AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1996
REGISTRATION NO. 333-10375
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- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- -----------------------------------------------------------------------------
AMENDMENT NO. 1
TO FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
- -----------------------------------------------------------------------------
TRANSEASTERN PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
FLORIDA 1531 59-2745379
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C>
ARTHUR FALCONE, PRESIDENT AND CHAIRMAN OF THE BOARD
3300 UNIVERSITY DRIVE TRANSEASTERN PROPERTIES, INC.
SUITE 001 3300 UNIVERSITY DRIVE, SUITE 001
CORAL SPRINGS, FLORIDA 33065 CORAL SPRINGS, FLORIDA 33065
TELEPHONE (954) 346-9700 TELEPHONE (954) 346-9700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
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PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
STEVEN D. RUBIN, ESQ. BRIAN J. MCCARTHY, ESQ.
STEARNS WEAVER MILLER WEISSLER SKADDEN, ARPS, SLATE, MEAGHER & FLOM
ALHADEFF & SITTERSON, P.A. 300 S. GRAND AVENUE,
150 WEST FLAGLER STREET, SUITE 2200 34TH FLOOR
MIAMI, FLORIDA 33130 LOS ANGELES, CALIFORNIA 90071
(305) 789-3200 (213) 687-5000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
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If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same Offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED PER SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value... 3,680,000 Shares(2) $10.00 per Share $36,800,000 $ 11,151.52
Representatives' Warrants...... 320,000 Warrants(3) $.01 per Warrant $ 320 (4)
Common Stock, $.01 par value... 320,000 Shares(5) $12.00 per Share $ 3,840,000 $ 1,163.64
Total Registration Fee.............................................................................................$ 12,315.16(6)
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457.
(2) Includes 480,000 Shares subject to the Underwriters' over-allotment
option.
(3) To be issued to the Representatives, as set forth on the cover page of
the Prospectus comprising a portion of this Registration Statement.
(4) No fee due pursuant to Rule 457(g).
(5) Issuable upon exercise of the Representatives' Warrants, together with
such indeterminate number of shares of Common Stock as may be issuable by
reason of the anti-dilution provisions contained therein.
(6) The amount of $10,906 was previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
TRANSEASTERN PROPERTIES, INC.
Cross-Reference Sheet Pursuant to Item 501(b) of Regulation S-K showing the
location in the Prospectus of the Responses to the Items of Part I of Form S-1.
<TABLE>
<CAPTION>
FORM S-1 ITEM NO. AND ITEM CAPTION LOCATION IN PROSPECTUS
- ---------------------------------- ----------------------
<S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus.................. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus................................... Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges....................... Prospectus Summary; Risk Factors
4. Use of Proceeds................................... Use of Proceeds
5. Determination of Offering Price................... Underwriting
6. Dilution.......................................... Dilution
7. Selling Security Holders.......................... Principal and Selling Shareholders
8. Plan of Distribution.............................. Underwriting
9. Description of Securities to be Registered........ Description of Capital Stock
10. Interests of Named Experts and Counsel........... Not Applicable
11. Information with Respect to the Registrant....... Prospectus Summary; Risk Factors; The
Company; Capitalization; Selected Financial
Data; Management's Discussion and Analysis
of Financial Condition and Results of
Operations; Business; Principal and Selling
Shareholders; Management; Certain
Relationships and Related Transactions;
Description of Capital Stock; Shares
Eligible for Future Sale; Underwriting;
Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities. Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 24, 1996
P R O S P E C T U S
3,200,000 SHARES
[LOGO] TRANSEASTERN PROPERTIES, INC.
COMMON STOCK
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Of the 3,200,000 shares of common stock, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering"), 2,892,326 shares are being
offered by Transeastern Properties, Inc., a Florida corporation
("Transeastern" or the "Company"), and 307,674 shares are being offered by
certain of the Selling Shareholders (as defined herein). The Company will not
receive any of the proceeds from the sale of the shares by the Selling
Shareholders. See "Principal and Selling Shareholders."
Prior to the Offering, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price for
the Common Stock will be between $8.00 and $10.00 per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price of the Common Stock.
The Common Stock has been approved for quotation on the Nasdaq Stock
Market's National Market under the symbol "TEPI."
SEE "RISK FACTORS" BEGINNING AT PAGE 6 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED UPON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
<S> <C> <C> <C> <C>
Per Share... $ $ $ $
Total(3).... $ $ $ $
</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters (as defined herein) against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended.
Excludes the value of the Representatives' Warrants (as defined herein)
to purchase up to 320,000 shares of Common Stock issued to the
Representatives (as defined herein) of the several Underwriters. See
"Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $ ,
including the Representatives' non-accountable expense allowance and
including the Selling Shareholders' expenses of $ to be paid by the
Company. See "Underwriting."
(3) The Company and certain Selling Shareholders have granted the
Underwriters an option exercisable within 30 days after the date of this
Prospectus to purchase up to an additional 480,000 shares of Common
Stock, on the terms set forth above solely to cover over-allotments, if
any. If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions, Proceeds to Company and Proceeds
to Selling Shareholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."
- -----------------------------------------------------------------------------
The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offers and to reject orders in whole or in part. Delivery of the
shares is expected against payment therefor on or about ___________, 1996, at
the offices of BT Securities Corporation, New York, New York or through the
facilities of the Depository Trust Company.
- -----------------------------------------------------------------------------
BT Securities Corporation
Cruttenden Roth
Incorporated
Janney Montgomery Scott Inc.
THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE>
1) Golf Course: This is a photograph of the golf course tenth hole at Aberdeen
Golf & Country Club, a Transeastern community in Boynton Beach, Florida.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
2
[INSIDE FOLDOUT FLAPS]
Flap (1) This is a collage of photographs of the interiors and exteriors of
homes and amenities developed by the Company.
Flap (2) This is a collage of photographs of the interiors and exteriors of
homes and amenities developed by the Company.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS
(INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS (I) ASSUMES THE
UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED, (II) ASSUMES AN INITIAL
PUBLIC OFFERING PRICE OF $9.00 PER SHARE (WHICH IS THE MIDPOINT OF THE
ESTIMATED RANGE OF THE INITIAL PUBLIC OFFERING PRICE), (III) REFLECTS AN
8.2-FOR-1 STOCK SPLIT OF THE COMMON STOCK EFFECTED ON AUGUST 15, 1996, (IV)
ASSUMES THE REDEMPTION OF ALL 1,819 SHARES OF THE COMPANY'S ISSUED AND
OUTSTANDING SERIES A PREFERRED STOCK, PAR VALUE $.01 PER SHARE (THE "SERIES A
PREFERRED STOCK") AND ALL 33,202 SHARES OF THE COMPANY'S ISSUED AND
OUTSTANDING SERIES B PREFERRED STOCK, PAR VALUE $.01 PER SHARE (THE "SERIES B
PREFERRED STOCK") UPON CONSUMMATION OF THE OFFERING, (V) ASSUMES THE CASHLESS
EXERCISE AND CONVERSION OF ALL OF THE 1,258,774 WARRANTS TO PURCHASE COMMON
STOCK OF THE COMPANY OUTSTANDING AT JUNE 30, 1996 ("WARRANTS"), (VI) ASSUMES
NO EXERCISE OF ANY OF THE REPRESENTATIVES' WARRANTS ISSUED IN CONNECTION WITH
THE OFFERING, (VII) ASSUMES NO EXERCISE OF ANY OPTIONS GRANTED UNDER THE
COMPANY'S 1996 STOCK OPTION AND SHAREHOLDER VALUE PLAN (THE "1996 STOCK
PLAN") AND (VIII) DOES NOT INCLUDE WARRANTS (THE "CONTINGENT WARRANTS") TO
PURCHASE SHARES OF COMMON STOCK, WHICH CONTINGENT WARRANTS ARE ISSUABLE IN
THE EVENT CERTAIN TARGETED COMMON STOCK SHARE PRICES ARE NOT ACHIEVED IN THE
OFFERING (SEE "CAPITALIZATION"). See "Underwriting," "Management--Stock
Option and Shareholder Value Plan," and "Description of Capital Stock--
Contingent Warrants." Investors should carefully consider the information set
forth under the heading "Risk Factors."
THE COMPANY
Transeastern has experienced rapid growth and is engaged primarily in the
acquisition of land and the construction and sale of quality, single-family
and multi-family homes for the move-up and senior home-buying markets in the
State of Florida. Transeastern uses a systematic and disciplined approach to
the acquisition of parcels of land through a rigorous evaluation of each
parcel to determine whether it satisfies the Company's quantitative and
qualitative acquisition criteria. The Company constructs homes with a variety
of designs with standardized option packages in order to cost-effectively
build homes of superior value. Transeastern's approach utilizes innovative
marketing and sales programs and procedures.
Transeastern believes that its disciplined approach coupled with its
emphasis on customer satisfaction, quality, value and pride in workmanship
are largely responsible for its growth. The Company experienced a ten-fold
increase in revenues over the past four years. The Company's objective is to
become a more broadly-diversified real estate company achieving long-term,
stable growth with measured risk. The Company employs the following
strategies in furtherance of its objective: (i) to aggressively target the
move-up and senior home-buying markets, by constructing and selling quality
homes of superior value on distinctive niche properties in growth markets,
primarily featuring waterfront and golf course living and other upscale
recreational amenities; (ii) to strategically acquire land which is
well-suited for the construction and sale of the Company's homes, and which
may also include parcels considered favorable for short-term, profitable
resale to other builders; (iii) to develop multi-family housing, primarily
for sale to institutional investors; (iv) to develop strategic alliances with
leading real estate and institutional investors to further the Company's
ability to opportunistically acquire and finance distinctive niche properties
in growth markets, primarily for single-family home development by the
Company; and (v) to develop ancillary business activities, typical of other
home builders, which traditionally complement single-family home development
businesses.
The Company has experienced significant growth in revenues during the past
four consecutive years. Revenues increased by 1,788% during the fiscal year
ended June 30, 1996 to $105.7 million as compared to $5.6 million in fiscal
year 1992. The Company's pre-tax income increased from $146,000 in 1992 to
$8.1 million in 1996. The Company's net income before income taxes and
extraordinary gain in 1996 of $8.1 million increased by 741% from $963,000 in
1995. The number of home sales closed increased from 25 in 1992 to 375 in 1996.
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock being offered:
By the Company ................................ 2,892,326 shares
By the Selling Shareholders ................... 307,674 shares
Total ......................................... 3,200,000 shares
Common Stock outstanding immediately prior to
the Offering(1) ............................... 7,523,992 shares
Common Stock to be outstanding immediately after
the Offering(1) ................................ 10,416,318 shares
Use of Proceeds ................................. The redemption of all issued and outstanding Series A Preferred
Stock and Series B Preferred Stock, the purchase of minority
interests in the Company's joint ventures and limited
partnerships, the repayment of existing indebtedness
(including indebtedness to certain affiliates), working
capital and general corporate purposes.
Nasdaq National Market Symbol .................. "TEPI"
</TABLE>
- --------
(1) Does not include an aggregate of up to 450,000 shares of Common Stock
reserved for issuance upon exercise of stock options which will be
outstanding upon consummation of the Offering under the Company's 1996
Stock Plan. See "Management--Executive Compensation."
SUMMARY FINANCIAL DATA
The following table sets forth summary selected financial and operating
information for the Company on a historical basis and pro forma basis and should
be read in conjunction with all of the financial statements and the notes
thereto and the pro forma adjustments included elsewhere in this Prospectus. The
historical financial information presented herein is based upon the historical
financial statements of the Company and the notes thereto which appear elsewhere
in this Prospectus and should be read in conjunction with such financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The unaudited pro forma financial information presented
herein is based upon the historical financial statements and the pro forma
adjustments of the Company included elsewhere in this Prospectus.
The pro forma financial information as of and for the year ended June 30,
1996 has been presented as if the Company had issued 2,892,326 shares of
Common Stock for $9.00 per share in the Offering on July 1, 1995 and utilized
the proceeds thereof as described in "Use of Proceeds" on July 1, 1995,
including, the proposed acquisition of certain minority interests in the
Company's Parkside Homes joint venture and in Transeastern Hollywood
Apartments, Ltd. and Transeastern Plantation Apartments, Ltd. In management's
opinion, all adjustments necessary to reflect the above transaction have been
made. See "Unaudited Pro Forma Financial Information."
The pro forma financial information is not necessarily indicative of what
the Company's actual financial position and results of operations would have
been as of and for the period indicated, nor does it purport to represent the
future financial position or results of operations of the Company.
4
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
---------------------------------------------------------
1994 1995 1996
------------ ------------ -----------------------------
PRO FORMA
AS ADJUSTED
ACTUAL FOR OFFERING
---------- ---------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA
Revenues ................................................ $ 22,595 $ 38,889 $ 105,673 $ 105,673
Expenses ................................................ 21,019 37,926 96,732 96,572
Minority interest in income of consolidated subsidiaries -- -- (865) --
Interest costs incurred ................................. 1,120 1,833 5,232 4,322
Less: Amounts capitalized ............................... 966 1,637 4,994 4,187
------------ ------------ ------------ ---------------
Net interest expense .................................... 154 196 238 134
Net income before income taxes and extraordinary gain .. 1,577 963 8,076 9,101
Income tax expense ...................................... 493 374 3,075 3,464
------------ ------------ ------------ ---------------
Net income before extraordinary gain .................... 1,084 589 5,001 5,637
Extraordinary gain from early extinguishment of debt,
net of income taxes ................................... -- 700 -- --
------------ ------------ ------------ ---------------
Net income .............................................. 1,084 1,289 5,001 5,637
Dividends on redeemable preferred stock ................. (352) (271) (411) --
Excess of the carrying amount of redeemable preferred
stock over the amount allocated upon repurchase ....... -- 1,712 -- --
------------ ------------ ------------ ---------------
Net income available for common shares .................. $ 732 $ 2,730 $ 4,590 $ 5,637
============ ============ ============ ===============
Net income per common and common
equivalent share:
Net income before extraordinary gain .................. $ .08 $ .25 $ .61 $ .54
Extraordinary gain ...................................... -- .09 -- --
Net income .............................................. $ .08 $ .34 $ .61 $ .54
============ ============ ============ ===============
Weighted average number of common stock and common stock
equivalents outstanding ............................... 8,841,128 8,228,341 7,548,443 10,440,769
============ ============ ============ ===============
OPERATING DATA:
Homes closed (units) ................................... 74 146 375 375
Average price of homes closed .......................... $ 260 $ 244 $ 203 $ 203
Number of projects owned at period end ................. 7 9 13 13
Net new orders (units) ................................. 162 190 385 385
Backlog (units) (at period end) ........................ 141 185 195 195
Sales value of backlog (at period end) ................. $ 38,181 $ 38,520 $ 45,663 $ 45,663
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents .............................. $ 470 $ 630 $ 3,769 $ 12,956
Total assets ........................................... 28,670 36,352 92,703 101,614
Total liabilities ...................................... 25,754 29,685 74,578 64,984
Minority interest in consolidated subsidiaries ........ -- -- 3,738 1,201
Redeemable preferred stock ............................. 2,271 3,373 3,502 --
Shareholders' equity ................................... $ 645 $ 3,294 $ 10,884 $ 35,429
</TABLE>
5
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CONSIDER
CAREFULLY THE FACTORS SET FORTH BELOW, TOGETHER WITH THE INFORMATION SET
FORTH IN THIS PROSPECTUS IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE
MAKING AN INVESTMENT DECISION.
REAL ESTATE AND HOMEBUILDING INDUSTRIES AND ECONOMIC CONDITIONS
The real estate and homebuilding industries are cyclical and significantly
affected by national, regional and local economic conditions and other
conditions, many of which are beyond the Company's control. In particular,
the real estate and homebuilding industries are adversely affected by
decreases in employment levels, reductions in the availability of financing,
increases in interest rates, increases in inflation, decreases in consumer
confidence and decreases in housing demand. A variety of other risks are also
inherent in the real estate and homebuilding industries, including conditions
of supply and demand in local markets, the demand of institutional investors
for multi-family rental housing, illiquidity of homesite inventory, the risks
inherent in holding and developing land, the carrying costs associated with
holding land and homesite inventory, competitive overbuilding, decreases in
the value of real property, delays in construction schedules, cost overruns,
increases in real estate taxes and other local government fees, the
availability and cost of land, materials and qualified labor and the risks
referenced below. Because of the long-term financial commitment involved in
purchasing a home, adverse economic conditions as well as economic
uncertainties tend to result in fewer home purchases. Moreover, builders are
subject to the risks associated with natural disasters such as hurricanes and
fires. Also, because a significant portion of the Company's customer base is
comprised of move-up buyers (i.e., a buyer selling a less expensive existing
home in order to purchase a more expensive home) and senior buyers, adverse
changes in the resale market for homes may have a material adverse effect
upon the Company. Adverse changes in the economy or any of these other
factors as well as economic uncertainties could have a material adverse
effect on the Company. The homebuilding and real estate industries are also
subject to significant variability and fluctuations in real estate values. No
assurance can be given that write-downs to the net realizable value of some
or all of the Company's assets will not occur from time to time if market
conditions deteriorate. Such write-downs, should they occur, could have a
material adverse effect on the Company's results of operations and financial
condition. See "Business--The Economy and Housing and Real Estate Markets,"
"Business--Business Strategy," "Business--Summary of Residential
Communities," "Business--Land Acquisition" and "Business--Customer Financing
and Title Services."
LEVERAGE AND FUTURE CAPITAL REQUIREMENTS
The homebuilding and real estate industries are capital intensive and
require significant expenditures for land purchases, land development and
housing construction. Primarily as a result of the capital intensive nature
of these industries, the Company has incurred significant indebtedness to
finance its operations. At June 30, 1996, on a pro forma basis after giving
effect to the Offering and the anticipated use of proceeds therefrom, the
Company's total liabilities would have been approximately $65.0 million and
the Company's ratio of indebtedness to net worth would have been
approximately 1.8 to 1. The Company's degree of leverage may limit its
ability to withstand adverse economic or business conditions. Additionally,
the Company's ability to make principal and interest payments on its
indebtedness will be dependent on future operations which may be affected by
financial, economic and other factors beyond the control of the Company.
There can be no assurance that the current level of operations will continue
or that the Company will in the future be able to make principal and interest
payments when due.
The Company believes, based on currently proposed plans and assumptions
relating to its operations and historical results of operations, including
cash required for land acquisitions, additions to its housing inventories,
operating expenses, interest and other costs, that proceeds from the
Offering, borrowings under its existing credit facilities or borrowings under
a proposed new revolving credit facility of up to $75 million (the "Credit
Facility") anticipated to be entered into in connection with the
6
<PAGE>
Offering and internally generated funds will be sufficient to satisfy the
Company's cash requirements for at least 12 months after the consummation of
the Offering. However, there is no assurance that the Company will be
successful in obtaining the Credit Facility. Additionally, the Company will
need to obtain additional financing or capital in the future in order to
implement its growth strategy or refinance its indebtedness upon maturity.
Such capital may be raised by the issuance of additional equity or the
incurrence of indebtedness. The amount and type of such additional financing
or capital may be limited by the terms of the Company's outstanding
indebtedness at that time (whether limited by the terms of the Company's
proposed Credit Facility or other indebtedness). In addition, the
availability of borrowed funds, especially for land acquisition and
construction financing, has been reduced nationally, and lenders are
requiring increased amounts of equity to be invested in a project by the
borrower in connection with both new loans and the extension or refinancing
of existing loans. There can be no assurance that additional financing or
capital will be available on terms satisfactory to the Company, if at all. If
the Company is unable to obtain sufficient additional capital or financing,
it may be forced to adopt alternative strategies that could materially and
adversely effect its operations and prospects, including, but not limited to,
reducing or delaying capital expenditures, reducing the size of its
operations and selling assets. Certain of the Company's indebtedness has
historically been guaranteed by certain of its shareholders and there are no
assurances and it is not currently anticipated that, any such shareholders
will guarantee the Company's indebtedness in the future.
The Company will also be subject to the risks associated with incurring
substantial indebtedness, including the risk that interest rates may
fluctuate and that cash flow may be insufficient to pay principal and
interest on such indebtedness. Additionally, the terms of such indebtedness
will include financial and other covenants with which the Company must remain
in compliance to avoid a default thereunder. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
MORTGAGE FINANCING AND INTEREST RATES
Almost all purchasers of the Company's homes finance their acquisitions
through third-party mortgage financing. Housing demand is generally adversely
affected by increases in interest rates, decreases in the availability of
mortgage financing, increasing housing costs and unemployment. If the
availability of financing decreases or interest rates increase and the
ability of prospective buyers to finance home purchases is adversely
affected, the Company's operating results and financial condition may be
negatively impacted. The Company's homebuilding activities also are dependent
upon the availability and cost of mortgage financing for buyers of homes
owned by potential customers, permitting these potential customers to sell
their existing homes. Also, the Company believes that the availability of
Federal Housing Administration and Veterans Administration mortgage financing
is an important factor in marketing certain of its homes. Any limitation or
restriction on the availability of such financing could materially adversely
affect the Company. See "Business--The Economy and Housing and Real Estate
Markets," "Business--Business Strategy," "Business -Summary of Residential
Communities," "Business--Land Acquisition" and "Business--Customer Financing
and Title Services."
VARIABILITY OF RESULTS
The Company historically has experienced, and expects to continue to
experience, variability in sales and revenues on a quarterly basis and from
year to year. Factors expected to contribute to this variability include,
among others, the Company's ability to acquire land on acceptable terms, the
timing of receipt of regulatory and other governmental approvals for the
construction of homes, the condition of the real estate market and economic
conditions in the Company's markets, the cyclical nature of the real estate
and homebuilding industries, prevailing interest rates, the availability of
mortgage financing, the cost and availability of materials and labor, the
timing of home closings, weather, competitive variables and the stage of
development of the Company's residential communities. The volume of the
Company's new sales contracts and home closings typically vary from quarter
to quarter depending primarily on the stages of development of its projects.
In the early stages of a project's development, the Company incurs
significant start-up costs associated with, among other things, project
design, land
7
<PAGE>
acquisition and development, construction and marketing expenses. Since
revenues from sales of homes are generally recognized only upon the transfer
of title at the closing of a sale of a home, there are no revenues during the
early stages of a project, other than from the sale of land parcels and
residential homesites to other builders. Accordingly, the Company's
historical financial performance is not necessarily a meaningful indicator of
future results, and the Company expects its financial results to vary from
community to community and from time to time. See "Business--The Economy and
Housing and Real Estate Markets" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
COMPETITION
The real estate and homebuilding industries are highly competitive and
fragmented. Competitive overbuilding in certain local markets, among other
competitive factors, may materially adversely affect homebuilders in that
market. Homebuilders compete for financing, raw materials and skilled labor,
as well as for the sale of homes. Additionally, competition for prime
properties is intense and the acquisition of such properties may become more
expensive in the future to the extent demand and competition increase. There
can be no assurance that the Company will continue to realize gross profits
from land sales in the future. The Company competes both with other local,
regional and national real estate companies and homebuilders, often within
larger subdivisions designed, planned and developed by such competitors. The
Company also competes for sales with individual resales of existing housing
and with available rental housing. Many of the Company's competitors have
longer operating histories and greater financial, marketing, sales and other
resources than the Company. See "Business--Competition."
DEPENDENCE ON SOUTH FLORIDA MARKET AND EXPANSION INTO NEW MARKETS
To date, substantially all of the Company's homebuilding and real estate
activities have been conducted in markets within South Florida, principally
in Broward County and Palm Beach County, and it is likely that the Company's
activities will continue to include a significant concentration in South
Florida in the near future. Accordingly, the Company's business and earnings
are likely to be dependent upon economic, demographic and other conditions in
South Florida and the Company's ability to achieve growth in that market. The
Company is, however, currently planning homebuilding and real estate ventures
in other areas of Florida where the Company has not previously operated,
including developments in Lee County, on the west coast of Florida and Winter
Park, in central Florida, and is also actively considering expansion into
other growth markets outside of Florida, including Texas and California. See
"Business--Summary of Residential Communities." To the extent the Company
expands into new markets, it will experience risks associated with these
markets, will incur additional costs relating to the employment of personnel
with knowledge of the new markets and will be required to raise additional
capital in order to meet its expansion plans. Such capital may be raised by
the issuance of additional equity or the incurrence of indebtedness. In
addition, in appropriate situations, the Company may seek financing from
other sources or may enter into joint venture and other collaborative
arrangements for the acquisition or development of properties. The expansions
and the methods or arrangements utilized by the Company to finance such
expansions could result in material changes in the Company's financial
condition and operating results. There can be no assurance that the Company
will be able to employ the necessary personnel, obtain the necessary capital
or that it will be successful in its efforts to expand into other areas of
Florida or any other new markets. See "Business Business Strategy."
GOVERNMENTAL REGULATION AND BUILDING MORATORIUMS
The Company and its competitors are subject to various federal, state and
local laws, ordinances and regulations concerning, among other things,
environmental matters, wetland preservation, health and safety, zoning, land
use and other entitlements, building design and density levels, which can,
among other things, limit the number of homes that may be built, result in
substantial compliance, mitigation and other costs, increase the cost of
development and construction, delay development and
8
<PAGE>
construction and otherwise have a material adverse effect on the homebuilding
industry in general. In developing a project and building homes, the Company
must also obtain the approval of numerous governmental authorities regulating
such matters as water and waste disposal, the dedication of acreage for open
space, parks, schools, and the construction design, methods and materials
used. Several governmental authorities have imposed impact fees as a means of
defraying the cost of providing certain governmental services to developing
areas, which fees have increased significantly during recent years.
The Company may be subject to delays or may be precluded from developing
in certain communities because of building moratoriums or changes in statutes
or rules that could be imposed in the future. The State of Florida and
various counties, including Broward County and Palm Beach County, have and
may continue to declare moratoriums on the issuance of building permits and
impose restrictions in areas where the infrastructure (E.G., roads, schools,
parks, water and sewage treatment facilities and other public facilities)
does not reach minimum standards. In addition, as a result of Hurricane
Andrew, Broward County and Palm Beach County and other counties in Florida
have recently enacted new, more stringent building codes which have resulted
in increased costs of construction. There can be no assurance that the
Company will be able to pass through its increased development and
construction costs to home buyers or that existing or new governmental
regulations will not have a material adverse effect on the business or
profitability of the Company. See "Business--Governmental Regulation and
Environmental Matters."
EFFECT OF NATURAL DISASTERS; AVAILABILITY AND COST OF HOMEOWNERS' INSURANCE
The markets in which the Company operates are subject to the risks of
natural disasters. The State of Florida in particular may be affected by
tropical storms and hurricanes such as Hurricane Andrew which struck the
southeast coast of Florida on August 24, 1992, damaging or destroying
thousands of homes and business structures, primarily in southern Dade
County, Florida. The occurrence of tropical storms or other natural disasters
could have a material adverse effect on the Company's business including the
incurrence of uninsured losses, delays in construction, and shortages and
increased costs of labor and building materials. Additionally, primarily as a
result of Hurricane Andrew, numerous insurance carriers have opted either not
to write homeowners' insurance in Florida at all or to only renew existing
policies and not to write new policies. These practices have resulted in
substantial increases in the cost of homeowners' insurance, a widespread
shortage of available private insurance for homeowners in the State of
Florida and the creation of a state joint underwriting association. The
state-provided insurance coverages generally afford homeowners less
protection than typically provided by private insurance carriers at greater
costs. The inability of homeowners to obtain cost effective homeowners'
insurance could have an adverse effect on demand for new homes and, as a
result, on the Company's homebuilding business.
CONCENTRATION OF OWNERSHIP
Immediately after consummation of the Offering, three existing
shareholders will own approximately 57.1% (53.4% if the Underwriters'
over-allotment option is exercised in full and these three existing
shareholders sell 70% of the shares sold in the over-allotment option) of the
Company's outstanding Common Stock. Accordingly, these three shareholders
will have the ability to elect the entire Board of Directors of the Company
and to control the outcome of all issues submitted to a vote of the
shareholders of the Company. Voting control by these shareholders may
discourage certain types of transactions involving an actual or potential
change of control of the Company, including transactions in which the holders
of Common Stock might receive a premium for their shares over prevailing
market prices. See "Principal and Selling Shareholders."
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends to a significant degree on the efforts
of the Company's principal executive officers. The Company's operations may
be adversely affected if one or more of the
9
<PAGE>
Company's current executive officers cease to be employed by the Company. The
Company's success is also dependent upon its ability to attract and retain
qualified personnel. The Company has no employment agreements with any of its
employees. Messrs. Arthur Falcone, Edward Falcone and Philip Cucci have,
however, represented that they will not compete with the Company in its
principal lines of business and that homebuilding and land development
opportunities will be directed to the Company. The Company has obtained
key-person life insurance on the lives of Messrs. Arthur Falcone, Edward
Falcone and Philip Cucci in the amount of $5 million, $4 million and $4
million, respectively. See "Management."
DILUTION
Upon completion of the Offering, investors in the Offering will experience
immediate dilution in the per share net tangible book value of their Common
Stock of $5.70 from the assumed initial public offering price of $9.00 per
share. See "Dilution."
ABSENCE OF PUBLIC MARKET AND VOLATILITY OF COMMON STOCK PRICE
Prior to the Offering, there has been no public market for the Common
Stock. Although the Common Stock has been approved for quotation on the
Nasdaq National Market, there is no assurance that any trading market for the
Common Stock will develop, or, if any such market develops, that it will be
sustained. Accordingly, purchasers of the Common Stock may experience
difficulty selling or otherwise disposing of their shares. The initial public
offering price of the Common Stock offered hereby will be determined through
negotiations among the Company, the Selling Shareholders and the
Representatives and may not be indicative of the market price for the Common
Stock after the Offering. Moreover, the market price for the Common Stock
after completion of the Offering may be volatile and will be affected by,
among other things, the Company's performance, industry related factors and
general market conditions. See "Underwriting" for information relating to the
method of determining the initial public offering price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of the Offering, the Company will have a total of
10,416,318 shares of Common Stock outstanding. Of such 10,416,318 shares, the
3,200,000 shares of Common Stock being sold in the Offering (together with
any shares sold upon exercise of the Underwriters' over-allotment option) and
shares issued upon exercise of stock options will be immediately eligible for
resale in the public market without restriction, except for shares purchased
by or issued to any "affiliate" of the Company (within the meaning of the
Securities Act of 1933, as amended (the "Securities Act")).
Of such outstanding shares, the remaining 7,216,318 shares will be
"restricted securities" (within the meaning of Rule 144 promulgated under the
Securities Act, in that they were issued by the Company in private
transactions not involving a public offering). The existing holders of these
shares of Common Stock and the Company's officers and directors have agreed
not to sell or otherwise dispose of any of their shares of Common Stock for a
period of six months from the date of the completion of the Offering without
the prior written consent of the Representatives. Upon the expiration of such
six-month period, 6,894,689 of such shares will be eligible for resale under
Rule 144. Management of the Company and each of the holders of Common Stock
issued upon exercise of Warrants issued in connection with the Series A
Preferred Stock and the Series B Preferred Stock and each of the purchasers
of Common Stock in the Company's March, 1996 offering of Common Stock have
been granted certain registration rights with respect to their shares (an
aggregate of 6,697,164 shares) of Common Stock. No prediction can be made as
to the effect, if any, that sales of shares of Common Stock or the
availability of such shares for sale will have on the market prices
prevailing from time to time. Nevertheless, the possibility that substantial
amounts of Common Stock (whether now outstanding or issued in the future) may
be sold in the public market may adversely affect prevailing market prices
for the Common Stock and impair the Company's ability to raise capital
through the sale of its equity securities. See "Shares Eligible for Future
Sale" and "Certain Relationships and Related Transactions--Registration
Rights Agreement."
10
<PAGE>
POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS; PREFERRED STOCK
Certain provisions of the Company's Articles of Incorporation and Bylaws,
such as the Company's staggered board, the advance notice requirements for
the nomination of directors and limits on the ability of the shareholders to
call a special meeting, have anti-takeover effects and may delay, defer or
prevent a takeover of the Company. In addition, Florida has enacted
legislation that may deter or frustrate takeovers of Florida corporations.
The Florida Control Share Act generally provides that shares acquired in a
"control share acquisition" will not possess any voting rights unless such
voting rights are approved by a majority of the corporation's disinterested
shareholders or approved by resolution of the Board of Directors. A "control
share acquisition" is an acquisition, directly or indirectly, by any person
or ownership of, or the power to direct the exercise of voting power with
respect to, issued and outstanding, "control shares" of a publicly-held
Florida corporation. "Control shares" are shares, which, except for the
Florida Control Share Act, would have voting power that, when added to all
other shares owned by a person or in respect of which such person may
exercise or direct the exercise of voting power, would entitle such person,
immediately after acquisition of such shares, directly or indirectly, alone
or as a part of a group, to exercise or direct the exercise of voting power
in the election of directors within any of the following ranges: (a) at least
20% but less than 33 1/3 % of all voting power; (b) at least 33 1/3 % but
less than a majority of all voting power; or (c) a majority or more of all
voting power. See "Description of Capital Stock."
The Company's Articles of Incorporation authorize the issuance of 20
million shares of "blank check" preferred stock (the "New Preferred Stock")
with such designations, rights and preferences as may be determined from time
to time by the Board of Directors. No shares of New Preferred Stock are
outstanding as of the date of this Prospectus. Accordingly, the Board of
Directors is empowered, without shareholder approval, to issue New Preferred
Stock with dividend, liquidation, conversion, voting or other rights that
could materially adversely affect the voting power or other rights of the
holders of the Company's Common Stock. In the event of issuance, New
Preferred Stock could be utilized, under certain circumstances, as a method
of discouraging, delaying, or preventing a change in control of the Company.
Although the Company has no present intention to issue any shares of New
Preferred Stock, there can be no assurance that the Company will not do so in
the future. The application of any such provisions or the issuance of New
Preferred Stock could prevent shareholders from realizing a premium upon the
sale of their shares of Common Stock. See "Description of Capital Stock."
CHANGES IN TAX LAWS
Recently, certain proposals have been made, generally in connection with
so-called "flat-tax" proposals, that would eliminate or limit the
deductibility of mortgage interest for federal income tax purposes and would
eliminate or limit tax-free rollover treatment provided under current law
where proceeds of the sale of a principal home are reinvested in a new
principal home. Enactment of such proposals may have a material adverse
effect on the homebuilding industry in general, and on the Company in
particular. There can be no assurance that such proposals will not be enacted
or, if enacted, what particular form such laws would take.
11
<PAGE>
THE COMPANY
The Company was incorporated in 1986 as a Florida corporation. The
Company's executive offices are located at 3300 University Drive, Suite 001,
Coral Springs, Florida 33065 and its telephone number at that address is
(954) 346-9700.
As of the date of this Prospectus, the Company had 6,266,636 shares of
Common Stock held by seven holders of record, 1,819 shares of outstanding
Series A Preferred Stock held by five holders of record and 33,202 shares of
Series B Preferred Stock held by thirty-one holders of record. All of the
Company's Series A Preferred Stock and Series B Preferred Stock which are
currently outstanding will be redeemed promptly after the consummation of the
Offering. Additionally, there were 1,258,774 warrants to purchase Common
Stock outstanding at September 30, 1996 held principally by the holders of
the Company's Series A and Series B Preferred Stock, all of which will be
exercised and converted in a cashless exercise into 1,257,356 shares of
Common Stock prior to the consummation of the Offering. Upon consummation of
the Offering, there will also be an aggregate of up to 450,000 shares of
Common Stock reserved for issuance upon the exercise of stock options granted
under the Company's 1996 Stock Plan and warrants issued to the
Representatives to purchase up to an additional 320,000 shares of Common
Stock (the "Representatives' Warrants"). The Company has also granted an
option to the Underwriters to purchase an additional 480,000 shares of Common
Stock solely to cover over-allotments. The Company has further agreed to
issue to certain of its shareholders Contingent Warrants to purchase
additional shares of Common Stock in the event the shares offered hereby are
not sold at certain targeted Common Stock share prices. See "Capitalization."
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of 2,892,326
shares of Common Stock by the Company in the Offering (after deducting the
estimated underwriting discounts and commissions and offering expenses) are
estimated to be approximately $23.5 million based on an assumed initial public
offering price of $9.00 per share (which is the midpoint of the estimated range
of the initial public offering price), and $24.4 million if the Underwriters'
over-allotment option is exercised in full (assuming that 20% of the shares sold
in the over-allotment option will be sold by the Company, with the remaining 80%
being sold by Selling Shareholders). The Company intends to use approximately
$3.5 million of the net proceeds of the Offering for the redemption of all
issued and outstanding Series A Preferred Stock and the Series B Preferred
Stock, approximately $8.2 million of the net proceeds for the repayment of
existing indebtedness to unaffiliated parties, consisting of: $1.8 million
principal amount of indebtedness, due in April, 1998, bearing interest at 20%
per annum; $2.7 million principal amount of indebtedness, due in February, 1999,
bearing interest at 20% per annum; and $3.7 million principal amount of
indebtedness, due in September, 2000, bearing interest at 20% per annum;
approximately $2.0 million of the net proceeds for the repayment of existing
indebtedness to non-management affiliates and approximately $0.4 million for the
repayment of existing indebtedness to management affiliates, all as described
under "Certain Relationships and Related Transactions--Certain Loans;"
approximately $2.4 million of the net proceeds to acquire the remaining minority
interests in the Company's Parkside Homes joint venture and in Transeastern
Hollywood Apartments, Ltd. and Transeastern Plantation Apartments, Ltd. and the
remaining approximately $7.0 million for working capital and general corporate
purposes. Of such $7.0 million, approximately $1.0 million may be used to repay
additional existing indebtedness to non-management affiliates, although the
Company has not presently determined to repay this loan from the proceeds of
this Offering. All of the indebtedness being repaid from the proceeds of this
Offering was utilized by the Company for land acquisitions and working capital
requirements. Pending utilization of the funds, the proceeds of the Offering
will be invested in short-term United States government securities and other
financial institutions, including, overnight repurchase agreements with
financial institutions. The Company will not receive any of the proceeds from
the sale of Common Stock by the Selling Shareholders.
12
<PAGE>
DIVIDEND POLICY
The Company currently intends to retain any earnings to finance the
development and expansion of the Company's business and does not anticipate
paying any cash dividends in the foreseeable future. The declaration and
payment of dividends by the Company are subject to the discretion of the
Board of Directors of the Company. Any future determination to pay dividends
will depend on the Company's results of operations, financial condition,
capital requirements, contractual restrictions and other factors deemed
relevant at the time by the Board of Directors. The terms of the Credit
Facility may restrict the Company's ability to pay dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
13
<PAGE>
CAPITALIZATION
The following table sets forth, at June 30, 1996 (i) the actual
capitalization of the Company and (ii) the capitalization of the Company as
adjusted to reflect the authorization of the New Preferred Stock, the redemption
of the Series A Preferred Stock and Series B Preferred Stock and the payment of
dividends thereon and the sale of Common Stock in the Offering (at an assumed
initial public offering price of $9.00 per share, which represents the midpoint
of the estimated range of the initial public offering price). The following
table should be read in conjunction with the financial statements of the Company
and the related notes thereto included elsewhere in this Prospectus. See "Use of
Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------------------
ACTUAL
---------------------------------
SHORT LONG
TERM TERM TOTAL AS ADJUSTED
--------- ---------- ---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Total indebtedness:
Construction loans ................................. $ 7,289 $14,182 $21,471 $21,471
Acquisition and development loans .................. 1,847 23,455 25,302 21,648
Other subordinated debt ............................ -- 7,810 7,810 3,260
Trade accounts payable and accrued expenses ....... 7,245 -- 7,245 7,245
Customer deposits .................................. 3,792 -- 3,792 3,792
Income taxes payable ............................... 2,725 -- 2,725 2,725
Deferred tax liabilities ........................... 1,283 -- 1,283 1,283
Due to affiliates and officers ..................... 2,441 -- 2,441 62
Other liabilities .................................. 2,509 -- 2,509 2,509
--------- ---------- ---------- --------------
Total liabilities .................................. 29,131 45,447 74,578 63,995
Minority interest in consolidated subsidiaries ..... 3,738 1,200
Redeemable preferred stock .......................... 3,502 --
Shareholders' equity:
Common stock, $.01 par value, 41,000,000 shares
authorized, 6,266,637(1) shares and 10,416,318
shares issued and outstanding, respectively, as of
June 30, 1996 and as adjusted as of June 30,
1996(2)(3) ....................................... 63 104
New preferred stock 20,000,000 shares authorized
and zero shares outstanding ...................... -- --
Additional paid-in capital ......................... 4,656 28,113
Retained earnings .................................. 6,165 6,165
---------- --------------
Total shareholders' equity ......................... 10,884 34,382
Total capitalization ................................ 92,703 99,577
========== ==============
</TABLE>
- -----------------------------------------------------------------------------
(1) Does not include the exercise of 1,258,774 Warrants outstanding as of
June 30, 1996.
(2) Reflects the 8.2-for-1 stock split effected on August 15, 1996. Effective
upon consummation of the Offering, the Company will have 100 million
shares of Common Stock authorized.
(3) Does not include the Contingent Warrants to purchase additional shares of
Common Stock in the event certain targeted Common Stock share prices are
not achieved in the Offering. Assuming an initial public offering price
of $9.00 per share, the Contingent Warrants would be exercisable for
95,038 shares of Common Stock. See "Description of Capital Stock--
Contingent Warrants" and Notes 2(j) and 12(e) to the Company's
Consolidated Financial Statements.
14
<PAGE>
DILUTION
The net tangible book value of the Common Stock as of June 30, 1996, was
$10,884,217 or approximately $1.45 per share (assuming the cashless exercise
and conversion of all of the Company's Warrants outstanding as of June 30,
1996 into 1,257,356 shares of Common Stock). "Net tangible book value per
share" represents the amount of the Company's stockholders' equity, less
intangible assets, divided by the number of shares of Common Stock
outstanding immediately prior to the Offering. After giving effect to the
sale by the Company of the 2,892,326 shares of Common Stock offered by the
Company hereby (based on an assumed initial public offering price of $9.00
per share (which is the midpoint of the estimated range of the initial public
offering price)) and after deducting the estimated underwriting discounts and
commissions and offering expenses payable by the Company, the Company's pro
forma net tangible book value as of June 30, 1996 would have been
$34,382,000, or $3.30 per share of Common Stock. This represents an immediate
increase in pro forma net tangible book value of $1.85 per share to existing
holders of Common Stock and an immediate dilution in net tangible book value
of $5.70 per share to new investors purchasing Common Stock in the Offering
at the assumed initial public offering price. The following table illustrates
the foregoing information with respect to dilution to new shareholders on a
per share basis:
ASSUMED INITIAL PUBLIC OFFERING PRICE PER SHARE ................ $9.00
Net tangible book value per share before the Offering ........ 1.45
Increase per share attributable to new investors .............. 1.85
Pro forma net tangible book value per share after the Offering 3.30
--------
Dilution per share to new investors ........................... $5.70
========
The following table sets forth on a pro forma basis as of June 30, 1996,
after giving effect to the sale by the Company of 2,892,326 shares of Common
Stock in the Offering, the differences between existing holders of Common
Stock and the purchasers of shares in the Offering (based on an assumed
initial public offering price of $9.00 per share (which is the midpoint of
the estimated range of the initial public offering price)) with respect to
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average consideration paid per share.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------ ------------------------ AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ---------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing
shareholder(1) ........ 7,523,992 72.2% $ 3,008,509 10.4% $ .40
New investors(1) ...... 2,892,326 27.8% $26,030,934 89.6% 9.00
------------- ---------- -------------- ---------- ----------------
Total ............... 10,416,318 100.0% $29,039,443 100% $2.79
============= ========== ============== ========== ================
</TABLE>
- -----------------------------------------------------------------------------
(1) The 307,674 shares sold by the Selling Shareholders will reduce the
number of shares held by the existing holders of Common Stock to
7,216,318 or 69.3% and increase the number of shares held by new
investors to 3,200,000 or 30.7%. The Underwriters have the option to
purchase 480,000 shares (96,000 shares from the Company and 384,000
shares from the Selling Shareholders) of the Company's Common Stock to
cover over-allotments, if any, in connection with the sale of Common
Stock. Assuming the Underwriters exercise the over-allotment option, the
number of shares held by the existing shareholders will be reduced to
6,832,318 or 65.0% and the number of shares of Common Stock held by new
investors will increase to 3,680,000 or 35.0%.
15
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data presented below under the captions "Statement
of Operations Data" and "Balance Sheet Data (at period-end)" for, and as of
the end of, each of the years in the three-year period ended June 30, 1996,
are derived from the Consolidated Financial Statements of Transeastern, which
financial statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants. The Consolidated Financial Statements as of
June 30, 1996 and 1995, and for each of the years in the three-year period
ended June 30, 1996, and the report thereon which refers to a change in the
method of accounting for a real estate joint venture, are included elsewhere
in this Prospectus. The selected data presented below as of and for the years
ended June 30, 1993 and 1992 have been derived from the unaudited
consolidated financial statements of the Company, which in the opinion of
management include all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the financial position and results
of operations for such dates and periods. The selected financial information
set forth below should be read in conjunction with the Consolidated Financial
Statements and the related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
-------------------------------------------------------------------
1992 1993 1994 1995 1996
------------ ------------ ------------ ------------ ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues:
Home and land sales ....................................... $ 5,597 $ 9,777 $ 22,473 $ 38,431 $ 104,474
Rental and other income ................................... 52 114 173 234 1,199
Equity in income of real estate joint venture ............. -- -- (51) 224 --
---------- ---------- ---------- ---------- ----------
Total revenues ............................................. 5,649 9,891 22,595 38,889 105,673
Expenses: ..................................................
Cost of home, land and homesite sales ..................... 4,839 8,705 18,903 32,449 86,442
Selling, general and administrative expenses .............. 650 1,118 1,962 5,281 10,051
Interest expense, net ..................................... 14 170 154 196 238
---------- ---------- ---------- ---------- ----------
Total expenses ............................................. 5,503 9,993 21,019 37,926 96,732
Minority interest in income of consolidated subsidiaries .. -- -- -- -- (865)
Net income (loss) before income taxes and extraordinary
gain ..................................................... 146 (102) 1,577 963 8,076
Income tax expense ......................................... -- -- 493 374 3,075
---------- ---------- ---------- ---------- ----------
Net income (loss) before extraordinary gain ................ 146 (102) 1,084 589 5,001
Extraordinary gain from early extinguishment of debt, net
of income taxes .......................................... -- -- -- 700 --
---------- ---------- ---------- ---------- ----------
Net income (loss) .......................................... $ 146 $ (102) $ 1,084 $ 1,289 $ 5,001
========== ========== ========== ========== ==========
Net income (loss) per common and common equivalent share .. $ .02 $ (.02) $ .08 $ .34 $ .61
========== ========== ========== ========== ==========
Weighted average number of common stock and common stock
equivalents outstanding .................................. 6,266,637 6,447,469 8,841,128 8,228,341 7,548,443
========== ========== ========== ========== ==========
OPERATING DATA:
Homes closed (units) ...................................... 25 46 74 146 375
Average price of homes closed ............................. $ 215 $ 212 $ 260 $ 244 $ 203
Number of communities owned at period end ................. 1 3 7 9 13
Net new orders (units) .................................... 40 66 162 190 385
Backlog (units) (at period end) ........................... 33 53 141 185 195
Sales value of homes in backlog (at period end) .......... $ 7,130 $ 11,324 $ 38,181 $ 38,520 $ 45,663
BALANCE SHEET DATA (AT PERIOD END):
Cash ...................................................... $ 73 $ 819 $ 470 $ 630 $ 3,769
Total assets .............................................. 4,205 8,761 28,670 36,352 92,703
Total liabilities ......................................... 4,074 6,898 25,754 29,685 74,578
Minority interest in consolidated subsidiaries ........... -- -- -- -- 3,739
Redeemable preferred stock ................................ -- 2,000 2,271 3,373 3,502
Shareholders' equity ...................................... $ 131 $ (137) $ 645 $ 3,294 $ 10,884
</TABLE>
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion includes the operations of the Company for each
of the periods presented. This discussion and analysis should be read in
conjunction with "Selected Financial Data" and the Company's Consolidated
Financial Statements and the related notes thereto which are included
elsewhere in this Prospectus.
OVERVIEW
The Company, which was formed in 1986, is engaged primarily in the
acquisition of land and the construction and sale of single-family homes and
rental apartments in the State of Florida. The Company has experienced
substantial growth in recent years as the result of acquiring and developing
several large land parcels. The Company posted record earnings before income
taxes of $8.1 million on total revenue of $105.7 million for the fiscal year
ending June 30, 1996. The Company expects to continue its growth in revenues
in 1997 with the acquisition, development and sale of additional properties
and by expanding its operations into new markets.
RESULTS OF OPERATIONS
YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995
The following tables set forth certain information relating to the
Company's operations for the years ended June 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---------------------- ---------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues .............................. $105,673 100.0% $38,889 100.0%
Cost of home and homesite sales ............. 86,442 81.8 32,449 83.4
----------- --------- ---------- ---------
Gross profit ................................ 19,231 18.2 6,440 16.6
Selling, general and administrative expenses 10,051 9.5 5,281 13.6
Interest expense, net ....................... 238 0.2 196 0.5
Net income .................................. $ 5,001 4.7% $ 1,289 3.3%
</TABLE>
TOTAL REVENUES. Total revenues in 1996 of $105.7 million were up 172% from
$38.9 million in 1995. The $66.8 million increase in total revenues was
primarily attributable to an increase in home sales revenues, an increase in
revenues from parcel and homesite sales and a change in the accounting method
used in connection with the Company's Parkside joint venture. Revenues from
home sales increased by $40.3 million to $76.0 million in 1996 from $35.7
million in 1995 as a result of a 157% increase in the number of home
deliveries (375 in 1996 versus 146 in 1995) due primarily to an expansion of
the number of residential projects under development (13 in 1996 versus 9 in
1995). The increase in home sales revenues based on higher deliveries was
partially offset by a lower average sales price of homes delivered in 1996
($203,000 in 1996 versus $244,000 in 1995). The lower average home price
reflected the Company's decision to broaden the range of product types it
offers by increasing its emphasis on moderately priced homes directed to the
move-up and senior markets. Management believes, based upon demographic
information published by the University of Florida's Bureau of Business and
Economic Research and the United States Department of Census, that these two
markets represent the largest growth segment of the geographic areas in which
it operates. See "Business--The Economy and Housing and Real Estate Markets."
The increase in parcel and homesite sales was attributable to the sale of
various parcels within the Company's communities to other builders. Land
parcel and unimproved homesite sales totaled $28.4 million in 1996 and $2.7
million in 1995. The Company sells such land parcels and homesites where
appropriate to take advantage of market opportunities and to reduce its
market risk and the carrying costs associated with its owning land. The
Company will continue to seek to identify opportunities to
17
<PAGE>
acquire land parcels as a part of large, mixed-use property acquisitions and
to resell these parcels to other builders. There is no assurance that the
Company will be successful in identifying, acquiring or reselling such
parcels in the future.
The increase in revenues in 1996 as compared to 1995 was also partially
attributable to a change in accounting method used in connection with the
Company's Parkside joint venture, which resulted in a $25.5 million increase
in sales revenues in 1996. The joint venture was accounted for on the equity
method of accounting in 1995 and 1994 but was accounted for as a consolidated
subsidiary in 1996. The change in accounting method was the result of a
modification to the joint venture agreement which gave the Company effective
operating control over the joint venture. Total revenues in 1995 would have
been $45.8 million (195 homes delivered) if the joint venture had been
accounted for as a consolidated subsidiary in that year. The change would not
have affected 1994 revenues as no homes were delivered at Parkside in that
year. Consolidation of the joint venture in 1995 would have had no effect on
the Company's reported earnings relating to the joint venture in that year.
COST OF SALES. Cost of sales increased from $32.4 million in 1995 to $86.4
million in 1996, an increase of $54.0 million, or 167%. The increase was the
result of increased home deliveries, land parcels sales and the change in the
accounting method used in connection with the Parkside joint venture, as
discussed above.
GROSS PROFIT. Gross profit percentages from the sales of homes and land
were 17.3% in 1996 and 15.6% in 1995. The higher gross profit percentage
experienced in 1996 was primarily attributable to the increase in land parcel
sales in 1996. The Company experienced gross profit percentages on land
parcel sales of 31.6% in 1996 and 45.3% in 1995. The relatively high margins
experienced on these parcels in 1996 as compared to margins experienced on
home sales reflects the benefits of purchasing parcels as part of large
mixed-use property acquisitions and then reselling the parcels to other
developers. This allows the Company to acquire parcels at bulk land prices
and to resell a portion of the parcels in a relatively short period of time
on a retail land basis. Land sales in 1995 consisted exclusively of the sale
of homesites in the Cypress Head subdivision, which had a relatively low land
basis, thus resulting in higher margins than those experienced from land
sales in 1996.
Excluding the effects of land sales, the Company experienced gross profit
percentages of 11.9% and 13.3% in 1996 and 1995, respectively. The lower
profit percentage experienced in 1996 on home sales was partially
attributable to low margins on custom home sales in the Coral Springs market.
A significant oversupply of housing inventory developed in the Coral Springs
market in 1996 as a result of a substantial increase in the sale of land
parcels by the area's master developer. This oversupply resulted in a
significant increase in competition in this market which, coupled with
permitting delays and other problems, caused profit margins to significantly
decline in this market in 1996. Management elected to substantially reduce
its involvement in the Coral Springs market, and began to take steps to
accomplish this reduction in late 1995. The Company's remaining inventory
relating to the Coral Springs custom home product line was $2.8 million as of
June 30, 1996. The Company experienced a 13.3% gross profit percentage in
1996 on total home sales excluding Coral Springs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $10.1 million in 1996 and $5.3 million in 1995.
These expenses as a percentage of total revenues were 9.5% and 13.6% in 1996
and 1995, respectively. These expenses as a percentage of revenues in 1995
were higher than 1996 expenses due to management's decision to significantly
increase its management resources and operating systems in preparing for the
anticipated substantial increase in home deliveries in 1996 and 1997. In
particular, the Company focused on building the core of its senior management
team during 1995. The Company had 85 total employees at the end of 1996, up
from approximately 60 in 1995. Management believes that, with its investment
in additional employees in 1996, it is prepared to handle significantly
higher levels of sales and home deliveries with minimal additional new hires
in 1997.
INTEREST EXPENSE, NET. The Company's total interest costs were $5.2
million in 1996 and $1.8 million in 1995. The higher interest costs in 1996
reflect the significant increases in the Company's acquisition,
18
<PAGE>
development and construction loan indebtedness, resulting from substantial
inventory additions during the year. In accordance with generally accepted
accounting principles, interest costs are capitalized to land and
construction in process inventories during the period in which activities
necessary to prepare the property for its intended use are in progress.
Interest costs of $5.0 million and $1.6 million were capitalized in 1996 and
1995, respectively.
NET INCOME. The Company's net income after tax increased 288% in 1996 to
$5.0 million ($.61 per share) from 1995 net income of $1.3 million ($.34 per
share). Net income in 1995 included a $0.7 million extraordinary item
relating to the early extinguishment of debt. The increase in income was
attributable to the $12.1 million increase in gross profit from sales,
partially offset by a $4.8 million increase in selling, general and
administrative expenses and a $2.7 million increase in income taxes.
The $2.7 million increase in income tax expenses was directly
proportionate to the increase in the Company's income before taxes. The
Company's effective tax rate was 38.1% and 38.2% in 1996 and 1995,
respectively.
YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994
The following tables sets forth certain information relating to the
Company's operations for the years ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
--------------------- ---------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues .................................. $38,889 100.0% $22,595 100.0%
Cost of home and sales .......................... 32,449 83.4 18,903 83.7
---------- --------- ---------- ---------
Gross profit .................................... 6,440 16.6 3,692 16.3
Selling, general and administrative expense, net 5,281 13.6 1,962 8.7
Interest expense, net ........................... 196 0.5 154 0.7
Net income ...................................... $ 1,289 3.3% $ 1,084 4.8%
</TABLE>
TOTAL REVENUES. Total revenues of $38.9 million in 1995 were 72% higher
than 1994 total revenues of $22.6 million, primarily due to a $16.4 million
increase in home sales revenues. The increase in home sales revenues resulted
from a 97% increase in home deliveries (146 in 1995 versus 74 in 1994),
partially offset by a reduction in the average sales price of homes delivered
from $260,000 in 1994 to $244,000 in 1995. The lower average price reflect
the Company's increased marketing emphasis on moderately priced houses
directed towards move-up and senior buyers versus high-end (over $500,000
average sales price) custom homes.
COST OF SALES. Cost of sales increased from $18.9 million in 1994 to $32.4
million in 1995, an increase of $13.5 million, or 71%. The increase was
directly proportionate to the increase in sales revenues, caused by increased
home deliveries in 1995 as discussed above.
GROSS PROFIT. Gross profit percentages from the sales of homes and land
were 15.6% in 1995 and 15.9% in 1994. Excluding the effects of land sales,
these percentages were 13.3% and 11.1% in 1995 and 1994, respectively.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $5.3 million in 1995 and $2.0 million in 1994.
These expenses as a percentage of total revenues were 13.6% and 8.7% in 1995
and 1994, respectively. These expenses in 1995 as a percentage of revenues
were higher than 1994 expenses due to management's decision to significantly
increase its management resources and operating systems in 1995 in preparing
for the anticipated substantial increase in home deliveries in 1996 and 1997.
In particular, the Company focused on building the core of its senior
management team during 1995. The Company had approximately 60 total employees
at the end of 1995 and approximately 40 employees at the end of 1994.
INTEREST EXPENSE, NET. The Company's total interest costs were $1.8
million in 1995 and $1.1 million in 1994. The higher interest costs in 1995
reflected the increases in the Company's acquisition,
19
<PAGE>
development and construction loan indebtedness, resulting from substantial
inventory additions during the year. In accordance with generally accepted
accounting principles, interest costs are capitalized to land and
construction in process inventories during the period in which activities
necessary to get the property ready for its intended use are in progress.
Interest costs of $1.6 million and $1.0 million were capitalized in 1995 and
1994, respectively.
NET INCOME. The Company's net income of $1.3 million in 1995 ($.34 per
share) was 19% higher than 1994 net income of $1.1 million ($.08 per share).
Net income in 1995 included a $0.7 million extraordinary item relating to the
early extinguishment of debt. The decrease in net income (before the
extraordinary item) was primarily attributable to the $3.3 million increase
in selling, general and administrative expenses, partially offset by a $2.7
million increase in gross profit from sales and a $.3 million increase in
equity in income from the Parkside joint venture.
The Company's income tax expense was $.4 million in 1995 and $.5 million
in 1994. The Company's effective tax rate was 38.2% in 1995 and 31.2% in
1994.
LIQUIDITY AND CAPITAL RESOURCES
Transeastern's operations require cash for land acquisitions, additions to
its housing inventories, operating expenses, interest and other costs. The
following table summarizes cash flows provided by (used in) various
activities of the Company during fiscal years 1994-1996 (dollars in
millions):
<TABLE>
<CAPTION>
1996 1995 1994
---------- --------- ----------
<S> <C> <C> <C>
Net cash used in operating activities .............. $(39.5) $(2.1) $(17.8)
Net cash provided by (used in) investing activities 4.4 (1.1) (0.7)
Net cash provided by financing activities ......... 38.2 3.3 18.2
---------- --------- ----------
Net increase in cash ............................... $ 3.1 $ 0.1 $ (0.3)
---------- --------- ----------
</TABLE>
The Company's most significant ongoing cash requirements for operating
activities relate to its growing inventory levels. The Company's land,
construction in process and completed home inventories increased by $53.1
million in 1996, primarily due to several large land acquisitions during the
year. As with most developers, the Company experiences a delay between the
time it acquires property and the time it is able to recover its acquisition
and development costs, due to, among other things, the time required to
obtain permits, make necessary land improvements and complete construction of
the homes, and due to the time period from the date customers execute their
sales contracts until the home closings. While customers typically place
deposits on home sales contracts with the Company equal to 10% of the
purchase price, these deposits are generally placed in escrow and are
generally not available for the Company's use until the time that the related
home contract closes. Escrow deposits totalled $2.7 million at June 30, 1996,
up from $1.2 million at June 30, 1995. The Company attempts to minimize the
capital resources needed to acquire additional property through the use of
options, phased closings, and by the short-term resale of selected land
parcels acquired as a part of large, mixed-use property acquisitions.
The Company has historically met the majority of its short-term financing
needs with cash generated from operations and from acquisition, development
and revolving construction loans provided by financial institutions. Interest
rates for these loans typically range from prime plus 1.0% to prime plus
1.5%. The Company obtained $47.1 million and $57.9 million in proceeds from
borrowings on acquisition and development loans and construction loans,
respectively, in 1996. The Company will continue to seek outside financing
for its future projects including acquisition and development loans and
construction loans. There can be no assurance, however, that the Company will
be able to obtain sufficient financing for future developments on terms
satisfactory to the Company or at all. Failure of the Company to obtain
additional financing on terms satisfactory to the Company could have a
material adverse effect on the Company's operations and prospects.
Additionally, Messrs. Arthur Falcone, Philip Cucci and Edward Falcone have
personally guaranteed approximately $38.6 million of the Company's existing
bank borrowings and there are no assurance and it is not currently
anticipated that, any of such individuals will guarantee the Company's
indebtedness in the future.
20
<PAGE>
The Company's loan agreements include customary representations and
covenants, including limitations on additional indebtedness and limitations
on the ability of the Company's subsidiaries to pay cash dividends or make
loans or advances to the Company. Additionally, under the loans guaranteed by
certain of the Company's shareholders, the death or insolvency of any of the
guarantors will generally be considered an event of default. Additionally,
substantially all of the loan agreements evidencing the Company's
indebtedness include cross-default provisions with respect to the Company's
other indebtedness and provide that a change in control of the Company would
be considered an event of default. If an event of default should occur under
such borrowings, the lender would have the immediate right to accelerate the
loan and there is no assurance the Company would be able to repay or
refinance such borrowings. See Notes (8) and (9) of the Company's
Consolidated Financial Statements.
The Company in 1996 also obtained capital for land acquisitions and
working capital requirements from other sources, including a $3.0 million
private placement of the Company's Common Stock and the placement of $5.7
million of subordinated debt. The Company also privately placed $3.0 million
in preferred stock in 1995, and issued $4.0 and $6.4 million in subordinated
debt in 1995 and 1994, respectively. Terms of the subordinated debt
placements vary and include both interest payments, rate of return
adjustments and profit participation features (see note 10 to the Company's
1996 financial statements for additional information regarding the terms of
these debt agreements). The Company intends to repay substantially all
subordinated debt and preferred stock currently outstanding with the proceeds
of the Offering. See "Use of Proceeds."
During 1996, the Company also obtained a $750,000 secured credit line from
a commercial bank which is used to provide working capital. The facility,
which bears interest at prime plus 1%, was fully drawn and had no available
balance as of the date of this Prospectus
The Company is currently seeking to establish a revolving line of credit
of up to $75 million which would be secured by first mortgages on its land
holdings and would be used as a primary source of working capital in the
future (the "Credit Facility"). It is anticipated that the proposed Credit
Facility would include customary representations and warranties and covenants
with respect to the conduct of the Company's business and require the
maintenance of various financial ratios, which could limit amounts available
to be borrowed under the proposed Credit Facility. There can be no assurance
that the Company will obtain this Credit Facility or as to the amount or
terms of any such Credit Facility. In the event that the Company does not
obtain such a Credit Facility, it intends to continue to use traditional
acquisition, development and revolving construction loans to provide the
majority of funding required on its projects. The Company believes that based
on currently proposed plans and assumptions relating to its operations and
historical results of operations, including cash required for land
acquisitions, additions to housing inventories, operating expenses, interest
and other costs, the capital available from existing credit facilities, cash
generated from operations and the proceeds of this Offering will be
sufficient to fund its obligations for at least 12 months. On a long term
basis, the need to raise additional capital will be primarily dependent on
the number of additional land acquisitions undertaken by the Company, and the
size and purchase terms of those acquisitions. There is no assurance that the
Company will be able to raise additional capital or to borrow funds in a
timely manner on favorable terms or at all. To the extent the Company is not
able to do so, the Company may be forced to adopt alternative strategies that
could materially and adversely affect its operations and prospects,
including, but not limited to, reducing or delaying capital expenditures,
reducing the size of its operations and selling assets. See "Risk Factors--
Leverage and Future Capital Requirements."
21
<PAGE>
SELECTED UNAUDITED QUARTERLY OPERATING DATA
The Company's quarterly financial results are subject to significant
fluctuations due to the timing of land parcel closings, which had a
significant impact on second and fourth quarter fiscal 1996 financial
results. To a lesser extent, quarterly operating profits are impacted by the
timing of home closings and the mix of sales among its product lines. The
following table presents certain selected quarterly operating data of the
Company for the years ended June 30, 1996 and June 30, 1995. This data is not
necessarily indicative of the results of operations for any future period.
See "Risk Factors--Variability of Results."
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1995 1995 1996 1996
---------------- --------------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues ....................... $13,154 $32,188 $16,555 $43,775
Total expenses ....................... 12,711 30,092 16,581 38,228
---------------- --------------- ------------ -----------
Net income (loss) before income taxes 443 2,096 (26) 5,547
Income tax expense (benefit) ......... 168 796 (10) 2,108
---------------- --------------- ------------ -----------
Net income (loss) .................... $ 275 $ 1,300 $ (16) $ 3,439
================ =============== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1994 1994 1995 1995
---------------- --------------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues ........................... $6,489 $6,738 $8,021 $17,641
Total expenses ........................... 6,516 6,318 7,685 17,407
---------------- --------------- ------------ -----------
Net income (loss) before income taxes and
extraordinary gain ....................... (27) 420 336 234
Income tax expense (benefit) ............. $ (11) $ 163 $ 130 $ 91
---------------- --------------- ------------ -----------
Extraordinary gain ....................... -- 700 -- --
Net income (loss) ........................ $ (16) $ 957 $ 205 $ 143
================ =============== ============ ===========
</TABLE>
Revenues for the quarter ended September 30, 1995 were $6.7 million higher
than for the quarter ended September 30, 1994, primarily due to an increase
in home sales. The Company had net income before taxes of $443,000 in the
quarter ended September 30, 1995 as compared to a net loss of $27,000 in the
quarter ended September 30, 1994, primarily due to higher sales margins in
1995.
Revenues and net income before income taxes for the quarter ended December
31, 1995 were $25.5 and $1.7 million higher than for the quarter ended
December 31, 1994, respectively, primarily due to a $12.0 million parcel sale
in the quarter ended December 31, 1995 which generated $1.9 in net income
before income taxes.
Revenues for the quarter ended March 31, 1996 were $8.5 million higher
than for the quarter ended March 31, 1995, primarily due to an increase in
home sales. The Company had a net loss before income taxes of $26,000 for the
quarter ended March 31, 1996 as compared to net income before income taxes of
$336,000 in the quarter ended March 31, 1995. The lower earnings were caused
by higher sales and marketing expenses for the quarter ended March 31, 1996
due primarily to grand opening, marketing and other costs incurred by the
Company in connection with the introduction of several new communities.
Revenues and net income before taxes for the quarter ended June 30, 1996
were $26.1 million and $5.3 million higher than for the quarter ended June
30, 1995, respectively, primarily due to $12.9 million in parcel and homesite
sales in the quarter ended June 30, 1996, which generated $6.0 million in net
income before income taxes.
22
<PAGE>
INTEREST RATES AND INFLATION
The majority of the Company's home purchasers finance their acquisitions
through third-party lenders who provide mortgage financing. Higher mortgage
interest rates may significantly affect the affordability of permanent
mortgage financing to prospective purchasers. Additionally, increases in
interest rates have a significant effect on the Company's financing costs,
which cannot necessarily be passed on to its customers. The Company seeks to
mitigate the potential impact of rising interest rates on its sales by
directing marketing efforts in several of its communities to the senior
market, which includes a significant percentage of cash buyers. The Company
further seeks to reduce the potential impact of rising interest rates through
its development and marketing of rental apartments, which tend to increase in
demand in periods of rising interest rates.
The Company's financial results may be adversely affected during periods
of high inflation due to higher land and construction costs. The Company
seeks to mitigate the potential short-term effects of inflation on its
construction costs by negotiating fixed price contracts with its
subcontractors and material suppliers for the construction of most of its
projects. The Company will also attempt to pass through to its customers any
increases in costs through increased sales prices. To date, inflation has not
had a material adverse effect on the Company's results of operations.
However, there is no assurance that inflation will not have a material
adverse impact on the Company's future results of operations.
BACKLOG
Sales of the Company's homes are generally made pursuant to a standard
contract which requires a down payment of at least 10% of the sales price.
Sales contracts often contain financing contingencies which permit the
customer to cancel in the event that mortgage financing at the then
prevailing interest rates is unobtainable within a specified period,
typically six weeks. The Company excludes sales contracts containing
financing and house sale contingencies from its sales backlog figures. The
following table summarizes the Company's backlog as of the end of each of the
last three fiscal years (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ---------
<S> <C> <C> <C>
Number of Homes in Backlog ............... 195 185 141
Aggregate Sales Value of Homes in Backlog $45,663 $38,520 $38,181
</TABLE>
The Company anticipates that substantially all of the homes in the
Company's backlog will be delivered within the current fiscal year.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus contains forward-looking statements, including statements
regarding, among other things, (i) the Company's growth strategies, (ii)
anticipated trends in the economy and the homebuilding industry and (iii) the
Company's future financing plans. In addition, when used in this Prospectus,
the words "believes," "anticipates," "expects" and similar words often are
intended to identify certain forward-looking statements. These
forward-looking statements are based largely on the Company's expectations
and are subject to a number of risks and uncertainties, many of which are
beyond the Company's control. Actual results could differ materially from
these forward-looking statements as a result of changes in trends in the
economy and the homebuilding industry, reductions in the availability of
financing, increases in interest rates and the other factors described in
"Risk Factors," including among others, "Real Estate and Homebuilding
Industries and Economic Conditions," "Mortgage Financing and Interest Rates,"
"Competition," "Leverage and Future Capital Requirements," "Dependence on
South Florida Market and Expansion into New Markets" and "Expansion
Strategy." In light of these risks and uncertainties, there can be no
assurance that the forward-looking statements contained in this Prospectus
will in fact occur. The Company does not undertake any obligation to publicly
release the results of any revisions to these forward-looking statements that
may be made to reflect any future events or circumstances.
23
<PAGE>
BUSINESS
GENERAL
Transeastern has experienced rapid growth and is engaged primarily in the
acquisition of land and the construction and sale of quality, single-family
and multi-family homes for the move-up and senior home-buying markets in the
State of Florida. Transeastern uses a systematic and disciplined approach to
the acquisition of parcels of land through a rigorous evaluation of each
parcel to determine whether it satisfies the Company's quantitative and
qualitative acquisition criteria. The Company constructs homes with a variety
of designs with standardized option packages in order to cost-effectively
build homes of superior value. Transeastern's approach utilizes innovative
marketing and sales programs and procedures.
Transeastern believes that its disciplined approach coupled with its
emphasis on customer satisfaction, quality, value and pride in workmanship
are largely responsible for its growth. The Company experienced a ten-fold
increase in revenues over the past four years. The Company's objective is to
become a more broadly-diversified real estate company achieving long-term,
stable growth with measured risk. The Company employs the following
strategies in furtherance of its objective: (i) to aggressively target the
move-up and senior home-buying markets, by constructing and selling quality
homes of superior value on distinctive niche properties in growth markets,
primarily featuring waterfront and golf course living and other upscale
recreational amenities; (ii) to strategically acquire land which is
well-suited for the construction and sale of the Company's homes, and which
may also include parcels considered favorable for short-term, profitable
resale to other builders; (iii) to develop multi-family housing, primarily
for sale to institutional investors; (iv) to develop strategic alliances with
leading real estate and institutional investors to further the Company's
ability to opportunistically acquire and finance distinctive niche properties
in growth markets, primarily for single-family home development by the
Company; and (v) to develop ancillary business activities, typical of other
home builders, which traditionally complement single-family home development
businesses.
The Company has experienced significant growth in revenues during the past
four consecutive years. Revenues increased by 1,788% during the fiscal year
ended June 30, 1996 to $105.7 million as compared to $5.6 million in fiscal
year 1992. The Company's pre-tax income increased from $146,000 in 1992 to
$8.1 million in 1996. The Company's net income before income taxes and
extraordinary gain in 1996 of $8.1 million increased by 741% from $963,000 in
1995. The number of home sales closed increased from 25 in 1992 to 375 in
1996.
THE ECONOMY AND HOUSING AND REAL ESTATE MARKETS
The economies of different geographic areas in the United States are
characterized by differing rates of economic and population growth.
Similarly, the market in the United States for real estate and homes in
general, and homes for the move-up and senior markets in particular, is also
characterized by differing rates of growth in different geographic areas. The
Company's objective has been to engage in real estate activities in
geographic areas which are projected to have (i) rapid economic and
population growth and (ii) rapid growth in home starts in general, and in
home starts for the move-up and senior markets in particular. All of the
Company's activities have in the past been in the State of Florida, where,
according to statistics published by the University of Florida's Bureau of
Business and Economic Research ("BEBR"), approximately one of twelve new
homes in the United States is currently being built.
As compared to the rest of the United States, South Florida and the
remainder of the State of Florida have favorable economic and demographic
profiles for real estate development and homebuilding in general, and for
homebuilding for the move-up and senior markets in particular.
According to the U.S. Department of Census projections, the population of
the United States is projected to grow by 19 million people from 1990 to
2000, an increase of 7.7%. The BEBR projects that
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the Gross Domestic Product will grow approximately 2.8% in 1997 and 2.9% in
1998, compared to 2.1% in 1995 and 2.2% in 1996.The BEBR projects that U.S.
employment will grow by 2.0% per year in 1996-1997, resulting in an
unemployment rate of approximately 5.7%. During the same period, the national
housing market is expected to grow at a rate of 1.2 million to 1.3 million
housing starts annually.
The BEBR forecasts that Florida's population will increase by 265,000
residents, or 1.8% in 1997, and by 249,000, or 1.7%, in 1998. Florida is
expected to add between 118,000 and 155,000 new jobs in 1997 and 1998,
respectively, a growth rate of 2.0% in 1997 and 2.5% in 1998. Florida's
continued population and job growth are expected to favorably impact
Florida's housing markets. The BEBR projects that Florida's housing market
will grow by 109,500 units (79,200 single family and 30,300 multi-family) in
1997, representing approximately 8% of all housing starts nationally. In
1998, Florida's housing market is forecasted to grow by an additional 110,200
units (77,700 single family and 32,500 multi-family).
A substantial portion of the Company's operations are based in Florida's
Broward County and Palm Beach County. The population of Broward County is
projected by BEBR to increase by 22,400, or 1.6% in 1997 and by 20,900, or
1.5%, in 1998. The population of Palm Beach County is projected to increase
by 19,300, or 2.0%, in 1997 and by 16,400, or 1.6% in 1998. The growth in
these counties in 1997 represents over 15% of total projected population
growth of the entire state in each respective year. BEBR forecasts that
Broward County and Palm Beach County will add 9,800 and 9,000 new jobs in
1997, respectively, and 13,200 and 9,900 new jobs in 1998, respectively. BEBR
further forecasts that personal income will increase by 7.5% and 7.7% in
Broward County and Palm Beach County, respectively, in 1997 and 5.1% and
5.2%, respectively, in 1998 and that adjusted labor earnings (earnings net of
social security payments) will increase by 6.3% and 5.1% in Broward County
and Palm Beach County, respectively, in 1997 and 5.4% and 6.3%, respectively,
in 1998. The population and job growth projected in these counties is
expected to favorably impact the area's housing market. The BEBR projects
that total housing starts in Broward County and Palm Beach County will be
10,444 and 9,747, respectively in 1997 and 9,752 and 9,824, respectively in
1998. According to The ARREA Report, which is published by Appraisal and Real
Estate Economic Associates, Inc., the average price of new single family
homes in Broward County and Palm Beach County increased from approximately
$154,100 and $195,200 in 1991, respectively, to $174,698 and $205,120 in
1995, respectively.
The housing markets primarily targeted by the Company are (i) move-up
families with heads of households 35-54 years old, and (ii) seniors buyers,
55-64 years old, purchasing retirement, vacation and second homes in warm
weather locations. Demographic information indicates that these age groups
are experiencing substantial population growth in the Company's targeted
geographic markets. According to U.S. Department of Census and BEBR
projections for the 1990-2000 period, the age group representing the move-up
market will grow by 7% nationally, but will grow by 29% in the state of
Florida, by 45% in Broward County and by 53% in Palm Beach County. For the
same period, the seniors market will grow by 11.5% nationally, 27% in
Florida, 23% in Broward County and 28% in Palm Beach County.
BUSINESS STRATEGY
The Company intends to continue to employ the following strategies in
furtherance of its primary business objectives:
DEVELOPMENT OF QUALITY HOMES ON DISTINCTIVE NICHE PROPERTIES
One of the Company's primary business strategies is to aggressively target
the move-up and senior home-buying markets by constructing and selling
value-based, quality homes which are (i) located on distinctive niche
properties, primarily featuring golf course and waterfront living and other
upscale recreational amenities, (ii) designed in a variety of styles and
price ranges, and (iii) built in a variety of architectural designs with
standardized option packages. The Company constructs and sells homes in a
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<PAGE>
broad variety of styles (including detached single-family homes, attached
villas, patio homes and townhouses) and throughout a wide range of prices
(primarily, from $100,000 to $500,000), designed to appeal to most lifestyles
and economic and demographic segments of the move-up and senior home-buying
markets. Based on the Company's demographic analyses, the Company believes
that this broad variety of products appeals to significant segments of the
home-buying public and mitigates the Company's exposure to cyclical market
conditions that may affect certain individual demographic or economic
segments of the market. See "Business--Summary of Residential Communities."
STRATEGIC ACQUISITION OF LAND
The Company intends to continue to acquire multi-use parcels of land in
growth markets which are suited for the construction and sale of the
Company's homes, and which may also include parcels which are considered
favorable for resale to other residential and commercial builders.
Transeastern's disciplined approach to the acquisition of parcels of land
involves an evaluation to determine whether the parcel satisfies the
Company's quantitative and qualitative acquisition criteria. Although this
land acquisition strategy is designed to effect prudent land acquisition, it
is also structured to enable the Company to act swiftly in taking advantage
of significant unique opportunities. The Company believes its reputation for
building homes of quality and value enables it to compete for and acquire
distinctive parcels of land. In turn, this creates opportunities for the
Company to sell selected parcels within its communities to other residential
and commercial builders, which provides additional revenue to the Company and
limits the amount of investment in, and the risks associated with, any single
community. See "Business--Land Acquisition" for a detailed description of the
Company's land acquisition policies and procedures.
DEVELOPMENT OF MULTI-FAMILY HOUSING PRIMARILY FOR SALE TO INSTITUTIONAL
INVESTORS
The Company intends to continue to expand its recent activities as a
developer of investment-grade multi-family housing. The Company believes that
multi-family housing development will complement its homebuilding activities
by, among other things, (i) furthering the Company's ability to capture
revenues in another segment of the real estate development industry, (ii)
providing the Company opportunities to acquire and maximize utilization of
multi-use properties, (iii) adding a degree of diversification to the
Company's business by enabling it to devote its resources to a broader
variety of complementary businesses throughout the economic cycle and (iv)
increasing the number of available properties which are both attractive to
the Company and satisfy its land-acquisition criteria. See "Business--Summary
of Residential Communities" and "Business--Land Acquisition."
DEVELOPMENT OF STRATEGIC ALLIANCES WITH LEADING REAL ESTATE AND INSTITUTIONAL
INVESTORS
The Company continually seeks to establish strategic alliances with
leading real estate and institutional investors to further its ability to
opportunistically acquire and finance interests in distinctive niche
properties in growth markets (primarily for single-family home development by
the Company). The Company believes that the successful implementation of this
strategy will also allow it to gain control over desirable properties while
minimizing its capital investment and the related land ownership risks and
carrying costs. Effective implementation of this strategy enhances the
Company's ability to act swiftly in taking advantage of acquisition
opportunities on a greater scale, while mitigating and diversifying the land
ownership risks associated with such acquisitions. See "Business--Land
Acquisition."
DEVELOPMENT OF ANCILLARY BUSINESS ACTIVITIES
In order to increase stability and predictability of the Company's
earnings throughout the business cycle, the Company is continually seeking to
enter into ancillary businesses, both on its own and through strategic
alliances with providers of such services, including residential mortgage
brokerage services, title insurance and closing services and other related
residential services. The Company believes that these activities complement
each other and the Company's core homebuilding activities,
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may provide the Company with an additional degree of cyclical diversification
and will enable the Company to capture revenues from a broader spectrum of
activities related to homebuilding. See "Business--Customer Financing and
Title Services."
SUMMARY OF RESIDENTIAL COMMUNITIES
The following tables provide an overview, as of June 30, 1996, of the
communities in which the Company has contracted to acquire land pursuant to
options and arrangements for phased closings, the communities in which the
Company has completed homebuilding activities, the communities in which the
Company is currently engaged in development and homebuilding activities and
the communities in which the Company has plans for development and
homebuilding activities.
LAND OPTIONS AND PHASED CLOSINGS
HOMESITES EXPIRATION PURCHASE PRICE
COMMUNITY UNDER OPTION DATE (000S)
- -------------------------- --------------- ------------------- ---------------
Village of Pembroke Pines 108(1) --(1) $3,500
Wellington Lakes 58(2) September 30, 1996 $487
---------------
166
===============
COMMUNITIES COMPLETED
<TABLE>
<CAPTION>
RANGE OF BASE
NUMBER OF HOMES HOME PRICES
COMMUNITY LOCATION COMPLETED AND DELIVERED FISCAL YEAR OPENED (000S)
- --------------- --------------- ------------------------ ------------------- -------------------
<S> <C> <C> <C> <C>
Coopers Pointe Broward County 36 1993 $140-$210
Cypress Cay Broward County 106 1994 $140-$193
------------------------
142
========================
</TABLE>
COMMUNITIES CURRENTLY BEING DEVELOPED
<TABLE>
<CAPTION>
NUMBER OF RANGE OF BASE
NUMBER HOMES HOMESITE FISCAL YEAR HOME PRICES
COMMUNITY OF HOMES SOLD/DELIVERED INVENTORY OPENED (000S)
- --------------------------------- ----------- --------------- ------------ -------------- --------------------
<S> <C> <C> <C> <C> <C>
Cypress Head 30(3) 29/27 3 1994 $450--$1,400
Eagle Trace at Eagle Landing 55 45/26 29 1994 $190--$300
Mariner's Cove 131 26/2 129 1994 $200--$325
Sunset Pointe on Lake Wellington 68 54/43 25 1995 $115--$160
Aberdeen Golf and Country Club 447(4) 88/32 415 1996 $145--$325
Parkside at Spring Valley(5) 465 235/216 249 1995 $125--$195
Weston(6) 72 72/44 28 1993 $230--$425
Coral Springs/Parkland(6) 215 215/205 10 1989 $235--$500
----------- --------------- ------------
1,483 764/595 888
=========== =============== ============
</TABLE>
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<PAGE>
COMMUNITIES PLANNED FOR FUTURE DEVELOPMENT
<TABLE>
<CAPTION>
FISCAL YEAR
LOCATION RANGE OF BASE
NUMBERS EXPECTED HOME PRICES
COMMUNITY LOCATION OF HOMES TO OPEN (000S)
- ----------------------------------------------- ------------------ ----------- -------------- ------------------
<S> <C> <C> <C> <C>
Wellington Lakes Palm Beach County 125 1997 $100--$140
Egret Walk at Village of Pembroke Pines Broward County 114 1997 $130--$167
Pelican Pointe at Village of Pembroke Pines(7) Broward County 356 1997 $ 77--$110
Carlyle Club Luxury Apartment Homes(8) Broward County 150 1997 (9)
Pinehurst Club Luxury Apartment Villas(8) Broward County 196 1997 (10)
Cape Coral(11) Lee County 60 1997 $100--$250
Banyan Bay(11) Martin County 750 1997 $100--$180
Aloma Woods(11) Orange County 143 1997 $180--$250
-----------
1,894
===========
</TABLE>
- -----------------------------------------------------------------------------
(1) An option was exercised by the Company on July 1, 1996 to acquire (i) an
additional 108 homesites in Pelican Pointe at the Village of Pembroke
Pines and (ii) a 10-acre commercial parcel. See "Business--Summary of
Residential Communities--Egret Walk and Pelican Pointe at the Village
of Pembroke Pines."
(2) Phased closing.
(3) Does not include 61 homesites sold to other homebuilders.
(4) Does not include 512 homesites sold to other homebuilders.
(5) The Company owns a 50 percent interest in the joint venture which is
developing this community.
(6) The Company acts as a preferred builder for developers in these
communities.
(7) Excludes the 108 homesites acquired on July 1, 1996 through the exercise
of the option described in note (1), above.
(8) The Company owns a controlling interest in the limited partnership which
is developing these communities.
(9) Monthly lease rates range from $750 to $1,500 per apartment unit.
(10) Monthly lease rates range from $700 to $1,200 per apartment unit.
(11) The Company has entered into a letter of intent or agreement to acquire
these homesites.
NARRATIVE SUMMARY OF RESIDENTIAL COMMUNITIES
Set forth below is a narrative description of the Company's communities as
of June 30, 1996.
COOPERS POINTE. Coopers Pointe is a community of 36 single-family homes
situated on 15 acres in Cooper City in Broward County. The Company acquired
this property in 1993, acted as the exclusive homebuilder in Coopers Pointe
and sold the last of the 36 single-family homes that were planned for this
community in 1995. The base sales prices of the Company's homes in this
community ranged from approximately $140,000 to $210,000.
CYPRESS CAY. Cypress Cay is located in Parkland, Florida, which the
Company believes is one of Broward County's most prestigious single-family
home communities, and is adjacent to Cypress Head (another of the Company's
communities, which is described below). Cypress Cay encompasses 24 acres of
land which the Company acquired in 1993. The Company was the exclusive
homebuilder in Cypress Cay and sold the last of the 106 single-family homes
planned for this community in 1996. The base price range of homes in Cypress
Cay was approximately $140,000 to $193,000. This community features a wide
range of amenities, including tennis courts, community swimming centers,
sundecks, cabana houses and a private, gated entrance.
CYPRESS HEAD. Cypress Head was the first master-planned community in
Parkland, Florida, which the Company believes is one of Broward County's most
prestigious single-family home communities. In 1993, the Company acquired the
last 130 acres of Cypress Head on which 91 custom homes were planned for
development. The Company sold 61 of the homesites in Cypress Head to other
builders, and has sold 29 of the 30 homes that it intends to build in Cypress
Head. Base prices for the Company's homes in Cypress Head range from
approximately $450,000 to $1,400,000. Cypress Head is an
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<PAGE>
established 670-acre community featuring towering pines and cypress trees and
a 70-acre lake. This community offers a wide array of recreational amenities,
including a lighted tennis center, nature trails, two private clubhouses,
water sports and team sports facilities.
EAGLE LANDING AT EAGLE TRACE. Eagle Trace is a country club community
located in Coral Springs, Florida, which features a TPC golf course and a
wide variety of upscale recreational amenities. The Company acquired the land
for the 55 single-family homes planned for development in Eagle Landing at
Eagle Trace in 1994. The Company is acting as the exclusive developer and
homebuilder in Eagle Landing, where approximately 70 percent of the homes
will have golf course or waterfront views. The base prices for these homes,
most of which have already been sold, range from approximately $190,000 to
$300,000. Other features of Eagle Landing include championship golf and
tennis facilities and 24-hour security.
MARINER'S COVE. Mariner's Cove is a single-family home community located
in Coral Springs, Florida, in which the Company is the exclusive builder. In
June 1994, the Company acquired the 43 acres of land which encompass
Mariner's Cove. Homes are currently being developed and sold at base prices
ranging from approximately $200,000 to $325,000. Approximately 50 of these
131 homes will have waterfront views. Mariner's Cove provides an array of
recreational amenities, including a children's play lot, family picnic area
and boat landing facility. This community is adjacent to a large existing
development, which also provides additional recreational opportunities,
including boating, canoeing and fishing, and is across the water from an
upscale neighborhood with homes selling for in excess of $1 million.
SUNSET POINTE ON WELLINGTON LAKE. Sunset Pointe on Lake Wellington was the
Company's first community in Palm Beach County. Situated on 15 acres of land
on a 180-acre lake near Wellington Lakes (another of the Company's
communities which is discussed below), this community features waterfront
views on one of Palm Beach County's largest man-made lake. The Company
acquired Sunset Pointe on Wellington Lakes in 1995, and is the exclusive
homebuilder. The base prices of the 68 single-family homes in this community
(most of which have already been sold) range from approximately $115,000 to
$160,000.
ABERDEEN GOLF AND COUNTRY CLUB. Aberdeen Golf and Country Club is a
master-planned senior community located in Boynton Beach, between West Palm
Beach and Boca Raton. In September 1995, the Company acquired 959 homesites in
this 1,441 acre country club community, which features a 40,000 square foot
clubhouse, private-gated entrances, an 18-hole championship golf course designed
by golf course architect Desmond Muirhead, a 15-court tennis complex and a
staffed fitness center. The Company re-sold 512 homesites to other residential
builders in this community in fiscal 1996, of which 486 had been delivered as of
June 30, 1996. The Company has sold a portion of the 447 single-family homes
which it plans to build in this community, and is currently building and selling
attached villas, patio homes and single-family homes. This community also
features over 400 acres of lakes, parks and upscale amenities. Aberdeen's land
plan features golf course and waterfront views and a low density of 1.6 homes
per acre. The Company's residences currently have base prices from approximately
$145,000 to $325,000.
PARKSIDE AT SPRING VALLEY. Parkside at Spring Valley is a community in
Broward County's Pembroke Pines in which approximately half of the 465 homes
scheduled for development have already been sold. Amenities in Parkside at
Spring Lake include a community pool and cabana baths. The Company serves as
project manager for the development of this 98-acre community which was
acquired in two phases in 1994 and 1995 through a 50/50 joint venture with
H.A. Cumber of Pembroke Pines, Inc., another builder in Broward County. The
base prices for the Company's homes in Parkside at Spring Valley range from
approximately $125,000 to $195,000.
WESTON. Weston is a master-planned community being developed by Arvida
Corporation in Broward County. Weston is a 10,000 acre country club
community, which features a broad variety of upscale amenities. The amenities
located within Weston include a championship golf course and tennis
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<PAGE>
facilities that are located at a clubhouse featuring restaurants and pro
shops, waterfront and golf course views, large parks and athletic fields,
schools, shopping centers and places of worship. Arvida has planned to
develop thousands of homes in this community at base prices ranging from
approximately $80,000 to over $2 million, and the base prices of the
Company's homes in Weston have ranged from $230,000 to $425,000. Arvida
controls all of the land in Weston and selected the Company as one of ten
preferred builders which home buyers may select to build their individual
single-family home.
CORAL SPRINGS/PARKLAND. Coral Springs/Parkland is a master-planned
community being developed by WCI Communities in northeast Broward County's
Coral Springs. This community of 35,000 homes features excellent schools,
extensive parks and other recreational amenities. WCI Communities controls
all of the land in this community and selected the Company as one of twenty
preferred builders which home buyers may select to build their individual
single-family home. Base home prices in this community range from
approximately $105,000 to $1,000,000. Since 1989, the Company has built 205
homes in this community and currently has a backlog of 10 homes there.
WELLINGTON LAKES. Wellington Lakes is a community located on Lake
Wellington in Palm Beach County, which will feature a wide array of
recreational amenities, including a community pool, cabana bathhouse located
on Lake Wellington, and water sports facilities. In 1996, the Company
acquired this 25-acre community and anticipates acting as the exclusive
developer and homebuilder in constructing 125 single-family cluster homes.
The Company anticipates that its homes in Wellington Lakes will be offered at
base prices ranging from approximately $100,000 to $140,000. Wellington Lakes
is surrounded by completed neighborhoods with homes offered in a higher price
range and also features water views.
EGRET WALK AND PELICAN POINTE AT THE VILLAGE OF PEMBROKE PINES. In March,
1996, the Company purchased a multi-use parcel encompassing 134 developable
acres, which includes Egret Walk and Pelican Pointe at the Village of
Pembroke Pines in Broward County. Of such 134 acres purchased, the Company
resold to other developers (i) a 29-acre parcel, on which a 300,000 square
foot shopping center is being constructed and (ii) a 26-acre parcel, on which
a 468-unit apartment complex is being developed. The remaining property has
been subdivided into enclaves which include two single-family residential
subdivisions known as Pelican Pointe and Egret Walk which the Company is
developing. Pelican Pointe will be comprised of 464 townhouses expected to be
offered at base prices ranging from approximately $77,000 to $110,000, and
will offer residents a central recreational island, which will include tennis
courts, a recreational building, swimming pool and cabana/bathhouse. Egret
Walk will be a gated neighborhood modeled after the community the Company is
developing at Parkside at Spring Valley and will be comprised of 114 patio
homes at base prices anticipated to range from approximately $130,000 to
$167,000. In connection with this acquisition, the Company also obtained and
exercised an option to acquire a 10-acre commercially-zoned parcel and an
additional six-acre site on which the Company will build 108 of the 464
townhouses in Pelican Pointe. The Company exercised this option in July 1996.
The Company intends to resell this commercial parcel to another developer in
fiscal 1997. The Company expects to begin the sales program for Pelican
Pointe and Egret Walk in September, 1996.
CARLYLE CLUB LUXURY APARTMENT HOMES. Carlyle Club Luxury Apartment Homes
is situated on 9.8 acres of land in Plantation, Florida, and will consist of
a gated community with 150, one, two and three bedroom apartment homes in
five separate, three-story courtyard buildings. Apartments will be offered
for lease to the public and will provide a wide range of amenities, including
a carport for each apartment, a swimming pool with a large deck and a
jacuzzi, and a club/recreation building, containing a media room, a business
center, management and leasing offices, a bar and kitchen area and exercise
facilities. The Company began construction of this community in November 1995
and intends to complete construction in October 1996. The Company anticipates
that substantially all of these apartments will be leased by March, 1997, and
is already engaged in preliminary discussions with a number of institutional
investors for the resale of all five of these buildings. Monthly rental rates
for these homes range from $750 to $1,500.
PINEHURST CLUB LUXURY APARTMENT VILLAS. The apartment project is situated
on a 7.8-acre parcel in Hollywood in Broward County and will consist of a
gated community with 196, one, two and three
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<PAGE>
bedroom apartment homes in seven separate, three-story courtyard buildings.
Apartments will be offered for lease to the public and will include use of a
wide range of amenities, including 60 covered parking spaces for rental, an
oversized swimming pool with a large deck and jacuzzi, and a club/ recreation
building, containing a media room, a business center, management and leasing
offices, a bar and kitchen area, exercise facilities and a full size air
conditioned racquetball court. The Company began construction of this
community in November 1995 and intends to complete construction in October
1996. The Company anticipates that substantially all of these apartments will
be leased by March, 1997, and is already engaged in preliminary discussions
with a number of institutional investors for the resale of all seven of these
buildings. Monthly rental rates for these homes range from $700 to $1,200.
CAPE CORAL. The Company has entered into a letter of intent to acquire
several parcels of land in Cape Coral in Lee County, Florida, which is near
Fort Myers. Subject to a variety of conditions, including the receipt of
governmental development approvals and the satisfactory completion of due
diligence, the closing is expected to occur in mid-1997. The purchase price
for the property is estimated to be approximately $1.5 million dollars, of
which $1 million will be paid in cash at or prior to the closing and the
remainder to be evidenced by a promissory note. The note will bear interest
at the rate at one percent (1%) above the prime rate of interest as
established by Citibank, N.A., and will be secured by a second mortgage on
the property. The Company intends to fund the acquisition of these parcels
through a combination of working capital, including proceeds obtained from
this Offering, and traditional acquisition loans provided by financial
institutions. The rights and obligations of each of the parties in the
above-described transaction will be defined in and subject to the execution
of a definitive purchase and sale agreement. There can be no assurance that
this transaction will be consummated. The Company anticipates that, if
consummated, it will build approximately 50 single-family homes in the
community, with base prices starting at approximately $100,000. This
community will be targeted to the move-up and senior markets, and features
boating, golf, parks and other amenities.
BANYAN BAY. The Company has entered into a letter of intent to acquire a
251-acre, single-family home community in Martin County, which is north of
Palm Beach County. Subject to a variety of conditions, including the receipt
of governmental development approvals and the satisfactory completion of due
diligence, the closing is expected to occur in mid-1997. The purchase price
for the property is approximately $5.5 million, of which $5 million will be
paid in cash at or prior to the closing and the remainder to be evidenced by
a promissory note. The note will bear interest at the rate at one percent
(1%) above the prime rate of interest as established by Citibank, N.A., and
will be secured by a second mortgage on the property. The Company intends to
fund the acquisition of the property through a combination of working
capital, including proceeds obtained from this Offering, and traditional
acquisition loans provided by financial institutions. The rights and
obligations of each of the parties in the above-described transaction will be
defined in and subject to the execution of a definitive purchase and sale
agreement. There can be no assurance that this transaction will be
consummated. The Company anticipates that it would be the exclusive
homebuilder for all of the approximately 700 single-family homes planned for
this community, with base prices starting at approximately $100,000. This
community will be targeted to senior buyers, and will feature a clubhouse, a
marina and other amenities.
ALOMA WOODS. On September 16, 1996, the Company entered into an agreement
to acquire 143 single-family homesites in Winter Park, an established suburb
of Orlando. This parcel is located in an existing community known as Aloma
Woods, and all zoning and land use approvals have already been obtained.
Subject to certain conditions, including the satisfactory completion of
certain infrastructure improvements, the closing is expected to occur in
stages from September, 1996 through June, 1999. The purchase price for lots
within the parcel is approximately $46,000, per lot, payable in cash at each
lot closing, with escalators at the rate of one and one-half percent (1 1/2
%) per quarter for lots closing after June 10, 1997 and premiums for lots
contiguous to ponds, conservative areas and lakes. The aggregate purchase
price for all lots within the parcel is estimated to be approximately $7.0
million (without consideration of price escalators). The Company intends to
fund the acquisition of these parcels through a combination of working
capital, including proceeds obtained from this Offering, and traditional
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acquisition loans provided by financial institutions. There can be no
assurance that all or any portion of this transaction will be consummated.
The Company anticipates that it would be the exclusive homebuilder for all
143 of these homes, with base prices starting at approximately $180,000. This
community will be targeted to the move-up buyer, and will feature a gated
community, a large lake and boat ramp and tennis facilities.
LAND ACQUISITION
The Company aggressively identifies and takes advantage of opportunities
to acquire land in a number of markets where demographic trends, housing
preferences, competitive factors and related economic data are indicative of
opportunities for successful construction and sale of the Company's homes and
investment-grade apartments and for the short-term sale of portions of
certain of the Company's parcels to other residential and commercial
builders.
The Company's approach to land-acquisition requires that before a local
market can be approved for development, the Company's methodology must be
used to evaluate whether that market satisfies the Company's quantitative and
qualitative selection criteria and is therefore deemed favorable for
successful development. This local market approval process includes a
detailed analysis of a variety of factors as they pertain to the Company's
primary target market of move-up and senior buyers, including demographic
trends, historical and projected growth in housing starts, job creation and
personal income, housing preferences, projected supply and demand for
competitive products, acquisition and development costs as they relate to
projected sales prices, and related national, regional and local economic
factors. Only after a particular local market is approved for development
will the Company's senior management team consider acquiring particular
parcels of land within that local market. The Company believes that the
development of relationships between members of the Company's senior
management team and key participants in each local market as well as personal
observation and analysis of a local market and particular parcels by members
of the Company's senior management team is critical to identifying and
capitalizing on strategic land acquisition opportunities.
Before acquiring a particular parcel of land within an approved local
market which the Company's senior management team has preliminarily
identified as an acquisition candidate, the Company undertakes simultaneous
(i) comprehensive feasibility, development and marketing studies and (ii)
detailed financial analyses. These studies and analyses evaluate a variety of
factors with the principal objective of determining whether the projected
rate of return on capital for the parcel justifies the anticipated level of
risk. These studies and analyses include the development of a comprehensive
master design theme and marketing concept. The Company also evaluates whether
conditions are favorable for both the short-term profitable resale of a
portion of the acquired land to other residential and commercial builders and
the development and construction of homes (and, where appropriate,
investment-grade apartments) by the Company on the remainder of the land. In
conducting these studies and analyses, the Company evaluates a wide variety
of qualitative and quantitative factors including (i) the competitive
environment, and the projected supply and demand for particular styles and
price ranges of homes, (ii) acquisition and development costs as they relate
to the projected market for fully-developed residential and commercial
communities, (iii) the distinctiveness and attractiveness of the parcel
(e.g., potential for golf course and waterfront living and other desirable
lifestyles and recreational amenities, and proximity to recreational
amenities and other desirable communities), (iv) compatibility of the
Company's product line with the desired lifestyles of targeted buyers, (v)
access to major thoroughfares, (vi) availability of desirable schools, (vii)
where applicable, the market for institutional-grade apartments for purchase
by institutional investors and (viii) the extent to which necessary zoning,
land use, building permit and other governmental entitlements and approvals
have been received. The Company's detailed financial analyses of a particular
parcel use the Company's established financial criteria and homebuilding
models to evaluate whether profitable development is likely. Particular
emphasis in these financial analyses is given to whether the projected return
on investment justifies the anticipated level of risk. While these studies
and analyses are designed to assure prudent land acquisitions, the Company is
able to conduct them quickly so as to enable the Company to act swiftly in
taking advantage of significant opportunities. In practice, even if a
particular parcel
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satisfies these selection criteria, it is acquired only if the Company's
senior management team believes that, based on its experience, relationships
with key real estate market participants, and personal observation of the
parcel and its surroundings, the parcel is desirable for acquisition and
development.
The Company's land acquisition program is also geared towards undertaking
projects with shorter life cycles in an effort to improve the rate of return
on capital and mitigate the risks inherent in land ownership and development.
The Company maintains a variety of policies designed specifically to shorten
project life cycles, including (i) acquiring land where rapid growth is
projected, (ii) acquiring land only if it has received (or the Company is
reasonably certain that it will soon receive) all necessary zoning, land use,
building permit and other governmental entitlements and approvals, (iii)
where possible, acquiring land through the utilization of options and other
similar non-recourse purchase agreements and (iv) conducting hazardous waste
and other environmental tests and surveys prior to acquiring land. As a
result, the Company is often able to begin marketing for a community soon
after it acquires a parcel of land.
The Company seeks to develop strategic alliances with leading real estate
and institutional investors to further the Company's ability to
opportunistically acquire interests in distinctive niche properties in growth
markets. The Company believes that the successful implementation of this
strategy will also allow it to obtain control over desirable properties while
minimizing its capital investment and the related land-ownership risks and
carrying costs. Effective development of these relationships enhances the
Company's ability to act swiftly in taking advantage of acquisition
opportunities on a greater scale, while mitigating and diversifying the land
ownership risks associated with such acquisitions.
The Company generally seeks to control a homesite inventory of two-to-four
years based on anticipated absorption rates, by options and other
non-recourse arrangements and by outright purchase.
The following table sets forth a summary of the Company's land/homesite
position at June 30, 1996:
Finished homesites owned by the Company ....................... 714
Homesites under development owned by the Company .............. 749
--------
Total owned homesites ....................................... 1,463
Homesites available under homesite option and similar
contracts ..................................................... 166
--------
Total land/homesite position ................................ 1,629
========
CONSTRUCTION AND COST CONTAINMENT
The Company generally acts as the general contractor for all of its
single-family home construction and utilizes subcontractors for site
improvement and construction. The Company retains independent firms to act as
general contractor for its multi-family home construction. Company employees
monitor site planning for the construction of each community. They also
participate in all material design and building decisions and coordinate the
activities of independent general contractors, subcontractors and suppliers
and subject general contractors' and subcontractors' work to quality and cost
controls. Finally, they monitor compliance with zoning, land use, building,
entitlement regulations and other governmental requirements and coordinate
the closing process. The services of independent architectural, design,
engineering and other consulting firms are engaged throughout this process.
The Company has implemented a broad array of policies and procedures with
its suppliers and subcontractors which are designed to facilitate
cost-effective development of quality homes in a timely manner. Whenever
possible, the Company negotiates agreements for price and volume discounts
with national, regional or local suppliers of materials for itself and its
subcontractors. The Company does not have any long-term contractual
commitments to any of its subcontractors or suppliers, but often obtains
long-term, fixed price commitments from them. Nonetheless, the Company is
still subject to variations in the price of materials which affect the
homebuilding industry in general. The Company generally requires its
subcontractors and suppliers to agree to standard terms such as frequency of
payment and
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maintenance of insurance. The Company also utilizes multiple subcontractors
and suppliers to minimize cost increases. The Company does not maintain
significant inventories of construction materials, except for homes under
construction and a limited amount of other materials.
The Company has developed an innovative system which enables it to offer a
broad variety of architectural designs and options to satisfy customer
requirements, while maintaining critical operating efficiencies. For each
price range of homes within a community, the Company creates general
architectural designs (which are consistent with the master design theme and
marketing concept for the community), each of which may be semi-customized by
the home buyer by selecting from a menu of standardized value-based option
packages. The Company generally obtains pre-approval from local zoning and
building departments for each of these architectural designs and standardized
option packages, thereby streamlining the process for obtaining building
permits for each particular home. By implementing this system, the Company
succeeds in providing the home buyer with a variety of designs and
standardized option packages which the Company's internal marketing data
suggests is more than broad enough for the targeted home buyer, while (i)
minimizing costly delays in the issuance of building permits and (ii)
avoiding an unduly broad combination of designs and options which is
unnecessary, unmanageable and not cost effective.
The Company develops and implements a number of policies and procedures
designed to facilitate effective communication of each customer's
construction-related desires to the Company's personnel throughout the
pre-sale, sale, closing and post-closing periods. The Company encourages home
buyers to be involved with the design staff and field personnel in all phases
of design and construction. The Company's personnel also maintain
responsibility for pre-closing, quality control inspections and responding to
customers' pre-closing and post-closing needs. In particular, the Company's
field personnel seek to complete all items on a buyer-prepared "punch-list"
simultaneously with the delivery of each home. Additionally, each home owner
is surveyed periodically to ensure that any construction-related matters
arising after the closing are promptly taken care of. The Company believes
that the prompt and courteous response to each home buyer's needs during and
after construction reduces pre-closing expenses and post-closing repair
costs, enhances the Company's reputation for quality and service, and
ultimately leads to significant repeat and referral business from the real
estate community and home buyers.
Additionally, to mitigate the risk of holding finished homes and the
related carrying costs, the Company generally does not begin construction
until each of the following steps is completed (i) the customer has chosen a
model, signed a sales contract and provided a cash deposit, (ii) plans have
been finalized and permits have been received, (iii) firm competitive
"fixed-price" bids have been obtained from subcontractors and "fixed-price"
contracts have been entered into with subcontractors and (iv) mortgage
approval has been obtained by the customer from a bank or mortgage company.
Construction time for the Company's homes depends on the time of year,
availability of labor, materials and supplies and other factors. The Company
typically completes the construction of a home within four to eight months
from commencement of construction.
MANAGEMENT INFORMATION SYSTEMS
From its inception, the Company has continually developed and implemented
uniform management information systems and procedures designed to increase
margins, assure quality and customer satisfaction and reduce cost overruns
and construction delays. A primary example is the Company's automated
computerized management information system, which fully integrates the
Company's purchasing, construction management, marketing, sales and
accounting functions into a common data base to maintain the integrity of the
data. This system uses a proven software package developed specifically for
the homebuilding industry and customized to meet the Company's particular
operating needs. Critical path techniques are employed in this system to
detail the integral steps necessary for the complete construction of a home
and to set forth specific milestones and the necessary timing to achieve
these milestones, allowing the Company to carefully track the progress of the
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construction of each of its homes. All data is updated on a daily basis
resulting in current management information by community and by individual
home to increase the likelihood of, among other things, timely completion of
homes under construction. At any time during the construction phase, the
Company can provide the home buyer with information regarding the status of
construction and anticipated delivery dates. The Company also utilizes
specialized software packages for special applications that range from
feasibility analyses to construction monitoring and scheduling. These
management information systems also assist the Company in monitoring
expenditures and coordinating subcontractors and suppliers and the delivery
of building materials to further control costs of construction. This system
and the related procedures have been developed to handle the Company's
anticipated growth by providing the capability to significantly increase the
system's capacity in a short period of time at a moderate incremental cost.
Additionally, all of the Company's offices are electronically connected
through dedicated telephone lines and a wide-area computer network. The
Company also has a full complement of experienced financial personnel to
manage these systems and procedures.
SALES AND MARKETING
The Company takes an innovative approach to marketing, using
non-traditional as well as traditional advertising vehicles and media sources
to maximize the impact of its marketing budget. The Company believes that
this has made it a market leader in the industry for unique campaigns and
successful special events. The Company received a total of 37 PRISM
(Professional Recognition in Sales & Marketing) awards in 1995 and 1996 from
the Florida's Gold Coast Builders Association, of which 13 were for
advertising excellence and outstanding creativity in promotions, marketing
and sales merchandising.
Foremost in Transeastern's marketing strategy is the development of
brand-name awareness for Transeastern and its reputation for quality
construction, customer service and outstanding value. The Company places an
emphasis on ensuring its logo and slogan are integral parts of all
advertising and marketing efforts. The Company also includes its "Built With
Pride" tag line on all ads, community signage, sales centers and collateral
materials. Major promotions are planned for the entire Company and specific
communities during peak seasonal shopping periods annually, such as a
month-long event that featured a free car, boat or other luxury item with
each new home purchase. The Company creates each community with a
comprehensive master design theme and marketing concept which is carried
throughout sales, merchandising and advertising for the life of the project.
By constantly emphasizing the Company's name and this master design theme in
all advertising, the Company continually attempts to reinforce brand-name
awareness.
The Company seeks to increase the effectiveness of its annual marketing
budget by employing cooperative arrangements with leading regional retailers.
This cooperative advertising effort reduces the Company's costs for its
entire marketing program while increasing its effectiveness. The Company
utilizes a broad variety of marketing vehicles, including newspapers, direct
mail, the internet, billboards, radio, corporate sponsorships and home shows.
The Company also relies heavily on customer referrals and repeat purchases
for its business.
The Company also builds model homes, many of which have won awards for
display to prospective home buyers. The Company uses sophisticated model
merchandising techniques and professional designers to create models which
appeal to target buyers in the specific market area. Designs are planned down
to the smallest detail, including personalized scents and music piped in
continuously in every model home and tailored to the specific buyer profile
for which that model is designed.
The Company sells its homes through a staff of approximately 15 sales
associates who typically work from sales offices located at model homes in
each community. Company sales personnel assist prospective home buyers by
providing them with floor plans, information on prices, options and custom
features and tours of model homes. The Company trains its sales personnel on
the availability of financing, construction schedules, marketing and
advertising plans. Keynote speakers and sales trainers
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are brought in periodically to conduct personalized training sessions,
seminars and workshops geared toward improving sales effectiveness. Sales
personnel are typically compensated on straight commission with a small draw,
and are evaluated monthly to determine whether they are meeting individual
sales goals.
The Company seeks to retain its sales personnel on a long-term, rather
than community-by-community basis, in order to reduce training costs and
ensure a more experienced sales force. The Company also pays brokers and
agents a fee for referring buyers. In order to assist the Company's sales
personnel, it maintains an ever-increasing and sophisticated data base of
prospects derived from sales registration questionnaires used in every sales
center. This data base also helps the Company to generate demographic and
market profile information about its customers.
Sales of the Company's homes generally are made pursuant to a standard
sales contract which requires a down payment of 10% of the sales price. The
contract includes a financing contingency which permits the customer to
cancel in the event mortgage financing at prevailing interest rates is not
obtainable within a specified period, typically four to six weeks, and may
include other contingencies, such as the sale of an existing home. The
Company includes a home sale in its sales backlog upon execution of the sales
contract and receipt of the initial down payment unless the contract includes
financing or other home sale contingencies. The Company does not recognize
revenue upon the sale of a home until the home is closed and title passes.
The Company also seeks to retain exclusive sales agency rights for homes
within its communities which are built by other builders to whom the Company
sold the underlying land. By doing so, the Company is able to capture
additional revenues in the development process and ensure quality and
consistency in the sales and marketing of all homes within its communities.
CUSTOMER FINANCING AND TITLE SERVICES
The Company seeks to assist its home buyers in obtaining financing by
arranging with mortgage lenders to offer qualified buyers a variety of
financing options. By making available an array of attractive mortgage
programs to qualified buyers, the Company is able to better coordinate and
expedite the entire sales process by ensuring that the mortgage commitments
are received and the closings take place on a timely and efficient basis. The
Company utilizes a network of preferred financial institutions with
representatives located at sales centers within its communities to assist
customers in the purchase of their homes. Substantially all home buyers
utilize long-term mortgage financing to purchase a home. The Company attempts
to minimize potential risks relating to customer-financing by securing
mortgage financing commitments that lock in the availability of funds and
interest costs at specified levels. Although the Company does not currently
underwrite or otherwise provide any mortgage financing, it is exploring
opportunities to enter into this business with an existing mortgage broker.
By providing mortgage brokerage services, the Company positions itself to
capture revenues from an ancillary business.
As of the closing of the Offering, the Company intends to provide title
insurance services through a wholly-owned subsidiary. Management currently
anticipates that this subsidiary will be an approved agent of one or more
nationally-recognized title insurance underwriters. The Company anticipates
that its provision of title insurance services will enable it to capture
revenues from an additional ancillary business which is complementary to its
core homebuilding activities.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
The Company and its competitors are subject to various local, state and
federal statues, ordinances, rules and regulations concerning zoning, land
use, building design, construction and similar matters including, permitted
land uses and levels of density in order to limit the number of homes that
can ultimately be built within the boundaries of a particular community, the
installation of utility services such as water and waste disposal and the
dedication of acreage for open space, parks, schools and other
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community purposes. A number of authorities in Florida (including Broward
County and Palm Beach County) and in other states have imposed impact fees as
a means of defraying the cost of providing certain governmental services to
developing areas, and the amount of these fees has increased significantly
during recent years. Other state and local laws require the use of specific
construction materials which reduce the need for energy-consuming heating and
cooling systems or are expected to withstand certain wind speeds. As a result
of Hurricane Andrew, Dade County and Broward County enacted more stringent
building codes which increased costs of construction. The State of Florida
and other states and counties and cities within the state have also, at
times, declared moratoriums on the issuance of building permits and imposed
other restrictions in areas where the infrastructure (E.G., roads, schools,
parks, water and sewage treatment facilities and other public facilities)
does not reach minimum standards, all of which could have a material adverse
effect on the Company's business. To date, the governmental approval
processes and the restrictive zoning and land use, moratoriums and allocation
system discussed above have not had a material adverse effect on the
Company's development activities, in large part because the Company maintains
a general policy of acquiring land only if zoning, land use, building permits
and other entitlements and governmental approvals have been (or the Company
is reasonably certain will soon be) obtained.
To minimize development risks, the Company restricts land purchases to
tracts that have (or that the Company is reasonably certain will soon have)
all necessary zoning, land use, building permit and other entitlements and
governmental approvals. A variety of permits and other approvals are often
required to complete the residential developments currently being planned by
the Company, including, land development permits (water, sewer, paving and
drainage), sales center permits, model home permits and building permits. The
process of obtaining these permits and other approvals is an ongoing process
in the ordinary course of business that the Company is engaged in as it
develops and constructs homes for its communities. The ability of the Company
to obtain these necessary permits and other approvals for these communities
is often beyond the Company's control, and could restrict the development of
otherwise desirable property. The length of time necessary to obtain these
permits and other approvals increases the carrying costs of unimproved
property acquired for the purpose of development and construction. To date,
the Company has not encountered any material difficulties in obtaining these
permits and other approvals.
Prior to acquiring property, the Company's current practice is to engage
independent environmental consultants to conduct assessments in order to
evaluate the environmental condition of, and potential environmental
liabilities associated with, such property. Such assessments generally
consist of an investigation of environmental conditions at the subject
property (not including soil or groundwater sampling or analysis), as well as
a review of available information regarding the site and publicly available
data regarding conditions at other sites in the vicinity. In certain cases,
the Company has conducted follow up reviews of certain such properties based
on such assessments. In addition to the risks, if any, identified by such
assessments, certain environmental-related laws and regulations that
typically apply to real estate development (for example, wetlands laws and
regulations, open space requirements, and zoning laws and regulations) may
result in delays, cause the Company to incur substantial compliance or other
costs and prohibit or severely restrict development in certain
environmentally sensitive regions or areas. To date, the Company has not been
materially adversely affected by any such environmental matters.
COMPETITION
The homebuilding industry is highly competitive and competition is based
on a number of interrelated factors, including location, reputation,
amenities, design, quality and price. The Company competes with numerous
large and small builders, including some builders with nationwide operations
and greater financial, marketing, sales and other resources. The Company also
competes for home sales with individual resales of existing homes and
condominiums, including sales of homes at deeply discounted prices by lenders
and other financial institutions. Based on its knowledge and analysis of the
homebuilding market and its knowledge of its competitors, management believes
that the Company's primary competitive strengths have been (i) its ability to
acquire land which meets its acquisition
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criteria at attractive prices, (ii) its ability to provide quality homes with
customized features at a wide range of prices, (iii) the distinctive location
of its communities and the lifestyles and recreational amenities offered in
its communities and (iv) its reputation for customer satisfaction, service,
innovative design and value pricing.
The Company also competes with other homebuilders for the acquisition of
land. Competition for available homesites varies from market to market
depending on supply and is based primarily on price, reputation and ability
to build, market and sell homes. Increased competition for land throughout
local markets or for particular parcels may significantly increase
acquisition costs and reduce the Company's ability to profitably build homes
or profitably resell land in such markets.
BONDS, WARRANTIES AND OTHER OBLIGATIONS
In connection with the development of its projects, the Company is often
required to obtain performance or maintenance bonds or letters of credit
which are generally for the benefit of governmental authorities. Lenders
financing these projects typically provide for these bonds and letters of
credit, and because these bonds and letters of credit do not materially
increase these lenders' exposure, the Company's marginal cost of obtaining
these bonds and letters of credit is not material. The amount of such
obligations outstanding at any time varies in accordance with the Company's
pending construction activities. In the event any such obligations are drawn
upon because of the Company's failure to build its required infrastructure,
the Company would be obligated to reimburse the lenders. At June 30, 1996,
there were approximately $4.0 million in letters of credit and bonds
outstanding.
The Company also has obligations to subsidize homeowners' associations in
certain of its residential developments up to a pro rata portion of expenses
based on the number of homesites which have not been closed in such
developments. These obligations are not a material part of the Company's
operating expenses.
The Company provides its home buyers with a limited one-year warranty on
workmanship and building materials. The subcontractors who perform most of
the actual construction, in turn, provide warranties of workmanship to the
Company, and generally are prepared to respond to the Company and homeowner
promptly upon request. To cover its potential warranty obligations, the
Company accrues an estimated amount for future warranty costs.
EMPLOYEES
At June 30, 1996, the Company employed 85 persons of whom 28 were sales
and marketing personnel, 26 were executive, administrative and clerical
personnel and 31 were involved in construction. Additionally, the Company has
15 salespersons who are independent contractors. The Company's employees are
not covered by any collective bargaining agreements; however, certain of the
subcontractors which the Company engages are represented by labor unions or
are subject to collective bargaining agreements. The Company believes that
its relations with its employees and subcontractors are good.
LEGAL PROCEEDINGS
The Company is involved from time to time in litigation arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the Company.
HEADQUARTERS FACILITIES
The Company currently leases approximately 4,800 square feet of office
space, increasing to 5,900 square feet effective October 1, 1996, for its
corporate headquarters in Coral Springs, Florida from University Financial
Plaza Limited, a limited partnership of which Messrs. Arthur Falcone, Philip
Cucci
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and Edward Falcone (all of whom are executive officers, directors and
principal shareholders of the Company) are partners. The lease has a
five-year term expiring in September 30, 2001, with a renewal option for an
additional five-year term. Pursuant to the terms of the lease, the Company
has paid rent of approximately $18,000, $59,000 and $60,000 for the years
ended June 30, 1994, 1995 and 1996, respectively. The minimum lease payment
for the year ended June 30, 1997 is approximately $72,000 and increases five
percent per year thereafter. The Company believes that the lease rate
reflects the gross market lease rate for comparable properties. See "Certain
Relationships and Related Transactions."
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The table below sets forth the names and ages of the directors, officers
and certain key employees of the Company as well as the positions and offices
held by such persons. A summary of the background and experience of each of
these individuals is set forth after the table. The officers of the Company
serve at the discretion of the Company's Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Arthur Falcone 37 President and Chairman of the Board
Philip Cucci 37 Executive Vice President, Chief Operating Officer and Director
Edward Falcone 43 Executive Vice President and Director
Les Campbell 39 Chief Financial Officer
Neil Eisner 41 Vice President of Real Estate Operations
Daniel Andreacci 50 Vice President of Sales and Marketing
Cora DiFiore 39 Vice President of Administration
Tom Pagnotta 36 Vice President of Construction
Richard Phillips 31 Controller
Christopher Allick 42 Director
Anthony Ciabattoni 52 Director
</TABLE>
ARTHUR FALCONE has been President and a Director of the Company since its
founding in 1986. During that period of time, the Company built and closed
over 700 homes. Mr. Falcone is responsible for overseeing all aspects of the
Company's business, including managing ongoing projects and locating and
securing land parcels for future acquisition and development. Mr. Falcone has
substantial experience in site selection and in the acquisition and
construction of residential and commercial properties. He has owned,
developed and operated over 100 restaurants including McDonald's, Wendy's and
other family style restaurants in New York, Florida and California. Mr.
Falcone also has owned, developed and managed office buildings, health clubs,
hotels and other properties in Florida, Massachusetts and New York. Mr.
Falcone is the brother of Edward Falcone.
PHILLIP CUCCI joined the Company in 1988 as Vice President and a Director
and became Executive Vice President and Chief Operating Officer in 1995.
During the time that Mr. Cucci has been associated with Transeastern, the
Company has built and closed over 700 homes. Mr. Cucci is responsible for
overseeing all aspects of the Company's operations. Mr. Cucci has over 17
years of experience in the homebuilding business. Prior to joining the
Company, Mr. Cucci managed, owned and operated various building firms on Long
Island, New York. From 1979 through 1981, Mr. Cucci was employed by a Nassau
County, New York firm specializing in custom remodeling and commercial
development. From 1982 through 1983, Mr. Cucci was a member of the management
team of a Suffolk, County, New York home building company, and served as
project manager responsible for all home building operations. During this
period he completed and delivered over 115 single family units. From 1984
through 1987, Mr. Cucci owned and operated a home building company which
built and delivered $22 milllion in high end custom estate homes. Mr. Cucci
has also owned and managed several office buildings during his career. Mr.
Cucci is licensed by the State of Florida as a General Contractor and serves
as the Company's general contractor qualifier. From 1978 through 1981, Mr.
Cucci attended C.W. Post College in Brookville, New York.
EDWARD FALCONE has been Vice President and a Director of the Company since
its founding in 1986, and was elected Executive Vice President of the Company
in 1995. During that period of time, the Company built and closed over 700
homes. Mr. Falcone is responsible for coordinating all sales, marketing and
advertising of the Company, as well as locating land for future acquisition
and development. Mr. Falcone has extensive experience in site selection and
acquisition of properties for
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commercial and residential construction, and in the marketing and advertising
of products. He has owned, developed and operated over 100 restaurants
including McDonald's, Wendy's and other family style restaurants in New York,
Florida and California. Mr. Falcone also has owned, built and managed hotels,
office buildings, health clubs and other properties in Florida,
Massachusetts, New York, Texas and Washington D.C., and has served in a
variety of management capacities in several businesses and consulting firms.
Mr. Falcone is the brother of Arthur Falcone.
LES CAMPBELL joined the Company as Chief Financial Officer in July 1994.
From 1984 until 1994, he was employed by Coral Ridge Properties, the
developer of Coral Springs, Florida. Mr. Campbell served as controller with
Coral Ridge Properties for eight years (1986 to 1994) and was director of
audits for Westinghouse Communities, Inc., the parent of Coral Ridge
Properties, for two years (1984 to 1986). Mr. Campbell is a certified public
accountant and, from 1978 to 1984, was an auditor with Price Waterhouse in
Fort Lauderdale and West Palm Beach, Florida. Mr. Campbell is a 1977 graduate
of Florida State University.
NEIL EISNER joined the Company during 1994 as Vice President of Real
Estate Operations. Mr. Eisner is responsible for the Company's real estate
operations in Broward County and Palm Beach County. From 1992 to 1994, Mr.
Eisner was Vice President of Real Estate Operations of Weitzer Homes, a
residential builder in Dade County and Broward County. From 1987 to 1992, Mr.
Eisner served as Vice President of Real Estate Operations for a developer of
hotels, office parks and single-family homes in New York. Mr. Eisner is a
1977 graduate of the University of Maryland, with a Bachelor of Science
Degree in Business Administration and Management.
DANIEL ANDREACCI joined the Company in 1993 as Vice President of Sales and
Marketing. Mr. Andreacci is currently responsible for the Company's marketing
and sales operations in Broward County and Palm Beach County. Over the past
20 years, Mr. Andreacci has been involved in many aspects of the real estate
business, including sales, marketing, development and acquisitions. In 1987,
Mr. Andreacci formed ASC Associates and later the Andreacci Group, both real
estate sales, marketing and consulting firms. Mr. Andreacci attended New
York's Pace College for business administration.
CORA DIFIORE has been Vice President of Administration since 1992. Ms.
DiFiore is responsible for coordinating construction, development and
acquisition financing, for coordinating all residential closings and for
managing the Company's corporate offices. Ms. DiFiore has worked with Arthur
Falcone and Edward Falcone in various administrative capacities for over 17
years, and held a variety of administrative positions with the Company until
being named Vice President in 1992. Ms. DiFiore is a 1978 graduate of Stony
Brook University in Stony Brook, New York.
TOM PAGNOTTA joined the Company in 1992 as Purchasing Director. He was
promoted to Vice President of Construction in July, 1996. His
responsibilities include monitoring all construction activities, construction
budgets and quality assurance for all projects in Broward County and Palm
Beach County. Mr. Pagnotta was President and owner of Pagnotta Construction
Corp. of America from 1987 to 1992. Prior to 1987, Mr. Pagnotta was Vice
President of Rolling Hills Development Corporation. Mr. Pagnotta attended New
York Institute of Technology in New York City.
RICHARD PHILLIPS has been Controller of the Company since August 1995.
From 1992 until 1994, Mr. Phillips served as Controller of the Houston
division of Lennar Corporation, one of the largest homebuilders in the United
States. Mr. Phillips is a certified public accountant, and, from 1988 to
1992, was an auditor for KPMG Peat Marwick in Boston, Massachusetts, and Ft.
Lauderdale, Florida. Mr. Phillips is a 1988 graduate of Northeastern
University in Boston, Massachusetts.
CHRISTOPHER ALLICK is an Executive Vice President at Jefferies & Company,
Inc. He is a member of the Corporate Finance Department's Management
Committee and a member of the Executive Committee of Jefferies & Company,
Inc. Prior to joining Jefferies & Company, Inc. in 1990 he was a First Vice
president in the Corporate Finance Department at Drexel Burnham Lambert, Inc.
for four years. From 1977 until 1986, Mr. Allick was a member of Dean Witter
Reynolds' Corporate Finance
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Department. Mr. Allick received an M.B.A./M.A. in Economics from the
University of Toronto in 1978 and a B.A. in Economics and English from the
University of Colorado in 1976.
ANTHONY CIABATTONI has been a director of the Company since 1995. Mr.
Ciabattoni is the founder of Pacific Business Interiors, one of the largest
of Steelcase furniture supply companies in Southern California. From 1984
until its sale in 1996, Mr. Ciabattoni was the President and CEO of Pacific
Business Interiors. Mr. Ciabattoni also founded Recycled Office Solutions in
1993. This is the largest re-manufacturer of Steelcase furniture in Southern
California. Mr. Ciabattoni received his Bachelor of Arts Degree from the
University of Delaware in 1967.
BOARD OF DIRECTORS
GENERAL.--The Board of Directors of the Company is currently comprised of
five directors. The directors will be divided into three classes at the first
annual meeting of shareholders after the Offering. At such meeting, one class
will be elected to serve a term expiring one year thereafter, the second
class will be elected to serve for a term expiring two years thereafter and
the third class will be elected to serve for a term expiring three years
thereafter. After expiration of such initial terms, each class will be
elected for a three-year term. Directors may be removed only for cause and
only by the affirmative vote of holders of greater than 66 2/3 % of the
outstanding Common Stock of the Company.
COMMITTEES.--After consummation of the Offering, the Board of Directors
will establish an audit committee and a compensation committee, both of which
shall initially be comprised of Mr. Allick and Mr. Ciabattoni. The audit
committee will, among other things, make recommendations to the Board of
Directors regarding the independent auditors for the Company, approve the
scope of the annual audit activities of the independent auditors, review
audit results and have general responsibility for all auditing-related
matters. The compensation committee will recommend to the Board of Directors
compensation plans and arrangements with respect to the Company's executive
officers and administer certain employee benefit plans, including the
Company's 1996 Stock Plan.
COMPENSATION OF DIRECTORS.--The Company intends to implement a
compensation program for non-employee directors, effective upon consummation
of the Offering, pursuant to which such directors will receive fees and stock
options. Non-employee directors will be entitled to receive $12,000 per year
and $500 per meeting for services as a director plus reimbursement of travel
expenses to board and committee meetings. The Company has granted, under the
Company's 1996 Stock Plan, subject to the consummation of the Offering,
options to purchase 8,000 and 2,000 shares of Common Stock to each of Messrs.
Allick and Ciabattoni, the Company's two non-employee directors. The options
were granted on the basis of 2,000 shares per year of service. These options
vest one year after the date of issuance, are exercisable at an exercise
price equal to the fair market value of the Common Stock on the date of grant
and have a term of ten years. Non-employee directors will be entitled to
participate in and receive further grants of stock options under the
Company's 1996 Stock Plan. Directors who are also employees of the Company
will receive no additional compensation for service as a director other than
reimbursement of any travel expenses to attend meetings. See "Executive
Compensation" for compensation, including stock options, received by
directors who are also employees of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the Offering, the Company had no separate compensation committee
or other committee of the Board of Directors performing equivalent functions.
The Company's Board of Directors carried out this function. Each of the
directors of the Company participated in deliberations concerning executive
compensation.
42
<PAGE>
EXECUTIVE COMPENSATION
The table set forth below sets forth the total compensation earned by the
Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company for services rendered in all capacities to
the Company for the fiscal year ended June 30, 1996. The Company did not
grant any stock options or restricted stock awards or make any long-term
incentive plan payments to any of these officers during the fiscal year ended
June 30, 1996, and none of such officers executed any stock options during
such year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)
- -------------------------------------- ------- ---------- ------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C>
Arthur Falcone 1996 234,627 0 -- (1)
President and Chairman of the Board
Philip Cucci 1996 203,051 0 -- (1)
Executive Vice President,
Chief Operating Officer and Director
Edward Falcone 1996 195,143 0 -- 0
Executive Vice President and Director
Neil Eisner 1996 100,096 133,922(2) -- 4,800(3)
Vice President of
Real Estate Operations
Daniel Andreacci 1996 82,192 96,657(2) -- 4,800(3)
Vice President of Marketing and Sales
</TABLE>
- -----------------------------------------------------------------------------
(1) In 1996, the Company constructed and sold homes to Messrs. Arthur Falcone
and Philip Cucci for amounts equal to the Company's cost of constructing
the homes, including land. See "Certain Relationship and Related
Transactions--Other Arrangements with Affiliates."
(2) Commissions for housing sales, based on commission rates ranging from
0.25% to 1% of the sales price.
(3) Car allowance.
STOCK OPTION AND SHAREHOLDER VALUE PLAN
The Company's 1996 Stock Option and Shareholder Value Plan is intended
generally to attract, retain and motivate officers, key employees and
non-employee directors and to align their interests with those of the
Company's shareholders. A total of 1,000,000 shares of Common Stock may be
issued under the 1996 Stock Plan, upon exercise of stock options and vesting
of restricted stock awards or performance units. The Company has granted,
under the 1996 Stock Plan, subject to the closing of the Offering, options to
purchase 450,000 shares of Common Stock, exercisable at the initial public
offering price set forth on the cover page hereof. Messrs. Arthur Falcone,
Edward Falcone, Philip Cucci, Neil Eisner, Daniel Andreacci, Christopher
Allick and Anthony Ciabattoni have been granted options to purchase 92,237,
78,000, 81,058, 33,750, 24,750, 8,000 and 2,000 shares of Common Stock,
respectively, pursuant to the 1996 Stock Plan. These options vest over a
three-year period, except for the options granted to Messrs. Allick and
Ciabattoni which vest one year after the date of issuance.
Pursuant to the 1996 Stock Plan, the Company may grant incentive stock
options within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), to employees and non-qualified stock options
to non-employee directors, independent contractors and agents, as well as to
employees of the Company. The Plan also provides for the grant of awards of
restricted shares of Common Stock to employees of the Company, which awards
will be subject to certain restrictions or the achievement of certain goals
as determined by the Compensation Committee (as hereafter defined).
43
<PAGE>
Additionally, the Plan provides that the Compensation Committee may grant
shareholder value units to participating employees. In the event the
Compensation Committee grants such awards, it will establish objective
performance goals which, depending on the extent to which they are met, will
determine the number and/or value of performance units that will be paid out.
Payouts will be made in cash unless the Compensation Committee determines to
pay awards in shares of Common Stock. Performance goals may be based upon
Company-wide, divisional and/or individual performance.
The 1996 Stock Plan provides for administration by a Compensation
Committee (the "Compensation Committee") of the Board of Directors. The
Compensation Committee of the Board of Directors will administer the 1996
Stock Plan. The Compensation Committee will select the plan's participants,
authorize the grant of options, restricted stock or shareholder value units
and determine the exercise price, terms and vesting schedule for options or
the vesting and other terms of restricted stock awards and the number and/or
value of performance units. The Compensation Committee also has the authority
to prescribe, amend and rescind rules and regulations relating to the 1996
Stock Plan, to accelerate the exercise date of any option or vesting
requirements of any restricted stock award, to delegate authority to specific
members of a committee of management, and to interpret the 1996 Stock Plan
and make all necessary determinations in administering the 1996 Stock Plan.
All options, restricted stock awards or performance units granted under the
1996 Stock Plan shall be evidenced by a written agreement between the Company
and the participant, which shall contain such provisions, including, without
limitation, restrictions upon the exercise of the options, the restricted
stock awards or the performance units as the Compensation Committee shall
determine.
The per share exercise price of an option shall be as determined by the
Compensation Committee, provided that the exercise price of stock options may
not be less than fair market value on the date of grant. The purchase price
for shares acquired pursuant to the exercise of an option shall be as
determined by the Compensation Committee and may consist of cash, check,
surrender of other shares of the Company's capital stock or any combination
thereof.
No stock options, restricted stock awards or performance units may be
transferred other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order, and, except with respect to
a qualified domestic relations order, during the lifetime of a participant,
the option or award will be exercisable only by the participant.
Notwithstanding the foregoing, to the extent permitted by applicable law and
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Compensation Committee may permit a recipient of a
non-qualified stock option to (i) designate in writing during the optionee's
lifetime a family member or a trust established by the optionee or a family
member (a "Beneficiary"), to receive and exercise the optionee's
non-qualified stock options in the event of such optionee's death or (ii)
transfer a non-qualified stock option to a Beneficiary.
In the event that a participant shall die, become disabled, or terminate
employment with the Company for any reason other than retirement, the
participant shall be able to exercise the vested portion of an option, if any
or receive the vested portion of the restricted stock award, if any. In the
event a participant shall terminate employment with the Company for any
reason other than death, disability or retirement, the participant shall
immediately forfeit all unvested and unexercisable options or unvested
restricted stock awards, if any, unless otherwise determined by the
Compensation Committee. In the event that a participant's employment with the
Company shall terminate as the result of death, disability, or retirement,
the Compensation Committee may determine, in its discretion, to vest all or a
portion of the unvested and unexercised options or unvested restricted stock
awards, if any. The exercise of any option or receipt of any restricted stock
award after termination of employment will be subject to the condition that
the participant not compete with or take other employment with or render
services to a competitor of the Company or its affiliates without the written
consent of the Company nor conduct himself or herself in a manner adversely
affecting the Company. In no case may options be exercised later than the
expiration date of the stock options originally specified in the related
written agreements. In the event of change of control of the Company, all
options then outstanding under the 1996 Stock Plan will become immediately
exercisable and all restrictions on any stock awards will immediately lapse.
44
<PAGE>
The 1996 Stock Plan will expire in 2006 unless terminated earlier by the
Board of Directors. No options granted under the 1996 Stock Plan can be
exercised more than 10 years from the date of grant. Shares under any
unexercised options or restricted stock awards that expire or that terminate
upon an employee's ceasing to be employed by the Company become available
again for issuance under the 1996 Stock Plan.
Except as otherwise required by law or regulation, the 1996 Stock Plan may
be amended or terminated by the Board of Directors without shareholder
approval. No amendment or termination of the 1996 Stock Plan will affect
previously granted awards under the 1996 Stock Plan without the participant's
consent unless the Compensation Committee determines that such amendment is
in the best interest of the shareholders or the participants.
INDEMNIFICATION AND LIMITED LIABILITY
Pursuant to the Company's Articles of Incorporation, Bylaws and
indemnification agreements between the Company and each of its officers and
directors the Company is obligated to indemnify each of its directors and
officers to the fullest extent permitted by law with respect to all liability
and loss suffered, and reasonable expense incurred, by such person in any
action, suit or proceeding in which such person was or is made or threatened
to be made a party or is otherwise involved by reason of the fact that such
person is or was a director or officer of the Company. The Company is also
obligated to pay the reasonable expenses of indemnified directors or officers
in defending such proceedings if the indemnified party agrees to repay all
amounts advanced should it be ultimately determined that such person is not
entitled to indemnification.
The Company maintains an insurance policy covering directors and officers
under which the insurer agrees to pay, subject to certain exclusions, for any
claim made against the directors and officers of the Company for a wrongful
act for which they may become legally obligated to pay or for which the
Company is required to indemnify its directors or officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CORPORATE HEADQUARTERS
The Company currently leases approximately 4,800 square feet of office
space, increasing to 5,900 square feet effective October 1, 1996, for its
corporate headquarters in Coral Springs, Florida from University Financial
Plaza Limited, a limited partnership of which Messrs. Arthur Falcone, Philip
Cucci and Edward Falcone (all of whom are executive officers, directors and
principal shareholders of the Company) are partners. The lease has a
five-year term expiring in September 30, 2001, with a renewal option for an
additional five-year term. Pursuant to the terms of the lease, the Company
has paid rent of approximately $18,000, $59,000, and $60,000 for the years
ended June 30, 1994, 1995 and 1996, respectively. The minimum lease payment
for the year ended June 30, 1997 is approximately $72,000 and increases five
percent per year thereafter. The Company believes that the lease rate
reflects the gross market lease rate for comparable properties in the area.
TRANSACTIONS WITH JEFFERIES & COMPANY, INC.
During 1995, the Company paid a $500,000 fee to Jefferies & Company, Inc.,
in which Christopher Allick, a director of the Company, serves as Executive
Vice President, to perform due diligence relating to prospective real estate
acquisitions and financial advisory services for the Company. The Company was
reimbursed by an unrelated third party for such fee in September 1995.
The Company also paid to Jefferies & Company, Inc. a fee of $424,819 for
services rendered in facilitating the Company's repurchase in 1995 of (i)
21,358 shares of Series A Preferred Stock and
45
<PAGE>
related warrants to purchase 2,057,692 shares of Common Stock, (ii)
$2,963,084 of senior subordinated project financing notes and (iii)
$2,500,000 of senior subordinated project financing acquisition notes. See
Notes (11), (12) and (13) to the Company's Consolidated Financial Statements
for the years ended June 30, 1995 and 1994.
During 1995, Jefferies & Company, Inc. also loaned to the Company
$1,000,000 pursuant to senior subordinated project financing notes bearing
interest at 18% per annum and payable quarterly. Such loan has been repaid in
full.
CERTAIN LOANS
In April 1993, B & E Management, Inc., a company controlled by Robert
Falcone, the brother of Messrs. Arthur and Edward Falcone, provided the
Company with a $100,000 loan, which was used in connection with the
acquisition of Coopers Pointe. The loan had a balance on June 30, 1996 of
$70,000. Interest is payable monthly at an annual rate of 12% and principal
is due on demand.
In April 1994, Robert Falcone, as Trustee of the Robert J. Falcone
Revocable Living Trust, provided the Company with a $200,000 loan, which was
used in connection with the acquisition of Eagle Landing. The loan had a
balance on June 30, 1996 of $200,000. Interest on the loan is payable monthly
at an annual rate of 10% and principal is due on demand.
In September 1995, Robert Falcone, as Trustee of the Robert J. Falcone
Revocable Living Trust, provided the Company with a $100,000 loan, which was
used in connection with the acquisition of Aberdeen. The loan had a balance
on June 30, 1996 of $100,000. Interest is payable monthly at an annual rate
of 12% and principal is due in September 1997.
In January 1996, Anthony Ciabattoni, a director of the Company, provided
the Company with a $600,000 loan, which was used for working capital by the
Company. The loan had a balance on June 30, 1996 of $600,000. The loan bears
interest at an annual rate of 13% and principal is due in October 1996.
In June 1996, Anthony Ciabattoni provided the Company with a $1,000,000
loan, which was used by the Company to exercise its option to acquire
additional property at the Village of Pembroke Pines. The loan had a balance
on June 30, 1996 of $1,000,000. The loan bears interest at an annual rate of
13% and principal is due in November 1996.
In October 1996, Anthony Ciabattoni provided the Company with a $1,000,000
loan, which will be used by the Company for land acquisitions and working
capital. The loan bears interest at an annual rate of 12% per annum and
principal is due in April 1997. The Company may, but has not presently
determined to, repay this loan from the proceeds of the Offering.
In September 1994, Arthur Falcone provided the Company with a $124,000
loan, which was used for working capital by the Company. The loan had a
balance on June 30, 1996 of $124,000. Interest on the loan is payable monthly
at an annual rate of 11% and principal is due on demand.
In September 1994, Edward Falcone provided the Company with a $156,512
loan, which was used for working capital by the Company. The loan had a
balance on June 30, 1996 of $156,512. Interest on the loan is payable monthly
at an annual rate of 11% and principal is due on demand.
In September 1994, Philip Cucci provided the Company with a $75,997 loan,
which was used for working capital by the Company. The loan had a balance on
June 30, 1996 of $75,997. Interest on the loan is payable monthly at an
annual rate of 11% and principal is due on demand.
Promptly after consummation of the Offering, the Company intends to
utilize a portion of the proceeds from this Offering to repay all of the
above-described indebtedness other than the October 1996 loan from Mr.
Ciabattoni, as described above. See "Use of Proceeds."
46
<PAGE>
REGISTRATION RIGHTS AGREEMENT
Messrs. Arthur J. Falcone, Edward W. Falcone, Philip Cucci, Jr.,
Christopher Allick, Anthony Ciabattoni and each of the other shareholders of
the Company listed under "Principal and Selling Shareholders" and the Company
have entered into a Registration Rights Agreement (the "Registration Rights
Agreement"), pursuant to which each of Messrs. Allick and Ciabattoni has been
granted the right, subject to various restrictions and limitations, at any
time after the date which is one year following consummation of the Offering,
to request that the Company file with the Securities and Exchange Commission
("SEC") a registration statement on Form S-3 for the proposed sale of their
shares of Common Stock (including Common Stock issued upon the exercise of
any Warrants) held by them. The Company may postpone any such requested
registration pursuant to this agreement for a period of up to 120 days if the
Company believes that such registration would not be in the Company's
interest . Each of the parties to the Registration Rights Agreement (other
than the Company) will also have an unlimited number of piggyback
registration rights in respect of their shares of Common Stock (including
Common Stock issued upon the exercise of any Warrants). The piggyback
registration rights will allow the holders to include their shares of Common
Stock in any registration statement filed by the Company, subject to certain
limitations.
The Company will pay all expenses (other than underwriting discounts and
commissions of the selling shareholders, taxes payable by the selling
shareholders and the fees and expenses of the selling shareholders' counsel)
in connection with up to two requested registrations, as well as any
registrations pursuant to the exercise of piggyback rights. The Company also
will agree to indemnify such persons against certain liabilities, including
liabilities arising under the Securities Act. The registration rights granted
pursuant to the Registration Rights Agreement will terminate on the earlier
of the fifth anniversary of the Offering or the date on which all parties to
the Agreement can sell all of their stock under Rule 144(k) promulgated under
the Securities Act. Additionally, each of Messrs. Allick and Ciabattoni shall
only have the right to request registration by the Company as long as he
remains an "affiliate" of the Company for purposes of Rule 144.
EXERCISE OF WARRANTS
All holders of the Company's outstanding Warrants as of June 30, 1996 have
converted such Warrants into Common Stock prior to the consummation of the
Offering. In connection therewith, the holders of Warrants issued in
connection with the Series A Preferred Stock and Series B Preferred Stock
agreed to sell certain of their shares of Common Stock in the Offering, to
vote in favor of all amendments to the Company's Articles of Incorporation
and Bylaws necessary to effectuate or as contemplated by the Offering, to
vote in favor of the adoption of the Company's 1996 Stock Plan, to modify
certain of their registration rights and to not sell or otherwise dispose of
any of their shares of Common Stock for a period of six months from the date
of the Offering without the consent of the Representatives. The holders of
the Series A and Series B Preferred Stock are entitled to one vote per share,
representing less than one percent of the total outstanding voting power of
the Company. All of the shareholders listed under the caption "Principal and
Selling Shareholders," other than Messrs. Arthur Falcone, Edward Falcone,
Philip Cucci, John Cucci and Bill Mitchell were the holders of the Warrants.
See "Principal and Selling Shareholders." The individuals to whom the
Contingent Warrants may be issued also agreed to sell certain of their shares
of Common Stock in the Offering, to modify certain of their registration
rights and not to sell or otherwise dispose of any of their shares of Common
Stock for a period of six months from the date of the Offering without the
consent of the Representatives.
OTHER ARRANGEMENTS WITH AFFILIATES
In 1996, the Company constructed and sold homes to Messrs. Arthur Falcone
and Philip Cucci. The homes were sold for amounts equal to the Company's cost
of constructing the homes, including land. In connection with the sales, the
Company accepted unsecured notes aggregating $215,873 from Messrs.
47
<PAGE>
Arthur Falcone and Philip Cucci. The loans to Messrs. Arthur Falcone and
Philip Cucci were forgiven in September 1996 in accordance with the terms and
conditions previously established by the Company's Board of Directors. The
loans were repayable two years from the date of closing and bore interest at
the rate of 5.88% per annum. The Company was owed an additional $67,449 on
the home sold to Mr. Arthur Falcone as of June 30, 1996, which was repaid in
July, 1996.
FUTURE TRANSACTIONS WITH AFFILIATES
Following the closing of the Offering, the Company intends to submit
transactions between the Company and its directors and their affiliates to a
committee of disinterested members of the Company's Board of Directors or to
require approval of any such transactions by a majority of the disinterested
members of the Board of Directors. Additionally, provisions of the Florida
Business Corporation Act require that certain specified transactions between
the Company and holders of more than 10% of the Company's outstanding Common
Stock will require the approval of disinterested shareholders of the Company,
unless such transactions are approved by a majority of disinterested members
of the Board of Directors.
48
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock immediately prior to and
immediately following the Offering, assuming the exercise of all of the
outstanding Warrants by (i) each person or entity who is the beneficial owner
of five percent or more of the outstanding shares of Common Stock, (ii) each
director and named executive officer of the Company, (iii) all directors and
executive officers of the Company as a group and (iv) all shareholders of the
Company offering Common Stock in the Offering (the "Selling Shareholders").
Except as set forth in the notes to the table, the business address of each
five percent holder is the Company's corporate address. As described in the
notes to the table, voting and/or investment power with respect to certain
shares of Common Stock is shared by the named individuals. Consequently, such
shares are shown as beneficially owned by more than one person.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
-------------------------- -------------------------------------------------
NAME AND ADDRESS NUMBER PERCENT NUMBER OF SHARES NUMBER PERCENT
OF BENEFICIAL OWNER OF SHARES OF SHARES BEING OFFERED OF SHARES OF SHARES
- ------------------------------------- ------------ ------------ ----------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Arthur Falcone(1) ................... 1,981,669 26.3% * (8) 1,981,669(8) 19.02%
Philip Cucci, Jr.(2) ................ 1,981,669 26.3 * (8) 1,981,669(8) 19.02
Edward Falcone ...................... 1,981,669 26.3 * (8) 1,981,669(8) 19.02
Anthony Ciabattoni .................. 356,841 4.7 0 356,841 3.43
John Cucci .......................... 5,363 * 1,000 4,363 *
Robert J. Falcone, Trustee(3) ...... 122,294 1.6 31,000 91,294 *
Christopher Allick .................. 34,253 * 18,000 16,253(9) *
Andrew Whittaker .................... 9,788 * 5,143 4,645(10) *
David F. Eisner ..................... 19,568 * 10,283 9,285(11) *
David J. Losito ..................... 9,788 * 5,143 4,645(10) *
Handler Family Trust ................ 97,873 1.3 56,431 41,442(12) *
Daniel Andreacci .................... 4,725 * 0 4,725 *
Brancaleone Family Partnership ..... 75,594 1.0 11,351 64,243 *
Albert Bruno ........................ 47,244 * 11,611 35,633 *
Les Campbell ........................ 4,725 * 0 4,725 *
Phillip J. Ciabattoni ............... 5,667 * 1,392 4,275 *
Otto Claricurzio .................... 4,725 * 1,162 3,563 *
Audrey Cohen ........................ 18,896 * 4,645 14,251 *
Neil Eisner ......................... 4,725 * 0 4,725 *
David W. Gove ....................... 9,442 * 2,322 7,120 *
Forrest Hamilton .................... 74,308 1.0 5,000 69,308 *
Larry T. Nicholson .................. 4,725 * 1,162 3,563 *
Bruce and Kim Phillips .............. 11,344 * 2,787 8,557 *
Ray Stromback(4) .................... 7,558 * 1,858 5,700 *
Stephen R. Day ...................... 4,725 * 1,162 3,563 *
Issac Abolafia ...................... 18,896 * 4,645 14,251 *
Anthony C. Musto .................... 18,896 * 4,645 14,251 *
Bruce R. and Jody A. Johnson ....... 33,075 * 8,129 24,946 *
Clay S. Cunningham .................. 4,717 * 1,160 3,557 *
Albert A. DiClemente ................ 4,717 * 1,160 3,557 *
Neal Katz ........................... 4,717 * 1,160 3,557 *
Brooke Jones ........................ 4,717 * 1,160 3,557 *
John Murphy ......................... 3,770 * 928 2,847 *
Marc J. Spizzirri ................... 4,717 * 1,160 3,557 *
DuRay E. Stromback, Trustee(5) ..... 4,717 * 1,160 3,557 *
John & Irene Passarelli ............. 28,348 * 6,967 21,381 *
Philip J. Weiss, Trustee(6) ......... 9,460 * 2,324 7,136 *
Arthur J. Falcone, Sr. .............. 6,609 * 1,624 4,985 *
Patrick Savin(7) .................... 444,929 5.9 100,000 344,929 3.31
All directors and executive officers
as a group (8 persons) ............ 6,350,276 84.4% 18,000(13) 6,332,276(13) 60.79%
</TABLE>
49
<PAGE>
- -----------------------------------------------------------------------------
* Represents beneficial ownership of less than 1%.
(1) Reflects shares beneficially owned by Arthur Falcone and Marcy Falcone,
his wife.
(2) Reflects shares beneficially owned by Philip Cucci, Jr. and Linda Cucci,
his wife.
(3) All shares of Common Stock are held by Mr. Falcone as trustee and
beneficiary of the Robert J. Falcone Revocable Living Trust.
(4) Includes 3,779 shares of Common Stock held by Mr. Stromback as trustee
and beneficiary of the Ray W. and Evelyn M. Stromback Living Trust.
(5) All shares of Common Stock are held by Mr. Stromback as trustee and
beneficiary of the DuRay E. Stromback Trust.
(6) All shares of Common Stock are held by Mr. Weiss as trustee of a trust
for the benefit of his wife. Mr. Weiss disclaims beneficial ownership of
such shares.
(7) The business address of Mr. Savin is 9777 Wilshire Boulevard, Suite 811,
Beverly Hills, California, 90212.
(8) Intends to sell 112,000 shares if the Underwriters' over-allotment
option is exercised in full.
(9) Intends to sell 9,600 shares if the Underwriters' over-allotment option
is exercised in full.
(10) Intends to sell 2,743 shares if the Underwriters' over-allotment option
is exercised in full.
(11) Intends to sell 5,484 shares if the Underwriters' over-allotment option
is exercised in full.
(12) Intends to sell 27,430 shares if the Underwriters' over-allotment option
is exercised in full.
(13) Does not include the 345,600 shares which would be sold if the
Underwriters' over-allotment option is exercised in full. See notes (8)
and (9).
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has been no public market for the Common
Stock. No predictions can be made as to the affect, if any, that market sales
of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of substantial
amounts of Common Stock of the Company in the public market after the lapse
of the restrictions described below, or the potential of such sales, could
materially adversely affect the prevailing market prices for the Common Stock
and the ability of the Company to raise equity capital in the future.
Upon completion of the Offering, the Company will have 10,416,318 shares
of Common Stock outstanding (10,512,318 if the Underwriters' over-allotment
option is exercised in full, assuming that twenty percent (20%) of the shares
sold under the over-allotment option are sold by the Company with the
remaining eighty percent (80%) being sold by certain Selling Shareholders).
All of the 3,200,000 shares of Common Stock offered hereby (3,680,000 if the
Underwriters' over-allotment option is exercised in full), will be freely
tradeable without restriction or further registration under the Securities
Act, unless purchased by "affiliates" of the Company, as that term is defined
in Rule 144, described below. All of the 7,216,318 remaining outstanding
shares of the Company's Common Stock are "restricted securities" as that term
is defined in Rule 144, as they were issued by the Company in private
transactions not involving a public offering.
In general, under Rule 144 as currently in effect, any affiliate of the
Company or any person (or persons whose shares are aggregated in accordance
with Rule 144) who has beneficially owned Common Stock which is treated as
restricted securities for at least two years would be entitled to sell within
any three-month period a number of shares that does not exceed the greater of
1% of the outstanding shares of Common Stock (approximately 104,163 shares
based upon the number of shares outstanding after the Offering) or the
reported average weekly trading volume in the Common Stock during the four
weeks preceding the date on which notice of such sale was filed under Rule
144. Sales under Rule 144 are also subject to certain manner of sale
restrictions and notice requirements and to the availability of current
public information concerning the Company. In addition, affiliates of the
Company must comply with the restrictions and requirements of Rule 144 (other
than the two-year holding period requirements) in order to sell shares of
Common Stock that are not restricted securities (such as Common Stock
acquired by affiliates in market transactions). Further, if a period of at
least three years has elapsed from the date restricted securities were
acquired from the Company or an
50
<PAGE>
affiliate of the Company, a holder of such restricted securities who is not
an affiliate at the time of the sale and who has not been an affiliate for at
least three months prior to such sale would be entitled to sell the shares
immediately without regard to the volume, manner of sale, notice and public
information requirements of Rule 144. Shares of Common Stock held by certain
management of the Company, the Common Stock issued upon exercise of the
Warrants issued in connection with the issuance of the Series A Preferred
Stock and the Series B Preferred Stock (an aggregate of 6,697,164 shares) and
the Common Stock issued upon exercise of any Contingent Warrants carry
certain demand and incidental (I.E., piggyback) rights to require the Company
to register sales of such shares of Common Stock and to participate in
certain subsequent registrations of shares of Common Stock by the Company for
sale to the public. See "Certain Relationships and Related
Transactions--Registration Rights Agreement."
The Company intends to file a registration statement on Form S-8 covering
all shares of Common Stock issuable under the Company's employee benefit
plans in effect on the date of this Prospectus. The Company has outstanding
stock options with respect to an aggregate of approximately 450,000 shares of
Common Stock as of the date of this Prospectus. Accordingly, any shares
issued upon exercise of outstanding options will be eligible for sale in the
public market (subject to the six-month lock-up arrangement described below)
beginning on the effective date of such registration statement.
The existing holders of the Company's Common Stock not being sold hereby,
and the Company's officers and directors have agreed not to sell, offer to
sell, grant any option for the sale of, assign, pledge, grant any security
interest in or otherwise dispose of, or register for sale by others, any
shares of Common Stock which they own prior to the Offering or any security
convertible into or exchangeable or exercisable for shares of Common Stock,
except for intra-family transfers, without the prior written consent of the
Representatives, on behalf of the Underwriters, for a period of six months
after the consummation of the Offering. Upon the expiration of such six-month
period, 6,894,689 of such shares will be eligible for resale under Rule 144.
51
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's shareholders have approved Amended and Restated Articles of
Incorporation and Bylaws to become effective upon consummation of the
Offering. Pursuant to the terms of the Amended and Restated Articles of
Incorporation, effective as of the consummation of the Offering, (i) the
Company's authorized Series A Preferred Stock and Series B Preferred Stock
will be eliminated and (ii) a new class of "blank check" preferred stock, par
value $.01 per share (the "New Preferred Stock"), will be created.
Accordingly, effective as of the consummation of the Offering, the Company's
capital stock will consist of 100 million shares of Common Stock and 20
million shares of New Preferred Stock. All of the Company's Series A Preferred
Stock and Series B Preferred Stock which is issued and outstanding immediately
prior to the consummation of the Offering will be redeemed immediately prior to
the consummation of the Offering. As of the date of this Prospectus, there were
6,266,637 shares of Common Stock outstanding, 1,819 shares of Series A Preferred
Stock outstanding and 33,202 shares of Series B Preferred Stock outstanding.
The following discussion describes the Company's capital stock, Articles
of Incorporation and Bylaws as anticipated to be in effect upon the
consummation of the Offering. The following description of the Company's
capital stock does not purport to be complete and is subject to and qualified
in its entirety by the provisions of the Company's Amended and Restated
Articles of Incorporation and Bylaws, which are included as exhibits to the
Registration Statement of which this Prospectus is a part, and by the
provisions of applicable law.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held
of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50 percent of the shares voted for the election
of directors can elect all of the directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the Board of
Directors out of funds legally available therefor, subject to the dividend
and liquidation rights of any New Preferred Stock that may be issued and
outstanding. In the event of liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all
assets remaining available for distribution to them after payment of
liabilities and after provision has been made for each class of stock, if any
having preference over the Common Stock. Holders of shares of Common Stock,
as such, have no conversion, preemptive or other subscription rights, and
there are no redemption provisions applicable to the Common Stock. All of the
outstanding shares of Common Stock are, and the shares of Common Stock
offered hereby, when issued against the consideration set forth in this
Prospectus will be, fully paid and nonassessable. In the event of
liquidation, after payment of the debts and of the liabilities of the Company
and after making provision for the holders of New Preferred Stock, if any,
the remaining assets of the Company will be distributable ratably among the
holders of Common Stock.
The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.
The Common Stock has been approved for quotation on the Nasdaq National
Market under the trading symbol "TEPI."
PREFERRED STOCK
The Board of Directors of the Company is authorized, without further
shareholder action, to divide any or all shares of the authorized New
Preferred Stock into series and fix and determine the designations,
preferences and relative rights and qualifications, limitations, or
restrictions thereon of any series so established, including voting powers,
dividend rights, liquidation preferences, redemption rights and conversion
privileges. As of the date of this Prospectus, the Board of Directors has not
authorized any series of New Preferred Stock, and there are no plans,
agreements or understandings for
52
<PAGE>
the authorization or issuance of any shares of Blank Check Preferred Stock.
The issuance of New Preferred Stock with voting rights or conversion rights
may adversely affect the voting power of the Common Stock, including the loss
of voting control to others. The issuance of New Preferred Stock may have the
effect of delaying, deferring or preventing a change of control of the
Company without shareholder approval. See "Risk Factors--Preferred Stock;
Possible Anti-Takeover Effect of Certain Charter Provisions."
CONTINGENT WARRANTS
In connection with the private placement of the Company's Common Stock in
March, 1996, the Company agreed to issue to the purchasers of the Common
Stock Contingent Warrants to purchase additional shares of Common Stock in
the event certain targeted Common Stock share prices are not achieved in the
Offering. The number of shares, if any, for which the Contingent Warrants are
exercisable is based upon the initial public offering price in the Offering.
Assuming an initial public offering price of $9.00 per share (which is the
midpoint of the estimated range of the initial public offering price), the
Contingent Warrants would be exercisable for an aggregate of 95,038 shares of
Common Stock. The Contingent Warrants are exercisable in whole or part at any
time prior to the first anniversary of the effective date of this Prospectus
at an exercise price equal to $.01 per share and contain customary
anti-dilution adjustments upon the occurrence of certain changes in the
Company's capital structure following the consummation of the Offering.
The holders of Common Stock issuable upon exercise of the Contingent
Warrants will have certain incidental (piggyback) rights to participate in
certain subsequent registrations of shares of Common Stock by the Company for
sale to the public.
CERTAIN PROVISIONS OF FLORIDA LAW
The Company is subject to several anti-takeover provisions under Florida
law that apply to a public corporation organized under Florida law, because
the corporation has not elected to opt out of such provisions in its articles
of incorporation or bylaws. The Common Stock of the Company is subject to the
"affiliated transactions" and "control-share acquisition" provisions of the
Florida Business Corporation Act. These provisions require, subject to
certain exceptions, that an "affiliated transaction" be approved by the
holders of two-thirds of the voting shares other than those beneficially
owned by an "interested shareholder" or by a majority of disinterested
directors and that voting rights be conferred on "control shares" acquired in
specified control share acquisitions generally only to the extent conferred
by resolution approved by the shareholders, excluding holders of shares
defined as "interested shares." In addition, Florida law presently limits the
personal liability of a corporate director for monetary damages, except where
the director (i) breaches his or her fiduciary duties and (ii) such breach
constitutes or includes certain unlawful distributions or certain other
reckless, wanton or willful acts or misconduct.
OTHER PROVISIONS OF ARTICLES OF INCORPORATION AND BYLAWS
The Articles of Incorporation provide that the Board will be divided into
three classes, with each class, after a transitional period, serving for
three years, and one class being elected each year. A majority of the
remaining directors then in office, though less than a quorum, or the sole
remaining director, will be empowered to fill any vacancy on the Board which
arises during the term of a director. The provision for a classified board
may be altered or repealed only upon the affirmative vote of holders of at
least 66 2/3 % of the total voting power of the Company. The classification
of the Board may discourage a third party from making a tender offer or
otherwise attempting to gain control of the Company and may have the effect
of maintaining the incumbency of the Board.
Special meetings of shareholders may be called by the Company's Board of
Directors, the Chairman of the Board of Directors or the Chief Executive
Officer. Shareholders of the Company may only call a special meeting of
shareholders if the holders of at least 50% of the total voting power of the
53
<PAGE>
Company sign, date and deliver to the Company's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to
be held.
Shareholders of the Company are required to provide advance notice of
nominations of directors to be made at, and of business proposed to be
brought before, a meeting of shareholders. The failure to deliver proper
notice within the periods specified in the Company's Bylaws will result in
the denial of the shareholder's right to make such nominations or propose
such action at the meeting.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain United States Federal tax
consequences of the acquisition, ownership and disposition of Common Stock by
a holder that, for United States Federal income tax purposes, is not a
"United States person" (a "Non-United States Holder"). This discussion is
based upon the United States Federal tax law now in effect, which is subject
to change, possibly retroactively. For purposes of this discussion, a "United
States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in the United
States or under the laws of the United States or of any political subdivision
thereof or an estate or trust whose income is includible in gross income for
United States Federal income tax purposes regardless of its source. This
discussion does not consider any specific facts or circumstances that may
apply to a particular Non-United States Holder. Prospective investors are
urged to consult their tax advisors regarding the United States Federal tax
consequences of acquiring, holding and disposing of Common Stock, as well as
any tax consequences that may arise under the laws of any foreign state,
local or other taxing jurisdiction.
DIVIDENDS
Dividends paid to a Non-United States Holder will generally be subject to
withholding of United States Federal income tax at the rate of 30% unless the
dividend is effectively connected with the conduct of a trade or business
within the United States by the Non-United States Holder, in which case the
dividend will be subject to the United States Federal income tax on net
income on the same basis that applies to United States persons generally
(and, with respect to corporate holders and under certain circumstances, the
branch profits tax). Non-United States Holders should consult any applicable
income tax treaties that may provide for a lower rate of withholding or other
rules different from those described above. A Non-United States Holder may be
required to satisfy certain certification requirements in order to claim
treaty benefits or otherwise claim a reduction of or exemption from
withholding under the foregoing rules.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale or other disposition of
Common Stock unless (i) the gain is effectively connected with the conduct of
a trade or business within the United States by the Non-United States Holder,
(ii) in the case of a Non-United States Holder who is a nonresident alien
individual and holds the Common Stock as a capital asset, such holder is
present in the United States for 183 or more days in the taxable year and
certain other requirements are met, or (iii) the Company is or has been a
"United States real property holding corporation" (a "USRPHC") for Federal
income tax purposes at any time during the five year period ending on the
date of disposition. While not free from doubt, the Company currently
believes that it is a USRPHC. Nevertheless, a Non-United States Holder would
generally not be subject to Federal income tax or withholding on the gain
from the sale or other disposition of Common Stock by reason of the Company's
USRPHC status if the Common Stock is regularly traded on an established
securities market ("regularly traded") during the calendar year in which such
sale or disposition occurs provided that such holder does not own, actually
or constructively, Common Stock
54
<PAGE>
with a fair market value in excess of 5% of the fair market value of all
Common Stock outstanding at any time during a required holding period. The
Company anticipates that the Common Stock will be regularly traded.
FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a
citizen or resident (as specially defined for United States Federal estate
tax purposes) of the United States at the date of death will be included in
such individual's estate for United States Federal estate tax purposes,
unless and applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the United States Internal Revenue
Service and to each Non-United States Holder the amount of dividends paid to,
and the tax withheld with respect to, such holder, regardless of whether any
tax was actually withheld. This information may also be made available to the
tax authorities of a country in which the Non-United States Holder resides.
Under temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally
not apply to dividends paid on the Common Stock to a Non-United States Holder
at an address outside the United States. Payments by a United States office
of a broker of the proceeds of a sale of the Common Stock is subject to both
backup withholding at a rate of 31% and information reporting unless the
holder certifies its Non-United States Holder status under penalties of
perjury or otherwise establishes an exemption. Information reporting
requirements (but not backup withholding) will also apply to payments of the
proceeds of sales of the Common Stock by foreign offices of United States
brokers, or foreign brokers with certain types of relationships to the United
States, unless the broker has documentary evidence in its records that the
holder is a Non-United States Holder and certain other conditions are met, or
the holder otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts withheld under
the backup withholding rules will be refunded or credited against the
Non-United States Holder's United States Federal income tax liability,
provided that certain required information is furnished to the United States
Internal Revenue Service.
These information reporting and backup withholding rules are under review
by the United States Treasury and their application to the Common Stock could
be changed by future regulations. The United States Internal Revenue Service
has recently issued proposed Treasury regulations concerning these rules
which are presently proposed to be effective for payments made after December
31, 1997. Prospective investors should consult their tax advisors concerning
the potential adoption of such proposed Treasury regulations and the
potential effect on their ownership and disposition of the Common Stock.
55
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), the underwriters named below (the "Underwriters"),
for whom BT Securities Corporation, Cruttenden Roth Incorporated and Janney
Montgomery Scott Inc. acting as representatives (the "Representatives"), have
severally agreed to purchase from the Company and the Selling Shareholders,
and the Company and the Selling Shareholders have agreed to sell the
Underwriters, the respective number of shares of Common Stock set forth
opposite each Underwriter's name below:
UNDERWRITERS NUMBER OF SHARES
- ------------------------------ -----------------
BT Securities Corporation ........
Cruttenden Roth Incorporated.......
Janney Montgomery Scott Inc........
---------
Total ........................... 3,200,000
=========
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to certain conditions precedent,
including the absence of any material adverse change in the Company's
business and the receipt of certain certificates, opinions and letters from
the Company and its counsel and independent certified public accountants. The
nature of the Underwriters' obligations is such that they are committed to
purchase and pay for all the shares in the Offering if any are purchased.
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the initial
public offering price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of $ per
share of Common Stock. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of $ per share of Common Stock on
sales to certain brokers and dealers. After the initial public offering of
the shares, the public offering price and other selling terms may be changed
by the Representatives. No change in such terms shall change the amount of
proceeds to be received by the Company and the Selling Shareholders as set
forth on the cover page of this Prospectus.
The Company has granted an option to the Underwriters, exercisable for a
period of 30 days after the date of this Prospectus, to purchase up to an
additional 480,000 shares of Common Stock at the public offering price set
forth on the cover page of this Prospectus, less the underwriting discounts
and commissions. The Underwriters may exercise this option only to cover
over-allotments, if any. To the extent that the Underwriters exercise this
option, each Underwriter will be committed, subject to certain conditions, to
purchase such additional shares of Common Stock in approximately the same
proportion as set forth in the above table.
The Company has agreed to issue to the Representatives, for a total of
$320, warrants (the "Representatives' Warrants") to purchase up to 320,000
shares of Common Stock at an exercise price per share equal to 120% of the
initial public offering price. The Representatives' Warrants are exercisable
for a period of four years beginning one year from the date of this
Prospectus. The holders of the Representatives' Warrants will have no voting,
dividend, or other stockholder rights until the Representatives' Warrants are
exercised.
The Company has agreed to pay the Representatives a non-accountable
expense allowance equal to two percent of the aggregate public offering price
(including with respect to shares of Common Stock underlying the
over-allotment option, if and to the extent it is exercised) set forth on the
front cover of this Prospectus for expenses in connection with this offering,
of which the sum of $30,000 has already been paid. To the extent that the
expenses of the Representatives are less than the non-accountable expense
allowance, the excess may be deemed to be compensation to the
Representatives.
The existing holders of the Company's Common Stock not being sold hereby,
and the holders of the Warrants and the Company's officers and directors have
agreed not to sell, offer to sell, grant any
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<PAGE>
option for the sale of, assign, pledge, grant any security interest in or
otherwise dispose of, or register for sale by others, any shares of Common Stock
or any security convertible into or exchangeable or exercisable for shares of
Common Stock, except for intra-family transfers, without the prior written
consent of the Representatives, on behalf of the Underwriters, for a period of
six months after the consummation of the Offering. See "Shares Eligible for
Future Sale."
At the request of the Company, the Underwriters have initially reserved up
to 280,000 shares of Common Stock for sale at the initial public offering
price set forth on the cover page of this Prospectus to directors, officers,
employees and business associates of the Company and other persons associated
with the Company or affiliated with any director, officer or employee of the
Company. Messrs. Dan Andreacci and Neil Eisner, executive officers of the
Company, have indicated that they will participate in the reserve share
program. The number of shares of Common Stock available for sale to the
general public will be reduced to the extent such persons purchase such
reserved shares. Any reserved shares which are not so purchased will be
offered by the Underwriters to the general public on the same basis as other
shares offered hereby.
Prior to the Offering, there has been no established trading market for
the shares of Common Stock of the Company. Consequently, the initial public
offering price for the Common Stock offered hereby has been determined by
negotiations between the Company and the Representatives. Among the factors
considered in such negotiations were the preliminary demand for the Common
Stock, the prevailing market and economic conditions, the Company's results
of operations, estimates of the business potential and prospects of the
Company, the present state of the Company's business operations, an
assessment of the Company's management, the consideration of these factors in
relation to the market valuation of comparable companies in related
businesses, the current condition of the markets in which the Company
operates, and other factors deemed relevant. There can be no assurance that
an active market will develop for the Common Stock or that the Common Stock
will trade in the public market subsequent to this Offering at or above the
initial public offering price.
The Company has received approval for quotation of the Common Stock on the
Nasdaq National Market under the trading symbol "TEPI."
The Underwriters do not intend to confirm sales of the Common Stock
offered hereby to any accounts over which they exercise discretionary
authority.
The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters and their controlling persons
against certain civil liabilities arising in connection with the Offering,
including certain liabilities under the Securities Act, or will contribute to
payments the Underwriters and their controlling persons may be required to
make in respect thereof.
LEGAL MATTERS
The validity of the Common Stock being offered hereby and certain other
legal matters will be passed upon for the Company by Stearns Weaver Miller
Weissler Alhadeff & Sitterson, P.A., Miami, Florida. Certain legal matters
will be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher &
Flom, Los Angeles, California.
EXPERTS
The consolidated financial statements of Transeastern Properties, Inc. and
subsidiaries as of June 30, 1996 and 1995, and for each of the years in the
three-year period ended June 30, 1996, have been included herein and in the
registration statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the
57
<PAGE>
authority of said firm as experts in accounting and auditing. The report of KPMG
Peat Marwick LLP covering the June 30, 1996 consolidated financial statements
refers to a change in the method of accounting for a real estate joint venture.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company or such Common Stock, reference is
made to such Registration Statement and the exhibits and schedules thereto,
certain portions of which are omitted from this Prospectus as permitted by
the rules and regulations of the Commission. Statements contained in this
Prospectus regarding the contents of any contract or other document referred
to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
Upon completion of the Offering, the Company will be subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file reports and other information with the Commission. Such reports and
other information, as well as the Registration Statement and the exhibits and
schedules thereto, may be inspected, without charge, at the public reference
facility maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material may also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Such information is also
available on the internet at http;//www.sec.gov.
The Company intends to furnish its shareholders with annual reports
containing audited financial statements examined and reported upon, with an
opinion expressed by independent certified public accountants, and quarterly
reports containing unaudited financial information for the first three
quarters of each year.
58
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report...............................................F-2
Consolidated Balance Sheets as of June 30, 1996 and 1995...................F-3
Consolidated Statements of Earnings for the Years ended
June 30, 1996, 1995 and 1994............................................F-4
Consolidated Statements of Changes in Shareholders' Equity for the
Years ended June 30, 1996, 1995 and 1994................................F-5
Consolidated Statements of Cash Flows for the Years ended
June 30, 1996, 1995 and 1994............................................F-6
Notes to Consolidated Financial Statements.................................F-7
Unaudited Pro Forma Financial Information..................................P-1
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Transeastern Properties, Inc.:
We have audited the accompanying consolidated balance sheets of
Transeastern Properties, Inc. and subsidiaries as of June 30, 1996 and 1995,
and the related consolidated statements of earnings, changes in shareholders'
equity and cash flows for each of the years in the three-year period ended
June 30, 1996. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Transeastern Properties, Inc. and subsidiaries at June 30, 1996 and 1995, and
the results of their operations and their cash flows for each of the years in
the three-year period ended June 30, 1996, in conformity with generally
accepted accounting principles.
The Company, through a modification of the joint venture agreement in
1996, as discussed in note 5, obtained effective operating control of its
50%-owned real estate joint venture. Accordingly, the joint venture has been
consolidated for the year ended June 30, 1996 and was carried under the
equity method for the years ended June 30, 1995 and 1994.
KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida
July 19, 1996
F-2
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
--------------- -------------
<S> <C> <C>
ASSETS
Cash ....................................................... $ 3,769,220 629,847
Restricted cash ............................................ 2,657,188 1,183,630
Trade and other accounts receivable ........................ 881,538 348,838
Due from affiliates and officers ........................... 637,313 136,792
Land, construction in process and completed homes ......... 82,919,919 29,829,373
Costs and estimated earnings in excess of billings
on uncompleted contracts ................................. -- 199,695
Investment in unconsolidated real estate joint venture .... -- 1,478,981
Property and equipment, net ................................ 1,006,715 382,160
Deferred tax asset ......................................... 27,500 188,500
Prepaid assets ............................................. 206,040 480,571
Other assets ............................................... 597,350 1,494,123
--------------- -------------
$92,702,783 36,352,510
=============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Trade accounts payable .................................... 853,661 163,517
Accrued expenses .......................................... 6,391,406 2,952,909
Customer deposits ......................................... 3,791,924 3,124,856
Income taxes payable ...................................... 2,725,600 314,480
Deferred tax liability .................................... 1,283,300 840,600
Due to affiliates and officers ............................ 2,441,366 885,073
Other liabilities ......................................... 2,507,605 148,169
Construction loans payable ................................ 21,470,810 10,785,290
Acquisition and development loans ......................... 25,302,389 6,895,377
Subordinated debt ......................................... 7,810,030 3,574,993
--------------- -------------
Total liabilities ....................................... 74,578,091 29,685,264
Minority interest in consolidated subsidiaries ............. 3,738,375 --
Redeemable preferred stock ................................. 3,502,100 3,372,632
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value, 41,000,000 shares authorized,
6,266,637 shares in 1996 and 5,945,008 shares in 1995
issued and outstanding ................................... 62,666 59,450
Additional paid-in capital ................................ 4,656,303 (52,200)
Retained earnings ......................................... 6,165,248 3,287,364
--------------- -------------
Total shareholders' equity .............................. 10,884,217 3,294,614
--------------- -------------
$92,702,783 36,352,510
=============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------------- -------------- -------------
<S> <C> <C> <C>
Revenues:
Home sales ................................................ $ 76,042,819 35,741,626 19,311,377
Land sales ................................................ 28,431,072 2,688,900 3,162,000
Rental and other income ................................... 1,199,286 234,173 173,277
Equity in income (loss) of real estate joint venture ..... -- 224,089 (51,032)
--------------- -------------- -------------
Total revenues .......................................... 105,673,177 38,888,788 22,595,622
--------------- -------------- -------------
Expenses:
Cost of home sales ........................................ 67,009,518 30,978,813 17,174,873
Cost of land sales ........................................ 19,432,828 1,470,000 1,728,000
Selling, general and administrative ....................... 10,051,254 5,281,026 1,962,158
Interest expense .......................................... 5,232,383 1,833,272 1,119,764
Less amount capitalized ................................... (4,993,970) (1,636,796) (965,905)
--------------- -------------- -------------
Net interest expense .................................... 238,413 196,476 153,859
--------------- -------------- -------------
Total expenses .......................................... 96,732,013 37,926,315 21,018,890
--------------- -------------- -------------
Minority interest in income of consolidated subsidiaries .. (865,394) -- --
--------------- -------------- -------------
Net income before income taxes and
extraordinary gain .................................... 8,075,770 962,973 1,576,733
Income tax expense ......................................... 3,074,820 374,200 492,700
--------------- -------------- -------------
Net income before extraordinary gain .................... 5,000,950 588,773 1,084,033
Extraordinary gain from early extinguishment of debt, net
of income taxes of $422,600 .............................. -- 700,485 --
--------------- -------------- -------------
Net income .............................................. 5,000,950 1,289,258 1,084,033
--------------- -------------- -------------
Dividends on redeemable preferred stock .................... (411,347) (270,723) (352,404)
Excess of the carrying amount of redeemable preferred stock
over the amount allocated upon repurchase ................ -- 1,711,719 --
--------------- -------------- -------------
Net income available for common shares .................. $ 4,589,603 2,730,254 731,629
=============== ============== =============
Net income per common and common
equivalent share:
Net income before extraordinary gain .................... .61 .25 .08
Extraordinary gain ........................................ -- .09 --
--------------- -------------- -------------
Net income .............................................. $ .61 .34 .08
=============== ============== =============
Average common and equivalent shares outstanding .......... 7,548,443 8,228,341 8,841,128
=============== ============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
RETAINED
ADDITIONAL EARNINGS
PAID-IN (ACCUMULATED
COMMON STOCK CAPITAL DEFICIT) TOTAL
--------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
Balance, June 30, 1993 ................... $ 59,450 (52,200) (144,519) (137,269)
Net income ............................... -- -- 1,084,033 1,084,033
Dividends:
Common stock ............................ -- -- (30,000) (30,000)
Preferred stock ......................... -- -- (352,404) (352,404)
--------------- ------------- -------------- ------------
Balance, June 30, 1994 ................... 59,450 (52,200) 557,110 564,360
--------------- ------------- -------------- ------------
Net income ............................... -- -- 1,289,258 1,289,258
Excess of carrying amount of redeemable
preferred stock over the amount
allocated
upon repurchase ........................ -- 1,711,719 -- 1,711,719
Dividends:
Preferred stock ......................... -- -- (270,723) (270,723)
--------------- ------------- -------------- ------------
Balance, June 30, 1995 ................... 59,450 1,659,519 1,575,645 3,294,614
--------------- ------------- -------------- ------------
Net income ............................... -- -- 5,000,950 5,000,950
Issuance of common stock ................. 3,216 2,996,784 -- 3,000,000
Dividends:
Preferred stock ......................... -- -- (411,347) (411,347)
--------------- ------------- -------------- ------------
Balance, June 30, 1996 ................... $ 62,666 4,656,303 6,165,248 10,884,217
=============== ============= ============== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income .................................................................. $ 5,000,950 1,289,258 1,084,033
Adjustments to reconcile net income to net cash used in operating
activities:
Amortization and depreciation ........................................... 222,220 64,340 43,078
Extraordinary gain from early extinguishment of debt, net of taxes ........ -- (700,485) --
Equity in (income) loss of real estate joint venture ....................... -- (224,089) 51,032
Deferred income taxes ...................................................... 603,700 682,200 (30,100)
Decrease (increase) in restricted cash ..................................... (1,473,557) 202,871 (355,809)
Decrease (increase) in trade and other accounts receivable ................. (532,700) (301,770) 17,713
Decrease (increase) in amounts due from affiliates ......................... (500,521) (24,459) --
Increase in land, construction in process and completed homes ............. (53,090,546) (5,782,056) (18,172,049)
Decrease (increase) in costs and estimated earnings in excess of billings
on uncompleted contracts ................................................. 199,695 160,099 (359,794)
Decrease (increase) in prepaid expenses .................................... 774,531 (723,958) (256,613)
Decrease (increase) in other assets ........................................ 396,773 587,211 (719,489)
Increase (decrease) in trade accounts payable .............................. 690,144 (246,544) 302,576
Increase in accrued expenses ............................................... 3,438,496 3,362,824 7,133
Increase (decrease) in income taxes payable ................................ 2,411,120 (630,920) 522,800
Increase in other liabilities .............................................. 2,359,434 148,171 --
--------------- --------------- ---------------
Net cash used in operating activities ...................................... (39,500,261) (2,137,307) (17,865,489)
--------------- --------------- ---------------
Cash flows from investing activities:
Additions to property and equipment ......................................... (846,775) (279,132) (182,447)
Receipts from real estate joint venture ..................................... 2,309,287 599,439 (-)
Advances to real estate joint venture ....................................... (830,306) (1,371,600) (533,763)
Increase (decrease) in minority interest in consolidated subsidiaries ...... 3,738,375 -- --
--------------- --------------- ---------------
Net cash provided by (used in) investing activities ........................ 4,370,581 (1,051,293) (716,210)
--------------- --------------- ---------------
Cash flows from financing activities:
Increase in customer deposits ............................................... 667,070 806,508 1,207,653
Proceeds from affiliate and officers' loans ................................. 1,745,000 435,000 --
Payments of affiliate and officers' loans ................................... (188,707) (108,491) (127,674)
Principal payments on construction loans payable ............................ (47,214,626) (21,753,677) (10,683,563)
Proceeds from borrowings on construction loans payable ...................... 57,900,146 25,080,661 13,872,834
Principal payments on acquisition and development loans ..................... (28,650,474) (9,410,859) --
Proceeds from borrowings on acquisition and development loans .............. 47,057,486 7,111,662 8,444,574
Proceeds from issuance of subordinated debt ................................. 5,658,819 4,028,128 6,360,000
Principal payments on subordinated debt ..................................... (1,423,782) (5,302,650) (810,000)
Proceeds from issuance of preferred stock ................................... -- 3,000,000 --
Proceeds from issuance of common stock ...................................... 3,000,000 -- --
Repurchase of preferred stock, common stock warrants and senior
subordinated notes ........................................................ (66,832) (535,000) --
Dividends ................................................................... (215,047) (3,184) (30,592)
--------------- --------------- ---------------
Net cash provided by financing activities .................................. 38,269,053 3,348,098 18,233,232
--------------- --------------- ---------------
Net increase (decrease) in cash ............................................ 3,139,373 159,498 (348,467)
Cash at beginning of year .................................................... 629,847 470,349 818,816
--------------- --------------- ---------------
Cash at end of year .......................................................... $ 3,769,220 629,847 470,349
=============== =============== ===============
Supplemental disclosure of noncash financing activities:
Imputed interest on noninterest-bearing loans ............................... $ -- -- 305,336
=============== =============== ===============
Preferred stock--stock dividends ............................................ $ 196,300 222,600 271,500
=============== =============== ===============
Supplemental disclosure of cash flow information:
Cash paid for:
Taxes ...................................................................... $ 60,000 322,920 --
=============== =============== ===============
Interest ................................................................... $ 1,621,855 982,708 498,020
=============== =============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION
Transeastern Properties, Inc. (the "Company") was formed on December 4,
1986. The Company acquires and develops land and constructs single family
homes and rental apartment buildings in South Florida. Subsequent to year-end
the Company changed its name from Transeastern Properties of South Florida,
Inc. to Transeastern Properties, Inc. which has been reflected in these
financial statements.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements for the year ended June 30, 1996
include the accounts of the Company and the following subsidiaries:
Transeastern Properties at the Cove, Inc., Transeastern Pembroke Properties,
Inc., Transeastern Pembroke Villages, Inc., Transeastern Plantation
Apartments, Inc., Transeastern Plantation Apartments, Ltd., Transeastern
Hollywood Apartments, Inc., Transeastern Hollywood Apartments, Ltd.,
Transeastern Aberdeen Properties, Inc., Transeastern Finance, Inc.,
Transeastern Wellington Properties, Inc. and Parkside Homes.
Transeastern Pembroke Properties, Inc. owns a 50% interest in Parkside
Homes, a real estate joint venture, formed to acquire and develop Parkside at
Spring Valley, a single family community in Pembroke Pines. The Company's
investment in this venture is consolidated for the year ended June 30, 1996
and was accounted for under the equity method for the years ended June 30,
1995 and 1994 (see note 5).
Transeastern Hollywood Apartments, Inc. and Transeastern Plantation
Apartments, Inc. own controlling interests, respectively, in real estate
limited partnerships, Transeastern Hollywood Apartments, Ltd. and
Transeastern Plantation Apartments, Ltd., formed during the year ended June
30, 1996 to acquire, develop and sell multifamily communities. The Company
owns both general and limited partnership interests. As general partner, the
Company has the option to buy out nonaffiliated limited partnership
interests, after one year from date of formation, for an amount equal to a
30% return on the nonaffiliated limited partnership investments. The
operations have been consolidated for the year ended June 30, 1996.
All significant intercompany balances and transactions have been
eliminated in consolidation.
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and these
differences could have a significant impact on the financial statements.
(C) BUSINESS RISK
Any substantial change in economic conditions or any significant price
fluctuations related to the real estate industry could affect the Company's
operations and have a material impact on the Company's business. In addition,
the Company is subject to competition from other entities engaged in the
business of building homes and apartments in the South Florida area.
F-7
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
(D) REVENUE RECOGNITION
SALE OF HOMES UNDER SHORT-TERM CONSTRUCTION CONTRACTS
Revenues from sales of homes in which the estimated construction period is
less than one year are recognized under the completed contract method at
closing.
SALE OF HOMES UNDER LONG-TERM CONSTRUCTION CONTRACTS
Revenues from construction contracts in which the estimated construction
period exceeds one year is recognized using the percentage of completion
method, measured by the ratio of costs incurred to total estimated costs
(cost to cost method). Estimated losses are accrued in full during the period
in which losses are determined. The asset entitled costs and estimated
earnings in excess of billings on uncompleted contracts represents revenues
recognized in advance of amounts billed. The liability, if any, entitled
billings in excess of costs and estimated earnings on uncompleted contracts
represents billings in advance of revenues recognized. As of June 30, 1996,
all contracts of this type are completed and no future percentage of
completion contracts are anticipated for the foreseeable future.
PARCEL AND LOT SALES
Revenues from sales of land parcels and residential lots to other builders
are recognized at closing when all contingencies, if any, have been resolved.
(E) CASH
Cash includes cash deposited in checking and savings accounts, money
market accounts, and overnight investment accounts.
(F) RESTRICTED CASH
Restricted cash comprises certain customer deposits relating to home
purchases which are held by the Company's escrow agents until closing.
(G) LAND, CONSTRUCTION IN PROCESS AND COMPLETED HOMES
Land, construction in process and completed homes are stated at the lower
of accumulated costs or net realizable value. Costs related to development of
land or construction are capitalized. Costs of land and related improvements
are allocated to sales under the relative sales value method. Construction
costs include all subcontractor, direct material and labor costs, and utility
connection rights as well as indirect costs related to subcontract
performance, such as indirect labor and supplies. Indirect costs that do not
clearly relate to development or construction, including general and
administrative expenses, are charged to expense as incurred. Real estate
taxes, insurance and interest are capitalized only during the period in which
activities necessary to get the property ready for its intended use are in
progress.
(H) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, ranging from three to seven years.
F-8
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
(I) INCOME TAXES
The Company accounts for income taxes under the asset and liability method
of computing deferred income taxes. Under the asset and liability method,
deferred income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying amount
of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured by using enacted statutory rates
expected to apply to taxable income.
(J) PER SHARE DATA
Earnings per common and common equivalent shares is computed by dividing
earnings reduced by redeemable preferred stock dividends and increased by the
excess of the carrying amount of redeemable preferred stock over the amount
allocated upon repurchase (see note 11) by the weighted average number of
common shares outstanding considering dilutive common equivalent shares.
Common equivalent shares consist of common stock warrants.
The March, 1996 common stock issuance included a provision which provided
for the issuance of warrants to purchase additional shares of the Company's
common stock in the event certain targeted common stock share prices were not
achieved in the Company's initial public offering. Presuming an offering
price of $9, the warrants would be exercisable for 95,038 shares of common
stock and net income per common and common equivalent share would be modified
for the additional common equivalents as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------------- ------------ -----------
<S> <C> <C> <C>
Net income available for common shares ........... $4,585,970 2,730,254 731,629
============== ============ ===========
Net income per common and common equivalent
share:
Net income before extraordinary gain ......... .60 .25 .08
Extraordinary gain ............................... - .08 -
-------------- ------------ -----------
Net income .................................... $ .60 .33 .08
============== ============ ===========
Average common and equivalent shares outstanding 7,643,481 8,323,379 8,936,166
============== ============ ===========
</TABLE>
In accordance with a Securities and Exchange Commission Staff Accounting
Bulletin, shares and warrants issued within a one-year period prior to the
initial filing of a registration statement relating to an initial public
offering are treated as outstanding for all periods presented. Such
calculation has been retroactively adjusted to reflect the Company's March
1996 common stock issuance (see note 12) and the Company's 8.2 to 1 common
stock split (see note 16).
(K) REDEEMABLE PREFERRED STOCK
Redeemable preferred stock is stated at redemption value.
(L) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is determined by reference to
various market data and other valuation techniques as appropriate. The
Company's financial instruments consist of cash equivalents,
F-9
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
mortgages and notes receivable, construction loans payable, acquisition and
development loans, and the subordinated debt. Unless otherwise disclosed, the
fair value of financial instruments approximates their recorded values.
(M) NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of," as of July 1, 1995 and, accordingly, evaluates its real
estate investments periodically to assess whether any impairment indications
are present, including recurring operating losses and significant adverse
changes in legal factors or business climate that affect the recovery of the
recorded value. If any real estate investment is considered impaired, a loss
is provided to reduce the carrying value of the property to its estimated
fair value. The implementation of this standard by the Company on July 1,
1996, prospectively, is not expected to have an initial material effect on
financial position or results of operations.
(N) RECLASSIFICATIONS
Certain 1995 amounts have been reclassified to conform with the 1996
presentation.
NOTE 3--LAND, CONSTRUCTION IN PROCESS AND COMPLETED HOMES
A summary of land, construction in process and completed homes is as
follows:
1996 1995
--------------- -------------
Land and land improvements $50,270,394 13,792,728
Construction in process ... 29,583,733 14,951,838
Completed homes ............ 3,065,792 826,679
--------------- -------------
$82,919,919 29,571,245
=============== =============
As of June 30, 1996, the construction in process and land and land
improvements balances include $7,434,096 and $6,301,367, respectively,
relating to multifamily apartment complexes under construction.
Substantially all of the land and land improvements, construction in
process and completed homes serve as collateral for the construction loans
payable, acquisition and development loans and subordinated debt.
F-10
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--CONTRACT BILLING STATUS
Information follows with respect to the billing status of uncompleted
contracts, under which revenue is recognized under the percentage of
completion method, as of June 30, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
-------------- ------------ ----------
<S> <C> <C> <C>
Costs incurred on uncompleted contracts $ 1,434,389 648,569 247,691
Estimated earnings ...................... 82,441 70,199 112,103
-------------- ------------ ----------
1,516,830 718,768 359,794
Less billings to date ................... (1,516,830) (519,073) --
-------------- ------------ ----------
Costs and estimated earnings in excess
of billings on uncompleted contracts $ -- 199,695 359,794
============== ============ ==========
</TABLE>
NOTE 5--INVESTMENT IN UNCONSOLIDATED REAL ESTATE JOINT VENTURE
On February 16, 1994, Transeastern Pembroke Properties, Inc. acquired a
50% interest in Parkside Homes, a joint venture with an unrelated party, H.
A. Cumber of Pembroke Pines, Inc., ("Cumber") for purposes of acquiring and
developing land in Pembroke Pines, Florida. Transeastern Pembroke Properties,
Inc. serves as the project manager for the joint venture and received a
management fee of $127,500, $150,000 and $80,000 included in rental and other
income in 1996, 1995 and 1994, respectively. Profits and losses of the joint
venture are allocated equally between the parties.
The joint venture agreement between the parties was modified in 1996,
resulting in Transeastern Pembroke Properties, Inc. obtaining perpetual and
unilateral operating control over the joint venture. Accordingly, the joint
venture has been consolidated for the year ended June 30, 1996 and was
accounted for under the equity method for the years ended June 30, 1995 and
1994.
Subsequent to year-end, the Company entered negotiations with Cumber to
purchase its interest in the Parkside Homes joint venture. In the event that
the Company consummates the acquisition of Cumber's interest, the purchase
will be accounted for using the purchase method of accounting. Under this
accounting method, the purchase price is allocated to the assets purchased
and the liabilities assumed based upon the fair values at the date of
acquisition.
F-11
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--INVESTMENT IN UNCONSOLIDATED REAL ESTATE JOINT VENTURE--(CONTINUED)
The condensed balance sheet of the joint venture at June 30, 1995 and 1994
is as follows:
<TABLE>
<CAPTION>
1995 1994
--------------- ----------
<S> <C> <C>
Cash .................................... $ 490,950 88,517
Restricted cash ......................... 210,000 --
Other current assets .................... 558,473 10,631
Deposit on land ......................... 735,525 832,117
Land .................................... 6,748,840 --
Construction in progress ................ 1,500,189 --
Fixed assets, net ....................... 78,235 34,197
--------------- ----------
$10,322,212 965,462
==========
Current liabilities ..................... 634,665 --
Customer deposits ....................... 964,422 --
Notes payable ........................... 5,765,163 --
Venturers' capital:
Transeastern Pembroke Properties, Inc. 1,478,981 482,731
H. A. Cumber of Pembroke Pines, Inc. .. 1,478,981 482,731
--------------- ----------
$10,322,212 965,462
=============== ==========
</TABLE>
The condensed statement of income of the joint venture for the periods
ended June 30, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
Sales .................................... $6,998,900 --
Cost of sales and expenses ............... 6,550,721 102,065
------------- ------------
Net income (loss) ........................ $ 448,179 (102,065)
============= ============
The Company's share of net income (loss) $ 224,089 (51,032)
============= ============
</TABLE>
NOTE 6--PROPERTY AND EQUIPMENT
Property and equipment are as follows at June 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
-------------- ------------
<S> <C> <C>
Property and equipment .................... $ 389,140 173,447
Office and model home furnishings ........ 983,602 352,520
-------------- ------------
1,372,742 525,967
Accumulated depreciation and amortization (366,027) (143,807)
-------------- ------------
$1,006,715 382,160
============== ============
</TABLE>
Depreciation expense was approximately $222,000, $64,000 and $43,000 for
the years ended June 30, 1996, 1995 and 1994, respectively.
F-12
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7--INCOME TAXES
During the years ended June 30, 1996, 1995 and 1994, income tax expense
consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------------- ------------ -----------
<S> <C> <C> <C>
Current:
Federal ............ $2,402,220 (263,000) 446,400
State .............. 411,000 (45,000) 76,400
-------------- ------------ -----------
2,813,220 (308,000) 522,800
-------------- ------------ -----------
Deferred:
Federal ............ 223,300 582,500 (27,200)
State .............. 38,300 99,700 (2,900)
-------------- ------------ -----------
261,600 682,200 (30,100)
-------------- ------------ -----------
Income tax expense $3,074,820 374,200 492,700
============== ============ ===========
</TABLE>
Total income tax expense differed from the amounts computed by applying
the U.S. Federal income tax rate of 34% for 1996, 1995 and 1994 to pre-tax
income as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------------- ---------- -----------
<S> <C> <C> <C>
Computed "expected" tax expense ...................... $2,745,400 327,400 536,090
State income taxes, net of Federal income tax benefit 302,800 36,100 50,400
Decrease in beginning of the year valuation allowance
for deferred tax assets .............................. -- -- (87,400)
Other, net ........................................... 26,620 10,700 (6,390)
-------------- ---------- -----------
$3,074,820 374,200 492,700
============== ========== ===========
</TABLE>
The significant components of deferred income tax (benefit) expense for
the years ended June 30, 1996, 1995 and 1994 follow:
<TABLE>
<CAPTION>
1996 1995 1994
------------ ---------- -----------
<S> <C> <C> <C>
Deferred income tax expense (benefit) ............... $ 261,600 682,200 57,300
Decrease in beginning of the year valuation
allowance for deferred tax assets ................. -- -- (87,400)
------------ ---------- -----------
$ 261,600 682,200 (30,100)
============ ========== ===========
</TABLE>
F-13
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7--INCOME TAXES-(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at June 30,
1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
--------------- -----------
<S> <C> <C>
Deferred tax assets:
Construction in process due to differences in indirect costs
capitalized ............................................... $ -- 164,500
Property and equipment due to differences in depreciation .. 21,600 --
Adjustment resulting from change in tax status .............. 5,900 7,900
Other ....................................................... -- 16,100
--------------- -----------
Total gross deferred tax assets ............................. 27,500 188,500
Less valuation allowance .................................... -- --
--------------- -----------
Deferred tax assets ....................................... 27,500 188,500
--------------- -----------
Deferred tax liabilities:
Interest capitalized ....................................... 975,500 434,800
Investment in joint venture ................................ 206,700 149,700
Construction in process due to differences in indirect
costs capitalized ........................................ 79,400 --
Profits recognized under percentage of completion method
for financial statement purposes ......................... -- 26,400
Commissions capitalized for tax reporting purposes ........ 21,700 21,700
Deferred cost .............................................. -- 188,200
Property and equipment due to differences
in depreciation .......................................... -- 19,800
--------------- -----------
Total gross deferred tax liabilities ...................... 1,283,300 840,600
--------------- -----------
Net deferred tax liabilities .............................. $(1,255,800) (652,100)
=============== ===========
</TABLE>
During the year ended June 30, 1996, there was no change to the valuation
on deferred tax assets.
NOTE 8--CONSTRUCTION LOANS PAYABLE
Construction loans payable as of June 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------------- ------------
<S> <C> <C>
Construction first mortgage loans for various communities
payable to various lenders, secured by construction in process
and completed homes, with interest rates ranging from prime
plus 1% to prime plus 1.5%, maturing as follows:
1997--$13,295,297, 1998--$8,175,513 ........................... $21,470,810 10,785,290
============== ============
</TABLE>
Approximately $38.6 million of the Company's construction, acquisition and
development loans has been personally guaranteed by the principal owners of
the Company. The prime rate at June 30, 1996 and 1995 was 8.25 percent and 9
percent, respectively.
F-14
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9--ACQUISITION AND DEVELOPMENT LOANS PAYABLE
Acquisition and development loans payable as of June 30, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------- ------------
<S> <C> <C>
Acquisition and development first mortgage loans payable,
interest ranging from prime plus 1% to prime plus 1.5% with
maturities ranging from August 28, 1996 to November 30, 1998,
secured by various underlying real estate parcels .............. $21,878,922 6,399,947
Acquisition and development first mortgage loan payable, interest
accruing at 20% per annum (an amount equal to prime plus 2% to
be paid monthly during the term of the loan with the difference
to be calculated and paid by the Company at the time the loan is
paid in full). The loan agreement provides that net cash flow
generated from the project securing the loan, after direct
expenses and overhead payments, will be paid to the lender to
reduce the loan balance. The loan matures on September 25, 2000 2,941,320 --
Acquisition and development second mortgage loans payable,
noninterest-bearing with maturities from the lesser of 6 to 24
months or upon the sale of the home, secured by construction in
process, completed homes or lots within various communities .... 482,147 495,430
--------------- ------------
$25,302,389 6,895,377
=============== ============
</TABLE>
The prime rate at June 30, 1996 and 1995 was 8.25 percent and 9 percent,
respectively.
Aggregate scheduled principal maturities are as follows:
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,
---------------------
<S> <C>
1997 ... $ 6,600,400
1998 ... 15,053,169
1999 ... 707,500
2000 ... --
2001 ... 2,941,320
---------------------
$25,302,389
=====================
</TABLE>
F-15
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--SUBORDINATED DEBT
Subordinated debt as of June 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------------- ------------
<S> <C> <C>
Subordinated loan payable, interest at 10% with an additional 10%
interest participation (subject to a minimum additional
participation of $800,000), maturing February 28, 1999, secured by a
collateral assignment of all the common stock of Transeastern
Properties at the Cove, Inc. ........................................ $ 3,121,785 2,821,212
Subordinated loan payable with a base interest rate of 20%. An
additional 4% interest is payable to the lender subject to the
generation of sufficient net profits from the property. In addition,
to the extent that the property generated net profits after the
payment of the 4% additional interest, the lender is entitled to an
additional 5% of net profits generated on the residential parcels
and 2.5% of net profits generated on other mixed-use parcels. In the
event that a $1,000,000 principal payment on the loan is not made by
September 1, 1996, the 5% and 2.5% are increased to 10% and 5%,
respectively. The lender is still entitled to receive the contingent
returns even in the event of prepayment of the loan. The loan
matures on March 29, 1998 and is secured by a pledge assignment of
all the common stock of Transeastern Pembroke Villages, Inc. ....... 2,800,000 --
Subordinated loan payable, interest at 10% with an additional
participation ranging from 30% to 45% of excess cash flow over the
term of the loan, subject to a minimum additional participation of
$500,000. The loan matures on November 28, 2000 and is secured by a
collateral assignment of all of the general and limited partnership
interest of Transeastern Plantation Apartments, Ltd. ................ $ 1,888,245 --
Subordinated loans payable, interest ranging from 14% to 18% with
various maturity dates. ............................................. -- 753,781
-------------- ------------
$ 7,810,030 3,574,993
============== ============
</TABLE>
Aggregate scheduled principal maturities are as follows:
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,
- ---------------------
<S> <C>
1997 .............. $ --
1998 .............. 2,800,000
1999 .............. 3,121,785
2000 .............. --
2001 .............. 1,888,245
------------
$7,810,030
============
</TABLE>
During January, 1996, the Company entered into an agreement with a lender
to provide a $750,000 revolving credit line, interest at prime plus 1%,
maturing on February 1, 1998. The line of credit is
F-16
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--SUBORDINATED DEBT--(CONTINUED)
secured by various underlying real estate parcels. Borrowings outstanding
under this line of credit totaling $1,000 were classified as other
liabilities at June 30, 1996.
NOTE 11--REDEEMABLE PREFERRED STOCK
A summary of redeemable preferred stock follows as of June 30, 1996 and
1995:
<TABLE>
<CAPTION>
1996 1995
-------------- ------------
<S> <C> <C>
Series A redeemable preferred stock, $.01 par value,
redeemable at $100 per share plus cumulative unpaid
dividends, 29,000 shares authorized, 1,819 and 2,215 shares
issued and outstanding in 1996 and 1995, respectively ...... $ 181,900 235,832
Series B redeemable preferred stock, $.01 par value,
redeemable at $100 per share plus cumulative unpaid
dividends, 46,500 shares authorized, 33,202 and 31,368
shares issued and outstanding in 1996 and 1995, respectively $ 3,320,200 3,136,800
-------------- ------------
$ 3,502,100 3,372,632
============== ============
</TABLE>
The Series A Redeemable Preferred Stock (the "Series A Preferred Stock")
contained a provision in which the Company retained the right to repurchase a
stipulated amount of shares and related warrants prior to November 30, 1995.
On an annual basis the Company has adjusted the carrying amount of the
redeemable preferred stock eligible for redemption by November 30, 1995 by
the amount representing the required rate of return of 25% less dividends
actually paid. This has been reflected with a charge against retained
earnings and a related adjustment to the preferred stock dividend amount. In
redeeming these Series A Preferred Stock shares and warrants, the Company was
required to redeem the same percentage of outstanding Series A preferred
stock as the percentage of warrants redeemed. Certain eligible shares and
warrants were redeemed as part of the repurchase in 1995 as described below.
In the current year, the Company repurchased all shares and warrants eligible
for redemption.
In 1995, the Company repurchased (1) 21,358 shares of Series A Preferred
Stock and related warrants to purchase 2,057,692 shares of common stock for
$.01, (2) $2,963,084 of senior subordinated project financing notes, and (3)
$2,500,000 of senior subordinated project financing acquisition notes for an
aggregate price of $4,500,000. Such repurchase transaction was facilitated
through an entity in which a director is an officer (note 13). Based on the
above, the Company recognized an extraordinary gain of $700,485, net of
related taxes of $422,600, relative to the extinguishment of the above
mentioned senior subordinated project financing and acquisition notes. The
Series A Preferred Stock and related common stock warrants had been issued
for an aggregate price of $2,135,800 and had a book value of $2,246,719 as of
the date of the repurchase, due to the rate of return adjustment described in
the previous paragraph. These securities were re-acquired for a total cost of
$535,000, including related tax effects. Such $1,711,719 excess of the
carrying amount of redeemable preferred stock over the amount allocated upon
repurchase, including related tax effects, has been reflected as a credit to
shareholders' equity.
During 1995, the Company authorized 46,500 and issued 30,000 shares of
Series B redeemable preferred stock (the "Series B Preferred Stock"), par
value $.01, at a price of $100 per share. Holders of the Series B or Series A
Preferred Stock (the "preferred stock") are entitled to receive cumulative
dividends at the rate of $12 per share per annum. Dividends are payable
quarterly in cash, except for
F-17
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11--REDEEMABLE PREFERRED STOCK--(CONTINUED)
the first twelve quarterly dividends for Series A Preferred Stock and the
first five quarterly dividends for Series B Preferred Stock which were, at
the option of the Company, paid by the issuance of additional shares of
preferred stock, based on a $100 share value. Series A Preferred Stock has a
dividend and liquidation preference over Series B Preferred Stock. Holders of
preferred stock shall have the right as a class to elect one member of the
Company's Board of Directors or additional members in order to retain at
least 25% of the total number of directors. Upon a default in payment of
dividends on preferred stock for two consecutive quarters, the preferred
stockholders shall have the right to elect a majority of the number of
directors constituting a full board. Series A Preferred Stock and Series B
Preferred Stock which remains outstanding until June 1, 2005 and December 31,
2004, respectively, shall be redeemed at $100 per share plus cumulative
unpaid dividends. The Company retains the right to call for redemption any or
all preferred stock at any time at a price equal to $100 per share plus
cumulative unpaid dividends. Additionally, all preferred stock must be
redeemed at a price equal to $100 per share plus cumulative unpaid dividends,
by the Company in the event that the Company completes a sale of its common
stock resulting in gross proceeds in excess of $5,000,000 or $10,000,000,
triggering redemption of Series A and Series B Preferred Stock, respectively.
NOTE 12--WARRANTS
Information relating to common stock warrants issued by the Company is
summarized as follows:
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES REPRESENTED
BY OUTSTANDING WARRANTS AT JUNE 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Issued in connection with:
Series A redeemable preferred stock(a) 171,462 197,308 2,255,000
Series B redeemable preferred stock(b) 567,580 567,580 --
Subordinated debt(c) ................... 445,424 445,424 445,424
Other(d) ............................... 74,308 74,308 74,308
Common stock-contingent shares(e) ..... -- -- --
------------ ------------ ------------
1,258,774 1,284,620 2,774,732
============ ============ ============
</TABLE>
As of June 30, 1996, the exercise price on all outstanding warrants was
$.01 per warrant share. Management did not allocate value to the warrants
related to subordinated debt based upon its determination that the value of
the warrants on date of issuance was deminimus. This determination was based
on the absence of a liquid market for the resale of the warrants, and the
level of profits generated by the Company prior to the date of issuance of
such of warrants.
(a) In 1993, in connection with the issuance of Series A preferred stock,
the Company issued warrants initially exercisable for 2,255,000 shares of
common stock (27.5% of fully diluted common stock) at an exercise price of
$.01 per warrant share (the "Series A Warrants"). As part of the
aforementioned repurchase of the Series A preferred stock, warrants to
purchase 2,057,692 shares of common stock were redeemed from the original
2,255,000 leaving outstanding 197,308 warrants to purchase common stock,
associated with Series A Preferred Stock. The Company redeemed 53,808 Series
A Warrants on November 30, 1995 in connection with a special redemption right
as described in note 11. The remaining Series A Warrants expire on June 1,
2005 if unexercised. The Series A Warrants contain an anti-dilution provision
which allows the warrantholder to purchase additional shares of
F-18
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12--WARRANTS--(CONTINUED)
common stock (additional warrants for 27,962 shares of common stock were
issued due to the 1996 common stock issuance) in the event that the
warrantholder's potential ownership percentage in the Company would otherwise
be reduced as the result of the sale of common stock to other parties. The
additional warrants were retroactively adjusted as outstanding for all
periods presented in the table above.
(b) In connection with the issuance of the Series B Preferred Stock, the
Company issued warrants initially exercisable for 540,733 shares of common
stock at an exercise price of $.01 per warrant share (the "Series B
Warrants"). The Series B Warrants are exercisable through the expiration date
of December 31, 2003. The Series B Warrants contain an anti-dilution
provision which allows the warrantholder to purchase additional shares of
common stock (additional warrants for 26,847 shares of common stock are
issuable to the warrantholders due to the 1996 common stock issuance) in the
event that the warrantholder's potential ownership percentage in the Company
would otherwise be reduced as the result of the sale of common stock for cash
to other parties in the aggregate amount not to exceed $5 million. The
additional warrants were retroactively adjusted as outstanding for all
periods presented in the table above.
(c) As additional consideration for the purchase of the $2,500,000 senior
subordinated project acquisition notes issued in 1994, the Company issued
warrants to purchase 445,424 shares of common stock at an exercise price of
$.01 per share. The warrants expire on June 1, 2005 if unexercised. As
described in note 11, the $2,500,000 subordinated project acquisition notes
were prepaid at a discount during 1995 but the warrants remain outstanding.
(d) In October, 1993, the Company also issued warrants to purchase 74,308
shares of common stock at an exercise price of $.01 per share. These warrants
were issued to an unrelated party for assistance in completing the Series A
preferred stock placement. The warrants expire on May 31, 2005 if
unexercised.
(e) The March, 1996 common stock issuance included a provision which
provided for the issuance of warrants to purchase additional shares of the
Company's common stock in the event certain targeted common stock share
prices were not achieved in the Company's initial public offering. Presuming
an offering price of $9, the warrants would be exercisable for 95,038 shares
of common stock. As of June 30, 1996, none of the warrants have been
exercised.
NOTE 13--RELATED PARTY TRANSACTIONS
During 1995, the Company had the following transactions with an entity in
which a director is an officer: (1) a $500,000 fee, which was paid to the
entity for due diligence relating to prospective real estate acquisitions and
financial advisory services. The acquisition effort was abandoned and the
company targeted for acquisition reimbursed the Company for the $500,000 fee
subsequent to June 30, 1995. The fee was accounted for as a deferred cost
included in other assets at June 30, 1996; (2) the entity received $424,819
for facilitating a repurchase of Series A preferred stock, warrants and
senior subordinated project financing and acquisition notes from an investor
(note 11); and (3) the entity loaned the Company $1,000,000 pursuant to
senior subordinated project financing notes of which $670,000 was outstanding
as of June 30, 1995 (note 10). Interest on such notes aggregated $88,000 for
1995.
Loans payable to affiliates and officers includes $2,441,366 of
interest-bearing unsecured loans at annual interest rates ranging from prime
plus 1% to 13% and maturities ranging from due on demand to November, 1996.
F-19
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 13--RELATED PARTY TRANSACTIONS--(CONTINUED)
In March, 1994, the Company entered into a five-year lease for office
space with an affiliated corporation. The lease agreement was modified
subsequent to year end and provides for a new five-year lease term expiring
in the year 2001. Rent expense under the lease was approximately $58,000 for
the year ended June 30, 1996 (see note 15).
In 1996, the Company constructed and sold homes to two of the Company's
principal shareholders and officers. The homes were sold for amounts equal to
the Company's cost of constructing the homes, including land. In connection
with the sales, the Company accepted unsecured notes aggregating $215,873
from the officers. The loans are repayable two years from the date of closing
and bear interest at 5.88%. Subsequent to June 30, 1996, it was determined by
the Company's Board of Directors that such loans will be forgiven contingent
upon the successful consummation of the Company's initial public offering, as
described in note 16. Compensation expense will be recognized upon resolution
of the contingency. The Company was owed an additional $67,449 on one of the
homes as of June 30, 1996 which was repaid subsequent to year end.
NOTE 14--EMPLOYEE BENEFITS
(A) 401(K) PLAN
In March, 1996, the Company adopted a defined contribution retirement plan
which complies with Section 401(k) of the Internal Revenue Code.
Substantially all employees who have completed 120 days of service with the
Company are eligible to participate in the plan. The plan provides for
Company matching contributions of 25% of the employee's voluntary
contributions, up to a maximum of 6% of the employee's compensation. The
amount expensed for the Company's 25% matching contribution during 1996 was
$2,586.
(B) INCENTIVE COMPENSATION PLANS (UNAUDITED)
In August, 1996, the Board of Directors adopted, subject to shareholder
approval, an incentive compensation program for its employees. One million
shares of the Company's common stock have been reserved for issuance. Under
the program, the Company may periodically grant nonqualified stock options
for common stock to key employees and/or award restricted common stock shares
to certain non-management employees. The restricted common stock awards would
vest over a three-year period, subject to the employee's continued employment
with the Company.
The program also provides for long-term incentive awards in which cash
awards will be paid to key employees at the end of three-year rolling
performance periods, based upon total shareholder return achieved by the
Company as compared to shareholder returns achieved by a broad index of other
publicly held companies.
F-20
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15--COMMITMENTS AND CONTINGENCIES
Rent expense for 1996 aggregated approximately $60,000. Future minimum
lease payments for the years ending June 30 are approximated as follows:
<TABLE>
<CAPTION>
AFFILIATED
COMPANY
OTHER (SEE NOTE 13) TOTAL
----------- -------------- ---------
<S> <C> <C> <C>
1997 ... $21,000 72,000 93,000
1998 ... 21,000 76,000 97,000
1999 ... 20,000 79,000 99,000
2000 ... -- 83,000 83,000
2001 ... -- 22,000 22,000
----------- -------------- ---------
$62,000 332,000 394,000
============ ============== =========
</TABLE>
Minimum lease payments to the affiliated company relate to a lease on the
Company's corporate office space, and are based upon a lease modification
executed in September 1996 (unaudited) as described in note 13.
Rent expense is recognized on a straight-line basis for financial
statement purposes.
The Company and certain subsidiaries are parties to various claims, legal
actions and complaints arising in the ordinary course of business. In the
opinion of management, the disposition of these matters will not have a
material adverse effect on the financial condition of the Company.
The Company is subject to the usual obligations associated with entering
into contracts for the purchase, development and sale of real estate in the
routine conduct of its business. However, at June 30, 1996, the Company was
subject to specific significant project construction and development
contracts with a remaining aggregate commitment of $8,640,000.
The Company is committed, under various letters of credit and performance
bonds, to perform certain development and construction activities and provide
certain guarantees in the normal course of business. Outstanding letters of
credit under these arrangements totaled approximately $3.5 million at June
30, 1996. Performance bonds outstanding as of June 30, 1996 totaled $491,155.
NOTE 16--SUBSEQUENT EVENTS
Effective August, 1996 (unaudited), the Company's Board of Directors
approved an 8.2 to 1 common stock split and an increase in the number of
shares authorized to 41,000,000. Amounts in the accompanying consolidated
financial statements have been restated to give retroactive effect to the
stock split. Due to the retroactive restatement, additional paid-in capital
was negative at June 30, 1994 and 1993, because total amounts paid for shares
at those dates did not exceed restated common stock outstanding amounts,
after the 8.2 to 1 stock split, times the applicable par value.
On July 1, 1996, the Company exercised an option to acquire a parcel of
land in Pembroke Pines, Florida. The purchase price was $3,500,000, funded in
part with a $2,485,000 first mortgage bearing interest at prime plus 1 1/2 %
and due and payable on October 1, 1996 with an option to extend to January 1,
1997.
F-21
<PAGE>
TRANSEASTERN PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 16--SUBSEQUENT EVENTS--(CONTINUED)
The Company intends to conduct an initial public offering by filing a
registration statement on Form S-1 for 3.2 million shares of common stock,
par value $.01 per share, with 2,892,326 shares being sold by the Company and
307,674 shares being sold by certain shareholders of the Company. The Company
will not receive any of the proceeds from the sale of common stock by selling
shareholders. However, there can be no assurances that such offering will be
consummated.
F-22
<PAGE>
TRANSEASTERN PROPERTIES, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
P-1
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following Unaudited Pro Forma Financial Information as of and for the
year ended June 30, 1996 has been presented as if the Company had issued
2,892,326 shares of Common Stock for $9.00 per share in the Offering on July
1, 1995 and utilized the proceeds thereof as described in "Use of Proceeds"
on July 1, 1995, including, the proposed acquisition of certain minority
interests in the Company's Parkside Homes joint venture and in Transeastern
Hollywood Apartments, Ltd. and Transeastern Plantation Apartments, Ltd. In
management's opinion, all adjustments necessary to reflect the above
transaction have been made.
The pro forma financial information is not necessarily indicative of what
the Company's actual financial position and results of operations would have
been as of and for the period indicated, nor does it purport to represent the
future financial position or results of operations of the Company.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1996
----------------------------------------------
PRO FORMA PRO FORMA
ADJUSTMENTS AS ADJUSTED
ACTUAL FOR OFFERING FOR OFFERING
------------ --------------- ---------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF EARNINGS DATA
Revenues .......................................................... $ 105,673 $ 105,673
Expenses .......................................................... 96,732 $ (160)(A) 96,572
Minority interest in income of consolidated subsidiaries ......... (865) 865 (B) --
Interest costs incurred ........................................... 5,232 (911) 4,322
Less: Amounts capitalized ......................................... 4,994 (807) 4,187
Net interest expense .............................................. 238 (104) 134
Net income before income taxes and extraordinary gain ............ 8,076 1,025 9,101
Income tax expense ................................................ 3,075 389 (C) 3,464
Net income before extraordinary gain .............................. 5,001 636 5,637
Extraordinary gain from early extinguishment of debt, net of
income taxes .................................................... -- -- --
Net income ........................................................ 5,001 636 5,637
Dividends on redeemable preferred stock ........................... (411) 411 (D) --
Net income available for common shares ............................ $ 4,590 $ 1,047 $ 5,637
Net income per common and common equivalent share:
Net income before extraordinary gain ............................ $ .61 $ (.07) $ .54
Extraordinary gain ................................................ -- -- --
Net income ........................................................ $ .61 $ (.07) $ .54
Weighted average number of common stock and common stock
equivalents outstanding ......................................... 7,548,443 2,892,326 10,440,769
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents ...................................... $ 3,769 $ 9,187 (E) $ 12,956
Total assets ..................................................... 92,703 8,911 (F) 101,614
Total liabilities ................................................ 74,578 (9,594)(G) 64,984
Minority interest in consolidated subsidiaries ................... 3,738 (2,538)(H) 1,200
Redeemable preferred stock ....................................... 3,502 (3,502)(I) --
Shareholders' equity ............................................. 10,884 24,545 (J) 35,429
</TABLE>
- -----------------------------------------------------------------------------
All of the dollar amounts in the following notes are in thousands, except per
share data.
(A) Reflects a $104 reduction of interest costs expensed, net of amounts
capitalized, relating to the repayment of debt, a $147 reduction in Cost
of Sales due to a reduction in interest costs capitalized to inventory,
net of a $91 increased cost of sales due to purchase account adjustments
relating to the Company's purchase of minority interests in the Company's
joint ventures and limited partnerships.
(B) Reflects the elimination of the minority interest in income of
consolidated subsidiaries relating to the Company's purchase of minority
interests in the Company's joint ventures and limited partnerships.
(C) Reflects adjustment to income tax expense at statutory rate.
P-2
<PAGE>
(D) Reflects the elimination of dividends on preferred stock as the result of
the assumed redemption of the stock as of July 1, 1995.
(E) Reflects increase to cash as the result of the initial public offering,
representing the net effect of the following transactions:
<TABLE>
<S> <C>
Proceeds of initial public offering, net of offering costs .............................. $ 23,498
Purchase of minority interests in joint ventures and limited partnerships (see note (K)) (2,413)
Redemption of preferred stock ........................................................... (3,502)
Repayment of debt (see note (G) below) .................................................. (10,583)
-----------
Net increase in cash and cash equivalents resulting from public offering ............... $ 7,000
</TABLE>
Additional cash flow adjustments which would have resulted if Company had
completed the Offering on July 1, 1995:
<TABLE>
<S> <C>
Increase in cash distributions from joint ventures during Fiscal 1996 as the result of
purchase of minority interests in joint ventures ............................................ 865
Increase in cash due to elimination of preferred stock cash dividends ......................... 411
Increase in cash due to interest cost savings on acquisition and development loans,
subordinated debt and loans to affiliates ................................................... 911
-------
Pro forma adjustment to cash and cash equivalents ............................................. 9,187
</TABLE>
(F) Reflects the following transactions:
<TABLE>
<S> <C>
Increase in cash and cash equivalents ................................................. $9,187
Increase in land inventory relating to purchase accounting adjustments associated
with
purchase of minority interests in joint ventures, net of increase in cost of sales . 384
Reduction in land inventory relating to a decrease in interest costs capitalized,
net of reduction in cost of sales .................................................. (660)
---------
$8,911
</TABLE>
(G) Reflects the following transactions:
<TABLE>
<CAPTION>
<S> <C>
Reduction in acquisition and development loans payable as the result of debt repayments ............ $ (3,654)
Reduction in subordinated debt payable as the result of debt payments ............................... (4,550)
Reduction in other liabilities relating to the repayment of loans payable to affiliates and officers (2,379)
-----------
(10,583)
Increase in notes payable relating to purchase of minority interest in joint venture (see note (K)) 600
Increase in income taxes payable per note (C) above ................................................. 389
-----------
(9,594)
</TABLE>
(H) Reflects the purchase of minority ownership interests in the Company's
joint ventures.
(I) Reflects the redemption of the Company's preferred stock as of July 1,
1995.
(J) Reflects the following transactions:
<TABLE>
<CAPTION>
<S> <C>
Increase in common stock and additional paid in capital resulting
from the Company's initial public offering ......................... $23,498
Increase in net income for fiscal year ending June 30, 1996 ......... 636
Increase in retained earnings relating to the elimination of
dividends
on preferred stock paid during fiscal 1996 ......................... 411
----------
$24,545
</TABLE>
(K) The aggregate purchase price of the minority interests in consolidated
subsidiaries of $3,013 will be paid $2,413 in cash from the proceeds of
the offering and $600 one year from the date of the purchase of these
interests.
P-3
<PAGE>
[INSIDE BACK COVER]
1) This is a picture of various PRISM Awards presented to the Company in 1995
and 1996, and several inset pictures of entry signage at certain communities
developed by the Company.
==============================================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SHAREHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO
MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE HEREOF.
- -------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary ......................... 3
The Offering ............................... 4
Summary Financial Data ..................... 4
Risk Factors ............................... 6
Use of Proceeds ............................ 12
Dividend Policy ............................ 13
Capitalization ............................. 14
Dilution ................................... 15
Selected Financial Data .................... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................. 17
Business ................................... 24
Management ................................. 40
Certain Relationships and Related
Transactions ............................... 45
Principal and Selling Shareholders ........ 49
Shares Eligible for Future Sale ............ 50
Description of Capital Stock ............... 52
Certain United States Federal Tax
Considerations for Non-U.S. Holders of
Common Stock ............................... 54
Underwriting ............................... 56
Legal Matters .............................. 57
Experts .................................... 57
Additional Information ..................... 58
Index to Financial Statements .............. F-1
Unaudited Pro Forma Financial Information .. P-1
</TABLE>
- -----------------------------------------------------------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BY REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
===============================================================================
===============================================================================
3,200,000 SHARES
[LOGO]
TRANSEASTERN
PROPERTIES, INC.
COMMON STOCK
- -----------------------------------------------------------------------------
P R O S P E C T U S
- -----------------------------------------------------------------------------
BT Securities Corporation
Cruttenden Roth
Incorporated
Janney Montgomery Scott Inc.
, 1996
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a list of the estimated expenses (other than underwriting
discounts and commissions and the Representative's non-accountable expense
allowance) to be paid by the Registrant in connection with the issuance and
distribution of the securities being registered herein.
SEC REGISTRATION FEE ............................ $ 14,014(1)
NASD Filing Fee ................................. 3,663
NASDAQ National Market Quotation Fee ............ 50,000
Legal Fees and Expenses* ........................ 160,000
Registrar and Transfer Agent Fees and Expenses* 7,000
Accounting Fees and Expenses* ................... 75,000
Printing and Engraving Expenses* ................ 60,000
Blue Sky Qualification Fees and Expenses ....... 40,000
Miscellaneous ................................... 50,000
-------------
Total* ........................................ $459,677
=============
- -----------------------------------------------------------------------------
* Estimated
(1) Of such expenses, approximately $11,639 is expected to be paid by the
Registrant and approximately $2,375 is expected to be paid by the
shareholders who are selling Common Stock of the Registrant in this
Offering.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0831 of the Florida Business Corporation Act (the "Florida
Act") provides that a director is not personally liable for monetary damages
to the corporation or any person for any statement, vote, decision or failure
to act regarding corporate management or policy, by a director, unless: (a)
the director breached or failed to perform his duties as a director; and (b)
the director's breach of, or failure to perform, those duties constitutes:
(i) a violation of criminal law unless the director had reasonable cause to
believe his conduct was lawful or had no reasonable cause to believe his
conduct was unlawful; (ii) a transaction from which the director derived an
improper personal benefit, either directly or indirectly; (iii) a
circumstance under which the director is liable for an improper distribution;
(iv) in a proceeding by, or in the right of the corporation to procure a
judgment in its favor or by or in the right of a shareholder, conscious
disregard for the best interests of the corporation, or willful misconduct;
or (v) in a proceeding by or in the right of someone other than the
corporation or a shareholder, recklessness or an act or omission which was
committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety or property.
Section 607.0850 of the Florida Act provides that a corporation shall have
the power to indemnify any person who was or is a party to any proceeding
(other than an action by, or in the right of, the corporation), by reason of
the fact that he is or was a director, officer or employee or agent of the
corporation against liability incurred in connection with such proceeding if
he acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. Section 607.0850 also provides that a corporation shall
have the power to indemnify any person, who was or is a party to any
proceeding by, or in the right of, the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Under Section 607.0850,
indemnification is authorized if such person acted in good faith
II-1
<PAGE>
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification may be made in
respect of any claim, issue, or matter as to which such person is adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability, but
in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court deems
proper. To the extent that a director, officer, employee or agent has been
successful on the merits or otherwise in defense of any of the foregoing
proceedings, or in defense of any claim, issue or matter therein Section
607.0850 provides that, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith. Under Section 607.0850,
any indemnification, unless pursuant to a determination by a court, shall be
made by the corporation only as authorized in the specific case upon a
determination that the indemnification of the director, officer, employee or
agent is proper under the circumstances because he has met the applicable
standard of conduct. Notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination by the corporation in
a specific case, Section 607.0850 permits a director, officer, employee or
agent of the corporation who is or was a party to a proceeding to apply for
indemnification to the appropriate court and such court may order
indemnification if it determines that such person is entitled to
indemnification under the applicable standard.
Section 607.0850 also provides that a corporation has the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation against any liability
asserted against him and incurred by him in any such capacity or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of Section
607.0850.
The Registrant's bylaws provide that it shall indemnify its officers and
directors and former officers and directors to the full extent permitted by
law.
The Registrant has entered into indemnification agreements with its
directors and certain of its officers. The indemnification agreements
generally provide that the Registrant will pay certain amounts incurred by an
officer or director in connection with any civil or criminal action or
proceeding and specifically including actions by or in the name of the
Registrant (derivative suits) where the individual's involvement is by reason
of the fact that he was or is an officer or director. Under the
indemnification agreements, an officer or director will not receive
indemnification if such person is found not to have acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Registrant. The agreements provide a number of procedures
and presumptions used to determine the officer's or director's right to
indemnification and include a requirement that in order to receive an advance
of expenses, the officer or director must submit an undertaking to repay any
expenses advanced on his behalf that are later determined he was not entitled
to receive.
The Registrant's directors and officers are covered by insurance policies
indemnifying them against certain liabilities, including liabilities under
the federal securities laws (other than liability under Section 16(b) of the
Exchange Act), which might be incurred by them in such capacities.
The Underwriting Agreement, filed as Exhibit 1.1 to this Registration
Statement, provides for indemnification by the Underwriter of the
Registrant's directors, officers and controlling persons against certain
liabilities that may be incurred in connection with the offering, including
liabilities under the Securities Act of 1933, as amended.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Except as hereinafter set forth, there have been no sales of unregistered
securities during the last three years by the Registrant. (The following
information has been adjusted to reflect an 8.2-for-1 stock split of the
Common Stock effected on August 15, 1996). The following transactions were
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof.
II-2
<PAGE>
(a) On October 20, 1993 the Registrant issued a warrant to purchase up to
74,308 shares of Common Stock at an exercise price of $.01 per share to
Forrest Hamilton in exchange for his performance of certain services on the
Registrant's behalf.
(b) On January 3, 1994 the Registrant issued a warrant to purchase up to
445,424 shares of Common Stock at an exercise price of $.01 per share to G.
Patrick Savin as an inducement to him to provide certain financial
accommodations to the Registrant.
(c) On December 6, 1994, the Registrant sold an aggregate of 30,000 shares
of its Series B Preferred Stock, par value $.01 per share (the "Series B
Preferred") at a price of $100 per share (yielding gross proceeds of
$3,000,000), and warrants to purchase an aggregate of approximately 567,587
shares of Common Stock at an exercise price of $.01 per share (the "Series B
Warrants"). The number of shares of Series B Preferred and Series B Warrants
sold and the names of the Registrant's shareholders to whom such Series B
Preferred and Series B Warrants were issued are set forth on the following
table:
<TABLE>
<CAPTION>
NUMBER OF SERIES B NUMBER OF SERIES B
NAME PREFERRED SHARES WARRANTS
- --------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Daniel J. Andreacci ............................... 250 4,733
Brancaleone Family Partnership .................... 4,000 75,676
Albert Bruno, Jr. ................................. 1,000 18,918
Les Campbell ...................................... 250 4,733
Anthony Ciabattoni ................................ 2,000 37,837
Philip J. Ciabattoni .............................. 300 5,670
Otto Claricurzio .................................. 250 4,736
Audrey Cohen ...................................... 1,000 18,918
Neil Eisner ....................................... 250 4,733
Robert J. Falcone, Trustee of the Robert J. Falcone
Revocable Living Trust 9/1/93 ................... 5,000 94,596
Kenneth Ginsberg .................................. 1,500 28,377
David W. Gove ..................................... 250 4,733
Larry T. Nicholson ................................ 250 4,733
Bruce Phillips, M.D. & Kim Phillips, JTWROS ...... 600 11,351
Anthony Prezzamolo ................................ 1,000 18,918
Ray Stromback ..................................... 200 3,787
Robert J. Falcone, Trustee of the Robert J. Falcone
Revocable Living Trust 9/1/93 ................... 11,900 225,138
TOTAL ........................................... 30,000 567,587
</TABLE>
(d) In March and April, 1996, the Registrant sold to 4 private investors
an aggregate of 321,629 shares of Common Stock for $9.33 per share, yielding
gross proceeds of approximately $3,000,798. The names of such Common Stock
shareholders and the amount of shares received by each are set forth on the
following table:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME COMMON STOCK
- --------------------------------------------------- --------------------
<S> <C>
Anthony Ciabattoni ................................ 300,169
John Cucci ........................................ 5,363
Bill Mitchell ..................................... 5,363
Robert J. Falcone, Trustee of the Robert J. Falcone
Revocable Living Trust 9/1/93 ................... 10,734
TOTAL ........................................... 321,629
</TABLE>
In April and May, 1996, in connection with the Registrant's sale of such
Common Stock, the Registrant agreed to issue to such investors warrants to
purchase additional shares of Common Stock (the "Common Stock Warrants") at
an exercise price of $.01 per share if the initial public offering price
II-3
<PAGE>
is less than certain targeted amounts. The number of shares, if any, for
which the Common Stock Warrants are exercisable shall be determined on the
effective date of this offering. Assuming an initial public offering price of
$9.00 per share (which is the midpoint of the estimated range of the initial
public offering price), the Common Stock Warrants will be exercisable for an
aggregate of 95,038 shares of Common Stock.
(e) On May 30, 1996, the Registrant reissued warrants to the holders of
outstanding shares of its Series A Redeemable Preferred Stock, par value $.01
per share (the "Series A Preferred") to purchase an aggregate of 171,462
shares of its Common Stock at an exercise price of $.01 per share (the
"Series A Warrants"). The Series A Warrants were reissued in connection with
the redemption of certain shares of the Series A Preferred by the Registrant
pursuant to certain of its contractual redemption rights and the related
cancellation of certain warrants held by the holders of the Series A
Warrants. The number of Series A Warrants issued and the names of the
Registrant's shareholders to whom the Series A Warrants were issued are set
forth on the following table:
<TABLE>
<CAPTION>
NUMBER OF
NAME SERIES A WARRANTS
- -------------------------- ------------------
<S> <C>
Christopher Allick ....... 34,292
Andrew Whittaker ......... 9,799
David Eisner ............. 19,590
David Losito ............. 9,799
The Handler Family Trust 97,982
TOTAL .................. 171,462
</TABLE>
ITEM 16. EXHIBITS
The following exhibits either are filed herewith or incorporated by
reference to documents previously filed or will be filed by amendment, as
indicated below:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------------------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement**
3.1 Amended and Restated Articles of Incorporation of the Registrant
3.2 Amended and Restated Bylaws of the Registrant
4.1 Form of Common Stock Certificate
4.2 Form of Warrant Agreement between Transeastern Properties, Inc. and the Representatives (including
the form of Representatives' Warrant Certificate)**
5.1 Opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
10.1 Series A Redeemable Preferred Stock and Warrant Purchase Agreement dated June 2, 1993, with schedules
and exhibits
10.2 Form of Amended and Restated Series A Warrant to Purchase Common Stock dated May 30, 1996*
10.3 Shareholders' Agreement dated June 2, 1993 between Transeastern Properties, Inc., Arthur J. Falcone
and Marcy Falcone, Edward W. Falcone and Diana Falcone, Philip Cucci, Jr. and Linda Cucci, Mezzonen,
S.A., The Handler Family Trust DTD 9/12/91, Christopher Allick, Andrew Whittaker, David F. Eisner
and David J. Losito*
10.4 Series B Redeemable Preferred Stock and Warrant Purchase Agreement dated December 6, 1994, with schedules
and exhibits
10.5 Form of Series B Warrant to Purchase Common Stock*
10.6 Common Stock Purchase Agreement dated April 15, 1996 between Transeastern Properties, Inc., Arthur
J. Falcone, Edward W. Falcone, Philip Cucci, Jr., Anthony Ciabattoni, John Cucci, Bill Mitchell and
Robert J. Falcone, Trustee of the Robert J. Falcone Revocable Living Trust 9/1/93, with schedules
and exhibits
II-4
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- -------------------------------------------------------------------------------------------------------------
10.7 Form of Common Stock Warrant to Purchase Common Stock*
10.8 Joint Venture Agreement dated February 16, 1994 between Transeastern Pembroke Properties, Inc. and
H.A. Cumber of Pembroke Pines, Inc., as amended
10.9 Aberdeen Acquisition and Development Loan Agreement dated September 25, 1995 between Transeastern
Aberdeen Properties, Inc. and Berkeley Federal Bank & Trust, F.S.B., including related Promissory
Note, Unconditional Guaranty and Purchase Money First Mortgage, Security Agreement, Financing Statement
and Assignment of Leases, Rent and Income
10.10 Loan Agreement dated March 29, 1996 between Transeastern Pembroke Villages, Inc. and AMRESCO Funding
Corporation (with exhibits), including related letter, Promissory Note, two Security Agreements, two
Assignments of Leases, Rents and Profits, two Collateral Assignments of Rights and Agreements Affecting
Real Estate, Pledge Agreement, two Mortgage, Assignment of Rents and Security Agreements, and Guaranty
10.11 Loan Agreement and two Construction Loan Agreements dated September 1996 between Transeastern Pembroke
Villages, Inc. and Chase Federal Bank, including related Tri-Party Agreement, three Guaranty Agreements,
three Real Estate Mortgage Assignment and Security Agreements and two Promissory Notes
10.12 Loan Agreement dated November 29, 1995 between Transeastern Plantation Apartments, Ltd. and Heller
Financial, Inc., including related Promissory Note, Assignment of Partnership Interest and Guaranty
10.13 Loan Agreement dated February 23, 1995 between Transeastern Properties at the Cove, Inc. and Heller
Financial, Inc., including related Promissory Note and Stock Pledge Agreement
10.14 Form of Indemnification Agreement dated June 2, 1993*
10.15 Registration Rights Agreement among the Registrant and certain shareholders of the Registrant
10.16 Notice of Election and Consent of Holders of the Series A Redeemable Preferred Stock, Series B Redeemable
Preferred Stock and Common Stock
10.17 Transeastern Properties, Inc. 1996 Stock Option and Shareholder Value Plan
10.18 Lease Agreement between University Financial Plaza Limited and the Registrant
10.19 Promissory Note of the Registrant to B & E Management, Inc. in the original principal amount of $100,000
10.20 Promissory Note of the Registrant to Robert Falcone, as Trustee, in the original principal amount
of $200,000
10.21 Promissory Note of the Registrant to Robert Falcone, as Trustee, in the original principal amount
of $100,000
10.22 Promissory Note of the Registrant to Anthony Ciabottani in the original principal amount of $600,000
10.23 Promissory Note of the Registrant to Anthony Ciabottani in the original principal amount of $1,000,000
10.24 Promissory Note of the Registrant to Anthony Ciabottani in the original principal amount of $1,000,000**
10.25 Promissory Note of the Registrant to Arthur Falcone in the original principal amount of $124,000
10.26 Promissory note of the Registrant to Edward Falcone in the original principal amount of $156,512
10.27 Promissory Note of the Registrant to Philip Cucci in the original principal amount of $75,997
21.1 Subsidiaries of the Registrant
II-5
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- -------------------------------------------------------------------------------------------------------------
23.1 Consent of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
23.2 Consent of KPMG Peat Marwick LLP
24.1 Power of Attorney (included with signature pages to this Registration Statement)*
27.1 Financial Data Schedule*
</TABLE>
- -----------------------------------------------------------------------------
* Previously filed
** To be filed by amendment
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such name as required by the Underwriters to
permit prompt delivery to each purchaser.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Coral Springs, State of Florida, on the 24th day of October, 1996.
TRANSEASTERN PROPERTIES, INC.
By: /s/ ARTHUR FALCONE
Arthur Falcone
President and Chairman of the
Board
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------------
<S> <C> <C>
/s/ ARTHUR FALCONE President and Chairman of the Board October 24, 1996
- --------------------
Arthur Falcone
* Director, Executive Vice President October 24, 1996
Philip Cucci and Chief Operating Officer
* Director and Executive Vice President October 24, 1996
Edward Falcone
/s/ LES CAMPBELL Chief Financial Officer October 24, 1996
- --------------------
Les Campbell (Principal Financial and
Accounting Officer)
* Director October 24, 1996
Christopher Allick
* Director October 24, 1996
Anthony Ciabattoni
</TABLE>
- -------------------------------------------------------------------------------
*BY: /S/ EDWARD FALCONE
Edward Falcone
(attorney-in-fact
pursuant
to Power of Attorney)
II-7
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
TRANSEASTERN PROPERTIES, INC.
PURSUANT TO SECTIONS 607.1006 AND 607.1007
OF THE FLORIDA BUSINESS CORPORATION ACT
Transeastern Properties, Inc., a Florida corporation (the
"Corporation"), hereby certifies that these Amended and Restated Articles of
Incorporation were duly adopted by the shareholders of the Corporation entitled
to vote thereon by written consent without a meeting, pursuant to Section
607.0704 of the Florida Business Corporation Act, on October 3, 1996.
ARTICLE I - NAME AND ADDRESS
The name of this corporation is Transeastern Properties, Inc. (the
"Corporation"). The address of the principal office and the mailing address of
this Corporation is 3300 University Drive, Suite 001, Coral Springs, Florida
33065.
ARTICLE II - PURPOSE
This Corporation is organized for the purpose of transacting any and
all lawful business for corporations organized under the Florida Business
Corporation Act.
ARTICLE III - CAPITAL STOCK
3.1 AUTHORIZED CAPITAL STOCK. The aggregate number of shares
which this Corporation shall have authority to issue is one hundred twenty
million (120,000,000) shares, consisting of (a) one hundred million
(100,000,000) shares of Common Stock, par value $0.01 per share (the "Common
Stock"); and (b) twenty million (20,000,000) shares of preferred stock, par
value $.01 per share (the "Preferred Stock"), issuable in one or more series as
hereinafter provided.
3.2 TERMS OF PREFERRED STOCK. Shares of Preferred Stock may be issued
from time to time in one or more series. The Board of Directors is authorized,
by resolution adopted and
<PAGE>
filed in accordance with law, to provide for the issue of such series of shares
of Preferred Stock. Each series of shares of Preferred Stock (a) may have such
voting powers, full or limited, or may be without voting powers; (b) may be
subject to redemption at such time or times and at such prices; (c) may be
entitled to receive dividends (which may be cumulative or non-cumulative) at
such rate or rates, on such conditions and at such times, and payable in
preference to, or in such relation to, the dividends payable on any other class
or classes or series of stock; (d) may have such rights upon the dissolution of,
or upon any distribution of the assets of, the Corporation; (e) may be made
convertible into, or exchangeable for, shares of any other class or classes or
of any other series of the same or any other class or classes of stock of the
Corporation or such other corporation or other entity at such price or prices or
at such rates of exchange and with such adjustments; (f) may be entitled to the
benefit of a sinking fund to be applied to the purchase or redemption of shares
of such series in such amount or amounts; (g) may be entitled to the benefit of
conditions and restrictions upon the creation of indebtedness of the Corporation
or any subsidiary, upon the issue of any additional shares (including additional
shares of such series or of any other series) and upon the payment of dividends
or the making of other distributions on, and the purchase, redemption or other
acquisition by the Corporation or any subsidiary of, any outstanding shares of
the Corporation; and (h) may have such other relative, participating, optional
or other special rights, qualifications, limitations or restrictions thereof, in
each case as shall be stated in said resolution or resolutions providing for the
issue of such shares of Preferred Stock. Shares of Preferred Stock of any series
that have been redeemed or repurchased by the Corporation (whether through the
operation of a sinking fund or otherwise) or that, if convertible or
exchangeable, have been converted or exchanged in accordance with their terms
shall be retired and have the status of authorized and unissued shares of
Preferred Stock of the same series and may be reissued as a part of the series
of which they were originally a part or may, upon the filing of an appropriate
certificate with the Secretary of
-2-
<PAGE>
State of the State of Florida be reissued as part of a new series of shares of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of shares of Preferred Stock, all
subject to the conditions or restrictions on issuance set forth in the
resolution or resolutions adopted by the Board of Directors providing for the
issue of any series of shares of Preferred Stock.
ARTICLE IV - REGISTERED OFFICE AND AGENT
The street address of the registered office of this Corporation and the
name of the registered agent of this Corporation at such office are:
NAME ADDRESS
---- -------
CSC Network 1201 Hays Street
Tallahassee, Florida 32301
ARTICLE V - SPECIAL MEETINGS OF SHAREHOLDERS
The shareholders of this Corporation may only call a special meeting of
shareholders if the holders of at least 50% of the voting power of all of the
shares of the capital stock of the Corporation all of the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting
sign, date and deliver to this Corporation's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to be
held.
ARTICLE VI - BOARD OF DIRECTORS
6.1 FUNCTION. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors. Directors must be
natural persons who are at least 18 years of age but need not be residents of
Florida or shareholders of the Corporation.
6.2 NUMBER OF DIRECTORS.
(i) The Board of Directors of the Corporation shall consist of
not less than four persons, the exact number to be determined from time to time
by resolution adopted
-3-
<PAGE>
by the affirmative vote of a majority of all directors of the Corporation then
holding office at any special or regular meeting. Any such resolution increasing
or decreasing the number of directors shall have the effect of creating or
eliminating a vacancy or vacancies, as the case may be, provided that no such
resolution shall reduce the number of directors below the number then holding
office and provided further that no such resolution may increase or decrease the
number of directors by more than 30% of the number of directors last approved by
the shareholders at any special or annual meeting of the shareholders of the
Corporation.
(ii) Commencing with the first annual meeting of shareholders of the
Corporation following the consummation of the initial offering and sale by the
Corporation of shares of its common stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended, the Board of Directors
shall be divided into three (3) classes; designated Class I, Class II and Class
III, with each class having as nearly an equal number of directors as possible.
At the annual meeting, directors of Class I shall be initially elected to hold
office for a one-year term, directors of Class II shall be initially elected to
hold office for a two-year term, and directors of Class III shall be initially
elected to hold office for a three-year term with each director in each class to
hold office until his successor is elected and qualified, or until his earlier
resignation, removal from office or death. At each succeeding annual meeting of
shareholders beginning at the annual meeting after such first meeting, the
successors of the class of directors whose term expires at the meeting will be
elected to hold office for a term expiring at the annual meeting of shareholders
held in the third year following the year of their election or until their
successors are duly elected and qualified. The original allocation among the
three classes of directors elected at such first annual meeting shall be
determined by a resolution of the Board of Directors.
6.3 ELECTION OF DIRECTORS. Directors shall be elected at the annual
meeting of shareholders, but when the annual meeting is not held or directors
are not elected thereat, they
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<PAGE>
may be elected at a special meeting called and held for that purpose. Directors
shall be elected by a plurality of the votes cast by the shares entitled to vote
in the election at a meeting at which a quorum is present.
6.4 VACANCIES. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled only by the Board of Directors (and not by the shareholders), by
resolution adopted by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors; provided,
however, that if not so filled, any such vacancy shall be filled by the
shareholders at the next annual meeting or at a special meeting called for that
purpose. Any director so elected or appointed shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred, as the case may be, and until
such director's successor is elected and qualified.
6.5 REMOVAL OF DIRECTORS. At a meeting of shareholders, any
director or the entire Board of Directors may be removed, solely with cause and
provided the notice of the meeting states that one of the purposes of the
meeting is the removal of the director. A director may be removed only if the
number of votes cast to remove him constitutes at least 66 2/3% of the voting
power of all of the shares of capital stock then entitled to vote generally in
the election of directors, voting together as a single class. For purposes of
this Section 6.5 of Article VI, "cause" shall mean the failure of a director to
substantially perform such director's duties to the Corporation (other than any
such failure resulting from incapacity due to physical or mental illness) or the
willful engaging by a director in gross misconduct injurious to the Corporation.
ARTICLE VII - INDEMNIFICATION
This Corporation shall indemnify any director, or any former director
of this Corporation, to the fullest extent permitted by law.
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<PAGE>
ARTICLE VIII - BYLAWS
The Bylaws of the Corporation may be altered, amended or repealed, and
new Bylaws adopted, by the affirmative vote of at least a majority of the
members of the Board of Directors then in office or by the affirmative vote of
the holders of not less than 66 2/3% of the voting power of all shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors, voting as a single class.
ARTICLE IX - AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation hereby reserves the right from time to time to amend,
alter, change or repeal any provision contained in these Articles of
Incorporation in any manner permitted by law and all rights and powers conferred
upon shareholders, directors and officers herein are granted subject to this
reservation. In addition to any vote otherwise required by law, any such
amendment, alteration, change or repeal shall require approval of both (a) the
Board of Directors by the affirmative vote of a majority of the members then in
office and (b) the holders of a majority of the voting power of all the shares
of capital stock of the Corporation entitled to vote generally in the election
of directors, voting together as a single class; provided, however, that any
proposal to amend, alter, change or repeal the provisions of Article VI and this
Article IX shall require the affirmative vote of the holders of at least 66 2/3%
of the voting power of all the shares of capital stock of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class.
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation on October 4, 1996.
___________________________________
Arthur Falcone,
President and Chairman of the Board
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<PAGE>
ACCEPTANCE OF APPOINTMENT
OF
REGISTERED AGENT
I hereby accept the appointment as registered agent contained in the
foregoing Articles of Incorporation and state that I am familiar with and accept
the obligations of Section 607.0501 of the Florida Statutes.
By:__________________________________
Its Agent:___________________________
As Registered Agent:_________________
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AMENDED AND RESTATED BYLAWS
OF
TRANSEASTERN PROPERTIES, INC.,
A FLORIDA CORPORATION
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
ARTICLE I MEETINGS OF SHAREHOLDERS.................................................... 1
Section 1. Annual Meeting.............................................................. 1
Section 2. Special Meeting............................................................. 1
Section 3. Place....................................................................... 2
Section 4. Notice...................................................................... 2
Section 5. Shareholder Quorum.......................................................... 2
Section 6. Shareholder Voting.......................................................... 3
Section 7. Fixing Record Dates......................................................... 3
Section 8. Proxies..................................................................... 3
Section 9. Action by Written Consent of Shareholders Without Meeting................... 3
Section 10. Notification of Nomination of Directors..................................... 4
Section 11. Notice of Business at Annual Meetings....................................... 5
ARTICLE II DIRECTORS................................................................... 6
Section 1. Function.................................................................... 6
Section 2. Compensation................................................................ 6
Section 3. Presumption of Assent....................................................... 6
Section 4. Number of Directors......................................................... 6
Section 5. Election of Directors....................................................... 7
Section 6. Vacancies................................................................... 7
Section 7. Removal of Directors........................................................ 7
Section 8. Quorum and Transaction of Business.......................................... 7
Section 9. Place of Meeting............................................................ 8
Section 10. Time, Notice and Call of Meetings........................................... 8
Section 11. Action Without a Meeting.................................................... 8
ARTICLE III COMMITTEES........................................................................... 9
Section 1. Executive Committee......................................................... 9
Section 2. Meetings of Executive Committee............................................. 9
Section 3. Other Committees............................................................ 9
ARTICLE IV OFFICERS............................................................................. 10
Section 1. General Provisions.......................................................... 10
Section 2. Term of Office.............................................................. 10
Section 3. Chairman of the Board....................................................... 10
Section 4. Chief Executive Officer..................................................... 10
Section 5. President................................................................... 10
Section 6. Chief Operating Officer..................................................... 11
Section 7. Vice President.............................................................. 11
<PAGE>
Section 8. Secretary................................................................... 11
Section 9. Treasurer................................................................... 11
Section 10. Assistant and Subordinate Officers; Special
Officers to the Chairman of the Board................................................ 12
Section 11. Duties of Officers May be Delegated......................................... 12
ARTICLE V SHARE CERTIFICATE AND SEAL.................................................. 12
Section 1. Form and Execution.......................................................... 12
Section 2. Registration of Transfer.................................................... 13
Section 3. Lost, Stolen or Destroyed Certificates...................................... 13
Section 4. Seal........................................................................ 13
ARTICLE VI DISTRIBUTIONS........................................................................ 13
ARTICLE VII MISCELLANEOUS PROVISIONS............................................................. 13
Section 1. Fiscal Year................................................................. 13
Section 2. Resignation................................................................. 14
Section 3. Voting Upon Stocks of Other Corporations.................................... 14
ARTICLE VIII CORPORATE RECORDS, SHAREHOLDERS'
INSPECTION RIGHTS; FINANCIAL INFORMATION............................................. 14
Section 1. Corporate Records........................................................... 14
Section 2. Shareholders' Inspection Rights............................................. 15
Section 3. Financial Statements for Shareholders....................................... 15
Section 4. Other Reports to Shareholders............................................... 16
ARTICLE IX INDEMNIFICATION...................................................................... 16
Section 1. Right to Indemnification.................................................... 16
Section 2. Advancement of Expenses..................................................... 17
Section 3. Procedure for Indemnification and Obtaining
Advancement of Expenses.............................................................. 17
Section 4. Other Rights, Continuation of Right to
Indemnification and Advancements..................................................... 17
Section 5. Insurance................................................................... 18
Section 6. Savings Clause.............................................................. 18
Section 7. Terms....................................................................... 18
ARTICLE X AMENDMENT................................................................... 19
</TABLE>
<PAGE>
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the date, time and place
designated by the Board of Directors.
SECTION 2. SPECIAL MEETING.
(a) Special meetings of the shareholders shall be held when directed by
the Chairman of the Board or the Board of Directors or when requested in writing
by shareholders holding at least 50% of the voting power of all of the
corporation's capital stock having the right and entitled to vote at such
meeting. The call for the meeting shall be issued by the secretary, unless the
Chairman of the Board, the Board of Directors or the shareholders requesting the
calling of the meeting designate another person to do so. Only business within
the purposes described in the notice required in Section 4 of this Article I may
be conducted at a special shareholders' meeting.
(b) Any shareholder of record seeking to have the shareholders request
a special meeting may, by written notice to the secretary, request the Board of
Directors to fix a record date pursuant to Section 7 of this Article I. The
Board of Directors shall promptly, but in all events within 10 business days
after the date upon which such a request is received, adopt resolutions fixing
the record date. In the event of the delivery, in the manner provided by Section
7 of this Article I, to the corporation of such a request or requests and/or any
related revocation or revocations, the corporation shall engage nationally
recognized independent inspectors of elections for the purpose of promptly
performing a ministerial review of the validity of the requests and revocations.
Every written request for a special meeting shall set forth the purpose or
purposes for which the special meeting is requested, the name and address, as
they appear in the corporation's books, of each shareholder making the request,
the class and number of shares of the corporation which are owned of record by
each such shareholder, and shall bear the date of signature of each such
shareholder. No such request shall be effective to request such a meeting
unless, within 60 days of any record date established in accordance with Section
7 of this Article I, a written request signed by a sufficient number of record
holders as of such date to request a special meeting in accordance with Section
2(a) of this Article I and, if applicable, the Articles of Incorporation are
delivered to the corporation in the manner prescribed in this Article I. For the
purposes of permitting a prompt ministerial review by the independent
inspectors, no request by shareholders for a special meeting shall be effective
until such date as the independent inspectors certify to the corporation that
the requests delivered to the corporation in accordance with this Article I
represent at least the minimum number of shares that would be necessary to
request such meeting. Within 10 business days after the independent inspectors
deliver such a certified report to the corporation, the Board of Directors shall
adopt a resolution calling a special meeting of the shareholders and fixing a
record date for such meeting in accordance with Section 7 of this Article I. In
setting a meeting date, the Board of Directors may consider such factors as it
deems relevant within the good faith exercise of its business judgment
including, without limitation, the nature of the action proposed
<PAGE>
to be taken, the facts and circumstances surrounding the request, and any plan
of the Board of Directors to call a special or annual meeting of shareholders
for the conduct of related business. Nothing contained in this section shall in
any way be construed to suggest or imply that the Board of Directors or any
shareholder shall not be entitled to contest the validity of any request or
revocation thereof, or to take any other action (including, without limitation,
the commencement, prosecution or defense of any litigation with respect
thereto).
SECTION 3. PLACE. Meetings of the shareholders shall be held at the
principal office of the corporation or as determined by the Chairman of the
Board, unless otherwise designated by resolution from time to time by the Board
of Directors.
SECTION 4. NOTICE. A written notice of each meeting of shareholders,
signed by the secretary, president or the person authorized to call the meeting,
shall be mailed to each shareholder having the right and entitled to vote at the
meeting at the address as it appears on the records of the corporation, not less
than 10 nor more than 60 days before the date set for the meeting. The notice
shall state the time and place the meeting is to be held. A notice of a special
meeting shall also state the purposes of the meeting. A notice of meeting shall
be sufficient for that meeting and any adjournment of it. If a shareholder
transfers any shares after the notice is sent, it shall not be necessary to
notify the transferee. All shareholders may waive notice of a meeting before, at
or after the meeting.
SECTION 5. SHAREHOLDER QUORUM. Except as otherwise required by law, or
by the Articles of Incorporation, a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting from time to time and place to place without further notice
until a quorum is obtained. Except as otherwise required by law, or by the
Articles of Incorporation, a majority of the outstanding shares entitled to vote
on a matter shall be present, in person or by proxy, at all meetings of the
shareholders to constitute a quorum for the transaction of business on such
matter, except to adjourn. When a specified item of business is required to be
voted on separately by a particular class or series of stock, the presence of a
majority of the shares of such class or series shall constitute a quorum for the
transaction of such item of business by that class or series. If less than a
quorum of shares entitled to vote on a matter, as above defined, shall be
present at the time and place for which a meeting shall be called, the Chairman
of the Board, chief executive officer or secretary or the holders of a majority
of the shares represented may adjourn any such meeting from time to time without
notice other than by announcement at such meeting, until the number of shares
requisite to constitute a quorum shall be present. At any adjourned meeting at
which a quorum, as above defined, shall be present, in person or by proxy, any
business may be transacted which might have been transacted at the meeting as
originally called. Once a share is represented for any purpose at a meeting, it
is deemed present for quorum purposes for the remainder of the meeting and for
any adjournment of that meeting unless a new record date is or must be set for
that adjourned meeting.
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<PAGE>
SECTION 6. SHAREHOLDER VOTING. If a quorum is present, action on a
matter is approved and shall be the act of the shareholders if the votes cast
favoring the action exceed the votes cast against the action, except as
otherwise provided in Section 6 of Article II or the Articles of Incorporation
or as required by law. Except as otherwise provided in the Articles of
Incorporation or as required by law, each outstanding share shall be entitled to
one vote on each matter submitted to a vote at a meeting of shareholders. The
books of record of shareholders shall be produced at a shareholders' meeting
upon the request of any shareholder.
SECTION 7. FIXING RECORD DATES. For the purpose of determining
shareholders entitled (a) to notice of or to vote at any meeting of shareholders
or any adjournment thereof, (b) to request a special meeting of shareholders
pursuant to Section 2 of this Article I, (c) to act by written consent, (d) to
receive payment of any dividend, or (e) to make a determination of shareholders
for any other proper purpose, the Board of Directors shall have the power to fix
a date, not more than 60 days (or such longer period as may be permitted by
current or future law) prior to the date on which the particular action
requiring a determination of shareholders is to be taken, as the record date for
any such determination of shareholders. A record date for the determination of
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof shall not be a date less than 10 days prior to such
meeting. In setting a record date, whether in response to a request from a
shareholder or otherwise, the Board of Directors may consider such factors as it
deems relevant within the good faith exercise of its business judgment
including, without limitation, the nature of the action proposed to be taken,
the facts and circumstances surrounding the request, and any plan of the Board
of Directors to call a special or annual meeting of shareholders for the conduct
of related business. In any case where a record date is set under any provision
of this Article I, only shareholders of record on the record date shall be
entitled to participate in the action for which the determination of
shareholders of record is made, and, if the record date is set for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, only such shareholders of record shall be entitled to such notice
or vote, notwithstanding any transfer of any shares on the books of the
corporation after such record date.
SECTION 8. PROXIES. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of proxy will be effective when received by the corporation's
secretary or other officer or agent authorized to tabulate votes. If a proxy
designates two or more persons to act as proxies, a majority of these persons
present at the meeting, or if only one is present, that one, has all of the
powers conferred by the instrument upon all the persons designated unless the
instrument otherwise provides. No proxy shall be valid more than 11 months after
the date of its execution unless a longer term is expressly stated in the proxy.
SECTION 9. ACTION BY WRITTEN CONSENT OF SHAREHOLDERS WITHOUT MEETING.
Any shareholder of record seeking to have the shareholders authorize or take
corporate action by written consent may, by written notice to the secretary,
request the Board of Directors to fix a record date pursuant to Section 7 of
this Article I. The Board of Directors shall promptly, but
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<PAGE>
in all events within 10 business days after the date on which such a request is
received, adopt a resolution fixing the record date. In the event of the
delivery, in the manner provided by this Section, to the corporation of a
consent or consents by shareholders to action without a meeting and/or any
related revocation or revocations, the corporation shall engage nationally
recognized independent inspectors of elections for the purpose of promptly
performing a ministerial review of the validity of the consents and revocations.
For the purpose of permitting a prompt ministerial review by the independent
inspectors, no consent by shareholders to action without a meeting shall be
effective until such date as the independent inspectors certify to the
corporation that the consents delivered to the corporation represent at least
the minimum number of shares that would be necessary to take action without a
meeting. Nothing contained in this Section 9 shall in any way be construed to
suggest or imply that the Board of Directors or any shareholder shall not be
entitled to contest the validity of any consent or revocation thereof, or to
take any other action (including, without limitation, the commencement,
prosecution or defense of any litigation with respect thereto). Within 10 days
after obtaining an authorization of an action by written consent, notice shall
be given to those shareholders who have not consented in writing or who are not
entitled to vote on the action. The notice shall fairly summarize the material
features of the authorized action. If the action creates dissenters' rights, the
notice shall contain a clear statement of the right of dissenting shareholders
to be paid the fair value of their shares upon compliance with and as provided
for by the Florida Business Corporation Act.
SECTION 10. NOTIFICATION OF NOMINATION OF DIRECTORS. Nominations for
election to the Board of Directors of the corporation at a meeting of
shareholders may be made by the Board of Directors or by any shareholder of the
corporation entitled to vote for the election of directors at such meeting who
complies with the notice procedures set forth in this Section 10. Such
nominations, other than those made by or on behalf of the Board of Directors,
may be made only if notice in writing is personally delivered to, or mailed by
first class United States mail, postage prepaid, and received by, the secretary
not less than 60 days nor more than 90 days prior to such meeting; PROVIDED,
HOWEVER, that if less than 70 days' notice or prior public disclosure of the
date of the meeting is given to shareholders, such nomination shall have been
mailed by first class United States mail, postage prepaid, and received by, or
personally delivered to, the secretary not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the
meeting was mailed or such public disclosure was made, whichever occurs first.
Such notice shall set forth (a) as to each proposed nominee (i) the name, age,
business address and, if known, residence address of each such nominee, (ii) the
principal occupation or employment of each such nominee, (iii) the number of
shares, if any, of stock of the corporation that are beneficially owned by each
such nominee and (iv) any other information concerning the nominee that must be
disclosed in proxy solicitations pursuant to the proxy rules of the Securities
and Exchange Commission if such person had been nominated, or was intended to be
nominated, by the Board of Directors (including such person's written consent to
be named as a nominee and to serve as a director if elected); and (b) as to the
shareholder giving the notice (i) the name and address, as it appears on the
corporation's books, of such shareholder, (ii) a representation that such
shareholder is a holder of record of shares of stock of the corporation entitled
to vote at the meeting and the class and number of shares of
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<PAGE>
the corporation which are beneficially owned by such shareholder, (iii) a
representation that such shareholder intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice and (iv) a
description of all arrangements or understandings between such shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
shareholder. The corporation also may require any proposed nominee to furnish
such other information as may reasonably be required by the corporation to
determine the eligibility of such proposed nominee to serve as a director of the
corporation.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting, and that the defective nomination shall be disregarded.
SECTION 11. NOTICE OF BUSINESS AT ANNUAL MEETINGS. At an annual meeting
of the shareholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors or (c) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before an annual meeting by a
shareholder, if such business relates to the election of directors of the
corporation, the procedures in Section 10 of this Article I must be complied
with. If such business relates to any other matter, the shareholder must have
given timely notice thereof in writing to the secretary. To be timely, a
shareholder's notice must be personally delivered to, or mailed by first class
United States mail, postage prepaid, and received by, the secretary not less
than 60 days not more than 90 days prior to such meeting; PROVIDED, HOWEVER,
that if less than 70 days' notice or prior public disclosure of the date of the
meeting is given to shareholders, such notice, to be timely, must have been
mailed by first class United States mail, postage prepaid, and received by, or
personally delivered to, the secretary not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the
meeting was mailed or such public disclosure was made, whichever occurs first. A
shareholder's notice to the secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address,
as they appear on the corporation's books, of the shareholder proposing such
business, (iii) a representation that the shareholder is a holder of record of
shares of stock of the corporation entitled to vote at the meeting and the class
and number of shares of the corporation which are beneficially owned by the
shareholder and (iv) any material interest of the shareholder in such business.
Notwithstanding anything in these Amended and Restated Bylaws (the "Bylaws") to
the contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 11 and except that any
shareholder proposal which complies with Rule 14a-8 of the proxy rules (or any
successor provision) promulgated under the Securities Exchange Act of 1934, as
amended, as is to be
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included in the corporation's proxy statement for an annual meeting of
shareholders shall be deemed to comply with the requirements of this Section 11.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 11, and if he should so
determine, he shall so declare to the meeting and the business not properly
brought before the meeting shall be disregarded.
ARTICLE II
DIRECTORS
SECTION 1. FUNCTION. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors. Directors must be
natural persons who are at least 18 years of age but need not be residents of
Florida or shareholders of the corporation.
SECTION 2. COMPENSATION. The directors, as such, shall be entitled to
receive such reasonable compensation for their services as may be fixed from
time to time by resolution of the Board of Directors. In addition, the directors
may be reimbursed for expenses of attending meetings of the Board of Directors
and committees thereof. Nothing herein contained shall be construed to preclude
any director from serving the corporation in any other capacity and receiving
compensation therefor. Members of the executive committee or of any standing or
special committee of the Board of Directors may by resolution of the Board be
allowed such compensation for their services as the Board of Directors may deem
reasonable, and additional compensation may be allowed to directors for special
services rendered.
SECTION 3. PRESUMPTION OF ASSENT. A director who is present at a
meeting of the Board of Directors or a committee of the Board of Directors at
which action on any corporate matter is taken shall be presumed to have assented
to the action taken unless he objects at the beginning of the meeting (or
promptly upon arriving) to the holding of the meeting or transacting the
specified business at the meeting, or if the director votes against the action
taken or abstains from voting because of an asserted conflict of interest.
SECTION 4. NUMBER OF DIRECTORS.
(a) The Board of Directors of the corporation shall consist of not less
than four persons, the exact number to be determined from time to time by
resolution adopted by the affirmative vote of a majority of all directors of the
corporation then holding office at any special or regular meeting. Any such
resolution increasing or decreasing the number of directors shall have the
effect of creating or eliminating a vacancy or vacancies, as the case may be,
provided that no such resolution shall reduce the number of directors below the
number then
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<PAGE>
holding office and provided further that no such resolution may increase or
decrease the number of directors by more than 30% of the number of directors
last approved by the shareholders at any special or annual meeting of the
shareholders of the corporation.
(b) Commencing with the first annual meeting of shareholders of the
Corporation following the consummation of the initial offering and sale by the
Corporation of shares of its common stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended, the Board of Directors
shall be divided into three (3) classes; designated Class I, Class II and Class
III, with each class having as nearly an equal number of directors as possible.
At the annual meeting, directors of Class I shall be initially elected to hold
office for a one-year term, directors of Class II shall be initially elected to
hold office for a two-year term, and directors of Class III shall be initially
elected to hold office for a three-year term with each director in each class to
hold office until his successor is elected and qualified, or until his earlier
resignation, removal from office or death. At each succeeding annual meeting of
shareholders beginning at the annual meeting after such first meeting, the
successors of the class of directors whose term expires at the meeting will be
elected to hold office for a term expiring at the annual meeting of shareholders
held in the third year following the year of their election or until their
successors are duly elected and qualified. The original allocation among the
three classes of directors elected at such first annual meeting shall be
determined by a resolution of the Board of Directors.
SECTION 5. ELECTION OF DIRECTORS. Directors shall be elected at the
annual meeting of shareholders, but when the annual meeting is not held or
directors are not elected thereat, they may be elected at a special meeting
called and held for that purpose. Directors shall be elected by a plurality of
the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present.
SECTION 6. VACANCIES. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled only by the Board of Directors (and not by the shareholders), by
resolution adopted by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors; provided,
however, that if not so filled, any such vacancy shall be filled by the
shareholders at the next annual meeting or at a special meeting called for that
purpose. Any director so elected or appointed shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred, as the case may be, and until
such director's successor is elected and qualified.
SECTION 7. REMOVAL OF DIRECTORS. At a meeting of shareholders, any
director or the entire Board of Directors may be removed, solely with cause and
provided the notice of the meeting states that one of the purposes of the
meeting is the removal of the director. A director may be removed only if the
number of votes cast to remove him constitutes at least 66 2/3% of the voting
power of all of the shares of capital stock then entitled to vote generally in
the election of directors, voting together as a single class. For purposes of
this Section 7 of Article II, "cause" shall mean the failure of a director to
substantially perform such director's duties to
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the corporation (other than any such failure resulting from incapacity due to
physical or mental illness) or the willful engaging by a director in gross
misconduct injurious to the corporation.
SECTION 8. QUORUM AND TRANSACTION OF BUSINESS. A majority of the number
of directors fixed pursuant to these Bylaws shall constitute a quorum for the
transaction of business, except that a majority of the directors in office shall
constitute a quorum for filling a vacancy on the Board. Whenever less than a
quorum is present at the time and place appointed for any meeting of the Board,
a majority of those present may adjourn the meeting from time to time and place
to place, until a quorum shall be present and no notice of any such adjourned
meeting shall be required. The act of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
SECTION 9. PLACE OF MEETING. Regular and special meetings of the Board
of Directors shall be held at the principal office of the corporation or as
determined by the Chairman of the Board, unless otherwise designated by
resolution from time to time by the Board of Directors.
SECTION 10. TIME, NOTICE AND CALL OF MEETINGS. Regular meetings of the
Board of Directors shall be held without notice at the time and on the date
designated by resolution of the Board of Directors. Meetings of the Board of
Directors may be called by the Chairman of the Board. Upon determining the need
for a special meeting, the Chairman of the Board shall direct the secretary of
the corporation to provide written notice of the time, date and place of such
special meeting of the Board of Directors to each director by personal delivery,
mail delivery or by facsimile at least two but not more than 15 days before the
meeting. Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meeting, the time of
the meeting, and the manner in which it has been called or convened, except when
a director states at the beginning of the meeting or promptly upon arrival at
the meeting, objection to the transaction of business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors must be
specified in the notice or waiver of notice of the meeting. A majority of the
directors present, whether or not a quorum exists, may adjourn any meeting of
the Board of Directors to another time and place. Notice of an adjourned meeting
shall be given to the directors who were not present at the time of the
adjournment and, unless the time and place of the adjourned meeting are
announced at the time of the adjournment, to the other directors. Members of the
Board of Directors (and any committee of the Board) may participate in a meeting
of the Board (or committee) by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time. Participation by these means
constitutes presence in person at a meeting.
SECTION 11. ACTION WITHOUT A MEETING. Any action required to be taken
at a meeting of the Board of Directors (or a committee of the Board), and any
action which may be taken at a meeting of the Board of Directors (or a committee
of the Board) may be taken without a meeting if a consent in writing, setting
forth the action to be taken and signed by all of the
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directors (or members of the committee), is filed in the minutes of the
proceedings of the Board of Directors. The action taken shall be deemed
effective when the last director signs the consent, unless the consent specifies
otherwise.
ARTICLE III
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may from time to
time, by resolution passed by a majority of the whole Board, create an executive
committee of three or more directors, the members of which shall be elected by
the Board of Directors to serve at the pleasure of the Board. If the Board of
Directors does not designate a chairman of the executive committee, the
executive committee shall elect a chairman from its own members. Except as
otherwise provided herein and in the resolution creating an executive committee,
such committee shall, during the intervals between the meetings of the Board of
Directors, possess and may exercise all of the powers of the Board of Directors
in the management of the business and affairs of the corporation, other than
that of filling vacancies among the directors or in any committee of the
directors and except as required by law. The executive committee shall keep full
records and accounts of its proceedings and transactions. All action by the
executive committee shall be reported to the Board of Directors at its meeting
next succeeding such action and shall be subject to control, revision and
alteration by the Board of Directors, provided that no rights of third persons
shall be prejudicially affected thereby. Vacancies in the executive committee
shall be filled by the directors, and the directors may appoint one or more
directors as alternate members of the committee who may take the place of any
absent member or members at any meeting.
SECTION 2. MEETINGS OF EXECUTIVE COMMITTEE. Subject to the provisions
of these Bylaws, the executive committee shall fix its own rules of procedure
and shall meet as provided by such rules or by resolutions of the Board of
Directors, and it shall also meet at the call of the Chairman of its Board, the
chairman of the executive committee or any two members of the committee. Unless
otherwise provided by such rules or by such resolutions, the provisions of
Section 11 of Article II relating to the notice required to be given for
meetings of the Board of Directors shall also apply to meetings of the executive
committee. A majority of the executive committee shall be necessary to
constitute a quorum.
SECTION 3. OTHER COMMITTEES. The Board of Directors may by resolution
provide for such other standing or special committees as it deems desirable, and
discontinue the same at its pleasure. Each such committee shall have such powers
and perform such duties, not inconsistent with law, as may be delegated to it by
the Board of Directors. The provisions of Section 1 and Section 2 of this
Article shall govern the appointment and action of such committee so far as
consistent, unless otherwise provided by the Board of Directors. Vacancies in
such committees shall be filled by the Board of Directors or as the Board of
Directors may provide.
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ARTICLE IV
OFFICERS
SECTION 1. GENERAL PROVISIONS. The Board of Directors shall appoint a
Chairman of the Board of Directors, a chief executive officer, a chief operating
officer, a president, such number of vice presidents, if any, as the Board may
from time to time determine, a secretary and a treasurer. The Board of Directors
may from time to time create such offices and appoint such other officers,
subordinate officers and assistant officers as it may determine. The Chairman of
the Board, shall be, but the other officers need not be, chosen from among the
members of the Board of Directors. Any two of such offices, other than those of
president and vice president, may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one capacity.
SECTION 2. TERM OF OFFICE. The officers of the corporation shall hold
office at the pleasure of the Board of Directors, and, unless sooner removed by
the Board of Directors, until the annual meeting of the Board of Directors
following the date of their appointment and until their successors are chosen
and qualified. The Board of Directors may remove any officer at any time, with
or without cause. A vacancy in any office created shall be filled by the Board
of Directors.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board of Directors and meetings of shareholders
and shall be the senior officer of the corporation and, subject to the control
of the Board of Directors, shall exercise supervision over the management of the
business of the corporation. He shall have authority to sign all certificates
for shares and all deeds, mortgages, bonds, agreements, notices, and other
instruments requiring his signature; and shall have all the powers and duties
prescribed by the Florida Business Corporation Act and such others as the Board
of Directors may from time to time assign to him.
SECTION 4. CHIEF EXECUTIVE OFFICER. The chief executive officer shall
exercise supervision over the management of the business of the corporation and
its several officers, subject, however, to the oversight of the Chairman of the
Board. In the absence of the Chairman of the Board, he shall preside at meetings
of the shareholders. He shall have authority to sign all certificates for shares
and all deeds, mortgages, bonds, agreements, notices, and other instruments
requiring his signature; and shall have all the powers and duties prescribed by
the Florida Business Corporation Act and such others as the Board of Directors
may from time to time assign to him.
SECTION 5. PRESIDENT. The president shall exercise supervision over the
business of the corporation and over its several officers, subject, however, to
the oversight of the Chairman of the Board and the chief executive officer. In
the absence of the Chairman of the Board and chief executive officer, he shall
preside at meetings of the shareholders. He shall have authority
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to sign all certificates for shares and all deeds, mortgages, bonds, agreements,
notices, and other instruments requiring his signature; and shall have all the
powers and duties prescribed by the Florida Business Corporation Act and such
others as the Board of Directors may from time to time assign to him.
SECTION 6. CHIEF OPERATING OFFICER. The chief operating officer shall
exercise supervision over the business of the corporation and over its several
officers, subject, however, to the oversight of the Chairman of the Board, the
chief executive officer and the president. In the absence of the Chairman of the
Board, chief executive officer and president, he shall preside at meetings of
the shareholders. He shall have authority to sign all deeds, mortgages, bonds,
agreements, notices, and other instruments requiring his signature; and shall
have all the powers and duties prescribed by the Florida Business Corporation
Act and such others as the Board of Directors may from time to time assign to
him.
SECTION 7. VICE PRESIDENT. The vice presidents shall have such powers
and duties as may from time to time be assigned to them by the Board of
Directors or the president. At the request of the president, or in the case of
his absence or disability, the vice president designated by the president (or in
the absence of such designation, the vice president designated by the Board)
shall perform all the duties of the president and, when so acting, shall have
all the powers of the president. The authority of vice presidents to sign in the
name of the corporation certificates for shares and deeds, mortgages, bonds,
agreements, notes and other instruments shall be coordinate with like authority
of the president.
SECTION 8. SECRETARY. The secretary shall keep minutes of all the
proceedings of the shareholders and the Board of Directors and shall make proper
record of the same, which shall be attested by him; shall have authority to
execute and deliver certificates as to any of such proceedings and any other
records of the corporation; shall have authority to sign all certificates for
shares and all deeds, mortgages, bonds, agreements, notes and other instruments
to be executed by the corporation which require his signature; shall give notice
of meetings of shareholders and directors; shall produce on request at each
meeting of shareholders a certified list of shareholders arranged in
alphabetical order; shall keep such books and records as may be required by law
or by the Board of Directors; and, in general, shall perform all duties incident
to the office of secretary and such other duties as may from time to time be
assigned to him by the Board of Directors or the president.
SECTION 9. TREASURER. The treasurer shall have general supervision of
all finances of the corporation; he shall be in charge of all money, bills,
notes, deeds, leases, mortgages and similar property belonging to the
corporation, and shall do with the same as may from time to time be required by
the Board of Directors. He shall cause to be kept adequate and correct accounts
of the business transactions of the corporation, including accounts of its
assets, liabilities, receipts, disbursements, gains, losses, stated capital and
shares, together with such other accounts as may be required; and he shall have
such other powers and duties as may from time to time be assigned to him by the
Board of Directors or the president.
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SECTION 10. ASSISTANT AND SUBORDINATE OFFICERS; SPECIAL OFFICERS TO THE
CHAIRMAN OF THE BOARD. The Board of Directors may appoint such assistant and
subordinate officers as it may deem desirable, and the Chairman of the Board may
appoint such assistant or special officers as he may deem desirable. Each such
officer shall hold office at the pleasure of the Board of Directors, in the case
of an officer appointed by the Board of Directors, or the Chairman of the Board,
in the case of an officer appointed by the Chairman of the Board, and perform
such duties as the Board of Directors, in the case of an officer appointed by
the Board of Directors, or the Chairman of the Board, in the case of an officer
appointed by the Chairman of the Board, may prescribe. The Board of Directors
may, from time to time, authorize any officer to appoint and remove subordinate
officers, to prescribe their authority and duties, and to fix their
compensation.
SECTION 11. DUTIES OF OFFICERS MAY BE DELEGATED. In the absence of any
officer of the corporation, or for any other reason the Board of Directors may
deem sufficient, the Board of Directors may delegate, for such period of time as
the Board of Directors deem appropriate, the powers or duties, or any of them,
of such officers to any other officer or to any director.
ARTICLE V
SHARE CERTIFICATE AND SEAL
SECTION 1. FORM AND EXECUTION. Certificates for shares, certifying the
number of fully-paid shares owned, shall be issued to each shareholder in such
form as shall be approved by the Board of Directors. Such certificates shall be
signed by the Chairman of the Board or the president or a vice president and by
the secretary or the treasurer; provided, however, that if such certificates are
countersigned by a transfer agent and/or registrar the signatures of any of said
officers and the seal of the corporation upon such certificates may be
facsimiles, engraved, stamped or printed. If any officer or officers who shall
have signed, or whose facsimile signature shall have been used, printed or
stamped on any certificate or certificates for shares, shall cease to be such
officer or officers, because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the corporation, such
certificate or certificates, if authenticated by the endorsement thereon of the
signature of a transfer agent or registrar, shall nevertheless be conclusively
deemed to have been adopted by the corporation by the use and delivery thereof
and shall be as effective in all respects as though signed by a duly elected,
qualified and authorized officer or officers, and as though the person or
persons who signed such certificate or certificates, or whose facsimile
signature or signatures shall have been used thereon, had not ceased to be an
officer or officers of the corporation. The failure of the corporation to note
upon a certificate a restriction on the transfer of shares imposed or which may
be imposed by law, contract or otherwise, shall not be deemed to imply that such
shares are free of any such restriction or create in favor of the person to whom
such certificate is issued, or any successor, assign, devise or heir of such
recipient, any cause of action of any nature against the corporation.
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SECTION 2. REGISTRATION OF TRANSFER. Any certificate for shares of the
corporation shall be transferable (subject to any applicable restrictions
imposed or which may be imposed by law, contract or otherwise) in person or by
attorney upon the surrender thereof to the corporation or any transfer agent
therefor (for the class of shares represented by the certificate surrendered)
properly endorsed for transfer and accompanied by such assurances as the
corporation or such transfer agent may require as to the genuineness and
effectiveness of each necessary endorsement.
SECTION 3. LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation
shall, upon the authorization of the Chairman of the Board, the secretary or
such other person as is authorized by resolution of the Board of Directors,
issue a new stock certificate in the place of any certificate previously issued
if the holder of record of the certificate (a) makes proof in affidavit form
that it has been lost, destroyed or wrongfully taken; (b) requests the issue of
a new certificate before the corporation has notice that the certificate has
been acquired by a purchaser for value in good faith and without notice of any
adverse claim; (c) gives bond in such form as the corporation may direct to
indemnify the corporation and any transfer agent and registrar against any claim
that may be made on account of the alleged loss, destruction, or theft of a
certificate; and (d) satisfies any other reasonable requirements imposed by the
corporation.
SECTION 4. SEAL. The corporate seal shall be circular in form and
include the name of the corporation.
ARTICLE VI
DISTRIBUTIONS
The Board of Directors may, from time to time, declare distributions to
its shareholders in cash, property, or its own shares, unless the distribution
would cause (i) the corporation to be unable to pay its debts as they become due
in the usual course of business, or (ii) the corporation's assets to be less
than its liabilities plus the amount necessary, if the corporation were
dissolved at the time of the distribution, to satisfy the preferential rights of
shareholders whose rights are superior to those receiving the distribution. The
shareholders and the corporation may enter into an agreement requiring the
distribution of corporate profits, subject to the provisions of applicable law.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. FISCAL YEAR. The fiscal year of the corporation shall be as
specified by the Board of Directors.
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SECTION 2. RESIGNATION. Any director or officer of the corporation may
resign his office at any time upon presenting his written resignation to the
Board of Directors, the Chairman of the Board, the chief executive officer, the
chief operating officer, the president or the secretary, and, unless some time
be fixed in such resignation as the date upon which it is to become effective,
the same shall become effective immediately upon presentation. The acceptance of
a resignation shall not be required to make it effective, unless otherwise so
stated in such resignation, and in that event it shall become effective at the
pleasure of the Board.
SECTION 3. VOTING UPON STOCKS OF OTHER CORPORATIONS. Unless otherwise
ordered by the Board of Directors, the Chairman of the Board, the chief
executive officer, the chief operating officer, or the president shall, in the
order above stated, have full power and authority on behalf of the corporation
to attend, act and vote at any meeting or meetings of shareholders of any
corporation in which this corporation may hold stock or other securities, and at
any such meeting shall possess and may exercise on behalf of the corporation any
and all of the rights and powers incident to the ownership of such stock or
other securities. The person having the power and authority as set forth above
may in his discretion delegate same to another person that he designates to act
on behalf of the corporation at any given meeting. The Board of Directors, by
resolution, may from time to time confer like powers upon any other person or
persons.
ARTICLE VIII
CORPORATE RECORDS; SHAREHOLDERS'
INSPECTION RIGHTS; FINANCIAL INFORMATION
SECTION 1. CORPORATE RECORDS.
(a) The corporation shall keep as permanent records minutes of all
meetings of its shareholders and Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a meeting, and a record
of all actions taken by a committee of the Board of Directors on behalf of the
corporation.
(b) The corporation shall maintain accurate accounting records and a
record of its shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
(c) The corporation shall keep a copy of: its articles or restated
articles of incorporation and all amendments to them currently in effect; these
Bylaws or restated Bylaws and all amendments currently in effect; resolutions
adopted by the Board of Directors creating one or more classes or series of
shares and fixing their relative rights, preferences, and limitations, if shares
issued pursuant to those resolutions are outstanding; the minutes of all
shareholders' meetings and records of all actions taken by shareholders without
a meeting for the past three years; written communications to all shareholders
generally or all shareholders of
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a class of series within the past three years, including the financial
statements furnished for the last three years; a list of names and business
street addresses of its current directors and officers; and its most recent
annual report delivered to the Department of State.
(d) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
SECTION 2. SHAREHOLDERS' INSPECTION RIGHTS. A shareholder is entitled
to inspect and copy, during regular business hours at the corporation's
principal office, any of the corporate records described in Section 1(c) of this
Article if the shareholder gives the corporation written notice of the demand at
least 5 business days before the date on which he wishes to inspect and copy the
records.
A shareholder is entitled to inspect and copy, during regular business
hours at a reasonable location specified by the corporation, any of the
following records of the corporation if the shareholder gives the corporation
written notice of this demand at least 5 business days before the date on which
he wishes to inspect and copy provided (a) the demand is made in good faith and
for a proper purpose; (b) the shareholder describes with reasonable
particularity the purpose and the records he desires to inspect; and (c) the
records are directly connected with the purpose: (i) excerpts from minutes of
any meeting of the Board of Directors, records of any action of a committee of
the Board of Directors while acting in place of the Board on behalf of the
corporation; (ii) accounting records; (iii) the record of shareholders; and (iv)
any other books and records of the corporation.
This Section 2 does not affect the right of a shareholder to inspect
and copy the shareholders' list described in Section 6 of Article I, if the
shareholder is in litigation with the corporation to the same extent as any
other litigant or the power of a court to compel the production of corporate
records for examination.
The corporation may deny any demand for inspection if the demand was
made for an improper purpose, or if the demanding shareholder has within the two
years preceding his demand, sold or offered for sale any list of shareholders of
the corporation or of any other corporation, has aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used any
information secured through any prior examination of the records of this
corporation or any other corporation.
SECTION 3. FINANCIAL STATEMENTS FOR SHAREHOLDERS. Unless modified by
resolution of the shareholders within 120 days after the close of each fiscal
year, the corporation shall furnish its shareholders with annual financial
statements which may be consolidated or combined statements of the corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and a
statement of cash flows for that year. If financial statements are prepared for
the corporation on the basis of generally accepted accounting principles, the
annual financial statements must also be prepared on that basis.
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If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the chief financial officer or the person
responsible for the corporation's accounting records stating his reasonable
belief whether the statements were prepared on the basis of generally accepted
accounting principles and, if not, describing the basis of preparation and
describing any respects in which the statements were not prepared on a basis of
accounting consistent with the statements prepared for the preceding year.
The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements. Thereafter, on written request from a
shareholder who was not mailed the statements, the corporation shall mail him
the latest annual financial statements.
SECTION 4. OTHER REPORTS TO SHAREHOLDERS. If the corporation indemnifies or
advances expenses to any director, officer, employee or agent otherwise than by
court order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the corporation, the corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders' meeting, or prior to the meeting if the
indemnification or advance occurs after the giving of the notice but prior to
the time the annual meeting is held. This report shall include a statement
specifying the persons paid, the amounts paid, and the nature and status at the
time of such payment of the litigation or threatened litigation.
If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
ARTICLE IX
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. Each person (including here and
hereinafter, the heirs, executors, administrators, or estate of such person) (i)
who is or was a director or officer of the corporation, (ii) who is or was an
agent or employee of the corporation other than an officer and as to whom the
corporation has agreed to grant such indemnity, or (iii) who is or was serving
at the request of the corporation as its representative in the position of
director, officer, agent or employee of another corporation, partnership, joint
venture, trust or other enterprise and as to whom the corporation has agreed to
grant such indemnity shall be indemnified by the corporation as of right to the
fullest extent permitted or authorized by current or future legislation or by
current or future judicial or administrative decision (but, in the case of any
such future legislation or decision, only to the extent that it permits the
corporation to
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provide broader indemnification rights than permitted prior to such legislation
or decision), against any liability or expense, awarded or assessed against him,
or incurred by him, in his capacity as such director, officer, agent, employee
or representative, or arising out of his status as such director, officer,
agent, employee, or representative, including (in the case of derivative
actions) expenses and amounts paid by him in settlement of any proceeding
asserted or brought against him in his aforesaid capacity or arising out of his
status as such.
SECTION 2. ADVANCEMENT OF EXPENSES. Expenses incurred by a person referred
to in Section 1 of this Article IX in defending a civil or criminal proceeding
shall be paid by the corporation in advance of the final disposition of such
proceeding, (i) upon receipt, in the case of a director or officer, of an
undertaking by or on behalf of the director or officer to repay all amounts so
advanced if he is ultimately found not to be entitled to be indemnified by the
corporation pursuant to this Article IX, and (ii) upon satisfaction of such
other conditions as are required by current or future legislation (but, with
respect to future legislation, only to the extent that it provides conditions
less burdensome to the director, officer, employee, agent or representative, and
to the corporation, than those provided previously). Such expenses incurred by
other employees, agents and representatives may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate. The Board of
Directors may, in the manner set forth above, and upon approval of such
director, officer, employee, agent or representative of the corporation,
authorize the corporation's counsel to represent such person, in any proceeding,
whether or not the corporation is a party to such proceeding.
SECTION 3. PROCEDURE FOR INDEMNIFICATION AND OBTAINING ADVANCEMENT OF
EXPENSES. Any indemnification of liabilities and expenses or advancement of
expenses under this Article shall be made promptly, and in any event within 60
days, upon the written request of the director, officer, employee, agent or
representative seeking indemnification or an advancement. If the corporation
denies such request in whole or in part or if no disposition thereof is made
within 60 days of its receipt of such request or if the corporation otherwise
fails to provide indemnification or advancement provided for in this Article IX,
and despite any contrary determination by the corporation (including its Board
of Directors or a committee thereof, its independent legal counsel or its
shareholders) in the specific case, a director, officer, employee, agent or
representative may apply for indemnification or advancement, or both, in an
appropriate proceeding brought in a court of competent jurisdiction and shall be
entitled to such indemnification or advancement, or both, as the court shall by
order direct. Such person's reasonable expenses in obtaining court-ordered
indemnification or advancement shall be reimbursed by the corporation. No such
contrary determination by the corporation (including the Board of Directors or a
committee thereof, its independent legal counsel or its shareholders) shall be a
defense to such proceeding or create a presumption that the claimant has not met
the applicable standard of conduct, if any, for indemnification or an
advancement.
SECTION 4. OTHER RIGHTS, CONTINUATION OF RIGHT TO INDEMNIFICATION AND
ADVANCEMENTS. The indemnification and advancements provided by this Article
shall not be deemed exclusive of any other or further rights to which a person
seeking indemnification or advancements may be entitled under any law (common or
statutory), agreement, vote of
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shareholders or disinterested directors or otherwise, either as to action taken
or omitted to be taken in his official capacity or as to action taken or omitted
to be taken in another capacity while holding office or while employed by or
acting as agent for the corporation. All rights to indemnification and to
advancements of expenses under this Article shall be deemed to be a contract
between the corporation and each director, officer, employee, agent or
representative of the corporation described in Section 1 of this Article who
serves or has served in any such capacity at any time while this Article is in
effect.
Any repeal or modification of this Article IX, or any repeal or
modification of relevant provisions of the Florida Business Corporation Act or
any other applicable law, shall not in any way diminish any right to
indemnification or to advancement of expenses of such director, officer,
employee, agent or representative, or the obligations of the corporation,
arising hereunder.
SECTION 5. INSURANCE. The corporation may purchase and maintain insurance,
at its expense, to protect itself and any person who is or was or has agreed to
become a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him or on
his behalf in any such capacity, or arising out of his status as such, whether
or not the corporation would have the legal power to directly indemnify him
against such liability.
SECTION 6. SAVINGS CLAUSE. If this Article IX or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and officer, and each
employee, agent and representative of the corporation described in Section 1 of
this Article IX, as to liabilities and expenses, and amounts paid in settlement
with respect to any proceeding, including any action by or in the right of the
corporation, to the full extent permitted by any applicable portion of this
Article IX that shall not have been invalidated and to the full extent permitted
by applicable law.
SECTION 7. TERMS. For purposes of this Article IX, the term "other
enterprises" includes employee benefit plans; the term "expenses" includes
counsel fees, including those for appeal; the term "liability' includes
obligations to pay a judgment, settlement, penalty, fine (including an excise
tax assessed with respect to any employee benefit plan), and expenses actually
and reasonably incurred with respect to a proceeding; the term "proceeding"
includes any threatened, pending, or completed action, suit, or other type of
proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal; the term "agent" includes a volunteer; and the term
"serving at the request of the corporation" includes any service as a director,
officer, employee or agent of the corporation that imposes duties on such
persons, including duties relating to an employee benefit plan and its
participants or beneficiaries.
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ARTICLE X
AMENDMENT
These Bylaws may be altered, amended or repealed, and new Bylaws
adopted, by the affirmative vote of at least a majority of the members of the
Board of Directors then in office or by the affirmative vote of the holders of
not less than 66 2/3% of the voting power of all shares of capital stock of the
corporation then entitled to vote generally in the election of directors, voting
as a single class.
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NUMBER TRANSEASTERN SHARES
TP HOMES
TRANSEASTERN PROPERTIES, INC. SEE REVERSE FOR
COMMON STOCK INCORPORATED UNDER THE LAWS CERTAIN DEFINITIONS
OF THE STATE OF FLORIDA CUSIP 89365R 10 2
THIS CERTIFIES THAT
is the record owner of
FULLY PAID AND NON-ASSESSABLE SHARES WITH A PAR VALUE OF $.01 EACH
OF THE COMMON STOCK OF
TRANSEASTERN PROPERTIES, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney, upon surrender of this Certificate properly
endorsed.
This Certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.
WITNESS the facsimile seal and the facsimile signatures of the duly
authorized officers of the Corporation.
Dated:
/s/ [illegible] TRANSEASTERN PROPERTIES, INC. /s/ [illegible]
SECRETARY CORPORATE SEAL PRESIDENT
FLORIDA
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
AMERICAN BANK NOTE COMPANY
<PAGE>
TRANSEASTERN PROPERTIES,INC.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF
WHICH THE CORPORATION IS AUTHORIZED TO ISSUE AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS OF EACH SUCH
CLASS OF STOCK OR SERIES THEREOF. ANY SUCH REQUEST SHOULD BE MADE TO THE
SECRETARY OF THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR TO THE
TRANSFER AGENT AND REGISTRAR.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - ________________ Custodian ______________________
(Cust) (Minor)
under Uniform Gifts to Minors
Act__________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED,_____________________HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
______________________________________
____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
____________________________________________________________________________
____________________________________________________________________________
______________________________________________________________________SHARES
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
____________________________________________________________________ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED_______________________________________________
______________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: ______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
EXHIBIT 5.1
October 24, 1996
Mr. Arthur Falcone
Chief Executive Officer
Transeastern Properties, Inc.
3300 University Drive, Suite 001
Coral Springs, Florida 33065
RE: TRANSEASTERN PROPERTIES, INC.
OFFERING OF SHARES OF COMMON STOCK
Dear Falcone:
As counsel to Transeastern Properties, Inc. (the "Corporation"), we have
examined the Articles of Incorporation and Bylaws of the Corporation as well as
such other documents and proceedings as we have considered necessary for the
purposes of this opinion. We have also examined and are familiar with the
proceedings taken by the Corporation to authorize the issuance of up to
3,680,000 shares of Common Stock of the Corporation, par value $.01 per share
(the "Common Stock"). In addition, we have examined a copy of the Prospectus
included in the Corporation's Registration Statement on Form S-1, File No.
333-10375, which is incorporated by reference into this registration statement.
In rendering this opinion, we have assumed, without independent
investigation: (i) the authenticity of all documents submitted to us as
originals; (ii) the conformity to original documents of all documents submitted
to us as certified or photostatic copies; and (iii) the genuineness of all
signatures. In addition, as to questions of fact material to the opinions
expressed herein, we have relied upon such certificates of public officials,
corporate agents and officers of the Corporation and such other certificates as
we deemed relevant.
Based upon the foregoing, and having regard to legal considerations which
we deem relevant, we are of the opinion that following the issuance and delivery
of the Common Stock against payment of adequate consideration therefore in
accordance with the terms of such Prospectus, the Common Stock will be validly
issued, fully paid and non-assessable.
Very truly yours,
STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A.
================================================================================
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT
PURCHASE AGREEMENT
AMONG
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.,
ARTHUR J. FALCONE and MARCY FALCONE,
EDWARD W. FALCONE and DIANA FALCONE,
PHILIP CUCCI, JR. and LINDA CUCCI
AND
THE SEVERAL INVESTORS NAMED IN SCHEDULE 1
Dated as of June 2, 1993
================================================================================
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TABLE OF CONTENTS
ARTICLE 1.THE PREFERRED STOCK .............................................. 2
Section 1.1 Purchase and Sale of Preferred Stock ..................... 2
Section 1.2 Purchase and Sale of Warrants ............................ 2
Section 1.3 Closing .................................................. 2
Section 1.4 Related Transactions ..................................... 2
ARTICLE 2.REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................... 3
Section 2.1 Organization, Qualifications and Corporate Power ........ 3
Section 2.2 Authorization of Agreements, Etc ........................ 3
Section 2.3 Validity ................................................ 4
Section 2.4 Authorized Capital Stock ................................ 4
Section 2.5 Litigation; Compliance with Law ......................... 5
Section 2.6 Proprietary Information of Third Parties ................ 5
Section 2.7 Title to Properties ..................................... 6
Section 2.8 Leasehold Interests ..................................... 7
Section 2.9 Insurance ............................................... 7
Section 2.10 Taxes .................................................. 8
Section 2.11 Other Agreements ....................................... 8
Section 2.12 Patents, Trademarks, Etc ............................... 10
Section 2.13 Loans and Advances ..................................... 11
Section 2.14 Assumption, Guaranties, Etc. of
Indebtedness of Other Persons .......................... 11
Section 2.15 Significant Customers and Suppliers .................... 11
Section 2.16 Governmental Approvals ................................. 11
Section 2.17 Financial Statements ................................... 11
Section 2.18 Absence of Undisclosed Liabilities ..................... 12
Section 2.19 Absence of Changes ..................................... 12
Section 2.20 Employee Benefit Plans ................................. 13
Section 2.21 Disclosure ............................................. 14
Section 2.22 Brokers ................................................ 14
Section 2.23 Transactions with Affiliates ........................... 14
Section 2.24 Employees .............................................. 14
Section 2.25 U.S. Real Property Holding Corporation ................. 15
Section 2.26 Foreign Corrupt Practices Act .......................... 15
Section 2.27 Environmental Regulations .............................. 15
Section 2.28 Disclosure ............................................. 16
ARTICLE 3.REPRESENTATION AND WARRANTIES OF THE INVESTORS .................. 16
ARTICLE 4.CONDITIONS PRECEDENT TO THE PURCHASE OF THE
PREFERRED STOCK AND WARRANTS BY INVESTORS ....................... 17
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ARTICLE 5.CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
COMPANY ......................................................... 19
ARTICLE 6.COVENANTS OF THE COMPANY ........................................ 19
Section 6.1 Financial Statements, Reports, Etc ...................... 19
Section 6.2 Financial Covenants and Ratios .......................... 21
Section 6.3 Corporate Existence ..................................... 22
Section 6.4 Properties, Business, Insurance ......................... 22
Section 6.5 Inspection, Consultation, and Advice .................... 22
Section 6.6 Restrictive Agreements Prohibited ....................... 22
Section 6.7 Transactions with Affiliates ............................ 22
Section 6.8 Expenses of Directors ................................... 23
Section 6.9 Use of Proceeds ......................................... 23
Section 6.10 Board of Directors Meetings ............................ 23
Section 6.11 Compensation ........................................... 23
Section 6.12 Bylaws ................................................. 23
Section 6.13 Maintenance of Ownership of Investments ................ 23
Section 6.14 Distributions by Investments ........................... 23
Section 6.15 Compliance with Laws ................................... 24
Section 6.16 Keeping of Records and Books of Account ................ 24
Section 6.17 Employee Stock Plans ................................... 24
Section 6.18 Fees and Expenses of Investors' Counsel ................ 24
Section 6.19 Indemnification Agreement .............................. 24
Section 6.20 United States Real Property Holding Corporation ........ 24
ARTICLE 7.SPECIAL REDEMPTION RIGHT ........................................ 25
ARTICLE 8.MISCELLANEOUS ................................................... 26
Section 8.1 Expenses ................................................ 26
Section 8.2 Survival of Agreements .................................. 26
Section 8.3 Survival of Agreements .................................. 27
Section 8.4 Brokerage ............................................... 27
Section 8.5 Parties in Interest ..................................... 27
Section 8.6 Notices ................................................. 27
Section 8.7 Governing Law ........................................... 28
Section 8.8 Entire Agreement ........................................ 28
Section 8.9 Counterparts ............................................ 28
Section 8.10 Amendments ............................................. 28
Section 8.11 Severability ........................................... 28
Section 8.12 Titles and Subtitles ................................... 29
Section 8.13 Certain Defined Terms .................................. 29
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<PAGE>
CROSS REFERENCE OF DEFINED TERMS
Term Section
---- -------
A. Falcones Preamble
affiliate Section 8.12
Agreement Preamble
Articles Section 2.4
Closing Section 1.3
Closing Date Section 1.3
Common Stock Section 2.4(a)
Company Preamble
Company Benefit Plans Section 2.20(a)
Contracts Section 2.11
Cuccis Preamble
Disclosure Schedule Article 2
E. Falcones Preamble
Employees Section 2.20(a)
Environmental Permits Section 2.27
ERISA Section 2.20(a)(i)
Expiration Date Section 7.2
Financial Statements Section 2.17
Founder Preamble
General Partnership Interest Section 2.1(b)
Hazardous Materials Section 2.27
Indemnification Agreement Section 1.4
Intellectual Property Section 2.12
Investment Section 2.1(b)
Investor Preamble
IRC Section 6.20
person Section 8.12
Preferred Stock Background
Real Property Section 2.7(a)
Redeemable Warrants and Shares Section 7.2
Securities Act Section 2.11(m)
Series A Directors Section 6.8
Shareholders Agreement Section 1.4
Special Redemption Notice Article 7
Special Redemption Rights Article 7
Total Equity Section 6.2(c)
Warrant Background
Warrant Shares Background
iii
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1 Preferred Stock and Warrant Shares Purchased
Schedule 2 Disclosure Schedule
Schedule 3 Accredited Investor Certificates
Exhibit A Form of Warrant Agreement
Exhibit B Shareholders Agreement
Exhibit C Opinion of Company Counsel
Exhibit D Amended and Restated Articles of Incorporation
Exhibit E Indemnification Agreement
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<PAGE>
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
THIS SERIES A REDEEMABLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
("Agreement") is made and entered into as of June 2, 1993 between TRANSEASTERN
PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation (the "Company"), ARTHUR
J. FALCONE and MARCY FALCONE, residents of the State of Florida (the "A.
Falcones"), EDWARD W. FALCONE and DIANA FALCONE, residents of the State of
Florida (the "E. Falcones"), PHILIP CUCCI, JR. and LINDA CUCCI, residents of the
State of Florida (the "Cuccis"), and the several persons named in the attached
Schedule 1 (such persons are hereinafter referred to individually as an
"Investor," and, collectively as the "Investors"). A. Falcones, E. Falcones, and
Cuccis are sometimes hereinafter referred to individually as a "Founder" and
collectively as the "Founders."
BACKGROUND
A. The Investors desire to invest in the Company to enable the Company to
pursue acquisition, development, management, and other opportunities
relating to the building and development of residential properties.
B. The Investors desire to purchase (i) an aggregate of 20,000 shares of
the Series A Redeemable Preferred Stock of the Company, par value
$.01, (the "Preferred Stock") at a price of $100.00 per share and (ii)
warrants initially exercisable for 275,000 shares of common stock (the
"Warrant Shares") at an exercise price of $.01 per Warrant Share (the
"Warrants"), on the terms and subject to the conditions set forth in
this Agreement.
C. The Company desires to obtain additional equity capital through the
issuance and sale to the Investors of the Preferred Stock and the
Warrants, on the terms and subject to the conditions set forth in this
Agreement. The Founders are the controlling shareholders of the
Company and will receive a direct benefit from the issuance and sale
by the Company of the Preferred Stock and the Warrants.
AGREEMENT
For and in consideration of the premises and the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereby agree:
<PAGE>
ARTICLE 1.
THE PREFERRED STOCK AND THE WARRANTS
SECTION 1.1 PURCHASE AND SALE OF PREFERRED STOCK. The Company agrees to
issue and sell to each Investor, and each Investor agrees to purchase from the
Company, the number of shares of Preferred Stock set forth opposite the name of
such Investor on Schedule 1 hereto under the caption "Preferred Stock Purchased"
at a purchase price of $100.00 per share.
SECTION 1.2 PURCHASE AND SALE OF WARRANTS. The Company agrees to issue and
sell to each Investor, and each Investor agrees to purchase from the Company, a
Warrant to purchase the number of Warrant Shares set forth opposite the name of
such Investor on Schedule 1 hereto under the caption "Warrant Shares Purchased."
Each Warrant shall be substantially in the form of Exhibit A attached hereto.
The purchase price for each Warrant shall be equal to the product of $.001
multiplied by the number of Warrant Shares issuable upon exercise of the
Warrant.
SECTION 1.3 CLOSING. The closing of the purchase and sale of the Preferred
Stock and the Warrants shall take place at the offices of Powell, Goldstein,
Frazer & Murphy, 191 Peachtree Street, N.E., Atlanta, GA 30303 at 10:00 a.m.,
Eastern Daylight Time, on June 2, 1993, or at such other location, date, and
time as may be agreed upon between the Investors and the Company (such closing
being called the "Closing" and such date and time being called the "Closing
Date"). At the Closing, the Company shall issue and deliver to each Investor a
stock certificate or certificates in definitive form, registered in the name of
each Investor, representing the Preferred Stock and the Warrants being purchased
by each Investor at the Closing. As payment in full for the Preferred Stock and
the Warrants, and against delivery of the certificates evidencing the Preferred
Stock and the Warrants purchased, on the Closing Date, each Investor shall
deliver to the Company a cashier's check payable to the order of the Company, in
the amount set forth opposite the name of such Investor on Schedule 1 under the
heading "Aggregate Purchase Price," or shall transfer such sum to the account of
the Company by wire transfer.
SECTION 1.4 RELATED TRANSACTIONS. At the Closing, the Company, the
Founders, and the Investors (and such other parties as may be necessary) shall
execute and deliver a shareholders agreement among the Company, the A. Falcones,
the E. Falcones, the Cuccis, and the Investors, in substantially the form of
Exhibit B hereto (the "Shareholders Agreement"). In addition, (a) the Company
and the Founders shall deliver (i) a certificate with respect to the matters
described in Section 4(f) hereof, and (ii) the opinion of Kinsey & Gleason,
counsel to the Company, in substantially the form of Exhibit C hereto, and (b)
the Company shall deliver an indemnification agreement in substantially the form
of Exhibit E hereto (the "Indemnification Agreement") to the Series A Directors
(as hereinafter defined).
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS
For the purpose of inducing the Investors to purchase the Shares and the
Warrants, the Company and each Founder represents and warrants to each Investor
that, except as otherwise set forth in the Disclosure Schedule attached hereto
as Schedule 2 (the "Disclosure Schedule") by means of an explicit reference to
the particular representation or warranty as to which exception is taken, which
in each case shall constitute the sole representation and warranty as to which
such exception shall apply:
SECTION 2.1 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER.
(a) The Company is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Florida and is duly licensed
or qualified to transact business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of the business transacted by
it or the character of the properties owned or leased by it requires such
licensing or qualification. The Company has the corporate power and authority to
(i) own and hold its properties and carry on its business as now conducted and
as proposed to be conducted, (ii) execute, deliver, and perform each of this
Agreement, the Warrants, the Shareholders Agreement, and the Indemnification
Agreement, (iii) issue, sell, and deliver the Preferred Stock, and (iv) issue
and deliver the Warrants and the Warrant Shares issuable upon exercise of the
Warrants.
(b) Section 2.1(b) of Schedule 2 contains a true and correct list of
each (i) corporation some or all of the securities of which are held by the
Company (an "Investment"), indicating with respect to each Investment, the
number and type of securities outstanding and the number and type of securities
held by the Company, and (ii) each general or limited partnership owned in whole
or in part by the Company (a "General Partnership Interest"). Except for
Investments and General Partnership Interests listed on Section 2.1(b) of the
Disclosure Schedule, the Company does not (i) own of record or beneficially,
directly or indirectly, (A) any shares of capital stock or securities
convertible into capital stock of any corporation, (B) any debt securities of
any corporation, or (C) any participating interest in or any indebtedness of any
partnership, joint venture, limited liability company, or other non-corporate
business enterprise or (ii) control, directly or indirectly, any other entity.
SECTION 2.2 AUTHORIZATION OF AGREEMENTS, ETC.
(a) The Company is not in violation of or default under any provision
of its Amended and Restated Articles of Incorporation, or Bylaws, of any
provision of any indenture, contract, agreement, mortgage, deed of trust, loan,
commitment, judgment, decree, order, or obligation to which it is a party or by
which any of its properties or assets are bound, or of any provision of any
Federal, state, or local statute, rule, or governmental regulation applicable to
the Company. The execution and delivery by the Company of this Agreement and
each of the other agreements, documents, and instruments contemplated hereby,
the performance by the Company of its obligations hereunder and thereunder, the
issuance, sale, and delivery of the Preferred Stock and the Warrants, and the
issuance and delivery of the Warrant Shares upon exercise of the Warrants, have
been duly authorized by all requisite corporate action on the part of the
Company and its officers, directors, and shareholders and will not result in any
such violation, conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any such provision, require any
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<PAGE>
consent or waiver under any such provision, or result in the creation or
imposition of any lien, charge, restriction, claim, or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company. There is no such
provision which materially and adversely affects, or so far as the Company is
presently aware, in the future may materially and adversely affect, the
condition (financial or otherwise), business, property, prospects, assets, or
liabilities of the Company.
(b) The Preferred Stock has been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid, and
nonassessable. The Warrants have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued. The Preferred Stock and
the Warrants, when issued in accordance with this Agreement, will be free and
clear of all liens, charges, restrictions, claims, and encumbrances imposed by
or through the Company, except as reflected on the certificates evidencing the
Preferred Stock. The Warrant Shares have been duly and validly reserved for
issuance upon exercise of the Warrants, and the Warrant Shares, when so issued,
will be duly authorized, validly issued, fully paid, and nonassessable and will
be free and clear of all liens, charges, restrictions, claims, and encumbrances
imposed by or through the Company, except as reflected on the certificates
evidencing the Warrants and the Warrant Shares. Neither the issuance, sale, and
delivery of the Preferred Stock and the Warrants nor the issuance and delivery
of the Warrant Shares is subject to any preemptive right, right of first
refusal, or other right in favor of any person.
SECTION 2.3 VALIDITY. Each of this Agreement, the Warrants, the
Shareholders Agreement, and the Indemnification Agreement have been duly and
validly executed and delivered by the Company and constitutes the legal, valid,
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
SECTION 2.4 AUTHORIZED CAPITAL STOCK. Immediately prior to the Closing:
(a) the authorized capital stock of the Company will consist of (i)
Twenty-Nine Thousand (29,000) shares of Series A Redeemable Preferred Stock and
(ii) Five Million (5,000,000) shares of common stock (the "Common Stock").
(b) Seven Hundred Twenty Five Thousand and One (725,001) shares of
Common Stock will be validly issued and outstanding, fully paid and
nonassessable, and no shares of Preferred Stock will be issued and outstanding;
(c) all issued and outstanding shares of Common Stock are owned of
record and beneficially by the persons and in the amounts set forth in Section
2.4 of the Disclosure Schedule;
(d) the relative rights, powers, preferences, qualifications,
limitations, and restrictions in respect of each class of authorized capital
stock of the Company are as set forth in the Company's Amended and Restated
Articles of Incorporation (the "Articles"), a copy of which is attached as
Exhibit D hereto, and all such rights, powers, preferences, qualifications,
limitations, and restrictions are valid, binding, and enforceable and in
accordance with all applicable laws;
(e) except as set forth in Section 2.4 of the Disclosure Schedule, (i)
no person owns of record or is known to the Company to own beneficially any
shares of any equity stock, (ii) no subscription, warrant, option, convertible
security, or other right (contingent or other) to purchase or otherwise acquire
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<PAGE>
equity securities of the Company is authorized or outstanding, and (iii) there
is no commitment by the Company to issue shares, subscriptions, warrants,
options, convertible securities, or other such rights or to distribute to
holders of any of its equity securities any evidence of indebtedness or assets,
except as contemplated by this Agreement; and
(f) except as set forth in the Articles and in the Shareholders
Agreement, the Company has no obligation (contingent or other) to purchase,
redeem, or otherwise acquire any of its equity securities or any interests
therein or to pay any dividend or make any other distribution in respect
thereof. Except as set forth in the Shareholders Agreement, there are no voting
trusts or agreements, preemptive rights, or proxies relating to any securities
of the Company (whether or not the Company is a party thereto). All of the
outstanding securities of the Company were issued in compliance with all
applicable Federal and state securities laws.
SECTION 2.5 LITIGATION; COMPLIANCE WITH LAW. There is no (i) action, suit,
claim, proceeding, or investigation pending or, to the knowledge of the Company
or the Founders, threatened against or affecting the Company, at law or in
equity, or before or by any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, (ii) arbitration proceeding relating to the Company pending under
collective bargaining agreements or otherwise, or (iii) governmental inquiry
pending or, to the knowledge of the Company or the Founders, threatened against
or affecting the Company, (including without limitation any inquiry as to the
qualification of the Company to hold or receive any license or permit), and
there is no basis known to the Company of the Founders for any of the foregoing.
The Company is not exposed to any liability which may be materially adverse to
the Company's business, prospects, financial condition, operations, properties,
or affairs. The Company is not subject to any order, writ, injunction, or decree
of any court or of any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign. There is no action or suit by the Company pending or threatened against
any other person. The Company is in material compliance with all laws, rules,
regulations, and orders applicable to the Company's business, operations,
properties, assets, licenses, and other authorizations required to conduct its
business as conducted and as proposed to be conducted. There is no existing law,
rule, regulation, or order, and neither the Company nor any Founder, after due
inquiry, is aware of any proposed law, rule, regulation, or order, whether
Federal or state, which would prohibit or restrict the Company from, or
otherwise materially adversely affect the Company in, conducting its business in
any jurisdiction in which it is now conducting business or in which it proposes
to conduct business within the foreseeaSection 2.6 Proprietary Information of
Third Parties. After reasonable investigation, neither the Company nor any
Founder is aware that any significant employee or consultant of the Company is
obligated under any contract or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that would conflict with
the obligation of such employee to use best efforts to promote the interests of
the Company. To the knowledge of the Company or the Founders, no third party has
claimed or has reason to claim that any person employed by or affiliated with
the Company has (a) violated or may be violating any of the terms or conditions
of any employment, non-competition, or non-disclosure agreement between such
employee and such third party, (b) disclosed or may be disclosing, or utilized
or may be utilizing, any trade secret or proprietary information or
documentation of such third party, or (c) interfered or may be interfering in
the employment relationship between such third party and any of the Company's
present or former employees. No third party has requested information from the
Company which suggests that such a claim might be contemplated. To the knowledge
of the Company and the Founders, no person employed by or affiliated with the
Company has employed or proposes to employ any trade secret or any information
or documentation proprietary to any
5
<PAGE>
former employer, and to the knowledge of the Company and the Founders, no person
employed by or affiliated with the Company has violated any confidential
relationship which such person may have had with any third party, in connection
with the development, manufacture, or sale of any product or proposed product,
or the development or sale of any service or proposed service of the Company,
and the Company has no reason to believe there will be any such employment or
violation. To the knowledge of the Company and the Founders, none of the
execution or delivery of this Agreement, or the carrying on of the business of
the Company by its officers, employees, or agentsproposed conduct of the
business of the Company, will conflict with or result in a breach of the terms,
conditions, or provisions of or constitute a default under any contract,
covenant, or instrument under which any such person is obligated.
SECTION 2.7 TITLE TO PROPERTIES.
(a) Section 2.7(a) of the Disclosure Schedule contains a true and
correct list of each tract of real property owned by the Company ("Real
Property") and a summary description of the proposed use thereof and the number
of buildable lots remaining in each tract, and if applicable, a general
description of all improvements and structures located on such tract. Attached
to the Disclosure Schedule are copies of binders for title insurance for each
tract of Real Property. Except as reflected in such title insurance binders, the
Company has good and marketable fee simple title to the Real Property, free and
clear of all mortgages, liens, charges, encumbrances, and purchase options and
other rights to or against such property, other than such minor imperfections of
title, liens, easements, zoning restrictions, or encumbrances, if any, as are
not substantial in character, amount, or extent, and do not, severally or in the
aggregate, detract from the value or interfere with the present uses of the Real
Property, or otherwise impair the business and operations of the Company, except
for claims of subcontractors, laborers, and materialmen which have performed
work or provided services to such property and which are unpaid within normal
payment terms. Copies of all documents evidencing mortgages, liens, charges, or
other encumbrances upon the Real Property and copies of all title insurance
policies insuring the interest of the Company therein are attached to the
Disclosure Schedule.
(b) All improvements on the Real Property conform in all material
respects to all applicable state and local laws, use restrictions, building
ordinances, and health and safety ordinances, and the property is zoned for the
various purposes for which the Real Property and improvements thereon are
presently being used.
(c) The Company, has received no written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning or subdivision changes, or other adverse claims affecting
the Real Property.
(d) There is no private restrictive covenant or governmental use
restriction (including zoning) known to the Company after reasonable inquiry, on
all or any portion of the Real Property which prohibits the current or
contemplated use of the Real Property.
(e) All licenses, permits, and approvals required for the occupancy
and operation of the Real Property have been obtained and are in full force and
effect and the Company has received no notices of violations in connection with
such items.
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(f) The Company does not have in its possession any studies or reports
which indicates any defects in the design or construction of any of the
improvements on the Real Property.
(g) There are no past due taxes, assessments, or other charges
affecting the Real Property.
(h) The Company has good and marketable title to all personal
properties and assets owned by it, free and clear of all mortgages, pledges,
security interests, liens, charges, claims, restrictions and other encumbrances,
except liens for current taxes not yet due and payable and minor imperfections
of title, if any, not material in nature or amount and not materially detracting
from the value or impairing the use of the personal property subject thereto or
impairing the operations or proposed operations of the Company. The Company owns
or leases all personal properties and assets necessary to the operation of its
business as now conducted. All of such personal properties and assets are in
good operating condition (normal wear and tear excepted), are reasonably fit for
the purposes for which such personal properties and assets are presently used,
are adequate and usable for the continued operation of the business of the
Company as the same is presently conducted, and none of such personal properties
and assets are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs, the cost of which will not vary materially from
historic patterns.
SECTION 2.8 LEASEHOLD INTERESTS. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal,
is a valid and subsisting agreement without any default of the Company
thereunder and, to the best of the Company's knowledge, without any default
thereunder of any other party thereto. No event has occurred and is continuing
which, with due notice or lapse of time or both, would constitute a default or
event of default by the Company under any such lease or agreement or, to the
best of the Company's knowledge, by any other party thereto. The Company's
possession of such property has not been disturbed and, to the best of the
Company's knowledge, no claim has been asserted against the Company adverse to
its rights in such leasehold interests.
SECTION 2.9 INSURANCE. All of the properties and business of the Company of
an insurable nature are insured to the extent usually insured by persons or
entities engaged in the same or similar businesses against loss or damage of the
kind customarily insured against by such persons or entities. The Company is not
in default regarding the provisions of any such policy. The Company has not,
since inception, self-insured against any risk ordinarily insured against by
similar businesses. The Company has not received any notice from any of its
insurers that any insurance premiums will be increased in the future or that any
insurance coverage presently in force will not be available in the future on
substantially the same terms as are now in effect. There are no outstanding
requirements or recommendations by any current insurer or underwriter with
respect to the Company which require or recommend changes in the conduct of the
business or require any repairs or other work to be done to the assets and
properties of the Company.
SECTION 2.10 TAXES. The Company has filed or obtained filing extensions for
all tax returns, Federal, state, county, and local, required to be filed by it,
and the Company has paid or established adequate reserves (in accordance with
generally accepted accounting principles) for the payment of all taxes shown to
be due by such returns as well as all other taxes, assessments, and governmental
charges which have become due or payable, including, without limitation, all
taxes which the Company is obligated to withhold from amounts owing to
employees, creditors, and third parties. The Federal income tax returns of the
Company have never been audited by the Internal Revenue Service and no state
income or sales tax returns of the
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Company have been audited. No deficiency assessment with respect to or proposed
adjustment of the Company's Federal, state, county, or local taxes is pending
or, to the best of the Company's knowledge, threatened. There is no tax lien,
whether imposed by any Federal, state, county, or local taxing authority,
outstanding against the assets, properties, or business of the Company. Neither
the Company nor any of its shareholders has ever filed a consent pursuant to
Section 341(f) of the IRC (as hereinafter defined), relating to collapsible
corporations.
SECTION 2.11 OTHER AGREEMENTS. Except as set forth in Section 2.11 of the
Disclosure Schedule, the Company is not a party to or otherwise bound by any
written or oral contract, obligation, agreement, commitment, restriction, or the
like which individually or in the aggregate could materially adversely affect
the business, prospects, financial condition, operations, property, or affairs
of the Company. Except as set forth in Section 2.11 of Disclosure Schedule, the
Company is not a party to or otherwise bound by any written or oral:
(a) distributor, dealer, manufacturer's representative, advertising or
sales agency contract or agreement which is not terminable on less than ninety
days' notice without cost or other liability to the Company (except for
contracts which, in the aggregate, are not material to the business of the
Company);
(b) contract with any labor union or collective bargaining
organization (and, to the knowledge of the Company or the Founders, no
organizational effort is being made with respect to any of its employees);
(c) contract or other commitment with any supplier containing any
provision permitting any party other than the Company to renegotiate the price
or other terms, or containing any pay-back or other similar provisions upon the
occurrence of a failure by the Company to meet its obligations when due or the
occurrence of any other event;
(d) contract for the future purchase of fixed assets or for the future
purchase of materials, supplies, or equipment in excess of expected normal
operating requirements;
(e) contract for the employment of any officer, employee, or other
person (whether of a legally binding nature or in the nature of informal
understandings) of a full-time or consulting basis, except severance
arrangements not in excess one month's pay and accrued vacation pay;
(f) bonus, pension, profit-sharing, retirement, hospitalization,
insurance, stock purchase, stock option, or other plan, contract or
understanding pursuant to which benefits are provided to any employee of the
Company (other than group insurance plans applicable to employees generally);
(g) loan, note, indenture, agreement, or instrument relating to or
evidencing the borrowing of money or the mortgaging or pledging of, or otherwise
placing a lien or security interest on, any asset of the Company;
(h) guaranty of any obligation for borrowed money or otherwise;
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(i) voting trust or agreement, shareholders agreement, pledge
agreement, buy-sell agreement, or first refusal or preemptive rights agreement
relating to any securities of the Company (except for the Shareholders
Agreement);
(j) agreement, or group of related agreements with the same party or
any group of affiliated parties under which the Company has advanced or agreed
to advance money or has agreed to lease any property as lessee or lessor;
(k) agreement or obligation (contingent or otherwise) to issue, sell,
or otherwise distribute or repurchase or otherwise acquire or retire any share
of its capital stock or any of its other equity securities, except pursuant to
this Agreement and the Shareholders Agreement;
(l) assignment, license, or other agreement with respect to any form
of intangible property;
(m) agreement under which it has granted any person any rights to
register under the Securities Act of 1933, as amended (the "Securities Act"),
any of its currently outstanding securities or any of its securities which may
hereafter be issued;
(n) agreement under which the Company, the Founders, or any executive
or key employee has limited or restricted its right to compete with any person
in any respect;
(o) agreement providing for disposition of the business, assets, or
shares of the Company, agreements of merger or consolidation to which the
Company is a party or letters of intent with respect to the foregoing;
(p) franchise agreement, or any agreements involving, or letters of
intent with respect to, the acquisition of the business, assets, or shares of
capital stock of any other business;
(q) insurance policies; or
(r) other contract or group of related contracts with the same party
involving more than $10,000 or continuing over a period of more than six (6)
months from the date or dates thereof (including renewals or extensions optional
with another party), which contract or group of contracts is not terminable by
the Company without penalty upon notice of thirty (30) days or less, but
excluding any contract or group of contracts with a customer of the Company for
the sale, lease, or rental of the Company's products or services if such
contract or group of contracts was entered into by the Company in the ordinary
course of business.
The Company has provided counsel to the Investors with copies of and access to
all of the obligations, agreements and the like set forth in Section 2.11 to the
Disclosure Schedule (referred to individually as a "Contract" and collectively
as the "Contracts"). Each of the Contracts are valid, binding and in full force
and effect in all material respects. The Company, and to the knowledge of the
Company and the Founders, each other party thereto has in all material respects
performed all the obligations required to be performed by it to date and has
received no notice of default and is not in default (with due notice or lapse of
time or both) under any of the Contracts. The Company has no present expectation
or intention of not fully performing all its obligations under each of the
Contracts, and the Company has no knowledge of any breach or anticipated breach
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by the other party to any of the Contracts. There is no Contract that contains
any contractual requirement with which there is a reasonable likelihood that the
Company or any other party thereto will be unable to comply with the terms
thereof. The continuation, validity, and effectiveness of each Contract will in
no way be affected by the consummation of the transactions contemplated by this
Agreement. There exists no actual or, to the best knowledge of the Company, any
threatened termination, cancellation, or limitation of, or any amendment,
modification, or change to any Contract, which would have a material adverse
effect on the business or condition, financial or otherwise, of the Company.
SECTION 2.12 PATENTS, TRADEMARKS, ETC. The Company has sufficient title to
and ownership of, or can obtain on terms which will not adversely affect its
business, all franchises, permits, licenses, and other similar authority
necessary for the conduct of its business as now being conducted and as planned
to be conducted, and it is not in default under any of such franchises, permits,
licenses, and other similar authority. The Company possesses all patents, patent
rights, patent applications, trademarks, trademark applications, service marks,
service mark applications, trade names, copyrights, formulae, trade secrets, and
know how (collectively, "Intellectual Property") necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the knowledge of the Company and the Founders,
threatened to the effect that the operations of the Company infringe upon or
conflict with the asserted rights of any other person under any Intellectual
Property, and, to the knowledge of the Company and the Founders, there is no
basis for any such claim (whether or not pending or threatened). No claim is
pending or threatened to the effect that any such Intellectual Property owned or
licensed by the Company, or which the Company otherwise has the right to use, is
invalid or unenforceable by the Company, and, to the knowledge of the Company
and the Founders, there is no basis for any such claim (whether or not pending
or threatened). The Company is not aware of any third party which is infringing
or violating any of the Intellectual Property of the Company. To the knowledge
of the Company and the Founders, all technical information developed by and
belonging to the Company which has not been patented has been kept confidential.
The Company has not granted or assigned to any other person or entity any of the
Intellectual Property or the right to manufacture, have manufactured, assemble,
or sell the products or proposed products or to provide the services or proposed
services of the CompaSection 2.13 Loans and Advances. The Company does not have
any outstanding loans or advances to any person and is not obligated to make any
such loans or advances, except, in each case, for advances to employees of the
Company in respect of reimbursable business expenses anticipated to be incurred
by them in connection with their performance of services for the Company in the
ordinary course of business, consistent with past practice.
SECTION 2.14 ASSUMPTION, GUARANTIES, ETC. of Indebtedness of Other Persons.
The Company has not assumed, guaranteed, endorsed, or otherwise become directly
or contingently liable on any indebtedness of any other person (including,
without limitation, liability by way of agreement, contingent or otherwise, to
purchase, to provide funds for payment, to supply funds to, or otherwise invest
in the debtor, or otherwise to assure the creditor against loss), except for
guaranties by endorsement of negotiable instruments for deposit or collection in
the ordinary course of business.
SECTION 2.15 SIGNIFICANT CUSTOMERS AND SUPPLIERS. No customer or supplier
which was or has been significant to the Company in the past three (3) years has
terminated, materially reduced or threatened to terminate or materially reduce
its purchases from or provision of products or services to the Company, as the
case may be.
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SECTION 2.16 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Investors set forth in Article 3 hereof,
no registration, qualification, or filing with, or consent or approval of or
other action by, any Federal, state, or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery, and
performance by the Company of this Agreement, the offer, issuance, sale and
delivery of the Preferred Stock and the Warrants, the issuance and delivery of
the Warrant Shares upon exercise of the warrants or the consummation of any
other transaction contemplated hereby, other than (i) filings pursuant to state
securities laws (all of which filings have been made as of the date hereof) in
connection with the offer and sale of the Preferred Stock and the Warrants and
(ii) the filing of a notice under Regulation D under the Securities Act.
SECTION 2.17 FINANCIAL STATEMENTS. Attached as Section 2.17 to the
Disclosure Schedule are true, correct, and complete copies of: the audited
Statement of Assets, Liabilities and Shareholders' Equity - Income Tax Basis of
the Company dated December 31, 1992, and an audited Statement of Revenues and
Expenses - Income Tax Basis, and an audited Statement of Changes in Shareholders
Equity - Income Tax Basis for the year then ended, together with notes thereto
and the audit report of KPMG Peat Marwick thereon (collectively, the "Financial
Statements"). The Financial Statements (i) are in accordance with the books and
records of the Company, (ii) present fairly the financial condition of the
Company as of the respective dates indicated and the results of operations for
such periods except that interim period financial statements are subject to
normal year-end audit adjustments, which in the aggregate will not materially or
adversely change such interim financial statements, (iii) have been prepared on
a tax accounting basis consistently applied throughout the periods involved, and
(iv) reflect adequate reserves for all liabilities and losses. The Company has
not received any advice or notification from its independent certified public
accountants that the Company has used any improper accounting practice that
would have the effect of not reflecting or incorrectly reflecting in the
Financial Statements or the books and records of the Company, any properties,
assets, liabilities, revenues, or expenses. The Financial Statements do not
contain any items of special or nonrecurring income, or other income not earned
in the ordinary course of business, except as set forth in the notes to the
Financial Statements. The books, records, and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions and the assets and
liabilities of the Company. The Company has not engaged in any transaction,
maintained any bank account, or used any of the funds of the Company, except for
transactions, bank accounts, and funds which have been and are reflected in the
normally maintained books and records of the Company.
SECTION 2.18 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
material liabilities or obligations (secured or unsecured, whether accrued,
absolute, direct, indirect, contingent, or otherwise, and whether due or to
become due) that are not fully accrued or reserved against in the Financial
Statements, other than (a) liabilities incurred in the ordinary course of
business subsequent to the date of the Financial Statements and (b) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements, which liabilities and obligations, individually or in
the aggregate, are not material to the financial condition or operating results
of the Company.
SECTION 2.19 ABSENCE OF CHANGES. Since the date of the Financial Statements
and except as reflected therein, (a) there has been no material adverse change
in the condition (financial or otherwise), business, property, assets, or
liabilities of the Company other than changes in the ordinary course of
business, none of which, individually or in the aggregate, has been materially
adverse; (b) the Company has not entered into any material transaction which was
not in the ordinary course of its business; (c) there has been no damage to,
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destruction of, or loss of physical property (whether or not covered by
insurance) materially adversely affecting the business or operations of the
Company; (d) except as contemplated by this Agreement, the Company has not
declared or paid any dividend on its stock, made any distribution on its stock,
redeemed, purchased, or otherwise acquired any of its stock, granted any options
to purchase shares of its stock; (e) the Company has not increased the
compensation of any of its officers, or the rate of pay of its employees as a
group, except as part of regular compensation increases in the ordinary course
of its business, to an amount in excess of the amounts set forth in the pro
formas previously delivered to the Investors; (f) there has been no resignation
or termination of employment of any key officer or employee of the Company, and
the Company does not know of the impending resignation or termination of
employment of any such officer or employee that if consummated, would have a
material adverse effect on the business of the Company; (g) there has been no
labor dispute involving the Company or its employees and none is pending or to
the knowledge of the Company and the Founders, threatened; (h) there has been no
change, except in the ordinary course of business, in the contingent obligations
of the Company by way of guaranty, endorsement, indemnity, warranty, or
otherwise; (i) there have been no loans made by the Company to its employees,
officers, directors, or partners other than travel advances and office advances
made in the ordinary course of business; and (j) to the knowledge of the Company
and the Founders, there has been no other event or condition of any kind which
might reasonably be expected to result in a material and adverse change in the
Company's condition (financial or otherwise) or business or to impair materially
the ability of the Company to conduct its business as it is currently being
conducted.
SECTION 2.20 EMPLOYEE BENEFIT PLANS.
(a) Section 2.20 of the Disclosure Schedule contains a true and
complete list of all the following agreements or plans which are presently in
effect or which have previously been in effect and which cover employees of the
Company ("Employees"):
(i) Any employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), and any trust or
other funding agency created thereunder, or under which the Company, with
respect to the Employees, has any outstanding, present, or future obligation or
liability, or under which any Employee or former Employee has any present or
future right to benefits which are covered by ERISA; or
(ii) Any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical, life insurance, or other
employee benefit plan, program, policy, or arrangement, whether written or
unwritten, formal or informal, which the Company, with respect to the Business,
maintains or to which the Company, with respect to the Business, has any
outstanding, present, or future obligations to contribute or make payments
under, whether voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements which are described in
subparagraph (i) or (ii) above and which are listed on Section 2.20 of the
Disclosure Schedule are hereinafter collectively referred to as the "Company
Benefit Plans." The Company has delivered to the Investors true and complete
copies of all written plan documents and contracts evidencing the Company
Benefit Plans, as they may have been amended to the date hereof, together with
(A) all documents relating to any tax-qualified retirement plan maintained by
the Company, which documents are required to have been filed prior to the date
hereof with governmental authorities for each of the three most recently
completed plan years; (B) attorney's response to an auditor's request for
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information for each of the three most recently completed plan years; and (C)
financial statements for each Company Benefit Plan for each of the three most
recently completed plan years.
(b) Except for the Company Benefit Plans, the Company does not now
maintain, nor has the Company at any time in the past been obligated to make any
payment or contribution to any pension, retirement, profit-sharing, deferred
compensation, stock purchase, stock option, bonus or incentive plan, any
medical, vision, dental, or other health plan, any life insurance plan,
vacation, severance, disability, or any other employee benefit plan, program,
policy, or arrangement, whether written, unwritten, formal, or informal,
including, without limitation, any "employee benefit plan" as defined in Section
3(3) of ERISA. The Company has not made, entered into, or agreed to any
commitment, whether written or oral, which would obligate the Company to
establish any employee benefit plan, or continue any employment agreement or
employment policy covering Employees. With respect to all "welfare plans," as
defined in Section 3(1) of ERISA, covering Employees or former Employees, there
are no obligations to continue coverage or to make payments to or on behalf of
persons who are or may become retired or terminated Employees or their
beneficiaries, other than as may be required by Sections 601 through 608 of
ERISA.
(c) The Company has complied with the continuation coverage
requirements of Section 1001 of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and ERISA Sections 601 through 608.
SECTION 2.21 DISCLOSURE.
(a) The Company has delivered to the Investors a true and correct copy
of (i) the Articles of Incorporation of the Company, and all amendments thereto
and restatements thereof certified by the appropriate state official; and (ii)
the Bylaws of the Company and all amendments thereto.
(b) The minute books of the Company made available to the Investors
prior to the date hereof, accurately reflect all corporate action taken by the
directors and shareholders of the Company or any committee of the Board of
Directors of the Company and contain true and accurate copies of or originals of
the respective minutes of all meetings or consent actions of the directors, any
committee of the Board of Directors, and the shareholders.
(c) The stock record books of the Company, made available to the
Investors prior to the date hereof, accurately reflect the stock ownership of
the Company, and contain complete and accurate records with respect to the
transfer of all securities issued by the Company and each Investment since
inception.
SECTION 2.22 BROKERS. The Company has no contract, arrangement, or
understanding with any broker, finder, or similar agent with respect to the
transactions contemplated by this Agreement, nor has the Company authorized or
employed any person in connection with the offering or sale of the Preferred
Stock, or the Warrants or any security of the Company similar to the Preferred
Stock or the Warrants.
SECTION 2.23 TRANSACTIONS WITH AFFILIATES. No Founder, director, officer,
employee, or shareholder of the Company, or member of the family of any such
person, or any corporation, partnership, trust, or other entity in which any
such person, or any member of the family of any such person, has a substantial
interest or is an officer, director, trustee, partner, or holder of more than 5%
of the outstanding equity interests thereof is
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a party to any transaction with the Company, including any contract, agreement
or other arrangement providing for the employment of, furnishing of services by,
rental of real or personal property from or otherwise requiring payments to any
such person or firm.
SECTION 2.24 EMPLOYEES.
(a) No officer or key Employee has advised the Company (orally or in
writing) that he or she intends to terminate employment with the Company. The
Company has complied in all material respects with all applicable laws relating
to the employment of labor, including provisions relating to wages, hours, equal
opportunity, worker health and safety, collective bargaining, and the payment of
Social Security and other taxes, and with ERISA.
(b) The Company does not have any collective bargaining agreement
covering any of its Employees. There is no pending or, to the best knowledge of
the Company, threatened labor dispute involving the Company or any of its
Employees. To the best of the Company's knowledge, the Company has amicable
relations with its Employees.
SECTION 2.25 U.S. REAL PROPERTY HOLDING CORPORATION. [Intentionally
omitted.]
SECTION 2.26 FOREIGN CORRUPT PRACTICES ACT. The Company has not made,
offered or agreed to offer anything of value to any government official,
political party or candidate for government office nor has it taken any action
which would cause the Company to be in violation of the Foreign Corrupt
Practices Act of 1977.
SECTION 2.27 ENVIRONMENTAL REGULATIONS.
(a) Except for failures which will not result in any material
liability or consequences to the Company, the Company has met, and continues to
meet, all applicable local, state, Federal and national environmental
regulations.
(b) The Company has not been notified that it is potentially liable,
has not received any requests for information or other correspondence concerning
any site or facility, and is not otherwise aware that it is considered
potentially liable under the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or any similar state law.
(c) The Company has not entered into or received any consent decree,
compliance order, or administrative order relating to environmental protection.
(d) The Company has neither entered into or received nor is the
Company in default under any judgment, order, writ, injunction, or decree of any
federal, state, or municipal court or other governmental authority relating to
environmental protection.
(e) The Company has all permits, licenses, approvals, consents, and
authorizations (the "Environmental Permits") relating to environmental or health
protection which are required under Federal, state, or local laws, rules, and
regulations and is in compliance with all the Environmental Permits (including
any information provided on the applications therefor), and Section 2.27 of the
Disclosure Schedule contains
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a complete list and description of all such Environmental Permits and attached
to Section 2.27 of the Disclosure Schedule is a true and correct copy of each
such Environmental Permit;
(f) There are no actions, suits, claims, arbitration proceedings, or
complaints pending or, to the Company's knowledge, threatened or under
consideration by any governmental authority, municipality, community, citizen,
or other entity against the Company relating to environmental protection, nor
does the Company have reason to believe that any such actions, suits, claims, or
complaints will be brought against it.
(g) No disposal, releases, burial, or placement of hazardous or toxic
substances, pollutants, contaminants, petroleum, gas products, or
asbestos-containing materials (as any of such terms may be defined under
Federal, state, or local law) (hereinafter collectively referred to as
"Hazardous Materials") has occurred on, in, at, or about any of the Company's
properties or facilities or any other facility or site to which Hazardous
Materials from the Company may have been taken at any time in the past and
Section 2.27 of the Disclosure Schedule contains a list of all facilities to
which Hazardous Materials from the Company have been taken in the past.
(h) To the Company's knowledge, there has been no disposal, releases,
burial, or placement of Hazardous Materials on any property not owned or
operated in the present or the past by the Company which may result or has
resulted in contamination of or beneath any of the Company's properties or
facilities.
(i) There are no above-ground and underground storage tanks on the
Real Property.
(j) No lien has arisen on the Company's properties or facilities under
Federal, state, or local laws, rules, or regulations as they relate to
environmental protection.
(k) No audit or investigation has been conducted as to environmental
matters at any of the Company's properties by any private party (including but
not limited to the Company) or any governmental agency.
SECTION 2.28 DISCLOSURE. Neither this Agreement nor any Schedule or Exhibit
hereto, contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading.
None of the statements, documents, certificates or other items prepared or
supplied by the Company with respect to the transactions contemplated hereby
contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading.
ARTICLE 3.
REPRESENTATION AND WARRANTIES OF THE INVESTORS
Each Investor represents and warrants to the Company as to such
Investor only, that:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act, as indicated on the Investor Certification of such
Investor, annexed hereto as Schedule 3;
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(b) it has sufficient knowledge and experience to evaluate the risks
and merits of its investment in the Company and it is able financially to bear
the risks thereof;
(c) it has had an opportunity to ask questions of and receive answers
from and to discuss the Company's business, management, and financial affairs
with the Company's management;
(d) the Preferred Stock and the Warrants are being acquired for its
own account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof;
(e) it was not offered nor made aware of the Company's interest in
issuing the Preferred Stock and the Warrants by any means of public
advertisement or solicitation;
(f) in connection with such Investor's purchase of the Preferred Stock
and the Warrants, it has been solely responsible for its own (i) due diligence
investigation of the Company and (ii) investment decision, and has not engaged
or relied upon any agent or "purchaser representative" to review or analyze the
Company's business and affairs or advise such Investor with respect to the
merits of the investment;
(g) it has full power and authority to execute, deliver, and perform
each of this Agreement, the Shareholders Agreement, the Warrant, and to purchase
the Preferred Stock and the Warrants; and, that each of this Agreement, the
Shareholders Agreement, and Warrant, will constitute the legal, valid, and
binding obligation of the Investor, enforceable against it in accordance with
their respective terms; and
(h) in the event that the Investor proposes to sell the Preferred
Stock or the Warrants pursuant to Rule 144A under the Securities Act, it will
(A) take reasonable steps to obtain the information required by such Rule to
establish a reasonable belief that the prospective purchaser is a "qualified
institutional buyer" as such term is defined in Rule 144A and (B) advise the
prospective purchaser that the Investor is relying on the exemption from the
registration provisions of the Securities Act available pursuant to Rule 144A.
ARTICLE 4.
CONDITIONS PRECEDENT TO THE PURCHASE OF THE
PREFERRED STOCK AND WARRANTS BY INVESTORS
In connection with the purchase of the Preferred Stock and Warrants at
the Closing, the Investors shall be entitled to receive the following
certificates, opinions, and documents or evidence reasonably satisfactory to
them as to the following, each of which requirements may be waived by the
Investors. The Company agrees to use its best efforts to cause each of such
requirements to be satisfied:
(a) The Investors shall have received from Kinsey & Gleason, counsel
for the Company and the Founders, an opinion dated the Closing Date, in form and
scope satisfactory to the Investors and its counsel, in substantially the form
attached hereto as Exhibit D.
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(b) The representations and warranties contained in Article 2 shall be
true, complete and correct.
(c) The Company shall have performed and complied with all covenants
and agreements contained herein required to be performed or complied with by it
prior to or at the Closing Date.
(d) The Company shall have obtained any and all consents, permits and
waivers and made all filings necessary or appropriate for the consummation of
the transactions contemplated hereby.
(e) All corporate and other proceedings to be taken by the Company in
connection with the transactions contemplated hereby and all documents relating
to such transactions shall be satisfactory in form and substance to the
Investors and its counsel, and the Investors and its counsel shall have received
all such counterpart originals or certified or other copies of such documents as
they reasonably may request. The Company shall have delivered to the Investors a
certificate executed by the President and Treasurer of the Company certifying as
to the fulfillment of the conditions specified in subsections (b), (c), (d) and
(i) of this Article 4.
(f) The Investors and their counsel shall have received copies of the
following documents:
(i) (A) the Articles in the form of Exhibit D hereto, certified
or bearing evidence of filing by the Department of State of the State of
Florida, and (B) a certificate of said Department of State, dated as of a
recent date as to the due incorporation and good standing of the Company,
the payment of all franchise taxes by the Company and listing all documents
of the Company on file with said Department of State;
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company dated the Closing Date and certifying: (A) that attached
thereto is a true and complete copy of the Bylaws of the Company as in
effect on the date of such certification; (B) that attached thereto is a
true and complete copy of all resolutions adopted by the Board of Directors
or the shareholders of the Company authorizing the execution, delivery, and
performance of this Agreement, the Shareholders Agreement, the
Indemnification Agreement, the Warrants, the issuance, sale, and delivery
of the Preferred Stock, and that all such resolutions are in full force and
effect and are all the resolutions adopted in connection with the foregoing
agreements and the transactions contemplated thereby; (C) that the Articles
have not been amended since the date of the last amendment referred to in
the certificate delivered pursuant to clause (i)(B) above; and (D) to the
incumbency and specimen signature of each officer of the Company executing
this Agreement, the Shareholders Agreement, the Indemnification Agreement,
the Warrants, the stock certificates representing the Preferred Stock, and
any certificate or instrument furnished pursuant hereto, and a
certification by another officer of the Company as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(ii); and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as the Investors
or its counsel reasonably may request.
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(g) The Investors shall have received the Shareholders Agreement
executed and delivered by each of the Company, each Investor, the A. Falcones,
the E. Falcones, and the Cuccis.
(h) All shareholders of the Company having any preemptive, first
refusal, or other rights with respect to the issuance of the Preferred Stock or
the Warrants shall have irrevocably waived the same in writing and copies of
such waivers shall have been delivered to Investors's counsel.
ARTICLE 5.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY
The obligation of the Company to issue and sell the Preferred Stock
and the Warrants to the Investors on the Closing Date is, at its option, subject
to the satisfaction, on or before the Closing Date, of the following conditions:
(a) All representations and warranties of the Investors contained in
Article 3 hereof shall be true and correct on the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date.
(b) All corporate and other proceedings to be taken by the Investors
in connection with the transactions contemplated hereby, and all documents
incidental thereto, shall be satisfactory in form and substance to the Company
and its counsel.
(c) The Investors shall have delivered to the Company the full
purchase price for the Preferred Stock and the Warrants to be purchased
hereunder.
(d) The Company shall have received the Shareholders Agreement
executed by each Investor.
ARTICLE 6.
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Investors that, unless waived in
accordance with Section 8.9 hereof, so long as any of the Preferred Stock or the
Warrants are outstanding:
SECTION 6.1 FINANCIAL STATEMENTS, REPORTS, ETC. The Company shall furnish
to the Investors:
(a) within one hundred twenty (120) days after the end of each fiscal
year of the Company, an audited balance sheet of the Company, as of the end of
such fiscal year and the related statements of income, shareholders' equity, and
changes in cash flows for such fiscal year, prepared in accordance with
generally accepted accounting principles and certified by a firm of independent
public accountants of recognized national standing selected by the Board of
Directors of the Company;
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(b) within forty-five (45) days after the end of each fiscal quarter
(other than the last quarter in each fiscal year) a balance sheet of the
Company, and the related statements of income, shareholders' equity, and changes
in cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company, such balance sheet to be as of the end of such quarter and such
statements of income, shareholders' equity and changes in cash flows to be for
such quarter and for the period from the beginning of the fiscal year to the end
of such quarter, in each case with comparative statements for the prior fiscal
year (except for 1992, the Company shall not be required to provide comparative
statements), provided that the Company's obligations under this Section 6.1(b)
shall terminate upon the completion of a firm commitment underwritten public
offering of the Company's securities;
(c) within thirty (30) days after the end of each fiscal month, other
than the last month in each fiscal year and each fiscal quarter, a summary
balance sheet of the Company and a summary income statement of the Company,
unaudited, but prepared in accordance with generally accepted accounting
principles;
(d) at the time of delivery of each annual financial statement
pursuant to Section 6.1(a) hereof, a certificate executed by the Chief Financial
Officer of the Company stating that such officer has caused this Agreement, the
Articles, the Shareholders Agreement, and the Warrants to be reviewed and has no
knowledge of any default by the Company in the performance or observance of any
of the provisions of this Agreement, the Articles, the Shareholders Agreement,
or the Warrants, if such officer has such knowledge, specifying such default and
the nature thereof;
(e) at the time of delivery of each quarterly statement pursuant to
Section 6.1(b) hereof, a management narrative report explaining all significant
variances from forecasts and all significant current developments in staffing,
marketing, sales, and operations;
(f) not less than forty-five (45) days prior to the start of each
fiscal year, capital and operating expense budgets, cash flow projections and
income and loss projections for the Company in respect of such fiscal year, all
itemized in reasonable detail and prepared on a monthly basis and approved by a
majority of the Board of Directors and the Series A Directors (as hereinafter
defined), and, promptly after preparation, any revisions to any of the foregoing
approved by the Board of Directors;
(g) promptly following receipt by the Company, each audit response
letter, accountant's management letter and other written report submitted to the
Company by its independent public accountants in connection with an annual or
interim audit of the books of the Company or any of its subsidiaries;
(h) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations, and inquiries of the type described
in Section 2.5 hereof that could materially adversely affect the Company or any
of its subsidiaries;
(i) promptly upon sending, making available or filing the same, all
press releases, reports, and financial statements that the Company sends or
makes available to its shareholders or directors;
(j) within ten (10) business days following the receipt of a request
by the Investors or any subsequent holder of the Preferred Stock or the Warrants
advising the Company that the Investors or
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such holder proposes to sell all or any part of such securities pursuant to Rule
144A or by a prospective purchaser of the Preferred Stock or the Warrants in a
sale proposed to be made pursuant to Rule 144A, (A) a brief statement of the
nature of the business of the Company and the products and services the Company
offers prepared as of a date within the preceding twelve (12) months, (B) the
Company's most recent (1) balance sheet which shall be as of a date within the
preceding sixteen (16) months, and (2) statements of profit and loss and
retained earnings which shall be as of a date within the twelve (12) months
preceding the date of such balance sheet, provided, however, that if such
balance sheet is not as of a date within the preceding six (6) months, the
balance sheet shall be accompanied by additional statements of profit and loss
and retained earnings for the period from the date of such balance sheet to a
date within the preceding six (6) months and (C) the Company's audited balance
sheet, statements of profit and loss and retained earnings for the two (2)
preceding fiscal years of the Company; and
(k) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property, or affairs of
the Company as the Investors reasonably may request.
SECTION 6.2 FINANCIAL COVENANTS AND RATIOS.
(a) The Company will not permit, at any time, its total shareholders'
equity (including common and preferred stock, capital surplus, additional
paid-in-capital and retained earnings, less the cost of capital stock of the
Company required for the Treasury and other capital accounts, if any) of the
Company at such date, determined in accordance with generally accepted
accounting principles consistently applied ("Total Equity"), to be less than
$1,000,000.
(b) The Company will not have any indebtedness due to any shareholder
except for up to $1,000,000 of indebtedness ("Shareholder Loans"), without the
approval of the Board of Directors and the Series A Director.
(c) The Company will not permit the ratio of (x) its indebtedness from
all sources (excluding indebtedness secured by real estate which is subject to a
binding, valid, and subsisting sale contract with an unaffiliated third party)
minus Shareholder Loans to (y) its Total Equity (excluding the effect, if any,
of the loans described in the previous parenthetical) plus Shareholder Loans to
exceed 2.5:1.0 as of the last day in any fiscal month.
(d) The Company will not acquire, purchase or lease pursuant to a
capitalized lease, fixed assets, equipment, or real estate (excluding building
lots for homes) having an aggregate purchase price of capitalized cost (in the
case of capitalized leases) in excess of $250,000 in any fiscal year provided
that the Company may exceed such amount, in each case with the approval of the
Board of Directors and the Series A Director.
(e) Any covenant violation in this Section 6.2 may be waived at the
discretion of the Series A Director.
SECTION 6.3 CORPORATE EXISTENCE. The Company shall maintain and cause any
Investment in which the Company owns a controlling interest to maintain their
respective separate corporate existences, rights, and franchises in full force
and effect.
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SECTION 6.4 PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain and
cause any subsidiary to maintain as to their respective properties and
businesses, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated which insurance shall be deemed by
the Company to be sufficient. The Company shall also maintain in effect "key
person" life insurance policies, payable to the Company, on the life of each of
Arthur J. Falcone and Philip Cucci, Jr. (so long as he remains an employee of
the Company), in the amount of at least $1,000,000. The Company shall not cause
or permit any assignment or change in beneficiary and shall not borrow against
such policy. If requested by the Investors, the Company will add one designee of
the Investors as a notice party for such policy and shall request that the
issuer of such policy provide such designee with ten (10) days notice before
such policy is terminated (for failure to pay premiums or otherwise) or assigned
or before any change is made in the beneficiary thereof.
SECTION 6.5 INSPECTION, CONSULTATION, AND ADVICE. The Company shall permit
and cause any subsidiary to permit any of the Investors and such persons as the
Investors may designate, at the expense of the Company once per year, and if
more often than once per calendar year, with the additional visits at such
Investor's expense, to visit and inspect any of the properties of the Company
and any Investment, examine their books and take copies and extracts therefrom,
discuss the affairs, finances, and accounts of the Company with their officers,
employees, and public accountants and the Company hereby authorizes said
accountants to discuss with such Investors and such designees such affairs,
finances, and accounts), and consult with and advise the management of the
Company as to their affairs, finances, and accounts, all at reasonable times and
upon reasonable notice.
SECTION 6.6 RESTRICTIVE AGREEMENTS PROHIBITED. The Company shall not become
a party to any agreement which by its terms restricts the Company's performance
of this Agreement, the Articles, the Shareholders Agreement, the Indemnification
Agreement, or the Warrants.
SECTION 6.7 TRANSACTIONS WITH AFFILIATES. Except for (a) transactions
contemplated by this Agreement, (b) transactions with the affiliated entities
listed in Section 6.7 of the Disclosure Schedule, provided that the terms of
such transactions are no less favorable to the Company than the terms available
from third parties on an arm's length basis from non-affiliated third parties,
(c) loans by shareholders up to $1,000,000 outstanding at any time, provided
that the security for such loans is limited to the real estate on which the
specific construction activities financed are located and provided further that
the interest rate and terms are no less favorable than the rate and terms
available on an arm's length basis from unaffiliated third parties, or (d) as
otherwise approved by the Board of Directors, the Company shall not enter into
any transaction with any director, officer, employee, or holder or more than 5%
of the outstanding capital stock of any class or series of capital stock of the
Company, member of the family of any such person, or any corporation,
partnership, trust, or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner, or holder
of more than 5% of the outstanding capital stock thereof, except for
transactions on customary terms related to such person's employment. All
transactions with affiliates shall be reported on a quarterly basis in the
financial reports required by Section 6.1(b) hereof, including, with respect to
each transaction, the affiliate involved, the amount paid to the affiliate in
such quarter, and amounts remaining to be paid to the affiliate by the Comany.
SECTION 6.8 EXPENSES OF DIRECTORS. The Company shall promptly reimburse in
full, each director of the Company who is designated as a nominee for the Board
of Directors pursuant to the rights of the Investors under the Shareholders
Agreement or pursuant to the Articles (the "Series A Directors"), for all of his
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or her reasonable out-of-pocket expenses incurred in attending each meeting of
the Board of Directors of the Company or any committee thereof. In addition, the
Company shall pay directors fees to each Series A Director in an amount of
$12,000 per annum, in equal quarterly installments commencing June 1993, and
continuing quarterly thereafter until holders of Preferred Stock and Warrant
Shares no longer have the right to designate Series A Directors.
SECTION 6.9 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Preferred Stock and the Warrants for repayment of indebtedness not
to exceed $400,000, working capital requirements, and for general corporate
purposes.
SECTION 6.10 BOARD OF DIRECTORS MEETINGS. The Company shall use its best
efforts to ensure that meetings of the Board of Directors of the Company are
held at least four (4) times each year and at least once each quarter.
SECTION 6.11 COMPENSATION. Without the written consent of the Series A
Directors, the Company shall not pay to its management compensation in excess of
that shown on the pro formas previously delivered to the Investors.
SECTION 6.12 BYLAWS. The Company shall at all times cause its Bylaws to
provide that, (a) unless otherwise required by the laws of the State of Florida,
(i) any two (2) directors and (ii) any holder or holders of at least 66% of the
outstanding shares of Common Stock or 25% of the outstanding Preferred Stock,
shall have the right to call a meeting of the Board of Directors or shareholders
and (b) the number of directors fixed in accordance therewith shall in no event
conflict with any of the terms or provisions of the Articles. The Company shall
at all times maintain provisions in its Bylaws or Articles indemnifying all
directors against liability to the maximum extent permitted under the laws of
the State of Florida.
SECTION 6.13 MAINTENANCE OF OWNERSHIP OF INVESTMENTS. The Company shall not
sell or otherwise transfer any shares of capital stock of any Investment, except
to the Company or another Investment, or permit any Investment in which the
Company owns a controlling interest, to issue, sell or otherwise transfer any
shares of its capital stock or the capital stock of any Investment except to the
Company or another Investment.
SECTION 6.14 DISTRIBUTIONS BY INVESTMENTS. The Company shall not permit any
Investment in which the Company owns a controlling interest to purchase or set
aside any sums for the purchase of, or pay any dividend, or make any
distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another Investment in which the Company
owns a controlling interest.
SECTION 6.15 COMPLIANCE WITH LAWS. The Company shall comply with all
applicable laws, rules, regulations, and orders, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise.
SECTION 6.16 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles, consistently
applied, reflecting all financial transactions of the Company and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts, and other purposes in connection with its
business shall be made.
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SECTION 6.17 EMPLOYEE STOCK PLANS. As long as the Investors shall continue
to own any of the Preferred Stock, Warrants, or Warrant Shares, the Company
shall sell shares of or grant options to purchase shares of its capital stock to
Employees, officers, and directors of and consultants to the Company only
pursuant to stock option plans or stock purchase plans which have been adopted
and approved by the Company's Board of Directors and only so long as the Company
has an option to repurchase such shares upon the termination of employment with
the Company of such Employees, officers, directors, and consultants, and the
total number of shares of Common Stock as to which the Company may make such
sales or grant such options shall not exceed 10,000 shares, such number subject
to equitable adjustment for reorganizations, stock splits, stock dividends, and
like events (including shares issued or sold pursuant to (i) any such stock
option plan even though the shares were acquired upon the exercise of stock
options which were granted prior to the date hereof, and (ii) any such stock
purchase plans even though the shares acquired thereunder were purchased prior
to the date hereof). Under no circumstances shall the total number of shares of
the Company's Common Stock issued under any such stock purchase plan, plus any
shares issued or subject to issuance under any such stock option plan, exceed
10,000 shares (such number subject to equitable adjustment for reorganizations,
stock splits, stock dividends, and like events) at any time.
SECTION 6.18 FEES AND EXPENSES OF INVESTORS' COUNSEL. The Company shall pay
the fees not to exceed $30,000, and expenses of Powell, Goldstein, Frazer &
Murphy, Investors' counsel at the closing of the purchase and sale of the
Preferred Stock and Warrants.
SECTION 6.19 INDEMNIFICATION AGREEMENT. The Company will execute and
deliver to each Director an Indemnification Agreement in substantially the form
of Exhibit E hereto and will not take any action to terminate, rescind, or
reduce the scope of the indemnification provided thereby.
SECTION 6.20 UNITED STATES REAL PROPERTY HOLDING CORPORATION. If at any
time in the future the Company shall become a "United States Real Property
Holding Corporation" (as that term is defined in Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service) the Company shall, as
promptly as practicable, notify each foreign investor. Within thirty (30) days
after receipt of a request from a foreign investor, the Company shall prepare
and deliver to such foreign investor the statement required under Regulation
Section 1.897-2(h)(1)(IV) and subject to the succeeding sentence either or both
of the following documents: (i) an affidavit in conformance with the
requirements of Internal Revenue Code ("IRC") Section 1445(b)(3) or (ii) a
notarized statement, executed by an officer having actual knowledge of the
facts, that the shares of Company stock held by such foreign investor are of a
class that is regularly traded on an established securities market, within the
meaning of IRC Section 1445(b)(6). If the Company is unable to provide either of
the documents described in (i) or (ii) above, if requested, it shall promptly
notify such foreign investor in writing of the reasons for such inability.
Finally, upon the request of a foreign investor and without regard to whether
either document described in (i) or (ii) above has been requested, the Company
shall reasonably cooperate with the efforts of such foreign investor to obtain a
"qualifying statement," within the meaning of IRC Section 1445(b)(4) or such
other documents as would excuse a transferee of a foreign investor's interest
from withholding of income tax imposed pursuant to IRC Section 897(a).
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ARTICLE 7.
SPECIAL REDEMPTION RIGHT
The Company, and with the unanimous written consent of the Board of
Directors, the Founders, or any of them, at any time prior to November 30, 1995
(the "Expiration Date"), shall have the right to redeem Warrants exercisable for
75,000 Warrant Shares, or if Warrants have been exercised such that the then
outstanding Warrants are exercisable for less than 75,000 shares, then the right
to redeem shall encompass (i) the then outstanding Warrants plus (ii) a number
of issued and outstanding Warrant Shares which, when added to the number of
Warrant Shares issuable upon exercise of the then outstanding Warrants, equals
75,000 (such number of Warrants or Warrants and Warrant Shares, as the case may
be, are hereinafter the "Redeemable Warrants and Shares") and 5,455 shares of
Preferred Stock, upon the following terms and conditions (the "Special
Redemption Right"):
(a) If the Company, or, if applicable, the Founders, determine that it
or they desire to exercise the Special Redemption Right, the Company or the
Founders shall deliver a written notice (the "Special Redemption Notice") to
each Investor which specifies (i) that 75,000 Redeemable Warrants and Shares and
5,455 shares of Preferred Stock are to be redeemed by the Company or the
Founders, whichever the case may be, (ii) the number of Redeemable Warrants and
Shares and shares of Preferred Stock to be redeemed from each Investor (as
determined in accordance with subsection (b) hereof), and (iii) the time, date,
and place of the closing of the redemption which shall be a date at least 30
days after the date the Special Redemption Notice is delivered to the Investors,
but in no event after the Expiration Date.
(b) The Special Redemption Notice shall constitute an irrevocable call
option in favor of the Company or the Founders, which ever is applicable, to
purchase from each Investor a number of (i) Redeemable Warrants and Shares equal
to the product of (A) 75,000 multiplied by (B) a fraction, the numerator of
which is the number of Redeemable Warrants and Shares owned of record by such
Investor, and the denominator of which is the total number of then outstanding
Warrant Shares plus the total number of Warrant Shares issuable upon exercise of
all then outstanding Warrants, and (ii) shares of Preferred Stock equal to the
product of (A) 5,455 multiplied by (B) a fraction, the numerator of which is the
number of shares Preferred Stock owned of record by such Investor on the date of
the Special Redemption Notice, and the denominator of which is the total number
of shares of Preferred Stock outstanding on the date of the Special Redemption
Notice (including any Preferred Stock issued as a Preferred Dividend-in-Kind, as
set forth in the Articles).
(c) The purchase price to be paid to each Investor at the closing of
the redemption described in the Special Redemption Notice shall be equal to the
product of the number of Shares of Preferred Stock to be redeemed from such
Investor multiplied by $100 plus an amount which, when added to the Preferred
Dividends (as defined in the Articles) actually paid on the shares of Preferred
Stock being redeemed, would yield to such Investor an annual internal rate of
return of 25%, computed from the date hereof through the date of the closing of
the redemption described in the Special Redemption Notice. For purposes of the
redemption, shares of Preferred Stock shall be redeemed on a first issued, first
redeemed basis, and Warrants shall be redeemed prior to the redemption of
Warrant Shares.
(d) The closing of the purchase of redemption described in the Special
Redemption Notice shall be held at the principal office of the Company in Coral
Springs, Florida on a date at least 30 days
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after the date the Special Redemption Notice is delivered to the Investors, but
in no event after the Expiration Date. At the closing, the Investors shall
deliver certificates evidencing the Warrants and the Preferred Stock being
redeemed, duly endorsed or accompanied by duly executed stock powers, free and
clear of all liens, claims, charges, or encumbrances, against payment for the
Redeemable Warrants and Shares and the shares of Preferred Stock being redeemed.
At the closing, the Company will, if necessary re-issue certificates evidencing
the balance of the Warrant Shares and shares of Preferred Stock held by such
Investor after the redemption. No Investor shall be obligated to tender the
Redeemable Warrants and Shares and shares of Preferred Stock at the closing of
the redemption described in the Special Redemption Notice, unless the Company
redeems the number of Redeemable Warrants and Shares and shares of Preferred
Stock from each Investor as specified in the Special Redemption Notice or any
amendment thereof which is satisfactory to all Investors.
ARTICLE 8.
MISCELLANEOUS
SECTION 8.1 EXPENSES. Except as provided in Section 6.17 hereof, the
Company shall pay at Closing, all expenses incurred by it and by the Investors
in connection with the negotiation, documentation, and consummation of the
transactions contemplated hereby, whether or not such transactions shall be
consummated.
SECTION 8.2 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations, and warranties made herein or in the Shareholders Agreement and
the Warrants, or any certificate or instrument delivered to the Investors
pursuant to or in connection with this Agreement, the Shareholders Agreement and
the Warrants shall survive the execution and delivery of this Agreement, the
Shareholders Agreement and the Warrants, and the closing of the transactions
contemplated hereby and thereby, and all statements contained in any certificate
or other instrument delivered by the Company or the Founders hereunder or
thereunder or in connection herewith or therewith shall be deemed to constitute
representations and warranties made by the Company or the Founders,
respectively. All covenants, agreements, representations, and warranties made
herein or in the Shareholders Agreement and the Warrants, or any certificate or
instrument delivered to the Company and the Founders pursuant to or in
connection with this Agreement, the Shareholders Agreement and the Warrants
shall survive the execution and delivery of this Agreement, the Shareholders
Agreement and the Warrants, and the closing of the transactions contemplated
hereby and thereby, and all statements contained in any certificate or other
instrument delivered by the Investors hereunder or thereunder or in connection
herewith or therewith shall be deemed to constitute representations and
warranties made by the Investors.
SECTION 8.3 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations, and warranties made herein or in the Shareholders Agreement and
the Warrants, or any certificate or instrument delivered to the Company or the
Founders pursuant to or in connection with this Agreement, the Shareholders
Agreement and the Warrants shall survive the execution and delivery of this
Agreement, the Shareholders Agreement and the Warrants, and the closing of the
transactions contemplated hereby and thereby, and all statements contained in
any certificate or other instrument delivered by the Investors hereunder or
thereunder or in connection herewith or therewith shall be deemed to constitute
representations and warranties made by the Investors.
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SECTION 8.4 BROKERAGE. Except for an advisory fee payable by the Company to
Jefferies & Company in the amount of $50,000, each party hereto will indemnify
and hold harmless the others against and in respect of any claim for brokerage
or other commissions relative to this Agreement or to the transactions
contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third
party.
SECTION 8.5 PARTIES IN INTEREST. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants, and agreements
benefiting the Investors shall inure to the benefit of any and all subsequent
holders from time to time of the Preferred Stock or the Warrants.
Notwithstanding the foregoing, the right to purchase the Preferred Stock and the
Warrants hereunder pursuant to Section 1.1 may not be sold, transferred, or
otherwise assigned except to an affiliate of the Investors, a successor to
substantially all the business and assets of the Investors.
SECTION 8.6 NOTICES. All notices, requests, consents, and other
communications required or permitted hereunder shall be in writing and shall be
effective when delivered in person or by a courier service, postage prepaid,
addressed as follows:
(a) if to the Company:
Transeastern Properties of South Florida, Inc.
7522 Wiles Road
Suite 203
Coral Springs, FL 33067
Attention: President
with a copy (which shall not constitute notice) to:
Kinsey & Gleason
185 Northwest Spanish River Boulevard
Suite 100
Boca Raton, FL 33431
Attention: John Kinsey, Esq.
(b) if to the Investors: At the address of
such Investor on Schedule 1 hereto
with a copy (which shall not constitute notice) to:
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, N.E.
16th Floor
Atlanta, Georgia 30303
Attention: Gerardo M. Balboni II, Esq.
Facsimile Number (404) 572-6999;
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or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 8.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, irrespective of
the choice of law provisions thereof.
SECTION 8.8 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits hereto, and the other documents delivered pursuant hereto constitute
the full and entire agreement of the parties with respect to the subject matter
hereof and thereof. All Schedules and Exhibits hereto are hereby incorporated
herein by reference.
SECTION 8.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 8.10 AMENDMENTS. This Agreement may not be amended or modified, and
no provisions hereof may be waived, without the written consent of the Company
and the holders of at least two-thirds of the outstanding shares of Preferred
Stock and Warrant Shares.
SECTION 8.11 SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority to
the extent possible, it shall be modified in such manner as to be valid, legal,
and enforceable but so as to most nearly retain the intent of the parties and,
if such modification is not possible, such provision shall be severed from this
Agreement, and in either case, the validity and enforceability of any other
provision and of the entire Agreement shall not be affected thereby.
SECTION 8.12 TITLES AND SUBTITLES. The title and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 8.13 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
(a) "affiliate" shall mean, with respect to any person, any person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such other person.
(b) "person" shall mean an individual, corporation, trust,
partnership, joint venture, limited liability company, unincorporated
organization, government agency, or any agency or political subdivision thereof,
or other entity.
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IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement as of the day and year first above written.
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC.
[Corporate Seal] By:
Attest: Title:
Secretary
INVESTORS:
MEZZONEN, S.A.
By: Patrick Savin, Chief Financial Officer
THE HANDLER FAMILY TRUST DTD 9/12/91
By: Richard Handler, Trustee
CHRISTOPHER ALLICK
ANDREW WHITTAKER
DAVID F. EISNER
DAVID J. LOSITO
By:
Kenneth Taratus, Attorney-in-fact
under POA dated June 1, 1993
[SIGNATURES CONTINUED ON NEXT PAGE]
28
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FOUNDERS
Arthur J. Falcone
Marcy Falcone
Edward W. Falcone
Diana Falcone
Philip Cucci, Jr.
Linda Cucci
29
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SCHEDULE 1
TO
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
Preferred Warrant Aggregate
Shares Shares Purchase
Investor Name and Address Purchased Purchased Price
- ------------------------- --------- --------- -----
Mezzonen, S.A.* ....................... 18,250 250,938 $ 1,825,250.94
Savin Carlson Investment Corp.
9777 Wilshire Boulevard
Suite 811
Beverly Hills, CA 92212
Attention: Patrick Savin,
Chief Investment Advisor
Christopher Allick .................... 350 4,812 $ 35,004.81
Jefferies & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, CA 90025
Andrew Whittaker ...................... 100 1,375 $ 10,001.38
Jefferies & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, CA 90025
David F. Eisner ....................... 200 2,750 $ 20,002.75
Jefferies & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, CA 90025
David J. Losito ....................... 100 1,375 $ 10,001.38
Jefferies & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, CA 90025
The Handler Family Trust DTD 9/12/91 .. 1,000 13,750 $ 100,013.75
Jefferies & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, CA 90025
20,000 275,000 $ 2,000,275.01
* Nominee to register shares for Mezzonen is: Banque Scandinave A. Luxembourg
<PAGE>
SCHEDULE 2
TO
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
<PAGE>
SCHEDULE 2
Section 2.1 Organization, Qualifications and Corporate Power
(a) The Company owns the following interests in the following entities:
(b) 100 % of Transeastern Finance, Inc. which owns 5.0% of Builder's
Finance, Inc.
Section 2.4 Authorized Capital Stock
As of June 1, 1993, the Company had authorized and outstanding 725,001
shares of common stock, which shares were owned by the following persons:
Edward W. Falcone and Diana Falcone, his wife 241,667 shares
Arthur J. Falcone and Marcy Falcone, his wife 241,667 shares
Philip Cucci, Jr. and Linda Cucci, his wife 241,667 shares
As of June 1, 1993, the Board of Directors of the Company voted to enter
into an arrangement with Forrest Hamilton ("Hamilton"), whereby the Company
would grant to Hamilton warrants for the purchase of 25,000 shares of the common
stock of the Company in exchange for the performance of certain advertising and
marketing services on behalf of the Company. Such warrants are to be issued no
later than July 15, 1993. The Board of Directors also voted to enter into a
separate arrangement with Hamilton whereby Hamilton would be entitled to receive
additional warrants for common stock of the Company for the performance of
future advertising and marketing services for the Company, as may hereafter be
approved by the Board of Directors, and for such other services as Hamilton may
perform for the Company as may hereafter be approved by the Board of Directors,
to a maximum of 2.5% of the authorized shares of the Company.
Section 2.7 Title to Properties
(a) Attached to this Schedule as Exhibit "2.7(a)" is a listing of the
individual building lots owned by the Company. The Company has
provided counsel to the Investors with copies of all title insurance
policies in favor of the Company with respect to such properties,
together with copies of all mortgages encumbering such properties.
The Company is in the process of planning and/or constructing single
family residences on the majority of such lots under contracts with
purchasers. The lots marked with asterisks are properties on which
the Company has constructed houses for which no sales contracts have
yet been executed ("spec" houses). The lots marked with double
asterisks represent model homes. In addition to the building lots
listed on Exhibit 2.7(a), the Company also owns a parcel of property
which is described as the last parcel of property on Exhibit 2.7(a)
and is referred to as the "Cooper City Property". The Cooper City
Property consists of 36 contiguous lots located in Cooper City,
Florida, comprised of two phases. The first phase of the Cooper City
Property consists of 26 lots and was purchased in April, 1993 for a
purchase price of $750,000. The second phase of the Cooper City
consists of 10 lots and will be purchased for $230,000 and will be
acquired in June, 1993. The Company intends to build homes on all
such lots for sale to individual purchasers under pre-executed
contracts for sale under a program for marketing and advertising for
the entire community.
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(b) The Cooper City Property is scheduled to receive final approval of
its plat from Broward County within the next 20 days. A sales
program at the Cooper City Property has already begun, which has
produced contracts for the sale of 10 homes.
(c) Certificates of occupancy have not been obtained for uncompleted
houses in the process of construction on any of the lots.
(d) Certain personal property used by the Company is leased. Copies of
such leases have been provided to Investor's counsel, and are listed
below:
Lease dated July 26, 1990 with Coggin O'Steen Motors for 1990
Mercedes used by Arthur Falcone Lease with Lou Bachrodt Chevrolet
for 1993 Chevrolet used by Philip Cucci
Additionally, the Company owns a 1993 Ford Pick-Up Truck which is
financed with Barnett Bank. The Company is also a party to two
leases with Builder's Design & Leasing Incorporated, whereby the
Company leases certain furniture for use in its office and models.
Section 2.8 Leasehold Interests
The Company has provided the Investor's counsel copies of all leases of
real property to which the Company is a party, as listed in Section 2.11(j)
below.
Section 2.9 Insurance
The Company has provided Investors' counsel with copies of all insurance
policies now held by the Company, as described in Section 2.11(q) below.
Although the Company has received no formal notice from its insurance carriers,
it is anticipated that the cost of the Company's builder's risk insurance will
increase later this year due to an industry-wide increase in South Florida due
to the claims arising from Hurricane Andrew from August, 1992.
Section 2.10 Taxes
In 1992, the Company achieved approximately $400,000 in taxable income
which was not distributed to shareholders. Because the Company had previously
elected treatment as a Sub-Chapter "S" corporation, this income was taxable to
the shareholders, despite the fact that such income had not been distributed to
them. In 1993, the Company has made distributions to Edward Falcone, Arthur
Falcone and Philip Cucci in the approximate amount of $120,000 to enable them to
pay such taxes.
Section 2.11 Other Agreements
(a) The Company is a party to an Exclusive Right of Sale Agreement with
Coral Ridge Properties and an Application and Agreement to become an
Arvida (Weston) Approved Builder. These agreements restrict the
Company in the marketing of homes within such communities. These are
standard agreements
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which all builders in these communities are required to execute,
which provide CRP and Arvida with the right to act as the exclusive
sales agents for homes sold in their respective communities. These
type of arrangements are believed to enhance the marketing of homes
in these communities. The Company has provided the Investors'
counsel with copies of these Agreements.
(b) The Company provides bonus, hospitalization, insurance and certain
other benefits to its employees and officers as described in Section
2.20 below.
(c) Copies of all promissory notes and mortgages or other security
documents securing the payment thereof have been provided to the
Investors' counsel, and are listed on Exhibit "2.11(g)" attached
hereto.
The Company is responsible for the payment of the sums due to the
FDIC in connection with a $255,018.00 loan which was made by First
Commercial Bank of Florida to Arthur Falcone and Philip Cucci,
individually, at a time when the Company was unable to obtain
sufficient financing in its own name. This loan was made to Falcone
and Cucci individually, who thereupon loaned the money to the
Company for general corporate purposes. First Commercial Bank was
taken over by the FDIC in December, 1990. Following such failure and
takeover, the FDIC refused to renew the line of credit in accordance
with established practice, and commenced such litigation. Agreement
has been reached with the FDIC regarding the resolution of
litigation between the FDIC and Falcone and Cucci regarding such
loan. Pursuant to such agreement, the FDIC will receive $5,000.00
principal payment per month, together with accrued interest at the
Wall Street Journal Prime Rate plus 1.0% on the unpaid principal
balance of such loan. The unpaid principal balance as of the date
hereof is approximately $180,000.00. We are awaiting receipt of the
executed settlement documents in connection with this matter. As the
loan was incurred for the corporate purposes of the Company, the
Company has agreed with Falcone and Cucci to make the payments to
the FDIC as aforesaid. Such agreement between the Company and
Falcone and Cucci has not been reduced to writing.
(d) The Company has provided Investors' counsel with copies of all
leases of real property to which the Company is a party. These
leases are listed as follows:
Lease for office space located at 7522 Wiles Road, Suite 203, Coral
Springs, Florida, attached.
Lease Agreement between the Company, Lessor, and Mary Ann Sullivan,
Lessee, for property located at 10319 N.W. 48th Court, Coral
Springs, FL 33076, attached.
Lease Agreement between the Company, Lessor, and Marvin and Francine
Cooper, Lessee, for property located at 5144 Northsprings Way, Coral
Springs, Florida 33067.
Lease Agreement between the Company, Lessor, and Coral Ridge Realty,
Inc., Lessee, for property described as Lot 55, Block "S",
Kensington, according to the Plat thereof, as recorded in Plat Book
146, at Page 39, of the Public Record of Broward County, Florida,
together with all appurtenances.
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(e) None other than the Stockholders Agreement to which the Investors
will become a party.
(f) As of the date hereof, the Company is the beneficiary under various
policies of insurance (other than title insurance), as set forth on
Exhibit "2.11(q)" attached hereto. Copies of all such policies have
been provided to counsel for the Investors.
(g) The Company is a party to a written agreement with Jack Hardy, Inc.,
which is the construction contractor performing certain earth moving
and site preparation work at various of the Company's projects. A
copy of this Agreement is being provided to the Investors' counsel.
Section 2.12 Patents, Trademarks, Etc.
The name "Transeastern" is also used by two other corporations in which
certain of the Founders hold an interest, such corporations being Transeastern
Construction, Inc. and Transeastern-Everglades Properties, Inc. Transeastern
Construction is engaged in the re-modeling and commercial construction business.
Transeastern Everglades is engaged in the development of a warehouse facility at
Port Everglades in Fort Lauderdale, Florida.
Section 2.14 Assumption, Guaranties, Etc. of Indebtedness of Other Persons
Other than the arrangement described in Section 2.11(h) above, the
Company has not guaranteed the indebtedness of any other person or entity, other
than guaranties associated with the endorsement of negotiable instruments given
to the Company as payment for the sale of property by the Company.
Section 2.17 Financial Statements
Financial Statements prepared by Peat Marwick & Mitchell have previously
been provided to counsel to the Investors.
Section 2.19 Absence of Changes
(a) The acquisition of the Cooper City Property is a departure from the
historic business of the Company, in that such property represents
the first time that the Company has acquired a large block of
contiguous lots for development and sale as a distinct community.
Section 2.20 Employee Benefit Plans
The Company provides group hospitalization coverage for five of its
employees. The limits of such coverage are $2,000,000 per covered person. The
Company pays 100% of the cost of such coverage for Edward W. Falcone, Arthur J.
Falcone and Philip Cucci, Jr. and their families. The Company pays 75% of the
cost of such coverage for Cora DiFiore and Tom
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Pagnotta, and 25% of the cost of their families, with 75% to be paid by the
employee. Such coverage is provided by John Alden Insurance Company.
The Company provides one week paid vacation to employees. There is no
limit on the amount of vacation which officers are entitled to take.
The company provides life insurance coverage on the lives of Edward W.
Falcone, Arthur J. Falcone and Philip Cucci at no cost to such officers. The
beneficiaries of such policies are the Company and the respective officers'
wives.
The Company has no severance policy.
Section 2.21 Disclosure
A true and correct copy of (i) the Articles of Incorporation of the
Company, and all amendments thereto certified by the appropriate state official;
and (ii) the By-laws of the Company and all amendments thereto, have previously
made available to counsel for the Investors.
(a) Minute books of the Company have been made available to counsel for
the Investors prior to the date hereof.
Section 2.23 Transactions with Affiliates
Robert Falcone, the brother of Edward and Arthur Falcone, has
previously made certain loans to the Company individually and through a
corporation which he owns named B & E Management. As of the date hereof, the
outstanding principal balance due under such loans is $250,000. Such loans are
payable upon the sale of the parcels of real property which serve as collateral
for such loan. Copies of the promissory notes and other loan documents
evidencing this arrangement have been provided to Investors' counsel.
Additionally, from time to time, the Company enters into transactions with
Transeastern Construction, Inc., a corporation whose shares are owned by Art
Falcone, Edward Falcone and Philip Cucci, whereby Transeastern Construction
performs certain construction services for the Company.
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<PAGE>
SCHEDULE 6
Section 6.7 Transactions With Affiliates
It is presently anticipated that the Company will do business from time
to time with several entities owned in whole or in part by the Founders. These
entities include:
Wiles Road Electric - Electrical Sub-Contractor
Transeastern Painting - Painting Sub-Contractor
Wiles Road Title - Title Insurance Company
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<PAGE>
SCHEDULE 3
TO
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
ACCREDITED INVESTOR CERTIFICATES
<PAGE>
EXHIBIT A
TO
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
FORM OF WARRANT
<PAGE>
Execution Copy
THIS WARRANT HAS BEEN, AND THE WARRANT SHARES ISSUABLE UPON EXERCISE HEREOF WILL
BE, ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") AND OF THE FLORIDA INVESTOR
PROTECTION ACT (THE "FLORIDA ACT"). SUCH SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, OR TRANSFERRED OTHER THAN (I) PURSUANT TO AN EFFECTIVE REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE 1933 ACT AND THE FLORIDA ACT, AND (II) UPON
RECEIPT BY THE ISSUER OF EVIDENCE SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933
ACT, THE FLORIDA ACT, AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Original Issue Date: June 2, 1993 Warrant No. 93-____
WARRANT TO PURCHASE COMMON STOCK
THIS CERTIFIES THAT IN CONNECTION WITH, and as an inducement to
____________________ (the "Holder"), to consummate the transactions contemplated
by that certain Series A Redeemable Preferred Stock and Warrant Purchase
Agreement, dated June 2, 1993 among Holder, TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC., a Florida corporation (the "Corporation"), and certain other
parties identified therein (the "Purchase Agreement"), Holder is entitled to
purchase, on the terms and conditions hereinafter set forth, ________ shares of
the Common Stock, $.01 par value, of the Corporation (the "Common Stock"), at a
price $.01 per share (the "Exercise Price"), such number of shares and such
Exercise Price being subject to adjustment upon the occurrence of the
contingencies set forth in this Warrant. Each share of Common Stock as to which
this Warrant is exercisable is a "Warrant Share" and all such shares are
collectively the "Warrant Shares").
SECTION 1. REGISTRATION OF WARRANT. This Warrant is one of a series of
Warrants (collectively, the "Transaction Warrants") issued in connection with
the transaction contemplated by the Purchase Agreement. Each Transaction Warrant
contains identical terms except for the number of Warrant Shares and the
distinctive Warrant number. The Corporation shall register this Warrant, upon
records to be maintained by the Corporation for that purpose, in the name of the
record Holder of this Warrant from time to time. The Corporation shall deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise or any distribution to the Holder hereof, and for all
other purposes, and the Corporation shall not be affected by any notice to the
contrary.
SECTION 2. EXERCISE OF WARRANT.
2.1 TIME OF EXERCISE. This Warrant may be exercised in whole or in part, at
any time or from time to time prior to 5:00 p.m., Eastern Daylight Time, June 1,
2005, unless extended as hereinafter provided. The Corporation shall deliver to
Holder, not less than 30 nor more than 60 days prior to the Expiration Date,
written notice (the "Expiration Notice") which specifies the last date this
Warrant may be exercised. The failure to deliver the Expiration Notice shall
automatically
<PAGE>
Execution Copy
extend the Expiration Date until a date which is 30 days after the date the
Expiration Notice shall have been delivered to Holder. The last day this Warrant
can be exercised, whether June 1, 2005 or a later date determined as set forth
above is hereinafter referred to as the "Expiration Date."
2.2 MANNER OF EXERCISE. In order to exercise this Warrant, the registered
Holder hereof shall deliver to the Corporation at its principal office at 7522
Wiles Road, Suite 203, Coral Springs, Florida 33067, Attention: President, or at
such other office as shall be designated by the Corporation in writing pursuant
to Section 12 hereof on or before 5:00 p.m. Eastern Time on the Expiration Date,
(i) a written notice of such registered Holder's election to exercise this
Warrant (the "Exercise Notice"), which notice may be in the form of the Notice
of Exercise attached hereto, properly executed and completed by the registered
Holder or an authorized officer thereof, (ii) a check payable to the order of
the Corporation, in an amount equal to the product of the Exercise Price
MULTIPLIED BY the number of Warrant Shares specified in the Exercise Notice, AND
(iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively
the "Exercise Materials"). Upon timely receipt of the Exercise Materials, the
Corporation shall, as promptly as practicable, and in any event within five (5)
business days after its receipt of the Exercise Materials, execute or cause to
be executed and delivered to such registered Holder a certificate or
certificates representing the number of Warrant Shares specified in the Exercise
Notice, together with cash in lieu of any fraction of a share, as hereinafter
provided, and, (x) if the Warrant is exercised in full, a copy this Warrant
marked "Exercised" or (y) if the Warrant is partially exercised, a copy this
Warrant marked "Partially Exercised" together with a new Warrant on the same
terms for the unexercised balance of the Warrant Shares. All of the certificates
evidencing Warrant Shares shall bear the legend set forth in Section 8.2 hereof.
The stock certificate or certificates shall be registered in the name of the
registered Holder of this Warrant or such other name as shall be designated in
the Exercise Notice. The date on which the Warrant shall be deemed to have been
exercised (the "Exercise Date"), and the date the person in whose name any
certificate for Warrant Shares is issued shall be deemed to have become the
holder of record of such shares, shall be the date the Corporation receives the
Exercise Materials, irrespective of the date of delivery of a certificate or
certificates evidencing the Warrant Shares, except that, if the date on which
the Exercise Materials are received by the Corporation is a date when the stock
transfer books of the Corporation are closed, the Exercise Date shall be the
date the Corporation receives the Exercise Materials, and the date such person
shall be deemed to have become the holder of the Warrant Shares shall be the
next succeeding date on which the stock transfer books are open.
SECTION 3. ADJUSTMENTS TO WARRANT SHARES. The number of Warrant Shares
issuable upon the exercise hereof shall be subject to adjustment in certain
cases as set forth in this Section 3.
3.1 CONSOLIDATION, MERGER, OR SALE. In the event the Corporation is a party
to a consolidation, share exchange, or merger, or the sale of all or
substantially all of the assets of the Corporation to, any person, or in the
case of any consolidation or merger of another corporation into the Corporation
in which the Corporation is the surviving corporation, and in which there is a
reclassification or change of the shares of Common Stock of the Corporation,
this Warrant shall after such consolidation, share exchange, merger, or sale be
exercisable for the kind and number of securities or amount and kind of property
of the Corporation or the corporation or other entity resulting from such share
exchange, merger, or consolidation, or to which such sale shall be made, as
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Execution Copy
the case may be (the "Successor Corporation"), to which a holder of the number
of shares of Common Stock deliverable upon the exercise (immediately prior to
the time of such consolidation, share exchange, merger, or sale) of this Warrant
would have been entitled upon such consolidation, share exchange, merger, or
sale; and in any such case appropriate adjustments shall be made in the
application of the provisions set forth herein with respect to the rights and
interests of the registered Holder of this Warrant, such that the provisions set
forth herein shall thereafter correspondingly be made applicable, as nearly as
may reasonably be, in relation to the number and kind of securities or the type
and amount of property thereafter deliverable upon the exercise of this Warrant.
The above provisions shall similarly apply to successive consolidations, share
exchanges, mergers, and sales. Any adjustment required by this Section 3.1(a)
because of a consolidation, share exchange, merger, or sale shall be set forth
in an undertaking delivered to the registered Holder of this Warrant and
executed by the Successor Corporation which provides that the Holder of this
Warrant shall have the right to exercise this Warrant for the kind and number of
securities or amount and kind of property of the Successor Corporation or to
which the holder of a number of shares of Common Stock deliverable upon exercise
(immediately prior to the time of such consolidation, share exchange, merger, or
sale) of this Warrant would have been entitled upon such consolidation, share
exchange, merger, or sale. Such undertaking shall also provide for future
adjustments to the number of Warrant Shares and the Exercise Price in accordance
with the provisions set forth in Section 3 hereof.
3.2 ADJUSTMENTS FOR STOCK DIVIDENDS AND SPLITS. In the event the
Corporation should at any time, or from time to time after the Original Issue
Date, fix a record date for the effectuation of a stock split or subdivision of
the outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, or securities or rights convertible into, or entitling
the holder thereof to receive directly or indirectly, additional shares of
Common Stock (hereinafter referred to as "Common Stock Equivalents") without
payment of any consideration by such holder for the additional shares of Common
Stock or the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon exercise or exercise thereof), then, as of such record date
(or the date of such dividend, distribution, split, or subdivision if no record
date is fixed), the number of Warrant Shares issuable upon the exercise hereof
shall be proportionately increased and the Exercise Price shall be appropriately
decreased by the same proportion as the increase in the number of outstanding
Common Stock Equivalents of the Corporation resulting from the dividend,
distribution, split, or subdivision. Notwithstanding the preceding sentence, no
adjustment shall be made to decrease the Exercise Price below $.01 per Share.
3.3 REVERSE STOCK SPLITS. In the event the Corporation should at any time
or from time to time after the Original Issue Date, fix a record date for the
effectuation of a reverse stock split, or a transaction having a similar effect
on the number of outstanding shares of Common Stock of the Corporation, then, as
of such record date (or the date of such reverse stock split or similar
transaction if no record date is fixed), the number of Warrant Shares issuable
upon the exercise hereof shall be proportionately decreased and the Exercise
Price shall be appropriately increased by the same proportion as the decrease of
the number of outstanding Common Stock Equivalents resulting from the reverse
stock split or similar transaction.
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<PAGE>
Execution Copy
3.4 RECLASSIFICATION. In the event the Corporation should at any time or
from time to time after the Original Issue Date, fix a record date for a
reclassification of its Common Stock, then, as of such record date (or the date
of the reclassification if no record date is set), this Warrant shall thereafter
be convertible into such number and kind of securities as would have been
issuable as the result of such reclassification to a holder of a number of
shares of Common Stock equal to the number of Warrant Shares issuable upon
exercise of this Warrant immediately prior to such reclassification, and the
Exercise Price shall be unchanged.
3.5 SALES OR DEEMED SALES OF CORPORATION SECURITIES.
(a) Prior to the exercise of the special redemption right of the
Company set forth in Section 7 of the Purchase Agreement, if and whenever the
Corporation shall issue or sell any shares of Common Stock or any equity or debt
securities of the Corporation which are convertible into or exchangeable for
shares of Common Stock, then, forthwith upon such issuance or sale, the number
of Warrant Shares issuable upon the exercise of this Warrant shall be adjusted
to a number which is equal to the product of (i) the quotient of (x) the number
of warrant shares issuable upon exercise hereof on the Original Issue Date
divided by (y) 275,000, MULTIPLIED BY (ii) the difference between (1) the
quotient of (x) the number of shares of Fully Diluted Common Stock immediately
after such issuance or sale DIVIDED BY (y) .725 MINUS (2) the number of shares
of Fully Diluted Common Stock immediately after such issuance or sale. As used
herein, the term "Fully Diluted Common Stock" means the outstanding shares of
Common Stock assuming the conversion into Common Stock of all then outstanding
convertible securities (at the then effective conversion prices), and the
exercise of all then outstanding rights, options, and warrants, excluding the
Transaction Warrants.
(b) From and after the exercise of the special redemption right of the
Company set forth in Section 7 of the Purchase Agreement, if and whenever the
Corporation shall issue or sell any shares of Common Stock or any equity or debt
securities of the Corporation which are convertible into or exchangeable for
shares of Common Stock, then, forthwith upon such issuance or sale, the number
of Warrant Shares issuable upon the exercise of this Warrant shall be adjusted
to a number which is equal to [A PRO RATA SHARE OF] the quotient of (x) the
number of shares of Fully Diluted Common Stock immediately after such issuance
or sale DIVIDED BY (y) .80 MINUS the number of shares of Fully Diluted Common
Stock immediately after such issuance or sale.
3.6 NO DILUTION OR IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or through reorganization, consolidation, merger,
dissolution, issue, or sale of securities, sale of assets or any other voluntary
action, void or seek to avoid the observance or performance of any of the terms
of the Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment. Without limiting the generality of the foregoing, the
Corporation (a) will not create a par value of any share of stock receivable
upon the exercise of the Warrant above the amount payable therefor upon such
exercise, and (b) will take all such action as may be necessary or appropriate
in order that the Corporation may validly and legally issue fully paid and
non-assessable shares upon the exercise of the Warrant.
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Execution Copy
3.7 NOTICE OF ADJUSTMENT. When any adjustment is required to be made in the
number or kind of shares purchasable upon exercise of the Warrant, or in the
Exercise Price, the Corporation shall promptly notify the Holder of such event
and of the number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of the Warrants and of the Exercise Price,
together with the computation resulting in such adjustment.
SECTION 4. CASH DIVIDENDS. In the event of any payment of any cash dividend
or any distribution of property (including evidences of indebtedness of the
Corporation, but excluding distributions of Common Stock), either tangible or
intangible, to the holders of the Common Stock, prior to the Exercise Date, the
registered Holder of this Warrant shall be entitled to receive, concurrently
with the holders of the Common Stock, the per share amount of any such dividend
or distribution MULTIPLIED BY the number of Warrant Shares then issuable upon
exercise of this Warrant in the same manner and to the same extent as if the
registered Holder of this Warrant were then the registered owner of such number
of shares of Common Stock. For purposes hereof, the per share amount of any
distribution of property shall be the fair market value thereof as determined by
the Board of Directors in good faith in the resolutions authorizing any such
distribution.
SECTION 5. COVENANTS AS TO COMMON STOCK. The Corporation covenants and
agrees that all Warrant Shares which may be issued will, upon issuance, be
validly issued, fully paid and non-assessable. The Corporation further covenants
and agrees that the Corporation will at all times have authorized and reserved,
free from preemptive rights, a sufficient number of shares of its Common Stock
to provide for the exercise of the Warrant in full.
SECTION 6. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the Holder
hereof to any voting rights or other rights as a stockholder of the Corporation.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE HOLDER TO THE
CORPORATION. The registered Holder of this Warrant, by acceptance of this
Warrant represents, warrants, and covenants to the Corporation as follows:
(a) The Holder is acquiring this Warrant, and agrees that the exercise
of this Warrant and the acceptance of a certificate for Warrant Shares shall
constitute its representation that the Warrant Shares are being acquired, for
its own account for investment and not with a view to the distribution thereof,
subject, however, to Holder's right to transfer this Warrant and the Warrant
Shares in accordance with and subject to the restrictions on such transfer set
forth herein.
(b) The Holder understands that this Warrant and the Warrant Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act") or state securities laws, by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act and
applicable state securities laws. The Holder acknowledges being informed that
this Warrant and the Warrant Shares must be held indefinitely unless this
Warrant or the Warrant Shares are registered for sale by such Holder under the
Securities Act and applicable state securities laws or an exemption from
registration is available. The Holder understands that a sale of the Warrant
Shares made in reliance upon Rule 144 promulgated under the Securities Act
("Rule 144") can only be made in accordance with the terms and conditions of
Rule 144 and further understands
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Execution Copy
that in the event that the exemption from registration provided by such Rule is
not available, compliance with some other exemption under the Securities Act
will be required in the absence of registration.
(c) The Holder agrees not to sell, transfer, pledge or hypothecate
this Warrant or any Warrant Shares unless a Registration statement is effective
for this Warrant or Warrant Shares under the Securities Act or, in the written
opinion of such Holder's counsel (a copy of which opinion shall be addressed to
and delivered to the Corporation, and which counsel and which opinion shall be
reasonably satisfactory to the Corporation), such transaction will not result in
any violation of the registration requirements of the Securities Act or any
applicable state securities law. The Corporation may not, and may instruct its
transfer agent not to, transfer this Warrant or the Warrant Shares unless the
Corporation has been advised by its counsel that the Holder has complied with
the provisions of this Warrant and applicable securities laws relating to the
proposed transfer.
SECTION 8. TRANSFER OF SECURITIES.
8.1 RESTRICTION ON TRANSFER. This Warrant and the Warrant Shares and any
shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon,or
otherwise, shall not be transferable except upon the conditions specified in
Section 7 and this Section 8, which conditions are intended to ensure compliance
with the provisions of the Securities Act and applicable State securities laws
with respect to the transfer of such securities. The Holder of this Warrant, by
acceptance of this Warrant, agrees to be bound by the provisions of Section 7
and this Section 8 and to indemnify and hold harmless the Corporation against
any loss or liability arising from the disposition of this Warrant or the
Warrant Shares issuable upon exercise hereof or any interest in either thereof
in violation of the provisions of this Warrant.
8.2 RESTRICTIVE LEGEND. Each certificate for the Warrant Shares and any
shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon or
otherwise, and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions hereof) be stamped or otherwise imprinted with a legend in
substantially the following form:
Legend for Warrant Shares or other shares of capital stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND THE FLORIDA
INVESTOR PROTECTION ACT (THE "FLORIDA ACT") THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR TRANSFERRED OTHER THAN (I) PURSUANT TO AN
EFFECTIVE REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT
AND THE FLORIDA ACT, AND (II) UPON RECEIPT BY THE ISSUER OF EVIDENCE
SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933 ACT, THE FLORIDA ACT,
AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE
ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY
TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
8.3 TRANSFER OF WARRANTS. Subject to the restrictions on transfer specified
in Section 7 and this Section 8, the Warrant is transferable in accordance with
this Warrant, in whole or in part, at the agency or office of the Corporation
referred to in Section 1 hereof, by the Holder
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Execution Copy
hereof in person or by a duly authorized attorney, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly executed by the then
registered Holder of this Warrant or its duly authorized agent. The Corporation
or its transfer agents shall register the transfer of any Warrants transferred
in compliance with Section 7 and this Section 8 upon records to be maintained
for that purpose, upon surrender of this Warrant. Upon any such Registration of
transfer, a new Warrant substantially in the form of this Warrant evidencing the
Warrant so transferred shall be issued to the transferee.
SECTION 9. LOST, STOLEN, MUTILATED, OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated, or destroyed, the Corporation shall issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated, or destroyed, provided the registered Holder hereof shall deliver a
lost warrant certificated in customary form, including indemnification of the
Corporation.
SECTION 10. FRACTIONAL WARRANT SHARES. The Corporation shall not be
required to issue any fractions of Warrant Shares upon exercise of this Warrant,
but the Corporation shall pay cash in respect of any fractional interest in a
Warrant Share which would otherwise be issuable in an amount equal to the same
fraction of the fair market value per share of the Common Stock on the day of
the exercise, as reasonably determined by the Board of Directors of the
Corporation.
SECTION 11. NOTICE. All notices, requests, demands, and other
communications required or permitted under this Warrant and the transactions
contemplated herein shall be in writing and shall be deemed to have been duly
given, made, and received when personally delivered the day after deposited with
a recognized national overnight delivery service prior to its dead-line for
receiving packages for next day delivery or upon the fifth day after deposited
in the United States registered or certified mail with postage prepaid, return
receipt requested, in each case addressed as set forth below:
If to the Corporation: Transeastern Properties of South Florida, Inc.
7522 Wiles Road
Suite 203
Coral Springs, FL 33067
Attention: President
If to the Holder hereof, to the address of such Holder appearing on the
books of the Corporation.
SECTION 12. CAPTIONS, SECTION, HEADINGS. Captions and section headings used
herein are for convenience only, and are not a part of this Warrant and shall
not be used in construing it.
SECTION 13. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws in the State of Florida, irrespective of the choice
of law provisions.
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Execution Copy
IN WITNESS WHEREOF, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., has
caused this Warrant to be executed in its name by its duly authorized officers
under its corporate seal, and to be dated as of the date first above written.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
By:___________________________________
Arthur Falcone, President
ATTEST:
___________________________
Secretary
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Execution Copy
FORM OF ASSIGNMENT
[To be signed only upon transfer of unexercised Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the attached Warrant to purchase the number
of full shares of Common Stock, $____ par value, of Transeastern Properties of
South Florida, Inc., issuable upon exercise of said Warrant, and appoints
________________, Attorney, to transfer such Warrant on the books of
Transeastern Properties of South Florida, Inc., with full power of substitution
in the premises.
Dated: ___________________ _______________________________
[Signature]
_______________________________
_______________________________
[Address]
Signature guaranteed by a member of a national securities exchange or national
bank:
__________________________
NOTICE
The signature above must correspond to the name as written upon the fact of
the within Warrant in every particular, without alteration or enlargement or any
change whatsoever.
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Execution Copy
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To: TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
The undersigned registered Holder of the attached Warrant hereby
irrevocably elects to exercise the Warrant for, and to purchase thereunder, the
full number of whole shares of Common Stock, $____ par value, of Transeastern
Properties of South Florida, Inc., issuable upon exercise of said Warrant and
hereby surrenders said Warrant and delivers to Transeastern Properties of South
Florida, Inc., in immediately available funds, $_________ representing the
Purchase Price for such shares. The undersigned herewith requests that the
certificates for such shares be issued in the name of, and delivered to the
undersigned, whose address is _________________________________ and social
security or tax identification number is ______________.
Dated: _________________________ _________________________________
NOTICE
The signature above must correspond to the name as written upon the fact of
the within Warrant in every particular, without alteration or enlargement or any
change whatsoever.
<PAGE>
EXHIBIT B
TO
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
FORM OF SHAREHOLDERS AGREEMENT
<PAGE>
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT is made and entered into this 2nd day of June,
1993, by and among TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC, a Florida
corporation (the "Company"), ARTHUR J. FALCONE and MARCY FALCONE, residents of
the State of Florida (the "A. Falcones"), EDWARD W. FALCONE and DIANA FALCONE,
residents of the State of Florida (the "E. Falcones"), PHILIP CUCCI, JR. and
LINDA CUCCI, residents of the State of Florida (the "Cuccis"), MEZZONEN, S.A.
("Mezzonen"), a Luxembourg company, HANDLER FAMILY TRUST DTD 9/12/91 ("HFT"), a
living trust organized and existing pursuant to the laws of the State of
California, CHRISTOPHER ALLICK, a resident of the State of California
("Allick"), ANDREW WHITTAKER, a resident of the State of California
("Whittaker"), DAVID F. EISNER, a resident of the State of California
("Eisner"), and DAVID J. LOSITO a resident of the State of California,
("Losito").
BACKGROUND
A. Each of the A. Falcones, the E. Falcones, and the Cuccis are the
holders as tenants by the entirety of the number of shares of the Common Stock
(as hereinafter defined) of the Company set forth beside their names on the
signature page hereto; and, the A. Falcones, the E. Falcones, and the Cuccis,
collectively own all of the Common Stock issued and outstanding on the date
hereof; and
B. Pursuant to a Series A Redeemable Preferred Stock and Warrant Purchase
Agreement (the "Stock Purchase Agreement") Mezzonen, HFT, Allick, Whittaker,
Eisner, and Losito, have collectively purchased twenty thousand (20,000) shares
of the Preferred Stock (as hereinafter defined), (or 100%) of the Preferred
Stock issued and outstanding on the date hereof; and
C. The execution and delivery of this Agreement by each of the A.
Falcones, the E. Falcones, the Cuccis, and the Company is a condition precedent
to the obligation of Mezzonen, HFT, Allick, Whittaker, Eisner, and Losito, to
purchase the Preferred Stock pursuant to the Stock Purchase Agreement;
D. The parties hereto wish to state herein their mutual agreements and
obligations and to impose certain restrictions on the rights and benefits with
respect to the disposition of the Shares (as hereinafter defined) now or
hereafter owned by the Shareholders (as defined below), and to set forth certain
agreements with respect to the management of the Company.
AGREEMENT
For and in consideration of the foregoing, the agreements set forth below,
and other good and valuable consideration, the receipt and sufficiency of which
is acknowledged, the parties agree as follows:
1. DEFINITIONS
The following capitalized terms are used in this Agreement with meanings
thereafter ascribed:
<PAGE>
1.1 AFFILIATE. When used to indicate a relationship to a specified person,
firm, corporation, partnership, association, or entity, "Affiliate" means any
person, firm, corporation, partnership, association, or entity that, directly or
indirectly or through one or more intermediaries, controls, is controlled by, or
is under common control with such person, firm, corporation, partnership,
association, or entity.
1.2 AGREEMENT. "Agreement" means this Agreement, together with any addenda
and amendments made in the manner described in this Agreement.
1.3 BUSINESS OF THE COMPANY. "Business of the Company" means the business
of acquisition, development, and management of residential properties.
1.4 CAUSE. "Cause" means (a) conduct amounting to fraud or dishonesty
against the Company; (b) willful misconduct or repeated refusal to follow the
reasonable directions of the Board of Directors of the Company; (c) knowing
violation of law in the course of performance of the duties of employment with
the Company; (d) repeated absences from work without a reasonable excuse; (e)
repeated intoxication with alcohol or drugs while on the Company's premises
during regular business hours; (f) a breach or violation of the terms of any
agreement with the Company; (g) an act of disloyalty to the Company,
substantially detrimental to the welfare of the Company; (h) a violation of the
covenants set forth in Section 3 hereof; or (i) a conviction or plea of guilty
or NOLO CONTENDERE to a felony or a crime involving moral turpitude.
1.5 COMMISSION. "Commission" means the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
1.6 COMMON STOCK. "Common Stock" means the Five Million (5,000,000)
authorized shares of common stock, $.01 par value, of the Company, of which
Seven Hundred and Twenty Five Thousand and One (725,001) shares are issued and
outstanding as of the date hereof.
1.7 COMMON STOCK EQUIVALENTS. "Common Stock Equivalents" means the sum of
(x) the number of shares of Common Stock outstanding, PLUS (y) the number of
shares of Common Stock issuable upon conversion of all outstanding convertible
securities and the exercise of all outstanding warrants, options, and rights.
1.8 COMPETITOR. "Competitor" means a person or entity that is
substantially engaged in a business like or similar to the Business of the
Company. For purposes hereof "substantially engaged" shall mean that the average
annual revenues of such person or entity derived from the conduct of a business
like or similar to the Business of the Company during the three most recent
completed fiscal years of such person or entity (of if such person or entity has
conducted such business for less than three completed fiscal years, then for
such lesser period) is equal to or greater than ten percent (10%) of the average
annual gross revenues of such person or entity over such fiscal years (or lesser
period).
1.9 DISABILITY. "Disability" means (i) the inability of a Management
Shareholder to perform the duties of such Management Shareholder's employment
due to physical or emotional incapacity or illness, where such inability is
expected to be of long-continued and indefinite duration or (ii) such Management
Shareholder shall be entitled to (x) disability retirement benefits under the
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Federal Social Security Act or (y) recover benefits under any long-term
disability plan or policy maintained by the Company. In the event of a dispute,
the determination of Disability shall be made by the Board of Directors of the
Company and shall be supported by advice of a physician competent in the area to
which such Disability relates.
1.10 DISPOSITION. "Disposition" means any transfer of all or any part of
the rights and incidents of ownership of the Shares, including the right to
vote, and the right to possession of Shares as collateral for indebtedness,
whether such transfer is outright or conditional, INTER VIVOS or testamentary,
voluntary or involuntary, or for or without consideration.
1.11 EFFECTIVE DATE OF TERMINATION. "Effective Date of Termination" means
the effective date of the termination of the employee-employer relationship
between a Management Shareholder and the Company for any reason, including,
without limitation, resignation, discharge (with or without Cause), death,
Disability, or retirement, notwithstanding that severance or similar payments
are made to such Management Shareholder, or if no effective date of termination
of such relationship is established by any notice given by either the Company or
such Management Shareholder (which date established by notice shall not be
retroactive), then the effective date of termination shall be the date such
Management Shareholder last performs the regular duties of such Management
Shareholder's employment or position with the Company, as determined in good
faith by the Board of Directors.
1.12 EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
1.13 INVESTORS. "Investors" means Mezzonen, HFT, Allick, Whittaker,
Eisner, and Losito,.
1.14 FAIR MARKET VALUE. "Fair Market Value" means the quotient of (x) the
fair market value of the Company as of the fiscal quarter ended immediately
prior to an Effective Date of Termination, as determined in good faith by the
Board of Directors of the Company, DIVIDED BY (y) the total number of Common
Stock Equivalents outstanding on the applicable Effective Date of Termination.
In making the determination of the Fair Market Value pursuant to this
subsection, the Board of Directors shall assume that fair market value of the
Company is equal to the amount which would be paid in cash for the Company, as a
going concern, by an unaffiliated third party financial buyer, and may take into
account such additional factors as may be relevant to such valuation, including
without limitation, the absence of a trading market for the Shares, the minority
status of the Shares, and such other facts and circumstances as may be material.
The Board of Directors may, but shall not be obligated to, engage the services
of a reputable, experienced investment banking firm to assist it in the
determination of Fair Market Value. The cost of determining Fair Market Value
shall be borne by the Company.
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1.15 MANAGEMENT SHAREHOLDERS. "Management Shareholders" means,
collectively, Arthur J. Falcone, Edward W. Falcone, and Philip Cucci, Jr.
1.16 PERMITTED DISPOSITION. "Permitted Disposition" means:
(a) a Disposition by a Management Shareholder to which each Shareholder
consents in writing;
(b) a Disposition effected pursuant to the provisions of Sections 2.2,
2.3, 2.6, and 2.7 hereof;
(c) a Disposition by a Management Shareholder to (i) a member of such
Management Shareholder's immediate family, as defined in the regulations
promulgated under Section 16 of the Exchange Act, or to any trust for his or
their benefit, (ii) to any employee of the Company;
(d) a Disposition effected by a Management Shareholder prior to a
Termination of Employment in one of the following transactions: (i) dissolution
or liquidation of the Company, (ii) merger of the Company into another
corporation, or any consolidation, share exchange, combination, reorganization,
or like transaction in which the Company is not the survivor, excluding any such
merger, consolidation, reorganization, or like transaction in which the
Investors or any Affiliate of an Investor is the survivor, (iii) sale or
transfer (other than as security for the Company's obligations) of at least a
majority of the assets of the Company, excluding any such transfer to the
Investors or their Affiliates, (iv) sale or transfer of 50% or more of the
issued and outstanding Shares by the holders thereof in a single transaction or
in a series of related transactions, excluding any such transfer to the
Investors or their Affiliates, (v) a Public Offering (if and to the extent
permitted by the managing underwriter thereof), or (vi) the exercise of the
right of the Company to repurchase the Shares upon a Termination of Employment;
or
(e) a Disposition effected by an Investor, provided the conditions of
Section 2.6(a) hereof are satisfied, if applicable.
The foregoing notwithstanding, no Disposition shall be a Permitted
Disposition unless the transferor shall have obtained the written agreement of
the proposed transferee, that such transferee will be bound by, and the Shares
proposed to be transferred will be subject to, this Agreement. Such written
agreement shall be attached as an addendum to this Agreement and thereby
incorporated as a part of this Agreement, whereupon the proposed transferee
shall have adopted this Agreement, and thereafter shall be a party hereto, and
the term "Shareholders" as used herein shall thereafter mean and include such
transferee.
1.17 PREFERRED STOCK. "Preferred Stock" means the Twenty Nine Thousand
(29,000) authorized shares of Series A Redeemable Preferred Stock, of which
Twenty Thousand (20,000) shares are issued and outstanding as of the date
hereof.
1.18 PRIME RATE. "Prime Rate" means the "prime rate" as published in THE
WALL STREET JOURNAL (Eastern Edition) under its "Money Rates" column and
specified as "[t]he base rate on corporate loans at large U.S. commercial
banks," or, if no longer published as such, the rate of
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interest announced from time to time by NationsBank, N.A., as its prime rate,
base rate or reference rate. If the Wall Street Journal publishes more than one
"Prime Rate" under its "Money Rates" column, then the Prime Rate shall be the
average of such rates.
1.19 PROPRIETARY INFORMATION. "Proprietary Information" means information
which derives economic value, actual or potential, from not being generally
known and not being readily ascertainable by proper means to other persons who
can obtain economic value from its disclosure or use and which is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy or
confidentiality, but shall not include Excluded Information. Proprietary
Information may include either technical or non-technical data, including
without limitation, (a) any process, machine, pattern, compilation, program,
method, technique, formula, chemical formula, composition of matter, or device
which (1) is not generally known or which a Management Shareholder has a
reasonable basis to believe may not be generally known, (2) is being used or
studied, or may be used or studied, by the Company and is not described in a
printed patent or in any literature already published and distributed externally
by the Company, and (3) is not readily ascertainable from inspection of a
product of the Company; (b) any engineering, technical, or product
specifications including those of features used in any current product of the
Company or which may be so used, or the use of which is contemplated, or may be
contemplated, in a future product of the Company; (c) any application, operating
system, communication system, or other computer software (whether in source or
object code) and all flow charts, algorithms, coding sheets, routines,
subroutines, compilers, assemblers, design concepts, test data, documentation,
or manuals related thereto, whether or not copyrighted, patented or patentable,
related to or used in the Business of the Company; or (d) information concerning
the customers, suppliers, products, pricing strategies of the Company, personnel
assignments and policies of the Company, or matters concerning the financial
affairs and management of the Company or any parent, subsidiary, or affiliate of
the Company; provided however, that Proprietary Information shall not include
any Excluded Information. As used herein, "Excluded Information" means
Proprietary Information (i) which has been voluntarily disclosed to the public
by the Company, (ii) independently developed and disclosed by parties other than
the Company, or (iii) that otherwise enters the public domain through lawful
means or without misappropriation of the Management Shareholders.
1.20 PUBLIC OFFERING. "Public Offering" means one or a series of firmly
underwritten public offerings by the Company, pursuant to registration
statements filed by the Company with the Securities and Exchange Commission,
whereby the Company completes a sale of its Common Stock such that the gross
proceeds to the Company resulting from such sale exceed Five Million Dollars
($5,000,000).
1.21 REGISTRATION EXPENSES. "Registration Expenses" means the expenses so
described in Section 5.5 hereof.
1.22 RESTRICTED STOCK. "Restricted Stock" means all shares of Common Stock
held by the Shareholders, including the shares of Common Stock issued or
issuable upon exercise of the Warrants described in the Stock Purchase
Agreement, excluding in each case securities which have been (a) registered
under the Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration statement
covering them or (b) publicly sold pursuant to Rule 144 under the Securities
Act.
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1.23 SECURITIES ACT. "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.24 SELLING EXPENSES. "Selling Expenses" means the expenses so described
in Section 5.5 hereof.
1.25 SHARES. "Shares" means and include as to each Shareholder, all shares
of the capital stock of the Company, including without limitation the Common
Stock and the Preferred Stock, now or in the future owned of record or
beneficially by such Shareholder (including without limitation, all Common
Stock, Preferred Stock, or other securities of the Company hereafter acquired
pursuant to the exercise of any option, warrant, or other right granted by the
Company to such Shareholder), and all securities of the Company that may be
issued in exchange for or in respect of such capital stock or securities
(including, without limitation, all securities issued or resulting from any
stock dividend, stock split, recapitalization, or merger effected by the
Company).
1.26 SHAREHOLDERS. "Shareholders" means the Management Shareholders and
the Investors.
1.27 TERMINATION OF EMPLOYMENT. "Termination of Employment" means the
termination of the employee-employer relationship between a Management
Shareholder and the Company for any reason, including, without limitation, a
termination by resignation, discharge, death, Disability, or retirement,
notwithstanding that severance or similar payments are made to such Management
Shareholder. The Board of Directors of the Company shall, in its absolute
discretion, determine the effect of all matters and questions relating to a
Termination of Employment, including whether a leave of absence constitutes a
Termination of Employment, or whether a Termination of Employment is for Cause.
1.28 TRANSACTION. "Transaction" means the Company shall consummate (i) a
sale of all or substantially all of the assets of the Company, (ii) the merger
of the Company into another corporation or any consolidation, share exchange,
combination, reorganization, or like transaction in which the Company is not the
survivor or in which persons holding a majority of the Common Stock of the
Company issued and outstanding immediately prior to the consummation of such
transaction and any related transaction hold less than a majority of the shares
of the resulting or surviving corporation, issued and outstanding immediately
after the consummation of such transaction or transactions, or (iii) sale or
transfer of 50% or more of the issued and outstanding common stock of the
Company held by the Investors, excluding any distribution by an Investor to its
partners of such Common Stock, treating as outstanding for the purposes of such
determination all shares of Common Stock issuable upon the conversion of all
then outstanding convertible securities and the exercise of all outstanding
options and warrants, effective the date immediately preceding the consummation
of such sale of assets, merger, consolidation, share exchange, combination,
reorganization, or sale of Common Stock.
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2. SHARE CONTROL
2.1 RESTRICTIONS UPON TRANSFER OF SHARES. Except as otherwise provided in
this Agreement, no Shareholder shall make any Disposition of any Shares owned by
such Shareholder, except a Permitted Disposition as provided in this Agreement.
No Permitted Disposition shall be valid unless the Shareholder shall have
obtained the written agreement of the proposed transferee, including, without
limitation, any pledgee, that such transferee will be bound by, and the Shares
to be transferred will be subject to, this Agreement.
2.2 RIGHT OF FIRST REFUSAL.
(a) If a Shareholder (the "Offering Shareholder"), desiring to make
a transfer of Shares, which is not a Permitted Disposition until the provisions
of this Section 2.2 have been observed, shall receive a bona fide written offer
from a third party that is not a Competitor (the "Proposed Transferee") to
purchase all or part of the Shares then owned by the Offering Shareholder that
the Offering Shareholder desires to accept (an "Offer"), the Offering
Shareholder shall as a condition precedent to accepting the Offer, offer to the
Company, the Investors, and each of the other Shareholders (collectively the
Investors and the other Shareholders are the "Other Shareholders" and
individually an "Other Shareholder"), in the manner set forth below, the right
to purchase, individually or in the aggregate, all of the Shares that are the
subject of the Offer for the same price and the same terms as contained in the
Offer.
(b) Within ten (10) business days after receipt of the Offer, the
Offering Shareholder shall notify the Company and each of the Other Shareholders
in writing of the Offer, stating in such notice (the "Transfer Notice") the
details of the Offer, including (i) the name and address of the Proposed
Transferee, (ii) the number of Shares to which the Offer pertains (the "Offered
Shares"), (iii) the price per share offered by the Proposed Transferee for the
Offered Shares (the "Price"), and (iv) the terms and method of payment. A copy
of the Offer shall be attached to the Transfer Notice. The Transfer Notice shall
constitute an offer (the "Right of First Refusal") by the Offering Shareholder
to sell the Offered Shares to the Company and, if and to the extent that the
Company shall not accept the Right of First Refusal, to the Other Shareholders
at the Price and upon the terms and conditions set forth in the Transfer Notice,
which offer shall be irrevocable for sixty (60) business days from the date the
Transfer Notice is delivered to the Company, subject to satisfaction of the
conditions specified in Section 2.2(f) hereof.
(c) The Company shall have the first option to purchase all or any
portion of the Offered Shares. If the Company desires to purchase all or any
part of the Offered Shares, the Company shall communicate, in writing, its
election to purchase to the Offering Shareholder, which communication shall
state the number of Offered Shares the Company desires to purchase and the Price
and terms of payment (which shall be identical to the terms described in the
Transfer Notice), and shall be delivered in person or mailed to the Offering
Shareholder at the address set forth in the Transfer Notice or if no address is
set forth in the Transfer Notice, at the address reflected in the Company's
stock transfer records (with a copy being contemporaneously delivered to each of
the Other Shareholders) within thirty (30) business days of the date the
Transfer Notice was delivered to the Company. Such communication shall, when
taken in conjunction with the Transfer Notice, be deemed to constitute a valid,
legally binding, and enforceable agreement for the sale and purchase of
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all or that portion of the Offered Shares which the Company has so elected to
purchase, subject to satisfaction to the conditions specified in Section 2.2(f)
hereof.
(d) If the Company does not exercise its option to purchase all of
the Offered Shares from the Offering Shareholder, each Other Shareholder shall
have an option to purchase all or any portion of the Offered Shares not
purchased by the Company (the "Remaining Shares"), exercisable by giving written
notice of exercise to the Offering Shareholder, each Other Shareholder and the
Company. Such written notice shall state the number of Remaining Shares such
Other Shareholder elects to purchase, and shall be delivered in person or mailed
to the Offering Shareholder, the Company, and all Other Shareholders at the
addresses reflected in the Company's stock transfer records within twenty (20)
business days after the expiration of the thirty (30) day period for exercise of
the Right of First Refusal granted to the Company in Section 2.2(c) above. Such
communication shall, when taken in conjunction with the Transfer Notice, be
deemed to constitute a valid, legally binding, and enforceable agreement for the
sale and purchase of all or that portion of the Offered Shares which the Other
Shareholder has so elected to purchase, subject to the satisfaction of the
conditions specified in Section 2.2(f) of this Agreement, and to the terms set
forth in the remainder of this paragraph. In the event that more than one Other
Shareholder exercises the right to purchase the Remaining Shares, each Other
Shareholder may purchase up to a pro rata portion of the Remaining Shares (based
upon the ratio of the number of Shares owned by each such exercising Other
Shareholder to the number of Shares owned by all exercising Other Shareholders).
In the event that one or more exercising Other Shareholders elects not to
purchase the full pro rata portion of Offered Shares to which such Other
Shareholder is entitled, the exercising Other Shareholders may purchase such
Remaining Shares on a pro rata basis (based upon the ratio of the number of
Shares owned by each exercising Other Shareholder to the number of Shares owned
by all exercising Other Shareholders). This method of allocation shall continue
to apply to options to purchase all of the Offered Shares not purchased by the
Company until all options have been exercised by one or more Other Shareholders
(which exercises shall constitute the valid, legally binding, and enforceable
agreement as provided above), or until the remaining Other Shareholders elect
not to exercise their rights to purchase any additional Remaining Shares.
(e) The closing of the purchase of any Offered Shares by the Company
or Remaining Shares by the Other Shareholders hereunder shall be held at the
principal office of the Company in Coral Springs, Florida. The Company shall
designate a closing date and time, which date shall be not earlier than sixty
(60) nor later than ninety (90) business days after the date of the Transfer
Notice as may be agreed upon by the Company and the Offering Shareholder. At the
closing, the Offering Shareholder shall deliver certificates duly endorsed or
accompanied by duly executed stock powers for the Offered Shares being purchased
pursuant to this Section 2.2 and shall transfer the Offered Shares being
purchased pursuant to this Section 2.2 to the purchasers thereof, free and clear
of all liens, claims, charges, or encumbrances, against payment for the Offered
Shares in accordance with the terms of the Transfer Notice. If the Company shall
be the purchaser of the Offered Shares, the Company shall have the right to set
off against any payment for such Offered Shares the amount by which the Offering
Shareholder shall be indebted to the Company.
(f) Notwithstanding the foregoing, if the Right of First Refusal is
not exercised with respect to all of the Offered Shares within sixty (60) days
after the date of the Transfer Notice, or if the Company and the Other
Shareholders do not purchase all of the Offered Shares within the
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time period specified in Section 2.2(e), then the Offering Shareholder shall be
under no obligation to sell any Offered Shares to the Company or the Other
Shareholders, and the Offered Shares may be sold by the Offering Shareholder to
the Proposed Transferee at any time within forty-five (45) days after the date
of the expiration of the sixty (60) day time period referred to above. Any such
sale shall be only to the Proposed Transferee at not less than the Price and
upon other terms and conditions not more favorable to the Proposed Transferee
than those specified in the Transfer Notice. No transfer of the Offered Shares
or any portion thereof shall be made to any Competitor.
(g) As a condition precedent to the sale and transfer of any Offered
Shares by the Offering Shareholder, the Offering Shareholder shall obtain (i)
the written agreement of the Proposed Transferee that the Proposed Transferee
will be bound by, and that the Offered Shares transferred to the Proposed
Transferee will be subject to, this Agreement as provided in Section 2.1 above,
except that, notwithstanding any other provision of this Agreement, the Proposed
Transferee shall not be subject to Sections 2.3, 2.6, or 2.7 of this Agreement
and (ii) an opinion of counsel, satisfactory to the Company, that such transfer
of interest does not require registration under the Securities Act, and any
applicable state securities laws. The Company shall not give effect on its books
to any transfer or purported transfer of Offered Shares held or owned by any
Offering Shareholder to the Proposed Transferee unless each and all of the
conditions hereof effecting such transfer shall have been satisfied. If the
transfer by the Offering Shareholder to the Proposed Transferee of that portion
of the Offered Shares as to which the Right of First Refusal has not been
exercised and consummated, is not made within forty-five (45) days after the
date the Offering Shareholder first becomes free to make such transfer, that
right to transfer in accordance with this Section 2.2 shall expire. In such
event the restrictions of this Section 2.2 shall be reinstated as to all Shares
which have not been so transferred, and any subsequent transfer of such Shares,
whether or not to the same Proposed Transferee, must be made strictly in
compliance with the provisions of this Section 2.2.
2.3 COMPANY'S RIGHT TO REPURCHASE SHARES.
(a) Upon the occurrence of a Termination of Employment prior to the
third anniversary of this Agreement, the Company shall have the option to
purchase all or any portion of the Shares owned by the Management Shareholder as
to whom a Termination of Employment has occurred (such Management Shareholder is
hereinafter the "Subject Shareholder") at any time within three (3) months after
the Effective Date of Termination. The purchase price for the Shares owned by
such Subject Shareholder shall be determined on the basis of whether the
Termination of Employment of the Subject Shareholder was for Cause, and if the
Termination of Employment was not for Cause, the amount of time which has
elapsed between the date of this Agreement and the Effective Date of
Termination.
(b) In the event the Termination of Employment of the Subject
Shareholder is for Cause, the purchase price per Share shall be $.01.
(c) In the event the Termination of Employment of the Subject
Shareholder is not for Cause, the aggregate purchase price for all Shares owned
by the Subject Shareholder shall be equal to the sum of (x) the product of (i)
the number of FMV Shares (as set forth on the table below) MULTIPLIED BY (ii)
Fair Market Value PLUS (y) the product of (i) the number of Cost Shares
MULTIPLIED BY (ii) $.01. The number of FMV Shares and the number of Cost Shares
shall be determined by
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multiplying the applicable percentage from the table set forth below by the
number of Shares owned of record and beneficially (in the case of a Permitted
Disposition described in Section 1.16(c) hereof) by the Subject Shareholder and
rounding to the nearest whole Share.
Percentage of Shares which are:
FMV COST
DATE OF TERMINATION SHARES SHARES
Prior to the first anniversary hereof ................. 0% 100%
On or after the first anniversary hereof through the
day prior to the second anniversary hereof ......... 33.3% 66.6%
On or after the second anniversary hereof through
the day prior to the third anniversary hereof ...... 66.6% 33.3%
On or after the third anniversary hereof .............. 100% 0%
(d) The Company shall exercise its right to purchase, if it chooses
to exercise such right, by giving written notice to the Subject Shareholder (or
the personal representative, executor or administrator of the Subject
Shareholder, as the case may be) within ninety (90) days following the
occurrence of the Termination of Employment. The closing of any purchase of
Shares pursuant to this Section 2.3 shall take place at the principal office of
the Company not earlier than thirty (30) nor later than forty-five (45) days
after the date of the Company's written notice of the exercise of its right to
purchase such Shares pursuant to this Section 2.3.
(e) At the closing, the Subject Shareholder shall deliver all stock
certificates representing the Shares to be purchased, properly endorsed for
transfer, and the Company shall pay the Subject Shareholder the aggregate
purchase price for the Shares (i) one part in cash in an amount equal to 25% of
the total purchase price and (ii) the other part shall be paid by delivery of an
unsecured promissory note of the Company, payable to the order of the Subject
Shareholder (or the personal representative, executor, or administrator of the
Subject Shareholder, as the case may be), and bearing interest at the Prime Rate
in effect on the date of the Closing PLUS three percentage points, with accrued
and unpaid interest being due on each principal installment payment date. The
principal amount of such note shall be payable in (i) eight (8) equal quarterly
installments if the original principal amount of the note is equal to or less
than $1,000,000, (ii) twelve (12) equal quarterly installments if the original
principal amount of the note is greater than $1,000,000 but equal to or less
than $1,500,000; (iii) sixteen (16) equal quarterly installments if the original
principal amount of the note is greater than $1,500,000 but equal to or less
than $2,000,000, or (iv) twenty (20) equal quarterly installments if the
original principal amount of the note is greater than $2,000,000. Payment of
quarterly installments shall commence on the first three month anniversary of
the closing date. The Company shall have the right to set off against the cash
portion of the purchase price paid at Closing the amount of any indebtedness,
including accrued but unpaid interest, then owed by the Subject Shareholder to
the Company.
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2.4 FAILURE TO DELIVER SHARES TO THE COMPANY. If a Shareholder becomes
obligated to sell any Shares to the Company or to the Other Shareholders under
this Agreement (the "Obligated Shareholder") and fails to deliver such Shares in
accordance with the terms of this Agreement, the Company or such Other
Shareholder may, in addition to all other remedies it may have, tender to the
Obligated Shareholder, at the address set forth in the stock transfer records of
the Company, the purchase price for such Offered Shares as is herein specified,
and (i) in the case of shares to be sold to the Company pursuant to this
Agreement, cancel such shares on its books and records whereupon all of the
Obligated Shareholder's right, title, and interest in and to such Shares shall
terminate, (ii) in the case of Shares to be sold to an Other Shareholder under
this Agreement, issue certificates representing such shares to the Other
Shareholder and register the Other Shareholder on its Company's books and
records as the record owner of the shares whereupon all of the Obligated
Shareholder's right, title, and interest in and to such shares shall terminate.
2.5 COMPANY'S INABILITY TO PURCHASE. If the Company shall become obligated
under either Sections 2.2 or 2.3 hereof to purchase the Shares of a Shareholder
and the Company at such time is unable to fulfill its obligations hereunder by
reason of the Company's commitments to creditors, the Company may assign its
rights or delegate its obligations hereunder to one or more other Shareholders
or Investors of the Company who may then perform all of the obligations of the
Company, and exercise all rights of the Company, with respect to the purchase of
such Shares; provided, however, such assignment and delegation shall not relieve
the Company of its obligations hereunder (including, without limitation, the
obligation to pay for the purchased Shares) upon the failure of such assignee or
delegatee to perform such obligations.
2.6 COMEALONG AND TAKEALONG RIGHTS OF MANAGEMENT SHAREHOLDERS.
(a) In the event an Investor proposes to sell, or otherwise dispose
of for value, more than twenty-five (25%) percent in value of the Warrants and
Warrant Shares owned by such Investor to (1) a third party, or, (2) directly or
indirectly, to the Company (for the purposes of this Section 2.6(a), a
"Transferee"), other than a transfer by an Investor that is a distribution or
partial distribution, without new consideration, of all or any part of the
Warrants and Warrant Shares owned by such Investor to the partners of such
Investor (for the purposes of this Section 2.6(a), the Warrants and Warrant
Shares to be sold are hereinafter referred to as the "Transfer Shares"), such
Investor shall require the Transferee, as a condition precedent to the
consummation of the sale or disposition of the Transfer Shares of such Investor
to the Transferee, to offer to acquire on the same terms as the proposed sale or
disposition from each Management Shareholder a number of Shares equal to the
product of (i) the number of Shares owned of record by such Management
Shareholder MULTIPLIED BY (ii) a fraction, the numerator of which is the number
of Transfer Shares such Investor proposes to sell or otherwise dispose of to the
Transferee, and the denominator of which is the total number of Shares owned
beneficially and of record by such Investor (for the purposes of this Section
2.6(a), such number of Shares is hereinafter referred to as the "Allocation
Shares"). For purposes of determining the numerator and denominator of the
fraction described in the preceding sentence, the number of Transfer Shares to
be sold by such Investor and the number of Shares owned of record or
beneficially by such Investor shall be determined on a Common Stock Equivalents
basis. Such Investor shall give written notice (for the purposes of this Section
2.6(a), the "Co-Sale Notice") to each Management Shareholder which shall
describe fully the terms of the proposed sale or disposition, the number of
Transfer Shares of such Investor to be sold or otherwise disposed of, and the
number of Allocation
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Shares of each Management Shareholder eligible for co-sale, the name and address
of the Transferee, and the proposed closing date of the purchase and sale. The
Co-Sale Notice shall be signed by such Investor and by the Transferee and shall
be an irrevocable offer, open for thirty (30) days after receipt, of both
parties to acquire, as provided above, all Allocation Shares. Each Management
Shareholder shall have thirty (30) days after receipt of the Co-Sale Notice to
accept such offer as to all or a portion of the Allocation Shares and notify the
Transferee and such Investor in writing of the number of Allocation Shares, if
any, such Management Shareholder wishes to sell to the Transferee. Such Investor
may not consummate the proposed sale or disposition to the Transferee unless (x)
the sale of Allocation Shares pursuant to the co-sale right of each Management
Shareholder who timely accepts the offer of the Transferee is consummated or (y)
each Management Shareholder waives the right of co-sale as to all or part of the
Allocation Shares or (z) the irrevocable offer expires without acceptance by any
Management Shareholder after the thirty (30) day period. Such Investor and the
Transferee shall keep each Management Shareholder fully informed of the progress
of the sale proposed in the Co-Sale Notice.
(b) In the event a Management Shareholder proposes to sell, or
otherwise dispose of for value, more than twenty five (25%) percent in number of
the Shares owned by such Management Shareholder (1) to a third party other than
a transaction described in Section 1.16(c) or 1.16(d) or (2) directly or
indirectly, to the Company (for the purposes of this Section 2.6(b), a
"Transferee"), after compliance with the provisions of Section 2.2 hereof (for
the purposes of this Section 2.6(b), the Shares to be sold are hereinafter
referred to as the "Transfer Shares"), such Management Shareholder shall require
the Transferee, as a condition precedent to the consummation of the sale or
disposition of the Transfer Shares of such Management Shareholder to the
Transferee, to offer to acquire on the same terms as the proposed sale or
disposition from each Investor a number of outstanding Warrant Shares and
Warrant Shares issuable upon exercise of outstanding Warrants (defined as the
"Warrant Share Equivalents") equal to the product of (i) the number of Warrant
Share Equivalents owned of record by such Investor MULTIPLIED BY (ii) a
fraction, the numerator of which is the number of Transfer Shares such
Management Shareholder proposes to sell or otherwise dispose of to the
Transferee, and the denominator of which is the total number of Shares owned
beneficially and of record by such Management Shareholder (for the purposes of
this Section 2.6(b), such number of Warrant Share Equivalents is hereinafter
referred to as the "Allocation Shares"). For purposes of determining the
numerator and denominator of the fraction described in the preceding sentence,
the number of Transfer Shares to be sold by such Management Shareholder and the
number of Shares owned of record or beneficially by such Management Shareholder
shall be determined on a Common Stock Equivalents basis. Such Management
Shareholder shall give written notice (for the purposes of this Section 2.6(b),
the "Co-Sale Notice") to each Investor which shall describe fully the terms of
the proposed sale or disposition, the number of Transfer Shares of such
Management Shareholder to be sold or otherwise disposed of, and the number of
Allocation Shares of each Investor eligible for co- sale, the name and address
of the Transferee, and the proposed closing date of the purchase and sale. The
Co-Sale Notice shall be signed by such Management Shareholder and by the
Transferee and shall be an irrevocable offer, open for thirty (30) days after
receipt, of both parties to acquire, as provided above, all Allocation Shares.
Each Investor shall have thirty (30) days after receipt of the Co-Sale Notice to
accept such offer as to all or a portion of the Allocation Shares and notify the
Transferee and such Management Shareholder in writing of the number of
Allocation Shares, if any, such Investor wishes to sell to the Transferee. Such
Management Shareholder may not consummate the proposed sale or disposition to
the Transferee unless (x) the sale of Allocation Shares pursuant to the
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co-sale right of each Investor who timely accepts the offer of the Transferee is
consummated or (y) each Investor waives the right of co-sale as to all or part
of the Allocation Shares or (z) the irrevocable offer expires without acceptance
by any Investor after the thirty (30) day period. Such Management Shareholder
and the Transferee shall keep each Investor fully informed of the progress of
the sale proposed in the Co-Sale Notice.
(c) In the event that the Investors, at any time after June 1, 1996,
negotiate in good faith a term sheet, letter of interest, or letter of intent
for the sale of all Preferred Stock, Warrants, and Warrant Shares owned by the
Investors as a group and all Shares owned by the Management Shareholders to a
non-affiliated buyer (such buyer is for the purposes of this Section 2.6(c), a
"Buyer") on terms acceptable to the Investors, in a transaction which is not an
offering which requires registration under the Act, the Investors shall notify
the Company and each of the Management Shareholders in writing of their receipt
of a term sheet, letter of interest, or letter of intent from a Buyer, stating
in such notice (the "Section 2.6(c) Notice") the details of the proposed
transaction, including (i) the name and address of the Buyer, (ii) the number of
Warrant Shares or rights to obtain Warrant Shares to be sold or transferred by
the Investors in the proposed transaction (which shall be all of the Warrants
and Warrant Shares held by the Investors), (iii) the number of shares of
Preferred Stock to be sold or transferred to the Buyer in the proposed
transaction (which shall be all of the Preferred Stock held by the Investors),
(iv) the total purchase price ("Total Proceeds") to be paid by the Buyer for all
outstanding shares of Preferred Stock, all outstanding Warrants, and all
outstanding Warrant Shares held by the Investors and all shares of Common Stock
by the Management Shareholders and their affiliates proposed to be sold or
transferred to the Buyer in the proposed transaction, (v) the allocation of the
Total Proceeds between the Preferred Stock on one hand and all outstanding
shares of the Common Stock and all outstanding Warrants and Warrant Shares on
the other, which allocation shall be made as follows: first, $100 per
outstanding share of Preferred Stock PLUS any accrued and unpaid Dividends on
each outstanding share of Preferred Stock, and second, the balance shall be
allocated equally per share to the then outstanding Common Stock, Warrants, and
Warrant Shares on a Common Stock Equivalent basis, such that each outstanding
share of Common Stock held by a Management Shareholder, and each Warrant Share
that is outstanding or issuable upon the exercise of an outstanding Warrant,
receives an identical per share allocation of the Total Proceeds, and (vi) the
terms and method of payment by the Buyer of the consideration to be paid for the
Preferred Stock, Common Stock, Warrants, and Warrant Shares to be sold or
transferred to the Buyer. A copy of the term sheet, letter of interest, or
letter of intent, shall be attached to the Section 2.6(c) Notice. The Management
Shareholders, acting by the vote of a majority of the Shares held by the
Management Shareholders, shall have thirty (30) days from receipt of the Section
2.6(c) Notice to consider the proposed transaction and (x) to deliver to the
Company and to each Investor, a Call Notice, which obligates the Company and the
Management Shareholders (on a joint and several basis) to redeem all outstanding
Preferred Stock, Warrants, and Warrant Shares then held by the Investors for the
same amount of consideration which the Investors would have received in the
proposed transaction, as specified in the Section 2.6(c) Notice in accordance
with subsection (v) of this Section 2.6(c), or (y) participate in the proposed
transaction, by each Management Shareholder selling to the Buyer, all Shares
owned by such Management Shareholder for the same consideration per share of
Common Stock held by a Management Shareholder as the consideration to be
received by the Investors for each Warrant Share outstanding or issuable upon
exercise of a Warrant, as specified in the Section 2.6(c) Notice, in accordance
with subsection (v) of this Section 2.6(c). In the event the Management
Shareholders holding a majority of the Shares held by Management Shareholders
elect,
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within such thirty (30) day period, to pursue the alternative described in
subsection (x) in the preceding sentence and thereby decline to participate in
the proposed transaction, the Company and the Management Shareholders shall
deliver a Call Notice within such thirty (30) day period, which shall constitute
an irrevocable call option from the Company and the Management Shareholders (on
a joint and several basis) on the Preferred Stock and on the Warrants and
Warrant Shares held by the Investors for the amount of consideration which the
Investors would have received in the proposed transaction as specified in the
Section 2.6(c) Notice in accordance with subsection (v) of this Section 2.6(c).
Delivery of the Call Notice within such thirty (30) day period shall terminate
any obligation of the Management Shareholders to sell any Shares to the Buyer.
The closing of the transaction contemplated by the Call Notice by the Company
and the Management Shareholders shall be held at the principal office of the
Company in Coral Springs, Florida. The Company shall designate a closing date
and time, which date shall be not later than one hundred fifty (150) days after
the date of the Section 2.6(c) Notice as may be agreed upon by the Company and
Investors. At the closing of the transactions contemplated by the Call Notice,
the Investors shall deliver certificates duly endorsed or accompanied by duly
executed stock powers for the Preferred Stock, Warrants, and Warrant Shares
being purchased pursuant to this Section 2.6(c) and shall transfer the Preferred
Stock, Warrants, and Warrant Shares being purchased pursuant to this Section
2.6(c) to the purchasers thereof, free and clear of all liens, claims, charges,
or encumbrances, against payment for the Preferred Stock, Warrants, and Warrant
Shares, against payment of the amount of consideration payable therefor, payable
in cash or cash and notes, in each case having a value equal to the amount of
consideration which the Investors would have received in the proposed
transaction as specified in the Section 2.6(c) Notice in accordance with
subsection (v) of this Section 2.6(c). If on the other hand, the Management
Shareholders holding a majority of Shares owned by all Management Shareholders
fail to deliver a Call Notice within such thirty (30) day period, the Management
Shareholders shall have an irrevocable obligation to sell to the Buyer, on the
same terms and conditions as the Investors for the consideration specified in
the Section 2.6(c) Notice as aforesaid. The Investors shall keep the Management
Shareholders fully informed as to the status of the proposed transaction and
permit the Management Shareholders to participate in all negotiations with the
Buyer after the expiration of the thirty (30) day period which commences on the
date the Company receives the Section 2.6(c) Notice (assuming no Call Notice is
delivered to the Investors. The Investors and the Management Shareholders will,
in such event, use best efforts to consummate the proposed transaction with the
Buyer. The right of first refusal provided in Section 2.2 hereof shall be
inapplicable to any sale effected under this Section 2.6(c).
2.7 PURCHASE UPON DEATH.
Prior to a Public Offering, upon the death of any of Arthur J. Falcone
("AJF"), Edward W. Falcone ("EWF") or Philip Cucci, Jr. ("CUCCI"), the Company
shall purchase from the surviving spouse of such individuals, or from the estate
of such individuals if their respective spouses shall not have survived them,
all Shares then owned by such individuals, either jointly with their respective
spouses or in their individual names. The Purchase Price for such Shares shall
be the par value thereof. The Company shall maintain life insurance policies on
the lives of each of AJF, EWF, and CUCCI in the amount of $1,000,000 each. The
beneficiaries of such policies shall be the spouses of the respective
individuals. Each of the spouses of such individuals, by their signatures hereto
agree to sell all Shares to the Company in accordance with the terms hereof. All
of the aforementioned individuals shall cause their respective last wills and
testaments to be modified to
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include an agreement for the sale of all Shares owned by such individuals to the
Company. In the event that the Company shall fail to maintain such policies or
if the proceeds thereof shall not be paid to the respective spouses, the
agreement of the spouses to such sale shall lapse.
3. RESTRICTIVE COVENANTS.
3.1 COVENANT NOT TO COMPETE. Each Management Shareholder separately
covenants and agrees with the Company that, for so long as such Management
Shareholder is employed by the Company, and for a period of one (1) year
following the termination, for whatever reason, of such employment, such party
will not, either directly or indirectly, on such party's own behalf or in the
service of others in the territorial United States:
(a) engage in the Business of the Company as an officer, director,
executive, managerial employee, consultant to, representative of, agent of,
partner, or stockholder of a Competitor (other than as owner of less than five
(5%) percent of the outstanding voting securities of an entity whose voting
securities are traded or quoted on a national securities exchange or the
National Association of Securities Dealers Automated Quotation System);
(b) solicit or attempt to solicit for the benefit of a Competitor,
the Business of the Company from any person, firm, or entity that was a customer
of the Company while Management Shareholder was an employee of the Company; or
(c) hire, solicit, or induce away, or attempt to hire, solicit, or
induce away, for the benefit of a Competitor any person employed by the Company,
whether such employment is at will or for a stated period.
3.2 PROPRIETARY INFORMATION.
(a) Each Management Shareholder acknowledges and agrees that all
Proprietary Information, and all physical embodiments thereof, are confidential
to and shall be and remain the sole and exclusive property of the Company and
that any Proprietary Information produced by the Management Shareholder during
the period of the Management Shareholder's employment by the Company shall be
considered "work for hire" as such term is defined in 17 U.S.C. Section 101, ET.
SEQ., the ownership and, if applicable, the copyright of which shall be vested
solely in the Company. Each Management Shareholder agrees (i) immediately to
disclose to the Company all Proprietary Information developed in whole or part
by such Management Shareholder during the term of such Management Shareholder's
employment by the Company, and (ii) at the request and expense of the Company,
to do all things and sign all documents or instruments reasonably necessary in
the opinion of the Company to eliminate any ambiguity as to the exclusive rights
of the Company in such Proprietary Information including, without limitation,
providing to the Company such Management Shareholder's full cooperation in any
litigation or other proceeding to establish, protect, or obtain such exclusive
rights. Upon request by the Company, and in any event upon Termination of
Employment, such Management Shareholder shall promptly deliver to the Company,
and shall not retain or transmit to any other party or parties, all property
belonging to the Company including, without limitation, all Proprietary
Information (and all embodiments thereof) then in such Management Shareholder's
custody, control, or possession.
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(b) Each Management Shareholder agrees that all Proprietary
Information received or developed by such Management Shareholder as a result of
such Management Shareholder's employment or association with the Company will be
held in trust and kept in the strictest confidence, that such Management
Shareholder will protect such Proprietary Information from disclosure, and that
such Management Shareholder will not use, reproduce, distribute, disclose, or
otherwise disseminate, by electronic or other means, the Proprietary Information
or any physical embodiments thereof, except in connection with such Management
Shareholder's employment hereunder, without the Company's prior written consent.
The obligations of confidentiality contained in this Agreement with respect to
all Proprietary Information will apply during such Management Shareholder's
employment by the Company and at any and all times after expiration or
termination (for whatever reason) of such employment.
3.3 ENFORCEMENT. In the event of final adjudication of a breach or
contemplated breach of the covenants and agreements set forth in Sections 3.1
and 3.2 above, the Company shall have the right, in addition to all other rights
or remedies available to it at law or in equity, to set off against and deduct
from any monies then payable or thereafter to become payable to the breaching
Shareholder pursuant to Section 2 hereof, the amount of any damages suffered or
incurred by the Company as a result of such breach. In addition, the Company
shall be entitled to preliminary and permanent injunctive relief against the
breaching Shareholder to prevent or enjoin an actual or threatened breach of
such covenants and agreements or the continuation thereof by such Shareholder.
4. CORPORATE GOVERNANCE
4.1 VOTING AGREEMENTS AND RIGHTS.
(a) For so long as this Agreement remains in effect, and no
Two-Dividend Default, as defined in the Amended and Restated Articles of
Incorporation of the Company as in effect on the date hereof has occurred, each
Shareholder agrees to vote all Shares the voting of which is under the control
of such Shareholder in the following manner:
(i) To maintain a Board of Directors consisting of four (4)
members, unless otherwise agreed to by all Shareholders in writing;
(ii) To cause AJF to be elected as a Director of the Company
for so long as AJF is a holder of Common Stock;
(iii) To cause two persons designated in writing by the
Management Shareholders holding a majority of the Shares held by the
Management Shareholders and their Affiliates (the "Management Shareholder
Nominees") to be elected as Directors of the Company; and
(iv) To cause a person designated in writing by the Investors
holding a majority of the outstanding shares of Preferred Stock and
Warrant Shares (the "Investor Nominee") to be elected as a director of the
Company.
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(b) As of the date hereof, the Management Shareholder Nominees are
EWF and CUCCI and the Investor Nominee is Christopher Allick. This designation
shall remain in effect until a new designation is delivered in writing to the
Corporation and each party to this Agreement. A new designation shall be
effective when delivered. The Management Shareholders and the Investors will
each use reasonable efforts to notify all other Shareholders at least three (3)
days prior to any meeting (or written action in lieu of a meeting) of
stockholders of the Company at or by which directors are to be elected, if the
director nominee will change from the Nominee set forth in this sub section (b).
(c) The Investor Nominee shall be appointed to fill the vacancy
created on the Board of Directors by the filing of the Company's Amended and
Restated Articles of Incorporation with the Department of State of the State of
Florida effective upon the execution of this Agreement.
(d) In the event that either a Management Shareholder Nominee or the
Investor Nominee shall cease to serve as a director of the Company for any
reason, the Management Shareholders or the Investors, which ever is applicable,
shall have the right to appoint a successor nominee. The Shareholders shall use
their best efforts to ensure that such successor nominee is duly appointed and
elected to fill such vacancy in the manner provided in the Bylaws of the
Company.
(e) From and after the occurrence of a Two-Dividend Default, the
Investors and the Management Shareholders shall have the voting rights set forth
in the Amended and Restated Articles of Incorporation.
4.2 LIMITATION ON CERTAIN ACTIONS.
(a) The Shareholders agree that, with regard to any matter which
requires stockholder action, or which the Board of Directors desires to obtain
stockholder consent, the action by the Shareholders shall be taken (i) by
written consent in lieu of a meeting and such written consent action is approved
in writing by the holders of a majority of the then outstanding shares of
Preferred Stock consenting as a separate class, in accordance with the Bylaws of
the Company or (ii) a meeting of Shareholders duly called and held in accordance
with the Bylaws of the Company.
(b) The Shareholders agree that no action shall be taken by the
Board of Directors unless such action is taken (i) by written consent in lieu of
a meeting or (ii) at a meeting duly called and held in accordance with the
Bylaws of the Company.
(c) The Shareholders agree that no dividend shall be payable on or
with respect to the Common Stock without the written consent of the Director or
Directors nominated by the Investors.
4.3 RIGHT TO PURCHASE NEW SECURITIES. The Company hereby grants to each
Shareholder the right to purchase a pro rata share of any New Securities, as
hereinafter defined (the "Purchase Right"), which the Company may, from time to
time, propose to sell and issue. A pro rata share, for purposes of this Purchase
Right, is a fraction, the numerator of which is the number of Common Stock
Equivalents then held by a Shareholder, and the denominator of which is the
total number of Common Stock Equivalents then outstanding.
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(a) Except as set forth below, "New Securities" shall mean any
shares of capital stock of the Company including Common Stock and Preferred
Stock, whether now authorized or not, and any rights, options, or warrants to
purchase said shares of Common Stock or Preferred Stock, and securities of any
type that are, or may become, convertible into said shares of Common Stock or
Preferred Stock. Notwithstanding the foregoing, "New Securities" does not
include: (i) securities offered to the public generally pursuant to a
registration statement filed pursuant to the Securities Act, or pursuant to
Regulation A under the Securities Act; (ii) securities issued pursuant to the
acquisition of another corporation by the Company by a merger, share exchange,
the purchase of substantially all of the assets, or other reorganization whereby
the Company or its shareholders own not less than fifty-one percent (51%) of the
voting power of the surviving or successor corporation; (iii) shares of Common
Stock or related options convertible into such Common Stock issued to employees
of, officers, and directors of the Company pursuant to any plan or arrangement
approved by the Board of Directors of the Company; (iv) securities issued
pursuant to any rights or agreements including without limitation convertible
securities, options, and warrants, provided that the Purchase Right under this
Section 4.3 applies with respect to the initial sale of New Securities or the
grant by the Company of such rights or agreements; (v) securities issued in
connection with any stock split, stock dividend, or recapitalization by the
Company; (vi) securities issued pursuant to the anti-dilution provisions of any
now or hereafter outstanding option, warrant, right, or convertible security; or
(vii) as a dividend in kind on the Preferred Stock.
(b) In the event the Company proposes to undertake an issuance of
New Securities, it shall give each Shareholder written notice of its intention,
describing the type of New Securities, and the price and terms upon which the
Company proposes to issue the New Securities. Each Shareholder shall have
fifteen (15) days from the date of receipt of any such notice to agree to
purchase up to its respective pro rata portion of shares of such New Securities
for the price and upon the terms specified in the notice by giving written
notice to the Company of such Shareholder's intentions and stating therein the
quantity of New Securities to be purchased by such Shareholder.
(c) In the event a Shareholder fails to exercise the Purchase as
provided herein within said fifteen (15) day period, the Company shall have
ninety (90) days thereafter to sell or enter into a written agreement (pursuant
to which the sale of New Securities covered thereby shall be completed, if at
all, within sixty (60) days from the date of said agreement) to sell the New
Securities not elected to be purchased by the Shareholders at a price and upon
such terms which are no more favorable to the purchaser of such New Securities
than specified in the Company's notice to the Shareholders. In the event the
Company has not sold the New Securities or entered into a written agreement to
sell the New Securities within said ninety (90) day period (or completed the
sale of the New Securities within sixty (60) days from the date of said
agreement, as provided above), the Company shall not thereafter issue or sell
any New Securities without first offering such securities in the manner provided
in this Section 4.3.
(d) The Right to Purchase New Securities granted to a Shareholder
under this Section 4.3 shall expire upon the first to occur of the following:
(i) the closing of the first public offering of the Common Stock of the Company
to the general public which is effected pursuant to a registration statement
filed with, and declared effective by, the Commission under the Securities Act
or (ii) the date such Shareholder no longer owns any Shares.
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5. REGISTRATION RIGHTS.
5.1 DEMAND REGISTRATION. Investors holding not less than one-half of the
shares of Restricted Stock then held by Investors, may request the Company to
register under the Securities Act not less than one-half of all shares of
Restricted Stock then held by the Investors as a group for sale in the manner
specified in such notice (shares of Restricted Stock issuable upon exercise of
any option, warrant, or right which is then immediately exercisable and shares
of Restricted Stock issuable upon conversion of any convertible security which
is then immediately convertible, shall be deemed held by such Investor for the
purposes of this Section 5.1). Notwithstanding anything to the contrary
contained herein, no request may be made under this Section 5.1 within six
months after the effective date of a registration statement filed by the Company
covering a firm commitment underwritten public offering in which the Investors
shall have been entitled to join pursuant to Sections 5.2 or 5.3 hereof, and in
which there shall have been effectively registered all shares of Restricted
Stock as to which registration shall have been requested by such Investors. If
the Company receives a notice from an Investor or Investors that imposes on the
Company the registration obligations of this Section 5.1, and if, in the
reasonable opinion of the Board of Directors of the Company the general market
conditions are not appropriate at the time for an offering, the Company may, at
its option, delay the commencement of the performance of the Company's
obligation pursuant to this Section 5.1 for up to one hundred twenty (120) days.
If an Investor specifies in the notice, that the method of disposition of the
Restricted Stock shall be an underwritten public offering, the Investor may
designate the managing underwriter of such offering, subject to the approval of
the Company, which approval shall not be unreasonably withheld or delayed. The
Company shall be obligated to register Restricted Stock pursuant to this Section
5.1 on two occasions only (irrespective of the number of Investors requesting
such registration), PROVIDED, HOWEVER, that such obligation shall be deemed
satisfied only when a registration statement covering shares of Restricted
Stock, for sale in accordance with the method of disposition specified by the
requesting Investor, shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, such shares shall
have been sold pursuant thereto. The Company shall be entitled to include in any
registration statement referred to in this Section 5.1 for sale in accordance
with the method of disposition specified by the requesting Investor, shares of
Common Stock to be sold by the Company for its own account, except as and to the
extent that in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the Restricted Stock to be sold. Except for
registration statements on Forms S-4 or S-8, or any successor thereto, the
Company will not file with the Commission any other registration statement with
respect to its Common Stock, whether for its own account or that of other
stockholders, from the date of receipt of a notice from the requesting Investor
pursuant to this Section 5.1 until the completion of the period of distribution
of the registration contemplated thereby.
5.2 PIGGYBACK REGISTRATION. If the Company at any time proposes to
register any of its securities under the Securities Act for sale to the public,
whether for its own account or for the account of other security holders or both
(except with respect to registration statements on Forms S-4 or S-8 or another
form not available for registering the Restricted Stock for sale to the public),
each such time it will give written notice to each Shareholder of its intention
so to do. Upon the written request of Shareholders received by the Company
within 30 days after the giving of any such notice by the Company, to register
such number of shares of Restricted Stock held by each Shareholder (or
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by persons taking from such Shareholder pursuant to a Permitted Disposition)
specified in such written request, the Company will cause the Restricted Stock
as to which registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent requisite to permit the sale or other disposition
by each Shareholder (in accordance with its written request) of such Restricted
Stock so registered. In the event that any registration pursuant to this Section
5.2 shall be, in whole or in part, an underwritten public offering of Common
Stock, the number of shares of Restricted Stock to be included in such an
underwriting may be reduced if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would adversely affect the marketing
of the securities to be sold by the Company therein. In the event such a
reduction is necessary, (i) all Shareholders proposing to sell Restricted Stock
in the offering shall bear the reduction on a pro-rata basis, based on the
number of shares of Restricted Stock each Shareholder proposed to offer for sale
in the Offering, or (ii) Shareholders holding a majority of the Shares may elect
to withdraw from such registration all shares of Restricted Stock held by
Shareholders as to which registration was requested. Notwithstanding the
foregoing provisions, the Company may withdraw any registration statement
referred to in this Section 5.2 without thereby incurring any liability to any
Shareholder.
5.3 REGISTRATION ON FORM S-3. If at any time a Shareholder shall request
that the Company file a registration statement on Form S-3 or any successor
thereto for a public offering of shares of Restricted Stock then held by such
Shareholder and the Company is a registrant entitled to use Form S-3 or any
successor thereto to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Restricted Stock specified in such
notice. Whenever the Company is required by this Section 5.3 to use its best
efforts to effect the registration of Restricted Stock, each of the procedures
and requirements of Section 5.4 hereof shall apply to such registration,
PROVIDED, HOWEVER, that there shall be no limitation on the number of
registrations on Form S-3 which may be requested and obtained under this Section
5.3, and PROVIDED, FURTHER, HOWEVER, that the Company shall not be required to
effect (i) more than one such registration in each six month period and (ii) any
registration under this Section 5.3 that would require the Company to expedite
the preparation or audit of its financial statements.
5.4 REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 5.1, 5.2, or 5.3 hereof to use its best efforts to
effect the registration of any shares of Restricted Stock under the Securities
Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 5.1
or 5.2 hereof, shall be on Form S-1, Form S-2, any successor forms thereto, or
other form of general applicability satisfactory to the managing underwriter
selected as herein provided) with respect to such securities and use its best
efforts to cause such registration statement to become and remain effective for
the period of the distribution contemplated thereby (determined as hereinafter
provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period of distribution and comply with the provisions
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of the Securities Act with respect to the disposition of all Restricted Stock
covered by such registration statement in accordance with the intended method of
disposition set forth in such registration statement for such period;
(c) furnish to each Shareholder and to each underwriter such number
of copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may request
in order to facilitate the public sale or other disposition of the Restricted
Stock covered by such registration statement;
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or "blue sky" laws
of such jurisdictions as the Shareholders, or, in the case of an underwritten
public offering, the managing underwriter reasonably shall request, PROVIDED,
HOWEVER, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;
(e) use its best efforts to list the Restricted Stock covered by
such registration statement with any securities exchange or NASDAQ on which the
Common Stock of the Company is then listed or quoted;
(f) notify each selling Shareholder at any time when a prospectus
relating to Restricted Stock is required to be delivered under the Securities
Act of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such Shareholder, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Restricted Stock, such prospectus will not contain an untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein not misleading; provided that the 180-day period described below will be
tolled from the time a prospectus contains such a statement or omission until a
prospectus correcting such statement or omission has been delivered to the
Shareholders and may be delivered to the purchasers of such Restricted Stock in
compliance with the Securities Act;
(g) notify the selling Shareholders immediately, and confirm the
notice in writing, (1) when the registration statement becomes effective, (2) of
the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceedings for that purpose, (3) of the receipt by the
Company of any notification with respect to the suspension of qualification of
the Restricted Stock for sale in any jurisdiction or of the initiation, or the
threatening, of any proceedings for that purpose, and (4) of the receipt of any
comments, or requests for additional information, from the Commission or any
state regulatory authority. If the Commission or any state regulatory authority
shall enter such a stop order or order suspending qualification at any time, the
Company will promptly use its best reasonable efforts to obtain the lifting of
such order; and
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders as soon as reasonably practicable, but not later than 15 months after
the effective date of the registration statement, an earnings statement covering
a period of at least 12 months beginning after the effective date of the
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registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
For purposes hereof, the period of distribution of Restricted Stock
in a firm commitment underwritten public offering shall be deemed to extend
until each underwriter has completed the distribution of all securities
purchased by it, and the period of distribution of Restricted Stock in any other
registration shall be deemed to extend until the earlier of the sale of all
Restricted Stock covered thereby or 180 days after the effective date thereof.
In connection with each registration hereunder, each Shareholder
will furnish to the Company in writing such information with respect to it as a
stockholder as reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws.
In connection with each registration pursuant to Section 5.1, 5.2,
or 5.3 hereof covering an underwritten public offering, the Company and each
Shareholder agree to enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and containing
such provisions as are customary in the securities business for such an
arrangement between such underwriter and companies of the Company's size and
investment stature.
5.5 EXPENSES. All reasonable expenses incurred by the Company in complying
with Section 5.1, 5.2, or 5.3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance, and fees and disbursements of one counsel for the sellers of
Restricted Stock , but excluding any Selling Expenses, are called "Registration
Expenses". All underwriting discounts and selling commissions applicable to the
sale of Restricted Stock are called "Selling Expenses".
(a) The Company shall pay all Registration Expenses attributable to
the shares of Restricted Stock of Shareholders included in the Registration in
connection with each registration statement under Section 5.1, 5.2, or 5.3
hereof.
(b) All Selling Expenses in connection with each registration
statement under Section 5.1, 5.2, or 5.3 hereof shall be borne by the
Shareholders and any other selling stockholder in proportion to the number of
shares sold by each Shareholder, or by such other selling stockholders.
5.6 INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Section 5.1, 5.2, or 5.3 hereof, the
Company will indemnify and hold harmless each Shareholder, its directors and its
officers (provided any such Shareholder is a seller of Restricted Stock
thereunder), each underwriter of such Restricted Stock thereunder, and each
other person, if any, who controls such Shareholder, its directors and its
officers or underwriter within the meaning of the Securities Act, against any
losses, claims, damages, or liabilities, joint or several, to which such
Shareholder, its directors and officers, such underwriter or such person may
become
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subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any shares of Restricted
Stock were registered under the Securities Act pursuant to Section 5.1, 5.2, or
5.3 hereof, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each such Shareholder, its directors and officers, each such
underwriter and each such person for any legal or other expenses reasonably
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability, or action, provided, however, that the Company
will not be liable in any such case if and to the extent that any such loss,
claim, damage, or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such Shareholder, its directors and its
officers, such underwriter and such person in writing specifically for use in
such registration statement or prospectus.
(b) In the event of a registration of any of the shares of
Restricted Stock under the Securities Act pursuant to Section 5.1, 5.2, or 5.3
hereof, each Shareholder including Shares of Restricted Stock in such
Registration, severally but not jointly, will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter, and each person who
controls any underwriter within the meaning of the Securities Act, against all
losses, claims, damages, or liabilities, joint or several, to which the person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which any shares of
Restricted Stock were registered under the Securities Act pursuant to Section
5.1, 5.2, or 5.3 hereof, any Preliminary Prospectus, or final Prospectus
contained therein, or any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and each such officer,
director, underwriter, and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action, provided, however, that each
such Shareholder will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Shareholder, as such, respectively, furnished in writing to the Company by
such Shareholder specifically for use in such registration statement or
prospectus, and provided, further, however, that the respective liability of
each Shareholder hereunder shall be limited to the proportion of any such loss,
claim, damage, liability, or expense which is equal to the proportion that the
public offering price of the shares sold by such Shareholder, under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the proceeds received
by such Shareholder from the sale of shares of Restricted Stock or covered by
such registration statement. In no event will any Shareholder be required to
enter into any agreement or undertaking in connection with any registration
under this Agreement providing for any
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indemnification or contribution obligation on the part of such Shareholder
greater than such Shareholder's obligation under this Section 5.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 5 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 5 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 5.6 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Restricted Stock exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section
5 then, and in each such case, the Company and such holder will contribute to
the aggregate losses, claims, damages, or liabilities to which they may be
subject (after contribution from others) in such proportion so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its Restricted Stock offered by the registration statement
bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the proceeds received from sale
of Restricted Stock offered by it pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
24
<PAGE>
5.7 CHANGES IN COMMON STOCK. If, and as often as, there is any change in
the Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the registration rights granted in this Section 5
shall continue with respect to the Common Stock as so changed.
5.8 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Stock to the public without registration, at all times
after ninety (90) days after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each Shareholder of Restricted Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports as such Shareholder may reasonably request in
availing itself of any rule or regulation of the Commission allowing such
Shareholder to sell any Restricted Stock without registration.
5.9 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Corporation
to register securities granted the Shareholders under Section 5 hereof may be
assigned to a transferee or assignee in connection with any transfer or
assignment of Restricted Stock provided that: (i) such transfer may otherwise be
effected in accordance with applicable securities laws, and (ii) such assignee
or transferee acquires at least one-half of the shares of Restricted Stock
(appropriately adjusted for stock split or recapitalization) then held by such
Shareholder. Notwithstanding the foregoing, the rights to cause the Company to
register securities may be assigned to any shareholder, partner, or affiliate of
an Investor without compliance with item (ii) above, provided written notice
thereof is promptly given to the Company.
5.10 STANDOFF AGREEMENT. Each Shareholder agrees, so long as such
Shareholder holds at least five percent (5%) of the Company's outstanding voting
equity securities, in connection with the Company's initial public offering,
upon request of the Company or the underwriters managing any underwritten
offering of the Company's securities, not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Restricted
Stock (other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed ninety (90) days from the effective date of such
registration as may be requested by the underwriters; provided that the
officers, directors, and all five percent or greater shareholders of the Company
also agree to such restrictions.
25
<PAGE>
6. GENERAL PROVISIONS
6.1 TERM. This Agreement shall terminate and be of no force and effect,
unless extended as provided herein, upon the first to occur of (a) the passage
of twenty (20) years from the date of this Agreement, (b) the effective date of
a written agreement signed by all of the parties hereto providing for the
termination of this Agreement, or (c) the effective date of a Public Offering.
6.2 LEGEND. During the term of this Agreement, each certificate
representing the Shares shall bear the following legend, or a similar legend
deemed by the Company to constitute an appropriate notice of the provisions
hereof and the applicable security laws (any such certificate not having such
legend shall be surrendered upon demand by the Company and so endorsed):
On the face of the certificate:
"TRANSFER OF THIS STOCK IS RESTRICTED IN ACCORDANCE WITH CONDITIONS PRINTED ON
THE REVERSE OF THIS CERTIFICATE."
On the reverse:
"THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND
TRANSFERRABLE ONLY IN ACCORDANCE WITH THAT CERTAIN SHAREHOLDERS AGREEMENT BY AND
AMONG TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC. (THE "COMPANY") AND THE
STOCKHOLDERS THEREOF, DATED JUNE 2, 1993, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY IN CORAL SPRINGS, FLORIDA. NO TRANSFER OR PLEDGE
OF THE SHARES EVIDENCED HEREBY MAY BE MADE EXCEPT IN ACCORDANCE WITH AND SUBJECT
TO THE PROVISIONS OF SAID AGREEMENT. BY ACCEPTANCE OF THIS CERTIFICATE, ANY
HOLDER, TRANSFEREE OR PLEDGEE HEREOF AGREES TO BE BOUND BY ALL OF THE PROVISIONS
OF SAID AGREEMENT."
"SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE
HOLDER FOR INVESTMENT PURPOSES ONLY AND NOT FOR RESALE, TRANSFER OR
DISTRIBUTION, HAVE BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF APPLICABLE STATE AND FEDERAL SECURITIES LAWS, AND MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED OTHER THAN PURSUANT TO EFFECTIVE
REGISTRATION UNDER SUCH LAWS, OR IN TRANSACTIONS OTHERWISE IN COMPLIANCE WITH
SUCH LAWS, AND UPON EVIDENCE SATISFACTORY TO THE COMPANY OF COMPLIANCE WITH SUCH
LAWS, AS TO WHICH THE COMPANY MAY RELY UPON AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY."
Each Shareholder shall promptly surrender the certificates representing his/her
Shares to the Company so that the Company may affix the foregoing legends
thereto. A copy of this Agreement shall be kept on file in the principal office
of the Company in Coral Springs, Florida. Upon termination of all applicable
restrictions set forth herein and upon tender to the Company of the appropriate
stock certificates, the Company shall reissue to the holder of such stock
certificates new stock certificates which shall contain only the second
paragraph of the restrictive legend set forth above. The parties to this
Agreement intend that the legend conform to the applicable provisions of the
Uniform Commercial Code of Florida and the Florida Business Corporation Act.
This legend may be modified from time to time by the Board of Directors of the
Company to conform to such statutes or to this Agreement.
26
<PAGE>
6.3 EXTENSION OF TERM. This Agreement may be extended for additional ten
(10) year periods if all Shareholders bound by this Agreement at the time of the
extension so agree in writing.
6.4 CONTINUATION OF EMPLOYMENT. Nothing in this Agreement shall create an
obligation on the Company to continue the employment of a Shareholder with the
Company or any Affiliate of the Company.
6.5 SPECIFIC ENFORCEMENT. The Shareholders expressly agree that they will
be irreparably damaged if this Agreement is not specifically enforced. Upon a
breach or threatened breach of the terms, covenants and/or conditions of this
Agreement by any Shareholder, any other Shareholder shall, in addition to all
other remedies available with respect to such breach, be entitled to a temporary
or permanent injunction, without showing any actual damage, and/or a decree for
specific performance, in accordance with the provisions hereof.
6.6 NOTICES. All notices, requests, consents, and other communications
required or permitted hereunder shall be in writing and shall be effective when
delivered in person or one day after deposit with a nationally recognized
overnight delivery carrier properly addressed and prior to its deadline for
receipt of overnight packages, or five days after deposit in the U.S. Mails,
certified or registered mail, return receipt requested, postage prepaid, in each
case addressed as follows (or at such other address for the parties as shall be
specified by like notice):
(a) if to the Company:
Transeastern Properties of South Florida, Inc.
7522 Wiles Road
Suite 203
Coral Springs, Florida
Attn: President
with a copy (which shall not constitute notice) to:
Kinsey & Gleason
185 Northwest Spanish River Boulevard
Suite 100
Boca Raton, Florida 33431
Attn: John Kinsey, Esq.
(b) if to a Shareholder, to the Shareholder's address as
reflected in the stock records of the Company or as the Shareholders
shall designate to the Company in writing, with a copy (which shall
not constitute notice) to Powell, Goldstein, Frazer & Murphy,
Sixteenth Floor, 191 Peachtree Street, N.E., Atlanta, GA 30303,
Attn: Gerardo M. Balboni II, Esq.
27
<PAGE>
(c) if to an Investor, to the Investor's address as reflected
in the stock records of the Company or as the Investors shall
designate to the Company in writing, with a copy (which shall not
constitute notice) to Powell, Goldstein, Frazer & Murphy, Sixteenth
Floor, 191 Peachtree Street, N.E., Atlanta, GA 30303, Attn: Gerardo
M. Balboni II, Esq.
6.7 ASSIGNMENT. This Agreement shall not be assignable by any of the
parties hereto without the written consent of the other parties.
6.8 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of Florida, irrespective of the
choice of law provisions thereof.
6.9 AMENDMENT. This Agreement may be amended, supplemented or interpreted
at any time, but only by a written instrument executed by all the parties
hereto.
6.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
6.11 ENTIRE AGREEMENT. This Agreement, together with other documents
delivered pursuant hereto or incorporated by reference herein, contain the
entire agreement between the parties hereto concerning the transactions
contemplated herein and supersede all prior agreements or understandings between
the parties hereto relating to the subject matter hereof. No oral
representation, agreement, or understanding made by any party hereto shall be
valid or binding upon such party or any other party hereto.
6.12 EFFECT OF OTHER LAWS AND AGREEMENTS. The rights and obligations of
the parties under this Agreement shall be subject to any restrictions on the
purchase of stock which may be imposed by the Florida Business Corporation Act
or any agreement now or hereafter entered into between the Company and any
financial institution with respect to loans or other financial accommodations
made to the Company. Nothing contained herein shall be deemed to limit the
obligations and duties imposed upon officers and directors in accordance with
state and federal laws.
6.13 FURTHER ASSURANCE. Each party hereto shall do and perform, or cause
to be done and performed, all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.14 CAPTIONS AND SECTION HEADINGS. Except as used in Section 1, captions
and section headings used herein are for convenience only and are not a part of
this Agreement and shall not be used in construing it.
28
<PAGE>
6.15 WAIVER. Any waiver by any party hereto of any of his or its rights
hereunder shall be without prejudice of his or its future assertion of any such
rights, and any delay in exercising any rights shall not operate as a waiver
thereof.
6.16 SEVERABILITY OF PROVISIONS. If any one or more of the provisions of
this Agreement shall be determined to be invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provision of this
Agreement shall not be impaired in any way.
6.17 SPECIFIC PERFORMANCE. In any action or proceeding to specifically
enforce the provisions of this Agreement, any person (including the Company)
against whom such action or proceeding is brought hereby waives the claim or
defense therein that the plaintiff or claimant has an adequate remedy at law,
and such person shall not urge in any such action or proceeding the claim or
defense that such remedy at law exists. The provisions of this paragraph shall
not prevent any party from seeking a remedy at law in connection with any breach
of this Agreement.
6.18 SHAREHOLDER OBLIGATIONS. The obligations of the Shareholders
hereunder are several and not joint.
29
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the date
and year first above written.
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC.
By:
Name:
Title:
[CORPORATE SEAL]
Attest:
Secretary
INVESTORS:
MEZZONEN, S.A.
By: Patrick Savin, Chief Financial Officer
THE HANDLER FAMILY TRUST DTD 9/12/91
By: Richard Handler, Trustee
CHRISTOPHER ALLICK
ANDREW WHITTAKER
DAVID F. EISNER
DAVID J. LOSITO
By:
Kenneth Taratus, Attorney-in-Fact
under POA dated June 1, 1993
[SIGNATURES CONTINUED ON NEXT PAGE]
30
<PAGE>
SHAREHOLDERS:
SHARES OF
COMMON STOCK:
241,667 (SEAL)
Arthur J. Falcone
and
(SEAL)
Marcy Falcone
241,667 (SEAL)
Edward W. Falcone
and
(SEAL)
Diana Falcone
241,667 (SEAL)
Philip Cucci, Jr.
and
(SEAL)
Linda Cucci
31
<PAGE>
EXHIBIT C
TO
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
AMENDED AND RESTATED ARTICLES OF INCORPORATION
<PAGE>
EXHIBIT D
TO
SERIES A REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
FORM OF OPINION OF COMPANY COUNSEL
<PAGE>
MAY __, 1993
The parties named in the attached Schedule I
c/o Gerardo M. Balboni II, Esq.
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street N.E.
Atlanta, GA 30303
Ladies and Gentlemen:
We have acted as counsel to Transeastern Properties of South Florida, Inc.,
a Florida corporation (the "Company"), in connection with (i) the preparation of
(a) the Series A Redeemable Preferred Stock and Warrant Purchase Agreement,
dated as of June 1, 1993, by and among the parties named in Schedule I hereto
(the "Purchasers") and the Company (the "Agreement") and (b) the Warrants, dated
as of June 1, 1993 by and among the parties named in Schedule I hereto (the
"Warrant Purchasers") and the Company (the "Warrant Agreement"); and (ii) the
sale and issuance of 20,000 shares of the Series A Redeemable Preferred Stock,
$.01 par value, of the Company (the "Shares") pursuant to the Agreement and (b)
the sale and delivery of warrants to purchase up to 275,000 shares of the Common
Stock, $.01 par value of the Company (the "Warrants") pursuant to the Agreement.
This opinion is rendered pursuant to Article 4(a) of the Agreement. Capitalized
terms used in this opinion letter and the attachments hereto and not otherwise
defined herein shall have the meanings assigned to such terms in the Agreement.
In connection with the foregoing, we have examined:
1. An executed copy of each of the Agreement, the Warrants, the
Indemnification Agreement and the Shareholders Agreement among the Company,
the Purchasers and the other parties listed therein (the "Shareholders
Agreement") collectively, the "Transaction Agreements";
2. The Amended and Restated Articles of Incorporation, of the Company,
filed with the Florida Department of State on May __, 1993, and the Bylaws
of the Company, certified by the Secretary of the Company on May __, 1993
(collectively, the "Charter"); and
3. The corporate proceedings of the Company relating to the execution
and delivery of the Agreement, the Warrants, the Indemnification Agreement
and the Shareholders Agreement, and the consummation of the transactions
provided for therein.
In all such examinations, we have assumed the genuineness of all signatures
(other than signatures on behalf of the Company), the authenticity of all
document submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
photostatic copies. As to questions of fact material to our opinions, we have
relied on certificates of public officials, the representations and warranties
of Company set forth in the Agreement, and on certificates of officers of the
Company.
<PAGE>
The use herein of the words "to the best of our knowledge", "known to us"
or similar language means that, during the course of our representation of the
Company, no information has come to the attention of any attorney in this Firm
involved in these transactions or otherwise regularly engaged in representing
the Company which would give us actual knowledge of the existence of any of the
documents or facts so qualified. Whenever we have made "due inquiry" as to
matters set forth herein, such inquiry was confined to reviewing documents
provided to us by the Company in the course of our representation in response to
inquiries as to such matters as we have deemed appropriate in order to render
the opinions hereinafter set forth, a review of documents of which we otherwise
have actual knowledge, to the extent we deemed such documents material and
relevant to the opinions hereinafter set forth, and obtaining certificates of
officers of the Company as to certain facts which we deemed material and
relevant to our opinion, and we have relied, with your permission, upon such
certificates in rendering this opinion.
Based on the foregoing, and subject to the further qualifications,
assumptions, and limitations hereinafter set forth, we are of the opinion that:
1. The Company is a corporation in good standing (as defined herein)
under the laws of the State of Florida. The Company is qualified to do
business as a foreign corporation and is in good standing in each state
where, based upon the nature of the business transacted by the Company or
the ownership or lease by the Company of real or personal property, the
failure to be so qualified would have a material and adverse effect on the
business or condition of the Company. The Company has no subsidiaries.
2. The Company has all requisite power to (i) own, lease, and operate
its properties and to carry on its business as currently conducted and as
proposed to be conducted, (ii) execute, deliver, and perform each of the
Transaction Agreements, (iii) issue, sell, and deliver the Shares and the
Warrants, and (iv) issue and deliver the Warrant Shares upon the exercise
of the Warrants.
3. Each of the Transaction Agreements has been duly authorized,
executed, and delivered by the Company, and if a party thereto, each holder
of Common Stock of the Company, and constitutes the legal, valid, and
binding obligations of the Company and if a party thereto, each holder of
Common Stock of the Company, enforceable in accordance with their
respective terms (subject, to enforcement of remedies, to the discretion of
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium, and similar laws affecting
creditors' rights or debtors' relief generally).
4. The execution and delivery by the Company of the Transaction
Agreements, and the performance by the Company of its obligations
thereunder, the issuance, sale, and delivery of the Shares and the
Warrants, and the issuance and delivery of the Warrant Shares upon exercise
of the Warrants, and of the Conversion Shares upon conversion of the Shares
and the Warrant Shares, will not violate any provision of law, the Charter,
any order of any court or other agency of government known to us and
binding upon the Company or its assets, or any indenture, agreement, or
other instrument known to us by which the Company or any of its properties
or assets is bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement, or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim, or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.
<PAGE>
5. The authorized capital stock of the Company consists of (i) 29,000
shares of Series A Redeemable Preferred Stock, $.01 par value and (ii)
5,000,000 shares of Common Stock, $.01 par value. Immediately prior to the
Closing, 725,000 shares of Common Stock will be validly issued, fully paid
and nonassessable, and none of the Series A Redeemable Preferred Stock will
be outstanding. Immediately prior to the Closing, the shareholders of
record and holders of record of subscriptions, warrants, options,
convertible securities, and other rights (contingent or other) to purchase
or otherwise acquire equity securities of the Company, and the number of
shares of Common Stock and the number of such subscriptions, warrants,
options, convertible securities, and other such rights held by each, will
be as set forth in Schedule 2 to the Agreement. The designations, power,
preferences, rights, qualifications, limitations, and restrictions in
respect of each class or series of authorized capital stock of the Company
are as set forth in the Charter, and all such designations, powers,
preferences, rights, qualifications, limitations, and restrictions are
valid, binding, and enforceable and in accordance with all applicable laws
(subject, as to enforcement, to the discretion of courts in awarding
equitable relief, and to applicable bankruptcy, reorganization, insolvency,
moratorium, and similar laws affecting creditors' rights and debtors'
relief generally). Except as set forth in Schedule 2 to the Agreement, to
our knowledge, immediately prior to the Closing, no subscription, warrant,
option, convertible security, or other right (contingent or other) to
purchase or acquire equity securities of the Company was authorized or
outstanding and there was no commitment by the Company to issue shares,
subscriptions, warrants, options, convertible securities, or other such
rights or to distribute to holders of any of its equity securities any
evidence of indebtedness or asset. Except as set forth in Schedule 2 to the
Agreement, to our knowledge, the Company has no obligation (contingent or
other) to purchase, redeem, or otherwise acquire any of its equity
securities or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
6. The Shares, the Warrants, and the Warrant Shares have been duly
authorized. The issuance, sale, and delivery of the Shares and the Warrants
and the issuance, sale, and delivery of the Warrant Shares upon exercise of
the Warrants have been duly authorized by all required corporate action;
assuming payment of the purchase price therefor as provided in the
Agreement, the Shares and the Warrants have been validly issued and are
fully paid, and nonassessable; to our knowledge, the Shares and the
Warrants are free and clear of all liens, charges, restrictions, claims,
and encumbrances imposed by the Company, except as set forth in the
Shareholders Agreement; and the Warrant Shares have been duly reserved for
issuance upon conversion of the Warrants, and, when so issued, will be
validly issued, fully paid, and nonassessable with no personal liability
attaching to the ownership thereof and, to our knowledge, will be free and
clear of all liens, charges, restrictions, claims, and encumbrances imposed
by or through the Company except as set forth in the Shareholders
Agreement. Neither the issuance, sale, or delivery of the Shares or the
Warrants, nor the issuance or delivery of the Warrant Shares, is subject to
any preemptive right or right of first refusal of shareholders of the
Company arising under law or the Charter or Bylaws of the Company which has
not been waived, or, to our knowledge, to any contractual right of first
refusal or other right in favor of any person.
7. Except as described in Schedule 2 to the Agreement, to our
knowledge, there is no (A) action, suit, claim, proceeding, or
investigation pending or threatened against or affecting the Company at law
or in equity, or before or by the Federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, (B) arbitration proceeding relating
to the Company pending under collective bargaining agreements, or (C)
governmental inquiry pending or threatened against or affecting the Company
(including, without limitation, any inquiry as to the qualification of the
Company to hold or receive any license or permit). To our
<PAGE>
knowledge, the Company is not subject to any order, writ, injunction, or
decree of any court or of any Federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign.
8. To our knowledge, no third party has claimed that any person
employed by or affiliated with the Company has violated or may be violating
any of the terms or conditions of his employment, noncompetition, or
nondisclosure agreement with such third party, or disclosed or may be
disclosing or utilized or may be utilizing any trade secret or proprietary
information or documentation of such third party or interfered or may be
interfering in the employment relationship between such third party and any
of its present or former employees.
9. No registration or filing with, and no consent or approval of, or
other action by any Federal, state, or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery,
and performance by the Company of the Transaction Agreements, the issuance,
sale, and delivery of the Shares and the Warrants, or the issuance, sale,
and delivery of the Warrant Shares upon exercise of the Warrants, other
than filings under the Securities Act and applicable state securities laws,
which filings, to the extent required to be made prior to the date hereof,
have ben made, and to the extent required to be made following the date
hereof, we assume will be timely made by the Company .
10. The issuance, sale, and delivery of the Shares and Warrants sold to
the Purchasers under the circumstances contemplated by the Agreement are
exempt from the registration requirements of the Securities Act, and the
issuance, sale, and delivery of the Warrant Shares upon exercise of the
Warrants will be exempt from such requirements.
11. To our knowledge, all of the outstanding shares of the Company's
capital stock have been issued in compliance with applicable exemptions
from the registration requirements of the Securities Act.
We also advise you that during the course of our representation of the
Company in connection with the transactions provided for in the Agreement,
nothing has come to our attention which would reasonably lead us to believe that
the Agreement and the Schedules thereto contains, as of the date hereof, any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Very truly yours,
KINSEY & GLEASON
Attachments
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT
PURCHASE AGREEMENT
AMONG
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.,
ARTHUR J. FALCONE,
EDWARD W. FALCONE,
PHILIP CUCCI, JR.,
AND
THE SEVERAL INVESTORS NAMED IN SCHEDULE 1
Dated as of December 6, 1994
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1. THE PREFERRED STOCK AND THE
WARRANTS..............................................................................................1
Section 1.1. Purchase and Sale of Preferred Stock.........................................1
Section 1.2. Purchase and Sale of Warrants................................................1
Section 1.3. Closing......................................................................2
Section 1.4. Related Transactions.........................................................2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS.........................2
Section 2.1. Organization, Qualifications and Corporate Power.............................2
Section 2.2. Authorization of Agreements, Etc.............................................3
Section 2.3. Validity.....................................................................3
Section 2.4. Authorized Capital Stock.....................................................4
Section 2.5. Litigation; Compliance with Law..............................................4
Section 2.6. Proprietary Information of Third Parties.....................................5
Section 2.7. Title to Properties..........................................................6
Section 2.8. Leasehold Interests..........................................................7
Section 2.9. Insurance....................................................................7
Section 2.10. Taxes........................................................................7
Section 2.11. Other Agreements.............................................................7
Section 2.12. Patents, Trademarks, Etc.....................................................8
Section 2.13. Loans and Advances...........................................................8
Section 2.14. Assumption, Guaranties, Etc. of Indebtedness of Other Persons................8
Section 2.15. Significant Customers and Suppliers..........................................9
Section 2.16. Governmental Approvals.......................................................9
Section 2.17. Financial Statements.........................................................9
Section 2.18. Absence of Undisclosed Liabilities...........................................9
Section 2.19. Absence of Changes..........................................................10
Section 2.20. Employee Benefit Plans......................................................10
Section 2.21. Disclosure..................................................................11
Section 2.22. Brokers.....................................................................12
Section 2.23. Transactions with Affiliates................................................12
Section 2.24. Employees...................................................................12
Section 2.25. Foreign Corrupt Practices Act..............................................12
Section 2.26. Environmental Regulations...................................................12
Section 2.27. Disclosure..................................................................13
ARTICLE 3. REPRESENTATION AND WARRANTIES OF THE INVESTORS........................................14
ARTICLE 4. CONDITIONS PRECEDENT TO THE PURCHASE OF THE PREFERRED STOCK AND
WARRANTS BY INVESTORS.................................................................14
ARTICLE 5. CONDITIONS PRECEDENT..................................................................16
ARTICLE 6. COVENANTS OF THE COMPANY..............................................................16
Section 6.1. Financial Statements, Reports, Etc..........................................16
Section 6.2. Corporate Existence.........................................................17
-i-
<PAGE>
Section 6.3. Properties, Business, Insurance.............................................17
Section 6.4. Inspection, Consultation, and Advice........................................17
Section 6.5. Restrictive Agreements Prohibited...........................................17
Section 6.6. Transactions with Affiliates................................................17
Section 6.7. Use of Proceeds.............................................................18
Section 6.8. Board of Directors Meetings.................................................18
Section 6.9. Bylaws......................................................................18
Section 6.10. Maintenance of Ownership of Investments.....................................18
Section 6.11. Distributions by Investments................................................18
Section 6.12. Compliance with Laws........................................................18
Section 6.13. Keeping of Records and Books of Account.....................................19
Section 6.14. Employee Stock Plans........................................................19
Section 6.15. Piggyback Registration Rights. .............................................19
Section 6.16. Registration Procedures. ...................................................20
Section 6.17. Expenses. ..................................................................21
ARTICLE 7. MISCELLANEOUS.........................................................................22
Section 7.1. Survival of Agreements......................................................22
Section 7.2. Brokerage...................................................................22
Section 7.3. Parties in Interest.........................................................22
Section 7.4. Notices.....................................................................22
Section 7.5. Governing Law...............................................................23
Section 7.6. Entire Agreement............................................................23
Section 7.7. Counterparts................................................................23
Section 7.8. Amendments..................................................................23
Section 7.9. Severability................................................................23
Section 7.10. Titles and Subtitles........................................................23
Section 7.11. Certain Defined Terms.......................................................23
</TABLE>
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CROSS REFERENCE OF DEFINED TERMS
Term Section
affiliate Section 7.12
AJF Preamble
Agreement Preamble
Articles Section 2.4(d)
Closing Section 1.3
Closing Date Section 1.3
Common Stock Section 2.4(a)
Company Preamble
Company Benefit Plans Section 2.20(a)
Contracts Section 2.11
Cucci Preamble
Disclosure Schedule Article 2
EWF Preamble
Employees Section 2.20(a)
Environmental Permits Section 2.26
ERISA Section 2.20(a)(i)
Financial Statements Section 2.17
Founder Preamble
General Partnership Interest Section 2.1(b)
Hazardous Materials Section 2.26(g)
Intellectual Property Section 2.12
Investment Section 2.1(b)
Investor Preamble
Memorandum Section 2.4(b)
person Section 7.12
Preferred Stock Background
Real Property Section 2.7(a)
Recapitalization Background
Registration Expenses Section 6.17
Selling Expenses Section 6.17
Shareholders Agreement Section 2.4(e)
Warrants Background
Warrant Shares Background
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SCHEDULES AND EXHIBITS
Schedule 1 Preferred Stock and Warrant Shares Purchased
Schedule 2 Disclosure Schedule
Schedule 3 Accredited Investor Certificates
Exhibit A Form of Warrant Agreement
Exhibit B Opinion of Company Counsel
Exhibit C Amended and Restated Articles of Incorporation
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SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
THIS SERIES B REDEEMABLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
("Agreement") is made and entered into as of December 6, 1994, among
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation (the
"Company"), ARTHUR J. FALCONE, a resident of the State of Florida ("AJF"),
EDWARD W. FALCONE, a resident of the State of Florida ("EWF"), PHILIP CUCCI,
JR., a resident of the State of Florida ("Cucci"), and the several persons named
in the attached Schedule 1 (such persons are hereinafter referred to
individually as an "Investor," and, collectively as the "Investors"). AJF, EWF,
and Cucci are sometimes hereinafter referred to individually as a "Founder" and
collectively as the "Founders."
BACKGROUND
A. The Investors desire to invest in the Company to enable the Company to
undertake the repurchase of $2,963,084 in principal amount of Senior
Subordinated Project Financing Notes due 1998, $2,500,000 in principal
amount of Amended and Restated Senior Subordinated Project Acquisition
Notes due 1998, and 21,358 shares of Series A Redeemable Preferred
Stock of the Company for an aggregate $5,000,000 (the
"Recapitalization").
B. The Investors desire to purchase (i) an aggregate of 30,000 shares of
the Series B Redeemable Preferred Stock of the Company, par value $.01
(the "Preferred Stock"), at a price of $100.00 per share and (ii)
warrants initially exercisable for 65,950 shares of common stock (the
"Warrant Shares") at an exercise price of $.01 per Warrant Share (the
"Warrants"), on the terms and subject to the conditions set forth in
this Agreement.
C. The Company desires to obtain additional equity capital through the
issuance and sale to the Investors of the Preferred Stock and the
Warrants, on the terms and subject to the conditions set forth in this
Agreement. The Founders are the controlling shareholders of the Company
and will receive a direct benefit from the issuance and sale by the
Company of the Preferred Stock and the Warrants.
AGREEMENT
For and in consideration of the premises and the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereby agree:
ARTICLE 1. THE PREFERRED STOCK AND THE WARRANTS
SECTION 1.1 PURCHASE AND SALE OF PREFERRED STOCK. The Company agrees to
issue and sell to each Investor, and each Investor agrees to purchase from the
Company, the number of shares of Preferred Stock set forth opposite the name of
such Investor on Schedule 1 hereto under the caption "Preferred Shares
Purchased" at a purchase price of $100.00 per share.
SECTION 1.2 PURCHASE AND SALE OF WARRANTS. The Company agrees to issue
and sell to each Investor, and each Investor agrees to purchase from the
Company, a Warrant to purchase a number of Warrant Shares equal to the product
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of the number of shares of Preferred Stock under the caption "Preferred Shares
Purchased" on Schedule 1 hereto MULTIPLIED BY 2.198 (rounded to the nearest
whole share), which number of Warrant Shares is set forth opposite the name of
such Investor on Schedule 1 hereto under the caption "Warrant Shares Purchased."
Each Warrant shall be substantially in the form of Exhibit A attached hereto.
SECTION 1.3 CLOSING. The closing of the purchase and sale of the
Preferred Stock and the Warrants shall take place at the offices of the Company,
3300 University Drive, Coral Springs, Florida 33065, at 10:00 a.m., Eastern
Standard Time, on November 30, 1994, or at such other location, date, and time
as may be agreed upon between the Investors and the Company (such closing being
called the "Closing" and such date and time being called the "Closing Date"). At
the Closing, the Company shall issue and deliver to each Investor a stock
certificate or certificates in definitive form, registered in the name of each
Investor, representing the Preferred Stock being purchased by each Investor and
the right to purchase Warrant Shares on the terms set forth in the Warrant. As
payment in full for the Preferred Stock and the Warrants, and against delivery
of the certificates evidencing the Preferred Stock and the Warrants purchased,
on the Closing Date, each Investor shall deliver to the Company a cashier's
check payable to the order of the Company, in the amount set forth opposite the
name of such Investor on Schedule 1 under the heading "Aggregate Purchase
Price," or shall transfer such sum to an account designated in writing by the
Company by wire transfer.
SECTION 1.4 RELATED TRANSACTIONS. At the Closing, the Company and the
Founders shall deliver (i) a certificate with respect to the matters described
in Section 4(f) hereof, and (ii) the opinion of John T. Kinsey, P.A., counsel to
the Company, in substantially the form of Exhibit B hereto.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS
For the purpose of inducing the Investors to purchase the Shares and
the Warrants, the Company and each Founder represents and warrants to each
Investor that, except as otherwise set forth in the Disclosure Schedule attached
hereto as Schedule 2 (the "Disclosure Schedule") by means of an explicit
reference to the particular representation or warranty as to which exception is
taken, which in each case shall constitute the sole representation and warranty
as to which such exception shall apply:
SECTION 2.1 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER
(a) The Company is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Florida
and is duly licensed or qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the
nature of the business transacted by it or the character of the
properties owned or leased by it requires such licensing or
qualification. The Company has the corporate power and authority to (i)
own and hold its properties and carry on its business as now conducted
and as proposed to be conducted, (ii) execute, deliver, and perform
each of this Agreement and the Warrants, (iii) issue, sell, and deliver
the Preferred Stock, and (iv) issue and deliver the Warrants and the
Warrant Shares issuable upon exercise of the Warrants.
(b) Section 2.1(b) of the Disclosure Schedule contains a true
and correct list of (i) each corporation some or all of the securities
of which are held by the Company (an "Investment"), indicating with
respect to each Investment, the number and type of securities
outstanding and the number and type of securities held by the Company,
and (ii) each general or limited partnership owned in whole or in part
by the Company (a "General Partnership Interest"). Except for
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Investments and General Partnership Interests listed on Section 2.1(b)
of the Disclosure Schedule, the Company does not (i) own of record or
beneficially, directly or indirectly, (A) any shares of capital stock
or securities convertible into capital stock of any corporation, (B)
any debt securities of any corporation, or (C) any participating
interest in or any indebtedness of any partnership, joint venture,
limited liability company, or other non-corporate business enterprise
or (ii) control, directly or indirectly, any other entity.
SECTION 2.2 AUTHORIZATION OF AGREEMENTS, ETC.
(a) The Company is not in violation of or default under any
provision of its Amended and Restated Articles of Incorporation, or
Bylaws, of any material provision of any indenture, contract,
agreement, mortgage, deed of trust, loan, commitment, judgment, decree,
order, or obligation to which it is a party or by which any of its
properties or assets are bound, or of any provision of any Federal,
state, or local statute, rule, or governmental regulation applicable to
the Company. The execution and delivery by the Company of this
Agreement and each of the other agreements, documents, and instruments
contemplated hereby, the performance by the Company of its obligations
hereunder and thereunder, the issuance, sale, and delivery of the
Preferred Stock and the Warrants, and the issuance and delivery of the
Warrant Shares upon exercise of the Warrants, have been duly authorized
by all requisite corporate action on the part of the Company and its
officers, directors, and shareholders and will not result in any such
violation, conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any such
provision, require any consent or waiver under any such provision, or
result in the creation or imposition of any lien, charge, restriction,
claim, or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company. There is no such provision which
materially and adversely affects, or so far as the Company is presently
aware, in the future may materially and adversely affect, the condition
(financial or otherwise), business, property, prospects, assets, or
liabilities of the Company.
(b) The Preferred Stock has been duly authorized and, when
issued in accordance with this Agreement, will be validly issued, fully
paid, and nonassessable. The Warrants have been duly authorized and,
when issued in accordance with this Agreement, will be validly issued.
The Preferred Stock and the Warrants, when issued in accordance with
this Agreement, will be free and clear of all liens, charges,
restrictions, claims, and encumbrances imposed by or through the
Company, except as reflected on the certificates evidencing the
Preferred Stock. The Warrant Shares have been duly and validly reserved
for issuance upon exercise of the Warrants, and the Warrant Shares,
when so issued, will be duly authorized, validly issued, fully paid,
and nonassessable and will be free and clear of all liens, charges,
restrictions, claims, and encumbrances imposed by or through the
Company, except as reflected on the certificates evidencing the
Warrants and the Warrant Shares. Neither the issuance, sale, and
delivery of the Preferred Stock and the Warrants nor the issuance and
delivery of the Warrant Shares is subject to any preemptive right,
right of first refusal, or other right in favor of any person.
SECTION 2.3 VALIDITY. Each of this Agreement and the Warrants have been
duly and validly executed and delivered by the Company and constitutes the
legal, valid, and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
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SECTION 2.4 AUTHORIZED CAPITAL STOCK. Immediately prior to the
Closing:
(a) the authorized capital stock of the Company will consist
of (i) Twenty-Nine Thousand (29,000) shares of Series A Redeemable
Preferred Stock; Thirty-six Thousand Five Hundred (36,500) shares of
Series B Redeemable Preferred Stock, and (ii) Five Million (5,000,000)
shares of common stock (the "Common Stock");
(b) Seven Hundred Twenty Five Thousand and One (725,001)
shares of Common Stock will be validly issued and outstanding, fully
paid and nonassessable, and after giving effect to the Recapitalization
described in the Private Placement Memorandum (the "Memorandum"), 2,036
shares of Series A Redeemable Preferred Stock and 30,000 shares of
Series B Redeemable Preferred Stock will be issued and outstanding will
be validly issued and outstanding, fully paid and nonassessable;
(c) all issued and outstanding shares of Common Stock and
Series A Redeemable Preferred Stock are owned of record and
beneficially by the persons and in the amounts set forth in Section 2.4
of the Disclosure Schedule;
(d) the relative rights, powers, preferences, qualifications,
limitations, and restrictions in respect of each class of authorized
capital stock of the Company are as set forth in the Company's Amended
and Restated Articles of Incorporation (the "Articles"), a copy of
which is attached as Exhibit C hereto, and all such rights, powers,
preferences, qualifications, limitations, and restrictions are valid,
binding, and enforceable and in accordance with all applicable laws;
(e) except as set forth in Section 2.4 of the Disclosure
Schedule, (i) no person owns of record or is known to the Company to
own beneficially any shares of any equity stock, (ii) no subscription,
warrant, option, convertible security, or other right (contingent or
other) to purchase or otherwise acquire equity securities of the
Company is authorized or outstanding, and (iii) there is no commitment
by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to
holders of any of its equity securities any evidence of indebtedness or
assets, except as contemplated by this Agreement; and
(f) except as set forth in the Articles and in the
Shareholders Agreement dated June 2, 1993 (the "Shareholders
Agreement"), the Company has no obligation (contingent or other) to
purchase, redeem, or otherwise acquire any of its equity securities or
any interests therein or to pay any dividend or make any other
distribution in respect thereof. Except as set forth in the
Shareholders Agreement, there are no voting trusts or agreements,
preemptive rights, or proxies relating to any securities of the Company
(whether or not the Company is a party thereto). All of the outstanding
securities of the Company were issued in compliance with all applicable
Federal and state securities laws.
SECTION 2.5 LITIGATION; COMPLIANCE WITH LAW. Except as set forth in
Section 2.5 of the Disclosure Schedule, there is no (a) action, suit, claim,
proceeding, or investigation pending or, to the knowledge of the Company or the
Founders, threatened against or affecting the Company, at law or in equity, or
before or by any Federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign, (b)
arbitration proceeding relating to the Company pending under collective
bargaining agreements or otherwise, or (c) governmental inquiry pending or, to
the knowledge of the Company or the Founders, threatened against or affecting
the Company, (including without limitation any inquiry as to the qualification
of the Company to hold or receive any license or permit), and there is no basis
known to the Company of the Founders for any of the foregoing. The Company is
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not subject to any order, writ, injunction, or decree of any court or of any
Federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign. There is no action or
suit by the Company pending or threatened against any other person. The Company
is in material compliance with all laws, rules, regulations, and orders
applicable to the Company's business, operations, properties, assets, licenses,
and other authorizations required to conduct its business as conducted and as
proposed to be conducted. There is no existing law, rule, regulation, or order,
and neither the Company nor any Founder, after due inquiry, is aware of any
proposed law, rule, regulation, or order, whether Federal or state, which would
prohibit or restrict the Company from, or otherwise materially adversely affect
the Company in, conducting its business in any jurisdiction in which it is now
conducting business or in which it proposes to conduct business within the
foreseeable future.
SECTION 2.6 PROPRIETARY INFORMATION OF THIRD PARTIES. After reasonable
investigation, neither the Company nor any Founder is aware that any significant
employee or consultant of the Company is obligated under any contract or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would conflict with the obligation of such employee
to use best efforts to promote the interests of the Company. To the knowledge of
the Company or the Founders, no third party has claimed or has reason to claim
that any person employed by or affiliated with the Company has (a) violated or
may be violating any of the terms or conditions of any employment,
non-competition, or non-disclosure agreement between such employee and such
third party, (b) disclosed or may be disclosing, or utilized or may be
utilizing, any trade secret or proprietary information or documentation of such
third party, or (c) interfered or may be interfering in the employment
relationship between such third party and any of the Company's present or former
employees. No third party has requested information from the Company which
suggests that such a claim might be contemplated. To the knowledge of the
Company and the Founders, no person employed by or affiliated with the Company
has employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer, and to the knowledge of the
Company and the Founders, no person employed by or affiliated with the Company
has violated any confidential relationship which such person may have had with
any third party, in connection with the development, manufacture, or sale of any
product or proposed product, or the development or sale of any service or
proposed service of the Company, and the Company has no reason to believe there
will be any such employment or violation. To the knowledge of the Company and
the Founders, none of the execution or delivery of this Agreement, or the
carrying on of the business of the Company by its officers, employees, or
agents, or the conduct or proposed conduct of the business of the Company, will
conflict with or result in a breach of the terms, conditions, or provisions of
or constitute a default under any contract, covenant, or instrument under which
any such person is obligated.
SECTION 2.7 TITLE TO PROPERTIES
(a) The Memorandum contains a list of the material tracts of
real property owned by the Company ("Real Property") and a summary
description of the proposed use thereof and the number of buildable
lots remaining in each such tract. Except as reflected in title
insurance binders for the tracts of Real Property, the Company has good
and marketable fee simple title to the Real Property, free and clear of
all mortgages, liens, charges, encumbrances, and purchase options and
other rights to or against such property, other than such minor
imperfections of title, liens, easements, zoning restrictions, or
encumbrances, if any, as are not substantial in character, amount, or
extent, and do not, severally or in the aggregate, detract from the
value or interfere with the present uses of the Real Property, or
otherwise impair the business and operations of the Company, except for
claims of subcontractors, laborers, and materialmen which have
performed work or provided services to such property and which are
unpaid within normal payment terms.
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(b) All improvements on the Real Property conform in all
material respects to all applicable state and local laws, use
restrictions, building ordinances, and health and safety ordinances,
and the property is zoned for the various purposes for which the Real
Property and improvements thereon are presently being used.
(c) The Company, has received no written notice of any pending
or threatened condemnations, planned public improvements, annexation,
special assessments, zoning or subdivision changes, or other claims
which would in the aggregate materially and adversely affect the Real
Property.
(d) There is no private restrictive covenant or governmental
use restriction (including zoning) known to the Company after
reasonable inquiry, on all or any portion of the Real Property which
prohibits the current or contemplated use of the Real Property.
(e) All licenses, permits, and approvals required for the
occupancy and operation of the Real Property have been obtained and are
in full force and effect and the Company has received no notices of
violations in connection with such items.
(f) The Company does not have in its possession any studies or
reports which indicates any defects in the design or construction of
any of the improvements on the Real Property.
(g) There are no past due taxes, assessments, or other charges
affecting the Real Property.
(h) The Company has good and marketable title to all personal
properties and assets owned by it, free and clear of all mortgages,
pledges, security interests, liens, charges, claims, restrictions and
other encumbrances, except liens for current taxes not yet due and
payable and minor imperfections of title, if any, not material in
nature or amount and not materially detracting from the value or
impairing the use of the personal property subject thereto or impairing
the operations or proposed operations of the Company. The Company owns
or leases all personal properties and assets necessary to the operation
of its business as now conducted. All of such personal properties and
assets are in good operating condition (normal wear and tear excepted),
are reasonably fit for the purposes for which such personal properties
and assets are presently used, are adequate and usable for the
continued operation of the business of the Company as the same is
presently conducted, and none of such personal properties and assets
are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs, the cost of which will not vary materially
from historic patterns.
SECTION 2.8 LEASEHOLD INTERESTS. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal,
is a valid and subsisting agreement without any default of the Company
thereunder and, to the best of the Company's knowledge, without any default
thereunder of any other party thereto. No event has occurred and is continuing
which, with due notice or lapse of time or both, would constitute a default or
event of default by the Company under any such lease or agreement or, to the
best of the Company's knowledge, by any other party thereto. The Company's
possession of such property has not been disturbed and, to the best of the
Company's knowledge, no claim has been asserted against the Company adverse to
its rights in such leasehold interests.
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SECTION 2.9 INSURANCE. All of the properties and business of the
Company of an insurable nature are insured to the extent usually insured by
persons or entities engaged in the same or similar businesses against loss or
damage of the kind customarily insured against by such persons or entities. The
Company is not in default regarding the provisions of any such policy. The
Company has not, since inception, self-insured against any risk ordinarily
insured against by similar businesses. The Company has not received any notice
from any of its insurers that any insurance premiums will be increased in the
future or that any insurance coverage presently in force will not be available
in the future on substantially the same terms as are now in effect. There are no
outstanding requirements or recommendations by any current insurer or
underwriter with respect to the Company which require or recommend changes in
the conduct of the business or require any repairs or other work to be done to
the assets and properties of the Company.
SECTION 2.10 TAXES. The Company has filed or obtained filing extensions
for all tax returns, Federal, state, county, and local, required to be filed by
it, and the Company has paid or established adequate reserves (in accordance
with generally accepted accounting principles) for the payment of all taxes
shown to be due by such returns as well as all other taxes, assessments, and
governmental charges which have become due or payable, including, without
limitation, all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors, and third parties. The Federal income tax returns
of the Company have never been audited by the Internal Revenue Service and no
state income or sales tax returns of the Company have been audited. No
deficiency assessment with respect to or proposed adjustment of the Company's
Federal, state, county, or local taxes is pending or, to the best of the
Company's knowledge, threatened. There is no tax lien, whether imposed by any
Federal, state, county, or local taxing authority, outstanding against the
assets, properties, or business of the Company. Neither the Company nor any of
its shareholders has ever filed a consent pursuant to Section 341(f) of the IRC
(as hereinafter defined), relating to collapsible corporations.
SECTION 2.11 OTHER AGREEMENT. The Company is not a party to or
otherwise bound by any written or oral contract, obligation, agreement,
commitment, restriction, or the like which individually or in the aggregate
could materially adversely affect the business, prospects, financial condition,
operations, property, or affairs of the Company. The Company has provided to the
Investors access to copies of all obligations, agreements, and the like
(referred to individually as a "Contract" and collectively as the "Contracts").
Each of the Contracts are valid, binding and in full force and effect in all
material respects. The Company, and to the knowledge of the Company and the
Founders, each other party thereto has in all material respects performed all
the obligations required to be performed by it to date and has received no
notice of default and is not in default (with due notice or lapse of time or
both) under any of the Contracts. The Company has no present expectation or
intention of not fully performing all its obligations under each of the
Contracts, and the Company has no knowledge of any breach or anticipated breach
by the other party to any of the Contracts. There is no Contract that contains
any contractual requirement with which there is a reasonable likelihood that the
Company or any other party thereto will be unable to comply with the terms
thereof. The continuation, validity, and effectiveness of each Contract will in
no way be affected by the consummation of the transactions contemplated by this
Agreement. There exists no actual or, to the best knowledge of the Company, any
threatened termination, cancellation, or limitation of, or any amendment,
modification, or change to any Contract, which would have a material adverse
effect on the business or condition, financial or otherwise, of the Company.
SECTION 2.12 PATENTS, TRADEMARKS, ETC. The Company has sufficient title
to and ownership of, or can obtain on terms which will not adversely affect its
business, all franchises, permits, licenses, and other similar authority
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necessary for the conduct of its business as now being conducted and as planned
to be conducted, and it is not in default under any of such franchises, permits,
licenses, and other similar authority. The Company possesses all patents, patent
rights, patent applications, trademarks, trademark applications, service marks,
service mark applications, trade names, copyrights, formulae, trade secrets, and
know how (collectively, "Intellectual Property") necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the knowledge of the Company and the Founders,
threatened to the effect that the operations of the Company infringe upon or
conflict with the asserted rights of any other person under any Intellectual
Property, and, to the knowledge of the Company and the Founders, there is no
basis for any such claim (whether or not pending or threatened). No claim is
pending or threatened to the effect that any such Intellectual Property owned or
licensed by the Company, or which the Company otherwise has the right to use, is
invalid or unenforceable by the Company, and, to the knowledge of the Company
and the Founders, there is no basis for any such claim (whether or not pending
or threatened). The Company is not aware of any third party which is infringing
or violating any of the Intellectual Property of the Company. To the knowledge
of the Company and the Founders, all technical information developed by and
belonging to the Company which has not been patented has been kept confidential.
The Company has not granted or assigned to any other person or entity any of the
Intellectual Property or the right to manufacture, have manufactured, assemble,
or sell the products or proposed products or to provide the services or proposed
services of the Company.
SECTION 2.14 LOANS AND ADVANCES. The Company does not have any
outstanding loans or advances to any person and is not obligated to make any
such loans or advances, except, in each case, for advances to employees of the
Company in respect of reimbursable business expenses anticipated to be incurred
by them in connection with their performance of services for the Company in the
ordinary course of business, consistent with past practice.
SECTION 2.14 ASSUMPTION, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS. The Company has not assumed, guaranteed, endorsed, or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to, or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except for (a) guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business and (b) guaranties by
the Company of the debts of its subsidaries.
SECTION 2.15 SIGNIFICANT CUSTOMERS AND SUPPLIERS. No customer or
supplier which was or has been significant to the Company in the past three (3)
years has terminated, materially reduced, or threatened to terminate or
materially reduce its purchases from or provision of products or services to the
Company, as the case may be.
SECTION 2.16 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Investors set forth in Article 3 hereof,
no registration, qualification, or filing with, or consent or approval of or
other action by, any Federal, state, or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery, and
performance by the Company of this Agreement, the offer, issuance, sale and
delivery of the Preferred Stock and the Warrants, the issuance and delivery of
the Warrant Shares upon exercise of the warrants or the consummation of any
other transaction contemplated hereby, other than (i) filings pursuant to state
securities laws (all of which filings have been made as of the date hereof) in
connection with the offer and sale of the Preferred Stock and the Warrants and
(ii) the filing of a notice under Regulation D under the Securities Act.
SECTION 2.17 FINANCIAL STATEMENTS. The Memorandum contains true,
correct, and complete copies of: the unaudited Consolidated Balance Sheet of the
Company dated September 30, 1994, and the unaudited Consolidated Statement of
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Operations of the Company for the three months then ended, the audited
Consolidated Balance Sheet of the Company dated June 30, 1994, and June 30,
1993, and an audited Consolidated Statements of Operations, Consolidated
Statements of Changes in Shareholders' Equity, and Consolidated Statements of
Cash Flows for the fiscal years then ended, together with notes thereto and the
audit report thereon of KPMG Peat Marwick thereon (collectively, the "Financial
Statements"). The Financial Statements (i) are in accordance with the books and
records of the Company, (ii) present fairly the financial condition of the
Company as of the respective dates indicated and the results of operations for
such periods except that interim period financial statements are subject to
normal year-end audit adjustments, which in the aggregate will not materially or
adversely change such interim financial statements, (iii) have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, and (iv) reflect adequate reserves for all
liabilities and losses. The books, records, and accounts of the Company
accurately and fairly reflect, in reasonable detail, the transactions and the
assets and liabilities of the Company. The Company has not engaged in any
transaction, maintained any bank account, or used any of the funds of the
Company, except for transactions, bank accounts, and funds which have been and
are reflected in the normally maintained books and records of the Company.
SECTION 2.18 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
material liabilities or obligations (secured or unsecured, whether accrued,
absolute, direct, indirect, contingent, or otherwise, and whether due or to
become due) that are required to be reflected in the Financial Statements by
generally accepted accounting principles which are not fully accrued or reserved
against in the Financial Statements, other than liabilities incurred in the
ordinary course of business subsequent to the date of the Financial Statements
which liabilities and obligations, individually or in the aggregate, are not
material to the financial condition or operating results of the Company.
SECTION 2.19 ABSENCE OF CHARGES. Since the date of the most recent
Consolidated Balance Sheet included in the Financial Statements and except as
reflected therein or in the Memorandum, (a) there has been no material adverse
change in the condition (financial or otherwise), business, property, assets, or
liabilities of the Company other than changes in the ordinary course of
business, none of which, individually or in the aggregate, has been materially
adverse; (b) the Company has not entered into any material transaction which was
not in the ordinary course of its business; (c) there has been no damage to,
destruction of, or loss of physical property (whether or not covered by
insurance) materially adversely affecting the business or operations of the
Company; (d) except as contemplated by this Agreement, the Company has not
declared or paid any dividend on its stock, made any distribution on its stock,
redeemed, purchased, or otherwise acquired any of its stock, granted any options
to purchase shares of its stock; (e) the Company has not increased the
compensation of any of its officers, or the rate of pay of its employees as a
group, except as part of regular compensation increases in the ordinary course
of its business, to an amount in excess of the amounts set forth in the pro
formas previously delivered to the Investors; (f) there has been no resignation
or termination of employment of any key officer or employee of the Company, and
the Company does not know of the impending resignation or termination of
employment of any such officer or employee that if consummated, would have a
material adverse effect on the business of the Company; (g) there has been no
labor dispute involving the Company or its employees and none is pending or to
the knowledge of the Company and the Founders, threatened; (h) there has been no
change, except in the ordinary course of business, in the contingent obligations
of the Company by way of guaranty, endorsement, indemnity, warranty, or
otherwise; (i) there have been no loans made by the Company to its employees,
officers, directors, or partners other than travel advances and office advances
made in the ordinary course of business; and (j) to the knowledge of the Company
and the Founders, there has been no other event or condition of any kind which
might reasonably be expected to result in a material and adverse change in the
Company's condition (financial or otherwise) or business or to impair materially
the ability of the Company to conduct its business as it is currently being
conducted.
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SECTION 2.20 EMPLOYEE BENEFIT PLANS.
(a) Section 2.20 of the Disclosure Schedule contains a true
and complete list of all the following agreements or plans which are
presently in effect or which have previously been in effect and which
cover employees of the Company ("Employees"):
(i) Any employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), and any trust or other funding agency created
thereunder, or under which the Company, with respect to the
Employees, has any outstanding, present, or future obligation
or liability, or under which any Employee or former Employee
has any present or future right to benefits which are covered
by ERISA; or
(ii) Any other pension, profit sharing, retirement,
deferred compensation, stock purchase, stock option, incentive,
bonus, vacation, severance, disability, hospitalization,
medical, life insurance, or other employee benefit plan,
program, policy, or arrangement, whether written or unwritten,
formal or informal, which the Company, with respect to the
Business, maintains or to which the Company, with respect to
the Business, has any outstanding, present, or future
obligations to contribute or make payments under, whether
voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements which are described in
subparagraph (i) or (ii) above and which are listed on Section 2.20 of the
Disclosure Schedule are hereinafter collectively referred to as the "Company
Benefit Plans." The Company has delivered to the Investors true and complete
copies of all written plan documents and contracts evidencing the Company
Benefit Plans, as they may have been amended to the date hereof, together with
(A) all documents relating to any tax-qualified retirement plan maintained by
the Company, which documents are required to have been filed prior to the date
hereof with governmental authorities for each of the three most recently
completed plan years; (B) attorney's response to an auditor's request for
information for each of the three most recently completed plan years; and (C)
financial statements for each Company Benefit Plan for each of the three most
recently completed plan years.
(b) Except for the Company Benefit Plans, the Company does not
now maintain, nor has the Company at any time in the past been
obligated to make any payment or contribution to any pension,
retirement, profit-sharing, deferred compensation, stock purchase,
stock option, bonus or incentive plan, any medical, vision, dental, or
other health plan, any life insurance plan, vacation, severance,
disability, or any other employee benefit plan, program, policy, or
arrangement, whether written, unwritten, formal, or informal,
including, without limitation, any "employee benefit plan" as defined
in Section 3(3) of ERISA. The Company has not made, entered into, or
agreed to any commitment, whether written or oral, which would obligate
the Company to establish any employee benefit plan, or continue any
employment agreement or employment policy covering Employees. With
respect to all "welfare plans," as defined in Section 3(1) of ERISA,
covering Employees or former Employees, there are no obligations to
continue coverage or to make payments to or on behalf of persons who
are or may become retired or terminated Employees or their
beneficiaries, other than as may be required by Sections 601 through
608 of ERISA.
(c) The Company has complied with the continuation coverage
requirements of Section 1001 of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and ERISA Sections 601 through
608.
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SECTION 2.21 DISCLOSURE.
(a) The Company has delivered to the Investors a true and
correct copy of (i) the Amended and Restated Articles of Incorporation
of the Company, and all amendments thereto and restatements thereof
certified by the appropriate state official; and (ii) the Bylaws of the
Company and all amendments thereto.
(b) The minute books of the Company made available to the
Investors prior to the date hereof, accurately reflect all corporate
action taken by the directors and shareholders of the Company or any
committee of the Board of Directors of the Company and contain true and
accurate copies of or originals of the respective minutes of all
meetings or consent actions of the directors, any committee of the
Board of Directors, and the shareholders.
(c) The stock record books of the Company, made available to
the Investors prior to the date hereof, accurately reflect the stock
ownership of the Company, and contain complete and accurate records
with respect to the transfer of all securities issued by the Company
and each Investment since inception.
The Company has no contract, arrangement, or understanding with any
broker, finder, or similar agent with respect to the transactions contemplated
by this Agreement, nor has the Company authorized or employed any person in
connection with the offering or sale of the Preferred Stock, or the Warrants or
any security of the Company similar to the Preferred Stock or the Warrants.
Except as permitted by Section 6.6 hereof, no Founder, director,
officer, employee, or shareholder of the Company, or member of the family of any
such person, or any corporation, partnership, trust, or other entity in which
any such person, or any member of the family of any such person, has a
substantial interest or is an officer, director, trustee, partner, or holder of
more than 5% of the outstanding equity interests thereof is a party to any
transaction with the Company, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from or otherwise requiring payments to any such
person or firm.
SECTION 2.24 EMPLOYEES.
(a) No officer or key Employee has advised the Company (orally
or in writing) that he or she intends to terminate employment with the
Company. The Company has complied in all material respects with all
applicable laws relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity, worker health
and safety, collective bargaining, and the payment of Social Security
and other taxes, and with ERISA.
(b) The Company does not have any collective bargaining
agreement covering any of its Employees. There is no pending or, to the
best knowledge of the Company, threatened labor dispute involving the
Company or any of its Employees. To the best of the Company's
knowledge, the Company has amicable relations with its Employees.
SECTION 2.25 FOREIGN CORRUPT PRACTICES ACT. The Company has not made,
offered or agreed to offer anything of value to any government official,
political party or candidate for government office nor has it taken any action
which would cause the Company to be in violation of the Foreign Corrupt
Practices Act of 1977.
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SECTION 2.26 ENVIRONMENTAL REGULATIONS.
(a) Except for failures which will not result in any material
liability or consequences to the Company, the Company has met, and
continues to meet, all applicable local, state, Federal and national
environmental regulations.
(b) The Company has not been notified that it is potentially
liable, has not received any requests for information or other
correspondence concerning any site or facility, and is not otherwise
aware that it is considered potentially liable under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, or any similar state law.
(c) The Company has not entered into or received any consent
decree, compliance order, or administrative order relating to
environmental protection.
(d) The Company has neither entered into or received nor is
the Company in default under any judgment, order, writ, injunction, or
decree of any federal, state, or municipal court or other governmental
authority relating to environmental protection.
(e) The Company has all permits, licenses, approvals,
consents, and authorizations (the "Environmental Permits") relating to
environmental or health protection which are required under Federal,
state, or local laws, rules, and regulations and is in compliance with
all the Environmental Permits (including any information provided on
the applications therefor);
(f) There are no actions, suits, claims, arbitration
proceedings, or complaints pending or, to the Company's knowledge,
threatened or under consideration by any governmental authority,
municipality, community, citizen, or other entity against the Company
relating to environmental protection, nor does the Company have reason
to believe that any such actions, suits, claims, or complaints will be
brought against it.
(g) No disposal, releases, burial, or placement of hazardous
or toxic substances, pollutants, contaminants, petroleum, gas products,
or asbestos-containing materials (as any of such terms may be defined
under Federal, state, or local law) (hereinafter collectively referred
to as "Hazardous Materials") has occurred on, in, at, or about any of
the Company's properties or facilities or any other facility or site to
which Hazardous Materials from the Company may have been taken at any
time in the past.
(h) To the Company's knowledge, there has been no disposal,
releases, burial, or placement of Hazardous Materials on any property
not owned or operated in the present or the past by the Company which
may result or has resulted in contamination of or beneath any of the
Company's properties or facilities.
(i) There are no above-ground and underground storage tanks on
the Real Property.
(j) No lien has arisen on the Company's properties or
facilities under Federal, state, or local laws, rules, or regulations
as they relate to environmental protection.
(k) No audit or investigation has been conducted as to
environmental matters at any of the Company's properties by any
governmental agency.
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SECTION 2.27 DISCLOSURE. Neither this Agreement nor any Schedule or
Exhibit hereto, contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading. None of the statements, documents, certificates or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not misleading.
The Memorandum was prepared in good faith by the Company to provide an overview
of the business of the Company and, to the best knowledge of Founders, does not
contain an untrue statement of a material fact.
ARTICLE 3. REPRESENTATION AND WARRANTIES OF THE INVESTORS
Each Investor represents and warrants to the Company as to such
Investor only, that:
(a) it is an "accredited investor" within the meaning of Rule
501 under the Securities Act, as indicated on the Investor
Certification of such Investor, annexed hereto as Schedule 3;
(b) it has sufficient knowledge and experience to evaluate the
risks and merits of its investment in the Company and it is able
financially to bear the risks thereof;
(c) it has had an opportunity to ask questions of and receive
answers from and to discuss the Company's business, management, and
financial affairs with the Company's management;
(d) the Preferred Stock and the Warrants are being acquired
for its own account for the purpose of investment and not with a view
to or for sale in connection with any distribution thereof;
(e) it was not offered nor made aware of the Company's
interest in issuing the Preferred Stock and the Warrants by any means
of public advertisement or solicitation;
(f) in connection with such Investor's purchase of the
Preferred Stock and the Warrants, it has been solely responsible for
its own (i) due diligence investigation of the Company and (ii)
investment decision, and has not engaged or relied upon any agent or
"purchaser representative" to review or analyze the Company's business
and affairs or advise such Investor with respect to the merits of the
investment;
(g) it has full power and authority to execute, deliver, and
perform each of this Agreement and to purchase the Preferred Stock and
the Warrants; and, that this Agreement will constitute the legal,
valid, and binding obligation of the Investor, enforceable against it
in accordance with their respective terms; and
(h) in the event that the Investor proposes to sell the
Preferred Stock or the Warrants pursuant to Rule 144A under the
Securities Act, it will (A) take reasonable steps to obtain the
information required by such Rule to establish a reasonable belief that
the prospective purchaser is a "qualified institutional buyer" as such
term is defined in Rule 144A and (B) advise the prospective purchaser
that the Investor is relying on the exemption from the registration
provisions of the Securities Act available pursuant to Rule 144A.
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ARTICLE 4. CONDITIONS PRECEDENT TO THE PURCHASE OF THE PREFERRED STOCK
AND WARRANTS BY INVESTORS
In connection with the purchase of the Preferred Stock and Warrants at
the Closing, the Investors shall be entitled to receive the following
certificates, opinions, and documents or evidence reasonably satisfactory to
them as to the following, each of which requirements may be waived by the
Investors. The Company agrees to use its best efforts to cause each of such
requirements to be satisfied:
(a) The Investors shall have received from John T. Kinsey,
P.A. counsel for the Company and the Founders, an opinion dated the
Closing Date, in form and scope satisfactory to the Investors and its
counsel, in substantially the form attached hereto as Exhibit B.
(b) The representations and warranties contained in Article 2
shall be true, complete and correct.
(c) The Company shall have performed and complied with all
covenants and agreements contained herein required to be performed or
complied with by it prior to or at the Closing Date.
(d) The Company shall have obtained any and all consents,
permits and waivers and made all filings necessary or appropriate for
the consummation of the transactions contemplated hereby.
(e) All corporate and other proceedings to be taken by the
Company in connection with the transactions contemplated hereby and all
documents relating to such transactions shall be satisfactory in form
and substance to the Investors and its counsel, and the Investors and
its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they reasonably may
request. The Company shall have delivered to the Investors a
certificate executed by the President and Treasurer of the Company
certifying as to the fulfillment of the conditions specified in
subsections (b), (c), (d) and (i) of this Article 4.
(f) The Investors shall have received copies of the following
documents:
(i) (A) the Articles in the form of Exhibit C hereto,
bearing evidence of filing by the Department of State of the
State of Florida, and (B) a certificate of said Department of
State, dated as of a recent date as to the due incorporation
and good standing of the Company;
(ii) a certificate of the Secretary or an Assistant
Secretary of the Company dated the Closing Date and certifying:
(A) that attached thereto is a true and complete copy of the
Bylaws of the Company as in effect on the date of such
certification; (B) that attached thereto is a true and complete
copy of all resolutions adopted by the Board of Directors or
the shareholders of the Company authorizing the execution,
delivery, and performance of this Agreement, the Warrants, the
issuance, sale, and delivery of the Preferred Stock, and that
all such resolutions are in full force and effect and are all
the resolutions adopted in connection with the foregoing
agreements and the transactions contemplated thereby; (C) that
the Articles have not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to
clause (i)(B) above; and (D) to the incumbency and specimen
signature of each officer of the Company executing this
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Agreement, the Warrants, the stock certificates representing
the Preferred Stock, and any certificate or instrument
furnished pursuant hereto, and a certification by another
officer of the Company as to the incumbency and signature of
the officer signing the certificate referred to in this clause
(ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the
Company as the Investors or its counsel reasonably may request.
(g) All shareholders of the Company having any preemptive,
first refusal, or other rights with respect to the issuance of the
Preferred Stock or the Warrants shall have irrevocably waived the same
in writing and copies of such waivers shall have been delivered to
Investors' counsel.
ARTICLE 5. CONDITIONS PRECEDENT
The obligation of the Company to issue and sell the Preferred Stock and
the Warrants to the Investors on the Closing Date is, at its option, subject to
the satisfaction, on or before the Closing Date, of the following conditions:
(a) All representations and warranties of the Investors
contained in Article 3 hereof shall be true and correct on the Closing
Date with the same effect as though such representations and warranties
had been made on and as of such date.
(b) All corporate and other proceedings to be taken by the
Investors in connection with the transactions contemplated hereby, and
all documents incidental thereto, shall be satisfactory in form and
substance to the Company and its counsel.
(c) The Investors shall have delivered to the Company the full
purchase price for the Preferred Stock and the Warrants to be purchased
hereunder.
ARTICLE 6. COVENANTS OF THE COMPANY
The Company covenants and agrees with the Investors that, unless waived
in accordance with Section 7.9 hereof, so long as any of the Preferred Stock is
outstanding:
SECTION 6.1 FINANCIAL STATEMENTS, REPORTS, ETC. The Company shall
furnish to the Investors:
(a) within one hundred twenty (120) days after the end of each
fiscal year of the Company, an audited balance sheet of the Company, as
of the end of such fiscal year and the related statements of income,
shareholders' equity, and changes in cash flows for such fiscal year,
prepared in accordance with generally accepted accounting principles
and certified by a firm of independent public accountants of recognized
national standing selected by the Board of Directors of the Company;
(b) within sixty (60) days after the end of each fiscal
quarter (other than the last quarter in each fiscal year) a balance
sheet of the Company, and the related statements of income,
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shareholders' equity, and changes in cash flows, unaudited but prepared
in accordance with generally accepted accounting principles and
certified by the Chief Financial Officer of the Company, such balance
sheet to be as of the end of such quarter and such statements of
income, shareholders' equity and changes in cash flows to be for such
quarter and for the period from the beginning of the fiscal year to the
end of such quarter, in each case with comparative statements for the
prior fiscal year;
(d) at the time of delivery of each annual financial statement
pursuant to Section 6.1(a) hereof, a certificate executed by the Chief
Financial Officer of the Company stating that such officer has caused
this Agreement, the Articles, and the Warrants to be reviewed and has
no knowledge of any default by the Company in the performance or
observance of any of the provisions of this Agreement, the Articles or
the Warrants, if such officer has such knowledge, specifying such
default and the nature thereof;
(e) at the time of delivery of each quarterly statement
pursuant to Section 6.1(b) hereof, a management narrative report
explaining all significant variances from forecasts and all significant
current developments in staffing, marketing, sales, and operations;
(f) promptly, from time to time, such other information
regarding the business, prospects, financial condition, operations,
property, or affairs of the Company as the Investors reasonably may
request.
SECTION 6.2 CORPORATE EXISTENCE. The Company shall maintain and cause
any Investment in which the Company owns a controlling interest to maintain
their respective separate corporate existences, rights, and franchises in full
force and effect.
SECTION 6.3 PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain
and cause any subsidiary to maintain as to their respective properties and
businesses, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated which insurance shall be deemed by
the Company to be sufficient.
SECTION 6.4 INSPECTION, CONSULTATION, AND ADVICE. The Company shall
permit and cause any subsidiary to permit any of the Investors and such persons
as the Investors may designate, at the expense of the Company once per year, and
if more often than once per calendar year, with the additional visits at such
Investor's expense, to visit and inspect any of the properties of the Company
and any Investment, examine their books and take copies and extracts therefrom,
discuss the affairs, finances, and accounts of the Company with their officers,
employees, and public accountants and the Company hereby authorizes said
accountants to discuss with such Investors and such designees such affairs,
finances, and accounts), and consult with and advise the management of the
Company as to their affairs, finances, and accounts, all at reasonable times and
upon reasonable notice.
SECTION 6.5 RESTRICTIVE AGREEMENTS PROHIBITED. The Company shall not
become a party to any agreement which by its terms restricts the Company's
performance of this Agreement, the Articles, or the Warrants.
SECTION 6.6 TRANSACTIONS WITH AFFILIATES. Except for (a) transactions
contemplated by this Agreement, (b) transactions with the affiliated entities
listed in Section 6.6 of the Disclosure Schedule, provided that the terms of
such transactions are no less favorable to the Company than the terms available
from third parties on an arm's length basis from non-affiliated third parties,
(c) loans by shareholders up to $1,000,000 outstanding at any time, provided
that the security for such loans is limited to the real estate on which the
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specific construction activities financed are located and provided further that
the interest rate and terms are no less favorable than the rate and terms
available on an arm's length basis from unaffiliated third parties, or (d) as
otherwise approved by the Board of Directors, the Company shall not enter into
any transaction with any director, officer, employee, or holder or more than 5%
of the outstanding capital stock of any class or series of capital stock of the
Company, member of the family of any such person, or any corporation,
partnership, trust, or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner, or holder
of more than 5% of the outstanding capital stock thereof, except for
transactions on customary terms related to such person's employment. All
transactions with affiliates shall be reported on a quarterly basis in the
financial reports required by Section 6.1(b) hereof, including, with respect to
each transaction, the affiliate involved, the amount paid to the affiliate in
such quarter, and amounts remaining to be paid to the affiliate by the Company.
SECTION 6.7 USE OF PROCEEDS. The Company shall use the proceeds from
the sale of the Preferred Stock and the Warrants as a part of the purchase price
to acquire $2,963,084 in principal amount of the Company's Senior Subordinated
Project Financing Notes due 1998, $2,500,000 in principal amount of the
Company's Amended and Restated Senior Subordinated Project Acquisition Notes due
1998, and 21,358 shares of Series A Redeemable Preferred Stock, and expenses of
the transactions contemplated hereby. The remainder of the purchase price will
be borrowed from NationsBank.
SECTION 6.8 BOARD OF DIRECTORS MEETINGS. The Company shall use its best
efforts to ensure that meetings of the Board of Directors of the Company are
held at least four (4) times each year and at least once each quarter.
SECTION 6.9 BYLAWS. The Company shall at all times cause its Bylaws to
provide that, (a) unless otherwise required by the laws of the State of Florida,
(i) any two (2) directors and (ii) any holder or holders of at least 66% of the
outstanding shares of Common Stock or 25% of the outstanding Preferred Stock,
shall have the right to call a meeting of the Board of Directors or shareholders
and (b) the number of directors fixed in accordance therewith shall in no event
conflict with any of the terms or provisions of the Articles. The Company shall
at all times maintain provisions in its Bylaws or Articles indemnifying all
directors against liability to the maximum extent permitted under the laws of
the State of Florida.
SECTION 6.10 MAINTENANCE OF OWNERSHIP OF INVESTMENTS. The Company shall
not sell or otherwise transfer any shares of capital stock of any Investment,
except to the Company or another Investment, or permit any Investment in which
the Company owns a controlling interest, to issue, sell or otherwise transfer
any shares of its capital stock or the capital stock of any Investment except to
the Company or another Investment.
SECTION 6.11 DISTRIBUTIONS BY INVESTMENTS. The Company shall not permit
any Investment in which the Company owns a controlling interest to purchase or
set aside any sums for the purchase of, or pay any dividend, or make any
distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another Investment in which the Company
owns a controlling interest.
SECTION 6.12 COMPLIANCE WITH LAWS. The Company shall comply with all
applicable laws, rules, regulations, and orders, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise.
SECTION 6.13 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles, consistently
applied, reflecting all financial transactions of the Company and in which, for
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each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts, and other purposes in connection with its
business shall be made.
SECTION 6.14 EMPLOYEE STOCK PLANS. As long as the Investors shall
continue to own any of the Preferred Stock, Warrants, or Warrant Shares, the
Company shall sell shares of or grant options to purchase shares of its capital
stock to Employees, officers, and directors of and consultants to the Company
only pursuant to stock option plans or stock purchase plans which have been
adopted and approved by the Company's Board of Directors and only so long as the
Company has an option to repurchase such shares upon the termination of
employment with the Company of such Employees, officers, directors, and
consultants, and the total number of shares of Common Stock as to which the
Company may make such sales or grant such options shall not exceed 10,000
shares, such number subject to equitable adjustment for reorganizations, stock
splits, stock dividends, and like events (including shares issued or sold
pursuant to (i) any such stock option plan even though the shares were acquired
upon the exercise of stock options which were granted prior to the date hereof,
and (ii) any such stock purchase plans even though the shares acquired
thereunder were purchased prior to the date hereof). Under no circumstances
shall the total number of shares of the Company's Common Stock issued under any
such stock purchase plan, plus any shares issued or subject to issuance under
any such stock option plan, exceed 10,000 shares (such number subject to
equitable adjustment for reorganizations, stock splits, stock dividends, and
like events) at any time.
SECTION 6.15 PIGGYBACK REGISTRATION RIGHTS. If the Company at any time
proposes to register any of its securities under the Securities Act for sale to
the public, whether for its own account or for the account of other security
holders or both (except with respect to registration statements on Forms S-4 or
S-8 or another form not available for registering the Warrant Shares for sale to
the public), each such time it will give written notice to Investors of its
intention so to do. Upon the written request of any Investor received by the
Company within 10 days after the giving of any such notice by the Company, to
register such number of Warrant Shares held by such Investor specified in such
written request, the Company will cause the Warrant Shares as to which
registration shall have been so requested to be included in the securities to be
covered by the registration statement proposed to be filed by the Company, all
to the extent requisite to permit the sale or other disposition by such Investor
(in accordance with its written request) of such Warrant Shares so registered.
In the event that any registration pursuant to this Section 6.15 shall be, in
whole or in part, an underwritten public offering of Common Stock, the number of
Warrant Shares to be included in such an underwriting may be reduced if and to
the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold by
the Company therein. In the event such a reduction is necessary, the reduction
shall be borne first by holders of common stock who are not Investors, and if a
further reduction is necessary in the judgment of the managing underwriter,
then, all Investors proposing to sell Warrant Shares and holders of warrants
issued in conjunction with the issuance of the Series A Redeemable Preferred
Stock in the offering shall bear the reduction on a pro-rata basis, based on the
number of Warrant Shares each Investor proposed to offer for sale in the
Offering, or an Investor holding a majority of the Warrant Shares may elect to
withdraw from such registration all Warrant Shares held by Investors as to which
registration was requested. Notwithstanding the foregoing provisions, the
Company may for any reason and without the consent of Investors withdraw any
registration statement referred to in this Section 6.15 without thereby
incurring any liability to any Investor.
SECTION 6.16 REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 6.15 hereof to use its best efforts to
effect the registration of any Warrant Shares under the Securities Act, the
Company will, as expeditiously as possible:
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<PAGE>
(a) prepare and file with the Commission a registration
statement (which shall be on Form S-1, Form S-2, any successor forms
thereto, or other form of general applicability satisfactory to the
managing underwriter selected as herein provided) with respect to such
securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period of distribution and comply with the
provisions of the Securities Act with respect to the disposition of all
Warrant Shares covered by such registration statement in accordance
with the intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each Investor and to each underwriter such
number of copies of the registration statement and the prospectus
included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale
or other disposition of the Warrant Shares covered by such registration
statement;
(d) use its best efforts to register or qualify the Warrant
Shares covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the Shareholders, or, in the
case of an underwritten public offering, the managing underwriter
reasonably shall request, provided, however, that the Company shall not
for any such purpose be required to qualify generally to transact
business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to list the Warrant Shares covered by
such registration statement with any securities exchange or NASDAQ on
which the Common Stock of the Company is then listed or quoted;
(f) notify each selling Investor at any time when a prospectus
relating to Warrant Shares is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such
Shareholder, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Warrant Shares, such prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(g) notify the selling Investors immediately, and confirm the
notice in writing, (1) when the registration statement becomes
effective, (2) of the issuance by the Commission of any stop order or
of the initiation, or the threatening, of any proceedings for that
purpose, (3) of the receipt by the Company of any notification with
respect to the suspension of qualification of the Warrant Shares for
sale in any jurisdiction or of the initiation, or the threatening, of
any proceedings for that purpose, and (4) of the receipt of any
comments, or requests for additional information, from the Commission
or any state regulatory authority. If the Commission or any state
regulatory authority shall enter such a stop order or order suspending
qualification at any time, the Company will promptly use its best
reasonable efforts to obtain the lifting of such order; and
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<PAGE>
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders as soon as reasonably practicable, but not
later than 15 months after the effective date of the registration
statement, an earnings statement covering a period of at least 12
months beginning after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
For purposes hereof, the period of distribution of Warrant Shares in a
firm commitment underwritten public offering shall be deemed to extend until
each underwriter has completed the distribution of all securities purchased by
it, and the period of distribution of Warrant Shares in any other registration
shall be deemed to extend until the earlier of the sale of all Warrant Shares
covered thereby or 180 days after the effective date thereof.
In connection with each registration hereunder, each Shareholder will
furnish to the Company in writing such information with respect to it as a
stockholder as reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws.
In connection with each registration pursuant to Section 6.15 hereof
covering an underwritten public offering, the Company and each Investor agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
SECTION 6.17 EXPENSES. All reasonable expenses incurred by the Company
in complying with Section 6.15 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance, and the reasonable fees and disbursements of one counsel for the
sellers of Warrant Shares , but excluding any Selling Expenses, are called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of Warrant Shares are called "Selling Expenses".
(a) The Company shall pay all Registration Expenses
attributable to the Warrant Shares of Investors included in the
Registration in connection with each registration statement under
Section 6.15 hereof.
(b) All Selling Expenses in connection with each registration
statement under Section 6.15 hereof shall be borne by the Investor and
any other selling stockholder in proportion to the number of shares
sold by Investor, or by such other selling stockholders.
ARTICLE 7. MISCELLANEOUS
SECTION 7.1 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations, and warranties made herein or in the Warrants, or any
certificate or instrument delivered to the Investors pursuant to or in
connection with this Agreement and the Warrants shall survive the execution and
delivery of this Agreement, the Warrants, and the closing of the transactions
contemplated hereby and thereby.
SECTION 7.2 BROKERAGE. Each party hereto will indemnify and hold
harmless the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 7.3 PARTIES IN INTEREST. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
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<PAGE>
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants, and agreements
benefiting the Investors shall inure to the benefit of any and all subsequent
holders from time to time of the Preferred Stock or the Warrants.
Notwithstanding the foregoing, the right to purchase the Preferred Stock and the
Warrants hereunder pursuant to Section 1.1 may not be sold, transferred, or
otherwise assigned except to an affiliate of the Investors, a successor to
substantially all the business and assets of the Investors.
SECTION 7.4 NOTICES. All notices, requests, consents, and other
communications required or permitted hereunder shall be in writing and shall be
effective when delivered in person or by a courier service, postage prepaid,
addressed as follows:
(a) if to the Company:
Transeastern Properties of South Florida, Inc.
3300 University Drive
Coral Springs, FL 33065,
Attention: Arthur J. Falcone, President
with a copy (which shall not constitute notice) to:
John T. Kinsey, P.A.
2300 Corporate Blvd.
Two Corporate Court, Suite 112
Boca Raton, FL 33431,
Attention: John Kinsey, Esq.
(b) if to the Investors:
At the address of such Investor on Schedule 1 hereto.
or, in any such case, at such other address or addresses as shall have
been furnished in writing by such party to the others.
SECTION 7.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, irrespective of
the choice of law provisions thereof.
SECTION 7.6 ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits hereto, and the other documents delivered pursuant hereto
constitute the full and entire agreement of the parties with respect to the
subject matter hereof and thereof. All Schedules and Exhibits hereto are hereby
incorporated herein by reference.
SECTION 7.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
SECTION 7.8 AMENDMENTS. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company and the holders of at least two-thirds of the outstanding shares of
Preferred Stock and Warrant Shares.
SECTION 7.9 SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority to
the extent possible, it shall be modified in such manner as to be valid, legal,
and enforceable but so as to most nearly retain the intent of the parties and,
if such modification is not possible, such provision shall be severed from this
Agreement, and in either case, the validity and enforceability of any other
provision and of the entire Agreement shall not be affected thereby.
SECTION 7.10 TITLES AND SUBTITLES. The title and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 7.11 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
(a) "affiliate" shall mean, with respect to any person, any person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such other person.
(b) "person" shall mean an individual, corporation, trust, partnership,
joint venture, limited liability company, unincorporated organization,
government agency, or any agency or political subdivision thereof, or other
entity.
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<PAGE>
+ IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement as of the day and year first above written.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
By:
Arthur J. Falcone, President
Attest:
Philip Cucci, Jr., Secretary
INVESTORS:
[SIGNATURE BLANKS TO FOLLOW]
-23-
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
INVESTOR NAME AND ADDRESS PREFERRED SHARES WARRANT SHARES AGGREGATE PURCHASE PRICE
PURCHASED PURCHASED
<S> <C> <C> <C>
Daniel J. Andreacci 250 550 $25,000.00
8649 - NW 43 Ct.
Coral Springs, Florida 33065
(305) 344-4800
Taxpayer ID No.: ###-##-####
Brancaleone Family Partnership 4,000 8,792 $400,000.00
Jesse Brancaleone
6661 Royal Palm Blvd.
Margate, Florida 33063
(305) 971-5986
Taxpayer ID No.: ###-##-####
Albert Bruno 1,000 2,198 $100,000.00
6915 Ocala Lane
Parkland, Florida 33067
(305) 755-1733
Taxpayer ID No.: ###-##-####
Les Campbell 250 550 $25,000.00
12644 Classic Drive
Coral Springs, Florida 33071
(305) 346-6446
Taxpayer ID No.: ###-##-####
Anthony Ciabattoni 2,000 4,396 $200,000.00
30662 Hunt Club Drive
San Juan Capistrano, California 92675
(714) 240-1022
Taxpayer ID No.: ###-##-####
Phillip J. Ciabattoni 300 659 $30,000.00
3 E. 40th Street, Apt. 1
Wilmington, Delaware 19802
(302) 762-7398
Taxpayer ID No.: ###-##-####
Otto Claricurzio 250 550 $25,000.00
106 Peoples Way
Hockessin Valley Falls
Hockessin, Delaware 19707
(302) 234-9431
Taxpayer ID No.: ###-##-####
Schedule 1 page 1 of 2
<PAGE>
Audrey Cohen 1,000 2,198 $100,000.00
16 The Hollows
Muttontown, New York 11732
(516) 922-1746
Taxpayer ID No.: ###-##-####
Neil Eisner 250 550 $25,000.00
9911 NW 48th Court
Coral Springs, Florida 33076
(305) 344-9246
Taxpayer ID No.: ###-##-####
Robert J. Falcone, Trustee of the Robert J. 16,900 37,146 $1,690,000.00
Falcone Rev. Living Trust 9/1/93
35 Riverview Terrace
Smithtown, New York 11287
(516) 499-9500
Taxpayer ID No.: ###-##-####
Kenneth Ginsberg 1,500 3,297 $150,000.00
5 Mohegan Place
Huntington Station, New York 11746
(516) 271-2636
Taxpayer ID No.: ###-##-####
David W. Gove 250 550 $25,000.00
27661 Nopales
Mission Viejo, California 92692
(714) 770-7403
Taxpayer ID No.: ###-##-####
Larry T. Nicholson 250 550 $25,000.00
6658 Thornhill Court
Boca Raton, Florida 33433
(407) 368-3529
Taxpayer ID No.: ###-##-####
Bruce Phillips, M.D. and Kim Phillips 600 1,319 $60,000.00
JTWROS
5800 NW 22nd Avenue
Boca Raton, Florida 33496
(407) 241-1480
Taxpayer ID No.: ###-##-####
Anthony Prezzamolo 1,000 2,198 $100,000.00
1736 NW 124 Way
Coral Springs, Florida 33071
(305) 752-1646
Taxpayer ID No.: ###-##-####
Ray Stromback 200 440 $20,000.00
1759 Modoc
Orange, California 92667
(714) 998-9603
Taxpayer ID No.: ###-##-####
</TABLE>
Schedule 1 page 2 of 2
<PAGE>
SCHEDULE 2
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
<PAGE>
SCHEDULE 2
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
Section 2.1(b) Companies whose securities are held by Transeastern
Transeastern Finance, Inc.
Transeastern Properties at the Cove, Inc.
Transeastern Pembroke Properties, Inc.
100% of the common stock of the foregoing companies is owned by
Transeastern Properties of South Florida, Inc.
Section 2.4 Current Owners Of Transeastern Common Stock, Preferred Stock
and Warrants
See page 27 of Private Placement Memorandum
Section 2.5 Pending lawsuits against Transeastern Properties of South
Florida, Inc.
1. Merillat Corp. vs. Transeastern Properties of South Florida, Inc.
Circuit Court of the 17th Judicial Circuit of Florida,
Suit for approximately $26,000.00. This is an obligation of
Transeastern Construction, Inc., a corporation owned by Arthur J. Falcone,
Edward W. Falcone and Philip Cucci, Jr., and Transeastern Properties of South
Florida, Inc. has no liability therefore.
2. Carpenter Corp. vs. Transeastern Properties of South Florida,
Inc. and Transeastern Construction, Inc.
Circuit Court of the 17th Judicial Circuit of Florida
Suit for approximately $34,000.00. This is an obligation of
Transeastern Construction, Inc., a corporation owned by Arthur J. Falcone,
Edward W. Falcone and Philip Cucci, Jr., and Transeastern Properties of South
Florida, Inc. has no liability therefore.
Section 2.20 Employee Benefit Plans
The Company provides group hospitalization of its full-time employees
after four months service. The limits of such coverage are $1,000,000 per
covered person. The Company 25% of the cost of such coverage for all employees,
with the remaining 75% of the cost for employee coverage and 100% of the cost of
any dependant coverage paid by such employees. Such coverage is provide by Blue
Cross Blue Shield.
The Company provides one week paid vacation to employees. There is no
limit on the amount of vacations which officers are entitled to take. The
Company provides life insurance coverage on the lives of Arthur J. Falcone,
Edward W. Falcone and Philip Cucci, Jr. The beneficiaries of such policies are
the Company and the wives of such respective officers.
<PAGE>
The Company has no severance policy.
Section 2.23 Transactions with Affiliates
The Company leases office space from University Financial Plaza
Associates, Ltd. ("University"), a limited partnership formed in June, 1994 for
the purpose of acquiring the office building located at 3300 University Drive,
Coral Springs, Florida. Such lease pre-dates the formation of University and was
negotiated with its predecessor in title, Metropolitan Life Insurance Company.
Arthur J. Falcone, Edward W. Falcone and Philip Cucci, Jr. own 100% of the stock
of the corporate general partner of University, three Class A limited partner
units and 1.59 Class B limited partner units in University.
The Company also has various loans from officers and affiliates as
disclosed in the Financial Statements attached as Exhibit "A" to the Private
Placement Memorandum.
Section 6.6 Affiliates
Southeast Electric, Inc.
Transeastern Painting, Inc.
Transeastern Construction, Inc.
<PAGE>
SCHEDULE 3
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
ACCREDITED INVESTOR CERTIFICATES
<PAGE>
EXHIBIT A
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
FORM OF WARRANT
<PAGE>
THIS WARRANT HAS BEEN, AND THE WARRANT SHARES ISSUABLE UPON EXERCISE
HEREOF WILL BE, ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT") AND OF THE FLORIDA INVESTOR PROTECTION ACT (THE "FLORIDA ACT").
SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR TRANSFERRED OTHER
THAN (I) PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE 1933 ACT AND THE FLORIDA ACT, AND (II) UPON RECEIPT
BY THE ISSUER OF EVIDENCE SATISFACTORY TO IT OF COMPLIANCE WITH THE
1933 ACT, THE FLORIDA ACT, AND THE APPLICABLE SECURITIES LAWS OF ANY
OTHER JURISDICTION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION
OF COUNSEL SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE
LAWS.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Original Issue Date: October 13, 1995 Warrant No. 94B-25
WARRANT TO PURCHASE COMMON STOCK
THIS CERTIFIES THAT IN CONNECTION WITH, and as an inducement to BRUCE
R. JOHNSON AND JODY A. JOHNSON AS TENANTS, BY THE ENTIRETY (the "Holder"), to
consummate the transactions contemplated by that certain Series B Redeemable
Preferred Stock and Warrant Purchase Agreement, dated December 6, 1994 among
Holder, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation
(the "Corporation"), and certain other parties identified therein (the "Purchase
Agreement"), Holder is entitled to purchase, on the terms and conditions
hereinafter set forth, Three Thousand Eight Hundred and Forty-Seven shares of
the Common Stock, $.01 par value, of the Corporation (the "Common Stock"), at a
price $.01 per share (the "Exercise Price"), such number of shares and such
Exercise Price being subject to adjustment upon the occurrence of the
contingencies set forth in this Warrant. Each share of Common Stock as to which
this Warrant is exercisable is a "Warrant Share" and all such shares are
collectively referred to as the "Warrant Shares").
SECTION 1. REGISTRATION OF WARRANT. This Warrant is one of a series of
Warrants (collectively, the "Transaction Warrants") issued in connection with
the transaction contemplated by the Purchase Agreement. Each Transaction Warrant
contains identical terms except for the number of Warrant Shares and the
distinctive Warrant number. The Corporation shall register this Warrant, upon
records to be maintained by the Corporation for that purpose, in the name of the
record Holder of this Warrant from time to time. The Corporation shall deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise or any distribution to the Holder hereof, and for all
other purposes, and the Corporation shall not be affected by any notice to the
contrary.
SECTION 2. EXERCISE OF WARRANT.
2.1. TIME OF EXERCISE. This Warrant may be exercised in whole
or in part, at any time or from time to time prior to 5:00 p.m., Eastern
Standard Time, December 31, 2003, unless extended as hereinafter provided. The
last day this Warrant can be exercised is hereinafter referred to as the
"Expiration Date."
2.1. MANNER OF EXERCISE. In order to exercise this Warrant,
the registered Holder hereof shall deliver to the Corporation at its principal
office at 3300 University Drive, Coral Springs, Florida 33065, Attention:
President, or at such other office as shall be designated by the Corporation in
writing pursuant to Section 12 hereof on or before 5:00 p.m. Eastern Standard
Time on the Expiration Date, (i) a written notice of such registered Holder's
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<PAGE>
election to exercise this Warrant (the "Exercise Notice"), which notice may be
in the form of the Notice of Exercise attached hereto, properly executed and
completed by the registered Holder or an authorized officer thereof, (ii) a
check payable to the order of the Corporation, in an amount equal to the product
of the Exercise Price multiplied by the number of Warrant Shares specified in
the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii),
and (iii) are collectively the "Exercise Materials"). Upon timely receipt of the
Exercise Materials, the Corporation shall, as promptly as practicable, and in
any event within ten (10) business days after its receipt of the Exercise
Materials, execute or cause to be executed and delivered to such registered
Holder a certificate or certificates representing the number of Warrant Shares
specified in the Exercise Notice, together with cash in lieu of any fraction of
a share, as hereinafter provided, and, (x) if the Warrant is exercised in full,
a copy this Warrant marked "Exercised" or (y) if the Warrant is partially
exercised, a copy this Warrant marked "Partially Exercised" together with a new
Warrant on the same terms for the unexercised balance of the Warrant Shares. All
of the certificates evidencing Warrant Shares shall bear the legend set forth in
Section 7.2 hereof. The stock certificate or certificates shall be registered in
the name of the registered Holder of this Warrant or such other name as shall be
designated in the Exercise Notice. The date on which the Warrant shall be deemed
to have been exercised (the "Exercise Date"), and the date the person in whose
name any certificate for Warrant Shares is issued shall be deemed to have become
the holder of record of such shares, shall be the date the Corporation receives
the Exercise Materials, irrespective of the date of delivery of a certificate or
certificates evidencing the Warrant Shares, except that, if the date on which
the Exercise Materials are received by the Corporation is a date when the stock
transfer books of the Corporation are closed, the Exercise Date shall be the
date the Corporation receives the Exercise Materials, and the date such person
shall be deemed to have become the holder of the Warrant Shares shall be the
next succeeding date on which the stock transfer books are open.
SECTION 3. ADJUSTMENTS TO WARRANT SHARES. The number of Warrant Shares
issuable upon the exercise hereof shall be subject to adjustment in certain
cases as set forth in this Section 3.
3.1. CONSOLIDATION, MERGER, OR SALE. In the event the
Corporation is a party to a consolidation, share exchange, or merger, or the
sale of all or substantially all of the assets of the Corporation to, any
person, or in the case of any consolidation or merger of another corporation
into the Corporation in which the Corporation is the surviving corporation, and
in which there is a reclassification or change of the shares of Common Stock of
the Corporation, this Warrant shall after such consolidation, share exchange,
merger, or sale be exercisable for the kind and number of securities or amount
and kind of property of the Corporation or the corporation or other entity
resulting from such share exchange, merger, or consolidation, or to which such
sale shall be made, as the case may be (the "Successor Corporation"), to which a
holder of the number of shares of Common Stock deliverable upon the exercise
(immediately prior to the time of such consolidation, share exchange, merger, or
sale) of this Warrant would have been entitled upon such consolidation, share
exchange, merger, or sale; and in any such case appropriate adjustments shall be
made in the application of the provisions set forth herein with respect to the
rights and interests of the registered Holder of this Warrant, such that the
provisions set forth herein shall thereafter correspondingly be made applicable,
as nearly as may reasonably be, in relation to the number and kind of securities
or the type and amount of property thereafter deliverable upon the exercise of
this Warrant. The above provisions shall similarly apply to successive
consolidations, share exchanges, mergers, and sales. Any adjustment required by
this Section 3.1 because of a consolidation, share exchange, merger, or sale
shall be set forth in an undertaking delivered to the registered Holder of this
Warrant and executed by the Successor Corporation which provides that the Holder
of this Warrant shall have the right to exercise this Warrant for the kind and
number of securities or amount and kind of property of the Successor Corporation
or to which the holder of a number of shares of Common Stock deliverable upon
exercise (immediately prior to the time of such consolidation, share exchange,
merger, or sale) of this Warrant would have been entitled upon such
consolidation, share exchange, merger, or sale. Such undertaking shall also
-2-
<PAGE>
provide for future adjustments to the number of Warrant Shares and the Exercise
Price in accordance with the provisions set forth in Section 3 hereof.
3.2. ADJUSTMENTS FOR STOCK DIVIDENDS AND SPLITS. In the event
the Corporation should at any time, or from time to time after the Original
Issue Date, fix a record date for the effectuation of a stock split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock, or securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon exercise or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split, or subdivision if no record date is fixed), the number of
Warrant Shares issuable upon the exercise hereof shall be proportionately
increased and the Exercise Price shall be appropriately decreased by the same
proportion as the increase in the number of outstanding Common Stock Equivalents
of the Corporation resulting from the dividend, distribution, split, or
subdivision. Notwithstanding the preceding sentence, no adjustment shall be made
to decrease the Exercise Price below $.01 per Share.
3.3. REVERSE STOCK SPLITS. In the event the Corporation should
at any time or from time to time after the Original Issue Date, fix a record
date for the effectuation of a reverse stock split, or a transaction having a
similar effect on the number of outstanding shares of Common Stock of the
Corporation, then, as of such record date (or the date of such reverse stock
split or similar transaction if no record date is fixed), the number of Warrant
Shares issuable upon the exercise hereof shall be proportionately decreased and
the Exercise Price shall be appropriately increased by the same proportion as
the decrease of the number of outstanding Common Stock Equivalents resulting
from the reverse stock split or similar transaction.
3.4. RECLASSIFICATION. In the event the Corporation should at
any time or from time to time after the Original Issue Date, fix a record date
for a reclassification of its Common Stock, then, as of such record date (or the
date of the reclassification if no record date is set), this Warrant shall
thereafter be convertible into such number and kind of securities as would have
been issuable as the result of such reclassification to a holder of a number of
shares of Common Stock equal to the number of Warrant Shares issuable upon
exercise of this Warrant immediately prior to such reclassification, and the
Exercise Price shall be unchanged.
3.5. SALES OR DEEMED SALES OF CORPORATION SECURITIES. If and
whenever the Corporation shall, prior to a public offering, issue or sell any
shares of Common Stock or any equity or debt securities of the Corporation which
are convertible into or exchangeable for shares of Common Stock in a transaction
in which the consideration received by the Corporation (including the cash
consideration for any non-convertible securities which were issued together with
a security convertible or exchangeable for Common Stock) consists SOLELY of cash
in the aggregate not to exceed $5,000,000, then, forthwith upon such issuance or
sale, the number of Warrant Shares issuable upon the exercise of this Warrant
shall be adjusted to a number which is equal to the product of (i) the number of
Warrant Shares issuable upon exercise hereof on the Original Issue Date
multiplied by (ii) a fraction, the numerator of which is the number of shares of
Fully Diluted Common Stock immediately after such issuance or sale and the
denominator of which is the number of shares of Fully Diluted Common Stock
immediately before such issuance or sale. As used herein, the term "Fully
Diluted Common Stock" means the outstanding shares of Common Stock assuming the
conversion into Common Stock of all then outstanding convertible securities (at
-3-
<PAGE>
the then effective conversion prices), and the exercise of all then outstanding
rights, options, and warrants, excluding the Transaction Warrants.
3.6. NO DILUTION OR IMPAIRMENT. The Corporation will not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution, issue, or sale of securities, sale of assets
or any other voluntary action, void or seek to avoid the observance or
performance of any of the terms of the Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Holder against dilution or other impairment. Without limiting the generality of
the foregoing, the Corporation (a) will not create a par value of any share of
stock receivable upon the exercise of the Warrant above the amount payable
therefor upon such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Corporation may validly and legally
issue fully paid and non-assessable shares upon the exercise of the Warrant.
3.7. NOTICE OF ADJUSTMENT. When any adjustment is required to
be made in the number or kind of shares purchasable upon exercise of the
Warrant, or in the Exercise Price, the Corporation shall promptly notify the
Holder of such event and of the number of shares of Common Stock or other
securities or property thereafter purchasable upon exercise of the Warrants and
of the Exercise Price, together with the computation resulting in such
adjustment.
SECTION 4. COVENANTS AS TO COMMON STOCK. The Corporation covenants and
agrees that all Warrant Shares which may be issued will, upon issuance, be
validly issued, fully paid and non-assessable. The Corporation further covenants
and agrees that the Corporation will at all times have authorized and reserved,
free from preemptive rights, a sufficient number of shares of its Common Stock
to provide for the exercise of the Warrant in full.
SECTION 5. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the
Holder hereof to any voting rights or other rights as a stockholder of the
Corporation.
SECTION 6. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE HOLDER .
The registered Holder of this Warrant, by acceptance of this Warrant represents,
warrants, and covenants to the Corporation as follows:
(a) The Holder is acquiring this Warrant, and agrees that the
exercise of this Warrant and the acceptance of a certificate for
Warrant Shares shall constitute its representation that the Warrant
Shares are being acquired, for its own account for investment and not
with a view to the distribution thereof, subject, however, to Holder's
right to transfer this Warrant and the Warrant Shares in accordance
with and subject to the restrictions on such transfer set forth herein.
(b) The Holder understands that this Warrant and the Warrant
Shares have not been registered under the Securities Act of 1933, as
amended (the "Securities Act") or state securities laws, by reason of
their issuance in a transaction exempt from the registration
requirements of the Securities Act and applicable state securities
laws. The Holder acknowledges being informed that this Warrant and the
Warrant Shares must be held indefinitely unless this Warrant or the
Warrant Shares are registered for sale by such Holder under the
Securities Act and applicable state securities laws or an exemption
from registration is available. The Holder understands that a sale of
the Warrant Shares made in reliance upon Rule 144 promulgated under the
Securities Act ("Rule 144") can only be made in accordance with the
terms and conditions of Rule 144 and further understands that in the
-4-
<PAGE>
event that the exemption from registration provided by such Rule is not
available, compliance with some other exemption under the Securities
Act will be required in the absence of registration.
(c) The Holder agrees not to sell, transfer, pledge or
hypothecate this Warrant or any Warrant Shares unless a Registration
statement is effective for this Warrant or Warrant Shares under the
Securities Act or, in the written opinion of such Holder's counsel (a
copy of which opinion shall be addressed to and delivered to the
Corporation, and which counsel and which opinion shall be reasonably
satisfactory to the Corporation), such transaction will not result in
any violation of the registration requirements of the Securities Act or
any applicable state securities law. The Corporation may not, and may
instruct its transfer agent not to, transfer this Warrant or the
Warrant Shares unless the Corporation has been advised by its counsel
that the Holder has complied with the provisions of this Warrant and
applicable securities laws relating to the proposed transfer.
SECTION 7. TRANSFER OF SECURITIES.
7.1. RESTRICTION ON TRANSFER. This Warrant and the Warrant
Shares and any shares of capital stock received in respect thereof, whether by
reason of a stock split or share reclassification thereof, a stock dividend
thereon, or otherwise, shall not be transferable except upon the conditions
specified in Section 6 and this Section 7, which conditions are intended to
ensure compliance with the provisions of the Securities Act and applicable State
securities laws with respect to the transfer of such securities. The Holder of
this Warrant, by acceptance of this Warrant, agrees to be bound by the
provisions of Section 6 and this Section 7 and to indemnify and hold harmless
the Corporation against any loss or liability arising from the disposition of
this Warrant or the Warrant Shares issuable upon exercise hereof or any interest
in either thereof in violation of the provisions of this Warrant.
7.2. RESTRICTIVE LEGEND. Each certificate for the Warrant
Shares and any shares of capital stock received in respect thereof, whether by
reason of a stock split or share reclassification thereof, a stock dividend
thereon or otherwise, and each certificate for any such securities issued to
subsequent transferees of any such certificate shall (unless otherwise permitted
by the provisions hereof) be stamped or otherwise imprinted with a legend in
substantially the following form:
Legend for Warrant Shares or other shares of capital stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND THE FLORIDA
INVESTOR PROTECTION ACT (THE "FLORIDA ACT") THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR TRANSFERRED OTHER THAN (I) PURSUANT TO AN
EFFECTIVE REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT AND
THE FLORIDA ACT, AND (II) UPON RECEIPT BY THE ISSUER OF EVIDENCE
SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933 ACT, THE FLORIDA ACT,
AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE
ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY
TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
7.3. TRANSFER OF WARRANTS. Subject to the restrictions on
transfer specified in Section 6 and this Section 7, the Warrant is transferable
in accordance with this Warrant, in whole or in part, at the agency or office of
the Corporation referred to in Section 1 hereof, by the Holder hereof in person
or by a duly authorized attorney, upon surrender of this Warrant, with the Form
of Assignment attached hereto duly executed by the then registered Holder of
this Warrant or its duly authorized agent. The Corporation or its transfer
agents shall register the transfer of any Warrants transferred in compliance
with Section 6 and this Section 7 upon records to be maintained for that
purpose, upon surrender of this Warrant. Upon any such Registration of transfer,
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<PAGE>
a new Warrant substantially in the form of this Warrant evidencing the Warrant
so transferred shall be issued to the transferee.
SECTION 8. LOST, STOLEN, MUTILATED, OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated, or destroyed, the Corporation shall issue a
new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated, or destroyed, provided the registered Holder hereof shall deliver a
lost warrant certificated in customary form, including indemnification of the
Corporation.
SECTION 9. FRACTIONAL WARRANT SHARES. The Corporation shall not be
required to issue any fractions of Warrant Shares upon exercise of this Warrant,
but the Corporation shall pay cash in respect of any fractional interest in a
Warrant Share which would otherwise be issuable in an amount equal to the same
fraction of the fair market value per share of the Common Stock on the day of
the exercise, as reasonably determined by the Board of Directors of the
Corporation.
SECTION 10. NOTICE. All notices, requests, demands, and other
communications required or permitted under this Warrant and the transactions
contemplated herein shall be in writing and shall be deemed to have been duly
given, made, and received when personally delivered the day after deposited with
a recognized national overnight delivery service prior to its dead-line for
receiving packages for next day delivery or upon the fifth day after deposited
in the United States registered or certified mail with postage prepaid, return
receipt requested, in each case addressed as set forth below:
If to the Corporation: Transeastern Properties of South Florida, Inc.
3300 University Drive
Coral Springs, Florida 33065
Attention: President
If to the Holder hereof, to the address of such Holder appearing on the
books of the Corporation.
SECTION 11. CAPTIONS, SECTION, HEADINGS. Captions and section headings
used herein are for convenience only, and are not a part of this Warrant and
shall not be used in construing it.
SECTION 12. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws in the State of Florida, irrespective of
the choice of law provisions.
IN WITNESS WHEREOF, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., has
caused this Warrant to be executed in its name by its duly authorized officers
under its corporate seal, and to be dated as of the date first above written.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
By:
Arthur J. Falcone, President
ATTEST:
Philip Cucci, Jr., Secretary
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<PAGE>
FORM OF ASSIGNMENT
[To be signed only upon transfer of unexercised Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the attached Warrant to purchase the number
of full shares of Common Stock, $____ par value, of Transeastern Properties of
South Florida, Inc., issuable upon exercise of said Warrant, and appoints
________________, Attorney, to transfer such Warrant on the books of
Transeastern Properties of South Florida, Inc., with full power of substitution
in the premises.
Dated:______________________
[Signature]
_______________________________________
_______________________________________
[Address]
Signature guaranteed by a member of a national securities exchange or
national bank:
--------------------------
NOTICE
The signature above must correspond to the name as written upon the
fact of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.
<PAGE>
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To: TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
The undersigned registered Holder of the attached Warrant hereby
irrevocably elects to exercise the Warrant for, and to purchase thereunder, the
full number of whole shares of Common Stock, $____ par value, of Transeastern
Properties of South Florida, Inc., issuable upon exercise of said Warrant and
hereby surrenders said Warrant and delivers to Transeastern Properties of South
Florida, Inc., a check in the amount of $_________ representing the aggregate
Exercise Price for such shares. The undersigned herewith requests that the
certificates for such shares be issued in the name of, and delivered to the
undersigned, whose address is _________________________________ and social
security or tax identification number is ______________.
Dated:
NOTICE
The signature above must correspond to the name as written upon the
fact of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
OPINION OF COMPANY COUNSEL
<PAGE>
NOVEMBER __, 1994
The parties named in the attached Schedule I
c/o Gerardo M. Balboni II, Esq.
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street N.E.
Atlanta, GA 30303
Ladies and Gentlemen:
We have acted as counsel to Transeastern Properties of South Florida, Inc.,
a Florida corporation (the "Company"), in connection with (i) the preparation of
(a) the Series B Redeemable Preferred Stock and Warrant Purchase Agreement,
dated as of November 30, 1994, by and among the parties named in Schedule I
hereto (the "Purchasers") and the Company (the "Agreement") and (b) the
Warrants, dated as of November ___, 1994 by and among the parties named in
Schedule I hereto (the "Warrant Purchasers") and the Company (the "Warrant
Agreement"); and (ii) the sale and issuance up to 36,500 shares of the Series B
Redeemable Preferred Stock of the Company, $.01 par value (the "Preferred
Shares") pursuant to the Agreement and (b) the sale and delivery of warrants to
purchase up to 65,950 shares of the Common Stock (the "Warrant Shares"), $.01
par value of the Company (the "Warrants") pursuant to the Agreement. This
opinion is rendered pursuant to Article 4(a) of the Agreement. Capitalized terms
used in this opinion letter and the attachments hereto and not otherwise defined
herein shall have the meanings assigned to such terms in the Agreement.
In connection with the foregoing, we have examined:
1. An executed copy of each of the Agreement and the Warrants among the
Company, the Purchasers and the other parties listed therein (collectively,
the "Transaction Agreements");
2. The Amended and Restated Articles of Incorporation of the Company,
filed with the Florida Department of State on November __, 1994, and the
Bylaws of the Company, certified by the Secretary of the Company on
November __, 1994 (collectively, the "Charter"); and
3. The corporate proceedings of the Company relating to the execution
and delivery of the Agreement and the Warrants, and the consummation of the
transactions provided for therein.
In all such examinations, we have assumed the genuineness of all signatures
(other than signatures on behalf of the Company), the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
photostatic copies. As to questions of fact material to our opinions, we have
relied on certificates of public officials, the representations and warranties
of Company set forth in the Agreement, and on certificates of officers of the
Company.
<PAGE>
The use herein of the words "to the best of our knowledge", "known to us"
or similar language means that, during the course of our representation of the
Company, no information has come to the attention of any attorney in this Firm
involved in these transactions or otherwise regularly engaged in representing
the Company which would give us actual knowledge of the existence of any of the
documents or facts so qualified. Whenever we have made "due inquiry" as to
matters set forth herein, such inquiry was confined to reviewing documents
provided to us by the Company in the course of our representation in response to
inquiries as to such matters as we have deemed appropriate in order to render
the opinions hereinafter set forth, a review of documents of which we otherwise
have actual knowledge, to the extent we deemed such documents material and
relevant to the opinions hereinafter set forth, and obtaining certificates of
officers of the Company as to certain facts which we deemed material and
relevant to our opinion, and we have relied, with your permission, upon such
certificates in rendering this opinion.
Based on the foregoing, and subject to the further qualifications,
assumptions, and limitations hereinafter set forth, we are of the opinion that:
1. The Company is a corporation in good standing (as defined herein)
under the laws of the State of Florida. The Company is qualified to do
business as a foreign corporation and is in good standing in each state
where, based upon the nature of the business transacted by the Company or
the ownership or lease by the Company of real or personal property, the
failure to be so qualified would have a material and adverse effect on the
business or condition of the Company. Except as reflected in the Disclosure
Schedule, the Company has no subsidiaries.
2. The Company has all requisite power to (i) own, lease, and operate
its properties and to carry on its business as currently conducted and as
proposed to be conducted, (ii) execute, deliver, and perform each of the
Transaction Agreements, (iii) issue, sell, and deliver the Preferred Shares
and the Warrants, and (iv) issue and deliver the Warrant Shares upon the
exercise of the Warrants.
3. Each of the Transaction Agreements has been duly authorized,
executed, and delivered by the Company and each constitutes the legal,
valid, and binding obligations of the Company, enforceable in accordance
with their respective terms (subject to enforcement of remedies, to the
discretion of courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium, and similar laws
affecting creditors' rights or debtors' relief generally).
4. The execution and delivery by the Company of the Transaction
Agreements, and the performance by the Company of its obligations
thereunder, the issuance, sale, and delivery of the Preferred Shares and
the Warrants, and the issuance and delivery of the Warrant Shares upon
exercise of the Warrants, will not violate any provision of law, the
Charter, any order of any court or other agency of government known to us
and binding upon the Company or its assets, or any indenture, agreement, or
other instrument known to us by which the Company or any of its properties
or assets is bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement, or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim, or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.
5. The authorized capital stock of the Company consists of (i) 29,000
shares of Series A Redeemable Preferred Stock, $.01 par value; (ii) 36,500
shares of Series B Redeemable Preferred Stock, $01. Par value, and (iii)
5,000,000 shares of Common Stock, $.01 par value. Immediately prior to the
Closing, 725,001 shares of Common Stock will
<PAGE>
be validly issued, fully paid and nonassessable, and 2,306 shares of Series
A Redeemable Preferred Stock (after giving effect to the Recapitalization)
and 30,000 shares of the Series B Redeemable Preferred Stock will be
outstanding. The designations, power, preferences, rights, qualifications,
limitations, and restrictions in respect of each class or series of
authorized capital stock of the Company are as set forth in the Charter.
Except as set forth in Schedule 2 to the Agreement, to our knowledge,
immediately prior to the Closing, no subscription, warrant, option,
convertible security, or other right (contingent or other) to purchase or
acquire equity securities of the Company was authorized or outstanding and
there was no commitment by the Company to issue shares, subscriptions,
warrants, options, convertible securities, or other such rights or to
distribute to holders of any of its equity securities any evidence of
indebtedness or asset. Except as set forth in Schedule 2 to the Agreement,
to our knowledge, the Company has no obligation (contingent or other) to
purchase, redeem, or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in
respect thereof.
6. The Preferred Shares, the Warrants, and the Warrant Shares have been
duly authorized. The issuance, sale, and delivery of the Preferred Shares
and the Warrants and the issuance, sale, and delivery of the Warrant Shares
upon exercise of the Warrants have been duly authorized by all required
corporate action; assuming payment of the purchase price therefor as
provided in the Agreement, the Preferred Shares have been validly issued
and are fully paid, and nonassessable. The Warrant Shares have been duly
reserved for issuance upon conversion of the Warrants, and, when so issued,
will be validly issued, fully paid, and nonassessable. Neither the
issuance, sale, or delivery of the Preferred Shares or the Warrants, nor
the issuance or delivery of the Warrant Shares, is subject to any
preemptive right or right of first refusal of shareholders of the Company
arising under law or the Charter or Bylaws of the Company which has not
been waived, or, to our knowledge, to any contractual right of first
refusal or other right in favor of any person.
7. Except as described in Schedule 2 to the Agreement, to our
knowledge, there is no (A) action, suit, claim, proceeding, or
investigation pending or threatened against or affecting the Company at law
or in equity, or before or by the Federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, (B) arbitration proceeding relating
to the Company pending under collective bargaining agreements, or (C)
governmental inquiry pending or threatened against or affecting the Company
(including, without limitation, any inquiry as to the qualification of the
Company to hold or receive any license or permit). To our knowledge, the
Company is not subject to any order, writ, injunction, or decree of any
court or of any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic
or foreign.
8. Based on the opinion provided to us by Morris, Manning & Martin, no
registration or filing with, and no consent or approval of, or other action
by any Federal, state, or other governmental agency or instrumentality is
or will be necessary for the valid execution, delivery, and performance by
the Company of the Transaction Agreements, the issuance, sale, and delivery
of the Preferred Shares and the Warrants, or the issuance, sale, and
delivery of the Warrant Shares upon exercise of the Warrants, other than
filings under
<PAGE>
the Securities Act and applicable state securities laws, which filings, to
the extent required to be made prior to the date hereof, have been made,
and to the extent required to be made following the date hereof, we assume
will be timely made by the Company.
Very truly yours,
John T. Kinsey, P.A.
Attachments
<PAGE>
EXHIBIT C
TO
SERIES B REDEEMABLE PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
AMENDED AND RESTATED ARTICLES OF INCORPORATION
- --------------------------------------------------------------------------------
COMMON STOCK
PURCHASE AGREEMENT
AMONG
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.,
ARTHUR J. FALCONE,
EDWARD W. FALCONE,
PHILIP CUCCI, JR.,
AND
THE SEVERAL INVESTORS NAMED IN SCHEDULE 1
Dated as of April 15, 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. THE COMMON STOCK 1
Section 1.1. Purchase and Sale of Common Stock. 1
Section 1.2. Issuance of Warrants. 1
Section 1.3. Closing. 1
Section 1.4. Related Transactions. 2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
FOUNDERS 2
Section 2.1. Organization, Qualifications and Corporate Power 2
Section 2.2. Authorization of Agreements, Etc. 2
Section 2.3. Validity. 3
Section 2.4. Authorized Capital Stock. 3
Section 2.5. Litigation; Compliance with Law. 4
Section 2.6. Proprietary Information of Third Parties. 4
Section 2.7. Title to Properties 5
Section 2.8. Leasehold Interests. 6
Section 2.9. Insurance. 6
Section 2.10. Taxes. 6
Section 2.11. Other Agreements. 7
Section 2.12. Patents, Trademarks, Etc. 7
Section 2.13. Loans and Advances. 7
Section 2.14. Assumption, Guaranties, Etc. of Indebtedness of Other
Persons. 8
Section 2.15. Governmental Approvals. 8
Section 2.16. Financial Statements. 8
Section 2.17. Absence of Undisclosed Liabilities. 8
Section 2.18. Absence of Changes. 9
Section 2.19. Employee Benefit Plans. 9
Section 2.20. Disclosure. 10
Section 2.21. Brokers. 10
Section 2.22. Transactions with Affiliates. 11
Section 2.23. Employees. 11
Section 2.24. Foreign Corrupt Practices Act. 11
Section 2.25. Environmental Regulations. 11
Section 2.26. Disclosure. 12
ARTICLE 3. REPRESENTATION AND WARRANTIES OF THE INVESTORS 12
ARTICLE 4. CONDITIONS PRECEDENT TO THE PURCHASE OF THE COMMON
STOCK AND WARRANTS BY INVESTORS 13
ARTICLE 5. CONDITIONS PRECEDENT 14
ARTICLE 6. COVENANTS OF THE COMPANY 15
Section 6.1. Financial Statements, Reports, Etc. 15
Section 6.2. Corporate Existence. 15
Section 6.3. Properties, Business, Insurance. 15
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<PAGE>
Section 6.4. Inspection, Consultation, and Advice. 16
Section 6.5. Restrictive Agreements Prohibited. 16
Section 6.6. Transactions with Affiliates. 16
Section 6.7. Use of Proceeds. 16
Section 6.8. Board of Directors Meetings. 16
Section 6.9. Bylaws. 16
Section 6.10. Maintenance of Ownership of Investments. 17
Section 6.11. Distributions by Investments. 17
Section 6.12. Compliance with Laws. 17
Section 6.13. Keeping of Records and Books of Account. 17
Section 6.14. Employee Stock Plans. 17
Section 6.15. Piggyback Registration Rights. 17
Section 6.16. Registration Procedures. 18
Section 6.17. Expenses. 19
ARTICLE 7. MISCELLANEOUS 20
Section 7.1. Survival of Agreements. 20
Section 7.2. Brokerage. 20
Section 7.3. Parties in Interest. 20
Section 7.4. Notices. 20
Section 7.5. Governing Law. 21
Section 7.6. Entire Agreement. 21
Section 7.7. Counterparts. 21
Section 7.8. Amendments. 21
Section 7.9. Severability. 21
Section 7.10. Titles and Subtitles. 21
Section 7.11. Certain Defined Terms. 21
-ii-
<PAGE>
CROSS REFERENCE OF DEFINED TERMS
TERM SECTION
affiliate Section 7.11
AJF Preamble
Agreement Preamble
Articles Section 2.4(d)
Closing Section 1.3
Closing Date Section 1.3
Common Stock Background
Company Preamble
Company Benefit Plans Section 2.19(a)
Contracts Section 2.11
Cucci Preamble
Disclosure Schedule Article 2
EWF Preamble
Employees Section 2.19(a)
Environmental Permits Section 2.25(e)
ERISA Section 2.19(a)(i)
Financial Statements Section 2.16
Founder Preamble
General Partnership Interest Section 2.1(b)
Hazardous Materials Section 2.25(g)
Intellectual Property Section 2.12
Investment Section 2.1(b)
Investor Preamble
Memorandum Section 2.7(a)
person Section 7.11
Real Property Section 2.7(a)
Registration Expenses Section 6.17
Selling Expenses Section 6.17
Shareholders Agreement Section 2.4(f)
Warrants Section 1.2
Warrant Shares Section 1.3
-iii-
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1 Common Stock Purchased
Schedule 2 Disclosure Schedule
Schedule 3 Accredited Investor Certificates
Exhibit A Form of Warrant Agreement
Exhibit B Opinion of Company Counsel
Exhibit C Amended and Restated Articles of Incorporation
-iv-
<PAGE>
COMMON STOCK
PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into
as of April 15, 1996, among TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a
Florida corporation (the "Company"), ARTHUR J. FALCONE, a resident of the State
of Florida ("AJF"), EDWARD W. FALCONE, a resident of the State of Florida
("EWF"), PHILIP CUCCI, JR., a resident of the State of Florida ("Cucci"), and
the several persons named in the attached SCHEDULE 1 (such persons are
hereinafter referred to individually as an "Investor," and, collectively as the
"Investors"). AJF, EWF, and Cucci are sometimes hereinafter referred to
individually as a "Founder" and collectively as the "Founders."
BACKGROUND
A. The Investors desire to purchase an aggregate of 39,223 shares of the
Common Stock of the Company, par value $.01 (the "Common Stock"), at a
price of $76.49 per share, on the terms and subject to the conditions set
forth in this Agreement.
B. The Company desires to obtain additional equity capital through the
issuance and sale to the Investors of the Common Stock, on the terms and
subject to the conditions set forth in this Agreement. The Founders are the
controlling shareholders of the Company and will receive a direct benefit
from the issuance and sale by the Company of the Common Stock.
AGREEMENT
For and in consideration of the premises and the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereby agree:
ARTICLE 1. THE COMMON STOCK
SECTION 1.1. PURCHASE AND SALE OF COMMON STOCK. The Company agrees to issue
and sell to each Investor, and each Investor agrees to purchase from the
Company, the number of shares of Common Stock set forth opposite the name of
such Investor on SCHEDULE 1 hereto under the caption "Common Stock Purchased" at
a purchase price of $76.49 per share.
SECTION 1.2. ISSUANCE OF WARRANTS. The Company agrees to issue and deliver
to each Investor, a warrant (the "Warrant") which may become exercisable for
Common Stock at the time of the Company's initial public offering. Each Warrant
shall be substantially in the form of EXHIBIT A attached hereto.
SECTION 1.3. CLOSING. The closing of the purchase and delivery of the sale
of the Common Stock shall take place at the offices of the Company, 3300
University Drive, Coral Springs, Florida 33065, at 10:00 a.m., Eastern Standard
Time, on April 15, 1996, or at such other location, date, and time as may be
agreed upon between the Investors and the Company (such closing being called the
"Closing" and such date and time being called the "Closing Date"). At the
Closing, the Company shall issue and deliver to each Investor a stock
certificate or certificates in definitive form, registered in the name of each
Investor, representing the Common Stock being purchased by each Investor and the
right to purchase Warrant Shares on the terms set forth in the Warrant. As
payment in full for the Common Stock, and against delivery of the certificates
evidencing the Common Stock purchased, on the Closing Date, each
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Investor shall deliver to the Company a cashier's check payable to the order of
the Company, in the amount set forth opposite the name of such Investor on
SCHEDULE 1 under the heading "Aggregate Purchase Price," or shall transfer such
sum to an account designated in writing by the Company by wire transfer.
SECTION 1.4. RELATED TRANSACTIONS. At the Closing, the Company and the
Founders shall deliver (i) a certificate with respect to the matters described
in Section 4(f) hereof, and (ii) the opinion of Balboni Ashley & Schoenberg LLC,
in substantially the form of EXHIBIT B hereto.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE FOUNDERS
For the purpose of inducing the Investors to purchase the Shares, the
Company and each Founder represents and warrants to each Investor that, except
as otherwise set forth in the Disclosure Schedule attached hereto as SCHEDULE 2
(the "Disclosure Schedule") by means of an explicit reference to the particular
representation or warranty as to which exception is taken, which in each case
shall constitute the sole representation and warranty as to which such exception
shall apply:
SECTION 2.1. ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER
(a) The Company is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Florida and is duly
licensed or qualified to transact business as a foreign corporation and is
in good standing in each jurisdiction in which the nature of the business
transacted by it or the character of the properties owned or leased by it
requires such licensing or qualification. The Company has the corporate
power and authority to (i) own and hold its properties and carry on its
business as now conducted and as proposed to be conducted, (ii) execute,
deliver, and perform each of this Agreement, (iii) issue, sell, and deliver
the Common Stock, and (iv) issue and deliver the Warrants and the Warrant
Shares issuable upon exercise of the Warrants.
(b) Section 2.1(b) of the Disclosure Schedule contains a true and
correct list of (i) each corporation some or all of the securities of which
are held by the Company (an "Investment"), indicating with respect to each
Investment, the number and type of securities outstanding and the number
and type of securities held by the Company, and (ii) each general or
limited partnership owned in whole or in part by the Company (a "General
Partnership Interest"). Except for Investments and General Partnership
Interests listed on Section 2.1(b) of the Disclosure Schedule, the Company
does not (i) own of record or beneficially, directly or indirectly, (A) any
shares of capital stock or securities convertible into capital stock of any
corporation, (B) any debt securities of any corporation, or (C) any
participating interest in or any indebtedness of any partnership, joint
venture, limited liability company, or other non-corporate business
enterprise or (ii) control, directly or indirectly, any other entity.
SECTION 2.2. AUTHORIZATION OF AGREEMENTS, ETC.
(a) The Company is not in violation of or default under any provision
of its Amended and Restated Articles of Incorporation, or Bylaws, of any
material provision of any indenture, contract, agreement, mortgage, deed of
trust, loan, commitment, judgment, decree, order, or obligation to which it
is a party or by which any of its properties or assets are bound, or of any
provision of any Federal, state, or local statute, rule, or governmental
regulation applicable to the Company. The execution and delivery by the
Company of this Agreement and each of the other
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agreements, documents, and instruments contemplated hereby, the performance
by the Company of its obligations hereunder and thereunder, the issuance,
sale, and delivery of the Common Stock, and the issuance and delivery of
the Warrant Shares upon exercise of the Warrants, have been duly authorized
by all requisite corporate action on the part of the Company and its
officers, directors, and shareholders and will not result in any such
violation, conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any such provision,
require any consent or waiver under any such provision, or result in the
creation or imposition of any lien, charge, restriction, claim, or
encumbrance of any nature whatsoever upon any of the properties or assets
of the Company. There is no such provision which materially and adversely
affects, or so far as the Company is presently aware, in the future may
materially and adversely affect, the condition (financial or otherwise),
business, property, prospects, assets, or liabilities of the Company.
(b) The Common Stock has been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid, and
nonassessable. The Warrants have been duly authorized and, when issued in
accordance with this Agreement, will be validly issued. The Common Stock,
when issued in accordance with this Agreement, will be free and clear of
all liens, charges, restrictions, claims, and encumbrances imposed by or
through the Company, except as reflected on the certificates evidencing the
Common Stock. The Warrant Shares have been duly and validly reserved for
issuance upon exercise of the Warrants, and the Warrant Shares, when so
issued, will be duly authorized, validly issued, fully paid, and
nonassessable and will be free and clear of all liens, charges,
restrictions, claims, and encumbrances imposed by or through the Company,
except as reflected on the certificates evidencing the Warrants and the
Warrant Shares. Neither the issuance, sale, and delivery of the Common
Stock nor the issuance and delivery of the Warrant Shares is subject to any
preemptive right, right of first refusal, or other similar right in favor
of any person, which has not been waived or complied with.
SECTION 2.3. VALIDITY. Each of this Agreement and the Warrants have been
duly and validly executed and delivered by the Company and constitutes the
legal, valid, and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
SECTION 2.4. AUTHORIZED CAPITAL STOCK. Immediately prior to the Closing:
(a) the authorized capital stock of the Company will consist of (i)
Twenty-Nine Thousand (29,000) shares of Series A Redeemable Common Stock;
Forty-Six Thousand Five Hundred (46,500) shares of Series B Redeemable
Preferred Stock, and (ii) Five Million (5,000,000) shares of Common Stock
(the "Common Stock");
(b) Seven Hundred Twenty Five Thousand One (725,001) shares of Common
Stock, Two Thousand Three Hundred Forty-five (2,345) shares of Series A
Redeemable Preferred Stock, and Thirty Three Thousand, Two Hundred Two
(33,202) shares of Series B Redeemable Preferred Stock will be validly
issued and outstanding, and fully paid and nonassessable;
(c) all issued and outstanding shares of Common Stock, Series A
Redeemable Preferred Stock, and Series B Redeemable Preferred Stock are
owned of record and beneficially by the persons and in the amounts set
forth in Section 2.4 of the Disclosure Schedule;
(d) the relative rights, powers, preferences, qualifications,
limitations, and restrictions in respect of each class of authorized
capital stock of the Company are as set forth in the
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Company's Amended and Restated Articles of Incorporation (the "Articles"),
a copy of which is attached as EXHIBIT C hereto, and all such rights,
powers, preferences, qualifications, limitations, and restrictions are
valid, binding, and enforceable and in accordance with all applicable laws;
(e) except as set forth in Section 2.4 of the Disclosure Schedule, (i)
no person owns of record or is known to the Company to own beneficially any
shares of any equity stock, (ii) no subscription, warrant, option,
convertible security, or other right (contingent or other) to purchase or
otherwise acquire equity securities of the Company is authorized or
outstanding, and (iii) there is no commitment by the Company to issue
shares, subscriptions, warrants, options, convertible securities, or other
such rights or to distribute to holders of any of its equity securities any
evidence of indebtedness or assets, except as contemplated by this
Agreement; and
(f) except as set forth in the Articles and in the Shareholders
Agreement dated June 2, 1993 (the "Shareholders Agreement"), the Company
has no obligation (contingent or other) to purchase, redeem, or otherwise
acquire any of its equity securities or any interests therein or to pay any
dividend or make any other distribution in respect thereof. Except as set
forth in the Shareholders Agreement, there are no voting trusts or
agreements, preemptive rights, or proxies relating to any securities of the
Company (whether or not the Company is a party thereto). All of the
outstanding securities of the Company were issued in compliance with all
applicable Federal and state securities laws.
SECTION 2.5. LITIGATION; COMPLIANCE WITH LAW. There is no (a) action, suit,
claim, proceeding, or investigation pending or, to the knowledge of the Company
or the Founders, threatened against or affecting the Company, at law or in
equity, or before or by any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, (b) arbitration proceeding relating to the Company pending under
collective bargaining agreements or otherwise, or (c) governmental inquiry
pending or, to the knowledge of the Company or the Founders, threatened against
or affecting the Company, (including without limitation any inquiry as to the
qualification of the Company to hold or receive any license or permit), and
there is no basis known to the Company or the Founders for any of the foregoing.
The Company is not subject to any order, writ, injunction, or decree of any
court or of any Federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign.
There is no action or suit by the Company pending or threatened against any
other person. The Company is in material compliance with all laws, rules,
regulations, and orders applicable to the Company's business, operations,
properties, assets, licenses, and other authorizations required to conduct its
business as conducted and as proposed to be conducted. There is no existing law,
rule, regulation, or order, and neither the Company nor any Founder, after due
inquiry, is aware of any proposed law, rule, regulation, or order, whether
Federal or state, which would prohibit or restrict the Company from, or
otherwise materially adversely affect the Company in, conducting its business in
any jurisdiction in which it is now conducting business or in which it proposes
to conduct business within the foreseeable future.
SECTION 2.6. PROPRIETARY INFORMATION OF THIRD PARTIES. After reasonable
investigation, neither the Company nor any Founder is aware that any significant
employee or consultant of the Company is obligated under any contract or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would conflict with the obligation of such employee
to use best efforts to promote the interests of the Company. To the knowledge of
the Company or the Founders, no third party has claimed or has reason to claim
that any person employed by or affiliated with the Company has (a) violated or
may be violating any of the terms or conditions of any employment,
non-competition, or non-disclosure agreement between such employee and such
third party, (b) disclosed or may be disclosing,
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or utilized or may be utilizing, any trade secret or proprietary information or
documentation of such third party, or (c) interfered or may be interfering in
the employment relationship between such third party and any of the Company's
present or former employees. No third party has requested information from the
Company which suggests that such a claim might be contemplated. To the knowledge
of the Company and the Founders, no person employed by or affiliated with the
Company has employed or proposes to employ any trade secret or any information
or documentation proprietary to any former employer, and to the knowledge of the
Company and the Founders, no person employed by or affiliated with the Company
has violated any confidential relationship which such person may have had with
any third party, in connection with the development, manufacture, or sale of any
product or proposed product, or the development or sale of any service or
proposed service of the Company, and the Company has no reason to believe there
will be any such employment or violation. To the knowledge of the Company and
the Founders, none of the execution or delivery of this Agreement, or the
carrying on of the business of the Company by its officers, employees, or
agents, or the conduct or proposed conduct of the business of the Company, will
conflict with or result in a breach of the terms, conditions, or provisions of
or constitute a default under any contract, covenant, or instrument under which
any such person is obligated.
SECTION 2.7. TITLE TO PROPERTIES
(a) The Memorandum contains a list of the material tracts of real
property owned by the Company ("Real Property") and a summary description
of the proposed use thereof and the number of buildable lots remaining in
each such tract. Except as reflected in title insurance binders for the
tracts of Real Property, the Company has good and marketable fee simple
title to the Real Property, free and clear of all mortgages, liens,
charges, encumbrances, and purchase options and other rights to or against
such property, other than such minor imperfections of title, liens,
easements, zoning restrictions, or encumbrances, if any, as are not
substantial in character, amount, or extent, and do not, severally or in
the aggregate, detract from the value or interfere with the present uses of
the Real Property, or otherwise impair the business and operations of the
Company, except for claims of subcontractors, laborers, and materialmen
which have performed work or provided services to such property and which
are unpaid within normal payment terms.
(b) All improvements on the Real Property conform in all material
respects to all applicable state and local laws, use restrictions, building
ordinances, and health and safety ordinances, and the property is zoned for
the various purposes for which the Real Property and improvements thereon
are presently being used.
(c) The Company has received no written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning, or subdivision changes, or other claims which would in
the aggregate materially and adversely affect the Real Property.
(d) There is no private restrictive covenant or governmental use
restriction (including zoning) known to the Company after reasonable
inquiry, on all or any portion of the Real Property, which prohibits the
current or contemplated use of the Real Property.
(e) All licenses, permits, and approvals required for the occupancy
and operation of the Real Property have been obtained and are in full force
and effect and the Company has received no notices of violations in
connection with such items.
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(f) The Company does not have in its possession any studies or reports
which indicate any defects in the design or construction of any of the
improvements on the Real Property.
(g) There are no past due taxes, assessments, or other charges
affecting the Real Property.
(h) The Company has good and marketable title to all personal
properties and assets owned by it, free and clear of all mortgages,
pledges, security interests, liens, charges, claims, restrictions and other
encumbrances, except liens for current taxes not yet due and payable,
listed on Section 2.7 of the Disclosure Schedule and minor imperfections of
title, if any, not material in nature or amount and not materially
detracting from the value or impairing the use of the personal property
subject thereto or impairing the operations or proposed operations of the
Company. The Company owns or leases all personal properties and assets
necessary to the operation of its business as now conducted. All of such
personal properties and assets are in good operating condition (normal wear
and tear excepted), are reasonably fit for the purposes for which such
personal properties and assets are presently used, are adequate and usable
for the continued operation of the business of the Company as the same is
presently conducted, and none of such personal properties and assets are in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs, the cost of which will not vary materially from historic patterns.
SECTION 2.8. LEASEHOLD INTERESTS. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal,
is a valid and subsisting agreement without any default of the Company
thereunder and, to the best of the Company's knowledge, without any default
thereunder of any other party thereto. No event has occurred and is continuing
which, with due notice or lapse of time or both, would constitute a default or
event of default by the Company under any such lease or agreement or, to the
best of the Company's knowledge, by any other party thereto. The Company's
possession of such property has not been disturbed and, to the best of the
Company's knowledge, no claim has been asserted against the Company adverse to
its rights in such leasehold interests.
SECTION 2.9. INSURANCE. All of the properties and business of the Company
of an insurable nature are insured to the extent usually insured by persons or
entities engaged in the same or similar businesses against loss or damage of the
kind customarily insured against by such persons or entities. The Company is not
in default regarding the provisions of any such policy. The Company has not,
since inception, self-insured against any risk ordinarily insured against by
similar businesses. The Company has not received any notice from any of its
insurers that any insurance premiums will be increased in the future or that any
insurance coverage presently in force will not be available in the future on
substantially the same terms as are now in effect. There are no outstanding
requirements or recommendations by any current insurer or underwriter with
respect to the Company which require or recommend changes in the conduct of the
business or require any repairs or other work to be done to the assets and
properties of the Company.
SECTION 2.10. TAXES. The Company has filed or obtained filing extensions
for all tax returns, Federal, state, county, and local, required to be filed by
it, and the Company has paid or established adequate reserves (in accordance
with generally accepted accounting principles) for the payment of all taxes
shown to be due by such returns as well as all other taxes, assessments, and
governmental charges which have become due or payable, including, without
limitation, all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors, and third parties. The Federal income tax returns
of the Company have never been audited by the Internal Revenue Service and no
state income or sales tax returns of the Company have been audited. No
deficiency assessment with respect to or proposed
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adjustment of the Company's Federal, state, county, or local taxes is pending
or, to the best of the Company's knowledge, threatened. There is no tax lien,
whether imposed by any Federal, state, county, or local taxing authority,
outstanding against the assets, properties, or business of the Company. Neither
the Company nor any of its shareholders has ever filed a consent pursuant to
Section 341(f) of the IRC (as hereinafter defined), relating to collapsible
corporations.
SECTION 2.11. OTHER AGREEMENTS. The Company is not a party to or otherwise
bound by any written or oral contract, obligation, agreement, commitment,
restriction, or the like which individually or in the aggregate could materially
adversely affect the business, prospects, financial condition, operations,
property, or affairs of the Company. The Company has provided to the Investors
access to copies of all obligations, agreements, and the like (referred to
individually as a "Contract" and collectively as the "Contracts"). Each of the
Contracts are valid, binding, and in full force and effect in all material
respects. The Company, and to the knowledge of the Company and the Founders,
each other party thereto has in all material respects performed all the
obligations required to be performed by it to date and has received no notice of
default and is not in default (with due notice or lapse of time or both) under
any of the Contracts. The Company has no present expectation or intention of not
fully performing all its obligations under each of the Contracts, and the
Company has no knowledge of any breach or anticipated breach by the other party
to any of the Contracts. There is no Contract that contains any contractual
requirement with which there is a reasonable likelihood that the Company or any
other party thereto will be unable to comply with the terms thereof. The
continuation, validity, and effectiveness of each Contract will in no way be
affected by the consummation of the transactions contemplated by this Agreement.
There exists no actual or, to the best knowledge of the Company, any threatened
termination, cancellation, or limitation of, or any amendment, modification, or
change to any Contract, which would have a material adverse effect on the
business or condition, financial or otherwise, of the Company.
SECTION 2.12. PATENTS, TRADEMARKS, ETC. The Company has sufficient title to
and ownership of, or can obtain on terms which will not adversely affect its
business, all franchises, permits, licenses, and other similar authority
necessary for the conduct of its business as now being conducted and as planned
to be conducted, and it is not in default under any of such franchises, permits,
licenses, and other similar authority. The Company possesses all patents, patent
rights, patent applications, trademarks, trademark applications, service marks,
service mark applications, trade names, copyrights, formulae, trade secrets, and
know how (collectively, "Intellectual Property") necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the knowledge of the Company and the Founders,
threatened to the effect that the operations of the Company infringe upon or
conflict with the asserted rights of any other person under any Intellectual
Property, and, to the knowledge of the Company and the Founders, there is no
basis for any such claim (whether or not pending or threatened). No claim is
pending or threatened to the effect that any such Intellectual Property owned or
licensed by the Company, or which the Company otherwise has the right to use, is
invalid or unenforceable by the Company, and, to the knowledge of the Company
and the Founders, there is no basis for any such claim (whether or not pending
or threatened). The Company is not aware of any third party which is infringing
or violating any of the Intellectual Property of the Company. To the knowledge
of the Company and the Founders, all technical information developed by and
belonging to the Company which has not been patented has been kept confidential.
The Company has not granted or assigned to any other person or entity any of the
Intellectual Property or the right to manufacture, have manufactured, assemble,
or sell the products or proposed products or to provide the services or proposed
services of the Company.
SECTION 2.13. LOANS AND ADVANCES. Except as described on Section 2.13 of
the Disclosure Schedule, the Company does not have any outstanding loans or
advances to any person and is not obligated to make any such loans or advances,
except, in each case, for advances to employees of the Company in
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respect of reimbursable business expenses anticipated to be incurred by them in
connection with their performance of services for the Company in the ordinary
course of business, consistent with past practice.
SECTION 2.14. ASSUMPTION, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER
PERSONS. The Company has not assumed, guaranteed, endorsed, or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to, or
otherwise invest in the debtor, or otherwise to assure the creditor against
loss), except for (a) guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business and (b) guaranties by
the Company of the debts of its subsidaries.
SECTION 2.15. GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Investors set forth in Article 3 hereof,
no registration, qualification, or filing with, or consent or approval of or
other action by, any Federal, state, or other governmental agency or
instrumentality is or will be necessary for the valid execution, delivery, and
performance by the Company of this Agreement, the offer, issuance, sale and
delivery of the Common Stock, the issuance and delivery of the Warrant Shares
upon exercise of the warrants or the consummation of any other transaction
contemplated hereby, other than (i) filings pursuant to state securities laws
(all of which filings have been made as of the date hereof) in connection with
the offer and sale of the Common Stock and (ii) the filing of a notice under
Regulation D under the Securities Act.
SECTION 2.16. FINANCIAL STATEMENTS.
The unaudited Consolidated Balance Sheet of the Company dated December 31,
1995, and the unaudited Consolidated Statement of Operations of the Company for
the six (6) months then ended, are attached as Section 2.16 of the Disclosure
Schedule. The Memorandum contains true, correct, and complete copies of the
audited Consolidated Balance Sheets of the Company dated June 30, 1995, June 30,
1994, and June 30, 1993, and audited Consolidated Statements of Operations,
Consolidated Statements of Changes in Shareholders' Equity, and Consolidated
Statements of Cash Flows for the fiscal years then ended, together with notes
thereto and the audit reports thereon of KPMG Peat Marwick thereon
(collectively, the "Financial Statements"). The Financial Statements (i) are in
accordance with the books and records of the Company, (ii) present fairly the
financial condition of the Company as of the respective dates indicated and the
results of operations for such periods except that interim period financial
statements are subject to normal year-end audit adjustments, which in the
aggregate will not materially or adversely change such interim financial
statements, (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved, and
(iv) reflect adequate reserves for all liabilities and losses. The books,
records, and accounts of the Company accurately and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of the
Company. The Company has not engaged in any transaction, maintained any bank
account, or used any of the funds of the Company, except for transactions, bank
accounts, and funds which have been and are reflected in the normally maintained
books and records of the Company.
SECTION 2.17. ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
material liabilities or obligations (secured or unsecured, whether accrued,
absolute, direct, indirect, contingent, or otherwise, and whether due or to
become due) that are required to be reflected in the Financial Statements by
generally accepted accounting principles which are not fully accrued or reserved
against in the Financial Statements, other than liabilities incurred in the
ordinary course of business subsequent to the date of the Financial Statements
which liabilities and obligations, individually or in the aggregate, are not
material to the financial condition or operating results of the Company.
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SECTION 2.18. ABSENCE OF CHANGES. Since the date of the most recent
Consolidated Balance Sheet included in the Financial Statements and except as
reflected therein or in the Memorandum, (a) there has been no material adverse
change in the condition (financial or otherwise), business, property, assets, or
liabilities of the Company other than changes in the ordinary course of
business, none of which, individually or in the aggregate, has been materially
adverse; (b) the Company has not entered into any material transaction which was
not in the ordinary course of its business; (c) there has been no damage to,
destruction of, or loss of physical property (whether or not covered by
insurance) materially adversely affecting the business or operations of the
Company; (d) except as contemplated by this Agreement, the Company has not
declared or paid any dividend on its stock, made any distribution on its stock,
redeemed, purchased, or otherwise acquired any of its stock, granted any options
to purchase shares of its stock; (e) the Company has not increased the
compensation of any of its officers, or the rate of pay of its employees as a
group, except as part of regular compensation increases in the ordinary course
of its business, to an amount in excess of the amounts set forth in the pro
forma previously delivered to the Investors; (f) there has been no resignation
or termination of employment of any key officer or employee of the Company, and
the Company does not know of the impending resignation or termination of
employment of any such officer or employee that if consummated, would have a
material adverse effect on the business of the Company; (g) there has been no
labor dispute involving the Company or its employees and none is pending or to
the knowledge of the Company and the Founders, threatened; (h) there has been no
change, except in the ordinary course of business, in the contingent obligations
of the Company by way of guaranty, endorsement, indemnity, warranty, or
otherwise; (i) there have been no loans made by the Company to its employees,
officers, directors, or partners other than travel advances and office advances
made in the ordinary course of business; and (j) to the knowledge of the Company
and the Founders, there has been no other event or condition of any kind which
might reasonably be expected to result in a material and adverse change in the
Company's condition (financial or otherwise) or business or to impair materially
the ability of the Company to conduct its business as it is currently being
conducted.
SECTION 2.19. EMPLOYEE BENEFIT PLANS.
(a) Section 2.19 of the Disclosure Schedule contains a true and
complete list of all the following agreements or plans which are presently
in effect or which have previously been in effect and which cover employees
of the Company ("Employees"):
(i) Any employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), and any
trust or other funding agency created thereunder, or under which the
Company, with respect to the Employees, has any outstanding, present,
or future obligation or liability, or under which any Employee or
former Employee has any present or future right to benefits which are
covered by ERISA; or
(ii) Any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus,
vacation, severance, disability, hospitalization, medical, life
insurance, or other employee benefit plan, program, policy, or
arrangement, whether written or unwritten, formal or informal, which
the Company, with respect to the Business, maintains or to which the
Company, with respect to the Business, has any outstanding, present,
or future obligations to contribute or make payments under, whether
voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements which are described in
subparagraph (i) or (ii) above and which are listed on Section 2.19 of the
Disclosure Schedule are hereinafter collectively referred
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to as the "Company Benefit Plans." The Company has delivered to the Investors
true and complete copies of all written plan documents and contracts evidencing
the Company Benefit Plans, as they may have been amended to the date hereof,
together with (A) all documents relating to any tax-qualified retirement plan
maintained by the Company, which documents are required to have been filed prior
to the date hereof with governmental authorities for each of the three most
recently completed plan years; (B) attorney's response to an auditor's request
for information for each of the three most recently completed plan years; and
(C) financial statements for each Company Benefit Plan for each of the three
most recently completed plan years.
(b) Except for the Company Benefit Plans, the Company does not now
maintain, nor has the Company at any time in the past been obligated to
make any payment or contribution to any pension, retirement,
profit-sharing, deferred compensation, stock purchase, stock option, bonus
or incentive plan, any medical, vision, dental, or other health plan, any
life insurance plan, vacation, severance, disability, or any other employee
benefit plan, program, policy, or arrangement, whether written, unwritten,
formal, or informal, including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of ERISA. The Company has not made,
entered into, or agreed to any commitment, whether written or oral, which
would obligate the Company to establish any employee benefit plan, or
continue any employment agreement or employment policy covering Employees.
With respect to all "welfare plans," as defined in Section 3(1) of ERISA,
covering Employees or former Employees, there are no obligations to
continue coverage or to make payments to or on behalf of persons who are or
may become retired or terminated Employees or their beneficiaries, other
than as may be required by Sections 601 through 608 of ERISA.
(c) The Company has complied with the continuation coverage
requirements of Section 1001 of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and ERISA Sections 601 through 608.
SECTION 2.20. DISCLOSURE.
(a) The Company has delivered to the Investors a true and correct copy
of (i) the Amended and Restated Articles of Incorporation of the Company,
and all amendments thereto and restatements thereof certified by the
appropriate state official; and (ii) the Bylaws of the Company and all
amendments thereto.
(b) The minute books of the Company made available to the Investors
prior to the date hereof, accurately reflect all corporate action taken by
the directors and shareholders of the Company or any committee of the Board
of Directors of the Company and contain true and accurate copies of or
originals of the respective minutes of all meetings or consent actions of
the directors, any committee of the Board of Directors, and the
shareholders.
(c) The stock record books of the Company, made available to the
Investors prior to the date hereof, accurately reflect the stock ownership
of the Company, and contain complete and accurate records with respect to
the transfer of all securities issued by the Company and each Investment
since inception.
SECTION 2.21. BROKERS. The Company has no contract, arrangement, or
understanding with any broker, finder, or similar agent with respect to the
transactions contemplated by this Agreement, nor has the Company authorized or
employed any person in connection with the offering or sale of the Common Stock,
or the Warrants or any security of the Company similar to the Common Stock or
the Warrants.
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SECTION 2.22. TRANSACTIONS WITH AFFILIATES. Except as permitted by Section
6.6 hereof, no Founder, director, officer, employee, or shareholder of the
Company, or member of the family of any such person, or any corporation,
partnership, trust, or other entity in which any such person, or any member of
the family of any such person, has a substantial interest or is an officer,
director, trustee, partner, or holder of more than 5% of the outstanding equity
interests thereof is a party to any transaction with the Company, including any
contract, agreement or other arrangement providing for the employment of,
furnishing of services by, rental of real or personal property from or otherwise
requiring payments to any such person or firm.
SECTION 2.23. EMPLOYEES.
(a) No officer or key Employee has advised the Company (orally or in
writing) that he or she intends to terminate employment with the Company.
The Company has complied in all material respects with all applicable laws
relating to the employment of labor, including provisions relating to
wages, hours, equal opportunity, worker health and safety, collective
bargaining, and the payment of Social Security and other taxes, and with
ERISA.
(b) The Company does not have any collective bargaining agreement
covering any of its Employees. There is no pending or, to the best
knowledge of the Company, threatened labor dispute involving the Company or
any of its Employees. To the best of the Company's knowledge, the Company
has amicable relations with its Employees.
SECTION 2.24. FOREIGN CORRUPT PRACTICES ACT. The Company has not made,
offered, or agreed to offer anything of value to any government official,
political party, or candidate for government office nor has it taken any action
which would cause the Company to be in violation of the Foreign Corrupt
Practices Act of 1977.
SECTION 2.25. ENVIRONMENTAL REGULATIONS.
(a) Except for failures which will not result in any material
liability or consequences to the Company, the Company has met, and
continues to meet, all applicable local, state, Federal, and national
environmental regulations.
(b) The Company has not been notified that it is potentially liable,
has not received any requests for information or other correspondence
concerning any site or facility, and is not otherwise aware that it is
considered potentially liable under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or any
similar state law.
(c) The Company has not entered into or received any consent decree,
compliance order, or administrative order relating to environmental
protection.
(d) The Company has neither entered into or received nor is the
Company in default under any judgment, order, writ, injunction, or decree
of any federal, state, or municipal court or other governmental authority
relating to environmental protection.
(e) The Company has all permits, licenses, approvals, consents, and
authorizations (the "Environmental Permits") relating to environmental or
health protection which are required under Federal, state, or local laws,
rules, and regulations and is in compliance with all the Environmental
Permits (including any information provided on the applications therefor);
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(f) There are no actions, suits, claims, arbitration proceedings, or
complaints pending or, to the Company's knowledge, threatened or under
consideration by any governmental authority, municipality, community,
citizen, or other entity against the Company relating to environmental
protection, nor does the Company have reason to believe that any such
actions, suits, claims, or complaints will be brought against it.
(g) No disposal, releases, burial, or placement of hazardous or toxic
substances, pollutants, contaminants, petroleum, gas products, or
asbestos-containing materials (as any of such terms may be defined under
Federal, state, or local law) (hereinafter collectively referred to as
"Hazardous Materials") has occurred on, in, at, or about any of the
Company's properties or facilities or any other facility or site to which
Hazardous Materials from the Company may have been taken at any time in the
past.
(h) To the Company's knowledge, there has been no disposal, releases,
burial, or placement of Hazardous Materials on any property not owned or
operated in the present or the past by the Company which may result or has
resulted in contamination of or beneath any of the Company's properties or
facilities.
(i) There are no above-ground and underground storage tanks on the
Real Property.
(j) No lien has arisen on the Company's properties or facilities under
Federal, state, or local laws, rules, or regulations as they relate to
environmental protection.
(k) No audit or investigation has been conducted as to environmental
matters at any of the Company's properties by any governmental agency.
SECTION 2.26. DISCLOSURE. Neither this Agreement nor any Schedule or
Exhibit hereto, contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading. None of the statements, documents, certificates or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not misleading.
The Memorandum was prepared in good faith by the Company to provide an overview
of the business of the Company and, to the best knowledge of Founders, does not
contain an untrue statement of a material fact.
ARTICLE 3. REPRESENTATION AND WARRANTIES OF THE INVESTORS
Each Investor represents and warrants to the Company as to such Investor
only, that:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act, as indicated on the Investor Certification of
such Investor, annexed hereto as SCHEDULE 3;
(b) it has sufficient knowledge and experience to evaluate the risks
and merits of its investment in the Company and it is able financially to
bear the risks thereof;
(c) it has had an opportunity to ask questions of and receive answers
from and to discuss the Company's business, management, and financial
affairs with the Company's management;
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(d) the Common Stock is being acquired for its own account for the
purpose of investment and not with a view to or for sale in connection with
any distribution thereof;
(e) it was not offered nor made aware of the Company's interest in
issuing the Common Stock by any means of public advertisement or
solicitation;
(f) in connection with such Investor's purchase of the Common Stock,
it has been solely responsible for its own (i) due diligence investigation
of the Company and (ii) investment decision, and has not engaged or relied
upon any agent or "purchaser representative" to review or analyze the
Company's business and affairs or advise such Investor with respect to the
merits of the investment;
(g) it has full power and authority to execute, deliver, and perform
each of this Agreement and to purchase the Common Stock ; and, that this
Agreement will constitute the legal, valid, and binding obligation of the
Investor, enforceable against it in accordance with their respective terms;
and
(h) in the event that the Investor proposes to sell the Common Stock
or the Warrants pursuant to Rule 144A under the Securities Act, it will (A)
take reasonable steps to obtain the information required by such Rule to
establish a reasonable belief that the prospective purchaser is a
"qualified institutional buyer" as such term is defined in Rule 144A and
(B) advise the prospective purchaser that the Investor is relying on the
exemption from the registration provisions of the Securities Act available
pursuant to Rule 144A.
ARTICLE 4. CONDITIONS PRECEDENT TO THE PURCHASE OF THE COMMON STOCK AND
WARRANTS BY INVESTORS
In connection with the purchase of the Common Stock and Warrants at the
Closing, the Investors shall be entitled to receive the following certificates,
opinions, and documents or evidence reasonably satisfactory to them as to the
following, each of which requirements may be waived by the Investors. The
Company agrees to use its best efforts to cause each of such requirements to be
satisfied:
(a) The Investors shall have received from Balboni Ashley & Schoenberg
LLC, an opinion dated the Closing Date, in substantially the form attached
hereto as EXHIBIT B.
(b) The representations and warranties contained in Article 2 shall be
true, complete and correct.
(c) The Company shall have performed and complied with all covenants
and agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date.
(d) The Company shall have obtained any and all consents, permits and
waivers and made all filings necessary or appropriate for the consummation
of the transactions contemplated hereby.
(e) All corporate and other proceedings to be taken by the Company in
connection with the transactions contemplated hereby and all documents
relating to such transactions shall be satisfactory in form and substance
to the Investors and its counsel, and the Investors and its counsel shall
have received all such counterpart originals or certified or other copies
of such
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documents as they reasonably may request. The Company shall have delivered
to the Investors a certificate executed by the President and Treasurer of
the Company certifying as to the fulfillment of the conditions specified in
subsections (b), (c), (d), and (i) of this Article 4.
(f) The Investors shall have received copies of the following
documents:
(i) (A) the Articles in the form of EXHIBIT C hereto, bearing
evidence of filing by the Department of State of the State of Florida,
and (B) a certificate of said Department of State, dated as of a
recent date as to the due incorporation and good standing of the
Company;
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company dated the Closing Date and certifying: (A) that attached
thereto is a true and complete copy of the Bylaws of the Company as in
effect on the date of such certification; (B) that attached thereto is
a true and complete copy of all resolutions adopted by the Board of
Directors or the shareholders of the Company authorizing the
execution, delivery, and performance of this Agreement, the Warrants,
the issuance, sale, and delivery of the Common Stock, and that all
such resolutions are in full force and effect and are all the
resolutions adopted in connection with the foregoing agreements and
the transactions contemplated thereby; (C) that the Articles have not
been amended since the date of the last amendment referred to in the
certificate delivered pursuant to clause (i)(B) above; and (D) to the
incumbency and specimen signature of each officer of the Company
executing this Agreement, the Warrants, the stock certificates
representing the Common Stock, and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of
the Company as to the incumbency and signature of the officer signing
the certificate referred to in this clause (ii); and
(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as the
Investors or its counsel reasonably may request.
(g) All shareholders of the Company having any preemptive, first
refusal, or other rights with respect to the issuance of the Common Stock
or the Warrants shall have irrevocably waived the same in writing and
copies of such waivers shall have been delivered to Investors' counsel.
ARTICLE 5. CONDITIONS PRECEDENT
The obligation of the Company to issue and sell the Common Stock to the
Investors on the Closing Date is, at its option, subject to the satisfaction, on
or before the Closing Date, of the following conditions:
(a) All representations and warranties of the Investors contained in
Article 3 hereof shall be true and correct on the Closing Date with the
same effect as though such representations and warranties had been made on
and as of such date.
(b) All corporate and other proceedings to be taken by the Investors
in connection with the transactions contemplated hereby, and all documents
incidental thereto, shall be satisfactory in form and substance to the
Company and its counsel.
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(c) The Investors shall have delivered to the Company the full
purchase price for the Common Stock to be purchased hereunder.
ARTICLE 6. COVENANTS OF THE COMPANY
The Company covenants and agrees with the Investors that, unless waived in
accordance with Section 7.9 hereof, so long as any of the Common Stock is
outstanding:
SECTION 6.1. FINANCIAL STATEMENTS, REPORTS, ETC. The Company shall furnish
to the Investors:
(a) within one hundred twenty (120) days after the end of each fiscal
year of the Company, an audited balance sheet of the Company, as of the end
of such fiscal year and the related statements of income, shareholders'
equity, and changes in cash flows for such fiscal year, prepared in
accordance with generally accepted accounting principles and certified by a
firm of independent public accountants of recognized national standing
selected by the Board of Directors of the Company;
(b) within sixty (60) days after the end of each fiscal quarter (other
than the last quarter in each fiscal year) a balance sheet of the Company,
and the related statements of income, shareholders' equity, and changes in
cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company, such balance sheet to be as of the end of such quarter and such
statements of income, shareholders' equity and changes in cash flows to be
for such quarter and for the period from the beginning of the fiscal year
to the end of such quarter, in each case with comparative statements for
the prior fiscal year;
(c) at the time of delivery of each annual financial statement
pursuant to Section 6.1(a) hereof, a certificate executed by the Chief
Financial Officer of the Company stating that such officer has caused this
Agreement, the Articles, and the Warrants to be reviewed and has no
knowledge of any default by the Company in the performance or observance of
any of the provisions of this Agreement, the Articles or the Warrants, if
such officer has such knowledge, specifying such default and the nature
thereof;
(d) at the time of delivery of each quarterly statement pursuant to
Section 6.1(b) hereof, a management narrative report explaining all
significant variances from forecasts and all significant current
developments in staffing, marketing, sales, and operations;
(e) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property, or affairs
of the Company as the Investors reasonably may request.
SECTION 6.2. CORPORATE EXISTENCE. The Company shall maintain and cause any
Investment in which the Company owns a controlling interest to maintain their
respective separate corporate existences, rights, and franchises in full force
and effect.
SECTION 6.3. PROPERTIES, BUSINESS, INSURANCE. The Company shall maintain
and cause any subsidiary to maintain as to their respective properties and
businesses, with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
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customary for companies similarly situated which insurance shall be deemed by
the Company to be sufficient.
SECTION 6.4. INSPECTION, CONSULTATION, AND ADVICE. The Company shall permit
and cause any subsidiary to permit any of the Investors and such persons as the
Investors may designate, at the expense of the Company once per year, and if
more often than once per calendar year, with the additional visits at such
Investor's expense, to visit and inspect any of the properties of the Company
and any Investment, examine their books and take copies and extracts therefrom,
discuss the affairs, finances, and accounts of the Company with their officers,
employees, and public accountants and the Company hereby authorizes said
accountants to discuss with such Investors and such designees such affairs,
finances, and accounts), and consult with and advise the management of the
Company as to their affairs, finances, and accounts, all at reasonable times and
upon reasonable notice.
SECTION 6.5. RESTRICTIVE AGREEMENTS PROHIBITED. The Company shall not
become a party to any agreement which by its terms restricts the Company's
performance of this Agreement, the Articles, or the Warrants.
SECTION 6.6. TRANSACTIONS WITH AFFILIATES. Except for (a) transactions
contemplated by this Agreement, (b) transactions with the affiliated entities
listed in Section 6.6 of the Disclosure Schedule, provided that the terms of
such transactions are no less favorable to the Company than the terms available
from third parties on an arm's length basis from non-affiliated third parties,
(c) loans by shareholders up to $1,000,000 outstanding at any time, provided
that the security for such loans is limited to the real estate on which the
specific construction activities financed are located and provided further that
the interest rate and terms are no less favorable than the rate and terms
available on an arm's length basis from unaffiliated third parties, or (d) as
otherwise approved by the Board of Directors, the Company shall not enter into
any transaction with any director, officer, employee, or holder or more than 5%
of the outstanding capital stock of any class or series of capital stock of the
Company, member of the family of any such person, or any corporation,
partnership, trust, or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner, or holder
of more than 5% of the outstanding capital stock thereof, except for
transactions on customary terms related to such person's employment. All
transactions with affiliates shall be reported on a quarterly basis in the
financial reports required by Section 6.1(b) hereof, including, with respect to
each transaction, the affiliate involved, the amount paid to the affiliate in
such quarter, and amounts remaining to be paid to the affiliate by the Company.
SECTION 6.7. USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Common Stock for general working capital purposes.
SECTION 6.8. BOARD OF DIRECTORS MEETINGS. The Company shall use its best
efforts to ensure that meetings of the Board of Directors of the Company are
held at least four (4) times each year and at least once each quarter.
SECTION 6.9. BYLAWS. The Company shall at all times cause its Bylaws to
provide that, (a) unless otherwise required by the laws of the State of Florida,
(i) any two (2) directors and (ii) any holder or holders of at least 66% of the
outstanding shares of Common Stock or 25% of the outstanding Common Stock, shall
have the right to call a meeting of the Board of Directors or shareholders and
(b) the number of directors fixed in accordance therewith shall in no event
conflict with any of the terms or provisions of the Articles. The Company shall
at all times maintain provisions in its Bylaws or Articles indemnifying all
directors against liability to the maximum extent permitted under the laws of
the State of Florida.
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SECTION 6.10. MAINTENANCE OF OWNERSHIP OF INVESTMENTS. The Company shall
not sell or otherwise transfer any shares of capital stock of any Investment,
except to the Company or another Investment, or permit any Investment in which
the Company owns a controlling interest, to issue, sell or otherwise transfer
any shares of its capital stock or the capital stock of any Investment except to
the Company or another Investment.
SECTION 6.11. DISTRIBUTIONS BY INVESTMENTS. The Company shall not permit
any Investment in which the Company owns a controlling interest to purchase or
set aside any sums for the purchase of, or pay any dividend, or make any
distribution on, any shares of its stock, except for dividends or other
distributions payable to the Company or another Investment in which the Company
owns a controlling interest.
SECTION 6.12. COMPLIANCE WITH LAWS. The Company shall comply with all
applicable laws, rules, regulations, and orders, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise.
SECTION 6.13. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles, consistently
applied, reflecting all financial transactions of the Company and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts, and other purposes in connection with its
business shall be made.
SECTION 6.14. EMPLOYEE STOCK PLANS. As long as the Investors shall continue
to own any of the Common Stock, Warrants, or Warrant Shares, the Company shall
sell shares of or grant options to purchase shares of its capital stock to
Employees, officers, and directors of and consultants to the Company only
pursuant to stock option plans or stock purchase plans which have been adopted
and approved by the Company's Board of Directors and only so long as the Company
has an option to repurchase such shares upon the termination of employment with
the Company of such Employees, officers, directors, and consultants, and the
total number of shares of Common Stock as to which the Company may make such
sales or grant such options shall not exceed 10,000 shares, such number subject
to equitable adjustment for reorganizations, stock splits, stock dividends, and
like events (including shares issued or sold pursuant to (i) any such stock
option plan even though the shares were acquired upon the exercise of stock
options which were granted prior to the date hereof, and (ii) any such stock
purchase plans even though the shares acquired thereunder were purchased prior
to the date hereof). Under no circumstances shall the total number of shares of
the Company's Common Stock issued under any such stock purchase plan, plus any
shares issued or subject to issuance under any such stock option plan, exceed
10,000 shares (such number subject to equitable adjustment for reorganizations,
stock splits, stock dividends, and like events) at any time.
SECTION 6.15. PIGGYBACK REGISTRATION RIGHTS. If the Company at any time
proposes to register any of its securities under the Securities Act for sale to
the public, whether for its own account or for the account of other security
holders or both (except with respect to registration statements on Forms S-4 or
S-8 or another form not available for registering the Common Stock and shares
(if any) issuable under the warrants (the "Registrable Securities") for sale to
the public), each such time it will give written notice to Investors of its
intention so to do. Upon the written request of any Investor received by the
Company within 10 days after the giving of any such notice by the Company, to
register such number of Registrable Securities held by such Investor specified
in such written request, the Company will cause the Registrable Securities as to
which registration shall have been so requested to be included in the securities
to be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the
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sale or other disposition by such Investor (in accordance with its written
request) of such Registrable Securities so registered. In the event that any
registration pursuant to this Section 6.15 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of Registrable
Securities to be included in such an underwriting may be reduced if and to the
extent that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company
therein. In the event such a reduction is necessary, the reduction shall be
borne first by holders of Common Stock who are not Investors, and if a further
reduction is necessary in the judgment of the managing underwriter, then, all
Investors proposing to sell Registrable Securities and holders of warrants
issued in conjunction with the issuance of the Series A Redeemable Common Stock
and the Series B Redeemable Preferred Stock in the offering shall bear the
reduction on a pro-rata basis, based on the number of Registrable Securities
each Investor proposed to offer for sale in the Offering, or an Investor holding
a majority of the Registrable Securities may elect to withdraw from such
registration all Registrable Securities held by Investors as to which
registration was requested. Notwithstanding the foregoing provisions, the
Company may for any reason and without the consent of Investors withdraw any
registration statement referred to in this Section 6.15 without thereby
incurring any liability to any Investor.
SECTION 6.16. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 6.15 hereof to use its best efforts to
effect the registration of any Registrable Securities under the Securities Act,
the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which shall be on Form S-1, Form S-2, any successor forms thereto, or
other form of general applicability satisfactory to the managing
underwriter selected as herein provided) with respect to such securities
and use its best efforts to cause such registration statement to become and
remain effective for the period of the distribution contemplated thereby
(determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period of distribution and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement in accordance
with the intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each Investor and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or other disposition of the
Registrable Securities covered by such registration statement;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the Shareholders, or, in the case
of an underwritten public offering, the managing underwriter reasonably
shall request, PROVIDED, HOWEVER, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent
to general service of process in any such jurisdiction;
(e) use its best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange or NASDAQ on which
the Common Stock of the Company is then listed or quoted;
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(f) notify each selling Investor at any time when a prospectus
relating to Registrable Securities is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such
Shareholder, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
(g) notify the selling Investors immediately, and confirm the notice
in writing, (1) when the registration statement becomes effective, (2) of
the issuance by the Commission of any stop order or of the initiation, or
the threatening, of any proceedings for that purpose, (3) of the receipt by
the Company of any notification with respect to the suspension of
qualification of the Registrable Securities for sale in any jurisdiction or
of the initiation, or the threatening, of any proceedings for that purpose,
and (4) of the receipt of any comments, or requests for additional
information, from the Commission or any state regulatory authority. If the
Commission or any state regulatory authority shall enter such a stop order
or order suspending qualification at any time, the Company will promptly
use its best reasonable efforts to obtain the lifting of such order; and
(h) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders as soon as reasonably practicable, but not later than 15 months
after the effective date of the registration statement, an earnings
statement covering a period of at least 12 months beginning after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
For purposes hereof, the period of distribution of Registrable Securities
in a firm commitment underwritten public offering shall be deemed to extend
until each underwriter has completed the distribution of all securities
purchased by it, and the period of distribution of Registrable Securities in any
other registration shall be deemed to extend until the earlier of the sale of
all Registrable Securities covered thereby or 180 days after the effective date
thereof.
In connection with each registration hereunder, each Shareholder will
furnish to the Company in writing such information with respect to it as a
stockholder as reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws.
In connection with each registration pursuant to Section 6.15 hereof
covering an underwritten public offering, the Company and each Investor agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
SECTION 6.17. EXPENSES. All reasonable expenses incurred by the Company in
complying with Section 6.15 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance, and the reasonable fees and disbursements of one counsel for the
sellers of Registrable
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Securities, but excluding any Selling Expenses, are called "Registration
Expenses." All underwriting discounts and selling commissions applicable to the
sale of Registrable Securities are called "Selling Expenses."
(a) The Company shall pay all Registration Expenses attributable to
the shares of Common Stock and Registrable Securities of Investors included
in the Registration in connection with each registration statement under
Section 6.15 hereof.
(b) All Selling Expenses in connection with each registration
statement under Section 6.15 hereof shall be borne by the Investor and any
other selling stockholder in proportion to the number of shares sold by
Investor, or by such other selling stockholders.
ARTICLE 7. MISCELLANEOUS
SECTION 7.1. SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations, and warranties made herein, or any certificate or instrument
delivered to the Investors pursuant to or in connection with this Agreement
shall survive the execution and delivery of this Agreement, and the closing of
the transactions contemplated hereby and thereby.
SECTION 7.2. BROKERAGE. Each party hereto will indemnify and hold harmless
the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements, or understandings made or
claimed to have been made by such party with any third party.
SECTION 7.3. PARTIES IN INTEREST. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants, and agreements
benefiting the Investors shall inure to the benefit of any and all subsequent
holders from time to time of the Common Stock or the Warrants. Notwithstanding
the foregoing, the right to purchase the Common Stock hereunder pursuant to
Section 1.1 may not be sold, transferred, or otherwise assigned except to an
affiliate of the Investors, a successor to substantially all the business and
assets of the Investors.
SECTION 7.4. NOTICES. All notices, requests, consents, and other
communications required or permitted hereunder shall be in writing and shall be
effective when delivered in person or by a courier service, postage prepaid,
addressed as follows:
(a) if to the Company:
Transeastern Properties of South Florida, Inc.
3300 University Drive
Coral Springs, FL 33065,
Attention: Arthur J. Falcone, President
with a copy (which shall not constitute notice) to:
John T. Kinsey, P.A.
2300 Corporate Boulevard
Two Corporate Court, Suite 112
-20-
<PAGE>
Boca Raton, Florida 33431,
Attention: John Kinsey, Esq.
and a copy to:
Balboni Ashley & Schoenberg LLC
990 One Live Oak Center
3475 Lenox Road, NE
Atlanta, Georgia 30326,
Attention: Gerardo M. Balboni II, Esq.
(b) if to the Investors: At the address of such Investor on SCHEDULE 1
hereto.
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 7.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, irrespective of
the choice of law provisions thereof.
SECTION 7.6. ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits hereto, and the other documents delivered pursuant hereto constitute
the full and entire agreement of the parties with respect to the subject matter
hereof and thereof. All Schedules and Exhibits hereto are hereby incorporated
herein by reference.
SECTION 7.7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 7.8. AMENDMENTS. This Agreement may not be amended or modified, and
no provisions hereof may be waived, without the written consent of the Company
and the holders of at least two-thirds of the outstanding shares of Common Stock
and Warrant Shares.
SECTION 7.9. SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority to
the extent possible, it shall be modified in such manner as to be valid, legal,
and enforceable but so as to most nearly retain the intent of the parties and,
if such modification is not possible, such provision shall be severed from this
Agreement, and in either case, the validity and enforceability of any other
provision and of the entire Agreement shall not be affected thereby.
SECTION 7.10. TITLES AND SUBTITLES. The title and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
SECTION 7.11. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
-21-
<PAGE>
(a) "affiliate" shall mean, with respect to any person, any person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such other person.
(b) "person" shall mean an individual, corporation, trust,
partnership, joint venture, limited liability company, unincorporated
organization, government agency, or any agency or political subdivision
thereof, or other entity.
IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement as of the day and year first above written.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA,
INC.
By: _____________________________
Arthur J. Falcone, President
Attest:
- -----------------------------
Philip Cucci, Jr., Secretary
INVESTORS:
------------------------------
Anthony Ciabattoni
------------------------------
John Cucci
------------------------------
Robert J. Falcone, Trustee
------------------------------
Bill Mitchell
-22-
<PAGE>
SCHEDULE 1
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
<TABLE>
<CAPTION>
COMMON STOCK AGGREGATE
INVESTOR NAME AND ADDRESS PURCHASED PURCHASE PRICE DATE PURCHASED
------------------------- --------- -------------- --------------
<S> <C> <C> <C>
Anthony Ciabattoni
18 Lagunita
Laguna Beach, CA 92651
(714) 494-1060
Taxpayer ID No.: ###-##-#### 36,606 $2,800,000.00 April 15, 1996
John Cucci
18 Leonard Street
Farmingdale, NY 11735 654 $50,000.00 May 7, 1996
Bill Mitchell
7821 Sequoia Lane
Parkland, FL 33067 654 $50,000.00 May 3, 1996
Robert J. Falcone, Trustee of the
Robert J. Falcone Rev. Living Trust
9/1/93
35 Riverview Terrace
Smithtown, NY 11287 1,309 $100,000.00 __________
TOTALS 39,223 $3,000,000.00
</TABLE>
<PAGE>
SCHEDULE 2
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
<PAGE>
SCHEDULE 2
TO
COMMON STOCK PURCHASE AGREEMENT
DISCLOSURE SCHEDULE
SECTION 2.1 (B) COMPANIES WHOSE SECURITIES ARE HELD BY TRANSEASTERN
Transeastern Wellington Properties, Inc.
Transeastern Pembroke Villages, Inc.
Transeastern Hollywood Apartments, Inc.
Transeastern Plantation Apartments, Inc.
Transeastern Abeerdeen Properties
Transeastern Finance, Inc.
Transeastern Properties at the Cove, Inc.
Transeastern Pembroke Properties, Inc.
100% of the common stock of the foregoing companies is owned by
Transeastern Properties of South Florida, Inc.
SECTION 2.4 CURRENT OWNERS OF TRANSEASTERN COMMON STOCK, PREFERRED STOCK
AND WARRANTS
See Attachment 1 hereto.
SECTION 2.7 All PERSONAL property/equipment owned by Transeastern.
Bank of North America holds a lien on corporate office
furniture.
SECTION 2.13 Loans by Transeastern to anyone.
None.
SECTION 2.16 Unaudited balance sheet date ended 12/31/95.
See Attachment 2 hereto.
<PAGE>
SECTION 2.18(F) MATERIAL CHANGES
Since the date of the most recent Consolidated Balance Sheet,
Mr. Larry Nicholson, Vice President of Construction, has
resigned.
SECTION 2.19 EMPLOYEE BENEFIT PLANS
The Company provides group hospitalization coverage for all of
its full-time employees after four months service. The limits
of such coverage are $1,000,000 per covered person. The Company
pays 75% of the cost of such coverage for all employees, with
the remaining 25% of the cost for employee coverage and 100% of
the cost of any dependent coverage being paid by such
employees. Such coverage is provided by Blue Cross/Blue Shield.
The Company provides one week paid vacation to employees after
one year; 2 weeks after 2 years; and 3 weeks for salaried
employees after 3 years. There is no limit on the amount of
vacations which officers are entitled to take.
The Company provides life insurance coverage on the lives of
Arthur J. Falcone, Edward W. Falcone and Philip Cucci, Jr. The
beneficiaries of such policies are the Company and the wives of
such respective officers.
The Company has no severance policy.
SECTION 2.22 TRANSACTIONS WITH AFFILIATES
The Company leases office space from University Financial
Plaza Associates, Ltd. ("University"), a limited partnership
formed in June, 1994 for the purpose of acquiring the office
building located at 3300 University Drive, Coral Springs,
Florida. Such lease pre-dates the formation of University and
was negotiated with its predecessor in title, Metropolitan Life
Insurance Company. Arthur J. Falcone, Edward W. Falcone and
Philip Cucci, Jr. own 100% of the stock of the corporate
general partner of University, three Class A limited partner
units and 1.59 Class B limited partner units in University.
The Company also has various loans from officers and affiliates
as disclosed in the Financial Statements attached as Exhibit
"A" to the Private Placement Memorandum.
SECTION 6.6 AFFILIATES
Transeastern Construction, Inc.
<PAGE>
<TABLE>
<CAPTION>
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
CONSOLIDATED PROFIT AND LOSS STATEMENT
FOR ALL LOCATIONS
FOR ALL DEPARTMENTS
FOR THE PERIOD JULY 1, 1995 TO DECEMBER 31, 1995
CURRENT PERIOD YEAR TO DATE CURRENT PERIOD YTD
AMOUNT AMOUNT BUDGET BUDGET
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenue
Housing Revenue-Base Price $17,776,543.19 $17,776,543.19 $19,506,000.00 $19,506,000.00
Housing Revenue-Option/Upgrade 499,321.99 499,321.99 .00 .00
Revenue-Lot Sales 385,500.00 385,500.00 .00 .00
Revenue-Land Sales 14,707,000.00 14,707,000.00 14,662,000.00 14,662,000.00
------------- ------------- ------------ -------------
Total Revenue $33,368,365.18 $33,368,365.18 $34,168,000.00 $34,168,000.00
------------- ------------- ------------ -------------
Cost of Sales
Cos-Inv & CC (Housing) $15,561,140.55 $15,561,140.55 $16,644,000.00 $16,644,000.00
Cos-Commissions (Housing) 724,313.41 724,313.41 368,100.00 368,100.00
Cos-Closed Job Exp (Housing) (31,338.82) (31,338.82) .00 .00
Cos-Inv & CC (Lot Sales) 236,546.41 236,546.41 .00 .00
Cos-Inv & CC (Land Sales) 12,983,976.64 12,983,976.64 13,148,000.00 13,148,000.00
------------- ------------- ------------- -------------
Total Cost of Sales $29,474,638.19 $29,474,638.19 $30,160,100.00 $30,160,100.00
------------- ------------- ------------- -------------
Gross Margin $ 3,893,726.99 $ 3,893,726.99 $ 4,007,900.00 $ 4,007,900.00
Equity Income (Loss) from JV 326,004.00 326,004.00 797,000.00 797,000.00
------------- ------------- ------------- -------------
Total Equity Income (Loss) $ 326,004.00 $ 326,004.00 $ 797,000.00 $ 797,000.00
------------- ------------- ------------- -------------
Other Income
Other Income-Rental $ 24,054.60 $ 24,054.60 .00 .00
Other Income-Management Fees 63,321.93 63,321.93 .00 .00
Other Income-Club Membership 136,020.00 136,020.00 .00 .00
Other Income-Int. & Misc. 182,938.08 182,938.08 45,000.00 45,000.00
------------- ------------- ------------- -------------
Total Other Income $ 406,334.61 $ 406,334.61 $ 45,000.00 $ 45,000.00
------------- ------------- ------------- -------------
Selling Expenses
Salaries & Wages-Sales $ 178,422.82 $ 178,422.82 $ 178,425.00 $ 178,425.00
Employee Taxes/Benefits-Sale 19,416.84 19,416.84 19,531.00 19,531.00
Advertising 631,068.32 631,068.32 620,827.00 620,827.00
Promotional Expenses 35,905.41 35,905.41 35,910.00 35,910.00
Model Expense 219,520.96 219,520.96 210,935.00 210,935.00
Sales Office Expense 78,591.77 78,591.77 80,331.00 80,331.00
Inventory Home Costs 1,281.72 1,281.72 1,357.00 1,357.00
Misc. Sales Expense 8,378.53 8,378.53 8,368.00 8,368.00
Total Selling Expenses $ 1,172,586.37 $ 1,172,586.37 $ 1,155,684.00 $ 1,155,684.00
============= ============= ============= ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
CONSOLIDATED PROFIT AND LOSS STATEMENT
FOR ALL LOCATIONS
FOR ALL DEPARTMENTS
FOR THE PERIOD JULY 1, 1995 TO DECEMBER 31, 1995
CURRENT PERIOD YEAR TO DATE CURRENT PERIOD YTD
AMOUNT AMOUNT BUDGET BUDGET
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Construction Expenses
Salaries & Wages-Field $ 48,393.01 $ 48,393.01 $ 50,000.00 $ 50,000.00
Employee Taxes/Benefits-Field 1,183.71 1,183.71 .00 .00
Warranty Expense 57,159.15 57,159.15 142,350.00 142,350.00
CIP Inventory Costs 5,194.47 5,194.47 5,195.00 5,195.00
Construction Office Expense 51,150,41 51,150,41 51,640.00 51,640.00
Community Maintenance 15,849.46 15,849.46 11,735.00 11,735.00
Other Misc. Field Expense 3,377.96 3,377.96 3,935.00 3,935.00
------------ ------------ ------------ ------------
Total construction Expense $ 182,388.17 $ 182,388.17 $ 264,855.00 $ 264,855.00
------------ ------------ ------------ ------------
General & Admin. Expenses
Salaries & Wages $ 767,998.21 $ 767,998.21 $ 702,969.00 $ 702,969.00
Employee Taxes/Benefits 112,900.87 112,900.87 116,780.00 116,780.00
Professional Fees 70,869.06 70,869.06 70,869.00 70,869.00
Auto Expense 58,291.44 58,291.44 58,291.00 58,291.00
Corporate Office Rent Expense 25,043.12 25,043.12 30,084.00 30,084.00
Corporate Office Expense 130,501.27 130,501.27 129,644.00 129,644.00
Repairs & Maintenance 5,013.56 5,013.56 5,014.00 5,014.00
Insurance 54,269.52 54,269.52 40,258.00 40,258.00
Depreciation 103,635.71 103,635.71 103,637.00 103,637.00
Travel & Entertainment 39,579.75 39,579.75 39,579.00 39,579.00
Property Taxes 501.06 501.06 25,501.00 25,501.00
Misc. Gen. & Admin. 1,120.30 1,120.30 1,821.00 1,821.00
------------ ------------ ------------ ------------
Total General & Admin. Exp. $1,369,723.87 $1,369,723.87 $1,324,447.00 $1,324,447.00
------------ ------------ ------------ ------------
Interest Expense $ 137,040.40 $ 137,040.40 .00 .00
------------ ------------ ------------ ------------
Net Income Before Income Taxes $1,764,406.79 $1,764,406.79 $2,104,914.00 $2,104,914.00
------------ ------------ ------------ ------------
Net Income $1,764,406.79 $1,764,406.79 $2,104,914.00 $2,104,914.00
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
04/01/95
% SHARES START OF END OF CASH PD TOTAL
OWNED AMOUNT DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL CASH
01/01/95 INVESTED PERIOD PERIOD AMOUNT SHARES CERT # SHARES PAY'T.
-------- -------- -------- -------- -------- ------ ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Chris Allick 418 41,800 01/02/95 04/01/95 1,233.08 12 95 6 23.08 37.74
Andrew Whitaker 118 11,800 01/02/95 04/01/95 345.27 3 95 7 45.27 89.33
David Eisner 237 23,700 01/02/95 04/01/95 693.47 6 95 8 93.47 184.57
David Losito 118 11,800 01/02/95 04/01/95 345.27 3 95 9 45.27 89.33
Handler Family Trust 1,204 120,400 01/02/95 04/01/95 3,522.94 35 95 10 22.94 120.33
----- ------- -------- --
2,095 209,500 6,130.03 59
===== ======= ======== ==
</TABLE>
<TABLE>
<CAPTION>
07/01/95
% SHARES START OF END OF CASH PD TOTAL
OWNED AMOUNT DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL CASH
04/01/95 INVESTED PERIOD PERIOD AMOUNT SHARES CERT # SHARES PAY'T.
-------- -------- -------- -------- -------- ------ ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Chris Allick 430 43,000 04/01/95 07/01/95 1,286.47 12 95 11 86.47
Andrew Whitaker 121 12,100 04/01/95 07/01/95 362.01 3 95 12 62.01
David Eisner 243 24,300 04/01/95 07/01/95 727.00 7 95 13 27.00
David Losito 121 12,100 04/01/95 07/01/95 362.01 3 95 14 62.01
Handler Family Trust 1,239 123,900 04/01/95 07/01/95 3,706.82 37 95 15 6.82
----- ------- -------- --
2,154 215,400 6,444.30 62
===== ======= ======== ==
</TABLE>
<TABLE>
<CAPTION>
10/01/95
% SHARES START OF END OF CASH PD TOTAL
OWNED AMOUNT DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL CASH
07/01/95 INVESTED PERIOD PERIOD AMOUNT SHARES CERT # SHARES PAY'T.
-------- -------- -------- -------- -------- ------ ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Chris Allick 442 44,200 07/02/95 10/01/95 1,340.73 13 95 16 40.73
Andrew Whitaker 124 12,400 07/02/95 10/01/95 376.13 3 95 17 76.13
David Eisner 250 25,000 07/02/95 10/01/95 758.33 7 95 18 58.33
David Losito 124 12,400 07/02/95 10/01/95 376.13 3 95 19 76.13
Handler Family Trust 1,276 127,600 07/02/95 10/01/95 3,870.53 38 95 20 70.53
----- ------- -------- --
2,216 221,600 6,721.87 64
===== ======= ======== ==
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
01/01/96
% SHARES START OF END OF CASH PD TOTAL
OWNED AMOUNT DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL CASH
07/01/95 INVESTED PERIOD PERIOD AMOUNT SHARES CERT # SHARES PAY'T.
-------- -------- -------- -------- -------- ------ ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Chris Allick 455 45,500 10/02/95 01/01/95 1,380.17 13 95 16 80.17
Andrew Whitaker 127 12,700 10/02/95 01/01/95 385.23 3 95 17 85.23
David Eisner 257 25,700 10/02/95 01/01/95 779.57 7 95 18 79.57
David Losito 127 12,700 10/02/95 01/01/95 385.23 3 95 19 85.23
Handler Family Trust 1,314 131,400 10/02/95 01/01/95 3,985.80 39 95 20 85.80
----- ------- -------- --
2,280 228,000 6,916.00 65
===== ======= ======== ==
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRANSEASTERN PROPERTIES
SUMMARY OF PREFERRED STOCK DIVIDENDS
SERIES B
01/01/96
START OF END OF CASH PD
AMOUNT # OF DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL AMOUNT
HOLDER INVESTED WARRANTS PERIOD PERIOD AMOUNT SHARES CERT # SHARES INVESTED
------ -------- -------- --------- -------- -------- ------ ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ciabattoni, A. 220,100 4,396 10/01/95 12/31/95 6,584.91
Ciabattoni, A. 100,000 2,198 09/27/95 12/31/95 3,123.29
320,100 6,594 9,708.20 97 B 86 8.20 329,800
Bruno 110,000 2,198 10/01/95 12/31/95 3,290.96
Bruno 162,000 3,297 10/01/95 12/31/95 4,846.68
272,000 5,495 8,137.64 81 B 87 37.64 280,100
R. Falcone Trust 440,400 8,793 10/01/95 12/31/95 13,175.80
R. Falcone Trust 100,000 2,198 12/06/94 12/31/95 12,821.92
R. Falcone Trust-retro payt 75,000 12/06/94 06/30/95 5,079.45
R. Falcone Trust 77,200 1,649 10/01/95 2/31/95 2,309.65
R. Falcone Trust 50,000 1,099 12/06/94 12/31/95 6,410.96
667,600 13,739 39,797.79 397 B 88 97.79 707,300
Gove 27,400 550 10/01/95 12/31/95 819.75
Gove 25,000 550 09/27/95 12/31/95 780.82
52,400 1,100 1,600.57 16 B 89 0.57 54,000
Stromback, R&E Living Tr. 21,900 440 10/01/95 12/31/95 655.20
Stromback, R&E Living Tr. 20,000 440 09/27/95 12/31/95 624.66
41,900 880 1,279.86 12 B 90 79.86 43,100
Aboiafia 109,600 2,198 10/01/95 12/31/95 3,278.99 32 B 91 76.99 112,800
Andreacci 27,400 550 10/01/95 12/31/95 819.75 8 B 92 19.75 28,200
Brancaleone 440,400 8,792 10/01/95 12/31/95 13,175.80 131 B 93 75.80 453,500
Bruce Johnson1 75,000 3,847 10/13/95 12/31/95 4,545.21 45 B 94 45.21 179,500
Campbell 27,400 550 10/01/95 12/31/95 819.75 8 B 95 19.75 28,200
Ciaricurzio 27,400 550 10/01/95 12/31/95 819.75 8 B 96 19.75 28,200
Cohen 110,000 2,198 10/01/95 12/31/95 3,290.96 32 B 97 90.96 113,200
Cunningham 25,000 550 09/27/95 12/31/95 780.82 7 B 98 80.82 25,700
Day 27,300 550 10/01/95 12/31/95 816.76 8 B 99 16.76 28,100
DiClemente 25,000 550 09/29/95 12/31/95 764.38 7 B 100 64.38 25,700
Elsner 27,400 550 10/01/95 12/31/95 819.75 8 B 101 19.75 28,200
Ginsberg 165,000 3,297 10/01/95 12/31/95 4,936.44 49 B 102 36.44 169,900
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
START OF END OF CASH PD
AMOUNT # OF DIVIDEND DIVIDEND DIVIDEND % OF FRACTIONAL AMOUNT
HOLDER INVESTED WARRANTS PERIOD PERIOD AMOUNT SHARES CERT # SHARES INVESTED
------ -------- -------- --------- -------- -------- ------ ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
John Passarelli1 50,000 3,297 10/19/95 12/31/95 3,600.00 36 B 103 0.00 153,600
Jones, Brooks 25,000 550 09/27/95 12/31/95 780.82 7 B 104 80.82 25,700
Katz 25,000 550 09/27/95 12/31/95 760.82 7 B 105 80.82 25,700
Murphy 20,000 440 09/27/95 12/31/95 624.66 6 B 106 24.66 20,600
Musto 107,900 2,198 10/01/95 12/31/95 3,228.13 32 B 107 28.13 111,100
Nicholson 27,400 550 10/01/95 12/31/95 819.75 8 B 108 19.75 28,200
P. Ciabattoni 32,900 659 10/01/95 12/31/95 964.30 9 B 109 84.30 33,800
Phillips 65,900 1,319 10/01/95 12/31/95 1,971.58 19 B 110 71.58 67,800
Prezzamoio 110,000 2,198 10/01/95 12/31/95 3,290.96 32 B 111 90.96 113,200
Spizzio 25,000 550 09/28/95 12/31/95 772.60 7 B 112 72.60 25,700
Stromback, DuRay E. Tr. 25,000 550 09/27/95 12/31/95 780.82 7 B 113 80.82 25,700
Weiss 52,100 1,100 10/01/95 12/31/95 1,558.72 15 B 114 58.72 53,600
--------- ------ -------- --- -------- ---------
3,207,100 65,951 114,585.57 1,131 1,485.57 3,320,200
========= ====== ========== ===== ======== =========
</TABLE>
<PAGE>
SCHEDULE 3
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
ACCREDITED INVESTOR CERTIFICATES
<PAGE>
EXHIBIT A
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
FORM OF WARRANT
<PAGE>
THIS WARRANT HAS BEEN, AND THE WARRANT SHARES ISSUABLE UPON EXERCISE HEREOF WILL
BE, ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") AND OF THE FLORIDA INVESTOR
PROTECTION ACT (THE "FLORIDA ACT"). SUCH SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, OR TRANSFERRED OTHER THAN (I) PURSUANT TO AN EFFECTIVE REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE 1933 ACT AND THE FLORIDA ACT, AND (II) UPON
RECEIPT BY THE ISSUER OF EVIDENCE SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933
ACT, THE FLORIDA ACT, AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER
JURISDICTION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Original Issue Date: April 15, 1996 Warrant No. 96C-2
WARRANT TO PURCHASE COMMON STOCK
THIS CERTIFIES THAT IN CONNECTION WITH, and as an inducement to ANTHONY
CIABATTONI (the "Holder"), to consummate the transactions contemplated by that
certain Common Stock Purchase Agreement, dated March 25, 1996 among Holder,
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation (the
"Corporation"), and certain other parties identified therein (the "Purchase
Agreement"), Holder may become entitled to purchase, on the terms and conditions
hereinafter set forth, a number shares of the Common Stock, $.01 par value, of
the Corporation (the "Common Stock") determined pursuant to Section 2.3 hereof,
at a price $.01 per share (the "Exercise Price"). Each share of Common Stock as
to which this Warrant is exerciseable is a "Warrant Share" and all such shares
are collectively referred to as the "Warrant Shares").
SECTION 1. REGISTRATION OF WARRANT. This Warrant is one of a series of
Warrants (collectively, the "Transaction Warrants") issued in connection with
the transaction contemplated by the Purchase Agreement. Each Transaction Warrant
contains identical terms except for the number of Warrant Shares and the
distinctive Warrant number. The Corporation shall register this Warrant, upon
records to be maintained by the Corporation for that purpose, in the name of the
record Holder of this Warrant from time to time. The Corporation shall deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise or any distribution to the Holder hereof, and for all
other purposes, and the Corporation shall not be affected by any notice to the
contrary.
SECTION 2. EXERCISE OF WARRANT.
2.1. TIME OF EXERCISE. This Warrant may be exercised in whole or in part,
at any time or from time to time prior to 5:00 p.m., Eastern Standard Time, on
the first anniversary of the Determination Date (as defined in Section 2.3
hereof), unless extended as hereinafter provided. The last day this Warrant can
be exercised is hereinafter referred to as the "Expiration Date."
2.2. MANNER OF EXERCISE. In order to exercise this Warrant, the registered
Holder hereof shall deliver to the Corporation at its principal office at 3300
University Drive, Coral Springs, Florida 33065, Attention: President, or at such
other office as shall be designated by the Corporation in writing pursuant to
Section 12 hereof on or before 5:00 p.m. Eastern Standard Time on the Expiration
Date, (i) a written notice of such registered Holder's election to exercise this
Warrant (the "Exercise Notice"), which notice may be in the form of the Notice
of Exercise attached hereto, properly executed and completed by the registered
-1-
<PAGE>
Holder or an authorized officer thereof, (ii) a check payable to the order of
the Corporation, in an amount equal to the product of the Exercise Price
MULTIPLIED BY the number of Warrant Shares specified in the Exercise Notice, AND
(iii) this Warrant (the items specified in (i), (ii), and (iii) are collectively
the "Exercise Materials"). Upon timely receipt of the Exercise Materials, the
Corporation shall, as promptly as practicable, and in any event within ten (10)
business days after its receipt of the Exercise Materials, execute or cause to
be executed and delivered to such registered Holder a certificate or
certificates representing the number of Warrant Shares specified in the Exercise
Notice, together with cash in lieu of any fraction of a share, as hereinafter
provided, and, (x) if the Warrant is exercised in full, a copy this Warrant
marked "Exercised" or (y) if the Warrant is partially exercised, a copy this
Warrant marked "Partially Exercised" together with a new Warrant on the same
terms for the unexercised balance of the Warrant Shares. All of the certificates
evidencing Warrant Shares shall bear the legend set forth in Section 7.2 hereof.
The stock certificate or certificates shall be registered in the name of the
registered Holder of this Warrant or such other name as shall be designated in
the Exercise Notice. The date on which the Warrant shall be deemed to have been
exercised (the "Exercise Date"), and the date the person in whose name any
certificate for Warrant Shares is issued shall be deemed to have become the
holder of record of such shares, shall be the date the Corporation receives the
Exercise Materials, irrespective of the date of delivery of a certificate or
certificates evidencing the Warrant Shares, except that, if the date on which
the Exercise Materials are received by the Corporation is a date when the stock
transfer books of the Corporation are closed, the Exercise Date shall be the
date the Corporation receives the Exercise Materials, and the date such person
shall be deemed to have become the holder of the Warrant Shares shall be the
next succeeding date on which the stock transfer books are open.
2.3. CALCULATION OF WARRANT SHARES The number of Warrant Shares (if any)
issuable upon exercise of this Warrant shall be fixed on the effective date of
the first registration statement (the "Determination Date") filed on Form S-1 or
S-18 (or any successor form thereto) filed with the Securities and Exchange
Commission (the "Registration Statement"). The number of Warrant Shares issuable
under this Warrant shall be:
(a) zero if the quotient of (i) the Share Price MINUS the Purchase
Price, DIVIDED BY the Purchase Price is greater than or equal to 25%.
(b) Equal to the quotient of (i) Share Price MINUS Purchase Price
MULTIPLIED BY the number of Purchased Shares DIVIDED BY (ii) the Share
Price if the quotient of (i) the Share Price MINUS the Purchase Price
DIVIDED BY the Purchase Price is less than 25%.
(c) The capitalized terms listed below are used with the meanings
thereafter ascribed.
"PURCHASED SHARES" means the number of shares of Common Stock purchased by
Holder from the Company pursuant to the Purchase Agreement, as adjusted for any
stock splits, stock dividends, or similar transactions.
"PURCHASE PRICE" means the purchase price for one (1) share of Common Stock
purchased by Holder pursuant to the Purchase Agreement, as adjusted for any
stock splits, stock dividends, or similar transactions.
"SHARE PRICE" means the price to the public in the Registration Statement,
before deduction of underwriting discounts, fees, and expenses.
2
<PAGE>
SECTION 3. ADJUSTMENTS TO WARRANT SHARES. The number of Warrant Shares
issuable upon the exercise hereof shall be subject to adjustment in certain
cases as set forth in this Section 3 which occur AFTER the Determination Date.
3.1. CONSOLIDATION, MERGER, OR SALE. In the event the Corporation is a
party to a consolidation, share exchange, or merger, or the sale of all or
substantially all of the assets of the Corporation to, any person, or in the
case of any consolidation or merger of another corporation into the Corporation
in which the Corporation is the surviving corporation, and in which there is a
reclassification or change of the shares of Common Stock of the Corporation,
this Warrant shall after such consolidation, share exchange, merger, or sale be
exerciseable for the kind and number of securities or amount and kind of
property of the Corporation or the corporation or other entity resulting from
such share exchange, merger, or consolidation, or to which such sale shall be
made, as the case may be (the "Successor Corporation"), to which a holder of the
number of shares of Common Stock deliverable upon the exercise (immediately
prior to the time of such consolidation, share exchange, merger, or sale) of
this Warrant would have been entitled upon such consolidation, share exchange,
merger, or sale; and in any such case appropriate adjustments shall be made in
the application of the provisions set forth herein with respect to the rights
and interests of the registered Holder of this Warrant, such that the provisions
set forth herein shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, in relation to the number and kind of securities or the
type and amount of property thereafter deliverable upon the exercise of this
Warrant. The above provisions shall similarly apply to successive
consolidations, share exchanges, mergers, and sales. Any adjustment required by
this Section 3.1 because of a consolidation, share exchange, merger, or sale
shall be set forth in an undertaking delivered to the registered Holder of this
Warrant and executed by the Successor Corporation which provides that the Holder
of this Warrant shall have the right to exercise this Warrant for the kind and
number of securities or amount and kind of property of the Successor Corporation
or to which the holder of a number of shares of Common Stock deliverable upon
exercise (immediately prior to the time of such consolidation, share exchange,
merger, or sale) of this Warrant would have been entitled upon such
consolidation, share exchange, merger, or sale. Such undertaking shall also
provide for future adjustments to the number of Warrant Shares and the Exercise
Price in accordance with the provisions set forth in Section 3 hereof.
3.2. ADJUSTMENTS FOR STOCK DIVIDENDS AND SPLITS. In the event the
Corporation should at any time, or from time to time after the Original Issue
Date, fix a record date for the effectuation of a stock split or subdivision of
the outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, or securities or rights convertible into, or entitling
the holder thereof to receive directly or indirectly, additional shares of
Common Stock (hereinafter referred to as "Common Stock Equivalents") without
payment of any consideration by such holder for the additional shares of Common
Stock or the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon exercise or exercise thereof), then, as of such record date
(or the date of such dividend, distribution, split, or subdivision if no record
date is fixed), the number of Warrant Shares issuable upon the exercise hereof
shall be proportionately increased and the Exercise Price shall be appropriately
decreased by the same proportion as the increase in the number of outstanding
Common Stock Equivalents of the Corporation resulting from the dividend,
distribution, split, or subdivision. Notwithstanding the preceding sentence, no
adjustment shall be made to decrease the Exercise Price below $.01 per Share.
3.3. REVERSE STOCK SPLITS. In the event the Corporation should at any time
or from time to time after the Original Issue Date, fix a record date for the
effectuation of a reverse stock split, or a transaction having a similar effect
on the number of outstanding shares of Common Stock of the Corporation, then, as
of such record date (or the date of such reverse stock split or similar
transaction if no
3
<PAGE>
record date is fixed), the number of Warrant Shares issuable upon the exercise
hereof shall be proportionately decreased and the Exercise Price shall be
appropriately increased by the same proportion as the decrease of the number of
outstanding Common Stock Equivalents resulting from the reverse stock split or
similar transaction.
3.4. RECLASSIFICATION. In the event the Corporation should at any time or
from time to time after the Original Issue Date, fix a record date for a
reclassification of its Common Stock, then, as of such record date (or the date
of the reclassification if no record date is set), this Warrant shall thereafter
be convertible into such number and kind of securities as would have been
issuable as the result of such reclassification to a holder of a number of
shares of Common Stock equal to the number of Warrant Shares issuable upon
exercise of this Warrant immediately prior to such reclassification, and the
Exercise Price shall be unchanged.
3.5. NO DILUTION OR IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or through reorganization, consolidation, merger,
dissolution, issue, or sale of securities, sale of assets or any other voluntary
action, void or seek to avoid the observance or performance of any of the terms
of the Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment. Without limiting the generality of the foregoing, the
Corporation (a) will not create a par value of any share of stock receivable
upon the exercise of the Warrant above the amount payable therefor upon such
exercise, and (b) will take all such action as may be necessary or appropriate
in order that the Corporation may validly and legally issue fully paid and
non-assessable shares upon the exercise of the Warrant.
3.6. NOTICE OF ADJUSTMENT. When any adjustment is required to be
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Exercise Price, the Corporation shall promptly notify the Holder of
such event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of the Warrants and of the
Exercise Price, together with the computation resulting in such adjustment.
SECTION 4. COVENANTS AS TO COMMON STOCK. The Corporation covenants and
agrees that all Warrant Shares which may be issued will, upon issuance, be
validly issued, fully paid and non-assessable. The Corporation further covenants
and agrees that the Corporation will at all times have authorized and reserved,
free from preemptive rights, a sufficient number of shares of its Common Stock
to provide for the exercise of the Warrant in full.
SECTION 5. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the Holder
hereof to any voting rights or other rights as a stockholder of the Corporation.
SECTION 6. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE HOLDER . The
registered Holder of this Warrant, by acceptance of this Warrant represents,
warrants, and covenants to the Corporation as follows:
(a) The Holder is acquiring this Warrant, and agrees that the exercise
of this Warrant and the acceptance of a certificate for Warrant Shares
shall constitute its representation that the Warrant Shares are being
acquired, for its own account for investment and not with a view to the
distribution thereof, subject, however, to Holder's right to transfer this
Warrant and the Warrant Shares in accordance with and subject to the
restrictions on such transfer set forth herein.
4
<PAGE>
(b) The Holder understands that this Warrant and the Warrant Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act") or state securities laws, by reason of their issuance in
a transaction exempt from the registration requirements of the Securities
Act and applicable state securities laws. The Holder acknowledges being
informed that this Warrant and the Warrant Shares must be held indefinitely
unless this Warrant or the Warrant Shares are registered for sale by such
Holder under the Securities Act and applicable state securities laws or an
exemption from registration is available. The Holder understands that a
sale of the Warrant Shares made in reliance upon Rule 144 promulgated under
the Securities Act ("Rule 144") can only be made in accordance with the
terms and conditions of Rule 144 and further understands that in the event
that the exemption from registration provided by such Rule is not
available, compliance with some other exemption under the Securities Act
will be required in the absence of registration.
(c) The Holder agrees not to sell, transfer, pledge or hypothecate
this Warrant or any Warrant Shares unless a Registration statement is
effective for this Warrant or Warrant Shares under the Securities Act or,
in the written opinion of such Holder's counsel (a copy of which opinion
shall be addressed to and delivered to the Corporation, and which counsel
and which opinion shall be reasonably satisfactory to the Corporation),
such transaction will not result in any violation of the registration
requirements of the Securities Act or any applicable state securities law.
The Corporation may not, and may instruct its transfer agent not to,
transfer this Warrant or the Warrant Shares unless the Corporation has been
advised by its counsel that the Holder has complied with the provisions of
this Warrant and applicable securities laws relating to the proposed
transfer.
SECTION 7. TRANSFER OF SECURITIES.
7.1. RESTRICTION ON TRANSFER. This Warrant and the Warrant Shares and
any shares of capital stock received in respect thereof, whether by reason
of a stock split or share reclassification thereof, a stock dividend
thereon, or otherwise, shall not be transferable except upon the conditions
specified in Section 6 and this Section 7, which conditions are intended to
ensure compliance with the provisions of the Securities Act and applicable
State securities laws with respect to the transfer of such securities. The
Holder of this Warrant, by acceptance of this Warrant, agrees to be bound
by the provisions of Section 6 and this Section 7 and to indemnify and hold
harmless the Corporation against any loss or liability arising from the
disposition of this Warrant or the Warrant Shares issuable upon exercise
hereof or any interest in either thereof in violation of the provisions of
this Warrant.
7.2. RESTRICTIVE LEGEND. Each certificate for the Warrant Shares and
any shares of capital stock received in respect thereof, whether by reason
of a stock split or share reclassification thereof, a stock dividend
thereon or otherwise, and each certificate for any such securities issued
to subsequent transferees of any such certificate shall (unless otherwise
permitted by the provisions hereof) be stamped or otherwise imprinted with
a legend in substantially the following form:
Legend for Warrant Shares or other shares of capital stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") AND THE FLORIDA
INVESTOR PROTECTION ACT (THE "FLORIDA ACT") THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR TRANSFERRED OTHER THAN (I) PURSUANT TO AN
EFFECTIVE REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT
AND THE FLORIDA ACT, AND (II) UPON RECEIPT BY THE ISSUER OF EVIDENCE
SATISFACTORY TO IT OF COMPLIANCE WITH THE 1933 ACT, THE FLORIDA ACT,
AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE
5
<PAGE>
ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY
TO IT WITH RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
7.3. TRANSFER OF WARRANTS. Subject to the restrictions on transfer
specified in Section 6 and this Section 7, the Warrant is transferable in
accordance with this Warrant, in whole or in part, at the agency or office of
the Corporation referred to in Section 1 hereof, by the Holder hereof in person
or by a duly authorized attorney, upon surrender of this Warrant, with the Form
of Assignment attached hereto duly executed by the then registered Holder of
this Warrant or its duly authorized agent. The Corporation or its transfer
agents shall register the transfer of any Warrants transferred in compliance
with Section 6 and this Section 7 upon records to be maintained for that
purpose, upon surrender of this Warrant. Upon any such Registration of transfer,
a new Warrant substantially in the form of this Warrant evidencing the Warrant
so transferred shall be issued to the transferee.
SECTION 8. LOST, STOLEN, MUTILATED, OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated, or destroyed, the Corporation shall issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated, or destroyed, provided the registered Holder hereof shall deliver a
lost warrant certificated in customary form, including indemnification of the
Corporation.
SECTION 9. FRACTIONAL WARRANT SHARES. The Corporation shall not be required
to issue any fractions of Warrant Shares upon exercise of this Warrant, but the
Corporation shall pay cash in respect of any fractional interest in a Warrant
Share which would otherwise be issuable in an amount equal to the same fraction
of the fair market value per share of the Common Stock on the day of the
exercise, as reasonably determined by the Board of Directors of the Corporation.
SECTION 10. NOTICE. All notices, requests, demands, and other
communications required or permitted under this Warrant and the transactions
contemplated herein shall be in writing and shall be deemed to have been duly
given, made, and received when personally delivered the day after deposited with
a recognized national overnight delivery service prior to its dead-line for
receiving packages for next day delivery or upon the fifth day after deposited
in the United States registered or certified mail with postage prepaid, return
receipt requested, in each case addressed as set forth below:
If to the Corporation: Transeastern Properties of South Florida, Inc.
3300 University Drive
Coral Springs, Florida 33065
Attention: President
If to the Holder hereof, to the address of such Holder appearing on the
books of the Corporation.
SECTION 11. CAPTIONS, SECTION, HEADINGS. Captions and section headings used
herein are for convenience only, and are not a part of this Warrant and shall
not be used in construing it.
SECTION 12. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws in the State of Florida, irrespective of the choice
of law provisions.
6
<PAGE>
IN WITNESS WHEREOF, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., has
caused this Warrant to be executed in its name by its duly authorized officers
under its corporate seal, and to be dated as of the date first above written.
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC.
By: ______________________________
Arthur J. Falcone, President
ATTEST:
____________________________
Philip Cucci, Jr., Secretary
7
<PAGE>
FORM OF ASSIGNMENT
[To be signed only upon transfer of unexercised Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________ the attached Warrant to purchase the number
of full shares of Common Stock, $____ par value, of Transeastern Properties of
South Florida, Inc., issuable upon exercise of said Warrant, and appoints
________________, Attorney, to transfer such Warrant on the books of
Transeastern Properties of South Florida, Inc., with full power of substitution
in the premises.
Dated:__________________
[Signature]
____________________
____________________
[Address]
Signature guaranteed by a member of a national securities exchange or
national bank:
__________________________
NOTICE
The signature above must correspond to the name as written upon the fact of
the within Warrant in every particular, without alteration or enlargement or any
change whatsoever.
<PAGE>
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To: TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
The undersigned registered Holder of the attached Warrant hereby
irrevocably elects to exercise the Warrant for, and to purchase thereunder, the
full number of whole shares of Common Stock, $____ par value, of Transeastern
Properties of South Florida, Inc., issuable upon exercise of said Warrant and
hereby surrenders said Warrant and delivers to Transeastern Properties of South
Florida, Inc., a check in the amount of $_________ representing the aggregate
Exercise Price for such shares. The undersigned herewith requests that the
certificates for such shares be issued in the name of, and delivered to the
undersigned, whose address is _________________________________ and social
security or tax identification number is ______________.
Dated:____________________
NOTICE
The signature above must correspond to the name as written upon the fact of
the within Warrant in every particular, without alteration or enlargement or any
change whatsoever.
<PAGE>
EXHIBIT B
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
OPINION OF COMPANY COUNSEL
<PAGE>
April 15, 1996
The parties named in the attached Schedule I
c/o Gerardo M. Balboni II, Esq.
Balboni Ashley & Schoenberg, LLC
990 One Live Oak Center
3475 Lenox Road, NE
Atlanta, Georgia 30326
Ladies and Gentlemen:
We have acted as counsel to Transeastern Properties of South Florida, Inc.,
a Florida corporation (the "Company"), in connection with (i) the preparation of
(a) Common Stock Purchase Agreement, dated as of April 15, 1996, by and among
the parties named in Schedule I thereto (the "Purchasers") and the Company (the
"Agreement") and (b) the Warrants, dated as of April 15, 1996 by and among the
parties named in Schedule I thereto (the "Warrant Purchasers") and the Company
(the "Warrant Agreement"); and (ii) (a) the sale and issuance of 39,223 shares
of Common Stock of the Company, $.01 par value (the "Shares") pursuant to the
Agreement and (b) the sale and delivery of warrants to purchase additional
shares of the Common Stock (the "Warrant Shares"), $.01 par value of the Company
(the "Warrants") under certain circumstances, pursuant to the Agreement. This
opinion is rendered pursuant to Article 4 of the Agreement. Capitalized terms
used in this opinion letter and the attachments hereto and not otherwise defined
herein shall have the meanings assigned to such terms in the Agreement.
This opinion letter is limited by, and is in accordance with, the
January 1, 1992, edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the State Bar of Georgia,
which Interpretative Standards are attached to this opinion letter as ATTACHMENT
1, and incorporated in this opinion letter by this reference. Capitalized terms
used in this opinion letter and the attachments hereto and not otherwise defined
herein shall have the meanings assigned to such terms in the Interpretive
Standards and/or the Purchase Agreement.
In connection with the foregoing, we have examined:
1. An executed copy of each of the Agreement and the Warrants among the
Company, the Purchasers and the other parties listed therein (collectively, the
"Transaction Agreements");
2. The Amended and Restated Articles of Incorporation of the Company, filed
with the Florida Department of State on December 5, 1994, and the Bylaws of the
Company, certified by the Secretary of the Company on April 15, 1996
(collectively, the "Charter"); and
3. The corporate proceedings of the Company relating to the execution and
delivery of the Agreement and the Warrants, and the consummation of the
transactions provided for therein.
In all such examinations, we have assumed the genuineness of all
signatures (other than signatures on behalf of the Company), the authenticity of
all documents submitted to us as originals, and the conformity to authentic
original documents of all documents submitted to us as certified, conformed or
photostatic copies. As to questions of fact material to our opinions, we have
relied on certificates of
<PAGE>
The parties named in the attached Schedule I
May ___, 1993
Page 2
public officials, the representations and warranties of Company set forth in the
Agreement, and on certificates of officers of the Company.
The use herein of the words "to the best of our knowledge", "known to us"
or similar language means that, during the course of our representation of the
Company, no information has come to the attention of any attorney in this Firm
involved in these transactions or otherwise regularly engaged in representing
the Company which would give us actual knowledge of the existence of any of the
documents or facts so qualified. Whenever we have made "due inquiry" as to
matters set forth herein, such inquiry was confined to reviewing documents
provided to us by the Company in the course of our representation in response to
inquiries as to such matters as we have deemed appropriate in order to render
the opinions hereinafter set forth, a review of documents of which we otherwise
have actual knowledge, to the extent we deemed such documents material and
relevant to the opinions hereinafter set forth, and obtaining certificates of
officers of the Company as to certain facts which we deemed material and
relevant to our opinion, and we have relied, with your permission, upon such
certificates in rendering this opinion.
We are admitted to practice in the State of Georgia. Accordingly, the
opinions set forth herein are limited to the laws of the State of Georgia and
applicable federal laws. To the extent that the laws of another jurisdiction may
govern any of the Agreements, such laws are assumed to be the same as the laws
of the State of Georgia.
Based on the foregoing, and subject to the further qualifications,
assumptions, and limitations hereinafter set forth, we are of the opinion that:
The Company is a corporation in good standing (as defined herein) under the
laws of the State of Florida. The Company is qualified to do business as a
foreign corporation and is in good standing in each state where, based upon the
nature of the business transacted by the Company or the ownership or lease by
the Company of real or personal property, the failure to be so qualified would
have a material and adverse effect on the business or condition of the Company.
Except as reflected in the Disclosure Schedule, the Company has no subsidiaries.
The Company has all requisite power to (i) own, lease, and operate its
properties and to carry on its business as currently conducted and as proposed
to be conducted, (ii) execute, deliver, and perform each of the Transaction
Agreements, (iii) issue, sell, and deliver the Shares and the Warrants, and (iv)
issue and deliver the Warrant Shares upon the exercise of the Warrants.
Each of the Transaction Agreements has been duly authorized, executed, and
delivered by the Company and each constitutes the legal, valid, and binding
obligation of the Company, enforceable in accordance with their respective terms
(subject, to enforcement of remedies, to the discretion of courts in awarding
equitable relief and to applicable bankruptcy, reorganization, insolvency,
moratorium, and similar laws affecting creditors' rights or debtors' relief
generally).
The execution and delivery by the Company of the Transaction Agreements,
and the performance by the Company of its obligations thereunder, the issuance,
sale, and delivery of the Shares and the
<PAGE>
The parties named in the attached Schedule I
May ___, 1993
Page 3
Warrants, and the issuance and delivery of the Warrant Shares upon exercise of
the Warrants, will not violate any provision of law, the Charter, any order of
any court or other agency of government known to us and binding upon the Company
or its assets, or any indenture, agreement, or other instrument known to us by
which the Company or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement, or other instrument, or result in
the creation or imposition of any lien, charge, restriction, claim, or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company.
The authorized capital stock of the Company consists of (i) 29,000 shares
of Series A Redeemable Preferred Stock, $.01 par value, (ii) 46,500 shares of
Series B Redeemable Preferred Stock, $.01 par value and (iii) 5,000,000 shares
of Common Stock, $.01 par value. Immediately prior to the Closing, 725,001
shares of Common Stock will be validly issued, fully paid and nonassessable, and
2,345 shares of Series A Redeemable Preferred Stock (after giving effect to the
Recapitalization) and 33,202 shares of the Series B Redeemable Preferred Stock
will be outstanding. The designations, power, preferences, rights,
qualifications, limitations, and restrictions in respect of each class or series
of authorized capital stock of the Company are as set forth in the Charter.
Except as set forth in Schedule 2 to the Agreement, to our knowledge,
immediately prior to the Closing, no subscription, warrant, option, convertible
security, or other right (contingent or other) to purchase or acquire equity
securities of the Company was authorized or outstanding and there was no
commitment by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to holders of any
of its equity securities any evidence of indebtedness or asset. Except as set
forth in Schedule 2 to the Agreement, to our knowledge, the Company has no
obligation (contingent or other) to purchase, redeem, or otherwise acquire any
of its equity securities or any interest therein or to pay any dividend or make
any other distribution in respect thereof.
The Shares, the Warrants, and the Warrant Shares have been duly authorized.
The issuance, sale, and delivery of the Shares and the Warrants and the
issuance, sale, and delivery of the Warrant Shares upon exercise of the Warrants
have been duly authorized by all required corporate action; assuming payment of
the purchase price therefor as provided in the Agreement, the Shares have been
validly issued and are fully paid, and nonassessable. The Warrant Shares have
been duly reserved for issuance upon conversion of the Warrants, and, when so
issued, will be validly issued, fully paid, and nonassessable. Neither the
issuance, sale, or delivery of the Shares or the Warrants, nor the issuance or
delivery of the Warrant Shares, is subject to any preemptive right or right of
first refusal of shareholders of the Company arising under law or the Charter or
Bylaws of the Company which has not been waived, or, to our knowledge, to any
contractual right of first refusal or other right in favor of any person.
Except as described in Schedule 2 to the Agreement, to our knowledge, there
is no (A) action, suit, claim, proceeding, or investigation pending or
threatened against or affecting the Company at law or in equity, or before or by
the Federal, state, municipal, or other governmental department, commission,
board, bureau, agency, or instrumentality, domestic or foreign, (B) arbitration
proceeding relating to the Company pending under collective bargaining
agreements, or (C) governmental inquiry pending or threatened against or
affecting the Company (including, without limitation, any inquiry as to the
qualification of the Company to hold or receive any license or permit). To our
knowledge, the Company is not subject to any order, writ, injunction, or decree
of any court or of any Federal, state,
<PAGE>
The parties named in the attached Schedule I
May ___, 1993
Page 4
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality, domestic or foreign.
No registration or filing with, and no consent or approval of, or other
action by any Federal, state, or other governmental agency or instrumentality is
or will be necessary for the valid execution, delivery, and performance by the
Company of the Transaction Agreements, the issuance, sale, and delivery of the
Shares and the Warrants, or the issuance, sale, and delivery of the Warrant
Shares upon exercise of the Warrants, other than filings under the Securities
Act and applicable state securities laws, which filings, to the extent required
to be made prior to the date hereof, have been made, and to the extent required
to be made following the date hereof, we assume will be timely made by the
Company.
Very truly yours,
Balboni Ashley & Schoenberg LLC
Attachments
<PAGE>
EXHIBIT C
TO
COMMON STOCK
AND
WARRANT PURCHASE AGREEMENT
AMENDED AND RESTATED ARTICLES OF INCORPORATION
JOINT VENTURE AGREEMENT
OF
PARKSIDE HOMES
THIS JOINT VENTURE AGREEMENT ("Agreement') is made and entered into as
of February __, 1994, by and between TRANSEASTERN PEMBROKE PROPERTIES, INC., a
Florida corporation ("Transeastern") and H.A. CUMBER OF PEMBROKE PINES, INC., a
Florida corporation ("Cumber"). Transeastern and Cumber are sometimes
hereinafter referred to individually as "Venturer" and collectively as
"Venturers."
WITNESSETH
WHEREAS, the Venturers have heretofore determined that they desire to
participate together in a joint venture (the "Venture") formed under the general
partnership law of the State of Florida for the acquisition of certain real
property located in Broward County, Florida, as more fully described on Exhibit
"A" attached hereto, and to construct thereon single family residences for sale
to the public (such real property and the improvements to be constructed thereon
being hereafter referred to as the "Project"); and
WHEREAS, the Venturers wish to reduce their agreements regarding the
acquisition and development of the Project to a written instrument.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein, the parties hereby agree as follows:
ARTICLE ONE
INCORPORATION BY REFERENCE AND DEFINITIONS
1.1 INCORPORATION BY REFERENCE. The foregoing recitals are hereby
acknowledged to be true and are incorporated herein by reference, and all
Exhibits annexed hereto and referred to herein are incorporated herein by
reference.
1.2 CERTAIN DEFINITIONS. The terms set forth on Exhibit "B" attached
hereto shall have the meanings set forth in such Exhibit "B".
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ARTICLE TWO
FORMATION NAME, PRINCIPAL OFFICE AND PURPOSE
2.1 FORMATION. The Venturers hereby form a joint venture partnership
pursuant to the laws of the State of Florida, for the purposes set forth herein.
2.2 NAME. The name of the Venture shall be "Parkside Homes" and the
business and affairs of the Venture initially shall be conducted under said
name. The Venture may conduct business under such other name or fictitious name
as may be determined, from time to time, by the Venturers. The Venturers shall
execute all assumed or fictitious name certificates necessary or appropriate to
be filed in the applicable records of any county or jurisdiction in which the
Venture is doing business.
2.3 PRINCIPAL OFFICE AND PLACE OF BUSINESS. The principal office of the
Venture shall be located at 3300 University Drive, Coral Springs, FL 33064, or
at such other location in the State of Florida as may be determined by the
Venturers.
2.4 PURPOSE AND SCOPE OF THE VENTURE. (a) The business, purpose
and scope of the Venture is to acquire the Property and to own, develop,
improve, maintain, manage, operate, sell, lease, mortgage, exchange and
otherwise use all or any portion of the Project for the production of income and
profit, and to engage in all manner of transactions and activities incidental to
the foregoing.
(b) The Venturers have approved a Business Plan providing for
construction and marketing of the Project as a residential community to be known
as "Meadow Run at Spring Valley", which Business Plan incorporates the following
components:
(i) A development plan reflecting a division of the
Property into two Phases, each of which is intended to improved
and marketed by the Venture at a particular time (each such
phase, as ultimately set forth in the Business Plan being
referred to as a "Phase"), including the specific number of lots
in each Phase, the houses to be built in each Phase, the time
frame for the planned acquisition of the Phase, construction of
houses and marketing of each Phase;
(ii) A marketing plan setting forth, with respect to
each Phase, the number and type of homes to be constructed in
such Phase, the projected prices therefor and the advertising
and marketing programs which the Venture plans for such Phase;
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(iii) A budget setting forth, in general categories, the
expenses anticipated to be incurred by the Venture with respect
to each Phase through the sale thereof and the projected
revenues to be derived from each Phase upon its disposition
(which budget, as approved by the Venturers, from time to time,
shall be hereinafter referred to as the "Budget"), and (iv) A
cash flow analysis setting forth, in the sequence in which the
Phases will be developed, improved and marketed, as applicable,
the sources and uses of funds that will be available to and
expended by the Venture in connection therewith (which cash flow
analysis, approved by the Venturers, from time to time, shall be
hereinafter referred to as the "Cash Flow Analysis"). (c) The
business of the Venture shall be as set forth herein and in the
Business Plan. The Venture shall not engage in any other
business or activity, except as the Venturers shall otherwise
agree in writing. Except as expressly provided to the contrary
in this Agreement, nothing herein shall be deemed to restrict in
any way the freedom of a Venturer to conduct any other business
or activity whatsoever without any accountability to the Venture
or the other Venturer.
2.5 TERM. The term of the Venture as a general partnership shall
commence as of the date of this Agreement and shall continue in full force and
effect until terminated in accordance with Article Eight of this Agreement or as
otherwise provided by the Law.
2.5 TITLE. Legal title to the Venture's property shall be held in the
name of the Venture, or in such other manner as the Venturers shall determine.
2.7 DESIGNATED PERSONS. For purposes of facilitating the performance of
the terms and provisions of this Agreement and the operation of the Venture,
each Venturer designates the person(s) set forth below opposite such Venturer's
name ("Designated Person") as such Venturer's attorney-in-fact to take all
actions, make all decisions on its behalf which such Venturer, in its capacity
as Venturer, is permitted or required to take or make, and to execute promissory
notes, mortgages or other collateral documents, agreements to purchase real
property and agreements to sell Lots within the Project as a group. Either
Venturer may change its Designated Person by delivering to the other Venturer
and to the Venture, written notice thereof, which notice shall be a certified
corporate resolution of the Venturer's Board of Directors. The foregoing shall
not be construed to preclude other duly authorized persons from acting on any
Venturer's behalf. The Designated Persons, as of the date hereof, are as
follows:
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VENTURER DESIGNATED PERSON
Transeastern Arthur J. Falcone
Cumber Aftab Cumber
(b) In addition to the foregoing, each of the Venturers designate
the persons listed on Exhibit "C" as their authorized representatives for the
execution of deeds, affidavits, bills of sale, closing statements and other
documents solely related to the closing of sales of single family homes within
the Project to customers. Such persons have no further authority by virtue of
this Paragraph to execute documents of any kind or nature on behalf of the
Venture. The Venturers may hereafter adopt resolutions granting further
authority to such persons or to other persons to execute various documents on
behalf of the Venture.
ARTICLE THREE
CAPITAL CONTRIBUTIONS; FINANCING
3.1 INITIAL CAPITAL CONTRIBUTIONS. Simultaneously with the execution
hereof, each Venturer shall make the following Capital Contributions to the
Venture and shall receive a credit to their respective Capital Accounts
therefor:
Transeastern $400,000.00
Cumber $400,000.00
3.2 ADDITIONAL CAPITAL. If and when, from time to time after the date
hereof, the Venturers agree that the Venture is in need of additional capital in
order to meet Venture obligations relating to the performance of the Venture
business, such additional cash shall be contributed to the Venture equally by
the Venturers as a Capital Contribution, for which each Venturer shall receive a
credit, in the amount thereof, to its Capital Account.
3.3 FINANCING FROM THIRD PARTIES. The cash contributed as Capital
Contributions to the Venture will not be sufficient to carry out the business of
the Venture. Accordingly, the Venturers contemplate that additional funds will
be made available to the Venture pursuant to third party financing from an
institutional lender or similar source. The responsibility for obtaining such
required financing for the Venture shall rest equally with the Venturers. Such
financing shall comply with the following parameters:
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(a) Separate Acquisition Loans for the purchase of the first and
second Phases of the Project on the following terms:
(i) Principal amounts of at least $5,700,000.00;
(ii) A term of at least two years each, with two
renewal options of two years each;
(iii) Interest rates not to exceed prime rate plus
1.0% per annum;
(iv) Secured by mortgages on the Project, permitting
the partial release of individual lots, together
with other collateral documents standard to
loans of similar type and size;
(v) Personal guaranties of payment by the parties
listed on Exhibit "D" hereto.
(b) Revolving construction lines of credit for use in both Phases
of the Project on the following terms:
(i) Principal amounts of at least $6,000,000.00;
(ii) A term of at least four years;
(iii) Interest rate not to exceed prime rate plus 1.0%
per annum;
(iv) Secured by mortgages on the Project, permitting
the partial release of individual lots, together
with other collateral documents standard to
loans of similar type and size, and providing an
acceptable procedure for the funding of
construction of individual houses;
(v) Personal guaranties of payment by the parties
listed on Exhibit "D" hereto.
3.4 LOANS FROM VENTURERS. If the financing provided by an Approved
Mortgage is insufficient to provide, together with other available funds of the
Venture, sufficient cash to satisfy Venture obligations with respect to the
construction and marketing of the Project, the Venturers may provide loans to
the Venture to fund such deficiencies, which loans shall be made in accordance
with the provisions hereof and shall be repaid as provided in Section 5.3(a)
hereof. Loans by any Venturer to the Venture shall not be considered Capital
Contributions. If not expressly agreed in writing otherwise, loans to the
Venture from a Venturer shall accrue interest at the rate of ten percent (10%)
per annum, and shall be otherwise be payable on terms to be agreed upon by the
Venturers. Nothing herein shall authorize any loan by a Venturer to
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the Venture unless otherwise authorized pursuant to other provisions of this
Agreement or unless agreed to in writing by the Venturers.
3.5 OTHER MATTERS RELATING TO CAPITAL. (a) Except as may be expressly
provided herein, no Venturer shall be entitled to withdraw or to the return of
any part of the Capital Contribution of such Venturer or to receive property or
assets other than cash from the Venture for any reason whatsoever. To the extent
that any distributions which any Venturer is entitled to receive pursuant to
Article Five hereof would constitute a return of capital, each of the Venturers
consent to the withdrawal of such capital.
(b) No Venturer shall be entitled to priority over any other
Venturer with respect to return of its Capital Contribution, except to the
extent expressly provided in this Agreement.
(c) No interest shall be paid by the Venture on Capital
Contributions, except to the extent expressly provided in this Agreement.
ARTICLE FOUR
MANAGEMENT OF THE VENTURE
4.1 MAJOR DECISIONS. No decision shall be made with respect to any of
the major decisions enumerated below ("Major Decisions") unless and until same
has been approved in writing by all Venturers. The Major Decisions are:
(a) The sale, exchange or other disposition of all, or
substantially all, of the property and assets of the
Venture, other than the sale of individual lots and
houses to be constructed thereon within the Project;
(b) Any material modification to the approved Business Plan
including, without limitation, any material modification
to the Budget or Cash Flow Analysis and any other
component thereof;
(c) Modifications to the layout or facade of houses,
adjustments to lot sizes, adjustments to selling prices
and incurring of expenditures not contemplated by the
Budget but which do result in increasing the Budget by
more than ten percent (10%) shall not be deemed material
modifications;
(d) A decision by the Venture to enter into an Approved
Mortgage or any other financing arrangements, whether or
not secured by any portion of
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the Property and whether or not with or without recourse
to the assets of the Venture, including routine
equipment leases or other installment obligations that
are substantially consistent with the Business Plan,
including the Budget and Cash Flow Analysis;
(e) A decision to admit any additional person into the
Venture as a Venturer or, except pursuant to Section
7.4, approval of any transfer of all or any part of a
Venturer's Venture Interest;
(f) A decision by the Venture to acquire any real property
other than the Property;
(g) A decision to dissolve the Venture;
(h) Any transaction, not expressly authorized herein,
between the Venture and a Venturer or any Affiliate of a
Venturer;
(i) A decision to enter into a joint venture or similar
arrangement with third parties for the purpose of
developing any portion of the Property or for any other
purpose;
(j) A decision to expand or restrict the authority of the
Project Manager Venturer to act with respect to any
matter concerning the Venture; and
(k) Such other decisions as, pursuant to the terms hereof,
are vested in the Venturers. For purposes of the
foregoing, any reference in this Agreement to an act,
approval, consent or other event occurring "by the
Venturers," "from the Venturers," "in the Venturers" or
"of the Venturers" shall mean by unanimous consent of
the Venturers. All power and authority of the Venture
not expressly delegated herein to the Managing Venturer
shall be vested in the Venturers.
4.2 PROJECT MANAGER. The Venturers shall select an individual to be in
charge of the day-to-day activities of the Venture in the construction and
marketing of the Project ( the "Project Manager"). The Project Manager shall
have the following responsibilities and all authority necessary to the
performance of such responsibilities: (a) Preparing and delivering monthly
reports to the Venturers as required pursuant to Article Six hereof and as shall
otherwise be necessary or helpful in keeping the Venturers fully informed as to
Venture affairs;
(b) Negotiating and entering into contracts with
sub-contractors and materialmen with respect to
construction and other activities of the Venture and
supervising the performance of same;
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(c) Arrange for appropriate insurance policies with such
coverage and in such amounts as prudent to protect the
Venture;
(d) To retain and/or hire on staff services of engineers,
surveyors, appraisers, architects, real estate brokers,
mortgage brokers, escrow agents, depositaries,
custodians, agents for collection, insurers, insurance
agents, advertising personnel and such other technical
or administrative advisors as reasonably deemed useful
by the Project Manager to further the purposes of the
Venture;
(e) Expending the capital and revenues of the Venture
substantially consistent with the Business Plan;
(f) Such other matters and obligations provided elsewhere in
this Agreement to be performed by the Project Manager or
as may be delegated, from time to time, by the
Venturers;
(g) Keeping all books of accounts and other records required
by the Venture, including vouchers, statements,
receipted bills, invoices and all other records needed
or helpful to documenting all collections, disbursements
and other data in connection with the activities of the
Venture;
(h) Supervising land development and construction with
respect to each Phase in substantial accordance with the
Business Plan;
(i) Authorizing parties to prepare research reports,
economic and statistical data, evaluations, analyses,
opinions and recommendations as may be necessary or
desirable with respect to preparing or implementing the
Business Plan;
(j) Doing any and all other things which are necessary,
incidental or required in giving effect to all of the
foregoing duties and responsibilities and, in general,
as required to carry out the day-to-day operations of
the Venture; and
(k) Approving minor adjustments to selling prices and
concessions in connection with the sale of houses to
customers in an amount not to exceed $500.00 per house..
4.3 VENTURE MEETINGS. Either Venturer may, at any time, deliver notice
to the other Venturer setting a meeting of the Venture to be held at the
principal office of the Venture on a business day that is not less than ten
(10), nor more than thirty (30) days after delivery of the
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notice. The annual meeting of the Venture shall take place at the principal
office of the Venture on a date which shall be within ten (10) days after
receipt of the periodic reports to be delivered to by the Venture Accountants
pursuant to Section 6.3 hereof
4.4 LIABILITY AND INDEMNIFICATION. No Venturer nor any of its officers,
shareholders, directors, employees or agents shall be liable to the Venture or
any Venturer for any loss or liability incurred in connection with any act or
omission in the conduct of the business of the Venture in accordance with the
terms hereof, except for any loss or liability which the Venture or Venturer
incurs in connection with such person's or entity's fraud, willful and wanton
misconduct or gross negligence. The Venture, to the fullest extent permitted by
law, hereby agrees to defend and indemnifies and holds harmless each Venturer
and its officers, directors, shareholders, employees and agents from and against
any and all liability, loss, cost, expense or damage incurred or sustained by
reason of any act or omission in the conduct of the business of the Venture in
accordance with the terms hereof including, but not limited to, reasonable
attorneys' and paralegals' fees through any and all negotiations, and trial and
appellate levels; provided, however, the Venture shall not indemnify such person
or entity or hold it harmless with respect to any of the foregoing incurred in
connection with such person's or entity's fraud, willful and wanton misconduct
or gross negligence. Notwithstanding the foregoing, the Venture shall advance,
on behalf of any Venturer against whom a claim is filed with respect to any
alleged act or omission in the conduct of the business of the Venture, all costs
and expenses of litigation, including reasonable attorneys' and paralegals' fees
through any and all negotiations, at trial and appellate levels, and will be
entitled to seek reimbursement from the Venturer for such sums advanced only to
the extent such Venturer is ultimately determined, by a final non-appealable
order or judgment, to have been guilty of fraud, willful or wanton misconduct or
gross negligence and only to the extent the Venture is not reimbursed by any
insurance policies with respect to such costs and expenses. The provisions of
this Section 4.5 shall survive termination of this Agreement.
4.6 COMPETITION. Each Venturer may have other business interests and may
engage in any other business or trade, individually, in partnership or
association with others or in any capacity whatsoever, whether or not such
business competes with the Venture. No Venturer shall be required to devote its
entire time or attention to the business of the Venture or, in any event, more
time or attention than shall reasonably be required to carry out its obligations
under this Agreement. Provided, however, that neither Venturer, nor any
corporation owned or controlled by the parties listed on Exhibits "E" and "F"
hereto shall be
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involved in the construction of "zero lot-line" single family homes in any
community located within a three mile radius of the sewer lift station located
in the Project until such time as contracts have been signed for at least 85% of
the homes to be constructed in the Project. This limitation shall not apply to
any community wherein either Venturer or any related entity is presently
constructing homes of any type.
ARTICLE FIVE
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS FROM OPERATIONS AND FROM CAPITAL TRANSACTIONS. Except as
provided below, the Adjusted Net Income or Adjusted Net Loss of the Venture from
operations and any income (including gain) or losses resulting from any Interim
or Terminating Capital Transactions as calculated for federal income tax
purposes and reported by the Venture on its U.S. Partnership Return of Income
for each fiscal year (or portion thereof) during the term of this Agreement,
shall be allocated to the Venturers pro rata in accordance with their respective
Venture Percentages.
5.2 DISTRIBUTION OF AVAILABLE CASH. Periodically, but not less
frequently than quarterly, the Available Cash of the Venture, if any, shall be
distributed to the Venturers in accordance with the provisions of this Section
5.2. Available Cash will be distributed to the Venturers as follows and in the
following order of priority:
(a) First: To the Venturers in repayment of the principal
amounts and accrued interest owing to the Venturers in
respect of any loans made by the Venturers to the
Venture. Amounts so distributed shall be applied first
to accrued interest and then to principal.
(b) Second: To the Venturers, PRO RATA, in accordance with
their then respective Unreturned Capital Contributions.
(c) Third: To the Venturers, PRO RATA, in accordance with
their then respective Venture Percentages.
5.3 DISTRIBUTION FOLLOWING TERMINATING CAPITAL TRANSACTIONS.
Distributions following a Terminating Capital Transaction shall be distributed
in the manner set forth in Section 8.2.
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5.4 DISTRIBUTION IN CASH ONLY. Except as the Venturers may otherwise
agree, no Venturer in his capacity as a Venturer shall have the right to demand
or receive property other than cash (as and when provided herein) from the
Venture for any reason whatsoever and no Venturer shall have the right to sue
for partition of the Venture or for the Venture's assets.
ARTICLE SIX
FISCAL MATTERS
6.1 ACCOUNTING YEAR. The fiscal year of the Venture for accounting
purposes ("Accounting Year") and for income tax purposes shall end on December
31.
6.2 BOOKS AND RECORDS. The Venture shall retain two sets of accountants.
The first group of accountants ("Basic Accountants") shall keep, or cause to be
kept, full and accurate books and records of all transactions of the Venture on
the accrual method of accounting. The Basic Accountants shall be responsible for
the routine day-to-day accounting functions of the Venture and the preparation
of periodic reports, excepting the annual audit to be performed for the Venture.
The second group of accountants ("Audit Accountants") shall be responsible for
the preparation of the annual audited financial statements of the Venture. All
organizational records of the Venture and other records required to be kept by
the Venture under the Law shall, at all times, be maintained at the Venture's
record-keeping office referred to in Section 2.3 hereof, and shall be open
during ordinary business hours for inspection and copying upon the reasonable
request and at the expense of any Venturer and its authorized representatives.
6.3 REPORTS AND STATEMENTS.
(a) ANNUAL REPORTS. Within sixty (60) days after the end of each
Accounting Year, the Basic Accountants shall, at the expense of the Venture,
cause to be delivered to the Venturers a balance sheet of the Venture as of the
end of such Accounting Year and a profit and loss statement for such Accounting
Year. Such financial statements shall be prepared on a federal income tax basis,
and shall be accompanied by such other information as may be reasonably
necessary for the Venturers to be advised of the financial status and results of
operations of the Venture.
In addition, within ninety (90) days after the end of each Accounting
Year, the Audit Accountants shall, at the expense of the Venture, cause to be
delivered to the Venturers audited financial statements of the Venture prepared
by the Audit Accountants, which financial
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statements shall include a balance sheet of the Venture as of the and of such
Accounting Year, a profit and loss statement for such Accounting Year and a
sources and uses of cash statement for such Accounting Year.
(b) QUARTERLY REPORTS. Within twenty (20) days after the end of
each quarter of an Accounting Year, the Project Manager shall, at the expense of
the Venture, cause to be delivered to the Venturers a quarterly status report
setting forth the following:
(i) An unaudited financial statement of the Venture
for the preceding quarter including an income
statement, balance sheet as of the last day of
the quarter and a statement as to the sources
and uses of Venture cash;
(ii) A comparison of the quarterly financial
statement with the Budget and Cash Flow Analysis
portions of the Business Plan applicable to the
transactions reflected in the quarterly
financial statement;
(iii) A narrative description of the Venture's
operations during the preceding quarter and its
financial condition and status at the end of the
quarter;
(iv) A description of any material default by the
Venture in any of its contractual obligations or
indebtedness and a description of any material
default by a party contractually obligated to
the Venture, and the intended action of the
Venture with respect to any such default; and
(v) Any other matters which are necessary or helpful
to enabling the Venturers to be fully apprised
as to all material matters relating to the
Venture.
6.4 TAX RETURNS. The Venture Accountants shall prepare or cause to be
prepared, all tax returns and statements, if any, that must be filed on behalf
of the Venture with any taxing authority and shall make or cause to be made the
timely filing thereof. The tax returns shall be prepared and distributed to the
Venturers for approval within a reasonable time after the end of each Accounting
Year.
6.5 TAX ELECTIONS. The Venturers shall determine, from time to time,
whether or not to make or attempt to revoke any and all tax elections regarding
depreciation methods and recovery periods, capitalization of construction period
expenses, amortization of organizational and start-up expenditures, basis
adjustments upon admission or retirement of Venturers, and any other federal,
state or local income tax elections.
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6.6 BANK ACCOUNTS. The Venturers may authorize the establishment of
Venture accounts for the Venture at banks, savings and loan associations or
other financial institutions ("Accounts") selected by the Venturers. The initial
parties who shall be authorized signatories for such accounts are set forth on
Exhibit "G" attached hereto. No funds of the Venture shall be co-mingled with
funds of any Venturer or any other individual or entity.
ARTICLE SEVEN
TRANSFER OF VENTURE INTEREST
7.1 GENERAL PROHIBITION. Except as expressly provided herein and except
with the prior written consent of all the Venturers, no Venturer shall sell,
transfer, assign, syndicate, pledge, encumber or otherwise dispose of, either
voluntarily, involuntarily, by operation of law or otherwise ("Transfer") all or
any part of its Venture Interest unless made pursuant to and in compliance with
this Article Seven and unless a copy of an executed and acknowledged assignment
effecting such Transfer has been filed with the Venture. A transaction which
results in any Person other than the parties listed on Exhibit "E" hereto
owning, directly or indirectly, a controlling portion of the outstanding capital
stock of Transeastern shall constitute a Transfer of Transeastern's Venture
Interest . A transaction which results in any Person other than the parties
listed on Exhibit "F" hereto owning, directly or indirectly, a controlling
portion of the outstanding capital stock of Cumber shall constitute a Transfer
of Cumber's Venture Interest. Any purported Transfer of a Venture Interest in
violation of the provisions of this Agreement shall be violation hereof, and
shall be null, void and of no force and effect. Provided, however, that the
foregoing prohibition shall not operate to prevent any of the parties listed on
Exhibits "E" and "F" from transferring all or any portion of the stock in
Transeastern or Cumber owned by such person to any member of such person's
immediate family or to any trust, corporation or other entity controlled by such
person.
7.2 RIGHTS OF ASSIGNEE. Any Transfer of a Venture Interest (or any part
thereof) to a Person ("Assignee") who is not admitted to the Venture as a
Venturer shall vest in such Person only the rights of an assignee, and shall not
entitle the Assignee to be admitted to the Venture as a Venturer. An Assignee
who has not been admitted to the Venture as a Venturer shall only have the right
to receive the share of profits, losses, tax credits and distributions of the
Venture to which the assigning Venturer would have been entitled with respect to
the Venture Interest (or a portion thereof) so assigned and shall have no right
to require any information or
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accounting of the Venture's transactions or finances or to inspect Venture
books, or to exercise any powers or other rights including voting and consent
rights, incidental to ownership of a Venture Interest. Admission of an Assignee
to the Venture as a Venturer in the manner hereinafter provided shall vest in
such person all rights and powers, and subject such person to all duties and all
obligations thereafter arising, of a Venturer.
7.3 ADMISSION OF VENTURERS. A Venturer may Transfer all or any part of
its Venture Interest to an Assignee to be admitted to the Venture as a Venturer
if all of the following conditions are met:
(a) All other Venturers consent in writing to the Transfer and
the admission of the Assignee as a Venturer, which consent may be withheld at
the non-transferring Venturer's sole discretion, it being agreed that the
parties hereto have entered into this Agreement in reliance upon the special
expertise, experience, financial strength, reputation and personal integrity of
the principals of each of the Venturers;
(b) The Assignee agrees in writing to be bound by the provisions of this
Agreement;
(c) The Assignee executes any and all documents, including an amendment
to this Agreement, required to effectuate or evidence its admission to the
Venture;
(d) The Venture has received an opinion of counsel to the effect that
the contemplated Transfer and admission of the Assignee as a Venturer will not
cause the termination of the Venture for federal income tax purposes or cause
the Venture not to be treated as a partnership for federal income tax purposes
or cause any other materially adverse impact to the Venture or any Venturer;
(e) The Assignee reimburses the Venture for all reasonable costs and
expenses (including reasonable attorney's fees) incurred in connection with the
Transfer and admission;
(f) The Assignee shall have delivered to the Venture, in writing, the
consent or waiver of the applicable parties to any note, mortgage, loan
agreement, contract or similar instrument or document to which the Venture is a
party and as to which the proposed Transfer may be a violation, event of default
under, or give rise to a right of acceleration; and
(g) The Assignee is not a minor or legal incompetent.
7.4 BLIND OPTION. (a) Without regard to any restrictions contained in
this Agreement or any other agreements between the Venture and third parties,
the Venturers shall each have the right (the Venturer exercising such right as
hereinafter set forth being referred to as the "Offeror") to purchase all, but
not less than all, of the Venture Interest of the other
14
<PAGE>
Venturer (the "Offeree") at any time that is at least eighteen (18) months after
the date hereof by delivering written notice of its election to do so (the
"Triggering Notice") setting forth (i) its offer to purchase the Offeree's
Venture Interest, (ii) the value at which the Offeror values the Venture's
assets after the assumed satisfaction of all Venture obligations so such assets
are free and clear of all liabilities (the "Assumed Net Asset Value"), (iii) the
amount ("Offeree Payment") that would be distributed to the Offeree as a final
distribution if all assets of the Venture were sold on the Purchase Date, such
sale resulted in proceeds to the Venture equal to the Assumed Net Asset Value,
and the proceeds were distributed among the Venturers in liquidation without any
reserve, in accordance with the provisions of this Agreement, (iv) a closing
date for the purchase (the "Purchase Date"), which shall be no later than one
hundred fifty (150) days, and no less than one hundred twenty (120) days after
the date of the Triggering Notice, (v) the amount ("Offeror Payment") that would
be paid to the Offeror as the final distribution the Offeror would receive in
such a liquidation, and (vi) the calculations made by the Offeror in concluding
that proceeds equal to the Assumed Net Asset Value would result in an Offeree
Payment and an Offeror Payment in the amounts set forth.
The Triggering Notice shall be accompanied by a copy of a check made
payable to a title company, bank or law firm willing to act as escrow agent, in
its capacity as such (the "Escrow Agent"), in an amount equal to five percent
(5.0%) of the Offeree Payment, the original of which was delivered by the
Offeror to the Escrow Agent as a down payment on the proposed purchase by the
Offeror (the "Offeror's Deposit"), and an escrow agreement executed by the
Offeror and the Escrow Agent pursuant to which the Escrow Agent acknowledges
receipt of the Offeror's Deposit and agrees to hold and apply same in accordance
with the provisions hereof.
(b) If the Offeree disputes the calculations made to arrive at
either the Offeror Payment or Offeree Payment set forth in the Triggering Notice
(no disputes may be based upon the Assumed Net Asset Value), the Offeree may,
within five days after delivery of the Triggering Notice, submit the dispute to
the Venture Accountants and, within ten days, the Venture Accountants shall make
a determination as to the dispute, all parties shall be bound thereby, and the
Offeror Payment and Offeree Payment shall thereafter be the amount established
by the Venture Accountants, if different than the amounts established by the
Offeror. The Offeree shall have the right, exercisable by delivery of written
notice to the Offeror not more than ninety (90) days after receipt of the
Triggering Notice (the "Election Notice") to elect to either (1) sell such
Offeree's Venture Interest to the Offeror for a price equal to the Offeree
Payment, or (2) purchase the Venture Interest of the Offeror for a cash purchase
price equal to the Offeror Payment.
15
<PAGE>
If the Offeree elects to purchase the Venture Interest of the Offeror,
then the Offeree shall, concurrent with the delivery of the Election Notice,
deliver a check payable to the Escrow Agent in an amount equal to five percent
(5.0%) of the Offeror Payment, as a down payment on the purchase by the Offeree
(the "Offeree's Deposit") and an agreement executed by the Offeree authorizing
the Escrow Agent to hold and apply the Offeree's Deposit pursuant to the
provisions hereof. The Offeree shall also authorize the Escrow Agent to return
the Offeror's Deposit, plus any interest accrued thereon, to the Offeror. In the
event the Offeree does not deliver an election Notice within ninety (90) days
after delivery of the Triggering Notice, the Offeree shall be deemed to have
accepted the offer by the Offeror to purchase the Offeree's Venture Interest in
return for the Offeree Payment.
(c) On the Purchase Date, the Offeree, unless it has delivered a
timely Election Notice and otherwise complied with the provisions of the
preceding paragraph, shall sell, and the Offeror shall purchase, the Venture
Interest of the Offeree for the Offeree Payment by directing the Escrow Agent to
deliver the Offeror's Deposit to the Offeree (including any interest accrued
thereon) and delivering the balance of the Offeror Payment to the Offeree by
cashier's check, federal funds wire or law firm trust account check. If the
Offeree has duly delivered an Election Notice and otherwise complied with the
provisions of the preceding paragraph, then, on the Purchase Date, the Offeree
shall purchase the Venture Interest of the Offeror and the Offeror shall sell
its Venture Interest to the Offeree for the Offeror Payment which shall be made
by the Offeree directing the Escrow Agent to disburse the Offeree's Deposit
(including any interest accrued thereon) to the Offeror and the Offeree paying
the balance of the Offeror Payment to the Offeror by cashier's check, federal
funds wire or law firm trust account check. If the purchasing Venturer shall
fail to complete the purchase on the Purchase Date through no fault of the
selling Venturer, unless the Offeror and Offeree mutually notify the Escrow
Agent to the contrary, the Escrow Agent shall deliver the Deposit made by the
defaulting Venturer, plus any interest accrued thereon, to the selling Venturer
as liquidated damages for the failure of the purchasing Venturer to complete the
purchase.
(d) After delivery of a Triggering Notice, no Venturer shall be
obligated to contribute any Additional Capital in accordance with the terms
hereof. Any Venturer may make a loan to the Venture, at two percent (2%) over
the Stipulated Rate, during the period from delivery of a Triggering Notice
until the Purchase Date, which loan shall be repaid if made by a selling
Venturer, on the Purchase Date.
(e) On the Purchase Date, the Venturer selling its Venture
Interest ("Seller") shall, in writing, represent and warrant to the purchasing
Venturer ("Purchaser") that the Seller's Venture Interest is owned by the Seller
free and clear of all claims and encumbrances and that
16
<PAGE>
valid title to the Seller's Venture Interest will be vested in the Purchaser (or
its designees) upon consummation of the transaction. The Purchaser may designate
one or more Persons to take title to all or any portion of the Venture Interest
being conveyed.
(f) The Purchaser hereunder must arrange for all loans owed by
the Venture to a Seller (or its Affiliates) to be paid in full at the closing on
the Purchase Date. Failure to do so shall be deemed a default for which the
above liquidated damages provision shall be applicable.
(g) At the closing of the purchase and sale of any Venture
Interest pursuant to this Section 7.4, the Seller shall assign, transfer and
convey the Venture Interest to be purchased to the Purchaser. In addition,
Purchaser shall be required to obtain and deliver to Seller the unconditional
release of Seller (and, if separate guaranties have been made by same, to any
shareholder, partner or other Affiliate of the Seller), from any and all
contractual obligations, contingent or otherwise, for monies borrowed by the
Venture and for contractual guaranties or contractual undertakings of the
Venture for which Seller (and/or its shareholders, partners or other Affiliates)
may be personally liable.
ARTICLE EIGHT
DISSOLUTION - TERMINATION
8.1 DISSOLUTION. It is the intention of the Venturers that the business
of the Venture be continued by the Venturers pursuant to the provisions of this
Agreement until such time as the occurrence of an "Event of Termination," as
hereinafter defined, at which time the Venture shall dissolve. The occurrence of
any of the following shall be deemed an "Event of Termination:"
(a) The sale of all or substantially all of the assets of the
Venture;
(b) The written decision by the Venturers that the Venture should be
dissolved;
(c) The Venture or a Venturer shall suffer a Bankruptcy; or
(d) December 31, 2003.
8.2 WIND-UP. Upon the dissolution of the Venture, the Venture
Accountants shall make a final accounting of the business and affairs of the
Venture and the Venturers shall proceed with reasonable promptness to liquidate
the business, property and assets of the Venture and to distribute the proceeds
in the following order of priority:
17
<PAGE>
(a) To the payment of expenses of any sale, disposition or
transfer of the Venture assets in liquidation of the Venture;
(b) To the payment of just debts and liabilities of the Venture
(including to any Venturers), in the order of priority provided by this
Agreement;
(c) To the establishment of a reasonable reserve for contingent
expenses, final legal, accounting and similar expenses incurred in connection
with liquidating the Venture and for other unforeseen and miscellaneous
expenses. In addition, the sum of $200,000.00 shall be deposited into a reserve
for the payment of any warranty claims by homeowners. Such reserves, when no
longer needed for the purposes established, shall be distributed as provided in
subparagraphs (d) through (f) below;
(d) To the Venturers, PRO RATA, in accordance with their
respective Unreturned Capital Contributions;
(e) To the Venturers, PRO RATA, in accordance with their
respective Venture Interests.
The Venturers may elect to distribute the remaining property and assets
of the Venture, if any, in kind, in lieu of selling them, based upon the then
existing fair market value thereof and after allocating to the Venturers, in
accordance with their respective interests in the Venture, any unrealized gain
inherent in such assets.
The wind-up of the affairs of the Venture shall be conducted by the
Venturers. In liquidating the assets of the Venture, all tangible assets of a
saleable value shall be sold at such price and terms as the Venturers determine
to be fair and equitable. Any Venturer may purchase such assets at such sale. It
shall not be necessary to sell any intangible assets of the Venture. A
reasonable time shall be allowed for the orderly liquidation of the assets of
the Venture and the discharge of liabilities to creditors to minimize the losses
that might otherwise occur upon liquidation.
ARTICLE NINE
GENERAL PROVISIONS
9.1 RELATIONSHIP. Nothing contained in this Agreement shall be deemed or
construed to constitute any Venturer as a general partner, employee or agent of
the other Venturer, other than in connection with activities included within the
purpose and scope of the Venture as set forth herein and subject to limitations
upon same, as set forth herein.
18
<PAGE>
9.2 NOTICE. All notices, demands or other communications given hereunder
shall be in writing and shall be deemed to have been duly given only upon hand
delivery thereof, including by recognized overnight courier, or upon the first
business day after mailing by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Transeastern: 3300 University Drive
Coral Springs, FL 33064
If to Cumber: 10100 West Sample Road
Suite 205
Coral Springs, FL 33065
or at such other address, or to such other person and at such address for that
person, as any party shall designate in writing to the other Venturer for such
purpose in the manner hereinabove set forth.
9.3 ENTIRE AGREEMENT. This Agreement sets forth all the promises,
covenants, agreements, conditions and understandings between the parties hereto,
and supersedes all prior and contemporaneous agreements, understandings,
inducements or conditions expressed or implied, oral or written, except as
herein contained.
9.4 AGENCY. Except as provided herein, nothing herein contained shall be
construed to constitute any Venturer the agent of any other Venturer or to limit
in any manner the Venturers in the carrying on of their own respective
businesses or activities.
9.5 BINDING EFFECT, NO ASSIGNMENT. This Agreement shall be binding upon
the parties hereto, their heirs, administrators, successors and permitted
assigns. No party may assign or transfer its interests herein, or delegate its
duties hereunder, except as expressly provided herein.
9.6 AMENDMENT. The parties hereby irrevocably agree that no attempted
amendment, modification, termination, discharge or change (collectively,
"Amendment") of this Agreement shall be valid and effective, unless the parties
shall unanimously agree in writing to such Amendment.
19
<PAGE>
9.7 NO WAIVER. No waiver of any provision of this Agreement shall be
effective unless it is in writing and signed by the party against whom it is
asserted, and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be a continuing or
future waiver.
9.8 GENDER AND USE OF SINGULAR AND PLURAL. All pronouns shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the party or parties, or their personal representatives, successors and
assigns may require.
9.9 COUNTERPARTS. This Agreement and any amendments may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
9.10 HEADINGS. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement.
9.11 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Florida and any proceeding arising between the parties
in any manner pertaining or related to this Agreement shall, to the extent
permitted by law, be held in Broward County, Florida.
9.12 FURTHER ASSURANCES. The parties hereto will execute and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
9.13 PROVISIONS SEVERABLE. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules, and regulations of the jurisdiction in which the parties do
business. If any provision of this Agreement, or the application thereof to any
person or circumstance shall, for any reason or to any extent, be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
20
<PAGE>
9.14 LITIGATION. If any party hereto is required to engage in litigation
against any other party hereto, either as plaintiff or as defendant, in order to
enforce or defend any of its rights under this Agreement, and such litigation
results in a final judgment in favor of such party ("Prevailing Party"), then
the party or parties against whom said final judgment is obtained shall
reimburse the Prevailing Party for all direct, indirect or incidental expenses
incurred by the Prevailing Party in so enforcing or defending its rights
hereunder including, but not limited to, all attorney's fees and court costs and
other expenses incurred throughout all negotiations, trials or appeals
undertaken in order to enforce the Prevailing Party's rights hereunder.
9.15 REMEDIES. Each party hereto recognizes and agrees that the
violation of any term, provision or condition of this Agreement may cause
irreparable damage to the other parties which may be difficult to ascertain, and
that the award of any sum of damages may not be adequate relief to such parties.
Each party, therefore, agrees that, in addition to other remedies available in
the event of a breach of this Agreement, any party shall have a right to
equitable relief including, but not limited to, the remedy of specific
performance.
9.16 NO FOREIGN PERSON WITHHOLDING. Each of the Venturers hereby
represent and warrant for the benefit of the other that it is not a "foreign
person" within the meaning of Code Section 1445.
9.17 NO RECORDATION. Neither this Agreement nor any memorandum thereof
shall be recorded among the public records of any governmental authority.
21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
H.A. CUMBER OF PEMBROKE PINES,
INC.,
a Florida corporation, general partner
- ------------------------
Print Name:__________________ By:______________________
Aftab H. Cumber,
President
(Corporate Seal)
- ------------------------
Print Name:__________________ Dated: February ___, 1994
TRANSEASTERN PEMBROKE PROPERTIES,INC.,
a Florida Corporation, general partner
- ------------------------
Print Name:__________________
By:_____________________
Arthur Falcone,
President
(Corporate Seal)
- ------------------------
Print Name:__________________ Dated: February ___, 1994
22
<PAGE>
EXHIBIT DESCRIPTION
A Legal Description of the Property
B Definitions
C Authoritzed signatories for house closings
D Guarantors of Approved Mortgage Loans
E Stockholders of Transeastern Pembroke Properties, Inc.
F Stockholders of A.H. Cumber of Pembroke Pines, Inc.
G Authorized signatories for Venture Bank Accounts
<PAGE>
EXHIBIT "A"
(Legal Description of the Property)
<PAGE>
EXHIBIT "B"
(Definitions)
(a) ADJUSTED NET INCOME AND ADJUSTED NET LOSS. "Adjusted Net Income" or
"Adjusted Net Loss" means the net income or loss of the Venture resulting from
Venture operations during any stated period, as calculated by the Venture
Accountants for federal income tax purposes, provided that gain or loss
resulting from any disposition of property with respect to which gain or loss is
recognized for federal income tax purposes shall be computed by reference to the
Gross Asset Value of the property disposed of, notwithstanding that the adjusted
tax basis of such property differs from its Gross Asset Value.
(b) AFFILIATE. Any of the following: (i) any person or entity directly
or indirectly controlling, controlled by or under common control with a
Venturer, (ii) a person or entity owning or controlling ten percent (10%) or
more of the outstanding voting equity of a Venturer, (iii) any officer, director
or partner of a Venturer or an employee acting in a similar capacity, and (iv)
if such other person is an officer, director, partner or similar employee of a
Venturer, any entity for which such person acts in any such capacity.
(c) AGREEMENT. This Joint Venture Agreement of Parkside Homes, a Florida
general partnership, as originally executed and as amended from time to time, as
the context requires.
(d) AVAILABLE CASH. Cash of the Venture, excluding cash proceeds from a
Terminating Capital Transaction, if any, not needed to satisfy current
liabilities, upcoming capital expenditures or as a reasonable reserve for either
and thus available for distribution to the Venturers, which may include, but
shall not be limited to, cash proceeds generated by Venture operations and
Interim Capital Transactions, including financing and refinancing (which term,
"refinancing" is defined, for all purposes under this Agreement, to include
financing which has been recast, modified, extended or increased).
(e) BANKRUPTCY. As used in this Agreement, the term "Bankruptcy" with
respect to the Venture or a Venturer, shall refer to:
(1) the appointment of a receiver, conservator, rehabilitator or
similar officer for the Venture, a Venturer or any person or entity that has
majority voting rights with respect to any Venturer, unless the appointment of
such officer shall be vacated and such officer discharged within one hundred
twenty (120) days of the appointment; (2) the taking of possession of, or the
assumption of control over, all or any substantial part of the property of the
Venture, any Venturer or any person or entity that has majority voting rights
with respect to any Venturer by any receiver, conservator, rehabilitator or
similar officer or by the United States Government or any agency thereof, unless
such property is relinquished within one hundred twenty (120) days of the
taking; (3) the filing of a petition in bankruptcy or the commencement of any
proceeding under any present or future federal or state law relating to
bankruptcy, insolvency, debt relief or reorganization of debtors by or against
the Venture, any Venturer or any person or entity that has majority voting
rights with respect to any Venturer provided, if filed against the Venture, any
Venturer or the person or entity that has majority voting rights with respect to
any Venturer, such petition or proceeding is not dismissed within thirty (30)
days of the filing of the petition or the commencement of the proceeding; (4)
the making of an assignment for the benefit of creditors or a private
composition, arrangement or adjustment with the creditors of the Venture, any
Venturer or any person or entity that has majority voting rights with respect to
any Venturer; or (5) the commencement of any
<PAGE>
proceedings supplementary to the execution of any judgment against the Venture,
any Venturer or any person or entity that has majority voting rights with
respect to any Venturer, unless such proceeding is dismissed within thirty (30)
days of the date it was commenced.
(f) CAPITAL ACCOUNTS. Throughout the full term of the Venture, each
Venturer shall have a separate Capital Account determined and maintained in
accordance with the provisions of Treasury Regulations Section
1.704-l(b)(2)(iv), promulgated under Code Section 704(b).
(g) CAPITAL CONTRIBUTION.The total amount of money or the agreed fair
market value of property other than money contributed by each Venturer to the
capital of the Venture, as reflected in the books of the Venture.
(h) CODE. The Internal Revenue Code of 1986, as amended from time to
time, or any corresponding provision or provisions of any federal internal
revenue law enacted in substitution of the Internal Revenue Code of 1986.
(i) EVENT OF TERMINATION. Any of the events that result in dissolution
of the Venture as set forth in Section 8.1 hereof.
(j) PERSON. Any individual, trust, partnership, corporation, joint
venture, or other entity or association, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person.
<PAGE>
EXHIBIT "C"
(Authoritzed Signatories for House cCosings)
<PAGE>
EXHIBIT "D"
(Guarantors of Approved Mortgage Loans)
<PAGE>
EXHIBIT "E"
(Stockholders of Transeastern Pembroke Properties, Inc.)
<PAGE>
EXHIBIT "F"
(Stockholders of A.H. Cumber of Pembroke Pines, Inc.)
<PAGE>
EXHIBIT "G"
(Authorized Signatories for Venture Bank Accounts)
<PAGE>
ADDENDUM TO JOINT VENTURE AGREEMENT
OF
PARKSIDE HOMES
THIS ADDENDUM TO JOINT VENTURE AGREEMENT OF PARKSIDE HOMES (the
"Addendum") is made and entered into as of May __, 1994, by and between
TRANSEASTERN PEMBROKE PROPERTIES, INC., a Florida corporation ("Transeastern")
and H.A. CUMBER OF PEMBROKE PINES, INC., a Florida corporation ("Cumber").
Transeastern and Cumber are sometimes hereinafter referred to individually as
"Venturer" and collectively as "Venturers."
WITNESSETH
WHEREAS, the Venturers have heretofore executed that certain Joint
Venture Agreement dated February 19, 1994 (the "Agreement"), pursuant to which
the Venturers have agreed to participate together in a joint venture (the
"Venture") formed under the general partnership law of the State of Florida for
the acquisition of certain real property located in Broward County, Florida, as
more fully described on Exhibit "A" attached hereto, and the construction
thereon of single family residences for sale to the public (such real property
and the improvements to be constructed thereon being hereafter referred to as
the "Project"); and
WHEREAS, the Venturers have reached agreement regarding certain
modifications to the Agreement and wish to reduce their agreement regarding such
modifications to a written instrument.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein, the parties hereby agree as follows:
1. INCORPORATION BY REFERENCE. The foregoing recitals are hereby
acknowledged to be true and are incorporated herein by reference, and all
Exhibits annexed hereto and referred to herein are incorporated herein by
reference.
2. RATIFICATION OF AGREEMENT. The terms, covenants and conditions of the
Agreement remain in full force and effect and are hereby expressly ratified by
the parties.
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<PAGE>
3. SELECTION OF PROJECT MANAGER. Section 4.2 of the Agreement is hereby
modified to provide that Transeastern Properties of South Florida, Inc.
("Transeastern Properties") shall serve as the Project Manager (as defined in
the Agreement) . All references in the Agreement to the Project Manager shall be
deemed to refer to Transeastern Properties in its capacity as Project Manager.
4. COMPENSATION OF PROJECT MANAGER. As compensation for its services as
Project Manager, Transeastern Properties shall be entitled to receive the sum of
$200,000.00 for the calendar year 1994, payable in twelve equal monthly
installments of $16,666.66 per month. Transeastern Properties shall be entitled
to receive the sum of One Hundred Thousand Dollars per annum for all calendar
years after 1994, payable in equal monthly installments of $8,333.33 per month,
through completion of the sale of houses within the Project. All such monthly
payments shall be due and payable on the first day of each month. The
compensation due to Transeastern Properties shall be an expense of the Venture,
shall be paid from the funds of the Venture and shall be included as an
operating expense of the Venture in determining the Available Cash of the
Venture. Prior to the commencement of sales of completed houses by the Venture,
the Venture shall pay such amount to Transeastern on a monthly basis. Cumber
shall not be entitled to any credit against its capital account in the venture
on account of such payments. Payment of the installments due for the months of
January - May, 1994 has been made concurrent with the execution hereof. The
provisions of Section of the Agreement shall be deemed modified to provide that
such monthly management fee paid to Transeastern from the Venture's funds shall
be charged against any Distribution of Available Cash due to Cumber under the
Agreement.
5. MISCELLANEOUS.
A. HEADINGS. The article and section headings contained in this Addendum
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of the Addendum or the Agreement.
B. GOVERNING LAW. This Addendum shall be construed in accordance with
the laws of the State of Florida and any proceeding arising between the parties
in any manner pertaining or related to this Addendum shall, to the extent
permitted by law, be held in Broward County, Florida.
C. EXTENT OF MODIFICATION. Except as expressly modified by the terms and
conditions hereof, the terms, covenants and conditions of the Agreement shall be
otherwise left unaffected, and are hereby ratified and confirmed in all
respects.
34
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Addendum the day and
year first above written.
H.A. CUMBER OF PEMBROKE PINES,
INC., a Florida corporation, general partner
- ------------------------
Print Name:__________________ By:______________________
Aftab H. Cumber,
President
(Corporate Seal)
- ------------------------
Print Name:__________________ Dated: May ___, 1994
TRANSEASTERN PEMBROKE
PROPERTIES,INC., a Florida Corporation, general
partner
- ------------------------
Print Name:__________________
By:_____________________
Arthur Falcone,
President
(Corporate Seal)
- ------------------------
Print Name:__________________ Dated: May ___, 1994
35
<PAGE>
SECOND
ADDENDUM TO JOINT VENTURE AGREEMENT
OF
PARKSIDE HOMES
THIS SECOND ADDENDUM TO JOINT VENTURE AGREEMENT OF PARKSIDE HOMES (the
"Addendum") is made and entered into as of May __, 1996, by and between
TRANSEASTERN PEMBROKE PROPERTIES, INC., a Florida corporation ("Transeastern")
and H.A. CUMBER OF PEMBROKE PINES, INC., a Florida corporation ("Cumber").
Transeastern and Cumber are sometimes hereinafter referred to individually as
"Venturer" and collectively as "Venturers."
WITNESSETH
WHEREAS, the Venturers have heretofore executed that certain Joint
Venture Agreement dated February 16, 1994 (the "Agreement"), pursuant to which
the Venturers agreed to participate together in a joint venture (the "Venture")
formed under the general partnership law of the State of Florida for the
acquisition of certain real property located in Broward County, Florida, as more
fully described on Exhibit "A" attached hereto, and the construction thereon of
single family residences for sale to the public (such real property and the
improvements to be constructed thereon being hereafter referred to as the
"Project"); and
WHEREAS, pursuant to the provisions of that certain Addendum to Joint
Venture Agreement dated July 1, 1994 (the "First Addendum"), the Venturers
agreed to certain modifications to the Agreement as more fully set forth in the
Addendum; and
WHEREAS, the Venturers have reached agreement regarding certain
additional modifications to the Agreement and wish to reduce their agreement
regarding such additional modifications to a written instrument.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein, the parties hereby agree as follows:
1. INCORPORATION BY REFERENCE. The foregoing recitals are hereby
acknowledged to be true and are incorporated herein by reference, and all
Exhibits annexed hereto and referred to herein are incorporated herein by
reference.
36
<PAGE>
2. RATIFICATION OF AGREEMENT. The terms, covenants and conditions of the
Agreement, as modified by the First Addendum, remain in full force and effect
and are hereby expressly ratified by the parties.
3. MODIFICATION OF MAJOR DECISIONS. Section 4.1 of the Agreement sets
forth various "Major Decisions," which require the consent of both of the
Venturers. The Venturers hereby agree that the provisions of Section are hereby
modified to provide that the Major Decisions shall henceforth be as follows: (a)
The sale, exchange or other disposition of all, or substantially all, of the
property and assets of the Venture, other than the sale of individual lots and
houses to be constructed thereon within the Project; (b) A decision to dissolve
the Venture;
4. MANAGING VENTURER. From the date of this Addendum, Transeastern shall
be the Managing Venturer, and in such capacity shall have the following
responsibilities and all authority necessary to the performance of such
responsibilities:
(a) Approval of any material modification to the approved
Business Plan including, without limitation, any material
modification to the Budget or Cash Flow Analysis and any
other component thereof;
(b) Approval of modifications to the layout or facade of
houses, adjustments to lot sizes, adjustments to selling
prices and incurring of expenditures not contemplated by
the Budget but which do result in increasing the Budget by
more than ten percent (10%) shall not be deemed material
modifications;
(c) To authorize the Venture to enter into an Approved
Mortgage or any other financing arrangements, whether or
not secured by any portion of the Property and whether or
not with or without recourse to the assets of the Venture,
including routine equipment leases or other installment
obligations that are substantially consistent with the
Business Plan, including the Budget and Cash Flow
Analysis;
(d) To authorize any transaction, not expressly authorized
herein, between the Venture and a Venturer or any
Affiliate of a Venturer. Provided, however, that any such
material transactions which provide for the payment of
compensation in excess of amounts which could be
reasonably negotiated at arms length with qualified
non-affiliated third parties for the performance of such
services will require approval of all Venturers;
(e) To authorize the Venture to enter into a joint venture or
similar arrangement with third parties for the purpose of
developing any portion of the Property or for any other
purpose; and
(f) To authorize an expansion or restriction of the authority
of the Project Manager to act with respect to any matter
concerning the Venture.
All power and authority of the Venture not expressly delegated herein to
the Venturers
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shall be vested in the Managing Venturer. For purposes of the foregoing, any
reference in this Agreement to an act, approval, consent or other event
occurring "by the Venturers," "from the Venturers," "in the Venturers" or "of
the Venturers" shall mean by unanimous consent of the Venturers.
5. MISCELLANEOUS.
A. HEADINGS. The article and section headings contained in this Addendum
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of the Addendum or the Agreement.
B. GOVERNING LAW. This Addendum shall be construed in accordance with
the laws of the State of Florida and any proceeding arising between the parties
in any manner pertaining or related to this Addendum shall, to the extent
permitted by law, be held in Broward County, Florida.
C. EXTENT OF MODIFICATION. Except as expressly modified by the terms and
conditions hereof, the terms, covenants and conditions of the Agreement, as
heretofore modified by the Addendum, shall be otherwise left unaffected, and are
hereby ratified and confirmed in all respects.
IN WITNESS WHEREOF, the parties have executed this Addendum the day and
year first above written.
H.A. CUMBER OF PEMBROKE PINES,
INC., a Florida corporation, general partner
- ------------------------
Print Name:__________________ By:__________________________________
Aftab A. Cumber, President
(Corporate Seal)
- ------------------------
Print Name:__________________ Dated: May ___, 1996
TRANSEASTERN PEMBROKE
PROPERTIES,INC.,
a Florida Corporation, general partner
- ------------------------
Print Name:__________________
By:_________________________________
Arthur J. Falcone, President
(Corporate Seal)
- ------------------------
Print Name:__________________ Dated: May ___, 1996
38
EXHIBIT 10.9
LAND ACQUISITION AND DEVELOPMENT
LOAN AGREEMENT
THIS LAND ACQUISITION AND DEVELOPMENT LOAN AGREEMENT is made as of
the _________ day of ____________________________, 1995, by and between
TRANSEASTERN ABERDEEN PROPERTIES, INC., a Florida corporation ("Borrower") and
BERKELEY FEDERAL BANK & TRUST FSB ("Lender").
PRELIMINARY STATEMENTS
A. Borrower has requested Lender to make an acquisition and development
loan to Borrower in the maximum aggregate principal amount of Twenty-three
Million Nine Hundred Thousand and No/100 Dollars ($23,900,000.00) (the
"Acquisition and Development Loan" or "Loan"), and Lender has agreed to do so
subject to the terms set forth herein and in the other Loan Documents, as
defined below.
B. To secure the Loan and Borrower's obligations under the Loan Documents,
Borrower has executed and delivered or agreed to execute and deliver to Lender a
Mortgage, Assignment of Rents, Financing Statements and other security
documents, as defined below.
C. To induce Lender to make the Loan, Transeastern Properties of South
Florida, Inc., a Florida corporation ("Transeastern Properties"), Arthur
Falcone, Marcy Falcone, Edward Falcone, Diana Falcone, Phillip Cucci, and Linda
Cucci (jointly and severally herein all the "Guarantors"), have agreed to
execute and deliver to Lender their unconditional guaranty of payment of the
Loan and completion of the Improvements and the Project, as defined below.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the parties intending to be legally bound agree as
follows as it may be supplemented, amended, renewed, restated, extended or
replaced:
ARTICLE I
CERTAIN DEFINITIONS
1.1 "AGREEMENT" shall mean this Land Acquisition and Development Loan
Agreement.
1.2 "APPRAISAL" shall mean an appraisal of the Property ordered by Lender,
at Borrower's sole cost and expense, in form and substance acceptable to Lender,
at Lender's sole discretion, and from an appraiser or appraisal company approved
by Lender in writing.
1.3 "APPROVED BUDGET" means the line item budget for the Project, broken
down into its component parts as follows: (i) the
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Planned Unit Development ("PUD") budget; and (ii) the Infrastructure budget. The
Approved Budget and each of its component budgets shall be approved in writing
by Borrower, Lender, Lender's Consulting Engineer and the General Contractor and
any supplements and/or modifications to any part or the whole shall also be may
be approved by Borrower, Lender, Lender's Consulting Engineer and the General
Contractor in writing from time to time in accordance with the terms of this
Agreement.
1.4 "ASSIGNMENT OF LEASES" shall mean the Assignment of Leases and Rents
executed by Borrower and delivered to Lender, in form and substance acceptable
to Lender.
1.5 "BORROWER'S COUNSEL'S OPINION" shall mean (a) an opinion letter from
Borrower's counsel to and for the benefit of Lender and Lender's counsel,
regarding Borrower, the Loan, the authorization, validity, and enforceability of
the Loan Documents, and such other matters as Lender may reasonably request, in
form and substance acceptable to Lender, and (b) an opinion letter from
Guarantor's counsel to and for the benefit of Lender and Lender's counsel,
regarding the Guarantor, the Loan, the authorization, validity, and
enforceability of the Guaranty and the other Loan Documents, and such other
matters as Lender may reasonably request, in form and substance acceptable to
Lender.
1.6 "BORROWER'S DEPOSIT" shall have the meaning given to it in Section
2.2(r)
1.7 "BORROWER'S EQUITY" shall have the meaning given to it in Section
2.2(r).
1.8 "BORROWER'S REQUIRED INVESTMENT" shall mean the funds necessary, if
any, in excess of the proceeds of the Loan and in excess of the Borrower's
Deposit, to pay the cost of the Project, and to complete the Project free of all
liens except the legal operation and effect of the Mortgage and such other
encumbrances as have been approved by Lender, whether or not the Mortgage has
been executed, delivered, and recorded. For example, if the direct construction
costs, in the sole judgment of the Consulting Engineers, plus non-construction
costs as estimated by Lender, in its sole judgment, exceed the amount of the
Loan, the Borrower's Required Investment shall include the amount of the excess
of such costs in the Project as required to complete the Project free of all
liens, whether or not the Mortgage has been executed, delivered, and recorded.
When determining the amount of Borrower's Required Investment, Lender shall not
include such funds as are then unavailable for advance under some special
restriction or limitation or reserve account set forth in this Agreement.
1.9 "BULK SALES" shall have the meaning given to it in Section 2.2(m).
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1.10 "CASH FLOW DEFICIT" shall have the meaning given to it in Section
2.10.
1.11 "CERTIFICATE AND AGREEMENT" shall mean (a) the Certificate and
Agreement executed by Borrower and the shareholders of Borrower regarding
ownership and control of Borrower, and (b) the Certificate and Agreement
executed by the Guarantor and the officers of the Guarantor regarding ownership
and control of the Guarantor, each in form and substance acceptable to Lender.
1.12 "CHANGE ORDERS" shall mean the changes in the Plans pursuant to the
terms hereof which would either increase any price, extend any time period or
change the quality or scope of the Improvements.
1.13 "COLLATERAL" shall mean all Property that is covered by an Security
Agreement or Mortgage.
1.14 "COMMITMENT LETTER" shall mean the commitment letter from Lender to
Transeastern Properties dated August 16, 1995, as the same has been assigned to
and the obligation thereunder assumed by Borrower, which assignment was
expressly consented to by Lender within the body of the Commitment Letter .
1.15 "COMPLETION DATE" shall mean the various dates, as applicable to
various aspects of the construction, as set forth on schedule attached hereto as
EXHIBIT "D".
1.16 "CONSENT OF DESIGN PROFESSIONAL" shall mean the Consent of Design
Professional from each Design Professional to Lender, in form and substance
acceptable to Lender.
1.17 "CONSULTING ENGINEERS" shall mean Shalloway, Foy, Ramon & Newell, or
any individual or engineering firm engaged by Lender to advise and assist Lender
in connection with the Project, including inspecting the progress of
construction.
1.18 "CORPORATE MANAGEMENT FEE" is defined within the definition of
"Operating Costs" defined hereinbelow.
1.19 "DEBT SERVICE" shall have the meaning given to it in Section 2.9.
1.20 "DESIGN PROFESSIONAL" shall mean collectively, the architects,
engineers, other professional consultants and planners with any other person or
entity approved by Lender with whom Borrower contracts to provide planning,
design, architectural, engineering or other similar services relating to the
Project, if any.
1.21 "DESIGN SERVICE CONTRACT" shall mean, collectively, all contracts and
agreements entered into between Borrower and each
3
<PAGE>
Design Professional pertaining to the design, development and construction of
the Improvements.
1.22 "DEVELOPMENT BUDGET" shall have the meaning given to it in Section
2.3(j).
1.23 "DEVELOPMENT PLAN" shall have the meaning given to it in Section
2.3(k).
1.24 "EQUITY FUNDS" shall have the meaning given to it in Section 2.2(r).
1.25 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, and the regulations promulgated thereunder, as the same may be amended
from time to time.
1.26 "EVENT OF DEFAULT" shall have the meaning given to it in Article
VIII.
1.27 "GENERAL CONSTRUCTION CONTRACT" shall mean the construction contract
between Borrower and Transeastern Properties, as approved by Lender in its sole
discretion, regarding rendering of services or the furnishing of materials,
supplies, equipment or labor in connection with the construction of the
Improvements at the Project, in form and substance acceptable to Lender.
1.28 "GENERAL CONTRACTOR" shall mean Transeastern Properties, or such
other general contractor acceptable to Lender.
1.29 "GENERAL CONTRACTOR'S CONSENT" shall mean the letter from the General
Contractor to Lender, in form and substance acceptable to the Lender.
1.30 "GENERAL WAIVER OF LIENS" shall mean the waiver of lien executed by
the Contractor and by each contractor, laborer and supplier furnishing label or
materials to the Property or for the project.
1.31 "GOVERNMENTAL REQUIREMENTS" shall mean all statutes, laws,
ordinances, rules, regulations, orders, writs, injunctions or decrees of any
governmental authority applicable to Borrower, Guarantor or the Property.
1.32 "GROSS REVENUES" shall mean for any given period all revenues,
receipts and consideration of any nature whatsoever, whether in cash or
otherwise, paid, credited or received by Borrower and derived in any manner from
the Property or its operations, including , but not limited to (i) all deposits
received which Borrower has no legal obligation to refund, (ii) all charges or
fees received by Borrower for services (including, without limitation, marketing
and management fees), (iii) memberships sold (including, without limitation, any
and all club memberships) at, from or as a consequence of Borrower's presence or
4
<PAGE>
business at the Property, or any cancellation or termination thereof, (iv) all
charges or monies, received as a consequence of the sale of Lots not improved
with residential units or Models at the Property, or any cancellation or
termination thereof, (v) disbursements from the Interest Reserve, (vi)
disbursements from the Cash Flow Deficit Reserve, (vii) disbursements to fund
the payment of closing costs relating to the acquisition of the Project all as
accepted and approved by Lender as evidenced by Lender's execution of the Loan
Disbursement Statement itemizing said closing costs, (viii) condemnation
proceeds and insurance proceeds in excess of such proceeds used in repairing and
restoring the Property; (ix) all proceeds, profits, income and all other sums of
money or otherwise as may be derived from the sale by Borrower of any of its
developer rights in and to Lots at the Project, or from the sale of water and
sewer allocations, benefits and rights (including, those pertaining to any
tap-in fees, connection fees, allocation of ERC's and the like), including any
other allocations, and any other developer rights appurtenant to the Project;
(x) all proceeds, profits, income and all other sums of money or the value of
any benefits derived from the sale, transfer or assignment of any land use or
regulatory approvals including, without limitation, those which may pertain to
density, development rights, water and /or sewer contracts or allocations by
Borrower to (1) Engle Homes/Palm Beach, Inc., a Florida corporation ("Engle"),
including that certain $150,000.00 security deposit (the "Engle Deposit") paid
by Engle to Borrower (the "Engle Contract") or (2) H.A. Cumber of Boynton Beach,
Inc., a Florida corporation ("Cumber"), including that certain $100,000.00
security deposit (the "Cumber Deposit") paid by Cumber to Borrower (the "Cumber
Contract"), and the said Engle Deposit and Cumber Deposit shall have been
deposited by Borrower in separate escrow accounts with a financial institution
acceptable to Lender, subject to disbursement in accordance with the Engle
Contract and the Cumber Contract, as applicable, which escrow accounts shall be
opened in the name of Borrower and Lender, and any withdrawals therefrom will
require the signature and authorization of both Borrower and Lender, (xi) any
contracts entered into by Borrower subsequent to the date of this Agreement and
approved by Lender for sale by Borrower of any of its developer rights in and to
Lots at the Project, or from the sale of water and sewer allocations, benefits
and rights (including, those pertaining to any tap-in fees, connection fees,
allocation of ERC's and the like), all as may be accepted and approved by Lender
and the security deposits paid in connection therewith shall have been deposited
by Borrower in separate escrow accounts with the financial institution
acceptable to Lender, subject to disbursement in accordance with the terms of
such contracts, which escrow accounts shall be opened in the name of Borrower
and Lender, and any withdrawals therefrom will require the signature and
authorization of both Borrower and Lender; and (xii) and any non-cash
consideration shall be valued at fair market value.
5
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1.33 "GUARANTOR" shall mean Transeastern Properties, Arthur Falcone, Marcy
Falcone, Edward Falcone, Diana Falcone, Phillip Cucci, and Linda Cucci, and any
other guarantor, accommodation party, endorser, or surety of Borrower's
obligation to Lender at any time.
1.34 "GUARANTY" shall mean each guaranty given by any Guarantor to Lender
to secure the Loan in whole or in part, as the same may be amended from time to
time.
1.35 "IMPROVEMENTS" shall mean all of the improvements to be made in, on,
under, and over the Land in completing the Project in accordance with the Plans
and in accordance with all dates for the submission of plans and specifications,
construction commencement and construction completion as the same are more
particularly outlined in EXHIBIT "D" attached hereto and made a part hereof,
including but not limited to all buildings, appurtenant parking areas,
landscaped areas, walkways, and driveways, together with all appurtenant
improvements including, without limitation, (a) the construction of all rights
of ingress and egress in accordance with all Governmental Requirements and the
acceptance of the dedication of applicable roadways, streets, etc. by the
applicable governmental authorities having jurisdiction with respect thereto;
and (b) the construction of all water, sewer and other utility services (whether
on-site or off-site) in accordance with all Governmental Requirements and the
acceptance of the conveyance of the utilities by the applicable governmental
authorities having jurisdiction with respect thereto.
1.36 "INTEREST RESERVE ACCOUNT" shall have the meaning given to it in
Section 2.9.
1.37 "LAND" shall mean the real property located within the development
known as the Aberdeen PUD, which PUD includes the Aberdeen Golf and Country
Club, comprised of 203 subdivided and improved lots, and unsubdivided land which
has been approved for 780 single family residential units ("improved" as used
here shall refer to subdivision improvements, including, but not limited to,
roadways, walkways, utilities and the like) (the "Lots"), eight model homes (the
"Model Homes") and a 5,000 square foot free standing sales facility (the "Sales
Office"), all of which are located in Palm Beach County, Florida and which is
the real property described in and encumbered by the Mortgage.
1.38 "LOAN" shall have the meaning given to it in Preliminary Statement A.
1.39 "LOAN DOCUMENTS" shall mean this Agreement, the A&D Note, the
Mortgage, the Security Agreement, the Guaranty, the Borrower's Counsel's
Opinion, the Consent of Design Professional, the General Contractor's Consent,
the Certificate and Agreement, the Assignment of Leases, the Assignment of
Purchase Contracts, the Assignment of
6
<PAGE>
Security Deposits, the Assignment of Contractor's Agreement, the Assignment of
Plans and Specifications, the Assignment of Marketing Agreement, and all other
documents, instruments and agreements now existing or hereafter entered into by
Borrower, any Guarantor, or any other person with Lender in relation to the
Loan, as the same may be amended from time to time. The Loan Documents executed
and delivered by Borrower and each Guarantor, if any, are listed on the Closing
List attached hereto as EXHIBIT A.
1.40 "LOTS" shall have the meaning given to it within the definition of
"Land."
1.41 "MAJOR SUBCONTRACTOR" shall mean each subcontractor whose contract
for the Project involves a function Lender believes to be essential to the
Project.
1.42 "MAJOR SUPPLIER" shall mean each supplier whose contract for the
Project involves a function Lender believes to be essential to the Project.
1.43 "MAXIMUM CONTRACT AMOUNT" shall mean the stipulated/lump sum contract
amount in accordance with the General Construction Contract.
1.44 "MEMBERSHIP MARKETING FEES" shall mean all revenues, receipts, and
consideration received by Borrower and derived from that certain Membership
Marketing Agreement by and between UDC Homes, Inc., a Delaware corporation and
Borrower as successor in interest to Transeastern Properties dated as of the
Closing Date, together with all rights with respect to said Membership Marketing
Agreement, as assigned to Lender.
1.45 "MODEL HOMES" shall have the meaning given to it within the
definition of "Land".
1.46 "MORTGAGE" shall mean the mortgage granted by Borrower for the
benefit of Lender covering the Land and Improvements, and covering Personal
Property relating to the Project, and recorded among the land records of the
jurisdiction in which the Land is located, as the same may be amended from time
to time.
1.47 "NET CASH FLOW" shall mean for any given period the difference
between Gross Revenues and Operating Costs.
1.48 "NOTE" shall refer to and mean the promissory note of even date
herewith from Borrower to the order of Lender in the principal amount of
$23,900,000.00 evidencing sums to be advanced to Borrower for land acquisition
and development relating to the Land (the "A&D Note").
1.49 "OFFSITE MATERIALS" shall have the meaning given to it in
Section 2.4(h).
7
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1.50 "OPERATING COSTS" shall mean the line item amounts for recurring
costs and expenses incurred by Borrower in the ordinary course of operating and
maintaining the Property for any given period, including, without limitation, ad
valorem taxes, income taxes, insurance premium payments, common area utility
charges, security charges, advertising expenses, marketing expenses, payroll
expenses for Borrower's employees, Corporate Management Fees (which include any
contractor fees due Borrower or Borrower's affiliates) with respect to the
Property approved by Lender (it being agreed by the parties that such right of
approval is only for purposes of calculating Operating Costs and Net Cash Flow,
and gives Lender no right to control or approve Borrower's operation of the
Property) and other expenses. Operating Costs shall not include: (i) payments to
Borrower or any affiliate of Borrower unless mutually agreed by Borrower and
Lender to be expenses relating to the day to day operations of the Property
pursuant to generally accepted accounting principles; (ii) payments under the
Loan or this Agreement or under any other borrowing not permitted pursuant to
the terms of the Loan; (iii) depreciation or other non-cash items. With respect
to Operating Costs such as taxes and insurance that cover more than one calendar
quarter, Borrower and Lender shall create an escrow with Lender for such items,
and funds placed in such escrow fund in accordance with an operating budget
approved by Borrower and Lender shall be deemed to be Operating Costs even
though the item to which such funds relate is not then due and payable, only
amounts added to the escrow fund during such quarter and not the payment of such
item, shall be deemed Operating Costs until the reserve or escrow fund is
exhausted, thereafter funds from other sources used to pay such items shall also
be deemed Operating Costs. For purposes of this paragraph, Corporate Management
Fees shall mean all costs, expenses and such other fees as initially provided to
Lender by Borrower as the costs, expenses and fees necessary for the actual
operation and management of the Project and consistent with other projects
operated and managed by Borrower and similar in nature to the Project, which
Corporate Management Fees payable to Transeastern Properties of South Florida,
Inc. shall in no event exceed a total sum of $62,500.00 per month or such other
sum as agreed upon in writing by Borrower and Lender upon review of the actual
expense of managing and operating the Project, which Cash Management Fees will
only be paid to Borrower upon Lender's receipt of a monthly report itemizing the
Operating Costs.
1.51 "ORDER" shall have the meaning given in Section 2.1(d).
1.52 "PERMITTED ENCUMBRANCES" shall mean (a) the liens and security
interest of Lender arising under this Agreement, under any Security Agreement,
or under the Mortgage; (b) such matters as are expressly stated as exceptions to
title in any Title Insurance Commitment, as marked up at closing and accepted by
Lender; (c) such matters affecting Personal Property as are expressly disclosed
on EXHIBIT B to this Agreement; (d) liens for taxes, assessment
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being contested in good faith by appropriate proceedings promptly initiated and
diligently conducted, provided that a reserve or other appropriate provision as
may be required by generally accepted accounting principles shall have been made
therefor and no foreclosure, distraint, sale or other similar proceedings shall
have been commenced; and (e) such other matters affecting the Property as Lender
may accept in writing from time to time in Lender's sole discretion.
1.53 "PERSONAL PROPERTY" shall mean all of Borrower's now owned and
hereafter acquired personal property and fixtures located on the Land or in the
Improvements or obtained or held in connection with the Land, Improvements, or
the Loan, regardless of where such personalty is located, including, but not by
way of limitation, all goods, fixtures, equipment, inventory, products of
inventory, accounts, contract rights, leases, letters of credit, proceeds of
letters of credit, chattel paper, general intangibles and instruments, and all
cash and non-cash proceeds thereof, including but not limited to insurance
proceeds.
1.54 "PLANS" shall mean the final plans, drawings, and specifications for
the Project that have been or are to be prepared by or under the supervision of
the Design Professional, and have been or are to be delivered to, and must be
acceptable to, Lender and the Consulting Engineers.
1.55 "PROJECT" shall mean the Land within the Aberdeen PUD to be acquired
by Borrower and the construction of subdivision improvements on the Lots (as
hereafter defined) as contemplated by the Plans, together with appurtenant
facilities, including landscaping, paving, and on-site and off-site improvements
in accordance with the Plans.
1.56 "PROJECT COSTS" shall mean the total of the costs, expenses and fees
required for the construction of the Project as set forth in the Approved
Budget.
1.57 "PROPERTY" shall mean the Land, the Improvements, and the Personal
Property.
1.58 "PURCHASE AGREEMENT" shall have the meaning set forth in Section
2.1(a).
1.59 "SALES OFFICE" shall have the meaning given to it within the
definition of "Land"
1.60 "SECURITY AGREEMENT" shall mean each security agreement other than
the Mortgage, if any, executed by Borrower to secure the Loan, as the same may
be amended from time to time.
1.61 "STORED MATERIALS" shall have the meaning given to it in Section
2.4.(k).
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1.62 "SUPPORTING DOCUMENTS" shall mean (i) resolutions of the Borrower,
authorizing the execution, delivery and performance of this Agreement, the
borrowing hereunder and the Loan Documents; (ii) a certificate of the Secretary
of the Borrower as to authenticity and completeness of a copy of the By-Laws of
Borrower attached thereto and as to the incumbency and signatures of the
officers of Borrower signing the Loan Documents; (iii) a certificate of the
Secretary of State from the state of formation as to the good standing of
Borrower; (iv) a copy of the Articles of Incorporation and any amendments
thereto and all other charter documents of the Borrower as certified by the
Florida Secretary of State; (v) certified copies of resolutions of the Board of
Directors of Guarantor, authorizing the execution, delivery and performance of
the Guaranty and the other Loan Documents; (vi) a certificate of the Secretary
of the Guarantor as to the authenticity and completeness of a copy of the
By-laws of Guarantor attached thereto and as to the incumbency and signatures of
the officers of Guarantor signing the Guaranty and the other Loan Documents;
(vii) a copy of the Articles of Incorporation and all other charter documents of
the Guarantor, all certified by an officer of the Guarantor as being correct and
complete; (viii) a certificate of the Secretary of State from the state of
formation as to the good standing of the Guarantor, and charter documents on
file; and (ix) such additional supporting documents as Lender or counsel to
Lender may reasonably request.
1.63 "SURVEY" means a survey prepared at Borrower's expense in accordance
with the survey requirements set forth in the Commitment Letter between Borrower
and Lender, by a registered engineer who shall certify thereon that the location
of the Improvements is in compliance with all set-back lines and other
applicable restrictions and such other certifications as Lender may request.
1.64 "TITLE COMPANY" shall mean Ticor Title Insurance Company, underwriter
for the title insurance agent that issued the Title Insurance Commitment and
shall issue the Title Insurance Policy, and all necessary endorsements thereto,
or such other title insurance company as may be acceptable to Lender.
1.65 "TITLE INSURANCE COMMITMENT" shall mean the Title Company's
commitment for a mortgagee's policy of title insurance in favor of Lender,
identified by Commitment No. 95-114.000 with an effective date of July 20, 1995,
proposing to insure the Loan in the aggregate amount of $23,900,000.00 covering
the Land and any Improvements on the Land, issued by the Title Company.
1.66 "TITLE INSURANCE POLICY" shall mean the mortgagee policy of title
insurance issued in standard ALTA form (1970 - last amended 10/17/84) by the
Title Company, at Borrower's sole cost and expense, to insure the lien and first
priority of the Mortgage with respect to the Land and any Improvements on the
Land, without
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exceptions as to mechanics' liens or survey and with no other exceptions
objectionable to Lender.
1.67 "UCC-11 SEARCH" shall mean a search of the records of the Florida
Secretary of State evidencing any UCC filings against the Borrower, which UCC-11
Search shall be current as of the recording of the Mortgage.
1.68 "USE OF PROCEEDS" means the Use of Proceeds attached hereto as
COMPOSITE EXHIBIT C, which shall include the preliminary Development Budget, as
modified from time to time in the sole discretion of Lender upon request of
Borrower.
ARTICLE II
ACQUISITION AND DEVELOPMENT LOAN
2.1 RECITALS
(a) Borrower has entered into an Agreement for the Purchase and
Sale of Real Property dated July 19, 1995 (the "Purchase
Agreement") to acquire the Property.
(b) Borrower and Lender both acknowledge that Borrower's purchase
of the Property pursuant to the Purchase Agreement is subject
to the approval by the U.S. Bankruptcy Court for the District
of Delaware.
(c) Borrower is a "good faith purchaser" with the meaning of 11
U.S.C. ss.363(m).
(d) Borrower has delivered to Lender prior to the execution of the
Agreement in form and substance satisfactory to Lender, an
order from the U.S. Bankruptcy Court for the District of
Delaware in the proceeding styled, UDC HOMES, INC., et al.,
CASE NO. 95-558 (HSB), evidencing the Court's approval of the
Purchase Agreement (the "Order").
(e) All applicable appeal periods relating to the Order
authorizing the sale of the Property to Borrower have expired
and title to the Property shall, simultaneously with the
closing hereof, have vested in Borrower free and clear of
liens, interests, or encumbrances and/or claims of any kind or
nature except for the Permitted Encumbrances.
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(f) Lender shall make the Acquisition and Development Loan to
Borrower in advances pursuant to the terms of the Commitment
Letter, the Development Budget as set forth on the Use of
Proceeds applicable to the Acquisition and Development Loan
and Borrower expressly agrees to comply with and perform all
of the terms and conditions of this Agreement, the Commitment
Letter, the A&D Note, the Mortgage and the Loan Documents
evidencing and securing the Loan. The Acquisition and
Development Loan shall be evidenced by the A&D Note and
secured by the Mortgage and other Loan Documents.
2.2 CONDITIONS TO LENDER'S OBLIGATION TO FIRST ADVANCE FOR ACQUISITION
COSTS UNDER THE LOAN. The following conditions are precedent to the obligation
of the Lender to fund under the Acquisition and Development Loan (an "Advance")
for acquisition costs and shall be complied with in form and substance prior to
the first Advance (the "First Advance") hereunder:
(a) RECITALS. All recitals contained in Section 2.1 of this
Agreement shall be true and correct and are hereby
incorporated herein by the reference and made a part hereof.
(b) TITLE INSURANCE: Borrower shall deliver to Lender the Title
Insurance Commitment, as marked-up at closing and approved by
Lender, issued by Title Company, in an amount equal to the
principal amount of the A&D Note, which Title Insurance Policy
(i) shall insure Lender against loss or damage on account of
mechanics' liens which may be filed upon the Property, (ii)
shall insure that the Mortgage is a valid first lien on the
Property at the time of each advance, and (iii) shall insure
that title to the land is good and marketable and free and
clear of all liens, encumbrances, easements, exceptions,
reservations and restrictions except for the Permitted
Encumbrances. From and after the date of the closing of the
Loan and the execution and delivery of this Agreement by all
parties hereto, Borrower shall not execute or enter into any
agreement, easement or dedication which would further encumber
the Property, without Lender's prior review, approval and
express written consent of same.
(c) SURVEY: Borrower shall deliver to Lender a current sketch of
survey prepared by a survey acceptable to Lender of the
Property showing the following:
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(i) the location of the perimeter of the Land by courses and
distances and perimeter footings in place, and by
reference to Township, Range and Section, excluding the
platted lots within the Land;
(ii) the location of and the identification by reference to
recording data of all easements, rights-of-way,
conditions and restrictions on or appurtenant to the
Property;
(iii) the location of all building setback lines;
(iv) the lines of the streets abutting the Property and the
width thereof;
(v) all encroachments, and the extent thereof in feet and
inches upon the Property;
(vi) the Improvements, to the extent constructed, and for a
construction draw the relation of the Improvements by
distances to the building setback lines and the street
lines;
(vii) if the Property is described as being on a filed map, a
legend relating to the plat of survey to such map; and
(viii)all matters set forth in the Surveyor's Certificate
attached to the Commitment Letter.
(d) TITLE COMPANY'S AGREEMENT: An agreement by the Title Company
in the form of EXHIBIT "E" attached hereto shall be executed
and delivered to Lender;
(e) NOTE: The A&D Note shall be duly authorized, executed and
delivered to Lender;
(f) MORTGAGE: The Mortgage shall be duly authorized, executed,
acknowledged, delivered to Lender, and recorded, in the public
records in and for Palm Beach County, Florida which Mortgage
shall be a valid first mortgage lien on the Property and all
fixtures and personal property to be used in connection with
the Improvements;
(g) GUARANTY: An agreement or agreements whereby Guarantor
personally, if applicable, and jointly and severally, if more
than one Guarantor, unconditionally guarantees the payment by
the
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Borrower of the Loan and the due and prompt performance by the
Borrower of the A&D Note, the Mortgage, and the due and prompt
performance by the General Contractor of the terms and
conditions of the General Construction Contract, which
Guaranty shall be duly authorized, executed and delivered to
Lender;
(h) ASSIGNMENT OF LEASES: The Assignment of Leases shall be duly
authorized, executed, acknowledged and delivered to Lender and
recorded in the public records in and for Palm Beach County,
Florida;
(i) MORTGAGOR'S AFFIDAVIT: An affidavit of Borrower shall be
executed and delivered to Lender certifying that no liens
exist on the Property other than for ad valorem taxes not yet
due and payable and that the Property is encumbered by no
other matters except the Permitted Encumbrances;
(j) FINANCING STATEMENTS: Borrower shall execute and deliver to
Lender and record or file with the appropriate governmental
authority, the Financing Statements which Lender may require
to perfect its security interest in the personal property
described in the Mortgage;
(k) ENGLE CONTRACT. Borrower shall execute and deliver to Lender a
collateral assignment of the Engle Contract, together with the
security deposits paid in connection therewith;
(l) CUMBER CONTRACT. Borrower shall execute and deliver to Lender
a collateral assignment of the Cumber Contract, together with
the security deposits paid in connection therewith;
(m) BULK SALES CONTRACTS. In the event that Borrower shall enter
into one or more contracts for the sale of Models or Lots not
improved with residential units at the Project, at any time
and from time to time, Borrower shall execute and deliver to
Lender a collateral assignment of any such contract or
contracts, together with any security deposits paid in
connection therewith ("Bulk Sales");
(n) NOTICE OF COMMENCEMENT: If required pursuant to ss.713 ,
Florida Statutes, any required Notice of Commencement shall
have been properly executed, acknowledged and delivered to
Lender, and recorded in the public records in and for Palm
Beach County, Florida and a certified copy of the Notice of
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Commencement shall be posted at the job site at least one day
subsequent to the date of recording of the Mortgage, and prior
to, but within 30 days of, the commencement of any work or
land development construction on the Land, and a copy thereof
furnished to Lender. The Notice of Commencement shall
designate the Title Company and Lender as additional persons
upon whom notices shall be served. Borrower shall have the
right to file subsequent notices upon the commencement of
construction of the improvements on the Lots.
(o) BUILDER'S RISK AND HAZARD INSURANCE: Borrower shall deliver to
Lender the original policy of Builder's Risk and Hazard
Insurance, in completed value form with extended coverage in
the amount of the full replacement value of the Improvements
as completed, issued by a company satisfactory to the Lender,
duly endorsed to show the interest of Lender under a standard
non-contributing mortgagee clause and providing that such
policy will not be canceled without 10 days notice of Lender
and that all insurance proceeds will be paid directly to
Lender. Such policy include endorsements for (i) replacement
cost (without deduction for depreciation); (ii) demolition and
debris removal; (iii) increased costs of construction; (iv)
ordinance deficiency (if the Property is a non- conforming use
or of significant age); and (v) agreed costs or stipulated
value. Borrower agrees that Lender shall have the right to
take any action necessary to continue said insurance in full
force and effect including, but not limited to, paying
premiums; any funds advanced to continue said policies in full
force and effect shall be considered as advances hereunder and
shall bear interest from the date of disbursement at the same
rate as other advances and payment of said funds and interest
shall be secured by the Mortgage;
(p) PUBLIC LIABILITY AND WORKMEN'S COMPENSATION INSURANCE:
Borrower shall deliver evidence satisfactory to Lender of the
existence of a public liability policy with minimum combined
single limit coverage of $1 million per occurrence and $2
million in the aggregate with umbrella liability coverage in
the minimum amount of $5 million, and worker's compensation
insurance relating to the Property in amounts and issued by
companies approved by Lender. Borrower agrees that Lender
shall have the right to take any action necessary to continue
said insurance in full force and effect
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<PAGE>
including, but not limited to, paying premiums; any funds
advanced to continue said policies in full force and effect
shall be considered as advances hereunder and shall bear
interest from the date of disbursement at the same rate as
other advances and payment of said funds and interest shall be
secured by the Mortgage;
(q) APPRAISAL: Lender shall have received an appraisal in form and
substance satisfactory to Lender, in its sole discretion, of
the Land and proposed Land Development by an appraiser
satisfactory to Lender, which appraisal shall support a loan
to value ratio of not less than seventy-five percent (75%) of
the aggregate Acquisition and Development Loan advances
outstanding at any one time;
(r) EQUITY FUNDS: Borrower shall deliver to Lender satisfactory
evidence of payment of $2,000,000.00 representing Borrower's
equity contribution toward the acquisition of the Property
("Borrower's Deposit"), together with such additional sums as
may be required by Borrower pursuant to that portion of the
Total Project Cost as set forth on the Use of Proceeds
attached hereto as EXHIBIT "C" as "Borrower Equity," and shall
deliver to Lender such other and detailed information
concerning the components of the Total Project Cost allocated
for the Acquisition and Development of the Property as may be
required by Lender. It is implicitly understood by the
Borrower that Borrower's Deposit shall be applicable to the
acquisition of the Property and in no event, shall the
Borrower's Deposit be intended, allocated or used for any
costs relating to the development. Notwithstanding the
foregoing, Borrower shall be responsible for and hereby
assumes the risk for any sums necessary to complete the
development of the Project in accordance with the Plans,
including any sums for development costs over and above any
costs approved by Lender pursuant to the Approved Budget,
including, any cost overruns, any penalties, deficiencies,
deposits or the like required by any party to the development.
Any such sums necessary to develop the Project as evidenced by
the Development Budget, in excess of the sums allocated in the
Approved Budget and the Use of Proceeds, including sums for
accrued interest (to the extent not paid from the Interest
Reserve) and other costs related to the development of the
Project, shall, upon Lender's demand, be deposited by Borrower
in an interest bearing account with Lender opened in
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<PAGE>
the name of Borrower ("Borrower's Required Investment"). Any
portion of the Total Project Cost allocated to Borrower Equity
and not paid or otherwise accounted for to Lender's
satisfaction shall, at Lender's option, within forty-five (45)
days from the date of written notice, be deposited by Borrower
with Lender, together with any other funds required to be so
deposited under this Agreement (the "Equity Funds"), such
funds to be held and disbursed by Lender as provided in this
Agreement;
(s) CORPORATE DOCUMENTS: Borrower shall deliver to Lender the
following documents:
(i) the certificate of incorporation and all amendments
thereof, certified by the appropriate official of the
State of its incorporation, together with a certificate
of such official to the effect that such corporation is
in good standing therein;
(ii) a good standing certificate from the Secretary of the
State of Florida;
(iii) by-laws, certified by the Secretary of such corporation;
(iv) an incumbency certificate specifying by name and title
the officers and directors, certified by the Secretary
of such corporation; and
(v) certified resolutions of the shareholders and the Board
of Directors authorizing the execution and delivery of
this Agreement, the Mortgage, the Note, and all other
documents necessary or desirable for the consummation of
the transactions contemplated by this Agreement;
(t) GUARANTOR'S ORGANIZATION DOCUMENTS: If Guarantor is an
organization, Borrower shall deliver to Lender the same
corporation or partnership documents for the Guarantor as
required for Borrower, including without limitation, certified
resolutions authorizing the execution and delivery of the
Guaranty;
(u) FLOOD INSURANCE: To the extent obtainable, Borrower shall
deliver to Lender evidence satisfactory to Lender either that
the Property is not within a
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hazardous flood area as designed by the Department of Housing
and Urban Development and any other governmental authority,
or, if the Property is within such a hazardous area, that the
Property is covered by flood insurance supplied by the Federal
Insurance Administration to the maximum amount available, all
as provided in the Flood Disaster Protection Act of 1973, as
amended, together with appropriate endorsements thereto
providing for Lender's interests in the same manner as the
Builder's Risk Insurance, including without limitation that
such insurance will not be canceled without 10 days notice to
Lender. Borrower agrees that Lender shall have the right to
take any action necessary to continue said insurance in full
force and effect including, but not limited to, paying
premiums. Any funds advanced to continue said policies in full
force and effect shall be considered as Advances hereunder and
shall bear interest from the date of disbursement at the same
rate as other Advances and payment of said funds and interest
shall be secured by the Mortgage;
(v) OPINION OF BORROWER'S COUNSEL: Borrower shall deliver to
Lender an opinion of counsel for Borrower and addressed to
Lender, such counsel to be reasonably satisfactory to Lender,
with such opinion to contain such matters as Lender may
reasonably require;
(w) OPINION OF GUARANTOR'S COUNSEL: Guarantor, and if more than
one, counsel for each Guarantor, shall deliver to Lender an
opinion of counsel for each Guarantor and addressed to Lender,
such counsel to be reasonably satisfactory to Lender, with
opinion to contain such matters as Lender may reasonably
require;
(x) EXPENSES: Borrower shall have paid all those fees and charges
due and payable or ordered paid by Lender in connection with
the Acquisition and Development Loan including, but not
limited to the expenses set forth in Section 2.7;
(y) FINANCIAL STATEMENTS: Borrower and Guarantor shall have
provided to Lender financial statements (which shall mean and
include a balance sheet, statement of cash flow and income
statement, all in form and in reasonable detail as Lender may
require, sitting forth the financial condition (including
contingent liabilities), cash flow and the income and expenses
for the immediately preceding fiscal year prepared
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<PAGE>
in accordance with generally accepted accounting principals
consistently applied, and which fairly represent the financial
condition of Borrower and each Guarantor. In addition,
Transeastern Properties, parent corporation to Borrower, and
each Guarantor shall deliver to Lender certified copies of
their respective 1993 and 1994 tax returns, or such extensions
thereto, as may be approved by Lender; and
(z) PLEDGE AGREEMENT. Borrower shall execute and deliver to Lender
a Pledge Agreement of all escrow accounts maintained with Bank
of North America, excluding only those with respect to
security deposits held pursuant to contracts for the sale of
residential units under construction.
(aa) OTHER DOCUMENTS: Borrower shall execute and deliver to Lender
an assignment of Borrower's Time and demand deposits with Bank
of North America, in a form approved by Lender.
(bb) ASSIGNMENT OF EXCLUSIVE AGENCY BROKERAGE AGREEMENT. Borrower's
affiliate, Executive Realty Group, Inc., shall execute and
deliver to Lender an assignment of that certain Exclusive
Agency Brokerage Agreement with Engle Homes/Palm Beach, Inc.,
in a form acceptable to Lender.
2.3 CONDITIONS TO LENDER'S OBLIGATION TO FIRST ADVANCE FOR DEVELOPMENT COSTS
UNDER THE LOAN. The following conditions are precedent to the obligation of the
Lender to fund any Advances under the Loan for development costs and shall be
complied with in form and substance prior to the First Advance for development
costs hereunder:
(a) RECITALS. All recitals contained in Section 2.1 of this
Agreement shall be true and correct and are hereby
incorporated herein by the reference and made a part hereof;
(b) ACQUISITION OF THE PROPERTY. Borrower shall have acquired the
Property and complied in all respects with Section 2.2 of this
Agreement;
(c) CONTRACTS: Borrower shall deliver to Lender an executed copy
of the General Construction Contract for the then applicable
portion of the land development on the Property and its
contracts with the Design Professional for the then applicable
portion of the land development and, executed copies of the
General Contractor's contracts with
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<PAGE>
Major Subcontractors and Major Suppliers for the then
applicable portion of the land development and, if requested
by Lender, executed copies of all contracts with
subcontractors for the then applicable portion of the land
development at the Project and any amendments or Change Orders
thereto, all in form and substance satisfactory to Lender. The
General Construction Contract shall contain a guaranteed
maximum price for the construction and completion of the land
development contemplated by the Plans and the Development Plan
in accordance with EXHIBIT "D" and in an amount as accepted by
Lender and as set forth on the Development Budget;
(d) GENERAL CONTRACTOR'S AGREEMENT: A contractor's agreement in
form to be approved by Lender in writing prior to execution
shall be executed and delivered to Lender whereby General
Contractor agrees that, in the event of default by Borrower
under the terms of this Agreement or the Loan Documents,
General Contractor will, at the request of Lender, continue
performance pursuant to the General Construction Contract
until completion of construction of the land development,
provided General Contractor is paid for all necessary labor,
materials and equipment furnished in accordance with the
General Construction Contract;
(e) DESIGN PROFESSIONAL'S AGREEMENT: An agreement by the Design
Professional in a form to be approved by Lender in writing,
and subsequently to be executed by the Design Professional and
delivered to Lender whereby the Design Professional agrees
that in the event of default by Borrower under the terms of
this Agreement or the Loan Documents, the Design Professional
will, at the request of Lender, (i) give, written notice to
Lender of any default at least 60 days prior to suspending or
terminating its obligations pursuant to its contract with
Borrower or General Contract; (ii) continue performance
pursuant to its contract with Borrower or General Contractor
until completion of construction of the land development,
provided the Design Professional is compensated in accordance
with said contract for all such services rendered from and
after the date on which Lender undertakes to complete the
Project; (iii) assign the Plans to Lender at no cost to Lender
other than the actual cost of making copies, and (iv) consent
to the assignment by Borrower or General Contractor to Lender
of the right to use or possess the Plans.
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<PAGE>
Borrower hereby assigns the Plans to Lender as additional
security for the Loan;
(f) MANAGEMENT CONTRACT. A consulting and management contract in
the form of EXHIBIT "H" attached hereto shall be executed and
delivered to Lender whereby University Plaza Management, Inc.
(the "Management Company") agrees that, in the event of
default by Borrower under the terms of this Agreement or the
Loan Documents, the Management Company will, at the request of
Lender, continue performance pursuant to its Management
Agreement until completion of the Project;
(g) CONSULTING ENGINEER'S AGREEMENT: An agreement by the
Consulting Engineer in the form of EXHIBIT "I" attached hereto
shall be executed and delivered to Lender. The Consulting
Engineer shall review and approve all aspects of the land
development, at Borrower's sole cost and expense, including,
but not limited to review and approval of the General
Construction Contract, the Design Professional's Contract, the
Plans, the Development Budget, the Construction Budget, draw
requests, inspection of the construction in place and
including the extent of Completion;
(h) PAYMENT AND PERFORMANCE BOND: At Lender's request, in its sole
discretion, Borrower shall procure and deliver to Lender
performance and payment bonds in the full amount of the Design
Professional's Contract, the General Contractor's Contract,
the Major Subcontractor's and Major Supplier's contracts for
work related to the land development in form and substance and
with sureties satisfactory to Lender, and Lender shall be
named as co-obligee. In the event Lender's requirements
pursuant to this subparagraph duplicate those of any governing
governmental entity whether at the federal, state or local
level, the requirements of such governmental entity shall
prevail. Borrower shall deliver evidence satisfactory to
Lender, of Borrower's satisfaction of any federal, state or
local bonding requirements;
(i) PUBLIC REQUIREMENTS: At least ten (10) days prior to
Borrower's request for the First Advance, Borrower shall
deliver to Lender:
(1) a copy of all valid and in-force permits, licenses,
certificates and authorizations from all governmental
authorities having
21
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jurisdiction confirming that the existing Improvements
on the Property comply with all permits, licenses,
certificates and authorizations pertaining to the
construction thereof; and the permits, licenses,
certificates and authorizations remain valid and in full
force and effect;
(2) a copy of the development permits and when issued by the
building permits authorizing construction of the
Improvements together with a certificate from the Design
Professional that the Improvements will conform to
existing zoning laws and specified variances, if any;
(3) all other authorizations, permits or approvals, if any,
required by any governmental authorities for the
construction of the Improvements and operation of the
Property for the purposes contemplated by the Plans,
which are presently procurable;
(4) letters from local utility companies or municipal
authorities stating that electric, telephone, sewer and
water facilities will be available to the Property upon
the completion of the Improvements;
(5) evidence from the proper municipality that the Property
is not the subject of any outstanding permit,
development or construction moratorium;
(6) if requested by Lender, a copy of the applicable zoning
ordinances, certified by an appropriate official to be a
complete and accurate statement thereof, and an
up-to-date zoning map similarly certified;
(7) evidence that the soils are acceptable for the single
family residential construction proposed for the
Project;
(8) evidence satisfactory to the Lender that all roads
necessary for the full utilization of the Improvements
for their intended purposes have either been completed
or the necessary rights of way therefor have either been
acquired by the appropriate governmental authorities or
have been dedicated to public use and accepted by such
governmental authorities and that all necessary steps
have
22
<PAGE>
been taken by the Borrower and such governmental
authorities to assure the complete construction and
installation thereof;
(9) evidence that there are no additional wetland areas
(other than those scheduled for mitigation) located with
the boundaries of the Project;
(10) copies of subdivision plats (recorded and/or proposed),
restrictive covenants, plans of developments, and all
other documents required by the local zoning and
subdivision ordinances, and such other documents
required by and satisfactory to Lender; and evidence
satisfactory to Lender and its counsel that the Plans
conform to all federal, state, and local laws,
ordinances, rules and regulations, including, but not
limited to, laws of the State of Florida regulating air
and water pollution, the Interstate Land Sales Full
Disclosure Act and all federal and state securities
laws.
(j) DEVELOPMENT BUDGET: Borrower shall have provided to Lender at
least sixty (60) days prior to the First Advance, a proposed
final budget for such hard and soft costs relative to the
proposed land development. Said development budget shall be
certified as true and accurate by Borrower, and shall contain
such reasonable detail as Lender may require in its sole
discretion, as to the estimated cost breakdown for the
Project, including, but not limited to: (i) the sums
anticipated for each category of work to be performed at the
Project; (ii) the sums anticipated for materials to be
supplied to the Project; (iii) financing and carrying costs;
(iv) operating costs; (v) legal and organizational costs; (vi)
any related costs for the development of the Project; and
(vii) the cost of payment and performance bond required
pursuant to the terms of subsection 2.3(h) hereinabove, all as
may be allocated between the components of the Approved
Budget. Lender shall have obtained from its Consulting
Engineer an approval of the proposed development budget as
submitted by Borrower. Once modified to the extent applicable
and approved by the Consulting Engineer the budget shall be
the "Development Budget." Borrower shall provide Lender with
the Development Budget at least sixty (60) days prior to the
First Advance. Borrower
23
<PAGE>
shall be responsible for any fees payable to the Consulting
Engineer for its review and opinion relating to the
Development Budget;
(k) DEVELOPMENT PLAN: Borrower shall deliver to Lender a plan,
prepared by Design Professional in form satisfactory to Lender
and reviewed and approved by the Consulting Engineer, setting
forth the business plan/proforma of the land development at
the Project. The Development Plan, once accepted and approved
by Lender and its Consulting Engineer, may not be changed
without Lender's prior written consent;
(l) HOMEOWNERS' ASSOCIATION DOCUMENTS: Borrower shall deliver to
Lender copies of all proposed homeowners' association
documents, including any declaration of covenants and
restrictions, easements, dedications or other documents
necessary to the creation of a planned unit development at the
Project. The documents, are subject to the provisions of
Section 2.2(b). The homeowners' documents once accepted and
approved by Lender, may not be changed without Lender's prior
written consent;
(m) ENVIRONMENTAL INDEMNITY AGREEMENT: Borrower shall procure and
deliver to Lender an environmental report certified to and in
form and substance acceptable to Lender, in its sole
discretion. Borrower shall also execute and deliver to Lender
the Environmental Indemnity Agreement attached hereto as
EXHIBIT "J";
(n) OTHER DOCUMENTS: Borrower shall deliver to Lender all of the
Loan Documents and such other documents and information as
Lender may reasonably require.
2.4 CONDITIONS TO EACH ADVANCE UNDER THE ACQUISITION AND DEVELOPMENT LOAN.
Advances hereunder shall be made not more than once a month and in accordance
with the Use of Proceeds attached hereto as EXHIBIT "C", and upon compliance
with the following conditions in form and substance satisfactory to Lender, in
its sole discretion:
(a) NO DEFAULT: The warranties and representations contained in
this Agreement are correct and true, all the covenants, terms
and conditions of this Agreement remain satisfied, all
conditions contained in the Commitment Letter have been
satisfied, and no Event of Default, or circumstances or events
which upon the lapse of
24
<PAGE>
time, the giving of notice, or both, could become an Event of
Default, has occurred as of the date of the Advance;
(b) CONTRACTS: Borrower shall deliver to Lender an executed copy
of the General Construction Contract for then applicable
portion of the land development on the Property and its
contracts with the Design Professional for the then applicable
portion of the land development and, executed copies of the
General Contractor's contracts with Major Subcontractors and
Major Suppliers for the then applicable portion of the land
development and, if requested by Lender, executed copies of
all contracts with subcontractors for the then applicable
portion of the land development at the Project and any
amendments or Change Orders thereto, all in form and substance
satisfactory to Lender. The General Construction Contract
shall contain a guaranteed maximum price for the construction
and completion of the land development contemplated by the
Plans and the Development Plan in accordance with EXHIBIT "D"
and in an amount as accepted by Lender and as set forth on the
Development Budget;
(c) GENERAL CONTRACTOR'S AGREEMENT: A contractor's agreement in
the form of EXHIBIT "F" attached hereto shall be executed and
delivered to Lender whereby General Contractor agrees that, in
the event of default by Borrower under the terms of this
Agreement or the Loan Documents, General Contractor will, at
the request of Lender, continue performance pursuant to the
General Construction Contract until completion of construction
of the land development, provided General Contractor is paid
for all necessary labor, materials and equipment furnished in
accordance with the General Construction Contract;
(d) DESIGN PROFESSIONAL'S AGREEMENT: An agreement by the Design
Professional, once approved by Lender, to be executed by the
Design Professional and delivered to Lender whereby the Design
Professional agrees that in the event of default by Borrower
under the terms of this Agreement or the Loan Documents, the
Design Professional will, at the request of Lender, (i) give,
written notice to Lender of any default at least 60 days prior
to suspending or terminating its obligations pursuant to its
contract with Borrower or General Contract; (ii) continue
performance pursuant to its contract
25
<PAGE>
with Borrower or General Contractor until completion of
construction of the land development, provided the Design
Professional is compensated in accordance with said contract
for all such services rendered from and after the date on
which Lender undertakes to complete the Project; (iii) assign
the Plans to Lender at no cost to Lender other than the actual
cost of making copies, and (iv) consent to the assignment by
Borrower or General Contractor to Lender of the right to use
or possess the Plans. Borrower hereby assigns the Plans to
Lender as additional security for the Loan;
(e) NO CONDEMNATION OR CASUALTY. The Improvements shall not have
been injured or damaged by fire or other casualty as of the
date of the Advance. No condemnation or eminent domain
proceedings shall have been commenced or threatened which
would involve the taking of all or any material part or
portion of the Property;
(f) BORROWER'S REQUEST AND EVIDENCE OF CONSTRUCTION AND PAYMENT:
Ten (10) business days prior to each Advance, Borrower shall
supply Lender with a written request executed by Borrower for
an Advance, which request shall set forth the amount sought,
shall constitute a covenant and affirmation of Borrower that
the warranties and representations in this Agreement are
correct and true, that all the covenants, terms, and
conditions of this Agreement are being complied with, and that
no Event of Default has occurred as of the date of the
Advance. Each request for an Advance shall be accompanied by
Lender's form attached hereto as EXHIBIT "K" and shall be
accompanied by Lender's Certificate in the form attached
hereto as EXHIBIT "L" fully executed, and such other evidence
as may from time to time be requested by Lender, including but
not limited to, applications, certificates, affidavits, lien
waivers and releases of Borrower, Consulting Engineer, General
Contractor, Major Subcontractors and Major Suppliers, any and
all as may be required by Lender, Disbursing Agent and Title
Company, showing:
(i) the percentage of completion or stage of the
Improvements and the value of that portion of the
Improvements completed at that time;
(ii) that all outstanding claims for labor, materials, and
fixtures through the date of the last Advance have been
paid, and liens
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therefor waived in writing, except for non-paid claims
approved by Lender;
(iii) that there are no liens outstanding against the Property
except for Lender's lien and security interest, other
than liens for property taxes not yet payable and other
liens approved in writing by Lender;
(iv) that Borrower has complied with all of Borrower's
obligations under the Loan Documents as of the date of
the request for an Advance;
(v) that all work prior to the date of the request for an
Advance has been done in a workmanlike manner by the
General Contractor and all subcontractors, and in
accordance with the Plans;
(vi) that the payment and performance bonds, if any, required
by Lender are in full force and effect;
(vii) copies of all bills or statements for expenses for which
the Advance is required;
(viii) that all Change Orders and extras in any amount have
been approved in writing by Lender;
(ix) that the amount of undisbursed Loan proceeds (including
revolving amount balances) are sufficient to pay the
cost of completing the Improvements in accordance with
the Plans;
(x) that each requisition of funds is to be used for the
specific account for which the requisition is made; and
(xi) that Lender shall have received copies of all
governmental licenses and permits necessary for the
construction work covered by the Advance requisition.
The request for an advance shall contain claims for labor and
materials to the date of the last inspection by Consulting
Engineer and not for labor and materials rendered thereafter.
On or about five (5) days prior to the making of a request for
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an advance, the Consulting Engineer will inspect the Property
to determine the percentage or stage of completion for
purposes of the next request for an Advance. Lender shall have
no obligation to disburse funds for any given item of work in
excess of the amount set forth on the applicable line item of
the Development Budget;
(g) SUBCONTRACTORS: If requested by Lender, Borrower shall furnish
copies, certified by Borrower to be true and correct, of all
subcontracts and purchase orders for the provision of labor
and materials for the development of the Land and the
construction of the Improvements, and statements from each
subcontractor and supplier:
(i) stating the amount of its contract and the amount paid
to date; and
(ii) acknowledging full payment (less retainage) for all work
done and/or materials supplied through the date of the
last Advance;
(h) AMOUNT OF ADVANCE. Lender shall not disburse more than 90% of
any request for Advance under the Acquisition and Development
Loan, with the retainage being disbursed at such time as
Borrower qualifies for a final draw hereunder;
(i) TITLE INSURANCE: Lender shall receive an endorsement to the
Title Insurance Policy updating the effective date of the
Title Insurance Policy to the date of the current Advance and
increasing the insurance coverage to an amount equal to the
sum of all prior Advances and the current Advance, less the
sum of all principal payments made, without additional
exceptions or objections;
(j) PROOF OF AVAILABILITY OF MATERIALS: If requested by Lender,
Borrower shall furnish to Lender evidence reasonably
satisfactory to Lender that Borrower and General Contractor
have obtained or can obtain all necessary materials as and
when required for the completion of the Improvements in
accordance with the Plans;
(k) STORED MATERIALS. Lender shall have the right to approve or
disapprove specifically, in its sole but reasonable judgment,
all disbursements for stored materials whether stored on the
Property or offsite (the "Stored Materials"). Without limiting
Lender's discretion, Lender will not approve an Advance for
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Stored Materials unless the request includes each of the
following:
(i) evidence satisfactory to Lender that the Stored Materials
are included in the coverage of insurance policies naming
Lender as an additional insured and that the Stored Materials
are satisfactorily stored on the Property in such a manner
that they are protected against theft or damage to the extent
reasonably necessary;
(ii) evidence satisfactory to Lender from the transferor or
fabricator or the Stored Materials certifying that, upon
payment, ownership thereof will vest in Lender free of any
liens or claims of third parties; and
(iii) evidence that the transferor, supplier or fabricator
acknowledges the Lender's right to enter the facility at
reasonable times to inspect or remove any Stored Materials
located off the Property (the "Offsite Materials");
With Lender's prior written approvals Stored Materials may be
stored in the yard or warehouse of the transferor or
fabricator, subject to satisfaction of conditions (i), (ii)
and (iii) in this paragraph and provided further that Lender
receives satisfactory evidence that the Stored Materials are
protected against theft or damage, have been suitably
identified as belonging to Borrower for use in the Project,
and that such Transferor or manufacturer has been notified of
the security interest of Lender therein. In no event shall
Lender be required to make an Advance for Stored Materials
until Lender has inspected and approved the Stored Materials
or waived in writing the requirement for such inspection and
approval. If Lender fails to inspect or waive approval within
thirty (30) days of request for storage, such inspection or
waiver shall be deemed made or given by Lender.
2.5 RIGHT TO WITHHOLD FUNDS. In addition to the right to require Equity
Funds under Sections 2.2(r) and 2.8, Lender may elect to withhold any Advance,
notwithstanding the substance of any report of the Consulting Engineer or the
Design Professional, or any documentation submitted to Lender in connection with
a request for an Advance, if Lender determines at any time that the actual cost
budget differs materially from that as shown on the Development Budget, but,
only if Borrower does not bring the loan
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into balance within forty-five (45) days from written notice of such
determination by Lender, or that the percentage of progress of construction of
the Improvements differs materially from that as shown on the request for an
Advance for the period in question. Furthermore, if any instrument or document
submitted by Borrower in connection with any Advance request shall not, in the
reasonable exercise of Lender's discretion, comply in all respects with the
conditions and requirements of this Agreement then Lender may amend, reduce or
withhold funding of an Advance request, as Lender, in its reasonable and timely
discretion, shall deem proper under the circumstances.
2.6 LIMITATION OF ADVANCES.
A. Notwithstanding anything to the contrary contained herein, at no
time shall Lender be obligated to fund nor shall there be more than
$23,900,000.00 allocated to the Acquisition and Development Loan. In
no event will Lender fund in excess of $16,275,000.00 for the
acquisition of the Land.
From and after the acquisition of the Lots, Model Homes and
Sales Office, and the satisfaction of the conditions precedent to
the funding of the Acquisition and Development Loan as contained in
Section 2.2, the Lender will advance to Borrower a sum not to exceed
$5,160,000 for costs related to the land development, as more
particularly described in the Plans and in the Development Budget
both of which shall be prepared by and submitted by Borrower to
Lender for Lender's review and written approval. Notwithstanding the
foregoing, the Lender may fund from the Acquisition and Development
Loan:
(x) an interest reserve in the amount of $1,000,000.00, more
particularly referenced in Section 2.9 (the "Interest Reserve
Account");
(y) a cash flow deficit reserve in the amount of $600,000 from
which funds may be advanced related to the operation of the
Project representing the difference between Gross Revenues and
Operating Expenses, in such amounts and at such times as
Lender shall in its sole discretion approve following a review
and comparison of projected cash flow deficits based on
Borrower's initial estimates and actual cash flow deficits
based on the difference between Gross Revenues and Operating
Expenses during any specific period to a maximum of $600,000
during the term of the Loan. Attached as Schedule M is the
form of Cash Flow Deficit Budget and report form to be
submitted to Lender in
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connection with any Advance from the Cash Flow Deficit Reserve
(the "Cash Flow Deficit"); and
(z) the payment of closing costs in an amount of $865,000.00
relating to the acquisition of the Project, but only to the
extent such closing costs are accepted and approved by Lender
as the same is to be evidenced by Lender's execution of the
Loan Disbursement Statement more particularly referenced in
Section 1.32 itemizing said closing costs.
B. If all conditions precedent to Lender's obligations hereunder and
to the Advance have been performed to the satisfaction of Lender,
Lender shall make the Advance from its main office in West Palm
Beach, Florida, or such other place as Lender may select, payable to
Borrower, or such other party as Lender may elect, within 10
business days after application by Borrower and shall make each
Advance in the amount justified by the applications, affidavits,
certificates and other evidence submitted to Lender under Sections
2.2 and 2.3.
C. Lender shall fund by wire an Advance to Borrower's demand deposit
account located at 1 ___________Account No. _________, which shall
be held, kept and maintained as a segregated account for the
disbursement of funds from the Advance, and through which all
payments by Borrower to General Contractor, subcontractors and third
parties shall be made. Notwithstanding the foregoing, the amount so
requested shall not exceed the total amount of the Development
Budget multiplied by the percentage of completion then attained less
the aggregate of all amounts theretofore advanced and not repaid.
The proceeds of each Advance hereunder shall be applied solely and
exclusively to payment, or to reimbursement of Borrower for payment,
of the costs of acquisition of the Land and for construction of the
Improvements as set forth on the Development Budget, and as
otherwise expressly set forth herein, and Borrower agrees at any
time and from time to time, upon request of Lender, to exhibit to
Lender receipts, vouchers, statements, bills of sale or other
evidence satisfactory to Lender of actual payment of such
Construction Cost. Each advance shall be deemed to be an advance
under the Note. Notwithstanding the foregoing, Lender may apply any
amounts due Borrower hereunder towards satisfaction of any of the
terms or conditions of this Agreement, and amounts so applied shall
be part of the Loan and shall be secured by the lien of Mortgage,
and all disbursements
- ----------------
1 To be provided by Borrower prior to Second Advance
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from any "contingency" categories shall be made at Lender's sole and
absolute discretion.
2.7 EXPENSES. Borrower shall pay all fees and charges incurred in the
procuring and making of the loan, and all other expenses incurred by Lender
during the term of the loan, including without limitation Title Company fees and
premiums, charges for examination of title to the Property, expenses of surveys,
Florida Documentary Stamp Taxes, Intangible Taxes, any applicable annual
recurring Intangible Taxes, recording expenses, fees of the Consulting Engineer
and Disbursing Agent, and the fees of the attorneys for Lender, and Borrower,
taxes, assessments, water rates, sewer rates and other charges, liens and
encumbrances upon the Property, any other expenses shown as part of the total
Project Cost, and any other amounts necessary for the payment of the cost of the
Improvements. Such amounts, unless sooner paid, shall be paid from time to time
as Lender shall request either to the person to whom such payments are due or to
Lender if Lender has paid the same, or Lender may, at its option, deduct from
any Advance any amounts necessary for the payment of these items, and apply such
amounts in making such payments, and all sums so applied shall be deemed
Advances under this Agreement.
2.8 EQUITY FUNDS. Any Equity Funds deposited by Borrower with Lender shall
be held in a separate account to be disbursed by Lender or the Disbursing Agent
to fund all subsequent requests for Advances and in a manner so as to comply
with the Florida Construction Lien Law, it being agreed that no Advances shall
be made by Lender until the Equity Funds have been exhausted or unless Lender
otherwise agrees in writing. Lender may at any time and from time to time
require Borrower to deposit additional Equity Funds whenever it shall appear to
Lender that the remaining proceeds of the Loan to be disbursed and remaining
Equity Funds will be insufficient to pay the remaining portion of the
Development Budget not already paid and to otherwise complete construction of
the Improvements in accordance with the Plans, and Borrower hereby covenants and
agrees that within 45 days after the date of written notice it will make such a
deposit upon Lender's request. If Lender does not require a deposit of Equity
Funds, Borrower shall pay and deliver to Lender satisfactory evidence of the
payment of any portion of the Development Budget in excess of the amount of the
Acquisition and Development Loan which remains to be disbursed, together with
lien waivers satisfactory to Lender and Title Company.
2.9 INTEREST RESERVE. Property is insufficient to pay interest, based upon
the Pay Rate ("Debt Service"), Borrower may obtain an Advance equal to the
difference between Debt Service and Net Cash Flow (but in no event will any such
advance be greater than the amount of Debt Service payable for the period in
question), on the following conditions (any or all of which may be waived by
Lender). Any amount drawn under this Section 2.9 (which
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shall in no event exceed the sum total of $1,000,000.00) shall be used only for
the payment of Debt Service, and Lender shall have the right to make an Advance
hereunder directly to Lender (and such sum shall nevertheless be deemed advanced
to Borrower) or, at the Lender's option, interest payments from the Interest
Reserve Account shall be funded by Lender for the account of Borrower on the
first day of each respective month, as the same become due, by Lender's
bookkeeping entries, unless Borrower elects to pay interest due in cash to
Lender. Each request for an Advance hereunder shall be accompanied by a detailed
report for the period in question establishing Net Cash Flow, together with such
supporting data as Lender may request. Upon disbursement of funds from the
Interest Reserve Account, the amount disbursed shall be added to the outstanding
principal sum of the Loan and shall bear interest at the rate set forth in the
Note. When and if such Interest Reserve Account is depleted, then and in such
event all monthly interest payments shall be paid by Borrower. Establishment of
an Interest Reserve Account shall in no way relieve Borrower of its obligation
to pay interest under the Note in the event Lender shall so require in its sole
and absolute discretion. Notwithstanding any other provision contained in this
Agreement to the contrary, Lender shall not be required to fund any sums of the
Interest Reserve Account if (i) Borrower is in default under any provision of
this Agreement; or (ii) any request for an Advance under this Section 2.9 made
more than fifteen (15) days period for which an insufficiency of Net Cash Flow
is claimed. Borrower expressly acknowledges than, whether or not it actually
receives funds which are advanced pursuant to this Section 2.9, any such
Advances are of direct and substantial benefit to Borrower inasmuch as they are
used exclusively to make Debt Service payments on Borrower's behalf, and
inasmuch as such advances eliminate the need for Borrower to obtain loans to
replace the Advances or obtain additional equity from its shareholders,
therefor, both of which Borrower represents it is unwilling and unable to do, it
being the intention of Borrower and Lender that Advances under this Section 2.9
be deemed Advances of principal for all purposes, including interest
calculations and usury analysis. If at any time (i) Borrower asserts, directly
or indirectly, that funds and Advances pursuant to this Section 2.9 are not loan
principal, or (ii) if at any time Lender receives evidence, by case law or
otherwise, based upon which it reasonably believes that its understanding on the
closing of the Loan that funds advanced for payment of loan interest constitute
loan principal are (a) incorrect or (b) being attacked by any third party in any
action or proceeding, whether or not relating to the Loan, then Lender at its
option shall have the right to accelerate maturity of the loan unless within
fifteen (15) days after notice of intent to accelerate Borrower repays to Lender
a sum equal to all Advances under this Section 2.9 plus all interest thereon and
executes in favor of Lender an instrument deleting this Section 2.9 and all
references thereto as of the closing of the Loan and containing a full release
in favor of
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Lender waiving any claims Borrower might have with respect to this Section 2.9.
2.10 CASH FLOW DEFICIT. If for any period Net Cash Flow for the Property
is insufficient to pay Operating Costs, Borrower may obtain an Advance equal to
the difference between Net Cash Flow and Operating Costs (but in no even the
amount of the Operating Costs (payable for the period in question), on the
following conditions (any or all of which may be waived by Lender): (a) Lender
shall have no obligation to advance more than $600,000.00 in the aggregate under
this Section 2.10; (b) any amount drawn under this Section 2.10 shall be used
only for the payment of Operating Costs, (c) each request for an Advance
hereunder shall be accompanied by a detailed report for the period in question
establishing Net Cash Flow, together with such supporting data as Lender may
request; (d) Lender shall have no obligation fund an Advance from the
$600,000.00 which may be disbursed pursuant to the terms of this Section 2.10
for any expense that exceeds the line item allocation for said expense on the
Operating Budget, which is a component part of the Approved Budget, without
Lender's prior written approval of the excess; (e) Lender shall have no
obligation to honor any request for an Advance under this Section 2.10 made more
than fifteen (15) days after the expiration of the period for which an
insufficiency of Net Cash Flow is claimed; and (f) Borrower is not in default
under any provision of this Agreement. When and if such $600,000.00 in the
aggregate which may be disbursed pursuant to the terms of this Section 2.10 is
depleted, then and in such event all Operating Costs shall be paid by Borrower.
Establishment of the $600,000.00 which may be disbursed pursuant to the terms of
this Section 2.10 shall in no way relieve Borrower of its obligation to pay
Operating Costs in the event Lender shall so require in its sole and absolute
discretion. Borrower shall maintain the Operating Budget which provides for
$62,500.00 in monthly operating expenses, or such other amount as may be
approved by Lender in writing. Borrower expressly acknowledges that, whether or
not it actually receives funds which are Advanced pursuant to this Section 2.10,
any such Advances are of direct and substantial benefit to Borrower inasmuch as
they are USEKE payments on Borrower's behalf, and inasmuch as such Advances
eliminate the need for Borrower to obtain loans to replace the Advances or
obtain additional equity from its shareholders therefor, both of which Borrower
represents it is unwilling and unable to do. It is the intention of Borrower and
Lender that Advances under this Section 2.10 be deemed advances of principal for
all purposes, including interest calculations and usury analysis. If at any time
(i) Borrower asserts, directly or indirectly, that funds and advances pursuant
to this Section 2.10 are not loan principal, or (ii) if at any time Lender
receives evidence, by case law or otherwise, based upon which it reasonably
believes that its understanding on the Closing Date that funds advanced for
payment of any deficit in Net Cash Flow constitute loan principal are (a)
incorrect or (b) being attached by any third party in any action or proceeding,
whether or
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not relating to the Loan, then Lender at its option shall have the right to
accelerate maturity of the Loan unless within fifteen (15) days after notice of
intent to accelerate Borrower repays to Lender a sum equal to all advances under
this Section 2.10 plus all interest thereon and executes in favor of Lender an
instrument deleting this Section 2.10 and all references thereto as of the
Closing Date and containing a full release in favor of Lender waiving any claims
Borrower might have with respect to this Section 2.10.
2.11 COST SAVINGS. Upon completion of any disbursement for all matters
covered by any category line item in the Approved Budget, or upon the execution
of a contract or subcontract for any construction category in an amount that is
less than the amount allocated to that construction category in the Approved
Budget, or upon the mutual agreement of Lender and Borrower, pursuant to an
amendment in the Approved Budget or otherwise, any remaining undisbursed amounts
allocated to that Construction category, or any amounts allocated to amount of
the contract, subcontract, or the amount originally allocated as the case may
be, shall be added to the "contingency" categories in the Approved Budget, and
therefore shall be held and/or disbursed in accordance with all terms, covenants
and provisions of Section 2.9.
2.12 CONDITIONS TO FINAL ADVANCE. When the land development and
construction contemplated by the Plans is completed, Borrower shall to the
extent required by Lender supply Lender with the following documents in addition
to satisfying all the conditions and supplying all the documents required under
Section 2.4 above prior to payment of the Final Advance by Lender.
(a) the Improvements shall have been completed in accordance with
the Plans and Lender shall have received evidence satisfactory
to Lender of the approval by all appropriate governmental
authorities of the Improvements in their entirety to the
extent any such approval is or will be a condition of the
lawful use of the Improvements, and evidence satisfactory to
Lender of approval by all appropriate governmental authorities
of the contemplated uses thereof;
(b) Lender shall have received on its standard form a written
certification by the Consulting Engineer, acceptable to Lender
in all respects, that the construction has been completed
substantially in accordance with the Plans, in a good and
workmanlike manner, and in accordance with all laws,
ordinances, rules and regulations of all governmental
authorities having, or purporting to have, jurisdiction over
the Property; and
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<PAGE>
containing the Consulting Engineer's written approval of the
final draw request;
(c) Lender shall have received three (3) copies of an as-built
survey prepared by a licensed surveyor showing all of the
Improvements in place,. The survey shall also include a
narrative metes and bounds description of the boundary of the
Land, the acreage of the Land and the square foot area of the
Improvements, the location and dimensions of any easements,
and the dimensions of any Improvements located on the Land.
The survey shall be certified to the Lender and to the Title
Company. The surveyor must include on the survey a signed
narrative statement in certification of the existence or
non-existence of any encroachments from or onto the Land and
must include the date of the survey, the surveyor's
registration number and seal and such other details and
information as may be required by required by Lender;
(d) Lender shall have received certifications of the Design
Professional and the General Contractor that all of the
on-site and off-site improvements have been substantially
completed in accordance with the Plans and that the
Improvements comply with all applicable requirements and are
in all respects complete;
(e) Lender shall have received a certification from the General
Contractor that all on-site and off-site improvements required
to be constructed have been substantially completed in
accordance with the Plans and an affidavit complying with the
laws of the State of Florida including a certification that
all subcontractors, suppliers and materialmen have been paid
in full through the date of the last Advance and that the
amount of this final Advance is an amount which is sufficient
to satisfy any and all sums remaining due and payable and
waiving all of the contractor's lien rights that they each may
have a prerequisite to a final advance.
(f) a certificate of completion from the appropriate governmental
authority to the extent obtainable, or the equivalent thereof;
(g) Lender shall be in possession of policies of fire, liability
and extended coverage and such other types of insurance as may
be required by Lender and in such amounts and containing such
terms as required in the Mortgage or as otherwise required
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<PAGE>
by Lender, endorsed to show the interests of Lender and in
form and substance and written by companies satisfactory to
Lender; and
(h) Borrower shall have conveyed and/or dedicated all roads and
water and sewer facilities to the Palm Beach County or
applicable water and sewer authority or governmental authority
having a jurisdiction with respect thereto (collectively, the
"Governmental Entities") and such Governmental Entities shall
have accepted such conveyance and/or dedication, without
condition, limitation or requirement of any further act or
deed.
(i) all other instruments and documents required by Lender.
ARTICLE III
NET CASH FLOW
3.1 NET CASH FLOW PAYMENTS.
(a) In addition to any other payment provided for herein, the Note
or in any other Loan Documents and as further security for the Loan, Borrower
shall pay Lender 100% of all Net Cash Flow for the Property (including without
limitation all revenues received from the Membership Marketing Agreement and the
Engle Contract, the Cumber Contract, the Bulk Sales contracts, and any other
contracts for the sale of Models or Lots which are not improved with residential
units). For each calendar quarter (or portion thereof) commencing with the
Closing Date, positive Net Cash Flow payments received by Lender shall be
applied to reduce Borrower's obligations under the Acquisition and Development
Loan. Net Cash Flow payments shall be calculated for each calendar quarter (or
fraction thereof) until (i) the Acquisition and Development Loan has been fully
repaid (principal, interest and Yield Maintenance Payments); and (ii) the
Borrower and Lender have executed a written agreement confirming the termination
of Borrower's obligation to make Net Cash Flow Payments. For any given calendar
quarter, Net Cash Flow Payments shall be due and payable on the fifteenth (15th)
day of the first (1st) month of each succeeding calendar quarter. Net Cash Flow
payments described herein are secured by all Loan Documents securing the Loan.
(b) On each due date for the payment of Net Cash Flow, whether or
not any amount is due, Borrower shall submit to Lender a detailed and
comprehensive report (i) showing how Gross Revenues, Operating Expenses and Debt
Service for the period in question were
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derived, and (ii) containing Borrower's calculation of Net Cash Flow. Said
report shall be certified and sworn to as being true and correct under penalty
of perjury by the Chief Financial Officer of Borrower.
(c) the payments provided herein and in the A & D Note shall be
credited by Lenderxes and assessments, if applicable;
(2) Second, to then due payments of interest and late charges,
if any, on the indebtedness thereunder in inverse order of maturity, i.e.,
current interest and then to accrued interest;
(3) Third, to principal under the Loan; and
(4) Fourth, to any Yield Maintenance Fee due under
the Loan.
(d) At no time shall any of the Net Cash Flow for the Property be
distributed for any reason to any shareholder of the Borrower and any such
distribution shall be deemed an Event of Default hereunder.
(e) Borrower and Lender hereby acknowledge and agree that Lender
shall have the sole and absolute right to receive all of the Net Cash Flow
generated from the Property without entering, operating, maintaining, or taking
possession of the Property or managing the same. The acceptance of all or any
part of the Net Cash Flow from the Property shall not be deemed or construed to
constitute Lender a "Mortgagee in Possession" nor thereafter or at any time or
in any event obligate Lender to appear in or defend any action or proceeding
relating to any lease, sale, management agreement, construction contract or
operation of the Property, to expend any money, incur any expenses, or perform
or discharge any obligation, duty or liability under any lease, sale, management
agreement, construction contract or to assume any obligation or responsibility
for any security deposits or other deposits, management, construction or
operation of the Property. Additionally, nothing contained herein, in the A&D
Note, the Mortgage, or any of the other Loan Documents shall be deemed or
construed to make Lender a partner or joint venture with Borrower or Guarantor
in the conduct of Borrower's or Guarantor's business or otherwise.
(f) It is further understood, acknowledged and agreed that receipt
by Lender of the Ne the A&D Note, under the Mortgage securing the A&D Note, or
under any of the Loan Documents. Lender shall have the right to accelerate the
indebtedness secured by the Mortgage and other Loan Document as evidence by the
A&D Note if any payment made to Lender of Net Cash Flow or otherwise is
insufficient to timely pay the interest at the interest rates as
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specified in the A&D Note, and the escrow payments required to be paid pursuant
to the terms of the A&D Note, the Mortgage or any of the Loan Documents, and no
waiver thereof shall be implied by or from Lender's acceptance of any Net Cash
Flow payments hereunder. Borrower and Guarantor are and shall remain solely
responsible and liable for any breach of contract and/or negligence in the
leasing, sales, management, operation, upkeep, repair, construction and control
of the Property and any liability for injury or damages to persons or property
sustained by any person or persons, firm or corporation in, on or about the
Property.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that from the date hereof and until payment
in full of all amounts owed by Borrower to Lender, unless Lender shall otherwise
consent in writing:
4.1 CONSTRUCTION OF PROJECT.
(a) Borrower agrees that it will construct the Project in accordance
with the Plans. Except as may be prohibited by law, Borrower agrees to draw all
of the Loan proceeds for purposes of acquisition of the Land and construction
and completion of the Project and agrees to cause the Project to be completed in
accordance with the provisions hereof. The Plans are to be approved by Lender
and authenticated by authorized signatures of Borrower, the Design Professional,
the General Contractor, the Consulting Engineers, and of all governmental
authorities having jurisdiction, one copy of the Plans, so authenticated, is to
be delivered to the Lender and another to the Consulting Engineers. Lender's
approval of the Plans is solely for the benefit of Lender, shall not be deemed a
representation, warranty, or guaranty as to the completeness, correctness, or
adequacy (legal, technical, or otherwise) of the Plans or the work of any person
who prepared the Plans, and Lender's approval of the Plans shall not be relied
upon by Borrower, Guarantor, or any other person for any purpose. No Change
Orders will be permitted without the prior written approval of the Design
Professional, the General Contractor, the Consulting Engineers, and of any
governmental authorities having jurisdiction. Lender agrees to act reasonably
promptly and non-arbitrarily in the consideration of any such changes. In no
event shall Lender be required to consider any change unless the same has first
been approved in writing by the other persons whose written approval is required
under this Section 4.1.
(b) All costs of construction, including the fees and expenses of
the Consulting Engineers, shall be paid by Borrower,
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which costs may be paid from the $5,160,000 to be advanced by Lender pursuant to
the terms hereof. No work other than that shown in the Plans shall be authorized
or undertaken in the construction of the Improvements without the prior written
consent of Lender. The cost of the Project shall include all costs of land
acquisition, development and construction (both direct and indirect) and all
other costs. Borrower agrees to pay all costs as they become due and payable. If
the General Contractor does not proceed diligently with the completion of the
work described in the Plans as required under the General Construction Contract
or fails for any reason to complete the work in accordance with its obligations
under the General Construction Contract, Borrower agrees to cause another
contractor or contractors satisfactory to Lender to be employed at Borrower's
expense to complete such work.
(c) No changes shall be made in either the General Construction
Contract, the Design Service Contract or in any contract with a Major
Subcontractor or Major Supplier without the prior written approval of the
Consulting Engineers and the prior written consent of Lender.
(d) All requisitions signed by Borrower shall be deemed
representations and covenants that all items noted thereon are expenses properly
incurred in respect of the Project. Upon funding of any requisition by Lender,
Borrower shall promptly use such proceeds to pay all items noted on such
requisition.
(e) Borrower shall not discontinue construction of the Project at
any time prior to co the reasonable control of Borrower, other than lack of
funds (collectively "events of force majeure"). Borrower shall not discontinue
construction of the Project at any time prior to completion for more than thirty
(30) consecutive days regardless of whether the delay is caused by an event of
force majeure.
4.2 COMMENCEMENT OF SUBSTANTIAL CONSTRUCTION; PROFORMA COMPLIANCE.
Substantial construction of the Project shall commence within forty-five (45)
days of the issuance of requisite building permits. Borrower shall proceed with
due diligence and best efforts to obtain such building permits as may be
required in order to commence the work contemplated in EXHIBIT "D", and in any
event, shall have obtained such building permits within ninety (90) days of the
date of this Agreement. If the requisite building permits have not been issued
within ninety (90) days of the date of this Agreement, Lender shall have the
right, at its sole and exclusive option, to withdraw all future funding
commitments (including any undisbursed portion of the Interest Reserve or the
Cash Flow Deficit Account) set forth in this Agreement. In no event shall any
construction commence prior to the execution of this Agreement. In the event
Borrower shall fail to meet the development schedule for Pods J, K and L, Lender
shall have the right, at its sole and exclusive option, to withdraw all future
funding commitments
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(including any undisbursed portion of the Interest Reserve or the Cash Flow
Deficit Account) set forth in this Agreement.
4.3 EXISTENCE, PROPERTIES, ETC. Borrower will (a) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, and (b) do or cause to be done all things necessary to obtain,
extend, preserve, renew, and keep in full force and effect the rights, licenses,
permits, franchises, patents, copyrights, trademarks, and trade names material
to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all laws, rules, regulations, and governmental
orders (whether federal, state, or local) applicable to the operation of such
business whether now in effect or hereafter enacted and with any and all other
applicable laws, rules, regulations, and governmental orders; and at all times
maintain, preserve, and protect all property MATERUCH property in good repair,
working order, and condition and from time to time make, or cause to be made,
all needful and proper repairs, renewals, additions, improvements, and
replacements thereto necessary in order, that the business carried on in
connection therewith may be properly conducted at all times. Borrower shall not
abandon the Property.
4.4 PAYMENT OF INDEBTEDNESS, TAXES, ETC. Borrower will (a) pay all of its
indebtedness and obligations promptly and in accordance with normal terms and
(b) pay and discharge or cause to be paid and discharged promptly all taxes,
assessments, and governmental charges or levies imposed upon it or upon its
income and profits, or upon any of its property, real, personal or mixed, or
upon any part thereof, before the same shall become in default, as well as all
lawful claims for labor, materials, and supplies or otherwise which, if unpaid,
might become a lien or charge upon such properties or any part thereof;
provided, however, Borrower shall not be required to pay and discharge or to
cause to be paid and discharged any such tax, assessment, charge, levy, or claim
so long as the validity thereof shall be contested in good faith by appropriate
proceedings and Borrower shall have set aside on its books adequate reserves
with respect to any such tax, assessment, charge, levy, or claim, so contested.
4.5 PROPERTY REPORTS. Borrower will maintain full and accurate books of
account and other records reflecting the results of the operations of the
Property, which books and records shall be separate and distinct from any and
all books and records of any of Borrower's affiliates, including, without
limitation, Transeastern Properties, and will furnish, or cause to be furnished,
to Lender:
(a) on or before thirty (30) days after the end of each calendar
month and on or before one hundred twenty (120) days after the end of each
fiscal year of Borrower, an operating statement for the Property, such reports
shall be generally in the form attached
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hereto as Exhibit N, the format of which Lender reserves the right to modify in
its sole discretion, setting forth the status of all sales and construction
contracts, the status of all closings, the income and expenses for the Property
for the immediately preceding calendar month or fiscal year, as applicable, and
a certificate executed by Borrower's chief executive officer certifying that
such report has been prepared in accordance with the cash-basis accounting,
applied on a consistent basis, and fairly presents the status of all sales and
construction contracts, the status of all closings, and results of the
Property's operations for the period covered thereby;
(b) on or before one hundred twenty (120) days after the end of each
fiscal year of Borrower, a certificate by Borrower certifying that, as of the
date thereof, there does or does not (as the case may be) exist an event that
constitutes, or that upon due notice or lapse of time or both would constitute
an Event of Default or, if an Event of Default exists, specifying the nature
thereof;
(c) immediate notice of any material adverse change in the
Property's financial condition or business prospects;
(d) on or before sixty (60) days prior to the start of each fiscal
year an annual budget for the Property for the next fiscal year, in form and
substance acceptable to Lender, and
(e) upon request of Lender, and at Borrower's expense, such other
operating, financial and credit information as Lender may reasonably request
with respect to the Property.
The fiscal year of the Property ends on June 30th. At any time and from
time to time Borrower shall deliver to Lender such other financial data as
Lender shall reasonably request with respect to the ownership, maintenance, use
and operation of the Property, and Lender shall have the right, at reasonable
times and upon reasonable notice, to audit, examine, and make copies or extracts
of Borrower's books of account and records relating to the Property, all of
which shall be maintained and made available to Lender and Lender's
representatives for such purpose at the address specified herein for Borrower or
at such other location as Lender may approve. Upon Lender's request, Borrower
shall also furnish Lender with convenient facilities and all books and records
necessary for an audit of such statements.
4.6 FINAN TEXT MISSING - NEED TO CHECK DISK
TEXT MISSING - NEED TO CHECK DISK er's financial conditions and transactions,
and shall furnish, or cause to be furnished, to Lender:
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(i) within one hundred twenty (120) days after the end of each
fiscal year of Borrower, financial statements (which shall
mean and include a balance sheet, statement of cash flow and
income statement for Borrower, such reports to be in such form
and in reasonable detail as Lender may request, setting forth
the financial condition (including all contingent
liabilities), cash flow and the income and expenses for
Borrower for the immediately preceding fiscal year) of
Borrower, prepared in accordance with generally accepted
accounting principles consistently applied, and which fairly
present the financial condition and transactions of Borrower
as of the date thereof or for the period covered thereby, and
certified to by an independent certified public accountant
with a national reputation;
(ii) on or before sixty (60) days prior to the end of each fiscal
year the Borrower shall submit to the Lender a comprehensive
list of "agreed-upon procedures" which the Borrower will use
to engage an independent certified public accountant with a
national reputation to perform the Borrower's year end
financial statements. Lender reserves the right to modify the
"agreed-upon procedures" in its sole discretion. The "agreed
upon procedures" report will be due within one hundred and
twenty (120) days after the end of the Borrower's fiscal year;
(iii) a tax return for each fiscal year of Borrower from and after
the date hereof, within thirty (30) days after same has been
filed with the Internal Revenue Service, but in no event later
than one hundred twenty (120) days after the end of each
fiscal year (provided, however, if Borrower shall have duly
filed for an extension of the filing deadline for such tax
return, and promptly furnished evidence thereof to Lender,
then such tax return shall be delivered to Lender on or before
two hundred fifty- five (255) days after the end of such
fiscal year);
(iv) on or before one hundred twenty (120) days after the end of
each fiscal year of Borrower, a certificate by Borrower
certifying that, as of the date thereof, there does or does
not (as the case may be) exist an event which constitutes, or
which upon due notice or lapse of time or both would
constitute an Event of Default or, if an Event of Default
exists specifying the nature thereof; and
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(v) immediate notice of any material adverse changes in the
financial condition or business prospects of Borrower. The
fiscal year of Borrower ends on December 31st.
B. Borrower shall cause Guarantor (or if Guarantor is more than one
party, then each party constituting Guarantor) to promptly furnish or cause to
be furnished to Lender:
(i) within one hundred twenty (120) days after the end of each
fiscal year of Guarantor, financial statements (which shall mean and include a
balance sheet, statement of cash flow and income statement for Guarantor, such
reports to be in such form and in reasonable detail as Lender may request,
setting forth the financial condition (including all contingent liabilities),
cash flow and the income and expenses for Guarantor for the immediately
preceding fiscal year) of Guarantor, (1) prepared in accordance with generally
accepted accounting principles consistently applied, as to Transeastern
Properties , and (2) prepared in a manner which fairly presents the financial
condition and transactions of each individual Guarantor as of the date thereof
or for the period covered thereby, and in a format approved by Lender, as to
each individual Guarantor, and (x) as to Transeastern Properties, audited and
certified to by and independent certified public accountant with a national
reputation; and (y) as to each individual Guarantor, certified and sworn to by
each individual Guarantor under penalty of perjury;
(ii) a tax return for each fiscal year of Guarantor from and
after the date hereof, as soon as available, but in no event later than one
hundred twenty (120) days after the end of each fiscal year (provided, however,
if Guarantor shall have duly filed for an extension of the deadline for such tax
return, and promptly furnish evidence thereof to Lender, then such tax return
shall be delivered to Lender on or before two hundred fifty-five (255) days
after the end of such fiscal year);
(iii) on or before one hundred twenty (120) days after the end
of each fiscal year of Guarantor, a certificate by Guarantor certifying that, as
of the date thereof, there does or does not (as the case may be) exist an event
which constitutes, or which upon due notice or lapse of time or both would
constitute an event of default under the Guaranty or, if such event of default
exists, specifying the nature thereof; and
(iv) immediate notice of any material adverse change in the
financial condition or business prospects of Guarantor.
The fiscal year of each individual Guarantor ends on December
31st, and as to Transeastern Properties, the fiscal year end is June 30th..
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C. In the event Borrower fails to furnish or cause to be furnished
any financial statement or report as required under this Subsection 4.6 or
Property report as required under the preceding Section 4.5, Lender may charge
the Borrower a $25.00 per day administrative fee for each day of delay in the
submission of the required reports. Such fee shall not exceed $1,000.00;
provided that if Borrower does not furnish or cause to be furnished any required
statement or report within forty (40) days after the due date specified above,
then Lender may, at the expense of Borrower, cause a certified public accountant
designated by Lender to prepare such balance sheets and statements and the costs
thereof shall become part of the principal secured hereby until repaid with
interest at the rate of two percent (2%) per annum above the rate from time to
time as set forth in the Note.
4.7 NOTICE OF DEFAULT. In the event any partner or agent of Borrower knows
of any Event of Default which shall have occurred or knows of the occurrence of
any event which, upon notice or lapse of time or both, would constitute an Event
of Default, Borrower shall promptly furnish to Lender a written statement as to
such occurrence, specifying the nature and extent thereof and the action (if
any) which is proposed to be taken with respect thereto.
4.8 NOTICE OF LITIGATION. Borrower shall promptly give Lender notice in
writing of all litigation and of all proceedings before any governmental or
regulatory agencies which, if adversely determined, would materially affect
Borrower's, or Guarantor's, financial or operating condition. Upon Lender's
request from time to time Borrower shall provide Lender with a current list of
all litigation or other proceedings pending against Borrower or Guarantor.
4.9 PAYMENT OF COSTS AND EXPENSES. The Loan shall be made without cost or
expense to Lender. Borrower will pay all costs and expenses (including
attorneys' fees and the fees of the Consulting Engineers) incurred by Lender for
preparation of the Loan Documents, perfecting the security interests of Lender
in the collateral, and all other reasonable expenses related to the Loan,
whether such expenses are incurred before or after the date of this Agreement,
and regardless of whether any advance is made under the Loan (unless Lender
improperly refuses to advance the Loan in accordance with the Loan Documents)
and including all such cost and expenses as may be incurred by Lender in
collecting the Loan. Without limiting the generality of the foregoing, Borrower
agrees to pay on demand all recordation taxes, filing or recording fees,
transfer taxes, certificate of title fees, and all other governmental
assessments, taxes, charges, and fees that may be due upon the filing or
recording of any financing statement, security agreement, mortgage, document, or
like INCURITY interests in any of Borrower's personal property and Lender's
security interests in any real or personal property given by any Guarantor to
secure the Loan.
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4.10 ACCESS TO PROJECT. Borrower shall permit representatives of the
Lender or Tenant, if applicable, to enter upon the Land to inspect the Project
at all reasonable times and also to examine all books and records of the Project
including all detailed plans, shop drawings, and specifications.
4.11 BORROWER'S REQUIRED INVESTMENT. Borrower hereby covenants and agrees
with Lender that (subject to the provisions hereof) prior to the first advance
(and from time to time in the event of change in the cost of the Project at a
later date) it will provide the Borrower's Required Investment from sources
other than the Loan. The Borrower's Required Investment shall be invested in the
Project as required to complete the Project, and, upon an Event of Default, and
at the request of Lender, Borrower shall deposit funds equal to the Borrower's
Required Investment with Lender pending completion of the Project.
4.12 SECURITY INTEREST. To further secure this Agreement and the Loan made
hereunder, and without limiting of the scope, effect, or generality of any
Security Agreement, Borrower, hereby grants Lender a security interest in the
Personal Property. Borrower agrees to execute such further documents, financing
statements and other instruments as may be reasonably requested by Lender in
order to perfect the security interests granted herein. To the extent that
possession of the Personal Property is necessary or advisable to perfect the
security interest, Borrower shall deliver such Personal Property to Lender upon
Lender's request. Borrower agrees to provide such evidence as Lender shall
request from time to time as to the perfection and first priority of such
security interests and liens.
4.13 FURTHER ASSURANCES. Borrower will execut ______________? which Lender
may reasonably request, to grant, preserve, protect, and perfect Lender's first
priority security interest in the Collateral.
4.14 PERSONALTY AND FIXTURES. Borrower will deliver to Lender, on demand,
any contracts, bills of sale, statements, receipted vouchers or agreements under
which Borrower claims title to any materials, fixtures or articles incorporated
in the Improvements or subject to the lien of the Mortgage.
4.15 APPRAISAL. Borrower shall deliver a (i) current Appraisal to Lender
prior to the first advance under the Acquisition and Development Loan, and (ii)
if required by Lender's bank regulatory requirements, an Appraisal for the
Project as a whole, or portion thereof as may be required by Lender, upon
completion of the Project.
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4.16 INSURANCE.
(a) COMMERCIAL GENERAL LIABILITY INSURANCE. Borrower shall at all
times maintain the policies of commercial general liability insurance that are
required by the Mortgage.
(b) WORKERS' COMPENSATION INSURANCE. Borrower shall at all times
maintain all workers' compensation insurance that Borrower is required to
maintain under the laws of each jurisdiction in which Borrower is required to
maintain such insurance. Borrower shall cause each contractor and subcontractor
of the Project to maintain workers' compensation insurance as required by the
Mortgage. In addition, Borrower shall maintain employer's liability insurance in
an amount not less than $500,000.00.
(c) BUSINESS INTERRUPTION INSURANCE. Borrower shall at all times
maintain policies of business interruption insurance in amounts acceptable to
Lender.
(d) FLOOD INSURANCE. To the extent obtainable, Borrower shall
maintain such flood insurance coverage in the face amount of the Loan or such
lesser amount as shall be acceptable to Lender, which must comply WIDES Lender,
upon demand from time to time, with written evidence that no part of the Land
has been designated as having moderate or special flood hazards or mudslide
hazards. Such evidence must be in form and substance satisfactory to Lender and
obtained at Borrower's cost, if any.
(e) PROPERTY INSURANCE. Borrower shall at all times maintain the
policies of property insurance required by the Mortgage. At all times during
construction of the Project, Borrower shall maintain builder's risk coverage
with a so-called Builder's Risk Completed Value non-reporting form of policy for
100% of the insurable replacement value of the Project to the extent obtainable.
(f) EVIDENCE OF INSURANCE COVERAGE. Prior to the first advance under
the Loan, and at the time of any change in the amount or scope of coverage
provided under any insurance policy (or any change in insurance company), and
from time to time upon Lender's request, Borrower shall deliver to Lender
counterpart originals, properly endorsed, of each policy of insurance that
Borrower is required to maintain under this Agreement, together with receipts
evidencing the payment of the premium for each such policy. If a counterpart
original of the insurance policy cannot be obtained from the insurer, then
Lender shall accept an original certificate of insurance in lieu of a
counterpart original of the insurance policy provided that (i) such certificate
is in form and substance satisfactory to Lender and (ii) the insurance company
issuing the certificate expressly authorizes Lender in writing to rely upon such
certificate. Borrower shall deliver to Lender like evidence
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of the renewals of all insurance policies required under this Agreement at least
thirty (30) days in advance of the expiration of the same, stamped "Paid" by the
agent or company issuing same.
(g) INSURANCE UPON COMPLETION. Upon completion of construction or
upon occupancy, whichever shall first occur, Borrower shall obtain and deliver
to Lender and thereafter, until the Loan is repaid, maintain policies of fire
and extended coverage and other insurance satisfactory to Lender in accordance
with the terms of the Mortgage to the extent such coverage is obtainable.
4.17 PROCEEDS OF THE LOAN TO BE DRAWN. Borrower shall cause the
requisitions and certifications referred to herein to be made and delivered to
Lender promptly to obtain funds as they become available for advance under the
terms of this Agreement. Borrower will not borrow from ANYOULD reduce the amount
of an advance that otherwise would be made under the terms of this Agreement.
Borrower will provide Lender, from time to time, with evidence satisfactory to
Lender that Borrower is complying with the conditions of this Section.
4.18 TITLE INSURANCE ENDORSEMENT. Borrower shall deliver to Lender at
Borrower's sole expense and in form and content satisfactory to Lender, all
endorsements and binders to the Title Insurance Policy or a endorsement bringing
the effective date of the Title Insurance Policy current and showing no new
exceptions to title, issued by Title Company at the option of the Lender,
required by Lender hereunder from time to time.
4.19 CONTINUED COMPLIANCE. Borrower shall comply with all Governmental
Requirements.
4.20 MAINTENANCE AND SECURITY OF THE PROPERTY. Borrower shall maintain the
Property fully furnished and in good condition and repair, take all measures
reasonably required by Lender to protect the physical security of the Property,
and not permit any waste or damage with respect to the Property.
4.21 NOTICE OF CERTAIN MATTERS. Borrower shall promptly give notice to
Lender of each of the following:
(a) any commencement of proceedings in condemnation or eminent
domain relating to the Property;
(b) any trade name hereafter used by Borrower and any change in
Borrower's principal place of business;
(c) any material aspect of the Project that is not in conformity
with the Plans;
(d) any material circumstance that may render the Approved Budget
inaccurate;
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(e) any other event or condition causing a material adverse change
in the financial condition of Borrower or any Guarantor;
(f) the creation of any lien on any portion of the Property or the
Personal Property within seven (7) business days after Borrower
receives notice of its creation.
4.22 FURTHER ASSURANCES. Borrower shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to Lender all documents, and take
all actions reasonably required by Lender from time to time to confirm the
rights created or now or hereafter intended to be created under the Documents,
to protect and further the validity, priority and enforceability of the
Documents, or otherwise to carry out the purposes of the Documents and the
transactions contemplated thereunder.
4.23 CONTINUED EXISTENCE. Borrower shall maintain its existence, and
continue to be a corporation qualified to transact business in the State of
Florida.
4.24 HAZARDOUS MATERIALS. In the event any investigation or monitoring of
site conditions or any cleanup, containment, restoration, removal or other
remedial work ("Remedial Work") is required (a) under any applicable federal,
state or local law or regulation, (b) by any judicial or administrative order,
(c) in order to comply with any agreements affecting the Property, (d) to
maintain the Property in a standard of environmental condition which prevents
the release of any Hazardous Materials to adjacent property and otherwise is
consistent with the prudent LENDERSHIP of property of the character of the
Property, or (e) as a result of the existence of Hazardous Materials on the
Property, or resulting from any activities on the Property which directly or
indirectly result in the Property becoming contaminated with Hazardous
Materials, Borrower shall perform or cause to be performed such Remedial Work
but only to the extent such Remedial Work is necessitated by the act or omission
of Borrower, or its contractors, subcontractors or agents; provided that
Borrower may withhold commencement of such Remedial Work pending resolution of
any good faith contest regarding the application, interpretation or validity of
any law, regulation, order or agreement, subject to the requirements set forth
below. All Remedial Work which Borrower may be obligated to undertake pursuant
to the foregoing provisions shall be conducted (i) in a diligent and timely
fashion by a licensed environmental engineer, (ii) pursuant to a detailed
written plan for the Remedial Work approved by any Governmental Agency with a
legal or contractual right to such approval, (iii) with such insurance coverage
pertaining to liabilities arising out of the Remedial Work as is then
customarily maintained with respect to such activities and (iv) only following
receipt of all required permits, licenses or approvals. In addition, Borrower
shall submit
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to the Lender promptly upon receipt or preparation, copies of any and all
reports, studies, analysis, correspondence, GOVES or approvals, proposed removal
or other Remedial Work contracts and similar information prepared or received by
Borrower in connection with any required Remedial Work or Hazardous Materials
relating to the Property. All costs and expenses of such Remedial Work which
Borrower may be obligated to undertake pursuant to the foregoing provisions
shall be paid by Borrower, including, without limitation, the charges of the
Remedial Work contractors and the consulting environmental engineer, any taxes
or penalties assessed in connection with the Remedial Work and the Lender's
reasonable fees and costs incurred in connection with monitoring or reviewing
such Remedial Work. If it is determined that such Remedial Work is necessitated
by an act or omission of Borrower, or its contractor, subcontractors or agents,
thereby obligating Borrower to undertake the Remedial Work pursuant to this
Section 4.24. and Borrower should fail to commence or cause to be commenced such
Remedial Work in a timely fashion, or fail diligently to prosecute to completion
such Remedial Work the Lender (following ten (10) days written notice to
Borrower) may, but shall not be required to cause such Remedial Work to be
performed. All such costs shall be due and payable by Borrower ten (10) days
after the Lender's demand therefor. Notwithstanding any provision of this
Agreement to the contrary, Borrower may contest by appropriate action any
Remedial Work requirement imposed by any Governmental Agency, and the Lender
shall have no right to perform such required Remedial Work on Borrower's behalf
during the pendency of such contest, provided that (a) if no Event of Default
has occurred and is continuing (b) Borrower has given the Lender written notice
that Borrower is contesting or shall contest, and Borrower does in fact contest
the application, interpretation or validity of the law, regulation, order or
agreement pertaining to the Remedial Work by appropriate legal or administrative
proceedings conducted in good faith and with due spatch, (c) such contest shall
not subject the Lender, any of the Lender's directors, trustees, beneficiaries,
officers, shareholders, employees and agents, or any assignee of all or any
portion of the Lender's interest in the Property to civil or criminal liability
and does not jeopardize any such parties' right, title, or interest in the
Property, and (d) Borrower shall give such security or assurances as may be
reasonably required by the Lender to insure ultimate compliance with all legal
or contractual requirements pertaining to the Remedial Work (and payment of all
costs, expenses, interest and penalties in connection therewith) and to prevent
any sale forfeiture or loss by reason of nonpayment or noncompliance. Borrower
agrees to immediately notify Lender if Borrower becomes aware of any Hazardous
Materials or other environmental problem or liability with respect to the
Property, or any adjacent property, or any lien, action or notice relating to
Hazardous Materials and served on Borrower or imposed against the Property, as
the case may be, by any Governmental Agency. To the extent of Borrower's
obligations as set forth above, Borrower agrees to protect, defend, indemnify
and hold Lender harmless from
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and against all claims, demands, damages, losses, liens, liabilities, penalties,
fines, lawsuits and other proceedings (including all foreseeable and
unforeseeable consequential damages) and all costs and expenses (including,
without limitation, the cost of any required cleanup of such Hazardous Materials
and all attorneys' fees and expenses incurred by Lender in connection therewith)
arising directly or indirectly from or out of, or in any way connected with (a)
the inaccuracy of the representations set forth in Article VII; (b) any
activities on the Property which directly or indirectly results in the Property
or any other property becoming contaminated with Hazardous Materials; (c) the
discovery of Hazardous Materials on the Property; and (d) the cleanup of
Hazardous Materials from the PROACKNOWLEDGES that it will be responsible for all
costs and expenses relating to the cleanup of Hazardous Materials from the
Property or from any other properties which become contaminated with Hazardous
Material as a result of any act or omission of Borrower or its contractors,
subcontractors or agents resulting in contamination of the Property. Borrower's
obligations under this Section 4.24 shall survive the completion of the Project
as contemplated by this Agreement for a period of twenty-four (24) months.
ARTICLE V.
NEGATIVE COVENANTS
Borrower covenants and agrees that, from the date hereof and until payment
in full of all amounts owed by Borrower to Lender, unless Lender shall otherwise
consent in writing:
5.1 GUARANTIES. Borrower will not guarantee, assume, sell with recourse,
endorse, contingently agree to purchase, become surety for, or otherwise become
liable upon the obligation of any person, except by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
5.2 NEGATIVE PLEDGE. Borrower will not create, incur, assume, or suffer to
exist any mortgage, pledge, security interest, conditional sale, or other title
retention agreement, encumbrance or other lien upon any property, now owned or
hereafter acquired, of Borrower (the sale with recourse of receivables or any
"sale and lease back" of any fixed assets being deemed to be the giving of a
lien thereon for money borrowed), other than Permitted Encumbrances, and other
than the "sale and lease back" of the Models which Lender has approved in
writing after having reviewed the form, content and terms of the sale and lease
back agreement(s). Borrower will not mortgage or in any manner encumber the Land
or Project or any part thereof, or permit or suffer to
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exist thereon any mortgage, lien, or encumbrance of any character (other than
the legal operation and effect of the Mortgage), and if any such mortgage, lien,
or encumbrance shall become effective in relation to the Project or the Land or
any part thereof, Borrower will forthwith pay and discharge the same.
5.3 CONSOLIDATIONS, MERGERS AND ACQUISITIONS. Borrower will not merge or
consolidate with or into any corporation or other entity or acquire any going
business or group of assets which together constitute an operating business, or
enter into any consolidation, recapitalization, or reorganization, or invest in
or advance funds to any subsidiary or affiliated corporation.
5.4 JUDGMENTS. Borrower will not permit any judgment entered against it to
remain unsatisfied for a period of more than thirty (30) days after the judgment
has become final.
5.5 INVESTMENTS, LOANS AND ADVANCES. Borrower will not purchase, hold or
acquire beneficially any stock, other securities, or evidences of indebtedness
of, make or permit to exist any loans or advances to, or make any investment or
acquire any interest whatsoever in, any other person.
5.6 NO ASSIGNMENT. Borrower shall not sell, lease, transfer, assign,
mortgage or encumber in any way the Membership Marketing Fees generated pursuant
to the Membership Marketing Agreement, without Lender's prior written consent.
ARTICLE VI.
ASSIGNMENTS
6.1 ASSIGNMENT OF CONSTRUCTION CONTRACT.
As additional security for the payment of the Loan, Borrower hereby
transfers and assigns to Lender all of Borrower's rights and interest, but not
its obligations, in, under and to each General Construction Contract upon the
following terms and conditions::
(a) Borrower represents and warrants that the copy of each General
Construction Contract the Borrower has furnished or will furnish to Lender is or
will be (as applicable) a true and complete copy thereof, including all
amendments thereto, if any, and that Borrower's interest therein is not subject
to any claim, setoff or encumbrance.
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(b) Neither this assignment nor any action by Lender shall
constitute an assumption by Lender of any obligations under any General
Construction Contract, and Borrower shall continue to be liable for all
obligations of Borrower thereunder, Borrower hereby agreeing to perform all of
its obligations under each General Construction Contract. Borrower agrees to
indemnify and hold Lender harmless against and from any loss, cost, liability or
expense (including but not limited to attorneys' fees) resulting from any
failure of Borrower to so perform.
(c) Lender shall have the right at any time (but shall have no
obligation) to take in its name or in the name of Borrower such action as Lender
may at any time determine to be necessary or advisable to cure any default under
any General Construction Contract or to protect the rights of Borrower or Lender
thereunder. Lender shall incur no liability if any action so taken by it or in
its behalf shall prove to be inadequate or invalid, and Borrower agrees to
indemnify and hold Lender harmless against and from any loss, cost, liability or
expense (including but not limited to reasonable attorneys' fees) incurred in
connection with any such action.
(d) Borrower hereby irrevocably constitutes and appoints Lender as
Borrower's attorney-in-fact, in Borrower's or Lender's name, to enforce all
rights of Borrower under each General Construction Contract. Such appointment is
coupled with an interest and is therefore irrevocable.
(e) Prior to the occurrence of an Event of Default, Borrower shall
have the right to exercise its rights as owner under each General Construction
Contract, provided that Borrower shall not cancel or amend any General
Construction Contract or do or suffer to be done any act which would impair the
security constituted by this assignment without the prior written consent of
Lender.
(f) This assignment shall inure to the benefit of Lender and its
successors and assigns, any purchaser upon foreclosure of the Mortgage, any
receiver in possession of the Property and any corporation affiliated with
Lender which assumes Lender's rights and obligations under this Agreement.
6.2 ASSIGNMENT OF PLANS AND SPECIFICATION.
As additional security for the Loan, Borrower hereby transfers and
assigns to Lender all of Borrower's right, title and interest in and to the
Plans and hereby represents and warrants to and agrees with Lender as follows:
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(a) Each schedule of the Plans delivered or to be delivered to
Lender is and shall be a complete and accurate description of the Plans.
(b) The Plans are and shall be complete and adequate for the
construction of the Improvements and there have been no modifications thereof
except as described in such schedule. The Plans shall not be modified without
the prior written consent of Lender.
(c) Lender may use the Plans for any purpose relating to the
Improvements, including but not limited to inspections of construction and the
completion of the Improvements.
(d) Lender's acceptance of this assignment shall not constitute
approval of the Plans by Lender. Lender has no liability or obligation in
connection with the Plans and no responsibility for the adequacy thereof or for
the construction of the Improvements contemplated by the Plans. Lender has no
duty to inspect the Improvements, and if Lender should inspect the Improvements,
Lender shall have no liability or obligation to Borrower or any other party
arising out of such inspection. No such inspection nor any failure by Lender to
make objections after any such inspection shall constitute a representation by
Lender that the Improvements are in accordance with the Plans or any other
requirement or constitute a waiver of Lender's right thereafter to insist that
the Improvements be constructed in accordance with the Plans or any other
requirement.
(e) This assignment shall inure to the benefit of Lender and its
successors and assigns, any purchaser upon foreclosure of the Mortgage, any
receiver in possession of the Property and any corporation affiliated with
Lender which assumes Lender's rights and obligations under this Agreement.
6.3 ASSIGNMENT OF DESIGN SERVICES CONTRACT. As additional security for the
payment of the Loan, Borrower hereby transfers and assigns to Lender all of
Borrower's rights and interest, but not its obligations, in, under and to each
Design Services Contract upon the following terms and conditions:
(a) BORROWPLICABLE) a true and complete copy thereof, including all
amendments thereto, if any, and that Borrower's interest therein is not subject
to any claim, setoff or encumbrance.
(b) Neither this assignment nor any action by Lender shall
constitute an assumption by Lender of any obligations under any Design Services
Contract, and Borrower shall continue to be liable for all obligations of
Borrower thereunder, Borrower hereby agreeing to perform all of its obligations
under each Design Services Contract. Borrower agrees to indemnify and hold
Lender
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harmless against and from any loss, cost, liability or expense (including but
not limited to attorneys' fees) resulting from any failure of Borrower to so
perform.
(c) Lender shall have the right at any time (but shall have no
obligation) to take in its name or in the name of Borrower such action as Lender
may at any time determine to be necessary or advisable to cure any default under
any Design Services Contract or to protect the rights of Borrower or Lender
thereunder. Lender shall incur no liability if any action so taken by it or in
its behalf shall prove to be inadequate or invalid, and Borrower agrees to
indemnify and hold Lender harmless against and from any loss, cost, liability or
expense (including but not limited to reasonable attorneys' fees) incurred in
connection with any such action.
(d) Borrower hereby irrevocably constitutes and appoints Lender as
Borrower's attorney-in-fact, in Borrower's or Lender's name, to enforce all
rights of Borrower under each Design Services Contract. Such appointment is
coupled with an interest and is therefore irrevocable.
(e) Prior to the occurrence of an Event of Default, Borrower shall
have the right to exercise its rights as owner under each Design Services
Contract, provided that Borrower shall not cancel or amend any Design Services
Contract or do or suffer to be done any act which would impair the security
constituted by this assignment without the prior written consent of Lender.
(f) This assignment shall inure to the benefit of Lender and its
successors and assigns, any purchaser upon foreclosure of the Mortgage, any
receiver in possession of the Property and any corporation affiliated with
Lender which assumes Lender's rights and obligations under this Agreement.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
7.1 RECITALS. Borrower makes the following representations and warranties
to Lender on the date hereof and at the time any advance is made, and with
respect to each such advance; provided, however, if at the time that an advance
is requested Borrower is unable to make one or more of the following
representations or warranties, then Borrower shall not be required to make such
representation or warranty if Borrower shall have given Lender written notice of
Borrower's inability to make such representation or warranty, which notice shall
identify each representation and warranty that Borrower is unable to make and
shall include an explanation in reasonable detail as to why Borrower is unable
to
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make such representation or warranty. If Borrower is unable to make one or more
of the representations or warranties contained in this Article with respect to
any requested advance, such inability shall constitute a failure to satisfy the
conditions precedent set forth in Article II, with respect to such requested
advance.
7.2 ORGANIZATION, POWER, ETC..
Borrower (i) is a corporation duly incorporated, validly existing
and in good standing under the laws of Florida, (ii) has the corporate power and
authority to own its properties and assets and to carry on its business as now
conducted, (iii) has the corporate power to execute, deliver and perform each of
the Loan Documents and each agreement or instrument contemplated thereby to
which it is or will be a party, and (iv) is qualified to do business in every
jurisdiction where such qualification is necessary except where the failure so
to qualify would not have a materially adverse effect on its business,
properties, operations, prospects or condition, financial or otherwise, or would
impair its ability to perform its obligations under or in connection with the
Loan Documents.
7.3 AUTHORIZATION OF BORROWING, ETC.. The borrowings hereunder and the
execution, delivery and performance of each of the Loan Documents have been duly
authorized by all requisite action on the part of Borrower and will not (i)
contravene any provision of law, any order of any court or other agency of
government, which contravention could reasonably be expected to have a material
adverse effect upon the prospects, profits, or financial or operating condition
of Borrower or Borrower's ability to perform the obligations under the Loan
Documents, or (ii) contravene the partnership agreement or any indenture,
agreement, or other instrument binding upon Borrower, which contravention could
reasonably be expected to have a material adverse effect upon the prospects,
profits, or financial or operating condition of Borrower or Borrower's ability
to perform the obligations under the Loan Documents, or (iii) be in conflict
with, result in the breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement, or other instrument binding
upon Borrower, which default or breach could reasonably be expected to have a
material adverse effect uponon of Borrower or Borrower's ability to perform the
obligations under the Loan Documents, or (iv) result in the creation or
imposition of any lien, charge, or encumbrance of any nature whatsoever upon any
of the property or assets of Borrower, except pursuant to the Loan Documents.
7.4 GOVERNMENTAL APPROVAL. No action or consent of, or registration or
filing with, any governmental agency, bureau, commission, or court is required
under existing law in connection with the execution, delivery, and performance
by Borrower of this Agreement, the borrowings hereunder or the execution and
delivery
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by Borrower of any of the Loan Documents, or, if any such action, consent,
filing, or registration is required, Borrower has given Lender written notice
thereof, including notice that (i) the required action has been taken, (ii) the
required consent has been obtained, and/or (iii) the required filing or
registration has been made.
7.5 PLANS APPROVED. The Plans have been approved by all governmental
authorities having jurisdiction, and all necessary building permits and all
other governmental and private authorizations and approvals have been obtained.
7.6 LITIGATION.
(a) On the date of this Agreement, there are no actions, suits, or
proceedings at law or in equity or by or before any governmental instrumentality
or other agency pending against Borrower or Guarantor other than as disclosed on
EXHIBIT "P" hereto, and, to Borrower's knowledge, there are no actions, suits,
or proceedings threatened against or affecting Borrower or Guarantor or any
property or rights of Borrower or Guarantor.
(b) There are no pending actions, suits, or proceedings at law or in
equity or by or before any governmental instrumentality or other agency which if
adversely determined would have a material adverse effect upon the prospects,
profits, or financial or operating condition of Borrower or Guarantor.
(c) Neither Borrower nor Guarantor is in default with respect to any
judgment, order, writ, injunction, decree, demand, rule, or regulations of any
court, arbitrator, grand jury, or of any governmental agency.
7.7 AGREEMENTS. Neither Borrower nor Guarantor is a party to, or bound by,
any contract or instrument, or subject to any charter or other corporate
restriction, materially and adversely affecting the business, property, assets,
operations or condition, financial or otherwise, of Borrower or Guarantor.
7.8 TAXES. Borrower and Guarantor have filed and will continue to file all
United States income tax returns and all state income tax returns that are
required to be filed, and have paid, or made adequate provisions for the payment
of, all taxes that have or may become due pursuant to said returns or pursuant
to any assessment received by Borrower or Guarantor, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided.
7.9 COMPLIANCE WITH LAW. Borrower and Guarantor are in compliance, in all
material respects, with all applicable statutes, rules, RINESSES or the
ownership of their properties. The improvements to be constructed on the Land,
and the use of the Land
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for the purposes intended will not violate any environmental, ecological,
subdivision, zoning, use, or other ordinance, law, or regulation or any
agreement applicable to the Land or its intended use.
7.10 ERISA. Based upon ERISA and published interpretations thereunder,
Borrower, Guarantor, and any Employee Plan, are in compliance in all material
respects with ERISA.
7.11 FINANCIAL STATEMENTS. Each financial statement of Borrower and
Guarantor delivered heretofore, concurrently herewith or hereafter to Lender was
and will be prepared in conformity with general accepted accounting principles,
as to Borrower and Transeastern Properties, and as to any individual Guarantor,
such other good accounting principles approved by Lender in writing, applied on
a basis consistent with that of previous statements and completely and
accurately disclose the financial condition of Borrower and Guarantor (including
all contingent liabilities) as of the date thereof and for the period covered
thereby, and there has been no material adverse change in either Borrower's or
Guarantor's financial condition subsequent to the date of the most recent
financial statement of Borrower and Guarantor delivered to Lender.
7.12 PLACE OF BUSINESS.. On the date of this Agreement, the address of
Borrower's chief executive office and chief place of business is 3300 University
Drive, Coral Springs, FL 33065, which is the mailing address for Borrower.
7.13 BROKERAGE COMMISSION. Borrower has not made any agreement or taken
any action that may cause anyone except Jon Block of J.D. Block Services, Inc.
to become entitled to a commission or finder's fee directly attributable to the
making of the Loan, and Borrower agrees to indemnify and hold the Lender
harmless from the claims of any other party for such fees, costs ac. in
connection with Borrower's acquisition of the Property is $110,000.00 and
Borrower agrees to evidence the full payment of said commission and receipt
therefore by J.D. Block Services, Inc. upon Lender's request.
7.14 UTILITIES. All utility services necessary for the completion of the
Project and the use of the Project for the intended purposes thereof are now, or
will be prior to completion of the Project, available at the boundaries of the
Property, including water, storm, and sanitary sewer facilities, gas (if
available to properties in the same area as the Property), electrical and
telephone, and will be brought and connected to the Project and fully utilized
in connection with the Project.
7.15 PUBLIC WORKS AND UTILITY AGREEMENTS. All public works and utility
agreements required for the Project, including but not limited to agreements
with respect to subdivision or the installation of water, sanitary sewer, storm
water management, gas
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and electric, telephone or similar or related utility systems, have been or will
be executed and delivered and either are, or upon execution and delivery shall
be, valid and in full force and effect and without default, or expected default,
on the part of any party to any such agreement.
7.16 ROADS. The Property currently has, or will have prior to completion
of the Project, adequate roads and sources of ingress and egress to permit the
Project to be used for their intended purposes. If public roads are to be
installed in the Property as part of the Project, the roads will be constructed
and installed in accordance with the standards and requirements of the
jurisdiction in which the Property is located and all other applicable
requirements of law, so that the roads, upon dedication to the public, will be
acquired and accepted by the jurisdiction in which the Property is located, as
the case may be, and maintained thereafter by the jurisdiction in which the
PROPERTY __________?
7.17 SUPPORTING DOCUMENTS. Each Supporting Document prepared by or on
behalf of Borrower or Guarantor and delivered to Lender is true, accurate,
correct, and complete in all respects. To Borrower's knowledge, each Supporting
Document prepared by the Secretary of State or any other governmental authority
and delivered to Lender by or on behalf of Borrower or Guarantor is true,
accurate, correct, and complete in all respects.
7.18 TITLE TO THE PROPERTIES. Borrower owns, or will own as of the time it
is purchased, absolutely free and clear of any chattel mortgages, conditional
bills of sale, or other liens or encumbrances other than Permitted Encumbrances,
the Personal Property, the Land, and the Improvements. All Property is free from
defects in title. No financing statement under the Uniform Commercial Code which
names Borrower has been filed, and Borrower has not signed any financing
statement or any security agreement authorizing any secured party thereunder to
file any such financing statement, except in favor of Lender or with respect to
Permitted Encumbrances.
ARTICLE VIII.
EVENTS OF DEFAULT AND CERTAIN REMEDIES
8.1 DEFAULT. The occurrence of any of the following shall be deemed an
Event of Default:
(a) a default has occurred under any term, condition, or covenant of
the Note, the Mortgage, this Agreement or any of the other Loan Documents; or
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(b) any representation, warranty, or statement made by Borrower,
Guarantor, or others in, under, or pursuant to the Loan Documents or any
affidavit or other instrument executed or delivered with respect to the Loan
Documents or the Indebtedness is determined by Lender to be false or misleading
in any material respect as of the date hereof or thereof or shall become so at
any time prior to the repayment in full of the Indebtedness.
(c) the Improvements are, in the judgment of Lender, materially
injured or destroyed by fire or otherwise, and the Consulting Engineers cannot
certify they can be restored so that the Improvements can be completed within
the time requirements and other terms and conditions hereof; or
(d) Borrower shall have failed to procure all necessary permits,
licenses, certificates and authorizations from all requisite governmental
authorities for the construction of the Improvements within the time schedule
set forth in Section 4.2 and as set forth on EXHIBIT "D".
(e) Borrower does not construct the Project in accordance with the
Plans (as the same may be amended from time to time with the written approval of
Lender as required by this Agreement) and in accordance with all laws, rules,
regulations, and requirements of all governmental authorities having
jurisdiction, now existing or hereafter enacted, adopted, or promulgated, in
accordance with the time schedule set forth on EXHIBIT "D", or fails to promptly
submit to Lender and to the Consulting Engineers all amendments and supplements
to the Plans or in any event, fails to so submit on or before the next
succeeding requisition; or
(f) the construction of the Improvements are, at any time, (i)
discontinued due to acts or matters within Borrower's control for a period of
thirty (30) or more consecutive days, (ii) not carried on with reasonable
dispatch, or (iii) not completed by the Completion Date free and clear of all
mechanics', materialmen's and other lien claims or stop notices asserted by
suppliers of labor, services or materials;
(g) Borrower fails to qualify for an advance hereunder for a period
in excess of thirty (30) days after notice from Lender; provided, however, that
no such notice may be sent by Lender within thirty (30) days of the last Advance
funded;
(h) Transeastern Properties, and/or any corporate Guarantor is
dissolved, liquidated or terminated;
(i) Borrower acquires, secures or procures assets in addition to the
Project, in violation of the Commitment Letter and this Agreement;
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(j) any transfer or further encumbrance of the Property by Borrower,
in violation of Section 10.1 of this Agreement;
(k) if there is filed by or against Borrower, Transeastern
Properties and/or any Guarantor a petition in bankruptcy or a petition for the
appointment of a receiver or trustees, or any Guarantor files a petition for
reorganization under any of the provisions of the Uniform Bankruptcy Act or of
any similar law, state, federal or foreign, or if Borrower, Transeastern
Properties or any Guarantor makes a general assignment for the benefit of
creditors or makes any insolvency assignment or is adjudged insolvent by any
court of competent jurisdiction;
(l) a judgment entered against Borrower, Transeastern Properties or
any Guarantor involving a sum in excess of $25,000.00 which is not discharged or
transferred to bond within sixty (60) days;
(m) any material adverse change shall occur in the financial
condition of the Borrower, Transeastern Properties or any Guarantor at any time
during the term of the Loan from the financial condition represented in
statement already presented to and accepted by Lender;
(n) any modification in any agreement or contract, or terminates any
agreement or contract required by and approved by Lender in connection with the
construction contemplated by this Agreement without Lender's prior written
approval;
(o) any default by Borrower under the Engle Contract unless Borrower
replaces the Engle Contract with a contract of equal value within the fifteen
(15) day cure period specified in Section 8.2;
(p) any default by Borrower under the Cumber Contract unless
Borrower replaces the Cumber Contract with a contract of equal value within the
fifteen (15) day cure period specified in Section 8.2;
(q) any default under any Bulk Sales contract consisting of ten (10)
or more Lots, which may be now or hereafter entered into;
(r) the distribution of any Net Cash Flow derived from the Project
to any shareholder of Borrower; or
(s) any declared default beyond any applicable cure period under any
documents securing that certain $3,500,000.00 loan from Ohio Savings Bank,
F.S.B. (the "Ohio Lender") to Borrower, which financing shall have been approved
in writing by Lender prior to the closing of such loan.
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8.2 REMEDIES. Upon the occurrence of an Event of Default:
(a) Lender shall have no further obligation to make any additional
advances to Borrower, and Lender may declare the Note to be forthwith due and
payable from and after five (5) days written notice to Borrower for any monetary
default unless cured within such five (5) day period, and from and AFTE-MONETARY
default and Borrower's failure to cure such default within fifteen (15) days, or
in the event such cure cannot be accomplished with said fifteen (15) day period,
commence such cure within said fifteen (15) days and diligently prosecute such
cure to completion within ninety (90) days thereof, whereupon the Note shall
become forthwith due and payable, both as to principal and interest, without
presentment, protest, or other notice of any kind, all of which are hereby
expressly waived, anything contained herein or in the Note to the contrary
notwithstanding;
(b) Lender may (but shall not be obliged to) apply any part of the
balance of the proceeds of the Loan to the payment of all costs and expenses
that may be incurred by the Lender under the Loan Document and to the payment of
interest and any Yield Maintenance Fee on the Note;
(c) Lender may, at its election, proceed to finish construction of
the Project, and for that purpose may employ such contractors, agents, and
employees as it deems appropriate and may advance any proceeds of the Loan
remaining unadvanced which proceeds together with any additional sums required
to protect the Project, shall be secured by the Mortgage; and
(d) Borrower hereby irrevocably constitutes and appoints Lender,
Borrower's attorney-in-fact (which appointment shall be deemed coupled with an
interest) for and in its name or the name of Borrower to perform all the
obligations of Borrower under the terms of this Agreement, and to exercise all
the rights and powers of Borrower under the General Construction Contract, the
contract with the Design Professional, and such other contracts and agreements
as Borrower has executed or should have executed or intends to execute in
connection with completion of the Project, and payment of all costs relating
thereto. Borrower hereby grants and gives to Lender full power and authority to
do and perform all and every act and thing whatsoever authorized, permitted,
requisite, or necessary to be done by Borrower and to complete the Project and
pay all costs in connection therewith, to all intents and purposes the same as
Borrower might do, hereby ratifying and confirming all the said attorney shall
lawfully do or choose to do or be done by virtue hereof, it being understood and
agreed that the aforesaid provisions impose no duty or obligation on Lender to
do or perform any act whatsoever. Any such action by Lender shall not relieve
Borrower of its responsibility to furnish any additional funds needed to
complete the Project, as the case may be. Upon demand by Lender, any or all
agreements or contracts with the General
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Contractor, subcontractors, and suppliers shall be assigned to Lender by
Borrower and/or the General Contractor, subcontractors, and suppliers. After an
Event of Default, Lender may, at its sole discretion, continue to make advances
and all sums so advanced shall be deemed advances under this Agreement and not
modifications thereof.
(e) Lender may, at its election, exercise any of its rights under
the Loan Documents and any rights provided by law, including the right to
foreclose on any Collateral and exercise any other rights with respect to any
Collateral, all in such order and manner as Lender in its sole discretion may
determine. Additionally, the y shall not constitute a cure or waiver of any
default, nor invalidate any notice of default or any act done pursuant to any
such notice, nor prejudice Lender in the exercise of any other right or remedy.
8.3 REMEDIES CUMULATIVE. The rights and remedies of Lender upon the
occurrence of an Event of Default set forth herein are in addition to the rights
and remedies contained elsewhere in the Loan Documents, and available at law and
in equity. No failure by Lender to exercise and no delay in exercising any
right, power, or privilege under this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other further exercise thereof or the exercise
of any other right, power, or privilege. Each waiver shall be strictly construed
and shall apply only to the next succeeding disbursement.
8.4 CROSS DEFAULT. An Event of Default as set out in this Agreement shall
constitute and be an Event of Default under the Mortgage, and an Event of
Default under the Mortgage shall constitute and be an Event of Default
hereunder.
ARTICLE IX.
LENDER'S DISCLAIMERS - BORROWER'S INDEMNITIES
9.1 NO OBLIGATION BY LENDER TO CONSTRUCT.
Lender has no liability or obligation whatsoever or howsoever in
connection with the Property or the development, construction or completion
thereof or work performed thereon, and has no obligation except to disburse the
Loan proceeds as herein agreed, Lender is not obligated to inspect the
Improvements nor is Lender liable, and under no circumstances whatsoever shall
Lender be or become liable, for the performance or default of any contractor or
subcontractor, or for any failure to construct, complete, protect or insure the
Property, or any part thereof, or
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for the payment of any cost or expense incurred in connection therewith, or for
the performance or nonperformance of any obligation of Borrower or Guarantor to
Lender nor to any other person, firm or entity without limitation. Nothing,
including without limitation any disbursement of Loan proceeds or the Borrower's
Deposit nor acceptance of any document or instrument, shall be construed as such
a representation or warranty, express or implied, on Lender's part.
9.2 NO OBLIGATION BY LENDER TO OPERATE.
Any term or condition of any of the Loan Documents to the contrary
notwithstanding, Lender shall not have, and by its execution and acceptance of
this Agreement hereby expressly disclaims, any obligation or responsibility for
the management, conduct or operation of the business and affairs of Borrower or
Guarantor. Any term or condition of the Loan Documents which permits Lender to
disburse funds, whether from the proceeds of the Loan, the Borrower's Deposit or
otherwise, or to take or refrain from taking any action with respect to
Borrower, Guarantor, the Property or any other collateral for repayment of the
Loan, shall be deemed to be solely to permit Lender to audit and review the
management, operation and conduct of the business and affairs of Borrower and
Guarantor, and to maintain and preserve the security GIURTHER, Lender shall not
have, has not assumed and by its execution and acceptance of this Agreement
hereby expressly disclaims any liability or responsibility for the payment or
performance of any indebtedness or obligation of Borrower or Guarantor and no
term or condition of the Loan Documents, shall be construed otherwise. Borrower
hereby expressly acknowledges that no term or condition of the Loan Documents
shall be construed so as to deem the relationship between Borrower, Guarantor
and Lender to be other than that of borrower, guarantor and lender, and Borrower
shall at all times represent that the relationship between Borrower, Guarantor
and Lender is solely that of borrower, guarantor and lender. Borrower hereby
indemnifies and agrees to hold Lender harmless from and against any cost,
expense or liability incurred or suffered by Lender as a result of any assertion
or claim of any obligation or responsibility of Lender for the management,
operation and conduct of the business and affairs of Borrower or Guarantor, or
as a result of any assertion or claim of any liability or responsibility of
Lender for the payment or performance of any indebtedness or obligation of
Borrower or Guarantor.
9.3 INDEMNITY BY BORROWER.
BORROWER HEREBY INDEMNIFIES LENDER AND EACH AFFILIATE THEREOF AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS FROM, AND HOLDS EACH
OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
COSTS, AND EXPENSES TO WHICH ANY OF THEM MAY BECOME SUBJECT, INSOFAR AS SUCH
LOSSES,
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LIABILITIES, CLAIMS, DAMAGES, COSTS, AND EXPENSES ARISE FROM OR RELATE TO ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY OR FROM ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF
THE FOREGOING. WITHOUT INTENDING TO LIMIT THE REMEDIES AVAILABLE TO LENDER WITH
RESPECT TO THE ENFORCEMENT OF ITS INDEANY LOAN DOCUMENT, IN THE EVENT ANY CLAIM
OR DEMAND IS MADE OR ANY OTHER FACT COMES TO THE ATTENTION OF LENDER IN
CONNECTION WITH, RELATING OR PERTAINING TO, OR ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, WHICH LENDER REASONABLY BELIEVES MIGHT INVOLVE
OR LEAD TO SOME LIABILITY OF LENDER, BORROWER SHALL, IMMEDIATELY UPON RECEIPT OF
WRITTEN NOTIFICATION OF ANY SUCH CLAIM OR DEMAND, ASSUME IN FULL THE PERSONAL
RESPONSIBILITY FOR AND THE DEFENSE OF ANY SUCH CLAIM OR DEMAND AND PAY IN
CONNECTION THEREWITH ANY LOSS, DAMAGE, DEFICIENCY, LIABILITY OR OBLIGATION,
INCLUDING, WITHOUT LIMITATION, LEGAL FEES AND COURT COSTS INCURRED IN CONNECTION
THEREWITH. IN THE EVENT OF COURT ACTION IN CONNECTION WITH ANY SUCH CLAIM OR
DEMAND, BORROWER SHALL ASSUME IN FULL THE RESPONSIBILITY FOR THE DEFENSE OF ANY
SUCH ACTION AND SHALL IMMEDIATELY SATISFY AND DISCHARGE ANY FINAL DECREE OR
JUDGMENT RENDERED THEREIN. LENDER MAY, IN ITS SOLE DISCRETION, MAKE ANY PAYMENTS
SUSTAINED OR INCURRED BY REASON OF ANY OF THE FOREGOING; AND BORROWER SHALL
IMMEDIATELY REPAY TO LENDER, IN CASH AND NOT WITH PROCEEDS OF THE LOAN, THE
AMOUNT OF SUCH PAYMENT, WITH INTEREST THEREON AT THE MAXIMUM RATE OF INTEREST
PERMITTED BY APPLICABLE LAW FROM THE DATE OF SUCH PAYMENT. LENDER SHALL HAVE THE
RIGHT TO JOIN BORROWER AS A PARTY DEFENDANT IN ANY LEGAL ACTION BROUGHT AGAINST
LENDER, AND BORROWER HEREBY CONSENTS TO THE ENTRY OF AN ORDER MAKING BORROWER A
PARTY DEFENDANT TO ANY SUCH ACTION.
9.4 NO AGENCY. Nothing herein shall be construed as making or constituting
Lender as the agent of Borrower in making payments pursuant to any construction
contracts or subcontracts entered into by Borrower for construction of the
Improvements or otherwise. The purpose of all requirements of Lender hereunder
is solely to allow Lender to check and require documentation (including, but not
limited to, lien waivers) sufficient to protect Lender and the Loan contemplated
hereby. Borrower shall have no right to rely on orrower hereby acknowledging
that Borrower has sole responsibility for constructing the Improvements and
paying for work done in accordance therewith and that Borrower has solely, on
Borrower's own behalf, selected or approved each contractor, each subcontractor
and each materialman, Lender having no responsibility for any such persons or
entities or for the quality of their materials or workmanship.
9.5 NO REPRESENTATION BY LENDER. Lender's approval of the any plans,
drawings, specifications, soil, geotechnical, environmental or any similar
studies, tests, reports or specifications, nor any inspections or approvals
requiring technical expertise beyond the scope of Lender's business, relative
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to the Project and while construction as contemplated by this Agreement in
on-going, shall not constitute a warranty or representation by Lender or any of
Lender's agents, representatives or designees as to the technical sufficiency or
adequacy or safety of the Improvements or any of their component parts,
including, without limitation, the Personal Property or such other fixtures,
equipment or furnishings located in, on or about the Property. In addition,
neither shall such approvals or inspections constitute a warranty or
representation as to the subsoil conditions of the Property or any other
physical condition or feature of the Project. All acts, including any failure to
act, relative to the Project by Lender's agents, representatives or designees
are performed solely for Lender's benefit to assure repayment of the Loan and
shall not be construed as being for Borrower's benefit or the benefit of any
other person, including, without limitation, purchasers, tenants, or other
occupants.
9.6 RELATIONSHIP OF PARTIES. THE RELATIONSHIP BETWEEN BORROWER AND LENDER
IS, AND AT ALL TIMES SHALL REMAIN, SOLELY THAT OF DEBTOR AND CREDITOR, AND SHALL
NOT BE, OR BE CONSTRUED TO BE, A JOINT VENTURE, EQUITY VENTURE, PARTNERSHIP OR
OTHER RELATIONSHIP OF ANY NATURE.
9.7 LIABILITY OF LENDER. Lender shall not be liable hereunder for any act
or omission by it, in the absence of fraud or gross negligence. Lender shall
incur no liability to Borrower by acting upon any certificate or other paper
believed by it to be genuine and purporting to be assigned by the proper party
or with respect to anything which Lender may do or refrain from doing unless it
amounts to fraud or gross negligence. Lender may consult with counsel selected
by it, and any action taken or suffered in good faith by it in accordance with
the opinion of such counsel shall be full justification and protection to it.
ARTICLE X.
MISCELLANEOUS
10.1 NO TRANSFER OF PROPERTY. The Property, nor any part thereof, shall
not be sold, leased, mortgaged or encumbered in any way without the prior
written consent of Lender, except to purchasers of Lots, or as otherwise
provided herein, it being understood and agreed that part of the consideration
for the Loan is the personal obligation of the Borrower.. Additionally, it is
understood and agreed by the Borrower and Lender that the Property is the sole
asset of the Borrower, and in no event shall Borrower: (i) own or operate any
other real property; (ii) operate or conduct any business other than the
operation of the Property; (iii) incur any liability or obligation other than
those incurred in connection
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with the ownership and operation of the Property as approved by the Lender. All
contracts, deeds, easements or other agreements affecting the property shall be
submitted to Lender for its written approval prior to the execution thereof by
the Borrower, and shall be accompanied by an appropriate survey showing the
specific portion of the Property affected and any other information required for
the requisite written approval of Lender for the purpose of this paragraph.
Notwithstanding anything to the contrary set forth in this Section 10.1,
Borrower and Lender have agreed that the Property may be further encumbered by
financing in favor of the Ohio Lender, pursuant to the terms and conditions of
the agreement by and between Borrower and the Ohio Lender, which Lender has
reviewed and consented to in writing and pursuant to Section 10.4 below. The
Ohio Lender shall have the right to place a blanket mortgage on the Property,
provided such mortgage not permit any foreclosure thereof against any portion of
the Property covered by Lender's Mortgage, prohibits the Ohio Lender from
funding any construction funds on such unreleased portions of the Property, and
prohibits Borrower from commencing any construction on any unreleased portion of
the Property encumbered by the FEE. Borrower agrees to pay Lender a loan fee in
the amount of two percent (2%) of the maximum principal amount of the
Acquisition and Development Loan such fee shall be due and payable by Borrower
in good funds upon the closing of the Loan, which shall be evidenced by the
signing of this Agreement by Borrower and Lender.
10.3 RELEASE PRICES. Lender agrees to release the Lots from the lien and
operation of the Mortgage and other Loan Documents provided the Loan is free of
any Event of Default, or circumstance or event which upon the lapse of time, the
giving of notice, or both, could become an Event of Default, has occurred as of
the date of the Advance; and upon the payment to Lender of a cash release price
for each individual Lot or Model as set forth on EXHIBIT "Q".
10.4 SUBORDINATION TO CONSTRUCTION FINANCING. Upon Lender's receipt and
approval of the Development Plan, which shall include Borrower's plans for the
construction of single family residential units at the Project, and a budget for
the proposed construction of said single family residential units, Lender will
agree to subordinate the Mortgage, the Security Agreement and Loan Documents to
a mortgage encumbering the Property in favor of the Ohio Lender in an amount not
to exceed $3.5 million for the construction of model and spec units, not
exceeding twelve (12) models and spec units in the aggregate; provided, however,
Lender shall have the right to approve the terms and conditions of the
subordination agreement, note, mortgage and all other security documents to be
executed in connection therewith, and the terms and conditions thereof shall
provide that Lender shall receive the applicable release price as specified in
Section 10.3 hereof prior to Borrower receiving any funds from the Ohio Lender
with respect to the applicable Lots. All costs and expenses incurred in
connection
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with this Section 10.4 shall be paid by Borrower, including without limitation
THEHTS. A parcel of real property adjoining Parcel M (the "Utility Land")
contains water and/or sewer facilities which have been dedicated to Palm Beach
County, Florida, subject to reverter rights in favor of the owner of the Land.
If at any time during the term of this Loan, Borrower shall become the owner of
all or any portion of the Utility Land, Borrower shall immediately notify Lender
of such event and shall enter into a Mortgage Spreading Agreement which will
spread the lien and operation of the Mortgage and Security Agreement to encumber
the Utility Land. All costs and expenses incurred in connection with complying
with this Section 10.5 shall be paid by borrower, including, without limitation
thereto, Lender's reasonable attorneys' fees and costs, applicable recording
fees and documentary stamp taxes, if applicable.
10.6 AMENDMENT, WAIVER. No amendment or waiver of any provision of this
Agreement or the Note, nor consent to any departure by Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Lender. Any such waiver, consent, or approval shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice or
demand in the same, similar, or other circumstances. Each holder of the Note
shall be bound by any modification, waiver, or consent authorized by this
Section whether or not the Note shall have been marked to indicate such
modification, waiver, or consent. No waiver by Lender of any breach or default
of or by Borrower under this Agreement shall be deemed a waiver of any other
previous breach or default or any thereafter occurring. In no event shall the
delay of enforcement of any rights or remedies available to Lender, or any other
indulgence, be construed as a waiver of rights or remedies unless the same shall
be agreed to in writing by Lender.
10.7 SEVERABILITY. Any provision of this Agreement prohibited by the laws
of any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition, or modified to conform with such laws, without invalidating
the remaining provisions of this Agreement, and any such prohibition in any
jurisdiction shall not invalidate such provisions in any other jurisdiction.
10.8 ESTOPPEL CERTIFICATES. Borrower, within ten (10) days after request
by mail, will furnish an estoppel certificate or written statement, duly
acknowledged, stating (a) the amounts advanced to it under this Agreement, (b)
the amounts due under the Note, (c) the indebtedness secured by the Mortgage,
and (d) whether any offsets or defenses exist thereunder or against the said
indebtedness secured by the Mortgage.
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10.9 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Florida, without regard to the
conflicts of law provisions thereof.
10.10 HEADINGS. The Article and Section headings in this Agreement are for
convenience only and shall not affect the construction hereof.
10.11 NOTICES. No notice or other communication shall be deemed given
unless sent in the manner, and to the persons, specified in this Section. All
notices and other communications hereunder shall be in writing and shall be
deemed given (a) upon receipt if delivered personally (unless subject to clause
(b)) or if mailed by registered or certified mail, (b) at noon on the date after
dispatch if sent by overnight courier or (c) upon the completion of transmission
(which is confirmed telephonically by the receiving party) if transmitted by
telecopy or other means of facsimile which provides immediate or near immediate
transmission to compatible equipment in the possession of the recipient, and in
any case to the parties at the following addresses or telecopy to Transeastern
Aberdeen Properties, Inc.
3300 University Drive
Coral Springs, Florida 33065
Telecopy Number: (305) 346-9704
Confirmation Number: (305) 346-9700
If to Lender: Berkeley Federal Bank & Trust FSB
1675 Palm Beach Lakes Boulevard
10th Floor
West Palm Beach, Florida 33401
Attention: Secretary
Telecopy Number: (407) 681-8177
Confirmation Number: (407) 681-8000
Notwithstanding the foregoing, any notice in fact received shall be effective as
of the time of receipt.
10.12 SIGNAGE. At Lender's request to Borrower and at Lender's expense,
Borrower shall erect and maintain on a suitable site on the Land a sign
satisfactory to Lender indicating that construction financing is being provided
by Lender. Lender shall have the right to secure printed publicity through
newspapers and other media concerning the Property and its financing.
10.13 SURVIVAL OF AGREEMENT. All covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto
shall survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note and shall continue in full force and effect so long as the
Note or any amount due hereunder is outstanding and unpaid; provided, however,
that
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Borrower does hereby release Lender and Lender does hereby release Borrower from
any further obligation under the Commitment Letter with respect to the
Acquisition and Development Loan described therein, it being understood and
agreed as between the parties that the Lender and the Borrower have fully
complied with and satisfied their respective obligations one to the other under
such portion of the Commitment Letter, as evidenced by the execution by Lender
and Borrower of this Agreement, except for the full payment and performance of
all obligations of each party hereto in accordance with the Note, Mortgage and
Loan Documents. The parties acknowledge and agree that their obligations and
rights under the Commitment as regarding the Construction Loan described in the
Commitment Letter shall remain in full force and effect and shall survive the
closing of the Acquisition and Development Loan.
10.14 MUTUAL WAIVER OF JURY TRIAL. LENDER AND BORROWER, EACH WAIVE ALL
RIGHTS TO TRIAL BY JURY OF ANY AND ALL CLAIMS, COUNTERCLAIMS, AND DEFENSES AMONG
AND BETWEEN ANY OF THEM ARIENT OR AGREEMENTS BETWEEN OR AMONG ANY OF THEM AT ANY
TIME, INCLUDING ANY SUCH AGREEMENTS, WHETHER WRITTEN OR ORAL, MADE OR ALLEGED TO
HAVE BEEN MADE AT ANY TIME PRIOR TO THE DATE HEREOF, AND ALL AGREEMENTS MADE
HEREAFTER OR OTHERWISE. IN MAKING THIS WAIVER LENDER AND BORROWER ACKNOWLEDGE
AND AGREE THAT ANY AND ALL SUCH CLAIMS, COUNTERCLAIMS, AND DEFENSES SHALL BE
HEARD BY A JUDGE OF A COURT OF COMPETENT JURISDICTION, WITHOUT A JURY. LENDER
AND BORROWER ACKNOWLEDGE AND AGREE THAT THIS WAIVER OF TRIAL BY JURY IS A
MATERIAL ELEMENT OF THE CONSIDERATION FOR THIS AGREEMENT. LENDER AND BORROWER
ACKNOWLEDGE THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT THIS WAIVER IS MADE
KNOWINGLY AND VOLUNTARILY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO CONSULT
WITH, COUNSEL OF ITS CHOICE.
10.15 CONTROLLING DOCUMENT. In the event of a conflict between the terms
and conditions of this Agreement and the terms and conditions of any other Loan
Document, the terms and conditions of this Agreement shall control.
10.16 SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of Borrower, its successors, and those assigns consented to in writing
by Lender, and upon Lender, its successors and assigns. Any assignment attempted
by Borrower without the written consent of Lender shall be void. Wherever the
word "Lender" is used herein it shall be deemed to include also the successors
and assigns of Lender, and the word "Borrower" shall include the successors of
Borrower and shall include those assignees of Borrower consented to in writing
by Lender. No consent by Lender of an assignment by Borrower shall release
Borrower as a party primarily obligated and liable under the terms of this
Agreement unless Borrower shall be released specifically by Lender in writing.
No consent by Lender to an assignment shall be deemed to be a waiver of the
requirement of consent by Lender of each and every further assignment, as a
condition precedent to the
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EFFECTIVENESPPLEMENT the provisions of Section 2.4 of this Agreement.
10.17 TIME. Time is of the essence of this Agreement and each and every
term, covenant, and condition herein.
10.18 CHANGES. This Agreement may not be changed or terminated orally.
10.19 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original, but
all of which shall constitute one and the same instrument.
10.20 RECITALS. The Recitals to this Agreement are a part of this
Agreement and are incorporated herein.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
Borrower and Lender execute this Agreement under seal the day and year first
above written.
WITNESS/ATTEST: (Borrower)
TRANSEASTERN ABERDEEN
PROPERTIES, INC., a Florida
corporation
By: ______________________________
______________________________
(SEAL)
______________________________
______________________________
(Lender)
BERKELEY FEDERAL BANK
& TRUST, F.S.B.
By: _______________________________
_______________________________
______________________________
______________________________ (SEAL)
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EXHIBIT "A"
CLOSING LIST
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EXHIBIT "B"
PERMITTED EXCEPTIONS
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EXHIBIT "C"
USE OF PROCEEDS
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EXHIBIT "D"
CONSTRUCTION SCHEDULE
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EXHIBIT "E"
TITLE COMPANY'S AGREEMENT
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EXHIBIT "F"
GENERAL CONTRACTOR'S AGREEMENT
To be provided post-closing prior to Second Advance
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EXHIBIT "G"
DESIGN PROFESSIONAL'S AGREEMENT
To be provided post-closing prior to Second Advance
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EXHIBIT "H"
MANAGEMENT AGREEMENT
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EXHIBIT "I"
CONSULTING ENGINEER'S AGREEMENT
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EXHIBIT "J"
ENVIRONMENTAL INDEMNITY AGREEMENT
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ENVIRONMENTAL INDEMNITY AGREEMENT
INDEMNITY AGREEMENT made as of the _____ day of September, 1995, by TRANSEASTERN
ABERDEEN PROPERTIES, INC., having its office at 3300University Drive, Coral
Springs, Florida 33065 ("Borrower"), in favor of BERKELEY FEDERAL BANK & TRUST
FSB, a federally chartered savings bank, having an office at 515 North Flagler
Drive, The Pavilion, 4th Floor, West Palm Beach, Florida 33401, Attention:
____________, Secretary, its successors and assigns ("Lender").
PRELIMINARY STATEMENT
WHEREAS, Borrower is the fee owner of that certain real property located
near the City of Boynton Beach, County of Palm Beach, State of Florida, commonly
known as Aberdeen Golf and Country Club and more particularly described in
EXHIBIT A attached hereto (said real property, together with any real property
hereafter encumbered by the lien of the Instrument (as hereinafter defined),
being herein collectively referred to as the "Land"; the Land, together with all
structures, buildings and improvements now or hereafter located on the Land,
being collectively referred to as the "Property"); and
WHEREAS, Lender is prepared to make an acquisition and development loan in
the principal sum of up to Twenty-Three Million Nine Hundred Thousand and No/100
Dollars ($23,900,000.00) (the "ACQUISITION AND DEVELOPMENT LOAN") and a
revolving construction loan in the principal sum of up to Three Million Five
Hundred Thousand and No/100 Dollars ($3,500,000.00) (the "REVOLVING LOAN") for
an aggregate amount not to exceed the full sum of Twenty-Seven Million Four
Hundred Thousand and No/100 Dollars ($27,400,00.00) (collectively, the "Loan")
to be evidenced by a promissory note of even date herewith in the amount of the
Acquisition and Development Loan (the "ACQUISITION AND DEVELOPMENT NOTE") and a
revolving construction loan promissory note of even date herewith in the amount
of the Revolving Loan (the "REVOLVING LOAN NOTE") (the Acquisition and
Development Note and the Revolving Loan Note are hereinafter individually and
collectively referred to as the "NOTE") given by Borrower to Lender and secured
by, among other things, a certain MORTGAGE, SECURITY AGREEMENT, FINANCING
STATEMENT AND ASSIGNMENT OF LEASES, RENTS AND INCOME made by Borrower to Lender
(the "Instrument") which will encumber the Property; and
WHEREAS, as a condition to making the Loan, Lender requires Borrower to
provide certain indemnities concerning Hazardous Materials (as hereinafter
defined) and Asbestos (as hereinafter defined); and
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WHEREAS, to induce Lender to consummate the above described transaction,
Borrower has agreed to enter into this Agreement;
NOW THEREFORE, in consideration of the promises contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower hereby represents, warrants and covenants to Lender as
follows:
1. Borrower represents and warrants that: (a) to the best of Borrower's
knowledge, after due inquiry and investigation: (i) Borrower has no knowledge of
any deposit, storage, seepage or filtration of oil, petroleum or chemical
liquids or solids, liquid or gaseous products or any Hazardous Materials or
Asbestos and there are no Hazardous Materials or Asbestos at, upon, under or
within the Property or any contiguous real estate, except as may be used in
compliance with all applicable Hazardous Materials Law (hereinafter defined);
(ii) no owner or occupant nor any prior owner or occupant of the Property has
received any notice or advice from any governmental agency or any source
whatsoever with respect to Hazardous Materials or Asbestos at, upon, under
within, on, from or affecting the Property or any contiguous real estate; and
(iii) Borrower has not caused or permitted to occur, and shall not permit to
exist, any condition which may cause a discharge of any Hazardous Materials or
Asbestos at, upon, under or within the Property or on any contiguous real
estate; and (b) to the best of Borrower's knowledge after due inquiry, no
property adjoining the Property is being used, or has ever been used at any
previous time, for the disposal, storage, treatment, processing or other
handling of Hazardous Materials or Asbestos.
Borrower further represents and warrants that (i) neither Borrower, nor to
the best of Borrower's knowledge, after due and diligent inquiry, any other
party, has been, is, or will be involved in operations at or near the Property,
which operations could lead to (A) the imposition of liability under the
Hazardous Materials Laws on Borrower, or on any subsequent or former owner of
the Property or (B) the Materials Laws or under any similar laws or regulations;
and (ii) Borrower has not permitted, and will not permit, any tenant or occupant
of the Property to engage in any activity that could impose liability under the
Hazardous Materials Laws on such tenant or occupant, Borrower, or on any other
owner of any of the Property.
2. Borrower covenants that: (a) the Property shall be kept free of
Hazardous Materials and Asbestos, except for those Hazardous Materials necessary
for the operation of the Property, provided that Borrower complies with all
applicable Hazardous Materials Law and (b) neither Borrower nor any occupant of
the Property shall use, transport, store, dispose of or in any manner deal with
Hazardous Materials or Asbestos on the Property, except for those Hazardous
Materials necessary for the operation of the Property, provided that such
materials are used, transported,
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stored and disposed of in compliance with all applicable Hazardous Materials
Law. Borrower shall strictly comply with, and ensure compliance by all occupants
of the Property with, all applicable Hazardous Materials Law, and shall keep the
Property free and clear of any liens imposed pursuant to such Hazardous
Materials Law, and shall notify Lender immediately in the event of any discharge
or discovery of any Hazardous Materials or any other matters relating to
Hazardous Materials Laws or any similar laws or regulations, as they may affect
the Property. Promptly upon the written and good faith request of Lender from
time to time, Borrower shall provide Lender, at Borrower's expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable to Lender, to assess with a reasonable
degree of certainty the presence or absence of any Hazardous Materials or
Asbestos and the potential costs in connection with abatement, cleanup, or
removal of any Hazardous Materials or Asbestos found on, under, at, or within
the Property. Borrower shall cons, studies, sampling, and testing, and all
remedial actions necessary to clean up and remove any Hazardous Materials and
Asbestos from the Property in accordance with all applicable Hazardous Materials
Law.
3. (a) Borrower covenants and agrees at its sole cost and expense, to
protect, defend, indemnify, save, defend and hold Lender, its directors,
officers, shareholders, employees, agents, representatives (whether legal or
otherwise) and attorneys, and the successors and assigns of each of the
foregoing, harmless from and against any and all losses (including diminution in
the value of the Property), liabilities, obligations, claims, damages,
penalties, causes of action, fines, costs, disbursements and expenses, including
without limitation, litigation costs (including, without limitation, attorneys'
fees, expenses, costs and disbursements and all other professionals' or
consultants' expenses, sums paid in settlement of claims in accordance with the
terms of this Agreement and any such fees and expenses incurred in enforcing
this Agreement or collecting any sums due hereunder), other than those arising
solely from the willful misconduct of Lender (collectively, the "Indemnified
Claims"), directly or indirectly imposed upon or incurred by or asserted against
Lender, its directors, officers, shareholders, employees, agents,
representatives (whether legal or otherwise) and attorneys, and the successors
and assigns of each of the foregoing, whether as mortgagee, mortgagee in
possession, successor in interest to Borrower by foreclosure, exercise of power
of sale, acceptance of a deed-in-lieu of foreclosure or otherwise, or in any
other capacity, arising out of or in connection with: (i) any violation of
Hazardous Materials Law including, without limitation, attorney and consultant
fees, investigation and laboratory fees, court costs, and litigation expenses;
(ii) any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Materials or Asbestos; (iii) the use, generation,
refining, manufacture, transportation, transfer, production,
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processing, storage, handling, or treatment of any Hazardous Materials or
Asbestos, on, under, from, or affecting the Property or any other property; (iv)
the presence, disposal, dumping, escape, seepage, leakage, spillage, discharge,
emission, pumping, emptying, injecting, leaching, pouring, release, or
threatened release of any Hazardous Materials or Asbestos on, under, from or
affecting the Property or any other property; (v) any remedial action, or
imposition of standards of conduct, including the clean-up, encapsulation,
treatment, abatement, removal and/or disposal of any Hazardous Materials or
Asbestos on, under, from or affecting the Property or any other property to the
extent required by any Hazardous Materials Law; (vi) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Materials or Asbestos; (vii) the preparation of an
environmental audit on the Property, whether conducted or authorized by
Borrower, Lender, or a third party, or the implementation of any environmental
audit's recommendations; or (viii) a material misrepresentation or material
inaccuracy in any representation or warranty or a material breach of or failure
to perform any covenant made by Borrower in this Agreement or in the Instrument.
(b) Borrower understands and agrees that its liability to Lender shall
arise upon the earlier to occur of (i) the discovery of, or the threat or
suspected presence of, any Hazardous Materials or Asbestos on, under or about
the Property, whether or not the Environmental Protection Agency, any other
federal agency or any state or local environmental or other agency or political
subdivision or any court, administrative panel or tribunal has taken or
threatened any action in connection with the presence, or threatened or
suspected presence, of any Hazardous Materials or Asbestos or (ii) the
institution of any Indemnified Claims, and not upon the realization of loss or
damage. Borrower shall also indemnify and hold harmless Lender from and against
all loss, costs, damages, or expenses (including, without limitation, attorney's
fees) arising out of the enforcement of this Agreement, or the assertion by any
Borrower of any defense to its obligations hereunder.
4. So long as Lender is beneficiary under the Loan Documents or if Lender
at any time shall have become a mortgagee in possession or a successor in
interest to Borrower by foreclosure or deed in lieu of foreclosure with respect
to all or part of the Property, Borrower shall not settle any claim under or on
account of the Hazardous Materials Laws without Lender's prior written consent,
which consent may be withheld in Lender's sole and absolute discretion;
provided, however that if the proposed settlement involves: (i) no admission of
guilt or liability on the part of Lender; (ii) no adverse financial impact on
Lender; and (iii) no adverse impact on the value of the Property for so long as
the Note is in effect, then such consent shall not be unreasonably withheld.
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5.1 Upon request of any person or entity indemnified pursuant to the terms
of this Agreement ("Indemnified Person"), Borrower is bound to defend any and
all actions or proceedings that may be brought against such INDEMNIFIEREEMENT.
In the event that Borrower is defending an Indemnified Person, Borrower may
settle the claim only with the Indemnified Person's prior written consent, said
consent or the denial thereof to be in the Indemnified Person's sole and
absolute discretion.
5.2 Within thirty (30) days from the date of receipt by Borrower from any
Indemnified Person of a request to defend, Borrower must acknowledge in a
writing satisfactory to the Indemnified Person in its sole discretion, its duty
to defend and that such claim is covered in its entirety by this Agreement (the
"Acknowledgment"); provided, however, that until the Indemnified Person receives
the Acknowledgment, the Indemnified Person shall be entitled to defend such
claim and Borrower shall be bound in the manner set forth in this Agreement.
5.3 In the event that Borrower is defending an Indemnified Person, such
defense shall be conducted by reputable attorneys retained by Borrower,
satisfactory to said Indemnified Person in its sole and absolute discretion, at
Borrower's sole cost and expense. In addition, said Indemnified Person shall
have the right to participate in such proceedings and to be represented by
attorneys of its own choosing. The Indemnified Person shall be responsible for
the cost of such participation unless the Indemnified Person shall have
concluded in its sole discretion that the interests of the Indemnified Person
and of Borrower in the action conflict in such a manner and to such an extent as
to require, consistent with applicable standards of professional responsibility,
the retention of separate counsel for the Indemnified Person, in which case
Borrower shall pay for separate counsel chosen by the Indemnified Person.
5.4 If Borrower fails to deliver the Acknowledgment or fails to choose
counsel satisfactory to the Indemnified Person, Borrower shall not thereafter be
entitled to elect or defend, and Borrower shall be bound by and shall be
conclusively liable for the results obtained by the Indemnified Person,
including without limitation, the amount of any judgment or good faith
out-of-court settlement or compromise and all costs and fees of counsel incurred
by the Indemnified Person in connection therewith.
5.5 In the event that an Indemnified Person elects in its sole and
absolute discretion to conduct its own defense, with participation of Borrower
(however, failure of Borrower to participate shall not limit indemnified
person's rights under this paragraph), of any action or proceeding that may be
brought against an Indemnified Party or to which it may be a party, Borrower
shall be conclusively liable for the results obtained by the Indemnified Person,
including without limitation, the amount of any judgment or
5
<PAGE>
good faith out-of-court settlement or compromise. In addition, Borrower shall be
liable for any and all costs and expenses, including, but not limited to, all
attorneys' fees, that said Indemnified Person incurs.
6. The term "Hazardous Materials" as used in this Agreement shall include,
without limitation, petroleum and petroleum products (excluding a small quantity
of gasoline used in maintenance equipment on the Property), flammable
explosives, radioactive materials (excluding radioactive materials in smoke
detectors), polychlorinated biphenyl, asbestos in any form that is or could
become friable, hazardous waste, toxic or hazardous substances or other related
materials or matter whether in the form of chemical, element, compound,
solution, mixture or otherwise including, but not limited to, those materials
defined as "hazardous substances," "extremely hazardous substances," "hazardous
chemicals," "hazardous materials," "toxic substances," "toxic chemicals," "air
pollutants," "toxic pollutants," "hazardous wastes," "extremely hazardous
waste," or "restricted hazardous waste" that may give rise to liability under
any Hazardous Materials Law.
7. The term "Asbestos" as used in this Agreement shall mean any asbestos
or material containing asbestos.
8. The term "Hazardous Materials Law," as used in this Agreement, means
any federal, state, or local law, rule, ordinance or regulation (either in
existence as of the date hereof or exacted or promulgated after the date of this
Agreement) or any court judgment or order of any federal, state or local agency
or regulatory body (either in existence as of the date hereof or exacted or
promulgated after the date of this Agreement) applicable to Borrower or to the
Property relating to or that concern the management, control, discharge,
treatment, containment and/or removal of substances or materials that are or may
become a threat to PUBLS conduct including, but not limited to, those relating
to the generation, manufacture, storage, handling, transportation, disposal,
release, emission or discharge of Hazardous Materials and Asbestos, those in
connection with the construction, fuel supply, power generation and
transmission, waste disposal or any other operations or processes relating to
the Property, and those relating to the atmosphere, soil, surface and ground
water, wetlands, stream sediments and vegetation on, under, in or about the
Property. "Hazardous Materials Law;" also shall include, but not be limited to,
the Comprehensive Environmental Response, Compensation and Liability Act, the
Emergency Planning and Community Right-to-Know Act of 1986, the Hazardous
Materials Transportation Act, the Resource Conservation and Recovery Act, the
Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the Toxic
Substance Control Act, the Safe Drinking Water Act and the Occupational Safety
and Health Act, and all regulations adopted in respect to the foregoing laws.
6
<PAGE>
9. This Agreement, the payment of all sums due hereunder and the
performance and discharge of each and every obligation, covenant and agreement
of Borrower contained herein, are, and shall be deemed to be, secured by the
Instrument.
10. The liability of Borrower under this Agreement shall in no way be
limited or impaired by, and Borrower hereby consents to and agrees to be bound
by, any amendment or modification of the provisions of the Note, the Instrument
or any other document which evidences, secures or guarantees all or any portion
of the Loan (the "Other Security Documents") to or with Lender by Borrower or
any person who succeeds Borrower as owner of the Property. In addition, the
liability of Borrower under this Agreement shall in no way be limited or
impaired by: (a) any extensions of time for performance required by the Note,
the Instrument or any of the Other Security Documents; (b) any sale or transfer
of all or part of the Property; (c) any exculpatory provision in the Note, the
Instrument, or any of the Other Security Documents limiting Lender's recourse to
property encumbered by the Instrument or to any other security, or limiting
Borrower's rights to a deficiency judgment against Borrower; (d) the accuracy or
inaccuracy of the representations and warranties made by Borrower under the
Note, the Instrument or any of the Other Security Documents or herein; (e) the
release of Borrower or any other person from performance or observance of any of
the agreements, covenants, terms or conditions contained in any of the Other
Security Documents by operation of law, Borrower's voluntary act, or otherwise;
(f) the RRITY for the Note or (g) Lender's failure to record the Instrument or
file any UCC financing statements (or Lender's improper recording or filing of
any thereof) or to otherwise perfect, protect, secure or insure any security
interest or lien given as security for the Note; and, in any such case, whether
with or without notice to Borrower and with or without consideration.
11. Lender may enforce the obligations of Borrower without first resorting
to or exhausting any security or collateral or without first having recourse to
the Note, the Instrument, or any Other Security Documents or any of the
Property, through foreclosure proceedings or otherwise, provided, however, that
nothing herein shall inhibit or prevent Lender from suing on the Note,
foreclosing, or exercising any power of sale under, the Instrument, or
exercising any other rights and remedies thereunder.
12. The obligations and liabilities of Borrower under this Indemnity shall
survive any termination, satisfaction, assignment, entry of a judgement of
foreclosure, exercise of any power of sale, or delivery of a deed in lieu of
foreclosure of the Instrument.
13. Any amounts payable to Lender under this Agreement shall become
immediately due and payable and, if not paid within seven (7) days of written
demand therefor, shall bear interest at the rate of five percent (5%) above the
rate set forth in the Note from
7
<PAGE>
the date payment is made or loss or damage is sustained by Lender until paid,
or, if such rate of interest may not be collected from the undersigned under
applicable law, then at the maximum rate of interest, if any, which may be
collected.
14. Borrower hereby waives to the maximum extent permitted by law: (a) any
right or claim of right to cause a marshaling of Borrower's assets or to cause
Lender or order Lender to proceed against any of the security for the Loan
before proceeding under this Agreement against Borrower; (b) relinquishes all
rights and REMEDIESUBROGATION which Borrower may have, provided that the
indemnity provided for hereunder shall neither be contingent upon the existence
of any such rights of subrogation nor subject to any claims or defenses
whatsoever which may be asserted in connection with the enforcement or attempted
enforcement of such subrogation rights including, without limitation, any claim
that such subrogation rights were abrogated by any acts of Lender or any other
lender; (c) trial by jury in any action or proceeding brought by Borrower or
Lender or any other lender or in any counterclaim asserted by Lender or any
other lender against Borrower or in any matter whatsoever arising out of or in
any way connected with this Agreement; (d) notice of acceptance hereof and of
any action taken or omitted in reliance hereon; (e) presentment for payment,
demand of payment, protest or notice of nonpayment or failure to perform or
observe, or other proof, or notice or demand and (f) all homestead exemption
rights against the obligations hereunder and the benefits of any statutes of
limitations or repose. Notwithstanding anything to the contrary contained
herein, Borrower hereby agrees to postpone the exercise of any rights of
subrogation with respect to any collateral securing the Loan until the Loan
shall have been paid in full.
15. Borrower shall take any and all reasonable actions, including
institution of legal action against third-parties, necessary or appropriate to
obtain reimbursement, payment or compensation from such persons responsible for
the presence of any Hazardous Materials or Asbestos at, in, on, under or near
the Property or otherwise obligated by law to bear the cost. Lender shall be and
hereby is subrogated to all of Borrower's rights now or hereafter in such
claims.
16. Borrower, at Borrower's sole expense, shall cooperate with Lender, and
provide access to Lender and any professionals engaged by Lender, upon Lender's
request, to conduct, contract for, evaluate or interpret any environmental
assessments, audits, investigations, testing, sampling, analysis and similar
procedures on the Property. Lender will cooperate at Borrower's expense.
17. Borrower represents and warrants that:
(a) Borrower has full power and authority to execute and deliver
this Agreement and to perform its obligations
8
<PAGE>
hereunder; the execution, delivery and performance of this Agreement
by Borrower has been duly and validly authorized; and all requisite
corporate/partnership action has been taken by Borrower to make this
Agreement valid and binding upon Borrower, enforceable in accordance with
its terms;
(b) Borrower's execution of, and compliance with, this Agreement are
in the ordinary course of business of Borrower and will not conflict with
or constitute a default under or result in the acceleration of any
obligation under, or result in the violation of any law, rule, regulation,
order, judgment or decree to which Borrower or the Property is subject;
(c) There is no action, suit, proceeding or investigation pending or
threatened against Borrower which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of Borrower, or in
any material impairment of the right or ability of Borrower to carry on
its business substantially as now conducted, or in any material liability
on the part of Borrower, or which would draw into question the validity of
this Agreement or of any action taken or to be taken in connection with
the obligations of Borrower contemplated herein, or which would be likely
to impair materially the ability of Borrower to perform under the terms of
the Agreement;
(d) Borrower does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in
this Agreement;
(e) No approval, authorization, order, license or consent of, or
registration or filing with, any governmental authority or other person,
and no approval, authorization or consent of any other party is required
in connection with this Agreement; and
(f) This Agreement constitutes a valid, legal and binding obligation
of Borrower, enforceable against it in accordance with the terms hereof.
18. Each party hereto shall immediately and in any event, within five (5)
business days of receipt thereof, give written notice to the other party hereto
of: (a) any notice or advice from any federal, state or local environmental
agency or any other political subdivision, administrative panel or governmental
agency having jurisdiction over the Property with respect to Hazardous Materials
or Asbestos on, from or affecting the Property and (b) any claim, suit or
proceeding, whether administrative or judicial in nature ("Legal Action"),
brought against such party or instituted with respect to the Property, with
respect to which
9
<PAGE>
Borrower may have liability under this Agreement. Such notice shall comply with
the provisions of paragraph 20 hereof.
19. Lender shall, at all times, be free to independently establish to its
satisfaction and in its absolute discretion the existence or nonexistence of any
fact or facts the existence or nonexistence of which is a condition of this
Agreement.
20. No notice or other communication shall be deemed given unless sent in
any of the manners, and to the persons, specified in this paragraph. All notices
and other communications hereunder shall be in writing and shall be deemed
given: (a) upon receipt if delivered personally (unless subject to clause (b))
or if mailed by registered or certified mail return receipt requested, postage
prepaid; (b) at noon on the business day after dispatch if sent by a nationally
recognized overnight courier or (c) upon the completion of transmission (which
is confirmed by telephone or by a statement generated by the transmitting
machine) if transmitted by telecopy or other means of facsimile which provides
immediate or near immediate transmission to compatible equipment in the
possession of the recipient, in any case to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy number for a
party as will be specified by like notice):
If to 3300 University Drive,
Coral Springs, Florida 33065
Attention: _______________, _________
Telecopy No.: (___) ___-____
Confirmation No.: (___) ___-____
or if to Lender:
Berkeley Federal Bank & Trust FSB
515 North Flagler Drive
The Pavilion, 4th Floor
West Palm Beach, Florida 33401
Attention: ___________, ___________
Telecopy No.: (___) ___-____
Confirmation Number: (___) ___-____
21. Borrower covenants and agrees that this Agreement shall be construed
in accordance with the laws of the state in which the Property is located.
22. The terms of this Agreement are for the sole and exclusive protection
and use of Lender, the other indemnified persons and any prospective purchaser
of the mortgage loan ("Purchaser"). No party other than Lender, the indemnified
persons or a Purchaser shall be a third-party beneficiary hereunder, and no
10
<PAGE>
provision hereof shall operate or inure to the use and benefit of any such
third party.
23. Capitalized terms used herein and not specifically defined herein
shall have the respective meanings ascribed to such terms in the Instrument and
if not contained therein in the other Loan Documents.
24. This Agreement may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which together
shall constitute a single agreement of Indemnity. The failure of any party
hereto to execute this Agreement, or any counterpart hereof, shall not relieve
the other signatories from their obligations hereunder.
25. This Agreement may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Lender, but only by an agreement in writing signed by the party against
whom enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought.
26. All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural as the identity of the
person or persons referred to may require. Without limiting the effect or
specific references in any provision of his Agreement, the term "Borrower" shall
be deemed to refer to Borrower and its general partners and each person or
entity comprising Borrower from time to time, as the sense of a particular
provision may require, and to include the heirs, executors, administrators,
legal representatives, successors and assigns of Borrower, all of whom shall be
bound by the provisions of this Agreement. Each reference herein to Lender shall
be deemed to include its successors and assigns, to whose favor the provisions
of this Agreement shall also inure.
27. If Borrower consists of more than one person or entity, the
obligations and liabilities of each or in respect of this Agreement may be
released without affecting the liability of any party not so released.
29. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies which Lender has under the Note, the
Instrument, or the Other Security Documents or would otherwise have at law or in
equity.
30. If any term, condition or covenant of this Agreement shall be held to
be invalid, illegal or unenforceable in any respect, this Agreement shall be
construed without such provision.
31. In any action to enforce or interpret this Agreement, the prevailing
party shall be entitled to receive from the losing
11
<PAGE>
party, its attorneys' fees and costs incurred in connection therewith.
32. There is no time limitation on Borrower's obligations hereunder, and
Borrower waives all present and future statutes of limitations as a defense to
any action to enforce the provisions of this Agreement.
33. BORROWER WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON, UNDER OR BY
VIRTUE OF THIS AGREEMENT AND WAIVES ANY RIGHT TO REQUIRE LENDER AT ANY TIME TO
PURSUE ANY REMEDY IN LENDER'S POWER WHATSOEVER. No failure or delay on the part
of an indemnified person in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any power, right or privilege preclude any other or further exercise
of any such power, right or privilege. All powers, rights and privileges
hereunder are cumulative to, and not exclusive of, any powers, rights or
privileges otherwise available.
IN WITNESS WHEREOF, this Agreement has been executed by Borrower and is
effective as of the day and year first above written.
BORROWER:
TRANSEASTERN ABERDEEN PROPERTIES,
INC., a Florida corporation
By: __________________________________
_________________________________ Print Name: __________________________
_________________________________ Title: _______________________________
STATE OF FLORIDA )
) SS:
COUNTY OF __________ )
I HEREBY CERTIFY THAT on this, the day of September, 1995, before
me, an officer duly authorized in the State aforesaid and in the County
aforesaid to take acknowledgments, personally appeared_______________, as
____________of TRANSEASTERN ABERDEEN PROPERTIES, INC., a Florida corporation,
who, upon having executed the foregoing instrument, swore and acknowledged to
and before me that he did so voluntarily and for the purposes set forth therein
by and on behalf of the aforesaid corporation, as the free act and deed thereof,
and who produced _______________________________________________________________
______________________ as identification, and who did take an oath.
12
<PAGE>
WITNESS my hand and official seal in the State and County last
aforesaid this ____ day of September, 1995.
______________________________________
Notary Public, State of Florida
Print Name: __________________________
Commission Number: ___________________
My Commission Expires: _______________
(Notarial Seal)
13
<PAGE>
EXHIBIT "C"
ABERDEEN GOLF & COUNTRY CLUB
SOURCES AND USES OF FUNDS
SOURCES:
Berkeley Loan $ 23,900,000
Borrower Equity:
Cash 2,000,000
---------------------
Total Cost $ 25,900,000
=====================
USES:
Acquisition of Land & $ 18,275,000
Entitlements (including
Borrowers Equity 5,160,000
Land Development Funding 1,000,000
Interest Reserve 600,000
Cash Flow Deficits 865,000___
Transaction Fees & Closing Costs $ 25,900,000
---------------------
Total Cost
14
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT D
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA INC.
SUMMARY OF DATES RELATING TO POD AND PROJECT IMPROVEMENTS
ABERDEEN PROJECT
- --------------------------------------------------------------------------------------------------------------------
PLANS/SPECS
COMPLETED, SUBMITTED
ESTIMATED TO OCWEN CONSTRUCTION CONSTRUCTION
OVERALL PROJECT IMPROVEMENTS TOTAL COST FOR REVIEW STARTED COMPLETED
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gateway Blvd. West to Jog 900 1-Oct-95 15-Nov-95 15-Apr-96
- --------------------------------------------------------------------------------------------------------------------
Park Improvements along Le Chalet 150 1-Jan-96(1) 15-Jan-96 15-Apr-96
- --------------------------------------------------------------------------------------------------------------------
Park Improvements for West POA 100 1-Jan-96(1) 15-Feb-96 15-May-96
- --------------------------------------------------------------------------------------------------------------------
Recreation Vehicle storage area buffer 75 1-Apr-96 15-May-96 15-Jul-96
- --------------------------------------------------------------------------------------------------------------------
Road from Gateway to Pod J 100 1-May-96 15-Jun-96 15-Aug-96
- --------------------------------------------------------------------------------------------------------------------
Stockpile Fill required for Pod K 100 1-Feb-97 1-Mar-97 15-May-96
- --------------------------------------------------------------------------------------------------------------------
Turnlane at Jog and Le Chalet 30 1-Jan-97 15-Feb-96 15-Apr-96
- --------------------------------------------------------------------------------------------------------------------
Landscaping improvements to ENTryways and 200 1-Jan-96 15-Feb-96 15-Jun-96
roads
- --------------------------------------------------------------------------------------------------------------------
Additional buffer, roadway and other 250 1-Jan-96 15-Feb-96 15-Jun-96
improvements
- --------------------------------------------------------------------------------------------------------------------
Sales office improvements 125
- --------------------------------------------------------------------------------------------------------------------
Contingency 170
- --------------------------------------------------------------------------------------------------------------------
_____________
2,200
- --------------------------------------------------------------------------------------------------------------------
POD IMPROVEMENTS
- --------------------------------------------------------------------------------------------------------------------
Pod J 704 1-Jan-97 15-Feb-97 15-Jun-97
- --------------------------------------------------------------------------------------------------------------------
Pod K 784 1-Feb-97 15-Mar-97 15-Jul-97
- --------------------------------------------------------------------------------------------------------------------
Brittany Lakes 525 1-Mar-96 15-Apr-96 15-Aug-96
- --------------------------------------------------------------------------------------------------------------------
Pod L Phase I 477 1-Oct-97 15-Nov-97 15-Apr-98
- --------------------------------------------------------------------------------------------------------------------
Pod L Phase II 468 1-Feb-99 15-Mar-99 15-Jul-99
- --------------------------------------------------------------------------------------------------------------------
_____________
2,958
- --------------------------------------------------------------------------------------------------------------------
(1) No drawings required 5,158
_____________
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
EXHIBIT "K"
ADVANCE REQUISITION FORM
16
<PAGE>
EXHIBIT "L"
LENDER'S CERTIFICATION
17
<PAGE>
CERTIFICATE
DATE:
TO: BERKELEY FEDERAL BANK & TRUST FSB (LENDER)
515 NORTH FLAGLER DRIVE
THE PAVILION, 4TH FLOOR
WEST PALM BEACH, FLORIDA 33401
RE: BUILDING LOAN AGREEMENT DATED , BETWEEN LENDER AND
(BORROWER) (OWNER)
_____________________________________
_________________________ (CONTRACTOR) HEREBY CERTIFIES THAT AMOUNTS
HAVE BEEN PAID AND ARE DUE IT UNDER ITS CONTRACT WITH OWNER, DATED , 19 ,
(CONTRACT) AS STATED HEREIN FOR WORK DONE AND MATERIALS FURNISHED AND
INCORPORATED INTO THE IMPROVEMENTS BEING ERECTED, THAT IT IS NOT BEHIND THE
CONSTRUCTION PROGRESS SCHEDULE HERETOFORE DELIVERED TO THE BANK; THAT THE COSTS
CONTINUE IN LINE WITH THE ANALYSIS COST OF THE PROJECT IN TRADE BY TRADE
BREAKDOWN FORM HERETOFORE APPROVED BY THE BANK; THAT ALL CHARGES FOR ALL EXTRA
WORK PERFORMED ON OR MATERIALS SUPPLIED TO THE PROJECT TO DATE HAVE BEEN
INCLUDED HEREIN AND THAT NO REQUEST FOR PAYMENT OR CHARGES WILL BE MADE FOR
EXTRA WORK PERFORMED OR MATERIALS SUPPLIED PRIOR TO THIS DATE; THAT THE LAST
CHANGE ORDER APPROVED BY OWNER IS NO. , THAT THE LAST REQUEST FOR A CHANGE ORDER
THAT HAS BEEN MADE BY CONTRACTOR BUT HAS NOT BEEN APPROVED IS REQUEST NO. , AND
THAT THE OWNER IS NOT IN DEFAULT UNDER THE CONTRACT, EXCEPT AS FOLLOWS:
THAT THE CONTRACTOR IS NOT IN DEFAULT IN ANY OBLIGATION IN ITS CONTRACTS WITH
SUBCONTRACTORS AND SUPPLIERS AND NO CLAIMS OF DEFAULT HAVE BEEN MADE BY ANY
SUBCONTRACTOR OR SUPPLIER, EXCEPT AS FOLLOWS:
THE BORROWER HEREBY CERTIFIES THAT THE AMOUNTS STATED HEREIN FOR WORK
DONE AND FOR MATERIALS FURNISHED AND INCORPORATED INTO THE IMPROVEMENTS BEING
ERECTED ARE CORRECT, AND IT REQUESTS AN ADVANCE IN THE AMOUNT STATED TO BE DUE
HEREIN AND BORROWER CERTIFIES THAT NEITHER IT NOR CONTRACTOR ARE IN DEFAULT
UNDER THE CONTRACT, EXCEPT AS FOLLOWS:
_________________________ (DESIGN PROFESSIONAL) HEREBY CERTIFIES THAT ALL WORK
IS DONE IN A GOOD AND WORKMANLIKE MANNER AND IN ACCORDANCE WITH THE DRAWINGS,
PLANS AND SPECIFICATIONS WHICH ARE THE ONES SUBMITTED TO AND APPROVED BY THE
VARIOUS GOVERNMENTAL ENTITIES HAVING JURISDICTION, THE BANK, THE CONSULTING
ENGINEER, THE OWNER AND THE CONTRACTOR AND IT HAS NO KNOWLEDGE OF ANY DEFAULT BY
CONTRACTOR UNDER THE CONTRACT, EXCE ______________(CONSULTING ENGINEER) HEREBY
CERTIFIES THAT (1) ON OR AFTER THE DATE OF THE WITHIN REQUISITION IT HAS
INSPECTED THE IMPROVEMENTS BEING ERECTED, (2) THE WORK HAS BEEN DONE IN A GOOD
AND WORKMANLIKE MANNER AND IN ACCORDANCE WITH THE DRAWINGS, PLANS AND
SPECIFICATIONS, (3) THE AMOUNTS STATED AS PAID AND DUE FOR WORK DONE AND FOR
MATERIALS FURNISHED AND INCORPORATED INTO THE IMPROVEMENTS BEING ERECTED ARE AS
STATED HEREIN, (4) IT HAS NO REASON TO BELIEVE THE CONSTRUCTION OF THE
IMPROVEMENTS CANNOT OR WILL NOT BE COMPLETED BY __________________________ IN
ACCORDANCE WITH THE DRAWINGS, PLANS AND SPECIFICATIONS WITH THE BALANCE
AVAILABLE FOR THAT PURPOSE YET TO BE ADVANCED BY THE BANK, (5) THE OWNER IS NOT
BEHIND THE CONSTRUCTION PROGRESS SCHEDULE HERETOFORE APPROVED BY THE CONSULTING
ENGINEER, (6) THE COSTS CONTINUE IN LINE WITH THE ANALYSIS COST OF THE PROJECT
IN TRADE BY TRADE BREAKDOWN FORM HERETOFORE APPROVED BY THE BANK AND (7) THE
CONSULTING ENGINEER HAS NO KNOWLEDGE OF A DEFAULT BY THE BORROWER UNDER THE
BUILDING LOAN AGREEMENT, EXCEPT AS FOLLOWS:
18
<PAGE>
90%* OF TOTAL VALUE OF CONSTRUC-
TION TO DATE (BASED ON
CONTRACT COST BREAKDOWN
PLUS PROPORTIONATE AMOUNT
OF CONTRACTOR'S FEE) $
LESS: REQUIRED INITIAL ADVANCE, $
ADDITIONAL AMOUNT, IF ANY,
TO BE ADVANCED BY OWNER ON
ACCOUNT OF CONTRACT CHANGES,
ETC. $
AMOUNT HERETOFORE ADVANCED BY
BANK TO BORROWER FOR PAYMENTS TO
CONTRACTOR FOR WORK DONE AND
MATERIALS FURNISHED AND INCORPORATED
INTO THE IMPROVEMENTS $ $
AMOUNT DUE BORROWER FOR PAYMENT TO
CONTRACTOR FOR WORK AND MATERIALS
INCORPORATED INTO THE IMPROVEMENTS,
TO BE ADVANCED BY THE BANK FOR
THAT PURPOSE PURSUANT TO THE BUILDING
LOAN AGREEMENT $
*100% ON FINAL COMPLETION AND ACCEPTANCE.
BY:______________________________ BY: ______________________________
(BORROWER) (CONTRACTOR)
BY:______________________________ BY: ______________________________
(CONSULTING ENGINEER) DESIGN PROFESSIONAL
19
<PAGE>
EXHIBIT "M"
(Intentionally Deleted)
20
<PAGE>
EXHIBIT "N"
REPORTING FORM
21
<PAGE>
EXHIBIT "O"
Intentionally Deleted
22
<PAGE>
EXHIBIT "P"
LITIGATION
23
<PAGE>
EXHIBIT "Q"
RELEASE PRICE SCHEDULE
24
<PAGE>
ABERDEEN ACQUISITION AND DEVELOPMENT LOAN AGREEMENT
TABLE OF CONTENTS
PAGE
PRELIMINARY STATEMENTS..................................................... 1
ARTICLE I CERTAIN DEFINITIONS.................................... 1
ARTICLE II ACQUISITION AND DEVELOPMENT LOAN....................... 11
2.1 RECITALS............................................... 11
2.2 CONDITIONS TO LENDER'S OBLIGATION TO FIRST ADVANCE
FOR ACQUISITION COSTS UNDER THE LOAN.................. 12
2.3 CONDITIONS TO LENDER'S OBLIGATION TO FIRST ADVANCE
FOR DEVELOPMENT COSTS UNDER THE LOAN.................. 19
2.4 CONDITIONS TO EACH ADVANCE UNDER THE ACQUISITION
AND DEVELOPMENT LOAN................................... 24
2.5 RIGHT TO WITHHOLD FUNDS................................ 29
2.6 LIMITATION OF ADVANCES................................. 30
2.7 EXPENSES............................................... 32
2.8 EQUITY FUNDS........................................... 32
2.9 INTEREST RESERVE....................................... 32
2.10 CASH FLOW DEFICIT...................................... 34
2.11 COST SAVINGS........................................... 35
2.12 CONDITIONS TO FINAL ADVANCE............................ 35
ARTICLE III NET CASH FLOW.......................................... 37
3.1 NET CASH FLOW PAYMENTS................................. 37
ARTICLE IV AFFIRMATIVE COVENANTS.................................. 39
4.1 CONSTRUCTION OF PROJECT................................ 39
4.2 COMMENCEMENT OF SUBSTANTIAL CONSTRUCTION; PROFORMA
COMPLIANCE............................................. 40
4.3 EXISTENCE, PROPERTIES, ETC............................. 41
4.4 PAYMENT OF INDEBTEDNESS, TAXES, ETC.................... 41
4.5 PROPERTY REPORTS....................................... 41
4.6 FINAN ....................................... 42
4.7 NOTICE OF DEFAULT...................................... 45
4.8 NOTICE OF LITIGATION................................... 45
4.9 PAYMENT OF COSTS AND EXPENSES.......................... 45
4.10 ACCESS TO PROJECT...................................... 46
4.11 BORROWER'S REQUIRED INVESTMENT......................... 46
4.12 SECURITY INTEREST...................................... 46
4.13 FURTHER ASSURANCES..................................... 46
4.14 PERSONALTY AND FIXTURES................................ 46
4.15 APPRAISAL.............................................. 46
4.16 INSURANCE.............................................. 47
4.17 PROCEEDS OF THE LOAN TO BE DRAWN....................... 48
4.18 TITLE INSURANCE ENDORSEMENT............................ 48
4.19 CONTINUED COMPLIANCE................................... 48
4.20 MAINTENANCE AND SECURITY OF THE PROPERTY............... 48
4.21 NOTICE OF CERTAIN MATTERS.............................. 48
4.22 FURTHER ASSURANCES..................................... 49
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PAGE
4.23 CONTINUED EXISTENCE.................................... 49
4.24 HAZARDOUS MATERIALS.................................... 49
ARTICLE V NEGATIVE COVENANTS..................................... 51
5.1 GUARANTIES............................................. 51
5.2 NEGATIVE PLEDGE........................................ 51
5.3 CONSOLIDATIONS, MERGERS AND ACQUISITIONS............... 52
5.4 JUDGMENTS.............................................. 52
5.5 INVESTMENTS, LOANS AND ADVANCES........................ 52
5.6 NO ASSIGNMENT.......................................... 52
ARTICLE VI. ASSIGNMENTS............................................ 52
6.1 ASSIGNMENT OF CONSTRUCTION CONTRACT.................... 52
6.2 ASSIGNMENT OF PLANS AND SPECIFICATION.................. 53
6.3 ASSIGNMENT OF DESIGN SERVICES CONTRACT................. 54
ARTICLE VII. REPRESENTATIONS AND WARRANTIES......................... 55
7.1 RECITALS............................................... 55
7.2 ORGANIZATION, POWER, ETC............................... 56
7.3 AUTHORIZATION OF BORROWING, ETC........................ 56
7.4 GOVERNMENTAL APPROVAL.................................. 56
7.5 PLANS APPROVED......................................... 57
7.6 LITIGATION............................................. 57
7.7 AGREEMENTS............................................. 57
7.8 TAXES.................................................. 57
7.9 COMPLIANCE WITH LAW.................................... 57
7.10 ERISA.................................................. 58
7.11 FINANCIAL STATEMENTS................................... 58
7.12 PLACE OF BUSINESS...................................... 58
7.13 BROKERAGE COMMISSION................................... 58
7.14 UTILITIES.............................................. 58
7.15 PUBLIC WORKS AND UTILITY AGREEMENTS.................... 58
7.16 ROADS.................................................. 59
7.17 SUPPORTING DOCUMENTS................................... 59
7.18 TITLE TO THE PROPERTIES................................ 59
ARTICLE VIII. EVENTS OF DEFAULT AND CERTAIN REMEDIES................. 59
8.1 DEFAULT................................................ 59
8.2 REMEDIES............................................... 62
8.3 REMEDIES CUMULATIVE.................................... 63
8.4 CROSS DEFAULT.......................................... 63
ARTICLE IX. LENDER'S DISCLAIMERS - BORROWER'S INDEMNITIES.......... 63
9.1 NO OBLIGATION BY LENDER TO CONSTRUCT................... 63
9.2 NO OBLIGATION BY LENDER TO OPERATE..................... 64
9.3 INDEMNITY BY BORROWER.................................. 64
9.4 NO AGENCY.............................................. 65
9.5 NO REPRESENTATION BY LENDER............................ 65
9.6 RELATIONSHIP OF PARTIES................................ 66
9.7 LIABILITY OF LENDER.................................... 66
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PAGE
ARTICLE X. MISCELLANEOUS.......................................... 66
10.1 NO TRANSFER OF PROPERTY................................ 66
10.3 RELEASE PRICES......................................... 67
10.4 SUBORDINATION TO CONSTRUCTION FINANCING................ 67
10.6 AMENDMENT, WAIVER...................................... 68
10.7 SEVERABILITY........................................... 68
10.8 ESTOPPEL CERTIFICATES.................................. 68
10.9 GOVERNING LAW.......................................... 69
10.10 HEADINGS............................................... 69
10.11 NOTICES................................................ 69
10.12 SIGNAGE................................................ 69
10.13 SURVIVAL OF AGREEMENT.................................. 69
10.14 MUTUAL WAIVER OF JURY TRIAL............................ 70
10.15 CONTROLLING DOCUMENT................................... 70
10.16 SUCCESSORS............................................. 70
10.17 TIME................................................... 71
10.18 CHANGES................................................ 71
10.19 COUNTERPARTS........................................... 71
10.20 RECITALS............................................... 71
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Exhibits
"A" Closing List
"B" Permitted Exceptions
"C" Use of Proceeds
"D" Completion Date Schedule
"E" Title Company Agreement
"F" General Contractor's Agreement
"G" Design Professional's Agreement
"H" Consulting and Management Agreement
"I" Consulting Engineer's Agreement
"J" Environmental Indemnity Agreement
"K" Form of Advance Requisition
"L" Lender's Certification
"M" Intentionally Deleted
"N" Reporting Form
"O" Intentionally Deleted
"P" Litigation
"Q" Release Price Schedule
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<PAGE>
ACQUISITION AND DEVELOPMENT
PROMISSORY NOTE
$23,900,000.00 West Palm Beach, Florida
September _____, 1995
FOR VALUE RECEIVED, TRANSEASTERN ABERDEEN PROPERTIES, INC.,
a corporation duly organized and validly existing under the laws of the State of
Florida (the "BORROWER"), promises to pay to the order of BERKELEY FEDERAL BANK
& TRUST FSB, a federally chartered savings bank (the "LENDER," which term shall
also include any subsequent holder of this Note), the principal sum of up to a
maximum amount of Twenty Three Million Nine Hundred Thousand and 00/100 Dollars
($23,900,000.00) (the "LOAN"), or so much thereof as shall have been advanced
under the provisions of the Acquisition and Development Loan Agreement of even
date herewith (the "LOAN AGREEMENT"), with interest until paid as set forth in
this Note.
1. INTEREST. Subject to the limitations set forth in Section 15 hereof,
interest shall accrue and be payable as follows:
(a) Interest shall accrue on the unpaid principal balance of this
Note at the rate equal to twenty (20%) percent per annum (the "Stated Rate"),
payable as follows:
(i) Interest only installments shall be paid on the unpaid
principal balance of this Note from time to time at a rate which is two percent
(2%) per annum above the Prime Rate as hereinafter defined (the "PAY RATE"). As
used herein, "PRIME RATE" shall mean the highest prime rate (or base rate)
reported in the Money Rates column or section of THE WALL STREET JOURNAL
(rounded upward to the nearest one-eighth of one percent) published on the
second business day of the month preceding the month in which a payment of
interest and/or principal is due on the Loan, as having been the rate in effect
for corporate loans at large U.S. money center commercial banks (whether or not
such rate has actually been charged by any such bank) as of the first calendar
day of such month for which such rate is published. If THE WALL STREET JOURNAL
ceases publication of the Prime Rate, then "Prime Rate" shall mean the prime
rate (or base rate) announced by Bankers Trust Company, New York, New York
(whether or not such rate has actually been charged by such bank). If Bankers
Trust Company discontinues the practice of announcing the Prime Rate, the "Prime
Rate" shall mean the highest rate charged by such bank on short term, unsecured
loans to its most credit-worthy large corporate borrowers. If THE WALL STREET
JOURNAL (1) publishes more than one Prime Rate, the higher or highest of such
rates shall apply, or (2) publishes a retraction or correction of such Prime
Rate, the rate reported in such retraction or correction shall apply. Interest
shall be adjusted monthly on the first day of each month in accordance with the
Prime Rate then in effect at the close of regular banking hours on the day of
adjustment. The interest which accrues as a result of the difference between the
Stated Rate and the Pay Rate shall be hereafter referred to as the "Accrued
Interest."
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(ii) To the extent not paid pursuant to subsection (a)(i) above,
the balance of the Accrued Interest at any time outstanding shall be payable
from Borrower's payments of Net Cash Flow (as defined in the Loan Agreement and
as to be paid in accordance with the terms hereof and the Loan Agreement);
(b) During any month that the interest portion of any Net Cash Flow
payments described in subsection (a)(ii) above shall be in an amount which is
less than the amount necessary to pay all Accrued Interest due for such month in
accordance with the terms of this Note calculated on a monthly basis, after
taking into account the interest paid in accordance with subsection (a)(i),
Lender shall subtract the interest portion of the monthly Net Cash Flow payment
received pursuant to subsection (a)(i) or (a)(ii) above from the amount of
Accrued Interest for such month (the "Monthly Difference") and shall add the
Monthly Difference to the outstanding and unpaid principal balance hereof. The
Monthly Difference added to the outstanding and unpaid principal balance shall
also bear interest at the rate of twenty (20%) percent per annum.
(c) Notwithstanding anything contained herein to the contrary, (i)
all interest which shall have accrued and be due and payable pursuant to this
Note shall in no event be less than $1,000,000.00, subject to the limitations
set forth in this subsection and in Section 15 hereof (the "Yield Maintenance
Fee"); and (ii) interest accrued pursuant to this Note (including the interest
added to the outstanding and unpaid principal balance hereof in the event that
the payments of interest received pursuant to subsection (a)(i) or (a)(ii) shall
be insufficient to pay all interest then accrued for the applicable monthly
period, and the Yield Maintenance Fee) shall not in any monthly period exceed
the maximum lawful rate, and if and to the extent that the interest accrued for
any monthly period shall exceed the maximum lawful rate, then IPSO FACTO, the
payment to be made or the amount accrued or to be delivered or to be fulfilled
shall be reduced to the maximum lawful rate; and if under any such circumstances
Lender shall ever receive an amount deemed interest, by applicable law, which
would exceed the maximum lawful rate such amount that would be excessive
interest under applicable usury laws shall be applied to the reduction of the
principal amount owing hereunder or to other indebtedness secured by the
Mortgage and not to the payment of interest or if such excessive interest
exceeds the unpaid balance of principal and other indebtedness, the excess shall
be deemed to have been a payment made by mistake and shall be refunded to
Borrower or to any other person making such payment on Borrower's behalf. To the
extent permitted by law, all sums paid or agreed to be paid to the Lender for
the use, forbearance or detention of the indebtedness of Borrower evidenced
hereby outstanding from time to time shall be amortized, prorated, allocated and
spread from the date of disbursement of the proceeds of this Note until payment
in full of such indebtedness so that the actual rate of interest on account of
such indebtedness is uniform through the term hereof. The terms and provisions
of this savings clause shall control and supersede every other provision of all
agreements between Lender and Borrower and any endorser, or guarantor of this
Note.
(d) Interest will accrue at the rate of 1/360th of the annual
interest rate for each day that principal is outstanding, adjusted for the
actual number of days elapsed in any period (Actual/360 computation).
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<PAGE>
2. REPAYMENT. Beginning on November 1, 1995 and on the first day of each
month thereafter until paid, Borrower shall make monthly payments, in arrears,
of interest on the aggregate of the outstanding amounts advanced from time to
time under the Loan Agreement at the Pay Rate. Beginning on November 15, 1995
and on the fifteenth (15th) day of each month thereafter until paid, Borrower
unconditionally promises to pay to Lender one hundred percent (100%) of all Net
Cash Flow (as defined in the Loan Agreement) which shall be remitted via
quarterly payments, in arrears, commencing on January 15, 1996. Interest shall
accrue on each amount advanced from the date advanced until paid.
3. PREPAYMENT. This Note may not be re-financed or prepaid in whole for
the period commencing on the date hereof and ending one year from the date
hereof, except for an involuntary prepayment resulting from the application of
insurance proceeds or condemnation awards by Borrower pursuant to the terms of
the Mortgage, unless the payment of the Yield Maintenance Fee, together with all
other interest, fees, payments and charges collected on the Loan through such
date would not exceed the maximum lawful interest rate permitted under the laws
of the State of Florida. Except as expressly provided in the preceding sentence
to the contrary, Borrower shall have the privilege to prepay the principal
indebtedness in whole or in part at any time without payment of a premium;
provided, however, that the Borrower shall remain fully liable for all interest
as provided in this Note, including the Yield Maintenance Fee. In the event
Borrower prepays the principal indebtedness in whole (whether from Net Cash Flow
or otherwise), such prepayment shall be accompanied by Borrower's payment to
Lender of the accrued and unpaid portion of the Yield Maintenance Fee. In the
event Borrower prepays the principal indebtedness in part (whether from Net Cash
Flow or otherwise), such prepayment shall be accompanied by Borrower's payment
of all accrued and unpaid interest (whether for the current month or for any
month in which interest has been added to principal in accordance with the terms
of Section 1 hereof). In the event of partial prepayments (whether from Net Cash
Flow or otherwise), the balance of the Yield Maintenance Fee, if any, shall be
paid by Borrower to Lender upon the final payment of outstanding principal
indebtedness.
4. MATURITY DATE. The entire unpaid principal balance with interest as
specified in this Note (including the Yield Maintenance Fee), unless sooner paid
shall be due and payable on September ____, 2000 (the "MATURITY DATE").
5. ESCROW FOR TAXES AND CASUALTY INSURANCE. At Lender's option, the
monthly payments shall also include a sum equal to one-twelfth of the annual
premiums that will next become due and payable on policies of fire and other
hazard insurance covering the property (the "PROPERTY") given to secure the
indebtedness evidenced by this Note, PLUS one-twelfth of the annual taxes and
assessments next due on the Property (all as estimated by Lender), such sums,
excluding payments of principal and interest, to be held by Lender in a
non-interest bearing account to pay such premiums, taxes and assessments. Any
amounts deposited pursuant to the provisions of this paragraph shall not be, nor
be deemed to be, trust funds, nor shall they operate to curtail or reduce the
indebtedness evidenced hereby, and all such amounts may be commingled with the
general funds of the depositor and be deposited at Lender or at an institution
designated
3
<PAGE>
by Lender. Lender shall not be responsible for the solvency of such institution,
provided that it is insured by the Federal Deposit Insurance Corporation or
other regulatory agency at the time of designation. Following a default
hereunder or under the Loan Agreement or mortgage securing the indebtedness
hereunder or various other documents and instruments evidencing or securing the
indebtedness as such are more particularly described in the Loan Agreement (the
"LOAN DOCUMENTS"), Lender may apply any amounts deposited pursuant to the
provisions of this paragraph or pursuant to any other term, covenant or
agreement toward the payment of the indebtedness evidenced by this Note (in such
manner or combination thereof including inverse order of maturity of
installments, if any, as Lender, in its sole discretion, may elect).
6. APPLICATION OF PAYMENTS. Prior to a default, all payments received by
Lender shall be applied to the following items in the order stated:
(I) Then due portions of the escrow for fire and other hazard
insurance premiums, taxes and assessments, if applicable;
(II) Then due payments of interest and late charges, if any, on
the indebtedness hereunder in inverse order of maturity i.e., current
interest and then to accrued interest;
(III) Then the principal of said indebtedness, including (i)
payments made to release lots and memberships from the lien of the
Mortgage and other Loan Documents, and (ii) Net Cash Flow payments to
the extent applied to a reduction of outstanding principal; and
(IV) Then to any Yield Maintenance Fee due under the Loan.
7. LATE CHARGES. If any installment of interest or principal or any other
payment due under this Note is not paid within five (5) days after the date that
the installment or payment is due, Borrower promises to pay Lender a "late
charge" equal to 5% of the aggregate monthly payment required by this Note.
Borrower promises to pay costs of collection, including a reasonable attorney's
fee, if this Note is referred to an attorney for collection after default.
8. DEFAULT RATE. In the event Borrower shall fail to make any one or
more payments on account of interest, principal, charges, or premiums within
five (5) days after the date the same shall become due and payable, as is herein
or in the deed of trust securing the indebtedness hereunder provided, Borrower
shall pay to Lender interest on any overdue payment of principal, interest,
charges and premiums at the rate of five percent (5%) per annum above the Pay
Rate otherwise payable under the terms of this Note (the "DEFAULT RATE"), from
the date the same shall become due and payable until the date paid. Following a
default hereunder or under the Loan Agreement or mortgage securing the
indebtedness hereunder or Loan Documents, the term "Pay Rate" as used in this
Note shall be deemed to be the Default Rate.
9. PLACE AND TIME OF PAYMENTS.
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<PAGE>
(a) All payments required to be made pursuant to this Note shall be
made during regular business hours to Lender's account at Berkeley Federal Bank
& Trust FSB, Account Number: 16000820, in the name of Lender, or at such other
place as Lender may from time to time designate in writing, either by wire
transfer of United States Dollars, ABA Number: 231170152, Attention: Loan
Servicing Department, or by cashier's check, or in coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public or private debts. Payments sent via U.S. Mail shall be sent
addressed as follows:
Berkeley Federal Bank & Trust FSB
The Forum
Suite 804
1675 Palm Beach Lakes Boulevard
West Palm Beach, Florida 33401
(b) Interest shall be payable for the Closing Date, but not for the
day of any payment on the amount paid if such payment is received by Lender
prior to twelve o'clock p.m. E.S.T. (or E.S.D.T. as the case may be). If any
payment of principal or interest shall be due on a day that is not a Business
Day, such payment shall be made on the next succeeding Business Day, and in the
case of a principal payment, such extension of time shall be included in
computing interest in connection with such payment. Any payment of principal and
interest received after twelve o'clock noon E.S.T. (or E.S.D.T. as the case may
be) shall be deemed to have been received by Lender on the next succeeding
Business Day and shall bear interest accordingly. Any payment tendered other
than in coin or currency of the United States as aforesaid shall be accepted by
Lender subject to collection, and interest shall accrue until the Business Day
on which good funds are available for immediate use by Lender on or before
twelve o'clock p.m. E.S.T. (or E.S.D.T as the case may be).
10.SECURITY FOR NOTE. This Note is secured by the mortgage and security
agreement (the "MORTGAGE") and the Loan Documents executed of even date herewith
by Borrower to Lender, to which Mortgage reference is made for a description of
the Property, definition of terms, the nature and extent of the security, and
the rights of Lender and its successors and assigns, in respect of such
security.
11.ACCELERATION. Upon any default under this Note or upon any violation
of the terms or conditions of the Mortgage, or the Loan Agreement, or the Loan
Documents, or any other term, covenant or agreement of Borrower or any affiliate
(as defined in 11 U.S.C. 101(2), hereinafter "affiliate") of Borrower or any
endorser, guarantor or surety for Borrower with or to Lender, however, created,
primary or secondary, whether direct or indirect, absolute or contingent, now or
hereafter existing, due or to become due, or any declared default beyond any
applicable cure period of any term, covenant or agreement of any document or
instrument evidencing or securing that certain Revolving Construction Loan or to
be made by Ohio Savings Bank, F.S.B. in favor of Borrower, including without
limitation the Mortgage and Security Agreement securing the Revolving
Construction Note and encumbering or to encumber the Property (the "Ohio
Mortgage"), the unpaid principal with all interest (including the Yield
Maintenance Fee) and all
5
<PAGE>
other sums secured by the Mortgage shall at the option of Lender become
immediately due and payable. In the event of such acceleration, Borrower may
discharge its obligations to Lender by paying all sums due under the Note and
the Mortgage, with interest at the Default Rate accruing from the date such
acceleration is declared, plus any applicable Yield Maintenance Fee. Failure to
exercise this option shall not constitute a waiver of the right to exercise this
option in the event of any subsequent default. Without limiting any right of
acceleration set forth herein, Lender may, at its sole option, exercise its
rights of set-off by applying any monies of Borrower on deposit with Lender or
pledged to Lender and on deposit with Bank of North America (other than with
respect to the sale of residential units under construction) toward payment of
any of Borrower's obligations to Lender, without notice. In the event Lender is
served with any legal notice, service of process or order seeking to seize
Borrower's rights and/or interest in any bank account maintained with Lender or
pledged to Lender and on deposit with the Bank of North America (other than with
respect to the sale of residential units under construction), the balance in any
said account shall immediately be deemed to have been and shall be set-off
against any and all obligations of Borrower to Lender to the extent permissible
under applicable law, as of the time of issuance of any such writ of process,
whether or not Borrower and/or Lender shall then have been served therewith.
12.PAYMENT OF COSTS. In the event this Note is turned over to an
attorney at law for collection after default or to protect Lender's interests
hereunder or enforce the Lender's security at law or in equity, or in a
bankruptcy, receivership or any other court proceeding (whether at the pretrial,
trial or appellate level), in addition to the principal, interest, late charges,
and/or Yield Maintenance Fee due hereunder, Lender shall be entitled to collect,
all costs of collection including but not limited to reasonable attorneys' fees,
incurred in connection with protection of or realization of collateral or in
connection with any of Lender's collection efforts, whether or not suit on this
Note or any foreclosure proceeding is filed, and all such costs and expenses
shall be payable on demand and shall also be secured by the Mortgage.
13.WAIVER. As to this Note, the Mortgage, and the Loan Documents,
Borrower and all guarantors, sureties and endorsers, if any, severally waive all
applicable exemption rights, whether under any state constitution, homestead
laws or otherwise, and also severally waive valuation and appraisement
presentment, protest and demand, notice of protest, demand and dishonor and
nonpayment, and also notice of acceleration of this Note for any period and all
other notices, filing of suit and diligence in collecting this Note, in
enforcing any of the security rights or in proceeding against the Property, and
expressly agree that the maturity of this Note, or any payment under this Note,
may be extended from time to time without notice to or consent of any and all
parties liable without in any way affecting the liability of Borrower and all
guarantors. Further, the Borrower and all guarantors agree that Lender may, from
time to time, extend, modify, amend or renew this Note for any period (whether
or not longer than the original period of the Note) and grant any releases,
compromises or indulgences with respect to the Note or any extensions,
modifications amendments or renewals thereof or any substitution, exchange,
addition or release of any security therefor, or to any party liable (primarily
or secondarily, all without notice to consent of Borrower and all guarantors and
sureties, each of which shall be and remain
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<PAGE>
jointly and severally directly and primarily, liable for all sums due under this
Note, the Mortgage, the Loan Agreement and the Loan Documents.
14.WAIVER OF JURY TRIAL. BORROWER WAIVES ALL RIGHTS TO TRIAL BY JURY OF
ANY SUITS, CLAIMS, COUNTERCLAIMS, AND ACTIONS OF ANY KIND ARISING UNDER OR
RELATING TO THIS NOTE. BORROWER ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL
RIGHT AND REPRESENTS TO LENDER THAT THIS WAIVER IS MADE KNOWINGLY AND
VOLUNTARILY. BORROWER AGREES THAT ALL SUCH SUITS, CLAIMS, COUNTERCLAIMS, AND
ACTIONS SHALL BE TRIED BEFORE A JUDGE OF A COURT OF COMPETENT JURISDICTION,
WITHOUT A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO
THIS TRANSACTION.
15.USURY LIMITATIONS. It is the intention of the parties to conform
strictly to applicable usury laws from time to time in force, and all agreements
between Borrower and Lender, whether now existing or hereafter arising and
whether oral or written, are hereby expressly limited so that in no contingency
or event whatsoever and under no circumstance, whether by acceleration of
maturity hereof, the happening of any subsequent event including, but not
limited to, a prepayment of the principal indebtedness in whole or in part, or
otherwise, shall the amount paid or agreed to be paid to Lender, or collected by
Lender, for the use, forbearance or detention of the money to be loaned
hereunder or otherwise, or for the payment or performance of any covenant or
obligation contained herein or in the Mortgage or in any other Loan Documents,
or in any other document evidencing, securing, or pertaining to the indebtedness
evidenced hereby, exceed the maximum amount permissible under applicable usury
laws. If under any circumstances whatsoever fulfillment of any provision hereof
or of the Mortgage or any other Loan Documents, at the time performance of such
provision shall be due, shall involve an amount or any portion thereof in excess
of the limit of validity prescribed by law, then IPSO FACTO, the payment to be
made or the amount to be delivered to be fulfilled shall be reduced to the limit
of such validity; and if under any circumstances Lender shall ever receive an
amount deemed interest, by applicable law, which would exceed the highest lawful
rate, such amount that would be excessive interest under applicable usury laws
shall be applied to the reduction of the principal amount owing hereunder or to
other indebtedness secured by the Mortgage and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of principal and other
indebtedness, the excess shall be deemed to have been a payment made by mistake
and shall be refunded to Borrower or to any other person making such payment on
Borrower's behalf. All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of the indebtedness of Borrower evidenced hereby,
outstanding from time to time shall, to the extent permitted by applicable law,
be amortized, pro-rated, allocated and spread from the date of disbursement of
the proceeds of this Note until payment in full of such indebtedness so that the
actual rate of interest on account of such indebtedness is uniform through the
term hereof. The terms and provisions of this paragraph shall control and
supersede every other provision of all agreements between Lender and Borrower
and any endorser or guarantor of this Note.
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16.BUSINESS PURPOSE. Borrower represents and warrants that it is a
business or commercial organization within the meaning of the commercial entity
and business purpose provisions of the laws of the State of Florida and Borrower
further represents and warrants that the Loan was made and transacted solely for
the purpose of carrying on or acquiring a business or commercial enterprise
within the meaning of that subtitle.
17.SEVERABILITY. In case any provision (or any part of any provision)
contained in this Note shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision (or remaining part of the affected
provision) of this Note, but this Note shall be construed as if such invalid,
illegal, or unenforceable provision (or part thereof) had never been contained
herein but only to the extent it is invalid, illegal, or unenforceable.
18.GOVERNING LAW. Borrower hereby acknowledges, consents and agrees (i)
that the provisions of this Note and the rights of all parties mentioned herein
shall be governed by the laws of the State of Florida and interpreted and
construed in accordance with such laws (without regard to conflict of laws
provisions) and (ii) that any court of competent jurisdiction of the State of
Florida shall have jurisdiction and venue in any proceeding instituted to
enforce this Note and any objections to such jurisdiction or venue are hereby
waived.
19.NO WAIVER BY LENDER. No failure on the part of Lender to exercise any
right or remedy hereunder, whether before or after the happening of a default
shall constitute a waiver thereof, and no waiver of any past default shall
constitute waiver of any future default or of any other default. No failure to
accelerate the debt evidenced hereby by reason of default hereunder, or
acceptance of a past due installment, or indulgence granted from time to time
shall be construed to be a waiver of the right to insist upon prompt payment
thereafter or to impose late charges retroactively or prospectively, or shall be
deemed to be a novation of this Note or as a reinstatement of the debt evidenced
hereby or as a waiver of such right or acceleration or any other right, or be
construed so as to preclude the exercise of any right that Lender may have,
whether by the laws of the State of Florida, by agreement, or otherwise; and
Borrower and each endorser or guarantor hereby expressly waives the benefit of
any statute or rule of law or equity that would produce a result contrary to or
in conflict with the foregoing. This Note may not be changed orally, but only by
an agreement in writing signed by the party against whom such agreement is
sought to be enforced.
20.NO OFFSETS. No indebtedness evidenced by this Note shall be deemed to
have been offset or shall be offset or compensated by all or part of any claim,
cause of action, counterclaim or cross-claim, whether liquidated or
unliquidated, which Borrower may have or claim to have against Lender now or
hereafter. Furthermore, in respect to the present indebtedness of, or any future
indebtedness incurred by, Borrower to Lender, Borrower waives, to the fullest
extent permitted by law, the benefits of any applicable law, regulation or
procedure that substantially provides that, if (i) cross-demands for money have
existed between persons at any point in time and (ii) neither demand was barred
by the applicable statute of limitations and (iii) an action is thereafter
commenced by one such person, then the other may assert in his answer the
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defense of payment in that the two demands are compensated so far as they equal
each other, notwithstanding that an independent action asserting the claim would
at the time of filing the answer be barred by the applicable statute of
limitations.
21.LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. In the event of the
loss, theft or destruction of this Note, upon Borrower's receipt of a reasonably
satisfactory indemnification agreement executed in favor of Borrower by the
party who held this Note immediately prior to its loss, theft or destruction, or
in the event of the mutilation of this Note, upon Lender's surrender to the
Borrower of the mutilated Note, Borrower shall execute and deliver to such party
or Lender, as the case may be, a new promissory note in form and content
identical to this Note in lieu of the lost, stolen, destroyed or mutilated Note.
22.RELATIONSHIP OF PARTIES. THE RELATIONSHIP BETWEEN BORROWER AND LENDER
IS, AND AT ALL TIMES SHALL REMAIN, SOLELY THAT OF DEBTOR AND CREDITOR, AND SHALL
NOT BE, OR BE CONSTRUED TO BE, A JOINT VENTURE, EQUITY VENTURE, PARTNERSHIP OR
OTHER RELATIONSHIP OF ANY NATURE.
23.INCREASED COST AND REDUCED RETURN.
(a) If on or after the date hereof, the adoption of any
applicable law, rule, or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lender with any request or directive (whether or
not having the force of law) of any such authority, central bank, or comparable
agency shall subject the Lender to any tax, duty or other charge with respect to
the Loan, or shall change the basis of taxation of payments to the Lender of the
principal of or interest on the Loan or any other amounts due under this Note in
respect of the Loan or its obligation to make the Loan (except for changes in
the rate of tax on the overall net income of the Lender imposed by the
jurisdiction in which the Lender's principal executive office is located) and
the result of the foregoing is to increase the cost to the Lender of making or
maintaining the Loan, or to reduce the amount of any sum received or receivable
by the Lender under this Note with respect thereto, by an amount deemed by the
Lender to be material, then, within fifteen (15) days after demand by the
Lender, the Borrower shall pay to the Lender such additional amount or amounts
as will compensate the Lender for such increased cost or reduction.
(b) The Lender will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle the
Lender to compensation pursuant to this Section. A certificate of the Lender
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Lender may use any reasonable
averaging and attribution methods.
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(c) Nothing in this Section 23 shall preclude Borrower from
repaying the Loan in full, including all accrued interest and Yield Maintenance
Fee that may be due, in lieu of paying such additional amount or amounts as are
required under this Section 23.
24.NOTICES. No notice or other communication shall be deemed given
unless sent in the manner, and to the persons, specified in this Section. All
notices and other communications hereunder shall be in writing and shall be
deemed given (a) upon receipt if delivered personally (unless subject to clause
(b)) or if mailed by registered or certified mail, (b) at noon on the date after
dispatch if sent by overnight courier or (c) upon the completion of transmission
(which is confirmed telephonically by the receiving party) if transmitted by
telecopy or other means of facsimile which provides immediate or near immediate
transmission to compatible equipment in the possession of the recipient, and in
any case to the parties at the following addresses or telecopy numbers (or at
such other address or telecopy number for a party as will be specified by like
notice):
If to Borrower: Transeastern Aberdeen Properties, Inc.
3300 University Drive
Coral Springs, Florida 33065
Attn: Mr. Arthur Falcone, President
Telecopy Number:305-346-9704
Confirmation Number: 305-346-9700
If to Lender: Berkeley Federal Bank & Trust FSB
1675 Palm Beach Lakes Boulevard
10th Floor
West Palm Beach, Florida 33401
Attention: Secretary
Telecopy Number: (407) 681-8177
Confirmation Number: (407) 681-8000
Notwithstanding the foregoing, any notice in fact received shall be effective as
of the time of receipt.
25.JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
(1) person, corporation or other entity, the obligations and liabilities of such
persons, corporations or other entities under this Note, under the Mortgagee,
and under the other Loan Documents shall be joint and several, and the word
"Borrower" shall mean all or some or any of them.
26.TIME OF THE ESSENCE. Time is of the essence to each and every
provision of this Note.
27. REMEDIES CUMULATIVE. The remedies of Lender as provided herein, in
the Mortgage, Loan Agreement and the Loan Documents shall be cumulative and
concurrent, and may be pursued singly, successively or together, at the sole
discretion of Lender, and may be exercised
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as often as occasion therefor shall arise. No act of omission or commission of
Lender, including specifically any failure to exercise any right, remedy or
recourse, shall be effective as a waiver thereof, unless it is set forth in a
written document executed by Lender and then only to the extent specifically
recited therein. A waiver or release with reference to one event shall not be
construed as continuing, as a bar to, or as a waiver of, any subsequent right,
remedy or recourse as to any subsequent event.
28. DURATION OF FULL LIABILITY. Borrower and Guarantor shall have full
personal liability for the repayment of the Loan and for the observance and
performance of all of the covenants and agreements under the terms of this Note,
the Mortgage, and any other Loan Documents until the completion of the
Improvements in accordance with all terms, covenants and conditions set forth
herein and in the Loan Agreement and Loan Documents; provided, however, that
nothing contained herein shall be construed to release or impair the full
personal liability for repayment of the Loan and for the observance and
performance of all terms, covenants, conditions and agreements under the terms
of this Note, the Mortgage and any other Loan Documents if, as of the date of
Borrower's completion of the Improvements in accordance with all terms,
covenants and conditions set forth herein and in the Loan Agreement and Loan
Documents, there shall be a default under any term, covenant, provision or
agreement under the terms of this Note, the Mortgage, the Loan Agreement or Loan
Documents. However, if as of the date of Borrower's completion of the
Improvements in accordance with all terms, covenants and conditions set forth
herein and in the Loan Agreement and Loan Documents there shall be no default
under any term, covenant, provision or agreement under the terms of this Note,
the Mortgage, the Loan Agreement or Loan Documents ("EVENT OF LIMITED RELEASE"),
then the remainder of this Section 28 shall be applicable. By its acceptance
hereof, Lender agrees that upon the happening of the Event of Limited Release,
Borrower and Guarantor (which term for purposes of this Section shall include
their present or future general partners, shareholders or members, and their
successors and assigns) shall not have any personal liability for the repayment
of the Loan or for the observation or performance of any covenants or agreements
under the terms of this Note, the Mortgage or any other Loan Documents (the term
"LOAN DOCUMENTS" for purposes of this sentence and the remainder of this Section
shall exclude the Environmental Indemnity Agreement executed by Borrower and
Lender concurrently with the execution of this Note and the provisions of this
Section shall not apply to Borrower's liabilities under such agreement). Upon
the happening of the Event of Limited Release, in the event of default under the
terms of this Note, the Mortgage or any other of the Loan Documents, Lender
shall rely solely on the Property and the foreclosure of any liens or security
interests securing payment of this Note to satisfy the obligations of Borrower
under this Note, the Mortgage and the other Loan Documents and no deficiency or
other money judgments shall ever be sought against Borrower; PROVIDED, HOWEVER,
that nothing herein contained shall be construed to release or impair the
indebtedness evidenced by this Note, or the lien upon the Property, or preclude
the application of the Property to the payment of this Note in accordance with
the terms of the Mortgage, the Loan Agreement and the Loan Documents, or impair
the rights of the Lender to accelerate the maturity of this Note (or to avail
itself of any of its rights and remedies) upon default hereunder.
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Notwithstanding anything contained in this Note or the Guaranty to the
contrary, Borrower and Guarantor shall have full personal liability for the
repayment of the Loan and for the observance or performance of all of the
covenants and agreements under the terms of this Note, the Mortgage and any
other Loan Documents (irrespective of the happening of the Event of Limited
Release) in the event that any of the following shall occur: (i) the Property,
or any interest therein is sold, conveyed, transferred or assigned without
Lender's prior written consent which consent may be expressly set forth in the
Loan Documents; (ii) a controlling interest in the entity comprising Borrower is
sold, conveyed, transferred or assigned without Lender's prior written consent
or, if Borrower is a partnership, the current general partner(s) of Borrower
cease to own 100% of their present interest in Borrower; (iii) Borrower shall
acquire or hold any asset other than the Property, or Borrower shall commence to
operate, acquire, or otherwise engage in any business or activity in addition to
the business of holding the Property in its capacity as a single-asset holding
entity; (iv) Borrower obtains additional financing secured by the Property
(excluding the Mortgage in favor of the Ohio Lender, as defined in and subject
to the terms of the Loan Agreement), or otherwise encumbers the Property without
Lender's prior written consent; (v) Borrower, Guarantor, or any of Borrower's or
Guarantor's partners, officers, directors, employees, agents, or any other
representatives of Borrower (collectively, the "BORROWER PARTIES") engages in
any fraud or misrepresents any fact to induce Lender to make the Loan, or
engages in fraud or breaches any representation or warranty contained in this
Note, Mortgage or any other Loan Documents during the term of the Loan; (vi)
Borrower or any of the Borrower Parties fails to apply proceeds received from
insurance policies or other sources in accordance with the terms of any of the
Loan Documents; (vii) Borrower or any of the Borrower Parties fails to apply all
proceeds produced by or derived from the Property (whether due to the sale or
transfer of Lots (as defined in the Loan Agreement) or golf club memberships or
management fees) in accordance with the terms of the Loan Documents; (viii) the
Property shall be in violation of any federal, state, or local law, ordinance or
regulation pertaining to the environmental condition or any other condition of
the Property and such violation shall not be cured within (30) days from the
date of issuance of a notice of the subject violation by a governmental entity
of competent jurisdiction; (ix) Borrower, or any of the Borrower Parties, has
knowledge of a pre-existing environmental condition or other condition that
adversely affects the value of the Property as collateral of the Loan and fails
to disclose any such condition to Lender in writing prior to the funding of the
Loan, or Borrower or any of the Borrower Parties discovers during the term of
the Loan, an environmental condition or other condition that adversely affects
the value of the Property as collateral for the Loan, and fails to disclose any
such condition to Lender in writing within ten (10) days of discovering the
condition, or to cure any such condition within thirty (30) days of discovering
the condition; (x) Borrower or any of the Borrower Parties fails to deliver to
Lender following a default hereunder or under the Loan Agreement, Mortgage or
Loan Documents all proceeds and deposits produced by or derived from the
Property (whether due to the sale or transfer of Lots or golf club memberships
or management fees) and all records pertaining to the foregoing and the
Property; (xi) permits any mechanic's or other liens to be filed against the
Property (excluding the Mortgage in favor of the Ohio Lender as defined in and
subject to the terms of the Loan Agreement), or any portion thereof, and such
lien (whether senior or subordinate to the Mortgage) is not bonded or removed
from title in a manner
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reasonably acceptable to Lender within ten (10) days; or (xii) Borrower fails to
complete the Improvements in accordance with all terms, covenants and conditions
set forth in the Loan Agreement or Loan Documents, or, if as of the date of
Borrower's completion of the Improvements as described herein, there shall be a
default under any term, covenant or provision of this Note, Mortgage, Loan
Agreement or Loan Documents.
Furthermore, notwithstanding anything to the contrary set forth herein
(including, without limitation, the happening of the Event of Limited Release),
Borrower and Guarantor (and their present or future general partners,
shareholders or members, successors and assigns, if any) shall be fully liable
to Lender for (i) damages suffered as a result of fraud, waste or
misrepresentation by any Borrower or any of the Borrower Parties; (ii) any
security deposit, monies due to sales or rentals or other income arising out of
or with respect to the Property (whether due to the sale or transfer of Lots or
golf club memberships or management fees) which is collected by Borrower after
Lender has given notice that Borrower is in default under this Note or any of
the other Loan Documents and prior to any cure of such default (to the full
extent of such security deposits, monies due to sales or rentals or other income
retained and collected by Borrower after the giving of any such notice and prior
to any cure of such default); (iii) the fair market value as of the time of the
giving of any written notice referred to in clause (ii) hereinabove of any
personal property or fixtures removed or disposed of by Borrower other than in
accordance with the terms of the Loan Documents; (iv) the misapplication of any
proceeds in violation of any of the Loan Documents (to the full extent of such
misapplied proceeds) under any insurance policies or awards resulting from
condemnation or the exercise of the power of eminent domain by reason of damage,
loss or destruction of any portion of the Property or any buildings located
thereon; or (v) violations of any applicable environmental laws such as the
presence of hazardous wastes or similar substances on the Property caused by
acts or omissions of Borrower. Notwithstanding clause (ii) above, Borrower may
apply income derived from the Property to the operating expenses directly
relating to the Property without creating personal liability hereunder.
29.DEFINITION OF BORROWER AND LENDER. As used herein, the words
"Borrower" and "Lender" shall be deemed to include Borrower and Lender as
defined herein, and their respective heirs, personal representatives, successors
and assigns.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered on its behalf under seal on the date first written above.
BORROWER:
TRANSEASTERN ABERDEEN PROPERTIES, INC.,
a Florida corporation
By: __________________________________
Name: ________________________________
Title: _______________________________
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ACQUISITION AND DEVELOPMENT
UNCONDITIONAL GUARANTY
THIS GUARANTY IS MADE AS OF THE _______ DAY OF SEPTEMBER, 1995 BY THE
UNDERSIGNED HAVING THE ADDRESSES SET FORTH BELOW THEIR SIGNATURES (COLLECTIVELY,
"GUARANTOR" WHICH TERM SHALL INCLUDE HIS/HER HEIRS, LEGAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS) IN FAVOR OF BERKELEY FEDERAL BANK & TRUST FSB, A
FEDERALLY CHARTERED SAVINGS BANK ("LENDER," WHICH TERM SHALL INCLUDE ANY
SUBSEQUENT HOLDER OF THE NOTE (AS DEFINED BELOW).
PRELIMINARY STATEMENTS
A. Lender has committed to make an acquisition and development loan to
Transeastern Aberdeen Properties, Inc., as the Assignee of Transeastern
Properties of Florida, Inc. ("BORROWER"), comprised in part of the principal sum
of Twenty Three Million Nine Hundred Thousand and 00/100 Dollars
($23,900,000.00) ("the LOAN") the repayment of which is or shall be evidenced in
part by an Acquisition and Development Promissory Note in the original principal
amount of Twenty Three Million Nine Hundred Thousand and 00/100 Dollars
($23,900,000.00) of even date herewith, as the same may be renewed, amended,
extended, modified, or supplemented (collectively, the "NOTE") and secured by a
mortgage, also of even date herewith (the "MORTGAGE") encumbering all of
Borrower's interest in the Property (as such term is more particularly described
in the Mortgage) and all renewals, amendments, extensions, modifications,
replacements, additions or supplements thereto (the "PROPERTY").
B. BORROWER HAS AGREED TO CONSTRUCT IMPROVEMENTS (AS DEFINED IN THE
LOAN AGREEMENT) ON THE PROPERTY AS MORE PARTICULARLY DESCRIBED IN A LAND
ACQUISITION AND DEVELOPMENT LOAN AGREEMENT OF EVEN DATE (THE "LOAN AGREEMENT")
IN ACCORDANCE WITH PLANS, DRAWINGS AND SPECIFICATIONS (THE "DRAWINGS AND
SPECIFICATIONS") PREPARED BY OR TO BE PREPARED UNDER THE SUPERVISION OF
BORROWER'S DESIGN PROFESSIONAL, AS DEFINED IN THE LOAN AGREEMENT.
C. EACH GUARANTOR IS EITHER AN AFFILIATE OF THE BORROWER OR A
SHAREHOLDER OF OR SPOUSE OF A SHAREHOLDER OF THE PARENT CORPORATION OF THE
BORROWER AND HAS A MATERIAL BUSINESS INTEREST IN BORROWER.
NOW, THEREFORE, WITNESSETH, IN CONSIDERATION OF, AND AS AN INDUCEMENT
FOR THE MAKING OF THE LOAN, AND IN FURTHER CONSIDERATION OF THE SUM OF ONE AND
00/100 DOLLAR ($1.00) AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF
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WHICH ARE HEREBY CONCLUSIVELY ACKNOWLEDGED GUARANTOR, JOINTLY AND SEVERALLY IF
MORE THAN ONE, HEREBY COVENANTS AND AGREES AS FOLLOWS:
1. GUARANTY UNCONDITIONAL. GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY GUARANTEES TO THE LENDER, AS PRIMARY OBLIGOR AND NOT MERELY AS A
SURETY, THAT THE FULL AND PROMPT PAYMENT OF PRINCIPAL, INTEREST, FEES, CHARGES
AND ALL OBLIGATIONS, INDEBTEDNESS OR LIABILITIES OF BORROWER UNDER THE NOTE,
MORTGAGE OR LOAN AGREEMENT OR ANY OF THE OTHER DOCUMENTS EXECUTED IN CONNECTION
WITH OR FURTHER EVIDENCING, SECURING OR GOVERNING THE LOAN (COLLECTIVELY THE
"LOAN DOCUMENTS") OF EVERY KIND AND DESCRIPTION, DIRECT OR INDIRECT, PRIMARY OR
SECONDARY, ABSOLUTE OR CONTINGENT, DUE OR TO BECOME DUE, WHETHER BY ACCELERATION
OR OTHERWISE, INCLUDING ALL DAMAGES PAYABLE TO LENDER TO THE EXTENT PROVIDED IN
THE LOAN DOCUMENTS, WHETHER VOLUNTARY OR INVOLUNTARY, AND HEREUNDER, THAT MAY
ARISE IN CONSEQUENCE OF ANY DEFAULT BY BORROWER UNDER ANY OF THE LOAN DOCUMENTS,
INCLUDING, WITHOUT LIMITATION, ALL ATTORNEYS' FEES INCURRED BY LENDER, SHALL BE
MADE ACCORDING TO THE TERMS OF THE NOTE WITHOUT DEDUCTION BY REASON OF ANY
SET-OFF, DEFENSE, OR COUNTERCLAIM, IRRESPECTIVE OF ANY INVALIDITY THEREIN, THE
UNENFORCEABILITY THEREOF, OR THE INSUFFICIENCY, INVALIDITY, OR UNENFORCEABILITY
OF ANY SECURITY THEREFOR.
2. CONSENT TO LOAN DOCUMENTS. GUARANTOR HEREBY UNCONDITIONALLY CONSENTS
TO THE TERMS, COVENANTS, AND CONDITIONS OF THE NOTE, THE MORTGAGE, LOAN
AGREEMENT, AND LOAN DOCUMENTS.
3. CONSENT TO TERMS. GUARANTOR HEREBY CONSENTS, WITHOUT NOTICE TO
GUARANTOR, TO THE EXTENSION, IN WHOLE OR IN PART FROM TIME TO TIME, WHETHER OR
NOT FOR A TERM IN EXCESS OF THE ORIGINAL TERM, OF THE PAYMENT OF THE NOTE; AND
AGREES IN CASE THE DATES OF PAYMENT OF THE NOTE SHALL BE EXTENDED IN WHOLE OR IN
PART, THAT ALL MONEYS DUE HEREUNDER SHALL BE PAID WHEN DUE ACCORDING TO SUCH
EXTENSION OR EXTENSIONS. GUARANTOR FURTHER CONSENTS TO THE WAIVING OR AMENDMENT
BY THE LENDER OF ANY TERM, COVENANT, OR CONDITION OF THE LOAN DOCUMENTS OR OF
ANY INDULGENCE OR RELEASE GRANTED THEREUNDER.
4. CONSENT TO MODIFICATIONS. GUARANTOR FURTHER CONSENTS TO ANY CHANGES,
ALTERATIONS, MODIFICATIONS, RENEWALS, OR EXTENSIONS WHICH MAY BE MADE IN ANY
TERM, COVENANT, OR CONDITION OF THE LOAN DOCUMENTS. GUARANTOR AGREES THAT NO
CHANGE, ALTERATION, MODIFICATION, RENEWAL, OR EXTENSION OF ANY OF THE LOAN
DOCUMENTS SHALL ALTER OR AFFECT THE LIABILITY OF ANY GUARANTOR HEREUNDER.
GUARANTOR CONSENTS TO THE RELEASE OF ANY COLLATERAL LENDER MAY HAVE UNDER THE
LOAN DOCUMENTS OR TO THE SUBORDINATION OF THE LOAN OR THE COLLATERAL SECURING
THE LOAN TO ANY OTHER DEBT OR SECURITY INTEREST UNDER SUCH terms and conditions
as Lender may agree to in its sole and absolute discretion. Guarantor's
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obligations under this Guaranty shall remain in full force and effect, or shall
be reinstated, as the case may be, without regard to, and shall not be impaired
or affected by:
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(a) any amendment, extension (which may be longer than the
time for repayment of the original indebtedness hereby
guaranteed), renewal, replacement, addition, supplement or
modification of or addition or supplement to any of the terms of
the Note, the Mortgage or any of the other Loan Documents; or
(b) any compromise, release, consent, extension,
indulgence or other action or inaction in respect to any of the
terms of the Note, the Mortgage or any of the other Loan Documents
or of the Borrower or other persons primarily or secondarily
liable; or
(c) any exchange, substitution, release or nonperfection,
in whole or in part, of any security for the Note, the Mortgage or
any of the other Loan Documents or this Guaranty which may be held
at any time by Lender or its successors or assigns; or
(d) any exercise or non-exercise by Lender or its
successors or assigns of any right, power or remedy under or in
respect of the Note, the Mortgage or any of the other Loan
Documents or any security held by Lender with respect thereto, or
any waiver of any such right, power or remedy; or
(e) any bankruptcy, insolvency, dissolution,
reorganization, arrangement, adjustment, composition, liquidation,
or the like of or relating to any Borrower; or the discharge or
release of Borrower in any such bankruptcy proceeding; or
(f) any limitations of Borrower's liability which may be
expressly provided for in the Loan Documents or any limitations of
Borrower's liability which may now or hereafter be imposed by any
statute, regulation or rule of law, of any illegality,
irregularity, invalidity or unenforceability, in whole or in part,
of the Note, the Mortgage or any of the other Loan Documents or
any term thereof; or
(g) any sale, lease or transfer of any or all of the
assets of Borrower to any other person, firm or entity; or
(h) any exchange, surrender, pledge, assignment or other
dealings or transfers with respect to the Note, the Mortgage or
any of the other Loan Documents; or
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(i) Lender's application of all or any part of any payment
to the indebtedness hereby guaranteed if such payment is or must
be rescinded or returned; or
(j) any act or omissions of any kind by Lender; or
(k) the existence of any security (or adequacy thereof, if
any) for, or other guaranty of the indebtedness evidenced by the
Note; or
(l) the creation of any indebtedness, including that
arising from or under subsequent or successive transactions which
shall either continue or increase the indebtedness under the Note
or, from time to time, recreate such indebtedness by new advances
after it has been reduced to a zero balance; or
(m) any circumstance similar to those enumerated
hereinabove;
whether or not Guarantor shall have had notice or knowledge thereof.
5. GUARANTY OF PAYMENT AND PERFORMANCE. This Guaranty is an absolute
and unconditional Guaranty of payment and of performance (rather than a guaranty
of collection). If Borrower shall fail to (a) make any payment of any sum due
under the Note or Mortgage, (b) complete Improvements upon the Property within
the period or periods required by the Loan Agreement, if any, in accordance with
the Drawings and Specifications with only such amendments thereto as shall be
approved by the Lender, and in accordance with all laws, rules, regulations, and
requirements of all governmental authorities having jurisdiction, (c) keep the
Property free from all liens and claims which may be filed or made for
performing work and labor thereon or furnishing materials therefor, or both, or
(d) make payment in full on or before the date of completion, for the cost of
making the improvements and all related costs associated with the Property, or
if the Borrower shall default in any term, covenant or condition of the Loan
Documents, then Guarantor hereby unconditionally jointly and severally
guarantees to the Lender that Guarantor shall (1) pay (without first requiring
the Lender to proceed against Borrower, or any other security) to the Lender the
entire unpaid balance with interest and costs, including all sums secured by the
Mortgage, (2) cure any default in any term, covenant, or condition of the Loan
Documents, (3) cause the improvements upon the Property to be completed within
the period or periods required by the Loan Agreement, if any, in accordance with
the Drawings and Specifications, amended only as aforesaid, and in accordance
with all laws, rules, regulations, and requirements of all governmental
authorities having jurisdiction, (4) cause said liens and claims to be removed
and thereafter keep the Property free from all liens and claims which may be
filed or made for performing work and labor thereon or furnishing
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materials therefor, or both, and (5) make payment in full on or before the date
of completion for the costs of the improvements and related costs associated
with the Property. Guarantor further agrees to indemnify and hold harmless, the
Lender and its and their present and future controlling persons, directors,
officers, agents and employees from any loss (including reasonable attorney's
fees) resulting from any default made at any time by Borrower in any terms of
the Loan Documents or by Guarantor under the terms of this Guaranty.
6. WAIVERS BY GUARANTOR.
(a) Guarantor waives any right to require Lender to: (i)
proceed against Borrower or any other guarantor, (ii) proceed against any
collateral for the Loan (collectively, the "COLLATERAL"), (iii) pursue any other
remedy in Lender's power whatsoever, or (iv) notify Guarantor of any default by
Borrower in the payment of any amounts due under the Loan Documents or in the
performance of any agreement of Borrower under the Loan Documents.
(b) Guarantor waives any defense arising by reason of any of
the following: (i) any disability or any counterclaim or right of set-off or
other defense of Borrower, (ii) any lack of authority of Borrower with respect
to the Loan Documents, (iii) the invalidity, illegality or lack of
enforceability of the Loan Documents or any provision thereof from any cause
whatsoever, including any action or inaction by Lender, (iv) the failure of
Lender to perfect or maintain perfection of any security interest in any
Collateral, (v) the cessation from any cause whatsoever of the liability of
Borrower, (vi) that the Loan Documents shall be void or voidable as against
Borrower or any of Borrower's creditors, including a trustee in bankruptcy of
Borrower, by reason of any fact or circumstance, (vii) the delay or failure of
Lender to exercise any of its rights and remedies against the Borrower or any
collateral or security for the Note, Mortgage or any of the other Loan Documents
or this Guaranty, (viii) any event or circumstance which might otherwise
constitute a legal or equitable discharge of Guarantor's obligations hereunder;
provided, however, that Guarantor does not waive any defense arising from the
due performance by Borrower of the terms and conditions of the Loan Documents,
(ix) all errors and omissions in connection with the Lender's administration of
all indebtedness guaranteed by this Agreement, except errors and omissions
resulting from Lender's acts of bad faith, (x) any right or claim of right to
cause a marshaling of the assets of the Borrower or any other guarantor, (xi)
any act or omission of the Lender (except acts or omissions in bad faith) which
changes the scope of Guarantor's risk hereunder, and (xii) all other notices and
demands otherwise required by law which the Guarantors may lawfully waive.
(c) Until the payment of all amounts due under the Loan
Documents and the performance of all of the terms, covenants and conditions
therein required to be kept, observed or performed by Borrower, Guarantor waives
(i) any right to enforce any remedy which Lender now
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has or may hereafter' have against Borrower, and (ii) any benefit of, and any
right to participate in, any security now or hereafter held by Lender.
(d) Guarantor waives all presentments, demands for
performance, notices of nonperformance, nonpayment or nonobservance or any
notice of acceptance of this Guaranty or any other notice or demand to which
Guarantor might otherwise be entitled, including without limitation, notices of
protests, notices of dishonor, and notices of acceptances of this Guaranty and
any other notice with respect to the Note, the Mortgage or any of the other Loan
Documents and notice thereof, notice of default under the Note, Mortgage or any
of the other Loan Documents, and all other notices to which Guarantor may
otherwise be entitled.
(e) Guarantor waives the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof.
(f) GUARANTOR WAIVES ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS,
DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND ARISING FROM OR RELATING TO THIS
GUARANTY. GUARANTOR ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT
IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY, AFTER CONSULTING WITH ITS LEGAL
COUNSEL. GUARANTOR AGREES THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND
SUITS SHALL BE TRIED BEFORE A JUDGE, NOT A JURY. THIS WAIVER OF JURY TRIAL IS
EXPRESSLY ACKNOWLEDGED TO BE AN ESSENTIAL INDUCEMENT FOR LENDER TO EXTEND CREDIT
TO BORROWER.
7. SUBORDINATION.
(a) Guarantor hereby subordinates the payment and the time of
payment of all indebtedness and obligations of the Borrower to Guarantor of
every kind and nature whatsoever whether now in existence or hereafter entered
into (the "SUBORDINATED INDEBTEDNESS") to the payment of all of Borrower's
obligations under the Loan Documents. Until all of such obligations under the
Loan Documents are paid, Guarantor shall not receive any payment or distribution
on account of, or accept any collateral or security for, or bring any action to
collect, the Subordinated Indebtedness. Guarantor shall not assign, transfer,
pledge or dispose of the Subordinated Indebtedness while this Guaranty is in
effect.
(b) If Guarantor does receive any such payment or
distribution, whether voluntary or involuntary, and whether or not under any
state or federal bankruptcy or other insolvency proceedings, then Guarantor
agrees and directs that any such payment or distribution shall be paid or
delivered directly to Lender for application to the Borrower's obligations under
the Loan
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Documents (whether due or not and in such order and manner as Lender may elect).
If any such payment or distribution is received by Guarantor, Guarantor will
deliver the same to Lender, and until so delivered, the same shall be held in
trust by Guarantor as property of the Lender. As further assurance of the
authorization herein given, Guarantor agrees to execute and deliver to Lender
any power of attorney, assignment, endorsement, or other instrument as may be
requested by Lender to enable Lender to enforce any claims upon the Subordinated
Indebtedness and to collect and receive any payment or distribution with respect
to the Subordinated Indebtedness. Guarantor hereby irrevocably authorizes and
empowers the Lender to demand, sue for, collect and receive every such payment
or distribution on account of the Subordinated Indebtedness and to file claims
and take such other proceedings in the name of the Lender or in the name of
Guarantor as the Lender may deem necessary or advisable to carry out the
provisions of this Guaranty.
(c) To secure the performance by Guarantor of the provisions
of this Guaranty, Guarantor assigns, pledges and grants to the Lender a security
interest in, and lien on, the Subordinated Indebtedness, all proceeds thereof
and all and any security and collateral therefor. Upon the request of the
Lender, Guarantor shall endorse, assign and deliver to the Lender all notes,
instruments and agreements evidencing, securing, guarantying or made in
connection with the Subordinated Indebtedness.
8. RIGHT OF SUBROGATION. Notwithstanding any conflicting or
inconsistent provisions in this Guaranty, Guarantor hereby irrevocably and
unconditionally waives, releases, and discharges any present or future right to
which Guarantor is or becomes entitled at law or in equity (including, without
limitation, any law subrogating the guarantor to the rights of the lender) to
seek contribution, indemnification, or any other form of reimbursement from
Borrower, any other guarantor, or any other person now or hereafter primarily or
secondarily liable for any obligations of Borrower to Lender, or to assert any
other claim or right of action against Borrower or other person so liable on
account of, arising under, or in connection with this Guaranty and/or any
payment or disbursement made by Guarantor in connection with this Guaranty or
otherwise, pursuant to any rights of contribution, indemnity, subrogation or
other form of reimbursement whether provided for by contract, by applicable law,
pursuant to any provisions of Articles of Incorporation, By-laws, standing or
special resolutions, partnership agreements or otherwise.
9. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants to the Lender as follows:
(a) This Agreement, when executed and delivered by Guarantor,
will constitute the legal, valid and binding obligation of Guarantor in
accordance with its terms.
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(b) Guarantor has reviewed all of the terms and provisions of
this Guaranty and all of the Loan Documents, has consulted with counsel of its
choice to the extent appropriate, and understands all of the terms and
provisions of this Guaranty and each of the Documents and the impact that the
same may have on it individually.
(c) All information, reports, papers and data given to the
Lender with respect to Guarantor are accurate and complete in all material
respects.
(d) Guarantor has adequate means to obtain from the Borrower,
on a continuing basis, information concerning the financial condition of the
Borrower and Guarantor is not relying on the Lender to provide such information
either now or in the future.
(e) There is not now pending against or affecting the
Guarantor, nor, to the knowledge of Guarantor, is there threatened, any action,
suit or proceeding at law or in equity or by or before any administrative agency
which if adversely determined would materially adversely impair or affect the
financial condition of the Guarantor.
(f) The execution, delivery and performance by Guarantor of
this Agreement (i) will not violate any provision of law, any order of court of
other agency of government, or any agreement to which Guarantor is a party or by
which Guarantor or any of its property is bound, or be in conflict with, result
in a breach of or constitute (with due notice of lapse of time or both) a
default under any such agreement or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of its property or
assets.
(g) Guarantor has a financial interest in the Borrower or will
derive a benefit from the loan to be made to Borrower pursuant to the Loan
Documents.
(h) The incurring or payment of the obligations of Guarantor
hereunder has not left and will not leave Guarantor insolvent, with an
unreasonably small capital, or unable to pay existing or future debts as they
mature.
(i) If Guarantor is a corporation, Guarantor represents and
warrants to the Lender as follows:
(i) Guarantor is a corporation duly organized,
validly existing and in good standing under
the laws of the state of its incorporation.
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(ii) The financial statements submitted by
Guarantor to the Lender, including any
schedules and notes pertaining thereto, have
been prepared in accordance with generally
accepted accounting principles consistently
applied, and fully and fairly present as of
the dates thereof the results of operations
for the periods covered thereby, and there
have been no material adverse changes in the
financial condition or business of Guarantor
from the dates thereof to the date hereof,
other than as disclosed in writing to the
Lender.
(iii) Guarantor is not in default with respect to
any of its existing indebtedness, and the
making and performance of this Guaranty will
not violate the charter or by-laws of
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the Guarantor, or result in a default under
any contract, agreement, or instrument to
which Guarantor is a party or by which
Guarantor or any of its property is bound.
(iv) Guarantor has the power and authority to
enter into and perform this Guaranty, and
has taken all corporate action necessary to
authorize the execution, delivery, and
performance of this Guaranty, and has
received all necessary consents or approvals
of any governmental agency or other person
to such execution, delivery and performance.
(J) GUARANTOR HAS FILED OR CAUSED TO BE FILED ALL TAX
RETURNS REQUIRED TO BE FILED BY GUARANTOR, AND HAS PAID ALL TAXES DUE
ON SAID RETURNS OR ON ANY ASSESSMENTS MADE AGAINST GUARANTOR (OTHER
THAN THOSE BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS);
(K) GUARANTOR HAS NOT RECEIVED NOTICE OF (I) ANY DEFAULT
IN THE PAYMENT OR PERFORMANCE OF GUARANTOR'S OBLIGATIONS UNDER ANY
MATERIAL LEASE, FRANCHISE, INDENTURE, MORTGAGE, DEED OF TRUST, LOAN
AGREEMENT, CREDIT AGREEMENT, OR OTHER INSTRUMENT TO WHICH GUARANTOR IS
A PARTY OR BY WHICH GUARANTOR MAY BE BOUND; OR (II) ANY VIOLATION OF
ANY LAW, RULE, REGULATION, ORDER, WRIT, JUDGMENT, DECREE, DETERMINATION
OR AWARD APPLICABLE TO IT, EXCEPT AS OTHERWISE PREVIOUSLY DISCLOSED TO
LENDER IN WRITING; AND
(L) THE REPRESENTATIONS AND WARRANTIES OF GUARANTOR
CONTAINED HEREIN ARE TRUE, COMPLETE AND CORRECT IN ALL MATERIAL
RESPECTS.
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10. WAIVER OF EXEMPTION LAWS. ALL THE LAWS EXEMPTING REAL OR PERSONAL
PROPERTY FROM EXECUTION AND INQUISITION AND EXTENSION UPON ANY LEVY ON REAL OR
PERSONAL PROPERTY ARE HEREBY WAIVED AND CONDEMNATION AGREED TO, AND NO BENEFIT
OF EXEMPTION WILL BE CLAIMED UNDER OR BY VIRTUE OF ANY EXEMPTION LAW NOW IN
FORCE OR WHICH HEREAFTER MAY BE PASSED.
11. WAIVER OF PROMPTNESS. Guarantor hereby waives promptness,
diligence, notice of acceptance, and any other notice with respect to any of the
terms, covenants, or conditions of any of the Loan Documents and this Guaranty
and any requirement that the Lender protect, secure, perfect, or insure any
security interest or lien or any property subject thereto or exhaust any right
or take any action against Borrower or any other person or entity or any
collateral.
12. ADDRESS FOR NOTICE, IF GIVEN. Guarantor hereby requests the Lender,
if it wishes to send any notice to Guarantor, although all notices and demands
have been waived, to send such notice to Guarantor at Guarantor's address set
forth above.
13. JURISDICTION; VENUE. Guarantor hereby (a) irrevocably consents and
submits to the jurisdiction of any Federal, state, county or municipal court
sitting in West Palm Beach, Florida in respect to any action or proceeding
brought therein by Lender against Guarantor concerning any matters arising out
of or in any way relating to this Guaranty or the Note, the Mortgage or any of
the other Loan Documents; (b) expressly and irrevocably waives, to the fullest
extent permitted by law, any rights or objections of Guarantor pursuant to the
laws of any other jurisdiction by virtue of which exclusive jurisdiction of the
courts of any other jurisdiction might be claimed; (c) expressly and irrevocably
waives all objections as to venue and any and all rights Guarantor may have to
seek a change of venue with respect to any such action or proceeding; and (ii)
claims and defenses that any suit, action or proceeding brought in the State of
Florida has been brought in an inconvenient or improper forum; (d) agrees that
the laws of the State of Florida shall govern in any such action or proceeding
and waives any defense to any action or proceeding granted by the laws of any
other jurisdiction unless such defense is also allowed by the laws of the State
of Florida; and (e) agrees that any final judgment rendered against it in any
such action or proceeding shall be conclusive and binding and may be enforced in
any other jurisdiction by suit on the judgment or in any other manner provided
by law and expressly consents to the affirmation of the validity of any such
judgment by the Courts of any other jurisdiction so as to permit execution
thereon. Guarantor further agrees that, any action or proceeding by Guarantor
against Lender in respect to any matters arising out of or in any way relating
to the Loan Documents shall be brought only in West Palm Beach, Florida.
14. REMEDIES.
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(a) Upon a default under this Guaranty, the Lender may, at its
option and without notice or demand, declare an amount equal to the remainder of
the Borrower's obligations under the Loan Documents (the "UNPAID BALANCE") to be
immediately due and payable by the Guarantor, whether or not the same are due
and payable by Borrower at that time. The books and records of Lender showing
the amount due by Borrower shall be binding upon Guarantor for the purpose of
establishing such items and shall be prima facie proof thereof.
(b) Guarantor agrees to pay Lender's attorneys' fees and all
other costs and expenses which may be incurred by Lender in the enforcement of
this Guaranty, whether or not suit is filed.
(c) Guarantor agrees to pay Lender interest on all amounts due
hereunder, from the date of the demand until the date paid, at the highest rate
after default authorized by the Loan Documents to the extent permitted by
applicable law. In the event any statute or rule of court specifies the rate of
interest that a judgment on this Guaranty may bear or the amount on which such
interest rate may apply and such rate or amount is less than that called for in
the preceding sentence absent a restriction under applicable law, Guarantor
agrees to pay to the order of the Lender an amount as will equal the interest
computed at the highest rate after default provided for in the Loan Documents
that would be due on the judgment amount less the interest due on the amount of
the judgment which bears judgment interest.
15. LENDER'S RIGHTS. The rights, powers, privileges, and discretions
(the "RIGHTS") to which the Lender may be entitled hereunder shall inure to the
benefit of Lender and its successors and assigns. All the rights of the Lender
are cumulative and not alternative and may be enforced successively or
concurrently. Failure of the Lender to exercise any of its rights shall not be
deemed a waiver thereof, and no waiver of any of its rights shall be deemed to
apply to any other rights, nor shall it be effective unless in writing and
signed by the Lender. The terms, covenants, and conditions of or imposed upon
the Guarantor herein shall be binding upon its successors and assigns.
16. SEVERABILITY. In case any provision (or any part of any provision)
contained in this Guaranty shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision (or remaining part of the
affected provision) of this Guaranty but this Guaranty shall be construed as if
such invalid, illegal, or unenforceable provision (or part thereof) had never
been contained herein but only to the extent it is invalid, illegal, or
unenforceable.
17. GENDER; CAPTIONS. When used herein, the singular shall include the
plural, the plural the singular, and the use of any gender shall be applicable
to all genders. Section headings
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are used solely for the convenience of the parties and are not intended to limit
or define any section.
18. JOINT AND SEVERAL LIABILITY. All warranties, representations, and
covenants by Guarantor herein are deemed to be made by each Guarantor, and the
undertakings herein by Guarantor are the joint and several obligations of each
Guarantor.
19. TIME OF ESSENCE. Time is of the essence to each and every provision
of this Guaranty.
20. COUNTERPARTS. This Guaranty may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument. This
Guaranty shall be fully effective against any Guarantor who signs below, even if
one or more of the persons whose name or names appear below does not execute
this Guaranty and even if this Guaranty is held not to be enforceable against
one or more of the persons who sign this Guaranty.
21. CONSENT TO DISCLOSURE. The Loan Documents, including this Guaranty,
may be placed, assigned, serviced or participated out (either in whole or in
part) by Lender, its successors and assigns. The Guarantor hereby grants Lender
the Guarantor's unlimited and unconditional consent to the disclosure and
dissemination of financial records, including, without limitation, this
Guaranty, financial statements, credit references and histories, property
appraisals, surveys, pro forma assumptions, profit and loss statements, resumes,
accounting reports, balance sheets, and other financial information provided to
Lender by or on behalf of the Borrower or the Guarantor, for such purposes as
Lender, in its sole discretion, from time to time deems necessary or proper. The
Guarantor further releases, acquits and forever discharges Lender and its agents
from all liability, claims, actions, or causes of action for disclosure of
confidential financial records under any applicable federal or state statute or
common law.
22. FINANCIAL STATEMENTS.
(a) Guarantor (or if Guarantor is more than one party, then
each party constituting Guarantor) to promptly furnish or cause to be furnished
to Lender:
(i) within one hundred twenty (120) days after the end of
each fiscal year of Guarantor, financial statements (which shall
mean and include a balance sheet, statement of cash flow and
income statement for Guarantor, such reports to be in such form
and in reasonable detail as Lender may request, setting forth the
financial
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condition (including all contingent liabilities), cash flow and
the income and expenses for Guarantor for the immediately
preceding fiscal year) of Guarantor, (1) prepared in accordance
with generally accepted accounting principles consistently
applied, as to Transeastern Properties of South Florida, Inc.
("Transeastern Properties") , and (2) prepared in a manner which
fairly presents the financial condition and transactions of each
individual Guarantor as of the date thereof or for the period
covered thereby in a format approved by Lender, as to any
individual Guarantor, and (x) as to Transeastern, audited and
certified to by an independent certified public accountant with a
national reputation, and (y) as to each individual Guarantor;
certified and sworn to by each individual Guarantor under penalty
of perjury;
(ii) a tax return for each fiscal year of Guarantor from
and after the date hereof, as soon as available, but in no event
later than one hundred twenty (120) days after the end of each
fiscal year (provided, however, if Guarantor shall have duly filed
for an extension of the deadline for such tax return, and promptly
furnish evidence thereof to Lender, then such tax return shall be
delivered to Lender on or before two hundred fifty-five (255) days
after the end of such fiscal year);
(iii) on or before one hundred twenty (120) days after the
end of each fiscal year of Guarantor, a certificate by Guarantor
certifying that, as of the date thereof, there does or does not
(as the case may be) exist an event which constitutes, or which
upon due notice or lapse of time or both would constitute an event
of default under the Guaranty or, if such event of default exists,
specifying the nature thereof; and
(iv) immediate notice of any material adverse change in
the financial condition or business prospects of Guarantor.
The fiscal year of any individual Guarantor ends on December 31st, and as
to Transeastern Properties, the fiscal year end is June 30th.
(b) In the event Guarantor fails to furnish or cause to be
furnished any financial statement or report as required under this Section,
Lender may charge a $25.00 per day administrative fee for each day of delay
in the submission of the required reports. Such fee shall not exceed
$1,000.00; PROVIDED THAT if Guarantor does not furnish any required
statement or report within forty (40) days after the due date specified
above, then Lender may, at the expense of Guarantor, cause a certified
public accountant designated by Lender to prepare such balance sheets and
statements and the costs thereof shall become part of the principal secured
hereby until repaid with interest at the rate of two percent (2%) per annum
above the Interest Rate from time to time as set forth in the Note.
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23. SATISFACTION OF GUARANTY OF COMPLETION. Guarantor's obligations
under this Guaranty shall be absolute and unconditional under any and all
circumstances except as set forth in the following sentence, and Guarantor shall
be released from its obligations under this Guaranty only upon completion of the
Improvements in accordance with all terms, covenants and conditions set forth in
the Loan Agreement on Loan Documents or any earlier discharge as provided in
Section 25 hereof. As used herein, "COMPLETION OF THE IMPROVEMENTS" in
accordance with all terms, covenants and conditions set forth in the Loan
Agreement on Loan Documents shall include, without limitation, the date on which
all of the following shall have been satisfied:
(a) the Improvements shall have been completed in accordance with
the Plans and Lender shall have received evidence satisfactory
to Lender of the approval by all appropriate governmental
authorities of the Improvements in their entirety to the
extent any such approval is or will be a condition of the
lawful use of the Improvements, and evidence satisfactory to
Lender of approval by all appropriate governmental authorities
of the contemplated uses thereof;
(b) Lender shall have received on its standard form a written
certification by the Consulting Engineer, acceptable to Lender
in all respects, that the construction has been completed
substantially in accordance with the Plans, in a good and
workmanlike manner, and in accordance with all laws,
ordinances, rules and regulations of all governmental
authorities having, or purporting to have, jurisdiction over
the Property; and containing the Consulting Engineer's written
approval of the final draw request;
(c) Lender shall have received three (3) copies of an as-built
survey prepared by a licensed surveyor showing all of the
Improvements in place. The survey shall also include a
narrative metes and bounds description of the boundary of the
Land, the acreage of the Land and the square foot area of the
Improvements, the location and dimensions of any easements,
and the dimensions of any Improvements located on the Land.
The survey shall be certified to the Lender and to the Title
Company. The surveyor must include on the survey a signed
narrative statement in certification of the existence or
non-existence of any encroachments from or onto the Land and
must include the date of the survey, the surveyor's
registration number and seal and such other details and
information as may be required by required by Lender;
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(d) Lender shall have received certifications of the Design
Professional and the General Contractor that all of the
on-site and off-site improvements have been substantially
completed in accordance with the Plans and that the
Improvements comply with all applicable requirements and are
in all respects complete;
(e) Lender shall have received a certification from the General
Contractor that all on-site and off-site improvements required
to be constructed have been substantially completed in
accordance with the Plans and an affidavit complying with the
laws of the State of Florida including a certification that
all subcontractors, suppliers and materialmen have been paid
in full through the date of the last advance and that the
amount of the final advance is an amount which is sufficient
to satisfy any and all sums remaining due and payable and
waiving all of the contractor's lien rights that they each may
have a prerequisite to a final advance.
(f) a certificate of completion from the appropriate governmental
authority to the extent obtainable, or the equivalent thereof;
(g) Lender shall be in possession of policies of fire, liability
and extended coverage and such other types of insurance as may
be required by Lender and in such amounts and containing such
terms as required in the Mortgage or as otherwise required by
Lender, endorsed to show the interests of Lender and in form
and substance and written by companies satisfactory to Lender;
and
(h) Borrower shall have conveyed and/or dedicated all roads and
water and sewer facilities to the Palm Beach County or
applicable water and sewer authority (collectively, the
"Governmental Entities") and such Governmental Entities shall
have accepted such conveyance and/or dedication, without
condition, limitation or requirement of any further act or
deed.
(i) all other instruments and documents reasonably required by
Lender.
24. NO THIRD PARTY BENEFIT. The terms and provisions of this Guaranty
are for the benefit of the Lender and no other person shall have any right or
cause of action on account thereof. The Lender has no obligation to make any
advance for the benefit of the Guarantor. Guarantor has no beneficial interest
in the Loan proceeds or rights or claims under the Loan Documents. The
obligations and liabilities of Guarantor shall in no manner be affected by the
actual use of the proceeds of the Loan or whether the Lender waives any or all
of the conditions to advances set forth in the Loan Documents.
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25. DISCHARGE OF GUARANTY.
(a) This Guaranty shall not be discharged and Guarantor shall
not be released from liability until all sums, charges, principal, interest,
costs, fees and obligations of Borrower have been satisfied in full, whether to
be performed before or after the last payment has been made under the Loan
Documents. Any amounts received by Lender from whatsoever source or account of
the Borrower's indebtedness, obligations or liabilities may be applied by the
Lender toward the payment of such of the indebtedness, obligations or
liabilities, and in such order of application, as the Lender may from time to
time elect.
(b) If all or any portion of the obligations of Borrower are
satisfied and the Lender is required for any reason to pay to any person the
sums used to satisfy the obligations, the obligations shall remain in effect and
enforceable to the extent thereof.
26. DURATION OF FULL RECOURSE GUARANTY. Borrower and Guarantor shall
have full personal liability for the repayment of the Loan and for the
observance and performance of all of the covenants and agreements under the
terms of the Note, the Mortgage, and any other Loan Documents until the
completion of the Improvements in accordance with all terms, covenants and
conditions set forth herein and in the Loan Agreement and Loan Documents;
provided, however, that nothing contained herein shall be construed to release
or impair the full personal liability for repayment of the Loan and for the
observance and performance of all terms, covenants, conditions and agreements
under the terms of the Note, the Mortgage and any other Loan Documents if, as of
the date of Borrower's completion of the Improvements in accordance with all
terms, covenants and conditions set forth herein and in the Loan Agreement and
Loan Documents, there shall be a default under any term, covenant or provision
or agreement under the terms of the Note, Mortgage, Loan Agreement or Loan
Documents. However, if as of the date of Borrower's completion of the
Improvements in accordance with all terms, covenants and conditions set forth
herein and in the Loan Agreement and Loan Documents there shall be no default
under any term, covenant or provision or agreement under the terms of the Note,
Mortgage, Loan Agreement or Loan Documents ("Event of Limited Release"), then
the remainder of this Section 26 shall be applicable. By its acceptance hereof,
Lender agrees that upon the happening of the Event of Limited Release, Borrower
and Guarantor (which term for purposes of this Section shall include their
present or future general partners, shareholders or members, and their
successors and assigns) shall not have any personal liability for the repayment
of the Loan or for the observation or performance of any covenants or agreements
under the terms of the Note, the Mortgage or any other Loan Documents (the term
"LOAN DOCUMENTS" for purposes of this sentence and the remainder of this Section
shall exclude the Environmental Indemnity Agreement executed by Borrower and
Lender concurrently with the execution of the Note and the provisions of this
Section shall not apply to Borrower's liabilities
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under such agreement). Upon the happening of the Event of Limited Release, in
the event of default under the terms of the Note, the Mortgage or any other of
the Loan Documents, Lender shall rely solely on the Property and the foreclosure
of any liens or security interests securing payment of the Note to satisfy the
obligations of Borrower under the Note, the Mortgage and the other Loan
Documents and no deficiency or other money judgments shall ever be sought
against Borrower; PROVIDED, HOWEVER, that nothing herein contained shall be
construed to release or impair the indebtedness evidenced by the Note, or the
lien upon the Property, or preclude the application of the Property to the
payment of the Note in accordance with the terms of the Mortgage, the Loan
Agreement and the Loan Documents; or impair the rights of the Lender to
accelerate the maturity of the Note (or to avail itself of any of its rights or
remedies) upon default hereunder.
Notwithstanding anything contained in this Guaranty to the contrary,
Borrower and Guarantor shall have full personal liability for the repayment of
the Loan and for the observance or performance of all of the covenants and
agreements under the terms of the Note, the Mortgage and any other Loan
Documents (irrespective of the happening of the Event of Limited Release) in the
event that any of the following shall occur: (i) the Property, or any interest
therein is sold, conveyed, transferred or assigned without Lender's prior
written consent which consent may be expressly set forth in the Loan Documents;
(ii) a controlling interest in the entity comprising Borrower is sold, conveyed,
transferred or assigned without Lender's prior written consent or, if Borrower
is a partnership, the current general partner(s) of Borrower cease to own 100%
of their present interest in Borrower; (iii) Borrower shall acquire or hold any
asset other than the Property, or Borrower shall commence to operate, acquire,
or otherwise engage in any business or activity in addition to the business of
holding the Property in its capacity as a single-asset holding entity; (iv)
Borrower obtains additional financing secured by the Property, (excluding the
mortgage in favor of the Ohio Lender, as defined in and subject to the terms of
the Loan Agreement or otherwise encumbers the Property without Lender's prior
written consent; (v) Borrower, Guarantor, or any of Borrower's or Guarantor's
partners, officers, directors, employees, agents, or any other representatives
of Borrower (collectively the "BORROWER PARTIES") engages in any fraud or
misrepresents any fact to induce Lender to make the Loan, or engages in fraud or
breaches any representation or warranty contained in the Note, Mortgage or any
other Loan Documents during the term of the Loan; (vi) Borrower or any of the
Borrower Parties fails to apply proceeds received from insurance policies or
other sources in accordance with the terms of any of the Loan Documents; (vii)
Borrower or any of the Borrower Parties fails to apply any proceeds produced by
or derived from the Property (whether due to the sale of Lots (as defined in the
Loan Agreement) or club memberships or management fees) in accordance with the
terms of the Loan Documents; (viii) the Property shall be in violation of any
federal, state, or local law, ordinance or regulation pertaining to the
environmental condition or any other condition of the Property and such
violation shall not be cured within (30) days from the date of issuance of a
notice of the subject violation by a governmental entity of competent
jurisdiction;
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(ix) Borrower, or any of the Borrower Parties, has knowledge of a pre-existing
environmental condition or other condition that adversely affects the value of
the Property as collateral for the Loan and fails to disclose any such condition
to Lender in writing prior to the funding of the Loan, or Borrower or any of the
Borrower Parties discovers during the term of the Loan, an environmental
condition or other condition that adversely affects the value of the Property as
collateral for the Loan, and fails to disclose any such condition to Lender in
writing within ten (10) days of discovering the condition, or to cure any such
condition within thirty (30) days of discovering the condition; (x) Borrower or
any of the Borrower Parties fail to deliver to Lender following a default
hereunder or under the Loan
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<PAGE>
Agreement, Mortgage or Loan Document, all proceeds and deposits procured by or
derived from the Property (whether due to the sale or transfer of lots, club
memberships or management fees) and all records pertaining to the foregoing and
the Property; (xi) permits, mechanics' liens or other liens to be filed against
the Property (excluding the mortgage in favor of the Ohio Lender, as defined in
and subject to the terms of the Loan Agreement); or (xii) Borrower fails to
complete the Improvements in accordance with all terms, covenants and conditions
set forth in the Loan Agreement or Loan Documents, or, if as of the date of
Borrower's completion of the Improvements as described herein, there shall be a
default under any term, covenant or provision of the Note, Mortgage, Loan
Agreement or Loan Documents.
Furthermore, notwithstanding anything to the contrary set forth herein
(including, without limitation, the happening of the Event of Limited Release),
Borrower and Guarantor (and their present or future general partners,
shareholders or members, successors and assigns, if any) shall be fully liable
to Lender for (i) damages suffered as a result of fraud, waste or
misrepresentation by any Borrower or any of the Borrower Parties; (ii) any
security deposit, monies due to sales or rentals, or other income arising out of
or with respect to the Property (whether due to the sale or transfer of Lots or
club memberships or management fees) which is collected by Borrower after Lender
has given notice that Borrower is in default under the Note or any of the other
Loan Documents and prior to any cure of such default (to the full extent of such
security deposits, monies due to sales or rentals or other income retained and
collected by Borrower after the giving of any such notice and prior to any cure
of such default); (iii) the fair market value as of the time of the giving of
any written notice referred to in clause (ii) hereinabove of any personal
property or fixtures removed or disposed of by Borrower other than in accordance
with the terms of the Loan Documents; (iv) the misapplication of any proceeds in
violation of any of the Loan Documents (to the full extent of such misapplied
proceeds) under any insurance policies or awards resulting from condemnation or
the exercise of the power of eminent domain by reason of damage, loss or
destruction of any portion of the Property or any buildings located thereon; or
(v) violations of any applicable environmental laws such as the presence of
hazardous wastes or similar substances on the Property caused by acts or
omissions of Borrower. Notwithstanding clause (ii) above, Borrower may apply
income derived from the Property to the operating expenses directly relating to
the Property without creating personal liability hereunder.
27. BINDING EFFECT. Notwithstanding the death or insanity of the
Guarantor, this Guaranty shall be binding upon his heirs, personal
representatives and estate with respect to the indebtedness hereby guaranteed
including, without limitation, any of the indebtedness hereby guaranteed coming
into existence after such death or insanity and prior to the actual receipt by
the Lender of written notice thereof from the Guarantor's legal representative.
This Guaranty shall continue in full force and be binding upon the Guarantor
notwithstanding the death or insanity or release of any other guarantor. The
bankruptcy or insolvency of any other guarantor of the indebtedness hereby
guaranteed shall not affect the obligations of the
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<PAGE>
Guarantor hereunder. The obligations of the Guarantor hereunder shall survive
the death of the Guarantor and shall be binding upon the heirs, personal
representatives and estate of the Guarantor and upon any other surviving
guarantor for all of the indebtedness hereby guaranteed coming into existence
after any such death, the same as if such death had not occurred.
28. ENTIRE AGREEMENT. This Guaranty contains the sole and entire
understanding and agreement with respect to its entire subject matter, and all
prior negotiations, discussions, commitments, representations, agreements and
understandings heretofore had with respect thereto are merged herein. This
Guaranty cannot be changed or terminated orally, and is not subject to any
conditions precedent or otherwise.
29. ATTORNEYS' FEES. In the event it shall become necessary for Lender
to employ counsel to enforce Guarantor's obligations under this Guaranty or any
part thereof, Guarantor agrees to pay Lender's attorneys' fees whether suit be
brought or not, including attorneys' fees on appeal or in bankruptcy
proceedings, and all other costs and expenses reasonably connected therewith.
30. INSOLVENCY PROCEEDINGS AND OTHER RIGHTS. In case of any
dissolution, liquidation, bankruptcy, reorganization, receivership, assignment,
debt arrangement or other proceeding under any bankruptcy or insolvency law or
procedure is instituted by or against the Borrower, all sums and charges
(however designated) payable to Lender by Borrower under or in connection with
the Note, the Mortgage or any of the other Loan Documents shall at the option of
Lender immediately become due and payable from Guarantor; and in any such event
the Guarantor hereby authorizes the Lender, without notice or demand, to
appropriate and apply any property, balances, credits, deposits, accounts or
moneys of the Guarantor then in the possession of Lender, or standing to the
credit of Guarantor, to the payment of such sums and charges. In addition to
other rights and remedies (including, without limitation, other rights of
setoff), Lender shall have a lien upon and a right of setoff against all monies,
securities and other property of Guarantor now or hereafter in the possession of
or on deposit with Lender, whether held in a general or special account or
deposit, whether matured or unmatured (and regardless of any penalties for
premature withdrawals), or for safekeeping or otherwise; and every such lien and
right of setoff may be exercised without demand upon or notice to Guarantor. No
lien or right of setoff shall be deemed to have been waived by any act or
conduct on the part of Lender, or by any neglect to exercise such right of
setoff or to enforce such lien, or by any delay in doing so; and every right of
setoff and lien shall continue in full force and effect until such right of
setoff or lien is specifically waived or released by an instrument in writing
executed by Lender.
31. NO MODIFICATION. No modification or waiver hereof shall be binding
on the Lender unless in writing signed by an officer of the Lender. This
Guaranty shall be construed
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in accordance with and governed by the laws of the state of Florida. Wherever
possible each provision of this Guaranty shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Guaranty shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty.
32. GUARANTOR BENEFITS. As a material inducement for the Lender to
accept and fund pursuant to the Note and accept this Guaranty, Guarantor hereby
represents and warrants that (i) Transeastern Properties is the sole and one
hundred percent (100%) legal owner of the Borrower and the individuals named
below are the sole and one hundred percent (100%) legal owners of, or the
spouses of, the sole and one hundred percent (100%) legal owners of all of the
common stock of the Transeastern Properties, free and clear of all liens,
security interests, charges and encumbrances of every nature; (ii) each share of
stock is duly authorized, validly issued fully paid and nonassessable; (iii) the
execution and delivery of this Guaranty and the performance of its terms will
not result in any violation of any provision of the certificate of incorporation
or by-laws of the issuer or any other agreement; (iv) without the prior written
consent of the Lender, the undersigned shall not, directly or indirectly, (a)
sell, convey or otherwise dispose of all or any portion of the stock of the
Borrower entity or any interest therein or (b) create, incur, or permit to exist
any pledge, mortgage, lien, charge, encumbrance or any security interest
whatsoever in or with respect to any of the stock of the Borrower entity; and
(v) the undersigned shall not consent to or approve the authorization and
issuance of any additional shares of any class of stock of the Borrower entity,
any securities convertible voluntarily by the holder thereof or automatically
upon the occurrence or nonoccurrence of any event or condition, any warrants,
options, rights or other commitments entitling any person to purchase or
otherwise acquire any such shares of stock, without the prior written consent of
the Lender.
33. MULTIPLE GUARANTORS. IF GUARANTOR IS MORE THAN ONE PERSON, (I) EACH
GUARANTOR HEREUNDER SHALL BE JOINTLY AND SEVERALLY LIABLE FOR THE OBLIGATIONS OF
GUARANTOR HEREUNDER, (II) THE TERM "GUARANTOR" WHENEVER USED HEREIN SHALL
INCLUDE EACH GUARANTOR, JOINTLY AND SEVERALLY WITH ALL OTHER GUARANTORS, AND
(III) LENDER MAY (WITHOUT NOTICE TO OR CONSENT OF ANY OTHER GUARANTOR AND WITH
OR WITHOUT CONSIDERATION) RELEASE, COMPROMISE, SETTLE WITH, AND PROCEED AGAINST
ANY GUARANTOR AND ANY SECURITY AND COLLATERAL GIVEN BY SUCH GUARANTOR WITHOUT
AFFECTING, IMPAIRING, LESSENING AND RELEASING THE OBLIGATIONS OF ANY OTHER
GUARANTOR. ANY ONE OR MORE SUCCESSIVE OR CONCURRENT ACTIONS OR PROCEEDINGS MAY
BE BROUGHT AGAINST ANY OR ALL OF THE GUARANTORS, EITHER IN THE SAME ACTION, IF
ANY, BROUGHT AGAINST THE BORROWER OR IN SEPARATE ACTIONS OR PROCEEDINGS, AS
OFTEN AS LENDER MAY DEEM ADVISABLE.
SIGNATURES ON FOLLOWING PAGES
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<PAGE>
IN WITNESS WHEREOF, EACH GUARANTOR HAS CAUSED THIS INSTRUMENT TO BE
DULY EXECUTED UNDER SEAL AND DELIVERED ON THE DATE FIRST ABOVE WRITTEN.
GUARANTOR:
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC., A FLORIDA CORPORATION
BY:
NAME:
TITLE:
ADDRESS:
GUARANTOR:
BY:
NAME: ARTHUR FALCONE
TITLE:
ADDRESS:
GUARANTOR:
BY:
NAME: MARCY FALCONE
TITLE:
ADDRESS:
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<PAGE>
GUARANTOR:
BY:
NAME: EDWARD FALCONE
TITLE:
ADDRESS:
GUARANTOR:
BY:
NAME: DIANA FALCONE
TITLE:
ADDRESS:
GUARANTOR:
BY:
NAME: PHILLIP CUCCI
TITLE:
ADDRESS:
GUARANTOR:
BY:
NAME: LINDA CUCCI
TITLE:
ADDRESS:
NOTARIAL ACKNOWLEDGMENTS ON FOLLOWING PAGES
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<PAGE>
STATE OF ___________ )
) SS:
COUNTY OF ________ )
The foregoing instrument was acknowledged and sworn to before me this
____ day of ________, 1995 by _____________, as _____________ of TRANSEASTERN
PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation. He/she has produced
_______________________ as identification and did take an oath.
--------------------------------
Print Name: ____________________
Notary Public, State of ________
Commission No.__________________
My Commission Expires: _________
STATE OF ___________ )
) SS:
COUNTY OF ________ )
The foregoing instrument was acknowledged and sworn to before me this
____ day of ________, 1995 by Arthur Falcone, who has produced
_______________________ as identification and who did take an oath.
--------------------------------
Print Name: ____________________
Notary Public, State of ________
Commission No.__________________
My Commission Expires: _________
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<PAGE>
STATE OF ___________ )
) SS:
COUNTY OF ________ )
The foregoing instrument was acknowledged and sworn to before me this
____ day of ________, 1995 by Marcy Falcone, who has produced
_______________________ as identification and who did take an oath.
--------------------------------
Print Name: ____________________
Notary Public, State of ________
Commission No.__________________
My Commission Expires: _________
STATE OF ___________ )
) SS:
COUNTY OF ________ )
The foregoing instrument was acknowledged and sworn to before me this
____ day of ________, 1995 by Edward Falcone, who has produced
_______________________ as identification and who did take an oath.
--------------------------------
Print Name: ____________________
Notary Public, State of ________
Commission No.__________________
My Commission Expires: _________
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<PAGE>
STATE OF ___________ )
) SS:
COUNTY OF ________ )
The foregoing instrument was acknowledged and sworn to before me this
____ day of ________, 1995 by Diana Falcone, who has produced
_______________________ as identification and who did take an oath.
--------------------------------
Print Name: ____________________
Notary Public, State of ________
Commission No.__________________
My Commission Expires: _________
STATE OF ___________ )
) SS:
COUNTY OF ________ )
The foregoing instrument was acknowledged and sworn to before me this
____ day of ________, 1995 by Phillip Cucci, who has produced
_______________________ as identification and who did take an oath.
-------------------------------
Print Name: ___________________
Notary Public, State of _______
Commission No._________________
My Commission Expires: ________
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<PAGE>
STATE OF ___________ )
) SS:
COUNTY OF ________ )
The foregoing instrument was acknowledged and sworn to before me this
____ day of ________, 1995 by Linda Cucci, who has produced
_______________________ as identification and did take an oath.
--------------------------------
Print Name: ____________________
Notary Public, State of ________
Commission No.__________________
My Commission Expires: _________
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<PAGE>
PREPARED BY AND RETURN TO:
Zena Manes Dickstein, P.A.
Steel Hector & Davis
200 South Biscayne Boulevard
Suite 4000
Miami, Florida 33131
PURCHASE MONEY FIRST MORTGAGE,
SECURITY AGREEMENT, FINANCING STATEMENT
AND ASSIGNMENT OF LEASES, RENTS AND INCOME
THIS MORTGAGE is made as of the _____ day of _________________, 1995,
by TRANSEASTERN ABERDEEN PROPERTIES, INC., a corporation duly organized and
existing under the laws of the State of Florida ("Mortgagor"), with an address
at 3300 University Drive, Coral Springs, Florida 33065, in favor of BERKELEY
FEDERAL BANK & TRUST FSB, a federally chartered savings bank ("Mortgagee"), with
an address at 1675 Palm Beach Lakes Boulevard, 10th Floor, West Palm Beach,
Florida 33401, Attention: Secretary.
RECITALS
A. Mortgagee has agreed, pursuant to the terms, conditions, covenants
and provisions of that certain Land Acquisition and Development Loan Agreement
of even date herewith (the "Loan Agreement"), and subject to the terms,
conditions, covenants and provisions set forth therein which are incorporated
herein by this reference, to advance to Mortgagor an acquisition and development
loan in the principal sum of up to Twenty-Three Million Nine Hundred Thousand
and No/100 Dollars ($23,900,000.00) (the "Acquisition and Development Loan" or
"Loan"), to be paid and performed in accordance with the terms, conditions,
covenants and provisions of the Loan Agreement and all other documents
associated therewith and which may now or hereafter evidence, govern and/or
secure the same, together with any renewals, extensions, consolidations or
modifications of all or any of the foregoing (collectively, the "Security
Documents").
B. Mortgagor has duly executed its acquisition and development
promissory note of even date herewith in the amount of the Acquisition and
Development Loan (the "Acquisition and Development Note" or "Note") to evidence
the terms of repayment of the Loan with interest at the rate or rates
established from time to time in accordance with the terms set forth therein,
which Note has been executed and delivered by Mortgagor to Mortgagee.
C. The entire unpaid balance of principal and interest, if not sooner
paid, shall be due and payable upon maturity as set forth in the Note.
D. All things necessary to make the Note the valid, binding and legal
obligation of Mortgagor, and to make this Mortgage a valid, binding and legal
instrument for the security of
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the Note in accordance with its terms, have been duly performed, and the
execution and delivery of the Note and this Mortgage by Mortgagor have been in
all respects duly authorized.
E. It has been agreed that the repayment of the Loan with interest,
according to the terms of the Note and Loan Agreement and any alterations,
modifications, substitutions, extensions or renewals thereof, and future
advances and readvances, as well as the performance of the other covenants,
terms and conditions herein, should be secured by the execution of this
Mortgage, which also shall secure payment by the Mortgagor of all costs and
expenses incurred in respect to the Loan, including reasonable attorneys' fees
as is hereinafter provided.
NOW, THEREFORE, in consideration of the Loan, the premises and of other
good and valuable considerations, the receipt, adequacy and sufficiency of which
are hereby conclusively acknowledged and to secure Mortgagor's payment and
performance under the Security Documents, Mortgagor grants, assigns, conveys,
mortgages and transfers unto Mortgagee, its successors and assigns, in fee
simple, all that land situate in Palm Beach County in the State of Florida, and
more particularly described in Exhibit A attached hereto and made a part hereof,
together with the buildings and improvements thereon erected or to be erected
(the "Premises").
TOGETHER with the following rights:
(a) All interests, estate or other claims, both in law and in equity,
which Mortgagor now has or may hereafter acquire in the Premises, including
without limitation, any and all rights, licenses or easements and appurtenances
in the 203 subdivided and improved lots, and unsubdivided land which has been
approved for 780 single family residential units, together with eight (8) fully
furnished model homes and a 5,000 square foot free standing sales facility with
fixtures and equipment related thereto;
(b) All easements, rights-of-way and rights used in connection
therewith or as a means of access thereto and all tenements, hereditaments and
appurtenances thereof and thereto, and all right, title and interest of
Mortgagor in and to any streets and roads abutting said Premises to the center
lines thereof and in and to any strips or gores of land therein, and all water,
sanitary and storm systems that are now or hereafter located on or adjacent to
the Premises and all gas and oil rights, mineral rights, timber rights and
riparian and littoral rights pertaining to the Premises, and any and all
development rights and permits, and any and all reversions, remainders, rents,
issues and profits thereof, and also all the estate, right, title, interest and
all claim and demand whatsoever, in law and in equity, of Mortgagor in and to
the same, including but not limited to all causes of action of Mortgagor
relating to the property hereby encumbered and all judgments, awards of damages
(including but not limited to severance and consequential damages), payments,
proceeds, settlements or other compensation (collectively, the "Awards")
heretofore or hereafter made, including interest thereon, resulting from, in
connection with or in lieu of: (i) condemnation proceedings or the taking of the
Premises or any part thereof under the power of eminent domain or the police
power; (ii) any damage (whether caused by such taking or otherwise) to the
Premises or the improvements thereon or any part thereof, or to any rights
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<PAGE>
appurtenant thereto; (iii) any change or alteration of the grade of any streets;
or (iv) any other injury or decrease in the value of the Premises or any part
thereof (including, but not limited to destruction or decrease in value by fire
or casualty), all of which Awards, rights thereto and shares therein are hereby
assigned to Mortgagee and Mortgagee is hereby authorized, on behalf and in the
name of Mortgagor, to execute and deliver valid acquittances for, and to appeal
from, any such Awards, and Mortgagee may apply all such sums or any part thereof
so received, after deducting the payment of all of its expenses, including costs
and attorneys' fees, on the indebtedness secured hereby in such manner as it
elects, or at its option, the entire amount or any part thereof so received may
be released to the Mortgagor in the manner and upon such terms and conditions as
Mortgagee may require;
(c) All right title and interest of Mortgagor in and to all furniture,
furnishings, fixtures, machinery, equipment, inventory and materials located on
or attached to the Premises, and all property of every nature or kind
whatsoever, whether deemed to be real or personal property, whether tangible or
intangible, whether or not now or hereafter owned or acquired by the Mortgagor
and located in, on, used or procured for use in connection with the operation of
the Premises, or the buildings, structures or other improvements thereon,
equipment, furniture, furnishings, fixtures, machinery, appliances, and
inventory, all apparatus, chattels, gas and electric fixtures, radiators,
heaters, water pumps, air conditioning equipment, machinery, boilers, ranges,
elevators and motors, bath tubs, sinks, water closets, water basins, pipes,
faucets, and other plumbing and heating fixtures, mantels, refrigerating plants
and ice boxes, window screens, screen doors, venetian blinds, cornices, storm
shutters and awnings, piping, controls, pumps, valves, motors, power units,
wiring, apparatus, machinery and equipment required or necessary for the
utilization or operation thereof, and all elevators, escalators, vaults, safes,
awnings, storm windows and doors, window blinds and shades, inlaid floor
coverings or carpeting, shrubbery, plants, fences, gates, stoves, ranges,
drinking fountains, ventilating, refrigerating, air conditioning, incinerating,
dishwashing and cleaning equipment, wires, irrigation and sprinkler systems
(including overhead or underground systems and all wells, pumps, motors and
power units which are installed as part of same) and all apparatus associated
with the foregoing which are now or may hereafter pertain to or be used with,
in, or on the Premises or any part thereof, even though they be detached or
detachable, including any and all buildings located thereon, or for use in any
construction being conducted on the Premises and/or for the reconstruction,
alteration and/or repair of such improvements now or hereafter erected thereon,
all of which shall be deemed to be included within the Premises immediately upon
delivery thereof to the Premises, and all extensions, additions, improvements,
accessions, betterments, renewals, substitutions or replacements of or to any of
the foregoing, whether or not the same are or shall be attached to said
buildings or improvements in any manner (hereinafter called the "Building
Equipment"), it being understood and agreed that all Building Equipment is part
and parcel of the Premises and appropriated to the use thereof and, whether
affixed or annexed to the Premises or not, shall for the purpose of this
Mortgage be deemed conclusively to be real estate and mortgaged hereby; and
Mortgagor agrees to execute and deliver, from time to time, such further
instruments as may be requested by Mortgagee to confirm the lien of this
Mortgage on any Building Equipment;
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<PAGE>
(d) All right, title and interest of Mortgagor in and to the Building
Equipment, personal property and fixtures, together with the benefit of any
deposits or payments now or hereafter made on such personal property or fixtures
by Mortgagor or on its behalf;
(e) All the right, title and interest (but not the obligations) of
Mortgagor, present and future, in and to all present and future accounts,
contract rights (including all fees and other obligations set forth in the
Mortgagee's commitment to make the Loan), agreements for deed, installment sales
contracts (other than those for the construction of residential units on any
subdivided and improved lot within the Premises), sales contracts (other than
those for the construction of residential units on any subdivided and improved
lot within the Premises), general intangibles, accounts, chattel paper,
receivables, documents and instruments including but not limited to licenses,
construction contracts, labor, materials and suppliers contracts, operating
agreements, management contracts, service contracts, utility contracts, options,
permits, operating authorizations, public works agreements (including, without
limitation, building, sewer, water and other utility agreements), architectural
and engineering agreements, all architectural, engineering and similar plans,
specifications, drawings, reports, surveys, plats, permits, bonds, purchase and
other deposits and payments thereunder, relating or appertaining to the Premises
or the golf and country club commonly referred to as the Aberdeen Golf and
Country Club (the "Golf Club")) and other property described herein and its
development, occupancy and use;
(f) Any and all rights to payment of the sale or rental for the use or
occupancy (transient or otherwise) of rooms or other space, including, without
limitation, Mortgagor's or any affiliate of Mortgagor's interest in the sale of
future club memberships and receipt of consulting, management, marketing and
membership fees, any hotel or motel rooms, meeting, banquet, restaurant,
parking, health, recreational or spa facilities, or for property (tangible or
intangible) sold or leased or for services rendered, whether or not yet earned
by performance, resulting from, arising out of, or in connection with or from
the operation of the improvements or any other facility on the Premises, or the
Golf Club, including, without limitation, (1) all accounts arising from the
operation of the improvements and all proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or intangible) received upon the sale,
exchange, transfer, collection or other disposition or substitution thereof, and
(2) all rights to payment from any consumer credit/charge card organization or
entity, including, without limitation, payments arising from the use of the
American Express Card, Visa Card, Carte Blanche Card, MasterCard, Diner's Club,
or any other credit card, including those now existing or hereafter created or
any substitutions therefor and all proceeds thereof (whether cash or non-cash,
movable or immovable, tangible or intangible) received upon the sale (other than
those for the construction of residential units on any subdivided and improved
lot within the Premises), exchange, transfer, collection, or other disposition
or substitution thereof;
(g) All of the rents, royalties, revenues, income, proceeds, profits
and other benefits paid or payable by parties to the leases or subleases for
using, leasing, licensing, possessing, occupying, operating from, residing in,
selling or otherwise enjoying the Premises, the
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<PAGE>
improvements, and other property securing the indebtedness, or any portion
thereof, including, without limitation, all cash or security deposits, advance
rentals and deposits or payments of similar nature. As used in this Mortgage the
word "leases" includes any and all leases, subleases, licenses, concessions,
reservations, accounts, permits, contracts, and other agreements (oral or
written, now or hereafter in effect) which grant a possessory interest or right
of occupancy in and to, or the right to use, or affect all or part of the
Premises, the improvements, and other property securing the indebtedness, or any
portion thereof;
(h) All of Mortgagor's right, title and interest in and to any and all
payments, proceeds, settlements or other compensation heretofore or hereafter
made, including any interest thereon, and the right to receive the same from any
and all insurance policies covering the Premises or any portion thereof, or any
of the other property described herein;
(i) All of Mortgagor's interest in and to any cash escrow fund, which
funds shall be deposited and held in accordance with all terms, covenants and
provisions of the Loan Agreement (other than those for the construction of
residential units on any subdivided and improved lot within the Premises) and in
any and all funds, securities, instruments, documents and other property which
are at any time paid to, deposited with, under the control of, or in the
possession of Mortgagee, or any of its agents, branches, affiliates,
correspondents or others acting on its behalf, which rights shall be in addition
to any right of set-off or right of lien that Mortgagee may otherwise enjoy
under applicable law, regardless of whether the same arose out of or relates in
any way, whether directly or indirectly, to the Premises;
(j) All interest of Mortgagor in and to any and all funds created or
established and held by Mortgagee pursuant to any indenture of trust or similar
instrument authorizing the issuance of bonds or notes for the purpose of
financing the Project (as such term is defined in the Loan Agreement);
(k) All inventory, including raw materials, components,
work-in-progress, finished merchandise and packing and shipping materials owned
by Mortgagor and located on the Premises;
(l) All proceeds, products, returns, additions, accessions and
substitutions of and to any or all of the above, but not including sale proceeds
of a permitted transfer of the Project;
(m) All of the records and books of account now or hereafter maintained
by or on behalf of Mortgagor in connection with the Project; and
(n) All names now or hereafter used in connection with the Project and
the goodwill associated therewith.
The Premises and all of the property, rights, privileges and franchises
referenced hereinabove and/or granted herein by Mortgagor to Mortgagee, together
with all proceeds,
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products, replacements, additions, substitutions, renewals and accessions of or
to any and all of the foregoing, are collectively referred to as the "Mortgaged
Property."
TO HAVE AND TO HOLD all and singular the Mortgaged Property hereby
conveyed, the tenements, hereditaments and appurtenances thereunto belonging or
in anyway appertaining and the reversion and reversions, remainder and
remainders, rents, issues and profits thereof and all estate, right, title,
interest, property, possession, claim and demand whatsoever, as well in law as
in equity, of the Mortgagor in and to the same and every part and parcel thereof
unto the Mortgagee in fee simple.
PROVIDED, HOWEVER, that these presents are upon the condition that if
Mortgagor shall pay and fully perform the Loan, including, without limitation,
all sums, including, without limitation, the principal and interest, payable in
respect to the Note, Loan Agreement and Security Documents and all amounts and
any other promissory note secured by this Mortgage, at the times and in the
manner stipulated therein and herein, all without any deduction or credit for
taxes or other similar charges paid by Mortgagor, and shall keep, perform and
observe all and singular the terms, conditions, covenants and provisions in the
Note, Loan Agreement and Security Documents, and any renewal, extension,
consolidation or modification thereof and in this Mortgage expressed to be kept,
performed and observed by and on the part of Mortgagor, all without fraud or
delay, then this Mortgage and all properties, interest and rights granted,
mortgaged and conveyed hereby shall cease, terminate and be void, but until the
same shall occur, this Mortgage shall otherwise remain in full force and effect.
ARTICLE I. COVENANTS AND AGREEMENTS OF MORTGAGOR
To protect the security of this Mortgage, Mortgagor further covenants,
warrants and agrees with Mortgagee as follows:
1.1 Title to the Mortgaged Property.
1.1.1 Warranty of Title. Mortgagor covenants that at the time of the
execution and delivery of this Mortgage it has good title to the Mortgaged
Property as being presently granted, assigned, conveyed and transferred
hereunder; Mortgagor hereby warrants generally and shall defend the title to the
Mortgaged Property, and every part thereof, whether now owned or hereafter
acquired, unto Mortgagee, its successors and assigns, against all claims and
demands by any person or entity whatsoever subject only to those matters set
forth in Exhibit B attached hereto and made a part hereof (the "Permitted
Exceptions"); Mortgagor covenants that Mortgagor shall comply with all the
terms, covenants and conditions of all agreements and instruments, recorded and
unrecorded, affecting the Mortgaged Property. Mortgagor further covenants and
warrants to Mortgagee that the Mortgaged Property is free of all liens,
encumbrances, claims and interests of third parties except as reflected in
Exhibit B.
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1.1.2 Identity. Mortgagor has never used any other name (including a
trade name) other than the name set forth in the first paragraph of this
Mortgage, and Mortgagor has not changed its identity or partnership or corporate
structure, as applicable, so as to make the use of Mortgagor's name as set forth
in the first paragraph of this Mortgage in a filed financing statement
materially misleading.
1.1.3 Business of Mortgagor. Mortgagor shall own only the Mortgaged
Property as its sole asset and shall not own or operate any other real property
other than the Mortgaged Property, shall not operate or conduct any business
other than the operation of the Mortgaged Property, nor incur any liability or
obligation other than those incurred in connection with the ownership and
operation of the Mortgaged Property.
1.2 Further Assurances.
1.2.1 Assurances. At any and all times Mortgagor shall furnish and
record all and every such further assurances as may be requisite or as Mortgagee
shall reasonably require for the better assuring and confirming unto Mortgagee
the estate and property hereby granted, assigned, conveyed or transferred, or
intended so to be whether now owned or hereafter acquired; Mortgagor shall bear
all expenses, charges and taxes in connection therewith.
1.2.2 Amendments to Financing Statements. If, at any time, any of the
information contained in any financing statement filed in connection with the
security interests created by this Mortgage, including without limitation, the
description of the collateral, shall change in any manner so as to cause such
financing statement to become misleading in any material respect or to impair
the perfection of the security interests intended to be created by this
Mortgage, then Mortgagor shall immediately advise Mortgagee of such change and,
upon Mortgagee's request, Mortgagor shall promptly prepare any amendments to any
affected financing statement necessary in order to protect and continue the
perfection of the security interest intended to be created thereby, and will
obtain the signatures of the debtor and secured party to such amendment, and
file the same in all offices where such amendment is required to be filed to
order to protect and continue the perfection of the security interest intended
to be created thereby. Mortgagor shall prepare, have executed and file (and
hereby irrevocably constitutes and appoints Mortgagee as its attorney-in-fact to
prepare, execute and file) any amendments to the financing statements filed with
respect to the security interests created by this Mortgage in such form as
Mortgagee may require in order to continue the perfection of such security
interests. Mortgagor shall pay all costs and expenses incurred in connection
with the performance of its obligations set forth in this Section.
1.3 Payment of Note.
1.3.1 Payment. Mortgagor covenants to duly and punctually pay the
principal of and interest, (including, without limitation, Yield Maintenance
Fee, as defined in the Acquisition and Development Note), participation
interest, shared appreciation interest or other additional
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interest, if any), charges and premiums, if any, on the Note and the Loan
Agreement at the date and place and in the manner provided in the Note and shall
otherwise comply with all the terms of the Loan Agreement, Note, this Mortgage
and the Security Documents. The rate of interest may vary from time to time and
portions of the interest may be contingent upon the occurrence of future events.
In the event Mortgagor fails to make any one or more payments on account of the
principal sum or interest thereon, as in the Note and Loan Agreement described,
or fails to pay the entire unpaid balance of the principal sum of the Note, with
interest, charges and premiums, when the same shall become due and payable as
herein or in the Note provided, Mortgagor shall pay to Mortgagee interest on any
overdue payment on account of the principal sum, and interest on any overdue
payment of interest, charges and premiums, at the rate set forth in the Note as
the applicable interest rate after the occurrence of a default (the "Default
Rate"), from the date the same shall become due and payable until the date paid,
and said sums shall become a part of the indebtedness secured hereby.
1.4 Taxes and Insurance.
1.4.1 Covenant to Pay Taxes and Insurance. Mortgagor shall promptly pay
and discharge all taxes (including all recordation, transfer and similar taxes),
water rents, assessments (public and private) and other dues, charges and levies
(collectively hereinafter called "taxes") which have been, are, or may hereafter
be imposed upon or encumber the Mortgaged Property or the Loan and upon payment
thereof will exhibit to Mortgagee, upon demand, the receipted bills therefor;
provided, however, that Mortgagor shall not be required to pay any such taxes,
(a) if the same shall not at the time be due and payable or (b) until fifteen
(15) days prior to the last day upon which the same can be paid without penalty.
Mortgagor shall pay at least quarterly in advance the premiums and other charges
applicable to the insurance required to be maintained by Mortgagor under Section
1.7 hereof and upon payment thereof will exhibit to Mortgagee, upon demand, the
receipted bills therefor.
1.4.2 Escrow for Taxes and Charges.
1.4.2.1 To better secure this covenant and Section 1.7 hereof,
at the option of Mortgagee, Mortgagor shall deposit with Mortgagee on the day of
each month on which a payment of interest is due under the Note, one-twelfth of
the annual taxes next due as estimated by Mortgagee, plus one-twelfth of the
annual fire, hazard and other insurance premiums as required herein, such
deposit to be held by Mortgagee, without interest, to pay said taxes and
premiums. If payments of interest are due under the Note other than monthly,
appropriate adjustment shall be made in the amount of the aforesaid periodic
deposits.
1.4.2.2 In the event the Premises is part of a larger tract
for purposes of taxation and assessments, Mortgagee may require Mortgagor to
have the Premises taxed and assessed as a separate parcel or separate parcels,
or, in the alternative, to make the deposits required under this Section based
upon the taxation and assessment of the larger tract.
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1.4.2.3 Any amounts deposited pursuant to the provisions of
this Section shall not be, nor be deemed to be, trust funds, nor shall they
operate to curtail or reduce the indebtedness secured hereby, and all such
amounts may be commingled with the general funds of the depositor and be
deposited at the Mortgagee or at an institution designated by Mortgagee;
provided, however, that Mortgagee shall keep accurate records with respect to
any amounts so deposited. Mortgagee shall not be responsible for the solvency of
such institution, provided it is insured by the Federal Deposit Insurance
Corporation or other regulatory agency at the time of designation. If at any
time Mortgagee shall determine that the amount then on deposit shall be
insufficient to pay an obligation in full, Mortgagor shall immediately after
demand deposit with Mortgagee the amount of the deficiency determined by
Mortgagee. Nothing contained in this Section shall be deemed to affect any right
or remedy of Mortgagee under any provisions of this Mortgage or of any statute
or rule of law to pay any such amount and to add the amount so paid, together
with interest at the rate provided for in the Note, to the indebtedness secured
hereby.
1.4.2.4 Change in Tax Law. In the event of the passage of any
law after the date of this Mortgage, which law changes in any way the laws for
the taxation of deeds of trust or debts secured by deeds of trust, or the manner
of collection of any such taxation so as to affect this Mortgage, Mortgagee may
give thirty (30) days' written notice to Mortgagor requiring the payment of the
indebtedness secured hereby. If such notice be given, the indebtedness secured
hereby shall become due and payable at the expiration of said thirty (30) days;
provided, however, that such requirement of payment shall be ineffective if
Mortgagor is permitted by law to pay the whole of such tax in addition to all
other payments required hereunder, without any penalty or charge thereby
accruing to Mortgagee, and if Mortgagor in fact pays such tax prior to the date
upon which payment is required by such notice.
1.4.2.5 Tax on Personal Property. Mortgagor shall furnish to
Mortgagee a list identifying all personal property owned by Mortgagor, including
a copy of Mortgagor's annual personal property return at the time such form is
filed. Mortgagor shall furnish written evidence to Mortgagee, upon demand by
Mortgagee at any time and at least once each year, of the amount of taxes that
are due and that they have been paid (a) at the time when they were due and
payable or (b) at least fifteen (15) days prior to the last day upon which the
same could have been paid without penalty.
1.5 Maintenance of the Mortgaged Property.
1.5.1 Repair; Inspection. Mortgagor (a) shall repair, restore, replace
or rebuild any part of the Mortgaged Property that is damaged or destroyed by
casualty or the remainder after a taking by eminent domain proceedings whether
or not covered by insurance or award; (b) shall keep the Mortgaged Property in
good order, condition and repair, and shall not commit, permit or suffer any
waste thereof; (c) shall make all needful and proper renewals, replacements and
additions of and to the same and shall permit Mortgagee or its designee to enter
upon and inspect the Mortgaged Property at any time or times; (d) shall not
alter or tear down the improvements on or to be made on the Premises or change
them nor permit them to be torn down or changed,
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without the written consent of Mortgagee; and (e) shall not make or permit
tenants or others to make any improvements to or on the Mortgaged Property,
without the written consent of Mortgagee.
1.5.1.1 Activities on Mortgaged Property. Mortgagor shall not
suffer any act to be done or any conditions to exist on the Mortgaged Property
or any part thereof or any thing or article to be brought thereon (i) which may
cause structural injury to the improvements on the Premises; or (ii) which would
cause the value or usefulness of the Mortgaged Property or any part thereof to
diminish (ordinary wear and tear excepted); or (iii) which may be dangerous,
unless safeguarded as required by law; or (iv) which may in fact or in law,
constitute a nuisance, public or private; or (v) which may void or make voidable
any insurance then in force or required by the terms of this Mortgage to be in
force. Mortgagor shall observe and comply with all conditions and requirements
necessary to preserve and extend any and all rights, licenses, permits,
privileges, franchises and concessions that are now applicable to the Mortgaged
Property.
1.5.2 Non-alienation. It is understood and agreed by Mortgagor that as
part of the inducement to Mortgagee to make the Loan, Mortgagee has relied upon
the creditworthiness and the reliability of Mortgagor. Mortgagor shall not sell,
convey, transfer, lease or further encumber any interest in or any part of the
Mortgaged Property without the prior written consent of the Mortgagee having
been obtained (which consent may be expressly set forth in the Loan Documents).
Any such sale, conveyance, transfer, pledge, lease or encumbrance made without
the Mortgagee's prior written consent shall constitute an Event of Default
hereunder. Any sale, conveyance or transfer of any interest in the Mortgagor to
any other entity, individual, firm, partnership or corporation without the
Mortgagee's prior written consent shall constitute an Event of Default
hereunder. Mortgagee's consent may be withheld in its absolute and sole
discretion, or it may be conditioned upon a number of actions to be determined
in Mortgagee's sole discretion, including, but not limited to, a determination
of the transferee's creditworthiness, the payment of an assumption fee and
associated costs and expenses, and a modification of the Note, Loan Agreement,
this Mortgage, the Security Documents, and any all terms and provisions thereof.
A contract to deed or an agreement for deed or an assignment of beneficial
interest in any trust shall constitute a transfer pursuant to the provisions of
this Section. If any person or entity should obtain any interest in all or any
part of the Mortgaged Property, pursuant to execution or enforcement of any
lien, security interest or other right whether superior, equal or subordinate to
this Mortgage or the lien hereof, such event shall be deemed to be a transfer by
Mortgagor and an Event of Default under this Mortgage. Notwithstanding anything
to the contrary set forth in this Section 1.5.2, Mortgagor and Mortgagee have
agreed that the Mortgaged Property may be further encumbered by financing in
favor of Ohio Savings Bank, F.S.B. ("Ohio Lender") subject to the terms of the
Loan Agreement.
1.5.3 Construction. Mortgagor shall promptly proceed to construct and
erect the buildings and improvements on the Premises in accordance with the
plans and specifications
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therefor filed with and approved by Mortgagee and shall comply with all of the
requirements of the Loan Agreement.
1.6 Encumbrances; Compliance with Laws.
1.6.1 Real Property. Mortgagor (a) shall keep the Mortgaged Property
free from all liens, claims, and other encumbrances of every kind except for
financing in favor the Ohio Lender subject to the terms of the Loan Agreement
and as reflected in Exhibit B, and (b) shall promptly and faithfully comply with
and obey all laws, ordinances, rules, regulations, requirements and orders of
every duly constituted governmental authority or agent having jurisdiction in
the premises with respect to the Mortgaged Property. In the event Mortgagee
consents to an encumbrance on the Mortgaged Property, a default under the terms
of any document creating such an encumbrance shall be a default hereunder.
1.6.2 Personal Property. Mortgagor shall not, without the prior written
permission of Mortgagee, place any personal property upon the Mortgaged Property
or any part thereof or attach any fixture that is subject to a title retention
agreement, security agreement, or other encumbrance, whether said lien or
interest is prior to the legal operation and effect of this Mortgage or
subsequent thereto, nor shall Mortgagor place or permit to be placed any
personal property upon the Mortgaged Property or any part thereof, other than
the personal property of Mortgagor or any tenant actually occupying all or part
of the Mortgaged Property.
1.7 Insurance; Restoration.
1.7.1 Required Insurance. Mortgagor shall at all times maintain in full
effect "all-risk" property insurance covering all improvements now or hereafter
erected on the Premises (hereinafter referred to as the "Improvements") under
forms approved by Mortgagee and by companies that meet the criteria specified in
subsection 1.7.12. Such insurance shall cover all risks of direct physical loss
to the Improvements, including but not limited to all loss or damage caused by
fire, lightning, explosion, windstorm, hail, smoke, aircraft, vehicles, riot or
civil commotion, vandalism, malicious mischief, sprinkler leakage, weight of
snow, ice or sleet, water damage, earthquake, wind and hurricane damage,
explosion and sinkhole, mudslide collapse. Such property insurance shall contain
an agreed amount endorsement and, in any event, be written in amounts sufficient
to prevent Mortgagor from becoming co-insurer within the terms of the policies
covering such risks, and in any event in amounts not less than One hundred
percent (100%) of the replacement value of the Improvements, including all
contents, fixtures, machinery, equipment and furnishings to the extent
obtainable. Mortgagor shall require annually the fire underwriters rating
bureau, or equivalent organization acceptable to Mortgagee, to establish a value
for the then existing Improvements (i.e., any models and sales facilities) and
to furnish an executed copy thereof to Mortgagee. Further, Mortgagor shall
maintain insurance equal to the full replacement value of all personal property
of Mortgagor. Mortgagor shall cause a non-contributing Standard New York
Mortgagee Clause satisfactory to Mortgagee to be attached to each such policy
providing that all payments thereunder shall be made to the sole
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order of Mortgagee as its interest may appear, and a clause providing that such
policy may not be surrendered, canceled or modified without thirty (30) days'
prior written notice to Mortgagee. During any construction, repair, restoration
or replacement of Improvements, to the extent obtainable, Mortgagor shall obtain
and keep in effect a standard builder's risk policy with extended coverage in
the amount of one hundred percent (100%) of the value of the Improvements, with
a non-contributing mortgagee clause and non-surrender, non-cancellation,
non-modification clause as aforesaid, together with all standard construction
industry clauses and endorsements and such other clauses and/or endorsements as
Mortgagee may from time to time require, including, without limitation,
endorsements (i) for replacement cost (without deduction for depreciation), (ii)
demolition and debris removal, (iii) increased costs of construction, (iv)
ordinance deficiency (if the Mortgaged Property is a non-conforming use or of
significant age) and (v) agreed cost or stipulated value, and all such insurance
shall be written in such manner as is approved by Mortgagee and by such
companies that meet the criteria specified in subsection 1.7.12.
1.7.2 Application of Proceeds. In the event any sum or sums are
received by Mortgagee by reason of any such insurance as aforesaid, Mortgagee
may, at its option, apply whatever sums are received either to the repair,
restoration and replacement of the damaged or destroyed property (without
obligation to see the sums are so applied) or toward the payment of the
indebtedness secured hereby (in such manner or combination thereof including
inverse order of maturity of installments, if any, as Mortgagee, in its sole
discretion, may elect).
1.7.3 Unearned Premiums. In the event of a foreclosure sale of the
Mortgaged Property or part thereof or other transfer of title to the Mortgaged
Property in lieu of foreclosure Mortgagee is authorized, but not obligated, to
cancel any or all of the aforesaid policies, and any unearned premium or
premiums returned shall be applied to the payment of the indebtedness secured
hereby.
1.7.4 Comprehensive Commercial General Liability. Mortgagor shall at
all times keep itself insured against liability for damages arising from any
accident or casualty in or upon the Mortgaged Property by maintaining
comprehensive commercial general liability insurance, written on an occurrence
basis, with coverage of at least One Million Dollars ($1,000,000) per occurrence
and Two Million Dollars ($2,000,000) in the aggregate. Such liability insurance
shall include broad form endorsement coverage, including blanket contractual
liability, products completed operations, independent contractors, broad form
property damage and personal injury coverage.
1.7.5 Umbrella/Excess Liability Insurance. Mortgagor shall carry, keep
and maintain at all times umbrella/excess liability insurance in an amount not
less than Five Million Dollars ($5,000,000) per occurrence and Five Million
Dollars ($5,000,000).
1.7.6 Business Interruption Insurance. To the extent obtainable at
reasonable risk rates, Mortgagor shall at all times maintain in full force and
effect business interruption or loss of rent
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insurance in the event the Improvements are damaged and any tenants are thereby
excused from paying rent in an amount equal to or in excess of the annual rent
roll for the Mortgaged Property and must otherwise be acceptable to Mortgagee
and under forms and by companies approved by Mortgagee. The insurance must
include an excess rental value endorsement covering losses due to renting the
Improvements at lower rates after a casualty related to cancellation of leases
with a higher rental rate.
1.7.7 Comprehensive Automobile Liability Insurance. Mortgagor shall
carry, keep and maintain at all times comprehensive automobile liability
insurance (including owned, non-owned, leased and hired car coverage) in an
amount not less than One Million Dollars ($1,000,000) per occurrence and Two
Million Dollars ($2,000,000) in the aggregate for bodily injury and in such
amounts as may be approved by Mortgagee for property damage. This insurance
shall apply among other things to all operations of Mortgagor both at and away
from the Mortgaged Property.
1.7.8 Flood Insurance. To the extent obtainable, Mortgagor shall at all
times maintain in full force and effect flood insurance coverage in the face
amount of the Loan or such lesser amount as shall be acceptable to Mortgagee,
issued by a company acceptable to Mortgagee, which policy must be in form and
substance satisfactory to Mortgagee and also must comply with all the
requirements, if applicable, of the Flood Disaster Protection Act of 1973 and
the regulations issued pursuant thereto. This requirement is waived during any
period in which Mortgagor provides Mortgagee, upon demand from time to time,
with written evidence, in form and substance satisfactory to Mortgagee, that no
part of the Mortgaged Property has been designated as having moderate or special
flood hazards or mudslide hazards.
1.7.9 Delivery of Policies. Mortgagor shall deliver all such policies
(or certificates with an endorsement showing the Mortgagee as first mortgagee
and a non-surrender, non-cancellation, and non-modification clause in form and
substance acceptable to Mortgagee) to Mortgagee at its principal office or at
such other place as it may designate in writing, and shall likewise deliver to
Mortgagee renewals of such policies (or certificates as aforesaid) thirty (30)
days in advance of the expiration of the same, stamped "Paid" by the agent or
company issuing same.
1.7.10 Notification of Loss. Mortgagor shall notify Mortgagee of any
casualty or loss within twenty-four (24) hours after Mortgagor has knowledge
thereof.
1.7.11 Workers' Compensation. During any construction, repair,
restoration or replacement of Improvements, Mortgagor shall cause all
contractors and subcontractors (including Mortgagor if it acts as a contractor)
to obtain and keep in effect workers' compensation insurance to the full extent
required by applicable law and also which shall cover all employees of each
contractor and subcontractor; upon demand, Mortgagor shall provide evidence
satisfactory to Mortgagee that it is complying with this covenant. Mortgagor
shall also maintain employer's liability insurance in an amount not less than
Five Hundred Thousand Dollars ($500,000).
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1.7.12 Insurance Ratings. All policies required hereunder shall be
placed with insurers with a rating of A or better and a financial size rating of
XIV or larger from Best's Key Rating Guide.
1.8 Leases and Agreements of the Mortgaged Property
1.8.1 Compliance with Leases. Mortgagor shall carry out all of its
agreements and covenants as landlord contained in any leases (which word when
used in this Mortgage shall include, without limitation, all agreements,
licenses, contracts, reservations, accounts, and permits affecting all or any
part of the Mortgaged Property or any use or occupancy thereof) and not permit a
lien or other encumbrance superior to such leases other than this Mortgage. No
lease shall include any space, or grant to any tenant any right or interest in
any area outside of the limits of the Mortgaged Property. Upon demand of
Mortgagee, Mortgagor shall furnish Mortgagee an executed copy of each lease
immediately upon its execution. All future leases shall be written on the
standard form accepted by Mortgagee, with only such changes as Mortgagee shall
have approved in writing or on a lease agreement approved by Mortgagee.
1.8.2 Assignment of Leases. Mortgagor hereby assigns and transfers to
Mortgagee all leases, subleases, rents, issues and profits of the Mortgaged
Property. Mortgagor hereby irrevocably appoints Mortgagee its true and lawful
attorney-in-fact, at the option of Mortgagee, at any time and from time to time,
to demand, receive and enforce payment, give receipts, releases and
satisfactions, and to sue, in the name of Mortgagor or Mortgagee, for all such
rents, issues and profits. Mortgagor, however, shall have the right to collect
such rents, issues and profits [but not more than two (2) months in advance]
prior to or at any time there is not an Event of Default under this Mortgage.
The assignment of leases, subleases, rents, issues and profits of the Mortgaged
Property in this Section is intended to confirm unto Mortgage all of the rights
and protections afforded thereto under and by virtue of Section 697.07, Florida
Statutes (1994), as amended, it being further intended to operate as an absolute
assignment, not merely the passing of a security interest, to the fullest extent
permissible by Florida law. If required by Mortgagee, Mortgagor will
specifically assign to Mortgagee all such leases whether now existing or
hereafter created.
1.8.3 Collection upon Default. In addition to the rights and
protections afforded to Mortgagee by Section 697.07 Florida Statutes (1994), as
amended (and not as an election of remedies), Mortgagee may, upon any Event of
Default under this Mortgage, and at any time without notice, and either in
person, by agent or by a receiver appointed by the court, and without regard to
the adequacy of any security for the indebtedness hereby secured, enter upon and
take possession of the Mortgaged Property or any part thereof. Mortgagee may, in
its own name, sue for or otherwise collect such rents, issues, and profits,
including those past due and unpaid, and apply same less costs and expenses of
operation and collection, including litigation expenses, court costs, costs of
suit, cost of an abstract of title and other title evidence and attorneys' fees,
and paralegal charges, including all appellate proceedings and disbursements,
upon any
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indebtedness secured hereby and in such order as Mortgagee may determine. The
collection of such rents, issues and profits or the entering upon and taking
possession of the Mortgaged Property, or application thereof as aforesaid, shall
not cure or waive any default or notice of default hereunder or invalidate any
act done in response to such default or pursuant to such notice of default, or
otherwise invalidate, impair, nullify, waive or extinguish the rights and
protections afforded Mortgagee under Section 697.07, Florida Statutes (1994), as
amended. Furthermore, and as provided by Section 697.07, Florida Statutes,
(1994) as amended, upon the occurrence of an Event of Default, Mortgagee may
apply for a court order requiring Mortgagor to deposit all rents in the court
registry pursuant to Section 697.07, Florida Statutes, as amended. Mortgagor
hereby consents to entry of such an order upon the sworn ex parte motion of
Mortgagee that an Event of Default has occurred hereunder.
1.8.4 Leases Affecting Mortgaged Property. Mortgagor will comply with
and observe its obligations as landlord under all leases affecting the Mortgaged
Property or any part thereof, whether now in existence or entered into in the
future. Mortgagor will furnish Mortgagee with executed copies of all leases now
or hereafter created on the Mortgaged Property, pursuant to the terms of Section
1.15 below. All leases now or hereafter entered into will be in form and
substance acceptable to Mortgagee. Other than may be reasonably necessary in the
ordinary course of Mortgagor's business, Mortgagor will not modify, surrender,
or terminate, either orally or in writing, any lease agreement now existing or
hereafter created upon the Mortgaged Property, nor will Mortgagor permit an
assignment or sublease thereof without the express prior written consent of
Mortgagee, which consent shall not be unreasonably withheld.
1.8.5 Other Liens. Mortgagor represents and warrants that it will
perform and promptly fulfill all of the covenants contained in any approved
superior or approved inferior mortgages on any and all of the Premises
encumbered hereby. In the event Mortgagor shall fail to do so, Mortgagee may, in
addition to the rights otherwise granted Mortgagee hereunder, at its election,
perform or fulfill such covenants of any such approved superior or approved
inferior mortgages without affecting its option to foreclose any of the rights
hereunder, and the cost thereof, together with interest from the date of payment
at the highest rate permitted by Florida law from the date incurred until paid
by Mortgagor, shall be secured hereby. The failure of Mortgagor to pay any
approved superior or approved inferior mortgages when due, and in accordance
with their terms or within any applicable cure period, or the failure by
Mortgagor to abide by the terms and conditions of any approved superior or
approved inferior mortgages within any applicable cure periods, shall be deemed
a breach of this Mortgage, and the Mortgagee, at its option, may immediately, or
thereafter, declare this Mortgage, an all indebtedness hereby secured, to be
immediately due and payable. Mortgagor shall not apply for, accept, or cause to
be made future advances under any superior or inferior mortgages so long as this
Mortgage, encumbering the Mortgaged Property, remains in force. Mortgagor
acknowledges and agrees that, in the event it breaches this covenant, same shall
be an Event of Default under this Mortgage and in such event Mortgagee shall
have the right to exercise any and all of its rights and remedies provided for
herein, including, without limitation, as further provided under Florida law.
Nothing in this Section shall be construed to waive the prohibition of further
encumbering the Mortgaged
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Property without Mortgagee's prior consent. Mortgagor covenants that the holder
of any subordinate lien shall have no right, and shall acquire no right, to
terminate or modify any lease affecting the Mortgaged Property whether or not
such lease is subordinate to the legal operation and effect of this Mortgage.
1.8.6 Deposit of Rents. All payments, including security deposits,
under any lease received by Mortgagor shall be deemed held by Mortgagor in trust
for the payment of the indebtedness secured hereby. Mortgagor shall deposit in a
non-interest bearing account or accounts with Mortgagee all payments made under
all leases, which sums, subject to the rights of the tenants therein, may be
used by Mortgagor in the ordinary course of Mortgagor's business to the extent
permitted by law, until one or more of the Events of Default shall occur, but
not thereafter.
1.8.7 Assignment of Bankruptcy Awards. Mortgagor hereby assigns to
Mortgagee any award made hereafter to it in any court procedure involving any of
the tenants in any bankruptcy, insolvency or reorganization proceeding in any
state or federal court and any and all payments by any tenant in lieu of rent.
1.8.8 Limitation of Liability under Leases. Mortgagee shall not be
obligated to perform or discharge any obligation or duty to be performed or
discharged by Mortgagor under any lease; and Mortgagor hereby agrees to
indemnify Mortgagee for and to save Mortgagee harmless from, any and all
liability arising from any lease, or this assignment thereof and this assignment
shall not place the responsibility for the control, care, management or repair
of the Mortgaged Property upon Mortgagee, nor make Mortgagee liable for any
negligence in the management, operation, upkeep, repair or control of the
Mortgaged Property resulting in loss or injury or death to any tenant, agent,
guest, or stranger.
1.8.9 Security Deposits. Mortgagor shall deposit in an account or
accounts with Mortgagee or its designee, under the depository's standard program
for such accounts, all security deposits made under residential leases which
sums, subject to the rights of the tenants therein, may be used by Mortgagor in
the ordinary course of Mortgagor's business to the extent permitted by law,
until one or more of the Events of Default shall occur, but not thereafter. All
such deposits shall be the continuing responsibility of Mortgagor, and Mortgagor
shall comply with all applicable requirements of Florida law. Deposits under
agreements for deed, installment sales contracts (other than those for the
construction of residential units or any subdivided and improved lot within the
Premises) ("Sales Agreements") shall be deposited and held in accordance with
the terms of the Loan Agreement.
1.8.10 Compliance with Agreements. Mortgagor shall carry out all of its
agreements and covenants as relating to all consulting, management and marketing
agreements, licenses, Sales Agreements, contracts, reservations, accounts, and
permits affecting all or any part of the Mortgaged Property and not permit a
lien or other encumbrance superior to such agreements other than this Mortgage.
Upon demand of Mortgagee, Mortgagor shall furnish Mortgagee an
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executed copy of each agreement immediately upon its execution. All future
agreements shall be written on a form accepted by Mortgagee, with only such
changes as Mortgagee shall have approved in writing or on a agreement approved
by Mortgagee.
1.8.11 Assignment of Agreements. Mortgagor hereby assigns and transfers
to Mortgagee all consulting, managementand marketing agreements, licenses, Sales
Agreements, contracts (other than those for the construction of residential
units on any subdivided and improved lot within the Premises), reservations,
accounts, permits and franchises of the Mortgaged Property and all revenues
generated from such consulting, management and marketing agreements, licenses,
Sales Agreements, contracts, reservations, accounts, permits and franchises.
Mortgagor hereby irrevocably appoints Mortgagee its true and lawful
attorney-in-fact, at the option of Mortgagee, at any time and from time to time,
to demand, receive and enforce payment, give receipts, releases and
satisfactions, and to sue, in the name of Mortgagor or Mortgagee, for all such
consulting, management and marketing agreements, licenses, Sales Agreements,
contracts, reservations, accounts, permits, franchises, rents, issues and
profits. Mortgagor, however, shall have the right to collect such issues and
profits prior to or at any time there is not an Event of Default under this
Mortgage. The assignment of consulting, management and marketing agreements,
licenses, Sales Agreements, contracts, reservations, accounts, permits,
franchises, rents, issues and profits of the Mortgaged Property in this Section
is intended to operate as an absolute assignment, not merely the passing of a
security interest, to the fullest extent permissible by Florida law. If required
by Mortgagee, Mortgagor will specifically assign to Mortgagee all such
agreements whether now existing or hereafter created.
1.8.12 Collection upon Default. Upon any Event of Default under this
Mortgage, Mortgagee may, in its own name, sue for or otherwise collect such
revenues generated by all consulting, management and marketing agreements,
licenses, Sales Agreements, contracts (other than those for the construction of
residential units on any subdivided and improved lot within the Premises),
reservations, accounts, permits and franchises of the Mortgaged Property (the
"Revenues"), including those past due and unpaid, and apply same less costs and
expenses of operation and collection, including litigation expenses, court
costs, costs of suit, cost of an abstract of title and other title evidence and
attorneys' fees, and paralegal charges, including all appellate proceedings and
disbursements, upon any indebtedness secured hereby and in such order as
Mortgagee may determine. The collection of such Revenues or application thereof
as aforesaid, shall not cure or waive any default or notice of default hereunder
or invalidate any act done in response to such default or pursuant to such
notice of default, or otherwise invalidate, impair, nullify, waive or extinguish
the rights and protections afforded Mortgagee under Florida law. Furthermore,
upon the occurrence of an Event of Default, Mortgagee may apply for a court
order requiring Mortgagor to deposit all Revenues in the court registry.
Mortgagor hereby consents to entry of such an order upon the sworn ex parte
motion of Mortgagee that an Event of Default has occurred hereunder.
1.8.13 Limitation of Liability under Agreements. Mortgagee shall not be
obligated to perform or discharge any obligation or duty to be performed or
discharged by Mortgagor under
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any consutling, management and marketing agreements, licenses, Sales Agreements,
contracts (other than those for the construction of residential units on any
subdivided and improved lot within the Premises), reservations, accounts,
permits and franchises of the Mortgaged Property; and Mortgagor hereby agrees to
indemnify Mortgagee for and to save Mortgagee harmless from, any and all
liability arising from any consulting, management and marketing agreements,
licenses, Sales Agreements, contracts, reservations, accounts, permits and
franchises of the Mortgaged Property, or this assignment thereof and this
assignment shall not place the responsibility for the control, care, management
or repair of the Mortgaged Property upon Mortgagee, nor make Mortgagee liable
for any negligence in the management, operation, upkeep, repair or control of
the Mortgaged Property resulting in loss or injury or death to any tenant,
agent, guest, or stranger.
1.9 Environmental Matters.
1.9.1 No Substances Present. Mortgagor hereby represents and warrants
to Mortgagee that there are not now and have never been any materials or
substances located on or near the Mortgaged Property that, under federal, state,
or local law, statute, ordinance, or regulation, or administrative or court
order or decree, or private agreement (collectively, the "Environmental Laws"),
are regulated as to use, generation, collection, storage, treatment, or disposal
(such materials or substances are hereinafter collectively referred to as
"Substances"). The term "Substances" includes any materials or substances whose
release or threatened release may pose a risk to human health or the environment
or impairment of property values and shall also include without limitation (i)
asbestos in any form, (ii) urea formaldehyde foam insulation, (iii) paint
containing lead, (iv) transformers or other equipment which contains dielectric
fluid containing levels of polychlorinated biphenyl of 50 parts per million or
more, and (v) petroleum in any form. Mortgagor further represents and warrants
to Mortgagee that the Mortgaged Property is not now being used nor has it ever
been used in the past for any activities involving the use, generation,
collection, storage, treatment, or disposal of any Substances. Mortgagor will
not place or permit to be placed any Substances on or near the Mortgaged
Property except for those Substances that are approved in writing by Mortgagee.
1.9.2 Acting Upon Presence of Substances. Mortgagor hereby covenants
and agrees that, if at any time (i) Substances are spilled, emitted, disposed,
or leaked in any amount; or (ii) it is determined that there are Substances
located on, in, or under the Premises other than those of which Mortgagee has
approved in writing or which are permitted to be used on the Premises without
Mortgagee's written approval pursuant to subsection 1.9.1 of this Section,
Mortgagor shall immediately notify Mortgagee and any authorities required by law
to be notified, and shall, within thirty (30) days thereafter or sooner if
required by Mortgagee or any governmental authority, take or cause to be taken,
at Mortgagor's sole expense, such action as may be required by Mortgagee or any
governmental authority. If Mortgagor shall fail to take such action, Mortgagee
may make advances or payments towards performance or satisfaction of the same
but shall be under no obligation so to do; and all sums so advanced or paid,
including all sums advanced or paid in connection with any investigation or
judicial or administrative proceeding
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relating thereto, including, without limitation, reasonable attorneys' fees,
expert fees, fines, or other penalty payments, shall be at once repayable by
Mortgagor and shall bear interest at the Default Rate, from the date advanced or
paid by Mortgagee until the date paid by Mortgagor to Mortgagee, and all sums so
advanced or paid, with interest as aforesaid, shall become a part of the
indebtedness secured hereby.
1.9.3 Environmental Audits. Mortgagor, promptly upon the written
request of Mortgagee from time to time, shall provide Mortgagee, at Mortgagor's
expense, from time to time with an environmental site assessment or
environmental audit report relating to the Mortgaged Property, or an update of
such an assessment or report, all in scope, form, and content satisfactory to
Mortgagee.
1.9.4 Environmental Notices. Mortgagor shall furnish to Mortgagee
duplicate copies of all correspondence, notices, or reports it receives from any
federal, state, or local agency or any other person regarding environmental
matters or Substances at or near the Mortgaged Property, immediately upon
Mortgagor's receipt thereof.
1.9.5 Condition of Mortgaged Property. To the best of Mortgagor's
knowledge after due and diligent inquiry, Mortgagor hereby represents and
warrants that there are no wells or septic tanks on the Mortgaged Property
serving any other property; no wells or septic tanks on other property serving
the Mortgaged Property; no burial grounds, archeological sites, or habitats of
endangered or threatened species on the Mortgaged Property; and that no part of
the Mortgaged Property is subject to tidal waters; has been designated as
wetlands by any federal, state, or local law or governmental agency; or is
located in a special flood hazard area.
1.9.6 Environmental Indemnity.
1.9.6.1 Mortgagor shall at all times indemnify and hold
harmless Mortgagee against and from any and all claims, suits, actions, debts,
damages, costs, losses, obligations, judgments, charges, and expenses, of any
nature whatsoever suffered or incurred by Mortgagee, whether as beneficiary of
this Mortgage, as mortgagee in possession, or as successor-in-interest to
Mortgagor by foreclosure deed or deed in lieu of foreclosure, under or on
account of the Environmental Laws or any similar laws or regulations, including
the assertion of any lien thereunder, with respect to:
(a) any discharge of Substances, the threat of a
discharge of any Substances, or the presence of any Substances
affecting the Mortgaged Property whether or not the same
originates or emanates from the Premises or any contiguous
real estate including any loss of value of the Mortgaged
Property as a result of any of the foregoing;
(b) any costs of removal or remedial action incurred
by any state or the United States Government or any costs
incurred by any other person or damages
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from injury to, destruction of, or loss of natural resources,
including reasonable costs of assessing such injury,
destruction or loss incurred pursuant to any Environmental
Laws;
(c) liability for personal injury or property damage
arising under any statutory or common law tort theory,
including, without limitation, damages assessed for the
maintenance of a public or private nuisance or for the
carrying on of an abnormally dangerous activity at or near the
Premises; and/or
(d) any other environmental matter affecting the
Mortgaged Property within the jurisdiction of the
Environmental Protection Agency, any other federal agency, or
any state or local environmental agency.
Mortgagor's obligations under this agreement shall arise upon
the discovery of the presence of any Substance, whether or not the Environmental
Protection Agency, any other federal agency or any state or local environmental
agency has taken or threatened any action in connection with the presence of any
Substances.
1.9.6.2 Mortgagor acknowledges that Mortgagee has agreed to
make the Loan in reliance upon Mortgagor's representations, warranties and
covenants in this Section 1.9. For this reason, it is the intention of Mortgagor
and Mortgagee that the provisions of this Section 1.9 shall supersede any
provisions in any of the Security Documents, Loan Agreement, Note and other loan
documents executed by Mortgagor or any guarantor in connection with the Loan
(collectively, the "Loan Documents") that in any way limit the personal
liability of Mortgagor and that Mortgagor shall be personally liable for any
obligations arising under this Mortgage even if the amount of liability incurred
exceeds the amount of the Loan. All of the representations, warranties,
covenants and indemnities of this Section 1.9 shall survive the repayment of the
Note and/or the release of the operation and effect of this Mortgage and shall
survive the transfer of any or all right, title and interest in and to the
Mortgaged Property by Mortgagor to any party, whether or not affiliated with
Mortgagor.
1.10 Additional Advances.
If Mortgagor shall fail to perform any of the covenants or satisfy any
of the conditions contained herein, Mortgagee may make advances or payments
towards performance or satisfaction of the same but shall be under no obligation
so to do; and all sums so advanced or paid shall be at once repayable by
Mortgagor and shall bear interest at the Default Rate from the date the same
shall become due and payable until the date paid, and all sums so advanced or
paid, with interest as aforesaid, shall become a part of the indebtedness
secured hereby; but no such advance or payment shall relieve Mortgagor from any
default hereunder. If Mortgagor shall fail to perform any of the covenants or
satisfy any of the conditions contained herein, Mortgagee may use any funds of
Mortgagor, including any funds held on deposit under Section 1.4 hereof, towards
performance or satisfaction of the same but shall be under no obligation so to
do; and no
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such use of funds shall relieve Mortgagor from any default hereunder including
the obligation to keep on deposit sufficient funds as required by Section 1.4.
1.11 Condemnation Awards.
1.11.1 Should the Mortgaged Property or any part thereof or interest
therein, be taken or damaged by reason of any public use or improvement or
condemnation proceeding or in any other manner, or should the grade of any
street be altered (collectively, "Condemnation") or should Mortgagor receive any
notice or information regarding such Condemnation, Mortgagor shall give prompt
written notice thereof to Mortgagee.
1.11.2 Mortgagee shall be entitled to all awards, compensation, and
other payment or relief granted in connection with such Condemnation and shall
be entitled, at its option, to appear in its own name or the Mortgagor's name,
in any action or proceeding relating thereto. In the event of such an
appearance, Mortgagor agrees to pay reasonable attorneys' fees incurred by
Mortgagee. All compensation, awards, damages, rights of action and proceeds
awarded to Mortgagor (the "Proceeds") are hereby assigned to Mortgagee and
Mortgagor agrees to execute such further assignments of the Proceeds as
Mortgagee may require.
1.11.3 In the event any portion of the Mortgaged Property is so taken
or damaged, Mortgagee shall have the option in its sole and absolute discretion
to apply all such Proceeds, after deducting therefrom all costs and expenses
(regardless of the particular nature thereof or whether incurred with or without
suit), including attorneys' fees incurred by it in connection with such
Proceeds, upon any indebtedness secured hereby, or apply all such Proceeds after
such deductions to the restoration of the Mortgaged Property upon such
conditions as Mortgagee may determine. Such application or release shall not
cure or waive any default or notice of default hereunder or invalidate any
action done pursuant to such notice.
1.11.4 Any amounts received by Mortgagee hereunder (after payment of
any costs in connection with obtaining same) shall, if retained by Mortgagee, be
applied in the same order as set forth in Section 6 of the Acquisition and
Development Note secured hereby, notwithstanding that same may not then be due
and payable.
1.12 Costs of Defending and Enforcing the Lien.
Mortgagor shall pay all costs, charges and expenses, including
appraisals, title examinations, and reasonable attorney's fees, which Mortgagee
may incur in defending or enforcing the validity or priority of the legal
operation and effect of this Mortgage, or any term, covenant or condition
hereof, or in collecting any sum secured hereby, or in protecting the security
of Mortgagee including without limitation being a party in any condemnation,
bankruptcy or administrative proceedings, or, if an Event of Default shall
occur, in administering and executing the trust hereby created and performing
its powers, privileges and duties hereunder. Mortgagee may make advances or
payments for such purposes but all advances or
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payments made by Mortgagee for such purposes shall be repayable immediately by
Mortgagor and shall bear interest at the Default Rate from the date the same
shall become due and payable until the date paid, and any such sum or sums with
interest as aforesaid shall become a part of the indebtedness secured hereby;
but no such advance or payment shall relieve Mortgagor from any default
hereunder.
1.13 Modification of Terms; No Novation.
Mortgagee may at any time, and from time to time, extend the time for
payment of the indebtedness secured hereby, or any part thereof, or interest
thereon, and waive, modify or amend any of the terms, covenants or conditions in
the Note, in this Mortgage or in any other paper or document executed in
connection with the Loan, in whole or in part, either at the request of
Mortgagor or of any person having an interest in the Mortgaged Property, accept
one or more notes in replacement or substitution of the Note, consent to the
release of all or any part of the Mortgaged Property from the legal operation
and effect of this Mortgage, take or release other security, release any party
primarily or secondarily liable on the Note or hereunder or on such other
security, grant extensions, renewals or indulgences therein or herein, apply to
the payment of the principal and interest and premium, if any, of the
indebtedness secured hereby any part or all of the proceeds obtained by sale or
otherwise as provided herein, without resort or regard to other security, or
resort to any one or more of the securities or remedies which Mortgagee may have
and which in its absolute discretion it may pursue for the payment of all or any
part of the indebtedness secured hereby, in such order and in such manner as it
may determine, all without in any way releasing Mortgagor or any party
secondarily liable from any of the terms, covenants or conditions of the Note,
this Mortgage, or other paper or document executed in connection with the Loan,
or relieving the unreleased Mortgaged Property from the legal operation and
effect of this Mortgage for all amounts owing under the Note and this Mortgage.
Mortgagee and Mortgagor recognize and agree that the provisions of this
Mortgage, the Note and the other Loan Documents may be modified by agreement
between Mortgagee and Mortgagor or their successors or assigns at any time
before or after default (which modification may involve increasing the rate of
interest in the Note, agreeing that other charges should be paid, or modifying
any other provision in any such instruments). Mortgagee may extend the time of
payment, may agree to alter the terms of payment of the indebtedness, and may
grant partial releases of any portion of the property included herein. No such
modification by Mortgagee and Mortgagor nor any such action by Mortgagee
referred to above shall be a substitution or novation of the original
indebtedness or instruments evidencing or securing the same, but shall be
considered a possible occurrence within the original contemplation of the
parties.
1.14 Books and Accounts.
Mortgagor shall provide competent and responsible management,
maintenance and operation of the Mortgaged Property and shall keep true books,
records and accounts (collectively the "books") in which full, true and correct
entries in accordance with sound accounting practice and principles applied on a
consistent basis from year to year shall be made
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of all dealings or transactions with respect to the Mortgaged Property.
Mortgagor represents and covenants that it keeps all such books at the Mortgaged
Property and will continue to keep such books at the Mortgaged Property.
Mortgagee and its designees shall have the right to audit all books, at the
expense of Mortgagor, to verify reports and statements delivered under this
Section.
1.15 Mortgaged Property Reports.
Mortgagor will maintain full and accurate books of account and other
records reflecting the results of the operations of the Mortgaged Property and
will furnish, or cause to be furnished, to Mortgagee:
(i) on or before thirty (30) days after the end of each
calendar month and on or before one hundred twenty
(120) days after the end of each fiscal year of
Mortgagor, an operating statement for the Mortgaged
Property, such reports to be in such form and in
reasonable detail as Mortgagee may request, setting
forth the financial condition and the income and
expenses for the Mortgaged Property for the
immediately preceding calendar month or fiscal year,
as applicable, and a certificate executed by
Mortgagor certifying that such report has been
prepared in accordance with the cash- basis
accounting, applied on a consistent basis, and fairly
presents the results of the Mortgaged Property's
operations for the period covered thereby and which
report shall be certified by an independent certified
public accountant with a national reputation
acceptable to Lender in its sole discretion;
(ii) on or before one hundred twenty (120) days after the
end of each fiscal year of Mortgagor, a certificate
by Mortgagor certifying that, as of the date thereof,
there does or does not (as the case may be) exist an
event that constitutes, or that upon due notice or
lapse of time or both would constitute an Event of
Default or, if an Event of Default exists, specifying
the nature thereof;
(iii) immediate notice of any material adverse change in
the Mortgaged Property's financial condition or
business prospects;
(iv) on or before sixty (60) days prior to the start of
each fiscal year an annual budget for the Mortgaged
Property for the next fiscal year, in form and
substance acceptable to Mortgagee, and
(v) upon request of Mortgagee, and at Mortgagor's
expense, such other operating, financial and credit
information as Mortgagee may reasonably request with
respect to the Mortgaged Property.
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The fiscal year of the Mortgaged Property ends on June 30th. At any
time and from time to time Mortgagor shall deliver to Mortgagee such other
financial data as Mortgagee shall reasonably request with respect to the
ownership, maintenance, use and operation of the Mortgaged Property, and
Mortgagee shall have the right, at reasonable times and upon reasonable notice,
to audit, examine, and make copies or extracts of Mortgagor's books of account
and records relating to the Mortgaged Property, all of which shall be maintained
and made available to Mortgagee and Mortgagee's representatives for such purpose
at the address specified herein for Mortgagor or at such other location as
Mortgagee may approve. Upon Mortgagee's request, Mortgagor shall also furnish
Mortgagee with convenient facilities and all books and records necessary for an
audit of such statements.
1.16 Financial Statements, Reports
(a) Mortgagor shall maintain full and accurate books of
accounts and other records reflecting Mortgagor's financial conditions and
transactions, and shall furnish, or cause to be furnished, to Mortgagee:
(i) within one hundred twenty (120) days after the end of
each fiscal year of Mortgagor, financial statements
(which shall mean and include a balance sheet,
statement of cash flow and income statement for
Mortgagor, such reports to be in such form and in
reasonable detail as Mortgagee may request, setting
forth the financial condition (including all
contingent liabilities), cash flow and the income and
expenses for Mortgagor for the immediately preceding
fiscal year) of Mortgagor, prepared in accordance
with generally accepted accounting principles
consistently applied, and which fairly present the
financial condition and transactions of Mortgagor as
of the date thereof or for the period covered
thereby, and audited and certified to by an
independent certified public accountant firm
acceptable to Mortgagee;
(ii) within sixty (60) days after the end of each fiscal
year of Mortgagor, the same financial statements
specified in clause (i) above, except that such
financial statements need not be audited by an
independent certified public accountant but must be
certified to by Mortgagor;
(iii) a tax return for each fiscal year of Mortgagor from
and after the date hereof, within thirty (30) days
after same has been filed with the Internal Revenue
Service, but in no event later than one hundred
twenty (120) days after the end of each fiscal year
(provided, however, if Mortgagor shall have duly
filed for an extension of the filing deadline for
such tax return, and promptly furnished evidence
thereof to Mortgagee, then such tax
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return shall be delivered to Mortgagee on or before
two hundred fifty-five (255) days after the end of
such fiscal year);
(iv) on or before one hundred twenty (120) days after the
end of each fiscal year of Mortgagor, a certificate
by Mortgagor certifying that, as of the date thereof,
there does or does not (as the case may be) exist an
event which constitutes, or which upon due notice or
lapse of time or both would constitute an Event of
Default or, if an Event of Default exists specifying
the nature thereof; and
(v) immediate notice of any material adverse changes in
the financial condition or business prospects of
Mortgagor. The fiscal year of Mortgagor ends on
December 31st.
(b) Mortgagor shall cause any guarantor of the Loan (as
identified and set forth in the Loan Agreement and herein collectively referred
to as "Guarantor") (if Guarantor is more than one party, then each party
constituting Guarantor) to promptly furnish or cause to be furnished to
Mortgagee:
(i) within one hundred twenty (120) days after the end of
each fiscal year of Guarantor, financial statements
(which shall mean and include a balance sheet,
statement of cash flow and income statement for
Guarantor, such reports to be in such form and in
reasonable detail as Mortgagee may request, setting
forth the financial condition (including all
contingent liabilities), cash flow and the income and
expenses for Guarantor for the immediately preceding
fiscal year) of Guarantor, (1) prepared in accordance
with generally accepted accounting principles
consistently applied, as to Transeastern Properties
of South Florida, Inc., a Florida corporation
("Transeastern Properties") and (2) prepared in a
manner which fairly present the financial condition
and transactions of each individual Guarantor and (y)
as to each individual Guarantor, as of the date
thereof or for the period covered thereby, and in a
format approved by Lender as to any individual
Guarantor, and (x) as to Transeastern, audited and
certified to by an independent certified public
accountant with a national reputation, certified and
sworn to by each individual Guarantor under penalty
of perjury;
(ii) a tax return for each fiscal year of Guarantor from
and after the date hereof, as soon as available, but
in no event later than one hundred twenty (120) days
after the end of each fiscal year (provided, however,
if Guarantor shall have duly filed for an extension
of the deadline for such tax return, and promptly
furnish evidence thereof to Mortgagee, then such
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tax return shall be delivered to Mortgagee on or
before two hundred fifty- five (255) days after the
end of such fiscal year);
(iii) on or before one hundred twenty (120) days after the
end of each fiscal year of Guarantor, a certificate
by Guarantor certifying that, as of the date thereof,
there does or does not (as the case may be) exist an
event which constitutes, or which upon due notice or
lapse of time or both would constitute an event of
default under the any guaranty executed by Guarantor
or, if such event of default exists, specifying the
nature thereof; and
(iv) immediate notice of any material adverse change in
the financial condition or business prospects of
Guarantor.
The fiscal year of any individual Guarantor ends on December 31st, and
as to Transeastern Properties, the fiscal year end is June 30th.
(c) In the event Mortgagor fails to furnish or cause to be furnished
any financial statement or report as required under this Subsection 1.16 or
Mortgaged Property report as required under the preceding Subsection 1.15,
Mortgagee may charge Mortgagor a $25.00 per day administrative fee for each day
of delay in the submission of the required reports. Such fee shall not exceed
$1,000.00; provided that if Mortgagor does not furnish or cause to be furnished
any required statement or report within forty (40) days after the due date
specified above, then Mortgagee may, at the expense of Mortgagor, cause a
certified public accountant designated by Mortgagee to prepare such balance
sheets and statements and the costs thereof shall become part of the principal
secured hereby until repaid with interest at the rate of two percent (2%) per
annum above the rate from time to time as set forth in the Note.
1.17 Governmental Action Affecting the Mortgaged Property.
Mortgagor agrees that in the event of the enactment of any law or
ordinance, the promulgation of any zoning or other governmental regulation, or
the rendition of any judicial decree restricting or affecting the use of the
Mortgaged Property or rezoning the area wherein the same shall be situate which
Mortgagee reasonably believes adversely affects the Mortgaged Property,
Mortgagee may, upon at least sixty (60) days' written notice to Mortgagor,
require payment of the indebtedness secured hereby at such time as may be
stipulated in such notice, and the whole of the indebtedness secured hereby,
shall thereupon become due and payable.
1.18 Use of Mortgaged Property.
Mortgagor at all times shall operate the Mortgaged Property as required
by and set forth in the Loan Agreement.
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ARTICLE II. EVENTS OF DEFAULT
The occurrence of one or more of the following events (herein called an
"Event of Default") shall constitute and be an Event of Default:
2.1 Failure to Pay.
Default shall be made in any payment and such default continues for
five (5) days after notice to Mortgagor on account of the principal sum of the
Note or interest thereon (including, without limitation, Yield Maintenance Fee
(as defined in the Acquisition and Development Note), participation interest,
shared appreciation interest or other additional interest, if any), charges and
premiums, if any, when and as the same shall become due and payable as herein or
in the Note or in the Loan Agreement provided.
2.2 Transfer of the Mortgaged Property; Encumbrances; Business of Mortgagor.
The Mortgagor fails to comply with subsections 1.1.3, 1.5.2 or 1.6.1(a)
and, only as to prohibited liens, claims and other encumbrances, such default
continues for fifteen (15) days after notice to Mortgagor.
2.3 Insurance Obligations.
The Mortgagor fails to promptly perform or comply with any of the terms
and conditions set forth in subsections 1.7.1, 1.7.4, 1.7.5, 1.7.6, 1.7.7, or
1.7.8 and such failure continues for fifteen (15) days after notice from
Mortgagee to Mortgagor.
2.4 Hazardous Materials.
The Mortgagor fails to promptly perform or comply with any of the terms
and conditions set forth in Section 1.9 and such failure continues for thirty
(30) days after notice from Mortgagee to Mortgagor.
2.5 Default under Other Loan Documents.
Default shall be made in the observance or performance of one or more
of the terms, covenants or conditions of any other document, including but not
limited to the Loan Agreement, executed in connection with the Loan, in which
document or by the terms of this Mortgage or the Note, such default shall be
stated to constitute a default in this Mortgage.
2.6 Material Inaccuracy in Representations and Warranties.
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Any representations or warranties of Mortgagor set forth in this
Mortgage or any document executed in connection with the Loan shall prove to be
incorrect in any material respect as of the time when made.
2.7 Bankruptcy.
Any court of competent jurisdiction shall sign an order (i)
adjudicating Mortgagor bankrupt, (ii) appointing a trustee or receiver of the
property, or of a substantial part of the property of Mortgagor, or (iii)
approving a petition for, or effecting, an arrangement in bankruptcy, or any
other judicial modification or alteration of the rights of Mortgagee or of other
creditors of Mortgagor; or if Mortgagor shall (A) file any petition or (B)
consent to any other action seeking any such judicial order; or if Mortgagor
shall make an assignment for the benefit of creditors or shall admit in writing
inability to pay debts generally as they become due; the term "Mortgagor" in
this subparagraph shall include severally any Guarantor and shall include
severally any person or entity related to or connected with Mortgagor if the
rights or enforcement of any remedies of Mortgagee are challenged, stayed, or
affected in any proceedings involving that person or entity, including without
limitation. Additionally, a subsequent bankruptcy of UDC Homes, Inc., a Delaware
corporation ("UDC"), wherein a final order is entered adjudicating the
Membership Marketing Agreement to be an executory contract and approving the
rejection of such executory contract by UDC, shall also constitute an Event of
Default under this Mortgage.
2.8 Dissolution of Mortgagor.
If Mortgagor or its directors or stockholders shall institute any
proceedings for the dissolution or liquidation of Mortgagor or fail to protect
and preserve its independent corporate franchise or pay taxes imposed in
connection therewith or comply with any and all additional requirements under
applicable laws necessary thereto, or fail to secure and protect a certificate
of authority to do its business in the State of Florida.
2.9 Transfer of Interest in Mortgagor.
Default shall be made in subsection 1.5.2 hereof limiting transfer of
the shares in and control of Mortgagor.
2.10 Judgment.
Unless adequately covered by insurance in the reasonable opinion of
Mortgagee, the entry of a final judgment for the payment of money involving more
than $25,000.00 against Mortgagor, or any Guarantor and the failure of the
Mortgagor, or any Guarantor to cause the same to be discharged or bonded off to
the satisfaction of Mortgagee within thirty (30) days from
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the date the order, decree or process under which or pursuant to which such
judgment was entered.
2.11 Material Adverse Change.
A material adverse change occurs in the financial condition of
Mortgagor or of any Guarantor which would affect their respective abilities to
perform their obligations under the Loan Documents.
2.12 Limiting Future Advances.
If Mortgagor, pursuant to Florida Statutes 697.04(1)(b), as amended
from time to time, shall file an instrument of record limiting the maximum
amount which may be secured by this Mortgage.
2.13 Failure to Perform.
Default shall be made in the observance or performance of one or more
of the other terms, covenants or conditions on the part of Mortgagor contained
herein or in the Note or in the commitment of the Mortgagee to make the Loan and
the same not be cured within thirty (30) days after written notice thereof.
ARTICLE III. REMEDIES
3.1 Acceleration.
If one or more of the Events of Default shall occur, Mortgagee may, at
its option, declare the entire unpaid principal amount of the Note (if not
already due and payable) to be due and payable immediately, and upon any such
declaration the same shall become and be immediately due and payable, anything
in the Note or in this Mortgage to the contrary notwithstanding; and in the
event of any sale of all or any part of the Mortgaged Property, such unpaid
principal amount shall automatically and without notice become so due and
payable. If Mortgagee exercises Mortgagee's option to declare the entire unpaid
principal amount of the Note to be due and payable, Mortgagor covenants to pay
immediately the full amount of the indebtedness secured hereby even though
foreclosure or other court proceedings to collect the indebtedness have not been
commenced. Acceleration of maturity, once declared by Mortgagee, may at the
option of Mortgagee, be rescinded by written acknowledgment to that effect by
Mortgagee, but the tender and acceptance of partial payments alone shall not
rescind or affect in any way such acceleration of maturity.
3.2 Possession of the Mortgaged Property.
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If one or more of the Events of Default shall occur, Mortgagor shall,
upon demand, forthwith surrender the actual possession, and, to the extent
permitted by law, Mortgagee, by such officers or agents as it may appoint, may
enter and take possession of the Mortgaged Property and may exclude Mortgagor,
its agents and servants, wholly therefrom, and having and holding the same, may
use, operate, manage and control the Mortgaged Property or any part thereof, and
upon every such entry Mortgagee, at the expense of Mortgagor and of the
Mortgaged Property, from time to time may make all necessary or proper repairs,
renewals, replacements and useful or required alterations, additions,
betterments and improvements (as provided in the Plans and the Approved Budget)
(as such terms are defined in the Loan Agreement) to and upon the Mortgaged
Property as to it may seem judicious and pay all costs and expenses of so
taking, holding and managing the same, including reasonable compensation to its
employees and other agents (including, without limitation, attorney's fees and
management and rental commissions) and any taxes, assessments and other charges
prior to the legal operation and effect of this Mortgage which Mortgagee may
deem it wise or desirable to pay, and in such case Mortgagee shall have the
right to manage the Mortgaged Property and to carry on the business and exercise
all rights and powers of Mortgagor, either in the name of Mortgagor, or
otherwise, as Mortgagee shall deem advisable; and Mortgagee shall be entitled to
collect and receive all rents thereof and therefrom. The taking of possession
and collection of rents by Mortgagee shall not be construed to be an affirmation
of any lease or acceptance of attornment with respect to any lease of all or any
portion of the Mortgaged Property. After deducting the expenses of operating the
Mortgaged Property and of conducting the business thereof, and of all repairs,
maintenance, renewals, replacements, alterations, additions, betterments,
improvements (as provided in the Plans and the Approved Budget) and all payments
which it may be required or may elect to make for taxes or other proper charges
on the Mortgaged Property, or any part thereof, as well as just and reasonable
compensation for all its employees and other agents (including, without
limitation, attorney's fees and management and rental commissions) engaged and
employed, the moneys arising as aforesaid shall be applied to the indebtedness
secured hereby. Whenever all that is due upon the principal of and interest on
the Note and under any of the terms of this Mortgage shall have been paid and
all defaults made good, Mortgagee shall surrender possession to Mortgagor. The
same right of entry, however, shall exist if any subsequent Event of Default
shall occur.
3.3 Appointment of a Receiver.
Until one or more of the Events of Default shall occur (but not
thereafter), Mortgagor shall have possession of the Mortgaged Property and shall
have the right to use and enjoy the same and to receive the rents thereof and
therefrom. If one or more of the Events of Default shall occur, Mortgagee may
apply, on ex parte motion to any court of competent jurisdiction, for the
appointment of a receiver to take charge of, manage, preserve, protect, complete
construction of and operate the Mortgaged Property and any business or
businesses located thereon, to collect rents, issues, profits and income
therefrom from whatever source derived; to make all necessary and needed repairs
to the Mortgaged Property; to pay all taxes and assessments against the
Mortgaged Property and insurance premiums for insurance thereon and thereupon it
is hereby expressly covenanted and agreed that the court shall forthwith appoint
such receiver with the
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usual powers and duties in like cases; and said appointment shall be made by the
court as a matter of strict right to the Mortgagee, and without reference to the
adequacy or inadequacy of the value of the Mortgaged Property, or to the
solvency or insolvency of the Mortgagor; and after payment of the expense of the
receivership, including reasonable attorneys' fees to Mortgagee's attorney, and
after compensation to the receiver for management and completion of the
Mortgaged Property, to apply the net proceeds derived therefrom in reduction of
the indebtedness secured hereby or in such other manner as such court shall
direct. All expenses, fees and compensation incurred pursuant to a receivership
approved by such court shall be secured by the lien of this Mortgage until paid.
The Mortgagor hereby specifically waives the right to object to the appointment
of a receiver as aforesaid and hereby consents that such appointment shall be
made as an admitted equity and as a matter of absolute right to the Mortgagee
and that the same may be done without notice to the Mortgagor or any other
defendant to such suit and without the requirement of any other showing and
without regard to the adequacy of the security. Mortgagor shall deliver to the
receiver appointed pursuant to the provisions of this Section, or to Mortgagee
in the event of entry pursuant to the terms of the preceding Section, all
original records, books, bank accounts, leases, agreements, security deposits of
the tenants and all other materials relating to the operation of the Mortgaged
Property.
3.4 Possession and Disposition of Personal Property.
3.4.1 If one or more of the Events of Default shall occur, Mortgagee
may at its discretion require Mortgagor to assemble such items of the Mortgaged
Property as may be designated by Mortgagee and make them available to Mortgagee
at a place reasonably convenient to both parties to be designated by Mortgagee.
Upon the occurrence of an Event of Default under this Mortgage, Mortgagee shall
have the right to take possession of such items of the Mortgaged Property as
Mortgagee may elect. In taking possession Mortgagee may proceed without judicial
process if this can be done without breach of the peace. Mortgagee shall have
the further right to remove such items of the Mortgaged Property as it may
choose to any location or locations selected by Mortgagee, and Mortgagor shall
pay the costs of such removal and for the storage and protection of such items
immediately upon demand therefor.
3.4.2 This Mortgage shall be construed as a security agreement and
financing statement under the Florida Uniform Commercial Code as adopted and in
force, from time to time, in the State of Florida, and shall be operative and
effective as such in addition to, and not in substitution for, any other
security agreement executed by Mortgagor in connection with the transaction
secured hereby. Mortgagor agrees to and shall, upon the request of Mortgagee,
execute and deliver to Mortgagee, in form satisfactory to Mortgage, such
"financing statements," descriptions of property and such further assurances as
Mortgagee, in its sole discretion, may, from time to time, consider necessary to
create, perfect and preserve the lien and encumbrance hereof and the security
interest granted herein upon and both the real property, the Improvements, and
all rights and interest of Mortgagor in the Mortgaged Property described herein.
Mortgagee, at the expense of Mortgagor, may cause such statements, descriptions
and assurances, and this Mortgage to be recorded and re-recorded, filed and
re-filed, at such times and in such places as
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may be required or permitted by law to so create, perfect and preserve the lien
and encumbrance hereof and the security interest granted herein upon and in all
of said Mortgaged Property. With respect to such Mortgaged Property, the
Mortgagee is a "secured party" and the Mortgagor is a "debtor" under the Florida
Uniform Commercial Code with its address being as set forth in this Mortgage. If
Mortgagee elects to proceed under the Florida Uniform Commercial Code to dispose
of some of the Mortgaged Property, Mortgagee shall give Mortgagor notice by
certified mail, postage prepaid, return receipt requested, of the time and place
of any public sale of any of such property or of the time after which any
private sale or other intended disposition thereof is to be made by sending
notice to Mortgagor at least five (5) days before the time of the sale or other
disposition, which provisions for notice Mortgagor and Mortgagee agree are
reasonable; provided, however, that nothing herein shall preclude Mortgagee from
proceeding as to all the Mortgaged Property in accordance with the rights and
remedies of Mortgagee in respect of the real property, as provided in Section
679.501(4), Florida Statutes (1994), as amended from time to time.
3.5 Foreclosure Sale.
3.5.1 If one or more of the Events of Default shall occur, Mortgagee is
authorized and shall have the power to foreclose this Mortgage and in case of
sale in an action or proceeding to foreclose this Mortgage, Mortgagee shall have
the right to sell the Mortgaged Property covered hereby in parts or as an
entirety or in such parcels, manner or order as Mortgagee in its sole and
absolute discretion may decide any provision of law to the contrary
notwithstanding. It is intended hereby to give to Mortgagee the widest possible
discretion permitted by law with respect to all aspects of any such sale or
sales. Mortgagor, for itself and all who may claim under Mortgagor, waives and
releases, to the extent that they lawfully may, all right to have the Mortgaged
Property marshaled.
3.5.2 Without declaring the entire unpaid principal balance due,
Mortgagee may foreclose only as to the sum past due without injury to this
Mortgage or the displacement or impairment of the remainder of the lien thereof
and at such foreclosure sale the Mortgaged Property shall be sold subject to all
remaining items of indebtedness and Mortgagee may again foreclose in the same
manner as often as there may be any sum past due.
3.5.3 Mortgagee may exercise all other remedies available, whether at
law or equity, in such order as Mortgagee may elicit. All such other rights and
remedies available to Mortgagee with respect to this Mortgage shall be
cumulative and may be pursued concurrently or successively. The failure or
omission on the part of Mortgagee to exercise the option for acceleration of
maturity and/or foreclosure following any default, as aforesaid, or to timely
exercise any other option, right, or remedy conferred upon the Mortgagee herein,
or the acceptance by Mortgagee of partial payments hereunder, shall not
constitute a waiver of any such default or the right to exercise any such
option, but such option shall remain continuously in force. Acceleration of
maturity, once claimed hereunder by Mortgagee, at the option of Mortgagee, may
be rescinded by written acknowledgment to that effect by Mortgagee, but the
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tender and acceptance of partial payments alone shall not, in any way, effect or
rescind such acceleration of maturity.
3.5.4 Mortgagee may bid and become the purchaser at any sale under this
Mortgage. If Mortgagee is the purchaser at any such sale, Mortgagee may apply
the outstanding indebtedness against all or any portion of the purchase price,
including the deposit.
ARTICLE IV. MISCELLANEOUS
4.1 Assignment of Bank Accounts.
Upon an Event of Default under this Mortgage any funds on deposit with
the Mortgagee in the name of any Mortgagor or pledged to Mortgagee and on
deposit with the Bank of North America (other than those with respect to the
sale of residential units under construction on any subdivided and improved lot
within the Premises) in accordance with the Loan Agreement, and any securities
and property given unto or left in the possession of the Mortgagee by any
Mortgagor, whether as collateral security or held in escrow or otherwise or
pledged to Mortgagee and on deposit with the Bank of North America (other than
with respect to the sale of residential units under construction) in accordance
with the Loan Agreement, is hereby assigned to the Mortgagee, shall be held by
it as additional security and may be applied to the payment of any sums due it
under the terms of the Note.
4.2 Estoppel Certificates.
Mortgagor, upon request, made either personally or by mail, shall,
within six (6) days in case the request is made personally, or within ten (10)
days after the mailing of such request in case the request is made by mail,
certify, by a writing duly acknowledged, to Mortgagee or to any proposed
assignee of the Note, the amount of principal and interest then owing on the
Note and whether any offsets or defenses exist against the indebtedness secured
hereby. At the request of Mortgagee, such certificate shall also contain a
statement that the Mortgagor knows of no Event of Default nor of any other
default which, after notice or lapse of time or both, would constitute an Event
of Default, which has occurred and remains uncured as of the date of such
certificate, or, if any such Event of Default or other default has occurred and
remains uncured as of the date of such certificate, then such certificate shall
contain a statement specifying the nature thereof, the time for which the same
has continued and the action which the Mortgagor has taken or proposes to take
with respect thereto.
4.3 Future Advances.
This Mortgage is given to secure not only the existing indebtedness of
the Mortgagor to the Mortgagee evidenced by the Security Documents secured
hereby, but also such future advances up to an additional amount equal to two
hundred (200%) percent of the principal
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amount originally secured hereby as are made within twenty (20) years from the
date hereof, plus interest thereon, together with any disbursements made by
Mortgagee for payment of Impositions, taxes, insurance or other liens on the
Mortgaged Property, together with interest on such disbursements at the highest
rate permissible under Florida law, which advances shall be secured hereby to
the same extent as if such future advances were made on this date. The total
amount of indebtedness secured hereby may increase or decrease from time to
time. This Mortgage shall also secure any sums due pursuant to the Security
Documents as a charge, fee or premium expressly provided for in the Security
Documents in the event of acceleration of any monetary obligations due to a
default therein or a prepayment thereof. The provisions of this Section shall
not be construed to imply any obligation on Mortgagee to make any future
advances, it being the intention of the parties that any future advances shall
be solely at the discretion and option of Mortgagee (except as may be otherwise
expressly provided in the Loan Agreement.) Any reference to monetary obligations
in this Mortgage shall be construed to reference any future advances made
pursuant to this Section.
4.4 Partial Releases.
Provided that Mortgagor shall not be in default hereunder, Mortgagee
shall from time to time provide Mortgagor with partial releases of portions of
the Mortgaged Property from the lien and effect of this Mortgage upon
Mortgagor's compliance with the terms, conditions and covenants of the Loan
Agreement.
4.5 Subrogation.
This Mortgage, as additional security, is hereby subrogated to the lien
or liens and to the rights of the owners and holders thereof of each and every
mortgage, lien or other encumbrance on the Mortgaged Property, or any part
thereof, or any claim or demand which is paid or satisfied, in whole or in part,
out of the proceeds of the indebtedness secured hereby and the respective liens
of said mortgages, liens and other encumbrances and claims and demands shall
pass to and be held by Mortgagee as additional security for the indebtedness to
Mortgagee to the same extent that they would have been preserved and would have
been passed to and been held by Mortgagee had they each been duly and regularly
assigned, transferred, set over and delivered to Mortgagee by separate deed of
assignment, notwithstanding the fact the same may be or may have been satisfied
and canceled of record, it being the intention of the parties hereto that the
same will be satisfied and canceled of record at or about the time they are paid
or satisfied out of the proceeds of the Loan.
4.6 Notices.
No notice or other communication shall be deemed given unless sent in
the manner, and to the persons, specified in this Section. All notices and other
communications hereunder shall be in writing and shall be deemed given (a) upon
receipt if delivered personally (unless subject to clause(b)) or if mailed by
registered or certified mail, (b) at noon on the date after dispatch if sent
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by overnight courier or (c) upon the completion of transmission (which is
confirmed telephonically by the receiving party) if transmitted by telecopy or
other means of facsimile which provides immediate or near immediate transmission
to compatible equipment in the possession of the recipient, and in any case to
the parties at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as will be specified by like notice):
If to Mortgagor: Transeastern Aberdeen Properties, Inc.
3300 University Drive
Coral Springs, Florida 33065
Attn: Mr. Arthur J. Falcone, President
Telecopy Number: (305) 346-9704
Confirmation Number: (305) 346-9700
If to Mortgagee: Berkeley Federal Bank & Trust FSB
1675 Palm Beach Lakes Boulevard
Tenth Floor
West Palm Beach, Florida 33401
Attention: Legal Department
Telecopy Number: (407) 681-8177
Confirmation Number: (407) 681-8000
Notwithstanding the foregoing, any notice in fact received shall be effective as
of the time of receipt.
4.7 Legal Construction.
The Note and this Mortgage shall be construed according to the laws of
the State of Florida (excluding Florida conflict of laws) and any court of
competent jurisdiction of the State of Florida shall have jurisdiction in any
proceeding instituted to enforce this Mortgage and any objections to venue are
hereby waived.
4.8 Usury Limitations.
No provision of this Mortgage or of the Note shall require the payment
or permit the collection of interest or other sum in excess of the maximum
permitted by applicable law, including a judicial determination. If any excess
of interest or other sum in such respect is herein or in the Note provided for,
or shall be adjudicated to be so provided for herein or in the Note, neither
Mortgagor nor its successors or assigns shall be obligated to pay such interest
or other sum in excess of the amount permitted by applicable law, including a
judicial determination, and the right to demand the payment of any such excess
shall be and hereby is waived. The provisions of this Section shall control all
other provisions of this Mortgage, the Note and the Loan Agreement.
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4.9 Title Insurance Policy.
Mortgagor covenants and agrees to cause (i) all documents required by
Mortgagee to be recorded or filed, including this Mortgage, and (ii) the title
insurance policy, in accordance with the title binder previously accepted by
Mortgagee, to be delivered to Mortgagee within forty-five (45) days from the
date hereof.
4.10 Rights of Mortgagee.
4.10.1 Rights Not Limited. The rights, powers, privileges and
discretions (hereinafter collectively called the "rights") specifically granted
to Mortgagee under this Mortgage are not in limitation of but in addition to
those to which they are entitled under any general or local law relating to
mortgages in the State of Florida, now or hereafter existing.
4.10.2 Benefit to Successors and Assigns. The rights to which Mortgagee
may be entitled shall inure to the benefit of its successors and assigns.
4.10.3 Rights Cumulative. All the rights of Mortgagee are cumulative
and not alternative and may be enforced successively or concurrently.
4.11 No Waiver.
Failure of Mortgagee to exercise any of its rights shall not impair any
of its rights nor be deemed a waiver thereof, and no waiver of any of its rights
shall be deemed to apply to any other such rights, nor shall it be effective
unless in writing and signed by the party waiving the right. The acceptance by
Mortgagee of any partial payment after default or an Event of Default, with or
without knowledge of the default or Event of Default, shall not be a waiver of
the default or Event of Default unless Mortgagee shall specifically state in
writing that the acceptance waives the default or Event of Default or states
further conditions which must be satisfied to constitute such a waiver. The
failure of Mortgagee to exercise the option for acceleration of maturity,
foreclosure, or either, following an Event of Default or to exercise any other
option or privilege granted to Mortgagee hereunder in any one or more instances,
shall not constitute a waiver of any such default, but such option or privilege
shall remain continuously in force.
4.12 Mutual Waiver of Jury Trial.
MORTGAGOR AND MORTGAGEE (BY ACCEPTANCE OF THIS MORTGAGE) EACH, ON
BEHALF OF ITSELF AND ITS SUCCESSORS AND ASSIGNS, WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW ALL RIGHT TO TRIAL BY JURY OF ANY AND ALL CLAIMS BETWEEN THEM
ARISING UNDER THIS MORTGAGE, THE NOTE, THE LOAN AGREEMENT, OR ANY OTHER
DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION, DIRECTLY OR INDIRECTLY, WITH
THE LOAN, AND
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ANY AND ALL CLAIMS ARISING UNDER COMMON LAW OR UNDER ANY STATUTE OF ANY STATE OR
THE UNITED STATES OF AMERICA, WHETHER ANY SUCH CLAIMS BE NOW EXISTING OR
HEREAFTER ARISING, NOW KNOWN OR UNKNOWN. IN MAKING THIS WAIVER MORTGAGEE AND
MORTGAGOR ACKNOWLEDGE AND AGREE THAT ANY AND ALL CLAIMS MADE BY MORTGAGEE AND
ALL CLAIMS MADE AGAINST MORTGAGEE SHALL BE HEARD BY A JUDGE OF A COURT OF PROPER
JURISDICTION, AND SHALL NOT BE HEARD BY A JURY. MORTGAGEE AND MORTGAGOR
ACKNOWLEDGE AND AGREE THAT THIS WAIVER OF TRIAL BY JURY IS A MATERIAL ELEMENT OF
THE CONSIDERATION FOR THIS TRANSACTION. MORTGAGEE AND MORTGAGOR, WITH ADVICE OF
COUNSEL, EACH ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING A LEGAL
RIGHT BY AGREEING TO THIS WAIVER PROVISION.
4.13 No Partnership.
Mortgagor acknowledges and agrees that nothing contained in the terms
and conditions of this Mortgage or any other Loan Document shall be deemed to
create a partnership, joint venture or joint enterprise between the parties
hereto, each of which is acting independently and for its own account and
benefit. The relationship created is that of lender and borrower. The
Mortgagee's commitment to make the Loan and its financing of the development and
construction of the improvements on the Mortgaged Property pursuant to the Loan
Agreement, does not create, and shall not be deemed to create, a partnership,
joint venture or joint enterprise between the parties.
4.14 Binding Effect.
The terms and conditions agreed to by Mortgagor and the covenants of
Mortgagor shall be binding upon the personal representatives, successors and
assigns of Mortgagor and of each of them, but this provision does not waive any
prohibition of assignment or any requirement of consent to an assignment under
the other provisions of this Mortgage; any consent to an assignment shall not be
consent to any further assignment, each of which must be specifically obtained
in writing.
4.15 Recitals.
The recitals of this Mortgage are incorporated herein and made a part
hereof.
4.16 Number and Gender.
Wherever used herein the singular shall include the plural and the
plural the singular, and the use of any gender shall include all genders.
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4.17 Time of Essence.
Time is of the essence of the obligations of Mortgagor in this Mortgage
and each and every term, covenant and condition made herein by or applicable to
Mortgagor.
4.18 Captions.
The captions of the Sections of this Mortgage are for the purpose of
convenience only and are not intended to be a part of this Mortgage and shall
not be deemed to modify, explain, enlarge, or restrict any of the provisions
hereof.
4.19 Drafting of Loan Documents.
The parties hereto acknowledge and agree that the terms, covenants, and
conditions of the Loan Documents have been drafted, reviewed, negotiated, and
revised by all the parties, with the assistance of counsel of their choice, and
that should any ambiguities occur herein, such ambiguities shall not be
construed or interpreted against one party or another by virtue of that party's
status as drafting party.
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IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly
executed on its behalf and its seal to be hereunto affixed as of the date first
above written.
Witnesses:
_______________________________ TRANSEASTERN ABERDEEN
Print Name:____________________ PROPERTIES, INC., a Florida corporation
______________________________
Print Name: __________________ By:________________________________
Arthur J. Falcone, President
Address: 3300 University Drive
Coral Springs, Florida 33065
(Corporate Seal)
JOINDER AND CONSENT
THE UNDERSIGNED, does hereby join in and consent to the execution of
the foregoing Purchase Money First Mortgage, Security Agreement, Financing
Statement and Assignment of Leases, Rents and Income with respect to the
encumbrance of consulting, management, marketing and club membership fees,
income, profits and revenues.
UNIVERSITY PLAZA MANAGEMENT, INC.
___________________________ By:____________________________
Name: _____________________ Name:__________________________
Title:_________________________
___________________________
Name: _____________________
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STATE OF FLORIDA )
) SS:
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ______ day of
__________, 1995, by Arthur J. Falcone, as President of TRANSEASTERN ABERDEEN
PROPERTIES, INC., a Florida corporation, on behalf of the corporation. He is
personally known to me or has produced _________________ as identification.
_______________________________ Notary
Public, State of Florida
Commission Number______________
Print Name:____________________
My Commission expires:
STATE OF FLORIDA )
) SS:
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ______ day of
__________, 1995, by ____________, as ___________ of UNIVERSITY PLAZA
MANAGEMENT, INC., a Florida corporation, on behalf of the corporation. He/she is
personally known to me or has produced _________________ as identification.
_______________________________ Notary
Public, State of Florida
Commission Number______________
Print Name:____________________
My Commission expires:
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EXHIBIT A-1
PROPERTY DESCRIPTION
PARCEL NO. 1:
All of ABERDEEN-PLAT No. 2, according to the Plat thereof on file in the Office
of the Clerk of the Circuit Court in and for Palm Beach County, Florida,
recorded in Plat Book 55, at Pages 11 through 22;
LESS AND EXCEPT Tracts A - I, inclusive, and Tracts L1 - L7, inclusive,
ABERDEEN-PLAT NO. 2, in Plat Book 55, at Pages 11 through 22;
LESS AND EXCEPT metes and bounds legal description attached hereto as Appendix
"1";
LESS AND EXCEPT that portion replatted as ABERDEEN-PLAT NO. 3, in Plat Book 55,
at Pages 23 through 25;
LESS AND EXCEPT that portion replatted as ABERDEEN-PLAT NO. 4, in Plat Book 55,
at Pages 36 through 39;
LESS AND EXCEPT that portion replatted as ABERDEEN-PLAT NO. 5, in Plat Book 59,
at Pages 86 and 87;
LESS AND EXCEPT that part of Hagen Ranch Road as described in Official Records
Book 3502, at Page 1524;
LESS AND EXCEPT that part of N.W. 22nd Avenue, as described in Official Records
Book 3502, at Page 1527;
LESS AND EXCEPT that part of Lake Worth Drainage District Canal L-20, as
described in Official Records Book 5099, at Page 1842;
LESS AND EXCEPT that part of Lake Worth Drainage District Canal L-22, as
described in Official Records Book 4652, at Page 531;
LESS AND EXCEPT that portion replatted as ABERDEEN-PLAT NO. 8, in Plat Book 59,
at Pages 181 through 183;
LESS AND EXCEPT that portion replatted as ABERDEEN-PLAT NO. 9, in Plat Book 59,
at Pages 178 through 180;
41
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LESS AND EXCEPT ABERDEEN-PLAT NO. 10, according to the plat thereof, recorded in
Plat Book 67, Page 195.
LESS AND EXCEPT that part of ABERDEEN-PLAT NO. 6, according to the plat thereof,
recorded in Plat Book 59, Page 139, now known as the Condominiums of Stratford
At Aberdeen I, Stratford At Aberdeen II, and Stratford At Aberdeen III,
according to the Declarations recorded in Official Records Book 5860, at Page
1132, O.R. Book 5944, at Page 884 and O.R. Book 6443, at Page 444, respectively;
LESS AND EXCEPT Tracts C, D, F, G, and H of ABERDEEN-PLAT NO. 6, according to
the plat thereof, recorded in Plat Book 59, at Page 139;
LESS AND EXCEPT that portion replatted as ABERDEEN-PLAT NO. 12, in Plat Book 60,
at Page 41;
LESS AND EXCEPT ABERDEEN-PLAT NO. 13, according to the plat thereof, recorded in
Plat Book 65, at Page 116;
LESS AND EXCEPT ABERDEEN-PLAT NO. 14, according to the plat thereof, recorded in
Plat Book 66, at Page 3;
LESS AND EXCEPT ABERDEEN-PLAT NO. 15, according to the plat thereof, recorded in
Plat Book 69, Page 63;
LESS AND EXCEPT Lots 3, 7, 10, 11, 12, 13, 14, 21, 22, 23, 24, 25, 26, 43, 44,
45, 46, 47 and 48, and Tracts W1 and W2, ABERDEEN-PLAT NO. 16, according to the
plat thereof, recorded in Plat Book 71, at Page 159;
LESS AND EXCEPT Lots 3 through 8, inclusive 19, 20, 21, 22, 27, 28, 39, 40, 41,
42, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 61, 62, 67, 68, 71, 72, 73 and 74,
and Tracts W3 and W4, ABERDEEN-PLAT NO. 17, according to the plat thereof,
recorded in Plat Book 71, at Page 128;
LESS AND EXCEPT Lots 2, 3, 4, 17, 18, 19, 20, 21, 22, 23, 30, 35, 36, 38, 39, 40
and 41, and Tracts W1 and W2, ABERDEEN PLAT NO. 19, according to the plat
thereof, recorded in Plat Book 72, at Page 135; and
LESS AND EXCEPT Lots 43 through 48, Tract O-2, and Tract W, ABERDEEN-PLAT NO. 7,
according to the plat thereof recorded in Plat Book 74, at Page 161.
PARCEL NO. 2:
Lots 11 through 16, inclusive, 23 through 26, inclusive, 28, 30 through 35,
inclusive, and 38, Block 2; Lots 1, 2, 5, 6, 7, 11, 12 and 15, Block 3; Lot 5,
Lots 7 through 9, inclusive, and 11 through 20, inclusive, Block 4; all of
Muirhead Circle, Desmond Drive, Estate Boulevard, and
42
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Dorchester Road within ABERDEEN-PLAT NO. 8, according to the Plat thereof,
recorded in Plat Book 59, at Page 181.
PARCEL NO. 3:
Lots 25, 26, 29, 34, 37, 60 and 62, ABERDEEN-PLAT NO. 10, according to the plat
thereof, recorded in Plat Book 67, at Page 195.
PARCEL NO. 4:
A parcel of land being a portion of Tract "G", PARKWALK - PLAT NO. 1, as
recorded in Plat Book 45, Pages 45 through 48, inclusive, Public Records of Palm
Beach County, Florida; said parcel being more particularly described as follows:
Beginning at the Northeast corner of said Tract "G," said Point of Beginning
being the intersection of the Southerly right-of-way line of Le Chalet Boulevard
as recorded in Plat Book 44, Pages 77 and 78, Public Records of Palm Beach
County, Florida and the West right-of-way line of Lake Worth Drainage District
(L.W.D.D.) Canal E-3 as recorded in Official Records (O.R.B.) 2456, Page 319,
Public Records of Palm Beach County, Florida; thence South 01(degree) 12' 07"
West along said West right-of-way line of Canal E-3, a distance of 995.78 feet
to a point on the North right-of-way line of Lake Worth Drainage District
(L.W.D.D.) Canal L-21 as recorded in Official Records Book (O.R.B.) 3416, Pages
563 through 566 Public Records of Palm Beach County, Florida; thence North
88(degree) 24' 59" West along said North right-of-way line of Canal L- 21, a
distance of 228.16 feet; thence North 01(degree) 12' 07" East, a distance of
913.46 feet to a point on said Southerly right-of-way line of Le Chalet
Boulevard; thence North 71(degree) 42' 05" East along said Southerly
right-of-way line, a distance of 242.04 feet to the above-described Point of
Beginning.
PARCEL NO. 5:
A parcel of land lying in Sections 14 and 15, Township 45 South, Range 42 East,
said parcel being more particularly described as follows:
Beginning at the Northeast corner of ABERDEEN-PLAT NO. 11, as recorded in Plat
Book 60, Pages 38 through 40, as recorded in the Public Records of Palm Beach
County, Florida; thence South 88(degree) 28' 16" East, a distance of 1,391.06
feet; thence South 01(degree) 31' 41" West along the West line of Parkwalk Plat
No. 3A (Plat Book 59, Pages 74 through 75), a distance of 356.30 feet; thence
South 66(degree) 30' 06" East, along the West line of said Plat, a distance of
230.03 feet; thence South 04(degree) 00' 00" East, along the West line of said
Plat, a distance of 230.48 feet to a point along the Northerly right-of-way line
of Parkwalk Drive; thence South 76(degree) 29' 39" West along said Northerly
right-of-way line, a distance of 184.12 feet to a point of curvature; said
curve being concave to the Northeast, having a central angle of 44(degree) 57'
28" and a radius of 1,760.00 feet; thence Westerly along the arc of said curve
and said Northerly right-of-way line, a distance of 1,381.00 feet to a point of
reverse curvature; said curve being concave to the Southwest, having a central
angle of 13(degree) 10' 19", and a radius of 540.00 feet; thence
43
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Northwesterly along the arc of said curve, a distance of 124.14 feet; thence
North 01(degree) 28' 00" East along the East line of said ABERDEEN-PLAT 11, a
distance of 496.09 feet of the aforementioned Point of Beginning.
44
<PAGE>
APPENDIX 1 TO EXHIBIT A-1
A parcel of land being a portion of ABERDEEN-PLAT NO. 2, as recorded in Plat
Book 55, at Pages 11 through 22, of the Public Records of Palm Beach County,
Florida; said parcel being more particularly described as follows:
Beginning at the Southeast corner of said ABERDEEN-PLAT NO. 2, Golf Course -
Tract "I"; said point being located on the Westerly right-of-way line of Jog
Road (O.R.B. 4456, at Pages 581 through 584) and also located on the arc of a
curve being concave to the Northeast, having a central angle of 05(degree) 55'
54", a radius of 2,592.06 feet and whose chord bears South 24(degree) 12' 49"
East; thence Southerly along the arc of said curve and said right-of-way line, a
distance of 268.35 feet to a point of tangency; thence South 27(degree) 10' 46"
East, a distance of 209.74 feet; thence South 62(degree) 49' 14" West, a
distance of 163.07 feet; thence North 82(degree) 29' 36" West, a distance of
373.32 feet; thence North 10(degree) 44' 04" East along said ABERDEEN-PLAT NO.
2, Lake - Water Management Tract "L-10", a distance of 369.89 feet; thence North
68(degree) 45' 08" East along South line of said ABERDEEN-PLAT NO. 2, Golf
Course -Tract "I", a distance of 258.02 feet to the aforementioned Point of
Beginning.
NOTE: Bearings as shown hereon are based on ABERDEEN-PLAT NO. 2 (P.B. 55, Pages
11 through 22) and all other bearings are relative thereto.
45
<PAGE>
EXHIBIT A-2
LEGAL DESCRIPTION OF THE MODEL HOMES
1. Lots 40 and 41, ABERDEEN-PLAT No. 17, according to the plat thereof
recorded in Plat Book 71, Page 128.
2. Lots 44 and 45, ABERDEEN-PLAT No. 7, according to the plat thereof
recorded in Plat Book 74, Page 161.
3. Lots 44 and 45, ABERDEEN-PLAT No. 16, according to the plat thereof
recorded in Plat Book 71, Page 159.
4. Lots 39 and 40, ABERDEEN-PLAT No. 19, according to the plat thereof
recorded in Plat Book 72, Page 135.
46
<PAGE>
EXHIBIT B
PERMITTED EXCEPTIONS
1. Taxes for the year(s) 1995, not yet due and payable, and any taxes
and assessments levied or assessed subsequent to the effective date hereof.
[To be inserted from information referenced in title commitment.]
47
<PAGE>
A-Cert Shares
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
A FLORIDA CORPORATION
SERIES A REDEEMABLE PREFERRED STOCK, PAR VALUE $0.01
29,000 SHARES AUTHORIZED
Name
Number (Shares)****
of the Series A Redeemable Preferred Stock of Transeastern Properties
of South Florida, Inc. which are fully paid and non-assessable and which are
_____________________________ __________________________________
PRESIDENT SECRETARY
LOAN AGREEMENT
Between
TRANSEASTERN PEMBROKE VILLAGES, INC.
and
AMRESCO FUNDING CORPORATION
Dated: , 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................................................2
Section 1.1 Definitions....................................2
Section 1.2 Other Definitional Provisions.................21
ARTICLE II
AMOUNT AND TERMS OF LOAN AND CHASE FEDERAL LOANS......................22
Section 2.1 Terms of Loan.................................22
Section 2.2 Terms of Chase Federal Loans..................23
Section 2.3 Terms of Note.................................24
Section 2.4 Application of Funds..........................24
Section 2.5 Tracts C and E Acquisition Loan
and Construction Loan.........................24
Section 2.6 Prepayment of Loan............................25
Section 2.7 [INTENTIONALLY DELETED].......................25
Section 2.8 Intent Not to Commit Usury....................25
Section 2.9 Determination of Net Profit...................25
Section 2.10 Application of Net Sales Proceeds.............25
Section 2.11 Distributions.................................26
ARTICLE III
SALE OF REAL PROPERTY; APPLICATION OF PROCEEDS........................26
Section 3.1 Partial Releases..............................26
Section 3.2 Sales of Tracts or Units on the
Real Property.................................27
Section 3.3 Borrower's First Priority Return..............30
Section 3.4 First Contingent Return.......................31
Section 3.5 Borrower's Second Priority Return.............31
Section 3.6 Second Contingent Return......................31
Section 3.7 Intent of Lender..............................31
ARTICLE IV
SECURITY AND GUARANTY FOR PAYMENT OF THE LOAN.........................33
Section 4.1 Mortgage......................................33
Section 4.2 Security Agreement............................33
Section 4.3 Assignment of Leases, Rents and Profits.......34
Section 4.4 Collateral Assignment of Agreements
Affecting Real Estate.........................34
Section 4.5 Pledge Agreements and Stock Certificates......34
Section 4.14 Mortgagor's Affidavit.........................34
<PAGE>
Section 4.15 Guaranty......................................34
Section 4.16 Funding Agreement.............................35
Section 4.17 Environmental Indemnity Agreement.............35
Section 4.18 [INTENTIONALLY DELETED].......................35
Section 4.19 Security Documents............................35
Section 4.20 Filing and Recording..........................35
ARTICLE V
SECURITY AND GUARANTY FOR
PAYMENT OF THE CONTINGENT RETURNS.....................................36
Section 5.1 Contingent Return Mortgage....................36
Section 5.2 Collateral Assignment of Agreements
Affecting Real Estate.........................36
Section 5.3 Pledge Agreements and Stock Certificates......36
Section 5.4 Assignment of Leases, Rents and Profits.......37
ARTICLE VI
DEBTOR PARTIES' REPRESENTATIONS AND WARRANTIES........................37
Section 6.1 Organization and Standing.....................37
Section 6.2 Capitalization................................37
Section 6.3 Power and Authority...........................38
Section 6.4 Valid and Binding Obligation..................38
Section 6.5 No Legal Bar..................................39
Section 6.6 Title to Collateral...........................39
Section 6.7 Financial Statements and Other
Information...................................39
Section 6.8 Litigation....................................40
Section 6.9 Investment Company Act........................40
Section 6.10 Federal Regulation............................40
Section 6.11 Disclosure....................................41
Section 6.12 Brokerage.....................................41
Section 6.13 Taxes.........................................41
Section 6.14 ERISA.........................................42
Section 6.15 Liabilities to Employees and Officers.........43
Section 6.16 Subsidiaries..................................43
Section 6.17 Environmental Contamination/Hazardous
Material......................................43
Section 6.19 Condition of Mortgaged Property...............44
Section 6.20 Utilities.....................................44
Section 6.21 Budget for Acquisition Contract
Development Work..............................45
Section 6.22 Zoning and Land Use...........................45
Section 6.23 Permits and Licenses..........................45
Section 6.24 [Intentionally Delete]........................45
Section 6.25 No Defaults...................................45
Section 6.26 Facilities For Handicapped....................45
Section 6.27 Other Agreements..............................46
Section 6.28 Chase Federal Loan Documents..................46
<PAGE>
Section 6.29 Representations and Warranties in
Other Loan Documents..........................46
Section 6.30 Reliance on Representations...................46
ARTICLE VII
CONDITIONS PRECEDENT..................................................47
Section 7.1 Correctness of Warranties.....................47
Section 7.2 Opinion of Counsel............................47
Section 7.3 Entity Documents..............................47
Section 7.4 Certified Resolutions and Incumbency..........47
Section 7.5 Loan Documents................................48
Section 7.6 Mortgagee Title Insurance Policy..............48
Section 7.7 Chase Federal Loan Documents..................48
Section 7.8 Equity Contribution...........................49
Section 7.9 Stock Certificates and Stock Powers...........49
Section 7.10 Acquisition Contract, Option Contract
and Tract B Sales Contract....................49
Section 7.11 Soils Test....................................49
Section 7.12 [INTENTIONALLY DELETED].......................49
Section 7.13 Copies of Permits, Licenses and
Approvals.....................................49
Section 7.14 Availability of Utilities.....................50
Section 7.15 Plans and Specifications......................50
Section 7.16 Construction Contract.........................50
Section 7.17 Approvals of Governmental Authorities.........50
Section 7.18 Compliance with Governmental
Requirements..................................50
Section 7.19 Certificates from General Contractor
and Engineer..................................51
Section 7.20 Cost Breakdown................................51
Section 7.21 Flood Hazard Area.............................51
Section 7.22 Survey........................................51
Section 7.23 Tri-Party Agreement...........................51
Section 7.24 No Moratorium.................................51
Section 7.25 Insurance.....................................52
Section 7.26 Subordination to the Loan.....................52
Section 7.27 Additional Documents and Instruments..........52
ARTICLE VIII
DEBTOR PARTIES' AFFIRMATIVE COVENANTS.................................52
Section 8.1 Existence and Qualification...................52
Section 8.2 Financial Statements and Information..........53
Section 8.3 [Intentionally Deleted].......................55
Section 8.4 Taxes and Claims..............................55
Section 8.5 Insurance.....................................56
Section 8.6 Sales.........................................58
Section 8.7 Books and Reserves............................58
<PAGE>
Section 8.8 Inspection by Lender..........................58
Section 8.9 Location of Collateral........................59
Section 8.10 Pay Indebtedness to the Lender and
Perform Other Covenants.......................59
Section 8.11 Litigation....................................59
Section 8.12 Defaults or Assessments.......................60
Section 8.13 Employee Benefit Plans........................60
Section 8.14 Subordination of Indebtedness.................60
Section 8.15 Correspondence with Accountants...............60
Section 8.16 Estoppel Affidavits...........................61
Section 8.17 Change of Name, Principal Place of
Business, Etc.................................61
Section 8.18 Environmental Laws............................61
Section 8.19 Compliance with Laws..........................62
Section 8.20 Purchase of Materials and Supplies............62
Section 8.21 Indemnification...............................62
Section 8.22 Solvency......................................63
Section 8.23 Separate Accounts.............................63
ARTICLE IX
BORROWER'S NEGATIVE COVENANTS.........................................64
Section 9.1 Type of Business..............................64
Section 9.2 Mortgages, Liens, Etc.........................64
Section 9.3 Covenant to Subordinate.......................65
Section 9.4 Indebtedness..................................65
Section 9.5 Loans, Investments and Guarantees.............66
Section 9.6 Merger, Sale of Assets, Dissolution,Etc.......67
Section 9.7 Transfer of Ownership Interest in
Borrower and Mortgaged Property...............67
Section 9.8 Distributions; Restricted Payments............68
Section 9.9 Transactions with Affiliates..................68
Section 9.10 Issuance or Disposition of Capital
Securities....................................68
Section 9.11 Change in Documents...........................68
Section 9.12 Change of Fiscal Year, Etc....................69
Section 9.13 Covenant Not to Compete.......................69
Section 9.14 Purchase Agreements...........................70
ARTICLE X
EVENTS OF DEFAULT.....................................................70
Section 10.1 Immediate Acceleration........................71
Section 10.2 Discretionary Acceleration....................72
Section 10.3 Waiver of Default.............................74
<PAGE>
ARTICLE XI
REMEDIES FOR DEFAULT..................................................74
Section 11.1 Action for Enforcement........................74
Section 11.2 Rights and Remedies Cumulative................75
Section 11.3 Rights and Remedies Not Waived................75
ARTICLE XII
FEES AND PAYMENTS.....................................................75
Section 12.1 Commitment Fee................................75
Section 12.2 Expense Deposit...............................76
Section 12.3 Costs, Taxes and Attorneys' Fees..............76
ARTICLE XIII
MISCELLANEOUS.........................................................78
Section 13.1 Notices.......................................78
Section 13.2 Further Assurances............................79
Section 13.3 Survival of Representations and
Warranties....................................80
Section 13.4 Attorneys' Fees...............................80
Section 13.5 Approved Form.................................80
Section 13.6 Severability..................................81
Section 13.7 Counterparts..................................81
Section 13.8 Interpretation................................81
Section 13.9 Conflict......................................81
Section 13.10 Headings......................................82
Section 13.11 Jurisdiction and Venue........................82
Section 13.12 Amendments....................................82
Section 13.13 Waivers.......................................82
Section 13.14 Publicity.....................................83
Section 13.15 Development Consultant........................83
Section 13.16 Governing Law; Benefit........................84
Section 13.17 Reproduction of Documents.....................84
Section 13.18 Absence of Control............................84
Section 13.19 Governmental Regulations of the Lender........85
Section 13.20 Accrual of Interest Under the Note............85
Section 13.21 WAIVER OF CONSEQUENTIAL DAMAGES...............85
Section 13.22 ENTIRE AGREEMENT..............................85
Section 13.23 WAIVER OF JURY TRIAL..........................85
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT made this 29th day of March, 1996 by and
between TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida corporation (the
"BORROWER") and AMRESCO FUNDING CORPORATION, a Delaware corporation, (the
"LENDER").
PRELIMINARY STATEMENTS:
WHEREAS, pursuant to that certain commitment letter dated March
15, 1996 (the "Commitment Letter"), Lender has agreed to loan and the Borrower
has agreed to borrow a sum not to exceed THREE MILLION DOLLARS
($3,000,000.00)(the "Loan"), the proceeds of which shall be used by the Borrower
for the (i) acquisition of Tracts B, D and F of the Real Property, as
hereinafter defined and (ii) funding of interest due on the Loan, all in
accordance with the terms and conditions set forth in the Loan Documents, as
hereinafter defined; and
WHEREAS, simultaneously herewith, Chase Federal Bank, a federal
savings bank ("Chase Federal") has made a loan to the Borrower in the principal
amount of TEN MILLION ONE HUNDRED FIFTY THOUSAND and no/100 DOLLARS
($10,150,000.00) and has issued letters of credit on behalf of the Borrower in
an aggregate amount of THREE MILLION, FIVE HUNDRED EIGHTY FIVE THOUSAND, FIVE
HUNDRED NINETY- THREE AND 78/100 DOLLARS ($3,585,593.78)(the "CHASE FEDERAL A&D
LOAN"), the proceeds of which shall be used by the Borrower for (i) the
acquisition of Tracts B, D and F of the Real Property, (ii) the Acquisition
Contract Development Work, as hereinafter defined, and (iii) the Chase Federal
Letters of Credit, as hereinafter defined, all in accordance with the terms and
conditions set forth in the Chase Federal Loan Documents, as hereinafter
defined; and
WHEREAS, Chase Federal has indicated its willingness to make a
loan to the Borrower in an amount equal to eighty percent (80%) of the cost of
the Tract Infrastructure Work, as hereinafter defined (the "Chase Federal Tract
Loan"), the proceeds of which shall be used by the Borrower for the Tract
Infrastructure Work, all in accordance with the terms and conditions to be set
forth in the Chase Federal Tract Loan Documents, as hereinafter defined; and
WHEREAS, simultaneously herewith, the Borrower has agreed to pay
to Lender certain Contingent Returns, as hereinafter defined, in accordance with
the terms of Article III hereof; and
WHEREAS, the Lender is willing to make the Loan on the terms and
conditions and on the security hereinafter set forth.
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises,
conditions, representations and warranties hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS
As used in this Loan Agreement, the Exhibits and Schedules
attached hereto, if any, and any Loan Document executed incidental thereto, the
following terms shall have the following meanings unless the context otherwise
requires:
"ACQUISITION CONTRACT" shall mean that certain Agreement of
Purchase and Sale dated August 14, 1995, by and between Transeastern and
SarahPark Development Corporation ("SarahPark"), as amended on December 13,
1995.
"ACQUISITION CONTRACT DEVELOPMENT WORK" shall mean the work
specified in Exhibit D to the Acquisition Contract, pertaining to all Tracts
within the boundary plat commonly referred to as the "Nasher Plat", which shall
not include the Tract Infrastructure Work, as incorporated into a business plan
and budget acceptable to Lender.
"AFFILIATE" shall mean, with respect to any Person, a Commonly
Controlled Entity, any other Person which controls (directly or indirectly) the
Person in question, or any other Person which is (directly or indirectly)
controlled by or under common control with the Person in question. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, or the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" shall mean this Loan Agreement, as the same may be
amended, supplemented or otherwise modified from time to time by an agreement in
writing signed by the Borrower, the Guarantor and the Lender.
"AMRESCO UNIT RELEASE PRICE" shall mean the release price(s) to
be specified by Lender.
2
<PAGE>
"BORROWER'S FIRST PRIORITY RETURN" shall mean an amount to be
paid from Net Sales Proceeds in connection with residences constructed on Tracts
D and F of the Real Property, and Tract E of the Real Property to the extent the
same is acquired by the Borrower, equal to 2% of gross sales proceeds for each
such residence, provided that (a) such return shall not be greater than
$30,000.00 in a given calendar month (and amounts payable but for this limit
shall not accrue), and (b) the aggregate of all amounts paid to the Borrower in
respect of the Borrower's First Priority Return shall not exceed an amount equal
to 4% of the sum of (x) development costs for the Tract Infrastructure
Development Work in connection with Tracts D and F of the Real Property, and
Tract E of the Real Property to the extent the same is acquired by the Borrower,
and (y) the costs of construction of improvements on Tracts D and F of the Real
Property, and Tract E of the Real Property to the extent the same is acquired by
the Borrower. Notwithstanding anything to the contrary contained herein, the
payment of the Borrower's First Priority Return shall be strictly conditioned
upon there not existing at the time that the same would otherwise be paid, a
default or event of default pursuant to the Loan Documents, or any event or
circumstance which with the passing of time or the giving of notice, or both,
would be a default or event of default pursuant to the Loan Documents (for the
purposes of this Agreement terms that refer to Borrower's costs of construction
or such similar terms or references shall refer to the actual amounts that are
billed and paid by Borrower to subcontractors/contractors to furnish labor and
materials to the Project and shall not include any Borrower overhead or
mark-up).
"BORROWER'S SECOND PRIORITY RETURN" shall mean (a) an amount
equal to 4% of the sum of (x) development costs for the Tract Infrastructure in
connection with Tracts D and F, and Tract E to the extent the same is acquired
by the Borrower, and (y) the costs of construction of improvements on Tracts D
and F, and Tract E to the extent the same is acquired by the Borrower; reduced
by (b) the amount of the Borrower's First Priority Return which has been paid to
the Borrower. Notwithstanding anything to the contrary contained herein, the
payment of the Borrower's Second Priority Return shall be strictly conditioned
upon there not existing at the time that the same would otherwise be paid, a
default or event of default pursuant to the Loan Documents, or any event or
circumstance which with the passing of time or the giving of notice, or both,
would be a default or event of default pursuant to the Loan Documents.
"BUDGET" shall mean that certain semi-annual budget to be
prepared by Borrower twice annually and submitted to Lender for Lender's review
and approval in accordance with the terms of Section 8.2 hereof.
3
<PAGE>
"BUSINESS DAY" shall mean a day other than Saturday, Sunday or
other day on which commercial banks in Broward County, Florida are authorized or
required by law to close.
"CAPITAL SECURITY" shall mean, (i) with respect to any Person
that is a corporation, any share of capital stock of such Person or any security
convertible into, or any option, warrant or other right to acquire, any share of
capital stock of such Person and (ii) with respect to any Person that is a
partnership, any partnership or other ownership interest in such Person or any
security convertible into, or any option, warrant or other right to acquire, any
partnership or other ownership interest in such Person.
"CASH FLOW" shall mean Gross Revenue minus Project Expenses.
"CHASE FEDERAL" shall mean Chase Federal Bank, a federal savings
bank.
"CHASE FEDERAL A&D LOAN" shall mean the credit facility described
in the second paragraph of the Preliminary Statements and in Section 2.2 hereof.
"CHASE FEDERAL LETTER(S) OF CREDIT" means those certain letters
of credit in an aggregate amount equal to $3,585,593.78 issued by Chase Federal
to applicable governmental authorities to insure completion of certain
infrastructure improvements on the Property.
"CHASE FEDERAL LOAN DOCUMENTS" shall mean (i) the Chase Federal
Note, the Chase Federal Mortgage and all other documents executed by Borrower to
Chase Federal evidencing and securing the Chase Federal A&D Loan, (ii) the Chase
Federal Tract Loan Documents, and (iii) all documents executed and delivered by
Borrower to Chase Federal evidencing and securing the Construction Loan, to the
extent the Construction Loan is provided by Chase Federal and the documents are
approved as to form and substance by Lender in writing.
"CHASE FEDERAL LOANS", collectively, shall mean the Chase Federal
A&D Loan, the proposed Chase Federal Tto Chase Federal encumbering the Property
which secures (i) the indebtedness evidenced by the Chase Federal Note, (ii)
sums disbursed under the
4
<PAGE>
Chase Federal Letters of Credit, and (iii) the Borrower's obligations under the
other Chase Federal Loan Documents.
"CHASE FEDERAL NOTE" shall mean that certain promissory note of
even date herewith from Borrower to Chase Federal evidencing the indebtedness to
Chase Federal under the Chase Federal A&D Loan in the original principal amount
of TEN MILLION ONE HUNDRED FIFTY THOUSAND and no/100 DOLLARS ($10,150,000.00)
together with any reimbursement obligations in connection with the Chase Federal
Letters of Credit.
"CHASE FEDERAL SECURED SUM" means (i) the outstanding principal
balance under the Chase Federal A&D Loan but in no event greater than
$10,150,000.00, (ii) the outstanding principal balance under the Chase Federal
Tract Loan but in no event greater than $2,600,000.00, provided the same is
approved by Lender in writing (iii) all accrued and unpaid interest under the
Chase Federal Loans, (iv) all sums advanced by Chase Federal to prevent
impairment of the collateral secured by the Chase Federal Loan Documents; and
(v) all sums advanced by Chase Federal in the event the Chase Federal Letter(s)
of Credit are drawn upon but in no event greater that $3,585,593.78.
"CHASE FEDERAL TRACT LOAN" shall mean the credit facility
described in the third paragraph of the Preliminary Statements and in Section
2.2 hereof.
"CHASE FEDERAL TRACT LOAN DOCUMENTS" shall mean all documents to
be executed and delivered by Borrower to Lender evidencing and securing the
proposed Chase Federal Tract Loan, provided such documents are approved as to
form and substance by Lender in writing.
"CHASE FEDERAL UNIT RELEASE PRICE" shall mean the sum of money to
be paid to Chase Federal in connection with the sale of a residence and the
release of the Chase Federal Loan Documents from such residence, which amount
shall be established upon execution of the construction loan documentation.
"CONSTRUCTION LOAN" means that certain loan to be obtained by the
Borrower to finance the construction of certain improvements on Tracts C and E
of the Real Property in accordance with the terms of Section 2.5 of this
Agreement.
"CLOSING" shall mean the consummation of the making of the
Loan.
"CLOSING DATE" shall mean the date on which the Closing takes
place.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and applicable regulations of the Department of Treasury
(including applicable final regulations, temporary regulations and proposed
regulations), the applicable rulings of the Internal Revenue Service (including
published Revenue Rulings and private letter rulings) and applicable court
decisions.
"COLLATERAL" shall mean at the time in question, all real and all
tangible and intangible personal property in which a Lien has been created
pursuant to any of the Loan Documents including, without limitation, the
Pledge), all Real Property and Personal Property.
"COLLATERAL ASSIGNMENTS" shall mean all of those certain
assignments, in form and substance satisfactory to the Lender, from the Borrower
which are being delivered, or in the future may be delivered, to the Lender
pursuant to Section 4 hereof.
"COMMITMENT LETTER" shall have the meaning specified in the
second paragraph of the Preliminary Statements.
"COMMONLY CONTROLLED ENTITY" shall mean, with respect to any
Person, an entity, whether or not incorporated, which is under common control
with such Person within the meaning of Subsections 414(b) or (c) of the Code.
"CONSISTENT BASIS" shall mean, in reference to the application of
Generally Accepted Accounting Principles, that the accounting principles
observed in the current period are comparable in all material respects to those
applied in the preceding period.
"CONSTRUCTION CONTRACT" shall mean that certain construction
contract between SarahPark and the General Contractor in connection with the
Acquisition Contract Development Work and the Tract Infrastructure Work, which
shall be assumed by the Borrower on or before the Closing Date.
"CONTINGENT OBLIGATION" as to any Person shall mean the undrawn
face amount of all letters of credit issued for the account of such Person and
shall mean any obligation of such Person guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends, letters of credit or other obligations
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation, or (ii) to maintain working capital or equity
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capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the obligee under any such
primary obligation, or (d) otherwise to assure or hold harmless the obligee
under such primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.
"CONTINGENT RETURNS" collectively, shall mean the Lender's
First Contingent Return and the Lender's Second Contingent Return.
"CONTINGENT RETURN DOCUMENTS" shall mean the Commitment Letter,
this Agreement, the Contingent Return Mortgage and all other documents,
agreements, instruments or certificates delivered to the Lender in connection
with the Contingent Returns (whether at, prior to or after the Closing).
"CONTINGENT RETURN MORTGAGE" shall mean that certain third
mortgage of even date herewith executed by the Borrower to Lender encumbering
the Mortgaged Property which secures the Contingent Returns and the Borrower's
obligations hereunder and under the other Contin "CONTRACTUAL OBLIGATION" of any
Person shall mean any provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is a party or by which
it or any of its property is bound or to which it is subject.
"COUNSEL FOR LENDER" shall mean the firm of Gunster, Yoakley,
Valdes-Fauli & Stewart, P.A. having an office at 500 East Broward
Boulevard, Suite 1400, Broward Financial Center, Fort Lauderdale,
Florida 33394, Attn: Andrew S. Robins.
"DEBTOR PARTIES" shall mean, collectively, the Borrower and
the Guarantors.
"DEFAULT" shall mean any of the events specified in Sections 10.1
and 10.2 herein, whether or not any requirement for the giving of notice, the
lapse of time or both, has been satisfied.
"DOLLARS" AND "$" shall mean dollars in lawful currency of the
United States of America.
"ENVIRONMENTAL CLAIM" shall mean any investigative, enforcement,
cleanup, removal, containment, remedial or other private or governmental or
regulatory action at any time threatened, instituted or completed pursuant to
any applicable Environmental Requirement, against Borrower or against or with
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respect to the Mortgaged Property or any condition, use or activity on the
Mortgaged Property (including any such action against Lender), and any claim at
any time threatened or made by any person against Borrower or against or with
respect to the Mortgaged Property or any condition, use or activity on the
Mortgaged Property (including any such claim against Lender), relating to
damage, contribution, cost recovery, compensation, loss or injury resulting from
or in any way arising in connection with any Hazardous Material or any
Environmental Requirement.
"ENVIRONMENTAL LAW" shall mean any federal, state or local law,
statute, ordinance, code, rule, regulation, license, authorization, decision,
order, injunction, decree, or rule of common law, and any judicial or agency
interpretation of any of the foregoing, which pertains to health, safety, any
Hazardous Material, or the environment (including but not limited to ground or
air or water or noise pollution or contamination, and underground or above
ground tanks) and shall include without limitation, the Solid Waste Disposal
Act, 42 U.S.C. ss. 6901 ET SEQ.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 ET SEQ. ("CERCLA"),
as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA");
the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 ET SEQ.; the
Federal Water Pollution Control Act, 33 U.S.C. ss. 1251 ET SEQ.; the Clean Air
Act, 42 U.S.C. ss. 7401 ET SEQ.; the Toxic Subhe Florida Resource Recovery and
Management Act, the Water Quality Assurance Act of 1983, The Florida Resource
Conversation and Recovery Act, the Florida Air and Water Pollution Control Act,
The Florida Safe Drinking Water Act, The Pollution Spill Prevention and Control
Act and any other local, state or federal environmental statutes, and all rules,
regulations, orders and decree now or hereafter promulgated under any of the
foregoing, as any of the foregoing now exist or may be changed or amended or
come into effect in the future.
"ENVIRONMENTAL REQUIREMENT" shall mean any Environmental Law,
agreement or restriction (including but not limited to any condition or
requirement imposed by any insurance or surety company), as the same now exists
or may be changed or amended or come into effect in the future, which pertains
to health, safety, any Hazardous Material, or the environment, including but not
limited to ground or air or water or noise pollution or contamination, and
underground or above ground tanks.
"EQUIPMENT" shall mean all furniture, fixtures, tenant
improvements, machinery, vehicles, equipment and other personal property of
every nature whatsoever now or hereafter owned by the Borrower wheresoever
located including personal property now or hereafter located in, on, or used or
intended to be used in
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connection with, the operation of the Mortgaged Property or any of the other
real property now or hereafter owned by the Borrower, including without
limitation (i) all extensions, additions, improvements, betterments, renewals
and replacements to any of the foregoing, and (ii) all of the right, title and
interest of the Borrower in any such personal property or fixtures subject to
any conditional sales contract, chattel mortgage or similar lien or claim
together with the benefit of any deposits or payments now or hereafter made by
or on behalf of the Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"EVENT OF DEFAULT" shall mean any of the events specified in
Sections 10.1 and 10.2 hereof, provided that any requirement for the giving of
notice, the lapse of time, or both, or any other condition, has been satisfied.
"FIRST CONTINGENT RETURN" shall mean an additional contingent
return to Lender that calculation of which shall be limited to the extent of any
Net Profits after the Borrower's First Priority Return (as that term is defined
herein) in an amount equal to an additional return on amounts which have been
advanced pursuant to the Loan, based on the amount of time that such funds have
been outstanding, at a rate equal to four (4%) percent per annum compounded
monthly.
"FIXTURES" shall have the meaning ascribed thereto in the
Mortgage.
"FUNDING AGREEMENT" shall mean that certain letter agreement of
even date herewith executed by the Guarantors to the Lender, agreeing to pay
certain amounts related to increases in the cost of the Project in excess of
said costs as reflected in the Pre-Closing Budget.
"GENERAL CONTRACTOR" shall mean Ryan Incorporated Eastern.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" OR "GAAP" shall mean
those principles of accounting set forth in Opinions of the Financial Accounting
Standards Board of the American Institute of Public Accountants or which have
other substantial authoritative support and are applicable in the circumstances
as of the date of any report required herein or as of the date of an application
of such principles as required herein.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, and
any state or other political subdivision thereof, and any other agency,
department, commission, board, bureau, court or other instrumentality or entity
exercising executive, legislative,
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judicial, regulatory or administrative functions of or pertaining
to government.
"GOVERNMENTAL REQUIREMENT" shall mean any law, enactment,
statute, code, ordinance, order, rule, regulation, judgment, decree, writ,
injunction, franchise, permit, certificate, license, authorization, or other
direction or requirement of any Governmental Authority now existing or hereafter
enacted, adopted, promulgated, entered, or issued applicable to Lender, Borrower
or the Mortgaged Property, including, without limitation, any Environmental Law.
"GROSS REVENUE" shall mean, for a given period of time, the gross
income received by Borrower or any affiliate of Borrower from all sources
arising from, or in connection with the Real Property during such period,
calculated on a cash basis but otherwise in accordance with generally accepted
accounting practices consistently applied and shall include, without limitation,
(i) proceeds of the sale of Tract B of the Real Property, (ii) proceeds of the
sale of Tract C of the Real Property, (iii) proceeds of the sale of any product
of the Real Property, (iv) proceeds of the sale of any other portion of the Real
Property or of any residential unit constructed on the Real Property or any
right or property interested associated with the Real Property or any such
residential unit constructed thereon, (v) proceeds of any contract right, cause
of action claim or other interest associated in any way with the Real Property,
(vi) proceeds of liability insurance; (vii) casualty proceeds and condemnation
proceeds net of reasonable expenses from any casualty, taking or conveyance in
lieu thereof (other than a total condemnation) of the Real Property to the
extent not paid to the holder of a mortgage on the Real Property and paid to
Borrower and not applied to the restoration of the Real Property, (viii)
interest payable to Borrower on security deposits, (ix) interest on escrows
approved or required by Lender, (x) payments made in consideration of any
contract extension for the sale of any of the property within the Project, (xi)
interest on Gross Receipts or on Cash Flow until applied in accordance with this
Loan Agreement, (xii) amounts received by Borrower from purchasers of Tracts or
from applicable Governmental Authorities as reimbursements for impact fees paid
by or on behalf of Borrower and (xiii) payments made under any joint venture
partnership interest owned by Borrower; and (xiv) and any other amounts or
revenues typically considered as revenues. Notwithstanding anything to the
contrary in the previous sentence, Gross Receipts shall not include (i) proceeds
the Loan Documents or the Chase Federal Loan Documents; (ii) casualty insurance
and taking proceeds actually applied to restoration of the Real Property as
permitted by the Loan Documents; (iii) income derived from the period prior to
the date of this Note; and (iv) amounts escrowed for Expenses to be paid on a
future date as provided in the Loan Documents until such time as the amounts are
applied to Expenses. Components of
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revenue will be allocated among the Tracts and Gross Revenue will be determined
on a Tract specific basis as well as on an aggregate basis.
"GUARANTORS" shall mean Transeastern and the Principals,
jointly and severally.
"GUARANTY" shall mean that certain guaranty of payment and
performance of even date herewith executed by each of the Guarantors to the
Lender.
"HAZARDOUS MATERIAL" shall mean any substance, whether solid,
liquid or gaseous which is listed, defined or regulated as a "hazardous
substance," "hazardous waste," or "solid waste," or pesticide or otherwise
classified as hazardous or toxic, in or pursuant to any Environmental
Requirement; or which is or contains asbestos, radon, any polychlorinated
biphenyl, urea formaldehyde foam insulation, explosive or radioactive material,
or motor fuel or other petroleum hydrocarbons; which causes or poses a threat to
cause a contamination or nuisance on the Mortgaged Property or any adjacent
property or a hazard to the environment or to the health or safety of persons on
the Mortgaged Property.
"IMPOSITIONS" shall mean all (i) real estate and personal
property taxes and other taxes and assessments, public or private; utility rates
and charges including those for water and sewer; all other governmental and
non-governmental charges and any interest or costs or penalties with respect to
any of the foregoing; and charges for any public improvement, easement or
agreement maintained for the benefit of or involving the Mortgaged Property,
general and special, ordinary and extraordinary, foreseen and unforeseen, of any
kind and nature whatsoever that at any time prior to or after the execution of
this Agreement may be assessed, levied or imposed upon the Mortgaged Property or
the Revenues or income received therefrom, or any use or occupancy thereof, (ii)
other taxes, assessments, fees and governmental and non-governmental charges
levied, imposed or assessed upon or against Borrower or any of its properties
and (iii) taxes levied or assessed upon this Mortgage, the Note, and the other
Loan Documents, or any of them.
"IMPROVEMENTS" shall mean all buildings, structures,
appurtenances and improvements, including all additions thereto and replacements
and extensions thereof, now constructed or hereafter to be constructed under, on
or above the Real Property.
"INDEBTEDNESS" of a Person shall mean (a) indebtedness of such
Person for borrowed money (other than its obligations hereunder), or (b)
indebtedness of such Person (i) for the deferred purchase price of services or
property, which purchase price is paid over a
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period of 12 months or more from the date of incurrence of the obligation in
respect thereof, or (ii) evidenced by a note or similar written instrument
(including, without limitation, any such indebtedness which is non-recourse to
the credit of such Person but is secured by assets of such Person), (c)
obligations of such Person under leases which have been or, in accordance with
GAAP, should be, recorded as Capitalized Leases, (d) indebtedness of such Person
arising under acceptance facilities, (e) indebtedness consisting of unpaid
reimbursement obligations in respect of all drafts drawn under letters of credit
issued for the account of such Person, (f) indebtedness of such Person arising
as a result of any Contractual Obligation (other than non-material Contractual
Obligations arising in the ordinary course of business of the Borrower), and (g)
a Contingent Obligation which has matured into a non-contingent obligation.
"INTEREST RATE" shall mean a fixed rate of interest equal to
Twenty Percent (20%) per annum.
"INTEREST RESERVE ACCOUNT" shall have the meaning ascribed
thereto in Section 2.1(b) hereof.
"LIEN" shall mean any mortgage, deed of trust, deed to secure
debt, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code (other than any such financing statement filed for informational
purposes only or in connection with an operating lease) or comparable law of any
jurisdiction to evidence any of the foregoing.
"LOAN" shall mean the credit facility described in the first
paragraph of the Preliminary Statements and in Section 2.1 hereof.
"LOAN DOCUMENTS" means, collectively, (i) this Agreement, the
Note, the Guaranty, the Funding Agreement, the Mortgage, the Contingent
Mortgage, the Pledge Agreement, the Security Documents, and all other documents
executed by the Debtor Parties to the Lender in connection with the Loan, and
(ii) all other agreements, documents and instruments arising out of any
agreement, document or instrument referred to in clause (i) above.
"LOAN PROCEEDS" shall mean (i) the portion of the Loan funded at
Closing, and (ii) the amount reserved for the payment of interest, all in
accordance with Section 2.1 of this Agreement, which is being funded for the
purpose of constructing
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infrastructure and other improvements for, among other things, the construction
of single and multi-family projects.
"LOAN TERM" shall mean that certain period of time commencing on
the Closing Date and terminating on that certain date twenty four (24) months
thereafter.
"MORTGAGE" shall mean that certain second mortgage of even date
herewith executed by the Borrower to Lender encumbering the Mortgaged Property
which secures (i) the indebtedness evidenced by the Note, and (ii) the
Borrower's obligations hereunder and under the other Loan Documents.
Notwithstanding the foregoing, the Mortgage shall not secure the Contingent
Returns which are secured by the Contingent Return Mortgage.
"MORTGAGED PROPERTY" shall mean the Real Property and the
Improvements, if any.
"NET PROFIT" shall mean net income before taxes, payment of the
Second Contingent Return, depreciation and other non cash expenses, all as
determined in accordance with GAAP; and shall be determined independently for
each Tract based on an allocation of income and expense items acceptable to the
Lender.
"NET SALES PROCEEDS" shall mean the gross sales price of each
unit for the sale of units to be constructed on the Real Property, less: (i)
Borrower's cost for deed preparation, transfer taxes and prorated property taxes
in an amount not to exceed one and one-half (1 1/2%) percent of the gross sales
price; (ii) aggregate sales commissions not to exceed six percent (6%) of the
gross sales price; (iii) 100% of the amount of construction loan proceeds drawn
in connection with the construction of such unit; (iv) the Chase Federal Unit
Release Price; and (v) the AMRESCO Unit Release Price.
"NOTE" shall mean that certain promissory note of even date
herewith from Borrower to Lender evidencing the indebtedness to Lender under the
Loan in the original principal amount of THREE MILLION DOLLARS ($3,000,000.00).
"OPTION CONTRACT" shall mean that certain option agreement
between SarahPark and Transeastern dated August 14, 1995, as amended by
amendment dated December 13, 1995.
"OPTION PROPERTY" shall mean those certain parcels of real
property which are the subject of the Option Contract and are more particularly
described as Tract C and Tract E in EXHIBIT 1 attached hereto and made a part
hereof.
"PAY RATE" shall mean a rate of interest equal to Ten Percent
(10%) per annum.
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"PERMITTED TITLE EXCEPTIONS" shall mean those matters described
in Schedule B to the title insurance policy insuring Lender's interest in the
Mortgage.
"PERSON" shall mean any corporation, business entity, natural
person, firm, joint venture, partnership, trust, unincorporated organization,
association, government, or any department or agency of any government.
"PERSONAL PROPERTY" shall have the meaning ascribed thereto in
the Mortgage.
"PLAN" shall mean any pension plan which is covered by Title IV
of ERISA and in respect of which the Borrower or a Commonly Controlled Entity of
the Borrower is an "employer" as defined in Subsection 407(d)(7) of ERISA.
"PLEDGE AGREEMENT" shall mean that certain Pledge Agreement of
even date herewith between Transeastern, as Pledgor, and Lender.
"PLEDGOR" shall mean Transeastern.
"PRE-CLOSING BUDGET" shall mean that certain budget to be
prepared by Borrower and submitted to Lender for its review and approval prior
to the Closing Date in accordance with the terms of Section 7.12 hereof.
"PRINCIPALS", collectively, shall mean Arthur Falcone, Edward
Falcone and Phil Cucci (each individually, a "Principal").
"PRIORITY RETURNS" collectively, shall mean the Borrower's First
Priority Return and the Borrower's Second Priority Return.
"PROJECT" shall mean the acquisition and development of the Real
Property, the construction of the Improvements and the selling of Tracts on and
units of the Real Property.
"PROJECT EXPENSES" shall mean, for any period, all costs and
expenses reasonably incurred and actually paid by Borrower during such period
incident to the normal ownership and development of and construction upon the
Real Property for which provision is made in a Budget, calculated on a cash
basis (except as otherwise set forth under (ii) below), but otherwise in
accordance with generally accepted accounting principles consistently applied,
including, without limitation, (i) approved costs of the Acquisition Contract
Development Work, the Tract Infrastructure Work and unit construction costs,
(ii) real estate and personal property taxes, water charges, sewer rents,
assessments and other governmental levies assessed against the Real Property, or
such other similar
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taxes, assessments, levies or charges as may be imposed in lieu of or in
addition to any of the foregoing by appropriate governmental authority, and
insurance premiums, all of which to the extent paid on other than a monthly
basis shall be calculated on an accrual basis allocating such expenses in equal
monthly amounts over the applicable period of their payment; (iii) regularly
scheduled installments of principal and interest on the Chase Federal Loan and
the Loan and release prices approved by the Lender in connection with the fees
in connection with a construction loan for improvements on Tracts D and F of the
Real Property, and Tract E of the Real Property to the extent the same is
acquired by the Borrower; (vi) other reasonable and ordinary expenses for
properties similar to the Real Property; and (vii) expenses deducted in
connection with the computation of Net Sales Proceeds.
Notwithstanding anything to the contrary in the preceding sentence, Expenses
shall not include (i) obligations of Borrower not related to the ownership and
operation of the Real Property, (ii) payments to the Borrower, the Principals or
their affiliates other than the Borrower's First Priority Return, (iv)
commitment, origination, finder's, broker's, and other fees paid in connection
with the acquisition of the Real Property or the Option Property, the sale of
Tract B or Tract C of the Real Property, or any financing of the Real Property
or any portion thereof, including any such fees paid in connection with the
Chase Federal Loan and the Loan, (v) any cost or expense paid out of any reserve
established to cover Cost Overruns, (vi) non-cash expenses such as depreciation,
(vii) the cost of any item required to be capitalized under generally accepted
accounting principles except for capital expenditures included in the
Pre-Closing Budget or a Budget, (viii) legal, accounting, management and similar
fees and other obligations and expenses of Borrower not exclusively related to
the ownership and operation of the Real Property or otherwise approved by Lender
in writing, with the exception of the Borrower's First Priority Return, (ix)
except for regularly scheduled installments of principal and interest on the
Chase Federal Loan and the Loan, all other payments of debt service or otherwise
on any loan or financing, including, without limitation, any late charges or
similar charges, including increased interest payments at a default rate,
payable under the Chase Federal Loan and the Loan, (x) any reimbursement to
Lender of expenses incurred by reason of an Event of Default together with any
interest payable thereon, (xi) any costs, expenses or fees, including interest
payments, payable to any party by reason of a default by Borrower in the
performance of any obligation owing to any such party, unless specifically
approved by Lender in its sole discretion for inclusion in Expenses, (xii) any
demand fees, penalties or similar charges relating to late payments of real
estate taxes, assessments and similar charges on the Real Property, and any
interest relating to such late payments, (xiii) any income, franchise or similar
taxes
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on Borrower or its affiliates, (xiv) any costs or expenses incurred by Borrower
in connection with closing the Loan or satisfying any of the conditions
precedent to the funding of the Loan, (xv) any costs or expenses not approved by
Lender in writing relating to correcting any violation of any law, ordinance or
regulation affecting the Real Property (xvi) appraisal costs, (xvii) expenses
relating to, or incurred during, the period prior to the date of this Agreement,
(xviii) any return of equity or return on equity, and (xix) any expenses for
which Borrower receives reimbursement or funds from other sources not included
in Gross Revenue, such as disbursements under the Chase Federal Loan or the Loan
or any other loan, and proceeds of insurance and condemnation awards other than
those included in Gross Receipts. In no event shall any particular payment of
any cost or expense included within the foregoing definition of "Project
Expenses" be taken into account more than once. Components of Project Expenses
will be allocated among the Tracts and Project Expenses will be determined on a
Tract specific basis as well as on an aggregate basis.
"REAL PROPERTY" shall mean that certain real property located in
Broward County, Florida and described more particularly in EXHIBIT 2 attached
hereto and made a part hereof as Tract B, Tract D and Tract F, together with any
additional real property the title to which is held by the Borrower from time to
time, including, without limitation, the Option Property.
"REPORTABLE EVENT" shall mean any of the events set forth in
Subsection 4043(b) of ERISA or the regulations thereunder.
"REQUIREMENT OF LAW" for any Person shall mean the Articles of
Incorporation and Bylaws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER" of any Person shall mean the trustee or the
chairman of the board or president of such Person in each case duly authorized
to undertake the required action then being taken and, as to financial matters,
the chief financial officer or treasurer of any Person, in each case duly
authorized to undertake the required action then being taken.
"SECOND CONTINGENT RETURN" shall mean an additional contingent
return equal to ten (10%) percent of the Net Profits on Tracts D, E and F of the
Real Property, and five (5%) percent of the Net Profits on Tracts B and C of the
Real Property, in each case, as reduced by (a) the First Contingent Return, (b)
the Borrower's First Priority Return, and (c) the Borrower's Second Priority
Return, provided, however, in the event that the Loan is reduced by
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the sum of $1,000,000.00 plus current and accrued interest on the $1,000,000 at
the Interest Rate thereon, on or before September 1, 1996, the foregoing
percentages shall be reduced to five (5%) percent and two and on half (2 1/2)
percent, respectively.
"SECURITY DOCUMENTS" shall have the meaning ascribed in
Section 4.19 hereof.
"STOCK" shall mean the stock of Borrower pledged by Transeastern
to Lender under the Stock Pledge Agreement.
"SUBORDINATED INDEBTEDNESS" shall mean the indebtedness of the
Borrower to any trustee, officer, director, shareholder, Subsidiary or Affiliate
of the Borrower which has been subordinated to the Loan pursuant to Section 8.14
hereof.
"SUBSIDIARY" of any Person shall mean (i) a corporation or other
entity of which shares of stock or other ownership interests having voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person, and (ii) as to the Borrower, any
Subsidiary of a Subsidiary (and successor Subsidiaries thereof) of the Borrower.
"TRACT" shall mean any one of the parcels of real property
forming a part of the Real Property, any one of which may be identified by
reference to the letter assigned thereto in the applicable exhibit to this
Agreement.
"TRACT B SALES CONTRACT" shall mean that certain contract for the
sale of Tract B of the Real Property dated December 8, 1995, by and between
Borrower, as seller, and Hanover PH Limited Partnership, as buyer.
"TRACT INFRASTRUCTURE FUNDING REQUIREMENT" shall mean the portion
of the costs of completing the Tract Infrastructure Work with respect to Tracts
D and F of the Real Property which are not funded pursuant to the Chase Federal
Tract Loan, which amount shall not exceed $642,000.00. The Tract Infrastructure
Funding Requirement shall be deemed reduced from time to time by the amount of
any other funds made available for the purpose of funding the Tract
Infrastructure Work (other than the proceeds obtained from the Chase Federal
Tract Loan), reductions in the cost of the Tract Infrastructure Work and as
otherwise appropriate to effectuate the intentions of the parties hereto.
"TRACT INFRASTRUCTURE WORK" shall mean the work required to
install infrastructure within the boundaries of a particular Tract
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of the Property, which work shall be approved by Lender and shall not include
Acquisition Contract Development Work.
"TRACTS C AND E ACQUISITION LOAN" shall have the meaning ascribed
thereto in Section 2.5 hereof.
"TRACT GROSS REVENUE" shall mean the Gross Revenue with respect
to a particular Tract forming a portion of the Real Property.
"TRACT NET PROFIT" shall mean the Net Profit with respect to a
particular Tract forming a portion of the Real Property.
"TRACT PROJECT EXPENSES" shall mean the Project Expenses with
respect to a particular Tract forming a portion of the Real Property.
"TRANSEASTERN" shall mean Transeastern Properties of South
Florida, Inc., a Florida corporation.
"TRI-PARTY AGREEMENT" shall mean that certain tri-party agreement
of even date herewith by and among Borrower, Lender and Chase Federal whereby
the parties thereto set forth their mutual understanding with respect to (i) the
terms by which Lender has agreed to subordinate to the Chase Federal Loan
Documents, (ii) the exercise of certain rights, remedies and options by the
respective parties hereto under the above described documents, and (iii) the
Borrower obtaining a construction loan to finance the construction of certain
improvements on the Property.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS
(a) The terms "material" and "materially" shall have the meanings
ascribed to such terms under GAAP as such would be applied to the business of
the Borrower, except as the context shall clearly otherwise require; (b) all of
the terms defined in this Agreement shall have such defined meanings when used
in other documents issued under, or delivered pursuant to, this Agreement unless
the context shall otherwise require; (c) all terms defined in this Agreement in
the singular shall have comparable meanings when used in the plural, and vice
versa; (d) accounting terms to the extent not otherwise defined shall have the
respective meanings given them under, and shall be construed in accordance with,
GAAP; (e) terms defined in, or by reference to, Article 9 of the Uniform
Commercial Code as adopted in Florida (Chapter 679 of the Florida Statutes) to
the extent not otherwise defined herein shall have the respective meanings given
to them in Article 9 with the exception of the word "document" unless the
context clearly requires such meaning; (f) the words "hereby," "hereto,"
"hereof," "herein,", "hereunder" and words of similar import when used in this
Agreement
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shall refer to this Agreement as a whole and not to any particular provision of
this Agreement; (g) the masculine and neuter genders are used herein and
whenever used shall include the masculine, feminine and neuter as well; and (h)
whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the heirs, personal representatives,
participants, successors and assigns of such parties unless the context shall
expressly provide otherwise.
ARTICLE II
AMOUNT AND TERMS OF LOAN AND CHASE FEDERAL LOANS
SECTION 2.1 TERMS OF LOAN
Subject to the terms, conditions set forth herein, the Lender
agrees to make the Loan to Borrower as follows:
(a) The Pre-Closing Budget shall call for the application of the
Loan Proceeds (i) for the acquisition of Tracts B, D and F of the Real Property
pursuant to the Acquisition Contract; and (ii) to fund interest to the Lender at
the Pay Rate in accordance with the terms of subsection (c) below.
(b) The Lender shall advance up to $2,800,000.00 at the Closing,
with the precise amount funded being determined by the Lender based on the
amount necessary to fund the acquisition of Tracts B, D and F of the Real
Property.
(c) The parties acknowledge that a portion of the Loan Proceeds,
$200,000, has been allocated by Lender to an "Interest Reserve Account."
Provided there is no Event of Default, interest payments from the Interest
Reserve Account shall be funded by Lender for the account of Borrower at the Pay
Rate on the first day of each respective month, as the same become due, by
Lender's bookkeeping entries, unless Borrower elects to pay interest due in cash
to Lender. Upon disbursement of funds from the Interest Reserve Account, the
amount disbursed shall be added to the outstanding principal sum of the Loan and
shall bear interest at the Interest Rate. When and if such Interest Reserve
Account is depleted, then and in such event all monthly interest payments shall
be paid by Borrower. Notwithstanding any other provisions contained in this
Agreement to the contrary, Lender shall not be required to fund any sums from
the Interest Reserve Account if there is an Event of Default.
SECTION 2.2 TERMS OF CHASE FEDERAL LOANS
(a) The Borrower has negotiated the Chase Federal A & D Loan
in connection with the acquisition of the Real Property and
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development of the Project, the closing on and funding of which loan on terms
satisfactory to Lender, is a condition precedent to the obligation of the Lender
to close the Loan. The Borrower contemplates that Chase Federal will fund the
Chase Federal Tract Loan to partially finance the cost of the Tract
Infrastructure Work. The Chase Federal Loans shall be as follows:
(i) The Chase Federal A&D Loan shall be for an
amount acceptable to the Borrower and the Lender, not to exceed $10,150,000.00,
together with any reimbursement obligations in connection with the Chase Federal
Letters of Credit for (aa) acquisition of Tracts B, D and F of the Real
Property, (bb) the Acquisition Contract Development Work, and (cc) the Chase
Federal Letters of Credit; and
(ii) The proposed Chase Federal Tract Loan shall be
for an amount acceptable to the Borrower and the Lender not to exceed a maximum
of 80% of the cost of the Tract Infrastructure Work for Tracts D and F of the
Real Property, which shall be $3,242,000.00 resulting in a maximum loan amount
of $2,600,000.00.
(b) As a condition to funding the Loan, (i) all documents
governing the Chase Federal Loans must be acceptable to the Lender, and (ii)
Chase Federal, Borrower and Lender shall have entered into the Tri-Party
Agreement. Lender acknowledges that the Chase Federal Loan Documents shall also
secure the repayment obligations pursuant to the Chase Federal Letters of Credit
in connection with the Acquisition Contract Development Work which is to be
funded pursuant to the Chase Federal A&D Loan.
SECTION 2.3 TERMS OF NOTE
As evidence of the Loan, the Borrower shall execute and deliver the
Note to the Lender on the Closing Date. The terms of The Note
shall be as follows:
(a) The Note shall bear interest at the Interest Rate calculated
on the basis of a 365-day year based on the actual number of days elapsed.
(b) Interest shall be paid in accordance with the Note.
(c) The entire unpaid principal balance then outstanding plus
accrued and unpaid interest shall mature and be due and payable upon the earlier
of: (i) the occurrence of an Event of Default; or (ii) April 1, 1998.
SECTION 2.4 APPLICATION OF FUNDS
All funds paid to the Lender in connection with the Loan shall be
applied first to the payment of any outstanding costs, expenses,
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fees or charges which were required to be paid pursuant to the Loan Documents,
then to the payment of all accrued interest and then to the repayment of
principal.
SECTION 2.5 TRACTS C AND E ACQUISITION LOAN AND
CONSTRUCTION LOAN
The parties acknowledge and agree that the Borrower may obtain a
loan for the acquisition of Tracts C and E of the Real Property (the "Tracts C
and E Acquisition Loan") and the Construction Loan from Chase Federal, or such
other financial institution reasonably satisfactory to Lender, to finance the
acquisition of Tracts C and E and the construction of the Improvements,
respectively. Lender agrees that it will subordinate the lien and operation of
the Loan Documents to the lien and operation of the documents securing the
Tracts C and E Acquisition Loan and the Construction Loan, provided, however,
that such loans shall be with lenders and pursuant to documents and in amounts
and on terms which shall be acceptable to the Lender, including, without
limitation, the terms governing the relationship between such lenders and the
Lender.
SECTION 2.6 PREPAYMENT OF LOAN
Borrower may prepay the Loan in whole or in part at any time
without bonus or penalty. Notwithstanding the foregoing, Borrower acknowledges
that the prepayment of the Loan in whole or in part shall in no way impair or
affect Lender's right to receive the Contingent Returns.
SECTION 2.7 [INTENTIONALLY DELETED]
SECTION 2.8 INTENT NOT TO COMMIT USURY
The Borrower does not intend or expect to pay, nor does the
Lender intend or expect to charge, accept or collect, any interest under the
Note, this Agreement or any other instrument executed in connection herewith
greater than the maximum legal rate of interest which may be charged under
applicable law. Should any event result in the computation or earning of
interest in excess of such maximum legal rate, any and all such excess shall be
refunded to the Borrower. Notwithstanding anything to the contrary contained in
this Agreement, the Note, or any other instrument delivered in connection
herewith, the amount of interest due under the terms of this Agreement, the Note
or any other instrument shall in no event exceed the maximum amount of interest
permitted to be charged by law.
SECTION 2.9 DETERMINATION OF NET PROFIT
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The Net Profits in connection with the Project shall be computed
separately with respect to each Tract (aggregating Tracts D and E) forming a
portion of the Real Property based on an allocation acceptable to the Lender of
all items which enter into the determination of Net Profit.
Net Profit shall be computed on a quarterly basis and shall be
reflected in the financial information required to be delivered to the Lender
pursuant to Section 8.2 of this Agreement.
SECTION 2.10 APPLICATION OF NET SALES PROCEEDS
The Lender shall have the right to direct the title company or
law firm acting as closing agent with respect to any closing on a residential
unit comprising a portion of the Real Property to deposit any Net Sales Proceeds
for each such unit in an account acceptable to the Lender and Borrower
authorizes such trust or escrow arrangements with respect to such funds as shall
be acceptable to the Lender.
SECTION 2.11 DISTRIBUTIONS
Other than the payment of the Borrower's First Priority Return,
as specifically set forth in Section 3.3 of this Agreement, all Cash Flow shall
be applied on a quarterly basis to reduce the principal balance of the Loan,
which shall include all accrued and unpaid interest pursuant to the Loan. All
funds so applied shall first be applied in accordance with the terms of Section
2.4 of this Agreement.
ARTICLE III
SALE OF REAL PROPERTY; APPLICATION OF PROCEEDS
SECTION 3.1 PARTIAL RELEASES.
Provided the Borrower is not then in Default hereunder, under the
Note, the Mortgage or any other Loan Document, Lender will provide partial
releases in respect of its interest under the Mortgage and other Loan Documents,
as required for the purpose of transferring clear title to purchasers of
portions of the Real Property, including, without limitation, residential units
in the Project, provided Borrower complies with all of the following items:
(a) That the Lender receives the proceeds due
Lender in accordance with the terms set forth in this Article III hereof.
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(b) Borrower's request for a partial release shall
be accompanied by a fully-executed photocopy of the purchase agreement and
fully-executed, original buyer's and seller's settlement statements.
(c) Payments made for releases shall be applied by
Lender in accordance with the terms of this Agreement.
(d) Borrower shall provide Lender with current
survey(s) of any Tract(s) to be released from the Mortgage which survey shall be
certified to Lender and shall be in compliance with applicable laws.
(e) Lender shall receive an endorsement to its
mortgagee title insurance policy reflecting the Tract or unit released.
(f) No Tract shall be released if such release
would deny or restrict (i) access from the remaining Mortgaged Property to a
paved public street, and (ii) utilities to the remaining Mortgaged Property.
(g) Borrower agrees to reimburse Lender for all
out-of- pocket fees and costs, including, without limitation, legal fees, in
connection with the granting of such partial releases and shall provide Lender
with any and all information requested by Lender with respect to the portion of
the Real Property to be released.
SECTION 3.2 SALES OF TRACTS OR UNITS ON THE REAL PROPERTY.
The parties acknowledge and agree that Borrower, upon the sale of
Tracts or Units constituting a portion of the Real Property shall pay to Chase
Federal and to Lender certain release prices in connection therewith and shall
apply other portions of the Net Sales Proceeds, as follows:
(a) TRACT B. Upon the sale or other transfer of
Tract B of the Real Property, the following terms shall apply:
(i) The Chase Federal Release Price for said Tract,
$5,000,000.00, shall be paid to Chase Federal to be applied against the
Borrower's outstanding indebtedness under the Chase Federal A&D Loan; and
(ii) The remaining net proceeds of sale (after
payment of closing costs and third party brokerage expenses in amounts and for
purposes acceptable to Lender), which shall be not less then $1,000,000.00,
subject to reduction for escrows of amounts due to secure the payment of the
full amount of the Municipal Land Dedication charges due or to become due, shall
be (i) paid to Lender to be applied against the Borrower's outstanding
indebtedness under the Loan, provided, however, a portion thereof
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not greater than an amount equal to the Tract Infrastructure Funding Requirement
may be used by the Borrower for the payment of costs incurred by the Borrower
for the Tract Infrastructure Work with respect to Tracts D and F of the Real
Property, provided such costs are approved in writing by Lender, with the
remaining balance thereof paid to Lender, or (ii) subject to the prior written
consent of Lender which consent may be granted or withheld by Lender in its sole
and absolute discretion, paid to Chase Federal to repay additional amounts due
Chase Federal under the Chase Federal A&D Loan.
(b) TRACT D. Upon the sale or other transfer of Tract D of the
Real Property and provided that Lender has approved the terms of such transfer,
which approval shall be given in Lender's sole and absolute discretion, the
following terms shall apply:
(i) The Chase Federal Release Price for said Tract,
$4,500,000.00, shall be paid to Chase Federal to be applied against the
Borrower's outstanding indebtedness under the Chase Federal A&D Loan; and
(ii) The remaining net proceeds of sale (after
payment of closing costs and third party brokerage expenses in amounts and for
purposes accepta sale or other transfer of Tract F of the Real Property and
provided that Lender has approved the terms of such transfer, which approval
shall be given in Lender's sole and absolute discretion, the following terms
shall apply:
(i) The Chase Federal Release Price for said Tract,
$3,000,000.00, shall be paid to Chase Federal to be applied against the
Borrower's outstanding indebtedness under the Chase Federal A&D Loan; and
(ii) The remaining net proceeds of sale (after
payment of closing costs and third party brokerage expenses in amounts and for
purposes acceptable to Lender) shall be paid to Lender to be applied against the
Borrower's outstanding indebtedness under the Loan.
(d) TRACT C. As to Tract C of the Option Property,
the following terms shall apply:
(i) It is the Borrower's intention to arrange for
the conveyance of Tract C of the Option Property contemporaneously with the
acquisition of the Option Property pursuant to the Option Contract, in which
event, (i) the net proceeds of sale (after payment of closing costs and third
party brokerage expenses in
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amounts and for purposes acceptable to Lender), which shall be not less than
$1,000,000.00, which may be payable at a later date pursuant to the terms of the
sale/joint venture documents and which documents Lender has the right to approve
in its sole and absolute discretion, shall be paid to Lender to be applied
against the Borrower's outstanding indebtedness under the Loan, provided,
however, at the Borrower's election, a portion thereof not greater than an
amount equal to the Tract Infrastructure Funding Requirement may be applied by
the Borrower to the payment of costs incurred by the Borrower for the Tract
Infrastructure Work with respect to Tracts D and F of the Real Property, and
Tract E of the Option Property, to the extent approved in writing by Lender,
with the remaining balance thereof paid to Lender, olute discretion, a portion
of such sales proceeds may be applied to repay additional amounts due Chase
Federal under the Chase Federal A&D Loan.
(ii) In the event that Tract C of the Option
Property is acquired by the Borrower and is not contemporaneously conveyed to a
third party, the Borrower shall be permitted to obtain up to $3,600,000.00 of
mortgage financing for the purpose of acquiring the Option Property, provided
that such loan shall be with lenders and pursuant to documents and in amounts
and on terms which shall be acceptable to Lender, including, without limitation,
terms governing the relationship between the provider of such financing and
AMRESCO (the "TRACTS C AND E ACQUISITION LOAN") . At the time of the subsequent
transfer of Tract C of the Option Property by the Borrower, (i) the net proceeds
of sale (after payment of closing costs and third party brokerage expenses in
amounts and for purposes acceptable to Lender) shall be applied to the release
price for such Tract C due to the lender which provided the Tract C and E
Acquisition Loan and the remaining net proceeds shall be paid to Lender to be
applied against the Borrower's outstanding indebtedness under the Loan,
provided, however, at the Borrower's election, a portion thereof not greater
than an amount equal to the Tract Infrastructure Funding Requirement may be
applied by the Borrower to the payment of costs incurred by the Borrower for the
Tract Infrastructure Work with respect to Tracts D and F of the Real Property,
and the remaining balance thereof paid to Lender, or, (ii) subject to the prior
written consent of Lender, which consent may be granted or withheld by Lender in
its sole and absolute discretion, a portion of such sales proceeds may be
applied to repay additional amounts due Chase Federal under the Chase Federal
A&D Loan.
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(e) SALE OF UNITS. Upon the sale or other transfer of Units,
the Borrower shall pay (in current funds) (i) the Chase Federal
Unit Release Price; (ii) 100% of the amount of construction loan proceeds drawn
in connection with the construction of such unit; (iii) to Lender, the AMRESCO
Unit Release Price and shall satisfy the other conditions to the granting of
partial releases which are set forth in Section 3.1 of this Agreement; (iv) any
excess shall be remitted to Borrower who shall reconcile and pay any outstanding
Project Expenses as to which funds have not been advanced pursuant to the Chase
Federal Loans or, at Lender's sole option, shall be paid into an account
pursuant to the terms of Section 2.10 from which such unfunded Project Expenses
may be paid in accordance with the Budget.
SECTION 3.3 BORROWER'S FIRST PRIORITY RETURN
The Borrower's First Priority Return shall be paid in connection
with the sale of each residence constructed on Tracts D and F of the Real
Property, and Tract E of the Real Property to the extent the same is acquired by
the Borrower, provided that (a) there does not exist at the time that the same
would otherwise be paid, a default or event of default pursuant hereto or
pursuant to any of the other documents or instruments evidencing or governing
the Loan, or any event or circumstance which with the passing of time or the
giving of notice, or both, would be a default or event of default pursuant
hereto or pursuant to any of the other documents or instruments evidencing or
governing the Loan, (b) the Chase Federal Unit Release Price shall have been
paid, and (c) to the extent that any portion of the principal or interest (at
the Interest Rate) pursuant to the Loan remains outstanding, a minimum payment
with respect to each residence conveyed, in amounts to be determined by Lender,
shall have been applied to reduce the same.
SECTION 3.4 FIRST CONTINGENT RETURN
At such time as the Loan has been repaid, together with interest
thereon, the AMRESCO Release Prices, together with the Net Cash Flow from the
sale of units, shall be used to pay Lender its First Contingent Return.
SECTION 3.5 BORROWER'S SECOND PRIORITY RETURN
To the extent of Cash Flow, the Borrower's Second Priority Return
may be distributed provided that (a) the First Contingent Return has been paid;
(b) there shall not exist at the time that the same would otherwise be paid, a
default or event of default pursuant to the Loan Documents, or any event or
circumstance which with the passing of time or the giving of notice, or both,
would be a default or event of default pursuant to the Loan Documents.
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SECTION 3.6 SECOND CONTINGENT RETURN
The Second Contingent Return shall be paid to the Lender after
the payment of the First Contingent Return, the Borrower's First Priority Return
and the Borrower's Second Priority Return, to the extent of the Borrower's Cash
Flow. Subject to the terms of Section 3.2(e) of this Agreement, the Borrower
shall pay the Contingent Returns on a quarterly basis based on the quarterly
determinations of Net Profit, and the amounts of such Contingent Returns shall
be adjusted if appropriate based on the audited financial statements provided
for in Section 8.2 of this Agreement, provided that any overpayment to Lender of
Contingent Returns, after adjustment as provided herein, shall be refunded to
the Borrower, within thirty (30) days after request therefor, or netted against
any future quarterly payment of Contingent Returns.
SECTION 3.7 INTENT OF LENDER
The Borrower acknowledges that the receipt by Lender of the
Contingent Returns is subject to numerous risks and uncertainties, including,
without limitation, the possibility of unanticipated costs in performing the
Acquisition Contract Development Work (e.g., as a result of change orders,
unforseen conditions or force majeure) and the Tract Infrastructure, the
possibility that Tract B is not sold pursuant to the Tract B Sales Contract at
the price contemplated therein; the possibility that the Borrower does not
acquire Tract C or Tract E; the possibility that no contract for the sale of
Tract C is completed or that said Tract is not conveyed pursuant thereto at the
price reflected in the Borrower's projections; the possibility of utility
moratoria or materials or labor costs decreasing the Borrower's anticipated
profits; and the possibility of a change in interest rates or the economy in
general, impacting the sale of residences. The Borrower further acknowledges
that the Lender's receipt of any of the Contingent Returns is contingent on the
availability of profit and the payment of the Borrower's First Priority Return
and the Borrower's Second Priority Return, as applicable. The Borrower
acknowledges that the Contingent Returns are not interest; but are an additional
return to the Lender which is based strictly on the success of the Borrower's
business venture. The Borrower further acknowledges that the Commitment Fee
charged pursuant hereto is a customary and reasonable charge for the Lender
performing the services necessary to enable it to, and to compensate it for,
committing to provide the Loan. The Borrower acknowledges that no portion of the
Commitment Fee constitutes interest. It is expressly stipulated and agreed to be
the intent of Borrower and Lender at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits
Lender to contract for, charge, take, reserve or receive a greater amount of
interest than under state law) and that this Paragraph shall control every other
covenant and agreement in this Commitment Letter. If the
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applicable law (state or federal) is ever judicially interpreted so as to render
usurious any amount called for under this Commitment Letter, the Note or under
any of the Loan Documents, or contracted for, charged, taken, reserved or
received with respect to the
indebtedness evidenced by the Loan, or to accelerate the maturity of the Note,
or if any prepayment by Borrower, late payment charge, default interest,
commitment fee, servicing or loan administration fee, or other fee, charge, or
imposition of any kind results in Borrower having paid any interest in excess of
that permitted by applicable law, then it is Borrower's and Lender's express
intent that all excess amounts theretofore collected by Lender be repaid to
Borrower with interest thereon at the maximum lawful rate, and the provisions of
the Note and the other Loan Documents immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder and thereunder. All sums paid or agreed to be paid to
Lender for the use, forbearance and detention of the indebtedness represented by
the Loan shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the maximum rate permitted under applicable law
from time to time in effect and applicable to the indebtedness evidenced hereby
for so long as such indebtedness remains outstanding. Notwithstanding anything
to the contrary contained herein or in any of the Loan Documents, it is not the
intention of Lender to accelerate the maturity of any interest that has not
accrued at the time of such acceleration or to collect unearned interest at the
time of such acceleration.
ARTICLE IV
SECURITY AND GUARANTY FOR PAYMENT OF THE LOAN
As security for the full and timely payment of the principal and
interest under the Note, and for any and all other indebtedness, obligations or
liability of the Borrower to the Lender pursuant to the Loan, whether now
existing or hereafter arising:
SECTION 4.1 MORTGAGE
The Borrower shall execute and deliver to the Lender the Mortgage
which shall constitute a second lien on the Mortgaged Property in accordance
with the terms of the Tri-Party Agreement and subject to the Permitted Title
Exceptions.
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SECTION 4.2 SECURITY AGREEMENT
The Borrower shall execute and deliver to Lender a Security
Agreement which shall grant to the Lender a second priority security interest in
and a continuing lien in and upon all of the Fixtures and Personal Property.
SECTION 4.3 ASSIGNMENT OF LEASES, RENTS AND PROFITS
The Borrower shall duly execute and deliver to the Lender an
Assignment of Leases, Rents and Profits as to the Mortgaged Property which gives
to the Lender the right to receive any income generated from the operation,
lease, sublease or sale of the Mortgaged Property.
SECTION 4.4 COLLATERAL ASSIGNMENT OF AGREEMENTS AFFECTING
REAL ESTATE
The Borrower shall execute and deliver an assignment, as
continuing collateral security, of the benefit of all agreements affecting the
Property and/or the Project.
SECTION 4.5 PLEDGE AGREEMENTS AND STOCK CERTIFICATES
Pledgor shall execute and deliver to Lender a Pledge (the
"Pledge") of all of such party's legal and beneficial interest in and to the
Borrower, together with stock certificates evidencing such interests and stock
powers, executed in blank.
[SECTIONS 4.5 THROUGH 4.13 ARE INTENTIONALLY DELETED]
SECTION 4.14 MORTGAGOR'S AFFIDAVIT
The Borrower shall execute and deliver to the Lender a
Mortgagor's Affidavit attesting to the absence of judgments and suits against
the Borrower, and the absence of liens and encumbrances, including mechanic's
liens, delinquent taxes or claims that can or might become liens on the
Property, and the ownership and possession of the Property.
SECTION 4.15 GUARANTY
Each Guarantor shall execute and deliver to the Lender a
Guaranty, whereby each Guarantor jointly and severally guarantees all of the
Borrower's obligations hereunder and under the Note in accordance with the terms
of the Guaranty.
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SECTION 4.16 FUNDING AGREEMENT
Each Guarantor shall execute and deliver to the Lender a Funding
Agreement, whereby each Guarantor jointly and severally guarantees certain
obligations in accordance with the terms of the Funding Agreement.
SECTION 4.17 ENVIRONMENTAL INDEMNITY AGREEMENT
The Borrower and the Guarantors shall each execute and deliver to
the Lender an Environmental Indemnity Agreement whereby the Borrower and the
Guarantors shall indemnify, defend and hold Lender harmless from any and all
loss and damage suffered as a result of any Environmental Claim.
SECTION 4.18 [INTENTIONALLY DELETED]
SECTION 4.19 SECURITY DOCUMENTS
The Borrower, in order to set forth the terms and conditions
under which the Collateral described in Sections 4.1 through 4.16 hereof will be
held by the Lender, shall execute and deliver to the Lender, in form and
substance satisfactory to the Lender and its Counsel, any and all mortgages,
security agreements, UCC-1 Financing Statements, hypothecation agreements,
assignments, pledge agreements, financing statements, notices of lien, and any
other documents relating to any security as the Lender shall require from time
to time (the documents and instruments referred to in Sections 4.1 through 4.16
and in Sections 5.1 through 5.5, together with all of the foregoing, are all
herein referred to collectively as the "SECURITY DOCUMENTS").
SECTION 4.20 FILING AND RECORDING
The Borrower shall bear the cost and expense of causing such of
the Security Documents to be duly recorded and/or filed in all places necessary,
in the opinion of the Lender and Counsel for Lender, to perfect and protect the
interest of the Lender in the property covered thereby. The Borrower hereby
authorizes the Lender to file any financing statement or notice of lien in
respect of any security interest created pursuant to this Agreement which may at
any time be required or which, in the opinion of the Lender, may at any time be
desirable, although the same may have been executed only by the Lender, or, at
the option of the Lender, to sign such financing statement or notice of lien on
behalf of the Borrower and file the same. The Borrower hereby irrevocably
designates the Lender, its agents, representatives and designees as agents and
attorneys-in-fact for Borrower for this purpose and acknowledges that this is a
power coupled with an interest and that it is irrevocable. In the event that any
rerecording or refiling
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thereof (or the filing of any statements of continuation or assignment of any
financing statement) is required to protect and preserve security interests in
favor of the Lender, the Borrower shall bear the cost and expense of causing the
same to be rerecorded and/or refiled at the time and in the manner required by
the Lender.
ARTICLE V
SECURITY AND GUARANTY FOR
PAYMENT OF THE CONTINGENT RETURNS
As security for the full and timely payment of the Contingent
Returns:
SECTION 5.1 CONTINGENT RETURN MORTGAGE
The Borrower shall execute and deliver to the Lender the
Contingent Return Mortgage which shall secure payment to Lender of the
Contingent Returns and which shall constitute a third lien on the Mortgaged
Property, subject to Permitted Title Exceptions.
SECTION 5.2 COLLATERAL ASSIGNMENT OF AGREEMENTS AFFECTING
REAL ESTATE
The Borrower shall execute and deliver an assignment, as
continuing collateral security, of the benefit of all agreements affecting the
Property and/or the Project.
SECTION 5.3 PLEDGE AGREEMENTS AND STOCK CERTIFICATES
Pledgor shall execute and deliver to Lender a Pledge (the
"Contingent Return Pledge") of all of such party's legal and beneficial interest
in and to the Borrower, together with stock certificates evidencing such
interests and stock powers, executed in blank.
SECTION 5.4 ASSIGNMENT OF LEASES, RENTS AND PROFITS
The Borrower shall duly execute and deliver to the Lender an
Assignment of Leases, Rents and Profits as to the Mortgaged Property which gives
to the Lender the right to receive any income generated from the operation,
lease, sublease or sale of the Mortgaged Property, in order to secure the
Contingent Returns.
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ARTICLE VI
DEBTOR PARTIES' REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the Debtor
Parties make the following representations and warranties which shall be deemed
to be continuing representations and warranties so long as the Note or other
indebtedness of the Borrower to the Lender remains unpaid:
SECTION 6.1 ORGANIZATION AND STANDING
Borrower and Transeastern (a) are duly organized, validly
existing and in good standing under the laws of the state of Florida, (b) have
the corporate power and authority to own their respective properties and to
carry on their respective business as now being conducted, (c) are qualified to
do business in all jurisdictions in which the character of their properties or
nature of their business requires such qualification, (d) are in compliance with
all Governmental Requirements, and (e) have not amended or modified their
articles or certificate of incorporation or bylaws except as previously
disclosed in writing to Lender prior to the execution hereof.
SECTION 6.2 CAPITALIZATION
(a) Borrower has authorized capital stock of 10,000 shares of
common stock, par value $.01 per share, of which 10,000 shares are issued and
outstanding and owned beneficially and of record by Pledgor. Subject to the
terms of this Agreement and the Loan Documents, Pledgor has the unrestricted
right to vote, and to receive dividends and distributions on, all shares of such
stock of Borrower. All such stock has been duly authorized and validly issued
and is fully paid and nonassessable. Other than the common stock, there are
outstanding no other Capital Securities of Borrower and there are no outstanding
subscriptions, rights, agreements, commitments, warrants or options for the
purchase of Capital Securities of Borrower. Borrower's common stock is subject
to no restrictions, limitations, prohibitions or other restraint on alienation
(including, without limitation, pursuant to a shareholders agreement). The
owners of all of the common (voting) stock of Transeastern are listed in EXHIBIT
6.2 attached hereto.
(b) There are two (2) classes of preferred stock of Transeastern,
Class A Preferred Stock and Class B Preferred. The owners of the Class A
Preferred Stock also own warrants for the purchase of Transeastern's common
stock. If such warrants are exercised, the common stock issued pursuant thereto
would not represent more than a twenty percent (20%) interest in all of such
issued common (voting) stock of Transeastern.
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SECTION 6.3 POWER AND AUTHORITY
The execution, delivery and performance by Borrower of the Loan
Documents, and the borrowing evidenced by the Note, (i) are within the powers
and purposes of Borrower, (ii) have been duly authorized by all requisite action
of Borrower, (iii) do not require the approval of any Governmental Authority,
and (iv) will not violate any Governmental Requirement, the articles of
incorporation or bylaws of Borrower or any Contractual Obligation of Borrower,
or be in conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such Contractual Obligation or result
in the creation or imposition of any Lien upon any of its property or assets,
except as contemplated by the provisions of the Loan Documents.
SECTION 6.4 VALID AND BINDING OBLIGATION
The Loan Documents constitute the legal, valid and binding
respective obligations of the Borrower, enforceable in accordance with their
terms subject to applicable bankruptcy and insolvency laws and laws affecting
creditors' rights and the enforcement thereof.
SECTION 6.5 NO LEGAL BAR
The execution, delivery and performance of this Agreement, the
other Loan Documents, and the borrowings contemplated by this Agreement do not
and will not violate any Requirement of Law or any Contractual Obligation of the
Debtor Parties and will not result in, or require, the creation or imposition of
any Lien (other than Liens created pursuant to the Loan Documents or permitted
under Section 9.2 hereof) on any of its properties or revenues pursuant to any
Requirement of Law or any Contractual Obligation which violation or Lien would
have a material adverse effect, cost or expense to the business, operations or
financial condition of the Debtor Parties.
SECTION 6.6 TITLE TO COLLATERAL
The Borrower is indefeasibly seized of and has and will have good
and marketable fee simple title to the Real Property and Improvements free and
clear of any and all mortgages, liens, encumbrances, claims, charges, equities,
covenants, conditions, restrictions, easements, rights-of-way and all other
matters affecting the Real Property and Improvements, whether or not of record,
except for the Permitted Title Exceptions. Borrower has and will have good,
absolute and marketable title to the Fixtures and Personal Property all free and
clear of any and all liens, charges, encumbrances, security interests and
adverse claims whatsoever, except those in favor of (i) Chase Federal pursuant
to the Chase Federal Loan Documents, and (ii) Lender. Borrower will
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preserve its title to the Mortgaged Property and will forever warrant and defend
the same to Lender and will forever warrant and defend the validity and priority
of the lien of the Mortgage against the claims of all persons and parties
whomsoever subject, however, to the rights of Chase Federal pursuant to the
Chase Federal Loan Documents.
SECTION 6.7 FINANCIAL STATEMENTS AND OTHER INFORMATION
(a) All balance sheets, statements of profit and loss, and other
financial data that have been given to Lender with respect to the Borrower and
the Guarantors, (i) are complete and correct in all material respects, (ii)
accurately present the financial condition of said parties as of the dates, and
the results of its or their operations, for the periods for which the same have
been furnished, and (iii) as to the Borrower and Transeastern, have been
prepared in accordance with Generally Accepted Accounting Principles
consistently followed throughout the periods covered thereby; all balance sheets
disclose all known liabilities, direct and contingent, as of their respective
dates; and there has been no change in the condition of the Borrower or the
Guarantors, financial or otherwise, since the date of the most recent financial
statements given to Lender with respect to said parties, other than changes in
the ordinary course of business, none of which changes has been materially
adverse.
(b) All other information, including reports, financial
statements, certificates, papers, data and otherwise, given and to be given to
Lender with respect (i) to Borrower or any Guarantor, (ii) to the Loan and (iii)
to others obligated under the terms of the Loan Documents, are true, accurate
and correct in all material respects and complete.
SECTION 6.8 LITIGATION
There are no judgments outstanding against the Debtor Parties and
there is no action, suit, proceeding, or investigation now pending (or to the
best of the Debtor Parties's knowledge after diligent inquiry, threatened)
against, involving or affecting the Debtor Parties or the Mortgaged Property, or
any part thereof, at law, in equity or before any Governmental Authority that if
adversely determined as to the Mortgaged Property or as to The Debtor Parties
would result in a material adverse change in the business or financial condition
of the Debtor Parties or the Borrower's operation and ownership of the Mortgaged
Property, nor is there any basis for such action, suit, proceeding or
investigation.
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SECTION 6.9 INVESTMENT COMPANY ACT
The Borrower is not an "investment company" (as the quoted term
is defined or used in the Investment Company Act of 1940, as amended).
SECTION 6.10 FEDERAL REGULATION
No part of the proceeds of the Loan will be used for any purpose
which violates, or which would be inconsistent with, the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
or any other Requirement of Law. Neither the Debtor Parties nor any agent acting
on their behalf has taken or will take any action which might cause this
Agreement or any of the Loan Documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, in each case, as in effect on the Closing Date.
SECTION 6.11 DISCLOSURE
No representation or warranty made by the Debtor Parties in this
Agreement, in any of the other Loan Documents or in any other document furnished
or to be furnished from time to time in connection herewith or therewith
contains or will contain any misrepresentation of a material fact or omits or
will omit to state any material fact necessary to make the statements herein or
therein not misleading. There is no fact known to the Debtor Parties which
materially adversely affects, or which would in the future materially adversely
affect, the business, assets, property, prospects or financial condition of the
Debtor Parties.
SECTION 6.12 BROKERAGE
The Debtor Parties have dealt with no broker or finder in
connection with the Loan other than Holliday, Fenoglio, Dockerty & Gibson (the
"Broker") who has been engaged by the Borrower, at the Borrower's expense. The
Debtor Parties hereby agree to indemnify the Lender against and to hold the
Lender harmless from any claims for finders' or brokerage fees or commission in
connection with the Loan (including any and all fees due the Broker) and agrees
to pay all expenses (including but not limited to attorneys' fees and expenses)
incurred by the Lender in connection with the defense of any action or
proceeding brought to collect any such fees or commissions or otherwise relating
to any such brokerage claims resulting from or arising out of any claim that the
Debtor Parties consulted, dealt or negotiated with the person or entity making
such brokerage claim.
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SECTION 6.13 TAXES
(a) The Debtor Parties have filed or caused to be filed all tax
returns which to the knowledge of the Debtor Parties are required to be filed,
and has fully paid all taxes shown to be due and payable on said returns or on
any assessments made against it or its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental
Authority, including payroll taxes. No tax liens have been filed and, to the
knowledge of the Debtor Parties, no claims are being made or may hereafter be
asserted with respect to any such taxes, fees or other charges, except for: (i)
those the amount or validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Debtor Parties, as the case may be;
and (ii) such failures to file or to pay such tax liens or claims, as could not,
in the aggregate, reasonably be expected to have a material adverse affect on
the business, operations, property or financial or other condition of the Debtor
Parties and could not reasonably be expected to have an adverse affect on the
ability of the Debtor Parties to perform any of its respective obligations in
any material respect under this Agreement, the other Loan Documents to which it
is a party or under any other Contractual Obligation.
(b) The Real Property is not currently assessed separately from
all other adjacent land for the purposes of real estate taxes.
Notwithstanding the foregoing, there is no intended public improvements which
may involve any charge being levied or assessed, or which may result in the
creation of any lien upon the Mortgaged Property. Borrower covenants and agrees
to proceed expeditiously after the Closing Date to have the Real Property
assessed separately.
SECTION 6.14 ERISA
Each pension, profit sharing or other employee benefit plan
maintained by the Debtor Parties is in material compliance with ERISA, the Code
and all applicable rules and regulations adopted by regulatory authorities
pursuant thereto. The Debtor Parties have filed all material reports required to
be filed by ERISA, the Code and such rules and regulations. In addition, any
qualified plan subject to the minimum funding standards does not as of the date
hereof have a funding deficiency as defined by ERISA. No "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) or
"accumulated funding deficiency" (as defined in Section 302 of ERISA) or
Reportable Event material in relation to the business, operations, property or
financial or other condition of the Debtor Parties has occurred with respect to
any Plan. No tax penalty, nor other liability in the aggregate material in
relation to business, operations, property or financial
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condition of the Debtor Parties has been assessed against the Debtor Parties
with respect to a Plan.
SECTION 6.15 LIABILITIES TO EMPLOYEES AND OFFICERS
The Debtor Parties do not have any liabilities to officers or
employees in respect of employment termination benefits.
SECTION 6.16 SUBSIDIARIES
The Borrower does not have any Subsidiaries, partnership
interests or Affiliates other than those listed on EXHIBIT 6.16 attached hereto.
All such Subsidiaries are wholly-owned by Borrower. The Borrower has the
unrestricted right to vote, and to receive dividends and distributions on, all
Capital Securities of the Subsidiaries owned by Borrower. All such Capital
Securities have been duly authorized and validly issued and are fully paid and
nonassessable.
SECTION 6.17 ENVIRONMENTAL CONTAMINATION/HAZARDOUS MATERIAL
Borrower and the Mortgaged Property are in full compliance with
all Environmental Laws, and there are no civil, criminal or administrative
actions, suits, demands, claims, hearings, notices or demand letters, notices of
violation, investigations, or proceedings pending or threatened against the
Borrower or the Mortgaged Property relating in any way to any Environmental Law
or any agreement, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved under any Environmental Law.
There have never been nor are there currently any Hazardous Material located on,
in, or under the Mortgaged Property or used in connection therewith, and neither
Borrower nor any other person has ever used the Mortgaged Property for the
manufacture, processing, distribution, use, transport, handling, treatment,
storage, disposal, emission, discharge or release of any Hazardous Material. No
notice or advice has been received by Borrower of any condition or state of
facts that would be contributing to a claim of pollution or any other damage to
the environment by reason of the conduct of any business on the Mortgaged
Property or operation of the Mortgaged Property, whether past or present.
SECTION 6.18 NO VIOLATIONS
No Governmental Requirement and no covenant, condition,
restriction, easement or similar matter affecting the Real Property has been
violated, and Borrower has not received any notice of violation from any
Governmental Authority or any other person with respect to any of the foregoing
matters.
SECTION 6.19 CONDITION OF MORTGAGED PROPERTY
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The Mortgaged Property or any part thereof, now existing, is not
damaged or injured as a result of any fire, explosion, accident, flood or other
casualty. The Improvements, if any, as of the date of this Mortgage, are free of
any defects in material, structure and construction and do not violate any
Governmental Requirements. There is no existing, proposed or contemplated plan
to modify or realign any street or highway or any existing, proposed or
contemplated eminent domain proceeding that would result in the taking of all or
any part of the Mortgaged Property or that would adversely affect the use or the
operation of the Mortgaged Property.
SECTION 6.20 UTILITIES
There is available to the Real Property and Improvements through
public or private easements or rights-of-way abutting or crossing the Real
Property (which would inure to the benefit of Lender in case of enforcement of
this Mortgage) a water supply and a sanitary sewer service, and electric, gas
(if applicable) and telephone service, all of sufficient capacity to serve the
needs of the Real Property and Improvements according to their intended purpose.
All necessary permits for the foregoing have been issued, are in good standing
and all fees have been paid to the applicable Governmental Authorities. Upon
completion of the utility line, said utility lines shall be approved by all
health and other applicable Governmental Authorities having jurisdiction.
SECTION 6.21 BUDGET FOR ACQUISITION CONTRACT DEVELOPMENT
WORK
The total budget for the (i) acquisition of Parcels B, D and F of
the Real Property, and (ii) performance of the Acquisition Contract Development
Work shall not exceed Thirteen Million Dollars
($13,000,000).
SECTION 6.22 ZONING AND LAND USE
The Real Property is zoned so as to permit the Real Property and
Improvements to be used for the purposes set forth in City of Pembroke Pines
Ordinance No. 1113 and all attachments thereto which include the intended use of
the Project.
SECTION 6.23 PERMITS AND LICENSES
The Borrower has obtained certain permits, licenses and approvals
in connection with its development of the Real Property and the construction of
the Improvements, all as set forth on EXHIBIT 6.23 attached hereto.
SECTION 6.24 [INTENTIONALLY DELETE]
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SECTION 6.25 NO DEFAULTS
The Acquisition Contract, the Option Contract, the Construction
Contract and the Tract B Sales Contract are all in full force and effect, there
are no defaults thereunder and no event has occurred which with due notice or
the lapse of time, or both, would constitute a default thereunder.
SECTION 6.26 FACILITIES FOR HANDICAPPED
The Improvements when constructed shall comply with all legal
requirements regarding access and facilities for handicapped or
disabled persons, including, without limitation, and to the extent
applicable, Part V of the Florida Building Construction Standards
Act entitled "Accessibility by Handicapped Persons", Chapter 553,
Fla Stat.; the Federal Architectural Barriers Act of 1988 (42
U.S.C. ss.4151, et.seq.), The Fair Housing Amendment Act of 1988 (42
U.S.C. ss.3601, et.seq), The Americans With Disabilities Act of 1990
(42 U.S.C. ss.12101 et. seq.), and The Rehabilitation Act of 1973 (29
U.S.C. ss.794).
SECTION 6.27 OTHER AGREEMENTS
Borrower is not a party to any agreement or instrument materially
and adversely affecting it or its present or proposed businesses, properties or
assets, operation or condition, financial or otherwise, and Borrower is not in
default in the performance, observance or fulfillment of any of the material
obligations, covenants or conditions set forth in any agreement or instrument to
which it is a party.
SECTION 6.28 CHASE FEDERAL LOAN DOCUMENTS
The Chase Federal Loan Documents are in good standing, all
principal, interest and other payments due thereunder have been paid in
accordance with the terms thereof, there is no default thereunder and no event
has occurred which with due notice or the lapse of time, or both, would
constitute a default thereunder. In connection therewith, monies from the Chase
Federal Letters of Credit are solely for the construction of the Project
(including offsite improvements therefor) and proceeds from the Chase Federal
Loan will be sufficient to construct the Acquisition Contract Development Work
and the Tract Infrastructure Work.
SECTION 6.29 REPRESENTATIONS AND WARRANTIES IN OTHER LOAN
DOCUMENTS
All of the representations and warranties contained in the other
Loan Documents are true and correct.
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SECTION 6.30 RELIANCE ON REPRESENTATIONS
The Borrower acknowledges that the Lender has relied upon the
Borrower's representations, has made no independent investigation of the truth
thereof, is not charged with any knowledge contrary thereto that may be received
by an examination of the public records in Tallahassee, Florida and Broward
County, Florida, or that may have been received by any officer, director, agent,
employee or shareholder of Lender.
ARTICLE VII
CONDITIONS PRECEDENT
The effectiveness of this Agreement and the obligation 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 time of the Closing Date.
SECTION 7.1 CORRECTNESS OF WARRANTIES
All representations and warranties contained herein or otherwise
made to the Lender in connection herewith or in any other Loan Document shall be
true and correct.
SECTION 7.2 OPINION OF COUNSEL
Lender shall have received from counsel to the Borrower specific
opinions addressed to and satisfactory to the Lender.
SECTION 7.3 ENTITY DOCUMENTS
Lender shall have received true and correct copies, certified as
to authenticity by a Responsible Officer of the Borrower and Transeastern, as
applicable, of the Articles of Incorporation and the By-Laws of the Borrower and
any amendments thereto, a current Certificate of Good Standing from the State of
Florida for both, and such other certificates, documents or instruments as may
be reasonably requested by the Lender.
SECTION 7.4 CERTIFIED RESOLUTIONS AND INCUMBENCY
The directors and the stockholders, if necessary, of the
Borrower and Transeastern shall have adopted specific resolutions
authorizing the execution and delivery of all Loan Documents and
the taking of all actions called for by this Agreement, and the
Borrower and Transeastern shall have furnished copies of such
resolutions, certified by the Secretary or an Assistant Secretary
to be true, correct and complete and in full force and effect. The
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Lender shall also have received a certificate of the Secretary or an Assistant
Secretary of the Borrower and Transeastern, as applicable, dated the Closing
Date, as to the incumbency and signature of the officers of the Borrower and
Transeastern, as applicable, executing this Agreement, the other Loan Documents
to which it is a party and any certificate or other documents to be delivered by
it pursuant hereto or thereto, together with evidence of the incumbency of such
Secretary or Assistant Secretary (or other representative), as the case may be.
SECTION 7.5 LOAN DOCUMENTS
The Lender shall have received the Loan Documents duly executed
and delivered by a Responsible Officer or other appropriate Person, as the case
may be, of each of the parties thereto, and the Lender shall have received
evidence satisfactory to it that all actions necessary to perfect the Liens or
other security interest granted thereby have been, or promptly after the Closing
will be, taken.
SECTION 7.6 MORTGAGEE TITLE INSURANCE POLICY
The Borrower shall cause to be delivered to the Lender a
Mortgagee Title Insurance Commitment (the "Commitment") naming the Lender as
insured which Commitment shall have title insurance coverage in the amount of
THREE MILLION DOLLARS ($3,000,000.00). The Commitment and policy shall be
written by a title insurance company acceptable to the Lender and licensed by
the State of Florida, unrecorded easements, mechanic's liens and/or parties in
possession. All other exceptions shall be subject to the approval of the Lender
and Counsel to Lender. The Commitment must provide to the Lender "gap" and "Form
9" insurance coverage. The Commitment and policy must also give such other
affirmative insurance and reinsurance as reasonably required by the Lender and
Counsel to Lender. The Borrower shall provide at the request of Counsel to
Lender any corrective instruments, releases, satisfactions, affidavits, etc.,
necessary to cause the Commitment and policy to be issued. The Commitment,
policy and endorsements shall be on American Real Property Title Association
Loan forms approved in the State of Florida.
SECTION 7.7 CHASE FEDERAL LOAN DOCUMENTS
The Lender shall have received copies of the Chase Federal Loan
Documents in form and substance satisfactory to Lender certified by a
Responsible Officer of the Borrower to be true, correct and complete.
SECTION 7.8 EQUITY CONTRIBUTION
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The Lender shall have received evidence that the Borrower has
invested into the Project a minimum equity contribution of not less than
$450,000.
SECTION 7.9 STOCK CERTIFICATES AND STOCK POWERS
The Lender shall have received the Pledge duly executed and
delivered by a Responsible Officer of Pledgor, together with the certificate(s)
evidencing the stock being pledged thereby and stock assignment powers separate
from certificate duly endorsed in blank for transfer.
SECTION 7.10 ACQUISITION CONTRACT, OPTION CONTRACT AND
TRACT B SALES CONTRACT
Borrower shall deliver to Lender shall have received copies of
the Acquisition Contract, the Option Contract and the Tract B Sales Contract,
and all amendments thereto, certified by a Responsible Officer of the Borrower
to be true, correct and complete.
SECTION 7.11 SOILS TEST
Lender shall have received a report as to soil borings showing
the Real Property to be suitable for construction of the Improvements and within
forty-five (45) days of completion of the filling activities of the Project,
shall provide soil compaction reports.
SECTION 7.12 [INTENTIONALLY DELETED]
SECTION 7.13 COPIES OF PERMITS, LICENSES AND APPROVALS
Lender shall have received copies of the excavation permit, tree
removal permit, land alteration permit, dredge and fill permit, storm water
discharge permit, the building permit and any other permits required by
applicable Governmental Authorities for the development of the Property.
SECTION 7.14 AVAILABILITY OF UTILITIES
Lender shall have received evidence of the availability and
suitability of the utilities needed to properly service the Improvements as to
their intended uses, including water, sewer, electric, telephone and natural gas
(if applicable).
SECTION 7.15 PLANS AND SPECIFICATIONS
Lender shall have received a complete set of plans and
specifications for the Acquisition Contract Development Work and, within fifteen
(15) days of completion shall provide to Lender
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plans for the Tract Infrastructure Work, approved in writing by the Borrower and
the General Contractor, and identical to those reviewed and approved by the
appropriate Governmental Authority.
SECTION 7.16 CONSTRUCTION CONTRACT
Lender shall have received a copy of the Construction Contract
certified by a Responsible Officer of the Borrower to be true, correct and
complete.
SECTION 7.17 APPROVALS OF GOVERNMENTAL AUTHORITIES
Lender shall have received evidence that all applicable
Governmental Authorities have approved Borrower's development plan for the Real
Property (exclusive of individual site plan approvals for the tracts).
SECTION 7.18 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS
Lender shall have received evidence that the Borrower's
development of the Real Property, construction of the proposed Improvements and
use of the Real Property complies in all respects with concurrency requirements
and all other applicable Governmental Requirements including, without
limitation, local comprehensive plan and local land development regulations,
zoning rules and regulations, environmental protection rules and regulations
pertaining to water supply, sewage disposal and air and water pollution, rules
and regulations governing the Mortgaged Real Property.
SECTION 7.19 CERTIFICATES FROM GENERAL CONTRACTOR AND
ENGINEER
Lender shall have received appropriate certificates from the
General Contractor and Borrower's engineer certifying (i) that the Borrower's
development of the Real Property is in compliance with all applicable
Governmental Requirements, and (ii) as to the status of permits and approvals
obtained by the Borrower in connection therewith.
SECTION 7.20 COST BREAKDOWN
Lender shall have received from the Borrower a detailed trade
breakdown of the cost of constructing the Acquisition Contract Development Work
and the Tract Infrastructure Work including an itemization of non-construction
and land costs.
SECTION 7.21 FLOOD HAZARD AREA
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Lender shall have received evidence that the Real Property is not
located in an area identified as having special flood hazards pursuant to the
Flood Disaster Protection Act of 1973.
SECTION 7.22 SURVEY
Within thirty (30) days of completion of the Acquisition Contract
Development Work, Lender shall have received at least four (4) current sealed
copies of a survey for the Real Property prepared by a registered surveyor,
reflecting no conditions unsatisfactory to Lender or Counsel for Lender and
prepared in accordance with Lender's survey requirements.
SECTION 7.23 TRI-PARTY AGREEMENT
Lender, Chase Federal and Borrower shall have entered into the
Tri-Party Agreement, in form and substance satisfactory to Lender.
SECTION 7.24 NO MORATORIUM
The Lender shall have received a certification or certifications
or other evidence, in form and substance and from a Person or Persons
satisfactory to the Lender, with respect to any moratorium or other legal
impediment currently in effect, proposed or threatened, which would prohibit or
materially and adversely interfere in any way with the operation, development
(as to non-developed Real Property), sale or disposition of the Mortgaged Real
Property.
SECTION 7.25 INSURANCE
Lender shall have received copies of insurance certificates or
binders for, or other evidence of, the maintenance by Borrower of the insurance
required by Section 8.5 hereof, which shall be satisfactory in form and
substance to Lender in accordance with its insurance requirements.
SECTION 7.26 SUBORDINATION TO THE LOAN
The subordination to the Loan (pursuant to an agreement in form
and substance satisfactory to Lender) of all loans and other indebtedness
payable by the Borrower to any partner, officer, director, stockholder,
Subsidiary or Affiliate of the Borrower, the General Partner and the Operator
shall have been delivered to Lender.
SECTION 7.27 ADDITIONAL DOCUMENTS AND INSTRUMENTS
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Lender shall have received all the instruments, documents and
Real Property contemplated to be delivered by the Borrower hereunder, and the
same shall be in full force and effect.
ARTICLE VIII
DEBTOR PARTIES' AFFIRMATIVE COVENANTS
The Debtor Parties covenant and agree 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 8.1 EXISTENCE AND QUALIFICATION
The Borrower shall do, or cause to be done, all things necessary
to preserve, renew and keep in full force and effect the Borrower's existence
and its rights, licenses and permits; shall 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 shall maintain,
preserve and protect all franchises and trade names and preserve all Real
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. Borrower
will not, no will Borrower permit any Guarantor to amend, modify or otherwise
change the articles or incorporation or bylaws of Borrower in a manner which
would adversely affect the Borrower's existence as a single purpose entity.
SECTION 8.2 FINANCIAL STATEMENTS AND INFORMATION
The Borrower shall keep its books of account (which shall not be
commingled) in accordance with Generally Accepted Accounting Principles and
shall furnish to Lender the following financial information, statements and
reports:
(a) MONTHLY REPORTS. Within fifteen (15) days of the end of each
calendar month, a report of (i) all fundings pursuant to any loans in connection
with the Project or the Real Property, (ii) all contracts, letters of intent,
reservation agreements, options or similar agreements relating to the sale of
Tracts or residential units comprising a portion of the Real Property and any
material changes in the status of any such contracts previously reported on,
(iii) any sales of Tracts or residential units comprising a portion of the Real
Property, (iv) copies of draw requests under the Chase Federal Loan, and (v)
such other matters with respect to the
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Project or the Real Property as Lender may request, all certified by a
Responsible Officer as being true and accurate.
(b) QUARTERLY REPORTS. Within forty-five (45) days after the end
of each fiscal quarter of the Borrower, (i) a profit and loss statement and
balance sheet, (ii) a listing and aging of accounts payable, (iii) an accounting
of Gross Revenue, Expenses, Cash Flow, and Net Profit for the Borrower, and (iv)
such other financial and related information with respect to the Borrower and
the Project as Lender may request, all prepared in accordance with Generally
Accepted Accounting Principles and certified by a Responsible Officer as being
true and accurate.
(c) ANNUAL REPORTS. Within sixty (60) days of the end of each
fiscal year of the Borrower, internally prepared financial statements of the
Borrower, including (i) a profit and loss statement and a balance sheet as of
the end of such year, (ii) an accounting of Gross Revenue, Expenses, Cash Flow,
and Net Profit for the Borrower for the prior fiscal year together with such
information as may be required to compute the First Contingent Return, the
Second Contingent Return, the Borrower's First Priority Return and the
Borrower's Second Priority Return, reconciling reports provided with respect to
each of the fiscal quarters within such fiscal year, and (iii) such other
financial and related information with respect to the Borrower and the Project
as Lender may request, all prepared in accordance with Generally Accepted
Accounting Principles and certified by a Responsible Officer as being true and
accurate.
(d) AUDITED ANNUAL REPORTS. Within 120 days after the end of
their respective fiscal years, the Borrower and each of the other
Debtor Parties shall provide to Lender (i) a profit and loss
statement and reconciliation of surplus statement for such year,
and a balance sheet as of the end of such year, audited without
scope limitations by independent certified public accountants of
recognized standing selected by the Debtor Parties and satisfactory
to Lender, (ii) an accounting of Gross Revenue, Expenses, Cash
Fl provided with respect to each of the fiscal
quarters within such fiscal year, together with such information as
may be required to compute the First Contingent Return, the Second
Contingent Return, the Borrower's First Priority Return and the
Borrower's Second Priority Return, for such fiscal year, (iii) such
other financial and related information as Lender may request, all
prepared in accordance with Generally Accepted Accounting
Principles and certified by a Responsible Officer as being true and
accurate and (iv) a representation that their examination has
revealed there exists no Event of Default and no event which, with
the giving of notice or passage of time, or both, would constitute
such an Event of Default, or, if this is not the case, that one or
more specified Events of Default have occurred. The outside
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accountant and the opinion of the outside accountant must be
acceptable to the Lender.
(e) TAX RETURNS. Within fifteen (15) after filing, complete
copies of the Borrower's and each of the Debtor Parties' annual tax
returns.
(f) BUDGET. On or before May 15, 1996, Borrower shall provide a
budget for the Project commencing July 1, 1996 which shall be updated every
November 15th and May 15th occurring thereafter and shall provide projections on
an individual tract and aggregate basis. The aforesaid budget shall include,
without limitation, a narrative description of the Borrower's business plan for
such upcoming year (each, a "BUDGET", collectively, the "BUDGETS").
(g) ADDITIONAL INFORMATION. The Borrower, with reasonable
promptness, shall furnish to Lender such other data as Lender may request and
will at all times and from time to time permit Lender by or through any of its
officers, agents, employees, attorneys or accountants to inspect and make
extracts from the Borrower's books and records, which may include, without
limitation, review and obtaining copies of all invo SECTION 8.3 [INTENTIONALLY
DELETED]
SECTION 8.4 TAXES AND CLAIMS
(a) The Borrower shall properly pay and discharge:
(a) all Impositions, including payroll taxes, prior to the date on which
penalties attach thereto, unless and to the extent that such Impositions 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 transferred to bond,
being diligently contested in good faith and by appropriate proceedings, and
appropriate reserves therefor have been established. Borrower shall deliver to
Lender receipts evidencing the payment of all Impositions within thirty (30)
days after same become due and payable or before same shall become delinquent,
whichever is sooner.
(b) In the event of the passage, after the date of
this Agreement, of any law (i) making it illegal for the Borrower to pay the
whole or any part of the Impositions, or charges or liens herein required to be
paid by Borrower, or (ii) rendering the payment by Borrower of any and all taxes
levied
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or assessed upon the Mortgage, the Note, or the other Loan Documents or the
interest in the Mortgaged Property represented by this Mortgage unlawful, or
(iii) rendering the covenants for the payment of the matters set forth in
Subparts (i) and (ii) of this Subsection by Borrower legally inoperative, the
Borrower shall pay, upon demand, the entire unpaid Obligations notwithstanding
anything in the Note, the Mortgage, or the other Loan Documents to the contrary.
SECTION 8.5 INSURANCE
Until the expiration of this Agreement, Borrower shall maintain,
at Borrower's cost and expense, the following insurance coverages in full force
and effect at all times throughout the term of this Agreement:
(a) LIABILITY INSURANCE. Borrower will obtain and
keep in full force a "Broad Form Comprehensive General Liability" insurance
coverage for both Borrower and any contractor performing services to the Real
Property in the minimum coverage amount of One Million Dollars ($1,000,000.00)
per occurrence and combined single limit ("CSL") of Ten Million Dollars
($2,000,000.00), with excess umbrella liability coverage of Five Million Dollars
($5,000,000).
(b) HAZARD INSURANCE. Upon completion of the
Improvements, Borrower shall keep the Improvements insured at all times against
loss or damage by fire and other hazards included within the term "all risk" or
"extended coverage" and against such other hazards as Lender may require in the
full insurable value thereof (or such lesser amount as Lender may authorize in
writing), with an insurer satisfactory to Lender. Such policy shall include a
Replacement Cost and Agreed Amount/Stipulated Value Endorsement and a Sinkhole
Endorsement, if deemed necessary by Lender.
(c) FLOOD INSURANCE. If at any time the Real
Property or any portion thereof is located in a "Flood Hazard Area" pursuant to
the Flood Disaster Protection Act of 1973 or any successor or supplemental act
thereto, flood insurance in the maximum amount available or such other amount as
Lender may reasonably request.
(d) BUILDER'S RISK INSURANCE. Prior to commencement
of construction of the Improvements, an "All risk", non-reporting, completed
value builder's risk insurance policy, which policy shall include Agreed Amount,
Replacement Cost, Permit to Occupy and Vandalism/Malicious Mischief
Endorsements.
(e) OTHER INSURANCE. Boiler and machinery
insurance, worker's compensation insurance, wind damage insurance, and other
insurance coverages as Lender may reasonably require.
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The policy or policies of insurance shall (i) be from companies
and in coverage amounts acceptable to Lender, (ii) contain a standard Lender
clause in favor of Lender naming Lender as a Lender and including a lender's
loss payee clause in such policy, as applicable (iii) not be terminable or
modified without thirty (30) days' prior written notice to Lender, and (iv) be
evidenced by original policies or certified copies of policies deposited with
Lender, as Lender may elect, to be held by Lender until the Obligations shall
have been fully paid and discharged. Borrower shall furnish Lender satisfactory
evidence of payment of all premiums required and similar evidence of renewal or
replacement coverage not later than thirty (30) days prior to the date any
coverage will expire.
Each insurance policy or endorsement required herein shall be
written by an insurer having a rating not less than "A-XII" Best's Rating
according to the most current edition of Best's Key Rating Guide as determined
at the time of the initial policy and at all times during the term hereof. All
policies shall indicate that notices related to such insurance shall be sent to
Lender at:
AMRESCO Funding Corporation
1845 Woodall Rodgers Freeway
Dallas, Texas 75201
Attn: Loan Servicing Department
(f) The Borrower shall from time to time, upon
request of Lender, promptly furnish or cause to be furnished to Lender evidence
in form and substance satisfactory to Lender of the maintenance of all insurance
required by this Section to be maintained, including, but not limited to, such
originals or copies as Lender may request of policies, certificates of
insurance, riders and endorsements relating to such insurance and proof of
premium payments. Lender shall be under no duty to examine such certificates or
to advise the Borrower in case the insurance is not sufficient or not in
compliance herewith.
SECTION 8.6 SALES
The Borrower shall achieve at least sixty (60%) percent of the
sales projected in the Borrower's sales projections for any rolling six (6)
month period, commencing four (4) months from the earlier to occur of (a) the
date of pouring the first slab for a residence under contract for sale to a
third party purchaser, or (b) on the effective date of such a contract for sale,
in the event the slab for such residence has previously been poured, which sales
projections shall be approved by the Lender prior to Closing.
SECTION 8.7 BOOKS AND RESERVES
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The Borrower shall: (a) maintain at all times true and complete
books, records and accounts in which true and correct entries shall be made of
its transactions in accordance with Generally Accepted Accounting Principles
consistently applied and consistent with those applied in the preparation of the
financial statements referred to in Section 8.2; and (b) by means of appropriate
quarterly entries reflected in its accounts and in all financial statements
furnished pursuant to Section 8.2, proper liabilities and reserves for all taxes
and proper reserves for depreciation, renewal and replacement, obsolescence and
amortization of its properties and bad debts, all in accordance with Generally
Accepted Accounting Principles consistently applied as above.
SECTION 8.8 INSPECTION BY LENDER
The Borrower shall allow any representative of Lender to visit
and inspect any of the Mortgaged Property or other properties of the Borrower,
to examine the books of account and other records and files of the Borrower, to
make copies thereof and to discuss the affairs, business, finances and accounts
of the Borrower with its officers and employees, all at such reasonable times
and upon reasonable prior notice and as often as Lender may request.
SECTION 8.9 LOCATION OF COLLATERAL
The Borrower shall keep the Collateral, to the extent applicable,
at its principal place of business or at the Mortgaged Property. In the event
the Borrower intends to maintain stores, warehouses or any other location where
any of the Collateral may be kept other than principal place of business, the
Borrower shall provide Lender with the address of such location or locations and
shall execute and deliver to Lender a UCC-l financing statement covering the
Collateral for filing in any other state before any Collateral is brought into
such other State.
SECTION 8.10 PAY INDEBTEDNESS TO THE LENDER AND PERFORM
OTHER COVENANTS
The Borrower shall: (a) make full and timely payments of the
principal of and interest on the Note and all other indebtedness of the Borrower
to the Lender (including without limitation the Contingent Returns), whether now
existing or hereafter arising; (b) duly comply with all the terms and covenants
contained in each of the instruments and documents given to the Lender pursuant
to this Agreement at the times and places and in the manner set forth herein;
and (c) at all times maintain the liens and security interests provided for
under or pursuant to this Agreement as valid and perfected liens and security
interests on the Real Property intended to be covered thereby.
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SECTION 8.11 LITIGATION
The Borrower will promptly notify Lender upon the commencement of
any action, suit, claim, counterclaim or proceeding against or investigation of
the Debtor Parties where the damage claim is in excess of $25,000 or where the
litigation may materially adversely affect the Debtor Parties' business (except
when the alleged liability is fully covered by insurance); and shall provide
Lender with an opinion of counsel concerning the litigation or investigation and
the probable outcome thereof, if requested by Lender.
SECTION 8.12 DEFAULTS OR ASSESSMENTS
The Borrower shall promptly notify Lender in writing of: (a) any
material assessment by any Governmental Authority for unpaid taxes as soon as
the Borrower has knowledge thereof and shall supply Lender with copies of all
notices from the Internal Revenue Service or any other taxing authority; and (b)
any alleged default by the Debtor Parties in the performance of or any material
modification of any of the terms or conditions contained in any agreement,
mortgage, indenture or instrument to which the Debtor Parties are a party or
which is binding upon the Debtor Parties and of any default by the Debtor
Parties in the payment of any of its Indebtedness.
SECTION 8.13 EMPLOYEE BENEFIT PLANS
The Borrower shall establish no employee benefit plans of any
nature without the prior written consent of Lender. Each pension, profit
sharing, or other employee benefit plan at any time maintained by the Borrower
shall be in material compliance with ERISA and all applicable rules and
regulations adopted by regulatory authorities pursuant hereto. The Borrower will
cause to be filed all material reports required to be filed by ERISA, the Code,
and such rules and regulations.
SECTION 8.14 SUBORDINATION OF INDEBTEDNESS
All indebtedness of the Borrower to any officer, director,
shareholder, Subsidiary or Affiliate, whether now existing or hereafter
incurred, shall be and is hereby subordinated to the indebtedness of the
Borrower to the Lender, and any claims by said parties against the Borrower are
subordinated to the indebtedness of the Borrower to the Lender and no such
claims shall be made against the Borrower until the Loan and the Contingent
Returns are paid in full.
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SECTION 8.15 CORRESPONDENCE WITH ACCOUNTANTS
The Borrower shall promptly deliver to Lender copies of all
material correspondence between the Debtor Parties and the Debtor Parties's
independent accountants.
SECTION 8.16 ESTOPPEL AFFIDAVITS
The Borrower, within 10 days after written request from Lender,
will furnish a written statement in form satisfactory to Lender, duly
acknowledged: (i) setting forth the unpaid principal balance of, and the
interest and other sums due on, the indebtedness evidenced by the Note and/or
secured by the Mortgage or any of the other Loan Documents; (ii) stating whether
or not any offsets or defenses exist against the payments due under the Note,
the Mortgage or any of the other Loan Documents; (iii) stating the current
maturity date of the Note; (iv) setting forth the amount and for which purpose
any escrow account is being held by Lender; and (v) setting forth such other
information as Lender may reasonably request from time to time.
SECTION 8.17 CHANGE OF NAME, PRINCIPAL PLACE OF BUSINESS,
ETC.
The Borrower shall notify Lender immediately of any change in the
name of any of the Debtor Parties, the principal place of business of the Debtor
Parties, the office where the books and records of the Debtor Parties are kept
or any change in the registered agent of the Debtor Parties for the purpose of
service of process.
SECTION 8.18 ENVIRONMENTAL LAWS
The Borrower shall keep and maintain the Mortgaged Real Property
in compliance in all material respects with all Environmental Laws; promptly
advise the Lender in writing of (a) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened in
writing pursuant to any applicable Environmental Laws, (b) any and all claims
made or threatened in writing by any third party against Borrower or the
Mortgaged Real Property relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials and (c)
discovery by Borrower of any occurrence or condition on any Real Property
adjoining or in the vicinity of the Mortgaged Real Property that could
reasonably be expected to cause the Mortgaged Real Property or any part thereof
to be subject to any restrictions on the ownership, occupancy, transferability
or use of the Mortgaged Real Property under any Environmental Laws.
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SECTION 8.19 COMPLIANCE WITH LAWS
The Borrower shall do or cause to be done all acts and things
necessary to effect compliance with all applicable local, state and federal
zoning, land use and building codes and shall do or cause to be done all acts
and things required for the preservation and protection of the Mortgaged
Property such that the Mortgaged Real Property are, at all times, in compliance
with all applicable zoning, land use and building codes. The Borrower shall also
do or cause to be done all acts and things necessary so that the Mortgaged Real
Property shall at all times be in full compliance with all covenants,
restrictions, agreements or instruments affecting the Mortgaged Real Property
and the uses thereof.
SECTION 8.20 PURCHASE OF MATERIALS AND SUPPLIES
In the event Borrower purchases any materials, supplies or
services for the Project from Affiliates, all such items shall be purchased at
cost and written verification of the same shall be provided to Lender.
SECTION 8.21 INDEMNIFICATION
(a) Borrower shall at its own expense, and does hereby agree to,
protect, indemnify, reimburse, defend and hold harmless Lender and its
directors, officers, shareholders, agents, employees attorneys, successors and
assigns from and against any and all liabilities (including strict liability),
losses, suits, proceedings, settlements, judgments, orders, penalties, fines,
liens, assessments, claims, demands, damages, injuries, obligations, costs,
disbursements, expenses or fees, of any kind or nature (including attorneys'
fees and expenses paid or incurred in connection therewith) arising out of or by
reason of (i) an incorrect legal description of the Real Property; (ii) any
action, or inaction of Lender in connection with the Loan Documents, the
Contingent Return Documents or the Mortgaged Property constituting gross
negligence or willful misconduct or a material breach of the Loan Documents;
(iii) the construction of any Improvements; (iv) the use and operation of the
Mortgaged Property; (v) any acts or omissions of Borrower or any other Person
at, on or about the Mortgaged Property regarding the contamination of air, soil,
surface waters or groundwaters over, on or under the Mortgaged Property; (vi)
the presence, whether past, present or future, of any Hazardous Material on, in
or under the Mortgaged Property; (vii) any past, present or future events,
conditions, circumstances, activities, practices, incidents, actions or plans
involving the manufacture, processing, distribution, use, transport, handling,
treatment, storage, disposal, cleanup, emission, discharge, seepage, spillage,
leakage, release or threatened release of any Hazardous Material on, in, under
or from the Mortgaged Property, in connection with Borrower's operations on
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the Mortgaged Property, or otherwise; or (viii) the acts of any third parties,
including, without limitation, third party claims, except to the extent that any
loss therefrom is caused by the gross
negligence or willful misconduct of Locuments; all of the foregoing regardless
of whether within the control of Lender.
(b) The indemnifications of this Section 8.21 shall survive the
full payment and performance of the Loan and the Contingent Returns.
SECTION 8.22 SOLVENCY
Borrower is and will remain solvent and Borrower shall pay its
debts from its assets as the same shall become due. In connection therewith,
Borrower shall maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations. Neither Borrower nor any constituent party of
Borrower will seek the dissolution or winding up, in whole or in part, of
Borrower, nor will Borrower merge with or be consolidated into any other entity.
SECTION 8.23 SEPARATE ACCOUNTS
Borrower will maintain books and records and bank accounts
separate from those of its Affiliates, including, without limitation,
Transeastern, and any constituent party of Borrower, and Borrower will file its
own tax return. In connection therewith, Borrower shall not commingle the funds
and other assets of Borrower with those of any Affiliate, any Guarantor, any
constituent party of Borrower or any other person. Borrower has and will
maintain its assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify its individual assets from those of any
constituent party or Borrower, an Affiliate, a Guarantor or any other Person.
ARTICLE IX
BORROWER'S NEGATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof and
until payment in full of the principal of and interest on the Note, and all
other indebtedness to the Lender under this Agreement, unless Lender shall
otherwise consent in writing, it will not, either directly or indirectly, do any
of the following:
SECTION 9.1 TYPE OF BUSINESS
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The Borrower will not engage in any business other than the
ownership, development and operation of the Project. In addition, Borrower does
not own and will not own any asset or property other than (a) the Real Property,
and (b) the incidental personal property necessary for the ownership,
construction and operation of the Project.
SECTION 9.2 MORTGAGES, LIENS, ETC.
The Borrower will not create, incur, assume or suffer to exist
any mortgage, pledge, security interest, encumbrance, lien or charge of any kind
upon any of the Borrower's properties or assets of any character, whether owned
at the date hereof or hereafter acquired, or hold or acquire any Real Property
or assets of any character under conditional sales or other title retention
agreements, except:
(a) Mortgages, liens, pledges and security
interests in favor of the Lender;
(b) The Chase Federal Loans subject, however, to
the terms of the Tri-Party Agreement;
(c) (i) Liens arising out of judgments or awards in respect of
which the Borrower shall in good faith be prosecuting an appeal or proceedings
for review and in respect of which the Borrower shall have secured a subsisting
stay of execution pending such appeal or procedures for review, provided the
Borrower shall have set aside on its books adequate reserves with respect to
such judgment or award; (ii) liens for taxes, assessments or governmental
charges or levies, provided payment thereof shall not at the time be required in
accordance with the provisions of Section 8.4; (iii) deposits, liens or pledges
to secure payments of worker's compensation, unemployment insurance, old age
pensions or other social security obligations or the performance of bids,
tenders, leases, contracts (other than contracts for the payment of money),
public or statutory obligations, surety, stay or appeal bonds or other similar
obligations arising in the ordinary course of business; (iv) mechanics',
workmens', repairmens' warehousemans', vendors' or carriers' liens or other
similar liens arising in the ordinary course of business which have been
transferred to bond as required herein; (v) statutory landlords' liens under
leases to which the Borrower is a party; and (vi) zoning restrictions,
easements, license restrictions on the use of Real Property or minor
irregularities relating thereto which do not materially impair the use of such
Real Property in the operation of the business of the Borrower or the value of
such Real Property or the purpose of such business; and
(d) The Permitted Title Exceptions.
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SECTION 9.3 COVENANT TO SUBORDINATE
In the event of a prepayment of the Loan in full, Lender agrees
to subordinate the Contingent Return Documents to senior secured financing which
shall not exceed the amount of the outstanding indebtedness of the Loan at the
time the Loan is paid in full and on such other terms and conditions which are
acceptable to Lender.
SECTION 9.4 INDEBTEDNESS
The Borrower will not create, incur, assume or suffer to exist,
contingently or otherwise, any Indebtedness, except:
(a) Indebtedness of the Borrower to the Lender;
(b) Indebtedness pursuant to the Chase Federal Loan
Documents subject, however, to the terms of the Tri-Party Agreement;
(c) The Tract C and E Acquisition Loan and/or the
Construction Loan(s) subject, however, to the terms of Section 2.5 hereof.
(e) Subordinated Indebtedness;
(e) Unsecured current liabilities incurred with
trade creditors relating to the Project in the ordinary course of business other
than those which are for money borrowed or are evidenced by bonds, debentures,
notes or other similar instruments;
(f) Indebtedness (not overdue) secured by
mortgages, liens or security interests permitted by Section 9.2 hereof;
(g) Indebtedness under guarantees or for other
contingent liabilities to the extent permitted by Section 9.5 hereof; or
(h) Liability under operating leases required in
the normal day-to-day operation of the business of the Borrower.
SECTION 9.5 LOANS, INVESTMENTS AND GUARANTEES
The Borrower will not lend or advance money, credit or Real
Property to any Person, or invest in (by capital contribution or otherwise), or
purchase or repurchase the stock or indebtedness, or all or a substantial part
of the assets or properties, of any Person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly or by any instrument
having the effect of assuring any Person's payment or performance or capability)
the indebtedness, performance, obligations, stock or dividends of any Person, or
agree to do any of the foregoing except:
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(a) Endorsement of negotiable instruments for
deposit or collection in the ordinary course of business;
(b) Investments in readily marketable, direct
obligations of the Government of the United States of America maturing not more
than one year after the date of the purchase thereof and/or in certificates of
deposit issued by Lender;
(c) Investments representing stock or obligations
issued to the Borrower in settlement of claims against any other Person by
reason of an event of bankruptcy or a composition or readjustment of debt or a
reorganization of any debtor of the Borrower;
(d) Investments representing the indebtedness of
any Person owing as a result of a sale by the Borrower in the ordinary course of
business of tangible personal Real Property no longer required in its business;
or
(e) Travel advances to officers and employees.
(f) Payment of brokerage commission advances for
residential sales which are customary in the construction industry subject,
however, to the prior written approval of Lender.
SECTION 9.6 MERGER, SALE OF ASSETS, DISSOLUTION, ETC.
The Borrower will not enter into any transaction of merger or
consolidation, or transfer, sell, assign, lease or otherwise dispose of (other
than sales of products and services in the ordinary course of business) all or a
substantial part of its properties or assets, or any of its notes or
Receivables, or any assets or properties necessary or desirable for the proper
conduct of its business or any interest in any of the foregoing, or change the
nature of its business, conclude, liquidate or dissolve, or acquire any assets
or business from or Capital Securities of any Person, or agree to do any of the
foregoing.
SECTION 9.7 TRANSFER OF OWNERSHIP INTEREST IN BORROWER AND
MORTGAGED PROPERTY
(a)The Borrower shall not permit the sale or other transfer
of any ownership interest(beneficial or otherwise) in the Borrower.
(b) Except as may otherwise be expressly permitted in this
Agreement, Borrower shall not sell, convey, or transfer or permit to be sold,
conveyed or transferred any interest in the Mortgaged Property or any part
thereof.
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SECTION 9.8 DISTRIBUTIONS; RESTRICTED PAYMENTS
The Borrower shall not make or declare or otherwise become
obligated to make (A) any dividend or other distribution, directly or
indirectly, on account of any Capital Securities of the Borrower (except for
annual cash distributions to its shareholder in an aggregate amount or any
Subsidiary (other than dividends and other distributions payable to the
Borrower), (B) any payment on account of the principal of or premium, if any, on
any indebtedness convertible into Capital Securities of the Borrower or any
Subsidiary ( other than any such payment to the Borrower), (C) any payment on
account of any purchase, redemption, retirement, exchange or conversion of any
Capital Securities of the Borrower or any Subsidiary (other than any such
payment to the Borrower), (D) any other payment, loan or advance to a
shareholder of the Borrower or any other Affiliate of the Borrower or Affiliate
of such shareholder (including the Principals) or (E) any forgiveness or release
without adequate consideration by Borrower of any indebtedness or other
obligation owing to Borrower by a Person that is a shareholder of Borrower or an
Affiliate of any such shareholder (including the Principals).
SECTION 9.9 TRANSACTIONS WITH AFFILIATES
The Borrower shall not effect any transaction with any Affiliate
(including the Principals) on a basis less favorable than would at the time be
obtainable for a comparable transaction in an arms-length dealing with an
unrelated third party.
SECTION 9.10 ISSUANCE OR DISPOSITION OF CAPITAL SECURITIES
The Borrower shall not issue any of its Capital Securities or
sell, transfer or otherwise dispose of any Capital Securities of any Subsidiary.
SECTION 9.11 CHANGE IN DOCUMENTS
The Borrower shall not amend, supplement, terminate or otherwise
modify its articles of incorporation or bylaws.
SECTION 9.12 CHANGE OF FISCAL YEAR, ETC.
The Borrower shall not change its fiscal year nor will the
Borrower amend in any respect its entity documents from those in existence on
the date of this Agreement or change its accounting methods or practices, its
depreciation or amortization policy or rates, except as required to comply with
law or with Generally Accepted Accounting Principles.
SECTION 9.13 COVENANT NOT TO COMPETE
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From the date hereof and for a period of one (1) year after the
date that Lender sells the Project after acquiring title thereto or the stock of
the Borrower pursuant to an occurrence of an Event of Default (such period, the
"RESTRICTION PERIOD"), neither the Borrower nor any Affiliate of the Borrower or
Affiliate of a shareholder of the Borrower (including the Principals) nor
Affiliate of any of the foregoing (collectively, the "RESTRICTED PARTIES")
shall, directly or indirectly, own, manage, invest or otherwise acquire any
economic stake or interest in, or otherwise engage or participate in any manner
whatsoever (whether as proprietor, partner, shareholder, investor, manager,
owner, officer, director, employee, agent, lender, borrower, guarantor, broker,
investor, independent contractor, consultant, advisor, representative, lessor,
lessee or other participant), or prepare to do any of the foregoing, with or in
any Person or other business enterprise in any form which engages in, directly
or indirectly, any business that is similar to the business as currently
conducted by the Borrower or as the same may be conducted by the Borrower at any
time during the Restriction Period, anywhere within one-half (1/2) mile of the
Real Property. Nothing in this Section 9.13 shall prohibit the Restricted
Parties from owning as a passive investment less than 1% of the outstanding
shares of capital stock in a corporation, which shares are listed on a national
securities exchange or publicly traded in the over-the-counter market. The
Restricted Parties acknowledge and confirm that (i) the length of the
Restriction Period and geographical restrictions contained herein are fair and
reasonable and (ii) the provisions and restrictions set forth in this Section
9.13 are reasonable and necessary for the protection of the legitimate interests
of the Borrower and Lender.
The Restricted Parties acknowledge that the Borrower and/or the
Lender will be irreparably harmed (and damages at law would be an inadequate
remedy) by a breach or threatened breach of the provisions of this Section 9.13.
Therefore, in the event of a breach or threatened breach by any Restricted Party
of any provision of this Section 9.13, the Lender and/or Borrower, as
applicable, shall be entitled, in addition to all other rights, remedies or
damages to which it is entitled, to injunctions restraining such breach and/or
to a decree for specific performance of the provisions of this Section 9.13,
without being required to show any actual damage or to post any bond or other
security. The existence of any claim or cause of action by Borrower and/or
Lender predicated on the provisions of this Section 9.13, shall not constitute a
defense to the enforcement by the Borrower and/or Lender of these covenants. In
the event the Borrower and/or Lender should bring any legal action or other
proceeding for the enforcement of this Section 9.13, the time for calculating
the applicable Restriction Period or terms of any other restriction herein shall
not include the period of time commencing with the filing of legal action or
other proceeding to enforce the terms of
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this Section 9.13 through the date of final judgment or final resolution,
including all appeals, if any, of such legal action or other proceeding.
SECTION 9.14 PURCHASE AGREEMENTS. Borrower shall not amend or
otherwise modify or amend any of the existing Purchase Agreements for the sale
of the all or any part of the Real Property, without Lender's consent. In
addition, Borrower shall not enter into any other purchase agreements for all or
any part of the Real Property, without Lender's consent, or thereafter amend or
modify the same, without the Lender's consent.
ARTICLE X
EVENTS OF DEFAULT
The occurrence of any one of more of the following events is a
Default hereunder and the continuance of any such Default beyond the period (if
any) provided below within which such Defaults may be cured shall be an Event of
Default hereunder:
SECTION 10.1 IMMEDIATE ACCELERATION
(A) Any of the Debtor Parties: (a) shall file a
voluntary petition under Title 11 of the United States Code for adjudication as
a bankrupt; (b) shall file an answer seeking reorganization or an arrangement
under any bankruptcy or similar statute of the United States of America or any
subdivision thereof or of any foreign jurisdiction in response to an involuntary
petition; (c) shall consent to the filing of a petition in any such bankruptcy
or reorganization proceeding; (d) shall consent to the appointment of a receiver
or trustee or officer performing similar functions with respect to any
substantial part of its Real Property; (e) shall make a general assignment for
the benefit of its creditors; or (f) shall execute a consent to any other type
of insolvency proceedings (under the Bankruptcy Act or otherwise) or any
informal proceeding for the dissolution or liquidation of, or settlement of,
claims against or winding up of affairs of, the Company or the Partnership; or
(B) The appointment of a receiver or trustee or
officer performing similar functions for any of the Debtor Parties for any of
its assets, or the filing against any of the Debtor Parties of a petition for
adjudication as a bankrupt or insolvent or for reorganization under any
bankruptcy or similar laws of the United States of America or of any state
thereof or of any foreign jurisdiction, or the institution against any of the
Debtor Parties of any other type of insolvency proceeding (under the Bankruptcy
Act or otherwise) or of any formal or informal proceeding for the
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dissolution or liquidation, settlement of claims against or winding up of
affairs, of any of the Debtor Parties, and the failure to have such appointment
vacated or such petition or proceeding dismissed within sixty (60) days after
such appointment, filing or institution;
then the credit hereby granted and all obligations to make advances hereunder
shall immediately terminate without notice, and all principal and interest owing
hereunder shall forthwith mature and become due and payable without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived.
SECTION 10.2 DISCRETIONARY ACCELERATION
(a) Default by the Borrower in the payment of any
principal, interest or payment within fifteen (15) days after the same becomes
due to the Lender hereunder or under the Note;
(b) Default in the payment or performance of any
other liability, obligation or covenant of the Borrower to the Lender hereunder,
under the Loan Documents or under any other agreement with the Lender (including
without limitation the Tri-Party Agreement), and continuance thereof for thirty
(30) days after written notice to the Borrower from the Lender;
(c) Default in the performance or observance of any
term, covenant, condition or agreement of any Debtor Party contained in any
Security Document or Loan Document to which such Debtor Party is a party and
continuance thereof for thirty (30) days after written notice to the Borrower
from the Lender;
(d) If, on or after the Closing Date, (i) for any
reason (other than any act on the part of any of the Lender) any Loan Document
ceases to be in full force and effect in any material respect or any of the
Liens created by any Loan Document ceases to be a valid and perfected Lien in
the priority set forth in the Tri- Party Agreement, or (ii) any party to any
Loan Document (other than the Lender) shall assert in writing that any such
document or agreement has ceased to be in full force and effect and Lender shall
have determined that such assertion constitutes an Event of Default;
(e) Any representation, warranty, statement,
certificate, schedule or report made or furnished by any of the Debtor Parties
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 any of the Debtor Parties, 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 matters shall not have been
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disclosed to the Lender at or prior to the time of such execution as which
Borrower shall have a period of ten (10) days following written notice to prove
that such matters were previously disclosed to Lender prior to execution of this
Agreement or are not erroneous;
(f) The rendition by any court of a final judgment
against the Borrower in excess of $25,000.00 which shall not be satisfactorily
stayed, discharged, vacated or set aside within thirty (30) days of the making
thereof; or the attachment of the Real Property which has not been released or
provided for to the satisfaction of Lender within thirty (30) days after the
making thereof;
(g) Any litigation or any proceeding which is
pending against any of the Debtor Parties or is threatened (and which is not
covered by adequate insurance as determined by Lender in its reasonable
discretion), the outcome of which would probably seriously affect the continued
operation of the applicable Debtor Party, and the applicable Debtor Party
failing to take corrective measures reasonably satisfactory to Lender within
thirty (30) days after notice from Lender;
(h) Borrower's failure to achieve the sales
projections as set forth in Section 8.6 hereof;
(i) If any Chase Federal Letters of Credit are
drawn upon and are not refunded by the applicable governmental authority or
reimbursed by the Guarantors within forty-five (45) days thereafter;
(j) A default or an event of default under any of
the Guaranty or the Funding Agreement;
(k) A default or an event of default is declared
under any of the Chase Federal Loan Documents and the same is not cured within
any applicable grace period;
(l) Transeastern shall cease to own, directly or
indirectly, 100% of the outstanding ownership interests in the Borrower.
(m) A default or an event of default is declared
under the Tract C and E Acquisition Loan and/or the Construction Loan.
then, upon the occurrence of any such Default and the execution of the
applicable grace period, the Lender, at its option, may terminate the Loan
hereby granted, together with all obligations of Lender hereunder, by written
notice to that effect to the Borrower and may declare (i) all principal and
interest owing hereunder, and (ii) the Contingent Returns, to be mature and be
forthwith due and payable without presentment, demand, protest or further notice
of
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any kind, all of which are hereby expressly waived or may elect not to
accelerate the Loan but increase the interest rate under the Note up to the
default rate of interest. Lender acknowledges that in the event Borrower is not
able to cure any of the non-monetary Defaults within the required grace periods
(if any) after diligently attempting to cure same, Borrower may have an
additional time to cure same provided, however, such additional grace period
shall in no event exceed thirty (30) days after expiration of the initial grace
period.
SECTION 10.3 WAIVER OF DEFAULT
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.
ARTICLE XI
REMEDIES FOR DEFAULT
Upon the occurrence of an Event of Default, Lender shall have the
following remedies:
SECTION 11.1 ACTION FOR ENFORCEMENT
In case any one or more Events of Default shall occur and be
continuing, Lender may proceed to protect and enforce its rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein, in
the Note, in the Contingent Return Mortgage or in any document or instrument
delivered in connection with or pursuant to this Agreement, or to enforce the
payment of the Note, the Contingent Returns or any other legal or equitable
right or remedy.
SECTION 11.2 RIGHTS AND REMEDIES CUMULATIVE
No right or remedy herein conferred upon Lender is intended to be
exclusive of any other right or remedy contained herein, in the Note, Loan
Documents, Contingent Return Documents or in any instrument or document
delivered in connection with or pursuant to this Agreement, and every such right
or remedy shall be cumulative and shall be in addition to every other such right
or remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute or otherwise. In the event of any conflict
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among the Loan Documents as to the notice required before resort to any remedy,
the shortest notice provision shall control all others with respect to the
remedy in question (for purposes of this Section only, "without notice" shall be
deemed a notice provision).
SECTION 11.3 RIGHTS AND REMEDIES NOT WAIVED
No course of dealing between the Borrower and the Lender or any
failure or delay on the part of 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 XII
FEES AND PAYMENTS
SECTION 12.1 COMMITMENT FEE
In consideration of the Lender holding itself ready, willing and
able to make the Loan and maintaining available a portion of its loan portfolio
to fund the Loan at the designated interest rate, and in further consideration
of the substantial services which the Lender has rendered, the Borrower shall
have paid to the Lender upon and as a condition of closing the Loan a Commitment
Fee in the aggregate amount of SIXTY THOUSAND AND NO/100 DOLLARS ($60,000.00)
payable as follows:
(i) A non-refundable commitment fee in the amount of $30,000
shall be due and payable to Lender in full upon the Borrower's acceptance of the
Commitment Letter and Lender acknowledges payment of same; and
(ii) A non-refundable commitment fee in the amount of $30,000
shall be due and payable to Lender in full upon the closing of the Loan.
The Commitment Fee described above shall be deemed earned by the
Lender upon issuance of the Commitment Letter and shall be retained by the
Lender as liquidated damages in the event the Borrower is unwilling or unable to
close the Loan for any cause whatsoever, and shall not be applied to any loan
costs or expenses of any kind.
SECTION 12.2 EXPENSE DEPOSIT
The Lender acknowledges receipt from the Borrower of the sum of
Twenty-Five Thousand and No/100 ($25,000.00) Dollars ("Expense
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Deposit") to be applied to expenses incurred by the Lender in accordance with
Section 12.3 hereof. These costs are payable at the earlier to occur of Closing
or the termination of the Commitment Letter and will be paid to the extent
available from the Expense Deposit and thereafter from the assets of the
Borrower, Transeastern and the Principals, who, by execution of the Commitment
Letter, agree to be jointly and severally liable for such obligations. If the
Loan closes, Lender shall return any portion of such Expense Deposit which is
not applied as provided above, to the Borrower within 45 days after Closing.
SECTION 12.3 COSTS, TAXES AND ATTORNEYS' FEES
Whether or not the Closing is effectuated and the transactions
contemplated hereby shall be consummated, the Borrower agrees: (a) to pay all
out-of-pocket costs, expenses, disbursements and fees incurred by the Lender in
connection with the origination, preparation, execution and delivery of and any
amendment, supplement or modification to, any of the Loan Documents and any
other documents prepared in connection herewith, and the consummation of the
transactions contemplated hereby and thereby (whether incurred before or after
the Closing), including, without limitation, title search, examination and
insurance charges, UCC searches, judgment and tax lien searches, surveys,
recording fees, charges and taxes, documentary stamps, intangible taxes,
disbursement fees, appraisal fees, attorneys' fees and disbursements of Counsel
to the Lender in connection with the origination and/or the Closing of the Loan;
(b) to pay or reimburse the Lender for all their out-of-pocket (I.E.,
non-overhead) costs and expenses incurred in connection with the administration,
audit and/or enforcement or preservation of any rights under the Loan Documents
and any such other documents; (c) to indemnify and hold the Lender harmless from
any and all recording and filing fees (including all intangible and documentary
stamp taxes) and any and all liabilities with respect to, or resulting from, any
delay in paying stamp, excise, documentary and other similar taxes, if any,
which may be payable or determined to be payable in connection with the
origination, administration, audit, execution and delivery of, or consummation
of, any of the transactions contemplated by, or any amendment, supplement or
modification to, or any waiver or consent under or in respect of, the Loan
Documents and any such other document; and (d) to pay, indemnify and hold the
Lender harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments and suits, costs, expenses or
commissions, including, without limitation, any brokerage claims arising out of
orn any way relating to the Loan and arising out of conduct (or alleged conduct)
of the Borrower (all of the foregoing, collectively, the "Indemnified
Liabilities"). The agreements contained in this Section shall survive repayment
of the Note and all other amounts payable hereunder or under the other Loan
Documents or under the
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Contingent Return Documents. Such expenses shall be paid at the Closing, or in a
reasonable time thereafter upon receipt of written invoices, and will be paid to
the extent available from the Expense Deposit and thereafter from the assets of
the Borrower. In the event the Borrower fails to pay such expenses within a
reasonable time, the Lender may pay any such expenses which exceed the Expense
Deposit on the Borrower's behalf and charge the Borrower's account. The Borrower
shall also pay post-closing expenses incurred by the Lender on behalf of the
Borrower, including, but not limited to, additional documentary stamp or
intangible taxes if required, recertification of title expenses and preparation
of documents to terminate the Loan and release the security therefor.
Furthermore, the Borrower shall be liable for post-closing collection expenses,
including, but not limited to, expenses related to the repossession, storage or
sale of the Collateral and to the collection of obligations of the Borrower
hereunder, including reasonable attorneys' fees, including appellate
proceedings, post-judgment proceedings and bankruptcy proceedings. Attorneys'
fees shall include the fees or paraprofessionals such as paralegals,
investigators, etc.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 NOTICES
All notices, consents, requests and demands to or upon the
respective parties hereto to be effective shall be in writing or by telegraph,
telex or telecopy and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand or when deposited
in the mail, postage prepaid, or, in the case of telex, telegraphic or telecopy
notice, when sent, addressed as follows, or to such address or other addresses
as may be hereafter notified by any of the respective parties hereto or any
future holders of the Note:
TO THE BORROWER: Transeastern Pembroke Villages, Inc.
3300 University Drive, 1st Floor
Coral Springs, Florida 33065
Attn: Arthur J. Falcone
Phone: (305) 346-9700
Fax: (305) 753-0351
WITH A COPY TO: John T. Kinsey, Esquire
Two Executive Court
2300 Corporate Blvd, Suite 112
Boca Raton, Florida 33431
Phone: (407) 994-9890
Fax: (407) 994-5952
TO THE GUARANTORS: Arthur J. Falcone
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Edward Falcone
Philip Cucci
Transeastern Properties of South Florida,
Inc.
3300 University Drive, 1st Floor
Coral Springs, Florida 33065
Attn: Arthur J. Falcone
Phone: (305) 346-9700
Fax: (305) 753-0351
WITH A COPY TO: John T. Kinsey, Esquire
Two Executive Court
2300 Corporate Blvd, Suite 112
Boca Raton, Florida 33431
Phone: (407) 994-9890
Fax: (407) 994-5952
TO THE LENDER: AMRESCO FUNDING CORPORATION,
1845 Woodall Rodgers Freeway
Suite 1400
Dallas, Texas 75201
Attn: President
Phone: (214) 953-7723
Fax: (214) 953-7756
WITH A COPY TO: AMRESCO FUNDING CORPORATION,
1845 Woodall Rodgers Freeway
Suite 1700
Dallas, Texas 75201
Attn: General Counsel
Phone: (214) 953-7000
Fax: (214) 953-
SECTION 13.2 FURTHER ASSURANCES
At any time and from time to time, upon Lender's request and at
the expense of the Borrower, the Borrower will promptly (and in no event within
more than 10 days) execute and deliver any and all further instruments and
documents and take such further action as Lender may deem reasonable to effect
the purposes of this Agreement and/or any of the other Loan Documents. In
addition, upon request of Lender from time to time, and at the Borrower's sole
cost and expense, the Borrower will promptly (and in no event within more than
10 days) correct any defect which may be discovered in the Note, the Mortgage,
this Agreement or any of the other Loan Documents, and after the execution of
same, the Borrower will make, execute and deliver to Lender and, where
appropriate, will cause to be recorded and/or filed and from time to time
thereafter re-recorded and/or refiled at such time and in such offices and
places as are deemed desirable by Lender, any and all mortgages, instruments of
further assurance, certificates and other documents as may, in the reasonable
opinion of Lender, be necessary or
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desirable by Lender in order to effectuate, complete or perfect, or to continue
and preserve: (i) the obligations of the Borrower under the Mortgage, the Note,
this Agreement or any of the other Loan Documents, (ii) the Lien of the Mortgage
as a Lien upon the Mortgaged Real Property, and the lien or security interest of
the Lender on any of the Collateral, whether now owned or hereafter acquired by
the Borrower. Upon any failure by the Borrower to comply with this Section,
Lender may make, execute, record, file, re-record and/or refile any and all
mortgages, instruments, certificates and documents for and in the name of the
Borrower, and the Borrower hereby irrevocably appoints Lender the agent and
attorney-in-fact of the Borrower to do so, which agency and appointment as
attorney-in-fact shall be coupled with an interest.
SECTION 13.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made hereunder, in the other
Loan Documents or in any document, certificate or statement delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery of this Agreement, the Note, the Mortgage and the other
Loan Documents.
SECTION 13.4 ATTORNEYS' FEES
Any and all references to the payment of attorneys' fees and
disbursements herein or in any of the other Loan Documents shall include those
incurred before, during and after litigation, whether in negotiating, drafting,
closing, attempting collection without litigation, investigating and litigating
in all trial and appellate levels, as well as those incurred in any bankruptcy
proceedings and post-judgment proceedings. Attorneys' fees includes fees of
paraprofessionals such as paralegals and investigators, administrative costs and
all other charges whatsoever billed by counsel to the Lender.
SECTION 13.5 APPROVED FORM
Any provision of this Agreement or any of the other Loan
Documents which requires the Borrower or any other party to execute and/or
deliver any agreement, instrument or other written document or material or which
requires the Borrower or any other party to take or perform any act or action,
shall in each case be interpreted, construed and enforced as if it was expressly
provided in such provision that each such agreement, instrument or other written
document is to be in form, substance and content satisfactory to the Lender in
its judgment (reasonably exercised in good faith), and that each such act or
action is to be performed and/or accomplished in a manner fully satisfactory to
the Lender acting in good faith.
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SECTION 13.6 SEVERABILITY
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 13.7 COUNTERPARTS
This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Confirmation of execution by telex or by telecopied facsimile
signature page shall be binding upon any party so confirming or telecopying. A
set of the copies of this Agreement signed by all the parties hereto shall be
lodged with the Borrower and the Lender.
SECTION 13.8 INTERPRETATION
Each of the parties hereto acknowledges that they have been
represented by their own counsel throughout the negotiations and at the
execution of this Agreement and all of the other Loan Documents and therefore
none of the parties hereto shall, while this Agreement is effective or after its
termination, claim or assert that any provisions of this Agreement or any of the
other Loan Documents should be construed against the drafter of this Agreement
or any of the other Loan Documents.
SECTION 13.9 CONFLICT
If the terms and provisions of any of the other Loan Documents
should conflict with any of the terms and provisions of this Agreement, the
terms and provisions of this Agreement shall be interpreted as being paramount,
superior and controlling.
SECTION 13.10 HEADINGS
The headings of the Articles, Sections, and Subsections of this
Agreement are for convenience of reference only, and are not to be considered a
part hereof, and do not limit or otherwise affect any of the terms hereof.
SECTION 13.11 JURISDICTION AND VENUE
Each of the parties irrevocably and unconditionally: (a) agrees
that any suit, action or other legal proceeding arising out of or relating to
this Agreement may, and to the extent permitted by the courts of the State of
Florida shall be brought in the courts of record of the State of Florida in
Broward County or the
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District Court of the United States, Southern District of Florida; (b) consents
to the jurisdiction of each such court in any such suit, action or proceeding;
(c) waives any objection which it may have to the laying of venue of any such
suit, action or proceeding in any of such court; and (d) agrees that service of
any court paper may be effected on such party by mail, as provided in this
Agreement, or in such other manner as may be provided under applicable laws or
court rules in the State of Florida.
SECTION 13.12 AMENDMENTS
The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any such amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
SECTION 13.13 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
Documents, 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'
rights.
SECTION 13.14 PUBLICITY
The Lender is authorized at its discretion to issue news releases
and, at its own expense, to publish "tombstone ads" and other announcements in
newspapers, trade journal and other appropriate media, containing information
about the Loan as may be deemed noteworthy by the Lender, including without
limitation the
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legal and trade names of the Borrower and Transeastern, the amount of the Loan
and the name, nature and location of the Collateral. The Borrower shall not
publicize or advertise the name of the Lender as a source of the financing
without the prior express written permission of the Lender.
SECTION 13.15 DEVELOPMENT CONSULTANT
The Lender may designate a consultant to perform various services
on behalf of the Lender both prior to and after Closing, including, without
limitation, review of plans and specifications and all proposed changes to them,
preparation of a "cost take-off" construction analysis, if so desired by the
Lender, the inspection of construction work for conformity with the approved
plans and specifications and the approval of requests for Loan disbursements,
and review and approval of the documents, permits, items and other matters more
particularly described in Section 7 of this Agreement.
SECTION 13.16 GOVERNING LAW; BENEFIT
This Agreement and all rights hereunder shall be governed by the
laws of the State of Florida and of the United States. In the event of conflicts
between Florida and Federal laws, the laws of the United States shall supersede
and control. This Agreement shall bind and inure to the benefit of, and the
terms "Borrower," "Subsidiaries," and "Lender," respectively, as used in this
Agreement shall include, the respective parties and their respective heirs,
personal representatives, participants, successors and assigns. However, the
Borrower may not assign its rights and obligations under this Agreement. The
Lender may assign, in whole or in part, and issue participating interests in and
to this Agreement, the Note and Loan Documents. No consent of the Borrower to
such assignment or participation shall be required. In such event, the Borrower
agrees to attorn to such assignee and to execute such estoppel certificates and
consents thereto and other documentation as may be reasonably required to
facilitate such assignment, provided such consents and documentation do not add
to the obligations of the Borrower.
SECTION 13.17 REPRODUCTION OF DOCUMENTS
This Agreement and all documents relating thereto, including,
without limitation: (a) consents, waivers and modifications which may hereafter
be executed; (b) documents received by the Lender at the closing of the Loan;
and (c) financial statements, appraisals, credit reports, certificates and other
information previously or hereafter furnished to the Lender, may be reproduced
by the Lender by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process and the Lender may destroy any original
document so reproduced. The Borrower agrees and stipulates that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether nor not the original is in
existence and whether or not such reproduction was made by the Lender in the
71
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regular course of business) and that any enlargement, facsimile or further
reproduction of shall like wise be admissible in evidence.
SECTION 13.18 ABSENCE OF CONTROL
In no event shall the Lender' rights hereunder or under any of
the Loan Documents grant the Lender the right to, or be deemed to indicate that,
the Lender are in control of the business, management or properties of the
Borrower, or has power over the daily management functions and operating
decisions made by the Borrower. The Lender are lenders only and shall not be
considered a shareholder, joint venturer or partner of the Borrower.
SECTION 13.19 GOVERNMENTAL REGULATIONS OF THE LENDER
The Lender is subject to various Governmental Authorities and the
laws, rules and regulations enacted, adopted and promulgated by them. To the
extent that the Lender's power and authority to perform the obligations on the
part of the Lender to be performed under this Agreement, now or hereafter, may
be limited or regulated thereby, the Lender is excused from such performance.
SECTION 13.20 ACCRUAL OF INTEREST UNDER THE NOTE
Interest under the Note shall commence to accrue as of the date
of disbursal or wire transfer by the Lender, notwithstanding whether the
Borrower shall receive the benefit of such monies as of such date and even if
such monies are held in escrow pursuant to the terms of any escrow arrangement
or agreement. When monies are disbursed by wire transfer, then such monies shall
be considered advanced at the time of receipt thereof by the receiving financial
institution.
SECTION 13.21 WAIVER OF CONSEQUENTIAL DAMAGES
The Lender and the Debtor Parties hereby waive any and all right
to claim or receive consequential damages in connection with any claim or cause
of action arising out of or related to the Loan.
SECTION 13.22 ENTIRE AGREEMENT
This Agreement and the Loan Documents embody the entire agreement
and understanding between the parties with respect to the matters set forth
herein and supersede and cancel all prior loan applications, expressions of
interest, commitments (including, without limitation, the Commitment Letter),
agreements and understandings, whether oral or written, relating to the subject
matter hereof.
SECTION 13.23 WAIVER OF JURY TRIAL
THE PARTIES HERETO DO HEREBY MUTUALLY AND WILLINGLY WAIVE THE
RIGHT TO A TRIAL BY JURY OF ANY AND ALL CLAIMS MADE AMONG THEM
72
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WHETHER NOW EXISTING OR ARISING IN THE FUTURE, INCLUDING WITHOUT LIMITATION, ANY
AND ALL CLAIMS, DEFENSES, COUNTERCLAIMS, CROSS-CLAIMS, THIRD PARTY CLAIMS AND
INTERVENOR'S CLAIMS WHETHER ARISING FROM OR RELATED TO THE NEGOTIATION,
EXECUTION AND PERFORMANCE OF THE TRANSACTION TO WHICH THIS LOAN AGREEMENT
RELATES.
TRANSEASTERN PEMBROKE VILLAGES,
INC., a Florida Corporation
By:
Name:
Title:
(CORPORATE SEAL)
AMRESCO FUNDING CORPORATION
By:
Name:
Title:
73
<PAGE>
CONSENT AND JOINDER OF GUARANTORS
The undersigned, referred to as one of the "Guarantors" in the
foregoing Loan Agreement, hereby consents thereto and joins therein, for the
purpose of making the representations and warranties set forth therein and
agreeing to the affirmative and negative covenants set forth therein, including,
without limitation, the negative covenant set forth in Section 9.13 therein, and
agrees to be bound by the terms of the foregoing Agreement, insofar as the same
apply to the undersigned.
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC., a Florida corporation
By:
Name:
Title:
(CORPORATE SEAL)
74
<PAGE>
CONSENT AND JOINDER OF GUARANTORS
The undersigned, referred to as one of the "Guarantors" in the
foregoing Loan Agreement, hereby consents thereto and joins therein, for the
purpose of making the representations and warranties set forth therein and
agreeing to the affirmative and negative covenants set forth therein, including,
without limitation, the negative covenant set forth in Section 9.13 therein, and
agrees to be bound by the terms of the foregoing Agreement, insofar as the same
apply to the undersigned.
By:
Name:
Title:
(CORPORATE SEAL)
75
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT 1 Option Property
EXHIBIT 2 Real Property
EXHIBIT 6.16 Subsidiaries
EXHIBIT 6.2 Transeastern Stockholders
EXHIBIT 6.23 Permits and Licenses
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EXHIBIT "A"
(Property # 1)
A portion of the NASHER PLAT, according to the plat thereof as recorded at Plat
Book 159, Page 42 of the Public Records of Broward County, Florida, being more
particularly described as follows:
A PORTION OF TRACTS 37 THROUGH 39, "EVERGLADES SUGAR AND LAND COMPANY'S
SUBDIVISION OF SECTION 13, TOWNSHIP 51 SOUTH, RANGE 40 EAST", ACCORDING TO THE
PLAT THEREOF, AS RECORDED IN PLAT BOOK 2, PAGE 39, OF THE PUBLIC RECORDS OF DADE
COUNTY, FLORIDA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE WEST ONE-QUARTER (W 1/4) CORNER OF SAID SECTION 13; THENCE
NORTH 89(degree)43'34" EAST, ALONG THE NORTH LINE OF THE SOUTHWEST ONE-QUARTER
(SW 1/4) OF SAID SECTION 13, A DISTANCE OF 269.64 FEET; THENCE SOUTH
00(degree)16'26" EAST, 140.00 FEET TO THE SOUTH RIGHT-OF -WAY LINE OF PINES
BOULEVARD AS DESCRIBED IN OFFICIAL RECORDS BOOK 15434, PAGE 361, OF THE PUBLIC
RECORDS OF BROWARD COUNTY; THENCE NORTH 89(degree)43'34" EAST, ALONG SAID SOUTH
RIGHT-OF-WAY LINE. 963.03 FEET; THENCE NORTH 00(degree)16'26" WEST, 40.00 FEET
TO THE SOUTH RIGHT-OF-WAY LINE OF PINES BOULEVARD AS DESCRIBED IN DEED BOOK 634,
PAGE 183, OF THE PUBLIC RECORDS OF BROWARD COUNTY; THENCE NORTH 89(degree)43'34"
EAST ALONG SAID SOUTH RIGHT-OF-WAY LINE, 1880.42 FEET TO THE POINT OF BEGINNING;
THENCE CONTINUE NORTH 89(degree)43'34" EAST, ALONG SAID SOUTH RIGHT-OF-WAY LINE
785.16 FEET; THENCE SOUTH 46(degree)01'19" EAST, 41.87 FEET TO THE WEST
RIGHT-OF-WAY LINE OF SOUTHWEST 114TH AVENUE AS DESCRIBED IN OFFICIAL RECORDS
BOOK 11797, PAGE 329, OF THE PUBLIC RECORDS BROWARD COUNTY, FLORIDA; THENCE
SOUTH 01(degree)46'12" EAST, ALONG SAID WEST RIGHT-OF-WAY LINE, 505.95 FEET;
THENCE SOUTH 89(degree)43'34" WEST, 814.46 FEET; THENCE NORTH 01(degree)45'43"
WEST, 535.18 FEET TO THE POINT OF BEGINNING.
SAID LANDS LYING IN THE CITY OF PEMBROKE PINES, BROWARD COUNTY, FLORIDA,
CONTAINING 9.993 ACRES (435,290 SQUARE FEET), MORE OR LESS.
<PAGE>
EXHIBIT "A"
(PROPERTY # 2)
Parcel B of the NASHER PLAT, according to the plat thereof as recorded at Plat
Book 159, Page 42 of the Public Records of Broward County, Florida, also
described as follows:
A portion of tracts 51 and 52, "Everglades Sugar and Land Company's Subdivision
of Section 13, Township 51 South, Range 40 East", according to the plat thereof,
as recorded in Plat Book 2, Page 39, of the Public Records of Dade County,
Florida, more particularly described as follows:
Commencing at the Southwest corner of said Section 13, thence North
89(degree)44'06" East, along the South line of said Section 13, a distance of
262.87 feet; thence North 00(degree)15'54" West, 50.00 feet to the North
right-of-way line of Washington Street as described in Deed Book 634, Page 183
of the Broward County Public Records, thence North 46(degree)00'49" West, 48.85
feet to the East line of Flamingo Road as described in Official Records Book
15434, Page 361, of the Public Records of Broward County; thence North
01(degree)45'43" West, along said East right-of-way line, 575.97 feet; thence
North 89(degree)43'58" East, 429.50 feet; thence South 01(degree)45'43" East,
610.09 feet to the aforesaid North right-of-way line of Washington Street;
thence South 89(degree)44'06" West along said North right-of-way line, 395.40
feet to the Point of Beginning.
Said Lands lying in The City of Pembroke Pines, Broward County, Florida,
containing 6.000 acres (261,360 square feet), more or less.
<PAGE>
LAND DESCRIPTION: PARCEL B
A PORTION OF PARCEL C, "NASHER PLAT," ACCORDING TO THE PLAT THEREOF AS RECORDED
IN PLAT BOOK 159, PAGE 42 OF THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHEAST CORNER OF SAID PARCEL C; THENCE SOUTH
89(degree)43'34" WEST, ALONG THE NORTH LINE OF SAID PARCEL C, SAME BEING THE
SOUTH RIGHT OF WAY LINE OF PINES BOULEVARD (STATE ROAD 820), A DISTANCE OF
714.89 FEET TO THE POINT OF BEGINNING; THENCE SOUTH 01(degree)45'43" EAST,
535.18 FEET; THENCE NORTH 89(degree)43'34" EAST, 485.65 FEET; THENCE SOUTH
01(degree)45'43" EAST, 534.34 FEET; THENCE SOUTH 89(degree)43'34" WEST, 1306.52
FEET; THENCE NORTH 00(degree)16'26" WEST 1069.16 FEET TO THE NORTH LINE OF
AFORESAID PARCEL C, SAME BEING SAID SOUTH RIGHT OF WAY LINE OF PINES BOULEVARD;
THENCE NORTH 89(degree)43'34" EAST ALONG SAID SOUTH RIGHT OF WAY LINE, 793.09
FEET TO THE POINT OF BEGINNING.
SAID LANDS LYING IN THE CITY OF PEMBROKE PINES, BROWARD COUNTY,
FLORIDA, CONTAINING 25.762 ACRES, (1,122,205 SQUARE FEET), MORE OR LESS
<PAGE>
LAND DESCRIPTION: PARCEL D
A portion of the NASHER PLAT, according to the plat thereof as recorded at Plat
Book 159, Page 42 of the Public Records of Broward County, Florida, being more
particularly described as follows:
A PORTION OF TRACTS 44, 47 THROUGH 50 AND 53, "EVERGLADES SUGAR AND LAND
COMPANY'S SUBDIVISION OF SECTION 13, TOWNSHIP 51 SOUTH, RANGE 40 EAST",
ACCORDING TO THE PLAT THEREOF, AS RECORDED IN PLAT BOOK 2, PAGE 39, OF THE
PUBLIC RECORDS OF DADE COUNTY, FLORIDA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF SAID SECTION 13; THENCE NORTH
01(degree)45'43" WEST, ALONG THE WEST LINE OF SAID SECTION 13, A DISTANCE OF
654.08 FEET; THENCE NORTH 88(degree)14'17" EAST, 230.00 FEET TO THE POINT OF
BEGINNING, SAME BEING A POINT ON THE EAST RIGHT-OF-WAY LINE OF FLAMINGO ROAD AS
DESCRIBED IN OFFICIAL RECORDS BOOK 15434, PAGE 361 OF THE PUBLIC RECORDS OF
BROWARD COUNTY; THENCE NORTH 01(degree)45'43" WEST, ALONG SAID EAST RIGHT-OF-WAY
LINE, 1054.29 FEET; THENCE NORTH 88(degree)14'17" EAST, 500.00 FEET; THENCE
NORTH 81(degree)41'26" EAST, 608.93 FEET; THENCE SOUTH 01(degree)45'43" EAST,
1094.86 FEET; THENCE SOUTH 89(degree)43'34" WEST, 675.83 FEET; THENCE SOUTH
01(degree)45'43" EAST, 57.61 FEET; THENCE SOUTH 89(degree)43'58" WEST, 429.50
FEET TO THE POINT OF THE BEGINNING. SAID LANDS LYING IN THE CITY OF PEMBROKE
PINES, BROWARD COUNTY, FLORIDA, CONTAINING 26.697 ACRES (1,162,922 SQUARE FEET),
MORE OR LESS.
<PAGE>
LAND DESCRIPTION: PARCEL F
A portion of the NASHER PLAT, according to the plat thereof as recorded at Plat
Book 159, Page 42 of the Public Records of Broward County, Florida, being more
particularly described as follows:
A PORTION OF TRACTS 51 THROUGH 57, "EVERGLADES SUGAR AND LAND COMPANY'S
SUBDIVISION OF SECTION 13, TOWNSHIP 51 SOUTH, RANGE 40 EAST", ACCORDING TO THE
PLAT THEREOF, AS RECORDED IN PLAT BOOK 2, PAGE 39, OF THE PUBLIC RECORDS OF DADE
COUNTY, FLORIDA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHWEST CORNER OF SAID SECTION 13; THENCE NORTH
89(degree)44'06" EAST, ALONG THE SOUTH LINE OF SAID SECTION 13, A DISTANCE OF
262.87 FEET; THENCE NORTH 00(degree)15'54" WEST, 50.00 FEET TO THE NORTH
RIGHT-OF-WAY LINE OF WASHINGTON STREET AS DESCRIBED IN DEED BOOK 634, PAGE 183
OF THE BROWARD COUNTY PUBLIC RECORDS; THENCE NORTH 89(degree)44'06" EAST, ALONG
SAID NORTH RIGHT-OF-WAY LINE, 819.38 FEET TO THE POINT OF BEGINNING; THENCE
NORTH 01(degree)45'43" WEST, 560.19 FEET; THENCE NORTH 89(degree)44'06" EAST,
1634.77 FEET; THENCE SOUTH 01(degree)45'43" EAST, 560.19 FEET TO AFORESAID NORTH
RIGHT-OF-WAY LINE OF SAID WASHINGTON STREET; THENCE SOUTH 89(degree)44'06" WEST,
ALONG SAID NORTH RIGHT-OF-WAY LINE, 1634.77 FEET TO THE POINT OF BEGINNING.
SAID LANDS LYING IN THE CITY OF PEMBROKE PINES, BROWARD COUNTY, FLORIDA,
CONTAINING 21.016 ACRES (915,469 SQUARE FEET), MORE OR LESS.
<PAGE>
EXHIBIT 6.16
SUBSIDIARIES OF TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Transeastern Properties at the Cove, Inc.
Transeastern Aberdeen Properties, Inc.
Transeastern Pembroke Properties, Inc.
Transeastern Pembroke Villages, Inc.
Transeastern Wellington Properties, Inc.
Transeastern Plantation Apartments, Inc.
Transeastern Hollywood Apartments, Inc.
Transeastern Finance, Inc.
<PAGE>
EXHIBIT 6.16
OWNERS OF COMMON VOTING STOCK
OF TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Arthur J. Falcone and Marcy Falcone 241,667 shares
Edward W. Falcone and Diana Falcone 241,667 shares
Philip Cucci, Jr. and Linda Cucci 241,667 shares
<PAGE>
EXHIBIT 6.23
Permits and Licenses
1. Road Impact Agreement between Broward County and Raymond D. Nasher
recorded in Official Record Book 23096, Page 0056 of the Public Records
of Broward County, Florida.
2. Recreational Impact Agreement between Broward County, SarahPark Owners
Association, Inc., and SarahPark Developers Corporation recorded in
Official Records Book 24214, Page 0936 of the Public Records of Broward
County, Florida.
3. Agreement among Broward County, the City of Pembroke Pines, SarahPark
Owners Association, Inc. and SarahPark Development Corporation for
installation of required improvements relating to Nasher Plat recorded
in Official Records Book 24232, page 0709 of the Public Records of
Broward County, Florida.
4. Agreement among Broward County, the City of Pembroke Pines, SarahPark
Owners Association, Inc. and SarahPark Development Corporation for
traffic signalization recorded in Official Records Book 24214, page
0947 of the Public Records of Broward County, Florida.
5. Developer Agreement between the City of Pembroke Pines and Raymond D.
Nasher School Agreement - executed January 5, 1995.
6. InterLocal Agreement between City o Pembroke Pines, Broward County and
School Board of Broward County dated April 11, 1995.
7. Agreement between Raymond D. Nasher and Broward County regarding
Flamingo Road Right-of-Way dated April 15, 1988 (not recorded).
8. Municipal Land Dedication Agreement between the City of Pembroke Pines
and Raymond D. Nasher dated September 19, 1994 recorded in Official
Records Book 24232, page 0552 of the Public Records of Broward County,
Florida.
9. Traffic Concurrency Agreement among Broward County, the City of
Pembroke Pines and Raymond D. Nasher for Road Concurrency Relating to
The Nasher Plat dated November 15, 1994 recorded in Official Records
Book 22907, at Page 0205, of the Public Records of Broward County,
Florida.
10. Broward County Department of Natural Resource Protection License No.
DF95-1035 dated June 23, 1995.
11. South Florida Water Management District Notice of Intent to Conduct
Pre-Permit Work dated January 31, 1995.
12. South Florida Water Management District Surface Water Management Permit
No. 06-02059-S dated March 16, 1995.
13. United States Army Corps of Engineers Dredge and Fill Permit No.
199403656 (IP-AW) dated January 3, 1995.
14. South Broward Drainage License No. LE940404-1 for lake excavation and
installation of interconnects.
<PAGE>
15. City of Pembroke Pines Clearing Approval Permit No. 95-0119.
16. City of Pembroke Pines Lake Excavation Permit No. 95-0120.
17. City of Pembroke Pines Demucking Permit No. 95-1027.
18. City of Pembroke Pines Engineering Conceptual Approval dated August 17,
1995.
19. City of Pembroke Pines Utility Permit No. U-95045 dated August 24,
1995.
20. FDOT Conceptual Connection Review Approval dated May 18, 1995.
21. Broward County Public Health Unit (HRS) Permit No. 6-95-2081QB dated
May 5, 1995.
<PAGE>
AMRESCO FUNDING CORPORATION
March 15, 1996
Mr. Arthur Falcone
Principal
Transeastern Properties of South Florida, Inc.
3300 University Drive, Suite 1
Coral Springs, FL 33065
RE: AMRESCO FUNDING CORP. - PROPOSED TERM LOAN TO
AFFILIATE OF TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Dear Mr. Falcone:
AMRESCO Funding Corporation ("AMRESCO" or "LENDER") is pleased to advise you
that it has agreed to extend a loan in the maximum aggregate amount of THREE
MILLION AND NO/100 ($3,000,000.00) DOLLARS (the "LOAN") to the Borrower
described below in accordance with the terms set forth in this commitment letter
(the "COMMITMENT LETTER" or "COMMITMENT"), including those set forth in Exhibit
A attached hereto and made a part hereof.
1. FACILITY:
The Loan shall be a term loan evidenced by a promissory note in the
maximum aggregate principal amount of Three Million and No/100
($3,000,000.00) Dollars executed by a bankruptcy remote single purpose
corporation to be formed, and payable to the order of AMRESCO (the
"NOTE") or such affiliate or designee of AMRESCO as AMRESCO shall
determine. The Loan shall be further evidenced, governed and secured by
a Loan Agreement and security documents as more particularly set forth
below.
2. BORROWER:
A "bankruptcy remote" single purpose corporation to be formed, which
shall be owned and controlled by Transeastern Properties of South
Florida, Inc. ("TRANSEASTERN"), and which shall not elect to be treated
as a "Small Business Corporation" under Chapter 1362 of Internal
Revenue Code, of 1986, as amended, and which shall be referred to
herein as the "Borrower".
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 2
3. PLEDGOR:
Each holder of legal or beneficial interests in shares of the Borrower,
each of which is referred to herein as a "Pledgor" and all of which are
referred to herein collectively as "the "Pledgors".
4. CONTINGENT GUARANTORS:
Jointly and severally, Arthur Falcone, Edward Falcone and Phil Cucci,
each individually, a "Principal", and collectively the "Principals".
5. LIABILITY:
Recourse to the Borrower; non-recourse to Principals, provided,
however, the Principals and Transeastern shall provide joint and
several guaranties of the Loan which shall become effective in the
event of the occurrence of any of those matters (the "RECOURSE
MATTERS") specified by AMRESCO and reflected in the documents governing
the Loan, including, without limitation, unpermitted transfers of the
Collateral, as hereinafter defined; breach of the non-compete agreement
described in Exhibit "A" attached hereto; unpermitted liens or
encumbrances upon the Collateral, including, without limitation,
mechanic's liens; misuse or misapplication of Loan Proceeds, as
hereinafter defined, sales proceeds or other revenues of the Borrower,
insurance or condemnation proceeds, deposits or escrowed funds;
transactions with affiliates not approved in writing by the Lender or
carried out in a manner inconsistent with the approval in writing by
the Lender; obstruction of the Lender's remedies; a challenge or
asserted defense to the Lender's rights pursuant to the Loan Documents,
including, without limitation, the Lender's right to any payments
provided for in the Loan Documents, be they payments of principal,
interest, contingent returns or otherwise; environmental liability;
intentional destruction or waste of improvements to the land of the
Borrower or other assets of the Borrower; failure to complete the
construction of the Project, as hereinafter defined, as a result of a
discrepancy between actual development and construction costs for the
Project being in excess of amounts reflected in the proforma
projections for the same which have been approved by the Lender, to the
extent that actual costs exceed those reflected in the projections by
an amount in excess of $50,000.00, in the aggregate (after netting
savings against cost increases); failure to complete the construction
of any structure (as evidenced by the issuance of a certificate of
occupancy) upon which construction has commenced (as defined as pouring
a slab) free of any mechanic's or materialman's liens; if requested by
the Lender, the failure of the Borrower to facilitate and cooperate
with the Lender in an uncontested foreclosure or a deed in lieu of
foreclosure for all of the real property, and one or more comparable
procedures with
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 3
respect to all personal property, which stands as collateral for the
Loan, in the event of a default pursuant to the Loan Documents which
has notgrace periods; if requested by the Lender, the failure of the
Borrower to liquidate the Collateral in a manner acceptable to the
Lender in the event of a default pursuant to the Loan Documents which
has not been cured within any applicable grace periods; fraud;
misrepresentation; and criminal acts. The liability of the Principals
shall not be affected by the Borrower challenging the existence of a
default pursuant to the Loan Documents unless a court of competent
jurisdiction determines that the default declared by the Lender does in
fact exist, in which event such challenge shall be deemed a Recourse
Matter.
6. PLAN OF DEVELOPMENT, USE OF PROCEEDS AND COMPLETION OBLIGATIONS:
The sum of the total acquisition budget for Tracts B, D and F and the
total development budget for the work specified in Exhibit D to that
certain Agreement of Purchase and Sale dated August 14, 1995, by and
between Transeastern and Sarahpark Development Corporation
("SARAHPARK"), as amended on December 13, 1995 (hereinafter, the
"ACQUISITION CONTRACT"), pertaining to all Tracts within the boundary
plat commonly referred to as the "NASHER PLAT" (hereinafter the
"ACQUISITION CONTRACT DEVELOPMENT WORK"), as incorporated in a business
plan and budget otherwise acceptable to the Lender and the Borrower,
shall be not more than $13,000,000.00. The Acquisition Contract
Development Work shall not include work required to install
infrastructure within the boundaries of a particular Tract, which
infrastructure related work is hereinafter referred to as "TRACT
INFRASTRUCTURE".
The Borrower has negotiated a financing proposal with Chase Federal
Bank ("CHASE FEDERAL") in connection with the acquisition and
development of the project (the "CHASE FEDERAL LOAN"), the closing on
and funding of which loan on terms satisfactory to Lender, is a
condition precedent to the obligation of the Lender to close the Loan.
The Chase Federal Loan shall be for an amount acceptable to the
Borrower and the Lender, not to exceed (A) $10,150,000.00 for (i)
acquisition of Tracts B, D and F, and (ii) the Acquisition Contract
Development Work, plus (B) an amount equal to a maximum of 80% of the
Tract Infrastructure for Tracts D and F, which the parties contemplate
to be $3,242,000.00 resulting in a maximum loan amount of approximately
$2,600,000.00, for Tract Infrastructure on said Tracts D and F. As a
condition to funding the Loan, all documents governing the Chase
Federal Loan must be acceptable to the Lender, and Chase Federal and
the Lender shall have entered into an agreement governing their rights
with regard to their respective loans and the collateral for each. The
Lender acknowledges that the security documents in favor of Chase
Federal shall also stand as security for the repayment obligations
pursuant to certain letters of credit issued by Chase
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 4
Federal in connection with development which is to funded pursuant to
the Chase Federal Loan.
The Lender shall advance up to $2,800,000.00 at the closing of the Loan
(the "CLOSING"), with the precise amount funded being determined by the
Lender based on the amount necessary to fund the acquisition of Tracts
B, D and F and the performance of the Acquisition Contract Development
Work, as set forth in a mutually agreed upon budget (the "PRE-CLOSING
BUDGET"). An additional $200,000.00 may be drawn pursuant to the Loan
within the first 12 months to fund interest payable on a current basis
to AMRESCO pursuant to the Note (the portion of the Loan funded at the
Closing together with the amount reserved for the payment of interest
being sometimes hereinafter referred to collectively as "LOAN
PROCEEDS").
The Pre-Closing Budget shall call for the application of the Loan
Proceeds for (a) the acquisition of approximately 73 acres in Broward
County, Florida, referred to as Tracts B, D and F, under the
Acquisition Contract; and (b) subject to the parameters set forth
below, to fund interest to the Lender at the pay rate as set forth in
PARAGRAPH 8 of this Commitment Letter.
At the time of transfer of Tract B by the Borrower, the cash proceeds
of sale (after payment of closing costs and third party brokerage
expenses in amounts and for purposes acceptable to the Lender), and in
no event less than $5,000,000.00, shall be applied to reduce the
Borrower's outstanding indebtedness on the Chase Federal Loan and the
remaining sales proceeds, which will be in the sum of not less than
$1,000,000.00, shall be applied to reduce the Lender's principal,
together with interest thereon, provided, however, at the Borrower's
election, a portion thereof not greater than the "TRACT INFRASTRUCTURE
FUNDING REQUIREMENT", as hereinafter defined, may be applied by the
Borrower to the payment of costs of the Tract Infrastructure with
respect to Tracts D and F, or, with the consent of the Lender, in its
sole and absolute discretion, to repay additional amounts due Chase
Federal under the Chase Federal Loan.
It is the Borrower's intention to arrange for the conveyance of Tract C
contemporaneously with the acquisition of Tracts C and E pursuant to
the Option Contract, in which event, any net proceeds of the sale of
Tract C, which shall be in an amount not less than $1,000,000.00, shall
be paid to the Lender as a principal reduction, provided, however, at
the Borrower's election, a portion thereof not greater than the "TRACT
INFRASTRUCTURE FUNDING REQUIREMENT", as hereinafter defined, may be
applied by the Borrower to the payment of costs of the Tract
Infrastructure with respect to Tracts D and F, or, with the consent of
the Lender, in its sole and absolute discretion, a portion
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 5
of such sales proceeds may be applied to repay additional amounts due
Chase Federal under the Chase Federal Loan.
In the event that Tract C is acquired by the Borrower and is not
contemporaneously conveyed to a third party, the Borrower shall be
permitted to obtain up to $3,600,000.00 of mortgage financing for the
purpose of acquiring said Tracts, provided that such loan shall be with
lenders and pursuant to documents and in amounts and on terms which
shall be acceptable to the Lender, including, without limitation, the
terms governing the relationship between the provider of such financing
and the Lender. At the time of the subsequent transfer of Tract C by
the Borrower, the cash proceeds of sale (after payment of closing costs
and third party brokerage expenses in amounts and for purposes
acceptable to the Lender) shall be applied to the release price for
such Tract and the remaining net proceeds shall be paid to the Lender
as a principal reduction, provided, however, at the Borrower's
election, a portion thereof not greater than the "TRACT INFRASTRUCTURE
FUNDING REQUIREMENT", as hereinafter defined, may be applied by the
Borrower to the payment of costs of the Tract Infrastructure with
respect to Tracts D and F, or, with the consent of the Lender, in its
sole and absolute discretion, a portion of such sales proceeds may be
applied to repay additional amounts due Chase Federal under the Chase
Federal Loan.
As used in this Commitment Letter, the term "TRACT INFRASTRUCTURE
FUNDING REQUIREMENT" shall mean the portion of the costs of completing
the Tract Infrastructure with respect to Tracts D and F which are not
funded pursuant to a loan for the purpose of funding such costs, which
amount is anticipated to be $642,000.00. The Tract Infrastructure
Funding Requirement shall be deemed reduced from time to time by the
amount of any other funds made available for the purpose of funding the
Tract Infrastructure (other than the loan proceeds obtained for that
purpose), reductions in the cost of such improvements and as otherwise
appropriate to effectuate the intentions of the parties hereto.
Any funds required to complete the development and sale of the Property
in accordance with the plan agreed to by the Lender and the Borrower
and not available from the Chase Federal Loan and the Loan shall be
funded by the Borrower, Transeastern, or the Principals pursuant to an
agreement acceptable to the Lender.
All of the interests in real property owned legally or beneficially by
the Borrower from time to time, including, without limitation, Tracts
B, C, D, E and F shall hereinafter collectively be referred to as the
"LAND". The infrastructure and the construction of any improvements
thereon shall hereinafter collectively be referred to as the
"IMPROVEMENTS". The Land and Improvements are hereinafter sometimes
collectively called the "PROPERTY".
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 6
The development of the Land with the Improvements is hereinafter
referred to as the "PROJECT" and shall be part of the "Collateral".
7. TERM: 24 MONTHS
8. INTEREST RATE:
Twenty (20%) percent per annum (hereinafter, the "INTEREST RATE").
Interest shall be payable at a pay rate of ten (10%) percent per annum,
on a monthly basis in arrears, with the remainder of the interest, to
the extent not paid (at the election of the Borrower) on a monthly
basis along with the interest paid at the foregoing pay rate, accruing
and being capitalized (and thereupon earning interest at the Interest
Rate) on the first day of each month. Accrued interest will be paid
from the payments described in PARAGRAPH 11, as applied in accordance
with the terms of that Paragraph and the Loan Documents.
9. CONTINGENT RETURNS:
With the exception of the Borrower's First Priority Return, as
hereinafter defined, the Lender shall be paid the First Contingent
Return, as hereinafter defined, prior to any return to the Borrower on
or of the Borrower's equity or any payment of a fee to the Borrower or
its affiliates. The "FIRST CONTINGENT RETURN" shall mean an additional
contingent return which shall be limited to the extent of any "Net
Profits" after the Borrower's First Priority Return [where "NET
PROFITS" shall mean all revenues or other proceeds from the Collateral
or the Project ("REVENUES") after payment of debt service and any
necessary Project expenses not funded from the proceeds of the Loan,
the Chase Federal Loan or such other loan as is approved by the Lender,
if approved by the Lender in a budget acceptable to the Lender
("EXPENSES"), which shall include debt service on the Loan and the
Chase Federal Loan, and release prices under the Chase Federal Loan,
all as more particularly specified in the Loan Documents] in an amount
equal to an additional return on amounts which have been advanced
pursuant to the Loan, based on the amount of time that such funds have
been outstanding, at a rate equal to four (4%) percent per annum
compounded monthly. The First Contingent Return shall not be paid to
the Lender unless and until all principal and interest pursuant to the
Loan, including, without limitation, accrued and capitalized interest,
have been paid or repaid to the Lender and the Borrower has received
the Borrower's First Priority Return.
The Borrower's First Priority Return and the Borrower's Second Priority
Return shall be a return on, and to the extent applicable, a return of,
the Borrower's equity investment in the Project. The amount of the
Borrower's First Priority Return and the manner of payment thereof
shall be as follows:
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 7
from net sales proceeds in connection with residences constructed on
Tracts D and F, and Tract E to the extent the same is acquired by the
Borrower, an amount equal to 2% of gross sales proceeds for each such
residence, provided that (a) the Borrower's First Priority Return shall
not be greater than $30,000.00 in a given calendar month (and amounts
payable but for this limit shall not accrue), and (b) the aggregate of
all amounts paid to the Borrower in respect of the Borrower's First
Priority Return shall not exceed an amount equal to 4% of the sum of
(x) development costs for the Tract Infrastructure in connection with
Tracts D and F, and Tract E to the extent the same is acquired by the
Borrower, and (y) the costs of construction of improvements on Tracts D
and F, and Tract E to the extent the same is acquired by the Borrower.
Notwithstanding anything to the contrary contained herein, the payment
of the Borrower's First Priority Return shall be strictly conditioned
upon (aa) there not existing at the time that the same would otherwise
be paid, a default or event of default pursuant to the Loan Documents,
or any event or circumstance which with the passing of time or the
giving of notice, or both, would be a default or event of default
pursuant to the Loan Documents, and (bb) to the extent that any portion
of the principal or interest (at the Interest Rate) pursuant to the
Loan remains outstanding, a minimum payment with respect to each
residence conveyed, in an amount to be specified in the Loan Documents,
shall have been applied to reduce the same.
In addition to the First Contingent Return, the Lender shall be
entitled to an additional contingent return equal to ten (10%) percent
of the Net Profits on Tracts D, E and F, and five (5%) percent of the
Net Profits on Tracts B and C, in each case, as reduced by (a) the
First Contingent Return and the Borrower's First Priority Return, and
(b) the Borrower's Second Priority Return, as hereinafter defined,
provided, however, in the event that the Loan is reduced by the sum of
$1,000,000.00 including interest at the Interest Rate thereon, on or
before September 1, 1996, the foregoing percentages shall be reduced to
five (5%) percent and two and on half (2 1/2) percent, respectively
(the "SECOND CONTINGENT RETURN"; the First Contingent Return and the
Second Contingent Return are sometimes hereafter referred to as the
"CONTINGENT RETURNS").
The term "BORROWER'S SECOND PRIORITY RETURN", as used in this
Commitment Letter, shall mean (a) an amount equal to 4% of the sum of
(x) development costs for the Tract Infrastructure in connection with
Tracts D and F, and Tract E to the extent the same is acquired by the
Borrower, and (y) the costs of construction of improvements on Tracts
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 8
D and F, and Tract E to the extent the same is acquired by the
Borrower; reduced by (b) the amount of the Borrower's First Priority
Return which has been paid to the Borrower.
Notwithstanding anything to the contrary contained herein, the payment
of the Borrower's Second Priority Return shall be strictly conditioned
upon (aa) there not existing at the time that the same would otherwise
be paid, a default or event of default pursuant to the Loan Documents,
or any event or circumstance which with the passing of time or the
giving of notice, or both, would be a default or event of default
pursuant to the Loan Documents.
The Second Contingent Return shall not be paid to the Lender unless and
until all principal and interest pursuant to the Loan, including,
without limitation, accrued and capitalized interest, have been paid or
repaid to the Lender and the Borrower has received the Borrower's First
Priority Return and the Borrower's Second Priority Return.
Net Profits shall be computed based on definitions of revenues and
expenses which are acceptable to the Lender and which take into
account, without limitation, all manner and form of revenue realized in
connection with the Project and the Property, which definitions shall
be set forth in the Loan Documents. The allocation of costs among
various components of the Project must be acceptable to the Lender.
Other than as expressly set forth herein, the Loan Documents shall
prohibit payments to affiliates of the Borrower, Transeastern or the
Principals.
10. INTENTION OF LENDER:
The Borrower acknowledges that the receipt by the Lender of the
Contingent Returns is subject to numerous risks and uncertainties,
including, without limitation, the possibility of unanticipated costs
in performing the Acquisition Contract Development Work (e.g., as a
result of change orders, unforseen conditions or force majeure) and the
Tract Infrastructure, the possibility that Tract B is not acquired
pursuant to the existing contract to which it is subject at the price
contemplated therein, the possibility that the Borrower does not
acquire Tract C or Tract E; the possibility that no contract for the
sale of Tract C is completed or that said Tract is not conveyed
pursuant thereto at the price reflected in the Borrower's projections,
the possibility of utility moratoria or materials or labor costs
decreasing the Borrower's anticipated profits, and the possibility of a
change in interest rates or the economy in general, impacting the sale
of residences. The Borrower further acknowledges that the Lender's
receipt of any of the Contingent Returns is contingent on the
availability of profit and the payment of the Borrower's First Priority
Return and the Borrower's Second Priority Return, as applicable. The
Borrower
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 9
acknowledges that the Contingent Returns are not interest; but are an
additional return to the Lender which is based strictly on the success
of the Borrower's business venture. The Borrower further acknowledges
that the Commitment Fee charged pursuant hereto is a customary and
reasonable charge for the Lender performing the services necessary to
enable it to, and to compensate it for, committing to provide the Loan.
The Borrower acknowledges that no portion of the Commitment Fee
constitutes interest. It is expressly stipulated and agreed to be the
intent of Borrower and Lender at all times to comply with applicable
state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a
greater amount of interest than under state law) and that this
Paragraph shall control every other covenant and agreement in this
Commitment Letter. If the applicable law (state or federal) is ever
judicially interpreted so as to render usurious any amount called for
under this Commitment Letter, the Note or under any of the Loan
Documents, or contracted for, charged, taken, reserved or received with
respect to the indebtedness evidenced by the Loan, or if Lender's
exercise of the option to accelerate the maturity of the Note, or if
any prepayment by Borrower, late payment charge, default interest,
commitment fee, servicing or loan administration fee, or other fee,
charge, or imposition of any kind results in Borrower having paid any
interest in excess of that permitted by applicable law, then it is
Borrower's and Lender's express intent that all excess amounts
theretofore collected by Lender be repaid to Borrower with interest
thereon at the maximum lawful rate, and the provisions of the Note and
the other Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with
the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder. All sums paid or
agreed to be paid to Lender for the use, forbearance and detention of
the indebtedness represented by the Loan shall, to the extent permitted
by applicable law, be amortized, prorated, allocated andll term of such
indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the maximum
rate permitted under applicable law from time to time in effect and
applicable to the indebtedness evidenced hereby for so long as such
indebtedness remains outstanding. Notwithstanding anything to the
contrary contained herein or in any of the Loan Documents, it is not
the intention of Lender to accelerate the maturity of any interest that
has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration.
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 10
11. PRINCIPAL REDUCTIONS:
Subject to the exceptions set forth in PARAGRAPH 6 of this Commitment
Letter, 100% of all Revenues, after payment of the Expenses, shall be
applied on a monthly basis to reduce the principal balance of the Loan,
which shall include all accrued and unpaid interest pursuant to the
Loan. All funds so applied shall first be applied to the payment of any
outstanding costs, expenses, fees or charges which were required to be
paid pursuant to the Loan Documents, then to the payment of all accrued
interest and then to the repayment of principal. With the exception of
the Borrower's First Priority Return, the term "Expenses" shall not
include any amounts payable to or on behalf of the Borrower,
Transeastern or the Principals. There shall be no prohibition on the
early repayment of amounts outstanding under the Loan and no prepayment
penalty shall be charged in connection therewith, provided, however,
prepayment in full of amounts outstanding under the Note shall not
impair the Borrower's obligations with respect to or the effect of the
Contingent Returns or the Loan Documents evidencing and securing the
same. In the event of such a prepayment the documents securing the
Contingent Returns shall be subordinated to senior financing meeting
the requirements to be established in the Loan Documents.
12. BUDGETS, FINANCIAL STATEMENTS AND REPORTING REQUIREMENTS:
Not less than one hundred-eighty (180) days prior to the beginning of
each fiscal year of the Borrower, the Borrower shall provide the
Lender, for its approval, a budget for the Borrower's operations for
the upcoming fiscal year, including, without limitation, a narrative
description of the Borrower's business plan for such upcoming year
(each, a "BUDGET", collectively, the "BUDGETS"), together with
financial statements reflecting the results of the first six (6) months
of the then current fiscal year. Each Budget shall be reviewed by the
Borrower and revised, if appropriate, shortly before the start of each
fiscal year of the Borrower and shall be delivered together with a
revised financial statement of the Borrower reflecting the internally
generated results of the fiscal year then coming to an end. The Budget
for the first full fiscal year after the Closing shall not be required
to be delivered to the Lender six (6) months in advance of the
commencement of such fiscal year provided that a Budget for the period
from the Closing to the commencement of the first fiscal year after the
Closing, and for such first full fiscal year, is delivered to the
Lender prior to the Closing.
Within sixty (60) days of the end of each fiscal year of the Borrower,
the Lender shall be provided internally prepared financial statements
of the Borrower, including an estimate of the computations reasonably
required to compute the First Contingent Return, the Second Contingent
Return, the Borrower's First Priority Return and the
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 11
Borrower's Second Priority Return. Within one hundred-twenty (120) days
of the end of each fiscal year of the Borrower, the Lender shall be
provided audited financial statements of the Borrower, including an
opinion of the outside accountant as to the computations reasonably
required to compute the First Contingent Return, the Second Contingent
Return, the Borrower's First Priority Return and the Borrower's Second
Priority Return.
The Loan Documents shall call for such additional financial and
operational reporting as the Lender may require and shall provide the
Lender with the right to review the Borrower's books and records and
have the Borrower provide the Lender with copies of the same.
13. NOTE:
The Note shall include provisions for late charges and a default rate
of interest in the event that payments are not received in accordance
with its terms.
14. COLLATERAL, PRIORITY AND OTHER FINANCING:
The Borrower and the Pledgors shall grant to the Lender security
interests in any and all assets of the Borrower, together with and
including, without limitation, the following:
a. MORTGAGE AND SECURITY AGREEMENT: The mortgage and security
agreement shall provide the Lender with a lien on all of
the Land and such of the Improvements as to which a
mortgage lien will attach, including, without limitation
Tracts B, D and F, as well as Tracts C and E, to the extent
acquired by the Borrower; and a security interest in all
fixtures and tangible and intangible personal property of
the Borrower, together with a collateral assignment of all
present and future contracts for the sale, option, lease,
or other use or conveyance of said properties and the
proceeds, profits, rents, royalties and deposits arising
therefrom.
b. ADDITIONAL MORTGAGE AND SECURITY AGREEMENT: The additional
mortgage and security agreement shall be for purpose of
securing the Lender's Contingent Returns and shall provide
the Lender with a lien on the Land and such of the
Improvements as to which a mortgage lien will attach,
including, without limitation, Tracts B, D and F, as well
as Tracts C and E, to the extent acquired by the Borrower;
and security interest in all fixtures and tangible and
intangible personal property of the Borrower, together with
a collateral assignment of all present and future contracts
for
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 12
the sale, option, lease, or other use or conveyance of such
properties and the proceeds, profits, rents profits and
royalties and deposits arising therefrom, SUBORDINATE TO
THE PRIOR INTERESTS OF THE LENDER (AS DESCRIBED ABOVE).
c. PLEDGE AGREEMENTS AND STOCK CERTIFICATES: A Pledge by each
Pledgor of all of such party's legal and beneficial
interest in and to the Borrower, together with stock
certificates evidencing such interests and stock powers,
executed in blank.
d. COLLATERAL ASSIGNMENT OF ACQUISITION CONTRACT: Assignment
of the Borrower's rights and earnest money pursuant to the
Acquisition Contract, together with all post closing rights
under that agreement.
e. COLLATERAL ASSIGNMENT OF OPTION CONTRACT: Assignment of the
Borrower's rights and earnest money pursuant to the Option
Contract together with all post closing rights under that
agreement.
f. COLLATERAL ASSIGNMENT OF PURCHASE AND SALE CONTRACTS FOR
CONVEYANCES: Assignment of purchase and sale contracts for
subsequent conveyances of any of the Property and earnest
money deposits thereunder, together with all proceeds of
such agreements and post closing rights, including, without
limitation, the right to payments, adjustments, refunds or
similar amounts paid to or for the benefit of the Borrower
or its affiliates in connection with the sale of portions
of the Property. Borrower covenants and agrees that Lender,
in its sole discretion, shall have the right to approve any
and all contracts and letters of intent for the sale or
disposition of all or any portion of the Property, at or
before the Closing of this Loan transaction.
g. COLLATERAL ASSIGNMENT OF RIGHTS UNDER SALES CONTRACT ON
TRACT A: Assignment of post closing rights, including,
without limitation, the right to payments, adjustments,
refunds or similar amounts paid to or for the benefit of
the Borrower, Transeastern or their affiliates in
connection with the sale of Tract A.
h. COLLATERAL ASSIGNMENT OF REVENUES: Such assignments
granting a first priority security interest with respect to
all present and future revenues of the Borrower.
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 13
i. COLLATERAL ASSIGNMENTS OF PLANS, SPECIFICATIONS AND
CONSTRUCTION RELATED DOCUMENTS: Assignment of plans and
specifications, development contracts, and utility
commitments, entitlements and other rights associated with
the Property.
j. COLLATERAL ASSIGNMENTS OF OTHER TANGIBLE AND INTANGIBLE
PERSONAL PROPERTY: Assignments of and security agreements
in all other tangible and intangible personal property of
the Borrower, including, without limitation, a general
security interest in contract rights, receivables, accounts
and other assets of the Borrower, assignments of deposits
and other assets supporting letters of credit.
The rights and interests of the Lender in and to the foregoing
Collateral, all of which is sometimes hereinafter referred to as the
"COLLATERAL", shall be senior to all other rights and interests other
than those expressly approved in writing by the Lender. The Lender
acknowledges that Chase Federal shall be granted a mortgage and certain
related assignments and security interests in Tracts B, D and F and
certain rights related thereto as security for a loan and for certain
letters of credit which are more particularly described in PARAGRAPH 6
of this Commitment Letter. Such rights and interests must be acceptable
to the Lender in its sole discretion. In addition, the Borrower shall
be permitted to obtain, and the Lender's security interests shall be
subordinated to, construction loans for the construction of residences
within Tracts D and F and Tract E to the extent that the same is
acquired by the Borrower, provided that such loans shall be with
lenders and pursuant to documents and in amounts and on terms which
shall be acceptable to the Lender, including, without limitation, the
terms governing the relationship between such construction lender and
the Lender. No other financing by the Borrower shall be permitted
pursuant to the Lender's Loan Documents without the express written
approval of the Lender.
Additionally, the Borrower shall obtain and provide to the Lender prior
to Closing, any and all approvals and consents required to grant the
interests referred to in this Paragraph, including, without limitation,
the right to collaterally assign all of its right, title and interest
in and to the Acquisition Contract and the Option Contract, including,
without limitation, the consent of SarahPark, as seller.
15. LOAN DOCUMENTS:
The Borrower, the Pledgors and the Guarantors and such third parties as
shall be specified therein shall execute and deliver to the Lender such
documents, satisfactory in form and content to the Lender and the
Lender's counsel, as shall be required by the Lender for the purpose of
documenting the Loan (hereinafter, the "LOAN DOCUMENTS")
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 14
together with such additional documents, verifications, information and
materials as shall be required by the Lender (the "CLOSING MATERIALS").
The Loan Documents shall provide the Borrower with a fifteen (15) day
curative period for monetary defaults and a thirty (30) day curative
period for non-monetary defaults. The curative period for non monetary
defaults shall be extended to sixty (60) days provided that such breach
can be cured within such sixty (60) day period and the Borrower has
commenced and diligently proceeds to effect such cure. It is the
intention of the Lender to comply with all applicable laws, rules and
regulations in connection with the underwriting, origination,
administration and ownership of the Loan and the Lender reserves the
right to modify the terms and structure of the transaction described
herein as necessary to effectuate compliance with such applicable laws,
rules and regulations.
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 15
16. DEVELOPMENT CONSULTANT:
The Lender may designate a consultant to perform various services on
behalf of the Lender both prior to and after Closing, including,
without limitation, review of plans and specifications and all proposed
changes to them, preparation of a "cost take-off" construction
analysis, if so desired by the Lender, the inspection of construction
work for conformity with the approved plans and specifications and the
approval of requests for Loan disbursements, and review and approval of
the matters described in PARAGRAPH 7 of EXHIBIT A to this Commitment
Letter.
17. CHOICE OF LAW:
THE LENDER CONTEMPLATES THAT ALL ISSUES ARISING IN CONNECTION WITH THE
LOAN AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA, OR TO THE EXTENT
APPLICABLE AND SELECTED BY THE LENDER, UNITED STATES FEDERAL LAW,
PROVIDED, HOWEVER, THAT THOSE ASPECTS OF THE SECURITY DOCUMENTS WHICH
RELATE TO THE ENFORCEMENT OF REMEDIES AGAINST THE COLLATERAL SHALL BE
GOVERNED BY THE LAWS OF FLORIDA. LENDER RETAINS THE RIGHT TO ALTER THE
CHOICE OF LAW PRIOR TO CLOSING FROM THAT STATED HEREIN AND SHALL BE
SATISFIED AT CLOSING THAT IN THE EVENT OF THE REJECTION BY A COURT OF
COMPETENT JURISDICTION OF THE LENDER'S DESIGNATED CHOICE OF LAW WITH
RESPECT TO A PARTICULAR MATTER OR ISSUE, THAT SUCH COURT WOULD APPLY
THE LAW OF THE STATE OF FLORIDA TO SUCH MATTER OR ISSUE AND ALL MATTERS
LITIGATED IN CONNECTION THEREWITH. THE LOAN DOCUMENTS SHALL INCLUDE A
WAIVER BY THE PARTIES OF THE RIGHT TO CLAIM OR RECEIVE CONSEQUENTIAL
DAMAGES IN CONNECTION WITH ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF
OR RELATED TO THE LOAN AND THE BORROWER, TRANSEASTERN, THE PRINCIPALS
AND THE LENDER DO HEREBY WAIVE THE RIGHT TO CLAIM OR RECEIVE
CONSEQUENTIAL DAMAGES IN CONNECTION WITH ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR RELATED TO THIS COMMITMENT LETTER. IN THE EVENT OF
ANY LITIGATION RELATED TO THIS COMMITMENT LETTER, THE PREVAILING PARTY
IN SUCH LITIGATION SHALL BE ENTITLED TO REIMBURSEMENT BY THE
NON-PREVAILING PARTY OF ALL COSTS INCURRED IN CONNECTION WITH SUCH
MATTER.
18. PUBLIC ANNOUNCEMENT:
UPON CLOSING OF THE LOAN, THE LENDER IS AUTHORIZED IN ITS DISCRETION TO
ISSUE NEWS RELEASES AND AT ITS OWN EXPENSE TO PUBLISH "TOMBSTONE ADS"
AND OTHER ANNOUNCEMENTS IN NEWSPAPERS, TRADE JOURNAL AND OTHER
APPROPRIATE MEDIA, CONTAINING INFORMATION ABOUT THE LOAN AS MAY BE
DEEMED NOTEWORTHY BY THE LENDER, INCLUDING WITHOUT LIMITATION THE LEGAL
AND TRADE NAMES OF THE BORROWER AND TRANSEASTERN, THE AMOUNT OF THE
LOAN AND THE NAME, NATURE AND LOCATION OF THE COLLATERAL.
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 16
19. COMMITMENT FEE:
The Borrower shall pay a commitment fee in connection with the issuance
of this Commitment Letter in an amount equal to two (2%) percent of the
Loan Amount (the "COMMITMENT FEE"), all of which shall be deemed earned
upon execution and delivery of this Commitment Letter by the Borrower
in consideration of the Lender's reservation of funds and the
performance of employees of the Lender having special talents in
connection with transactions of this type who have been unable to
devote time to other matters as a result of the time committed to the
documentation of the Loan. A portion of the Commitment Fee equal to one
(1%) percent of the Loan Amount (the "Initial Commitment Fee Payment")
shall be paid in immediately available funds upon acceptance of this
Commitment Letter, and the balance of the Commitment Fee, in an amount
of one (1%) percent of the Loan Amount, shall be paid by the Borrower
to the Lender, in current funds, as a condition precedent to Closing of
the Loan.
20. EXPENSE DEPOSIT:
The Lender acknowledges receipt from the Borrower of the sum of
Twenty-Five Thousand and No/100 ($25,000.00) Dollars ("EXPENSE
DEPOSIT") to be applied to expenses incurred by the Lender, including
without limitation all out of pocket due diligence, documentation and
closing costs, including costs for services performed by third party
professionals (environmental consultants, engineers, etc.) associated
with the Lender's due diligence in underwriting, as well as fees and
costs of the Lender's outside counsel. These costs are payable at the
earlier to occur of Closing or the termination of this Commitment
Letter and will be paid to the extent available from the good faith
expense deposit and thereafter from the assets of the Borrower,
Transeastern and the Principals, who, by execution of the Commitment
Letter, agree to be jointly and severally liable for such obligations.
If the Loan closes, the Lender shall return any portion of such Expense
Deposit which is not applied as provided above, to the Borrower within
45 days after Closing. If the Loan fails to close for reasons beyond
Transeastern's and the Principal's control, any remaining portion of
the Expense Deposit shall be refunded, less the Lender's out of pocket
expenses, personnel costs and a $2,000.00 processing fee.
21. BROKER:
The Borrower warrants that there are no mortgage brokers in this
transaction, other than Holliday, Fenoglio, Dockerty & Gibson (the
"BROKER") who has been engaged by the Borrower, at the Borrower's
expense. The Borrower shall be responsible for any fees
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 17
of the Broker and shall indemnify, defend and hold the Lender harmless
from all claims by the Broker or any other brokers, unless claiming
through the Lender.
22. ACCEPTANCE AND CLOSING:
This Commitment shall not be effective unless or until it has been
executed by each of Transeastern and the Principals on behalf of
themselves and the Borrower and Pledgors, and delivered together with
the sum of $30,000.00, representing one-half of the Commitment Fee (all
funds to be in immediately available funds), to the Lender. The
delivery of the original acknowledgment and the foregoing fees must
occur no later than Friday, March 15, 1996, or the Lender's agreement
to enter into this Commitment shall terminate.
Upon confirmation of the Borrower's compliance with all of the
conditions precedent specified herein, including, but not limited to
those set forth on EXHIBIT "A" attached hereto, the Lender shall fund
the Loan. The Borrower agrees to exercise diligent efforts to cause
Closing of the Loan to occur on or before March 25, 1996 and
acknowledges that as a material term of this Commitment Letter, time
being of the essence, the Closing of the Loan must occur on or before
March 29, 1996, subject to any extensions which may be mutually agreed
to (the "OUTSIDE DATE FOR CLOSING"). In the event the Borrower, the
Pledgors, and/or Guarantors have not fulfilled any one or all of the
Conditions Precedent by the time set forth in any particular Condition
Precedent, or, if no date is specified, by the Outside Date for
Closing, this Commitment Letter shall terminate and the Lender shall
have no obligations to extend the Loan to the Borrower.
Closing may be conducted through an escrow established with a neutral
third party subject to the Lender's approval. Should Closing of the
Loan not occur by the Outside Date for Closing, this Commitment Letter
shall terminate without further action by the Lender and the Lender
shall have no further obligations to the Borrower. Notwithstanding
anything to the contrary contained in this Commitment Letter, the
obligations of the Borrower, the Principals and Transeastern with
respect to the payment of the Lender's expenses, the payment of
brokerage commissions and pursuant to any indemnities set forth herein,
shall survive termination of the other obligations set forth in this
Commitment Letter.
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 18
23. INDEMNITY:
THE BORROWER, TRANSEASTERN AND THE PRINCIPALS DO, BY ACCEPTING THIS
COMMITMENT LETTER, AGREE ON A JOINT AND SEVERAL BASIS TO DEFEND AND
HOLD THE LENDER HARMLESS FROM ALL LOSS, COST AND EXPENSE INCURRED BY
THE LENDER AS A RESULT OF ANY CLAIM, ALLEGATION, CHARGE, JUDGEMENT OR
INQUIRY RELATED DIRECTLY OR INDIRECTLY TO THE ISSUANCE OF THIS
COMMITMENT LETTER, THE NEGOTIATION OF THE LOAN WITH THE BORROWER OR THE
PROPERTY, EXCEPT TO THE EXTENT IT IS FINALLY DETERMINED THAT SUCH LOSS
WAS CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE LENDER
OR BY THE BREACH BY THE LENDER OF ITS OBLIGATIONS PURSUANT TO THIS
COMMITMENT LETTER. IN CONNECTION WITH THE LOAN, THE LENDER REQUIRES AN
INDEMNIFICATION BY THE BORROWER, TRANSEASTERN AND THE PRINCIPALS
AGAINST ALL MATTERS RELATED TO THE LOAN, INCLUDING, WITHOUT LIMITATION,
ALL THIRD PARTY CLAIMS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL
MATTERS, EXCEPT TO THE EXTENT IT IS FINALLY DETERMINED THAT SUCH LOSS
WAS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LENDER
OR BY THE VIOLATION BY THE LENDER OF THE TERMS OF THE LOAN DOCUMENTS.
24. CONFIDENTIALITY:
Please note that this Commitment Letter and any written or oval advice
provided by the Lender in connection with this arrangement is
exclusively for the information of senior management of the Borrower,
the Pledgors and the Principals and may not be disclosed to any third
party or circulated or referred to publicly without the Lender's prior
written consent. By its execution of this Commitment Letter, the Lender
consents to the making of such disclosure to Chase Federal, SarahPark
and the Borrower's counsel, John T. Kinsey, P.A.
25. ASSIGNMENT, TRANSFER OR SALE:
LENDER RESERVES THE RIGHT TO SELL, ASSIGN OR TRANSFER ALL OR ANY POTION
OF THE LOAN, WITHOUT THE CONSENT OF BORROWER, THE PRINCIPALS, OR THE
PLEDGORS, INCLUDING, WITHOUT LIMITATION, THE SALE OF PARTICIPATING
INTERESTS IN THE LOAN, AND THE BORROWER, THE PRINCIPALS AND THE
PLEDGORS HEREBY AGREE COOPERATE WITH LENDER IN CONNECTION THEREWITH AND
TO EXECUTE SUCH DOCUMENTS CONFIRMING THEIR OBLIGATIONS UNDER THE LOAN
DOCUMENTS AS MAY BE REASONABLY REQUESTED BY THE LENDER.
26. EXECUTION:
This Commitment Letter may be executed in counterparts. Telefaxed
signatures will be effective as originals.
<PAGE>
Mr. Arthur Falcone
March 15, 1996
Page 19
If you should have any questions regarding this matter, please call
Rebecca Kuban at (214) 953-8348.
Sincerely,
AMRESCO Funding Corporation
By: _________________________________
Name: _______________________________
Title: ________________________________
This Commitment Letter, including the terms and conditions set forth in
the Exhibits attached hereto, is accepted as of this _________ day of
March, 1996.
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
By: __________________________________
Name: ____________________________
Its: ______________________________
________________________________________
Arthur Falcone, Principal and authorized signatory
for Pledgors and the corporation to be formed as the Borrower
________________________________________
Edward Falcone, Principal and authorized signatory
for Pledgors and the corporation to be formed as the Borrower
________________________________________
Phil Cucci, Principal and authorized signatory
for Pledgors and the corporation to be formed as the Borrower
<PAGE>
EXHIBIT "A"
CONDITIONS PRECEDENT TO CLOSING
As conditions precedent to the Closing of the Loan and unless otherwise
specified, all of the items required hereunder shall be submitted to the Lender
no later than ten (10) business days prior to the intended date of the Loan
Closing, to enable Lender, its counsel and the construction consultant
sufficient time to review and comment on these items:
1. EQUITY: At or before Closing, the Borrower shall provide to the Lender
confirmation satisfactory to the Lender that the Borrower will at
Closing contribute, or substantiate that it has contributed, not less
than $450,000.00 to the Project.
2. LOAN DOCUMENTS AND CLOSING MATERIALS: There shall have been delivered
to the Lender, in form and substance acceptable to the Lender and its
counsel, the Loan Documents and the Closing Materials.
3. LOAN AGREEMENT: The Borrower shall execute and deliver a Loan Agreement
which shall include, without limitation, provisions for the following:
a. The general Loan conditions and such affirmative and
negative covenants as shall be required by the Lender
including, without limitation, the following:
i. There shall be no change in the ownership of shares
of Borrower unless Lender, in its sole and absolute
discretion, has given its prior written approval.
ii. The Borrower, Pledgors and Guarantors and any
affiliates and/or family members of same shall
subordinate any and all claims owed to any Borrower,
Pledgor, Guarantor, affiliate or family member to all
amounts due to Lender under the Loan, provided,
however, the Borrower's First Priority Return shall
not be so subordinated to the Contingent Returns and
the Borrower's Second Priority Return shall only be
subordinated to the First Contingent Return.
b. Among the circumstances and conditions which shall create
defaults pursuant to the Loan Agreement shall be the
failure of the Borrower to achieve at least sixty (60%)
percent of the sales projected in the Borrower's sales
projections for any rolling six (6) month period,
commencing four (4) months from the earlier to occur of (a)
the date of pouring the first slab for a residence under
contract for sale to a third party purchaser, or (b) on the
effective date of such a contract for sale, in the event
the slab for such residence has previously been poured,
which sales projections shall be approved by the Lender
prior to Closing.
<PAGE>
4. CHASE FEDERAL LOAN AND TRI-PARTY AGREEMENT: The Chase Federal Loan
shall have closed and an agreement acceptable to the Lender among the
Lender, the Chase Federal and the Borrower, governing the rights of the
parties with respect to the loans by the Lender and the Chase Federal
to the Borrower and the collateral for such loans including, without
limitation, provisions requiring:
a. Chase Federal shall provide the Lender with notice of any
default pursuant to the Chase Federal Loan and a reasonable
opportunity to cure the same;
b. Other than future advances for the purposes described in
PARAGRAPH 6 of the main body of this Commitment Letter,
Chase Federal shall be restricted from making future
advances other than advances to protect its collateral and
the collateral in favor of Chase Federal shall secure only
the Chase Federal Loan and shall not be cross
collateralized with any other obligations to Chase Federal
or otherwise;
c. Chase Federal consents to the realization by the Lender of
any of its rights in and to any and all collateral for the
Loan, including, without limitation, those rights which
result in a change in the legal or beneficial ownership of
the Borrower and to a subsequent change in the legal or
beneficial ownership of the Borrower as a result of the
subsequent transfer of the legal or beneficial ownership
interests in the Borrower; and
d. Chase Federal shall consent to the modification or
amendment of the Loan and the Loan Documents provided that
the same does not purport to create a lien or security
interest in any collateral of Chase Federal that would be
prior in dignity to the interest of Chase Federal pursuant
to the Chase Federal Loan unless the same is expressly
agreed to in writing by Chase Federal.
5. TITLE INSURANCE: The Borrower shall provide a standard ALTA mortgagee
title policy from a company approved by Lender. The policy shall be
acceptable in form and substance to the Lender and shall include such
endorsements to coverage as may be requested by the Lender. Borrower
shall deliver funds sufficient to purchase such policy at Closing. If
required by the Lender, Borrower shall execute for recording by Lender
a Notice of Commencement complying with Chapter 713, Florida Statutes,
which Notice of Commencement shall be recorded subsequent to the
recording of Lender's mortgage and shall be posted by Borrower on the
construction site. In the event that the Lender requires the filing of
a Notice of Commencement, Borrower shall also execute and deliver an
Affidavit of Posting, certifying that the Notice of Commencement has
been posted at the project site.
6. SURVEY: As of the date hereof, Borrower does not have surveys of the
property within the Nasher Plat. Borrower shall provide the Lender with
sketches of legal description
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and accompanying legal descriptions, together with such certificates of
Keith & Schnars, P.A. as shall be reasonably requested by the Lender.
Additionally, upon completion of the Acquisition Contract Development
Work the Borrower shall provide three (3) copies of a recent survey of
each tract of the Property by a registered surveyor certified to
Lender, the title insurance company and the Borrower. The survey shall
be acceptable in form and substance to the Lender and shall be
sufficient to enable the title insurer to delete the so called "survey
exception" from the Title Policy upon the delivery of such surveys.
7. ADDITIONAL DOCUMENTS AND EVIDENCE. Borrower shall provide Lender with
such additional documents and evidence, all of which are to be reviewed
by Lender, its consultants and counsel prior to Closing, and are to be
in form and substance, satisfactory to Lender, which shall address the
following matters and matters related thereto in a manner acceptable to
Lender: (a) evidence of the availability and suitability of the
utilities needed to properly service the Improvements in their intended
uses, including water, sewer, electric, telephone and natural gas (if
applicable); (b) detailed plans and specifications, approved in writing
by Borrower and the general contractor; (c) a copy of the contract
executed by Borrower and the general contractor; (d) appropriate
certificates from Borrower's engineer and general contractor regarding
compliance with applicable laws and the status of permits and
development approvals; (e) a detailed trade breakdown of the cost of
constructing the Acquisition Contract Development Work and Tract
Infrastructure and an itemization of non-construction and land costs;
(f) a report as to soil borings made on each tract of the Property; (g)
evidence in the form of a Phase I environmental assessment of the
Property; (h) copies of the excavation permit, tree removal permit,
land alteration permit, dredge and fill permit, storm water discharge
permit, the building permit and any other permits required for the
development of the Property; (i) evidence that all applicable
governmental authorities have given their approval of Borrower's
development plan for the property within the Nasher Plat, which
approvals will not include individual site plan approvals for Tracts B,
D or F; (j) evidence that Borrower's development proposal for the
Property and the construction of the Improvements are consistent with
concurrency requirements and other applicable provisions of the local
comprehensive plan and local land development regulations; (k) evidence
that the construction of the Imed uses of the Property are in
compliance with all applicable laws, regulations and ordinances; (l)
evidence as to whether or not the Land is located within an area
identified as having special flood hazards pursuant to the Flood
Disaster Protection Act of 1973; (m) insurance, including but not
limited to, flood hazard insurance, Builder's Risk Insurance, Liability
Insurance, and such other insurance as Lender deems necessary; (n)
written confirmation satisfactory to Lender that one
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<PAGE>
hundred percent (100%) of the stock of Borrower is owned by Pledgors;
(o) certified copies of Borrower's and other appropriate entities'
Articles of Incorporation and Bylaws and any amendments thereto or
modifications thereof; (p) resolutions authorizing the transaction; (q)
a Certificates of Incumbency from Borrower and other appropriate
entities; and (r) all other Loan documents or items that are
customarily provided in loan transactions of this type or necessary in
connection with Lender's equity requirements. Borrower, the Principals
and the Pledgors shall provide such copies and/or originals of the
foregoing, as the Lender may request, which shall be certified,
endorsed or approved by all parties specified by the Lender and any
such assignments of the foregoing in favor of Lender, shall be
consented to as may be required pursuant to the Loan Documents.
8. BORROWER'S ATTORNEY OPINION: The Borrower shall provide a written
opinion addressed to Lender, from counsel for the Borrower acceptable
to the Lender, concerning those matters requested by Lender's counsel,
and including the following:
a. ENFORCEABILITY: an opinion regarding enforceability of the
Loan Documents under applicable law, and an opinion
regarding the choice of law provision set forth in the Loan
Documents.
b. FORMATION, OWNERSHIP AND AUTHORIZATION: an opinion
regarding the due formation of the Borrower and Pledgors,
an opinion regarding the record ownership of the stock of
Borrower and Pledgors, and an opinion regarding the due
authorization of this transaction.
c. PERFECTION: an opinion regarding perfection of the security
interests in the Collateral.
d. LITIGATION: Neither the Borrower, Transeastern, the
Pledgors, nor the Principals, is a party to any pending
litigation.
e. COMPLIANCE: Borrower has obtained all requisite consents,
approvals, licenses and permits of the local, regional,
state and federal governmental agencies which have
jurisdiction over, and regulations relating to, the
construction and operation of the Improvements.
(Certificates from Borrower's engineers and general
contractor may be attached as support for this opinion.)
f. ZONING: The Land is validly zoned to permit the use of the
Property as represented to the Lender. When completed in
accordance with the plans and specifications submitted to
Lender, the Property will comply with the applicable local
zoning regulations, including requirements as to parking,
lot size, access and building set backs.
g. LAND USE: The proposed Improvements are in compliance with
the concurrency requirements and all other applicable
requirements of the
A-4
<PAGE>
local comprehensive plan (as amended pursuant to the Local
Government Comprehensive Planning and Land Development
Regulation Act), and with the land development regulations
adopted pursuant thereto. Borrower has received all
necessary land development approvals from the local
development review department.
h. D.R.I.: The Improvements do not constitute a Development
of Regional Impact as defined in Section 380.06 of the
Florida Statutes.
i. INTERNAL REVENUE ("FIRPTA"): Borrower complied with Section
1445 of the Internal Revenue Code of 1954, as added by
Section 129 of Public Law 98-369, in connection with
Borrower's acquisition of the Land. (A copy of the seller's
affidavit shall be attached to the opinion.)
j. USURY: The Loan and the Interest Rate and the Contingent
Returns do not violate laws applicable to civil or criminal
usury.
9. PRINCIPALS' AND PLEDGORS' ATTORNEYS' OPINION: The Principals and the
Pledgors shall deliver to Lender opinion(s) of independent counsel
satisfactory to Lender, which opinion(s) shall include, without
limitation, an opinion as to the enforceability of the Guaranty
executed by the Principals and the pledge documents executed by the
Pledgors. Counsel to the Principals and the Pledgors may be, but are
not required to be, the same counsel as that of Borrower.
10. FINANCIAL STATEMENTS: The Lender shall have received financial
statements of Transeastern and the Principals, acceptable to the
Lender.
11. TAXES: As soon as reasonably practicable, the Borrower shall provide
evidence that each tract of the Property will be separately assessed
for tax purposes and information as to folio numbers, tax rates,
estimated tax values and the identities of the taxing authorities.
Prior to Closing, the Borrower shall provide the Lender with
satisfactory proof as to the manner in which real ,property taxes for
the Property have been allocated and pro-rated as between the Borrower
and SarahPark.
12. NON-COMPETE AGREEMENT: The Borrower shall provide to Lender, in form
and substance satisfactory to Lender, a non-compete agreement covering
competition within one-half mile of the Project by other projects of
the Borrower, Transeastern, the Principals or the Pledgors.
13. EXPENSES: Whether or not the Loan closes, Borrower shall be
responsible and liable for, and shall hold Lender harmless from, and
shall pay, all costs and expenses incurred in connection with the Loan
(pre- and post-closing) including, but not limited to: (a) any unpaid
portion of Loan commitment fees; (b) title, hazard and other insurance
premiums; (c) surveys; appraisals, brokerage commissions and claims of
brokerage; (d)
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<PAGE>
property, documentary stamp and intangible taxes; (e) attorneys' fees;
(f) design and engineering fees, including, without limitation fees of
any consultant; (g) Lender's development consultant's fees; (h)
hazardous substance report costs; and (i) recording charges. Borrower
shall reimburse Lender for all such costs and expenses paid by Lender.
14. LOAN APPLICATION: The issuance of this Commitment is based upon the
accuracy of your representations and statements, any loan application
and all additional information, representations, exhibits and other
matters submitted to Lender for its consideration. Lender shall have
the option to declare this Commitment to be breached if (i) there shall
have been any material misrepresentation or misstatement or any
material error in anything submitted to Lender; (ii) there shall have
been a material adverse change in the Property, the Project or the
state of facts submitted to Lender, or in the financial condition of
Borrower, any Principal or any Pledgor; (iii) Borrower, any Principal
or any Pledgor has become insolvent, bankrupt, incapacitated or is
deceased; or (iv) the Lender is otherwise not satisfied, in its sole
and absolute discretion, with the background, experience and track
record of the Principals or Transeastern.
A-6
<PAGE>
PROMISSORY NOTE
$3,000,000 March 29, 1996
Fort Lauderdale, Florida
PAYMENT SCHEDULE AND MATURITY DATE. FOR VALUE RECEIVED, the
undersigned (herein called "MAKER," whether one or more) hereby promises to pay
to the order of AMRESCO FUNDING CORPORATION, a Delaware corporation ("LENDER")
without offset, in immediately available funds in lawful money of the United
States of America, at P.O. BOX 277215, ATLANTA, GEORGIA 30384-7215, the
principal sum of THREE MILLION AND NO/100 DOLLARS ($3,000,000) (or the unpaid
balance of all principal advanced against this Note, if that amount is less),
plus amounts capitalized pursuant to the terms hereof, together with interest on
the unpaid principal balance of this Note from day to day outstanding as
hereinafter provided, as follows:
INTEREST PAYMENTS. Commencing on May 1, 1996 and on the first
(1st) day of each month thereafter until April 1, 1998 (the "MATURITY DATE"),
Maker (i) shall make payments of interest in arrears at the Pay Rate (as defined
in Section 3 hereof), and (ii) may make payments of all or a portion of the
interest earned at the Accrual Rate (as defined in Section 3 hereof) and the
balance of such accrued interest that has not been paid in accordance with this
clause (ii) shall be added to the unpaid principal amount of this note (this
"NOTE") on the first (1st) day of each month and shall thereafter accrue
interest together with the unpaid principal amount of this Note at the Stated
Rate.
PRINCIPAL PAYMENTS. Maker shall apply the sums described in
Section 3.2 of the Loan Agreement (as defined in Paragraph 2 below) to the
payment of the obligations described therein, including, without limitation and
to the extent provided for therein, to the reduction of the unpaid principal
balance of this Note. On the Maturity Date the entire unpaid principal amount of
this Note, together with all unpaid principal and interest shall be due and
payable.
SECURITY; LOAN DOCUMENTS. The loan evidenced by this Note is
further evidenced, secured and governed by that certain Loan Agreement of even
date herewith between Maker and Lender (the "LOAN AGREEMENT" - unless otherwise
defined herein all capitalized terms used in this Note shall have the meanings
assigned to the same in the Loan Agreement). All of the terms, definitions,
conditions and covenants of the Loan Documents are expressly made a part of this
Note by reference in the same manner and with the same effect as if set forth
herein at length, and any holder of this Note is entitled to the benefit of and
remedies provided in the Loan Documents. Subject to the terms and conditions of
this Note and the Loan Documents, Lender shall advance funds to Maker pursuant
to the terms of the Loan Agreement.
DOCUMENTARY STAMPS IN THE AMOUNT OF $________ HAVE BEEN PAID AND PROPER STAMPS
HAVE BEEN AFFIXED TO THE MORTGAGE.
<PAGE>
INTEREST RATE.
Subject to the further provisions of this Section 3, the unpaid
principal balance of this Note from day to day outstanding which is not past due
shall bear interest at a rate per annum equal to the lesser of: ( the Maximum
Rate (hereinafter defined); or ( the Stated Rate (hereinafter defined) computed
on the Annual Basis (hereinafter defined). The term "STATED RATE" as used in
this Note means a fixed rate of twenty percent (20%) per annum. The terms "PAY
RATE" and "ACCRUAL RATE" as used in this Note each means a fixed rate of ten
percent (10%) per annum, thereby totaling the Stated Rate of twenty percent
(20%) per annum.
The "Annual Basis" referred to in this Note means computation of
interest for the actual number of days elapsed and as if each year were composed
of 365 days.
Any principal of, and to the extent permitted by applicable law,
any interest on this Note, and any other sum payable hereunder, which is not
paid when due shall bear interest, from the date due and payable until paid,
payable on demand, at a rate per annum (the "PAST DUE RATE") equal to the lesser
of (i) the Stated Rate plus two and four-tenths percent (2.4%) or (ii) the
Maximum Rate. The term "Maximum Rate" as used in this Note means the maximum
nonusurious rate of interest per annum permitted by the law of the state of
Florida, including to the extent permitted by applicable law, any amendments
thereof hereafter or any new law hereafter coming into effect to the extent a
higher Maximum Rate is permitted thereby. The interest that accrues hereunder at
the Maximum Rate and that remains unpaid shall be added to the unpaid principal
amount of this Note on the first (1st) day of each month and shall thereafter
accrue interest together with the unpaid principal amount of this Note at the
Maximum Rate. The Maximum Rate shall be applied by taking into account all
amounts characterized by applicable law as interest on the debt evidenced by
this Note, so that the aggregate of all interest does not exceed the maximum
nonusurious amount permitted by applicable law (the "MAXIMUM AMOUNT").
PREPAYMENT. Maker may prepay the principal balance of this Note,
in full at any time or in part from time to time, provided that: ( Lender shall
have actually received from Maker at least five (5) business days' prior written
notice of Maker's intent to prepay, of the amount of principal which will be
prepaid (the "PREPAID PRINCIPAL") and of the date on which the prepayment will
be made; and ( each prepayment shall be in the amount of 100% of the Prepaid
Principal, plus accrued unpaid interest thereon to the date of prepayment, plus
any other sums which have become due to Lender under the Loan Documents on or
before the date of prepayment but have not been paid. If this Note is prepaid in
full, any commitment of Lender for further advances shall automatically
terminate. Any partial prepayment shall be applied in accordance with Paragraph
6 below and shall not postpone the due date of any subsequent installments or
the Maturity Date, or change the amount of such installments due, unless Lender
shall otherwise agree in writing.
CERTAIN PROVISIONS REGARDING PAYMENTS. All payments made as
scheduled on this Note and all prepayments shall be applied as provided in the
Loan Agreement. Remittances in payment of any part of the indebtedness shall
not, regardless of any receipt or credit issued therefor, constitute payment
until such amount is actually received by the holder hereof in immediately
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<PAGE>
available U.S. funds and shall be made and accepted subject to the condition
that any check or draft may be handled for collection in accordance with the
practice of the collecting bank or banks. Acceptance by the holder hereof of any
payment in an amount less than the amount then due on any indebtedness shall be
deemed an acceptance on account only and shall not in any way excuse the
existence of a Default (as defined in Section 6 below).
DEFAULT/ACCELERATION.
It shall be a default ("DEFAULT") under this Note in the event
that: (a) any principal, interest or other amount of money due under this Note
is not paid in full within ten (10) days after the same is due, regardless of
how such amount may have become due; or (b) there shall occur any Event of
Default (as such term is defined in the Loan Agreement). Upon the occurrence of
a Default, the holder hereof shall have the right to declare the unpaid
principal balance and accrued but unpaid interest on this Note at once due and
payable (and upon such acceleration, the same shall be at once due and payable
without presentation, demand, protest or notice of any kind, which are all
hereby waived by Maker, and this Note shall thereafter bear interest at the Past
Due Rate), to foreclose any liens and security interests securing payment hereof
and to exercise any of its other rights, powers and remedies under this Note,
under any other Loan Document, or at law or in equity.
All of the rights, remedies, powers and privileges (together,
"RIGHTS") of the holder hereof provided for in this Note and in any other Loan
Document are cumulative of each other and of any and all other Rights at law or
in equity. The resort to any Right shall not prevent the concurrent or
subsequent employment of any other appropriate Right. No single or partial
exercise of any Right shall exhaust it, or preclude any other or further
exercise thereof, and every Right may be exercised at any time and from time to
time. No failure by the holder hereof to exercise, nor delay in exercising any
Right, including but not limited to the right to accelerate the maturity of this
Note, shall be construed as a waiver of any Default or as a waiver of the Right.
Without limiting the generality of the foregoing provisions, the acceptance by
the holder hereof from time to time of any payment under this Note which is past
due or which is less than the payment in full of all amounts due and payable at
the time of such payment, shall not ( constitute a waiver of or impair or
extinguish the right of the holder hereof to accelerate the maturity of this
Note or to exercise any other Right at the time or at any subsequent time, or
nullify any prior exercise of any such Right, or ( constitute a waiver of the
requirement of punctual payment and performance or a novation in any respect.
If any holder of this Note retains an attorney in connection with
any Default or at the Maturity Date or to collect, enforce or defend this Note
or any other Loan Document in any lawsuit, at trial, or in any appellate,
probate, reorganization, bankruptcy or other proceeding, or if Maker sues any
holder in connection with this Note or any other Loan Document and does not
prevail, then Maker agrees to pay to each such holder, in addition to principal,
interest and any other sums owing to Lender under the Loan Documents, all
reasonable costs and expenses incurred by such holder in trying to collect this
Note or in any such suit or proceeding, including without limitation reasonable
attorneys' fees, paralegals' fees and costs.
3
<PAGE>
CONTROLLING AGREEMENT. All parties to the Loan Documents intend
to comply with applicable usury law. All existing and future agreements
regarding the debt evidenced by this Note are hereby limited and controlled by
the provisions of this Section. In no event (including but not limited to
prepayment, default, demand for payment, or acceleration of maturity) shall the
interest taken, reserved, contracted for, charged or received under this Note or
under any of the other Loan Documents or otherwise, exceed the Maximum Amount.
If, from any possible construction of any document, interest would otherwise be
payable in excess of the Maximum Amount, then IPSO FACTO, such document shall be
reformed and the interest payable reduced to the Maximum Amount, without
necessity of execution of any amendment or new document. If the holder hereof
ever receives interest in an amount which apart from this provision would exceed
the Maximum Amount, the excess shall, without penalty, be refunded to the payor,
or at the option of such payor, be applied to the unpaid principal of this Note
in inverse order of maturity of installments and not to the payment of interest.
The holder hereof does not intend to charge or receive unearned interest on
acceleration. All interest paid or agreed to be paid to the holder hereof shall
be spread throughout the full term (including any renewal or extension) of the
debt so that the amount of interest does not exceed the Maximum Amount. The
provisions of this Section 8 are further supplemented by the provisions of
Section 3.7 of the Loan Agreement.
GENERAL PROVISIONS.
Time is of the essence hereunder. If more than one person or
entity executes this Note as Maker, all of said parties shall be jointly and
severally liable for payment of the indebtedness evidenced hereby. Maker and all
sureties, endorsers, guarantors and any other party now or hereafter liable for
the payment of this Note in whole or in part, hereby severally ( waive demand,
presentment for payment, notice of dishonor and of nonpayment, protest, notice
of protest, notice of intent to accelerate, notice of acceleration and all other
notices (except any notices which are specifically required by this Note or any
other Loan Document), filing of suit and diligence in collecting this Note or
enforcing any of the security therefor; ( agree to any substitution,
subordination, exchange or release of any such security or the release of any
party primarily or secondarily liable hereon; ( agree that the holder hereof
shall not be required first to institute suit or exhaust its remedies hereon
against Maker or others liable or to become liable hereon or to perfect or
enforce its rights against them or any security therefor; and ( consent to any
extensions or postponements of time of payment of this Note for any period or
periods of time and to any partial payments, before or after maturity, and to
any other indulgences with respect hereto, without notice thereof or further
consent of Maker or any guarantors to any of them.
A determination that any provision of this Note is unenforceable
or invalid shall not affect the enforceability or validity of any other
provision and the determination that the application of any provision of this
Note to any person or circumstance is illegal or unenforceable shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances. The remaining provisions of this Note shall remain
operative and in full force and effect and shall in no way be affected
prejudiced, or disturbed thereby. This Note may not be amended except in a
writing specifically intended for the purpose and executed by the party against
whom enforcement of the amendment is sought. In the event any provisions of this
Note are inconsistent with the provisions of the Loan Documents, or any other
agreements or documents
4
<PAGE>
executed in connection with this Note, this Note shall control. The holder of
this Note may, from time to time, sell or offer to sell the loan evidenced by
this Note, or interests therein, to one or more assignees or participants and is
hereby authorized to disseminate any information it has pertaining to the loan
evidenced by this Note, including, without limitation, any security for this
Note and credit information on Maker, any of its principals and any guarantor of
this Note, to any such assignee or participant or prospective assignee or
prospective participant, and to the extent, if any, specified in any such
assignment or participation, such assignee(s) or participant(s) shall have the
rights and benefits with respect to this Note and the other Loan Documents as
such person(s) would have if such person(s) were Lender hereunder. Maker
warrants and represents to Lender and all other holders of this Note that the
loan evidenced by this Note is and will be for business or commercial purposes
and not primarily for personal, family, or household use. The terms, provisions,
covenants and conditions hereof shall be binding upon Maker and the heitives,
successors and assigns of Maker. Captions and headings in this Note are for
convenience only and shall be disregarded in construing it. The pronouns used in
this instrument shall be construed as masculine, feminine or neuter as the
occasion may require. Use of the singular includes the plural, and vice versa.
Any reference herein to a day or business day shall be deemed to refer to a
banking day which shall be a day on which Lender is open for the transaction of
business, excluding any national holidays, and any performance which would
otherwise be required on a day other than a banking day shall be timely
performed in such instance, if performed on the next succeeding banking day.
Notwithstanding such timely performance, interest shall continue to accrue
hereunder until such payment or performance has been made.
SUBMISSION TO JURISDICTION. Maker irrevocably and
unconditionally: (a) agrees that any suit, action, or other legal proceeding
arising out of or relating to this Note may be brought, at the option of the
Lender, in a court of record of the STATE OF FLORIDA IN BROWARD COUNTY, IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA, or in any
other court of competent jurisdiction; (b) consents to the jurisdiction of each
such court in any such suit, action, or proceeding; (c) waives any objection
which it may have to the laying of venue of any such suit, action, or proceeding
in any of such courts; and (d) agrees that service of any court paper may be
effected on Maker as may be provided under applicable laws or court rules in
said State. Maker hereby irrevocably appoints John Kinsey, whose address is Two
Executive Court, 2300 Corporate Boulevard, Suite 112, Boca Raton, Florida 33431,
as agent for the service of process for the purposes of any purported
controversy or cause of action arising out of this Note or any Loan Document.
CONFLICT OF LAW. This Note shall be construed, interpreted,
enforced and governed by and in accordance with the laws of the STATE OF FLORIDA
(excluding the principles thereof governing conflicts of law).
FURTHER ASSURANCE. Maker agrees, upon the written request of
Lender, to execute and deliver to Lender from time to time any additional
instruments or documents reasonably considered necessary by Lender or its
counsel to cause this Note to be, become or remain valid and effective in
accordance with its terms.
WAIVER OF TRIAL BY JURY. TO THE EXTENT ANY LITIGATION BETWEEN
LENDER AND MAKER MAY ARISE IN CONNECTION WITH THIS NOTE, LENDER
5
<PAGE>
AND MAKER KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
COUNTERCLAIM BASED ON THIS NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS
NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER ACCEPTING THIS NOTE FROM MAKER AND FOR MAKER GIVING THIS NOTE TO
LENDER.
IN WITNESS WHEREOF, Maker has duly executed this Note as of the date
first above written.
MAKER:
TRANSEASTERN PEMBROKE
VILLAGES, INC., a Florida corporation
By:____________________________
Name:_______________________
Title: President
6
<PAGE>
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this _____
day of March, 1996, by , as of TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, on behalf of the corporation. He/she is personally known to me or
has produced a driver's license as identification.
Print or Stamp Name:
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
7
<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT"), dated the 29th day of
March, 1996, by TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida corporation,
having a place of business at 3300 University Drive, Suite 1, Coral Springs, FL
33065 ("DEBTOR") in favor of AMRESCO FUNDING CORPORATION, a Delaware
corporation, having a place of business at 1845 Woodall Rodgers Freeway, Dallas,
Texas 75201 ("SECURED PARTY").
WHEREAS, Secured Party and Debtor have entered into that certain Loan
Agreement of even date herewith (the "LOAN AGREEMENT"). Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings assigned to
the same in the Loan Agreement.
WHEREAS, Secured Party will lend and Debtor will borrow the sum of
THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) (the "LOAN"), evidenced by a
certain Promissory Note (the "NOTE") executed and delivered by Debtor to Secured
Party of even date herewith; and
WHEREAS, as security for the Note, Debtor, on even date herewith,
granted Secured Party the Mortgage on certain real property owned by Debtor and
located in Broward County, Florida (the "PROPERTY"), as more particularly
described in EXHIBIT "A" attached hereto and incorporated herein; and
WHEREAS, in accordance with the terms of the Loan Agreement, and to
further secure the Note and other Loan Documents, but excluding the Contingent
Returns, Debtor hereby grants to Secured Party a security interest in certain of
the assets of the Debtor now or hereinafter located on the Property, as
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the
covenants hereinafter set forth, the parties hereto agree as follows:
SECTION L. CREATION OF SECURITY INTEREST.
Debtor hereby grants to Secured Party a security interest in the
following described property:
(a) All of Debtor's inventory, of whatever type or
description, wherever located and whether now owned or hereafter acquired;
(b) All of Debtor's accounts, which include, but are not
limited to, all notes receivable, accounts receivable, beach club dues,
membership fees, and all other forms of customer obligations now existing and
which may at any time hereafter come into existence;
(c) All of Debtor's vehicles, equipment, machinery,
furniture, fixtures and other items of personal property, whether now or
hereafter acquired;
(d) All of Debtor's permits, licenses, and other
governmental approvals;
<PAGE>
(e) Debtor's business on an ongoing basis, together with
all goodwill of the business, and all of Debtor's customer lists, routes, price
lists, patents, trademarks, service marks, trade names, trade secrets and other
proprietary information;
(f) All of Debtor's cash, certificates of deposit,
securities, instruments and general intangibles;
(g) The right to all insurance proceeds of all insurance
covering the Collateral as hereinafter defined;
(h) All proceeds, products, replacements, additions,
substitutions and accessions of and to all of the foregoing; and
(i) All personal property of Debtor, whether now or
hereafter existing or now owned or hereafter acquired, of every kind and
description, tangible or intangible, now or hereafter in the possession, custody
or control of Secured Party, now or hereafter existing.
Paragraphs (a) through (i) are collectively herein referred to as the
"COLLATERAL".
SECTION 2. OBLIGATIONS SECURED.
Such security interest shall secure the Note and the payment and
performance of any and all indebtedness, obligations and liabilities of any kind
of Debtor to Secured Party and also to others to the extent of their
participations granted to or interests therein created or acquired for them by
Secured Party, now or hereafter existing, arising directly between Debtor and
Secured Party or acquired outright, conditionally or as collateral security from
another by Secured Party, absolute or contingent, joint or several, secured or
unsecured, due or not due, contractual or tortious, liquidated or unliquidated,
arising by operation of law or otherwise, direct or indirect, including, but
without limiting the generality of the foregoing, indebtedness, obligations or
liabilities of Debtor as a member of any partnership, syndicate, association or
other group, to Secured Party, and whether incurred by Debtor as principal,
surety, indorser, guarantor, accommodation party or otherwise, provided,
however, that the foregoing shall exclude all obligations of Borrower arising
from the Contingent Returns which are secured by a separate security agreement
(all of the foregoing matters are collectively referred to as the
"OBLIGATIONS").
SECTION 3.DEBTOR'S COVENANTS, REPRESENTATIONS AND WARRANTIES.
Debtor covenants, represents and warrants that:
(a) Debtor is the owner of the Collateral free from any
adverse lien, security interest, or encumbrance, other than the security
interest granted hereby and the Permitted Title Exceptions.
- 2 -
<PAGE>
(b) Debtor will defend the Collateral against all claims
and demands of all persons at any time claiming the same or any interest
therein.
(c) None of the Collateral shall be subject to a purchase
money security interest other than that of Secured Party or otherwise permitted
under the Loan Agreement.
(d) The Collateral is and shall be kept at the Property, or
at Debtor's principal place of business, where Secured Party may inspect it at
any reasonable time. Debtor shall not remove the Collateral from said location
without the prior written consent of Secured Party. The Collateral will not be
allowed to be wasted, misused or abused or to deteriorate, except for ordinary
wear and tear, and will not be used in violation of any law, ordinance or
regulation of any governmental authority.
(e) The Collateral shall be insured with such carriers and
in such amounts and against such risks as shall be reasonably satisfactory to
Secured Party, with policies payable to Secured Party as its interest may
appear. All policies of insurance shall provide for thirty (30) days' prior
written notice of cancellation, modification, termination or expiration to
Secured Party, and Secured Party shall be furnished with duplicate policies or
other evidence of compliance with the foregoing insurance provisions.
(f) Debtor will pay, when due, all taxes and assessments
upon the Collateral or its operation or use.
(g) At its option, and without any obligation to do so,
Secured Party may discharge or pay any taxes, liens, security interests or other
encumbrances at any time levied or placed on or against the Collateral or
Debtor, and may pay for insurance on the Collateral, and may pay for the
Collateral's maintenance and preservation. Debtor agrees to reimburse Secured
Party on demand for any such payment made or expense incurred pursuant to the
foregoing authorizations or, at Secured Party's option, any payment made by
Secured Party may be added to the balance of the liability then owing.
(h) The Collateral will not, without the prior written
consent of Secured Party, be sold, leased, transferred, disposed of or
substantially modified except for the sale, replacement or other disposition of
the Collateral in the ordinary course of Debtor's business.
(i) Debtor hereby authorizes Secured Party to file such
financing statements relating to the Collateral without Debtor's signature
thereon, as Secured Party may deem appropriate. Debtor shall also execute from
time to time, along or with Secured Party, any financing statements or other
documents, and do such other act or acts considered by Secured Party to be
necessary or desirable to perfect or protect the security interest hereby
created, and shall pay all costs and expenses (including, without limitation,
reasonable fees and expenses of counsel and filing fees) related to the
preparation and filing of any financing statements, continuation statements or
other documents related to the perfection or protection of the security interest
hereby created.
- 3 -
<PAGE>
SECTION 4. RIGHTS OF SECURED PARTY PRIOR TO DEFAULT.
(a) Notwithstanding any other part of this Agreement,
Secured Party may enter upon the Property or such other of Debtor's premises, at
any reasonable time, to inspect Debtor's books and records pertaining to the
Collateral or its proceeds, and Debtor shall assist Secured Party in whatever
way necessary to make any inspection.
(b) Debtor hereby agrees that upon five (5) days' written
notice from Secured Party, it will do any or all of the following:
(l) deliver to Secured Party lists or copies of
all accounts, which are proceeds of Debtor's Collateral, promptly after they
arise; and/or
(2) join with Secured Party, at its request, in
executing financing statements and pay the cost of filing the same wherever
Secured Party deems, and will do, make, execute and deliver all such additional
and further acts, things, deeds, assurances and instruments as Secured Party may
require to completely vest in it and assure to it its rights hereunder in and to
the Collateral and the proceeds thereof and will pay all out-of-pocket expenses,
including attorneys' fees and disbursements including appellate, bankruptcy and
post judgment proceedings, incurred or expended by Secured Party in connection
with this Agreement and other agreements relating to the Collateral, the
enforcement of any of the obligations or the administration, preservation or
protection of or realization upon the Collateral or any part thereof.
SECTION 5. RIGHTS OF DEBTOR PRIOR TO DEFAULT.
Until an Event of Default shall have occurred or as otherwise
provided herein, Debtor may use the Collateral in any lawful manner not
inconsistent with this Agreement and with the terms of insurance thereon.
SECTION 6. EVENTS OF DEFAULT.
Debtor shall be in default under this Security Agreement upon (a) the
occurrence of an Event of Default under the Loan Agreement; or (b) loss, theft,
substantial change or destruction to a substantial portion of the Collateral
unless replaced forthwith or covered by insurance.
Upon the happening of any of the foregoing Events of Default, the
Obligations shall become and be immediately due and payable. Debtor expressly
waives any presentment, demand, protest or other notice of any kind.
SECTION 7.SECURED PARTY'S REMEDIES AND ADDITIONAL RIGHTS AFTER
DEFAULT.
Upon the occurrence of an Event of Default, Secured Party shall have
the rights and remedies of a secured party under the Florida Uniform Commercial
Code or any other applicable law.
- 4 -
<PAGE>
Without limiting the generality of the foregoing, Secured Party may exercise the
following rights and remedies:
(a) Secured Party may peaceably, or by its own means or
with judicial assistance by injunction or otherwise, enter the Property or such
other of Debtor's premises and take possession of the Collateral, or render it
unusable, or dispose of the Collateral on the Property, and Debtor will not
resist or interfere with such action;
(b) Secured Party may with judicial assistance by
injunction, or otherwise, require Debtor, at Debtor's expense, to assemble all
or any part of the Collateral and make it available to Secured Party at any
place designated by Secured Party. Debtor hereby agrees that any place
designated by Secured Party within Broward County, Florida, is a place
reasonably convenient to Debtor to assemble such Collateral;
(c) Debtor hereby agrees that a notice to Debtor, at least
five (5) days before the time of any intended sale or of the time after which
any public or private sale or other disposition of the Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition;
(d) In the event of sale or other disposition of any of the
Collateral, Secured Party may apply the proceeds of any such sale or disposition
to the satisfaction of its reasonable attorneys' fees, legal expenses, and other
costs and expenses incurred in connection with its taking, retaking, holding,
preparing for sale and selling of the Collateral;
(e) Without precluding any other methods of sale, the sale
of Collateral shall have been made in commercially reasonable manner if
conducted in conformity with reasonable commercial practices but, in any event,
Secured Party may sell on such terms as it may choose, without assuming any
credit risk and without any obligation to advertise or give notice of any kind;
(f) The Collateral need not be present at any public or
private sale or in view of the purchaser or purchasers, and title shall pass
upon such sale wherever the property or any part thereof is located with like
effect as though all the property were present and in the possession of the
person conducting the sale and where physically delivered to the purchaser or
purchasers; Secured Party may bid for and purchase at any public or private sale
the Collateral offered for sale or any part thereof, and by such purchase, shall
become the owner thereof;
(g) In the case of the exercise of any of the rights or
remedies of Secured Party hereunder, all Collateral, and other property or
security given to secure the Obligations, may be offered for sale for one total
price, and the proceeds of such sale accounted for in one account without
distinction between items of security or without assigning to them any
proportion of the proceeds of such sale. Debtor, insofar as it legally may do
so, hereby waives the application of any doctrine of marshaling. At the option
of Secured Party, the Collateral, or such other property or security for the
Obligations, may be offered for sale separately at different times and/or
locations.
- 5 -
<PAGE>
No such separate sale shall preclude subsequent sales of the Collateral or the
exercise by Secured Party of any other right or remedy hereunder;
(h) Secured Party may deduct from the gross proceeds of any
public or private sale the expenses incurred by Secured Party in connection
therewith, including reasonable attorneys' fees and brokers' commissions, if
any, and the net proceeds then remaining shall be applied first to the
satisfaction of the amount owed to Secured Party by Debtor and any amount then
remaining shall be returned to Debtor; and
(i) If the proceeds from the sale of the Collateral are not
sufficient to satisfy the indebtedness of Debtor to Secured Party, Secured Party
may proceed against Debtor for any deficiency.
SECTION 8. MISCELLANEOUS.
(a) No failure on the part of Secured Party to exercise,
and no delay in exercising any right or remedy hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise by Secured Party of any
right or remedy hereunder preclude any other or future exercise thereof, or the
exercise of any other right or remedy.
(b) This Security Agreement and the rights and obligations
of the parties hereunder shall be construed and interpreted in accordance with
the laws of the STATE OF FLORIDA without regard for its conflict of laws
doctrine.
(c) In the event of a conflict between the terms and
conditions of this Security Agreement and the Note, the Mortgage, or the Loan
Agreement, then, and in that event occurring, the terms and conditions of the
Note, the Mortgage, or the Loan Agreement shall prevail.
(d) The terms of this Security Agreement shall be binding
upon Debtor and its successors and permitted assigns and shall inure to the
benefit of Secured Party and its heirs, executors, administrators, personal
representatives, successors and assigns.
(e) This Security Agreement may not be changed orally, but
only by an instrument in writing and signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
SECTION 9. WAIVER OF JURY TRIAL.
THE PARTIES HERETO MUTUALLY AND WILLINGLY WAIVE THE RIGHT TO A TRIAL
BY JURY OF ANY AND ALL CLAIMS MADE BETWEEN THEM WHETHER NOW EXISTING OR ARISING
IN THE FUTURE, INCLUDING WITHOUT LIMITATION, ANY AND ALL CLAIMS, DEFENSES,
COUNTERCLAIMS, CROSS CLAIMS, THIRD PARTY CLAIMS AND INTERVENOR'S CLAIMS WHETHER
ARISING FROM OR
- 6 -
<PAGE>
RELATED TO THE NEGOTIATION, EXECUTION AND PERFORMANCE OF THE TRANSACTIONS TO
WHICH THIS DOCUMENT RELATES.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
DEBTOR:
TRANSEASTERN PEMBROKE
VILLAGES, INC., a Florida corporation
By:
Name:
Title:
(CORPORATE SEAL)
SECURED PARTY:
AMRESCO FUNDING CORPORATION,
a Delaware corporation
By:
Name:
Title:
(CORPORATE SEAL)
- 7 -
<PAGE>
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 29th day of
March, 1996, by _______________________ , as _________________ of TRANSEASTERN
PEMBROKE VILLAGES, INC., a Florida corporation, on behalf of the corporation.
He/she is personally known to me or has produced a driver's license as
identification.
Print or Stamp Name: ________________________
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this 29th day of
March, 1996, by __________________________ , as _______________________ of
AMRESCO FUNDING CORPORATION, a Delaware corporation, on behalf of the
corporation. He/she is personally known to me or has produced a driver's license
as identification.
Print or Stamp Name: ________________________
Notary Public, State of at Large
Commission No.:
My Commission Expires:
- 8 -
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
<PAGE>
SECURITY AGREEMENT (CONTINGENT RETURNS)
THIS SECURITY AGREEMENT (this "AGREEMENT"), dated the 29th day of
March, 1996, by TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida corporation,
having a place of business at 3300 University Drive, Suite 1, Coral Springs, FL
33065 ("DEBTOR") in favor of AMRESCO FUNDING CORPORATION, a Delaware
corporation, having a place of business at 1845 Woodall Rodgers Freeway, Dallas,
Texas 75201 ("SECURED PARTY").
WHEREAS, Secured Party and Debtor have entered into that certain Loan
Agreement of even date herewith (the "LOAN AGREEMENT"). Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings assigned to
the same in the Loan Agreement.
WHEREAS, as security for the payment of the Contingent Returns,
Debtor, on even date herewith, granted Secured Party the Contingent Mortgage on
certain real property owned by Debtor and located in Broward County, Florida
(the "PROPERTY"), as more particularly described in EXHIBIT "A" attached hereto
and incorporated herein; and
WHEREAS, in accordance with the terms of the Loan Agreement, and to
further secure the Borrower's obligations to pay the Contingent Returns under
the Loan Agreement, Debtor hereby grants to Secured Party a security interest in
certain of the assets of the Debtor now or hereinafter located on the Property,
as hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the
covenants hereinafter set forth, the parties hereto agree as follows:
SECTION L. CREATION OF SECURITY INTEREST.
Debtor hereby grants to Secured Party a security interest in the
following described property:
(a) All of Debtor's inventory, of whatever type or
description, wherever located and whether now owned or hereafter acquired;
(b) All of Debtor's accounts, which include, but are not
limited to, all notes receivable, accounts receivable, beach club dues,
membership fees, and all other forms of customer obligations now existing and
which may at any time hereafter come into existence;
(c) All of Debtor's vehicles, equipment, machinery,
furniture, fixtures and other items of personal property, whether now or
hereafter acquired;
(d) All of Debtor's permits, licenses, and other
governmental approvals;
(e) Debtor's business on an ongoing basis, together with
all goodwill of the business, and all of Debtor's customer lists, routes, price
lists, patents, trademarks, service marks, trade names, trade secrets and other
proprietary information;
<PAGE>
(f) All of Debtor's cash, certificates of deposit,
securities, instruments and general intangibles;
(g) The right to all insurance proceeds of all insurance
covering the Collateral as hereinafter defined;
(h) All proceeds, products, replacements, additions,
substitutions and accessions of and to all of the foregoing; and
(i) All personal property of Debtor, whether now or
hereafter existing or now owned or hereafter acquired, of every kind and
description, tangible or intangible, now or hereafter in the possession, custody
or control of Secured Party, now or hereafter existing.
Paragraphs (a) through (i) are collectively herein referred to as the
"COLLATERAL".
SECTION 2. OBLIGATIONS SECURED.
Such security interest shall secure the Borrower's obligations to pay
the Contingent Returns in accordance with the terms of the Loan Agreement (all
of the foregoing matters are collectively referred to as the "OBLIGATIONS").
SECTION 3.DEBTOR'S COVENANTS, REPRESENTATIONS AND WARRANTIES.
Debtor covenants, represents and warrants that:
(a) Debtor is the owner of the Collateral free from any
adverse lien, security interest, or encumbrance, other than the security
interest granted hereby and the Permitted Title Exceptions.
(b) Debtor will defend the Collateral against all claims
and demands of all persons at any time claiming the same or any interest
therein.
(c) None of the Collateral shall be subject to a purchase
money security interest other than that of Secured Party or otherwise permitted
under the Loan Agreement.
(d) The Collateral is and shall be kept at the Property, or
at Debtor's principal place of business, where Secured Party may inspect it at
any reasonable time. Debtor shall not remove the Collateral from said location
without the prior written consent of Secured Party. The Collateral will not be
allowed to be wasted, misused or abused or to deteriorate, except for ordinary
wear and tear, and will not be used in violation of any law, ordinance or
regulation of any governmental authority.
- 2 -
<PAGE>
(e) The Collateral shall be insured with such carriers and
in such amounts and against such risks as shall be reasonably satisfactory to
Secured Party, with policies payable to Secured Party as its interest may
appear. All policies of insurance shall provide for thirty (30) days' prior
written notice of cancellation, modification, termination or expiration to
Secured Party, and Secured Party shall be furnished with duplicate policies or
other evidence of compliance with the foregoing insurance provisions.
(f) Debtor will pay, when due, all taxes and assessments
upon the Collateral or its operation or use.
(g) At its option, and without any obligation to do so,
Secured Party may discharge or pay any taxes, liens, security interests or other
encumbrances at any time levied or placed on or against the Collateral or
Debtor, and may pay for insurance on the Collateral, and may pay for the
Collateral's maintenance and preservation. Debtor agrees to reimburse Secured
Party on demand for any such payment made or expense incurred pursuant to the
foregoing authorizations or, at Secured Party's option, any payment made by
Secured Party may be added to the balance of the liability then owing.
(h) The Collateral will not, without the prior written
consent of Secured Party, be sold, leased, transferred, disposed of or
substantially modified except for the sale, replacement or other disposition of
the Collateral in the ordinary course of Debtor's business.
(i) Debtor hereby authorizes Secured Party to file such
financing statements relating to the Collateral without Debtor's signature
thereon, as Secured Party may deem appropriate. Debtor shall also execute from
time to time, along or with Secured Party, any financing statements or other
documents, and do such other act or acts considered by Secured Party to be
necessary or desirable to perfect or protect the security interest hereby
created, and shall pay all costs and expenses (including, without limitation,
reasonable fees and expenses of counsel and filing fees) related to the
preparation and filing of any financing statements, continuation statements or
other documents related to the perfection or protection of the security interest
hereby created.
SECTION 4. RIGHTS OF SECURED PARTY PRIOR TO DEFAULT.
(a) Notwithstanding any other part of this Agreement,
Secured Party may enter upon the Property or such other of Debtor's premises, at
any reasonable time, to inspect Debtor's books and records pertaining to the
Collateral or its proceeds, and Debtor shall assist Secured Party in whatever
way necessary to make any inspection.
(b) Debtor hereby agrees that upon five (5) days' written
notice from Secured Party, it will do any or all of the following:
(l) deliver to Secured Party lists or copies of
all accounts, which are proceeds of Debtor's Collateral, promptly after they
arise; and/or
- 3 -
<PAGE>
(2) join with Secured Party, at its request, in
executing financing statements and pay the cost of filing the same wherever
Secured Party deems, and will do, make, execute and deliver all such additional
and further acts, things, deeds, assurances and instruments as Secured Party may
require to completely vest in it and assure to it its rights hereunder in and to
the Collateral and the proceeds thereof and will pay all out-of-pocket expenses,
including attorneys' fees and disbursements including appellate, bankruptcy and
post judgment proceedings, incurred or expended by Secured Party in connection
with this Agreement and other agreements relating to the Collateral, the
enforcement of any of the obligations or the administration, preservation or
protection of or realization upon the Collateral or any part thereof.
SECTION 5. RIGHTS OF DEBTOR PRIOR TO DEFAULT.
Until an Event of Default shall have occurred or as otherwise
provided herein, Debtor may use the Collateral in any lawful manner not
inconsistent with this Agreement and with the terms of insurance thereon.
SECTION 6. EVENTS OF DEFAULT.
Debtor shall be in default under this Security Agreement upon (a) the
occurrence of an Event of Default under the Loan Agreement; or (b) loss, theft,
substantial change or destruction to a substantial portion of the Collateral
unless replaced forthwith or covered by insurance.
Upon the happening of any of the foregoing Events of Default, the
Obligations shall become and be immediately due and payable. Debtor expressly
waives any presentment, demand, protest or other notice of any kind.
SECTION 7.SECURED PARTY'S REMEDIES AND ADDITIONAL RIGHTS AFTER
DEFAULT.
Upon the occurrence of an Event of Default, Secured Party shall have
the rights and remedies of a secured party under the Florida Uniform Commercial
Code or any other applicable law. Without limiting the generality of the
foregoing, Secured Party may exercise the following rights and remedies:
(a) Secured Party may peaceably, or by its own means or
with judicial assistance by injunction or otherwise, enter the Property or such
other of Debtor's premises and take possession of the Collateral, or render it
unusable, or dispose of the Collateral on the Property, and Debtor will not
resist or interfere with such action;
(b) Secured Party may with judicial assistance by
injunction, or otherwise, require Debtor, at Debtor's expense, to assemble all
or any part of the Collateral and make it available to Secured Party at any
place designated by Secured Party. Debtor hereby agrees that any place
designated by Secured Party within Broward County, Florida, is a place
reasonably convenient to Debtor to assemble such Collateral;
- 4 -
<PAGE>
(c) Debtor hereby agrees that a notice to Debtor, at least
five (5) days before the time of any intended sale or of the time after which
any public or private sale or other disposition of the Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition;
(d) In the event of sale or other disposition of any of the
Collateral, Secured Party may apply the proceeds of any such sale or disposition
to the satisfaction of its reasonable attorneys' fees, legal expenses, and other
costs and expenses incurred in connection with its taking, retaking, holding,
preparing for sale and selling of the Collateral;
(e) Without precluding any other methods of sale, the sale
of Collateral shall have been made in commercially reasonable manner if
conducted in conformity with reasonable commercial practices but, in any event,
Secured Party may sell on such terms as it may choose, without assuming any
credit risk and without any obligation to advertise or give notice of any kind;
(f) The Collateral need not be present at any public or
private sale or in view of the purchaser or purchasers, and title shall pass
upon such sale wherever the property or any part thereof is located with like
effect as though all the property were present and in the possession of the
person conducting the sale and where physically delivered to the purchaser or
purchasers; Secured Party may bid for and purchase at any public or private sale
the Collateral offered for sale or any part thereof, and by such purchase, shall
become the owner thereof;
(g) In the case of the exercise of any of the rights or
remedies of Secured Party hereunder, all Collateral, and other property or
security given to secure the Obligations, may be offered for sale for one total
price, and the proceeds of such sale accounted for in one account without
distinction between items of security or without assigning to them any
proportion of the proceeds of such sale. Debtor, insofar as it legally may do
so, hereby waives the application of any doctrine of marshaling. At the option
of Secured Party, the Collateral, or such other property or security for the
Obligations, may be offered for sale separately at different times and/or
locations. No such separate sale shall preclude subsequent sales of the
Collateral or the exercise by Secured Party of any other right or remedy
hereunder;
(h) Secured Party may deduct from the gross proceeds of any
public or private sale the expenses incurred by Secured Party in connection
therewith, including reasonable attorneys' fees and brokers' commissions, if
any, and the net proceeds then remaining shall be applied first to the
satisfaction of the amount owed to Secured Party by Debtor and any amount then
remaining shall be returned to Debtor; and
(i) If the proceeds from the sale of the Collateral are not
sufficient to satisfy the indebtedness of Debtor to Secured Party, Secured Party
may proceed against Debtor for any deficiency.
- 5 -
<PAGE>
SECTION 8. MISCELLANEOUS.
(a) No failure on the part of Secured Party to exercise,
and no delay in exercising any right or remedy hereunder, shall operate as a
waiver thereof, nor shall any single or partial exercise by Secured Party of any
right or remedy hereunder preclude any other or future exercise thereof, or the
exercise of any other right or remedy.
(b) This Security Agreement and the rights and obligations
of the parties hereunder shall be construed and interpreted in accordance with
the laws of the STATE OF FLORIDA without regard for its conflict of laws
doctrine.
(c) In the event of a conflict between the terms and
conditions of this Security Agreement and the Contingent Mortgage or the Loan
Agreement, then, and in that event occurring, the terms and conditions of the
Contingent Mortgage or the Loan Agreement shall prevail.
(d) The terms of this Security Agreement shall be binding
upon Debtor and its successors and permitted assigns and shall inure to the
benefit of Secured Party and its heirs, executors, administrators, personal
representatives, successors and assigns.
(e) This Security Agreement may not be changed orally, but
only by an instrument in writing and signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
SECTION 9. WAIVER OF JURY TRIAL.
THE PARTIES HERETO MUTUALLY AND WILLINGLY WAIVE THE RIGHT TO A TRIAL
BY JURY OF ANY AND ALL CLAIMS MADE BETWEEN THEM WHETHER NOW EXISTING OR ARISING
IN THE FUTURE, INCLUDING WITHOUT LIMITATION, ANY AND ALL CLAIMS, DEFENSES,
COUNTERCLAIMS, CROSS CLAIMS, THIRD PARTY CLAIMS AND INTERVENOR'S CLAIMS WHETHER
ARISING FROM OR RELATED TO THE NEGOTIATION, EXECUTION AND PERFORMANCE OF THE
TRANSACTIONS TO WHICH THIS DOCUMENT RELATES.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
DEBTOR:
TRANSEASTERN PEMBROKE
VILLAGES, INC., a Florida corporation
By:
Name:
Title:
(CORPORATE SEAL)
[SIGNATURES AND ACKNOWLEDGEMENTS CONTINUE ON NEXT PAGE]
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<PAGE>
SECURED PARTY:
AMRESCO FUNDING CORPORATION,
a Delaware corporation
By:
Name:
Title:
(CORPORATE SEAL)
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 29th day of
March, 1996, by _________________________ , as _____________________ of
TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida corporation, on behalf of the
corporation. He/she is personally known to me or has produced a driver's license
as identification.
Print or Stamp Name: ________________________
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
STATE OF )
) ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this 29th day of
March, 1996, by ____________________________ , as ______________________ of
AMRESCO FUNDING CORPORATION, a Delaware corporation, on behalf of the
corporation. He/she is personally known to me or has produced a driver's license
as identification.
Print or Stamp Name: ________________________
Notary Public, State of at Large
Commission No.:
My Commission Expires:
- 7 -
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
<PAGE>
Record and Return To:
John T. Kinsey, Esq.
Two Executive Court
2300 Corporate Boulevard, Suite 112
Boca Raton, Florida 33431
ASSIGNMENT OF LEASES, RENTS AND PROFITS
THIS ASSIGNMENT OF LEASES, RENTS AND PROFITS (this "ASSIGNMENT"), made
this 29th day of March, 1996, by TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, ("ASSIGNOR"), having its principal office at 3300 University Drive,
Suite 1, Coral Springs, FL 33065 to AMRESCO FUNDING CORPORATION, a Delaware
corporation ("ASSIGNEE"), having an office at 1845 Woodall Rodgers Freeway,
Dallas, Texas 75201.
WITNESSETH:
WHEREAS, Assignor is the present owner in fee simple of real estate
situate, lying and being in Broward County, Florida, as more particularly
described in EXHIBIT "A" attached hereto and made a part hereof (the
"PROPERTY"); and
WHEREAS, in consideration of Assignee making that certain loan in the
principal amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) (the
"LOAN") to Assignor, which Loan is evidenced by, among other things, a certain
Promissory Note in the original principal amount of $3,000,000.00, from Assignor
in favor of Assignee, and a Loan Agreement (the "LOAN AGREEMENT") between
Assignor and Assignee, all of even date herewith and secured by, among other
things, the Mortgage (unless otherwise defined herein all capitalized terms used
herein shall have the meanings assigned to the same in the Loan Agreement);
NOW, THEREFORE, for value received and as security for the payment of
said obligations of Assignor under the Loan Documents, Assignor, for itself and
for its successors and assigns, does hereby transfer, assign and deliver unto
Assignee, its successors and assigns, all of the right, title and interest of
Assignor in and to (1) all leases, subleases, tenancies and any other agreements
affecting the use of the Property, whether written or oral, now or hereafter
existing with respect to any portion or portions of the Property, together with
any renewals or extensions thereof and leases, subleases, tenancies and such
agreements in substitution therefor (collectively,
<PAGE>
the "ASSIGNED LEASES"), (2) all rents and other payments of every kind due or
payable and to become due or payable to Assignor by virtue of the Assigned
Leases, or otherwise due or payable and to become due or payable to Assignor as
the result of any issue, possession or occupancy of any portion or portions of
the Property, (3) all right, title and interest of Assignor in and to all
guarantees of the Assigned Leases and (4) any award made in any court proceeding
involving any of the lessees in any bankruptcy, insolvency, or reorganization
proceedings in any state or federal court.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns,
until such time as the indebtedness secured by the Mortgage shall have been paid
in full, for the purpose of further and collaterally securing (1) payment of the
indebtedness evidenced by the Note, the Loan Agreement and the other Loan
Documents, together with the interest on said indebtedness; (2) payment of all
other sums, with interest thereon, to become due and payable to Assignee
hereunder or under the provisions of the other Loan Documents or any other
obligation of Assignor to Assignee now or hereafter existing; and (3)
performance and discharge of each and every obligation, covenant and agreement
of Assignor contained herein or in the other Loan Documents or any other
obligation of Assignor to Assignee now or hereafter existing, provided, however,
that the foregoing obligations shall exclude Borrower's obligations to pay the
Contingent Returns which is secured by a separate assignment of leases, rents
and profits (the obligations of Borrower under this Assignment and the other
Loan Documents are collectively herein referred to as the "OBLIGATIONS").
This instrument of Assignment is delivered and accepted upon the
following terms and conditions:
1. ASSIGNOR'S LICENSE TO OPERATE IF NO DEFAULT.
So long as no Event of Default shall occur, Assignor shall have a
license to manage and operate the Property and to collect, receive and apply for
its own account all rents, issues and profits accruing by virtue of the Assigned
Leases, and to execute and deliver proper receipts and acquittances therefor,
PROVIDED, HOWEVER, that without the written consent of Assignee, Assignor shall
not collect any installment of rent in advance of the respective dates
prescribed in the Assigned Leases for the payment thereof other than a two (2)
months advance rental in the form of a security deposit for the first and last
month of any lease term (the "PERMITTED ADVANCE RENTAL PAYMENTS").
2. ASSIGNEE'S RIGHTS IN EVENT OF DEFAULT.
2.1 Immediately upon the occurrence of any Event of Default and,
at the option of Lender, which option may be exercised by giving written notice
thereof to Assignee, the license mentioned in the foregoing Paragraph 1 hereof
shall cease and terminate, and in such event Assignee is hereby expressly and
irrevocably authorized to enter and take possession of the Property by actual
physical possession, or by written notice to Assignor served in accordance with
- 2 -
<PAGE>
Paragraph 10 hereof, without further authorization, notice or demand (except as
otherwise specifically provided in the Loan Agreement or any other Loan
Documents) and without the commencement of any action to foreclose the Mortgage
or to exercise its power of sale thereunder.
2.2 Assignor does hereby constitute and appoint Assignee,
following such entry and taking of possession, irrevocably, with full power of
substitution and revocation, its true and lawful attorney, for it and in its
name, place and stead, to do and perform any or all of the following actions, as
fully, to all intents and purposes, as it could do if personally present, hereby
ratifying and confirming all that its said attorney or its substitute shall
lawfully do or cause to be done by virtue hereof:
(a) manage and operate the Property or any part thereof;
(b) lease any part or parts thereof for such periods of
time, and upon such terms and conditions as Assignee may, in its sole
discretion, deem proper;
(c) enforce, cancel or modify any of the Assigned Leases;
(d) demand, collect, sue for, attach, levy, recover,
receive, compromise and adjust, and make, execute and deliver receipts and
releases for all rents, issues, profits and other amounts that may then be or
may thereafter become due, owing or payable with respect to the Property or any
part thereof from any present or future lessees, guests, tenants, subtenants or
occupants thereof;
(e) institute, prosecute to completion or compromise and
settle, all summary proceedings, actions for rent or for removing any and all
lessees, guests, tenants, subtenants or occupants of the Property or any part or
parts thereof;
(f) enforce or enjoin or restrain the violation of any of
the terms, provisions and conditions of any lease or leases, now or hereafter
affecting the Property or any part thereof;
(g) make such repairs and alterations to the Property as
Assignee may, in its reasonable discretion, deem proper;
(h) pay, from and out of rents, issues and profits
collected in respeclevied, assessed or imposed against the Property, or any
portion thereof, and also any and all other charges, costs and expenses which it
may be necessary or advisable for Assignee to pay in the management or operation
of the Property, including (without limiting the generality of any rights,
powers, privileges and authority hereinbefore or hereinafter conferred) the
costs of such repairs and
- 3 -
<PAGE>
alterations, commissions for renting the Property or any portions thereof, any
legal expenses in enforcing claims, preparing papers or for any other services
that may be required; and
(i) generally, do, execute and perform any other act,
deed, matter or thing whatsoever that ought to be done, executed and performed
in and about or with respect to the Property, as fully as Assignor might do,
provided, however, that any action, or failure or refusal to act, by Assignee
under this subparagraph 2.2 shall be at its election and without any liability
on Assignee's part.
2.3 Assignee shall apply the net amount of rents, issues and
profits received by it from the Property, after payment of all proper costs and
charges (including any liability, loss, expense or damage hereinafter referred
to in paragraph 5 hereof), first to the payment, when due, of the installments
of interest payable under the Note, and thereafter to the payment of principal
thereunder. Any of such funds remaining after such application shall be paid as
soon as reasonably practicable by Assignee to Assignor or paid over to such
persons as Assignor may designate to Assignee in writing.
2.4 Assignee shall be accountable to Assignor only for monies
actually received by Assignee pursuant to this Assignment and the acceptance of
this Assignment shall not constitute a satisfaction of any indebtedness,
liability or obligations, or any part thereof, now or hereafter owed by Assignor
to Assignee, except to the extent of amounts actually received and applied by
Assignee on account of the same.
2.5 The rights and powers of Assignee hereunder shall continue
and remain in full force and effect until all amounts secured hereby, including
any deficiency resulting from foreclosure sale, are paid in full, and shall
continue after commencement of foreclosure and after foreclosure sale and until
expiration of the equity of redemption, notwithstanding the sale of the Property
to a purchaser other than Assignee. Assignee shall not be liable to Assignor or
any one claiming under or through Assignor by reason of anything done or left
undone by Assignee hereunder.
2.6 For the purposes of this paragraph 2, a default shall be
deemed to be cured only when Assignor shall have paid in full all sums owing and
past due, and/or shall have performed all other terms, covenants and conditions,
the failure in the performance of which shall terminate the license contained in
paragraph 1 hereof, such default shall have been waived by Assignee, in writing.
3. ATTORNMENT OF LESSEES IN EVENT OF DEFAULT.
Assignor hereby irrevocably directs each Lessee under each Assigned
Lease, upon demand and notice from Assignee of an Event of Default, to pay
Assignee all rents, issues and profits accruing or due under its Assigned Lease
from and after the receipt of such demand and notice.
- 4 -
<PAGE>
Any Lessee making such payment to Assignee shall be under no obligation to
inquire into or determine the actual existence of any such default claimed by
Assignee.
4. COVENANTS OF ASSIGNOR.
Assignor, for itself and for its successors and assigns, covenants and
warrants as follows:
(a) that each of the Assigned Leases now or hereafter in effect
is and shall be a valid and subsisting lease and that there are, to the extent
ascertainable by Assignor, no defaults on the part of any of the parties
thereto;
(b) that Assignor has not sold, assigned, transferred, mortgaged
or pledged any of the rents, issues or profits from the Property or any part
thereof, except as permitted by the Loan Agreement, whether now or hereafter to
become due, to any person, firm or corporation other than Assignee;
(c) that no rents issues or profits of the Property, or any part
thereof, becoming due subsequent to the date hereof have been collected (other
than Permitted Advance Rental Payments) nor has payment of any of the sums been
anticipated, waived, released, discounted or otherwise discharged or
compromised;
(d) that it will not assign, pledge or otherwise encumber any of
the Assigned Leases or any of the rents thereunder unless the prior written
consent of Assignee shall have been obtained thereto or the Loan Agreement
specifically allows for the same and unless the instrument creating such
assignment, pledge or encumbrance shall expressly state that the same is subject
to this assignment;
(e) that it will not, without in each case having obtained the
prior written consent of Assignee thereto, amend or modify, directly or
indirectly in any respect whatsoever cancel, terminate, or accept any surrender
of any Assigned Lease, without Lender's prior written consent which may be
withheld in Lender's sole discretion.
(f) that it will not waive or give any consent with respect to
any default or variation in the performance of any of the terms, covenants, and
conditions on the part of any lessee, sublessee, tenant or other occupant to be
performed under any of the Assigned Leases, but will at all time take proper
steps to enforce all of the provisions and conditions thereof;
(g) that it will not collect or receive, without in each case
having obtained the prior written consent of Assignee thereto from any such
lessee, sublessee, tenant or other occupant, any installment of rent in advance
of the respective dates prescribed in the Assigned Leases, except for Permitted
Advance Rental Payments;
- 5 -
<PAGE>
(h) that it will perform and observe, or cause to be performed
and observed, all of the terms, covenants and conditions on its part to be
performed and observed with respect to each of the Assigned Leases;
(i) that it will, upon written request by Assignee, while this
agreement remains in force and effect, serve such written notices upon any
lessee, sublessee, tenant, guest or other occupant of any portion of the
Property concerning this Assignment, or include among the written provisions of
any instrument hereafter creating any such lease, sublease, tenancy or right of
occupancy specific reference to this Assignment, and make, execute and deliver
all such powers of attorney, instruments of pledge or assignment, and such other
instruments or documents as Assignee may reasonably request at any time for the
purpose of securing its rights hereunder;
(j) that at all times during which this Assignment shall be in
effect, Assignor will use its best efforts to keep the Property fully rented at
the highest possible rentals obtainable; and
(k) that Assignor shall (a) notify Assignee promptly when any
Assigned Lease, is hereafter extended, renewed, amended or modified, and (b)
furnish to Assignee, on demand, true copies of all Assigned Leases hereafter
executed and true copies of each agreement or letter effecting the renewal,
amendment or modification of any Assigned Lease.
5. INDEMNIFICATION.
5.1 Assignor hereby agrees to indemnify and hold Assignee
harmless (a) against and from any and all liability, loss, damage and expense,
including but not limited to reasonable attorneys' fees, paralegals' fees and
expenses on both the trial and appellate level which it may or shall incur under
or in connection with any of the Assigned Leases, or by reason of any of the
Obligations, or by reason of any action taken by Assignee under any of the
Obligations (including without limitation any action which Assignee in its
discretion may make to protect its interest in the Property, including without
limitation the making of advances and the entering into of any action or
proceeding arising out of or connected with the Assigned Leases or the
Obligations), and (b) against and from any and all claims and demand whatsoever
which may be asserted against Assignor by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants and
conditions contained in any of the Assigned Leases.
5.2 Should Assignee incur any such liability, loss, damage or
expense, the amount thereof, together with interest thereon at the Default
Interest Rate, as defined in the Note, shall be payable by Assignor to Assignee
immediately upon demand, or at the option of Assignee, Assignee may reimburse
itself therefor out of any rents, issues or profits of the Property collected by
Assignee.
5.3 Nothing contained herein shall operate or be construed to
obligate Assignee to perform any of the terms, covenants or conditions contained
in any Assigned Lease, or to take any measures, legal or otherwise, to enforce
collection of any of said rents or other payments,
- 6 -
<PAGE>
or otherwise to impose any obligation upon Assignee with respect to any of said
leases, including but not limited to, any obligation arising out of any covenant
of quiet enjoyment therein contained, in the event that any lessee shall have
been joined as a party defendant in any action to foreclose the Mortgage and the
estate of such lessee shall have been thereby terminated.
5.4 Prior to actual entry into any taking possession of the
Property by Assignee, this Assignment shall not operate to place upon Assignee
any responsibility for the operation, control, care, management or repair of the
Property, and the execution of this assignment by Assignor shall constitute
conclusive evidence that all responsibility for the operation, control, care,
management and repair of the Property is and shall be that of Assignor prior to
such actual entry and taking of possession.
6. EXERCISE OF REMEDIES.
Failure of Assignee to avail itself of any of the terms, covenants and
conditions of this Assignment for any period of time, or at any time or times,
shall not be construed or deemed to be a waiver of any of its rights hereunder.
The rights and remedies of Assignee under this Assignment are cumulative and are
not in lieu of but are in addition to any other rights and remedies which
Assignee shall have under or by virtue of any other of the Obligations. The
rights and remedies of Assignee hereunder may be exercised from time to time and
as often as such exercise is deemed expedient.
7. ASSIGNMENT BY ASSIGNEE.
Assignee shall have the right to assign to any subsequent holder of the
Mortgage, or to any person acquiring title to the Property, Assignor's rights,
title and interest in any lease hereby or hereafter assigned, subject, however,
to the provisions of this Assignment. After Assignor shall have been barred and
foreclosed of all right, title and interest and equity of redemption in said
Property, no assignee of Assignor's interest in said leases shall be liable to
account to Assignor for any rents, income, revenue, issues or profits thereafter
accruing.
8. TERMINATION OF THIS AGREEMENT.
Upon payment in full of all the indebtedness secured by the Mortgage, as
evidenced by a recorded satisfaction or release of Mortgage, as well as any sums
which may be payable hereunder, this Assignment shall become and be void and of
no effect and, in that event, upon the request of Assignor, Assignee covenants
to execute and deliver to Assignor instruments effective to evidence the
termination of this Assignment and/or the reassignment to Assignor of the
rights, power and authority granted herein.
- 7 -
<PAGE>
9. NO MERGER OF ASSIGNED LEASES.
As against Assignee, at all times during which this Assignment shall be
in effect, there shall be no merger of the Assigned Leases or the leasehold
estate created thereby with the fee estate in the Property by reason of the fact
that the Assigned Leases or any interest therein may be held by or for the
account of any person, firm or corporation which may be or become the owner of
said fee estate, unless Assignee shall consent in writing to said merger.
10. NOTICE.
Any notice, demand, request or other communication given hereunder or in
connection herewith shall be given in accordance with the Loan Agreement.
11. MISCELLANEOUS PROVISIONS.
11.1 Whenever the context so requires, reference herein to the
neuter gender shall include the masculine and/or feminine gender, and the
singular number shall include the plural.
11.2 All of the provisions of this Assignment shall be deemed and
construed to be "conditions" and "covenants" as though the words specifically
expressing or importing covenants and conditions were used in each separate
provision hereof.
11.3 This Assignment is being delivered and is intended to be
performed in the STATE OF FLORIDA and shall be construed and enforced in
accordance with and governed by the laws of such state.
11.4 No change, amendment, modification, cancellation or
discharge hereof, or of any part hereof, shall be valid unless Assignee shall
have consented thereto in writing.
11.5 In the event there is any conflict between the terms and
provisions of the Mortgage or the Loan Agreement and the terms and provisions of
this Assignment, the terms and provisions of the Mortgage or Loan Agreement
shall prevail.
11.6 The provisions of this instrument shall be binding upon
Assignor and its heirs, personal representatives, successors or permitted
assigns and upon Assignee and its participants, successors or assigns. The word
"Assignor" shall be construed to mean any one or more persons or person or
parties who are holders of the legal title or equity of redemption to or in the
Property.
11.7 The captions of this Assignment are for convenience and
reference only and neither in any way define, limit, or describe the scope or
interest of this Assignment nor in any way affect this Assignment.
- 8 -
<PAGE>
11.8 In case any one or more of the provisions contained in this
Assignment are, or shall for any reason be held to be, invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof or thereof, but each shall be
construed as if such invalid, illegal or unenforceable provision had never been
included.
12. WAIVER OF JURY TRIAL. ASSIGNEE AND ASSIGNOR HEREBY 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 THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, 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 ASSIGNEE ENTERING INTO THIS AGREEMENT.
IN WITNESS WHEREOF, Assignor and Assignee have caused these presents to
be executed by their duly authorized officer, on the day and year first above
written.
Signed, sealed and delivered
in the presence of: ASSIGNOR:
TRANSEASTERN PEMBROKE
VILLAGES, INC., a Florida corporation
By:
Name:
Title:
(CORPORATE SEAL)
- 9 -
<PAGE>
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this _____ day of
March, 1996, by , as of TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, on behalf of the corporation. He/she is personally known to me or
has produced a driver's license as identification.
Print or Stamp Name: ________________________
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
[EXHIBITS FOLLOW]
- 10 -
<PAGE>
This Instrument Was Prepared By:
Andrew S. Robins, Esq.
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
500 East Broward Boulevard, Suite 1400
Ft. Lauderdale, FL 33496
- 11 -
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
<PAGE>
Record and Return To:
John T. Kinsey, Esq.
Two Executive Court
2300 Corporate Boulevard, Suite 112
Boca Raton, Florida 33431
ASSIGNMENT OF LEASES, RENTS AND PROFITS
(CONTINGENT RETURNS)
THIS ASSIGNMENT OF LEASES, RENTS AND PROFITS (this "ASSIGNMENT"), made
this 29th day of March, 1996, by TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, ("ASSIGNOR"), having its principal office at 3300 University Drive,
Suite 1, Coral Springs, FL 33065 to AMRESCO FUNDING CORPORATION, a Delaware
corporation ("ASSIGNEE"), having an office at 1845 Woodall Rodgers Freeway,
Dallas, Texas 75201.
WITNESSETH:
WHEREAS, Assignor is the present owner in fee simple of real estate
situate, lying and being in Broward County, Florida, as more particularly
described in EXHIBIT "A" attached hereto and made a part hereof (the
"PROPERTY"); and
WHEREAS, in consideration of Assignee making that certain loan in the
principal amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) (the
"LOAN") to Assignor, Assignor has agreed to pay certain "Contingent Returns" as
defined in that certain Loan Agreement of even date between Assignor and
Assignee (the "LOAN AGREEMENT") (unless otherwise defined herein all capitalized
terms used herein shall have the meanings assigned to the same in the Loan
Agreement), the payment of which is secured by the Contingent Mortgage;
NOW, THEREFORE, for value received and as security for the payment of
said obligations of Assignor to pay the Contingent Returns pursuant to the terms
of the Loan Agreement, Assignor, for itself and for its successors and assigns,
does hereby transfer, assign and deliver unto Assignee, its successors and
assigns, all of the right, title and interest of Assignor in and to (1) all
leases, subleases, tenancies and any other agreements affecting the use of the
Property, whether written or oral, now or hereafter existing with respect to any
portion or portions
<PAGE>
of the Property, together with any renewals or extensions thereof and leases,
subleases, tenancies and such agreements in substitution therefor (collectively,
the "ASSIGNED LEASES"), (2) all rents and other payments of every kind due or
payable and to become due or payable to Assignor by virtue of the Assigned
Leases, or otherwise due or payable and to become due or payable to Assignor as
the result of any issue, possession or occupancy of any portion or portions of
the Property, (3) all right, title and interest of Assignor in and to all
guarantees of the Assigned Leases and (4) any award made in any court proceeding
involving any of the lessees in any bankruptcy, insolvency, or reorganization
proceedings in any state or federal court.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns,
until such time as the indebtedness secured by the Contingent Mortgage shall
have been paid in full, for the purpose of further and collaterally securing
payment of the Contingent Returns pursuant to the terms of the Loan Agreement
(herein referred to as the "OBLIGATIONS").
This instrument of Assignment is delivered and accepted upon the
following terms and conditions:
1. ASSIGNOR'S LICENSE TO OPERATE IF NO DEFAULT.
So long as no Event of Default shall occur, Assignor shall have a
license to manage and operate the Property and to collect, receive and apply for
its own account all rents, issues and profits accruing by virtue of the Assigned
Leases, and to execute and deliver proper receipts and acquittances therefor,
PROVIDED, HOWEVER, that without the written consent of Assignee, Assignor shall
not collect any installment of rent in advance of the respective dates
prescribed in the Assigned Leases for the payment thereof other than a two (2)
months advance rental in the form of a security deposit for the first and last
month of any lease term (the "PERMITTED ADVANCE RENTAL PAYMENTS").
2. ASSIGNEE'S RIGHTS IN EVENT OF DEFAULT.
2.1 Immediately upon the occurrence of any Event of Default and,
at the option of Lender, which option may be exercised by giving written notice
thereof to Assignee, the license mentioned in the foregoing Paragraph 1 hereof
shall cease and terminate, and in such event Assignee is hereby expressly and
irrevocably authorized to enter and take possession of the Property by actual
physical possession, or by written notice to Assignor served in accordance with
Paragraph 10 hereof, without further authorization, notice or demand (except as
otherwise specifically provided in the Loan Agreement or any other Loan
Documents) and without the commencement of any action to foreclose the
Contingent Mortgage or to exercise its power of sale thereunder.
2.2 Assignor does hereby constitute and appoint Assignee,
following such entry and taking of possession, irrevocably, with full power of
substitution and revocation, its true and lawful attorney, for it and in its
name, place and stead, to do and perform any or all of the
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<PAGE>
following actions, as fully, to all intents and purposes, as it could do if
personally present, hereby ratifying and confirming all that its said attorney
or its substitute shall lawfully do or cause to be done by virtue hereof:
(a) manage and operate the Property or any part thereof;
(b) lease any part or parts thereof for such periods of
time, and upon such terms and conditions as Assignee may, in its sole
discretion, deem proper;
(c) enforce, cancel or modify any of the Assigned Leases;
(d) demand, collect, sue for, attach, levy, recover,
receive, compromise and adjust, and make, execute and deliver receipts and
releases for all rents, issues, profits and other amounts that may then be or
may thereafter become due, owing or payable with respect to the Property or any
part thereof from any present or future lessees, guests, tenants, subtenants or
occupants thereof;
(e) institute, prosecute to completion or compromise and
settle, all summary proceedings, actions for rent or for removing any and all
lessees, guests, tenants, subtenants or occupants of the Property or any part or
parts thereof;
(f) enforce or enjoin or restrain the violation of any of
the terms, provisions and conditions of any lease or leases, now or hereafter
affecting the Property or any part thereof;
(g) make such repairs and alterations to the Property as
Assignee may, in its reasonable discretion, deem proper;
(h) pay, from and out of rents, issues and profits
collected in respecnt charges levied, assessed or imposed against the Property,
or any portion thereof, and also any and all other charges, costs and expenses
which it may be necessary or advisable for Assignee to pay in the management or
operation of the Property, including (without limiting the generality of any
rights, powers, privileges and authority hereinbefore or hereinafter conferred)
the costs of such repairs and alterations, commissions for renting the Property
or any portions thereof, any legal expenses in enforcing claims, preparing
papers or for any other services that may be required; and
(i) generally, do, execute and perform any other act,
deed, matter or thing whatsoever that ought to be done, executed and performed
in and about or with respect to the Property, as fully as Assignor might do,
provided, however, that any action, or failure or
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<PAGE>
refusal to act, by Assignee under this subparagraph 2.2 shall be at its election
and without any liability on Assignee's part.
2.3 Assignee shall apply the net amount of rents, issues and
profits received by it from the Property, after payment of all proper costs and
charges (including any liability, loss, expense or damage hereinafter referred
to in paragraph 5 hereof) in accordance with the terms of the Loan Documents.
Any of such funds remaining after such application shall be paid as soon as
reasonably practicable by Assignee to Assignor or paid over to such persons as
Assignor may designate to Assignee in writing.
2.4 Assignee shall be accountable to Assignor only for monies
actually received by Assignee pursuant to this Assignment and the acceptance of
this Assignment shall not constitute a satisfaction of any indebtedness,
liability or obligations, or any part thereof, now or hereafter owed by Assignor
to Assignee, except to the extent of amounts actually received and applied by
Assignee on account of the same.
2.5 The rights and powers of Assignee hereunder shall continue
and remain in full force and effect until all amounts secured hereby, including
any deficiency resulting from foreclosure sale, are paid in full, and shall
continue after commencement of foreclosure and after foreclosure sale and until
expiration of the equity of redemption, notwithstanding the sale of the Property
to a purchaser other than Assignee. Assignee shall not be liable to Assignor or
any one claiming under or through Assignor by reason of anything done or left
undone by Assignee hereunder.
2.6 For the purposes of this paragraph 2, a default shall be
deemed to be cured only when Assignor shall have paid in full all sums owing and
past due, and/or shall have performed all other terms, covenants and conditions,
the failure in the performance of which shall terminate the license contained in
paragraph 1 hereof, such default shall have been waived by Assignee, in writing.
3. ATTORNMENT OF LESSEES IN EVENT OF DEFAULT.
Assignor hereby irrevocably directs each Lessee under each Assigned
Lease, upon demand and notice from Assignee of an Event of Default, to pay
Assignee all rents, issues and profits accruing or due under its Assigned Lease
from and after the receipt of such demand and notice. Any Lessee making such
payment to Assignee shall be under no obligation to inquire into or determine
the actual existence of any such default claimed by Assignee.
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<PAGE>
4. COVENANTS OF ASSIGNOR.
Assignor, for itself and for its successors and assigns, covenants and
warrants as follows:
(a) that each of the Assigned Leases now or hereafter in effect
is and shall be a valid and subsisting lease and that there are, to the extent
ascertainable by Assignor, no defaults on the part of any of the parties
thereto;
(b) that Assignor has not sold, assigned, transferred, mortgaged
or pledged any of the rents, issues or profits from the Property or any part
thereof, except as permitted by the Loan Agreement, whether now or hereafter to
become due, to any person, firm or corporation other than Assignee;
(c) that no rents issues or profits of the Property, or any part
thereof, becoming due subsequent to the date hereof have been collected (other
than Permitted Advance Rental Payments) nor has payment of any of the sums been
anticipated, waived, released, discounted or otherwise discharged or
compromised;
(d) that it will not assign, pledge or otherwise encumber any of
the Assigned Leases or any of the rents thereunder unless the prior written
consent of Assignee shall have been obtained thereto or the Loan Agreement
specifically allows for the same and unless the instrument creating such
assignment, pledge or encumbrance shall expressly state that the same is subject
to this assignment;
(e) that it will not, without in each case having obtained the
prior written consent of Assignee thereto, amend or modify, directly or
indirectly in any respect whatsoever cancel, terminate, or accept any surrender
of any Assigned Lease, without Lender's prior written consent which may be
withheld in Lender's sole discretion.
(f) that it will not waive or give any consent with respect to
any default or variation in the performance of any of the terms, covenants, and
conditions on the part of any lessee, sublessee, tenant or other occupant to be
performed under any of the Assigned Leases, but will at all time take proper
steps to enforce all of the provisions and conditions thereof;
(g) that it will not collect or receive, without in each case
having obtained the prior written consent of Assignee thereto from any such
lessee, sublessee, tenant or other occupant, any installment of rent in advance
of the respective dates prescribed in the Assigned Leases, except for Permitted
Advance Rental Payments;
(h) that it will perform and observe, or cause to be performed
and observed, all of the terms, covenants and conditions on its part to be
performed and observed with respect to each of the Assigned Leases;
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<PAGE>
(i) that it will, upon written request by Assignee, while this
agreement remains in force and effect, serve such written notices upon any
lessee, sublessee, tenant, guest or other occupant of any portion of the
Property concerning this Assignment, or include among the written provisions of
any instrument hereafter creating any such lease, sublease, tenancy or right of
occupancy specific reference to this Assignment, and make, execute and deliver
all such powers of attorney, instruments of pledge or assignment, and such other
instruments or documents as Assignee may reasonably request at any time for the
purpose of securing its rights hereunder;
(j) that at all times during which this Assignment shall be in
effect, Assignor will use its best efforts to keep the Property fully rented at
the highest possible rentals obtainable; and
(k) that Assignor shall (a) notify Assignee promptly when any
Assigned Lease, is hereafter extended, renewed, amended or modified, and (b)
furnish to Assignee, on demand, true copies of all Assigned Leases hereafter
executed and true copies of each agreement or letter effecting the renewal,
amendment or modification of any Assigned Lease.
5. INDEMNIFICATION.
5.1 Assignor hereby agrees to indemnify and hold Assignee
harmless (a) against and from any and all liability, loss, damage and expense,
including but not limited to reasonable attorneys' fees, paralegals' fees and
expenses on both the trial and appellate level which it may or shall incur under
or in connection with any of the Assigned Leases, or by reason of any of the
Obligations, or by reason of any action taken by Assignee under any of the
Obligations (including without limitation any action which Assignee in its
discretion may make to protect its interest in the Property, including without
limitation the making of advances and the entering into of any action or
proceeding arising out of or connected with the Assigned Leases or the
Obligations), and (b) against and from any and all claims and demand whatsoever
which may be asserted against Assignor by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants and
conditions contained in any of the Assigned Leases.
5.2 Should Assignee incur any such liability, loss, damage or
expense, the amount thereof, together with interest thereon at the default rate
as provided in the Loan Documents, shall be payable by Assignor to Assignee
immediately upon demand, or at the option of Assignee, Assignee may reimburse
itself therefor out of any rents, issues or profits of the Property collected by
Assignee.
5.3 Nothing contained herein shall operate or be construed to
obligate Assignee to perform any of the terms, covenants or conditions contained
in any Assigned Lease, or to take any measures, legal or otherwise, to enforce
collection of any of said rents or other payments, or otherwise to impose any
obligation upon Assignee with respect to any of said leases, including but not
limited to, any obligation arising out of any covenant of quiet enjoyment
therein contained, in the event that any lessee shall have been joined as a
party defendant in any action to foreclose the Contingent Mortgage and the
estate of such lessee shall have been thereby terminated.
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<PAGE>
5.4 Prior to actual entry into any taking possession of the
Property by Assignee, this Assignment shall not operate to place upon Assignee
any responsibility for the operation, control, care, management or repair of the
Property, and the execution of this assignment by Assignor shall constitute
conclusive evidence that all responsibility for the operation, control, care,
management and repair of the Property is and shall be that of Assignor prior to
such actual entry and taking of possession.
6. EXERCISE OF REMEDIES.
Failure of Assignee to avail itself of any of the terms, covenants and
conditions of this Assignment for any period of time, or at any time or times,
shall not be construed or deemed to be a waiver of any of its rights hereunder.
The rights and remedies of Assignee under this Assignment are cumulative and are
not in lieu of but are in addition to any other rights and remedies which
Assignee shall have under or by virtue of any other of the Obligations. The
rights and remedies of Assignee hereunder may be exercised from time to time and
as often as such exercise is deemed expedient.
7. ASSIGNMENT BY ASSIGNEE.
Assignee shall have the right to assign to any subsequent holder of the
Contingent Mortgage, or to any person acquiring title to the Property,
Assignor's rights, title and interest in any lease hereby or hereafter assigned,
subject, however, to the provisions of this Assignment. After Assignor shall
have been barred and foreclosed of all right, title and interest and equity of
redemption in said Property, no assignee of Assignor's interest in said leases
shall be liable to account to Assignor for any rents, income, revenue, issues or
profits thereafter accruing.
8. TERMINATION OF THIS AGREEMENT.
Upon payment in full of all the indebtedness secured by the Contingent
Mortgage, as evidenced by a recorded satisfaction or release of Contingent
Mortgage, as well as any sums which may be payable hereunder, this Assignment
shall become and be void and of no effect and, in that event, upon the request
of Assignor, Assignee covenants to execute and deliver to Assignor instruments
effective to evidence the termination of this Assignment and/or the reassignment
to Assignor of the rights, power and authority granted herein.
9. NO MERGER OF ASSIGNED LEASES.
As against Assignee, at all times during which this Assignment shall be
in effect, there shall be no merger of the Assigned Leases or the leasehold
estate created thereby with the fee estate in the Property by reason of the fact
that the Assigned Leases or any interest therein may be held by or for the
account of any person, firm or corporation which may be or become the owner of
said fee estate, unless Assignee shall consent in writing to said merger.
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<PAGE>
10. NOTICE.
Any notice, demand, request or other communication given hereunder or in
connection herewith shall be given in accordance with the Loan Agreement.
11. MISCELLANEOUS PROVISIONS.
11.1 Whenever the context so requires, reference herein to the
neuter gender shall include the masculine and/or feminine gender, and the
singular number shall include the plural.
11.2 All of the provisions of this Assignment shall be deemed and
construed to be "conditions" and "covenants" as though the words specifically
expressing or importing covenants and conditions were used in each separate
provision hereof.
11.3 This Assignment is being delivered and is intended to be
performed in the STATE OF FLORIDA and shall be construed and enforced in
accordance with and governed by the laws of such state.
11.4 No change, amendment, modification, cancellation or
discharge hereof, or of any part hereof, shall be valid unless Assignee shall
have consented thereto in writing.
11.5 In the event there is any conflict between the terms and
provisions of the Contingent Mortgage or the Loan Agreement and the terms and
provisions of this Assignment, the terms and provisions of the Contingent
Mortgage or Loan Agreement shall prevail.
11.6 The provisions of this instrument shall be binding upon
Assignor and its heirs, personal representatives, successors or permitted
assigns and upon Assignee and its participants, successors or assigns. The word
"Assignor" shall be construed to mean any one or more persons or person or
parties who are holders of the legal title or equity of redemption to or in the
Property.
11.7 The captions of this Assignment are for convenience and
reference only and neither in any way define, limit, or describe the scope or
interest of this Assignment nor in any way affect this Assignment.
11.8 In case any one or more of the provisions contained in this
Assignment are, or shall for any reason be held to be, invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof or thereof, but each shall be
construed as if such invalid, illegal or unenforceable provision had never been
included.
12. WAIVER OF JURY TRIAL. ASSIGNEE AND ASSIGNOR HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED
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<PAGE>
HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, 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 ASSIGNEE ENTERING INTO
THIS AGREEMENT.
IN WITNESS WHEREOF, Assignor and Assignee have caused these presents to
be executed by their duly authorized officer, on the day and year first above
written.
Signed, sealed and delivered
in the presence of: ASSIGNOR:
TRANSEASTERN PEMBROKE
VILLAGES, INC., a Florida corporation
By:
Name:
Title:
(CORPORATE SEAL)
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<PAGE>
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this _____ day of
March, 1996, by , as of TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, on behalf of the corporation. He/she is personally known to me or
has produced a driver's license as identification.
Print or Stamp Name: ________________________
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
[EXHIBITS FOLLOW]
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<PAGE>
This Instrument Was Prepared By:
Andrew S. Robins, Esq.
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
500 East Broward Boulevard, Suite 1400
Ft. Lauderdale, FL 33496
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<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
<PAGE>
This instrument was prepared by:
Andrew S. Robins, Esq.
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
500 East Broward Boulevard, Suite 1400
Ft. Lauderdale, FL 33394
<PAGE>
Record and Return To:
John T. Kinsey, Esq.
Two Executive Court
2300 Corporate Blvd., Suite 112
Boca Raton, FL 33431
COLLATERAL ASSIGNMENT OF
RIGHTS AND AGREEMENTS AFFECTING REAL ESTATE
THIS COLLATERAL ASSIGNMENT OF RIGHTS AND AGREEMENTS
AFFECTING REAL ESTATE (this "ASSIGNMENT"), made this 29th day of March, 1996, by
TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida corporation ("BORROWER"), to
AMRESCO FUNDING CORPORATION, a Delaware corporation ("LENDER").
BACKGROUND OF ASSIGNMENT
1. Lender has agreed to advance up to THREE MILLION AND NO/100 DOLLARS
($3,000,000.00) to Borrower (the "LOAN") pursuant to that certain Loan Agreement
of even date herewith between Borrower and Lender ("LOAN AGREEMENT"). Unless
otherwise specified herein, terms are used herein with the same meanings as
defined in the Loan Agreement.
2. The Loan is evidenced by a promissory note ("NOTE") of Borrower to
Lender in the principal amount of $3,000,000.00 and other collateral documents
described in the Loan Agreement, including the Mortgage encumbering certain real
property (the "PROPERTY") situate and being in Broward County, Florida, and more
fully described on EXHIBIT "A" attached hereto and made part hereof.
3. As an additional condition to granting the Loan and any future
advances thereunder, the Lender has required Borrower to execute and deliver
this Assignment.
NOW, THEREFORE, in consideration of the Loan, and intending to be
legally bound, Borrower does hereby covenant, agree, warrant, represent, assign,
set over and transfer as set forth herein.
SECTION L. ITEMS OF COLLATERAL.
As security for the full, timely and faithful repayment by the Borrower
of the Loan and the performance by the Borrower of all of its obligations under
the Loan Documents, excluding, however, Borrower's obligations to pay the
Contingent Returns, the Borrower hereby assigns, sets over and transfers to the
Lender all of its right, title and interest in and to the following:
<PAGE>
(a) All licenses, permits, approvals, development orders,
certificates and agreements with or from all boards, agencies, departments,
governmental or otherwise, relating directly or indirectly to the ownership,
use, operation and maintenance of the Property, or the construction or
development of improvements on the Property, whether heretofore or hereafter
issued or executed (collectively, the "LICENSES"), said boards, agencies,
departments, governmental or otherwise being hereinafter collectively referred
to as the "GOVERNMENTAL AUTHORITIES."
(b) All contracts (including construction contracts),
subcontracts, agreements, service agreements, warranties, purchase orders,
sanitary and storm sewer service agreements, water and utility service
agreements, engineering and architects agreements, insurance policies (and the
proceeds thereof), agreements with any utility companies or governmental
authorities, all as to which Borrower is a party or beneficiary that have
heretofore been or will hereafter be executed by or on behalf of the Borrower,
or that have been assigned to the Borrower (together with all deposits
associated with the foregoing), in connection with the use, operation and
maintenance of the Property, or the construction or development of improvements
on the Property, including, without limitation (i) any contracts, easements or
rights-of-way permitting the Borrower to cross the property of others in order
to gain access to the Property, and (ii) that certain Contract dated June 24,
1995 between Sarahpark Development Corporation ("SARAHPARK"), as owner, and Ryan
Incorporated Eastern, a Florida corporation, as contractor, for construction of
certain improvements on the Property, which was assigned by Sarahpark to
Borrower by that certain assignment dated March 29, 1996. All of the foregoing
contracts, agreements and other items referred to in this subparagraph (b) are
herein collectively referred to as the "CONTRACTS", and the parties with whom or
to whom such Contracts have been or are given are hereinafter collectively
referred to as the "CONTRACTORS."
(c) All contracts, options and agreements that have heretofore
been or will hereafter be executed by or on behalf of the Borrower in connection
with Borrower's purchase of any unit, lot or portion of the Property
(collectively, the "ACQUISITION AGREEMENTS"), including, without limitation,
those certain contracts and letters of intent described on EXHIBIT "B" attached
hereto, together with any and all earnest money deposits given by Assignor in
connection therewith and all post-closing rights of the Borrower, if any, in and
to such Acquisition Agreements. The parties with whom or to whom the Agreements
have been or are given are hereinafter collectively referred to as the
"SELLERS."
(d) All contracts and agreements that have heretofore been or
will hereafter be executed by or on behalf of the Borrower in connection with
Borrower's sale or lease of any unit, lot or portion of the Property
(collectively, the "CONVEYANCE AGREEMENTS"), including, without limitation,
those certain contracts and letters of intent described on EXHIBIT "C" attached
hereto, together with all earnest money deposits paid to the Borrower
thereunder, together with all proceeds of such Conveyance Agreements and post
closing rights, including, without limitation, the right to payments,
adjustments, refunds or similar amounts paid to or for the benefit of the
Borrower or its affiliates in connection with the sale of portions of the
Property. The parties with whom or to whom the Agreements have been or are given
are hereinafter collectively referred to as the "PURCHASERS AND LESSEES."
2
<PAGE>
(e) All plans, specifications, certifications, studies, surveys,
architectural and engineering drawings or sketches, soil boring tests,
environmental audits, site development criteria, consultant's reports and any
other information for or otherwise related to the construction of the
Improvements, whether now or hereafter prepared (collectively referred to as the
"DEVELOPMENT INFORMATION").
The items described in subsections (a), (b), (c), (d) and (e) above
shall hereinafter be collectively referred to as the "ADDITIONAL COLLATERAL."
SECTION 2. BORROWER'S AFFIRMATIVE COVENANTS.
(a) The Borrower covenants and agrees that it shall faithfully
observe and perform all of the obligations and agreements imposed upon the
Borrower under the Additional Collateral.
(b) The Borrower shall, upon request of the Lender, from time to
time, furnish the Lender a complete list of all Additional Collateral. Further,
if requested, the Borrower shall deliver to the Lender executed or certified
copies of all Additional Collateral and other written agreements, correspondence
and memoranda between the Borrower (and its predecessors in title) and the
Contractors, the Governmental Authorities, the Sellers and the Purchasers and
Lessees, setting forth the contractual and other arrangements between them. To
the extent that the Borrower does not have executed or certified copies of the
foregoing in its possession, the Borrower shall deliver copies of those of the
foregoing which are in its possession, with a certification that, to the best of
its knowledge and belief, they are true and correct copies.
(c) The Borrower shall give prompt notice to Lender of any claim
of default under any of the Additional Collateral given to or by Borrower,
together with a complete copy or statement of any information submitted or
referenced in support of such claim.
(d) The Borrower, at its sole cost and expense, shall enforce the
performance and observance of each and every material covenant and condition of
the Additional Collateral to be performed or observed by any other party to any
of the Additional Collateral, which shall include, without limitation, the
obligation to appear in and defend any action related to or in any manner
connected with the Additional Collateral.
(e) The Borrower shall not, without the prior written consent of
Lender, which may be given in Lender's sole and absolute discretion:
(i) modify any of the material terms of the Additional
Collateral; or
(ii) waive or release any person from the observance or
performance of any material obligation to be
performed under the terms of the Additional
Collateral or from liability on account of any
warranty given by them.
3
<PAGE>
Record and Return To:
John T. Kinsey, Esq.
Two Executive Court
2300 Corporate Blvd., Suite 112
Boca Raton, FL 33431
COLLATERAL ASSIGNMENT OF
RIGHTS AND AGREEMENTS AFFECTING REAL ESTATE
(CONTINGENT RETURNS)
THIS COLLATERAL ASSIGNMENT OF RIGHTS AND AGREEMENTS
AFFECTING REAL ESTATE (this "ASSIGNMENT"), made this 29th day of March, 1996, by
TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida corporation ("BORROWER"), to
AMRESCO FUNDING CORPORATION, a Delaware corporation ("LENDER").
BACKGROUND OF ASSIGNMENT
1. Lender has agreed to advance up to THREE MILLION AND NO/100 DOLLARS
($3,000,000.00) to Borrower (the "LOAN") pursuant to that certain Loan Agreement
of even date herewith between Borrower and Lender ("LOAN AGREEMENT"). Unless
otherwise specified herein, terms are used herein with the same meanings as
defined in the Loan Agreement.
2. Under the Loan Agreement, the Borrower is obligated to pay Contingent
Returns pursuant to the terms thereof. Borrower's obligation to the the
Contingent Returns is secured by, among other things, the Contingent Mortgage
encumbering certain real property (the "PROPERTY") situate and being in Broward
County, Florida, and more fully described on EXHIBIT "A" attached hereto and
made part hereof.
3. As an additional condition to granting the Loan and any future
advances thereunder, the Lender has required Borrower to execute and deliver
this Assignment.
NOW, THEREFORE, in consideration of the Loan, and intending to be
legally bound, Borrower does hereby covenant, agree, warrant, represent, assign,
set over and transfer as set forth herein.
SECTION L. ITEMS OF COLLATERAL.
<PAGE>
As security for the full, timely and faithful repayment by the Borrower
of its oblligation to pay the Contingent Returns under the terms of the Loan
Agreement, the Borrower hereby assigns, sets over and transfers to the Lender
all of its right, title and interest in and to the following:
(a) All licenses, permits, approvals, development orders,
certificates and agreements with or from all boards, agencies, departments,
governmental or otherwise, relating directly or indirectly to the ownership,
use, operation and maintenance of the Property, or the construction or
development of improvements on the Property, whether heretofore or hereafter
issued or executed (collectively, the "LICENSES"), said boards, agencies,
departments, governmental or otherwise being hereinafter collectively referred
to as the "GOVERNMENTAL AUTHORITIES."
(b) All contracts (including construction contracts),
subcontracts, agreements, service agreements, warranties, purchase orders,
sanitary and storm sewer service agreements, water and utility service
agreements, engineering and architects agreements, insurance policies (and the
proceeds thereof), agreements with any utility companies or governmental
authorities, all as to which Borrower is a party or beneficiary that have
heretofore been or will hereafter be executed by or on behalf of the Borrower,
or that have been assigned to the Borrower (together with all deposits
associated with the foregoing), in connection with the use, operation and
maintenance of the Property, or the construction or development of improvements
on the Property, including, without limitation (i) any contracts, easements or
rights-of-way permitting the Borrower to cross the property of others in order
to gain access to the Property, and (ii) that certain Contract dated June 24,
1995 between Sarahpark Development Corporation ("SARAHPARK"), as owner, and Ryan
Incorporated Eastern, a Florida corporation, as contractor, for construction of
certain improvements on the Property, which was assigned by Sarahpark to
Borrower by that certain assignment dated March 29, 1996. All of the foregoing
contracts, agreements and other items referred to in this subparagraph (b) are
herein collectively referred to as the "CONTRACTS", and the parties with whom or
to whom such Contracts have been or are given are hereinafter collectively
referred to as the "CONTRACTORS."
(c) All contracts, options and agreements that have heretofore
been or will hereafter be executed by or on behalf of the Borrower in connection
with Borrower's purchase of any unit, lot or portion of the Property
(collectively, the "ACQUISITION AGREEMENTS"), including, without limitation,
those certain contracts and letters of intent described on EXHIBIT "B" attached
hereto, together with any and all earnest money deposits given by Assignor in
connection therewith and all post-closing rights of the Borrower, if any, in and
to such Acquisition Agreements. The parties with whom or to whom the Agreements
have been or are given are hereinafter collectively referred to as the
"SELLERS."
(d) All contracts and agreements that have heretofore been or
will hereafter be executed by or on behalf of the Borrower in connection with
Borrower's sale or lease of any unit, lot or portion of the Property
(collectively, the "CONVEYANCE AGREEMENTS"), including, without limitation,
those certain contracts and letters of intent described on EXHIBIT "C" attached
hereto, together with all earnest money deposits paid to the Borrower
thereunder, together with all proceeds of such Conveyance Agreements and post
closing rights, including, without limitation, the right to
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payments, adjustments, refunds or similar amounts paid to or for the benefit of
the Borrower or its affiliates in connection with the sale of portions of the
Property. The parties with whom or to whom the Agreements have been or are given
are hereinafter collectively referred to as the "PURCHASERS AND LESSEES."
(e) All plans, specifications, certifications, studies, surveys,
architectural and engineering drawings or sketches, soil boring tests,
environmental audits, site development criteria, consultant's reports and any
other information for or otherwise related to the construction of the
Improvements, whether now or hereafter prepared (collectively referred to as the
"DEVELOPMENT INFORMATION").
The items described in subsections (a), (b), (c), (d) and (e) above
shall hereinafter be collectively referred to as the "ADDITIONAL COLLATERAL."
SECTION 2. BORROWER'S AFFIRMATIVE COVENANTS.
(a) The Borrower covenants and agrees that it shall faithfully
observe and perform all of the obligations and agreements imposed upon the
Borrower under the Additional Collateral.
(b) The Borrower shall, upon request of the Lender, from time to
time, furnish the Lender a complete list of all Additional Collateral. Further,
if requested, the Borrower shall deliver to the Lender executed or certified
copies of all Additional Collateral and other written agreements, correspondence
and memoranda between the Borrower (and its predecessors in title) and the
Contractors, the Governmental Authorities, the Sellers and the Purchasers and
Lessees, setting forth the contractual and other arrangements between them. To
the extent that the Borrower does not have executed or certified copies of the
foregoing in its possession, the Borrower shall deliver copies of those of the
foregoing which are in its possession, with a certification that, to the best of
its knowledge and belief, they are true and correct copies.
(c) The Borrower shall give prompt notice to Lender of any claim
of default under any of the Additional Collateral given to or by Borrower,
together with a complete copy or statement of any information submitted or
referenced in support of such claim.
(d) The Borrower, at its sole cost and expense, shall enforce the
performance and observance of each and every material covenant and condition of
the Additional Collateral to be performed or observed by any other party to any
of the Additional Collateral, which shall include, without limitation, the
obligation to appear in and defend any action related to or in any manner
connected with the Additional Collateral.
(e) The Borrower shall not, without the prior written consent of
Lender, which may be given in Lender's sole and absolute discretion:
(i) modify any of the material terms of the
Additional Collateral; or
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<PAGE>
(ii) waive or release any person from the observance
or performance of any material obligation to be
performed under the terms of the Additional
Collateral or from liability on account of any
warranty given by them.
SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants:
(a) That it has the right to execute and deliver this Assignment;
(b) That all Additional Collateral is in full force and effect on
the date hereof, subject to no defenses, set-offs or counterclaims whatsoever;
(c) That there exists no event, condition or occurrence that
constitutes, or which with notice and/or the passage of time would constitute, a
breach of or default under any term or condition of any of the Additional
Collateral;
(d) That it shall not do any act which would destroy or impair
the security of the Lender under this Assignment;
(e) That it has not otherwise pledged or assigned any of its
rights under the Additional Collateral to any other person or entity, except
Chase Federal as permitted under the Loan Agreement;
(f) That it has not done or omitted to do any acts so as to be
estopped from exercising any of its rights under any of the Additional
Collateral;
(g) Borrower is not prohibited under any agreement with any other
person or under any judgment or decree from the execution and delivery of this
Assignment or the performance of each and every covenant of Borrower hereunder
or in the Additional Collateral; and
(h) No action has been brought or threatened that would in any
way prohibit or impair the execution and delivery of this Assignment or the
performance of each and every covenant of Borrower hereunder or under the
Additional Collateral.
SECTION 4. RIGHTS PRIOR TO AN EVENT OF DEFAULT.
Until the occurrence of an Event of Default under the Loan Documents,
the Borrower may retain, use and enjoy the benefits of the Additional
Collateral.
SECTION 5. REMEDIES FOR DEFAULT.
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<PAGE>
Upon the occurrence of an Event of Default, the Lender shall have the
following remedies:
(a) The Lender may elect to exercise any and all of the
Borrower's rights and remedies under the Additional Collateral, without any
interference or objection from the Borrower, and the Borrower shall cooperate in
causing the Contractors to comply with all the terms and conditions of the
Contracts.
(b) The Lender may enforce this Assignment by notifying the
Borrower by registered or certified mail sent in accordance with the notice
provision of the Loan Agreement. The affidavit or written statement of an
officer, agent or attorney of the Lender stating that there has been an Event of
Default shall constitute conclusive evidence thereof, and any of the
Governmental Authorities, the Contractors, the Sellers or the Purchasers and
Lessees or any other person is authorized and directed to rely thereon.
(c) If and to the extent permitted by law and the terms of the
Additional Collateral, the Lender may, with or without entry upon the Property,
at its option, take over and enjoy the benefits of all or part of the Additional
Collateral (including, without limitation, taking possession of the Development
Information), exercise the Borrower's rights under the Additional Collateral
(including, without limitation, taking possession of the Development
Information), and perform all acts in the same manner and to the same extent as
the Borrower might do. In connection with any and all of the foregoing powers,
and without limiting the same, the Lender may effect new Contracts, Licenses,
Acquisition Agreements and Conveyance Agreements, cancel or surrender existing
Contracts, Licenses, Acquisition Agreements or Conveyance Agreements, alter and
amend the terms of and renew existing Contracts, Licenses, Acquisition
Agreements and Conveyance Agreements, and make concessions to the Governmental
Authorities, the Contractors, the Sellers and the Purchasers and Lessees. The
Borrower hereby releases any and all claims that it has or might have against
the Lender arising out of such performance by the Lender.
(d) The Lender may do and perform all other acts that Lender may
deem necessary or proper, in its sole and absolute discretion, to protect its
security, including, without limitation, the Additional Collateral.
SECTION 6. MISCELLANEOUS.
(a) Borrower hereby constitutes the Lender as its
attorney-in-fact to take such actions and execute such documents as Lender may
deem appropriate in the exercise of the rights and remedies of Lender granted
herein. The powers herein granted shall include, but shall not be limited to,
the power to sue on or under the Additional Collateral, in the name of Borrower
or Lender or both. The power of attorney granted hereby shall be and is
irrevocable and coupled with an interest and shall terminate only upon the
payment of all sums due Lender by Borrower. Borrower shall indemnity and hold
harmless Lender from and against all losses, costs, damages, fees and expenses
whatsoever associated with the exercise of this power of attorney (including all
attorneys' fees, paraprofessional fees and disbursements through all appellate
levels) and shall release Lender
5
<PAGE>
from all liability whatsoever for the exercise of the foregoing power of
attorney and all actions taken pursuant thereto.
(b) The Lender will not be deemed in any manner to have assumed
any of the obligations under the Additional Collateral, nor shall the Lender be
liable to the Governmental Authorities, the Contractors, the Sellers or the
Purchasers and Lessees by reason of any default by any party under the Licenses,
Contracts, Acquisition Agreements or Conveyance Agreements. The Borrower agrees
to indemnify and to hold the Lender harmless of and from any and all liability,
loss or damage that it may or might incur by reason of any claims or demands
against it based on its alleged assumption of the Borrower's duty and obligation
to perform and discharge the terms, covenants and agreements of the Additional
Collateral.
(c) All of the foregoing powers herein granted to the Lender
shall be liberally construed. The Lender need not expend its own funds in the
exercise of such powers, but if it does, such amounts shall be considered as
advances for and on behalf of the Borrower secured by this Assignment and also
evidenced and secured by the Loan Agreement, Contingent Mortgage and certain
other Loan Documents. Any amounts so advanced shall bear interest at the then
current rate prescribed in the Loan Agreement.
(d) Nothing herein contained shall be construed as making the
Lender a mortgagee in possession, or as constituting a waiver or suspension by
the Lender of its right to enforce payment of Borrower's obligation to pay the
Contingent Returns under the terms of the Loan Agreement. The Lender is not the
agent, partner, or joint venturer of the Borrower or of any of the Contractors,
the Governmental Authorities, the Sellers or the Purchasers and Lessees.
(e) This Assignment may be enforced from time to time by the
Lender at its discretion, with or without order of any court and with or without
appointment of a receiver, as the Lender shall determine. The Lender may also at
any time cease to enforce this Assignment. Any failure on the part of the Lender
promptly to exercise any option hereby given or reserved shall not prevent the
exercise of any such option at any time thereafter. The Lender may pursue and
enforce any remedy or remedies accorded it herein independently of, in
conjunction or concurrently with, or subsequent to its pursuit of enforcement of
any remedy or remedies that it may have under the applicable Loan Documents.
(f) When the context so requires, the singular shall include the
plural and conversely, and use of any gender shall include all genders.
SECTION 7. WAIVER OF JURY TRIAL.
THE PARTIES HERETO DO HEREBY MUTUALLY AND WILLINGLY WAIVE THE RIGHT TO A
TRIAL BY JURY OF ANY AND ALL CLAIMS MADE BETWEEN THEM WHETHER NOW EXISTING OR
ARISING IN THE FUTURE, INCLUDING WITHOUT LIMITATION, ANY AND ALL CLAIMS,
DEFENSES, COUNTERCLAIMS,
6
<PAGE>
CROSSCLAIMS, THIRD PARTY CLAIMS AND INTERVENOR'S CLAIMS WHETHER ARISING FROM OR
RELATED TO THE NEGOTIATION, EXECUTION AND PERFORMANCE OF THE TRANSACTIONS TO
WHICH THIS DOCUMENT RELATES.
IN WITNESS WHEREOF, the Borrower has caused this Assignment to be duly
executed on the date first above written.
Signed, sealed and delivered
in the presence of: ASSIGNOR:
TRANSEASTERN PEMBROKE
VILLAGES, INC., a Florida corporation
By:
Name:
Title:
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this _____
day of March, 1996, by________________ , as___________________________ of
TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida corporation, on behalf of the
corporation. He/she is personally known to me or has produced a driver's license
as identification.
Print or Stamp Name: ________________________
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
7
<PAGE>
EXHIBIT "A"
[LEGAL DESCRIPTION OF THE PROPERTY]
8
<PAGE>
EXHIBIT "B"
1. Agreement of Purchase and Sale dated August 14, 1995, as
amended by that certain Amendment to Agreement of Purchase and Sale dated
December 13, 1995, by and between SARAHPARK DEVELOPMENT CORPORATION, a Texas
corporation, as Seller, and TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a
Florida corporation, as Buyer, as assigned by Buyer to Borrower by virtue of
that Assignment dated as of March 29, 1996.
2. Option Agreement dated August 14, 1995, as amended by that
certain Amendment to Option Agreement dated December 13, 1995, by and between
SARAHPARK DEVELOPMENT CORPORATION, a Texas corporation, as Seller, and
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation, as Buyer,
as assigned by Buyer to Borrower by virtue of that Assignment dated as of March
29, 1996.
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<PAGE>
EXHIBIT "C"
3. Agreement of Purchase and Sale, as amended by that certain
First Amendment to Agreement of Purchase and Sale, by and between TRANSEASTERN
PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation, as Seller, and HANOVER
P.H. LIMITED PARTNERSHIP, a Texas limited partnership, as Buyer, as assigned by
Seller to Borrower by virtue of that Assignment dated as of March 29, 1996.
4. Letter of Intent dated September 14, 1995 by and between
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation, as
Seller, and TRAMMEL CROW COMPANY, as Buyer, as assigned by Seller to Borrower by
virtue of that Assignment dated as of March 29, 1996.
5. Agreement of Purchase and Sale, as amended by that certain
First Amendment to Agreement of Purchase and Sale, by and between TRANSEASTERN
PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation, as Seller, and
SAPPHIRE PROPERTIES, a Texas general partnership, as Buyer, as assigned by
Seller to Borrower by virtue of that Assignment dated as of March 29, 1996.
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<PAGE>
This instrument was prepared by:
Andrew S. Robins, Esq.
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
500 East Broward Boulevard, Suite 1400
Ft. Lauderdale, FL 33394
<PAGE>
GUARANTY
Dated as of March 29, 1996
DEFINITIONS:
In this Guaranty (this "GUARANTY"), the following terms shall have the
following indicated meanings:
1. BORROWER: TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida corporation
2. LENDER: AMRESCO FUNDING CORPORATION, a Delaware corporation
3. GUARANTORS: collectively, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA,
INC., a Florida corporation ("TRANSEASTERN"), ARTHUR FALCONE, EDWARD FALCONE,
and PHILIP CUCCI, jointly and severally.
4. OBLIGATIONS: All indebtedness, liabilities, covenants, promises,
agreements, terms, conditions and other obligations of every nature whatsoever
of Borrower to Lender and all renewals, modifications and extensions thereof
howsoever, evidenced, whether now existing or hereafter created or arising,
direct or indirect, absolute or contingent, joint or several, liquidated or
unliquidated, matured or unmatured, and howsoever now or hereafter owned, held
or acquired by Lender and arising out of (a) that certain promissory note
executed by Borrower to Lender of even date herewith in the original principal
amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00); (b) that certain
loan agreement executed by Borrower and Lender of even date herewith (the "LOAN
AGREEMENT" - unless otherwise defined herein, all capitalized terms used herein
shall have the meanings assigned to the same in the Loan Agreement); and (c) all
other Loan Documents. The foregoing shall be deemed to include, without
limitation: (i) all principal and interest (including, without limitation, all
interest accruing after a petition is filed in bankruptcy or similar
proceedings, notwithstanding that Borrower's obligation to pay such interest may
have ceased to exist by operation of law) and other charges and payments due
under the Loan Documents, including, without limitation the Contingent Returns
if they become payable pursuant to the Loan Documents; (ii) all costs of
collection, including reasonable attorneys' fees, paralegals' fees and legal
assistants' fees (whether incurred with collection, trial, appeal, bankruptcy
proceedings or otherwise notwithstanding that Borrower's obligation to pay such
fees may have ceased to exist by operation of law); (iii) all monies paid by
Lender on account of taxes, assessments, wages, insurance, or to any other
person as a result of this Guaranty or arising out of or connected with the
loans or advances made to Borrower; (iv) all documentary stamp tax and
intangible tax (including interest and penalties, if any) determined to be due
in connection with any evidence of said indebtedness, obligations and
liabilities; and (v) all other amounts which Borrower is obligated to pay Lender
under any of the Loan Documents.
CONSIDERATION:
As a material inducement to Lender to extend credit to Borrower pursuant
to the Loan Documents and because the Guarantors will benefit from any credit
extended to Borrower, the Guarantors make this Guaranty. In connection
therewith, the Guarantors covenant that Transeastern is the sole shareholder of
Borrower and Arthur Falcone, Edward Falcone and Philip Cucci are the sole
shareholders, jointly with their spouses, of at least 80% of the voting (I.E.,
common) stock of Traneastern and, accordingly, the Guarantors will derive a
substantial benefit from the Loan.
TERMS, COVENANTS AND CONDITIONS:
1. NATURE AND SCOPE OF GUARANTY. Subject to the provisions of Section 10
of this Guaranty:
1.1 The Guarantors, jointly and severally, irrevocably, absolutely and
unconditionally guarantee to Lender, the due and punctual payment and
performance of the Obligations.
1.2 This Guaranty is an absolute and unconditional guaranty of payment
and performance and not one of collection and all Obligations guaranteed hereby
shall be conclusively presumed to have been created in reliance hereon.
1.3 Guarantors will make all payments hereunder in lawful money of the
United States of America in immediately available funds without set-off or
counterclaim.
1.4 Guarantors' liability hereunder shall remain unchanged irrespective
of any invalidity, illegality or unenforceability of or any defense (whether
arising by reason of disability, dissolution or liquidation of Borrower, or lack
of corporate or partnership power or authority of Borrower, or claims that any
interest to be paid to Lender in connection with the Loan Documents, exceeds the
applicable usury threshold or otherwise) to the Obligations, the Loan Documents
or any portion thereof, or of any security for the Obligations, or any portion
thereof, it being understood and agreed that each Guarantor shall be and remain
fully bound hereunder regardless of whether Borrower shall be found not liable
on the Obligations or any other guarantor (including a Guarantor) be relieved or
released from liability for any reason whatsoever.
1.5 In case of the death, incompetency, disability, dissolution,
liquidation or insolvency (howsoever evidenced) of Borrower, or in case any
bankruptcy, reorganization, debt arrangement, adjustment, composition, or other
proceeding under any bankruptcy or insolvency law, or any dissolution,
liquidation or receivership proceeding is instituted by or against Borrower, or
Borrower admits in writing its inability to pay its debts as they mature, all
Obligations then existing shall at the option of Lender, without notice to
anyone, immediately become due and payable by the Guarantors.
1.6 Guarantors acknowledge that Lender has no obligations or
duties to Guarantors under this Guaranty.
2. DISCHARGE OF GUARANTORS. Guarantors shall be discharged from
liability hereunder only upon the full payment and performance of the
Obligations; provided, however, that if any sums paid to and applied by Lender
toward the Obligations are thereafter required to be repaid to Borrower or to
any affiliate of Borrower, or to any trustee, receiver or other person, by
reason of the application of the Bankruptcy Code, the Uniform Fraudulent
Transfer Act or any other law relating to creditors' rights generally, then this
Guaranty shall be reinstated, AB INITIO, as if such portion of the Obligations
had never been paid.
3. CONSENT TO AGREEMENTS MADE BY BORROWER. Guarantors consent, without
notice to Guarantors, to all terms and agreements set forth in the Loan
Documents and all other terms and agreements hereafter made by Borrower with
Lender insofar as same may affect the Obligations.
4. CONSENT TO LENDER'S ACTIONS OR INACTIONS REGARDING BORROWER, THE
GUARANTORS, AND THE COLLATERAL. Guarantors consent that Lender may at any time
and from time to time, before or after any default by Borrower, with or without
further notice to or consent from Guarantors:
4.1 Either with or without consideration to Borrower, any guarantor
(including any of the Guarantors), pledgor, or grantor of any Collateral,
exchange, release, surrender (in whole or in part), or fail to protect or to
preserve the value of any Collateral now or hereafter held as security for the
Obligations, or waive, release, or subordinate any lien or security interest (in
whole or in part) in or on any such Collateral;
4.2 Waive or delay the exercise of any of its rights or remedies against
Borrower or any other person or entity, including, without limitation, any
guarantor (including any Guarantor); notwithstanding any waiver or delay, Lender
shall not be precluded from further exercise of any of its rights, powers or
privileges expressly provided for herein or otherwise available, it being
understood that all such rights and remedies are cumulative;
4.3 Waive or extend the time of Borrower's performance of any and all
terms, provisions and conditions set forth in the Loan Documents or in any other
instrument or agreement evidencing or relating to the Obligations;
4.4 Release Borrower or any other person or entity, including, without
limitation, any guarantor (including any Guarantor) from all or any portion of
the Obligations;
4.5 Proceed against any or all of the Guarantors without first
proceeding against or joining Borrower or any guarantor (including the other
Guarantors) or any endorser of the Note or other agreement evidencing the
Obligations, or any property securing the payment or performance of the
Obligations, including, without limitation, the Loan Documents;
4.6 Renew, extend or modify the terms of the Obligations or any
instrument or agreement evidencing or relating to the Obligations;
4.7 Apply payments by Borrower, the Guarantors, or any other person or
entity to the reduction of the Obligations in such manner and in such amounts
and at such time or times and in such order and priority as Lender may see fit;
and
4.8 Generally deal with Borrower or any of the security for the
Obligations or other person or party as Lender may see fit.
The Guarantors shall remain bound under this Guaranty notwithstanding any such
exchange, release, surrender, subordination, waiver (whether or not such waiver
is oral or written), delay, proceeding, renewal, extension, modification,
application, act or failure to act, or other dealing described in Subsections
4.1 through 4.8, inclusive, above even though done without notice to or consent
from the Guarantors.
5. WAIVER OF RIGHTS.
5.1 Guarantors shall not be entitled to any abatement, deferment,
suspension, reduction, set-off, defense or counterclaim in respect of the
Obligations.
5.2 Guarantors expressly waive all rights Guarantors may have now or in
the future under any statute, or at common law, or at law or in equity, or
otherwise, including, without limitation, any rights Guarantors may have to
compel Lender to proceed in respect of the Obligations against Borrower or any
other party or against any security for the payment of the Obligations before or
while proceeding against, or as a condition to proceeding against, Guarantors.
Guarantors agree that any notice or direction given at any time to Lender which
is inconsistent with the waiver in the immediate preceding sentence shall be
void and may be ignored by Lender, and, in addition, may not be pleaded or
introduced as evidence in any litigation relating to this Guaranty for the
reason that such pleading or introduction would be at variance with the written
terms of this Guaranty, unless Lender has specifically agreed otherwise by a
written document.
5.3 It is agreed between Guarantors and Lender that the foregoing
waivers contained in this Section 5 are of the essence of the making of the Loan
and that, but for this Guaranty and such waivers, Lender would decline to agree
to the Loan.
5.4 In addition to the other waivers by Guarantors contained herein,
Guarantors waive and agree that Guarantors will not at any time insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
and all appraisal, valuation, stay, extension, marshalling-of-assets or
redemption laws, or right of homestead or exemption, whether now or at any time
hereafter in force, which may delay, prevent or otherwise affect the performance
by Guarantors or Guarantors' obligations under, or the enforcement by Lender of
this Guaranty.
5.5 Guarantors hereby waive diligence, notice of dishonor, presentment
and demand (whether for non-payment or protest or of acceptance, maturity,
extension of time, change in nature or form of the Obligations, acceptance of
further security, release of security, composition or agreement arrived at as to
the amount of or the terms of the Obligations, notice of adverse change in
Borrower's financial condition, any default by Borrower or any pledgor, grantor
of security, or any guarantor (including the Guarantors) and any other fact
which might materially increase the risk to Guarantors) and any other notices to
which the Guarantors may otherwise be entitled with respect to any of the
Obligations, and all other demands whatsoever, and waive the benefit of all
provisions of law which are or might be in conflict with the terms of this
Guaranty, except to the extent that this Guaranty may otherwise specify the
giving of notice.
6. SUBROGATION Guarantors shall not have any right of contribution,
subrogation, reimbursement or indemnity whatsoever against Borrower, nor any
right of recourse to security for the Obligations or guaranty obligations of
Borrower to Lender, all of which shall be deemed to be waived by Guarantors.
Neither Guarantors nor Borrower shall be deemed a creditor of the other with
respect to the Obligations or to any other obligations arising hereunder, as
said term "creditor" is defined pursuant to Title 11 of the United States Code,
as amended.
(a) If, notwithstanding the foregoing, Guarantors, by payment or
otherwise, become subrogated to all or any of the rights of Lender under any of
the Loan Documents or any other documentation underlying or securing the
Obligations and the foregoing waiver is not effective under applicable law, the
rights of Lender to which Guarantors shall be subrogated shall be accepted by
Guarantors "as is" and without any representation or warranty of any kind by
Lender, expressed or implied, with respect to the legality, value, validity or
enforceability of any of such rights, or the existence, availability, value,
merchantability or fitness for any particular purpose of any Collateral.
(b) If Lender may under any applicable law proceed to realize its
benefits under any of the Loan Documents giving Lender a lien upon or security
interest in the Collateral whether owned by Borrower or by any other person,
either by judicial foreclosure or by non-judicial sale or enforcement, Lender
may, at its sole option, determine which of its remedies or rights it may pursue
without affecting any of its rights and remedies under this Guaranty. If in the
exercise of any of its rights and remedies Lender shall forfeit any of its
rights or remedies, whether because of any applicable laws pertaining to
"election of remedies" or anti-deficiency statute or law or the like, Guarantors
hereby consent to such action by Lender and waives any claim based upon such
action, even if such action by Lender shall result in a full or partial loss of
any rights of subrogation which the Guarantors might otherwise have had but for
such action by Lender. Any election of remedies or anti-deficiency statute or
law which results in the denial or impairment of Lender's right to seek a
deficiency judgment against Borrower, including, without limitation, the
exercise of Lender's rights under the Pledge Agreement to retain the Stock under
Section 679.505(2) of the Florida Statutes in effect on the date hereof (or any
successor statutory section), shall not impair Guarantors' obligation to pay
such deficiency. In the event Lender shall bid in at any foreclosure sale or at
any private sale permitted by law or by the Loan Documents for the Mortgaged
Property or any of the Collateral, including the Stock, Lender may bid all or
less than the amount of the indebtedness owing by Borrower to Lender and the
amount of such bid need not be paid by Lender but will be credited against the
Obligations. The amount of the successful bid at any such sale, whether Lender
or any other party is the successful bidder, shall be conclusively deemed to be
the fair market value of the Collateral notwithstanding that any present or
future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Lender might otherwise be entitled under
this Guaranty.
7. SUBORDINATION.
7.1 All rights and claims of Guarantors (collectively the "GUARANTOR
CLAIMS") against Borrower or any of Borrower's property now or hereafter
existing shall be subordinate and subject in right of payment to the prior
payment in full of and the performance of all of the Obligations.
Notwithstanding the foregoing, if an Event of Default occurs and Lender retains
or otherwise disposes of the Stock in accordance with the Pledge Agreement, then
as and from the date that the Stock is retained or otherwise disposed of by
Lender, Guarantors shall be deemed to have waived all of their Guarantor Claims.
7.2 Until the Obligations have been paid and performed in full and
Guarantors shall have performed all of Guarantors' obligations hereunder,
Guarantors shall not receive or collect, directly or indirectly, from Borrower
or any other party any payment upon the Guarantor Claims, nor seek to realize
upon any collateral securing such Guarantor Claims. Notwithstanding the
foregoing, if Guarantors should receive any such payment, Guarantors agree to
hold same in trust for Lender and agrees that Guarantors shall have absolutely
no rights in or to or dominion over such payments except to pay them promptly to
Lender, and Guarantors hereby covenant to do so; provided, however, that
Guarantors are not obligated to repay amounts representing Borrower's First
Property Returns which are received by Guarantors prior to the occurrence of an
Event of Default.
8. GRANT. To secure the prompt payment and performance of the
Obligations, the Guarantors grant to Lender a continuing first lien security
interest in the Guarantor Claims and all proceeds thereof. Guarantors agree that
Lender shall have the rights and remedies of a secured party under the Uniform
Commercial Code-Secured Transactions as adopted by the State of Florida with
respect to all of the Guarantor Claims, including, without limitation, the right
to sell or otherwise dispose of any or all of such property. Lender may, without
further notice to anyone, apply or set off any balances, credits, deposits,
accounts, monies or other indebtedness at any time created by or due from Lender
to the Guarantors against the amounts due hereunder. Any notification of
intended disposition of any property required by law shall be deemed reasonably
and properly given if given at least five (5) calendar days before such
disposition.
9. DEFAULT BY BORROWER. Guarantors shall be deemed to be in default
under the terms of this Guaranty in the event that: (a) Guarantors fail to
provide the financial statements set forth in Section 10 below; (b) any
representation of Guarantors herein proves to be false or materially misleading;
or (c) Guarantors fail to comply with their representations, covenants, and
agreements set forth herein. If any Event of Default or any default which
continues beyond any applicable grace or cure period shall occur under any of
the Loan Documents, including, without limitation, a default under this
Guaranty, and if Lender shall declare the then outstanding principal amount of
the Note and all other amounts due under the Loan Agreement and other Loan
Documents, together with accrued interest, to be immediately due and payable and
if this Guaranty has become enforceable under the provisions of Section 10
thereof, then Guarantors shall, within three (3) days after demand in writing
therefor shall have been made by Lender to Guarantors, pay to Lender the amount
of all outstanding Obligations due and owing Lender. Payment by Guarantors shall
be made to Lender at the address indicated below for the giving of notice to
Lender or at any other address that may be specified in writing from time to
time by Lender.
10. EFFECTIVENESS OF GUARANTY. This Guaranty shall be effective on the
date hereof, provided, however, that Lender shall not proceed to enforce any of
the terms and provisions hereof, unless and until the occurrence of the
following events:
(a) any Collateral shall be transferred which causes an Event of Default
to occur under the Loan Agreement;
(b) an Event of Default occurs under the Loan Agreement as a result of
the breach of the non-competition covenant set forth in Section 9.13 thereof;
(c) any lien or encumbrance, including, without limitation, mechanic=s
liens, shall be placed against any of the Collateral which causes an Event of
Default under the Loan Agreement;
(d) Borrower shall misuse or misapply any funds, including, without
limitation, Loan Proceeds, sales proceeds or other revenues of Borrower,
insurance or condemnation proceeds, deposits or escrowed funds;
(e) Borrower, Guarantors or any other Borrower related parties to the
Loan Documents shall enter into any transactions with affiliates of Borrower or
Guarantors (i.e., entities in which Borrower and/or any Guarantors own,
singularly or in the aggregate, more than a fifteen percent (15%) interest);
(f) Borrower, any or all of the Guarantors or any other Borrower related
parties to the Loan Documents (including, without limitation, any successors of
the foregoing, such as a trustee in Bankruptcy), shall attempt in any manner to
obstruct Lender=s exercise of any of its remedies under the Loan Documents after
an Event of Default has occurred thereunder, provided, however, that Borrower or
any or all of the Guarantors or any other Borrower related party to the Loan
Documents may challenge the existence of a Default or Event of Default, without
causing this Guaranty to become effective under this subsection (f), unless a
court of competent jurisdiction determines that the Default or Event of Default
declared by Lender does in fact exist, in which event such challenge shall be
deemed the occurrence of an event set forth in this subsection (f) and this
Guaranty shall thereupon become effective;
(g) Borrower, any or all of the Guarantors or any other Borrower related
parties to the Loan Documents (including, without limitation, any successors of
the foregoing, such as a trustee in Bankruptcy) shall challenge or assert a
defense to Lender=s rights pursuant to the Loan Documents, including, without
limitation, Lender=s right to any payments provided for in the Loan Documents,
be they payments of principal, interest, Contingent Returns or otherwise;
(h) Lender becomes liable or is otherwise alleged to be liable for any
Environmental Claim that is not cured and/or paid by Borrower in accordance with
the terms of the Environmental Indemnity Agreement and the other Loan Documents;
(i) there shall occur any intentional destruction or waste of the
Improvements or other assets of Borrower;
(j) Borrower shall fail to complete the construction of the Project as a
result of a discrepancy between actual development and construction costs for
the Project being in excess of amounts reflected in the proforma projections for
the same which have been approved by Lender, to the extent that actual costs
exceed those reflected in the projections by an amount in excess of $50,000.00,
in the aggregate (after netting savings against cost increases);
(k) Borrower shall fail to complete the construction of any structure
(as evidenced by the issuance of a certificate of occupancy) upon which
construction has commenced (as defined as pouring a slab) free of any Liens.
(l) if an Event of Default occurs and if so requested by Lender, the
failure of Borrower, Guarantors or any other Borrower related party to the Loan
Documents to facilitate and cooperate with Lender in an uncontested foreclosure
and/or a deed in lieu of foreclosure for all of the real property, and one or
more comparable procedures with respect to all personal property, which stands
as Collateral for the Loan, which shall include, without limitation, Borrower's,
Pledgor's or any other party's objection to Lender retaining the Stock under the
Pledge Agreement in satisfaction of Borrower's obligations under the Loan in
accordance with Section 679.505(2) of the Florida Statutes, in effect on the
date hereof (or any successor statutory section); .
(m) if an Event of Default occurs and if so requested by Lender, the
failure of Borrower, Pledgor or any other Borrower related party to the Loan
Documents to liquidate the Collateral in a manner acceptable to Lender;
(n) fraud of Borrower, any of the Guarantors or any other Borrower
related parties to the Loan Documents;
(o) misrepresentation of Borrower, any of the Guarantors or any other
Borrower related parties to the Loan Documents;
(p) criminal acts of Borrower, any of the Guarantors or any other
Borrower related parties to the Loan Documents; or
(q) Borrower merges or consolidates with any partnership, corporation or
other entity or person, including, without limitation, Transeastern, or acquires
any assets or business from or stock of any partnership, corporation or other
entity or person, including, without limitation, Transeastern, or is otherwise
deemed to be consolidated or merged in any bankruptcy proceedings or otherwise,
or causes an Event of Default to occur under the Loan Agreement as a result of
the breach of Section 9.10 thereof.
11. FINANCIAL STATEMENTS. So long as all or any portion of the
Obligations remains unpaid or unsatisfied, each Guarantor covenants and agrees
that each Guarantor shall deliver to Lender:
11.1 within one hundred twenty (120) days after the end of each fiscal
year of a corporate Guarantor, financial statements of profit and loss for each
such fiscal year and balance sheets as of the end of each such year, in
reasonable detail, and in form and content acceptable to Lender, prepared in
accordance with generally accepted accounting principles consistently applied
and certified by such corporate Guarantor;
11.2 within one hundred twenty (120) days after the end of each calendar
year, then current financial statements of each Guarantor (which shall be
prepared at least annually), certified by each Guarantor and in form and content
satisfactory to Lender and (A) if a corporate Guarantor, prepared in accordance
with generally accepted accounting principles consistently applied, and (B) if
an individual Guarantor, prepared on a present value basis;
11.3 within fifteen (15) days after the same is filed, a copy of the tax
return of each Guarantor; and
11.4 forthwith after the issuance thereof, any other financial
statements of each Guarantor, prepared by an accountant or furnished directly or
indirectly to any other creditor.
12. REPRESENTATIONS AND WARRANTIES.
12.1 Guarantors represent and warrant to Lender that:
(a) Transeastern (A) is duly organized, validly existing and in good
standing under the laws of the state of Florida, (B) has the corporate power and
authority to own its properties and to carry on its business as now being
conducted, (C) is qualified to do business in the State of Florida, (D) is in
compliance with all laws, orders, regulations, authorizations and similar
matters (collectively the "GOVERNMENTAL REQUIREMENTS") of all governmental
authorities, whether federal, state, county, or municipal (collectively the
"GOVERNMENTAL AUTHORITY"), (E) all of its issued and outstanding stock is fully
paid and nonassessable, there are no outstanding rights or options to acquire
any additional stock (except for warrants exercisable by holders of Class A
Preferred Shares of Transeastern for conversion to common stock thereof), and
its stock has not been pledged or encumbered in any manner whatsoever and (F)
has not amended or modified its articles of incorporation or its bylaws except
as previously disclosed in writing to Lender prior to the execution hereof.
(b) The execution, delivery and performance by Guarantors of this
Guaranty, (i) is within the corporate purposes of Transeastern, (ii) has been
duly authorized by all requisite corporate action of Transeastern, (iii) does
not require the approval of any Governmental Authority, and (iv) will not
violate any Governmental Requirement, the articles of incorporation and bylaws
of Transeastern or any indenture, agreement or other instrument to which
Guarantors are a party or by which Guarantors or any of Guarantors' property is
bound, or be in conflict with, result in a breach of or constitute (with due
notice or the lapse of time, or both) a default under any such indenture,
agreement or other instrument, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of Guarantors'
property or assets, except as contemplated by the provisions of this Guaranty.
(c) This Guaranty when executed and delivered by Guarantors will
constitute the legal, valid and binding obligations of Guarantors enforceable in
accordance with the terms hereof.
(d) There are no judgments outstanding against Guarantors and there is
no action, suit, proceeding, or investigation now pending (or to the best of
Guarantors' knowledge after diligent inquiry threatened) against, involving or
affecting any Guarantor or any Guarantor's properties or any part thereof, at
law, in equity or before any Governmental Authority, which will have a material
adverse effect on the Project or the financial condition of the Guarantors.
(e) All balance sheets, statements of profit and loss and other
financial data that have been and will be given to Lender with respect to
Guarantors in accordance with Section 11 hereof, (i) are and will be complete
and correct in all material respects; (ii) do and will accurately present the
financial condition of Guarantors as of the dates, and the results of
Guarantors' operations, for the periods for which the same have been and will be
furnished; and (iii) as to Transeastern, have been and will be prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods covered and to be covered thereby and, as to the
individual Guarantors, have been or will be prepared on a present value basis.
(f) All balance sheets disclose and will disclose all known liabilities,
direct and contingent, as of their respective dates; and there has been no
change in the condition of Guarantors, financial or otherwise, since the date of
the most recent financial statements given to Lender with respect to Guarantors
other than changes in the ordinary course of business, none of which changes has
been materially adverse.
(g) None of the Guarantors are insolvent and will not be rendered
insolvent by the execution, delivery, payment and performance of this Guaranty.
(h) Until the Obligations have been paid and performed in full and
Guarantors shall have performed all of Guarantors' obligations hereunder,
Guarantors shall not, directly or indirectly, sell, convey, or transfer or
permit to be sold, conveyed, or transferred any of Guarantors' assets to any
party or entity to which Guarantors are related or in which Guarantors have an
interest without Lender's prior written consent which may be granted or withheld
in Lender's sole and absolute discretion.
(i) Guarantors represent, warrant and agree that, as of the date of this
Guaranty, Guarantors' obligations under this Guaranty are not subject to any
counterclaims, offsets or defenses against Lender of any kind. Guarantors
further agree that Guarantors' obligations under this Guaranty shall not be
subject to any counterclaims, offsets or defenses against Lender or against
Borrower of any kind which may arise in the future.
12.2 Guarantors acknowledge that Lender has relied upon the Guarantors'
representations, has made no independent investigation of the truth thereof and
is not charged with any knowledge contrary thereto that may have been received
by any officer, director, employee, or shareholder of Lender. Guarantors further
acknowledges that they have not been induced to execute and deliver this
Guaranty as a result of, and is not relying upon, any representations,
warranties, agreements, or conditions, whether express or implied, written or
oral, by Lender or by any officer, director, employee, or shareholder of Lender.
13. MODIFICATION. No agreement unless in writing and signed by an
authorized officer of Lender and no course of dealing between Guarantors and
Lender shall be effective to change or modify or to discharge in whole or in
part this Guaranty. No waiver of any rights or powers of Lender or consent by it
shall be valid unless in writing signed by an authorized officer of Lender and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
14. COST OF ENFORCEMENT. Guarantors agree that, whenever an attorney is
used to obtain payment or performance under or otherwise enforce this Guaranty
or to enforce, declare, or adjudicate any rights or obligations under this
Guaranty, whether by suit or any other manner whatsoever, reasonable attorneys'
fees, paralegals' fees, legal assistants' fees and costs (whether incurred in
collection, litigation, bankruptcy proceedings, appeals, or otherwise) shall be
payable by Guarantors to Lender.
15. SUBMISSION TO JURISDICTION. Guarantors irrevocably and
unconditionally: (a) agree that any suit, action, or other legal proceeding
arising out of or relating to this Guaranty may be brought, at the option of
Lender, in a court of record of the STATE OF FLORIDA IN BROWARD COUNTY, IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA, or in any
other court of competent jurisdiction; (b) consent to the jurisdiction of each
such court in any such suit, action, or proceeding; (c) waive any objection
which it may have to the laying of venue of any such suit, action, or proceeding
in any of such courts; and (d) agree that service of any court paper may be
effected on any Guarantor by mail, addressed and mailed as provided in Section
16 hereof or in such other manner as may be provided under applicable laws or
court rules in said State. Transeastern hereby irrevocably appoints John T.
Kinsey, whose address is Two Executive Court, 2300 Corporate Boulevard, Suite
112, Boca Raton, Florida 33431, as agent for the service of process for the
purposes of any purported controversy or cause of action arising out of this
Guaranty or any related instrument.
16. NOTICE. All notices, demands, requests and other communications, if
any, required under this Guaranty shall be given in accordance with the Loan
Agreement. This Guaranty does not require that Lender give Guarantors any
notice, demand, or request and this Section 16 shall not be construed to create
such a requirement.
17. CONFLICT OF LAW. This Guaranty shall be construed, interpreted,
enforced and governed by and in accordance with the laws of the State of Florida
(excluding the principles thereof governing conflicts of law).
18. CONTINUING GUARANTY. Guarantors agree that this Guaranty is a
continuing guaranty and shall remain in full force and effect until the payment
in full of the Obligations.
19. PERMITTED ASSIGNMENT BY LENDER. Lender may freely assign its rights
and delegate its duties under this Guaranty without notice to or the consent of
Guarantors.
20. FURTHER ASSURANCE. Guarantors agree, upon the written request of
Lender, to execute and deliver to Lender from time to time any additional
instruments or documents reasonably considered necessary by Lender or its
counsel to cause this Guaranty to be, become or remain valid and effective in
accordance with its terms.
21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Guarantors set forth in this Guaranty shall survive for so long as
all or any portion of the Obligations remains unpaid or unsatisfied.
22. NON-WAIVER. The failure of Lender to enforce any right or remedy
hereunder, or promptly to enforce any such right or remedy, shall not constitute
a waiver thereof, nor give rise to any estoppel against Lender, nor excuse
Guarantors from their obligations hereunder. Any waiver of any such right or
remedy must be in writing and signed by Lender. In the event any of the deadline
for the payment of any sums or performance of any obligations hereunder occurs
on a day which is not a Business Day, then such deadline shall be deemed to be
the next occurring Business Day.
23. GENDER AND NUMBER. In this Guaranty, wherever the context so
requires, the use of any gender shall include all other genders, and words in
the singular shall include the plural and the plural shall include the singular.
Where applicable the term "Guarantors" as used herein mean the "Guarantors and
each of them".
24. SUCCESSORS AND ASSIGNS. This Guaranty shall inure to the benefit of
Lender, its successors and assigns, and shall be binding upon the Guarantors and
their respective heirs, personal representatives, successors and assigns.
25. SAVINGS CLAUSE. If any provision or portion of this Guaranty is
declared or found by a court of competent jurisdiction to be unenforceable or
null and void, such provision or portion thereof shall be deemed stricken and
severed from this Guaranty, and the remaining provisions and portions thereof
shall continue in full force and effect.
26. HEADINGS. The captions of Sections of this Guaranty are for
convenient reference only, and shall not affect the construction or
interpretation of any of the terms and provisions set forth in this Guaranty.
27. JOINT AND SEVERAL LIABILITY. The liability of the Guarantors
hereunder shall be joint and several with Borrower and all other guarantors of
the Obligations.
28. WAIVER OF TRIAL BY JURY. LENDER AND GUARANTORS HEREBY KNOWINGLY,
IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS
GUARANTY, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY OR ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS GUARANTY, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER
ACCEPTING THIS GUARANTY FROM GUARANTORS AND FOR GUARANTORS GIVING THIS GUARANTY
TO LENDER.
IN WITNESS WHEREOF, the Guarantors intending to be jointly and severally
legally bound hereby have duly executed and delivered this Guaranty on the 29th
day of March, 1996.
Signed, sealed and delivered
in the presence of:
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC., a Florida corporation
By:
Name:
Title:
ARTHUR FALCONE
EDWARD FALCONE
PHILIP CUCCI
[ACKNOWLEDGMENTS FOLLOW]
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 29th day of March,
1996, by , as
of TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a Florida
corporation, on behalf of the corporation. He/she is personally known to me or
has produced a driver's license as identification.
Print or Stamp Name:
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 29th day of
March, 1996, by ARTHUR FALCONE, an individual. He/she is personally known to me
or has produced a driver's license as identification.
Print or Stamp Name:
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 29th day of
March, 1996, by EDWARD FALCONE, an individual. He/she is personally known to me
or has produced a driver's license as identification.
Print or Stamp Name:
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
STATE OF FLORIDA )
) ss.:
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this 29th day of
March, 1996, by PHILIP CUCCI, an individual. He/she is personally known to me or
has produced a driver's license as identification.
Print or Stamp Name:
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
<PAGE>
PLEDGE AGREEMENT
PLEDGE AGREEMENT (as may be amended, modified, supplemented, waived,
extended or restated from time to time, this "AGREEMENT") dated as of March 29,
1996, between TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC. (the "PLEDGOR") and
AMRESCO FUNDING CORPORATION, a Delaware corporation (the "SECURED PARTY").
WHEREAS, contemporaneously with the execution hereof, Secured Party has
entered into a Loan Agreement of even date herewith (as the terms thereof may
have been or may be amended, supplemented, waived or otherwise modified from
time to time, the "LOAN AGREEMENT") with Transeastern Pembroke Villages, Inc., a
Florida corporation (the "BORROWER"), pursuant to which Lender will lend and
Borrower will borrow the sum of Three Million and No/100 Dollars ($3,000,000.00)
(the "LOAN"), evidenced by a certain Promissory Note of even date herewith (the
"NOTE") executed and delivered by Borrower to Lender; and
WHEREAS, Pledgor will derive substantial benefit, directly and
indirectly, by reason of the Secured Party entering into the Loan Agreement with
the Borrower; and
WHEREAS, to induce the Secured Party to enter into the Loan Agreement
and to extend credit thereunder and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Pledgor has
agreed to grant to the Secured Party a security interest in the Collateral (as
hereinafter defined) as security for the Secured Obligations (as hereinafter
defined in Section 1 below) on the terms set forth below.
NOW, THEREFORE, in consideration of the premises, and other good
and valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the Pledgor and the Secured Party hereby agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Loan
Agreement. The following terms, as used herein, shall have the following
respective meanings:
"AGREEMENT" means this Agreement, including all Schedules,
Annexes and Exhibits hereto.
"COLLATERAL" shall have the meaning assigned to such term in
Section 2.
"CONTRACT" means (i) any agreement (whether executory or
non-executory and whether a Person entitled to rights thereunder is so entitled
directly or as a third-party beneficiary), including an indenture, lease or
license, (ii) any deed or other instrument of conveyance, (iii) any certificate
of incorporation or charter and (iv) any by-law.
"GOVERNMENTAL APPROVAL" means any authorization, consent,
approval, license or exemption of, registration or filing with, or report or
notice to, any Governmental Authority.
Statements, the Loan Agreement, the Other Assignments and the Loan Documents
referred to which are not
<PAGE>
"OTHER PLEDGE AGREEMENT" means that certain Pledge Agreement of
even date herewith between Pledgor and Secured Party securing, among other
things, payment of the Contingent Returns.
"PLEDGED SECURITIES" shall have the meaning assigned to such term
in Section 2.
"PROCEEDS" shall have the meaning assigned to such term under the
Florida Uniform Commercial Code and, in any event, shall include (i) any and all
proceeds of any guarantee, insurance or indemnity payable to the Pledgor from
time to time with respect to any of the Collateral; (ii) any and all payments
(in any form whatsoever) made or due and payable to the Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority); and (iii) any and
all other amounts from time to time paid or payable with respect to or in
connection with any of the Collateral.
"SECURED OBLIGATIONS" shall mean, collectively: (a) the principal
of and interest on (including, without limitation, interest accruing after the
date of any filing by the Borrower of any petition in bankruptcy or the
commencement of any bankruptcy, insolvency or similar proceedings with respect
to the Borrower, whether or not allowed as a claim in such proceeding under
applicable law) the Loan, the Note, and all other indebtedness, liability or
obligation of the Borrower from time to time owing to the Secured Party
(including all commitment and other fees but excluding Borrower's obligations in
respect of the Contingent Returns) under or in respect of the Loan Documents to
which the Borrower is a party; and (b) all obligations of the Pledgor to the
Secured Party under this Agreement.
Unless otherwise defined herein or in the Loan Agreement, or
unless the context otherwise requires, all terms used herein that are defined in
the Florida Uniform Commercial Code shall have the meanings therein stated. The
definitions in this Section 1 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"include," "includes" and "including" as used in this Agreement shall be deemed
in each case to be followed by the phrase "without limitation." References to
Sections, Schedules and Exhibits shall be deemed references to Sections of and
Schedules and Exhibits to this Agreement, unless otherwise specified.
SECTION 2. PLEDGE. As security for the payment and performance in
full of the Secured Obligations, the Pledgor hereby hypothecates, pledges,
assigns, grants, sets over and delivers to the Secured Party, a continuing first
priority security interest in all its right, title and interest in, to and under
the following, whether now owned or hereafter acquired:
(i) the shares of capital stock of the Borrower owned by the
Pledgor on the date hereof, including the shares of such capital stock
listed on Schedule I, and any additional shares of capital stock of the
Borrower (or successors thereto) obtained in the future by the Pledgor,
and, in each case, all certificates representing such shares and, in
each case, all
-2-
<PAGE>
rights, options, warrants, stock or other securities which may hereafter
be received, receivable or distributed in respect of, or exchanged for,
any of the foregoing (all of the foregoing being referred to herein as
the "PLEDGED SECURITIES");
(ii) all other property which may be delivered to and held by
the Secured Party pursuant to the terms hereof of any character
whatsoever into which any of the foregoing may be converted or which may
be substituted for any of the foregoing; and
(iii) subject to the provisions of Section 5, all Proceeds of
the Pledged Securities and of such other property, including all cash,
securities or other property at any time and from time to time acquired,
receivable or otherwise distributed in respect of, or in exchange for,
any of or all such stock or other property (the items referred to in
clauses (i) through (iii) being collectively referred to as the
"COLLATERAL").
TO HAVE AND TO HOLD the Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Secured Party, its successors and assigns, forever; SUBJECT,
HOWEVER, to the terms, covenants and conditions hereinafter set forth.
SECTION 3. DELIVERY OF COLLATERAL. (a) Contemporaneously with the
execution of this Agreement, the Pledgor shall deliver or cause to be delivered
to the Secured Party (i) any and all certificates and other instruments
evidencing the Pledged Securities, along with undated stock powers duly executed
in blank or other instruments of transfer satisfactory to the Secured Party and
endorsed in blank and such other instruments and documents as the Secured Party
may reasonably request to effect the purposes contemplated hereby, (ii) any and
all certificates or other instruments or documents representing any of the
Collateral and (iii) all other property comprising part of the Collateral with
proper instruments of assignment duly executed and such other instruments or
documents as the Secured Party may reasonably request to effect the purposes
contemplated hereby.
(b) If the Pledgor shall become entitled to receive or shall
receive any shares of stock (including, without limitation, shares of Pledged
Securities acquired after the date hereof), options, warrants, rights or other
similar property (including, without limitation, any certificate representing a
stock dividend, or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in connection
with any reorganization of the Borrower) in respect of the Pledged Securities
(whether as an addition to, in substitution of, or in exchange for, such Pledged
Securities or otherwise), the Pledgor agrees:
(i) to accept the same as the agent of the Secured Party;
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(ii) to hold the same in trust on behalf of and for the
benefit of the Secured Party; and
(iii) to deliver any and all certificates or instruments
evidencing the same to the Secured Party on or before the close of
business on the seventh (7th) day following the receipt thereof by the
Pledgor, in the exact form received, with the endorsement in blank of
the Pledgor when necessary and with appropriate undated stock powers
duly executed in blank (with signatures properly guaranteed), to be held
by the Secured Party, subject to the terms of this Agreement, as
additional Collateral.
SECTION 4. REGISTRATION IN NOMINEE NAME. Upon the occurrence of
an Event of Default, the Secured Party shall have the right (in its sole and
absolute discretion and without prior notice to the Pledgor) to transfer to or
to register the Pledged Securities in its own name or the name of its nominee.
SECTION 5. VOTING RIGHTS, ETC. (a) Unless and until an Event of
Default shall have occurred:
(i) The Pledgor shall be entitled to exercise any and all voting
and/or consensual rights and powers accruing to an owner of Pledged
Securities or any part thereof for any purpose not prohibited by the
terms of this Agreement or the Loan Agreement.
(ii) The Secured Party shall execute and deliver to the Pledgor,
or cause to be executed and delivered to the Pledgor, all such proxies,
powers of attorney, and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the voting
and/or consensual rights and powers which it is entitled to exercise
pursuant to subparagraph (i) above.
(iii) The Pledgor shall be entitled to receive, subject to the
provisions of the Loan Agreement and Section 2 hereof, and retain any
and all dividends paid on the Pledged Securities. Except for dividends
that the Pledgor shall be entitled to receive and retain pursuant to the
preceding sentence, all noncash dividends, stock or dividends paid or
payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, instruments, securities, other distributions
in property, return of capital, capital surplus or paid-in surplus or
other distributions made on or in respect of Pledged Securities, whether
paid or payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the outstanding capital
stock of the Borrower or from any bankruptcy or reorganization of the
Borrower or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by the Pledgor, shall not be commingled by
the Pledgor with any of its other funds or property but shall be held
separate and apart therefrom, shall be held in trust for the benefit of
the Secured Party and shall be forthwith
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delivered to the Secured Party in the same form as so received (with any
necessary endorsements).
(b) Upon the occurrence of an Event of Default, if so specified
by the Secured Party in a written notice to the Pledgor, all rights of the
Pledgor to exercise the voting and consensual rights and powers which the
Pledgor is entitled to exercise pursuant to Section 5(a)(i) shall cease, and all
such rights shall thereupon become vested in the Secured Party, which shall have
the sole and exclusive right and authority to exercise such voting and
consensual rights and powers, and the Pledgor shall execute and deliver to the
Secured Party all such documents and instruments (including proxies) as the
Secured Party shall reasonably request in order to effect the purposes of this
Section 5(b).
(c) Upon the occurrence of an Event of Default, all rights of the
Pledgor to receive any dividends which the Pledgor is authorized to receive
pursuant to clause (iii) of paragraph (a) of this Section 5 shall cease, and all
such rights shall thereupon become vested in the Secured Party, which shall have
the sole and exclusive right and authority to receive and retain such dividends.
All dividends which are received by the Pledgor contrary to the provisions of
this paragraph (c) shall be received in trust for the benefit of the Secured
Party shall be segregated from other property or funds of the Pledgor and shall
be forthwith delivered to the Secured Party as Collateral in the same form as so
received (with any necessary endorsement). Any and all money and other property
paid over to or received by the Secured Party pursuant to the provisions of this
Section 5 shall be retained by the Secured Party in an account to be established
by the Secured Party upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 9 hereof.
SECTION 6. REPRESENTATIONS; WARRANTIES AND COVENANTS. The Pledgor
hereby represents, warrants and covenants to and with the Secured Party that:
(a) Except for any security interest granted to the Secured
Party, the Pledgor (i) is and will at all times continue to be the
direct owner, beneficially and of record, of the Pledged Securities,
(ii) is and will at all times hold the Collateral free and clear of all
Liens, (iii) will make no assignment, pledge, hypothecation or transfer
of, or create or suffer to exist any Lien on, the Collateral and (iv)
subject to Section 5, will cause any and all Collateral, whether for
value paid by the Pledgor or otherwise, to be forthwith deposited with
the Secured Party and pledged or assigned hereunder.
(b) The Pledgor (i) has, and at all times will have, the right
and legal authority to pledge the Collateral in the manner hereby done
or contemplated and (ii) will defend its and the Secured Party's
respective title and interest thereto or therein against any and all
attachments, Liens, claims or other impediments of any nature, however
arising, of all Persons whomsoever.
(c) No authorization, consent or approval, or other action by,
and no notice to or filing with, any Governmental Authority (including
any securities exchange) not previously
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obtained is required (i) for the pledge by the Pledgor of the Collateral
pursuant to this Agreement or the perfection therein of the Secured
Party's security interest created hereby, other than the filing of
appropriate Uniform Commercial Code financing statements in the offices
of the Department of State in the State of Florida, (ii) for the
execution, delivery or performance of this Agreement by the Pledgor or
(iii) for the exercise by the Secured Party of the rights provided for
in this Agreement or the remedies in respect of the Collateral pursuant
to this Agreement, other than compliance with applicable Federal and
state securities laws in connection with the acquisition and sale or
other disposition of Pledged Securities in accordance with the terms of
this Agreement.
(d) By virtue of the execution and delivery by the Pledgor of
this Agreement, when the certificates representing the Pledged
Securities owned by the Pledgor are delivered to the Secured Party in
accordance with this Agreement, the Secured Party will obtain and, so
long as the Secured Party maintains possession of the certificates
representing the Pledged Securities, will have and will continue to have
a valid and perfected first priority lien upon and security interest in
such Pledged Securities as security for the repayment of the Secured
Obligations, prior to all other liens and encumbrances thereon and
security interests therein.
(e) The Pledged Securities constitute, and at all times will
constitute, all of the issued and outstanding shares of capital stock of
Borrower owned by the Pledgor.
(f) All of the representations and warranties contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement.
(g) This Agreement constitutes the legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its terms
(subject as to enforceability to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights
generally and to general principles of equity).
(h) The execution, delivery and performance in accordance with
its respective terms by the Pledgor of this Agreement do not and will
not (a) require any Governmental Approval or any other consent or
approval or (b) violate, conflict with, result in a breach of or
constitute a default under, or result in or require the creation of any
Lien upon any assets of the Pledgor under, (i) any Contract to which the
Pledgor is a party or by which it or its property may be bound or (ii)
any applicable law.
(i) The Pledged Securities have been duly authorized and validly
issued, are fully paid and non-assessable and have been duly and validly
pledged hereunder in accordance with applicable law.
(j) There are no contractual restrictions upon the voting rights
or upon the transfer of any of the shares of the Pledged Securities
other than as referred to herein, in the Other Pledge Agreement or in
the Loan Agreement.
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(k) The Pledgor represents and warrants that it has made its own
arrangements for keeping informed of changes or potential changes
affecting the Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of dividends, reorganization or
other exchanges, tender offers and voting rights), and the Pledgor
agrees that the Secured Party shall not have any responsibility or
liability for informing the Pledgor of any such changes or potential
changes.
(l) The Pledgor shall not:
(i) permit or suffer Borrower to voluntarily dissolve or
liquidate, retire any of its capital stock, reduce its capital or merge
or consolidate with any other entity if such action would violate the
provisions of the Loan Agreement, or
(ii) vote any of the Pledged Securities in favor of any
of the foregoing.
SECTION 7. ISSUANCE OF ADDITIONAL STOCK. The Pledgor agrees that
it will not (a) permit Borrower to issue any stock or other securities
(including warrants, options and other similar agreements), whether in addition
to, by stock dividend or other distribution upon, or in substitution for, the
Pledged Securities or otherwise (unless such issuance is not prohibited by the
Loan Agreement and such stock or other securities are effectively pledged
hereunder in a manner reasonably satisfactory to the Secured Party) or (b) sell,
assign, transfer, exchange or otherwise dispose of, or grant any option with
respect to, the Collateral, or create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the Lien provided for by this
Agreement and the Other Pledge Agreement.
SECTION 8. REMEDIES UPON DEFAULT. (a) If an Event of Default
shall have occurred, the Secured Party shall have, in addition to any other
rights and except as otherwise provided herein, all of the rights and remedies
with respect to the Collateral of a secured party under the Uniform Commercial
Code in the State of Florida. In addition, the Secured Party may (without any
obligation to seek performance of any guarantee or to resort to any other
security, right or remedy granted to it under any other instrument or agreement,
including the Loan Agreement) sell the Collateral, or any part thereof, at
public or private sale or at any broker's board or on any securities exchange,
for cash, upon credit or for future delivery as the Secured Party shall deem
appropriate. The Secured Party shall be authorized at any such sale (if it deems
it advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Collateral for
their own account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Secured Party shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
so sold absolutely, free from any claim or right on the part of the Pledgor
(other than rights that the Pledgor may have against such purchaser generally
and without regard to this Agreement or such sale), and the Pledgor hereby
waives (to the extent permitted by law) all equity or rights of redemption, stay
and appraisal which the Pledgor may
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now have or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.
(b) No demand, advertisement or notice, all of which are hereby
expressly waived by the Pledgor, shall be required in connection with any sale
or other disposition of any part of the Collateral that may decline speedily in
value or that is of a type customarily sold in a reorganized market; otherwise,
the Secured Party shall give the Pledgor at least 10 days' written notice (which
the Pledgor agrees is reasonable notice within the meaning of Section 9-504(3)
of the Uniform Commercial Code as in effect in Florida) of the time of and place
where such sale is to be made (or, in the case of a sale at a broker's board or
on a securities exchange, the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange) and of the time after
which any private sale or other disposition is to be made, all other demand,
advertisements and notices being hereby waived. Any such public sale shall be
held at such time or times within ordinary business hours and at such place or
places as the Secured Party may fix and state in the notice of such sale. At any
such sale, the Collateral, or portion thereof, to be sold may be sold as a unit
or in separate parcels, as the Secured Party may (in its sole and absolute
discretion) determine. The Secured Party shall not be obligated to make any sale
of any Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of such Collateral shall have been given. The Secured Party
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Secured Party until the sale price is paid by the
purchaser or purchasers thereof, but the Secured Party shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice, and in no event shall any portion of the
proceeds of any such sale be credited against payment of the costs, expenses and
obligations set forth in Section 9 hereof until cash payment for the Collateral
so sold has been received by the Secured Pavate sale of Collateral of a type
customarily sold in a recognized market, and at any public sale made pursuant to
this Section 8, the Secured Party may bid for or purchase, free (to the extent
permitted by law) from any equity or right of redemption, stay or appraisal on
the part of the Pledgor (all said rights being also hereby waived and released
to the extent permitted by law), the Collateral or any part thereof offered for
sale and may make payment on account thereof by using any claim then due and
payable to the Secured Party by the Pledgor under or pursuant to the Loan
Documents as a credit, up to an amount equal to the amount the Secured Party
would otherwise be entitled to receive pursuant to Section 9 in connection with
such sale, against the purchase price. For purposes hereof, in the case of any
such sale pursuant to a written agreement to purchase the Collateral or any
portion thereof, the Secured Party shall be free to carry out such sale pursuant
to such agreement, and the Pledgor shall not be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Secured Party shall have entered into such an agreement all Events of
Default shall have been remedied and the Secured Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon it, the
Secured Party may proceed by a suit or suits at law or in equity to foreclose
upon the Collateral pursuant to this
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Agreement and to sell the Collateral, or any portion thereof, pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
(c) If the Secured Party shall have instituted any proceeding to
enforce any right or remedy hereunder, and such proceeding shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Secured Party, the Secured Party shall, subject to any
determination in any such proceeding, be restored to its former position
hereunder, and thereafter, subject as aforesaid, all rights and remedies of the
Secured Party shall continue as though no such proceeding had been instituted.
SECTION 9. APPLICATION OF PROCEEDS OF SALE. The proceeds of any
sale of, or other realization upon, all or any part of the Collateral pursuant
to Section 8, as well as any Collateral consisting of cash, shall be applied by
the Secured Party as follows:
FIRST, to the payment of all costs and expenses reasonably
incurred by the Secured Party in connection with such sale or otherwise
in connection with this Agreement or any of the Secured Obligations,
including all court costs and the reasonable fees and expenses of its
agents, brokers, investment advisors, and legal counsel, the repayment
of all advances plus any interest thereon made hereunder by the Secured
Party on behalf of the Pledgor and any other costs or expenses
reasonably incurred in connection with the exercise of any right or
remedy hereunder;
SECOND, to the payment in full of the Secured Obligations
(whether or not then due and payable, at maturity, by acceleration or
otherwise) as of the date of such payment, until all the Secured
Obligations have been paid in full; and
THIRD, to the Pledgor, its successors or assigns, subject to the
duty of the Secured Party imposed by law to the holder of any
subordinate security interest or as a court of competent jurisdiction
may otherwise direct.
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The Pledgor
hereby appoints the Secured Party, its successors or assigns, as its true and
lawful agent and attorney-in-fact for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument which the
Secured Party may deem necessary or advisable to accomplish the purposes hereof,
in each case upon the occurrence of an Event of Default, which appointment is
irrevocable and coupled with an interest and any proxy or proxies heretofore
given by the Pledgor to any other person that is inconsistent herewith are
hereby revoked. Without limiting the generality of the foregoing, the Secured
Party shall have the right, upon the occurrence of an Event of Default, with
full power of substitution either in the Secured Party's name or in the name of
the Pledgor, to ask for, demand, sue for, collect, receive, receipt and give
acquittance for any and all moneys due or to become due under and by virtue of
any Collateral, to endorse checks, drafts, orders and other instruments for the
payment of money payable to the Pledgor representing any interest or dividend
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or other distribution payable in respect of the Collateral or any part thereof
or on account thereof and to give full discharge for the same, to settle,
compromise, prosecute or defend any action, claim or proceeding with respect
thereto, and to sell, assign, endorse, pledge, transfer and make any agreement
respecting, or otherwise deal with, the same; PROVIDED, HOWEVER, that nothing
herein contained shall be construed as requiring or obligating the Secured Party
to take any action, including requiring or obligating the Secured Party to make
any commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Secured Party or to present or file any claim or notice,
or to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby,
and no action taken by the Secured Party or omitted to be taken by it with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclf the Pledgor or to any claim or action against the Secured Party in
the absence of the gross negligence or willful misconduct of the Secured Party
as shall have been determined in a final, nonappealable judgment of a court of
competent jurisdiction.
SECTION 11. NO WAIVER; REMEDIES CUMULATIVE. No failure on the
part of the Secured Party to exercise, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy by the Secured
Party preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law or otherwise. The Secured Party
shall not be deemed to have waived any rights hereunder or under any other
agreement or instrument unless such waiver shall be in writing and signed by the
Secured Party.
SECTION 12. SECURITIES ACT, ETC. (a) In view of the position of
the Pledgor in relation to the Pledged Securities, or because of other present
or future circumstances, a question may arise under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), or any similar or successor Federal
securities law (together with the Securities Act, the "FEDERAL SECURITIES LAWS")
with respect to any disposition of the Pledged Securities permitted hereunder.
The Pledgor understands that compliance with the Federal Securities Laws might
strictly limit the course of conduct of the Secured Party if the Secured Party
were to attempt to dispose of all or any part of the Pledged Securities, and
might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Securities could dispose of the same. Similarly, there
may be other legal restrictions or limitations affecting the Secured Party in
any attempt to dispose of all or part of the Pledged Securities under applicable
blue sky or other state securities laws or similar laws analogous in purpose or
effect.
(b) Anything herein to the contrary notwithstanding, and in view
of restrictions specified in paragraph (a) of this Section 12, the Pledgor
agrees that, upon the occurrence of an Event of Default, the Secured Party may,
from time to time, attempt to sell all or any part of the Pledged Securities by
means of a private placement, restricting the bidders and prospective purchasers
to those who will represent or agree as to their investment intent or method of
resale or both in a manner reasonably required by the Secured Party to assure
compliance with applicable
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securities laws. In so doing, the Secured Party may solicit offers to buy such
Pledged Securities or any part thereof, for cash, from a limited number of
investors deemed by the Secured Party, in its exclusive judgment, to be
responsible parties who might be interested in purchasing such Pledged
Securities. Pledgor acknowledges and agrees that private sales so made may be at
prices and other terms less favorable to the seller than if the Pledged Security
were sold at public sales.
SECTION 13. SECURITY INTEREST ABSOLUTE; WAIVERS BY PLEDGOR. (a)
All rights of the Secured Party hereunder, the grant of a security interest in
the Collateral and all obligations of the Pledgor hereunder, shall be absolute
and unconditional irrespective of (i) any lack of validity or enforceability of
the Loan Agreement, any other agreement with respect to any of the Secured
Obligations or any other agreement or instrument relating to any of the
foregoing, (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from the Loan Agreement or any other
agreement or instrument, (iii) any exchange, release or nonperfection of any
other collateral, or any release or amendment or waiver of or consent to or
departure from any guaranty, for all or any of the Secured Obligations, (iv) any
failure by the Secured Party to demand payment or performance by the Borrower of
any of the Secured Obligations or to exercise or enforce any right or remedy in
respect thereof or (v) any other circumstance (other than payment in full of the
Secured Obligations or, in the case of rights predicated on the existence of an
Event of Default, a cure or waiver of such Event of Default) which might
otherwise constitute a defense available to, or a discharge of, the Pledgor or
any other person in respect of the Secured Obligations or in respect of this
Agreement. The Pledgor hereby acknowledges that the Secured Party shall not be
under any obligation to marshal any assets in favor of the Pledgor or against or
in payment of any or all of the Secured Obligations. The Pledgor hereby waives
and forever relinquishes any and all rights of subrogation, reimbursement, or
indemnity whatsoever in respect of the Borrower arising out of remedies
exercised by the Secured Party hereunder.
(b) The Pledgor hereby waives notice of acceptance of this
Agreement. The Pledgor further waives presentment and demand for payment of any
of the Secured Obligations, protest and notice of dishonor or default with
respect to any of the Secured Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided in
this Agreement or in the Loan Agreement. The Pledgor (to the extent that it may
lawfully do so) covenants that it shall not at any time insist upon or plead, or
in any manner claim or take the benefit or advance of, any stay (except in
connection with a pending appeal), valuation, appraisal, redemption or extension
law now or at any time hereafter in force that, but for this waiver, might be
applicable to any sale made under any judgment, order or decree based on this
Agreement or on the Loan Agreement; and the Pledgor (to the extent that it may
lawfully do so) hereby expressly waives and relinquishes all benefit and advance
of any and all such laws and hereby covenants that it will not hinder, delay or
impede the execution of any power in this Agreement or therein granted and
delegated to the Secured Party, but that it will suffer and permit the execution
of every such power as though no such law or laws had been made or enacted.
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SECTION 14. PAYMENT OF COSTS AND EXPENSES, ETC. (a) The Pledgor
hereby agrees that upon demand it shall pay to the Secured Party the amount of
any and all expenses, including the reasonable fees and expenses the Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Secured Party hereunder, or (iv) the failure by the
Pledgor to perform or observe any of the provisions hereof. Any such amounts
payable as provided hereunder or thereunder shall be additional Secured
Obligations secured hereby. The Pledgor hereby agrees to indemnify and hold
harmless the Secured Party (and each of its directors, officers, agents and
employees), to the fullest extent permitted by law, from and against any and all
claims, losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, costs and expenses (including reasonable attorneys'
and paralegals' fees and expenses incurred, whether litigation is commenced ot
not and, if incurred, through all appellate and bankruptcy proceedings) of
whatever nature incurred by the Secured Party hereunder or in connection
herewith, unless such loss, liability, cost or expense shall be due to willful
misconduct or gross misconduct or gross negligence on the part of the Secured
Party or its directors, officers, agents or employees as shall have been
determined in a final, nonappealable judgment of a court of competent
jurisdiction.
(b) The Pledgor hereby agrees to pay to the Secured Party, upon
demand, the amount of any taxes (including documentary stamp taxes) which the
Secured Party may have been required to pay by reason of the security interests
established pursuant to this Agreement (including any applicable transfer
taxes).
(c) All obligations of the Pledgor under this Sectwed by law and
shall be additional Secured Obligations secured hereby.
SECTION 15. TERMINATION. This Agreement, and the assignments,
pledges and security interests created or granted hereby, shall terminate when
(a) all the Secured Obligations shall have been indefeasibly paid in full in
cash and satisfied and (b) the commitments and obligations of the Secured Party
under the Loan Agreement have terminated, at which time the Secured Party shall
reassign and deliver to the Pledgor, or to such person or persons as the Pledgor
shall designate, against receipt, such of the Collateral (if any) as shall not
have been sold or otherwise applied by the Secured Party pursuant to the terms
hereof and shall still be held by it hereunder, together with appropriate
instruments of reassignment and release, all without any recourse to, or
warranty whatsoever by, the Secured Party, and at the sole cost and expense of
the Pledgor; PROVIDED, HOWEVER, that all indemnities of the Pledgor contained in
this Agreement shall survive, and remain operative and in full force and effect
regardless of, the termination of this Agreement. Upon any such termination of
the security interests or release of Collateral, the Secured Party will, at the
Pledgor's expense, execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence the termination of the security
interests in the Collateral.
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SECTION 16. NOTICES. All notices, demands, requests and other
communications, if any, required under this Agreement shall be given in the
manner set forth in the Loan Agreement. This Agreement does not require that
Secured Party give Pledgor any notice, demand, or request and this Section 16
shall not be construed to create such a requirement.
SECTION 17. FURTHER ASSURANCES. The Pledgor agrees to do such
further acts and things, and to execute and deliver such additional conveyances,
stock powers, proxies, assignments, agreements, financing statements and other
recordings, and instruments, as the Secured Party may at any time request in
connection with the administration and enforcement of this Agreement or with
respect to the Collateral or any part thereof or in order better to assure and
confer unto the Secured Party its rights, powers and remedies hereunder.
SECTION 18. SUCCESSORS AND ASSIGNS. In the event of assignment of
all or a portion of any of the indebtedness under the Loan Agreement by the
Secured Party, the rights of or on behalf of the Secured Party hereunder, to the
extent applicable to the indebtedness so assigned, shall be transferred with
such indebtedness. This Agreement is binding on the Pledgor and its heirs, legal
representatives and successors, but none of them shall be permitted to assign
this Agreement, any of its obligations hereunder or any interest herein or in
the Collateral, or any part thereof, or otherwise pledge, encumber or grant any
option with respect to the Collateral, or any part thereof, or any cash or
property held by the Secured Party as Collateral under this Agreement except as
expressly permitted by this Agreement or the Loan Agreement.
SECTION 19. CHANGES IN WRITING. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by a statement or instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. Any
waiver shall be effective only in the specific instance and for the specific
purpose for which made or given.
SECTION 20. APPLICABLE LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of Florida.
SECTION 21. JUDICIAL PROCEEDINGS Pledgor irrevocably and
unconditionally: (a) agrees that any suit, action, or other legal proceeding
arising out of or relating to this Agreement may be brought, at the option of
the Secured Party, in a court of record of the State of Florida in Broward
County, in the United States District Court for the Southern District of
Florida, or in any other court of competent jurisdiction; (b) consents to the
jurisdiction of each such court in any such suit, action, or proceeding; (c)
waives any objection which it may have to the laying of venue of any such suit,
action, or proceeding in any of such courts; and (d) agrees that service of any
court paper may be effected on Pledgor by mail, addressed and mailed as provided
in Section 16 hereof or in such other manner as may be provided under applicable
laws or court rules in said State. Pledgor hereby irrevocably appoints John T.
Kinsey, Esq., whose address is Two Executive Court, 2300 Corporate Blvd., Suite
112, Boca Raton, Florida 33431, as agent for the service of process for the
purposes of any purported controversy or cause of action arising out of this
Agreement or any related
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<PAGE>
instrument.
SECTION 22. SEVERABILITY. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in such
jurisdiction, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 23. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument. This Agreement
shall be effective when a counterpart bearing the signature of the Pledgor shall
have been delivered to the Secured Party.
SECTION 24. HEADINGS. Section headings used herein are for
convenience only and are not to affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 25. IMMUNITIES OF SECURED PARTY. The Secured Party's
performance of its duties hereunder shall in all respects be subject to and
governed by the Loan Agreement. Nothing contained herein shall be construed to
enlarge the degree of responsibility or discretion or the duty of care to be
exercised by the Secured Party beyond those expressly set forth in the Loan
Agreement.
SECTION 26. WAIVER OF TRIAL BY JURY. SECURED PARTY AND PLEDGOR
HEREBY KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
COUNTERCLAIM BASED ON THIS AGREEMENT, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION
WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR SECURED PARTY ACCEPTING THIS AGREEMENT FROM PLEDGOR AND
FOR PLEDGOR GIVING THIS AGREEMENT TO SECURED PARTY.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
PLEDGOR:
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC., a Florida corporation
By:
<PAGE>
Name:
Title: President
AMRESCO FUNDING CORPORATION, as
Secured Party
By_________________________________
Name:
Title:
SCHEDULE 1 TO THE
PLEDGE AGREEMENT
PLEDGED SECURITIES
<TABLE>
<CAPTION>
==========================================================================================================
ISSUER SHARES PLEDGED CERTIFICATE NUMBER(S) PLEDGOR
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transeastern Pembroke Villages, Inc.
==========================================================================================================
</TABLE>
<PAGE>
Record and Return To:
John T. Kinsey, Esquire
Two Executive Court
2300 Corporate Boulevard, Suite 112
Boca Raton, Florida 33431
MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
THIS MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
"Mortgage"), made as of the 29th day of March, 1996 between TRANSEASTERN
PEMBROKE VILLAGES, INC., a Florida corporation (the "Mortgagor"), as mortgagor
and debtor, whose principal place of business is 3300 University Drive, 1st
Floor, Coral Springs, Florida 33065, and AMRESCO FUNDING CORPORATION, a Delaware
corporation (the "Mortgagee"), as mortgagee and secured party, whose address is
1845 Woodall Rodgers Freeway, Dallas Texas 75201.
ARTICLE I
DEFINITIONS, HEADINGS, RULES OF
CONSTRUCTION AND SECURITY AGREEMENT
1.1 DEFINITIONS. As used in this Mortgage and in the exhibits
attached hereto, the following terms shall have the following meanings herein
specified, such definition to be applicable equally to the singular and plural
forms of such terms (unless otherwise defined herein all capitalized terms used
in this Mortgage shall have the meanings assigned to the same in this Loan
Agreement (as defined below)):
(a) COMMITMENT: The commitment letter from Mortgagee
to Transeastern Properties of South Florida, Inc. dated March 15, 1996 together
with all amendments thereto.
(b) DEFAULT RATE: The Default Rate as defined in the
Note.
(c) EVENTS OF DEFAULT: Those events described in
Article VI hereof.
(d) FIXTURES: All property and equipment now owned or
hereafter acquired by Mortgagor and now or hereafter located under, on, or above
the Land, whether or not permanently affixed, which, to the fullest extent
permitted by applicable law in effect from time to time, shall be deemed
fixtures and a part of the Land.
(e) FUTURE ADVANCES: Any loan of money from Mortgagee
to Mortgagor made within twenty (20) years from the date hereof. The total
amount of such loan or loans may decrease or increase from time to time, but the
total unpaid aggregate balance secured by this Mortgage at any one time shall
not exceed $6,000,000 plus interest thereon, and any disbursements made for the
payment of the Impositions (whether taxes, levies or otherwise), insurance, or
other liens on the Mortgaged Property, with interest on such disbursements. The
Mortgagee has no obligation, whatsoever, to make a Future Advance.
(f) GOVERNMENTAL AUTHORITY: Any (domestic or foreign)
federal, state, county, municipal or other governmental department, entity,
authority, commission, board, bureau, court, agency or any instrumentality of
any of them.
<PAGE>
(g) GOVERNMENTAL REQUIREMENT: Any law, enactment,
statute, code, ordinance, order, rule, regulation, judgment, decree, writ,
injunction, franchise, permit, certificate, license, authorization, or other
direction or requirement of any Governmental Authority now existing or hereafter
enacted, adopted, promulgated, entered, or issued applicable to Mortgagee,
Mortgagor or the Mortgaged Property, including, without limitation, any
Environmental Law.
(h) GUARANTOR: Jointly and severally any and all
Persons now or hereafter guarantying the Obligations or any part thereof
(collectively referred to as the "Guarantor").
(i) GUARANTY: Any guaranty of payment, performance or
completion executed by any Guarantor in favor of Mortgagee with respect to the
Obligations.
(j) IMPOSITIONS: All (i) real estate and personal
property taxes and other taxes and assessments, public or private; utility rates
and charges including those for water and sewer; all other governmental and
non-governmental charges and any interest or costs or penalties with respect to
any of the foregoing; and charges for any public improvement, easement or
agreement maintained for the benefit of or involving the Mortgaged Property,
general and special, ordinary and extraordinary, foreseen and unforeseen, of any
kind and nature whatsoever that at any time prior to or after the execution of
this Mortgage may be assessed, levied or imposed upon the Mortgaged Property or
the Rent or income received therefrom, or any use or occupancy thereof, (ii)
other taxes, assessments, fees and governmental and non-governmental charges
levied, imposed or assessed upon or against Mortgagor or any of its properties
and (iii) taxes levied or assessed upon this Mortgage, the Note, and the other
Obligations, or any of them.
(k) IMPROVEMENTS: All buildings, structures,
appurtenances and improvements, including all additions thereto and replacements
and extensions thereof, now constructed or hereafter to be constructed under, on
or above the Land, which term includes any part thereof.
(l) LAND: The real property described in Exhibit "A"
attached hereto and made a part hereof, together with all rights, privileges,
tenements, hereditaments, rights-of-way, easements, appendages, projections,
appurtenances, water rights including riparian and littoral rights, streets,
ways, alleys, and strips and gores of land now or hereafter in anyway belonging,
adjoining, crossing or pertaining to the Land.
(m) LEASES: Any and all leases, subleases, licenses,
concessions, or grants of other possessory interests, together with the security
therefor, now or hereafter in force, oral or written, covering or affecting the
Mortgaged Property or any part thereof.
(n) LOAN: $3,000,000.00 as evidenced by the Note.
(o) LOAN AGREEMENT: The loan agreement of even date
herewith, between Mortgagor and Mortgagee.
(p) LOAN DOCUMENTS: Those documents or instruments
executed, submitted, or to be submitted by Mortgagor or others in connection
with the Loan, including but not limited to the: (i) Note, (ii) Mortgage, (iii)
Guaranty, (iv) Loan Agreement, (v) financing statements, (vi) Environmental
Indemnity Agreement, and (vii) any other document or instrument executed by
Mortgagor or Guarantor in connection with the Loan.
(q) MORTGAGED PROPERTY: The Land, Improvements,
Fixtures, Leases, Rents and Personal Property together with:
(i) all judgments, awards of
damages and settlements hereafter made resulting from condemnation proceedings
or the taking of the Mortgaged Property or any part thereof under the power of
eminent domain, or by agreement in lieu thereof, or for any damage thereto
caused by any governmental action (whether by such taking or otherwise), such as
without limitation, any award for change of grade of streets;
(ii) all judgments, awards and
settlements hereafter made, and all insurance proceeds hereafter paid for any
damage to the Mortgaged Property, and all unearned insurance premiums on any
insurance policies maintained by the Mortgagor pursuant to this Mortgage;
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<PAGE>
(iii) all awards and refunds
hereafter made with respect to any Imposition; and
(iv) the estate, right, title,
interest, privilege, claim or demand whatsoever of Mortgagor, now or hereafter,
either at law or in equity, in and to the Mortgaged Property.
The term Mortgaged Property includes any part of the foregoing property
described as Mortgaged Property, and all proceeds, products, replacements,
improvements, betterments, extensions, additions, substitutions, renewals,
accessories, and appurtenances thereto and thereof.
(r) MORTGAGEE: AMRESCO Funding Corporation a Delaware
corporation, its successors and assigns.
(s) MORTGAGOR: TRANSEASTERN VILLAGES, INC., a Florida
corporation.
(t) NOTE: The promissory note dated of even date
herewith from Mortgagor to Mortgagee, in the amount of $3,000,000.00 and by this
reference made a part hereof to the same extent as though set out in full
herein, and any other note given to Mortgagee evidencing a Future Advance as any
of said notes may from time to time hereafter be modified, amended, extended or
renewed.
(u) OBLIGATIONS:
(i) Any and all of the
indebtedness, liabilities, covenants, promises, agreements, terms, conditions,
and other obligations of every nature whatsoever, whether joint or several,
direct or indirect, absolute or contingent, liquidated or unliquidated, of
Mortgagor and Guarantor, or any of them, to Mortgagee, evidenced by, secured by,
under and as set forth in the Note, this Mortgage, the Guaranty or the other
Loan Documents, excluding the Contingent Returns and other amounts secured by
the Contingent Mortgage;
(ii) Any and all other indebtedness,
liabilities and obligations of every nature whatsoever (whether or not otherwise
secured or to be secured) of Mortgagor (whether as maker, endorser, surety,
guarantor or otherwise) to Mortgagee or any of Mortgagee's affiliates, whether
now existing or hereafter created or arising or now owned or howsoever hereafter
acquired by Mortgagee or any of the Mortgagee's affiliates, whether such
indebtedness, liabilities and obligations are or will be joint or several,
direct or indirect, absolute or contingent, liquidated or unliquidated, matured
or unmatured, including, but not limited to, any letter of credit issued by
Mortgagee for the account of Mortgagor; together with all expenses, attorneys'
fees, paralegals' fees and legal assistants' fees incurred by Mortgagee in the
preparation, execution, perfection or enforcement of any document relating to
any of the foregoing, excluding the Contingent Returns and other amounts secured
by the Contingent Mortgage; and
(iii) Any and all Future Advances.
(v) PERMITTED TITLE EXCEPTIONS: Those matters, if
any, described in Schedule B to the title insurance policy insuring Mortgagee's
interest in this Mortgage.
(w) PERSON: Any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government, or agency or political subdivision thereof, or any
other form of entity.
(x) PERSONAL PROPERTY: All of the following property
of Mortgagor whether now owned or existing, or hereafter acquired or arising,
whether located in, on, pertaining to, used or intended to be used in connection
with or resulting or created from the ownership, development, management, or
operation of the Land:
(i) all Improvements (to the extent
same are not deemed to be real property) and landscaping;
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<PAGE>
(ii) all Fixtures (to the extent
same are not deemed to be real property) and goods to become Fixtures;
(iii) all accounts, accounts
receivable, other receivables, contract rights, chattel paper, instruments and
documents; any other obligations or indebtedness owed to Mortgagor from whatever
source arising; all rights of Mortgagor to receive any performance or any
payments in money or kind; all guaranties of the foregoing and security
therefor; all of the right, title and interest of Mortgagor in and with respect
to the goods, services, or other property that gave rise to or that secure any
of the foregoing, and all rights of Mortgagor as an unpaid seller of goods and
services, including, but not limited to, the rights to stoppage in transit,
replevin, reclamation, and resale;
(iv) all goods, including without
limitation, all machinery, equipment, furniture, furnishings, building supplies
and materials, appliances, business machines, tools, aircraft and motor vehicles
of every kind and description, and all warranties and guaranties for any of the
foregoing;
(v) all inventory, merchandise, raw
materials, parts, supplies, work-in-process and finished products intended for
sale, of every kind and description, in the custody or possession, actual or
constructive, of Mortgagor including such inventory as is temporarily out of the
custody or possession of Mortgagor, and any returns upon any accounts and other
proceeds resulting from the sale or disposition of any of the foregoing,
including, without limitation, raw materials, work-in-process, and finished
goods;
(vi) all general intangibles,
including without limitation, corporate or other business records and books,
computer records whether on tape, disc or otherwise stored, blueprints, surveys,
architectural or engineering drawings, plans and specifications, trademarks,
tradenames, goodwill, telephone numbers, licenses, governmental approvals,
franchises, permits, payment and performance bonds, tax refund claims, and
agreements with utility companies, together with any deposits, prepaid fees and
charges paid thereon;
(vii) all Leases and Rents (to the
extent same are not deemed to be real property);
(viii) all judgments, awards of
damages and settlements from any condemnation or eminent domain proceedings
regarding the Land, the Improvements or any of the Mortgaged Property;
(ix) all insurance policies required
by this Mortgage, the unearned premiums therefor and all loss proceeds thereof;
(x) all other personal property,
including without limitation, management contracts, construction contracts,
architectural contracts, service contracts, engineering contracts, advertising
contracts, contracts for purchase and sale of any of the Mortgaged Property,
purchase orders, equipment leases, monies in escrow accounts, reservation
agreements, prepaid expenses, deposits and down payments with respect to the
sale or rental of any of the Mortgaged Property, options and agreements with
respect to additional real property for use or development of the Mortgaged
Property, end-loan commitments, abstracts of title, all brochures, advertising
materials, condominium documents and prospectuses; and
(xi) all proceeds, products,
replacements, additions, betterments, extensions, improvements, substitutions,
renewals and accessions of any and all of the foregoing.
(y) RENTS: All of the rents, royalties, issues,
revenues, income, profits, security deposits and other benefits whether past
due, or now or hereafter arising from the Mortgaged Property and the occupancy,
use and enjoyment thereof.
(z) SENIOR MORTGAGE: That certain Mortgage and
Security Agreement of even date herewith from Mortgagor, as mortgagor, in favor
of Chase Federal Bank, as mortgagee, to be recorded in the Public Records of
Broward County, Florida, together with the note secured thereby.
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<PAGE>
1.2 RULES OF CONSTRUCTION. The use of any gender shall include
all other genders. The singular shall include the plural and the plural shall
include the singular. The word "or" is not exclusive and the use of the word
"and" may be conjunctive or disjunctive in the sole and absolute discretion of
Mortgagee. The captions of Articles, Sections and Subsections of this Mortgage
are for convenient reference only, and shall not affect the construction or
interpretation of any of the terms and provisions set forth herein.
1.3 SECURITY AGREEMENT. This Mortgage constitutes a "Security
Agreement" within the meaning of and shall create a security interest under the
Uniform Commercial Code-Secured Transactions as adopted by the State of Florida,
with respect to the Fixtures, Leases, Rents and Personal Property. A carbon,
photographic or other reproduction of this Mortgage or of any financing
statement shall be sufficient as a financing statement. The debtor's principal
place of business and the secured party's address is set forth in the
introduction to this Mortgage.
ARTICLE II
GRANT
2.1 GRANT. For good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and to secure the payment,
observance, performance and discharge of the Obligations, Mortgagor does by
these presents give, transfer, grant, bargain, sell, alien, remise, release,
assign, mortgage, hypothecate, deposit, pledge, set over, confirm, convey and
warrant unto Mortgagee all estate, right, title and interest of Mortgagor in and
to the Mortgaged Property, whether now owned or held or hereafter acquired by
Mortgagor, subject, however, to the Permitted Title Exceptions and the rights of
the holder of the Senior Mortgage, to have and to hold the Mortgaged Property
unto Mortgagee, its successors and assigns forever.
2.2 CONDITION OF GRANT. Subject to the provisions of this
Mortgage, the condition of these presents is such that if Mortgagor shall pay,
observe, perform and discharge the Obligations, or cause same to be paid,
observed, performed and discharged in strict accordance with the terms thereof,
then this Mortgage and the estates, interests, rights and assignments granted
hereby shall be null and void, but otherwise shall remain in full force and
effect.
2.3 SUBROGATION. The Mortgagee is hereby subrogated to the
claims and liens of all parties whose claims or liens are fully or partially
discharged or paid with the proceeds of the indebtedness secured by this
Mortgage notwithstanding that such claims or liens may have been canceled and
satisfied of record.
ARTICLE III
ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. The Mortgagor does hereby absolutely and
unconditionally assign and transfer to Mortgagee all of Mortgagor's estate,
right, title and interest in and to the Leases and Rents, to have and to hold
the Leases and Rents unto Mortgagee, its successors and assigns forever. From
time to time, upon request of Mortgagee, Mortgagor shall give further evidence
of this assignment to Mortgagee by executing and delivering to Mortgagee
specific assignments of the Leases and Rents, in form and content approved by
Mortgagee. All such specific assignments shall be of the same dignity and
priority as this Mortgage. From time to time, upon request of Mortgagee,
Mortgagor shall also execute and deliver to Mortgagee any notification to
tenants or other document reasonably required by Mortgagee.
3.2 PAYMENT OF RENTS TO MORTGAGOR, AS TRUSTEE, UNTIL DEFAULT.
So long as no Event of Default has occurred, Mortgagor may, as trustee for the
use and benefit of Mortgagee, collect, receive and accept the Rents as they
become due and payable (but in no event for more than two (2) months in
advance); provided, however, that if the Rents exceed the payments due under the
Note, the Mortgagor may use such excess, first, for the operation and benefit of
the Mortgaged Property and, second, for the general benefit of the Mortgagor.
Upon the occurrence of an Event of Default Mortgagee may, at its option, remove
the Mortgagor as trustee for the collection of the Rents and appoint any other
person including, but not limited to, itself as a substitute trustee to collect,
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receive, accept and use all such Rents in payment of the Obligations, in such
order as Mortgagee shall elect in its sole and absolute discretion, whether or
not Mortgagee takes possession of the Mortgaged Property. Mortgagor hereby
directs each of the respective tenants under the Leases, and any rental agent,
to pay to Mortgagee all such Rents, as may now be due or shall hereafter become
due, upon demand for payment thereof by Mortgagee without any obligation on the
part of any such tenant or rental agent to determine whether or not an Event of
Default has in fact occurred. Upon an Event of Default, the permission hereby
given to Mortgagor to collect, receive and accept such Rents as trustee shall
terminate and such permission shall not be reinstated upon a cure of the Event
of Default without Mortgagee's specific written consent. Further, upon the event
of a Default, Mortgagor shall immediately turn over to Mortgagee all Rents in
the actual or constructive possession of Mortgagor, its affiliates, contractors,
or its agents, together with an accounting thereof. Exercise of Mortgagee's
rights under this Section, and the application of any such Rents to the
Obligations, shall not cure or waive any default or notice of default hct done
pursuant hereto, but shall be cumulative and in addition to all other rights and
remedies of Mortgagee.
3.3 PERFORMANCE UNDER LEASES. Mortgagor covenants that it
shall, at its sole cost and expense, (a) duly and punctually perform and
discharge, or cause to be performed and discharged, all of the obligations and
undertakings of Mortgagor or its agents under the Leases, (b) use its best
efforts to enforce or secure, or cause to be enforced or secured, the
performance of each and every obligation and undertaking of the respective
tenants under the Leases, (c) promptly notify Mortgagee if Mortgagor receives
any notice from a tenant claiming that Mortgagor is in default under a Lease and
(d) appear in and defend any action or proceeding arising under or in any manner
connected with the Leases.
3.4 LEASES IN GOOD STANDING. All Leases, if any, are in full
force and effect, and there are no defaults thereunder or any defenses or
offsets thereto on the part of any tenant.
3.5 PROVISIONS OF LEASES. All Leases shall be inferior and
subordinate to the lien of this Mortgage and the terms of each Lease shall so
expressly provide. Mortgagor covenants that all Leases hereafter entered into by
Mortgagor shall be in form and substance satisfactory to Mortgagee.
3.6 TERMINATION OR MODIFICATION. Mortgagor covenants that it
shall not, without the prior express written consent of Mortgagee, enter into a
Lease, or materially modify, terminate, or consent to the cancellation or
surrender of any Lease, or permit any tenant under any Lease to assign or sublet
its rights thereunder.
3.7 NO OBLIGATION OF MORTGAGEE. This Assignment shall not be
deemed or construed to constitute Mortgagee as a mortgagee in possession of the
Mortgaged Property nor shall it obligate Mortgagee to take any action or to
incur expenses or perform or discharge any obligation, duty or liability of
Mortgagor under any Lease.
3.8 CUMULATIVE REMEDIES. Each and every right, remedy and
power granted to Mortgagee by this Article shall be cumulative and in addition
to every other right, remedy and power given by the Loan Documents and now or
hereafter existing in equity, at law, or by virtue of statute or otherwise. The
failure of Mortgagee to avail itself of any of its rights, remedies and powers
shall not be construed or deemed to be a waiver thereof.
3.9 NOTIFICATION OF MORTGAGEE'S RIGHTS. Mortgagee shall have
the right, but not the obligation, at any time and from time to time, to notify
any tenant under any Lease of the rights of Mortgagee as provided in this
Article III and Mortgagor, upon demand from Mortgagee, shall confirm to such
tenant the existence of such rights.
3.10 LEASING COMMISSION. Mortgagor covenants that every
agreement to pay leasing commissions with respect to the leasing of space in the
Mortgaged Property, or any part thereof, are and shall be subject, subordinate
and inferior to the right of Mortgagee, so that in the event Mortgagee acquires
title to the Mortgaged Property either at a foreclosure sale or by other means,
Mortgagee will be exonerated and discharged from all liabilities for the payment
of any such commissions or compensations.
3.11 ATTORNEY-IN-FACT. To further effectuate Mortgagee's
rights under this Article III, Mortgagor hereby constitutes and irrevocably
appoints Mortgagee its true and lawful attorney-in-fact, which appointment is
coupled with an interest, with full power of substitution, and empowers said
attorney or attorneys in the name of Mortgagor, but at the option of said
attorney-in-fact, to (i) collect and receive the Rents and to issue receipts
therefor, (ii) to make, enter into, extend, modify, amend, terminate,
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consent to the cancellation or surrender of any Lease, or permit any tenant to
assign or sublet its rights thereunder, (iii) to execute, acknowledge and
deliver any and all instruments and documents that Mortgagee may deem necessary
or proper to implement its rights as provided in this Article III, and (iv) to
perform and discharge any and all obligations and undertakings of Mortgagor
under any Lease.
3.12 OTHER ASSIGNMENTS. Mortgagor shall not further assign or
transfer the Leases or Rents except in favor of (i) Mortgagee as provided in
this Article III, and (ii) the holder of the Senior Mortgage and shall not
create or permit to be created or to remain, any mortgage, pledge, lien,
encumbrance, claim, or charge on the Leases or Rents except pursuant to the
Senior Mortgage, if any. Any transaction prohibited under this Section shall be
null and void.
3.13 SECTION 697.07 OF THE FLORIDA STATUTES. The assignments
of Leases and Rents contained in this Mortgage are intended to provide Mortgagee
with all the rights and remedies of mortgagees pursuant to Section 697.07 of the
Florida Statutes (hereinafter "Section 697.07"), as may be amended from time to
time. However, in no event shall this reference diminish, alter, impair, or
affect any other rights and remedies of Mortgagee, including but not limited to,
the appointment of a receiver as provided in Section 6.1(e) herein, nor shall
any provision in this Section 3.13 diminish, alter, impair or affect any rights
or powers of the receiver in law or equity or as set forth in Section 6.1(e)
herein. In addition, this assignment shall be fully operative without regard to
value of the Mortgaged Property or without regard to the adequacy of the
Mortgaged Property to serve as security for the obligations owed by Mortgagor to
Mortgagee, and shall be in addition to any rights arising under Section 697.07.
Further, except for the notices required hereunder, if any, Mortgagor waives any
notice of default or demand for turnover of rents by Mortgagee, together with
any rights under Section 697.07 to apply to a court to deposit the Rents into
the registry of the court or such other depository as the court may designate.
ARTICLE IV
AFFIRMATIVE COVENANTS
4.1 PAYMENT AND PERFORMANCE. Mortgagor shall promptly pay and
punctually perform, or shall cause to be promptly paid and punctually performed,
all of the Obligations as and when due and payable.
4.2 RESTORATION FOLLOWING CASUALTY.
(a) If all or any part of the Mortgaged Property
shall be damaged or destroyed by a casualty, Mortgagor shall immediately give
written notice thereof to Mortgagee and the appropriate insurer, and Mortgagee
is authorized and empowered (but not obligated or required) to make proof of
loss and to settle, adjust or compromise any claims for loss, damage or
destruction under any policies of insurance required under this Mortgage.
Subject to the rights of the holder of the Senior Mortgage, all proceeds of
insurance shall be paid to Mortgagee and shall be applied first to the payment
of all costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses) incurred by Mortgagee in obtaining such proceeds, and second,
at the option of Mortgagee, either to the payment of the Obligations whether or
not due, in such order as Mortgagee may elect, or to the restoration, repair, or
replacement of the Mortgaged Property. If Mortgagee elects to apply the
insurance proceeds to the restoration, repair or replacement of the Mortgaged
Property, such proceeds shall be disbursed to Mortgagor as work progresses
pursuant to a construction and disbursing agreement in form and content
satisfactory to Mortgagee in its sole discretion, and Mortgagor shall promptly
and diligently, regardless of whether there shall be sufficient insurance
proceeds therefor, restore, repair and rebuild the Mortgaged Property to the
equivalent of its condition immediately prior to the casualty. During the period
of restoration and repair, Mortgagor shall continue to duly and promptly pay,
perform, observe and comply with all of the Obligations. The election by
Mortgagee to apply the insurance proceeds to the restoration, repair or
replacement of the Mortgaged Property shall not affect the lien of this Mortgage
or affect or reduce the Obligations.
(b) If all or any of the Mortgaged Property shall be
damaged or destroyed by a casualty not covered by insurance, or, if so covered,
the insurer fails or refuses to pay the claim within thirty (30) days following
the filing thereof, Mortgagor shall immediately give written notice thereof to
Mortgagee, and Mortgagor shall promptly and diligently, at Mortgagor's sole cost
and expense, restore, repair and rebuild the Mortgaged Property to the
equivalent of its condition immediately prior to the casualty.
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During the period of restoration and repair, Mortgagor shall continue to duly
and promptly pay, perform, observe and comply with all of the Obligations.
(c) If any work required to be performed under
Subsections (a) or (b) above, or both, shall involve an estimated expenditure of
more than $25,000.00, no such work shall be undertaken until plans and
specifications therefor, prepared by an architect satisfactory to Mortgagee,
have been submitted to and approved by Mortgagee.
4.3 CONDEMNATION.
(a) Mortgagor shall immediately notify Mortgagee upon
obtaining any knowledge of the institution of any proceedings for the
condemnation of the Mortgaged Property or any part thereof.
(b) If all or any part of the Mortgaged Property
shall be damaged or taken through condemnation (which term when used in this
Mortgage shall include any damage or taking by any Governmental Authority and
any transfer by private sale in lieu thereof, either temporarily or
permanently), Mortgagee at its option may declare all of the unpaid Obligations
to be immediately due and payable, and upon ten (10) days written notice from
Mortgagee to Mortgagor all such Obligations shall immediately become due and
payable as fully and to the same effect as if such date were the date originally
specified for the final payment or maturity thereof. Subject to the rights of
the holder of the Senior Mortgage, the Mortgagee shall be entitled to all
compensation, awards and other payments resulting from such condemnation and is
hereby authorized, at its option, to commence, appear in and prosecute, in its
own or in Mortgagor's name, any action or proceeding relating to any
condemnation, and to settle or compromise any claim in connection therewith. All
such compensation, awards, damages, claims, rights of action and proceeds and
the right thereto are hereby assigned by Mortgagor to Mortgagee and shall, be
applied first to the payment of all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) incurred by Mortgagee in
connection with any action or proceeding under this Section 4.3, and second, at
the option of Mortgagee, either to the payment of the Obligations whether or not
due, in such order as Mortgagee may elect, or to the restoration, repair or
alteration of the Mortgaged Property. If Mortgagee elects to apply the
condemnation awards to the restoration, repair or alteration of the Mortgaged
Property, such awards shall be disbursed to Mortgagor as work progresses
pursuant to a construction and disbursing agreement in form and content
satisfactory to Mortgagee in its sole discretion, and Mortgagor shall promptly
and diligently, regardless of whether there shall be sufficient condemnation
awards therefor, restore, repair and alter the Mortgaged Property in a manner
satisfactory to Mortgagee. During the period of restoration, repair and
alteration, the Mortgagor shall continue to duly and promptly pay, perform,
observe and comply with all of the Obligations. The election by Mortgagee to
apply the condemnation awards to the restoration, repair or alteration of the
Mortgaged Property shall not affect the lien of this Mortgage or affect or
reduce the Obligations. If any restoration, repair or alteration of the
Mortgaged Property shall involve an estimated expenditure of more than
$25,000.00, same shall not be commenced until plans and specifications therefor,
prepared by an architect satisfactory to Mortgagee, have been submitted to and
approved by Mortgagee.
4.4 MORTGAGOR'S RIGHT TO REBUILD THE MORTGAGED PROPERTY.
(a) Notwithstanding the provisions of Sections 4.2
and 4.3 hereof to the contrary, in the event that any portion or portions of the
Mortgaged Property are damaged or destroyed by fire or by any other casualty, or
are the subject of a "de minimis" (for purposes of this Section 4.4, the term
"de minimis" shall mean an amount, as determined by Mortgagee in its sole
discretion, which does not adversely affect the actual use of the Improvements)
condemnation, and such damage, destruction, or condemnation results in the need
for repair, rebuilding, or restoration work to be performed on the Mortgaged
Property (such repair, rebuilding, or restoration is referred to herein as the
"Work"), Mortgagee shall allow Mortgagor to use the proceeds of all insurance
policies, judgments, settlements, or awards collected with respect to such
damage, destruction, or condemnation (except such amounts as are attributable to
a loss of rents) (said net amount is defined herein as the "Reconstruction
Funds"), to perform the Work, so long as the following conditions have been met:
(i) No Event of Default exists
hereunder, under the Note, or under any other of the Loan Documents;
(ii) Mortgagor shall have delivered
evidence satisfactory to Mortgagee that the Improvements may be reconstructed in
accordance with all applicable zoning and building codes, and all rules,
regulations, and
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ordinances of Governmental Authorities and that, upon completion of the Work,
the condition of the Improvements will be at least equal in value and general
utility to that which existed immediately prior to such casualty or
condemnation;
(iii) Mortgagor shall have delivered
evidence satisfactory to Mortgagee that sufficient funds, including the
Reconstruction Funds, are available to perform the Work and that the Work is
capable of completion prior to the then effective maturity date of the Note; and
(iv) Mortgagor shall have delivered
evidence satisfactory to Mortgagee that business interruption or income
insurance proceeds payable to Mortgagor as a result of the damage or destruction
or income from the Improvements, or that sources other than the Reconstruction
Funds are sufficient to cover payments of debt service, costs, and expenses on
the Note during the period the Work is to be performed. The balance of any
proceeds, assuming income from the Improvements, business interruption or income
insurance, and other sources equals or exceeds debt service under the Note plus
monthly expenses of the Mortgaged Property, shall be paid to Mortgagor.
(v) Mortgagee shall be satisfied,
in its sole discretion, that the work can be completed and the Improvements can
be ready for occupancy at least three (3) months prior to the maturity of the
Loan;
(vi) All parties having existing or
expected possessory interest in the Property agree in a manner satisfactory to
Mortgagee that they will continue or extend their intent and arrangements for
the contract terms then in effect following the work;
(vii) All parties having operating,
management, or franchise intent in, and arrangement concerning the Property
agree that they will continue their interest and arrangements for the contract
terms then in effect following the work;
(viii) Mortgagee shall be satisfied
that it will not incur any liability to any other person as a result of such use
or release of insurance proceeds; and
(ix) The holder of the Senior
Mortgage agrees in writing to the terms of this Section 4.4.
(b) In the event that the conditions set forth in
Section 4.4(a) above are satisfied, Mortgagee shall make the Reconstruction
Funds available to Mortgagor for the Work only under the following procedures,
terms, and conditions:
(i) Mortgagor shall execute and
deliver to Mortgagee a copy of a contract with a licensed contractor acceptable
to Mortgagee setting forth a fixed price for the Work and a completion date
acceptable to Mortgagee;
(ii) Mortgagor shall demonstrate to
Mortgagee that the Reconstruction Funds are at least equal to the fixed price of
the Work as set forth in said contract or shall deposit with Mortgagee funds in
the amount by which such fixed price exceeds the Reconstruction Funds;
(iii) The Work shall be supervised by
an architect or engineer and performed in accordance with plans and
specifications prepared by such architect or engineer and approved by Mortgagee;
(iv) The Reconstruction Funds, plus
any additional funds deposited by Mortgagor, shall be received and held by
Mortgagee and disbursed in accordance with the terms and conditions used by
Mortgagee in connection with the a loan disbursing agreement to be prepared by
Mortgagee and Mortgagor's expense, and Mortgagor shall reimburse Mortgagee for
costs and expenses incurred in connection with such disbursements;
(v) Upon completion of and final
payment for the Work, any remaining Reconstruction Funds shall, at the option of
Mortgagee, be applied to the Obligations in such order as Mortgagee shall elect
or paid
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over to Mortgagor; provided, however, that in either event, any remaining
additional funds deposited by Mortgagor for excess costs shall be refunded to
Mortgagor; and
(vi) Mortgagor shall otherwise
comply with the terms and conditions of this Mortgage and the other Loan
Documents during the performance of the Work.
(c) In the event any one or more of the conditions
set forth in Subsection 4.4(a) and 4.4(b) above is not satisfied, Mortgagee may
elect, in its sole discretion, to apply the Reconstruction Funds against the
balance of the Obligations, whether or not due, in such manner as Mortgagee
shall elect.
(d) If an Event of Default shall occur hereunder, or
if Mortgagor shall fail diligently to pursue and complete the Work, Mortgagee
may, in its sole discretion, apply any undisbursed Reconstruction Funds and any
of Mortgagor's deposits against the balance of the Obligations, whether or not
due, in such manner as Mortgagee shall elect.
4.5 FURTHER ASSURANCES. Mortgagor, at its sole expense, upon
the request of Mortgagee, shall execute, acknowledge and deliver such further
instruments and do such further acts as may, in the opinion of the Mortgagee, be
necessary, desirable, or proper to carry out more effectively the purpose of
this Mortgage and to subject to the lien hereof any property intended by the
terms hereof to be covered hereby, including, without limitation, any proceeds,
renewals, additions, substitutions, replacements, products, betterments,
accessions and appurtenances thereto and thereof.
4.6 FINANCING STATEMENTS. Mortgagor shall execute and deliver
to Mortgagee, in form and substance satisfactory to Mortgagee, such financing
statements, continuation statements, and such further assurances as Mortgagee
may from time to time consider reasonably necessary to create, perfect, preserve
and maintain in full force and effect Mortgagee's lien upon the Fixtures,
Leases, Rents and Personal Property; and, Mortgagee, at the expense of
Mortgagor, may cause such statements and assurances to be recorded and
rerecorded, filed and re-filed, in the name of Mortgagor, and Mortgagor hereby
constitutes and irrevocably appoints Mortgagee its true and lawful
attorney-in-fact, which appointment is coupled with an interest, with full power
of substitution, and empowers said attorney or attorneys in the name of
Mortgagor, but at the option of said attorney-in-fact, to execute and file any
and all financing statements.
4.7 LOAN AGREEMENT. The Loan evidenced by the Note and secured
by this Mortgage is to be disbursed in accordance with the terms and provisions
of the Loan Agreement. The Note, this Mortgage and the Loan Agreement shall
always be taken and read together as constituting parts of one transaction. All
sums disbursed pursuant to the terms of the Loan Agreement shall be secured by
this Mortgage with the same priority as if advanced on the date hereof.
Mortgagor shall fully, duly and promptly discharge each and every of its
agreements contained in the Loan Agreement and comply with, abide by and perform
all of the provisions and conditions thereof.
ARTICLE V
EVENTS OF DEFAULT
5.1 EVENTS OF DEFAULT. An "Event of Default", as used in this
Mortgage, shall occur at any time or from time to time:
(a) FAILURE TO PAY. If any Obligation or any
installment thereof is not paid within ten (10) days as and when due and
payable;
(b) FAILURE TO PERFORM. If any Obligation [other than
an Obligation requiring the payment of money) is not duly and promptly performed
or is violated and such non-performance or violation is not curable, or if
curable continues for a period of thirty (30) days after written notice thereof
from Mortgagee to Mortgagor, provided, however, if such non-performance or
violation may not reasonably be cured within such thirty (30) day period, an
Event of Default shall not be deemed to have occurred
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so long as same shall be diligently and continuously endeavored to be cured.
Notwithstanding the foregoing, it shall be an Event of Default if such
non-performance or violation has not been cured within sixty (60) days after
notice thereof;
(c) DEFAULT UNDER LOAN DOCUMENTS. If any Event of
Default occurs under the Loan Agreement; or
(d) NOTICE LIMITING FUTURE ADVANCES. If Mortgagor,
pursuant to Florida Statutes 697.04(1)(b) as amended from time to time, files
for record a notice limiting the maximum amount which may be secured by this
Mortgage.
ARTICLE VI
RIGHTS AND REMEDIES
6.1 REMEDIES. If an Event of Default shall have occurred,
Mortgagee may, at its option, exercise any, some or all of the following
remedies, concurrently or consecutively.
(a) ACCELERATION. Mortgagee may declare all of the
unpaid Obligations, together with all accrued interest thereon, to be due and
payable without notice or demand which are hereby expressly waived, and upon
such declaration all such Obligations shall immediately become due and payable
as fully and to the same effect as if the date of such declaration were the date
originally specified for the full payment or maturity thereof.
(b) MORTGAGEE'S RIGHT TO ENTER AND TAKE POSSESSION,
OPERATE AND APPLY INCOME.
(i) Mortgagee may demand that
Mortgagor surrender the actual possession of the Mortgaged Property and upon
such demand, Mortgagor shall forthwith surrender same to Mortgagee and, to the
extent permitted by law, Mortgagee itself, or by such officers or agents as it
may appoint, may enter and take possession of all of the Mortgaged Property and
may exclude Mortgagor and its agents and employees wholly therefrom.
(ii) If Mortgagor shall for any
reason fail to surrender or deliver the Mortgaged Property or any part thereof
after Mortgagee's demand, Mortgagee may obtain a judgment or order conferring on
Mortgagee the right to immediate possession or requiring the Mortgagor to
deliver immediate possession to Mortgagee, to the entry of which judgment or
decree the Mortgagor hereby specifically consents.
(iii) Mortgagee may from time to
time: (A) continue and complete construction of, hold, store, use, operate,
manage and control the Mortgaged Property and conduct the business thereof; (B)
make all reasonably necessary maintenance, repairs, renewals, replacements,
additions, betterments and improvements thereto and thereon and purchase or
otherwise acquire additional Fixtures and Personal Property; (C) insure or keep
the Mortgaged Property insured; (D) exercise all the rights and powers of the
Mortgagor in its name or otherwise with respect to the same; and (E) enter into
agreements with others (including, without limitation, new Leases or amendments,
extensions, or cancellations to existing Leases) all as Mortgagee from time to
time may determine in its sole discretion. Mortgagor hereby constitutes and
irrevocably appoints Mortgagee its true and lawful attorney-in-fact, which
appointment is coupled with an interest, with full power of substitution, and
empowers said attorney or attorneys in the name of Mortgagor, but at the option
of said attorney-in-fact, to do any and all acts and execute any and all
agreements that Mortgagee may deem necessary or proper to implement and perform
any and all of the foregoing.
(iv) The Mortgagee may, with or
without taking possession of the Mortgaged Property as hereinabove provided,
collect and receive all the Rents therefrom, including those past due as well as
those accruing thereafter, and shall apply the monies so received first, to the
payment of all costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Mortgagee and its agents in connection
with the collection of same, whether or not in possession of the Mortgaged
Property, and second, in such order as Mortgagee may elect, to the payment of
the Obligations.
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(c) PROCEEDINGS TO RECOVER SUMS DUE.
(i) If any installment or part of
any Obligation shall fail to be paid when due, Mortgagee shall be entitled to
sue for and to recover judgment against the Mortgagor for the amount so due and
unpaid together with all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by Mortgagee in connection
with such proceeding, together with interest thereon at the Default Rate from
the date incurred by Mortgagee. All such costs and expenses shall be secured by
this Mortgage and shall be due and payable by Mortgagor immediately.
(ii) If Mortgagor shall fail to pay
upon the Mortgagee's demand, after acceleration as provided in Subsection
8.1(a), all of the unpaid Obligations, together with all accrued interest
thereon, Mortgagee shall be entitled to sue for and to recover judgment against
the Mortgagor for the entire amount so due and unpaid together with all costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses) incurred by Mortgagee in connection with such proceeding, together
with interest thereon at the Default Rate from the date incurred by Mortgagee.
All such costs and expenses shall be secured by this Mortgage and shall be
payable by Mortgagor immediately. Mortgagee's right under this Sub-section (ii)
may be exercised by Mortgagee either before, after or during the pendency of any
proceedings for the enforcement of this Mortgage, including appellate
proceedings.
(iii) No recovery of any judgment as
provided in Subsections (i) and (ii) above and no attachment or levy of any
execution upon any of the Mortgaged Property or any other property shall in any
way affect the lien of this Mortgage upon the Mortgaged Property or any part
thereof, or any lien, rights, powers, or remedies of Mortgagee hereunder, but
such lien, rights, powers and remedies shall continue unimpaired as before.
(d) FORECLOSURE.
(i) Mortgagee may institute
proceedings for the partial or complete foreclosure of this Mortgage and
Mortgagee may, pursuant to any final judgment of foreclosure, sell the Mortgaged
Property as an entirety or in separate lots, units, or parcels.
(ii) In case of a foreclosure sale
of all or any part of the Mortgaged Property, the proceeds of sale shall be
applied in accordance with Section 8.8 hereof, and the Mortgagee shall be
entitled to seek a deficiency judgment against the Mortgagor to enforce payment
of any and all Obligations then remaining due and unpaid, together with interest
thereon, and to recover a judgment against the Mortgagor therefor.
(iii) The Mortgagee is authorized to
foreclose this Mortgage subject to the rights of any tenants of the Mortgaged
Property, or Mortgagee may elect which tenants Mortgagee desires to name as
parties defendant in such foreclosure and failure to make any such tenants
parties defendant to any such foreclosure proceedings and to foreclose their
rights will not be, nor be asserted by the Mortgagor to be, a defense to any
proceedings instituted by the Mortgagee to collect the unpaid Obligations or to
collect any deficiency remaining unpaid after the foreclosure sale of the
Mortgaged Property.
(e) RECEIVER. Mortgagee may apply to any court of
competent jurisdiction to have a receiver appointed to enter upon and take
possession of the Mortgaged Property, collect the Rents therefrom and apply the
same as the court may direct, such receiver to have all of the rights and powers
permitted under the laws of the State of Florida. The right of the appointment
of such receiver shall be a matter of strict right without regard to the value
or the occupancy of the Mortgaged Property or the solvency or insolvency of
Mortgagor. The expenses, including receiver's fees, attorneys' fees, costs and
agent's commission incurred pursuant to the powers herein contained, together
with interest thereon at the Default Rate, shall be secured hereby and shall be
due and payable by Mortgagor immediately without notice or demand.
Notwithstanding the appointment of any receiver or other custodian, Mortgagee
shall be entitled as pledgee to the possession and control of any cash or
deposits at the time held by, payable, or deliverable under the terms of this
Mortgage to the Mortgagee, and the Mortgagee shall have the right to offset the
unpaid Obligations against any such cash or deposits in such order as Mortgagee
may elect.
(f) REMEDIES AS TO PERSONAL PROPERTY. Mortgagee may
exercise any or all of its rights and remedies under the Uniform Commercial
Code-Secured Transactions as adopted by the State of Florida or other applicable
law as well
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as all other rights and remedies possessed by Mortgagee, all of which shall be
cumulative. Mortgagee is hereby authorized and empowered to enter the Mortgaged
Property or other place where the Personal Property may be located without legal
process, and to take possession of the Personal Property without notice or
demand, which hereby are waived to the maximum extent permitted by the laws of
the State of Florida. Upon demand by Mortgagee, Mortgagor shall make the
Personal Property available to Mortgagee at a place reasonably convenient to
Mortgagee. Mortgagee may sell at one or more public or private sales and for
such price as Mortgagee may deem commercially reasonable, any and all of the
Personal Property secured by this Mortgage, and any other security or property
held by Mortgagee and Mortgagee may be the purchaser of any or all of the
Personal Property.
(g) OTHER. Mortgagee may institute and maintain any
suits and proceedings as the Mortgagee may deem advisable (i) to prevent any
impairment of the Mortgaged Property by any acts which may be unlawful or in
violation of this Mortgage, (ii) to preserve or protect its interest in the
Mortgaged Property, and (iii) to restrain the enforcement of or compliance with
any Governmental Requirement that may be unconstitutional or otherwise invalid,
if the enforcement of or compliance with such Governmental Requirement might
impair the security hereunder or be prejudicial to the Mortgagee's interest.
6.2 REMEDIES CUMULATIVE AND CONCURRENT. No right, power or
remedy of Mortgagee as provided in the Note, this Mortgage, the Guaranty, or the
other Loan Documents is intended to be exclusive of any other right, power, or
remedy of Mortgagee, but each and every such right, power and remedy shall be
cumulative and concurrent and in addition to any other right, power or remedy
available to Mortgagee now or hereafter existing at law or in equity and may be
pursued separately, successively or together against Mortgagor, any Guarantor,
or any endorser, co-maker, surety or guarantor of the Obligations, or the
Mortgaged Property or any part thereof, or any one or more of them, at the sole
discretion of Mortgagee. The failure of Mortgagee to exercise any such right,
power or remedy shall in no event be construed as a waiver or release thereof.
6.3 WAIVER, DELAY OR OMISSION. No waiver of any Event of
Default hereunder shall extend to or affect any subsequent or any other Event of
Default then existing, or impair any rights, powers or remedies consequent
thereon, and no delay or omission of Mortgagee to exercise any right, power or
remedy shall be construed to waive any such Event of Default or to constitute
acquiescence therein.
6.4 CREDIT OF MORTGAGEE. To the maximum extent permitted by
the laws of the State of Florida, upon any sale made under or by virtue of this
Article, Mortgagee may bid for and acquire the Mortgaged Property, or any part
thereof, and in lieu of paying cash therefor may apply to the purchase price,
any portion of or all of the unpaid Obligations in such order as Mortgagee may
elect.
6.5 SALE. Any sale or sales made under or by virtue of this
Article shall operate to divest all the estate, right, title, interest, claim
and demand whatsoever at law or in equity, of the Mortgagor and all Persons,
except tenants pursuant to Leases approved by Mortgagee, claiming by, through or
under Mortgagor in and to the properties and rights so sold, whether sold to
Mortgagee or to others.
6.6 PROOFS OF CLAIM. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition,
seizure of the Mortgaged Property by any Governmental Authority, or other
judicial proceedings affecting the Mortgagor, any Guarantor, any endorser,
co-maker, surety, or guarantor of the Obligations, or any of their respective
properties, the Mortgagee, to the extent permitted by law, shall be entitled to
file such proofs of claim and other documents as may be necessary or advisable
in order to have its claim allowed in such proceedings for the entire unpaid
Obligations at the date of the institution of such proceedings, and for any
additional amounts which may become due and payable after such date.
6.7 WAIVER OF REDEMPTION, NOTICE, MARSHALING, ETC. Mortgagor
hereby waives and releases, for itself and anyone claiming through, by, or under
it, to the maximum extent permitted by the laws of the State of Florida:
(a) all benefit that might accrue to Mortgagor by
virtue of any present or future law exempting the Mortgaged Property, or any
part of the proceeds arising from any sale thereof, from attachment, levy or
sale on execution, or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption or extension of time for
payment,
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(b) unless specifically required herein, all notices
of default, or Mortgagee's actual exercise of any option or remedy under the
Loan Documents, or otherwise, and
(c) any right to have the Mortgaged Property
marshaled.
6.8 APPLICATION OF PROCEEDS. The proceeds of any sale of all
or any portion of the Mortgaged Property shall be applied by Mortgagee first, to
the payment of receiver's fees and expenses, if any, and to the payment of all
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) incurred by Mortgagee, together with interest thereon at the
Default Rate from the date so incurred, in connection with any entry, action or
proceeding under this Article and, second, in such order as Mortgagee may elect,
to the payment of the Obligations. Mortgagor shall be and remain liable to
Mortgagee for any difference between the net proceeds of sale and the amount of
the Obligations until all of the Obligations have been paid in full.
6.9 DISCONTINUANCE OF PROCEEDINGS. If Mortgagee shall have
proceeded to enforce any right under any Loan Document and such proceedings
shall have been discontinued or abandoned for any reason, then except as may be
provided in any written agreement between Mortgagor and Mortgagee providing for
the discontinuance or abandonment of such proceedings, Mortgagor and Mortgagee
shall be restored to their former positions and the rights, remedies and powers
of Mortgagee shall continue as if no such proceedings had been instituted.
6.10 MORTGAGEE'S ACTIONS. Mortgagee may, at any time without
notice to any Person and without consideration, do or refrain from doing any or
all of the following actions, and neither the Mortgagor, any Guarantor, any
endorser, co-maker, surety or guarantor of the Obligations, nor any other Person
(hereinafter in this Section 8.10 collectively referred to as the "Obligor") now
or hereafter liable for the payment and performance of the Obligations shall be
relieved from the payment and performance thereof, unless specifically released
in writing by Mortgagee: (a) renew, extend or modify the terms of the Note, this
Mortgage, the Guaranty and the other Loan Documents, or any of them; (b) forbear
or extend the time for the payment or performance of any or all of the
Obligations; (c) apply payments by any Obligor to the reduction of the unpaid
Obligations in such manner, in such amounts, and at such times and in such order
and priority as Mortgagee may see fit; (d) release any Obligor; (e) substitute
or release in whole or in part the Mortgaged Property or any other collateral or
any portion thereof now or hereafter held as security for the Obligations
without affecting, disturbing or impairing in any manner whatsoever the validity
and priority of the lien of this Mortgage upon the Mortgaged Property which is
not released or substituted, or the validity and priority of any security
interest of the Mortgagee in such other collateral which is not released or
substituted; (f) subordinate the lien of this Mortgage or the lien of any other
security interest in any other collateral now or hereafter held as security for
the Obligations; (g) join in the execution of a plat or replat of the Land; (h)
join in and consent to the filing of a declaration of condominium or declaration
of restrictive covenants regarding all or any part of the Land; (i) consent to
the granting of any easement on the Land; and (j) generally deal with any
Obligor or any other party as Mortgagee may see fit.
ARTICLE VII
MISCELLANEOUS
7.1 CONTINUING AGREEMENT. This Mortgage and all of the
Mortgagor's representations, warranties and covenants herein, Mortgagee's
security interest in the Mortgaged Property and all of the rights, powers and
remedies of Mortgagee hereunder shall continue in full force and effect until
all of the Obligations have been paid and performed in full; until Mortgagee has
no further obligation to make any advances under the Loan; and until Mortgagee,
upon the request of the Mortgagor, has executed a satisfaction of mortgage.
Furthermore, if for any reason no Obligations are owing, notwithstanding such
occurrence, this Mortgage shall remain valid and in full force and effect as to
subsequent Obligations, so long as Mortgagee has not executed a satisfaction of
mortgage; provided, however, that the indemnifications set forth in Article V of
this Mortgage shall survive the satisfaction of this Mortgage.
7.2 SURVIVAL OF WARRANTIES AND COVENANTS. The warranties,
representations, covenants and agreements set forth in this Mortgage shall
survive the making of the Loan and the execution and delivery of the Note, and
shall continue in full force and effect until all of the Obligations shall have
been paid and performed in full.
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7.3 NO REPRESENTATION BY MORTGAGEE. By accepting or approving
anything required to be observed, performed or fulfilled, or to be given to
Mortgagee, pursuant to this Mortgage, or the other Loan Documents, or the
Commitment, including, but not limited to, any officer's certificate, balance
sheet, statement, survey or appraisal, Mortgagee shall not be deemed to have
warranted or represented the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision or condition thereof, and such
acceptance or approval thereof shall not be or constitute any warranty or
representation with respect thereto by Mortgagee.
7.4 NOTICE. All notices, demands, requests and other
communications required under this Mortgage shall be given in accordance with
the terms of the Loan Agreement.
7.5 COVENANTS RUNNING WITH THE LAND. All covenants contained
in this Mortgage shall be binding on the Mortgagor and shall run with the Land.
7.6 SUCCESSORS AND ASSIGNS. All of the terms of this Mortgage
shall apply to and be binding upon, and inure to the benefit of, the heirs,
devisees, personal representatives, successors and assigns of Mortgagor and
Mortgagee, respectively, and all persons claiming under or through them.
7.7 INVALIDITY.
(a) If any one or more of the provisions contained in
this Mortgage is declared or found by a court of competent jurisdiction to be
invalid, illegal, or unenforceable, such provision or portion thereof shall be
deemed stricken and severed and the remaining provisions hereof shall continue
in full force and effect.
(b) If any one or more of the Obligations is declared
or found by a court of competent jurisdiction to be invalid, illegal, or
unenforceable, the validity, legality and enforceability of the remaining
Obligations shall continue in full force and effect.
7.8 MODIFICATION. No agreement unless in writing and signed by
an authorized officer of Mortgagee and no course of dealing between the parties
hereto shall be effective to change, waive, terminate, modify, discharge, or
release in whole or in part any provision of this Mortgage. No waiver of any
rights or powers of Mortgagee or consent by it shall be valid unless in writing
signed by an authorized officer of Mortgagee and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
7.9 APPLICABLE LAW. This Mortgage shall be construed,
interpreted, enforced and governed by and in accordance with the laws of the
State of Florida (excluding the principles thereof governing conflicts of law),
and federal law, in the event federal law permits a higher rate of interest than
Florida law.
7.10 REPLACEMENT OF NOTE. Upon receipt of evidence reasonably
satisfactory to Mortgagor of the loss, theft, destruction or mutilation of the
Note, or any amendment or modification thereto, including without limitation any
renewal note or additional note, and in the case of any such loss, theft, or
destruction, upon delivery of any indemnity agreement, reasonably satisfactory
to Mortgagor or, in the case of any such mutilation, upon surrender of such
mutilated note, Mortgagor will execute and deliver, in lieu thereof, a
replacement Note, identical in form and substance to the Note and dated as of
the date of the Note and upon such execution and delivery all references in any
of the Loan Documents to the Note shall be deemed to refer to the replacement
Note.
7.11 STRICT PERFORMANCE. It is specifically agreed that time
is of the essence as to all matters provided for in this Mortgage and that no
waiver of any Obligation hereunder or secured hereby shall at any time
thereafter be held to be a waiver of the Obligations.
7.12 WAIVER OF TRIAL BY JURY. MORTGAGOR AND MORTGAGEE (BY
ACCEPTANCE OF THIS INSTRUMENT) HEREBY KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS MORTGAGE, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE, THE NOTE, OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF
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ANY PARTY HERETO OR TO ANY LOAN DOCUMENT. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR MORTGAGOR AND MORTGAGEE ENTERING INTO THE SUBJECT LOAN
TRANSACTION.
IN WITNESS WHEREOF, Mortgagor has executed this instrument as
of the day and year first above written.
Signed, sealed and delivered
in the presence of:
TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation
_____________________________
Print Name:__________________
By: ___________________________________________
Name: _________________________________________
_____________________________ Title: ________________________________________
Print Name:__________________
[CORPORATE SEAL]
STATE OF FLORIDA )
) ss.:
COUNTY OF ______ )
The foregoing instrument was acknowledged before me this _____ day of
_________________, 1996, by ___________________________________________, as
_______________________ of TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, on behalf of the corporation. He/she is personally known to me or
has produced a driver's license as identification and did not take an oath.
____________________________________________
Print or Stamp Name: _______________________
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
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This Instrument Was Prepared By:
Andrew S. Robins, Esq.
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
Suite 1400
500 E. Broward Boulevard
Fort Lauderdale, Florida 33394
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<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
<PAGE>
Record and Return To:
John T. Kinsey, Esquire
Two Executive Court
2300 Corporate Boulevard, Suite 112
Boca Raton, Florida 33431
MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(CONTINGENT RETURN MORTGAGE)
THIS MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
"Mortgage"), made as of the 29th day of March, 1996 between TRANSEASTERN
PEMBROKE VILLAGES, INC., a Florida corporation (the "Mortgagor"), as mortgagor
and debtor, whose principal place of business is 3300 University Drive, 1st
Floor, Coral Springs, Florida 33065, and AMRESCO FUNDING CORPORATION, a Delaware
corporation (the "Mortgagee"), as mortgagee and secured party, whose address is
1845 Woodall Rodgers Freeway, Dallas Texas 75201.
ARTICLE I
DEFINITIONS, HEADINGS, RULES OF
CONSTRUCTION AND SECURITY AGREEMENT
1.1 DEFINITIONS. As used in this Mortgage and in the exhibits
attached hereto, the following terms shall have the following meanings herein
specified, such definition to be applicable equally to the singular and plural
forms of such terms (unless otherwise defined herein all capitalized terms used
in this Mortgage shall have the meanings assigned to the same in this Loan
Agreement (as defined below)):
(a) COMMITMENT: The commitment letter from Mortgagee
to Transeastern Properties of South Florida, Inc. dated March 15, 1996 together
with all amendments thereto.
(b) DEFAULT RATE: The default rate of interest as set
forth in the Loan Agreement and other applicable Loan Documents.
(c) EVENTS OF DEFAULT: Those events described in
Article VI hereof.
(d) FIXTURES: All property and equipment now owned or
hereafter acquired by Mortgagor and now or hereafter located under, on, or above
the Land, whether or not permanently affixed, which, to the fullest extent
permitted by applicable law in effect from time to time, shall be deemed
fixtures and a part of the Land.
(e) [Intentionally Deleted]
(f) GOVERNMENTAL AUTHORITY: Any (domestic or foreign)
federal, state, county, municipal or other governmental department, entity,
authority, commission, board, bureau, court, agency or any instrumentality of
any of them.
<PAGE>
(g) GOVERNMENTAL REQUIREMENT: Any law, enactment,
statute, code, ordinance, order, rule, regulation, judgment, decree, writ,
injunction, franchise, permit, certificate, license, authorization, or other
direction or requirement of any Governmental Authority now existing or hereafter
enacted, adopted, promulgated, entered, or issued applicable to Mortgagee,
Mortgagor or the Mortgaged Property, including, without limitation, any
Environmental Law.
(h) GUARANTOR: Jointly and severally any and all
Persons now or hereafter guarantying the Obligations or any part thereof
(collectively referred to as the "Guarantor").
(i) GUARANTY: Any guaranty of payment, performance or
completion executed by any Guarantor in favor of Mortgagee with respect to the
Obligations.
(j) IMPOSITIONS: All (i) real estate and personal
property taxes and other taxes and assessments, public or private; utility rates
and charges including those for water and sewer; all other governmental and
non-governmental charges and any interest or costs or penalties with respect to
any of the foregoing; and charges for any public improvement, easement or
agreement maintained for the benefit of or involving the Mortgaged Property,
general and special, ordinary and extraordinary, foreseen and unforeseen, of any
kind and nature whatsoever that at any time prior to or after the execution of
this Mortgage may be assessed, levied or imposed upon the Mortgaged Property or
the Rent or income received therefrom, or any use or occupancy thereof, (ii)
other taxes, assessments, fees and governmental and non-governmental charges
levied, imposed or assessed upon or against Mortgagor or any of its properties
and (iii) taxes levied or assessed upon this Mortgage and the other Obligations,
or any of them.
(k) IMPROVEMENTS: All buildings, structures,
appurtenances and improvements, including all additions thereto and replacements
and extensions thereof, now constructed or hereafter to be constructed under, on
or above the Land, which term includes any part thereof.
(l) LAND: The real property described in Exhibit "A"
attached hereto and made a part hereof, together with all rights, privileges,
tenements, hereditaments, rights-of-way, easements, appendages, projections,
appurtenances, water rights including riparian and littoral rights, streets,
ways, alleys, and strips and gores of land now or hereafter in anyway belonging,
adjoining, crossing or pertaining to the Land.
(m) LEASES: Any and all leases, subleases, licenses,
concessions, or grants of other possessory interests, together with the security
therefor, now or hereafter in force, oral or written, covering or affecting the
Mortgaged Property or any part thereof.
(n) [Intentionally Deleted]
(o) LOAN AGREEMENT: The loan agreement of even date
herewith, between Mortgagor and Mortgagee.
(p) LOAN DOCUMENTS: Those documents or instruments
executed, submitted, or to be submitted by Mortgagor or others in connection
with the Loan, including but not limited to the: (i) Mortgage, (ii) Guaranty,
(iii) Loan Agreement, (iv) financing statements, (v) Environmental Indemnity
Agreement, and (vi) any other document or instrument executed by Mortgagor or
Guarantor in connection with the Loan.
(q) MORTGAGED PROPERTY: The Land, Improvements,
Fixtures, Leases, Rents and Personal Property together with:
(i) all judgments, awards of
damages and settlements hereafter made resulting from condemnation proceedings
or the taking of the Mortgaged Property or any part thereof under the power of
eminent domain, or by agreement in lieu thereof, or for any damage thereto
caused by any governmental action (whether by such taking or otherwise), such as
without limitation, any award for change of grade of streets;
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<PAGE>
(ii) all judgments, awards and
settlements hereafter made, and all insurance proceeds hereafter paid for any
damage to the Mortgaged Property, and all unearned insurance premiums on any
insurance policies maintained by the Mortgagor pursuant to this Mortgage;
(iii) all awards and refunds
hereafter made with respect to any Imposition; and
(iv) the estate, right, title,
interest, privilege, claim or demand whatsoever of Mortgagor, now or hereafter,
either at law or in equity, in and to the Mortgaged Property.
The term Mortgaged Property includes any part of the foregoing property
described as Mortgaged Property, and all proceeds, products, replacements,
improvements, betterments, extensions, additions, substitutions, renewals,
accessories, and appurtenances thereto and thereof.
(r) MORTGAGEE: AMRESCO Funding Corporation a Delaware
corporation, its successors and assigns.
(s) MORTGAGOR: TRANSEASTERN VILLAGES, INC., a Florida
corporation.
(t) NOTE: The promissory note dated of even date
herewith from Mortgagor to Mortgagee, in the amount of $3,000,000.00 and by this
reference made a part hereof to the same extent as though set out in full
herein, and any other note given to Mortgagee evidencing a Future Advance as any
of said notes may from time to time hereafter be modified, amended, extended or
renewed.
(u) OBLIGATIONS: Any and all of the indebtedness,
liabilities, covenants, promises, agreements, terms, conditions, and other
obligations of every nature whatsoever, whether joint or several, direct or
indirect, absolute or contingent, liquidated or unliquidated, of Mortgagor and
Guarantor, or any of them, to Mortgagee, evidenced by, secured by, under and as
set forth in this Mortgage, the Guaranty or the Loan Agreement or the other Loan
Documents that pertain to Mortgagor's obligation to pay the Contingent Returns
in accordance with the terms of the Loan Agreement and other Loan Documents;
(v) PERMITTED TITLE EXCEPTIONS: Those matters, if
any, described in Schedule B to the title insurance policy insuring Mortgagee's
interest in this Mortgage.
(w) PERSON: Any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government, or agency or political subdivision thereof, or any
other form of entity.
(x) PERSONAL PROPERTY: All of the following property
of Mortgagor whether now owned or existing, or hereafter acquired or arising,
whether located in, on, pertaining to, used or intended to be used in connection
with or resulting or created from the ownership, development, management, or
operation of the Land:
(i) all Improvements (to the extent
same are not deemed to be real property) and landscaping;
(ii) all Fixtures (to the extent
same are not deemed to be real property) and goods to become Fixtures;
(iii) all accounts, accounts
receivable, other receivables, contract rights, chattel paper, instruments and
documents; any other obligations or indebtedness owed to Mortgagor from whatever
source arising; all rights of Mortgagor to receive any performance or any
payments in money or kind; all guaranties of the foregoing and security
therefor; all of the right, title and interest of Mortgagor in and with respect
to the goods, services, or other property that gave rise to or that secure any
of the foregoing, and all rights of Mortgagor as an unpaid seller of goods and
services, including, but not limited to, the rights to stoppage in transit,
replevin, reclamation, and resale;
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<PAGE>
(iv) all goods, including without
limitation, all machinery, equipment, furniture, furnishings, building supplies
and materials, appliances, business machines, tools, aircraft and motor vehicles
of every kind and description, and all warranties and guaranties for any of the
foregoing;
(v) all inventory, merchandise, raw
materials, parts, supplies, work-in-process and finished products intended for
sale, of every kind and description, in the custody or possession, actual or
constructive, of Mortgagor including such inventory as is temporarily out of the
custody or possession of Mortgagor, and any returns upon any accounts and other
proceeds resulting from the sale or disposition of any of the foregoing,
including, without limitation, raw materials, work-in-process, and finished
goods;
(vi) all general intangibles,
including without limitation, corporate or other business records and books,
computer records whether on tape, disc or otherwise stored, blueprints, surveys,
architectural or engineering drawings, plans and specifications, trademarks,
tradenames, goodwill, telephone numbers, licenses, governmental approvals,
franchises, permits, payment and performance bonds, tax refund claims, and
agreements with utility companies, together with any deposits, prepaid fees and
charges paid thereon;
(vii) all Leases and Rents (to the
extent same are not deemed to be real property);
(viii) all judgments, awards of
damages and settlements from any condemnation or eminent domain proceedings
regarding the Land, the Improvements or any of the Mortgaged Property;
(ix) all insurance policies required
by this Mortgage, the unearned premiums therefor and all loss proceeds thereof;
(x) all other personal property,
including without limitation, management contracts, construction contracts,
architectural contracts, service contracts, engineering contracts, advertising
contracts, contracts for purchase and sale of any of the Mortgaged Property,
purchase orders, equipment leases, monies in escrow accounts, reservation
agreements, prepaid expenses, deposits and down payments with respect to the
sale or rental of any of the Mortgaged Property, options and agreements with
respect to additional real property for use or development of the Mortgaged
Property, end-loan commitments, abstracts of title, all brochures, advertising
materials, condominium documents and prospectuses; and
(xi) all proceeds, products,
replacements, additions, betterments, extensions, improvements, substitutions,
renewals and accessions of any and all of the foregoing.
(y) RENTS: All of the rents, royalties, issues,
revenues, income, profits, security deposits and other benefits whether past
due, or now or hereafter arising from the Mortgaged Property and the occupancy,
use and enjoyment thereof.
(z) SENIOR MORTGAGE: That certain Mortgage and
Security Agreement of even date herewith from Mortgagor, as mortgagor, in favor
of Chase Federal Bank, as mortgagee, to be recorded in the Public Records of
Broward County, Florida, together with the note secured thereby.
1.2 RULES OF CONSTRUCTION. The use of any gender shall include
all other genders. The singular shall include the plural and the plural shall
include the singular. The word "or" is not exclusive and the use of the word
"and" may be conjunctive or disjunctive in the sole and absolute discretion of
Mortgagee. The captions of Articles, Sections and Subsections of this Mortgage
are for convenient reference only, and shall not affect the construction or
interpretation of any of the terms and provisions set forth herein.
1.3 SECURITY AGREEMENT. This Mortgage constitutes a "Security
Agreement" within the meaning of and shall create a security interest under the
Uniform Commercial Code-Secured Transactions as adopted by the State of Florida,
with respect to the Fixtures, Leases, Rents and Personal Property. A carbon,
photographic or other reproduction of this Mortgage or of any
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<PAGE>
financing statement shall be sufficient as a financing statement. The debtor's
principal place of business and the secured party's address is set forth in the
introduction to this Mortgage.
ARTICLE II
GRANT
2.1 GRANT. For good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and to secure the payment,
observance, performance and discharge of the Obligations, Mortgagor does by
these presents give, transfer, grant, bargain, sell, alien, remise, release,
assign, mortgage, hypothecate, deposit, pledge, set over, confirm, convey and
warrant unto Mortgagee all estate, right, title and interest of Mortgagor in and
to the Mortgaged Property, whether now owned or held or hereafter acquired by
Mortgagor, subject, however, to the Permitted Title Exceptions and the rights of
the holder of the Senior Mortgage, to have and to hold the Mortgaged Property
unto Mortgagee, its successors and assigns forever.
2.2 CONDITION OF GRANT. Subject to the provisions of this
Mortgage, the condition of these presents is such that if Mortgagor shall pay,
observe, perform and discharge the Obligations, or cause same to be paid,
observed, performed and discharged in strict accordance with the terms thereof,
then this Mortgage and the estates, interests, rights and assignments granted
hereby shall be null and void, but otherwise shall remain in full force and
effect.
2.3 SUBROGATION. The Mortgagee is hereby subrogated to the
claims and liens of all parties whose claims or liens are fully or partially
discharged or paid with the proceeds of the indebtedness secured by this
Mortgage notwithstanding that such claims or liens may have been canceled and
satisfied of record.
ARTICLE III
ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. The Mortgagor does hereby absolutely and
unconditionally assign and transfer to Mortgagee all of Mortgagor's estate,
right, title and interest in and to the Leases and Rents, to have and to hold
the Leases and Rents unto Mortgagee, its successors and assigns forever. From
time to time, upon request of Mortgagee, Mortgagor shall give further evidence
of this assignment to Mortgagee by executing and delivering to Mortgagee
specific assignments of the Leases and Rents, in form and content approved by
Mortgagee. All such specific assignments shall be of the same dignity and
priority as this Mortgage. From time to time, upon request of Mortgagee,
Mortgagor shall also execute and deliver to Mortgagee any notification to
tenants or other document reasonably required by Mortgagee.
3.2 PAYMENT OF RENTS TO MORTGAGOR, AS TRUSTEE, UNTIL DEFAULT.
So long as no Event of Default has occurred, Mortgagor may, as trustee for the
use and benefit of Mortgagee, collect, receive and accept the Rents as they
become due and payable (but in no event for more than two (2) months in
advance); provided, however, that if the Rents exceed the payments due under the
Loan Agreement for the Contingent Returns, the Mortgagor may use such excess,
first, for the operation and benefit of the Mortgaged Property and, second, for
the general benefit of the Mortgagor. Upon the occurrence of an Event of Default
Mortgagee may, at its option, remove the Mortgagor as trustee for the collection
of the Rents and appoint any other person including, but not limited to, itself
as a substitute trustee to collect, receive, accept and use all such Rents in
payment of the Obligations, in such order as Mortgagee shall elect in its sole
and absolute discretion, whether or not Mortgagee takes possession of the
Mortgaged Property. Mortgagor hereby directs each of the respective tenants
under the Leases, and any rental agent, to pay to Mortgagee all such Rents, as
may now be due or shall hereafter become due, upon demand for payment thereof by
Mortgagee without any obligation on the part of any such tenant or rental agent
to determine whether or not an Event of Default has in fact occurred. Upon an
Event of Default, the permission hereby given to Mortgagor to collect, receive
and accept such Rents as trustee shall terminate and such permission shall not
be reinstated upon a cure of the Event of Default without Mortgagee's specific
written consent. Further, upon the event of a Default, Mortgagor shall
immediately turn over to Mortgagee all Rents in the actual or constructive
possession of Mortgagor, its affiliates, contractors, or its agents, together
with an accounting thereof. Exercise of Mortgagee's rights under this Section,
and the
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application of any such Rents to the Obligations, shall not cure or waidefault
hereunder or invalidate any act done pursuant hereto, but shall be cumulative
and in addition to all other rights and remedies of Mortgagee.
3.3 PERFORMANCE UNDER LEASES. Mortgagor covenants that it
shall, at its sole cost and expense, (a) duly and punctually perform and
discharge, or cause to be performed and discharged, all of the obligations and
undertakings of Mortgagor or its agents under the Leases, (b) use its best
efforts to enforce or secure, or cause to be enforced or secured, the
performance of each and every obligation and undertaking of the respective
tenants under the Leases, (c) promptly notify Mortgagee if Mortgagor receives
any notice from a tenant claiming that Mortgagor is in default under a Lease and
(d) appear in and defend any action or proceeding arising under or in any manner
connected with the Leases.
3.4 LEASES IN GOOD STANDING. All Leases, if any, are in full
force and effect, and there are no defaults thereunder or any defenses or
offsets thereto on the part of any tenant.
3.5 PROVISIONS OF LEASES. All Leases shall be inferior and
subordinate to the lien of this Mortgage and the terms of each Lease shall so
expressly provide. Mortgagor covenants that all Leases hereafter entered into by
Mortgagor shall be in form and substance satisfactory to Mortgagee.
3.6 TERMINATION OR MODIFICATION. Mortgagor covenants that it
shall not, without the prior express written consent of Mortgagee, enter into a
Lease, or materially modify, terminate, or consent to the cancellation or
surrender of any Lease, or permit any tenant under any Lease to assign or sublet
its rights thereunder.
3.7 NO OBLIGATION OF MORTGAGEE. This Assignment shall not be
deemed or construed to constitute Mortgagee as a mortgagee in possession of the
Mortgaged Property nor shall it obligate Mortgagee to take any action or to
incur expenses or perform or discharge any obligation, duty or liability of
Mortgagor under any Lease.
3.8 CUMULATIVE REMEDIES. Each and every right, remedy and
power granted to Mortgagee by this Article shall be cumulative and in addition
to every other right, remedy and power given by the Loan Documents and now or
hereafter existing in equity, at law, or by virtue of statute or otherwise. The
failure of Mortgagee to avail itself of any of its rights, remedies and powers
shall not be construed or deemed to be a waiver thereof.
3.9 NOTIFICATION OF MORTGAGEE'S RIGHTS. Mortgagee shall have
the right, but not the obligation, at any time and from time to time, to notify
any tenant under any Lease of the rights of Mortgagee as provided in this
Article III and Mortgagor, upon demand from Mortgagee, shall confirm to such
tenant the existence of such rights.
3.10 LEASING COMMISSION. Mortgagor covenants that every
agreement to pay leasing commissions with respect to the leasing of space in the
Mortgaged Property, or any part thereof, are and shall be subject, subordinate
and inferior to the right of Mortgagee, so that in the event Mortgagee acquires
title to the Mortgaged Property either at a foreclosure sale or by other means,
Mortgagee will be exonerated and discharged from all liabilities for the payment
of any such commissions or compensations.
3.11 ATTORNEY-IN-FACT. To further effectuate Mortgagee's
rights under this Article III, Mortgagor hereby constitutes and irrevocably
appoints Mortgagee its true and lawful attorney-in-fact, which appointment is
coupled with an interest, with full power of substitution, and empowers said
attorney or attorneys in the name of Mortgagor, but at the option of said
attorney-in-fact, to (i) collect and receive the Rents and to issue receipts
therefor, (ii) to make, enter into, extend, modify, amend, terminate, consent to
the cancellation or surrender of any Lease, or permit any tenant to assign or
sublet its rights thereunder, (iii) to execute, acknowledge and deliver any and
all instruments and documents that Mortgagee may deem necessary or proper to
implement its rights as provided in this Article III, and (iv) to perform and
discharge any and all obligations and undertakings of Mortgagor under any Lease.
3.12 OTHER ASSIGNMENTS. Mortgagor shall not further assign or
transfer the Leases or Rents except in favor of (i) Mortgagee as provided in
this Article III, and (ii) the holder of the Senior Mortgage and shall not
create or permit to be created or to remain, any mortgage, pledge, lien,
encumbrance, claim, or charge on the Leases or Rents except pursuant to the
Senior Mortgage, if any. Any transaction prohibited under this Section shall be
null and void.
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3.13 SECTION 697.07 OF THE FLORIDA STATUTES. The assignments
of Leases and Rents contained in this Mortgage are intended to provide Mortgagee
with all the rights and remedies of mortgagees pursuant to Section 697.07 of the
Florida Statutes (hereinafter "Section 697.07"), as may be amended from time to
time. However, in no event shall this reference diminish, alter, impair, or
affect any other rights and remedies of Mortgagee, including but not limited to,
the appointment of a receiver as provided in Section 6.1(e) herein, nor shall
any provision in this Section 3.13 diminish, alter, impair or affect any rights
or powers of the receiver in law or equity or as set forth in Section 6.1(e)
herein. In addition, this assignment shall be fully operative without regard to
value of the Mortgaged Property or without regard to the adequacy of the
Mortgaged Property to serve as security for the obligations owed by Mortgagor to
Mortgagee, and shall be in addition to any rights arising under Section 697.07.
Further, except for the notices required hereunder, if any, Mortgagor waives any
notice of default or demand for turnover of rents by Mortgagee, together with
any rights under Section 697.07 to apply to a court to deposit the Rents into
the registry of the court or such other depository as the court may designate.
ARTICLE IV
AFFIRMATIVE COVENANTS
4.1 PAYMENT AND PERFORMANCE. Mortgagor shall promptly pay and
punctually perform, or shall cause to be promptly paid and punctually performed,
all of the Obligations as and when due and payable.
4.2 RESTORATION FOLLOWING CASUALTY.
(a) If all or any part of the Mortgaged Property
shall be damaged or destroyed by a casualty, Mortgagor shall immediately give
written notice thereof to Mortgagee and the appropriate insurer, and Mortgagee
is authorized and empowered (but not obligated or required) to make proof of
loss and to settle, adjust or compromise any claims for loss, damage or
destruction under any policies of insurance required under this Mortgage.
Subject to the rights of the holder of the Senior Mortgage, all proceeds of
insurance shall be paid to Mortgagee and shall be applied first to the payment
of all costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses) incurred by Mortgagee in obtaining such proceeds, and second,
at the option of Mortgagee, either to the payment of the Obligations whether or
not due, in such order as Mortgagee may elect, or to the restoration, repair, or
replacement of the Mortgaged Property. If Mortgagee elects to apply the
insurance proceeds to the restoration, repair or replacement of the Mortgaged
Property, such proceeds shall be disbursed to Mortgagor as work progresses
pursuant to a construction and disbursing agreement in form and content
satisfactory to Mortgagee in its sole discretion, and Mortgagor shall promptly
and diligently, regardless of whether there shall be sufficient insurance
proceeds therefor, restore, repair and rebuild the Mortgaged Property to the
equivalent of its condition immediately prior to the casualty. During the period
of restoration and repair, Mortgagor shall continue to duly and promptly pay,
perform, observe and comply with all of the Obligations. The election by
Mortgagee to apply the insurance proceeds to the restoration, repair or
replacement of the Mortgaged Property shall not affect the lien of this Mortgage
or affect or reduce the Obligations.
(b) If all or any of the Mortgaged Property shall be
damaged or destroyed by a casualty not covered by insurance, or, if so covered,
the insurer fails or refuses to pay the claim within thirty (30) days following
the filing thereof, Mortgagor shall immediately give written notice thereof to
Mortgagee, and Mortgagor shall promptly and diligently, at Mortgagor's sole cost
and expense, restore, repair and rebuild the Mortgaged Property to the
equivalent of its condition immediately prior to the casualty. During the period
of restoration and repair, Mortgagor shall continue to duly and promptly pay,
perform, observe and comply with all of the Obligations.
(c) If any work required to be performed under
Subsections (a) or (b) above, or both, shall involve an estimated expenditure of
more than $25,000.00, no such work shall be undertaken until plans and
specifications therefor, prepared by an architect satisfactory to Mortgagee,
have been submitted to and approved by Mortgagee.
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4.3 CONDEMNATION.
(a) Mortgagor shall immediately notify Mortgagee upon
obtaining any knowledge of the institution of any proceedings for the
condemnation of the Mortgaged Property or any part thereof.
(b) If all or any part of the Mortgaged Property
shall be damaged or taken through condemnation (which term when used in this
Mortgage shall include any damage or taking by any Governmental Authority and
any transfer by private sale in lieu thereof, either temporarily or
permanently), Mortgagee at its option may declare all of the unpaid Obligations
to be immediately due and payable, and upon ten (10) days written notice from
Mortgagee to Mortgagor all such Obligations shall immediately become due and
payable as fully and to the same effect as if such date were the date originally
specified for the final payment or maturity thereof. Subject to the rights of
the holder of the Senior Mortgage, the Mortgagee shall be entitled to all
compensation, awards and other payments resulting from such condemnation and is
hereby authorized, at its option, to commence, appear in and prosecute, in its
own or in Mortgagor's name, any action or proceeding relating to any
condemnation, and to settle or compromise any claim in connection therewith. All
such compensation, awards, damages, claims, rights of action and proceeds and
the right thereto are hereby assigned by Mortgagor to Mortgagee and shall, be
applied first to the payment of all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) incurred by Mortgagee in
connection with any action or proceeding under this Section 4.3, and second, at
the option of Mortgagee, either to the payment of the Obligations whether or not
due, in such order as Mortgagee may elect, or to the restoration, repair or
alteration of the Mortgaged Property. If Mortgagee elects to apply the
condemnation awards to the restoration, repair or alteration of the Mortgaged
Property, such awards shall be disbursed to Mortgagor as work progresses
pursuant to a construction and disbursing agreement in form and content
satisfactory to Mortgagee in its sole discretion, and Mortgagor shall promptly
and diligently, regardless of whether there shall be sufficient condemnation
awards therefor, restore, repair and alter the Mortgaged Property in a manner
satisfactory to Mortgagee. During the period of restoration, repair and
alteration, the Mortgagor shall continue to duly and promptly pay, perform,
observe and comply with all of the Obligations. The election by Mortgagee to
apply the condemnation awards to the restoration, repair or alteration of the
Mortgaged Property shall not affect the lien of this Mortgage or affect or
reduce the Obligations. If any restoration, repair or alteration of the
Mortgaged Property shall involve an estimated expenditure of more than
$25,000.00, same shall not be commenced until plans and specifications therefor,
prepared by an architect satisfactory to Mortgagee, have been submitted to and
approved by Mortgagee.
4.4 MORTGAGOR'S RIGHT TO REBUILD THE MORTGAGED PROPERTY.
(a) Notwithstanding the provisions of Sections 4.2
and 4.3 hereof to the contrary, in the event that any portion or portions of the
Mortgaged Property are damaged or destroyed by fire or by any other casualty, or
are the subject of a "de minimis" (for purposes of this Section 4.4, the term
"de minimis" shall mean an amount, as determined by Mortgagee in its sole
discretion, which does not adversely affect the actual use of the Improvements)
condemnation, and such damage, destruction, or condemnation results in the need
for repair, rebuilding, or restoration work to be performed on the Mortgaged
Property (such repair, rebuilding, or restoration is referred to herein as the
"Work"), Mortgagee shall allow Mortgagor to use the proceeds of all insurance
policies, judgments, settlements, or awards collected with respect to such
damage, destruction, or condemnation (except such amounts as are attributable to
a loss of rents) (said net amount is defined herein as the "Reconstruction
Funds"), to perform the Work, so long as the following conditions have been met:
(i) No Event of Default exists
hereunder, under the Loan Agreement or under any other of the Loan Documents;
(ii) Mortgagor shall have delivered
evidence satisfactory to Mortgagee that the Improvements may be reconstructed in
accordance with all applicable zoning and building codes, and all rules,
regulations, and ordinances of Governmental Authorities and that, upon
completion of the Work, the condition of the Improvements will be at least equal
in value and general utility to that which existed immediately prior to such
casualty or condemnation;
(iii) Mortgagor shall have delivered
evidence satisfactory to Mortgagee that sufficient funds, including the
Reconstruction Funds, are available to perform the Work and that the Work is
capable of completion prior to the payment in full of all Contingent Returns as
set forth in the Loan Agreement; and
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(iv) Mortgagor shall have delivered
evidence satisfactory to Mortgagee that business interruption or income
insurance proceeds payable to Mortgagor as a result of the damage or destruction
or income from the Improvements, or that sources other than the Reconstruction
Funds are sufficient to cover payments of debt service, costs, and expenses on
the Project during the period the Work is to be performed. The balance of any
proceeds, assuming income from the Improvements, business interruption or income
insurance, and other sources equals or exceeds debt service under the Project
plus monthly expenses of the Mortgaged Property, shall be paid to Mortgagor.
(v) Mortgagee shall be satisfied,
in its sole discretion, that the work can be completed and the Improvements can
be ready for occupancy at least three (3) months prior to payment in full of all
of the Contingent Returns under the Loan Agreement;
(vi) All parties having existing or
expected possessory interest in the Property agree in a manner satisfactory to
Mortgagee that they will continue or extend their intent and arrangements for
the contract terms then in effect following the work;
(vii) All parties having operating,
management, or franchise intent in, and arrangement concerning the Property
agree that they will continue their interest and arrangements for the contract
terms then in effect following the work;
(viii) Mortgagee shall be satisfied
that it will not incur any liability to any other person as a result of such use
or release of insurance proceeds; and
(ix) The holder of the Senior
Mortgage agrees in writing to the terms of this Section 4.4.
(b) In the event that the conditions set forth in
Section 4.4(a) above are satisfied, Mortgagee shall make the Reconstruction
Funds available to Mortgagor for the Work only under the following procedures,
terms, and conditions:
(i) Mortgagor shall execute and
deliver to Mortgagee a copy of a contract with a licensed contractor acceptable
to Mortgagee setting forth a fixed price for the Work and a completion date
acceptable to Mortgagee;
(ii) Mortgagor shall demonstrate to
Mortgagee that the Reconstruction Funds are at least equal to the fixed price of
the Work as set forth in said contract or shall deposit with Mortgagee funds in
the amount by which such fixed price exceeds the Reconstruction Funds;
(iii) The Work shall be supervised by
an architect or engineer and performed in accordance with plans and
specifications prepared by such architect or engineer and approved by Mortgagee;
(iv) The Reconstruction Funds, plus
any additional funds deposited by Mortgagor, shall be received and held by
Mortgagee and disbursed in accordance with the terms and conditions used by
Mortgagee in connection with the a loan disbursing agreement to be prepared by
Mortgagee and Mortgagor's expense, and Mortgagor shall reimburse Mortgagee for
costs and expenses incurred in connection with such disbursements;
(v) Upon completion of and final
payment for the Work, any remaining Reconstruction Funds shall, at the option of
Mortgagee, be applied to the Obligations in such order as Mortgagee shall elect
or paid over to Mortgagor; provided, however, that in either event, any
remaining additional funds deposited by Mortgagor for excess costs shall be
refunded to Mortgagor; and
(vi) Mortgagor shall otherwise
comply with the terms and conditions of this Mortgage and the other Loan
Documents during the performance of the Work.
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(c) In the event any one or more of the conditions
set forth in Subsection 4.4(a) and 4.4(b) above is not satisfied, Mortgagee may
elect, in its sole discretion, to apply the Reconstruction Funds against the
balance of the Obligations, whether or not due, in such manner as Mortgagee
shall elect.
(d) If an Event of Default shall occur hereunder, or
if Mortgagor shall fail diligently to pursue and complete the Work, Mortgagee
may, in its sole discretion, apply any undisbursed Reconstruction Funds and any
of Mortgagor's deposits against the balance of the Obligations, whether or not
due, in such manner as Mortgagee shall elect.
4.5 FURTHER ASSURANCES. Mortgagor, at its sole expense, upon
the request of Mortgagee, shall execute, acknowledge and deliver such further
instruments and do such further acts as may, in the opinion of the Mortgagee, be
necessary, desirable, or proper to carry out more effectively the purpose of
this Mortgage and to subject to the lien hereof any property intended by the
terms hereof to be covered hereby, including, without limitation, any proceeds,
renewals, additions, substitutions, replacements, products, betterments,
accessions and appurtenances thereto and thereof.
4.6 FINANCING STATEMENTS. Mortgagor shall execute and deliver
to Mortgagee, in form and substance satisfactory to Mortgagee, such financing
statements, continuation statements, and such further assurances as Mortgagee
may from time to time consider reasonably necessary to create, perfect, preserve
and maintain in full force and effect Mortgagee's lien upon the Fixtures,
Leases, Rents and Personal Property; and, Mortgagee, at the expense of
Mortgagor, may cause such statements and assurances to be recorded and
rerecorded, filed and re-filed, in the name of Mortgagor, and Mortgagor hereby
constitutes and irrevocably appoints Mortgagee its true and lawful
attorney-in-fact, which appointment is coupled with an interest, with full power
of substitution, and empowers said attorney or attorneys in the name of
Mortgagor, but at the option of said attorney-in-fact, to execute and file any
and all financing statements.
4.7 LOAN AGREEMENT. The obligation to pay the Contingent
Returns is evidenced and governed by the Loan Agreement and secured by this
Mortgage. This Mortgage and the Loan Agreement shall always be taken and read
together as constituting parts of one transaction. All sums disbursed pursuant
to the terms of the Loan Agreement shall be secured by this Mortgage with the
same priority as if advanced on the date hereof. Mortgagor shall fully, duly and
promptly discharge each and every of its agreements contained in the Loan
Agreement and comply with, abide by and perform all of the provisions and
conditions thereof.
ARTICLE V
EVENTS OF DEFAULT
5.1 EVENTS OF DEFAULT. An "Event of Default", as used in this
Mortgage, shall occur at any time or from time to time:
(a) FAILURE TO PAY. If any Obligation or any
installment thereof is not paid within ten (10) days as and when due and
payable;
(b) FAILURE TO PERFORM. If any Obligation [other than
an Obligation requiring the payment of money) is not duly and promptly performed
or is violated and such non-performance or violation is not curable, or if
curable continues for a period of thirty (30) days after written notice thereof
from Mortgagee to Mortgagor, provided, however, if such non-performance or
violation may not reasonably be cured within such thirty (30) day period, an
Event of Default shall not be deemed to have occurred so long as same shall be
diligently and continuously endeavored to be cured. Notwithstanding the
foregoing, it shall be an Event of Default if such non-performance or violation
has not been cured within sixty (60) days after notice thereof;
(c) DEFAULT UNDER LOAN DOCUMENTS. If any Event of
Default occurs under the Loan Agreement; or
(d) NOTICE LIMITING FUTURE ADVANCES. If Mortgagor,
pursuant to Florida Statutes 697.04(1)(b) as amended from time to time, files
for record a notice limiting the maximum amount which may be secured by this
Mortgage.
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ARTICLE VI
RIGHTS AND REMEDIES
6.1 REMEDIES. If an Event of Default shall have occurred,
Mortgagee may, at its option, exercise any, some or all of the following
remedies, concurrently or consecutively.
(a) ACCELERATION. Mortgagee may declare all of the
unpaid Obligations, together with all accrued interest thereon, to be due and
payable without notice or demand which are hereby expressly waived, and upon
such declaration all such Obligations shall immediately become due and payable
as fully and to the same effect as if the date of such declaration were the date
originally specified for the full payment or maturity thereof.
(b) MORTGAGEE'S RIGHT TO ENTER AND TAKE POSSESSION,
OPERATE AND APPLY INCOME.
(i) Mortgagee may demand that
Mortgagor surrender the actual possession of the Mortgaged Property and upon
such demand, Mortgagor shall forthwith surrender same to Mortgagee and, to the
extent permitted by law, Mortgagee itself, or by such officers or agents as it
may appoint, may enter and take possession of all of the Mortgaged Property and
may exclude Mortgagor and its agents and employees wholly therefrom.
(ii) If Mortgagor shall for any
reason fail to surrender or deliver the Mortgaged Property or any part thereof
after Mortgagee's demand, Mortgagee may obtain a judgment or order conferring on
Mortgagee the right to immediate possession or requiring the Mortgagor to
deliver immediate possession to Mortgagee, to the entry of which judgment or
decree the Mortgagor hereby specifically consents.
(iii) Mortgagee may from time to
time: (A) continue and complete construction of, hold, store, use, operate,
manage and control the Mortgaged Property and conduct the business thereof; (B)
make all reasonably necessary maintenance, repairs, renewals, replacements,
additions, betterments and improvements thereto and thereon and purchase or
otherwise acquire additional Fixtures and Personal Property; (C) insure or keep
the Mortgaged Property insured; (D) exercise all the rights and powers of the
Mortgagor in its name or otherwise with respect to the same; and (E) enter into
agreements with others (including, without limitation, new Leases or amendments,
extensions, or cancellations to existing Leases) all as Mortgagee from time to
time may determine in its sole discretion. Mortgagor hereby constitutes and
irrevocably appoints Mortgagee its true and lawful attorney-in-fact, which
appointment is coupled with an interest, with full power of substitution, and
empowers said attorney or attorneys in the name of Mortgagor, but at the option
of said attorney-in-fact, to do any and all acts and execute any and all
agreements that Mortgagee may deem necessary or proper to implement and perform
any and all of the foregoing.
(iv) The Mortgagee may, with or
without taking possession of the Mortgaged Property as hereinabove provided,
collect and receive all the Rents therefrom, including those past due as well as
those accruing thereafter, and shall apply the monies so received first, to the
payment of all costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Mortgagee and its agents in connection
with the collection of same, whether or not in possession of the Mortgaged
Property, and second, in such order as Mortgagee may elect, to the payment of
the Obligations.
(c) PROCEEDINGS TO RECOVER SUMS DUE.
(i) If any installment or part of
any Obligation shall fail to be paid when due, Mortgagee shall be entitled to
sue for and to recover judgment against the Mortgagor for the amount so due and
unpaid together with all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by Mortgagee in connection
with such proceeding, together with interest thereon at the Default Rate from
the date incurred by Mortgagee. All such costs and expenses shall be secured by
this Mortgage and shall be due and payable by Mortgagor immediately.
(ii) If Mortgagor shall fail to pay
upon the Mortgagee's demand, after acceleration as provided in Subsection
8.1(a), all of the unpaid Obligations, together with all accrued interest
thereon, Mortgagee shall
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be entitled to sue for and to recover judgment against the Mortgagor for the
entire amount so due and unpaid together with all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by
Mortgagee in connection with such proceeding, together with interest thereon at
the Default Rate from the date incurred by Mortgagee. All such costs and
expenses shall be secured by this Mortgage and shall be payable by Mortgagor
immediately. Mortgagee's right under this Sub-section (ii) may be exercised by
Mortgagee either before, after or during the pendency of any proceedings for the
enforcement of this Mortgage, including appellate proceedings.
(iii) No recovery of any judgment as
provided in Subsections (i) and (ii) above and no attachment or levy of any
execution upon any of the Mortgaged Property or any other property shall in any
way affect the lien of this Mortgage upon the Mortgaged Property or any part
thereof, or any lien, rights, powers, or remedies of Mortgagee hereunder, but
such lien, rights, powers and remedies shall continue unimpaired as before.
(d) FORECLOSURE.
(i) Mortgagee may institute
proceedings for the partial or complete foreclosure of this Mortgage and
Mortgagee may, pursuant to any final judgment of foreclosure, sell the Mortgaged
Property as an entirety or in separate lots, units, or parcels.
(ii) In case of a foreclosure sale
of all or any part of the Mortgaged Property, the proceeds of sale shall be
applied in accordance with Section 8.8 hereof, and the Mortgagee shall be
entitled to seek a deficiency judgment against the Mortgagor to enforce payment
of any and all Obligations then remaining due and unpaid, together with interest
thereon, and to recover a judgment against the Mortgagor therefor.
(iii) The Mortgagee is authorized to
foreclose this Mortgage subject to the rights of any tenants of the Mortgaged
Property, or Mortgagee may elect which tenants Mortgagee desires to name as
parties defendant in such foreclosure and failure to make any such tenants
parties defendant to any such foreclosure proceedings and to foreclose their
rights will not be, nor be asserted by the Mortgagor to be, a defense to any
proceedings instituted by the Mortgagee to collect the unpaid Obligations or to
collect any deficiency remaining unpaid after the foreclosure sale of the
Mortgaged Property.
(e) RECEIVER. Mortgagee may apply to any court of
competent jurisdiction to have a receiver appointed to enter upon and take
possession of the Mortgaged Property, collect the Rents therefrom and apply the
same as the court may direct, such receiver to have all of the rights and powers
permitted under the laws of the State of Florida. The right of the appointment
of such receiver shall be a matter of strict right without regard to the value
or the occupancy of the Mortgaged Property or the solvency or insolvency of
Mortgagor. The expenses, including receiver's fees, attorneys' fees, costs and
agent's commission incurred pursuant to the powers herein contained, together
with interest thereon at the Default Rate, shall be secured hereby and shall be
due and payable by Mortgagor immediately without notice or demand.
Notwithstanding the appointment of any receiver or other custodian, Mortgagee
shall be entitled as pledgee to the possession and control of any cash or
deposits at the time held by, payable, or deliverable under the terms of this
Mortgage to the Mortgagee, and the Mortgagee shall have the right to offset the
unpaid Obligations against any such cash or deposits in such order as Mortgagee
may elect.
(f) REMEDIES AS TO PERSONAL PROPERTY. Mortgagee may
exercise any or all of its rights and remedies under the Uniform Commercial
Code-Secured Transactions as adopted by the State of Florida or other applicable
law as well as all other rights and remedies possessed by Mortgagee, all of
which shall be cumulative. Mortgagee is hereby authorized and empowered to enter
the Mortgaged Property or other place where the Personal Property may be located
without legal process, and to take possession of the Personal Property without
notice or demand, which hereby are waived to the maximum extent permitted by the
laws of the State of Florida. Upon demand by Mortgagee, Mortgagor shall make the
Personal Property available to Mortgagee at a place reasonably convenient to
Mortgagee. Mortgagee may sell at one or more public or private sales and for
such price as Mortgagee may deem commercially reasonable, any and all of the
Personal Property secured by this Mortgage, and any other security or property
held by Mortgagee and Mortgagee may be the purchaser of any or all of the
Personal Property.
(g) OTHER. Mortgagee may institute and maintain any
suits and proceedings as the Mortgagee may deem advisable (i) to prevent any
impairment of the Mortgaged Property by any acts which may be unlawful or in
violation of
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this Mortgage, (ii) to preserve or protect its interest in the Mortgaged
Property, and (iii) to restrain the enforcement of or compliance with any
Governmental Requirement that may be unconstitutional or otherwise invalid, if
the enforcement of or compliance with such Governmental Requirement might impair
the security hereunder or be prejudicial to the Mortgagee's interest.
6.2 REMEDIES CUMULATIVE AND CONCURRENT. No right, power or
remedy of Mortgagee as provided in the Loan Agreement or the other applicable
Loan Documents with respect to the Contingent Returns is intended to be
exclusive of any other right, power, or remedy of Mortgagee, but each and every
such right, power and remedy shall be cumulative and concurrent and in addition
to any other right, power or remedy available to Mortgagee now or hereafter
existing at law or in equity and may be pursued separately, successively or
together against Mortgagor, any Guarantor, or any endorser, co-maker, surety or
guarantor of the Obligations, or the Mortgaged Property or any part thereof, or
any one or more of them, at the sole discretion of Mortgagee. The failure of
Mortgagee to exercise any such right, power or remedy shall in no event be
construed as a waiver or release thereof.
6.3 WAIVER, DELAY OR OMISSION. No waiver of any Event of
Default hereunder shall extend to or affect any subsequent or any other Event of
Default then existing, or impair any rights, powers or remedies consequent
thereon, and no delay or omission of Mortgagee to exercise any right, power or
remedy shall be construed to waive any such Event of Default or to constitute
acquiescence therein.
6.4 CREDIT OF MORTGAGEE. To the maximum extent permitted by
the laws of the State of Florida, upon any sale made under or by virtue of this
Article, Mortgagee may bid for and acquire the Mortgaged Property, or any part
thereof, and in lieu of paying cash therefor may apply to the purchase price,
any portion of or all of the unpaid Obligations in such order as Mortgagee may
elect.
6.5 SALE. Any sale or sales made under or by virtue of this
Article shall operate to divest all the estate, right, title, interest, claim
and demand whatsoever at law or in equity, of the Mortgagor and all Persons,
except tenants pursuant to Leases approved by Mortgagee, claiming by, through or
under Mortgagor in and to the properties and rights so sold, whether sold to
Mortgagee or to others.
6.6 PROOFS OF CLAIM. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition,
seizure of the Mortgaged Property by any Governmental Authority, or other
judicial proceedings affecting the Mortgagor, any Guarantor, any endorser,
co-maker, surety, or guarantor of the Obligations, or any of their respective
properties, the Mortgagee, to the extent permitted by law, shall be entitled to
file such proofs of claim and other documents as may be necessary or advisable
in order to have its claim allowed in such proceedings for the entire unpaid
Obligations at the date of the institution of such proceedings, and for any
additional amounts which may become due and payable after such date.
6.7 WAIVER OF REDEMPTION, NOTICE, MARSHALING, ETC. Mortgagor
hereby waives and releases, for itself and anyone claiming through, by, or under
it, to the maximum extent permitted by the laws of the State of Florida:
(a) all benefit that might accrue to Mortgagor by
virtue of any present or future law exempting the Mortgaged Property, or any
part of the proceeds arising from any sale thereof, from attachment, levy or
sale on execution, or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption or extension of time for
payment,
(b) unless specifically required herein, all notices
of default, or Mortgagee's actual exercise of any option or remedy under the
Loan Documents, or otherwise, and
(c) any right to have the Mortgaged Property
marshaled.
6.8 APPLICATION OF PROCEEDS. The proceeds of any sale of all
or any portion of the Mortgaged Property shall be applied by Mortgagee first, to
the payment of receiver's fees and expenses, if any, and to the payment of all
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) incurred by Mortgagee, together with interest thereon at the
Default Rate from the date so incurred, in connection with any entry, action or
proceeding under this Article and, second, in such order as Mortgagee may elect,
to the payment of the Obligations. Mortgagor shall be and remain liable to
Mortgagee for any difference between the net proceeds of sale and the amount of
the Obligations until all of the Obligations have been paid in full.
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6.9 DISCONTINUANCE OF PROCEEDINGS. If Mortgagee shall have
proceeded to enforce any right under any Loan Document and such proceedings
shall have been discontinued or abandoned for any reason, then except as may be
provided in any written agreement between Mortgagor and Mortgagee providing for
the discontinuance or abandonment of such proceedings, Mortgagor and Mortgagee
shall be restored to their former positions and the rights, remedies and powers
of Mortgagee shall continue as if no such proceedings had been instituted.
6.10 MORTGAGEE'S ACTIONS. Mortgagee may, at any time without
notice to any Person and without consideration, do or refrain from doing any or
all of the following actions, and neither the Mortgagor, any Guarantor, any
endorser, co-maker, surety or guarantor of the Obligations, nor any other Person
(hereinafter in this Section 8.10 collectively referred to as the "Obligor") now
or hereafter liable for the payment and performance of the Obligations shall be
relieved from the payment and performance thereof, unless specifically released
in writing by Mortgagee: (a) renew, extend or modify the terms of the Loan
Agreement, this Mortgage or the other applicable Loan Documents that pertain to
the Contingent Returns or any of them; (b) forbear or extend the time for the
payment or performance of any or all of the Obligations; (c) apply payments by
any Obligor to the reduction of the unpaid Obligations in such manner, in such
amounts, and at such times and in such order and priority as Mortgagee may see
fit; (d) release any Obligor; (e) substitute or release in whole or in part the
Mortgaged Property or any other collateral or any portion thereof now or
hereafter held as security for the Obligations without affecting, disturbing or
impairing in any manner whatsoever the validity and priority of the lien of this
Mortgage upon the Mortgaged Property which is not released or substituted, or
the validity and priority of any security interest of the Mortgagee in such
other collateral which is not released or substituted; (f) subordinate the lien
of this Mortgage or the lien of any other security interest in any other
collateral now or hereafter held as security for the Obligations; (g) join in
the execution of a plat or replat of the Land; (h) join in and consent to the
filing of a declaration of condominium or declaration of restrictive covenants
regarding all or any part of the Land; (i) consent to the granting of any
easement on the Land; and (j) generally deal with any Obligor or any other party
as Mortgagee may see fit.
ARTICLE VII
MISCELLANEOUS
7.1 CONTINUING AGREEMENT. This Mortgage and all of the
Mortgagor's representations, warranties and covenants herein, Mortgagee's
security interest in the Mortgaged Property and all of the rights, powers and
remedies of Mortgagee hereunder shall continue in full force and effect until
all of the Obligations have been paid and performed in full; until Mortgagee has
no further obligation to make any advances under the Loan Agreement or other
Loan Documents; and until Mortgagee, upon the request of the Mortgagor, has
executed a satisfaction of mortgage. Furthermore, if for any reason no
Obligations are owing, notwithstanding such occurrence, this Mortgage shall
remain valid and in full force and effect as to subsequent Obligations, so long
as Mortgagee has not executed a satisfaction of mortgage; provided, however,
that the indemnifications set forth in Article V of this Mortgage shall survive
the satisfaction of this Mortgage.
7.2 SURVIVAL OF WARRANTIES AND COVENANTS. The warranties,
representations, covenants and agreements set forth in this Mortgage shall
survive the execution of the Loan Agreement, and shall continue in full force
and effect until all of the Obligations shall have been paid and performed in
full.
7.3 NO REPRESENTATION BY MORTGAGEE. By accepting or approving
anything required to be observed, performed or fulfilled, or to be given to
Mortgagee, pursuant to this Mortgage, or the other Loan Documents, or the
Commitment, including, but not limited to, any officer's certificate, balance
sheet, statement, survey or appraisal, Mortgagee shall not be deemed to have
warranted or represented the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision or condition thereof, and such
acceptance or approval thereof shall not be or constitute any warranty or
representation with respect thereto by Mortgagee.
7.4 NOTICE. All notices, demands, requests and other
communications required under this Mortgage shall be given in accordance with
the terms of the Loan Agreement.
7.5 COVENANTS RUNNING WITH THE LAND. All covenants contained
in this Mortgage shall be binding on the Mortgagor and shall run with the Land.
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<PAGE>
7.6 SUCCESSORS AND ASSIGNS. All of the terms of this Mortgage
shall apply to and be binding upon, and inure to the benefit of, the heirs,
devisees, personal representatives, successors and assigns of Mortgagor and
Mortgagee, respectively, and all persons claiming under or through them.
7.7 INVALIDITY.
(a) If any one or more of the provisions contained in
this Mortgage is declared or found by a court of competent jurisdiction to be
invalid, illegal, or unenforceable, such provision or portion thereof shall be
deemed stricken and severed and the remaining provisions hereof shall continue
in full force and effect.
(b) If any one or more of the Obligations is declared
or found by a court of competent jurisdiction to be invalid, illegal, or
unenforceable, the validity, legality and enforceability of the remaining
Obligations shall continue in full force and effect.
7.8 MODIFICATION. No agreement unless in writing and signed by
an authorized officer of Mortgagee and no course of dealing between the parties
hereto shall be effective to change, waive, terminate, modify, discharge, or
release in whole or in part any provision of this Mortgage. No waiver of any
rights or powers of Mortgagee or consent by it shall be valid unless in writing
signed by an authorized officer of Mortgagee and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
7.9 APPLICABLE LAW. This Mortgage shall be construed,
interpreted, enforced and governed by and in accordance with the laws of the
State of Florida (excluding the principles thereof governing conflicts of law),
and federal law, in the event federal law permits a higher rate of interest than
Florida law.
7.10 [Intentionally Deleted]
7.11 STRICT PERFORMANCE. It is specifically agreed that time
is of the essence as to all matters provided for in this Mortgage and that no
waiver of any Obligation hereunder or secured hereby shall at any time
thereafter be held to be a waiver of the Obligations.
7.12 WAIVER OF TRIAL BY JURY. MORTGAGOR AND MORTGAGEE (BY
ACCEPTANCE OF THIS INSTRUMENT) HEREBY KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS MORTGAGE, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE, THE LOAN AGREEMENT, OR ANY OTHER
APPLICABLE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY
LOAN DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MORTGAGOR AND
MORTGAGEE ENTERING INTO THE SUBJECT LOAN TRANSACTION.
IN WITNESS WHEREOF, Mortgagor has executed this instrument as
of the day and year first above written.
Signed, sealed and delivered
in the presence of:
TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation
_____________________________
Print Name:__________________
By: ___________________________________________
-15-
<PAGE>
Name: _________________________________________
_____________________________ Title: ________________________________________
Print Name:__________________
[CORPORATE SEAL]
STATE OF FLORIDA )
) ss.:
COUNTY OF ______ )
The foregoing instrument was acknowledged before me this _____ day of
_________________, 1996, by ___________________________________________, as
_______________________ of TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, on behalf of the corporation. He/she is personally known to me or
has produced a driver's license as identification and did not take an oath.
____________________________________________
Print or Stamp Name: _______________________
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
-16-
<PAGE>
This Instrument Was Prepared By:
Andrew S. Robins, Esq.
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
Suite 1400
500 E. Broward Boulevard
Fort Lauderdale, Florida 33394
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<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
-18-
LOAN AGREEMENT
BY AND BETWEEN
TRANSEASTERN PEMBROKE VILLAGES, INC.,
A FLORIDA CORPORATION
(THE "BORROWER")
AND
CHASE FEDERAL BANK, A FEDERAL SAVINGS BANK, A DIVISION OF
NATIONSBANK, N.A. (SOUTH), A NATIONAL BANKING ASSOCIATION
ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES
(THE "BANK")
DATED: SEPTEMBER ___, 1996
RICHARD A. WOOD, ESQ.
THERREL BAISDEN & MEYER WEISS
1111 LINCOLN ROAD
SUITE 500
MIAMI BEACH, FLORIDA 33139
(305) 672-1921
<PAGE>
Loan No. 91000839
THIS LOAN AGREEMENT, dated as of the _____ day of September, 1996 (the
"Loan Agreement" or "Agreement"), is made by and between TRANSEASTERN PEMBROKE
VILLAGES, INC., A FLORIDA CORPORATION, with its principal place of business at
3300 University Drive, Coral Springs, Florida 33065 ("Borrower"), and CHASE
FEDERAL BANK, A FEDERAL SAVINGS BANK, A DIVISION OF NATIONSBANK, N.A. (SOUTH), a
national banking association organized and existing under the laws of the United
States, with its offices located at 701 West Cypress Creek Road, Suite 101, Fort
Lauderdale, Florida 33309 ("Bank").
RECITALS
A. Borrower has applied to Bank for a loan in the principal amount of
EIGHT MILLION SEVEN HUNDRED THIRTY SEVEN THOUSAND FIVE HUNDRED AND NO/100
DOLLARS ($8,737,500.00) (the "Loan") to be used for the purpose of acquiring the
Land, as hereinafter defined, and developing same into single family lots and
townhome lots now owned or to be acquired by Borrower in fee simple and
mortgaged to Bank as security for the Loan, which lots are to be located in a
certain residential developments known as "Pelican Pointe" and "Egrets Way"
located upon certain property in Broward County, Florida.
B. Bank has agreed to accept a note and mortgage under which advances
may be made for the land acquisition and infrastructure development in
accordance with plats, specifications, terms, and conditions approved by Bank.
C. Bank is willing to make the Loan described above based on the terms
and conditions set forth in this Loan Agreement and in the Loan Documents
referred to herein.
NOW, THEREFORE, in consideration of the premises, of the Loan advances
which are to be agreed to be made by Bank to Borrower hereinafter and the note
and mortgage given by Borrower in evidence thereof, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 For the purposes hereof:
(a) "Approved Project" or "Project" means the collective reference
to the development identified in Section 2.4 of this Agreement,
together with the Land, the Improvements, rights, property, and
appurtenances as defined, described or identified in the Mortgage.
(b) "Borrower's Representative" means the person or persons
designated in writing to Bank by Borrower as being authorized to submit
Draw Requests on Borrower's behalf and to consent to changes in the
Cost Breakdown and Use of Proceeds. Unless and until changed by written
notice to Bank, Borrower designates any one of the following: Arthur
Falcone or Les Campbell as its Borrower's Representative(s).
(c) "Closing Date" means the date as of which this Loan Agreement
is executed by Borrower and Bank.
(d) "Collateral" means the Mortgaged Property, Rents, Intangible
Property and other property rights as defined in and encumbered by the
Mortgage.
<PAGE>
(e) "Commitment" means Bank's commitment letters to Borrower dated
July 5, 1996 and all amendments thereto. The parties intend that this
Agreement and the Loan Documents shall supersede and replace the
Commitment.
(f) "Completion means completion of the Improvements in accordance
with the Plans, such Completion to be evidenced by satisfaction of the
conditions of Section 6.2 in substantial compliance with the Plans,
free and clear of liens or claims of liens or other encumbrances,
except Permitted Encumbrances;
(g) "Construction Documents" means the stipulated sum construction
contract between Borrower and the General Contractor, if a General
Contractor is engaged, and all other contracts, plans or documents
concerning the construction of the Improvements and any addenda,
amendments or modifications thereto. The Construction Documents shall
include a hard cost breakdown and a maximum fixed cost for the
performance of all services, labor, and materials furnished thereunder.
(h) "Construction Inspector" means the architectural or engineering
firm or such party which Bank shall designate to perform various
services on behalf of Bank. The services to be performed by Bank's
Construction Inspector shall include the issuance of reports and
certifications solely for the benefit of Bank and shall not impose upon
Bank any obligation to make inspections, or to correct or require any
other person to correct any defects, or to notify any person with
respect to such defects, review of the Plans and all proposed changes
to them, preparation of a "cost breakdown" construction analysis (the
"Construction Analysis"), periodic inspections of construction work for
conformity with the Plans, and approval of Draw Requests.
(i) "Cost Breakdown" means the detailed trade breakdown of the cost
of constructing the Improvements and an itemization of non-construction
and Land costs, all as approved by Bank from time to time.
(j) "Default" means a violation of any term, covenant, or condition
hereunder or a Default as defined under any of the other Loan Documents
which remains uncured after any applicable grace period.
(k) "Default Condition" means the occurrence or existence of an
event or condition which, upon the giving of notice or the passage of
time, or both, would constitute a Default.
(l) "Draw Request" means a written request for any disbursement of
Loan proceeds, which shall be submitted for each requested disbursement
as set forth in Article III hereof, in accordance with the draw request
sheet attached hereto as EXHIBIT "A-1", EXHIBIT "A-2" AND EXHIBIT
"A-3".
(m) "Engineer" shall mean such party who will serve as Borrower's
supervising engineer in accordance with the Plans and specifications;
(n) "Engineering Contract" means the "full service', contract
between Borrower and Engineer which shall require engineering services
throughout the Land development and construction contemplated under the
Loan.
(o) "Financing Statements" means the UCC financing statements filed
in order to perfect Bank's lien on certain personal property and
fixtures as more particularly described therein.
(p) "Firm Contract" means an arm's length, bona-fide binding
contract for purchase and sale, in form and content satisfactory to
Bank, for the sale of a Unit to a purchaser unaffiliated and unrelated
2
<PAGE>
to Borrower or Guarantor, under which (i) Borrower has received a cash
deposit equal to ten percent (10%) of the purchase price except as
herein after provided; (ii) Borrower is not obligated to provide any
purchase-money financing, (iii) all applicable statutory cancellation
or rescission periods have expired, (iv) there are no contingencies
other than a first mortgage financing contingency for which Borrower
has confirmed to Bank that purchaser has made a mortgage application,
(v) the closing date for the contract is within forty-five (45) days of
the date of issuance of the Certificate of Occupancy for the Unit, and
(vi) the gross sales price, after payment of all of Borrower's closing
expenses thereunder, will result in sufficient proceeds to pay to Bank
the Unit Release Price and Lot Release Price. If a purchaser has
received preliminary loan approval from an institutional Bank,
including income qualification and credit verification, the required
deposit shall be five percent (5%) for said contract to constitute a
Firm Contract. The purchaser's interest in the Mortgaged Property and
under the Firm Contract must be expressly subordinated to the lien and
operation of Bank's Mortgage, either by separate subordination
agreement in favor of Bank or pursuant to the terms of the Firm
Contract.
(q) "General Contractor" means Borrower who will serve as the
general contractor in accordance with the Construction Documents; if a
General Contractor is not engaged or is not named here, any obligation
of the General Contractor referred to in the Loan Documents shall be
the obligation of the Borrower to perform or to cause to be performed.
(r) "Governmental Authorities" means any local, state, or federal
governmental agency, regulatory body or office, or any
quasi-governmental office (including health and environmental), or any
officer or official of any such agency, office, or body whose consent
or approval is required as a prerequisite to the commencement of the
construction of the Improvements or to the operation and occupancy of
the Improvements or the Approved Project or to the performance of any
act or obligation or the observance of any agreement, provision or
condition of whatsoever nature herein contained.
(s) "Guarantor" means: Arthur Falcone, Edward Falcone, Philip Cucci
And Transeastern Properties, Inc., a Florida corporation, f/k/a
Transeastern Properties of South Florida, Inc., a Florida corporation.
(t) "Guaranty" means the Guaranty Agreement executed by Guarantor
in favor of Bank, providing for Guarantor's payment of all sums due
under the Loan Documents and of performance of all obligations of
Borrower thereunder except as otherwise specifically therein provided,
including, without limitation, timely completion of the Improvements in
accordance with the Construction Documents and Loan Documents.
(u) "Improvements" means all infrastructure improvements to the
Land constructed or to be constructed on the Land as defined in the
Mortgage, together with all fixtures and appurtenances now or later to
be located on the Land and/or in such Improvements.
(v) "Land" means the real property described in the Mortgage at the
inception of the Loan as per EXHIBIT "F" attached hereto.
(w) "Loan Documents" means this Loan Agreement, the Note and any
funding agreement, the Mortgage, the Guaranty, the Financing
Statements, and any other document or writing executed in connection
therewith or in furtherance thereof.
(x) "Lot Release Price" shall mean the partial release price for
each lot improved with Note proceeds as set forth in EXHIBITS "B-1" AND
"B-2" attached hereto and incorporated herein.
3
<PAGE>
(y) "Mortgage" means the Amended and Restated Real Estate Mortgage,
Assignment and Security Agreement of even date herewith executed by
Borrower for the benefit of Bank encumbering the Collateral (as defined
in the Mortgage), and any extensions, modifications, renewals or
replacements thereof.
(z) "Note" means the Consolidated Renewal Promissory Note in the
amount of EIGHT MILLION SEVEN HUNDRED THIRTY SEVEN THOUSAND FIVE
HUNDRED AND NO/DOLLARS ($8,737,500.00) ("Note") dated as of the Closing
Date executed by Borrower in favor of Bank as well as any promissory
note, sub-note, or other notes issued by Borrower in substitution,
replacement, extension, future advance, amendment or renewal of the
Note or any such promissory note or notes.
(aa) "Permitted Encumbrances" means those liens, encumbrances,
easements and other matters defined in the Mortgage as "Permitted
Encumbrances".
(bb) "Plans" means plans and specifications for the development of
the Land and construction of the Improvements submitted to and approved
by Bank from time to time, and including such amendments thereto as may
from time to time be made by Borrower and approved by Bank.
(cc) "Security Documents" means the Mortgage, the Financing
Statements, and any other instrument executed to establish and perfect
Bank's lien on the Collateral, and any extensions, modifications,
renewals, or replacements thereof.
(dd) "Site Development Contractor" means such party who will serve
as the subcontractor for the site development of the Land as
contemplated under the Loan.
(ee) "Site Development Contract" means the contract between
Borrower and Site Development Contractor for the site development of
the Land per the site development Plans and specifications.
(ff) "Site Plan" means collectively the site plans for the Project
as set forth on EXHIBIT "E" attached hereto.
(gg) "Title Policy" means the mortgagee title policy meeting the
requirements of this Loan Agreement.
(hh) "Unit" means a portion of the Land suitable for the
construction of single residential dwelling units, and designated or
depicted as such on the site plans submitted to Bank by Borrower.
(ii) "Unit Release Price" shall mean the partial release price for
each Unit as set forth on EXHIBIT "B" attached hereto and incorporated
herein.
(jj) "Use of Proceeds" means the description of the permitted use
of the Loan proceeds under the Note as set forth on EXHIBIT "A-1",
EXHIBIT "A-2" AND EXHIBIT "A-3" attached hereto and incorporated by
reference herein.
Capitalized terms not defined in this Loan Agreement shall have the
meanings ascribed to them in the Mortgage.
ARTICLE II
4
<PAGE>
THE LOAN
2.1 LOAN TERMS. Subject to the terms and conditions of this Loan
Agreement, Bank will lend and Borrower will borrow the principal sum of EIGHT
MILLION SEVEN HUNDRED THIRTY SEVEN THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($
8,737,500.00), which borrowing shall be evidenced by the Note. Also, all of the
terms, definitions, conditions, and covenants of the Note, the Guaranty, the
Mortgage, and any other documents executed in connection therewith or pursuant
thereto are expressly made a part of this Loan Agreement by reference in the
same manner and with the same effect as if set forth herein at length and shall
have the meaning set forth in such instruments unless otherwise defined herein.
2.2 NOTE. Intentionally omitted.
2.3 CONSTRUCTION LINE. Intentionally omitted.
2.4 LOAN PURPOSE. The purpose of the Loan is to finance the acquisition
of the Land as well as the completion of infrastructure development for the
NASHER P.U.D. (P.U.D. Development") and the development of the Land into two (2)
residential developments to be located on parcels (referred to as Parcel "D" and
Parcel "F") of the Land. Parcel "F" is to be developed into one hundred fourteen
(114) developed single family lots, Parcel "D" is to be developed into three
hundred fifty six (356) townhome lots in the approved projects known as "Egrets
Way" and "Pelican Pointe" respectively, located in Pembroke Pines, Florida,
which projects shall be hereinafter collectively referred to as the "Approved
Project".
2.5 LIMITATIONS ON USE OF NOTE PROCEEDS. Bank will disburse Note
proceeds for the acquisition and development of the Land subject to the terms
and conditions of this Loan Agreement and in accordance with the Use of Proceeds
attached hereto as EXHIBIT "A-1", EXHIBIT "A-2" AND EXHIBIT "A-3".
(a) Disbursements shall be made on the basis of the net amount due,
not to exceed one hundred percent (100%) of cost (i) as shown on the
application for payment from the General Contractor of work and
materials in place, (ii) as substantiated by an independent engineer
retained by Bank at Borrower's expense and (iii) as based on the
budgeted costs provided by Borrower to Bank which have been reviewed
and approved by such independent engineer, (iv) and in accordance with
EXHIBIT "A-1", EXHIBIT "A-2" AND EXHIBIT "A-3" attached hereto.
2.6 LIMITATIONS ON USE OF CONSTRUCTION LINE PROCEEDS. Intentionally
omitted.
2.7 LOAN MATURITY. The maturity date of the Note shall be September 1,
1999 with two (2) extension option of three (3) months each to be granted at the
Borrower's request, at the sole and absolute discretion of the Bank and as more
particularly set forth in such Note. On the Maturity Date of the Note, all sums
outstanding under such notes shall be immediately due and payable, and the
Bank's obligation to fund shall cease and terminate.
ARTICLE III
DISBURSEMENTS
3.1 NOTE DISBURSEMENT - GENERAL PROVISIONS. Bank agrees that it will,
from time to time, and so long as there shall exist no Default Condition or
Default (which has not been cured within any applicable grace period), disburse
Note proceeds for the purchase and development of the Land in the Approved
Project subject to the terms and conditions of this Agreement.
5
<PAGE>
3.2 GENERAL PROVISIONS. Bank agrees that it will, from time to time,
and so long as there shall exist no Default Condition or Default (which has not
been cured within any applicable grace period), but not more frequently than two
(2) times per month, disburse proceeds for the infrastructure construction in
the Approved Project, subject to the terms and conditions of this Agreement.
3.3 REQUEST FOR INITIAL FUNDING FOR DEVELOPMENT OF LAND UNDER THE NOTE
When Borrower wishes to commence funding Land development Borrower shall submit
a draw request, accompanied by all items required in Articles IV and V as
conditions precedent, to the extent applicable. All supporting documentation
shall be submitted no later than five (5) days prior to the requested date of
the initial disbursement under each note. No disbursement by Bank shall
constitute an approval or acceptance by Bank of any construction work or
constitute a waiver by Bank of any conditions precedent to any future
disbursements. Bank shall not be obligated to approve any disbursement for
purposes other than those contemplated in this Agreement. The conditions set
forth in Articles IV and V hereof must be satisfied before Bank will make the
first advance or disbursement for the development of Land and the conditions set
forth in Article VI hereof must be and remain satisfied before Bank will make
each subsequent disbursement or advance.
3.4 INTERIM DRAW REQUESTS. No later than five (5) days prior to each
disbursement by Bank, Borrower must submit to Bank a Draw Request, which shall
include or be accompanied by the requirements set out herein for draws.
3.5 DISBURSEMENT AMOUNTS. Following receipt of a Draw Request and
Bank's review and approval of supporting documentation, Bank shall determine the
amount of the disbursement it will make in accordance with Bank's standard draw
sheet, a copy of which is attached as EXHIBIT "A-1", EXHIBIT "A-2" AND EXHIBIT
"A-3" provided no Default Condition or Default exists.
3.6 EQUITY DISBURSEMENTS. If Bank at any time determines in its
reasonable discretion that the Loan proceeds plus the amount of all equity
investments made or scheduled to be made are not sufficient to fully complete
the Improvements in accordance with the Plans and to pay all other sums due
under the Loan Documents, then Bank shall have the option of requiring Borrower
to deposit with Bank additional funds from some other source (or submit evidence
to Bank of equity investments previously made) in amounts sufficient to cover
the resulting deficit before Bank will disburse any additional Loan proceeds.
Deposited funds shall be advanced as construction progresses in accordance with
this Loan Agreement before any additional Loan disbursements are made.
3.7 OPTION TO DISBURSE FUNDS TO ANY GUARANTOR AND/OR TO PAY
CONTRACTORS. If a Default shall exist, at its option, Bank may, after so
notifying Borrower, make Loan disbursements directly to any guarantor or obligor
of the debt when such party shall be performing the obligations of Borrower
hereunder or the General Contractor or any unpaid subcontractor, laborer or
material supplier providing labor, services or materials in connection with the
construction of the Improvements, and the execution of this Loan Agreement by
Borrower shall, and hereby does, constitute an irrevocable direction and
authorization to Bank to so disburse the funds. No further direction or
authorization from Borrower shall be necessary to warrant such direct
disbursements and all such disbursements shall be secured by the Security
Documents as fully as if made to Borrower, regardless of the disposition thereof
by the General Contractor, any subcontractor, laborer or material supplier so
paid.
ARTICLE IV
GENERAL PRE-CLOSING CONDITIONS
6
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Bank's obligations to close the Loan shall be expressly conditioned
upon satisfaction of the following conditions, or execution and/or delivery to
Bank of the following items, all in form and substance reasonably satisfactory
to Bank and Bank's counsel:
4.1 NOTE. The original Note, properly executed, shall have been
delivered to Bank.
4.2 GUARANTY. The original Guaranty(s), properly executed, shall have
been delivered to Bank.
4.3 MORTGAGE. The Mortgage, which shall be a first lien on the Land and
Improvements, shall have been properly executed in recordable form and delivered
to Bank, subject to those matters reflected in the Title Policy.
4.4 INDEMNITY. The Hazardous Substance Certificate and Indemnification
Agreement, properly executed by Borrower and each Guarantor, shall have been
delivered to Bank.
4.5 FINANCING STATEMENTS. The Financing Statements on forms approved
for filing in the appropriate state and local filing offices shall have been
properly executed.
4.6 TITLE POLICY. A standard ALTA mortgagee title policy insuring the
lien of the Mortgage as a first priority lien encumbering the Land and
Improvements from a company or from companies approved by Bank (including any
reinsurance agreements required by Bank, together with direct access provisions
in favor of Bank): (1) providing coverage for the full principal amount of the
Loan, (2) providing a variable rate endorsement, if appropriate, the Form 9
Endorsement, the Survey Endorsement, and any other endorsements requested by
Bank, (3) deleting all "standard" exceptions except taxes for the current year,
(4) insuring all appurtenant easements, (5) containing no bankruptcy or
creditors' rights exceptions or exclusions; and (6) containing no title
exceptions other than the Permitted Exceptions or the other exceptions approved
by Bank.
4.7 TITLE EXCEPTIONS. Copies of all documents creating exceptions to
the Title Policy.
4.8 SURVEY/RECORDED AND PRELIMINARY PLAT/APPROVED SITE PLAN. Three (3)
copies of a recent survey of the Land prepared by a registered land surveyor
acceptable to Bank and certified to Bank, the title insurance company, and
Borrower. Such survey shall contain a certification as to the applicable flood
zone (s) for the Land, and a certification that the survey was and in accordance
with the Minimum Technical Standards for Surveys as set fourth in Chapter
21HH-6, Florida Administrative Code. In addition, a copy of the boundary plat
for the Land and a copy of the site plan is required approved by all applicable
governmental authorities. Notwithstanding the foregoing, the Bank will not
unreasonably withhold its consent to the execution of the final plat and will
join when requested by Borrower.
4.9 FLOOD HAZARDS. Evidence as to whether or not the Land is located
within an area identified as having "special flood hazards" as such term is used
in the Federal Flood Disaster Protection Act of 1973.
4.10 FLOOD HAZARD INSURANCE. If all or any part of the Improvements is
or is to be located in an area having "special flood hazards", a flood insurance
application or policy naming the Bank as mortgagee must be submitted to Bank at
such time as it is commercially available. Satisfactory evidence of premium
payments must also be provided.
4.11 BUILDER'S RISK INSURANCE. A builder's risk insurance policy
meeting the requirements set forth in the Mortgage.
4.12 LIABILITY INSURANCE. Liability insurance meeting the requirements
set forth in the Mortgage.
7
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4.13 BORROWER'S ORGANIZATIONAL DOCUMENTS AND RESOLUTIONS. A certified
copy, from the appropriate governmental body or corporate officer, of
organizational documents of Borrower, and any partner of Borrower, as
appropriate, certifying that Borrower and/or such partner (i) is duly organized,
validly existing, and in good standing under the state of its existence, (ii)
has the authority under such documents and laws to enter into the Loan as
contemplated by the Loan Documents, and (iii) has made all appropriate filings,
including without limitation, qualification to do business in the State of
Florida, necessary to enter into the Loan and execute the Loan Documents.
Additionally, Borrower shall provide (i) if appropriate, certified resolutions
or other internal documents or writing of Borrower and such partner evidencing
that Borrower and such partner have taken all requisite organizational action,
and received all organizational approvals necessary to enter into the Loan and
execute the Loan Documents, and (ii) such other documents or writings as Bank
may request.
4.14 GUARANTOR'S ORGANIZATIONAL DOCUMENTS AND RESOLUTIONS.
Intentionally omitted.
4.15 FICTITIOUS NAME CERTIFICATE. If Borrower utilizes or intends to
utilize a fictitious name, a copy of the Fictitious Name Certificate of the
Borrower issued by the Florida Secretary of State.
4.16 ATTORNEY'S OPINION. The written opinions of counsel to Borrower
and Guarantor, addressed to Bank, acceptable to Bank and Bank's counsel, as to
those matters required by Bank. The attorney's opinion, with respect to the
enforceability of remedies provided in any instrument may be made subject to or
affected by, applicable bankruptcy, moratorium, reorganization, insolvency or
similar laws from time to time in effect affecting the rights of creditors
generally. As to matters of fact, such opinions may be qualified to the extent
of the knowledge of such counsel based upon inquiry and reasonable
investigation.
4.17 RESTRICTIVE COVENANTS. A copy of the executed and recorded
homeowners, documents, filed articles of incorporation for the homeowners,
associations, executed by-laws for the associations, and any other related
documents as Bank may request for the Approved Project.
4.18 FINANCIAL STATEMENTS. The updated Borrower prepared financial
statements certified to the Bank must be received by Bank within thirty (30)
days of the Closing Date. With respect to the Guarantors, signed personal
financial statements on Bank forms shall be required prior to the Closing Date.
All statements must include income and contingent liability information.
4.19 OMPLIANCE WITH LAWS AND MATTERS OF RECORD. Satisfactory
documentary evidence that the Land, and the intended uses of the Land are in
compliance with all applicable laws, regulations and ordinances and private
covenants, easements, and conditions of record. Such evidence is subject to
approval by Bank and Bank's counsel and may include letters, licenses, permits,
certificates and other correspondence from the appropriate Governmental
Authorities, opinions of Borrower's counsel or other counsel, and opinions or
certifications from the Architect, Engineer and the General Contractor. The
laws, regulations and ordinances with which compliance should be evidenced
include without limitation the following: health and environmental protection
laws, laws related to or regulating water management districts, hazardous
materials and substances and stormwater drainage, erosion control ordinances,
tree and landscaping ordinances, building codes, land use requirements,
threshold building consultant requirements, the Development of Regional Impact
Statutes, doing business and/or licensing laws and zoning laws (the evidence
submitted as to zoning should include the zoning designation made for the Land,
the permitted uses of the Land under such zoning designation and zoning
requirements as to parking, lot size, ingress, egress and building setbacks).
4.20 TAXES. Evidence that the Land is, or will be, separately assessed
for tax purposes and information as to tax parcel identification numbers, tax
rates, estimated tax values and the identities of the taxing authorities. Also,
Borrower shall submit proof that the taxes are paid current upon the Land.
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4.21 UTILITIES. Evidence of the availability and suitability of the
water, sewer, telephone, electrical, and other utilities needed to properly
service the Project in its intended use.
4.22 PLANS AND SPECIFICATIONS. Two sets of the site development Plans
which must have been approved in writing by Borrower and the General Contractor
either by initialing same or by other written approval identifying all pages and
dates, including revision dates. The Plans must include all site development
(including storm drainage, utility lines, erosion control and landscaping) plans
and specifications and must incorporate the recommendations in the soil testing
report. Bank will engage its engineer to review such Plans to determine
sufficiency of such under its guidelines.
4.23 PERMITS. Borrower will provide a copy, certified by the Borrower
to be a true and correct copy of the South Florida Water Management District
Permit, if applicable.
4.24 SOIL TESTS. A report as to soil borings made on the Land by a soil
testing firm satisfactory to Bank. The number and location of such borings shall
be in accordance with the recommendations of the soil testing firm and must also
be satisfactory to Bank. The report shall include the recommendations of the
soil testing firm as to the preparation of the soil needed in order to
adequately support the Improvements, and shall be delivered to and approved by
Bank within sixty (60) days of the date of this Agreement.
4.25 ENVIRONMENTAL ASSESSMENT.
(a) An environmental assessment of the Land and Improvements
performed at Borrower's expense by a licensed engineer or other
environmental consultant satisfactory to Bank stating that:
i. the Land is not located within any area designated as a
hazardous substance site by any of the Governmental Authorities;
and
ii. no hazardous or toxic wastes or other materials or
substances regulated, controlled, or prohibited by any federal,
state, or local environmental laws, including but not limited to
asbestos, are located on the Land or Improvements; and
iii. the Land has not been cited or investigated in the past
for any violation of any such laws, regulations, or ordinances.
(b) If the environmental assessment shall reveal any condition
unacceptable to Bank, same shall constitute a Default hereunder and in
addition to all remedies available to Bank, Bank shall be relieved of
any obligation under the Commitment. If the environmental assessment
recommends, or if Bank so requests, in its sole and absolute
discretion, a Phase II audit, additional testing or remedial action,
Borrower, at its sole cost and expense shall promptly conduct such
additional audits and testing and/or complete such remedial action.
Bank may require the Borrower to provide evidence that all necessary
actions have been taken to remove any hazardous substance contamination
and/or to restore the site to a condition acceptable to Bank and state
and federal governmental agencies.
4.26 TAXPAYER IDENTIFICATION NUMBER. Borrower's federal taxpayer
identification number.
4.27 BORROWER'S AFFIDAVIT. An affidavit of Borrower regarding the
absence of any other parties in possession of the Land, stating that a notice of
commencement has not been filed with respect to the Property, the
non-commencement of construction of Improvements , and such other matters as may
be requested by Bank.
4.28 COMMITMENT FEE. The balance of the non-refundable commitment fee
in the total amount of THIRTY FIVE THOUSAND NINE HUNDRED SIXTY AND NO/100
DOLLARS ($35,960.00), which was
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earned upon acceptance of the Commitment and the reserving of sufficient funds
by Bank from which to make Loan disbursements, and is due and payable whether or
not any disbursements are made hereunder.
4.29 APPRAISAL. Bank shall have received a narrative appraisal
certified to the Bank for the Land and site development improvements prepared by
an appraiser acceptable to Bank.
4.30 COMPREHENSIVE PLAN. Documentary evidence, satisfactory to Bank and
its counsel, that Borrower's development proposal for the Project and the
construction of the Improvements are consistent with concurrency requirements
and other applicable provisions of the local comprehensive plan and local land
development regulations, as defined and required by the Local Government
Comprehensive Planning and Land Development Regulation Act, Florida Statutes.
Section 163.3161, et seq.
4.31 FACILITIES FOR HANDICAPPED. Subsequent to the Closing Date but not
later than the commencement of the construction of the sales center or the
clubhouse, as applicable, Bank shall have received and approved evidence,
satisfactory to Bank, that the Plans and specifications do, and the
Improvements, when constructed, will comply to the extent applicable with all
legal requirements regarding access and facilities for handicapped or disabled
persons, including, without limitation, and to the extent applicable, Part V of
the Florida Building Construction Standards Act entitled "Accessibility by
Handicapped Persons", Chapter 553, Fla Stat.; the Federal Architectural Barriers
Act of 1988 (42 U.S.C. ss.4151, et. seq.), The Fair Housing Amendment Act of
1988 (42 U.S.C. ss.3601, et. seq), The Americans With Disabilities Act Of 1990
(42 U.S.C. ss.12101 et. seq.), and The Rehabilitation Act of 1973 (29 U.S.C.
ss.794).
4.32 CONTRACTS. A copy of the executed contract for the purchase of the
Land by the Borrower, if applicable.
4.33 SUBORDINATION AGREEMENTS. Borrower will provide a fully executed
original Loan Subordination Agreement, which document shall be recorded in the
Public Records of Broward County, evidencing the subordination of Amresco
Funding Corporation, a Delaware corporation's interest, as evidenced by that
certain Mortgage, Assignment of Rents, and Security Agreement, dated March 29,
1996, and recorded April 3, 1996 in Official Records Book 24694 at Page 0744, of
the Public Records of Broward County, Florida (the "Amresco Third Mortgage") and
that certain Contingent Mortgage, Assignment of Rents and Security Agreement,
dated March 29, 1996 and recorded April 3, 1996, in Official Records Book 24694
at Page 0787, of the Public Records of Broward County, Florida, (the "Amresco
Fourth Mortgage") to the Bank's Mortgage.
4.34 MISCELLANEOUS. All other Loan Documents or items that are
customarily provided in loan transactions of this type and all other loan
documents or items set forth in the Commitment.
ARTICLE V
CONDITIONS PRECEDENT TO FIRST SITE DEVELOPMENT
5.1 NOTE DISBURSEMENTS. Under the Note, Bank shall not be obligated to
make the first Loan disbursement for the. development of the Land until all of
the following conditions have been satisfied by proper evidence, execution
and/or delivery to Bank of the following items, all in form and substance
reasonably satisfactory to Bank and Bank's counsel:
(a) There shall be no Loan Default or Default Condition.
(b) he Land shall be free and clear of all liens and encumbrances
except for Bank's Mortgage and the Permitted Exceptions, the Amresco
Third Mortgage and the Amresco Fourth Mortgage.
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(c) All conditions precedent as set forth in Article IV shall have
been satisfied.
(d) Bank shall have received and approved Borrower's Draw Request.
(e) There shall not be any construction with respect to the Land
and no materials shall have been provided to the Land, which have not
been paid for by Borrower to the party providing same, and which have
been disclosed to Bank.
(f) Bank shall have received a copy certified by Borrower of all
applicable permits with respect to that draw including, without
limitation, excavation permits, tree removal permits, land development
permits, dredge and fill permits, stormwater discharge permits (federal
and state), and any other permits required for completion of the site
development of that portion of the Land for which the Loan Disbursement
is being requested.
(g) Borrower shall have paid to Bank the fees incurred by Bank for
property inspections in connection with draw requests.
(h) CONSTRUCTION DOCUMENTS. A copy of the Construction Documents
with respect to site development work and copies of all other executed
contracts as may be required by Bank.
(i) CONTRACTOR'S CONTRACT. Copies of the contracts signed by the
Borrower and Contractor for construction services.
(j) SITE DEVELOPMENT CONTRACTOR'S CONTRACT. Copies of the
contracts signed by the Borrower and Site Development Contractor for
construction services.
(k) ENGINEER'S CONTRACT. Copies of the contracts signed by the
Borrower and Engineer for engineering services.
(l) CONSENTS OF GENERAL CONTRACTOR, ENGINEER AND SITE DEVELOPMENT
CONTRACTOR. Consents from the General Contractor, Engineer and Site
Development Contractor to Borrower's assignments to Bank of Borrower's
interests in the contract with each of them, respectively. In
furtherance of the assignment granted herein, Borrower shall cause all
contract parties to acknowledge this assignment to Bank and agree to
continue such contract on the same terms as presently exist if Bank
shall succeed to the interest of Borrower thereunder and if so
requested by Bank.
5.2 CONSTRUCTION LINE DISBURSEMENTS. Intentionally omitted.
ARTICLE VI
CONDITIONS PRECEDENT TO DISBURSEMENTS
FOLLOWING THE FIRST DISBURSEMENT
6.1 GENERAL PERIODIC DISBURSEMENTS UNDER THE NOTE. Bank shall not be
obligated to make any Loan disbursements after the first disbursement provided
for in Article V under the Note until all of the following conditions have been
and remain satisfied as of the date of each such disbursement:
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(a) All of the conditions stated in Article III hereof, including,
without limitation submission of a Draw Request.
(b) A request for payment signed by Borrower setting forth a
detailed breakdown of the disbursement requested in a format acceptable
to Bank.
(c) Construction of the Improvements for which such Draw Request
has been made has been performed in accordance with the Plans, the
Construction Schedule, and all terms and conditions hereunder.
(d) The Title Policy insurer shall have issued to the Bank an ALTA
Construction Endorsement Form to the Title Policy updating the Policy
and listing any additional subordinate matters or certifying that no
lien or other interest shall have attached to the Project other than
the interest of Bank pursuant to the lien of the Security Documents,
whether superior or subordinate to such lien, except taxes for the
current year and other matters acceptable to Bank, and there are no
liens which may take priority over the disbursement to be made and
there are no survey exceptions not theretofore approved by Bank in
writing.
(e) At the time of each disbursement: (i) Bank is reasonably
satisfied with the progress of construction; (ii) in Bank's reasonable
opinion, the equity requirements set out in Section 2.5 and 3.6 are
satisfied; and (iii) no Default Condition or Default exists under the
Loan Documents.
(f) Bank shall have received Bank's Construction Inspector's
approval to the Borrower's requisition for any hard costs.
(g) Bank shall have received copies of all notarized partial
release lien waiver forms executed by each appropriate subcontractor,
supplier and/or materialman which have filed a Notice to Owner.
(h) An Owner's Affidavit from Borrower certifying that the funds
disbursed to date by Bank have been paid to the appropriate parties.
(i) No litigation, arbitration or other proceeding shall have been
commenced against Borrower or the General Contractor, which in Bank's
judgment, materially impairs, or is likely to materially impair the
Borrower's or the General Contractor's ability to complete the Project.
(j) As and when reasonably requested by Bank, a recertification of
the Survey reflecting all changes in the physical conditions of the
Land and Improvements subsequent to the date of the last certification
of the Survey. Each such recertification shall show all construction
work in place.
(k) Bank, based on the advice of its Construction Inspector, must
believe in its reasonable opinion that construction can be completed
within the time frame set forth in the Bank's Engineer's Report.
(1) There shall not have been any destruction or casualty to the
Improvements not covered by insurance.
(m) If the Draw Request requires an amendment to the Use of
Proceeds or reallocation of hard cost items which would require
contractor and lienor notice under ss.713.347(2), Fla. Stat., written
notice from owner to the Contractor and all required lienors, in
compliance with ss.713.347,(2) Fla. Stat., and countersigned by the
Contractor and any lienors who have provided notices to owner.
(n) Retainage: Bank has the right to retainage in the amount of
three percent (3.0%) of the portion of the site development loan
relating to completion of infrastructure development for the NASHER
P.U.D. and six percent (6.0%) of the portion of the site development
loan relating to infrastructure
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development of Parcel "D" and Parcel "F". Amounts so retained will be
disbursed with the final draw for the Site Development Contractor upon
Borrower's compliance, in addition to the requirement applicable to all
other disbursements, with the applicable requirements for a final draw
herein.
6.2 CONSTRUCTION LINE PERIODIC DISBURSEMENTS. Intentionally omitted.
6.3 REQUIREMENTS FOR DISBURSEMENT AT COMPLETION. Bank shall not be
obligated to make the final disbursement for the site development until all the
following additional conditions have been satisfied:
(a) The site development improvements in their entirety have been
commenced have been substantially completed and are substantially in
accordance with the Plans, and certificates as to such Completion have
been issued in satisfactory form to Bank by the Engineer and the
General Contractor, including, without limitation, Architect's
Certificate of Completion together with AIA G704 Certificate of
Substantial Completion, Contractor's Certificate of Completion together
with the AIA G704 Certificate of Substantial Completion and, if
applicable, the Engineer's Certificate of Completion, and certificates
as to occupancy and use have been issued by the appropriate
Governmental Authorities (and copies provided to Bank).
(b) Bank has received two sets of detailed as-built plans and
specifications approved and identified as such in writing by Borrower,
the Architect/Engineer and the General Contractor. The two sets must
include plans and specifications for all site development (including
without limitation, storm drainage utility lines and landscaping) work,
as applicable.
(c) Bank has received final lien waivers and releases from the
General Contractor and all general contractors, subcontractors,
subcontractors, suppliers, laborers, and materialmen certifying that
they and all parties in privity with them have been paid in full and
waiving their lien rights against the Project.
(d) Bank has received an inspection report performed by this
Construction Inspector in substance satisfactory to Bank and
Construction Inspector's written approval of the final Draw Request.
ARTICLE VII
THE BORROWER'S CONVENTS AND AGREEMENTS
7.1 PAYMENT AND PERFORMANCE. Borrower will pay when due or within any
applicable grace period all sums owing to Bank under the Note, this Loan
Agreement, the Mortgage and the other Loan Documents, and perform all
obligations as outlined or referenced therein.
7.2 FURTHER ASSURANCES. On demand by Bank, Borrower will do any act and
execute any additional documents reasonably required by Bank to secure the Loan,
to confirm or perfect the lien of the Security Documents, including, but not
limited to, additional financing statements or continuation statements, new or
replacement notes and/or Security Documents and agreements supplementing,
extending or otherwise modifying the Loan Documents, certificates as to the
amounts of the indebtedness evidenced by the Note from time to time, and
certificates that Borrower knows of no defaults by or defenses or set-offs
against Bank as long as such certificate represents the true statement of
Borrower.
7.3 CONSTRUCTION. The Borrower will: (a) continue
conscientiously the construction of the Improvements; (b) not discontinue or
permit the discontinuance of work on the Improvements for longer than fifteen
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(15) consecutive days, (c) in any event, complete the Improvements, including
installation of any required items of personalty in substantial compliance with
the Plans, free and clear of liens or claims of liens for material supplied or
for labor or services performed in connection with the construction of the
Improvements; and (d) not file, prior to the recording of the Mortgage, a Notice
of Commencement for the Approved Project. Notwithstanding the foregoing, any
delays in the event of unavailability of materials at reasonable cost, strikes,
other labor problems, governmental order, acts of God or other events which
would support a defense based upon impossibility of performance for reasons
beyond the control of Borrower shall not be a breach of Borrower's
responsibilities under this Section VII.
7.4 PAYMENT OF CONTRACTORS. Borrower covenants to advise Bank
immediately, and in writing if Borrower receives any claim of lien in connection
with any services, labor or materials furnished in connection with the
construction of Units, and to remove such liens within thirty (30) days of the
date of filing. Borrower shall comply with the Construction Contract Prompt
Payment Law contained in the Florida Construction Lien Law, Chapter 713, Fla.
Stat. Notwithstanding the foregoing, Borrower shall not be in Default under this
paragraph if the number and amount of such liens are under the amounts set forth
in Section 9.1(g).
7.5 FEES AND EXPENSES. Whether or not the Loan is made or all Loan
proceeds disbursed hereunder, Borrower agrees to pay all expenses incurred by
Bank, or by Borrower in order to meet Bank's requirements, in connection with
the Loan, including without limitation, commitment and renewal fees or deposits
to Bank, fees for appraisal, environmental assessment, reappraisal, survey,
recording, title insurance, builder's risk and other insurance premiums,
brokerage commissions and claims of brokerage, property taxes, intangible taxes,
documentary stamp taxes, architect's fees, engineer's fees, inspection fees, the
General Contractor's fees, and such legal fees and costs incurred by Bank in
connection with the making and administration of the Loan, the enforcement, of
Bank's rights under the Loan Documents, arbitration, the renewal, modification,
or extension of the Loan, or in connection with litigation or threatened
litigation by a third party which arises because Bank made the Loan. Any such
amounts paid by Bank shall constitute part of the indebtedness which is secured
by the Security Documents, and shall be due and payable upon demand.
7.6 INSURANCE. Borrower covenants to maintain insurance, as required
herein and in the Mortgage.
7.7 TAXES AND INSURANCE. Upon the request of Bank, Borrower shall
submit to Bank such receipts and other statements which shall evidence, to the
satisfaction of Bank, that all taxes (by April 30th of each year), assessments
and insurance premiums have been paid in full.
7.8 TITLE POLICY. When requested by Bank during the Loan term, Borrower
shall provide an endorsement to the Title Policy certifying that (a) real estate
taxes due through such date have been paid; (b) no additional restrictions or
encumbrances are of record which have not been approved by Bank; and (c) no
liens or lis pendens have been filed against the Land or the Improvements. In
the event that periodic title endorsements are not required to be issued in
connection with the title insurance, Borrower agrees to cause title endorsements
to be issued as reasonably required by Bank. When requested, after the final
disbursement of Loan proceeds, Borrower will provide Bank with an endorsement to
the Title Policy insuring the principal balance of the Loan and containing no
exceptions not approved by Bank.
7.9 ADDITIONAL CONSTRUCTION. Intentionally omitted.
7.10 SALES REPORTS. Within ten (10) days after the end of each month
Borrower shall deliver to Bank a Sales Report covering that month such Sales
Report shall include, among other things as may be required by Bank, a
cumulative summary of the number of Units sold, closed and under construction as
well as the number of Spec and Model Units in each Transeastern Properties,
Inc., a Florida corporation project.
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7.11 INSPECTION. Borrower will permit Bank and its authorized agents to
enter upon the Project during normal working hours and as often as Bank desires,
for the purpose of inspecting the construction of the Improvements. When
requested, Borrower will furnish to Bank detailed plans, shop drawings and
specifications which relate to the Improvements. Failure of Bank or its
authorized agents to discover deficiencies in or to reject materials or
workmanship incorporated or provided to the Improvements shall not make Bank or
its agent liable to Borrower or to any other person on account of such failure,
nor shall any prior failure constitute a waiver of Bank's right to subsequently
reject any such workmanship or materials. Borrower specifically acknowledges
that all inspections undertaken by Bank or its agent shall be for the sole
benefit of Bank and not for Borrower, any Guarantor, or any third party.
7.12 FOUNDATION AND OTHER SURVEYS. With respect to construction under
the Note, Borrower will promptly submit to Bank for its approval surveys as
requested by Bank prepared by a registered land surveyor and consistent with the
requirements of Section 4.8 above. In connection therewith, the surveyor shall
submit a certification as to the compliance of the Improvements, as then
constructed, with all applicable laws, ordinances, and regulations, including
without limitation, zoning laws, environmental regulations, and other relevant
restrictions. In addition to the surveys specifically required by this
Agreement, Borrower shall provide Bank during construction with such additional
surveys as requested by Bank.
7.13 SOIL AND OTHER TESTS. A report as to the compaction or other soil
tests made on the Land by a soil testing firm shall also be submitted to Bank
when so requested in accordance with the requirements of paragraph 4.24 above.
The number and locations of such soil tests shall be in accordance with the
recommendations of the soil testing firm. Borrower shall promptly submit to Bank
copies of reports of all other physical tests made on the Land, the Improvements
or the materials to be incorporated into the Improvements and shall, at
Borrower's expense, cause to be made such additional tests from time to time as
Bank may reasonably require.
7.14 USE OF LOAN FUNDS. Borrower shall use all Loan proceeds
disbursed to Borrower solely in payment of costs incurred in connection with
acquiring, developing and constructing the Project, in accordance Use of
Proceeds attached hereto as EXHIBITS "A-1" AND "A-2".
7.15 AVAILABILITY OF UTILITIES. All utility services necessary for the
construction of the Improvements and the operation thereof for their intended
purposes are presently available or will be available when needed through
presently existing public or unencumbered private easements or rights-of-ways in
accordance with validly executed and enforceable utility service agreements
between Borrower and the provider of each of such services (the "Utility Service
Agreements") (which would inure to the benefit of Bank in the event of the
foreclosure of the Mortgage) at the boundaries of the Land, including but not
limited to, water, storm and sanitary sewer, gas, electric and telephone
facilities, and all such utilities are non-interruptible. Borrower shall also
provide Bank with copies of all Utility Service Agreements.
7.16 HAZARDOUS SUBSTANCES. Borrower affirms and incorporates by
reference the representations, warranties, terms, conditions, and indemnities
contained in that certain Hazardous Substance Certificate and Indemnification
Agreement of even date herewith.
At any time deemed necessary by Bank, in its sole and absolute
discretion, Bank may, at its election, obtain one or more environmental
assessments of the Land prepared by a geohydrologist, an independent engineer,
or other qualified consultant or expert approved by Bank evaluating or
confirming (i) whether any Hazardous Substances as defined in other Loan
Documents are present in the soil or water at the Land and (ii) whether the use
and operation of the Land complies with all applicable Environmental Laws
relating to air quality, environmental control, release of oil, hazardous
materials, hazardous wastes and hazardous substances, and any and all other
applicable environmental laws. Environmental assessments may include detailed
visual inspections of the Land including, without limitation, any and all
storage areas, storage tanks, drains, dry wells, and leaching areas, and the
taking of soil samples, surface water samples, and ground water samples, as well
as such other
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investigations or analyses as are necessary. or appropriate for a
complete determination of the compliance of the Land and the use and operation
thereof with all applicable Environmental Laws. Such environmental assessments
shall be at the sole cost and expense of Borrower. In the event that it is
determined that additional tests and/or remediation are necessary as a result of
the aforesaid assessments, or in the event such additional testing or
remediation is recommended by the aforesaid assessments, the Borrower agrees to
immediately perform the tests or undertake the remediation as recommended. In
the event contamination or other environmental problem is found on the Property,
the Borrower shall be in Default hereunder after a thirty (30) day cure period.
7.17 CAPITAL ADEQUACY. If at any time after the date hereof, and from
time to time, Bank determines that the adoption or modification of any
applicable law, rule or regulation regarding taxation, Bank's required levels of
reserves, deposits, insurance, or capital (including any allocation of capital
requirements or conditions), or similar requirements, or any interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation, administration, or compliance
of Bank with any of such requirements, has or would have the effect of (i)
increasing Bank's costs relating to the obligation hereunder, or (ii) reducing
the yield or rate of return of Bank on the obligation hereunder, to a level
below that which Bank could have achieved but for the adoption or modification
of any such requirements, Borrower shall, within fifteen (15) days of any
request by Bank, pay to Bank such additional amounts as (in Bank's sole
judgment, after good faith and reasonable computation) will compensate Bank for
such increase in costs or reduction in yield or rate or return of Bank. No
failure by Bank to demand immediate payment of any additional amounts payable
hereunder shall constitute a waiver of Bank's right to demand payment of such
amounts at any subsequent time. Nothing herein contained shall be construed or
so operate as to require Borrower to pay any interest, fees, costs, or charges
greater than is permitted by applicable law.
7.18 INDEMNIFICATIONS. The Borrower and the Guarantor shall indemnify
and hold Bank and its directors, officers, agents, employees, and attorneys
harmless from all liability, loss, expense or damage of any kind or nature,
including, without limitation, any suits, proceedings, claims, demands, or
damages (including attorneys' fees and costs paid or incurred in connection
therewith at both trial and appellate levels), incurred or arising by reason of:
(a) The Commitment or the making of the Loan (except for
liability, loss, expense or damage arising from the willful misconduct
or gross negligence of Bank);
(b) Any claim or action for the payment of any brokerage
commissions or fees which may be claimed to be payable in connection
with the Commitment; and
(c) The past, present or future handling, storage, transportation,
or disposal of hazardous substances upon the Land. Notwithstanding the
foregoing, Borrower's and Guarantor's indemnity shall be limited to the
extent provided in the Hazardous Substance Certificate and
Indemnification Agreement executed by such parties as of the Closing
Date.
These indemnifications shall survive the full payment and performance
of the obligations of the Borrower under the Loan documents except as set forth
above and in the Hazardous Substance Certificate and Indemnification Agreement.
7.19 FINANCIAL STATEMENTS. Borrower and each Guarantor shall submit
annual and interim financial statements as set forth below and when so requested
by Bank. Such statements shall include, at a minimum: a balance sheet; an income
and expense statement; a statement showing contingent liabilities; and any
supporting schedules or documentation which Bank may require. Each unaudited
statement must contain a certification to Bank of the statement's accuracy and
completeness signed by an authorized officer or the individual, as applicable.
Annual statements of business entities (including corporations and partnerships)
shall be audited by a certified public accountant reasonably acceptable to Bank
and shall be submitted no later than one hundred twenty (120) days after
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fiscal year end. Interim statements shall be submitted within forty five (45)
days of each quarter end certified to Bank by the financial officer of Borrower.
Guarantor's personal financial statement shall be submitted to Bank prepared on
Bank's approved form within one hundred twenty (120) days of each calendar year
end. Borrower and Guarantor shall provide Bank with annual tax returns within
thirty (30) days of filing.
7.20 APPRAISALS. Bank must order, at Borrower's expense, and receive a
narrative discounted appraisal for the Land by an appraiser acceptable to Bank
prior to the Closing Date. In addition to the appraisals required by Bank prior
to closing of the Loan, updated appraisals shall be prepared at Borrower's
expense when requested by Bank not more than annually. Such appraisals shall be
prepared in accordance with written instructions from Bank and by a professional
appraiser selected and engaged by Bank. Borrower shall cooperate fully with the
appraisal process and shall allow the appraisers reasonable access to the
Project.
7.21 LEASES AFFECTING APPROVED PROJECT. Borrower shall not, without the
express prior written consent of Bank, enter into any lease affecting the
Approved Project or any part thereof.
7.22 ASSIGNMENT OF CONTRACTS. As additional security for the Loan and
for the performance by Borrower of all of its obligations hereunder, Borrower
hereby assigns to Bank all of Borrower's interest in any and all contracts,
agreements, permits, licenses, approvals, or other documents or writings
relating to the construction, leasing, management or operation of the
Improvements, including but not limited to the Construction Documents, the
architect's contract, the engineer's contract, site development contractor's and
the Plans. This assignment shall not, however, be deemed to impose upon Bank any
of Borrower's obligations under any such contract. Incident to the assignment of
the Construction Documents, the architect's contract, site development
contractor's contract, the engineer's contract, and the Plans, Borrower will
fulfill the obligations of Borrower thereunder, enforce the performance thereof
and give immediate notice to Bank of any default by the architect, site
development contractor, the engineer, or the General Contractor thereunder.
Further, Borrower will not, without the prior written consent of Bank (i)
materially modify, or amend the terms of the architect's contract, the Plans,
engineer's contract, site development contractor's contract or the Construction
Documents; or (ii) waive or release the performance of any material obligation
to be performed by the architect, the engineer, site development contractor or
the General Contractor thereunder.
7.23 SUBORDINATE FINANCING. Borrower shall not permit there to exist
nor shall Borrower obtain any subordinate or secondary financing of the Land or
any other property granted as security for the Loan, except for that certain
loan in favor of Amresco Funding Corporation, a Delaware corporation, which loan
is secured by that certain mortgage dated March 29, 1996 and recorded in
Official Records Book 24694 at Page 0744 of the Public Records of Broward
County, Florida and that certain contingent return mortgage dated March 29, 1996
and received in Official Records Book 24694 at Page 0787 of the Public Records
of Broward County, Florida, both of which have been voluntarily subordinated to
Bank's mortgages.
7.24 TRANSFER OF PROPERTY OF BORROWER. The Borrower shall not permit
any change in its ownership (or the ownership of its general partners, if
applicable), its corporate or trade name, the nature and operation of its
business or the nature and character of the Borrower or the Approved Project,
nor shall the Borrower sell, assign, transfer, hypothecate or dispose of all or
any portion of the Land, Improvements, or the Approved Project, except to
bonafide purchasers of individual lots under Firm Contracts and as may be
permitted hereby, without the prior written consent of Bank, which consent shall
be withheld or granted in Bank's sole and absolute discretion.
7.25 PARTIAL RELEASES OF PROPERTY. Provided the Borrower is not then in
Default hereunder, under the Note, the Mortgage or any other Loan Document, Bank
will provide partial releases in respect of its interest under the Mortgage and
other Loan Documents upon the terms and conditions set out in Exhibit "B"
attached. Payments made for releases shall be applied by Bank against the
outstanding principal of the Loan unless the release payment is calculated to
take into account allocable interest or other constituent costs or accruals, in
which event Bank may apply the release payment in accordance with such
calculations. Borrower agrees to reimburse Bank for all out-of-
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pocket fees and costs, as set forth in Exhibits "B-1" and "B-2" hereto in
connection with the granting of such partial releases and shall provide Bank
with any and all information requested by Bank with respect to the Unit to be
released.
Notwithstanding anything contained herein to the contrary, if
Borrower applies for the partial release of a lot from the lien of the Mortgage
and other Loan Documents and there is not then any outstanding principal balance
under the Note, but there are outstanding letters of credit (either drawn or
undrawn upon) issued by Bank on Borrower's behalf which are secured by the
Mortgage (the "Secured Letters of Credit"), the Lot Release Price (computed in a
redefined manner as follows: that certain amount derived by dividing the sum of
all remaining outstanding letters of credit by the number of remaining developed
lots encumbered by the Mortgage) shall nevertheless be due and payable as a
precondition to Bank's obligation to grant a partial release or permit the
commencement of a Unit on a particular lot, as applicable, and the Lot Release
Prices paid for partial releases in this situation (collectively, the "Partial
Release Funds") shall be placed by Bank in an account in Borrower's name, which
account shall be pledged by Borrower to Bank as additional collateral for the
Loan and the indebtedness of Borrower to Bank arising out of the Secured Letters
of Credit. Borrower shall have no rights to make withdrawals or otherwise
receive disbursements from the pledged account. Borrower agrees to execute any
and all documents required by Bank to evidence the pledge of the Partial Release
Funds. If the Secured Letters of Credit are drawn, or if Borrower Defaults under
the Loan Documents, Bank may, in its sole and absolute discretion, and in
addition to any and all of its available rights and remedies under the Loan
Documents, the documents evidencing the Secured Letters of Credit, or otherwise,
apply the Partial Release Funds to reimburse Bank for any drawings made under
the Secured Letters of Credit and to any then outstanding balance under the
Loan. If said Secured Letters of Credit are reduced or released, the pledged
account will be reduced or released as well and shall be returned to Borrower.
Notwithstanding any provision herein to the contrary, if Bank at
its sole discretion has agreed to issue letters of credit for the performance of
site development work contemplated in this Agreement, sufficient availability
for funding such scope of work must exist under the Use of Proceeds for which
the letter of credit is being requested.
7.26 DISCLOSURE OF CONTRACTS AND NOTE. Borrower shall disclose to Bank
upon demand, the names of all persons with whom Borrower has contracted or
intends to contract for any construction or for the furnishing of labor or
materials therefor, and when required by Bank obtain the approval by Bank of all
such persons. Borrower shall upon Bank's request, at all times during the
construction period of any Improvements, provide to the Bank, within ten (10)
days of the Borrower's receipt thereof, copies of all notices to owner, claims
of lien, and demands for sworn statement of account, issued by any party,
whether pursuant to any notice of commencement or otherwise, in connection with
the Approved Project or the Land.
7.27 CONSTRUCTION LIEN LAW NOTIFICATION REQUIREMENTS. Borrower hereby
authorizes Bank to provide written notices to Contractor and lienors providing
notices to owner pursuant to ss.713.3471 (1)(a), Fla. Stat., and ss.713.3471
(2)(b), Fla. Stat., to the extent such notices are required by law. Borrower
hereby releases Bank and waives all claims it may have against Bank for damages
Borrower may incur as a result of Bank's failure to deliver said notices.
Borrower hereby agrees to provide all required notices to the Contractor and all
lienors providing notices to owner in compliance with ss.713.3471(2)(a), Fla.
Stat., in a timely fashion.
7.28 AMENDMENTS TO COST BREAKDOWN. If Borrower amends the Cost
Breakdown or reallocate items in the Cost Breakdown such that written notice to
the Contractor and lienors serving notices to owner would be required under
ss.713.3471(2)(a), Fla. Stat., (1992), Borrower agrees to provide written notice
to the Contractor and all required lienors in compliance with ss.713.3471
(2)(a), Fla. Stat., Bank shall not be obligated to make any disbursements of
Loan proceeds until Borrower has provided Bank with copies of any required
notices to the Contractor and required lienors in compliance with ss.713.3471
(2)(a), Fla. Stat., together with evidence that such notices have been
countersigned by the Contractor and all lienors who are required to receive the
notice under ss.713.3471 (2)(a), Fla. Stat., thereby confirming receipt thereof.
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7.29 AMENDMENT TO THE USE OF PROCEEDS. With the written authorization
of Borrower or Borrower's authorized representative only, as evidenced by
Borrower's Draw Request, Bank may amend the Use of Proceeds or reallocate funds
designated for specific line items to other line items. ________ Such amendment
may be evidenced by Borrower's Draw Request or by an Amended Use of Proceeds
Schedule and may be made without the consent of the Guarantors. Bank shall not
be permitted to reallocate items in the Use of Proceeds without the Borrower's
or Borrower's authorized representatives prior written consent.
7.30 LOAN FEES. Intentionally omitted.
7.31 MINIMUM NOTE REPAYMENT SCHEDULE. Intentionally omitted.
7.32 AMERICANS WITH DISABILITIES ACT. Borrower covenants and agrees
that, during the term of the Loan, to the extent such Act is applicable, the
Improvements and Approved Project will be in full compliance with the Americans
with Disabilities Act ("ADA") of July 26, 1990, 42 U.S.C Section 12191, et.
seq.) as amended from time to time, and the regulations promulgated pursuant
thereto. Borrower shall be solely responsible for all ADA compliance costs,
including without limitation, attorneys' fees and litigation costs, solely
relating to such period in which Borrower is the owner of the Land which
responsibility shall survive the repayment of the Loan and foreclosure of the
Land and Improvements.
7.33 REGULATION "Z". The Loan is exempt from the provisions of the
Federal Consumers Credit Protection Act (Truth-in-Lending Act) and Regulation
"Z" of the Board of Governors of the Federal Reserve System, because Borrower is
a person fully excluded therefrom, and/or because the Loan is only for business
or commercial purposes of Borrower and the proceeds of the Loan are not being
used for personal, household, family or agricultural purposes.
7.34 FINANCIAL COVENANTS. Borrower shall at all times be
prohibited from incurring or providing A guaranty for any additional debt,
except trade accounts payable in the ordinary course of business relative to the
Approved Project, or form pledging its assets to secure or guarantee any debt
other than that of the Borrower.
7.35 SUBORDINATION OF SHAREHOLDER LOANS. Borrower hereby subordinates,
to the prior payment to Bank of all sums owing under the Loan, any and all
loans, advances, and indebtedness owing from Borrower to shareholders of
Borrower from time to time, whether or not evidenced by promissory notes.
Borrower may make payments of principal and interest for any loan owing to its
shareholders until the Loan is paid in full so long as no Default exists under
the Loan.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Bank that:
(a) REPRESENTATIONS AND WARRANTIES IN MORTGAGE AND GUARANTY. All
of the representations and warranties contained in the Mortgage and
Guaranty are true and correct and are incorporated herein by reference
as if set out in full.
(b) OTHER FINANCING. The Borrower has not (i) received any other
financing for the acquisition of or development and construction on the
Land existing as of the date hereof for which a lien equal to or
superior to Bank's mortgage could be successfully asserted, or (ii)
received any other financing for the construction of the Improvements.
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(c) PLANS. The Plans have been or will be prior to use approved by
the Borrower, the Guarantor, and each appropriate Governmental
Authority.
(d) GOVERNMENTAL REQUIREMENTS AND OTHER REQUIREMENTS. Borrower
will cause the Land to be developed and the Units to be constructed in
accordance with the Plans submitted to and approved by Bank, and when
so constructed the Land and the Units do and shall comply with all
covenants, conditions and restrictions affecting the Land or any
portion thereof, and do and shall comply with all Governmental
Requirements.
(e) USE OF THE APPROVED PROJECT. There is no (i) plan, study or
effort by any Governmental Authority or any nongovernmental person or
agency which may adversely affect the current or planned use of the
Approved Project, or (ii) to the best of Borrower's knowledge any
intended or proposed Governmental Requirement (including, but not
limited to, zoning changes) which may adversely affect the current or
planned use of the Approved Project.
(f) MORATORIUM. There is no moratorium or like governmental order
or restriction now in effect with respect to the Approved Project and,
to the best of Borrower's knowledge, no moratorium or similar ordinance
or restriction is now contemplated.
(g) PERMITS. All permits, approvals and consents of Governmental
Authorities and public and private utilities having jurisdiction
necessary in connection with the Approved Project have been or will be
issued and are or will be in good standing.
(h) CONDITION OF APPROVED PROJECT. No defect or condition of the
Land or the solid or geology thereof exists which will impair the
construction, use, or the operation of the Approved Project for its
intended purpose.
(i) LABOR AND MATERIALS. All labor and materials contracted for in
connection with the construction of the Improvements shall be used and
employed solely on the Land in said construction and only in accordance
with the Plans.
(j) SURVEYS. The Survey, the preliminary plat for the Land, and
all plot plans and other documents heretofore furnished by the Borrower
to Bank with respect to the Land and Improvements are accurate and
complete as of their respective dates. There are no encroachments onto
the Land and no improvements on the Land encroach onto any adjoining
property.
(k) CONSTRUCTION COSTS. The amount of the hard costs and soft
costs are accurate, true and correct and are satisfactory to Borrower.
(l) SALE OF SECURITIES. The Borrower has not instituted, caused to
be instituted or been a party to and, to the best of Borrower's
knowledge, there has not been any public offering with respect to the
Land and Improvements, or either, within the meaning of the Securities
Act of 1933 and the Securities Exchange Act of 1934.
(m) CONSTRUCTION LIEN LAW. At the time of Closing and at the time
of the recording of the Mortgage, no work has been done on Improvements
or on the Approved Project by the Borrower or anyone else acting for,
or on behalf of the Borrower, and no materials have been placed on the
Property by any materialmen or by anyone else. No Notice of
Commencement has been recorded in the Public Records with respect to
the Approved Project or the Land at the time of Closing. Borrower shall
not permit the commencement of any excavation or construction work of
any nature whatsoever, nor the delivery of any materials to the
Approved Project or the Land, prior to the recordation and posting of a
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Notice of Commencement as hereinafter set forth. Borrower shall execute
an appropriate Notice of Commencement and cause the same to be recorded
in the public records of the county in which the Property is located in
sequence after the recording of the Mortgage. Borrower shall post a
certified copy of the Notice of Commencement on the Approved Project,
in strict conformity with the Florida Construction Lien Law. If
construction is commenced prior to the recordation and posting of the
Notice of Commencement, or the Notice of Commencement is recorded prior
to the Mortgage, Bank shall have the absolute right to cancel this
Agreement and be immediately reimbursed by Borrower for all
disbursements of loan proceeds, together with expenses and reasonable
attorneys' fees incurred in, connection therewith. Construction shall
commence within ninety (90) days after recordation of the Notice of
Commencement. Construction shall proceed continuously in a workmanlike
manner. Bank reserves the right to require Borrower to furnish an
itemized cost breakdown for the Improvements to be constructed.
(n) REPRESENTATIONS AND WARRANTIES IN OTHER LOAN DOCUMENTS. All of
the representations and warranties contained in the other Loan
Documents are true and correct.
8.2 RELIANCE ON REPRESENTATIONS. The Borrower acknowledges that Bank
has relied upon the Borrower's representations and is not charged with any
knowledge contrary thereto that may be received by an examination of the public
records wherein the Land is located or that may have been received by any
officer, director, agent, employee or shareholder of Bank.
8.3 CERTIFICATE REGARDING LOAN STATUS. Upon Bank's request, Borrower
and Guarantors shall provide Bank with a written certification, certifying to
such matters related to the Loan as Bank may request, including, but not limited
to, a statement that Borrower and Guarantors are not in Default and that no
Default Conditions have occurred.
ARTICLE IX
EVENTS OF DEFAULT
9.1 DEFAULT. The occurrence of any one or more of the following events
(time being of the essence as to this Loan Agreement and all of its provisions)
constitutes a "Default" by Borrower under this Loan Agreement, and at the option
of Bank, under the other Loan Documents:
(a) SCHEDULED PAYMENT. Borrower's failure to make any payment
required under the Note when due or within any applicable grace period.
(b) MONETARY DEFAULT. Borrower's failure to make any other payment
required by this Loan Agreement or the other Loan Documents when due.
(c) OTHER. Borrower's failure to perform any other obligation
imposed upon Borrower by this Loan Agreement or any other Loan Document
within thirty (30) days after the date when performance is due. This
provision shall not be construed to provide Borrower with any grace
period in complying with any obligations imposed on Borrower by the
terms of the Loan Documents. Notwithstanding the foregoing provision,
Bank shall give Borrower notice, as defined in the Mortgage, of any
non-monetary default after which Borrower shall have a thirty (30) day
cure period.
(d) REPRESENTATION. Any representation or warranty of Borrower
contained in this Loan Agreement or in any certificate delivered
pursuant hereto, or in any other instrument or statement furnished in
connection herewith, proves to be incorrect or misleading in any
adverse respect as of the time when the same shall have been made,
including, without limitation, any and all financial statements,
operating
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statements, and schedules attached thereto, furnished by Borrower or
any guarantor of the Loan to Bank or pursuant to any provision of this
Loan Agreement,
(e) BANKRUPTCY. Borrower or any general partner of Borrower or any
guarantor of the Loan (i) files a voluntary petition in bankruptcy or a
petition or answer seeking or acquiescing in any reorganization or for
an arrangement,, composition, readjustment, liquidation, dissolution,
or similar relief for itself pursuant to the United State Bankruptcy
Code or any similar law or regulation, federal or state, relating to
any relief for debtors, now or hereafter in effect; or (ii) makes an
assignment for the benefit of creditors or admits in writing its
inability to pay or fails to pay its debts as they become due; or (iii)
suspends payment of its obligations or takes any action in furtherance
of the foregoing; or (iv) consents to or acquiesces in the appointment
of a receiver, trustee, custodian, conservator, liquidator or other
similar official of Borrower, a general partner of Borrower, or any
guarantor, for all or any part of the Collateral or other assets of
such party, or either; or (v) has filed against it an involuntary
petition, arrangement, composition, readjustment, liquidation,
dissolution, or an answer proposing an adjudication of it as a bankrupt
or insolvent, or is subject to reorganization pursuant to the United
States Bankruptcy Code, an action seeking to appoint a trustee,
receiver, custodian, or conservator or liquidator, or any. similar law,
federal or state, now or hereinafter in effect, and such action is
approved by any court of competent jurisdiction and the order approving
the same shall not be vacated or stayed within sixty (60) days from
entry; or (vi) consents to the filing of any such petition or answer,
or shall fail to deny the material allegations of the same in a timely
manner.
(f) JUDGMENTS. (1) A final judgment other than a final judgment in
connection with any condemnation is entered against Borrower,
Guarantors, or any general partner of Borrower, that (i) adversely
affects the value, use or operation of the Land or the Improvements in
Bank's sole judgment, or (ii) adversely affects, or may adversely
affect, the validity, enforceability or priority of the lien or
security interest created by the Mortgage or any other Loan Document in
Bank's sole judgment, or both; or (2) execution or other final process
issues thereon with respect to the Land or the Improvements; and (3)
Borrower, Guarantor, or any general partner of Borrower, does not
discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereon, in any event within
thirty (30) days from entry, or Borrower shall not, within such period
or such longer period during which execution on such judgment shall
have been entered, and cause its execution to be stayed during such
appeal, or if on appeal such order, decree or process shall be affirmed
and Borrower shall not discharge such judgment or provide for its
discharge in accordance with its terms within sixty (60) days after the
entry of such order or decree or affirmance, or if any stay of
execution on appeal is released or otherwise discharged.
(g) LIENS. Any federal, state or local tax lien or any claim of
lien for labor or materials or any other lien or encumbrance of any
nature whatsoever is recorded against Borrower or the Land or
Improvements and is not removed by payment or transferred to substitute
security in the manner provided by law, within thirty (30) days after
it is recorded in accordance with applicable law.
(h) OTHER NOTES OR MORTGAGES. Borrower's default in the
performance or payment of Borrower's obligations under any other note
which remains uncured after any applicable grace period, or under any
other mortgage encumbering all or any part of the Land or the
Improvements, if the other mortgage is permitted by the Bank, whether
such other note or mortgage is held by Bank or by any other party, and
unless otherwise agreed to by separate written agreement between Bank
and such other mortgage holder.
(i) BORROWER DEFAULT UNDER LOAN DOCUMENTS. Borrower's default in
the payment or performance of any of Borrower obligations under any of
the Loan Documents, including this Loan Agreement and any riders
thereto.
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(j) GUARANTOR DEFAULT.
i) The default after expiration of any applicable grace period
in the payment or performance of any obligation of a Guarantor of
the Note arising under its guaranty or pursuant to any other Loan
Documents; or
ii) The death of any Guarantor and the failure of Borrower to
provide Bank with an alternate guaranty or alternate collateral
satisfactory to Bank in its sole and absolute discretion within
sixty (60) days of the date of Guarantor's death.
(k) BORROWERS/GENERAL PARTNER'S CONTINUED EXISTENCE. Borrower or
any corporate General Partner of Borrower shall cease to exist or to be
qualified to do or transact business in the State in which the Land and
Improvements are located, or shall be dissolved or shall be a party to
a merger or consolidation, or shall sell all or substantially all of
its assets, or shall change its corporate name or trade name without
prior written notice to Bank.
(1) STOCK IN BORROWER/CHANGE IN PARTNERS. If Borrower is a limited
partnership and without the prior written consent of Bank, any shares
of stock of any corporate general partner of Borrower are issued, sold,
transferred, conveyed, assigned, mortgaged, pledged, or otherwise
disposed of so as to result in change of control of Borrower, whether
voluntarily or by operation of law, and whether with or without
consideration, or any agreement for any of the foregoing is entered
into; or, if any general partnership interest or other equity interest
in the Borrower is sold, transferred, assigned, conveyed, mortgaged,
pledged, or otherwise disposed of, whether voluntarily or by operation
of law, and whether with or without consideration, or any agreement for
any of the foregoing is entered into, or any general partner of
Borrower withdraws from the partnership.
(m) TRANSFER OF PROPERTY OR OWNERSHIP. Any sale, conveyance,
transfer, assignment, or other disposition or encumbrance of all or any
part of the Land, Improvements, or the Approved Project, or any
ownership interest in Borrower or any guarantor without the prior
consent of Bank or except as otherwise permitted hereby, or as outlined
in the prospectus for public offering for Transeastern Properties,
Inc., a Florida corporation delivered to Bank by Borrower.
(n) FALSE STATEMENT. Any statement or representation of Borrower
or any guarantor contained in the loan application or any financial
statements or other materials furnished to Bank or any other Bank prior
or subsequent to the making of the Loan secured hereby are discovered
to have been false or incorrect or incomplete.
(o) DEFAULT UNDER INDEMNITY. Borrower or Guarantor shall default
after any applicable grace period under any obligation imposed by any
indemnity contained within any of the Loan Documents including the
Hazardous Waste Certification and Indemnification. .
(p) CROSS-DEFAULT. Any monetary default by the Borrower or
Guarantor under this Loan shall be a default under all other documents,
instruments, mortgages and other collateral documents evidencing and
securing all other loans by Bank to Borrower or Guarantor.
(q) NON-COMPLIANCE WITH THE PLANS AND SPECIFICATIONS. Failure of
any of the materials supplied for the development of the Land or the
construction of the Units to comply with the Plans and Specifications
or any requirements of any Governmental Authority unless the Borrower
undertakes and diligently pursues the correction of such failure.
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(r) PROJECTED COMPLETION OF CONSTRUCTION. Failure to construct the
Improvements with reasonable dispatch, or the discontinuance of
construction at any time for a period of fifteen (15) days
consecutively, or determination by Bank that construction of the
Improvements will not be timely completed and Borrower's failure to
complete, cure or provide satisfactory assurances after notice or
demand from Bank. Notwithstanding the foregoing, any delays in the
event of unavailability of materials at reasonable cost, strikes, other
labor problems, governmental orders, acts of God or other events which
would support a defense based upon impossibility of performance for
reasons beyond the control of Borrower shall not be a Default under
this paragraph.
(s) NON-PAYMENT OF DEBTS. Borrower is generally not paying its
debts as such debts become due.
(t) SECURITIES LAWS VIOLATION. The assertion of any violation of
the 1933 Securities Act, 1934 Securities Act or the Florida Blue Sky
Laws by any Governmental Authorities or the institution of any
securities litigation not dismissed within sixty (60) days of the
commencement of same.
(u) NON-COMPLIANCE WITH HOMEOWNER ASSOCIATION DOCUMENTS. Borrower
shall fail to perform any duty required of it, fulfill any condition,
abide by any covenant or in any manner default under the homeowners,
association documents encumbering the Approved Project, if any.
(v) ADVERSE ACTIONS. Any legal or equitable action is commenced
against Borrower which, if adversely determined, could reasonably be
expected to impair substantially the ability of Borrower to perform
each and every obligation under the Loan Documents and this Agreement;
provided, however, if Borrower has commenced a counter action, contest
or defense to the adverse action and resolved such adverse action
within one hundred twenty (120) days of the commencement of same then
Borrower shall not be in Default.
(w) GOVERNMENT CHALLENGES. The validity of any permit, approval or
consent by any Governmental Authority relating to the Land, the
Improvements, or the Approved Project, or the operation thereof is
challenged by a proceeding before a board, commission, agency, court or
other authority having jurisdiction; provided, however, if Borrower has
commenced a counter action, contest or defense to the governmental
challenge and resolved such challenge within one hundred twenty (120)
days of the commencement of same then Borrower shall not be in Default.
(x) BORROWER'S ACTIONS. Any action by the Borrower, which would,
in the sole opinion of the Bank, significantly endanger the security of
the Loan and which Borrower fails to mitigate after notice from Bank
will render the Loan payable on demand.
(y) MISCELLANEOUS. If at any time the Bank shall determine that
there has been a material adverse change in the financial condition or
prospects of Borrower, the Guarantor, or any general partner of
Borrower, which is not corrected or cured after reasonable notice from
Bank.
ARTICLE X
BANK'S RIGHTS AND REMEDIES
The following rights and remedies are available to Bank:
10.1 ACCELERATION. Upon the occurrence of a Default, the entire unpaid
principal balance of the Loan and all accrued but unpaid interest thereon and
any costs or expenses then due to Bank and any and all other
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obligations of Borrower to Bank, shall, at the option of Bank and without notice
to Borrower, become immediately due and payable.
10.2 COMPLETION OF CONSTRUCTION. From and after the occurrence of a
Default, Bank shall be entitled to have and use the Plans And the Construction
Documents and, after first having given written notice to the architect, site
development contractor, the engineer, or the General Contractor, shall be
entitled from and after such notice to enjoy and enforce all of the rights of
Borrower under the architect's contract, engineer's contract, site development
contractor's contract, the Plans or the Construction Contracts. Borrower hereby
irrevocably constitutes and appoints Bank its true and lawful attorney-in-fact
with full power of substitution in the Approved Project to complete the
Improvements in the name of Borrower following a Default. Borrower hereby
empowers Bank from and after Default as its attorney-in-fact as follows: (a) to
use any funds of Borrower, including any Loan proceeds or equity deposits which
may remain undisbursed hereunder, for the purpose of completing the Improvements
in accordance with the Plans; (b) to make such additions, changes,
modifications, or corrections in, or deviations from, the Plans as shall be
necessary or desirable to complete the Improvements; (c) to employ such
contractors, subcontractors, agents, architects, engineers, inspectors, or other
parties as shall be required for said purposes; (d) to pay, settle, or
compromise all existing bills and claims which may be liens against the
Improvements or as may.be necessary or desirable in the sole discretion of Bank
for the completion of the Improvements or for clearance of title; (e) to direct
use of and/or use all or any part of the labor, materials, supplies and
equipment contracted for, owned by, or under the control of Borrower, whether or
not previously incorporated into the Improvements; (f) to execute all
applications and certificates in the name of Borrower which may be required by
the Construction Documents, the architect's contract, the engineer's contract,
site development contractor's contract, Plans, or any of the contract documents;
(g) to prosecute and defend all actions or proceedings in connection with the
Approved Project or the construction of the Improvements and take such action
and require such performance as Bank shall deem necessary under any performance
or payment bond; and (h) to do any and every act with respect to construction or
completion of the Improvements or the closing of any permanent financing which
Borrower might do in its own behalf including, without limitation, execution,
acknowledgment, and delivery of all instruments, documents, and papers in the
name of Borrower as may be necessary or desirable in the sole discretion of
Bank. It is further understood and agreed that this power of attorney which
shall be deemed to be a power coupled with an interest, cannot be revoked. All
sums expended by Bank pursuant hereto shall be deemed to have been disbursed to
Borrower and secured by the Security Documents, and the other Loan Documents.
10.3 DISPUTES. Where disputes have arisen which, in the opinion of
Bank, may endanger timely completion of the Improvements or fulfillment of any
condition or covenant herein, Bank may agree to disburse Loan proceeds for the
account of Borrower without prejudice to Borrower's rights, if any, to recover
said proceeds from the party to whom paid. Such agreement or agreements may take
the form which Bank in its discretion deems proper, including, but without
limiting the generality of the foregoing, agreements to indemnify (on behalf of
Borrower and/or for Bank's own account) any title insurer against possible
assertion of lien claims, agreements to pay disputed amounts and the like. All
sums paid or agreed to be paid pursuant to such undertaking shall be advances of
Loan proceeds.
10.4 REMEDIES CUMULATIVE: NONWAIVER: JUDGMENTS. All remedies of Bank
provided for herein or in the other Loan Documents are cumulative and shall be
in addition to any and all other rights and remedies provided for or available
under the other Loan Documents, at law or in equity. The exercise of any right
or remedy by Bank hereunder shall not in any way constitute a cure or waiver of
a Default Condition or a Default hereunder or under the Loan Documents, or
invalidate any act done pursuant to any notice of the occurrence of a Default
Condition or Default, or prejudice Bank in the exercise of any of its rights
hereunder or under any of the other Loan Documents, unless, in the exercise of
said rights, Bank realizes all amounts owed to it under the Loan Documents. ANY
JUDGMENT IN FAVOR OF BANK AGAINST BORROWER SHALL BEAR INTEREST AT THE DEFAULT
RATE (AS DEFINED IN THE NOTE).
10.5 NO LIABILITY OF BANK. Whether or not Bank elects to employ any or
all remedies available to it in the event of an occurrence of a Default
Condition or Default, Bank shall not be liable for the construction of or
25
<PAGE>
failure to construct or complete or protect the Improvements or for payment of
any expense incurred in connection with the exercise or any remedy available to
Bank or for the construction or Completion of the Improvements or for the
performance or nonperformance of any other obligation of Borrower.
10.6 SECURITY INTEREST. It is understood and agreed that Bank shall
have and enjoy and is hereby granted a lien on, and a security interest in, all
collateral described in the Mortgage, and including without limitation, any and
all materials (stored on-site or off-site), reserves, deferred payments,
deposits or advance PAYments for materials (stored on-site or off-site)
undisbursed Loan proceeds, insurance refunds, impound accounts, refunds for
overpayment of any kind, and such lien and security interest shall constitute
additional security for the Indebtedness of Borrower to Bank, and Bank shall
have and possess any and all rights and remedies of a secured party provided by
law with respect to enforcement of and recovery on its security interest on such
items and amounts. In the event of a conflict between this paragraph and any
security interest granted pursuant to the Mortgage, the Mortgage shall control.
10.7 CESSATION OF FUNDING. Upon the occurrence of a Default, Bank shall
have the right to immediately terminate further funding of the Loan irrespective
of completion.
ARTICLE XI
GENERAL CONDITIONS
The following conditions shall be applicable throughout the term of
this Loan Agreement:
11.1 WAIVERS. No waiver of any Default Condition or Default or breach
by Borrower hereunder shall be implied from any delay or omission by Bank to
take action on account of such Default Condition or Default, and no express
waiver shall affect any Default Condition or Default other than the Default
specified in the waiver and it shall be operative only for the time and to the
extent therein stated. Waivers of any covenants, terms or conditions contained
herein must be in writing and shall not be construed as a waiver of any
subsequent breach of the same covenant, term or condition. The consent or
approval by Bank to or of any act by Borrower requiring further consent or
approval shall not be deemed to waive or render unnecessary the consent or
approval to or of any subsequent or similar act. No single or partial exercise
of any right or remedy of Bank hereunder shall preclude any further exercise
thereof or the exercise of any other or different right or remedy.
11.2 BENEFIT. This Loan Agreement is made and entered into for the sole
protection and benefit of Bank and Borrower, their successors and assigns, and
no other person or persons have any right to action hereon or rights to the Loan
all proceeds at any time, nor shall Bank owe any duty whatsoever to any claimant
for labor or services performed or material furnished in connection with the
Approved Project, or to apply any undisbursed portion of the Loan to the payment
of any such claim, or to exercise any right or power of Bank hereunder or
arising from any Default Condition or Default by Borrower.
11.3 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 Borrower shall not assign this Loan
Agreement or any of its rights, interests, duties or obligations hereunder or
any Loan proceeds or other moneys to be advanced hereunder in whole or in part
without the prior written consent of Bank and that any such assignment (whether
voluntary or by operation of law) without said consent shall be void. It is
expressly recognized and agreed that Bank may assign this Loan Agreement, the
Note, the Security Documents, and any other Loan Documents, in whole or in part,
to any other person, firm, or legal entity provided that all of the provisions
hereof shall continue in full force and effect and, in the event of such
assignment, Bank shall thereafter be relieved of all liability under the Loan
Documents and any Loan disbursements made by any assignee shall be deemed made
26
<PAGE>
in pursuant and not in modification hereof and shall be evidenced by the Note
and secured by the Security Documents and any other Loan Documents.
11.4 AMENDMENTS. This Loan Agreement shall not be amended except by a
written instrument signed by all parties hereto.
11.5 TERMS. Whenever the context and construction so 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.
11.6 GOVERNING LAW AND JURISDICTION. This Loan Agreement and the other
Loan Documents and all matters relating thereto shall be governed by and
construed and interpreted in accordance with the laws of the State of Florida.
Borrower and all of its general partners hereby submits to the jurisdiction of
the state and federal courts located in Florida and agree that Bank may, at its
option, enforce its rights under the Loan Documents in such courts.
11.7 PUBLICITY. At Bank's request and expense, and subject to
applicable laws, regulations and restrictions, Borrower shall place upon the
Approved Project, at a location mutually acceptable :to Borrower and Bank, a
sign or signs advertising the fact that financing is being provided by Bank.
Bank shall also have the right to secure printed publicity through newspaper and
other media concerning the Approved Project and source of financing.
11.8 SAVINGS CLAUSE. Invalidation of any one or more of the provisions
of this Loan Agreement shall in no way affect any of the other provisions
hereof, which shall remain in full force and effect.
11.9 EXECUTION IN COUNTERPARTS. This Loan Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument, and in making proof
of this Loan Agreement, it shall not be necessary to produce or account for more
than one such counterpart.
11.10 CAPTIONS. The captions herein are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this Loan Agreement nor the intent of any provision hereof.
11.11 NOTICES. All notices required to be given hereunder shall be
given in accordance with the requirements of the Mortgage.
11.12 MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including but not limited to those arising out of or relating
to this Loan Agreement or any related agreements or instruments, including any
claim based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law) , the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event
of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Loan Agreement may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which this Loan
Agreement applies in any court having jurisdiction over such action.
(a) SPECIAL RULES. The arbitration shall be conducted in the
County of Broward, Florida and administered by Endispute, Inc., d/b/a
J.A.M.S./Endispute who will appoint an arbitrator; if
J.A.M.S./Endispute is unable or legally precluded from administering
the arbitration, then the American Arbitration Association will serve.
All arbitration hearings will be commenced within 90 days of the
27
<PAGE>
demand for arbitration; further, the arbitrator shall only, upon a
showing of cause, be permitted to extend the commencement of such
hearing for up to an additional 60 days.
(b) RESERVATION OF RIGHTS. Nothing in this Loan Agreement shall
be deemed to (i) limit the applicability of any otherwise applicable
statutes of limitation or repose and any waivers contained in this Loan
Agreement; or (ii) be a waiver by the Bank of the protection afforded
to it by 12 U.S.C. Sec. 91 or any substantially equivalent state law;
or (iii) limit the right of the Bank hereto (A) to exercise self help
remedies such as (but not limited to) setoff, or (B) to foreclose
against any real or personal property collateral, or (C) to obtain from
a court provisional or ancillary remedies such as (but not limited to)
injunctive relief or the appointment of a receiver. The Bank may
exercise such self help rights, foreclose upon such property, or obtain
such provisional or ancillary remedies before, during or after the
pendency of any arbitration proceeding brought pursuant to this
Agreement. At Bank's option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of a
power of sale under the deed of trust or mortgage, or by judicial sale
under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary
remedies shall constitute a waiver of the right of any party, including
the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
11.13 DISBURSEMENT OF CONSTRUCTION LINE FUNDS AT RENEWAL. Intentionally
omitted.
IN WITNESS WHEREOF, Borrower and Bank have executed this Loan Agreement
as of the above written date.
Signed, sealed and delivered
in the presence of TRANSEASTERN PEMBROKE VILLAGES, INC.,
a Florida corporation
_______________________________
Witness #1 By __________________________________(SEAL)
_______________________________ Edward Falcone, Executive Vice President
Print Name
_______________________________
Witness #2 Address:
_______________________________
Print Name 3300 University Drive
Coral Springs, Florida 33065
CHASE FEDERAL BANK, a Federal Savings
Bank, a Division of NATIONSBANK, N.A.
(SOUTH), a national banking association
_______________________________
28
<PAGE>
Witness #1 _____________________________________(SEAL)
________________________________ James T. Webb, Real Estate Banking Officer
Print Name
________________________________
Witness #2 Address:
________________________________
Print Name 701 West Cypress Creek Road
Suite 101
Ft. Lauderdale, Florida 33309
29
<PAGE>
JOINDER OF GUARANTORS
The undersigned as Guarantor hereby joins in and consents to the
foregoing Loan Agreement.
________________________________
Witness #1
________________________________
Print Name
___________________________________
________________________________ Arthur Falcone
Witness #2
________________________________
Print Name
________________________________
Witness #1
________________________________
Print Name
___________________________________
________________________________ Edward Falcone
Witness #2
________________________________
Print Name
________________________________
Witness #1
________________________________
Print Name
___________________________________
________________________________ Philip Cucci
Witness #
________________________________
Print Name
________________________________ Transeastern Properties, Inc.,
Witness #1 a Florida corporation, f/k/a
________________________________ Transeastern Properties of South,
Print Name Inc., a Florida corporation
By __________________________(SEAL)
________________________________ Arthur Falcone, President
Witness #2
________________________________
Print Name
30
<PAGE>
EXHIBITS
1. Exhibit "A-1": Draw Sheets / Use of Proceeds - Pelican Pointe
2. Exhibit "A-2": Draw Sheets / Use of Proceeds - Egret's Way
3. Exhibit "A-3": P.U.D. Development
4. Exhibit "B-1": Partial Release - Pelican Pointe
5. Exhibit "B-2": Partial Release - Egret's Way
6. Exhibit "C": Intentionally Omitted
7. Exhibit "D": Intentionally Omitted
8. Exhibit "E": Site Plans
9. Exhibit "F": Legal Description
31
<PAGE>
EXHIBIT "A-1" - DRAW SHEETS/USE OF PROCEEDS
PARCEL "D" - "PELICAN POINTE"
<PAGE>
EXHIBIT "A-2" - DRAW SHEETS/USE OF PROCEEDS
PARCEL "F" - "EGRET'S WAY"
<PAGE>
EXHIBIT "A-3" - P.U.D. DEVELOPMENT
Balance of Development Work to be Funded under
Loan Agreement dated March 29, 1996 $ 288,668.45
Interest Reserve 151,948.65
<PAGE>
EXHIBIT B-1
PARCEL "D" - "PELICAN POINTE"
PARTIAL RELEASES
1. PARTIAL RELEASES UNDER THE NOTE. Provided that Borrower is not then
in Default hereunder, under the Note, the Mortgage or any other Loan Document,
Bank will provide partial releases of individual lots from the Note upon the
following terms:
a. Bank shall be given written notice of the request for each
partial release at least five (5) business days prior to each partial
release.
b. The cost of each partial release, including reasonable attorney's
fees for Bank's attorney, shall be paid by Borrower.
c. Contemporaneously with the delivery to Borrower of each partial
release, Borrower shall prepay principal equal to THIRTY ONE THOUSAND
SIX HUNDRED FIFTY THREE AND NO/100 DOLLARS ($31,653.00) per developed
lot (the "Lot Release Price"). If the value or total amount funded
changes materially, in the sole discretion of Bank, Bank reserves the
right to modify the Lot Release Prices. Such change in Lot Release
Price will be based on relative value of the collateral subject to the
originally contemplated average Lot Release Price set forth above based
on one hundred twenty percent (120%) accelerated lot release pricing.
<PAGE>
EXHIBIT B-2
PARCEL "F" - "EGRET'S WAY"
PARTIAL RELEASES
1. PARTIAL RELEASES UNDER THE NOTE. Provided that Borrower is not then
in Default hereunder, under the Note, the Mortgage or any other Loan Document,
Bank will provide partial releases of individual lots from the Note upon the
following terms:
a. Bank shall be given written notice of the request for each
partial release at least five (5) business days prior to each partial
release.
b. The cost of each partial release, including reasonable attorney's
fees for Bank's attorney, shall be paid by Borrower.
c. Contemporaneously with the delivery to Borrower of each partial
release, Borrower shall prepay principal equal to NINETEEN THOUSAND
THREE HUNDRED FORTY FIVE AND NO/100 DOLLARS ($19,345.00) per developed
lot (the "Lot Release Price"). If the value or total amount funded
changes materially, in the sole discretion of Bank, Bank reserves the
right to modify the Lot Release Prices. Such change in Lot Release
Price will be based on relative value of the collateral subject to the
originally contemplated average Lot Release Price set forth above based
on one hundred twenty percent (120%) accelerated lot release pricing.
<PAGE>
EXHIBIT "C"
INTENTIONALLY OMITTED
<PAGE>
EXHIBIT "D"
INTENTIONALLY OMITTED
<PAGE>
EXHIBIT "E"
SITE PLANS
<PAGE>
EXHIBIT "F"
LEGAL DESCRIPTION
Portions of the NASHER PLAT, according to the Plat thereof as recorded
at Plat Book 159 at Page 42, of the Public Records of Broward County
more particularly described as follows:
<PAGE>
CONSTRUCTION LOAN
AGREEMENT
BY AND BETWEEN
TRANSEASTERN PEMBROKE VILLAGES, INC.
A FLORIDA CORPORATION
(THE "BORROWER")
AND
CHASE FEDERAL BANK, A FEDERAL SAVINGS BANK, A DIVISION OF
NATIONSBANK, N.A. (SOUTH), A NATIONAL BANKING ASSOCIATION
ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES
(THE "BANK")
PELICAN POINTE
(THE "APPROVED PROJECT")
DATED: SEPTEMBER ____, 1996
RICHARD A. WOOD, ESQ.
THERREL BAISDEN & MEYER WEISS
1111 LINCOLN ROAD
SUITE 500
MIAMI BEACH, FLORIDA 33139
(305) 672-1921
<PAGE>
Loan No. 91004439
THIS LOAN AGREEMENT, dated as of the _____ day of September, 1996 (the
"Loan Agreement" or "Agreement"), is made by and between TRANSEASTERN PEMBROKE
VILLAGES, INC., A FLORIDA CORPORATION, with its principal place of business at
3300 University Drive, Coral Springs, Florida 33065 ("Borrower"), and CHASE
FEDERAL BANK, A FEDERAL SAVINGS BANK, A DIVISION OF NATIONSBANK, N.A. (SOUTH), a
national banking association organized and existing under the laws of the United
States, with its offices located at 701 West Cypress Creek Road, Suite 101, Fort
Lauderdale, Florida 33309 ("Bank").
RECITALS
A. Borrower has applied to Bank for a loan in the principal amount of
THREE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($ 3,400,000.00) (the
"Loan") to be used for the purpose of the constructing of three hundred fifty
six townhome dwellings on such individual lots now owned by Borrower in fee
simple and mortgaged to Bank as security for the Loan, which lots are to be
located in a certain residential development known as Pelican Pointe located
upon certain property in Broward County, Florida.
B. Bank has agreed to establish a note and mortgage structure under
which advances may be made for the land acquisition, development and the
construction of single family residential dwellings on individual lots in
accordance with plats, specifications, terms, and conditions approved by Bank.
C. Bank is willing to make the Loan described above based on the
terms and conditions set forth in this Loan Agreement and in the Loan Documents
referred to herein.
NOW, THEREFORE, in consideration of the premises, of the Loan advances
which are to be agreed to be made by Bank to Borrower hereinafter and the notes
and mortgage given by Borrower in evidence thereof, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 For the purposes hereof:
(a) "Approved Project" or "Project" means the collective
reference to the development identified in Section 2.4 of this
Agreement, together with the Land, the Improvements, rights, property,
and appurtenances as defined, described or identified in the Mortgage,
and means, as the context may require, an individual Unit, as well as
the aggregate of all such Units.
(b) "Architect" or "Supervising Architect" means that party
who will serve as Borrower's architect in conjunction with the
construction of Units and common amenities to be constructed in the
Approved Project. Bank's Construction Consultant and Borrower's
architect shall not be the same person or firm.
(c) "Architect's Contract" means the contract between
Borrower and the Architect "Architect's Contract" shall also mean
Borrower's design architect's contract.
<PAGE>
(d) "Borrower's Representative" means the person or persons
designated in writing to Bank by Borrower as being authorized to submit
Draw Requests on Borrower's behalf and to consent to changes in the
Cost Breakdown and Use of Proceeds. Unless and until changed by written
notice to Bank, BorroWer designates any one of the following: Arthur
Falcone or Les Campbell as its Borrower's Representative(s).
(e) "Closing Date" means the date as of which this Loan
Agreement is executed by Borrower and Bank.
(f) "Collateral" means the Mortgaged Property, Rents,
Intangible Property and other property rights as defined in and
encumbered by the Mortgage.
(g) "Commitment" means Bank's commitment letter to Borrower
dated July 1, 1996 and all amendments thereto. The parties intend that
this Agreement and the Loan Documents shall supersede and replace the
Commitment.
(h) "Completion means completion of the Improvements in
accordance with the Plans, such Completion to be evidenced by
satisfaction of the conditions of Section 6.3 plus the installation of
any required items of personalty in substantial compliance with the
Plans, free and clear of liens or claims of liens or other
encumbrances, except Permitted Encumbrances;
(i) "Construction Documents" means the stipulated sum
construction contract between Borrower and the General Contractor, if a
General Contractor is engaged, and all other contracts, plans or
documents concerning the construction of the Improvements and any
addenda, amendments or modifications thereto. The Construction
Documents shall include a hard cost breakdown and a maximum fixed cost
for the performance of all services, labor, and materials furnished
thereunder.
(j) "Construction Inspector" means the architectural or
engineering firm or such party which Bank shall designate to perform
various services on behalf of Bank. The services to be performed by
Bank's Construction Inspector shall include the issuance of reports and
certifications solely for the benefit of Bank and shall not impose upon
Bank any obligation to make inspections, or to correct or require any
other person to correct any defects, or to notify any person with
respect to such defects, review of the Plans and all proposed changes
to them, preparation of a "cost breakdown" construction analysis (the
"Construction Analysis"), periodic inspections of construction work for
conformity with the Plans, and approval of Draw Requests.
(k) "Cost Breakdown" means the detailed trade breakdown of
the cost of constructing the Improvements and an itemization of
non-construction and Land costs, all as approved by Bank from time to
time.
(1) "Default" means a violation of any term, covenant, or
condition hereunder or a Default as defined under any of the other Loan
Documents which remains uncured after any applicable grace period.
(m) "Default Condition" means the occurrence or existence of
an event or condition which, upon the giving of notice or the passage
of time, or both, would constitute a Default.
(n) "Draw Request" means a written or verbal request for any
disbursement of Loan proceeds, which shall be submitted for each
requested disbursement as set forth in Article III hereof, in
accordance with the draw request sheet attached hereto as EXHIBIT "A"
attached hereto and incorporated herein by reference.
2
<PAGE>
(o) "Engineer" shall mean such party who will serve as
Borrower's supervising engineer in accordance with the Plans and
specifications;
(p) "Engineering Contract" means the "full service",
contract between Borrower and Engineer which shall require engineering
services throughout the Land development and construction contemplated
under the Loan.
(q) "Financing Statements" means the UCC financing
statements filed in order to perfect Bank's lien on certain personal
property and fixtures as more particularly described therein.
(r) "Firm Contract" means an arm's length, bona-fide binding
contract for purchase and sale, in form and content satisfactory to
Bank, for the sale of a Unit to a purchaser unaffiliated and unrelated
to Borrower or Guarantor, under which (i) Borrower has received a cash
deposit equal to ten percent (10%) of the purchase price except as
herein after provided; (ii) Borrower is not obligated to provide any
purchase-money financing, (iii) all applicable statutory cancellation
or rescission periods have expired, (iv) there are no contingencies
other than a first mortgage financing contingency for which Borrower
has confirmed to Bank that purchaser has made a mortgage application
and has received a mortgage commitment without contingencies, (v) the
closing date for the contract is within forty-five (45) days of the
date of issuance of the Certificate of occupancy for the Unit, and (vi)
the gross sales price, after payment of all of Borrower's closing
expenses thereunder, will result in sufficient proceeds to pay to Bank
the Unit Release Price and Lot Release Price. The purchaser's interest
in the Mortgaged Property and under the Firm Contract must be expressly
subordinated to the lien and operation of Bank's Mortgage, either by
separate subordination agreement in favor of Bank or pursuant to the
terms of the Firm Contract.
(s) "General Contractor" means Borrower who will serve as
the general contractor in accordance with the Construction Documents;
if a General Contractor is not engaged or is not named here, any
obligation of the General Contractor referred to in the Loan Documents
shall be the obligation of the Borrower to perform or to cause to be
performed.
(t) "Governmental Authorities" means any local, state, or
federal governmental agency, regulatory body or office, or any
quasi-governmental office (including health and environmental), or any
officer or official of any such agency, office, or body whose consent
or approval is required as a prerequisite to the commencement of the
construction of the Improvements or to the operation and occupancy of
the Improvements or the Approved Project or to the performance of any
act or obligation or the observance of any agreement, provision or
condition of whatsoever nature herein contained.
(u) "Guarantor" means: Arthur Falcone, Edward Falcone,
Philip Cucci and Transeastern Properties Inc., a Florida corporation,
f/k/a Transeastern Properties of South Florida, Inc., a Florida
corporation.
(v) "Guaranty" means the Guaranty Agreement executed by
Guarantor in favor of Bank, providing for Guarantor's payment of all
sums due under the Loan Documents and of performance of all obligations
of Borrower thereunder except as otherwise specifically therein
provided, including, without limitation, timely completion of the
Improvements in accordance with the Construction Documents and Loan
Documents.
(w) "Improvements" means all infrastructure improvements to
the Land and single family residences, structures, dwellings, and Units
constructed or to be constructed on the Land as defined in the
Mortgage, together with all fixtures and appurtenances now or later to
be located on the Land and/or in such Improvements.
3
<PAGE>
(x) "Land" means the real property described in the Mortgage
at the inception of the Loan as per EXHIBIT "F" attached hereto and as
may be later included by modification and spreader agreement.
(y) "Loan Documents" means this Loan Agreement, the Note and
any funding agreement, the Mortgage, the Guaranty, the Financing
Statements, and any other document or writing executed in connection
therewith or in furtherance thereof.
(z) "Lot Release Price" shall mean the partial release
price as set forth in EXHIBIT "B" attached hereto and incorporated
herein.
(aa) "Model Unit" means a Unit constructed and furnished
initially for inspection by prospective purchasers.
(bb) "Mortgage" means the Real Estate Mortgage, Assignment
and Security Agreement of even date herewith executed by Borrower for
the benefit of Bank encumbering the Collateral (as defined in the
Mortgage), and any extensions, modifications, renewals or replacements
thereof.
(cc) "Note" means collectively the Promissory Note (for
Revolving Line of Credit) in the amount of THREE MILLION FOUR HUNDRED
THOUSAND AND NO/DOLLARS ($ 3,400,000.00) ("Construction Line") dated as
of the Closing Date executed by Borrower in favor of Bank, as well as
any promissory note, sub-note, or other notes issued by Borrower in
substitution, replacement, extension, future advance, amendment or
renewal of the Note or any such promissory note or notes.
(dd) "Permitted Encumbrances" means those liens,
encumbrances, easements and other matters defined in the Mortgage as
"Permitted Encumbrances".
(ee) "Plans" means plans and specifications for the
development of the Land and construction of the Improvements submitted
to and approved by Bank from time to time, and including such
amendments thereto as may from time to time be made by Borrower and
approved by Bank.
(ff) "Pre-Sold Unit" means a Unit owned by Borrower and
covered by a Firm Contract.
(gg) "Security Documents" means the Mortgage, the Financing
Statements, and any other instrument executed to establish and perfect
Bank's lien on the Collateral, and any extensions, modifications,
renewals, or replacements thereof.
(hh) "Site Development Contractor" means such party who will
serve as the subcontractor for the site development of the Land as
contemplated under the Loan.
(ii) "Site Development Contract" means the contract between
Borrower and Site Development Contractor for the site development of
the Land per the site development Plans and specifications.
(jj) "Site Plan" means collectively the site plans for the
Project as set forth on EXHIBIT "E" attached hereto.
(kk) "Spec Unit" means a Unit for which a Firm Contract has
not been received or approved, and which is not used as a Model Unit.
(ll) "Title Policy" means the mortgagee title policy meeting
the requirements of this Loan Agreement.
4
<PAGE>
(mm) "Unit" means a portion of the Land and its respective
improvements constituting a single residential dwelling unit.
(nn) "Unit Release Price", shall mean the partial release
price for each Unit funded under the Construction Line as set forth on
EXHIBIT "B" attached hereto and incorporated herein.
(oo) "Use of Proceeds" means the description of the
permitted use of the Loan proceeds under the A&D Note as set forth on
EXHIBIT "A" attached hereto and incorporated by reference herein.
Capitalized terms not defined in this Loan Agreement shall have the
meanings ascribed to them in the Mortgage.
ARTICLE II
THE LOAN
2.1 LOAN TERMS. Subject to the terms and conditions of this Loan
Agreement, Bank will lend and Borrower will borrow up to a principal sum of
THREE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($ 3,400,000.00), which
borrowing shall be evidenced by the Note. Also, all of the terms, definitions,
conditions, and covenants of the Note, the Guaranty, the Mortgage, and any other
documents executed in connection therewith or pursuant thereto are expressly
made a part of this Loan Agreement by reference in the same manner and with the
same effect as if set forth herein at length and shall have the meaning set
forth in such instruments unless otherwise defined herein.
2.2 A&D NOTE. The A&D Note is a Consolidated Renewal Promissory Note
in the original principal amount of EIGHT MILLION SEVEN HUNDRED THIRTY SEVEN
THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($8,737,500.00), which note is secured
by a first mortgage in favor of Bank, dated March 29, 1996, and recorded April
3, 1996 in Official Records Book 24694 at Page 0702, of the Public Records of
Broward County, Florida, as modified by that certain Amended and Restated Real
Estate Mortgage Assignment, and Security Agreement of even date herewith
executed by Borrower in favor Bank.
2.3 CONSTRUCTION LINE. The Construction Line is a revolving line of
credit and the principal amount outstanding under such note may increase and
decrease from time to time as Borrower draws and repays note funds thereunder
but the principal balance of such note outstanding from time to time shall not
exceed the original, principal amount of the Construction Line. Provided
Borrower is not in Default, outstanding amounts under such note may be repaid or
reborrowed from time to time subject to the terms, conditions and limitations
set forth in this Agreement, but the principal balance of such note outstanding
from time to time shall not exceed the original, principal amount of the
Construction Line.
2.4 LOAN PURPOSE. The purpose of the Loan is to finance construction
costs of Units to be constructed in that certain Approved Project known as
Pelican Pointe, located in Pembroke Pines, Florida ("Pelican Pointe") which
project shall be hereinafter referred to as the "Approved Project".
Disbursements of Loan proceeds for construction of Units in other developments
owned or hereinafter acquired by Borrower or Units not meeting the following
limitations shall be at Bank's sole discretion, and Bank shall under no
circumstances be obligated to disburse Loan proceeds except as expressly set
forth in this Loan Agreement.
2.5 LIMITATIONS ON USE OF A&D NOTE PROCEEDS. INTENTIONALLY OMITTED.
2.6 LIMITATIONS ON USE OF CONSTRUCTION LINE PROCEEDS. Bank will
disburse Construction Line proceeds for the construction of Units subject to the
terms and conditions of this Loan Agreement, the Use of Proceeds attached as
Exhibit "A", and the following limitations:
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(a) Construction Line proceeds shall be used solely to
fund construction of Units (i) for which Bank has approved the Plans
and (ii) having a maximum sales price of ONE HUNDRED FIFTEEN THOUSAND
AND NO/100 DOLLARS ($115,000.00) or for which the total construction
costs as set forth in the Unit Cost Breakdown, excluding lot cost as
approved by Bank, do not exceed SIXTY FIVE THOUSAND AND NO/100 DOLLARS
($65,000.00).
(b) Construction Line proceeds shall be used solely for the
direct and indirect costs to construct Units as set forth in the Unit
Cost Breakdown and approved by Bank. Borrower states for the express
benefit and reliance of Bank that it has not relied and is not relying
on any binding obligation on the part of Bank to finance the
construction of a particular number of Units unless Borrower has
performed the prerequisites for such construction as set forth in the
Loan Documents.
(c) The amount to be funded on each Pre-Sold Unit will be
determined by deducting the Lot allocation of SIXTEEN THOUSAND ONE
HUNDRED SEVENTEEN AND NO/100 DOLLARS ($16,117.00) from eighty percent
(80%) of the lesser of: (i) the "completed value" of such Unit, which
amount shall be determined by an appraisal satisfactory to Bank (which
appraisal shall be at Borrower's sole expense); or (ii) the purchase
price for the Unit reflected in the Firm Contract; provided, however,
that in no event shall Bank be obligated to fund Construction Line
proceeds in an amount in excess of one hundred percent (100%) of the
Unit Cost Breakdown submitted by Borrower and approved by Bank.
(d) The amount to be funded on each Spec Unit and Model Unit
will be determined by deducting the Lot allocation of SIXTEEN THOUSAND
ONE HUNDRED SEVENTEEN AND NO/100 DOLLARS ($16,117.00) from seventy five
percent (75%) of the "completed value,' of said Spec Unit or Model
Unit, which amount shall be determined by an appraisal satisfactory to
Bank (which appraisal shall be at Borrower'S sole expense) ; provided,
however, that in no event shall Bank be obligated to disburse
Construction Line proceeds in excess of one hundred percent (100%) of
the Unit Cost Breakdown for such Spec Unit or Model Unit submitted by
Borrower and approved by Bank.
(e) Use of Construction Line proceeds for the construction
of Units shall be limited to sixteen (16) Spec Units and four (4) Model
Units, forty (40) Pre-Sold Units. Notwithstanding any provision in this
Agreement to the contrary, at any time no more than five (5) Spec Units
shall be permitted for any one home model type.
(f) Intentionally omitted.
(g) Each Pre-Sold Unit financed under the Construction Line
shall be completed, as defined in this Agreement, in a period not to
exceed nine (9) months from the date construction commences.
(h) The amount financed under the Construction Line must be
repaid in full (i) for any Spec Unit within (12) months from the date
construction commences on such Spec Unit and (ii) for any Model Unit
within thirty five (35) months from the date of this Agreement.
(i) only residential Units within the Approved Project shall
be financed by the Construction Line.
(j) At such time as the number of Spec Units financed
under the Construction Line has become sixteen (16) Spec Units,
additional Spec Units financed under the Construction Line may only be
commenced upon (a) repayment of all Loan advances for one of the
sixteen (16) Spec Units; or (b) at such earlier time as one of the Spec
Units becomes a Pre-Sold Unit. All Pre-Sold Units upon which the Sales
Contract has been canceled due to the default of the buyer and which
are available for sale, shall become designated as a Spec Unit. If, at
any time, the number of Spec Units exceeds sixteen (16) in number, the
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Borrower shall not be permitted to request funding for construction of
any further Spec Units until the number of such funded Spec Units is
reduced to no more than sixteen (16) Spec Units.
(k) At such time as the number of Model Units financed
under the Construction Line has become four (4) Model Units, additional
Model Units financed under the Construction Line may only be commenced
upon (a) repayment of all Loan advances for one of the four (4) Model
Units; or (b) at such earlier time as one of the Model Units becomes a
Pre-Sold Unit. If, at any time, the number of Model Units exceeds four
(4) in number, the Borrower shall not be permitted to request funding
for construction of any further Model Units until the number of such
funded Model Units is reduced to no more than four (4) Model Units.
(l) The total amount to be funded for the costs of
construction of a Unit, as approved and allocated by Bank pursuant to
Subparagraphs 2.5(a) through (e), inclusive, less the allocable loan
amount per lot, above shall be called the "Committed Unit Amount." Upon
Bank's approval of the commencement of construction of a Unit and the
Bank's approval of the Committed Unit Amount for said Unit, the
Committed Unit Amount shall be reserved under the Construction Line,
and shall not be available for disbursement for construction of any
other Units until such time as the Unit Release Prices repaid create
amounts available under the Construction Line. After making the initial
disbursement under the Committed Unit Amount, the remaining unfunded
Committed Unit Amount shall be disbursed on a percentage basis in
accordance with the terms of this Agreement. Bank shall not in any case
be obligated to approve or fund the construction of a new Unit unless
there are sufficient "available" Construction Line proceeds as noted
below to complete construction of that Unit. For purposes of this
Agreement, the term "available" Construction Line proceeds shall mean
the amount derived by subtracting the total Committed Unit Amounts from
the Maximum Committed Funding Amount of THREE MILLION FOUR HUNDRED
THOUSAND AND NO/100 DOLLARS ($3,400,000.00) as described below in
subparagraph (m).
(m) Notwithstanding any provision in this Agreement to the
contrary, the number of Units (Model, Spec and Pre-Sold) financed under
the Construction Line shall be limited by a "Maximum Committed Funding
Amount" of THREE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($3,400.000.00) representing the total of all Committed Unit Amounts
for all Units under the Construction Line for which construction has
commenced and initial funding by Bank has been made. Regardless of the
Maximum Committed Funding Amount "availability" under the Construction
Line, consisting of up to THREE MILLION FOUR HUNDRED THOUSAND AND
NO/100 DOLLARS ($3,400,000.00) of "Committed Unit Amounts", the amount
outstanding at any one time under the Construction Line shall be no
greater than THREE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($3,400,000.00).
2.7 LOAN MATURITY. The maturity date of the Construction Line shall be
September 1, 1999 with two (2) extension options of three (3) months each to be
granted at Borrower's request, at the sole and absolute discretion of Bank and
on the terms as set forth in the Construction Line Note. On the Maturity Date of
the Note, all sums outstanding under such notes shall be immediately due and
payable, and the Bank's obligation to fund shall cease and terminate.
ARTICLE III
DISBURSEMENTS
3.1 A&D NOTE DISBURSEMENT - GENERAL PROVISIONS. INTENTIONALLY
OMITTED.
3.2 CONSTRUCTION LINE DISBURSEMENT - GENERAL PROVISIONS. Bank agrees
that it will, from time to time, and so long as there shall exist no Default
Condition or Default (which has not been cured within any
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applicable grace period), but not more frequently than two (2) times per month,
disburse Construction Line proceeds for the construction of Units in the
Approved Project, subject to the terms and conditions of this Agreement.
3.3 REQUEST FOR INITIAL FUNDING COMMENCEMENT OF CONSTRUCTION OF A UNIT
UNDER THE CONSTRUCTION LINE. When Borrower wishes to commence funding for
construction of a particular Unit, Borrower shall submit a draw request,
accompanied by all items required in Articles IV and V as conditions precedent,
to the extent applicable. All supporting documentation shall be submitted no
later than five (5) days prior to the requested date of the initial disbursement
under each note. No disbursement by Bank shall constitute an approval or
acceptance by Bank of any construction work or constitute a waiver by Bank of
any conditions precedent to any future disbursements. Bank shall not be
obligated to approve any disbursement for purposes other than those contemplated
in this Agreement. The conditions set forth in Articles IV and V hereof must be
satisfied before Bank will make the first advance or disbursement for the
development of Land or construction of a Unit, and the conditions set forth in
Article VI hereof must be and remain satisfied before Bank will make each
subsequent disbursement or advance.
3.4 INTERIM DRAW REQUESTS. No later than five (5) days prior to
disbursement by Bank, Borrower must submit to Bank a Draw Request, which shall
include or be accompanied by the requirements set out herein for draws.
3.5 DISBURSEMENT AMOUNTS. Following receipt of a Draw Request and
Bank's review and approval of supporting documentation, Bank shall determine the
amount of the disbursement it will make in accordance with the Percentage
Completion Draw Schedule, a copy of which is attached as EXHIBIT "D" provided no
Default Condition or Default exists.
3.6 EQUITY DISBURSEMENTS. Except as provided in Section 2.6(m), if
Bank at any time determines in its reasonable discretion that the Loan proceeds
plus the amount of all equity investments made or scheduled to be made are not
sufficient to fully complete the Improvements in accordance with the Plans and
to pay all other sums due under the Loan Documents, then Bank shall have the
option of requiring Borrower to deposit with Bank additional funds from some
other source (or submit evidence to Bank of equity investments previously made)
in amounts sufficient to cover the resulting deficit before Bank will disburse
any additional Loan proceeds. Deposited funds shall be advanced as construction
progresses in accordance with this Loan Agreement before any additional Loan
disbursements are made.
3.7 OPTION TO DISBURSE FUNDS TO ANY GUARANTOR AND/OR TO PAY
CONTRACTORS. If a Default shall exist, at its option, Bank may, after so
notifying Borrower, make Loan disbursements directly to any guarantor or obligor
of the debt when such party shall be performing the obligations of Borrower
hereunder or the General Contractor or any unpaid subcontractor, laborer or
material supplier providing labor, services or materials in connection with the
construction of the Improvements, and the execution of this Loan Agreement by
Borrower shall, and hereby does, constitute an irrevocable direction and
authorization to Bank to so disburse the funds. No further direction or
authorization from Borrower shall be necessary to warrant such direct
disbursements and all such disbursements shall be secured by the Security
Documents as fully as if made to Borrower, regardless of the disposition thereof
by the General Contractor, any subcontractor, laborer or material supplier so
paid.
ARTICLE IV
GENERAL PRE-CLOSING CONDITIONS
Bank's obligations to close the Loan shall be expressly conditioned
upon satisfaction of the following conditions, or execution and/or delivery to
Bank of the following items, all in form and substance reasonably satisfactory
to Bank and Bank's counsel:
4.1 NOTE. The original Note, properly executed, shall have been
delivered to Bank.
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4.2 GUARANTY. The original Guaranty(s), properly executed, shall have
been delivered to Bank.
4.3 MORTGAGE. The Mortgage, which shall be a second lien on the Land
and Improvements, shall have been properly executed in recordable form and
delivered to Bank, subject to those matters reflected in the Title Policy.
4.4 INDEMNITY. The Hazardous Substance Certificate and Indemnification
Agreement, properly executed by Borrower and each Guarantor, shall have been
delivered to Bank.
4.5 FINANCING STATEMENTS. The Financing Statements on forms approved f
or filing in the appropriate state and local filing offices shall have been
properly executed.
4.6 TITLE POLICY. A standard ALTA mortgagee title policy insuring the
lien of the Mortgage as a first priority lien encumbering the Land and
Improvements from a company or from companies approved by Bank (including any
reinsurance agreements required by Bank, together with direct access provisions
in favor of Bank): (1) providing coverage for the full principal amount of the
Loan, (2) providing a variable rate endorsement, if appropriate, the Form 9
Endorsement, the Revolving Loan Endorsement, the Survey Endorsement, and any
other endorsements requested by Bank, (3) deleting all "standard" exceptions
except taxes for the current year, (4) insuring all appurtenant easements, (5)
containing no bankruptcy or creditors' rights exceptions or exclusions; and (6)
containing no title exceptions other than the Permitted Exceptions or the other
exceptions approved by Bank.
4.7 TITLE EXCEPTIONS. Copies of all documents creating exceptions to
the Title Policy.
4.8 SURVEY/RECORDED AND PRELIMINARY PLAT/APPROVED SITE PLAN. Three (3)
copies of a recent survey of the Land prepared by a registered land surveyor
acceptable to Bank and certified to Bank, the title insurance company, and
Borrower. Such survey shall contain a certification as to the applicable flood
zone (s) for the Land, and a certification that the survey was and in accordance
with the Minimum Technical Standards for Surveys as set fourth in Chapter
21HH-6, Florida Administrative Code. In addition, a copy of the boundary plat
for the Land and a copy of the site plan is required approved by all applicable
governmental authorities. Notwithstanding the foregoing, the Bank will not
unreasonably withhold its consent to the execution of the final plat and will
join when requested by Borrower. A recorded copy of the plat shall be delivered
to Bank prior to any Construction Line funding requests for Units with Firm
Contracts.
4.9 FLOOD HAZARDS. Evidence as to whether or not the Land is located
within an area identified as having "special flood hazards" as such term is used
in the Federal Flood Disaster Protection Act of 1973.
4.10 FLOOD HAZARD INSURANCE. If all or any part of the Improvements is
or is to be located in an area having "special flood hazards", a flood insurance
application or policy naming the Bank as mortgagee must be submitted to Bank at
such time as it is commercially available. Satisfactory evidence of premium
payments must also be provided.
4.11 BUILDER'S RISK INSURANCE. A builder's risk insurance policy
meeting the requirements set forth in the Mortgage.
4.12 LIABILITY INSURANCE. Liability insurance meeting the requirements
set forth in the Mortgage.
4.13 BORROWER'S ORGANIZATIONAL DOCUMENTS AND RESOLUTIONS. A certified
copy, from the appropriate governmental body or corporate officer, of
organizational documents of Borrower, and any partner of Borrower, as
appropriate, certifying that Borrower and/or such partner (i) is duly organized,
validly existing, and in good standing under the state of its existence, (ii)
has the authority under such documents and laws to enter into the Loan as
contemplated by the Loan Documents, and (iii) has made all appropriate filings,
including without limitation,
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qualification to do business in the State of Florida, necessary to enter into
the Loan and execute the Loan Documents. Additionally, Borrower shall provide
(i) if appropriate, certified resolutions or other internal documents or writing
of Borrower and such partner evidencing that Borrower and such partner have
taken all requisite organizational action, and received all organizational
approvals necessary to enter into the Loan and execute the Loan Documents, and
(ii) such other documents or writings as Bank may request.
4.14 GUARANTOR'S ORGANIZATIONAL DOCUMENTS AND RESOLUTIONS.
INTENTIONALLY OMITTED.
4.15 FICTITIOUS NAME CERTIFICATE. If Borrower utilizes or intends to
utilize a fictitious name, a copy of the Fictitious Name Certificate of the
Borrower issued by the Florida Secretary of State.
4.16 ATTORNEY'S OPINION. The written opinions of counsel to Borrower
and Guarantor, addressed to Bank, acceptable to Bank and Bank's counsel, as to
those matters required by Bank. The attorney's opinion, with respect to the
enforceability of remedies provided in any instrument may be made subject to or
affected by, applicable bankruptcy, moratorium, reorganization, insolvency or
similar laws from time to time in effect affecting the rights of creditors
generally. As to matters of fact, such opinions may be qualified to the extent
of the knowledge of such counsel based upon inquiry and reasonable
investigation.
4.17 RESTRICTIVE COVENANTS. A copy of the executed and recorded
homeowners, documents, filed articles of incorporation for the homeowners,
associations, executed by-laws for the associations, and any other related
documents as Bank may request for the Approved Project. Notwithstanding the
foregoing, such documents shall be delivered to Bank prior to any Construction
Line funding for Units with Firm Contracts and Bank agrees to not unreasonably
withhold or delay its consent to such documents.
4.18 FINANCIAL STATEMENTS. The updated Borrower prepared financial
statements certified to the Bank must be received by Bank within thirty (30)
days of the Closing Date. With respect to the Guarantors, signed personal
financial statements on Bank forms shall be required prior to the Closing Date.
All statements must include income and contingent liability information.
4.19 COMPLIANCE WITH LAWS AND MATTERS OF RECORD. Satisfactory
documentary evidence that the Land, and the intended uses of the Land are in
compliance with all applicable laws, regulations and ordinances and private
covenants, easements, and conditions of record. Such evidence is subject to
approval by Bank and Bank's counsel and may include letters, licenses, permits,
certificates and other correspondence from the appropriate Governmental
Authorities, opinions of Borrower's counsel or other counsel, and opinions or
certifications from the Architect, Engineer and the General Contractor. The
laws, regulations and ordinances with which compliance should be evidenced
include without limitation the following: health and environmental protection
laws, laws related to or regulating water management districts, hazardous
materials and substances and stormwater drainage, erosion control ordinances,
tree and landscaping ordinances, building codes, land use requirements,
threshold building consultant requirements, the Development of Regional Impact
Statutes, doing business and/or licensing laws and zoning laws (the evidence
submitted as to zoning should include the zoning designation made for the Land,
the permitted uses of the Land under such zoning designation and zoning
requirements as to parking, lot size, ingress, egress and building setbacks).
4.20 TAXES. Evidence that the Land is, or will be, separately assessed
for tax purposes and information as to tax parcel identification numbers, tax
rates, estimated tax values and the identities of the taxing authorities. Also,
Borrower shall submit proof that the taxes are paid current upon the Land.
4.21 UTILITIES. Evidence of the availability and suitability of the
water, sewer, telephone, electrical, and other utilities needed to properly
service the Project in its intended use.
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4.22 PLANS AND SPECIFICATIONS. Two sets of the site development Plans
which must have been approved in writing by Borrower and the General Contractor
either by initialing same or by other written approval identifying all pages and
dates, including revision dates. The Plans must include all site development
(including storm drainage, utility lines, erosion control and landscaping) plans
and specifications and must incorporate the recommendations in the soil testing
report. Bank will engage its engineer to review such Plans to determine
sufficiency of such under its guidelines.
4.23 PERMITS. Borrower will provide a copy, certified by the Borrower
to be a true and correct copy of the South Florida Water Management District
Permit, if applicable.
4.24 SOIL TESTS. A report as to soil borings made on the Land by a soil
testing firm satisfactory to Bank. The number and location of such borings shall
be in accordance with the recommendations of the soil testing firm and must also
be satisfactory to Bank. The report shall include the recommendations of the
soil testing firm as to the preparation of the soil needed in order to
adequately support the Improvements, and shall be delivered and approved by Bank
within sixty (60) days of the date of this Agreement.
4.25 ENVIRONMENTAL ASSESSMENT.
(a) An environmental assessment of the Land and Improvements
performed at Borrower's expense by a licensed engineer or other
environmental consultant satisfactory to Bank stating that:
i. the Land is not located within any area designated as a
hazardous substance site by any of the Governmental Authorities;
and
ii. no hazardous or toxic wastes or other materials or
substances regulated, controlled, or prohibited by any federal,
state, or local environmental laws, including but not limited to
asbestos, are located on the Land or Improvements; and
iii. the Land has not been cited or investigated in the past
for any violation of any such laws, regulations, or ordinances.
(b) If the environmental assessment shall reveal any condition
unacceptable to Bank, same shall constitute a Default hereunder and in
addition to all remedies available to Bank, Bank shall be relieved of
any obligation under the Commitment. If the environmental assessment
recommends, or if Bank so requests, in its sole and absolute
discretion, a Phase II audit, additional testing or remedial action,
Borrower, at its sole cost and expense shall promptly conduct such
additional audits and testing and/or complete such remedial action.
Bank may require the Borrower to provide evidence that all necessary
actions have been taken to remove any hazardous substance contamination
and/or to restore the site to a condition acceptable to Bank and state
and federal governmental agencies.
4.26 TAXPAYER IDENTIFICATION NUMBER. Borrower's federal taxpayer
identification number.
4.27 BORROWER'S AFFIDAVIT. An affidavit of Borrower regarding the
absence of any other parties in possession of the Land, stating that a notice of
commencement has not been filed with respect to the Property, the
non-commencement of construction of Improvements , and such other matters as may
be requested by Bank.
4.28 COMMITMENT FEE. The balance of the non-refundable commitment
fee in the total amount of THIRTY FOUR THOUSAND AND NO/100 DOLLARS ($34,000.00)
which was earned upon acceptance of the Commitment and the reserving of
sufficient funds by Bank from which to make Loan disbursements, and is due and
payable whether or not any disbursements are made hereunder.
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4.29 APPRAISAL. Bank shall have received a narrative appraisal
certified to the Bank for the Land and site development improvements prepared by
an appraiser acceptable to Bank.
4.30 COMPREHENSIVE PLAN. Documentary evidence, satisfactory to Bank and
its counsel, that Borrower's development proposal for the Project and the
construction of the Improvements are consistent with concurrency requirements
and other applicable provisions of the local comprehensive plan and local land
development regulations, as defined and required by the Local Government
Comprehensive Planning and Land Development Regulation Act, Florida Statutes.
Section 163.3161, et seq.
4.31 FACILITIES FOR HANDICAPPED. Subsequent to the Closing Date but not
later than the commencement of the construction of the sales center or the
clubhouse, as applicable, Bank shall have received and approved evidence,
satisfactory to Bank, that the Plans and specifications do, and the
Improvements, when constructed, will comply to the extent applicable with all
legal requirements regarding access and facilities for handicapped or disabled
persons, including, without limitation, and to the extent applicable, Part V of
the Florida Building Construction Standards Act entitled "Accessibility by
Handicapped Persons", Chapter 553, Fla Stat.; the Federal Architectural Barriers
Act of 1988 (42 U.S.C. ss.4151, et. seq.), The Fair Housing Amendment Act of
1988 (42 U.S.C. ss.3601, et. seq), The Americans With Disabilities Act Of 1990
(42 U.S.C. ss.12101 et. seq.), and The Rehabilitation Act of 1973 (29 U.S.C.
ss.794).
4.32 CONTRACTS. A copy of the executed contract for the purchase of th
Land by the Borrower, if applicable.
4.33 SUBORDINATION AGREEMENTS. Borrower will provide a fully executed
original Loan Subordination Agreement, which document shall be recorded in the
Public Records of Broward County, evidencing the subordination of Amresco
Funding Corporation, a Delaware corporation's interest, as evidenced by that
certain Mortgage, Assignment of Rents, and Security Agreement, dated March 29,
1996, and recorded April 3, 1996 in Official Records Book 24694 at Page 0744, of
the Public Records of Broward County, Florida (the "Amresco Third Mortgage") and
that certain Contingent Mortgage, Assignment of Rents and Security Agreement,
dated March 29, 1996 and recorded April 3, 1996, in Official Records Book 24694
at Page 0787, of the Public Records of Broward County, Florida, (the "Amresco
Fourth Mortgage") the Bank's Mortgage.
4.34 MISCELLANEOUS. All other Loan Documents or items that are
customarily provided in loan transactions of this type and all other loan
documents or items set forth in the Commitment.
ARTICLE V
CONDITIONS PRECEDENT TO FIRST SITE DEVELOPMENT AND
CONSTRUCTION DISBURSEMENTS
5.1 A&D NOTE DISBURSEMENTS. INTENTIONALLY OMITTED.
5.2 CONSTRUCTION LINE DISBURSEMENTS. Under the Construction Line, Bank
shall not be obligated to make the first Loan disbursement for construction of a
particular Unit until all of the following conditions have been satisfied by
proper evidence, execution and/or delivery to Bank of the following items, all
in form and substance reasonably satisfactory to Bank and Bank's counsel:
(a) There shall be no Loan Default or Default Condition, which
has not been cured with any applicable grace period.
(b) The Land shall be free and clear of all liens and
encumbrances except for Bank's Mortgages in favor of Bank and the
Permitted Exceptions, the Amresco Third Mortgage and the Amresco Fourth
Mortgage.
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(c) All conditions precedent as set forth in Article IV shall
have been satisfied.
(d) Bank shall have received an appraisal for such Unit, in form
and substance satisfactory to Bank, indicating its "completed value".
(e) If the Unit is a Pre-Sold Unit, the requirements necessary
for establishing a Firm Contract shall have been met.
(f) Bank shall have received satisfactory evidence that the Unit
is covered by Borrower's builder's risk insurance policy; if the Unit
is located in a flood hazard zone, Bank shall have received
satisfactory evidence that the Unit is covered by Borrower's flood
insurance policy or that application for flood insurance has been made.
(g) Bank shall have received a true and correct copy of the Cost
Breakdown and Plans for that Unit type.
(h) Bank shall have received a copy of the Notice of Commencement
recorded for that Unit under the Florida Construction Lien Act, which
Notice of Commencement must have been recorded after the recording of
Bank's Mortgage.
(i) Bank shall have received and approved Borrower's Draw
Request.
(j) Bank is satisfied that all roads necessary for ingress and
egress to the Unit and the Approved Project have been completed or will
be completed and that all utility services necessary for the
construction of the Improvements are available at the boundaries of the
Land and will be available to the boundary of the lot upon which the
Unit will be constructed.
(k) Borrower shall have paid to Bank a fee in the amount of
ONE HUNDRED FIFTY AND NO/100 DOLLARS ($150.00) per Unit for property
inspections in connection with up to a maximum of ten (10) draw
requests (such fee may be paid from the initial construction funding on
each Unit). Thereafter, Borrower shall pay Bank FIFTY AND NO/100
DOLLARS ($50.00), for each inspection per Unit in connection with a
draw request (such fee shall be a charge against the per Unit
construction funding for such Unit).
(l) Bank shall have received a copy of the building permit and
all permits pursuant thereto for the Unit to be constructed.
(m) The third party purchaser's interest in the Mortgaged
Property and under the Firm Contract shall be expressly subordinated to
the lien and operation of Bank's Mortgage.
(n) Two sets of the Plans (including standard Unit floor plans)
which must have been approved in writing by Borrower and the General
Contractor either by initialing same or by other written approval
identifying all pages and dates, including revision dates. The Plans
must include architectural, structural, mechanical, plumbing and
electrical plans and specifications and must incorporate the
recommendations in the soil testing report.
(o) APPRAISAL. Borrower shall have furnished Bank with
narrative appraisals certified to the Bank for each base Unit model
type on a standard non-premium lot prepared by an appraiser acceptable
to Bank.
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(p) COST BREAKDOWN. A detailed cost breakdown for the
construction of each base Unit model type. At Borrower's expense, Bank
will engage its engineer to review such costs to determine sufficiency
of same under the Bank's guidelines.
(q) CONTRACTS. The proposed contract for sale and purchase of a
completed Unit, and other documents to be used by Borrower to market
and convey Units in the Approved Project.
(r) ARCHITECT'S CONTRACT. Copies of the contracts signed by
Borrower and Architect for design and supervisory services.
(s) CONTRACTOR'S CONTRACT. Copies of the contracts signed by the
Borrower and Contractor for construction services related to the Units.
(t) CONSENT OF THE ARCHITECT. Consents from the Architect to
Borrower's assignments to Bank of Borrower's interests in the contract
with such party. In addition, the design architect, if any, shall agree
that Bank may use and copy the Plan if a Default occurs. In furtherance
of the assignment granted herein, Borrower shall cause all contract
parties to acknowledge this assignment to Bank and agree to continue
such contract on the same terms as presently exist if Bank shall
succeed to the interest of Borrower thereunder and if so requested by
Bank.
ARTICLE VI
CONDITIONS PRECEDENT TO DISBURSEMENTS
FOLLOWING THE FIRST DISBURSEMENT
6.1 GENERAL PERIODIC DISBURSEMENTS UNDER THE A&D NOTE AND
CONSTRUCTION LINE. Bank shall not be obligated to make any Loan disbursements
after the first disbursement provided for in Article V under the A&D Note or the
Construction Line until all of the following conditions have been and remain
satisfied as of the date of each such disbursement:
(a) All of the conditions stated in Article III hereof,
including, without limitation submission of a Draw Request.
(b) A request for payment signed by Borrower setting forth a
detailed breakdown of the disbursement requested in a format acceptable
to Bank.
(c) Construction of the Improvements for which such Draw Request
has been made has been performed in accordance with the Plans, the
Construction Schedule, and all terms and conditions hereunder.
(d) The Title Policy insurer shall have issued to the Bank an
ALTA Construction Endorsement Form to the Title Policy updating the
Policy and listing any additional subordinate matters or certifying
that no lien or other interest shall have attached to the Project other
than the interest of Bank pursuant to the lien of the Security
Documents, whether superior or subordinate to such lien, except taxes
for the current year and other matters acceptable to Bank, and there
are no liens which may take priority over the disbursement to be made
and there are no survey exceptions not theretofore approved by Bank in
writing.
(e) At the time of each disbursement: (i) Bank is reasonably
satisfied with the progress of construction; (ii) in Bank's reasonable
opinion, the equity requirements set out in Section 2.5 and 3.6 are
satisfied; and (iii) no Default Condition or Default exists under the
Loan Documents.
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(f) Bank shall have received Bank's Construction Inspector's
approval to the Borrower's requisition for any hard costs.
(g) Bank shall have received copies of all notarized partial
release lien waiver forms executed by each appropriate subcontractor,
supplier and/or materialman which have filed a Notice to Owner.
(h) An Owner's Affidavit from Borrower certifying that the funds
disbursed to date by Bank have been paid to the appropriate parties.
(i) No litigation, arbitration or other proceeding shall have
been commenced against Borrower or the General Contractor, which in
Bank's judgment, materially impairs, or is likely to materially impair
the Borrower's or the General Contractor's ability to complete the
Project.
(j) As and when reasonably requested by Bank, a recertification
of the Survey reflecting all changes in the physical conditions of the
Land and Improvements subsequent to the date of the last certification
of the Survey. Each such recertification shall show all construction
work in place.
(k) Bank, based on the advice of its Construction Inspector, must
believe in its reasonable opinion that construction can be completed
within the time frame set forth in Paragraph 2.6(g) herein as to the
Units under the Construction Line.
(l) There shall not have been any destruction or casualty to the
Improvements not covered by insurance.
(m) If the Draw Request requires an amendment to the Use of
Proceeds or the Percentage Completion Draw Schedule or reallocation of
hard cost items which would require contractor and lienor notice under
ss.713.347(2), Fla. Stat., written notice from owner to the Contractor
and all required lienors, in compliance with ss.713.347,(2) Fla. Stat.,
and countersigned by the Contractor and any lienors who have provided
notices to owner.
(n) RETAINAGE. Bank has the right to withhold the final six
percent (6.0%) of the individual unit's construction loan until such
time as the Certificate of Occupancy or Final Certificate of Inspection
by the appropriate governmental authority is issued.
6.2 CONSTRUCTION LINE PERIODIC DISBURSEMENTS. The following
additional conditions shall have been and remain satisfied as of the date of
each Construction Line disbursement for a Unit:
(a) At request of Bank, if the slab has been poured on a lot, a
satisfactory foundation or tie-in survey for such lot shall have been
submitted to Bank consistent with the requirements herein prior to any
draws subsequent to the initial draw.
(b) At request of Bank, soil report as to the compaction and
other soil test on the Land by a soil testing firm satisfactory to
Bank, at such times and in such locations as recommended by such firm.
Borrower shall promptly submit to Bank copies of all such reports,
together with any other physical tests made on the Land, the
Improvements, or the materials to be incorporated into the Improvement
and shall, at its sole cost and expense, cause such additional test to
be made from time to time, as Bank may reasonably require.
(c) At such time as any portion of the Improvements are occupied,
Borrower shall submit to Bank an "all risk" permanent hazard insurance
policy with respect to such Improvements, complying with the
requirements set forth in the Mortgage, and including a Replacement
Cost and Agreed
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Amount/Stipulated Value Endorsement and such other endorsements as are
deemed necessary by Bank, together with evidence that all insurance
premiums have been paid.
(d) After the slab has been poured, no additional advances toward
construction shall be made until after the effective date of the flood
hazard application/policy.
6.3 REQUIREMENTS FOR DISBURSEMENT AT COMPLETION. Bank shall not be
obligated to make the final construction disbursement for a Unit until all of
the following additional conditions have been satisfied:
(a) The Units which have been commenced have been substantially
completed and are substantially in accordance with the Plans, and
certificates as to such Completion have been issued in satisfactory
form to Bank by the Architect/Engineer and the General Contractor,
including, without limitation, Architect's Certificate of Completion
together with AIA G704 Certificate of Substantial Completion,
Contractor's Certificate of Completion together with the AIA G704
Certificate of Substantial Completion and, if applicable, the
Engineer's Certificate of Completion, and certificates as to occupancy
and use have been issued by the appropriate Governmental Authorities
(and copies provided to Bank).
(b) Bank has received three (3) copies of an "as-built" survey
prepared by a registered surveyor consistent with Section 4.8 above and
additionally showing all of the Improvements in place.
(c) Bank has received two sets of detailed as-built plans and
specifications approved and identified as such in writing by Borrower,
the Architect/Engineer and the General Contractor. The two sets must
include plans and specifications for (i) as to the Construction Line,
architectural, structural, mechanical, plumbing and electrical details;
and (ii) as to the A&D Note, all site development (including without
limitation, storm drainage, easements, utility lines and landscaping)
work, as applicable.
(d) Bank has received final lien waivers and releases from the
General Contractor and all general contractors, subcontractors,
subcontractors, suppliers, laborers, and materialmen certifying that
they and all parties in privity with them have been paid in full and
waiving their lien rights against the Project (or such lot, as
appropriate).
(e) Bank has received an inspection report performed by this
Construction Inspector in substance satisfactory to Bank and
Construction Inspector's written approval of the final Draw Request.
ARTICLE VII
THE BORROWER'S CONVENTS AND AGREEMENTS
7.1 PAYMENT AND PERFORMANCE. Borrower will pay when due or within any
applicable grace period all sums owing to Bank under the Note, this Loan
Agreement, the Mortgage and the other Loan Documents, and perform all
obligations as outlined or referenced therein.
7.2 FURTHER ASSURANCES. On demand by Bank, Borrower will do any act
and execute any additional documents reasonably required by Bank to secure the
Loan, to confirm or perfect the lien of the Security Documents, including, but
not limited to, additional financing statements or continuation statements, new
or replacement notes and/or Security Documents and agreements supplementing,
extending or otherwise modifying the Loan Documents, certificates as to the
amounts of the indebtedness evidenced by the Note from time to time, and
certificates that Borrower knows of no defaults by or defenses or set-offs
against Bank as long as such certificate represents the true statement of
Borrower.
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7.3 CONSTRUCTION. The Borrower will: (a) continue conscientiously the
construction of the Improvements; (b) not discontinue or permit the
discontinuance of work on the Improvements for longer than fifteen (15)
consecutive days, (c) in any event, complete the Improvements, including
installation of any required items of personalty in substantial compliance with
the Plans, free and clear of liens or claims of liens for material supplied or
for labor or services performed in connection with the construction of the
Improvements; and (d) not file, prior to the recording of the Mortgage, a Notice
of Commencement for the Approved Project. Notwithstanding the foregoing, any
delays in the event of unavailability of materials at reasonable cost, strikes,
other labor problems, governmental order, acts of God or other events which
would support a defense based upon impossibility of performance for reasons
beyond the control of Borrower shall not be a breach of Borrower's
responsibilities under this Section VII.
7.4 PAYMENT OF CONTRACTORS. Borrower covenants to advise Bank
immediately, and in writing if Borrower receives any claim of lien in connection
with any services, labor or materials furnished in connection with the
construction of Units, and to remove such liens within thirty (30) days of the
date of filing. Borrower shall comply with the Construction Contract Prompt
Payment Law contained in the Florida Construction Lien Law, Chapter 713, Fla.
Stat. Notwithstanding the foregoing, Borrower shall not be in Default under this
paragraph if the number and amount of such liens are under the amounts set forth
in Section 9.1(g).
7.5 FEES AND EXPENSES. Whether or not the Loan is made or all Loan
proceeds disbursed hereunder, Borrower agrees to pay all expenses incurred by
Bank, or by Borrower in order to meet Bank's requirements, in connection with
the Loan, including without limitation, commitment and renewal fees or deposits
to Bank, fees for appraisal, environmental assessment, reappraisal, survey,
recording, title insurance, builder's risk and other insurance premiums,
brokerage commissions and claims of brokerage, property taxes, intangible taxes,
documentary stamp taxes, architect's fees, engineer's fees, inspection fees, the
General Contractor's fees, and such legal fees and costs incurred by Bank in
connection with the making and administration of the Loan, the enforcement, of
Bank's rights under the Loan Documents, arbitration, the renewal, modification,
or extension of the Loan, or in connection with litigation or threatened
litigation by a third party which arises because Bank made the Loan. Any such
amounts paid by Bank shall constitute part of the indebtedness which is secured
by the Security Documents, and shall be due and payable upon demand.
7.6 INSURANCE. Borrower covenants to maintain insurance, as required
herein and in the Mortgage.
7.7 TAXES AND INSURANCE. Upon the request of Bank, Borrower shall
submit to Bank such receipts and other statements which shall evidence, to the
satisfaction of Bank, that all taxes (by April 30th of each year), assessments
and insurance premiums have been paid in full.
7.8 TITLE POLICY. When requested by Bank during the Loan term,
Borrower shall provide an endorsement to the Title Policy certifying that (a)
real estate taxes due through such date have been paid; (b) no additional
restrictions or encumbrances are of record which have not been approved by Bank;
and (c) no liens or lis pendens have been filed against the Land or the
Improvements. In the event that periodic title endorsements are not required to
be issued in connection with the title insurance, Borrower agrees to cause title
endorsements to be issued as reasonably required by Bank. When requested, after
the final disbursement of Loan proceeds, Borrower will provide Bank with an
endorsement to the Title Policy insuring the principal balance of the Loan and
containing no exceptions not approved by Bank.
7.9 ADDITIONAL CONSTRUCTION. Borrower shall not construct or permit
the construction of any improvements other than options prepaid by end
purchasers on the Approved Project other than those Improvements described in
the Plans, or approved in writing by Bank.
7.10 SALES REPORTS. Within ten (10) days after the end of each month
Borrower shall deliver to Bank a Sales Report covering that month such Sales
Report shall include, among other things as may be required by Bank,
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a cumulative summary of the number of Units sold, closed and under construction
as well as the number of Spec and Model Units in each Transeastern Properties,
Inc., a Florida corporation project.
7.11 INSPECTION. Borrower will permit Bank and its authorized agents to
enter upon the Project during normal working hours and as often as Bank desires,
for the purpose of inspecting the construction of the Improvements. When
requested, Borrower will furnish to Bank detailed plans, shop drawings and
specifications which relate to the Improvements. Failure of Bank or its
authorized agents to discover deficiencies in or to reject materials or
workmanship incorporated or provided to the Improvements shall not make Bank or
its agent liable to Borrower or to any other person on account of such failure,
nor shall any prior failure constitute a waiver of Bank's right to subsequently
reject any such workmanship or materials. Borrower specifically acknowledges
that all inspections undertaken by Bank or its agent shall be for the sole
benefit of Bank and not for Borrower, any Guarantor, or any third party.
7.12 FOUNDATION AND OTHER SURVEYS. Under the Construction Line, upon
the completion of the construction of the foundation of each unit, Borrower will
promptly submit to Bank for its approval one (1) copy of a foundation survey of
the Project prepared by a registered land surveyor and consistent with the
requirements of Section 4.8 above. In addition to the surveys specifically
required by this Agreement, Borrower shall provide Bank during construction with
such additional surveys as requested by Bank.
7.13 SOIL AND OTHER TESTS. A report as to the compaction or other soil
tests made on the Land by a soil testing firm shall also be submitted to Bank
when so requested in accordance with the requirements of paragraph 4.24 above.
The number and locations of such soil tests shall be in accordance with the
recommendations of the soil testing firm. Borrower shall promptly submit to Bank
copies of reports of all other physical tests made on the Land, the Improvements
or the materials to be incorporated into the Improvements and shall, at
Borrower's expense, cause to be made such additional tests from time to time as
Bank may reasonably require.
7.14 USE OF LOAN FUNDS. Borrower shall use all Loan proceeds disbursed
to Borrower solely in payment of costs incurred in connection with constructing
the Project, in accordance with the Cost Breakdown and Use of Proceeds.
7.15 AVAILABILITY OF UTILITIES. All utility services necessary for the
construction of the Improvements and the operation thereof for their intended
purposes are presently available or will be available when needed through
presently existing public or unencumbered private easements or rights-of-ways in
accordance with validly executed and enforceable utility service agreements
between Borrower and the provider of each of such services (the "Utility Service
Agreements"), if applicable (which would inure to the benefit of Bank in the
event of the foreclosure of the Mortgage) at the boundaries of the Land,
including but not limited to, water, storm and sanitary sewer, gas, electric and
telephone facilities, and all such utilities are non-interruptible. Borrower
shall also provide Bank with copies of all Utility Service Agreements.
7.16 HAZARDOUS SUBSTANCES. Borrower affirms and incorporates by
reference the representations, warranties, terms, conditions, and indemnities
contained in that certain Hazardous Substance Certificate and Indemnification
Agreement of even date herewith.
At any time deemed necessary by Bank, in its sole and absolute
discretion, Bank may, at its election, obtain one or more environmental
assessments of the Land prepared by a geohydrologist, an independent engineer,
or other qualified consultant or expert approved by Bank evaluating or
confirming (i) whether any Hazardous Substances as defined in other Loan
Documents are present in the soil or water at the Land and (ii) whether the use
and operation of the Land complies with all applicable Environmental Laws
relating to air quality, environmental control, release of oil, hazardous
materials, hazardous wastes and hazardous substances, and any and all other
applicable environmental laws. Environmental assessments may include detailed
visual inspections of the Land including, without limitation, any and all
storage areas, storage tanks, drains, dry wells, and leaching areas,
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as well as such other investigations or analyses as are necessary. or
appropriate for a complete determination of the compliance of the Land and the
use and operation thereof with all applicable Environmental Laws. Such
environmental assessments shall be at the sole cost and expense of Borrower. In
the event that it is determined that additional tests and/or remediation are
necessary as a result of the aforesaid assessments, or in the event such
additional testing or remediation is recommended by the aforesaid assessments,
the Borrower agrees to immediately perform the tests or undertake the
remediation as recommended. In the event contamination or other environmental
problem is found on the Property, the Borrower shall be in Default hereunder
after a thirty (30) day cure period.
7.17 CAPITAL ADEQUACY. INTENTIONALLY OMITTED.
7.18 INDEMNIFICATIONS. The Borrower and the Guarantor shall indemnify
and hold Bank and its directors, officers, agents, employees, and attorneys
harmless from all liability, loss, expense or damage of any kind or nature,
including, without limitation, any suits, proceedings, claims, demands, or
damages (including attorneys' fees and costs paid or incurred in connection
therewith at both trial and appellate levels), incurred or arising by reason of:
(a) The Commitment or the making of the Loan (except for
liability, loss, expense or damage arising from the willful misconduct
or gross negligence of Bank);
(b) Any claim or action for the payment of any brokerage
commissions or fees which may be claimed to be payable in connection
with the Commitment; and
(c) The past, present or future handling, storage,
transportation, or disposal of hazardous substances upon the Land.
Notwithstanding the foregoing, Borrower's and Guarantor's indemnity
shall be limited to the extent provided in the Hazardous Substance
Certificate and Indemnification Agreement executed by such parties as
of the Closing Date.
These indemnifications shall survive the full payment and performance
of the obligations of the Borrower under the Loan documents except as set forth
above and in the Hazardous Substance Certificate and Indemnification Agreement.
7.19 FINANCIAL STATEMENTS. Borrower and each Guarantor shall submit
annual and interim financial statements as set forth below and when so requested
by Bank. Such statements shall include, at a minimum: a balance sheet; an income
and expense statement; a statement showing contingent liabilities; and any
supporting schedules or documentation which Bank may require. Each unaudited
statement must contain a certification to Bank of the statement's accuracy and
completeness signed by an authorized officer or the individual, as applicable.
Annual statements of business entities (including corporations and partnerships)
shall be audited by a certified public accountant reasonably acceptable to Bank
and shall be submitted no later than one hundred twenty (120) days after fiscal
year end. Interim statements shall be submitted within forty five (45) days of
each quarter end certified to Bank by the financial officer of Borrower.
Guarantor's personal financial statement shall be submitted to Bank prepared on
Bank's approval form within one hundred twenty (120) days of each calendar year
end. Borrower and Guarantor shall provide Bank with annual tax returns within
thirty (30) days of filing.
7.20 APPRAISALS. Bank must order, at Borrower's expense, and receive a
narrative discounted appraisal on the Land by an appraiser acceptable to Bank
and Bank must review said appraisal prior to Closing Date. At any time during
the term of the Loan, the Loan balance, including the unfunded but committed
portion, may not be in excess of seventy five percent (75%) of the Loan-to-value
with "value" being defined as, on a discounted basis, "as if" fully developed
with respect to Land for which development funding has commenced or is available
to commence and raw Land for which development has not commenced or is not
available to commence, all contemplated site development and Unit improvements.
In addition to the appraisal required by Bank prior to closing of the Loan,
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updated appraisals shall be prepared at Borrower's expense when requested by
Bank but in no event more tan annually, if Bank believes, in its sole
discretion, that the value of the collateral for the Loan would render the
Loan-to-value to less than seventy five percent (75%) as defined above. Borrower
shall cooperate fully with the appraisal process and shall allow the appraisers
reasonable access to the Approved Project.
7.21 LEASES AFFECTING APPROVED PROJECT. Borrower shall not, without the
express prior written consent of Bank, enter into any lease affecting the
Approved Project or any part thereof.
7.22 ASSIGNMENT OF CONTRACTS. As additional security for the Loan and
for the performance by Borrower of all of its obligations hereunder, Borrower
hereby assigns to Bank all of Borrower's interest in any and all contracts,
agreements, permits, licenses, approvals, or other documents or writings
relating to the construction, leasing, management or operation of the
Improvements, including but not limited to the Construction Documents, the
architect's contract, the engineer's contract, site development contractor's and
the Plans. This assignment shall not, however, be deemed to impose upon Bank any
of Borrower's obligations under any such contract. Incident to the assignment of
the Construction Documents, the architect's contract, site development
contractor's contract, the engineer's contract, and the Plans, Borrower will
fulfill the obligations of Borrower thereunder, enforce the performance thereof
and give immediate notice to Bank of any default by the architect, site
development contractor, the engineer, or the General Contractor thereunder.
Further, Borrower will not, without the prior written consent of Bank (i)
materially modify, or amend the terms of the architect's contract, the Plans,
engineer's contract, site development contractor's contract or the Construction
Documents; or (ii) waive or release the performance of any material obligation
to be performed by the architect, the engineer, site development contractor or
the General Contractor thereunder.
7.23 SUBORDINATE FINANCING. Borrower shall not permit there to exist
nor shall Borrower obtain any subordinate or secondary financing of the Land or
any other property granted as security for the Loan, except for that certain
loan in favor of Amresco Funding Corporation, a Delaware corporation, which loan
is secured by that certain mortgage dated March 29, 1996 and recorded in
Official Records Book 24694 at Page 0744 of the Public Records of Broward
County, Florida and that certain contingent return mortgage dated March 29, 1996
and received in Official Records Book 24694 at Page 0787 of the Public Records
of Broward County, Florida, both of which have been voluntarily subordinated to
Bank's mortgages.
7.24 TRANSFER OF PROPERTY OF BORROWER. The Borrower shall not permit
any change in its ownership (or the ownership of its general partners, if
applicable), its corporate or trade name, the nature and operation of its
business or the nature and character of the Borrower or the Approved Project,
nor shall the Borrower sell, assign, transfer, hypothecate or dispose of all or
any portion of the Land, Improvements, or the Approved Project, except as may be
permitted hereby, without the prior written consent of Bank, which consent shall
be withheld or granted in Bank's sole and absolute discretion.
7.25 PARTIAL RELEASES OF PROPERTY. Provided the Borrower is not then in
Default hereunder, under the Note, the Mortgage or any other Loan Document, Bank
will provide partial releases in respect of its interest under the Mortgage and
other Loan Documents upon the terms and conditions set out in Exhibit "B"
attached. Payments made for releases shall be applied by Bank against the
outstanding principal of the Loan unless the release payment is calculated to
take into account allocable interest or other constituent costs or accruals, in
which event Bank may apply the release payment in accordance with such
calculations. Borrower agrees to reimburse Bank for all out-of-pocket fees and
costs, as set forth in Exhibit "B" hereto in connection with the granting of
such partial releases and shall provide Bank with any and all information
requested by Bank with respect to the Unit to be released.
Notwithstanding anything contained herein to the contrary, if
Borrower applies for the partial release of a lot from the lien of the Mortgage
and other Loan Documents and there is not then any outstanding principal balance
under the A&D Note, but there are outstanding letters of credit (either drawn or
undrawn upon) issued by Bank on Borrower's behalf which are secured by the
Mortgage (the "Secured Letters of Credit"), the Lot
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Release Price (computed in a redefined manner as follows: that certain amount
derived by dividing the sum of all remaining outstanding letters of credit by
the number of remaining developed lots encumbered by the Mortgage) shall
nevertheless be due and payable as a precondition to Bank's obligation to grant
a partial release or permit the commencement of a Unit on a particular lot, as
applicable, and the Lot Release Prices paid for partial releases in this
situation (collectively, the "Partial Release Funds") shall be placed by Bank in
an account in Borrower's name, which account shall be pledged by Borrower to
Bank as additional collateral for the Loan and the indebtedness of Borrower to
Bank arising out of the Secured Letters of Credit. Borrower shall have no rights
to make withdrawals or otherwise receive disbursements from the pledged account.
Borrower agrees to execute any and all documents required by Bank to evidence
the pledge of the Partial Release Funds. If the Secured Letters of Credit are
drawn, or if Borrower Defaults under the Loan Documents, Bank may, in its sole
and absolute discretion, and in addition to any and all of its available rights
and remedies under the Loan Documents, the documents evidencing the Secured
Letters of Credit, or otherwise, apply the Partial Release Funds to reimburse
Bank for any drawings made under the Secured Letters of Credit and to any then
outstanding balance under the Loan. If said Secured Letters of Credit are
reduced or released, the pledged account will be reduced or released as well and
shall be returned to Borrower.
Notwithstanding any provision herein to the contrary, if Bank at
its sole discretion has agreed to issue letters of credit for the performance of
site development work contemplated in this Agreement, sufficient availability
for funding such scope of work must exist under the Use of Proceeds for which
the letter of credit is being requested.
7.26 DISCLOSURE OF CONTRACTS AND NOTE. Borrower shall disclose to Bank
upon demand, the names of all persons with whom Borrower has contracted or
intends to contract for any construction or for the furnishing of labor or
materials therefor, and when required by Bank obtain the approval by Bank of all
such persons. Borrower shall upon Bank's request, at all times during the
construction period of any Improvements, provide to the Bank, within ten (10)
days of the Borrower's receipt thereof, copies of all notices to owner, claims
of lien, and demands for sworn statement of account, issued by any party,
whether pursuant to any notice of commencement or otherwise, in connection with
the Approved Project or the Land.
7.27 CONSTRUCTION LIEN LAW NOTIFICATION REQUIREMENTS. Borrower hereby
authorizes Bank to provide written notices to Contractor and lienors providing
notices to owner pursuant to ss.713.3471 (1)(a), Fla. Stat., and ss.713.3471
(2)(b), Fla. Stat., to the extent such notices are required by law. Borrower
hereby releases Bank and waives all claims it may have against Bank for damages
Borrower may incur as a result of Bank's failure to deliver said notices.
Borrower hereby agrees to provide all required notices to the Contractor and all
lienors providing notices to owner in compliance with ss.713.3471(2)(a), Fla.
Stat., in a timely fashion.
7.28 AMENDMENTS TO COST BREAKDOWN. If Borrower amends the Cost
Breakdown or reallocate items in the Cost Breakdown such that written notice to
the Contractor and lienors serving notices to owner would be required under
ss.713.3471(2)(a), Fla. Stat., (1992), Borrower agrees to provide written notice
to the Contractor and all required lienors in compliance with ss.713.3471
(2)(a), Fla. Stat., Bank shall not be obligated to make any disbursements of
Loan proceeds until Borrower has provided Bank with copies of any required
notices to the Contractor and required lienors in compliance with ss.713.3471
(2)(a), Fla. Stat., together with evidence that such notices have been
countersigned by the Contractor and all lienors who are required to receive the
notice under ss.713.3471 (2)(a), Fla. Stat., thereby confirming receipt thereof.
7.29 AMENDMENT TO THE USE OF PROCEEDS. With the written authorization
of Borrower or Borrower's authorized representative only, as evidenced by
Borrower's Draw Request, Bank may amend the Use of Proceeds or reallocate funds
designated for specific line items to other line items. Such amendment may be
evidenced by Borrower's Draw Request or by an Amended Use of Proceeds Schedule
and may be made without the consent of the Guarantors. Bank shall not be
permitted to reallocate items in the Use of Proceeds without the Borrower's or
Borrower's authorized representatives prior written consent.
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7.30 LOAN FEES. INTENTIONALLY OMITTED.
7.31 MINIMUM A&D NOTE REPAYMENT SCHEDULE. INTENTIONALLY OMITTED
7.32 AMERICANS WITH DISABILITIES ACT. Borrower covenants and agrees
that, during the term of the Loan, to the extent such Act is applicable, the
Improvements and Approved Project will be in full compliance with the Americans
with Disabilities Act ("ADA") of July 26, 1990, 42 U.S.C Section 12191, et.
seq.) as amended from time to time, and the regulations promulgated pursuant
thereto. Borrower shall be solely responsible for all ADA compliance costs,
including without limitation, attorneys' fees and litigation costs, solely
relating to such period in which Borrower is the owner of the Land which
responsibility shall survive the repayment of the Loan and foreclosure of the
Land and Improvements.
7.33 REGULATION "Z". The Loan is exempt from the provisions of the
Federal Consumers Credit Protection Act (Truth-in-Lending Act) and Regulation
"Z" of the Board of Governors of the Federal Reserve System, because Borrower is
a person fully excluded therefrom, and/or because the Loan is only for business
or commercial purposes of Borrower and the proceeds of the Loan are not being
used for personal, household, family or agricultural purposes.
7.34 FINANCIAL COVENANTS. Borrower shall at all times be prohibited
from incurring or providing a guaranty for any additional debt, except trade
accounts payable in the ordinary course of business relative to the Approved
Project, or form pledging its assets to secure or guarantee any debt other than
that of the Borrower.
7.35 SUBORDINATION OF SHAREHOLDER LOANS. Borrower hereby subordinates,
to the prior payment to Bank of all sums owing under the Loan, any and all
loans, advances, and indebtedness owing from Borrower to shareholders of
Borrower from time to time, whether or not evidenced by promissory notes.
Borrower may make payments of principal and interest for any loan owing to its
shareholders until the Loan is paid in full so long as no Default exists under
the Loan.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Bank that:
(a) REPRESENTATIONS AND WARRANTIES IN MORTGAGE AND GUARANTY. All
of the representations and warranties contained in the Mortgage and
Guaranty are true and correct and are incorporated herein by reference
as if set out in full.
(b) OTHER FINANCING. The Borrower has not (i) received any other
financing for the acquisition of or development and construction on the
Land existing as of the date hereof for which a lien equal to or
superior to Bank's mortgage could be successfully asserted, or (ii)
received any other financing for the construction of the Improvements,
except for financing in favor of Amresco Funding Corporation, a
Delaware corporation's interest, as evidenced by that certain Mortgage,
Assignment of Rents, and Security Agreement, dated March 29, 1996, and
recorded April 3, 1996 in Official Records Book 24694 at Page 0744, of
the Public Records of Broward County, Florida (the "Amresco Third
Mortgage") and that certain Contingent Mortgage, Assignment of Rents
and Security Agreement, dated March 29, 1996 and recorded April 3,
1996, in Official Records Book 24694 at Page 0787, of the Public
Records of Broward County, Florida, (the "Amresco Fourth Mortgage") the
Bank's Mortgage.
(c) PLANS. The Plans have been or will be prior to use approved
by the Borrower, the Guarantor, and each appropriate Governmental
Authority.
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(d) GOVERNMENTAL REQUIREMENTS AND OTHER REQUIREMENTS. Borrower
will cause the Land to be developed and the Units to be constructed.in
accordance with the Plans submitted to and approved by Bank, and when
so constructed the Land and the Units do and shall comply with all
covenants, conditions and restrictions affecting the Land or any
portion thereof, and do and shall comply with all Governmental
Requirements.
(e) USE OF THE APPROVED PROJECT. There is no (i) plan, study or
effort by any Governmental Authority or any nongovernmental person or
agency which may adversely affect the current or planned use of the
Approved Project, or (ii) to the best of Borrower's knowledge any
intended or proposed Governmental Requirement (including, but not
limited to, zoning changes) which may adversely affect the current or
planned use of the Approved Project.
(f) MORATORIUM. There is no moratorium or like governmental order
or restriction now in effect with respect to the Approved Project and,
to the best of Borrower's knowledge, no moratorium or similar ordinance
or restriction is now contemplated.
(g) PERMITS. All permits, approvals and consents of Governmental
Authorities and public and private utilities having jurisdiction
necessary in connection with the Approved Project have been or will be
issued and are or will be in good standing.
(h) CONDITION OF APPROVED PROJECT. No defect or condition of the
Land or the solid or geology thereof exists which will impair the
construction, use, or the operation of the Approved Project for its
intended purpose.
(i) LABOR AND MATERIALS. All labor and materials contracted for
in connection with the construction of the Improvements shall be used
and employed solely on the Land in said construction and only in
accordance with the Plans.
(j) SURVEYS. The Survey, the preliminary plat for the Land, and
all plot plans and other documents heretofore furnished by the Borrower
to Bank with respect to the Land and Improvements are accurate and
complete as of their respective dates. There are no encroachments onto
the Land and no improvements on the Land encroach onto any adjoining
property.
(k) CONSTRUCTION COSTS. The amount of the hard costs and soft
costs are accurate, true and correct and are satisfactory to Borrower.
(l) SALE OF SECURITIES. The Borrower has not instituted, caused
to be instituted or been a party to and, to the best of Borrower's
knowledge, there has not been any public offering with respect to the
Land and Improvements, or either, within the meaning of the Securities
Act of 1933 and the Securities Exchange Act of 1934.
(m) CONSTRUCTION LIEN LAW. At the time of Closing and at the time
of the recording of the Mortgage, no work has been done on Improvements
or on the Approved Project by the Borrower or anyone else acting for,
or on behalf of the Borrower, and no materials have been placed on the
Property by any materialmen or by anyone else. No Notice of
Commencement has been recorded in the Public Records with respect to
the Approved Project or the Land at the time of Closing. Borrower shall
not permit the commencement of any excavation or construction work of
any nature whatsoever, nor the delivery of any materials to the
Approved Project or the Land, prior to the recordation and posting of a
Notice of Commencement as hereinafter set forth. Borrower shall execute
an appropriate Notice of Commencement and cause the same to be recorded
in the public records of the county in which the Property is located in
sequence after the recording of the Mortgage. Borrower shall post a
certified copy
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of the Notice of Commencement on the Approved Project, in strict
conformity with the Florida Construction Lien Law. If construction is
commenced prior to the recordation and posting of the Notice of
Commencement, or the Notice of Commencement is recorded prior to the
Mortgage, Bank shall have the absolute right to cancel this Agreement
and be immediately reimbursed by Borrower for all disbursements of loan
proceeds, together with expenses and reasonable attorneys' fees
incurred in, connection therewith. Construction shall commence within
ninety (90) days after recordation of the Notice of Commencement.
Construction shall proceed continuously in a workmanlike manner. Bank
reserves the right to require Borrower to furnish an itemized cost
breakdown for the Improvements to be constructed.
(n) REPRESENTATIONS AND WARRANTIES IN OTHER LOAN DOCUMENTS. All
of the representations and warranties contained in the other Loan
Documents are true and correct.
8.2 RELIANCE ON REPRESENTATIONS. The Borrower acknowledges that Bank
has relied upon the Borrower's representations and is not charged with any
knowledge contrary thereto that may be received by an examination of the public
records wherein the Land is located or that may have been received by any
officer, director, agent, employee or shareholder of Bank.
8.3 CERTIFICATE REGARDING LOAN STATUS. Upon Bank's request, Borrower
and Guarantors shall provide Bank with a written certification, certifying to
such matters related to the Loan as Bank may request, including, but not limited
to, a statement that Borrower and Guarantors are not in Default and that no
Default Conditions have occurred.
ARTICLE IX
EVENTS OF DEFAULT
9.1 DEFAULT. The occurrence of any one. or more of the following
events (time being of the essence as to this Loan Agreement and all of its
provisions) constitutes a "Default" by Borrower under this Loan Agreement, and
at the option of Bank, under the other Loan Documents:
(a) SCHEDULED PAYMENT. Borrower's failure to make any payment
required under the Note when due or within any applicable grace period.
(b) MONETARY DEFAULT. Borrower's failure to make any other
payment required by this Loan Agreement or the other Loan Documents
when due or within any applicable grace period.
(c) OTHER. Borrower's failure to perform any other obligation
imposed upon Borrower by this Loan Agreement or any other Loan Document
within thirty (30) days after the date when performance is due. This
provision shall not be construed to provide Borrower with any grace
period in complying with any obligations imposed on Borrower by the
terms of the Loan Documents. Notwithstanding the foregoing provision,
Bank shall give Borrower notice, as defined in the Mortgage, of any
non-monetary default after which Borrower shall have a thirty (30) day
cure period.
(d) REPRESENTATION. Any representation or warranty of Borrower
contained in this Loan Agreement or in any certificate delivered
pursuant hereto, or in any other instrument or statement furnished in
connection herewith, proves to be incorrect or misleading in any
adverse respect as of the time when the same shall have been made,
including, without limitation, any and all financial statements,
operating statements, and schedules attached thereto, furnished by
Borrower or any guarantor of the Loan to Bank or pursuant to any
provision of this Loan Agreement,
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(e) BANKRUPTCY. Borrower or any general partner of Borrower or
any guarantor of the Loan (i) files a voluntary petition in bankruptcy
or a petition or answer seeking or acquiescing in any reorganization or
for an arrangement,, composition, readjustment, liquidation,
dissolution, or similar relief for itself pursuant to the United State
Bankruptcy Code or any similar law or regulation, federal or state,
relating to any relief for debtors, now or hereafter in effect; or (ii)
makes an assignment for the benefit of creditors or admits in writing
its inability to pay or fails to pay its debts as they become due; or
(iii) suspends payment of its obligations or takes any action in
furtherance of the foregoing; or (iv) consents to or acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator
or other similar official of Borrower, a general partner of Borrower,
or any guarantor, for all or any part of the Collateral or other assets
of such party, or either; or (v) has filed against it an involuntary
petition, arrangement, composition, readjustment, liquidation,
dissolution, or an answer proposing an adjudication of it as a bankrupt
or insolvent, or is subject to reorganization pursuant to the United
States Bankruptcy Code, an action seeking to appoint a trustee,
receiver, custodian, or conservator or liquidator, or any. similar law,
federal or state, now or hereinafter in effect, and such action is
approved by any court of competent jurisdiction and the order approving
the same shall not be vacated or stayed within sixty (60) days from
entry; or (vi) consents to the filing of any such petition or answer,
or shall fail to deny the material allegations of the same in a timely
manner.
(f) JUDGMENTS. (1) A final judgment other than a final judgment
in connection with any condemnation is entered against Borrower,
Guarantors, or any general partner of Borrower, that (i) adversely
affects the value, use or operation of the Land or the Improvements in
Bank's sole judgment, or (ii) adversely affects, or may adversely
affect, the validity, enforceability or priority of the lien or
security interest created by the Mortgage or any other Loan Document in
Bank's sole judgment, or both; or (2) execution or other final process
issues thereon with respect to the Land or the Improvements; and (3)
Borrower, Guarantor, or any general partner of Borrower, does not
discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereon, in any event within
thirty (30) days from entry, or Borrower shall not, within such period
or such longer period during which execution on such judgment shall
have been entered, and cause its execution to be stayed during such
appeal, or if on appeal such order, decree or process shall be affirmed
and Borrower shall not discharge such judgment or provide for its
discharge in accordance with its terms within sixty (60) days after the
entry of such order or decree or affirmance, or if any stay of
execution on appeal is released or otherwise discharged.
(g) LIENS. Any federal, state or local tax lien or any claim of
lien for labor or materials or any other lien or encumbrance of any
nature whatsoever is recorded against Borrower or the Land or
Improvements and is not removed by payment or transferred to substitute
security in the manner provided by law, within thirty (30) days after
it is recorded in accordance with applicable law.
(h) OTHER NOTES OR MORTGAGES. Borrower's default in the
performance or payment of Borrower's obligations under any other note
which remains uncured after any applicable grace period, or under any
other mortgage encumbering all or any part of the Land or the
Improvements, if the other mortgage is permitted by the Bank, whether
such other note or mortgage is held by Bank or by any other party, and
unless otherwise agreed to by separate written agreement between Bank
and such other mortgage holder.
(i) BORROWER DEFAULT UNDER LOAN DOCUMENTS. Borrower's default in
the payment or performance of any of Borrower obligations under any of
the Loan Documents, including this Loan Agreement and any riders
thereto.
(j) GUARANTOR DEFAULT.
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i) The default after expiration of any applicable grace
period in the payment or performance of any obligation of a
Guarantor of the Note arising under its guaranty or pursuant to
any other Loan Documents; or
ii) The death of any Guarantor and the failure of Borrower
to provide Bank with an alternate guaranty or alternate collateral
satisfactory to Bank in its sole and absolute discretion within
sixty (60) days of the date of Guarantor's death.
(k) BORROWERS/GENERAL PARTNER'S CONTINUED EXISTENCE. Borrower or
any corporate General Partner of Borrower shall cease to exist or to be
qualified to do or transact business in the State in which the Land and
Improvements are located, or shall be dissolved or shall be a party to
a merger or consolidation, or shall sell all or substantially all of
its assets, or shall change its corporate name or trade name without
prior written notice to Bank.
(l) STOCK IN BORROWER/CHANGE IN PARTNERS. If Borrower is a
limited partnership and without the prior written consent of Bank, any
shares of stock of any corporate general partner of Borrower are
issued, sold, transferred, conveyed, assigned, mortgaged, pledged, or
otherwise disposed of so as to result in change of control of Borrower,
whether voluntarily or by operation of law, and whether with or without
consideration, or any agreement for any of the foregoing is entered
into; or, if any general partnership interest or other equity interest
in the Borrower is sold, transferred, assigned, conveyed, mortgaged,
pledged, or otherwise disposed of, whether voluntarily or by operation
of law, and whether with or without consideration, or any agreement for
any of the foregoing is entered into, or any general partner of
Borrower withdraws from the partnership.
(m) TRANSFER OF PROPERTY OR OWNERSHIP. Any sale, conveyance,
transfer, assignment, or other disposition or encumbrance of all or any
part of the Land, Improvements, or the Approved Project, or any
ownership interest in Borrower or any guarantor without the prior
consent of Bank or except as otherwise permitted hereby, or as outlined
in the prospectus for public offering for Transeastern Properties,
Inc., a Florida corporation delivered to Bank by Borrower.
(n) FALSE STATEMENT. Any statement or representation of
Borrower or any guarantor contained in the loan application or any
financial statements or other materials furnished to Bank or any other
Bank prior or subsequent to the making of the Loan secured hereby are
discovered to have been false or incorrect or incomplete.
(o) DEFAULT UNDER INDEMNITY. Borrower or Guarantor shall default
after any applicable grace period under any obligation imposed by any
indemnity contained within any of the Loan Documents including the
Hazardous Waste Certification and Indemnification.
(p) CROSS-DEFAULT. Any monetary default by the Borrower or
Guarantor under this Loan shall be a default under all other documents,
instruments, mortgages and other collateral documents evidencing and
securing all other loans by Bank to Borrower or Guarantor.
(q) NON-COMPLIANCE WITH THE PLANS AND SPECIFICATIONS. Failure of
any of the materials supplied for the development of the Land or the
construction of the Units to comply with the Plans and Specifications
or any requirements of any Governmental Authority unless the Borrower
undertakes and diligently pursues the correction of such failure.
(r) PROJECTED COMPLETION OF CONSTRUCTION. Failure to construct
the Improvements with reasonable dispatch, or the discontinuance of
construction at any time for a period of fifteen (15) days
consecutively, or determination by Bank that construction of the
Improvements will not be timely completed
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and Borrower's failure to complete, cure or provide satisfactory
assurances after notice or demand from Bank. Notwithstanding the
foregoing, any delays in the event of unavailability of materials at
reasonable cost, strikes, other labor problems, governmental orders,
acts of God or other events which would support a defense based upon
impossibility of performance for reasons beyond the control of Borrower
shall not be a Default under this paragraph.
(s) NON-PAYMENT OF DEBTS. Borrower is generally not paying its
debts as such debts become due.
(t) SECURITIES LAWS VIOLATION. The assertion of any violation of
the 1933 Securities Act, 1934 Securities Act or the Florida Blue Sky
Laws by any Governmental Authorities or the institution of any
securities litigation not dismissed within sixty (60) days of the
commencement of same.
(u) NON-COMPLIANCE WITH HOMEOWNER ASSOCIATION DOCUMENTS. Borrower
shall fail to perform any duty required of it, fulfill any condition,
abide by any covenant or in any manner default under the homeowners,
association documents encumbering the Approved Project, if any.
(v) ADVERSE ACTIONS. Any legal or equitable action is commenced
against Borrower which, if adversely determined, could reasonably be
expected to impair substantially the ability of Borrower to perform
each and every obligation under the Loan Documents and this Agreement;
provided, however, if Borrower has commenced a counter action, contest
or defense to the adverse action and resolved such adverse action
within one hundred twenty (120) days of the commencement of same then
Borrower shall not be in Default.
(w) GOVERNMENT CHALLENGES. The validity of any permit, approval
or consent by any Governmental Authority relating to the Land, the
Improvements, or the Approved Project, or the operation thereof is
challenged by a proceeding before a board, commission, agency, court or
other authority having jurisdiction; provided, however, if Borrower has
commenced a counter action, contest or defense to the governmental
challenge and resolved such challenge within one hundred twenty (120)
days of the commencement of same then Borrower shall not be in Default.
(x) BORROWER'S ACTIONS. Any action by the Borrower, which would,
in the sole opinion of the Bank, significantly endanger the security of
the Loan and which Borrower fails to mitigate after notice from Bank
will render the Loan payable on demand.
(y) MISCELLANEOUS. If at any time the Bank shall determine that
there has been a material adverse change in the financial condition or
prospects of Borrower, the Guarantor, or any general partner of
Borrower, which is not corrected or cured after reasonable notice from
Bank.
ARTICLE X
BANK'S RIGHTS AND REMEDIES
The following rights and remedies are available to Bank:
10.1 ACCELERATION. Upon the occurrence of a Default, the entire unpaid
principal balance of the Loan and all accrued but unpaid interest thereon and
any costs or expenses then due to Bank and any and all other obligations of
Borrower to Bank, shall, at the option of Bank and without notice to Borrower,
become immediately due and payable.
10.2 COMPLETION OF CONSTRUCTION. From and after the occurrence of a
Default, Bank shall be entitled to have and use the Plans And the Construction
Documents and, after first having given written notice to the
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architect, site development contractor, the engineer, or the General Contractor,
shall be entitled from and after such notice to enjoy and enforce all of the
rights of Borrower under the architect's contract, engineer's contract, site
development contractor's contract, the Plans or the Construction Contracts.
Borrower hereby irrevocably constitutes and appoints Bank its true and lawful
attorney-in-fact with full power of substitution in the Approved Project to
complete the Improvements in the name of Borrower following a Default. Borrower
hereby empowers Bank from and after Default as its attorney-in-fact as follows:
(a) to use any funds of Borrower, including any Loan proceeds or equity deposits
which may remain undisbursed hereunder, for the purpose of completing the
Improvements in accordance with the Plans; (b) to make such additions, changes,
modifications, or corrections in, or deviations from, the Plans as shall be
necessary or desirable to complete the Improvements; (c) to employ such
contractors, subcontractors, agents, architects, engineers, inspectors, or other
parties as shall be required for said purposes; (d) to pay, settle, or
compromise all existing bills and claims which may be liens against the
Improvements or as may.be necessary or desirable in the sole discretion of Bank
for the completion of the Improvements or for clearance of title; (e) to direct
use of and/or use all or any part of the labor, materials, supplies and
equipment contracted for, owned by, or under the control of Borrower, whether or
not previously incorporated into the Improvements; (f) to execute all
applications and certificates in the name of Borrower which may be required by
the Construction Documents, the architect's contract, the engineer's contract,
site development contractor's contract, Plans, or any of the contract documents;
(g) to prosecute and defend all actions or proceedings in connection with the
Approved Project or the construction of the Improvements and take such action
and require such performance as Bank shall deem necessary under any performance
or payment bond; and (h) to do any and every act with respect to construction or
completion of the Improvements or the closing of any permanent financing which
Borrower might do in its own behalf including, without limitation, execution,
acknowledgment, and delivery of all instruments, documents, and papers in the
name of Borrower as may be necessary or desirable in the sole discretion of
Bank. It is further understood and agreed that this power of attorney which
shall be deemed to be a power coupled with an interest, cannot be revoked. All
sums expended by Bank pursuant hereto shall be deemed to have been disbursed to
Borrower and secured by the Security Documents, and the other Loan Documents.
10.3 DISPUTES. Where disputes have arisen which, in the opinion of
Bank, may endanger timely completion of the Improvements or fulfillment of any
condition or covenant herein, Bank may agree to disburse Loan proceeds for the
account of Borrower without prejudice to Borrower's rights, if any, to recover
said proceeds from the party to whom paid. Such agreement or agreements may take
the form which Bank in its discretion deems proper, including, but without
limiting the generality of the foregoing, agreements to indemnify (on behalf of
Borrower and/or for Bank's own account) any title insurer against possible
assertion of lien claims, agreements to pay disputed amounts and the like. All
sums paid or agreed to be paid pursuant to such undertaking shall be advances of
Loan proceeds.
10.4 REMEDIES CUMULATIVE: NONWAIVER: JUDGMENTS. All remedies of Bank
provided for herein or in the other Loan Documents are cumulative and shall be
in addition to any and all other rights and remedies provided for or available
under the other Loan Documents, at law or in equity. The exercise of any right
or remedy by Bank hereunder shall not in any way constitute a cure or waiver of
a Default Condition or a Default hereunder or under the Loan Documents, or
invalidate any act done pursuant to any notice of the occurrence of a Default
Condition or Default, or prejudice Bank in the exercise of any of its rights
hereunder or under any of the other Loan Documents, unless, in the exercise of
said rights, Bank realizes all amounts owed to it under the Loan Documents. ANY
JUDGMENT IN FAVOR OF BANK AGAINST BORROWER SHALL BEAR INTEREST AT THE DEFAULT
RATE (AS DEFINED IN THE NOTE).
10.5 NO LIABILITY OF BANK. Whether or not Bank elects to employ any or
all remedies available to it in the event of an occurrence of a Default
Condition or Default, Bank shall not be liable for the construction of or
failure to construct or complete or protect the Improvements or for payment of
any expense incurred in connection with the exercise or any remedy available to
Bank or for the construction or Completion of the Improvements or for the
performance or nonperformance of any other obligation of Borrower.
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10.6 SECURITY INTEREST. It is understood and agreed that Bank shall
have and enjoy and is hereby granted a lien on, and a security interest in, all
collateral described in the Mortgage, and including without limitation, any and
all materials (stored on-site or off-site), reserves, deferred payments,
deposits or advance PAYments for materials (stored on-site or off-site)
undisbursed Loan proceeds, insurance refunds, impound accounts, refunds for
overpayment of any kind, and such lien and security interest shall constitute
additional security for the Indebtedness of Borrower to Bank, and Bank shall
have and possess any and all rights and remedies of a secured party provided by
law with respect to enforcement of and recovery on its security interest on such
items and amounts. In the event of a conflict between this paragraph and any
security interest granted pursuant to the Mortgage, the Mortgage shall control.
10.7 CESSATION OF FUNDING. Upon the occurrence of a Default, Bank shall
have the right to immediately terminate further funding of the Loan irrespective
of the stage of completion.
ARTICLE XI
GENERAL CONDITIONS
The following conditions shall be applicable throughout the term of
this Loan Agreement:
11.1 WAIVERS. No waiver of any Default Condition or Default or breach
by Borrower hereunder shall be implied from any delay or omission by Bank to
take action on account of such Default Condition or Default, and no express
waiver shall affect any Default Condition or Default other than the Default
specified in the waiver and it shall be operative only for the time and to the
extent therein stated. Waivers of any covenants, terms or conditions contained
herein must be in writing and shall not be construed as a waiver of any
subsequent breach of the same covenant, term or condition. The consent or
approval by Bank to or of any act by Borrower requiring further consent or
approval shall not be deemed to waive or render unnecessary the consent or
approval to or of any subsequent or similar act. No single or partial exercise
of any right or remedy of Bank hereunder shall preclude any further exercise
thereof or the exercise of any other or different right or remedy.
11.2 BENEFIT. This Loan Agreement is made and entered into for the sole
protection and benefit of Bank and Borrower, their successors and assigns, and
no other person or persons have any right to action hereon or rights to the Loan
all proceeds at any time, nor shall Bank owe any duty whatsoever to any claimant
for labor or services performed or material furnished in connection with the
Approved Project, or to apply any undisbursed portion of the Loan to the payment
of any such claim, or to exercise any right or power of Bank hereunder or
arising from any Default Condition or Default by Borrower.
11.3 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 Borrower shall not assign this Loan
Agreement or any of its rights, interests, duties or obligations hereunder or
any Loan proceeds or other moneys to be advanced hereunder in whole or in part
without the prior written consent of Bank and that any such assignment (whether
voluntary or by operation of law) without said consent shall be void. It is
expressly recognized and agreed that Bank may assign this Loan Agreement, the
Note, the Security Documents, and any other Loan Documents, in whole or in part,
to any other person, firm, or legal entity provided that all of the provisions
hereof shall continue in full force and effect and, in the event of such
assignment, Bank shall thereafter be relieved of all liability under the Loan
Documents and any Loan disbursements made by any assignee shall be deemed made
in pursuant and not in modification hereof and shall be evidenced by the Note
and secured by the Security Documents and any other Loan Documents.
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11.4 AMENDMENTS. This Loan Agreement shall not be amended except by a
written instrument signed by all parties hereto.
11.5 TERMS. Whenever the context and construction so 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.
11.6 GOVERNING LAW AND JURISDICTION. This Loan Agreement and the other
Loan Documents and all matters relating thereto shall be governed by and
construed and interpreted in accordance with the laws of the State of Florida.
Borrower and all of its general partners hereby submits to the jurisdiction of
the state and federal courts located in Florida and agree that Bank may, at its
option, enforce its rights under the Loan Documents in such courts.
11.7 PUBLICITY. At Bank's request and expense, and subject to
applicable laws, regulations and restrictions, Borrower shall place upon the
Approved Project, at a location mutually acceptable :to Borrower and Bank, a
sign or signs advertising the fact that financing is being provided by Bank.
Bank shall also have the right to secure printed publicity through newspaper and
other media concerning the Approved Project and source of financing.
11.8 SAVINGS CLAUSE. Invalidation of any one or more of the provisions
of this Loan Agreement shall in no way affect any of the other provisions
hereof, which shall remain in full force and effect.
11.9 EXECUTION IN COUNTERPARTS. This Loan Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument, and in making proof
of this Loan Agreement, it shall not be necessary to produce or account for more
than one such counterpart.
11.10 CAPTIONS. The captions herein are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this Loan Agreement nor the intent of any provision hereof.
11.11 NOTICES. All notices required to be given hereunder shall be
given in accordance with the requirements of the Mortgage.
11.12 MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including but not limited to those arising out of or relating
to this Loan Agreement or any related agreements or instruments, including any
claim based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law) , the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event
of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Loan Agreement may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which this Loan
Agreement applies in any court having jurisdiction over such action.
(a) SPECIAL RULES. The arbitration shall be conducted in the
County of Broward, Florida and administered by Endispute, Inc., d/b/a
J.A.M.S./Endispute who will appoint an arbitrator; if
J.A.M.S./Endispute is unable or legally precluded from administering
the arbitration, then the American Arbitration Association will serve.
All arbitration hearings will be commenced within 90 days of the demand
for arbitration; further, the arbitrator shall only, upon a showing of
cause, be permitted to extend the commencement of such hearing for up
to an additional 60 days.
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(b) RESERVATION OF RIGHTS. Nothing in this Loan Agreement shall
be deemed to (i) limit the applicability of any otherwise applicable
statutes of limitation or repose and any waivers contained in this Loan
Agreement; or (ii) be a waiver by the Bank of the protection afforded
to it by 12 U.S.C. Sec. 91 or any substantially equivalent state law;
or (iii) limit the right of the Bank hereto (A) to exercise self help
remedies such as (but not limited to) setoff, or (B) to foreclose
against any real or personal property collateral, or (C) to obtain from
a court provisional or ancillary remedies such as (but not limited to)
injunctive relief or the appointment of a receiver. The Bank may
exercise such self help rights, foreclose upon such property, or obtain
such provisional or ancillary remedies before, during or after the
pendency of any arbitration proceeding brought pursuant to this
Agreement. At Bank's option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of a
power of sale under the deed of trust or mortgage, or by judicial sale
under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary
remedies shall constitute a waiver of the right of any party, including
the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
11.13 DISBURSEMENT OF CONSTRUCTION LINE FUNDS AT RENEWAL. If, in Bank's
sole and absolute discretion, Bank agrees to extend the term of the Construction
Line, and the outstanding principal balance of the Construction Line IS LESS
than the original, principal Construction Line amount at the time of the
extension, then Bank may, in its sole and absolute discretion, but is not
obligated to, disburse sufficient Construction Line funds to increase the
outstanding principal balance of the Construction Line up the original,
principal amount of the Construction Line, provided that Borrower pledges to
Bank as additional security for the Construction Line liquid collateral in kind
and amount acceptable to Bank in its sole discretion and deposits the same in an
account with Bank. In connection with any such pledge of liquid collateral,
Borrower shall deliver to Bank any original securities or other instruments
evidencing the collateral and shall execute such security agreements,
assignments, powers-of-attorney, stock powers, endorsements, financing
statements or other documentation as Bank may require to establish and perfect
the security interest so granted by Borrower. Nothing contained herein shall
constitute Bank's agreement or commitment to renew the Construction Line.
IN WITNESS WHEREOF, Borrower and Bank have executed this Loan Agreement
as of the above written date.
Signed, sealed and delivered
in the presence of TRANSEASTERN PEMBROKE VILLAGES, INC., a
Florida corporation
_________________________
Witness #1 By __________________________________(SEAL)
_________________________ Edward Falcone, Executive Vice President
Print Name
_________________________ Address:
Witness #2
_________________________ 3300 University Drive
Print Name Coral Springs, Florida 33065
CHASE FEDERAL BANK, a Federal Savings Bank,
a Division of NATIONSBANK, N.A. (SOUTH), a
national banking association
31
<PAGE>
_________________________
Witness #1 By __________________________________(SEAL)
_________________________ James T. Webb, Real Estate Banking
Print Name Officer
_________________________
Witness #2 Address:
_________________________
Print Name 701 West Cypress Creek Road
Suite 101
Ft. Lauderdale, Florida 33309
32
<PAGE>
JOINDER OF GUARANTORS
The undersigned as Guarantor hereby joins in and consents to the
foregoing Loan Agreement.
_________________________
Witness #1
_________________________
Print Name
___________________________________________
_________________________ Arthur Falcone
Witness #2
_________________________
Print Name
_________________________
Witness #1
_________________________
Print Name
___________________________________________
_________________________ Edward Falcone
Witness #2
_________________________
Print Name
_________________________
Witness #1
_________________________
Print Name
___________________________________________
_________________________ Philip Cucci
Witness #2
_________________________
Print Name
_________________________ Transeastern Properties, Inc., a Florida
Witness #1 of South,Inc., a Florida corporation
_________________________
Print Name
By __________________________________(SEAL)
_________________________ Edward Falcone, Executive Vice President
Witness #2
_________________________
Print Name
33
<PAGE>
EXHIBITS
1. Exhibit "A": Draw Sheets/Use of Proceeds
2. Exhibit "B": Partial Release
3. Exhibit "C": Intentionally Omitted
4. Exhibit "D": Percentage Completion Draw Schedule
5. Exhibit "E": Site Plans
6. Exhibit "F": Legal Description
34
<PAGE>
EXHIBIT "A" - DRAW SHEETS/USE OF PROCEEDS
NATIONSBANK, N.A. (SOUTH)
ACQUISITION AND DEVELOPMENT LOAN
REQUEST FOR FUNDING
PAGE 1 OF 2
BORROWER: ______________________________________________________________
SUBDIVISION: ______________________________________________________________
UNIT: ______________________________________________________________
TOTAL LOAN AMOUNT (COL. D): $ _____________________
TOTAL WORK IN PLACE (COL. E): $ _____________________
LESS RETAINAGE (COL. F): $ _____________________
TOTAL COMPLETED LESS RETAINAGE: $______________________
LESS PREVIOUS REQUESTS FOR FUNDING: $ _____________________
CURRENT FUNDING REQUEST (COL. H): $ _____________________
The above request is in accordance with terms of the Loan Agreement dated
__________________, and is certified that: 9a) The improvements on the above
listed property have been completed and are in place in accordance with the
plans & specifications, as submitted to and approved by Lender; (b) There are no
unpaid bills for labor, taxes and/or material for which liens may be filed upon
the date of this request; (c) All requirements of governmental agencies have
been fully complied with.
BORROWER:
<PAGE>
PAGE 2 OF 2
OBTAIN A COPY FROM BANK
<PAGE>
EXHIBIT B
PARTIAL RELEASES
1. PARTIAL RELEASES UNDER THE CONSTRUCTION LINE. Provided that
Borrower is not then in Default hereunder, under the Construction Line, the
Mortgage or any other Loan Document, Bank will provide partial releases of Units
from the lien of the Mortgage upon the following terms:
(a) If the partial release relates to developed lots in
connection with a bona fide sale or construction loan on which no home
construction advances have been made:
(i) Bank shall be given written notice of the request for
each partial release at least five (5) business days prior to each
partial release.
(ii) The cost of each partial release shall be paid by
Borrower.
(ii) Contemporaneously with the delivery to Borrower of each
partial release, Borrower shall prepay principal in an amount
equal to the amount advanced upon such lot plus accrued interest
thereon.
(b) If the partial release relates to Units for which advances of
Construction Line proceeds have been made, Borrower shall prepay
principal of the Construction Line in an amount equivalent to the total
actual amount advanced by Bank under the Construction Line on account
of the Unit to be released, together with interest accrued thereon
("Unit Release Price") and the applicable Lot Release Price.
<PAGE>
EXHIBIT "C"
INTENTIONALLY OMITTED
<PAGE>
ONE STORY DRAW SHEET
(OBTAIN FROM BANK)
<PAGE>
TWO STORY DRAW SHEET
(OBTAIN FROM BANK)
<PAGE>
EXHIBIT "E"
SITE PLANS
<PAGE>
EXHIBIT "F"
LEGAL DESCRIPTION
<PAGE>
CONSTRUCTION LOAN
AGREEMENT
BY AND BETWEEN
TRANSEASTERN PEMBROKE VILLAGES, INC.
A FLORIDA CORPORATION
(THE "BORROWER")
AND
CHASE FEDERAL BANK, A FEDERAL SAVINGS BANK, A DIVISION OF
NATIONSBANK, N.A. (SOUTH), A NATIONAL BANKING ASSOCIATION
ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES
(THE "BANK")
EGRET'S WAY
(THE "APPROVED PROJECT")
DATED: SEPTEMBER ____, 1996
RICHARD A. WOOD, ESQ.
THERREL BAISDEN & MEYER WEISS
1111 LINCOLN ROAD
SUITE 500
MIAMI BEACH, FLORIDA 33139
(305) 672-1921
<PAGE>
Loan No. 91004539
THIS LOAN AGREEMENT, dated as of the _____ day of September, 1996 (the
"Loan Agreement" or "Agreement"), is made by and between TRANSEASTERN PEMBROKE
VILLAGES, INC., A FLORIDA CORPORATION, with its principal place of business at
3300 University Drive, Coral Springs, Florida 33065 ("Borrower"), and CHASE
FEDERAL BANK, A FEDERAL SAVINGS BANK, A DIVISION OF NATIONSBANK, N.A. (SOUTH), a
national banking association organized and existing under the laws of the United
States, with its offices located at 701 West Cypress Creek Road, Suite 101, Fort
Lauderdale, Florida 33309 ("Bank").
RECITALS
A. Borrower has applied to Bank for a loan in the principal amount
of THREE MILLION AND NO/100 DOLLARS ($ 3,000,000.00) (the "Loan") to be used for
the purpose of the constructing of one hundred fourteen single family dwellings
on such individual lots now owned by Borrower in fee simple and mortgaged to
Bank as security for the Loan, which lots are to be located in a certain
residential development known as Egret's Way located upon certain property in
Broward County, Florida.
B. Bank has agreed to establish a note and mortgage structure under
which advances may be made for the land acquisition, development and the
construction of single family residential dwellings on individual lots in
accordance with plats, specifications, terms, and conditions approved by Bank.
C. Bank is willing to make the Loan described above based on the
terms and conditions set forth in this Loan Agreement and in the Loan Documents
referred to herein.
NOW, THEREFORE, in consideration of the premises, of the Loan advances
which are to be agreed to be made by Bank to Borrower hereinafter and the notes
and mortgage given by Borrower in evidence thereof, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 For the purposes hereof:
(a) "Approved Project" or "Project" means the collective
reference to the development identified in Section 2.4 of this
Agreement, together with the Land, the Improvements, rights, property,
and appurtenances as defined, described or identified in the Mortgage,
and means, as the context may require, an individual Unit, as well as
the aggregate of all such Units.
(b) "Architect" or "Supervising Architect" means that party who
will serve as Borrower's architect in conjunction with the
construction of Units and common amenities to be constructed in the
Approved Project. Bank's Construction Consultant and Borrower's
architect shall not be the same person or firm.
(c) "Architect's Contract" means the contract between Borrower
and the Architect "Architect's Contract" shall also mean Borrower's
design architect's contract.
<PAGE>
(d) "Borrower's Representative" means the person or persons
designated in writing to Bank by Borrower as being authorized to
submit Draw Requests on Borrower's behalf and to consent to changes in
the Cost Breakdown and Use of Proceeds. Unless and until changed by
written notice to Bank, BorroWer designates any one of the following:
Arthur Falcone or Les Campbell as its Borrower's Representative(s).
(e) "Closing Date" means the date as of which this Loan Agreement
is executed by Borrower and Bank.
(f) "Collateral" means the Mortgaged Property, Rents, Intangible
Property and other property rights as defined in and encumbered by the
Mortgage.
(g) "Commitment" means Bank's commitment letter to Borrower dated
July 1, 1996 and all amendments thereto. The parties intend that this
Agreement and the Loan Documents shall supersede and replace the
Commitment.
(h) "Completion means completion of the Improvements in
accordance with the Plans, such Completion to be evidenced by
satisfaction of the conditions of Section 6.3 plus the installation of
any required items of personalty in substantial compliance with the
Plans, free and clear of liens or claims of liens or other
encumbrances, except Permitted Encumbrances;
(i) "Construction Documents" means the stipulated sum
construction contract between Borrower and the General Contractor, if
a General Contractor is engaged, and all other contracts, plans or
documents concerning the construction of the Improvements and any
addenda, amendments or modifications thereto. The Construction
Documents shall include a hard cost breakdown and a maximum fixed cost
for the performance of all services, labor, and materials furnished
thereunder.
(j) "Construction Inspector" means the architectural or
engineering firm or such party which Bank shall designate to perform
various services on behalf of Bank. The services to be performed by
Bank's Construction Inspector shall include the issuance of reports
and certifications solely for the benefit of Bank and shall not impose
upon Bank any obligation to make inspections, or to correct or require
any other person to correct any defects, or to notify any person with
respect to such defects, review of the Plans and all proposed changes
to them, preparation of a "cost breakdown" construction analysis (the
"Construction Analysis"), periodic inspections of construction work
for conformity with the Plans, and approval of Draw Requests.
(k) "Cost Breakdown" means the detailed trade breakdown of the
cost of constructing the Improvements and an itemization of
non-construction and Land costs, all as approved by Bank from time to
time.
(1) "Default" means a violation of any term, covenant, or
condition hereunder or a Default as defined under any of the other
Loan Documents which remains uncured after any applicable grace
period.
(m) "Default Condition" means the occurrence or existence of an
event or condition which, upon the giving of notice or the passage of
time, or both, would constitute a Default.
(n) "Draw Request" means a written or verbal request for any
disbursement of Loan proceeds, which shall be submitted for each
requested disbursement as set forth in Article III hereof, in
accordance with the draw request sheet attached hereto as EXHIBIT "A"
attached hereto and incorporated herein by reference.
2
<PAGE>
(o) "Engineer" shall mean such party who will serve as Borrower's
supervising engineer in accordance with the Plans and specifications;
(p) "Engineering Contract" means the "full service", contract
between Borrower and Engineer which shall require engineering services
throughout the Land development and construction contemplated under
the Loan.
(q) "Financing Statements" means the UCC financing statements
filed in order to perfect Bank's lien on certain personal property and
fixtures as more particularly described therein.
(r) "Firm Contract" means an arm's length, bona-fide binding
contract for purchase and sale, in form and content satisfactory to
Bank, for the sale of a Unit to a purchaser unaffiliated and unrelated
to Borrower or Guarantor, under which (i) Borrower has received a cash
deposit equal to ten percent (10%) of the purchase price except as
herein after provided; (ii) Borrower is not obligated to provide any
purchase-money financing, (iii) all applicable statutory cancellation
or rescission periods have expired, (iv) there are no contingencies
other than a first mortgage financing contingency for which Borrower
has confirmed to Bank that purchaser has made a mortgage application
and has received a mortgage commitment without contingencies, (v) the
closing date for the contract is within forty-five (45) days of the
date of issuance of the Certificate of occupancy for the Unit, and
(vi) the gross sales price, after payment of all of Borrower's closing
expenses thereunder, will result in sufficient proceeds to pay to Bank
the Unit Release Price and Lot Release Price. The purchaser's interest
in the Mortgaged Property and under the Firm Contract must be
expressly subordinated to the lien and operation of Bank's Mortgage,
either by separate subordination agreement in favor of Bank or
pursuant to the terms of the Firm Contract.
(s) "General Contractor" means Borrower who will serve as the
general contractor in accordance with the Construction Documents; if a
General Contractor is not engaged or is not named here, any obligation
of the General Contractor referred to in the Loan Documents shall be
the obligation of the Borrower to perform or to cause to be performed.
(t) "Governmental Authorities" means any local, state, or federal
governmental agency, regulatory body or office, or any
quasi-governmental office (including health and environmental), or any
officer or official of any such agency, office, or body whose consent
or approval is required as a prerequisite to the commencement of the
construction of the Improvements or to the operation and occupancy of
the Improvements or the Approved Project or to the performance of any
act or obligation or the observance of any agreement, provision or
condition of whatsoever nature herein contained.
(u) "Guarantor" means: Arthur Falcone, Edward Falcone, Philip
Cucci and Transeastern Properties Inc., a Florida corporation, f/k/a
Transeastern Properties of South Florida, Inc., a Florida corporation.
(v) "Guaranty" means the Guaranty Agreement executed by Guarantor
in favor of Bank, providing for Guarantor's payment of all sums due
under the Loan Documents and of performance of all obligations of
Borrower thereunder except as otherwise specifically therein provided,
including, without limitation, timely completion of the Improvements
in accordance with the Construction Documents and Loan Documents.
(w) "Improvements" means all infrastructure improvements to the
Land and single family residences, structures, dwellings, and Units
constructed or to be constructed on the Land as defined in the
Mortgage, together with all fixtures and appurtenances now or later to
be located on the Land and/or in such Improvements.
3
<PAGE>
(x) "Land" means the real property described in the Mortgage at
the inception of the Loan as per EXHIBIT "F" attached hereto and as
may be later included by modification and spreader agreement.
(y) "Loan Documents" means this Loan Agreement, the Note and any
funding agreement, the Mortgage, the Guaranty, the Financing
Statements, and any other document or writing executed in connection
therewith or in furtherance thereof.
(z) "Lot Release Price" shall mean the partial release price as
set forth in EXHIBIT "B" attached hereto and incorporated herein.
(aa) "Model Unit" means a Unit constructed and furnished
initially for inspection by prospective purchasers.
(bb) "Mortgage" means the Real Estate Mortgage, Assignment and
Security Agreement of even date herewith executed by Borrower for the
benefit of Bank encumbering the Collateral (as defined in the
Mortgage), and any extensions, modifications, renewals or replacements
thereof.
(cc) "Note" means collectively the Promissory Note (for Revolving
Line of Credit) in the amount of THREE MILLION AND NO/DOLLARS
($3,000,000.00) ("Construction Line") dated as of the Closing Date
executed by Borrower in favor of Bank, as well as any promissory note,
sub-note, or other notes issued by Borrower in substitution,
replacement, extension, future advance, amendment or renewal of the
Note or any such promissory note or notes.
(dd) "Permitted Encumbrances" means those liens, encumbrances,
easements and other matters defined in the Mortgage as "Permitted
Encumbrances".
(ee) "Plans" means plans and specifications for the development
of the Land and construction of the Improvements submitted to and
approved by Bank from time to time, and including such amendments
thereto as may from time to time be made by Borrower and approved by
Bank.
(ff) "Pre-Sold Unit" means a Unit owned by Borrower and covered
by a Firm Contract.
(gg) "Security Documents" means the Mortgage, the Financing
Statements, and any other instrument executed to establish and perfect
Bank's lien on the Collateral, and any extensions, modifications,
renewals, or replacements thereof.
(hh) "Site Development Contractor" means such party who will
serve as the subcontractor for the site development of the Land as
contemplated under the Loan.
(ii) "Site Development Contract" means the contract between
Borrower and Site Development Contractor for the site development of
the Land per the site development Plans and specifications.
(jj) "Site Plan" means collectively the site plans for the
Project as set forth on EXHIBIT "E" attached hereto.
(kk) "Spec Unit" means a Unit for which a Firm Contract has not
been received or approved, and which is not used as a Model Unit.
(ll) "Title Policy" means the mortgagee title policy meeting the
requirements of this Loan Agreement.
4
<PAGE>
(mm) "Unit" means a portion of the Land and its respective
improvements constituting a single residential dwelling unit.
(nn) "Unit Release Price,, shall mean the partial release price
for each Unit funded under the Construction Line as set forth on
EXHIBIT "B" attached hereto and incorporated herein.
(oo) "Use of Proceeds" means the description of the permitted use
of the Loan proceeds under the A&D Note as set forth on EXHIBIT "A"
attached hereto and incorporated by reference herein.
Capitalized terms not defined in this Loan Agreement shall have the
meanings ascribed to them in the Mortgage.
ARTICLE II
THE LOAN
2.1 LOAN TERMS. Subject to the terms and conditions of this Loan
Agreement, Bank will lend and Borrower will borrow up to a principal sum of
THREE MILLION AND NO/100 DOLLARS ($3,000,000.00), which borrowing shall be
evidenced by the Note. Also, all of the terms, definitions, conditions, and
covenants of the Note, the Guaranty, the Mortgage, and any other documents
executed in connection therewith or pursuant thereto are expressly made a part
of this Loan Agreement by reference in the same manner and with the same effect
as if set forth herein at length and shall have the meaning set forth in such
instruments unless otherwise defined herein.
2.2 A&D NOTE. The A&D Note is a Consolidated Renewal Promissory Note
in the original principal amount of EIGHT MILLION SEVEN HUNDRED THIRTY SEVEN
THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($8,737,500.00), which note is secured
by a first mortgage in favor of Bank, dated March 29, 1996, and recorded April
3, 1996 in Official Records Book 24694 at Page 0702, of the Public Records of
Broward County, Florida, as modified by that certain Amended and Restated Real
Estate Mortgage Assignment, and Security Agreement of even date herewith
executed by Borrower in favor Bank.
2.3 CONSTRUCTION LINE. The Construction Line is a revolving line of
credit and the principal amount outstanding under such note may increase and
decrease from time to time as Borrower draws and repays note funds thereunder
but the principal balance of such note outstanding from time to time shall not
exceed the original, principal amount of the Construction Line. Provided
Borrower is not in Default, outstanding amounts under such note may be repaid or
reborrowed from time to time subject to the terms, conditions and limitations
set forth in this Agreement, but the principal balance of such note outstanding
from time to time shall not exceed the original, principal amount of the
Construction Line.
2.4 LOAN PURPOSE. The purpose of the Loan is to finance construction
costs of Units to be constructed in that certain Approved Project known as
Egret's Way, located in Pembroke Pines, Florida ("Egret's Way") which project
shall be hereinafter referred to as the "Approved Project". Disbursements of
Loan proceeds for construction of Units in other developments owned or
hereinafter acquired by Borrower or Units not meeting the following limitations
shall be at Bank's sole discretion, and Bank shall under no circumstances be
obligated to disburse Loan proceeds except as expressly set forth in this Loan
Agreement.
2.5 LIMITATIONS ON USE OF A&D NOTE PROCEEDS. INTENTIONALLY OMITTED.
2.6 LIMITATIONS ON USE OF CONSTRUCTION LINE PROCEEDS. Bank will
disburse Construction Line proceeds for the construction of Units subject to the
terms and conditions of this Loan Agreement, the Use of Proceeds attached as
Exhibit "A", and the following limitations:
5
<PAGE>
(a) Construction Line proceeds shall be used solely to fund
construction of Units (i) for which Bank has approved the Plans and
(ii) having a maximum sales price of ONE HUNDRED NINETY THOUSAND AND
NO/100 DOLLARS ($ 190,000.00) or for which the total construction
costs as set forth in the Unit Cost Breakdown, excluding lot cost as
approved by Bank, do not exceed ONE HUNDRED EIGHT THOUSAND AND NO/100
DOLLARS ($108,000.00).
(b) Construction Line proceeds shall be used solely for the
direct and indirect costs to construct Units as set forth in the Unit
Cost Breakdown and approved by Bank. Borrower states for the express
benefit and reliance of Bank that it has not relied and is not relying
on any binding obligation on the part of Bank to finance the
construction of a particular number of Units unless Borrower has
performed the prerequisites for such construction as set forth in the
Loan Documents.
(c) The amount to be funded on each Pre-Sold Unit will be
determined by deducting the Lot allocation of TWENTY SIX THOUSAND
THREE HUNDRED SIXTEEN AND NO/100 DOLLARS ($26,316.00) from eighty
percent (80%) of the lesser of: (i) the "completed value" of such
Unit, which amount shall be determined by an appraisal satisfactory to
Bank (which appraisal shall be at Borrower's sole expense); or (ii)
the purchase price for the Unit reflected in the Firm Contract;
provided, however, that in no event shall Bank be obligated to fund
Construction Line proceeds in an amount in excess of one hundred
percent (100%) of the Unit Cost Breakdown submitted by Borrower and
approved by Bank.
(d) The amount to be funded on each Spec Unit and Model Unit will
be determined by deducting the Lot allocation of TWENTY SIX THOUSAND
THREE HUNDRED SIXTEEN AND NO/100 DOLLARS ($26,316.00) from seventy
five percent (75%) of the "completed value," of said Spec Unit or
Model Unit, which amount shall be determined by an appraisal
satisfactory to Bank (which appraisal shall be at Borrower'S sole
expense); provided, however, that in no event shall Bank be obligated
to disburse Construction Line proceeds in excess of one hundred
percent (100%) of the Unit Cost Breakdown for such Spec Unit or Model
Unit submitted by Borrower and approved by Bank.
(e) Use of Construction Line proceeds for the construction of
Units shall be limited to eight (8) Spec Units and four (4) Model
Units, at any one time, with the balance available for the
construction of Pre-Sold Units. Notwithstanding any provision in this
Agreement to the contrary, at any time no more than three (3) Spec
Units shall be permitted for any one home model type.
(f) Intentionally omitted.
(g) Each Pre-Sold Unit financed under the Construction Line shall
be completed, as defined in this Agreement, in a period not to exceed
nine (9) months from the date construction commences.
(h) The amount financed under the Construction Line must be
repaid in full (i) for any Spec Unit within (12) months from the date
construction commences on such Spec Unit and (ii) for any Model Unit
within thirty five (35) months from the date of this Agreement.
(i) only residential Units within the Approved Project shall be
financed by the Construction Line.
(j) At such time as the number of Spec Units financed under the
Construction Line has become eight (8) Spec Units, additional Spec
Units financed under the Construction Line may only be commenced upon
(a) repayment of all Loan advances for one of the eight (8) Spec
Units; or (b) at such earlier time as one of the Spec Units becomes a
Pre-Sold Unit. All Pre-Sold Units upon which the Sales Contract has
been canceled due to the default of the buyer and which are available
for sale, shall become designated as a Spec Unit. If, at any time, the
number of Spec Units exceeds eight (8) in number, the
6
<PAGE>
Borrower shall not be permitted to request funding for construction of
any further Spec Units until the number of such funded Spec Units is
reduced to no more than eight (8) Spec Units.
(k) At such time as the number of Model Units financed under the
Construction Line has become four (4) Model Units, additional Model
Units financed under the Construction Line may only be commenced upon
(a) repayment of all Loan advances for one of the four (4) Model
Units; or (b) at such earlier time as one of the Model Units becomes a
Pre-Sold Unit. If, at any time, the number of Model Units exceeds four
(4) in number, the Borrower shall not be permitted to request funding
for construction of any further Model Units until the number of such
funded Model Units is reduced to no more than four (4) Model Units.
(l) The total amount to be funded for the costs of construction
of a Unit, as approved and allocated by Bank pursuant to Subparagraphs
2.5(a) through (e), inclusive, less the allocable loan amount per lot,
above shall be called the "Committed Unit Amount." Upon Bank's
approval of the commencement of construction of a Unit and the Bank's
approval of the Committed Unit Amount for said Unit, the Committed
Unit Amount shall be reserved under the Construction Line, and shall
not be available for disbursement for construction of any other Units
until such time as the Unit Release Prices repaid create amounts
available under the Construction Line. After making the initial
disbursement under the Committed Unit Amount, the remaining unfunded
Committed Unit Amount shall be disbursed on a percentage basis in
accordance with the terms of this Agreement. Bank shall not in any
case be obligated to approve or fund the construction of a new Unit
unless there are sufficient "available" Construction Line proceeds as
noted below to complete construction of that Unit. For purposes of
this Agreement, the term "available" Construction Line proceeds shall
mean the amount derived by subtracting the total Committed Unit
Amounts from the Maximum Committed Funding Amount of THREE MILLION AND
NO/100 DOLLARS ($3,000,000.00) as described below in subparagraph (m).
(m) Notwithstanding any provision in this Agreement to the
contrary, the number of Units (Model, Spec and Pre-Sold) financed
under the Construction Line shall be limited by a "Maximum Committed
Funding Amount" of THREE MILLION AND NO/100 DOLLARS ($3,000.000.00)
representing the total of all Committed Unit Amounts for all Units
under the Construction Line for which construction has commenced and
initial funding by Bank has been made. Regardless of the Maximum
Committed Funding Amount "availability" under the Construction Line,
consisting of up to THREE MILLION AND NO/100 DOLLARS ($3,000,000.00)
of "Committed Unit Amounts", the amount outstanding at any one time
under the Construction Line shall be no greater than THREE MILLION AND
NO/100 DOLLARS ($3,000,000.00).
2.7 LOAN MATURITY. The maturity date of the Construction Line shall
be September 1, 1999 with two (2) extension options of three (3) months each to
be granted at Borrower's request, at the sole and absolute discretion of Bank
and on the terms as set forth in the Construction Line Note. On the Maturity
Date of the Note, all sums outstanding under such notes shall be immediately due
and payable, and the Bank's obligation to fund shall cease and terminate.
ARTICLE III
DISBURSEMENTS
3.1 A&D NOTE DISBURSEMENT - GENERAL PROVISIONS. INTENTIONALLY
OMITTED.
3.2 CONSTRUCTION LINE DISBURSEMENT - GENERAL PROVISIONS. Bank agrees
that it will, from time to time, and so long as there shall exist no Default
Condition or Default (which has not been cured within any
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applicable grace period), but not more frequently than two (2) times per month,
disburse Construction Line proceeds for the construction of Units in the
Approved Project, subject to the terms and conditions of this Agreement.
3.3 REQUEST FOR INITIAL FUNDING COMMENCEMENT OF CONSTRUCTION OF A
UNIT UNDER THE CONSTRUCTION LINE. When Borrower wishes to commence funding for
construction of a particular Unit, Borrower shall submit a draw request,
accompanied by all items required in Articles IV and V as conditions precedent,
to the extent applicable. All supporting documentation shall be submitted no
later than five (5) days prior to the requested date of the initial disbursement
under each note. No disbursement by Bank shall constitute an approval or
acceptance by Bank of any construction work or constitute a waiver by Bank of
any conditions precedent to any future disbursements. Bank shall not be
obligated to approve any disbursement for purposes other than those contemplated
in this Agreement. The conditions set forth in Articles IV and V hereof must be
satisfied before Bank will make the first advance or disbursement for the
development of Land or construction of a Unit, and the conditions set forth in
Article VI hereof must be and remain satisfied before Bank will make each
subsequent disbursement or advance.
3.4 INTERIM DRAW REQUESTS. No later than five (5) days prior to
disbursement by Bank, Borrower must submit to Bank a Draw Request, which shall
include or be accompanied by the requirements set out herein for draws.
3.5 DISBURSEMENT AMOUNTS. Following receipt of a Draw Request and
Bank's review and approval of supporting documentation, Bank shall determine the
amount of the disbursement it will make in accordance with the Percentage
Completion Draw Schedule, a copy of which is attached as EXHIBIT "D" provided no
Default Condition or Default exists.
3.6 EQUITY DISBURSEMENTS. Except as provided in Section 2.6(m), if
Bank at any time determines in its reasonable discretion that the Loan proceeds
plus the amount of all equity investments made or scheduled to be made are not
sufficient to fully complete the Improvements in accordance with the Plans and
to pay all other sums due under the Loan Documents, then Bank shall have the
option of requiring Borrower to deposit with Bank additional funds from some
other source (or submit evidence to Bank of equity investments previously made)
in amounts sufficient to cover the resulting deficit before Bank will disburse
any additional Loan proceeds. Deposited funds shall be advanced as construction
progresses in accordance with this Loan Agreement before any additional Loan
disbursements are made.
3.7 OPTION TO DISBURSE FUNDS TO ANY GUARANTOR AND/OR TO PAY
CONTRACTORS. If a Default shall exist, at its option, Bank may, after so
notifying Borrower, make Loan disbursements directly to any guarantor or obligor
of the debt when such party shall be performing the obligations of Borrower
hereunder or the General Contractor or any unpaid subcontractor, laborer or
material supplier providing labor, services or materials in connection with the
construction of the Improvements, and the execution of this Loan Agreement by
Borrower shall, and hereby does, constitute an irrevocable direction and
authorization to Bank to so disburse the funds. No further direction or
authorization from Borrower shall be necessary to warrant such direct
disbursements and all such disbursements shall be secured by the Security
Documents as fully as if made to Borrower, regardless of the disposition thereof
by the General Contractor, any subcontractor, laborer or material supplier so
paid.
ARTICLE IV
GENERAL PRE-CLOSING CONDITIONS
Bank's obligations to close the Loan shall be expressly conditioned upon
satisfaction of the following conditions, or execution and/or delivery to Bank
of the following items, all in form and substance reasonably satisfactory to
Bank and Bank's counsel:
4.1 NOTE. The original Note, properly executed, shall have been
delivered to Bank.
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4.2 GUARANTY. The original Guaranty(s), properly executed, shall have
been delivered to Bank.
4.3 MORTGAGE. The Mortgage, which shall be a second lien on the Land
and Improvements, shall have been properly executed in recordable form and
delivered to Bank, subject to those matters reflected in the Title Policy.
4.4 INDEMNITY. The Hazardous Substance Certificate and
Indemnification Agreement, properly executed by Borrower and each Guarantor,
shall have been delivered to Bank.
4.5 FINANCING STATEMENTS. The Financing Statements on forms approved
for filing in the appropriate state and local filing offices shall have been
properly executed.
4.6 TITLE POLICY. A standard ALTA mortgagee title policy insuring the
lien of the Mortgage as a first priority lien encumbering the Land and
Improvements from a company or from companies approved by Bank (including any
reinsurance agreements required by Bank, together with direct access provisions
in favor of Bank): (1) providing coverage for the full principal amount of the
Loan, (2) providing a variable rate endorsement, if appropriate, the Form 9
Endorsement, the Revolving Loan Endorsement, the Survey Endorsement, and any
other endorsements requested by Bank, (3) deleting all "standard" exceptions
except taxes for the current year, (4) insuring all appurtenant easements, (5)
containing no bankruptcy or creditors' rights exceptions or exclusions; and (6)
containing no title exceptions other than the Permitted Exceptions or the other
exceptions approved by Bank.
4.7 TITLE EXCEPTIONS. Copies of all documents creating exceptions to
the Title Policy.
4.8 SURVEY/RECORDED AND PRELIMINARY PLAT/APPROVED SITE PLAN. Three
(3) copies of a recent survey of the Land prepared by a registered land surveyor
acceptable to Bank and certified to Bank, the title insurance company, and
Borrower. Such survey shall contain a certification as to the applicable flood
zone (s) for the Land, and a certification that the survey was and in accordance
with the Minimum Technical Standards for Surveys as set fourth in Chapter
21HH-6, Florida Administrative Code. In addition, a copy of the boundary plat
for the Land and a copy of the site plan is required approved by all applicable
governmental authorities. Notwithstanding the foregoing, the Bank will not
unreasonably withhold its consent to the execution of the final plat and will
join when requested by Borrower. A recorded copy of the plat shall be delivered
to Bank prior to any Construction Line funding requests for Units with Firm
Contracts.
4.9 FLOOD HAZARDS. Evidence as to whether or not the Land is located
within an area identified as having "special flood hazards" as such term is used
in the Federal Flood Disaster Protection Act of 1973.
4.10 FLOOD HAZARD INSURANCE. If all or any part of the Improvements is
or is to be located in an area having "special flood hazards", a flood insurance
application or policy naming the Bank as mortgagee must be submitted to Bank at
such time as it is commercially available. Satisfactory evidence of premium
payments must also be provided.
4.11 BUILDER'S RISK INSURANCE. A builder's risk insurance policy
meeting the requirements set forth in the Mortgage.
4.12 LIABILITY INSURANCE. Liability insurance meeting the requirements
set forth in the Mortgage.
4.13 BORROWER'S ORGANIZATIONAL DOCUMENTS AND RESOLUTIONS. A certified
copy, from the appropriate governmental body or corporate officer, of
organizational documents of Borrower, and any partner of Borrower, as
appropriate, certifying that Borrower and/or such partner (i) is duly organized,
validly existing, and in good standing under the state of its existence, (ii)
has the authority under such documents and laws to enter into the Loan as
contemplated by the Loan Documents, and (iii) has made all appropriate filings,
including without limitation,
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qualification to do business in the State of Florida, necessary to enter into
the Loan and execute the Loan Documents. Additionally, Borrower shall provide
(i) if appropriate, certified resolutions or other internal documents or writing
of Borrower and such partner evidencing that Borrower and such partner have
taken all requisite organizational action, and received all organizational
approvals necessary to enter into the Loan and execute the Loan Documents, and
(ii) such other documents or writings as Bank may request.
4.14 GUARANTOR'S ORGANIZATIONAL DOCUMENTS AND RESOLUTIONS.
INTENTIONALLY OMITTED.
4.15 FICTITIOUS NAME CERTIFICATE. If Borrower utilizes or intends to
utilize a fictitious name, a copy of the Fictitious Name Certificate of the
Borrower issued by the Florida Secretary of State.
4.16 ATTORNEY'S OPINION. The written opinions of counsel to Borrower
and Guarantor, addressed to Bank, acceptable to Bank and Bank's counsel, as to
those matters required by Bank. The attorney's opinion, with respect to the
enforceability of remedies provided in any instrument may be made subject to or
affected by, applicable bankruptcy, moratorium, reorganization, insolvency or
similar laws from time to time in effect affecting the rights of creditors
generally. As to matters of fact, such opinions may be qualified to the extent
of the knowledge of such counsel based upon inquiry and reasonable
investigation.
4.17 RESTRICTIVE COVENANTS. A copy of the executed and recorded
homeowners, documents, filed articles of incorporation for the homeowners,
associations, executed by-laws for the associations, and any other related
documents as Bank may request for the Approved Project. Notwithstanding the
foregoing, such documents shall be delivered to Bank prior to any Construction
Line funding for Units with Firm Contracts and Bank agrees to not unreasonably
withhold or delay its consent to such documents.
4.18 FINANCIAL STATEMENTS. The updated Borrower prepared financial
statements certified to the Bank must be received by Bank within thirty (30)
days of the Closing Date. With respect to the Guarantors, signed personal
financial statements on Bank forms shall be required prior to the Closing Date.
All statements must include income and contingent liability information.
4.19 COMPLIANCE WITH LAWS AND MATTERS OF RECORD. Satisfactory
documentary evidence that the Land, and the intended uses of the Land are in
compliance with all applicable laws, regulations and ordinances and private
covenants, easements, and conditions of record. Such evidence is subject to
approval by Bank and Bank's counsel and may include letters, licenses, permits,
certificates and other correspondence from the appropriate Governmental
Authorities, opinions of Borrower's counsel or other counsel, and opinions or
certifications from the Architect, Engineer and the General Contractor. The
laws, regulations and ordinances with which compliance should be evidenced
include without limitation the following: health and environmental protection
laws, laws related to or regulating water management districts, hazardous
materials and substances and stormwater drainage, erosion control ordinances,
tree and landscaping ordinances, building codes, land use requirements,
threshold building consultant requirements, the Development of Regional Impact
Statutes, doing business and/or licensing laws and zoning laws (the evidence
submitted as to zoning should include the zoning designation made for the Land,
the permitted uses of the Land under such zoning designation and zoning
requirements as to parking, lot size, ingress, egress and building setbacks).
4.20 TAXES. Evidence that the Land is, or will be, separately assessed
for tax purposes and information as to tax parcel identification numbers, tax
rates, estimated tax values and the identities of the taxing authorities. Also,
Borrower shall submit proof that the taxes are paid current upon the Land.
4.21 UTILITIES. Evidence of the availability and suitability of the
water, sewer, telephone, electrical, and other utilities needed to properly
service the Project in its intended use.
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4.22 PLANS AND SPECIFICATIONS. Two sets of the site development Plans
which must have been approved in writing by Borrower and the General Contractor
either by initialing same or by other written approval identifying all pages and
dates, including revision dates. The Plans must include all site development
(including storm drainage, utility lines, erosion control and landscaping) plans
and specifications and must incorporate the recommendations in the soil testing
report. Bank will engage its engineer to review such Plans to determine
sufficiency of such under its guidelines.
4.23 PERMITS. Borrower will provide a copy, certified by the Borrower
to be a true and correct copy of the South Florida Water Management District
Permit, if applicable.
4.24 SOIL TESTS. A report as to soil borings made on the Land by a
soil testing firm satisfactory to Bank. The number and location of such borings
shall be in accordance with the recommendations of the soil testing firm and
must also be satisfactory to Bank. The report shall include the recommendations
of the soil testing firm as to the preparation of the soil needed in order to
adequately support the Improvements, and shall be delivered and approved by Bank
within sixty (60) days of the date of this Agreement.
4.25 ENVIRONMENTAL ASSESSMENT.
(a) An environmental assessment of the Land and Improvements
performed at Borrower's expense by a licensed engineer or other
environmental consultant satisfactory to Bank stating that:
i. the Land is not located within any area designated as a
hazardous substance site by any of the Governmental Authorities;
and
ii. no hazardous or toxic wastes or other materials or
substances regulated, controlled, or prohibited by any federal,
state, or local environmental laws, including but not limited to
asbestos, are located on the Land or Improvements; and
iii. the Land has not been cited or investigated in the past
for any violation of any such laws, regulations, or ordinances.
(b) If the environmental assessment shall reveal any condition
unacceptable to Bank, same shall constitute a Default hereunder and in
addition to all remedies available to Bank, Bank shall be relieved of
any obligation under the Commitment. If the environmental assessment
recommends, or if Bank so requests, in its sole and absolute
discretion, a Phase II audit, additional testing or remedial action,
Borrower, at its sole cost and expense shall promptly conduct such
additional audits and testing and/or complete such remedial action.
Bank may require the Borrower to provide evidence that all necessary
actions have been taken to remove any hazardous substance
contamination and/or to restore the site to a condition acceptable to
Bank and state and federal governmental agencies.
4.26 TAXPAYER IDENTIFICATION NUMBER. Borrower's federal taxpayer
identification number.
4.27 BORROWER'S AFFIDAVIT. An affidavit of Borrower regarding the
absence of any other parties in possession of the Land, stating that a notice of
commencement has not been filed with respect to the Property, the
non-commencement of construction of Improvements , and such other matters as may
be requested by Bank.
4.28 COMMITMENT FEE. The balance of the non-refundable commitment fee
in the total amount of THIRTY FOUR THOUSAND AND NO/100 DOLLARS ($34,000.00)
which was earned upon acceptance of the Commitment and the reserving of
sufficient funds by Bank from which to make Loan disbursements, and is due and
payable whether or not any disbursements are made hereunder.
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4.29 APPRAISAL. Bank shall have received a narrative appraisal
certified to the Bank for the Land and site development improvements prepared by
an appraiser acceptable to Bank.
4.30 COMPREHENSIVE PLAN. Documentary evidence, satisfactory to Bank
and its counsel, that Borrower's development proposal for the Project and the
construction of the Improvements are consistent with concurrency requirements
and other applicable provisions of the local comprehensive plan and local land
development regulations, as defined and required by the Local Government
Comprehensive Planning and Land Development Regulation Act, Florida Statutes.
Section 163.3161, et seq.
4.31 FACILITIES FOR HANDICAPPED. Subsequent to the Closing Date but
not later than the commencement of the construction of the sales center or the
clubhouse, as applicable, Bank shall have received and approved evidence,
satisfactory to Bank, that the Plans and specifications do, and the
Improvements, when constructed, will comply to the extent applicable with all
legal requirements regarding access and facilities for handicapped or disabled
persons, including, without limitation, and to the extent applicable, Part V of
the Florida Building Construction Standards Act entitled "Accessibility by
Handicapped Persons", Chapter 553, Fla Stat.; the Federal Architectural Barriers
Act of 1988 (42 U.S.C. ss.4151, et. seq.), The Fair Housing Amendment Act of
1988 (42 U.S.C. ss.3601, et. seq), The Americans With Disabilities Act Of 1990
(42 U.S.C. ss.12101 et. seq.), and The Rehabilitation Act of 1973 (29 U.S.C.
ss.794).
4.32 CONTRACTS. A copy of the executed contract for the purchase of
the Land by the Borrower, if applicable.
4.33 SUBORDINATION AGREEMENTS. Borrower will provide a fully executed
original Loan Subordination Agreement, which document shall be recorded in the
Public Records of Broward County, evidencing the subordination of Amresco
Funding Corporation, a Delaware corporation's interest, as evidenced by that
certain Mortgage, Assignment of Rents, and Security Agreement, dated March 29,
1996, and recorded April 3, 1996 in Official Records Book 24694 at Page 0744, of
the Public Records of Broward County, Florida (the "Amresco Third Mortgage") and
that certain Contingent Mortgage, Assignment of Rents and Security Agreement,
dated March 29, 1996 and recorded April 3, 1996, in Official Records Book 24694
at Page 0787, of the Public Records of Broward County, Florida, (the "Amresco
Fourth Mortgage") the Bank's Mortgage.
4.34 MISCELLANEOUS. All other Loan Documents or items that are
customarily provided in loan transactions of this type and all other loan
documents or items set forth in the Commitment.
ARTICLE V
CONDITIONS PRECEDENT TO FIRST SITE DEVELOPMENT AND
CONSTRUCTION DISBURSEMENTS
5.1 A&D NOTE DISBURSEMENTS. INTENTIONALLY OMITTED.
5.2 CONSTRUCTION LINE DISBURSEMENTS. Under the Construction Line,
Bank shall not be obligated to make the first Loan disbursement for construction
of a particular Unit until all of the following conditions have been satisfied
by proper evidence, execution and/or delivery to Bank of the following items,
all in form and substance reasonably satisfactory to Bank and Bank's counsel:
(a) There shall be no Loan Default or Default Condition, which
has not been cured within any applicable grace period.
(b) The Land shall be free and clear of all liens and
encumbrances except for Bank's Mortgages in favor of Bank and the
Permitted Exceptions, the Amresco Third Mortgage and the Amresco
Fourth Mortgage.
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(c) All conditions precedent as set forth in Article IV shall
have been satisfied.
(d) Bank shall have received an appraisal for such Unit, in form
and substance satisfactory to Bank, indicating its "completed value".
(e) If the Unit is a Pre-Sold Unit, the requirements necessary
for establishing a Firm Contract shall have been met.
(f) Bank shall have received satisfactory evidence that the Unit
is covered by Borrower's builder's risk insurance policy; if the Unit
is located in a flood hazard zone, Bank shall have received
satisfactory evidence that the Unit is covered by Borrower's flood
insurance policy or that application for flood insurance has been
made.
(g) Bank shall have received a true and correct copy of the Cost
Breakdown and Plans for that Unit type.
(h) Bank shall have received a copy of the Notice of Commencement
recorded for that Unit under the Florida Construction Lien Act, which
Notice of Commencement must have been recorded after the recording of
Bank's Mortgage.
(i) Bank shall have received and approved Borrower's Draw
Request.
(j) Bank is satisfied that all roads necessary for ingress and
egress to the Unit and the Approved Project have been completed or
will be completed and that all utility services necessary for the
construction of the Improvements are available at the boundaries of
the Land and will be available to the boundary of the lot upon which
the Unit will be constructed.
(k) Borrower shall have paid to Bank a fee in the amount of ONE
HUNDRED FIFTY AND NO/100 DOLLARS ($150.00) per Unit for property
inspections in connection with up to a maximum of ten (10) draw
requests (such fee may be paid from the initial construction funding
on each Unit). Thereafter, Borrower shall pay Bank FIFTY AND NO/100
DOLLARS ($50.00), for each inspection per Unit in connection with a
draw request (such fee shall be a charge against the per Unit
construction funding for such Unit).
(l) Bank shall have received a copy of the building permit and
all permits pursuant thereto for the Unit to be constructed.
(m) The third party purchaser's interest in the Mortgaged
Property and under the Firm Contract shall be expressly subordinated
to the lien and operation of Bank's Mortgage.
(n) Two sets of the Plans (including standard Unit floor plans)
which must have been approved in writing by Borrower and the General
Contractor either by initialing same or by other written approval
identifying all pages and dates, including revision dates. The Plans
must include architectural, structural, mechanical, plumbing and
electrical plans and specifications and must incorporate the
recommendations in the soil testing report.
(o) APPRAISAL. Borrower shall have furnished Bank with narrative
appraisals certified to the Bank for each base Unit model type on a
standard non-premium lot prepared by an appraiser acceptable to Bank.
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(p) COST BREAKDOWN. A detailed cost breakdown for the
construction of each base Unit model type. At Borrower's expense, Bank
will engage its engineer to review such costs to determine sufficiency
of same under the Bank's guidelines.
(q) CONTRACTS. The proposed contract for sale and purchase of a
completed Unit, and other documents to be used by Borrower to market
and convey Units in the Approved Project.
(r) ARCHITECT'S CONTRACT. Copies of the contracts signed by
Borrower and Architect for design and supervisory services.
(s) CONTRACTOR'S CONTRACT. Copies of the contracts signed by the
Borrower and Contractor for construction services related to the
Units.
(t) CONSENT OF THE ARCHITECT. Consents from the Architect to
Borrower's assignments to Bank of Borrower's interests in the contract
with such party. In addition, the design architect, if any, shall
agree that Bank may use and copy the Plan if a Default occurs. In
furtherance of the assignment granted herein, Borrower shall cause all
contract parties to acknowledge this assignment to Bank and agree to
continue such contract on the same terms as presently exist if Bank
shall succeed to the interest of Borrower thereunder and if so
requested by Bank.
ARTICLE VI
CONDITIONS PRECEDENT TO DISBURSEMENTS
FOLLOWING THE FIRST DISBURSEMENT
6.1 GENERAL PERIODIC DISBURSEMENTS UNDER THE A&D NOTE AND
CONSTRUCTION LINE. Bank shall not be obligated to make any Loan disbursements
after the first disbursement provided for in Article V under the A&D Note or the
Construction Line until all of the following conditions have been and remain
satisfied as of the date of each such disbursement:
(a) All of the conditions stated in Article III hereof,
including, without limitation submission of a Draw Request.
(b) A request for payment signed by Borrower setting forth a
detailed breakdown of the disbursement requested in a format
acceptable to Bank.
(c) Construction of the Improvements for which such Draw Request
has been made has been performed in accordance with the Plans, the
Construction Schedule, and all terms and conditions hereunder.
(d) The Title Policy insurer shall have issued to the Bank an
ALTA Construction Endorsement Form to the Title Policy updating the
Policy and listing any additional subordinate matters or certifying
that no lien or other interest shall have attached to the Project
other than the interest of Bank pursuant to the lien of the Security
Documents, whether superior or subordinate to such lien, except taxes
for the current year and other matters acceptable to Bank, and there
are no liens which may take priority over the disbursement to be made
and there are no survey exceptions not theretofore approved by Bank in
writing.
(e) At the time of each disbursement: (i) Bank is reasonably
satisfied with the progress of construction; (ii) in Bank's reasonable
opinion, the equity requirements set out in Section 2.5 and 3.6 are
satisfied; and (iii) no Default Condition or Default exists under the
Loan Documents.
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(f) Bank shall have received Bank's Construction Inspector's
approval to the Borrower's requisition for any hard costs.
(g) Bank shall have received copies of all notarized partial
release lien waiver forms executed by each appropriate subcontractor,
supplier and/or materialman which have filed a Notice to Owner.
(h) An Owner's Affidavit from Borrower certifying that the funds
disbursed to date by Bank have been paid to the appropriate parties.
(i) No litigation, arbitration or other proceeding shall have
been commenced against Borrower or the General Contractor, which in
Bank's judgment, materially impairs, or is likely to materially impair
the Borrower's or the General Contractor's ability to complete the
Project.
(j) As and when reasonably requested by Bank, a recertification
of the Survey reflecting all changes in the physical conditions of the
Land and Improvements subsequent to the date of the last certification
of the Survey. Each such recertification shall show all construction
work in place.
(k) Bank, based on the advice of its Construction Inspector, must
believe in its reasonable opinion that construction can be completed
within the time frame set forth in Paragraph 2.6(g) herein as to the
Units under the Construction Line.
(l) There shall not have been any destruction or casualty to the
Improvements not covered by insurance.
(m) If the Draw Request requires an amendment to the Use of
Proceeds or the Percentage Completion Draw Schedule or reallocation of
hard cost items which would require contractor and lienor notice under
ss.713.347(2), Fla. Stat., written notice from owner to the Contractor
and all required lienors, in compliance with ss.713.347,(2) Fla.
Stat., and countersigned by the Contractor and any lienors who have
provided notices to owner.
(n) RETAINAGE. Bank has the right to withhold the final six
percent (6.0%) of the individual unit's construction loan until such
time as the Certificate of Occupancy or Final Certificate of
Inspection by the appropriate governmental authority is issued.
6.2 CONSTRUCTION LINE PERIODIC DISBURSEMENTS. The following
additional conditions shall have been and remain satisfied as of the date of
each Construction Line disbursement for a Unit:
(a) At request of Bank, if the slab has been poured on a lot, a
satisfactory foundation or tie-in survey for such lot shall have been
submitted to Bank consistent with the requirements herein prior to any
draws subsequent to the initial draw.
(b) At request of Bank, soil report as to the compaction and
other soil test on the Land by a soil testing firm satisfactory to
Bank, at such times and in such locations as recommended by such firm.
Borrower shall promptly submit to Bank copies of all such reports,
together with any other physical tests made on the Land, the
Improvements, or the materials to be incorporated into the Improvement
and shall, at its sole cost and expense, cause such additional test to
be made from time to time, as Bank may reasonably require.
(c) At such time as any portion of the Improvements are occupied,
Borrower shall submit to Bank an "all risk" permanent hazard insurance
policy with respect to such Improvements, complying with the
requirements set forth in the Mortgage, and including a Replacement
Cost and Agreed
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Amount/Stipulated Value Endorsement and such other endorsements as are
deemed necessary by Bank, together with evidence that all insurance
premiums have been paid.
(d) After the slab has been poured, no additional advances toward
construction shall be made until after the effective date of the flood
hazard application/policy.
6.3 REQUIREMENTS FOR DISBURSEMENT AT COMPLETION. Bank shall not be
obligated to make the final construction disbursement for a Unit until all of
the following additional conditions have been satisfied:
(a) The Units which have been commenced have been substantially
completed and are substantially in accordance with the Plans, and
certificates as to such Completion have been issued in satisfactory
form to Bank by the Architect/Engineer and the General Contractor,
including, without limitation, Architect's Certificate of Completion
together with AIA G704 Certificate of Substantial Completion,
Contractor's Certificate of Completion together with the AIA G704
Certificate of Substantial Completion and, if applicable, the
Engineer's Certificate of Completion, and certificates as to occupancy
and use have been issued by the appropriate Governmental Authorities
(and copies provided to Bank).
(b) Bank has received three (3) copies of an "as-built" survey
prepared by a registered surveyor consistent with Section 4.8 above
and additionally showing all of the Improvements in place.
(c) Bank has received two sets of detailed as-built plans and
specifications approved and identified as such in writing by Borrower,
the Architect/Engineer and the General Contractor. The two sets must
include plans and specifications for (i) as to the Construction Line,
architectural, structural, mechanical, plumbing and electrical
details; and (ii) as to the A&D Note, all site development (including
without limitation, storm drainage, easements, utility lines and
landscaping) work, as applicable.
(d) Bank has received final lien waivers and releases from the
General Contractor and all general contractors, subcontractors,
subcontractors, suppliers, laborers, and materialmen certifying that
they and all parties in privity with them have been paid in full and
waiving their lien rights against the Project (or such lot, as
appropriate).
(e) Bank has received an inspection report performed by this
Construction Inspector in substance satisfactory to Bank and
Construction Inspector's written approval of the final Draw Request.
ARTICLE VII
THE BORROWER'S CONVENTS AND AGREEMENTS
7.1 PAYMENT AND PERFORMANCE. Borrower will pay when due or within any
applicable grace period all sums owing to Bank under the Note, this Loan
Agreement, the Mortgage and the other Loan Documents, and perform all
obligations as outlined or referenced therein.
7.2 FURTHER ASSURANCES. On demand by Bank, Borrower will do any act
and execute any additional documents reasonably required by Bank to secure the
Loan, to confirm or perfect the lien of the Security Documents, including, but
not limited to, additional financing statements or continuation statements, new
or replacement notes and/or Security Documents and agreements supplementing,
extending or otherwise modifying the Loan Documents, certificates as to the
amounts of the indebtedness evidenced by the Note from time to time, and
certificates that Borrower knows of no defaults by or defenses or set-offs
against Bank as long as such certificate represents the true statement of
Borrower.
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7.3 CONSTRUCTION. The Borrower will: (a) continue conscientiously the
construction of the Improvements; (b) not discontinue or permit the
discontinuance of work on the Improvements for longer than fifteen (15)
consecutive days, (c) in any event, complete the Improvements, including
installation of any required items of personalty in substantial compliance with
the Plans, free and clear of liens or claims of liens for material supplied or
for labor or services performed in connection with the construction of the
Improvements; and (d) not file, prior to the recording of the Mortgage, a Notice
of Commencement for the Approved Project. Notwithstanding the foregoing, any
delays in the event of unavailability of materials at reasonable cost, strikes,
other labor problems, governmental order, acts of God or other events which
would support a defense based upon impossibility of performance for reasons
beyond the control of Borrower shall not be a breach of Borrower's
responsibilities under this Section VII.
7.4 PAYMENT OF CONTRACTORS. Borrower covenants to advise Bank
immediately, and in writing if Borrower receives any claim of lien in connection
with any services, labor or materials furnished in connection with the
construction of Units, and to remove such liens within thirty (30) days of the
date of filing. Borrower shall comply with the Construction Contract Prompt
Payment Law contained in the Florida Construction Lien Law, Chapter 713, Fla.
Stat. Notwithstanding the foregoing, Borrower shall not be in Default under this
paragraph if the number and amount of such liens are under the amounts set forth
in Section 9.1(g).
7.5 FEES AND EXPENSES. Whether or not the Loan is made or all Loan
proceeds disbursed hereunder, Borrower agrees to pay all expenses incurred by
Bank, or by Borrower in order to meet Bank's requirements, in connection with
the Loan, including without limitation, commitment and renewal fees or deposits
to Bank, fees for appraisal, environmental assessment, reappraisal, survey,
recording, title insurance, builder's risk and other insurance premiums,
brokerage commissions and claims of brokerage, property taxes, intangible taxes,
documentary stamp taxes, architect's fees, engineer's fees, inspection fees, the
General Contractor's fees, and such legal fees and costs incurred by Bank in
connection with the making and administration of the Loan, the enforcement, of
Bank's rights under the Loan Documents, arbitration, the renewal, modification,
or extension of the Loan, or in connection with litigation or threatened
litigation by a third party which arises because Bank made the Loan. Any such
amounts paid by Bank shall constitute part of the indebtedness which is secured
by the Security Documents, and shall be due and payable upon demand.
7.6 INSURANCE. Borrower covenants to maintain insurance, as required
herein and in the Mortgage.
7.7 TAXES AND INSURANCE. Upon the request of Bank, Borrower shall
submit to Bank such receipts and other statements which shall evidence, to the
satisfaction of Bank, that all taxes (by April 30th of each year), assessments
and insurance premiums have been paid in full.
7.8 TITLE POLICY. When requested by Bank during the Loan term,
Borrower shall provide an endorsement to the Title Policy certifying that (a)
real estate taxes due through such date have been paid; (b) no additional
restrictions or encumbrances are of record which have not been approved by Bank;
and (c) no liens or lis pendens have been filed against the Land or the
Improvements. In the event that periodic title endorsements are not required to
be issued in connection with the title insurance, Borrower agrees to cause title
endorsements to be issued as reasonably required by Bank. When requested, after
the final disbursement of Loan proceeds, Borrower will provide Bank with an
endorsement to the Title Policy insuring the principal balance of the Loan and
containing no exceptions not approved by Bank.
7.9 ADDITIONAL CONSTRUCTION. Borrower shall not construct or permit
the construction of any improvements other than options prepaid by end
purchasers on the Approved Project other than those Improvements described in
the Plans, or approved in writing by Bank.
7.10 SALES REPORTS. Within ten (10) days after the end of each month
Borrower shall deliver to Bank a Sales Report covering that month such Sales
Report shall include, among other things as may be required by Bank,
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a cumulative summary of the number of Units sold, closed and under construction
as well as the number of Spec and Model Units in each Transeastern Properties,
Inc., a Florida corporation project.
7.11 INSPECTION. Borrower will permit Bank and its authorized agents
to enter upon the Project during normal working hours and as often as Bank
desires, for the purpose of inspecting the construction of the Improvements.
When requested, Borrower will furnish to Bank detailed plans, shop drawings and
specifications which relate to the Improvements. Failure of Bank or its
authorized agents to discover deficiencies in or to reject materials or
workmanship incorporated or provided to the Improvements shall not make Bank or
its agent liable to Borrower or to any other person on account of such failure,
nor shall any prior failure constitute a waiver of Bank's right to subsequently
reject any such workmanship or materials. Borrower specifically acknowledges
that all inspections undertaken by Bank or its agent shall be for the sole
benefit of Bank and not for Borrower, any Guarantor, or any third party.
7.12 FOUNDATION AND OTHER SURVEYS. Under the Construction Line, upon
the completion of the construction of the foundation of each unit, Borrower will
promptly submit to Bank for its approval one (1) copy of a foundation survey of
the Project prepared by a registered land surveyor and consistent with the
requirements of Section 4.8 above. In addition to the surveys specifically
required by this Agreement, Borrower shall provide Bank during construction with
such additional surveys as requested by Bank.
7.13 SOIL AND OTHER TESTS. A report as to the compaction or other soil
tests made on the Land by a soil testing firm shall also be submitted to Bank
when so requested in accordance with the requirements of paragraph 4.24 above.
The number and locations of such soil tests shall be in accordance with the
recommendations of the soil testing firm. Borrower shall promptly submit to Bank
copies of reports of all other physical tests made on the Land, the Improvements
or the materials to be incorporated into the Improvements and shall, at
Borrower's expense, cause to be made such additional tests from time to time as
Bank may reasonably require.
7.14 USE OF LOAN FUNDS. Borrower shall use all Loan proceeds disbursed
to Borrower solely in payment of costs incurred in connection with constructing
the Project, in accordance with the Cost Breakdown and Use of Proceeds.
7.15 AVAILABILITY OF UTILITIES. All utility services necessary for the
construction of the Improvements and the operation thereof for their intended
purposes are presently available or will be available when needed through
presently existing public or unencumbered private easements or rights-of-ways in
accordance with validly executed and enforceable utility service agreements
between Borrower and the provider of each of such services (the "Utility Service
Agreements"), if applicable (which would inure to the benefit of Bank in the
event of the foreclosure of the Mortgage) at the boundaries of the Land,
including but not limited to, water, storm and sanitary sewer, gas, electric and
telephone facilities, and all such utilities are non-interruptible. Borrower
shall also provide Bank with copies of all Utility Service Agreements.
7.16 HAZARDOUS SUBSTANCES. Borrower affirms and incorporates by
reference the representations, warranties, terms, conditions, and indemnities
contained in that certain Hazardous Substance Certificate and Indemnification
Agreement of even date herewith.
At any time deemed necessary by Bank, in its sole and absolute
discretion, Bank may, at its election, obtain one or more environmental
assessments of the Land prepared by a geohydrologist, an independent engineer,
or other qualified consultant or expert approved by Bank evaluating or
confirming (i) whether any Hazardous Substances as defined in other Loan
Documents are present in the soil or water at the Land and (ii) whether the use
and operation of the Land complies with all applicable Environmental Laws
relating to air quality, environmental control, release of oil, hazardous
materials, hazardous wastes and hazardous substances, and any and all other
applicable environmental laws. Environmental assessments may include detailed
visual inspections of the Land including, without limitation, any and all
storage areas, storage tanks, drains, dry wells, and leaching areas,
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and the taking of soil samples, surface water samples, and ground water samples,
as well as such other investigations or analyses as are necessary. or
appropriate for a complete determination of the compliance of the Land and the
use and operation thereof with all applicable Environmental Laws. Such
environmental assessments shall be at the sole cost and expense of Borrower. In
the event that it is determined that additional tests and/or remediation are
necessary as a result of the aforesaid assessments, or in the event such
additional testing or remediation is recommended by the aforesaid assessments,
the Borrower agrees to immediately perform the tests or undertake the
remediation as recommended. In the event contamination or other environmental
problem is found on the Property, the Borrower shall be in Default hereunder
after a thirty (30) day cure period.
7.17 CAPITAL ADEQUACY. INTENTIONALLY OMITTED.
7.18 INDEMNIFICATIONS. The Borrower and the Guarantor shall indemnify
and hold Bank and its directors, officers, agents, employees, and attorneys
harmless from all liability, loss, expense or damage of any kind or nature,
including, without limitation, any suits, proceedings, claims, demands, or
damages (including attorneys' fees and costs paid or incurred in connection
therewith at both trial and appellate levels), incurred or arising by reason of:
(a) The Commitment or the making of the Loan (except for
liability, loss, expense or damage arising from the willful misconduct
or gross negligence of Bank);
(b) Any claim or action for the payment of any brokerage
commissions or fees which may be claimed to be payable in connection
with the Commitment; and
(c) The past, present or future handling, storage,
transportation, or disposal of hazardous substances upon the Land.
Notwithstanding the foregoing, Borrower's and Guarantor's indemnity
shall be limited to the extent provided in the Hazardous Substance
Certificate and Indemnification Agreement executed by such parties as
of the Closing Date.
These indemnifications shall survive the full payment and performance
of the obligations of the Borrower under the Loan documents except as set forth
above and in the Hazardous Substance Certificate and Indemnification Agreement.
7.19 FINANCIAL STATEMENTS. Borrower and each Guarantor shall submit
annual and interim financial statements as set forth below and when so requested
by Bank. Such statements shall include, at a minimum: a balance sheet; an income
and expense statement; a statement showing contingent liabilities; and any
supporting schedules or documentation which Bank may require. Each unaudited
statement must contain a certification to Bank of the statement's accuracy and
completeness signed by an authorized officer or the individual, as applicable.
Annual statements of business entities (including corporations and partnerships)
shall be audited by a certified public accountant reasonably acceptable to Bank
and shall be submitted no later than one hundred twenty (120) days after fiscal
year end. Interim statements shall be submitted within forty five (45) days of
each quarter end certified to Bank by the financial officer of Borrower.
Guarantor's personal financial statement shall be submitted to Bank prepared on
Bank's approval form within one hundred twenty (120) days of each calendar year
end. Borrower and Guarantor shall provide Bank with annual tax returns within
thirty (30) days of filing.
7.20 APPRAISALS. Bank must order, at Borrower's expense, and receive a
narrative discounted appraisal on the Land by an appraiser acceptable to Bank
and Bank must review said appraisal prior to Closing Date. At any time during
the term of the Loan, the Loan balance, including the unfunded but committed
portion, may not be in excess of seventy five percent (75%) of the Loan-to-value
with "value" being defined as, on a discounted basis, "as if" fully developed
with respect to Land for which development funding has commenced or is available
to commence and raw Land for which development has not commenced or is not
available to commence, all contemplated site development and Unit improvements.
In addition to the appraisal required by Bank prior to closing of the Loan,
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updated appraisals shall be prepared at Borrower's expense when requested by
Bank but in no event more than annually, if Bank believes, in its sole
discretion, that the value of the collateral for the Loan would render the
Loan-to-value to less than seventy five percent (75%) as defined above. Borrower
shall cooperate fully with the appraisal process and shall allow the appraisers
reasonable access to the Approved Project.
7.21 LEASES AFFECTING APPROVED PROJECT. Borrower shall not, without
the express prior written consent of Bank, enter into any lease affecting the
Approved Project or any part thereof.
7.22 ASSIGNMENT OF CONTRACTS. As additional security for the Loan and
for the performance by Borrower of all of its obligations hereunder, Borrower
hereby assigns to Bank all of Borrower's interest in any and all contracts,
agreements, permits, licenses, approvals, or other documents or writings
relating to the construction, leasing, management or operation of the
Improvements, including but not limited to the Construction Documents, the
architect's contract, the engineer's contract, site development contractor's and
the Plans. This assignment shall not, however, be deemed to impose upon Bank any
of Borrower's obligations under any such contract. Incident to the assignment of
the Construction Documents, the architect's contract, site development
contractor's contract, the engineer's contract, and the Plans, Borrower will
fulfill the obligations of Borrower thereunder, enforce the performance thereof
and give immediate notice to Bank of any default by the architect, site
development contractor, the engineer, or the General Contractor thereunder.
Further, Borrower will not, without the prior written consent of Bank (i)
materially modify, or amend the terms of the architect's contract, the Plans,
engineer's contract, site development contractor's contract or the Construction
Documents; or (ii) waive or release the performance of any material obligation
to be performed by the architect, the engineer, site development contractor or
the General Contractor thereunder.
7.23 SUBORDINATE FINANCING. Borrower shall not permit there to exist
nor shall Borrower obtain any subordinate or secondary financing of the Land or
any other property granted as security for the Loan, except for that certain
loan in favor of Amresco Funding Corporation, a Delaware corporation, which loan
is secured by that certain mortgage dated March 29, 1996 and recorded in
Official Records Book 24694 at Page 0744 of the Public Records of Broward
County, Florida and that certain contingent return mortgage dated March 29, 1996
and received in Official Records Book 24694 at Page 0787 of the Public Records
of Broward County, Florida, both of which have been voluntarily subordinated to
Bank's mortgages.
7.24 TRANSFER OF PROPERTY OF BORROWER. The Borrower shall not permit
any change in its ownership (or the ownership of its general partners, if
applicable), its corporate or trade name, the nature and operation of its
business or the nature and character of the Borrower or the Approved Project,
nor shall the Borrower sell, assign, transfer, hypothecate or dispose of all or
any portion of the Land, Improvements, or the Approved Project, except as may be
permitted hereby, without the prior written consent of Bank, which consent shall
be withheld or granted in Bank's sole and absolute discretion.
7.25 PARTIAL RELEASES OF PROPERTY. Provided the Borrower is not then
in Default hereunder, under the Note, the Mortgage or any other Loan Document,
Bank will provide partial releases in respect of its interest under the Mortgage
and other Loan Documents upon the terms and conditions set out in Exhibit "B"
attached. Payments made for releases shall be applied by Bank against the
outstanding principal of the Loan unless the release payment is calculated to
take into account allocable interest or other constituent costs or accruals, in
which event Bank may apply the release payment in accordance with such
calculations. Borrower agrees to reimburse Bank for all out-of-pocket fees and
costs, as set forth in Exhibit "B" hereto in connection with the granting of
such partial releases and shall provide Bank with any and all information
requested by Bank with respect to the Unit to be released.
Notwithstanding anything contained herein to the contrary, if
Borrower applies for the partial release of a lot from the lien of the Mortgage
and other Loan Documents and there is not then any outstanding principal balance
under the A&D Note, but there are outstanding letters of credit (either drawn or
undrawn upon) issued by Bank on Borrower's behalf which are secured by the
Mortgage (the "Secured Letters of Credit"), the Lot
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Release Price (computed in a redefined manner as follows: that certain amount
derived by dividing the sum of all remaining outstanding letters of credit by
the number of remaining developed lots encumbered by the Mortgage) shall
nevertheless be due and payable as a precondition to Bank's obligation to grant
a partial release or permit the commencement of a Unit on a particular lot, as
applicable, and the Lot Release Prices paid for partial releases in this
situation (collectively, the "Partial Release Funds") shall be placed by Bank in
an account in Borrower's name, which account shall be pledged by Borrower to
Bank as additional collateral for the Loan and the indebtedness of Borrower to
Bank arising out of the Secured Letters of Credit. Borrower shall have no rights
to make withdrawals or otherwise receive disbursements from the pledged account.
Borrower agrees to execute any and all documents required by Bank to evidence
the pledge of the Partial Release Funds. If the Secured Letters of Credit are
drawn, or if Borrower Defaults under the Loan Documents, Bank may, in its sole
and absolute discretion, and in addition to any and all of its available rights
and remedies under the Loan Documents, the documents evidencing the Secured
Letters of Credit, or otherwise, apply the Partial Release Funds to reimburse
Bank for any drawings made under the Secured Letters of Credit and to any then
outstanding balance under the Loan. If said Secured Letters of Credit are
reduced or released, the pledged account will be reduced or released as well and
shall be returned to Borrower.
Notwithstanding any provision herein to the contrary, if Bank at
its sole discretion has agreed to issue letters of credit for the performance of
site development work contemplated in this Agreement, sufficient availability
for funding such scope of work must exist under the Use of Proceeds for which
the letter of credit is being requested.
7.26 DISCLOSURE OF CONTRACTS AND NOTE. Borrower shall disclose to Bank
upon demand, the names of all persons with whom Borrower has contracted or
intends to contract for any construction or for the furnishing of labor or
materials therefor, and when required by Bank obtain the approval by Bank of all
such persons. Borrower shall upon Bank's request, at all times during the
construction period of any Improvements, provide to the Bank, within ten (10)
days of the Borrower's receipt thereof, copies of all notices to owner, claims
of lien, and demands for sworn statement of account, issued by any party,
whether pursuant to any notice of commencement or otherwise, in connection with
the Approved Project or the Land.
7.27 CONSTRUCTION LIEN LAW NOTIFICATION REQUIREMENTS. Borrower hereby
authorizes Bank to provide written notices to Contractor and lienors providing
notices to owner pursuant to ss.713.3471 (1)(a), Fla. Stat., and ss.713.3471
(2)(b), Fla. Stat., to the extent such notices are required by law. Borrower
hereby releases Bank and waives all claims it may have against Bank for damages
Borrower may incur as a result of Bank's failure to deliver said notices.
Borrower hereby agrees to provide all required notices to the Contractor and all
lienors providing notices to owner in compliance with ss.713.3471(2)(a), Fla.
Stat., in a timely fashion.
7.28 AMENDMENTS TO COST BREAKDOWN. If Borrower amends the Cost
Breakdown or reallocate items in the Cost Breakdown such that written notice to
the Contractor and lienors serving notices to owner would be required under
ss.713.3471(2)(a), Fla. Stat., (1992), Borrower agrees to provide written notice
to the Contractor and all required lienors in compliance with ss.713.3471
(2)(a), Fla. Stat., Bank shall not be obligated to make any disbursements of
Loan proceeds until Borrower has provided Bank with copies of any required
notices to the Contractor and required lienors in compliance with ss.713.3471
(2)(a), Fla. Stat., together with evidence that such notices have been
countersigned by the Contractor and all lienors who are required to receive the
notice under ss.713.3471 (2)(a), Fla. Stat., thereby confirming receipt thereof.
7.29 AMENDMENT TO THE USE OF PROCEEDS. With the written authorization
of Borrower or Borrower's authorized representative only, as evidenced by
Borrower's Draw Request, Bank may amend the Use of Proceeds or reallocate funds
designated for specific line items to other line items. Such amendment may be
evidenced by Borrower's Draw Request or by an Amended Use of Proceeds Schedule
and may be made without the consent of the Guarantors. Bank shall not be
permitted to reallocate items in the Use of Proceeds without the Borrower's or
Borrower's authorized representatives prior written consent.
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7.30 LOAN FEES. INTENTIONALLY OMITTED.
7.31 MINIMUM A&D NOTE REPAYMENT SCHEDULE. INTENTIONALLY OMITTED
7.32 AMERICANS WITH DISABILITIES ACT. Borrower covenants and agrees
that, during the term of the Loan, to the extent such Act is applicable, the
Improvements and Approved Project will be in full compliance with the Americans
with Disabilities Act ("ADA") of July 26, 1990, 42 U.S.C Section 12191, et.
seq.) as amended from time to time, and the regulations promulgated pursuant
thereto. Borrower shall be solely responsible for all ADA compliance costs,
including without limitation, attorneys' fees and litigation costs, solely
relating to such period in which Borrower is the owner of the Land which
responsibility shall survive the repayment of the Loan and foreclosure of the
Land and Improvements.
7.33 REGULATION "Z". The Loan is exempt from the provisions of the
Federal Consumers Credit Protection Act (Truth-in-Lending Act) and Regulation
"Z" of the Board of Governors of the Federal Reserve System, because Borrower is
a person fully excluded therefrom, and/or because the Loan is only for business
or commercial purposes of Borrower and the proceeds of the Loan are not being
used for personal, household, family or agricultural purposes.
7.34 FINANCIAL COVENANTS. Borrower shall at all times be prohibited
from incurring or providing a guaranty for any additional debt, except trade
accounts payable in the ordinary course of business relative to the Approved
Project, or form pledging its assets to secure or guarantee any debt other than
that of the Borrower.
7.35 SUBORDINATION OF SHAREHOLDER LOANS. Borrower hereby subordinates,
to the prior payment to Bank of all sums owing under the Loan, any and all
loans, advances, and indebtedness owing from Borrower to shareholders of
Borrower from time to time, whether or not evidenced by promissory notes.
Borrower may make payments of principal and interest for any loan owing to its
shareholders until the Loan is paid in full so long as no Default exists under
the Loan.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Bank that:
(a) REPRESENTATIONS AND WARRANTIES IN MORTGAGE AND GUARANTY. All
of the representations and warranties contained in the Mortgage and
Guaranty are true and correct and are incorporated herein by reference
as if set out in full.
(b) OTHER FINANCING. The Borrower has not (i) received any other
financing for the acquisition of or development and construction on
the Land existing as of the date hereof for which a lien equal to or
superior to Bank's mortgage could be successfully asserted, or (ii)
received any other financing for the construction of the Improvements,
except for financing in favor of Amresco Funding Corporation, a
Delaware corporation's interest, as evidenced by that certain
Mortgage, Assignment of Rents, and Security Agreement, dated March 29,
1996, and recorded April 3, 1996 in Official Records Book 24694 at
Page 0744, of the Public Records of Broward County, Florida (the
"Amresco Third Mortgage") and that certain Contingent Mortgage,
Assignment of Rents and Security Agreement, dated March 29, 1996 and
recorded April 3, 1996, in Official Records Book 24694 at Page 0787,
of the Public Records of Broward County, Florida, (the "Amresco Fourth
Mortgage") the Bank's Mortgage.
(c) PLANS. The Plans have been or will be prior to use approved
by the Borrower, the Guarantor, and each appropriate Governmental
Authority.
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(d) GOVERNMENTAL REQUIREMENTS AND OTHER REQUIREMENTS. Borrower
will cause the Land to be developed and the Units to be constructed.in
accordance with the Plans submitted to and approved by Bank, and when
so constructed the Land and the Units do and shall comply with all
covenants, conditions and restrictions affecting the Land or any
portion thereof, and do and shall comply with all Governmental
Requirements.
(e) USE OF THE APPROVED PROJECT. There is no (i) plan, study or
effort by any Governmental Authority or any nongovernmental person or
agency which may adversely affect the current or planned use of the
Approved Project, or (ii) to the best of Borrower's knowledge any
intended or proposed Governmental Requirement (including, but not
limited to, zoning changes) which may adversely affect the current or
planned use of the Approved Project.
(f) MORATORIUM. There is no moratorium or like governmental order
or restriction now in effect with respect to the Approved Project and,
to the best of Borrower's knowledge, no moratorium or similar
ordinance or restriction is now contemplated.
(g) PERMITS. All permits, approvals and consents of Governmental
Authorities and public and private utilities having jurisdiction
necessary in connection with the Approved Project have been or will be
issued and are or will be in good standing.
(h) CONDITION OF APPROVED PROJECT. No defect or condition of the
Land or the solid or geology thereof exists which will impair the
construction, use, or the operation of the Approved Project for its
intended purpose.
(i) LABOR AND MATERIALS. All labor and materials contracted for
in connection with the construction of the Improvements shall be used
and employed solely on the Land in said construction and only in
accordance with the Plans.
(j) SURVEYS. The Survey, the preliminary plat for the Land, and
all plot plans and other documents heretofore furnished by the
Borrower to Bank with respect to the Land and Improvements are
accurate and complete as of their respective dates. There are no
encroachments onto the Land and no improvements on the Land encroach
onto any adjoining property.
(k) CONSTRUCTION COSTS. The amount of the hard costs and soft
costs are accurate, true and correct and are satisfactory to Borrower.
(l) SALE OF SECURITIES. The Borrower has not instituted, caused
to be instituted or been a party to and, to the best of Borrower's
knowledge, there has not been any public offering with respect to the
Land and Improvements, or either, within the meaning of the Securities
Act of 1933 and the Securities Exchange Act of 1934.
(m) CONSTRUCTION LIEN LAW. At the time of Closing and at the time
of the recording of the Mortgage, no work has been done on
Improvements or on the Approved Project by the Borrower or anyone else
acting for, or on behalf of the Borrower, and no materials have been
placed on the Property by any materialmen or by anyone else. No Notice
of Commencement has been recorded in the Public Records with respect
to the Approved Project or the Land at the time of Closing. Borrower
shall not permit the commencement of any excavation or construction
work of any nature whatsoever, nor the delivery of any materials to
the Approved Project or the Land, prior to the recordation and posting
of a Notice of Commencement as hereinafter set forth. Borrower shall
execute an appropriate Notice of Commencement and cause the same to be
recorded in the public records of the county in which the Property is
located in sequence after the recording of the Mortgage. Borrower
shall post a certified copy
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of the Notice of Commencement on the Approved Project, in strict
conformity with the Florida Construction Lien Law. If construction is
commenced prior to the recordation and posting of the Notice of
Commencement, or the Notice of Commencement is recorded prior to the
Mortgage, Bank shall have the absolute right to cancel this Agreement
and be immediately reimbursed by Borrower for all disbursements of
loan proceeds, together with expenses and reasonable attorneys' fees
incurred in, connection therewith. Construction shall commence within
ninety (90) days after recordation of the Notice of Commencement.
Construction shall proceed continuously in a workmanlike manner. Bank
reserves the right to require Borrower to furnish an itemized cost
breakdown for the Improvements to be constructed.
(n) REPRESENTATIONS AND WARRANTIES IN OTHER LOAN DOCUMENTS. All
of the representations and warranties contained in the other Loan
Documents are true and correct.
8.2 RELIANCE ON REPRESENTATIONS. The Borrower acknowledges that Bank
has relied upon the Borrower's representations and is not charged with any
knowledge contrary thereto that may be received by an examination of the public
records wherein the Land is located or that may have been received by any
officer, director, agent, employee or shareholder of Bank.
8.3 CERTIFICATE REGARDING LOAN STATUS. Upon Bank's request, Borrower
and Guarantors shall provide Bank with a written certification, certifying to
such matters related to the Loan as Bank may request, including, but not limited
to, a statement that Borrower and Guarantors are not in Default and that no
Default Conditions have occurred.
ARTICLE IX
EVENTS OF DEFAULT
9.1 DEFAULT. The occurrence of any one. or more of the following
events (time being of the essence as to this Loan Agreement and all of its
provisions) constitutes a "Default" by Borrower under this Loan Agreement, and
at the option of Bank, under the other Loan Documents:
(a) SCHEDULED PAYMENT. Borrower's failure to make any payment
required under the Note when due or within any applicable grace
period.
(b) MONETARY DEFAULT. Borrower's failure to make any other
payment required by this Loan Agreement or the other Loan Documents
when due or within any applicable grace period.
(c) OTHER. Borrower's failure to perform any other obligation
imposed upon Borrower by this Loan Agreement or any other Loan
Document within thirty (30) days after the date when performance is
due. This provision shall not be construed to provide Borrower with
any grace period in complying with any obligations imposed on Borrower
by the terms of the Loan Documents. Notwithstanding the foregoing
provision, Bank shall give Borrower notice, as defined in the
Mortgage, of any non-monetary default after which Borrower shall have
a thirty (30) day cure period.
(d) REPRESENTATION. Any representation or warranty of Borrower
contained in this Loan Agreement or in any certificate delivered
pursuant hereto, or in any other instrument or statement furnished in
connection herewith, proves to be incorrect or misleading in any
adverse respect as of the time when the same shall have been made,
including, without limitation, any and all financial statements,
operating statements, and schedules attached thereto, furnished by
Borrower or any guarantor of the Loan to Bank or pursuant to any
provision of this Loan Agreement,
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(e) BANKRUPTCY. Borrower or any general partner of Borrower or
any guarantor of the Loan (i) files a voluntary petition in bankruptcy
or a petition or answer seeking or acquiescing in any reorganization
or for an arrangement,, composition, readjustment, liquidation,
dissolution, or similar relief for itself pursuant to the United State
Bankruptcy Code or any similar law or regulation, federal or state,
relating to any relief for debtors, now or hereafter in effect; or
(ii) makes an assignment for the benefit of creditors or admits in
writing its inability to pay or fails to pay its debts as they become
due; or (iii) suspends payment of its obligations or takes any action
in furtherance of the foregoing; or (iv) consents to or acquiesces in
the appointment of a receiver, trustee, custodian, conservator,
liquidator or other similar official of Borrower, a general partner of
Borrower, or any guarantor, for all or any part of the Collateral or
other assets of such party, or either; or (v) has filed against it an
involuntary petition, arrangement, composition, readjustment,
liquidation, dissolution, or an answer proposing an adjudication of it
as a bankrupt or insolvent, or is subject to reorganization pursuant
to the United States Bankruptcy Code, an action seeking to appoint a
trustee, receiver, custodian, or conservator or liquidator, or any.
similar law, federal or state, now or hereinafter in effect, and such
action is approved by any court of competent jurisdiction and the
order approving the same shall not be vacated or stayed within sixty
(60) days from entry; or (vi) consents to the filing of any such
petition or answer, or shall fail to deny the material allegations of
the same in a timely manner.
(f) JUDGMENTS. (1) A final judgment other than a final judgment
in connection with any condemnation is entered against Borrower,
Guarantors, or any general partner of Borrower, that (i) adversely
affects the value, use or operation of the Land or the Improvements in
Bank's sole judgment, or (ii) adversely affects, or may adversely
affect, the validity, enforceability or priority of the lien or
security interest created by the Mortgage or any other Loan Document
in Bank's sole judgment, or both; or (2) execution or other final
process issues thereon with respect to the Land or the Improvements;
and (3) Borrower, Guarantor, or any general partner of Borrower, does
not discharge the same or provide for its discharge in accordance with
its terms, or procure a stay of execution thereon, in any event within
thirty (30) days from entry, or Borrower shall not, within such period
or such longer period during which execution on such judgment shall
have been entered, and cause its execution to be stayed during such
appeal, or if on appeal such order, decree or process shall be
affirmed and Borrower shall not discharge such judgment or provide for
its discharge in accordance with its terms within sixty (60) days
after the entry of such order or decree or affirmance, or if any stay
of execution on appeal is released or otherwise discharged.
(g) LIENS. Any federal, state or local tax lien or any claim of
lien for labor or materials or any other lien or encumbrance of any
nature whatsoever is recorded against Borrower or the Land or
Improvements and is not removed by payment or transferred to
substitute security in the manner provided by law, within thirty (30)
days after it is recorded in accordance with applicable law.
(h) OTHER NOTES OR MORTGAGES. Borrower's default in the
performance or payment of Borrower's obligations under any other note
which remains uncured after any applicable grace period, or under any
other mortgage encumbering all or any part of the Land or the
Improvements, if the other mortgage is permitted by the Bank, whether
such other note or mortgage is held by Bank or by any other party, and
unless otherwise agreed to by separate written agreement between Bank
and such other mortgage holder.
(i) BORROWER DEFAULT UNDER LOAN DOCUMENTS. Borrower's default in
the payment or performance of any of Borrower obligations under any of
the Loan Documents, including this Loan Agreement and any riders
thereto.
(j) GUARANTOR DEFAULT.
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<PAGE>
i) The default after expiration of any applicable grace
period in the payment or performance of any obligation of a
Guarantor of the Note arising under its guaranty or pursuant to
any other Loan Documents; or
ii) The death of any Guarantor and the failure of Borrower
to provide Bank with an alternate guaranty or alternate
collateral satisfactory to Bank in its sole and absolute
discretion within sixty (60) days of the date of Guarantor's
death.
(k) BORROWERS/GENERAL PARTNER'S CONTINUED EXISTENCE. Borrower or
any corporate General Partner of Borrower shall cease to exist or to
be qualified to do or transact business in the State in which the Land
and Improvements are located, or shall be dissolved or shall be a
party to a merger or consolidation, or shall sell all or substantially
all of its assets, or shall change its corporate name or trade name
without prior written notice to Bank.
(l) STOCK IN BORROWER/CHANGE IN PARTNERS. If Borrower is a
limited partnership and without the prior written consent of Bank, any
shares of stock of any corporate general partner of Borrower are
issued, sold, transferred, conveyed, assigned, mortgaged, pledged, or
otherwise disposed of so as to result in change of control of
Borrower, whether voluntarily or by operation of law, and whether with
or without consideration, or any agreement for any of the foregoing is
entered into; or, if any general partnership interest or other equity
interest in the Borrower is sold, transferred, assigned, conveyed,
mortgaged, pledged, or otherwise disposed of, whether voluntarily or
by operation of law, and whether with or without consideration, or any
agreement for any of the foregoing is entered into, or any general
partner of Borrower withdraws from the partnership.
(m) TRANSFER OF PROPERTY OR OWNERSHIP. Any sale, conveyance,
transfer, assignment, or other disposition or encumbrance of all or
any part of the Land, Improvements, or the Approved Project, or any
ownership interest in Borrower or any guarantor without the prior
consent of Bank or except as otherwise permitted hereby, or as
outlined in the prospectus for public offering for Transeastern
Properties, Inc., a Florida corporation delivered to Bank by Borrower.
(n) FALSE STATEMENT. Any statement or representation of Borrower
or any guarantor contained in the loan application or any financial
statements or other materials furnished to Bank or any other Bank
prior or subsequent to the making of the Loan secured hereby are
discovered to have been false or incorrect or incomplete.
(o) DEFAULT UNDER INDEMNITY. Borrower or Guarantor shall default
after any applicable grace period under any obligation imposed by any
indemnity contained within any of the Loan Documents including the
Hazardous Waste Certification and Indemnification.
(p) CROSS-DEFAULT. Any monetary default by the Borrower or
Guarantor under this Loan shall be a default under all other
documents, instruments, mortgages and other collateral documents
evidencing and securing all other loans by Bank to Borrower or
Guarantor.
(q) NON-COMPLIANCE WITH THE PLANS AND SPECIFICATIONS. Failure of
any of the materials supplied for the development of the Land or the
construction of the Units to comply with the Plans and Specifications
or any requirements of any Governmental Authority unless the Borrower
undertakes and diligently pursues the correction of such failure.
(r) PROJECTED COMPLETION OF CONSTRUCTION. Failure to construct
the Improvements with reasonable dispatch, or the discontinuance of
construction at any time for a period of fifteen (15) days
consecutively, or determination by Bank that construction of the
Improvements will not be timely completed
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<PAGE>
and Borrower's failure to complete, cure or provide satisfactory
assurances after notice or demand from Bank. Notwithstanding the
foregoing, any delays in the event of unavailability of materials at
reasonable cost, strikes, other labor problems, governmental orders,
acts of God or other events which would support a defense based upon
impossibility of performance for reasons beyond the control of
Borrower shall not be a Default under this paragraph.
(s) NON-PAYMENT OF DEBTS. Borrower is generally not paying its
debts as such debts become due.
(t) SECURITIES LAWS VIOLATION. The assertion of any violation of
the 1933 Securities Act, 1934 Securities Act or the Florida Blue Sky
Laws by any Governmental Authorities or the institution of any
securities litigation not dismissed within sixty (60) days of the
commencement of same.
(u) NON-COMPLIANCE WITH HOMEOWNER ASSOCIATION DOCUMENTS. Borrower
shall fail to perform any duty required of it, fulfill any condition,
abide by any covenant or in any manner default under the homeowners,
association documents encumbering the Approved Project, if any.
(v) ADVERSE ACTIONS. Any legal or equitable action is commenced
against Borrower which, if adversely determined, could reasonably be
expected to impair substantially the ability of Borrower to perform
each and every obligation under the Loan Documents and this Agreement;
provided, however, if Borrower has commenced a counter action, contest
or defense to the adverse action and resolved such adverse action
within one hundred twenty (120) days of the commencement of same then
Borrower shall not be in Default.
(w) GOVERNMENT CHALLENGES. The validity of any permit, approval
or consent by any Governmental Authority relating to the Land, the
Improvements, or the Approved Project, or the operation thereof is
challenged by a proceeding before a board, commission, agency, court
or other authority having jurisdiction; provided, however, if Borrower
has commenced a counter action, contest or defense to the governmental
challenge and resolved such challenge within one hundred twenty (120)
days of the commencement of same then Borrower shall not be in
Default.
(x) BORROWER'S ACTIONS. Any action by the Borrower, which would,
in the sole opinion of the Bank, significantly endanger the security
of the Loan and which Borrower fails to mitigate after notice from
Bank will render the Loan payable on demand.
(y) MISCELLANEOUS. If at any time the Bank shall determine that
there has been a material adverse change in the financial condition or
prospects of Borrower, the Guarantor, or any general partner of
Borrower, which is not corrected or cured after reasonable notice from
Bank.
ARTICLE X
BANK'S RIGHTS AND REMEDIES
The following rights and remedies are available to Bank:
10.1 ACCELERATION. Upon the occurrence of a Default, the entire unpaid
principal balance of the Loan and all accrued but unpaid interest thereon and
any costs or expenses then due to Bank and any and all other obligations of
Borrower to Bank, shall, at the option of Bank and without notice to Borrower,
become immediately due and payable.
10.2 COMPLETION OF CONSTRUCTION. From and after the occurrence of a
Default, Bank shall be entitled to have and use the Plans And the Construction
Documents and, after first having given written notice to the
27
<PAGE>
architect, site development contractor, the engineer, or the General Contractor,
shall be entitled from and after such notice to enjoy and enforce all of the
rights of Borrower under the architect's contract, engineer's contract, site
development contractor's contract, the Plans or the Construction Contracts.
Borrower hereby irrevocably constitutes and appoints Bank its true and lawful
attorney-in-fact with full power of substitution in the Approved Project to
complete the Improvements in the name of Borrower following a Default. Borrower
hereby empowers Bank from and after Default as its attorney-in-fact as follows:
(a) to use any funds of Borrower, including any Loan proceeds or equity deposits
which may remain undisbursed hereunder, for the purpose of completing the
Improvements in accordance with the Plans; (b) to make such additions, changes,
modifications, or corrections in, or deviations from, the Plans as shall be
necessary or desirable to complete the Improvements; (c) to employ such
contractors, subcontractors, agents, architects, engineers, inspectors, or other
parties as shall be required for said purposes; (d) to pay, settle, or
compromise all existing bills and claims which may be liens against the
Improvements or as may.be necessary or desirable in the sole discretion of Bank
for the completion of the Improvements or for clearance of title; (e) to direct
use of and/or use all or any part of the labor, materials, supplies and
equipment contracted for, owned by, or under the control of Borrower, whether or
not previously incorporated into the Improvements; (f) to execute all
applications and certificates in the name of Borrower which may be required by
the Construction Documents, the architect's contract, the engineer's contract,
site development contractor's contract, Plans, or any of the contract documents;
(g) to prosecute and defend all actions or proceedings in connection with the
Approved Project or the construction of the Improvements and take such action
and require such performance as Bank shall deem necessary under any performance
or payment bond; and (h) to do any and every act with respect to construction or
completion of the Improvements or the closing of any permanent financing which
Borrower might do in its own behalf including, without limitation, execution,
acknowledgment, and delivery of all instruments, documents, and papers in the
name of Borrower as may be necessary or desirable in the sole discretion of
Bank. It is further understood and agreed that this power of attorney which
shall be deemed to be a power coupled with an interest, cannot be revoked. All
sums expended by Bank pursuant hereto shall be deemed to have been disbursed to
Borrower and secured by the Security Documents, and the other Loan Documents.
10.3 DISPUTES. Where disputes have arisen which, in the opinion of
Bank, may endanger timely completion of the Improvements or fulfillment of any
condition or covenant herein, Bank may agree to disburse Loan proceeds for the
account of Borrower without prejudice to Borrower's rights, if any, to recover
said proceeds from the party to whom paid. Such agreement or agreements may take
the form which Bank in its discretion deems proper, including, but without
limiting the generality of the foregoing, agreements to indemnify (on behalf of
Borrower and/or for Bank's own account) any title insurer against possible
assertion of lien claims, agreements to pay disputed amounts and the like. All
sums paid or agreed to be paid pursuant to such undertaking shall be advances of
Loan proceeds.
10.4 REMEDIES CUMULATIVE: NONWAIVER: JUDGMENTS. All remedies of Bank
provided for herein or in the other Loan Documents are cumulative and shall be
in addition to any and all other rights and remedies provided for or available
under the other Loan Documents, at law or in equity. The exercise of any right
or remedy by Bank hereunder shall not in any way constitute a cure or waiver of
a Default Condition or a Default hereunder or under the Loan Documents, or
invalidate any act done pursuant to any notice of the occurrence of a Default
Condition or Default, or prejudice Bank in the exercise of any of its rights
hereunder or under any of the other Loan Documents, unless, in the exercise of
said rights, Bank realizes all amounts owed to it under the Loan Documents. ANY
JUDGMENT IN FAVOR OF BANK AGAINST BORROWER SHALL BEAR INTEREST AT THE DEFAULT
RATE (AS DEFINED IN THE NOTE).
10.5 NO LIABILITY OF BANK. Whether or not Bank elects to employ any or
all remedies available to it in the event of an occurrence of a Default
Condition or Default, Bank shall not be liable for the construction of or
failure to construct or complete or protect the Improvements or for payment of
any expense incurred in connection with the exercise or any remedy available to
Bank or for the construction or Completion of the Improvements or for the
performance or nonperformance of any other obligation of Borrower.
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<PAGE>
10.6 SECURITY INTEREST. It is understood and agreed that Bank shall
have and enjoy and is hereby granted a lien on, and a security interest in, all
collateral described in the Mortgage, and including without limitation, any and
all materials (stored on-site or off-site), reserves, deferred payments,
deposits or advance PAYments for materials (stored on-site or off-site)
undisbursed Loan proceeds, insurance refunds, impound accounts, refunds for
overpayment of any kind, and such lien and security interest shall constitute
additional security for the Indebtedness of Borrower to Bank, and Bank shall
have and possess any and all rights and remedies of a secured party provided by
law with respect to enforcement of and recovery on its security interest on such
items and amounts. In the event of a conflict between this paragraph and any
security interest granted pursuant to the Mortgage, the Mortgage shall control.
10.7 CESSATION OF FUNDING. Upon the occurrence of a Default, Bank
shall have the right to immediately terminate further funding of the Loan
irrespective of the stage of completion.
ARTICLE XI
GENERAL CONDITIONS
The following conditions shall be applicable throughout the term of
this Loan Agreement:
11.1 WAIVERS. No waiver of any Default Condition or Default or breach
by Borrower hereunder shall be implied from any delay or omission by Bank to
take action on account of such Default Condition or Default, and no express
waiver shall affect any Default Condition or Default other than the Default
specified in the waiver and it shall be operative only for the time and to the
extent therein stated. Waivers of any covenants, terms or conditions
contained herein must be in writing and shall not be construed as a waiver of
any subsequent breach of the same covenant, term or condition. The consent or
approval by Bank to or of any act by Borrower requiring further consent or
approval shall not be deemed to waive or render unnecessary the consent or
approval to or of any subsequent or similar act. No single or partial exercise
of any right or remedy of Bank hereunder shall preclude any further exercise
thereof or the exercise of any other or different right or remedy.
11.2 BENEFIT. This Loan Agreement is made and entered into for the
sole protection and benefit of Bank and Borrower, their successors and assigns,
and no other person or persons have any right to action hereon or rights to the
Loan all proceeds at any time, nor shall Bank owe any duty whatsoever to any
claimant for labor or services performed or material furnished in connection
with the Approved Project, or to apply any undisbursed portion of the Loan to
the payment of any such claim, or to exercise any right or power of Bank
hereunder or arising from any Default Condition or Default by Borrower.
11.3 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 Borrower shall not assign this Loan
Agreement or any of its rights, interests, duties or obligations hereunder or
any Loan proceeds or other moneys to be advanced hereunder in whole or in part
without the prior written consent of Bank and that any such assignment (whether
voluntary or by operation of law) without said consent shall be void. It is
expressly recognized and agreed that Bank may assign this Loan Agreement, the
Note, the Security Documents, and any other Loan Documents, in whole or in part,
to any other person, firm, or legal entity provided that all of the provisions
hereof shall continue in full force and effect and, in the event of such
assignment, Bank shall thereafter be relieved of all liability under the Loan
Documents and any Loan disbursements made by any assignee shall be deemed made
in pursuant and not in modification hereof and shall be evidenced by the Note
and secured by the Security Documents and any other Loan Documents.
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<PAGE>
11.4 AMENDMENTS. This Loan Agreement shall not be amended except by a
written instrument signed by all parties hereto.
11.5 TERMS. Whenever the context and construction so 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.
11.6 GOVERNING LAW AND JURISDICTION. This Loan Agreement and the other
Loan Documents and all matters relating thereto shall be governed by and
construed and interpreted in accordance with the laws of the State of Florida.
Borrower and all of its general partners hereby submits to the jurisdiction of
the state and federal courts located in Florida and agree that Bank may, at its
option, enforce its rights under the Loan Documents in such courts.
11.7 PUBLICITY. At Bank's request and expense, and subject to
applicable laws, regulations and restrictions, Borrower shall place upon the
Approved Project, at a location mutually acceptable to Borrower and Bank, a sign
or signs advertising the fact that financing is being provided by Bank. Bank
shall also have the right to secure printed publicity through newspaper and
other media concerning the Approved Project and source of financing.
11.8 SAVINGS CLAUSE. Invalidation of any one or more of the provisions
of this Loan Agreement shall in no way affect any of the other provisions
hereof, which shall remain in full force and effect.
11.9 EXECUTION IN COUNTERPARTS. This Loan Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument, and in making proof
of this Loan Agreement, it shall not be necessary to produce or account for more
than one such counterpart.
11.10 CAPTIONS. The captions herein are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this Loan Agreement nor the intent of any provision hereof.
11.11 NOTICES. All notices required to be given hereunder shall be
given in accordance with the requirements of the Mortgage.
11.12 MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including but not limited to those arising out of or relating
to this Loan Agreement or any related agreements or instruments, including any
claim based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event
of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Loan Agreement may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which this Loan
Agreement applies in any court having jurisdiction over such action.
(a) SPECIAL RULES. The arbitration shall be conducted in the
County of Broward, Florida and administered by Endispute, Inc., d/b/a
J.A.M.S./Endispute who will appoint an arbitrator; if
J.A.M.S./Endispute is unable or legally precluded from administering
the arbitration, then the American Arbitration Association will serve.
All arbitration hearings will be commenced within 90 days of the
demand for arbitration; further, the arbitrator shall only, upon a
showing of cause, be permitted to extend the commencement of such
hearing for up to an additional 60 days.
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<PAGE>
(b) RESERVATION OF RIGHTS. Nothing in this Loan Agreement shall
be deemed to (i) limit the applicability of any otherwise applicable
statutes of limitation or repose and any waivers contained in this
Loan Agreement; or (ii) be a waiver by the Bank of the protection
afforded to it by 12 U.S.C. Sec. 91 or any substantially equivalent
state law; or (iii) limit the right of the Bank hereto (A) to exercise
self help remedies such as (but not limited to) setoff, or (B) to
foreclose against any real or personal property collateral, or (C) to
obtain from a court provisional or ancillary remedies such as (but not
limited to) injunctive relief or the appointment of a receiver. The
Bank may exercise such self help rights, foreclose upon such property,
or obtain such provisional or ancillary remedies before, during or
after the pendency of any arbitration proceeding brought pursuant to
this Agreement. At Bank's option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of
a power of sale under the deed of trust or mortgage, or by judicial
sale under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary
remedies shall constitute a waiver of the right of any party,
including the claimant in any such action, to arbitrate the merits of
the controversy or claim occasioning resort to such remedies.
11.13 DISBURSEMENT OF CONSTRUCTION LINE FUNDS AT RENEWAL. If, in
Bank's sole and absolute discretion, Bank agrees to extend the term of the
Construction Line, and the outstanding principal balance of the Construction
Line IS LESS than the original, principal Construction Line amount at the time
of the extension, then Bank may, in its sole and absolute discretion, but is not
obligated to, disburse sufficient Construction Line funds to increase the
outstanding principal balance of the Construction Line up the original,
principal amount of the Construction Line, provided that Borrower pledges to
Bank as additional security for the Construction Line liquid collateral in kind
and amount acceptable to Bank in its sole discretion and deposits the same in an
account with Bank. In connection with any such pledge of liquid collateral,
Borrower shall deliver to Bank any original securities or other instruments
evidencing the collateral and shall execute such security agreements,
assignments, powers-of-attorney, stock powers, endorsements, financing
statements or other documentation as Bank may require to establish and perfect
the security interest so granted by Borrower. Nothing contained herein shall
constitute Bank's agreement or commitment to renew the Construction Line.
IN WITNESS WHEREOF, Borrower and Bank have executed this Loan
Agreement as of the above written date.
Signed, sealed and delivered
in the presence of TRANSEASTERN PEMBROKE VILLAGES, INC.,
a Florida corporation
_____________________________________
Witness #1 By ____________________________(SEAL)
_____________________________________ Edward Falcone, Executive Vice
Print Name President
_____________________________________
Witness #2
_____________________________________
Print Name Address:
3300 University Drive
Coral Springs, Florida 33065
CHASE FEDERAL BANK, a Federal Savings
Bank, a Division of NATIONSBANK, N.A.
(SOUTH), a national banking
association
31
<PAGE>
_____________________________________
Witness #1 By ____________________________(SEAL)
James T. Webb, Real Estate Banking
_____________________________________ Officer
Print Name
_____________________________________
Witness #2 Address:
_____________________________________
Print Name 701 West Cypress Creek Road
Suite 101
Ft. Lauderdale, Florida 33309
32
<PAGE>
JOINDER OF GUARANTORS
The undersigned as Guarantor hereby joins in and consents to the
foregoing Loan Agreement.
_____________________________________
Witness #1
_____________________________________
Print Name
____________________________________
_____________________________________ Arthur Falcone
Witness #2
_____________________________________
Print Name
_____________________________________
Witness #1
_____________________________________
Print Name
____________________________________
_____________________________________ Edward Falcone
Witness #2
_____________________________________
Print Name
_____________________________________
Witness #1
_____________________________________
Print Name
____________________________________
_____________________________________ Philip Cucci
Witness #2
_____________________________________
Print Name
_____________________________________ Transeastern Properties, Inc., a
Witness #1 Florida corporation, f/k/a
Transeastern Properties of South,
Inc., a Florida corporation
_____________________________________
Print Name
By_____________________________(SEAL)
_____________________________________ Edward Falcone, Executive Vice
Witness #2 President
_____________________________________
Print Name
33
<PAGE>
EXHIBITS
1. Exhibit "A": Draw Sheets/Use of Proceeds
2. Exhibit "B": Partial Release
3. Exhibit "C": Intentionally Omitted
4. Exhibit "D": Percentage Completion Draw Schedule
5. Exhibit "E": Site Plans
6. Exhibit "F": Legal Description
34
<PAGE>
EXHIBIT "A" - DRAW SHEETS/USE OF PROCEEDS
NATIONSBANK, N.A. (SOUTH)
ACQUISITION AND DEVELOPMENT LOAN
REQUEST FOR FUNDING
PAGE 1 OF 2
BORROWER: ___________________________________________________________
SUBDIVISION: ___________________________________________________________
UNIT: ___________________________________________________________
TOTAL LOAN AMOUNT (COL. D): $ _____________________
TOTAL WORK IN PLACE (COL. E): $ _____________________
LESS RETAINAGE (COL. F): $ _____________________
TOTAL COMPLETED LESS RETAINAGE: $______________________
LESS PREVIOUS REQUESTS FOR FUNDING: $ _____________________
CURRENT FUNDING REQUEST (COL. H): $ _____________________
The above request is in accordance with terms of the Loan Agreement dated
__________________, and is certified that: 9a) The improvements on the above
listed property have been completed and are in place in accordance with the
plans & specifications, as submitted to and approved by Lender; (b) There are no
unpaid bills for labor, taxes and/or material for which liens may be filed upon
the date of this request; (c) All requirements of governmental agencies have
been fully complied with.
BORROWER:
<PAGE>
PAGE 2 OF 2
OBTAIN A COPY FROM BANK
<PAGE>
EXHIBIT B
PARTIAL RELEASES
1. PARTIAL RELEASES UNDER THE CONSTRUCTION LINE. Provided that
Borrower is not then in Default hereunder, under the Construction Line, the
Mortgage or any other Loan Document, Bank will provide partial releases of Units
from the lien of the Mortgage upon the following terms:
(a) If the partial release relates to developed lots in
connection with a bona fide sale or construction loan on which no home
construction advances have been made:
(i) Bank shall be given written notice of the request for
each partial release at least five (5) business days prior to
each partial release.
(ii) The cost of each partial release shall be paid by
Borrower.
(iii) Contemporaneously with the delivery to Borrower of
each partial release, Borrower shall prepay principal in an
amount equal to the amount advanced upon such lot plus accrued
interest thereon.
(b) If the partial release relates to Units for which advances of
Construction Line proceeds have been made, Borrower shall prepay
principal of the Construction Line in an amount equivalent to the
total actual amount advanced by Bank under the Construction Line on
account of the Unit to be released, together with interest accrued
thereon ("Unit Release Price") and the applicable Lot Release Price.
<PAGE>
EXHIBIT "C"
INTENTIONALLY OMITTED
<PAGE>
ONE STORY DRAW SHEET
(OBTAIN FROM BANK)
<PAGE>
TWO STORY DRAW SHEET
(OBTAIN FROM BANK)
<PAGE>
EXHIBIT "E"
SITE PLANS
<PAGE>
EXHIBIT "F"
LEGAL DESCRIPTION
<PAGE>
Borrower's Taxpayer
Identification No: 65-0653049
THIS IS A CONSOLIDATED RENEWAL PROMISSORY NOTE
(THE "CONSOLIDATED NOTE") TO CONSOLIDATE THE INDEBTEDNESS
REPRESENTED BY THE PROMISSORY NOTE DATED MARCH 29, 1996
("FIRST NOTE") AND THE DEMAND NOTE OF EVEN DATE HEREWITH
("DEMAND NOTE"). THE ORIGINAL FIRST NOTE AND DEMAND NOTE
ARE ATTACHED TO THIS CONSOLIDATED NOTE. INTANGIBLE TAXES AND
DOCUMENTARY STAMPS ON THE FIRST NOTE HAVE BEEN
AFFIXED TO THE MORTGAGE AND SECURITY AGREEMENT SECURING
THE FIRST NOTE. INTANGIBLE TAXES AND DOCUMENTARY
STAMPS ON THE DEMAND NOTE HAVE BEEN PAID IN CONNECTION WITH
THE RECORDING OF THE AMENDED AND RESTATED REAL ESTATE MORT-
GAGE, ASSIGNMENT AND SECURITY AGREEMENT SECURING THE
CONSOLIDATED NOTE.
CONSOLIDATED RENEWAL
PROMISSORY NOTE
$8,737,500.00 September ____, 1996
Fort Lauderdale, Florida
FOR VALUE RECEIVED, TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, (sometimes hereinafter referred to as the "undersigned" or the
"Borrower"), promises to pay to the order of CHASE FEDERAL BANK, A FEDERAL
SAVINGS BANK, A DIVISION OF NATIONSBANK, N.A. (SOUTH), a national banking
association, or any subsequent holder of this note ("Bank") at its principal
offices located at Suite 101, 701 West Cypress Creek Road, Fort Lauderdale,
Florida 33309, or such other place or places as Bank may designate) the
principal sum of EIGHT MILLION SEVEN HUNDRED THIRTY SEVEN THOUSAND FIVE HUNDRED
AND NO/100 DOLLARS ($8,737,500.00) or so much thereof as may be from time to
time outstanding, plus interest thereon at the Rate hereinafter defined, all in
accordance with the terms and conditions of this Promissory Note (the "Note")
and in accordance with the Loan Agreement by and between Borrower and Bank of
even date (the "Loan Agreement") . This Note is secured by a Real Estate
Mortgage, Assignment, and Security Agreement of even date filed or to be filed
for record in the public records of Broward County, Florida (the "Mortgage"),
Guaranty Agreements (the "Guaranty") of Transeastern Properties, Inc., a Florida
corporation, f/k/a Transeastern Properties of South Florida, Inc., a Florida
corporation, Arthur Falcone, Edward Falcone and Philip Cucci (the "Guarantor"),
UCC Financing Statements of even date filed or to be filed for record in the
public records of Broward County, Florida, and in the Office of the Secretary of
State of the State of Florida (the "Financing Statements") , and other
agreements by and between Borrower and Bank. The
<PAGE>
Mortgage, Guaranty, Financing Statements and such other agreements are
hereinafter referred to collectively as the "Security Documents" and the loan
evidenced thereby is hereinafter referred to as the "Loan." Terms used herein
but not otherwise defined hereunder are defined as set forth in the Security
Documents or the Loan Agreement. All of the terms, definitions, conditions and
covenants of the Security Documents or the Loan Agreement are expressly made a
part of this Note by reference in the same manner and with the same effect as if
set forth herein at length, and any holder of this Note is entitled to the
benefits of and remedies provided in the Security Documents or the Loan
Agreement.
A. PRIME RATE. For purposes hereof, "Prime Rate" means the fluctuating
rate of interest per annum established by Bank as its prime lending
rate in effect from time to time whether or not such rate shall be
otherwise published. Such Prime Rate is established by Bank as an
index or base rate and may or may not at any time be the best or
lowest rate of interest offered by Bank.
B. INTEREST. The outstanding Loan principal balance shall bear interest
at a variable rate per annum equal to the Prime Rate plus one (1.00%).
The interest rate hereunder shall be adjusted daily in accordance with
fluctuations in the Prime Rate. Interest shall be computed on the
basis of a daily amount of interest accruing on the daily outstanding
principal balance during a 360- day year multiplied by the actual
number of days the principal is outstanding during such applicable
interest period.
C. PAYMENT OF INTEREST. Interest accrued in accordance with this Note
shall be due and payable monthly, in arrears, on the FIRST day of each
month immediately following the calendar month for which said interest
has accrued. All accrued but unpaid interest and principal shall be
due and payable in full on the Maturity Date, as defined in Paragraph
6 below. All payments of principal and interest shall be made in
lawful currency of the United States of America which shall be legal
tender in payment of all debts, public and private, at the time of
payment.
D. PREPAYMENT. This Note may be prepaid in whole or in part at any time
without fee, premium or penalty. Any partial prepayment shall be
applied in accordance with paragraph 10 below and shall not postpone
the due date of any subsequent periodic installments or the Maturity
Date, or change the amount of such installments due, unless Bank shall
otherwise agree in writing.
E. LATE CHARGES. Should Borrower fail to pay the installments of interest
or principal (if applicable) on any due date provided for herein or
within ten (10) days thereafter, then Borrower further promises to pay
a late payment charge equal to five percent (5.0%) of the amount of
the unpaid installment as liquidated compensation to Bank for the
extra expense to Bank to process and administer the late payment,
Borrower agreeing, by execution hereof, that any other measure of
compensation for a late payment is speculative and impossible to
compute. This
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<PAGE>
provision for late charges shall not be deemed to extend the time for
payment or be a "grace period" or "cure period" that gives Borrower a
right to cure a Default or Default Condition. Imposition of late
charges is not contingent upon the giving of any notice or lapse of
any cure period provided for in the Mortgage and shall not be deemed a
waiver of any right or remedy of Bank, including without limitation,
acceleration of this Note.
F. MATURITY DATE. The then outstanding principal balance plus all accrued
but unpaid interest shall be due and payable on September 1, 1999 (the
"Maturity Date"). The Maturity Date shall be automatically extended
for two (2) additional three month (3) periods (the three (3) month
period hereafter referred to as the first three (3) month extension
referred to as the "First Renewal Period", the second three (3) month
extension referred to as the "Second Renewal Period", or either or
both referred to as a "Renewal Term") on the same terms and conditions
as are contained in this Note, commencing on the Maturity Date,
provided the following conditions have been satisfied:
1. Borrower and Guarantor are not in Default under the Loan and no
Default Condition exists;
2. There has been no material adverse change in the financial
condition of the Borrower or Guarantor;
3. Borrower, prior to the commencement of each Renewal Term remits
to Bank an additional non-refundable prorated origination fee of
one quarter of one percent (0.25%) of all outstanding and
unfunded committed Note amounts computed as of the Maturity Date;
4. An acceptable title endorsement has been submitted to Bank;
5. Borrower shall have provided Bank with an internally prepared
year end statement (including consolidating schedules) as well as
the most recent quarter end financial statements both in such
form as described in the Loan Agreement; and
6. With respect to the request for the first three (3) month
renewal, Borrower has provided written notice to Bank not later
than six (6) months prior to Maturity Date ("First Renewal"); and
pursuant to such notice, Bank, at its sole and absolute
discretion, not later than sixty (60) days following the First
Renewal Request Date ("Notification Date") has approved the first
extension and notified Borrower in writing of same. With respect
to the request for the second three (3) month renewal, Borrower
has provided written notice not later than three (3) months prior
to the Extended Maturity Date (the "Second Renewal Request Date")
and pursuant to such
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<PAGE>
notice, Bank at its sole and absolute discretion, not later than
thirty (30) days following the Second Renewal Request Date has
approved the extension and notified Borrower in writing of same.
If Bank notifies Borrower that it does not intend to grant the
Renewal Term by the Notification Date or if Bank does not notify
Borrower by the Notification Date that it will grant the Renewal Term,
the entire outstanding balance of the Note shall be due and payable on
the Maturity Date. If Borrower does not provide written notice to Bank
of its election to extend the Maturity Date on or before the Request
Date, the outstanding balance of the Note shall also be due and
payable in full on the Maturity Date. Bank's decision to grant the
Renewal Term shall be made by Bank in its sole and absolute discretion
and approval of the Renewal Term may be withheld for any reason. Bank
shall not be under any obligation to grant the Renewal Term. If the
Renewal Term is granted, such Renewal Term shall be on the same terms
and conditions as this Note and all of the terms and conditions of the
Security Documents and the Loan Agreement shall apply. If Borrower or
the Guarantor Defaults under the Loan between the Notification Date
and the Maturity Date, or if any of the foregoing terms and conditions
are not satisfied as required above, this Note shall be due and
payable in full on the Maturity Date. Borrower agrees to execute any
documents as Bank may reasonably request in connection with any
extension of the Maturity Date.
G. DEFAULT. Any failure of Borrower or any Guarantor to comply with any
term, covenant,or condition of this Note, including without
limitation, Borrower's failure to pay principal, interest, or expenses
when same shall become due or Default under the Security Documents or
Loan Agreement after any applicable cure period shall be deemed, at
the option of Bank, a Default under this Note. Any judgment rendered
on this Note shall bear interest at the Default Rate. Notwithstanding
the foregoing, Borrower shall have a ten (10) day grace period for the
payment of interest and expenses.
H. ACCELERATION. Upon the occurrence of a Default hereunder or under the
terms of any one or more of the Security Documents or the Loan
Agreement, Bank may declare the then outstanding principal and all
accrued but unpaid interest immediately due and payable and upon
acceleration and thereafter this Note shall bear interest at the
Default Rate, hereinafter defined, until all indebtedness evidenced
hereby and secured by the Security Documents has been paid in full.
Further, in the event of such acceleration, the Loan, and all other
indebtedness of Borrower to Bank arising out of or in connection with
the Loan shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are
hereby waived by Borrower. ANY JUDGMENT RENDERED ON THIS NOTE SHALL
BEAR INTEREST AT THE DEFAULT RATE (AS HEREIN DEFINED).
4
<PAGE>
I. DEFAULT RATE. After default, and following the expiration of any
applicable cure period, or maturity or upon acceleration, and
thereafter, the unpaid indebtedness then evidenced by this Note and
due under and secured by the Security Documents shall bear interest at
a fixed rate equal to the lesser of (a) the maximum rate then
permitted under applicable law, or (b) twenty percent (20.0%) per
annum.
J. APPLICATION OF PAYMENTS. All sums received by Bank for application to
the Loan may be applied by Bank to late charges, expenses, costs,
interest, principal, and other amounts owing to Bank in connection
with the Loan in the order selected by Bank in its sole discretion.
K. EXPENSES. In the event this Note is not paid when due on any stated or
accelerated maturity date, or should it be necessary for Bank to
enforce any other of its rights under this Note, the Loan Agreement,
or the Security Documents, Borrower will pay to Bank, in addition to
principal, interest and other charges due hereunder or under the Loan
Agreement or the Security Documents, all costs of collection or
enforcement, including reasonable attorneys' fees, paralegals' fees,
legal assistants' fees, costs and expenses, whether incurred with
respect to collection, arbitration, litigation, bankruptcy
proceedings, interpretation, dispute, negotiation, trial, appeal,
defense of actions instituted by a third party against Bank arising
out of or related to the Loan, enforcement of any judgment based on
this Note, or otherwise, whether or not a suit to collect such amounts
or to enforce such rights is brought or, if brought, is prosecuted to
judgment.
L. WAIVER. All persons now or at any time liable for payment of this
Note, whether directly or indirectly, including without limitation any
Guarantor, hereby waive presentment, protest, notice of protest and
dishonor. The undersigned expressly consents to any extensions and
renewals, in whole or in part, to the release of any or all Guarantors
or co-makers and any collateral security or portions thereof, given to
secure this Note, and all delays in time of payment or other
performance which Bank may grant, in its sole discretion, at any time
and from time to time without limitation all without any notice or
further consent of Borrower, and any such grant by Bank shall not be
deemed a waiver of any subsequent delay or any of Bank's rights
hereunder or under the Loan Agreement or the Security Documents.
M. USURY. In no event shall this or any other provision herein or in the
Loan Agreement or Security Documents, permit the collection of any
interest which would be usurious under the laws of the State of
Florida. If any such interest in excess of the maximum rate allowable
under applicable law has been collected, Borrower agrees that the
amount of interest collected above the maximum rate permitted by
applicable law, together with interest thereon at the rate required by
applicable law, shall be refunded to Borrower, and Borrower agrees to
accept
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<PAGE>
such refund, or, at Borrower's option, such refund shall be applied as
a principal payment hereunder.
N. MODIFICATION. This Note may not be changed orally, but only by an
agreement in writing signed by the Bank and Borrower.
O. APPLICABLE LAW. This Note shall be governed by and construed in
accordance with the laws of the State of Florida.
P. NOTICES. All notices or other communications required or permitted to
be given pursuant to the provisions of this Note shall be given in
accordance with the notice provisions of the Mortgage.
Q. SUCCESSORS AND ASSIGNS. As used herein, the terms "Borrower" and
"Bank" shall be deemed to include their respective heirs, personal
representatives, successors and assigns.
R. SEVERABILITY. In the event any one or more of the provisions of this
Note shall for any reason be held to be invalid, illegal, or
unenforceable, in whole or in part or in any respect, or in the event
that any one or more of the provisions of this Note operates or would
prospectively operate to invalidate this Note, then and in any of
those events, only such provision or provisions shall be deemed null
and void and shall not affect any other provision of this Note. The
remaining provisions of this Note shall remain operative and in full
force and effect and shall in no way be affected, prejudiced, or
disturbed thereby. In the event any provisions of this Note are
inconsistent with the provisions of the Loan Agreement, the Security
Documents, or any other agreements or documents executed in connection
with this Note, this Note shall control.
S. CAPTIONS; PRONOUNS. Captions are for reference only and in no way
limit the terms of this Note. The pronouns used in this instrument
shall be construed as masculine, feminine, or neuter as the occasion
may require. Use of the singular includes the plural, and vice versa.
T. BUSINESS DAY. Any reference herein or in the Loan Agreement or
Security Documents to a day or business day shall be deemed to refer
to a banking day which shall be a day on which Bank is open for the
transaction of business, excluding any national holidays, and any
performance which would otherwise be required on a day other than a
banking day shall be timely performed in such instance, if performed
on the next succeeding banking day. Notwithstanding such timely
performance, interest shall continue to accrue hereunder until such
payment or performance has been made.
6
<PAGE>
U. DISCLOSURE OF BORROWER AND GUARANTOR FINANCIAL INFORMATION. The owner
of this Note may, from time to time, sell or offer to sell the Loan
evidenced by this Note, or interests therein, to one or more assignees
or participants and is hereby authorized to disseminate any
information it has pertaining to the loan evidenced by this Note,
including, without limitation, any security for this Note and credit
information on Borrower, any of its principals and any Guarantor of
this Note, to any company affiliated with the owner of this Note, any
assignee or participant or prospective assignee or prospective
participant, and to the extent, if any, specified in any such
assignment or participation, such affiliated companies, assignee(s) or
participant(s) shall have the rights and benefits with respect to this
Note, the Security Documents or the Loan Agreement as such person(s)
would have if such person(s) were Bank hereunder. The Bank or its
successors and/or assigns as owner of this Note may also disclose any
such information to any regulatory body having jurisdiction over Bank.
V. MANDATORY ARBITRATION. Any controversy or claim between or among the
parties hereto including, but not limited to, those arising out of or
relating to this agreement or any related agreements or instruments,
including any claim based on or arising from an alleged tort, shall be
determined by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state law), the
Rules of Practice and Procedure for the Arbitration of Commercial
Disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.), and the "Special Rules" set forth below. In the event of
any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any
party to this agreement may bring an action, including a summary or
expedited proceeding, to compel arbitration of any controversy or
claim to which this agreement applies in any court having
jurisdiction' over such action.
1. Special Rules: The arbitration shall be conducted in Broward
County, Florida, and administered by Endispute, Inc., d/b/a
J.A.M.S./Endispute who will appoint an arbitrator; if
J.A.M.S./Endispute is unable or legally precluded from
administering the arbitration, then the American Arbitration
Association will serve. All arbitration hearings will be
commenced within 90 days of the demand for arbitration; further,
the arbitrator shall only, upon a showing of cause, be permitted
to extend the commencement of such hearing for up to an
additional 60 days.
2. Reservations of Rights: Nothing in this agreement shall be deemed
to (i) limit the applicability of any otherwise applicable
statutes of limitation or repose and any waivers contained in
this agreement; or (ii) be a waiver by the Bank of the protection
afforded to it by 12 U.S.C. Section 91 or any substantially
equivalent state law; or (iii) limit the right of the Bank hereto
(A) to exercise self help remedies such as (but not limited to)
setoff, or
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<PAGE>
(B) to foreclose against any real or personal property
collateral, or (C) to obtain from a court provisional or
ancillary remedies such as (but not limited to) injunctive relief
or the appointment of a receiver. The Bank may exercise such self
help rights, foreclose upon such property, or obtain such
provisional or ancillary remedies before, during or after the
pendency of any arbitration proceeding brought pursuant to this
agreement. At Bank's option, foreclosure under a mortgage or deed
of trust may be accomplished by any of the following: the
exercise of a power of sale under the deed of trust or mortgage,
or by judicial sale under the deed of trust or mortgage, or by
judicial foreclosure. Neither this exercise of self help remedies
nor the institution or maintenance of an action for foreclosure
or provisional or ancillary remedies shall constitute a waiver of
the right of any party, including the claimant in any such
action, to arbitrate the merits of the controversy or claim
occasioning resort to such remedies.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of
the day and year first above written.
TRANSEASTERN PEMBROKE VILLAGES,
INC., a Florida corporation
By _______________________(SEAL)
Edward Falcone, Executive
Vice President
Documentary Stamps in the amount of $12,556.25 have been paid and affixed to the
Real Estate Mortgage, Assignment and Security Agreement securing this Note.
8
<PAGE>
Borrower's Taxpayer
Identification No: 65-0653049
PROMISSORY NOTE
(REVOLVING LINE OF CREDIT)
$3,000,000.00
September ____, 1996
Fort Lauderdale, Florida
FOR VALUE RECEIVED, TRANSEASTERN PEMBROKE VILLAGES, INC., a Florida
corporation, (sometimes hereinafter referred to as the "undersigned" or the
"Borrower"), promises to pay to the order of CHASE FEDERAL BANK, A FEDERAL
SAVINGS BANK, NATIONSBANK, N.A. (SOUTH), a national banking association, or any
subsequent holder of this note ("Bank") at its principal offices located at
Suite 101, 701 West Cypress Creek Road, Fort Lauderdale, Florida 33309, or such
other place or places as Bank may designate) the principal sum of THREE MILLION
AND NO/100 DOLLARS ($3,000,000.00) or so much thereof as may be from time to
time outstanding, plus interest thereon at the Rate hereinafter defined, all in
accordance with the terms and conditions of this Promissory Note (Revolving line
of Credit) (the "Note") and in accordance with the Loan Agreement by and between
Borrower and Bank of even date (the "Loan Agreement") . This Note is secured by
a Real Estate Mortgage, Assignment, and Security Agreement of even date filed or
to be filed for record in the public records of Broward County, Florida (the
"Mortgage"), Guaranty Agreements (the "Guaranty") of Transeastern Properties,
Inc., a Florida corporation, f/k/a Transeastern Properties of South Florida,
Inc., a Florida corporation, Arthur Falcone, Edward Falcone and Philip Cucci
(the "Guarantor"), UCC Financing Statements of even date filed or to be filed
for record in the public records of Broward County, Florida, and in the Office
of the Secretary of State of the State of Florida (the "Financing Statements") ,
and other agreements by and between Borrower and Bank. The Mortgage, Guaranty,
Financing Statements and such other agreements are hereinafter referred to
collectively as the "Security Documents" and the loan evidenced thereby is
hereinafter referred to as the "Loan." Terms used herein but not otherwise
defined hereunder are defined as set forth in the Security Documents or the Loan
Agreement. All of the terms, definitions, conditions and covenants of the
Security Documents or the Loan Agreement are expressly made a part of this Note
by reference in the same manner and with the same effect as if set forth herein
at length, and any holder of this Note is entitled to the benefits of and
remedies provided in the Security Documents or the Loan Agreement. Subject to
the terms and conditions of this Note and the Security Documents, Bank shall
advance funds to Borrower pursuant to the terms of the Loan Agreement such that
Borrower may use the line of credit provided for by this Note by borrowing,
paying and repaying, in whole or in part, and reborrowing on a revolving basis,
up to a maximum principal sum of THREE MILLION AND NO/100 DOLLARS
($3,000,000.00) at any one time outstanding, the funds evidenced by this note.
<PAGE>
A. PRIME RATE. For purposes hereof, "Prime Rate" means the
fluctuating rate of interest per annum established by Bank as
its prime lending rate in effect from time to time whether or
not such rate shall be otherwise published. Such Prime Rate is
established by Bank as an index or base rate and may or may
not at any time be the best or lowest rate of interest offered
by Bank.
B. INTEREST. The outstanding Loan principal balance shall bear
interest at a variable rate per annum equal to the Prime Rate
plus one (1.00%). The interest rate hereunder shall be
adjusted daily in accordance with fluctuations in the Prime
Rate. Interest shall be computed on the basis of a daily
amount of interest accruing on the daily outstanding principal
balance during a 360- day year multiplied by the actual number
of days the principal is outstanding during such applicable
interest period.
C. PAYMENT OF INTEREST. Interest accrued in accordance with this
Note shall be due and payable monthly, in arrears, on the
FIRST day of each month immediately following the calendar
month for which said interest has accrued. All accrued but
unpaid interest and principal shall be due and payable in full
on the Maturity Date, as defined in Paragraph 6 below. All
payments of principal and interest shall be made in lawful
currency of the United States of America which shall be legal
tender in payment of all debts, public and private, at the
time of payment.
D. PREPAYMENT. This Note may be prepaid in whole or in part at
any time without fee, premium or penalty. Any partial
prepayment shall be applied in accordance with paragraph 10
below and shall not postpone the due date of any subsequent
periodic installments or the Maturity Date, or change the
amount of such installments due, unless Bank shall otherwise
agree in writing.
E. LATE CHARGES. Should Borrower fail to pay the installments of
interest or principal (if applicable) on any due date provided
for herein or within ten (10) days thereafter, then Borrower
further promises to pay a late payment charge equal to five
percent (5.0%) of the amount of the unpaid installment as
liquidated compensation to Bank for the extra expense to Bank
to process and administer the late payment, Borrower agreeing,
by execution hereof, that any other measure of compensation
for a late payment is speculative and impossible to compute.
This provision for late charges shall not be deemed to extend
the time for payment or be a "grace period" or "cure period"
that gives Borrower a right to cure a Default or Default
Condition. Imposition of late charges is not contingent upon
the giving of any notice or lapse of any cure period provided
for in the Mortgage and shall not be deemed a waiver of any
right or remedy of Bank, including without limitation,
acceleration of this Note.
F. MATURITY DATE. The then outstanding principal balance plus all
accrued but unpaid interest shall be due and payable on
September 1, 1999 (the "Maturity
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<PAGE>
Date"). The Maturity Date shall be automatically extended for
two (2) additional three month (3) periods (each three (3)
month period hereafter referred to as the "Renewal Term") on
the same terms and conditions as are contained in this Note,
commencing on the Maturity Date, provided the following
conditions have been satisfied:
1. Borrower and Guarantor are not in Default under the
Loan and no Default Condition exists;
2. There has been no material adverse change in the
financial condition of the Borrower or Guarantor;
3. Borrower, prior to the commencement of the Renewal
Term remits to Bank an additional non-refundable
prorated origination fee of one quarter of one
percent (0.25%) of all outstanding and unfunded
committed Note amounts computed as of the Maturity
Date;
4. An acceptable title endorsement has been submitted to
Bank;
5. Borrower shall have provided Bank with an internally
prepared year end statement (including consolidating
schedules) as well as the most recent quarter end
financial statements both in such form as described
in the Loan Agreement; and
6. With respect to the request for the first three (3)
month renewal, Borrower has provided written notice
to Bank not later than six (6) months prior to
Maturity Date ("First Renewal"); and pursuant to such
notice, Bank, at its sole and absolute discretion,
not later than sixty (60) days following the First
Renewal Request Date ("Notification Date") has
approved the first extension and notified Borrower in
writing of same. With respect to the request for the
second three (3) month renewal, Borrower has provided
written notice not later than three (3) months prior
to the Extended Maturity Date (the "Second Renewal
Request Date") and pursuant to such notice, Bank at
its sole and absolute discretion, not later than
thirty (30) days following the Second Renewal Request
Date has approved the extension and notified Borrower
in writing of same.
If Bank notifies Borrower that it does not intend to
grant the Renewal Term by the Notification Date or if Bank
does not notify Borrower by the Notification Date that it will
grant the Renewal Term, the entire outstanding balance of the
Note shall be due and payable on the Maturity Date. If
Borrower does not provide written notice to Bank of its
election to extend the Maturity Date on or before the Request
Date , the outstanding balance of the Note shall also be due
and payable in full on the Maturity Date. Bank's decision to
grant the
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<PAGE>
Renewal Term shall be made by Bank in its sole and absolute
discretion and approval of the Renewal Term may be withheld
for any reason. Bank shall not be under any obligation to
grant the Renewal Term. If the Renewal Term is granted, such
Renewal Term shall be on the same terms and conditions as this
Note and all of the terms and conditions of the Security
Documents and the Loan Agreement shall apply. If Borrower or
the Guarantor Defaults under the Loan between the Notification
Date and the Maturity Date, or if any of the foregoing terms
and conditions are not satisfied as required above, this Note
shall be due and payable in full on the Maturity Date.
Borrower agrees to execute any documents as Bank may
reasonably request in connection with any extension of the
Maturity Date.
G. DEFAULT. Any failure of Borrower or any Guarantor to comply
with any term, covenant,or condition of this Note, including
without limitation, Borrower's failure to pay principal,
interest, or expenses when same shall become due or Default
under the Security Documents or Loan Agreement after any
applicable cure period shall be deemed, at the option of Bank,
a Default under this Note. Any judgment rendered on this Note
shall bear interest at the Default Rate. Notwithstanding the
foregoing, Borrower shall have a ten (10) day grace period for
the payment of interest and expenses.
H. ACCELERATION. Upon the occurrence of a Default hereunder or
under the terms of any one or more of the Security Documents
or the Loan Agreement, Bank may declare the then outstanding
principal and all accrued but unpaid interest immediately due
and payable and upon acceleration and thereafter this Note
shall bear interest at the Default Rate, hereinafter defined,
until all indebtedness evidenced hereby and secured by the
Security Documents has been paid in full. Further, in the
event of such acceleration, the Loan, and all other
indebtedness of Borrower to Bank arising out of or in
connection with the Loan shall become immediately due and
payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by Borrower. ANY
JUDGMENT RENDERED ON THIS NOTE SHALL BEAR INTEREST AT THE
DEFAULT RATE (AS HEREIN DEFINED).
I. DEFAULT RATE. After default, and following the expiration of
any applicable cure period, or maturity or upon acceleration,
and thereafter, the unpaid indebtedness then evidenced by this
Note and due under and secured by the Security Documents shall
bear interest at a fixed rate equal to the lesser of (a) the
maximum rate then permitted under applicable law, or (b)
twenty percent (20.0%) per annum.
J. APPLICATION OF PAYMENTS. All sums received by Bank for
application to the Loan may be applied by Bank to late
charges, expenses, costs, interest, principal, and other
amounts owing to Bank in connection with the Loan in the order
selected by Bank in its sole discretion.
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<PAGE>
K. EXPENSES. In the event this Note is not paid when due on any
stated or accelerated maturity date, or should it be necessary
for Bank to enforce any other of its rights under this Note,
the Loan Agreement, or the Security Documents, Borrower will
pay to Bank, in addition to principal, interest and other
charges due hereunder or under the Loan Agreement or the
Security Documents, all costs of collection or enforcement,
including reasonable attorneys' fees, paralegals' fees, legal
assistants' fees, costs and expenses, whether incurred with
respect to collection, arbitration, litigation, bankruptcy
proceedings, interpretation, dispute, negotiation, trial,
appeal, defense of actions instituted by a third party against
Bank arising out of or related to the Loan, enforcement of any
judgment based on this Note, or otherwise, whether or not a
suit to collect such amounts or to enforce such rights is
brought or, if brought, is prosecuted to judgment.
L. WAIVER. All persons now or at any time liable for payment of
this Note, whether directly or indirectly, including without
limitation any Guarantor, hereby waive presentment, protest,
notice of protest and dishonor. The undersigned expressly
consents to any extensions and renewals, in whole or in part,
to the release of any or all Guarantors or co-makers and any
collateral security or portions thereof, given to secure this
Note, and all delays in time of payment or other performance
which Bank may grant, in its sole discretion, at any time and
from time to time without limitation all without any notice or
further consent of Borrower, and any such grant by Bank shall
not be deemed a waiver of any subsequent delay or any of
Bank's rights hereunder or under the Loan Agreement or the
Security Documents.
M. USURY. In no event shall this or any other provision herein
or in the Loan Agreement or Security Documents, permit the
collection of any interest which would be usurious under the
laws of the State of Florida. If any such interest in excess
of the maximum rate allowable under applicable law has been
collected, Borrower agrees that the amount of interest
collected above the maximum rate permitted by applicable law,
together with interest thereon at the rate required by
applicable law, shall be refunded to Borrower, and Borrower
agrees to accept such refund, or, at Borrower's option, such
refund shall be applied as a principal payment hereunder.
N. MODIFICATION. This Note may not be changed orally, but only
by an agreement in writing signed by the Bank and Borrower.
O. APPLICABLE LAW. This Note shall be governed by and construed
in accordance with the laws of the State of Florida.
P. NOTICES. All notices or other communications required or
permitted to be given pursuant to the provisions of this Note
shall be given in accordance with the notice provisions of the
Mortgage.
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Q. SUCCESSORS AND ASSIGNS. As used herein, the terms "Borrower"
and "Bank" shall be deemed to include their respective heirs,
personal representatives, successors and assigns.
R. SEVERABILITY. In the event any one or more of the provisions
of this Note shall for any reason be held to be invalid,
illegal, or unenforceable, in whole or in part or in any
respect, or in the event that any one or more of the
provisions of this Note operates or would prospectively
operate to invalidate this Note, then and in any of those
events, only such provision or provisions shall be deemed null
and void and shall not affect any other provision of this
Note. The remaining provisions of this Note shall remain
operative and in full force and effect and shall in no way be
affected, prejudiced, or disturbed thereby. In the event any
provisions of this Note are inconsistent with the provisions
of the Loan Agreement, the Security Documents, or any other
agreements or documents executed in connection with this Note,
this Note shall control.
S. CAPTIONS; PRONOUNS. Captions are for reference only and in no
way limit the terms of this Note. The pronouns used in this
instrument shall be construed as masculine, feminine, or
neuter as the occasion may require. Use of the singular
includes the plural, and vice versa.
T. BUSINESS DAY. Any reference herein or in the Loan Agreement
or Security Documents to a day or business day shall be deemed
to refer to a banking day which shall be a day on which Bank
is open for the transaction of business, excluding any
national holidays, and any performance which would otherwise
be required on a day other than a banking day shall be timely
performed in such instance, if performed on the next
succeeding banking day. Notwith- standing such timely
performance, interest shall continue to accrue hereunder until
such payment or performance has been made.
U. DISCLOSURE OF BORROWER AND GUARANTOR FINANCIAL INFORMATION.
The owner of this Note may, from time to time, sell or offer
to sell the Loan evidenced by this Note, or interests therein,
to one or more assignees or participants and is hereby
authorized to disseminate any information it has pertaining to
the loan evidenced by this Note, including, without
limitation, any security for this Note and credit information
on Borrower, any of its principals and any Guarantor of this
Note, to any company affiliated with the owner of this Note,
any assignee or participant or prospective assignee or
prospective participant, and to the extent, if any, specified
in any such assignment or participation, such affiliated
companies, assignee(s) or participant(s) shall have the rights
and benefits with respect to this Note, the Security Documents
or the Loan Agreement as such person(s) would have if such
person(s) were Bank hereunder. The Bank or its successors
and/or assigns as owner of this Note may also disclose any
such information to any regulatory body having jurisdiction
over Bank.
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<PAGE>
V. MANDATORY ARBITRATION. Any controversy or claim between or
among the parties hereto including, but not limited to, those
arising out of or relating to this agreement or any related
agreements or instruments, including any claim based on or
arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or
if not applicable, the applicable state law), the Rules of
Practice and Procedure for the Arbitration of Commercial
Disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.), and the "Special Rules" set forth below. In the
event of any inconsistency, the Special Rules shall control.
Judgment upon any arbitration award may be entered in any
court having jurisdiction. Any party to this agreement may
bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which
this agreement applies in any court having jurisdiction' over
such action.
1. Special Rules: The arbitration shall be conducted in
Broward County, Florida, and administered by
Endispute, Inc., d/b/a J.A.M.S./Endispute who will
appoint an arbitrator; if J.A.M.S./Endispute is
unable or legally precluded from administering the
arbitration, then the American Arbitration
Association will serve. All arbitration hearings will
be commenced within 90 days of the demand for
arbitration; further, the arbitrator shall only, upon
a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional
60 days.
2. Reservations of Rights: Nothing in this agreement
shall be deemed to (i) limit the applicability of any
otherwise applicable statutes of limitation or repose
and any waivers contained in this agreement; or (ii)
be a waiver by the Bank of the protection afforded to
it by 12 U.S.C. Section 91 or any substantially
equivalent state law; or (iii) limit the right of the
Bank hereto (A) to exercise self help remedies such
as (but not limited to) setoff, or (B) to foreclose
against any real or personal property collateral, or
(C) to obtain from a court provisional or ancillary
remedies such as (but not limited to) injunctive
relief or the appointment of a receiver. The Bank may
exercise such self help rights, foreclose upon such
property, or obtain such provisional or ancillary
remedies before, during or after the pendency of any
arbitration proceeding brought pursuant to this
agreement. At Bank's option, foreclosure under a
mortgage or deed of trust may be accomplished by any
of the following: the exercise of a power of sale
under the deed of trust or mortgage, or by judicial
sale under the deed of trust or mortgage, or by
judicial foreclosure. Neither this exercise of self
help remedies nor the institution or maintenance of
an action for foreclosure or provisional or ancillary
remedies shall constitute a waiver of the right of
any party, including the claimant in any such action,
to arbitrate the merits of the controversy or claim
occasioning resort to such remedies.
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<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
as of the day and year first above written.
TRANSEASTERN PEMBROKE VILLAGES,
INC., a Florida corporation
By _______________________________(SEAL)
Edward Falcone, Executive Vice President
Documentary Stamps in the amount of $10,500.00 have been paid and affixed to the
Real Estate Mortgage, Assignment and Security Agreement securing this Note.
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<PAGE>
Loan No. 91000839
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of September ___, 1996
(the"Guaranty") is executed by TRANSEASTERN PROPERTIES, INC., A FLORIDA
CORPORATION, F/K/A TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., A FLORIDA
CORPORATION, (the "Guarantor"), and extended to CHASE FEDERAL BANK, A F.S.B., A
DIVISION OF NATIONSBANK, N.A. (SOUTH), a national banking association ("Bank")
for the benefit of TRANSEASTERN PEMBROKE VILLAGES, INC., A FLORIDA CORPORATION,
a Florida limited partnership ("Borrower").
RECITALS:
1. Bank has agreed to extend a loan (the "Loan") to Borrower pursuant
to the terms and conditions of, among other documents, a Promissory Note in the
original principal amount of EIGHT MILLION SEVEN HUNDRED THIRTY SEVEN THOUSAND
FIVE HUNDRED AND NO/100 DOLLARS ($8,737,500.00) of even date herewith executed
and delivered by Borrower in favor of Bank (the "Note") and a Loan Agreement of
even date, by and between Borrower and Bank (the "Loan Agreement") for the
infrastructure development for two (2) parcels of land to be developed into 114
single family lots and 356 townhome lots in those certain projects known as
Egret's Way and Pelican Pointe located in Pembroke Pines, Florida (the
"Mortgaged Property") , which Loan is secured by a Real Estate Mortgage,
Assignment, and Security Agreement of even date filed or to be filed in the
public records of Broward County, Florida (the "Mortgage"), a Hazardous
Substance Certificate and Indemnification Agreement of even date between
Borrower, Guarantor and Bank (the "Indemnity") and other agreements to be
executed by the Borrower and Bank. The Mortgage, this Guaranty, the Indemnity
and the other agreements are hereinafter referred to collectively as the
"Security Documents". The Security Documents and the Loan Agreement are
hereinafter referred to collectively for convenience as the "Loan Documents".
2. Guarantor is a shareholder of TRANSEASTERN PEMBROKE VILLAGES, INC.,
a Florida corporation.
3. Without this Guaranty, Bank would be unwilling to make the Loan to
Borrower.
4. Because of the direct benefit to Guarantor from the Loan to
Borrower, and as an inducement to Bank to make the Loan to Borrower, Guarantor
agrees to guarantee to Bank the obligations of Borrower as set forth herein.
NOW, THEREFORE, in consideration of Bank entering into the Loan
Agreement and making the Loan to Borrower, and for other good and valuable
consideration by Borrower to Guarantor, the receipt and sufficiency of which is
hereby acknowledged by Guarantor, Guarantor hereby covenants and agrees as
follows:
<PAGE>
1. GUARANTY OF PAYMENT. Guarantor hereby unconditionally guarantees to
Bank the payment, when due, by acceleration or otherwise, of the Indebtedness.
For the purposes hereof, the term "Indebtedness" shall include any and all
indebtedness and obligations of Borrower to Bank, except as the Guarantor's
liability is specifically limited in the Loan Documents, including without
limitation, all principal , interest, fees and expenses, including attorneys'
fees, evidenced by the Note, the Loan Agreement, the Security Documents or
otherwise, or arising in connection with the Loan, whether existing now or
arising hereafter, as such Indebtedness may be modified, increased, extended or
renewed from time to time. The guaranty of Guarantor as set forth in this
section is a guaranty of payment and not of collection.
2. GUARANTY OF PERFORMANCE. Guarantor additionally unconditionally
guarantees to Bank the timely performance of all other obligations of Borrower
under all of the Loan Documents, including, without limiting the generality of
the foregoing, that:
(a) the Improvements will be constructed upon the Land in accordance
with the Loan Agreement and with the Plans; and
(b) the Improvements will be completed and ready for occupancy,
including delivery of any certificates, licenses, and permits required
by law or the Loan Agreement, within the time periods required in the
Loan Agreement.
In the event the foregoing obligations of Borrower are not timely
performed in any respect whatsoever, Guarantor, without the necessity of any
notice from Bank to Guarantor, agrees to (i) assume all responsibility for the
completion of the Improvements and, at Guarantor's own cost and expense, to
cause the Improvements to be fully completed in accordance with the Plans and in
accordance with the Loan Agreement; (ii) pay all bills, costs, and expenses in
connection with the construction and completion of the Improvements; and (iii)
indemnify and hold Bank harmless from any and all loss, cost, liability or
expense Bank may suffer by reason of any such acts or omissions of Borrower. If,
after the occurrence of a Default by Borrower, Guarantor has not caused
construction to progress as required by the Loan Agreement, Bank may, at its
option, after first having given notice to the Guarantor at the address set
forth below in the manner prescribed herein for giving notice, complete the
Improvements either before or after commencement of foreclosure proceedings or
before or after any other remedy of Bank against Borrower or Guarantor, with
such changes or modifications in the Plans which Bank reasonably deems necessary
and expend such sums as Bank, in its discretion, reasonably deems necessary and
proper in order to so complete the Improvements, and Guarantor hereby waives any
right to contest any such expenditures. The amount of any and all expenditures
made by Bank for the foregoing purposes shall be due and payable to Bank upon
demand and accrue interest at the rate then applicable under the Note (or that
would be applicable under the Note if it were still outstanding).
3. SUBORDINATION.
3.1 All rights and claims of Guarantor now or hereafter existing
(collectively the
2
<PAGE>
"Guarantor Claims") against Borrower or any of Borrower's
property which Borrower now owns or shall acquire in the future or hereafter
existing shall be subordinate and subject in right of payment to the prior
payment in full of the Indebtedness to Bank.
3.2 Until the Indebtedness has been paid in full and Guarantor shall
have performed or satisfied all of its obligations hereunder and provided no
Default exists, Guarantor may receive or collect, directly or indirectly, from
Borrower or any other party any payment upon Guarantor Claims, seek to realize
upon any collateral securing such Guarantor Claims or claim any offset or other
reduction of Guarantor's obligations hereunder because of any Guarantor Claims.
Notwithstanding the foregoing, only if a Default exists, if Guarantor should
receive any such payment, Guarantor agrees to hold same in trust for Bank and
agrees that Guarantor shall have absolutely no rights in or to or dominion over,
such payments except to pay them promptly to Bank without demand by Bank.
4. GUARANTOR WAIVERS. Guarantor hereby waives and agrees not to assert
or take advantage of (a) any right or claim of right to cause a marshaling of
any of Borrower's assets or the assets of any other party now or hereafter held
as security for the Indebtedness; (b) the defense of the statute of limitations
in any action hereunder or for the payment of the Indebtedness and performance
of any obligation hereby guaranteed; (c) any defense that may arise by reason of
the incapacity, lack of authority, death or disability of Guarantor, any other
guarantor of the Loan, or Borrower or any other person or entity, or the
voluntary or involuntary dissolution of Borrower or Guarantor, or the failure of
Bank to file or enforce a claim against the estate (either in administration,
bankruptcy, or any other proceeding) of Borrower or any other person or entity;
(d) any defense based on the failure of Bank to give notice of the existence,
creation, or incurring of any new or additional indebtedness or obligation, or
of any action or nonaction on the part of any other person whomsoever, or any
modification of the terms of the Loan Documents, or the Indebtedness, in
connection with any obligation hereby guaranteed; (e) any defense based upon an
election of remedies by Bank which destroys or otherwise impairs any subrogation
rights of Guarantor or any other guarantor of the Loan or the right of Guarantor
to proceed against Borrower or any other guarantor for reimbursement, or both;
(f) any defense based upon failure of Bank to commence an action against
Borrower; (g) any defense based upon acceptance of this Guaranty by Bank; (h)
any defense based upon the invalidity or unenforceability of any of the Loan
Documents; (i) any defense based upon any limitation of liability contained in
any of the Loan Documents unless specifically set forth therein; (j) any defense
based upon any transfer by Borrower of all or any part of the Collateral; (k)
any defense based upon the failure of Bank to perfect any security or to extend
or renew the perfection of any security; and (l) any other legal or equitable
defenses whatsoever to which Guarantor might otherwise be entitled.
5. CONSENT TO BANK'S ACTIONS OR INACTIONS. Guarantor consents that Bank
may, at any time and from time to time, before or after any Default by Borrower,
without affecting the liability of Guarantor hereunder and with or without
further notice to or assent from Guarantor:
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<PAGE>
5.1 Either with or without consideration to Borrower or to any
guarantor guaranteeing the completion of the Project or payment of any portion
of the Indebtedness, or any pledgor or grantor of any collateral, exchange,
release or surrender (in whole or in part), or fail to protect or to preserve
the value of any collateral now or hereafter held as security for the Loan, or
waive, release or subordinate any lien or security interest (in whole or in
part) in or on any such collateral;
5.2 Waive or delay the exercise of any of its rights or remedies
against Borrower or any other person or entity, including without limitation,
any guarantor guaranteeing the completion of the Project or payment of any
portion of the Indebtedness; notwithstanding any waiver or delay, Bank shall not
be precluded from further exercise of any of its rights, powers or privileges
expressly provided for herein or otherwise available, it being understood that
all such rights and remedies are cumulative;
5.3 Waive or extend the time from Borrower's or any other guarantor's
performance of any and all terms, provisions and conditions set forth in the
Loan Documents;
5.4 Release Borrower or any other person or entity, including without
limitation any other guarantor guaranteeing the completion of the Project or
payment of any portion of the Indebtedness, from their obligations to complete
the Project and/or from their obligations to repay all or any portion of the
Indebtedness;
5.5 Proceed against Guarantor without first proceeding against or
joining Borrower or any other guarantor guaranteeing the completion of the
Project or payment of any portion of the Indebtedness or any endorser of the
Note, or any property securing the payment of the Indebtedness;
5.6 Renew, extend or modify the terms of the Loan or any instrument or
agreement evidencing, securing, or relating to the Loan;
5.7 Generally deal with Borrower or other person or party or any
Collateral as Bank may see fit; and
5.8 Consent to any change in the Plans and/or the Improvements.
Guarantor shall remain bound under this Guaranty notwithstanding any
such exchange, release, surrender, subordination, waiver (whether or not such
waiver is oral or written), delay, proceeding, renewal, extension, modification,
act or failure to act, or other dealings described in Subsections 5.1 through
5.8 above, inclusive, including without limitation, any change in the Plans
and/or the Improvements even though done without notice to or consent from
Guarantor.
6. WAIVER OF NOTICE. Guarantor waives all notices whatsoever with
respect to the Loan Documents, including without limitation, this Guaranty, and
with respect to the Loan, including, but not limited to, notice of:
4
<PAGE>
6.1 Bank's acceptance of this Guaranty or its intention to act, or its
action, in reliance hereon;
6.2 The making of the Loan by Bank to Borrower;
6.3 Presentment and demand for payment of the Loan or any portion
thereof;
6.4 Protest and notice of dishonor or non-payment with respect to the
Loan or any portion thereof;
6.5 Any Default by Borrower or any pledgor, grantor of security, or any
other guarantor guaranteeing the completion of the Project and/or payment of any
portion of the Indebtedness;
6.6 Any other notices to which Guarantor may otherwise be entitled; and
6.7 Any demand for payment under this Guaranty.
7. PRIMARY LIABILITY OF GUARANTOR. Guarantor agrees that this Guaranty
may be enforced by Bank without the necessity at any time of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having resorted to recourse to the Note or the Collateral through
foreclosure proceedings under the Security Documents or otherwise, and Guarantor
hereby waives any rights to require Bank to proceed against Borrower or any
other guarantor or to require Bank to pursue any other remedy or enforce any
other right. Guarantor further agrees that Guarantor shall have no right of
subrogation, reimbursement or indemnity whatsoever, nor any right of recourse to
security for the Indebtedness or Borrower to Bank, unless and until all of the
Indebtedness of Borrower to Bank has been paid in full. Guarantor further agrees
that nothing contained herein shall prevent Bank from suing on the Note or
foreclosing the Mortgage or from exercising any other rights available to it
under any other Loan Documents, or any other instrument of security if there is
a Default by Borrower or Guarantor , and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute a
discharge of any of Guarantor's obligations hereunder; it being the purpose and
intent of Guarantor that Guarantor's obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither
Guarantor's obligations under this Guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of Borrower or any other guarantor or by reason of Borrower's or any
other guarantor's bankruptcy, insolvency, death, or dissolution. At any time
Bank is entitled to exercise its remedies hereunder, it may in its discretion
elect to demand payment or performance. In the event Bank elects to demand
performance, it shall at all times thereafter have the right to demand payment
until all of the Indebtedness has been paid in full. In the event Bank elects to
demand payment, it shall at all times thereafter have the right to demand
performance until all of the Indebtedness has been paid in full.
5
<PAGE>
8. SUBROGATION RIGHTS. Until the Loan is paid in full, Guarantor will
not assert any right to which it may be or may become entitled, whether by
subrogation, contribution or otherwise, against Borrower (except Guarantor's
right to receive a management fee and distribution of cash flow from Borrower
for so long as no Default exists) or any other guarantor guaranteeing the
completion of the Project or payment of any portion of the Indebtedness or
against any of their respective properties, by
reason of the performance by Guarantor of its obligations under this Guaranty,
except after completion of the Project and payment in full of the Indebtedness
in accordance with the Loan Agreement.
9. COST OF ENFORCEMENT. In the event that the Note or this Guaranty are
not paid when due after any applicable grace period on any stated or accelerated
maturity date, or should it be necessary for Bank to enforce any other of its
rights under the Loan Documents, Guarantor will pay to Bank, in addition to
principal, interest and other charges due hereunder or under the other Loan
Documents, all costs of collection or enforcement, including reasonable
attorneys' fees, paralegals' fees, legal assistants' fees, costs and expenses,
whether incurred with respect to collection, arbitration, litigation, bankruptcy
proceedings, interpretation, dispute, negotiation, trial, appeal, defense of
actions instituted by a third party against Bank arising out of or related to
the Loan, enforcement of any judgment based on this Guaranty, or otherwise,
whether or not a suit to collect such amounts or to enforce such rights is
brought or, if brought, is prosecuted to judgment.
10. GRANT. INTENTIONALLY DELETED
11. TERM OF GUARANTY; WARRANTIES. This Guaranty shall continue in full
force and effect until the Indebtedness is fully paid, and all obligations of
Borrower and Guarantor are performed and discharged. This Guaranty covers the
Indebtedness whether presently outstanding or arising subsequent to the date
hereof including all amounts advanced by Bank in stages or installments.
Guarantor warrants and represents to Bank, (i) that this Guaranty is binding
upon and enforceable against Guarantor, its heirs, personal representatives,
executors, successors, and assigns in accordance with its terms, (ii) that the
execution and delivery of this Guaranty do not violate any applicable laws or
constitute a breach of any agreement to which Guarantor is a party, (iii) that
there is no litigation, claim, action or proceeding pending or, to the best
knowledge of Guarantor, threatened against Guarantor which would adversely
affect the financial condition of Guarantor or its ability to fulfill its
obligations hereunder. Guarantor agrees to promptly inform Bank of the adverse
determination of any litigation, claim, action or proceeding or the institution
of any litigation, claim, action or proceeding against Guarantor which does or
could adversely affect the financial condition of Guarantor or its ability to
fulfill its obligations hereunder.
12. FURTHER REPRESENTATIONS AND WARRANTIES. Guarantor further
represents to Bank that Guarantor has knowledge of Borrower's financial
condition and affairs and represents and agrees that it will keep so informed
while this Guaranty is in force. Guarantor agrees that Bank has no present or
future obligation to investigate the financial condition or affairs of Borrower
for the benefit of Guarantor nor to advise Guarantor of any fact respecting, or
any change in,
6
<PAGE>
the financial condition or affairs of Borrower or any other
guarantor of the Loan which might come to the knowledge of Bank at any time,
whether or not Bank knows or believes or has reason to know or believe that any
such fact or change is unknown to Guarantor or might (or does) increase the risk
of Guarantor as guarantor or might (or would) affect the willingness of
Guarantor to continue as a guarantor with respect to the Indebtedness.
13. FINANCIAL STATEMENTS. Guarantor shall submit annual financial
statements to Bank within one hundred twenty (120) days of each June 30th of the
Loan, and interim financial statements to Bank within thirty (30) days after
Bank has requested same in writing. The statements shall include, at a minimum,
the following current items: a balance sheet, an income and expense statement, a
statement showing contingent liabilities, detailed information regarding project
sales and construction status on each project and/or entity in which Guarantor
has an interest and any supporting schedules or documentation which Bank may
require. Such detailed statements shall include, as applicable, the project
name, location, percentage of Guarantor's ownership interest, leasing status,
net operating income, current loan balance, debt service, source of any
operating deficit, amount of and beneficiary of any cash distributions, and the
amount of cash invested in or received from that enterprise. Each statement
shall bear an authorized signature attesting to the accuracy of the statement.
Annual statements of business entities shall be audited and bear the unqualified
opinion of an acceptable certified public accountant. Guarantor shall also
provide Bank with current year personal tax returns within thirty (30) days of
filing.
14. ADDITIONAL LIABILITY OF GUARANTOR. If Guarantor is or becomes
liable for any indebtedness owing by Borrower to Bank by endorsement or
otherwise than under this Guaranty, such liability shall not be in any manner
impaired or reduced hereby but shall have all and the same force and effect it
would have had if this Guaranty had not existed and Guarantor's liability
hereunder shall not be in any manner impaired or reduced thereby.
15. CUMULATIVE RIGHTS. All rights of Bank hereunder or otherwise
arising under any documents executed in connection with or as security for the
Indebtedness are separate and cumulative and may be pursued separately,
successively or concurrently, or not pursued without affecting, reducing or
limiting any other right of Bank and without affecting, reducing or impairing
the liability of Guarantor.
16. MULTIPLE COUNTERPARTS; PRONOUNS; CAPTIONS; SEVERABILITY. This
Guaranty may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute but one and the same document. The
pronouns used in this instrument shall be construed as masculine, feminine or
neuter as the occasion may require. Use of the singular includes the plural, and
vice versa. Captions are for reference only and in no way limit the terms of
this Guaranty. Invalidation of any one
or more of the provisions of this Guaranty shall in no way affect any of the
other provisions hereof, which shall remain in full force and effect. Use of the
term "include" or "including" is always without limitation. "Person" or "party"
means any natural person or artificial entity having legal capacity.
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<PAGE>
17. BANK ASSIGNS. This Guaranty is intended for and shall inure to the
benefit of Bank and each and every person who shall from time to time be or
become the owner or holder of any document evidencing or securing the
Indebtedness, and each and every reference herein to Bank shall include and
refer to each and every successor or assignee of Bank at any time holding or
owning any part of or interest in any part of the Indebtedness. This Guaranty
shall be transferable and negotiable with the same force and effect, and to the
same extent, that any document evidencing or securing all or any portion of the
Indebtedness is transferable and negotiable, it being understood and stipulated
that upon assignment or transfer by Bank of any of the Indebtedness, the legal
holder or owner of said Indebtedness (or a part thereof or interest therein thus
transferred or assigned by Bank) shall (except as otherwise stipulated by Bank
in its assignment) have and may exercise all of the rights granted to Bank under
this Guaranty to the extent of that part of or interest in the Indebtedness thus
assigned or transferred to said person. Guarantor expressly waives notice of
transfer or assignment of the Indebtedness, or any part thereof, or of the
rights of Bank hereunder. Failure to give notice will not affect the liabilities
of Guarantor hereunder. Bank may sell or offer to sell the Loan or interests in
the Loan to one or more assignees or participants and may disclose to any such
assignee or participant or prospective assignee or participant any information
Lender has pertaining to the Guaranteed Obligations, this Guaranty, or
Guarantor, including, without limitation, information regarding any security for
the Guaranteed obligations or any other party liable, directly or indirectly,
for any part of the Guaranteed Obligations. Bank may also disclose any such
information to any regulatory body having jurisdiction over Bank.
18. APPLICATION OF PAYMENTS. Bank may apply any payments received by it
from any source against that portion of the Indebtedness (principal, interest,
court costs, attorneys' fees or other) in such priority and fashion as it may
deem appropriate.
19. NOTICES. Any notice or demand that must or may be given or made in
connection with this Guaranty must be in writing and, unless receipt is
expressly required, will be deemed given, delivered or made, as the case may be,
when delivered by personal delivery or the day after it is mailed by Express
Mail, by overnight delivery service of a nationally-recognized company,
addressed to the parties at the following addresses, or such other addresses as
may from time to time be designated by written notice given as herein required:
to Guarantor:
Arthur Falcone
Transeastern Pembroke Villages, Inc.
3300 University Drive, Coral Springs, FL 33065
to Bank:
NationsBank of Florida, N.A.
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<PAGE>
701 W. Cypress Creek Road, Suite 101
Fort Lauderdale, FL 33309
Attention: James T. Webb, Real Estate Banking Officer
Personal delivery to a party or to any officer, partner, agent or employee of
such party, or if a proper person, to a member of his family, at its address
herein shall constitute receipt. Rejection or other refusal to accept or
inability to deliver because of changed address of which no notice has been
received shall also constitute receipt. Notwithstanding the foregoing, no notice
of change of address shall be effective until the date of receipt thereof. This
section shall not be construed in any way to affect or impair any waiver of
notice or demand herein provided or to require giving of notice or demand to or
upon Guarantor in any situation or for any reason.
20. CONFLICT OF LAW. This Guaranty shall be construed, interpreted,
enforced and governed by and in accordance with the laws of the State of
Florida.
21. SUBMISSION TO JURISDICTION. Guarantor irrevocably and
unconditionally (a) agrees that any suit, action or other legal proceeding
arising out of or relating to this Guaranty may be brought, at the option of
Bank, in a court of competent jurisdiction of the State of Florida or any United
States District Court in Florida; (b) consents to the jurisdiction of each such
court in any such suit, action or proceeding; (c) waives any and all personal
rights under the laws of any state to object to the laying of venue of any such
suit, action or proceeding in the State of Florida; and (d) agrees that service
of any court paper may be effected on Guarantor by mail, addressed and mailed as
provided in Section 19 hereof or in such other manner as may be provided under
applicable laws or court rules in the State of Florida. Nothing contained
herein, however, shall prevent Bank from bringing an action or exercising any
rights against any security for the Loan or against Guarantor personally, and
against any property of Guarantor, within any other state. Initiating such
proceeding or taking such action in any other state shall in no event constitute
a waiver of the agreement contained herein that the law of the State of Florida
shall govern the rights and obligations of Guarantor and Bank hereunder or of
the submission herein made by Guarantor to personal jurisdiction within the
State of Florida. The aforesaid means of obtaining personal jurisdiction and
perfecting service of process are not intended to be exclusive but are
cumulative and in addition to all other means of obtaining personal jurisdiction
and perfecting service of process now or hereafter provided by the law of the
State of Florida.
22. WAIVER OF HOMESTEAD. Guarantor waives any and all homestead
and exemption rights which it may have under or by virtue of the Constitution or
the laws of the United States of America or of any state as against this
Guaranty, any renewal hereof, or any indebtedness represented hereby, and does
jointly and severally transfer, convey, and assign to Bank a sufficient amount
of such homestead or exemption as may be allowed, including such homestead or
exemption as may be set apart in bankruptcy, to pay all amounts due hereunder in
full, with all costs of collection, and does hereby direct any trustee in
bankruptcy having possession of such homestead or exemption to deliver to Bank a
sufficient amount of property or money set apart as exempt to pay the
indebtedness guaranteed hereby, or any renewal thereof, and does
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<PAGE>
hereby appoint Bank the attorney-in-fact for each of them, to claim any and all
homestead exemptions allowed by law.
23. CONTINUING LIABILITY. Notwithstanding any other provisions of this
Guaranty, the Indebtedness shall be deemed to include any and all liability,
damage, cost and expense, including reasonable attorneys' fees, paralegals' fees
and legal assistants' fees, which may hereafter be incurred by Bank as a result
of the Mortgaged Property:
(a) having been used in the past or present or being used in the
future while the Mortgaged Property is owned by Borrower, for the sale,
handling, storage, transportation, or disposal of hazardous or toxic materials,
in violation of any Governmental Requirements in effect from time to time
regulating hazardous or toxic materials or the Mortgaged Property; or
(b) having contained or hereafter containing, while the Mortgaged
Property is owned by Borrower, asbestos or products containing asbestos in
violation of any laws, ordinances, or regulations of any Governmental
Authorities affecting asbestos or products containing asbestos or the Mortgaged
Property.
Except as Guarantor's liability is specifically limited in the Loan
Documents, it is expressly acknowledged by Guarantor that this indemnification
shall survive in accordance with the terms and conditions set forth in the
Hazardous Substance Certificate and Indemnification Agreement of even date
herewith executed by the Guarantor and Borrower.
24. DISCLOSURE OF BORROWER AND GUARANTOR FINANCIAL INFORMATION. Bank
may sell or offer to sell the Loan or interests in the Loan to one or more
assignees or participants and may disclose to any such assignee or participant
or prospective assignee or participant any information Bank has pertaining to
the Loan Documents, this Guaranty, or Guarantor, including, without limitation,
information regarding any security for the Loan Documents or for this Guaranty,
credit information on Guarantor, Borrower, and/or any other party liable,
directly or indirectly, for any part of the Loan Documents. Bank may also
disclose any such information to any regulatory body having jurisdiction over
Bank.
25. ORAL MODIFICATION INEFFECTIVE. This Guaranty may not be changed
orally, and no obligation of Guarantor can be released or waived by Bank or any
officer or agent of Bank, except by a writing signed by a duly authorized
officer of Bank. This Guaranty shall be irrevocable by Guarantor until the
Indebtedness has been completely repaid and all obligations and undertakings of
Borrower under, by reason of, or pursuant to the Loan Documents have been
completely performed, at which time Bank will terminate this Guaranty. This
Guaranty shall continue in full force and effect unless and until discharged or
released by Bank pursuant to a written instrument properly executed by an
appropriate officer of Bank. This Guaranty shall continue in full force and
effect unless and until discharged or released by Bank pursuant to a written
instrument properly executed by an appropriate officer of Bank.
26. REFERENCE TO OTHER LOAN DOCUMENTS. All of the terms,
definitions, conditions
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and covenants of the Loan Agreement, the Note, the
Mortgage, and the Assignment are expressly made a part of this Guaranty by
reference in the same manner and with the same effect as if set forth herein at
length and shall have the meaning set forth in the Loan Agreement, the Note, the
Mortgage, and the Assignment unless otherwise defined herein.
27. MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including, but not limited to, those arising out of or
relating to this Agreement or any related agreements or instruments, including
any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and
Mediations Services, Inc. (J.A.M.A.S.), and the "Special Rules" set forth below.
In the event of any inconsistency, the Special Rules shall control. Judgment
upon any arbitration award may be entered in any court having jurisdiction. Any
party to this Agreement may bring an action, including a summary or expedited
proceeding, to compel arbitration of any controversy or claim to which this
Agreement applies in any court having jurisdiction over such action.
(a) Special Rules: The arbitration shall be conducted in Broward
County, Florida and administered by Endispute, Inc., d/b/a J.A.M.S./Endispute
who will appoint an arbitrator; if J.A.M.S./Endispute is unable or legally
precluded from administering the arbitration, then the American Arbitration
Association will serve. All arbitration hearings will be commenced within 90
days of the demand for arbitration; further, the arbitrator shall only, upon a
showing of cause, be permitted to extend the commencement of such hearing for up
to an additional 60 days.
(b) Reservations of Rights: Nothing in this Agreement shall be
deemed to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (ii) be a
waiver by the Bank of the protection afforded to it by 12 U.S.C. Section 91 or
any substantially equivalent state law; or (iii) limit the right of the Bank
hereto (A) to exercise self help remedies such as (but not limited to) setoff,
or (B) to foreclose against any real or personal property collateral, or (C) to
obtain from a court provisional or ancillary remedies such as (but not limited
to) injunctive relief or the appointment of a receiver. The Bank may exercise
such self help rights, foreclose upon such property, or obtain such provisional
or ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Agreement. At Bank's option, foreclosure
under a mortgage or deed of trust may be accomplished by any of the following:
the exercise of a power of sale under the deed of trust or mortgage, or by
judicial sale under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or maintenance
of an action for foreclosure or provisional or ancillary remedies shall
constitute a waiver of the right of any party, including the claimant in any
such action, to arbitrate the merits of the controversy or claim occasioning
resort to such remedies.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as of
the day and year first above written.
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Signed, sealed and delivered
in the presence of: TRANSEASTERN PROPERTIES, INC.,
A FLORIDA CORPORATION, F/K/A TRANSEASTERN
PROPERTIES OF SOUTH FLORIDA, INC., A
FLORIDA CORPORATION
____________________________________
Witness #1 By_________________________________(SEAL)
____________________________________ Edward Falcone, Executive Vice President
____________________________________
Print Name
____________________________________ Address:
Witness #1
3300 University Drive
____________________________________ Coral Springs, Florida 33065
Print Name
STATE OF FLORIDA )
)ss
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this ____ day of
September, 1996, by EDWARD FALCONE, as EXECUTIVE VICE President of TRANSEASTERN
PROPERTIES INC., a Florida corporation, f/k/a Transeastern Properties of South
Florida, Inc., a Florida corporation, by and on behalf the corporation. He is
personally known to me and/or has produced ________________________________ as
identification.
My Commission Expires: ___________________________________________
NOTARY PUBLIC STATE OF FLORIDA
___________________________________________
Print Name
<PAGE>
Loan No. 91004439
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of September ___, 1996
(the "Guaranty") is executed by TRANSEASTERN PROPERTIES, INC., A FLORIDA
CORPORATION, F/K/A TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., A FLORIDA
CORPORATION (the "Guarantor"), and extended to CHASE FEDERAL BANK, A FEDERAL
SAVINGS BANK, A DIVISION OF NATIONSBANK, N.A. (SOUTH), a national banking
association ("Bank") for the benefit of TRANSEASTERN PEMBROKE VILLAGES, INC., A
FLORIDA CORPORATION, a Florida limited partnership ("Borrower").
RECITALS:
1. Bank has agreed to extend a loan (the "Loan") to Borrower
pursuant to the terms and conditions of, among other documents, a Promissory
Note in the original principal amount of THREE MILLION FOUR HUNDRED THOUSAND AND
NO/100 DOLLARS ($3,400,000.00) of even date herewith executed and delivered by
Borrower in favor of Bank (the "Note") and a Loan Agreement of even date, by and
between Borrower and Bank (the "Loan Agreement") for the construction of of up
to 356 townhomes in that certain project known as Pelican Pointe located in
Pembroke Pines, Florida (the "Mortgaged Property") , which Loan is secured by a
Real Estate Mortgage, Assignment, and Security Agreement of even date filed or
to be filed in the public records of Broward County, Florida (the "Mortgage"), a
Hazardous Substance Certificate and Indemnification Agreement of even date
between Borrower, Guarantor and Bank (the "Indemnity") and other agreements to
be executed by the Borrower and Bank. The Mortgage, this Guaranty, the Indemnity
and the other agreements are hereinafter referred to collectively as the
"Security Documents". The Security Documents and the Loan Agreement are
hereinafter referred to collectively for convenience as the "Loan Documents".
2. Guarantor is a shareholder of TRANSEASTERN PEMBROKE VILLAGES,
INC., a Florida corporation.
3. Without this Guaranty, Bank would be unwilling to make the
Loan to Borrower.
4. Because of the direct benefit to Guarantor from the Loan to
Borrower, and as an inducement to Bank to make the Loan to Borrower, Guarantor
agrees to guarantee to Bank the obligations of Borrower as set forth herein.
NOW, THEREFORE, in consideration of Bank entering into the Loan
Agreement and making the Loan to Borrower, and for other good and valuable
consideration by Borrower to Guarantor, the receipt and sufficiency of which is
hereby acknowledged by Guarantor, Guarantor hereby covenants and agrees as
follows:
1. GUARANTY OF PAYMENT. Guarantor hereby unconditionally
guarantees to Bank the payment, when due, by acceleration or otherwise, of the
Indebtedness. For the purposes hereof,
<PAGE>
the term "Indebtedness" shall include any and all indebtedness and obligations
of Borrower to Bank, except as the Guarantor's liability is specifically limited
in the Loan Documents, including without limitation, all principal , interest,
fees and expenses, including attorneys' fees, evidenced by the Note, the Loan
Agreement, the Security Documents or otherwise, or arising in connection with
the Loan, whether existing now or arising hereafter, as such Indebtedness may be
modified, increased, extended or renewed from time to time. The guaranty of
Guarantor as set forth in this section is a guaranty of payment and not of
collection.
2. GUARANTY OF PERFORMANCE. Guarantor additionally
unconditionally guarantees to Bank the timely performance of all other
obligations of Borrower under all of the Loan Documents, including, without
limiting the generality of the foregoing, that:
(a) the Improvements will be constructed upon the Land in
accordance with the Loan Agreement and with the Plans; and
(b) the Improvements will be completed and ready for
occupancy, including delivery of any certificates, licenses, and permits
required by law or the Loan Agreement, within the time periods required in the
Loan Agreement.
In the event the foregoing obligations of Borrower are not timely
performed in any respect whatsoever, Guarantor, without the necessity of any
notice from Bank to Guarantor, agrees to (i) assume all responsibility for the
completion of the Improvements and, at Guarantor's own cost and expense, to
cause the Improvements to be fully completed in accordance with the Plans and in
accordance with the Loan Agreement; (ii) pay all bills, costs, and expenses in
connection with the construction and completion of the Improvements; and (iii)
indemnify and hold Bank harmless from any and all loss, cost, liability or
expense Bank may suffer by reason of any such acts or omissions of Borrower. If,
after the occurrence of a Default by Borrower, Guarantor has not caused
construction to progress as required by the Loan Agreement, Bank may, at its
option, after first having given notice to the Guarantor at the address set
forth below in the manner prescribed herein for giving notice, complete the
Improvements either before or after commencement of foreclosure proceedings or
before or after any other remedy of Bank against Borrower or Guarantor, with
such changes or modifications in the Plans which Bank reasonably deems necessary
and expend such sums as Bank, in its discretion, reasonably deems necessary and
proper in order to so complete the Improvements, and Guarantor hereby waives any
right to contest any such expenditures. The amount of any and all expenditures
made by Bank for the foregoing purposes shall be due and payable to Bank upon
demand and accrue interest at the rate then applicable under the Note (or that
would be applicable under the Note if it were still outstanding).
3. SUBORDINATION.
3.1 All rights and claims of Guarantor now or hereafter existing
(collectively the "Guarantor Claims") against Borrower or any of Borrower's
property which Borrower now owns or shall acquire in the future or hereafter
existing shall be subordinate and subject in right of
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<PAGE>
payment to the prior payment in full of the Indebtedness to Bank.
3.2 Until the Indebtedness has been paid in full and Guarantor
shall have performed or satisfied all of its obligations hereunder and provided
no Default exists, Guarantor may receive or collect, directly or indirectly,
from Borrower or any other party any payment upon Guarantor Claims, seek to
realize upon any collateral securing such Guarantor Claims or claim any offset
or other reduction of Guarantor's obligations hereunder because of any Guarantor
Claims. Notwithstanding the foregoing, only if a Default exists, if Guarantor
should receive any such payment, Guarantor agrees to hold same in trust for Bank
and agrees that Guarantor shall have absolutely no rights in or to or dominion
over, such payments except to pay them promptly to Bank without demand by Bank.
4. GUARANTOR WAIVERS. Guarantor hereby waives and agrees not to
assert or take advantage of (a) any right or claim of right to cause a
marshaling of any of Borrower's assets or the assets of any other party now or
hereafter held as security for the Indebtedness; (b) the defense of the statute
of limitations in any action hereunder or for the payment of the Indebtedness
and performance of any obligation hereby guaranteed; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of
Guarantor, any other guarantor of the Loan, or Borrower or any other person or
entity, or the voluntary or involuntary dissolution of Borrower or Guarantor, or
the failure of Bank to file or enforce a claim against the estate (either in
administration, bankruptcy, or any other proceeding) of Borrower or any other
person or entity; (d) any defense based on the failure of Bank to give notice of
the existence, creation, or incurring of any new or additional indebtedness or
obligation, or of any action or nonaction on the part of any other person
whomsoever, or any modification of the terms of the Loan Documents, or the
Indebtedness, in connection with any obligation hereby guaranteed; (e) any
defense based upon an election of remedies by Bank which destroys or otherwise
impairs any subrogation rights of Guarantor or any other guarantor of the Loan
or the right of Guarantor to proceed against Borrower or any other guarantor for
reimbursement, or both; (f) any defense based upon failure of Bank to commence
an action against Borrower; (g) any defense based upon acceptance of this
Guaranty by Bank; (h) any defense based upon the invalidity or unenforceability
of any of the Loan Documents; (i) any defense based upon any limitation of
liability contained in any of the Loan Documents unless specifically set forth
therein; (j) any defense based upon any transfer by Borrower of all or any part
of the Collateral; (k) any defense based upon the failure of Bank to perfect any
security or to extend or renew the perfection of any security; and (l) any other
legal or equitable defenses whatsoever to which Guarantor might otherwise be
entitled.
5. CONSENT TO BANK'S ACTIONS OR INACTIONS. Guarantor consents
that Bank may, at any time and from time to time, before or after any Default by
Borrower, without affecting the liability of Guarantor hereunder and with or
without further notice to or assent from Guarantor:
5.1 Either with or without consideration to Borrower or to any
guarantor guaranteeing the completion of the Project or payment of any portion
of the Indebtedness, or any pledgor or
3
<PAGE>
grantor of any collateral, exchange, release or surrender (in whole or in part),
or fail to protect or to preserve the value of any collateral now or hereafter
held as security for the Loan, or waive, release or subordinate any lien or
security interest (in whole or in part) in or on any such collateral;
5.2 Waive or delay the exercise of any of its rights or remedies
against Borrower or any other person or entity, including without limitation,
any guarantor guaranteeing the completion of the Project or payment of any
portion of the Indebtedness; notwithstanding any waiver or delay, Bank shall not
he precluded from further exercise of any of its rights, powers or privileges
expressly provided for herein or otherwise available, it being understood that
all such rights and remedies are cumulative;
5.3 Waive or extend the time from Borrower's or any other
guarantor's performance of any and all terms, provisions and conditions set
forth in the Loan Documents;
5.4 Release Borrower or any other person or entity, including
without limitation any other guarantor guaranteeing the completion of the
Project or payment of any portion of the Indebtedness, from their obligations to
complete the Project and/or from their obligations to repay all or any portion
of the Indebtedness;
5.5 Proceed against Guarantor without first proceeding against
or joining Borrower or any other guarantor guaranteeing the completion of the
Project or payment of any portion of the Indebtedness or any endorser of the
Note, or any property securing the payment of the Indebtedness;
5.6 Renew, extend or modify the terms of the Loan or any
instrument or agreement evidencing, securing, or relating to the Loan;
5.7 Generally deal with Borrower or other person or party or any
Collateral as Bank may see fit; and
5.8 Consent to any change in the Plans and/or the Improvements.
Guarantor shall remain bound under this Guaranty notwithstanding any
such exchange, release, surrender, subordination, waiver (whether or not such
waiver is oral or written), delay, proceeding, renewal, extension, modification,
act or failure to act, or other dealings described in Subsections 5.1 through
5.8 above, inclusive, including without limitation, any change in the Plans
and/or the Improvements even though done without notice to or consent from
Guarantor.
6. WAIVER OF NOTICE. Guarantor waives all notices whatsoever
with respect to the Loan Documents, including without limitation, this Guaranty,
and with respect to the Loan, including, but not limited to, notice of:
6.1 Bank's acceptance of this Guaranty or its intention to act, or
its action, in reliance
4
<PAGE>
hereon;
6.2 The making of the Loan by Bank to Borrower;
6.3 Presentment and demand for payment of the Loan or any portion
thereof;
6.4 Protest and notice of dishonor or non-payment with respect to
the Loan or any portion thereof;
6.5 Any Default by Borrower or any pledgor, grantor of security,
or any other guarantor guaranteeing the completion of the Project and/or payment
of any portion of the Indebtedness;
6.6 Any other notices to which Guarantor may otherwise be
entitled; and
6.7 Any demand for payment under this Guaranty.
7. PRIMARY LIABILITY OF GUARANTOR. Guarantor agrees that this
Guaranty may be enforced by Bank without the necessity at any time of resorting
to or exhausting any other security or collateral and without the necessity at
any time of having resorted to recourse to the Note or the Collateral through
foreclosure proceedings under the Security Documents or otherwise, and Guarantor
hereby waives any rights to require Bank to proceed against Borrower or any
other guarantor or to require Bank to pursue any other remedy or enforce any
other right. Guarantor further agrees that Guarantor shall have no right of
subrogation, reimbursement or indemnity whatsoever, nor any right of recourse to
security for the Indebtedness or Borrower to Bank, unless and until all of the
Indebtedness of Borrower to Bank has been paid in full. Guarantor further agrees
that nothing contained herein shall prevent Bank from suing on the Note or
foreclosing the Mortgage or from exercising any other rights available to it
under any other Loan Documents, or any other instrument of security if there is
a Default by Borrower or Guarantor , and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute a
discharge of any of Guarantor's obligations hereunder; it being the purpose and
intent of Guarantor that Guarantor's obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither
Guarantor's obligations under this Guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of Borrower or any other guarantor or by reason of Borrower's or any
other guarantor's bankruptcy, insolvency, death, or dissolution. At any time
Bank is entitled to exercise its remedies hereunder, it may in its discretion
elect to demand payment or performance. In the event Bank elects to demand
performance, it shall at all times thereafter have the right to demand payment
until all of the Indebtedness has been paid in full. In the event Bank elects to
demand payment, it shall at all times thereafter have the right to demand
performance until all of the Indebtedness has been paid in full.
5
<PAGE>
8. SUBROGATION RIGHTS. Until the Loan is paid in full, Guarantor
will not assert any right to which it may be or may become entitled, whether by
subrogation, contribution or otherwise, against Borrower (except Guarantor's
right to receive a management fee and distribution of cash flow from Borrower
for so long as no Default exists) or any other guarantor guaranteeing the
completion of the Project or payment of any portion of the Indebtedness or
against any of their respective properties, by reason of the performance by
Guarantor of its obligations under this Guaranty, except after completion of the
Project and payment in full of the Indebtedness in accordance with the Loan
Agreement.
9. COST OF ENFORCEMENT. In the event that the Note or this
Guaranty are not paid when due after any applicable grace period on any stated
or accelerated maturity date, or should it be necessary for Bank to enforce any
other of its rights under the Loan Documents, Guarantor will pay to Bank, in
addition to principal, interest and other charges due hereunder or under the
other Loan Documents, all costs of collection or enforcement, including
reasonable attorneys' fees, paralegals' fees, legal assistants' fees, costs and
expenses, whether incurred with respect to collection, arbitration, litigation,
bankruptcy proceedings, interpretation, dispute, negotiation, trial, appeal,
defense of actions instituted by a third party against Bank arising out of or
related to the Loan, enforcement of any judgment based on this Guaranty, or
otherwise, whether or not a suit to collect such amounts or to enforce such
rights is brought or, if brought, is prosecuted to judgment.
10. GRANT. INTENTIONALLY DELETED
11. TERM OF GUARANTY; WARRANTIES. This Guaranty shall continue in
full force and effect until the Indebtedness is fully paid, and all obligations
of Borrower and Guarantor are performed and discharged. This Guaranty covers the
Indebtedness whether presently outstanding or arising subsequent to the date
hereof including all amounts advanced by Bank in stages or installments.
Guarantor warrants and represents to Bank, (i) that this Guaranty is binding
upon and enforceable against Guarantor, its heirs, personal representatives,
executors, successors, and assigns in accordance with its terms, (ii) that the
execution and delivery of this Guaranty do not violate any applicable laws or
constitute a breach of any agreement to which Guarantor is a party, (iii) that
there is no litigation, claim, action or proceeding pending or, to the best
knowledge of Guarantor, threatened against Guarantor which would adversely
affect the financial condition of Guarantor or its ability to fulfill its
obligations hereunder. Guarantor agrees to promptly inform Bank of the adverse
determination of any litigation, claim, action or proceeding or the institution
of any litigation, claim, action or proceeding against Guarantor which does or
could adversely affect the financial condition of Guarantor or its ability to
fulfill its obligations hereunder.
12. FURTHER REPRESENTATIONS AND WARRANTIES. Guarantor further
represents to Bank that Guarantor has knowledge of Borrower's financial
condition and affairs and represents and agrees that it will keep so informed
while this Guaranty is in force. Guarantor agrees that Bank has no present or
future obligation to investigate the financial condition or affairs of Borrower
for the benefit of Guarantor nor to advise Guarantor of any fact respecting, or
any change in,
6
<PAGE>
the financial condition or affairs of Borrower or any other guarantor of the
Loan which might come to the knowledge of Bank at any time, whether or not Bank
knows or believes or has reason to know or believe that any such fact or change
is unknown to Guarantor or might (or does) increase the risk of Guarantor as
guarantor or might (or would) affect the willingness of Guarantor to continue as
a guarantor with respect to the Indebtedness.
13. FINANCIAL STATEMENTS. Guarantor shall submit annual financial
statements to Bank within one hundred twenty (120) days of each June 30th of the
Loan, and interim financial statements to Bank within thirty (30) days after
Bank has requested same in writing. The statements shall include, at a minimum,
the following current items: a balance sheet, an income and expense statement, a
statement showing contingent liabilities, detailed information regarding project
sales and construction status on each project and/or entity in which Guarantor
has an interest and any supporting schedules or documentation which Bank may
require. Such detailed statements shall include, as applicable, the project
name, location, percentage of Guarantor's ownership interest, leasing status,
net operating income, current loan balance, debt service, source of any
operating deficit, amount of and beneficiary of any cash distributions, and the
amount of cash invested in or received from that enterprise. Each statement
shall bear an authorized signature attesting to the accuracy of the statement.
Annual statements of business entities shall be audited and bear the unqualified
opinion of an acceptable certified public accountant. Guarantor shall also
provide Bank with current year personal tax returns within thirty (30) days of
filing.
14. ADDITIONAL LIABILITY OF GUARANTOR. If Guarantor is or becomes
liable for any indebtedness owing by Borrower to Bank by endorsement or
otherwise than under this Guaranty, such liability shall not be in any manner
impaired or reduced hereby but shall have all and the same force and effect it
would have had if this Guaranty had not existed and Guarantor's liability
hereunder shall not be in any manner impaired or reduced thereby.
15. CUMULATIVE RIGHTS. All rights of Bank hereunder or otherwise
arising under any documents executed in connection with or as security for the
Indebtedness are separate and cumulative and may be pursued separately,
successively or concurrently, or not pursued without affecting, reducing or
limiting any other right of Bank and without affecting, reducing or impairing
the liability of Guarantor.
16. MULTIPLE COUNTERPARTS; PRONOUNS; CAPTIONS; SEVERABILITY. This
Guaranty may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute but one and the same document. The
pronouns used in this instrument shall be construed as masculine, feminine or
neuter as the occasion may require. Use of the singular includes the plural, and
vice versa. Captions are for reference only and in no way limit the terms of
this Guaranty. Invalidation of any one or more of the provisions of this
Guaranty shall in no way affect any of the other provisions hereof, which shall
remain in full force and effect. Use of the term "include" or "including" is
always without limitation. "Person" or "party" means any natural person or
artificial entity having legal capacity.
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17. BANK ASSIGNS. This Guaranty is intended for and shall inure to
the benefit of Bank and each and every person who shall from time to time be or
become the owner or holder of any document evidencing or securing the
Indebtedness, and each and every reference herein to Bank shall include and
refer to each and every successor or assignee of Bank at any time holding or
owning any part of or interest in any part of the Indebtedness. This Guaranty
shall be transferable and negotiable with the same force and effect, and to the
same extent, that any document evidencing or securing all or any portion of the
Indebtedness is transferable and negotiable, it being understood and stipulated
that upon assignment or transfer by Bank of any of the Indebtedness, the legal
holder or owner of said Indebtedness (or a part thereof or interest therein thus
transferred or assigned by Bank) shall (except as otherwise stipulated by Bank
in its assignment) have and may exercise all of the rights granted to Bank under
this Guaranty to the extent of that part of or interest in the Indebtedness thus
assigned or transferred to said person. Guarantor expressly waives notice of
transfer or assignment of the Indebtedness, or any part thereof, or of the
rights of Bank hereunder. Failure to give notice will not affect the liabilities
of Guarantor hereunder. Bank may sell or offer to sell the Loan or interests in
the Loan to one or more assignees or participants and may disclose to any such
assignee or participant or prospective assignee or participant any information
Lender has pertaining to the Guaranteed Obligations, this Guaranty, or
Guarantor, including, without limitation, information regarding any security for
the Guaranteed obligations or any other party liable, directly or indirectly,
for any part of the Guaranteed Obligations. Bank may also disclose any such
information to any regulatory body having jurisdiction over Bank.
18. APPLICATION OF PAYMENTS. Bank may apply any payments received
by it from any source against that portion of the Indebtedness (principal,
interest, court costs, attorneys' fees or other) in such priority and fashion as
it may deem appropriate.
19. NOTICES. Any notice or demand that must or may be given or
made in connection with this Guaranty must be in writing and, unless receipt is
expressly required, will be deemed given, delivered or made, as the case may be,
when delivered by personal delivery or the day after it is mailed by Express
Mail, by overnight delivery service of a nationally-recognized company,
addressed to the parties at the following addresses, or such other addresses as
may from time to time be designated by written notice given as herein required:
to Guarantor:
Arthur Falcone
Transeastern Pembroke Villages, Inc.
3300 University Drive, Coral Springs, FL 33065
to Bank:
NationsBank of Florida, N.A.
701 W. Cypress Creek Road, Suite 101
8
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Fort Lauderdale, FL 33309
Attention: Jim Webb, Vice President
Personal delivery to a party or to any officer, partner, agent or employee of
such party, or if a proper person, to a member of his family, at its address
herein shall constitute receipt. Rejection or other refusal to accept or
inability to deliver because of changed address of which no notice has been
received shall also constitute receipt. Notwithstanding the foregoing, no notice
of change of address shall be effective until the date of receipt thereof. This
section shall not be construed in any way to affect or impair any waiver of
notice or demand herein provided or to require giving of notice or demand to or
upon Guarantor in any situation or for any reason.
20. CONFLICT OF LAW. This Guaranty shall be construed,
interpreted, enforced and governed by and in accordance with the laws of the
State of Florida.
21. SUBMISSION TO JURISDICTION. Guarantor irrevocably and
unconditionally (a) agrees that any suit, action or other legal proceeding
arising out of or relating to this Guaranty may be brought, at the option of
Bank, in a court of competent jurisdiction of the State of Florida or any United
States District Court in Florida; (b) consents to the jurisdiction of each such
court in any such suit, action or proceeding; (c) waives any and all personal
rights under the laws of any state to object to the laying of venue of any such
suit, action or proceeding in the State of Florida; and (d) agrees that service
of any court paper may be effected on Guarantor by mail, addressed and mailed as
provided in Section 19 hereof or in such other manner as may be provided under
applicable laws or court rules in the State of Florida. Nothing contained
herein, however, shall prevent Bank from bringing an action or exercising any
rights against any security for the Loan or against Guarantor personally, and
against any property of Guarantor, within any other state. Initiating such
proceeding or taking such action in any other state shall in no event constitute
a waiver of the agreement contained herein that the law of the State of Florida
shall govern the rights and obligations of Guarantor and Bank hereunder or of
the submission herein made by Guarantor to personal jurisdiction within the
State of Florida. The aforesaid means of obtaining personal jurisdiction and
perfecting service of process are not intended to be exclusive but are
cumulative and in addition to all other means of obtaining personal jurisdiction
and perfecting service of process now or hereafter provided by the law of the
State of Florida.
22. WAIVER OF HOMESTEAD. Guarantor waives any and all homestead
and exemption rights which it may have under or by virtue of the Constitution or
the laws of the United States of America or of any state as against this
Guaranty, any renewal hereof, or any indebtedness represented hereby, and does
jointly and severally transfer, convey, and assign to Bank a sufficient amount
of such homestead or exemption as may be allowed, including such homestead or
exemption as may be set apart in bankruptcy, to pay all amounts due hereunder in
full, with all costs of collection, and does hereby direct any trustee in
bankruptcy having possession of such homestead or exemption to deliver to Bank a
sufficient amount of property or money set apart as exempt to pay the
indebtedness guaranteed hereby, or any renewal thereof, and does hereby appoint
Bank the attorney-in-fact for each of them, to claim any and all homestead
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exemptions allowed by law.
23. CONTINUING LIABILITY. Notwithstanding any other provisions of
this Guaranty, the Indebtedness shall be deemed to include any and all
liability, damage, cost and expense, including reasonable attorneys' fees,
paralegals' fees and legal assistants' fees, which may hereafter be incurred by
Bank as a result of the Mortgaged Property:
(a) having been used in the past or present or being used
in the future while the Mortgaged Property is owned by Borrower, for the sale,
handling, storage, transportation, or disposal of hazardous or toxic materials,
in violation of any Governmental Requirements in effect from time to time
regulating hazardous or toxic materials or the Mortgaged Property; or
(b) having contained or hereafter containing, while the
Mortgaged Property is owned by Borrower, asbestos or products containing
asbestos in violation of any laws, ordinances, or regulations of any
Governmental Authorities affecting asbestos or products containing asbestos or
the Mortgaged Property.
Except as Guarantor's liability is specifically limited in the Loan
Documents, it is expressly acknowledged by Guarantor that this indemnification
shall survive in accordance with the terms and conditions set forth in the
Hazardous Substance Certificate and Indemnification Agreement of even date
herewith executed by the Guarantor and Borrower.
24. DISCLOSURE OF BORROWER AND GUARANTOR FINANCIAL INFORMATION.
Bank may sell or offer to sell the Loan or interests in the Loan to one or more
assignees or participants and may disclose to any such assignee or participant
or prospective assignee or participant any information Bank has pertaining to
the Loan Documents, this Guaranty, or Guarantor, including, without limitation,
information regarding any security for the Loan Documents or for this Guaranty,
credit information on Guarantor, Borrower, and/or any other party liable,
directly or indirectly, for any part of the Loan Documents. Bank may also
disclose any such information to any regulatory body having jurisdiction over
Bank.
25. ORAL MODIFICATION INEFFECTIVE. This Guaranty may not be
changed orally, and no obligation of Guarantor can be released or waived by Bank
or any officer or agent of Bank, except by a writing signed by a duly authorized
officer of Bank. This Guaranty shall be irrevocable by Guarantor until the
Indebtedness has been completely repaid and all obligations and undertakings of
Borrower under, by reason of, or pursuant to the Loan Documents have been
completely performed, at which time Bank will terminate this Guaranty. This
Guaranty shall continue in full force and effect unless and until discharged or
released by Bank pursuant to a written instrument properly executed by an
appropriate officer of Bank. This Guaranty shall continue in full force and
effect unless and until discharged or released by Bank pursuant to a written
instrument properly executed by an appropriate officer of Bank.
26. REFERENCE TO OTHER LOAN DOCUMENTS. All of the terms,
definitions, conditions and covenants of the Loan Agreement, the Note, the
Mortgage, and the Assignment are
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expressly made a part of this Guaranty by reference in the same manner and with
the same effect as if set forth herein at length and shall have the meaning set
forth in the Loan Agreement, the Note, the Mortgage, and the Assignment unless
otherwise defined herein.
27. MANDATORY ARBITRATION. Any controversy or claim between or
among the parties hereto including, but not limited to, those arising out of or
relating to this Agreement or any related agreements or instruments, including
any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediations
Services, Inc. (J.A.M.A.S.), and the "Special Rules" set forth below. In the
event of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action.
(a) Special Rules: The arbitration shall be conducted in
Broward County, Florida and administered by Endispute, Inc., d/b/a
J.A.M.S./Endispute who will appoint an arbitrator; if J.A.M.S./Endispute is
unable or legally precluded from administering the arbitration, then the
American Arbitration Association will serve. All arbitration hearings will be
commenced within 90 days of the demand for arbitration; further, the arbitrator
shall only, upon a showing of cause, be permitted to extend the commencement of
such hearing for up to an additional 60 days.
(b) Reservations of Rights: Nothing in this Agreement
shall be deemed to (i) limit the applicability of any otherwise applicable
statutes of limitation or repose and any waivers contained in this Agreement; or
(ii) be a waiver by the Bank of the protection afforded to it by 12 U.S.C.
Section 91 or any substantially equivalent state law; or (iii) limit the right
of the Bank hereto (A) to exercise self help remedies such as (but not limited
to) setoff, or (B) to foreclose against any real or personal property
collateral, or (C) to obtain from a court provisional or ancillary remedies such
as (but not limited to) injunctive relief or the appointment of a receiver. The
Bank may exercise such self help rights, foreclose upon such property, or obtain
such provisional or ancillary remedies before, during or after the pendency of
any arbitration proceeding brought pursuant to this Agreement. At Bank's option,
foreclosure under a mortgage or deed of trust may be accomplished by any of the
following: the exercise of a power of sale under the deed of trust or mortgage,
or by judicial sale under the deed of trust or mortgage, or by judicial
foreclosure. Neither this exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary remedies
shall constitute a waiver of the right of any party, including the claimant in
any such action, to arbitrate the merits of the controversy or claim occasioning
resort to such remedies.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as of
the day and year first above written.
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Signed, sealed and delivered
in the presence of: TRANSEASTERN PROPERTIES, INC., A FLORIDA
CORPORATION, F/K/A TRANSEASTERN
PROPERTIES OF SOUTH FLORIDA, INC., A
FLORIDA CORPORATION
____________________________________
Witness #1 By________________________________(SEAL)
____________________________________ Edward Falcone, Executive Vice President
____________________________________
Print Name
_____________________________________ Address:
Witness #1
3300 University Drive
_____________________________________ Coral Springs, Florida 33065
Print Name
STATE OF FLORIDA )
)ss
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this ____ day of
September, 1996, by EDWARD FALCONE, as Executive Vice President of TRANSEASTERN
PROPERTIES, INC., a Florida corporation, f/k/a Transeastern Properties of South
Florida, Inc., a Florida corporation by and on behalf the corporation. He is
personally known to me and/or has produced ________________________________ as
identification.
My Commission Expires: ___________________________________________
NOTARY PUBLIC STATE OF FLORIDA
___________________________________________
Print Name
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Loan No. 91004539
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of September ___, 1996 (the "Guaranty")
is executed by TRANSEASTERN PROPERTIES, INC., A FLORIDA CORPORATION, F/K/A
TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, A FLORIDA CORPORATION (the
"Guarantor"), and extended to CHASE FEDERAL BANK, A FEDERAL SAVINGS BANK, A
DIVISION OF NATIONSBANK, N.A. (SOUTH), a national banking association ("Bank")
for the benefit of TRANSEASTERN PEMBROKE VILLAGES, INC., A FLORIDA CORPORATION,
a Florida limited partnership ("Borrower").
RECITALS:
1. Bank has agreed to extend a loan (the "Loan") to Borrower pursuant to
the terms and conditions of, among other documents, a Promissory Note in the
original principal amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) of
even date herewith executed and delivered by Borrower in favor of Bank (the
"Note") and a Loan Agreement of even date, by and between Borrower and Bank (the
"Loan Agreement") for the construction of up to 114 single family homes in that
certain project known as Egret's Way located in Pembroke Pines, Florida (the
"Mortgaged Property") , which Loan is secured by a Real Estate Mortgage,
Assignment, and Security Agreement of even date filed or to be filed in the
public records of Broward County, Florida (the "Mortgage"), a Hazardous
Substance Certificate and Indemnification Agreement of even date between
Borrower, Guarantor and Bank (the "Indemnity") and other agreements to be
executed by the Borrower and Bank. The Mortgage, this Guaranty, the Indemnity
and the other agreements are hereinafter referred to collectively as the
"Security Documents". The Security Documents and the Loan Agreement are
hereinafter referred to collectively for convenience as the "Loan Documents".
2. Guarantor is a shareholder of TRANSEASTERN PEMBROKE VILLAGES, INC., a
Florida corporation.
3. Without this Guaranty, Bank would be unwilling to make the Loan to
Borrower.
4. Because of the direct benefit to Guarantor from the Loan to Borrower,
and as an inducement to Bank to make the Loan to Borrower, Guarantor agrees to
guarantee to Bank the obligations of Borrower as set forth herein.
NOW, THEREFORE, in consideration of Bank entering into the Loan Agreement
and making the Loan to Borrower, and for other good and valuable consideration
by Borrower to Guarantor, the receipt and sufficiency of which is hereby
acknowledged by Guarantor, Guarantor hereby covenants and agrees as follows:
1. GUARANTY OF PAYMENT. Guarantor hereby unconditionally guarantees to
Bank the
<PAGE>
payment, when due, by acceleration or otherwise, of the Indebtedness. For the
purposes hereof, the term "Indebtedness" shall include any and all indebtedness
and obligations of Borrower to Bank, except as the Guarantor's liability is
specifically limited in the Loan Documents, including without limitation, all
principal , interest, fees and expenses, including attorneys' fees, evidenced by
the Note, the Loan Agreement, the Security Documents or otherwise, or arising in
connection with the Loan, whether existing now or arising hereafter, as such
Indebtedness may be modified, increased, extended or renewed from time to time.
The guaranty of Guarantor as set forth in this section is a guaranty of payment
and not of collection.
2. GUARANTY OF PERFORMANCE. Guarantor additionally unconditionally
guarantees to Bank the timely performance of all other obligations of Borrower
under all of the Loan Documents, including, without limiting the generality of
the foregoing, that:
(a) the Improvements will be constructed upon the Land in accordance
with the Loan Agreement and with the Plans; and
(b) the Improvements will be completed and ready for occupancy,
including delivery of any certificates, licenses, and permits required by law or
the Loan Agreement, within the time periods required in the Loan Agreement.
In the event the foregoing obligations of Borrower are not timely performed
in any respect whatsoever, Guarantor, without the necessity of any notice from
Bank to Guarantor, agrees to (i) assume all responsibility for the completion of
the Improvements and, at Guarantor's own cost and expense, to cause the
Improvements to be fully completed in accordance with the Plans and in
accordance with the Loan Agreement; (ii) pay all bills, costs, and expenses in
connection with the construction and completion of the Improvements; and (iii)
indemnify and hold Bank harmless from any and all loss, cost, liability or
expense Bank may suffer by reason of any such acts or omissions of Borrower. If,
after the occurrence of a Default by Borrower, Guarantor has not caused
construction to progress as required by the Loan Agreement, Bank may, at its
option, after first having given notice to the Guarantor at the address set
forth below in the manner prescribed herein for giving notice, complete the
Improvements either before or after commencement of foreclosure proceedings or
before or after any other remedy of Bank against Borrower or Guarantor, with
such changes or modifications in the Plans which Bank reasonably deems necessary
and expend such sums as Bank, in its discretion, reasonably deems necessary and
proper in order to so complete the Improvements, and Guarantor hereby waives any
right to contest any such expenditures. The amount of any and all expenditures
made by Bank for the foregoing purposes shall be due and payable to Bank upon
demand and accrue interest at the rate then applicable under the Note (or that
would be applicable under the Note if it were still outstanding).
3. SUBORDINATION.
3.1 All rights and claims of Guarantor now or hereafter existing
(collectively the "Guarantor Claims") against Borrower or any of Borrower's
property which Borrower now owns
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or shall acquire in the future or hereafter existing shall be subordinate and
subject in right of payment to the prior payment in full of the Indebtedness to
Bank.
3.2 Until the Indebtedness has been paid in full and Guarantor shall
have performed or satisfied all of its obligations hereunder and provided no
Default exists, Guarantor may receive or collect, directly or indirectly, from
Borrower or any other party any payment upon Guarantor Claims, seek to realize
upon any collateral securing such Guarantor Claims or claim any offset or other
reduction of Guarantor's obligations hereunder because of any Guarantor Claims.
Notwithstanding the foregoing, only if a Default exists, if Guarantor should
receive any such payment, Guarantor agrees to hold same in trust for Bank and
agrees that Guarantor shall have absolutely no rights in or to or dominion over,
such payments except to pay them promptly to Bank without demand by Bank.
4. GUARANTOR WAIVERS. Guarantor hereby waives and agrees not to
assert or take advantage of (a) any right or claim of right to cause a
marshaling of any of Borrower's assets or the assets of any other party now or
hereafter held as security for the Indebtedness; (b) the defense of the statute
of limitations in any action hereunder or for the payment of the Indebtedness
and performance of any obligation hereby guaranteed; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of
Guarantor, any other guarantor of the Loan, or Borrower or any other person or
entity, or the voluntary or involuntary dissolution of Borrower or Guarantor, or
the failure of Bank to file or enforce a claim against the estate (either in
administration, bankruptcy, or any other proceeding) of Borrower or any other
person or entity; (d) any defense based on the failure of Bank to give notice of
the existence, creation, or incurring of any new or additional indebtedness or
obligation, or of any action or nonaction on the part of any other person
whomsoever, or any modification of the terms of the Loan Documents, or the
Indebtedness, in connection with any obligation hereby guaranteed; (e) any
defense based upon an election of remedies by Bank which destroys or otherwise
impairs any subrogation rights of Guarantor or any other guarantor of the Loan
or the right of Guarantor to proceed against Borrower or any other guarantor for
reimbursement, or both; (f) any defense based upon failure of Bank to commence
an action against Borrower; (g) any defense based upon acceptance of this
Guaranty by Bank; (h) any defense based upon the invalidity or unenforceability
of any of the Loan Documents; (i) any defense based upon any limitation of
liability contained in any of the Loan Documents unless specifically set forth
therein; (j) any defense based upon any transfer by Borrower of all or any part
of the Collateral; (k) any defense based upon the failure of Bank to perfect any
security or to extend or renew the perfection of any security; and (l) any other
legal or equitable defenses whatsoever to which Guarantor might otherwise be
entitled.
5. CONSENT TO BANK'S ACTIONS OR INACTIONS. Guarantor consents that
Bank may, at any time and from time to time, before or after any Default by
Borrower, without affecting the liability of Guarantor hereunder and with or
without further notice to or assent from Guarantor:
5.1 Either with or without consideration to Borrower or to any
guarantor guaranteeing the completion of the Project or payment of any portion
of the Indebtedness, or any pledgor or
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<PAGE>
grantor of any collateral, exchange, release or surrender (in whole or in part),
or fail to protect or to preserve the value of any collateral now or hereafter
held as security for the Loan, or waive, release or subordinate any lien or
security interest (in whole or in part) in or on any such collateral;
5.2 Waive or delay the exercise of any of its rights or remedies
against Borrower or any other person or entity, including without limitation,
any guarantor guaranteeing the completion of the Project or payment of any
portion of the Indebtedness; notwithstanding any waiver or delay, Bank shall not
he precluded from further exercise of any of its rights, powers or privileges
expressly provided for herein or otherwise available, it being understood that
all such rights and remedies are cumulative;
5.3 Waive or extend the time from Borrower's or any other guarantor's
performance of any and all terms, provisions and conditions set forth in the
Loan Documents;
5.4 Release Borrower or any other person or entity, including without
limitation any other guarantor guaranteeing the completion of the Project or
payment of any portion of the Indebtedness, from their obligations to complete
the Project and/or from their obligations to repay all or any portion of the
Indebtedness;
5.5 Proceed against Guarantor without first proceeding against or
joining Borrower or any other guarantor guaranteeing the completion of the
Project or payment of any portion of the Indebtedness or any endorser of the
Note, or any property securing the payment of the Indebtedness;
5.6 Renew, extend or modify the terms of the Loan or any instrument
or agreement evidencing, securing, or relating to the Loan;
5.7 Generally deal with Borrower or other person or party or any
Collateral as Bank may see fit; and
5.8 Consent to any change in the Plans and/or the Improvements.
Guarantor shall remain bound under this Guaranty notwithstanding any
such exchange, release, surrender, subordination, waiver (whether or not such
waiver is oral or written), delay, proceeding, renewal, extension, modification,
act or failure to act, or other dealings described in Subsections 5.1 through
5.8 above, inclusive, including without limitation, any change in the Plans
and/or the Improvements even though done without notice to or consent from
Guarantor.
6. WAIVER OF NOTICE. Guarantor waives all notices whatsoever with
respect to the Loan Documents, including without limitation, this Guaranty, and
with respect to the Loan, including, but not limited to, notice of:
6.1 Bank's acceptance of this Guaranty or its intention to act, or
its action, in reliance
4
<PAGE>
hereon;
6.2 The making of the Loan by Bank to Borrower;
6.3 Presentment and demand for payment of the Loan or any portion
thereof;
6.4 Protest and notice of dishonor or non-payment with respect to the
Loan or any portion thereof;
6.5 Any Default by Borrower or any pledgor, grantor of security, or
any other guarantor guaranteeing the completion of the Project and/or payment of
any portion of the Indebtedness;
6.6 Any other notices to which Guarantor may otherwise be entitled;
and
6.7 Any demand for payment under this Guaranty.
7. PRIMARY LIABILITY OF GUARANTOR. Guarantor agrees that this
Guaranty may be enforced by Bank without the necessity at any time of resorting
to or exhausting any other security or collateral and without the necessity at
any time of having resorted to recourse to the Note or the Collateral through
foreclosure proceedings under the Security Documents or otherwise, and Guarantor
hereby waives any rights to require Bank to proceed against Borrower or any
other guarantor or to require Bank to pursue any other remedy or enforce any
other right. Guarantor further agrees that Guarantor shall have no right of
subrogation, reimbursement or indemnity whatsoever, nor any right of recourse to
security for the Indebtedness or Borrower to Bank, unless and until all of the
Indebtedness of Borrower to Bank has been paid in full. Guarantor further agrees
that nothing contained herein shall prevent Bank from suing on the Note or
foreclosing the Mortgage or from exercising any other rights available to it
under any other Loan Documents, or any other instrument of security if there is
a Default by Borrower or Guarantor , and the exercise of any of the aforesaid
rights and the completion of any foreclosure proceedings shall not constitute a
discharge of any of Guarantor's obligations hereunder; it being the purpose and
intent of Guarantor that Guarantor's obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances. Neither
Guarantor's obligations under this Guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by an impairment, modification, change, release or limitation of the
liability of Borrower or any other guarantor or by reason of Borrower's or any
other guarantor's bankruptcy, insolvency, death, or dissolution. At any time
Bank is entitled to exercise its remedies hereunder, it may in its discretion
elect to demand payment or performance. In the event Bank elects to demand
performance, it shall at all times thereafter have the right to demand payment
until all of the Indebtedness has been paid in full. In the event Bank elects to
demand payment, it shall at all times thereafter have the right to demand
performance until all of the Indebtedness has been paid in full.
5
<PAGE>
8. SUBROGATION RIGHTS. Until the Loan is paid in full, Guarantor
will not assert any right to which it may be or may become entitled, whether by
subrogation, contribution or otherwise, against Borrower (except Guarantor's
right to receive a management fee and distribution of cash flow from Borrower
for so long as no Default exists) or any other guarantor guaranteeing the
completion of the Project or payment of any portion of the Indebtedness or
against any of their respective properties, by reason of the performance by
Guarantor of its obligations under this Guaranty, except after completion of the
Project and payment in full of the Indebtedness in accordance with the Loan
Agreement.
9. COST OF ENFORCEMENT. In the event that the Note or this Guaranty
are not paid when due after any applicable grace period on any stated or
accelerated maturity date, or should it be necessary for Bank to enforce any
other of its rights under the Loan Documents, Guarantor will pay to Bank, in
addition to principal, interest and other charges due hereunder or under the
other Loan Documents, all costs of collection or enforcement, including
reasonable attorneys' fees, paralegals' fees, legal assistants' fees, costs and
expenses, whether incurred with respect to collection, arbitration, litigation,
bankruptcy proceedings, interpretation, dispute, negotiation, trial, appeal,
defense of actions instituted by a third party against Bank arising out of or
related to the Loan, enforcement of any judgment based on this Guaranty, or
otherwise, whether or not a suit to collect such amounts or to enforce such
rights is brought or, if brought, is prosecuted to judgment.
10. GRANT. INTENTIONALLY DELETED
11. TERM OF GUARANTY; WARRANTIES. This Guaranty shall continue in
full force and effect until the Indebtedness is fully paid, and all obligations
of Borrower and Guarantor are performed and discharged. This Guaranty covers the
Indebtedness whether presently outstanding or arising subsequent to the date
hereof including all amounts advanced by Bank in stages or installments.
Guarantor warrants and represents to Bank, (i) that this Guaranty is binding
upon and enforceable against Guarantor, its heirs, personal representatives,
executors, successors, and assigns in accordance with its terms, (ii) that the
execution and delivery of this Guaranty do not violate any applicable laws or
constitute a breach of any agreement to which Guarantor is a party, (iii) that
there is no litigation, claim, action or proceeding pending or, to the best
knowledge of Guarantor, threatened against Guarantor which would adversely
affect the financial condition of Guarantor or its ability to fulfill its
obligations hereunder. Guarantor agrees to promptly inform Bank of the adverse
determination of any litigation, claim, action or proceeding or the institution
of any litigation, claim, action or proceeding against Guarantor which does or
could adversely affect the financial condition of Guarantor or its ability to
fulfill its obligations hereunder.
12. FURTHER REPRESENTATIONS AND WARRANTIES. Guarantor further
represents to Bank that Guarantor has knowledge of Borrower's financial
condition and affairs and represents and agrees that it will keep so informed
while this Guaranty is in force. Guarantor agrees that Bank has no present or
future obligation to investigate the financial condition or affairs of Borrower
for the benefit of Guarantor nor to advise Guarantor of any fact respecting, or
any change in,
6
<PAGE>
the financial condition or affairs of Borrower or any other guarantor of the
Loan which might come to the knowledge of Bank at any time, whether or not Bank
knows or believes or has reason to know or believe that any such fact or change
is unknown to Guarantor or might (or does) increase the risk of Guarantor as
guarantor or might (or would) affect the willingness of Guarantor to continue as
a guarantor with respect to the Indebtedness.
13. FINANCIAL STATEMENTS. Guarantor shall submit annual financial
statements to Bank within one hundred twenty (120) days of each June 30th of the
Loan, and interim financial statements to Bank within thirty (30) days after
Bank has requested same in writing. The statements shall include, at a minimum,
the following current items: a balance sheet, an income and expense statement, a
statement showing contingent liabilities, detailed information regarding project
sales and construction status on each project and/or entity in which Guarantor
has an interest and any supporting schedules or documentation which Bank may
require. Such detailed statements shall include, as applicable, the project
name, location, percentage of Guarantor's ownership interest, leasing status,
net operating income, current loan balance, debt service, source of any
operating deficit, amount of and beneficiary of any cash distributions, and the
amount of cash invested in or received from that enterprise. Each statement
shall bear an authorized signature attesting to the accuracy of the statement.
Annual statements of business entities shall be audited and bear the unqualified
opinion of an acceptable certified public accountant. Guarantor shall also
provide Bank with current year personal tax returns within thirty (30) days of
filing.
14. ADDITIONAL LIABILITY OF GUARANTOR. If Guarantor is or becomes
liable for any indebtedness owing by Borrower to Bank by endorsement or
otherwise than under this Guaranty, such liability shall not be in any manner
impaired or reduced hereby but shall have all and the same force and effect it
would have had if this Guaranty had not existed and Guarantor's liability
hereunder shall not be in any manner impaired or reduced thereby.
15. CUMULATIVE RIGHTS. All rights of Bank hereunder or otherwise
arising under any documents executed in connection with or as security for the
Indebtedness are separate and cumulative and may be pursued separately,
successively or concurrently, or not pursued without affecting, reducing or
limiting any other right of Bank and without affecting, reducing or impairing
the liability of Guarantor.
16. MULTIPLE COUNTERPARTS; PRONOUNS; CAPTIONS; SEVERABILITY. This
Guaranty may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute but one and the same document. The
pronouns used in this instrument shall be construed as masculine, feminine or
neuter as the occasion may require. Use of the singular includes the plural, and
vice versa. Captions are for reference only and in no way limit the terms of
this Guaranty. Invalidation of any one or more of the provisions of this
Guaranty shall in no way affect any of the other provisions hereof, which shall
remain in full force and effect. Use of the term "include" or "including" is
always without limitation. "Person" or "party" means any natural person or
artificial entity having legal capacity.
7
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17. BANK ASSIGNS. This Guaranty is intended for and shall inure to
the benefit of Bank and each and every person who shall from time to time be or
become the owner or holder of any document evidencing or securing the
Indebtedness, and each and every reference herein to Bank shall include and
refer to each and every successor or assignee of Bank at any time holding or
owning any part of or interest in any part of the Indebtedness. This Guaranty
shall be transferable and negotiable with the same force and effect, and to the
same extent, that any document evidencing or securing all or any portion of the
Indebtedness is transferable and negotiable, it being understood and stipulated
that upon assignment or transfer by Bank of any of the Indebtedness, the legal
holder or owner of said Indebtedness (or a part thereof or interest therein thus
transferred or assigned by Bank) shall (except as otherwise stipulated by Bank
in its assignment) have and may exercise all of the rights granted to Bank under
this Guaranty to the extent of that part of or interest in the Indebtedness thus
assigned or transferred to said person. Guarantor expressly waives notice of
transfer or assignment of the Indebtedness, or any part thereof, or of the
rights of Bank hereunder. Failure to give notice will not affect the liabilities
of Guarantor hereunder. Bank may sell or offer to sell the Loan or interests in
the Loan to one or more assignees or participants and may disclose to any such
assignee or participant or prospective assignee or participant any information
Lender has pertaining to the Guaranteed Obligations, this Guaranty, or
Guarantor, including, without limitation, information regarding any security for
the Guaranteed obligations or any other party liable, directly or indirectly,
for any part of the Guaranteed Obligations. Bank may also disclose any such
information to any regulatory body having jurisdiction over Bank.
18. APPLICATION OF PAYMENTS. Bank may apply any payments received by
it from any source against that portion of the Indebtedness (principal,
interest, court costs, attorneys' fees or other) in such priority and fashion as
it may deem appropriate.
19. NOTICES. Any notice or demand that must or may be given or made
in connection with this Guaranty must be in writing and, unless receipt is
expressly required, will be deemed given, delivered or made, as the case may be,
when delivered by personal delivery or the day after it is mailed by Express
Mail, by overnight delivery service of a nationally-recognized company,
addressed to the parties at the following addresses, or such other addresses as
may from time to time be designated by written notice given as herein required:
to Guarantor:
Arthur Falcone
Transeastern Pembroke Villages, Inc.
3300 University Drive, Coral Springs, FL 33065
to Bank:
NationsBank of Florida, N.A.
701 W. Cypress Creek Road, Suite 101
Fort Lauderdale, FL 33309
Attention: Jim Webb, Vice President
8
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Personal delivery to a party or to any officer, partner, agent or employee of
such party, or if a proper person, to a member of his family, at its address
herein shall constitute receipt. Rejection or other refusal to accept or
inability to deliver because of changed address of which no notice has been
received shall also constitute receipt. Notwithstanding the foregoing, no notice
of change of address shall be effective until the date of receipt thereof. This
section shall not be construed in any way to affect or impair any waiver of
notice or demand herein provided or to require giving of notice or demand to or
upon Guarantor in any situation or for any reason.
20. CONFLICT OF LAW. This Guaranty shall be construed, interpreted,
enforced and governed by and in accordance with the laws of the State of
Florida.
21. SUBMISSION TO JURISDICTION. Guarantor irrevocably and
unconditionally (a) agrees that any suit, action or other legal proceeding
arising out of or relating to this Guaranty may be brought, at the option of
Bank, in a court of competent jurisdiction of the State of Florida or any United
States District Court in Florida; (b) consents to the jurisdiction of each such
court in any such suit, action or proceeding; (c) waives any and all personal
rights under the laws of any state to object to the laying of venue of any such
suit, action or proceeding in the State of Florida; and (d) agrees that service
of any court paper may be effected on Guarantor by mail, addressed and mailed as
provided in Section 19 hereof or in such other manner as may be provided under
applicable laws or court rules in the State of Florida. Nothing contained
herein, however, shall prevent Bank from bringing an action or exercising any
rights against any security for the Loan or against Guarantor personally, and
against any property of Guarantor, within any other state. Initiating such
proceeding or taking such action in any other state shall in no event constitute
a waiver of the agreement contained herein that the law of the State of Florida
shall govern the rights and obligations of Guarantor and Bank hereunder or of
the submission herein made by Guarantor to personal jurisdiction within the
State of Florida. The aforesaid means of obtaining personal jurisdiction and
perfecting service of process are not intended to be exclusive but are
cumulative and in addition to all other means of obtaining personal jurisdiction
and perfecting service of process now or hereafter provided by the law of the
State of Florida.
22. WAIVER OF HOMESTEAD. Guarantor waives any and all homestead and
exemption rights which it may have under or by virtue of the Constitution or the
laws of the United States of America or of any state as against this Guaranty,
any renewal hereof, or any indebtedness represented hereby, and does jointly and
severally transfer, convey, and assign to Bank a sufficient amount of such
homestead or exemption as may be allowed, including such homestead or exemption
as may be set apart in bankruptcy, to pay all amounts due hereunder in full,
with all costs of collection, and does hereby direct any trustee in bankruptcy
having possession of such homestead or exemption to deliver to Bank a sufficient
amount of property or money set apart as exempt to pay the indebtedness
guaranteed hereby, or any renewal thereof, and does hereby appoint Bank the
attorney-in-fact for each of them, to claim any and all homestead
9
<PAGE>
exemptions allowed by law.
23. CONTINUING LIABILITY. Notwithstanding any other provisions of
this Guaranty, the Indebtedness shall be deemed to include any and all
liability, damage, cost and expense, including reasonable attorneys' fees,
paralegals' fees and legal assistants' fees, which may hereafter be incurred by
Bank as a result of the Mortgaged Property:
(a) having been used in the past or present or being used in the
future while the Mortgaged Property is owned by Borrower, for the sale,
handling, storage, transportation, or disposal of hazardous or toxic materials,
in violation of any Governmental Requirements in effect from time to time
regulating hazardous or toxic materials or the Mortgaged Property; or
(b) having contained or hereafter containing, while the Mortgaged
Property is owned by Borrower, asbestos or products containing asbestos in
violation of any laws, ordinances, or regulations of any Governmental
Authorities affecting asbestos or products containing asbestos or the Mortgaged
Property.
Except as Guarantor's liability is specifically limited in the Loan
Documents, it is expressly acknowledged by Guarantor that this indemnification
shall survive in accordance with the terms and conditions set forth in the
Hazardous Substance Certificate and Indemnification Agreement of even date
herewith executed by the Guarantor and Borrower.
24. DISCLOSURE OF BORROWER AND GUARANTOR FINANCIAL INFORMATION. Bank
may sell or offer to sell the Loan or interests in the Loan to one or more
assignees or participants and may disclose to any such assignee or participant
or prospective assignee or participant any information Bank has pertaining to
the Loan Documents, this Guaranty, or Guarantor, including, without limitation,
information regarding any security for the Loan Documents or for this Guaranty,
credit information on Guarantor, Borrower, and/or any other party liable,
directly or indirectly, for any part of the Loan Documents. Bank may also
disclose any such information to any regulatory body having jurisdiction over
Bank.
25. ORAL MODIFICATION INEFFECTIVE. This Guaranty may not be changed
orally, and no obligation of Guarantor can be released or waived by Bank or any
officer or agent of Bank, except by a writing signed by a duly authorized
officer of Bank. This Guaranty shall be irrevocable by Guarantor until the
Indebtedness has been completely repaid and all obligations and undertakings of
Borrower under, by reason of, or pursuant to the Loan Documents have been
completely performed, at which time Bank will terminate this Guaranty. This
Guaranty shall continue in full force and effect unless and until discharged or
released by Bank pursuant to a written instrument properly executed by an
appropriate officer of Bank. This Guaranty shall continue in full force and
effect unless and until discharged or released by Bank pursuant to a written
instrument properly executed by an appropriate officer of Bank.
26. REFERENCE TO OTHER LOAN DOCUMENTS. All of the terms, definitions,
conditions and covenants of the Loan Agreement, the Note, the Mortgage, and the
Assignment are expressly
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made a part of this Guaranty by reference in the same manner and with the same
effect as if set forth herein at length and shall have the meaning set forth in
the Loan Agreement, the Note, the Mortgage, and the Assignment unless otherwise
defined herein.
27. MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including, but not limited to, those arising out of or
relating to this Agreement or any related agreements or instruments, including
any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Meditations
Services, Inc. (J.A.M.A.S.), and the "Special Rules" set forth below. In the
event of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action.
(a) Special Rules: The arbitration shall be conducted in Broward
County, Florida and administered by Endispute, Inc., d/b/a J.A.M.S./Endispute
who will appoint an arbitrator; if J.A.M.S./Endispute is unable or legally
precluded from administering the arbitration, then the American Arbitration
Association will serve. All arbitration hearings will be commenced within 90
days of the demand for arbitration; further, the arbitrator shall only, upon a
showing of cause, be permitted to extend the commencement of such hearing for up
to an additional 60 days.
(b) Reservations of Rights: Nothing in this Agreement shall be
deemed to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or (ii) be a
waiver by the Bank of the protection afforded to it by 12 U.S.C. Section 91 or
any substantially equivalent state law; or (iii) limit the right of the Bank
hereto (A) to exercise self help remedies such as (but not limited to) setoff,
or (B) to foreclose against any real or personal property collateral, or (C) to
obtain from a court provisional or ancillary remedies such as (but not limited
to) injunctive relief or the appointment of a receiver. The Bank may exercise
such self help rights, foreclose upon such property, or obtain such provisional
or ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Agreement. At Bank's option, foreclosure
under a mortgage or deed of trust may be accomplished by any of the following:
the exercise of a power of sale under the deed of trust or mortgage, or by
judicial sale under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or maintenance
of an action for foreclosure or provisional or ancillary remedies shall
constitute a waiver of the right of any party, including the claimant in any
such action, to arbitrate the merits of the controversy or claim occasioning
resort to such remedies.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as of
the day and year first above written.
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<PAGE>
Signed, sealed and delivered
in the presence of: TRANSEASTERN PROPERTIES, INC., A FLORIDA
CORPORATION, F/K/A TRANSEASTERN PROPERTIES
OF SOUTH FLORIDA, INC., A FLORIDA
CORPORATION
____________________________________
Witness #1 By_________________________________(SEAL)
____________________________________ Edward Falcone, Executive Vice President
____________________________________
Print Name
____________________________________ Address:
Witness #1
3300 University Drive
____________________________________ Coral Springs, Florida 33065
Print Name
STATE OF FLORIDA )
)ss
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this ____ day of
September, 1996, by EDWARD FALCONE, as Executive Vice President of TRANSEASTERN
PROPERTIES OF SOUTH FLORIDA, INC., a Florida corporation, by and on behalf the
corporation. He is personally known to me and/or has produced
________________________________ as identification.
My Commission Expires: ___________________________________________
NOTARY PUBLIC STATE OF FLORIDA
___________________________________________
Print Name
12
<PAGE>
This Instrument Prepared by:
Richard A. Wood, Esq.
Therrel Baisden & Meyer Weiss
1111 Lincoln Road, Ste. 500
Miami Beach, Florida 33139
Loan No. 91004539
REAL ESTATE MORTGAGE, ASSIGNMENT,
AND SECURITY AGREEMENT,
(THE "MORTGAGE")
DATE: September ___, 1996
BORROWER:
TRANSEASTERN PEMBROKE VILLAGES, INC., A FLORIDA CORPORATION
3300 University Drive
Coral Springs, Florida 33065
BANK:
CHASE FEDERAL BANK, A FEDERAL SAVINGS BANK, A DIVISION OF
NATIONSBANK, N.A. (SOUTH), a national banking association 701
West Cypress Creek Road
Suite 101
Fort Lauderdale, FL 33309
AMOUNT OF INITIAL LOAN SECURED HEREBY: $3,000,000.00
MAXIMUM POSSIBLE PRINCIPAL DEBT, INCLUDING FUTURE ADVANCES, THAT MAY BE SECURED
HEREBY: $6,000,000.00
LAND: That certain parcel of Land commonly referred to as Parcel "F" -
"Egret's Way" located within the NASHER PLAT as recorded in Plat Book
159 at Page 42, of the Public Records of Broward County, Florida, and
as particularly described on Exhibit "A" attached hereto and
incorporated herein by reference.
1. MORTGAGE. In consideration of Ten Dollars ($10.00) and other
valuable consideration received by Borrower, the receipt and sufficiency of
which are hereby acknowledged, Borrower hereby grants, bargains, sells, assigns,
transfers, conveys and mortgages to Bank, its successors and assigns, to its own
proper use and benefit forever, subject to the terms and conditions of this
Mortgage, the real estate described above as the Land, together with:
a. APPURTENANCES. The benefit of all easements and other rights
of any nature whatsoever, if any, appurtenant to the Land or the
Improvements, or both, the benefit of all rights-of- way, strips and
gores of land, streets, alleys, passages, drainage rights, sanitary
sewer and potable water rights, stormwater drainage rights, rights of
ingress and egress to the Land and all adjoining property, and any
improvements of Borrower now or hereafter located on any of such real
property interests, water rights and powers, oil, gas, mineral and
riparian and littoral rights, whether now existing or hereafter
arising, together with the
<PAGE>
reversion or reversions, remainder or remainders, rents, issues,
incomes and profits of any of the foregoing (the "Appurtenances").
b. IMPROVEMENTS. All buildings, structures, betterments and
other improvements of any nature now or hereafter situated in whole or
in part upon the Land or on the Appurtenances, regardless of whether
physically affixed thereto or severed or capable of severance therefrom
(the "Improvements").
c. TANGIBLE PROPERTY. All of Borrower's right, title and
interest, if any, in and to all fixtures, equipment and tangible
personal property of any nature whatsoever that is now or hereafter (i)
attached or affixed to the Land, the Appurtenances, or the
Improvements, or (ii) situated upon or about the Land, the
Appurtenances and/or the Improvements, regardless of whether physically
affixed thereto or severed or capable of severance therefrom, or (iii)
used, regardless of where situated, if used, usable or intended to be
used, in connection with any present or future use or operation of or
upon the Land. The foregoing includes: all goods and inventory, all
heating, air conditioning, lighting, incinerating and power equipment;
all engines, compressors, pipes, pumps, tanks, motors, conduits,
wiring, and switchboards; all plumbing, lifting, cleaning, fire
prevention, fire extinguishing, refrigerating, ventilating, and
communications and public address apparatus; all signage and
recreational amenities including, without limitation, swimming pools,
exercise equipment, tennis courts, clubhouse furnishings or saunas; all
boilers, furnaces, oil burners, vacuum cleaning systems, elevators and
escalators; all stoves, ovens, ranges, disposal units, dishwashers,
water heaters, exhaust systems, refrigerators, cabinets, and
partitions; all rugs, draperies and carpets; all laundry equipment; all
building materials; all furniture (including, without limitation, any
outdoor furniture) , furnishings, office equipment and office supplies;
and all additions, accessions, renewals, replacements and substitutions
of any or all of the foregoing. The property interests encumbered and
described by this paragraph are called the "Tangible Property" in this
Mortgage.
d. All rents, issues, incomes and profits in any manner arising
from the Land, Improvements, Appurtenances or Tangible Property, or any
combination thereof, including Borrower's interest in and to all leases
of whatsoever kind or nature, licenses, franchises and concessions of
or relating to all or any portion of the Land, Appurtenances,
Improvements or Tangible Property,or the operation thereof, whether now
existing or hereafter made, including all amendments, modifications,
replacements, substitutions, extensions, renewals or consolidations
thereof. The property interests encumbered and described in this
subparagraph are called the "Rents" in this Mortgage.
e. SECONDARY FINANCING. All of the Borrower's rights, power or
privilege to further encumber any of the Collateral described in this
paragraph 1, it being intended by this provision to divest Borrower of
the power to encumber or to grant a security interest in any of the
Collateral as security for the performance of an obligation, except for
"Permitted Encumbrances," as defined in paragraph 5 herein.
f. PROCEEDS. All proceeds of the conversion, voluntary or
involuntary, of any of the property encumbered by this Mortgage into
cash or other liquidated claims, or that are otherwise payable for
injury to or the taking or requisitioning of any such property,
including all judgments, settlements and insurance and condemnation
proceeds as provided in this Mortgage.
g. CONTRACT RIGHTS. All of Borrower's right, title and interest
in and to any and all contracts or leases, written or oral, express or
implied, now existing or hereafter entered into or arising, in any
matter related to the improvement, use, operation, sale, conversion or
other disposition of any interest in the Land, Appurtenances,
Improvements, Tangible Property or the Rents, or any combination
thereof, including all tenant leases, sales contracts, payments due and
to become due thereunder; and including, without limitation, contracts
pertaining to maintenance, on-site security service, elevator
maintenance, landscaping services, building or project management,
marketing, leasing, sale and janitorial services; Borrower's interest
as lessee in equipment leases, including telecommunications, computers,
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<PAGE>
vending machines, model furniture, televisions, laundry equipment; and
Borrower's interests in construction contracts or documents (including
architectural and engineering drawings and plans and specifications
relating to the Improvements), service contracts, use and access
agreements, advertising contracts and purchase orders. The property
interest encumbered and described in this paragraph are called the
"Contract Rights" in this Mortgage. Notwithstanding the foregoing, Bank
will not be bound by any of Borrower's obligations under any of the
foregoing contracts unless and until Bank elects to assume any of such
contracts or leases in writing.
h. NAME. All right, title and interest of Borrower in and to all
trade names, project names, logos, service marks, trademarks, goodwill,
and slogans now or hereafter used in connection with the operation of
the Mortgaged Property except the name of Transeastern Properties,
Inc., a Florida corporation, f/k/a Transeastern Properties of South
Florida, Inc., a Florida corporation.
i. OTHER INTANGIBLES. All contract rights, commissions, money,
deposits, certificates of deposit, letters of credit, documents,
instruments, chattel paper, accounts, and general intangibles [as such
terms from time to time are defined in the Uniform Commercial Code as
adopted by the State of Florida (the "Uniform Commercial Code"], in any
manner related to the construction, use, operation, sale, conversion or
other disposition (voluntary or involuntary) of the Land, Appurtenanc-
es, Improvements, Tangible Property or Rents, including all
construction plans and specifications, architectural plans, engineering
plans and specifications, permits, governmental or quasi-governmental
approvals, licenses, developer rights, vested rights under any Planned
Unit Development or Development of Regional Impact or other project,
zoning, or land use approval, insurance policies, rights of action and
other choses in action.
The Land, Appurtenances, Improvements and Tangible Property are
collectively referred to as the "Mortgaged Property" in this Mortgage.
The portion of the property encumbered by this Mortgage that from time
to time consists of intangible personal property, except for the Rents,
is called the "Intangible Property" in this Mortgage. The Mortgaged
Property, Rents, Intangible Property and any other property interests
encumbered hereby are hereinafter referred to collectively as the
"Collateral". Wherever used in this Mortgage, the use of the terms,
"Mortgaged Property," "Rents", "Intangible Property", and "Collateral"
means and includes all or any portion thereof applicable to the
context.
Notwithstanding the grant of Borrower's interest in the Rents and
Contract Rights above, so long as no Default shall exist hereunder or
under any of the other Loan Documents, Borrower shall have a license to
collect and receive all incomes arising from the operation, ownership,
and maintenance of the Mortgaged Property, Rents and Contract Rights,
but not more than one (1) month prior to accrual.
2. SECURITY AGREEMENT. To the extent any of the Collateral
encumbered by this Mortgage from time to time constitutes personal property
subject to the provisions of the Uniform Commercial Code, this Mortgage
constitutes a "Security Agreement" for all purposes under the Uniform Commercial
Code. Without limitation, Bank, at its election, upon the occurrence of a
Default under this Mortgage, will have all rights, powers, privileges and
remedies from time to time available to a secured party under the provisions of
the Uniform Commercial Code with respect to the Collateral. The names and
addresses of debtor and secured party are as shown for Borrower and Bank,
respectively, on the signature pages hereof. The remedies for any Default under
the covenants, terms, and conditions of the security agreement herein contained
shall be (i) as prescribed herein, or (ii) as prescribed by general law, or
(iii) as prescribed by the specific statutory provisions now or hereafter
enacted and specified in the Uniform Commercial Code, all at Bank's sole
election. Borrower and Bank agree that the filing of financing statements in the
records normally having to do with personal property shall never be construed as
in anywise derogating from or impairing this declaration and hereby stated
intention of Borrower and Bank that everything used in connection with the
production of income from the Collateral or adapted for use therein or which is
described or reflected in this Mortgage, is, and at all times and for all
purposes and in all proceedings
3
<PAGE>
both legal or equitable shall be, regarded as part of the real estate
irrespective of whether (i) any such item is physically attached to the
Improvements, (ii) serial numbers are used for the better identification of
certain items capable of being thus identified in a recital contained herein, or
(iii) any such item is referred to or reflected in any financing statement(s) so
filed at any time. Similarly, the mention in any financing statement of the
rights in, or the proceeds of, any fire, hazard or liability insurance policy,
or any award in eminent domain proceedings for a taking or for loss of value, or
Borrower's interest as lessor in any present or future lease, or rights to
income growing out of the use of the Mortgaged Property, whether pursuant to a
lease or otherwise, shall not be construed as altering any of Bank's rights as
determined by this Mortgage, or otherwise available at law or in equity, or
impugning the priority of this Mortgage or the Loan Documents, or both, but such
mention in any financing statement is declared to be for Bank's protection if,
as, and when any court holds that notice of Bank's priority of interest, to be
effective against a particular class of persons, including the federal
government and any subdivisions or entities of the federal government, must be
perfected in the manner required by the Uniform Commercial Code.
Borrower covenants and agrees that Borrower will furnish Bank with
notice of any change in name, identity, organizational structure, mailing
address, residence, or principal place of business thirty (30) days prior to the
effective date of any such change. Borrower will promptly execute any financing
statements or other instruments deemed necessary by Bank to prevent any filed
financing statement from becoming misleading or losing its perfected status or
to reinstate any lapsed financing statement.
3. AFTER-ACQUIRED PROPERTY. Without the necessity of any further act
of Borrower or Bank, the lien of and security interest created by this Mortgage
automatically will extend to and include (i) any and all renewals, replacements,
substitutions, accessions, proceeds, products, additions or after-acquired
property or to the Collateral, and (ii) any and all monies, proceeds and other
property that from time to time, either by delivery to Borrower or by any
instrument (including this Mortgage) may be subjected to such lien and security
interest by Borrower or by anyone on behalf of Borrower, or with the consent of
Borrower, or which otherwise may come into the possession or otherwise be
subjected to the control of Bank or Borrower pursuant to this Mortgage or the
other Loan Documents.
4. DEBT. Borrower is justly indebted to Bank in the principal amount
indicated above (or so much as may be advanced to Borrower by Bank from time to
time), as evidenced by that certain Promissory Note in the original principal
amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00), of even date
herewith, made by Borrower, payable to the order of Bank and maturing as stated
in said Notes, unless such maturity is accelerated or extended (as provided in
said Notes) , which Notes, together with any and all renewals, replacements,
extensions, modifications, substitutions, future advances, and any and all other
certificates or evidence of indebtedness evidenced by said Notes are herein
called the "Note".
Borrower's obligations described below are secured, among other things,
by the collateral described in this Mortgage, which term includes any and all
amendments, extensions, renewals, replacements, substitutions, modifications and
consolidations of this Mortgage, and may also from time to time be secured by
other collateral described in written documents. The Mortgage and such other
documents as may exist on the date hereof or may exist hereafter are referred to
as the "Security Documents," which term, as defined in the Note, includes any
and all financing statements, letters of credit, assignments, agreements, any
and all amendments, modifications, extensions, renewals, replacements,
substitutions and consolidations thereof or thereto. The Security Documents, the
Note and the Loan Agreement between Borrower and Bank are referred to
collectively as the "Loan Documents". The Loan evidenced by the Note and secured
by this Mortgage is to be disbursed in accordance with the terms and provisions
of a Loan Agreement of even date herewith between Borrower and Bank (the "Loan
Agreement"). The Note, the Mortgage and the Loan Agreement shall always be taken
and read together as constituting part of one transaction. All sums disbursed
pursuant to the terms of the Loan Agreement shall be secured by this Mortgage
with the same priority as if advanced on the date hereof.
4
<PAGE>
The obligations of Borrower secured by the Security Documents arising
pursuant to the Loan Documents are as follows and are called the "Debt" in this
Mortgage and the other Loan Documents:
a. NOTE. Borrower's payment of all sums due from time to time as
evidenced by the Note; and
b. LOAN DOCUMENTS. Borrower's payment or performance of all
obligations imposed upon Borrower by the Loan Documents; and
c. ADVANCES. All sums advanced by Bank to or for the benefit of
Borrower in the manner provided in the Loan Documents, or for the
protection of the Security of the Collateral, including, without
limitation, all sums advanced pursuant to this Mortgage, including
advances for repairs, maintenance, insurance, taxes, or assessments;
and
d. COSTS. All costs, expenses, losses, damages and other charges
sustained or incurred by Bank because of: (i) Borrower's Default in
payment or performance, as the case may be, of any provision contained
in the Loan Documents; (ii) defense of actions instituted by Borrower
or a third party against Bank arising out of or related to the Loan, or
in the realizing upon, protecting, perfecting, defending, or (iii)
actions brought or defended by Bank enforcing Bank's security interest
in the Collateral. All of these costs and expenses include reasonable
attorneys' fees, paralegals' fees, or legal assistants' fees, whether
incurred with respect to collection, litigation, bankruptcy proceedings
interpretation dispute, negotiation, trial, appeal, defense of actions
instituted by a third party against Bank, or enforcement of any
judgment based on the Loan Documents, whether or not suit is brought to
collect such amounts or to enforce such rights or, if brought, is
prosecuted to judgment.
e. LETTERS OF CREDIT. All sums advanced by Bank for the benefit
of Borrower under any other instrument or otherwise, including, without
limitation, any amounts paid by Bank under any letters of credit issued
by Bank for the benefit of Borrower.
f. MISCELLANEOUS EXPENSES. All costs and expenses incurred by
Bank in connection with the Loan, whether prior to or at closing or
during the term thereof, including, without limitation, loan
origination fees, commitment fees, extension fees, title insurance
search fees, premiums and endorsement fees, hazard and other insurance
required by the Loan Documents, pre-closing and post-closing
appraisals, appraisal reports or opinions of value, surveys, brokerage
commissions and claims of brokerage in connection with the Loan, ad
valorem and personal property taxes, documentary stamp taxes and
intangible taxes, attorneys' fees, consultant fees, architect's and
engineer's fees, construction consultant's fees, environmental surveys
or assessments, and recording charges.
g. INDEMNITIES. All costs, expenses, and amounts arising under
or pursuant to any indemnity contained within the Loan Documents or in
any separate agreement executed by Borrower in favor of Bank including,
without limitation, the Hazardous Substance Certificate and
Indemnification Agreement (the "Indemnity").
5. TITLE WARRANTIES. Subject to the Permitted Encumbrances (as
hereinafter defined), Borrower covenants with Bank that: (i) Borrower is
indefeasibly seized of the Land and Improvements in fee simple, has good and
marketable title to the Collateral and has full power, lawful right and
authority to convey the same in fee simple and to grant Bank a perfected first
lien security interest in the Collateral, and (ii) the Collateral is free and
clear of all liens, encumbrances, restrictions, and security interests of any
nature except for those permitted encumbrances which Bank has previously
approved, as set out in Schedule B of the title insurance policy and
endorsements insuring this Mortgage, which are referred to as "Permitted
Encumbrances" in this Mortgage.
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6. LIENS. Except as otherwise provided in the Loan Agreement,
Borrower will not create or permit to be created, or to remain, and will
promptly discharge at Borrower's expense any and all liens or encumbrances upon,
or security interests in, the Collateral, or any combination thereof, whether
consensual, common law, statutory, voluntary, involuntary, or arising by
operation of law, except Permitted Encumbrances. Notwithstanding the foregoing,
and except for any construction liens, Borrower may contest the amount, validity
and enforceability of any involuntary or nonconsensual lien, encumbrance or
security interest, including those arising by operation of law, in the manner
provided in paragraph 8 below. Except as otherwise provided in the Loan
Agreement, if any construction lien is filed against the Mortgaged Property,
Borrower agrees to discharge or otherwise remove such lien by bond or otherwise,
within thirty (30) days of imposition of same, but may thereafter contest the
amount or validity of such lien as provided in paragraph 8 below.
7. TAXES AND OTHER IMPOSITIONS. Borrower will pay or cause to be
paid, prior to any delinquency in (i) all property taxes, assessments, water,
sewer, utility and other rents, rates and charges, including all excises, taxes,
levies, license fees, permit fees, impact fees, connection fees, and other fees
and charges, whether general or special, ordinary or extraordinary, foreseen or
unforeseen, that may be assessed, levied or imposed upon the Collateral, or
otherwise arising with respect to the occupancy, use, possession or disposition
thereof, whether or not the failure to pay the same might result in the creation
of a lien upon the Collateral, or any combination thereof; (ii) all franchise,
excise and other taxes, fees and charges assessed, levied or imposed with
respect to Borrower's right to do business in the State of Florida and the
political subdivisions thereof; (iii) all taxes and fees (except for Bank's
state and federal income taxes) that may be levied by the United States of
America or any state or political subdivision thereof, upon Bank or Borrower in
connection with or upon the Loan Documents, or the Debt or its payment, or
collection, or any combination thereof (including all documentary stamp taxes
and intangible taxes plus any penalties and interest charged for the late
payment of any such taxes); and (iv) except as otherwise provided in the Loan
Agreement, all lawful claims and demands of contractors, subcontractors,
mechanics, laborers, materialmen and other lienors which, if unpaid, might
result in the creation of a lien upon the Collateral. The sums payable under
this paragraph are called "Impositions". Nothing contained in this paragraph
will require the payment of any Imposition so long as the amount, validity or
enforceability thereof is contested by appropriate proceedings as provided in
paragraph 8 below. With respect to state and local real and tangible personal
property taxes, however, Borrower will pay same and will furnish Bank with
copies of the receipts for each such payment without demand prior to April 30th
of each year of the Loan and any contest of the same must be by a suit or other
proceeding for a refund. With respect to all other Impositions, Borrower will
furnish Bank with proof of such payment upon demand. If any payment required to
be made by Borrower by this paragraph is prohibited by law, with the result that
Bank becomes liable for its payment, then the Debt will immediately become due
and payable, at Bank's option.
8. CONTESTS. Borrower may contest, by any and all appropriate
administrative, trial or appellate proceedings, or any combination thereof, and
in Bank's name, if required by law, the amount, validity, enforceability or
application of any Imposition that Borrower is required to pay or perform to any
person or entity other than Bank by any provision of this Mortgage or the other
Loan Documents if and only for so long as: (i) Borrower notifies Bank in writing
of its intent to contest the Imposition; (ii) such contest suspends the
collection or enforcement of the item(s) contested; (iii) no part of the
Collateral will be subject to loss, sale or forfeiture before final
determination of any such contest; (iv) neither Borrower nor Bank will be
subject to any criminal liability; (v) Borrower furnishes such security as may
be required by law in connection with each such contest; (vi) the value,
usefulness and marketability of the Collateral will not be adversely impaired by
any such contest; (vii) Borrower otherwise continues to pay and perform, as the
case may be, the Debt and Borrower's obligations under this Mortgage; (viii)
Borrower otherwise is not in Default under any provision of the Loan Documents;
(ix) each such contest is continuously prosecuted diligently to final
determination; (x) Borrower pays or causes to be paid, and defends, indemnities
and holds Bank harmless of and from any and all losses, judgments, decrees and
costs (including all reasonable attorneys, fees) incurred in connection with
each such contest; (xi) Borrower, promptly following final determination of each
such contest, fully pays and discharges all amounts that may be levied,
assessed, charged, imposed or otherwise determined to be payable, together with
all penalties, fines, interests, costs
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and expenses, and otherwise complies with such final determination, at
Borrower's sole cost and expense; (xii) Borrower furnishes Bank with such
security as Bank reasonably may require to assure Borrower's compliance with all
of the foregoing requirements, and (xiii) such liens are not filed against the
Mortgaged Property pursuant to Chapter 713, Florida Statutes, in which event
such liens must be discharged or transferred to bond pursuant to paragraph 6
above before Borrower contests such liens except as otherwise provided in the
Loan Agreement. So long as Borrower complies with the foregoing and Bank is
promptly reimbursed for all costs and expenses incurred, Bank will cooperate
with Borrower in connection with any such contest.
9. INSURANCE. Until the Debt shall have been discharged by Borrower,
Borrower shall maintain, at Borrower's cost and expense, the following insurance
coverages in full force and effect at all times:
a. HAZARD INSURANCE. Borrower shall keep the Tangible Property
and Improvements which now or hereafter may constitute part of the
Mortgaged Property insured at all times against loss or damage by fire
and other hazards included within the term "all risk" or "extended
coverage" and against such other hazards as Bank may require in the
full insurable value thereof (or such lesser amount as Bank may
authorize in writing) , with an insurer satisfactory to Bank. Such
policy shall include a Replacement Cost and Agreed Amount/Stipulated
Value Endorsement and a Sinkhole Endorsement, if deemed necessary by
Bank.
b. LIABILITY INSURANCE. Borrower will obtain and keep in full
force a "Broad Form Comprehensive General Liability" insurance coverage
for both Borrower and any contractor performing services to the
Mortgaged Property in the minimum coverage amount of TWO MILLION AND
NO/100 DOLLARS ($2,000,000.00) per occurrence for bodily injury and One
Hundred Thousand Dollars ($100,000.00) per occurrence for property
damage.
c. FLOOD INSURANCE. If at any time the Land or any portion
thereof is located in a "Flood Hazard Area" pursuant to the Flood
Disaster Protection Act of 1973 or any successor or supplemental act
thereto, flood insurance in the maximum amount available or such other
amount as Bank may reasonably request;
d. BUILDER'S RISK INSURANCE. An "All risk", non-reporting,
completed value builder's risk insurance policy in an amount not less
than loan amount on a per unit basis which policy shall include Agreed
Amount, Replacement Cost, Permit to occupy and Vandalism/Malicious
Mischief Endorsements.
e. OTHER INSURANCE. Machinery insurance, worker's c ompensation
insurance, wind damage insurance, and other insurance coverages as Bank
may reasonably require.
The policy or policies of insurance shall (i) be from companies and in
coverage amounts acceptable to Bank, (ii) contain a standard mortgagee clause in
favor of Bank naming Bank as a mortgagee and including a lender's loss payee
clause in such policy, as applicable (iii) not be terminable or modified without
thirty (30) days, prior written notice to Bank, and (iv) be evidenced by
original policies or certified copies of policies deposited with Bank, as Bank
may elect, to be held by Bank until the Debt shall have been fully paid and
discharged. Borrower shall furnish Bank satisfactory evidence of payment of all
premiums required and similar evidence of renewal or replacement coverage not
later than thirty (30) days prior to the date any coverage will expire.
Each insurance policy or endorsement required herein shall be written
by an insurer having a rating not less than "A-XI" Best's Rating according to
the most current edition of Best's Key Rating Guide as determined at the time of
the initial policy and at all times during the term hereof. All policies shall
indicate that notices related to such insurance shall be sent to Bank at:
Chase Federal Bank, a Federal Savings Bank,
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a Division of NationsBank, N.A. (South)
Suite 101 701 West Cypress Creek Road
Ft. Lauderdale, FL 33309
Attn: Loan Administration Section,
Real Estate Banking Group
If any loss occurs with respect to the Mortgaged Property, Bank is
hereby appointed attorney-in-fact for Borrower to make proof of loss if Borrower
fails to make the same punctually, and to give a receipt for any proceeds
collected under such policies. Borrower will promptly give written notice to
Bank of any loss or damage greater than ONE THOUSAND AND NO/100 DOLLARS
($1,000.00) per Unit or TWENTY FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00)
cumulatively to the Mortgaged Property, and will not adjust or settle any such
loss without Bank's prior written consent, which consent shall not be
unreasonably withheld or delayed. Upon any Default by Borrower under this
Mortgage, all right, title and interest of Borrower in and to all such insurance
policies then in force, including any and all unearned premiums and existing
claims, will inure to Bank, which, at its option, and as attorney-in-fact for
Borrower, may then make, settle and give binding acquittances for claims under
all such policies, and may assign and transfer such policies or cancel or
surrender them, applying any unearned premium in such manner as Bank may elect.
The foregoing appointment of Bank as attorney-in-fact for Borrower is coupled
with an interest, and is irrevocable. Notwithstanding the occurrence of any
casualty or the availability of any insurance proceeds, Borrower will pay the
Debt in the manner required by the Loan Documents.
10. CONDEMNATION. If all or any part of the Collateral, or any
interest therein or right accruing thereto, is taken as a result of, or in lieu
or in anticipation of, the exercise of the right of condemnation or eminent
domain, or by reason of the temporary requisition of the use or occupancy of the
Mortgaged Property, in any event by any government or quasi-governmental
authority, civil or military, or any other party entitled to exercise such
powers by law, general or special, or is devalued or otherwise adversely
affected by any of the foregoing actions, all proceeds payable with respect to
any such action are assigned to Bank and shall be paid to Bank. Bank shall be
under no obligation to question the amount of any such award or compensation and
may accept the same in the amount in which the same shall be paid. The proceeds
of any award or compensation so received shall, at the option of the Bank,
either be applied to the payment of the Debt or be paid over to the Borrower for
the restoration of the Improvement. Borrower, immediately upon obtaining
knowledge of the institution or threatened institution, of any proceedings for
the Mortgaged Property, or any part thereof, by condemnation or eminent domain,
will notify the Bank of the pending of such proceedings. Bank shall have the
right to intervene and participate in any proceedings for and in connection with
any taking referred to in this section. Borrower shall not enter into any
agreement for the taking of the Mortgaged Property or any part thereof with any
person or persons authorized to acquire the same by condemnation or eminent
domain, unless the Bank shall have consented thereto in writing. Any of the
foregoing actions are sometimes called a "condemnation" or "taking" in this
Mortgage and the other Loan Documents. Such proceeds include, without
limitation, severance damages, damages arising from the change of grade of any
street or the access thereto, the taking of air rights and damages caused by
noise, pollutants and other emissions. Notwithstanding any such taking or other
injury or decrease in value, or the availability of any proceeds for any of the
foregoing, Borrower shall continue to pay the Debt in the manner required by the
Loan Documents. Bank's rights under this paragraph will survive the foreclosure
or other enforcement of this Mortgage, and Bank will have the right to receive
and retain all proceeds to the extent of any deficiency which exists upon such
foreclosure or other enforcement, together with legal interest thereon, and to
the extent of the reasonable counsel fees, costs and disbursements incurred by
Bank in connection with the collection of such proceeds. Such right shall exist
whether or not a deficiency judgment shall have been sought or recovered or
denied upon the Note. The remaining balance of such proceeds, if any, will inure
to the benefit of the party entitled thereto by applicable law. Notwithstanding
the foregoing, if Bank uses the net proceeds of the condemnation to reduce the
principal balance owed under the Note, Bank will thenceforth allow those funds
to be disbursed to the Borrower in accordance with the Loan Agreement.
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<PAGE>
11. APPLICATION OF INSURANCE PROCEEDS AND AWARDS. The Borrower will
promptly give the Bank written notice of any damage to or destruction of the
Mortgaged Property or any part thereof, generally describing the nature and
extent of such damage or destruction and the Borrower's best estimate of the
cost of restoring the Mortgaged Property. The Bank shall be entitled to all
insurance proceeds payable on account of such damage or destruction and the
Borrower hereby irrevocably assigns, transfers and sets over to the Bank all
rights of the Borrower to any such proceeds or payments and irrevocably
authorizes and empowers the Bank, at its option and in its sole and absolute
discretion, in the name of the Borrower or otherwise, to file and prosecute what
would otherwise be the Borrower's claim for any such proceeds or payment and to
collect, receipt for and retain the same for disposition in accordance with this
Section. The Bank may, at its sole option, apply all amounts recovered under any
insurance policy required to be maintained by the Borrower hereunder in any one
or more of the following ways: (a) to the payment of the reasonable costs and
expenses incurred by the Bank in obtaining such insurance proceeds, including
the fees and expenses of attorneys and insurance and other experts and
consultants, the costs of litigation, arbitration, mediation, investigations and
other judicial, administrative or other proceedings and all other out-of-pocket
expenses; (b) to the payment of any of the Debt other than indebtedness with
respect to the Note at the time outstanding; (c) to the payment of the principal
of the Note and any interest accrued and unpaid thereon, without regard to
whether any portion or all of such amounts shall be matured or unmatured,
together with interest at the default interest rate on any overdue principal and
(to the extent permitted by applicable law) interest; and, in case such amount
shall be insufficient to pay in full all such amounts, then such amounts shall
be applied, FIRST, to the payment of all amounts of interest accrued on the Note
and unpaid, without preference or priority of any payment of interest over any
other payment of interest or of any other Note, and, SECOND, to the payment of
all amounts of principal at the time outstanding, without preference or priority
of any installment or amount of principal over any other installment or amount
of principal or of any Note over any other Note, but otherwise in such manner
and order as the Bank shall in its sole discretion determine; (d) to fulfill any
of the other covenants contained herein as the Bank may determine; (e) release
to the Borrower for application to the cost of restoring the Mortgaged Property;
or (f) release to the Borrower. In the event of a foreclosure of this Mortgage,
the purchaser of the Mortgaged Property shall succeed to all the rights of the
Borrower including any right to unearned premiums, in and to all policies of
insurance assigned and delivered to the Bank. Notwithstanding the foregoing, if
Bank uses the net proceeds of the insurance proceeds or awards to reduce the
principal balance owed under the Note, Bank will thenceforth allow those funds
to be disbursed to the Borrower in accordance with the Loan Agreement.
Notwithstanding anything in this paragraph to the contrary, if the Bank has
elected to apply proceeds to the Debt, Bank will re-disburse said proceeds in
accordance with the Loan Agreement.
12. MAINTENANCE, REPAIRS, AND RECONSTRUCTION.
a. MAINTENANCE AND REPAIRS. Borrower, at its sole cost and
subject to Bank's satisfaction, shall make all repairs, renewals,
replacements, servicing and reconstruction that are necessary to
maintain the Mortgaged Property in good order, condition and repair.
Immediately following the occurrence of any casualty or other loss,
Borrower promptly will undertake all restoration required or desirable
and will pursue it diligently to completion. The foregoing shall be
accomplished by the Bank funding the insurance proceeds it receives
from the insurer to the Borrower under the terms and conditions of the
Loan Agreement for the construction of individual Units. Borrower shall
(i) not strip, waste, remove or demolish any portion of the Mortgaged
Property, nor suffer or permit any such action; (ii) promptly comply
with all laws, governmental regulations and public or private
restrictions or easements, or both, of any kind affecting the Mortgaged
Property or requiring any alterations or improvements to be made
thereon, and (iii) not commit, suffer or permit any act upon the
Mortgaged Property in violation of any law, subject to Borrower's
right' to contest the same in good faith to conclusion, as provided in
paragraph 8 of this Mortgage. If any public agency or authority
requires or commences any proceedings for the demolition or removal, or
both, of any improvements or portions thereof comprising the Mortgaged
Property due to non-compliance with health, safety, fire or building
codes, then, unless Borrower undertakes to contest such action in the
manner provided in paragraph 8 above and pursues such contest to a
successful conclusion, such action will constitute a Default under this
Mortgage. Borrower will not,
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<PAGE>
without Bank's prior written consent, (i) make any material
alterations, additions or improvements of or to the Mortgaged Property
unless required by the Loan Agreement; (ii) make any material change in
the general nature of the use or occupancy of the Mortgaged Property;
(iii) institute or join or acquiesce in any action to change the
existing zoning or land use classification of the Mortgaged Property,
or (iv) grant easements or licenses affecting the use or operation of
the Mortgaged Property. Bank and any persons authorized by Bank may
enter the Mortgaged Property at all reasonable times without prior
notice for inspections or for any other lawful purpose. If Borrower
fails to comply with the requirements of this paragraph, then Bank,
without waiving the option to foreclose, may take some or all measures
Bank reasonably deems necessary or desirable for the maintenance,
repair, preservation or protection of the Mortgaged Property, and any
expenses reasonably incurred by Bank in so doing shall become part of
the Debt secured hereby, and shall, at the option of Bank, become
immediately due and payable, and shall bear interest at the Default
Rate specified in the Note. Bank shall have no obligation to care for
or maintain the Mortgaged Property, or, having taken some measures
therefor, to continue same or take other measures.
b. RECONSTRUCTION. The Borrower after receipt of net insurance
proceeds from Bank funded in accordance with the Loan Agreement shall
promptly repair, restore, replace or rebuild any part of the Mortgaged
Property, now or hereafter encumbered by this Mortgage which may be
affected by any condemnation proceeding or which may otherwise become
damaged, destroyed, lost or unsuitable for use. In the event the
Mortgaged Property or any part thereof if damaged or destroyed by fire
or other casualty, the Borrower shall immediately notify the Bank, in
writing, of such damage or destruction. The Borrower shall not cause or
permit anything to be done which would or could increase the risk of
fire or other hazard to the Mortgaged Property, or any part thereof, or
which would or could result in an increase in any insurance premiums
payable with respect to the Mortgaged Property, or which would or could
result in the cancellation of any insurance policy carried with respect
to the Mortgaged Property. No part of the Mortgaged Property,
including, but not limited to, any building, structure, water system,
sewer system, parking lot, driveway, landscape scheme, timber or other
ground improvement, equipment or other property, now or hereafter
mortgaged, shall be removed, demolished or materially altered without
the prior written consent of the Bank. No top soil, sand, sod, loam,
clay or gravel shall be mined, stripped, or removed from the Mortgaged
Property without the written consent of the Bank. However, this shall
not prevent or restrict removal of any such materials taken for
excavation necessary to construct a basement, cellar or foundation
footings for the erection of a building or buildings for which a
building permit or permits has or have first been issued by the
governmental authority having jurisdiction thereof; or for the
construction of roadways or the Improvements constructed in accordance
with plans approved by the governmental authorities having jurisdiction
thereof in accordance with the Loan Agreement; provided, nevertheless,
that in the event the required removals become so extensive, as
determined by the Bank, as to create profit by sale of the removed
portion of the Mortgaged Property, said sums shall inure to the benefit
of the Bank to be applied as the Bank so directs, to the reduction of
the Debt.
13. ADVANCES. If Borrower Defaults in the observance or performance of
any of the provisions of the Loan Documents, including but not limited to
obtaining and maintaining insurance pursuant to paragraph 9, paying Impositions
pursuant to paragraph 7, and maintaining the Mortgaged Property pursuant to
paragraph 12, then Bank, without waiving or otherwise impairing any other of its
rights or remedies, at its sole option and without obligation to do so, and
without demand upon Borrower, may make any such payment or take such action as
Bank deems necessary or appropriate to correct such Default, or to protect the
security of the Collateral encumbered by the Loan Documents. All payments so
made, together with all costs and expenses so incurred, will be added to the
principal amount due under the Note and thereafter will bear interest at the
rate then payable as provided for in the Note, and will be secured by the lien
and security interest granted by the Security Documents. For the foregoing
purposes, Bank is authorized to (a) enter upon the Mortgaged Property; (b)
appear in and defend any action or proceeding purporting to affect the security
of this Mortgage or the rights or powers of Bank hereunder; (c) pay, purchase,
contest or compromise any encumbrance, charge or lien that in the reasonable
judgment of Bank appears
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<PAGE>
to adversely affect the Collateral; and (d) take whatever action Bank, in its
discretion, deems necessary or appropriate in exercising any such powers.
Notwithstanding the foregoing, Borrower immediately, upon Bank's demand, will
pay all sums so expended by Bank with interest as stated above.
14. BOOKS AND RECORDS. Borrower, at all times, will keep proper books
of record and account in which full, true and correct entries will be made of
its transactions with respect to the Collateral in accordance with generally
accepted accounting principles, consistently applied, and which will properly
and correctly reflect all items of income and expense in connection with the
operation of the Collateral, regardless of whether such income or expense is
realized by Borrower or any other person or entity whatsoever. Bank will have
the right from time to time during normal business hours to examine all such
books, records and accounts at Borrower's office or at the office of such other
person as maintains them, and to make such copies or extracts as Bank may
desire, at Borrower's expense.
15. TAXATION OF MORTGAGE. In the event of the passage after the date
of this Mortgage of any federal, state or local law deducting from the value of
real property for the purpose of ad valorem taxation any lien thereon or
changing in any way the laws for the taxation of mortgages or debts secured by
mortgages for federal, state or local purposes, or the manner of the collection
of any such taxes, and imposing a tax, either directly or indirectly, on any or
all of the Loan Documents, Bank shall have the right to declare the Debt due on
a date to be specified by not less than sixty (60) days' written notice given to
Borrower by Bank; provided, however, that such election shall be ineffective if
Borrower is permitted by law to pay the whole of such tax in addition to all
other payments required hereunder, and if Borrower, prior to such specified
date, does pay such tax and agrees to pay any such tax (excluding, however, all
taxes on the income of Bank) when thereafter levied or assessed, and such
agreement shall constitute a modification of this Mortgage. Notwithstanding any
provision in this paragraph to the contrary, Borrower may contest the matters
described herein per the procedures set forth in paragraph 8 above.
16. ASSIGNMENT OF RENTS, LEASES, PROFITS AND CONTRACT RIGHTS. Pursuant
to paragraph 1 of this Mortgage, Borrower has irrevocably assigned and set over
unto Bank all right, title, and interest of Borrower in and to the Rents and
Contract Rights (including all leases and sales contracts now or hereafter
existing relating to the Mortgaged Property) as security for the Debt, together
with the right to collect and enforce the same; provided, however, so long as
there shall be no Default under the Loan Documents, Borrower has been granted a
license to collect and receive all Rents assigned hereunder in accordance with
paragraph 1. Neither these assignments nor Bank's enforcement of the provisions
of these assignments (including the receipt of the Rents) will operate to
subordinate the lien of this Mortgage to any of the rights of any lessee or
purchaser under any lease or sales contract of the Mortgaged Property, or to
subject Bank to any liability to any such lessee or purchaser for the
performance of any obligations of Borrower under any such lease or sales
contract unless and until Bank agrees to such subordination or assumes such
liability by an appropriate written instrument. All right, title and interest of
each such lessee or purchaser in and to the Mortgaged Property, whether arising
by virtue of any such lease, contract or otherwise, at all times will be and
remain subject, subordinate and inferior to the lien of this Mortgage and all
rights, remedies, powers and privileges of Bank arising under or by virtue of
any of the Loan Documents. The assignments of Rents and Contract Rights
(including leases) contained in this Mortgage are intended to provide Bank with
all the rights and remedies of mortgagees pursuant to Section 697.07, Florida
Statutes, as may be amended from time to time. However, in no event shall this
reference diminish, alter, impair, or affect any other rights and remedies of
Bank. Notwithstanding the foregoing, if Borrower shall have executed an
Assignment of Rents constituting one of the Loan Documents, such Assignment of
Rents is hereby incorporated herein by reference and shall control if in
conflict with the provisions of this Mortgage.
17. LEASES AFFECTING MORTGAGED PROPERTY. The assignments contained in
paragraph 1 shall not be deemed to impose upon Bank any of the obligations or
duties of Borrower provided in any lease affecting the Mortgaged Property
(including, without limitation, any liability under the covenant of quiet
enjoyment contained in any lease in the event that any tenant shall have been
joined as a party defendant in any action to foreclose this Mortgage and shall
have been barred and foreclosed thereby of all right, title and interest and
equity
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of redemption in the Mortgaged Property or any part thereof), and
Borrower will comply with and observe its obligations as landlord under all
leases affecting the Mortgaged Property or any part thereof. Borrower has a
license to collect the Rents, but shall not accept payment of rent more than one
month in advance without the prior written consent of the Bank, and only so long
as there is no Default hereunder or under the other Loan Documents. Borrower
shall receive the Rents in trust on Bank's behalf, and Borrower covenants to
apply same to the payment of taxes and assessments upon the Mortgaged Property,
to the cost of insurance and maintenance and repairs, and to the payment of the
Debt, before using any part of the Rents for any other purpose.
Prior to a Default hereunder and demand by Bank for delivery of
security deposits held by Borrower or any agent of Borrower to Bank or its
designee, Borrower shall maintain all security deposits pursuant to the leases
in a separate, identifiable account deposited with Bank, or any other
institution acceptable to Bank, and in accordance with all applicable laws and
regulations. Upon delivery of such security deposits to Bank, or upon Bank's
enforcement of its security interest in such deposits, Bank shall hold such
security deposits pursuant to the terms of the leases in respect of which such
deposits were obtained by Borrower and in accordance with applicable law;
provided, however, in no event shall Bank be liable to any lessee of any part of
the Mortgaged Property for the return of any security deposit in any amount in
excess of the amount delivered to Bank by Borrower. Any security deposits held
by Bank shall not bear interest unless required by applicable law.
Borrower will: (a) not collect any of the Rents arising or accruing
under any lease in advance of the time when the same shall become due, other
than as required to be paid in advance by the terms of any lease, but in no
event more than one (1) month in advance; (b) not pledge, transfer, mortgage or
otherwise encumber or assign any of Borrower's interest in the leases or any
Rents arising or accruing therefrom; (c) not waive, excuse, condone, discount,
set-off, compromise, or in any manner release or discharge any tenant thereunder
of and from any obligations, covenants, conditions and agreements by said tenant
to be kept, observed and performed, including the obligation to pay the rents
thereunder, in the manner at the place and time specified therein; (d) not
cancel, terminate or consent to any surrender of any lease, nor modify, alter or
change any of the terms thereof without the prior written consent of Bank; (e)
not consent to any assignment of or subletting under any lease, whether or not
in accordance with the terms thereof, without the prior written consent of Bank;
and (f) not enter into, execute or deliver any leases without the prior written
consent of Bank.
In the event any tenant of the Mortgaged Property should be the subject
of any proceeding under the Federal Bankruptcy Code, as amended from time to
time, or any other federal, state or local statue which provided for the
possible termination or rejection of any of the leases assigned hereby, Borrower
covenants and agrees that if any of the leases is so terminated or rejected, no
settlement for damages shall be made without the prior written consent of Bank,
and any check in payment of damages for termination or rejection of any such
lease will be made payable both to Borrower and Bank. Borrower hereby assigns
any such payment to Bank and further covenants and agrees that upon the request
of Bank, it will duly endorse to the order of Bank any such check, the proceeds
of which will be applied to that portion of the Debt as Bank may elect.
From time to time, Borrower agrees to obtain tenant estoppel
certificates from each tenant of the Mortgaged Property containing such
information as may be reasonably requested by Bank.
18. DEFAULT. The occurrence of any of the following (time being of the
essence as to this Mortgage and all of its provisions) constitutes a "Default"
by Borrower under this Mortgage, and, at the option of Bank, under the other
Loan Documents:
a. SCHEDULED PAYMENT. Borrower's failure to make any payment
required under the Note when due or within any applicable grace period.
b. MONETARY DEFAULT. Borrower's failure to make any other
payment required by this Loan Agreement or the other Loan Documents
when due.
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c. OTHER. Borrower's failure to perform any other obligation
imposed upon Borrower by this Loan Agreement or any other Loan Document
within thirty (30) days after the date when performance is due. This
provision shall not be construed to provide Borrower with any grace
period in complying with any obligations imposed on Borrower by the
terms of the Loan Documents. Notwithstanding the foregoing provision,
Bank shall give Borrower notice, as defined in the Mortgage, of any
non-monetary default after which Borrower shall have a thirty (30) day
cure period, unless such non-monetary default is not capable of being
cured within said thirty (30) day period, in which case Borrower shall
have sixty (60) days to cure such default following the date
performance is due provided Borrower has commenced and is diligently
pursuing the cure for such default (which determination shall be made
in Bank's sole and absolute discretion), and provided such additional
time to cure such default does not negatively affect the value of the
collateral or the preservation of the collateral's value, which
determination shall be made in Bank's sole and absolute discretion..
d. REPRESENTATION. Any representation or warranty of Borrower
contained in this Loan Agreement or in any certificate delivered
pursuant hereto, or in any other instrument or statement furnished in
connection herewith, proves to be incorrect or misleading in any
adverse respect as of the time when the same shall have been made,
including, without limitation, any and all financial statements,
operating statements, and schedules attached thereto, furnished by
Borrower or any guarantor of the Loan to Bank or pursuant to any
provision of this Loan Agreement.
e. BANKRUPTCY. Borrower or any general partner of Borrower or
any guarantor of the Loan (i) files a voluntary petition in bankruptcy
or a petition or answer seeking or acquiescing in any reorganization or
for an arrangement, composition, readjustment, liquidation,
dissolution, or similar relief for itself pursuant to the United State
Bankruptcy Code or any similar law or regulation, federal or state,
relating to any relief for debtors, now or hereafter in effect; or (ii)
makes an assignment for the benefit of creditors or admits in writing
its inability to pay or fails to pay its debts as they become due; or
(iii) suspends payment of its obligations or takes any action in
furtherance of the foregoing; or (iv) consents to or acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator
or other similar official of Borrower, a general partner of Borrower,
or any guarantor, for all or any part of the Collateral or other assets
of such party, or either; or (v) has filed against it an involuntary
petition, arrangement, composition, readjustment, liquidation,
dissolution, or an answer proposing an adjudication of it as a bankrupt
or insolvent, or is subject to reorganization pursuant to the
United-States Bankruptcy Code, an action seeking to appoint a trustee,
receiver, custodian, or conservator or liquidator, or any similar law,
federal or state, now or hereinafter in effect, and such action is
approved by any court of competent jurisdiction and the order approving
the same shall not be vacated or stayed within sixty (60) days from
entry; or (vi) consents to the filing of any such petition or answer,
or shall fail to deny the material allegations of the same in a timely
manner.
f. JUDGMENTS. (1) A final judgment other than a final judgment
in connection with any condemnation is entered against Borrower,
Guarantors, or any general partner of Borrower, that (i) adversely
affects the value, use or operation of the Land or the improvements in
Bank's sole judgment, or (ii) adversely affects, or may adversely
affect, the validity, enforceability or priority of the lien or
security interest created by the Mortgage or any other Loan Document in
Bank's sole judgment, or both; or (2) execution or other final process
issues thereon with respect to the Land or the Improvements; and (3)
Borrower, Guarantor, or any general partner of Borrower, does not
discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereon, in any event within
thirty (30) days from entry, or Borrower shall not, within such period
or such longer period during which execution on such judgment shall
have been entered, and cause its execution to be stayed during such
appeal, or if on appeal such order, decree or process shall be affirmed
and Borrower shall not discharge such judgment or provide for its
discharge in accordance with its terms within sixty (60) days after the
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entry of such order or decree or affirmance, or if any stay of
execution on appeal is released or otherwise discharged.
g. LIENS. Any federal, state or local tax lien or any claim of
lien for labor or materials or any other lien or encumbrance of any
nature whatsoever is recorded against Borrower or the Land or
Improvements and is not removed by payment or transferred to substitute
security in the manner provided by law, within thirty (30) days after
it is recorded in accordance with applicable law.
h. OTHER NOTES OR MORTGAGES. Borrower's default in the
performance or payment of Borrower's obligations under any other note
which remains uncured after any applicable grace period, or under that
certain Real Estate Mortgage, Assignment and Security Agreement of even
date herewith in favor of Bank, securing a note in the original
principal amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00)
and encumbering that portion of the Land commonly referred to as Parcel
"F" and that certain Real Estate Mortgage, Assignment and Security
Agreement of even date herewith in favor of Bank, securing a note in
the original principal amount of THREE MILLION FOUR HUNDRED THOUSAND
AND NO/100 DOLLARS ($3,400,000.00), and encumbering that portion of the
Land commonly referred to as Parcel "D", or under any other mortgage
encumbering all or any part of the Land or the Improvements, if the
other mortgage is permitted by the Bank, whether such other note or
mortgage is held by Bank or by any other party, and unless otherwise
agreed to by separate written agreement between Bank and such other
mortgage holder.
i. BORROWER DEFAULT UNDER LOAN DOCUMENTS. Borrower's default in
the payment or performance following expiration of any applicable grace
period of any of Borrower obligations under any of the Loan Documents,
including this Mortgage and any riders thereto.
j. GUARANTOR DEFAULT.
i) The default after expiration of any applicable grace
period in the payment or performance of any obligation of a
Guarantor of the Note arising under its guaranty or pursuant to
any other Loan Documents; or
ii) The death of any Guarantor and the failure of Borrower
to provide Bank with an alternate guaranty or alternate collateral
satisfactory to Bank in its sole and absolute discretion within
sixty (60) days of the date of Guarantor's death.
k. BORROWERS/GENERAL PARTNER'S CONTINUED EXISTENCE. Borrower or
any corporate General Partner of Borrower shall cease to exist or to be
qualified to do or transact business in the State in which the Land and
Improvements are located, or shall be dissolved or shall be a party to
a merger or consolidation, or shall sell all or substantially all of
its assets, or shall change its corporate name or trade name without
prior written notice to Bank.
l. STOCK IN BORROWER/CHANGE IN PARTNERS. If Borrower is a
limited partnership and without the prior written consent of Bank, any
shares of stock of any corporate general partner of Borrower are
issued, sold, transferred, conveyed, assigned, mortgaged, pledged, or
otherwise disposed of so as to result in change of control of Borrower,
whether voluntarily or by operation of law, and whether with or without
consideration, or any agreement for any of the foregoing is entered
into; or, if any general partnership interest or other equity interest
in the Borrower is sold, transferred, assigned, conveyed, mortgaged,
pledged, or otherwise disposed of, whether voluntarily or by operation
of law, and whether with or without consideration, or any agreement for
any of the foregoing is entered into, or any general partner of
Borrower withdraws from the partnership.
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m. TRANSFER OF PROPERTY OR OWNERSHIP. Any sale, conveyance,
transfer, assignment, or other disposition or encumbrance of all or any
part of the Land, Improvements, or the Approved Project, or any
ownership interest in Borrower or any guarantor without the prior
consent of Bank or except as otherwise permitted hereby, or as outlined
in the prospectus for public offering for Transeastern Properties,
Inc., a Florida corporation delivered to Bank by Borrower.
n. FALSE STATEMENT. Any statement or representation of Borrower
or any guarantor contained in the loan application or any financial
statements or other materials furnished to Bank or any other Bank prior
or subsequent to the making of the Loan secured hereby are discovered
to have been false or incorrect or incomplete.
o. DEFAULT UNDER INDEMNITY. Borrower or Guarantor shall default
after any applicable grace period under any obligation imposed by any
indemnity contained within any of the Loan Documents including the
Hazardous Waste Certification and Indemnification.
p. OTHER DEFAULTS. Borrower or Guarantor shall Default under any
other Default provision set forth in the Loan Agreement, which is not
cured within any applicable grace period.
19. REMEDIES. Upon the occurrence and continuance, if applicable, of
any Default, Bank may exercise any one or more of the following rights and
remedies, in addition to all other rights and remedies otherwise available at
law or in equity:
a. OTHER DOCUMENTS. To pursue any right or remedy provided by
the Loan Documents.
b. ACCELERATION. To declare the entire unpaid amount of the Debt
together with all accrued and unpaid interest thereon immediately due
and payable with interest to be due thereon at the Default Rate set
forth in the Note.
c. FORECLOSURE. To foreclose the lien of this Mortgage and
obtain possession of the Collateral, by any lawful procedure.
d. CODE RIGHTS. To exercise any right or remedy available to
Bank as a secured party under the Uniform Commercial Code as adopted by
the State of Florida, as it from time to time is in force and effect,
with respect to any portion of the Collateral then constituting
property subject to the provisions of such Code; or Bank, at its
option, may elect to treat the Collateral as real property, or an
interest therein, for remedial purposes.
e. RECEIVER. To apply, on EX PARTE motion, to any court of
competent jurisdiction for the appointment of a receiver to take charge
of, manage, preserve, protect, complete construction of, rent, and
operate the Mortgaged Property and any of Borrower's business or
businesses situated thereon, or any combination thereof; to collect the
Rents; to make all necessary and needed repairs; to pay all taxes,
assessments, insurance premiums and all other costs incurred in
connection with the Mortgaged Property; and, after payment of the
expenses of the receivership, including reasonable attorneys, fees and
other costs and expenses related to the enforcement of the Security
Documents, and after compensation to the receiver for any of the
services described herein or pursuant hereto, to apply all net proceeds
derived therefrom in reduction of the Debt or in such other manner as
the court shall direct. The appointment of such receiver shall be a
matter of strict right to Bank, regardless of the adequacy of the
security or of the solvency of any party obligated for payment of the
Debt. All expenses, fees and compensation incurred pursuant to any such
receivership shall be secured by the lien of this Mortgage until paid.
The receiver, personally or through agents, may exclude Borrower wholly
from the Mortgaged Property and have, hold, use, operate, manage and
control the Mortgaged Property and may, in the name of Borrower,
exercise all of
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Borrower's rights and powers to maintain, construct, operate, restore,
insure and keep insured the Mortgaged Property in such manner as such
receiver deems appropriate.
f. SET-OFFS. Intentionally deleted.
g. RENTS. After Bank shall have given written notice to
Borrower, to collect all rents, issues, profits, revenues, income,
proceeds, or other benefits from the Collateral, or to pursue any
remedy available under Chapter 697.07, Florida Statutes, as amended,
supplemented, or superseded from time to time.
h. OTHER SECURITY. To proceed to realize upon any and all other
security for the Debt in such order as Bank may elect; no such action,
suit, proceeding, judgment, levy, execution or other process will
constitute an election of remedies by Bank or will in any manner alter,
diminish or impair the lien and security interest created by this
Mortgage or any other Security Documents unless and until the Debt is
paid in full.
i. ADVANCES. To advance such monies and take such other action
as is authorized by paragraphs 13 and 25 herein.
20. WAIVER OF CERTAIN RIGHTS. Borrower will not claim, take or insist
upon any benefit or advantage of any present or future stay, extension,
redemption or moratorium law that may affect Borrower's obligations hereunder,
or any law providing for the valuation or appraisal of the Mortgaged Property or
any portion thereof prior to any sale or sales that may be made under or by
virtue of this Mortgage. Borrower, for itself and all who may claim under
Borrower, waives, to the extent that it lawfully may, all rights to have the
Mortgaged Property and any other security for the Debt marshaled upon any
foreclosure or otherwise. Borrower hereby waives and renounces all homestead and
exemption rights provided for by the laws of the United States of America and of
any state, including Florida, in and to the Mortgaged Property as against the
collection of the Debt, or any part thereof.
21. FURTHER ASSURANCES. Borrower, from time to time, will execute,
acknowledge, subscribe and deliver to or at the direction of Bank such documents
and further assurances as Bank may reasonably require for the purpose of
evidencing, perfecting or confirming the lien and security interest created by
this Mortgage, or the security intended to be afforded by the Loan Documents, or
both. Without limitation of the foregoing, Borrower will defend, indemnify and
hold Bank harmless with respect to any suit or proceeding in which the validity,
enforceability or priority of the lien or security interest, or both, is
endangered or contested, directly or indirectly, and will provide Bank with such
security for the defense of any such suit or proceeding as Bank reasonably may
require. If Borrower fails to undertake the defense of any such claim in a
timely manner, or fails to furnish Bank with reasonable security for such
defense after notice from Bank, or, in Bank's sole but reasonable determination,
fails to prosecute such defense with due diligence, then Bank is authorized to
take, at the expense of Borrower, all necessary and proper action in defense of
any such claim, including the retention of legal counsel, the prosecution or
defense of litigation and the compromise or discharge of claims, including
payment of all costs and reasonable attorneys' fees. All costs, expenses and
losses, if any, so incurred by Bank, including reasonable attorneys' fees,
regardless of whether suit is brought and, if suit is brought, for all
administrative, trial and appellate proceedings, if any, will constitute
advances by Bank as provided in paragraph 13.
22. CUMULATIVE RIGHTS AND NON-WAIVER. No right or remedy conferred
upon or reserved to Bank by this Mortgage or in any of the other Loan Documents
is intended to be exclusive of any other right or remedy; and each and every
right and remedy is cumulative and in addition to any other right or remedy
otherwise available. Every right, power, privilege and remedy granted Bank by
this Mortgage or any of the other Loan Documents, or both, or otherwise
available at law or in equity may be exercised by Bank from time to time as
often as Bank deems expedient until the Debt is paid in full. Bank's failure to
insist at any time upon the strict
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observance or performance by Borrower of any of the provisions of this Mortgage
or in any of the other Loan Documents, or to exercise any right or remedy
provided for in this Mortgage or in any of the other Loan Documents, will not
impair any such right or remedy or be construed as a waiver or relinquishment
thereof for the future. Receipt by Bank of any payment required to be made
pursuant to any of the Loan Documents with knowledge of the breach of any
provision of any of the Loan Documents will not constitute a waiver of such
breach. In addition to all other remedies provided in this Mortgage, Bank will
be entitled, to the extent permitted by applicable law, to injunctive relief in
the case of a violation or attempted or threatened violation of any of the
provisions of the Loan Documents or to a decree ordering performance of any of
the provisions of any of the foregoing.
23. JUDGMENT. Bank may seek and recover a judgment for all amounts due
and payable in accordance with the Note or under this Mortgage either before,
after or during the pendency of any other proceedings or action to obtain relief
under or with respect to any of the Loan Documents. Bank's right to seek and
recover any such judgment will not be affected by obtaining any other such
relief. Bank will continue to be entitled to enforce payment of, and to seek and
recover a judgment for, any portion of the Debt remaining due and payable after
the application of any proceeds of any sale of the Collateral pursuant to law.
Neither the lien nor security interest of this Mortgage, nor any rights or
remedies of Bank hereunder or under any of the Loan Documents, will be impaired
in any way by the recovery, of any judgment by Bank against Borrower or any
guarantor of the Debt, or by the levy of an execution under such judgment upon
any portion of the Collateral, until the Debt is paid in full.
24. INDEMNIFICATION. Borrower has read and does hereby approve the
legal description of the Land which is the subject of this Mortgage as set forth
on the first page of this Mortgage or in Exhibit "A" attached hereto, and hereby
indemnifies Bank, its successors or assigns, and their attorneys with respect to
any liability which might arise as a consequence of Section 697.10, Florida
Statutes, or any successors or amendments thereto.
25. RELEASES AND EXTENSIONS BY BANK. Bank, from time to time, without
notice to any person and without affecting the liability of Borrower or of any
guarantor or of any other person (other than any person expressly released by
Bank in writing) for the payment of any of the Debt, and without affecting the
priority or extent of the lien and security interest of this Mortgage (except as
to property specifically released by Bank in writing), may do any or all of the
following: (i) release in whole or in part any person liable for payment of any
or all of the Debt, or (ii) extend the time or otherwise alter the terms of
payment of the Debt, in whole or in part, or (iii) accept additional or
substitute security of any kind, or (iv) release or otherwise deal with all or
any portion of the Collateral.
26. NOTICES. Any notice or demand that must or may be given or made in
connection with this Mortgage must be in writing and, unless receipt is
expressly required, will be deemed given, delivered or made, as the case may be,
when delivered by personal delivery or the day after it is mailed by Express
Mail, by overnight delivery service of a nationally-recognized company and
addressed to the parties at the addresses written on the first page of this
Mortgage or on the signature pages of this Mortgage. Such addresses may be
changed by notice pursuant to this paragraph. Notice of change of address is
effective only upon receipt. All of the persons executing this Mortgage as
Borrower severally agree that a single notice to Borrower in the manner provided
in this paragraph will be effective to bind each such person for all purposes.
27. ESTOPPEL LETTERS. As and when, from time to time, requested by
either Borrower or Bank, and within ten (10) days after any such request,
Borrower or Bank, as the case may be, will execute and deliver to or at the
direction of Bank or Borrower, as the case may be, such estoppel letters
certifying such matters relating to this Mortgage or the Loan Documents, or
both, as may reasonably be required.
28. TRANSFER. Borrower may not sell, convey, assign, transfer or
otherwise dispose of any interest in all or any portion of the Collateral, or
any ownership interest in Borrower or any guarantor, without Bank's prior
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written consent, which consent may be withheld in Bank's sole discretion, or as
outlined in the prospectus for public offering for Transeastern Properties,
Inc., a Florida corporation delivered to Bank by Borrower. Whether such transfer
is voluntary or involuntary, or by operation of law, any such transfer will be
void as to Bank, and constitute an immediate Default under this Mortgage,
without notice, in the sole discretion of Bank. Bank's consent to any transfer,
sale, or conveyance hereunder shall not be deemed a consent to any subsequent
transfer, sale, or conveyance for which Bank's prior written approval has not
been obtained except as provided in the Loan Agreement.
29. REPLACEMENT OF NOTE. Upon receipt of evidence reasonably
satisfactory to Borrower of the loss, theft, destruction or mutilation of the
Note, or any amendment or modification thereto, including without limitation any
renewal note or additional note, and in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement, reasonably satisfactory to
Borrower or, in the case of any such mutilation, upon surrender of such
mutilated note, Borrower will execute and deliver, in lieu thereof, a
replacement Note, identical in form and substance to the Note and dated as of
the date of the Note and upon such execution and delivery all references in any
of the Loan Documents to the Note shall be deemed to refer to the replacement
Note.
30. FUTURE ADVANCES. This mortgage is given to secure not only the
existing Debt, but also such future advances, whether such advances are
obligatory or are to be made at the option of Bank, or otherwise, as are made
within twenty (20) years from the date hereof, to the same extent as if such
future advances were made on the date of the execution of this Mortgage. The
total amount of Debt that may be so secured may decrease or increase from time
to time, but the maximum possible principal debt so secured at one time shall
not exceed the amount shown on Page of this Mortgage, plus interest thereon, and
any disbursements made for the payment of taxes, levies or insurance on the
Mortgaged Property, with interest on such disbursements at the rate then in
effect pursuant to the terms of the Note.
31. GENERAL. The provisions of this Mortgage inure to the benefit of
Bank and its successors and assigns, and bind all persons executing this
Mortgage as Borrower and their respective legal representatives, successors and
assigns, jointly and severally, and all persons now or hereafter claiming any
right, title and interest in and to any of the property, real, personal or
mixed, tangible or intangible, now or hereafter existing or any substitutions or
replacements thereof and described in this Mortgage as the Collateral. Time is
of the essence to this Mortgage and each of its provisions. The provisions of
this Mortgage are to be interpreted, construed, applied and enforced in
accordance with the laws of the State of Florida, regardless of where this
Mortgage is executed, delivered or breached, or where any payment or other
performance required by this Mortgage is made, where any action or other
proceeding involving this Mortgage is instituted, or whether the laws of the
State of Florida otherwise would apply the laws of another jurisdiction; the
foregoing choice of law provisions will apply to the Loan Documents. The
provisions of the Loan Documents are severable at Bank's option so that if any
provision is declared by a court of competent jurisdiction to be invalid or
unenforceable, no other provision will be affected by such invalidity or
unenforceability, but will remain in force and effect according to its original
terms, if Bank so elects. Wherever used in this Mortgage or the other Loan
Documents, or both, and unless expressly provided otherwise: (i) use of the
singular includes the plural, and vice versa; (ii) use of one gender includes
all genders; (iii) use of the term "include" or "including" is always without
limitation; (iv) use of the words, "should," "must" and "will" has the same
legal effect as the use of the word "shall"; (v) the term "day" means a banking
day which shall be a day on which Bank and other banks are open for the
transaction of business, excluding any national holidays, and any performance
which would otherwise be required on a day other than a banking day shall be
timely performed in such instance, if performed on the next succeeding banking
day; (vi) any definition herein incorporating one or more documents or items
shall refer to such items "singularly and collectively", and (vii) "person"
means any natural person or artificial entity having legal capacity. Paragraph
headings and subheadings are for indexing purposes only and are not to be used
to interpret, construe, apply or enforce the provisions of this Mortgage.
Borrower and Bank intend the provisions of this Mortgage and the other Loan
Documents to be interpreted, construed, applied and enforced so as to avoid
inconsistencies or conflicting results; but if any such inconsistency or
conflict necessarily occurs, Borrower and Bank intend that the provisions of the
Loan Agreement
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control unless otherwise provided therein. This Mortgage may be
amended only by a written instrument executed by Borrower and Bank with the same
formalities as this Mortgage.
32. SATISFACTION. The lien and security interest provided by the Loan
Documents will continue unimpaired and in full force and effect unless and until
the Debt is paid in full, whereupon such lien and security interest will be
without further force or effect. Until this Mortgage shall be satisfied of
record, Borrower hereby waives for itself, and all subsequent successors in
title to the mortgaged Property, any right it may now have or hereafter have,
pursuant to Florida Statutes 697.04 (1).(b), as amended from time to time, to
file for record a notice limiting the maximum amount which may be secured by
this Mortgage.
33. DEPOSITS. Bank may, at its sole option upon occurrence of a
Default, require Borrower to make monthly deposits with Bank of a sum equivalent
to one-twelfth (1/12) of the annual real and tangible personal property taxes
assessed with respect to the Mortgaged Property and one-twelfth (1/12) of the
annual premiums for all insurance required to be maintained by this Mortgage. In
addition, upon occurrence of a Default, if required by Bank, Borrower shall also
deposit with Bank a sum of money which, together with the aforesaid monthly
deposits, will be sufficient to make each of such payments for taxes and
insurance at least ten (10) days prior to the date such payments are due. The
amount of such taxes, assessments, and premiums, when unknown, will be estimated
by Bank in good faith. Such deposits may be commingled with Bank's general
funds; Bank will not be liable for any interest on account of such deposits. To
the extent sufficient, such deposits will be applied by Bank to the payment of
such taxes, assessments, and premiums, when due, upon Borrower's presentation of
bills therefor; but Bank will have no obligation to make any such payment except
to the extent of such deposits. Any insufficiency of such deposits will be paid
by Borrower to Bank on demand. Upon any Default by Borrower under this Mortgage,
Bank may apply all such deposits to the Debt in such order as Bank may elect.
The enforceability of Borrower's covenants relating to taxes, assessments, and
insurance provided in this Mortgage will not be altered, diminished, impaired,
or otherwise affected by the provisions of this paragraph except insofar as such
obligations are actually met by Borrower's compliance with this paragraph. Bank
from time to time, at its sole option, may waive and, after any such waiver,
reinstate any or all of the provisions of this paragraph. While any such waiver
is in effect, Borrower will pay all taxes, assessments, and insurance premiums
as provided elsewhere in this Mortgage.
34. BORROWER AS TENANT HOLDING OVER. In the event of a foreclosure
sale of the Mortgaged Property, Borrower shall be deemed a tenant holding over
and shall forthwith deliver possession to Bank or any purchaser or purchasers at
such sale or be summarily dispossessed according to provisions of the law of the
State of Florida applicable to tenants holding over.
35. TIME OF THE ESSENCE. Time is of the essence with respect to each
and every covenant, agreement, and obligation of Borrower under this Mortgage
and the other Loan Documents, and any and all other instruments now or hereafter
evidencing, securing or otherwise relating to the Loan.
36. ORAL MODIFICATION INEFFECTIVE. No term of this Mortgage or any
other of the Loan Documents, or such documents, may be waived, changed,
modified, discharged, or terminated except by an instrument in writing signed by
the party against which enforcement of the waiver, change, modification,
discharge, or termination is sought.
37. HAZARDOUS SUBSTANCES. Borrower hereby represents and warrants to
Bank: (a) that neither Borrower nor any of its subsidiaries is in violation of
any judgment, decree, order, law, license, rule, or regulation pertaining to
environmental matters, including, without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Water
Pollution Control Act, the Toxic Substances Control Act, or any state or local
statute, regulation, ordinance, order, or decree relating to health, safety, or
the environment (hereinafter "Environmental
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Laws); (b) that neither Borrower nor any of its subsidiaries has received notice
that it or any of its tenants has been identified by the United States
Environmental Protection Agency as a potentially responsible party under CERCLA
with respect to a site listed on the National Priorities List, 40 C.F.R. Part
300 Appendix B (1986); nor has Borrower or any of its subsidiaries received any
notification that any hazardous waste, as defined by 42 U.S.C. ss.6093(5), any
hazardous substances as defined by 42 U.S.C. ss.9601(14), any "pollutant or
contaminant" as defined by 42 U.S.C. ss.9601(33) and any toxic substance,
hazardous materials, oil or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which it has disposed of has been
found at any site on which a federal or state agency is conducting a remedial
investigation or other action pursuant to any Environmental Law; (c) (i) to the
best of Borrower's knowledge except as disclosed in the Phase I and II
Environmental Report prepared for Bank and Borrower by Law Engineering and
Environmental Services, Inc., a Florida corporation dated November 7, 1995, no
portion of the Mortgaged Property has been used for the handling, processing,
storage, or disposal of Hazardous Substances and no underground tank or other
underground storage receptacle for Hazardous Substances is located on the
Mortgaged Property, (ii) in the course of its activities, neither Borrower nor
any of its subsidiaries has generated or is generating any hazardous waste on
the Mortgaged Property, (iii) to the best of our knowledge there have been no
releases (i.e., any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing, or dumping) of Hazardous Substances by Borrower or any of its
subsidiaries on, upon, or into the Mortgaged Property, which releases would have
a material adverse effect on the value of the Mortgaged Property. In addition,
to the best of Borrower's knowledge, there have been no such releases on, upon,
or into any real property in the vicinity of the Mortgaged Property which,
through soil or groundwater contamination, may have come to be located on the
Mortgaged Property; (d) to the best of Borrower's knowledge, that no asbestos,
oil, petroleum or chemical liquids or solids, liquid or gaseous products, or
hazardous or toxic substances, within the meaning of any applicable statute or
regulation, are presently stored or otherwise located on or under the Mortgaged
Property or on or under any adjacent and contiguous real property owned by
Borrower or any related entity or affiliate of Borrower; (e) to the best of
Borrower's knowledge, that no release of any such hazardous or toxic substance
has occurred on the Mortgaged Property or on any adjacent and contiguous real
property owned by Borrower or any related entity or affiliate of Borrower; (f)
to the best of Borrower's knowledge, that no part of the Mortgaged Property or
any adjacent and contiguous real property owned by Borrower or any related
entity or affiliate of Borrower, including the groundwater located thereon, is
presently contaminated by such hazardous or toxic substance; and (g) that
Borrower has not received any notice from any governmental agency or authority
or from any tenant under a lease with respect to any such release of hazardous
or toxic materials onto the Mortgaged Property or adjacent parcels of real
property. Borrower further covenants and agrees with Bank that, throughout the
term of the Note: (h) the Mortgaged Property shall be operated and maintained in
compliance with all applicable governmental or regulatory requirements; (i)
Borrower shall maintain or procure all necessary permits, licenses, and
certificates required by federal, state, and local laws throughout the Loan
term; (j) all hazardous or toxic substances, within the definition of any
applicable statute or regulation, which may be used by any person for any
purpose upon the Mortgaged Property, shall be used or stored thereon only in a
safe and approved manner, in accordance with all industrial standards and all
laws, regulations and requirements for such storage promulgated by any
applicable governmental agency or authority; (k) other than as described in (j)
above, the Mortgaged Property will not be used for the purpose of storing such
substances; and (1) other than as described in above, no such storage or use
will otherwise be allowed on the Mortgaged Property (whether through leases with
tenants who might store or use hazardous substances or otherwise) which will
cause, or which will increase the likelihood of causing, the release of such
hazardous or toxic substances onto the Mortgaged Property. Borrower shall
immediately notify Bank of any failure to comply under this paragraph or receipt
of an notice of violation or third party complaint. Borrower hereby agrees to
indemnify and save and hold Bank harmless of and from all claims, damages, loss,
liabilities, penalties, fines, remedial action requirements, and enforcement
actions, along with the costs and attorneys' fees incurred by Bank in defending
Borrower's use, generation, transportation, and disposal, release, or threatened
release of hazardous substances, including without limitation, asbestos
containing materials or damage whatsoever incurred by Bank arising out of or by
reason of any violation of any applicable statute or regulation for the
protection of the environment which occurs upon the Mortgaged Property, or by
reason of the imposition of any governmental lien for the recovery of
environmental clean-up costs expended by reason of such violation, including
without limitation any lien arising pursuant to any so-called "Super Fund" or
"Super Lien" legislation; provided, however, that to the extent that Bank is
strictly liable under any such
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statute or regulation, Borrower's obligation to Bank under this indemnity shall
likewise be without regard to fault on the part of Borrower with respect to the
violation of law which results in liability to Bank. A default under this
paragraph shall constitute a Default under this Mortgage subject to any cure
periods set forth in the Loan Agreement. It is expressly acknowledged by
Borrower that this indemnification shall survive in accordance with the terms
and conditions set forth in the Hazardous Substance Certificate and
Indemnification Agreement of even date herewith executed by the Borrower and
Guarantor.
38. ENVIRONMENTAL ASSESSMENTS. At any time deemed necessary by Bank,
in its reasonable and sound business judgment, Bank may, at 'its election,
obtain one or more environmental assessments of the Mortgaged Property prepared
by a geohydrologist, an independent engineer, or other qualified consultant or
expert approved by Bank evaluating or confirming (i) whether any Hazardous
Substances are present in the soil or water at the Mortgaged Property and (ii)
whether the use and operation of the Mortgaged Property comply with all
applicable Environmental Laws relating to air quality, environmental control,
release of oil, hazardous materials, hazardous wastes and hazardous substances,
and any and all other applicable environmental laws. Environmental assessments
may include detailed visual inspections of the Mortgaged Property including,
without limitation, any and all storage areas, storage tanks, drains, dry wells,
and leaching areas, and the taking of soil samples, surface water samples, and
ground water samples, as well as such other investigations or analyses as are
necessary or appropriate for a complete determination of the compliance of the
Mortgaged Property and the use and operation thereof with all applicable
Environmental Laws. All such environmental assessments shall be at the sole cost
and expense of Borrower. In the event it is determined that additional tests
and/or remediation are necessary as a result of the aforesaid assessments, or in
the event such additional testing or remediation is recommended by the aforesaid
assessments, the Borrower agrees to immediately perform the tests or undertake
the remediation as recommended. In the event contamination or an environmental
problem is found on the Mortgaged Property, the Borrower shall be in Default
hereunder after a thirty (30) day cure period.
39. SUBROGATION. To the extent of the indebtedness of the Borrower to
the Bank described herein or secured hereby, the Bank is hereby subrogated to
the lien or liens and to the rights of the owners and holders of each and every
mortgage, lien or other encumbrance on the land described herein which is paid
and/or satisfied, in whole or in part, out of the proceeds of the loan described
herein or secured hereby, and the respective liens of said mortgages, liens or
other encumbrances, shall be and the same and each of them hereby is preserved
and shall pass to and be held by the Bank herein as security for the
indebtedness to the Bank herein described or hereby secured, to the same extent
that it would have been preserved and would have been passed to and been held by
the Bank had it been duly and regularly assigned, transferred, set over, and
delivered unto the Bank by separate deed of assignment, notwithstanding the fact
that the same may be satisfied and canceled of record, it being the intention of
the parties hereto that the same will be satisfied and canceled of record by the
holders thereof at or about the time of the recording of this Mortgage.
40. MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including but not limited to those arising out of or relating
to this Agreement or any related agreements or instruments, including any claim
based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event
of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this agreement
applies in any court having jurisdiction over such action.
a. SPECIAL RULES. The arbitration shall be conducted in the
County of Broward, Florida and administered by Endispute, Inc., d/b/a
J.A.M.S., who will appoint an arbitrator; if J.A.M.S./Endisp- ute is
unable or legally precluded from administering the arbitration, then
the American Arbitration Association will serve. All arbitration
hearings will be commenced within 90 days of the demand for
arbitration;
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further, the arbitrator shall only, upon a showing of cause, be
permitted to extend the commencement of such hearing for up to an
additional sixty 60 days.
b. RESERVATION OF RIGHTS. Nothing in this Agreement shall be
deemed to (i) limit the applicability of any otherwise applicable
statutes of limitation or repose and any waivers contained in this
Agreement; or (ii) be a waiver by the Bank of the protection afforded
to it by 12 U.S.C. Sec. 91 or any substantially equivalent state law;
or (iii) limit the right of the bank hereto (A) to exercise self help
remedies such as (but not limited to) setoff, or (B) to foreclose
against any real or personal property collateral, or (C) to obtain from
a court provisional or ancillary remedies such as (but not limited to)
injunctive relief or the appointment of a receiver. The Bank may
exercise such self help rights, foreclose upon such property, or obtain
such provisional or ancillary remedies before, during or after the
pendency of any arbitration proceeding brought pursuant to this
Agreement. At Bank's option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of a
power of sale under the deed of trust or mortgage, or by judicial sale
under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary
remedies shall constitute a waiver of the right of any party, including
the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
41. CROSS-DEFAULT. This Loan shall be cross-defaulted with other loans
by Bank to Borrower as more specifically described in the Loan Agreement.
42. RELEASE PROVISION. Provided that Borrower is not then in Default
hereunder, under the Construction Line, the Mortgage or any other Loan Document,
Bank will provide partial releases of Units from the lien of the Mortgage upon
the following terms:
a. If the partial release relates to developed lots in
connection with a bona fide sale or construction loan on which no home
construction advances have been made:
i. Bank shall be given written notice of the request for
each partial release at least five (5) business days prior to each
partial release.
ii. The cost of each partial release shall be paid by
Borrower.
iii. Contemporaneously with the delivery to Borrower of each
partial release, Borrower shall prepay principal in an amount
equal to the amount advanced upon such lot plus accrued interest
thereon.
b. If the partial release relates to Units for which advances of
Construction Line proceeds have been made, Borrower shall prepay
principal of the Construction Line in an amount equivalent to the total
actual amount advanced by Bank under the Construction Line on account
of the Unit to be released, together with interest accrued thereon
("Unit Release Price") and the applicable Lot Release Price.
IN WITNESS WHEREOF, Borrower has executed and delivered this Mortgage as of
the date stated above.
Signed, sealed and delivered
in the presence of: TRANSEASTERN PEMBROKE VILLAGES, INC., A
FLORIDA CORPORATION
____________________________
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<PAGE>
Witness #1 By __________________________________(SEAL)
Edward Falcone, Executive Vice President
____________________________
Print Name
____________________________ Address:
Witness #1
3300 University Drive
____________________________ Coral Springs, Florida 33065
Print Name
STATE OF FLORIDA )
)ss
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this ____ day of
September, 1996, by EDWARD FALCONE, as Executive Vice President of TRANSEASTERN
PEMBROKE VILLAGES, INC., a Florida corporation, by and on behalf the
corporation. He is personally known to me and/or has produced
________________________________ as identification.
My Commission Expires: ___________________________________________
NOTARY PUBLIC STATE OF FLORIDA
___________________________________________
Print Name
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<PAGE>
This Instrument Prepared by:
Richard A. Wood, Esq.
Therrel Baisden & Meyer Weiss
1111 Lincoln Road, Ste. 500
Miami Beach, Florida 33139
Loan No. 91000839
AMENDED AND RESTATED REAL ESTATE MORTGAGE
ASSIGNMENT AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED REAL ESTATE MORTGAGE ASSIGNMENT AND SECURITY
AGREEMENT ("Mortgage") is made this ____ day of September, 1996, by and between
TRANSEASTERN PEMBROKE VILLAGES, INC., A FLORIDA CORPORATION (the " Borrower"),
having a post office address at 3300 University Drive, Coral Springs, Florida
33065 and CHASE FEDERAL BANK, A FEDERAL SAVINGS BANK, A DIVISION OF NATIONSBANK,
N.A. (SOUTH), F/K/A CHASE FEDERAL BANK, A FEDERAL SAVINGS BANK, (the " Bank"),
having a post office address at 701 Cypress Creek Road, Suite 101, Ft.
Lauderdale, Florida 33309.
R E C I T A L S:
WHEREAS, on March 29, 1996, Borrower executed and delivered that
certain promissory note in the original principal amount of TEN MILLION ONE
HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($10,150,000.00) ("Original Note") in
favor of Bank, which Original Note is secured, inter alia, by that certain
mortgage and security agreement recorded in Official Records Book 24694, at Page
0702 of the Public Records of Broward County, Florida ("Original Mortgage"); and
WHEREAS, the Original Mortgage encumbers that certain real property
lying, being and situated in Broward County, Florida, more particularly
described on Exhibit "A" attached hereto and made a part hereof ("Mortgaged
Property"); and
WHEREAS, simultaneously herewith, Borrower executed and delivered that
certain demand promissory note in the original promissory amount of THREE
MILLION FIVE HUNDRED EIGHTY SEVEN THOUSAND FIVE HUNDRED AND NO/100 DOLLARS
($3,587,500.00) ("Note No. 2") in favor of Bank; and
WHEREAS, the parties desire that Original Note and Note No. 2 be
consolidated, amended, restated and superseded to that certain consolidated
promissory note dated of even date herewith ("Consolidated Promissory Note",
"Promissory Note" or "Note"), and the outstanding principal balance represented
thereby to be repaid in accordance with the terms and provisions of the
Consolidated Promissory Note; and
DOCUMENTARY STAMPS AND INTANGIBLE TAXES HAVE BEEN PAID
ON $3,587,500.00, WHICH IS THE AMOUNT BEING ADVANCED UNDER
NOTE NO. 2 DESCRIBED IN THIS AGREEMENT.
<PAGE>
WHEREAS, Mortgagor and Bank desire to amend and restate the Original
Mortgage to provide for the agreed upon amendments thereto, including, but not
limited to, securing all indebtedness owed by Mortgagor to Mortgagee under the
Consolidated Promissory Note.
NOW THEREFORE, in consideration of the sum of TEN AND NO/100 DOLLARS
($10.00) and other good and valuable consideration, receipt, adequacy and
sufficiency of which is hereby acknowledged, the Mortgagor and Mortgagee
intending to be legally bound do hereby agree as follows, to wit:
1. The recitations set forth in the preamble of this Mortgage are true
and correct and incorporated herein by this reference.
2. The Original Mortgage is hereby modified and restated in its
entirety as follows:
REAL ESTATE MORTGAGE, ASSIGNMENT,
AND SECURITY AGREEMENT,
(THE "MORTGAGE")
DATE: September ___, 1996
BORROWER:
TRANSEASTERN PEMBROKE VILLAGES, INC., A FLORIDA CORPORATION
3300 University Drive
Coral Springs, Florida 33065
BANK:
CHASE FEDERAL BANK, F.S.B., A DIVISION OF NATIONSBANK, N.A. (SOUTH),
a national banking association
701 West Cypress Creek Road
Suite 101
Fort Lauderdale, FL 33309
AMOUNT OF INITIAL LOAN SECURED HEREBY: $8,737,500.00
MAXIMUM POSSIBLE PRINCIPAL DEBT, INCLUDING FUTURE ADVANCES, THAT MAY BE SECURED
HEREBY: $18,692,000.00
LAND: Those certain parcels of Land commonly referred to as Parcel "D"and
Parcel "F" contained within the Nasher Plat, as recorded in Plat Book
159 at Page 42 of the Public Records of Broward County, Florida, and
more particularly described on Exhibit "A" attached hereto and
incorporated herein by reference.
1. MORTGAGE. In consideration of Ten Dollars ($10.00) and other
valuable consideration received by Borrower, the receipt and sufficiency of
which are hereby acknowledged, Borrower hereby grants, bargains, sells, assigns,
transfers, conveys and mortgages to Bank, its successors and assigns, to its own
proper use and benefit forever, subject to the terms and conditions of this
Mortgage, the real estate described above as the Land, together with:
a. APPURTENANCES. The benefit of all easements and other rights of
any nature whatsoever, if any, appurtenant to the Land or the
Improvements, or both, the benefit of all rights-of-way, strips and
gores of land, streets, alleys, passages, drainage rights, sanitary
sewer and potable water rights, stormwater
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drainage rights, rights of ingress and egress to the Land and all
adjoining property, and any improvements of Borrower now or hereafter
located on any of such real property interests, water rights and
powers, oil, gas, mineral and riparian and littoral rights, whether now
existing or hereafter arising, together with the reversion or
reversions, remainder or remainders, rents, issues, incomes and profits
of any of the foregoing (the "Appurtenances").
b. IMPROVEMENTS. All buildings, structures, betterments and other
improvements of any nature now or hereafter situated in whole or in
part upon the Land or on the Appurtenances, regardless of whether
physically affixed thereto or severed or capable of severance therefrom
(the "Improvements").
c. TANGIBLE PROPERTY. All of Borrower's right, title and interest,
if any, in and to all fixtures, equipment and tangible personal
property of any nature whatsoever that is now or hereafter (i) attached
or affixed to the Land, the Appurtenances, or the Improvements, or (ii)
situated upon or about the Land, the Appurtenances and/or the
Improvements, regardless of whether physically affixed thereto or
severed or capable of severance therefrom, or (iii) used, regardless of
where situated, if used, usable or intended to be used, in connection
with any present or future use or operation of or upon the Land. The
foregoing includes: all goods and inventory, all heating, air
conditioning, lighting, incinerating and power equipment; all engines,
compressors, pipes, pumps, tanks, motors, conduits, wiring, and
switchboards; all plumbing, lifting, cleaning, fire prevention, fire
extinguishing, refrigerating, ventilating, and communications and
public address apparatus; all signage and recreational amenities
including, without limitation, swimming pools, exercise equipment,
tennis courts, clubhouse furnishings or saunas; all boilers, furnaces,
oil burners, vacuum cleaning systems, elevators and escalators; all
stoves, ovens, ranges, disposal units, dishwashers, water heaters,
exhaust systems, refrigerators, cabinets, and partitions; all rugs,
draperies and carpets; all laundry equipment; all building materials;
all furniture (including, without limitation, any outdoor furniture) ,
furnishings, office equipment and office supplies; and all additions,
accessions, renewals, replacements and substitutions of any or all of
the foregoing. The property interests encumbered and described by this
paragraph are called the "Tangible Property" in this Mortgage.
d. All rents, issues, incomes and profits in any manner arising from
the Land, Improvements, Appurtenances or Tangible Property, or any
combination thereof, including Borrower's interest in and to all leases
of whatsoever kind or nature, licenses, franchises and concessions of
or relating to all or any portion of the Land, Appurtenances,
Improvements or Tangible Property,or the operation thereof, whether now
existing or hereafter made, including all amendments, modifications,
replacements, substitutions, extensions, renewals or consolidations
thereof. The property interests encumbered and described in this
subparagraph are called the "Rents" in this Mortgage.
e. SECONDARY FINANCING. All of the Borrower's rights, power or
privilege to further encumber any of the Collateral described in this
paragraph 1, it being intended by this provision to divest Borrower of
the power to encumber or to grant a security interest in any of the
Collateral as security for the performance of an obligation, except for
"Permitted Encumbrances," as defined in paragraph 5 herein.
f. PROCEEDS. All proceeds of the conversion, voluntary or
involuntary, of any of the property encumbered by this Mortgage into
cash or other liquidated claims, or that are otherwise payable for
injury to or the taking or requisitioning of any such property,
including all judgments, settlements and insurance and condemnation
proceeds as provided in this Mortgage.
g. CONTRACT RIGHTS. All of Borrower's right, title and interest in
and to any and all contracts or leases, written or oral, express or
implied, now existing or hereafter entered into or arising, in any
matter related to the improvement, use, operation, sale, conversion or
other disposition of any interest in the Land, Appurtenances,
Improvements, Tangible Property or the Rents, or any combination
thereof, including all tenant leases, sales contracts, payments due and
to become due thereunder; and
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<PAGE>
including, without limitation, contracts pertaining to maintenance,
on-site security service, elevator maintenance, landscaping services,
building or project management, marketing, leasing, sale and janitorial
services; Borrower's interest as lessee in equipment leases, including
telecommunications, computers, vending machines, model furniture,
televisions, laundry equipment; and Borrower's interests in
construction contracts or documents (including architectural and
engineering drawings and plans and specifications relating to the
Improvements), service contracts, use and access agreements,
advertising contracts and purchase orders. The property interest
encumbered and described in this paragraph are called the "Contract
Rights" in this Mortgage. Notwithstanding the foregoing, Bank will not
be bound by any of Borrower's obligations under any of the foregoing
contracts unless and until Bank elects to assume any of such contracts
or leases in writing.
h. NAME. All right, title and interest of Borrower in and to all
trade names, project names, logos, service marks, trademarks, goodwill,
and slogans now or hereafter used in connection with the operation of
the Mortgaged Property except the name of Transeastern Properties,
Inc., a Florida corporation, f/k/a Transeastern Properties of South
Florida, Inc., a Florida corporation.
i. OTHER INTANGIBLES. All contract rights, commissions, money,
deposits, certificates of deposit, letters of credit, documents,
instruments, chattel paper, accounts, and general intangibles [as such
terms from time to time are defined in the Uniform Commercial Code as
adopted by the State of Florida (the "Uniform Commercial Code"], in any
manner related to the construction, use, operation, sale, conversion or
other disposition (voluntary or involuntary) of the Land,
Appurtenances, Improvements, Tangible Property or Rents, including all
construction plans and specifications, architectural plans, engineering
plans and specifications, permits, governmental or quasi-governmental
approvals, licenses, developer rights, vested rights under any Planned
Unit Development or Development of Regional Impact or other project,
zoning, or land use approval, insurance policies, rights of action and
other choice in action.
The Land, Appurtenances, Improvements and Tangible Property are
collectively referred to as the "Mortgaged Property" in this Mortgage.
The portion of the property encumbered by this Mortgage that from time
to time consists of intangible personal property, except for the Rents,
is called the "Intangible Property" in this Mortgage. The Mortgaged
Property, Rents, Intangible Property and any other property interests
encumbered hereby are hereinafter referred to collectively as the
"Collateral". Wherever used in this Mortgage, the use of the terms,
"Mortgaged Property," "Rents", "Intangible Property", and "Collateral"
means and includes all or any portion thereof applicable to the
context.
Notwithstanding the grant of Borrower's interest in the Rents and
Contract Rights above, so long as no Default shall exist hereunder or
under any of the other Loan Documents, Borrower shall have a license to
collect and receive all incomes arising from the operation, ownership,
and maintenance of the Mortgaged Property, Rents and Contract Rights,
but not more than one (1) month prior to accrual.
2. SECURITY AGREEMENT. To the extent any of the Collateral encumbered
by this Mortgage from time to time constitutes personal property subject to the
provisions of the Uniform Commercial Code, this Mortgage constitutes a "Security
Agreement" for all purposes under the Uniform Commercial Code. Without
limitation, Bank, at its election, upon the occurrence of a Default under this
Mortgage, will have all rights, powers, privileges and remedies from time to
time available to a secured party under the provisions of the Uniform Commercial
Code with respect to the Collateral. The names and addresses of debtor and
secured party are as shown for Borrower and Bank, respectively, on the signature
pages hereof. The remedies for any Default under the covenants, terms, and
conditions of the security agreement herein contained shall be (i) as prescribed
herein, or (ii) as prescribed by general law, or (iii) as prescribed by the
specific statutory provisions now or hereafter enacted and specified in the
Uniform Commercial Code, all at Bank's sole election. Borrower and Bank agree
that the filing of financing statements in the records normally having to do
with personal property shall never be
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<PAGE>
construed as in anywise derogating from or impairing this declaration and hereby
stated intention of Borrower and Bank that everything used in connection with
the production of income from the Collateral or adapted for use therein or which
is described or reflected in this Mortgage, is, and at all times and for all
purposes and in all proceedings both legal or equitable shall be, regarded as
part of the real estate irrespective of whether (i) any such item is physically
attached to the Improvements, (ii) serial numbers are used for the better
identification of certain items capable of being thus identified in a recital
contained herein, or (iii) any such item is referred to or reflected in any
financing statement(s) so filed at any time. Similarly, the mention in any
financing statement of the rights in, or the proceeds of, any fire, hazard or
liability insurance policy, or any award in eminent domain proceedings for a
taking or for loss of value, or Borrower's interest as lessor in any present or
future lease, or rights to income growing out of the use of the Mortgaged
Property, whether pursuant to a lease or otherwise, shall not be construed as
altering any of Bank's rights as determined by this Mortgage, or otherwise
available at law or in equity, or impugning the priority of this Mortgage or the
Loan Documents, or both, but such mention in any financing statement is declared
to be for Bank's protection if, as, and when any court holds that notice of
Bank's priority of interest, to be effective against a particular class of
persons, including the federal government and any subdivisions or entities of
the federal government, must be perfected in the manner required by the Uniform
Commercial Code.
Borrower covenants and agrees that Borrower will furnish Bank with
notice of any change in name, identity, organizational structure, mailing
address, residence, or principal place of business thirty (30) days prior to the
effective date of any such change. Borrower will promptly execute any financing
statements or other instruments deemed necessary by Bank to prevent any filed
financing statement from becoming misleading or losing its perfected status or
to reinstate any lapsed financing statement.
3. AFTER-ACQUIRED PROPERTY. Without the necessity of any further act of
Borrower or Bank, the lien of and security interest created by this Mortgage
automatically will extend to and include (i) any and all renewals, replacements,
substitutions, accessions, proceeds, products, additions or after-acquired
property or to the Collateral, and (ii) any and all monies, proceeds and other
property that from time to time, either by delivery to Borrower or by any
instrument (including this Mortgage) may be subjected to such lien and security
interest by Borrower or by anyone on behalf of Borrower, or with the consent of
Borrower, or which otherwise may come into the possession or otherwise be
subjected to the control of Bank or Borrower pursuant to this Mortgage or the
other Loan Documents.
4. DEBT. Borrower is justly indebted to Bank in the principal amount
indicated above (or so much as may be advanced to Borrower by Bank from time to
time), as evidenced by that certain Promissory Note in the original principal
amount of EIGHT MILLION SEVEN HUNDRED THIRTY SEVEN FIVE HUNDRED AND NO/100
DOLLARS ($8,737,500.00), of even date herewith, made by Borrower, payable to the
order of Bank and maturing as stated in said Notes, unless such maturity is
accelerated or extended (as provided in said Notes) , which Notes, together with
any and all renewals, replacements, extensions, modifications, substitutions,
future advances, and any and all other certificates or evidence of indebtedness
evidenced by said Notes are herein called the "Note".
Borrower's obligations described below are secured, among other things,
by the collateral described in this Mortgage, which term includes any and all
amendments, extensions, renewals, replacements, substitutions, modifications and
consolidations of this Mortgage, and may also from time to time be secured by
other collateral described in written documents. The Mortgage and such other
documents as may exist on the date hereof or may exist hereafter are referred to
as the "Security Documents," which term, as defined in the Note, includes any
and all financing statements, letters of credit, assignments, agreements,
supplements, and riders made and delivered in connection with the Note and this
Mortgage, and any and all amendments, modifications, extensions, renewals,
replacements, substitutions and consolidations thereof or thereto. The Security
Documents, the Note and the Loan Agreement between Borrower and Bank are
referred to collectively as the "Loan Documents". The Loan evidenced by the Note
and secured by this Mortgage is to be disbursed in accordance with the terms and
provisions of a Loan Agreement of even date herewith between Borrower and Bank
(the "Loan Agreement"). The Note, the Mortgage and the Loan Agreement shall
always be taken and read together as constituting part of one transaction. All
sums
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disbursed pursuant to the terms of the Loan Agreement shall be secured by this
Mortgage with the same priority as if advanced on the date hereof.
The obligations of Borrower secured by the Security Documents arising
pursuant to the Loan Documents are as follows and are called the "Debt" in this
Mortgage and the other Loan Documents:
a. NOTE. Borrower's payment of all sums due from time to time as
evidenced by the Note; and
b. LOAN DOCUMENTS. Borrower's payment or performance of all
obligations imposed upon Borrower by the Loan Documents; and
c. ADVANCES. All sums advanced by Bank to or for the benefit of
Borrower in the manner provided in the Loan Documents, or for the
protection of the Security of the Collateral, including, without
limitation, all sums advanced pursuant to this Mortgage, including
advances for repairs, maintenance, insurance, taxes, or assessments;
and
d. COSTS. All costs, expenses, losses, damages and other charges
sustained or incurred by Bank because of: (i) Borrower's Default in
payment or performance, as the case may be, of any provision contained
in the Loan Documents; (ii) defense of actions instituted by Borrower
or a third party against Bank arising out of or related to the Loan, or
in the realizing upon, protecting, perfecting, defending, or (iii)
actions brought or defended by Bank enforcing Bank's security interest
in the Collateral. All of these costs and expenses include reasonable
attorneys' fees, paralegals' fees, or legal assistants' fees, whether
incurred with respect to collection, litigation, bankruptcy proceedings
interpretation dispute, negotiation, trial, appeal, defense of actions
instituted by a third party against Bank, or enforcement of any
judgment based on the Loan Documents, whether or not suit is brought to
collect such amounts or to enforce such rights or, if brought, is
prosecuted to judgment.
e. LETTERS OF CREDIT. All sums advanced by Bank for the benefit of
Borrower under any other instrument or otherwise, including, without
limitation, any amounts paid by Bank under any letters of credit issued
by Bank for the benefit of Borrower.
f. MISCELLANEOUS EXPENSES. All costs and expenses incurred by Bank
in connection with the Loan, whether prior to or at closing or during
the term thereof, including, without limitation, loan origination fees,
commitment fees, extension fees, title insurance search fees, premiums
and endorsement fees, hazard and other insurance required by the Loan
Documents, pre-closing and post-closing appraisals, appraisal reports
or opinions of value, surveys, brokerage commissions and claims of
brokerage in connection with the Loan, ad valorem and personal property
taxes, documentary stamp taxes and intangible taxes, attorneys' fees,
consultant fees, architect's and engineer's fees, construction
consultant's fees, environmental surveys or assessments, and recording
charges.
g. INDEMNITIES. All costs, expenses, and amounts arising under or
pursuant to any indemnity contained within the Loan Documents or in any
separate agreement executed by Borrower in favor of Bank including,
without limitation, the Hazardous Substance Certificate and
Indemnifica- tion Agreement (the "Indemnity").
5. TITLE WARRANTIES. Subject to the Permitted Encumbrances (as
hereinafter defined) , Borrower covenants with Bank that: (i) Borrower is
indefeasibly seized of the Land and Improvements in fee simple, has good and
marketable title to the Collateral and has full power, lawful right and
authority to convey the same in fee simple and to grant Bank a perfected first
lien security interest in the Collateral, and (ii) the Collateral is free and
clear of all liens, encumbrances, restrictions, and security interests of any
nature except for those permitted
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encumbrances which Bank has previously approved, as set out in Schedule B of the
title insurance policy and endorsements insuring this Mortgage, which are
referred to as "Permitted Encumbrances" in this Mortgage.
6. LIENS. Except as otherwise provided in the Loan Agreement, Borrower
will not create or permit to be created, or to remain, and will promptly
discharge at Borrower's expense any and all liens or encumbrances upon, or
security interests in, the Collateral, or any combination thereof, whether
consensual, common law, statutory, voluntary, involuntary, or arising by
operation of law, except Permitted Encumbrances. Notwithstanding the foregoing,
and except for any construction liens, Borrower may contest the amount, validity
and enforceability of any involuntary or nonconsensual lien, encumbrance or
security interest, including those arising by operation of law, in the manner
provided in paragraph 8 below. Except as otherwise provided in the Loan
Agreement, if any construction lien is filed against the Mortgaged Property,
Borrower agrees to discharge or otherwise remove such lien by bond or otherwise,
within thirty (30) days of imposition of same, but may thereafter contest the
amount or validity of such lien as provided in paragraph 8 below.
7. TAXES AND OTHER IMPOSITIONS. Borrower will pay or cause to be paid,
prior to any delinquency in (i) all property taxes, assessments, water, sewer,
utility and other rents, rates and charges, including all excises, taxes,
levies, license fees, permit fees, impact fees, connection fees, and other fees
and charges, whether general or special, ordinary or extraordinary, foreseen or
unforeseen, that may be assessed, levied or imposed upon the Collateral, or
otherwise arising with respect to the occupancy, use, possession or disposition
thereof, whether or not the failure to pay the same might result in the creation
of a lien upon the Collateral, or any combination thereof; (ii) all franchise,
excise and other taxes, fees and charges assessed, levied or imposed with
respect to Borrower's right to do business in the State of Florida and the
political subdivisions thereof; (iii) all taxes and fees (except for Bank's
state and federal income taxes) that may be levied by the United States of
America or any state or political subdivision thereof, upon Bank or Borrower in
connection with or upon the Loan Documents, or the Debt or its payment, or
collection, or any combination thereof (including all documentary stamp taxes
and intangible taxes plus any penalties and interest charged for the late
payment of any such taxes); and (iv) except as otherwise provided in the Loan
Agreement, all lawful claims and demands of contractors, subcontractors,
mechanics, laborers, materialmen and other lienors which, if unpaid, might
result in the creation of a lien upon the Collateral. The sums payable under
this paragraph are called "Impositions". Nothing contained in this paragraph
will require the payment of any Imposition so long as the amount, validity or
enforceability thereof is contested by appropriate proceedings as provided in
paragraph 8 below. With respect to state and local real and tangible personal
property taxes, however, Borrower will pay same and will furnish Bank with
copies of the receipts for each such payment without demand prior to April 30th
of each year of the Loan and any contest of the same must be by a suit or other
proceeding for a refund. With respect to all other Impositions, Borrower will
furnish Bank with proof of such payment upon demand. If any payment required to
be made by Borrower by this paragraph is prohibited by law, with the result that
Bank becomes liable for its payment, then the Debt will immediately become due
and payable, at Bank's option.
8. CONTESTS. Borrower may contest, by any and all appropriate
administrative, trial or appellate proceedings, or any combination thereof, and
in Bank's name, if required by law, the amount, validity, enforceability or
application of any Imposition that Borrower is required to pay or perform to any
person or entity other than Bank by any provision of this Mortgage or the other
Loan Documents if and only for so long as: (i) Borrower notifies Bank in writing
of its intent to contest the Imposition; (ii) such contest suspends the
collection or enforcement of the item(s) contested; (iii) no part of the
Collateral will be subject to loss, sale or forfeiture before final
determination of any such contest; (iv) neither Borrower nor Bank will be
subject to any criminal liability; (v) Borrower furnishes such security as may
be required by law in connection with each such contest; (vi) the value,
usefulness and marketability of the Collateral will not be adversely impaired by
any such contest; (vii) Borrower otherwise continues to pay and perform, as the
case may be, the Debt and Borrower's obligations under this Mortgage; (viii)
Borrower otherwise is not in Default under any provision of the Loan Documents;
(ix) each such contest is continuously prosecuted diligently to final
determination; (x) Borrower pays or causes to be paid, and defends, indemnities
and holds Bank harmless of and from any and all losses, judgments, decrees and
costs
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(including all reasonable attorneys, fees) incurred in connection with each such
contest; (xi) Borrower, promptly following final determination of each such
contest, fully pays and discharges all amounts that may be levied, assessed,
charged, imposed or otherwise determined to be payable, together with all
penalties, fines, interests, costs and expenses, and otherwise complies with
such final determination, at Borrower's sole cost and expense; (xii) Borrower
furnishes Bank with such security as Bank reasonably may require to assure
Borrower's compliance with all of the foregoing requirements, and (xiii) such
liens are not filed against the Mortgaged Property pursuant to Chapter 713,
Florida Statutes, in which event such liens must be discharged or transferred to
bond pursuant to paragraph 6 above before Borrower contests such liens except as
otherwise provided in the Loan Agreement. So long as Borrower complies with the
foregoing and Bank is promptly reimbursed for all costs and expenses incurred,
Bank will cooperate with Borrower in connection with any such contest.
9. INSURANCE. Until the Debt shall have been discharged by Borrower,
Borrower shall maintain, at Borrower's cost and expense, the following insurance
coverages in full force and effect at all times:
a. HAZARD INSURANCE. Borrower shall keep the Tangible Property and
Improvements which now or hereafter may constitute part of the
Mortgaged Property insured at all times against loss or damage by fire
and other hazards included within the term "all risk" or "extended
coverage" and against such other hazards as Bank may require in the
full insurable value thereof (or such lesser amount as Bank may
authorize in writing) , with an insurer satisfactory to Bank. Such
policy shall include a Replacement Cost and Agreed Amount/Stipulated
Value Endorsement and a Sinkhole Endorsement, if deemed necessary by
Bank.
b. LIABILITY INSURANCE. Borrower will obtain and keep in full force
a "Broad Form Comprehensive General Liability" insurance coverage for
both Borrower and any contractor performing services to the Mortgaged
Property in the minimum coverage amount of TWO MILLION AND NO/100
DOLLARS ($2,000,000.00) per occurrence for bodily injury and One
Hundred Thousand Dollars ($100,000.00) per occurrence for property
damage.
c. FLOOD INSURANCE. If at any time the Land or any portion thereof
is located in a "Flood Hazard Area" pursuant to the Flood Disaster
Protection Act of 1973 or any successor or supplemental act thereto,
flood insurance in the maximum amount available or such other amount as
Bank may reasonably request;
d. BUILDER'S RISK INSURANCE. An "All risk", non-reporting, completed
value builder's risk insurance policy in an amount not less than loan
amount per Unit which policy shall include Agreed Amount, Replacement
Cost, Permit to occupy and Vandalism/Malicious Mischief Endorsements.
Notwithstanding the foregoing, Bank will not fund at any one time in
excess of the total loan amount without further insurance being issued
to cover the additional funded balances.
e. OTHER INSURANCE. Machinery insurance, worker's compensation
insurance, wind damage insurance, and other insurance coverages as Bank
may reasonably require.
The policy or policies of insurance shall (i) be from companies and in
coverage amounts acceptable to Bank, (ii) contain a standard mortgagee clause in
favor of Bank naming Bank as a mortgagee and including a lender's loss payee
clause in such policy, as applicable (iii) not be terminable or modified without
thirty (30) days, prior written notice to Bank, and (iv) be evidenced by
original policies or certified copies of policies deposited with Bank, as Bank
may elect, to be held by Bank until the Debt shall have been fully paid and
discharged. Borrower shall furnish Bank satisfactory evidence of payment of all
premiums required and similar evidence of renewal or replacement coverage not
later than thirty (30) days prior to the date any coverage will expire.
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Each insurance policy or endorsement required herein shall be written
by an insurer having a rating not less than "A-XI" Best's Rating according to
the most current edition of Best's Key Rating Guide as determined at the time of
the initial policy and at all times during the term hereof. All policies shall
indicate that notices related to such insurance shall be sent to Bank at:
Chase Federal Bank, a Federal Savings Bank,
a Division of NationsBank, N.A. (South)
Suite 101 701 West Cypress Creek Road
Ft. Lauderdale, FL 33309
Attn: Loan Administration Section,
Real Estate Banking Group
If any loss occurs with respect to the Mortgaged Property, Bank is
hereby appointed attorney-in-fact for Borrower to make proof of loss if Borrower
fails to make the same punctually, and to give a receipt for any proceeds
collected under such policies. Borrower will promptly give written notice to
Bank of any loss or damage to the Mortgaged Property, and will not adjust or
settle any such loss without Bank's prior written consent, which consent shall
not be unreasonably withheld or delayed. Upon any Default by Borrower under this
Mortgage, all right, title and interest of Borrower in and to all such insurance
policies then in force, including any and all unearned premiums and existing
claims, will inure to Bank, which, at its option, and as attorney-in-fact for
Borrower, may then make, settle and give binding acquittances for claims under
all such policies, and may assign and transfer such policies or cancel or
surrender them, applying any unearned premium in such manner as Bank may elect.
The foregoing appointment of Bank as attorney-in-fact for Borrower is coupled
with an interest, and is irrevocable. Notwithstanding the occurrence of any
casualty or the availability of any insurance proceeds, Borrower will pay the
Debt in the manner required by the Loan Documents.
10. CONDEMNATION. If all or any part of the Collateral, or any interest
therein or right accruing thereto, is taken as a result of, or in lieu or in
anticipation of, the exercise of the right of condemnation or eminent domain, or
by reason of the temporary requisition of the use or occupancy of the Mortgaged
Property, in any event by any government or quasi-governmental authority, civil
or military, or any other party entitled to exercise such powers by law, general
or special, or is devalued or otherwise adversely affected by any of the
foregoing actions, all proceeds payable with respect to any such action are
assigned to Bank and shall be paid to Bank. Bank shall be under no obligation to
question the amount of any such award or compensation and may accept the same in
the amount in which the same shall be paid. The proceeds of any award or
compensation so received shall, at the option of the Bank, either be applied to
the payment of the Debt or be paid over to the Borrower for the restoration of
the Improvement. Borrower, immediately upon obtaining knowledge of the
institution or threatened institution, of any proceedings for the Mortgaged
Property, or any part thereof, by condemnation or eminent domain, will notify
the Bank of the pending of such proceedings. Bank shall have the right to
intervene and participate in any proceedings for and in connection with any
taking referred to in this section. Borrower shall not enter into any agreement
for the taking of the Mortgaged Property or any part thereof with any person or
persons authorized to acquire the same by condemnation or eminent domain, unless
the Bank shall have consented thereto in writing. Any of the foregoing actions
are sometimes called a "condemnation" or "taking" in this Mortgage and the other
Loan Documents. Such proceeds include, without limitation, severance damages,
damages arising from the change of grade of any street or the access thereto,
the taking of air rights and damages caused by noise, pollutants and other
emissions. Notwithstanding any such taking or other injury or decrease in value,
or the availability of any proceeds for any of the foregoing, Borrower shall
continue to pay the Debt in the manner required by the Loan Documents. Bank's
rights under this paragraph will survive the foreclosure or other enforcement of
this Mortgage, and Bank will have the right to receive and retain all proceeds
to the extent of any deficiency which exists upon such foreclosure or other
enforcement, together with legal interest thereon, and to the extent of the
reasonable counsel fees, costs and disbursements incurred by Bank in connection
with the collection of such proceeds. Such right shall exist whether or not a
deficiency judgment shall have been sought or recovered or denied upon the Note.
The remaining balance of such proceeds, if any, will inure to the benefit of the
party entitled thereto by applicable law.
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Notwithstanding the foregoing, if Bank uses the net proceeds of the condemnation
to reduce the principal balance owed under the Note, Bank will thenceforth allow
those funds to be disbursed to the Borrower in accordance with the Loan
Agreement.
11. APPLICATION OF INSURANCE PROCEEDS AND AWARDS. The Borrower will
promptly give the Bank written notice of any damage to or destruction of the
Mortgaged Property or any part thereof, generally describing the nature and
extent of such damage or destruction and the Borrower's best estimate of the
cost of restoring the Mortgaged Property. The Bank shall be entitled to all
insurance proceeds payable on account of such damage or destruction and the
Borrower hereby irrevocably assigns, transfers and sets over to the Bank all
rights of the Borrower to any such proceeds or payments and irrevocably
authorizes and empowers the Bank, at its option and in its sole and absolute
discretion, in the name of the Borrower or otherwise, to file and prosecute what
would otherwise be the Borrower's claim for any such proceeds or payment and to
collect, receipt for and retain the same for disposition in accordance with this
Section. The Bank may, at its sole option, apply all amounts recovered under any
insurance policy required to be maintained by the Borrower hereunder in any one
or more of the following ways: (a) to the payment of the reasonable costs and
expenses incurred by the Bank in obtaining such insurance proceeds, including
the fees and expenses of attorneys and insurance and other experts and
consultants, the costs of litigation, arbitration, mediation, investigations and
other judicial, administrative or other proceedings and all other out-of-pocket
expenses; (b) to the payment of any of the Debt other than indebtedness with
respect to the Note at the time outstanding; (c) to the payment of the principal
of the Note and any interest accrued and unpaid thereon, without regard to
whether any portion or all of such amounts shall be matured or unmatured,
together with interest at the default interest rate on any overdue principal and
(to the extent permitted by applicable law) interest; and, in case such amount
shall be insufficient to pay in full all such amounts, then such amounts shall
be applied, FIRST, to the payment of all amounts of interest accrued on the Note
and unpaid, without preference or priority of any payment of interest over any
other payment of interest or of any other Note, and, SECOND, to the payment of
all amounts of principal at the time outstanding, without preference or priority
of any installment or amount of principal over any other installment or amount
of principal or of any Note over any other Note, but otherwise in such manner
and order as the Bank shall in its sole discretion determine; (d) to fulfill any
of the other covenants contained herein as the Bank may determine; (e) release
to the Borrower for application to the cost of restoring the Mortgaged Property;
or (f) release to the Borrower. In the event of a foreclosure of this Mortgage,
the purchaser of the Mortgaged Property shall succeed to all the rights of the
Borrower including any right to unearned premiums, in and to all policies of
insurance assigned and delivered to the Bank. Notwithstanding the foregoing, if
Bank uses the net proceeds of the insurance proceeds or awards to reduce the
principal balance owed under the Note, Bank will thenceforth allow those funds
to be disbursed to the Borrower in accordance with the Loan Agreement.
Notwithstanding anything in this paragraph to the contrary, if the Bank has
elected to apply proceeds to the Debt, Bank will re-disburse said proceeds in
accordance with the Loan Agreement.
12. MAINTENANCE, REPAIRS, AND RECONSTRUCTION.
a. MAINTENANCE AND REPAIRS. Borrower, at its sole cost and subject
to Bank's satisfaction, shall make all repairs, renewals, replacements,
servicing and reconstruction that are necessary to maintain the
Mortgaged Property in good order, condition and repair. Immediately
following the occurrence of any casualty or other loss, Borrower
promptly will undertake all restoration required or desirable and will
pursue it diligently to completion. The foregoing shall be accomplished
by the Bank funding the insurance proceeds it receives from the insurer
to the Borrower under the terms and conditions of the Loan Agreement
for the construction of individual Units. Borrower shall (i) not strip,
waste, remove or demolish any portion of the Mortgaged Property, nor
suffer or permit any such action; (ii) promptly comply with all laws,
governmental regulations and public or private restrictions or
easements, or both, of any kind affecting the Mortgaged Property or
requiring any alterations or improvements to be made thereon, and (iii)
not commit, suffer or permit any act upon the Mortgaged Property in
violation of any law, subject to Borrower's right' to contest the same
in good faith to conclusion, as provided in paragraph 8 of this
Mortgage. If any public agency or authority requires or commences any
proceedings for the
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demolition or removal, or both, of any improvements or portions thereof
comprising the Mortgaged Property due to non-compliance with health,
safety, fire or building codes, then, unless Borrower undertakes to
contest such action in the manner provided in paragraph 8 above and
pursues such contest to a successful conclusion, such action will
constitute a Default under this Mortgage. Borrower will not, without
Bank's prior written consent, (i) make any material alterations,
additions or improvements of or to the Mortgaged Property unless
required by the Loan Agreement; (ii) make any material change in the
general nature of the use or occupancy of the Mortgaged Property; (iii)
institute or join or acquiesce in any action to change the existing
zoning or land use classification of the Mortgaged Property, or (iv)
grant easements or licenses affecting the use or operation of the
Mortgaged Property. Bank and any persons authorized by Bank may enter
the Mortgaged Property at all reasonable times without prior notice for
inspections or for any other lawful purpose. If Borrower fails to
comply with the requirements of this paragraph, then Bank, without
waiving the option to foreclose, may take some or all measures Bank
reasonably deems necessary or desirable for the maintenance, repair,
preservation or protection of the Mortgaged Property, and any expenses
reasonably incurred by Bank in so doing shall become part of the Debt
secured hereby, and shall, at the option of Bank, become immediately
due and payable, and shall bear interest at the Default Rate specified
in the Note. Bank shall have no obligation to care for or maintain the
Mortgaged Property, or, having taken some measures therefor, to
continue same or take other measures.
b. RECONSTRUCTION. The Borrower after receipt of net insurance
proceeds from Bank funded in accordance with the Loan Agreement shall
promptly repair, restore, replace or rebuild any part of the Mortgaged
Property, now or hereafter encumbered by this Mortgage which may be
affected by any condemnation proceeding or which may otherwise become
damaged, destroyed, lost or unsuitable for use. In the event the
Mortgaged Property or any part thereof if damaged or destroyed by fire
or other casualty, the Borrower shall immediately notify the Bank, in
writing, of such damage or destruction. The Borrower shall not cause or
permit anything to be done which would or could increase the risk of
fire or other hazard to the Mortgaged Property, or any part thereof, or
which would or could result in an increase in any insurance premiums
payable with respect to the Mortgaged Property, or which would or could
result in the cancellation of any insurance policy carried with respect
to the Mortgaged Property. No part of the Mortgaged Property,
including, but not limited to, any building, structure, water system,
sewer system, parking lot, driveway, landscape scheme, timber or other
ground improvement, equipment or other property, now or hereafter
mortgaged, shall be removed, demolished or materially altered without
the prior written consent of the Bank. No top soil, sand, sod, loam,
clay or gravel shall be mined, stripped, or removed from the Mortgaged
Property without the written consent of the Bank. However, this shall
not prevent or restrict removal of any such materials taken for
excavation necessary to construct a basement, cellar or foundation
footings for the erection of a building or buildings for which a
building permit or permits has or have first been issued by the
governmental authority having jurisdiction thereof; or for the
construction of roadways or the Improvements constructed in accordance
with plans approved by the governmental authorities having jurisdiction
thereof in accordance with the Loan Agreement; provided, nevertheless,
that in the event the required removals become so extensive, as
determined by the Bank, as to create profit by sale of the removed
portion of the Mortgaged Property, said sums shall inure to the benefit
of the Bank to be applied as the Bank so directs, to the reduction of
the Debt.
13. ADVANCES. If Borrower Defaults in the observance or performance of
any of the provisions of the Loan Documents, including but not limited to
obtaining and maintaining insurance pursuant to paragraph 9, paying Impositions
pursuant to paragraph 7, and maintaining the Mortgaged Property pursuant to
paragraph 12, then Bank, without waiving or otherwise impairing any other of its
rights or remedies, at its sole option and without obligation to do so, and
without demand upon Borrower, may make any such payment or take such action as
Bank deems necessary or appropriate to correct such Default, or to protect the
security of the Collateral encumbered by the Loan Documents. All payments so
made, together with all costs and expenses so incurred, will be added to the
principal amount due under the Note and thereafter will bear interest at the
rate then payable as provided for in the
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Note, and will be secured by the lien and security interest granted by the
Security Documents. For the foregoing purposes, Bank is authorized to (a) enter
upon the Mortgaged Property; (b) appear in and defend any action or proceeding
purporting to affect the security of this Mortgage or the rights or powers of
Bank hereunder; (c) pay, purchase, contest or compromise any encumbrance, charge
or lien that in the reasonable judgment of Bank appears to adversely affect the
Collateral; and (d) take whatever action Bank, in its discretion, deems
necessary or appropriate in exercising any such powers. Notwithstanding the
foregoing, Borrower immediately, upon Bank's demand, will pay all sums so
expended by Bank with interest as stated above.
14. BOOKS AND RECORDS. Borrower, at all times, will keep proper books
of record and account in which full, true and correct entries will be made of
its transactions with respect to the Collateral in accordance with generally
accepted accounting principles, consistently applied, and which will properly
and correctly reflect all items of income and expense in connection with the
operation of the Collateral, regardless of whether such income or expense is
realized by Borrower or any other person or entity whatsoever. Bank will have
the right from time to time during normal business hours to examine all such
books, records and accounts at Borrower's office or at the office of such other
person as maintains them, and to make such copies or extracts as Bank may
desire, at Borrower's expense.
15. TAXATION OF MORTGAGE. In the event of the passage after the date of
this Mortgage of any federal, state or local law deducting from the value of
real property for the purpose of ad valorem taxation any lien thereon or
changing in any way the laws for the taxation of mortgages or debts secured by
mortgages for federal, state or local purposes, or the manner of the collection
of any such taxes, and imposing a tax, either directly or indirectly, on any or
all of the Loan Documents, Bank shall have the right to declare the Debt due on
a date to be specified by not less than sixty (60) days' written notice given to
Borrower by Bank; provided, however, that such election shall be ineffective if
Borrower is permitted by law to pay the whole of such tax in addition to all
other payments required hereunder, and if Borrower, prior to such specified
date, does pay such tax and agrees to pay any such tax (excluding, however, all
taxes on the income of Bank) when thereafter levied or assessed, and such
agreement shall constitute a modification of this Mortgage. Notwithstanding any
provision in this paragraph to the contrary, Borrower may contest the matters
described herein per the procedures set forth in paragraph 8 above.
16. ASSIGNMENT OF RENTS, LEASES, PROFITS AND CONTRACT RIGHTS. Pursuant
to paragraph 1 of this Mortgage, Borrower has irrevocably assigned and set over
unto Bank all right, title, and interest of Borrower in and to the Rents and
Contract Rights (including all leases and sales contracts now or hereafter
existing relating to the Mortgaged Property) as security for the Debt, together
with the right to collect and enforce the same; provided, however, so long as
there shall be no Default under the Loan Documents, Borrower has been granted a
license to collect and receive all Rents assigned hereunder in accordance with
paragraph 1. Neither these assignments nor Bank's enforcement of the provisions
of these assignments (including the receipt of the Rents) will operate to
subordinate the lien of this Mortgage to any of the rights of any lessee or
purchaser under any lease or sales contract of the Mortgaged Property, or to
subject Bank to any liability to any such lessee or purchaser for the
performance of any obligations of Borrower under any such lease or sales
contract unless and until Bank agrees to such subordination or assumes such
liability by an appropriate written instrument. All right, title and interest of
each such lessee or purchaser in and to the Mortgaged Property, whether arising
by virtue of any such lease, contract or otherwise, at all times will be and
remain subject, subordinate and inferior to the lien of this Mortgage and all
rights, remedies, powers and privileges of Bank arising under or by virtue of
any of the Loan Documents. The assignments of Rents and Contract Rights
(including leases) contained in this Mortgage are intended to provide Bank with
all the rights and remedies of mortgagees pursuant to Section 697.07, Florida
Statutes, as may be amended from time to time. However, in no event shall this
reference diminish, alter, impair, or affect any other rights and remedies of
Bank. Notwithstanding the foregoing, if Borrower shall have executed an
Assignment of Rents constituting one of the Loan Documents, such Assignment of
Rents is hereby incorporated herein by reference and shall control if in
conflict with the provisions of this Mortgage.
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17. LEASES AFFECTING MORTGAGED PROPERTY. The assignments
contained in paragraph 1 shall not be deemed to impose upon Bank any of the
obligations or duties of Borrower provided in any lease affecting the Mortgaged
Property (including, without limitation, any liability under the covenant of
quiet enjoyment contained in any lease in the event that any tenant shall have
been joined as a party defendant in any action to foreclose this Mortgage and
shall have been barred and foreclosed thereby of all right, title and interest
and equity of redemption in the Mortgaged Property or any part thereof), and
Borrower will comply with and observe its obligations as landlord under all
leases affecting the Mortgaged Property or any part thereof. Borrower has a
license to collect the Rents, but shall not accept payment of rent more than one
month in advance without the prior written consent of the Bank, and only so long
as there is no Default hereunder or under the other Loan Documents. Borrower
shall receive the Rents in trust on Bank's behalf, and Borrower covenants to
apply same to the payment of taxes and assessments upon the Mortgaged Property,
to the cost of insurance and maintenance and repairs, and to the payment of the
Debt, before using any part of the Rents for any other purpose.
Prior to a Default hereunder and demand by Bank for delivery of
security deposits held by Borrower or any agent of Borrower to Bank or its
designee, Borrower shall maintain all security deposits pursuant to the leases
in a separate, identifiable account deposited with Bank, or any other
institution acceptable to Bank, and in accordance with all applicable laws and
regulations. Upon delivery of such security deposits to Bank, or upon Bank's
enforcement of its security interest in such deposits, Bank shall hold such
security deposits pursuant to the terms of the leases in respect of which such
deposits were obtained by Borrower and in accordance with applicable law;
provided, however, in no event shall Bank be liable to any lessee of any part of
the Mortgaged Property for the return of any security deposit in any amount in
excess of the amount delivered to Bank by Borrower. Any security deposits held
by Bank shall not bear interest unless required by applicable law.
Borrower will: (a) not collect any of the Rents arising or accruing
under any lease in advance of the time when the same shall become due, other
than as required to be paid in advance by the terms of any lease, but in no
event more than one (1) month in advance; (b) not pledge, transfer, mortgage or
otherwise encumber or assign any of Borrower's interest in the leases or any
Rents arising or accruing therefrom; (c) not waive, excuse, condone, discount,
set-off, compromise, or in any manner release or discharge any tenant thereunder
of and from any obligations, covenants, conditions and agreements by said tenant
to be kept, observed and performed, including the obligation to pay the rents
thereunder, in the manner at the place and time specified therein; (d) not
cancel, terminate or consent to any surrender of any lease, nor modify, alter or
change any of the terms thereof without the prior written consent of Bank; (e)
not consent to any assignment of or subletting under any lease, whether or not
in accordance with the terms thereof, without the prior written consent of Bank;
and (f) not enter into, execute or deliver any leases without the prior written
consent of Bank.
In the event any tenant of the Mortgaged Property should be the subject
of any proceeding under the Federal Bankruptcy Code, as amended from time to
time, or any other federal, state or local statue which provided for the
possible termination or rejection of any of the leases assigned hereby, Borrower
covenants and agrees that if any of the leases is so terminated or rejected, no
settlement for damages shall be made without the prior written consent of Bank,
and any check in payment of damages for termination or rejection of any such
lease will be made payable both to Borrower and Bank. Borrower hereby assigns
any such payment to Bank and further covenants and agrees that upon the request
of Bank, it will duly endorse to the order of Bank any such check, the proceeds
of which will be applied to that portion of the Debt as Bank may elect.
From time to time, Borrower agrees to obtain tenant estoppel
certificates from each tenant of the Mortgaged Property containing such
information as may be reasonably requested by Bank.
18. DEFAULT. The occurrence of any of the following (time being of the
essence as to this Mortgage and all of its provisions) constitutes a "Default"
by Borrower under this Mortgage, and, at the option of Bank, under the other
Loan Documents:
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a. SCHEDULED PAYMENT. Borrower's failure to make any payment
required under the Note when due or within any applicable grace period.
b. MONETARY DEFAULT. Borrower's failure to make any other payment
required by this Loan Agreement or the other Loan Documents when due.
c. OTHER. Borrower's failure to perform any other obligation imposed
upon Borrower by this Loan Agreement or any other Loan Document within
thirty (30) days after the date when performance is due. This provision
shall not be construed to provide Borrower with any grace period in
complying with any obligations imposed on Borrower by the terms of the
Loan Documents. Notwithstanding the foregoing provision, Bank shall
give Borrower notice, as defined in the Mortgage, of any non-monetary
default after which Borrower shall have a thirty (30) day cure period,
unless such non-monetary default is not capable of being cured within
said thirty (30) day period, in which case Borrower shall have sixty
(60) days to cure such default following the date performance is due
provided Borrower has commenced and is diligently pursuing the cure for
such default (which determination shall be made in Bank's sole and
absolute discretion), and provided such additional time to cure such
default does not negatively affect the value of the collateral or the
preservation of the collateral's value, which determination shall be
made in Bank's sole and absolute discretion.
d. REPRESENTATION. Any representation or warranty of Borrower
contained in this Loan Agreement or in any certificate delivered
pursuant hereto, or in any other instrument or statement
furnished in connection herewith, proves to be incorrect or misleading
in any adverse respect as of the time when the same shall have been
made, including, without limitation, any and all financial statements,
operating statements, and schedules attached thereto, furnished by
Borrower or any guarantor of the Loan to Bank or pursuant to any
provision of this Loan Agreement.
e. BANKRUPTCY. Borrower or any general partner of Borrower or any
guarantor of the Loan (i) files a voluntary petition in bankruptcy or a
petition or answer seeking or acquiescing in any reorganization or for
an arrangement, composition, readjustment, liquidation, dissolution, or
similar relief for itself pursuant to the United State Bankruptcy Code
or any similar law or regulation, federal or state, relating to any
relief for debtors, now or hereafter in effect; or (ii) makes an
assignment for the benefit of creditors or admits in writing its
inability to pay or fails to pay its debts as they become due; or (iii)
suspends payment of its obligations or takes any action in furtherance
of the foregoing; or (iv) consents to or acquiesces in the appointment
of a receiver, trustee, custodian, conservator, liquidator or other
similar official of Borrower, a general partner of Borrower, or any
guarantor, for all or any part of the Collateral or other assets of
such party, or either; or (v) has filed against it an involuntary
petition, arrangement, composition, readjustment, liquidation,
dissolution, or an answer proposing an adjudication of it as a bankrupt
or insolvent, or is subject to reorganization pursuant to the
United-States Bankruptcy Code, an action seeking to appoint a trustee,
receiver, custodian, or conservator or liquidator, or any similar law,
federal or state, now or hereinafter in effect, and such action is
approved by any court of competent jurisdiction and the order approving
the same shall not be vacated or stayed within sixty (60) days from
entry; or (vi) consents to the filing of any such petition or answer,
or shall fail to deny the material allegations of the same in a timely
manner.
f. JUDGMENTS. (1) A final judgment other than a final judgment in
connection with any condemnation is entered against Borrower,
Guarantors, or any general partner of Borrower, that (i) adversely
affects the value, use or operation of the Land or the improvements in
Bank's sole judgment, or (ii) adversely affects, or may adversely
affect, the validity, enforceability or priority of the lien or
security interest created by the Mortgage or any other Loan Document in
Bank's sole judgment, or both; or (2) execution or other final process
issues thereon with respect to the Land or the Improvements; and (3)
Borrower, Guarantor, or any general partner of Borrower, does not
discharge the same or provide for
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its discharge in accordance with its terms, or procure a stay of
execution thereon, in any event within thirty (30) days from entry, or
Borrower shall not, within such period or such longer period during
which execution on such judgment shall have been entered, and cause its
execution to be stayed during such appeal, or if on appeal such order,
decree or process shall be affirmed and Borrower shall not discharge
such judgment or provide for its discharge in accordance with its terms
within sixty (60) days after the entry of such order or decree or
affirmance, or if any stay of execution on appeal is released or
otherwise discharged.
g. LIENS. Any federal, state or local tax lien or any claim of lien
for labor or materials or any other lien or encumbrance of any nature
whatsoever is recorded against Borrower or the Land or Improvements and
is not removed by payment or transferred to substitute security in the
manner provided by law, within thirty (30) days after it is recorded in
accordance with applicable law.
h. OTHER NOTES OR MORTGAGES. Borrower's default in the performance
or payment of Borrower's obligations under any other note which remains
uncured after any applicable grace period, or under that certain Real
Estate Mortgage, Assignment and Security Agreement of even date
herewith in favor of Bank, securing a note in the original principal
amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) and
encumbering that portion of the Land commonly referred to as Parcel "F"
and that certain Real Estate Mortgage, Assignment and Security
Agreement of even date herewith in favor of Bank, securing a note in
the original principal amount of THREE MILLION FOUR HUNDRED THOUSAND
AND NO/100 DOLLARS ($3,400,000.00), and encumbering that portion of the
Land commonly referred to as Parcel "D", or under any other mortgage
encumbering all or any part of the Land or the Improvements, if the
other mortgage is permitted by the Bank, whether such other note or
mortgage is held by Bank or by any other party, and unless otherwise
agreed to by separate written agreement between Bank and such other
mortgage holder.
i. BORROWER DEFAULT UNDER LOAN DOCUMENTS. Borrower's default in the
payment or performance following expiration of any applicable grace
period of any of Borrower obligations under any of the Loan Documents,
including this Mortgage and any riders thereto.
j. GUARANTOR DEFAULT.
i) The default after expiration of any applicable grace period in
the payment or performance of any obligation of a Guarantor of the
Note arising under its guaranty or pursuant to any other Loan
Documents; or
ii) The death of any Guarantor and the failure of Borrower to
provide Bank with an alternate guaranty or alternate collateral
satisfactory to Bank in its sole and absolute discretion within
sixty (60) days of the date of Guarantor's death.
k. BORROWERS/GENERAL PARTNER'S CONTINUED EXISTENCE. Borrower or any
corporate General Partner of Borrower shall cease to exist or to be
qualified to do or transact business in the State in which the Land and
Improvements are located, or shall be dissolved or shall be a party to
a merger or consolidation, or shall sell all or substantially all of
its assets, or shall change its corporate name or trade name without
prior written notice to Bank.
l. STOCK IN BORROWER/CHANGE IN PARTNERS. If Borrower is a limited
partnership and without the prior written consent of Bank, any shares
of stock of any corporate general partner of Borrower are issued, sold,
transferred, conveyed, assigned, mortgaged, pledged, or otherwise
disposed of so as to result in change of control of Borrower, whether
voluntarily or by operation of law, and whether with or without
consideration, or any agreement for any of the foregoing is entered
into; or, if any general
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partnership interest or other equity interest in the Borrower is sold,
transferred, assigned, conveyed, mortgaged, pledged, or otherwise
disposed of, whether voluntarily or by operation of law, and whether
with or without consideration, or any agreement for any of the
foregoing is entered into, or any general partner of Borrower withdraws
from the partnership.
m. TRANSFER OF PROPERTY OR OWNERSHIP. Any sale, conveyance,
transfer, assignment, or other disposition or encumbrance of all or any
part of the Land, Improvements, or the Approved Project, or any
ownership interest in Borrower or any guarantor without the prior
consent of Bank or except as otherwise permitted hereby, or as outlined
in the prospectus for public offering for Transeastern Properties,
Inc., a Florida corporation delivered to Bank by Borrower.
n. FALSE STATEMENT. Any statement or representation of Borrower or
any guarantor contained in the loan application or any financial
statements or other materials furnished to Bank or any other Bank prior
or subsequent to the making of the Loan secured hereby are discovered
to have been false or incorrect or incomplete.
o. DEFAULT UNDER INDEMNITY. Borrower or Guarantor shall default
after any applicable grace period under any obligation imposed by any
indemnity contained within any of the Loan Documents including the
Hazardous Waste Certification and Indemnification.
p. OTHER DEFAULTS. Borrower or Guarantor shall Default under any
other Default provision set forth in the Loan Agreement, which is not
cured within any applicable grace period.
19. REMEDIES. Upon the occurrence and continuance, if applicable, of
any Default, Bank may exercise any one or more of the following rights and
remedies, in addition to all other rights and remedies otherwise available at
law or in equity:
a. OTHER DOCUMENTS. To pursue any right or remedy provided by the
Loan Documents.
b. ACCELERATION. To declare the entire unpaid amount of the Debt
together with all accrued and unpaid interest thereon immediately due
and payable with interest to be due thereon at the Default Rate set
forth in the Note.
c. FORECLOSURE. To foreclose the lien of this Mortgage and obtain
possession of the Collateral, by any lawful procedure.
d. CODE RIGHTS. To exercise any right or remedy available to Bank as
a secured party under the Uniform Commercial Code as adopted by the
State of Florida, as it from time to time is in force and effect, with
respect to any portion of the Collateral then constituting property
subject to the provisions of such Code; or Bank, at its option, may
elect to treat the Collateral as real property, or an interest therein,
for remedial purposes.
e. RECEIVER. To apply, on EX PARTE motion, to any court of competent
jurisdiction for the appointment of a receiver to take charge of,
manage, preserve, protect, complete construction of, rent, and operate
the Mortgaged Property and any of Borrower's business or businesses
situated thereon, or any combination thereof; to collect the Rents; to
make all necessary and needed repairs; to pay all taxes, assessments,
insurance premiums and all other costs incurred in connection with the
Mortgaged Property; and, after payment of the expenses of the
receivership, including reasonable attorneys, fees and other costs and
expenses related to the enforcement of the Security Documents, and
after compensation to the receiver for any of the services described
herein or pursuant hereto, to apply all net proceeds derived therefrom
in reduction of the Debt or in such other manner as the court shall
direct. The appointment of such receiver
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shall be a matter of strict right to Bank, regardless of the adequacy
of the security or of the solvency of any party obligated for payment
of the Debt. All expenses, fees and compensation incurred pursuant to
any such receivership shall be secured by the lien of this Mortgage
until paid. The receiver, personally or through agents, may exclude
Borrower wholly from the Mortgaged Property and have, hold, use,
operate, manage and control the Mortgaged Property and may, in the name
of Borrower, exercise all of Borrower's rights and powers to maintain,
construct, operate, restore, insure and keep insured the Mortgaged
Property in such manner as such receiver deems appropriate.
f. SET-OFFS. Intentionally deleted.
g. RENTS. After Bank shall have given written notice to Borrower, to
collect all rents, issues, profits, revenues, income, proceeds, or
other benefits from the Collateral, or to pursue any remedy available
under Chapter 697.07, Florida Statutes, as amended, supplemented, or
superseded from time to time.
h. OTHER SECURITY. To proceed to realize upon any and all other
security for the Debt in such order as Bank may elect; no such action,
suit, proceeding, judgment, levy, execution or other process will
constitute an election of remedies by Bank or will in any manner alter,
diminish or impair the lien and security interest created by this
Mortgage or any other Security Documents unless and until the Debt is
paid in full.
i. ADVANCES. To advance such monies and take such other action as is
authorized by paragraphs 13 and 25 herein.
20. WAIVER OF CERTAIN RIGHTS. Borrower will not claim, take or insist
upon any benefit or advantage of any present or future stay, extension,
redemption or moratorium law that may affect Borrower's obligations hereunder,
or any law providing for the valuation or appraisal of the Mortgaged Property or
any portion thereof prior to any sale or sales that may be made under or by
virtue of this Mortgage. Borrower, for itself and all who may claim under
Borrower, waives, to the extent that it lawfully may, all rights to have the
Mortgaged Property and any other security for the Debt marshaled upon any
foreclosure or otherwise. Borrower hereby waives and renounces all homestead and
exemption rights provided for by the laws of the United States of America and of
any state, including Florida, in and to the Mortgaged Property as against the
collection of the Debt, or any part thereof.
21. FURTHER ASSURANCES. Borrower, from time to time, will execute,
acknowledge, subscribe and deliver to or at the direction of Bank such documents
and further assurances as Bank may reasonably require for the purpose of
evidencing, perfecting or confirming the lien and security interest created by
this Mortgage, or the security intended to be afforded by the Loan Documents, or
both. Without limitation of the foregoing, Borrower will defend, indemnify and
hold Bank harmless with respect to any suit or proceeding in which the validity,
enforceability or priority of the lien or security interest, or both, is
endangered or contested, directly or indirectly, and will provide Bank with such
security for the defense of any such suit or proceeding as Bank reasonably may
require. If Borrower fails to undertake the defense of any such claim in a
timely manner, or fails to furnish Bank with reasonable security for such
defense after notice from Bank, or, in Bank's sole but reasonable determination,
fails to prosecute such defense with due diligence, then Bank is authorized to
take, at the expense of Borrower, all necessary and proper action in defense of
any such claim, including the retention of legal counsel, the prosecution or
defense of litigation and the compromise or discharge of claims, including
payment of all costs and reasonable attorneys' fees. All costs, expenses and
losses, if any, so incurred by Bank, including reasonable attorneys' fees,
regardless of whether suit is brought and, if suit is brought, for all
administrative, trial and appellate proceedings, if any, will constitute
advances by Bank as provided in paragraph 13.
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22. CUMULATIVE RIGHTS AND NON-WAIVER. No right or remedy conferred upon
or reserved to Bank by this Mortgage or in any of the other Loan Documents is
intended to be exclusive of any other right or remedy; and each and every right
and remedy is cumulative and in addition to any other right or remedy otherwise
available. Every right, power, privilege and remedy granted Bank by this
Mortgage or any of the other Loan Documents, or both, or otherwise available at
law or in equity may be exercised by Bank from time to time as often as Bank
deems expedient until the Debt is paid in full. Bank's failure to insist at any
time upon the strict observance or performance by Borrower of any of the
provisions of this Mortgage or in any of the other Loan Documents, or to
exercise any right or remedy provided for in this Mortgage or in any of the
other Loan Documents, will not impair any such right or remedy or be construed
as a waiver or relinquishment thereof for the future. Receipt by Bank of any
payment required to be made pursuant to any of the Loan Documents with knowledge
of the breach of any provision of any of the Loan Documents will not constitute
a waiver of such breach. In addition to all other remedies provided in this
Mortgage, Bank will be entitled, to the extent permitted by applicable law, to
injunctive relief in the case of a violation or attempted or threatened
violation of any of the provisions of the Loan Documents or to a decree ordering
performance of any of the provisions of any of the foregoing.
23. JUDGMENT. Bank may seek and recover a judgment for all amounts due
and payable in accordance with the Note or under this Mortgage either before,
after or during the pendency of any other proceedings or action to obtain relief
under or with respect to any of the Loan Documents. Bank's right to seek and
recover any such judgment will not be affected by obtaining any other such
relief. Bank will continue to be entitled to enforce payment of, and to seek and
recover a judgment for, any portion of the Debt remaining due and payable after
the application of any proceeds of any sale of the Collateral pursuant to law.
Neither the lien nor security interest of this Mortgage, nor any rights or
remedies of Bank hereunder or under any of the Loan Documents, will be impaired
in any way by the recovery, of any judgment by Bank against Borrower or any
guarantor of the Debt, or by the levy of an execution under such judgment upon
any portion of the Collateral, until the Debt is paid in full.
24. INDEMNIFICATION. Borrower has read and does hereby approve the
legal description of the Land which is the subject of this Mortgage as set forth
on the first page of this Mortgage or in Exhibit "A" attached hereto, and hereby
indemnifies Bank, its successors or assigns, and their attorneys with respect to
any liability which might arise as a consequence of Section 697.10, Florida
Statutes, or any successors or amendments thereto.
25. RELEASES AND EXTENSIONS BY BANK. Bank, from time to time,
without notice to any person and without affecting the liability of Borrower or
of any guarantor or of any other person (other than any person expressly
released by Bank in writing) for the payment of any of the Debt, and without
affecting the priority or extent of the lien and security interest of this
Mortgage (except as to property specifically released by Bank in writing), may
do any or all of the following: (i) release in whole or in part any person
liable for payment of any or all of the Debt, or (ii) extend the time or
otherwise alter the terms of payment of the Debt, in whole or in part, or (iii)
accept additional or substitute security of any kind, or (iv) release or
otherwise deal with all or any portion of the Collateral.
26. NOTICES. Any notice or demand that must or may be given or made in
connection with this Mortgage must be in writing and, unless receipt is
expressly required, will be deemed given, delivered or made, as the case may be,
when delivered by personal delivery or the day after it is mailed by Express
Mail, by overnight delivery service of a nationally-recognized company, and
addressed to the parties at the addresses written on the first page of this
Mortgage or on the signature pages of this Mortgage. Such addresses may be
changed by notice pursuant to this paragraph. Notice of change of address is
effective only upon receipt. All of the persons executing this Mortgage as
Borrower severally agree that a single notice to Borrower in the manner provided
in this paragraph will be effective to bind each such person for all purposes.
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27. ESTOPPEL LETTERS. As and when, from time to time, requested by
either Borrower or Bank, and within ten (10) days after any such request,
Borrower or Bank, as the case may be, will execute and deliver to or at the
direction of Bank or Borrower, as the case may be, such estoppel letters
certifying such matters relating to this Mortgage or the Loan Documents, or
both, as may reasonably be required.
28. TRANSFER. Borrower may not sell, convey, assign, transfer or
otherwise dispose of any interest in all or any portion of the Collateral, or
any ownership interest in Borrower or any guarantor, without Bank's prior
written consent, which consent may be withheld in Bank's sole discretion, or as
outlined in the prospectus for public offering for Transeastern Properties,
Inc., a Florida corporation delivered to Bank by Borrower. Whether such transfer
is voluntary or involuntary, or by operation of law, any such transfer will be
void as to Bank, and constitute an immediate Default under this Mortgage,
without notice, in the sole discretion of Bank. Bank's consent to any transfer,
sale, or conveyance hereunder shall not be deemed a consent to any subsequent
transfer, sale, or conveyance for which Bank's prior written approval has not
been obtained except as provided in the Loan Agreement.
29. REPLACEMENT OF NOTE. Upon receipt of evidence reasonably
satisfactory to Borrower of the loss, theft, destruction or mutilation of the
Note, or any amendment or modification thereto, including without limitation any
renewal note or additional note, and in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement, reasonably satisfactory to
Borrower or, in the case of any such mutilation, upon surrender of such
mutilated note, Borrower will execute and deliver, in lieu thereof, a
replacement Note, identical in form and substance to the Note and dated as of
the date of the Note and upon such execution and delivery all references in any
of the Loan Documents to the Note shall be deemed to refer to the replacement
Note.
30. FUTURE ADVANCES. This mortgage is given to secure not only the
existing Debt, but also such future advances, whether such advances are
obligatory or are to be made at the option of Bank, or otherwise, as are made
within twenty (20) years from the date hereof, to the same extent as if such
future advances were made on the date of the execution of this Mortgage. The
total amount of Debt that may be so secured may decrease or increase from time
to time, but the maximum possible principal debt so secured at one time shall
not exceed the amount shown on Page of this Mortgage, plus interest thereon, and
any disbursements made for the payment of taxes, levies or insurance on the
Mortgaged Property, with interest on such disbursements at the rate then in
effect pursuant to the terms of the Note.
31. GENERAL. The provisions of this Mortgage inure to the benefit of
Bank and its successors and assigns, and bind all persons executing this
Mortgage as Borrower and their respective legal representatives, successors and
assigns, jointly and severally, and all persons now or hereafter claiming any
right, title and interest in and to any of the property, real, personal or
mixed, tangible or intangible, now or hereafter existing or any substitutions or
replacements thereof and described in this Mortgage as the Collateral. Time is
of the essence to this Mortgage and each of its provisions. The provisions of
this Mortgage are to be interpreted, construed, applied and enforced in
accordance with the laws of the State of Florida, regardless of where this
Mortgage is executed, delivered or breached, or where any payment or other
performance required by this Mortgage is made, where any action or other
proceeding involving this Mortgage is instituted, or whether the laws of the
State of Florida otherwise would apply the laws of another jurisdiction; the
foregoing choice of law provisions will apply to the Loan Documents. The
provisions of the Loan Documents are severable at Bank's option so that if any
provision is declared by a court of competent jurisdiction to be invalid or
unenforceable, no other provision will be affected by such invalidity or
unenforceability, but will remain in force and effect according to its original
terms, if Bank so elects. Wherever used in this Mortgage or the other Loan
Documents, or both, and unless expressly provided otherwise: (i) use of the
singular includes the plural, and vice versa; (ii) use of one gender includes
all genders; (iii) use of the term "include" or "including" is always without
limitation; (iv) use of the words, "should," "must" and "will" has the same
legal effect as the use of the word "shall"; (v) the term "day" means a banking
day which shall be a day on which Bank and other banks are open for the
transaction of business, excluding any national holidays, and any performance
which would otherwise be required on a day other than a banking day shall be
timely
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performed in such instance, if performed on the next succeeding banking day;
(vi) any definition herein incorporating one or more documents or items shall
refer to such items "singularly and collectively", and (vii) "person" means any
natural person or artificial entity having legal capacity. Paragraph headings
and subheadings are for indexing purposes only and are not to be used to
interpret, construe, apply or enforce the provisions of this Mortgage. Borrower
and Bank intend the provisions of this Mortgage and the other Loan Documents to
be interpreted, construed, applied and enforced so as to avoid inconsistencies
or conflicting results; but if any such inconsistency or conflict necessarily
occurs, Borrower and Bank intend that the provisions of the Loan Agreement
control unless otherwise provided therein. This Mortgage may be amended only by
a written instrument executed by Borrower and Bank with the same formalities as
this Mortgage.
32. SATISFACTION. The lien and security interest provided by the Loan
Documents will continue unimpaired and in full force and effect unless and until
the Debt is paid in full, whereupon such lien and security interest will be
without further force or effect. Until this Mortgage shall be satisfied of
record, Borrower hereby waives for itself, and all subsequent successors in
title to the mortgaged Property, any right it may now have or hereafter have,
pursuant to Florida Statutes 697.04 (1).(b), as amended from time to time, to
file for record a notice limiting the maximum amount which may be secured by
this Mortgage.
33. DEPOSITS. Bank may, at its sole option upon occurrence of a
Default, require Borrower to make monthly deposits with Bank of a sum equivalent
to one-twelfth (1/12) of the annual real and tangible personal property taxes
assessed with respect to the Mortgaged Property and one-twelfth (1/12) of the
annual premiums for all insurance required to be maintained by this Mortgage. In
addition, upon occurrence of a Default, if required by Bank, Borrower shall also
deposit with Bank a sum of money which, together with the aforesaid monthly
deposits, will be sufficient to make each of such payments for taxes and
insurance at least ten (10) days prior to the date such payments are due. The
amount of such taxes, assessments, and premiums, when unknown, will be estimated
by Bank in good faith. Such deposits may be commingled with Bank's general
funds; Bank will not be liable for any interest on account of such deposits. To
the extent sufficient, such deposits will be applied by Bank to the payment of
such taxes, assessments, and premiums, when due, upon Borrower's presentation of
bills therefor; but Bank will have no obligation to make any such payment except
to the extent of such deposits. Any insufficiency of such deposits will be paid
by Borrower to Bank on demand. Upon any Default by Borrower under this Mortgage,
Bank may apply all such deposits to the Debt in such order as Bank may elect.
The enforceability of Borrower's covenants relating to taxes, assessments, and
insurance provided in this Mortgage will not be altered, diminished, impaired,
or otherwise affected by the provisions of this paragraph except insofar as such
obligations are actually met by Borrower's compliance with this paragraph. Bank
from time to time, at its sole option, may waive and, after any such waiver,
reinstate any or all of the provisions of this paragraph. While any such waiver
is in effect, Borrower will pay all taxes, assessments, and insurance premiums
as provided elsewhere in this Mortgage.
34. BORROWER AS TENANT HOLDING OVER. In the event of a foreclosure sale
of the Mortgaged Property, Borrower shall be deemed a tenant holding over and
shall forthwith deliver possession to Bank or any purchaser or purchasers at
such sale or be summarily dispossessed according to provisions of the law of the
State of Florida applicable to tenants holding over.
35. TIME OF THE ESSENCE. Time is of the essence with respect to each
and every covenant, agreement, and obligation of Borrower under this Mortgage
and the other Loan Documents, and any and all other instruments now or hereafter
evidencing, securing or otherwise relating to the Loan.
36. ORAL MODIFICATION INEFFECTIVE. No term of this Mortgage or any
other of the Loan Documents, or such documents, may be waived, changed,
modified, discharged, or terminated except by an instrument in writing signed by
the party against which enforcement of the waiver, change, modification,
discharge, or termination is sought.
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37. HAZARDOUS SUBSTANCES. Borrower hereby represents and warrants to
Bank: (a) that neither Borrower nor any of its subsidiaries is in violation of
any judgment, decree, order, law, license, rule, or regulation pertaining to
environmental matters, including, without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA") , the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 as amended
("CERCLA") , the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Federal Water Pollution Control Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order, or decree relating to
health, safety, or the environment (hereinafter "Environmental Laws); (b) that
neither Borrower nor any of its subsidiaries has received notice that it or any
of its tenants has been identified by the United States Environmental Protection
Agency as a potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986);
nor has Borrower or any of its subsidiaries received any notification that any
hazardous waste, as defined by 42 U.S.C. ss.6093(5), any hazardous substances as
defined by 42 U.S.C. ss.9601(14), any "pollutant or contaminant" as defined by
42 U.S.C. ss.9601(33) and any toxic substance, hazardous materials, oil or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which it has disposed of has been found at any site on which a
federal or state agency is conducting a remedial investigation or other action
pursuant to any Environmental Law; (c) (i) to the best of Borrower's knowledge
except as disclosed in the Phase I and II Environmental Report prepared for Bank
and Borrower by Law Engineering and Environmental Services, Inc., a Florida
corporation dated November 7, 1995, no portion of the Mortgaged Property has
been used for the handling, processing, storage, or disposal of Hazardous
Substances and no underground tank or other underground storage receptacle for
Hazardous Substances is located on the Mortgaged Property, (ii) in the course of
its activities, neither Borrower nor any of its subsidiaries has generated or is
generating any hazardous waste on the Mortgaged Property, (iii) to the best of
our knowledge there have been no releases (i.e., any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing, or dumping) of Hazardous Substances by Borrower
or any of its subsidiaries on, upon, or into the Mortgaged Property, which
releases would have a material adverse effect on the value of the Mortgaged
Property. In addition, to the best of Borrower's knowledge, there have been no
such releases on, upon, or into any real property in the vicinity of the
Mortgaged Property which, through soil or groundwater contamination, may have
come to be located on the Mortgaged Property; (d) to the best of Borrower's
knowledge, that no asbestos, oil, petroleum or chemical liquids or solids,
liquid or gaseous products, or hazardous or toxic substances, within the meaning
of any applicable statute or regulation, are presently stored or otherwise
located on or under the Mortgaged Property or on or under any adjacent and
contiguous real property owned by Borrower or any related entity or affiliate of
Borrower; (e) to the best of Borrower's knowledge, that no release of any such
hazardous or toxic substance has occurred on the Mortgaged Property or on any
adjacent and contiguous real property owned by Borrower or any related entity or
affiliate of Borrower; (f) to the best of Borrower's knowledge, that no part of
the Mortgaged Property or any adjacent and contiguous real property owned by
Borrower or any related entity or affiliate of Borrower, including the
groundwater located thereon, is presently contaminated by such hazardous or
toxic substance; and (g) that Borrower has not received any notice from any
governmental agency or authority or from any tenant under a lease with respect
to any such release of hazardous or toxic materials onto the Mortgaged Property
or adjacent parcels of real property. Borrower further covenants and agrees with
Bank that, throughout the term of the Note: (h) the Mortgaged Property shall be
operated and maintained in compliance with all applicable governmental or
regulatory requirements; (i) Borrower shall maintain or procure all necessary
permits, licenses, and certificates required by federal, state, and local laws
throughout the Loan term; (j) all hazardous or toxic substances, within the
definition of any applicable statute or regulation, which may be used by any
person for any purpose upon the Mortgaged Property, shall be used or stored
thereon only in a safe and approved manner, in accordance with all industrial
standards and all laws, regulations and requirements for such storage
promulgated by any applicable governmental agency or authority; (k) other than
as described in (j) above, the Mortgaged Property will not be used for the
purpose of storing such substances; and (1) other than as described in above, no
such storage or use will otherwise be allowed on the Mortgaged Property (whether
through leases with tenants who might store or use hazardous substances or
otherwise) which will cause, or which will increase the likelihood of causing,
the release of such hazardous or toxic substances onto the Mortgaged Property.
Borrower shall immediately notify Bank of any failure to comply under this
paragraph or receipt of an notice of violation or third party complaint.
Borrower hereby agrees to indemnify and save and hold Bank harmless
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of and from all claims, damages, loss, liabilities, penalties, fines, remedial
action requirements, and enforcement actions, along with the costs and
attorneys' fees incurred by Bank in defending Borrower's use, generation,
transportation, and disposal, release, or threatened release of hazardous
substances, including without limitation, asbestos containing materials or
damage whatsoever incurred by Bank arising out of or by reason of any violation
of any applicable statute or regulation for the protection of the environment
which occurs upon the Mortgaged Property, or by reason of the imposition of any
governmental lien for the recovery of environmental clean-up costs expended by
reason of such violation, including without limitation any lien arising pursuant
to any so-called "Super Fund" or "Super Lien" legislation; provided, however,
that to the extent that Bank is strictly liable under any such statute or
regulation, Borrower's obligation to Bank under this indemnity shall likewise be
without regard to fault on the part of Borrower with respect to the violation of
law which results in liability to Bank. A default under this paragraph shall
constitute a Default under this Mortgage subject to any cure periods set forth
in the Loan Agreement. It is expressly acknowledged by Borrower that this
indemnification shall survive in accordance with the terms and conditions set
forth in the Hazardous Substance Certificate and Indemnification Agreement of
even date herewith executed by the Borrower and Guarantor.
38. ENVIRONMENTAL ASSESSMENTS. At any time deemed necessary by Bank, in
its reasonable and sound business judgment, Bank may, at its election, obtain
one or more environmental assessments of the Mortgaged Property prepared by a
geohydrologist, an independent engineer, or other qualified consultant or expert
approved by Bank evaluating or confirming (i) whether any Hazardous Substances
are present in the soil or water at the Mortgaged Property and (ii) whether the
use and operation of the Mortgaged Property comply with all applicable
Environmental Laws relating to air quality, environmental control, release of
oil, hazardous materials, hazardous wastes and hazardous substances, and any and
all other applicable environmental laws. Environmental assessments may include
detailed visual inspections of the Mortgaged Property including, without
limitation, any and all storage areas, storage tanks, drains, dry wells, and
leaching areas, and the taking of soil samples, surface water samples, and
ground water samples, as well as such other investigations or analyses as are
necessary or appropriate for a complete determination of the compliance of the
Mortgaged Property and the use and operation thereof with all applicable
Environmental Laws. All such environmental assessments shall be at the sole cost
and expense of Borrower. In the event it is determined that additional tests
and/or remediation are necessary as a result of the aforesaid assessments, or in
the event such additional testing or remediation is recommended by the aforesaid
assessments, the Borrower agrees to immediately perform the tests or undertake
the remediation as recommended. In the event contamination or an environmental
problem is found on the Mortgaged Property, the Borrower shall be in Default
hereunder after a thirty (30) day cure period.
39. SUBROGATION. To the extent of the indebtedness of the Borrower to
the Bank described herein or secured hereby, the Bank is hereby subrogated to
the lien or liens and to the rights of the owners and holders of each and every
mortgage, lien or other encumbrance on the land described herein which is paid
and/or satisfied, in whole or in part, out of the proceeds of the loan described
herein or secured hereby, and the respective liens of said mortgages, liens or
other encumbrances, shall be and the same and each of them hereby is preserved
and shall pass to and be held by the Bank herein as security for the
indebtedness to the Bank herein described or hereby secured, to the same extent
that it would have been preserved and would have been passed to and been held by
the Bank had it been duly and regularly assigned, transferred, set over, and
delivered unto the Bank by separate deed of assignment, notwithstanding the fact
that the same may be satisfied and canceled of record, it being the intention of
the parties hereto that the same will be satisfied and canceled of record by the
holders thereof at or about the time of the recording of this Mortgage.
40. MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including but not limited to those arising out of or relating
to this Agreement or any related agreements or instruments, including any claim
based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event
of any inconsistency, the Special Rules shall
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<PAGE>
control. Judgment upon any arbitration award may be entered in any court having
jurisdiction. Any party to this Agreement may bring an action, including a
summary or expedited proceeding, to compel arbitration of any controversy or
claim to which this agreement applies in any court having jurisdiction over such
action.
a. SPECIAL RULES. The arbitration shall be conducted in the County
of Broward, Florida and administered by Endispute, Inc., d/b/a
J.A.M.S., who will appoint an arbitrator; if J.A.M.S./Endispute is
unable or legally precluded from administering the arbitration, then
the American Arbitration Association will serve. All arbitration
hearings will be commenced within 90 days of the demand for
arbitration; further, the arbitrator shall only, upon a showing of
cause, be permitted to extend the commencement of such hearing for up
to an additional sixty (60) days.
b. RESERVATION OF RIGHTS. Nothing in this Agreement shall be deemed
to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained
in this Agreement; or (ii) be a waiver by the Bank of the protection
afforded to it by 12 U.S.C. Sec. 91 or any substantially equivalent
state law; or (iii) limit the right of the bank hereto (A) to exercise
self help remedies such as (but not limited to) setoff, or (B) to
foreclose against any real or personal property collateral, or (C) to
obtain from a court provisional or ancillary remedies such as (but not
limited to) injunctive relief or the appointment of a receiver. The
Bank may exercise such self help rights, foreclose upon such property,
or obtain such provisional or ancillary remedies before, during or
after the pendency of any arbitration proceeding brought pursuant to
this Agreement. At Bank's option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of a
power of sale under the deed of trust or mortgage, or by judicial sale
under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary
remedies shall constitute a waiver of the right of any party, including
the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
41. CROSS-DEFAULT. This Loan shall be cross-defaulted with other loans
by Bank to Borrower as more specifically described in the Loan Agreement.
42. RELEASE PROVISION:
PARTIAL RELEASES UNDER THE NOTE. Provided that Borrower is not then in
Default hereunder, under the Note, the Mortgage or any other Loan Document, Bank
will provide partial releases of individual lots from the Note upon the
following terms:
a. Bank shall be given written notice of the request for each
partial release at least five (5) business days prior to each partial
release.
b. The cost of each partial release, including reasonable attorney's
fees for Bank's attorney, shall be paid by Borrower.
c. As to Parcel "D" Pelican Pointe:
Contemporaneously with the delivery to Borrower of each partial
release, Borrower shall prepay principal equal to THIRTY ONE
THOUSAND SIX HUNDRED FIFTY THREE AND NO/100 DOLLARS ($31,653.00) per
developed lot (the "Lot Release Price"). If the value or total
amount funded changes materially, in the sole discretion of Bank,
Bank reserves the right to modify the Lot Release Prices. Such
change in Lot Release Price will be based on relative value of the
collateral subject to the originally contemplated average Lot
Release Price set forth above based on one hundred twenty percent
(120%) accelerated lot release pricing.
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<PAGE>
d. As to Parcel "F" Egret's Way:
Contemporaneously with the delivery to Borrower of each partial
release, Borrower shall prepay principal equal to NINETEEN THOUSAND
THREE HUNDRED FORTY FIVE AND NO/100 DOLLARS ($19,345.00) per
developed lot (the "Lot Release Price"). If the value or total
amount funded changes materially, in the sole discretion of Bank,
Bank reserves the right to modify the Lot Release Prices. Such
change in Lot Release Price will be based on relative value of the
collateral subject to the originally contemplated average Lot
Release Price set forth above based on one hundred twenty percent
(120%) accelerated lot release pricing.
IN WITNESS WHEREOF, Borrower has executed and delivered this Mortgage
as of the date stated above.
Signed, sealed and delivered
in the presence of: TRANSEASTERN PEMBROKE VILLAGES, INC., A
FLORIDA CORPORATION
_____________________________
Witness #1 By ____________________________________(SEAL)
Edward Falcone, Executive Vice President
_____________________________
Print Name
_____________________________ Address:
Witness #1
3300 University Drive
_____________________________ Coral Springs, Florida 33065
Print Name
STATE OF FLORIDA )
)ss
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this ____ day of
September, 1996, by EDWARD FALCONE, as Executive Vice President of TRANSEASTERN
PEMBROKE VILLAGES, INC., a Florida corporation, by and on behalf the
corporation. He is personally known to me and/or has produced
________________________________ as identification.
My Commission Expires: ___________________________________
NOTARY PUBLIC STATE OF FLORIDA
___________________________________
Print Name
24
<PAGE>
This Instrument Prepared by:
Richard A. Wood, Esq.
Therrel Baisden & Meyer Weiss
1111 Lincoln Road, Ste. 500
Miami Beach, Florida 33139
Loan No. 91004439
REAL ESTATE MORTGAGE, ASSIGNMENT,
AND SECURITY AGREEMENT,
(THE "MORTGAGE")
DATE: September ___, 1996
BORROWER:
TRANSEASTERN PEMBROKE VILLAGES, INC., A FLORIDA CORPORATION
3300 University Drive
Coral Springs, Florida 33065
BANK:
CHASE FEDERAL BANK, F.S.B., A DIVISION OF NATIONSBANK, N.A. (SOUTH),
a national banking association
701 West Cypress Creek Road
Suite 101
Fort Lauderdale, FL 33309
AMOUNT OF INITIAL LOAN SECURED HEREBY: $3,400,000.00
MAXIMUM POSSIBLE PRINCIPAL DEBT, INCLUDING FUTURE ADVANCES, THAT MAY BE SECURED
HEREBY: $7,200,000.00
LAND: That certain parcel of Land commonly referred to as Parcel "D" -
"Pelican Pointe" located within the NASHER PLAT as recorded in Plat
Book 159 at Page 42, of the Public Records of Broward County, Florida,
and as particularly described on Exhibit "A" attached hereto and
incorporated herein by reference.
1. MORTGAGE. In consideration of Ten Dollars ($10.00) and other
valuable consideration received by Borrower, the receipt and sufficiency of
which are hereby acknowledged, Borrower hereby grants, bargains, sells, assigns,
transfers, conveys and mortgages to Bank, its successors and assigns, to its own
proper use and benefit forever, subject to the terms and conditions of this
Mortgage, the real estate described above as the Land, together with:
a. APPURTENANCES. The benefit of all easements and other rights of
any nature whatsoever, if any, appurtenant to the Land or the
Improvements, or both, the benefit of all rights-of- way, strips and
gores of land, streets, alleys, passages, drainage rights, sanitary
sewer and potable water rights, stormwater drainage rights, rights of
ingress and egress to the Land and all adjoining property,
and any improvements of Borrower now or hereafter located on any of
such real property interests, water rights and powers, oil,
<PAGE>
gas, mineral and riparian and littoral rights, whether now existing or
hereafter arising, together with the reversion or reversions, remainder
or remainders, rents, issues, incomes and profits of any of the
foregoing (the "Appurtenances").
b. IMPROVEMENTS. All buildings, structures, betterments and other
improvements of any nature now or hereafter situated in whole or in
part upon the Land or on the Appurtenances, regardless of whether
physically affixed thereto or severed or capable of severance therefrom
(the "Improvements").
c. TANGIBLE PROPERTY. All of Borrower's right, title and interest,
if any, in and to all fixtures, equipment and tangible personal
property of any nature whatsoever that is now or hereafter (i) attached
or affixed to the Land, the Appurtenances, or the Improvements, or (ii)
situated upon or about the Land, the Appurtenances and/or the
Improvements, regardless of whether physically affixed thereto or
severed or capable of severance therefrom, or (iii) used, regardless of
where situated, if used, usable or intended to be used, in connection
with any present or future use or operation of or upon the Land. The
foregoing includes: all goods and inventory, all heating, air
conditioning, lighting, incinerating and power equipment; all engines,
compressors, pipes, pumps, tanks, motors, conduits, wiring, and
switchboards; all plumbing, lifting, cleaning, fire prevention, fire
extinguishing, refrigerating, ventilating, and communications and
public address apparatus; all signage and recreational amenities
including, without limitation, swimming pools, exercise equipment,
tennis courts, clubhouse furnishings or saunas; all boilers, furnaces,
oil burners, vacuum cleaning systems, elevators and escalators; all
stoves, ovens, ranges, disposal units, dishwashers, water heaters,
exhaust systems, refrigerators, cabinets, and partitions; all rugs,
draperies and carpets; all laundry equipment; all building materials;
all furniture (including, without limitation, any outdoor furniture) ,
furnishings, office equipment and office supplies; and all additions,
accessions, renewals, replacements and substitutions of any or all of
the foregoing. The property interests encumbered and described by this
paragraph are called the "Tangible Property" in this Mortgage.
d. All rents, issues, incomes and profits in any manner arising from
the Land, Improvements, Appurtenances or Tangible Property, or any
combination thereof, including Borrower's interest in and to all leases
of whatsoever kind or nature, licenses, franchises and concessions of
or relating to all or any portion of the Land, Appurtenances,
Improvements or Tangible Property,or the operation thereof, whether now
existing or hereafter made, including all amendments, modifications,
replacements, substitutions, extensions, renewals or consolidations
thereof. The property interests encumbered and described in this
subparagraph are called the "Rents" in this Mortgage.
e. SECONDARY FINANCING. All of the Borrower's rights, power or
privilege to further encumber any of the Collateral described in this
paragraph 1, it being intended by this provision to divest Borrower of
the power to encumber or to grant a security interest in any of the
Collateral as security for the performance of an obligation, except for
"Permitted Encumbrances," as defined in paragraph 5 herein.
f. PROCEEDS. All proceeds of the conversion, voluntary or
involuntary, of any of the property encumbered by this Mortgage into
cash or other liquidated claims, or that are otherwise payable for
injury to or the taking or requisitioning of any such property,
including all judgments, settlements and insurance and condemnation
proceeds as provided in this Mortgage.
g. CONTRACT RIGHTS. All of Borrower's right, title and interest in
and to any and all contracts or leases, written or oral, express or
implied, now existing or hereafter entered into or arising, in any
matter related to the improvement, use, operation, sale, conversion or
other disposition of any interest in the Land, Appurtenances,
Improvements, Tangible Property or the Rents, or any combination
thereof, including all tenant leases, sales contracts, payments due and
to become due thereunder; and including, without limitation, contracts
pertaining to maintenance, on-site security service, elevator
maintenance, landscaping services, building or project management,
marketing, leasing, sale and janitorial
2
<PAGE>
services; Borrower's interest as lessee in equipment leases, including
telecommunications, computers, vending machines, model furniture,
televisions, laundry equipment; and Borrower's interests in
construction contracts or documents (including architectural and
engineering drawings and plans and specifications relating to the
Improvements), service contracts, use and access agreements,
advertising contracts and purchase orders. The property interest
encumbered and described in this paragraph are called the "Contract
Rights" in this Mortgage. Notwithstanding the foregoing, Bank will not
be bound by any of Borrower's obligations under any of the foregoing
contracts unless and until Bank elects to assume any of such contracts
or leases in writing.
h. NAME. All right, title and interest of Borrower in and to all
trade names, project names, logos, service marks, trademarks, goodwill,
and slogans now or hereafter used in connection with the operation of
the Mortgaged Property except the name of Transeastern Properties,
Inc., a Florida corporation, f/k/a Transeastern Properties of South
Florida, Inc., a Florida corporation.
i. OTHER INTANGIBLES. All contract rights, commissions, money,
deposits, certificates of deposit, letters of credit, documents,
instruments, chattel paper, accounts, and general intangibles [as such
terms from time to time are defined in the Uniform Commercial Code as
adopted by the State of Florida (the "Uniform Commercial Code"], in any
manner related to the construction, use, operation, sale, conversion or
other disposition (voluntary or involuntary) of the Land,
Appurtenances, Improvements, Tangible Property or Rents, including all
construction plans and specifications, architectural plans, engineering
plans and specifications, permits, governmental or quasi-governmental
approvals, licenses, developer rights, vested rights under any Planned
Unit Development or Development of Regional Impact or other project,
zoning, or land use approval, insurance policies, rights of action and
other choice in action.
The Land, Appurtenances, Improvements and Tangible Property are
collectively referred to as the "Mortgaged Property" in this Mortgage.
The portion of the property encumbered by this Mortgage that from time
to time consists of intangible personal property, except for the Rents,
is called the "Intangible Property" in this Mortgage. The Mortgaged
Property, Rents, Intangible Property and any other property interests
encumbered hereby are hereinafter referred to collectively as the
"Collateral". Wherever used in this Mortgage, the use of the terms,
"Mortgaged Property," "Rents", "Intangible Property", and "Collateral"
means and includes all or any portion thereof applicable to the
context.
Notwithstanding the grant of Borrower's interest in the Rents and
Contract Rights above, so long as no Default shall exist hereunder or
under any of the other Loan Documents, Borrower shall have a license to
collect and receive all incomes arising from the operation, ownership,
and maintenance of the Mortgaged Property, Rents and Contract Rights,
but not more than one (1) month prior to accrual.
2. SECURITY AGREEMENT. To the extent any of the Collateral encumbered
by this Mortgage from time to time constitutes personal property subject to the
provisions of the Uniform Commercial Code, this Mortgage constitutes a "Security
Agreement" for all purposes under the Uniform Commercial Code. Without
limitation, Bank, at its election, upon the occurrence of a Default under this
Mortgage, will have all rights, powers, privileges and remedies from time to
time available to a secured party under the provisions of the Uniform Commercial
Code with respect to the Collateral. The names and addresses of debtor and
secured party are as shown for Borrower and Bank, respectively, on the signature
pages hereof. The remedies for any Default under the covenants, terms, and
conditions of the security agreement herein contained shall be (i) as prescribed
herein, or (ii) as prescribed by general law, or (iii) as prescribed by the
specific statutory provisions now or hereafter enacted and specified in the
Uniform Commercial Code, all at Bank's sole election. Borrower and Bank agree
that the filing of financing statements in the records normally having to do
with personal property shall never be construed as in anywise derogating from or
impairing this declaration and hereby stated intention of Borrower and Bank that
everything used in connection with the production of income from the Collateral
or adapted for use therein
3
<PAGE>
or which is described or reflected in this Mortgage, is, and at all times and
for all purposes and in all proceedings both legal or equitable shall be,
regarded as part of the real estate irrespective of whether (i) any such item is
physically attached to the Improvements, (ii) serial numbers are used for the
better identification of certain items capable of being thus identified in a
recital contained herein, or (iii) any such item is referred to or reflected in
any financing statement(s) so filed at any time. Similarly, the mention in any
financing statement of the rights in, or the proceeds of, any fire, hazard or
liability insurance policy, or any award in eminent domain proceedings for a
taking or for loss of value, or Borrower's interest as lessor in any present or
future lease, or rights to income growing out of the use of the Mortgaged
Property, whether pursuant to a lease or otherwise, shall not be construed as
altering any of Bank's rights as determined by this Mortgage, or otherwise
available at law or in equity, or impugning the priority of this Mortgage or the
Loan Documents, or both, but such mention in any financing statement is declared
to be for Bank's protection if, as, and when any court holds that notice of
Bank's priority of interest, to be effective against a particular class of
persons, including the federal government and any subdivisions or entities of
the federal government, must be perfected in the manner required by the Uniform
Commercial Code.
Borrower covenants and agrees that Borrower will furnish Bank with
notice of any change in name, identity, organizational structure, mailing
address, residence, or principal place of business thirty (30) days prior to the
effective date of any such change. Borrower will promptly execute any financing
statements or other instruments deemed necessary by Bank to prevent any filed
financing statement from becoming misleading or losing its perfected status or
to reinstate any lapsed financing statement.
3. AFTER-ACQUIRED PROPERTY. Without the necessity of any further act of
Borrower or Bank, the lien of and security interest created by this Mortgage
automatically will extend to and include (i) any and all renewals, replacements,
substitutions, accessions, proceeds, products, additions or after-acquired
property or to the Collateral, and (ii) any and all monies, proceeds and other
property that from time to time, either by delivery to Borrower or by any
instrument (including this Mortgage) may be subjected to such lien and security
interest by Borrower or by anyone on behalf of Borrower, or with the consent of
Borrower, or which otherwise may come into the possession or otherwise be
subjected to the control of Bank or Borrower pursuant to this Mortgage or the
other Loan Documents.
4. DEBT. Borrower is justly indebted to Bank in the principal amount
indicated above (or so much as may be advanced to Borrower by Bank from time to
time), as evidenced by that certain Promissory Note in the original principal
amount of THREE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($3,400,000.00), of even date herewith, made by Borrower, payable to the order
of Bank and maturing as stated in said Notes, unless such maturity is
accelerated or extended (as provided in said Notes) , which Notes, together with
any and all renewals, replacements, extensions, modifications, substitutions,
future advances, and any and all other certificates or evidence of indebtedness
evidenced by said Notes are herein called the "Note".
Borrower's obligations described below are secured, among other things,
by the collateral described in this Mortgage, which term includes any and all
amendments, extensions, renewals, replacements, substitutions, modifications and
consolidations of this Mortgage, and may also from time to time be secured by
other collateral described in written documents. The Mortgage and such other
documents as may exist on the date hereof or may exist hereafter are referred to
as the "Security Documents," which term, as defined in the Note, includes any
and all financing statements, letters of credit, assignments, agreements,
supplements, and riders made and delivered in connection with the Note and this
Mortgage, and any and all amendments, modifications, extensions, renewals,
replacements, substitutions and consolidations thereof or thereto. The Security
Documents, the Note and the Loan Agreement between Borrower and Bank are
referred to collectively as the "Loan Documents". The Loan evidenced by the Note
and secured by this Mortgage is to be disbursed in accordance with the terms and
provisions of a Loan Agreement of even date herewith between Borrower and Bank
(the "Loan Agreement"). The Note, the Mortgage and the Loan Agreement shall
always be taken and read together as constituting part of one transaction. All
sums disbursed pursuant to the terms of the Loan Agreement shall be secured by
this Mortgage with the same priority as if advanced on the date hereof.
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The obligations of Borrower secured by the Security Documents arising
pursuant to the Loan Documents are as follows and are called the "Debt" in this
Mortgage and the other Loan Documents:
a. NOTE. Borrower's payment of all sums due from time to time as
evidenced by the Note; and
b. LOAN DOCUMENTS. Borrower's payment or performance of all
obligations imposed upon Borrower by the Loan Documents; and
c. ADVANCES. All sums advanced by Bank to or for the benefit of
Borrower in the manner provided in the Loan Documents, or for the
protection of the Security of the Collateral, including, without
limitation, all sums advanced pursuant to this Mortgage, including
advances for repairs, maintenance, insurance, taxes, or assessments;
and
d. COSTS. All costs, expenses, losses, damages and other charges
sustained or incurred by Bank because of: (i) Borrower's Default in
payment or performance, as the case may be, of any provision contained
in the Loan Documents; (ii) defense of actions instituted by Borrower
or a third party against Bank arising out of or related to the Loan, or
in the realizing upon, protecting, perfecting, defending, or (iii)
actions brought or defended by Bank enforcing Bank's security interest
in the Collateral. All of these costs and expenses include reasonable
attorneys' fees, paralegals' fees, or legal assistants' fees, whether
incurred with respect to collection, litigation, bankruptcy proceedings
interpretation dispute, negotiation, trial, appeal, defense of actions
instituted by a third party against Bank, or enforcement of any
judgment based on the Loan Documents, whether or not suit is brought to
collect such amounts or to enforce such rights or, if brought, is
prosecuted to judgment.
e. LETTERS OF CREDIT. All sums advanced by Bank for the benefit of
Borrower under any other instrument or otherwise, including, without
limitation, any amounts paid by Bank under any letters of credit issued
by Bank for the benefit of Borrower.
f. MISCELLANEOUS EXPENSES. All costs and expenses incurred by Bank
in connection with the Loan, whether prior to or at closing or during
the term thereof, including, without limitation, loan origination fees,
commitment fees, extension fees, title insurance search fees, premiums
and endorsement fees, hazard and other insurance required by the Loan
Documents, pre-closing and post-closing appraisals, appraisal reports
or opinions of value, surveys, brokerage commissions and claims of
brokerage in connection with the Loan, ad valorem and personal property
taxes, documentary stamp taxes and intangible taxes, attorneys' fees,
consultant fees, architect's and engineer's fees, construction
consultant's fees, environmental surveys or assessments, and recording
charges.
g. INDEMNITIES. All costs, expenses, and amounts arising under or
pursuant to any indemnity contained within the Loan Documents or in any
separate agreement executed by Borrower in favor of Bank including,
without limitation, the Hazardous Substance Certificate and
Indemnifica- tion Agreement (the "Indemnity").
5. TITLE WARRANTIES. Subject to the Permitted Encumbrances (as
hereinafter defined) , Borrower covenants with Bank that: (i) Borrower is
indefeasibly seized of the Land and Improvements in fee simple, has good and
marketable title to the Collateral and has full power, lawful right and
authority to convey the same in fee simple and to grant Bank a perfected first
lien security interest in the Collateral, and (ii) the Collateral is free and
clear of all liens, encumbrances, restrictions, and security interests of any
nature except for those permitted encumbrances which Bank has previously
approved, as set out in Schedule B of the title insurance policy and
endorsements insuring this Mortgage, which are referred to as "Permitted
Encumbrances" in this Mortgage.
5
<PAGE>
6. LIENS. Except as otherwise provided in the Loan Agreement, Borrower
will not create or permit to be created, or to remain, and will promptly
discharge at Borrower's expense any and all liens or encumbrances upon, or
security interests in, the Collateral, or any combination thereof, whether
consensual, common law, statutory, voluntary, involuntary, or arising by
operation of law, except Permitted Encumbrances. Notwithstanding the foregoing,
and except for any construction liens, Borrower may contest the amount, validity
and enforceability of any involuntary or nonconsensual lien, encumbrance or
security interest, including those arising by operation of law, in the manner
provided in paragraph 8 below. Except as otherwise provided in the Loan
Agreement, if any construction lien is filed against the Mortgaged Property,
Borrower agrees to discharge or otherwise remove such lien by bond or otherwise,
within thirty (30) days of imposition of same, but may thereafter contest the
amount or validity of such lien as provided in paragraph 8 below.
7. TAXES AND OTHER IMPOSITIONS. Borrower will pay or cause to be paid,
prior to any delinquency in (i) all property taxes, assessments, water, sewer,
utility and other rents, rates and charges, including all excises, taxes,
levies, license fees, permit fees, impact fees, connection fees, and other fees
and charges, whether general or special, ordinary or extraordinary, foreseen or
unforeseen, that may be assessed, levied or imposed upon the Collateral, or
otherwise arising with respect to the occupancy, use, possession or disposition
thereof, whether or not the failure to pay the same might result in the creation
of a lien upon the Collateral, or any combination thereof; (ii) all franchise,
excise and other taxes, fees and charges assessed, levied or imposed with
respect to Borrower's right to do business in the State of Florida and the
political subdivisions thereof; (iii) all taxes and fees (except for Bank's
state and federal income taxes) that may be levied by the United States of
America or any state or political subdivision thereof, upon Bank or Borrower in
connection with or upon the Loan Documents, or the Debt or its payment, or
collection, or any combination thereof (including all documentary stamp taxes
and intangible taxes plus any penalties and interest charged for the late
payment of any such taxes); and (iv) except as otherwise provided in the Loan
Agreement, all lawful claims and demands of contractors, subcontractors,
mechanics, laborers, materialmen and other lienors which, if unpaid, might
result in the creation of a lien upon the Collateral. The sums payable under
this paragraph are called "Impositions". Nothing contained in this paragraph
will require the payment of any Imposition so long as the amount, validity or
enforceability thereof is contested by appropriate proceedings as provided in
paragraph 8 below. With respect to state and local real and tangible personal
property taxes, however, Borrower will pay same and will furnish Bank with
copies of the receipts for each such payment without demand prior to April 30th
of each year of the Loan and any contest of the same must be by a suit or other
proceeding for a refund. With respect to all other Impositions, Borrower will
furnish Bank with proof of such payment upon demand. If any payment required to
be made by Borrower by this paragraph is prohibited by law, with the result that
Bank becomes liable for its payment, then the Debt will immediately become due
and payable, at Bank's option.
8. CONTESTS. Borrower may contest, by any and all appropriate
administrative, trial or appellate proceedings, or any combination thereof, and
in Bank's name, if required by law, the amount, validity, enforceability or
application of any Imposition that Borrower is required to pay or perform to any
person or entity other than Bank by any provision of this Mortgage or the other
Loan Documents if and only for so long as: (i) Borrower notifies Bank in writing
of its intent to contest the Imposition; (ii) such contest suspends the
collection or enforcement of the item(s) contested; (iii) no part of the
Collateral will be subject to loss, sale or forfeiture before final
determination of any such contest; (iv) neither Borrower nor Bank will be
subject to any criminal liability; (v) Borrower furnishes such security as may
be required by law in connection with each such contest; (vi) the value,
usefulness and marketability of the Collateral will not be adversely impaired by
any such contest; (vii) Borrower otherwise continues to pay and perform, as the
case may be, the Debt and Borrower's obligations under this Mortgage; (viii)
Borrower otherwise is not in Default under any provision of the Loan Documents;
(ix) each such contest is continuously prosecuted diligently to final
determination; (x) Borrower pays or causes to be paid, and defends, indemnities
and holds Bank harmless of and from any and all losses, judgments, decrees and
costs (including all reasonable attorneys, fees) incurred in connection with
each such contest; (xi) Borrower, promptly following final determination of each
such contest, fully pays and discharges all amounts that may be levied,
assessed, charged, imposed or otherwise determined to be payable, together with
all penalties, fines, interests, costs
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and expenses, and otherwise complies with such final determination, at
Borrower's sole cost and expense; (xii) Borrower furnishes Bank with such
security as Bank reasonably may require to assure Borrower's compliance with all
of the foregoing requirements, and (xiii) such liens are not filed against the
Mortgaged Property pursuant to Chapter 713, Florida Statutes, in which event
such liens must be discharged or transferred to bond pursuant to paragraph 6
above before Borrower contests such liens except as otherwise provided in the
Loan Agreement. So long as Borrower complies with the foregoing and Bank is
promptly reimbursed for all costs and expenses incurred, Bank will cooperate
with Borrower in connection with any such contest.
9. INSURANCE. Until the Debt shall have been discharged by Borrower,
Borrower shall maintain, at Borrower's cost and expense, the following insurance
coverages in full force and effect at all times:
a. HAZARD INSURANCE. Borrower shall keep the Tangible Property and
Improvements which now or hereafter may constitute part of the
Mortgaged Property insured at all times against loss or damage by fire
and other hazards included within the term "all risk" or "extended
coverage" and against such other hazards as Bank may require in the
full insurable value thereof (or such lesser amount as Bank may
authorize in writing) , with an insurer satisfactory to Bank. Such
policy shall include a Replacement Cost and Agreed Amount/Stipulated
Value Endorsement and a Sinkhole Endorsement, if deemed necessary by
Bank.
b. LIABILITY INSURANCE. Borrower will obtain and keep in full force
a "Broad Form Comprehensive General Liability" insurance coverage for
both Borrower and any contractor performing services to the Mortgaged
Property in the minimum coverage amount of TWO MILLION AND NO/DOLLARS
($2,000,000.00) per occurrence for bodily injury and One Hundred
Thousand Dollars ($100,000.00) per occurrence for property damage.
c. FLOOD INSURANCE. If at any time the Land or any portion thereof
is located in a "Flood Hazard Area" pursuant to the Flood Disaster
Protection Act of 1973 or any successor or supplemental act thereto,
flood insurance in the maximum amount available or such other amount as
Bank may reasonably request;
d. BUILDER'S RISK INSURANCE. An "All risk", non-reporting,
completed value builder's risk insurance policy in an amount not less
than loan amount on a per unit basis which policy shall include Agreed
Amount, Replacement Cost, Permit to occupy and Vandalism/Malicious
Mischief Endorsements.
e. OTHER INSURANCE. Machinery insurance, worker's compensation
insurance, wind damage insurance, and other insurance coverages as Bank
may reasonably require.
The policy or policies of insurance shall (i) be from companies and in
coverage amounts acceptable to Bank, (ii) contain a standard mortgagee clause in
favor of Bank naming Bank as a mortgagee and including a lender's loss payee
clause in such policy, as applicable (iii) not be terminable or modified without
thirty (30) days, prior written notice to Bank, and (iv) be evidenced by
original policies or certified copies of policies deposited with Bank, as Bank
may elect, to be held by Bank until the Debt shall have been fully paid and
discharged. Borrower shall furnish Bank satisfactory evidence of payment of all
premiums required and similar evidence of renewal or replacement coverage not
later than thirty (30) days prior to the date any coverage will expire.
Each insurance policy or endorsement required herein shall be written
by an insurer having a rating not less than "A-XI" Best's Rating according to
the most current edition of Best's Key Rating Guide as determined at the time of
the initial policy and at all times during the term hereof. All policies shall
indicate that notices related to such insurance shall be sent to Bank at:
Chase Federal Bank, a Federal Savings Bank,
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a Division of NationsBank, N.A. (South)
Suite 101 701 West Cypress Creek Road
Ft. Lauderdale, FL 33309
Attn: Loan Administration Section,
Real Estate Banking Group
If any loss occurs with respect to the Mortgaged Property, Bank is
hereby appointed attorney-in-fact for Borrower to make proof of loss if Borrower
fails to make the same punctually, and to give a receipt for any proceeds
collected under such policies. Borrower will promptly give written notice to
Bank of any loss or damage greater than ONE THOUSAND AND NO/100 DOLLARS
($1,000.00) per Unit or TWENTY FIVE THOUSAND AND NO/100 DOLLARS ($25,000.00)
cumulatively to the Mortgaged Property, and will not adjust or settle any such
loss without Bank's prior written consent, which consent shall not be
unreasonably withheld or delayed. Upon any Default by Borrower under this
Mortgage, all right, title and interest of Borrower in and to all such insurance
policies then in force, including any and all unearned premiums and existing
claims, will inure to Bank, which, at its option, and as attorney-in-fact for
Borrower, may then make, settle and give binding acquittances for claims under
all such policies, and may assign and transfer such policies or cancel or
surrender them, applying any unearned premium in such manner as Bank may elect.
The foregoing appointment of Bank as attorney-in-fact for Borrower is coupled
with an interest, and is irrevocable. Notwithstanding the occurrence of any
casualty or the availability of any insurance proceeds, Borrower will pay the
Debt in the manner required by the Loan Documents.
10. CONDEMNATION. If all or any part of the Collateral, or any interest
therein or right accruing thereto, is taken as a result of, or in lieu or in
anticipation of, the exercise of the right of condemnation or eminent domain, or
by reason of the temporary requisition of the use or occupancy of the Mortgaged
Property, in any event by any government or quasi-governmental authority, civil
or military, or any other party entitled to exercise such powers by law, general
or special, or is devalued or otherwise adversely affected by any of the
foregoing actions, all proceeds payable with respect to any such action are
assigned to Bank and shall be paid to Bank. Bank shall be under no obligation to
question the amount of any such award or compensation and may accept the same in
the amount in which the same shall be paid. The proceeds of any award or
compensation so received shall, at the option of the Bank, either be applied to
the payment of the Debt or be paid over to the Borrower for the restoration of
the Improvement. Borrower, immediately upon obtaining knowledge of the
institution or threatened institution, of any proceedings for the Mortgaged
Property, or any part thereof, by condemnation or eminent domain, will notify
the Bank of the pending of such proceedings. Bank shall have the right to
intervene and participate in any proceedings for and in connection with any
taking referred to in this section. Borrower shall not enter into any agreement
for the taking of the Mortgaged Property or any part thereof with any person or
persons authorized to acquire the same by condemnation or eminent domain, unless
the Bank shall have consented thereto in writing. Any of the foregoing actions
are sometimes called a "condemnation" or "taking" in this Mortgage and the other
Loan Documents. Such proceeds include, without limitation, severance damages,
damages arising from the change of grade of any street or the access thereto,
the taking of air rights and damages caused by noise, pollutants and other
emissions. Notwithstanding any such taking or other injury or decrease in value,
or the availability of any proceeds for any of the foregoing, Borrower shall
continue to pay the Debt in the manner required by the Loan Documents. Bank's
rights under this paragraph will survive the foreclosure or other enforcement of
this Mortgage, and Bank will have the right to receive and retain all proceeds
to the extent of any deficiency which exists upon such foreclosure or other
enforcement, together with legal interest thereon, and to the extent of the
reasonable counsel fees, costs and disbursements incurred by Bank in connection
with the collection of such proceeds. Such right shall exist whether or not a
deficiency judgment shall have been sought or recovered or denied upon the Note.
The remaining balance of such proceeds, if any, will inure to the benefit of the
party entitled thereto by applicable law. Notwithstanding the foregoing, if Bank
uses the net proceeds of the condemnation to reduce the principal balance owed
under the Note, Bank will thenceforth allow those funds to be disbursed to the
Borrower in accordance with the Loan Agreement.
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<PAGE>
11. APPLICATION OF INSURANCE PROCEEDS AND AWARDS. The Borrower will
promptly give the Bank written notice of any damage to or destruction of the
Mortgaged Property or any part thereof, generally describing the nature and
extent of such damage or destruction and the Borrower's best estimate of the
cost of restoring the Mortgaged Property. The Bank shall be entitled to all
insurance proceeds payable on account of such damage or destruction and the
Borrower hereby irrevocably assigns, transfers and sets over to the Bank all
rights of the Borrower to any such proceeds or payments and irrevocably
authorizes and empowers the Bank, at its option and in its sole and absolute
discretion, in the name of the Borrower or otherwise, to file and prosecute what
would otherwise be the Borrower's claim for any such proceeds or payment and to
collect, receipt for and retain the same for disposition in accordance with this
Section. The Bank may, at its sole option, apply all amounts recovered under any
insurance policy required to be maintained by the Borrower hereunder in any one
or more of the following ways: (a) to the payment of the reasonable costs and
expenses incurred by the Bank in obtaining such insurance proceeds, including
the fees and expenses of attorneys and insurance and other experts and
consultants, the costs of litigation, arbitration, mediation, investigations and
other judicial, administrative or other proceedings and all other out-of-pocket
expenses; (b) to the payment of any of the Debt other than indebtedness with
respect to the Note at the time outstanding; (c) to the payment of the principal
of the Note and any interest accrued and unpaid thereon, without regard to
whether any portion or all of such amounts shall be matured or unmatured,
together with interest at the default interest rate on any overdue principal and
(to the extent permitted by applicable law) interest; and, in case such amount
shall be insufficient to pay in full all such amounts, then such amounts shall
be applied, FIRST, to the payment of all amounts of interest accrued on the Note
and unpaid, without preference or priority of any payment of interest over any
other payment of interest or of any other Note, and, SECOND, to the payment of
all amounts of principal at the time outstanding, without preference or priority
of any installment or amount of principal over any other installment or amount
of principal or of any Note over any other Note, but otherwise in such manner
and order as the Bank shall in its sole discretion determine; (d) to fulfill any
of the other covenants contained herein as the Bank may determine; (e) release
to the Borrower for application to the cost of restoring the Mortgaged Property;
or (f) release to the Borrower. In the event of a foreclosure of this Mortgage,
the purchaser of the Mortgaged Property shall succeed to all the rights of the
Borrower including any right to unearned premiums, in and to all policies of
insurance assigned and delivered to the Bank. Notwithstanding the foregoing, if
Bank uses the net proceeds of the insurance proceeds or awards to reduce the
principal balance owed under the Note, Bank will thenceforth allow those funds
to be disbursed to the Borrower in accordance with the Loan Agreement.
Notwithstanding anything in this paragraph to the contrary, if the Bank has
elected to apply proceeds to the Debt, Bank will re-disburse said proceeds in
accordance with the Loan Agreement.
12. MAINTENANCE, REPAIRS, AND RECONSTRUCTION.
a. MAINTENANCE AND REPAIRS. Borrower, at its sole cost and subject
to Bank's satisfaction, shall make all repairs, renewals, replacements,
servicing and reconstruction that are necessary to maintain the
Mortgaged Property in good order, condition and repair. Immediately
following the occurrence of any casualty or other loss, Borrower
promptly will undertake all restoration required or desirable and will
pursue it diligently to completion. The foregoing shall be accomplished
by the Bank funding the insurance proceeds it receives from the insurer
to the Borrower under the terms and conditions of the Loan Agreement
for the construction of individual Units. Borrower shall (i) not strip,
waste, remove or demolish any portion of the Mortgaged Property, nor
suffer or permit any such action; (ii) promptly comply with all laws,
governmental regulations and public or private restrictions or
easements, or both, of any kind affecting the Mortgaged Property or
requiring any alterations or improvements to be made thereon, and (iii)
not commit, suffer or permit any act upon the Mortgaged Property in
violation of any law, subject to Borrower's right' to contest the same
in good faith to conclusion, as provided in paragraph 8 of this
Mortgage. If any public agency or authority requires or commences any
proceedings for the demolition or removal, or both, of any improvements
or portions thereof comprising the Mortgaged Property due to
non-compliance with health, safety, fire or building codes, then,
unless Borrower undertakes to contest such action in the manner
provided in paragraph 8 above and pursues such contest to a successful
conclusion, such action will constitute a Default under this Mortgage.
Borrower will not,
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<PAGE>
without Bank's prior written consent, (i) make any material
alterations, additions or improvements of or to the Mortgaged Property
unless required by the Loan Agreement; (ii) make any material change in
the general nature of the use or occupancy of the Mortgaged Property;
(iii) institute or join or acquiesce in any action to change the
existing zoning or land use classification of the Mortgaged Property,
or (iv) grant easements or licenses affecting the use or operation of
the Mortgaged Property. Bank and any persons authorized by Bank may
enter the Mortgaged Property at all reasonable times without prior
notice for inspections or for any other lawful purpose. If Borrower
fails to comply with the requirements of this paragraph, then Bank,
without waiving the option to foreclose, may take some or all measures
Bank reasonably deems necessary or desirable for the maintenance,
repair, preservation or protection of the Mortgaged Property, and any
expenses reasonably incurred by Bank in so doing shall become part of
the Debt secured hereby, and shall, at the option of Bank, become
immediately due and payable, and shall bear interest at the Default
Rate specified in the Note. Bank shall have no obligation to care for
or maintain the Mortgaged Property, or, having taken some measures
therefor, to continue same or take other measures.
b. RECONSTRUCTION. The Borrower after receipt of net insurance
proceeds from Bank funded in accordance with the Loan Agreement shall
promptly repair, restore, replace or rebuild any part of the Mortgaged
Property, now or hereafter encumbered by this Mortgage which may be
affected by any condemnation proceeding or which may otherwise become
damaged, destroyed, lost or unsuitable for use. In the event the
Mortgaged Property or any part thereof if damaged or destroyed by fire
or other casualty, the Borrower shall immediately notify the Bank, in
writing, of such damage or destruction. The Borrower shall not cause or
permit anything to be done which would or could increase the risk of
fire or other hazard to the Mortgaged Property, or any part thereof, or
which would or could result in an increase in any insurance premiums
payable with respect to the Mortgaged Property, or which would or could
result in the cancellation of any insurance policy carried with respect
to the Mortgaged Property. No part of the Mortgaged Property,
including, but not limited to, any building, structure, water system,
sewer system, parking lot, driveway, landscape scheme, timber or other
ground improvement, equipment or other property, now or hereafter
mortgaged, shall be removed, demolished or materially altered without
the prior written consent of the Bank. No top soil, sand, sod, loam,
clay or gravel shall be mined, stripped, or removed from the Mortgaged
Property without the written consent of the Bank. However, this shall
not prevent or restrict removal of any such materials taken for
excavation necessary to construct a basement, cellar or foundation
footings for the erection of a building or buildings for which a
building permit or permits has or have first been issued by the
governmental authority having jurisdiction thereof; or for the
construction of roadways or the Improvements constructed in accordance
with plans approved by the governmental authorities having jurisdiction
thereof in accordance with the Loan Agreement; provided, nevertheless,
that in the event the required removals become so extensive, as
determined by the Bank, as to create profit by sale of the removed
portion of the Mortgaged Property, said sums shall inure to the benefit
of the Bank to be applied as the Bank so directs, to the reduction of
the Debt.
13. ADVANCES. If Borrower Defaults in the observance or performance of
any of the provisions of the Loan Documents, including but not limited to
obtaining and maintaining insurance pursuant to paragraph 9, paying Impositions
pursuant to paragraph 7, and maintaining the Mortgaged Property pursuant to
paragraph 12, then Bank, without waiving or otherwise impairing any other of its
rights or remedies, at its sole option and without obligation to do so, and
without demand upon Borrower, may make any such payment or take such action as
Bank deems necessary or appropriate to correct such Default, or to protect the
security of the Collateral encumbered by the Loan Documents. All payments so
made, together with all costs and expenses so incurred, will be added to the
principal amount due under the Note and thereafter will bear interest at the
rate then payable as provided for in the Note, and will be secured by the lien
and security interest granted by the Security Documents. For the foregoing
purposes, Bank is authorized to (a) enter upon the Mortgaged Property; (b)
appear in and defend any action or proceeding purporting to affect the security
of this Mortgage or the rights or powers of Bank hereunder; (c) pay, purchase,
contest or compromise any encumbrance, charge or lien that in the reasonable
judgment of Bank appears
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<PAGE>
to adversely affect the Collateral; and (d) take whatever action Bank, in its
discretion, deems necessary or appropriate in exercising any such powers.
Notwithstanding the foregoing, Borrower immediately, upon Bank's demand, will
pay all sums so expended by Bank with interest as stated above.
14. BOOKS AND RECORDS. Borrower, at all times, will keep proper books
of record and account in which full, true and correct entries will be made of
its transactions with respect to the Collateral in accordance with generally
accepted accounting principles, consistently applied, and which will properly
and correctly reflect all items of income and expense in connection with the
operation of the" Collateral, regardless of whether such income or expense is
realized by Borrower or any other person or entity whatsoever. Bank will have
the right from time to time during normal business hours to examine all such
books, records and accounts at Borrower's office or at the office of such other
person as maintains them, and to make such copies or extracts as Bank may
desire, at Borrower's expense.
15. TAXATION OF MORTGAGE. In the event of the passage after the date of
this Mortgage of any federal, state or local law deducting from the value of
real property for the purpose of ad valorem taxation any lien thereon or
changing in any way the laws for the taxation of mortgages or debts secured by
mortgages for federal, state or local purposes, or the manner of the collection
of any such taxes, and imposing a tax, either directly or indirectly, on any or
all of the Loan Documents, Bank shall have the right to declare the Debt due on
a date to be specified by not less than sixty (60) days' written notice given to
Borrower by Bank; provided, however, that such election shall be ineffective if
Borrower is permitted by law to pay the whole of such tax in addition to all
other payments required hereunder, and if Borrower, prior to such specified
date, does pay such tax and agrees to pay any such tax (excluding, however, all
taxes on the income of Bank) when thereafter levied or assessed, and such
agreement shall constitute a modification of this Mortgage. Notwithstanding any
provision in this paragraph to the contrary, Borrower may contest the matters
described herein per the procedures set forth in paragraph 8 above.
16. ASSIGNMENT OF RENTS, LEASES, PROFITS AND CONTRACT RIGHTS. Pursuant
to paragraph 1 of this Mortgage, Borrower has irrevocably assigned and set over
unto Bank all right, title, and interest of Borrower in and to the Rents and
Contract Rights (including all leases and sales contracts now or hereafter
existing relating to the Mortgaged Property) as security for the Debt, together
with the right to collect and enforce the same; provided, however, so long as
there shall be no Default under the Loan Documents, Borrower has been granted a
license to collect and receive all Rents assigned hereunder in accordance with
paragraph 1. Neither these assignments nor Bank's enforcement of the provisions
of these assignments (including the receipt of the Rents) will operate to
subordinate the lien of this Mortgage to any of the rights of any lessee or
purchaser under any lease or sales contract of the Mortgaged Property, or to
subject Bank to any liability to any such lessee or purchaser for the
performance of any obligations of Borrower under any such lease or sales
contract unless and until Bank agrees to such subordination or assumes such
liability by an appropriate written instrument. All right, title and interest of
each such lessee or purchaser in and to the Mortgaged Property, whether arising
by virtue of any such lease, contract or otherwise, at all times will be and
remain subject, subordinate and inferior to the lien of this Mortgage and all
rights, remedies, powers and privileges of Bank arising under or by virtue of
any of the Loan Documents. The assignments of Rents and Contract Rights
(including leases) contained in this Mortgage are intended to provide Bank with
all the rights and remedies of mortgagees pursuant to Section 697.07, Florida
Statutes, as may be amended from time to time. However, in no event shall this
reference diminish, alter, impair, or affect any other rights and remedies of
Bank. Notwithstanding the foregoing, if Borrower shall have executed an
Assignment of Rents constituting one of the Loan Documents, such Assignment of
Rents is hereby incorporated herein by reference and shall control if in
conflict with the provisions of this Mortgage.
17. LEASES AFFECTING MORTGAGED PROPERTY. The assignments contained in
paragraph 1 shall not be deemed to impose upon Bank any of the obligations or
duties of Borrower provided in any lease affecting the Mortgaged Property
(including, without limitation, any liability under the covenant of quiet
enjoyment contained in any lease in the event that any tenant shall have been
joined as a party defendant in any action to foreclose this Mortgage and shall
have been barred and foreclosed thereby of all right, title and interest and
equity
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of redemption in the Mortgaged Property or any part thereof), and Borrower will
comply with and observe its obligations as landlord under all leases affecting
the Mortgaged Property or any part thereof. Borrower has a license to collect
the Rents, but shall not accept payment of rent more than one month in advance
without the prior written consent of the Bank, and only so long as there is no
Default hereunder or under the other Loan Documents. Borrower shall receive the
Rents in trust on Bank's behalf, and Borrower covenants to apply same to the
payment of taxes and assessments upon the Mortgaged Property, to the cost of
insurance and maintenance and repairs, and to the payment of the Debt, before
using any part of the Rents for any other purpose.
Prior to a Default hereunder and demand by Bank for delivery of
security deposits held by Borrower or any agent of Borrower to Bank or its
designee, Borrower shall maintain all security deposits pursuant to the leases
in a separate, identifiable account deposited with Bank, or any other
institution acceptable to Bank, and in accordance with all applicable laws and
regulations. Upon delivery of such security deposits to Bank, or upon Bank's
enforcement of its security interest in such deposits, Bank shall hold such
security deposits pursuant to the terms of the leases in respect of which such
deposits were obtained by Borrower and in accordance with applicable law;
provided, however, in no event shall Bank be liable to any lessee of any part of
the Mortgaged Property for the return of any security deposit in any amount in
excess of the amount delivered to Bank by Borrower. Any security deposits held
by Bank shall not bear interest unless required by applicable law.
Borrower will: (a) not collect any of the Rents arising or accruing
under any lease in advance of the time when the same shall become due, other
than as required to be paid in advance by the terms of any lease, but in no
event more than one (1) month in advance; (b) not pledge, transfer, mortgage or
otherwise encumber or assign any of Borrower's interest in the leases or any
Rents arising or accruing therefrom; (c) not waive, excuse, condone, discount,
set-off, compromise, or in any manner release or discharge any tenant thereunder
of and from any obligations, covenants, conditions and agreements by said tenant
to be kept, observed and performed, including the obligation to pay the rents
thereunder, in the manner at the place and time specified therein; (d) not
cancel, terminate or consent to any surrender of any lease, nor modify, alter or
change any of the terms thereof without the prior written consent of Bank; (e)
not consent to any assignment of or subletting under any lease, whether or not
in accordance with the terms thereof, without the prior written consent of Bank;
and (f) not enter into, execute or deliver any leases without the prior written
consent of Bank.
In the event any tenant of the Mortgaged Property should be the subject
of any proceeding under the Federal Bankruptcy Code, as amended from time to
time, or any other federal, state or local statue which provided for the
possible termination or rejection of any of the leases assigned hereby, Borrower
covenants and agrees that if any of the leases is so terminated or rejected, no
settlement for damages shall be made without the prior written consent of Bank,
and any check in payment of damages for termination or rejection of any such
lease will be made payable both to Borrower and Bank. Borrower hereby assigns
any such payment to Bank and further covenants and agrees that upon the request
of Bank, it will duly endorse to the order of Bank any such check, the proceeds
of which will be applied to that portion of the Debt as Bank may elect.
From time to time, Borrower agrees to obtain tenant estoppel
certificates from each tenant of the Mortgaged Property containing such
information as may be reasonably requested by Bank.
18. DEFAULT. The occurrence of any of the following (time being of the
essence as to this Mortgage and all of its provisions) constitutes a "Default"
by Borrower under this Mortgage, and, at the option of Bank, under the other
Loan Documents:
a. SCHEDULED PAYMENT. Borrower's failure to make any payment
required under the Note when due or within any applicable grace period.
b. MONETARY DEFAULT. Borrower's failure to make any other payment
required by this Loan Agreement or the other Loan Documents when due.
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c. OTHER. Borrower's failure to perform any other obligation
imposed upon Borrower by this Loan Agreement or any other Loan Document
within thirty (30) days after the date when performance is due. This
provision shall not be construed to provide Borrower with any grace
period in complying with any obligations imposed on Borrower by the
terms of the Loan Documents. Notwithstanding the foregoing provision,
Bank shall give Borrower notice, as defined in the Mortgage, of any
non-monetary default after which Borrower shall have a thirty (30) day
cure period, unless such non-monetary default is not capable of being
cured within said thirty (30) day period, in which case Borrower shall
have sixty (60) days to cure such default following the date
performance is due provided Borrower has commenced and is diligently
pursuing the cure for such default (which determination shall be made
in Bank's sole and absolute discretion), and provided such additional
time to cure such default does not negatively affect the value of the
collateral or the preservation of the collateral's value, which
determination shall be made in Bank's sole and absolute discretion..
d. REPRESENTATION. Any representation or warranty of Borrower
contained in this Loan Agreement or in any certificate delivered
pursuant hereto, or in any other instrument or statement furnished in
connection herewith, proves to be incorrect or misleading in any
adverse respect as of the time when the same shall have been made,
including, without limitation, any and all financial statements,
operating statements, and schedules attached thereto, furnished by
Borrower or any guarantor of the Loan to Bank or pursuant to any
provision of this Loan Agreement.
e. BANKRUPTCY. Borrower or any general partner of Borrower or any
guarantor of the Loan (i) files a voluntary petition in bankruptcy or a
petition or answer seeking or acquiescing in any reorganization or for
an arrangement, composition, readjustment, liquidation, dissolution, or
similar relief for itself pursuant to the United State Bankruptcy Code
or any similar law or regulation, federal or state, relating to any
relief for debtors, now or hereafter in effect; or (ii) makes an
assignment for the benefit of creditors or admits in writing its
inability to pay or fails to pay its debts as they become due; or (iii)
suspends payment of its obligations or takes any action in furtherance
of the foregoing; or (iv) consents to or acquiesces in the appointment
of a receiver, trustee, custodian, conservator, liquidator or other
similar official of Borrower, a general partner of Borrower, or any
guarantor, for all or any part of the Collateral or other assets of
such party, or either; or (v) has filed against it an involuntary
petition, arrangement, composition, readjustment, liquidation,
dissolution, or an answer proposing an adjudication of it as a bankrupt
or insolvent, or is subject to reorganization pursuant to the
United-States Bankruptcy Code, an action seeking to appoint a trustee,
receiver, custodian, or conservator or liquidator, or any similar law,
federal or state, now or hereinafter in effect, and such action is
approved by any court of competent jurisdiction and the order approving
the same shall not be vacated or stayed within sixty (60) days from
entry; or (vi) consents to the filing of any such petition or answer,
or shall fail to deny the material allegations of the same in a timely
manner.
f. JUDGMENTS. (1) A final judgment other than a final judgment in
connection with any condemnation is entered against Borrower,
Guarantors, or any general partner of Borrower, that (i) adversely
affects the value, use or operation of the Land or the improvements in
Bank's sole judgment, or (ii) adversely affects, or may adversely
affect, the validity, enforceability or priority of the lien or
security interest created by the Mortgage or any other Loan Document in
Bank's sole judgment, or both; or (2) execution or other final process
issues thereon with respect to the Land or the Improvements; and (3)
Borrower, Guarantor, or any general partner of Borrower, does not
discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereon, in any event within
thirty (30) days from entry, or Borrower shall not, within such period
or such longer period during which execution on such judgment shall
have been entered, and cause its execution to be stayed during such
appeal, or if on appeal such order, decree or process shall be affirmed
and Borrower shall not discharge such judgment or provide for its
discharge in accordance with its terms within sixty (60) days after the
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entry of such order or decree or affirmance, or if any stay of
execution on appeal is released or otherwise discharged.
g. LIENS. Any federal, state or local tax lien or any claim of lien
for labor or materials or any other lien or encumbrance of any nature
whatsoever is recorded against Borrower or the Land or Improvements and
is not removed by payment or transferred to substitute security in the
manner provided by law, within thirty (30) days after it is recorded in
accordance with applicable law.
h. OTHER NOTES OR MORTGAGES. Borrower's default in the performance
or payment of Borrower's obligations under any other note which remains
uncured after any applicable grace period, or under that certain Real
Estate Mortgage, Assignment and Security Agreement of even date
herewith in favor of Bank, securing a note in the original principal
amount of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) and
encumbering that portion of the Land commonly referred to as Parcel "F"
and that certain Real Estate Mortgage, Assignment and Security
Agreement of even date herewith in favor of Bank, securing a note in
the original principal amount of THREE MILLION FOUR HUNDRED THOUSAND
AND NO/100 DOLLARS ($3,400,000.00), and encumbering that portion of the
Land commonly referred to as Parcel "D", or under any other mortgage
encumbering all or any part of the Land or the Improvements, if the
other mortgage is permitted by the Bank, whether such other note or
mortgage is held by Bank or by any other party, and unless otherwise
agreed to by separate written agreement between Bank and such other
mortgage holder.
i. BORROWER DEFAULT UNDER LOAN DOCUMENTS. Borrower's default in the
payment or performance following expiration of any applicable grace
period of any of Borrower obligations under any of the Loan Documents,
including this Mortgage and any riders thereto.
j. GUARANTOR DEFAULT.
i) The default after expiration of any applicable grace period
in the payment or performance of any obligation of a Guarantor of
the Note arising under its guaranty or pursuant to any other Loan
Documents; or
ii) The death of any Guarantor and the failure of Borrower to
provide Bank with an alternate guaranty or alternate collateral
satisfactory to Bank in its sole and absolute discretion within
sixty (60) days of the date of Guarantor's death.
k. BORROWERS/GENERAL PARTNER'S CONTINUED EXISTENCE. Borrower or any
corporate General Partner of Borrower shall cease to exist or to be
qualified to do or transact business in the State in which the Land and
Improvements are located, or shall be dissolved or shall be a party to
a merger or consolidation, or shall sell all or substantially all of
its assets, or shall change its corporate name or trade name without
prior written notice to Bank.
l. STOCK IN BORROWER/CHANGE IN PARTNERS. If Borrower is a limited
partnership and without the prior written consent of Bank, any shares
of stock of any corporate general partner of Borrower are issued, sold,
transferred, conveyed, assigned, mortgaged, pledged, or otherwise
disposed of so as to result in change of control of Borrower, whether
voluntarily or by operation of law, and whether with or without
consideration, or any agreement for any of the foregoing is entered
into; or, if any general partnership interest or other equity interest
in the Borrower is sold, transferred, assigned, conveyed, mortgaged,
pledged, or otherwise disposed of, whether voluntarily or by operation
of law, and whether with or without consideration, or any agreement for
any of the foregoing is entered into, or any general partner of
Borrower withdraws from the partnership.
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m. TRANSFER OF PROPERTY OR OWNERSHIP. Any sale, conveyance,
transfer, assignment, or other disposition or encumbrance of all or any
part of the Land, Improvements, or the Approved Project, or any
ownership interest in Borrower or any guarantor without the prior
consent of Bank or except as otherwise permitted hereby, or as outlined
in the prospectus for public offering for Transeastern Properties,
Inc., a Florida corporation delivered to Bank by Borrower.
n. FALSE STATEMENT. Any statement or representation of Borrower or
any guarantor contained in the loan application or any financial
statements or other materials furnished to Bank or any other Bank prior
or subsequent to the making of the Loan secured hereby are discovered
to have been false or incorrect or incomplete.
o. DEFAULT UNDER INDEMNITY. Borrower or Guarantor shall default
after any applicable grace period under any obligation imposed by any
indemnity contained within any of the Loan Documents including the
Hazardous Waste Certification and Indemnification.
p. OTHER DEFAULTS. Borrower or Guarantor shall Default under any
other Default provision set forth in the Loan Agreement, which is not
cured within any applicable grace period.
19. REMEDIES. Upon the occurrence and continuance, if applicable, of
any Default, Bank may exercise any one or more of the following rights and
remedies, in addition to all other rights and remedies otherwise available at
law or in equity:
a. OTHER DOCUMENTS. To pursue any right or remedy provided by the
Loan Documents.
b. ACCELERATION. To declare the entire unpaid amount of the Debt
together with all accrued and unpaid interest thereon immediately due
and payable with interest to be due thereon at the Default Rate set
forth in the Note.
c. FORECLOSURE. To foreclose the lien of this Mortgage and obtain
possession of the Collateral, by any lawful procedure.
d. CODE RIGHTS. To exercise any right or remedy available to Bank
as a secured party under the Uniform Commercial Code as adopted by the
State of Florida, as it from time to time is in force and effect, with
respect to any portion of the Collateral then constituting property
subject to the provisions of such Code; or Bank, at its option, may
elect to treat the Collateral as real property, or an interest therein,
for remedial purposes.
e. RECEIVER. To apply, on EX PARTE motion, to any court of
competent jurisdiction for the appointment of a receiver to take charge
of, manage, preserve, protect, complete construction of, rent, and
operate the Mortgaged Property and any of Borrower's business or
businesses situated thereon, or any combination thereof; to collect the
Rents; to make all necessary and needed repairs; to pay all taxes,
assessments, insurance premiums and all other costs incurred in
connection with the Mortgaged Property; and, after payment of the
expenses of the receivership, including reasonable attorneys, fees and
other costs and expenses related to the enforcement of the Security
Documents, and after compensation to the receiver for any of the
services described herein or pursuant hereto, to apply all net proceeds
derived therefrom in reduction of the Debt or in such other manner as
the court shall direct. The appointment of such receiver shall be a
matter of strict right to Bank, regardless of the adequacy of the
security or of the solvency of any party obligated for payment of the
Debt. All expenses, fees and compensation incurred pursuant to any such
receivership shall be secured by the lien of this Mortgage until paid.
The receiver, personally or through agents, may exclude Borrower wholly
from the Mortgaged Property and have, hold, use, operate, manage and
control the Mortgaged Property and may, in the name of Borrower,
exercise all of
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Borrower's rights and powers to maintain, construct, operate, restore,
insure and keep insured the Mortgaged Property in such manner as such
receiver deems appropriate.
f. SET-OFFS. Intentionally deleted.
g. RENTS. After Bank shall have given written notice to Borrower,
to collect all rents, issues, profits, revenues, income, proceeds, or
other benefits from the Collateral, or to pursue any remedy available
under Chapter 697.07, Florida Statutes, as amended, supplemented, or
superseded from time to time.
h. OTHER SECURITY. To proceed to realize upon any and all other
security for the Debt in such order as Bank may elect; no such action,
suit, proceeding, judgment, levy, execution or other process will
constitute an election of remedies by Bank or will in any manner alter,
diminish or impair the lien and security interest created by this
Mortgage or any other Security Documents unless and until the Debt is
paid in full.
i. ADVANCES. To advance such monies and take such other action as
is authorized by paragraphs 13 and 25 herein.
20. WAIVER OF CERTAIN RIGHTS. Borrower will not claim, take or insist
upon any benefit or advantage of any present or future stay, extension,
redemption or moratorium law that may affect Borrower's obligations hereunder,
or any law providing for the valuation or appraisal of the Mortgaged Property or
any portion thereof prior to any sale or sales that may be made under or by
virtue of this Mortgage. Borrower, for itself and all who may claim under
Borrower, waives, to the extent that it lawfully may, all rights to have the
Mortgaged Property and any other security for the Debt marshaled upon any
foreclosure or otherwise. Borrower hereby waives and renounces all homestead and
exemption rights provided for by the laws of the United States of America and of
any state, including Florida, in and to the Mortgaged Property as against the
collection of the Debt, or any part thereof.
21. FURTHER ASSURANCES. Borrower, from time to time, will execute,
acknowledge, subscribe and deliver to or at the direction of Bank such documents
and further assurances as Bank may reasonably require for the purpose of
evidencing, perfecting or confirming the lien and security interest created by
this Mortgage, or the security intended to be afforded by the Loan Documents, or
both. Without limitation of the foregoing, Borrower will defend, indemnify and
hold Bank harmless with respect to any suit or proceeding in which the validity,
enforceability or priority of the lien or security interest, or both, is
endangered or contested, directly or indirectly, and will provide Bank with such
security for the defense of any such suit or proceeding as Bank reasonably may
require. If Borrower fails to undertake the defense of any such claim in a
timely manner, or fails to furnish Bank with reasonable security for such
defense after notice from Bank, or, in Bank's sole but reasonable determination,
fails to prosecute such defense with due diligence, then Bank is authorized to
take, at the expense of Borrower, all necessary and proper action in defense of
any such claim, including the retention of legal counsel, the prosecution or
defense of litigation and the compromise or discharge of claims, including
payment of all costs and reasonable attorneys' fees. All costs, expenses and
losses, if any, so incurred by Bank, including reasonable attorneys' fees,
regardless of whether suit is brought and, if suit is brought, for all
administrative, trial and appellate proceedings, if any, will constitute
advances by Bank as provided in paragraph 13.
22. CUMULATIVE RIGHTS AND NON-WAIVER. No right or remedy conferred upon
or reserved to Bank by this Mortgage or in any of the other Loan Documents is
intended to be exclusive of any other right or remedy; and each and every right
and remedy is cumulative and in addition to any other right or remedy otherwise
available. Every right, power, privilege and remedy granted Bank by this
Mortgage or any of the other Loan Documents, or both, or otherwise available at
law or in equity may be exercised by Bank from time to time as often as Bank
deems expedient until the Debt is paid in full. Bank's failure to insist at any
time upon the strict
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observance or performance by Borrower of any of the provisions of this Mortgage
or in any of the other Loan Documents, or to exercise any right or remedy
provided for in this Mortgage or in any of the other Loan Documents, will not
impair any such right or remedy or be construed as a waiver or relinquishment
thereof for the future. Receipt by Bank of any payment required to be made
pursuant to any of the Loan Documents with knowledge of the breach of any
provision of any of the Loan Documents will not constitute a waiver of such
breach. In addition to all other remedies provided in this Mortgage, Bank will
be entitled, to the extent permitted by applicable law, to injunctive relief in
the case of a violation or attempted or threatened violation of any of the
provisions of the Loan Documents or to a decree ordering performance of any of
the provisions of any of the foregoing.
23. JUDGMENT. Bank may seek and recover a judgment for all amounts due
and payable in accordance with the Note or under this Mortgage either before,
after or during the pendency of any other proceedings or action to obtain relief
under or with respect to any of the Loan Documents. Bank's right to seek and
recover any such judgment will not be affected by obtaining any other such
relief. Bank will continue to be entitled to enforce payment of, and to seek and
recover a judgment for, any portion of the Debt remaining due and payable after
the application of any proceeds of any sale of the Collateral pursuant to law.
Neither the lien nor security interest of this Mortgage, nor any rights or
remedies of Bank hereunder or under any of the Loan Documents, will be impaired
in any way by the recovery, of any judgment by Bank against Borrower or any
guarantor of the Debt, or by the levy of an execution under such judgment upon
any portion of the Collateral, until the Debt is paid in full.
24. INDEMNIFICATION. Borrower has read and does hereby approve the
legal description of the Land which is the subject of this Mortgage as set forth
on the first page of this Mortgage or in Exhibit "A" attached hereto, and hereby
indemnifies Bank, its successors or assigns, and their attorneys with respect to
any liability which might arise as a consequence of Section 697.10, Florida
Statutes, or any successors or amendments thereto.
25. RELEASES AND EXTENSIONS BY BANK. Bank, from time to time, without
notice to any person and without affecting the liability of Borrower or of any
guarantor or of any other person (other than any person expressly released by
Bank in writing) for the payment of any of the Debt, and without affecting the
priority or extent of the lien and security interest of this Mortgage (except as
to property specifically released by Bank in writing), may do any or all of the
following: (i) release in whole or in part any person liable for payment of any
or all of the Debt, or (ii) extend the time or otherwise alter the terms of
payment of the Debt, in whole or in part, or (iii) accept additional or
substitute security of any kind, or (iv) release or otherwise deal with all or
any portion of the Collateral.
26. NOTICES. Any notice or demand that must or may be given or made in
connection with this Mortgage must be in writing and, unless receipt is
expressly required, will be deemed given, delivered or made, as the case may be,
when delivered by personal delivery or the day after it is mailed by Express
Mail, by overnight delivery service of a nationally-recognized company, and
addressed to the parties at the addresses written on the first page of this
Mortgage or on the signature pages of this Mortgage. Such addresses may be
changed by notice pursuant to this paragraph. Notice of change of address is
effective only upon receipt. All of the persons executing this Mortgage as
Borrower severally agree that a single notice to Borrower in the manner provided
in this paragraph will be effective to bind each such person for all purposes.
27. ESTOPPEL LETTERS. As and when, from time to time, requested by
either Borrower or Bank, and within ten (10) days after any such request,
Borrower or Bank, as the case may be, will execute and deliver to or at the
direction of Bank or Borrower, as the case may be, such estoppel letters
certifying such matters relating to this Mortgage or the Loan Documents, or
both, as may reasonably be required.
28. TRANSFER. Borrower may not sell, convey, assign, transfer or
otherwise dispose of any interest in all or any portion of the Collateral, or
any ownership interest in Borrower or any guarantor, without Bank's prior
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written consent, which consent may be withheld in Bank's sole discretion, or as
outlined in the prospectus for public offering for Transeastern Properties,
Inc., a Florida corporation delivered to Bank by Borrower.. Whether such
transfer is voluntary or involuntary, or by operation of law, any such transfer
will be void as to Bank, and constitute an immediate Default under this
Mortgage, without notice, in the sole discretion of Bank. Bank's consent to any
transfer, sale, or conveyance hereunder shall not be deemed a consent to any
subsequent transfer, sale, or conveyance for which Bank's prior written approval
has not been obtained except as provided in the Loan Agreement.
29. REPLACEMENT OF NOTE. Upon receipt of evidence reasonably
satisfactory to Borrower of the loss, theft, destruction or mutilation of the
Note, or any amendment or modification thereto, including without limitation any
renewal note or additional note, and in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement, reasonably satisfactory to
Borrower or, in the case of any such mutilation, upon surrender of such
mutilated note, Borrower will execute and deliver, in lieu thereof, a
replacement Note, identical in form and substance to the Note and dated as of
the date of the Note and upon such execution and delivery all references in any
of the Loan Documents to the Note shall be deemed to refer to the replacement
Note.
30. FUTURE ADVANCES. This mortgage is given to secure not only the
existing Debt, but also such future advances, whether such advances are
obligatory or are to be made at the option of Bank, or otherwise, as are made
within twenty (20) years from the date hereof, to the same extent as if such
future advances were made on the date of the execution of this Mortgage. The
total amount of Debt that may be so secured may decrease or increase from time
to time, but the maximum possible principal debt so secured at one time shall
not exceed the amount shown on Page of this Mortgage, plus interest thereon, and
any disbursements made for the payment of taxes, levies or insurance on the
Mortgaged Property, with interest on such disbursements at the rate then in
effect pursuant to the terms of the Note.
31. GENERAL. The provisions of this Mortgage inure to the benefit of
Bank and its successors and assigns, and bind all persons executing this
Mortgage as Borrower and their respective legal representatives, successors and
assigns, jointly and severally, and all persons now or hereafter claiming any
right, title and interest in and to any of the property, real, personal or
mixed, tangible or intangible, now or hereafter existing or any substitutions or
replacements thereof and described in this Mortgage as the Collateral. Time is
of the essence to this Mortgage and each of its provisions. The provisions of
this Mortgage are to be interpreted, construed, applied and enforced in
accordance with the laws of the State of Florida, regardless of where this
Mortgage is executed, delivered or breached, or where any payment or other
performance required by this Mortgage is made, where any action or other
proceeding involving this Mortgage is instituted, or whether the laws of the
State of Florida otherwise would apply the laws of another jurisdiction; the
foregoing choice of law provisions will apply to the Loan Documents. The
provisions of the Loan Documents are severable at Bank's option so that if any
provision is declared by a court of competent jurisdiction to be invalid or
unenforceable, no other provision will be affected by such invalidity or
unenforceability, but will remain in force and effect according to its original
terms, if Bank so elects. Wherever used in this Mortgage or the other Loan
Documents, or both, and unless expressly provided otherwise: (i) use of the
singular includes the plural, and vice versa; (ii) use of one gender includes
all genders; (iii) use of the term "include" or "including" is always without
limitation; (iv) use of the words, "should," "must" and "will" has the same
legal effect as the use of the word "shall"; (v) the term "day" means a banking
day which shall be a day on which Bank and other banks are open for the
transaction of business, excluding any national holidays, and any performance
which would otherwise be required on a day other than a banking day shall be
timely performed in such instance, if performed on the next succeeding banking
day; (vi) any definition herein incorporating one or more documents or items
shall refer to such items "singularly and collectively", and (vii) "person"
means any natural person or artificial entity having legal capacity. Paragraph
headings and subheadings are for indexing purposes only and are not to be used
to interpret, construe, apply or enforce the provisions of this Mortgage.
Borrower and Bank intend the provisions of this Mortgage and the other Loan
Documents to be interpreted, construed, applied and enforced so as to avoid
inconsistencies or conflicting results; but if any such inconsistency or
conflict necessarily occurs, Borrower and Bank intend that the provisions of the
Loan Agreement
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control unless otherwise provided therein. This Mortgage may be
amended only by a written instrument executed by Borrower and Bank with the same
formalities as this Mortgage.
32. SATISFACTION. The lien and security interest provided by the Loan
Documents will continue unimpaired and in full force and effect unless and until
the Debt is paid in full, whereupon such lien and security interest will be
without further force or effect. Until this Mortgage shall be satisfied of
record, Borrower hereby waives for itself, and all subsequent successors in
title to the mortgaged Property, any right it may now have or hereafter have,
pursuant to Florida Statutes 697.04 (1).(b), as amended from time to time, to
file for record a notice limiting the maximum amount which may be secured by
this Mortgage.
33. DEPOSITS. Bank may, at its sole option upon occurrence of a
Default, require Borrower to make monthly deposits with Bank of a sum equivalent
to one-twelfth (1/12) of the annual real and tangible personal property taxes
assessed with respect to the Mortgaged Property and one-twelfth (1/12) of the
annual premiums for all insurance required to be maintained by this Mortgage. In
addition, upon occurrence of a Default, if required by Bank, Borrower shall also
deposit with Bank a sum of money which, together with the aforesaid monthly
deposits, will be sufficient to make each of such payments for taxes and
insurance at least ten (10) days prior to the date such payments are due. The
amount of such taxes, assessments, and premiums, when unknown, will be estimated
by Bank in good faith. Such deposits may be commingled with Bank's general
funds; Bank will not be liable for any interest on account of such deposits. To
the extent sufficient, such deposits will be applied by Bank to the payment of
such taxes, assessments, and premiums, when due, upon Borrower's presentation of
bills therefor; but Bank will have no obligation to make any such payment except
to the extent of such deposits. Any insufficiency of such deposits will be paid
by Borrower to Bank on demand. Upon any Default by Borrower under this Mortgage,
Bank may apply all such deposits to the Debt in such order as Bank may elect.
The enforceability of Borrower's covenants relating to taxes, assessments, and
insurance provided in this Mortgage will not be altered, diminished, impaired,
or otherwise affected by the provisions of this paragraph except insofar as such
obligations are actually met by Borrower's compliance with this paragraph. Bank
from time to time, at its sole option, may waive and, after any such waiver,
reinstate any or all of the provisions of this paragraph. While any such waiver
is in effect, Borrower will pay all taxes, assessments, and insurance premiums
as provided elsewhere in this Mortgage.
34. BORROWER AS TENANT HOLDING OVER. In the event of a foreclosure sale
of the Mortgaged Property, Borrower shall be deemed a tenant holding over and
shall forthwith deliver possession to Bank or any purchaser or purchasers at
such sale or be summarily dispossessed according to provisions of the law of the
State of Florida applicable to tenants holding over.
35. TIME OF THE ESSENCE. Time is of the essence with respect to each
and every covenant, agreement, and obligation of Borrower under this Mortgage
and the other Loan Documents, and any and all other instruments now or hereafter
evidencing, securing or otherwise relating to the Loan.
36. ORAL MODIFICATION INEFFECTIVE. No term of this Mortgage or any
other of the Loan Documents, or such documents, may be waived, changed,
modified, discharged, or terminated except by an instrument in writing signed by
the party against which enforcement of the waiver, change, modification,
discharge, or termination is sought.
37. HAZARDOUS SUBSTANCES. Borrower hereby represents and warrants to
Bank: (a) that neither Borrower nor any of its subsidiaries is in violation of
any judgment, decree, order, law, license, rule, or regulation pertaining to
environmental matters, including, without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA") , the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 as amended
("CERCLA") , the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Federal Water Pollution Control Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order, or decree relating to
health, safety, or the environment (hereinafter "Environmental
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Laws); (b) that neither Borrower nor any of its subsidiaries has received notice
that it or any of its tenants has been identified by the United States
Environmental Protection Agency as a potentially responsible party under CERCLA
with respect to a site listed on the National Priorities List, 40 C.F.R. Part
300 Appendix B (1986); nor has Borrower or any of its subsidiaries received any
notification that any hazardous waste, as defined by 42 U.S.C. ss.6093(5), any
hazardous substances as defined by 42 U.S.C. ss.9601(14), any "pollutant or
contaminant" as defined by 42 U.S.C. ss.9601(33) and any toxic substance,
hazardous materials, oil or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which it has disposed of has been
found at any site on which a federal or state agency is conducting a remedial
investigation or other action pursuant to any Environmental Law; (c) (i) to the
best of Borrower's knowledge except as disclosed in the Phase I and II
Environmental Report prepared for Bank and Borrower by Law Engineering and
Environmental Services, Inc., a Florida corporation dated November 7, 1995, no
portion of the Mortgaged Property has been used for the handling, processing,
storage, or disposal of Hazardous Substances and no underground tank or other
underground storage receptacle for Hazardous Substances is located on the
Mortgaged Property, (ii) in the course of its activities, neither Borrower nor
any of its subsidiaries has generated or is generating any hazardous waste on
the Mortgaged Property, (iii) to the best of our knowledge there have been no
releases (i.e., any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing, or dumping) of Hazardous Substances by Borrower or any of its
subsidiaries on, upon, or into the Mortgaged Property, which releases would have
a material adverse effect on the value of the Mortgaged Property. In addition,
to the best of Borrower's knowledge, there have been no such releases on, upon,
or into any real property in the vicinity of the Mortgaged Property which,
through soil or groundwater contamination, may have come to be located on the
Mortgaged Property; (d) to the best of Borrower's knowledge, that no asbestos,
oil, petroleum or chemical liquids or solids, liquid or gaseous products, or
hazardous or toxic substances, within the meaning of any applicable statute or
regulation, are presently stored or otherwise located on or under the Mortgaged
Property or on or under any adjacent and contiguous real property owned by
Borrower or any related entity or affiliate of Borrower; (e) to the best of
Borrower's knowledge, that no release of any such hazardous or toxic substance
has occurred on the Mortgaged Property or on any adjacent and contiguous real
property owned by Borrower or any related entity or affiliate of Borrower; (f)
to the best of Borrower's knowledge, that no part of the Mortgaged Property or
any adjacent and contiguous real property owned by Borrower or any related
entity or affiliate of Borrower, including the groundwater located thereon, is
presently contaminated by such hazardous or toxic substance; and (g) that
Borrower has not received any notice from any governmental agency or authority
or from any tenant under a lease with respect to any such release of hazardous
or toxic materials onto the Mortgaged Property or adjacent parcels of real
property. Borrower further covenants and agrees with Bank that, throughout the
term of the Note: (h) the Mortgaged Property shall be operated and maintained in
compliance with all applicable governmental or regulatory requirements; (i)
Borrower shall maintain or procure all necessary permits, licenses, and
certificates required by federal, state, and local laws throughout the Loan
term; (j) all hazardous or toxic substances, within the definition of any
applicable statute or regulation, which may be used by any person for any
purpose upon the Mortgaged Property, shall be used or stored thereon only in a
safe and approved manner, in accordance with all industrial standards and all
laws, regulations and requirements for such storage promulgated by any
applicable governmental agency or authority; (k) other than as described in (j)
above, the Mortgaged Property will not be used for the purpose of storing such
substances; and (1) other than as described in above, no such storage or use
will otherwise be allowed on the Mortgaged Property (whether through leases with
tenants who might store or use hazardous substances or otherwise) which will
cause, or which will increase the likelihood of causing, the release of such
hazardous or toxic substances onto the Mortgaged Property. Borrower shall
immediately notify Bank of any failure to comply under this paragraph or receipt
of an notice of violation or third party complaint. Borrower hereby agrees to
indemnify and save and hold Bank harmless of and from all claims, damages, loss,
liabilities, penalties, fines, remedial action requirements, and enforcement
actions, along with the costs and attorneys' fees incurred by Bank in defending
Borrower's use, generation, transportation, and disposal, release, or threatened
release of hazardous substances, including without limitation, asbestos
containing materials or damage whatsoever incurred by Bank arising out of or by
reason of any violation of any applicable statute or regulation for the
protection of the environment which occurs upon the Mortgaged Property, or by
reason of the imposition of any governmental lien for the recovery of
environmental clean-up costs expended by reason of such violation, including
without limitation any lien arising pursuant to any so-called "Super Fund" or
"Super Lien" legislation; provided, however, that to the extent that Bank is
strictly liable under any such
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<PAGE>
statute or regulation, Borrower's obligation to Bank under this indemnity shall
likewise be without regard to fault on the part of Borrower with respect to the
violation of law which results in liability to Bank. A default under this
paragraph shall constitute a Default under this Mortgage subject to any cure
periods set forth in the Loan Agreement. It is expressly acknowledged by
Borrower that this indemnification shall survive in accordance with the terms
and conditions set forth in the Hazardous Substance Certificate and
Indemnification Agreement of even date herewith executed by the Borrower and
Guarantor.
38. ENVIRONMENTAL ASSESSMENTS. At any time deemed necessary by Bank, in
its reasonable and sound business judgment, Bank may, at its election, obtain
one or more environmental assessments of the Mortgaged Property prepared by a
geohydrologist, an independent engineer, or other qualified consultant or expert
approved by Bank evaluating or confirming (i) whether any Hazardous Substances
are present in the soil or water at the Mortgaged Property and (ii) whether the
use and operation of the Mortgaged Property comply with all applicable
Environmental Laws relating to air quality, environmental control, release of
oil, hazardous materials, hazardous wastes and hazardous substances, and any and
all other applicable environmental laws. Environmental assessments may include
detailed visual inspections of the Mortgaged Property including, without
limitation, any and all storage areas, storage tanks, drains, dry wells, and
leaching areas, and the taking of soil samples, surface water samples, and
ground water samples, as well as such other investigations or analyses as are
necessary or appropriate for a complete determination of the compliance of the
Mortgaged Property and the use and operation thereof with all applicable
Environmental Laws. All such environmental assessments shall be at the sole cost
and expense of Borrower. In the event it is determined that additional tests
and/or remediation are necessary as a result of the aforesaid assessments, or in
the event such additional testing or remediation is recommended by the aforesaid
assessments, the Borrower agrees to immediately perform the tests or undertake
the remediation as recommended. In the event contamination or an environmental
problem is found on the Mortgaged Property, the Borrower shall be in Default
hereunder after a thirty (30) day cure period.
39. SUBROGATION. To the extent of the indebtedness of the Borrower to
the Bank described herein or secured hereby, the Bank is hereby subrogated to
the lien or liens and to the rights of the owners and holders of each and every
mortgage, lien or other encumbrance on the land described herein which is paid
and/or satisfied, in whole or in part, out of the proceeds of the loan described
herein or secured hereby, and the respective liens of said mortgages, liens or
other encumbrances, shall be and the same and each of them hereby is preserved
and shall pass to and be held by the Bank herein as security for the
indebtedness to the Bank herein described or hereby secured, to the same extent
that it would have been preserved and would have been passed to and been held by
the Bank had it been duly and regularly assigned, transferred, set over, and
delivered unto the Bank by separate deed of assignment, notwithstanding the fact
that the same may be satisfied and canceled of record, it being the intention of
the parties hereto that the same will be satisfied and canceled of record by the
holders thereof at or about the time of the recording of this Mortgage.
40. MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including but not limited to those arising out of or relating
to this Agreement or any related agreements or instruments, including any claim
based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the Rules of Practice and Procedure for
the Arbitration of Commercial Disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.), and the "Special Rules" set forth below. In the event
of any inconsistency, the Special Rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this agreement
applies in any court having jurisdiction over such action.
a. SPECIAL RULES. The arbitration shall be conducted in the County
of Broward, Florida and administered by Endispute, Inc., d/b/a
J.A.M.S., who will appoint an arbitrator; if J.A.M.S./Endispute is
unable or legally precluded from administering the arbitration, then
the American Arbitration Association will serve. All arbitration
hearings will be commenced within 90 days of the demand for
arbitration;
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<PAGE>
further, the arbitrator shall only, upon a showing of cause, be
permitted to extend the commencement of such hearing for up to an
additional sixty 60 days.
b. RESERVATION OF RIGHTS. Nothing in this Agreement shall be deemed
to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Agreement; or
(ii) be a waiver by the Bank of the protection afforded to it by 12
U.S.C. Sec. 91 or any substantially equivalent state law; or (iii)
limit the right of the bank hereto (A) to exercise self help remedies
such as (but not limited to) setoff, or (B) to foreclose against any
real or personal property collateral, or (C) to obtain from a court
provisional or ancillary remedies such as (but not limited to)
injunctive relief or the appointment of a receiver. The Bank may
exercise such self help rights, foreclose upon such property, or obtain
such provisional or ancillary remedies before, during or after the
pendency of any arbitration proceeding brought pursuant to this
Agreement. At Bank's option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of a
power of sale under the deed of trust or mortgage, or by judicial sale
under the deed of trust or mortgage, or by judicial foreclosure.
Neither this exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary
remedies shall constitute a waiver of the right of any party, including
the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
41. CROSS-DEFAULT. This Loan shall be cross-defaulted with other loans
by Bank to Borrower as more specifically described in the Loan Agreement.
42. RELEASE PROVISION. Provided that Borrower is not then in Default
hereunder, under the Construction Line, the Mortgage or any other Loan Document,
Bank will provide partial releases of Units from the lien of the Mortgage upon
the following terms:
a. If the partial release relates to developed lots in connection
with a bona fide sale or construction loan on which no home
construction advances have been made:
i. Bank shall be given written notice of the request for each
partial release at least five (5) business days prior to each
partial release.
ii. The cost of each partial release shall be paid by Borrower.
iii. Contemporaneously with the delivery to Borrower of each
partial release, Borrower shall prepay principal in an amount equal
to the amount advanced upon such lot plus accrued interest thereon.
b. If the partial release relates to Units for which advances of
Construction Line proceeds have been made, Borrower shall prepay
principal of the Construction Line in an amount equivalent to the total
actual amount advanced by Bank under the Construction Line on account
of the Unit to be released, together with interest accrued thereon
("Unit Release Price") and the applicable Lot Release Price.
IN WITNESS WHEREOF, Borrower has executed and delivered this Mortgage as of
the date stated above.
Signed, sealed and delivered
in the presence of: TRANSEASTERN PEMBROKE VILLAGES, INC.,
A FLORIDA CORPORATION
- --------------------------------
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<PAGE>
Witness #1 By ________________________________(SEAL)
Edward Falcone, Executive Vice President
_______________________________
Print Name
_______________________________ Address:
Witness #1
3300 University Drive
_______________________________ Coral Springs, Florida 33065
Print Name
STATE OF FLORIDA )
)ss
COUNTY OF BROWARD )
The foregoing instrument was acknowledged before me this ____ day of
September, 1996, by EDWARD FALCONE, as Executive Vice President of TRANSEASTERN
PEMBROKE VILLAGES, INC., a Florida corporation, by and on behalf the
corporation. He is personally known to me and/or has produced
________________________________ as identification.
My Commission Expires: ___________________________________
NOTARY PUBLIC STATE OF FLORIDA
___________________________________P
Print Name
23
<PAGE>
TRI-PARTY AGREEMENT
This TRI-PARTY AGREEMENT (this "Agreement") dated as of March 29, 1996 by
and among CHASE FEDERAL BANK, a federal savings bank ("Chase Federal"), AMRESCO
FUNDING CORPORATION, a Delaware corporation ("AMRESCO") and TRANSEASTERN
PEMBROKE VILLAGES, INC., a Florida corporation ("Borrower").
PRELIMINARY STATEMENTS
WHEREAS, the Borrower is or shall be the owner of that certain real
property lying and being in Broward County, Florida and legally described in
Exhibit A attached hereto and made a part hereof (the "Property"); and
WHEREAS, simultaneously herewith, Chase Federal has made a loan to the
Borrower in the principal amount of TEN MILLION ONE HUNDRED FIFTY THOUSAND and
No/100 DOLLARS ($10,150,000.00), together with any reimbursement obligations in
connection with Letter(s) of Credit (the "Chase Federal Loan"); and
WHEREAS, simultaneously herewith, AMRESCO has made a loan to the Borrower
in the principal amount of THREE MILLION DOLLARS ($3,000,000.00) (the "AMRESCO
Loan"), the proceeds of which shall be used by the Borrower for the (i)
acquisition of the Property, and (ii) funding of interest due on the AMRESCO
Loan, all in accordance with the terms and conditions set forth in the AMRESCO
Loan Documents, as hereinafter defined; and
WHEREAS, simultaneously herewith, the Borrower has agreed to pay to the
"Contingent Returns" (as defined in that certain Loan Agreement (the "Loan
Agreement") between Lender and Borrower of Even date herewith) to the extent
that there are net profits from the Property, all in accordance with the terms
and conditions set forth in the AMRESCO Loan Documents; and
WHEREAS, Chase Federal and AMRESCO have agreed to set forth certain rights
between the parties with respect to the Chase Federal Loan and the AMRESCO Loan.
NOW, THEREFORE, for and in consideration of the premises and of the
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, covenant and agree as follows:
<PAGE>
SECTION 1. DEFINITIONS. The following terms shall have the meanings herein
specified unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.
"AMRESCO Loan Documents" shall mean the AMRESCO Note, the AMRESCO Mortgage,
and all other documents executed by Borrower to AMRESCO in connection with the
AMRESCO Loan.
"AMRESCO Mortgage" shall mean those certain mortgages of even date herewith
executed by the Borrower to AMRESCO encumbering the Property which secures the
indebtedness evidenced by the AMRESCO Note and the Borrower's obligations under
the other AMRESCO Loan Documents.
"AMRESCO Note" shall mean that certain promissory note of even date
herewith from Borrower to AMRESCO evidencing the indebtedness to AMRESCO under
the AMRESCO Loan in the original principal amount of THREE MILLION DOLLARS
($3,000,000.00).
"Chase Federal Loan Documents" shall mean (i) the Chase Federal Note, the
Chase Federal Mortgage and all other documents executed by Borrower to Chase
Federal evidencing and securing the Chase Federal A&D Loan, (ii) all documents
executed and delivered by Borrower to Chase Federal evidencing and securing the
Chase Federal Loan.
"Chase Federal Mortgage" shall mean that certain mortgage of even date
herewith executed by the Borrower to Chase Federal encumbering the Property
which secures (i) the indebtedness evidenced by the Chase Federal Note, (ii)
sums disbursed under the Letters of Credit, and (iii) any and all of the
Borrower's obligations under the other Chase Federal Loan Documents.
"Chase Federal Note" shall mean that certain promissory note of even date
herewith from Borrower to Chase Federal evidencing the indebtedness to Chase
Federal under the Chase Federal A&D Loan in the original principal amount of TEN
MILLION ONE HUNDRED FIFTY THOUSAND and no/100 DOLLARS ($10,150,000.00).
"Chase Federaer than the sum of $10,150,000.00, plus amounts owed to Chase
Federal by the Borrower as result of draws under the Letters of Credit, which
shall in no event exceed the principal amount of $3,585,593.78 and all accrued
but unpaid interest on such Letter(s) of Credit, (ii) all accrued and unpaid
interest under the Chase Federal Loan, (iii) all sums advanced by Chase Federal
to prevent impairment of the collateral secured by the Chase Federal Loan
Documents.
"Event of Default" means as such term is defined in the Chase Federal Loan
Documents or as such term is defined in the AMRESCO Documents.
"Letter(s) of Credit" means those certain letters of credit in an aggregate
principal amount which shall not exceed $3,585,593.78 issued by Chase Federal to
applicable
2
<PAGE>
governmental authorities to insure completion of certain infrastructure
improvements on the Real Property.
SECTION 2. RIGHTS AND OBLIGATIONS OF CHASE FEDERAL AND AMRESCO
2.1 Chase Federal agrees that Borrower and AMRESCO may enter into
modifications, extensions, replacements and renewals of the AMRESCO Loan
Documents without the consent of Chase Federal provided that the same does not
purport to create a lien or security interest in any collateral of Chase Federal
that would be prior dignity to the interest of Chase Federal pursuant to the
Chase Federal Loan Documents.
2.2 Chase Federal covenants and agrees that, at all times, the collateral
that is subject to the Chase Federal Loan Documents shall secure payment only of
the Chase Federal Loan and said collateral shall not secure payment of any other
loans of the Borrower to Chase Federal.
2.3 Chase Federal covenants and agrees that the payment or repayment terms
(e.g., release prices, maturity date) of the Chase Federal Loan Documents shall
not be amended without prior written notice to AMRESCO.
2.4 Borrower hereby expressly waives and relinquishes any right the
Borrower may have to receive any advance of funds under the terms of the Chase
Federal Loan Documents in excess of the original principal amount of the Chase
Federal Loan as the same may be reduced from time to time, plus the
reimbursement obligations of any of the Letter(s) of Credit. Borrower further
covenants not to accept any advances under the Chase Federal Loan in excess of
the Chase Federal Secured Sum, as the same may be reduced, from time to time.
Chase Federal covenants not to make any advances under the Chase Federal Loan
Documents in excess of the Chase Federal Secured Sum, as the same may be
reduced, from time to time. The Borrower and Chase Federal hereby acknowledge
and agree that the making by Chase Federal of any advances under the Chase
Federal Loan Documents in excess of the Chase Federal Secured Sum, as the same
may be reduced, from time to time, shall constitute a default under the AMRESCO
Loan Documents. Upon request by AMRESCO, Borrower agrees to execute and deliver
to AMRESCO a notice limiting amounts of future advances in accordance with
Florida Statutes Section 697.04(b), which notice may be recorded in the public
records of Broward County, Florida, in AMRESCO's sole discretion.
Notwithstanding anything herein to the contrary, the parties hereto covenant and
agree that as the amount of the Chase Federal Loan is paid down, then advances
cannot thereafter be made by Chase Federal to increase the outstanding principal
amount of the Chase Federal Loan (except for any advances with respect to the
Letter(s) of Credit or sums advanced by Chase Federal to prevent impairment of
the collateral secured by the Chase Federal Loan Documents).
2.5 Chase Federal and Borrower agree that they will not amend or reallocate
any portion of the $425,000 interest reserve in the budget for the Chase Federal
Loan in excess of $50,000 in the aggregate, without the prior written consent of
AMRESCO.
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<PAGE>
2.6 Borrower covenants that the budget for the Chase Federal Loan contains
sufficient funds to construct the improvements that are secured by the Letter(s)
of Credit.
2.7 The Letter(s) of Credit are for improvements, including offsite
improvements, to be constructed solely for the Project.
SECTION 3. EVENTS OF DEFAULT; EXERCISE OF RIGHTS AND REMEDIES. The parties
acknowledge and agree that upon the occurrence of an Event of Default, the
following provisions shall apply:
3.1 The Borrower and Chase Federal hereby acknowledge and agree that an
Event of Default under the terms of the Chase Federal Loan Documents shall
constitute an Event of Default under the AMRESCO Documents entitling AMRESCO to
all rights and remedies set forth therein or otherwise available at law or in
equity. The Borrower and Chase Federal hereby covenant and agree to provide
AMRESCO with copies of all written notices of default sent to the Borrower under
the Chase Federal Loan Documents, simultaneously with the sending of such
notice. Chase Federal hereby acknowledges and agrees that AMRESCO shall have the
right, but not the obligation, to cure any Event of Default by the Borrower
under the Chase Federal Loan Documents within thirty (30) days following the
receipt by AMRESCO of the notice referred to above, in the event of monetary
defaults, and within sixty (60) days (which period shall be extended by another
sixty (60) days in the event that AMRESCO has initiated and is diligently
pursuing the cure) in the case of non-monetary defaults. If an Event of Default
under the Chase Federal Loan Documents is not capable of being cured by AMRESCO,
Chase Federal covenants and agrees that so long as all payments due under the
Chase Federal Loan are current, Chase Federal shall refrain from exercising any
and all remedies available to it under the Chase Federal Loan Documents or
otherwise available at law or equity.
3.2 The Borrower and Chase Federal hereby acknowledge and agree that an
Event of Default under the AMRESCO Loan Documents shall not constitute an Event
of Default under the Chase Federal Loan Documents. Notwithstanding the
foregoing, as an accommodation to Chase Federal, the Borrower and AMRESCO hereby
covenant and agree to provide Chase Federal with copies of all written notices
of default sent to the Borrower under the AMRESCO Loan Documents simultaneously
with the sending of such notice. AMRESCO's failure to send such a notice to
Chase Federal and Chase Federal's failure to receive any such notice of default
shall in no way affect or impair the validity of same. If an Event of Default
under the AMRESCO Loan Documents results in foreclosure proceedings thereof,
such proceeding shall be specifically advertised as under, and subject to, the
lien and operation of the Chase Federal Mortgage and the other Chase Federal
Loan Documents.
3.3 Chase Federal (i) consents to the realization by AMRESCO of any of
AMRESCO's rights in and to any and all collateral for the AMRESCO Loan,
including, without limitation, those rights which result in a change in the
legal or beneficial ownership
4
<PAGE>
of the Borrower and to a subsequent change in the legal or beneficial ownership
of the Borrower as a result of the subsequent transfer of the legal or
beneficial ownership interests in the Borrower, and (ii) acknowledges and agrees
that the occurrence of the aforementioned shall not constitute an Event of
Default under the Chase Federal Loan Documentsso long as AMRESCO or its
affiliate owns the collateral that is realized upon.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
4.1 Each of the parties hereto hereby makes the following representations
and warranties as of the date hereof with respect to itself for the benefit of
the other parties hereto:
(a) Each of the parties hereto has all necessary partnership or
corporate power and authority, as the case may be, to execute, deliver and
perform its obligations under this Agreement. All action on the part of the
parties hereto that is required for the authorization, execution, delivery and
performance of this Agreement, in each case has been duly and effectively taken.
(b) This Agreement has been duly executed and delivered by each of
the parties hereto. This Agreement constitutes a legal, valid and binding
obligation of the parties hereto enforceable against them in accordance with the
terms thereof, except as such enforceability (A) may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights and remedies generally, and (B) is subject to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).
SECTION 5. AGREEMENT FOR BENEFIT OF PARTIES HERETO. Nothing in this
Agreement, express or implied, is intended or shall be construed to confer upon,
or to give to, any party other than the parties hereto and their respective
successors and assigns , any right, remedy or claim under or by reason of this
Agreement or any covenant, condition or stipulation hereto; and the covenants,
stipulations and agreements contained in this Agreement are and shall be for the
sole and exclusive benefit of the parties hereto and their respective successors
and assigns.
SECTION 6. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validyt, legality and enforceability of the remaining provisions
conrtained herein shall not in any way be affected and/or impaired thereby.
SECTION 7. NOTICES. All notices, demands, certificates or other
communications hereunder shall be in writing and shall be deemed sufficiently
given or served for all purposes when delivered personally, when sent by
certified or registered mail, postage prepaid, return receipt requested or by
private courier service, in each case, with the proper address as indicated
below. Each party may, by written notice given to the other parties, designate
any other address or addresses to which notices, certificates or other
communications to them shall
5
<PAGE>
be sent as contemplated by this Agreement. Notices shall be deemed to have been
given if and when received by an officer, manager or suervisor in the department
of the addressee speciried for attention (unless the addressee refuses to accept
delivery, in which case they shall be deemed to have been given when first
presented to the addressee for acceptance). Until otherwise so provided by the
respective parties, all notices, certificates and communications to each of them
shall be addressed as follows:
Chase Federal: Chase Federal Bank, F.S.B.
7300 North Kendall Drive
Miami, Florida 33156
Attn: Charles L. Clements III
Telephone: (305) 670-7600
With a copy to:
Chase Federal Bank, F.S.B.
7300 North Kendall Drive
Miami, Florida 33156
Attn: Brenda Manson
Telephone: (305) 444-7700
With a copy to:
Richard A. Wood, Esq.
Therrel Baisden & Meyer Weiss
1111 Lincoln Road Mall
Suite 500
Miami each, Florida 33139
Telephone: (305) 672-1921
AMRESCO: AMRESCO Funding Corporation
1845 Woodall Rodgers Freeway
Suite 1400
Dallas, Texas 75201
Attn: Ms. Rebecca Kuban
Telephone: (214) 953-7723
Telecopy: (214) 953-7756
With a copy to:
AMRESCO, INC.
1845 Woodall Rodgers Freeway
Suite 1700
Dallas, Texas 75201
Attn: General Counsel
Telephone: (214) 953-7700
Telecopy: (214) 953-7757
Borrower: Transeastern Pembroke Villages, Inc.
3300 University Drive, 1st Floor
Coral Springs, Florida 33065
Attn: Arthur J. Falcone
Telephone: (954) 346-9700
Telecopy: (305) 753-0351
SECTION 8. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any party
hereto is named or referred to, the successors and assigns of such party shall
be deemed to be included and all rights, benefits, covenants, promises and
agreements in this Agreement by or on behalf of the respective parties hereto
shall bind and inure to the benefit of the respective successors and assigns of
such parties, whether so expressed or not, provided, however, benefits of this
Agreement shall not inure to the benefit of an assignee that is not a permitted
assignee.
SECTION 9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
counterparts together constituting only one instrument.
SECTION 10. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Florida
applicable to contracts made and to be performed in such state. Except as
otherwise provided in this Agreement, the rights and priorities of the parties
shall be determined in accordance with applicable law.
SECTION 11. NO IMPAIRMENTS OF OTHER RIGHTS. Nothing in this Agreement is
intended or shall be construed to impair, diminish or otherwise adversely affect
any other rights that Chase Federal or AMRESCO may have or may obtain against
the Borrower.
SECTION 12. AMENDMENT; WAIVER. No amendment or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing and signed
by all the Secured Parties, and any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
delay on the part of any Secured Party in the exercise of any right, power or
remedy shall operate as a waiver thereof, nor shall any single or partial waiver
by such Secured Party of any right, power or remedy preclude any further
exercise thereof, or the exercise of any other right, power or remedy.
SECTION 13. HEADINGS. Headings herein are for convenience only and shall
not be relied upon in interpreting or enforcing this Agreement.
SECTION 14. TERMINATION. This Agreement shall remain in full force and
effect until payment in full of the Chase Federal Loan and the Construction
Loan.
SECTION 15. ENTIRE AGREEMENT. This Agreement, including the documents
referred to herein, embodies the entire agreement and understanding of the
parties hereto and supersedes all prior agreements and understandings of the
parties hereto relating to the subject matter herein contained.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this TRI-PARTY Agreement
to be duly executed by their respective officers thereunto duly authorized, as
of the day and year first above written.
Signed, sealed and delivered CHASE FEDERAL BANK, a federal
in the presence of: savings bank
By:
Name: Name: Charles L. Clements III
Title: Senior Vice President
AMRESCO FUNDING CORPORATION,
a Delaware corporation
By:
Name: Name: Rebecca R.A. Kuban
Title: Vice President
TRANSEASTERN PEMBROKE
VILLAGES, INC., a Florida corporation
By:
Name: Name: Arthur J. Falcone
Title: President
LOAN AGREEMENT
BETWEEN
TRANSEASTERN PLANTATION APARTMENTS, LTD.,
A FLORIDA LIMITED PARTNERSHIP
AND
HELLER FINANCIAL, INC.,
A DELAWARE CORPORATION
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
Article I
The Loan................................................................ 1
Article II
Security................................................................ 6
Article III
Conditions Precedent.................................................... 6
Article IV
Representations and Warranties.......................................... 8
Article V
Affirmative Covenants................................................... 13
Article VI
Negative Covenants...................................................... 17
Article VII
Events of Default; Acceleration of Indebtedness......................... 19
Article VIII
Miscellaneous........................................................... 20
EXHIBITS
Exhibit A Legal Description
Exhibit B Litigation
SCHEDULES
Schedule I Index of Defined Terms
(i)
<PAGE>
LOAN NO. 95-130A
PINE ISLAND PLACE
LOAN AGREEMENT
THIS LOAN AGREEMENT ("AGREEMENT") is made as of this ___ day of
November, 1995 between TRANSEASTERN PLANTATION APARTMENTS, LTD., a Florida
limited partnership ("BORROWER") and HELLER FINANCIAL, INC., a Delaware
corporation ("LENDER").
RECITALS
A. Lender has agreed to make a loan (the "LOAN") to Borrower
subject to the terms and conditions contained herein. The Loan is evidenced by
that certain Promissory Note of even date herewith in the original principal
amount of Two Million One Hundred Sixty Thousand and No/100ths Dollars
($2,160,000.00) (the note and all amendments thereto and substitutions therefor
are hereinafter referred to as the "NOTE"). The terms and provisions of the Note
are hereby incorporated herein by reference in this Agreement.
B. Borrower is or on the Closing Date will be the owner of
certain real property described on EXHIBIT A hereto, located in Plantation,
Florida, commonly known as "PINE ISLAND PLACE" (the "PROPERTY").
C. Borrower shall acquire and develop the Property with a 150
unit apartment complex (collectively called the "IMPROVEMENTS") using the
proceeds of the Loan, the Senior Loan, and Borrower's Equity. The Property, the
Improvements, and all other improvements now or hereafter located on the
Property are collectively called the "PROJECT".
D. An index of defined terms appears on the attached SCHEDULE 1.
NOW, THEREFORE, in consideration of the foregoing and the mutual
conditions and agreements contained herein the parties agree as follows:
ARTICLE I
THE LOAN
1.1 FUNDING. On the Closing Date, Lender shall lend to Borrower
the sum of One Million Eight Hundred and No/100ths Dollars ($1,800,000.00) (the
"INITIAL FUNDING AMOUNT"). "CLOSING DATE" shall mean the date of disbursement of
the Initial Funding Amount.
1.2 LOAN TERM. The Loan shall mature on the last day of the 60th
month after the Closing Date (the "MATURITY DATE").
<PAGE>
1.3 INTEREST RATE. Borrower shall pay interest on the outstanding
principal balance of the Loan at a fixed rate per annum equal to ten percent
(10%) (the "INTEREST RATE"). Interest shall be computed based on a 360 day year
and charged for the actual number of days elapsed.
1.4 PAYMENTS. Notwithstanding the amount due at the Interest Rate,
Borrower shall make payments on the twentieth (20th) day of each month, computed
on the outstanding principal balance of the Loan at the Payment Rate, which
shall be applied first to interest, and then to Accrued Interest. "PAYMENT RATE"
shall mean an amount equal to Net Cash Flow for the immediately preceding
calendar month; provided, however, in no event shall the Payment Rate exceed the
total of current and accrued interest then outstanding.
To the extent interest at the Interest Rate exceeds the Payment Rate,
the excess interest shall accrue ("ACCRUED INTEREST") and be added to principal
outstanding under the Loan. Accrued Interest shall bear interest at the Interest
Rate. The aggregate outstanding amount of Accrued Interest shall not exceed the
lesser of: (i) 20% of the outstanding balance of the Loan; and $360,000.00 (the
"MAXIMUM INTEREST ACCRUAL"). In the event Accrued Interest reaches the Maximum
Interest Accrual, Borrower shall immediately commence monthly payments at the
greater of the Interest Rate and the Payment Rate. Once a repayment of Accrued
Interest has occurred such that the outstanding amount of Accrued Interest is
less than the Maximum Interest Accrual, Borrower shall be permitted to again
accrue interest up to the Maximum Interest Accrual.
"NET CASH FLOW" means all gross revenue collected from or in connection
with the Project (including rents, expense reimbursements, interest income and
forfeited security deposits); LESS (a) all bona fide normal, customary and
reasonable operating expenses actually paid (including a management fee not to
exceed four percent (4%) of effective gross income) and any real estate tax
escrow; (b) all amounts then due on the Senior Loan or any loan approved by
Lender that refinanced the Senior Loan; and (c) deposits into reserves approved
by Lender or required by the Loan Documents or the Senior Loan Documents.
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1.5 SOURCES AND USES. The sources and uses of funds for the
contemplated transaction are as follows:
SOURCES USES
------- ----
Borrower Equity $ 716,800.00 Hard Costs $ 7,911,351.00
Initial Funding 1,800,000.00 Soft Costs 2,183,449.00
Amount
Senior Loan 9,900,000.00 Developer Fees 300,000.00
Accrued Interest 360,000.00
Accrued Interest 360,000.00
Land Costs/
Purchase Price 1,995,000.00
Lender 27,000.00
Commitment
Fee
-------------------------- --------------------------------
Total $12,776,800.00 Total $12,776,800.00
========================== ================================
Borrower shall deliver such information and documentation as Lender shall
request to verify that the sources and uses are as indicated above. A reduction
in the amounts necessary for any of the uses shall result in an equal reduction
in the amount of the Loan, provided such reduction is approved by Senior Lender
and subject to Borrower's ability to reallocate any cost savings toward the
payment of any cost overruns elsewhere within the Budget.
1.6 EXCESS CASH FLOW. As additional consideration for entering
into this Agreement and making the Loan and in lieu of a larger commitment fee,
Borrower shall pay to Lender each calendar quarter Lender's Percentage of Excess
Cash Flow corresponding to such period commencing on the Closing Date and
continuing until such time as the Participation is paid in full. Excess Cash
Flow payments shall be due and payable within fifteen (15) days after the end of
each calendar quarter and shall be accompanied by operating statements for the
Project certified true, complete and correct by Borrower and a certificate
showing Borrower's calculation of Excess Cash Flow.
"EXCESS CASH FLOW" for any calendar quarter shall be defined as Net
Cash Flow for such period less (i) current payments due on the Loan for such
period; and (ii) actual expenditures for capital improvements, tenant
improvements and leasing commissions approved by Lender.
1.7 DISTRIBUTION/PARTICIPATION. Net Proceeds realized from a
Transfer Event, an Appraisal Event, or any Refinance, respectively, shall be
distributed, or have an assumed distribution, in the following order of
priority:
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(1) To Senior Lender, if the Senior Loan is being repaid in
full, to pay all outstanding principal, interest, costs and expenses
under the Senior Loan;
(2) To Lender to pay all outstanding principal, interest, costs
and expenses under the Loan Documents;
(3) To Borrower for distribution pursuant to the Partnership
Agreement (as hereinafter defined) an amount equal to a ten percent
(10%) annual return on Borrower's Equity, to the extent not previously
distributed;
(4) To Borrower to repay its Equity in the amount of $716,800.00,
to the extent not previously distributed;
(5) To Lender to pay the greater of the Preferred Payment amount
and the applicable Lender's Percentage of the Net Proceeds to the
extent not previously distributed; and
(6) To Borrower, the Net Proceeds then remaining.
The amounts due Lender pursuant to subsection (5) above are hereinafter referred
to as the "PARTICIPATION". The Participation is paid to Lender as additional
consideration for making the Loan and in lieu of a larger commitment fee. A
Participation shall be due upon each Refinance of the Property unless Lender
elects to treat a Refinance as a final distribution of the Participation. Absent
such election, the Loan Documents shall remain in effect after each Refinance to
secure future payments of the Participation. The documents evidencing and
securing such Refinance shall be subject to Lender's approval.
In no event shall Lender be obligated to return any payments received
pursuant to this Section 1.7. Borrower shall consult with Lender regarding any
proposed sale of the Project prior to the issuance of the final certificate of
occupancy at least thirty (30) days prior to the execution of a binding
agreement regarding such sale.
"TRANSFER EVENT" means any of the following made to a third party in an
arm's length transaction for fair value: (i) any sale, assignment, transfer,
exchange or other disposition of all or any portion of the Project or all of
Borrower's interest therein; (ii) any sale, assignment, transfer, exchange or
other disposition of all of the ownership interest of Borrower including any
merger, consolidation, recapitalization or reorganization of Borrower; or (iii)
the entering into a ground lease of the entire Project.
"APPRAISAL EVENT" means, at Lender's election, the occurrence of any of
the following: (i) unless expressly permitted under the Loan Documents, any sale
or transfer of the Project, of any economic interest in the Project or of any
interest in Borrower that does not constitute a Transfer Event; (ii) a
Refinance; (iii) the Maturity Date or any earlier date on which the Loan becomes
due as a result of acceleration or otherwise; or (iv) November 30, 2000 ("END
DATE").
"REFINANCE" means any refinancing or payoff of the Senior Loan or the
Loan, whether by another loan, a syndication or the issuance of securities or
otherwise.
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"NET PROCEEDS" means:
(i) in the case of an Appraisal Event, the Appraised
Value less the estimated amount of customary closing costs (including a
broker's commission) not to exceed three percent (3%) of the Appraised
Value;
(ii) in the case of a Refinance, the gross financing
proceeds less reasonable costs and expenses of the financing; or
(iii) in the case of a Transfer Event, the value of all
consideration received in connection with such Transfer Event including
cash, notes, assumed indebtedness, deferred payments (contingent or
otherwise), prepaid expenses, non-customary prorations in favor of the
seller LESS reasonable and customary costs and expenses of transfer
(including broker's commissions) not to exceed three percent (3%) of
the aggregate consideration; PROVIDED that if the aggregate
consideration for the Project is not readily ascertainable or if Lender
disputes the computation of aggregate consideration, Net Proceeds shall
mean the Appraised Value less reasonable and customary costs above
provided for a Transfer Event.
"APPRAISED VALUE" means the market value of the Project assuming a
stabilized occupancy of 95%, as of a date not earlier than sixty (60) days prior
to an Appraisal Event or a Transfer Event, as the case may be, determined by one
or more independent MAI appraisers as set forth below. Borrower and Lender shall
each retain an appraisal firm to appraise the Project. If the two (2) appraisals
vary by less than ten percent (10%), the market value shall be the average of
the two. If the appraisals vary by more than ten percent (10%), then the two (2)
firms shall choose another appraisal firm, which firm shall render its opinion
of value. If a third firm is retained, the market value shall be the average of
the two (2) appraisals closest in value. If Borrower fails to retain an
appraiser within ten (10) days of Lender's request, the market value shall be
the amount determined by Lender's appraiser. In any such case, the determination
so made shall be conclusive and binding on Borrower and Lender.
"PREFERRED PAYMENT" from and after the date hereof means an amount of
equal to $500,000.00.
"LENDER'S PERCENTAGE" means: (i) thirty percent (30%) for the first two
(2) Loan Years; (ii) thirty-five percent (35%) for the third Loan Year; (iii)
forty percent (40%) for the fourth Loan Year; and (iv) forty-five percent (45%)
for the fifth Loan Year. Lender's Percentage shall be determined on the date all
principal and interest due under the Loan Documents is paid in full.
"LOAN YEAR" means the period from the Closing Date through the last day
of the same month in the following year and thereafter each successive twelve
(12) month period.
1.8 PREPAYMENTS. Borrower may prepay the outstanding principal
balance of the Loan in full or in part at any time; PROVIDED Borrower gives
Lender at least five (5) days' prior written notice and pays all accrued and
unpaid interest and the Participation and any other fees and costs then due to
Lender.
5
<PAGE>
Borrower may prepay the Senior Loan without a simultaneous prepayment
of the Loan provided: (i) the Loan is not in default; (ii) the new senior loan
is on substantially the same terms and is otherwise acceptable to Lender; (iii)
the proceeds from a Senior Loan Refinance are distributed pursuant to Section
1.7; and (iv) the new senior lender is acceptable to Lender and provides to
Lender a recognition agreement on substantially the same terms and conditions as
contained in the Recognition Agreement. Upon a Refinance of the Senior Loan, all
references in this Agreement to Senior Lender, Senior Loan and Senior Loan
Documents shall be deemed to apply to the new senior lender and its
documentation.
ARTICLE II
SECURITY
The Loan and all other indebtedness and obligations under the Loan
Documents shall be secured by the following (collectively called the
"COLLATERAL"): (a) collateral assignments of all of the general and limited
partnership interests in Borrower (collectively, the "PLEDGES"); (b) a
completion guarantee from the Principals ("GUARANTY"); and (c) any other
collateral or security described in this Agreement.
ARTICLE III
CONDITIONS PRECEDENT
Lender's obligation to disburse the Loan is subject to satisfaction of
all of the following conditions.
3.1 SENIOR LOAN.
(a) Borrower shall have obtained a development and construction
loan (the "SENIOR LOAN") in the principal amount of $9,900,000.00 from
SouthTrust Bank, a national banking association ("SENIOR LENDER"). The Senior
Loan shall (i) bear interest at a rate of not more than 10% per annum, (ii) have
no amortization of principal until the twenty-fifth (25th) month of its loan
term, (iii) have a term of not less than 48 months, (iv) charge a fee of not
more than 1%, (v) permit prepayment without a fee (except as otherwise set forth
in the Senior Loan Documents), (vi) be guaranteed by the Principals and
Properties and (vii) be secured by, among other things, a mortgage encumbering
the Project. Lender shall have received copies of all documents which evidence
and secure the Senior Loan (collectively the "SENIOR LOAN DOCUMENTS"). The
Senior Loan Documents shall not contain provisions cross-defaulting or
cross-collateralizing the Senior Loan with any other loans.
(b) Lender and Senior Lender shall have executed an agreement
("RECOGNITION AGREEMENT") agreeing and stating that: (i) the Senior Loan is not
in default; (ii) that the granting of the Pledges does not constitute a default
under the Senior Loan; (iii) Lender has the right (but not the obligation) to
cure monetary defaults within thirty (30) days and other defaults within
forty-five (45) days (or such additional time as it will take Lender to gain
possession of the Project if possession is required to effect such cure) of
receipt of written notice; (iv) Senior Lender will not assert against Lender any
defaults which by their nature are personal to
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<PAGE>
Borrower and not curable by Lender; (v) a default of the Loan will not result
in a default of the Senior Loan; and (vi) Lender, or its designee, will be
permitted to succeed to the interests in Borrower.
The Senior Loan Documents and the Recognition Agreement shall be
satisfactory to Lender in form and substance.
3.2 LOAN DOCUMENTS. Lender shall have received the following
documentation (collectively with this Agreement, called the "LOAN DOCUMENTS"),
all in form and substance satisfactory to Lender:
(a) the Note;
(b) the Pledges;
(c) Uniform Commercial Code financing statements;
(d) a hazardous materials indemnity agreement;
(e) an agreement of Arthur Falcone, Edward Falcone and Philip
Cucci, collectively the "PRINCIPALS") regarding non-recourse
exception liability; and
(f) the Guaranty.
3.3 MINIMUM EQUITY. On the Closing Date, Borrower shall have cash
equity to in an amount not less than $716,800.00 ("EQUITY").
3.4 APPRAISAL. Lender shall have received a copy of an appraisal
report for the Property prepared for Senior Lender by an independent MAI
appraiser in accordance with the Financial Institutions Reform, Recovery and
Enforcement Act ("FIRREA") and the regulations promulgated pursuant to such act.
The FIRREA appraisal shall be acceptable to Lender.
3.5 TITLE. Lender shall have received a copy of Borrower's title
insurance policy, acceptable to Lender, subject only to exceptions to title
approved by Lender and containing endorsements required by Lender including,
without limitation, a so-called "Fairway" (insuring that a transfer of
partnership interest does not cause dissolution or otherwise void coverage and
extended coverage endorsements.
3.6 ENVIRONMENTAL REPORT. Lender shall have received a Phase I
Environmental audit of the Property. The audit shall (i) be addressed to Lender;
(ii) state that Lender may rely thereon; and (iii) be acceptable to Lender in
its sole discretion.
3.7 LEASES. Lender shall have received a copy of and approved
the form lease Borrower proposes to utilize for the Project. All existing and
future leases of the Project ("LEASES") shall be on the approved form or as
otherwise approved by Lender. All non-residential leases shall be approved by
Lender.
7
<PAGE>
3.8 APPROVALS. Lender shall have received copies of all
necessary approvals for the Project, including approvals relating to the final
site plan, zoning and set back variances, if applicable and issuance of all
building permits.
3.9 CONSTRUCTION DOCUMENTS. Lender and its independent consultant
shall have reviewed and approved a soils report, construction schedule
("CONSTRUCTION SCHEDULE") indicating the anticipated progress and completion of
construction, final plans and specifications for construction of the
Improvements ("PLANS AND SPECIFICATIONS"), detailed budget for construction of
the Improvements in an aggregate amount not to exceed $12,776,800.00 ("BUDGET"),
fixed price contract with a bonded general contractor which shall not be an
Affiliate for construction of the Improvements ("CONTRACT"), fixed price
subcontracts representing not less than seventy-five percent (75%) of total
construction costs (including all individual subcontracts in excess of
$50,000.00), architect's contract, applications for building permits, and
evidence acceptable to Lender, in its sole discretion, of Project approval by
the City of Plantation. All of the foregoing and all other documents and reports
used in preparation for or in the actual construction of the Improvements are
collectively referred to as the "CONSTRUCTION DOCUMENTS."
3.10 MANAGEMENT CONTRACT. Lender shall have approved the
management company and its management contract with Borrower for the Project
prior to Closing, provided, however, that if the management contract is to be
executed at any time after the Closing, the contract shall be submitted to
Lender for its written approval prior to the execution thereof. The management
contract shall prohibit the payment to the management company or an Affiliate
thereof of any termination or cancellation fees.
3.11 OPINIONS OF COUNSEL. Lender shall have received an opinion of
Borrower's counsel, acceptable to Lender, stating: (a) that the Loan including
the Participation is not usurious under applicable laws; (b) that the Loan
Documents are validly executed, duly authorized and binding and enforceable in
accordance with their terms; (c) that the execution and delivery of the Loan
Documents and the performance of the transactions contemplated thereby do not
violate or contravene any law, court order, judgment or contract to which
Borrower or any Principal is a party; (d) that the choice of law provision is
enforceable; and (e) such further opinions as Lender shall require. The opinion
of Borrower's counsel shall be from an independent counsel acceptable to Lender.
3.12 INDEPENDENT CONSULTANT'S REPORT. Lender shall have received a
from its independent consultant in form, and substance satisfactory to Lender
regarding construction of the Project.
3.13 ADDITIONAL ITEMS. Lender shall have received such other items
as Lender may reasonably require.
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<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
As an inducement to Lender to disburse the Loan, Borrower hereby
represents and warrants as follows, which representations and warranties shall
be true as of the date hereof and shall remain true throughout the term of the
Loan:
4.1 BORROWER EXISTENCE. Borrower is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Florida with its principal place of business at c/o Transeastern Properties of
South Florida, Inc., 3300 University Drive, Coral Springs, Florida 33067.
Borrower is in good standing under the laws of the State of Florida and is
authorized to transact business in the State of Florida. Borrower has the full
right, power and authority to execute, deliver and carry out the terms and
provisions of the Loan Documents executed or to be executed by Borrower. The
Loan Documents have each been duly authorized, executed and delivered and each
constitutes the duly authorized, valid and legally binding obligation of
Borrower and the Principals, as the case may be, enforceable against Borrower
and the Principals, as the case may be, in accordance with their respective
terms.
4.2 PARTNERS.
(a) Transeastern Plantation Apts., Inc. ("GENERAL PARTNER") is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida with its principal place of business at 3300 University
Drive, Coral Springs, Florida 33067. General Partner is the sole general partner
of Borrower and owns ninety-one and four-tenths percent (91.4%) of the
partnership interests in Borrower free and clear of all liens, claims and
encumbrances (except for the security interest granted to Lender). General
Partner has full right, power and authority to execute the Loan Documents on its
own behalf and on behalf of Borrower.
(b) Transeastern Properties of South Florida, Inc. ("PROPERTIES")
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida with its principal place of business at 3300
University Drive, Coral Springs, Florida 33067. Properties is solely a limited
partner in Borrower and owns four and three-tenths percent (4.3%) of the
partnership interests in Borrower, free and clear of all liens, claims and
encumbrances (except for the security interest granted to Lender). Properties
owns all of the issued and outstanding stock of General Partner.
(c) Principals and their respective wives are the sole common
stockholders in Properties. Arthur Falcone and his wife own thirty-three and
one-third percent (33-1/3%), Edward Falcone and his wife own thirty-three and
one-third percent (33-1/3%) and Philip Cucci and his wife own thirty-three and
one-third percent (33-1/3%) of the issued and outstanding common stock in
Properties. Principals shall have the sole authority to make all material
business decisions (including a sale or refinance) for Borrower and General
Partner during the term of the Loan.
(d) Cahaba Land L.L.C. ("CAHABA") is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Alabama with its principal
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place of business at Suite 100, 400 Union Hill Drive, Birmingham, Alabama 35209
and is qualified to do business in the State of Florida. Cahaba is solely a
limited partner in Borrower and owns four and three-tenths percent (4.3%) of the
partnership interests in Borrower, free and clear of all liens, claims and
encumbrances (except for the security interest granted to Lender).
4.3 BORROWER'S PARTNERSHIP DOCUMENTS. A true and complete copy of
the agreement creating Borrower and any and all amendments thereto
(collectively, the "PARTNERSHIP AGREEMENT") have been furnished to Lender. The
Partnership Agreement constitutes the entire agreement among the partners and is
binding upon and enforceable against each of the partners in accordance with its
terms. There are no other agreements, oral or written, among any of the partners
relating to Borrower. No breach exists under the Partnership Agreement and no
condition exists which, with the giving of notice or the passage of time would
constitute a breach under the Partnership Agreement. The Partnership Agreement
expressly recognizes and permits the Pledges and any transfers of partnership
interests relating thereto, and provides that such a transfer shall not cause a
dissolution of Borrower.
4.4 CORPORATE DOCUMENTS.
(a) A true and complete copy of the articles of incorporation and
by-laws of General Partner and all other documents creating and governing
General Partner and its stockholders (collectively, the "GP INCORPORATION
DOCUMENTS") have been furnished to Lender. There are no other agreements, oral
or written, among any of the shareholders of General Partner relating to General
Partner. The Incorporation Documents were duly executed and delivered, are in
full force and effect, and binding upon and enforceable in accordance with their
terms. The Incorporation Documents constitute the entire understanding among the
shareholders of General Partner. No breach exists under the Incorporation
Documents and no act has occurred and no condition exists which, with the giving
of notice or the passage of time would constitute a breach under the
Incorporation Documents. The Incorporation Documents expressly recognize and
permit the Pledges of partnership interests in Borrower and any transfers of
ownership interests relating thereto, and provides that such a transfer shall
not cause a dissolution of General Partner. There are no shareholder agreements
affecting the shareholders of General Partner or Properties.
(b) A true and complete copy of the articles of incorporation and
by-laws of Properties, the Properties Shareholders' Agreement (as hereinafter
defined) and all other documents creating and governing Properties and its
stockholders (collectively, the "LP INCORPORATION DOCUMENTS") (the GP
Incorporation Documents and the LP Incorporation Documents are hereinafter
collectively referred to as the "INCORPORATION DOCUMENTS") have been furnished
to Lender. Other than that certain Agreement among all of the common
shareholders and those shareholders holding a majority interest of the preferred
shares of Properties dated November 21, 1995 (the "PROPERTIES SHAREHOLDERS'
AGREEMENT"), there are no other agreements, oral or written, among any of the
shareholders of Properties relating to Properties. The LP Incorporation
Documents were duly executed and delivered, are in full force and effect, and
binding upon and enforceable in accordance with their terms. The LP
Incorporation Documents constitute the entire understanding among the
shareholders of Properties. No breach exists under the LP Incorporation
Documents and no act has occurred and no condition exists which, with the giving
of notice or the passage of time would constitute
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a breach under the LP Incorporation Documents. The LP Incorporation Documents
expressly recognize and permit the Pledges of partnership interests in Borrower
and any transfers of ownership interests relating thereto, and provides that
such a transfer shall not cause a dissolution of Properties.
4.5 OTHER AGREEMENTS. Borrower is not in default under any
contract, agreement or commitment to which it is a party, which would adversely
affect Borrower's ability to perform hereunder. The execution and delivery of
the Loan Documents, the consummation of the transactions herein or therein
contemplated and compliance with the terms and provisions of this Agreement and
the Loan Documents will not (i) to the best of Borrower's knowledge, violate any
provisions of law or any applicable regulation, order or other decree of any
court or governmental entity, or (ii) to the best of Borrower's knowledge upon
due inquiry, conflict or be inconsistent with, or result in any breach of, or
constitute a default under, any contract, agreement or commitment to which
Borrower is bound. Borrower has delivered to Lender copies of any agreements
(including leases) between Borrower and any Affiliate related in any way to the
Project and any other agreements materially affecting the construction, use and
operation of the Project.
4.6 PROPERTY. Fee simple title to the Property is/or
contemporaneously with the initial funding of the Loan will be owned by Borrower
free and clear of all liens, claims, encumbrances, covenants, conditions and
restrictions, security interests and claims of others, except for exceptions
which have been approved in writing by Lender (Lender hereby acknowledges that
it has approved the Senior Loan). Borrower has obtained all approvals needed to
construct the Project. The Property is and the Project when completed will be in
compliance with all zoning requirements, building codes, subdivision improvement
agreements, and all covenants, conditions and restrictions of record. The zoning
and subdivision approval of the Project and the right and ability to construct,
use or operate the Improvements are not in any way dependent on or related to
any real estate other than the Property. There are no, nor are there any alleged
or asserted, violations of law, regulations, ordinances, codes, permits,
licenses, declarations, covenants, or restrictions of record, or other
agreements relating to the Project or the contemplated Improvements, or any part
thereof.
4.7 PROPERTY ACCESS. The Property is accessible through fully
improved and dedicated roads accepted for maintenance and public use by the
public authority having jurisdiction.
4.8 UTILITIES. All utility services necessary and sufficient for
the construction, use or operation of the Project are available at the boundary
of the Property including water, storm, sanitary sewer, gas, electric and
telephone facilities. Unconditional written permission has been obtained from
the applicable utilities or municipalities, as the case may be, to connect the
Project with each of such services.
4.9 FLOOD HAZARDS/WETLANDS. The Property is not situated in an
area designated as having special flood hazards as defined by the Flood Disaster
Protection Act of 1973, as amended, or as a wetlands by any governmental entity
having jurisdiction over the Property.
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4.10 HAZARDOUS MATERIALS. No Hazardous Materials are located on or,
to the best knowledge of Borrower after due inquiry, beneath the surface of the
Property, or on or beneath the surface of adjacent property. "HAZARDOUS
MATERIALS" is defined to include any hazardous, dangerous or toxic substance or
material within the meaning of any federal, state or local law, regulation or
ordinance.
4.11 TAXES/ASSESSMENTS. There are no unpaid or outstanding real
estate or other taxes or assessments on or against the Project or any part
thereof, except general real estate taxes for 1995 not yet due or payable.
Copies of the current general real estate tax bills with respect to the Project
have been delivered to Lender. Said bills cover the entire Property and do not
cover or apply to any other property. There is no pending or contemplated action
pursuant to which any special assessment may be levied against any portion of
the Project.
4.12 EMINENT DOMAIN. There is no eminent domain or condemnation
proceeding pending or, to the best of Borrower's knowledge threatened, relating
to the Property.
4.13 LITIGATION. Except as set forth in EXHIBIT B, there is no
litigation, arbitration or other proceeding or governmental investigation
pending or, to the best of Borrower's knowledge, threatened against or relating
to Borrower, any partner in Borrower, any Principal or any of their property,
assets, or business, including the Project, which if decided adversely would
affect the business, affairs, assets or financial condition of Borrower, any
Principal, the Project, or the prospects for repayment of the Loan.
4.14 DOCUMENTS. Borrower and the Principals have furnished Lender
with a true and complete copy of all documents relating to the Senior Loan and
the Project.
4.15 ACCURACY. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement furnished to Lender by
Borrower or the Principals contains any untrue statement of a material fact or
omits to state a material fact which would affect Lender's decision to make the
Loan.
4.16 FOREIGN OWNERSHIP. Neither Borrower nor any partner in
Borrower nor any Principal is or will be, and no legal or beneficial interest of
a partner in Borrower is or will be held, directly or indirectly, by a "foreign
corporation", "foreign partnership", "foreign trust", "foreign estate", "foreign
person", "affiliate" of a "foreign person" or a "United States intermediary" of
a "foreign person" within the meaning of IRC Sections 897 and 1445, the Foreign
Investments in Real Property Tax Act of 1980, the International Foreign
Investment Survey Act of 1976, the Agricultural Foreign Investment Disclosure
Act of 1978, or the regulations promulgated pursuant to such Acts or any
amendments to such Acts.
4.17 SOLVENCY. Neither Borrower, nor any partner in Borrower, nor
any Principal is insolvent and there has been no: (i) assignment made for the
benefit of the creditors of any of them; (ii) appointment of a receiver for any
of them or for the property of any of them; or (iii) bankruptcy, reorganization,
or liquidation proceeding instituted by or against any of them.
4.18 FINANCIAL CONDITION/NO CHANGE. Borrower has heretofore
delivered to Lender copies of the most current financial statements of Borrower,
General Partner and Principals.
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Said financial statements were prepared on a basis consistent with that of
preceding years, and all of such financial statements present fairly the
financial condition of said Borrower, General Partner and Principals as of the
dates in question and the results of operations for the periods indicated. Since
the dates of such statements, there has been no material adverse change in the
business or financial condition of Borrower, General Partner or any Principal.
Neither Borrower, General Partner nor any Principal has any material contingent
liabilities not provided for or disclosed in said financial statements. The
Principals have delivered collateral value statements prepared on a basis which
is acceptable to Lender and certified as true and correct by such Principals.
There has been no material adverse change since July 5, 1995 in the structure,
business operations, credit, prospects or financial condition of Borrower,
General Partner, any Principal or the value, condition or use of the Project.
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 PAYMENT OF INDEBTEDNESS; PERFORMANCE OF OBLIGATIONS.
Borrower shall promptly pay when due all payment obligations of Borrower
(including the payment of Lender's Percentage of Excess Cash Flow and the
Participation) to Lender (the "INDEBTEDNESS") and shall promptly perform all
other obligations of Borrower to Lender.
5.2 TAXES AND OTHER OBLIGATIONS.
(a) Except as provided in subsection (b) below, Borrower shall
pay, before delinquency, and before any interest, collection fees or penalties
shall accrue, all taxes, assessments, fines, impositions and other charges and
obligations, which may become a lien on or charge against the Project
(collectively, "CHARGES"). Borrower shall have the right to contest, in good
faith by appropriate proceedings, the amount or validity of any such Charges, so
long as: (a) Borrower has given prior written notice to Lender of Borrower's
intent to so contest or object to any such Charges; (b) such contest stays the
enforcement or collection of the Charges or any lien created; and (c) the
Charges or lien created are bonded or insured over by the title insurance
company or Borrower has posted security therefor in accordance with the
provisions of the Senior Loan Documents and in a manner acceptable to Lender.
Upon the request of Lender, Borrower shall immediately furnish to Lender all
notices of amounts due and receipts evidencing payment. Borrower shall promptly
notify Lender of any lien on all or any part of the Property and shall promptly
discharge any unpermitted lien or encumbrance. Without releasing Borrower from
its obligations hereunder, Borrower's rights and obligations pursuant to this
Section 5.2 may be assumed by a tenant of the Property pursuant to its Lease.
(b) On the Closing Date Borrower shall establish a real estate
tax and assessment escrow with Lender if not established with Senior Lender. On
the first day of each calendar month Borrower shall deposit into such escrow
one-twelfth (1/12) of the annual real estate taxes and assessments for the
Project as estimated by Lender. If at any time, including on the Closing Date,
there are insufficient funds in such escrow, when added to such monthly escrow
payments, to pay the next due real estate tax and assessment invoices for the
Project, immediately upon Lender's request Borrower shall deposit into such
escrow an amount equal to such deficiency. From time to time to the extent the
Senior Loan Documents (i) require a similar real estate tax
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and assessment escrow to be held by Senior Lender or (ii) permit the proceeds of
the Senior Loan to be used to pay real estate taxes and assessments on the
Project and there are sufficient Senior Loan proceeds available therefor, the
provisions of this Section 5.2(b) shall be suspended.
5.3 INSURANCE. Borrower shall keep the Project insured, and shall
maintain general liability coverage and such other coverages required by the
Senior Loan Documents and as otherwise required by Lender, by carrier(s), in
amounts and in form at all times satisfactory to Lender, which carrier(s),
amounts and form shall not be changed without the prior written consent of
Lender. In case of loss or damage by fire or other casualty, Borrower shall give
immediate written notice thereof to the insurance carrier(s) and to Lender. In
such case of loss or damage by fire or other casualty, Lender shall allow
Borrower to use the proceeds of the applicable insurance policy for restoration
of the Project, subject to the consent of the Senior Lender and provided, in
Lender's reasonable discretion, that the value of the Project and the ability to
service the Project's debt has not been impaired.
5.4 CONDEMNATION. Borrower shall within three (3) business days of
its receipt of notice thereof, notify Lender of any action or proceeding
relating to any condemnation or other taking of the Project, or part thereof,
and Borrower shall, after consultation with and subject to Lender's written
approval, appear in and prosecute any such action or proceeding and/or settle or
compromise any claim in connection therewith.
5.5 PRESERVATION AND MAINTENANCE OF THE PROJECT. Borrower shall:
(a) not commit waste or permit impairment or deterioration of the Project; (b)
not abandon the Project; (c) keep the Project in good repair and restore or
repair promptly, in a good and workmanlike manner, all or any part of the
Project to the equivalent of its original condition; and (d) give notice in
writing to Lender of and, unless otherwise directed in writing by Lender, appear
in and defend any action or proceeding purporting to affect the Project, the
security granted by the Loan Documents or the rights or powers of Lender.
Borrower shall not remove, demolish or alter any Improvement on the Property
except when incident to the Construction Documents.
5.6 INSPECTION. Subject to the rights of tenants under Lender
approved Leases, Lender and its authorized agents may enter upon and inspect the
Project at all reasonable times for reasonable purposes upon notice given orally
or in writing. Lender, at Borrower's expense, shall retain one or more
independent consultants to periodically inspect the progress of construction of
the Project and all documents, drawings, plans, and consultants' reports
relating thereto.
5.7 BOOKS AND RECORDS/AUDITS. Borrower shall keep and maintain at
all times at Borrower's address stated below, or such other place as Lender may
approve in writing, complete and accurate books of accounts and records adequate
to reflect the results of the operation of the Project (including computations
of Net Cash Flow and Excess Cash Flow) and to provide the financial statements
required to be provided to Lender pursuant to Section 5.8 below and copies of
all written contracts, correspondence, reports of Senior Lender's independent
consultant, Construction Documents and other documents affecting the Project.
Lender and its designated agents shall have the right to inspect and copy any of
the foregoing. Additionally, Lender may audit and determine, in Lender's sole
and absolute discretion, the accuracy of Borrower's records and computations.
The costs and expenses of the audit shall be
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paid by Borrower if the audit discloses a monetary variance in any financial
information or computation (including the computation of Net Cash Flow and
Excess Cash Flow) equal to or greater than the greater of: (i) five percent (5%)
in the aggregate; or (ii) $5,000.00 more than any computation submitted by
Borrower.
5.8 FINANCIAL STATEMENTS.
(a) Borrower shall furnish to Lender and shall cause General
Partner and Principals to furnish to Lender such financial statements and other
financial information as Lender may from time to time request. Without
limitation of the foregoing, Borrower shall furnish to Lender and shall cause
Principals to furnish to Lender statements of the operation of the Project
(including a current rent roll, monthly operating statements, monthly
delinquency reports and a monthly schedule of delinquency of receipts and
payments) as of the last day of each month, to be delivered within 20 days after
the end of each month and certified by Borrower as true, correct, and complete,
and yearly statements of the operation of the Project, to be delivered within
120 days after the end of each fiscal year and certified by Borrower as true,
correct, and complete. All such financial statements shall show all material
contingent liabilities.
(b) Borrower shall furnish to Lender and shall cause Principals
to furnish Lender with an annual balance sheet and financial statements from
Borrower, General Partner and each Principal, certified true, correct, and
complete by Borrower, General Partner or such Principal, as applicable, within
120 days of the end of each fiscal year. At Lender's request, such financial
statements shall include, specific information concerning Borrower's, General
Partner's and each Principal's other real estate holdings, including property
income and expenses, debt service requirements and occupancy) and most recently
filed Form 1065 federal income tax return for Borrower.
(c) If Borrower fails to furnish or cause to be furnished promptly
any report required by the previous subparagraphs (a) and (b) hereof, or if
Lender reasonably deems such reports to be unacceptable, Lender may elect (in
addition to exercising any other right and remedy) to conduct an audit of all
books and records of Borrower, General Partner and each Principal which in any
way pertain to the Project and to prepare the statement or statements which
Borrower failed to procure and deliver. Such audit shall be made and such
statement or statements shall be prepared by an independent firm of certified
public accountants to be selected by Lender. Borrower shall pay all reasonable
expenses of the audit and other services, which expenses shall be immediately
due and payable with interest thereon at the default rate contained in the Note.
5.9 USE OF PROCEEDS. Borrower shall use the proceeds of the Loan
for proper business purposes. No portion of the proceeds of the Loan shall be
used by Borrower in any manner that might cause the borrowing or the application
of such proceeds to violate Regulation G, Regulation U, Regulation T or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act.
5.10 NOTICE OF LITIGATION OR DEFAULT. Borrower shall promptly
provide Lender with:
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(a) written notice of any litigation, arbitration, or other
proceeding or governmental investigation pending or, to Borrower's or any
Principal's knowledge, threatened against or relating to Borrower, General
Partner, any Principal, or the Project;
(b) a copy of all notices of default and violations of laws,
regulations, codes, ordinances and the like received by Borrower or any
Principal relating to the Project; and
(c) written notice of any default under the Senior Loan
Documents within five (5) days of Borrower's actual knowledge of such default
and, if Borrower has received written notice of default from Senior Lender, a
copy of such notice.
5.11 AUTHORITY. Edward Falcone, Arthur Falcone and Philip Cucci
are and will remain officers of General Partner, and Arthur Falcone shall have
authority to make all material business decisions (including a sale or
refinance) for Borrower during the term of the Loan.
5.12 AFFILIATE TRANSACTIONS. From time to time before entering into
any agreement with an Affiliate, Borrower shall deliver to Lender copies of any
agreements between Borrower and any Affiliate related in any way to the Project,
all of which shall be satisfactory to Lender, in its sole discretion. If
requested by Lender, such agreements shall provide Lender the right to terminate
same upon Lender's (or its designee's) acquisition of the partnership interests
in Borrower through foreclosure, an assignment-in-lieu of foreclosure, UCC sale
or otherwise.
"AFFILIATE" shall mean with respect to any individual, trust, estate,
partnership, limited liability company, corporation or any other incorporated or
unincorporated organization (each a "PERSON"), a Person that directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with Borrower or any Principal; any officer, director,
partner or shareholder of such Borrower or any Principal; and any relative of
any of the foregoing. The term "CONTROL" means possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
5.13 HAZARDOUS MATERIALS. Borrower covenants to keep the Project
free from Hazardous Materials.
5.14 CONSTRUCTION. The Improvements shall be completed in
substantial accordance with the Construction Documents and in compliance with
all applicable laws, regulations, ordinances, codes, permits, licenses,
covenants of record or other agreements relating to the Project, or any part
thereof.
5.15 COPIES OF SENIOR LOAN REQUESTS. Borrower shall provide
Lender, on a monthly basis, with copies of all draw requests which are provided
to or for Senior Lender.
5.16 REFINANCING. In the event that Borrower shall refinance the
Senior Loan prior to the maturity of the Loan, such refinancing shall be a
non-participating fixed-rate loan in an amount not less than the outstanding
balance of the Senior Loan (the "REPLACEMENT LOAN"). All documents evidencing
and securing the Replacement Loan (collectively, the "REPLACEMENT LOAN
DOCUMENTS") shall be subject to Lender's approval and shall not contain
provisions cross-
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defaulting or cross-collateralizing the Replacement Loan with any other loans.
Lender and the Replacement Loan lender ("REPLACEMENT LENDER") shall enter into a
recognition agreement on substantially the same terms and conditions as the
Recognition Agreement. Upon such refinancing, all references to the Senior
Lender, Senior Loan and Senior Loan Documents shall be deemed to refer to the
Replacement Lender, Replacement Loan and Replacement Loan Documents,
respectively.
ARTICLE VI
NEGATIVE COVENANTS
6.1 NO AMENDMENTS. Borrower shall not:
(a) materially amend or modify Lender's approved form of lease
for the Project without Lender's written consent;
(b) suffer or permit the amendment or modification of the
Partnership Agreement without Lender's consent;
(c) make or enter into any changes to the terms of the Senior
Loan Documents without Lender's prior consent; or
(d) amend or modify the Construction Documents without Lender's
written consent; provided that Borrower may implement change orders to the
Budget, Plans and Specifications and Contract without Lender's prior approval if
(i) the change order is for less than $50,000.00, (ii) the aggregate sum of all
change orders does not exceed $300,000.00, and (iii) the change order does not
materially alter the design or quality of the Project.
6.2 LEASES. Without Lender's prior written consent, Borrower
shall not enter into any lease or other rental or occupancy arrangement or
concession agreement with respect to the Project unless on a form previously
approved by Lender.
6.3 TRANSFERS OF THE PROPERTY OR BENEFICIAL INTEREST IN
BORROWER. Neither Borrower nor any Principal shall (a) create or permit the
creation of any new ownership interest in Borrower, any partner in Borrower or
any Principal, or (b) sell, transfer or assign (i) all or any part of the
Project; or (ii) any ownership interest in Borrower or any Principal (including
any interest in the profits, losses or cash distributions in any way relating to
the Project or Borrower) except that, so long as at all times Arthur Falcone,
Edward Falcone and Philip Cucci control Borrower, General Partner and
Properties, (A) Properties and Cahaba can each transfer their limited
partnership interest to another partner or to a third party provided that all
new partners shall execute any necessary documentation to pledge their interests
to Lender as security for the Loan, all in form and substance acceptable to
Lender, (B) Properties may elect to become a publicly held corporation, or (C)
new ownership interests may be created in Properties provided that the parties
that executed or execute the Properties Shareholders' Agreement always
constitute a sufficient majority of the ownership interests in each class of
stock in Properties to ensure that Arthur Falcone, Edward Falcone and Philip
Cucci control all material decisions in
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Properties. Intestate transfers or transfers by devise shall not constitute a
transfer for the purposes of the foregoing provisions.
6.4 NO ADDITIONAL LIENS, ENCUMBRANCES OR INDEBTEDNESS. Borrower
covenants not to grant or permit the filing of any lien or encumbrance on the
Project, other than those created by the Senior Loan Documents, without the
prior written consent of Lender; provided, however, Borrower may, by appropriate
proceeding, contest the validity or amount of any asserted lien and, pending
such contest, Borrower shall not be deemed to be in default hereunder if (a)
Borrower has given prior written notice to Lender of Borrower's intent to so
contest, (b) such contest stays the enforcement of the contested lien, and (c)
the contested lien is bonded or insured over by the title insurance company or
Borrower has posted security therefor in accordance with the provisions of the
Senior Loan Documents and in a manner acceptable to Lender.
6.5 NO ADDITIONAL INDEBTEDNESS. Borrower shall not, without
Lender's prior written consent, incur additional indebtedness, except for (a)
trade payables in the ordinary course of business and (b) other amounts in the
Budget or any other budget approved by Lender.
6.6 SINGLE ASSET ENTITY. Borrower shall not: (i) hold or acquire,
directly or indirectly, any ownership interest (legal or equitable) in any real
or personal property other than the Project; (ii) become a shareholder, member
or partner of any entity which acquires or holds any property other than the
Project; or (iii) conduct any business other than the ownership and development
of the Project.
6.7 PERSONAL PROPERTY. Neither Borrower nor the Principals shall,
without the prior written consent of Lender, sell, assign, transfer, remove or
permit to be removed from the Project any personal property owned by Borrower
now or at any time located at or used in connection with the construction,
operation, repair or replacement of the Project ("PERSONAL PROPERTY"). So long
as no Event of Default exists, Borrower may sell or otherwise dispose of the
Personal Property when obsolete, worn out, inadequate, unserviceable or
unnecessary for use in the operation of the Project, but only upon replacing the
same with other Personal Property at least equal in value and utility to the
disposed Personal Property.
6.8 CONVERSION. Borrower shall not, and shall not permit, the
Property or any portion thereof to be converted or take any preliminary actions
which could lead to a conversion to condominium or cooperative form of ownership
("CONVERSION") until such time as the Loan is paid in full, together with all
interest thereon, including the Participation.
6.9 USE OF PROPERTY; IMPROVEMENTS. Borrower shall not permit
changes in the plat of subdivision, zoning classification or use of any part of
the Project from residential use without Lender's written consent.
6.10 NO COMMINGLING FUNDS. Borrower shall not commingle the funds
related to the Project with funds from any other property.
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6.11 PROPERTY MANAGER. Borrower shall not change the Project
manager or amend or terminate the management contract for the Project without
Lender's prior written consent, which shall not be unreasonably withheld.
ARTICLE VII
EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "EVENT OF DEFAULT" under this Agreement:
(a) failure of Borrower to pay, within five (5) days of the
due date, any of the Indebtedness, including any payment due under the
Note or this Agreement; or
(b) failure of Borrower to strictly comply with Sections 5.3
(insurance), 5.6 (inspection), 6.3 (prohibition on transfers), 6.4 (no
additional liens), and 6.6 (single asset entity) of this Agreement; or
(c) breach of any covenant, representation or warranty other
than as set forth in subsections (a) and (b) above which is not cured
within thirty (30) days after notice; provided, however, if such breach
cannot by its nature be cured within thirty (30) days, and Borrower
diligently pursues the curing thereof (and then in all events cures
such failure within ninety (90) days after the original notice
thereof), Borrower shall not be in default hereunder; or
(d) a petition under any Chapter of Title 11 of the United
States Code or any similar law or regulation is filed by or against
Borrower or any Principal (and in the case of an involuntary petition
in bankruptcy, such petition is not discharged within ninety (90) days
of its filing), or a custodian, receiver or trustee for any of the
Project is appointed, or Borrower or any Principal makes an assignment
for the benefit of creditors, or any of them are adjudged insolvent by
any state or federal court of competent jurisdiction, or any of them
admit their insolvency or inability to pay their debts as they become
due or an attachment or execution is levied against any of the Project;
or
(e) the occurrence of a default and the expiration of any
cure period applicable thereto under any other Loan Document; or
(f) Borrower shall default in the payment of any indebtedness
(other than the Indebtedness) and such default is declared and is not
cured within the time, if any, specified therefor in any agreement
governing the same; or
(g) any statement, report or certificate made or delivered to
Lender by Borrower or any Principal is not materially true and complete
at any time;
(h) the occurrence of a default under the Senior Loan
Documents and the expiration of any applicable cure period; or
(i) the failure of Borrower to obtain, within ten (10) days
after the Closing Date, all building permits required for construction
of the Improvements.
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7.2 ACCELERATION; REMEDIES. Upon the occurrence of an Event of
Default at the option of Lender, the Indebtedness shall become immediately due
and payable without notice to Borrower and Lender shall be entitled to all of
the rights and remedies provided in the Loan Documents or at law or in equity.
Each remedy provided in the Loan Documents is distinct and cumulative to all
other rights or remedies under the Loan Documents or afforded by law or equity,
and may be exercised concurrently, independently, or successively, in any order
whatsoever.
ARTICLE VIII
MISCELLANEOUS
8.1 BORROWER AND LIEN NOT RELEASED. Without affecting the
liability of Borrower, any Principal or any other person liable for the payment
of the Indebtedness, and without affecting Lender's rights under this Agreement,
Lender may, from time to time and without notice to any lien holder or holder of
any right or other interest in and to the Project: (a) release any person so
liable; (b) waive or modify any provision of this Agreement or the other Loan
Documents or grant other indulgences; (c) release all or any part of the
Project; (d) take additional security for any obligation herein mentioned; (e)
subordinate its rights under any of the Loan Documents; (f) consent to the
granting of any easement; or (g) consent to any map or plan of the Project.
8.2 EXPENDITURES AND EXPENSES. Borrower agrees to promptly pay
all reasonable "COSTS" incurred by Lender in connection with the documentation,
modification, workout, collection or enforcement of the Loan or any of the Loan
Documents (as applicable) and all such Costs shall be included as additional
Indebtedness bearing interest at the default rate set forth in the Note until
paid. For the purposes hereof "COSTS" shall mean all expenditures and expenses
which may be paid or incurred by or on behalf of Lender including repair costs,
payments to remove or protect against liens, attorneys' fees (including fees of
Lender's inside counsel), receivers' fees, appraisers' fees, engineers' fees,
accountants' fees, independent consultants' fees (including environmental
consultants), all costs and expenses incurred in connection with any of the
foregoing, Lender's out-of-pocket costs and expenses related to any audit or
inspection of the Property, outlays for documentary and expert evidence,
stenographers' charges, stamp taxes, publication costs, and costs (which may be
estimates as to items to be expended after entry of an order or judgment) for
procuring all such abstracts of title, title searches and examination, title
insurance policies, and similar data and assurances with respect to title as
Lender may deem reasonably necessary either to prosecute any action or to
evidence to bidders at any sale of the partnership interests in Borrower the
true condition of the title to, or the value of, the Project.
8.3 DISCLOSURE OF INFORMATION. Borrower agrees that Lender
shall have the right (but shall be under no obligation) to make available to any
party for the purpose of granting participations in or selling, transferring,
assigning or conveying all or any part of the Loan (including any governmental
agency or authority and any prospective bidder at any sale of the partnership
interests in Borrower) any and all information which Lender may have with
respect to the Project and Borrower, whether provided by Borrower, the
Principals or any third party or obtained as a result of any environmental
assessments. Except in the event of gross
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negligence or reckless misconduct on the part of Lender, Borrower and the
Principals agree that Lender shall have no liability whatsoever as a result of
delivering any such information to any third party, and Borrower and the
Principals, on behalf of themselves and their successors and assigns, hereby
release and discharge Lender from any and all liability, claims, damages, or
causes of action, arising out of, connected with or incidental to the delivery
of any such information to any third party.
8.4 SALE OF LOAN. Lender, at any time and without the consent
of Borrower or the Principals, may grant participations in or sell, transfer,
assign and convey all or any portion of its right, title and interest in and to
the Loan, this Agreement and the other Loan Documents, any guaranties given in
connection with the Loan and any collateral given to secure the Loan.
8.5 FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by
Lender in exercising any right or remedy under any of the Loan Documents, or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of any right or remedy. Lender's acceptance of payment of any sum
secured by any of the Loan Documents after the due date of such payment shall
not be a waiver of Lender's right to either require prompt payment when due of
all other sums so secured or to declare a default for failure to make prompt
payment. The procurement of insurance or the payment of taxes or other liens or
charges by Lender shall not be a waiver of Lender's right to accelerate the
maturity of the Indebtedness, nor shall Lender's receipt of any awards, proceeds
or damages pursuant to Section 5.4 hereof operate to cure or waive Borrower's or
the Principals' default in payment or sums secured by any of the Loan Documents.
With respect to all Loan Documents, only waivers made in writing by Lender shall
be effective against Lender.
8.6 WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives
the right to assert any statute of limitations as a bar to the enforcement of
the lien created by any of the Loan Documents or to any action brought to
enforce the Note or any other obligation secured by any of the Loan Documents.
8.7 GOVERNING LAW; SEVERABILITY. The Loan Documents shall be
governed by and construed in accordance with the internal laws of the State of
Illinois, except that the provisions of the laws of the State of Florida shall
be applicable to the creation, perfection and enforcement of the lien created by
the Pledges. The invalidity, illegality or unenforceability of any provision of
this Agreement shall not affect or impair the validity, legality or
enforceability of the remainder of this Agreement, and to this end, the
provisions of this Agreement are declared to be severable.
8.8 RELATIONSHIP. The relationship between Lender and Borrower
shall be that of creditor-debtor only. No term in this Agreement or in the other
Loan Documents and no course of dealing between the parties shall be deemed to
create any relationship of agency, partnership or joint venture or any fiduciary
duty by Lender to any other party.
8.9 INDEMNITY. Borrower hereby agrees to indemnify, protect,
hold harmless and defend Lender, its successors, assigns, shareholders,
directors, officers, employees, and agents from and against any and all loss,
damage, cost, expense (including attorneys' fees), and claims arising out of or
in connection with (a) the Project, (b) the Collateral, (c) any act or omission
21
<PAGE>
of Borrower, any Principal, or their respective employees or agents, whether
actual or alleged, and (d) any and all brokers' commissions or other costs of
similar type by any party in connection with the Loan, in each case except to
the extent arising from the indemnitee's gross negligence or willful misconduct.
Upon written request by an indemnitee, Borrower will undertake, at its own costs
and expense, on behalf of such indemnitee, using counsel satisfactory to the
indemnitee, the defense of any legal action or proceeding whether or not such
indemnitee shall be a party and for which such indemnitee is entitled to be
indemnified pursuant to this section. At Lender's option, Lender may, at
Borrower's expense, prosecute or defend any action involving the priority,
validity or enforceability of any of the Pledges.
8.10 NOTICE. Any notice or other communication required or
permitted to be given shall be in writing addressed to the respective party as
set forth below and may be personally served, telecopied or sent by overnight
courier or U.S. Mail and shall be deemed given: (a) if served in person, when
served; (b) if telecopied, on the date of transmission if before 3:00 p.m.
(Chicago time) on a business day; or on the first business day after the date of
such transmission if on a non-business day or after 3:00 p.m. (Chicago time) on
a business day; PROVIDED that a hard copy of such notice is also sent pursuant
to (c) or (d) below; (c) if by overnight courier, on the first business day
after delivery to the courier; or (d) if by U.S. Mail, certified or registered
mail, return receipt requested on the fourth (4th) day after deposit in the mail
postage prepaid.
22
<PAGE>
Notices to Borrower: Transeastern Plantation Apartments, Ltd.,
c/o Transeastern Properties of South Florida, Inc.
3300 University Drive
Coral Springs, Florida 33065
Attn: Mr. Edward Falcone
Telecopy: (305) 753-0351
With a copy to: Nason, Gildan, Yeager, Gerson & White, P.A.
1645 Palm Beach Lake Boulevard, Suite 1200
West Palm Beach, Florida 33401
Attention: Gary Gerson, Esq.
Telecopier: (407) 686-5442
Notices to Lender: Heller Financial, Inc.
Real Estate Financial Services
Attn: Manager, Asset Management
500 West Monroe St. 15th Fl.
Chicago, Illinois 60661
Telecopy: (312) 441-7119
22
<PAGE>
With a copy to: Heller Financial, Inc.
Real Estate Financial Services
Attn: Group General Counsel
500 West Monroe St. 15th Fl.
Chicago, Illinois 60661
Telecopy: (312) 441-7872
8.11 SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY;
AGENTS; AND CAPTIONS. The covenants and agreements contained in the Loan
Documents shall bind, and the rights thereunder shall inure to, the respective
successors and assigns of Lender, Borrower and the Principals, subject to the
provisions of this Agreement. All covenants and agreements of Borrower and the
Principals shall be joint and several. In exercising any rights under the Loan
Documents or taking any actions provided for therein, Lender may act through its
employees, agents or independent contractors as authorized by Lender. The
captions and headings of the paragraphs of this Agreement are for convenience
only and are not to be used to interpret or define the provisions hereof.
8.12 TERMS AND USAGE. As used in the Loan Documents "BUSINESS
DAY" means any day, other than a Saturday or a Sunday, when banks in Chicago,
Illinois are not required or authorized to be closed.
8.13 LOSS OF NOTE. Upon notice from Lender of the loss, theft,
or destruction of the Note and upon receipt of an indemnity reasonably
satisfactory to Borrower from Lender, or in the case of mutilation of the Note,
upon surrender of the mutilated Note, Borrower shall make and deliver a new note
of like tenor in lieu of the then to be superseded Note.
8.14 EXCULPATION. This Agreement and other Loan Documents and
all of Borrower's obligations hereunder and thereunder are subject to the
provisions of the Note entitled Exculpation, which are incorporated herein by
this reference.
8.15 TIME OF ESSENCE. Time is of the essence of this Agreement
and the other Loan Documents and the performance of each of the covenants and
agreement contained herein and therein.
8.16 VENUE. BORROWER AGREES THAT ALL ACTIONS OR PROCEEDINGS
ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO
OR FROM THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED, AT
LENDER'S SOLE DISCRETION AND ELECTION, ONLY IN COURTS HAVING A SITUS WITHIN THE
COUNTY OF COOK, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND
STATE. BORROWER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES CT CORPORATION
SYSTEM, WHOSE ADDRESS IS BORROWER, C/O CT CORPORATION SYSTEM, 208 S. LASALLE
STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED AGENT FOR SERVICE OF
LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY SHALL
CONSTITUTE PERSONAL SERVICE OF PROCESS UPON SUCH PARTY. IN THE EVENT SERVICE IS
23
<PAGE>
UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO,
ILLINOIS, BORROWER SHALL, WITHIN TEN (10) DAYS AFTER LENDER'S REQUEST, APPOINT A
SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD
NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY
APPOINTED, LENDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A
SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO BORROWER. BORROWER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST IT BY LENDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH THIS PARAGRAPH.
8.17 JURY TRIAL WAIVER. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER AND LENDER, AND
BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF
LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF TRIAL BY
JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.
BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. BORROWER AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL.
8.18 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and together shall
constitute the Agreement.
8.19 FINAL AGREEMENT/MODIFICATION. This Agreement, together with
the other Loan Documents, represents the entire agreement among Borrower,
Principals and Lender and supersedes all prior agreements among the parties.
This Agreement and the other Loan Documents may only be modified by written
instrument executed by the applicable parties.
[THIS SPACE INTENTIONALLY LEFT BLANK]
24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
has caused the same to be executed by their duly authorized representatives as
of the date first above written.
BORROWER:
TRANSEASTERN PLANTATION APARTMENTS, LTD.,
a Florida limited partnership
By: TRANSEASTERN PLANTATION APTS., INC.,
a Florida corporation, its sole general
partner
By:____________________________________
Name:__________________________________
Its:___________________________________
LENDER:
HELLER FINANCIAL, INC., a Delaware
corporation
By:________________________________________
Name:______________________________________
Its:_______________________________________
25
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
PARCEL 1: FEE SIMPLE ESTATE:
That portion of Tract "A", according to the plat of Pine Island Villas,
as recorded in Plat Book 83 at Page 25 of the Public Records of Broward County,
Florida, described as follows:
Commencing at the Southwest corner of said Tract "A"; Thence run North
1(degree)45'35" West (on a plat bearing) 411.19 feet along the West boundary of
said Tract "A", to the Point of Beginning; thence continue North 1(degree)45'35"
West 290.97 feet along said West boundary to the Northwest corner of said Tract
"A", being a point of intersection with the arc of a curve running Northeasterly
to the left, a radial at said point bearing North 20(degree)16'15" West; Thence
along the arc of said curve to the left (also forming the Northerly boundary of
said Tract "A") having a radius of 1033.25 feet and a central angle of
24(degree)16'02" run Northeasterly 437.63 feet to a point of tangency; Thence
run North 45(degree)27'43" East 396.70 feet along said Northerly boundary being
the tangent extended to the most Northerly corner of said Tract "A", being a
point of intersection with the arc of a curve running Southeasterly to the right
a radial at said point bearing South 46(degree)26'37" West; Thence along the arc
of said curve to the right (also forming the easterly boundary of said Tract
"A") having a radius of 1947 feet and a central angle of 16(degree)56'09", run
Southeasterly 575.50 feet; Thence run South 65(degree)30' West 229.17 feet;
Thence run South 75(degree)30' East 52.07 feet to a point of curvature of a
curve to the right; Thence along the arc of said curve to the right, having a
radius of 15 feet and a central angle of 141(degree), run Southeasterly and
Southwesterly 36.91 feet to a point of tangency; Thence run South 65(degree)30'
West 34.92 feet along the tangent extended to a point of curvature of a curve to
the left; Thence along the arc of said curve to the left, having a radius of 20
feet and a central angle of 40(degree)32'30", run Southwesterly 14.15 feet to a
point of reverse curvature; Thence along the arc of a curve to the right, having
a radius of 20 feet and a central angle of 161(degree)25'15", run Southwesterly
and Northwesterly 56.35 feet to a point of reverse curvature; Thence along the
arc of a curve to the left, having a radius of 20 feet and a central angle of
30(degree)52'46", run Northwesterly 10.78 feet to a point of tangency; Thence
run North 24(degree)30' West 14.74 feet along the tangent extended to a point of
curvature of a curve to the left; Thence along the arc of said curve to the
left, having a radius of 20 feet and a central angle of 90(degree), run
Northwesterly and Southwesterly 31.42 feet to a point of tangency; Thence run
South 65(degree)30' West 80.01 feet along the tangent extended to a point of
curvature of a curve to the left; Thence along the arc of said curve to the
left, having a radius of 20 feet and a central angle of 65(degree)30', run
Southwesterly 22.86 feet to a point of tangency; Thence run due South 18.28 feet
along the tangent extended to a point of curvature of a curve to the right;
Thence along the arc of said curve to the right, having a radius of 20 feet and
a central angle of 90(degree), run Southwesterly 31.42 feet to a point of
tangency; Thence run due West 20 feet along the tangent extended to a point of
curvature of a curve to the left; Thence along the arc of said curve to the
left, having a radius of 20 feet and a central angle of 90(degree), run
Southwesterly 31.42 feet to a point of tangency; Thence run due South 82.83 feet
along the tangent extended to a point of curvature of a curve to the right;
Thence along the arc of said curve to the right, having a radius of 20 feet and
a central angle
A-1
<PAGE>
of 90(degree), run Southwesterly 31.42 feet to a point of tangency; Thence run
due West 25.08 feet along the tangent extended to a point of curvature of a
curve to the right; Thence along the arc of said curve to the right, having a
radius of 30 feet and a central angle of 28(degree)57'18", run Westerly 15.16
feet to a point of reverse curvature; Thence along the arc of a curve to the
left, having a radius of 30 feet and a central angle of 28(degree)57'18", run
Westerly 15.16 feet to a point of tangency; Thence run due West 210 feet along
the tangent extended; Thence run due South 11.67 feet; Thence run due West
271.96 feet, to the Point of Beginning.
Said lands situate in the City of Plantation, Broward County, Florida.
PARCEL 2:
Together with a Non-Exclusive Easement for Ingress and Egress pursuant
to instrument recorded in Official Records Book 22825, Page 895, as amended by
First Amendment to Declaration recorded in Official Records Book ____, Page
____.
A-2
<PAGE>
EXHIBIT B
LITIGATION
None
A-3
<PAGE>
SCHEDULE 1
INDEX OF DEFINED TERMS
DEFINED TERM PAGE
- ------------ ----
Accrued Interest 2
Affiliate 16
Agreement 1
Appraisal Event 4
Appraised Value 5
Assignments 6
Borrower 1
Budget 8
Business day 23
Cahaba 9
Closing Date 1
Collateral 6
Construction Documents 8
Construction Schedule 8
Contract 8
Control 16
Conversion 18
Costs 20
End Date 4
Equity 7
Event of Default 19
Excess Cash Flow 3
Fairway 7
FIRREA 7
General Partner 9
GP Incorporation Documents 10
Guaranty of Completion 6
Hazardous Materials 12
Improvements 1
Incorporation Documents 10
Indebtedness 13
Initial Funding Amount 1
Interest Rate 2
Lender 1
Lender's Percentage 5
Loan 1
Loan Documents 7
Loan Year 5
LP Incorporation Documents 10
Maturity Date 1
Maximum Interest Accrual 2
I-1
<PAGE>
Net Cash Flow 2
Net Proceeds 5
Note 1
Participation 4
Partnership Agreement 10
Payment Rate 2
Person 16
Personal Property 18
Plans and Specifications 8
Pledges 6
Preferred Payment 5
Principals 7
Project 1
Property 1
Recognition Agreement 6
Refinance 4
Replacement Lender 17
Replacement Loan 16
Replacement Loan Documents 16
Senior Lender 6
Senior Loan 6
Senior Loan Documents 6
Transfer Event 4
I-2
<PAGE>
LOAN NO. 95-130A
PINE ISLAND PLACE
GUARANTY
1. THE GUARANTY. To induce HELLER FINANCIAL, INC., a Delaware
corporation (hereinafter, together with its successors and assigns, referred to
as "LENDER"), having a mailing address at 500 West Monroe Street, 15th Floor,
Chicago, Illinois 60661, to enter into a certain financing transaction with
TRANSEASTERN PLANTATION APARTMENTS, LTD., a Florida limited partnership, having
a mailing address at c/o Transeastern Properties of South Florida, Inc., 3300
University Drive, Coral Springs, Florida 33065 (hereinafter referred to as
"BORROWER"), and in consideration of any funds or other financial accommodations
heretofore, now or hereafter advanced or made by Lender to or for the benefit of
Borrower (the "LOAN") under that certain Loan Agreement of even date herewith
(the "LOAN AGREEMENT"), and pursuant to the terms of that certain Promissory
Note of even date herewith (the "NOTE") made by Borrower to the order of Lender
in the amount of $2,160,000.00 and for other good and valuable consideration,
the receipt and sufficiency of which are hereby irrevocably acknowledged, the
undersigned, EDWARD FALCONE, an individual residing at 2565 S. Ocean Boulevard,
Penthouse 4N, Highland Beach, Florida 33487, ARTHUR FALCONE, an individual
residing at 1940 Hartford Way, Coral Springs, Florida 33071, and PHILIP CUCCI,
an individual residing at 5144 N. Springs Way, Coral Springs, Florida 33076
(individually, "GUARANTOR" and collectively, "GUARANTORS"), who, along with
their respective wives, are the sole common shareholders in Transeastern
Properties of South Florida, Inc., which is (A) a limited partner in Borrower
and (B) the sole owner of all issued and outstanding common stock of
Transeastern Plantation Apts., Inc., the sole general partner in Borrower.
Guarantors undertake and guarantee, until such time as this Guaranty is
terminated in accordance with Section 8 below, the following obligations (the
"OBLIGATIONS"):
(a) the full, faithful and timely performance of the obligations (the
"CONSTRUCTION OBLIGATIONS") set forth in the Loan Agreement on Borrower's
part to be kept and performed with respect to the construction and one
hundred percent (100%) completion ("COMPLETION") of all of the
"Improvements" (as defined in the Loan Agreement) required to be performed
by Borrower; such Completion shall be:
(i) in substantial accordance with the "Plans and Specifications"
(as defined in the Loan Agreement) and the "Budget" (as defined in
the Loan Agreement) relating to the real property legally described
on EXHIBIT A attached hereto and the improvements thereon
(collectively, the "PROJECT");
(ii) free and clear of all liens (other than liens for taxes and
assessments which are not delinquent and liens filed by SouthTrust
Bank in connection with the Senior Loan (as defined in the Loan
Agreement)), as certified by the Lender's independent consultant;
and
<PAGE>
(iii) pursuant to and in accordance with each portion of the
"Completion Schedule" (as defined in the Loan Agreement, including
but not limited to Completion by June 30, 1997
(all of the foregoing as reasonably determined by Lender and its
independent consultant);
(b) the issuance of a final certificate of occupancy;
(c) the payment of all costs in excess of the Budget associated with the
Completion of the Improvements;
(d) the payment of any and all amounts advanced by Lender after the
Closing Date (as defined in the Loan Agreement) to cure defaults (after
the expiration of any applicable notice and cure period) under the Loan
with respect to the Completion;
(e) the payment of all expenses (including, without limitation, reasonable
attorneys' and paralegals' fees, court costs, costs of appeal and other
reasonable legal expenses) paid or incurred by Lender in enforcing its
option to cause the Completion in accordance with Section 3 below;
(f) the payment of all expenses (including, without limitation, reasonable
attorneys' and paralegals' fees, court costs, costs of appeal and other
reasonable legal expenses) paid or incurred by Lender in endeavoring to
collect any amount due Lender under this Guaranty; and
(g) in addition to the foregoing, all obligations under the Loan Documents
(as defined in the Loan Agreement) until the City of Plantation issues all
building permits required for construction of the Improvements.
2. CONSTRUCTION OBLIGATIONS OF GUARANTORS. If (a) the Construction
Obligations are not performed by Borrower, or (b) Lender takes possession of the
Project prior to the completion of the Construction Obligations by reason of an
"Event of Default" (as that term is defined in the Loan Agreement) under the
Loan Agreement or any of the other "Loan Documents" (as defined in the Loan
Agreement) and Borrower refuses to continue performing Borrower's Construction
Obligations, or (c) Lender has the right to cease making or to refuse to make
any further disbursements to Borrower under the Loan Documents (any such
nonperformance by Borrower, taking of possession by Lender or rightful refusal
by Lender to make advances are herein collectively called an "EVENT OF DEFAULT
BY BORROWER"), then each Guarantor agrees, jointly and severally, whether or not
the funds available to Guarantor pursuant to the Loan Documents are sufficient
for such purposes and notwithstanding any act or failure to act of any bonding
company issuing a bond:
(i) to assume full responsibility for lien-free Completion under
the same standards, time schedule and other requirements as are applicable
to Borrower under the Loan Agreement;
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<PAGE>
(ii) at the cost and expense of Guarantors, to perform the
Construction Obligations in a manner acceptable to Lender as required by
the provisions of the Loan Agreement, the other Loan Documents and the
City of Plantation, Florida;
(iii) to indemnify and hold Lender harmless from any and all loss,
cost, damage, liability or expense Lender may suffer by reason of any
failure of Guarantor to fulfill the Obligations after the expiration of
any applicable notice and cure period set forth herein (such failure is
hereinafter referred to as a "GUARANTY EVENT OF DEFAULT"); and
(iv) to reimburse or repay Lender fully and promptly on demand for
all outlays and expenses, including interest thereon at the rate of
interest to be charged after the occurrence of a default under the terms
of the Note, that Lender may make or incur by reason of a Guaranty Event
of Default, including, without limitation, all reasonable outlays and
expenses that Lender may make or incur if Lender, in its sole discretion,
following a refusal to perform by any Guarantor, elects to complete the
Improvements in substantial accordance with the Plans and Specifications,
with such changes or modifications thereto as Lender deems reasonably
necessary and that in the aggregate do not unreasonably materially
increase the cost or scope of the Improvements.
3. LENDER'S OPTION TO COMPLETE THE PROJECT. If an Event of Default by
Borrower occurs or if a Guaranty Event of Default by any Guarantor occurs under
this Guaranty, Lender, at its option, shall have the right to complete the
Improvements in substantial accordance with the Plans and Specifications, with
such changes or modifications thereto as Lender deems reasonably necessary and
that in the aggregate do not unreasonably materially increase the cost or scope
of the Improvements, either before, during or after commencement of foreclosure
proceedings and before, during or after the pursuing of any other remedy of
Lender against Borrower or any Guarantor, and expend such sums as Lender deems
proper in order to complete the Improvements and cause the Completion to occur
in substantial accordance with the Plans and Specifications, with such changes
or modifications thereto as Lender deems reasonably necessary and that in the
aggregate do not unreasonably materially increase the cost or scope of
Improvements. The amount of any and all expenditures incurred by Lender to cause
Completion of the Improvements to occur and not funded by any other party shall
be immediately due and payable to Lender by Guarantors on demand of Lender.
4. REPRESENTATIONS AND WARRANTIES. The following shall constitute
representations and warranties of each Guarantor respectively (and not
representations and warranties by one Guarantor to the status or the facts
relating to any other Guarantor), and each Guarantor acknowledges that Lender
intends to make the Loan in reliance thereon:
(a) There is no existing event of default, and no event has
occurred which with the passage of time and/or the giving of notice or
both will constitute an event of default, under any agreement to which he
is a party, the effect of which event of default will impair performance
by such Guarantor of his obligations pursuant to and as contemplated by
the terms of this Guaranty, and to the best of Guarantor's knowledge after
due inquiry, neither the execution and delivery of this Guaranty nor
compliance with the terms and provisions hereof will violate any presently
existing provision of law
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<PAGE>
or any presently existing regulation, order, writ, injunction or decree of
any court or governmental department, commission, board, bureau, agency or
instrumentality, or will conflict or will be inconsistent with, or will
result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, instrument, document, agreement or contract of any kind
that creates, represents, evidences or provides for any lien, charge or
encumbrance upon any of the property or assets of any Guarantor, or any
other indenture, mortgage, deed of trust, instrument, document, agreement
or contract of any kind to which such Guarantor is a party or by which he
or any of his property may be subject, or in the event of any such
conflict, the required consent or waiver of the other party or parties
thereto has been validly granted, is in full force and effect, is valid
and sufficient therefor and has been approved by Lender;
(b) There are no actions, suits or proceedings pending or, to the
best of Guarantor's knowledge after due inquiry, threatened against
Guarantor before any court or any governmental, administrative,
regulatory, adjudicatory or arbitrational body or agency of any kind that
will materially adversely affect performance by any Guarantor of his
obligations pursuant to and as contemplated by the terms and provisions of
this Guaranty; and
(c) Neither this Guaranty nor any document, financial statement,
credit information, certificate or statement heretofore furnished or
required herein to be furnished to Lender by any Guarantor contains any
untrue statement of fact or omits to state a fact material to this
Guaranty.
5.COVENANTS. Each Guarantor for himself agrees and covenants that:
(a) Any indebtedness of Borrower now or hereafter existing and/or
owing, together with any interest thereon, to any Guarantor or Guarantor,
is hereby subordinated to the indebtedness of Borrower to Lender under the
Loan Agreement and the other Loan Documents, and such indebtedness of
Borrower to such Guarantor(s), if a Guaranty Event of Default occurs,
shall be collected, enforced and received by such Guarantor(s) trust for
the benefit of Lender, and shall be paid over to Lender on account of the
indebtedness of Borrower to Lender, but without impairing or affecting in
any manner the liability of Guarantor under the other provisions of this
Guaranty;
(b) Any lien, security interest or charge on the Project, the
personal property located thereon, all rights therein and thereto, or on
the revenue and income to be realized therefrom, which any Guarantor may
have or obtain as security for any loans, advances or costs in connection
with the completion of the Improvements shall be, and such lien, security
interest or charge hereby is, with the exception of liens filed by
SouthTrust Bank in connection with the Senior Loan (as defined in the Loan
Agreement), subordinated to all liens and security interests heretofore,
now or hereafter granted by Borrower to Lender under the Loan Agreement
and the other Loan Documents;
(c) If such subrogation shall prejudice Lender's interests, no
payment by any Guarantor under any provision of this Guaranty shall
entitle such Guarantor, by
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<PAGE>
subrogation to the rights of Lender or otherwise, to (i) any payment by
Borrower or out of its property, or (ii) any payment from or rights in any
applicable bonds, title insurance certifications, commitments or
indemnities or other security held by or for the benefit of Lender in
connection with the Project;
(d) The liability of each Guarantor shall be joint and several, and
shall in no way be affected, diminished or released by any extension of
time or forbearance that may be granted by Lender to Borrower or to any
Guarantor or any waiver by Lender under any of the Loan Documents or by
reason of any change or modification in any of said instruments or by the
acceptance by Lender of additional security or any increase, substitution
or changes therein, or by the release by Lender of any security or any
withdrawal thereof or decrease therein or by the failure or election not
to pursue any remedies Lender may have against Borrower or any Guarantor
or by any act or failure to act of the bonding company issuing the Bond;
(e) Lender, in its sole discretion, may at any time enter into
agreements with Borrower to amend and modify any one or more of the Loan
Agreement, the other Loan Documents and the plans and specifications for
the Improvements, and may waive or release any provision or provisions of
any one or more thereof and, with reference thereto, may make and enter
into any such agreement or agreements as Lender or Borrower may deem
proper or desirable, without any notice to or further assent from any
Guarantor and without in any manner impairing or affecting this Guaranty
or any of Lender's rights hereunder;
(f) Lender may enforce this Guaranty without the necessity at any
time of resorting to or exhausting any other remedy or any other security
or collateral and without the necessity at any time of having recourse to
any of the Loan Documents or the Project through foreclosure proceedings
or otherwise, and without the necessity of proceeding against Borrower;
(g) Nothing contained herein or otherwise shall prevent Lender from
pursuing concurrently or successively all rights and remedies available to
it pursuant to any document or agreement in law or in equity and against
any persons, firms or entities whatsoever (and particularly, but not by
way of limitation, Lender may sue on the Note, foreclose the liens secured
by the Loan Documents and exercise any other rights available to it under
any one or more of the Loan Documents, or any other instrument of
security), and the exercise of any of its rights or the completion of any
of its remedies shall not constitute a discharge of any obligation of any
Guarantor hereunder, it being the purpose and intent of such Guarantor
that its obligations shall be absolute, independent and unconditional
under any and all circumstances whatsoever;
(h) The liability of any Guarantor hereunder or any remedy for the
enforcement thereof shall in no way be affected by (i) the release or
discharge of Borrower in any creditors' receivership, bankruptcy or other
proceedings, (ii) the impairment, limitation or modification of the
liabilities of Borrower to Lender or the estate of Borrower in bankruptcy,
or of any remedy for the enforcement of Borrower's said liability under
the Loan Agreement or any of the other Loan Documents, resulting
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from the operation of any present or future provision of Title 11 of the
United States Code or other statute or from the decision in any court,
(iii) the rejection or disaffirmance of the Loan Agreement or any of the
other Loan Documents in any such proceedings, (iv) any disability or other
defense of Borrower, (v) the cessation from any cause whatsoever of the
liability of Borrower to Lender or (vi) any defense, current or future, of
such Guarantor to any action, suit or proceeding at law or otherwise, that
may be instituted on this Guaranty;
(i) Guarantors shall pay all reasonable attorneys' fees, court
costs and expenses that may be incurred by Lender in enforcing the
obligations of any Guarantor hereunder, including without limitation costs
of appeal of any judgment;
(j) The obligations of Guarantors shall not be affected by, or
dependent upon, the genuineness, validity, regularity or enforceability
of, the existence of a default with respect to the Loan, the Loan
Agreement or the other Loan Documents; and
(k) If at any time all or any part of any payment theretofore
applied by Lender to any of the Obligations is or must be rescinded or
returned by Lender for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of Borrower),
such Obligations shall, for the purposes of this Guaranty, to the extent
such payment is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application by Lender, and
this Guaranty shall continue to be effective or be reinstated, as the case
may be, as to such Obligations, all as though such application by Lender
had not been made.
6. WAIVERS. Guarantors waive (i) notice of acceptance of this Guaranty by
Lender and any and all notices and demands of every kind that may be required to
be given by any statute or rule or law, (ii) any defense arising by reason of
any disability or other defense of Borrower, (iii) presentment, demand, notice
of dishonor, protest and all other notices whatsoever, (iv) any right to
participate in any security now or later held by Lender, (v) any right to
enforce remedies Lender now has, or later may have, against Borrower, (vi)
diligence in collection or protection of or realization upon the Obligations, or
any thereof, any other obligation hereunder, or any security for or guaranty of
any of the foregoing, and any and all formalities that otherwise might be
legally required to charge Guarantors with liability, (vii) any right to require
Lender to proceed against Borrower or any other person at any time or to proceed
against or exhaust any security held by Lender at any time or to pursue any
other remedy whatsoever at any time, (viii) the defense of any statute of
limitations affecting the liability of Guarantors hereunder or the enforcement
thereof, to the extent permitted by law, (ix) any defense arising by reason of
any invalidity or unenforceability of the Note or any other instrument
evidencing or securing the Note or any defense of Borrower, or any disability of
Borrower, or by any cessation from any cause whatsoever of the liability of
Borrower, (x) any duty of Lender to advise Guarantors of any information known
to Lender regarding the financial condition of Borrower (it is agreed that
Guarantors assume the responsibility for being and keeping informed regarding
such condition), (xi) any right of subrogation and any right to enforce any
remedy which Lender now has or may hereafter have against Borrower and any
benefit of, and the right to participate in, any security now or hereafter held
by Lender, (xii) any defense arising by reason of any election by Lender
pursuant to Section 1111(b)(2) of Title 11
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of the United States Code or any similar or successor section based upon any
borrowing or grant of a security interest under Section 364 of such Code or any
similar or successor section or pursuant to any other election afforded to
Lender pursuant to applicable law and (xiii) any defense arising by reason of
any act or failure to act of the bonding company issuing the Bond.
Guarantors understand that the exercise by Lender of certain rights and
remedies contained in the Loan Agreement or any of the other Loan Documents may
affect or eliminate Guarantors' rights of subrogation against Borrower and that
Guarantors may therefore incur partially or totally nonreimbursable liability
thereunder. Nevertheless, Guarantors hereby authorize and empower Lender, its
successors, endorsees and/or assignees, to exercise in its or their sole
discretion, any rights and remedies, or any combination thereof, which may then
be available, it being the purpose and intent of Guarantors that their
obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances. Each Guarantor therefore waives any defense based upon an
election of remedies by Lender including, without limitation, any election to
proceed by judicial or nonjudicial foreclosure or by deed in lieu thereof, or
any election of remedies which destroys or otherwise impairs the subrogation
rights of Guarantors or the rights of Guarantors to proceed against Borrower for
reimbursement, or both.
The obligations of Guarantors hereunder are independent of the obligations
of Borrower and, in the event of any default and the lapse of any applicable
notice and cure periods hereunder, a separate action or actions may be brought
and prosecuted against each Guarantor whether or not such Guarantor is the alter
ego of Borrower and whether or not Borrower is joined therein or a separate
action or actions are brought against Borrower.
Guarantors hereby agree that in the event any bankruptcy, insolvency,
reorganization, liquidation or similar proceeding is instituted by or against
Borrower, whether voluntary or involuntary, Lender shall have the right to: (a)
file claims in any such proceeding on behalf of Guarantors if Guarantors fail to
file such claims; (b) vote Guarantors' claims in any such proceeding; and (c)
receive interest on the Note accruing after the filing of a petition or other
document to institute any such proceeding without regard to the extent of
Guarantors' claims against Borrower.
7. EFFECT OF LENDER'S DELAY OR ACTION. No delay on the part of Lender in
the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Lender of any right or remedy shall preclude other
or further exercise thereof or the exercise of any other right or remedy. No
action of Lender permitted hereunder shall in any way affect or impair the
rights of Lender and the obligation of Guarantors under this Guaranty.
8. CONTINUING GUARANTY. This Guaranty shall in all respects be a
continuing, absolute and unconditional guaranty, shall for all purposes be
construed to be a guaranty of payment and not of collectability with respect to
Guarantors' payment obligations hereunder, and shall remain in full force and
effect (notwithstanding, without limitation, the death of any Guarantor) until
the Loan has been reported in full and all other obligations of Borrower under
the Loan Agreement have been satisfied. Upon Lender's verification of the
matters in the foregoing sentence, this Guaranty automatically shall terminate
and Lender shall release this Guaranty and return same to any one of the
Guarantors marked "cancelled." Notwithstanding
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the foregoing, this Guaranty shall continue to be effective, or be reinstated,
as the case may be, if at any time payment of all or any portion of the amounts
due hereunder are rescinded or otherwise required to be returned upon the
insolvency, bankruptcy or reorganization of Borrower or any Guarantor, all as
though such payment to Lender had not been made, regardless of whether Lender
contested the order requiring the return of such payment.
9. NO EXCULPATION. No exculpatory language contained in the Loan
Agreement, in any of the Loan Documents or in any other document or instrument
shall in any way prevent or limit Lender from proceeding to enforce this
Guaranty against each Guarantor personally as set forth herein.
10. TIME OF ESSENCE. Time is of the essence of this Guaranty.
11. NO MODIFICATION WITHOUT WRITING. This Guaranty may not be modified,
amended, revised, revoked, terminated, changed or varied in any way whatsoever
except by the express terms of a writing signed by the party or parties sought
to be bound thereby.
12. NOTICES. All notices permitted or required to be given under this
Guaranty shall be in writing addressed to the respective parties as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if served in person, when served; (b)
if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on
a Business Day; PROVIDED that a hard copy of such notice is also sent pursuant
to (c) or (d) below; (c) if by overnight courier, on the first Business Day
after delivery to the courier; or (d) if by U.S. Mail, certified or registered
mail, return receipt requested on the fourth (4th) day after deposit in the mail
postage prepaid.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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(a) Notices to Lender:
Heller Financial, Inc.
Real Estate Financial Services
500 West Monroe Street
15th Floor
Chicago, Illinois 60661
Attention: Manager, Asset Management
Telecopy: (312) 441-7119
With a copy to:
Heller Financial, Inc.
Real Estate Financial Services
500 West Monroe Street
15th Floor
Chicago, Illinois 60661
Attention: Group General Counsel
Telecopy: (312) 441-7872
(b) Notices to Guarantors:
c/o Transeastern Properties of South Florida, Inc.
3300 University Drive
Coral Springs, Florida 33065
"BUSINESS DAY" shall mean any day other than Saturday, Sunday or any other day
on which national banks in Chicago, Illinois or New York, New York are not open
for business.
13. SEVERABILITY. Whenever possible each provision of this Guaranty shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
14. CAPITALIZED TERMS. Any term capitalized but not specifically defined
herein, which is capitalized and defined in the Loan Agreement, shall have the
same meaning for purposes of this Guaranty as it has for purposes of the Loan
Agreement.
15. SUCCESSORS AND ASSIGNS. This instrument shall inure to the benefit of
Lender, its successors and assigns, and shall bind each Guarantor and his heirs,
representatives and assigns and shall survive the acquisition by Lender of
Borrower's title to the Project by foreclosure, deed in lieu of foreclosure, UCC
sale, or the exercise of any similar remedy.
16. INTEREST. Notwithstanding any provision contained in this Guaranty to
the contrary, in no event shall Guarantors be charged or assessed, nor shall
they pay, any sum or
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sums of interest as defined by applicable laws of the State of Illinois which
would cause the total interest for which they are liable to exceed the highest
conventional rate of interest allowed by the laws of the State of Illinois (with
due regard for applicable exemptions) and any provision herein requiring payment
in excess of such highest rate is null and void as to such excess.
17. GOVERNING LAW. THIS GUARANTY IS SUBMITTED TO LENDER AT ITS PRINCIPAL
PLACE OF BUSINESS IN CHICAGO, ILLINOIS AND SHALL BE DEEMED TO HAVE BEEN MADE
THEREAT. THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS BY THE
LAWS, STATUTES AND DECISIONS OF THE STATE OF ILLINOIS.
18. VENUE. GUARANTORS, IN ORDER TO INDUCE LENDER TO ACCEPT THIS GUARANTY,
AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF
WHICH HEREBY IS ACKNOWLEDGED, AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM
THIS GUARANTY SHALL BE LITIGATED, AT LENDER'S SOLE DISCRETION AND ELECTION, ONLY
IN COURTS HAVING A SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS.
GUARANTORS HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. GUARANTORS HEREBY
IRREVOCABLY APPOINT AND DESIGNATE CT CORPORATION SYSTEM, WHOSE ADDRESS IS
GUARANTORS, C/O CT CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS
60604, AS THEIR DULY AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES
THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE
OF PROCESS UPON SUCH PARTY. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH
AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, GUARANTORS SHALL,
WITHIN TEN (10) DAYS AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN
CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH
APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL, IN
ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE
(5) DAYS NOTICE TO GUARANTORS. GUARANTORS HEREBY CONSENT AND SUBMIT TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND
STATE. GUARANTORS HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO TRANSFER OR CHANGE THE
VENUE OF ANY LITIGATION BROUGHT AGAINST THEM BY LENDER ON THIS GUARANTY IN
ACCORDANCE WITH THIS PARAGRAPH.
19. WAIVER OF JURY TRIAL. GUARANTORS, AND BY ITS ACCEPTANCE OF THIS
GUARANTY, LENDER, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
GUARANTY AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY GUARANTORS, AND BY ITS
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ACCEPTANCE OF THIS GUARANTY, LENDER, AND GUARANTORS ACKNOWLEDGE THAT NEITHER
LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF
FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. GUARANTORS, AND BY THEIR ACCEPTANCE OF
THIS GUARANTY, LENDER, ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH OF THEM WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. GUARANTORS, AND BY ITS
ACCEPTANCE OF THIS GUARANTY, LENDER, FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS GUARANTY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
20. WAIVER OF CERTAIN RIGHTS. Each Guarantor hereby irrevocably waives all
rights he may have at law or in equity (including, without limitation, any law
subrogating him to the rights of Lender) to seek contribution, indemnification
or any other form of reimbursement from Borrower, any other guarantor of
Borrower's obligations to Lender, or any other person or entity now or hereafter
primarily or secondarily liable for any of Borrower's obligations to Lender, for
any disbursement made by him under or in connection with this Guaranty and
further agrees that he shall have no claims of any kind or type against Borrower
as a result of any payments made by him to Lender, all such claims being hereby
specifically waived. Notwithstanding the foregoing, following the payment in
full of all amounts owed to Lender, the foregoing waiver shall not apply to any
person or entity other than (a) Borrower, if Lender or its designee acquires an
ownership interest therein, and (b) Lender.
IN WITNESS WHEREOF, Guarantors have duly executed this Guaranty as of the
____ day of November, 1995.
GUARANTORS:
_____________________________________
Edward Falcone, an individual
_____________________________________
Arthur Falcone, an individual
_____________________________________
Philip Cucci, an individual
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EXHIBIT A
LEGAL DESCRIPTION
PARCEL 1: FEE SIMPLE ESTATE:
That portion of Tract "A", according to the plat of Pine Island Villas, as
recorded in Plat Book 83 at Page 25 of the Public Records of Broward County,
Florida, described as follows:
Commencing at the Southwest corner of said Tract "A"; Thence run North
1(degree)45'35" West (on a plat bearing) 411.19 feet along the West boundary of
said Tract "A", to the Point of Beginning; thence continue North 1(degree)45'35"
West 290.97 feet along said West boundary to the Northwest corner of said Tract
"A", being a point of intersection with the arc of a curve running Northeasterly
to the left, a radial at said point bearing North 20(degree)16'15" West; Thence
along the arc of said curve to the left (also forming the Northerly boundary of
said Tract "A") having a radius of 1033.25 feet and a central angle of
24(degree)16'02" run Northeasterly 437.63 feet to a point of tangency; Thence
run North 45(degree)27'43" East 396.70 feet along said Northerly boundary being
the tangent extended to the most Northerly corner of said Tract "A", being a
point of intersection with the arc of a curve running Southeasterly to the right
a radial at said point bearing South 46(degree)26'37" West; Thence along the arc
of said curve to the right (also forming the easterly boundary of said Tract
"A") having a radius of 1947 feet and a central angle of 16(degree)56'09", run
Southeasterly 575.50 feet; Thence run South 65(degree)30' West 229.17 feet;
Thence run South 75(degree)30' East 52.07 feet to a point of curvature of a
curve to the right; Thence along the arc of said curve to the right, having a
radius of 15 feet and a central angle of 141(degree), run Southeasterly and
Southwesterly 36.91 feet to a point of tangency; Thence run South 65(degree)30'
West 34.92 feet along the tangent extended to a point of curvature of a curve to
the left; Thence along the arc of said curve to the left, having a radius of 20
feet and a central angle of 40(degree)32'30", run Southwesterly 14.15 feet to a
point of reverse curvature; Thence along the arc of a curve to the right, having
a radius of 20 feet and a central angle of 161(degree)25'15", run Southwesterly
and Northwesterly 56.35 feet to a point of reverse curvature; Thence along the
arc of a curve to the left, having a radius of 20 feet and a central angle of
30(degree)52'46", run Northwesterly 10.78 feet to a point of tangency; Thence
run North 24(degree)30' West 14.74 feet along the tangent extended to a point of
curvature of a curve to the left; Thence along the arc of said curve to the
left, having a radius of 20 feet and a central angle of 90(degree), run
Northwesterly and Southwesterly 31.42 feet to a point of tangency; Thence run
South 65(degree)30' West 80.01 feet along the tangent extended to a point of
curvature of a curve to the left; Thence along the arc of said curve to the
left, having a radius of 20 feet and a central angle of 65(degree)30', run
Southwesterly 22.86 feet to a point of tangency; Thence run due South 18.28 feet
along the tangent extended to a point of curvature of a curve to the right;
Thence along the arc of said curve to the right, having a radius of 20 feet and
a central angle of 90(degree), run Southwesterly 31.42 feet to a point of
tangency; Thence run due West 20 feet along the tangent extended to a point of
curvature of a curve to the left; Thence along the arc of said curve to the
left, having a radius of 20 feet and a central angle of 90(degree), run
Southwesterly 31.42 feet to a point of tangency; Thence run due South 82.83 feet
along the tangent extended to a point of curvature of a curve to the right;
Thence along the arc of said curve to the right, having a radius of 20 feet and
a central angle
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of 90(degree), run Southwesterly 31.42 feet to a point of tangency; Thence run
due West 25.08 feet along the tangent extended to a point of curvature of a
curve to the right; Thence along the arc of said curve to the right, having a
radius of 30 feet and a central angle of 28(degree)57'18", run Westerly 15.16
feet to a point of reverse curvature; Thence along the arc of a curve to the
left, having a radius of 30 feet and a central angle of 28(degree)57'18", run
Westerly 15.16 feet to a point of tangency; Thence run due West 210 feet along
the tangent extended; Thence run due South 11.67 feet; Thence run due West
271.96 feet, to the Point of Beginning.
Said lands situate in the City of Plantation, Broward County, Florida.
PARCEL 2:
Together with a Non-Exclusive Easement for Ingress and Egress pursuant to
instrument recorded in Official Records Book 22825, Page 895, as amended by
First Amendment to Declaration recorded in Official Records Book ____, Page
____.
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LOAN NO. 95-130A
PINE ISLAND PLACE
ASSIGNMENT OF PARTNERSHIP INTEREST (SECURITY
AGREEMENT)
This ASSIGNMENT OF PARTNERSHIP INTEREST (SECURITY AGREEMENT) is
made as of the _____ day of November, 1995 by TRANSEASTERN PLANTATION APTS.,
INC., a Florida corporation ("GRANTOR"), to and in favor of HELLER FINANCIAL,
INC., a Delaware corporation (hereinafter, together with its successors and
assigns, referred to as "LENDER").
RECITALS
A. Grantor is the sole general partner in Transeastern Plantation
Apartments, Ltd., a Florida limited partnership ("BORROWER").
B. Borrower and Lender entered into that certain Loan Agreement dated
of even date herewith (said Loan Agreement as amended from time to time, the
"LOAN AGREEMENT"). All capitalized terms herein shall have the meanings ascribed
to them in the Loan Agreement unless otherwise defined in this Assignment.
C. Under the provisions of the Loan Agreement, Lender agreed, subject
to the terms and conditions contained therein, to make a loan ("LOAN") to
Borrower as evidenced by that certain Promissory Note of even date herewith made
by Borrower to the order of Lender in the maximum principal amount of TWO
MILLION ONE HUNDRED SIXTY THOUSAND AND NO/100THS DOLLARS ($2,160,000.00) (said
note and any and all renewals, amendments, modifications, increases and
extensions thereof are hereinafter collectively called the "NOTE").
D. As a condition precedent to Lender's making the Loan, Lender has
further required that Grantor execute and deliver this Assignment to Lender to
secure the prompt and complete performance all of the obligations and payment of
all of the indebtedness under the Loan Documents (all such obligations and
indebtedness are hereinafter referred to collectively as the "LIABILITIES").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. As used in this Assignment, the following terms shall
have the following meanings:
"ASSIGNMENT" shall mean this Assignment of Partnership Interest
(Security Agreement), as the same may from time to time be amended or
supplemented.
<PAGE>
"CODE" shall mean the Uniform Commercial Code as the same may from
time to time be in effect in the State of Illinois.
"PARTNERSHIP AGREEMENT" shall mean that certain Agreement of Limited
Partnership dated as of September 29, 1995 pursuant to which Borrower
was formed, as such agreement may be hereafter amended from time to
time in accordance with the terms of this Assignment.
"PROCEEDS" shall mean "proceeds," as such term is defined in the
Code and, in any event, shall include, but not be limited to, (i) any
and all payments (in any form whatsoever) made or due and payable to
Grantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of
the "Pledged Collateral" (as hereinafter defined) by any governmental
body, authority, bureau or agency (or any person acting under color of
governmental authority), (ii) any and all amounts paid or payable to
Grantor for or in connection with any sale or other disposition of
Grantor's interests in Borrower and (iii) any and all other amounts
from time to time paid or payable under or in connection with any of
the Pledged Collateral.
2. GRANT OF SECURITY INTEREST. As security for the prompt and complete
payment and performance when due of the Liabilities, Grantor hereby grants to
Lender a security interest in and pledges to Lender all of the following (all of
which being herein collectively called the "PLEDGED COLLATERAL"):
(i) all of Grantor's right, title and interest as a partner in
Borrower, including without limitation, all of Grantor's right to
receive distributions at any time or from time to time of cash and
other property, real, personal or mixed, from Borrower upon complete or
partial liquidation or otherwise;
(ii) all of Grantor's right, title, and interest in specific
Borrower property;
(iii) all of Grantor's right, title and interest, if any, to
participate in the management and voting of Borrower;
(iv) all of Grantor's right, title and interest in and to:
(a) all rights, privileges, authority and power of Grantor as
owner and holder of the items specified in (i), (ii), and (iii)
above, including but not limited to, all contract rights related
thereto;
(b) all options and other agreements for the purchase or
acquisition of any interests in Borrower; and
(c) any document or certificate representing or evidencing
Grantor's rights and interests in Borrower; and
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<PAGE>
(v) to the extent not otherwise included, all Proceeds and products
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES. Grantor represents and warrants
that:
(a) Grantor is the sole owner of each item of the Pledged
Collateral, free and clear of any and all liens and claims whatsoever except for
the security interest granted to Lender pursuant to this Assignment.
(b) No security agreement, financing statement, assignment,
equivalent security or lien instrument or continuation statement covering all or
any part of the Pledged Collateral is on file or of record in any public office
or at the records of Borrower, except financing statements with respect to the
Pledged Collateral filed by Lender pursuant to this Assignment.
(c) Upon the filing of all appropriate financing statements under
the applicable Uniform Commercial Code, all steps necessary to create and
perfect the security interest created by this Assignment as a valid and
continuing first lien on and first perfected security interest in the Pledged
Collateral in favor of Lender, prior to all other liens, security interests and
other claims of any sort whatsoever will have been taken. This Assignment and
the security interest created hereby are enforceable as such against creditors
of and purchasers from Grantor except with respect to liens or other interests
accorded a superior priority as a matter of law.
(d) Grantor's principal place of business is 3300 University Drive,
Coral Springs, Florida 33065.
(e) Grantor has not changed Grantor's name, or used, adopted or
discontinued the use of any trade name, fictitious name or other trade name or
trade style.
(f) Grantor's interests in Borrower consists of a ninety-one and
four-tenths percent (91.4%) general partnership interest, including the same
percentage interests in all distributions by Borrower to its partners of cash or
other property, whether in complete or partial liquidation or otherwise.
(g) Grantor has all power, statutory and otherwise, to execute and
deliver this Assignment, to perform Grantor's obligations hereunder and to
subject the Pledged Collateral to the security interest created hereby, all of
which has been duly authorized by all necessary action.
(h) No amendments or supplements have been made to the Partnership
Agreement since it was originally entered into; such Partnership Agreement
remains in effect; and no party to the Partnership Agreement is presently in
default thereunder.
(i) Grantor has the right, full power and authority (subject,
however, to the Securities Act of 1933, as amended and/or other applicable laws
regulating the sale generally of such interests) to transfer all or any part of
the Pledged Collateral free of any lien or encumbrance.
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(j) No authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required either
(i) for Grantor's granting of a security interest in the Pledged Collateral
pursuant to this Assignment for the execution, delivery or performance of this
Assignment by Grantor or (ii) for the exercise by Lender of the rights provided
for in this Assignment or the remedies in respect of the Pledged Collateral
pursuant to this Assignment (except as may be required in connection with such
disposition by laws affecting the offering and sale of securities generally).
(k) Grantor is a Florida corporation, in good standing and duly
qualified to do business in the state of its organization and in the state where
the Property is located.
(l) Upon the transfer of the Pledged Collateral, or any portion
thereof, to any party pursuant to Section 10 below, Borrower shall continue in
existence and the Partnership Agreement provides for such continuation.
(m) As of the date hereof, there are no certificates, instruments or
other documents evidencing any of the Pledged Collateral and Grantor is not a
party to and has no knowledge of any agreements restricting the transfer of any
of the Pledged Collateral other than as provided in the Loan Documents.
(n) This Assignment, when executed and delivered, will constitute
the valid and legally binding obligation of Grantor, enforceable against Grantor
in accordance with its respective terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and (ii)
equitable principles.
(o) To the best of Grantor's knowledge after due inquiry, there are
no actions, suits, arbitration proceedings or claims pending or threatened
against Grantor or maintained by Grantor at law or in equity or before any
governmental body which, if adversely determined, could have a material adverse
effect on Grantor and/or the Pledged Collateral. To the best of Grantor's
knowledge after due inquiry, there are no proceedings pending or threatened
against Grantor which call into question the validity or enforceability of any
of the Loan Documents to which Grantor is a party or any of the transactions
contemplated thereby.
(p) rantor is not in default under any agreement to which Grantor is
a party or by which Grantor or any of the property of Grantor is bound, the
effect of which default might have a material adverse effect on Grantor or
Grantor's ability to perform hereunder. No authorization, consent, approval or
other action by, and no notice to or filing with, any governmental body or any
other person which has not already been obtained, taken or filed, as applicable,
is required (i) for the execution, delivery or, performance by Grantor of this
Assignment or (ii) as a condition to the validity or, enforceability of this
Assignment, or the validity, enforceability or priority of the security
interests in favor of Lender, except for certain filings to establish and
perfect the security interests in favor of Lender. To the best of Grantor's
knowledge after due inquiry, no provision of any mortgage, indenture, contract,
agreement, statute, rule, regulation, judgment, decree or order binding on
Grantor or affecting the property of Grantor conflicts with, or requires any
consent which has not already been obtained under, or would in any way prevent
the execution, delivery or performance of the terms of any of the
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Loan Documents to which Grantor is a party. The execution, delivery and carrying
out of the terms of the Loan Documents will not constitute a default under, or
result in the creation or imposition of, or obligation to create, any Lien upon
the property of Grantor pursuant to the terms of any such mortgage, indenture,
contract or agreement.
(q) Grantor has filed or caused to be filed all tax returns required
to be filed, and has paid, or has made adequate provision for the payment of,
all taxes shown to be due and payable on such returns or in any assessments made
against Grantor, and no tax liens have been filed and no claims are being
asserted in respect of such taxes against Grantor or any of the property of
Grantor.
(r) To the best of Grantor's knowledge after due inquiry, Grantor is
not in default with respect to any judgment, order, writ, injunction, decree or
decision of any governmental body, which default could have a material adverse
effect.
(s) Neither this Assignment nor any certificate, information or
report furnished or to be furnished by or on behalf of Grantor to Lender in
connection with any of the transactions contemplated hereby, contains or will
contain a misstatement of material fact, or omits or will omit to state a
material fact required to be stated in order to make the statements contained
herein, taken as a whole, not misleading in the light of the circumstances under
which such statements were made. To the best of Grantor's knowledge after due
inquiry, there is no fact, other than information known to the public generally,
that would be expected to have a material adverse effect that has not been
disclosed expressly to Lender in writing.
(t) After giving effect to the transactions contemplated by this
Assignment and the other Loan Documents to which Grantor is a party, Grantor (i)
will not be a party to or be bound by any franchise, agreement, deed, lease or
other instrument, or be subject to any restriction, which is so unusual or
burdensome, so as to cause a material adverse effect, (ii) does not intend to
incur, and does not believe that Grantor will incur, debts beyond Grantor's
ability to pay such debts as they become due, (iii) owns and will own property,
the fair saleable value of which is (A) greater than the total amount of
Grantor's liabilities (including contingent liabilities) and (B) greater than
the amount that will be required to pay the probable liabilities of Grantor's
then existing debts as they become absolute and matured and (iv) has and will
have capital that is not unreasonably small in relation to Grantor's businesses
as presently conducted and as proposed to be conducted. Grantor does not
presently anticipate that future expenditures needed to meet the provisions of
federal or state statutes, orders, rules or regulations will be so burdensome so
as to have a material adverse effect.
4. COVENANTS. Grantor covenants and agrees that from and after the date
of this Assignment and until the Liabilities are fully satisfied:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS. At any time and
from time to time, upon the written request of Lender, and at the sole expense
(which shall not be unreasonable in nature) of Grantor, Grantor will promptly
and duly execute and deliver any and all such further instruments and documents
and take such further actions as Lender may reasonably deem desirable to obtain
the full benefits of this Assignment and of the rights and powers herein
granted, including, without limitation, the execution and filing of any
financing
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or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the security interest granted hereby and, if
otherwise required hereunder, transferring Pledged Collateral to the possession
of Lender (if a security interest in such Pledged Collateral can be perfected by
possession). Grantor also hereby authorizes Lender to file any such financing or
continuation statement without the signature of Grantor to the extent otherwise
permitted by applicable law. If any amount payable under or in connection with
any of the Pledged Collateral shall be or become evidenced by any promissory
note or other instrument (other than an instrument which constitutes chattel
paper under the Code), such note or instrument shall be immediately pledged
hereunder and a security interest therein hereby granted to Lender and shall be
duly endorsed without recourse or warranty in a manner satisfactory to Lender
and delivered to Lender. If at any time Grantor's right or interest in any of
the Pledged Collateral becomes an interest in real property, Grantor immediately
shall execute, acknowledge and deliver to Lender such further documents as
Lender reasonably deems necessary or advisable to create a first priority
perfected mortgage lien in favor of Lender in such real property interest.
(b) PRIORITY OF LIENS. Grantor will defend the right, title and
interest hereunder of Lender, as a first priority security interest in the
Pledged Collateral, against the claims and demands of all persons whomsoever.
(c) FURTHER IDENTIFICATION OF PLEDGED COLLATERAL. Grantor will
furnish to Lender from time to time such reports in connection with the Pledged
Collateral as Lender may reasonably request.
(d) NOTICES. Grantor will advise Lender promptly, in reasonable
detail, (i) of any lien, security interest, encumbrance or claim made or
asserted against any of the Pledged Collateral, (ii) of any distribution of cash
or other property by Borrower, whether in complete or partial liquidation or
otherwise and of any other change in the composition of the Pledged Collateral,
Grantor or Borrower, and (iii) of the occurrence of any other event which would
have an adverse effect on the aggregate value of the Pledged Collateral or on
the security interest created hereunder.
(e) CONTINUOUS PERFECTION. Grantor will not change Grantor's name,
in any manner which might make any financing or continuation statement filed
hereunder seriously misleading within the meaning of Section 9-402(7) of the
Code (or any other then-applicable provision of the Code) unless Grantor shall
have given Lender at least thirty (30) days' prior written notice thereof and
shall have taken all action (or made arrangements to take such action
substantially simultaneously with such change if it is impossible to take such
action in advance) necessary or reasonably requested by Lender to amend such
financing statement or continuation statement so that it is not seriously
misleading.
(f) PLACE OF BUSINESS. Grantor will not change Grantor's principal
place of business unless Grantor has taken such action as is necessary to cause
the security interest of Lender in the Pledged Collateral to continue to be
perfected. Grantor will not change Grantor's principal place of business without
giving prior notice thereof to Lender.
(g) TRANSFER OF ASSETS. Grantor will not directly or indirectly
sell, pledge, mortgage, assign, transfer, or otherwise dispose of or create or
suffer to be created any lien,
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security interest, charging order, or encumbrance on any of the Pledged
Collateral or the assets of Borrower other than the liens relating to the Senior
Loan.
(h) PERFORMANCE OF OBLIGATIONS. Grantor will perform all of
Grantor's obligations under the Partnership Agreement prior to the time that any
interest or penalty would attach against Grantor or any of the Pledged
Collateral as a result of Grantor's failure to perform any of such obligations,
and Grantor will do all things necessary to maintain Borrower as a limited
partnership under the laws of the State of Florida and to maintain Grantor's
interest as the sole general partner in Borrower in full force and effect
without diminution.
(i) PARTNERSHIP AGREEMENT. Grantor will not (x) suffer or permit any
amendment or modification of the Partnership Agreement without the prior written
consent of Lender, or (y) waive, release, or compromise any rights or claims
Grantor may have against any other party which arise under the Partnership
Agreement.
(j) STAY OR EXTENSION LAWS. Grantor will not at any time claim,
take, insist upon or invoke the benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the Pledged
Collateral prior to any sale or sales thereof to be made pursuant to the
provisions hereof or pursuant to the decree, judgment, or order of any court of
competent jurisdiction; nor, after such sale or sales, claim or exercise any
right under any statute now or hereafter made or enacted by any state to redeem
the property so sold or any part thereof, and Grantor hereby expressly waives,
on behalf of Grantor and each and every person claiming by, through and under
Grantor, all benefit and advantage of any such law or laws, and covenants that
Grantor will not invoke or utilize any such law or laws or otherwise hinder,
delay or impede the execution of any power, right or remedy herein or hereby
granted and delegated to Lender, but will authorize, allow and permit the
execution of every such power, right or remedy as though no such law or laws had
been made or enacted.
(k) DELIVERY OF CERTIFICATES. Grantor agrees (i) immediately to
deliver to Lender, or Lender's designee, all certificates, instruments or other
documents evidencing any of the Pledged Collateral which may at any time come
into the possession of Grantor and (ii) to execute and deliver a notice of
Lender's security interest in the Pledged Collateral (which notice shall be
satisfactory to Lender in form and substance and which may request
acknowledgement from the addressee) to any third party which either has
possession of the Pledged Collateral or any certificates evidencing any of the
Pledged Collateral or otherwise has the ability under applicable law or the
terms of any agreement to record transfers or transfer ownership of any of the
Pledged Collateral (whether at the direction of Grantor or otherwise). Grantor
hereby appoints Lender as Grantor's attorney-in-fact, with authority at any time
or times to take any of the foregoing actions on behalf of Grantor. Grantor
agrees that this Assignment or a photocopy of this Assignment shall be
sufficient as a financing statement.
(l) BORROWER'S RECORDS. Grantor shall cause Borrower to make a
notation on the records of Borrower indicating the security interest granted
hereby.
5. GRANTOR'S POWERS.
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(a) So long as an "Event of Default" (as hereinafter defined) shall
not then exist, Grantor shall be the sole party entitled (1) to exercise for any
purpose any and all (i) voting rights and (ii) powers, and (2) to receive any
and all distributions, in each case arising from or relating to the Pledged
Collateral; provided, however, that Grantor shall not exercise such rights or
powers, or consent to any action of Borrower that would be in contravention of
the provisions of, or constitute an Event of Default under, this Assignment or
any of the other Loan Documents.
(b) Upon the occurrence of an Event of Default, unless Lender
designates in writing to Grantor to the contrary, all rights of Grantor provided
in Section 5(a) hereof shall cease, and all voting rights and powers and rights
to distributions included in the Pledged Collateral or otherwise described in
such Section 5(a) shall thereupon become vested in Lender, and Lender shall
thereafter have the sole and exclusive right and authority to exercise such
voting rights and powers. Grantor shall execute such documents and instruments,
including but not limited to, statements that Grantor no longer has the right to
act as a general partner or otherwise relating to such change as Lender may
request. Grantor agrees that Borrower and any partner in Borrower may rely
conclusively upon any notice from Lender that Lender has the right and authority
to exercise all rights and powers of Grantor as a general partner under the
Partnership Agreement. Grantor irrevocably waives any claim or cause of action
against Borrower or any partner in Borrower who deals directly with Lender
following receipt of such notice from Lender.
6. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Grantor hereby irrevocably constitutes and appoints Lender and
each officer or agent of Lender with full power of substitution, as Grantor's
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of Grantor and in the name of Grantor or in such
attorney-in-fact's own name, from time to time in the discretion of each such
attorney-in-fact following the occurrence of an Event of Default, for the
purpose of carrying out the terms of this Assignment, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Assignment and,
without limiting the generality of the foregoing, hereby gives each such
attorney-in-fact the power and right, from and after an Event of Default, on
behalf of Grantor, without notice to or assent by Grantor, to do the following:
(i) to collect and otherwise take possession of and title to any
and all distributions of cash or other property due or distributable
at any time after the date hereof to Grantor as a general partner
from Borrower, whether in complete or partial liquidation or
otherwise, and to prosecute or defend any action or proceeding in
any court of law or equity or otherwise deemed appropriate by such
attorney-in-fact for the purpose hereof;
(ii) to ask, demand, collect, receive and give acceptances and
receipts for any and all moneys due and to become due under any
Pledged Collateral and, in the name of Grantor or such
attorney-in-fact's own name or otherwise, to take possession of and
endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Pledged
Collateral and to file any claim or to take any
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other action or proceeding in any court of law or equity or
otherwise deemed appropriate by such attorney-in-fact for the
purpose of collecting any and all such moneys due under any Pledged
Collateral whenever payable;
(iii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Pledged Collateral, to effect any repairs or any insurance called
for with respect to any of the Pledged Collateral by the terms of
this Assignment and to pay all or any part of the premiums therefor
and the costs thereof; and
(iv) (A) to direct any party liable for any payment under any of
the Pledged Collateral to make payment of any and all moneys due and
to become due thereunder directly to Lender or as such
attorney-in-fact shall direct; (B) to receive payment of and receipt
for any and all moneys, claims and other amounts due and to become
due at any time in respect of or arising out of any Pledged
Collateral; (C) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Pledged Collateral or any portion
thereof and to enforce any other right in respect of any Pledged
Collateral; (D) to defend any suit, action or proceeding brought
against Grantor with respect to any Pledged Collateral; (E) to
settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such
discharges or releases as such attorney-in-fact may deem
appropriate; and (F) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Pledged
Collateral as fully and completely as though such attorney-in fact
were the absolute owner thereof for all purposes, and to do, at the
option of such attorney-in-fact at Grantor's expense, at any time,
or from time to time, all acts and things which such
attorney-in-fact deems reasonably necessary to protect, preserve or
realize upon the Pledged Collateral and the security interest of
Lender therein, in order to effect the intent of this Assignment,
all as fully and effectively as Grantor might do.
Grantor hereby ratifies, to the extent permitted by law, all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on each attorney-in-fact hereunder are
solely to protect the interest in the Pledged Collateral of Lender and shall not
impose any duty upon any such attorney-in-fact to exercise any such powers. Each
such attorney-in-fact shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to Grantor for
any act or failure to act unless such action or failure to act constitutes gross
negligence.
(c) Grantor also authorizes Lender and each officer or agent of
Lender at any time and from time to time upon the occurrence of any Event of
Default, to execute, in connection with the sale provided for in Section 10 of
this Assignment, any endorsements, assignments or other instruments of
conveyance or transfer with respect to any of the Pledged Collateral.
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7. DISTRIBUTIONS. Following an Event of Default, Grantor hereby grants
Lender full irrevocable power and authority to receive and hold at any such time
cash and non-cash distributions by Borrower on account of any of the Pledged
Collateral (together with all interest, if any, earned thereon), which may be
held free and clear of the liens created hereby, and to convert any such
non-cash distributions to cash, and to apply any such cash distributions,
interest or proceeds of conversion in the manner specified in Section 10(d) of
this Assignment.
8. PERFORMANCE BY LENDER OF GRANTOR'S OBLIGATIONS. If Grantor fails to
perform or comply with any of Grantor's agreements contained herein and Lender
as provided for by the terms of this Assignment shall itself perform or comply,
or otherwise cause performance or compliance, with such agreement, the expenses
of Lender incurred in connection with such performance or compliance, together
with interest thereon at the rate following a default specified in the Note in
effect from time to time shall be payable by Grantor to Lender on demand and
shall constitute Liabilities secured hereby.
9. DEFAULT. Any of the following shall constitute an "EVENT OF DEFAULT"
hereunder:
(a) A failure by Borrower or Grantor to observe or perform any
obligation, covenant, condition, or agreement hereof to be performed by Grantor
which involves the payment of money after any grace period provided herein;
(b) A failure by Borrower or Grantor to observe or perform any
nonmonetary obligation, covenant, condition, or agreement hereof to be performed
by Grantor (which is not otherwise included in Section 9(a), (c), or (d)) which
is not cured within thirty (30) days after written notice thereof to Grantor
provided, however, if such default cannot be cured within such thirty (30) day
period, and Borrower or Grantor has commenced to cure such default and
diligently and in good faith continues to cure the default, such cure period
shall be extended by thirty (30) days;
(c) Any representation or warranty made by Grantor in this
Assignment is false or misleading or is not true and correct in any material
respect;
(d) The occurrence of any "Event of Default" under any Loan
Document; or
(e) If any material portion of the Pledged Collateral shall be
seized or taken by a governmental body or person, or Grantor shall fail to
maintain or cause to be maintained the liens in the Pledged Collateral granted
hereby and the priority of such liens as against any person, or the title and
rights of Grantor to any material portion of the Pledged Collateral shall have
become the subject matter of litigation not dismissed within thirty (30) days
after filing, which could reasonably be expected to result in impairment or loss
of the security provided by this Assignment.
10. REMEDIES, RIGHTS UPON DEFAULT. (a) Upon the occurrence of any Event
of Default, Lender or Lender's designee may, at Lender's option, elect to become
a substituted general partner in Borrower with respect to the Pledged Collateral
and Grantor shall execute or cause to be executed all documents necessary to
evidence Lender so becoming a substituted general partner. If any Event of
Default shall occur, Lender or Lender's designee may exercise
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in addition to all other rights and remedies granted to them in this Assignment
and in any other instrument or agreement securing, evidencing or relating to the
Liabilities, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, Grantor expressly agrees that in any
such event Lender, without demand of performance or other demand, advertisement
or notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon Grantor or any other person (all and each of
which demands, advertisements and/or notices are hereby expressly waived), may
forthwith collect, receive, appropriate and realize upon the Pledged Collateral,
or any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or sell or otherwise dispose of and deliver said Pledged
Collateral (or contract to do so), or any part thereof, in one or more parcels
at public or private sale or sales, at any exchange or broker's board or at any
of Lender's offices or elsewhere at such prices as it may reasonably deem best,
for cash or on credit or for future delivery without the assumption of any
credit risk. Grantor expressly acknowledges that private sales may be less
favorable to a seller than public sales but that private sales shall
nevertheless be deemed commercially reasonable and otherwise permitted
hereunder. In view of the fact that federal and state securities laws and/or
other applicable laws may impose certain restrictions on the method by which a
sale of the Pledged Collateral may be effected, Grantor agrees that upon the
occurrence of an Event of Default, Lender may, from time to time, attempt to
sell all or any part of the Pledged Collateral by means of a private placement,
restricting the prospective purchasers to those who will represent and agree
that they are purchasing for investment only and not for distribution. In so
doing, Lender may solicit offers to buy the Pledged Collateral, or any part
thereof, for cash, from a limited number of investors deemed by Lender in its
judgment, to be financially responsible parties who might be interested in
purchasing the Pledged Collateral, and if Lender solicits such offers, then the
acceptance by Lender of the highest offer obtained therefrom shall be deemed to
be a commercially reasonable method of disposing of the Pledged Collateral.
Lender or Lender's designee shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of said Pledged Collateral so sold,
free of any right or equity of redemption, which equity of redemption Grantor
hereby releases. Grantor further agrees, at the request of Lender, to assemble
the Pledged Collateral and make it available to Lender at places which Lender
shall reasonably select, whether at Grantor's premises or
elsewhere. Lender shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale as provided in Section 10(d) of this
Assignment. Only after so paying over such net proceeds and after the payment by
Lender of any other amount required by any provision of law, including Section
9-504(1)(c) of the Code, need Lender account for the surplus, if any, to
Grantor. To the extent permitted by applicable law, Grantor waives all claims,
damages, and demands against Lender arising out of the repossession, retention
or sale of the Pledged Collateral except in each case such as arise out of the
gross negligence or wilful misconduct of Lender. Grantor agrees that Lender need
not give more than ten (10) days' notice (which notification shall be deemed
given when mailed or delivered on an overnight basis, postage prepaid, addressed
to Grantor at Grantor's address referred to in Section 12 hereof) of the time
and place of any public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such matters.
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(b) Grantor also agrees to pay all costs of Lender, including
reasonable attorneys' fees and expenses, incurred with respect to the collection
of any of the Liabilities the enforcement of any of Lender's rights hereunder.
(c) Grantor hereby waives presentment, demand, or protest (to the
extent permitted by applicable law) of any kind in connection with this
Assignment or any Pledged Collateral. Except for notices provided for herein,
Grantor hereby waives notice (to the extent permitted by applicable law) of any
kind in connection with this Assignment.
(d) The proceeds of any sale, disposition or other realization upon
all or any part of the Pledged Collateral shall be distributed by Lender in the
following order of priorities:
FIRST, to Lender in an amount sufficient to pay in full the expenses
of Lender in connection with such sale, disposition or other
realization, including all expenses, liabilities and advances incurred
or made by Lender in connection therewith, including reasonable
attorneys' fees and expenses;
SECOND, to Lender until the other Liabilities (including the
Participation, if due) are paid in full; and
FINALLY, upon payment in full of all of the Liabilities, to Grantor,
or their representative or as a court of competent jurisdiction or
Grantor may direct.
Grantor agrees to indemnify and hold harmless Lender, its directors,
officers, employees, agents and parent, and subsidiary corporations, and each of
them, from and against any and all liabilities, obligations, claims, damages, or
expenses incurred by any of them arising out of or by reason of entering into
this Assignment or the consummation of the transactions contemplated by this
Assignment and to pay or reimburse Lender for the fees and disbursements of
counsel incurred in connection with any investigation, litigation or other
proceedings (whether or not Lender is a party thereto) arising out of or by
reason of any of the aforesaid. Lender will promptly give Grantor written notice
of the assertion of any claim which it believes is subject to the indemnity set
forth in this Section 10 and will upon the request of Grantor promptly furnish
Grantor with all material in its possession relating to such claim or the
defense thereof to the extent that Lender may do so without breach of duty to
others. Any amounts properly due under this Section 10 shall be payable to
Lender immediately upon demand.
(f) Grantor also agrees to allow Lender or its nominee to exercise
any other remedy specifically granted under this Assignment, the Guaranty, the
other Loan Documents or now or hereafter existing in equity, or at law, by
virtue of statute or otherwise.
(g) For the purposes of this Section 10, an agreement to sell all or
any part of the Pledged Collateral shall be treated as a sale thereof and Lender
shall be free to carry out such sale pursuant to such agreement, and Grantor
shall not be entitled to the return of any of the same subject thereto,
notwithstanding the fact that after Lender shall have entered into such an
agreement, all Events of Default hereunder may have been remedied or all of
Borrower's obligations may have been paid and/or performed in full.
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(h) At any sale made pursuant to this Section 10 above, Lender may
bid for and purchase, free from any right of equity or redemption on the part of
Grantor (the same hereby being waived and released by Grantor), any part or all
of the Pledged Collateral that is offered for sale, and Lender, upon compliance
with the terms of sale, may hold, retain and dispose of such Pledged Collateral
without further accountability therefor.
(i) Lender shall not have any duty to exercise any of the rights,
privileges, options or powers or to sell or otherwise realize upon any of the
Pledged Collateral, as hereinbefore authorized, and Lender shall not be
responsible for any failure to do so or delay in so doing.
(j) Any sale of all or any portion of the Pledged Collateral
pursuant to this Section 10 shall operate to divest all right, title and
interest of Grantor to the Pledged Collateral which is the subject of any such
sale.
11. LIMITATION ON LENDER'S DUTY IN RESPECT OF PLEDGED COLLATERAL.
Except as expressly provided in the Code, Lender shall have no duty as to any
Pledged Collateral in its possession or control or in the possession or control
of any agent or nominee of Lender or as to any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto.
12. NOTICE. Any notice or other communication required or permitted to
be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if served in person, when served; (b)
if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on
a business day; or on the first business day of the date of such transmission if
on a non-business day or after 3:00 p.m. (Chicago time) on a business day;
PROVIDED that a hard copy of such notice is also sent pursuant to (c) or (d)
below; (c) if by overnight courier, on the first business day after delivery to
the courier; or (d) if by U.S. Mail, certified or registered mail, return
receipt requested on the fourth (4th) day after deposit in the mail postage
prepaid.
Notices to Grantor: Transeastern Plantation Apt., Inc.
c/o Transeastern Properties of South Florida, Inc.
3300 University Drive
Coral Springs, Florida 33065
Attn: Mr. Edward Falcone
Telecopy: (305) 753-0351
With a copy to: Nason, Gildan, Yeager, Gerson & White, P.A.
1645 Palm Beach Lake Boulevard, Suite 1200
West Palm Beach, Florida 33401
Attention: Gary Gerson, Esq.
Telecopier: (407) 686-5442
Notices to Lender: Heller Financial, Inc.
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<PAGE>
Real Estate Financial Services
Attn: Manager, Asset Management
500 West Monroe St. 15th Fl.
Chicago, Illinois 60661
Telecopy: (312) 441-7119
With a copy to: Heller Financial, Inc.
Real Estate Financial Services
Attn: Group General Counsel
500 West Monroe St. 15th Fl.
Chicago, Illinois 60661
Telecopy: (312) 441-7872
Any party may change its respective address for the giving of notice to another
address by giving at least 10 business days' notice of such change.
13. SEVERABILITY. Any provision of this Assignment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14. NO WAIVER; CUMULATIVE REMEDIES. Lender shall not, by any act,
delay, omission or otherwise, be deemed to have waived any of its rights or
remedies hereunder. No waiver hereunder shall be valid except to the extent
therein set forth. A waiver of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which Lender would
otherwise have had on any future occasion. No failure to exercise nor any delay
in exercising on the part of Lender any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege. Except to the
extent that Lender has specifically and expressly waived such remedies in this
Assignment or otherwise, the rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law. Lender may resort to and realize on the
Pledged Collateral simultaneously with any acts or proceedings initiated by
Lender in its sole and conclusive discretion to resort to or realize upon any
other sources of repayment of the Liabilities, including, but not limited to,
collateral granted by other security agreements and the personal liability of
Grantor and any person or corporation which has guaranteed repayment of the
Liabilities. None of the terms or provisions of this Assignment may be waived,
altered, modified or amended except by an instrument in writing, duly executed
by Grantor and Lender.
15. SUCCESSORS AND ASSIGNS; GOVERNING LAW. This Assignment and all
obligations of Grantor hereunder shall be binding upon the successors and
assigns of Grantor, except that Grantor shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of
Lender and shall, together with the rights and remedies of Lender hereunder,
inure to the benefit of Lender and its respective successors and assigns. This
Assignment shall be governed by, and be construed and interpreted in accordance
with, the laws
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<PAGE>
of the State of Illinois. Neither this Assignment nor anything
set forth herein is intended to, nor shall it, confer any rights on any person
or entity other than the parties hereto and all third party rights are expressly
negated.
16. TERMINATION. This Assignment, and the assignments, pledges and
security interests created or granted hereby, shall terminate when the
Liabilities shall have been fully paid and satisfied, at which time Lender shall
release and reassign (without recourse upon, or any warranty whatsoever by,
Lender), and deliver to Grantor all Pledged Collateral and related documents
then in the custody or possession of Lender, including termination statements
under the Code, all without recourse upon, or warranty whatsoever, by Lender and
at the cost and expense of Grantor.
17. INJUNCTIVE RELIEF. Grantor recognizes that in the event Grantor
fails to perform, observe or discharge any of Grantor's obligations hereunder,
no remedy of law will provide adequate relief to Lender, and agrees that Lender
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
18. WAIVER OF SUBROGATION. Grantor shall have no rights of subrogation
as to any of the Pledged Collateral until full and complete performance and
payment of the Liabilities.
19. WAIVER OF JURY TRIAL. GRANTOR AND LENDER, BY ITS ACCEPTANCE OF THIS
ASSIGNMENT, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
ASSIGNMENT AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER
IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY GRANTOR AND LENDER, AND
GRANTOR ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF
LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF TRIAL BY
JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.
GRANTOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS ASSIGNMENT AND THAT EACH OF THEM WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. GRANTOR AND LENDER FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS ASSIGNMENT AND IN THE MAKING OF THIS WAIVER
BY INDEPENDENT LEGAL COUNSEL.
20. VENUE. GRANTOR AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING
DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM
THIS ASSIGNMENT SHALL BE LITIGATED, AT LENDER'S SOLE DISCRETION AND ELECTION,
ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS.
GRANTOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. GRANTOR HEREBY IRREVOCABLY
APPOINTS AND DESIGNATES C T
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<PAGE>
CORPORATION SYSTEM, WHOSE ADDRESS IS GRANTOR, C/O C
T CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS
DULY AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF
SUCH PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON
SUCH PARTY. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR
CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, GRANTOR SHALL, WITHIN TEN (10) DAYS
AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS
BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH
SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL, IN ITS SOLE DISCRETION,
HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO
GRANTOR. GRANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE
VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY LENDER ON THE LOAN DOCUMENTS IN
ACCORDANCE WITH THIS PARAGRAPH.
21. OTHER PARTNERS' ASSIGNMENTS. Grantor hereby recognizes,
acknowledges, and agrees to and that, contemporaneously with the execution and
delivery of this Assignment, the other partners in Borrower are executing and
delivering Assignments of Partnership Interest (Security Agreements) as
additional collateral for the Liabilities ("OTHER ASSIGNMENTS"). Grantor hereby
consents to (i) the grant of the security interest contained in such Other
Assignments, and (ii) following an "Event of Default" as defined in such Other
Assignments, Lender, Lender's designee, or any other person or entity acquiring
the collateral in which the security interest was granted in such Other
Assignments, succeeding to such Pledged Collateral (as defined in the Other
Assignments) (including voting and managerial rights) and being admitted as a
limited partner in Borrower. Grantor covenants and agrees that following an
Event of Default under any of the Loan Documents, Lender, its designee(s) and/or
any other person(s) or entity(ies) acquiring the collateral in which the
security interest was granted in this Assignment and the Other Assignments,
acting alone or with others, shall have the right, but not the obligation, to
accede to one hundred percent (100%) of all of the rights and interests of all
limited and general partners in the Borrower, which constitutes one hundred
percent (100%) of all interests in Borrower.
IN WITNESS WHEREOF, Grantor has executed this Assignment or has caused
the same to be executed by Grantor's duly authorized representative(s) as of the
date first above written.
Grantor:
TRANSEASTERN PLANTATION APTS., INC.
By:
----------------------------------
Name:
--------------------------------
Its:
---------------------------------
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<PAGE>
Loan No. 95-130A
Pine Island Place
PROMISSORY NOTE
$2,160,000.00 Dated as of November ___, 1995
1. PROMISE TO PAY.
FOR VALUE RECEIVED, Transeastern Plantation Apartments, Ltd., a Florida
limited partnership ("MAKER") whose address is c/o Transeastern Properties of
South Florida, Inc., 3300 University Drive, Coral Springs, Florida 33065
promises to pay to the order of HELLER FINANCIAL, INC., a Delaware corporation,
and its successors and assigns ("HOLDER") the sum of Two Million One Hundred
Sixty Thousand and No/100 Dollars ($2,160,000.00), together with all other
amounts added thereto pursuant to this Note or otherwise payable to Holder
including, but not limited to, any Participation as defined and set forth in the
Loan Agreement (as hereinafter defined) (the "LOAN") (or so much thereof as may
from time to time be outstanding), together with interest thereon as hereinafter
set forth, payable in lawful money of the United States of America. Payments
shall be made to Holder at 500 West Monroe Street, 15th Floor, Chicago, Illinois
60661 (or such other address as Holder may hereafter designate in writing to
Maker).
The repayment of the Loan evidenced by this Note is secured by those
certain Assignments of Partnership Interest (Security Agreement) of even date
herewith (collectively, the "PLEDGE") encumbering all of the partnership
interests in Maker. This Note, the Pledge, the Loan Agreement dated of even date
herewith, executed by and between Maker and Holder (the "LOAN AGREEMENT") and
any other documents evidencing or securing the Loan or executed in connection
therewith, and any modification, renewal or extension of any of the foregoing
are collectively called the "LOAN DOCUMENTS".
2. PRINCIPAL AND INTEREST.
So long as no Event of Default exists, interest shall accrue on the
principal balance hereof from time to time outstanding and Maker shall pay
interest thereon at a rate equal to a fixed rate per annum equal to ten percent
(10.0%) (the "INTEREST RATE"). Interest shall be calculated based on a 360 day
year and charged for the actual number of days elapsed.
3. PAYMENT.
Notwithstanding the Interest Rate, commencing December 20, 1995, Maker
shall make monthly payments in arrears on the twentieth (20th) day of the month
equal to the Net Cash Flow for the immediately preceding calendar month from
Pine Island Place (the "PROPERTY") (the "PAYMENT RATE"). "NET CASH FLOW" shall
mean all gross revenue collected from or in
<PAGE>
connection with the Property (including without limitation rents, expense
reimbursements, interest income and forfeited security deposits) LESS (a) all
bona fide normal, customary and reasonable operating expenses actually paid
(including a management fee not to exceed four percent (4%) of effective gross
income) and any real estate tax escrow, (b) current debt service on the first
mortgage loan from SouthTrust Bank of Alabama, National Association, a national
banking association (the "SENIOR LOAN") or any loan approved by Holder that
refinanced the Senior Loan and (c) deposit into reserves approved by Lender or
required by the Loan Documents or the Senior Loan Documents. The Payment Rate
shall be calculated based on a 360 day year and charged for the actual number of
days elapsed. Maker's monthly payment shall be applied first to interest due at
the Interest Rate for such month, and second to Accrued Interest, if any, until
paid in full.
To the extent the Interest Rate exceeds the Payment Rate, the excess
interest shall accrue ("ACCRUED INTEREST") and shall bear interest at the
Interest Rate. The aggregate outstanding amount of Accrued Interest shall not
exceed the lesser of: (a) Three Hundred Sixty Thousand and No/100 Dollars
($360,000.00) and (b) twenty percent (20%) of the then outstanding balance of
the Loan (the "MAXIMUM INTEREST ACCRUAL"). In the event Accrued Interest reaches
the Maximum Interest Accrual, no further interest accrual shall be permitted,
and Maker shall immediately commence monthly interest payments at the greater of
the Interest Rate or the Payment Rate. Once a paydown of Accrued Interest has
occurred, Maker shall be permitted to again accrue interest up to the Maximum
Interest Accrual.
The Loan shall be due and payable on or before November 30, 2000, or
any earlier date on which the Loan shall be required to be paid in full, whether
by acceleration or otherwise ("MATURITY DATE").
4. PREPAYMENT.
Maker may prepay the Loan in full or in part at any time; PROVIDED
Maker gives Holder not less than five (5) days' prior written notice to Holder
and pays all accrued and unpaid interest and the Participation and any other
fees and costs then due Holder. In the event Maker receives any payment with
respect to a lease of the Property (other than rental payments and expense
reimbursements) including, without limitation, lease termination, cancellation
or similar fees, Maker shall, subject to the terms of the Senior Loan Documents,
immediately prepay the principal balance of the Loan in an amount equal to such
payment. No prepayment premium will be due with respect to any such prepayment.
5. DEFAULT.
5.1 EVENTS OF DEFAULT.
Any of the following shall constitute an "EVENT OF DEFAULT" under this
Note: (a) failure to pay any amounts owed pursuant to this Note within five (5)
calendar days after such payment is due; or (b) the occurrence of any default
under any of the other Loan Documents, after giving effect to any applicable
grace or cure period.
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<PAGE>
5.2 REMEDIES.
So long as an Event of Default remains outstanding: (a) interest shall
accrue at a rate equal to the Interest Rate plus four percent (4%) per annum;
(b) Holder may, at its option and without notice (such notice being expressly
waived), declare the Loan immediately due and payable; and (c) Holder may pursue
all rights and remedies available under the Loan Agreement or any other Loan
Documents. Holder's rights, remedies and powers, as provided in this Note and
the other Loan Documents, are cumulative and concurrent, and may be pursued
singly, successively or together against Maker, any guarantor of the Loan, the
security described in the Loan Documents, and any other security given at any
time to secure the payment hereof, all at the sole discretion of Holder.
Additionally, Holder may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies contained herein,
all in Holder's sole discretion. Failure of Holder, for any period of time or on
more than one occasion, to exercise its option to accelerate the Maturity Date
shall not constitute a waiver of the right to exercise the same at any time
during the continued existence of any Event of Default or any subsequent Event
of Default.
If any attorney is engaged: (i) to collect the Loan or any sums due
under the Loan Documents, whether or not legal proceedings are thereafter
instituted by Holder; (ii) to represent Holder in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Note; (iii) to protect the liens and security
interests of the Pledge or any of the Loan Documents; (iv) to represent Holder
in any other proceedings whatsoever in connection with the Pledge or any of the
Loan Documents including post judgment proceedings to enforce any judgment
related to the Loan Documents; or (v) in connection with seeking an out-of-court
workout or settlement of any of the foregoing, then Maker shall pay to Holder
all costs, attorneys' fees and expenses in connection therewith, in addition to
all other amounts due hereunder.
6. LATE CHARGE.
If payments of principal and/or interest, or any other amounts under
the other Loan Documents are not timely made or remain overdue for a period of
ten (10) days, Maker, without notice or demand by Holder, promptly shall pay an
amount ("Late Charge") equal to four percent (4%) of each delinquent payment.
7. GOVERNING LAW; SEVERABILITY.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.
8. WAIVER.
Maker, for itself and all endorsers, guarantors and sureties of this
Note, and their heirs, successors, assigns, and legal representatives, hereby
(except as may otherwise be specifically set forth herein and in the other Loan
Documents) waives presentment for payment, demand,
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<PAGE>
notice of nonpayment, notice of dishonor, protest of any dishonor, notice of
protest and protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of the payment of this
Note, and agrees that their respective liability shall be unconditional and
without regard to the liability of any other party and shall not be in any
manner affected by any indulgence, extension of time, renewal, waiver or
modification granted or consented to by Holder. Maker, for itself and all
endorsers, guarantors and sureties of this Note, and their heirs, legal
representatives, successors and assigns, hereby consents to every extension of
time, renewal, waiver or modification signed by Maker that may be granted by
Holder with respect to the payment or other provisions of this Note, and to the
release of any makers, endorsers, guarantors or sureties, and of any collateral
given to secure the payment hereof, or any part hereof, with or without
substitution, and agrees that additional makers, endorsers, guarantors or
sureties may become parties hereto without notice to Maker or to any endorser,
guarantor or surety and without affecting the liability of any of them.
9. SECURITY, APPLICATION OF PAYMENTS.
This Note is secured by the liens, encumbrances and obligations created
hereby and by the other Loan Documents and the terms and provisions of the other
Loan Documents are hereby incorporated herein. Payments will be applied, at
Holder's option, first to any fees, expenses or other costs Maker is obligated
to pay under this Note or the other Loan Documents, second to interest due on
the Loan and third to the outstanding principal balance of the Loan.
10. MISCELLANEOUS.
10.1 AMENDMENTS.
This Note may not be terminated or amended orally, but only by a
termination or amendment in writing signed by Holder. All amendments must also
be signed by Maker to be effective against Maker.
10.2 LAWFUL RATE OF INTEREST.
In no event whatsoever shall the amount of interest paid or agreed to
be paid to Holder pursuant to this Note or any of the Loan Documents exceed the
highest lawful rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Note and the
other Loan Documents shall involve exceeding the lawful rate of interest which a
court of competent jurisdiction may deem applicable hereto ("EXCESS INTEREST"),
then IPSO FACTO, the obligation to be fulfilled shall be reduced to the highest
lawful rate of interest permissible under such law and if, for any reason
whatsoever, Holder shall receive, as interest, an amount which would be deemed
unlawful under such applicable law, such interest shall be applied to the Loan
(whether or not due and payable), and not to the payment of interest, or
refunded to Maker if such Loan has been paid in full. Neither Maker nor any
guarantor or endorser shall have any action against Holder for any damages
whatsoever arising out of the payment or collection of any such Excess Interest.
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<PAGE>
10.3 CAPTIONS.
The captions of the Paragraphs of this Note are for convenience of
reference only and shall not be deemed to modify, explain, enlarge or restrict
any of the provisions hereof.
10.4 NOTICES.
Notices shall be given under this Note in conformity with the terms and
conditions of the Loan Agreement.
10.5 JOINT AND SEVERAL.
The obligations of Maker under this Note shall be joint and several
obligations of Maker and each of Maker's heirs, personal representatives,
successors and assigns.
10.6 TIME OF ESSENCE.
Time is of the essence of this Note and the performance of each of the
covenants and agreements contained herein.
11. EXCULPATION.
Subject to the provisions set forth below and as otherwise set forth in
the other Loan Documents, neither Maker nor any Principal (as defined in the
Loan Agreement) shall be personally liable to pay the Loan and Holder agrees to
look solely to the Property and any other collateral heretofore, now, or
hereafter pledged by any party to secure the Loan. Notwithstanding the
foregoing, Maker and each Principal, jointly and severally, shall be personally
liable:
(a) for all losses, damages, costs and expenses including attorneys'
fees incurred by Holder as a result of (i) any failure after the
occurrence and during the continuance of any Event of Default (without
benefit of any applicable grace or cure period), to apply any portion
of the gross income from the Property to the Loan, the Senior Loan (as
defined in the Loan Agreement) or to customary operating expenses of
the Property including reserves, (ii) any material misrepresentation in
any Loan Document, fraud or any misappropriation of any funds deriving
from the Property by Borrower or any Principal, (iii) any intentional
or material waste or abandonment of the Property, or (iv) any breach of
any representation, warranty, covenant or obligation concerning
Hazardous Materials (as defined in the Loan Agreement) set forth in the
Loan Agreement or set forth in that certain Hazardous Materials
Indemnity Agreement from Maker and Principals to Holder of even date
herewith, each as amended from time to time, and
(b) for repayment of the Loan and all other obligations of Maker under
the Loan Documents, including without limitation, the Participation and
all costs and expenses of Lender in the event of (i) any breach of any
of the covenants in Sections 6.3 or 6.4 of the Loan Agreement
pertaining to transfers of interests and additional encumbrances,
respectively, (ii) the filing by Maker, or the filing against Maker by
any Principal, of any
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<PAGE>
proceeding for relief under any federal or state bankruptcy, insolvency
or receivership laws or any assignment for the benefit of creditors
made by Maker, or (iii) the failure of Maker to obtain all building
permits required for construction of the Improvements.
The foregoing shall in no way limit or impair the enforcement against
the Property or any other security granted by the Loan Documents of any of the
Holder's rights and remedies pursuant to the Loan Documents.
12. SALE OF LOAN.
Holder, at any time and without the consent of Maker, may grant
participations in or sell, transfer, assign and convey all or any portion of its
right, title and interest in and to the Loan, this Note, the Pledge and the
other Loan Documents, any guaranties given in connection with the Loan and any
collateral given to secure the Loan.
13. VENUE.
MAKER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY,
INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS NOTE
SHALL BE LITIGATED, AT HOLDER'S SOLE DISCRETION AND ELECTION, ONLY IN COURTS
HAVING A SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS. MAKER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT
LOCATED WITHIN SAID COUNTY AND STATE. MAKER HEREBY IRREVOCABLY APPOINTS AND
DESIGNATES C T CORPORATION SYSTEM, WHOSE ADDRESS IS MAKER, C/O C T CORPORATION
SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED
AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH PROCESS UPON
SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON MAKER. IN THE EVENT
SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN
CHICAGO, ILLINOIS, MAKER SHALL, WITHIN TEN (10) DAYS AFTER HOLDER'S REQUEST,
APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH
PERIOD NOTIFY HOLDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY
APPOINTED, HOLDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A
SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO MAKER. MAKER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST IT BY HOLDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH THIS PARAGRAPH.
14. JURY TRIAL WAIVER.
MAKER, AND HOLDER BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE BUSINESS RELATIONSHIP THAT
IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
MADE BY MAKER AND BY
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<PAGE>
HOLDER, AND MAKER ACKNOWLEDGES THAT NEITHER HOLDER NOR ANY PERSON ACTING ON
BEHALF OF HOLDER HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF
TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. MAKER AND HOLDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT MAKER AND HOLDER HAVE ALREADY RELIED
ON THIS WAIVER IN ENTERING INTO THIS NOTE AND THAT EACH OF THEM WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. MAKER AND HOLDER FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL.
IN WITNESS WHEREOF, Maker has executed this Note or has caused the same
to be executed by its duly authorized representatives as of the date set first
forth above.
MAKER:
TRANSEASTERN PLANTATION APARTMENTS, LTD., a Florida
limited partnership
By: Transeastern Plantation Apts., Inc., a Florida
corporation, its sole general partner
By:______________________________________
Name:____________________________________
Its:_____________________________________
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EXHIBIT 10.13
Loan No. 94-273
LOAN AGREEMENT
THIS LOAN AGREEMENT ("AGREEMENT") is made this 22nd day of February,
1995 between TRANSEASTERN PROPERTIES AT THE COVE, INC., a Florida corporation,
("BORROWER") and HELLER FINANCIAL, INC., a Delaware corporation ("LENDER").
RECITALS
A. Lender has agreed to make a loan (the "LOAN") to Borrower subject to
the terms and conditions contained herein. The Loan is evidenced by that certain
Promissory Note of even date herewith in the original principal amount of THREE
MILLION FOUR HUNDRED AND THIRTY SEVEN THOUSAND FIVE HUNDRED AND NO/100 DOLLARS
($3,437,500) (the note and all amendments thereto and substitutions therefor are
hereinafter referred to as the "NOTE"). The terms and provisions of the Note are
hereby incorporated herein by reference in this Agreement.
B. Borrower is the owner of certain real property described on Exhibit
A, currently consisting of 105 lots on approximately 44 acres, located at
Atlantic Avenue and NW 119th Drive, Coral Springs, Florida (the "PROPERTY").
Upon the recording of Borrower's revised plat of subdivision (the "PRELIMINARY
PLAT") creating 131 lots on the Property, Borrower shall develop the Property as
a residential subdivision improved with 131 single family homes (individually
"HOME(S)," collectively, the "IMPROVEMENTS") to be known as "Mariner's Cove"
(the Property and the Improvements are collectively called the "PROJECT").
C. An index of defined terms appears on the attached
Schedule 1.
NOW, THEREFORE, in consideration of the foregoing and the mutual
conditions and agreements contained herein the parties agree as follows:
ARTICLE I
THE LOAN
1.1 FUNDING. On the Closing Date, Lender shall lend to Borrower up to
the sum of $2,250,000 (the "INITIAL FUNDING AMOUNT"). The Initial Funding Amount
shall be applied to Borrower for return of land basis, closing costs, and
working capital. "CLOSING DATE" shall mean the date of funding the Initial
Funding Amounts.
1.2 ADDITIONAL ADVANCES. Except as set forth in Section 5.13, absent an
Event of Default hereunder or under any of the Loan Documents, or an event
which, with the giving of notice or passage of time would constitute an Event of
Default, Lender shall make additional advances of the Loan ("ADDITIONAL
ADVANCES") of up to
<PAGE>
the positive difference between the Initial Funding Amount and $2,750,000 to pay
for the working capital needs of the Project. Additional Advances shall be
disbursed no more often than monthly and in amounts not less than $50,000. At
least fifteen (15) business days prior to the date of any requested
disbursement, Borrower shall provide Lender with the following:
(a) A written request for payment executed by Borrower detailing all
costs for which payment is requested together with a statement that such costs
have not been, nor will be, funded by Construction Mortgagee; and
(b) Copies of invoices, canceled checks and/or other evidence
of payment of amounts due and payable by Borrower.
Additional Advances are to be made only if no Event of Default (as hereinafter
defined) has occurred, and are subject to Lender's approval, which approval
shall not be unreasonably withheld to the extent the Additional Advance
requested is in an amount and for purposes consistent with the Business Plan (as
hereinafter defined). Lender reserves the right to require its independent
consultant to review and approve each Additional Advance requested.
Notwithstanding the foregoing, Lender shall not be obligated to make any
Additional Advance after August 31, 1995.
1.3 LOAN TERM. The Loan shall mature on the last day of the
forty-eighth month after the Closing Date (the "MATURITY DATE").
1.4 INTEREST RATE. Borrower shall pay interest on the Loan
at a fixed rate per annum equal to ten percent (10%) (the "INTEREST
RATE"). Interest shall be computed based on a 360 day year and
charged for the actual number of days elapsed.
1.5 PAYMENTS. Notwithstanding the amount due at the Interest Rate,
Borrower shall make payments on the twentieth (20th) day of each month computed
at the Payment Rate. "PAYMENT RATE" shall mean an amount equal to cash available
as of the end of the prior month, after applying Revenue to satisfy the
distribution requirements of subsections (i) through (viii) of Section 1.8
hereof but not in excess of current interest then due plus all Accrued Interest.
Borrower's monthly payment shall be applied first to interest due at the
Interest Rate for such prior month and then to Accrued Interest, if any, until
paid in full. Any repaid Accrued Interest is not available for further accrual.
To the extent interest at the Interest Rate exceeds the Payment Rate, the excess
interest shall accrue ("ACCRUED INTEREST") and be added to principal outstanding
under the Loan. Accrued Interest shall bear interest at the Interest Rate and
the cumulative amount of Accrued Interest shall not exceed the lesser of (a)
$687,500, or (b) twenty-five percent (25%) of the outstanding balance of the
principal amount of the Loan (the "MAXIMUM INTEREST ACCRUAL"). In the event
Accrued Interest reaches the Maximum Interest Accrual, no further interest
accrual shall be permitted for the term of the Loan, and Borrower shall
immediately commence monthly payments at the greater of the Interest Rate or the
Payment Rate for the remainder of the Loan term.
<PAGE>
1.6 PREPAYMENT. Borrower may prepay the Loan in full or in
part at any time, subject to Lender's minimum Participation
requirement of $800,000.
1.7 PARTICIPATION. As additional consideration for making the Loan,
Borrower shall pay Lender an amount (the "PARTICIPATION") equal to interest on
the outstanding principal balance of the Loan over the term thereof at a ten
percent (10%) per annum interest rate compounded monthly and computed monthly.
Notwithstanding the foregoing, Participation shall be at least an amount equal
to (i) $800,000 minus (ii) all interest paid pursuant to the Note.
Notwithstanding payment of the Loan in full, the Loan Documents shall remain in
effect to secure payment of the Participation.
1.8 DISTRIBUTION OF REVENUE. Borrower shall cause all amounts received
in connection with the Project from any sources (other than loan proceeds and
capital contributions), including, without limitation, rebates, refunds,
interest on corporate bank accounts, deposits on Homes (when earned and
nonrefundable), the final balance of all reserves together with any undisbursed
interest thereon, insurance proceeds and condemnation awards to the extent not
used to restore the Property, and all proceeds from Sales (collectively,
"REVENUE"), to be distributed in the following order:
(i) To pay the release price under the A & D Loan.
(ii) To pay the release price under the Construction Loan.
(iii) To pay Sales Costs not previously paid.
(iv) To pay Project Costs which are either due and payable or
previously paid and not reimbursed.
(v) If Accrued Interest has reached the Maximum Interest
Accrual, then to pay Lender current interest on the Loan.
(vi) To pay Transeastern Properties of South Florida, Inc., a
Florida corporation, a fee equal to 2% of the gross sales
proceeds from a Sale (the "ADMINISTRATION FEE") to the extent
not funded under the Construction Loan.
(vii) To fund a working capital reserve account for the Project in
an aggregate amount not to exceed $150,000 (the "WORKING
CAPITAL RESERVE").
(viii) To pay Lender current interest on the Loan (if not paid
under (v) above).
(ix) To pay Lender Accrued Interest.
(x) To repay Lender the unpaid principal balance of the Loan.
(xi) To pay Lender its Participation.
(xii) The remaining balance to Borrower.
<PAGE>
On the closing date of each Sale, Borrower shall distribute Revenue to pay the
amounts due pursuant to subsections (i) through (iii) above (to the extent not
previously funded). On or before the 20th day of each month, or as otherwise
agreed by Borrower and Lender, Borrower shall distribute all remaining Revenue
from the prior month, if any, in the priority set forth in subsections (iv)
through (xii) above, and shall provide Lender with an accounting specifically
setting forth the distribution of all Revenue for such month.
The Working Capital Reserve shall be used solely to manage timing differences
for Project Costs. At such time as $150,000 of Revenue in the aggregate has been
deposited in the Working Capital Reserve, withdrawals thereafter shall be
replenished from Revenue and from proceeds of the A & D Loan and the
Construction Loan. Any balance remaining in the Working Capital Reserve after
the date of Sale of the last Home in the Project shall be disbursed as Revenue.
"SALE" shall mean a sale and conveyance of a lot, or portion thereof comprising
part of the Property improved with a Home, in an arm's-length transaction in
accordance with the Business Plan.
"SALES COSTS" shall mean the following fees and expenses, which shall not exceed
the amount for such fees and expenses set forth in the total cost budget
("BUDGET") contained in the business plan attached hereto as Exhibit B
("BUSINESS PLAN") by Lender:
(a) All customary closing costs incurred and paid by Borrower in
connection with the Sale, including title insurance and escrow
costs and transfer taxes customarily paid by a seller; and
(b) All customary sales costs and other marketing expenses
relating to the Sale, including incentives, concessions, sales
commissions, and fees paid to third parties, provided,
however, that sales commissions to Borrower, an Affiliate or
any employee of Borrower shall not exceed 1.5% of the gross
sales proceeds related to such Sale (the "SALES COMMISSION").
"PROJECT COSTS" shall be defined as all costs and expenses of acquiring,
developing, constructing, marketing and disposing of the Project as set forth in
the Budget, including all payments of interest made in accordance with the A&D
Loan Documents and Construction Loan Documents (as those terms are hereinafter
defined). Project Costs shall exclude all costs incurred that are not set forth
in the Budget or that are in excess of the Budget, unless they are demonstrated
to be offset by cost and/or expense savings under another line item under the
Budget or offset by an increase in the sales price of the Homes in the Project.
1.9 AFFILIATE FEES. Fees payable to an Affiliate in connection with the
Project shall be limited to the Administration Fee, the Sales Commission, and
market rate fees for other services rendered to the Project, including costs for
labor that is reasonably necessary. Borrower shall promptly deliver to Lender
copies of all agreements entered into between Borrower and an
<PAGE>
Affiliate relating to the Project, all of which shall be satisfactory to Lender
in its sole discretion.
"AFFILIATE" shall mean any individual, trust, estate, partnership, limited
liability company, corporation or any other incorporated or unincorporated
organization (each a "PERSON"), that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
Borrower or any Principal; any officer, director, or shareholder of such
Borrower or any Principal; and any relative of any of the foregoing. The term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
ARTICLE II
SECURITY
The Loan and all other indebtedness and obligations under the Loan
Documents shall be secured by the following (collectively the "COLLATERAL"): (a)
a collateral assignment of all issued and outstanding common stock of Borrower
("PLEDGE"); and (b) any other collateral or security described in this
Agreement.
ARTICLE III
CONDITIONS PRECEDENT
Lender's obligation to disburse the Loan is subject to satisfaction of
all of the following conditions:
3.1 A & D AND CONSTRUCTION LOANS. (a) Borrower shall obtain an
acquisition and development loan (the "A & D LOAN") in the principal amount of
$6,250,000 and a construction loan (the "CONSTRUCTION LOAN") in the principal
amount of $5,000,000 from Ohio Savings Bank ("CONSTRUCTION MORTGAGEE"). The A &
D Loan shall (i) bear interest at a rate of not more than Prime plus 1.5% per
annum, (ii) have a term of not less than 3 years and (iii) charge a closing fee
of not more than 1.5%, plus other fees described in the commitment therefore.
The Construction Loan shall (x) bear interest at a rate of not more than Prime
plus 1.5% per annum, (y) have a term of not less than 42 months and (z) charge a
closing fee of not more than 1.5%, plus other fees described in the commitment
therefore, and extension fees for up to ten (10) "spec/models" as provided for
in the Unit Construction and Revolving Loan Agreement between Borrower and
Construction Mortgagee dated February 23, 1995.
(b) Lender shall have received copies of all documents which evidence
and secure the A & D Loan (collectively called the "A & D LOAN DOCUMENTS") and
all documents which evidence and secure the Construction Loan (collectively
called the "CONSTRUCTION LOAN DOCUMENTS"). The A & D Loan Documents and the
Construction Loan Documents shall not contain provisions cross-defaulting or
cross-collateralizing the A & D Loan or the Construction Loan with any other
loans. Lender shall also have received a letter from Construction Mortgagee in
the form attached as Exhibit C. The A & D Loan Documents, the Construction Loan
Documents and the
<PAGE>
Construction Mortgagee letter shall be satisfactory to Lender in form and
substance.
(c) Lender shall have received copies of all documents which evidence
and secure that certain loan from Florida National Properties (the "PURCHASE
MONEY MORTGAGEE") to Borrower (the "PURCHASE MONEY LOAN").
3.2 LOAN DOCUMENTS. Borrower shall deliver to Lender the
following documentation (collectively with this Agreement, called
the "LOAN DOCUMENTS"), all in form and substance satisfactory to
Lender:
(a) The Note;
(b) the Pledge;
(c) Uniform Commercial Code financing statements;
(d) a hazardous materials indemnity agreement; and
(e) an agreement of Principals regarding non-recourse
exception liability.
3.3 OPINIONS OF COUNSEL. Lender shall have received an opinion of
Borrower's counsel, acceptable to Lender, stating: (a) that the Loan is not
usurious under applicable laws; (b) that the Loan Documents are validly
executed, fully authorized and binding and enforceable in accordance with their
terms; (c) that the execution and delivery of the Loan Documents and the
performance of the transactions contemplated thereby do not violate or
contravene any law, court order, judgment or contract to which Borrower or any
Principal is a party; and (d) such further opinions as Lender shall require. The
opinion of Borrower's counsel shall be from an independent counsel acceptable to
Lender, and shall be limited to Florida law. Lender shall have also received
satisfactory opinions from its own counsel in connection with the Loan.
3.4 APPRAISAL. Lender shall have received a copy of an appraisal report
for the Property prepared for Construction Mortgagee by an independent MAI
appraiser in accordance with the Financial Institutions Reform, Recovery and
Enforcement Act ("FIRREA") and the regulations promulgated pursuant to such act.
The FIRREA appraisal shall be acceptable to Lender.
3.5 BUSINESS PLAN. Borrower shall have delivered to Lender
a business plan for the Project acceptable to Lender.
3.6 TITLE. Lender shall have received a copy of Borrower's title
insurance policy, acceptable to Lender, subject only to exceptions to title
approved by Lender and containing endorsements required by Lender including
creditor's rights, and extended coverage endorsements.
3.7 ENVIRONMENTAL REPORT. Lender shall have received a Phase
I Environmental audit of the Property. The audit shall (i) be
<PAGE>
addressed to Lender; (ii) state that Lender may rely thereon; and (iii) be
acceptable to Lender in its sole discretion.
3.8 SALES CONTRACT AND WARRANTY. Lender shall have received
and approved the form sales contract and warranty agreement for the
Project.
3.9 ADDITIONAL ITEMS. Lender shall have received such other
items as Lender may reasonably require.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
As an inducement to Lender to disburse the Loan, Borrower hereby
represents and warrants as follows, which representations and warranties shall
be true as of the date hereof and shall remain true throughout the term of the
Loan:
4.1 BORROWER EXISTENCE. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida
with its principal place of business at 3300 University Drive, Coral Springs,
Florida 33065. Borrower is in good standing under the laws of the State of
Florida and is authorized to transact business in the State of Florida. Borrower
has full right, power and authority to execute, deliver and carry out the terms
and provisions of the Loan Documents. The Loan Documents are enforceable against
Borrower in accordance with their respective terms.
(a) The sole shareholder of Borrower is Transeastern
Properties of South Florida, Inc., a Florida corporation
("TRANSEASTERN").
(b) The sole common shareholders of Transeastern are
Arthur Falcone, Edward Falcone, and Philip Cucci (Arthur Falcone,
Edward Falcone, Philip Cucci, and Transeastern are collectively
referred to as "PRINCIPALS").
4.2 CORPORATE DOCUMENTS. A true and complete copy of the articles of
incorporation and by-laws of Borrower and all other documents creating and
governing Borrower (collectively, the "INCORPORATION DOCUMENTS") have been
furnished to Lender. The Incorporation Documents shall provide that the
shareholders of Borrower shall fund cash shortfalls required by Borrower to
satisfy its obligations when due as capital contributions. There are no other
agreements, oral or written, among any of the shareholders of Borrower relating
to Borrower. The Incorporation Documents were duly executed and delivered, are
in full force and effect, and binding upon and enforceable in accordance with
their terms. The Incorporation Documents constitute the entire understanding
among the shareholders of Borrower. No breach exists under the Incorporation
Documents and no act has occurred and no condition exists which, with the giving
of notice or the passage of time would constitute a breach under the
Incorporation Documents.
4.3 OTHER AGREEMENTS. Borrower is not in default under any
contract, agreement or commitment to which it is a party. The
<PAGE>
execution, delivery and compliance with the terms and provisions of this
Agreement and the Loan Documents will not (i) to the best of Borrower's
knowledge, violate any provisions of law or any applicable regulation, order or
other decree of any court or governmental entity, or (ii) conflict or be
inconsistent with, or result in any default under, any contract, agreement or
commitment to which Borrower is bound.
4.4 BUSINESS PLAN. The Improvements will be completed in
accordance with the Business Plan approved by Lender and the plans
and specifications for the Improvements approved by Construction
Mortgagee.
4.5 PROPERTY. Fee simple title to the Property is owned by Borrower
free and clear of all liens, claims, encumbrances, covenants, conditions and
restrictions, security interests and claims of others, except as set forth in
Exhibit D attached hereto. The Property and contemplated Improvements are and
will be in compliance with all zoning requirements, building codes, subdivision
improvement agreements, and all covenants, conditions and restrictions of
record. The zoning and subdivision approval of the Property and the right and
ability to construct, use or operate the Improvements are not in any way
dependent on or related to any real estate other than the Property. There are
no, nor are there any alleged or asserted violations of law, regulations,
ordinances, codes, declarations, covenants, conditions, or restrictions of
record, or other agreements relating to the Property or the Improvements, or any
part thereof
4.6 PROPERTY ACCESS. The Property is accessible through
fully improved and dedicated roads accepted for maintenance and
public use by the public authority having jurisdiction.
4.7 UTILITIES. All utility services necessary and sufficient for the
construction, use or operation of the Project are available at the boundary of
the Property [(OR SUCH FUNDS ARE SET FORTH IN THE BUDGET FOR THE PURPOSE OF
BRINGING SUCH SERVICES TO SAID BOUNDARY)] including, without limitation, water,
storm, sanitary sewer, gas, electric and telephone facilities. Unconditional
written permission has been obtained from the applicable utilities or
municipalities, as the case may be, to connect the Project with each of such
services.
4.8 FLOOD HAZARDS/WETLANDS. Except as otherwise disclosed to Lender,
the Property is not situated in an area designated as having special flood
hazards as defined by the Flood Disaster Protection Act of 1973, as amended, or
as a wetlands by any governmental entity having jurisdiction over the Property.
Borrower will maintain flood insurance on the Property in amounts and forms at
all times satisfactory to Lender
4.9 HAZARDOUS MATERIALS. To the best of Borrower's
knowledge, after due inquiry, there exists no hazardous, dangerous
or toxic substance or material within the meaning of any federal,
state or local law, regulation or ordinance (collectively
"Hazardous Materials"), on or beneath the surface of the Property
<PAGE>
or adjacent property and covenants to keep the Property free of any
thereof.
4.10 TAXES/ASSESSMENTS. There are no unpaid or outstanding real estate
or other taxes or assessments on or against the Project or any part thereof,
except general real estate taxes for 1994-1995 not yet due or payable. Copies of
the current general real estate tax bills with respect to the Project shall be
delivered to Lender when available. Said bills cover the entire Property and do
not cover or apply to any other property. There is no pending or contemplated
action pursuant to which any special assessment may be levied against any
portion of the Project.
4.11 EMINENT DOMAIN. There is no eminent domain or
condemnation proceeding pending or, to the best of Borrower's
knowledge threatened, relating to the Property.
4.12 LITIGATION. Except as set forth in Exhibit E, there is no
litigation, arbitration or other proceeding or governmental investigation
pending or, to the best of Borrower's knowledge, threatened against or relating
to Borrower, any shareholder of Borrower, any Principal or any of their
property, assets, or business, including the Project, which if decided adversely
would materially and adversely affect the business, affairs, assets or financial
condition of Borrower, any Principal, the Property, or the prospects for
repayment of the Loan.
4.13 DOCUMENTS. Borrower and the Principals have furnished Lender with
a true and complete copy of all documents relating to the A & D Loan, the
Construction Loan, and the Property.
4.14 ACCURACY. Neither this Agreement nor any document, financial
statement, credit information, certificate or statement furnished to Lender by
Borrower or the Principals contains any untrue statement of a material fact or
omits to state a material fact which would affect Lender's decision to make the
Loan.
4.15 MATERIAL ADVERSE CHANGE. There has been no material
adverse change since December 13, 1994 in the structure, business
operations, credit, prospects or financial condition of Borrower,
any Principal or the Project.
4.16 FOREIGN OWNERSHIP. Neither Borrower nor any Principal is or will
be, and no legal or beneficial interest of a shareholder of Borrower is or will
be held, directly or indirectly, by a "foreign corporation," "foreign
partnership," "foreign trust," "foreign estate," "foreign person," "affiliate"
of a "foreign person" or a "United States intermediary" of a "foreign person"
within the meaning of IRC Sections 897 and 1445, the Foreign Investments in Real
Property Tax Act of 1980, the International Foreign Investment Survey Act of
1976, the Agricultural Foreign Investment Disclosure Act of 1978, or the
regulations promulgated pursuant to such Acts or any amendments to such Acts.
4.17 SOLVENCY. Neither Borrower, any shareholder in Borrower,
nor any Principal is insolvent and there has been no: (i)
assignment made for the benefit of the creditors of any of them;
<PAGE>
(ii) appointment of a receiver for any of them or for the property of any of
them; or (iii) bankruptcy, reorganization, or liquidation proceeding instituted
by or against any of them.
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 PAYMENT OF INDEBTEDNESS; PERFORMANCE OF OBLIGATIONS.
Borrower shall promptly pay when due all payment obligations of
Borrower to Lender (the "INDEBTEDNESS") and shall promptly perform
all other obligations of Borrower to Lender.
5.2 TAXES AND OTHER OBLIGATIONS. Borrower shall pay, when due, and
before any interest, collection fees or penalties shall accrue, all taxes,
assessments, fines, impositions and other charges and obligations, which may
become a lien on or charge against the Project (collectively, "CHARGES").
Borrower shall have the right to contest, in good faith by appropriate
proceedings, the amount or validity of any such Charges, so long as: (a)
Borrower has given prior written notice to Lender of Borrower's intent to so
contest or object to any such Charges; (b) such contest stays the enforcement or
collection of the Charges or any lien created; and (c) the Charges or lien
created are bonded or insured over by the title insurance company or Borrower
has posted security therefor in accordance with the provisions of the A & D Loan
Documents, the Construction Loan Documents or, if there are no such
requirements, in a manner acceptable to Lender. Upon the request of Lender,
Borrower shall immediately furnish to Lender all notices of amounts due and
receipts evidencing payment. Borrower shall promptly notify Lender of any lien
on all or any part of the Property and shall promptly discharge any unpermitted
lien or encumbrance.
5.3 RECORDING OF THE PRELIMINARY PLAT. Subject to the terms of Section
7.1(i), Borrower shall have the Preliminary Plat showing 131 lots within the
Property approved by applicable authorities and Lender, and recorded by April
30, 1995.
5.4 USE OF PROPERTY; IMPROVEMENTS. After the recording of the
Preliminary Plat, Borrower shall not permit changes in the plat of subdivision,
zoning classification or use of any part of the Property from residential use
without Lender's written consent.
5.5 INSURANCE. Borrower shall keep the Project insured, and shall
maintain general liability coverage and such other coverages required by the
Construction Loan Documents or as otherwise required by Lender, by carrier(s),
in amounts and in form at all times satisfactory to Lender, which carrier(s),
amounts and form shall not be changed without the prior written consent of
Lender. In case of loss or damage by fire or other casualty, Borrower shall give
immediate written notice thereof to the insurance carrier(s) and to Lender.
5.6 CONDEMNATION. Borrower shall within three (3) business days of its
receipt of notice thereof, notify Lender of any action or proceeding relating to
any condemnation or other taking of the Project, or part thereof, and Borrower
shall, after consultation with and subject to Lender's written approval, appear
in and
<PAGE>
prosecute any such action or proceeding and/or settle or compromise any claim in
connection therewith.
5.7 PRESERVATION AND MAINTENANCE OF THE PROJECT. Borrower shall: (a)
not commit waste or permit impairment or deterioration of the Project; (b) not
abandon the Project; (c) keep the Project in good repair and restore or repair
promptly, in a good and workmanlike manner, all or any part of the Project to
the equivalent of its original condition; and (d) give notice in writing to
Lender of and, unless otherwise directed in writing by Lender, appear in and
defend any action or proceeding purporting to affect the Project, the security
granted by the Loan Documents or the rights or powers of Lender. Borrower shall
not remove, demolish or alter any Improvement on the Property except when
incident to the Business Plan.
5.8 INSPECTION. Lender and its authorized agents may enter upon and
inspect the Project at all reasonable times upon notice given orally or in
writing. Lender, at Borrower's expense, may retain one or more independent
consultants to inspect the Project and all documents, drawings, plans, and
consultants' reports relating thereto, provided, however, so long as no Event of
Default (as hereinafter defined) has occurred, Lender shall not retain such
independent consultants at Borrower's expense more than one (1) time in any
twelve-month period during the period beginning April 30, 1995, and ending on
the Maturity Date.
5.9 BOOKS AND RECORDS. Borrower shall keep and maintain at all times at
Borrower's address stated below, or such other place as Lender may approve in
writing, complete and accurate books of accounts and records adequate to reflect
the results of the operation of the Project and copies of all written contracts,
correspondence, reports of Construction Mortgagee's independent consultant,
plans and specifications for the Improvements and other documents affecting the
Project. Lender and its designated agents shall have the right to inspect and
copy any of the foregoing.
5.10 FINANCIAL STATEMENTS. (a) Borrower shall furnish to Lender (i)
weekly sales reports detailing the number of residences under contract, in
escrow and sold and the amount of traffic at the Project, (ii) a copy of all
draw request packages to Construction Mortgagee, (iii) a copy of all executed
sales contracts, closing statements and escrow disbursement statements within
five (5) days after Borrower's receipt, (iv) quarterly financial statements, (v)
quarterly reports, including a status report on all construction activity on the
Property, an updated construction schedule, a report comparing the Business Plan
to actual costs to date and projected total costs, a revised business plan,
detail of disbursement of Revenue for each Sale (all of the deliveries set forth
in (iv) and (v) to be delivered within twenty (20) days after the end of each
quarter), and (vi) additional documents or information Lender may reasonably
request.
(b) Borrower and the Principals shall furnish to Lender, if and when
requested by Lender, annual financial statements for the operation of the
Project, annual financial statements and balance sheet of assets and liabilities
for Borrower and each Principal and
<PAGE>
a copy of the tax return(s) filed by Transeastern Properties of South Florida,
Inc., a Florida corporation, which accurately and fairly presents the results of
the operations and the financial condition of the Borrower at the dates and for
the period indicated.
Each report or statement shall be in reasonable detail and certified as
true and complete by Borrower or each Principal, as the case may be. In the
event Borrower fails to comply with the requirements set forth above, Lender
shall have the right to cause the books and records of Borrower to be audited by
an independent certified public accountant at Borrower's expense.
5.11 USE OF PROCEEDS. Borrower shall use the proceeds of the Loan for
proper business purposes. No portion of the proceeds of the Loan shall be used
by Borrower in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X or any other regulation of the Board of Governors of the Federal Reserve
System or to violate the Exchange Act.
5.12 NOTICE OF LITIGATION OR DEFAULT. Borrower shall provide
Lender with:
(a) notice of any litigation, arbitration, or other proceeding or
governmental investigation pending or, to Borrower's or any Principal's
knowledge, threatened against or relating to Borrower, any Principal, or the
Project; and
(b) a copy of all notices of default and violations of laws,
regulations, codes, ordinances and the like received by Borrower or
any Principal relating to the Project.
5.13 CHANGE IN BUSINESS PLAN. Borrower shall provide prompt notice to
Lender of any modification or amendment of the Business Plan or the taking of an
action constituting a "material deviation" therefrom. "MATERIAL DEVIATION" shall
mean a material change to the Business Plan, including (i) an expenditure which
[in the aggregate, together with all other expenditures over the duration of the
project, would increase or decrease total projected Project Costs by at least
five percent (5%) of the total cost shown on the Business Plan, (ii) a change in
the size of types of Homes in the Project, (iii) a change of at least five
percent (5%) (higher or lower) in the current base sales price (excluding lot
premiums) from the prices set forth in the Business Plan, (iv) a change of at
least five percent (5%) (higher or lower) in the lot premiums set forth in the
Business Plan, or (v) any change that may result in slower cumulative sales
absorption than projected by the Business Plan. In the event Lender does not, in
its sole discretion, approve the Material Deviation in the Business Plan, Lender
shall not be obligated to make any Additional Advance.
5.14 PURCHASE MONEY MORTGAGE. On or before May 31, 1995, that certain
Mortgage of the Property from Borrower in favor of Purchase Money Mortgagee
dated June 30, 1994, and recorded in the real estate records of Broward County,
Florida, on July 5, 1994, as File
<PAGE>
No. 94-330709 ("PURCHASE MONEY MORTGAGE"), shall be assigned to
Construction Mortgagee.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 NO AMENDMENTS. Borrower shall not:
(a) materially amend or modify the sales contracts and
warranty agreements for the Project without Lender's written
consent; or
(b) suffer or permit the amendment or modification of the
Incorporation Documents.
6.2 LEASES. Neither Borrower nor any Principal will enter into any
lease or other rental or occupancy arrangement or concession agreement with
respect to the Project without Lender's written consent, other than leases for
model furniture or any other leases listed in the Business Plan.
6.3 TRANSFERS OF THE PROPERTY OR BENEFICIAL INTEREST IN BORROWER.
Neither Borrower nor any Principal shall (a) create or permit the creation of
any new ownership interest in Borrower, any shareholder of Borrower, or any
Principal, or (b) sell, transfer or assign (i) all or any part of the Project
(except Sales in accordance with the Business Plan); (ii) any ownership interest
in Borrower, any shareholder of Borrower, or any Principal (including any
interest in the profits, losses or cash distributions in any way relating to the
Project or Borrower), or (iii) the beneficial interests of any Principal in
Borrower which would result in the Principals, in the aggregate, owning less
than 51% of the total beneficial interests in Borrower. Intestate transfers or
transfers by devise shall not constitute a transfer for the purposes of the
foregoing provisions.
6.4 NO ADDITIONAL LIENS, ENCUMBRANCES OR INDEBTEDNESS. Borrower
covenants not to grant or permit the filing of any lien or encumbrance on the
Project, other than those created by the A & D Loan Documents, the Construction
Loan Documents, and the Loan Documents, without the prior written consent of
Lender; provided, however, Borrower may, by appropriate proceeding, contest the
validity or amount of any asserted lien and, pending such contest, Borrower
shall not be deemed to be in default hereunder if (a) Borrower has given prior
written notice to Lender of Borrower's intent to so contest, (b) such contest
stays the enforcement of the contested lien, and (c) the contested lien is
bonded or insured over by the title insurance company or Borrower has posted
security therefor in accordance with the provisions of the A & D Loan Documents,
the Construction Loan Documents or, if there are no such requirements, in a
manner acceptable to Lender.
6.5 NO ADDITIONAL INDEBTEDNESS. Borrower shall not, without
Lender's prior written consent, incur additional indebtedness.
6.6 SINGLE ASSET ENTITY. Borrower shall not: (i) hold or
acquire, directly or indirectly, any ownership interest (legal or
<PAGE>
equitable) in any real or personal property other than the Project; (ii) become
a shareholder, member or partner of any entity which acquires or holds any
property other than the Project; or (iii) conduct any business other than the
ownership and development of the Project.
6.7 PERSONAL PROPERTY. Neither Borrower nor the Principals shall,
without the prior written consent of Lender, sell (except Sales in accordance
with the Business Plan), assign, transfer, remove or permit to be removed from
the Project any personal property owned by Borrower now or at any time located
at or used in connection with the construction, operation, repair or replacement
of the Project ("PERSONAL PROPERTY"). So long as no Event of Default exists,
Borrower may sell or otherwise dispose of the Personal Property when obsolete,
worn out, inadequate, unserviceable or unnecessary for use in the operation of
the Project, but only upon replacing the same with other Personal Property at
least equal in value and utility to the disposed Personal Property. If
replacement of the disposed Personal Property is not necessary, in Borrower's
discretion with Lender's written approval, then the proceeds of such sale shall
become a part of the Revenue.
6.8 NO AMENDMENTS. Borrower shall not modify or amend the terms and
provisions of the A & D Loan Documents or the Construction Loan Documents, in
any material respect without Lender's written consent. Borrower shall promptly
furnish Lender with copies of all modifications and amendments. Borrower will
notify Lender in writing of any default under the A & D Loan Documents or the
Construction Loan Documents within five (5) days of Borrower's actual knowledge
of such default. If Borrower has received a written default notice, Borrower
shall send a copy of such notice with its written notification to Lender.
6.9 IMBALANCE. Borrower shall immediately fund all
shortfalls and amounts necessary to keep the A&D Loan and the
Construction Loan in balance.
ARTICLE VII
EVENTS OF DEFAULT; ACCELERATION OF INDEBTEDNESS
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an "EVENT OF DEFAULT" under
this Agreement:
(a) failure of Borrower to pay, within ten (10) days of the
due date, any of the Indebtedness, including any payment due under
the Note or this Agreement; or
(b) failure of Borrower to strictly comply with Sections 5.5
(insurance), 5.8 (inspection), 6.3 (prohibition on transfers), 6.4 (no
additional liens), and 6.6 (single asset entity) of this Agreement; or
(c) breach of any covenant, representation or warranty other than as
set forth in subsections (a) and (b) above which is not cured within thirty (30)
days after notice; provided, however, if
<PAGE>
such breach cannot by its nature be cured within thirty (30) days, and Borrower
diligently pursues the curing thereof (and then in all events cures such failure
within ninety (90) days after the original notice thereof), Borrower shall not
be in default hereunder; or
(d) a petition under any Chapter of Title 11 of the United States Code
or any similar law or regulation is filed by or against Borrower or any
Principal (and in the case of an involuntary petition in bankruptcy, such
petition is not discharged within sixty (60) days of its filing), or a
custodian, receiver or trustee for any of the Project is appointed, or Borrower
or any Principal makes an assignment for the benefit of creditors, or any of
them are adjudged insolvent by any state or federal court of competent
jurisdiction, or any of them admit their insolvency or inability to pay their
debts as they become due or an attachment or execution is levied against any of
the Project; or
(e) the occurrence of a default and the expiration of any
cure period applicable thereto under any other Loan Document; or
(f) Borrower shall default in the payment of any indebtedness (other
than the Indebtedness) and such default is declared and is not cured within the
time, if any, specified therefor in any agreement governing the same; or
(g) any statement, report or certificate made or delivered to
Lender by Borrower or any Principal is not materially true and
complete at any time; or
(h) the occurrence of a default under the A & D Loan Documents or the
Construction Loan Documents and the expiration of any applicable cure period.
(i) failure to have the Preliminary Plat approved creating 131 lots on
the Property by the applicable authorities by April 30, 1995, unless Borrower
has prepaid the sum of $500,000 by May 1, 1995.
7.2 ACCELERATION; REMEDIES. Upon the occurrence of an Event of Default
at the option of Lender, the Indebtedness shall become immediately due and
payable without notice to Borrower and Lender shall be entitled to all of the
rights and remedies provided in the Loan Documents or at law or in equity. Each
remedy provided in the Loan Documents is distinct and cumulative to all other
rights or remedies under the Loan Documents or afforded by law or equity, and
may be exercised concurrently, independently, or successively, in any order
whatsoever.
ARTICLE VIII
MISCELLANEOUS
8.1 BORROWER AND LIEN NOT RELEASED. Without affecting the liability of
Borrower, any Principal or any other person liable for the payment of the
Indebtedness, and without affecting Lender's rights under this Agreement, Lender
may, from time to time and without notice to any lien holder or holder of any
right or other
<PAGE>
interest in and to the Project: (a) release any person so liable; (b) waive or
modify any provision of this Agreement or the other Loan Documents or grant
other indulgences; (c) release all or any part of the Project; (d) take
additional security for any obligation herein mentioned; (e) subordinate its
rights under any of the Loan Documents; (f) consent to the granting of any
easement; or (g) consent to any map or plan of the Project.
8.2 EXPENDITURES AND EXPENSES. Borrower agrees to promptly pay all
reasonable "COSTS" incurred by Lender in connection with the documentation,
modification, workout, collection or enforcement of the Loan or any of the Loan
Documents (as applicable) and all such Costs shall be included as additional
Indebtedness bearing interest at the Default Rate set forth in the Note until
paid. For the purposes hereof "Costs" shall mean all expenditures and expenses
which may be paid or incurred by or on behalf of Lender including repair costs,
payments to remove or protect against liens, attorneys' fees (including fees of
Lender's inside counsel), receivers' fees, appraisers' fees, engineers' fees,
accountants' fees, independent consultants' fees (including environmental
consultants), all costs and expenses incurred in connection with any of the
foregoing, Lender's out-of-pocket costs and expenses related to any audit or
inspection of the Property, outlays for documentary and expert evidence,
stenographers' charges, stamp taxes, publication costs, and costs (which may be
estimates as to items to be expended after entry of an order or judgment) for
procuring all such abstracts of title, title searches and examination, title
insurance policies, and similar data and assurances with respect to title as
Lender may deem reasonably necessary either to prosecute any action or to
evidence to bidders at any sale of the stock in Borrower the true condition of
the title to, or the value of, the Project.
8.3 DISCLOSURE OF INFORMATION. Borrower agrees that Lender shall have
the right (but shall be under no obligation) to make available to any party for
the purpose of granting participations in or selling, transferring, assigning or
conveying all or any part of the Loan (including, without limitation, any
governmental agency or authority and any prospective bidder at any sale of any
of the stock in Borrower) any and all information which Lender may have with
respect to the Project and the Borrower, whether provided by Borrower, the
Principals or any third party or obtained as a result of any environmental
assessments. Borrower and the Principals agree that Lender shall have no
liability whatsoever as a result of delivering any such information to any third
party, and Borrower and the Principals, on behalf of themselves and their
successors and assigns, hereby release and discharge Lender from any and all
liability, claims, damages, or causes of action, arising out of, connected with
or incidental to the delivery of any such information to any third party.
8.4 SALE OF LOAN. Lender, at any time and without the consent of
Borrower or the Principals, may grant participations in or sell, transfer,
assign and convey all or any portion of its right, title and interest in and to
the Loan, this Agreement and the other Loan Documents, any guaranties given in
connection with
<PAGE>
the Loan and any collateral given to secure the Loan, so long as Lender remains
as manager and servicer of the Loan.
8.5 FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by Lender in
exercising any right or remedy under any of the Loan Documents, or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any right or remedy. Lender's acceptance of payment of any sum secured by any of
the Loan Documents after the due date of such payment shall not be a waiver of
Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Indebtedness, nor shall Lender's receipt of any awards, proceeds or damages
under Section 7.2 hereof operate to cure or waive Borrower's or the Principals'
default in payment of sums secured by any of the Loan Documents. With respect to
all Loan Documents, only waivers made in writing by Lender shall be effective
against Lender.
8.6 WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby
waives the right to assert any statute of limitations as a bar to
the enforcement of the lien created by any of the Loan Documents or to any
action brought to enforce the Note or any other obligation secured by any of the
Loan Documents.
8.7 GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Illinois. The
invalidity, illegality or unenforceability of any provision of this Agreement
shall not affect or impair the validity, legality or enforceability of the
remainder of this Agreement, and to this end, the provisions of this Agreement
are declared to be severable.
8.8 NOTICE. Any notice or other communication required or permitted to
be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if served in person, when served; (b)
if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time) on
a business day; provided that a hard copy of such notice is also sent pursuant
to clause (c) or (d) below; (c) if by overnight courier, on the first business
day after delivery to the courier; or (d) if by U.S. Mail, on the fourth (4th)
day after deposit in the mail, postage prepaid, certified mail, return receipt
requested.
Notices to Borrower: Transeastern Properties at the Cove, Inc.
3300 University Drive
Coral Springs, Florida 33065
Attention: Arthur Falcone
Telecopy: (305) 346-9704
<PAGE>
Notices to Lender: Heller Financial, Inc.
Real Estate Financial Services
500 West Monroe Street, 13th Floor
Chicago, Illinois 60661
Attention: Manager, Residential Investment Group
Telecopy: (312) 441-7150
with a copy to: Heller Financial, Inc.
Real Estate Financial Services
500 West Monroe Street, 15th Floor
Chicago, Illinois 60661
Attention: Deputy General Counsel
Telecopy: (312) 441-7872
8.9 SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS. The covenants and agreements contained in the Loan Documents shall
bind, and the rights thereunder shall inure to, the respective successors and
assigns of Lender, Borrower and the Principals, subject to the provisions of
this Agreement. All covenants and agreements of Borrower and the Principals
shall be joint and several. In exercising any rights under the Loan Documents or
taking any actions provided for therein, Lender may act through its employees,
agents or independent contractors as authorized by Lender. The captions and
headings of the paragraphs of this Agreement are for convenience only and are
not to be used to interpret or define the provisions hereof.
8.10 TERMS. As used in the Loan Documents "business day" means any day,
other than a Saturday or a Sunday, when banks in Chicago, Illinois are not
required or authorized to be closed.
8.11 LOSS OF NOTE. Upon notice from Lender of the loss, theft, or
destruction of the Note and upon receipt of an indemnity reasonably satisfactory
to Borrower from Lender, or in the case of mutilation of the Note, upon
surrender of the mutilated Note, Borrower shall make and deliver a new note of
like tenor in lieu of the then to be superseded Note.
8.12 EXCULPATION. This Agreement and other Loan Documents and all of
Borrower's obligations hereunder and thereunder are subject to the provisions of
the Note entitled Exculpation, which are incorporated herein by this reference.
8.13 TIME OF ESSENCE. Time is of the essence of this
Agreement and the performance of each of the covenants and
agreement contained herein.
8.14 VENUE. BORROWER AGREES THAT ALL ACTIONS OR PROCEEDINGS
ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT
OF, RELATED TO OR FROM THIS AGREEMENT SHALL BE LITIGATED, AT
LENDER'S SOLE DISCRETION AND ELECTION, ONLY IN COURTS HAVING A
SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS. BORROWER
HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE
OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. BORROWER
HEREBY IRREVOCABLY APPOINTS AND DESIGNATES C T CORPORATION SYSTEM,
<PAGE>
WHOSE ADDRESS IS BORROWER, C/O C T CORPORATION SYSTEM, 208 S. LASALLE STREET,
CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED AGENT FOR SERVICE OF LEGAL
PROCESS AND AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY SHALL CONSTITUTE
PERSONAL SERVICE OF PROCESS UPON SUCH PARTY. IN THE EVENT SERVICE IS
UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO,
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>
ILLINOIS, BORROWER SHALL, WITHIN TEN (10) DAYS AFTER LENDER'S REQUEST, APPOINT A
SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD
NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY
APPOINTED, LENDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A
SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO BORROWER. BORROWER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST IT BY LENDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH THIS PARAGRAPH.
8.15 JURY TRIAL WAIVER. BORROWER AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND THE BUSINESS RELATIONSHIP
THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY MADE BY BORROWER AND LENDER, AND BORROWER ACKNOWLEDGES THAT NEITHER
LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF
FACT TO INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER AND LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
OF THEM HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. BORROWER AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
8.16 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original and
together shall constitute the Agreement.
8.17 FINAL AGREEMENT. This Agreement, together with the other Loan
Documents, represent the entire agreement among Borrower, Principal, and Lender
and supercedes all prior agreements among such parties. The Loan Documents may
only be modified by written instrument executed by the applicable parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
has caused the same to be executed by their duly authorized representatives as
of the date first above written.
BORROWER:
TRANSEASTERN PROPERTIES AT THE COVE,
INC., a Florida corporation
By:____________________________
Name: Arthur Falcone
Its: President
<PAGE>
LENDER:
HELLER FINANCIAL, INC.
By:____________________________
Its:___________________________
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
LOTS 1 THROUGH 12 INCLUSIVE, BLOCK A; LOTS 1 THROUGH 57, INCLUSIVE, BLOCK B;
LOTS 1 THROUGH 10 INCLUSIVE, BLOCK C; LOTS 1 THROUGH 26, INCLUSIVE, BLOCK D;
PARCELS A, B AND C, THE COVE OF EAGLE LAKE, ACCORDING TO THE PLAT THEREOF, AS
RECORDED IN PLAT BOOK 146 AT PAGE 40 OF THE PUBLIC RECORDS OF BROWARD COUNTY,
FLORIDA.
<PAGE>
EXHIBIT B
BUSINESS PLAN
<PAGE>
EXHIBIT C
CONSTRUCTION MORTGAGEE LETTER
Loan No. 94-273
--------------------
February __, 1995
Heller Financial, Inc.
500 West Monroe Street
Suite 1500
Chicago, Illinois 60661
Re: $3,437,500.00 loan (the "Loan") by Heller Financial, Inc.
("Heller") to Transeastern Properties at the Cove, Inc,
a Florida corporation ("Borrower")
Ladies and Gentlemen:
We have been advised by Borrower that Heller requires this letter from
us as a condition precedent to making the Loan to Borrower.
As an inducement to Heller making the Loan, we hereby agree as follows:
1. We will promptly send Heller a copy of all default notices
sent to Borrower under the loan documents evidencing or
securing our loans to Borrower (collectively, the "ADC
Documents").
2. We acknowledge the pledge of the common stock to Heller.
Heller's acquisition of additional common stock in Borrower
due to Heller's exercise of its rights under the stock pledge
agreement shall not constitute a default or an event of
default under the ADC Documents.
3. We will not change the loan amount, the interest rate, the
maturity date, the release provisions or the default
provisions of the ADC Documents without Heller's prior written
consent.
4. We confirm that there is no default or event of default under
the ADC Documents, and that all of the conditions precedent to
the funding of our loans to Borrower have either been
satisfied or waived by us except as follows:
---------------------------------------------------
-------------------------------------------------------
<PAGE>
-------------------------------------------------------
---------------------.
Sincerely,
OHIO SAVINGS BANK
By: ______________________________
Name: _____________________________
Title: ______ President
<PAGE>
EXHIBIT D
PERMITTED EXCEPTIONS
<PAGE>
EXHIBIT E
LITIGATION
NONE
<PAGE>
SCHEDULE 1
A&D Loan 3.1
A&D Loan Documents 3.1(b)
Accrued Interest 1.5
Additional Advances 1.2
Administration Fee 1.8 (vi)
Affiliate 1.9
Agreement Preamble
Borrower Preamble
Budget 1.8
Business Day 8.10
Business Plan 1.8
Charges 5.2
Closing Date 1.1
Collateral Article II
Construction Loan 3.1
Construction Loan Documents 3.1(b)
Construction Mortgagee 3.1
Control 1.9
Costs 8.2
Event of Default 7.1
FIRREA 3.4
Hazardous Materials 4.9
Home(s) Recitals/B.
Improvements Recitals/B.
Incorporation Documents 4.2
Indebtedness 5.1
Initial Funding Amount 1.1
Interest Rate 1.4
Lender Preamble
Loan Recitals/A.
Loan Documents 3.2
Material Deviation 5.13
Maturity Date 1.3
Maximum Interest Accrual 1.5
Note Recitals/A.
Participation 1.6
Payment Terms 1.5
Person 1.9
Personal Property 6.7
Pledge Article II
Preliminary Plat Recitals/B.
Principals 4.1(b)
Project Recitals/B.
Project Costs 1.8
Property Recitals/B.
Purchase Money Loan 3.1(c)
Purchase Money Mortgage 5.14
Purchase Money Mortgagee 3.1(c)
Revenue 1.8
Sale 1.8
Sales Commission 1.8 (b)
Sales Costs 1.8
Warranty Reserve 1.8 (viii)
<PAGE>
Working Capital Reserve 1.8 (vii)
<PAGE>
PROMISSORY NOTE
$3,437,500 February 22, 1995
1. PROMISE TO PAY.
FOR VALUE RECEIVED, TRANSEASTERN PROPERTIES AT THE COVE, INC., a
Florida corporation ("MAKER") whose address is 3300 University Drive, Coral
Springs, Florida 33065, promises to pay to the order of HELLER FINANCIAL, INC.,
a Delaware corporation, and its successors and assigns ("HOLDER") the sum of
THREE MILLION FOUR HUNDRED AND THIRTY SEVEN THOUSAND FIVE HUNDRED AND NO/100
DOLLARS ($3,437,500), together with all other amounts added thereto pursuant to
this Note or otherwise payable to Holder including, but not limited to, the
Participation set forth in the Loan Agreement (as hereinafter defined) (the
"LOAN") (or so much thereof as may from time to time be outstanding), together
with interest thereon as hereinafter set forth, payable in lawful money of the
United States of America. Payments shall be made to Holder at 500 West Monroe
Street, 15th Floor, Chicago, Illinois 60661 (or such other address as Holder may
hereafter designate in writing to Maker).
The repayment of the Loan evidenced by this Note is secured by, among
other things, those certain Stock Pledge Agreements of even date herewith (the
"ASSIGNMENTS") encumbering, among other things, all of the issued and
outstanding common stock in Maker. This Note, the Assignments, the Loan
Agreement of even date herewith (the "LOAN AGREEMENT") and any other documents
evidencing or securing the Loan or executed in connection therewith, and any
modification, renewal or extension of any of the foregoing are collectively
called the "LOAN DOCUMENTS".
2. PRINCIPAL AND INTEREST.
So long as no Event of Default exists, interest shall accrue on the
principal balance hereof from time to time outstanding and Maker shall pay
interest thereon at a rate equal to a fixed rate per annum equal to ten percent
(10%) (the "INTEREST RATE"). Interest shall be calculated based on a 360 day
year and charged for the actual number of days elapsed.
3. PAYMENT.
Notwithstanding the Interest Rate, commencing March 20, 1995, Maker
shall make monthly payments in arrears on or before the twentieth day of each
month computed at the Payment Rate. "PAYMENT RATE" shall mean an amount equal to
cash available as of the end of the prior month after applying "REVENUE" (as
defined in the Loan Agreement) to satisfy the distribution requirements of
subsections (i) through (vii) of Section 1.8 of the Loan Agreement ("AVAILABLE
CASH"). The Payment Rate shall not exceed the sum of (i) all
-1-
<PAGE>
outstanding Accrued Interest plus (ii) Interest then due and payable from time
to time on the outstanding Principal Amount. The Payment Rate shall be
calculated based on a 360 day year and charged for the actual number day
elapsed. Maker's monthly payment shall be applied first to interest due at the
Interest Rate for such month, second to Accrued Interest, if any, until paid in
full, and third to the outstanding principal balance.
To the extent the Interest Rate exceeds the Payment Rate, such excess
interest shall accrue ("ACCRUED INTEREST") and shall bear interest at the
Interest Rate, and the cumulative amount of Accrued Interest shall not exceed
the lesser of (a) Six Hundred Eighty-Seven Thousand Five Hundred Dollars
($687,500), or (b) twenty-five percent (25%) of the outstanding balance of the
principal amount of the Loan (the "MAXIMUM INTEREST ACCRUAL"). In the event
Accrued Interest reaches the Maximum Interest Accrual, no further interest
accrual shall be permitted, and Maker shall immediately commence monthly
interest payments at the greater of the Interest Rate and the Payment Rate. Any
repaid Accrued Interest shall not be available for further accrual.
The Loan shall be due and payable on or before February 28, 1999, or
any earlier date on which the Loan shall be required to be paid in full, whether
by acceleration or otherwise ("MATURITY DATE").
4. PREPAYMENT.
Maker may prepay the Loan in full or in part without premium at any
time.
5. DEFAULT.
5.1 EVENTS OF DEFAULT.
Any of the following shall constitute an "EVENT OF DEFAULT" under this
Note: (a) failure to pay any amounts owed pursuant to this Note within ten (10)
calendar days after such payment is due; or (b) the occurrence of any default
under any of the other Loan Documents, after giving effect to any applicable
grace or cure period.
5.2 REMEDIES.
So long as an Event of Default remains outstanding: (a) interest shall
accrue at a rate equal to the Interest Rate plus four percent (4%) per annum;
(b) Holder may, at its option and without notice (such notice being expressly
waived), declare the Loan immediately due and payable; and (c) Holder may pursue
all rights and remedies available under the Assignments or any other Loan
Documents. Holder's rights, remedies and powers, as provided in this Note and
the other Loan Documents, are cumulative and concurrent, and may be pursued
singly, successively or together against Maker, any guarantor of the Loan, the
security described in the Loan Documents, and any other security given at any
time to
-2-
<PAGE>
secure the payment hereof, all at the sole discretion of Holder. Additionally,
Holder may resort to every other right or remedy available at law or in equity
without first exhausting the rights and remedies contained herein, all in
Holder's sole discretion. Failure of Holder, for any period of time or on more
than one occasion, to exercise its option to accelerate the Maturity Date shall
not constitute a waiver of the right to exercise the same at any time during the
continued existence of any Event of Default or any subsequent Event of Default.
If any attorney is engaged: (i) to collect the Loan or any sums due
under the Loan Documents, whether or not legal proceedings are thereafter
instituted by Holder; (ii) to represent Holder in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Note; (iii) to protect the liens and security
interests of the Assignments or any of the Loan Documents; (iv) to represent
Holder in any other proceedings whatsoever in connection with any Assignment or
any of the other Loan Documents including post judgment proceedings to enforce
any judgment related to the Loan Documents; or (v) in connection with seeking an
out-of-court workout or settlement of any of the foregoing, then Maker shall pay
to Holder all costs, attorneys' fees and expenses in connection therewith, in
addition to all other amounts due hereunder.
6. LATE CHARGE.
If payments of principal and/or interest, or any other amounts under
the other Loan Documents are not timely made or remain overdue for a period of
ten (10) days, Maker, without notice or demand by Holder, promptly shall pay an
amount ("LATE CHARGE") equal to four percent (4%) of each delinquent payment.
7. GOVERNING LAW; SEVERABILITY.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.
8. WAIVER.
Maker, for itself and all endorsers, guarantors and sureties of this
Note, and their heirs, successors and assigns, legal representatives, hereby
waives presentment for payment, demand, notice of nonpayment, notice of
dishonor, protest of any dishonor, notice of protest and protest of this Note,
and all other notices in connection with the delivery, acceptance, performance,
default or enforcement of the payment of this Note, and agrees that their
respective liability shall be unconditional and without regard to the liability
of any other party and shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or modification granted or consented to by
Holder. Maker, for itself
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and all endorsers, guarantors and sureties of this Note, and their heirs, legal
representatives, successors and assigns, hereby consents to every extension of
time, renewal, waiver or modification that may be granted by Holder with respect
to the payment or other provisions of this Note, and to the release of any
makers, endorsers, guarantors or sureties, and of any collateral given to secure
the payment hereof, or any part hereof, with or without substitution, and agrees
that additional makers, endorsers, guarantors or sureties may become parties
hereto without notice to Maker or to any endorser, guarantor or surety and
without affecting the liability of any of them.
9. SECURITY, APPLICATION OF PAYMENTS.
This Note is secured by the liens, encumbrances and obligations created
hereby and by the other Loan Documents and the terms and provisions of the other
Loan Documents are hereby incorporated herein. Payments will be applied, at
Holder's option, first to any fees, expenses or other costs Maker is obligated
to pay under this Note or the other Loan Documents, second to interest due on
the Loan and third to the outstanding principal balance of the Loan.
10. MISCELLANEOUS.
10.1 AMENDMENTS.
This Note may not be terminated or amended orally, but only by a
termination or amendment in writing signed by Holder and Maker.
10.2 LAWFUL RATE OF INTEREST.
In no event whatsoever shall the amount of interest paid or agreed to
be paid to Holder pursuant to this Note or any of the Loan Documents exceed the
highest lawful rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Note and the
other Loan Documents shall involve exceeding the lawful rate of interest which a
court of competent jurisdiction may deem applicable hereto ("EXCESS INTEREST"),
then IPSO FACTO, the obligation to be fulfilled shall be reduced to the highest
lawful rate of interest permissible under such law and if, for any reason
whatsoever, Holder shall receive, as interest, an amount which would be deemed
unlawful under such applicable law, such interest shall be applied to the Loan
(whether or not due and payable), and not to the payment of interest, or
refunded to Maker if such Loan has been paid in full. Neither Maker nor any
guarantor or endorser shall have any action against Holder for any damages
whatsoever arising out of the payment or collection of any such Excess Interest.
10.3 CAPTIONS.
The captions of the Paragraphs of this Note are for convenience of
reference only and shall not be deemed to modify, explain, enlarge or restrict
any of the provisions hereof.
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10.4 NOTICES.
Notices shall be given under this Note in conformity with the terms and
conditions of the Loan Agreement.
10.5 JOINT AND SEVERAL.
The obligations of Maker under this Note shall be joint and several
obligations of Maker and of each Maker, if more than one, and of each Maker's
heirs, personal representatives, successors and assigns.
10.6 TIME OF ESSENCE.
Time is of the essence of this Note and the performance of each of the
covenants and agreements contained herein.
11. EXCULPATION.
Subject to the provisions set forth below, neither Maker nor any
Principal (as defined in the Loan Agreement) shall be personally liable to pay
the Loan and Holder agrees to look solely to the Project (as defined in the Loan
Agreement) and any other collateral heretofore, now, or hereafter pledged by any
party to secure the Loan. Notwithstanding the foregoing, Maker and each
Principal, jointly and severally, shall be personally liable:
(a) for all losses, damages, costs and expenses including
attorneys' fees incurred by Holder as a result of (i) any failure after
the occurrence and during the continuance of any Event of Default
(without benefit of any applicable grace or cure period), to apply any
portion of the gross income from the Project to the Loan or to
customary operating expenses of the Project, (ii) any material
misrepresentation in any Loan Document, fraud or any misappropriation
of any funds deriving from the Project, (iii) any intentional or
material waste or abandonment of the Project, or (iv) any breach of any
representation, covenant or obligation concerning Hazardous Materials
(as defined in the Loan Agreement) set forth in the Loan Agreement or
set forth in that certain Hazardous Materials Indemnity Agreement from
Maker and Principals to Holder of even date herewith, each as amended
from time to time, and
(b) for payment of the Loan (including the Participation, if
due, and all principal, interest, fees, costs, expenses and attorney's
fees) and all other obligations of Maker under the Loan Documents in
the event of (i) any breach of any of the covenants in Sections 6.3,
6.4 or 6.5 of the Loan Agreement pertaining to transfers of interests
and additional encumbrances, respectively or (ii) the filing by Maker,
or the filing against Maker by any Principal, of any proceeding for
relief under any federal or state bankruptcy, insolvency or
receivership laws or any assignment for the benefit of creditors made
by Maker.
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The foregoing shall in no way limit or impair the enforcement against
the Project or any other security granted by the Loan Documents of any of the
Holder's rights and remedies pursuant to the Loan Documents.
12. SALE OF LOAN.
Holder, at any time and without the consent of Maker, may grant
participations in or sell, transfer, assign and convey all or any portion of its
right, title and interest in and to the Loan, this Note, the Assignments and the
other Loan Documents, any guaranties given in connection with the Loan and any
collateral given to secure the Loan.
13. VENUE.
MAKER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY,
INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS NOTE
SHALL BE LITIGATED, AT HOLDER'S SOLE DISCRETION AND ELECTION, ONLY IN COURTS
HAVING A SITUS WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS. MAKER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT
LOCATED WITHIN SAID COUNTY AND STATE. MAKER HEREBY IRREVOCABLY APPOINTS AND
DESIGNATES C T CORPORATION SYSTEM, WHOSE ADDRESS IS MAKER, C/O C T CORPORATION
SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS DULY AUTHORIZED
AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH PROCESS UPON
SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON MAKER. IN THE EVENT
SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN
CHICAGO, ILLINOIS, MAKER SHALL, WITHIN TEN (10) DAYS AFTER HOLDER'S REQUEST,
APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH
PERIOD NOTIFY HOLDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY
APPOINTED, HOLDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A
SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO MAKER. MAKER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST IT BY HOLDER ON THE LOAN DOCUMENTS IN ACCORDANCE WITH THIS PARAGRAPH.
14. JURY TRAIL WAIVER.
MAKER, AND HOLDER BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE BUSINESS RELATIONSHIP THAT
IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
MADE BY MAKER AND BY HOLDER, AND MAKER ACKNOWLEDGES THAT NEITHER HOLDER NOR ANY
PERSON ACTING ON BEHALF OF HOLDER HAS MADE ANY REPRESENTATIONS OF FACT TO
INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY
MODIFY OR NULLIFY ITS EFFECT. MAKER AND HOLDER ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT MAKER AND HOLDER
HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS NOTE AND THAT EACH OF
THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.
MAKER AND HOLDER FURTHER ACKNOWLEDGE THAT THEY
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HAVE BEEN REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL.
IN WITNESS WHEREOF, Maker has executed this Note or has caused the same
to be executed by its duly authorized representatives as of the date set first
forth above.
MAKER:
TRANSEASTERN PROPERTIES AT THE COVE,
INC., a Florida corporation
By: _______________________
Name: Arthur Falcone
Its: President
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STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (this "PLEDGE AGREEMENT"), dated as of
October, 1994, is between TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC., a
corporation ("SHAREHOLDER"), and HELLER FINANCIAL, INC., a Delaware corporation
("LENDER").
RECITALS
A. Lender and Transeastern Properties at the Cove, Inc., a Florida
corporation ("BORROWER"), have entered into a Loan Agreement (as the same may be
amended, modified, supplemented or restated from time to time, the "LOAN
AGREEMENT"), pursuant to which Lender has agreed or to make loans and other
financial accommodations to Borrower (the "Loan") subject to the terms and
conditions set forth in the Loan Agreement;
B. One of the conditions to Lender's agreement to enter into the Loan
Agreement is that Shareholder shall have executed and delivered this Pledge
Agreement to secure the payment and performance of Shareholder's Obligations (as
hereinafter defined).
NOW, THEREFORE, in order to induce Lender to make the Loan, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, Shareholder and Lender hereby agree as follows:
1. DEFINITIONS. All capitalized terms not elsewhere defined in this
Pledge Agreement and defined in the Loan Agreement shall have the respective
meanings ascribed to such terms in the Loan Agreement. The following terms
shall have the following meanings in this Pledge Agreement:
COLLATERAL: the Securities and all dividends, distributions and other
amounts or additional securities of Borrower or any successor in interest to
Borrower to which Shareholder or any successor in interest to Shareholder (with
or without additional consideration) is or becomes entitled by virtue of the
ownership by such Person of any of the Securities or as the result of any
corporate reorganization, merger, consolidation, stock split, stock dividend,
conversion, preemptive right or otherwise, and the proceeds thereof.
INDEBTEDNESS: all liabilities and obligations of Borrower and
Principal to Lender under the Loan Documents, including payments of Lender's
Percentage of Excess Cash Flow and the Participation.
SECURITIES: the capital stock of Borrower and any warrants, options or
other rights to purchase capital stock of Borrower owned by Shareholder and
described in Exhibit A hereto, and duly executed assignments separate from
certificate satisfactory to Lender attached thereto.
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SHAREHOLDER'S OBLIGATIONS: (i) any and all Indebtedness, due or to
become due, now existing or hereafter arising, of Shareholder to Lender pursuant
to the terms of this Pledge Agreement or any other Loan Documents and (ii) the
performance of the covenants contained in this Pledge Agreement and all other
Loan Documents.
2. PLEDGE OF COLLATERAL. To secure payment and performance of Shareholder's
Obligations, Shareholder hereby pledges and deposits with Lender the Securities
and hereby assigns and grants to Lender a valid and perfected first Lien in (i)
the Securities and (ii) all other items of Collateral now owned or hereafter
acquired by Shareholder.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. Shareholder hereby
represents, warrants and covenants to Lender as follows:
3.1 AUTHORITY. Shareholder has full power and authority to enter into,
execute, deliver and carry out the terms of the Loan Documents to which
it is a party and to incur the obligations provided for therein.
3.2 RESTRICTIONS. Shareholder is not a party to and has no knowledge of
any agreements restricting the transfer of any of the Collateral other
than as provided in the Loan Documents. Shareholder has not granted any
options for the purchase of, or any calls, commitments or claims of any
character relating to, any of the Collateral to any person.
3.3 BINDING AGREEMENTS. This Pledge Agreement, when executed and
delivered, will constitute the valid and legally binding obligations of
Shareholder, enforceable against Shareholder in accordance with their
respective terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and (ii) equitable principles.
3.4 LITIGATION. There are no actions, suits, arbitration proceedings or
claims pending or threatened against Shareholder or maintained by
Shareholder at law or in equity or before any governmental body which,
if adversely determined, could have a material adverse effect. There
are no proceedings pending or threatened against Shareholder which call
into question the validity or enforceability of any of the Loan
Documents to which Shareholder is a party or any of the transactions
contemplated thereby.
3.5 CONFLICTING AGREEMENTS. Shareholder is not in default under any
agreement to which Shareholder is a party or by which Shareholder or
any of the property of Shareholder is bound, the effect of which
default might have a material adverse effect. No authorization,
consent, approval or other action by, and no notice to or filing with,
any governmental body or any other person which has not already been
obtained, taken or filed, as applicable, is required (i) for the
execution, delivery or, performance by Shareholder of this Pledge
Agreement or (ii) as a condition to the validity or,
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enforceability of this Pledge Agreement, or the validity,
enforceability or priority of the security interests in favor of
Lender, except for certain filings to establish and perfect the
security interests in favor of Lender. No provision of any mortgage,
indenture, contract, agreement, statute, rule, regulation, judgment,
decree or order binding on Shareholder or affecting the property of
Shareholder conflicts with, or requires any consent which has not
already been obtained under, or would in any way prevent the execution,
delivery or performance of the terms of any of the Loan Documents to
which Shareholder is a party. The execution, delivery and carrying out
of the terms of the Loan Documents will not constitute a default under,
or result in the creation or imposition of, or obligation to create,
any Lien upon the property of Shareholder pursuant to the terms of any
such mortgage, indenture, contract or agreement.
3.6 TAXES. Shareholder has filed or caused to be filed all tax returns
required to be filed, and has paid, or has made adequate provision for
the payment of, all taxes shown to be due and payable on such returns
or in any assessments made against Shareholder, and no tax liens have
been filed and no claims are being asserted in respect of such taxes
against Shareholder or any of the property of Shareholder.
3.7 COMPLIANCE WITH APPLICABLE LAWS. Shareholder is not in
default with respect to any judgment, order, writ, injunction, decree
or decision of any governmental body, which default could have a
material adverse effect.
3.8 NO MISREPRESENTATION. Neither this Pledge Agreement nor any
certificate, information or report furnished or to be furnished by or
on behalf of Shareholder to any Lender in connection with any of the
transactions contemplated hereby, contains or will contain a
misstatement of material fact, or omits or will omit to state a
material fact required to be stated in order to make the statements
contained herein, taken as a whole, not misleading in the light of the
circumstances under which such statements were made. There is no fact,
other than information known to the public generally, that would be
expected to have a material adverse effect that has not been disclosed
expressly to Lender in writing.
3.9 BURDENSOME OBLIGATIONS. After giving effect to the transactions
contemplated by this Pledge Agreement and the other Loan Documents to
which Shareholder is a party, Shareholder (i) will not be a party to or
be bound by any franchise, agreement, deed, lease or other instrument,
or be subject to any restriction, which is so unusual or burdensome, so
as to cause a material adverse effect, (ii) does not intend to incur,
and does not believe that Shareholder will incur, debts beyond
Shareholder's ability to pay such debts as they become due, (iii) owns
and will own property, the fair saleable value of which is (A) greater
than the total amount of Shareholder's liabilities (including
contingent liabilities) and (B) greater than the amount that will be
required to pay the probable liabilities of Shareholder's then existing
debts as they become absolute and matured and (iv) has and will have
capital that is not unreasonably small in relation to Shareholder's
businesses as presently conducted and as proposed to be conducted.
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Shareholder does not presently anticipate that future expenditures
needed to meet the provisions of federal or state statutes, orders,
rules or regulations will be so burdensome so as to have a material
adverse effect.
3.10 COLLATERAL. With respect to the Collateral deposited by
Shareholder with Lender on the date hereof, (i) such Collateral
represents 100% of the issued and outstanding capital stock and
warrants, options and other rights to purchase capital stock of
Borrower, (ii) Shareholder is the legal and beneficial owner of such
Collateral, (iii) such Collateral is validly issued, fully paid and
non-assessable and is registered in the name of Shareholder, (iv) the
pledge of such Collateral pursuant to the terms of this Pledge
Agreement, together with delivery thereof, creates a valid and
perfected first Lien on such Collateral in favor of Lender, (v) the
assignments separate from certificate attached to the certificates
representing such Collateral have been duly executed and delivered by
Shareholder to Lender, (vi) none of such Collateral is subject to any
Lien of any kind whatsoever, except for the perfected first Lien on
such Collateral granted to Lender hereby, (vii) no authorization,
approval or other action by, or notice to or filing with, any
governmental body is required for the pledge by Shareholder of such
Collateral pursuant to the terms of this Pledge Agreement, (viii) until
all of Borrower's Obligations have been paid and performed in full,
subject to the provisions of the Loan Agreement, Shareholder: (A) will
not create or permit to exist any lien upon or with respect to the
Collateral, except for the first Lien thereon granted to Lender by this
Pledge Agreement, and (B) will not sell, transfer, convey, assign, or
otherwise divest Shareholder's interest in the Collateral, or any part
thereof, to any other person.
4. STOCK SPLITS, STOCK DIVIDENDS.
4.1 ADDITIONAL SECURITIES. Shareholder agrees that in the event that
Shareholder, by virtue of the ownership by Shareholder of the
Collateral, now is, or hereafter becomes, entitled (with or without
additional consideration) to other or additional securities as the
result of any corporate reorganization, merger, consolidation, stock
split, stock dividend, conversion or preemptive right or otherwise,
Shareholder shall:
4.1.1 DELIVERY. Cause the issuer of such additional securities
to deliver to Lender the certificates evidencing the ownership
by Shareholder of such additional securities and hereby
authorizes and empowers Lender to demand the same from such
issuer, and agrees if such certificates are delivered to
Shareholder, to take possession thereof in trust for Lender;
4.1.2 ASSIGNMENT SEPARATE FROM CERTIFICATE. Deliver to
Lender an assignment separate from certificate with respect
to such securities, executed in blank by Shareholder;
4.1.3 REPRESENTATIONS AND WARRANTIES. Deliver to Lender a
certificate, executed by Shareholder and dated the date of
such pledge, as to the truth and correctness
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on such date of the representations and warranties set forth
in Section 3 hereof; and
4.1.4 ADDITIONAL DOCUMENTS. Deliver to Lender such other
certificates, forms and other instruments as Lender may
request in connection with such pledge.
4.2 ADDITIONAL COLLATERAL. Shareholder agrees that such additional
securities shall constitute a portion of the Collateral and be subject
to this Pledge Agreement in the same manner and to the same extent as
the Securities pledged hereby to Lender on the date hereof.
5. VOTING POWER; DISTRIBUTIONS. Unless and until an Event of Default shall have
occurred and be continuing, Shareholder shall be entitled to exercise all voting
powers in all corporate matters pertaining to the Collateral or otherwise, for
any purpose not inconsistent with, or in violation of, the provisions of any of
the Loan Documents. Except as otherwise provided in the Loan Agreement, unless
and until all of Borrower's Obligations and Shareholder's Obligations have been
performed and paid in full, Shareholder shall not be entitled to receive any
dividends or other distributions with respect to any portion of the Collateral.
If any such distributions are received by Shareholder in violation of the terms
of this Section 5, such distributions shall be (i) held in trust by Shareholder
on behalf of Lender, (ii) turned over to Lender by Shareholder immediately upon
receipt thereof and (iii) deemed to constitute a portion of the Collateral
pledged by Shareholder to Lender hereunder.
6. DEFAULT AND REMEDIES.
6.1 OCCURRENCE. The occurrence of any of the following shall
constitute an Event of Default hereunder:
6.1.1 DEFAULT UNDER LOAN DOCUMENTS. If an Event of Default
under the Loan Documents shall occur.
6.1.2 BREACH OF COVENANTS. If Shareholder shall fail to
observe or perform any covenant or agreement (other than those
specifically addressed elsewhere in this Section 6.1) made by
Shareholder under this Pledge Agreement, and such failure
shall continue for a period of thirty (30) days after written
notice of such failure is given by Agent.
6.1.3 BREACH OF WARRANTY. If any representation or warranty
made by or on behalf of any Shareholder in or pursuant to this
Pledge Agreement shall prove to be false or misleading in any
material respect on the date made.
6.1.4 COLLATERAL. If any material portion of the Collateral
shall be seized or taken by a governmental body or person,
or Shareholder shall fail to maintain or cause to be
maintained the liens in the Collateral granted hereby and
the priority
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of such Liens as against any person, or the title and rights
of Shareholder to any material portion of the Collateral shall
have become the subject matter of litigation which could
reasonably be expected to result in impairment or loss of the
security provided by this Pledge Agreement.
6.2 REMEDIES. If an Event of Default shall occur and be
continuing, Lender, at its option, may:
6.2.1 REGISTRATION. Cause the Collateral to be registered in
its name or in the name of its nominee;
6.2.2 VOTING POWER. Exercise all voting powers pertaining to
the Collateral and otherwise act with respect thereto as
though Lender were the owner thereof;
6.2.3 DISTRIBUTIONS. Receive all dividends and all other
distributions of any kind whatsoever on all or any part of
such Collateral;
6.2.4 COLLECTION, CONVERSION. Exercise any and all rights of
collection, conversion or exchange, and any and all other
rights, privileges, options or powers of Shareholder
pertaining or relating to such Collateral;
6.2.5 SALE OF COLLATERAL. Subject to any applicable state or
federal securities laws, sell, assign and deliver the whole,
or from time to time, any part of the Collateral at any
broker's board or at any private sale or at public auction,
with or without demand for performance or advertisement of the
time or place of sale or adjournment thereof or otherwise, and
free from any right of redemption (all of which hereby
expressly are waived by Shareholder) for cash, for credit or
for other property, for immediate or future delivery, and for
such price and on such terms as Lender in its sole discretion
may determine; and
6.2.6 OTHER REMEDIES. Exercise any other remedy specifically
granted under this Pledge Agreement, the Guaranty , the other
Loan Documents or now or hereafter existing in equity, or at
law, by virtue of statute or otherwise.
With respect to the actions described in each of subsections 6.2.2 and
6.2.4 above, Shareholder hereby irrevocably constitutes and appoints
Lender its proxy and attorney-in-fact with full power of substitution
and acknowledges that the constitution and appointment of such proxy
and attorney-in-fact are coupled with an interest and are irrevocable.
6.3 AGREEMENT TO SELL COLLATERAL. For the purposes of this Section 6,
an agreement to sell all or any part of the Collateral shall be treated
as a sale thereof and Lender shall be free to carry out such sale
pursuant to such agreement, and Shareholder shall not be entitled to
the return of any of the same subject thereto, notwithstanding the fact
that
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after Lender shall have entered into such an agreement, all Events of
Default hereunder may have been remedied or all of Borrower's
Obligations and Shareholder's Obligations may have been paid and/or
performed in full.
6.4 LENDER MAY BID. At any sale made pursuant to Section 6.2 above,
Lender may bid for and purchase, free from any right of equity or
redemption on the part of Shareholder (the same hereby being waived and
released by Shareholder), any part or all of the Collateral that is
offered for sale, and Lender, upon compliance with the terms of sale,
may hold, retain and dispose of such Collateral without further
accountability therefor.
6.5 PROCEEDS OF SALE. The proceeds of any sale of the whole or any part
of the Collateral and any other monies at the time held by Lender under
the provisions of this Pledge Agreement shall be applied in accordance
with the terms of the Loan Agreement.
6.6 NO DUTY OF LENDER. Lender shall not have any duty to exercise any
of the rights, privileges, options or powers or to sell or otherwise
realize upon any of the Collateral, as hereinbefore authorized, and
Lender shall not be responsible for any failure to do so or delay in so
doing.
6.7 EFFECT OF SALE. Any sale of all or any portion of the Collateral
pursuant to Section 6.2 above shall operate to divest all right, title
and interest of Shareholder to the Collateral which is the subject of
any such sale.
6.8 SECURITIES ACT. Shareholder acknowledges that Lender may be unable
to effect a public sale of all or a part of the Collateral by reason of
certain prohibitions contained in the Securities Act, or that it may be
able to do so only after delay which might adversely affect the value
that might be realized upon the sale of the Collateral. Accordingly,
Shareholder agrees that Lender, without the necessity of attempting to
cause any registration of the Collateral to be effected under the
Securities Act, may sell the Collateral or any part thereof in one or
more private sales to a restricted group of purchasers who may be
required to agree, among other things, that they are acquiring the
Collateral for their own account, for investment purposes only, and not
with a view toward the distribution or resale thereof. Shareholder
agrees that any such private sale may be at prices or on terms less
favorable to the owner of the Collateral than would be the case if such
Collateral was sold at public sale, and that any such private sale
shall not be deemed not to have been made in a commercially reasonable
manner by virtue of such sale having been a private sale.
6.9 NOTICE. Lender shall give not less than ten (10) Business Days
prior written notice to Shareholder of any sale pursuant to this
Section 6. Shareholder hereby agrees that such notice is commercially
reasonable.
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7. LENDER'S OBLIGATIONS, CUSTODIAL AGREEMENT, PERFORMANCE RIGHTS, PLEDGE DOES
NOT MAKE LENDER SHAREHOLDER. Lender shall not have any duty to protect, preserve
or enforce rights against the Collateral other than a duty of reasonable
custodial care of any such Collateral in its possession, it being understood
that Lender shall (i) have no responsibility for (A) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to the Collateral, whether or not Lender has or is deemed
to have knowledge of such matters, (B) taking any necessary steps to preserve
rights against any parties with respect to the Collateral or (C) making any
capital contributions or other payments on behalf of Shareholder and (ii) not be
deemed to be a shareholder of Borrower unless Lender purchases or otherwise
retains the applicable portion of the Collateral in connection with a
foreclosure.
8. TERMINATION OF PLEDGE AGREEMENT. Upon the payment and performance in full
of all of Borrower's Obligations, Lender shall deliver to Shareholder the
Collateral in its possession and this Pledge Agreement thereupon shall
terminate.
9. MISCELLANEOUS.
9.1 EXERCISE OF RIGHTS. Shareholder unconditionally agrees that if an
Event of Default has occurred and is continuing, Lender may exercise
its rights and remedies hereunder prior to, concurrently with, or
subsequent to the exercise by Lender of its rights and remedies against
Shareholder or any other person under any of the Loan Documents or
otherwise. The obligations of Shareholder under this Pledge Agreement
shall be absolute and unconditional and shall remain in full force and
effect without regard to, and shall not be released or discharged or in
any way affected by:
9.1.1 AMENDMENTS. Any amendment or modification of or
supplement to any of the Loan Documents;
9.1.2 EXERCISE OR NON-EXERCISE OF RIGHTS. Any exercise or
non-exercise of any right or remedy under any of the Loan
Documents, or the granting of any postponements or extensions
for time of payment or other indulgences to Shareholder or any
other person, or the settlement or adjustment of any claim or
the release or discharge or substitution of any person
primarily or secondarily liable with respect to any of the
Loan Documents;
9.1.3 BANKRUPTCY. The institution of any bankruptcy,
insolvency, reorganization, debt arrangement, readjustment,
composition, receivership or liquidation proceedings by or
against Shareholder, Borrower or any other person; or
9.1.4 OTHER DEFENSES. Any other circumstance which otherwise
might constitute a defense to, or a discharge of, Shareholder
with respect to Borrower's Obligations.
-8-
<PAGE>
9.2 RIGHTS CUMULATIVE. Each and every right, remedy and power granted
to Lender hereunder, under the Guaranty and the other Loan Documents
shall be cumulative and in addition to any other right, remedy or power
specifically granted herein or now or hereafter existing in equity, at
law, by virtue of statute or otherwise and may be exercised by Lender,
from time to time, concurrently or independently and as often and in
such order as Lender may deem expedient. Any failure or delay on the
part of Lender in exercising any such right, remedy or power, or
abandonment or discontinuance of steps to enforce the same, shall not
operate as a waiver thereof or affect the right of Lender thereafter to
exercise the same, and any single or partial exercise of any such
right, remedy or power shall not preclude any other or further exercise
thereof or the exercise of any other right, remedy or power, and no
such failure, delay, abandonment or single or partial exercise of
rights of Lender hereunder shall be deemed to establish a custom or
course of dealing or performance among the parties hereto.
9.3 MODIFICATION. Any modification or waiver of any provision of this
Pledge Agreement, or any consent to any departure by Shareholder
therefrom, shall not be effective in any event unless the same is in
writing and signed by Lender and then such modification, waiver or
consent shall be effective only in the specific instance and for the
specific purpose given. Any notice to or demand on Shareholder in any
event not specifically required of Lender hereunder shall not entitle
Shareholder to any other or further notice or demand in the same,
similar or other circumstances unless specifically required hereunder.
9.4 FURTHER ASSURANCES. Shareholder agrees that at any time, and from
time to time, after the execution and delivery of this Pledge
Agreement, Shareholder, upon the request of Lender and at the expense
of Shareholder, promptly will execute and deliver such further
documents and do such further acts and things as Lender reasonably may
request in order to effect fully the purposes of this Pledge Agreement
and to subject to the security interest created hereby any property
intended by the provisions hereof to be covered hereby. Shareholder and
Lender acknowledge their intent that, upon the occurrence of an Event
of Default, Lender shall receive, to the fullest extent permitted by
law and governmental policy, all rights necessary or desirable to
obtain, use or sell the Collateral, and to exercise all remedies
available to Lender under the Loan Documents, the Uniform Commercial
Code or other applicable law. Shareholder and Lender further
acknowledge and agree that, in the event of changes in law or
governmental policy occurring subsequent to the date hereof that affect
in any manner Lender's rights of access to, or use or sale of, the
Collateral, or the procedures necessary to enable Lender to obtain such
rights of access, use or sale, Lender and Shareholder shall amend this
Pledge Agreement and any other Loan Documents to which Shareholder is a
party, in such manner as Lender reasonably shall request, in order to
provide Lender such rights to the greatest extent possible consistent
with then applicable law.
9.5 PRESERVATION OF COLLATERAL. Shareholder agrees that it will
warrant, preserve, maintain and defend, at the expense of Shareholder,
the right, title and interest of Lender
-9-
<PAGE>
in and to the Collateral and all right, title and interest represented
thereby against all claims, charges and demands of all persons
whomsoever.
9.6 NOTICES. All notices and communications under this Pledge Agreement
shall be delivered in the manner set forth in the Loan Agreement, with
all notices to Shareholder to be sent to the address set forth in the
Loan Agreement for Borrower.
9.7 APPLICABLE LAW. THIS PLEDGE AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
9.8 SEVERABILITY. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Pledge
Agreement or the other Loan Documents shall not affect or impair the
validity, legality or enforceability of the remaining provisions or
obligations under this Pledge Agreement, or the other Loan Documents or
of such provision or obligation in any other jurisdiction.
9.9 SUCCESSORS AND ASSIGNS. This Pledge Agreement shall inure to the
benefit of the successors, assigns of Lender and shall be binding upon
the successors and assigns of Shareholder.
9.10 COUNTERPARTS. This Pledge Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which when taken together shall be deemed to be one and the same
instrument.
9.11 NOTATION ON BOOKS. Concurrently with the execution and delivery
hereof, Shareholder shall cause Borrower to register in its corporate
books the security interests in and the pledge of the Collateral
affected hereby.
10. CONSENT TO JURISDICTION. SHAREHOLDER, IN ORDER TO INDUCE LENDER TO
ACCEPT THIS PLEDGE AGREEMENT, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH HEREBY IS ACKNOWLEDGED, AGREES THAT ALL ACTIONS
OR PROCEEDINGS ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT
OF, RELATED TO OR FROM THIS PLEDGE AGREEMENT SHALL BE LITIGATED, AT LENDER'S
SOLE DISCRETION AND ELECTION, ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF
COOK, STATE OF ILLINOIS. SHAREHOLDER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND
STATE. SHAREHOLDER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES CT CORPORATION
SYSTEM, WHOSE ADDRESS IS SHAREHOLDER, C/O CT CORPORATION SYSTEM, 208 S. LASALLE
STREET, CHICAGO, ILLINOIS 60604 AS ITS DULY AUTHORIZED AGENT FOR SERVICE OF
LEGAL PROCESS AND AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY SHALL
CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS
-10-
<PAGE>
UPON SHAREHOLDER. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES
OR CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, SHAREHOLDER SHALL, WITHIN TEN
(10) DAYS AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN CHICAGO,
ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH
APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL, IN
ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE
(5) DAYS NOTICE TO SHAREHOLDER. SHAREHOLDER HEREBY WAIVES ANY RIGHT IT MAY HAVE
TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY LENDER
ON THIS INDEMNITY IN ACCORDANCE WITH THIS PARAGRAPH.
11. JURY WAIVER. SHAREHOLDER WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
PLEDGE AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE
BY SHAREHOLDER, AND SHAREHOLDER ACKNOWLEDGES THAT NEITHER THE HOLDER NOR ANY
PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT. SHAREHOLDER FURTHER ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS PLEDGE AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL. SHAREHOLDER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING
AND RAMIFICATIONS OF THIS WAVIER PROVISION.
-11-
<PAGE>
IN WITNESS WHEREOF, Shareholder and Lender have caused this Pledge
Agreement to be executed as of the date first above written.
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC., a Florida corporation
By:_________________________
Name:_______________________
Title: President
HELLER FINANCIAL, INC., a Delaware
corporation
By:________________________________
Name:______________________________
Its:_______________________________
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
DESCRIPTION OF SECURITIES
ISSUED TO
DESCRIPTION SHAREHOLDER AND
SHAREHOLDER OF STOCK OUTSTANDING
- ----------- ----------- -----------
<S> <C> <C>
Transeastern Properties of Common Stock of 1000 shares, represented by
South Florida, Inc. Transeastern Properties at certificate no. 1.
the Cove, Inc.
</TABLE>
A-1
<PAGE>
BORROWER ACKNOWLEDGMENT
The undersigned, as presidemt of Transeastern Properties at the Cove,
Inc., a Florida corporation (the "Corporation"), hereby acknowledges, on behalf
of the Corporation, the pledge of 100% of the issued and outstanding capital
stock of the Corporation pursuant to the terms of this Pledge Agreement.
TRANSEASTERN PROPERTIES AT THE
COVE, INC., a Florida corporation
By:________________________________
Name: Arthur Falcone
Its: President
A-2
EXHIBIT 10.15
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into this 12th day of September, 1996 by and among Transeastern
Properties, Inc., a Florida corporation (the "Company"), Arthur J. Falcone,
Edward W. Falcone, and Philip Cucci, Jr. (collectively the "Executive
Shareholders"), and the persons and entities listed on the signature pages
hereto who, on the date hereof are: the holders of all of the Company's Series A
Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"); the
holders of all of the Company's Series B Preferred Stock, par value $.01 per
share (the "Series B Preferred Stock"); and, the holders of Common Stock and
Warrants purchased pursuant to the Common Stock Purchase Agreement dated April
15, 1996. Each holder of the Series A Preferred Stock is hereinafter referred to
as a "Series A Shareholder," and all such holders are collectively referred to
as the "Series A Shareholders." Each holder of the Series B Preferred Stock is
hereinafter referred to as a "Series B Shareholder," and all such holders are
collectively referred to as the "Series B Shareholders." Each holder of Common
Stock and Warrants purchased in the 1996 offering (the "1996 Offering") is
hereinafter referred to as an "Investor," and all such holders are collectively
referred to as the "Investors."
BACKGROUND
The parties hereto wish to provide for certain registration rights with
respect to securities of the Company.
AGREEMENT
For and in consideration of the premises and mutual covenants and
agreements and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. As used herein, the following terms shall have
the meaning thereafter ascribed:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act of 1933, as
amended (the "Securities Act").
"HOLDER" shall mean any holder of Registrable Securities.
"INITIATING HOLDER" shall mean each of Christopher Allick ("Allick")
and Anthony Ciabattoni, ("Ciabattoni") but only for as long as each is an
"affiliate" of the Company for purposes of Rule 144 promulgated under the
Securities Act. At such time as Allick is no longer an affiliate of the Company
for purposes of Rule 144, Allick shall no longer be an Initiating Holder. At
such time as Ciabattoni is no longer an affiliate of the Company for purposes of
Rule 144, Ciabattoni shall no longer be an Initiating Holder.
"OTHER SHAREHOLDER" shall mean any holder of Company securities who is
not a Holder.
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear or bearing the legend set forth in Section 2 hereof.
<PAGE>
"REGISTRABLE SECURITIES" shall mean (a) all shares of Common Stock
issued upon the exercise of Amended and Restated Warrants (collectively "Series
A Warrants") issued to the Series A Shareholders in connection with the issuance
and sale of Series A Preferred Stock, (b) all shares of Common Stock issued upon
the exercise of Warrants (the "Series B Warrants") issued to the Series B
Shareholders in connection with the issuance and sale of Series B Preferred
Stock and all shares of Common Stock acquired directly from the Company prior to
the date hereof by Series B Shareholders, (c) all shares of Common Stock issued
to the Investors, and all shares of Common Stock issued upon the exercise of
Warrants (the "Investors' Warrants") issued to the Investors in connection with
the issuance and sale of Common Stock in the 1996 Offering, (d) all shares of
Common Stock owned by the Executive Shareholders, and (e) all shares of Common
Stock issued in respect of the foregoing securities upon any stock split, stock
dividend, merger, consolidation, recapitalization, or similar event, EXCLUDING
all such shares which (i) have been registered under the Securities Act and
disposed of in accordance with the registration statement covering them, or (ii)
have been publicly sold pursuant to Rule 144 under the Securities Act.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in compliance with Sections 4.1 and 4.2 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, the fees and expenses of
one counsel for all the selling Holders and other security holders (as a group)
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of counsel included under Registration Expenses).
2. RESTRICTIVE LEGEND. Each certificate representing Common Stock held
by the Series A Shareholders, the Series B Shareholders, the Executive
Shareholders, or the Investors shall (unless the securities evidenced by such
certificate shall have been registered under the Securities Act) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. NO TRANSFER OF SAID SECURITIES
SHALL BE PERMITTED IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS COVERING THE SHARES PROPOSED TO BE
TRANSFERRED OR (II) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
TRANSFER WILL NOT REQUIRE COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF THE
ACT AND OF ANY APPLICABLE STATE LAWS.
<PAGE>
Upon request of a holder of such a certificate, the Company shall
remove the foregoing legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if, (i) with such request, the
Company shall have received either an opinion referred to in Section 3 hereof to
the effect that any transfer by such holder of the securities evidenced by such
certificate will not violate the Securities Act and applicable state securities
laws, or (ii) in accordance with paragraph (k) of Rule 144, such holder is not
and has not during the last three months been an affiliate of the Company and
such holder has held the securities represented by such certificate for a period
of at least three years. The Company will use reasonable efforts to assist any
holder in complying with the provisions of this Section 2 for removal of the
legend set forth above.
3. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 3 of this Agreement. Prior to any
proposed transfer of any Restricted Securities (other than under circumstances
described in Sections 4.1 or 4.2 hereof), the holder thereof shall give written
notice to the Company of such holder's intention to effect such transfer. Each
such notice shall describe the manner and circumstances of the proposed
transfer, and shall be accompanied (except in transactions in compliance with
Rule 144) by a written opinion of legal counsel who shall be satisfactory to the
Company, addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act and applicable state securities laws, whereupon the holder of
such Restricted Securities, subject to compliance with the Amended and Restated
Shareholders Agreement of even date herewith, by and among the Company and its
shareholders, shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the Company.
Each certificate evidencing the Restricted Securities transferred as above
provided shall bear the appropriate restrictive legend set forth above unless
the opinion of counsel referred to above is to the further effect that no such
legend is required in order to establish compliance with any provisions of the
Securities Act or applicable state securities laws.
4. REGISTRATION RIGHTS.
4.1 PIGGY BACK REGISTRATION.
(a) If the Company shall determine to register any of its securities
for its own account, other than a registration relating solely to
employee benefit plans or with regard to acquisitions or a registration
on any registration form which does not permit secondary sales or other
than a registration on Form S-3 made at the request of an Initiating
Holder pursuant to Section 4.2 hereof, the Company will:
(i) promptly give to each Holder written notice thereof (which
shall include a preliminary list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all Registrable Securities specified in a written
request or requests, made by any Holder within thirty (30) days
after receipt of the written notice from the
<PAGE>
Company described in clause (i) above, except as set forth in
Section 4.1(b) below. Such written request may specify all or any
part of a Holder's Registrable Securities.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall
so advise the Holders by written notice. All Holders proposing to
distribute their securities through such underwriting shall (together
with the Company or any other securityholders distributing its or their
securities for its own account through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected by the Company. Notwithstanding any other
provision of this Section 4.1, if the representative of the
underwriters advises the Company in writing that, in its opinion,
inclusion of the full number of Registrable Securities requested to be
included in the registration by Holders would adversely affect the
underwriting, the representative may (subject to the allocation
priority set forth below), limit the number of shares to be included in
the registration and underwriting. The Company shall so advise all
holders of securities requesting registration of the limitation and the
number of shares to be excluded from the registration by reason of the
limitation imposed by the representative. The number of shares to be
excluded from the registration shall be allocated as follows:
(i) first, all shares held by persons who, in the sole judgment
of the representative of the underwriters, would adversely affect
the marketing of the underwriting will be excluded from the
registration;
(ii) then, if a further limitation on the number of shares is
required, all
Registrable Securities held by persons who are eligible to sell
shares under Rule 144(k) will be excluded from the registration;
(iii) then, if a further limitation on the number of shares is
required, all Registrable Securities which were eligible for sale
under Rule 144 during the three (3) months ended on the date the
registration statement is filed will be excluded; except that no
Registrable Securities held by any Initiating Holder or any
Executive Shareholder shall be excluded under this provision; and
(v) finally, if a further limitation on the number of shares is
still required, the limitation of the number of Registrable
Securities shall be allocated in the sole discretion of the Company.
(c) If any Holder of Registrable Securities who has requested
inclusion in such registration as provided above disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom
by written notice to the Company, the underwriter and the Initiating
Holders. The securities so withdrawn shall also be withdrawn from
registration.
(d) Notwithstanding the foregoing, the Company may, in its sole
discretion and without the consent of or prior notice to any Holders,
withdraw any registration statement referred to in this Section 4.1 and
abandon the proposed offering at anytime
<PAGE>
without thereby incurring any liability to any Holder.
4.2 REGISTRATION ON FORM S-3.
(a) In addition to the rights contained in Section 4.1 and subject
to the Company being qualified to utilize a registration statement on
Form S-3, the Initiating Holders shall have the right to request from
time to time after the date which is one year after the date of
consummation of the Company's initial public offering of Common Stock,
registration on Form S-3. Such requests shall be in writing, and shall
state the number of shares of Registrable Securities to be disposed of
and the intended methods of disposition of such shares by the Holders.
(b) The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the allocation priority set forth in
subsection (c) below, include other securities of the Company which are
held by other shareholders and may include securities of the Company
being sold for the account of the Company.
(c) Notwithstanding any other provision of this Section 4.2, if the
registration requested under this Section 4.2 involves an underwriting
and if the representative of the underwriters advises the Company in
writing that, in its opinion, inclusion of the full number of (A)
Registrable Securities requested to be included in the registration by
Holders and (B) shares proposed to be included in the registration by
other shareholders would adversely affect the underwriting, the
representative may (subject to the allocation priority set forth
below), limit the number of shares to be included in the registration
and underwriting. The Company shall so advise all holders of securities
requesting registration of the limitation and the number of shares to
be excluded from the registration by reason of the limitation imposed
by the representative. The number of shares to be excluded from the
registration shall be allocated as follows:
(i) first, all shares held by persons who, in the sole judgment
of the representative of the underwriters, would adversely affect
the marketing of the underwriting will be excluded from the
registration;
(ii) then, if a further limitation on the number of shares is
required, all held by persons who are eligible to sell shares under
Rule 144(k) will be excluded from the registration;
(iii) then, if a further limitation on the number of shares is
required, all Registrable Securities which were eligible for sale
under Rule 144 during the three (3) months ended on the date the
registration statement is filed will be excluded; except that no
Registrable Securities held by any Initiating Holder or any
Executive Shareholder shall be excluded under this provision;
(iv) then, if a further limitation on the number of shares is
still required, the limitation of the number of Registrable
Securities shall be allocated in the sole discretion of the Company,
among all remaining Holders, except that no Registrable Securities
held by any Initiating Holder or any Executive Shareholder shall be
excluded under this provision;
<PAGE>
(v) then, if a further limitation on the number of shares is
required, all securities of the Company being sold for the account
of the Company will be excluded; and,
(vi) finally, if a further limitation on the number of shares is
still required, the limitation of the number of Registrable
Securities shall be borne by the Executive Holders pro rata.
(d) The Company shall have the right to defer the request of the
Initiating Holders to effect a registration for up to one hundred and
twenty (120) calendar days if, in the Company's sole discretion,
effecting a registration would not be in the Company's interest.
4.3 EXPENSES OF REGISTRATION.
(a) Subject to paragraph (b) below, the Company shall bear all
Registration Expenses and the selling securityholders shall bear all
Selling Expenses (in proportion, as nearly as practicable, to the
securities of each securityholder being registered) incurred in
connection with any registration, qualification or compliance pursuant
to the provisions of Section 4.1 or 4.2.
(b) Notwithstanding paragraph (a) above, in regard to registrations
pursuant to Section 4.2 herein, the Company shall bear all Registration
Expenses for two (2) registrations pursuant to Section 4.2 and the
selling securityholders shall bear all Selling Expenses in connection
therewith (in proportion, as nearly as practicable, to the securities
of each securityholder then being registered). Thereafter, selling
securityholders shall bear all Selling and all Registration Expenses
for such registrations (in proportion, as nearly as practicable, to the
securities of each securityholder then being registered).
4.4. REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will
keep each Holder advised in writing as to the initiation of each
registration and as to the completion thereof, and the Company will:
(a) Keep such registration effective for a period of sixty (60) days
or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever
first occurs, PROVIDED, HOWEVER, that in the case of any registration
of Registrable Securities on Form S-3 which are intended to be offered
on a continuous or delayed basis, the Company shall have the right to
prohibit the sale of Registrable Securities pursuant to the Form S-3
registration statement, upon notice to the Holders (i) if in the
opinion of counsel for the Company, the Company would thereby be
required to disclose information not otherwise than required by law to
be publicly disclosed, provided that the Company shall use its best
efforts to minimize the period of time which it shall prohibit the
sales of any shares of Registrable Securities pursuant to this clause
(i); (ii) for periods of up to 120 days if the Company reasonably
believes that such sale might reasonably be expected to have an adverse
effect on any significant proposal or plan of the Company to engage in
an acquisition of assets or any merger, consolidation, tender offer,
financing, corporate reorganization or similar transaction; (iii)
during the period starting with the date 10 days prior to the Company's
estimate of the date of filing of, and ending on a date 90 days after
the effective date of, a Company initiated registration in which the
Holders requesting registration on Form S-3 are entitled to
<PAGE>
participate in accordance with Section 4.1 hereof, or such longer
post-effective period as may be reasonably required by the underwriter
or underwriters if such offering is underwritten; or (iv) upon the
happening of any event, as a result of which the prospectus under the
Form S-3 registration statement includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing (in which case, the Company
shall promptly provide the Holders requesting registration on Form S-3
with revised or supplemental prospectuses and such Holders shall
promptly take action to cease making any offers of the Registrable
Securities until the receipt and distribution of such revised or
supplemental prospectuses), PROVIDED HOWEVER, that the sixty (60) day
period described above shall be tolled during any period described in
this Section 4.4(a);
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of securities covered by such registration statement;
(c) Furnish such number of prospectuses and other documents incident
thereto, including any term sheet or any amendment of or supplement to
the prospectus, as a Holder from time to time may reasonably request;
(d) Notify each Holder, at their last known addresses as set forth
in the Company's books and records, of Registrable Securities covered
by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading or incomplete in the light of the circumstances then
existing, and at the request of any such Holder, prepare and furnish to
such Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such shares, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing;
(e) Cause all such Registrable Securities to be listed on each, if
any, securities exchange on which similar securities issued by the
Company are then listed;
(f) Make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant
to such registration statement, and any attorney or accountant retained
by any such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause
the Company's officers and directors to supply all information
reasonably requested by any such seller, underwriter, attorney or
accountant in connection with such registration statement; provided,
however, that such seller, underwriter, attorney or accountant shall
agree to hold in confidence and trust all information so provided;
(g) Furnish to each selling Holder a signed counterpart, addressed
to the selling Holder, of an opinion of counsel for the Company, dated
the effective date of the
<PAGE>
registration statement, and "comfort" letters signed by the Company's
independent public accountants who have examined and reported on the
Company's financial statements included in the registration statement,
to the extent permitted by the standards of the AICPA or other relevant
authorities, covering substantially the same matters with respect to
the registration statement (and the prospectus included therein) and
(in the case of the accountants' "comfort" letters) with respect to
events subsequent to the date of the financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
"comfort" letters delivered to the underwriters in underwritten public
offerings of securities;
(h) Furnish to each selling Holder a copy of all documents filed
with and all correspondence from or to the Commission in connection
with any such offering other than non-substantive cover letters and the
like;
(i) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the
effective date of the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
and
(j) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 4.2 hereof, enter into
any underwriting agreement reasonably necessary to effect the offer and
sale of Registrable Securities on terms reasonably acceptable to the
Company, provided such underwriting agreement contains customary
underwriting provisions and is entered into by the Holders and provided
further that if the underwriter so requests the underwriting agreement
will contain customary contribution provisions.
5. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, and each person controlling such Holder, with
respect to which registration, qualification or compliance has been
effected pursuant to Section 4 hereof, and each underwriter, if any,
and each person who controls any underwriter, against all claims,
losses, damages and liabilities (or actions, proceedings or settlements
in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or
any rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will
reimburse each such Holder, each of its officers, directors and
partners, each person controlling such Holder, and each such
underwriter and each person who controls any such underwriter, for any
legal and any other expenses as they are reasonably incurred in
connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any
<PAGE>
such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement (or alleged untrue statement) or omission
(or alleged omission) made in any prospectus, offering circular or
other document (i) based upon written information furnished to the
Company by such Holder or underwriter and stated to be specifically for
use therein, or (ii) if such Holder or its agents failed to deliver a
copy of such sserting such loss, claim, damage, liability, or expense
after the Company had furnished such Holder with a sufficient number of
copies of the same and at a time sufficient to permit timely delivery
of same and such document corrected such untrue statement or omission;
and, provided, further that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability, or
expense arises out of or is based upon any untrue statement (or alleged
untrue statement) or omission (or alleged omission) in any prospectus,
offering circular or other document, if such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is
corrected in an amendment or supplement to such document and such
Holder or its agent thereafter fails to deliver such document as so
amended or supplemented prior to or concurrently with the sale of the
Registrable Securities covered by a registration statement to the
person asserting such loss, claim, damage, liability, or expense after
the Company had furnished such Holder with a sufficient number of
copies thereof in a manner and at a time sufficient to permit timely
delivery of the same.
(b) Each Holder will, if Registrable Securities held by it are
included in the securities as to which such registration, qualification
or compliance is being effected, indemnify the Company, each of its
directors and officers and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of the
Securities Act and the rules and regulations thereunder, each other
Holder and each of their officers, directors and partners, and each
person controlling such other Holder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse the Company and such Holders, directors, officers,
partners, persons, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each
case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made
in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically
for use therein; provided, however, that the obligations of such
Holders hereunder shall be limited to an amount equal to the proceeds
to each such Holder of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice in writing to the party required
to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may
<PAGE>
participate in such defense at such Indemnified Party's expense, and
provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 5, unless such failure prejudices
the ability of the Indemnifying Party to defend against the claims
asserted against the Indemnified Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting
therefrom.
(d) If the indemnification provided for in this Section 5 is
unavailable to an Indemnified Party in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable by such Indemnified Party as a result of
such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Company on the one
hand and the shareholders offering securities in the offering (the
"Selling Shareholders") on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and the Selling
Shareholders on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or by the Selling
Shareholders and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Selling Shareholders agree that it would
not be just and equitable if contribution pursuant to this Section 5(d)
were based solely upon the number of entities from whom contribution
was requested or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
Section 5(d). The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to above
in this Section 5(d) shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim, subject to
the provisions of Section 5(d) hereof. Notwithstanding the provisions
of this Section 5(d), no equired to contribute any amount or make any
other payments under this Agreement which in the aggregate exceed the
net proceeds received by such Selling Shareholder. No person guilty of
fraudulent misrepresentation (within the meaning of the Securities Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
6. INFORMATION BY HOLDER. Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
7. NO LIMITATIONS ON FUTURE REGISTRATION RIGHTS. Nothing contained in
this agreement shall prevent the Company from entering into any agreement with
any holder or prospective holder of any securities of the Company giving such
holder or prospective holder a
<PAGE>
right to require the Company to initiate any registration of any securities of
the Company or to require the Company, upon any registration of any of its
securities, to include, among the securities which the Company is then
registering, securities owned by such holder.
8. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to:
(a) use its best efforts to make and keep public information
available as those terms are understood and defined in Rule 144 under
the Securities Act at all times from and after ninety (90) days
following the effective date of the first registration under the
Securities Act filed by the Company for an offering of its securities
to the general public; use its best efforts to file with the Commission
in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act at any time after
it has become subject to such reporting requirements; and
(b) so long as the Holders own any Restricted Securities, furnish to
the Holders forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 (at
any time from and after ninety (90) days following the effective date
of the first registration statement filed by the Company for an
offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents so filed as the Holders may reasonably request in availing
itself of any rule or regulation of the Commission allowing the Holders
to sell any such securities without registration.
9. TERMINATION. The provisions of Sections 4.1 and 4.2 of this
Agreement shall terminate on the first to occur of: the fifth anniversary of the
Company's initial public offering of its Common Stock; or, the date on which all
parties to the Agreement can sell all of their Common Stock under Rule 144(k).
10. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof. No amendment, alteration or modification of this Agreement shall be
valid unless in each instance such amendment, alteration or modification is
expressed in a written instrument executed by the holders of at least sixty-six
and two-thirds percent (66-2/3%) of the shares of the Registrable Securities,
provided that no amendment to Section 4.2 or the definition of Initiating Holder
shall be made without the consent of each of Allick and Ciabattoni. No waiver of
any provision of this Agreement shall be valid unless it is expressed in a
written instrument duly executed by the party or parties making such waiver. The
failure of any party to insist, in any one or more instances, on performance of
any of the terms and conditions of this Agreement shall not be construed as a
waiver or relinquishment of any rights granted hereunder or of the future
performance of any such term, covenant or condition but the obligation of any
party with respect thereto shall continue in full force and effect.
11. SPECIFIC PERFORMANCE. The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
by reason of a failure to perform any of the obligations under this Agreement.
Therefore, all parties hereto shall have the
<PAGE>
right to specific performance of the obligations of the other parties under this
Agreement, and if any party hereto shall institute an action or proceeding to
enforce the provisions hereof, any person (including the Company) against whom
such action or proceeding is brought hereby waives the claim or defense therein
that such party has an adequate remedy at law, and such person shall not urge in
any such action or proceeding the claim or defense that such remedy at law
exists.
12. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by first-class mail, postage
prepaid, return receipt requested, or transmitted by facsimile or delivered
either by hand, by messenger or by nationally recognized overnight courier,
addressed:
(a) if to the holders of the Registrable Securities, at the
addresses set forth on the attachments hereto or at such other address
as they shall have furnished to the Company in writing, with a copy to:
Balboni Ashley & Schoenberg LLC
990 One Live Oak Center
3475 Lenox Road, N.E.
Atlanta, GA 30326
Attn.: Gerardo M. Balboni II
Phone: (404) 812-3111
Fax: (404) 812-3101
and
(b) if to the Company, to the following address, or at such
other address as the Company shall have furnished to the holders of the
Registrable Securities and each such other holder in writing,
Transeastern Properties, Inc.
3300 University Drive
Coral Springs, FL 33065
Attn.: Secretary
Alternatively, to such other address as a party hereto supplies to each other
party in writing.
13. SUCCESSORS AND ASSIGNS. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective transferees, successors and assigns of the parties hereto,
whether so expressed or not.
14. GOVERNING LAW. This Agreement is to be governed by and interpreted
under the laws of the State of Florida without giving effect to the principles
of conflicts of laws thereof.
15. TITLES AND SUBTITLES. The titles of the sections of this Agreement
are for the convenience of reference only and are not to be considered in
construing this Agreement.
16. SEVERABILITY. The invalidity or unenforceability of any provisions
of this Agreement shall not be deemed to affect the validity or enforceability
of any other provision of this Agreement.
<PAGE>
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
TRANSEASTERN PROPERTIES, INC.
By:
Edward W. Falcone, Executive Vice
President
Arthur J. Falcone
Edward W. Falcone
Philip Cucci, Jr.
Signatures of Holders are attached to:
Notice of Election and Consent of Holders of Series A Redeemable Preferred
Stock;
Notice of Election and Consent of Holders of Series B Redeemable Preferred
Stock;
Notice of Election and Consent of Holders of 1996 Offering Common Stock.
EXHIBIT 10.16
NOTICE OF ELECTION AND CONSENT
OF
HOLDERS OF SERIES A REDEEMABLE PREFERRED STOCK
Each of the undersigned holders (each of whom is hereinafter referred to as
a "Holder" and all of whom collectively are hereinafter referred to as
"Holders") of Series A Redeemable Preferred Stock ("Series A Shares") of
Transeastern Properties, Inc., a Florida corporation (the "Company"),
understands that Cruttenden Roth Incorporated (the "Managing Underwriter") and
certain other firms propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") providing for the purchase by the Managing Underwriter
and such other firms (the "Underwriters") of shares (the "Shares") of Common
Stock, $.01 par value (the "Common Stock"), of the Company and that the
Underwriters propose to reoffer the Shares to the public (the "Public
Offering").
This Notice of Election and Consent (the "Consent") relates to actions to
be taken by Holders in connection with the proposed Public Offering including:
(a) Notification to the Company by holders of Warrants to purchase
Common Stock issued in conjunction with the issuance and sale of the
Series A Shares (the "Warrants") of their intent to exercise the
Warrants in full and to include a portion of the shares of Common Stock
issued upon exercise of the Warrants in the Public Offering;
(b) The termination of certain agreements which were entered into at
the time of the purchase of the Series A Shares and Warrants;
(c) Appointment of David F. Eisner and Gerardo M. Balboni II, as
proxies to vote all Series A Shares registered in the name of each
Holder at any meeting at, or any action for which shareholder approval
or consent is taken to approve the Specified Charter Amendments (as
defined below) and the Plan (as defined below);
(d) The execution of a Registration Rights Agreement in
substantially the form of EXHIBIT A hereto; and
(e) An Agreement to "lock up" shares of Common Stock after the
Public Offering.
In addition, in all cases, to the extent that any Holder has a right to
vote on any of the actions set forth herein or to receive notice of such
actions, this Consent will act as the authorization and consent of each Holder
of such actions and as a waiver of such notice.
ITEM 1. REQUEST TO INCLUDE SHARES IN THE REGISTRATION AND PUBLIC
OFFERING
Each Holder hereby notifies the Company that such Holder intends to
exercise, in full, the Warrant held by such Holder, the exercise to be effective
immediately prior to the effective date of the Registration Statement (as
defined below), and does hereby request that the Managing Underwriter include
the number of shares of Common Stock (giving effect to the 8.2 for 1 stock
split) issued upon exercise of the Warrant set forth adjacent to the
<PAGE>
signature of such Holder in the registration and the Public Offering (such
number of shares with respect to each undersigned to this Consent are the
"Requested Shares"). Each Holder acknow edges that shareholders selling shares
of Common Stock in the Public Offering will be required to sign certain
agreements for the benefit of the Underwriters. Each Holder may withdraw some or
all of the Requested Shares as to which registration is requested at any time
prior to the effective date of the Registration Statement on Form S-1 filed by
the Company in connection with the Public Offering (the "Registration
Statement") without penalty or obligation to the Company. If a limitation in the
number of shares of Common Stock to be sold by selling shareholders in the
Public Offering is required in the judgment of the Underwriters, the limitation
shall be borne by all selling shareholders pro-rata. Each Holder waives any
right: (a) to exclude from the Public Offering shares of Common Stock held by
any other person (other than as set forth in this Item 1) and (b) to include a
pro rata number of shares in the Underwriters' Over Allotment Option, EXCEPT
that if the Underwriters elect to exercise the Underwriters' Over Allotment
Option, the Holders, in the aggregate, shall be entitled to sell to the
Underwriters 10% of the total number of shares purchased by the Underwriters
pursuant to the Underwriters' Over Allotment Option. Except as set forth in this
Item 1, each Holder hereby waives all registration rights it may have with
respect to the Company's securities. The Company acknowledges that the Company
will pay all Registration Expenses, (as such term is defined in the Shareholders
Agreement which is as defined below) and the Holders acknowledge that the
Holders shall pay the Selling Expenses (as such term is defined in the
Shareholders Agreement) attributable to the shares of Common Stock sold by the
Holders in the Public Offering.
ITEM 2. TERMINATION OF CERTAIN AGREEMENTS
Each Holder by affixing his, her or its signature to this Consent,
consents to and agrees that each of (a) the Series A Redeemable Preferred Stock
and Warrant Purchase Agreement dated June 2, 1993, by and among the Company, the
Holders, and Arthur J. Falcone and Marcy Falcone, Edward W. Falcone and Diana
Falcone, and Philip Cucci, Jr. and Linda Cucci (the "Purchase Agreement"), and
(b) the Shareholders Agreement dated June 2, 1993, by and among the Company, the
Holders, and Arthur J. Falcone and Marcy Falcone, Edward W. Falcone and Diana
Falcone, and Philip Cucci, Jr. and Linda Cucci (the "Shareholders Agreement")
contain provisions which, at the closing of the Public Offering, would no longer
be in the best interest of the Company and are no longer desired by the Holder.
Accordingly, each Holder agrees to the termination and cancellation of each of
the Purchase Agreement and the Shareholders Agreement, with such cancellation to
be effective, without any further action by the Company or any Holder,
immediately prior to the effective date of the Registration Statement.
ITEM 3. LOCK UP AGREEMENT
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, each Holder hereby
irrevocably agrees that without the prior written consent of Cruttenden Roth
Incorporated (which consent may be
<PAGE>
withheld in its sole discretion) such Holder will not sell, offer to sell,
solicit an offer to buy, contract to sell, loan, pledge, grant any option to
purchase, exercise a warrant or option to purchase, shares of Common Stock or
otherwise exercise, transfer, or dispose of (collectively, a "Disposition"), any
other securities convertible into or exercisable or exchangeable for Common
Stock (collectively, "Securities"), now owned or hereafter acquired by such
Holder or with respect to which such Holder has or hereafter acquires the power
of disposition, for a period of 180 days after the date of the final Prospectus
relating to the Public Offering of the Shares to the public by the Underwriters
(the "Lock-Up Period"). The foregoing restriction is expressly agreed to
preclude the holder of the Securities from engaging in any hedging, pledge or
other transaction which is designed to, or which may reasonably be expected to
lead to or result in Disposition of Securities during the Lock-Up Period even if
such Securities would be disposed of by someone other than such Holder. Such
prohibited hedging, pledge or other transactions would include without
limitation, any short sale (whether or not against the box), any pledge of
Securities covering an obligation that matures, or could reasonably mature
during the Lock-Up Period, or any purchase, sale or grant of any right
(including without limitation any put or call option) with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from Securities.
Not withstanding the foregoing, each Holder may (a) exercise (on a cash
or cashless basis, whether in a traditional cashless exercise or in a "brokers"
cashless exercise) options to purchase Common Stock outstanding on the date
hereof, it being understood, however, that the shares of Common Stock received
(net of shares sold by or on behalf of such Holder in a "brokers" cashless
exercise or shares delivered to the Company in a traditional cashless exercise
thereof) by such Holder upon exercise thereof shall be subject to the terms of
this Item 3 of this Consent, (b) transfer shares of Common Stock or Securities
during such Holder's lifetime by bona fide gift or upon death by will or
intestacy, provided that any transferee agrees to be bound by the terms of Item
3 of this Consent, and (c) transfer or otherwise dispose of shares of Common
Stock or Securities as a distribution to limited partners or shareholders of
such Holder, provided that the distributees thereof agree to be bound by the
terms of Item 3 of this Consent.
Each Holder understands that the Underwriters will rely upon the
representations set forth in this Lock-Up Agreement in proceeding with the
Public Offering. Each Holder agrees that the successors, assigns, heirs,
personal and legal representatives of such Holder, shall be bound by this
Agreement. Furthermore, each Holder hereby agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by the such Holder except in compliance with
this Lock-Up Agreement.
It is understood that, if the Underwriting Agreement does not become
effective prior to December 31, 1996 (the "Expiration Date"), or if the
Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Shares, the obligations under Item 3 of this Consent shall automatically
terminate and be of no further force and effect.
<PAGE>
ITEM 4. WAIVER OF NOTICE
Each Holder, by affixing his, her or its signature to this Consent,
hereby waives advance notice of all actions described in this Consent required
under any of the Purchase Agreement, the Shareholders Agreement, the Warrants,
the Company's Amended and Restated Articles of Incorporation, and the Company's
Bylaws.
ITEM 5. WAIVER OF DEFAULTS UNDER THE COMPANY AGREEMENTS AND WARRANTS
Each Holder by affixing his, her or its signature to this Consent,
hereby waives any and all defaults by the Company under the Purchase Agreement,
the Shareholders Agreement, the Company's Amended and Restated Articles of
Incorporation, the Company's Bylaws, and the Warrants held by each Holder. Each
Holder acknowledges that all dividends in respect of Series A Redeemable
Preferred Shares due and payable on or before the date hereof have been paid,
and that all anti-dilution adjustments which have accrued on or before the date
hereof have been made, and to the extent not made, are hereby waived.
ITEM 6. CASHLESS EXERCISE OF WARRANTS
In consideration of the execution and delivery of this Consent, the
Company hereby agrees that each Holder may exercise the Warrant held by such
Holder, by a cashless exercise to permit "tacking" of the holding period of the
Warrants to the shares of Common Stock issued upon exercise of the Warrants. The
exercise will be effective immediately prior to the effective date of the
Registration Statement. The exercise price shall be paid by a reduction of the
number of shares of Common Stock issued upon exercise of each Warrant. The
number of shares to be retained by the Company in payment of the exercise price
shall be equal to the quotient of (x) the entire price of $.01 MULTIPLIED BY the
stated number of shares issuable upon exercise of such Warrant DIVIDED BY (y)
$10.00. Subject to receipt of the opinion specified in the following sentence,
at the closing of the Public Offering the Company will deliver certificates
evidencing the shares of Common Stock issued upon exercise of the Warrants
without the legend required by (a) Section 6.2 of the Shareholders Agreement,
(b) Section 2 of the Registration Rights Agreement (as defined below), or (c)
the legend required by Section 8 of the Warrant. Counsel to the Holders will
deliver an opinion of counsel to the Company to the effect that such legends are
not required by the Securities Act of 1933.
ITEM 7. ADOPTION OF STOCK OPTION PLAN
The Company plans to establish a stock option plan (the "Plan") in
preparation of the Public Offering. The Plan will become effective upon its
adoption by the Company's Board of Directors and shareholders, provided that any
options granted thereunder shall not vest until the closing of the Public
Offering. Subject to the closing of the Public Offering on or before the
Expiration Date, each Holder hereby waives: (a) the 10,000 share limitation
provided in Section 6.17 of the Purchase Agreement relating to the number of
shares which may be issued upon exercise of stock options, (b) all anti-dilution
adjustments under the
<PAGE>
Warrants relating to the establishment of the Plan, (c) the grant of all options
thereunder, including the grant of options which do not conform to the
requirements of Section 6.17 of the Purchase Agreement, and (d) any preemptive
rights that might arise under the Shareholders Agreement or otherwise with
respect to the grant or exercise of any options under the Plan, the
establishment of the Plan, and the reservation of shares for issuance upon
exercise of options granted under the Plan.
ITEM 8. PROXY TO APPROVE SPECIFIED CHARTER AMENDMENTS AND STOCK OPTION
PLAN
Each Holder does hereby make, constitute, and appoint, David F. Eisner
and Gerardo M. Balboni II, or either of them as agent and proxy of each Holder,
with full power of substitution in the premises, to vote and exercise all
consensual and voting rights with respect to all shares of Series A Shares of
the Company registered in the name of each Holder on the stock transfer books of
the Company, at each meeting of shareholders and to execute any written consent
of shareholders of the Company, with all power which the Holders would possess
if personally present, PROVIDED HOWEVER, that the matters for which this proxy
is valid are strictly limited to (a) approval of the Specified Charter
Amendments and (b) the approval of the Plan, and PROVIDED FURTHER that the
effectiveness of the approval of the Specified Charter Amendments and the Plan
shall be conditioned upon the closing of the Public Offering on or before the
Expiration Date, and resolutions shall provide that if the Public Offering is
not closed on or before the Expiration Date, that any actions which were
approved by this proxy shall be null and void and of no force and effect. As
used herein, the term "Specified Charter Amendments" means, any amendment to the
Articles of Incorporation or Bylaws of the Company adopted in connection with
the Public Offering that (a) effects any stock split (provided that the number
of shares issuable upon exercise of the Warrants is adjusted to reflect the
stock split), (b) removes the existing Series A Redeemable Preferred Stock and
authorizes additional shares of blank check preferred stock, (c) provides for
exculpation or indemnification of directors, (d) authorizes a staggered board of
directors, (e) increases the number of authorized shares, (f) requires advance
notice for the nomination of directors, (g) provides for limitations on the
rights of shareholders to call shareholder meetings, (h) authorizes a name
change of the Company, (i) authorizes amended and restated B the Articles of
Incorporation or Bylaws that do not otherwise adversely affect the rights of the
Holders.
This Proxy shall terminate upon the first to occur of (a) the closing
of the Public Offering, or (b) the Expiration Date. Each Holder hereby revokes
any proxy or proxies heretofore given to vote such shares of Series A Redeemable
Preferred Stock. Each Holder further agrees, until the first to occur of the
closing of the Public Offering or the Expiration Date, to vote, or provide a
consent with respect to, his, her or its shares of Series A Redeemable Preferred
Stock in favor of the Specified Charter Amendments and the Plan and the Restated
Bylaws.
<PAGE>
ITEM 9. REGISTRATION RIGHTS AGREEMENT
The signature pages to this Consent shall act as the signature pages of
the Holders to the Registration Rights Agreement in substantially the form of
EXHIBIT A hereto, together with such changes as may be approved by Balboni
Ashley & Schoenberg LLC, counsel to the Holders.
This Consent may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same Consent.
IN THE EVENT THE PUBLIC OFFERING DOES NOT CLOSE BEFORE THE EXPIRATION
DATE, THE SERIES A PREFERRED STOCK SHALL REMAIN OUTSTANDING; THE COMPANY SHALL
REISSUE THE WARRANTS EXERCISED IN ITEM 1 OF THIS CONSENT (AGAINST DELIVERY OF
ALL COMMON STOCK ISSUED UPON EXERCISE OF THE WARRANTS); ALL TERMINATIONS AND
CANCELLATIONS IN ITEM 2 OF THIS CONSENT SHALL BE NULL AND VOID; AND ALL WAIVERS
IN ITEM 5 OF THIS CONSENT SHALL BE NULL AND VOID. NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THIS CONSENT, THE HOLDERS OF WARRANTS SHALL BE PLACED IN THE
SAME POSITION WITH RESPECT TO ANTI-DILUTION RIGHTS AS THEY HAD BEFORE THE
REGISTRATION STATEMENT AND CONTEMPLATION OF THE PUBLIC OFFERING.
IN WITNESS WHEREOF, the Company and the Holders hereunto set their
hands as of the 30th day of August, 1996.
TRANSEASTERN PROPERTIES OF SOUTH
FLORIDA, INC.
By:
Edward W. Falcone, Executive Vice
President
[SIGNATURE PAGES OF HOLDERS ATTACHED]
<PAGE>
SIGNATURE PAGE TO NOTICE OF ELECTION AND CONSENT
Requested Shares SHAREHOLDER
18,000 Christopher Allick
5,143 Andrew Whittaker
10,283 David F. Eisner
5,143 David J. Losito
51,431 Richard A. Handler, Trustee of the Handler
Family Trust
<PAGE>
NOTICE OF ELECTION AND CONSENT
OF
HOLDERS OF SERIES B REDEEMABLE PREFERRED STOCK
Each of the undersigned holders (each of whom is hereinafter referred
to as a "Holder" and all of whom collectively are hereinafter referred to as
"Holders") of Series B Redeemable Preferred Stock ("Series B Shares") of
Transeastern Properties, Inc., a Florida corporation (the "Company"),
understands that Cruttenden Roth Incorporated (the "Representative") and certain
other firms propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") providing for the purchase by the Representative and such other
firms (the "Underwriters") of shares (the "Shares") of Common Stock, $.01 par
value (the "Common Stock"), of the Company and that the Underwriters propose to
reoffer the Shares to the public (the "Public Offering").
This Notice of Election and Consent (the "Consent") relates to actions
to be taken by Holders in connection with the proposed Public Offering
including:
(a) Notification to the Company by holders of Warrants to purchase
Common Stock issued in conjunction with the issuance and sale of the
Series B Shares (the "Warrants") of their intent to exercise the
Warrants in full and to include a portion of the shares of Common Stock
issued upon exercise of the Warrants in the Public Offering;
(b) The termination of certain agreements which were entered into at
the time of the purchase of the Series B Shares and Warrants;
(c) Appointment of Edward W. Falcone and Gerardo M. Balboni II, as
proxies to vote all Series B Shares registered in the name of each
Holder at any meeting at, or any action for which shareholder approval
or consent is taken to approve the Specified Charter Amendments (as
defined below) and the Plan (as defined below);
(d) The execution of a Registration Rights Agreement in
substantially the form of EXHIBIT A hereto; and
(e) An Agreement to "lock up" shares of Common Stock after the
Public Offering.
In addition, in all cases, to the extent that any Holder has a right to
vote on any of the actions set forth herein or to receive notice of such
actions, this Consent will act as the authorization and consent of each Holder
of such actions and as a waiver of such notice.
ITEM 1. REQUEST TO INCLUDE SHARES IN THE REGISTRATION AND PUBLIC
OFFERING
Each Holder hereby notifies the Company that such Holder intends to
exercise, in full, the Warrant(s) held by such Holder, the exercise to be
effective immediately prior to the effective date of the Registration Statement
on Form S-1 filed by the Company in connection with the Public Offering (the
"Registration Statement"), and does hereby request that the Representative
include the number of shares of Common Stock (giving effect to the 8.2 for 1
<PAGE>
stock split) issuable upon exercise of the Warrant (s) held by such Holder set
forth adjacent to the signature of such Holder in the registration and the
Public Offering (such number of shares with respect to each undersigned to this
Consent are the "Requested Shares"). In the event a Holder is the holder of more
than one Warrant, such Holder requests that the Requested Shares be the shares
issued upon exercise of the oldest warrant first. Each Holder acknowledges that
shareholders selling shares of Common Stock in the Public Offering will be
required to sign certain agreements for the benefit of the Underwriters. If a
limitation in the number of shares of Common Stock to be sold by selling
shareholders in the Public Offering is required in the judgment of the
Underwriters, the limitation shall be borne by all selling shareholders
pro-rata. Each Holder waives any right: (a) to exclude from the Public Offering
shares of Common Stock held by any other person (other than as set forth in this
Item 1) and (b) to include any shares in the Underwriters' Over Allotment
Option. Except as set forth in this Item 1, each Holder hereby waives all
registration rights it may have with respect to the Company's securities. The
Company acknowledges that the Company will pay all Registration Expenses, (as
such term is defined in the Purchase Agreement which is as defined below) and
the Holders acknowledge that the Holders shall pay the Selling Expenses (as such
term is defined in the Purchase Agreement) attributable to the shares of Common
Stock sold by the Holders in the Public Offering.
ITEM 2. TERMINATION OF CERTAIN AGREEMENTS
Each Holder by affixing his, her or its signature to this Consent,
consents to and agrees that the Series B Redeemable Preferred Stock and Warrant
Purchase Agreement dated December 6, 1994, by and among the Company, the
Holders, and Arthur J. Falcone, Edward W. Falcone, and Philip Cucci, Jr. (the
"Purchase Agreement) contains provisions which, at the closing of the Public
Offering, would no longer be in the best interest of the Company and are no
longer desired by the Holder. Accordingly, each Holder agrees to the termination
and cancellation of the Purchase Agreement with such cancellation to be
effective without any further action by the Company or any Holder, immediately
prior to the effective date of the Registration Statement.
ITEM 3. LOCK UP AGREEMENT
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, each Holder hereby
irrevocably agrees that without the prior written consent of Cruttenden Roth
Incorporated (which consent may be withheld in its sole discretion) such Holder
will not sell, offer to sell, solicit an offer to buy, contract to sell, loan,
pledge, grant any option to purchase, exercise a warrant or option to purchase,
shares of Common Stock or otherwise exercise, transfer, or dispose of
(collectively, a "Disposition"), any other securities convertible into or
exercisable or exchangeable for Common Stock (collectively, "Securities"), now
owned or hereafter acquired by such Holder or with respect to which such Holder
has or hereafter acquires the power of disposition, for a period of 180 days
after the date of the final Prospectus relating to the Public Offering of the
Shares to the public by the Underwriters (the "Lock-Up Period"). The foregoing
restriction is expressly agreed to preclude the holder of the Securities from
engaging in any hedging, pledge or other transaction which is designed to, or
which may reasonably be expected to lead to or result in Disposition of
Securities during the Lock-Up Period even if such Securities would be disposed
of by someone other than such Holder. Such prohibited hedging, pledge or other
transactions would include without limitation, any short sale (whether or not
against the box), any pledge of Securities covering an obligation that matures,
or could reasonably
<PAGE>
mature during the Lock-Up Period, or any purchase, sale or grant of any right
(including without limitation any put or call option) with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from Securities.
Not withstanding the foregoing, each Holder may (a) exercise (on a cash
or cashless basis, whether in a traditional cashless exercise or in a "brokers"
cashless exercise) options to purchase Common Stock outstanding on the date
hereof, it being understood, however, that the shares of Common Stock received
(net of shares sold by or on behalf of such Holder in a "brokers" cashless
exercise or shares delivered to the Company in a traditional cashless exercise
thereof) by such Holder upon exercise thereof shall be subject to the terms of
this Item 3 of this Consent, (b) transfer shares of Common Stock or Securities
during such Holder's lifetime by bona fide gift or upon death by will or
intestacy, provided that any transferee agrees to be bound by the terms of Item
3 of this Consent, and (c) transfer or otherwise dispose of shares of Common
Stock or Securities as a distribution to limited partners or shareholders of
such Holder, provided that the distributees thereof agree to be bound by the
terms of Item 3 of this Consent.
Each Holder understands that the Underwriters will rely upon the
representations set forth in this Lock-Up Agreement in proceeding with the
Public Offering. Each Holder agrees that the successors, assigns, heirs,
personal and legal representatives of such Holder, shall be bound by this
Agreement. Furthermore, each Holder hereby agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by the such Holder except in compliance with
this Lock-Up Agreement.
It is understood that, if the Underwriting Agreement does not become
effective prior to December 31, 1996 (the "Expiration Date"), or if the
Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Shares, the obligations under Item 3 of this Consent shall automatically
terminate and be of no further force and effect.
ITEM 4. WAIVER OF NOTICE
Each Holder, by affixing his, her or its signature to this Consent,
hereby waives advance notice of all actions described in this Consent required
under any of the Purchase Agreement, the Warrants, the Company's Amended and
Restated Articles of Incorporation, and the Company's Bylaws.
ITEM 5. WAIVER OF DEFAULTS UNDER THE COMPANY AGREEMENTS AND WARRANTS
Each Holder by affixing his, her or its signature to this Consent,
hereby waives any and all defaults by the Company under the Purchase Agreement,
the Company's Amended and Restated Articles of Incorporation, the Company's
Bylaws, and the Warrants held by each Holder. Each Holder acknowledges that all
dividends in respect of Series B Shares due and payable on or before the date
hereof have been paid, and that all anti-dilution adjustments which have accrued
on or before the date hereof have been made, and to the extent not made, are
hereby waived.
<PAGE>
ITEM 6. CASHLESS EXERCISE OF WARRANTS
In consideration of the execution and delivery of this Consent, the
Company hereby agrees that each Holder may exercise the Warrant held by such
Holder, by a cashless exercise to permit "tacking" of the holding period of the
Warrants to the shares of Common Stock issued upon exercise of the Warrants. The
exercise will be effective immediately prior to the effective date of the
Registration Statement. The exercise price shall be paid by a reduction of the
number of shares of Common Stock issued upon exercise of each Warrant. The
number of shares to be retained by the Company in payment of the exercise price
shall be equal to the quotient of (x) the entire price of $.01 MULTIPLIED BY the
stated number of shares issuable upon exercise of such Warrant DIVIDED BY (y)
$10.00. At the closing of the Public Offering the Company will deliver
certificates evidencing the shares of Common Stock issued upon exercise of the
Warrants with the legend required by Section 7.2 of the Warrant.
ITEM 7. ADOPTION OF STOCK OPTION PLAN
The Company plans to establish a stock option plan (the "Plan") in
preparation of the Public Offering. The Plan will become effective upon its
adoption by the Company's Board of Directors and shareholders, provided that any
options granted thereunder shall not vest until the closing of the Public
Offering. Subject to the closing of the Public Offering on or before the
Expiration Date, each Holder hereby waives: (a) the 10,000 share limitation
provided in Section 6.14 of the Purchase Agreement relating to the number of
shares which may be issued upon exercise of stock options; (b) all anti-dilution
adjustments under the Warrants relating to the establishment of the Plan; and
(c) the grant of all options thereunder, including the grant of options which do
not conform to the requirements of Section 6.14 of the Purchase Agreement.
ITEM 8. PROXY TO APPROVE SPECIFIED CHARTER AMENDMENTS AND STOCK OPTION
PLAN
Each Holder does hereby make, constitute, and appoint, Edward W.
Falcone and Gerardo M. Balboni II, as agent and proxy of each Holder, with full
power of substitution in the premises, to vote and exercise all consensual and
voting rights with respect to all shares of Series B Shares of the Company
registered in the name of each Holder on the stock transfer books of the
Company, at each meeting of shareholders and to execute any written consent of
shareholders of the Company, with all power which the Holders would possess if
personally present, PROVIDED HOWEVER, that the matters for which this proxy is
valid are strictly limited to (a) approval of the Specified Charter Amendments
and (b) the approval of the Plan, and PROVIDED FURTHER that the effectiveness of
the approval of the Specified Charter Amendments and the Plan shall be
conditioned upon the closing of the Public Offering on or before the Expiration
Date, and resolutions shall provide that if the Public Offering is not closed on
or before the Expiration Date, that any actions which were approved by this
proxy shall be null and void and of no force and effect. As used herein, the
term "Specified Charter Amendments" means, any amendment to the Articles of
Incorporation or Bylaws of the Company adopted in connection with the Public
Offering that (a) effects any stock split (provided that the number of shares
issuable upon exercise of the Warrants is adjusted to reflect the stock split),
(b) removes the existing Series B Redeemable Preferred Stock and authorizes
additional shares of blank check preferred stock, (c) provides for exculpation
or indemnification of directors, (d) authorizes a staggered board of directors,
(e) increases the number of authorized shares, (f) requires advance notice for
the nomination of directors, (g)
<PAGE>
provides for limitations on the rights of shareholders to call shareholder
meetings, (h) authorizes a name change of the Company, (i) authorizes amended
and restated Bylaws, or (j), authorincorporation or Bylaws that do not otherwise
adversely affect the rights of the Holders.
This Proxy shall terminate upon the first to occur of (a) the closing
of the Public Offering, or (b) the Expiration Date. Each Holder hereby revokes
any proxy or proxies heretofore given to vote such shares of Series B Redeemable
Preferred Stock. Each Holder further agrees, until the first to occur of the
closing of the Public Offering or the Expiration Date, to vote, or provide a
consent with respect to, his, her or its shares of Series B Redeemable Preferred
Stock in favor of the Specified Charter Amendments and the Plan and the Restated
Bylaws.
ITEM 9. REGISTRATION RIGHTS AGREEMENT
The signature pages to this Consent shall act as the signature pages of
the Holders to the Registration Rights Agreement in substantially the form of
EXHIBIT A hereto, together with such changes as may be approved by Balboni
Ashley & Schoenberg LLC, counsel to the Holders.
This Consent may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same Consent.
IN THE EVENT THE PUBLIC OFFERING DOES NOT CLOSE BEFORE THE EXPIRATION
DATE, THE SERIES B PREFERRED STOCK SHALL REMAIN OUTSTANDING; THE COMPANY SHALL
REISSUE THE WARRANTS EXERCISED IN ITEM 1 OF THIS CONSENT (AGAINST DELIVERY OF
ALL COMMON STOCK ISSUED UPON EXERCISE OF THE WARRANTS); ALL TERMINATIONS AND
CANCELLATIONS IN ITEM 2 OF THIS CONSENT SHALL BE NULL AND VOID; AND ALL WAIVERS
IN ITEM 5 OF THIS CONSENT SHALL BE NULL AND VOID. NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THIS CONSENT, THE HOLDERS OF WARRANTS SHALL BE PLACED IN THE
SAME POSITION WITH RESPECT TO ANTI-DILUTION RIGHTS AS THEY HAD BEFORE THE
REGISTRATION STATEMENT AND CONTEMPLATION OF THE PUBLIC OFFERING.
IN WITNESS WHEREOF, the Company and the Holders hereunto set their
hands as of the 12th day of September, 1996.
TRANSEASTERN PROPERTIES, INC.
By:
Edward W. Falcone, Executive Vice
President
[SIGNATURE PAGES OF HOLDERS ATTACHED]
<PAGE>
SIGNATURE PAGE TO NOTICE OF ELECTION AND CONSENT
REQUESTED SHARES SHAREHOLDER
1,162 ---------------------------------
Daniel Andreacci
18,579 Brancaleone Family Partnership
By:
------------------------------
Jesse Brancaleone, Managing Partner
11,611 ---------------------------------
Albert Bruno
1,162 ---------------------------------
Les Campbell
30,000 ---------------------------------
Anthony Ciabattoni
1,392 ---------------------------------
Phillip J. Ciabattoni
1,162 ---------------------------------
Otto Claricurzio
4,645 ---------------------------------
Audrey Cohen
1,162 ---------------------------------
Neil Eisner
<PAGE>
SIGNATURE PAGE TO NOTICE OF ELECTION AND CONSENT
19,266 ----------------------------------
Robert J. Falcone, Trustee of the
Robert J. Falcone Revocable Living
Trust DTD September 1, 1993
6,967 -----------------------------------
Kenneth Ginsberg
2,322 -----------------------------------
David. W. Gove
1,162 -----------------------------------
Larry T. Nicholson
2,787 Bruce and Kim Phillips JTWRS
-----------------------------------
Bruce Phillips
-----------------------------------
Kim Phillips
4,645 -----------------------------------
Anthony Prezzamolo
930 -----------------------------------
Ray Stromback
1,162 -----------------------------------
Stephen R. Day
4,645 -----------------------------------
Isaac Abolafia
4,645 -----------------------------------
Anthony Musto
<PAGE>
SIGNATURE PAGE TO NOTICE OF ELECTION AND CONSENT
8,129 Bruce R. and Jody A. Johnson, as
tenants by the entirety
---------------------------------
Bruce R. Johnson
---------------------------------
Jody A. Johnson
1,160 ---------------------------------
Clay S. Cunningham
1,160 ---------------------------------
Albert A. DiClemente
1,160 ---------------------------------
Neal Katz
1,160 ---------------------------------
Brooke Jones
928 ---------------------------------
John Murphy
1,160 ---------------------------------
Mark J. Spizzirri
1,160 ----------------------------------
DuRay E. Stromback, a Trustee under
the DuRay E. Stromback Trust DTD
December 2, 1982
<PAGE>
SIGNATURE PAGE TO NOTICE OF ELECTION AND CONSENT
928 -------------------------------
Ray W. Stromback, a trustee under the
Ray W. and Evelyn M. Stromback
Living Trust DTD November 5, 1993
John and Irene Passarelli JTWROS
6,967
--------------------------------
John Passarelli
--------------------------------
Irene Passarelli
2,324 --------------------------------
Philip J. Weiss, Trustee
1,624 --------------------------------
Arthur J. Falcone, Sr.
<PAGE>
NOTICE OF ELECTION AND CONSENT OF
HOLDERS OF COMMON STOCK
Each of the undersigned holders (each of whom is hereinafter referred
to as a "Holder" and all of whom collectively are hereinafter referred to as
"Holders") of common stock of Transeastern Properties, Inc., a Florida
corporation (the "Company"), understands that Cruttenden Roth Incorporated (the
"Representative") and certain other firms propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") providing for the purchase by the
Representative and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, $.01 par value (the "Common Stock"), of the Company
and that the Underwriters propose to reoffer the Shares to the public (the
"Public Offering").
This Notice of Election and Consent (the "Consent") relates to actions to be
taken by Holders in connection with the proposed Public Offering including:
(a) Notification to the Company by holders of Warrants to purchase
Common Stock issued in conjunction with the issuance and sale of Common
Stock (the "Warrants") of their intent to exercise the Warrants in full
and to include a portion of the shares of Common Stock issued pursuant
to the Purchase Agreement (as defined in Item 2 below) in the Public
Offering;
(b) The termination of certain agreements which were entered into at
the time of the purchase of the Common Stock and Warrants;
(c) Appointment of Edward W. Falcone and Gerardo M. Balboni II, as
proxies to vote all Common Stock registered in the name of each Holder
at any meeting at, or any action for which shareholder approval or
consent is taken to approve the Specified Charter Amendments (as
defined below) and the Plan (as defined below);
(d) The execution of a Registration Rights Agreement in
substantially the form of EXHIBIT A hereto; and
(e) An Agreement to "lock up" shares of Common Stock after the
Public Offering.
In addition, in all cases, to the extent that any Holder has a right to
vote on any of the actions set forth herein or to receive notice of such
actions, this Consent will act as the authorization and consent of each Holder
of such actions and as a waiver of such notice.
<PAGE>
ITEM REQUEST TO INCLUDE SHARES IN THE REGISTRATION AND PUBLIC OFFERING
Each Holder hereby notifies the Company that such Holder intends to
exercise, in full, the Warran held by such Holder, the exercise to be effective
immediately prior to the effective date of the Registration Statement on Form
S-1 filed by the Company in connection with the Public Offering (the
"Registration Statement"). Each Holder does hereby request that the
Representative include the number of shares of Common Stock (giving effect to
the 8.2 for 1 stock split) set forth adjacent to the signature of such Holder in
the registration and the Public Offering (such number of shares with respect to
each undersigned to this Consent are the "Requested Shares"). Each Holder
acknowledges that shareholders selling shares of Common Stock in the Public
Offering will be required to sign certain agreements for the benefit of the
Underwriters. If a limitation in the number of shares of Common Stock to be sold
by selling shareholders in the Public Offering is required in the judgment of
the Underwriters, the limitation shall be borne by all selling shareholders
pro-rata. Each Holder waives any right: (a) to exclude from the Public Offering
shares of Common Stock held by any other person (other than as set forth in this
Item 1) and (b) to include a pro rata number of shares in the Underwriters' Over
Allotment Option. Except as set forth in this Item 1, each Holder hereby waives
all registration rights it may have with respect to the Company's securities.
The Company acknowledges that the Company will pay all Registration Expenses,
(as such term is defined in the Purchase Agreement which is as defined below)
and the Holders acknowledge that the Holders shall pay the Selling Expenses (as
such term is defined in the Purchase Agreement) attributable to the shares of
Common Stock sold by the Holders in the Public Offering.
ITEM TERMINATION OF CERTAIN AGREEMENTS
Each Holder by affixing his, her or its signature to this Consent,
consents to and agrees that the Common Stock and Warrant Purchase Agreement
dated April 15, 1996, by and among the Company, the Holders, and Arthur J.
Falcone, Edward W. Falcone, and Philip Cucci, Jr. (the "Purchase Agreement)
contains provisions which, at the closing of the Public Offering, would no
longer be in the best interest of the Company and are no longer desired by the
Holder. Accordingly, each Holder agrees to the termination and cancellation of
the Purchase Agreement with such cancellation to be effective without any
further action by the Company or any Holder, immediately prior to the effective
date of the Registration Statement.
<PAGE>
ITEM LOCK UP AGREEMENT
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, each Holder hereby
irrevocably agrees that without the prior written consent of Cruttenden Roth
Incorporated (which consent may be withheld in its sole discretion) such Holder
will not sell, offer to sell, solicit an offer to buy, contract to sell, loan,
pledge, grant any option to purchase, exercise a warrant or option to purchase,
shares of Common Stock or otherwise exercise, transfer, or dispose of
(collectively, a "Disposition"), any other securities convertible into or
exercisable or exchangeable for Common Stock (collectively, "Securities"), now
owned or hereafter acquired by such Holder or with respect to which such Holder
has or hereafter acquires the power of disposition, for a period of 180 days
after the date of the final Prospectus relating to the Public Offering of the
Shares to the public by the Underwriters (the "Lock-Up Period"). The foregoing
restriction is expressly agreed to preclude the holder of the Securities from
engaging in any hedging, pledge, or other transaction which is designed to, or
which may reasonably be expected to lead to or result in Disposition of
Securities during the Lock-Up Period even if such Securities would be disposed
of by someone other than such Holder. Such prohibited hedging, pledge or other
transactions would include without limitation, any short sale (whether or not
against the box), any pledge of Securities covering an obligation that matures,
or could reasonably mature during the Lock-Up Period, or any purchase, sale or
grant of any right (including without limitation any put or call option) with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from
Securities.
Not withstanding the foregoing, each Holder may (a) exercise (on a cash
or cashless basis, whether in a traditional cashless exercise or in a "brokers"
cashless exercise) options to purchase Common Stock outstanding on the date
hereof, it being understood, however, that the shares of Common Stock received
(net of shares sold by or on behalf of such Holder in a "brokers" cashless
exercise or shares delivered to the Company in a traditional cashless exercise
thereof) by such Holder upon exercise thereof shall be subject to the terms of
this Item 3 of this Consent, (b) transfer shares of Common Stock or Securities
during such Holder's lifetime by bona fide gift or upon death by will or
intestacy, provided that any transferee agrees to be bound by the terms of Item
3 of this Consent, and (c) transfer or otherwise dispose of shares of Common
Stock or Securities as a distribution to limited partners or shareholders of
such Holder, provided that the distributees thereof agree to be bound by the
terms of Item 3 of this Consent.
Each Holder understands that the Underwriters will rely upon the
representations set forth in this Lock-Up Agreement in proceeding with the
Public Offering. Each Holder agrees that the successors, assigns, heirs,
personal and legal representatives of such Holder, shall be bound by this
Agreement. Furthermore, each Holder hereby agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the Securities held by the such Holder except in compliance with
this Lock-Up Agreement. It is understood that, if the Underwriting Agreement
does not become effective prior to December 31, 1996 (the "Expiration Date"), or
if the Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the Shares, the obligations under Item 3 of this Consent shall automatically
terminate and be of no further force and effect.
<PAGE>
ITEM WAIVER OF NOTICE
Each Holder, by affixing his, her or its signature to this Consent,
hereby waives advance notice of all actions described in this Consent required
under any of the Purchase Agreement, the Warrants, the Company's Amended and
Restated Articles of Incorporation, and the Company's Bylaws.
ITEM WAIVER OF DEFAULTS UNDER THE COMPANY AGREEMENTS AND WARRANTS
Each Holder by affixing his, her or its signature to this Consent,
hereby waives any and all defaults by the Company under the Purchase Agreement,
the Company's Amended and Restated Articles of Incorporation, the Company's
Bylaws, and the Warrants held by each Holder. Each Holder acknowledges that all
dividends in respect of Common Shares due and payable on or before the date
hereof have been paid, and that all anti-dilution adjustments which have accrued
on or before the date hereof have been made, and to the extent not made, are
hereby waived.
ITEM CASHLESS EXERCISE OF WARRANTS
In consideration of the execution and delivery of this Consent, the
Company hereby agrees that each Holder may exercise the Warrant held by such
Holder, by a cashless exercise to permit "tacking" of the holding period of the
Warrants to the shares of Common Stock issued upon exercise of the Warrants. The
exercise will be effective immediately prior to the effective date of the
Registration Statement. The exercise price shall be paid by a reduction of the
number of shares of Common Stock issued upon exercise of each Warrant. The
number of shares to be retained by the Company in payment of the exercise price
shall be equal to the quotient of (x) the entire price of $.01 MULTIPLIED BY the
stated number of shares issuable upon exercise of such Warrant DIVIDED BY (y)
$10.00. At the closing of the Public Offering the Company will deliver
certificates evidencing the shares of Common Stock issued upon exercise of the
Warrants with the legend required by Section 7.2 of the Warrant.
ITEM ADOPTION OF STOCK OPTION PLAN
The Company plans to establish a stock option plan (the "Plan") in
preparation of the Public Offering. The Plan will become effective upon its
adoption by the Company's Board of Directors and shareholders, provided that any
options granted thereunder shall not vest until the closing of the Public
Offering. Subject to the closing of the Public Offering on or before the
Expiration Date, each Holder hereby waives: (a) the 10,000 share limitation
provided in Section 6.14 of the Purchase Agreement relating to the number of
shares which may be issued upon exercise of stock options; (b) all anti-dilution
adjustments under the Warrants relating to the establishment of the Plan, and
(c) the grant of all options thereunder, including the grant of options which do
not conform to the requirements of Section 6.14 of the Purchase Agreement.
ITEM PROXY TO APPROVE SPECIFIED CHARTER AMENDMENTS AND STOCK OPTION
PLAN
Each Holder does hereby make, constitute, and appoint, Edward W.
Falcone and Gerardo M. Balboni II, as agent and proxy of each Holder, with full
power of substitution in the premises, to vote and exercise all consensual and
voting rights with respect to all shares of
<PAGE>
Common Stock of the Company registered in the name of each Holder on the stock
transfer books of the Company, at each meeting of shareholders and to execute
any written consent of shareholders of the Company, with all power which the
Holders would possess if personally present, PROVIDED HOWEVER, that the matters
for which this proxy is valid are strictly limited to (a) approval of the
Specified Charter Amendments and (b) the approval of the Plan, and PROVIDED
FURTHER that the effectiveness of the approval of the Specified Charter
Amendments and the Plan shall be conditioned upon the closing of the Public
Offering on or before the Expiration Date, and resolutions shall provide that if
the Public Offering is not closed on or before the Expiration Date, that any
actions which were approved by this proxy shall be null and void and of no force
and effect. As used herein, the term "Specified Charter Amendments" means, any
amendment to the Articles of Incorporation or Bylaws of the Company adopted in
connection with the Public Offering that (a) effects any stock split (provided
that the number of shares issuable upon exercise of the Warrants is adjusted to
reflect the stock split), (b) provides for exculpation or indemnification of
directors, (c) authorizes a staggered board of directors, (d) increases the
number of authorized shares, (e) requires advance notice for the nomination of
directors, (f) provides for limitations on the rights of shareholders to call
shareholder meetings, (g) authorizes a name change of the Company, (h)
authorizes amended and restated Bylaws, or (i), authorizes other changes to the
Articles of Incorporation or Bylaws that do not otherwise adversely affect the
rights of the Holders.
This Proxy shall terminate upon the first to occur of (a) the closing
of the Public Offering, or (b) the Expiration Date. Each Holder hereby revokes
any proxy or proxies heretofore given to vote such shares of Common Stock. Each
Holder further agrees, until the first to occur of the closing of the Public
Offering or the Expiration Date, to vote, or provide a consent with respect to,
his, her or its shares of Common Stock in favor of the Specified Charter
Amendments and the Plan and the Restated Bylaws.
ITEM REGISTRATION RIGHTS AGREEMENT
The signature pages to this Consent shall act as the signature pages of
the Holders to the Registration Rights Agreement in substantially the form of
EXHIBIT A hereto, together with such changes as may be made and approved by
Balboni Ashley & Schoenberg LLC, counsel to the Holders.
This Consent may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same Consent.
IN THE EVENT THE PUBLIC OFFERING DOES NOT CLOSE BEFORE THE EXPIRATION
DATE, THE COMMON STOCK SHALL REMAIN OUTSTANDING; THE COMPANY SHALL REISSUE THE
WARRANTS EXERCISED IN ITEM 1 OF THIS CONSENT (AGAINST DELIVERY OF ALL COMMON
STOCK ISSUED UPON EXERCISE OF THE WARRANTS); ALL TERMINATIONS AND CANCELLATIONS
IN ITEM 2 OF THIS CONSENT SHALL BE NULL AND VOID; AND ALL WAIVERS IN ITEM 5 OF
THIS CONSENT SHALL BE NULL AND VOID. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS CONSENT, THE HOLDERS OF WARRANTS SHALL BE PLACED IN THE SAME POSITION WITH
RESPECT TO ANTI-DILUTION RIGHTS AS THEY HAD BEFORE THE REGISTRATION STATEMENT
AND CONTEMPLATION OF THE PUBLIC OFFERING.
IN WITNESS WHEREOF, the Company and the Holders hereunto set their
hands as of the 12th day of September, 1996.
<PAGE>
TRANSEASTERN PROPERTIES, INC
By:
Edward W. Falcone, Executive Vice President
[SIGNATURE PAGES OF HOLDERS ATTACHED]
<PAGE>
SIGNATURE PAGE TO NOTICE OF ELECTION AND CONSENT
REQUESTED SHARES SHAREHOLDER
10,734
Robert J. Falcone, trustee of the Robert J. Falcone
Revocable Living Trust DTD September 1, 1993
1,000 John Cucci
1,000 Bill Mitchell
30,000 Anthony Ciabattoni
EXHIBIT 10.17
TRANSEASTERN PROPERTIES, INC.
1996 STOCK OPTION AND SHAREHOLDER VALUE PLAN
<PAGE>
TABLE OF CONTENTS
PAGE
I. GENERAL PROVISIONS................................... 1
1.1 Purpose............................ 1
1.2 Definitions................................. 1
1.3 Administration.............................. 4
1.4 Participants................................ 4
1.5 Stock....................................... 5
II. STOCK OPTIONS........................................ 5
2.1 Grant of Options............................ 5
2.2 Incentive Stock Options..................... 5
2.3 Option Price................................ 6
2.4 Certain Corporate Transactions.............. 6
2.5 Payment for Option Shares................... 6
III. RESTRICTED STOCK..................................... 7
3.1 Grant of Restricted Stock................... 7
3.2 Terms of Restricted Stock Grants............ 7
3.3 Restricted Stock Agreement.................. 7
3.4 Transferability............................. 8
3.5 Other Restrictions.......................... 8
3.6 Certificate Legend.......................... 8
3.7 Removal of Restrictions..................... 8
3.8 Voting Rights............................... 9
3.9 Dividends and Other Distributions........... 9
IV. SHAREHOLDER VALUE UNITS.............................. 9
4.1 Grant of Shareholder Value Units............ 9
4.2 Terms and Conditions of Awards.............. 9
4.3 Payment of Shareholder Value Units.......... 11
V. TERMINATION OF EMPLOYMENT............................ 11
5.1 Options..................................... 11
5.2 Restricted Stock............................ 12
5.3 Shareholder Value Units..................... 12
5.4 Other Provisions............................ 13
VI. ADJUSTMENTS AND CHANGE IN CONTROL.................... 13
6.1 Adjustments................................. 13
6.2 Change in Control........................... 13
6.3 Merger...................................... 14
VII. MISCELLANEOUS........................................ 14
7.1 Partial Exercise/Fractional Shares.......... 14
7.2 Rule 16b-3 Requirements..................... 14
7.3 Rights Prior to Issuance of Shares.......... 15
7.4 Non-Assignability........................... 15
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PAGE
7.5 Securities Laws............................ 15
7.6 Withholding and Taxes...................... 16
7.7 Termination and Amendment.................. 17
7.8 Effect on Employment....................... 17
7.9 Use of Proceeds............................ 17
7.10 Approval of Plan........................... 17
7.11 Governing Law.............................. 18
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<PAGE>
TRANSEASTERN PROPERTIES, INC.
1996 STOCK OPTION AND SHAREHOLDER VALUE PLAN
Effective ____________, 1996
I.
GENERAL PROVISIONS
1.1 PURPOSE. This 1996 Stock Option and Shareholder Value Plan (the "Plan")
is intended to attract, retain and motivate highly competent, effective and
loyal persons as directors, officers and key employees of Transeastern
Properties, Inc. (the "Company") or its Affiliates, by providing them
opportunities to acquire ownership interests in the Company through Options and
Restricted Stock Grants or to receive monetary benefits pursuant to the
Shareholder Value Units described herein. Furthermore, the Plan is intended to
assist in aligning the interests of the Company's directors, officers and key
employees with those of its shareholders.
1.2 DEFINITIONS. As used in this Plan, the following terms have the
meanings described below:
(a) "Affiliates" means a corporation or other entity that is
affiliated with the Company and includes any parent or subsidiary of
the Company, as defined in Code Sections 424(e) and (f), respectively.
(b) "Agreement" means the written agreement that sets forth the
terms of a Participant's Option, Restricted Stock Grant or Shareholder
Value Unit Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means termination of employment because of a
Participant's personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule,
or regulation (other than traffic violations or similar offenses) or
receipt of a final cease-and-desist order, or other material breach of
any provision in a Participant's written employment agreement with the
Company, if applicable. In determining willfulness, no act or failure
to act on a Participant's part shall be considered "willful" unless
done or omitted to be done by the Participant not in good faith and
without reasonable belief that the Participant's action or omission was
in the best interests of the Company.
(e) "Change in Control" means the occurrence of any of the following
events:
<PAGE>
(1) if any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act in effect on the date hereof), or group of persons acting in
concert (excluding Arthur Falcone, Philip Cucci, Jr. and Edward Falcone), other
than the Company or any subsidiary thereof or any employee benefit plan of the
Company or any subsidiary thereof, becomes the "beneficial owner" (as such term
is defined in Rule 13d-3 of the Exchange Act, except that a person shall also be
deemed the beneficiary owner of all securities which such person may have a
right to acquire, whether or not such right is presently exercisable) directly
or indirectly, of securities of the Company representing more than 50% of the
combined voting power of all classes of the Company's then outstanding
securities ordinarily having the right to vote in the election of directors
("voting stock"). Notwithstanding the foregoing, the beneficial ownership
requirement in this Section 1.2(e) shall not be satisfied if the attainment of
the applicable percentage of beneficial ownership is the result of an
acquisition of voting stock by the Company which, by reducing the number of
shares outstanding increases the proportionate number of shares beneficially
owned by any person; provided, however, that if a person shall become the
beneficial owner of more than 50% of the voting stock of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company become the beneficial owner of any additional
voting stock, then the beneficial ownership requirement in this Section 1.2(e)
shall have been satisfied; or
(2) if there is a change in the majority of the members of the Board
within any twenty-four month period, unless the selection or nomination for
election of each new director was approved by a vote of at least a majority of
the directors still in office who were directors at the beginning of the period
(current members of the Board and those directors approved by a majority of the
current members shall be referred to as "Incumbent Directors"); or
(3) if there shall be consummated (A) any merger or consolidation (or
series of mergers or consolidations) of the Company, other than a merger or
consolidation effected to implement a reorganization of the Company's ownership
wherein the Company shall become a wholly-owned subsidiary of another
corporation and the shareholders of the Company shall become shareholders of
such other corporation without any material change in each shareholder's
proportionate ownership or such other corporation from that owned in the Company
prior to such merger or consolidation, or (B) any sale, lease, exchange or other
transfer (in transactions) of all, or substantially all, of the assets of the
Company; or
(4) upon the adoption of any plan or proposal for the liquidation or
dissolution of the Company.
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<PAGE>
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Compensation Committee of the Company,
which shall be comprised of two or more members of the Board who are
deemed "Non-Employee Directors," as defined in Rule 16b-3 of the
Exchange Act and "outside directors" within the meaning of the
regulations under Section 162(m) of the Code.
(h) "Common Stock" means the Company's common stock, par value $.01
per share.
(i) "Disability" means disability as defined in Section 22(e) of the
Code.
(j) "Employee" means a full-time salaried employee of the Company or
Affiliate, who has an "employment relationship" with the Company or an
Affiliate, as defined in Treasury Regulation 1.421-7(h); the term
"employment" means employment with the Company, or an Affiliate of the
Company; and "full-time" means employment on the basis of at least 35
hours per week.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time and any successor thereto.
(l) "Fair Market Value" means for purposes of determining the value
of Common Stock on the Grant Date, the average of the highest and
lowest reported sales prices of the Company's Common Stock, as reported
in THE WALL STREET JOURNAL for the Grant Date. In the event that there
were no Common Stock transactions on such date, the Fair Market Value
shall be the closing price of the Company's Common Stock, as reported
in THE WALL STREET JOURNAL for the immediately preceding date on which
there were Common Stock transactions. For purposes of tendering
previously acquired shares to exercise an Option, "Fair Market Value"
shall mean the closing price of the Company's Common Stock, as reported
in THE WALL STREET JOURNAL for the immediately preceding day on which
there were Common Stock transactions. For purposes of determining "Fair
Market Value" when an Option is exercised pursuant to the "cashless
exercise procedure" set forth in Section 2.5(b), it shall mean the
price actually paid to the Participant upon the sale of the Company's
Common Stock used to satisfy the exercise price. Notwithstanding the
foregoing, the Committee may determine "Fair Market Value" in such
other manner as it may deem more equitable for Plan purposes, or as
required by applicable law.
(m) "Grant Date" means the date on which the Committee authorizes an
individual Option, Restricted Stock Grant or
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<PAGE>
Shareholder Value Unit Award, or such later date as shall be
designated by the Committee.
(n) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code.
(o) "Nonqualified Stock Option" means an Option that is not intended
to constitute an Incentive Stock Option.
(p) "Option" means either an Incentive Stock Option or a
Nonqualified Stock Option.
(q) "Participant" means an individual designated by the Committee to
participate in the Plan.
(r) "Performance Period" means the period of time set forth in a
Participant's Shareholder Value Unit Agreement.
(s) "Plan" means the Transeastern Properties, Inc. 1996 Long Term
Stock Option and Shareholder Value Plan, the terms of which are set
forth herein, and any amendments hereto.
(t) "Restricted Stock" means Common Stock that is granted subject to
restrictions, pursuant to Article III.
(u) "Restriction Period" means the period of time during which a
Participant's Restricted Stock Grant is subject to restrictions that
make it nontransferable.
(v) "Retirement" means termination of a Participant's employment at
or after age 65 other than as a result of termination for Cause.
(w) "Shareholder Value Unit Award" means an award granted in
accordance with Article IV of the Plan.
1.3 ADMINISTRATION. The Plan shall be administered by the Committee, in
accordance with Rule 16b-3 of the Exchange Act and any other applicable rules
and regulations. The Committee shall interpret the Plan, prescribe, amend, and
rescind rules and regulations relating to the Plan, and make all other
determinations necessary or advisable for its administration. The decision of
the Committee on any question concerning the interpretation of the Plan or its
administration with respect to any Option, Restricted Stock Grant or Shareholder
Value Unit Award granted under the Plan shall be final and binding upon all
Participants.
1.4 PARTICIPANTS. Participants in the Plan shall be such Employees
(including Employees who are directors), non-Employee
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<PAGE>
directors, independent contractors and agents of the Company and its Affiliates
as the Committee may select from time to time.
1.5 STOCK. The total number of shares of Company Common Stock which
shall be available for grants and awards under this Plan shall be 1,000,000,
subject to adjustments as provided in Article VI. The maximum number of shares
of Common Stock that may be subject to Option grants under the Plan to any
Participant in any calendar year shall not exceed 100,000 shares. Shares subject
to any unexercised portion of a terminated, cancelled, forfeited or expired
Option or Restricted Stock Award granted hereunder, and pursuant to which a
Participant never acquired benefits of ownership, including payment of a stock
dividend (but excluding voting rights), may again be subjected to grants and
awards under the Plan. All provisions in this Section 1.5 shall be adjusted, as
applicable, in accordance with Article VI.
II.
STOCK OPTIONS
2.1 GRANT OF OPTIONS. The Committee, at any time and from time to time,
subject to Sections 2.2 and 7.7, may grant Options to such Participants and for
such number of shares of Common Stock as it shall designate. Any Participant may
hold more than one Option under the Plan and any other Plan of the Company or
Affiliate. The Committee shall determine the general terms and conditions of
exercise, including any applicable vesting or performance requirements, which
shall be set forth in a Participant's Agreement. The Committee may designate any
Option granted as either an Incentive Stock Option or a Nonqualified Stock
Option, or the Committee may designate a portion of an Option as an Incentive
Stock Option or a Nonqualified Stock Option. No Option shall have an exercise
period that extends beyond 10 years from the Grant Date. A Participant's Option
exercise rights in the event of a Change in Control shall be in accordance with
Section 6.2.
2.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options may be granted
only to Employees. Any Option intended to constitute an Incentive Stock Option
shall comply with the requirements of this Section 2.2. No Incentive Stock
Option shall be granted with an exercise price below its Fair Market Value on
the Grant Date. An Incentive Stock Option shall not be granted to any
Participant who owns (within the meaning of Code Section 424(d)) stock of the
Company or any Affiliate possessing more than 10% of the total combined voting
power of all classes of stock of the Company or such Affiliate unless, at the
Grant Date, the exercise price for the Option is at least 110% of the Fair
Market Value of the shares subject to the Option and the Option, by its terms,
is not exercisable more than 5 years after the Grant Date. The aggregate
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<PAGE>
Fair Market value of the underlying Common Stock (determined at the Grant Date)
as to which Incentive Stock Options granted under the Plan (including a plan of
an Affiliate) may first be exercised by a Participant in any one calendar year
shall not exceed $100,000. To the extent that an Option intended to constitute
an Incentive Stock Option shall violate the foregoing $100,000 limitation (or
any other limitation set forth in Code Section 422), the portion of the Option
that exceeds the $100,000 limitation (or fails any other Code Section 422
requirement) shall be deemed to constitute a Nonqualified Stock Option.
2.3 OPTION PRICE. The Committee shall determine the per share exercise
price for each Option granted under the Plan, but no Option shall be granted
with an exercise price below 100% of the Fair Market value of Common Stock on
the Grant Date.
2.4 CERTAIN CORPORATE TRANSACTIONS. Notwithstanding Section 2.3 of the
Plan, in the event the Company substitutes an Option for a stock option issued
by another corporation in connection with a corporate transaction, such as a
merger, consolidation, acquisition of property or stock, separation (including a
spin-off or other distribution of stock or property), reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or partial or complete liquidation involving the Company and such
other corporation, the exercise price of such substituted Option shall be as
determined by the Committee in its discretion (subject to the provisions of
Section 424(a) of the Code in the case of a stock option that was intended to
qualify as an Incentive Stock Option) to preserve, on a per share basis
immediately after such corporate transaction, the same ratio of fair market
value per option share to exercise price per share which existed immediately
prior to such corporate transaction under the option issued by such other
corporation.
2.5 PAYMENT FOR OPTION SHARES.
(a) The purchase price for shares of Common Stock to be acquired
upon exercise of an Option granted hereunder shall be paid in full in
cash or by personal check, bank draft or money order at the time of
exercise; provided, however, that in lieu of such form of payment, the
Committee may permit a Participant to pay such purchase price in whole
or in part by tendering shares of Common Stock that have been held at
least six months by the Participant, which are freely owned and held by
the Participant independent of any restrictions, hypothecations or
other encumbrances, duly endorsed for transfer (or with duly executed
stock powers attached), or in any combination of the above. Shares of
Common Stock surrendered upon exercise shall be valued at the closing
price of the Company's Common Stock, as reported in THE WALL STREET
JOURNAL, for the immediately preceding date on which there were
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<PAGE>
Common Stock transactions prior to the date on which the certificate(s) for such
shares, duly endorsed for transfer or accompanied by appropriate stock powers,
are surrendered to the Company. Participants who are subject to short-swing
profit restrictions under the Exchange Act and who exercise an Option by
tendering previously acquired shares shall do so only in accordance with the
provisions of Rule 16b-3 of the Exchange Act. In determining which methods a
participant may utilize to pay the exercise price, the Committee may consider
such factors as it determines are appropriate.
(b) At the discretion of the Committee, as set forth in a
Participant's Option Agreement, any Option granted under the Plan may
be deemed exercised by delivery to the Company of a properly executed
exercise notice, acceptable to the Company, together with irrevocable
instructions to the Participant's broker to deliver to the Company
sufficient cash to pay the exercise price and any applicable income and
employment withholding taxes, in accordance with a written agreement
between the Company and the brokerage firm ("cashless exercise
procedure").
III.
RESTRICTED STOCK
3.1 GRANT OF RESTRICTED STOCK. Subject to the terms and conditions of
the Plan, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under this Plan to such Participants and in such amounts as it
shall determine.
3.2 TERMS OF RESTRICTED STOCK GRANTS. The Committee shall have the
authority to make Restricted Stock Grants to such Participants and for such
number of shares of Common Stock as it shall designate, subject to such terms
and conditions as the Committee deems appropriate, including without limitation,
restrictions on the sale or other disposition of such shares, the right of the
Company to reacquire such shares for no consideration upon termination of the
Participant's employment within specified periods, and requiring that the shares
be earned in whole or in part upon the achievement of performance goals
established by the Committee over a designated period of time. The Committee may
require the Participant to deliver a duly signed stock power, endorsed in blank,
relating to the Restricted Stock covered by such grant. The Committee may also
require that the stock certificates evidencing such shares be held in custody or
bear restrictive legends until the restrictions thereon shall have lapsed.
3.3 RESTRICTED STOCK AGREEMENT. Each grant of Restricted Stock shall be
evidenced by an Agreement that shall specify the terms of the restrictions,
including the restriction period, or
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<PAGE>
periods, the number of Restricted Stock shares subject to the grant, and such
other provisions, including performance goals, as the Committee shall determine.
3.4 TRANSFERABILITY. Except as provided in this Article III of the
Plan, the shares of Restricted Stock granted hereunder may not be transferred,
pledged, assigned, or otherwise alienated or hypothecated until the termination
of (a) the applicable Restriction Period or for such period of time as shall be
established by the Committee and specified in the Restricted Stock Agreement, or
(b) upon the earlier satisfaction of other conditions as specified by the
Committee and set forth in the Restricted Stock Agreement. All rights with
respect to the Restricted Stock granted to an Employee shall be exercisable
during a Participant's lifetime only by the Participant or the Participant's
legal representative.
3.5 OTHER RESTRICTIONS. The Committee shall impose such other
restrictions on any shares of Restricted Stock granted under the Plan as it may
deem advisable including, without limitation, restrictions under applicable
Federal or State securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.
3.6 CERTIFICATE LEGEND. In addition to any legends placed on
certificates pursuant to Section 3.4, each certificate representing shares of
Restricted Stock shall bear the following legend:
The sale or other transfer of the shares of stock represented
by this certificate, whether voluntary, involuntary or by
operation of law, is subject to certain restrictions of
transfer set forth in the Transeastern Properties, Inc. 1996
Stock Option and Shareholder Value Plan ("Plan"), rules and
administrative guidelines adopted pursuant to such Plan and a
Restricted Stock Agreement dated ____________. A copy of the
Plan, such rules and such Restricted Stock Agreement may be
obtained from the Corporate Secretary of the Company.
3.7 REMOVAL OF RESTRICTIONS. Except as otherwise provided under the
Plan, and subject to applicable federal and state securities laws, shares
covered by each Restricted Stock Grant made under the Plan shall become freely
transferable by the Participant after the last day of the Restriction Period.
Once the shares are released from the restrictions, the Participant shall be
entitled to have the legend required by Section 3.6 of the Plan removed from his
or her stock certificate. Provided further, the Committee shall have the
discretion to waive the applicable Restriction Period with respect to all or any
part of a Restricted Stock Grant.
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<PAGE>
The Company shall have the right to retain the certificates representing shares
of Restricted Stock Grants in its possession until such time as all conditions
and/or restrictions applicable to such shares of Common Stock have been
satisfied. The lapse of the Restriction Period in the event of a Change in
Control shall be in accordance with Section 6.2.
3.8 VOTING RIGHTS. During the Restriction Period, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to the Restricted Stock.
3.9 DIVIDENDS AND OTHER DISTRIBUTIONS.
(a) During the Restriction Period, a Participant shall be entitled
to receive all dividends and other distributions paid with respect to
shares under his or her Restricted Stock Grant. If any dividends or
distributions are paid in shares of Common Stock during the Restriction
Period, the dividend or other distribution shares shall be subject to
the same restrictions on transferability as the shares of Restricted
Stock with respect to which they were paid.
(b) Notwithstanding the foregoing, in the event that any dividend
constitutes a "derivative security" or an "equity security" pursuant to
Section 16(a) of the Exchange Act, such dividend shall be subject to a
Restriction Period equal to the remaining Restriction Period applicable
to the shares of Restricted Stock on which the dividend was paid.
IV.
SHAREHOLDER VALUE UNITS
4.1 GRANT OF SHAREHOLDER VALUE UNITS. Shareholder Value Units may be
granted to Participants at any time and from time to time, as shall be
determined by the Committee. The Committee shall have complete discretion in
determining the number, amount and timing of awards granted to each Participant.
A Shareholder Value Unit Award shall be based upon pre-established objective
performance goals that are intended to satisfy the performance-based
compensation requirements of Code Section 162(m) and the regulations promulgated
thereunder.
4.2 TERMS AND CONDITIONS OF AWARDS.
(a) Each Participant designated by the Committee shall be eligible
for such number of Shareholder Value Units as shall be determined by
the Committee in its discretion. The commencement of services for which
the Shareholder Value Unit Award relates (or
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<PAGE>
within the permissible time-period established under Code Section 162(m)) and
while the outcome of the performance goals and targets is uncertain. Any payment
under such Shareholder Value Units Awards shall be determined at the end of the
Performance Period in accordance with the table set forth in Section 4.2(b)
based fifty percent (50%) on the Company's percentile rank among the companies
in the Standard & Poor's 500 Composite Index ("S&P Companies") and fifty percent
(50%) on a selected group of publicly traded home builders or other diversified
real estate companies (i) the common stock of which has been publicly traded
throughout the applicable performance period and (ii) which are not in the
process of a change in control or other significant corporate reorganization
that has been publicly announced ("Peer Companies") on a Total Shareholder
Return ("TSR") basis. The Fair Market Value of the Common Stock as of the first
date of the Performance Period shall be indexed to $100 so that the Company's
accumulated compound shareholder return can be compared to and ranked on a
percentile basis among the S&P Companies and the Peer Companies. The 100%
targeted value of a Shareholder Value Unit Award to any participant (i.e., the
amount payable at the 60th percentile target), shall not exceed 25% of the
Participant's annual base compensation as in effect on the first day of the
applicable Performance Period. The maximum potential payment pursuant to a
Shareholder Value Unit Award to any one Participant for any Performance Period
shall not exceed $1 million. The number of Shareholder Value Units awarded and
the Performance Period with respect to each Participant shall be set forth in
each Participant's individual Shareholder Value Unit Agreement.
(b) The cash value of each Shareholder Value Unit shall be
determined in accordance with the following table:
TSR Percentile Rank Among The Cash Value of Each
S&P COMPANIES/PEER COMPANIES SHAREHOLDER VALUE UNIT*
Threshold 50th $ 500
55th 750
Target 60th 1,000
65th 1,300
70th 1,600
75th 1,950
80th 2,300
85th 2,650
Maximum 90th 3,000
* Interpolate between points to the nearest $1.00.
(c) No Shareholder Value Unit Award shall be payable if both the
Company's TSR as a percentile among the S&P Companies and Peer
Companies is less than the 50th. The maximum
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<PAGE>
Shareholder Value Unit Award payable is 300% of the 60th percentile "Target
Award." If the TSR as a percentile among the S&P Companies and the Peer
Companies is not specifically shown in the table in Section 4.2(b), then the
Committee shall interpolate between the amounts shown. For the sample of the
Peer Companies, the TSR of the first and last Peer Companies ranked in
descending order of TSR shall be equivalent to the 100th and zero percentiles,
respectively. The 90th percentile shall be determined by interpolating between
the third (91.6%) and fourth (87.5%) ranked Peer Companies. The 60th percentile
shall be determined by interpolating between the 10th (62.5%) and 11th (58.3%)
ranked Peer Companies. The 50th percentile shall be the equivalent to the TSR of
the 13th ranked Peer Company. The payment for all Shareholder Value Units
hereunder shall be in cash, unless the Committee determines to pay all or a part
of the Shareholder Value Unit Award in shares of Common Stock.
4.3 PAYMENT OF SHAREHOLDER VALUE UNITS. Payments of earned Shareholder
Value Units shall be made in accordance with terms and conditions prescribed or
authorized by the Committee. The Participant may elect to defer, or the
Committee may require or permit the deferral of, the receipt of Shareholder
Value Units upon such terms as the Committee deems appropriate.
V.
TERMINATION OF EMPLOYMENT
5.1 OPTIONS.
(a) If, prior to the date that an Option first becomes exercisable,
a Participant's employment is terminated for any reason, the
Participant's right to exercise the Option shall terminate and all
rights thereunder shall cease as of the Participant's termination of
employment.
(b) Subject to the Change in Control provisions in Section 6.2, if,
on or after the date that an Option first becomes exercisable, a
Participant's employment is terminated for any reason (except "Cause,"
as addressed in 5.1(d) below), including death, Disability or
Retirement, the Option, to the extent that it is then exercisable,
shall expire on the date set forth by the Committee in the
Participant's Agreement, not to extend beyond 10 years from the Grant
Date. The Committee, at its discretion, may extend an exercise period,
not to exceed the tenth anniversary of the Grant Date; it being
understood, that the extension of the exercise term for an Incentive
Stock Option may cause such Option to lose its preferential tax
treatment.
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<PAGE>
(c) The Committee, at the time of a Participant's termination of
employment, may, in its sole discretion, accelerate a Participant's
right to exercise an Option.
(d) Notwithstanding any provision herein to the contrary, any
Participant whose employment is terminated for "Cause" shall, as of the
time of the "Cause" determination, forfeit his or her right to any
unexercised Option granted hereunder, whether or not such Option is
vested and exercisable at the time of the termination for "Cause."
(e) Notwithstanding any provision herein to the contrary, the
exercise of any Option after termination of employment shall be subject
to satisfaction of the conditions precedent that the Participant
neither (i) competes with, or takes other employment with or renders
services to a competitor of the Company or its Affiliates without the
written consent of the Company, nor (ii) conducts himself or herself in
a manner adversely affecting the Company.
(f) Shares subject to Options that are not exercised in accordance
with the provisions of (a) through (c) above shall expire and be
forfeited by the Participant as of 5:00 p.m, (Florida time) on their
expiration date and shall become available for new grants and awards
under the Plan as of such time.
5.2 RESTRICTED STOCK. Subject to the Change in Control provisions in
Section 6.2, if a Participant with a Restricted Stock Grant terminates
employment for any reason other than (a) Retirement, (b) death, or (c)
Disability, the Participant's shares of Restricted Stock still subject to the
Restriction Period automatically shall expire and be forfeited by the
Participant and, to the extent that the Participant has not acquired any
benefits of ownership in the forfeited shares (as described in Section 1.5),
such shares shall be available for new grants and awards under the Plan as of
such termination date; provided, however, that the Committee, in its sole
discretion, may waive the restrictions remaining on any or all shares of
Restricted Stock and such new restrictions to such shares of Restricted Stock as
it deems appropriate. In the event of a Participant's Retirement, death or
Disability, the Restriction Period on any outstanding Restricted Stock Grants
shall be deemed to have lapsed as of the occurrence of such event.
5.3 SHAREHOLDER VALUE UNITS. Subject to the Change in Control
provisions in Section 6.2, Shareholder Value Units shall expire and be forfeited
by a Participant upon the Participant's termination of employment for any reason
other than Retirement, death, or Disability. In the event of a Participant's
Retirement, death or Disability, the Performance Period shall be deemed to have
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<PAGE>
ended as of the last trading date of the month immediately preceding the event,
and the Participant's outstanding Shareholder Value Units shall be measured and
valued as of such date and prorated for the number of months completed in the
Performance Period that had elapsed as of such date. Any Shareholder Value Unit
payment pursuant to a Participant's Retirement, death or Disability shall be
made within sixty (60) days following such date.
5.4 OTHER PROVISIONS. (a) The transfer of a Participant from one
corporation or division to another corporation or division among the Company and
any of its Affiliates, or (b) a leave of absence under the Company's leave
policy, or (c) the transfer of a Participant to a part-time employment status
with the Company or an Affiliate, or (d) a Participant's employment termination
but continuation as a member of the Board, shall not be deemed to constitute a
termination of employment for purposes of the Plan.
VI.
ADJUSTMENTS AND CHANGE IN CONTROL
6.1 ADJUSTMENTS.
(a) The total amount of Common Stock for which Options, Restricted
Stock and Shareholder Value Unit Awards may be granted under the Plan,
and the number of shares subject to any such grants or awards (both as
to the number of shares of Common Stock and the Option price), shall be
adjusted pro rata for any increase or decrease in the number of
outstanding shares of Common Stock resulting from a reorganization,
recapitalization, stock split, stock dividend, combination of shares,
rights offering, liquidation, dissolution, merger, consolidation,
spin-off or sale of assets, or any other change in or affecting the
corporate structure or capitalization of the Company.
(b) The foregoing adjustments shall be made by the Committee or, if
such adjustment is required by the Board, then by the Board at the
recommendation of the Committee. Any such adjustment shall provide for
the elimination of any fractional share which might otherwise become
subject to an Option, Restricted Stock Grant or Shareholder Value Unit
Award.
6.2 CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control, or if the Committee
determines in its sole discretion that a Change in Control has
occurred, then (i) any outstanding Option granted hereunder immediately
shall become exercisable in full, regardless of any installment
provision applicable to such Option, (ii) the
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<PAGE>
remaining Restriction Period on any Restricted Stock granted
hereunder immediately shall lapse and the shares shall become fully
transferable, subject to any applicable federal or state securities
laws, and (iii) the Performance Period on any outstanding Shareholder
Value Unit Awards and a Participant's outstanding Shareholder Value
Units shall be measured and valued as of the date of the Change in
Control, and prorated for the number of months in the Performance
Period that had lapsed as of such date. Any Shareholder Value Unit
payment due pursuant to a Change in Control shall be made within 45
days following the date on which the Change in Control occurred or is
deemed to have occurred by the Committee.
(b) Notwithstanding the foregoing, if the Compensation Committee
determines in its sole discretion that the provisions in Section 6.2(a)
will in any way prevent or impair pooling of interest accounting
treatment in connection with a Change in Control, then the provisions
of Section 6.2(a) shall be null and void. In the event of the
occurrence of a Change in Control in which a Participant is unable to
exercise a grant or award due to the short-swing profit restrictions of
Section 16(b) of the Exchange Act, the Participant's exercise period
shall be deferred until six months and one day following the occurrence
of the Change in Control.
6.3 MERGER. If the Company is a party to any merger, consolidation,
reorganization, or sale of substantially all of its assets, each holder of
outstanding Options and Restricted Stock Grants, to the extent that such grants
are not cancelled, cashed-out or exercised, as applicable (or restrictions
lapsed on Restricted Stock) in connection with the merger, shall be entitled to
receive the securities and/or property which a shareholder owning the number of
shares subject to the grants would be entitled to receive pursuant to such
merger, consolidation, reorganization or sale of assets upon the eventual
exercise of such Options or the eventual lapse of the Restriction Period on
Restricted Stock (if applicable).
VII.
MISCELLANEOUS
7.1 PARTIAL EXERCISE/FRACTIONAL SHARES. The Committee may permit, and
shall establish procedures for, the partial exercise of Options granted under
the plan. No fractional shares shall be issued in connection with the exercise
or payment of a grant or award under the Plan; instead, the Fair Market Value of
the fractional shares shall be paid in cash, or at the discretion of the
Committee, the number of shares shall be rounded down to the nearest whole
number of shares, and any fractional shares shall be disregarded.
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<PAGE>
7.2 RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Committee may impose such conditions on a Restricted Stock Grant, a
Shareholder Value Unit Award or the exercise of an Option (including, without
limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Rule 16b-3
of the Exchange Act.
7.3 RIGHTS PRIOR TO ISSUANCE OF SHARES. No Participant shall have any
rights as a shareholder with respect to shares covered by an Option, Restricted
Stock Grant or Shareholder Value Unit Award until the issuance of a stock
certificate for such shares. No adjustment shall be made for dividends or other
rights with respect to such shares for which the record date is prior to the
date the certificate is issued.
7.4 NON-ASSIGNABILITY. Except as set forth below, no Option, Restricted
Stock Grant or Shareholder Value Unit Award shall be transferable by a
Participant except by will or the laws of descent and distribution. During the
lifetime of a Participant, an Incentive Stock Option shall be exercised only by
the Participant. A Nonqualified Stock Option may be transferred and exercised
only in accordance with the transfer restrictions under Rule 16b-3 of the
Exchange Act, as amended from time to time. Specifically, to the extent
permitted by applicable law and Rule 16b-3, the Committee may grant Nonqualified
Stock Options that permit a Participant to transfer such Options to any of the
following: (1) a spouse or lineal descendant of the Participant; (2) a trust
established primarily for the benefit of the Participant and/or a spouse or
lineal descendant of said Participant; or (3) any charitable organization exempt
from income tax under Section 501(c)(3) of the Code. Any other attempt to sell,
pledge, assign, hypothecate, transfer or otherwise dispose of any Option under
the Plan or of any right or privilege conferred thereby, contrary to the
provisions of the Plan, or the sale or levy or any attachment or similar process
upon the rights and privileges conferred hereby, shall be null and void. No
transfer of an Option, Restricted Stock Grant or Shareholder Value Unit Award by
will or the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice thereof
and a copy of the will or such evidence as the Company may deem necessary to
establish the validity of the transfer and the acceptance by the transferee of
the terms and conditions of the Option, Restricted Stock Grant or Shareholder
Value Unit Award.
7.5 SECURITIES LAWS.
(a) Anything to the contrary herein notwithstanding, the Company's
obligation to sell and deliver Common Stock pursuant to the exercise of
an Option, or deliver Common Stock pursuant to a
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<PAGE>
Restricted Stock Grant or Shareholder Value Unit Award is subject to
such compliance with federal and state laws, rules and regulations
applying to the authorization, issuance or sale of securities as the
Company deems necessary or advisable. The Company shall not be required
to sell or deliver Common Stock unless and until it receives
satisfactory assurance that the issuance or transfer of such shares
shall not violate any of the provisions of the Securities Act of 1933,
the Exchange Act, any other applicable federal laws, or the rules and
regulations of the Securities Exchange Commission promulgated
thereunder or those of the National Association of Securities Dealers
("NASD") or any stock exchange or reporting system on which the Common
Stock may be listed, traded or quoted, the provisions of any state laws
governing the sale of securities, or that there has been compliance
with the provisions of such acts, rules, regulations and laws.
(b) The Committee may impose such restrictions on any shares of
Common Stock acquired pursuant to the exercise of an Option, or the
grant of Restricted Stock or a Shareholder Value Unit Award under the
Plan as it may deem advisable, including, without limitation,
restrictions (i) under applicable federal securities laws, (ii) under
the requirements of the NASD or any stock exchange or reporting system
or other recognized trading market upon which such shares of Common
Stock are then listed, traded or quoted, or (iii) under any blue sky or
state securities laws applicable to such shares. No shares shall be
issued until counsel for the Company has determined that the Company
has complied with all requirements under appropriate securities laws.
7.6 WITHHOLDING AND TAXES.
(a) The Company shall have the right to withhold from a
Participant's compensation or require a Participant to remit sufficient
funds to satisfy applicable withholding for income and employment taxes
upon the exercise of an Option, or the lapse of the Restriction period
on a Restricted Stock Grant or the payment of a Shareholder Value Unit
Award. A Participant may make a written election to tender previously
acquired shares of Common Stock or have shares of stock withheld from
the exercise, provided that the shares have an aggregate Fair Market
Value sufficient to satisfy in whole or in part the applicable
withholding or other federal, state or local taxes. The cashless
exercise procedure of Section 2.5(b) may be utilized to satisfy the
withholding requirements related to the exercise of an Option.
(b) A Participant subject to the insider trading restrictions of
Section 16(b) of the Exchange Act may use Common Stock to satisfy the
applicable withholding and tax requirements only in compliance with
Rule 16b-3. Any election by a Participant
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to utilize Common Stock for withholding and tax purposes is subject
to the discretion of the Committee.
7.7 TERMINATION AND AMENDMENT.
(a) The Board may terminate the Plan, or the granting of Options,
Restricted Stock or Shareholder Value Unit Awards under the Plan, at
any time. No new grants or awards shall be made under the Plan after
December 31, 2006.
(b) Subject to applicable law and the rules and regulations of the
Securities and Exchange Commission, the NASD or any stock exchange or
reporting system on which the Common Stock may be listed, traded or
quoted, the Board may amend or modify the Plan at any time and from
time to time, without the approval of the shareholders of the Company.
(c) No amendment, modification, or termination of the Plan shall in
any manner affect any Option, Restricted Stock Grant or Shareholder
Value Unit Award granted under the Plan without the consent of the
Participant holding the Option, Restricted Stock Grant or Shareholder
Value Unit Award, except that the Committee may amend or modify the
Plan in a manner that does affect Options, Restricted Stock Grants or
Shareholder Value Unit Awards theretofore granted upon a finding by the
Committee that such amendment or modification is in the best interest
of shareholders or Participants.
7.8 EFFECT ON EMPLOYMENT. Neither the adoption of the Plan nor the
granting of any Option, Restricted Stock or Shareholder Value Unit Award
pursuant to the Plan shall be deemed to create any right in any individual to be
retained or continued in the employment of the Company or an Affiliate.
7.9 USE OF PROCEEDS. The proceeds received from the sale of Common
Stock pursuant to the Plan shall be used for general corporate purposes of the
Company.
7.10 APPROVAL OF PLAN. Continuance of the Plan shall be subject to the
approval of the holders of at least a majority of the Common Stock of the
Company present and entitled to vote at a meeting of shareholders of the Company
held or written consent of the holders of a majority of the outstanding shares
of Common Stock obtained, within 12 months after adoption of the Plan by the
Board. No Option, Restricted Stock Grant or Shareholder Value Unit Award granted
under the Plan may be exercised or paid out in whole or in part unless the Plan
has been approved by the shareholders as provided herein. If not approved by
shareholders within 12 months after approval by the Board, the Plan and any
Options, Restricted
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Stock Grants and Shareholder Value Unit Awards granted under such Plan shall be
rescinded.
7.11 GOVERNING LAW. The Plan and all actions taken under the Plan shall
be governed and construed in accordance with Florida law.
THIS PLAN is hereby executed as of October ____, 1996, in accordance
with the Board of Directors resolutions adopted on such date.
TRANSEASTERN PROPERTIES, INC.
By:
------------------------------------
Arthur Falcone
President and Chairman of the Board
BOARD APPROVAL: October _____, 1996
SHAREHOLDER APPROVAL: October _____, 1996
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LEASE INDEX
1. DEFINITIONS -1-
2. PREMISES AND TERM -3-
3. RENT -4-
4. USE OF PREMISES -4-
5. ASSIGNMENT AND SUBLETTING -5-
6. ACCESS TO PREMISES -6-
7. LANDLORD'S SERVICES -6-
8. ELECTRICAL OVERLOAD: STRUCTURAL OVERLOAD -7-
9. PARKING AREAS -8-
10. LEASEHOLD IMPROVEMENTS -8-
11. REPAIRS AND MAINTENANCE -8-
12. ALTERATIONS AND IMPROVEMENTS -9-
13. INDEMNITY -10-
14. DAMAGE BY FIRE OR THE ELEMENTS -10-
15. BUILDING RULES AND REGULATIONS -11-
16. EMINENT DOMAIN -11-
17. SIGNS AND ADVERTISING -11-
18. TENANT'S DEFAULT -12-
19. CONTRACTUAL LANDLORD'S LIEN -14-
20. SUBORDINATION; ESTOPPEL CERTIFICATES -15-
I
<PAGE>
21. TRANSFER OF LANDLORD'S INTEREST -15-
22. QUIET ENJOYMENT -16-
23. SECURITY DEPOSIT -16-
24. MECHANIC'S LIENS -16-
25. FORCE MAJEURE -17-
26. SEVERABILITY -17
27. HOLDING OVER -17-
28. RELOCATION -17
29. RENT A SEPARATE COVENANT -17
30. JOINT AND SEVERAL LIABILITY -18-
31. ABSENCE OF OPTION -18-
32. CORPORATE TENANCY -18-
33. BROKERAGE COMMISSION -18-
34. LANDLORD'S DEFAULT -18-
35. NOTICES -19-
36. INSURANCE -21-
37. RECORDING -21-
38. STATUTORILY MANDATED NOTIFICATION -21-
39. NON-DISCLOSURE -21-
40. HAZARDOUS MATERIALS -23-
II
<PAGE>
41. AMENDMENTS
EXHIBIT A - PLAN OF PREMISES -25-
EXHIBIT B - LEASEHOLD IMPROVEMENTS AND/OR SERVICES -26-
EXHIBIT C - BUILDING RULES AND REGULATIONS -27-
III
<PAGE>
LEASE
THIS LEASE AGREEMENT ("Lease") is made this _________day of ____________,
1995 between "Landlord" and "Tenant," as hereafter defined.
W I T N E S S E T H:
WHEREAS, Tenant desires to lease from Landlord and the Landlord desires to
lease to Tenant, certain commercial office space set forth herein.
NOW, THEREFORE, for and in consideration of the rents and all other
charges and payments provided for hereunder and of the covenants, agreements,
terms, provisions and conditions setforth herein, Landlord and Tenant hereby
agree as follows:
1. DEFINITIONS. For purposes of this Lease, the following terms shall bear
the meanings set forth in this section, unless the context clearly requires
otherwise:
(a) "Landlord": UNIVERSITY FINANCIAL PLAZA ASSOCIATES, LTD
Address: 3300 University Drive
Suite 002
Coral Springs, FL 33065
(b) "Tenant": TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC.
Address: 3300 University Drive
Suite 001
Coral Springs, FL 33065
(c) "Premises": Suite No. 001 consisting of approximately 4,541 square
feet and as of October 1, 1996 5,893 square feet of rentable area,
which the parties agree are contained in the Premises, as outlined
in red on the attached Exhibit "A", expressly made a part hereof.
The Premises are located on the 1ST floor of the structure,
hereinafter called the "Building" located at 3300 University Drive,
Coral Springs, Florida, 33065.
(d) "Use of Premises":REAL ESTATE DEVELOPMENT OFFICE
(e) "Commencement": On July 1, 1996 (the anticipated Commencement
Date"), or upon the date the Landlo rd can deliver possession of
the Premises. It is agreed that the Tenant will take occupancy of
the Premises on a date prior to July 1, 1996 in the event Landlord
can deliver possession of the Premises.
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(f) "Term": Not less than 63 months commencing on the Commencement Date
of this Lease and terminating on the last day of the 63th calendar
month after Commencement date, now contemplated as September 3,
2001.
(g) "Rent": The sum of $59,033.04 DOLLARS annually, payable monthly in
equal monthly installments in the sum of $4,919.42 DOLLARS as
defined in Article 3 of this Lease. Rent and all other sums payable
by Tenant to Landlord under this Lease, plus any applicable tax,
shall be paid to Landlord, without demand, deduction, or offset, at
its management office presently located at Suite 002, 3300
University Drive, Coral Springs, Florida, 33065, or at such other
place as Landlord may hereafter specify in writing. Landlord and
Tenant understand and agree that included within the Rent provided
for in this Article 1 (g) is the estimated "Operating Cost" for the
first (base) year of the term of this Lease which sum is more
particularly identified in Article 1 (i) hereinafter.
RENT STARTING OCTOBER 1, 1996:
"Rent": The sum of $76,609.00 DOLLARS annually, payable monthly in
equal monthly installments in the sum of $6,384.09 DOLLARS as
defined in Article 3 of this Lease. Rent and all other sums payable
by Tenant to Landlord under this Lease, plus any applicable tax,
shall be paid to Landlord, without demand, deduction, or offset, at
its management office presently located at Suite 002, 3300
University Drive, Coral Springs, Florida, 33065, or at such other
place as Landlord may hereafter specify in writing. Landlord and
Tenant understand and agree that included within the Rent provided
for in this Article 1 (g) is the estimated "Operating Cost" for the
first (base) year of the term of this Lease which sum is more
particularly identified in Article 1 (i) hereinafter.
Second Lease Year: The sum of $80,439.45 Dollars annually, payable
in equal monthly installments in the sum of $6,703.29 Dollars as
defined in Article 3 of this Lease.
Third Lease Year: The sum of $84,461.43 Dollars annually, payable in
equal monthly installments in the sum of $7,038.46 Dollars as
defined in Article 3 of this Lease.
Fourth Lease Year: The sum of $88,684.51 Dollars annually, payable
in equal monthly installments in the sum of $7,390.38
Dollars as defined in Article 3 of this Lease.
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<PAGE>
Fifth Lease Year: The sum of $93,118.74 Dollars annually, payable in
equal monthly installments in the sum of $7,759.90 Dollars as
defined in Article 3 of this Lease.
Option Years Six through Ten: The annual rent payable by Tenant to
Landlord during each option year shall be as follows:
Sixth Lease Year: The sum of $97,774.68 Dollars annually, payable in
equal monthly installments in the sum of $8,147.89 Dollars as
defined in Article 3 of this Lease.
Seventh Lease Year: The sum of $102,663.42 Dollars annually, payable
in equal monthly installments in the sum of $8,555.29 Dollars as
defined in Article 3 of this Lease.
Eighth Lease Year: The sum of $107,796.60 Dollars annually, payable
in equal monthly installments in the sum of $8,983.05 Dollars as
defined in Article 3 of this Lease.
Ninth Lease Year: The sum of $113,186.43 Dollars annually, payable
in equal monthly installments in the sum of $9,432.21 Dollars as
defined in Article 3 of this Lease.
Tenth Lease Year: The sum of $118,845.76 Dollars annually, payable
in equal monthly installments in the sum of $9,903.82 Dollars as
defined in Article 3 of this Lease.
(h) "Security Deposit"The sum of $4,541.00 DOLLARS.
2. PREMISES AND TERM. Landlord, in consideration of the Rent hereinafter
reserved to be paid and of the covenants, conditions, and agreements to be kept
and performed by Tenant, hereby leases, lets and demises to Tenant, and Tenant
hereby leases and hires from Landlord, that certain space called the Premises as
described above in Article 1, Section (c).
If Landlord, for any reason whatsoever, cannot deliver possession of the
Premises to Tenant on or before the anticipated Commencement Date, this Lease
shall not be void or voidable, nor shall Landlord be liable to Tenant for any
loss or damage resulting therefrom, but, in that event, there shall be an
abatement of Rent covering the period between the anticipated Commencement Date
and the time when Landlord can deliver possession, the date when Landlord can
deliver possession being deemed to be the "Commencement Date". The ending date
of this Lease shall be extended for not less than an identical period of time
that transpired between the anticipated Commencement Date and the actual
Commencement Date, it being the parties' intent that this Lease have not
3
<PAGE>
less than a complete term as described and contemplated in Article 1, Section
(f) above. To this end, if the actual Commencement Date is a day other than the
first day of a particular month, the term of the Lease shall not expire until
the last day of the last month of the proposed term as described in Article 1,
Section (f). If the Commencement Date is other than the anticipated Commencement
Date, the parties' representatives shall execute a letter amendment to this
Lease (which they are hereby authorized to do) whereby the Commencement Date and
expiration date of this Lease will be specified. By occupying the Premises,
Tenant shall be conclusively deemed to have accepted the Premises as complying
fully with Landlord's covenants and obligations.
3. RENT. Tenant covenants and agrees to pay, without demand, deduction of
offset, to Landlord Rent and Additional Rent for the Premises as described above
in 1, Section (g), on or by calendar month of the term hereof and on or before
the first (1st) day of each and every successive calendar month thereafter
during the full term of this Lease, subject to the adjustments as provided
hereinafter, if any, along with any applicable tax, at the then current rate. In
the event the Commencement Date occurs on a day other than the first (1st) day
of a calendar month, the first Rent payment shall be in the amount of the Rent
for one (1) full calendar month plus the prorated Rent for the calendar month in
which the term of this Lease commences such payment to be due on the
Commencement Date.
Whenever under the terms of this Lease any sum of money is required to be
paid by Tenant in addition to the Rent herein reserved, whether or not such sum
is herein described as "Additional Rent" or a provision is made for the
collection of said sum as "Additional Rent," said sum shall nevertheless, at
Landlord's option, if not paid when due, be deemed Additional Rent, and shall be
collectible as such with the first installment of Rent thereafter falling due
hereunder. In the event any installment or increment of Rent or Additional Rent
payable under this Lease shall not be paid when due, a "late charge" of four
percent (4%) of the amount overdue shall be charged (as Additional Rent) by
Landlord for the purpose of defraying the expense incident to handling such
overdue payment and for the purpose of compensating Landlord for its attendant
loss of cash flow.
4. USE OF PREMISES. The Premises shall be used by Tenant as described
above in Article 1, Section (d), and for no other purpose without the prior
written discretionary consent of Landlord. Tenant shall not do or permit to be
done in or about the Premises, nor bring or keep or permit to be brought or kept
therein, anything which is prohibited by or will in any way conflict with any
law, stature, ordinance or governmental rule or regulation now in force or which
may hereafter be enacted or promulgated, or which is prohibited by any standard
form of fire insurance policy or will in any way increase the existing rate of
or affect any fire or other insurance upon the Building or any of its contents,
or cause a cancellation of any insurance policy covering the Building or any
part thereof or any of its contents. Tenant shall not do or permit anything to
be done in or about the Premises which will in any way obstruct or interfere
with the rights of other tenants of the Building, or injure or annoy them or use
or allow the
4
<PAGE>
Premises to be used for any improper, immoral, unlawful or objectionable purpose
(as determined by Landlord); nor shall Tenant cause, maintain, or permit any
nuisance (as determined by Landlord or by law) in or about the Premises or
commit or suffer to be committed any waste in, on, or about the Premises.
Tenant, at Tenant's expense, shall comply with all laws, rules, orders,
statutes, ordinances, directions, regulations and requirements of all federal,
state, county and municipal authorities pertaining to Tenant's use of the
Premises and with the recorded covenants, conditions and restrictions pertaining
thereto, regardless of when they become effective or applicable, including,
without limitation, all applicable federal, state and local laws, regulations or
ordinances pertaining to air and water quality, hazardous materials, waste
disposal, air emissions and other environmental matters, all zoning and other
land use matters, and The Americans with Disability to time ("ADA") and with any
direction of any public officer or officials which shall impose any duty upon
Landlord or Tenant with respect to the use or occupation of the Premises.
5. ASSIGNMENT AND SUBLETTING. Tenant shall not assign the right of
occupancy under this Lease, or any other interest therein, or sublet the
Premises, or any portion thereof, without the prior written consent of Landlord,
which the parties agree shall not be unreasonably withheld. When Tenant requests
Landlord's consent to such assignment or sublease, Tenant shall notify Landlord
in writing of the name and address of proposed assignee or subtenant and the
nature and character of the business of the proposed assignee or subtenant and
shall provide financial information including financial statements of the
proposed assignee and subtenant. Tenant shall also provide Landlord with a copy
of the proposed sublease or assignment agreement. Tenant absolutely shall have
no right of assignment or subletting if Tenant is then in default of this Lease.
Should Landlord elect to grant its written consent to any proposed assignment to
sublease (whether by Tenant or by others claiming by or through Tenant), Tenant
or such others agree to pay Landlord an administrative fee for each transaction
in a reasonable amount (but not less than $150.00), plus reasonable attorney's
and paralegal' fees to process and approve such assignment or sublease, and
Landlord may describe the substance and form of such assignment or sublease.
Upon completion of any approved assignment of the Lease, or the subletting
of the Premises, or any portion thereof, Tenant shall continue to be liable for
the performance of the terms, conditions and covenants of this Lease, including,
but not limited to, the payment of Rent and Additional Rent (FOR A PERIOD OF SIX
MONTHS, FROM SUCH ASSIGNMENT). Consent by Laner of Landlord's rights as to any
subsequent assignments' subletting. Landlord shall have the additional option,
which shall be exercised by providing Tenant with written notice, of terminating
Tenant's rights and obligations under this Lease rather than permitting any
assignment or subletting by Tenant.
Should Landlord permit any assignment of subletting by Tenant and should
the monies received as a result of such assignment or subletting (when compared
to the monies still payable by Tenant to Landlord) be greater than would have
been received hereunder
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had the Landlord not permitted such assignment or subletting, then the excess
shall be payable by Tenant to Landlord, it being the parties' intention that
Landlord, and not Tenant, in consideration for Landlord's permitting such
assignment or subletting receive any and all such excess. If there are one or
any assignments or subletting by Tenant to which Landlord consents, then any and
all renewal options to be exercised subsequent to the date of such assignment or
subletting and an option to lease additional space in the Building to be
exercised subsequent to the date of such assignment or subletting are absolutely
waived and terminated at Landlord's sole discretion. In the event of the
transfer and assignment by Landlord of its interest in this Lease and/or sale of
the Building containing the Premises, either of which it may do at its sole
option, Landlord shall thereby be released from any further obligations
hereunder, and Tenant agrees to look solely to such successor in interest of
Landlord for performance of such obligations. The provisions of Article 36
hereafter dealing with "Notices" shall be amended to provide the correct names
and addresses of the assignee or sublessee. If Tenant is a corporation whose
stock is not regularly traded on a bona fide public exchange, and if any
transfer, sale, pledge or other disposition of the common stock shall occur
which changes the power to vote the majority of the outstanding capital sh
action shall be considered an assignment under the terms of this Lease. Any
breach of this Article 7 by Tenant will constitute a default under the terms of
this Lease, per Article 20 hereof.
6. ACCESS TO PREMISE. Landlord or its authorized agent or agents shall
have the right to enter upon the Premises at all reasonable times for the
purposes of inspecting the same, preventing waste, making such repairs as
Landlord may consider reasonable or necessary and showing the Premises to
prospective tenants, mortgagees and/or purchasers. If during the last month of
the term, Tenant shall have removed all or substantially all of Tenant's
property therefrom, Landlord may immediately enter and renovate and redecorate
the Premises without elimination or abatement of Rent or incurring liability to
Tenant for any compensation or offsets in Rent and charges owed and such acts
shall have no effect upon this Lease.
7. LANDLORD'S SERVICES. Landlord shall furnish the Premises with (i)
electricity subject to Article 10 of this Lease; (ii) heat and air-conditioning
during reasonable and usual business hours (exclusive of Saturday afternoons,
Sundays and holidays) reasonably required for the occupation of the Premises,
such heat and air-conditioning to be provided by utilizing the existing systems
in the Building, it being expressly understood and agreed by the parties that
Landlord specifically shall not be liable for any losses or damages of any
nature whatsoever incurred by Tenant due to any failure of the equipment to
function properly, or while it is being repaired, or due to any governmental
laws, regulations or restrictions pertaining to the furnishing or use of such
heat and air-conditioning; (iii) elevator service; (iv) lighting replacement or
Building Standard lights; (v) toilet room supplies; (vi)daily janitor service
during the time and in the manner that such janitor service is customarily
furnished in first class office buildings in the metropolitan area where the
Building is located; (vii) water; and (viii) sewerage. The foregoing services
are designated "Building Standard".
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Tenant agrees that Landlord is only responsible for Building Standard
Maintenance and Building Standard services. If other more complete or special
services and maintenance (over Building Standard) are required then Tenant
solely shall be and is responsible for same and for any expenses and costs of
any nature whatsoever associated with same. To this end, Tenant is and shall be
solely responsible for any expenses and costs of any nature whatsoever
associated with, among other things, maintaining upgraded tenant improvements in
the Premises, replacing non-Building Standard lighting fixtures and bulb in the
Premises, servicing, operating and maintaining any separate and non-Building
Standard HVAC systems and facilities serving the Premises, etc.
Landlord shall not be liable for any damages directly or indirectly
resulting from, nor shall any Rent herein set forth be reduced or abated by
reason of (1) installations, use, or interruption of use of any equipment in
connection with the furnishing of any of the foregoing services, or (2) failure
to furnish, or delay in furnishing, any such services when such failure or delay
is caused by accident or any condition beyond the reasonable control of Landlord
or by the making of necessary repairs or improvements to the Premises or to the
Building or because of any governmental laws, regulations or restrictions. The
temporary failure to furnish any such services shall not be construed as an
eviction of Tenant or relieve Tenant from the duty of observing and performing
any and all of the provisions of this Lease.
8. ELECTRICAL OVERLOAD: STRUCTURAL OVERLOAD.
A. Tenant's use of electrical services furnished by Landlord
shall be subject to the following:
(1) Tenant's electrical equipment shall be restricted to
that equipment which individually does not have a rated
capacity greater than .5 kilowatts per hour and/or
require voltage other than 120/208 volts, single phase.
Collectively, Tenant's equipment shall not have an
electrical design load greater than an average of 3
watts per square foot (including overhead lighting).
(2) Tenant's overhead lighting shall not have a design load
greater than an average of 2 watts per square foot.
(3) If Tenant's consumption of electrical services exceeds
either the rated capacities and/or design loads as per
subsections (1) and (2) above, then Tenant shall remove
such equipment and/or lighting to achieve compliance
within ten (10) days after receiving notice from
Landlord. Or upon receiving Landlord's prior written
approval, such equipment and/or lighting may remain in
the Premises, subject to the following:
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(a) Tenant shall pay for all costs of installation
and maintenance of submeter, wiring, air conditioning and other s required by
Landlord, in Landlord's discretion, to accommodate Tenant's excess design loads
and capacities.
(b) Tenant shall pay to Landlord, upon demand, the
cost of the excess demand and consumption of electrical service at rate
determined by Landlord which shall be in accordance with any applicable laws.
(c) Landlord may, at its option, upon not less than
thirty (30) days' prior written notice to Tenant, discontinue the availability
of such extraordinary utility service. If Landlord gives any such notice, Tenant
will contract directly with the public utility for the supplying of such utility
service.
B. Tenant shall not place a load upon any floor of the Premises
exceeding the floor load per square foot area which such floor was designed to
carry and which may be allowed by law. Landlord reserves the right to prescribe
the weight and position of all heavy equipment and similar s and any
reinforcement deemed by Landlord to be required under the circumstances, such
reinforcement to be at Tenant's pre-paid expense.
9. PARKING AREAS. Landlord shall keep and maintain in good condition
any parking areas that may be provided. Landlord reserves the right to control
the method, manner and time of parking in parking spaces.
10. LEASEHOLD IMPROVEMENTS. The Premises are rented "as is", without any
additional services or improvements to be rendered by Landlord other than those
services described in Article 9 and such other services or improvements as may
be described in Exhibit "B" attached hereto expressly made a part hereof. If
Landlord is to additionally improve, alter, remodel, or do any physical act or
thing to the space as presently constituted or as described in Exhibit B, same
shall be at the sole expense of Tenant and shall be effected only by an "Extra
Work Agreement" signed by the parties, the monies due Landlord from Tenant for
which shall be deemed "Additional Rent" hereunder. In the absence of an "Extra
Work Agreement" signed by the parties, Landlord is under no obligation to make
any such alteration, remodeling or improvement or do any physical act or thing
to the space.
Any and all expenses and costs of any nature whatsoever attributed to the
installation, maintenance and/or removal of telephone equipment, computer
equipment and the like shall be borne solely by Tenant and may be deemed by
Landlord to be "Additional Rent" hereunder.
11. REPAIRS AND MAINTENANCE. Landlord will, at its own cost and expense,
except as may be provided elsewhere herein, make necessary repairs of damage to
the Building corridors, lobby, structural members of the Building, and equipment
used to
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provide the Building Standard services referred to in Article 9, unless
any such damage is caused by acts or omissions of Tenant, its agents, customers,
employees, principals, contractors, consultants, assigns, subtenants or
invitees, in which event Tenant will bear the cost of such repairs. Tenant will
not injure the Premises or the Building and will maintain the Premises in a
clean, attractive condition and in good repair, except as to damage to be
repaired by Landlord as provided above. Upon termination of this Lease, Tenant
will surrender and deliver the Premises to Landlord in the same condition in
which they existed at the commencement of this Lease, excepting only ordinary
wear and tear. This Article 13 shall not apply in the case of damage or
destruction by fire or other casualty which is covered by insurance maintained
by Landlord on the Building (as to which Article 16 hereof shall apply) or
damage resulting from an Eminent Domain taking (as to which Article 18 hereof
shall apply).
12. ALTERATIONS AND IMPROVEMENTS. Tenant shall make no alterations,
additions or improvements to the Premises without the prior written approval of
Landlord, unless in each instance and for each such alteration, addition or
improvement Landlord or contractor approved by Landlord is hired to do such
alterations, additions or improvements. Such approval shall not be unreasonable
withheld in the case of alterations, additions or improvements are normal for
the use described in Section i (d) of this Lease, do not adversely affect
utility of the Premises for future tenants, do not alter the exterior of the
Building, and are accompanied by prepayment or bond provisions or waivers by the
contractor in form satisfactory to Landlord sufficient to protect the Building.
Furthermore, and as a condition of obtaining Landlord's approval, any such
alterations, additions or improvements absolutely shall not affect the plumbing,
electrical and HVAC systems in the Premises or the Building and shall not be of
a structural nature (EXCEPT AS MAY BE APPROVED IN WRITING BY LANDLORD). Tenant
shall conduct its work in such a manner as to maintain harmonious labor
relations and as not to interfere with the operation of the Building and shall,
prior to the commencement of the work, submit to Landlord copies of all
necessary permits. Landlord reserves the right to have final approval of the
contractors hired by Tenant. All such contractors hired by Tenant shall be, at
levels and coverage prescribed by Landlord, bonded and insured, and Landlord may
require evidence of same, which Tenant agrees to secure and provide Landlord
prior to the commencement of any work by such contractors. All alterations,
additions or improvements, whether temporary or permanent in character, made in
or on the Premises, either by Landlord or Tenant, shall be Landlord's property
and at the end of the term hereof shall remain in or upon the Premises without
compensation to Tenant. All of Tenant's furniture, moveable trade fixtures and
equipment not attached to the Building may be removed by Tenant at the
termination of this Lease, if not removed, shall, at the option of Landlord,
become. To the extent Tenant makes any alterations, additions or improvements
and/or to the extent Landlord on behalf of Tenant under an "Extra Work
Agreement" makes such alterations, additions or improvements, and as a result
thereof it can be determined that thereupon was caused an increase in real
estate taxes or insurance premiums, then Tenant shall be responsible for
reimbursing Landlord for such increases as Landlord my pay. Tenant shall keep
the Premises and Building free from any liens arising from any work performed in
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accordance with this Lease. Any such alterations, additions or improvements
conducted by Tenant shall be in accordance with all federal, state and local
laws, rules and regulations, including, without limitation, the ADA.
13. INDEMNITY. Landlord shall not be liable for, and Tenant will
indemnify, and save Landlord harmless of and from, all fines, suits, damages,
claims, demands, losses and actions (including reasonable attorneys' and
paralegal' fees (whether incurred in court, out of court, on appeal or in
bankruptcy or administrative proceedings) for any injury to person or damage to
or loss of property on or about the Premises and Building caused by the
negligence or misconduct or breach of this Lease by Tenant, its employees,
agents, principals, contractors, consultants, assigns, subtenants, invitees or
by any other person entering the Premises or the Building under express or
implied invitation of Tenant, or arising out of Tenant's use of the Premises,
unless such injury or damage was caused solely by Landlord's gross negligence.
Landlord shall not be liable or responsible for any loss or damage to any
property or the death or injury to any person occasioned by theft, fire, act of
God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition of governmental body or authority, by other tenants of the Building
or by any other matter beyond the control of Landlord, or for any injury or
damage or inconvenience which may ariany part of the Building, or failure to
make repairs, or from any cause whatsoever except Landlord's negligence or
intentional act. It is specifically understood and agreed that there shall be no
personal liability on Landlord with respect to any of the covenants, conditions
or provisions of this Lease, in the event of a breach or default by Landlord of
any of its obligations under this Lease. Separate from and in addition to any
consideration for the execution of this Lease, Landlord has paid to Tenant the
sum of $50.00 as consideration for Tenant's indemnification under this Lease.
14. DAMAGE BY FIRE OR THE ELEMENTS. In the event that the building should
be totally destroyed by fire, tornado or other casualty, or in the event the
Premises within the Building should be so damaged that rebuilding or repairs
cannot be completed within one hundred eighty (180) days after the date of such
damage, either Landlord or Tenant may, at its option, by written notice to the
other given not more than thirty (30) days after the date of such fire or other
casualty, terminate this Lease. In such event, the Rent shall be abated during
the unexpired portion of this Lease effective as of the date of such notice.
In the event the Building or the Premises should be damaged by fire,
tornado, or other casualty covered by Landlord's insurance, Landlord may elect
to rebuild or repair damage, but only to such extent that rebuilding or repairs
can be completed within ninety (90) days after the date of such damage, or if
the damage should be more serious but neither Landlord nor Tenant elects to
terminate this Lease, then Landlord shall, within thirty (30) days after the
date of such damage or such election, commence to rebuild or repair the Building
and/or the Premises and shall proceed with reasonable diligence to restore the
Building and/or the Premises to substantially the same condition in which
it/they was/were immediately prior to the happening of the casualty, except that
Land or replace
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any part of the furniture, equipment, fixtures and other improvements which may
have been placed by Tenant or other tenants within the Building or Premises.
Landlord shall, unless such damage is the result of the negligence or willful
misconduct of Tenant or Tenant's employees, agents, principals, contractors,
consultants, assigns, subtenants or invitees, allow Tenant a fair diminution of
Rent during the time of such rebuilding or repairs.
In the event any mortgagee, or the holder of any deed of trust, security
agreement or mortgage on the Building, requires that the insurance proceeds be
used to retire the mortgage debt, Landlord shall have no obligation to rebuild
and this Lease shall terminate upon notice to Tenant. Any insurance which may be
carried by Landlord or Tenant against loss or damage to the Building or to the
Premises shall be for the sole benefit of the party carrying such insurance and
under its sole control.
15. BUILDING RULES AND REGULATIONS. Tenant shall faithfully observe and
comply with the Rules and Regulations printed on or annexed to this Lease and
all reasonable modifications of and additions thereto from time to time put into
effect by Landlord. Landlord shall not be responsible to Tenant for the
nonperformance of any of said Rules and Regulations by any other tenant or
occupant of the Building. Tenant shall and does hereby have an affirmative
obligation (to include indemnification of Landlord, per Article 15 hereof) to
notify its agents, employees, principals, assigns, subtenants and invitees of
the contents of such Rules and Regulations and of this Lease and to assure their
compliance therewith.
16. EMINENT DOMAIN. If the whole or a portion of the Building shall be
taken for any public or quasi-public use under any statute or by right of
Eminent Domain or private purchase in lieu thereof, then at Landlord's option,
but not otherwise, the term hereby demised and all rights of Tenant hereunder
shall immediately cease and terminate and the Rent shall be adjusted as of the
date of such termination. Tenant shall be entitled to no part of the award made
for such condemnation (or other taking) or the purchase price thereof.
Nevertheless, anything to the contrary notwithstanding, likewise at Landlord's
option, but not otherwise, if the Premises are not included in by such
condemnation (or other taking), then this Lease and each and every one of its
provisions shall continue in full force and effect.
17. SIGNS AND ADVERTISING. Without the prior written approval of Landlord,
which may be withheld at Landlord's discretion, Tenant shall not permit the
painting or display of any signs, placard, lettering, or advertising material of
any kind on or near the exterior of the Premises or the Building.
Notwithstanding the foregoing, Tenant may, with Landlord's prior approval,
display Tenant's name on or near the entrance to the Premises, in a manner
prescribed by Landlord. Tenant may use exterior location used by previous
tenant, subject to Landlord's approval, and any governmental regulations. Tenant
may also use the building lobby sign space formerly used by the former tenant
for a lobby sign subject to Landlord's reasonable approval.
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18. TENANT'S DEFAULT. Landlord, at its election, may exercise any one or more of
the options referred to below upon the happening, or at any time after the
happening, of any one or more of the following events, to wit:
(a) Tenant's failure to pay the Rent, Additional Rent, or any other
sums payable hereunder for a period of three (3) days after written notice by
Landlord;
(b) Tenant's failure to observe, keep or perform any of the other
terms, covenants, agreements or conditions of this Lease or in the Building
Rules and Regulations for a period of ten (10) days after written notice by
Landlord;
(c) The bankruptcy of Tenant;
(d) Tenant making an assignment for the benefit for creditors;
(e) A receiver or trustee being appointed for Tenant or a
substantial portion of Tenant's assets;
(f) Tenant's voluntary petitioning for relief under, or otherwise
seeking the benefit of, any bankruptcy, reorganization, arrangements of
insolvency law;
(g) Tenant's deserting, vacating or abandoning any substantial
portion of the Premises for attempting to mortgage or pledge or otherwise
encumber in any way its interest hereunder;
(h) Tenant's interest under this Lease being sold under execution
or other legal process;
(i) Tenant's interest under this Lease being modified or altered
by any unauthorized assignment or subletting or by operation
of law;
(j) Any of the goods or chattels of Tenant used in, or incoperation
the of Tenant's business in the Premises being seized, sequestered, or impounded
by virtue of, or under authority of, any legal proceeding;
(k) Tenant's failure to pay timely the Rent, Additional Rent, or any
other sums payable hereunder when due for two (2) consecutive months or for a
total of four (4) months in any lease or calendar year, no notice whatsoever to
be due Tenant from Landlord;
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(l) Tenant's failure to operate continuously during normal business
hours from Premises in a fully staffed, fully equipped manner and/or as
contemplated by Article 1 (d) of this Lease;
(m) Tenant's failure to take occupancy of the Premises whetendereds
by Landlord to Tenant, unless Rent has been prepaid to cover the applicable
period of non-occupancy.
In the event of any of the foregoing happenings, Landlord, at its
election, may exercise any one or more of the following options, the exercise of
any of which shall not be deemed to preclude the exercise of any others herein
listed or otherwise provided by statute or general law at the same time or in
subsequent times or actions;
(1) Terminate Tenant's right to possession under the Lease and
re-enter and retake possession of the Premises and relet or
attempt to relet the Premises on behalf of Tenant at such rent
and under such terms and conditions as Landlord may deem best
under the circumstances for the purpose of reducing Tenant's
liability. Landlord shall not be deemed to have thereby
accepted a surrender of the Premises, and Tenant shall remain
liable for all Rent, Additional Rent, or other sums due under
this Lease and for all damages suffered by Landlord because of
Tenant's breach of any of the covenants of the Lease.
(2) Declare this Lease to be terminated, ended and null and void,
and re-enter upon and take possession of the Premises
whereupon all right, title and interest of Tenant in the
Premises shall end.
(3) Accelerate and declare the entire remaining unpaid Rent and
Additional Rent for the balance of this Lease to be
immediately due and payable forthwith, and may, at once, take
legal action to recover and collect the same.
No re-entry or retaking possession of the Premises by Landlord shall be
construed as an election on its part to terminate this Lease, unless a written
notice of such intention be given to Tenant, nor shall pursuit of any remedy
herein provided constitute a forfeiture or waiver of any Rent or other monies
due to Landlord hereunder or of any damages accruing to Landlord by reason of
the violations of any of the terms, provisions, and covenants herein contained.
Landlord's acceptance of Rent or Additional Rent or other monies following any
event of default hereunder shall not be construed as Landlord's waiver of such
event of default. No forbearance by Landlord of action upon any violation or
breach of any of the terms, provisions, and covenants herein contained shall be
deemed or construed to constitute a waiver of the terms, provisions, and
covenants herein contained. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver
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of any other violation or default. Legal actions to recover for loss or damage
that Landlord may suffer by reason of termination of this Lease or the
deficiency from any reletting as provided for above shall include, the expense
of repossession or reletting and any repairs or remodeling undertaken by
Landlord following repossession.
The parties hereto shall, and they hereby do, waive trial by jury in any
action, proceeding, or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of, or in any way
connected with, this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of the Premises and/or Building, and/or claim or injury or
damage.
The parties hereto agree that any and all suits for any and every breach
of this Lease shall be instituted and maintained only in those courts of
competent jurisdiction in the county of municipality in which the Building is
located. In the event it shall be necessary (as determined by Landlord) for
Landlord at any time to institute or defend any legal action or proceedings of
any nature for the enforcement of, or as regards, this Lease, or any of the
provisions hereof, or any of its statutory or common law rights as concern
Tenant, or to employ an attorney therefor, Tenant agrees to pay all court costs
and reasonable attorney's and paralegals, fees (whether incurred in court, out
of court, on appeal or in bankruptcy or administrative proceedings) incurred by
Landlord.
Time is of the essence of this Lease; and in case Tenant shall fail to
perform the covenants on its part to be performed at the time fixed for the
performance of such respective covenants by the provisions of this Lease,
Landlord may declare Tenant to be in default such Lease.
19. CONTRACTUAL LANDLORD'S LIEN. Landlord shall have, rent of all Rent,
Additional Rent and other sums of money becoming due hereunder from Tenant, and
to secure payment of any damages or loss which Landlord may suffer by reason of
the breach by Tenant of any covenant, agreement or condition contained herein,
upon all goods, wares, equipment, fixtures, furniture, improvements and other
personal property of Tenant presently or which may hereinafter be situated in
the Premises, and all proceeds therefrom, and such property shall not be removed
therefrom without the consent of Landlord until all arrearage in Rent as well as
any and all other sums of money then due to Landlord hereunder shall first have
been paid and discharged and all of the covenants, agreements, and conditions
hereof have been fully complied with and performed by Tenant. In consideration
of this Lease, upon the occurrence of an event of default by Tenant, Landlord
may, in addition to any other remedies provided herein, enter upon the Premises
and take possession of any and all goods, wares, equipment, fixtures, furniture,
improvements, and other personal property of Tenant situated on or in the
Premises, without liability for trespass or conversion, and sell the same at
public private sale, with or without having such property at the sale, after
giving Tenant reasonable notice of the time and place of any public sale or of
the time after which any private sale is to be made, at which sale Landlord or
its assigns may purchase unless otherwise prohibited by law.
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Unless otherwise provided by law, and without intending to exclude any other
manner of giving Tenant reasonable notice, the requirement of reasonable notice
shall be met if such notice is given in the manner prescribed in Article 36
dealing with "Notices" in this Lease at least five (5) days before the time of
sale. The proceeds from any such disposition, less any and all expenses
connected with the taking of possession, holding and selling of the property
(including reasonable attorney's and paralegal' fees (whether incurred court, on
appeal or in bankruptcy or administrative proceedings) and other expenses, shall
be applied as a credit against the indebtedness secured by the security interest
granted in Article 21. Any surplus shall be paid to Tenant or as other wise
required by law, and Tenant shall pay any deficiencies forthwith. Upon request
by Landlord, Tenant agrees to execute and deliver to Landlord a financing
statement in form sufficient to perfect the security interest of Landlord in the
aforementioned property and proceeds thereof under the provisions of the Uniform
Commercial Code in force in the State of Florida.
20. SUBORDINATION; ESTOPPEL CERTIFICATES. In consideration of the
execution of this Lease by Landlord, Tenant accepts this Lease subject to any
deeds of conveyance and any deeds of trust, master leases, security interests or
mortgages and all renewals, modifications, extensions, consolidations and
replacements of the foregoing which might now or hereafter constitute a lien
upon the Building (or the land upon which it is situated) or improvements
therein or thereon or upon the Premises and to zoning ordinances and other
building and fire ordinances and governmental regulations relating to the use of
the property. Although no instrument or act on the part of Tenant shall be
necessary to effectuate such subordination, Tenant shall, nevertheless, for the
purpose of confirmation at any time hereafter, on demand in the form(s)
prescribed by Landlord, execute any instruments, estoppel certificates, release
or other documents that may be requested or required by any purchaser or any
holder of any superior interest for the purposes of subjecting and subordinating
this Lease to such deed or conveyance or to the lien of any such deed of trust,
master lease, security interest, mortgage, or superior interest. SUCH
SUBORDINATION SHALL BE EVIDENCED BY THE SUBORDINATION AND NON-DISTURBANCE
AGREEMENT ATTACHED HERETO WHICH SHALL BE EXECUTED BY LANDLORD AND TENANT AND
SHALL NOT BE RECORDED IN THE PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA. Tenant
hereby appoints Landlord attorney-in-fact, irrevocably, to execute and deliver
any such instrument or document for Tenant should Tenant fail or refuse to do so
within ten (10) days of Landlord's written request for such instrument or
document. In the event the Building is sold or subjected to foreclosure
proceedings, Tenant shall attorn to the purchaser and recognize same as Landlord
under this Lease. In the event any proceedings are brought for foreclosure, or
in the event of the exercise of the power of sale under any mortgage or deed of
trust made by Landlord covering the Premises, Tenant shall attorn to the
purchaser at any such foreclosure or to the grantee of a deed in lieu of
foreclosure and recognize such purchaser or grantee as Landlord under this
Lease.
21. TRANSFER OF LANDLORD'S INTEREST. In the event of any transfer(s) of
Landlord's interest in the Premises or the Building, other than a transfer for
security purposes only, the transferor shall be automatically relieved of any
and all obligations and
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liabilities on the part of Landlord accruing from and after the date of such
transfer, and Tenant agrees to attorn to the transferee.
22. QUIET ENJOYMENT. Provided Tenant has fully, duly and timely performed
all of the terms, covenants, agreements and conditions of this Lease on its part
to be performed, including the payment of Rent and all other sums due hereunder,
Tenant shall peacefully and quietly hold and enjoy the Premises, except as
described in 22 above, against Landlord and all persons claiming by,
through or under Landlord, for the term herein described, subject to the
provisions and conditions of this Lease.
23. SECURITY DEPOSIT. Tenant, concurrently with the execution of this
Lease, has deposited with Landlord a Security Deposit as described in Article 1,
Section (h), which sum shall be retained by Landlord as a Security Deposit. The
Security Deposit shall be held by Landlord without liability for interest and as
security for the performing expressly understood that such deposit shall not be
considered an advance payment of Rent or Additional Rent or a measure of
Landlord's damages in case of default by Tenant. Upon the occurrence of any
event of default by Tenant, Landlord may, from time to time, without prejudice
to any other available remedy, use such deposit to the extent necessary to make
good any arrearage of Rent, Additional Rent and any other damage, injury,
expense or liability caused to Landlord by such event of default. Following any
such application of the Security Deposit, Tenant shall pay to Landlord on demand
the amount so applied in order to restore the Security Deposit to its original
amount. If Tenant is not then in default hereunder, any remaining balance of
such deposit shall be returned by Landlord to Tenant upon expiration of this
Lease. If Landlord transfers its ownership interest in the Building during the
Lease term, Landlord may assign the Security Deposit to the transferee and
thereafter Landlord shall have no further liability for the return of such
Security Deposit.
24. MECHANIC'S LIENS. Tenant is prohibited from making, and agrees not to
make, alterations in the Premises, except as permitted by Article 14, and Tenant
will not permit any mechanic's lien or liens to be placed upon the Premises or
the Building or improvements thereon during the term hereof caused by or
resulting from any work performed, materials furnished or obligation incurred by
or at the request of Tenant, and in the case of the filing of any such lien,
Tenant will promptly pay same. If default in payment thereof shall continue for
ten (10) days after written notice thereof from Landlord to Tenant, Landlord
shall have the right and privilege, at Landlord's option, of paying the same or
any portion thereof without inquiry as to the validity thereof, and any amounts
so paid, including expenses, interest, and reasonable attorney's and paralegal's
fee (whether incurred in court, out of court, on appeal or other proceedings),
shall be so much additional indebtedness hereunder due from Tenant to Landlord
and shall be repaid to Landlord immediately on rendition of a bill therefor, and
if not so paid within ten (10) days of the rendition of such bill shall
constitute default under Article 20 hereof. The interest of Landlord shall not
be subject to liens for improvements made by Tenant in and to the Premises.
Tenant shall notify every contractor making such improvements of the provisions
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set forth in the preceding sentence of this paragraph. The parties agree, should
Landlord so request, to execute, acknowledge and deliver, without charge to the
other, a Memorandum of Lease in recordable form containing a confirmation that
the interest of Landlord shall not be subject to liens for improvements made by
Tenant to the Premises.
25. FORCE MAJEURE. Whenever a period of time is herein prescribed for
action to be taken by Landlord, Landlord shall not be liable or responsible for,
and there shall be excluded from the computation for any such period of time,
any delays due to strikes, riots, acts of God, shortages of labor or materials,
theft, fire, public enemy, injunction, insurrection, court order, requisition of
other governmental body or authority, war, governmental laws, regulations or
restrictions or any other causes of any kind whatsoever which are beyond the
control of Landlord.
26. SEVERABILITY. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws effective during the term
of this Lease, then and in that event, it is the intention of the parties hereto
that the remainder of this Lease shall not be affected thereby.
27. HOLDING OVER. The failure of Tenant to surrender the Premises on the
date provided herein for the expiration of the term of this Lease (or at the
time the Lease may be terminated otherwise by Landlord), and the subsequent
holding over by Tenant, with or without the cons the Rent payable at the time of
the date provided herein for the expiration of this Lease or at the time the
Lease may be terminated otherwise by Landlord. This provision does not give
Tenant any right to hold over at the expiration of the term of this Lease, the
parties agree that it shall not be deemed to be a renewal of the Lease term,
either by operation of law or otherwise.
28. RELOCATION. Landlord may at any time during the term (as may be
extended) of this Lease relocate Tenant, providing Landlord pays the reasonable
cost of the relocation, and substitute for the Premises other space (which would
then become the "Premises" for the purposes of this Lease) in the Building. The
parties expressly agree that Landlord shall pay the reasonable moving costs of
such relocation, but shall not be responsible for any other costs, damages or
injuries of any nature whatsoever. Tenant's new space shall be substantially
comparable to the Premises hereby leased. Tenant shall relocate within thirty
(30) days (or such additional time as Landlord may direct) of Landlord's written
notice to Tenant that Tenant do so. Tenant's failure timely so to relocate shall
be a Default (see Article 20 of this Lease), no curative notice of any nature
(after the expiration os such 30 day or additional period) shall be due Tenant
from Landlord. Upon such a Default by Tenant, Landlord shall have all the rights
and remedies described in said Article 20.
29. RENT A SEPARATE COVENANT. Tenant shall not for any reason withhold or
reduce Tenant's required payments of Rent and other charges provided in this
Lease, it being expressly understood and agreed by the parties that the payment
of Rent and
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Additional Rent is a contractual covenant by Tenant that is independent of the
other covenants of the parties hereunder.
30. JOINT AND SEVERAL LIABILITY. If two or more individuals, corporations,
partnerships, or other business associations (or any combination of such
individual, corporation, partnership or other business association to pay Rent
and perform all other obligations hereunder shall be deems to be joint and
several. In like manner, if Tenant, is a partnership or other business
association, the members of which are, by virtue of statute or general law,
subject to personal liability, the liability of each member shall be joint and
several.
31. ABSENCE OF OPTION. The submission of this Lease for examination does
not constitute a reservation of or option for the Premises, and this Lease
becomes effective only upon execution and delivery thereof by Landlord.
32. CORPORATE TENANCY. If Tenant is a corporation, the undersigned officer
of Tenant hereby warrants and certifies to Landlord that Tenant is a corporation
in good standing and is authorized to do business in the State of Florida. The
undersigned officer of Tenant hereby further warrants and certifies to Landlord
that he or she, as such officer, is authorized and empowered to bind the
corporation to the terms of this Lease by his or her signature thereto.
Landlord, before it accepts and delivers this Lease, may require Tenant to
supply it with a certified copy of the corporate resolution authorizing the
execution of this Lease by Tenant. If Tenant is a corporation (other than one
whose shares are regularly and publicly traded on a recognized stock exchange),
Tenant represents that the ownership and power to vote its entire outstanding
capital stock belongs to and is vested in the officer or officers listed on the
signature page of this Lease or members of his, her or their immediately family.
If there shall occur any change in the ownership of and/or power to vote the
majority of the outstanding capital stock of Tenant, whether such change of
ownership is by sale, assignment, bequest, inheritance, operation of law or
otherwise, without the prior written consent of Landlord, then Landlord shall
have the option to terminate, furthermore, Tenant shall have an affirmative
obligation to notify immediately Landlord of any such change.
33. BROKERAGE COMMISSION. Tenant warrants that there are no claims for
broker's commissions or finder's fees in connection with its execution of this
Lease and agrees to indemnity and save Landlord harmless from any liability that
may arise from such claim, including reasonable attorneys' and paralegal' fees
(whether incurred in court, out of court, on appeal or in bankruptcy or
administrative proceedings).
34. LANDLORD'S DEFAULT. Landlord shall in no event be charged with default
in the performance of any of its obligations under this Lease unless and until
Landlord shall have failed to perform such obligations within ten (10) days (or
within such additional time as is reasonably required to remedy any such
default) after written notice to Landlord by Tenant properly specifying and
detailing the particulars of wherein and
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whereby Tenant claims Landlord has failed to perform such obligations. If the
holder of the first mortgage covering the Premises shall have give prior written
notice to Tenant that it is the holder of such first mortgage and such notice
includes the address at which notices to such mortgagee are to be sent, that
Tenant shall give such mortgagee notice simultaneously with any notice given to
Landlord to correct any default of Landlord as hereinabove provided. Such
mortgagee shall have the right within thirty (30) days (or within such
additional time as is reasonable required to correct any such default) after
receipt of such notice to correct or remedy such default before Tenant may take
any action under this Lease by reason of such default. Any notice of default
given Landlord by Tenant shall be null and void unless simultaneous notice has
been given by Tenant to said first mortgagee.
Anything in this Lease to the contrary notwithstanding, covenants,
undertakings and agreements herein made on the part of Landlord personally or
the assets of Landlord but are made and intended to bind only the Landlords's
interest in the Premises, as the same may, from time to time, be encumbered and
no personal liability shall at any time be asserted or enforceable against
Landlord or its stockholders, officers or partners or their respective heirs,
legal representatives, successors and assigns on account of the Lease or on
account of any covenant, undertaking or agreement of Landlord in this Lease.
35. NOTICES. Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered or given when (a) actually received or
(b) signed for or "refused" as indicated on the postal service return receipt.
Delivery may be by personal delivery or by United States mail, postage prepaid,
certified or registered mail, addressed to the parties hereto at the respective
addresses set out opposite their names below, or at such other address as they
may hereafter specify by written notice delivered in accordance herewith:
LANDLORD: UNIVERSITY FINANCIAL PLAZA ASSOCIATES, LTD
3300 University Drive
Suite 002
Coral Springs, Florida 33065
With a copy to: John T. Kinsey, Esq.
Two Executive Court
2300 Corporate Boulevard
Suite 112
Boca Raton, Florida 33431
TENANT:
Before Occupancy: TRANSEASTERN PROPERTIES
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During Occupancy: TRANSEASTERN PROPERTIES
3300 University Drive, Suite 001
Nor shall, at Tenant's sole expense, obtain and keep enforce at all times
during the term of this Lease, comprehensive general liability insurance,
including property damage on an occurrence basis, with limits of not less than
One Million Dollars ($1,000,000.00) combined single limit, insuring Landlord and
Tenant against any liability arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Fire and legal
liability insurance in an amount of not less than Fifty Thousand ($50,000.00)
shall also be obtained and kept in force during the term of this Lease at
Tenant's expense. The limit of said insurance shall not, however, limit the
liability of Tenant hereunder. Tenant may carry said insurance under a blanket
policy, provided an endorsement naming Landlord as an additional insured is
attached thereto.
Tenant shall maintain insurance upon Tenant's trade fixtures, merchandise
and personal property in the Premises in an amount not less than one hundred
percent (100%) of their full replacement cost, which insurance shall provide
protection against perils included within the standard Florida form of fire and
extended coverage insurance policy, together with insurance against sprinkler
damage, vandalism and malicious mischief. Tenant shall maintain insurance
against such other perils and in such amounts as Landlord may in writing from
time to time require.
All insurance policies required to be obtained and maintained under this
Lease shall be with a company or companies licensed to issue the relevant
insurance, licensed to do business in the State of Florida, and reasonable
acceptable to Landlord. Such insurance company or companies shall each have a
policyholder's rating of no less than "A" in the most recent edition of BEST
INSURANCE REPORTS. No policy shall be cancelable of subject to reduction of
coverage except after thirty (30) days prior written notice to Landlord.
Landlord shall receive written evidence of insurance maintained by Tenant shall
be in a form and, shall have a substance, acceptable to Landlord with
satisfactory evidence that all premiums have been paid. Tenant agrees not to
violate knowingly or permit to be violated any of the conditions or provisions
of the insurance policies required to be furnished hereunder, and agrees to
promptly notify Landlord of any fire or other casualty. If Tenant fails to
procure and maintain demand, as Additional Rent, reimburse Landlord for all
monies expended by Landlord to procure and maintain such insurance.
Tenant hereby waives and releases Landlord of and from any and all
liabilities, claims and losses for which Landlord is or may be held liable to
the extend Tenant receives insurance proceeds on account thereof. TENANT SHALL
LOOK SOLELY TO ITS INSURANCE POLICY PROCEEDS AND SHALL SEED NO ADDITIONAL
RECOVERY AGAINST LANDLORD, PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS
PARAGRAPH IS INTENDED NOR SHALL IT OPERATE TO IMPAIR OR ADVERSELY AFFECT
TENANT'S INSURERS RIGHTS OF SUBROGATION AS TO ANY CLAIM OF TENANT AGAINST
LANDLORD.
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Upon Landlord's written request for same, Tenant will provide Landlord
with written evidence of Tenant's compliance with its obligations under this
Article 38.
36. RECORDING. This Lease shall not be recorded without Landlord's prior
written consent.
37. STATUTORILY MANDATED NOTIFICATION. As required by F.S. 404.056(8),
Landlord notifies Tenant as follow: "RADON GAS": Radon is a naturally occurring
radioactive gas that, when it has accumulated in a building in sufficient
quantities, may present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon testing
may be obtained from your county public health unit".
38. NON-DISCLOSURE. Tenant agrees that it will not divulge or disclose to
third parties the terms, provisions and conditions of this Lease. Tenant's
breach of this Article 40 shall constitute a default under Article 20 of this
Lease, no curative notice to Tenant from Landlord being required.
39. HAZARDOUS MATERIALS. Tenant shall not cause or permit any Hazardous
Material (as hereinafter defined) to be brought upon, kept or used in or about
the Premises or the Building by Tenant, its agents, principals, employees,
assigns, sublessee, contractors, consultants or invitees without the prior
written consent of Landlord, which consent by be withheld for any reason
whatsoever or for no reason at all. If Tenant breaches the obligations stated in
the preceding sentence, or is the presence of Hazardous Material on the Premises
or around the Building caused or permitted by Tenant (or the aforesaid others)
results in (a) any contamination of the Building or the surrounding area(s), the
soil or surface or ground water or (b) loss or damage to person(s) or property,
or if contamination of the Premises or the Building or the surrounding area(s)
by Hazardous Material otherwise occurs for which Tenant is legally, actually or
factually liable or responsible to Landlord (or any party claiming by, through
or under Landlord) from any and all claims, judgements, damages, penalties,
fines, costs liabilities or losses [including, without limitation:
(i) diminution in the value of the Premises and/or any adjoining area(s)
which Landlord owns or in which holds a property interest; (ii) damages for the
loss or restriction on use of rentable or usable space of any amenity of the
Premises, the Building or the land on which the Building is located; (ii)
damages arising from adverse impact on marketing of space; and (iv) any sums
paid in settlement of claims, reasonable attorneys' and paralegal's fee,
(whether incurred in court, out of court, on appeal or in bankruptcy or
administrative proceeding during or after the term of this Lease, as may be
extended, as a consequence of such contamination. This indemnification of
Landlord by Tenant included, without limitation, costs incurred in connection
with an investigation or site conditions or any clean-up, remedial, removal or
restoration work required by any federal,
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state or local governmental agency or political subdivision because of Hazardous
Material present in the soil or ground water on or under the Premises or the
Building.
Without limiting the foregoing, if the presence of any Hazardous Material
on, under or about the Premises, the Building or the surrounding areas(s) caused
or permitted by Tenant (or the aforesaid others) results in (a) any
contamination of the Premises, the Building, the surrounding area(s), the soil
or surface or ground water or (b) loss or damage to person(s) or property, then
Tenant shall immediately notify Landlord of any contamination, claim of
contamination, loss or damage and, after consultation and approval by Landlord,
take all actions at Tenant's sole expense as are necessary or appropriate to
return the Premises, the Building, the surrounding area(s) and the soil or
surface or ground water to the condition existing prior to the introduction of
any such Hazardous Material thereto, such that the contaminated areas are
brought into full compliance with all applicable statutory regulations and
standards. The foregoing obligations and responsibilities of Tenant shall
survive the expiration or earlier termination of this Lease.
As used herein, the term "Hazardous Material" means any hazardous or toxic
substance, material or waste, including, by not limited to, those substance,
materials, and wastes listed in the United States Department of Transportation
Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection
agency as hazardous substances (40 CFR Part 302) and amendments thereto, or such
substances, materials and wastes that are or become regulated under any
applicable local, state or federal law. "Hazardous Material" includes any and
all material or substances which are defined as "hazardous waste", "extremely
hazardous waste" or a "hazardous substance" pursuant to local, state or federal
governmental law. "Hazardous substance" includes but is not restricted to,
asbestos, polychlorobiphenyls ("PCB's), petroleum, any and all materials or
substances which are classified as "biohazardous" or "biological waste" (as such
terms are defined by Florida Adpter 17- 712, as amended from time to time), and
extremely "hazardous waste" or "hazardous substance" pursuant to federal, state
or local governmental law.
Landlord and its agents shall have the right, but not the duty, to inspect
the Premises at any time to determine whether Tenant is complying with the terms
of this Lease.
If Tenant is not in compliance with this Lease, Landlord shall have the
right to immediately enter upon the Premises to remedy any contamination caused
by Tenant's failure to comply, notwithstanding any other provision of this
Lease. Landlord shall use its best efforts to minimize interference with
Tenant's business, but shall not be liable for any interference caused thereby.
Any non-compliance by Tenant with its duties, responsibilities and
obligations under this Article 41 shall be "automatic" (no notice of any nature
from Landlord to Tenant being required) default of this Lease (see Article 20).
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Effective January 1, 1989, Section 404.056(8) of the Florida Statutes
requires that the following notification be included in, among other documents,
rental agreements for buildings in the State of Florida:
RADON GAS: RADON IS A NATURALLY OCCURRING RADIOACTIVE
GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT
QUANTITIES, MAY PRESENT HEALTH RISKS TO PERSONS WHO ARE
EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED
FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN
FLORIDA. ADDITIONAL INFORMATION REGARDING
RADON AND RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY
PUBLIC HEALTH UNIT.
40. AMENDMENTS. This Lease contains the entire agreement between the
parties hereto and may not be altered, changed or amended, except by written
instrument signed by both parties hereto. No provision of this Lease shall be
deemed to have been waived by Landlord unless such waiver is in writing signed
by Landlord and addressed to Tenant, nor shall any custom or practice which may
grow up between the parties in the administration of the provisions hereof be
construed to waive or lessen the right of Landlord to insist upon the
performance by Tenant in strict accordance with the terms hereof. The terms,
provisions, covenants, and conditions contained in this Lease shall apply to,
inure to the benefit of, and be binding upon the parties hereto, and upon their
respective successors in interest and legal representative, except as otherwise
herein expressly provided.
The parties acknowledge that they have read this Lease (to include its
Exhibits and attachments) in it entirety, that they are familiar with all of the
terms, covenants, provision and conditions set forth therein and that there are
no other representations, undertakings, warranties or agreements concerning this
Lease which do not appear in writing therein. The parties further acknowledge
that the terms and provisions contained within this Lease have been fully,
freely and fairly negotiated by and between them.
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IN WITNESS WHEREOF, the undersigned authorities have hereunto executed
this Lease, effective on the day and year first above written.
LANDLORD
UNIVERSITY FINANCIAL PLAZA
ASSOCIATES, LTD., a Florida
Limited Partnership
By: Sample Financial Plaza, Inc.
a Florida Corporation
By:
- --------------------------- --------------------------------------
Witness Edward W. Falcone, President
Date: ___________________
- -------------------------
Witness
Date:____________________
TENANT
TRANSEASTERN PROPERTIES OF
SOUTH FLORIDA, INC.
By:
_________________________ --------------------------------------
Witness
Date: ___________________
- -------------------------
Witness
Date: ___________________
24
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EXHIBIT A
PLAN OF PREMISES
25
<PAGE>
EXHIBIT B
LEASEHOLD IMPROVEMENTS AND/OR SERVICES
1. Landlord and Tenant agree that the following improvements shall be
installed within the Premises at Tenant's sole cost and expense:
2. Landlord and Tenant agree that the following additional services
shall be provided:
LANDLORD
UNIVERSITY FINANCIAL PLAZA
ASSOCIATES, LTD., a Florida
Limited Partnership
By: Sample Financial Plaza, Inc.
a Florida Corporation
By:
_________________________________ ----------------------------------
Witness Edward W. Falcone, President
Date: __________________
_________________________________ ----------------------------------
Witness
Date: ___________________
TENANT
TRANSEASTERN PROPERTIES OF
SOUTH FLORIDA, INC.
Witness__________________________ By:
Date:_____________________ ---------------------------------
_________________________________ ---------------------------------
Witness
Date: _____________________
26
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EXHIBIT C
BUILDING RULES AND REGULATIONS
The following Building Rules and Regulations have been adopted by Landlord
for the care, protection and benefit of the Premises and the Building and for
the general comfort and welfare of all Tenants.
1. The sidewalks, entrances, passages, halls elevators and stairways shall
not be obstructed by Tenant or used by Tenant for any purpose other than for
ingress and egress to and from the Building and Tenant's Premises.
2. Restroom facilities, water fountains, and other water apparatus shall
not be used for any purpose other than those for which they were constructed.
3. Landlord reserves the right to designate the time when freight,
furniture, goods, merchandise and other articles may be brought into, moved or
taken from Tenants's Premises or the Building.
4. Tenant shall not put additional locks or latches upon any door without
the prior written discretionary consent of Landlord. Any and all locks so added
on any door shall remain for the benefit of Landlord, and the keys to such locks
shall be delivered to Landlord by and from Tenant.
5. Landlord shall not be liable for injuries, damage, theft, or other
loss, to persons or property that may occur upon, or near any parking areas that
may be provided by Landlord. Tenant, its agents, employees, and invitees are to
use same at their own risk, Landlord to provided no security with respect
thereto. The driveways, entrances, and exists upon, into and from such parking
areas shall not be obstructed by Tenant, Tenant's employees, agents, guests, or
invitees. Tenant, its employees, agents, guests and/or invitees shall not park
in space(s) that are identified as reserved for others.
6. Tenant shall not install in the Premises any heavy equipment or
fixtures or permit any concentration of excessive weight in any portion thereof
without first having obtained Landlord's written consent.
7. Landlord reserves the right at a identification or credentials from all
persons seeking access to any part of the Building outside ordinary business
hours. Landlord will exercise its best judgment in the execution of such control
but will not be liable for the granting or refusal of such access.
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8. Landlord reserves the right at all times to exclude the general public
from the Building upon such days and at such hours as in Landlord's sole
judgment will be in the best interest of the Building and its Tenants.
9. No wires of any kind or type (including but not limited to T.V. and
radio antennas) shall be attached to the outside of the Building and no wires
shall be run or installed in any part of the Building without Landlord's prior
written consent.
10. If the Premises are furnished with carpeting, Tenant shall provide a
plexiglass or comparable carpet protection mat for each desk chair customarily
used by Tenant. For default or carelessness in these respects, Tenant shall pay
Landlord the cost of repairing or replacing said carpet, in whole or in part, as
Additional Rent when, in Landlord's sole judgment, shall repair or replacement
is necessary.
11. Landlord shall furnish a reasonable number of door keys to Tenant's
Premises and/or Building which shall be surrendered on termination or expiration
of the Lease. Landlord reserves the right to require a deposit of such keys to
insure their return at the termination or expiration of the Lease. Tenant shall
get keys only from Landlord and shall not obtain duplicate keys from outside
source. Further, Tenant shall not alter locks or effect any substitution of such
locks as are presently being used in Tenant's Premises or the Building.
12. Tenant shall keep all doors to Premises closed at all times exceptfor
ingress and egress to the Premises.
13. All installations in the Common Telephone/Electrical Equipment Rooms
shall be limed to terminal boards and connections. All other electrical
equipment mush be installed within Tenant's Premises.
14. It is expressly understood and agreed that any items of any nature
whatsoever placed in Common Areas (i.e., hallways, restrooms, elevators, parking
garage, storage areas and regards same.
29
EXHIBIT 10.19
PROMISSORY NOTE
$100,000.00 AT CORAL SPRINGS, FLORIDA THIS 15TH DAY OF APRIL, 1993.
FOR VALUE RECEIVED, THE UNDERSIGNED (JOINTLY AND SEVERALLY, IF MORE
THAN ONE) PROMISE TO PAY TO THE ORDER OF B & E MANAGEMENT , INC., 6143 JERICHO
TURNPIKE, COMMACK, NY 11725 OR AT SUCH OTHER PLACE WITHIN THE UNITED STATES AS
THE HOLDER HEREOF MAY IN WRITING DESIGNATE, IN LAWFUL MONEY OF THE UNITED STATES
OF AMERICA, THE SUM OF ONE HUNDRED THOUSAND AND 00/100 ($100,000.00), TOGETHER
WITH INTEREST THEREON FROM THE DATE HEREOF AT THE RATE OF TWELVE (12%) PERCENT
PER ANNUM, PAYABLE AS FOLLOWS:
$100,000.00 PRINCIPAL DUE AND PAYABLE AS A BALLOON PAYMENT ON OR BEFORE JULY 15,
1994 PLUS INTEREST. ONE POINT TO BE PAYABLE UPON SIGNING OF NOTE. INTEREST DUE
EVERY SIX MONTHS AS FOLLOWS:
NOVEMBER 1, 1993
MAY 1, 1994
JULY 1, 1994
IF ANY PAYMENT DUE HEREUNDER IS NOT MADE WITHIN THIRTY (30) DAYS FROM
THE DATE IT IS DUE, THIS NOTE SHALL BE IN DEFAULT AND THE UNPAID BALANCE
HEREUNDER SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED BY LAW FROM THE DATE
OF SUCH PAYMENT. IF THIS NOTE SHALL BE IN DEFAULT THEN, AT THE OPTION OF THE
HOLDER HEREOF THE ENTIRE PRINCIPAL SUM REMAINING UNPAID, TOGETHER WITH ACCRUED
INTEREST, SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT NOTICE, AND ANY
FAILURE TO EXERCISE THIS OPTION SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
EXERCISE IT AT ANY OTHER TIME. UPON ANY DEFAULT HEREUNDER ALL PERSONS LIABLE
HEREON JOINTLY AND SEVERALLY PROMISE TO PAY ALL COSTS OF COLLECTION WHETHER WITH
OR WITHOUT SUIT INCLUDING REASONABLE ATTORNEY'S FEES, WHICH FEES SHALL INCLUDE
ANY ARISING BY REASON OF APPELLATE PROCEEDINGS. PRESENTMENT FOR PAYMENT, DEMAND,
NOTICE OF DISHONOR, PROTEST AND NOTICE OF PROTEST ARE HEREBY WAIVED BY ALL
MAKERS AND ENDORSERS HEREOF. PAYMENTS HEREUNDER SHALL BE APPLIED FIRST TO
ACCRUED INTEREST, WITH THE BALANCE, IF ANY, APPLIED TO PRINCIPAL. THIS NOTE MAY
BE PREPAID AT ANY TIME WITHOUT PENALTY.
THIS NOTE IS PAYABLE IN AND SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF FLORIDA.
PAYMENT GUARANTEED:
DATE:____________________ _________________________________
ARTHUR FALCONE, INDIVIDUALLY
7522 WILES ROAD STE. 203
CORAL SPRINGS, FL 33067
<PAGE>
DATE:____________________ ____________________________
PHIL CUCCI, INDIVIDUALLY
7522 WILES ROAD STE. 203
CORAL SPRINGS, FL 33067
DATE:____________________ ____________________________
ARTHUR FALCONE, PRESIDENT
TRANSEASTERN PROPERTIES OF STH. FL., INC.
7522 WILES ROAD STE. 203
CORAL SPRINGS, FL 33067
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY ARTHUR
FALCONE & PHILIP CUCCI, WHO ARE KNOWN TO ME ON THIS 15TH DAY OF APRIL, 1993.
- -------------------------------------
NOTARY PUBLIC
<PAGE>
B & E Management, Inc
6143 Jericho Turnpike
Commack, New York 11725
September 18, 1996
Transeastern Properties, Inc.
3300 University Drive
Suite 001
Coral Springs, Florida 33065
Gentlemen:
Reference is made to that certain Promissory Note (the "Note"), dated
April 15, 1993, made by Transeastern Properties, Inc. (f.k.a. "Transeastern
Properties of South Florida, Inc."), Arthur Falcone, individually, and Phillip
Cucci, individually, payable to the order of B & E Management, Inc. ("B & E") in
the amount of $100,000, a copy of which is attached hereto. Notwithstanding
anything to the contrary set forth in the Note, B & E irrevocably agrees that
the principal payments under the Note shall be due on demand, rather than on the
date set forth in the Note. Except as otherwise provided herein, all of the
provisions of the Note shall remain in full force and effect.
Very truly yours,
B & E Management, Inc.
/s/ Robert J. Falcone
----------------------------
Robert J. Falcone, President
EXHIBIT 10.20
PROMISSORY NOTE
$200,000.00 AT CORAL SPRINGS, FLORIDA THIS 10TH DAY OF APRIL, 1994.
FOR VALUE RECEIVED, THE UNDERSIGNED (JOINTLY AND SEVERALLY, IF MORE
THAN ONE) PROMISE TO PAY TO THE ORDER OF ROBERT J. FALCONE TRUSTEE OF THE ROBERT
J. FALCONE REVOCABLE LIVING TRUST 9/1/93, 6143 JERICHO TURNPIKE, COMMACK, NY
11725 OR AT SUCH OTHER PLACE WITHIN THE UNITED STATES AS THE HOLDER HEREOF MAY
IN WRITING DESIGNATE, IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA, THE SUM
OF TWO HUNDRED THOUSAND AND 00/100 ($200,000.00), TOGETHER WITH INTEREST THEREON
FROM THE DATE HEREOF AT THE RATE OF TEN (10%) PERCENT PER ANNUM, PAYABLE AS
FOLLOWS:
INTEREST TO BE PAID MONTHLY ON THE 1ST DAY OF EACH MONTH COMMENCING ON JUNE 1,
1994. $200,000 PRINCIPAL DUE AND PAYABLE AS A BALLOON PAYMENT ON OR BEFORE
OCTOBER 25, 1995 PLUS ANY ACCRUED INTEREST DUE.
IF ANY PAYMENT DUE HEREUNDER IS NOT MADE WITHIN THIRTY (30) DAYS FROM
THE DATE IT IS DUE, THIS NOTE SHALL BE IN DEFAULT AND THE UNPAID BALANCE
HEREUNDER SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED BY LAW FROM THE DATE
OF SUCH PAYMENT. IF THIS NOTE SHALL BE IN DEFAULT THEN, AT THE OPTION OF THE
HOLDER HEREOF THE ENTIRE PRINCIPAL SUM REMAINING UNPAID, TOGETHER WITH ACCRUED
INTEREST, SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT NOTICE, AND ANY
FAILURE TO EXERCISE THIS OPTION SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
EXERCISE IT AT ANY OTHER TIME. UPON ANY DEFAULT HEREUNDER ALL PERSONS LIABLE
HEREON JOINTLY AND SEVERALLY PROMISE TO PAY ALL COSTS OF COLLECTION WHETHER WITH
OR WITHOUT SUIT INCLUDING REASONABLE ATTORNEY'S FEES, WHICH FEES SHALL INCLUDE
ANY ARISING BY REASON OF APPELLATE PROCEEDINGS. PRESENTMENT FOR PAYMENT, DEMAND,
NOTICE OF DISHONOR, PROTEST AND NOTICE OF PROTEST ARE HEREBY WAIVED BY ALL
MAKERS AND ENDORSERS HEREOF. PAYMENTS HEREUNDER SHALL BE APPLIED FIRST TO
ACCRUED INTEREST, WITH THE BALANCE, IF ANY, APPLIED TO PRINCIPAL. THIS NOTE MAY
BE PREPAID AT ANY TIME WITHOUT PENALTY.
THIS NOTE IS PAYABLE IN AND SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF FLORIDA.
PAYMENT GUARANTEED:
DATE:____________________ _________________________________
TRANSEASTERN PROPS. OF STH.
FLORIDA, INC.
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY PHILIP
CUCCI, VICE PRESIDENT WHO IS KNOWN TO ME ON THIS 8TH DAY OF APRIL, 1994.
- -------------------------------------
NOTARY PUBLIC
<PAGE>
Robert J. Falcone Revocable Living Trust 9/1/93
6143 Jericho Turnpike
Commack, New York 11725
September 18, 1996
Transeastern Properties, Inc.
3300 University Drive
Suite 001
Coral Springs, Florida 33065
Gentlemen:
Reference is made to that certain Promissory Note (the "Note"), dated
April 10, 1994, made by Transeastern Properties, Inc. (f.k.a. "Transeastern
Properties of South Florida, Inc.") payable to the order of Robert J. Falcone
Trustee of the Robert J. Falcone Revocable Living Trust 9/1/93 (the "Trustee")
in the amount of $200,000, a copy of which is attached hereto. Notwithstanding
anything to the contrary set forth in the Note, the Trustee irrevocably agrees
that the principal payments under the Note shall be due on demand, rather than
on the date set forth in the Note. Except as otherwise provided herein, all of
the provisions of the Note shall remain in full force and effect.
Very truly yours,
Robert J. Falcone Revocable Living Trust 9/1/93
/s/ Robert J. Falcone
--------------------------
Robert J. Falcone, Trustee
EXHIBIT 10.21
PROMISSORY NOTE
$100,000.00 AT CORAL SPRINGS, FLORIDA THIS 25TH DAY OF SEPTEMBER, 1995.
FOR VALUE RECEIVED, THE UNDERSIGNED (JOINTLY AND SEVERALLY, IF MORE
THAN ONE) PROMISE TO PAY TO THE ORDER OF ROBERT J. FALCONE, TRUSTEE ROBERT J.
FALCONE TRUST AT 35 RIVERVIEW TERRACE, SMITHTOWN, NY 11787 OR AT SUCH OTHER
PLACE WITHIN THE UNITED STATES AS THE HOLDER HEREOF MAY IN WRITING DESIGNATE, IN
LAWFUL MONEY OF THE UNITED STATES OF AMERICA, THE SUM OF ONE HUNDRED THOUSAND
AND 00/100 ($100,000.00), TOGETHER WITH INTEREST THEREON FROM THE DATE HEREOF AT
THE RATE OF TWELVE (12%) PERCENT PER ANNUM, PAYABLE AS FOLLOWS:
INTEREST ONLY PAYABLE MONTHLY. PRINCIPAL SHALL BE MADE AS A BALLOON PAYMENT 24
MONTHS THEREAFTER, SEPTEMBER 25, 1997.
IF ANY PAYMENT DUE HEREUNDER IS NOT MADE WITHIN THIRTY (30) DAYS FROM
THE DATE IT IS DUE, THIS NOTE SHALL BE IN DEFAULT AND THE UNPAID BALANCE
HEREUNDER SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED BY LAW FROM THE DATE
OF SUCH PAYMENT. IF THIS NOTE SHALL BE IN DEFAULT THEN, AT THE OPTION OF THE
HOLDER HEREOF THE ENTIRE PRINCIPAL SUM REMAINING UNPAID, TOGETHER WITH ACCRUED
INTEREST, SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT NOTICE, AND ANY
FAILURE TO EXERCISE THIS OPTION SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
EXERCISE IT AT ANY OTHER TIME. UPON ANY DEFAULT HEREUNDER ALL PERSONS LIABLE
HEREON JOINTLY AND SEVERALLY PROMISE TO PAY ALL COSTS OF COLLECTION WHETHER WITH
OR WITHOUT SUIT INCLUDING REASONABLE ATTORNEY'S FEES, WHICH FEES SHALL INCLUDE
ANY ARISING BY REASON OF APPELLATE PROCEEDINGS. PRESENTMENT FOR PAYMENT, DEMAND,
NOTICE OF DISHONOR, PROTEST AND NOTICE OF PROTEST ARE HEREBY WAIVED BY ALL
MAKERS AND ENDORSERS HEREOF. PAYMENTS HEREUNDER SHALL BE APPLIED FIRST TO
ACCRUED INTEREST, WITH THE BALANCE, IF ANY, APPLIED TO PRINCIPAL. THIS NOTE MAY
BE PREPAID AT ANY TIME WITHOUT PENALTY.
THIS NOTE IS PAYABLE IN AND SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF FLORIDA.
PAYMENT GUARANTEED:
DATE: ____________________ _______________________________
ARTHUR FALCONE, PRESIDENT
TRANSEASTERN PROPERTIES
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY ARTHUR
FALCONE, PRESIDENT, TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC. WHO IS KNOWN
TO ME ON THIS 25TH DAY OF SEPTEMBER, 1995.
- -------------------------------------
NOTARY PUBLIC
EXHIBIT 10.22
PROMISSORY NOTE
$600,000.00 AT CORAL SPRINGS, FLORIDA THIS 30TH DAY OF JANUARY, 1996.
FOR VALUE RECEIVED, THE UNDERSIGNED (JOINTLY AND SEVERALLY, IF MORE
THAN ONE) PROMISE TO PAY TO THE ORDER OF ANTHONY CIABATTONIO AT 5835 EASTERN
AVENUE, SUITE 100, LOS ANGELES, CALIFORNIA 90040 OR AT SUCH OTHER PLACE WITHIN
THE UNITED STATES AS THE HOLDER HEREOF MAY IN WRITING DESIGNATE, IN LAWFUL MONEY
OF THE UNITED STATES OF AMERICA, THE SUM OF SIX HUNDRED THOUSAND AND 00/100
($600,000.00), TOGETHER WITH INTEREST THEREON FROM THE DATE HEREOF AT THE RATE
OF THIRTEEN (13%) PERCENT PER ANNUM, PAYABLE AS FOLLOWS:
INTEREST DUE QUARTERLY AS FOLLOWSWITHIN NINETY (90) DAYS.
IF ANY PAYMENT DUE HEREUNDER IS NOT MADE WITHIN THIRTY (30) DAYS FROM
THE DATE IT IS DUE, THIS NOTE SHALL BE IN DEFAULT AND THE UNPAID BALANCE
HEREUNDER SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED BY LAW FROM THE DATE
OF SUCH PAYMENT. IF THIS NOTE SHALL BE IN DEFAULT THEN, AT THE OPTION OF THE
HOLDER HEREOF THE ENTIRE PRINCIPAL SUM REMAINING UNPAID, TOGETHER WITH ACCRUED
INTEREST, SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT NOTICE, AND ANY
FAILURE TO EXERCISE THIS OPTION SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
EXERCISE IT AT ANY OTHER TIME. UPON ANY DEFAULT HEREUNDER ALL PERSONS LIABLE
HEREON JOINTLY AND SEVERALLY PROMISE TO PAY ALL COSTS OF COLLECTION WHETHER WITH
OR WITHOUT SUIT INCLUDING REASONABLE ATTORNEY'S FEES, WHICH FEES SHALL INCLUDE
ANY ARISING BY REASON OF APPELLATE PROCEEDINGS. PRESENTMENT FOR PAYMENT, DEMAND,
NOTICE OF DISHONOR, PROTEST AND NOTICE OF PROTEST ARE HEREBY WAIVED BY ALL
MAKERS AND ENDORSERS HEREOF. PAYMENTS HEREUNDER SHALL BE APPLIED FIRST TO
ACCRUED INTEREST, WITH THE BALANCE, IF ANY, APPLIED TO PRINCIPAL. THIS NOTE MAY
BE PREPAID AT ANY TIME WITHOUT PENALTY.
THIS NOTE IS PAYABLE IN AND SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF FLORIDA.
PAYMENT GUARANTEED:
DATE:____________________ _________________________________
THOMAS E. POMPILIO, JR.
<PAGE>
STATE OF
COUNTY OF
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY THOMAS E.
POMPILIO, JR. WHO IS PERSONALLY KNOWN TO ME OR HAS PRODUCED ____________________
ON THIS _____ DAY OF ______________, 1995.
- -------------------------------------
NOTARY PUBLIC
EXIBIT 10.23
PROMISSORY NOTE
$1,000,000.00 AT CORAL SPRINGS, FLORIDA THIS 26TH DAY OF JUNE, 1996.
FOR VALUE RECEIVED, THE UNDERSIGNED (JOINTLY AND SEVERALLY, IF MORE
THAN ONE) PROMISE TO PAY TO THE ORDER OF ANTHONY CIABATTONI AT 18 LAGUNITA,
LAGUNA BEACH, CALIFORNIA 92651 OR AT SUCH OTHER PLACE WITHIN THE UNITED STATES
AS THE HOLDER HEREOF MAY IN WRITING DESIGNATE, IN LAWFUL MONEY OF THE UNITED
STATES OF AMERICA, THE SUM OF ONE MILLION DOLLARS AND 00/100 ($1,000,000.00),
TOGETHER WITH INTEREST THEREON FROM THE DATE HEREOF AT THE RATE OF THIRTEEN
(13%) PERCENT PER ANNUM, PAYABLE AS FOLLOWS:
INTEREST DUE QUARTERLY ACCORDING TO THE FOLLOWING SCHEDULE:
OCTOBER 1, 1996
PRINCIPAL ALONG WITH ANY ACCRUED INTEREST WILL BE DUE ON NOVEMBER 1, 1996.
IF ANY PAYMENT DUE HEREUNDER IS NOT MADE WITHIN THIRTY (30) DAYS FROM
THE DATE IT IS DUE, THIS NOTE SHALL BE IN DEFAULT AND THE UNPAID BALANCE
HEREUNDER SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED BY LAW FROM THE DATE
OF SUCH PAYMENT. IF THIS NOTE SHALL BE IN DEFAULT THEN, AT THE OPTION OF THE
HOLDER HEREOF THE ENTIRE PRINCIPAL SUM REMAINING UNPAID, TOGETHER WITH ACCRUED
INTEREST, SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT NOTICE, THE PRINCIPAL
SUM AND ACCRUED INTEREST SHALL BOTH BEAR INTEREST AT THE HIGHEST RATE ALLOWABLE
BY LAW FROM THE DATE OF THE DEFAULT UNTIL PAID, AND ANY FAILURE TO EXERCISE THIS
OPTION SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO EXERCISE IT AT ANY OTHER
TIME. UPON ANY DEFAULT HEREUNDER ALL PERSONS LIABLE HEREON JOINTLY AND SEVERALLY
PROMISE TO PAY ALL COSTS OF COLLECTION WHETHER WITH OR WITHOUT SUIT INCLUDING
REASONABLE ATTORNEY'S FEES, WHICH FEES SHALL INCLUDE ANY ARISING BY REASON OF
APPELLATE PROCEEDINGS. PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF DISHONOR,
PROTEST AND NOTICE OF PROTEST ARE HEREBY WAIVED BY ALL MAKERS AND ENDORSERS
HEREOF. PAYMENTS HEREUNDER SHALL BE APPLIED FIRST TO ACCRUED INTEREST, WITH THE
BALANCE, IF ANY, APPLIED TO PRINCIPAL. THIS NOTE MAY BE PREPAID AT ANY TIME
WITHOUT PENALTY.
THIS NOTE IS PAYABLE AT THE ADDRESS LISTED ABOVE AND SHALL BE GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF FLORIDA.
PAYMENT GUARANTEED:
DATE: ____________________ _______________________________
ARTHUR FALCONE, PRESIDENT (SEAL)
TRANSEASTERN PROPERTIES OF STH. FL., INC.
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
<PAGE>
DATE: ____________________ _______________________________
ARTHUR FALCONE, INDIVIDUALLY
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
DATE: ____________________ _______________________________
EDWARD FALCONE, INDIVIDUALLY
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
DATE: ____________________ _______________________________
PHIL CUCCI, INDIVIDUALLY
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY ARTHUR
FALCONE, PRESIDENT OF TRANSEASTERN PROPERTIES OF SOUTH FLORIDA, INC. WHO IS
PERSONALLY KNOWN TO ME ON THIS 26TH DAY OF JUNE, 1996.
- -------------------------------------
NOTARY PUBLIC
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY ARTHUR
FALCONE WHO IS PERSONALLY KNOWN TO ME ON THIS 26TH DAY OF JUNE, 1996.
- -------------------------------------
NOTARY PUBLIC
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY EDWARD
FALCONE WHO IS PERSONALLY KNOWN TO ME ON THIS 26TH DAY OF JUNE, 1996.
- -------------------------------------
NOTARY PUBLIC
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY PHIL CUCCI
WHO IS PERSONALLY KNOWN TO ME ON THIS 26TH DAY OF JUNE, 1996.
- -------------------------------------
NOTARY PUBLIC
EXHIBIT 10.25
PROMISSORY NOTE
$124,000.00 AT CORAL SPRINGS, FLORIDA THIS 22ND DAY OF SEPTEMBER, 1994.
FOR VALUE RECEIVED, THE UNDERSIGNED (JOINTLY AND SEVERALLY, IF MORE
THAN ONE) PROMISE TO PAY TO THE ORDER OF ARTHUR FALCONE AT 3300 UNIVERSITY
DRIVE, CORAL SPRINGS, FL 33065 OR AT SUCH OTHER PLACE WITHIN THE UNITED STATES
AS THE HOLDER HEREOF MAY IN WRITING DESIGNATE, IN LAWFUL MONEY OF THE UNITED
STATES OF AMERICA, THE SUM OF ONE HUNDRED TWENTY FOUR THOUSAND AND 00/100
($124,000.00), TOGETHER WITH INTEREST THEREON FROM THE DATE HEREOF AT THE RATE
OF ELEVEN (11%) PERCENT PER ANNUM, PAYABLE AS FOLLOWS:
INTEREST ONLY PAYABLE TO DEAN WITTER REYNOLDS, INC., C/O ROBERT COHEN, 2 JERICHO
PLAZA, JERICHO, NY 11753-9853, MONTHLY, ON THE FIRST DAY OF THE MONTH. PRINCIPAL
SHALL BE MADE AS A BALLOON PAYMENT 12 MONTHS THEREAFTER, SEPTEMBER 21, 1995.
IF ANY PAYMENT DUE HEREUNDER IS NOT MADE WITHIN THIRTY (30) DAYS FROM
THE DATE IT IS DUE, THIS NOTE SHALL BE IN DEFAULT AND THE UNPAID BALANCE
HEREUNDER SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED BY LAW FROM THE DATE
OF SUCH PAYMENT. IF THIS NOTE SHALL BE IN DEFAULT THEN, AT THE OPTION OF THE
HOLDER HEREOF THE ENTIRE PRINCIPAL SUM REMAINING UNPAID, TOGETHER WITH ACCRUED
INTEREST, SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT NOTICE, AND ANY
FAILURE TO EXERCISE THIS OPTION SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
EXERCISE IT AT ANY OTHER TIME. UPON ANY DEFAULT HEREUNDER ALL PERSONS LIABLE
HEREON JOINTLY AND SEVERALLY PROMISE TO PAY ALL COSTS OF COLLECTION WHETHER WITH
OR WITHOUT SUIT INCLUDING REASONABLE ATTORNEY'S FEES, WHICH FEES SHALL INCLUDE
ANY ARISING BY REASON OF APPELLATE PROCEEDINGS. PRESENTMENT FOR PAYMENT, DEMAND,
NOTICE OF DISHONOR, PROTEST AND NOTICE OF PROTEST ARE HEREBY WAIVED BY ALL
MAKERS AND ENDORSERS HEREOF. PAYMENTS HEREUNDER SHALL BE APPLIED FIRST TO
ACCRUED INTEREST, WITH THE BALANCE, IF ANY, APPLIED TO PRINCIPAL. THIS NOTE MAY
BE PREPAID AT ANY TIME WITHOUT PENALTY.
THIS NOTE IS PAYABLE IN AND SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF FLORIDA.
PAYMENT GUARANTEED:
DATE:____________________ ____________________________
TRANSEASTERN PROPERTIES
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY
____________________ WHO IS KNOWN TO ME ON THIS _____ DAY OF SEPT., 1994.
- -------------------------------------
NOTARY PUBLIC
<PAGE>
Arthur Falcone
3300 University Drive
Suite 001
Coral Springs, Florida 33065
September 18, 1996
Transeastern Properties, Inc.
3300 University Drive
Suite 001
Coral Springs, Florida 33065
Gentlemen:
Reference is made to that certain Promissory Note (the "Note"), dated
September 22, 1994, made by Transeastern Properties, Inc. (f.k.a. "Transeastern
Properties of South Florida, Inc.") payable to the order of Arthur Falcone
("Falcone") in the amount of $124,000, a copy of which is attached hereto.
Notwithstanding anything to the contrary set forth in the Note, Falcone
irrevocably agrees that the principal payments under the Note shall be due on
demand, rather than on the date set forth in the Note. Except as otherwise
provided herein, all of the provisions of the Note shall remain in full force
and effect.
Very truly yours,
/s/ Arthur Falcone
------------------
Arthur Falcone
EXHIBIT 10.26
PROMISSORY NOTE
$156,512.00 AT CORAL SPRINGS, FLORIDA THIS 22ND DAY OF SEPTEMBER, 1994.
FOR VALUE RECEIVED, THE UNDERSIGNED (JOINTLY AND SEVERALLY, IF MORE
THAN ONE) PROMISE TO PAY TO THE ORDER OF EDWARD FALCONE AT 3300 UNIVERSITY
DRIVE, CORAL SPRINGS, FL 33065 OR AT SUCH OTHER PLACE WITHIN THE UNITED STATES
AS THE HOLDER HEREOF MAY IN WRITING DESIGNATE, IN LAWFUL MONEY OF THE UNITED
STATES OF AMERICA, THE SUM OF ONE HUNDRED FIFTY SIX FIVE HUNDRED TWELVE AND
00/100 ($156,512.00), TOGETHER WITH INTEREST THEREON FROM THE DATE HEREOF AT THE
RATE OF ELEVEN (11%) PERCENT PER ANNUM, PAYABLE AS FOLLOWS:
INTEREST ONLY PAYABLE TO DEAN WITTER REYNOLDS, INC., C/O ROBERT COHEN, 2 JERICHO
PLAZA, JERICHO, NY 11753-9853, MONTHLY, TO BE PAID ON FIRST DAY OF THE MONTH.
PRINCIPAL SHALL BE MADE AS A BALLOON PAYMENT 12 MONTHS THEREAFTER, SEPTEMBER 21,
1995.
IF ANY PAYMENT DUE HEREUNDER IS NOT MADE WITHIN THIRTY (30) DAYS FROM
THE DATE IT IS DUE, THIS NOTE SHALL BE IN DEFAULT AND THE UNPAID BALANCE
HEREUNDER SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED BY LAW FROM THE DATE
OF SUCH PAYMENT. IF THIS NOTE SHALL BE IN DEFAULT THEN, AT THE OPTION OF THE
HOLDER HEREOF THE ENTIRE PRINCIPAL SUM REMAINING UNPAID, TOGETHER WITH ACCRUED
INTEREST, SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT NOTICE, AND ANY
FAILURE TO EXERCISE THIS OPTION SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
EXERCISE IT AT ANY OTHER TIME. UPON ANY DEFAULT HEREUNDER ALL PERSONS LIABLE
HEREON JOINTLY AND SEVERALLY PROMISE TO PAY ALL COSTS OF COLLECTION WHETHER WITH
OR WITHOUT SUIT INCLUDING REASONABLE ATTORNEY'S FEES, WHICH FEES SHALL INCLUDE
ANY ARISING BY REASON OF APPELLATE PROCEEDINGS. PRESENTMENT FOR PAYMENT, DEMAND,
NOTICE OF DISHONOR, PROTEST AND NOTICE OF PROTEST ARE HEREBY WAIVED BY ALL
MAKERS AND ENDORSERS HEREOF. PAYMENTS HEREUNDER SHALL BE APPLIED FIRST TO
ACCRUED INTEREST, WITH THE BALANCE, IF ANY, APPLIED TO PRINCIPAL. THIS NOTE MAY
BE PREPAID AT ANY TIME WITHOUT PENALTY.
THIS NOTE IS PAYABLE IN AND SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF FLORIDA.
PAYMENT GUARANTEED:
DATE:____________________ _______________________________
TRANSEASTERN PROPERTIES
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY
____________________ WHO IS KNOWN TO ME ON THIS _____ DAY OF SEPTEMBER, 1994.
- -------------------------------------
NOTARY PUBLIC
<PAGE>
Edward Falcone
3300 University Drive
Suite 001
Coral Springs, Florida 33065
September 18, 1996
Transeastern Properties, Inc.
3300 University Drive
Suite 001
Coral Springs, Florida 33065
Gentlemen:
Reference is made to that certain Promissory Note (the "Note"), dated
September 22, 1994, made by Transeastern Properties, Inc. (f.k.a. "Transeastern
Properties of South Florida, Inc.") payable to the order of Edward Falcone
("Falcone") in the amount of $156,512, a copy of which is attached hereto.
Notwithstanding anything to the contrary set forth in the Note, Falcone
irrevocably agrees that the principal payments under the Note shall be due on
demand, rather than on the date set forth in the Note. Except as otherwise
provided herein, all of the provisions of the Note shall remain in full force
and effect.
Very truly yours,
/s/ Edward Falcone
------------------
Edward Falcone
EXHIBIT 10.27
PROMISSORY NOTE
$75,996.60 AT CORAL SPRINGS, FLORIDA THIS 22ND DAY OF SEPTEMBER, 1994.
FOR VALUE RECEIVED, THE UNDERSIGNED (JOINTLY AND SEVERALLY, IF MORE
THAN ONE) PROMISE TO PAY TO THE ORDER OF PHIL CUCCI AT 3300 UNIVERSITY DRIVE,
CORAL SPRINGS, FL 33065 OR AT SUCH OTHER PLACE WITHIN THE UNITED STATES AS THE
HOLDER HEREOF MAY IN WRITING DESIGNATE, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE SUM OF SEVENTY FIVE THOUSAND NINE HUNDRED NINETY SIX AND 60/100
($75,996.60), TOGETHER WITH INTEREST THEREON FROM THE DATE HEREOF AT THE RATE OF
ELEVEN (11%) PERCENT PER ANNUM, PAYABLE AS FOLLOWS:
INTEREST ONLY PAYABLE TO DEAN WITTER REYNOLDS, INC., C/O ROBERT COHEN, 2 JERICHO
PLAZA, JERICHO, NY 11753-9853, MONTHLY, ON THE FIRST DAY OF THE MONTH. PRINCIPAL
SHALL BE MADE AS A BALLOON PAYMENT 12 MONTHS THEREAFTER, SEPTEMBER 21, 1995.
IF ANY PAYMENT DUE HEREUNDER IS NOT MADE WITHIN THIRTY (30) DAYS FROM
THE DATE IT IS DUE, THIS NOTE SHALL BE IN DEFAULT AND THE UNPAID BALANCE
HEREUNDER SHALL BEAR INTEREST AT THE HIGHEST RATE PERMITTED BY LAW FROM THE DATE
OF SUCH PAYMENT. IF THIS NOTE SHALL BE IN DEFAULT THEN, AT THE OPTION OF THE
HOLDER HEREOF THE ENTIRE PRINCIPAL SUM REMAINING UNPAID, TOGETHER WITH ACCRUED
INTEREST, SHALL BECOME IMMEDIATELY DUE AND PAYABLE WITHOUT NOTICE, AND ANY
FAILURE TO EXERCISE THIS OPTION SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
EXERCISE IT AT ANY OTHER TIME. UPON ANY DEFAULT HEREUNDER ALL PERSONS LIABLE
HEREON JOINTLY AND SEVERALLY PROMISE TO PAY ALL COSTS OF COLLECTION WHETHER WITH
OR WITHOUT SUIT INCLUDING REASONABLE ATTORNEY'S FEES, WHICH FEES SHALL INCLUDE
ANY ARISING BY REASON OF APPELLATE PROCEEDINGS. PRESENTMENT FOR PAYMENT, DEMAND,
NOTICE OF DISHONOR, PROTEST AND NOTICE OF PROTEST ARE HEREBY WAIVED BY ALL
MAKERS AND ENDORSERS HEREOF. PAYMENTS HEREUNDER SHALL BE APPLIED FIRST TO
ACCRUED INTEREST, WITH THE BALANCE, IF ANY, APPLIED TO PRINCIPAL. THIS NOTE MAY
BE PREPAID AT ANY TIME WITHOUT PENALTY.
THIS NOTE IS PAYABLE IN AND SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF FLORIDA.
PAYMENT GUARANTEED:
DATE:____________________ __________________________
TRANSEASTERN PROPERTIES
3300 UNIVERSITY DRIVE
CORAL SPRINGS, FL 33065
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD
THE FOREGOING INSTRUMENT WAS SWORN AND SUBSCRIBED TO ME BY
____________________ WHO IS KNOWN TO ME ON THIS _____ DAY OF SEPT., 1994.
- -------------------------------------
NOTARY PUBLIC
<PAGE>
Phillip Cucci
3300 University Drive
Suite 001
Coral Springs, Florida 33065
September 18, 1996
Transeastern Properties, Inc.
3300 University Drive
Suite 001
Coral Springs, Florida 33065
Gentlemen:
Reference is made to that certain Promissory Note (the "Note"), dated
September 22, 1994, made by Transeastern Properties, Inc. (f.k.a. "Transeastern
Properties of South Florida, Inc.") payable to the order of Phillip Cucci
("Cucci") in the amount of $75,996.60, a copy of which is attached hereto.
Notwithstanding anything to the contrary set forth in the Note, Cucci
irrevocably agrees that the principal payments under the Note shall be due on
demand, rather than on the date set forth in the Note. Except as otherwise
provided herein, all of the provisions of the Note shall remain in full force
and effect.
Very truly yours,
/s/ Phillip Cucci
------------------------
Phillip Cucci
EXHIBIT 21.1
SUBSIDIARIES
Transeastern Properties at the Cove, Inc., a Florida corporation
Transeastern Wellington Properties, Inc., a Florida corporation
Transeastern Aberdeen Properties, Inc., a Florida corporation
Transeastern Pembroke Villages, Inc., a Florida corporation
Transeastern Pembroke Properties, Inc., a Florida corporation
Transeastern Plantation Apartments, Inc., a Florida corporation
Transeastern Hollywood Apartments, Inc., a Florida corporation
Transeastern Finance, Inc., a Florida corporation
EXHIBIT 23.1
CONSENT OF COUNSEL
We hereby consent to the use of our opinion included herein and to the
incorporation by reference in this Registration Statement on Form S-1 of all
references to this firm under the heading "Legal Matters" in the Prospectus
constituting a part of the Registration Statement on Form S-1 of Transeastern
Properties, Inc. (File No. 333-10375).
STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A.
Miami, Florida
October 24, 1996
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
The Board of Directors
Transeastern Properties, Inc.:
We consent to the use of our report dated July 19, 1996, on the consolidated
financial statements of Transeastern Properties, Inc. as of June 30, 1996 and
1995, and for each of the years in the three-year period ended June 30, 1996
included herein. Our report refers to a change in the method of accounting for a
real estate joint venture. We consent to the reference to our firm under the
headings "Selected Financial Data" and "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
West Palm Beach, Florida
October 24, 1996
