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EXHIBIT 10.2
GUARANTY AGREEMENT
This Guaranty Agreement (this "Guaranty") is made jointly and
severally, as of the 27th day of June, 2000, by NEWMARK HOMES CORP., a Nevada
corporation and NEWMARK HOME CORPORATION, a Nevada corporation (each, and
collectively, referred to herein as "Guarantor"), in favor of BANK OF AMERICA,
N.A., a national banking association ("Administrative Agent"), as the
Administrative Agent, and the Lenders, under the Credit Agreement (as
hereinafter defined), and their successors and assigns.
Preliminary Statements.
(1) Administrative Agent, Lenders and Newmark Homes, L.P., a Texas limited
partnership ("Borrower"), have entered into that certain Credit Agreement of
even date herewith (herein called, as it may hereafter be modified,
supplemented, extended, or renewed and in effect from time to time, the "Credit
Agreement"), which Credit Agreement sets forth the terms and conditions of a
credit facility to Borrower for the acquisition and development of Development
Parcels, the purchase of Lots and construction of Units, and related costs and
expenses.
(2)
(3) A condition precedent to Lenders' obligation to make the Loans to Borrower
is Guarantor's execution and delivery to Lender of this Guaranty.
(4)
(5) The Loans are, or will be, evidenced by those certain promissory notes of
even date with the Credit Agreement, executed by Borrower and payable to the
order of each Lender in the aggregate principal face amount of One Hundred Fifty
Million and No/100 Dollars ($150,000,000.00) (such notes, as they may hereafter
be renewed, extended, supplemented, increased or modified and in effect from
time to time, and all other notes given in substitution therefor, or in
modification, renewal, or extension thereof, in whole or in part, are herein
collectively called the "Note").
(6)
(7) Any capitalized term used and not defined in this Guaranty shall have the
meaning given to such term in the Credit Agreement. This Guaranty is one of the
Loan Documents described in the Credit Agreement.
(8)
(9) For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and as a material inducement to Lenders to extend credit to
Borrower, Guarantor hereby guarantees to each Lender the prompt and full payment
and performance of the indebtedness and obligations described below in this
Guaranty (collectively called the "Guaranteed Obligations"), this Guaranty being
upon the following terms and conditions:
(10)
2. Guaranty of Payment. Guarantor hereby unconditionally and irrevocably
guarantees to each Lender the punctual payment when due, whether by lapse of
time, by acceleration of maturity, or otherwise, and at all times thereafter, of
all principal, interest (including interest accruing after the commencement of
any bankruptcy or insolvency proceeding by or against Borrower, whether or not
allowed in such proceeding), fees, costs, expenses, indemnification
indebtedness, and other sums of money now or hereafter due and owing pursuant to
(i) the terms of the Note, the Credit Agreement, any Mortgage, the Environmental
Indemnity and the other Loan Documents, including any indemnifications contained
in such Loan Documents, now or hereafter existing, and (ii) all renewals,
extensions, refinancings, modifications, supplements or amendments of such
indebtedness, or any of the Loan Documents, or any part thereof (the
indebtedness described in clauses (i) and (ii) above in this Section 1 is herein
collectively called the "Indebtedness"). This Guaranty covers the Indebtedness,
whether presently outstanding or arising subsequent to the date hereof,
including all amounts advanced by the Lenders in stages or installments. The
guaranty of Guarantor as set forth in this Section 1 is a continuing guaranty of
payment and not a guaranty of collection.
3.
4. Guaranty of Performance. Guarantor additionally hereby unconditionally and
irrevocably guarantees to each Lender the timely performance of all other
obligations of Borrower under all of the Loan Documents, including, without
limiting the generality of the foregoing, that:
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5.
(a) the Development Parcels will be developed in accordance with the
Credit Agreement and with the Plans therefor; and
(a) the Units will be constructed in accordance with the Plans therefor
and will be completed and ready for occupancy, including delivery of
any certificates required by law or the Credit Agreement, as and to the
extent required in the Credit Agreement.
If any of such obligations of Borrower are not complied with, in any respect
whatsoever, and without the necessity of any notice from Administrative Agent or
any Lender to Guarantor (except as expressly provided in this Guaranty),
Guarantor agrees to (i) assume all responsibility for the development of the
Development Parcels and the construction of the Units and, at Guarantor's own
cost and expense, cause the Development Parcels and the Units to be fully
completed in accordance with the Loan Documents and the Plans therefor; (ii) pay
all bills in connection with the foregoing; and (iii) subject to any limitations
contained in the Loan Documents, indemnify and hold the Lenders harmless from
any and all loss, cost, liability or expense that the Lenders may suffer by any
reason of any such non-compliance. So long as all of such obligations are being
performed by Borrower or Guarantor and no Default exists, the Lenders will make
the Loan proceeds available under and subject to the terms of the Credit
Agreement. If after the occurrence of an Event of Default which entitles Lenders
to accelerate the Indebtedness, and without limiting the Lenders' rights and
remedies, the Lenders, in their sole discretion, are dissatisfied with the
progress of construction by Borrower and/or Guarantor, the Lenders may, at their
option, without notice to Guarantor or anyone else, perform Borrower's
obligations under the Loan Documents and Guarantor's obligations hereunder,
either before or after commencement of foreclosure proceedings or before or
after exercise of any other right or remedy of any Lender against Borrower or
Guarantor, with such changes or modifications in any Plans that the Lenders deem
necessary and expend such sums as the Lenders, in their discretion, deem
necessary or advisable to complete the Development Parcels and the Units, and
Guarantor hereby waives any right to contest any such necessary expenditures.
The amount of any and all expenditures made by the Lenders for the foregoing
purposes shall bear interest from the date made until repaid to the Lenders, at
a rate per annum equal to the interest rate provided for in the Note and,
together with such interest, shall be due and payable by Guarantor to the
Lenders upon demand. Lenders do not have and shall never have any obligation to
complete the Development Parcels or the Units or take any such action. The
obligations and liability of Guarantor under this Section 2 shall not be limited
or restricted by the existence of (or any terms of) the guaranty of payment
under Section 1.
1. Primary Liability of Guarantor; Notice of Default.
2. (a) This Guaranty is an absolute, irrevocable and unconditional
guaranty of payment and performance. Guarantor shall be liable for the
payment and performance of the Guaranteed Obligations, as set forth in
this Guaranty, as a primary obligor. This Guaranty shall be effective
as a waiver of, and Guarantor hereby expressly waives, any and all
rights to which Guarantor may otherwise have been entitled under any
suretyship laws in effect from time to time.
(a) In the event of default by Borrower in payment or performance of
the Guaranteed Obligations, or any part thereof, when such indebtedness
or performance becomes due, either by its terms or as the result of the
exercise of any power to accelerate, Guarantor shall, on demand and
without presentment, protest, notice of protest, further notice of
nonpayment or of dishonor or of default or nonperformance, or notice of
acceleration or of intent to accelerate, or any other notice whatsoever
(except as herein expressly provided), without any notice having been
given to Guarantor previous to such demand of the acceptance by the
Lenders of this Guaranty, and without any notice having been given to
Guarantor previous to such demand of the creating or incurring of such
indebtedness or of such obligation to perform, all such notices being
hereby waived by Guarantor, pay the amount due thereon to the Lenders
or perform or observe the agreement, covenant, term or condition, as
the case may be, and it shall not be necessary for the Lenders, in
order to enforce such payment or performance by Guarantor, first to
institute suit or pursue or exhaust any rights or remedies against
Borrower or others liable on such indebtedness or for such performance,
or to enforce any rights against any security that shall ever have been
given to secure such indebtedness or performance, or to join Borrower
or any others liable for the payment or performance of the Guaranteed
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Obligations or any part thereof in any action to enforce this Guaranty,
or to resort to any other means of obtaining payment or performance of
the Guaranteed Obligations.
(a) Suit may be brought or demand may be made against all parties who
have signed this Guaranty or any other guaranty covering all or any
part of the Guaranteed Obligations, or against any one or more of them,
separately or together, without impairing the rights of the Lenders
against any party hereto. Any time that the Lenders are entitled to
exercise their rights or remedies hereunder, they may in their
discretion elect to demand payment and/or performance. If the Lenders
elect to demand performance, they shall at all times thereafter have
the right to demand payment until all of the Guaranteed Obligations
have been paid and performed in full. If the Lenders elect to demand
payment, they shall at all times thereafter have the right to demand
performance until all of the Guaranteed Obligations have been paid and
performed in full.
(a) Notwithstanding anything contained in this Guaranty to the
contrary, Administrative Agent and Lenders agree that, as a condition
to Guarantor's obligations hereunder, Guarantor shall receive the same
notice and opportunity to cure as is provided to Borrower under the
Credit Agreement, which notice and opportunity to cure can be given and
run concurrent with Borrower's notice and opportunity to cure.
1. Certain Agreements and Waivers by Guarantor.
2.
(a) Guarantor hereby agrees that neither the Lenders' rights or
remedies nor Guarantor's obligations under the terms of this Guaranty
shall be released, diminished, impaired, reduced or affected by any one
or more of the following events, actions, facts, or circumstances, and
the liability of Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(i) any limitation of liability or recourse in any other Loan
Document or arising under any law;
(i) the taking or accepting of any other security or guaranty for,
or right of recourse with respect to, any or all of the Guaranteed
Obligations;
(i) any release, surrender, abandonment, exchange, alteration,
sale or other disposition, subordination, deterioration, waste, failure
to protect or preserve, impairment, or loss of, or any failure to
create or perfect any lien or security interest with respect to, or any
other dealings with, any collateral or security at any time existing or
purported, believed or expected to exist in connection with any or all
of the Guaranteed Obligations, including any impairment of Guarantor's
recourse against any Person or collateral;
(i) whether express or by operation of law, any partial release of
the liability of Guarantor hereunder, or if one or more other
guaranties are now or hereafter obtained by any Lender covering all or
any part of the Guaranteed Obligations, any complete or partial release
of any one or more of such guarantors under any such other guaranty, or
any complete or partial release of Borrower or any other party liable,
directly or indirectly, for the payment or performance of any or all of
the Guaranteed Obligations;
(i) the insolvency, bankruptcy, disability, dissolution,
liquidation, termination, receivership, reorganization, merger,
consolidation, change of form, structure or ownership, sale of all
assets, or lack of corporate, partnership or other power of Borrower or
any other party at any time liable for the payment or performance of
any or all of the Guaranteed Obligations;
(i) either with or without notice to or consent of Guarantor: any
renewal, extension, modification or rearrangement of the terms of any
or all of the Guaranteed Obligations and/or any of the Loan Documents,
including, without limitation, material alterations of the terms of
payment (including changes in maturity date(s) and interest rate(s)) or
performance (including
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changes in any Plans and other terms or aspects of construction of the
Development Parcels and the Units) or any other terms thereof, or any
waiver, termination, or release of, or consent to departure from, any
of the Loan Documents or any other guaranty of any or all of the
Guaranteed Obligations, or any adjustment, indulgence, forbearance, or
compromise that may be granted from time to time by Administrative
Agent or any Lender to Borrower, Guarantor, and/or any other Person at
any time liable for the payment or performance of any or all of the
Guaranteed Obligations;
(i) any lack of diligence, delay, omission, failure, or refusal of
Administrative Agent or any Lender to take or prosecute (or in taking
or prosecuting) any action for the collection or enforcement of any of
the Guaranteed Obligations, or to foreclose or take or prosecute any
action to foreclose (or in foreclosing or taking or prosecuting any
action to foreclose) upon any security therefor, or to exercise (or in
exercising) any other right or power with respect to any security
therefor, or to take or prosecute (or in taking or prosecuting) any
action in connection with any Loan Document, or any failure to sell or
otherwise dispose of in a commercially reasonable manner any collateral
securing any or all of the Guaranteed Obligations;
(i) any failure of Administrative Agent or any Lender to notify
Guarantor of any creation, renewal, extension, rearrangement,
modification, supplement, subordination, or assignment of the
Guaranteed Obligations or any part thereof, or of any Loan Document, or
of any release of or change in any security, or of any other action
taken or refrained from being taken by Administrative Agent or any
Lender against Borrower or any security or other recourse, or of any
new agreement between Administrative Agent or any Lender and Borrower,
it being understood that neither Administrative Agent nor any Lender
shall be required to give Guarantor any notice of any kind under any
circumstances with respect to or in connection with the Guaranteed
Obligations (except for any notice expressly required by this
Guaranty), any and all rights to notice Guarantor may have otherwise
had being hereby waived by Guarantor;
(i) if for any reason Administrative Agent or any Lender is
required to refund any payment by Borrower to any other party liable
for the payment or performance of any or all of the Guaranteed
Obligations or pay the amount thereof to someone else;
(i) the existence of any claim, set-off, or other right that
Guarantor may at any time have against Borrower, Administrative Agent,
any Lender, or any other Person, whether or not arising in connection
with this Guaranty, the Note, the Credit Agreement, or any other Loan
Document;
(i) the unenforceability of all or any part of the Guaranteed
Obligations against Borrower, whether because the Guaranteed
Obligations exceed the amount permitted by law or violate any usury
law, or because the act of creating the Guaranteed Obligations, or any
part thereof, is ultra vires, or because the officers or Persons
creating same acted in excess of their authority, or because of a lack
of validity or enforceability of or defect or deficiency in any of the
Loan Documents, or because Borrower has any valid defense, claim or
offset with respect thereto, or because Borrower's obligation ceases to
exist by operation of law, or because of any other reason or
circumstance, it being agreed that Guarantor shall remain liable hereon
regardless of whether Borrower or any other Person be found not liable
on the Guaranteed Obligations, or any part thereof, for any reason (and
regardless of any joinder of Borrower or any other party in any action
to obtain payment or performance of any or all of the Guaranteed
Obligations); or
(i) any order, ruling or plan of reorganization emanating from
proceedings under Title 11 of the United States Code with respect to
Borrower or any other Person, including any extension, reduction,
composition, or other alteration of the Guaranteed Obligations, whether
or not consented to by Administrative Agent or any Lender.
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(a) In the event any payment by Borrower or any other Person to
Administrative Agent or any Lender is held to constitute a preference,
fraudulent transfer or other voidable payment under any bankruptcy,
insolvency or similar law, or if for any other reason Administrative
Agent or any Lender is required to refund such payment or pay the
amount thereof to any other party, such payment by Borrower or any
other party to Administrative Agent or such Lender shall not constitute
a release of Guarantor from any liability hereunder, and this Guaranty
shall continue to be effective or shall be reinstated (notwithstanding
any prior release, surrender or discharge by Administrative Agent or
such Lender of this Guaranty or of Guarantor), as the case may be, with
respect to, and this Guaranty shall apply to, any and all amounts so
refunded by Administrative Agent or such Lender or paid by
Administrative Agent or such Lender to another Person (which amounts
shall constitute part of the Guaranteed Obligations), and any interest
paid by Administrative Agent or such Lender and any attorneys' fees,
costs and expenses paid or incurred by Administrative Agent or such
Lender in connection with any such event. It is the intent of
Guarantor, Administrative Agent and the Lenders that the obligations
and liabilities of Guarantor hereunder are absolute and unconditional
under any and all circumstances and that until the Guaranteed
Obligations are fully and finally paid and performed, and not subject
to refund or disgorgement, the obligations and liabilities of Guarantor
hereunder shall not be discharged or released, in whole or in part, by
any act or occurrence that might, but for the provisions of this
Guaranty, be deemed a legal or equitable discharge or release of a
guarantor. Administrative Agent shall be entitled to continue to hold
this Guaranty in its possession for the benefit of the Lenders for a
period of one year from the date the Guaranteed Obligations are paid
and performed in full and for so long thereafter as may be necessary to
enforce any obligation of Guarantor hereunder and/or to exercise any
right or remedy of any Lender hereunder so long as Administrative Agent
or any Lender has commenced an action under this Guaranty during such
one year period, and then only as to the amount in controversy in such
action.
(a) If acceleration of the time for payment of any amount payable by
Borrower under the Note, the Credit Agreement, or any other Loan
Document is stayed or delayed by any law or tribunal, all such amounts
shall nonetheless be payable by Guarantor on demand by Administrative
Agent or any Lender.
1. Subordination. If, for any reason whatsoever, Borrower is now or
hereafter becomes indebted to Guarantor:
2.
(a) such indebtedness and all interest thereon and all liens, security
interests and rights now or hereafter existing with respect to property
of Borrower securing same shall, at all times, be subordinate in all
respects to the Guaranteed Obligations and to all liens, security
interests and rights now or hereafter existing to secure the Guaranteed
Obligations;
(a) after the occurrence and during the continuation of a Default,
Guarantor shall not be entitled to enforce or receive payment, directly
or indirectly, of any such indebtedness of Borrower to Guarantor until
the Guaranteed Obligations have been fully and finally paid and
performed;
(a) Guarantor hereby assigns and grants to the Lenders a security
interest in all such indebtedness and security therefor, if any, of
Borrower to Guarantor now existing or hereafter arising, including any
dividends and payments pursuant to debtor relief or insolvency
proceedings referred to below. In the event of receivership,
bankruptcy, reorganization, arrangement or other debtor relief or
insolvency proceedings involving Borrower as debtor, the Lenders shall
have the right to prove their claim in any such proceeding so as to
establish their rights hereunder and shall have the right to receive
directly from the receiver, trustee or other custodian (whether or not
a Default shall have occurred or be continuing under any of the Loan
Documents), dividends and payments that are payable upon any obligation
of Borrower to Guarantor now existing or hereafter arising, and to have
all benefits of any security therefor, until the Guaranteed Obligations
have been fully and finally paid and performed. If, notwithstanding the
foregoing provisions, Guarantor should receive any payment, claim or
distribution that is prohibited as provided above in this Section 5,
Guarantor shall pay the same to Administrative Agent for the benefit of
the Lenders immediately, Guarantor hereby agreeing that it shall
receive the payment, claim or distribution in trust for
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the Lenders and shall have absolutely no dominion over the same except
to pay it immediately to Administrative Agent for the benefit of the
Lenders; and
(a) Guarantor shall promptly upon request of Administrative Agent or
any Lender from time to time execute such documents and perform such
acts as Administrative Agent or the Lenders may require to evidence and
perfect its interest and to permit or facilitate exercise of its rights
under this Section 5, including, but not limited to, execution and
delivery of financing statements, proofs of claim, further assignments
and security agreements, and delivery to Administrative Agent or the
Lenders of any promissory notes or other instruments evidencing
indebtedness of Borrower to Guarantor. All promissory notes, accounts
receivable ledgers or other evidences, now or hereafter held by
Guarantor, of obligations of Borrower to Guarantor shall contain a
specific written notice thereon that the indebtedness evidenced thereby
is subordinated under and is subject to the terms of this Guaranty.
1. Other Liability of Guarantor or Borrower. If Guarantor is or becomes liable,
by endorsement or otherwise, for any indebtedness owing by Borrower to any
Lender other than under this Guaranty, such liability shall not be in any manner
impaired or affected hereby, and the rights of the Lenders hereunder shall be
cumulative of any and all other rights that the Lenders may have against
Guarantor. If Borrower is or becomes indebted to the Lenders for any
indebtedness other than or in excess of the Indebtedness for which Guarantor is
liable under this Guaranty, any payment received or recovery realized upon any
indebtedness of Borrower to the Lenders may, except to the extent paid by
Guarantor on the Indebtedness for which Guarantor is liable under this Guaranty
or specifically required by law or agreement of the Lenders to be applied to the
Indebtedness for which Guarantor is liable under this Guaranty, in the Lenders'
sole discretion, be applied upon indebtedness of Borrower to the Lenders other
than the Indebtedness for which Guarantor is liable under this Guaranty.
2.
3. Lender Assigns. This Guaranty is for the benefit of the Lenders and the
Lenders' successors and assigns, and in the event of an assignment of the
Guaranteed Obligations, or any part thereof, the rights and benefits hereunder,
to the extent applicable to the Guaranteed Obligations so assigned, may be
transferred with such Guaranteed Obligations. Notice of any transfer or
assignment of the Guaranteed Obligations, or any part thereof, is to be given to
Guarantor pursuant to Section 11.04(b) of the Credit Agreement; provided,
however, Guarantor agrees that failure to give such notice will not affect (i)
the obligations of Guarantor hereunder or (ii) the validity of any such
assignment.
4.
5. Binding Effect. This Guaranty is binding not only on Guarantor, but also on
Guarantor's legal representatives, successors and assigns.
6.
7. Governing Law; Forum. This Guaranty, and its validity, enforcement, and
interpretation, shall for all purposes be governed by and construed in
accordance with the laws of the State of Texas and applicable United States
federal law, and is intended to be performed in accordance with, and only to the
extent permitted by, such laws. All obligations of Guarantor hereunder are
payable and performable at the place or places where the Guaranteed Obligations
are payable and performable. Guarantor hereby irrevocably submits generally and
unconditionally for Guarantor and in respect of Guarantor's property to the
jurisdiction of any state court, or any United States federal court, sitting in
the state specified in the first sentence of this Section and to the
jurisdiction of any state or United States federal court sitting in the state in
which any land covered by a Mortgage is located, over any suit, action or
proceeding arising out of or relating to this Guaranty or the Guaranteed
Obligations. Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, any objection that Guarantor may now or hereafter have to the
laying of venue in any such court and any claim that any such court is an
inconvenient forum. Guarantor hereby agrees and consents that, in addition to
any methods of service of process provided for under applicable law, all service
of process in any such suit, action or proceeding in any state court, or any
United States federal court, sitting in the state specified in the first
sentence of this Section may be made by certified or registered mail, return
receipt requested, directed to Guarantor at its address stated in Section 16, or
at a subsequent address of which Administrative Agent received actual notice
from Guarantor in accordance with said Section, and service so made shall be
complete five (5) days after the same shall have been so mailed. Nothing herein
shall affect the right of any Lender to serve process in any manner permitted by
law or limit the right of any Lender to bring proceedings against Guarantor in
any other court or jurisdiction.
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8.
9. Invalidity of Certain Provisions. If any provision of this Guaranty or the
application thereof to any Person or circumstance shall, for any reason and to
any extent, be declared to be invalid or unenforceable, neither the remaining
provisions of this Guaranty nor the application of such provision to any other
Person or circumstance shall be affected thereby, and the remaining provisions
of this Guaranty, or the applicability of such provision to other Persons or
circumstances, as applicable, shall remain in effect and be enforceable to the
maximum extent permitted by applicable law.
10.
11. Attorneys' Fees and Costs of Collection. Guarantor shall pay on demand all
reasonable attorneys' fees and all other costs and expenses incurred by the
Lenders in the enforcement of or preservation of the Lenders' rights under this
Guaranty. Guarantor agrees to pay interest on any expenses or other sums due to
the Lenders under this Section 11 that are not paid when due, at a rate per
annum equal to the interest rate provided for in the Note, but in no event shall
such interest exceed the maximum amount of interest permitted under applicable
law.
12.
13. Payments. All sums payable under this Guaranty shall be paid in lawful money
of the United States of America that at the time of payment is legal tender for
the payment of public and private debts.
14.
15. Controlling Agreement. It is not the intention of the Lenders or Guarantor
to obligate Guarantor to pay interest in excess of that lawfully permitted to be
paid by Guarantor under applicable law. Should it be determined that any portion
of the Guaranteed Obligations or any other amount payable by Guarantor under
this Guaranty constitutes interest in excess of the maximum amount of interest
that Guarantor, in Guarantor's capacity as guarantor, may lawfully be required
to pay under applicable law, the obligation of Guarantor to pay such interest
shall automatically be limited to the payment thereof in the maximum amount so
permitted under applicable law. The provisions of this Section 13 shall override
and control all other provisions of this Guaranty and of any other agreement
between Guarantor and the Lenders.
16.
17. Representations, Warranties, and Covenants of Guarantor. Guarantor hereby
represents, warrants, and covenants that
18.
(a) Guarantor will derive substantial benefit, directly or
indirectly, from the making of the Loans to Borrower and from the
making of this Guaranty by Guarantor;
(b) all financial statements and information heretofore
furnished to the Administrative Agent and/or the Lenders by Newmark
Homes Corp. do, and all financial statements and information hereafter
furnished to Administrative Agent and/or the Lenders by Newmark Homes
Corp. will, fully and accurately present the condition (financial or
otherwise) of Newmark Homes Corp. (on a consolidated basis) as of their
dates and the results of Newmark Homes Corp. operations for the periods
therein specified, and, since the date of the most recent financial
statements of Newmark Homes Corp. heretofore furnished to
Administrative Agent and/or the Lenders, no material adverse change has
occurred in the financial condition of Newmark Homes Corp. (on a
consolidated basis), nor, except as heretofore disclosed in writing to
Administrative Agent, has Newmark Homes Corp. incurred any material
liability, direct or indirect, fixed or contingent;
(c) after giving effect to this Guaranty, Guarantor is
solvent, is not engaged or about to engage in business or a transaction
for which the property of Guarantor is an unreasonably small capital,
and does not intend to incur or believe that it will incur debts that
will be beyond its ability to pay as such debts mature;
(d) neither Administrative Agent nor any Lender has any duty
at any time to investigate or inform Guarantor of the financial or
business condition or affairs of Borrower or any change therein, and
Guarantor will keep fully appraised of Borrower's financial and
business condition;
(e) Guarantor acknowledges and agrees that Guarantor may be
required to pay and perform the Guaranteed Obligations in full without
assistance or support from the Borrower or any other Person;
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(f) Guarantor has read and fully understands the provisions
contained in the Note, the Credit Agreement, the Mortgages, the
Environmental Indemnity and the other Loan Documents;
(g) Guarantor is a corporation or partnership duly organized
or formed, validly existing and in good standing under the Laws of the
state of its incorporation or organization, has the power and authority
and the legal right to own and operate its properties, to lease the
properties it operates and to conduct its business, is duly qualified
and in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its
business requires such qualification, and is in compliance with all
Laws except to the extent that noncompliance does not have a Material
Adverse Effect;
(h) Guarantor has the power and authority and the legal right
to make, deliver and enter into this Guaranty. No consent or
authorization of, filing with, or other act by or in respect of any
Governmental Authority, is required in connection with the execution,
delivery, performance, validity or enforceability of this Guaranty.
This Guaranty has been duly executed and delivered by Guarantor, and
constitutes a legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its respective terms;
(i) the execution, delivery, and performance by Guarantor of
this Guaranty and compliance with the provisions hereof have been duly
authorized by all requisite action on the part of Guarantor and do not
and will not (A) violate or conflict with, or result in a breach of, or
require any consent under (1) any Organization Documents of Guarantor,
(2) any applicable Laws, rules, or regulations or any order, writ,
injunction, or decree of any Governmental Authority or arbitrator, or
(3) any Contractual Obligation of Guarantor or by which Guarantor or
any of Guarantor's property is bound or subject, (B) constitute a
default under any such agreement or instrument, or (C) result in, or
require, the creation or imposition of any Lien on any of the
properties of Guarantor;
(j) no litigation, investigation or proceeding of or before an
arbitrator or Governmental Authority is pending or, to the knowledge of
Guarantor after due and diligent investigation, threatened in writing
by or against Guarantor or against any of Guarantor's properties or
revenues which, if determined adversely, could have a Material Adverse
Effect;
(k) Guarantor is not in default under or with respect to any
Contractual Obligation which could have a Material Adverse Effect, and
no Default or Event of Default has occurred and is continuing or will
result from the consummation of this Guaranty or under any agreement or
restriction by which Guarantor is bound or affected;
(l) Guarantor has good and indefeasible title to all its real
property and good and marketable title to all its other personal
property, except to the extent the failure to have such title would not
create a Material Adverse Effect;
(m) Guarantor has filed all tax returns which are required to
be filed, and has paid, or made provision for the payment of, all taxes
with respect to the periods, property or transactions covered by said
returns, or pursuant to any assessment received by Guarantor, except
(A) such taxes, if any, as are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been
established and maintained, (B) immaterial taxes, and (C) to the extent
appropriate extensions have been filed for payment thereof; provided,
however, that in each case no material item or portion of property of
Guarantor is, to Guarantor's knowledge, in jeopardy of being seized,
levied upon or forfeited;
(n) Guarantor is not engaged and will not engage, principally
or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" "margin stock"
within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect;
GUARANTY AGREEMENT (Newmark) Page 8
<PAGE> 9
(o) Guarantor (A) is not a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, and (B) is not and is not required
to be registered as an "investment company" under the Investment
Company Act of 1940;
(p) Guarantor owns, or possesses the right to use, all
trademarks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intangible assets that are used in the
conduct of Guarantor's businesses as now operated, and none of such
items, to the best knowledge of Guarantor, conflicts with the valid
trademark, trade name, copyright, patent, patent right or intangible
asset of any other Person to the extent that such conflict has a
Material Adverse Effect;
(q) Guarantor is in compliance in all material respects with
all Laws that are applicable to Guarantor; and
(r) no statement, information, report, representation, or
warranty made by Guarantor in this Guaranty or any Loan Document or
furnished to Administrative Agent or any Lender in connection with any
Loan Document contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or
therein not misleading.
Guarantor's representations, warranties and covenants are a material
inducement to Lender to enter into the other Loan Documents and shall survive
the execution hereof and any bankruptcy, foreclosure, transfer of security or
other event affecting Borrower, Guarantor, any other party, or any security for
all or any part of the Guaranteed Obligations.
1. Financial Covenants of Newmark Homes Corp.. Newmark Homes Corp. covenants and
agrees that so long as any of the Indebtedness is outstanding:
2.
(a) Tangible Net Worth. Newmark Homes Corp. shall not permit its Consolidated
Tangible Net Worth as of the end of any fiscal quarter (commencing on June 30,
2000) to be less than the sum of (i) $60,000,000, plus (ii) based on, and as
of the date of delivery of, the annual audited financial statements delivered
pursuant to Section 19(a) of this Guaranty, an amount equal to 70% of Newmark
Homes Corp.'s Consolidated Net Income (after taxes) (with no deduction for a
net loss) for the first fiscal year ending after December 31, 1999, an amount
equal to 50% of Newmark Homes Corp.'s Consolidated Net Income (after taxes)
(with no deduction for a net loss) for the second fiscal year ending after
December 31, 1999, and an amount equal to 30% of Newmark Homes Corp.'s
Consolidated Net Income (after taxes) (with no deduction for a net loss) for
the third fiscal year ending after December 31, 1999 (as reflected in their
year-end audited financial statements), plus (iii) an amount equal to 90% of
the net proceeds (i.e. gross proceeds less usual and customary closing costs
and expenses) of any equity issuance of Newmark Homes Corp. (whether public or
private). "Consolidated Tangible Net Worth" means, as of any date of
determination, collectively for Newmark Homes Corp. and its Subsidiaries
determined on a consolidated basis in accordance with GAAP, an amount equal to
(i) the assets of such Persons on that date, minus (ii) the Intangible Assets
of such Persons on that date minus (iii) the liabilities of such Persons on
that date. "Consolidated Net Income" means, for any period, for Newmark Homes
Corp. and its Subsidiaries determined on a consolidated basis in accordance
with GAAP, the net income (after tax) of such Persons from continuing
operations after extraordinary items (excluding gains or losses from
Dispositions of assets) for that period.
(a) Leverage Ratio. Newmark Homes Corp. shall not permit its Leverage Ratio as
of the last day of any fiscal quarter to be more than 3.50 to 1.00. "Leverage
Ratio" means, as of any date of determination, for Newmark Homes Corp. and its
Subsidiaries determined on a consolidated basis in accordance with GAAP, the
ratio of (i) Indebtedness (as defined in the Credit Agreement) of such Persons
to (ii) Consolidated Tangible Net Worth (as defined above) of such Persons.
GUARANTY AGREEMENT (Newmark) Page 9
<PAGE> 10
(c) Coverage Ratio. Newmark Homes Corp. shall not permit the
Interest Coverage Ratio as of the end of any fiscal quarter to be less
than 2.50 to 1.00. "Interest Coverage Ratio" means, as of any date of
determination, for Newmark Homes Corp. and its Subsidiaries determined
on a consolidated basis in accordance with GAAP, the ratio of (i)
Consolidated EBITDA for such Persons for the period of the four prior
fiscal quarters ending on such date plus lease and rental expense of
such Persons for such period to (ii) Consolidated Interest Charges for
such Persons for such period plus lease and rental expense for such
Persons for such Period. "Consolidated EBITDA" means, for any period,
for Newmark Homes Corp. and its Subsidiaries on a consolidated basis,
an amount equal to the sum of (a) Consolidated Net Income, (b)
Consolidated Interest Charges, (c) the amount of taxes, based on or
measured by income, used or included in the determination of such
Consolidated Net Income, and (d) the amount of depreciation and
amortization expense deducted in determining such Consolidated Net
Income. "Consolidated Interest Charges" means, for any period, for
Newmark Homes Corp. and its Subsidiaries on a consolidated basis, the
sum of (a) all interest, premium payments, fees, charges and related
expenses payable by Newmark Homes Corp. and its Subsidiaries in
connection with borrowed money (including capitalized interest) or in
connection with the deferred purchase price of assets, in each case to
the extent treated as interest in accordance with GAAP, and (b) the
portion of rent payable by Newmark Homes Corp. and its Subsidiaries
with respect to such period under capital leases that is treated as
interest in accordance with GAAP.
1. Notices. Unless specifically provided otherwise, any notice for purposes of
this Guaranty shall be given in writing or by telex or by facsimile (fax)
transmission and shall be addressed or delivered to the respective addresses set
forth at the end of this Guaranty, or to such other address as may have been
previously designated by the intended recipient by notice given in accordance
with this Section. If sent by prepaid, registered or certified mail (return
receipt requested), the notice shall be deemed effective when the receipt is
signed or when the attempted initial delivery is refused or cannot be made
because of a change in address of which the sending party has not been notified;
if transmitted by telex, the notice shall be effective when transmitted
(answerback confirmed); and if transmitted by facsimile or personal delivery,
the notice shall be effective when received. No notice of change of address
shall be effective except upon actual receipt. This Section 16 shall not be
construed in any way to affect or impair any waiver of notice or demand provided
in this Guaranty or in any other Loan Document or to require giving notice or
demand to or upon any Person in any situation or for any reason.
2.
3. Cumulative Rights. The exercise by Administrative Agent or any Lender of any
right or remedy hereunder or under any other Loan Document, or at law or in
equity, shall not preclude the concurrent or subsequent exercise of any other
right or remedy. Administrative Agent and the Lenders shall have all rights,
remedies and recourses afforded to the Lenders by reason of this Guaranty or any
other Loan Document or by law or equity or otherwise, and the same (a) shall be
cumulative and concurrent, (b) may be pursued separately, successively or
concurrently against Guarantor or others obligated for the Guaranteed
Obligations, or any part thereof, or against any one or more of them, or against
any security or otherwise, at the sole discretion of the Lenders, (c) may be
exercised as often as occasion therefor shall arise, it being agreed by
Guarantor that the exercise of, discontinuance of the exercise of or failure to
exercise any of such rights, remedies, or recourses shall in no event be
construed as a waiver or release thereof or of any other right, remedy, or
recourse, and (d) are intended to be, and shall be, nonexclusive. No waiver of
any default on the part of Guarantor or of any breach of any of the provisions
of this Guaranty or of any other document shall be considered a waiver of any
other or subsequent default or breach, and no delay or omission in exercising or
enforcing the rights and powers granted herein or in any other document shall be
construed as a waiver of such rights and powers, and no exercise or enforcement
of any rights or powers hereunder or under any other document shall be held to
exhaust such rights and powers, and every such right and power may be exercised
from time to time. The granting of any consent, approval or waiver by
Administrative Agent or any Lender shall be limited to the specific instance and
purpose therefor and shall not constitute consent or approval in any other
instance or for any other purpose. No notice to or demand on Guarantor in any
case shall of itself entitle Guarantor to any other or further notice or demand
in similar or other circumstances. No provision of this Guaranty or any right,
remedy or recourse of the Lenders with respect hereto, or any default or breach,
can be waived, nor can this Guaranty or Guarantor be released or discharged in
any way or to any extent, except specifically in each case by a writing intended
for that purpose (and which refers specifically to this Guaranty) executed, and
delivered to Guarantor, by the Lenders.
4.
GUARANTY AGREEMENT (Newmark) Page 10
<PAGE> 11
5. Term of Guaranty. This Guaranty shall continue in effect until all the
Guaranteed Obligations are fully and finally paid, performed, and discharged,
except that, and notwithstanding any return of this Guaranty to Guarantor, this
Guaranty shall continue in effect (i) with respect to any of the Guaranteed
Obligations that survive the discharge of the Guaranteed Obligations, (ii) with
respect to all obligations and liabilities of Guarantor under Section 11, and
(iii) as provided in Section 4(b).
6.
7. Delivery of Financial Statements. As used in this Section, "Financial
Statements" means in accordance with the requirements of this Section, a balance
sheet, income statement, statements of cash flow and amount and sources of
contingent liabilities, and a reconciliation of changes in equity, and, unless
Lenders otherwise consent, consolidated and consolidating statements if the
reporting party is a holding company or a parent of a subsidiary entity.
Guarantor shall provide or cause to be provided to the Lenders the following:
8.
(a) As soon as available, but in any event within 90 days
after the end of each fiscal year of Newmark Homes Corp., consolidated
Financial Statements of such Guarantor and its Subsidiaries as of the
end of such fiscal year, all in reasonable detail, audited and
accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to
the Lenders, which report and opinion shall be prepared in accordance
with GAAP and shall not be subject to any qualifications or exceptions
as to the scope of the audit nor to any qualifications and exceptions
not reasonably acceptable to the Lenders;
(b) As soon as available, but in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal
year of Newmark Homes Corp., consolidated Financial Statements of such
Guarantor and its Subsidiaries as at the end of such fiscal quarter,
for such fiscal quarter and for the portion of such Guarantor's fiscal
year then ended, all in reasonable detail and certified by a
Responsible Officer of such Guarantor as fairly presenting the
financial condition, results of operations and cash flows of such
Guarantor and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes;
(c) Together with the Financial Statements to be delivered
pursuant to subsections (a) and (b) above, (i) a compliance certificate
in the form attached hereto as Exhibit A signed by a Responsible
Officer of the applicable Guarantor showing the calculations necessary
to determine compliance with Section 15 of this Guaranty and stating
that no Default or Event of Default exists under this Guaranty, or if
any Default or Event of Default exists under this Guaranty, stating the
nature and status thereof and (ii) the most recent 10-Q filed in
accordance with U.S. securities laws on behalf of any Guarantor
required to file such 10-Q; and
(d) From time to time promptly after Administrative Agent's
request, such additional information, reports and statements respecting
the business operations and financial condition of each reporting party
as Administrative Agent may reasonably request, subject to any
restriction on the Guarantor's ability to deliver any such information,
reports and statements under applicable Law.
All Financial Statements shall be in form and detail satisfactory to
Administrative Agent and shall contain or be attached to the signed and dated
written certification of the reporting party in form specified by Administrative
Agent to certify that the Financial Statements are furnished to the Lenders in
connection with the extension of credit by the Lenders and constitute a true and
correct statement of the reporting party's financial position. All
certifications and signatures on behalf of corporations, partnerships or other
entities shall be by a representative of the entity satisfactory to
Administrative Agent.
1. Disclosure of Information. The Lenders may sell or offer to sell the Loans or
interests in the Loans to one or more assignees or participants as more
particularly described in the Credit Agreement and may disclose to any such
assignee or participant or prospective assignee or prospective participant, the
Lenders' affiliates, any regulatory body having jurisdiction over any Lender,
and to any other parties as necessary or appropriate in the Lenders' reasonable
judgment any information Administrative Agent or any Lender now has or hereafter
obtains pertaining to the Guaranteed Obligations, this Guaranty, and Guarantor
including, without limitation, information regarding any
GUARANTY AGREEMENT (Newmark) Page 11
<PAGE> 12
security for the Guaranteed Obligations or for this Guaranty, any credit or
other information on Guarantor, Borrower, and any other party liable, directly
or indirectly, for any part of the Guaranteed Obligations.
2.
3. Right of Set-Off. Upon the occurrence and during the continuance of any
Default, however defined, in the payment or performance when due of any of the
Guaranteed Obligations, each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by applicable law, without notice
to any Person, except as required by applicable law to set off and apply any and
all deposits funds, or assets at any time held and other indebtedness at any
time owing by a Lender to or for the credit or the account of Guarantor against
any and all of the obligations of Guarantor now or hereafter existing under this
Guaranty, whether or not such Lender shall have made any demand under this
Guaranty or exercised any other right or remedy hereunder. Such Lender will
promptly notify Administrative Agent and Guarantor after any such set-off and
shall apply such amounts as provided in the Credit Agreement, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lenders under this Section 21 are in addition to
the other rights and remedies (including other rights of set-off) that the
Lenders may have.
4.
5. Subrogation. Notwithstanding anything to the contrary contained herein,
Guarantor shall not have any right of subrogation in or under any of the Loan
Documents or to participate in any way therein, or in any right, title or
interest in and to any security or right of recourse for the Indebtedness, until
the Indebtedness has been fully and finally paid.
6.
7. Further Assurances. Guarantor at Guarantor's expense will promptly execute
and deliver to the Lenders upon any Lender's request all such other and further
documents, agreements, and instruments in compliance with or accomplishment of
the agreements of Guarantor under this Guaranty.
8.
9. No Fiduciary Relationship. The relationship between Lenders and Guarantor is
solely that of lender and guarantor. No Lender has any fiduciary or other
special relationship with or duty to Guarantor and none is created hereby or may
be inferred from any course of dealing or act or omission of any Lender.
10.
11. Interpretation. If this Guaranty is signed by more than one Person as
"Guarantor", then the term "Guarantor" as used in this Guaranty shall refer to
all such Persons jointly and severally, and all promises, agreements, covenants,
waivers, consents, representations, warranties and other provisions in this
Guaranty are made by and shall be binding upon each and every such undersigned
Person, jointly and severally. The term "Lender" shall be deemed to include any
subsequent holder(s) of the Note. Whenever the context of any provisions hereof
shall require it, words in the singular shall include the plural, words in the
plural shall include the singular, and pronouns of any gender shall include the
other genders. Captions and headings in the Loan Documents are for convenience
only and shall not affect the construction of the Loan Documents. All references
in this Guaranty to Schedules, Articles, Sections, Subsections, paragraphs and
subparagraphs refer to the respective subdivisions of this Guaranty, unless such
reference specifically identifies another document. The terms "herein",
"hereof", "hereto", "hereunder" and similar terms refer to this Guaranty and not
to any particular Section or subsection of this Guaranty. The terms "include"
and "including" shall be interpreted as if followed by the words "without
limitation". All references in this Guaranty to sums denominated in dollars or
with the symbol "$" refer to the lawful currency of the United States of
America, unless such reference specifically identifies another currency. For
purposes of the Agreement, "Person" or "Persons" shall include firms,
associations, partnerships (including limited partnerships), joint ventures,
trusts, corporations, limited liability companies, and other legal entities,
including governmental bodies, agencies, or instrumentalities, as well as
natural persons.
12.
13. Time of Essence. Time shall be of the essence in this Guaranty with respect
to all of Guarantor's obligations hereunder.
14.
15. Execution. This Guaranty may be executed in multiple counterparts (by
original or facsimile signatures, with original signatures to be delivered as
soon as reasonably possible), each of which, for all purposes, shall be deemed
an original, and all of which together shall constitute one and the same
agreement.
16.
GUARANTY AGREEMENT (Newmark) Page 12
<PAGE> 13
17. Entire Agreement. This Guaranty embodies the entire agreement between the
Lenders and Guarantor with respect to the guaranty by Guarantor of the
Guaranteed Obligations. This Guaranty supersedes all prior agreements and
understandings, if any, with respect to guaranty by Guarantor of the Guaranteed
Obligations. No condition or conditions precedent to the effectiveness of this
Guaranty exist. This Guaranty shall be effective upon execution by Guarantor and
delivery to the Lenders. This Guaranty may not be modified, amended or
superseded except in a writing signed by the Lenders (or Administrative Agent on
their behalf, as provided in the Credit Agreement) and Guarantor referencing
this Guaranty Agreement by its date and specifically identifying the portions
hereof that are to be modified, amended or superseded.
18.
19. Waiver of Right to Trial by Jury. EACH PARTY TO THIS GUARANTY HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS GUARANTY MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
20.
21. THIS WRITTEN GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.
22.
23. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN PARTIES.
24.
25.
GUARANTY AGREEMENT (Newmark) Page 13
<PAGE> 14
IN WITNESS WHEREOF, Guarantor duly executed this Guaranty as of the
date first written above.
<TABLE>
<S> <C>
1.
Address of Guarantor: GUARANTOR:
1200 Soldiers Field Drive NEWMARK HOMES CORP., a Nevada corporation
Sugar Land, Texas 77479
Attention: Holly Hubenak
By: /s/ Constantine Stengos
Name: Constantine Stengos
Title: Chairman of the Board of Directors
1200 Soldiers Field Drive NEWMARK HOME CORPORATION, a Nevada corporation
Sugar Land, Texas 77479
Attention: Holly Hubenak
By: /s/ Terry C. White
Name: Terry C. White
Title: Senior Vice President
Address of Administrative Agent: ADMINISTRATIVE AGENT:
2600 Citadel Plaza Drive BANK OF AMERICA, N.A., a national banking association, as
Suite 210 Administrative Agent
Houston, Texas 77008
Attn: Jessica Chu By: /s/ Jessica N. Chu
Name: Jessica N. Chu
Title: Vice President
</TABLE>
GUARANTY AGREEMENT (Newmark) Page 14
