UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 0-13800
INTERNATIONAL AMERICAN HOMES, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2472608
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification Number)
6001 Montrose Road, Rockville, Maryland 20852
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 231-8745
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12 (g) of the Act:
Title of class
Common Stock, $.01 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of June 1, 1995, the number of shares outstanding of the
registrant's common stock, $.01 par value, was 2,612,132. After
giving effect to the future issuance of 112,263 shares of common stock
to the creditors, pursuant to the Company's confirmed Plan of
Reorganization, the aggregate number of shares of common stock
outstanding will be 2,724,395. As of June 1, 1995 the aggregate
market value of the registrant's common stock held by non-affiliates,
including shares to be issued to the creditors pursuant to the
Company's confirmed Plan of Reorganization, was $4,310,311.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes [X] No
DOCUMENTS INCORPORATED BY REFERENCE
Applicable portions of the registrant's Proxy Statement for the 1995
Annual Meeting of Shareholders to be filed with the Securities and
Exchange Commission are incorporated by reference in Part III of this
report.
<PAGE>
Page 2
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
FORM 10-K
Index
Page
Part I.
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . .9
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . .9
Part II.
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . 13
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . 18
Item 9. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . 18
Part III.
Item 10. Directors and Executive Officers of the Registrant . . . . . . . 19
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . 19
Item 12. Security Ownership by Certain Beneficial Owners and Management. . 19
Item 13. Certain Relationships and Related Transactions . . . . . . . . . 19
Part IV.
Item 14. Exhibits, Financial Statements, Schedules, and Reports on
Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
<PAGE>
Page 3
PART I
Item 1. Business
General Description
International American Homes, Inc. (the "Company") was
incorporated under the laws of the State of Delaware on April 27,
1983. The Company, through its subsidiaries, Porten Sullivan
Corporation and Suarez Housing Corporation, designs, builds, and
sells single-family homes and townhomes, primarily in middle income
communities. The Company currently conducts its building
activities in suburban residential areas in Metropolitan
Washington, D.C. and Greater Tampa, Florida.
On April 16, 1990, the Company and certain of its wholly-owned
subsidiaries filed voluntary petitions (the "Bankruptcy Petitions")
for relief under Chapter 11, Title 11 of the United States
Bankruptcy Code (the "Code") in the United States Bankruptcy Court
for the District of New Jersey (the "Bankruptcy Court"). Certain
related partnerships filed similar petitions in the same Court in
1990 and 1991. Under the bankruptcy proceedings, substantially all
claims against the Company as of the date of the filing of the
Bankruptcy Petitions were stayed while the Company continued
operations as a debtor-in-possession.
A Third Amended Joint Plan of Reorganization dated June 29, 1992
was filed with the Bankruptcy Court. A Second Amended Disclosure
Statement with respect to the Third Amended Joint Plan of
Reorganization and the exhibits thereto was approved by Bankruptcy
Court Order dated June 29, 1992. On August 12, 1992, the
Bankruptcy Court entered an order confirming the Third Amended
Joint Plan of Reorganization. On October 29, 1992 the Bankruptcy
Court approved certain technical modifications to the Third Amended
Joint Plan of Reorganization effective as of August 12, 1992. A
Fourth Amended Joint Plan of Reorganization dated November 17,
1992, and containing those technical modifications was filed with
the Bankruptcy Court. (The Third Amended Joint Plan of
Reorganization and the Fourth Amended Joint Plan of Reorganization
are collectively referred to as the "Plan" or the "Plan of
Reorganization".)
The Plan provides for an initial cash distribution to creditors
of approximately $4,700,000, less administrative expenses. The
Plan further provides for subsequent distributions equal to 50
percent of future cash flows (as defined in the Plan), if any, for
the periods ending June 30, 1993 through June 30, 1998. The Plan
also provides for the issuance of 2,043,296 shares of the Company's
common stock to the creditors resulting in the dilution of existing
shareholders to 25 percent of the common stock outstanding after
issuance of the additional shares to creditors. The Company
retained cash for working capital of $1,250,000 at August 12, 1992.
The Company made partial initial distributions to creditors
amounting to $3,741,000 through March 31, 1995, of which $701,000
was made during the year ended March 31, 1995. On June 10, 1994,
the Company issued 1,931,033 shares of the Company's common stock
to the creditors. The Company anticipates that the remainder of
the initial cash distribution amounting to approximately $260,000
and the remaining 112,263 shares of stock will be distributed to
the creditors once certain remaining disputed claims are resolved.
<PAGE>
Page 4
The Company has calculated the cash flow (as defined in the Plan)
for the period ended June 30, 1994 and has determined that there
was no excess cash flow (as defined in the Plan) for that period
and accordingly no distribution to creditors was required. Based
on the Company's projections, it is anticipated that there will be
no excess cash flow (as defined in the Plan) for the period ending
June 30, 1995 and accordingly no distribution to creditors is
expected to be required.
The Plan does not permit the subsidiaries of the Company to pay
any dividends to the parent company. The Plan further restricts
the Company and its subsidiaries from acquiring debt securities
from or loaning or advancing any monies to any other party except
in the ordinary course of business.
In conjunction with the reorganization, the Company adopted fresh
start reporting pursuant to which all assets and assumed
liabilities are restated to reflect their reorganization value
which approximates their fair value at the date of reorganization.
Included in the Company's liabilities as of March 31, 1995 is an
estimate of $1,322,000 which reflects the discounted present value
of distributions to creditors from future cash flows as provided
for in the Plan.
Financing Arrangements
The Company, through its subsidiaries, obtains financing from
commercial banks for a portion of the cost of acquiring finished
building lots and for most of the costs of the construction of
homes. This financing is generally available for homes that are
subject to a contract of sale and also for a limited number of
homes in advance of sale. The Company's loan commitments as well
as current banking regulations limit the portion of each home that
can be financed to approximately 75% of its value. Since the
Company uses its own capital resources to fund those costs which
cannot be financed, the Company's future growth will be limited by
the amount of such resources. As a result of the use of these
financing arrangements, the Company is currently and expects to
continue to be, highly leveraged. All of the Company's financing
arrangements are secured by the related real estate inventory.
Management believes that the Company currently has adequate
financing and liquidity to meet its financial obligations and will
be able to fund the acquisition and construction of inventory to
support modest growth. However, there is no assurance that
financing will be available to the Company in the future. In
addition, homebuilding is a cyclical industry with economic
conditions having a substantial impact on operating performance.
<PAGE>
Page 5
Markets
During the three fiscal years ended March 31, 1995, the Company
built and sold 847 homes realizing $115,890,000 in revenues. The
following tables summarize, by market area, the Company's sales
revenues and number of homes delivered respectively, for its last
three fiscal years.
Home Sales Revenue
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended Period August Period
March 31, 1995 March 31, 1994 13, 1992 April 1, 1992
-------------- -------------- through March through
31, 1993 August 12,
------------- 1992
--------------
<S> <C> <C> <C> <C>
MARKET AREA
Metropolitan Washington, D.C. $ 19,559 $ 8,419 $ 7,540 $ 4,917
and Greater Baltimore
Greater Tampa 30,788 25,937 12,078 6,652
-------- -------- -------- --------
Total $ 50,347 $ 34,356 $ 19,618 $ 11,569
======== ======== ======== ========
</TABLE>
Number of Homes Delivered
<TABLE>
<CAPTION>
Year Ended Year Ended Period August Period
March 31, 1995 March 31, 1994 13, 1992 April 1, 1992
-------------- -------------- through March through
31, 1993 August 12,
------------- 1992
------------
<S> <C> <C> <C> <C>
MARKET AREA
Metropolitan Washington, D.C. 87 40 44 29
and Greater Baltimore
Greater Tampa 254 229 108 56
--- --- --- --
Total 341 269 152 85
=== === === ==
</TABLE>
The Company is currently offering single-family homes in 13 communities at
prices ranging from $88,000 to $257,000. Purchasers of the Company's homes
include both entry-level and move-up buyers. The average sales price of the
homes settled in the year ended March 31, 1995 was $148,000.
<PAGE>
Page 6
Land Acquisition and Development
The Company generally acquires finished building lots under
contracts which spread the time for acquisition of those lots over
a substantial period of time roughly coinciding with the estimated
time required for the sale of the homes on those lots. At March
31, 1995, the Company had commitments to purchase 901 finished
building lots at a total purchase price of approximately
$28,709,000 over a four year period. These commitments assure a
continuing supply of finished building lots in the future.
Substantial deposits will be forfeited if the Company is unable to
satisfy these commitments.
At March 31, 1995, the Company also had a commitment to purchase
a parcel of undeveloped land at a price of $449,000 in Greater
Tampa, Florida which the Company plans to develop into
approximately 300 finished building lots. The Company is not
otherwise engaged in any land development activities.
Subcontractors and Suppliers
The Company constructs homes utilizing subcontractors which
operate under the supervision of the Company's staff. The
subcontracts are generally fixed-price, short-term agreements.
Building materials and subcontractors are readily available in the
areas where the Company constructs its homes and the Company
believes that no relationship with any particular supplier or
subcontractor is material to its operations.
Warranties
The Company provides warranties to all of its customers. The
Company provides a written ten year warranty through independent
warranty programs which insure performance by the Company. The
warranties cover major structural defects for ten years, limited
structural and mechanical defects for one to two years, and all
defects for one year.
Seasonal Nature of Business
Due to its geographic and product mix, the Company's operations
taken as a whole are not seasonal in nature.
Backlog
As of March 31, 1995 and 1994, the Company had backlogs of signed
contracts for 121 homes with aggregate sales prices of $21,025,000
(including $3,353,000 of contingent contracts) and 111 homes with
aggregate sales prices of $17,481,000 (including $3,128,000 of
contingent contracts), respectively. The Company anticipates that
substantially all the homes in backlog at March 31, 1995 will be
delivered by the end of calendar 1995.
<PAGE>
Page 7
Sales and Marketing
The Company generally sells its homes through its own sales
personnel who work in on-site model homes. Sales personnel are
compensated through a combination of salary and commission. A
significant portion of the Company's sales are initiated by
independent real estate brokers who are also compensated on a
commission basis.
The Company advertises in local and regional newspapers and
publications and provides prospective purchasers with illustrated
brochures and floor plans. The Company's customers may select
custom options to be incorporated into their homes at additional
cost.
The Company requires a cash deposit from purchasers at the time
a contract is executed. Such deposits are held in trust, escrow,
or segregated bank accounts. Purchasers are permitted to cancel
their contract and receive a refund of their deposit under certain
limited circumstances including their inability to obtain permanent
mortgage financing or to sell their existing home. For the years
ended March 31, 1995, 1994 and 1993, the Company experienced
cancellation rates of 29%, 22%, and 25% respectively.
Although the Company attempts to limit its inventory of unsold
homes, it may commence construction of homes prior to obtaining
sales contracts when market conditions warrant. Frequently, the
Company discounts the purchase price of certain homes or provides
various options and other sales incentives to purchasers.
Customer Financing
The Company assists customers in arranging permanent mortgage
financing by providing information regarding potential mortgage
lenders. There currently is an adequate supply of competitively
priced permanent mortgages available from unrelated sources to
satisfy the needs of homebuyers.
Prior to 1987 the Company originated mortgages (secured by the
homes it built and sold) for certain of its subsidiaries through
its wholly-owned mortgage subsidiaries and assembled them into
pools against which collateralized mortgage obligation bonds were
issued, or such mortgages were sold in the open market. Most of
such mortgage loan repayments are insured by Housing and Urban
Development or the Federal Housing Administration ("FHA"), or
guaranteed by the Veterans' Administration ("VA").
The Company receives in cash, at closing, the full sales price
for its homes, less any financing subsidies, deposits, closing
costs, and loan repayments.
<PAGE>
Page 8
Competition
The homebuilding industry is highly competitive and fragmented.
The Company competes in the geographic areas in which it operates
with numerous residential construction companies ranging from small
local builders to large regional and national builders. The
Company's national competitors include: Pulte Corporation, U.S.
Home Corporation, The Ryland Group, Inc., Lennar Corporation,
Centex Corporation, M.D.C. Holdings, Inc., NVR, Inc., and
Washington Homes, Inc. The national builders and many of the local
and regional companies have greater sales and financial resources
than the Company. The Company considers all homes, whether offered
for sale or rent (including apartment and condominium housing), to
be competitive with its homes. The Company competes primarily on
the basis of quality, location, price, design, and reputation in
each local market.
Regulation
The Company's business is affected by various local, state, and
Federal statutes, ordinances, rules, and regulations concerning
zoning, building design and construction, home sales, environmental
protection, and other matters. Changes in governmental regulations
may adversely affect the Company's business.
Many of the homes built by the Company are approved for FHA or
VA financing. Where required, all construction is inspected by
local government inspectors and, on FHA and VA approved homes, by
FHA or VA building inspectors.
Employees
The Company employed 58 persons as of March 31, 1995 of whom 5
were officers, 18 were sales personnel, 16 were administrative and
clerical personnel, and 19 were involved in construction and
supervision of construction. The Company believes its employee
relations are satisfactory.
Item 2. Properties
As of March 31, 1995, the Company occupied leased office
facilities in Rockville, Maryland and in Tampa, Florida totalling
approximately 6,077 square feet. See Note 10 to Notes to
Consolidated Financial Statements of the Company appearing
elsewhere in this report.
<PAGE>
Page 9
Item 3. Legal Proceedings
On April 16, 1990, the Company and certain of its wholly-owned
subsidiaries filed petitions for relief under Chapter 11, Title 11
of the United States Bankruptcy Code in the United States
Bankruptcy Court for the District of New Jersey. Certain related
partnerships filed similar petitions in the same Court in 1990 and
1991.
Under the bankruptcy proceedings, substantially all claims
against the Company as of the date of the filing of the Bankruptcy
Petitions were stayed while the Company continued operations as a
debtor-in-possession.
A Third Amended Joint Plan of Reorganization dated June 29, 1992
was filed with the Bankruptcy Court. A Second Amended Disclosure
Statement with respect to the Third Amended Joint Plan of
Reorganization and the exhibits thereto was approved by Bankruptcy
Court Order dated June 29, 1992. On August 12, 1992, the
Bankruptcy Court entered an order confirming the Third Amended
Joint Plan of Reorganization.
On October 29, 1992 the Bankruptcy Court approved certain
technical modifications to the Third Amended Joint Plan of
Reorganization effective as of August 12, 1992. A Fourth Amended
Joint Plan of Reorganization dated November 17, 1992, and
containing those technical modifications, was filed with the
Bankruptcy Court.
The Company is involved from time to time in other litigation
arising in the ordinary course of business which is not expected to
have a material adverse effect on the Company's financial position
or its results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of shareholders during the
fourth quarter of the fiscal year covered by this report.
<PAGE>
Page 10
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
At the 1994 Annual Meeting of Stockholders, which was held on
September 13, 1994, the stockholders approved a proposal to adopt
certain amendments (the "Amendments"), to the Company's Restated
Certificate of Incorporation (i) to effect a 1-for-10 reverse stock
split of the Company's issued and outstanding common stock (the
"Reverse Stock Split"), and (ii) to change the number of authorized
shares of common stock from 30 million to 10 million. The
Amendments did not change the par value of the common stock which
remained at $.01 per share. The Amendments became effective on May
31, 1995 with the filing of a Certificate of Amendment with the
Secretary of State of Delaware. The effect of the Reverse Stock
Split has been retroactively reflected in this report.
Shares of the Company's common stock are traded in the over-the-
counter market. The trading symbol is "IAHM".
The following table sets forth the range of high and low bid
prices, as adjusted for the Reverse Stock Split, for the periods
indicated as reported by the National Quotation Bureau (which
reflect inter-dealer prices, without retail mark-up, mark down, or
commission and may not necessarily represent actual transactions).
HIGH LOW
---- ---
1993
- ----
Second Quarter $ .50 $ .30
Third Quarter .60 .30
Fourth Quarter 3.44 .50
1994
- ----
First Quarter 2.10 1.00
Second Quarter 1.90 .40
Third Quarter 1.20 .20
Fourth Quarter .80 .20
1995
- ----
First Quarter 1.40 .35
As of June 1, 1995 there were 2,790 stockholders of record. The
remaining 112,263 shares of common stock to be issued pursuant to
the Plan will be distributed to approximately five creditors.
The Company has never declared or paid any cash dividends. In
addition, the payment of dividends is not permitted under the Plan
of Reorganization during the six (6) year period ending August 13,
1998. The Plan also provides that after August 12, 1998, the
Company may not pay any cash dividends to stockholders until it has
first paid an additional $1,250,000 to the creditors.
<PAGE>
Page 11
Item 6. Selected Financial Data
Selected Consolidated Statements of Operations (1)
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended March 31, Period Period Year Ended March 31,
-------------------- August 13, April 1, --------------------
1992 1992
through through
March 31, August 12,
1995 1994 1993 1992 1992 1991
---- ---- --------- ---------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Home sales $ 50,347 $ 34,356 $ 19,618 $ 11,569 $ 24,795 $ 30,030
Land sales - - 28 32 2,872 11,178
Interest and other income 878 1,277 1,116 949 2,520 2,601
-------- -------- -------- -------- -------- --------
51,225 35,633 20,762 12,550 30,187 43,809
-------- -------- -------- -------- -------- --------
Costs and expenses:
Cost of home sales 43,455 28,764 16,476 9,898 21,555 25,461
Cost of land sales - - 28 33 2,779 10,721
Net charge to write down - 50 - 240 3,017 16,141
real estate inventory,
receivables, investments in
and advances to
unconsolidated partnerships,
and adjust lease expense
Selling, general and 5,673 4,560 2,252 1,973 5,555 10,420
administrative
Interest 857 1,239 1,077 647 2,220 2,742
Depreciation and 81 64 25 11 81 307
amortization ------- ------ ------ ------ ------ ------
50,066 34,677 19,858 12,802 35,207 65,792
------ ------ ------ ------ ------ --------
Income (loss) before income 1,159 956 904 (252) (5,020) (21,983)
taxes and extraordinary item ------ ------ ------ ------ ------ --------
Provision (Benefit) for 72 (124) (65) (18) (1,344) (8,100)
income taxes ------ ------ ------ ------ ------- --------
Income (loss) before 1,087 1,080 969 (234) (3,676) (13,883)
extraordinary item
Extraordinary item:
Effect of Plan of - - - 16,303 - -
Reorganization --------- --------- -------- -------- --------- ---------
Net income (loss) $ 1,087 $ 1,080 $ 969 $ 16,069 $ (3,676) $(13,883)
========= ========= ======== ======== ========= =========
</TABLE>
<PAGE>
Page 12
Selected Consolidated Statements of Operations (1)
<TABLE>
<CAPTION>
Year Ended March 31, Year Ended March 31,
-------------------- Period Period --------------------
August 13, April 1,
1992 1992
through through
March 31, August 12,
1995 1994 1993 1992 1992 1991
---- ---- ----------- ---------- ---- ----
<C> <C> <C> <C> <C> <C>
Per Common Share:
Income (loss) before $ .40 $ .40 $ .36 $ (.34) $ (5.39) $ (20.21)
extraordinary item
Extraordinary item:
Effect of Plan of - - - 23.93 - -
Reorganization ---------- ---------- --------- -------- -------- ---------
Net income (loss) $ .40 $ .40 $ .36 $ 23.59 $ (5.39) $ (20.21)
========== ========== ========= ======== ======== =========
Weighted average number of 2,724,395 2,724,395 2,724,395 681,099 681,587 686,959
shares used in earnings per ========= ========== ========= ======== ======== =========
share data, as adjusted for
the Reverse Stock Split
</TABLE>
Selected Consolidated Balance Sheet Data (1)
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, March 31, March 31, August 12, March 31, March 31,
1995 1994 1993 1992 1992 1991
---------- --------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Receivables $ 444 $ 431 $ 445 $ 204 $ 4,508 $ 5,563
Collateral for bonds 7,620 9,666 14,170 17,037 18,968 22,931
payable
Real estate inventory 16,997 11,177 9,143 8,890 19,669 40,615
Total assets 27,668 25,395 28,082 34,090 49,436 78,034
Mortgage notes and loans 9,724 6,116 6,003 6,973 20,247 40,474
payable
Bonds payable 7,362 9,337 13,699 16,493 18,434 22,307
Total liabilities 22,177 20,971 24,738 31,715 62,354 87,275
Stockholders' equity 5,511 4,424 3,344 2,375 (12,918) (9,241)
(deficit)
</TABLE>
- ------------------------------------------------------------------------
(1)In conjunction with the reorganization, the Company adopted fresh start
reporting pursuant to which all assets and assumed liabilities are restated
to reflect their reorganization value which approximates their fair value at
the date of reorganization. Accordingly, the Selected Consolidated
Statements of Operations for the period August 13, 1992 through March 31,
1995 and the Selected Consolidated Balance Sheet Data as of August 12, 1992,
March 31, 1993, March 31, 1994, and March 31, 1995 are not comparable to the
related statements for any prior period and as of any prior date.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Plan of Reorganization and Fresh Start Accounting
See Note 3, "Reorganization Under Chapter 11" and Note 4, "Fresh
Start Reporting" to Notes to Consolidated Financial Statements of
the Company appearing elsewhere in this report.
The Company made certain adjustments at August 12, 1992 to adjust
the value of real estate inventory to its fair value at that date.
These adjustments combined with adjustments to write down real
estate inventory which were recorded in prior periods, resulted in
real estate inventory being reported at a fair value which was
$1,581,000 below its previously recorded cost. During the year
ended March 31, 1995 cost of home sales was $43,455,000. If the
cost of home sales had been based on previously recorded cost, the
cost of home sales would have been $43,721,000.
Liquidity and Capital Resources
The Company, through its subsidiaries, obtains financing from
commercial banks for a portion of the cost of acquiring finished
building lots and for most of the costs of the construction of
homes. This financing is generally available for homes that are
subject to a contract of sale and also for a limited number of
homes in advance of sale. The Company's loan commitments as well
as current banking regulations generally limit the portion of each
home that can be financed to approximately 75% of its value. Since
the Company must use its own capital resources to fund those costs
which cannot be financed, the Company's future growth will be
limited by the amount of such resources. As a result of the use of
these financing arrangements, the Company is currently and expects
to continue to be, highly leveraged.
The Company's subsidiaries currently have financing agreements
in the aggregate amount of $30,550,000 with commercial banks
located in the areas in which the subsidiaries operate. The terms
of these financing agreements vary, are each for one year or more
from their date of origination, (with expiration dates ranging from
June 1995 to May 1997), are generally guaranteed by the Company,
and are all secured by the related real estate inventory. The
Company's Chairman and President has personally guaranteed certain
of these obligations in the aggregate maximum amount of
$19,250,000, at a fee of one percent of the amount guaranteed, not
to exceed $80,000 per year. At March 31, 1995 the outstanding
principal amount of loans guaranteed by the Company's Chairman and
President was $6,358,000.
The Company generally acquires finished building lots under
contracts which spread the time for acquisition of such lots over
a substantial period of time roughly coinciding with the estimated
time required for the sale of homes on those lots. At March 31,
1995, the Company had commitments to purchase 901 finished building
lots at a total purchase price of approximately $28,709,000 over a
four year period. These commitments assure a continuing supply of
finished building lots in the future. Substantial deposits will be
forfeited if the Company is unable to satisfy these commitments.
The Company's short-term liquidity and its ability to operate
over the short term are reasonably assured by the financing
agreements in place, by the Company's backlog of sales contracts,
and by the commitments to acquire finished building lots. The
Company's long-term liquidity is not affected by
<PAGE>
Page 14
any material capital expenditures but would be impacted by the inability
to renew certain of the financing agreements when they mature. Also
having an impact on the Company's long-term liquidity are the
strength of the housing markets in the areas where the Company
operates and the ability of the Company to maintain a continued
supply of finished building lots. Management believes that the
Company currently has adequate financing and liquidity to meet its
financial obligations and will be able to fund the acquisition and
construction of inventory to support modest growth. However, there
is no assurance that such financing will be available to the
Company in the future.
On June 10, 1994, the Company made an additional partial initial
distribution to creditors in the amount of $701,000. The Company
anticipates that the remainder of the initial distribution to
creditors amounting to approximately $260,000 will be distributed
once certain remaining disputed claims are resolved.
The Plan does not permit the subsidiaries of the Company to pay
any dividends to the parent company. The Plan further prohibits
the Company and its subsidiaries from acquiring debt securities
from or loaning or advancing any monies to any other party except
in the ordinary course of business. These restrictions are
effective until August 12, 1998 and by their nature require the
Company's subsidiaries to be self sufficient. From time to time,
a subsidiary of the Company makes a purchase of finished building
lots from or on behalf of another and later resells those lots to
the latter on terms that will assure that the accommodation
purchaser recovers its costs plus reasonable compensation for
having made the purchase. While such transactions can affect
temporarily the cash flow of each of the participating
subsidiaries, they do not impact the overall cash flow of the
Company. The Plan further provides for the payment of
distributions to the creditors equal to 50 percent of cash flows
(as defined in the Plan), if any, generated by the Company's
subsidiaries for the periods ending June 30, 1993 through June 30,
1998. Any such payment of 50 percent of the cash flow would be
funded from the cash flow generated. Despite these requirements
and restrictions, management believes that the Company and each of
its subsidiaries currently have adequate liquidity to meet their
financial obligations. However, there is no assurance that these
requirements and restrictions will not have an impact on the future
liquidity of the Company or its subsidiaries.
Results of Operations
The following tables sets forth certain information with respect to
homes delivered and homes sold during the periods presented
(dollars in thousands).
<TABLE>
<CAPTION>
Year Ended March 31, Period August Period April
--------------------- 13, 1992 1, 1992
through March through August
1995 1994 31, 1993 12, 1993
---- ---- ------------- ---------------
<S> <C> <C> <C> <C>
Homes delivered
Units 341 269 152 85
Home sales revenue $ 50,347 $ 34,356 $ 19,618 $ 11,569
Average sales price $ 147.6 $ 127.7 $ 129.1 $ 136.1
Homes sold
Units 351 305 160 77
Sales value $ 53,891 $ 41,927 $ 20,754 $ 9,772
Average sales price $ 153.5 $ 137.5 $ 129.7 $ 126.9
</TABLE>
The increase in home sales revenues for the year ended March 31,
1995 compared to the year ended March 31, 1994 and the increase in
home sales revenues for the year ended March 31, 1994 compared to
the period August 13, 1992 through March 31, 1993 both result from
a combination of an increase in the number of units delivered and
an increase in the average sales price of the units delivered. The
increases in the number of units delivered are due to opening new
communities, primarily in Metropolitan Washington, D.C. The
increases in the average price of the units delivered are due
primarily to increased sales prices in Greater Tampa, Florida and
a greater percentage of deliveries in Metropolitan Washington, D.C.
where the average sales price is higher than in Greater Tampa,
Florida.
The Company realized an increase in the number of homes sold during
the year ended March 31, 1995 compared to the year ended March 31,
1994 and an increase during the year ended March 31, 1994 compared
to the period August 13, 1992 through March 31, 1993. The average
sales price of the homes sold also increased. These increases are
attributable to a greater number of operating communities,
primarily in Metropolitan Washington, D.C., and also due to higher
average sales prices.
The following tables sets forth certain information with respect to
homes sold under contract but not delivered ("Backlog") at the
dates shown (dollars in thousands).
March 31,
----------------------------------
1995 1994 1993
-------- -------- --------
Backlog
Units 121 111 75
Sales value $ 21,025 $ 17,481 $ 9,910
Average sales price $ 173.8 $ 157.5 $ 132.1
The Backlog at March 31, 1995, 1994 and 1993 includes $3,353,000, $3,128,000,
and $843,000 of contingent contracts, respectively.
From March 31, 1993 to March 31, 1995 the Company realized a substantial
increase in both the size of its backlog of sales contracts and the average
sales price of those contracts. The increases are attributed to a greater
number of operating communities in Metropolitan Washington, D.C. and to a
greater percentage of backlog from Metropolitan Washington D.C. where the
average sales price is substantially higher than in Greater Tampa, Florida.
<PAGE>
Page 16
Year Ended March 31, 1995 Compared to the Year Ended March 31, 1994.
Results of Operations
The following table sets forth, for the periods indicated, certain information
regarding the Company's operations (dollars in thousands).
<TABLE>
<CAPTION>
Year Ended March 31,
---------------------------------------------------------------------------
1995 1994
--------------------------------- -------------------------------
Dollars % Dollars %
----------- ------ ------------- -----
<S> <C> <C> <C> <C>
Home sales revenues $ 50,347 100.0 $ 34,356 100.0
Cost of home sales 43,455 86.3 28,764 83.7
Gross profit 6,892 13.7 5,592 16.3
Selling, general and administrative expenses 5,673 11.3 4,560 13.3
Pre-tax profit 1,159 2.3 956 2.8
</TABLE>
While gross profit increased for the year ended March 31, 1995
compared to the year ended March 31, 1994, gross profit as a
percentage of home sales revenue decreased from 16.3% to 13.7%.
This percentage decrease results primarily from the comparative
increase in developed lot costs from period to period as well as
increases in other construction costs.
Selling, general and administrative expenses for the year ended
March 31, 1995 increased when compared with the prior comparable
period but decreased as a percentage of the related home sales
revenue. The increase in selling, general and administrative
expenses is due to the increase in sales while the percentage
decrease results primarily from the more efficient absorption of
the fixed components of selling, general and administrative
expenses over higher revenues.
The change in pre-tax profit for the year ended March 31, 1995
compared to the year ended March 31, 1994 is a reflection of the
changes in gross profit and in selling, general, and administrative
expenses.
Interest and Other Income
Interest and other income includes $791,000 and $1,119,000 and
interest expense includes $752,000 and $1,032,000 for the year
ended March 31, 1995 and for the year ended March 31, 1994,
respectively, from wholly-owned finance subsidiaries established in
prior years to sell collateralized mortgage obligations through
participation in various multi-builder bond programs.
Income Taxes
The provision for income taxes for the year ended March 31, 1995
of $72,000 is for state income taxes and was provided for at the
statutory rates. A provision for federal income taxes is not
required for the year ended March 31, 1995.
<PAGE>
Page 17
The benefit for income taxes for the year ended March 31, 1994 of
$124,000 includes federal income taxes of $66,000 and state income
taxes of $88,000, offset by $278,000 in state income tax refunds
which were received during the year ended March 31, 1994.
Year Ended March 31, 1994 Compared to the Period August 13, 1992
through March 31, 1993
Results of Operations
The following table sets forth, for the periods indicated, certain
information regarding the Company's operations (dollars in
thousands).
<TABLE>
<CAPTION>
Period
Year Ended August 13, 1992 through
March 31, 1994 March 31, 1993
--------------------------------- ---------------------------------
Dollars % Dollars %
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Home sales revenues $ 34,356 100.0 $ 19,618 100.0
Cost of home sales 28,764 83.7 16,476 84.0
Gross profit 5,592 16.3 3,142 16.0
Selling, general and administrative expenses 4,560 13.3 2,252 11.5
Pre-tax profit 956 2.8 904 4.6
</TABLE>
Selling, general and administrative expenses as a percentage of
home sales revenues increased during the year ended March 31, 1994
as compared to the period August 13, 1992 through March 31, 1993
primarily due to the additional cost of opening new communities in
the Metropolitan Washington, D.C. area.
Interest and Other Income
Interest and other income includes $1,119,000 and $973,000 and
interest expense includes $1,032,000 and $924,000 for the year
ended March 31, 1994 and for the period August 13, 1992 through
March 31, 1993, respectively, from wholly-owned finance
subsidiaries established in prior years to sell collateralized
mortgage obligations through participation in various multi-builder
bond programs.
Income Taxes
In conjunction with fresh start reporting, the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes". The adoption of the standard did not have a
material effect on the Company's financial position or the results
of operations.
The benefit for income taxes for the year ended March 31, 1994 of
$124,000 includes federal income taxes of $66,000 and state income
taxes of $88,000, offset by $278,000 in state income tax refunds
which were received during the year ended March 31, 1994.
<PAGE>
Page 18
Period April 1, 1992 through August 12, 1992
Results of Operations
Revenues for the period April 1, 1992 through August 12, 1992 were
$12,550,000, including $11,569,000 of home sales and net income was
$16,069,000. At August 12, 1992 the Company recorded the effect of
the Plan of Reorganization as an extraordinary gain of $16,303,000.
For the period April 1, 1992 through August 12, 1992, the gross
margin from home sales was 14% of home sales revenues and selling,
general and administrative expenses were 17% of home sales
revenues.
Interest and Other Income
Interest income of $623,000 and interest expense of $580,000 for
the period April 1, 1992 through August 12, 1992 were from wholly-
owned, finance subsidiaries established in prior years to sell
collateralized mortgage obligations through participation in
various multi-builder bond programs.
Income Taxes
The Internal Revenue Service has completed the examination of the
Company's tax returns through the year ended March 31, 1990. There
were no material changes and in June 1992, the Internal Revenue
Service refunded $3,519,000 of taxes previously paid.
Inflation and Business Cycles
General economic conditions in the United States, and
particularly the impact of inflation, availability of funds, and
other factors on interest rates, affect both the Company's sales
and its costs. Inflation can have a long-term impact on the
Company because increasing costs of land, materials, and labor
result in higher sales prices of its homes. In addition, increases
in interest rates on permanent mortgages generally result in
reduced sales rates. The Company's business is also affected by
local economic conditions, such as unemployment rates and housing
demand in the markets in which it builds homes. Homebuilding is a
cyclical industry with economic conditions having a substantial
impact on operating performance.
Item 8. Financial Statements and Supplementary Data
The information required under this item is incorporated herein
by reference to the information of Pages F-1 through F-20 of this
report.
Item 9. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
<PAGE>
Page 19
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required to be set forth hereunder has been omitted
and will be incorporated by reference, when filed, from the
Company's Proxy Statement for its 1995 Annual Meeting of
Stockholders.
Item 11. Executive Compensation
Information required to be set forth hereunder has been omitted
and will be incorporated by reference, when filed, from the
Company's Proxy Statement for its 1995 Annual Meeting of
Stockholders.
Item 12. Security Ownership by Certain Beneficial Owners and
Management
Information required to be set forth hereunder has been omitted
and will be incorporated by reference, when filed, from the
Company's Proxy Statement for its 1995 Annual Meeting of
Stockholders.
Item 13. Certain Relationships and Related Transactions
Information required to be set forth hereunder has been omitted
and will be incorporated by reference, when filed, from the
Company's Proxy Statement for its 1995 Annual Meeting of
Stockholders.
<PAGE>
Page 20
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports
on Form 8-K
(a) Financial Statements. The following consolidated
financial statements are filed as part of this Annual Report on
Form 10-K to Stockholders. (All other schedules are omitted as the
required information is inapplicable, or the information is
presented in the financial statements and related notes thereto):
Page
INTERNATIONAL AMERICAN HOMES, INC. AND SUBSIDIARIES ----
Report of Independent Public Accountants . . . . . . . . . . F-1
Consolidated Balance Sheets as of March 31, 1995 and
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Statements of Operations for the years ended
March 31, 1995 and 1994, the period August 13, 1992
through March 31, 1993, and the period April 1, 1992
through August 12, 1992. . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Changes in Stockholders'
Equity for the years ended March 31, 1995 and 1994, the
period August 13, 1992 through March 31, 1993, and the
period April 1, 1992 through August 12, 1992 . . . . . . . . F-5
Consolidated Statements of Cash Flows for the years ended
March 31, 1995 and 1994, the period August 13, 1992
through March 31, 1993, and the period April 1, 1992
through August 12, 1992. . . . . . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . F-7
(b) Reports on Form 8-K. No reports on Form 8-K were
filed by the Company during the last quarter of the fiscal year ended
March 31, 1995. On May 31, 1995 the registrant filed a Current
Report on Form 8-K with respect to Item 5 (other events).
(c) Exhibits. The following exhibits are filed as part of
this Annual Report:
Exhibit
Number
- -------
2.1 Second Amended Disclosure Statement dated as of June 29,
1992 and Third Amended Joint Plan of Reorganization dated
June 29, 1992 (incorporated by reference to Exhibit 2.4
to Annual Report on Form 10-K for the fiscal year ended
March 31, 1993).
2.2 Fourth Amended Joint Plan of Reorganization dated
November 17, 1992 (incorporated by reference to Exhibit
2.5 to Annual Report on Form 10-K for the fiscal year
ended March 31, 1993).
3.1(a) Restated Certificate of Incorporation of Registrant
(incorporated by reference to Exhibit 4 to
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1989).
3.1(b) Certificate of Amendment to the Restated
Certificate of Incorporation of Registrant dated
September 8, 1994 (filed herewith).
3.1(c) Certificate of Amendment to the Restated
Certificate of Incorporation of Registrant dated
May 22, 1995 (filed herewith).
3.2 By-laws of Registrant (incorporated by reference to Exhibit
3.2 to Annual Report on Form 10-K for the fiscal year ended
March 31, 1989).
10.1 Key Employee Agreement dated August 12, 1992 of Robert J.
Suarez (incorporated by reference to Exhibit 10.17 to
Annual Report on Form 10-K for the fiscal year ended
March 31, 1993).
10.2 Key Employee Agreement dated August 12, 1992 of Ronald I.
Garshag (incorporated by reference to Exhibit 10.18 to
Annual Report on Form 10-K for the fiscal year ended
March 31, 1993).
10.3 Non-Qualified Stock Option Agreement dated August 12,
1992 between Robert J. Suarez and the Registrant
(incorporated by reference to Exhibit 10.19 to Annual
Report on Form 10-K for the fiscal year ended March 31,
1993).
10.4 Guaranty dated as of January 20, 1993 by Robert J. Suarez
to First Florida Bank, N.A. (incorporated by reference to
Exhibit 10.23 to Annual Report on Form 10-K for the
fiscal year ended March 31, 1993).
10.5 Indemnity Agreement dated as of January 20, 1993 by
Suarez Housing Corporation, the Registrant, and Robert J.
Suarez to and for the benefit of First Florida Bank, N.A.
(incorporated by reference to Exhibit 10.24 to Annual
Report on Form 10-K for the fiscal year ended March 31,
1993).
10.6 Mortgage Modification Agreement dated as of October 7,
1994 by and between Barnett Bank of Tampa and Suarez
Housing Corporation (filed herewith).
10.7 Consulting Agreement dated as of November 1, 1993 between
Peter Davis and the Registrant (incorporated by reference
to Exhibit 10.1 to Quarterly Report on Form 10-Q for the
quarter ended December 31, 1993).
10.8 Master Loan Agreement dated as of November 15, 1994
between Nations Bank of Florida, N.A. and Suarez Housing
Corporation (filed herewith).
21 List of subsidiaries of the registrant (incorporated by
reference to Exhibit 21 to Annual Report on Form 10-K for
the fiscal year ended March 31, 1994).
27 Financial Data Schedule (filed herewith)
<PAGE>
Page 22
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: June 29, 1995 INTERNATIONAL AMERICAN HOMES, INC.
By: /s/ Robert J. Suarez
----------------------
Robert J. Suarez
Chairman of the Board of Directors and President
(Principal Executive Officer)
By: /s/ Michael P. Villa
-------------------------
Michael P. Villa
Vice President, Treasurer, and
Chief Financial Officer
<PAGE>
Page 23
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
Signature Title Date
/s/ Robert J. Suarez Chairman of the Board of
- -------------------- Directors and President June 29, 1995
Robert J. Suarez
/s/ Kenneth W. Carlson
- -----------------------
Kenneth W. Carlson Director June 29, 1995
/s/ William D. Aiken
- -----------------------
William D. Aiken Director June 29, 1995
/s/ Dionel Cotanda
- -----------------------
Dionel Cotanda Director June 29, 1995
/s/ Peter A. Davis
- -----------------------
Peter A. Davis Director June 29, 1995
/s/ Robert E. Everett
- -----------------------
Robert E. Everett Director June 29, 1995
/s/ Brian Gibney
- -----------------------
Brian Gibney Director June 29, 1995
/s/ Philip T. Mercer
- -----------------------
Philip T. Mercer Director June 29, 1995
/s/ Jeffrey D. Prol
- -----------------------
Jeffrey D. Prol Director June 29, 1995
<PAGE>
Page F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To International American Homes, Inc.:
We have audited the accompanying consolidated balance sheets of
International American Homes, Inc. (a Delaware corporation) and
subsidiaries as of March 31, 1995 and 1994, and the related
consolidated statements of operations and stockholders' equity and
cash flow for the years ended March 31, 1995 and 1994, the period
April 1, 1992 to August 12, 1992, and the period August 13, 1992 to
March 31, 1993. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these 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 International American Homes, Inc. and subsidiaries as
of March 31, 1995 and 1994, and the results of their operations and
their cash flows for the years ended March 31, 1995 and 1994, the
period April 1, 1992 to August 12, 1992, and the period August 13,
1992 to March 31, 1993 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
June 2, 1995
<PAGE>
Page F-2
Item 14(a) Financial Statements
FRESH START REPORTING USING THE PRINCIPLES OF PURCHASE ACCOUNTING
WAS USED TO RECORD THE FAIR VALUE OF ASSETS AND ASSUMED LIABILITIES
OF THE REORGANIZED COMPANY AT AUGUST 12, 1992. ACCORDINGLY, THE
ACCOMPANYING BALANCE SHEETS AND RELATED FINANCIAL STATEMENTS AS OF
MARCH 31, 1995 AND 1994 ARE NOT COMPARABLE TO SUCH BALANCE SHEET
AND RELATED FINANCIAL STATEMENTS AS OF ANY DATE PRIOR TO AUGUST 12,
1992.
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, March 31,
1995 1994
------------ ---------
<S> <C> <C>
$ 1,938 $ 3,353
CASH AND SHORT-TERM INVESTMENTS
($457 and $1,532 restricted)
RECEIVABLES 444 431
REAL ESTATE INVENTORY (Notes 2 and 6) 16,997 11,177
COLLATERAL FOR BONDS PAYABLE (Note 12) 7,620 9,666
PROPERTY AND EQUIPMENT - less accumulated depreciation of 106 120
$162 and $81 (Note 2)
OTHER ASSETS 583 648
-------- --------
$ 27,688 $ 25,395
TOTAL ASSETS ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
<PAGE>
Page F-3
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
MORTGAGE NOTES AND LOANS PAYABLE (Note 8)
Construction and mortgage notes secured by real estate $ 9,664 $ 5,959
inventory
Other secured notes payable 60 157
-------- --------
9,724 6,116
BONDS PAYABLE (Note 12) 7,362 9,337
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 4,908 5,319
(Notes 2, 7, and 9)
CUSTOMER DEPOSITS 183 199
-------- --------
Total Liabilities 22,177 20,971
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY (Notes 2, 3, and 11)
PREFERRED STOCK - $.01 par value, 4,000,000 shares - -
authorized, none issued
COMMON STOCK - $.01 par value, 3,000,000 shares authorized, 29 289
2,894,343 shares issued, including 112,263 shares to be
issued to creditors, as of March 31, 1995; $.01 par
value, 30,000,000 shares authorized, 28,943,432 shares
issued, including 20,432,961 shares to be issued to
creditors, as of March 31, 1994 (Note 11)
ADDITIONAL PAID-IN CAPITAL 2,348 2,103
RETAINED EARNINGS 3,136 2,049
TREASURY STOCK, 169,948 shares as of March 31, 1995 and (2) (17)
1,699,484 as of March 31, 1994 (Note 11) -------- --------
Total Stockholders' Equity 5,511 4,424
-------- --------
TOTAL LIABILITIES AND $ 27,688 $ 25,395
======== ========
STOCKHOLDERS' EQUITY
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
<PAGE>
Page F-4
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended March 31, Period Period
-------------------- August 13, April 1, 1992
1992 through through
March 31, August 12,
1995 1994 1993 1992
------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Home sales $ 50,347 $ 34,356 $ 19,618 $ 11,569
Land sales - - 28 32
Interest and other income 878 1,277 1,116 949
--------- -------- --------- --------
51,225 35,633 20,762 12,550
--------- -------- --------- --------
COSTS AND EXPENSES
Cost of home sales 43,455 28,764 16,476 9,898
Cost of land sales - - 28 33
Charge to write down real estate - 50 - 240
inventory
Selling, general and administrative 5,673 4,560 2,252 1,973
Interest 857 1,239 1,077 647
Depreciation 81 64 25 11
------- -------- -------- --------
50,066 34,677 19,858 12,802
------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND 1,159 956 904 (252)
EXTRAORDINARY ITEM ------- -------- -------- --------
PROVISION (BENEFIT) FOR INCOME TAXES 72 (124) (65) (18)
------- -------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 1,087 1,080 969 (234)
EXTRAORDINARY ITEM - - - 16,303
Effect of Plan of Reorganization (Note ------- -------- -------- --------
3)
NET INCOME $ 1,087 $ 1,080 $ 969 $ 16,069
PER SHARE DATA (Primary and Fully Diluted, ======= ======== ======== ========
as adjusted for the Reverse Stock Split)
Income (loss) before extraordinary item $ .40 $ .40 $ .36 $ (.34)
Extraordinary item - - - 23.93
------- -------- --------- -----------
Net income $ .40 $ .40 $ .36 $ 23.59
========= ========= ========= ===========
WEIGHTED AVERAGE NUMBER OF SHARES 2,724,395 2,724,395 2,724,395 681,099
OUTSTANDING ========= ========= ========= ===========
Primary and fully diluted, as adjusted
for the Reverse Stock Split
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
Page F-5
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Stock
-----------------------------
Shares Issued Additional
and Paid-In Retained Treasury
Outstanding Amount Capital Earnings Stock Total
------------- ------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1992 6,810,987 $ 85 $ 24,228 $(33,949) $(3,282) $(12,918)
Net income - - - 16,069 - 16,069
Adjustments to 20,432,961 204 (204) - - -
record the effects of
the Plan of
Reorganization
Adjustments to - - (21,921) 17,880 3,265 (776)
record Fresh Start ----------- ------ --------- --------- -------- ---------
Reporting
Balance, August 12, 27,243,948 $ 289 $ 2,103 $ - $ (17) $ 2,375
1992 ========== ===== ======== ========= ======= =========
Balance, August 12, 27,243,948 $ 289 $ 2,103 $ - $ (17) $ 2,375
1992
Net income - - - 969 - 969
---------- ----- -------- -------- -------- ---------
Balance, March 31, 1993 27,243,948 289 2,103 969 (17) 3,344
Net income - - - 1,080 - 1,080
---------- ----- -------- -------- -------- ---------
Balance, March 31, 1994 27,243,948 289 2,103 2,049 (17) 4,424
Reverse stock split (24,519,553) (260) 245 - 15 -
Net income - - - 1,087 - 1,087
----------- ----- -------- -------- -------- ---------
Balance, March 31, 1995 2,724,395 $ 29 $ 2,348 $ 3,136 $ (2) $ 5,511
=========== ===== ======== ======== ======== =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
Page F-6
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Period
Period April 1,
Year Year August 13, 1992
Ended Ended 1992 through through
March 31, March 31, March 31, August 12,
1995 1994 1993 1992
---------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,087 $ 1,080 $ 969 $ 16,069
Adjustments to reconcile net income to
net cash provided by operating activities:
Extraordinary gain - effect of Plan of - - (16,303)
Reorganization
Charge to write down real estate - 50 - 240
inventory
Depreciation 81 64 25 11
Deferred income taxes - (3) (124) -
Changes in operating assets and
liabilities:
(Increase) decrease in receivables (13) 14 (241) 4,029
(Increase) decrease in real estate (5,820) (2,084) (253) 1,411
inventory
Decrease in collateral for bonds 2,046 4,504 2,867 2,057
payable
(Decrease) increase in accounts (411) 444 (2,940) (713)
payable and accrued liabilities
(Decrease) increase in customer (16) 41 (149) 249
deposits
Other 65 (227) 249 (43)
------- ----- ------ -----
Net cash (used in) provided by operating (2,981) 3,883 403 7,007
activities ------- ----- ------ -----
Cash flows used in investing activities:
Property and equipment, net (67) (85) (39) (12)
------- ---- ---- ----
Cash flows from financing activities:
Proceeds from mortgage notes and loans 30,521 18,895 11,419 5,103
payable
Payments of mortgage notes and loans (26,913) (18,782) (12,389) (7,905)
payable
Repayments of bonds payable - finance (1,975) (4,362) (2,794) (2,026)
subsidiaries
------- ------- ------- -------
Net cash provided by (used in) financing 1,633 (4,249) (3,764) (4,828)
activities ------- ------- ------- -------
Net (decrease) increase in cash and (1,415) (451) (3,400) 2,167
equivalents
Cash and equivalents at beginning of period 3,353 3,804 7,204 5,037
--------- -------- -------- --------
Cash and equivalents at end of period $ 1,938 $ 3,353 $ 3,804 $ 7,204
========= ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
Page F-7
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
International American Homes, Inc. (the "Company") was incorporated
under the laws of the State of Delaware on April 27, 1983. The
Company, through its subsidiaries, designs, builds, and sells
single-family homes and townhomes. The Company currently conducts
its building activities in Metropolitan Washington, D.C. and
Greater Tampa, Florida.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of International American Homes, Inc. and all wholly-owned
subsidiaries. All significant intercompany transactions and
balances have been eliminated.
Revenue Recognition
Revenues from sales are recognized at the time of closing, i.e.,
when a sufficient down payment has been made; financing has been
arranged with a third party lender; title, possession and other
attributes of ownership have been transferred to the buyer; and the
Company is not obligated to perform significant additional
activities after the sale.
Real Estate Inventory
Real estate inventory is carried at the lower of cost or net
realizable value. Net realizable value is defined as the estimated
proceeds upon disposition less all future costs to complete and
expected costs to sell. Construction costs are accumulated during
the period of construction and charged to cost of sales under
specific identification methods. Land and land development costs
are charged to cost of sales under specific identification methods
or are amortized based upon the number of homes to be constructed
in each community.
Interest costs related to projects in progress are capitalized
during the construction period and charged to cost of sales as the
related inventories are sold (see Note 8).
Land option costs are capitalized when incurred and either
included as part of the purchase price when the land is acquired or
charged to operations to the extent of any unrecoverable amount
when the Company determines it will not exercise the option.
<PAGE>
Page F-8
Income Taxes
Deferred income taxes are provided for temporary differences
between book and tax accounting.
Depreciation
Depreciation is computed on the straight-line method for all
depreciable assets. Estimated useful lives range from two to five
years. Maintenance and repairs are charged to expense as incurred.
Major renewals and improvements are capitalized and depreciated.
Per Share Data
Net income (loss) per share is based upon the weighted average
number of common shares outstanding during each period, as adjusted
for the Reverse Stock Split. Common stock equivalents are not
included in the computations because the effect is not material.
The shares to be issued to creditors pursuant to the Plan of
Reorganization (see Note 3) are considered as if they had been
issued on August 12, 1992.
Statements of Cash Flows
For purposes of the statements of cash flows, the Company
generally considers all highly liquid instruments purchased with an
original maturity of three months or less to be cash equivalents.
The Company paid interest and paid (recovered) income taxes as
follows (in thousands):
Income
Period Interest Taxes
- ------------------------------------ ------------- ---------
Year Ended March 31, 1995 $ 1,981 $ 67
Year Ended March 31, 1994 1,782 (239)
August 13, 1992 through March 31, 1993 1,379 (1)
April 1, 1992 through August 12, 1992 999 (3,518)
Reclassifications
Certain amounts in the prior periods' consolidated financial statements
have been reclassified to conform with the current year presentation.
<PAGE>
Page F-9
NOTE 3 - REORGANIZATION UNDER CHAPTER 11
On April 16, 1990, the Company and certain of its wholly-owned
subsidiaries filed voluntary petitions (the "Bankruptcy Petitions")
for relief under Chapter 11, Title 11 of the United States
Bankruptcy Code (the "Code"), in the United States Bankruptcy Court
for the District of New Jersey (the "Bankruptcy Court"). Certain
related partnerships filed similar petitions in the same Court in
1990 and 1991. Under the bankruptcy proceeding, substantially all
claims against the Company as of the date of the filing of the
Bankruptcy Petitions were stayed while the Company continued
operations as a debtor-in-possession.
A Third Amended Joint Plan of Reorganization dated June 29, 1992
was filed with the Bankruptcy Court. A Second Amended Disclosure
Statement with respect to the Third Amended Joint Plan of
Reorganization and exhibits thereto was approved by Bankruptcy
Court Order dated June 29, 1992. On August 12, 1992, the
Bankruptcy Court entered an order confirming the Third Amended
Joint Plan of Reorganization. On October 29, 1992, the Bankruptcy
Court approved certain technical modifications to the Third Amended
Joint Plan of Reorganization to be effective as of August 12, 1992.
A Fourth Amended Joint Plan of Reorganization dated November 17,
1992, containing those technical modifications, was filed with the
Bankruptcy Court.
The Plan provides for an initial cash distribution to creditors of
approximately $4,700,000 less administrative expenses. The Plan
further provides for subsequent distributions equal to 50 percent
of future cash flows (as defined in the Plan), if any, for the
periods ending June 30, 1993 through June 30, 1998. The Plan also
provides for the issuance of 2,043,296 shares of the Company's
common stock to the creditors resulting in the dilution of existing
shareholders to 25 percent of the common stock outstanding after
issuance of the additional shares to creditors.
The Company has made partial initial distributions to the creditors
amounting to $3,741,000 through March 31, 1995, of which $701,000
was made during the year ended March 31, 1995. On June 10, 1994
the Company issued 1,931,033 shares of the Company's common stock
to the creditors. The Company anticipates that the remainder of
the initial cash distribution amounting to approximately $260,000
and the remaining 112,263 shares of stock will be distributed to
creditors once certain remaining disputed claims are resolved.
The Company has calculated the cash flow (as defined in the Plan)
for the period ended June 30, 1994 and has determined that there
was no excess cash flow (as defined in the Plan) for that period
and accordingly no distribution to creditors was required. Based
on the Company's projections, it is anticipated that there will be
no excess cash flow (as defined in the Plan) for the period ending
June 30, 1995 and accordingly no distribution to creditors is
expected to be required.
The accompanying financial statements reflect the estimated effect
of the reorganization, including the settlement of liabilities and
other claims, the estimated present value of future cash
distributions to creditors of $1,322,000 and the issuance of
112,263 additional shares of common stock.
<PAGE>
Page F-10
The Company's Plan of Reorganization does not permit the
subsidiaries of the Company to pay any dividends to the parent
company. The Plan further restricts the Company and its
subsidiaries from acquiring debt securities from or loaning or
advancing any monies to any other party except in the ordinary
course of business. The net assets at March 31, 1995 of the
Company's two subsidiaries are as follows (in thousands):
Net Assets
at
March 31,
1995
(Unaudited)
-----------
Porten Sullivan Corporation $ 2,715
Suarez Housing Corporation 2,086
NOTE 4 - FRESH START REPORTING
The American Institute of Certified Public Accountants has issued
Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Pursuant
to the guidance provided by SOP 90-7, the Company adopted fresh
start reporting as of August 12, 1992. Under fresh start
reporting, all assets and liabilities are restated to reflect their
reorganization value which approximates their fair value at the
date of reorganization.
The company calculated that the fresh start reporting equity value
was $2,375,000. Factors considered by management included current
value of assets and assumed liabilities, the $1,250,000 retention
of cash for working capital and the estimated future cash flows.
Under fresh start reporting, the final consolidated balance sheet
as of August 12, 1992 became the beginning consolidated balance
sheet of the emerging Company. Since fresh start reporting was
reflected in the consolidated balance sheet as of August 12, 1992,
the consolidated balance sheets and related financial statements as
of March 31, 1995 and March 31, 1994 are not comparable in all
material respects to any such statement as of any date prior to
August 12, 1992.
NOTE 5 - REORGANIZATION ITEMS
Professional fees and other related expenses associated with the Chapter
11 filing were $562,000 for the period April 1, 1992 through August 12,
1992.
Interest earned on cash balances accumulated during the Chapter 11 proceedings
amounted to $312,000 for the period April 1, 1992 through August 12, 1992.
<PAGE>
Page F-11
NOTE 6 - REAL ESTATE INVENTORY
Real estate inventory consists of the following (in thousands):
March 31, 1995 March 31, 1994
-------------- --------------
Accumulated costs of construction
completed and in progress $ 9,121 $ 5,361
Land and land development costs 6,833 4,987
Land options and deposits 1,043 829
-------- --------
$ 16,997 $ 11,177
======== ========
From time to time as part of the normal operations of the business,
the subsidiaries of the Company have bought lots which the other
subsidiary of the Company was obligated to buy from a third party
seller or which the other subsidiary of the Company owned. Such
transactions were at prices approximating fair market value and
were not significant.
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following
(in thousands):
March 31, 1995 March 31, 1994
-------------- --------------
Accounts payable - trade $ 2,033 $ 2,718
Accrued liabilities 1,553 1,279
Accrued estimated future cash
distribution to creditors 1,322 1,322
-------- --------
$ 4,908 $ 5,319
======== ========
Accounts payable and accrued liabilities of as of March 31, 1995
and March 31, 1994, include liabilities of approximately $294,000
and $1,050,000, respectively, which represent cash to be
distributed to the creditors pursuant to the Plan of Reorganization
and accrued professional fees related to the bankruptcy. The
accrued estimated future cash distribution to creditors is an
estimate of future cash distributions to creditors as defined by
the Plan of Reorganization. The balance of accounts payable and
accrued liabilities represents liabilities that were incurred
and/or accrued subsequent to the filing of the Bankruptcy
petitions.
<PAGE>
Page F-12
NOTE 8 - MORTGAGE NOTES AND LOANS PAYABLE
Mortgage notes and loans payable consist of the following (in thousands):
March 31, 1995 March 31, 1994
-------------- --------------
Construction loans payable secured
by real estate inventory,
with interest at 1% to 2%
above prime $ 9,664 $ 5,959
Notes payable principally secured
by mortgage notes receivable
with interest at 1% above prime 60 157
-------- --------
$ 9,724 $ 6,116
======== ========
Construction loans payable at March 31, 1995 are due as follows (in
thousands):
1996 $9,195
1997 469
The construction loans payable are principally payable from sales
proceeds, generally provide for extensions, and are all secured by
real estate inventory. As of March 31, 1995, the Company had
$13,167,000 of undrawn commitments for additional construction and
land acquisition financing.
Interest costs incurred and the amount capitalized to inventories
are as follows (in thousands):
<TABLE>
<CAPTION>
Incurred Capitalized (a) Capitalized and Total Expensed
Expensed (b)
----------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Year Ended March 31, 1995 $ 1,978 $ 1,121 $ 1,066 $ 1,923
Year Ended March 31, 1994 1,848 609 955 2,194
Period August 13, 1992 1,507 372 795 1,930
through March 31, 1993
Period April 1, 1992 through
August 12, 1992:
as reported 932 261 530 1,201
at contractual rates 1,041 291 530 1,280
</TABLE>
(a) Interest incurred that was capitalized.
(b) Interest capitalized previously and charged to cost of sales.
<PAGE>
Page F-13
NOTE 9 - INCOME TAXES
In connection with implementing fresh start reporting as of August 12, 1992,
the Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). SFAS 109 is an asset and liability
approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. In estimating future tax
consequences, SFAS 109 generally considers all expected future events other
than enactments of changes in the tax law or rates.
Income tax expense consisted of the following (in thousands):
<TABLE>
<CAPTION>
Period Period
Year Ended Year August 13, April 1, 1992
March 31, 1995 Ended 1992 through through
March 31, March 31, August 12,
1994 1993 1992
--------------- --------- ------------- ---------------
<S> <C> <C> <C> <C>
Current
Federal $ - $ 69 $ - $ -
State 72 (190) 59 -
------ ---------- ----------- ----------
72 (121) 59 -
------ ---------- ----------- ----------
Deferred
Federal - (3) (121) -
State - - (3) (18)
------ ----------- ----------- ---------
- (3) (124) (18)
------ ----------- ----------- ---------
Provision (Benefit) for $ 72 $ (124) $ (65) $ (18)
income taxes ====== =========== =========== =========
</TABLE>
<PAGE>
Page F-14
The provision for income taxes differs from that computed at Federal statutory
corporate tax rate as follows (in thousands):
<TABLE>
<CAPTION>
Period Period
Year Ended Year August 13, April 1, 1992
March 31, 1995 Ended 1992 through through
March 31, March 31, August 12,
1994 1993 1992
--------------- --------- ------------- -------------
<C> <C> <C> <C>
Tax (benefit) at 34% $ 394 $ 325 $ 307 $ (86)
statutory rate
State income tax benefit 48 (125) 39 (18)
net of Federal benefit
Taxes applicable to loss (280) (325) (411) -
carryforwards
Change in the valuation (76) - - -
allowance
Other (14) 1 - 86
------- ----------- ---------- ---------
$ 72 $ (124) $ (65) $ (18)
======= =========== ========== =========
</TABLE>
Temporary differences and carryforwards which give rise to a significant
portion of deferred tax (assets) and liabilities for March 31, 1995 and 1994
are as follows (in thousands):
<TABLE>
<CAPTION>
Deferred Expense
March 31, 1994 (Benefit) March 31, 1995
-------------- ----------------- --------------
<S> <C> <C> <C>
Differences in the tax basis and
the book basis of -
Partnerships $ (438) $ 427 $ (11)
Inventory (141) 51 (90)
Installment sales 461 (103) 358
Other (209) (19) (228)
Loss carryforwards (705) (280) (985)
Valuation allowance 1,032 (76) 956
--------- ---------- ---------
Net Deferred Tax Liability $ - $ - $ -
========= ========== =========
</TABLE>
At March 31, 1995, the Company had Federal income tax loss carryforwards of
approximately $2,900,000 which includes approximately $2,025,000 of
carryforwards that become available at approximately $150,000 per year through
2008. The Company has provided a valuation allowance on the net deferred tax
assets which primarily results from the restricted use of net operating loss
carryforwards.
<PAGE>
Page F-15
NOTE 10 - COMMITMENTS AND CONTINGENCIES
A. At March 31, 1995 the Company had commitments to purchase 901 finished
building lots, providing for an aggregate purchase price of approximately
$28,709,000, over a four year period. Substantial deposits will be forfeited
if the Company is unable to satisfy these commitments.
B. Suarez Housing Corporation, a subsidiary of the Company, has an employment
agreement with the Company's Chairman and President expiring August 12, 1995
currently providing for compensation of $264,710 per annum.
C. Porten Sullivan Corporation, a subsidiary of the Company, has an employment
agreement with the Company's former Executive Vice President who retired on May
12, 1995. The agreement provides for compensation and benefits of
approximately $150,000 to be paid through February 1996 in exchange for
consulting services.
D. At March 31, 1995 the Company had open letters of credit and guarantees
totalling approximately $103,000 to secure performance obligations.
E. The Company currently occupies office space and leases model home furniture
under operating lease agreements expiring at various dates through 1996. The
Company also leases storage space on a month to month basis. The combined
rental expense incurred under these leases was $215,000, $131,000, $76,000, and
$66,000 for the years ended March 31, 1995, and 1994, the period August 13,
1992 through March 31, 1993, and the period April 1, 1992 through August 12,
1992, respectively. The future minimum rental payments under these operating
leases as of March 31, 1995 are as follows:
1996 $159,000
1997 $ 60,000
1998 $ 0
F. At March 31, 1995, restricted cash and short term investments of
approximately $457,000 includes $294,000 to be paid out to creditors as a part
of the initial distribution and accrued professional fees related to the
bankruptcy.
G. 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's financial position or the results of
operations.
<PAGE>
Page F-16
NOTE 11 - COMMON STOCK AND STOCK OPTIONS
At the 1994 Annual Meeting of Stockholders, which was held on September 13,
1994, the stockholders approved a proposal to adopt certain amendments to the
Company's Restated Certificate of Incorporation (i) to effect a 1-for-10
reverse stock split of the Company's issued and outstanding common stock and
(ii) to change the number of authorized shares of common stock from 30 million
to 10 million. The Amendments did not change the par value of the common stock
which remained at $.01 per share. The Amendments became effective on May 31,
1995 with the filing of a Certificate of Amendment with the Secretary of State
of Delaware on May 31, 1995. The effect of the Reverse Stock Split has been
retroactively reflected in the statements for all periods presented.
Under the Plan of Reorganization, 2,043,296 shares of common stock, as adjusted
for the Reverse Stock Split, were to be issued pro rata to creditors which
would represent 75% of the outstanding common stock after issuance of those
shares. 1,931,033 of those shares were issued on June 10, 1994. The remaining
112,263 shares will be distributed to the creditors once certain remaining
disputed claims are resolved.
Under the Company's Plan of Reorganization, the payment of dividends is not
permitted during the six year period beginning August 13, 1992. The Plan also
provides that after August 12, 1998, the Company may not pay any cash dividends
to stockholders until it has first paid an additional $1,250,000 to the
creditors.
On August 12, 1992, an option for 50,000 shares of common stock at a purchase
price of $.50 per share, as adjusted for the Reverse Stock Split, was granted
to the Chairman and President of the Company. The option is exercisable 50%
currently and the remainder after August 11, 1995. All shares must be
purchased by August 11, 1996.
On February 9, 1993 certain key employees of the Company were granted options
to purchase 11,000 shares of common stock at a price of $.50 per share, as
adjusted for the Reverse Stock Split. The options are exercisable 30%
currently, an additional 30% on or after February 9, 1996, an additional 40% on
or after February 9, 1997 and all of the shares must be purchased by February
9, 1998.
On November 9, 1993 the Company's former Executive Vice President, who retired
on May 12, 1995, was granted options to purchase 10,000 shares of common stock
at a price of $.60 per share, as adjusted for the Reverse Stock Split. The
options are exercisable in full at any time until May 12, 1996.
<PAGE>
Page F-17
NOTE 12 - CONDENSED FINANCIAL STATEMENTS OF CONSOLIDATED FINANCE SUBSIDIARIES
The Company's wholly-owned finance subsidiaries were established to sell
collateralized mortgage obligations through participation in various
multi-builder bond programs. In these sales, which last occurred in 1987, the
Company originated and pooled mortgage loans which were then pledged as
collateral for bonds payable. The interest rates on the mortgage loans which
comprise the collateral for bonds payable, roughly equate with the interest
rates on the related bonds payable.
Condensed financial information is as follows (in thousands):
Condensed Balance Sheets
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
-------------------- --------------------
<S> <C> <C>
Assets:
Collateral for bonds payable $ 7,620 $ 9,666
Other assets 9 29
-------- -------
$ 7,629 $ 9,695
======== =======
Liabilities and Equity:
Bonds payable $ 7,362 $ 9,337
Equity and intercompany advances 267 358
-------- -------
$ 7,629 $ 9,695
======== =======
</TABLE>
Condensed Statements of Income
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------- Period August Period
13, 1992 April 1, 1992
through through
March 31, August 12,
1995 1994 1993 1992
------- -------- ----------- --------------
<S> <C> <C> <C> <C>
Revenues $ 791 $ 1,119 $ 973 $ 623
====== ======== ========= =========
Income before income taxes $ 22 $ 58 $ 34 $ 9
====== ======== ========= =========
</TABLE>
<PAGE>
Page F-18
NOTE 13 - RELATED PARTY TRANSACTIONS
A. The Company's Chairman and President has personally guaranteed bank loans in
the aggregate maximum amount of $19,250,000 for Suarez Housing Corporation, a
subsidiary of the Company, at a fee of one percent of the amount guaranteed,
not to exceed $80,000 per year. At March 31, 1995 the outstanding principal
amount of loans guaranteed by the Company's Chairman and President was
$6,358,000. The Company has agreed to indemnify the President and Chairman in
the event that this personal guarantee is called.
B. The Chairman and President of the Company is a one third partner in a
partnership from which the Company bought 20 finished building lots during the
year ended March 31, 1995 for $470,000, a price which approximates fair market
value.
C. A member of the Board of Directors, is Vice President and a Director of a
company which during the year ended March 31, 1995 sold building material
products in the amount of approximately $3,367,000 to Suarez Housing
Corporation. That company is a creditor of Suarez Housing Corporation under
the Chapter 11 filing, and is subject to the terms of settlement under the Plan
of Reorganization. In addition, an employee of that company is the Chairwoman
of the Official Creditors Committee in the Reorganization Cases of
International American Homes, Inc., Inland Pacific Communities, Inc., Porten
Sullivan Corporation of Florida, Suarez Housing Corporation, Beacon Hill Farm
Associates II, and Lakeview Professional Park (the "IAH Creditors Committee").
The IAH Creditors Committee's primary remaining function is to oversee the
terms of settlement under the approved Plan of Reorganization.
D. Another member of the Board of Directors, is Executive Vice President of a
company which during the year ended March 31, 1995 sold heating, ventilating
and air conditioning systems in the amount of approximately $441,000 to Porten
Sullivan Corporation, a subsidiary of the Company. That company is a creditor
of Porten Sullivan Corporation under the Chapter 11 filing, and is subject to
the terms of settlement under the Plan of Reorganization. This director is
also a member of the Official Creditors Committee in the Reorganization Cases
of Porten Sullivan Corporation and J&S Development Associates (the "Porten
Sullivan Creditors Committee"). The Porten Sullivan Creditors Committee's
primary remaining function is to oversee the terms of settlement under the
approved Plan of Reorganization.
E. Another member of the Board of Directors, is the Chief Executive Officer and
owner of a company which during the year ended March 31, 1995 sold engineered
fireplaces and other specialty building products in the amount of approximately
$175,000 to Porten Sullivan Corporation. That company is a creditor of Porten
Sullivan Corporation under the Chapter 11 filing, and is subject to the terms
of settlement under the Plan of Reorganization.
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
INTERNATIONAL AMERICAN HOMES, INC.
Pursuant to section 242
INTERNATIONAL AMERICAN HOMES, INC., a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
FIRST: Pursuant to a Plan of Reorganization (the
"Plan") dated as of May 13, 1992, which was approved by the
United States Bankruptcy Court for the District of New
Jersey and confirmed by creditors, the Corporation was
required to amend its Certificate of Incorporation to:
(i) include a provision prohibiting the issuance of
nonvoting equity securities, (ii) ratify and authorize
the issuance of not more than 30,000,000 shares of New
Common Stock and (iii) not contain any provisions which
contravene the restrictions on the issuance of stock
and other securities described below or are otherwise
inconsistent with [the Plan].
SECOND: Pursuant to a Disclosure Statement dated
as of June 29, 1992, all of the shareholders of the
Corporation, as an impaired class, were notified of the
above-noted amendment and confirmed same on August 12, 1992.
THIRD: To effectuate the Plan, the Restated
Certificate of Incorporation of the Corporation is hereby
amended by changing the Sections thereof numbered "5",
<PAGE>
Page 2
"5.1" and "5.2" so that, as amended said Sections shall be
and read as follows:
5. Capital Stock The total number of shares of
capital stock which the Corporation shall have
authority to issue is thirty-four million
(34,000,000), of which thirty million (30,000,000)
shall be shares of Common Stock with a par value
of $.01 per share, and four million (4,000,000)
shall be shares of Preferred Stock with a par
value of $.01 per share.
5.1 Common Stock Each holder of record of shares of
Common Stock shall be entitled to one vote for
each share of Common Stock standing in his name on
the books of the Corporation. Except as otherwise
provided by the resolution or resolutions
providing for the issue of any series of shares of
Preferred Stock, the holders of shares of Common
Stock shall be entitled, to the exclusion of the
holders of shares of Preferred Stock of any and
all series, to receive such dividends as from time
to time may be declared by the Board of Directors.
In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary
or involuntary, after payment shall have been made
to the holders of shares of Preferred Stock of the
full amount for which they shall be entitled
pursuant to the resolution or resolutions
providing for the issue of any series of shares of
Preferred Stock, the holders of shares of Common
Stock shall be entitled, to the exclusion of the
holders of shares of Preferred Stock of any and
all series, to share, ratably according to the
number of shares of Common Stock held by them, in
all remaining assets of the Corporation available
for distribution to its shareholders.
5.2 Preferred Stock; Designation of Classes; Relative
Rights, Etc. The shares of Preferred Stock shall
rank senior to the Common Stock as to dividends
and upon liquidation. Each holder of record of
shares of Preferred Stock shall be entitled to one
vote for each share of Preferred Stock standing in
his name on the books of the Corporation. The
Board of Directors is hereby authorized, subject
to limitations prescribed by law and this Section
5.2, to provide by resolutions for the issuance of
the Preferred Stock in one or more series, to
establish the number of shares to be included in
each such series, provided that the aggregate
number of shares issued and not canceled of any
<PAGE>
Page 3
and all such series shall not exceed the total
number of shares of Preferred Stock hereinabove
authorized, and with distinctive serial
designations, and to establish the designations,
preferences and relative, participating, optional
or other special rights, if any, or the
qualifications, limitations or restrictions
thereof all as shall hereafter be stated and
expressed in such resolutions from time to time
adopted by the Board. The authority of the Board
of Directors with respect to each such series
shall include, without limitation, determination
of the following:
A. Whether or not the shares of that series
shall be redeemable, and, if so, the terms
and conditions of such redemption, including
the date or dates upon or after which they
shall be redeemable, and the amount per share
payable in case of redemption, which amount
may vary under different conditions and at
different redemption rates;
B. The dividend rate on the shares of that
series, whether dividends shall be cumulative
and the date or dates, if any, from which
dividends thereon shall be cumulative, and
whether payable in preference to, or in such
relation to, the dividends payable on any
other class or classes or series of stock;
C. The rights of the shares of that series in
the event of a voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation;
D. Whether the shares of that series are
convertible into, or exchangeable for, at the
option of either the holder or the
Corporation or upon the happening of a
specified event, shares of any other class or
classes or any series of securities of the
Corporation, at such price or prices or at
such rate or rates of exchange and with such
adjustments as shall be stated in the
Restated Certificate of Incorporation or in
the resolution or resolutions providing for
the issue of any series of shares of
Preferred Stock;
E. Whether shares of that series shall be
entitled to the benefit of sinking fund
<PAGE>
Page 4
provisions and, if so, upon what terms and
conditions;
F. Whether shares of that series 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 any 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 or any
subsidiary of, any outstanding shares of the
Corporation; and
G. Generally, to fix the other relative,
participating, optional or other special
rights, and qualifications, limitations or
restrictions thereof; all as shall be stated
in the resolution or resolutions providing
for the issue of such shares of Preferred
Stock. Shares of Preferred Stock of any
series which have been redeemed (whether
through the operation of a sinking fund or
otherwise) of which, if convertible or
exchangeable, have been converted into or
exchanged for shares of any other class or
classes and shall 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 be reclassified and
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 or 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.
Any and all shares of Preferred Stock issued, for which
such consideration has been paid or delivered to the
Corporation, shall be deemed fully paid shares and
shall not be liable to any further call or assessments
thereon, and the holders of such shares shall not be
liable for any further payments in respect of such
shares of Preferred Stock.
<PAGE>
Page 5
No holder of any series of Preferred Stock shall, as
such holder, have any preferential right to purchase or
subscribe for any stock of any series or class which
the Corporation may issue or sell or any obligations
convertible into or exchangeable for stock of any
series or class of the Corporation or any right of
subscription to any thereof other than such right, if
any, as the Board of Directors in its discretion may
determine.
Subject to the provision of this Restated Certificate
of Incorporation and except as otherwise provided by
law, the capital stock of the Corporation, regardless
of class, may be issued for such consideration and for
such corporate purposes as the Board of Directors in
its discretion may from time to time determine.
FOURTH: This Certificate of Amendment to the
Restated Certificate of Incorporation shall be deemed
effective as of August 12, 1992, the date the United States
Bankruptcy Court entered an order confirming the Plan and
such order became final and non-appealable.
FIFTH: The capital of said corporation shall not
be reduced under or by reason of said amendment.
IN WITNESS WHEREOF, International American Homes,
Inc. has caused its corporate seal be hereunto affixed and
this certificate to by signed by Robert J. Suarez, its
President, and Robert I. Antle, its Secretary, this 8th day
of September, 1994.
International American Homes, Inc.
By: /s/ Robert J. Suarez
-------------------------
President
By: /s/ Robert I. Antle
--------------------------
Secretary
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
INTERNATIONAL AMERICAN HOMES, INC.
________________________
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
________________________
INTERNATIONAL AMERICAN HOMES, INC., a Delaware
corporation, does hereby certify as follows:
FIRST: The first paragraph of Paragraph 5 of the
Corporation's Restated Certificate of Incorporation is
hereby amended to read in its entirety as set forth below:
"The total number of shares of capital stock which the
Corporation shall have authority to issue is fourteen
million (14,000,000), of which ten million (10,000,000)
shall be shares of common stock with a par value of
$.01 per share (the "Common Stock"), and four million
(4,000,000) shall be shares of preferred stock with a
par value of $.01 per share (the "Preferred Stock").
Each share of Common Stock issued and outstanding or
issued and held in the treasury of the Corporation as
of the close of business on the date (the "Effective
Date") on which the amendment to the Restated
Certificate of Incorporation of the Corporation adding
this sentence shall become effective, is hereby
automatically and without further action reclassified,
converted, and changed into one-tenth (1/10th) of a
share of Common Stock, par value $.01 per share,
provided that no fractional shares shall be issued
pursuant to such reclassification, conversion, and
change. The Corporation shall pay to each stockholder
who would otherwise be entitled to a fractional share
as a result of such reclassification, conversion, and
change, the cash value of such fractional share based
on the average closing bid prices of the Common Stock
<PAGE>
Page 2
for a period of ten trading days immediately preceding
the Effective Date, as reported by the National
Quotation Bureau. Each certificate for Common Stock
outstanding or held in treasury on the Effective Date
shall thereupon and thereafter evidence the number of
shares of Common Stock, and/or the right to receive
cash into which such shares shall have been
reclassified, converted and changed, and may be
surrendered to the Corporation for cancellation in
exchange for new certificates representing such number
of shares and/or such cash."
SECOND: The foregoing amendments were duly
adopted in accordance with Section 242 of the General
Corporation Law of the State of Delaware.
THIRD: This Certificate shall not become
effective until 6:00 p.m. Delaware time on May 31, 1995.
IN WITNESS WHEREOF, the undersigned has caused
this Certificate to be duly executed in its corporate name
this 22nd day of May, 1995.
INTERNATIONAL AMERICAN HOMES, INC.
BY: /s/ Michael P. Villa
Michael P. Villa
Vice President, Treasurer, and
Chief Financial Officer
ATTEST:
By: /s/ Pamela A. Perez
Pamela A. Perez
Vice President and
Assistant Secretary
ALL DOCUMENTARY STAMPS AND INTANGIBLE TAXES REQUIRED BY LAW
ON ALL NOTES DESCRIBED HEREIN WERE FULLY PAID UPON
RECORDATION OF THOSE INSTRUMENTS DESCRIBED HEREIN AND
RECORDED IN THE PUBLIC RECORDS OF HILLSBOROUGH COUNTY,
PINELLAS COUNTY, AND PASCO COUNTY, FLORIDA. DOCUMENTARY
STAMP TAXES IN THE AMOUNT OF $3,500.00 ARE BEING PAID AND
EVIDENCE IS BEING AFFIXED HERETO IN HILLSBOROUGH COUNTY,
FLORIDA, DUE TO THE ADDITIONAL BORROWING IN THE AMOUNT OF
$1,000,000.00, SECURED BY THE MORTGAGE DESCRIBED HEREIN.
MORTGAGE MODIFICATION AGREEMENT
This Mortgage Modification Agreement ("Agreement")
executed this 7th day of October, 1994 is by and between
Suarez Housing Corporation, a Florida corporation, whose
address is 9950 Princess Palm Avenue, Suite 112, Tampa,
Florida 33619 (hereinafter referred to as "Mortgagor"), and
Barnett Bank of Tampa, a state banking corporation, formerly
known as First Florida Bank, successor by conversion to
First Florida Bank, N.A., whose address is P. 0. Box 30014,
Tampa, Florida 33630, (hereinafter referred to as
"Mortgagee" or "Bank").
R E C I T A L S :
A. Mortgagor, being indebted to Bank, executed
and delivered to Bank Mortgagor's obligations under (i) that
certain Consolidation and Renewal Revolving Note #1 dated
August 29, 1991 in the original principal sum of
$7,900,000.00, which was renewed by that Renewal Revolving
Note #1 dated December 31, 1992 in the original principal
amount of $5,000,000.00, and (ii) that certain Consolidation
and Renewal Revolving Note #2 dated August 29, 1991 in the
original principal sum of $3,500,000.00, which was renewed
by that Renewal Revolving Note #2, dated December 31, 1992
in the original principal sum of $3,500,000.00.
B. As security for its indebtedness, Mortgagor
executed and delivered to Bank, Mortgagor's Mortgage and
Security Agreement described in and amended by that Mortgage
Modification Agreement having been recorded in Official
Record Book 6369 at page 1890 of the public records of
Hillsborough County, Florida, in O.R. Book 7672 page 1879 of
the public records of Pinellas County, Florida, and in O.R.
Book 3097 page 1571 of the public records of Pasco County,
Florida as amended by that Mortgage Renewal and Extension
Agreement dated January 20, 1993 recorded in O.R. Book 6862
page 1611 of the public records of Hillsborough County,
Florida, in O.R. Book 3109 page 894 of the public records of
Pasco County, Florida, and in O.R. Book 8166 page 1277 of
the public records of Hillsborough County, Florida
(hereinafter collectively the "Mortgage").
<PAGE>
Page 2
C. Mortgagor has asked Bank to increase the
Notes and Bank is willing to do so but only under the terms
and provisions contained herein.
BODY OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, and in consideration of the sum
of $10.00 and other good and valuable consideration to each
in hand paid, the receipt of which is hereby acknowledged by
the parties, it is agreed as follows:
1. RECITALS. The above recitals are true and
correct and are incorporated herein as though set forth
herein in full.
2. INCREASE AND CONSOLIDATED NOTES. Mortgagor
has this date executed and delivered to Bank Mortgagor's
Increase Revolving Promissory Note #1 in the original
principal amount of $500,000.00 and its Consolidated
Revolving Promissory Note #1 in the original principal
amount of $5,500,000.00 together with its Increase Revolving
Promissory Note #2 in the original principal amount of
$500,000.00 and its Consolidated Revolving Promissory Note
#2 in the original principal amount of $4,000,000.00. All
references to the Note shall mean these two consolidated
notes of even date, collectively referred to as the
"Consolidated Notes" or the "Notes."
3. SECURITY. The Mortgage shall continue to
stand as security for repayment of the Consolidated Notes.
In addition, any other collateral in which Mortgagee has
been granted a lien to secure the Notes shall continue to
stand as security for the indebtedness.
4. GUARANTORS. International American Homes and
Robert J. Suarez are this day executing guarantees of the
indebtedness evidenced by the Consolidated Notes.
5. NO NOVATION. It is the intent of the parties
that this Agreement shall not constitute a novation and
shall in no way adversely affect the lien priority of the
Mortgage. In the event that this Agreement, or any part
hereof, shall be construed by a court of competent
jurisdiction as operating to affect the lien priority of the
Mortgage over the claims which would otherwise be
subordinate thereto, then to the extent that third persons
acquiring an interest in such property between the time of
execution of the Mortgage and the execution hereof are
prejudiced thereby, this Agreement, or such portion hereof
as shall be so construed, shall be void and of no force and
effect and this Agreement shall constitute, as to that
portion, a subordinate lien on the collateral, incorporating
<PAGE>
Page 3
by reference the terms of this Agreement; provided, however,
that notwithstanding the foregoing, the parties hereto, as
between themselves, shall be bound by all terms and
conditions hereof until all indebtedness owing from
Mortgagor to Mortgagee shall have been paid in full.
6. PENDING LITIGATION. Mortgagor represents and
warrants to Bank and Bank specifically relies upon such
representations and warranties as follows:
(a) There are no actions, suits, proceedings
or investigations pending or, to Mortgagor's knowledge,
threatened against or affecting Mortgagor at law or in
equity or before or by any governmental department,
commission, board or agency which might have any materially
adverse affect on Mortgagor's ability to carry on
Mortgagor's operations as presently conducted or to perform
Mortgagor's obligations under this Agreement or any of the
existing loan documents.
(b) Mortgagor is not a party to any agree-
ment or instrument or subject to any corporate restriction
or any judgment, order, writ, injunction, decree, award,
rule or regulation which materially and adversely affects
Mortgagor's business, operations, prospects, properties or
assets or condition, financial or otherwise, or Mortgagor's
ability to perform Mortgagor's obligations under this
Agreement or any other document required to be delivered in
connection herewith.
(c) No consent, waiver or authorization of
or filing with any person is required to be obtained or made
by them in connection with the execution, delivery and
performance of this Agreement or any other document required
to be delivered in connection herewith. Neither the
execution nor the delivery of this Agreement or such
documents nor the consummation of the transactions herein
and therein contemplated nor compliance with the terms,
conditions and provisions hereof and thereof will conflict
with or result in a breach of or constitute a default under
any of the terms, conditions or provisions of any agreement
or instrument to which Mortgagor is a party or by which
Mortgagor is bound or result in the creation or imposition
of any mortgage lien, charge or encumbrance of any nature
whatsoever upon Mortgagor's undertaking, property or assets.
(d) Mortgagor has furnished the Bank with
Mortgagor's financial statements for the current fiscal or
calendar period. Such financial statements have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis during such period.
The balance sheet forming a part thereof presents fairly the
financial position as at the date thereof and the statement
<PAGE>
Page 4
of profit and loss forming a part thereof presents fairly
the results of operations for the period indicated. Except
as previously disclosed in writing to the Bank since the
close of the fiscal or calendar period referred to above,
(i) there has been no change since the close of the period
referred to above in the financial condition of Mortgagor
other than in the ordinary course of business and any change
in the ordinary course of business has not been materially
adverse and, (ii) the business operations or assets of
Mortgagor have not been materially adversely affected as a
result of any act or event including without limitation
fire, accident, strike, expropriation or act of any
government.
(e) No representation or warranty made by
Mortgagor in this Agreement nor any other document furnished
to the Bank from time to time in connection herewith
contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements
herein or therein in light of the circumstances under which
they are made not misleading. Except as previously
disclosed in writing to the Bank, there is no fact known to
Mortgagor on the date they execute this Agreement which
materially adversely affects or which has any reasonable
likelihood of materially adversely affecting the ability of
Mortgagor to carry on Mortgagor's obligations as presently
conducted or to perform Mortgagor's obligations under this
Agreement, the existing loan documents, or any documents
required to be delivered by them hereunder.
(f) Environmental condition of Property;
Indemnification. Mortgagor warrants and represents to Bank
after appropriate inquiry and investigation that: (i) while
the Bank has any interest in or lien on the mortgaged
property (the "Property"), the Property is and at all times
hereafter will continue to be in full compliance with all
federal, state and local environmental laws and regulations
including but not limited to, the Comprehensive
Environmental Response, compensation and Liability Act of
1980 ("CERCLA"), Public Law No. 96-510, 94 Stat. 2767,42 USC
9601 et seq., and the Superfund Amendments and Reauthori-
zation Act of 1986 (SARA), Public Law No. 99-499, 100 Stat.
1613, and (ii) as of the date hereof there are no hazardous
materials, substances, wastes or other environmentally
regulated substances (including without limitation, any
materials containing asbestos) located on, in or under the
Property or used in connection therewith other than such
materials that are typically found in similar properties, or
Mortgagor has fully disclosed to Bank in writing the
existence, extent and nature of any such hazardous
materials, substances, wastes or other environmentally
regulated substances, which Mortgagor is legally authorized
and empowered to maintain on, in or under the Property or
<PAGE>
Page 5
use in connection therewith, and Mortgagor has obtained and
will maintain all licenses, permits and approvals required
with respect thereto, and is in full compliance with all of
the terms, conditions and requirements of such licenses,
permits and approvals. Mortgagor further warrants and
represents that Mortgagor will promptly notify Bank of any
change known to Mortgagor in the nature or extent of any
hazardous materials, substances or wastes maintained on, in
or under the Property or used in connection therewith, and
will transmit to Bank copies of any citations, orders,
notices or other material governmental or other
communications received with respect to any other hazardous
materials, substances, wastes or other environmentally
regulated substances affecting the Property.
(g) Mortgagor shall indemnify and hold Bank
harmless from and against any and damages, penalties, fines,
claims, liens, suits, liabilities, costs (including clean-up
costs), judgments and expenses (including attorneys'
consultants' or experts' fees and expenses) of every kind
and nature suffered by or asserted against Bank as a direct
or indirect result of any warranty or representation made by
Mortgagor in the preceding paragraph being false or untrue
in any material respect or any requirement under any law,
regulation or ordinance, local, state or federal, which
requires the elimination or removal of any hazardous
materials, substances, wastes or other environmentally
regulated substances.
(h) Mortgagor's obligations hereunder shall
not be limited to any extent by the term of the Consolidated
Notes, and, as to any act or occurrence prior to payment in
full and satisfaction of said Notes which gives rise to
liability hereunder, shall continue, survive and remain in
full force and effect notwithstanding payment in full and
satisfaction of the Notes and the Mortgage or foreclosure of
the Mortgage, or delivery of a deed in lieu of foreclosure.
7. CROSS DEFAULT. It is agreed between the
parties that a default under the terms and provisions of
either of the Consolidated Notes or any other loan
documentation executed by Borrower, in connection with any
loan from Bank shall be deemed a default under the terms and
provisions of all evidences of indebtedness executed by
Borrower entitling Bank to, at its option, declare the
entire outstanding principal indebtedness and all interest
accrued on all loans owed by Borrower to Bank to be
immediately due and payable in full.
8. RATIFICATION. Except as herein modified and
amended, the terms and provisions of the Mortgage and all
other documents executed by Mortgagor in favor of Mortgagee
<PAGE>
Page 6
to evidence or collateralize the loan evidenced by the
Consolidated Notes, shall remain the same.
9. COSTS. Mortgagor shall pay all costs of the
modification made hereto, including without limitation,
attorneys' fees and recording fees, as well as the cost of
an endorsement to the title policy insuring the Mortgage
after the recording of this Agreement. Such costs shall be
due at closing hereunder. In the event it is determined
that additional costs relating to this transaction are due,
Mortgagor agrees to pay such costs immediately upon demand,
including without limitation, any documentary stamps,
intangible taxes, and/or penalties and interest that may be
due thereon.
10. LATE CHARGES. Mortgagor agrees to pay a late
charge of $.05 for each $1.00 not paid within ten (10) days
from the date any payment is due under the Consolidated
Note.
11. RECORDATION. This Agreement shall be
recorded in the Public Records of Hillsborough County, Pasco
County, and Pinellas County, Florida.
12. MISCELLANEOUS. In consideration of the
extension of this loan by Mortgagee, Mortgagor hereby agrees
to cooperate and reexecute any loan documentation reasonably
deemed necessary in Mortgagee's discretion, to correct or
adjust for any clerical errors or omissions contained in any
document executed in connection with the loan.
13. EFFECTIVE DATE. The loan is being increased
and consolidated as of the execution date hereof and this
Mortgage modification Agreement will be effective as of that
date.
MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT MORTGAGOR MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR
THEREIN OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. MORTGAGOR FURTHER WAIVES ANY RIGHT MORTGAGOR MAY
HAVE TO SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN
WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED. FURTHER,
MORTGAGOR HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT
OF BANK, NOR BANK'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF SUCH
LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY
TRIAL PROVISION. MORTGAGOR ACKNOWLEDGES THAT THE PROVISIONS
<PAGE>
Page 7
OF THIS PARAGRAPH ARE A MATERIAL INDUCEMENT TO BANK'S
RENEWAL OF THIS LOAN.
"Mortgagor" as defined herein includes all of the
persons who executed the original Mortgage, and whose
covenants contained herein shall be deemed joint and several
covenants.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement under seal on the day and year first
above written.
WITNESSES: SUAREZ HOUSING CORPORATION
A Florida Company
/s/ Robert I. Antle By:/s/ Robert J. Suarez(SEAL)
Robert J. Suarez, as
Robert I. Antle its President
(Printed Name of Witness)
/s/ W. Lois Davis "MORTGAGOR"
W. Lois Davis
(Printed Name of Witness)
WITNESSES: BARNETT BANK OF TAMPA,
a state banking corporation,
formerly known as First
Florida Bank, successor by
conversion to First Florida
Bank, N.A.
/s/ Robert I. Antle
Robert I. Antle
(Printed Name of Witness) By:/s/ Carole Hartunian(SEAL)
CAROLE HARTUNIAN, as
its Vice President
/s/ W. Lois Davis "MORTGAGEE" or "BANK"
W. Lois Davis
(Printed Name of Witness)
<PAGE>
Page 8
STATE, OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing Mortgage Modification Agreement was
executed before me this 7th day of October, 1994 by
Robert J. Suarez, as President of SUAREZ HOUSING
CORPORATION, a Florida corporation, on behalf of the
corporation. He is personally known to me or has produced
_____________________ as identification and did not take an
oath.
/s/ Willie Lois Davis
Signature of Notary Public
Willie Lois Davis
Notary's Name-Typed or Stamped
STATE, OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing Mortgage Modification Agreement was
executed before me this 7th day of October, 1994 by CAROLE
HARTUNIAN as Vice President of Barnett Bank of Tampa, a
state banking corporation, formerly known as First Florida
Bank, N.A., on behalf of the corporation. She is personally
known to me or has produced _____________________ as
identification and did not take an oath.
/s/ Willie Lois Davis
Signature of Notary Public
Willie Lois Davis
Notary's Name-Typed or Stamped
MASTER LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of the 15th day of
November, 1994 (the "Loan Agreement" or "Agreement"), is
made by and between Suarez Housing Corporation, a Florida
corporation ("Borrower"), with its offices located at 9950
Princess Palm, Tampa, Florida 33619, and NationsBank of
Florida, N.A., a national banking association organized and
existing under the laws of the United States, with its
offices located at 1410 N. Westshore Boulevard, Suite 100,
Tampa, Florida ("Bank").
RECITALS
A. Borrower has applied to Bank for a revolving
line of credit loan in the principal amount of $5,700,000.00
(the "Loan") to be used for the purpose of constructing
single family dwellings on individual lots now owned or to
be acquired by Borrower in fee simple and mortgaged to Bank
as security for the Loan.
B. Bank has not agreed in advance nor committed
to Borrower to fund any or all of the construction funding
which might be advanced to Borrower, but has agreed to
establish a master note and master mortgage structure under
which advances may be made for construction on individual
lots and dwellings in accordance with plans, 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 may be agreed to be made 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 Construction Loan" means the
terms, conditions, and documentation approved by Bank and
accepted by Borrower upon which advances will be made under
the Loan for construction of a dwelling on a particularly
identified lot, which Approved Construction Loan shall be
<PAGE>
Page 2
evidenced by a written commitment letter from Bank to
Borrower.
(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.
Unless and until changed by written notice to Bank, Borrower
designates Robert J. Suarez or Robert I. Antle 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 described in and encumbered by the Mortgage.
(e) "Commitment" means Bank's commitment
letter to Borrower dated September 28, 1994 (and all
amendments thereto), the terms and conditions of which are
incorporated herein by reference, but in the event of any
conflict or discrepancy between the terms of this Agreement
and the Commitment, the terms of this Agreement shall
control.
(f) "Construction Consultant" means the
architectural, engineering, or consulting firm which Bank
may designate to perform various services on behalf of Bank.
The services to be performed by Bank's Construction
Consultant may include review of the Plans and all proposed
changes to them, preparation of a "cost take-off" con-
struction analysis (the "Construction Analysis"), periodic
inspections of construction work for conformity with the
Plans, and approval of Draw Requests.
(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 Loan Agreement" means the
written agreement made by Borrower and Bank as to each
Approved Construction Loan containing terms and conditions
governing construction funding and administration.
(i) "Cost Breakdown" means the detailed
trade breakdown of the cost of constructing the Improvements
<PAGE>
Page 3
and an itemization of nonconstruction and Land costs, all as
approved by Bank from time to time as to each Approved
Construction Loan.
(j) "Default" means a violation of any term,
covenant, or condition hereunder or a Default as defined
under any of the other Loan Documents.
(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 request for any
disbursement of Loan proceeds, which shall be submitted for
each requested disbursement as set forth in Article II
hereof.
(m) "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.
(n) "General Contractor" means Suarez
Housing Corporation, if named here, 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.
(o) "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 Project or to the
performance of any act or obligation or the observance of
any agreement, provision or condition of whatsoever nature
herein contained.
(p) "Guarantor" means collectively, and
jointly and severally, the following: Robert J. Suarez,
individually; and International American Homes, Inc., a
Delaware corporation.
(q) "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, including, without limitation, timely Completion
<PAGE>
Page 4
of the Improvements in accordance with the Construction
Documents and Loan Documents.
(r) "Improvements" means all improvements on
the Land as defined in the Mortgage.
(s) "Land" means the real property described
in the Mortgage at the inception of the Loan and as may be
later included by modification and spreader agreement.
(t) "Loan Documents" means this Loan
Agreement, the Note and any funding agreement, the Mortgage,
the Guaranty, the Financing Statements, any Construction
Loan Agreement, and any other document or writing executed
in connection therewith or in furtherance thereof.
(u) "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.
(v) "Note" means the promissory notes dated
as of the Closing Date executed by Borrower in favor of Bank
in the amount of Five Million Seven Hundred Thousand and
No/100 Dollars ($5,700,000.00) 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.
(w) "Permitted Encumbrances" means those
liens, encumbrances, easements and other matters defined in
the Mortgage as "Permitted Encumbrances."
(x) "Plans" means plans and specifications
for the 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.
(y) "Project" means the collective reference
to 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 lot and the Approved Construction Loan thereon,
as well as the aggregate of all such lots and loans.
(z) "Security Documents" means the Mortgage,
the Financing Statements, and any other instrument executed
to establish and perfect Bank's lien, and any extensions,
modifications, renewals, or replacements thereof.
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Page 5
(aa) "Site Plan" means the site plan for the
Project prepared by ______________________________ and dated
___________, 199_.
(ab) "Title Policy" means the mortgagee
title policy meeting the requirements of this Loan
Agreement.
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 Five Million
Seven Hundred Thousand and No/100 Dollars ($5,700,000.00),
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 ex-
pressly 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 instrument(s) unless otherwise defined herein. The
Loan will be a revolving line of credit. Borrower will be
entitled to borrow and reborrow the principal previously
repaid provided no default exists.
2.2 Interest. The outstanding principal balance
of the Loan shall bear interest, and principal and interest
shall be repayable, all in accordance with the terms of the
Note.
2.3 Approvals for Funding. Bank will advance
funds for individual home construction loans within the
projects previously approved by Bank. The amount to be
funded on each pre-sold unit will be an amount which does
not exceed 100% of the unit cost breakdown submitted by
Borrower and approved by Bank nor 80% of the lesser of
1) the completed value of each unit, which amount shall be
determined by an appraiser acceptable to Lender, or 2) the
contracted purchase price of the unit. The amount to be
funded on each speculative or model unit will be an amount
which does not exceed 100% of the unit cost breakdown
submitted by Borrower and approved by Lender nor 80% of the
completed value of each unit, which amount shall be deter-
mined by an appraiser acceptable to Lender. Said appraisals
will be at Borrower's expense. Funding under the construc-
tion line will be limited to: (a) no more than 10 spec or
model units under this line in any one subdivision at one
time; (b) no more than 22 spec or model units under this
line at any one time; (c) no more than 35 pre-sold units
under this line at any one time; (d) no more than 75 spec or
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Page 6
model units from all lenders at any one time. Pre-sold
units are defined as those having a firm purchase contract
negotiated at arm's length with bona fide third party
purchasers (no relatives or affiliates of Borrower or
Guarantors) with no contingencies except a first mortgage
financing contingency and either (a) a minimum of $1,000.00
deposit, and a preliminary mortgage approval from an
institutional lender to include income qualification and
credit verification, or (b) a minimum of 10% deposit on a
contract for all cash. Expenses associated with the
individual funding agreements to be drawn against this
construction line may be funded from the initial draw on
each unit. Bank shall not be obligated to advance funds
under the Note except in accordance with the terms and
conditions for an Approved Construction Loan as described in
this Agreement. Funding for construction in projects or
locations other than a previously approved project shall be
in Bank's sole discretion.
(a) Request for Approval. Borrower may
initiate funding for construction of a particular dwelling
by submitting a request to Bank, together with supporting
items or documents required by Bank as conditions precedent
to funding, including but not limited to:
(i) Construction plans and
specifications;
(ii) Cost breakdown for the
construction;
(iii) Appraisal in form and content and
by an appraiser satisfactory to Bank;
(iv) True copy of the presale contract
on the dwelling, if any;
(v) Such other information as may from
time to time be required by Bank to be submitted under
its credit underwriting practices.
After receipt and review of the foregoing and such other
information as it may require, Bank will evaluate the
application and determine whether the required documentation
is complete. If Bank approves the request for funding, it
shall issue to Borrower its written commitment letter
confirming the amount to be funded and detailing the terms,
conditions, and further requirements or instructions for
closing as to that Approved Construction Loan.
(b) Closing on Approved Construction Loan.
When Borrower has accepted and returned the commitment
letter and complied with or fulfilled its requirements for
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Page 7
closing, Borrower and Bank shall qualify the Approved
Construction Loan for funding under the Loan by executing
and providing documentation more specifically detailed in
the commitment letter from Bank to Borrower, including but
not limited to:
(i) Funding agreement, reciting the
maximum amount approved for funding on account of this
construction, and incorporating the terms of the Note
and Mortgage;
(ii) Notice of Commencement;
(iii) Builder's Risk Insurance Policy or
endorsement adding the subject property;
(iv) Such other documents as may
customarily be required by Bank in connection with
construction loans.
Unless stated otherwise in the funding agreement, all sums
disbursed on account of an Approved Construction Loan shall
mature and shall be due and payable, and the Bank's
obligation to fund shall cease, on the maturity date of the
Note, or nine months from the date of execution of the
funding agreement, or Bank's acceleration of maturity of the
Note on Borrower's default, whichever comes first. If there
is a Default under the Note, Mortgage, this Loan Agreement,
or any of the Loan Documents, or if Bank elects in the
future to terminate this Loan Agreement or not to renew the
Note at its maturity, Bank may, at its option, declare the
Note and any outstanding Approved Construction Loans
immediately due and payable, whereupon Bank shall not be
obligated to make any further disbursements under the Loan
or under any Approved Construction Loans.
2.4 Disbursements. Bank agrees that it will,
from time to time, and so long as there shall exist no
Default Condition or Default, but not more frequently than
monthly, disburse Loan proceeds to Borrower. The conditions
set forth in Article III hereof must be satisfied before
Bank will make the first advance or disbursement, and the
conditions set forth in Article IV hereof must be and remain
satisfied before Bank will make each subsequent disbursement
or advance.
2.5 Draw Requests. No later than 3:00 p.m. on
Tuesday prior to each Loan disbursement on Friday by Bank,
Borrower must submit to Bank a Draw Request, which shall
include or be accompanied by the requirements set out herein
for draws.
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Page 8
2.6 Disbursement Amounts. Following receipt of a
Draw Request and receipt and review of Bank's inspection,
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, provided no Default
Condition or Default exists.
2.7 Equity Requirements. 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.
2.8 Option to Disburse Funds to any Guarantor
and/or to Pay Contractors. If a Default shall exist, at its
option, Bank may 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 disburse-
ments 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.
2.9 Line of Credit Proceeds Availability. Prior
to each Approved Construction Loan funding, and at all times
during the term of each Approved Construction Loan, Bank
must be satisfied that the outstanding Loan balance plus the
cost to complete construction of all units then under
construction does not exceed the total amount of the Loan.
Bank shall not be obligated to make Loan disbursements if it
is not satisfied that there are sufficient Loan proceeds
available as set forth herein.
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Page 9
ARTICLE III
Conditions Precedent to First Disbursement
Bank shall not be obligated to make the first Loan
disbursement until all of the following conditions have been
satisfied by proper evidence, execution and/or delivery to
Bank, all in form and substance reasonably satisfactory to
Bank and Bank's counsel:
3.1 Note. The original Note, properly executed,
shall have been delivered to Bank.
3.2 Guaranty. The original Guaranty(s), properly
executed, shall have been delivered to Bank.
3.3 Mortgage. The Mortgage, which shall be a
first lien on the Project, shall have been properly executed
in recordable form.
3.4 Indemnity. The Hazardous Substance
Certificate and Indemnification Agreement, properly executed
by Borrower and each Guarantor, shall have been delivered to
Bank.
3.5 Financing Statements. The Financing
Statements on forms approved for filing in the appropriate
state and local filing offices shall have been properly
executed.
3.6 Title Policy. A standard ALTA mortgagee
title policy as to the Project 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, and
(5) containing no title exceptions not approved by Bank.
3.7 Title Exceptions. Copies of all documents
creating exceptions to the Title Policy.
3.8 Survey. Three 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 made in accordance with
the Minimum Technical Standards for Surveys as set out in
Chapter 21HH-6, Florida Administrative Code.
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Page 10
3.9 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. Such evidence can be
the certification that is required in connection with the
survey required herein.
3.10 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 policy naming the
Bank as mortgagee must be submitted to Bank. Satisfactory
evidence of premium payments must also be provided.
3.11 Builder's Risk Insurance. A builder's risk
insurance policy meeting the requirements set forth in the
Mortgage. Satisfactory evidence of premium payments must
also be provided.
3.12 Liability Insurance. Liability insurance
meeting the requirements set forth in the Mortgage.
Satisfactory evidence of premium payments must be provided.
3.13 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.
3.14 Guarantor's Organizational Documents and
Resolutions. A certified copy, from the appropriate
governmental body or corporate officer, of organizational
documents of Guarantor, and any partner of Guarantor, as
appropriate, certifying that Guarantor 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 and
execute the Guaranty, (iii) has made all appropriate
filings, including without limitation, qualification to do
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Page 11
business in the State of Florida, necessary to enter into
the Guaranty. Additionally, Guarantor shall provide (i) if
appropriate, certified resolutions or other internal
documents or writing of Guarantor and such partner
evidencing that Guarantor and such partner have taken all
requisite organizational action, and received all
organizational approvals, necessary to enter into and
execute the Guaranty, and (ii) such other documents or
writings as Bank may request.
3.15 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.
3.16 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.
3.17 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.
3.18 Plans and Specifications. As to each
Approved Construction Loan, two sets of the 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, electrical and site development
(including storm drainage and utility lines) plans and
specifications. The Plans for each type of proposed
residential unit must have been approved in accordance with
governing homeowners' documents and any other restrictions
governing construction of improvements, and written evidence
of such approval shall be provided to Bank at its request.
3.19 Permits. At Bank's request, a copy
certified by Borrower of all applicable permits including,
without limitation, the building permit and all permits
pursuant thereto, excavation permits, tree removal permits,
land development permits, dredge and fill permits,
<PAGE>
Page 12
stormwater discharge permits (federal and state), and any
other permits required for development and completion of the
Project.
3.20 Soil Tests. If required by Bank, a report
as to soil borings and tests made on the Land by a soil
testing firm satisfactory to Bank as to the suitability of
the surface and subsoils for the intended improvements.
3.21 Environmental Assessment. If upon
reasonable cause Bank shall so require:
(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 with 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 environ-
mental 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 and Borrower shall
fail to cure or mitigate such condition after request or
demand by 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.
3.22 Taxpayer Identification Number. Borrower's
federal taxpayer identification number.
3.23 Borrower's Affidavit. An affidavit of
Borrower regarding the absence of any other parties in
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Page 13
possession of the Land, stating that a notice of
commencement has not been filed with respect to the
Property, the non-commencement of Construction Work, and
such other matters as may be requested by Bank.
3.24 Commitment Fee. The commitment fee required
by the Commitment Letter.
3.25 Site Plan Approval. If requested by Bank,
evidence that all applicable governmental, quasi-
governmental, or regulatory authorities have approved
Borrower's site plan for the Project. A copy of the
recorded plat for the Project shall be provided to Bank
without cost or charge at Bank's request.
3.26 Facilities For Handicapped. 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).
3.27 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.
3.28 No Defaults. No Default Condition or
Default shall exist under the Loan Documents.
3.29 Draw Request. Bank shall have received
Borrower's Draw Request.
ARTICLE IV
Conditions Precedent to Disbursements
Following the First Disbursement
4.1 Periodic Disbursements. Bank shall not be
obligated to make any Loan disbursements as to an Approved
Construction Loan after the first disbursement until the
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Page 14
following requirements and conditions have been and remain
satisfied as of the date of each such disbursement:
(a) The real estate is free and clear of all
liens and encumbrances except the Security Instrument of
Bank.
(b) All evidence, statements and writings
required to be furnished under the terms of this Agreement
are true and omit no material fact, the omission of which
may make them misleading.
(c) All moneys previously advanced have been
used solely to pay for financing, labor, materials and
fixtures used or on hand and to be used in the construction
of Improvements.
(d) No mechanic's or materialmen's lien or
other encumbrance shall have been filed and remain in effect
against the Property.
(e) All terms of the Draw Requirements
marked with an (x) on the Loan Commitment have been complied
with.
(f) At the time of the first advance there
shall be no construction on the Property and no material
shall have been placed thereon to be used in construction.
(g) No Event of Default, as herein defined,
shall have occurred.
(h) The construction has been in accordance
with the Plans and Specifications and satisfactory evidence
thereof has been furnished Bank, and all change orders for
amounts in the aggregate in excess of 10% of the original
contract price for construction of Improvements have been
approved in writing by the Bank.
(i) In the sole opinion of Bank the
estimated remaining cost of construction in accordance with
the approved Plans and Specifications does not exceed the
balance hereunder to be advanced.
(j) Bank may, at its option, retain up to 7%
from the amount of the last scheduled advance pending
(i) Bank's receipt of a certificate of completion executed
by the general contractor; (ii) receipt by Bank of all lien
waivers required by Bank; and (iii) receipt by Bank of the
Certificate of Occupancy or local equivalent.
(k) All applicable construction permits
issued by appropriate governmental authorities and other
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Page 15
necessary approvals have been issued and Bank is satisfied
that all roads necessary for ingress and egress to the
Property have been completed.
(l) The representations and warranties made
in the Loan Documents must be true and correct on and as of
the date of each advance.
4.2 General Conditions of Disbursement.
Construction financing under the Loan shall be subject to
the following limitations:
(a) Only residential units within the
Project to be constructed by Borrower shall be financed
thereby;
(b) Any Loan Default declared by Bank shall
render the entire Loan in default, notwithstanding the fact
that Default may relate directly only to the construction of
a specific unit. Accordingly, any Default shall cease
further funding of every nature under the Loan, at Bank's
sole discretion.
(c) The Loan is a revolving line of credit
for the purposes stated herein. Consequently, funding from
the Loan may be advanced by Bank, repaid by Borrower, and
subsequently readvanced by Bank, all subject to the
provisions of the Loan Documents. However, notwithstanding
any contrary Provisions of said Loan Documents, the
outstanding Loan principal plus remaining committed funds
available to complete construction of the units upon which
construction has commenced under the Loan shall never exceed
the face amount of the Note at any one time.
(d) All units shall be commenced and shall
thereafter progress until the Loan maturity date, whereupon
the entire outstanding indebtedness evidenced by the Note
shall be due and payable. Borrower shall bear all risks
that the units may not be completed by the Loan maturity
date.
4.3 Limitations on Disbursements. If any of the
above conditions are not satisfied, as determined by Bank,
in its sole discretion, Bank shall not be obligated to
disburse any Loan proceeds. In addition to the foregoing
requirements, Bank reserves the right to require the
Borrower to furnish prior to each disbursement at Borrower's
expense: (a) a waiver of lien or release of lien from any
contractor, subcontractor, supplier, laborer or other lienor
who has furnished labor, materials, or other services for
construction of the Improvements or who has issued a Notice
to Owner or filed a claim of lien; (b) a certificate from
the architect, engineer, or Bank's inspector, certifying
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Page 16
that the Improvements have been completed to date in
accordance with the plans and specifications or have been
substantially completed in accordance with the plans and
specifications; (c) a foundation or as-built survey; (d) any
permits, certificate of occupancy, licenses, or other
evidence of compliance with applicable laws and building
codes; (e) an endorsement to Bank's title policy or other
form of title update satisfactory to Bank evidencing that
the Security Instrument continues to be a first lien on the
Property and that no intervening liens or other encumbrances
not consented to by Bank have been filed against the
Property since the recordation of the Security Instrument;
(f) affidavit of the Borrower that each person or entity
supplying materials or performing labor or services in
connection with the Improvements has been paid in full;
(g) such other items as may be required by the Bank in its
discretion.
4.4 Requirements for Disbursement at Completion.
Bank shall not be obligated to make the final construction
disbursement as to an Approved Construction Loan until all
of the requirements and conditions set out in the applicable
Construction Loan Agreement have been and remain satisfied
as of the date of disbursement.
ARTICLE V
The Borrower's Covenants and Agreements
5.1 Payment and Performance. Borrower will pay
when due 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.
5.2 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 or to
comply with the Commitment, 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 amount of the
indebtedness evidenced by the Note from time to time, and
certificates that Borrower knows of no defaults by or
defenses or setoffs against Lender.
5.3 Construction. The Borrower will: (a) begin
construction on the Improvements as soon as practicable
after closing on an Approved Construction Loan, and in any
event, within thirty (30) days after the date thereof;
(b) continue conscientiously the construction of the
Improvements; (c) not discontinue or permit the discon-
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Page 17
tinuance of work on the Improvements for longer than ten
(10) consecutive business days; (d) 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;
(e) not file, prior to the recording of the Mortgage, a
Notice of Commencement for the Project; and (f) meet the
schedule for lot takedowns as described in Exhibit A
attached.
5.4 Payment of Contractors. Borrower will advise
Bank in writing immediately if Borrower receives any notice,
written or oral, from any laborer, contractor, subcon-
tractor, materialmen, or other party to the effect that said
party has not been paid for any labor, services, or
materials furnished to or in the Project, and Borrower will
deliver to Bank on demand, any contracts, bills of sale,
statements, receipted vouchers or agreements, under which
Borrower claims title to any materials, fixtures or articles
used in the construction of the Improvements. Borrower
shall comply with the Construction Contract Prompt Payment
Law contained in the Florida Construction Lien Law, Chapter
713, Fla. Stat.
5.5 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 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, the Con-
struction Consultant's fees, the General Contractor's fees,
and such legal fees and costs incurred by Bank in connection
with the making of the Loan, the enforcement of Bank's
rights under the Loan Documents, or in connection with
litigation or threatened litigation by a third party which
arises because Bank made this Loan. Any such amounts paid
by Bank shall constitute part of the Debt which is secured
by the Security Documents, and shall be due and payable upon
demand.
5.6 Use of Loan Funds. Borrower shall use all
Loan proceeds disbursed to Borrower solely in payment of
costs incurred in connection with acquiring, constructing,
developing and operating the Project, in accordance with the
Cost Breakdown.
5.7 Insurance. Borrower covenants to maintain
insurance as required herein and in the Mortgage.
<PAGE>
Page 18
5.8 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, assessments and insurance premiums
have been paid in full.
5.9 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 Mortgaged Property. 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.
5.10 Additional Construction. Borrower shall not
construct or permit the construction of any improvements on
the Project other than those Improvements described in the
Plans, or approved in writing by Bank.
5.11 Financial Statements. Borrower (and
Borrower's general partners, if applicable) and each
Guarantor shall submit current internal financial statements
an a quarterly basis within 45 days after each quarter's end
and audited statements annually within 120 days after year-
end. Guarantor(s) shall provide personal financial
statements on Bank's form within 120 days after year-end.
5.12 Appraisals. In addition to the appraisals
required by Bank prior to closing of the Loan and the
individual Approved Construction Loans, updated appraisals
shall be prepared at Borrower's expense when requested by
Bank or when required in connection with any extension
options in the Note. 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 and its tenants.
5.13 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, a copy of which is
attached.
<PAGE>
Page 19
5.14 Leases Affecting Project. Borrower shall
not, without the express prior written consent of Bank,
enter into any lease affecting the Project or any part
thereof.
5.15 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, manage-
ment or operation of the Improvements, including but not
limited to the Construction Documents, the architect's
contract, the engineer's contract, 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, 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,
the engineer, or the General Contractor thereunder.
Further, Borrower will not, without the prior written
consent of Bank (i) modify, or amend the terms of the
architect's contract, the Plans, engineer'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, or the General Contractor
thereunder.
5.16 Subordinate Financing. Borrower shall not
permit there to exist nor shall Borrower obtain any
subordinate financing of the Land or any other Property
granted as security for the Loan.
5.17 Transfer of Property or 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
Project, nor shall the Borrower sell, assign, transfer,
hypothecate or dispose of all or any portion of the Property
or the Project except as permitted hereby, without the prior
written consent of Bank, which consent shall be withheld or
granted in Bank's sole and absolute discretion.
5.18 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
<PAGE>
Page 20
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 accord with such calculations.
Borrower agrees to reimburse Bank 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 Bank with any and all information requested by
Bank with respect to the Unit to be released.
5.19 Disclosure of Contracts and Notices.
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, at
all times during the construction period of any Improve-
ments, provide to the Bank, within 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 Premises.
5.20 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.
5.21 Amendments to Construction Budget. Lender
shall not be permitted to reallocate items in the Con-
struction Budget without the Borrower's prior consent. For
purposes of this and the preceding section, "Construction
Budget" shall mean for each Approved Construction Loan that
portion of the Cost Breakdown allocated to actual construc-
tion costs, not including non-construction and land costs.
If Borrower and Lender agree to amend the Construction
Budget or reallocate items in the Construction Budget 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. Lender shall not be
obligated to make any disbursements of Loan proceeds until
Borrower has provided Lender with copies of any required
notices to the Contractor and required lienors in compliance
<PAGE>
Page 21
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.
5.22 Americans With Disabilities Act. Borrower
covenants and agrees that, during the term of the Loan, to
the extent such Act is applicable, the Property 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 promul-
gated pursuant thereto. Borrower shall be solely responsible
for all ADA compliance costs, including, without limitation,
attorneys' fees and litigation costs, which responsibility
shall survive the repayment of the Loan and foreclosure of
the Property.
ARTICLE VI
Representations and Warranties
6.1 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 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.
(c) Plans. The Plans have been approved by
the Borrower, the Guarantors, and each appropriate Govern-
mental Authority.
(d) Governmental Requirements and Other
Requirements. Borrower will cause the Improvements to be
constructed in accordance with the Plans submitted to and
approved by Bank, and when so constructed the Land and the
Improvements do and shall comply with all covenants,
conditions and restrictions affecting the Land or any
portion thereof, and do and shall comply with all Govern-
mental Requirements.
(e) Use of the Project. There is no
(i) plan, study or effort by any Governmental Authority or
<PAGE>
Page 22
any nongovernmental person or agency which may adversely
affect the current or planned use of the Project, or
(ii) any intended or proposed Governmental Requirement
(including, but not limited to, zoning changes) which may
adversely affect the current or planned use of the Project.
(f) Moratorium. There is no moratorium or
like governmental order or restriction now in effect with
respect to the 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 Project have been issued and are in good standing.
(h) Condition of Project. No defect or
condition of the Land or the soil or geology thereof exists
which will impair the construction, use, or the operation of
the 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, and all plot plans
and other documents heretofore furnished by the Borrower to
Bank with respect to 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 Improve-
ments, 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 Security
Instrument, no work has been done on Improvements or on the
Property 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
<PAGE>
Page 23
Records with respect to the Property at the time of Closing.
Borrower shall not permit the commencement of any excavation
or construction work of any nature whatsoever, nor the de-
livery of any materials to the Property, 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
Security Instrument. Borrower shall post a certified copy of
the Notice of Commencement on the Property, 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 Security Instrument,
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 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.
6.2 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.
ARTICLE VII
Events of Default
7.1 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 an applicable grace period, if any.
(b) Monetary Default. Borrower's failure to
make any other payment required by this Loan Agreement or
<PAGE>
Page 24
the other Loan Documents within 15 days after demand
therefor.
(c) Other. Borrower's failure to perform
any other obligation imposed upon Borrower by this Loan
Agreement or any other Loan Document within 30 days after
demand, or as may be specified by Bank, if in the sole
opinion of Bank such Default is curable. 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.
(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 state-
ments, 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 States 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 thirty (30) days from entry; or (vi) consents to the
<PAGE>
Page 25
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 Collateral (as defined in the Mortgage) 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 Collateral; and (3) Borrower, Guarantors, 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 execu-
tion 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 Mortgaged Property (as
defined in the Mortgage) and is not removed by payment or
transferred to substitute security in the manner provided by
law, within ten (10) 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 obli-
gations under any other note, or under any other mortgage
encumbering all or any part of the Mortgaged Property, if
the other mortgage is permitted by the Bank, whether such
other note or mortgage is held by Bank or by any other
party.
(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. The death of a
guarantor, or any default in the payment or performance of
<PAGE>
Page 26
any obligation of any guarantor of the Note arising under
its guaranty or pursuant to any other Loan Document.
(k) Borrower's Continued Existence.
Borrower shall cease to exist or to be qualified to do or
transact business in the State in which the Mortgaged
Property is 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 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 dis-
posed 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 or, 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 Collateral or any
ownership interest in Borrower or any guarantor without the
prior consent of Bank or except as otherwise permitted
hereby.
(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 lender 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
any guarantor shall default under any obligation imposed by
any indemnity whether contained within any of the Loan
Documents, the Hazardous Waste Certification and Indemnifi-
cation, or otherwise.
(p) Cross Default. Any default by the
Borrower under any other documents or instruments evidencing
any other loans by Bank to Borrower or in any mortgages or
other collateral documents securing such loans.
<PAGE>
Page 27
(q) Non-Compliance with the Plans and
Specifications. Failure of any of the materials supplied
for the construction of the Improvements 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 15 days consecutively, or determination by
Bank's Construction Consultant 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.
(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 securi-
ties 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 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 sub-
stantially the ability of Borrower to perform each and every
obligation under the Loan Documents and this Agreement.
(w) Government Challenges. The validity of
any permit, approval or consent by any Governmental
Authority relating to the Property, the Improvements, or the
operation thereof is challenged by a proceeding before a
board, commission, agency, court or other authority having
jurisdiction.
(x) 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,
any guarantor, or if applicable any general partner of
Borrower, which is not corrected or cured after reasonable
notice from Bank.
<PAGE>
Page 28
ARTICLE VIII
Bank's Rights and Remedies
The following rights and remedies are available to
Bank:
8.1 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.
8.2 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, 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 con-
tract, 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 Project to complete the Improvements in the name of
Borrower. Borrower hereby empowers Bank as it 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 Improve-
ments; (f) to execute all applications and certificates in
the name of Borrower which may be required by the Construc-
tion Documents, the architect's contract, the engineer's
contract, Plans, or any of the contract documents; (g) to
prosecute and defend all actions or proceedings in con-
nection with the Project or the construction of the Improve-
ments 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
<PAGE>
Page 29
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.
8.3 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.
8.4 Remedies Cumulative: Nonwaiver. 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.
8.5 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.
<PAGE>
Page 30
8.6 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 Debt of
Borrower, 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.
8.7 Cessation of Funding. Upon the occurrence of
a Default, Bank shall have the right to immediately termi-
nate further funding of any Approved Construction Loan
irrespective of the stage of completion, and to terminate
consideration of applications for new Approved Construction
Loans.
ARTICLE IX
General Conditions
The following conditions shall be applicable
throughout the term of this Loan Agreement:
9.1 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 exer-
cise 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.
9.2 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
<PAGE>
Page 31
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 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.
9.3 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.
9.4 Amendments. This Loan Agreement shall not be
amended except by a written instrument signed by all parties
hereto.
9.5 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.
9.6 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.
9.7 Publicity. At Bank's request and expense,
and subject to applicable laws, regulations and restric-
tions, Borrower shall place upon the Project, at a location
<PAGE>
Page 32
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
Project and source of financing.
9.8 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.
9.9 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.
9.10 Captions. The captions herein are inserted
only as a matter or 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.
9.11 Notices. All notices required to be given
hereunder shall be given in accordance with the requirements
of the Mortgage.
9.12 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 city of the Borrower's domicile at time of
this Loan Agreement's execution and administered by J.A.M.S.
who will appoint an arbitrator; if J.A.M.S. is unable or
legally precluded from administering the arbitration, then
the American Arbitration Association will serve. All arbi-
tration hearings will be commenced within 90 days of the
<PAGE>
Page 33
demand for arbitration; further, the arbitrator shall only,
upon a showing of cause, be permitted to extend the com-
mencement 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 applica-
bility 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 provi-
sional 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.
<PAGE>
IN WITNESS WHEREOF, Borrower and Bank have
executed this Loan Agreement as of the above written date.
SUAREZ HOUSING CORPORATION,
a Florida corporation
/s/ Robert I. Antle
Witness
/s/ Becky R. Jarrett By: /s/ Robert J. Suarez
Witness Robert J. Suarez,
President
"Borrower"
NATIONSBANK OF FLORIDA, N.A.
_____________________
Witness
_____________________ By:_________________________
Witness Its:________________________
"Bank"
<PAGE>
JOINDER OF GUARANTOR
The undersigned as Guarantor hereby joins in and
consents to the foregoing Loan Agreement.
/s/ Robert I. Antle
Witness
/s/ Becky R. Jarrett /s/ Robert J. Suarez
Witness ROBERT J. SUAREZ
INTERNATIONAL AMERICAN HOMES, INC.,
/s/ Robert I. Antle a Delaware corporation
Witness
/s/ Becky R. Jarrett By: /s/ Robert J. Suarez
Witness Its: President
"Guarantor"
<PAGE>
EXHIBITS
A Draw Sheets
B Partial Releases
C Hazardous Substance Certificate Indemnification
Agreement
<PAGE>
EXHIBIT B
Partial Releases
PARTIAL RELEASES. 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 following terms:
(1) 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:
(a) Lender shall be given written notice of
the request for each partial release at least 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 in an amount equal to $__________ per lot.
(2) If the partial release relates to lots on
which home construction advances have been made:
(a) Borrower shall prepay principal of the
revolving line of credit Note in an amount equivalent to the
total advanced by Bank under the Loan on account of the lot
to be released, together with interest accrued thereon.
<PAGE>
EXHIBIT C
HAZARDOUS SUBSTANCE CERTIFICATE AND
INDEMNIFICATION AGREEMENT
THIS HAZARDOUS SUBSTANCE CERTIFICATE AND
INDEMNIFICATION AGREEMENT (the "Indemnity") is made as of
the 15th day of November, 1994, by Suarez Housing
Corporation, a corporation organized under the laws of the
State of Florida, whose address is 9950 Princess Palm,
Tampa, Florida 33619 ("Borrower"), Robert J. Suarez,
individually, whose address is 9950 Princess Palm, Tampa,
Florida 33619, and International American Homes, Inc., a
corporation organized under the laws of the State of
Delaware, whose address is 6001 Montrose Road, S-910,
Rockville, Maryland 20852, jointly and severally (all of the
foregoing parties are hereinafter referred to collectively
as the "Indemnitor"), in favor of NationsBank of Florida,
N.A., a national banking association (the "Bank"), whose
address is 1410 N. Westshore Boulevard, Suite 100, Tampa,
Florida 33607.
R E C I T A L S:
A. Bank is making a revolving line of credit
loan in the amount of Five Million Seven Hundred Thousand
and No/100 Dollars ($5,700,000.00) to Borrower (the "Loan")
to be secured by a mortgage on the real property owned by
Borrower described in Exhibit "A" and on real property to be
encumbered by the mortgage during the term of the Loan (all
of which property is referred to herein as the "Property").
B. The Loan is evidenced by a promissory note
executed and delivered by the Borrower (the "Note") which is
secured by a Real Estate Mortgage, Assignment and Security
Agreement and other documents described in an accompanying
Loan Agreement (the "Loan Documents").
C. To induce Bank to make the Loan to Borrower,
Indemnitor is executing and delivering this Indemnity; and
Bank has requested this Indemnity as a condition of Bank's
entering into the Loan.
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and for other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged by all parties, the parties hereto agree as
follows:
<PAGE>
Page 2
1. Recitals; Definitions.
(a) The parties agree the recitals are true
and correct, and the recitals are incorporated herein by
this reference. All exhibits attached hereto or referred to
herein are hereby incorporated by this reference.
(b) The term "Hazardous Substances" means
and includes, without limitation, any toxic or hazardous
substances or materials, petroleum or other pollutants and
substances, whether or not naturally occurring, including,
without limitation, asbestos, radon, and methane gas,
generated, treated, stored or disposed of, or otherwise
deposited in or located on or under the Property, including
without limitation, the surface and subsurface waters of the
Property. For purposes of this Indemnity, "Hazardous
Substances" shall also include any activity undertaken or
hereafter undertaken on the Property which would cause
(i) the Property to become a hazardous waste treatment,
storage, or disposal facility within the meaning of, or
otherwise bring the Property within the ambit of, the
Resource Conservation and Recovery Act of 1976 ("RCRA"),
42 U.S.C. 6901 et seq., or any similar state law or local
ordinance; (ii) a release or threatened release of hazardous
waste from the Property within the meaning, or otherwise
bring the Property within the ambit of, the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended ("CERCLA") , 42 U.S.C. 9601-9657, the
Superfund Amendments and Reauthorization Act of 1986
("SARA"), or any similar state law or local ordinance or any
other environmental law; (iii) the discharge of pollutants
or effluent into any water source or system, or the dis-
charge into the air of any emissions, which would require a
permit under the Federal Water Pollution Control Act, 33
U.S.C. 1251 et seq., or the Clean Air Act, 42 U.S.C. 7401 et
seq., the Toxic Substances Control Act, or any similar state
law or local ordinance; or (iv) any substances or conditions
in, on, or under the Property which may support a claim or
cause of action under RCRA, CERCLA, SARA, or any other
federal, state, or local environmental statutes, regula-
tions, ordinances, orders, decrees, or other environmental
regulatory requirements relating to health, safety, or the
environment (collectively, the "Statutes"), including the
presence of any underground storage tanks or underground
deposits located on the Property. Indemnitor assumes all
obligations of compliance with all environmental require-
ments related to health, safety, or the environment imposed
by federal, state, and local authorities that affect the
Property or any business or other activity conducted thereon
or therewith.
<PAGE>
Page 3
2. Presence of Hazardous Substances.
(a) Indemnitor has no knowledge after due
investigation of (i) the presence of any unlawful Hazardous
Substances on the Property, or (ii) any spills, releases,
discharges, or disposal of Hazardous Substances that have
occurred or are presently occurring on or onto the Property
or any adjacent properties, or (iii) any spills or disposal
of Hazardous Substances that have occurred or are presently
occurring off the Property as a result of any construction
or operation and use of the Property.
(b) In connection with the construction on
or operation and use of the Property, Indemnitor represents
as to itself, its contractors, subcontractors, and any other
of its agents, that, as of the date of this Indemnity, it
has no knowledge of any failure to comply with all applic-
able local, state, and federal environmental laws, regula-
tions, ordinances, and administrative and judicial orders
relating to the generation, recycling, reuse, sale, storage,
handling, transport, and disposal of any Hazardous
Substances.
(c) Indemnitor represents and warrants to
Bank that it has duly investigated the present and past uses
of the Property and has made due inquiry of the appropriate
governmental agencies and offices having jurisdiction over
the Property and the laws regulating the environment, as to
whether the Property or any property in the immediate
vicinity of the Property is or has been the site of storage
of or contamination by any Hazardous Substances. Upon Bank's
request, Indemnitor will provide Bank with a summary of its
investigations and copies of all inquiries and responses.
(d) Indemnitor warrants and agrees that the
execution and delivery to Bank of instruments adding
additional property to the described Property pursuant to
the revolving line of credit shall extend the terms,
conditions, covenants, representations and warranties of
this Agreement to such additional properties as of the time
of delivery of each such instrument.
3. Future Presence of Hazardous Substances.
Indemnitor agrees to immediately notify Bank if Indemnitor
becomes aware of (a) any Hazardous Substances or other
environmental problem or liability with respect to the
Property, or any adjacent property, or (b) any lien, action,
or notice of the nature described in paragraph 2 above. At
its own cost, Indemnitor will take all actions which are
necessary or desirable to clean up any Hazardous Substances
affecting the Property, including removal, containment, or
any other remedial action required by applicable govern-
mental or regulatory authorities.
<PAGE>
Page 4
4. Indemnification. Indemnitor hereby agrees,
jointly and severally, unconditionally, absolutely, and
irrevocably, to indemnify, defend, and hold harmless Bank,
its affiliates, successors, assigns, and the officers,
directors, employees, and agents of Bank, against and in
respect of:
(a) any loss, liability, cost, injury,
expense, or damage of any and every kind whatsoever
(including without limitation, court costs and attorneys'
fees and expenses) which at any time or from time to time
may be suffered or incurred in connection with any inquiry,
charge, claim, cause of action, demand, or lien made or
arising directly or indirectly or in connection with, with
respect to, or as a direct or indirect result of the
presence on or under, or the escape, seepage, leakage,
spillage, discharge, injection, disposal, emission, or
release from, the Property into or upon any land, the
atmosphere, or any watercourse, body of water, or wetland,
of any Hazardous Substances including, without limitation,
any losses, liabilities, damages, injuries, costs, expenses,
or claims asserted or arising under the statutes, whether
now known or unknown, including without limitation:
i. any costs, fees, or expenses
incurred in connection with the removal, encapsulation, or
other treatment of Hazardous Substances from or on the
Property;
ii. any loss or damage resulting from a
loss of priority of any of the Mortgage Loan Documents due
to the imposition of a lien against the Property;
iii. any attorneys' fees, engineer's
fees, and/or charges of any contractor or expert retained or
consulted in connection with any inquiry, claim, or demand,
including without limitation any costs incurred in connec-
tion with compliance with such inquiry, claim, or demand;
(b) any loss, liability, cost, expense, or
damage (including without limitation, attorneys' fees)
suffered or incurred as a result of or arising out of or in
connection with any failure of the Property to comply with
all applicable environmental protection laws, ordinances,
rules, and regulations relating to health, safety, or the
environment, and any litigation, proceeding, or governmental
investigation relating to such compliance or non-compliance;
and
(c) any loss, liability, cost, expense, or
damage directly or indirectly arising from any claim,
action, demand, cause of action, or damage relating to or in
connection with any personal injury concerning or relating
<PAGE>
Page 5
to the presence of asbestos or other Hazardous Substances on
the Property.
(d) any loss, liability, cost, expense, or
damage of any and every kind whatsoever (including without
limitation, fees and expenses of attorneys, engineers, and
experts) which at any time or from time to time may be
suffered or incurred in connection with any environmental
assessment undertaken at any time deemed necessary by Bank,
in its sole and absolute discretion, to evaluate or confirm
(i) whether any Hazardous Substances are present in the soil
or water at the Property and (ii) whether the use and opera-
tion of the Property comply with all applicable Statutes
relating to air quality, environmental control, release of
oil, hazardous materials, hazardous wastes and hazardous
substances, and any and all other applicable environmental
requirements. Environmental assessments may include
detailed visual inspections of the 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.
5. Survival.
(a) The provisions of and undertakings and
indemnification set out in this Indemnity shall survive the
satisfaction and release of the Mortgage and the other Loan
Documents, and shall continue to be the personal liability,
obligation, and indemnification of the Indemnitor, binding
upon the Indemnitor, forever.
(b) This Indemnity shall be continuing,
irrevocable, and binding on the Indemnitor and its
respective successors and assigns and shall inure to the
benefit of Bank and Bank's successors and assigns. Indem-
nitor's obligations hereunder may not be assigned. The
dissolution of the Indemnitor shall not affect this
Indemnity or any of Indemnitor's obligations hereunder.
(c) The representations, warranties, and
covenants of Indemnitor set forth in this Indemnity shall
continue in effect and, to the extent permitted by law,
shall survive the transfer of the Property pursuant to the
foreclosure proceedings (whether judicial or nonjudicial),
by deed in lieu of foreclosure or otherwise.
6. Indemnification Procedure.
(a) Indemnitor shall notify Bank promptly
upon receipt of any inquiry, notice, claim, charge, cause of
action, or demand pertaining to the matters indemnified
<PAGE>
Page 6
hereunder, including without limitation any notice of
inspection, abatement, or noncompliance, stating the nature
and basis of such inquiry or notification. Indemnitor shall
promptly deliver to Bank any and all documentation or
records as Bank may request in connection with such notice
or inquiry, and shall keep Bank advised of any subsequent
developments.
(b) Bank shall give written notice to
Indemnitor of any claim against Bank which might give rise
to a claim by Bank against Indemnitor under this Indemnity
stating the nature and basis of the claim, the amount
thereof, and reasonable best estimate of the amount of the
Indemnitor's liability to Bank in connection therewith.
(c) If any action shall be brought against
Bank, then after Bank notifies Indemnitor thereof as
provided in paragraph 6(b), Indemnitor shall be entitled to
participate therein, and to assume the defense thereof at
the expense of Indemnitor with counsel reasonably satis-
factory to Bank and to settle and compromise any such claim
or action; provided, however, that Bank may elect to be
represented by separate counsel, at Bank's expense, and if
Bank so elects, such settlement or compromise shall be
effected only with the consent of Bank, which consent shall
not be unreasonably withheld.
(d) Indemnitor shall make any payment
required to be made under this Indemnity promptly, and shall
make such payment in cash in the amount thereof. In the
event that such payment is not made forthwith, Bank, at its
sole election and in its sole discretion, may proceed to
suit against Indemnitor.
7. Conflict With Loan Documents. The provisions
of this Indemnity shall govern and control over any incon-
sistent provisions of any of the Loan Documents, including
without limitation, any exculpatory or non-recourse limited
provisions or limitations under any guaranty for the Loan
contained in any of the foregoing agreements.
8. Attorneys' Fees. If at any time or times
hereafter Bank employs counsel for advice or other repre-
sentation (i) with respect to this Indemnity, (ii) except as
otherwise expressly provided herein, to represent Bank in
any negotiation, litigation, trial, appeal, bankruptcy,
contest, dispute, suit, or proceeding (whether instituted by
Bank, Indemnitor, or any other party) in any way or respect
relating to this Indemnity, or (ii) to enforce Indemnitor's
obligations hereunder, then, in any of the foregoing events,
all of the attorneys' fees, paralegals' fees, legal
assistants' fees, and expenses arising from such services
and all expenses, costs, and charges in any way or respect
<PAGE>
Page 7
arising in connection therewith or relating thereto shall be
paid by Indemnitor to Bank, on demand whether or not suit is
brought, or if brought, is prosecuted to judgment.
9. Waiver. No consent or waiver, expressed or
implied, by a party of any breach or default by any other
party in the performance by that other party of its obli-
gations hereunder shall be deemed or construed to be a
consent or waiver to any other breach or default in the
performance by such other party of the same or any other
obligations of such other party hereunder. Failure on the
part of any party to complain of any act or failure to act
of another party or to declare that other party in default,
irrespective of how long such failure continues, shall not
constitute a waiver of such party of its rights hereunder.
Indemnitor's obligations hereunder shall in no way, manner,
or respect be impaired, affected, reduced, or released by
reason of Bank's failure to delay to do or take any of the
acts, actions, or things described herein or in any of the
Loan Documents.
10. Delivery of Notice. Any notice required to
be given hereunder shall be in writing and addressed to the
address set forth above, and shall be delivered by hand, by
United States certified or registered mail, return receipt
requested, or by overnight express delivery. Notice shall
be deemed received on the date of receipt if delivered by
hand; on the day after delivery to an overnight express
delivery service, charges prepaid, if service is by
overnight courier; and on the third (3rd) day following
posting if delivery by United States mail, at the addresses
set forth in the preamble of this Indemnity, or at such
other addresses as the parties may respectively designate
from time to time and give notice of to the other party
pursuant to this paragraph.
11. Governing Law. The provisions of this
Indemnity shall be governed by federal and Florida law, as
applicable.
12. Separate Covenant. Indemnitor acknowledges
and agrees that its covenants and obligations hereunder are
unsecured and are separate and distinct from its obligations
under the Loan and the Loan Documents.
13. Severability. In case any one or more
provisions contained in this Indemnity shall, for any
reason, be held invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof and this
Indemnity shall be construed as if such invalid, illegal, or
unenforceable provision had not been contained herein.
<PAGE>
Page 8
14. Entire Agreement. This Indemnity contains
the entire understanding among the parties and supersedes
any prior written or oral agreement between them respecting
the subject matter of this Indemnity. There are no repre-
sentations, agreements, arrangements, or understandings,
oral or written, between the parties hereto relating to the
subject matter of this Indemnity which are not fully
expressed herein.
15. Construction. The table of contents,
articles, section headings, captions, or abbreviations are
used for convenience only and shall not be resorted to for
interpretation of this Indemnity.
16. 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 Agree-
ment 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 applic-
able 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 city of the Borrower's domicile at time of
this Agreement's execution and administered by J.A.M.S. who
will appoint an arbitrator; if J.A.M.S. is unable or legally
precluded from administering the arbitration, then the
American Arbitration Association will serve. All arbitra-
tion 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. 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
<PAGE>
Page 9
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.
IN WITNESS WHEREOF, the undersigned has executed
this Hazardous Substance Certificate and Indemnification
Agreement as of the date first written above.
Signed, sealed and delivered
in the presence of:
Suarez Housing Corporation,
a Florida corporation
/s/ Robert I. Antle
Robert I. Antle, Witness
Print or type your name here
/s/ Becky R. Jarrett
Becky R. Jarrett, Witness
Print or type your name here By: /s/ Robert J. Suarez
Its: President
/s/ Robert I. Antle
Robert I. Antle, Witness
Print or type your name here
/s/ Becky R. Jarrett
Becky R. Jarrett, Witness
Print or type your name here /s/ Robert J. Suarez
Robert J. Suarez
/s/ Robert I. Antle International American
Robert I. Antle, Witness Homes, Inc., a Delaware
Print or type your name here corporation
/s/ Becky R. Jarrett
Becky R. Jarrett, Witness
Print or type your name here By: /s/ Robert J. Suarez
Its: President
<PAGE>
Page 10
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before
me this 15th day of November, 1994, by Robert J. Suarez as
President of Suarez Housing Corporation, a Florida
corporation, on behalf of the corporation. He/She: (check
one) [ ] is personally known to me; or
[x] has produced FLAL #S620-770-49-260-0, as
identification.
/s/ Becky R. Jarrett
Signature of person taking
acknowledgment
___________________________
(Typed, printed or stamped
name of acknowledger)
[Complete if Notary]
Notary Public, State of
Florida at Large
Serial Number:______________
My Commission Expires:
____________________________
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before
me this 15th day of November, 1994, by Robert J. Suarez.
He: (check one)
[ ] is personally known to me; or
[x] has produced FLAL #S620-770-49-260-0, as
identification.
/s/ Becky R. Jarrett
Signature of person taking
acknowledgment
___________________________
(Typed, printed or stamped
name of acknowledger)
[Complete if Notary]
Notary Public, State of
Florida at Large
Serial Number:______________
My Commission Expires:
____________________________
<PAGE>
Page 11
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before
me this 15th day of November, 1994, by Robert J. Suarez.
He: (check one)
[ ] is personally known to me; or
[x] has produced __________________, as identification.
/s/ Becky R. Jarrett
Signature of person taking
acknowledgment
___________________________
(Typed, printed or stamped
name of acknowledger)
[Complete if Notary]
Notary Public, State of
Florida at Large
Serial Number:______________
My Commission Expires:
____________________________
<PAGE>
Page 12
EXHIBIT "A"
Borrower/Mortgagor/Debtor: Suarez Housing Corporation
Lender/Mortgagee/Secured Party: NationsBank of Florida, N.A.
Legal Description
PARCEL 1:
Lots 41 and 45, Block 14, BRENTWOOD HILLS TRACT B, UNIT 2,
according to map or plat thereof as recorded in Plat Book
73, page 35, of the public records of Hillsborough County,
Florida.
PARCEL 2:
Lots 14 and 15, Block 2 AND Lots 8 and 9, Block 7, RIVERGLEN
UNIT 3, according to map or plat thereof as recorded in Plat
Book 73, page 33, of the public records of Hillsborough
County, Florida.
PARCEL 3:
Lots 1, 2, 3 and 4, Block 1, STERLING RANCH UNIT 2,
according to map or plat thereof as recorded in Plat Book
73, page 39, of the public records of Hillsborough County,
Florida.
PARCEL 4:
Lot 15, Block 2, STERLING RANCH UNIT 6, according to map or
plat thereof as recorded in Plat Book 73, page 40, of the
public records of Hillsborough County, Florida.
PARCEL 5:
Lot 70, Block 1 AND Lot 25, Block 5, WYNDHAM LAKES
SUBDIVISION PHASE I, according to map or plat thereof as
recorded in Plat Book 68, page 30, of the public records of
Hillsborough County, Florida.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 1,938
<SECURITIES> 0
<RECEIVABLES> 444
<ALLOWANCES> 0
<INVENTORY> 16,997
<CURRENT-ASSETS> 0 *
<PP&E> 106
<DEPRECIATION> 162
<TOTAL-ASSETS> 27,688
<CURRENT-LIABILITIES> 0 *
<BONDS> 17,026
<COMMON> 29
0
0
<OTHER-SE> 5,482
<TOTAL-LIABILITY-AND-EQUITY> 27,688
<SALES> 50,347
<TOTAL-REVENUES> 51,225
<CGS> 43,455
<TOTAL-COSTS> 50,066
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 857
<INCOME-PRETAX> 1,159
<INCOME-TAX> 72
<INCOME-CONTINUING> 1,087
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,087
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
* The company does not present a classified balance sheet.
</TABLE>
