Exhibit 10.4
LOAN AGREEMENT
This Loan Agreement is executed as of the 9th day of December, 2005 by and
between the Borrower, who hereby agrees to borrow, and the Lender, who hereby
agrees to lend, the Loan Amount subject to and in accordance with the following
terms and conditions:
1. DEFINITIONS.
When used herein, the terms set forth below shall be defined as follows:
"BORROWER" is Enclaves of Grand Oaks LLC, a South Carolina limited
liability company.
"BORROWER'S NOTICE ADDRESS" is c/o Enclaves Group, Inc., Attention: Xxxxxx
X. Xxxxx, 00 Xxxxxxxxx Xxxx, Xxxxxxxx, XX 00000.
"COLLATERAL" is collectively all property now or hereafter pledged,
mortgaged, assigned, hypothecated or otherwise provided to the Lender as
collateral security for the obligations evidenced by the Loan Documents, whether
to secure the Note, any guaranty, this Loan Agreement, or any other instrument,
indebtedness or undertaking.
"DEFAULT CONDITION" is the uncured existence of any Event of Default (as
defined in Section 5.1) or any fact or circumstance which with the passage of
time, giving of notice, or both, would constitute an Event of Default.
"GOVERNING STATE" is the State of Connecticut.
"GUARANTOR" means Homes for America Holdings, Inc.
"LENDER" is Sovereign Bank.
"LENDER'S NOTICE ADDRESS" is 0000 Xxxxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, XX
00000.
"LOAN AMOUNT" is $4,615,000.00.
"LOAN DOCUMENTS" are collectively this Loan Agreement as well as each and
every other document, instrument and agreement now or hereafter executed or
delivered in connection with the indebtedness evidenced by the Note, including,
without limitation, any mortgage, security agreement, loan agreement, guaranty,
indemnity, certification, assignment of leases and rents or pledge agreement, as
each may be amended, extended or renewed.
"MORTGAGED PROPERTY" is the real estate located at Longs Pond Road and
Xxxxx Xxxx, Lexington County, South Carolina as more particularly described in
the Mortgage (hereafter defined).
"NOTE" is that certain Promissory Note of even date by the Borrower, as
maker, to the Lender, as payee, in the Loan Amount.
"OBLIGORS" are collectively, jointly and severally, the Borrower, the
Guarantor, and all other parties obligated under the Loan Documents (except the
Lender).
"SECURITY DOCUMENTS" means any mortgage, assignment, security agreement,
pledge or other agreement or instrument granting to the Lender a security
interest in or lien on any Collateral.
All capitalized words and phrases in this Loan Agreement which are not
otherwise specifically defined herein shall have the meaning as assigned in the
other Loan Documents.
2. THE LOAN.
2.1. LOAN. On the date hereof Lender shall make the Loan to Borrower in
the Loan Amount. The Loan is evidenced by a Promissory Note of even date
herewith, which Note is hereby incorporated and made a part of this Agreement
(the "Note"). The Note is secured, inter alia, by that certain Mortgage Deed and
Security Agreement of even date herewith to be recorded in the land records of
Lexington County, South Carolina (the "Mortgage") (the Note, the Mortgage, this
Loan Agreement and any and all documents executed and delivered in connection
therewith being herein referred to as the "Loan Documents"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Mortgage.
2.2. USE OF PROCEEDS. The Loan proceeds shall be used to fund the
acquisition of the Mortgaged Property, and to fund an interest reserve to be
maintained by the Lender in an interest bearing account at Lender in the amount
of Two Hundred Seventy-Five Thousand Dollars ($275,000) to be utilized to fund
monthly interest payments due under the Note. Such reserve funds shall be
automatically debited by Lender to make such payments.
3. REPRESENTATIONS AND WARRANTIES.
As a material inducement to Lender to make the Loan, the Obligors
represent and warrant to the Lender the following, and such representations and
warranties shall continue so long as any of the Loan Amount or other Obligations
secured by the Security Documents shall remain outstanding:
3.1. INCORPORATION BY REFERENCE. Each warranty and representation made by
the Obligors in the Loan Documents is true, accurate, and complete, and is
incorporated herein by reference.
3.2. NO VIOLATION. The payment and performance by the Obligors of the
Obligors' obligations hereunder or under any other Loan Document do not
constitute a violation of any law, order, regulation, contract, or agreement to
which any Obligor is a party or by which any Obligor or the Obligors' property
may be bound; do not require the consent of any party (which has not already
been obtained); and do not require any filing or registration with, or any
permit, license, consent, or approval of, any governmental agency or regulatory
authority.
3.3. NO LITIGATION. There is no litigation or arbitration pending or, to
the best of the Obligors' knowledge, threatened against any Obligor which, if
adversely decided, could materially impair the ability of any Obligor to pay and
perform the Obligors' obligations under any Loan Document.
3.4. ENTITY MATTERS. Those Obligors are and shall remain duly organized,
validly existing entities in good standing under the laws of the state of their
creation, have and shall have all requisite power and authority to conduct their
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business and to own their property as the same are and shall be conducted or
owned, and are and shall remain qualified to do business in all jurisdictions
where the nature and extent of their business is or may be such that
qualification is required by law. Also, the execution of the Loan Documents does
not require any consent(s) which have not otherwise been obtained, whether of
any Obligor's directors, stockholders, partners, creditors, or otherwise; and
does not and will not violate any Obligor's instruments of organization, bylaws,
or similar documents or agreements of creation, governance, or management.
3.5. LOAN DOCUMENTS ENFORCEABLE. The Loan Documents were duly authorized,
executed, and delivered and are and shall remain legal, valid, and binding
instruments, enforceable against each party thereto in accordance with their
respective terms.
3.6. NO DEFAULT. The Obligors are not in default in any material respect
in the payment of any monies borrowed from or otherwise owed to any third party.
The Obligors are not in default under any order, award, or decree of any court,
arbitrator, or governmental authority which may at any time adversely affect the
ability of any Obligor to carry on his/her/its business as presently conducted
or to perform his/her/its obligations under any Loan Document.
3.7. NO NOTICE OF VIOLATIONS. The Obligors have no knowledge and have not
received any notice or communication (a) from any public authority that the
Collateral does not comply with zoning or that there exists any condition which
violates any municipal, state, or federal law, rule, or regulation; (b) from any
insurance carrier of the Collateral or any other party regarding any dangerous,
illegal, or other condition requiring corrective action; (c) regarding any
litigation or proceeding, pending or threatened, against or relating to the
Collateral or any Obligor; or (d) regarding any taking, condemnation, or
assessment, actual or proposed, with respect to the Collateral.
3.8. FINANCIAL STATEMENTS. All financial statements delivered to the
Lender by the Obligors (previously or in the future) are and shall be true and
correct in all material respects and such statements fairly present and shall
fairly present the financial condition of such parties.
3.9. BUSINESS PURPOSE. All of the Loan Amount shall be used solely for
business or commercial purposes, and specifically for the purchase of the
Mortgaged Property, and none shall be used for personal, family, or household
purposes, and no individual liable under any Loan Document shall at any time
reside in any portion of the Collateral.
3.10. PERMITS AND UTILITIES. All permits and approvals required for the
creation of 1,100 residential building lots have been duly obtained and remain
in full force and effect. All utility services required for the operation of the
Mortgaged Property in the ordinary course (such as water, gas, electric,
telephone, sewer, and storm drainage) are available as a matter of right at the
boundaries of the Mortgaged Property.
3.11. COMPLIANCE WITH LAW. The intended use of the Project complies, or
when built will comply, with all applicable federal, state, and local laws and
regulations (including, without limitation, those applicable to zoning,
subdivision, building, health, safety, and sanitary codes, wetlands,
environmental, and other land use restrictions).
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4. COVENANTS AND AGREEMENTS.
4.1. FINANCIAL STATEMENTS. The Obligors shall furnish or cause to be
furnished to the Lender from time to time the following financial statements,
reports, and other information: (i) Within ninety (90) days after the close of
each fiscal year, financial statements of the Borrower, including a balance
sheet, statement of cash flow and a statement of income and retained earnings
prepared on a review basis by the Borrower's certified public accountant in form
and detail acceptable to Lender; (ii) Within thirty (30) days of its due date,
complete copies of all federal and state income tax returns of each Obligor
(including all schedules); (iii) Copies of paid real estate tax bills for the
Mortgaged Property from each applicable taxing authority on or before the due
date thereof; and (iv) On or before March 30 of each year, an audited financial
statement of Guarantor, prepared by a certified public accountant acceptable to
Lender, in form and detail acceptable to Lender; and (v) Within a reasonable
period of time and from time to time, such other financial data or information
as the Lender may reasonably request with respect to any Collateral or any
Obligor (including, without limitation, any information, schedules, or reports
as shall be required from time to time by regulatory governmental agencies
having supervisory authority over the Lender).
4.2. NOTICE OF MATERIAL EVENTS. The Obligors shall, promptly upon
obtaining knowledge thereof, give notice to the Lender of (i) any Event of
Default, (ii) any material casualty, loss, or depreciation to any Collateral or
any other force majeure, or any litigation, investigation, or other proceeding
against or involving any Obligor, the result of which might have a materially
adverse effect upon the condition (financial or otherwise) or business of any
Obligor, or the value of any Collateral, (iii) any litigation, investigation,
arbitration, or other proceeding or dispute affecting any Obligor, (1) which
relates, in whole or in part, to any of the transactions evidenced or
contemplated by the Loan Documents, (2) which involves any amount in excess of
Twenty Thousand Dollars ($20,000), or (3) which may exist between any Obligor
and any governmental body with respect to any Collateral. Furthermore, the
Obligors shall furnish to the Lender from time to time all information which the
Lender shall reasonably request with respect to the status of any litigation,
investigation, arbitration, or other proceeding or dispute to which any Obligor
is a party.
4.3. INSURANCE COVERAGE. The Borrower will keep any buildings,
improvements, fixtures, and personal property on the Mortgaged Property insured
with so-called "all risk or special form" casualty insurance policies, and such
other forms of coverage as the Lender shall require (which may include, without
limitation, earthquake, steam boiler, plate glass, business interruption, and
building ordinance coverages) in an amount which, in the Lender's judgment,
shall be 100% of the full insurable value of said buildings, improvements,
fixtures, and personal property and not less than an amount sufficient to
prevent the Borrower or the Lender from becoming a co-insurer within the terms
of such policies. The Borrower shall also provide, maintain, and keep in full
force and effect (i) public liability insurance naming the Lender as an
additional insured, with limits reasonably acceptable, from time to time, to the
Lender with a contractual liability endorsement; and (ii) rent-loss insurance in
an amount equal to one year's rent under the leases of the Mortgaged Property in
effect from time to time. Borrower shall also provide, maintain, and keep in
force, if the buildings and improvements (or any part thereof) are located in a
flood prone, flood risk, or flood hazard area as designated pursuant to the
Federal Flood Disaster Protection Act of 1973, as amended, and regulations
thereunder, a policy of flood insurance issued under and in compliance with that
Act and those regulations in an amount determined from time to time by the
Lender and which will comply with the requirements of that Act and those
regulations.
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Any insurance or condemnation proceeds shall, at the discretion of
the Lender, be applied to or toward Borrower's obligations hereunder in such
order as the Lender may determine; or if the Lender shall require repair of that
part of the Mortgaged Property so damaged by such insured hazard, the Lender
shall release to the Borrower insurance proceeds paid to it upon such conditions
as the Lender may prescribe and the Borrower shall apply all of such proceeds to
the repair and restoration of the Mortgaged Property. The Borrower shall
promptly notify the Lender upon the occurrence of any loss or claim, and, except
with respect to amounts less than $10,000, at the Lender's option in each
instance, the Lender, to the exclusion of the Borrower, shall have the right and
authority to file any proofs of claim and negotiate any adjustment or settlement
thereof. Each insurance company is hereby directed and authorized to remit all
payments (including the return of unearned premiums) directly to the Lender
alone and not to the Borrower or the Borrower and Lender jointly.
All insurance policies shall be subject to Lender's reasonable
review and approval; shall be written by insurers which are rated at least "A"
by Best's Key Rating Guide, authorized to conduct business in the state in which
the Mortgaged Property is located, and otherwise acceptable to Lender; shall be
first payable in case of loss to the Lender under the standard mortgagee clause,
so-called, or its equivalent, provided, that the personal property and liability
insurance policies shall designate the Lender as an additional insured; shall
contain an agreed amount or waiver of co-insurance endorsement; shall be issued
on a replacement cost basis; shall require at least thirty (30) days written
notice to the Lender before cancellation or material coverage reductions; shall
include deductible amounts satisfactory to the Lender; and shall contain a
so-called lender's loss payable endorsement. The original of all such policies
of insurance (or certificates thereof issued by the insurer in form, content and
manner of execution satisfactory to the Lender) shall be delivered to the
Lender, and the Borrower shall deliver to the Lender a new policy (or such a
certificate) as replacement for an expiring policy (or such a certificate)
required to be deposited hereunder together with proof of payment of the
premiums therefor annually at least thirty (30) days before the date of such
expiration. The acceptance by the Lender of any insurance policies or
certificates it may receive from the Borrower or the Borrower's insurance agent
shall not be deemed or construed as an approval by the Lender of the form,
sufficiency, or amount of such insurance. The Borrower hereby irrevocably
appoints the Lender its true and lawful attorney-in-fact, with full power of
substitution, upon an Event of Default, to deal with the insurer with respect to
all matters arising under the policy, and, in the event the Lender forecloses
upon the Mortgaged Property to assign any policy to any subsequent owner of the
Mortgaged Property.
4.4. TAX AND INSURANCE RESERVE. The Borrower shall, upon the request of
the Lender after the occurrence of an Event of Default, pay to the Lender on the
dates upon which installments of principal or interest are payable under the
Note, such amount as the Lender from time to time estimates as necessary to
create and maintain a reserve fund from which to pay, before the same become
due, all taxes, assessments, liens, and charges on or against the Mortgaged
Property as well as the full annual premium for the insurance coverage required
to be maintained by the Borrower hereunder. Such payments may be mingled with
the general funds of the Lender, who shall not be liable for interest thereon
unless applicable law shall provide otherwise. Upon an Event of Default, any
part or all of said reserve fund may be applied, at the discretion of the
Lender, against any part of the Obligations evidenced by the Loan Documents.
4.5. BOOKS AND RECORDS. The Borrower hereby covenants and agrees to
permit the Lender, through its authorized attorneys, accountants, architects,
engineers, and representatives, to enter and inspect the Collateral and to
examine the books, records, accounts, computer tapes and disks, ledgers, and
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assets of every kind and description of the Borrower at all reasonable times and
upon reasonable notice and to contact the Borrower's accountants directly.
4.6. LEASING MATTERS. The Borrower shall not enter into leases or
occupancy agreements (or extend, amend, or modify existing leases) with respect
to any tenant at the Mortgaged Property without the Lender's prior written
consent.
4.7. GUARANTOR'S COMPLIANCE. The Borrower shall cause each Guarantor (if
any) to execute all instruments, supply all financial information, pay all
amounts, and perform all other obligations of such Guarantor arising or imposed
under the Loan Documents, and shall cause Guarantor to maintain a minimum net
worth of $1,500,000 and unencumbered liquid assets of $500,000, such compliance
to be tested annually based on the financial statements required in Section 4.1.
4.8. LOAN-TO-VALUE RATIO. The Borrower shall maintain a Loan-to-Value
Ratio of not greater than 65%. "Loan-to-Value Ratio" shall mean the ratio,
expressed as a percentage, of (a) the outstanding principal balance plus any
accrued but unpaid interest under the Note, divided by (b) the Mortgaged
Property Value. The "Mortgaged Property Value" shall mean the fair market value
of the Mortgaged Property based upon the most recent appraisal obtained from
time to time at the Lender's request (at the Lender's expense before the
occurrence of an Event of Default and at the Borrower's expense after the
occurrence of an Event of Default) and satisfactory to the Lender.
4.9. VISITS AND INSPECTIONS. Upon not less than three (3) days advance
notice (no advance notice being required after the occurrence and during the
continuance of an Event of Default), permit representatives of Lender and
Lender's Consultant from time to time, as often as may be reasonably requested,
but only during normal business hours, to visit and inspect the Mortgaged
Property, inspect, audit and make extracts from its books and records, and
discuss the Mortgaged Property with its officers, its employees and its
independent accountants.
4.10. OPERATING ACCOUNT. Borrower shall maintain its principal operating
account relating to the Mortgaged Property with Lender.
4.11. PRINCIPAL REPAYMENTS UPON SALE OF LOTS. Upon the sale of any portion
of the Mortgaged Property, Borrower shall make principal repayments on the Note
equal to the greater of (i) the Net Sales Proceeds of such sale (defined as the
gross sales price as set forth on the purchase and sale agreement for the land
being sold, less customary sales commissions and closing costs) or (ii) 94% of
the gross sales price.
4.12. SITE PLAN APPROVAL. Borrower agrees to obtain site plan approval for
the creation of 1,100 residential building lots for the Mortgaged Property on or
before ninety (90) days from the date of this Agreement. Borrower shall also
provide to Lender a copy of any proposed submissions for site plan approval five
(5) days prior to such submission so that Lender shall have the opportunity to
review the same with counsel.
5. EVENTS OF DEFAULT.
5.1. DEFINITION. The occurrence of any of the following shall constitute
an event of default for purposes of this Loan Agreement and the other Loan
Documents (an "Event of Default"):
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(a) The Borrower shall fail to pay any principal, interest, or
other sum owed under the Loan Documents within ten (10) days after the same is
due and payable;
(b) Any representation, warranty, certificate, or other
information provided in or pursuant to the Loan Documents is or shall be untrue
or misleading in any material respect;
(c) The occurrence of any event of default under any agreement
(other than the Loan Documents) between the Lender and any Obligor or any
Affiliate of any Obligor, whether now existing or hereafter arising
(notwithstanding that the Lender may not have exercised its rights upon default
under such other agreement) (and for theses purposes, the term "Affiliate" shall
mean, as to any person or entity, any other person or entity who directly or
indirectly owns or controls, is under common ownership or control with, or is
owned or controlled by or is an officer or director of such person or entity;
and without limitation, any person or entity who owns or controls, directly or
indirectly, ten percent (75%) or more of the equity or voting interests of an
entity shall be deemed to control such entity);
(d) The acceleration of or the failure to pay upon maturity or
demand any debt owed by Borrower or any Guarantor to any lender other than the
Lender;
(e) If any Obligor (i) commences a voluntary case under the
Bankruptcy Reform Act of 1978 as now or hereafter in effect (the "Bankruptcy
Code"); (ii) files a petition or commences any case, proceeding, or action
seeking relief under any other bankruptcy, insolvency, reorganization, or
similar act or law providing relief from creditors generally in any
jurisdiction, now or hereafter existing; (iii) takes any action indicating its
consent to, approval of, or acquiescence in, any such case, proceeding or other
action; (iv) applies for a receiver, trustee, or custodian of such party or for
all or a substantial part of such party's property; (v) makes an assignment for
the benefit of creditors; (vi) is unable to pay its debts as they mature or
admits in writing such inability; or (vii) is adjudicated insolvent or bankrupt;
(f) (i) If there is commenced against any Obligor (1) an
involuntary case under the Bankruptcy Code; or (2) any case, proceeding, or any
action seeking relief under any other bankruptcy, insolvency, reorganization, or
similar act or law providing relief from creditors generally in any
jurisdiction, now or hereafter existing, or seeking appointment of a receiver,
trustee, or custodian of any Obligor or for all or a substantial part of such
party's property; and any of the foregoing cases, proceedings, or actions are
not dismissed within sixty (60) days; or (ii) if an order, judgment, or decree
approving any of the foregoing is entered and such order, judgment, decree, or
similar process is not vacated or stayed within sixty (60) days; or (iii) if an
order for relief under the Bankruptcy Code is entered against any Obligor;
(g) The entry of a judgment against any Obligor which is not
satisfied or appealed from (with execution and similar process stayed or bonded)
within thirty (30) days after its entry;
(h) The death, incapacity, incompetency, termination of existence,
dissolution, winding up, or liquidation of any Obligor;
(i) If any Security Document ceases at any time to be in full
force and effect or to create in favor of the Lender, valid and enforceable
liens in the Collateral subject thereto, having priority over all liens except
as otherwise expressly permitted in the Loan Documents;
(j) The termination or purported revocation of any guaranty by any
Guarantor;
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(k) If all or any part of the Collateral or any ownership of the
Borrower shall, without the prior written consent of the Lender, become subject
to any lien or encumbrance or shall be transferred or conveyed to any other
party; provided that in the event of a mechanic's lien Borrower shall not be in
default unless within thirty (30) days of lien notice it fails to remove or bond
over such lien to the Lender's satisfaction;
(l) The failure to pay any real estate, AD VALOREM, or other taxes
which, if not paid, create a lien on any Collateral, when due and prior to the
date any penalty or interest first accrues thereon;
(m) The failure to pay any premium of insurance on any Collateral
when due;
(n) If, in the Lender's judgment, any Obligor shall have concealed
or removed any part of such party's property with intent to hinder, delay, or
defraud creditors, or made or suffered a fraudulent transfer as defined by any
bankruptcy, fraudulent conveyance, or similar law;
(o) If a state or federal income tax lien is filed against any
Obligor and the same is not discharged or contested (PROVIDED that such contest
is made in good faith, is effective to stay collection of such tax, and the
Borrower has established adequate reserves for payment of such tax) within
thirty (30) days;
(p) If any Obligor shall fail to observe or perform any covenants,
terms, conditions, or agreements contained in the Loan Documents (other than as
set forth in the other paragraphs of this Section 5.1), and, if the same is
susceptible of cure, the same is not cured within thirty (30) days after notice
thereof from the Lender to Borrower, or within a reasonable time thereafter so
long as such Obligor is proceeding diligently to cure the same; or
(q) If any attachment, garnishment, trustee process, or other
pre-judgment security is granted against any Obligor and is not dissolved within
thirty (30) days (with respect to amounts over $50,000) or ninety (90) days
(with respect to amounts of $50,000 or less) after its issuance.
5.2. REMEDIES. Upon the occurrence of any Event of Default, the Lender
shall have and may exercise any one or more of following rights and remedies:
(a) The Lender shall have the right to accelerate the Note,
declare all obligations from the Obligors to the Lender immediately due and
payable, and exercise any and all rights and remedies under the Loan Documents
as the Lender in its sole discretion may elect; provided, however, that upon the
occurrence of an Event of Default specified in items 6.1 (e) or (f) above, then
such acceleration shall be automatic without any other action necessary.
(b) At the Lender's option and without demand, notice, or protest,
the occurrence of any such Event of Default shall also constitute a default
under all other agreements between the Lender and the Obligor(s).
(c) All of the costs and expenses incurred by the Lender in
connection with exercising all or any of the foregoing rights shall be evidenced
and secured by the Loan Documents.
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6. GENERAL PROVISIONS.
6.1. TIME OF THE ESSENCE. Time is of the essence in this Loan Agreement
and each other Loan Document.
6.2. FURTHER ASSURANCES. The Obligors shall promptly, upon the reasonable
request of the Lender and at the Obligors' expense, execute, acknowledge, and
deliver, or cause the execution, acknowledgment, and delivery of, any document
or instrument supplemental to or confirmatory of the Security Documents or
otherwise necessary or desirable in the Lender's opinion for the creation,
preservation, and/or perfection of any liens on the Collateral.
6.3. RIGHTS CUMULATIVE. To the extent permitted by applicable law, the
Lender's rights and remedies under this Loan Agreement and the other Loan
Documents shall be cumulative and may be exercised in such manner, order, and
combination as the Lender may determine in its sole discretion. Without limiting
the generality of the foregoing, the Lender shall not be required to proceed
against the Collateral before proceeding against any Obligor or to proceed
against the Obligors in any particular order. Likewise, the enforcement of the
Lender's rights and remedies against any Obligor or the Collateral shall not
impair the Lender's ability to enforce its rights against any other party or
Collateral, it being expressly agreed that any such action by the Lender shall
never operate as a release or other diminution of the liability of any party
under the Loan Documents.
6.4. NO WAIVER. The failure of the Lender at any time or times to require
strict performance by any party of any of the provisions, warranties, terms, and
conditions contained in this Loan Agreement or any other Loan Document shall not
waive, affect, or diminish any right of the Lender at any time or times
thereafter to demand strict performance thereof. Furthermore, no rights or
remedies of the Lender under the Loan Documents shall be deemed to have been
waived by any action or knowledge of the Lender, its agents, officers, or
employees, unless such waiver is contained in an instrument in writing, signed
by an officer of the Lender and directed to the applicable party specifying the
exact defaults or provisions which are being waived. No waiver by the Lender of
any of its rights shall operate as a waiver of any other of its rights on a
future occasion. Delay by the Lender in exercising any of its rights or remedies
or in declaring or giving notice of default shall not constitute a waiver of its
rights to exercise the same at a later time for the same or other cause.
6.5. MODIFICATIONS MUST BE IN WRITING. The Loan Documents may only be
amended, terminated, extended, or otherwise modified by a writing signed by the
party to be charged. In no event whatsoever shall any oral agreements, promises,
actions, inactions, knowledge, course of conduct, course of dealing, or the like
be effective to modify, terminate, extend, or otherwise amend any Loan Document.
6.6. NOTICES. All notices, demands, and other communications made with
respect to any Loan Document shall be in writing and given by hand; by telegram;
by federal express, express mail, or any other nationally recognized overnight
delivery service; by telecopier (provided a copy is also sent via first class
mail); or by certified or registered first class mail, return receipt requested,
postage prepaid; and addressed as specified on page one hereof.
Each of the foregoing addresses may be changed upon fifteen (15)
days prior written notice given by any of the foregoing prescribed methods. All
notices shall be deemed to have been given, delivered, and received on the
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earlier of (i) actual receipt; or (ii) the tender of delivery by one of the
above prescribed methods during normal business hours at the specified address.
6.7. SUCCESSORS AND ASSIGNS. The Loan Documents shall bind and inure to
the benefit of the parties, their respective heirs, executors, administrators,
personal representatives, successors, and assigns.
6.8. PARTIAL INVALIDITY. Whenever possible, each provision of the Loan
Documents shall be interpreted and construed in such manner as to be effective
and valid to the fullest extent possible under applicable law. However, in the
event any one portion of any Loan Document shall be determined by a court of
competent jurisdiction to be unenforceable, then the remaining provisions shall
remain enforceable in accordance with their terms as if the unenforceable
provisions were never contained in such Loan Document.
6.9. INTEGRATION. The Loan Documents supersede all prior agreements
between the parties with respect to the loan transactions which they evidence,
whether oral or written, including, without limitation, all correspondence
between counsel for the respective parties, commitment letters, and term sheets.
The Loan Documents constitute the sole and entire agreement between the parties
with respect to the subject loan transaction, and the rights, duties, and
obligations of the parties with respect thereto.
6.10. MUTUAL WAIVERS OF JURY TRIAL. EACH PARTY TO THE LOAN DOCUMENTS
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED UPON THE LOAN DOCUMENTS, ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THE LOAN TRANSACTIONS WHICH THE LOAN DOCUMENTS
EVIDENCE, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS BY ANY PARTY. THIS MUTUAL WAIVER IS GIVEN AS A
MATERIAL INDUCEMENT FOR THE LENDER TO EXECUTE THIS LOAN AGREEMENT AND LEND THE
LOAN FUNDS.
6.11. TRANSFER OF LOAN DOCUMENTS; PARTICIPATIONS. Lender may, without
notice to or the consent of any party, sell, assign, transfer, or otherwise
dispose of all or any portion of its rights under the Loan Documents. In the
event all of such rights are transferred to another person or entity (including,
without limitation, any trustee or other fiduciary), then such party shall
succeed to and become vested with all rights, remedies, powers, privileges, and
duties of the Lender under the Loan Documents and, upon written notice thereof
to the Borrower, the Lender shall thereupon be discharged and relieved from all
duties and obligations assumed by such transferee. Provided, however,
notwithstanding the foregoing, such transferee shall take the Loan Documents
free from all claims and defenses of any Obligor except those disclosed in
writing to the transferee prior to the transfer of the Loan Documents. Also,
without notice to or the consent of any party, the Lender may sell or grant
participation interests in all or any portion of the loan transactions evidenced
by the Loan Documents to one or more financial institutions or other parties. In
connection therewith, the Lender may disclose to prospective or actual
participants or transferees any information in its files relating to any
Obligor, the Collateral, the Loan Documents, or the credit transaction which
they evidence.
6.12. DESCRIPTIVE HEADINGS; CONTEXT. The captions in the Loan Documents
are for convenience of reference only and shall not define or limit any
provision. Whenever the context so requires, reference in the Loan Documents to
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the neuter gender shall include the masculine and/or feminine gender, and the
singular number shall include the plural, and, in each case, vice versa.
6.13. COUNTERPARTS. The Loan Documents may be executed by one or more of
the parties on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
6.14. SETOFF. Borrower hereby grants to Lender a lien, security interest
and a right of setoff as security for all of the present or future obligations
of the Borrower to the Lender, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Lender or any entity under the control of Lender, or
in transit to any of them. At any time, without demand or notice, Lender may set
off the same or any part thereof and apply the same to any liability or
obligation of Borrower even though unmatured and regardless of the adequacy of
any other collateral securing such obligations. ANY AND ALL RIGHTS TO REQUIRE
LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES SUCH OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Lender shall not be required to
marshal any present or future security for, or guarantees of, such obligations
or to resort to any such security or guarantee in any particular order and the
Borrower waives to the fullest extent that it lawfully can, (a) any right it
might have to require the Lender to pursue any particular remedy before
proceeding against the Lender and (b) any right to the benefit of, or to direct
the application of the proceeds of any collateral until such obligations are
paid in full.
6.15. INDEMNIFICATION; COSTS AND EXPENSES. With the exception of any loss
caused by the willful misconduct of the Lender taken or omitted in bad faith,
the Obligors shall indemnify, defend, and hold the Lender harmless against (a)
any claim brought or threatened against the Lender by any Obligor, or any other
party (including, without limitation, reasonable attorney's fees and expenses
incurred in connection therewith) on account of the loan transaction evidenced
by the Loan Documents or the credit relationship with respect thereto, and (b)
any harm suffered or incurred by the Lender as a result of the inaccuracy of any
representation or warranty set forth or incorporated herein; each of which may
be defended, compromised, settled, or pursued by the Lender with counsel of the
Lender's selection but at the expense of the Obligors.
The Obligors agree to pay all reasonable costs and expenses incurred
by the Lender in connection with the loan evidenced by the Loan Documents,
including all costs payable to third parties for the implementation and (after
the occurrence of an Event of Default) administration of the Loan, the
collection of outstanding indebtedness, and the enforcement of the Lender's
rights under the Loan Documents, whether incurred prior or subsequent to any
judgment which may be obtained by the Lender against any Obligor. Without
limiting the generality of the foregoing, such costs and expenses shall include
(i) all reasonable attorneys' fees and costs (including the time of any in-house
counsel for the Lender charged at the same rate as comparable outside
attorneys), and the following only if incurred after the occurrence of an Event
of Default (ii) appraisal fees (including annual updates), (iii) tax service
fees, (iv) property inspection costs (including annual updates), and (v)
environmental site assessment, consultant fees, remediation expenses, and
related costs.
6.16. CHOICE OF LAW. It is understood and agreed that all of the Loan
Documents were negotiated, executed, and delivered in the Governing State, which
state the parties agree has a substantial relationship to the parties and to the
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underlying transactions embodied by the Loan Documents. Accordingly, this Loan
Agreement and each of the other Loan Documents shall in all respects be
governed, construed, applied, and enforced in accordance with the laws of the
Governing State. Provided, however, if any Collateral is located outside of the
Governing State, then the procedures governing the enforcement by the Lender of
its foreclosure and other similar remedies under the Security Documents with
respect thereto shall be governed by the laws of the state(s) wherein such
Collateral is situated.
6.17. VENUE. It is expressly agreed that any suit or claim by any Obligor
against the Lender with respect to the Loan Documents or the transaction which
they evidence, whether by way of claim, counterclaim, or otherwise, shall be
filed and adjudicated exclusively in the courts of the Governing State and the
Obligors hereby expressly consent to and waive any right to contest the
appropriateness of any proceeding brought by the Lender within such jurisdiction
based upon lack of personal jurisdiction, improper venue, or FORUM NON
CONVENIENS.
Executed by the Lender and the Borrower by their duly authorized officers
as of the date first above-written.
LENDER: BORROWER:
SOVEREIGN BANK ENCLAVES OF GRAND OAKS LLC
By: Enclaves Group, Inc.
Its Managing Member
By: ______________________________ By: /s/ Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx ----------------------------
Its Vice President Xxxxxx X. Xxxxx
President and CEO
AGREED AND ASSENTED TO:
GUARANTOR:
HOMES FOR AMERICA HOLDINGS, INC.
By: ______________________________
Its
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