Exhibit 10.11
REVOLVING WORKING CAPITAL, LAND ACQUISITION AND DEVELOPMENT
AND RESIDENTIAL CONSTRUCTION BORROWING BASE FACILITY
AGREEMENT

     
Date:
  March 21, 2007
 
   
Loan No.:
  1001839 
 
   
Borrower:
  LEVITT AND SONS, LLC
 
  2200 West Cypress Creek Road
 
  Fort Lauderdale, Florida 33309
 
   
Lender:
  OHIO SAVINGS BANK
 
  200 Ohio Savings Plaza
 
  Mail Code OH 99-0204
 
  1801 East Ninth Street
 
  Cleveland, Ohio 44114
 
  Attn: Frank J. Bolognia, Sr. Executive Vice President
 
   
Maximum Facility Amount:
  $100,000,000.00 
 
   
Expiration Date:
  March 20, 2009, as such date may be extended as set forth below.

     THIS REVOLVING WORKING CAPITAL, LAND ACQUISITION AND DEVELOPMENT AND
RESIDENTIAL CONSTRUCTION BORROWING BASE FACILITY AGREEMENT (the “Agreement”) is
entered into as of the date set forth above, by and between Borrower and Lender,
with reference to the following facts:
     A. Lender has approved a revolving loan facility (the “Loan” or the
“Facility”) for Borrower under which Borrower may request funding for the
acquisition or refinance of land, development thereof, and the construction of
Units (as hereinafter defined) located in one or more Approved Projects (as
hereafter defined) in the states of Florida, Georgia, North Carolina, South
Carolina, Tennessee and Texas, and for working capital purposes. The
availability of such credit for new projects hereunder is subject to the
Expiration Date identified above.
     B. The total amount of the Facility is the Maximum Facility Amount shown
above, the availability of which is subject to certain sub-limits and
restrictions, including the establishment of a Maximum Available Amount” that is
determined from time to time based on the current value of the underlying
collateral and certain other restrictions as set forth on SCHEDULE 1.
     C. As of the date hereof, Lender has agreed to advance funds under the
Facility in connection with the Project identified in Section I of SCHEDULE 1
hereto, which shall constitute an Approved project, as defined below. The
approval by Lender of additional Approved Projects
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and the disbursement of funds in connection therewith shall be upon Borrower’s
request and at Lender’s sole discretion, in accordance with the provisions
hereinafter contained.
     D. Except for funds advanced under the Working Capital Line, funds advanced
under the Facility shall be secured by one or more mortgages and or deeds of
trust, as applicable, in a form satisfactory to Lender (collectively, and as
amended from time to time, the “Mortgages”) creating first priority liens or
deeds of trust encumbering the Property (the “Property”) included or to be
included within an Approved Project for which Borrower anticipates an immediate
need for financing hereunder. In lieu of recording additional Mortgages to
encumber additional Properties to be designated additional Approved Projects,
any existing Mortgage and the legal description therein may be modified and
amended, by a mortgage modification and spreader agreement, in form and content
acceptable to Lender, to encumber such additional Property as funds under the
Facility are advanced in connection with such additional Property.
     E. The repayment of funds advanced from time to time under the Working
Capital Line shall be (i) guaranteed by the Working Capital Line Guarantor and
(ii) secured by a pledge of, and security interest in and to, all the equity
interests (the “Working Capital Line Collateral”) in Borrower.
     F. Any term set forth herein in quotes shall be as hereinafter defined in
this Agreement.
     NOW, THEREFORE, the parties agree as follows:
     1. CERTAIN DEFINITIONS. As used herein, the following terms shall have the
meanings set forth below:
          1.1 “A&D Draw” means a “Draw” which is made for the acquisition or
refinancing of “A&D Land”, development of “A&D Improvements”, or other costs
contained in a “Budget” for an “A&D Project” set forth in an “A&D Project
Addendum”.
          1.2 “A&D Draw Request” means that portion of the Collateral
Verification Certificate representing the Collateral Basis Amount for A&D
Projects submitted in accordance with the draw procedures set forth in Section 4
below which shall be accompanied by (i) an AIA Application and Certificate for
Payment signed by Borrower’s engineer and general contractor, if applicable, of
the A&D Project, or equivalent acceptable to Lender; (ii) Borrower certifying
the status of development and the percentage of completion; and (iii) a
spreadsheet report for all costs confirmed by an applicable AIA form.
          1.3 “A&D Improvements” means the development improvements being made
by Borrower or the applicable Project Guarantor on A&D Land, as set forth in the
A&D Project Budget.
          1.4 “A&D Land” means Property for which Borrower or the applicable
Project Guarantor has in place or shall obtain all permits and approvals for
development, that is purchased by Borrower or a Project Guarantor for the
purpose of eventual development as an A&D Project.
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          l.5 “A&D Land Acquisition” means the acquisition or refinance of A&D
Land by Borrower or a Project Guarantor.
          1.6 “A&D Land Addendum” means a document which shall be substantially
in the form shown on the attached EXHIBIT A, executed by an “Authorized Person”
on behalf of Borrower and by Lender, which shall indicate Lender’s approval of
an A&D Land Acquisition.
          1.7 “A&D Land Allocation” means the portion of the Maximum Facility
Amount allocated for a particular A&D Land Acquisition, as set forth in an A&D
Land Addendum for such A&D Land Acquisition or as set forth on an A&D Project
Budget.
          1.8 “A&D Project” means the A&D Land and the A&D Improvements in or
for a particular Approved Project.
          1.9 “A&D Project Addendum” means a document which shall be
substantially in the form shown on the attached EXHIBIT B, executed by an
Authorized Person on behalf of borrower and by Lender, which shall indicate
Lender’s approval of, and special conditions relating to, an A&D Project.
          1.10 “A&D Project Allocation” means the portion of the Maximum
Facility Amount allocated for a particular A&D Project, as set forth in an A&D
Project Addendum for such A&D Project.
          1.11 “Appraisal” means an appraisal ordered by Lender from an
independent appraiser acceptable to Lender, that complies with all applicable
state and federal laws and regulations and with the Uniform Standards of
Professional Appraisal Practice; provided, however, that the value shown in any
such Appraisal shall be subject to review and potential adjustment by Lender’s
in-house appraisal review department, in its sole discretion.
          1.12 “Approved Project” means Property approved by Lender in its sole
discretion for inclusion as collateral for this Facility and for Draws hereunder
under one of the applicable “Eligible Property Types”. Borrower shall provide
Lender with all relevant information for each prospective or existing Approved
Project based on its applicable Eligible Property Type, including, without
limitation and at Lender’s request, appraisals, surveys, recorded plats, plans
and specifications, copies of all existing permits and governmental approvals
obtained for the Approved Project, insurance policies in form and amount
acceptable to Lender and issued by insurance companies acceptable to Lender,
environmental audits, project budgets, and all other documents and information
that Lender may require, and that otherwise satisfy the requirements for
approval of a particular Project as set forth in Section 4 below or on SCHEDULE
1.
          1.13 “Authorized Person” means a person authorized to execute and
deliver the “Loan Documents”, A&D Draw Requests, “Borrowing Base Draw Requests,”
“Working Capital Line Draw Requests,” “Collateral Verification Certificates” in
the form attached hereto and incorporated herein as EXHIBIT C, and “Certificates
of Compliance” in the form attached hereto and incorporated herein as EXHIBIT D,
and to certify financial statements in connection with
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this Facility, as set forth in a borrowing resolution or otherwise designated by
Borrower in writing from time to time in a form acceptable to Lender.
          1.14 “Borrower” means, individually and collectively if more than one,
those entities identified above and on SCHEDULE 1 attached hereto.
          1.15 “Borrowing Base Draw” means a Draw other than an A&D Draw or a
Working Capital Line Draw.
          1.16 “Borrowing Base Draw Request” means that portion of the
Collateral Verification Certificate representing the Collateral Basis Amount
other than A&D Projects.
          1.17 “Borrowing Formula” means the percentages set forth in SCHEDULE 1
hereto, which represent the maximum rates at which Draws shall be made hereunder
for the A&D Improvements and for the construction of particular types of Units
on the Property.
          1.18 “Budget” means a budget or series of budgets that cover all
“Eligible Costs” for the acquisition or refinance of A&D Land and/or the
development of an A&D Project with proceeds of this Facility and that have been
reviewed and approved by Lender and/or any third-party consultant retained by
Lender to review such budget(s) prior to the disbursement of the first A&D Draw
to be made hereunder for such A&D Land Acquisition or A&D Project.
          1.19 “Collateral Basis Amount” means as defined in SCHEDULE 1.
          1.20 “Collateral Verification Certificate” means a document setting
forth each A&D Land Allocation and associated costs in place, A&D Project
Allocation and associated costs in place, the percentage of development
completed in each such A&D Project, Units (and related “Developed Lots”)
securing the Facility and associated costs in place, the percentage of
construction completed on each such Unit, the marketing status of each such
Unit, and such additional information regarding the status of construction of
each such Unit as Lender, in its sole discretion, may require, which document
shall be in the form shown on the attached EXHIBIT C, completed by Borrower and
certified by an Authorized Person in a form provided by Lender or a form
otherwise acceptable to Lender, and provided to Lender within twenty (20) days
from month end for the month being reported.
          1.21 “Construction Documents” means the general construction contract
between Borrower or any applicable Project Guarantor and any general contractor
for the rendering of all services and the furnishing of all materials for the
development and construction of improvements on any portion of the Property,
together with any other or additional contracts entered into in connection with
the construction of the improvements on any portion of the Property, and all
subcontracts, “Plans and Specifications”, and related documents, in all cases
satisfactory in form and substance to Lender.
          1.22 “Curtailment Requirement” means the minimum required principal
repayment schedule, if any, for a particular A&D Project set forth on the
applicable A&D Project Addendum.
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          1.23 “Debt” means GAAP total liabilities for the specified Financial
Covenant Party(ies), but excluding Subordinated Debt.
          1.24 “Debt-to-Worth Ratio” means the ratio of the total Debt of the
specified Financial Covenant Party(ies) to its “Tangible Net Worth”.
          1.25 “Developed Lot” means a fully developed, platted, separately
conveyable lot developed as part of an A&D Project.
          1.26 “Draw” means a disbursement of funds under the “Note” in
accordance with Section 4 below and the other terms of this Agreement.
          1.27 “Eligible Costs” means, as applicable, the expenses of acquiring
specific property and developing an Approved Project, including, without
limitation: interest payments on the Loan, development costs, recording fees,
closing and sale costs, and any other costs that Lender may approve in its sole
discretion.
          1.28 “Eligible Property Types” means A&D Land, A&D Improvements,
Developed Lots, and Units that are located in one or more Approved Projects that
secure the Facility with a first priority lien or trust deed under the Mortgages
(subject only to exceptions approved by Lender) and have not been included in
Borrower’s Collateral Verification Certificates for longer than the “Maximum
Holding Period” specified in SCHEDULE 1, if any, for the particular property
type.
          1.29 “Equity Funds” means an amount to be contributed from Borrower’s
own funds equal to the difference between the Eligible Costs and the amounts
available for borrowing under the Facility.
          1.30 “Expiration Date” means the date set forth above, which is the
date on which Lender’s authorization for Borrower to add additional collateral
to the Facility expires and the Term-Out Period begins, as such dates may be
extended as set forth below.
          1.31 “Expiration Date Extension” means as described in Section 2.4
herein.
          1.32 “Financial Covenant Party” and, collectively, “Financial Covenant
Parties” means each of the entities whose financial performance determines
Borrower’s compliance with one or more of the financial covenants set forth on
SCHEDULE 2 attached hereto, as such parties are identified in that Schedule.
          1.33 “Guarantor” means, individually and collectively, the Working
Capital Line Guarantor and each Project Guarantor.
          1.34 “Guaranty” means, individually and collectively, the
Unconditional and Continuing Limited Guaranty of the Working Capital Line
Guarantor and the Unconditional and Continuing Guaranty and Indemnity Agreements
executed by the Project Guarantors, as required herein.
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          1.35 “Letter of Credit” means a letter of credit issued by Lender to
or for the benefit of Borrower or any Project Guarantor.
          1.36 “Leverage” means the Debt-to-Worth Ratio.
          1.37 “Loan Documents” means the Note, the Guarantees, the Mortgages,
the Working Capital Line Pledge, this Agreement, and all other agreements and
documents evidencing, securing, or otherwise relating to this Facility or any
Draw under this Facility, all of which shall be in the form required by Lender.
          1.38 “Maturity Date” means the date which is twenty-four (24) months
after the Expiration Date, as such Expiration Date may be extended as provided
for herein or in the other Loan Documents.
          1.39 “Maximum Available Amount” shall have the meaning given to such
term in SCHEDULE 1.
          1.40 “Maximum Holding Period” means the time period specified in
SCHEDULE 1 for each Eligible Property Type, which time period represents the
maximum amount of time that any particular Property may be included in
Collateral Verification Certificates used in calculating the Maximum Available
Amount in the manner set forth on SCHEDULE 1.
          1.41 “Net A&D Allocations” means the sum of all A&D Project
Allocations less the Per Lot Amounts for all Developed Lots within such A&D
Projects that are either Released Lots or on which construction of a Unit has
commenced, provided such Unit is included in a Collateral Verification
Certificate.
          1.42 “Note” means, collectively, one or more Revolving Promissory
Notes, in the aggregate principal amount not exceeding the Maximum Facility
Amount, executed and delivered to Lender by Borrower to evidence this Facility,
as the same may be amended, modified, split, consolidated or renewed from time
to time.
          1.43 “Per Lot Amount” means the per lot amount set forth on the
applicable A&D Project Addendum.
          1.44 “Plans and Specifications” means, as applicable, the final
development plans and specifications and the full set of engineering and
architectural plans and specifications for development or construction in
connection with the applicable Approved Project or Units, all as reviewed and
approved by Lender.
          1.45 “Project” means, from time to time all subdivision development
and residential construction work scheduled or proposed by Borrower to be
completed with proceeds of the Facility with respect to Approved Projects.
          1.46 “Project Guarantor” means each owner of Property to become A&D
Land or an Approved Project, which owner shall have executed and delivered to
Lender (i) an unconditional guaranty, in form and content acceptable to Lender
in its sole discretion, pursuant to which such
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owner shall have jointly and severally guaranteed the repayment, in full, of the
Facility, (ii) a Mortgage encumbering such Property as a first priority lien or
deed of trust thereon and (iii) such other documents as may be reasonably
required in connection with the requested designation of Property owned by such
person or entity as A&D Land or an Approved Project, in accordance with
Section 3 hereof.
          1.47 “Qualified Contract” means a binding contract, in form and
content reasonably satisfactory to Lender, for the sale of a Unit for
consideration approved by Lender to a purchaser unaffiliated with Borrower or
Guarantors, under which (i) Borrower or the applicable Project Guarantor has
received cash deposit(s) in such percentage of the Unit’s approved sale price as
Lender may reasonably require; (ii) the proposed purchaser is purchasing the
Unit for cash or has been approved for permanent financing by an institutional
lender reasonably satisfactory to Lender; (iii) all contract contingencies,
other than seller’s performance (including financing contingencies), have been
satisfied or waived; (iv) all applicable cancellation or rescission periods have
expired; and (v) neither Borrower, Guarantor nor any affiliate thereof is
obligated to provide any purchase money financing for such Unit.
          1.48 “Released Lot” means a Developed Lot which has been released from
the lien and encumbrance of the applicable Mortgage.
          1.49 “Sub-Limit” means the Maximum Available Amount and the related
restrictions on the aggregate amounts outstanding under the Facility for the
Working Capital Line or for particular Eligible Property Types and related
limits on disbursements for certain purposes, all as set forth in SCHEDULE 1
hereto.
          1.50 “Subordinated Debt” means indebtedness and liabilities of
Borrower that have been subordinated by written agreement in form and substance
acceptable to Lender to indebtedness owed by Borrower to Lender.
          1.51 “Tangible Net Worth” means the aggregate of shareholder equity of
the specified Financial Covenant Party(ies) increased by Subordinated Debt due
to parent and decreased by all intangible assets (i.e., goodwill, trademarks,
organizational expenses, and similar intangible items) and decreased by
obligations due from shareholders and/or affiliates of the specified Financial
Covenant Party(ies).
          1.52 “Term-Out Period” means the twenty four (24) month period
immediately following the Expiration Date, during which the Facility is subject
to certain additional restrictions, all as set forth on SCHEDULE 1 hereto.
          1.53 “Unit” means a Developed Lot and the residential dwelling
constructed or to be constructed thereon, located in an Approved Project
including any of the following, as designated in Borrower’s Collateral
Verification Certificate and confirmed or adjusted by Lender’s inspections:
               1.53.1 “Model Unit” means a Unit that is under construction or
has been constructed for use as a model for sales and marketing purposes.
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               1.53.2 “Pre-Sold Unit” means a Unit with respect to which there
exists a Qualified Contract, subject only to completion, final inspection and
closing.
               1.53.3 “Spec Unit” means a Unit that is not pre-sold (or as to
which a Qualified Contract has been terminated), and that will be sold on the
open market upon completion.
          1.54 “Unsatisfied Curtailment Requirement” means the cumulative
Curtailment Requirement for a particular A&D Project as reduced by all Per Lot
Amounts for all Developed Lots within such A&D Project that are either Released
Lots or on which construction of a Unit has commenced, provided such Unit is
included in a Borrowing Base Draw Request.
          1.55 “Working Capital Line” means a portion of the Facility, in the
amount not exceeding $15,000,000.00 at anyone time, available for disbursement
to Borrower without regard to the Borrowing Formula or any Collateral Basis
Amount, in accordance with the provisions of Section 2.6 and Section 4 hereof.
          1.56 “Working Capital Line Collateral” means all of the equity
interests in Borrower, and any successor thereof, which interest shall have been
duly and validly pledged to Lender as collateral security for the prompt and
full satisfaction of all obligations of the Working Capital Line Guarantor under
its Guaranty of the Working Capital Line.
          1.57 “Working Capital Line Draw” means a Draw made under, and subject
to all conditions pertaining to, the Working Capital Line, in accordance with
Section 4 hereof.
          1.58 “Working Capital Line Draw Requests” means a written request for
the disbursement to Borrower in accordance with the procedures set forth in
Section 4 below.
          1.59 “Working Capital Line Guarantor” shall mean Levitt Corporation a
Florida corporation, and its successors.
          1.60 “Working Capital Line Pledge” shall mean the Pledge and Security
Agreement of even date herewith, executed by the Working Capital Line Guarantor
in favor of Lender, encumbering the Working Capital Line Collateral as security
for the obligations of the Working Capital Line Guarantor under its limited
guaranty of the Facility.
     2. LINE OF CREDIT PROVISIONS.
          2.1 Description of the Facility. The purpose of the Facility is to
fund the Borrower’s working capital needs and the acquisition or the refinance
of A&D Land, the development of A&D Land, and the construction of Units located
in one or more Approved Projects, and neither Borrower nor any Project Guarantor
shall use Draws for any other purpose. Subject to the terms and conditions of
this Agreement, upon Borrower’s submission of a Working Capital Line Draw
Request or a Collateral Verification Certificate (comprised of A&D Draw Requests
and Borrowing Base Draw Requests) and subject to Lender’s approval, Lender will
authorize Draws, which shall be subject to the Maximum Facility Amount, the
Maximum Available Amount, and all related Sub-Limits. Lender will maintain
records reflecting the disbursed and un-disbursed portions of the Maximum
Facility Amount and Maximum Available
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Amount, A&D Land Allocations, A&D Project Allocations, Net A&D Allocations, and
payments received and applied to the outstanding Facility, interest accrued, and
other matters related to the Facility and the Note, which shall be conclusive
evidence of amounts owing thereunder absent manifest error.
          2.2 Interest and Payment Provisions.
               2.2.1 Interest and Payment Provisions. Interest rates and payment
provisions shall be as set forth in the Note and as further described in
Section 2.2.3.
               2.2.2 A&D Project Interest Reserves. If applicable to a specific
A&D Project, that portion of an A&D Land Allocation or an A&D Project Allocation
allocated in the Budget for the A&D Land Acquisition or A&D Project set forth in
the A&D Land Addendum or A&D Project Addendum, if any, for the payment of
interest (the “Interest Reserve”) shall be retained by Lender and shall be
available for payment of accrued interest due Lender pursuant to that portion of
the outstanding principal balance of the Note consisting of A&D Draw Requests
for the particular A&D Project. Borrower hereby authorizes Lender to advance
such proceeds on behalf of Borrower directly to Lender each month to pay such
portion of the interest due on the Note, notwithstanding that Borrower may not
have requested an advance of such amount. Such advance, if made, shall be made
by a bookkeeping entry on Lender’s records, shall be considered an A&D Draw
Request, added to the outstanding principal balance of the Note and shall be
deemed paid to and received by Borrower. The authorization hereby granted,
however, shall not obligate Lender to make any such advance or prevent Borrower
from paying interest from its own funds. Borrower acknowledges that the payment
of interest by the method described in this section is for its convenience and
benefit. Notwithstanding any term or provision hereof to the contrary, if from
time to time Lender reasonably determines, in its sole and absolute discretion,
that the undisbursed portion of the interest reserve established pursuant to the
Budget for the A&D Project (the “Undisbursed Reserve Sum”) may not be sufficient
to defray in its entirety the entire amount of interest allocated to the A&D
Project which Lender then anticipates is likely to accrue during the remainder
of the time the A&D Draw Request for such A&D Project shall be outstanding (the
“Anticipated Interest Sum”), whether as a result of (a) any existing or
anticipated increase in the applicable interest rate, (b) any existing or
anticipated deviation from sales or income pro-formas or projections, (c) any
existing or anticipated increase in cost of development or delay in commencement
or completion of development, and/or (d) any other matter Lender deems relevant
in assessing the possibility of any interest reserve insufficiency, then Lender
may, at its option, elect to (i) make no further advances from the Undisbursed
Reserve Sum and require interest payments to be made directly by Borrower,
(ii) require Borrower to deposit in an escrow account with Lender or such other
escrow agent as Lender may designate, pursuant to an escrow agreement in form
and content as required by Lender, an amount equal to the difference between the
Anticipated Interest Sum and the Undisbursed Reserve Sum, and/or (iii) require
Borrower to provide such other and further assurances to Lender as Lender may,
in its discretion, reasonably require, it being agreed that Borrower’s failure
to fully comply with any of Lender’s requirements pursuant to this Section 2.2.2
within ten (10) days from the delivery to Borrower of Lender’s notice of such
requirements shall, without further notice, constitute an “Event of Default”
under this Agreement and each of the other Loan Documents.
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               2.2.3 Principal Payments. In addition to the interest and
principal payment requirements of the Note, Borrower shall make principal
payments as needed from time to time in order to ensure that the principal
amount outstanding under the Facility at no time exceeds the Maximum Facility
Amount, that the aggregate outstanding principal amount of Draws at no time
exceeds the Maximum Available Amount, or any applicable Sub-Limits are exceeded.
Further, if there exists Unsatisfied Curtailment Requirements such that, after
the application of such principal payments, the Collateral Basis Amounts (as
further described in SCHEDULE 1) for all Eligible Property Types included in the
Maximum Available Amount are insufficient to cover all Unsatisfied Curtailment
Requirements and the face amount of all outstanding Letters of Credit, Borrower
shall make an additional principal payment sufficient to satisfy all Unsatisfied
Curtailment Requirements, which shall be applied by Lender to the Unsatisfied
Curtailment Requirements, and to the outstanding Facility and shall further
comply with the provisions of Section 2.5 below. Provided no Event of Default
shall have occurred (and not been waived, in writing, by Lender), principal
payments received by Lender shall be applied to the Facility first, to the
extent applicable, in accordance with the preceding sentence and then as
directed by Borrower. Following the occurrence of any Event of Default, which
shall not have been waived, in writing, by Lender, Lender may apply such
principal receipts in such order as Lender may determine, in its sole
discretion.
          2.3 Facility Fees and Costs. Borrower shall pay, either from proceeds
of the Facility or from Borrower’s own funds, at Lender’s discretion, the
nonrefundable Facility Fees in the amounts and in the manner specified in
SCHEDULE 1. Borrower shall pay, within five (5) business days following Lender’s
demand, all reasonable out-of-pocket costs related to the Facility, including
without limitation: title insurance premiums, appraisal fees, recording costs,
third-party architect/engineer fees, fees for plan and cost reviews, if any, by
third-party consultants, and attorneys’ fees.
          2.4 Extension of Expiration Date. Upon each annual anniversary of the
date hereof, at the sole discretion and option of Lender, the Expiration Date
may be extended in writing for a period of twelve (12) months, subject to
Lender’s review of the latest annual fiscal year end financial information, and
all supplemental current financial statements provided by Borrower to Lender and
such other information as Lender may deem material, and on such terms as Lender
may require, including payment of any applicable Facility Fee (See Schedule 1
hereto).
          2.5 Letter of Credit. From time to time, upon the request of Borrower,
Lender shall issue Letter(s) of Credit to or for the benefit of Borrower or any
Project Guarantor; provided, however, that the issuance of each Letter of Credit
by Lender shall be subject to the approval of Lender in Lender’s sole
discretion. Each such Letter of Credit shall have an expiry date no later than
thirty (30) days prior to the then applicable Maturity Date. In the event that
the sum of (i) the outstanding principal balance of the Note plus
(ii) unadvanced A&D Land Allocations and unadvanced Net A&D Allocations, plus
(iii) the face amount of all outstanding Letters of Credit issued to or for the
benefit of Borrower or any Project Guarantor, exceeds the sum of (a) the amount
of the Working Capital Line and (b) the Collateral Basis Amounts for all
Eligible Property Types included in the Maximum Available Amount after the
application of any principal payments required by Section 2.2.3 above, Borrower
shall immediately deposit with Lender, upon demand therefor, the amount of such
excess, which shall be deposited into an account established with Lender, which
account shall be assigned as additional collateral for the
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Note. Thereafter, Borrower shall maintain a balance in such account in the
amount of such excess, as such excess may increase or decrease over time in
conjunction with changes in the Maximum Available Amount and availability under
the Working Capital Line.
          2.6 Working Capital Line. Subject to all of the terms and conditions
set forth in Section 4 or otherwise in this Agreement, upon Borrower’s
submission of Working Capital Line Draw Requests, Lender shall disburse Draws
under the Working Capital Line without regard to any Collateral Basis Amount,
provided that the amount of any such disbursement shall not exceed the
limitation set forth in Section 4.4.3 hereof. At Borrower’s request at any time
during the term of the Facility, Borrower may irrevocably elect, by written
notice to Lender, to terminate the Working Capital Line. Effective upon receipt
of any such termination notice, Lender’s obligation to disburse any further
Working Capital Line Draws shall cease and the Working Capital Line shall be
reduced to the then outstanding principal balance thereof, as further reduced by
the amount of each principal payment subsequently received by Lender and applied
by Lender to the Working Capital Line, as provided in this Agreement. Upon the
termination of the Working Capital Line and the repayment, in full, of the
Working Capital Line, Lender shall (a) cancel the Working Capital Line
Guarantor’s Guaranty, (b) terminate Lender’s security interests in the Working
Capital Line Collateral and (c) cancel and return to the Working Capital Line
Guarantor the Working Capital Line Guarantor’s Guaranty and the Working Capital
Line Collateral.
     3. CONDITIONS TO CLOSING AND ADVANCEMENT OF FUNDS FOR PROPERTY. Lender’s
obligation to advance any funds under this Facility with respect to any existing
Approved Project or A&D Land, and Lender’s subsequent obligation to advance
funds with respect to any additional Property, shall be in Lender’s sole and
absolute discretion and subject to approval by Lender’s credit administration
department and (unless waived or deferred by Lender, in writing) the
satisfaction, at Borrower’s sole cost and expense, of each of the following
conditions for the particular Property providing the basis for which Borrower is
requesting funds:
          3.1 Approved Project. The additional Property shall either have been
approved as A&D Land by Lender, in its sole discretion, or shall be located in
an Approved Project, and for A&D Projects, Lender shall have approved Borrower’s
plans for the current stage of development of such A&D Project proposed as
additional Property hereunder. For A&D Land, it shall be sufficient to indicate
Lender’s approval by its execution of an A&D and Addendum. For an A&D Project,
it shall be sufficient to indicate Lender’s approval by its execution of an A&D
Project Addendum, which may contain special conditions precedent to any or all
advances hereunder.
          3.2 Guaranty of Property Owner. The fee owner of the applicable
Property shall have become a Project Guarantor, guaranteeing repayment (as a
direct obligor, and not as a guarantor of collection) of the Note and all
obligations of Borrower under the Facility.
          3.3 Recording of Mortgages. A Mortgage (together with an assignment of
leases, rents, development and similar rights and such other security documents
as are customary in the applicable jurisdiction) shall have been recorded in the
appropriate jurisdiction and Borrower or the applicable Project Guarantor shall
have paid all recording fees and taxes
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(excluding real estate taxes not then due and payable) and removed all
encumbrances (a) necessary to perfect the Mortgage as first lien or first deed
of trust (as applicable) on the applicable Property and (b) not approved by
Lender, in its sole discretion.
          3.4 Title Policy. Borrower or the applicable Project Guarantor shall
have procured, before any A&D Draw is made hereunder with respect to the
particular A&D Land or A&D Project, after the initial recordation of the
Mortgage encumbering such Property or following the recording of any amendments
thereto or any additional Mortgages required to secure the Facility, an ALTA
1970 form extended coverage lender’s policy of title insurance (or its
equivalent acceptable to Lender) in a form and issued by a title company
satisfactory to Lender, in an insured amount of not less than (a) in those
jurisdictions imposing material taxes on Mortgages based on the amount secured
thereby, the Maximum Available Amount allocated to the applicable Approved
Project plus 120%, and (b) in all other jurisdictions, an amount equal to the
Maximum Facility Amount minus the maximum amount of the Working Capital Line
(i.e. $85,000,000.00), insuring the Mortgages as first liens or first deeds of
trust (as applicable) on all Property securing the Facility, subject only to
such exceptions as may be approved in writing by Lender and including such
endorsements as shall be customary or as Lender may require, including, but not
limited to Tie-In Endorsements, Florida Form 9 (or comparable comprehensive
endorsements in other States), Letter of Credit Endorsements and Revolving
Credit Endorsements (provided issuance of the requested endorsements is legal in
the applicable State). No work of any character is to be commenced or material
delivered to the applicable Property before the title policy insuring such
Mortgage is furnished to Lender and Lender has advised Borrower that such policy
has been received and is acceptable to Lender, except to the extent that the
title policy ultimately provided to Lender insures the first lien priority of
such Mortgage subject only to permitted exceptions approved by Lender despite
any such prior work and without exceptions for construction liens. The intention
of the parties hereto is that every Mortgage granted as security for the
Facility is and, to the extent modified by any modification and spreader
thereof, shall continue to be prior to any construction lien. If any material is
delivered or work performed before Lender has received each such policy, Lender
may, at its option, refuse to make any Draws hereunder with respect to such
Property, other than to pay all expenses incurred in connection with the
Facility and proceed to exercise any and all remedies available to Lender under
the Loan Documents upon an occurrence of an Event of Default.
          3.5 Appraisals and Market Studies. For A&D Land, Lender shall have
obtained an Appraisal setting forth the as-is market value of the undeveloped
A&D Land. For A&D Projects, Lender shall have obtained an Appraisal setting
forth the as-is market value of the undeveloped A&D Land and the bulk discounted
market value of the Developed Lots to be developed in the A&D Project. For
Units, Lender shall have obtained a master appraisal on base model types and
lots with option value addendum for each Approved Project which shall be
utilized throughout the period of sales of the Units, but updated if and when
requested by Lender at Borrower’s expense. In addition, Borrower shall deliver
to Lender a then current market study for the Units to be constructed in such
Project. Each such Appraisal and market study shall demonstrate a market value
acceptable to Lender utilizing Lender’s then current policies and guidelines.
Further, at any time, Lender shall have the right to re-appraise any portion of
the Property at Borrower’s expense and adjust the Collateral Basis Amounts for
such portions of the
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Property in the event such re-appraisal indicates a decline in the market value
of the re-appraised portions of the Property.
          3.6 Plans/Permits. For A&D Projects (i.e. for Draws other than simply
to finance or refinance A&D Land), Lender shall have been provided with Plans
and Specifications, acceptable to Lender and its third party consultant, for the
applicable phase of development or construction and, for A&D Land on which
Borrower intends to begin Unit construction, a final plat map, in a form
satisfactory in all respects to Lender, shall have been recorded in the
appropriate jurisdiction. In addition, Borrower shall have provided Lender with
evidence satisfactory to Lender that Borrower or the applicable Project
Guarantor has obtained or will obtain (as determined in Lender’s reasonable
satisfaction) all permits and approvals necessary to allow Borrower or the
applicable Project Guarantor to proceed with the development of the A&D Project
or the construction of individual Units in accordance with the Plans and
Specifications.
          3.7 Third Party Contracts. Borrower or the applicable Project
Guarantor shall have provided Lender with such construction, development,
engineering, and architectural contracts, and major subcontracts relating to the
applicable Approved Project, as Lender may request and Lender in its sole
discretion shall have approved such contracts in writing.
          3.8 Budget. Lender (and its inspecting engineer) shall have received
and approved a cost breakdown and itemization of all hard and soft costs for the
applicable Approved Project and the sources for payment of such costs from the
Borrower or the applicable Project Guarantor. This itemization shall include:
(i) a summary page indicating costs of land, site work, hard and soft costs of
construction, and (ii) detailed schedules supporting the construction costs.
          3.9 Zoning and Concurrency. Borrower shall have provided Lender with
evidence satisfactory to Lender that the Property has zoning and concurrency
approvals which will permit the development and construction of the applicable
Approved Project.
          3.10 Search. Lender shall have received satisfactory federal and state
tax lien, judgment, UCC, and pending litigation search for Borrower and the
applicable Project Guarantor for the state and county in which Borrower and such
Project Guarantor was formed as well as for the State and county in which the
applicable Property is located in each case, dated not more than sixty (60) days
prior to the date of the first Draw to be disbursed with respect to such
Property.
          3.11 Cost Analysis. Lender shall have received a cost analysis, in
form and substance satisfactory to Lender, as determined in its sole discretion
that supports the information in the Budget submitted by Borrower.
          3.12 Insurance. Borrower shall have provided Lender with evidence
acceptable to Lender of the insurance required to be maintained under
Section 8.11 hereof and under any of the other Loan Documents, which insurance
shall be in form and amount, and issued by companies satisfactory to Lender.
          3.13 Utilities. Where applicable, Borrower shall have delivered to
Lender evidence satisfactory to Lender that all utilities, including water,
electric, gas, and telephone, and all storm and sanitary sewer drainage
facilities are or will be available at the Property for
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utilization by Borrower or the applicable Project Guarantor for the development
and use of the Approved Project and that the respective lines and treatment or
generating plants are of adequate size and capacity to serve the Approved
Project.
          3.14 Survey. At Lender’s request, Borrower shall have delivered to
Lender a current survey (dated note more than ninety (90) days prior to the date
of the first Draw with respect to such Property), properly certified and in a
form acceptable to Lender, showing such Property to be free from encroachments
and otherwise acceptable to Lender.
          3.15 Soil Tests, Environmental Report. Borrower shall have delivered
to Lender copies of all soil analysis reports, all soil compaction tests, all
environmental reports or statements, and all other tests prepared or performed
with respect to Property, all of which shall be satisfactory to Lender in form
and content. In addition, Lender shall have received a fully completed
environmental questionnaire, in form and content acceptable to Lender, the
answers to which must be acceptable to Lender, in it sole discretion. Further,
Lender shall have received and approved from an approved engineer hired by
Borrower, a Phase I Environmental Site Assessment together with a Reliance
Letter thereto issued in favor of Lender (if said assessment is not addressed to
Lender), in form and substance satisfactory to Lender, as determined in its sole
and absolute discretion, indicating, that the Property in the subdivision
proposed for approval is free from risk, in Lender’s sole judgment, from all
hazardous substances, toxic substances, or hazardous wastes as defined by any
federal, state, or local law, statute, ordinance, or regulation and is free of
all other contamination which, even if not so regulated, is known to pose a
hazard to the health of any person on or about the Property, and unless
specifically approved by Lender, that the subject Property is not located within
a “Wetlands” or “Flood Plain” area, and contains no underground storage tanks or
oil or gas wells.
          3.16 Fees and Expenses. Borrower shall have paid all legal, appraisal,
and inspection fees; title insurance and survey costs; recording and filing
fees; documentary stamp, intangible or other applicable mortgage taxes; real
estate commissions; hazard and liability insurance and property taxes (due and
payable) on the Project; and any and all other charges or expenses reasonably
incurred by Lender in connection with the Loan or the preparation and recording
or filing of the Loan Documents. Borrower shall indemnify and hold Lender
harmless against any and all claims for such fees, charges, commissions, taxes,
or other expenses of any kind in any way connected with the Loan.
          3.17 Notice of Commencement. For each Unit (or building within which
such Unit is situated), Borrower or the applicable Project Guarantor shall have
prepared and recorded a Notice of Commencement in accordance with Chapter 713,
Part I, Florida Statutes, or any similar requirement under the lien laws of the
State in which the applicable Property is situated.
          3.18 Financial Reports and Covenant Compliance. Borrower, and the
reporting parties set forth therein, shall have provided Lender with current
versions of all the financial reports described in SCHEDULE 2, and Borrower and
such reporting parties shall be in compliance with all reporting requirements
and financial covenants set forth on SCHEDULE 2.
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          3.19 Default. No Event of Default shall have occurred (which shall not
have been waived, in writing, by Lender) and no event shall have occurred which,
with the giving of notice or passage of time, could become an Event of Default.
          3.20 Other Documents. Borrower shall have provided Lender with such
other reports, certificates, documents, and instruments regarding Borrower, the
applicable Project Guarantor and the applicable Property and Approved Project as
may be listed in the A&D Land Addendum or A&D Project Addendum or as Lender may
otherwise reasonably require.
          3.21 Authority Documents.
               3.21.1 Organizational Documents. Borrower and each Guarantor
shall have provided Lender with an updated certified copy of each of their
respective Articles of Incorporation, Bylaws and shareholder agreements or
Articles of Organization and Operating Agreements, together with all amendments
and modifications thereto, and such other organizational documents as Lender may
request, and a certified copy of each assumed name certificate, if any, of
Borrower and/or each Guarantor.
               3.21.2 Good Standing Certificates. Borrower and each Guarantor
shall have provided Lender with good standing certificates, or their equivalent,
issued by the Secretary of State or other appropriate offices within the State
of organization of Borrower and each Guarantor, and evidence satisfactory to
Lender of Borrower’s and each Guarantor’s authorization to do business in the
State wherein the Approved Project is located, if the State of Borrower’s and/or
the Guarantor’s organization is other than the State of the location of the
applicable Approved Project.
               3.21.3 Resolutions and Consents. Borrower shall have provided
Lender with certified resolutions and/or consents authorizing Borrower and the
applicable Guarantor to enter into the Loan Documents, including but not limited
to the Mortgages or any mortgage modification and spreader agreement amending
any then existing Mortgage (if the applicable Property is not currently subject
to the Mortgage).
               3.21.4 Delivery of Loan Documents. Borrower and Guarantors shall
have executed and delivered to Lender all Loan Documents required by Lender and
any other documentation as required by Lender to carry out the provisions and
purposes of this Agreement and the Facility.
               3.21.5 Borrower’s Counsel’s Opinions. Lender shall have received
an opinion letter from counsel to the Borrower or the applicable Project
Guarantor, in form and content satisfactory to Lender and its counsel, opining
to such matters as Lender may require, including, but not limited to opinions
regarding (a) the due organization, existence and good standing of Borrower or
the applicable Project Guarantor (and any applicable general partner or manager
thereof), (b) the due power, authorization and execution of the Guaranty,
Mortgage and other applicable Loan Documents executed by such Project Guarantor,
(c) that the form of the Mortgage and other documents to be recorded or filed
are proper for recording or filing in the applicable State and (d) all documents
executed by the Borrower or the Project Guarantor (as applicable) are valid and
binding (subject to customary qualifications and assumptions).
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               3.21.6 Other Conditions. Borrower and Guarantors shall have
fulfilled each and every other condition to any initial Draw (i.e. to finance or
refinance A & D Land) or any subsequent Draw set forth in SCHEDULE 1 attached
hereto or the applicable A&D Land Addendum or A&D Project Addendum.
     4. A&D DRAWS/BORROWING BASE DRAWS/WORKING CAPITAL LINE DRAWS. Lender shall
make Draws available to Borrower for the purposes and in accordance with the
procedures set forth in this Agreement, and in the case of all Draws other than
Working Capital Line Draws, based on Borrower’s most current Collateral
Verification Certificate, in each case, subject to verification or adjustment
based on Lender’s inspections and review as set forth below, and provided that
the total amount outstanding under the Facility shall at no time exceed the
Maximum Facility Amount and Maximum Available Amount as defined in SCHEDULE 1.
Lender may impose such additional conditions on such Draws as Lender may
subsequently determine are necessary to insure that the proceeds of the Facility
are applied to the purposes contemplated hereunder.
          4.1 Draw Procedures.
               4.1.1 Collateral Verification Certificate Report. Borrower shall
submit periodic Collateral Verification Certificates no less than one (1) time
per month and within twenty (20) days of month end for the month being reported,
on a day Lender is open for business at the address set forth above, that shall
cover all amounts being requested hereunder for A&D Draws and Borrowing Base
Draws by providing Lender with such information, authorizations, and documents
as Lender may request, including but not limited to Borrower’s A&D Draw Request,
a spreadsheet report for all A&D Project Budget Costs and related costs
incurred, and a report detailing and listing all costs by category (“Borrower’s
Job Cost Reports”) by Approved Project and Borrowing Base Draw Request. If all
conditions to Draws set forth herein and in the applicable Loan Documents have
been satisfied, including each of the conditions set forth in Section 3 above
and in SCHEDULE 1 hereof, Lender will make available the difference between the
current outstanding principal amount of the Facility and the Maximum Available
Amount as directed from time to time by Borrower.
               4.1.2 All Draws. Lender shall not be required to fund any Draw
unless, on the date such Draw is requested to be made (which shall not be less
than 5 business days after Lender’s receipt of the applicable Draw request),
each of the following conditions are satisfied:
                    4.1.2.1 Representations and Warranties. All representations
and warranties contained herein or in any of the applicable Loan Documents shall
be true and correct, in all material respects;
                    4.1.2.2 No Default. Borrower and Guarantors shall be in full
compliance with all terms, conditions, and covenants set forth herein or in any
of the applicable Loan Documents, no Event of Default shall have occurred (which
shall not have been waived, in writing, by Lender) and no event shall have
occurred which, with the giving of notice or passage of time would become an
Event of Default;
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                    4.1.2.3 No Illegality. No change in applicable Laws, or in
the interpretation of such Laws shall have occurred which would make it illegal
for Lender to perform its obligations under this Agreement, and the making of
any advance hereunder would not cause Lender to exceed its then current
loans-to-one-borrower limitation; and
                    4.1.2.4 Title Endorsements. If required by Lender in
accordance with the terms of this Agreement, Lender has received (i) such
continuation endorsements and date-down endorsements to the title policies
issued pursuant to Section 3.4 hereof, in form and substance satisfactory to
Lender as Lender determines in its sole discretion necessary to insure the
priority of the applicable Mortgages as valid first liens on the Property
described in the most recent Collateral Verification Certificate or (ii) an
unconditional, irrevocable written commitment by the applicable title insurance
company to issue such endorsements.
          4.2 Project Information. Borrower shall provide all information
requested by Lender, in form and content satisfactory to Lender, prior to any
Draw hereunder, including without limitation: Budgets for all Approved Projects
under development or Units under construction, appraisals, surveys, recorded
plats, plans and specifications, copies of all applicable permits and
governmental approvals obtained for the particular Approved Project, copies of
all recorded declarations or covenants affecting that Approved Project,
insurance policies in form and amount reasonably acceptable to Lender and issued
by insurance companies reasonably acceptable to Lender, environmental reports,
borrowing resolutions, evidence of corporate or other status, current
contractor’s licenses, lien waivers or subordinations, evidence of all required
surety bonding and insurance coverages, plan and cost reviews performed by an
independent inspection agent, and all other documents and information that
Lender may require. Date down endorsements to title insurance policies and/or
lien releases may be required as a condition to making any Draw (other than a
Working Capital Line Draw).
          4.3 Property Inspections.
               4.3.1 A&D Project Inspections. Lender may, at Lender’s option,
inspect A&D Projects at such intervals and as often as Lender may desire but not
less than quarterly, and Lender will not withhold funding for A&D Draw Requests
pending the inspection report next due. Should inspections of the A&D Projects
indicate that the A&D Draw Requests portion of the Collateral Verification
Certificate overstate the values, costs, or completion percentages, in addition
to any other remedy afforded Lender, Lender may increase its frequency or scope
of its inspections.
               4.3.2 Lot and Unit Inspections. Lender may, at Lender’s option,
inspect Developed Lots and Units securing the Facility at such intervals and as
often as Lender may desire. Lender shall have sole discretion as to which
portion and how much of the Property to inspect. Should inspections of the
Property indicate that the Collateral Verification Certificates overstate the
values, costs, or completion percentages, in addition to any other remedy
afforded Lender, Lender may increase its sample size, frequency, or scope of its
inspections.
               4.3.3 All Inspections. Borrower shall cooperate and shall cause
Guarantors to cooperate with Lender in arranging for inspections by
representatives of Lender or
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any third-party consultant retained by Lender of the progress of the development
and construction from time to time, including an examination of (i) the Approved
Project improvements; (ii) all materials to be used in the development and
construction; (iii) all Plans and Specifications; (iv) any contract, bill of
sale, statement, receipt, or voucher in connection with the Approved Project
improvements; (v) all work done, labor performed, materials furnished in and
about the Approved Projects; (vi) all books, contracts, and records with respect
to the Approved Projects; and (vii) any other Construction Document. Borrower
shall cooperate and shall cause the Project Guarantors to cooperate with Lender
to enable Lender to perform its functions hereunder and shall promptly comply
with Lender’s requirements and correct any deficiency regarding the construction
of the Approved Projects or the progress thereof. Draw inspections shall be made
by in-house Lender personnel or by a third-party architect/engineer, as required
by Lender. Borrower shall pay inspection costs of Lender within twenty (20) days
of demand. If inspections of the Property indicate that the Collateral
Verification Certificate overstates the values, costs, or completion
percentages, in addition to any other remedy afforded Lender, Lender may
increase its sample size, frequency or scope of its inspections. In such event
Borrower shall pay an additional inspection fee commensurate with the increased
inspections.
          4.4 Draw Amounts.
               4.4.1 A&D Draw Requests. The allowed amount of each A&D Draw
Request shown in the Collateral Verification Certificate shall be subject to the
Maximum Facility Amount and all applicable Sub-Limits, in accordance with the
approved Budget for the A&D Project set forth on the applicable A&D Project
Addendum and determined by the information provided by Borrower in its A&D Draw
Request, subject to adjustment based on Lender’s inspections. A&D Draw Requests
shall be further limited by the A&D Limitations set forth in paragraph K on
SCHEDULE 1 or in the applicable A & D Project Addendum. If applicable, the A&D
Draws shall also be made for the payment of interest in accordance with the
provisions of Section 2.2.2 above (to the extent provided for in the applicable
Budget) and for payment of all other Eligible Costs shown in the Budget for the
particular A&D Project, payable by or on behalf of Borrower in connection with
the particular A&D Project. The allowed amount of each A&D Draw Request shall be
determined, at Lender’s option: (i) by Lender’s review of a detailed report
listing all invoices and costs as provided by Borrower and Lender’s confirming
physical inspection; (ii) on a percentage completion basis with reference to the
schedules included in the applicable approved Budget, as established by a
physical inspection of the construction conducted by Lender or its agent (or, at
Lender’s sole discretion, as disclosed by the information provided by Borrower
in the A&D Draw Request); or (iii) by a combination of the foregoing methods.
Lender shall require that Borrower or the applicable Project Guarantor
contribute any Equity Funds necessary to pay any portion of Eligible Costs
incurred to the date of Borrower’s Collateral Verification Certificate that are
not covered by the applicable A&D Draw Request which, unless otherwise agreed to
by Lender, in writing, shall be amounts not less than (a) thirty-five percent
(35%) of the cost of the A&D Land and (b) twenty percent (20%) of all hard and
soft costs incurred from time to time in connection with the applicable Project.
The aggregate amount available shall be the total of such Eligible Costs
actually paid or incurred by Borrower for each of the cost line items specified
in such Budget, but in no event shall the A&D Draw Request for a particular A&D
Project exceed the total of all sums allocated to such cost line items, being in
the aggregate the A&D Project Allocation. Notwithstanding anything herein to the
contrary, Lender, in its sole discretion, shall have the right, but shall not be
obligated, to increase, decrease, reallocate, or reapply the amount of the A&D
Project Allocation to be disbursed for each item set forth in the Budget.
Notwithstanding any other provisions contained herein, Borrower shall
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maintain records of all Approved Project invoices and Lender, at its discretion,
may require submission by Borrower of the invoices set forth on the
spreadsheets.
               4.4.2 Borrowing Base Draws. The allowed amount of each Borrowing
Base Draw Request shall be subject to the Maximum Facility Amount, the Maximum
Available Amount and all applicable Sub-Limits and determined by the information
provided by Borrower and Guarantors. Borrower shall not be entitled to any Draws
based on the information in a particular Collateral Verification Certificate
until Lender has had at least five (5) full business days to review and confirm
the information provided by Borrower in that certificate, subject to adjustment
based on Lender’s inspections; provided, however, that Lender’s failure to
require adjustment within such time frame shall in no way limit Lender’s right
to require adjustments thereafter prior to the time funds are to be available in
order to allow time for inspection. Borrower acknowledges that the foregoing
disbursement schedule may be different than the disbursement schedule contained
in Borrower’s or the Project Guarantors’ construction contracts or subcontracts
and Borrower acknowledges that it is its responsibility to resolve any such
differences directly with the applicable contractors or subcontractors. The
Maximum Available Amount is based on the applicable Collateral Basis Amounts for
the Eligible Property Types calculated as set forth on SCHEDULE 1. In reviewing
Borrower’s Collateral Verification Certificate, determinations of “value,”
“cost,” and “percentage of completion” shall be made by Lender in its reasonable
discretion and in accordance with its standard credit procedures. In the event
the percentage of completion or other information relating to a particular
Eligible Property Type as determined by Lender varies from the information
provided by Borrower in its most current Collateral Verification Certificate,
Lender may, at any time and in its sole discretion, use the information as
determined by Lender to calculate the Collateral Basis Amount.
               4.4.3 Working Capital Line Draws. The allowed amount of each
Working Capital Line Draw shall be subject to the Maximum Facility Amount and
shall in no event exceed the difference between $15,000,000.00 and the
outstanding principal balance allocated to the Working Capital Line from time to
time.
               4.4.4 Application of Draws. Although Borrowing Base Draws shall
not be made hereunder on a line-item or paid invoice basis, the parties intend
that all such proceeds of the Facility be applied first to pay all costs
incurred for the refinance or purchase and development of the Property and the
construction of single family residences thereon, as applicable, and that A&D
Draws and Borrowing Base Draws be used to pay all such costs before being used
to repay Borrower or any Guarantor any portion of their equity in the Property.
Working Capital Line Draws may be used by Borrower for general working capital
purposes; provided, however, that in no event shall proceeds of the Working
Capital Line (or the Facility) be used for (a) personal, consumer, family,
household, educational, agricultural or similar uses, (b) land banking or land
speculation or (c) the purpose of purchasing or carrying any margin stock within
the meaning of Regulation G of the Board of Governors of the Federal Reserve
System or to extend credit to any party for the purpose of purchasing or
carrying any such margin stock, or for any purpose which violates, or is
inconsistent with, Regulation X of such Board of Governors. Lender shall have no
obligation to ensure that proceeds of the Facility are properly applied to
purposes of the Facility as set forth herein or in the other Loan Documents.
Borrower shall have the sole obligation to ensure proper allocation of all Draws
hereunder. Despite the foregoing, Lender shall have the right, but not the
obligation, to disburse Facility proceeds directly to any unpaid supplier of
labor, materials, equipment, services, or supplies whose claim
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has or may become a lien against any portion of the Property, or to require that
Draws be made in the form of dual-payee checks or other restricted forms of
transfer.
     5. MANNER OF CONSTRUCTION.
          5.1 Conformance with Plans and Laws. All work shall be performed and
the Approved Projects and Units shall be developed and constructed in a good and
workmanlike manner, free from all material defects in materials or workmanship.
Development of Approved Projects and construction and use of the Units shall
conform in all material respects to the applicable Plans and Specifications and
all federal, state, and local laws, ordinances, regulations, and rules relating
thereto (“Laws”), including, without limitation, all building, zoning, planning,
subdivision, fire, traffic, safety, health, disability, labor, discrimination,
environmental, air quality, wetlands, shoreline, and flood plain laws,
ordinances, regulations, and rules. The Laws shall also include all governmental
and private covenants, conditions, and restrictions applicable to the
development of the Property and the construction of Units thereon. Prior to any
Draw hereunder with respect to any Approved Project, Lender may require Borrower
to supply evidence satisfactory to Lender that it and each applicable Project
Guarantor has complied in all material respects with the applicable Plans and
Specifications and that neither Borrower nor any Project Guarantor has been
cited for the violation of any Laws.
          5.2 Right of Entry. Lender or its agents shall at all times have the
right to enter upon any portion of the Project during the period of development
or construction upon one (1) business day prior notice to Borrower. If the work
is not satisfactory to Lender in its reasonable discretion, Lender shall have
the right to stop such non-conforming work and order its replacement, whether or
not the unsatisfactory work has theretofore been incorporated in the
improvements.
          5.3 Rights In Personal Property. No materials, equipment, fixtures, or
any other part of such improvements or apparatus to be used in connection
therewith shall be purchased and/or installed under conditional sale agreements
or other arrangements wherein the right is reserved or may accrue to anyone to
remove and/or to repossess any such items.
          5.4 No Changes in the Construction Documents. Borrower and the Project
Guarantors shall make no changes in the Plans and Specifications or the other
Construction Documents, after the same have been approved by Lender, which would
result in an increase in the cost of construction by more than five percent (5%)
in the aggregate, without first obtaining the written consent of Lender to such
changes (which shall not be unreasonably withheld), unless such increased cost
is as a result of options chosen by and fully paid for by the purchaser of a
Pre-Sold Unit or required by Law.
          5.5 Deadline for Start of Development/Construction. Borrower and/or
the applicable Project Guarantor shall begin development of particular A&D
Improvements prior to or by the commencement date set forth in the A&D Project
Addendum for the applicable A&D Project. In the event that the development of
such A&D Improvements has not commenced on or before the Commencement Date set
forth in the applicable A&D Project Addendum, all funding availability for such
A&D Project shall be immediately reduced to zero on the Collateral
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Verification Certificate. Borrower and/or the applicable Project Guarantor shall
begin construction of a particular Unit, as applicable, within ninety (90) days
of the Unit’s inclusion in a Collateral Verification Certificate or Lender shall
require that the advance for the Developed Lot upon which the Unit shall be
constructed be reduced to no more than sixty-five percent (65%)
loan-to-appraised value.
          5.6 Start Limitation. Unless otherwise approved by Lender, neither
Borrower nor any Project Guarantor shall be entitled to add any additional A&D
Projects to the Facility either (a) at any time during which Borrower is in
violation of the minimum pre-tax net income financial covenant set forth in
Schedule 2, Section B hereto or (b) after the Expiration Date, as such date may
be extended as set forth herein. Further, Lender shall not be required to
advance any Draw or portion thereof with respect to any Unit, as to which
construction shall have commenced later than six (6) months prior to the
Maturity Date (as same may be extended pursuant to the terms hereof).
          5.7 Lender’s Right to Complete Development/Construction. If
(i) development or construction is at any time abandoned, discontinued, or not
carried on with reasonable dispatch and not cured within five (5) days after
written notice or such longer period as approved by Lender, except as may be
extended by force majeure, if Borrower commences to cure and is proceeding
diligently to complete such cure; (ii) the work is not properly performed as
determined by Lender and such failure is not cured within five (5) days after
written notice or such longer period as approved by Lender if Borrower commences
to cure and is proceeding diligently to complete such cure; or (iii) an Event of
Default exists under the Loan Documents, then Lender may, at its option and in
addition to any and all other remedies available to Lender under the Loan
Documents, without further notice, take possession of the affected Property and
enter into contracts for or proceed with the finishing of such improvements
according to the applicable Plans and Specifications and pay the cost thereof.
Borrower shall repay any and all costs incurred by Lender in taking such action
upon demand by Lender and repayment thereof, together with interest charged at
the default rate under the Note from the date funds are advanced by Lender for
such purpose, shall be secured by the Mortgages.
          5.8 Recorded Covenants. Borrower shall submit to Lender a copy of any
declaration of covenants, conditions, and restrictions, or any other restrictive
covenants affecting the Property and obtain Lender’s approval of any such
declaration or covenant prior to recording, which approval shall not be
unreasonably withheld. Upon approval, Lender agrees to consent to such
document(s), to the extent such consent is required by Law.
          5.9 Time/Construction/Development. Once Borrower or the applicable
Project Guarantor has commenced physical development of A&D Improvements within
a particular A&D Project or construction of a particular Unit, Borrower and the
applicable Project Guarantor shall not cease or substantially cease productive
work on that A&D Project or Unit, as applicable, for more than twenty (20) days
in the aggregate, except as may be extended by force majeure, without the prior
written consent of Lender. In any event, unless each A&D Project shall be
completed to Lender’s satisfaction on or before the Completion Date set forth in
the applicable A&D Project Addendum, Lender shall have no further obligation to
fund further A&D Draws with respect to such A&D Project. Once construction of an
individual Unit with proceeds of the Facility shall be commenced, the
construction of such Unit shall be diligently pursued to
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completion, to Lender’s reasonable satisfaction, and shall remain included in
Collateral Verification Certificates, but only for such period specified by
Lender in writing. [see SCHEDULE 1 attached hereto].
          5.10 Actions Required by Lien Laws. Borrower shall take all steps
necessary under the Laws of each applicable State to prevent the assertion of
claims or liens against the Property or any part thereof or right or interest
appurtenant thereto, or of claims against Lender or the Facility and shall
otherwise comply with all provisions of lien laws applicable to Borrower, each
Project Guarantor and the Property.
          5.11 Costs Incurred by Lender. Borrower shall be liable to Lender for
all sums paid or incurred by Lender in finishing the improvements or otherwise
protecting its security hereunder, whether the same shall be paid or incurred
pursuant to the provisions of this Section 5 or otherwise in accordance with the
Loan Documents, and all such payments made or liabilities incurred by Lender of
any kind whatsoever as a result thereof shall be paid by Borrower to Lender
within twenty (20) days of demand, together with interest at the default rate
under the Note to the date of payment to Lender, and all of the foregoing sums,
including interest thereon, shall be deemed advances by Lender to protect its
security, separate and distinct from advances of proceeds of the Facility, and
shall be evidenced and secured by the Guarantees, the Mortgages and other Loan
Documents:
     6. PARTIAL RELEASES. So long as (i) there does not exist any Event of
Default or uncured default by Borrower or Guarantors hereunder or under the
other Loan Documents or under any document evidencing or securing any other loan
from Lender or its affiliates to Borrower, the Guarantors or their subsidiaries
or affiliates or (ii) there does not exist any event which, following notice
and/or the expiration of any applicable cure period without a cure, would
constitute a default thereunder, Borrower shall be entitled to a partial release
of the particular Unit and/or Developed Lot or other parcel of land from the
lien and encumbrance of the applicable Mortgage only upon Borrower’s fulfillment
and the applicable Project Guarantor’s fulfillment of all conditions to such
partial release set forth below:
          6.1 Third-Party Sale. The Unit or Developed Lot has been sold to a
third- party unaffiliated with Borrower pursuant to a Qualified Contract;
          6.2 Interest and Reimbursable Advances. Borrower pays any delinquent
monthly interest payments and any advances by Lender that are reimbursable by
Borrower hereunder or under any of the Loan Documents, whether or not Borrower
is then in default with respect to such reimbursement;
          6.3 Property Legally Subdivided. The applicable Property has been
legally subdivided into parcels or lots such that both (a) the Developed Lot or
Unit to be released and (b) the portion of the applicable Property remaining
subject to the Mortgage are legally segregated properties capable of being
transferred in accordance with the law;
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          6.4 Access Unimpaired. The partial release does not deny or
unreasonably impair access to public roads and utilities for either the portion
of the Property remaining subject to the applicable Mortgage or the Developed
Lot or Unit to be released;
          6.5 Indemnification of Property. Borrower or the applicable Project
Guarantor secures all necessary services of surveyors, engineers, and other
consultants of any kind or nature whatsoever required in connection with the
partial release in order to sufficiently identify the portion of the Property to
be released and to enable Lender or any trustee to complete the partial release;
and
          6.6 Request for Partial Release. Lender shall have received a written
request for such release at least three (3) business days prior the proposed
date for such release, and such request shall be accompanied by a statement,
certified to be true, accurate and complete by an Authorized Person, calculating
the Collateral Basis Amount remaining after the requested release;
          6.7 Costs and Expenses. Borrower pays the reasonable costs of
preparing and delivering the partial release, the premium for any special title
insurance endorsements required by Lender, and any and all other escrow, legal,
closing, and recording costs incurred by Lender in connection with such partial
release.
          6.8 Release Price. Provided all the conditions of this Section 6 have
been complied with by the Borrower, the release price for a Unit or Developed
Lot shall be for the consideration of ZERO DOLLARS ($0.00), except that if the
removal of the Unit or developed Lot from the Collateral Basis Amount would
cause the outstanding principal amount under the Facility to exceed the Maximum
Available Amount or any Sublimit, Borrower shall pay within five (5) days, a
“Release Fee” equal to such excess principal amount, which Lender shall apply to
the outstanding principal balance of the Facility in accordance with the
provisions of Section 2.2 hereof.
          6.9 Other Releases. Subject to the satisfaction of the conditions
contained in this Section 6 above, Lender shall release the lien and encumbrance
of the applicable Mortgage from any portion of the Property that is conveyed or
dedicated to a homeowners’ or master association or that is dedicated to
governmental entities, if such conveyance is made without any compensation and
made pursuant to an agreement or applicable homeowners or condominium documents
approved, in writing, by Lender. At Borrower’s request, Lender shall terminate
the Working Capital Line Pledge, release its lien upon the Working Capital Line
Collateral and return the Working Capital Line Collateral to the Working Capital
Line Guarantor, subject to and in accordance with the provisions of Section 2.6
hereof.
          6.10 Joinders and Consents. Lender agrees, upon Borrower’s request, to
join in any plat for A&D Land and any utility easements or licenses, and to
consent to any homeowner’s association documents or declarations, development
agreements or similar instruments affecting the A&D Land and needed by the
applicable Project Guarantor in connection with the development of such A&D Land
(as contemplated in the applicable A&D Project Addendum), at no cost or
liability to Lender, provided that such instruments are in form and substance
reasonably acceptable to Lender; provided, however, that Lender shall not be
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required to join in or consent to any such document if doing so would materially
diminish the value of the A&D Land or require Lender to directly assume any
obligations of Borrower or any Project Guarantor thereunder.
     7. GENERAL REPRESENTATIONS AND WARRANTIES. Borrower, as of the date of
execution hereof and as of the date of each request for a Draw hereunder,
represents and warrants to Lender that:
          7.1 Payment of Taxes and Proper Books and Records. Borrower and each
Guarantor have filed all required tax returns and paid all federal and state
taxes, FICA payments, and similar taxes now due and owing, and maintains proper
books and records relating to all operations of Borrower and each Guarantor.
          7.2 Liens and Encumbrances. The liens, security interests and
assignments created by the Loan Documents are valid, effective, properly
perfected and enforceable liens, security interests and assignments. There are
no claims for social security, unemployment compensation, unpaid taxes,
construction work or materials, or other obligations to or claims by any
governmental body or any private person, firm, or corporation that are or could
become liens upon the Property securing the Facility.
          7.3 Condemnation. Neither Borrower nor any Guarantor has received any
notice of any eminent domain or condemnation proceeding that in any way affects
any material portion of the Property and, to the best of Borrower’s and each
Guarantor’s knowledge, no such action or proceeding is pending or threatened.
          7.4 Improvement Districts. Except as disclosed to Lender in writing or
in the title policy, no portion of the Property is situated within any
metropolitan, local, special, or other improvement district and neither Borrower
nor any Guarantor has knowledge of any proposal under which any portion of the
Property or any particular Project is to be placed in any such improvement
district. Neither Borrower nor any Guarantor shall consent or agree to the
inclusion of the Property in an improvement district of any kind without the
written consent of Lender so long as any portion of the Loan remains unpaid.
          7.5 Access. Each parcel of the Property has full and free (subject to
terms of easements) access to and from public highways, streets, and/or roads,
and neither Borrower nor any Guarantor has knowledge of any fact or condition
that would result in the termination of such access.
          7.6 Existence and Authority. Borrower and each Guarantor are duly
organized, validly existing, and in good standing under the laws of the State in
which it is organized. Borrower and each Guarantor have taken all necessary
action on the part of Borrower and Guarantors relating to the authorization,
execution, delivery and performance of this Agreement and the related Loan
Documents, and this Agreement and all related documents, when executed and
delivered, will be valid and enforceable against Borrower and Guarantors in
accordance with their terms.
          7.7 Litigation. There are no pending or threatened actions or
proceedings by or against Borrower, any Guarantor or any Project before any
federal, state, or local court or
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administrative agency, that might have a material adverse effect on Borrower or
any Guarantor or their respective ability to perform under this Agreement or the
related Loan Documents, except as has been disclosed to Lender in writing.
          7.8 Financial Statements; Taxes; Indebtedness. Borrower has furnished
to Lender (i) current financial statements that have been prepared in accordance
with generally accepted accounting principles (or such variations thereof as may
have been explained to and approved by Lender in writing) consistently followed
and (ii) such other financial information as may be required hereunder, and such
information fairly presents the financial condition of Borrower as of the
applicable date in all material respects and the results of its operations for
the applicable period, and since such date there has been no material change in
such Borrower’s condition or operations. Borrower has filed all federal, state,
and other tax returns required to be filed by it. The IRS has not asserted any
liability for taxes in excess of those already paid by Borrower and its assets
are free of any federal or state tax liens. Borrower does not have indebtedness
in existence as of the applicable date other than the indebtedness reflected on
the financial statements referred to above, except as has been disclosed in
writing to Lender.
          7.9 Legally Enforceable Agreements. This Agreement is, and each of the
other Loan documents when delivered pursuant to this Agreement shall be, legal,
valid and binding obligations of Borrower and each Guarantor, as applicable,
enforceable against Borrower and the applicable Guarantor in accordance with
their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors’ rights generally.
          7.10 Compliance with Other Instruments. The execution, delivery, and
performance of this Agreement and all other Loan Documents shall not violate the
provisions of any applicable law, order, or resolution of any governmental
authority having jurisdiction over Borrower or any Guarantor and shall not
conflict with or result in a breach of any of the terms, conditions, or
provisions of Borrower’s or Guarantors’ organizational documents or any other
agreement or instrument to which Borrower or any Guarantor is a party, or result
in the creation or imposition of any lien, charge, or encumbrance of any nature
whatsoever upon any of the properties or assets of Borrower or any Guarantor
except for the security interests created hereunder.
          7.11 Permits and Licenses. Borrower or the applicable Project
Guarantor has obtained, or will obtain when necessary or appropriate (but in any
event prior to submitting an A&D Draw Request or a Borrowing Base Draw Request
with respect to the applicable improvements), all licenses, permits, consents,
approvals and authorizations necessary or appropriate for the commencement and
completion of the A&D Improvements and the construction of the Units in all of
the Approved Projects for which funding has been requested, and after the
issuance thereof, all such licenses, permits, consents, approvals and
authorizations shall remain in full force and effect.
          7.12 Business Location. Borrower keeps all of its records pertaining
to its assets and accounts at the office located at the address indicated on
page one of this agreement, which address is either Borrower’s principal place
of business or the place of business from which Borrower manages the main part
of its business operations. Borrower shall give Lender prior
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written notice of any change in such location or the location of any asset in
which Lender has a security interest.
          7.13 OFAC. Neither Borrower nor any Guarantor is (nor shall be) a
person with whom Lender is restricted from doing business under regulations of
the Office of Foreign Asset Control ( “OFAC” ) of the Department of the Treasury
of the United States of America (including, those Persons named on OFAC’s
Specially Designated and Blocked Persons list) or under any statute, executive
order (including, the September 24,2001 Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and is not and shall not engage in any
dealings or transactions or otherwise be associated with such persons. In
addition, Borrower hereby agrees to provide Lender with any additional
information that Lender may deem necessary from time to time in order to ensure
compliance with all applicable laws concerning money laundering and similar
activities.
          7.14 Environmental Matters. Borrower and each Guarantor has duly
complied with, and its businesses, operations, assets, equipment, property,
leaseholds, or other facilities are in compliance with, the provisions of all
federal, state and local environmental, health, and safety laws, codes and
ordinances, and all rules and regulations promulgated thereunder. Borrower and
each Guarantor has been issued and will maintain all required federal, state and
local permits, licenses, certificates, and approvals relating to (a) air
emissions; (b) discharged to surface water or groundwater; (c) noise emissions;
(d) solid or liquid waste disposal; (e) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or wastes (intended
hereby and hereafter to include any and all such materials listed in any
federal, state or local law, code or ordinance, and all rules and regulations
promulgated thereunder as hazardous or potentially hazardous); or (f) other
environmental, health or safety matters. Neither Borrower nor any Guarantor has
received notice of, nor knows of, or suspects, facts which might constitute any
violations of any federal, state or local environmental, health or safety laws,
codes or ordinances, and any rules or regulations promulgated thereunder with
respect to its businesses, operations, assets, equipment, property, leaseholds
or other facilities. Except in accordance with a valid governmental permit,
license, certificate or approval, there has been no emission, spill, release or
discharge into or upon (a) the air; (b) soils, or any improvements located
thereon; (c) surface water or groundwater; or (d) the sewer, septic system or
waste treatment, storage or disposal system servicing any of the Property, of
any toxic or hazardous substances or wastes at or from any of the Property in
violation of any applicable law; and accordingly the Property is free of toxic
or hazardous substances or wastes in amounts in violation of applicable laws.
There has been no complaint, order, directive, claim, citation or notice by any
governmental authority or any person or entity with respect to (a) air emission;
(b) spills, releases or discharges to soils or improvements located thereon,
surface water, groundwater or the sewer, septic system or waste treatment,
storage or disposal systems servicing any Property; (c) noise emissions;
(d) solid or liquid waste disposal; (e) the use, generation, storage,
transportation or disposal of toxic or hazardous substances or waste; or
(f) other environmental, health or safety matters affecting the Borrower, any
Guarantor or their businesses, operations, assets, equipment, property,
leaseholds or other facilities. Borrower and Guarantors do not have any
indebtedness, obligation or liability, absolute or contingent, matured or not
matured, with respect to the storage, treatment, cleanup or disposal of any
solid wastes, hazardous
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wastes, or other toxic or hazardous substances (including without limitation any
such indebtedness, obligation or liability with respect to any current
regulation, law or statute regarding such storage, treatment, cleanup or
disposal).
          7.15 No Brokerage Commission. Neither Borrower nor any Guarantor has,
in connection with this Facility, entered into any agreement, incurred any
obligation, made any commitment or taken any action which might result in a
claim for or an obligation to pay a brokerage commission, finder’s fee or
similar fee in respect to the transactions described in this Agreement, and
Borrower shall indemnify Lender against all loss, expense, demand and liability
(including attorneys fees) arising in connection with any such claim or
obligation.
     8. AFFIRMATIVE COVENANTS. Borrower shall:
          8.1 No Liens. Make all necessary payments so that at all times the
property securing this Facility shall be completely free of any lien or claim of
any governmental department or agency or of any private person, firm, or
corporation unless such lien or claim is specifically permitted by Lender in
writing or contemplated in this Agreement. Borrower shall, upon request, furnish
full information to Lender and permit inspection of its and Guarantor’s books
and records by Lender, so as to satisfy Lender of full compliance with the
provisions of this paragraph.
          8.2 Legal Entity, Business, etc. (a) Maintain its existence in the
form under which it currently operates, and preserve in full force and effect
all its rights and franchises having a material effect upon its business or the
ownership of its properties; and (b) give prompt notice to Lender of any
material change in Borrower’s or Guarantor’s business or financial position, any
change in any location where Borrower’s or Guarantor’s accounts and/or assets
are to be maintained, the location of any new places of business of Borrower or
Guarantor, and the changing or closing of any of its existing places of
business, and any change in Borrower’s or Guarantor’s name.
          8.3 Financial Reports, Information and Covenants. Furnish to Lender
all reasonably available information concerning the condition of Borrower and
Guarantor, and their current operations, including balance sheets and income
statements and such other financial information at such reasonable times as
Lender may require, but in no instance less often than annually. Such
information shall be certified by a duly authorized officer or agent of Borrower
and Guarantor, as applicable. Without limiting the foregoing, so long as any
amount remains outstanding under the Note or any of the other Loan Documents,
Borrower agrees to comply with the specific financial reporting requirements and
to maintain and satisfy the financial ratios and covenants set forth on SCHEDULE
2 to this Agreement, as such covenants may subsequently be amended.
          8.4 Inspection. Permit any authorized representative of Lender, upon
one (1) business day prior notice to Borrower, to visit Borrower’s and
Guarantor’s business location and project sites and to inspect and take extracts
from its books, accounts, and records and to discuss its business, finances, and
accounts with its officers and authorized representatives. Borrower acknowledges
that Lender may, at Lender’s option, perform collateral audits at such intervals
and as often as Lender may desire.
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     8.5 Payment of Taxes. Pay all taxes, assessments, and governmental charges
upon Borrower and Guarantor or levied against any of its properties prior to the
date on which penalties will attach, unless and to the extent the same shall be
contested in good faith and by appropriate lawful proceedings by Borrower and/or
Guarantor, in accordance with the provisions of the Mortgages or other
applicable Loan Documents. Upon Lender’s request, Borrower shall provide to
Lender a schedule of real estate taxes owed with respect to the Property on such
date of each year during the term hereof when the Borrower or any Project
Guarantor is assessed a tax on any Property by the applicable State. Upon
Lender’s request, Borrower shall provide copies of cancelled checks or paid
receipts evidencing the payment of all applicable real estate taxes for the
Property no later than such date of each year during the term hereof, when the
aforementioned real estate taxes are due in the applicable State, such date
being the last day when the real estate taxes can be paid without incurring a
penalty in the State.
     8.6 Use of Proceeds. Use each Draw hereunder only for payment or
reimbursement to Borrower of the Eligible Costs on the Project and for no other
purpose.
     8.7 Compliance with Law. Comply with all applicable requirements (including
applicable Laws) of any governmental authority having jurisdiction over
Borrower, Guarantor, any particular project, or the Property.
     8.8 USA Patriot Act. Borrower covenants to Lender that if it becomes aware
that it, any Guarantor or any respective affiliate is identified on any Blocked
Persons List, the Borrower shall immediately notify the Lender in writing of
such information. Borrower further agrees that in the event it, any Guarantor or
any respective affiliate is at any time identified on any Blocked Persons List,
such event shall be an Event of Default, and shall entitle Lender to exercise
any and all remedies provided in any Loan Documents or otherwise permitted by
law. In addition, the Lender may immediately contact the Office of Foreign
Assets Control and any other government agency the Lender deems appropriate in
order to comply with its legal obligations. Upon the occurrence of such Event of
Default, Lender will forbear enforcement of its rights and remedies during such
time as (a) the person or entity identified in a Blocked Persons List is
contesting in good faith by appropriate legal proceedings such person’s or
entity’s inclusion in a Blocked Persons List, and (b) the Lender determines, in
its sole and absolute discretion, that such forbearance will not adversely
affect title to, the condition or value of, or any lien in favor of Lender and
encumbering any part of the Property or otherwise adversely impact the ability
of any person or entity to perform such person’s or entity’s obligations under
or with respect to any Loan Document.
     8.9 Furnishing Notice. Provide Lender with copies of all material notices
pertaining to any particular project or the Property that are received by
Borrower or Guarantor, including notices from any governmental authority or
insurance company, within seven (7) days after such notice is received.
     8.10 Municipal Districts. Borrower shall immediately give notice to Lender
of any notification or advice that Borrower or Guarantor may receive from any
municipality or other third party of any intent or proposal to include all or
any part of an Approved Project in a municipal utilities district or similar
municipal district. Lender shall have the right to file a written
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objection to the inclusion of all or any part of an Approved Project in such a
district, either in its own name or in the name of Borrower and/or Guarantor,
and to appear at, and participate in, any hearing with respect to the formation
of any such district.
     8.11 Insurance. The following insurance shall be obtained and maintained
and all related premiums shall be paid as they become due:
          8.11.1 Property. Insurance of the Approved Project against damage or
loss by fire, lightning, and other perils, on an all-risks basis, such coverage
to be in an amount not less than the full replacement cost, and during the
period of construction of any portion of each Approved Project, such policy
shall be written in the so-called “Builder’s Risk Completed Value Non-Reporting
Form,” on an all-risks basis, with no coinsurance requirement except as approved
by Lender, shall contain a provision granting the insured permission to complete
and/or occupy the Approved Project, in each case providing for a deductible not
exceeding $200,000.00 or such greater amount as to which Lender may grant its
written approval, which approval shall not be reasonably withheld.
          8.11.2 Liability. Commercial general liability insurance protecting
Borrower or the applicable Project Guarantor and Lender against loss or losses
from liability imposed by law or assumed in any agreement, document, or
instrument and arising from bodily injury, death, or property damage with a
limit of liability of not less than $2,500,000.00 per occurrence and
$9,000,000.00 general aggregate. Such policies must be written on an occurrence
basis so as to provide blanket contractual liability, broad form property damage
coverage, and coverage for products and completed operations.
          8.11.3 Flood. A policy or policies of flood insurance in the maximum
amount of flood insurance available with respect to the Property under the Flood
Disaster Protection Act of 1973, as amended. This requirement will be waived
upon presentation of evidence satisfactory to the Lender that no portion of the
Property is located within an area identified by the U.S. Department of Housing
and Urban Development as having special flood hazards.
          8.11.4 Windstorm. A policy or policies of windstorm insurance in the
maximum amount of insurance available with respect to the collateral and
otherwise meeting Lender’s requirements. Lender hereby acknowledges that
Borrower’s coverage in effect on the date hereof is acceptable.
          8.11.5 Workman’s Compensation. Workman’s compensation insurance,
disability benefits insurance, and such other forms of insurance as required by
law covering loss resulting from injury, sickness, disability, or death of
employees of Borrower or each applicable Project Guarantor, any contractor, and
any subcontractor located on or assigned to each Approved Project. Borrower
shall cause each contractor and each subcontractor having employees located on
or assigned to each Approved Project to obtain and maintain this same coverage
for all eligible employees.
          8.11.6 Additional Insurance. Borrower shall obtain and maintain such
other policies of insurance as Lender may reasonably request in writing.
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          8.11.7 Other. All policies for required insurance shall be in form and
substance reasonably satisfactory to Lender. All required insurance shall be
procured and maintained in financially sound and generally recognized
responsible insurance companies selected by Borrower and approved by Lender.
Such companies must be authorized to write such insurance in the State where the
applicable Property is situated. Each company shall be rated “A” or better by
A.M. Best Co., in Best’s Key Guide, or such other rating acceptable to Lender in
Lender’s sole and absolute discretion. All property policies evidencing required
insurance shall name Lender as first mortgagee and loss payee. All liability
policies evidencing required insurance shall name Lender as additional insured.
The policies shall not be cancelable as to the interests of the Lender due to
the acts of Borrower. The policies shall provide for the insurer to endeavor to
provide at least thirty (30) days prior written notice of the cancellation or
modification thereof to Lender.
          8.11.8 Evidence. The original or a certified copy of each insurance
policy or, if acceptable to Lender in its sole and absolute discretion,
certificates of insurance evidencing that such insurance is in full force and
effect, shall be delivered to Lender, together with proof of the payment of the
premiums thereof. Prior to the expiration of such policies, Borrower shall
furnish Lender evidence that such policy has been renewed or replaced in the
form of the original or a certified copy of the renewal or replacement policy
or, if acceptable to Lender in its sole and absolute discretion, a certificate
reciting that there is in full force and effect, with a term covering at least
the next succeeding calendar year, insurance of the types and in the amounts
required in this Section 8.11.
     8.12 Environmental Covenants. Borrower hereby agrees that:
          (a) If Borrower receives any notice of (i) the happening of any event
involving the spill, release, leak, seepage, discharge or cleanup of any
Hazardous Substance (as hereinafter defined) on or in connection with any
Property or in connection with operations thereon in violation of any applicable
law or (ii) any complaint, order, citation or notice with regard to air
emissions, water discharges, or any other environmental, health or safety matter
affecting or related to any the Property (an “Environmental Complaint”) from any
person or entity (including without limitation the EPA), then Borrower shall
immediately notify Lender orally and in writing of the notice. For purposes of
this Section 8.12, “Hazardous Substance” shall mean and include those elements
or compounds which are from time to time contained in the list of hazardous
substances adopted by the United States Environmental Protection Agency (“EPA”)
and the list of toxic pollutants designated by Congress or the EPA or defined by
any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material as now or at any time hereafter in effect.
          (b) Borrower, jointly and severally with each applicable Project
Guarantor, shall indemnify Lender, its officers, directors employees and their
respective successors and assigns (collectively, the “Indemnified Parties”) and
shall hold the Indemnified Parties harmless from and against any and all losses,
liabilities, including strict liability, damages, injuries, expenses, including
reasonable attorneys’ and paralegals’ fees, costs of any settlement or judgment
and claims of any and every governmental agency for, with respect to, or as a
direct or indirect result of, the presence, usage, storage, generation or
disposal on or
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under or in connection with any Property, or the escapes, seepage, leakage,
spillage, discharge, emission, discharging or release from any Property of any
Hazardous Substance (including, without limitation, liabilities or claims
asserted or arising under the Comprehensive Environmental Response, Compensation
and Liability Act, under any so called federal, state or local “superfund” or
“superlien” law, or under any statute, law ordinance, code, rule, regulation,
order or decree regulating, relating to or imposing liability, including strict
liability, or standards of conduct concerning any Hazardous Substance);
provided, however, that the foregoing shall not extend to matters caused solely
by the Indemnified Parties or other third party owners following a sale or
foreclosure of any such Property or conveyance by the Indemnified Parties in
lieu of foreclosure.
     9. NEGATIVE COVENANTS. While any sums remain outstanding hereunder,
Borrower shall not, without Lender’s prior written consent:
          9.1 Indebtedness. Incur indebtedness other than: (i) indebtedness owed
to Lender or to any affiliate of Lender which is secured by the Property, other
than as provided in this Agreement; (ii) unsecured current indebtedness incurred
in the ordinary course of business; (iii) which would not violate the financial
covenants of Borrower; (iv) purchase money secured indebtedness for equipment
acquired in the ordinary course of business; (v) indebtedness secured by liens
permitted hereby; (vi) indebtedness for taxes, assessments, and governmental
charges permitted hereby; and (vii) indebtedness for land acquisition,
development, and construction activities obtained by Borrower in the ordinary
course of business.
          9.2 Liens and Encumbrances. Create or permit to exist any mortgage,
pledge, lien, or other encumbrance with respect to any of its assets secured by
the Loan Documents, and except for the following permitted liens: (i) liens for
taxes, assessments, and governmental charges not delinquent or being contested
in good faith; (ii) liens of the kinds arising in the ordinary course of
business of Borrower in respect to obligations that are not due or being
contested in good faith; (iii) liens in respect to judgments against Borrower
for which Borrower has posted a bond or otherwise secured payment in a manner
acceptable to Lender as provided in Section 12 below and with respect to which
Borrower shall, in good faith, be prosecuting an appeal or proceeding for
review, and a stay of execution shall have been secured; (iv) liens in respect
to indebtedness owed to Lender or to any affiliate of Lender; (v) lien s that do
not affect property securing any indebtedness to Lender and secure indebtedness
for land acquisition, development, and construction activities relating to loans
obtained by Borrower in the ordinary course of business; and (vi) other liens
permitted under Section 8.1 herein.
          9.3 Assignment or Sale of Assets. Assign or sell any of its assets,
except in the ordinary course of its business consistent with its past practices
or in connection with any indebtedness consented to by Lender (including
collateral assignments permitted under Section 9.2 above) to the extent same
would violate any financial covenant of Borrower set forth on Schedule 2.
          9.4 Corporate, Limited Liability Company, and Partnership
Restrictions. Borrower shall not issue any limited liability company interest in
Borrower or grant any option, right-of-first-refusal, warrant, or other right to
purchase any limited liability company interest or other securities in Borrower.
Each Project Guarantor is and shall remain wholly owned and
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controlled by Borrower, either directly or through entities wholly owned and
controlled by Borrower, and Borrower shall not permit any Project Guarantor to
issue any capital stock or other securities of, or any limited liability
membership or partnership interests in any Project Guarantor, or grant any
option, right-of-first refusal warrant or other right to acquire equity
interests in any Project Guarantor which would or could result in any Project
Guarantor not being directly or indirectly wholly owned by Borrower. Neither
Borrower nor any Project Guarantor shall amend, modify, restate, supplement, or
terminate its certificate of incorporation or bylaws, its limited liability
company operating agreement, or its partnership agreement, as the case may be,
without the prior written consent of Lender, which shall not be unreasonably
withheld or delayed. Neither Borrower nor any Project Guarantor shall reorganize
itself or consolidate with or merge with or into any other corporation, limited
liability company or other legal entity, or permit any other corporation,
limited liability company or other legal entity to be merged into Borrower or
any Project Guarantor, if, as a result thereof, the foregoing covenants
contained in Section 9.4 will have been breached. Notwithstanding the foregoing
provisions, Lender hereby acknowledges its consent to (i) the merger of the
Working Capital Line Guarantor into BFC Financial Corporation (“BFC”) and
(ii) the transfer of the Borrower and/or any Project Guarantor into an entity
controlled by BFC, provided that (a) with respect to any transfer described in
clause (ii), (1) Borrower (or its successor in interest) remains the direct or
indirect owner of the equity interests in any “transferred” Project Guarantor
and (2) all of the equity interests in Borrower (or its successor in interest)
remain or are encumbered by a valid first lien security interest in favor of
Lender, securing the Working Capital Line Guaranty, (b) Lender shall have been
provided with at least five (5) business days advance notice of such transfer,
(c) Lender shall have received properly executed Loans to One Borrower
Certificates or other documents required by all applicable governmental or
regulatory authorities or agencies having jurisdiction over Lender and (d) after
giving effect to such transfer, Lender shall not be in violation of any
applicable law, regulation, rule, ordinance or order of any applicable
governmental or regulatory authority or agency having jurisdiction over Lender.
In addition, without the prior written consent of Lender, in its sole and
absolute discretion, neither Borrower nor any Guarantor shall be dissolved or
liquidated.
          9.5 Dividends, Distributions and Payment of Subordinated Debt. During
the existence of an Event of Default or at any time in which Borrower is not in
compliance with the Financial Covenants (or if Borrower would not be in
compliance with the Financial Covenants as a result of any of the following),
neither Borrower nor any Project Guarantor will directly or indirectly do any of
the following: (i) declare or pay any dividend or other distribution on or on
account of any capital stock or other securities of Borrower or any Project
Guarantor; (ii) pay any management fee; (iii) make any loans to shareholders of
or members or partners in Borrower or any Project Guarantor; (iv) make any
purchase, redemption, retirement, or other acquisition of any shares of any
class of capital stock of or any membership interest or partnership interest in
Borrower or any Project Guarantor or of any warrants or rights to purchase any
such stock, membership interest or partnership interest; or (v) make any payment
of, or with respect to, any Subordinate Debt.
     10. EVENTS OF DEFAULT.
          10.1 Events of Default Defined. The occurrence of any of the events
described below shall be an “Event of Default”: (a) failure to pay any principal
reduction or
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interest payment when and as the same shall become due and payable hereunder or
under any of the Loan Documents or under any other indebtedness of Borrower or
Guarantor or their affiliates to Lender, whether at its scheduled payment date
or otherwise, subject to any applicable grace period as set forth in the Loan
Documents; (b) any representation or warranty made now or hereafter by Borrower
or any Guarantor pursuant to this Agreement or any other Loan Document, or any
statement, report, or certificate provided to Lender by Borrower or any
Guarantor in connection therewith, proves to be false in any material respect;
(c) Borrower or any Guarantor fails to perform any other non-curable term,
provision, or covenant in this Agreement or in any other Loan Document; (d)
Borrower or any Guarantor fails to perform or is in breach of any other curable,
non-monetary term, provision or covenant contained in this Agreement and fails
to cure such default within ten (10) days after notice thereof from Lender;
provided, however, that if such curable, non-monetary default may not reasonably
be cured within ten (10) days, an “Event of Default” shall not be deemed to have
occurred unless (i) Borrower fails to commence the actions necessary to cure
such default within ten (10) days after Lender’s notice thereof or (ii) such
default is not cured within sixty (60) days after Lender’s notice of such
default; or (e) Borrower or any Guarantor shall become involved in financial
difficulties as evidenced by failing generally to pay debts as they become due,
or filing a petition under any chapter of the Bankruptcy Code, or filing any
answer or admission asking for such relief, or making an assignment for the
benefit of creditors, or consenting to the appointment of a trustee or receiver
for all or a major portion of such party’s assets, or the entry of an order for
relief against such party as a debtor under any chapter of the Bankruptcy Code,
or the entry of a court order appointing a receiver or trustee for all or a
major portion of such party’s property without its consent, which order shall
not be vacated or stayed within sixty (60) days of its entry.
          10.2 Remedies. Upon the occurrence of and continuation of any Event of
Default, any and all liabilities of Borrower and Guarantors to Lender shall
become immediately due and payable without presentment, demand, protest, or
notice (except as provided in this Agreement) of any kind, all of which are
hereby expressly waived by Borrower (unless prohibited by applicable law) and
Borrower shall have no further right to additional Draws hereunder. Lender may
exercise, at its option, any of the rights and remedies available to it
hereunder or otherwise available under law or equity, including without
limitation, electing (a) to perform any defaulted covenant or provision to such
extent as Lender shall elect in its sole discretion, and/or to disburse funds
under the Note for such purpose (including, without limitation, payment of
insurance premiums, taxes, or assessments), which amounts, together with
interest thereon from the disbursement date until paid at a rate per annum equal
to the Default Rate provided for in the Note, shall be secured by the Mortgages;
(b) to take control of any or all collateral until all amounts due hereunder are
paid in full; or (c) to exercise all rights and remedies of Lender under this
Agreement, under any other Loan Documents, and under applicable law.
     11. PAYMENT OF EXPENSES. Borrower shall pay all reasonable costs and
expenses of Lender in connection with the underwriting, processing, closing, and
funding of the Facility and the preparation, negotiation, execution, and
delivery of the Loan Documents, as well as any amendments, modifications,
consents, or waivers relating thereto, including, without limitation, attorneys’
fees (including reasonable fees of Lender’s in-house counsel, if used) and
costs. In addition, Lender shall be entitled to recover any reasonable costs and
expenses incurred in connection with the preservation of rights under and
enforcement of the Loan Documents, or the
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protection of its collateral thereunder, whether or not any lawsuit is
commenced, in all such cases including, without limitation, reasonable
attorneys’ fees (including reasonable fees of Lender’s in-house counselor any
local counsel, if used) and costs, and all such fees and costs incurred by
Lender in connection with any bankruptcy proceeding affecting the Facility or
Lender’s security therefor in any manner.
     12. UNAUTHORIZED LIENS OR ENCUMBRANCES. If any claim of lien is filed or
recorded, or any stop notice or other notice of lien is served upon Lender, in
connection with any Unit or other portion of the Property securing the Facility,
or if a judgment or other encumbrance is placed against any such Property, such
Unit or other portion of the Property securing the Facility in violation of the
terms of this Agreement or any other Loan Documents shall be excluded from the
current and all future Collateral Verification Certificates until such breach is
corrected and it shall constitute an Event of Default unless Borrower, within
twenty (20) days of receiving notice of such event, either (a) pays the related
judgment or claim and obtains the release and satisfaction of such lien, claim
of lien, judgment, or encumbrance; or (b) obtains the release of such lien,
judgment, or other encumbrance by transferring the same to or providing a surety
bond in accordance with applicable law, and provides to Lender evidence of such
release, in form and content acceptable to Lender.
     13. OFFSET RIGHTS. Upon the occurrence of an Event of Default hereunder,
Lender may take from any funds of Borrower or any Guarantor in its possession
or, at the option of Lender, from any of the proceeds of the Facility, any
amounts that Borrower has agreed to pay or is liable for under any of the Loan
Documents, but Borrower shall nevertheless remain liable to Lender until all
obligations provided for in this Agreement have been fully paid and discharged,
notwithstanding Lender may not have elected to take payment from such funds.
     14. DISCLAIMEROF LIABILITY. The execution of this Agreement or any of the
other Loan Documents by Lender and Borrower or any Guarantor does not constitute
a joint venture and no provision of this Agreement or of any of the other Loan
Documents is made or shall be construed for the benefit of any third party.
Borrower has accepted and hereby accepts the sole responsibility for the
selection of all contractors, subcontractors, and all materials, supplies, and
equipment to be used in the development and construction work at the Property
securing the Facility, and Lender assumes no responsibility to Borrower or any
Guarantor, any contractor, subcontractor, or any other person for the completion
of the improvements or for the quality thereof, nor does Lender assume any
responsibility for the application of Draws or payment of contractors,
subcontractors, or suppliers. Inspection by Lender of development and
construction work is for the purpose of protecting the security of Lender and is
not to be construed as a representation by Lender that such work will be free
from faulty material or workmanship. In no event shall Lender be liable to
Borrower or any Guarantor for punitive, exemplary, or consequential damages,
including, without limitation, lost profits, whatever the nature of a breach by
Lender of its obligations under this Agreement or any of the Loan Documents, and
Borrower waives all claims for punitive, exemplary, or consequential damages.
     15. REQUIRED NOTICE OF DEFAULT TO LENDER. Lender shall not be in default
under this Agreement, or under any other Loan Documents, unless a written notice
specifically setting forth the claim of Borrower shall have been given to Lender
within ten (10) days after Borrower first had actual knowledge of the occurrence
of the event that Borrower alleges gave
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rise to such claim and Lender does not remedy or cure the default, if any,
promptly thereafter. Borrower waives any claim, set-off, or defense against
Lender arising by reason of any alleged default by Lender to which Borrower does
not give such notice as set forth herein. Borrower acknowledges that such waiver
is or may be essential to Lender’s ability to enforce its remedies without delay
and that such waiver therefore constitutes a substantial part of the bargain
between Lender and Borrower with regard to the Loan.
     16. GENERAL PROVISIONS.
          16.1 Captions, Severability. Captions and headings are used for
convenience only and are not intended to modify or limit the textual provisions
of this Agreement. If anyone or more provisions of this Agreement are determined
to be invalid, illegal, or unenforceable, such unenforceability shall not affect
the other provisions thereof.
          16.2 Notices. Any notice or demand to Borrower shall be deemed to have
been given when sent by certified mail, first class, postage prepaid, sent by
overnight mail by a nationally recognized courier or personally delivered to
Borrower at Borrower’s address set forth above, or to such other address as
Borrower may furnish in writing to Lender for such purpose.
          16.3 GOVERNING LAW; CHOICE OF LAW; SUBMISSION TO JURISDICTION. EXCEPT
AS SPECIFICALLY PROVIDED HEREIN AND EXCEPT WHERE FEDERAL LAW IS APPLICABLE AND
PREEMPTS STATE LAW (IN WHICH EVENT SUCH FEDERAL LAW SHALL CONTROL), THIS
AGREEMENT, THE NOTE, THE LIEN INSTRUMENTS, AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, CONSTRUED, INTERPRETED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF FLORIDA, WITHOUT REGARD TO THAT STATE’S OR ANY OTHER STATE’S CHOICE
OF LAW RULES OR CONFLICTS OF LAW PRINCIPLES.
          16.4 Entire Agreement; Relationship to Prior Agreement; Amendment.
This Agreement is intended to set forth the entire and final agreement of the
parties concerning the subject matter hereof. This Agreement may not be amended
or modified except by written agreement of Borrower and Lender.
          16.5 Publicity. If Lender desires, it may announce and publicize the
fact that it is providing financing, and may (at Lender’s expense) place signs
on any property securing this Facility, as long as such property remains subject
to Lender’s security interest.
          16.6 Discretionary Rights. All rights, powers and remedies granted
Lender herein, or otherwise available to Lender, are for the sole benefit and
protection of Lender, and except as otherwise provided herein Lender may
exercise any such right, power or remedy at its option and in its sole and
absolute discretion without any obligation to do so; provided, however, that
where Lender’s consent or approval is required and not expressly reserved to the
sole discretion of Lender, such consent or approval shall not be unreasonably
withheld or delayed. In addition, if, under the terms hereof, Lender is given
two or more alternative courses of action, Lender may elect any alternative or
combination of alternatives, at its option and in its sole and absolute
discretion. All monies advanced by Lender under the terms hereof and all amounts
paid, suffered or incurred by Lender in exercising any authority granted herein,
including reasonable
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attorneys’ fees, shall be secured by the Mortgages and other Loan Documents,
shall bear interest at the Default Rate payable on the Facility until paid, and
shall be due and payable by Borrower to Lender immediately without demand.
     16.7 Indemnity. Borrower shall indemnify and hold Lender harmless from and
against all claims, costs, expenses, actions, suits, proceedings, losses,
damages and liabilities of any kind whatsoever, including but not limited to
attorneys’ fees and expenses, arising out of any matter relating, directly or
indirectly, to the Facility, to the ownership, development, construction, or
sale of the Property, whether resulting from internal disputes of Borrower,
disputes between Borrower and any Guarantor, or whether involving other third
persons or entities, or out of any other matter whatsoever related to this
Agreement, the Loan Documents, or any property encumbered thereby, but excluding
any claim or liability which arises as the direct result of the gross negligence
or willful misconduct of Lender or the breach by Lender of this Agreement. This
indemnity provision shall continue in full force and effect and shall survive
not only the making of the Facility but shall also survive the repayment of the
Facility and the performance of all of Borrower’s other obligations hereunder.
     16.8 Time of Essence. Time is expressly made of the essence of this
Agreement.
     16.9 Successors. Except as otherwise provided herein, this Agreement shall
be binding upon, and shall inure to the benefit of, the parties hereto and their
successors and assigns.
     16.10 Participations/Syndications. Lender, at any time, shall have the
right to sell, assign, transfer, negotiate or grant participation or syndication
interests in the Facility and in any documents and instruments executed in
connection herewith; provided, however, to the extent Lender retains any portion
of the Facility, Lender shall remain as the lead lender or administrative agent
under the Facility, as applicable. Lender shall endeavor to provide thirty
(30) days written notice to Borrower prior to any such sale, assignment,
transfer, participation or syndication if, after giving effect to such
transaction, Lender shall no longer be the lead lender or administrative agent
under the Facility; provided, however that Lender shall incur no liability to
Borrower for failure to deliver such notice, except to the extent such failure
shall have been intentional. Lender is authorized to furnish to any participant,
co-lender or prospective participant or co-lender any information or document
that Lender may have or obtain regarding the Facility, Borrower or any
Guarantor.
     16.11 Interest. It is the intention of the parties hereto to conform
strictly to usury laws applicable to Lender. Accordingly, if the transactions
contemplated hereby would be usurious under applicable law (including the laws
of the United States of America and the States of Florida, Georgia, North
Carolina, South Carolina, Tennessee or Texas), then, in that event,
notwithstanding anything to the contrary in the Note, this Agreement or in any
other Loan Document or agreement entered into in connection with or as security
for the Note, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under law applicable to Lender that is contracted
for, taken, reserved, charged or received under the Note, this Agreement or
under any of the other aforesaid Loan Documents or agreements or otherwise in
connection
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with the Note shall under no circumstances exceed the maximum amount allowed by
such applicable law, and any excess shall be credited by Lender on the principal
amount of the Facility (or, if the principal amount of the Facility shall have
been paid in full, refunded by Lender to Borrower); and (ii) in the event that
the maturity of the Note is accelerated by reason of an election of Lender
resulting from any Event of Default under this Agreement or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest under law applicable to Lender may never include more than
the maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically as
of the date of such acceleration or prepayment and, if theretofore paid, shall
be credited by Lender on the principal amount of the Facility (or, if the
principal amount of the Facility shall have been paid in full, refunded by
Lender to Borrower). Without limiting the foregoing, all calculations of the
rate of interest taken, reserved, contracted for, charged, received or provided
for under the Note or any of the other Loan Documents which are made for the
purpose of determining whether the interest rate exceeds the applicable highest
lawful rate (the “Highest Lawful Rate”) shall be made, to the extent allowed by
law, by amortizing, prorating, allocating and spreading in equal parts during
the period of the full stated term of the Facility, all interest at anytime
taken, reserved, contracted for, charged, received or provided for under the
Note or any of the other Loan Documents. If at anytime the sum of the stated
interest rate on the Note exceeds the Highest Lawful Rate, the rate of interest
to accrue on the Note shall be limited to the Highest Lawful Rate, but any
subsequent reductions in any index upon which the stated rate of the Note is
based shall not reduce the interest to accrue on the Note below the Highest
Lawful Rate until the total amount of interest accrued on the Note equals the
amount of interest which would have accrued if a varying rate per annum equal to
the stated interest rate on the Note had at all times been in effect. If at
maturity or final payment of the Note the total amount of interest paid or
accrued on the Note under the foregoing provisions is less than the total amount
of interest which would have accrued if a varying rate per annum equal to the
stated interest rate on the Note had at all times been in effect, then Borrower
agrees, to the fullest extent permitted by law, to pay to Lender an amount equal
to the difference between (a) the lesser of (i) the amount of interest which
would have accrued on the Note if the Highest Lawful Rate had at all times been
in effect and (ii) the amount of interest which would have accrued on the Note
if a varying rate per annum equal to the stated interest rate on the Note had at
all times been in effect, and (b) the amount of interest accrued in accordance
with the other provisions of the Note.
     16.12 Waiver of Jury Trial. LENDER AND BORROWER EACH HEREBY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY
LENDER AND BORROWER, AND LENDER AND BORROWER ACKNOWLEDGE THAT NO PERSON ACTING
ON BEHALF OF THE OTHER PARTY TO THIS AGREEMENT HAS MADE ANY REPRESENTATIONS OF
FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY
ITS EFFECT. BORROWER AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS AGREEMENT AND
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IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN
FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL
     16.13 Execution in Counterparts. This Agreement maybe executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
     16.14 Notice Regarding Oral Agreements. THIS AGREEMENT AND ALL THE OTHER
LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF BORROWER AND LENDER AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF BORROWER AND
LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN BORROWER AND LENDER.
     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.

                      BORROWER:       LENDER:    
 
                    LEVITT AND SONS, LLC, a Florida limited
Liability company       OHIO SAVINGS BANK, a federal savings
bank    
 
                   
By:
          By:        
 
 
 
George Scanlon, Chief Financial Officer          
 
                    , Vice President    

Attachments:

     
Schedule 1
  Facility Terms and Sub-Limits
Schedule 2
  Financial Covenants
Exhibit A
  Form of A&D Land Addendum
Exhibit B
  Form of A&D Project Addendum
Exhibit C
  Collateral Verification Certificate
Exhibit D
  Certificate of Compliance

Borrowing Base Facility Agreement- Loan No. 1001839

 

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SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.
     16.13 Execution in Counterparts. This Agreement maybe executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
     16.14 Notice Regarding Oral Agreements. THIS AGREEMENT AND ALL THE OTHER
LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF BORROWER AND LENDER AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE · SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF BORROWER AND
LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN BORROWER AND LENDER.
     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.

                      BORROWER:       LENDER:    
 
                    LEVITT AND SONS, LLC, a Florida limited
Liability company       OHIO SAVINGS BANK, a federal savings
bank    
 
                   
By:
          By:        
 
 
 
George Scanlon, Chief Financial Officer          
 
                    , Vice President    

      Attachments:  
Schedule 1
  Facility Terms and Sub-Limits
Schedule 2
  Financial Covenants
Exhibit A
  Form of A&D Land Addendum
Exhibit B
  Form of A&D Project Addendum
Exhibit C
  Collateral Verification Certificate
Exhibit D
  Certificate of Compliance

Borrowing Base Facility Agreement- Loan No. 1001839

 

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SCHEDULE l
Basic Facility Terms and Sub-Limits
Borrower: LEVITT ANDSONS, LLC, a Florida limited liability company
     THIS SCHEDULE sets forth the Basic Loan Terms and certain other provisions
applicable to funding under the Revolving Working Capital, Land Acquisition and
Development and Residential Construction Borrowing Base Facility Agreement
between Ohio Savings Bank, a federal savings bank, as “Lender,” and the
above-named Borrower.
A. Total Facility Amount:
Borrower shall at no time have funds advanced or available to be advanced under
this Facility in an aggregate amount in excess of $100,000,000.00.
B. Maximum Available Amount:
The “Maximum Available Amount” applicable to the Facility shall be the sum of
(i) the $15,000,000 Working Capital Line plus (ii) the sum of the “Collateral
Basis Amounts” for the following Eligible Property Types securing the Facility
(not exceeding $85,000,000.00), calculated as follows:

     
Eligible Property Type:
  Collateral Basis Amount:
 
   
Spec Units or Model Units
  Lesser of (i) seventy-five percent (75%) of the appraised value of the Unit,
multiplied by the percentage of completion of such Unit, (ii) eighty-five
percent (85%) of the discounted appraised value of the Unit, multiplied by the
percentage of completion of such Unit; or (iii) one hundred percent (100%) of
the actual costs incurred by Borrower or the applicable Project Guarantor to
date for construction of the Unit, including the Per Lot Amount
 
   
Pre-Sold Units
  Lesser of (i) eighty percent (80%) of the appraised value of the Unit,
multiplied by the percentage of completion of such Unit, (ii) eighty percent
80%) of the purchase price set forth in the Qualified Contract for such Unit,
multiplied by the percentage of completion of such Unit; or (iii) one hundred
percent (l00%) of the actual costs incurred by Borrower or the applicable
Project Guarantor to date for construction of the Unit, including the Per Lot
Amount.

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A&D Improvements
  On a per Project basis, eighty percent (80%) of the lesser of total budgeted
costs or actual costs incurred by Borrower or the applicable Project Guarantor
to date, not to exceed seventy five percent (75%) of appraised value when
combined with A&D Land, and not to exceed the A&D Project Allocation.
 
   
A&D Land (for current and future phases)
  Lesser of (i) sixty-five percent (65%) of the appraised value of the A&D Land
in a Project or (ii) sixty-five percent (65%) of the actual costs incurred by
Borrower or the applicable Project Guarantor to date for acquisition of the A&D
Land in a Project, not to exceed the A&D Land Allocation.

LESS:
     (i) The face amount of all outstanding Letters of Credit issued to or for
the benefit of Borrower or any Project Guarantor in conjunction with the
Projects; and
     ii) All Unsatisfied Curtailment Requirements; provided, however, that:

  (a)   Maximum Collateral Basis Amounts for Spec Units and Model
Units(Combined). The aggregate Collateral Basis Amounts for Spec Units and Model
Units combined and including the Collateral Basis Amount for the Developed Lot
associated therewith shall not exceed twenty five percent (25%) of the Maximum
Facility Amount (presently $25,000,000.00).     (b)   Maximum Collateral Basis
Amounts for All Units (including associated Lots). The aggregate Collateral
Basis Amount for all Units combined and including the Collateral Basis Amount
for the Developed Lot associated therewith shall not exceed $85,000,000.00 less
the sum of all A&D Land Allocations and Net A&D Allocations;     (c)   Maximum
Number of Spec Units. A Collateral Verification Certificate shall not contain
more Spec Units than Lender has approved and no more than a six (6) month supply
of Spec Units, on a per Project basis, as determined by Lender pursuant to the
inventory adsorption assumptions set forth in the Lender’s most current
Appraisal of the applicable Project;     (d)   Maximum Number of Model Units. A
Collateral Verification Certificate shall not contain more Model Units than
Lender has approved and no more than one (1) model per plan type (subject to
Lender’s approval) for each applicable Project;

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  (e)   Maximum Holding Period.. Once the Maximum Holding Period for a
particular Unit has expired, such Unit and the associated Developed Lot shall no
longer be an Eligible Property Type or included in determining the Collateral
Basis Amount;     (f)   Unit Value Limit. No Unit included in a Collateral
Verification Certificate shall have a Collateral Basis Amount in excess of
$600,000.00 without Lender’s prior written approval; and     (g)   Developed
Lots. Only Collateral Basis Amounts for Developed Lots on which a Unit is being
constructed, which Unit is included in the Collateral Verification Certificate,
shall be included in the Maximum Available Amount.

The Maximum Available Amount shall be determined based on Borrower’s most
current Collateral Verification Certificate, subject to adjustment based on
Lender’s inspections, which shall establish the maximum Available Amount until
the first to occur of (a) the date thirty (30) days after Lender’s receipt of
such certificate or (b) Lender’s receipt of a new Collateral Verification
Certificate in conformance with this Agreement. Upon the occurrence of any of
the following events, any Property constituting a portion of the Collateral
Basis Amount may be declared by Lender to no longer be included in the
Collateral Basis Amount: (i) the filing or commencement of any foreclosure
proceeding, forfeiture proceeding, notice of trustee’s sale or other action by
any person to realize upon any such Property; (ii) the Property shall become
subject to any environmental claim or Borrower or the applicable Project
Guarantor is otherwise in breach of any applicable Mortgage or environmental
indemnity agreement, which breach shall not have been cured within the
applicable cure period therefore, if any; (iii) in the event the Property is
subject to any damage or destruction (including, without limitation, fire,
earthquake and flood) that Lender determines is material, unless (A) Lender has
a first priority perfected security interest in insurance proceeds resulting
from such casualty; (B) Lender has possession of such insurance proceeds and
other sums provided by Borrower or any Guarantor, in an aggregate amount
sufficient to repair and reconstruct such Property, or, alternatively, Lender
shall have received assurances, in form and content acceptable to Lender (in its
sole discretion) of the source and availability of such sums; (C) Lender shall
have received evidence, satisfactory to Lender in its sole discretion, that the
Property and the applicable Units can be restored and completed no later than
the earlier of (x) twelve (12) months following the date of such casualty or
(y) one hundred twenty (120) days prior to the then applicable Maturity Date;
and (D) Borrower and the applicable Project Guarantor agree and timely undertake
the repair or replacement of such Property within a reasonable period of time,
not to exceed ninety (90) days after the event that caused the damage or
destruction; or (iv) in the event any Property is subject to any claim of
condemnation.
Principal payments made by Borrower during the effective period of a particular
Collateral Verification Certificate shall not reduce the Maximum Available
Amount. If, at any time, the aggregate principal amount of outstanding principal
under the Facility exceeds the Maximum Available Amount, Borrower shall be
required to pay down the outstanding principal amount under the Facility in an
amount equal to such excess amount within five (5) business days of
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Borrower’s receipt of written notice from Lender, and Borrower’s failure to do
so shall constitute an immediate Event of Default hereunder.
C. Sub-Limits:
     (i) Working Capital Line. The maximum principal amount outstanding from
time to time under the Working Capital Line shall not exceed $15,000,000.00.
     (ii) Letters of Credit. The maximum aggregate face amount of all
outstanding letters of Credit issued to or for the benefit of Borrower or any
Project Guarantor shall be limited to $15,000,000.00.
D. Facility Fees:
     (i) Annual Fee. Borrower shall pay Lender an annual fee of $250,000.00
(.25% of the Facility Amount) payable on the date hereof and annually thereafter
on or before each anniversary date hereof.
     (ii) Letter of Credit Fee. Borrower shall pay Lender an additional fee
equal to the greater of (a) one percent (1.00%) of the face amount of any Letter
of Credit issued by Lender to or for the benefit of Borrower or (b) Two Hundred
Fifty Dollars ($250.00) on or before the issuance of such Letter of Credit or
any renewal thereof.
Lender shall be permitted to fund any of the foregoing fees and any inspection
fees by advancing same from the Facility.
E. Maximum Holding Periods for Units:
Units shall be included in calculating the Maximum Available Amount only for the
following periods (as applicable, the “Maximum Holding Period”):

     
Unit Type:
  Maximum Holding Periods:
 
   
Pre-Sold Units:
  twelve (12) months Spec Units:
Model Units:
  twelve (12) months, subject to one (1), six (6) month extension option, at
Borrower’s request and Lender’s approval, in its reasonable discretion
thirty-six (36) months

F. Revolving Loan:
This Facility shall be structured as a revolving obligation and shall be
available on a revolving basis through the Maturity Date. The aggregate amounts
available hereunder shall be limited by the Maximum Facility Amount, and subject
to the Sub-Limits and other requirements set forth above.
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G. Term-Out Period:
Following the Expiration Date hereof, as such date may be extended as set forth
above, the following additional provisions shall be applicable during the last
twenty four (24) months of the Facility (the “Term-Out Period”):
     (i) No new Approved Projects shall be added as security for the Facility
during the Term-out Period.
     (ii) Borrower shall be allowed to proceed with development and construction
starts on Property already included as collateral for the Facility as long as
the amounts outstanding under the Note do not exceed the Maximum Facility
Amount, Maximum Available Amount or any other borrowing Sub-Limits applicable
hereunder; provided, however, that Lender shall have no obligation to fund any
Draws relating to Units commenced within the last six (6) months of the Term-Out
Period.
     (iii) All outstanding principal under the Facility shall be paid in full on
or before the Maturity Date.
H. Inspections.
At Lender’s option, the Lender may require (i) an inspection of each A&D Project
as a condition of each A&D Draw Request included in the Collateral Verification
Certificate by Borrower for such A&D Project, and (ii) inspections of a minimum
of twenty percent (20%) of the Unit construction in progress on a quarterly
basis; provided, however, that the foregoing shall not limit the Lender’s right,
pursuant to Section 4.3 of the Agreement, to inspect the A&D Projects, Lots and
Units securing the Facility at such intervals and as often as Lender may desire,
at Borrower’s expense.
I. Existing Approved Projects:
The following subdivision has been identified by Lender as of the date hereof as
Approved Projects qualifying for financing under the terms of this Facility:
     Tradition South Carolina, located in the City of Hardeeville, Jasper
County, South Carolina.
J. INTENTIONALLY DELETED.
K. A&D Limitations:
     (i) A&D Draws for A&D Land shall not exceed the lesser of (i) sixty-five
percent (65%) of the appraised value of the undeveloped A&D Land, or
(ii) seventy five percent (75%) of the actual costs incurred by Borrower or the
applicable Project Guarantor for the purchase of the undeveloped A&D Land; and
     (ii) A&D Draw Requests for the A&D Projects (including A&D Land and A&D
Improvements) shall not exceed the lesser of (a) seventy five percent (75%) of
the bulk
Borrowing Base Facility Agreement- Loan No. 1001839

 

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discounted appraised value of the completed Developed Lots multiplied by the
percentage of completion of the A&D Improvements, or (b) seventy five percent
(75%) of the actual costs incurred by Borrower or the applicable Project
Guarantor for the A&D Land, and eighty percent (80%) for the A&D Improvements
completed to date in accordance with the approved Budget.
L. Conversion of Eligible Property Types:
Upon the approval by Lender of an A&D Project, the associated A&D Land shall be
converted to and considered as part of the A&D Project. Upon the inclusion of a
Unit in a Collateral Verification Certificate, the associated Developed Lot
shall be considered as a part of the Borrowing Base Request in the Collateral
Verification Certificate.
M. Repayment Terms for A&D Land, A&D Projects and Developed Lots:
The respective amounts of each Net A&D Allocation shall be repaid in full on or
before the end of the following time periods, each measured from the first Draw
for the respective Eligible Property Type, unless the Eligible Property Type has
been converted to another Eligible Property Type or another time period is
reflected on the A&D Land Addendum or A&D Project Addendum (as applicable, the
“Required Repayment Term”):

     
Eligible Property Type:
  Required Repayment Term:
 
   
A&D Land:
  thirty six (36) months
A&D Project:
  thirty six (36) months

Notwithstanding the foregoing, at such time as A&D Land is converted to an A&D
Project, the Required Repayment Term shall commence for such A&D Project
(including the A&D Land) from the date of conversion to an A&D Project; and at
such time as a Unit on a Developed Lot is included in a Collateral Verification
Certificate, the Required Repayment Term for such Developed Lot shall no longer
apply.
N. Borrower’s Equity:
The Borrower shall provide to Lender satisfactory evidence that it has
contributed equity into the Approved Projects, on a per Project basis, as
follows:

     
Eligible Property Type:
  Required Equity:
 
   
A&D Land (for current and future phases):
  thirty-five percent (35%) initial equity
 
   
A&D Improvements:
  twenty percent (20%) pari pasu for all hard and soft costs as incurred

O. Required Guarantor(s):
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As a condition of the Loan, Borrower shall cause the Working Capital Line
Guarantor to execute a Guaranty in the form as required by Lender, guarantying
all obligations of Borrower to Lender under the Working Capital Line and such
guaranty must remain in force at all times while amounts are outstanding or
available for disbursement under the Working Capital Line. As a condition to the
initial advance of Facility proceeds with respect to any Property added as A&D
Land hereafter, Borrower shall cause the owner(s) of such Property to execute a
Guaranty in the form required by Lender, guarantying all obligations of Borrower
to Lender and such guaranty must remain in force at all times while amounts are
outstanding or available for disbursement under the Facility with respect to
such Property or the Approved Project of which it may be a part.
Borrowing Base Facility Agreement- Loan No. 1001839

 

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SCHEDULE 2
Financial Covenants
Borrower: LEVITT AND SONS, LLC
     THIS SCHEDULE sets forth the applicable financial reporting requirements
and financial covenants which are applicable to the Facility.
     A. Reporting Requirements.
Borrower shall provide the following financial information to Lender within the
applicable deadlines set forth below:

          Financial Covenant         Party(ies) required   Information to Be    
To provide Information   Provided   Frequency
Levitt Corporation
  CPA Audited Financial Statements on a consolidated and consolidating basis,
showing the financial status of Borrower*   Annually, within one hundred twenty
(120) days of the applicable fiscal year end
 
       
Borrower
  Financial Statements, Prepared and certified by management   Quarterly, within
forty five (45) days of the end of each calendar quarter, with the exception of
any calendar quarter for which the applicable Financial Covenant Party is
Otherwise providing an Annual financial statement hereunder
 
       
Borrower
  Sales, Inventory Reports, Work in Progress, and Closing Reports, or all
communities   Monthly, within thirty (30) Days of each month end
 
       
Borrower
  Certificate of Compliance   Quarterly within forty five (45) days of the end
of each calendar quarter
 
       
Borrower
  Collateral Verification
Certificate   Monthly, within twenty (20) days of month end for the month being
reported

 

*   Borrower, while required to submit annual financial statements, will not be
required to submit separate audited reports, rather the Borrower’s year-end
financial information shall be included in the audited year end financial
statements submitted by its parent, Levitt Corporation.

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All such financial information shall be in a format approved by Lender, in
Lender’s sole discretion, and certified as true, complete, and correct by its
preparer and by Borrower. In addition, together with each financial statement to
be provided by Borrower to Lender, Borrower shall deliver to Lender a duly
executed Certificate of Compliance in the form attached hereto as EXHIBIT “D”.
Borrower shall also provide such additional information regarding the financial
condition of Borrower as Lender may reasonably request.
     B. Financial Covenants.
The following financial covenants shall be maintained at all times while any
amounts are outstanding under the Loan:

                  Frequency at Which Entity Required to Comply       Compliance
will be With Covenant   Financial Covenant   Measured
Borrower
  A maximum Debt-to-Worth Ratio not Exceeding 3.5 to 1.00.*   Quarterly, as of
the Following dates: March 31, June 30, September 30, and December 31:
 
       
Borrower
  A minimum Tangible Net Worth of $115,000,000.00 Plus an increase of 40% After
tax income Determined on a quarterly Basis subsequent to December 31, 2005.*  
Quarterly, as of the following dates March 31, June 30, September 30, and
December 31
 
       
Borrower
  A minimum pre-tax net annual income of $19,000,000.00 for the year ended 2007
and subsequent years. In the event Borrower fails to satisfy this covenant in
any year, Lender’s sole remedy for breach of this covenant shall be the right to
withhold its consent to the addition of any additional Property as an Approved
Project.    

 

*   For purposes hereof, both the inventory, and the liabilities associated with
such inventory, not owned by Borrower, but is required to be reflected on its
balance sheet in accordance with FIN 46 of the Financial Accounting Standards
Board shall be excluded from this calculation.

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Borrower’s compliance with the applicable covenants shall be determined in
accordance with Lender’s standard underwriting and financial analysis criteria
on the basis of the financial statements and other financial information
provided to Lender and disclosed in the Certificates of Compliance provided
Lender by Borrower as set forth above, as reviewed and approved by Lender.
     C. Revision of Reporting Requirements and Financial Covenants.
Borrower understands that in the Event of Default, Lender may revise the
Reporting Requirements and Financial Covenants applicable to Borrower from time
to time based on the most current financial information provided Lender by
Borrower. Borrower agrees that, notwithstanding the above, the Reporting
Requirements and Financial Covenants applicable to Borrower and the Loan shall
be those stated in this Schedule of Financial Covenants.
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EXHIBIT A
Form of A&D Addendum
LEVITT AND SONS, LLC

                  Borrower            
 
                Loan No.:            
 
                Loan Agreement Dated:            
 
                Approved Project Name/County/State            
 
                A&D Land Allocations: $            
 
                A&D Land Acquisitions Budget: See attached:            
 
                BORROWER:   LENDER:    
 
                LEVITT AND SONS, LLC, A Florida limited
Liability company   OHIO SAVINGS BANK, a federal savings
bank    
 
               
By:
      By:        
 
 
 
                    , Vice President or CFO      
 
                    , Vice President    

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EXHIBIT B
Form of A&D Project Addendum
LEVITT AND SONS, LLC
Borrower
Loan No.:                     
Approved Project Name/County/State:
Total A&D Project Allocation:
Number of Lots (by product line):
Commencement Date:
Completion Date:
A&D Project Budget: See attached.
Per Lot Amount (by product line): $                     per Developed Lot
Curtailment Requirement: $                     on or before                    
and $                     every months thereafter.
(The Borrower shall reflect a reduction of the A&D Project Allocation by the
stated Per Lot Amount for each Developed Lot that is (a) released from the lien
and encumbrance of the Mortgage by Lender or (b) on which construction of a Unit
has commenced (as evidenced by inclusion as a Unit on the Borrowing Base Request
Portion of the Collateral Verification Certificate). The reductions shall be
credited toward the Curtailment Requirement. If upon any Curtailment Requirement
dates(s) an Unsatisfied Curtailment Requirement balance remains, then the A&D
Project Allocation shall be reduced by said balance.)
Other Conditions:

                      BORROWER:       LENDER:    
 
                    LEVITT AND SONS, LLC, a Florida limited
liability company       OHIO SAVINGS BANK, a federal savings
bank    
 
                   
By:
          By:        
 
 
 
                    , Vice President or CFO          
 
                    , Vice President    

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COLLATERAL VERIFICATION CERTIFICATE
The attached collateral inventory report of Borrower (“Inventory Report”) which
is incorporated by this reference, is provided to induce Lender to extend or to
continue the extension of credit to Borrower and to evidence the collateral base
securing such credit (s). Borrower hereby represents, warrants, and certifies
that the information provided herein is true, correct, and complete. Borrower
agrees to notify Lender immediately the event of any adverse change in (1) the
information contained herein, or (2) the financial condition of any Borrower, or
(3) the ability of any Borrower to perform any of its financial obligations, or
(4) any title defect affecting any of Lender’s collateral. In the absence of
such notice, or the submission of a new certification, this certification shall
be considered as a continuing statement and substantially correct. Lender is
hereby authorized to make all inquiries deemed necessary to verify the accuracy
of the information contained herein and to determine the credit-worthiness of
Borrower.
Borrower hereby represents, warrants, and confirms all of the Representations
and Warranties of the Revolving Working Capital, Land Acquisition and
Development, and Residential Construction Borrowing Base Facility Agreement
(“Agreement”) dated, by and between Lender and Borrower, and any amendments,
modifications or replacements thereof.
Borrower hereby represents, warrants, and certifies that currently there exists
(1) no Event of Default, or (2) no event which, with the giving of notice or
passing of time, would be an Event of Default.
Borrower hereby represents, warrants, and certifies that all eligible collateral
described on the attached Inventory Report is duly owned by the mortgagor that
has granted to Lender a recorded Mortgage (as defined in the Agreement), which
is a first lien on the property, free of any title defects, and fully eligible
under the terms and conditions of the Agreement, to the best of Borrower’s
knowledge.
Borrower herby represents, warrants, and certifies that all property described
on this Inventory Report is properly insured against title defects.
Borrower hereby represents, warrants, and certifies that all Units shown as
Pre-Sold units on the attached Inventory Report have a valid, qualified, and
non-contingent executed sales contract, together with an end mortgage commitment
or pre-approval letter.
Borrower hereby represents, warrants and certifies that all Units shown as
Pre-Sold Units, Model Units, or Spec Units on the attached Inventory Report, are
under construction, and all applicable documents necessary to satisfy any
governing municipalities have been recorded in the Public Records of the county
in which the collateral is located, and Borrower has posted a certified copy of
any required applicable documents at the site, all in accordance with applicable
local law, and that all applicable permits required by governmental authorities,
site plans, and boundary surveys have been obtained.
Borrower further represents, warrants and certifies that as construction
progresses and at the appropriate times, a comparison test, a Foundation Survey,
a Certificate of Occupancy, and any and all other necessary inspections shall be
obtained. Furthermore, all state, county, city and subdivision/homeowner’s
association rules, regulations, and guidelines shall be complied with in the
construction of homes.
Finally, Borrower represents and certifies that all Loan proceeds have been used
for the purposes outlined in the Agreement. I hereby certify that the above
information is true and correct to the best of my knowledge.
Levitt and Sons, LLC, a Florida limited liability company,
By:                                         
Kevin L Cronin, Treasurer
Borrowing Base Facility Agreement- Loan No. 1001839

 

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EXHIBIT D
Certificate of Compliance
OHIO SAVINGS BANK
200 Ohio Savings Plaza
1801 East Ninth Street
Cleveland, Ohio 44114
Attn:                     

Re:   Revolving Working Capital, Land Acquisition and Development and
Residential Construction Borrowing Base Facility Agreement dated as of
______________, 20___ (as amended, modified, supplemented, restated, or renewed,
from time to time, the “Agreement”), between LEVITT AND SONS, LLC, a Florida
limited liability company (“Borrower”), and OHIO SAVINGS BANK, a federal savings
bank (“Lender”).

Reference is made to the Agreement. Capitalized terms used in this Certificate
(including schedules and other attachments hereto, this “Certificate”) without
definition have the meanings specified in the Agreement.
Pursuant to applicable provisions of the Agreement, the undersigned, being an
Authorized Person designated in the Agreement, hereby certifies to Lender that
the information provided in this Certificate or attached hereto is true,
correct, and complete in all material respects as of the last day of the fiscal
periods subject to the financial statements delivered to the Lender together
with this Certificate (such statements the “Financial Statements” and the
periods covered thereby the “Reporting Period”).
The undersigned hereby further certifies to the Lender that:
     1. Compliance with Financial Covenants. As shown below, each Financial
Covenant Party is in full compliance with the applicable Financial Covenants
contained in the Agreement.
     A. Covenant: A maximum Debt-to-Worth Ratio for Borrower not exceeding 3.5
to 1.00, tested quarterly.
     Actual: Debt-to-Worth Ratio of ___ to 1.00 for Reporting Period ended ___.
          Compliance? (Yes or No) ___
     B. Covenant: A minimum Tangible Net Worth for Borrower equaling
$115,000,000.00 plus an increase of 40% of after tax income determined on a
quarterly basis subsequent to December 31, 2005.
     Actual: Tangible Net Worth of $ ___ for Reporting Period ended ___.
          Compliance? (Yes or No) ___
Borrowing Base Facility Agreement- Loan No. 1001839

 

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     C. Covenant: Minimum annual pre-tax income of Borrower of $19,000,000.00,
tested on an annual basis.
     Actual: Pre-tax income of $___ for Reporting Period ended December 31,
20___.
          Compliance? (Yes or No) ___.
     2. Review of Condition. The undersigned has reviewed the terms of the
Agreement, including, but not limited to, the representations and warranties of
Borrower set forth in the Agreement and the covenants of Borrower set forth in
the Loan Documents, and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the transactions and condition of
Borrower, through the applicable Reporting Periods(s).
     3. Non-Compliance Schedule. To the extent Borrower is not in compliance
with any of the covenants set forth in the Loan Documents or is otherwise in
default under any of the terms or conditions of the Loan Documents, or in the
event any of the representations and warranties of Borrower in the Loan
Documents are no longer true and accurate, the undersigned has attached as
Schedule A to this certificate an addendum describing and explaining each such
default.
     4. Representations and Warranties. To the undersigned’s actual knowledge,
the representations and warranties of Borrower contained in the Loan Documents,
including those contained in the Agreement, are true and accurate in all
material respects as of the date hereof and were true and accurate in all
material respects at all times during the applicable Reporting Period(s) except
as expressly noted on any attached Schedule A.
     5. Covenants. To the undersigned’s actual knowledge, during the Reporting
Period, Borrower observed and performed all of the respective covenants and
other agreements under the Agreement and the Loan Documents, and satisfied each
of the conditions contained therein to be observed, performed, or satisfied by
Borrower, except as expressly noted on any attached Schedule A.
     6. No Event of Default. To the undersigned’s actual knowledge, no Event of
Default exists as of the date hereof or existed at any time during the Reporting
Period, except as expressly noted on any attached Schedule A.
IN WITNESS WHEREOF, this Certificate is executed by the undersigned this___ day
of ___20___.

                  LEVITT AND SONS, LLC, a Florida
limited liability company    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

Borrowing Base Facility Agreement- Loan No. 1001839