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EXHIBIT 10.6.18
DEVELOPMENT AND RECEIVABLES
LOAN AND SECURITY AGREEMENT
This DEVELOPMENT AND RECEIVABLES LOAN AND SECURITY AGREEMENT is entered
into as of June 30, 1995, by and between FINOVA CAPITAL CORPORATION, a Delaware
corporation, and GREENSPRINGS ASSOCIATES, a Virginia joint venture.
1. DEFINITIONS
As used in this Agreement and the other Documents (as defined below) unless
otherwise expressly indicated in this Agreement or the other Documents, the
following terms shall have the following meanings (such meanings to be
applicable equally both to the singular and plural terms defined).
1.1 "Advances": the Development Loan Advances and the Receivables Loan
Advances: and "Advance": one of the Advances.
1.2 "Affidavit of Borrower": a sworn Affidavit of Borrower (and such
other parties as Lender may require) in the form of EXHIBIT J-1C, to
accompany a Development Loan Advance Request.
1.3 "Affiliate": with respect to any individual or entity, any other
individual or entity that directly or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under
common control with, such individual or entity.
1.4 "Agents": the Servicing Agent and the Lockbox Agent.
1.5 "Agreement": this Development and Receivables Loan and Security
Agreement, as it may be from time to time renewed, amended, restated
or replaced.
1.6 "Applicable Usury Law": the usury law chosen by the parties pursuant
to the terms of paragraph 9.10 or such other usury law which is
applicable if such usury law is not.
1.7 "Architect/Engineer": an architect, design professional or engineer
employed by Borrower to perform architectural, design or
engineering services.
1.8 "Architect/Engineer Agreement": a contract (written or oral, now or
hereafter in effect) between Borrower and an Architect/Engineer for
the performance of architectural, design or engineering services in
connection with the Improvements as approved by Lender in writing
and modified from time to time with Lender's prior written consent,
not to be unreasonably withheld.
1.9 "Articles of Organization": the charter, articles, operating
agreement, joint venture agreement, partnership agreement, by-laws
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and any other written documents evidencing the formation,
organization and continuing existence of an entity.
1.10 "Availability Advances": an Advance which is made against an
Eligible Instrument after the first Advance made against such
Instrument and is based upon the difference at such time between
the Borrowing Base of such Instrument and the unpaid principal
balance of the Receivables Loan attributable to such Instrument:
provided that neither any readvance of Refundable Receivables
Collateral Proceeds (as defined in paragraph 2.5) pursuant to
paragraph 2.5 nor the substitution of an Eligible Instrument for an
ineligible Instrument pursuant to paragraph 3.2 shall be deemed to
be an Availability Advance for purposes of this paragraph 1.10, but
the first and every subsequent Advance against such substituted
Eligible Instrument shall be deemed to be an Availability Advance.
1.11 "Borrower": Greensprings Associates, a Virginia joint venture
between Greensprings Plantation Resort, Inc., a Virginia
corporation, Plantation Group, L.L.C., a Virginia limited liability
company, and Offsite International Inc., a Virginia corporation;
and, subject to the restrictions on assignment and transfer
contained in this Agreement, its successors and assigns.
1.12 "Borrower's Assignments": collectively, a written assignment or
assignments, including, without limitation, the Time-Share Program
Governing Documents Assignment, which may be separate from and/or
included within the Borrower's Mortgage, executed by Borrower and
creating in favor of Lender, as security for the Performance of the
Obligations, a perfected. direct, and first assignment of, subject
only to the Permitted Encumbrances: all leases, sales contracts,
rents and sales and other proceeds pertaining to or arising from the
Real Property or any business of Borrower conducted thereon; the
Architect/Engineer Agreement(s); the Plans and Specifications; the
Construction Contract(s); all marketing agreements for the sale of
Time-Share Interests in the Time-Share Project; any and all special
rights and privileges of Borrower under the Declaration which are
not enjoyed by all other owners of property governed by the
Declaration; and all other Contracts, Intangibles, Licenses and
Permits; as such assignments may be from time to time renewed,
amended, restated or replaced.
1.13 "Borrower's Mortgage": a credit line deed of trust to be executed
and delivered by Borrower and under the terms of which Borrower has
conveyed or granted in favor of Lender, as security for the
Performance of the Obligations, a perfected, direct and first
priority lien, subject only to the Permitted Encumbrances, upon the
Real Property, as it may be from time to time renewed, amended,
restated or replaced.
1.14 "Borrower's Security Agreement": a written security agreement which
may be separate from and/or included within the Borrower's
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Mortgage or this Agreement, to be executed by Borrower and creating
in favor of Lender, as security for the Performance of the
Obligations, a perfected, direct and first security interest,
subject only to the Permitted Encumbrances, in the Personal
Property, as it may be from time to time renewed, amended, restated
or replaced.
1.15 "Borrower's Security Documents": the Borrower's Mortgage, the
Borrower's Security Agreement, the Borrower's Assignments, this
Agreement and all other documents now or hereafter securing the
Obligations, as they may be from time to time renewed, amended,
restated or replaced.
1.16 "Borrowing Base": with respect to an Eligible Instrument, an amount
equal to the lesser of:
(a) ninety percent (90%) of the unpaid principal balance of such
Eligible Instrument; or
(b) ninety percent (90%) of the present value of the unmatured
installments of principal and interest under such Eligible
Instrument, discounted at the higher of (i) the applicable
interest rate under the terms of the Receivables Loan Note or
(ii) the Discount Rate.
1.17 "Business Day": any day other than a Saturday, Sunday or a day on
which banks in Phoenix, Arizona are required to close.
1.18 "Collateral": the Real Property, Personal Property, Receivables
Collateral , Insurance Policies, and any and all other property now
or hereafter serving as security for the Performance of the
Obligations, and all products and proceeds thereof.
1.19 "Completion":
(a) completion of the Work, in accordance with the Plans and
Specifications, the Construction Contract(s), all applicable
laws, regulations and private restrictions, the Documents,
sound construction, engineering and architectural principles
and commonly accepted safety-standards, free of liens and
free of defective materials and workmanship;
(b) expiration of the statutory period in which mechanics' liens
and similar liens can be filed on account of the
Work; and
(c) receipt by Lender of the following in form and substance
satisfactory to it: (i) a certificate of completion from
Borrower and Architect(s)/Engineer(s) and, if Lender elects,
from Lender's Inspector to the effect that the Work has been
so completed, all utilities necessary to serve the
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Real Property have been connected and are operating, the
Improvements are fully furnished and ready for occupancy
for the intended time-share purposes, and final payment
is due under all Construction Contracts between Borrower
and all Contractors; (ii) a certificate of occupancy (or
its equivalent) from the appropriate governmental
authority having jurisdiction over the Work which has
the effect of allowing the use of Improvements for the
intended timeshare purposes; (iii) if applicable laws
provide that the recording of a notice of completion
will cause the expiration upon a date certain of the
statutory period within which mechanics' and similar
liens can be filed, verification of the recording of
such notice in the manner prescribed by such laws; (iv)
final lien waivers; (v) the as-built survey required
pursuant to paragraph 6.4(h) after substantial
completion of the Work; and (vi) the title policy
endorsements required pursuant to paragraph 6.4(i) after
substantial completion of the Work.
1.20 "Construction Budget": a detailed budget cost itemization
prepared by Borrower and approved in writing by Lender, for
each Development Loan Component, each of which specifies by
item the cost and source of payment of: (a) all labor,
materials and services necessary for Completion of the related
Work Component in accordance with the Plans and
Specifications, the Construction Contract(s), the Documents,
all applicable laws, regulations and private restrictions,
sound construction, engineering and architectural principles,
and commonly accepted safety standards; (b) interest on such
Development Loan Component; and (c) all other expenses
incidental to such Development Loan Component and the
Completion of the Work. The Construction Budget shall include
within the Costs of the Work to be paid from the Construction
Loan an interest reserve and a contingency reserve determined
to be adequate by Lender, but in no event shall the interest
reserve and contingency reserve be in an aggregate amount less
than Five Hundred Thousand Dollars ($500,000). The
Construction Budget approved by Lender as of the date of this
Agreement is attached as Exhibit N.
1.21 "Construction Contract": a contract (written or oral, now or
hereafter in effect) between Borrower and a Contractor,
between a Contractor and any other person or entity relating
in any way to the construction of the Improvements, including
the performing of labor and the furnishing of equipment,
materials or services (other than architectural or engineering
services), as approved by Lender in writing and modified from
time to time with Lender's prior written consent.
1.22 "Contractor": a contractor employed by Borrower to provide
labor and/or to furnish equipment, materials or services for
any portion of the Work.
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1.23 "Contracts, Intangibles, Licenses and Permits": the property
so described in EXHIBIT M.
1.24 "Declaration": collectively, the Time-Share Declaration and
any and all other declarations of covenants, conditions and
restrictions governing the Real Property.
1.25 "Default Rate": the "Default Rate" as defined in and
determined under the Notes.
1.26 "Development Loan": the loan made pursuant to paragraph
2.1(a).
1.27 "Development Loan Advance": an advance of the proceeds of the
Development Loan by Lender on behalf of Borrower in accordance
with the terms and conditions of this Agreement.
1.28 "Development Loan Borrowing Term": the period commencing on
the date of this Agreement and ending on the close of the
Business Day (or if not a Business Day, the first Business Day
thereafter) which is the earlier of (a) the date eighteen (18)
months from the date of the first Development Loan Advance or
(b) February 2, 1997.
1.29 "Development Loan Components": the Facilities Construction
Component and the Time-Share Building (Phase I) Construction
Component; and "Development Loan Component": one of the
Development Loan Components.
1.30 "Development Loan Fee": Sixty-Eight Thousand Dollars
($68,000).
1.31 "Development Loan Maturity Date": the date (or if not a
Business Day, the first Business Day thereafter) which is the
earlier of (a) thirty-six (36) months from the date of the
last Development Loan Advance or (b) February 2, 2000.
1.32 "Development Loan Note": the "Development Loan Promissory
Note" in form and substance identical to EXHIBIT D-1 to be
made and delivered by Borrower to Lender pursuant to paragraph
4.1A(a)(i), as it may be from time to time renewed,
amended, restated or replaced.
1.33 "Discount Rate": thirteen percent (13%).
1.34 "Documents": the Notes, the Guaranty(ies), the Subordination
Agreement(s), the Lockbox Agreement, the Servicing Agreement,
the Environmental Certificate, this Agreement, the Borrower's
Security Documents, the Oversight Agreement, and all other
documents now or hereafter executed in connection with the
Loans, as they may be from time to time renewed, amended,
restated or replaced.
1.35 "Eligible Instrument": an Instrument which conforms to the
standards set forth in EXHIBIT B. An Instrument that has
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qualified as an Eligible Instrument shall cease to be an
Eligible Instrument upon the date of the first occurrence of
any of the following: (a) any installment due with respect to
that Instrument becomes more than fifty-nine (59) days past
due unless cured to Lender's satisfaction or (b) that
Instrument otherwise fails to continue to conform to the
standards set forth in EXHIBIT B.
1.36 "Environmental Certificate": an environmental certificate
executed by Borrower and such other persons or parties as
required by Lender in form and substance identical to EXHIBIT
C as it may be from time to time renewed, amended, restated
or replaced.
1.37 "Event of Default": the meaning set forth in paragraph 7.1.
1.38 "Facilities": an amenity complex consisting of an outdoor pool
complex, two (2) tennis courts fenced and lighted, an athletic
center with indoor swimming pool and weight room, a sales
facility, a maintenance facility and infrastructure.
1.39 "Facilities Construction Component": that portion of the
Development Loan, not to exceed the Maximum Facilities
Development Loan Amount, allocated in the Construction Budget
to the construction of the Facilities, but in all events
excluding the Interest Reserve Fund.
1.40 "Force Majeure Event": an "act of God," a fire, a strike, a
governmental order and/or injunction which is issued by a
court of competent jurisdiction for reasons other than for
Borrower's acts or omissions which would constitute a default
under this Agreement, or a similar event beyond Borrower's
reasonable control.
1.41 "Guarantor": each person or entity now or hereafter
guaranteeing all or any part of the Obligations (which is
initially limited to Greensprings Plantation Resort, Inc.,
Offsite International, Inc., Plantation Group, L. L. C.,
Powhatan Associates, Xxxx X. Xxxxxx, Xxxxxx X. Xxx and Xxx X.
Xxx, Xxxxx X. Xxxxxx and Xxxxxxxx X. Xxxxxx, Xxxx X. Xxxxx and
Xxxxx X. Xxxxx, Xxxxxxx X. Xxxx and Xxxxxxx X. Xxxx).
1.42 "Guaranty": a primary, joint and several guarantee and
subordination agreement made by a Guarantor of the
Obligations, as it may be from time to time renewed, amended,
restated or replaced. The Guaranties will exclude the
Receivables Loan Obligations from the Obligations guaranteed
and will be limited, as to the Construction Loan Obligations
guaranteed by those Guarantors who are natural persons, all as
more fully set forth in Exhibit P.
1.43 "Improvements": the improvements to be constructed upon, added
to or made to the Real Property as part of the Work,
consisting
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of (a) the Facilities and the Time-Share Building (Phase I)
and (b) furniture, furnishings, fixtures and/or equipment
necessary for the Improvements; and all as set forth in the
Plans and Specifications and the Construction Contract(s) and
as described in the Construction Budget.
1.44 "Incipient Default": an event which after notice and/or lapse
of time would constitute an Event of Default,
1.45 "Instrument": a purchase money promissory note which has
arisen out of the sale of a Time-Share Interest by Borrower to
a Purchaser, is made payable by such Purchaser to Borrower,
and is secured by a Purchaser Mortgage.
1.46 "Insurance Policies": the insurance policies that Borrower is
required to maintain and deliver pursuant to paragraph 6.10.
1.47 "Interest Reserve Advance": a Development Loan Advance (or
portion thereof) made to pay accrued and unpaid interest on
the Development Loan.
1.48 "Interest Reserve Fund": that portion of the Development Loan
which is allocated within the Construction Budget for the
monthly payment of interest accrued on the Development Loan.
1.49 "Lender": FINOVA Capital Corporation and its successors and
assigns.
1.50 "Lender's Inspector": the meaning given to it in paragraph
8.1.
1.51 "Loans": the Development Loan and the Receivables Loan; and
"Loan": one of the Loans.
1.52 "Lockbox Agent": Central Fidelity Bank, a Virginia
corporation, or its successor as lockbox agent under the
Lockbox Agreement.
1.53 "Lockbox Agreement": an agreement to be made among Lender,
Borrower and Lockbox Agent, which provides for Lockbox Agent
to collect through a lockbox payments under Instruments
constituting part of the Receivables Collateral and to remit
them to Lender, as it may be from time to time renewed,
amended, restated or replaced.
1.54 "Maximum Development Loan Amount": the sum of the Maximum
TimeShare Building (Phase I) Component Amount plus the Maximum
Facilities Construction Component Amount plus the Interest
Reserve Fund, which shall not exceed Six Million Eight Hundred
Thousand Dollars ($6,800,000).
1.55 "Maximum Development Loan Component Amounts": the Maximum
Facilities Construction Component Amount and the Maximum
TimeShare Building (Phase I) Construction Component Amount;
and
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"Maximum Development Loan Component": one of the Maximum
Development Loan Components.
1.56 "Maximum Facilities Construction Component Amount": Five
Million Six Hundred Thousand Dollars ($5,600,000).
1.57 "Maximum Receivables Loan Amount": subject to the provisions
of paragraph 2.6. Thirty-Five Million Dollars ($35,000,000).
1.58 "Maximum Time-Share Building (Phase I) Construction Component
Amount": Seven Hundred Thousand Dollars ($700,000),
1.59 "Minimum Project Equity": a cash expenditure to be made by
Borrower for the purpose of paying a portion of the
Construction Costs, which expenditure shall be equal to the
difference between the unpaid cost of Completion of the Work
and the Maximum Development Loan Amount, but in no event less
than One Million Seven Hundred Fifty Thousand Dollars
($1,750,000),
1.60 "Minimum Required Time-Share Approvals": all approvals
required from governmental agencies in order to sell
Time-Share Interests and offer them for sale at the Time-Share
Project,
1.61 "Notes": the Development Loan Note and the Receivables Loan
Note, and "Note": one of the Notes.
1.62 "Obligations": all obligations, agreements, duties, covenants
and conditions of Borrower to Lender which Borrower is now or
hereafter required to Perform under the Documents.
1.63 "Oversight Agent": FINOVA Portfolio Services, Inc., an Arizona
corporation and a wholly-owned subsidiary of Lender, or its
successor as Oversight Agent under the Oversight Agreement.
1.64 "Oversight Agreement": the agreement to be made among Lender,
Borrower, Servicing Agent and Oversight Agent, which provides
for Oversight Agent to perform for the benefit of Lender
certain oversight functions with respect to the servicing of
the Receivables Collateral, as it may be from time to time
renewed, amended, restated or replaced.
1.65 "Partial Release Fee": with respect to a Time-Share Interest
to be released from the Borrower's Mortgage, an amount to be
paid at the time of each release and to be determined as
provided in the Borrower's Mortgage.
1.66 "Performance" or "Perform": full, timely and faithful
performance.
1.67 "Permitted Encumbrances": the rights, restrictions,
reservations, encumbrances, easements and liens of record
which Lender has agreed to accept as set forth in EXHIBIT E.
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1.68 "Personal Property": the property described in Exhibit M.
1.69 "Plans and Specifications": the architectural, structural,
mechanical, electrical and other plans and specifications for
the construction of the Improvements and the completion of the
rest of the Work prepared by Architect(s)/Engineer(s), as
approved by Lender as modified from time to time with Lender's
prior written consent.
1.70 "Powhatan Assignment": a written assignment to be executed by
Powhatan Associates ("Powhatan"), which creates in favor of
Lender, as security for the performance of the Obligations, a
perfected, direct. first and exclusive assignment of, and
security interest in all of Powhatan's right, title and
interest in any and all excess cash flow generated by the
Powhatan Associates Mortgage Trust I, as more fully described
in the Powhatan Assignment.
1.71 "Prepayment Premium": the meaning given to it in paragraph
5.3(a).
1.72 "Principal Work-Related Items": the Plans and Specifications
and all agreements between Borrower and third parties
pertaining to the Work, including, without limitation,
Construction Contract(s) and Architect/Engineer Agreement(s),
as approved by Lender in writing and modified from time to
time with Lender's prior written consent.
1.73 "Property": the Real Property and Personal Property.
1.74 "Purchaser Mortgage": the purchase money deed of trust given
to secure an Instrument.
1.75 "Purchase Contract": a purchase contract pursuant to which
Borrower has agreed to sell and a third party has agreed to
purchase a Time-Share Interest.
1.76 "Purchaser": a purchaser who has executed a Purchase Contract.
1.77 "Real Property": the real property described in Exhibit L.
1.78 "Receivables Assignment": a written assignment of specific
Instruments and/or Purchaser Mortgages and their proceeds,
executed by Borrower in the form of Exhibit A.
1.79 "Receivables Collateral": (a) the Instruments which are now or
hereafter assigned, endorsed or delivered to Lender pursuant
to this Agreement or against which an Advance has been made;
(b) all rights under all documents evidencing, securing or
otherwise pertaining to such Instruments; (c) the Insurance
Policies; (d) all Borrower's rights under all escrow
agreements and accounts pertaining to any of the foregoing;
(e) to the extent of Borrower's interest therein, all
reservation systems pertaining
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to the use of Time-Share Interests; (f) all contracts for the
construction of Units as to which Instruments are being
financed by Lender prior to completion of the Units, together
with bonds, plans and specifications, and architectural ,
engineering and other design professional contracts related to
the construction of such Units; (g) all data bases, files,
books and records of Borrower pertaining to any of the
foregoing; and (h) the cash and non-cash proceeds of all of
the foregoing, including, without limitation (whether or not
acquired with cash proceeds), all accounts, chattel paper,
contract rights, documents, general intangibles, instruments,
and equipment, inventory and other goods (as defined in the
Uniform Commercial Code).
1.80 "Receivables Loan": the loan made pursuant to paragraph
2.1(b).
1.81 "Receivables Loan Advance": an advance of the proceeds of the
Receivables Loan by Lender on behalf of Borrower in accordance
with the terms and conditions of this Agreement. An
Availability Advance is a Receivables Loan Advance.
1.82 "Receivables Loan Borrowing Term": subject to the provisions
of paragraph 2.6, the period commencing on the date of this
Agreement and ending on the close of the Business Day (or if
not a Business Day, the first Business Day thereafter) on the
earlier of (a) the date thirty-six (36) months from the date
of the first Receivables Loan Advance or (b) December 2, 1998.
1.83 "Receivables Loan Fee": Three Hundred Fifty Thousand Dollars
($350,000).
1.84 "Receivables Loan Maturity Date": the date (or if not a
Business Day, the first Business Day thereafter) which is one
hundred twenty (120) months from the date of the last
Receivables Loan Advance.
1.85 "Receivables Loan Note": the "Receivables Loan Promissory
Note" in form and substance identical to Exhibit D-2 to be
made and delivered by Borrower to Lender pursuant to paragraph
4.1(a)(iii), as it may be from time to time renewed,
amended, restated or replaced.
1.86 "Required Completion Assurance Deposit": the definition given
to it in paragraph 6.4(1).
1.87 "Required Completion Date": August 31, 1996, plus such
additional time which is necessary to achieve Completion of
the Work and is due solely to the occurrence of one or more
Force Majeure Events, but in no event later than the
expiration of the Development Loan Borrowing Term.
1.88 "Resolution": a resolution of a corporation certified as true
and correct by an authorized officer of such corporation, a
certificate signed by the manager of a limited liability
company
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and such members whose approval is required, or a partnership
certificate signed by all of the general partners of such
partnership and such other partners whose approval is
required.
1.89 "Security Interest": a perfected, direct and first security
interest, subject only to the Permitted Encumbrances, in and
charge upon the property intended to be covered by it.
1.90 "Servicing Agent": Borrower or its successor as Servicing
Agent under the Servicing Agreement.
1.91 "Servicing Agreement": an agreement to be made between Lender
and Servicing Agent, which provides for Servicing Agent to
perform for the benefit of Lender accounting, reporting and
other servicing functions with respect to the Instruments
constituting part of the Receivables Collateral, as it may be
from time to time renewed, amended, restated or replaced.
1.92 "Subordination Agreement(s)": the subordination agreement(s)
made and delivered pursuant to paragraph 6.13, as it/they may
be from time to time renewed, amended, restated or replaced.
1.93 "Term": the duration of this Agreement, commencing on the date
as of which this Agreement is entered into and ending when all
of the Obligations shall have been Performed.
1.94 "Third Party Consents": those consents which Lender requires
Borrower to obtain, or which Borrower is contractually or
legally obligated to obtain, from others in connection with
the transaction contemplated by the Documents.
1.95 "Time-Share Association": Greensprings Plantation Resort
Owners Association, a Virginia non-stock corporation, the
association provided for in the Time-Share Declaration to
manage the Time-Share Program and in which all owners of
Time-Share Interests are members.
1.96 "Time-Share Building (Phase I)": a time-share building
consisting of four (4) units, each of which is a 4-bedroom
unit capable of being locked off into two 2-bedroom units to
be built as part of the Improvements.
1.97 "Time-Share Building (Phase I) Construction Component": that
portion of the Development Loan, not to exceed the Maximum
Time-Share Building (Phase I) Construction Component Amount,
allocated in the Construction Budget to the construction of
the Time-Share Building (Phase I), but in all events excluding
the Interest Reserve Fund.
1.98 "Time-Share Declaration": that Time-Share Instrument for
Greensprings Plantation Resort, A Vacation Ownership Resort,
which is to be recorded in the real estate records of the
county where
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the Real Property is located, as more fully described in
EXHIBIT E and when so recorded will establish the Time-Share
Program.
1.99 "Time-Share Interest": the estate described in EXHIBIT F in
the Time-Share Project.
1.100 "Time-Share Management Agreement": the management agreement
from time to time entered into between the Time-Share
Association and the Time-Share Manager for the management of
the Time-Share Program.
1.101 "Time-Share Management Agreement Assignment": a written
assignment to be executed and delivered to Lender (and
thereafter re-delivered as appropriate) by each Borrower and
each Affiliate of Borrower if any of them is the Time-Share
Manager and granting to Lender, granting to Lender as security
for the performance of the Obligations, a perfected, direct
and first assignment of the Time-Share Management Agreement,
and as it may be from time to time renewed, amended, replaced
or restated.
1.102 "Time-Share Manager": the person from time to time employed by
Time-Share Association to manage the Time-Share Program.
1.103 "Time-Share Program": the program by which Purchasers may own
Time-Share Interests in fee simple, enjoy their respective
Time-Share Interests on a recurring basis, and share the
expenses associated with the operation and management of such
program.
1.104 "Time-Share Program Consumer Documents": the Purchase
Contract, Instrument, Purchaser Mortgage, deed of conveyance,
credit application, credit disclosures, rescission right
notices, final subdivision public reports/prospectuses/public
offering statements, exchange affiliation agreement and other
documents used or to be used by Borrower in connection with
the sale of Time-Share Interests.
1.105 "Time-Share Program Governing Documents": the Declaration, the
Articles of Organization for the Time-Share Association, any
and all rules and regulations from time to time adopted by the
Time-Share Association, the Time-Share Management Agreement
and any subsidy agreement by which Borrower is obligated to
subsidize shortfalls in the budget of the Time-Share Program
in lieu of paying assessments.
1.106 "Time-Share Program Governing Documents Assignment": a written
assignment to be executed BY Borrower to Lender, which grants
to Lender, as security for the Performance of the Obligations,
a perfected, direct and first assignment of and security
interest in, subject only to the Permitted Encumbrances,
Borrower's rights in, to and under the Time-Share Program
Governing Documents, as it may be from time to time renewed,
amended, restated or replaced.
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1.107 "Time-Share Project": the time share resort or part of the
resort described in EXHIBIT F and such other time share
resorts or part thereof as Borrower may request and Lender may
from time to time approve in writing.
1.108 "Title Insurer (Borrower's Mortgage)": a title company which
is acceptable to Lender and issues the Title Policy
(Borrower's Mortgage).
1.109 "Title Insurer (Purchaser)": a title company which is
acceptable to Lender and issues a Title Policy (Purchaser).
1.110 "Title Policy (Borrower's Mortgage)": an ALTA policy of title
insurance in an amount not less than the Maximum Development
Loan Amount, insuring Lender's interest in the Borrower's
Mortgage as a perfected, direct, first and exclusive lien on
the Real Property, subject only to the Permitted Encumbrances,
issued by Title Insurer (Borrower's Mortgage) and in form and
substance acceptable to Lender.
1.111 "Title Policy (Purchaser Mortgage)": a policy of title
insurance in an amount not less than the Borrowing Base of an
Instrument, insuring Lender's interest in the Purchaser
Mortgage securing such Instrument as a perfected, direct,
first and exclusive lien on the Time-Share Interest encumbered
thereby, subject only to the Permitted Encumbrances, issued by
Title Insurer (Purchaser) and in form and substance acceptable
to Lender.
1.112 "Uncovered Cost of the Work": the amount equal to the excess
(if any) of (a) the remaining unpaid cost of Completion of the
Work over (b) the committed and undisbursed portion of the
Development Loan and the remaining balance of any Required
Completion Assurance Deposits held by Lender.
1.113 "Unit": a dwelling unit in the Time-Share Project.
1.114 "Work": the construction of the Improvements and the
acquisition and installation of any and all furniture,
furnishings, fixtures and/or equipment required for the
time-share use of the Time-Share Project or by the terms of
this Agreement or shown on or described in the Plans and
Specifications or the Construction Contract(s) or as costs on
the Construction Budget.
1.115 "Work Components": the Time-Share Building (Phase I) and the
Facilities; and "Work Component": one of the Work Components.
1.116 "Work Progress Schedule": the schedule for the Completion of
the Work and parts thereof, as approved by Lender in writing.
The Work Progress Schedule approved by Lender on the date
hereof is attached as Exhibit 0.
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1.117 "Work-Related Advance": a Development Loan Advance made for
the purpose of paying or reimbursing Borrower for costs of the
Work, excluding interest on the Development Loan.
1.118 "Work-Related Advance Request": the written application of
Borrower on Lender's standard forms made by Borrower and
such other parties as Lender may require specifying by
name and amount all parties to whom Borrower is obligated for
labor, materials, equipment or services supplied for the
performance of the Work and all other expenses incidental to
the Development Loan, the Real Property and the Completion of
the Work, and requesting a Development Loan Advance for
payment of such items, accompanied by an Affidavit of Borrower
and such schedules, affidavits, releases, waivers,
statements, invoices, bills and other documents as Lender may
reasonably request. Work-Related Advance Requests under the
Facilities Construction Loan Component and the Time-Share
Construction Loan Component, respectively, shall be submitted
on separate forms, indicating for which such component the
Advance is being requested, but when submitted together shall
constitute a single request for Development Loan Advance for
the purposes of paragraph 4.2(b).
2. LOAN COMMITMENT: USE OF PROCEEDS
2.1 (a) Development Loan Commitment: Determination of
Development Loan Advance Amounts; Retainage. Lender
hereby agrees, if Borrower has Performed all the
Obligations then due, to make Development Loan Advances.
Subject to the provisions of paragraph 4.4, the amount
of each Interest Reserve Advance shall be in the amount
of interest then accrued and unpaid on the Development
Loan. The amount of each Work-Related Advance shall be
an amount equal to the costs of the Work covered by the
applicable Work-Related Advance Request and allocated
within the relevant Construction Budget for payment out
of the Development Loan less an amount equal to the sum
of (a) ten percent (10%) of the costs of such Work
("Basic Retainage") and (b) any additional retainage
("Additional Retainage") required under the Construction
Contract(s); provided, however, that Work-Related
Advances shall be made for stored or ordered materials
not yet incorporated into the Improvements only upon
terms and conditions set forth in EXHIBIT R. The Basic
Retainage shall apply to all "hard" costs of the Work
but not to "soft" costs of the Work, and in no event
shall the Basic Retainage apply to the costs of
furniture and furnishings. The Additional Retainage
shall be disbursed as part of the next Advance occurring
after Lender has reasonably determined that a Contractor
is entitled to it under the applicable Construction
Contract. The Basic Retainage for each Work Component
shall be disbursed at the time of Substantial Completion
(as that term is defined in AIA Document A201, 1987
edition) of that Work Component to
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the extent Contractor(s) are then entitled to it under
the Construction Contract(s) between Borrower and such
Contractor(s) prior to final payment, subject to
Lender's right to keep such portion of the Basic
Retainage as it may determine to be necessary to ensure
Completion of the Work, with such retained portion to be
disbursed promptly after Completion of the Work. Lender
shall have no obligation to make any Development Loan
Advance if after giving effect to such Advance the sum
of (i) the unpaid principal balance of any Development
Loan Component, (ii) the committed and undisbursed
portion of such Development Loan Component, and (iii)
the Uncovered Cost of the Work attributable to the Work
Component being constructed with the proceeds of such
Development Loan Component exceeds the Maximum
Development Loan Component Amount for such Development
Loan Component.
(b) Receivables Loan Commitment: Determination of
Receivables Loan Advance Amounts. Lender hereby agrees,
if Borrower has Performed all of the Obligations then
due, to make Receivables Loan Advances to Borrower for
the purposes specified in paragraph 2.3(b). The maximum
amount of a Receivables Loan Advance shall be equal to
(i) the Borrowing Base of the Eligible Instruments less
(ii) the then unpaid principal balance of the
Receivables Loan; provided, however, at no time shall
the unpaid principal balance of the Receivables Loan
exceed the Maximum Receivables Loan Amount; provided,
further, that until the Development Loan is paid in
full, the amount of any Receivables Loan Advance shall
not include any amount which would constitute an
Availability Advance.
(c) Limitation on Total Amount of Advances. Lender shall
have no obligation to make any Advance if after giving
effect to the Advance the sum of (i) the unpaid
principal balances of the Development Loan and the
Receivables Loan, (ii) the committed and undisbursed
portion of the Development Loan, and (iii) the Uncovered
Cost of the Work exceeds Forty Million Dollars
($40,000,000).
(d) Limitation on Advances During Deferral of Conditions.
Lender shall have no obligation to make any Advance,
prior to the fulfillment of the conditions for which
compliance may be deferred under paragraph 4.1A(d) of
this Agreement, if after giving effect to the Advance
the sum of the unpaid principal balance of the
Development Loan and the Receivables Loan exceeds Two
Million Six Hundred Thousand Dollars ($2,600,000).
2.2 (a) Development Loan Non-Revolving. The Development Loan
shall be non-revolving. All Development Loan Advances
shall be viewed as a single loan. Borrower shall not be
entitled to obtain Development Loan Advances after the
expiration of
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the Development Loan Borrowing Term unless Lender, in
its discretion, agrees in writing with Borrower to make
the Development Loan Advances thereafter on terms and
conditions satisfactory to Lender.
(b) Receivables Loan Revolver. The Receivables Loan is a
revolving line of credit; however, all of the
Receivables Loan Advances shall be viewed as a single
loan. Borrower shall not be entitled to obtain
Receivables Loan Advances after the expiration of the
Receivables Loan Borrowing Term unless Lender, in its
discretion, agrees in writing with Borrower to make
Receivables Loan Advances thereafter on terms and
conditions satisfactory to Lender.
(c) Continuation of Obligations Throughout Term. Whether or
not Borrower's right to obtain Advances has terminated,
this Agreement and Borrower's liability for Performance
of the Obligations shall continue until the end of the
Term.
2.3 (a) Use of Development Loan Advances. Borrower will use
Development Loan Advances only to pay or reimburse for
the line-item expenses shown in the Construction Budget.
If the amount needed by Borrower for any line item
expense set forth in the Construction Budget is less
than the budgeted amount of the line item expense, such
excess may be reallocated to other line items as
approved by Lender in writing, such approval not to be
unreasonably withheld.
(b) Use of Receivables Loan Advances. Borrower will use the
proceeds of the Receivables Loan only for working
capital and other business purposes, including, without
limitation, repayment of the Development Loan.
2.4 Minimum Borrowing Requirements. Until the earlier to occur of
the end of the Receivables Loan Borrowing Term or a date one
(1) year following the date on which the Development Loan has
been paid in full, Borrower shall assign to Lender, and shall
request Receivables Loan Advances under, Receivables
Collateral representing an aggregate minimum percentage
("Minimum Assignment Percentage") of the deferred purchase
price (i.e. that part of the purchase price not paid at
closing) of all Time-Share Interests from time to time sold in
the Time-Share Project and financed by Borrower or an
Affiliate of Borrower ("Seller Financed Time-Share
Interests"), as follows:
(a) until the then outstanding principal balance of the
Receivables Loan is not less than Ten Million Dollars
($10,000,000), the Minimum Assignment Percentage shall
be at least seventy-five percent (75%); and
(b) thereafter, the Minimum Assignment Percentage shall be
that percentage necessary to maintain (i) the
outstanding
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principal balance of the Receivables Loan at not less
than Ten Million Dollars ($10,000,000) and (ii) the
percentage which the deferred purchase price of all
Seller Financed Time-Share Interests assigned to Lender
bears to the deferred purchase price of all Seller
Financed Time-Share Interests at fifty percent (50%).
2.5 Readvances of Receivables Collateral Process. Notwithstanding
anything in the Loan Agreement to the contrary, after the
Borrowing Term has expired, but subject to the provisions of
this paragraph, Lender shall re-advance to Borrower each month
a portion ("Refundable Receivables Collateral Proceeds") of
the proceeds of the Receivables Collateral which were received
by Lender during the preceding month if, but only if, the
following conditions precedent are satisfied at the time of,
and after giving effect to, such refund:
(a) neither an Event of Default nor Incipient Default has
occurred and is continuing:
(b) the proceeds have not resulted from a casualty or
condemnation; and
(c) Lender has received (i) a written request for the
readvance, (ii) the reports for the preceding month
required pursuant to paragraph 5.4(b), and (iii) a
certificate signed by Borrower setting forth the amount
of the Refundable Receivables Collateral Proceeds
available to be re-advanced to Borrower and the
calculation of that amount, setting forth the amount
requested to be re-advanced, and certifying that all
conditions precedent to the refund are satisfied.
The Refundable Receivables Collateral Proceeds which Lender is
required to re-advance in any month shall be determined
according to the following schedule based upon the LTVR at the
end of the preceding month:
(a) if the LTVR is greater than 80%, none:
(b) if the LTVR is 80% or less but greater than 70%, up to
30% of the excess at the end of the preceding month of
(i) 80% of the then unpaid principal balance of all
Eligible Instruments (including Eligible Instruments
substituted pursuant to paragraph 3.2) over (ii) the
then unpaid principal balance of the Receivables Loan:
(c) if the LTVR is 70% or less but greater than 60%, up to
40% of the excess at the end of the preceding month of
(i) 70% of the then unpaid principal balance of all
Eligible Instruments (including Eligible Instruments
substituted
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pursuant to paragraph 3.2) over (ii) the then unpaid
principal balance of the Receivables Loan; and
(d) if the LTVR is 60% or less, up to 50% of the excess at
the end of the preceding month of (i) 60% of the then
unpaid principal balance of all Eligible instruments
(including Eligible Instruments substituted pursuant to
paragraph 3.2) over (ii) the then unpaid principal
balance of the Receivables Loan.
As used in this paragraph, when determining the Refundable
Receivables Collateral Proceeds, the term "LTVR" shall mean
the then ratio, expressed as a percentage, of the unpaid
principal balance of the Receivables Loan to the unpaid
principal balance of all Eligible Instruments (including
Eligible Instruments substituted pursuant to paragraph 3.2).
The Refundable Receivables Collateral Proceeds shall be
re-advanced by Lender to Borrower by wire transfer within
three (3) Business Days after Lender receives the information
required pursuant to the first sentence of this paragraph and
the amount re-advanced shall be deemed a Receivables Loan.
Without limiting the generality of any other provision of this
Agreement, Lender shall be entitled to charge its reasonable
and customary fee in connection with each wire transfer of
Refundable Receivables Collateral Proceeds, which currently is
Twenty-Five Dollars ($25.00).
2.6 Restrictions on Right to Receivables Loan Advances After
Specified Date and in Excess of Thirty Million Dollars. At
least thirty (30), but not more than ninety (90), days prior
to requesting (a) the first Receivables Loan Advance which
would cause the outstanding principal balance of the
Receivables Loan to exceed Thirty Million Dollars
($30,000,000) or (b) the first Receivables Loan Advance which
would be made on or after a date twenty-four (24)months from
the initial Receivables Loan Advance, whichever of such
Receivables Loan Advances is the first to occur, Borrower will
give Lender notice of its intention to do so. As an additional
condition precedent to such Receivables Loan Advance, (a)
Lender shall have received the required notice and Borrower
shall have delivered to Lender (or at Lender's option, Lender
shall have obtained) such items as Lender may require
[including, without limitation, the current searches, credit
bureau reports and financial statements of the type described
in paragraph 4.1A(c)(i)-(ii) and opinions as to such matters
as Lender may reasonably require, in form and from counsel to
Borrower satisfactory to Lender] in order to determine whether
the conditions set forth in paragraphs 4.1F(a)-(c), inclusive,
have been satisfied: and (b) Lender and Borrower shall have
agreed in writing to the minimum required tangible net worth
Borrower will be required to maintain after that date. The
costs of any UCC, tax lien, litigation, judgment and
bankruptcy searches and credit bureau and Dun & Bradstreet
reports required by Lender shall be paid by Lender; but
otherwise, the items required pursuant to the
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terms of the preceding sentence will be provided at Borrower's
expense.
2.7 Option to Prepay the Loans. In addition to its rights to
prepay the Loans as may be set forth elsewhere in this
Agreement or the Notes, subject to the terms and conditions of
this paragraph, Borrower may prepay the Loans in full but not
in part if Lender sells or assigns its entire interest in
either of the Loans or the Collateral, except for an
assignment for security purposes, to any person other than an
Affiliate of Lender. If Borrower wishes to exercise such
option, it must give Lender notice ("Loan Transfer Prepayment
Notice") of its intention to do so within ninety (90) days
after notice ("Loan Transfer Notice") is given to Borrower
that such a sale or transfer has occurred and must prepay both
Loans in full but not in part, together with a Prepayment
Premium calculated at the time of prepayment as if the
prepayment was an involuntary prepayment made pursuant to
paragraph 5.3(c), within one hundred twenty (120) days after
the Loan Transfer Notice is given to Borrower. If Borrower
fails to give the Loan Transfer Notice or to prepay the Loans,
together with the applicable Prepayment Premium, within the
period applicable pursuant to the preceding sentence, then
Borrower's option under this paragraph shall terminate:
provided that termination of such option shall not affect
Borrower's rights to prepay the Loans as may be set forth
elsewhere in this Agreement or the Notes.
3. SECURITY
3.1 Grant of Security Interest in Receivables Collateral. To
secure the Performance of all of the Obligations, Borrower
hereby grants to Lender a Security Interest in and assigns to
Lender the Receivables Collateral. Such Security Interest
shall be absolute, continuing and applicable to all existing
and future Advances and to all of the Obligations. All of the
Receivables Collateral shall secure repayment of the Loans and
the Performance of the other Obligations. Borrower will
unconditionally assign and deliver to Lender. with full
recourse, all Instruments which are part of the Receivables
Collateral. Lender is hereby appointed Borrower's
attorney-in-fact to take any and all actions in Borrower's
name and/or on Borrower's behalf deemed necessary or
appropriate by Lender with respect to the collection and
remittance of payments (including the endorsement of payment
items) received on account of the Receivables Collateral;
provided, however, that Lender shall not take any action which
is described in paragraph 7.2(c) unless an Event of Default
exists.
3.2 Ineligible Instruments. If (a) a previously Eligible
Instrument which is part of the Receivables Collateral ceases
to be an Eligible Instrument ("Ineligibility Event") and (b)
as a result of such Ineligibility Event, the outstanding
principal balance of the Receivables Loan exceeds the
Borrowing Base of all Eligible Instruments, then within thirty
(30) days thereafter Borrower will
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either (i) make to Lender a principal payment in an amount
equal to the positive remainder ("Borrowing Base Shortfall"),
if any, obtained by subtracting the Borrowing Base of all
Eligible Instruments from the unpaid principal balance of the
Receivables Loan, together with interest, costs and expenses
attributable thereto, or (ii) replace any one or more of such
ineligible Instruments with one or more Eligible Instruments
having an aggregate Borrowing Base not less than the Borrowing
Base Shortfall. Simultaneously with the delivery of the
replacement Eligible Instrument to Lender for an ineligible
Instrument, Borrower will deliver to Lender all of the items
(except for a "Request for Advance and Certification")
required to be delivered by Borrower to Lender pursuant to
paragraph 4.1, together with a "Borrower's Certificate" in
form and substance identical to EXHIBIT G. Lender will
reassign and/or endorse to Borrower, without recourse or
warranty of any kind, the ineligible Instrument causing the
Ineligibility Event if:
(a) no Event of Default or Incipient Default exists; and
(b) (i) Borrower has made any principal payment or
replacement with an Eligible Instrument as required
above in connection with the Ineligibility Event, or
(ii) there is no Borrowing Base Shortfall and Borrower
has requested Lender in writing to release the
ineligible Instrument.
Borrower will prepare the reassignment instrument, which shall
be in form and substance identical to EXHIBIT G-1, and shall
deliver it to Lender for execution, and Lender will send
Borrower the reassignment instrument and the Instruments being
re-assigned within ten (10) Business Days after satisfaction
of the conditions specified in the foregoing sentence.
3.3 Maintenance of Security. Borrower will deliver or cause to be
delivered to Lender and will maintain or cause to be
maintained in full force and effect throughout the Term
(except as otherwise expressly provided in such Document), the
Borrower's Security Documents and all other security required
to be given to Lender pursuant to the terms of this Agreement.
3.4 Partial Releases from Borrower's Mortgage. Borrower shall be
entitled to the release of Time-Share Interests from the
Borrower's Mortgage according to the terms and conditions of
the Borrower's Mortgage.
4. ADVANCES
4.1A General Conditions Precedent to Initial Advance. Lender's
obligation to make the initial Advance shall be subject to and
conditioned upon the terms and conditions set forth in the
following subparagraphs and elsewhere in this Agreement having
been satisfied:
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(a) Documents. Borrower shall have delivered to Lender the
following Documents, duly executed, delivered and in
form and substance satisfactory to Lender:
(i) this Agreement;
(ii) the Development Loan Promissory Note;
(iii) the Receivables Loan Promissory Note;
(iv) the Guaranties:
(v) the Subordination Agreements;
(vi) the Borrower's Mortgage;
(vii) the Borrower's Security Agreement;
(viii) the Borrower's Assignments;
(ix) the Powhatan Assignment:
(x) the Environmental Certificate:
(xi) UCC financing statements for filing and/or
recording, as appropriate, where necessary to
perfect the Security Interest in the Collateral;
(xii) a favorable opinion or opinions from independent
counsel for Borrower in form and substance
substantially identical to Exhibit I:
(xiii) a favorable opinion or opinions from independent
counsel for Guarantors in the form and substance
substantially identical to EXHIBIT I:
(xiv) the Lockbox Agreement;
(xv) the Servicing Agreement:
(xvi) Oversight Agreement;
(xvii) the Title Policy (Borrower's Mortgage):
(xviii) the Third Party Consents; and
(xix) agreements executed by all persons owning or
having a lien on any real property intended to
be available to owners of Time-Share Interests
which assure the satisfaction of the condition
specified in paragraph 4.1A(b)(xxvii).
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(b) Organizational, Time-Share Project and Other Due
Diligence Documents. Borrower shall have delivered to
Lender at least ten (10) Business Days (unless a longer
period is expressly specified) prior to the date of the
Advance:
(i) the Articles of Organization of Borrower, each
of the Guarantor(s), any other surety for the
Obligations and, if applicable, their respective
managers, members and partners, to the extent
any such entity is not a natural person;
(ii) the Resolutions of Borrower, each of the
Guarantor(s) which is not an individual , any
other surety for the Obligations and, if
applicable, their respective managers, members
and partners, to the extent any such entity is
not a natural person;
(iii) a Phase I environmental assessment of the Real
Property;
(iv) evidence that all taxes and assessments on the
Property have been paid;
(v) a title commitment or preliminary title report
for the issuance of the Title Policy (Borrower's
Mortgage), together with copies of all documents
referred to therein;
(vi) unless waived in writing by Lender, at least
fifteen (15) Business Days prior to such
Advance, a 1988 ALTA/ACSM survey map of the Real
Property prepared by a licensed land surveyor
acceptable to Lender, showing the Real Property,
evidence of access to the Real Property, all
easements necessary to the operation and use of
the Real Property, and such other details as
Lender may reasonably require, and a copy of the
recorded condominium map for the Time-Share
Project:
(vii) at least fifteen (15) Business Days prior to
such Advance, all licenses and certificates for
the construction of the Improvements and the use
and operation (exclusive of certificates of
occupancy or other licenses and certificates
dependent upon completion of construction of the
Improvements) of the Time-Share Project and Real
Property for time-share and other intended uses,
including certificates of occupancy and
environmental permits:
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(viii) evidence the Real Property is zoned for
time-share and other intended uses;
(ix) at least fifteen (15) Business Days prior to
such Advance, the Minimum Required Time-Share
Approvals;
(x) at least fifteen (15) Business Days prior to
such Advance, a copy of the Time-Share Program
Consumer Documents and the Time-Share Program
Governing Documents;
(xi) the Insurance Policies;
(xii) at least fifteen (15) Business Days prior to
such Advance, evidence that the Real Property is
not located within a flood prone area or, if
within a flood zone, evidence that flood
insurance has been obtained;
(xiii) at least fifteen (15) Business Days prior to
such Advance, evidence of the current and
continued availability of utilities necessary to
serve the Real Property for time-share and other
intended uses;
(xiv) at least fifteen (15) Business Days prior to
such Advance, evidence of access to and parking
for the Real Property adequate for time-share
and other intended uses;
(xv) evidence that Borrower has invested in the
Property an amount equal to the Minimum Project
Equity;
(xvi) at least fifteen (15) days prior to such
Advance, a soils test report with respect to the
suitability of the soils on the Real Property
for purposes of constructing the Improvements;
(xvii) at least fifteen (15) Business Days prior to
such Advance, if required by Lender, a pro forma
balance sheet of Borrower, showing the projected
financial condition of Borrower immediately
following the closing of, and first Advance
under, the Loans;
(xviii) at least fifteen (15) Business Days prior to
such Advance, a flood and drainage study with
respect to the Real Property and the
Improvements;
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(xix) at least fifteen (15) Business Days prior to
such Advance, the Architect/Engineer Agreement
for each Architect/Engineer and such
certificates as Lender may require from each
Architect/Engineer regarding the adequacy of the
Plans and Specifications (including, without
limitation, their compliance with the Americans
With Disabilities Act and all other applicable
laws and regulations) and the Construction
Budget and such other matters as Lender may deem
pertinent:
(xx) at least fifteen (15) Business Days prior to
such Advance, Plans and Specifications complete
in all respects (subject only to Lender's
approval):
(xxi) at least fifteen (15) Business Days prior to
such Advance, the Construction Budget complete
in all respects (subject only to Lender's
approval);
(xxii) at least fifteen (15) Business Days prior to
such Advance, a detailed draw schedule;
(xxiii) at least fifteen (15) Business Days prior to
such Advance, the Work Progress Schedule
complete in all respects (subject only to
Lender's approval);
(xxiv) at least fifteen (15) Business Days prior to
such Advance, a list of all Contractors with
whom Borrower has contracted (i.e. direct
contractors) and all subcontractors and
materialmen, all whom must be satisfactory to
Lender:
(xxv) at least fifteen (15) Business Days prior to
such Advance, fixed price Construction Contracts
necessary for Completion of the Work between
Borrower and Contractors and for all
subcontractors performing major portions of the
Work; and such certificates as Lender may
request from the direct Contractors regarding
the adequacy of the Budget and such other
matters as Lender may reasonably deem
appropriate; all information as Lender may
reasonably require regarding all direct
Contractors, and, if required by Lender, the
subcontractors performing major portions of the
Work (which, if available, may consist of
financial statements for the last two years and
federal employer tax identification numbers);
(xxvi) at least fifteen (15) Business Days prior to
such Advance, all building permits, licenses
and, if any, architectural committee approvals
necessary
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for the construction of the Improvements and
Completion of the Work:
(xxvii) evidence satisfactory to it that owners of
Time-Share Interests shall have the right to use
all amenities within the Time-Share Project upon
the same terms and conditions as owners of other
time-share interests in the Time-Share Project
and that each owner of a Time-Share Interest
which has been sold by Borrower has a right,
which cannot be disturbed by any third party, to
use the amenities which are part of the
Time-Share Project so long as the owner is not
in default of its obligations to pay the
purchase price of its Time-Share Interest, to
pay the normal assessments to the Time-Share
Project owner's association and to comply with
reasonable covenants, conditions and
restrictions with respect to the use of such
amenities;
(xxviii) the items described in paragraph 4.1B if the
Advance includes a Work-Related Advance;
(xxix) the items described in paragraph 4.1F if the
Advance includes a Receivables Loan Advance; and
(xxx) such other items as Lender requests which are
reasonably necessary to evaluate the request for
the Advance and the satisfaction of the
conditions precedent to the Advance.
(c) Lender shall have received the following in form and
substance satisfactory to Lender:
(i) current lien, litigation, judgment and
bankruptcy searches for Borrower, Guarantors and
the Time-Share Association conducted in such
jurisdictions as Lender deems appropriate;
(ii) credit bureau reports and Dun & Bradstreet
reports on Borrower and Guarantors,
respectively;
(iii) current financial statements of all Guarantors
in form and detail satisfactory to Lender, and
such financial statements must be satisfactory
to Lender in its sole discretion; provided that
Lender acknowledges that current financial
statements for Powhatan Associates have been
received and are satisfactory; and
(iv) the report of Lender's Inspector with respect to
the Construction Budget, Plans and Specifi-
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cations, Contracts, Work Progress Schedule, and
other construction-related items.
(d) Deferral of Satisfaction of Certain Conditions. Subject
to the provisions of paragraph 2.1(d) limiting the
unpaid principal balance of the Loans under such
circumstances, so long as Borrower is not in default of
its obligations under paragraph 6.5(b) and has approved
the form and substance of all Documents for which
execution and delivery has been deferred, Borrower may
defer satisfaction of the conditions specified in items
4.1A(a)(viii) (to the extent of the Time-Share Program
Governing Documents Assignment only) 4.1A(b)(vii) (to
the extent of the Minimum Required Time-Share Approvals
only), (ix) and (x) until October 15, 1995. With respect
to the maintenance facility and amenity complex,
Borrower may defer satisfaction of the conditions
specified in items 4.1A(b)(vii), (xix), (xx), (xxv), and
(xxvi) and Lender shall make no Advance for such
improvements until satisfaction of those conditions.
4.1B Additional Conditions Precedent for Initial Work-Related
Advance. For the initial Work-Related Advance, Lender's
obligation to make such Advance shall be subject to the
additional terms and conditions set forth in the following
subparagraphs and elsewhere in this Agreement:
(a) Borrower shall have satisfied all conditions set forth
in paragraph 4.1A; and
(b) Borrower shall have satisfied the terms and conditions
set forth in EXHIBIT J-1, including delivery to Lender
of the items called for therein at least ten (10)
Business Days prior to the date of such Work-Related
Advance or such longer period as may be described in
EXHIBIT J-1.
4.1C Additional Conditions Precedent for Subsequent Work-Related
Advance. For each Work-Related Advance after the initial
Work-Related Advance, Lender's obligation to make such Advance
shall be subject to the terms and conditions set forth in
EXHIBIT J-1, including delivery to Lender of the items called
for therein at least ten (10) Business Days prior to the date of
such Work-Related Advance.
4.1D Additional Conditions Precedent for Initial Receivables Loan
Advances. For the initial Receivables Loan Advance, Lender's
obligation to make such Receivables Loan Advance shall be
subject to the additional terms and conditions set forth in the
following subparagraphs and elsewhere in this Agreement:
(a) Borrower shall have satisfied all conditions set forth
in paragraph 4.1A;
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(b) Borrower shall have satisfied the terms and conditions
set forth in EXHIBIT J-2, including delivery to Lender
of the items called for therein at least three (3)
Business Days prior to the date of such Receivables Loan
Advance; and
(c) such legal opinions as Lender may require in its
discretion from Borrower's and Lender's counsel.
4.1E Additional Conditions Precedent for Subsequent Receivables Loan
Advances. For each Receivables Loan Advance after the initial
Receivables Loan Advance, Lender's obligation to make such
Receivables Loan Advance shall be subject to the terms and
conditions set forth in paragraph 2.6 and/or in EXHIBIT J-2,
including delivery of the items called for therein at least
three (3) Business Days prior to the date of such Receivables
Loan Advance.
4.1F General Conditions Precedent to All Advances. Lender's
obligation to fund any Advance is subject to and conditioned
upon the additional terms and conditions set forth in the
following subparagraphs remaining satisfied at the time of such
Advance:
(a) No material adverse change shall have occurred in the
Time-Share Project or in the business or financial
condition of Borrower or any Guarantor since the date of
the latest financial and operating statements given to
Lender by or on behalf of Borrower or any Guarantor.
(b) There shall have been no material , adverse change in
the warranties and representations made in the Documents
by Borrower, any Guarantor and/or any surety for the
performance of the Obligations.
(c) Neither an Event of Default nor Incipient Default shall
have occurred and be continuing.
(d) The interest rate applicable to the Advance (before
giving effect to any savings clause) will not exceed the
maximum rate permitted by the Applicable Usury Law.
(e) Borrower shall have paid to Lender so much of the
Receivables Loan Fee and the Development Loan Fee and
all other fees, as are required to be paid at the time
of the Advance.
(f) Borrower shall not be entitled to any Receivables Loan
Advance or any subsequent Development Loan Advance
unless on or before August 15, 1995, all Documents have
been executed by persons required to do so and the
initial Development Loan Advance has been made.
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4.1G Conditions Satisfied at Borrower's Expense. The conditions to
Advances shall be satisfied by Borrower at its expense.
4.2 Advance Requests.
(a) Receivables Loan Advances shall be made in amounts not
less than One Hundred Thousand Dollars ($100,000).
Requests for Receivables Loan Advances shall be made no
more than twice in any calendar month, Borrower shall
pay an administrative fee, as a withholding from the
second Advance under the Receivables Loan in any
calendar month, in an amount equal to the greater of (i)
$500, and (ii) one quarter of one percent (0.25%) of the
amount of such second Advance.
(b) Development Loan Advances (other than Interest Reserve
Advances) shall be made in amounts not less than Two
Hundred Fifty Thousand Dollars ($250,000) or, if the
undisbursed portion of a Development Loan Component is
less, the final Development Loan Advance of such
Development Loan Component may be in such lesser amount.
Development Loan Advances shall be made no more
frequently than once per calendar month; provided,
however, that two such Advances may be made in a
calendar month, so long as one such Advance is an
Interest Reserve Advance.
4.3 Disbursement of Advances. Advances may be payable to Borrower;
or if requested by Borrower and approved in writing by Lender,
to others, either severally or jointly with Borrower, for the
credit or benefit of Borrower. Advances shall be disbursed by
wire transfer or, at Borrower's option exercised by written
request to Lender, by check or drafts. Borrower will pay
Lender's reasonable charge in connection with any wire transfer,
which is currently Twenty-Five Dollars ($25). Lender may, at its
option, withhold from any Advance any sum (including costs and
expenses) then due to it under the terms of the Documents or
which Borrower would be obligated to reimburse Lender pursuant
to the Documents if first paid directly by Lender.
4.4 Interest Reserve Advances. If neither an Event of Default nor an
Incipient Default exists and subject to the terms and conditions
applicable to Interest Reserve Advances, during the Development
Loan Borrowing Term and, in Lender's discretion, after
expiration of the Development Loan Borrowing Term to the extent
that the Interest Reserve Fund has not been exhausted, Lender
will charge the Interest Reserve Fund for monthly interest
xxxxxxxx on the Development Loan until it has been exhausted. If
the Interest Reserve Fund is exhausted, Borrower will pay to
Lender the monthly installments of interest on the Note in
accordance with the terms of the Note.
4.5 No Waiver. Although Lender shall have no obligation to make an
Advance unless and until all of the conditions precedent to the
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Advance have been satisfied, Lender may, at its discretion, make
Advances prior to that time without waiving or releasing any of
the Obligations.
5. NOTES; MAINTENANCE OF BORROWING BASE; PRE-PAYMENTS; SERVICING AND
COLLECTION
5.1 Repayment of Loans. The Development Loan and the Receivables
Loan shall be evidenced by the Development Loan Note and the
Receivables Loan Note, respectively, and shall be repaid in
immediately available funds according to the terms of such Notes
and the Documents.
5.2 (a) Development Loan Minimum Required Principal Payments.
Until principal , interest and other sums due under the
Documents have been paid, exclusive of principal,
interest and other charges on the Receivables Loan Note,
Borrower will make to Lender at the time of each partial
release of a Time-Share Interest from the Borrower's
Mortgage a principal payment equal to the Partial
Release Fee required to be paid in connection with such
partial release. On each of the first and second
anniversary dates of the last Advance under the
Development Loan, Borrower will make to Lender a
principal payment on the Development Loan in an amount
equal to the positive remainder, if any, obtained by
subtracting the maximum allowable Development Loan
principal balance for such anniversary date set forth
below from the then outstanding principal balance of the
Development Loan:
Anniversary of Maximum Principal
Last Advance Balance
-------------- -----------------
1 $4,500,000
2 $2,750,000
(b) Receivables Loan Minimum Required Principal Payments. If
for any reason the aggregate principal amount of the
Receivables Loan outstanding at any time shall exceed
the then Borrowing Base of all Eligible Instruments,
Borrower, without notice or demand, will immediately
make to Lender a principal payment in an amount equal to
such excess plus accrued and unpaid interest on such
principal payment, subject to Borrower's right to
provide sufficient Eligible Instruments or make
principal payments as provided in paragraph 3.2(b).
5.3 (a) Prohibitions on Prepayment; Prepayment Premiums. Except
as expressly provided below, by Lender in writing in its
discretion or as otherwise provided in paragraph 2.7 or
the Notes, Borrower will not be entitled to prepay, in
whole or in part, either of the Loans. Commencing on the
date which
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is two (2) years after the date of last Receivables Loan
Advance ("Receivable Loan Opening Prepayment Date") if
neither an Event of Default nor an Incipient Default has
occurred and is continuing, then Borrower shall have the
option to prepay the Receivables Loan in full but not in
part on any date an installment is due on the
Receivables Loan Note upon sixty (60) days prior written
notice and the simultaneous payment of a prepayment
premium ("Prepayment Premium"), which shall be
determined in accordance with the following prepayment
premium schedule (expressed as a percentage of the
unpaid principal balance of the Receivables Loan on the
date of prepayment):
Year Prepayment Premium
---- ------------------
1-2 Prepayment Not Permitted
3-4 4%
5 3%
6 2%
7 and thereafter 1%
"Year" as used above refers to the twelve (12) month
period commencing on the Receivables Loan Opening
Prepayment Date with the second year commencing on the
first anniversary of that event and each succeeding year
commencing on the appropriate anniversary of that event,
provided that the last year shall end on the maturity
date of the Receivables Loan.
(b) Exceptions to Prepayment Prohibitions. Notwithstanding
anything in paragraph 5.3(a) to the contrary, the
following shall not be prepayments prohibited pursuant
to paragraph 5.3(a) or to require the payment of any
Prepayment Premium: (i) principal payments scheduled
under the Notes [including, without limitation, those
payments required pursuant to paragraphs 5.2(a) and
(unless due to an intentional misrepresentation or
breach of warranty concerning the Receivables Collateral
qualifying as Eligible Instruments) 5.2 (b)]; (ii)
repayments of the Development Note made with proceeds of
Receivables Loan Advances; and (iii) prepayments of the
Receivables Loan resulting from prepayments of the
Receivables Collateral by Purchasers which have not been
solicited by Borrower in breach of its Obligations under
this Agreement.
(c) Prepayment Premium Payable for Involuntary Prepayments.
A Prepayment Premium determined in accordance with the
schedule set forth in paragraph 5.3(a) shall be payable
regardless of whether the prepayment of the Development
Loan or Receivables Loan is voluntary or is required
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because repayment of such Loan has been accelerated
pursuant to any of Lender's rights under the Documents
(including, without limitation, any right to accelerate
following (i) casualty or condemnation to the Property
or (ii) an Event of Default). If an involuntary
prepayment occurs during a period for which no
Prepayment Premium has been specifically scheduled in
paragraph 5.3(a), the applicable Prepayment Premium
shall be four percent (4%).
5.4 (a) Intentionally Omitted.
(b) Lockbox Collections and Servicing. Lockbox Agent shall
collect payments on the Instruments constituting part of
the Receivables Collateral and remit collected payments
to Lender on the fifteenth (15th) and last days (or if
such day is not a Business Day, on the preceding
Business Day) of each and every month after the date of
the first Receivables Loan Advance, according to the
terms of the Lockbox Agreement. Payments shall not be
deemed received by Lender until Lender actually receives
such payments from Lockbox Agent. Servicing Agent shall
furnish to Lender at Borrower's sole cost and expense,
no later than the fifteenth (15th) day of each month
commencing with the first full calendar month following
the date of this Agreement, a report, substantially in
the format of EXHIBIT K, which: (i) shows as of the end
of the prior month with respect to each Instrument which
constitutes part of the Receivables Collateral (A) all
payments received, allocated between principal and
interest, (B) the closing balances, (C) present value,
and (D) consumer interest rates; and (ii) indicates
delinquencies of thirty (30), sixty (60), ninety (90)
days and in excess of ninety (90) days. Borrower will
pay without notice or demand any amount which was due
and payable by Borrower on the last Business Day of the
preceding month covered by such reports within five (5)
Business Days of Borrower's knowledge of such amounts.
If such reports are not timely received, Lender may
estimate the amount which was due and payable. Borrower
will pay upon demand the amount determined by Lender in
good faith to be due and payable. If payment is made on
the basis of Lender's estimate and thereafter reports
required by this paragraph are received by Lender, the
estimated payment amount shall be adjusted by an
additional payment or a refund to the correct amount, as
the reports may indicate; such additional amount to be
paid by Borrower upon demand and such refund to be made
by Lender within five (5) Business Days after receipt of
written request therefor by Borrower. At the end of each
calendar quarter, Borrower will deliver or cause the
Servicing Agent to deliver to Lender a current list of
the names, addresses and phone numbers of the obligors
on each of the Instruments constituting part of the
Receivables
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Collateral. Borrower will also deliver or cause
Servicing Agent to deliver to Lender, promptly after
receipt of a written request for them, such other
reports with respect to Instruments constituting part
of the Receivables Collateral as Lender may from time
to time reasonably require.
(c) Oversight Agreement. Borrower will enter into and
perform and cause Servicing Agent to enter into and
perform their respective obligations under the
Oversight Agreement. All fees and charges of Oversight
Agent for services provided under the Oversight
Agreement shall be the sole responsibility of Lender.
(d) Replacement of Agents. Lender, subject to any
additional restriction thereon contained in the Lockbox
Agreement or the Servicing Agreement may at any time
and from time to time substitute a successor or
successors to any Agent acting under the Lockbox
Agreement or the Servicing Agreement; provided such
Agent has acted negligently in the performance of its
duties or responsibilities.
5.5 Application of Proceeds. Any and all payments received by
Lender with respect to the Obligations (including, without
limitation, payments made with proceeds of the Collateral but
excluding funds set aside/held in escrow prior to the
expiration of a Purchaser's statutory rescission rights) shall
be first applied to the payment of all late charges, costs,
fees and expenses required by the Documents to be paid by
Borrower ("First Priority Application"); then to accrued and
unpaid interest on the Loans in such order and manner as
Lender may determine; and then to principal of the Loans in
such order and manner as Lender may determine. Notwithstanding
anything in the preceding sentence to the contrary, after the
First Priority Application, remaining proceeds of the payments
made pursuant to paragraph 5.2(a) shall be applied first to
the principal balance of the Development Loan Note, and then
to accrued and unpaid interest due under the Development Loan
Note. The provisions of this paragraph are subject to the
parties rights and obligations under Article VII and the other
Documents as to the application of proceeds of the Collateral
following an Event of Default.
5.6 Borrower's Unconditional Obligation to Make Payments. Whether
or not the proceeds from the Collateral shall be sufficient
for that purpose, Borrower will pay when due all payments
required to be made pursuant to any of the Documents,
Borrower's Obligation to make such payments being absolute and
unconditional.
6. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 (a) Good Standing. Borrower and each of its venturers are,
and will remain at all times, duly organized, validly
existing
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and in good standing under the laws of Virginia and are
authorized and will remain at all times authorized, to
do business in Virginia and in each jurisdiction in
which Borrower is at any time selling Time-Share
Interests or where at any time the location or nature of
its properties or its business makes such qualification
necessary. Borrower has and will maintain full authority
to Perform the Obligations and to carry on its business
and own its property.
(b) Power and Authority; Enforceability. Borrower has and
will maintain full power and authority to execute and
deliver the Documents and to Perform the Obligations.
All action necessary and required by Borrower's Articles
of Organization and all applicable laws for Borrower to
obtain the Loans, to execute and deliver the Documents
which have been or will be executed and delivered in
connection with the Loans and to perform the Obligations
has been duly and effectively taken. The Documents are
and shall be, legal, valid, binding and enforceable
against Borrower; and do not violate the Applicable
Usury Law or constitute a default or result in the
imposition of a lien under the terms or provisions of
any agreement to which Borrower is a party. No consent
of any governmental agency or any other person not a
party to this Agreement is or will be required as a
condition to the execution, delivery, or enforceability
of the Documents.
(c) Borrower's Principal Place of Business. Borrower's
principal place of business is located in the
Commonwealth of Virginia, and Borrower will not move its
principal place of business except upon not less than
sixty (60) days prior written notice to Lender.
6.2 No Litigation. There is no action, litigation or other
proceeding pending or, to Borrower's knowledge, threatened
before any arbitration tribunal, court, governmental agency or
administrative body against Borrower, which might materially
adversely affect the Performance of the Obligations, the
Time-Share Project, the business or financial condition of
Borrower, the Collateral, or the ability of Borrower to Perform
the Obligations. Borrower will promptly notify Lender if any
such action, litigation or proceeding is commenced or
threatened.
6.3 (a) Adequacy of Principal Work-Related Items. The Principal
Work-Related Items delivered to Lender are adequate (or
will be adequate at the time required to be delivered to
Lender pursuant to this Agreement) and will continue at
all times to be adequate for Completion of the Work. The
Principal Work-Related Items delivered to Lender are in
full force and effect; no third party bound thereby is
in default of its obligations thereunder or has
threatened to
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terminate Borrower's rights thereunder; Borrower has
paid all sums and performed all other obligations it has
under them; and no third party bound thereby has any
defense to the enforcement of Borrower's rights
thereunder. No moratorium or other legal impediment
exists or, to the knowledge of Borrower, is threatened
with respect to the issuance of any permit or approval
necessary to use the Time-Share Project for intended
time-share purposes upon Completion of the Work.
(b) Adequacy of Construction Budget. Borrower will cause the
Construction Budget to accurately and completely set
forth the types and estimated maximum amounts of all
costs which must be incurred for Completion of the Work
to occur.
(c) Adequacy of Streets and Utilities. All streets,
easements, and utilities (including potable water, storm
and sanitary sewer, gas, electric, telephone and cable
television facilities and garbage removal) necessary for
the Completion of the Work and use of the Real Property
for intended time-share purposes have been completed,
paid for in full and are available at the boundaries of
the Real Property. All water and sewer treatment plants
and power generation facilities intended to serve the
Real Property have been constructed and are operational;
and upon Completion of the Work, will have adequate
capacity and size to serve the intended time-share use
of the Real Property.
(d) Status of Work; Break in Priority. To the extent work,
equipment, materials, services or work of any kind has
been performed or provided with respect to the Real
Property that may give rise to any mechanics or similar
statutory lien which will have priority to the lien of
the Borrower's Mortgage (including, without limitation,
the destruction or removal of existing Improvements,
site work, clearing, grubbing, draining or fencing of
the Real Property), such work, equipment, materials and
services must be fully disclosed in writing to Lender
and Title Insurer (Borrower's Mortgage) prior to
recordation of the Borrower's Mortgage, such work,
equipment, materials and services must be satisfactory
to Lender and Lender's Inspector, and Title Insurer
(Borrower's Mortgage) must insure the priority of the
Borrower's Mortgage over all such liens.
6.4 Work-Related Covenants. Borrower will:
(a) cause the progress of the Work to occur in substantial
compliance with the Work Progress Schedule, subject to
Force Majeure Events, all in accordance with the Plans
and Specifications, Construction Contract(s), applicable
laws, regulations and private restrictions, the
Documents, sound
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35
construction engineering and architectural principles
and commonly accepted safety standards, lien free and
free from defective materials and workmanship; and cause
Completion of the Work to occur on or before the
Required Completion Date.
(b) (i) pay when due all costs, expenses and claims
pertaining to the Work; (ii) deliver to Lender during
the course of the Work in order to monitor and/or
provide assurance that the Work is proceeding lien free
in accordance with the Plans and Specifications, the
Construction Contract(s), applicable laws, regulations
and private restrictions, the Documents, sound
construction; engineering and architectural principles
and commonly accepted safety standards: bills of sale,
conveyances and paid invoices pertaining to the Work;
all waivers and releases of lien or claims on the Real
Property and/or the Improvements in connection with the
Work which Lender may determine to be necessary or may
otherwise reasonably request for its protection; from
persons acceptable to Lender, additional engineering or
architectural studies and reports as Lender or Lender's
Inspector may reasonably require; and (iii) record all
notices of commencement/ completion and similar notices
permitted by applicable laws and regulations which have
the effect of shortening periods within which mechanics
and similar liens may be filed;
(c) allow Lender, Lender's Inspector and/or its agents and
employees to inspect the Work at all reasonable times,
with the costs of such inspections to be borne by
Borrower to the extent provided in paragraph 6.16(a);
(d) not enter into any Architect/Engineer Agreement or
Construction Contract with respect to the Improvements
except upon terms and with such parties as Lender may
approve in writing, such approval not to be unreasonably
withheld;
(e) deliver all Principal Work-Related Items to Lender
promptly after obtaining them (or at such earlier time
as may be required pursuant to paragraph 4.1);
(f) not amend any of the Principal Work-Related Items except
with Lender's prior written approval. not to be
unreasonably withheld, and for change orders which (i)
do not change the cost of Completion of the Work by more
than Ten Thousand Dollars ($10,000) individually or
Fifty Thousand Dollars ($50,000) in the aggregate beyond
that shown in the Construction Budget as originally
approved by Lender and (ii) do not affect the design,
structural integrity or quality of the Improvements;
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(g) perform all its obligations and preserve its rights
under the Principal Work-Related Items and secure the
performance of the other parties to the Principal
Work-Related Items;
(h) deliver to Lender promptly after substantial completion
of the Improvements, a survey certified to Lender, Title
Insurer (Borrower's Mortgage) and Title Insurer
(Purchaser Mortgage) by a licensed surveyor or engineer
acceptable to Lender, showing such Improvements and that
the location thereof is entirely within the property
lines of the Real Property and does not encroach upon,
breach, or violate any set back line, easement or
similar restriction and meeting ALTA standards and other
reasonable requirements of the Lender, Title Insurer
(Borrower's Mortgage) and Title Insurer (Purchaser
Mortgage);
(i) deliver to Lender: prior to each Work-Related Advance,
at Lender's option, an endorsement ("date down
endorsement") issued by the Title Insurer (Borrower's
Mortgage) insuring Lender against any loss by reason of
defects in, mechanic's or similar statutory liens upon
or unmarketability of the title to the Real Property, as
well as insuring that the Borrower's Mortgage, at the
time of each Work-Related Advance, constitutes a valid
first lien upon the Real Property, subject only to the
Permitted Encumbrances; promptly after the construction
of the foundation for any building forming part of the
Improvements, an endorsement insuring that such
foundation is located on the Real Property within all
side and set-back lines and does not encroach upon any
easements, rights-of-way (public or private) or upon any
adjoining landowner's property; and promptly after
substantial completion of the Improvements has occurred,
an endorsement insuring that the Improvements are
located upon the Real Property within all side and
setback lines and do not encroach upon any easements,
rightsof-way (public or private) or upon any adjoining
landowner's property; and upon Completion of the Work, a
date down endorsement;
(j) after obtaining knowledge or receiving notice thereof,
correct or cause to be corrected (i) any material defect
in the Work, (ii) any material departure in the
completion of the Work from the Plans and Specifications
or the Construction Contract(s) (unless expressly
permitted in this Agreement or consented to in writing
by Lender), any applicable laws, regulations or private
restrictions, sound, construction, engineering or
architectural principles or commonly accepted safety
standards or (iii) any encroachment of any part of the
Improvements on any building line, easement linee or
restricted area, or any adjacent landowner's property;
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(k) promptly deliver to Lender any and all notices received
by Borrower that it is not complying with applicable
laws, regulations and private restrictions pertaining to
the Work or that the Work is not being completed in
accordance with the Plans and Specifications, the
Construction Contract(s), sound construction,
engineering and architectural principles and commonly
accepted safety standards,
(1) if at any time there exists or appears likely to exist
any Uncovered Cost of the Work, Borrower will notify
Lender within fifteen (15) Business Days (and in any
event prior to the next Advance) after obtaining
knowledge thereof; within the earlier of such fifteen
(15) Business Day period or fifteen (15) Business Days
after Lender's demand that it do so, Borrower will
deliver to Lender a cash deposit ("Required Completion
Assurance Deposit") equal to the Uncovered Cost of the
Work; in the event of any dispute, the necessity for and
amount of the Required Completion Assurance Deposit
shall be determined by Lender; the Required Completion
Assurance Deposit shall be deposited in an
interest-bearing account, such interest accruing to the
benefit of Borrower, provided that Lender will disburse
the Required Completion Assurance Deposit to pay and/or
reimburse Borrower for the costs of the Work prior to
any further disbursement of the Development Loan for
such purpose, but subject to the terms and conditions of
this Agreement pertaining to the disbursement of
Development Loan Advances; and Lender is hereby granted
a security interest in all Required Completion Assurance
Deposits, together with interest accruing thereon, from
time to time held by Lender;
(m) cause all materials supplied for or intended to be
utilized in the Completion of the Work, but previously
not affixed to or incorporated into the Improvements, to
be stored on the Real Property with adequate safeguards,
as reasonably required by Lender, to prevent loss,
theft, damage or commingling with other materials; and
(n) promptly after receipt by Borrower (but in no event
later than the Required Completion Date), deliver to
Lender copies of all certificates of acceptance and/or
occupancy relating to the Work.
6.5 (a) Compliance with Laws. Borrower has complied, and will
comply, with all applicable laws and regulations,
including, without limitation, all laws and regulations
of the state in which the Time-Share Project is located
and all other governmental jurisdictions in which the
TimeShare Project is located or in which Time-Share
Interests will be sold or offered for sale.
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38
Share Project is located or in which Time-Share
Interests will be sold or offered for sale.
(b) Sales Activities. Borrower has not yet sold any
Time-Share Interest or offered any.' Time-Share Interest
for sale. Borrower will not sell any Time-Share Interest
or offer any Time-Share Interest for sale in any
jurisdiction, unless: (i) Borrower has delivered to
Lender true and complete copies of the Minimum Required
Time-Share Approvals, all other approvals required to be
obtained by Borrower in such jurisdiction prior to
engaging in its proposed conduct, and all other evidence
required by Lender that Borrower has complied with all
laws of such jurisdiction governing its proposed
conduct; and (ii) Borrower has delivered to Lender the
Time-Share Program Consumer Documents and the TimeShare
Program Governing Documents which Borrower will be using
in connection with the Time-Share Project and the sale
or offering for sale of Time-Share Interests and such
documents have been approved by Lender, which approval
shall not be unreasonably withheld. Borrower will submit
to the appropriate department of the Commonwealth of
Virginia not later than August 15, 1995, an application
for the issuance of the Minimum Required Time-Share
Approvals which complies with applicable' laws and
regulations and will thereafter diligently pursue
approval of such application and the issuance of the
Minimum Required Time-Share Approvals. Not later than
October 15, 1995, Borrower will deliver to Lender the
Minimum Required Time-Share Approvals, the Time-Share
Program Governing Documents and Time-Share Program
Consumer Documents (which have, to the extent required,
been approved for use in the Commonwealth of Virginia)
and will take all steps necessary to commence the sale
of Time-Share Interests in the Commonwealth of Virginia,
and from and after October 15, 1995, Borrower will
maintain an active marketing program for the sale of
Time-Share Interests in conformance with all applicable
laws and regulations and consistent with the provisions
of this paragraph and the terms and conditions of
Borrower's Mortgage pertaining to the sale of Time-Share
Interests.
(c) Time-Share Interest Not a Security. Borrower has not
sold or offered for sale any Time-Share Interest as an
investment. Neither the sale nor the offering for sale
of any Time-Share Interest would constitute the sale or
the offering of a security for sale under any applicable
law.
(d) Zoning Compliance. Neither time-share use nor other
transient use and occupancy of the Real Property
violates or will violate or constitute a non-conforming
use or require a variance under any private covenant or
restriction or any zoning, use or similar law, ordinance
or
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6.6 (a) Eligible Instruments. Each Instrument which is assigned
to Lender pursuant to this Agreement and against which
an Advance is requested shall be an Eligible Instrument
at the time of assignment. Borrower has performed all of
its obligations to Purchasers, and there are no
executory obligations to Purchasers to be performed by
Borrower, except for Completion of the Work. Borrower
further warrants and guarantees the enforceability of
the Receivables Collateral.
(b) No Modification of Receivables Collateral or Payments by
Borrower. Without the prior written consent of Lender,
Borrower will not cancel or materially modify, or
consent to or acquiesce in any material modification
(including. without limitation, any change in the
interest rate or amount, frequency or number of
payments) to, or solicit the prepayment of, any
Instrument which constitutes part of the Receivables
Collateral; or waive the timely performance of the
obligations of the Purchaser under any such Instrument
or its security; or release the security for any such
Instrument. Borrower will not pay or advance directly or
indirectly for the account of any Purchaser any sum
required to be deposited or owing by the Purchaser
either under any Purchase Contract or under any
Instrument which constitutes part of the Receivables
Collateral.
(c) Fulfillment of Obligations to Purchasers. Borrower at
all times will fulfill and will cause its Affiliates,
agents and independent contractors at all times to
fulfill all obligations to Purchasers. Borrower will
perform all of its obligations under the Time-Share
Program Consumer Documents and the Time-Share Program
Governing Documents.
(d) No Modification of Time-Share Documents. Borrower,
without the prior written consent of Lender, will not
cancel or materially modify any of the Time-Share
Program Consumer Documents or the Time-Share Program
Governing Documents.
(e) Associations: Assessments and Reserves. Upon and after
closing of the Time-Share Interest purchased, each
Purchaser will automatically be a member of the
Time-Share Association and will be entitled to vote on
the affairs thereof. The Time-Share Association will at
all times be governed by a board of directors. Until the
time ("Developer Control Termination Date") Borrower
conveys fee simple title to the Time-Share Project,
excluding the units, Borrower shall be responsible for
all costs ("Project Operation Costs") associated with
the control, management and operations of the Time-Share
Project, except "time-share interest occupancy expenses"
which are all costs and expenses incurred in the
interior use and occupancy of completed Time-Share
Interest units,
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including, but not limited to maintenance and
housekeeping charges, repairs. refurbishing costs,
insurance premiums, properly allocated labor and
overhead costs, utility charges and deposits and the
cost of periodic repair and replacement to wall and
window treatments, and furnishings, including furniture
and appliances. The Time-Share Association board has the
authority to fix and levy pro rata upon each Purchaser
annual assessments to meet timeshare interest occupancy
expenses. From and after the Developer Control
Termination Date, the Time-Share Association board will
have the authority to fix and levy pro rata upon each
Purchaser annual assessments to cover all costs
associated with the control, management and operations
of the Time-Share Project; provided, however, that from
and after such date, Borrower shall at its expense
complete all of the amenities and facilities comprising
the Project and shall use its best efforts to cause the
Time-Share Association board to pay the Project
Operation Costs. The obligations of Borrower under this
Paragraph are in addition to and not in limitation of
its other Obligations under the Documents, including
without limitation, its Obligations under paragraphs
6.5(a), 6.6(c) and 6.6(f).
(f) Title and Condition of Amenities. Subject to the
provisions of the Time Share Program Governing Documents
as and when the same are recorded, the Time-Share
Association or the owners of Time-Share Interests in
common will at all times own the furnishings in the
Time-Share Project dwelling units and all the common
areas in the Time-Share Project and other amenities
which have been promised or represented as being
available to Purchasers, free and clear of liens and
security interests except for the Permitted
Encumbrances; and no part of the Time-Share Project is
subject to partition by the owners of Time-Share
Interests except as permitted by Virginia Code Section
55-373(c). Borrower will maintain or cause to be
maintained in good condition and repair all common areas
in the Time-Share Project and other amenities which have
been promised or represented as being available to
Purchaser and which are not the responsibility of the
Time-Share Association to maintain and repair. Borrower
will maintain a reasonable reserve to assure compliance
with the terms of the foregoing sentence.
6.7 Collection of Receivables Collateral. Borrower will undertake
the diligent and timely collection of amounts delinquent under
each Instrument which constitutes part of the Receivables
Collateral and will bear the entire expense of such collection.
Lender shall have no obligation to undertake any action to
collect under any Instrument.
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6.8 Notice of Lender's Interest. Borrower will notify persons bound
thereby of the existence of Lender's interest as assignee in the
Receivables Collateral. Borrower will deliver such notice under
its letterhead and will cause such notice to comply with Va.
Code Section 55-389.
6.9 (a) Restrictions on Additional Indebtedness. Without the
prior written consent of Lender not to be unreasonably
withheld, and subject to the additional restrictions set
forth in subparagraph (b) below. Borrower will not incur
any additional debt (including without limitation any
contingent or guarantor liability), except for the
following ("Permitted Debt"): (i) short term accounts
payable incurred in connection with the operation of the
Time-Share Project; (ii) construction financings for
subsequent time-share phases of the Greensprings
Plantation Resort which are not secured by any of the
Collateral and cannot subject any of the Collateral to a
mechanics' or similar lien and in connection with which
the construction lenders have executed non-disturbance
agreements which are satisfactory to Lender and provide
non-disturbance rights of the type described in
paragraph 4.1A(b)(xxvii): and (iii) receivables
financings which are not secured by any of the
Collateral and are funded when Borrower is not in
default of its obligations Lender paragraph 2.4. Without
limiting the generality of the foregoing, as a condition
to approval of any third party loan or financing which
is not Permitted Debt, Lender may require evidence that
such third party has executed non-disturbance agreements
which are satisfactory to Lender and provide
non-disturbance rights of the type described in
paragraph 4.1A(b)(xxvii). Notwithstanding anything in
this paragraph 6.9(a) to the contrary, the provisions of
the preceding sentences of this paragraph 6.9 will
terminate when the Development Loan has been paid in
full and Lender has no further obligation to make
Development Loan Advances: provided, however, that such
termination shall not affect the restrictions set forth
in paragraph 2.4 or 6.9(b).
(b) Restrictions on Liens or Transfers. Borrower, without
the prior written consent of Lender not to be
unreasonably withheld, will not: (i) sell, convey,
lease, pledge, hypothecate, encumber or otherwise
transfer any security for the Performance of the
Obligations; (ii) permit or suffer to exist any liens,
security interests or other encumbrances on any of the
Collateral, except for the Permitted Encumbrances and
liens and security interests expressly granted to
Lender; (iii) sell, lease, transfer or dispose of all or
substantially all of its assets to another entity, or
(iv) permit or suffer to exist any transfer of any of
the ownership interests or control of Borrower or any of
its venturers. As a condition to
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approval of any lien, security interest or other charge
upon any of the Collateral, Lender may require that the
third party execute a subordination agreement
satisfactory to Lender and that Borrower deliver to
Lender such information as Lender may reasonably request
with respect to such third party loan and/or financing.
6.10 Insurance. Borrower will pay the cost of and will maintain and
deliver to Lender evidence of insurance policies required by
Lender which are written by insurers and are in amounts and on
forms reasonably satisfactory to Lender.
6.11 (a) No Misrepresentations. The Documents and all
certificates, financial statements and written materials
furnished to Lender by or on behalf of Borrower in
connection with the Loans do not contain any untrue
statement of a material fact or omit to state a fact
which materially adversely affects or in the future may
materially adversely affect the Collateral, the
Time-Share Project, the business or financial condition
of Borrower, or the ability of Borrower to Perform the
Obligations.
(b) Reliance. Lender's examination, inspection, or receipt
of information pertaining to the Collateral or the
Time-Share Project and its proposed operation shall not
in any way be deemed to reduce the full scope and
protection of the warranties, representations and
Obligations contained in this Agreement.
6.12 (a) Sales Reports. On or before the fifteenth (15th) day of
each month, Borrower will cause to be furnished to
Lender (i) the reports required pursuant to paragraph
5.4(a) and (ii)if requested by Lender, a sales report
for the prior month showing the number of sales and
closing of Time-share Interests and the aggregate dollar
amount thereof, including down payments.
(b) Financial Information. Borrower will furnish or cause to
be furnished to Lender within one hundred twenty (120)
days after each fiscal year of the subject, a copy of
the current annual financial statements of Borrower,
each Guarantor and, subject to the best efforts of
Borrower, the Time-Share Association. Such financial
statements shall contain a balance sheet as of the end
of the relevant fiscal period and statements of income
and of cash flow for such fiscal period (together. in
each case, with the comparable figures for the
corresponding period of the previous fiscal year), all
in reasonable detail. All financial statements shall be
prepared in accordance with generally accepted
accounting principles, consistently applied. All
financial statements of Borrower and the Time-Share
Association shall be certified by the chief
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financial officer of such entity. Annual statements of
Borrower and the Time-Share Association shall be audited
and certified by a recognized firm of certified public
accountants reasonably satisfactory to Lender. Together
with such financial statements, Borrower will deliver to
Lender a certificate signed by Borrower's chief
financial officer stating that there exists no Event of
Default or Incipient Default or, if any such Event of
Default or Incipient Default exists, specifying the
nature and period of its existence and what action
Borrower proposes to take with respect to it. Such
certificate shall state specifically that Borrower is in
compliance with paragraphs 6.9(a), and 6.18 through
6.23, inclusive, and shall set forth in reasonable
detail the calculations upon which such certification is
based.
(c) Time-Share Project and Sales Information. Borrower will
deliver to Lender from time to time, as available, and
promptly upon amendment or effective date: current price
lists, sales literature, registrations/consents to sell,
and final subdivision public reports/public offering
statements/prospectuses. Borrower will deliver to Lender
any changes which Borrower proposes or any other person
having the power to do so proposes be made to the
Time-Share Program Consumer Documents and/or the
Time-Share Program Governing Documents last delivered to
Lender, together with a description and explanation of
the changes; and other items requested by Lender which
relate to the Time-Share Interests.
(d) Right to Inspect. Borrower will at its expense permit
Lender and its representatives at all reasonable times
to inspect the Time-Share Project and to inspect, audit
and copy Borrower's books and records.
(e) Time-Share Association Budgets. Borrower will submit to
Lender, (i) with respect to the budget for the
Time-Share Association's 1996 fiscal year, by September
30, 1995, and (ii) with respect to budgets for
subsequent years annually within ten (10) days after
each is available, proposed annual maintenance and
operating budgets of the Time-Share Association,
certified to be adequate by the Time-Share Manager (or
if there is not a Time-Share Manager, by an authorized
officer of the Association) and a statement of the
annual assessment to be levied upon the owners of
Time-Share Interests: and will use its best efforts to
cause to be made available to Lender for inspection,
auditing and copying, upon Lender's request, the books
and records of the Time-Share Association.
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(f) Additional Information. Borrower will make available
such further information as Lender may from time to time
reasonably request.
6.13 Subordination of Indebtedness Owing to Affiliates. Borrower will
cause any and all indebtedness owing by it to its venturers,
Guarantors, or the shareholders, directors, officers, partners,
members, relatives and Affiliates of Borrower or the foregoing
and all liens, security interests and other charges on the
assets of Borrower, including, without limitation, the
Collateral, to be fully subordinated in all aspects to the
Obligations pursuant to written agreements satisfactory to
Lender: provided, however, that if neither an Event of Default
nor an Incipient Default then exists or will exist after giving
effect to such payment, such subordination shall not extend to
(i) reasonable salaries and fees at normal and customary rates
for services actually rendered and other distributions expressly
permitted pursuant to the terms of this Agreement or (ii)
regularly scheduled payments in accordance with the written
agreements described in this paragraph. Any such creditor shall
execute a written subordination agreement in form and substance
satisfactory to Lender.
6.14 No Default for Third Party Obligations. Borrower is not in
default under any other agreement evidencing, guaranteeing or
securing borrowed money or a receivables purchase financing or
in violation of or in default under any material term in any
other material agreement, instrument, order, decree or judgment
of any court, arbitration or governmental authority to which it
is a party or by which it is bound.
6.15 Payment of Taxes. Borrower has filed and will file all tax
returns and has paid and will pay all taxes, assessments, levies
and penalties, if any, required to be filed by it or paid by it
to any governmental or quasi-governmental authority or
subdivision, including real estate taxes and assessments
relating to the Time-Share Project or the Collateral. Borrower
will provide to Lender not more than thirty (30) days after such
taxes and assessments become due evidence that all taxes and
assessments on the Units and Time-Share Project common areas and
related amenities have been paid in full.
6.16 Fees, Costs and Expenses.
(a) Loan Fees and Documentation Fee. Borrower will pay to
Lender the Development Loan Fee and the Receivables Loan
Fee. The Development Loan Fee and Receivables Loan Fee
have been earned and shall be non-refundable. Lender
acknowledges receipt of Ten Thousand Dollars ($10,000)
of the Receivables Loan Fee. Borrower will pay the
entire Development Loan Fee and Ninety Thousand Dollars
of the Receivables Loan Fee at the time of the initial
Development Loan Advance, but not later than July 15,
1995. Borrower
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will pay the balance of the Receivables Loan Fee in five
(5) payments of $50,000, one of such payments payable on
each of the dates on which an Advance is made which
causes the then outstanding principal balance of the
Receivables Loan to exceed $10,000.000, $15,000,000,
$20,000,000, $25,000,000, and $30,000,000 respectively,
but the full amount of the Receivables Loan Fee shall be
payable not later than (i) the date thirty (30) months
after the initial Receivables Loan Advance or (ii) the
last day of the Receivables Loan Borrowing Term,
whichever first occurs. Borrower will pay on demand any
and all costs and expenses incurred by Lender (exclusive
of Lender's employee's expenses, but inclusive of travel
expenses) in connection with the initiation,
documentation and closing of the Loans, the making of
Advances, the protection of the Collateral, or the
enforcement of the Obligations against Borrower,
including, without limitation, all attorneys' and other
professionals' fees (including, without limitation,
reasonable out-of-pocket expenses and reasonable and
normal charges of such attorneys' and professionals for
photocopy, telecopy and computer services, and staff
overtime), consumer credit reports [not to exceed ten
percent (10%) of the Instruments assigned to Lender at
the time of such Assignment if current (no more than six
months old) credit reports are provided by Borrower at
such time and not to exceed twenty-five percent (25%) of
such Instruments if current credit reports are not
provided by Borrower], and revenue, documentary stamp,
documentary transaction and intangible taxes. However,
Borrower will have no obligation to pay or reimburse
Lender for Lender's attorneys' fees (excluding
reasonable out-of-pocket expenses and reasonable and
normal charges for photocopy and telecopy services)
which are incurred in connection with the Original
Services, or are otherwise incurred in connection with
the closing of the first Advance and are in excess of
Fifteen Thousand Dollars ($15,000), unless caused by the
negligence of Borrower or third parties, the lack of
diligence or cooperation by Borrower or third parties in
the negotiation of the Documents and the closing of the
first Advance, changes requested by Borrower to the
commitment letter from Lender to Borrower dated June 30,
1995, and accepted on June 30 1995, or circumstances
which would not reasonably have been foreseen by Lender
or its counsel. Furthermore, Borrower will have no
obligation to pay or reimburse Lender for the fees and
costs (including out-of-pocket expenses and charges for
photocopy and telecopy services) of Lender's Inspector
in excess of Three Thousand Dollars ($3,000) for the
services described in subparagraphs 8.1(a), (b) and (d),
unless caused by the negligence or lack of diligence or
cooperation by Borrower or third parties.
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(b) Custodial Fee. In addition to all other fees required to
be paid in connection with the Loan, Borrower shall pay
to Lender a fee ("Custodial Fee") equal to Ten Dollars
($10) per each Instrument which is delivered to Lender
in connection with the Loan and is in the physical
custody of Lender. The Custodial Fee for an Instrument
shall be paid by Borrower to Lender at the time the
Instrument is assigned to Lender. After the Custodial
Fee is paid for an Instrument, no fee shall be payable
to Lender pursuant to paragraph 3.2 in replacement for
an Instrument for which Borrower has paid the Custodial
Fee. Once a Custodial Fee has been paid to Lender,
Borrower shall not be entitled to any reimbursement of
any portion hereof.
(c) Availability Advance Fee. Borrower will pay to Lender,
at the time of any Advance, a fee ("Availability Fee")
equal to one percent (1.0%) of the amount of such
Advance which constitutes an Availability Advance.
6.17 Indemnification. Borrower will INDEMNIFY, PROTECT, HOLD
HARMLESS, and defend Lender, its successors, assigns and
shareholders (including corporate shareholders), and the
directors, officers, employees, servants and agents of the
foregoing, for, from and against (a) any and all liability,
damage, penalties, or fines, loss, costs or expenses (including,
without limitation, court costs, and attorneys' fees), (b) any
and all claims and demands whatsoever asserted against it and
arising from or brought in connection with the Time-Share
Project, the Collateral, Lender's status by virtue of the
Documents, creation of Security Interests, the terms of the
Documents or the transactions related thereto, or any act or
omission of Borrower or any Agent, or their respective employees
or agents, whether actual or alleged unless such act or omission
is caused by Lender's gross negligence or willful misconduct,
and (c) any and all brokers' commissions or finders' fees or
other costs of similar type by any party in connection with any
of the Loans. On written request by a person or other entity
covered by the above agreement of indemnity, Borrower will
undertake, at its own cost and expense, on behalf of such
indemnitee, using counsel satisfactory to the indemnitee, the
defense of any legal action or proceeding to which such person
or entity shall be a party. At Lender's option, Lender may at
Borrower's expense prosecute or defend any action involving the
priority, validity or enforceability of the Security Interests
in the security for the Performance of the Obligations.
6.18 Limitations on Distributions and Loans. Except for advances to
Offsite International , Inc., in an amount from time to time
approved in writing by Lender in respect of marketing fees for
Time-Share Interests sold but not yet released from escrow and
which may otherwise be paid to Offsite International , Inc.
pursuant to paragraph 6.13, Borrower will not make distributions
(inclusive of the making of loans to or investments in any of
its
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venturers and/or any other Affiliate of Borrower but exclusive
of the repayment of loans from any of its venturers and/or any
other Affiliate of Borrower) unless (a) the Development Loan is
repaid in full and (b) after giving effect to such distribution,
there exists neither an Event of Default nor an Incipient
Default; and when permitted, distributions by Borrower shall be
limited to the lesser of (A) one hundred percent (100%) of
Borrower's net income or (B) one hundred percent (100%) of
Borrower's net cash flow, in each case measured from December
31, 1995. As used above, "net income" shall be determined in
accordance with generally accepted accounting principles applied
on a consistent basis, and "net cash flow" shall mean for any
period the net income or loss of the subject determined in
accordance with generally accepted accounting principles
consistently applied (excluding the effect of any extraordinary
gains or losses from sales of property not in the ordinary
course of business), plus (a) depreciation, (b) amortization and
(c) other non-cash expenses during such period to the extent
deducted from revenues in calculating net income and less
capital expenditures to the extent paid in such period. The
foregoing notwithstanding, Borrower may pay salaries and fees to
its venturers and to other Affiliates of Borrower, subject to
the restrictions set forth in paragraph 5.13: and may make
quarterly distributions to its venturers in an aggregate amount
not exceeding the federal income tax liability of such venturers
with respect to income of Borrower for the preceding quarter
attributable to such venturers, but taking into account any
losses realized or reasonably expected to be realized during any
preceding or subsequent quarter for the same calendar year. Such
distributions shall be calculated based upon the marginal tax
rate which would be applicable if the taxpayer has no other
taxable income, deductions or credits.
6.19 Limitation on Marketing Expenses. Borrower will not incur
marketing expenses with respect to sales of the Time-Share
Interests that exceed an amount equal to forty-five percent
(45%) of all net sales of Time-Share Interests. Compliance with
this covenant will be tested as of the end of each of its fiscal
quarters on a twelve (12) month rolling basis. For purposes of
this Agreement, "marketing expenses" for any period means the
aggregate of all costs and expenses for commissions and sales
relating to Time-Share Interests sold during such period,
including, without limitation, advertising, mailing, consumer
premiums, sales referrals and lead generation of sales leads,
and "net sales" for any period shall mean the gross sales
prices of all Time-Share Interests sold during such period
reduced by the gross sales prices of Time-Share Interests that
are canceled or rescinded during such period.
6.20 Limitation on General and Administrative Expenses. Borrower
shall not incur general and administrative expenses in excess of
ten percent (10%) of net sales. For purposes hereof, "general
and
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administrative expenses" are defined as all Borrower's operating
expenses less marketing expenses.
6.21 Net Worth Maintenance. Borrower must maintain a tangible net
worth, determined in accordance with generally accepted
accounting principles, in an amount not less than One Hundred
Twenty-Five Thousand Dollars ($125,000).
6.22 Minimum Average Sales Price. Borrower will maintain an average
gross sales price of not less than Thirteen Thousand Dollars
($13,000) per annual Time-Share Interest and Six Thousand Five
Hundred Dollars ($6,500) per biannual Time-Share Interest,
tested as of the end of each of its calendar quarters through
June 30, 1996 for the period beginning on the date of this
Agreement. Borrower will maintain Fourteen Thousand Dollars
($14,000) per annual Time-Share Interest sold and not less than
Seven Thousand Dollars ($7,000) per biannual Time-Share Interest
sold, tested as of the end of each of its fiscal quarters
beginning September 30, 1996 on a twelve (12) month rolling
basis.
6.23 Minimum Net Sales. Borrower will not permit net sales of
Time-Share Interests for the Time-Share Project to be less than
the volumes determined according to the following schedule
during the periods set forth in such schedule:
For 6 Month Periods Ending Minimum Sales
June 30, 1996 $7,000,000
December 31, 1996 $13,000,000
June 30, 1997 $7,000,000
December 31, 1997 $13,000,000
6.24 Payment of Impositions. All Impositions imposed upon Lender by
reason of the Documents or Instruments shall be promptly paid by
Borrower upon demand. If Lender has not received evidence
satisfactory to it from Borrower that such taxes have been paid
by Borrower within five (5) days after demand was made upon
Borrower to make such payment, Lender may, at its option, pay
the same, and Borrower shall immediately reimburse Lender for
such sums so expended, together with interest at the Default
Rate. As used in this paragraph, "Impositions" means any and all
taxes (other than any tax measured by net income payable by
Borrower to the Commonwealth of Virginia or any political
subdivision thereof or to any State of the United States or
political subdivision thereof or to the United States under
Section 11 or 1201 of the Internal Revenue Code, as amended, in
consequence of the receipt of payments provided for in the
Documents), license fees, assessments, charges, fines,
penalties, property, privilege,
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excise, real estate or other taxes currently or hereafter levied
or imposed by the Commonwealth of Virginia, the United States of
America or any political subdivision of either thereof, upon or
in connection with or measured by the Documents or any sale,
rental, use, payments, delivery or transfer of title under the
terms of the Instruments.
6.25 Perfection of Security Interests. Borrower will execute or cause
to be executed all documents and do or cause to be done all acts
necessary for Lender to perfect or evidence and to continue the
perfection of the Security Interest of Lender in the Collateral
or otherwise to effect the intent and purposes of the Documents.
6.26 Survival and Additional Representations, Warranties and
Covenants. The representations, warranties and covenants
contained in this Article VI are in addition to, and not in
derogation of, the representations and warranties contained
elsewhere in the Documents and shall be deemed to be made and
reaffirmed prior to the making of each Advance.
7. DEFAULT
7.1 Events of Default. The occurrence of any of the following events
or conditions shall constitute an Event of Default by Borrower
under the Documents:
(a) failure of Lender to receive from Borrower within five
(5) Business Days of the date when due and payable any
amount payable under either Note, except for a payment
due at the Maturity Date of a Note for which no grace
period is allowed;
(b) failure of Lender to receive from Borrower within thirty
(30) days of the date when due and payable any payment
due under the Documents not referred to in item (a)
above;
(c) any representation or warranty which is made by a person
other than Lender and is contained in the Documents or
in any certificate furnished to Lender under the
Documents by or on behalf of Borrower (other than by
Lender's Inspector) proves to be, in any material
adverse respect, false or misleading as of the date
deemed made;
(d) a default in the Performance of the Obligations set
forth in paragraph 3.2, 3.6, 6.9(a), 6.9(b)(i),
6.9(b)(iii), 6.9(b)(iv) or 6.10;
(e) a default in the Performance of the Obligations or a
violation of any term, covenant or provision of the
Documents (other than a default or violation referred to
elsewhere in this paragraph 7.1) which continues
unremedied (i) for a period of thirty (30) days after
notice of such
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default or violation to Borrower in the case of a
default under or violation of paragraph 6.9(b)(ii),
6.13, 6.18, 6.19, 6.20, 6.21. 6.22 and 6.23 or any
default or violation which can be cured by the payment
of money alone or (ii) for a period of thirty (30)
Business Days after notice to Borrower in the case of
any other default or violation, plus, only if the
default is not reasonably susceptible to cure within
such thirty (30) Business Day period but Borrower has
within such period begun efforts to effect such cure and
continues to diligently pursue such cure. such
additional period of time as may be required for
Borrower to effect such cure, but in no event shall the
combined period exceed sixty (60) calendar days after
the original notice to Borrower;
(f) an "Event of Default," as defined in the Powhatan
Assignment, any of the Borrower's Assignments or the
Borrower's Mortgage;
(g) any default by Borrower under any other agreement
evidencing, guaranteeing or securing borrowed money or a
receivables purchase financing involving an obligation
in excess of One Hundred Thousand Dollars ($100,000) to
make a payment of principal or interest or to repurchase
receivables or any other material default by Borrower
permitting the acceleration of the payment or repurchase
obligations of Borrower, which payment or repurchase
obligations entitled to be accelerated are in excess of
One Hundred Thousand Dollars ($100,000) in the
aggregate;
(h) any final, non-appealable judgment or decree for money
damages or for a fine or penalty against Borrower which
is not paid and discharged or stayed within thirty (30)
days thereafter and when aggregated with all other
judgment(s) or decree(s) that have remained unpaid and
undischarged or stayed for such period is in excess of
One Hundred Thousand Dollars ($100,000);
(i) any party holding a lien or security interest in any
Collateral (other than a lien created by Purchaser
solely with respect to its Time-Share Interest)
commences foreclosure or similar sale thereof;
(j) Borrower shall (i) generally not be paying its debts as
they become due. (ii) file, or consent by answer or
otherwise to the filing against it of a petition for
relief or reorganization, arrangement or liquidation or
any other petition in bankruptcy or insolvency under the
laws of any jurisdiction, (iii) make an assignment for
the benefit of its creditors, (iv) consent to the
appointment of a custodian, receiver, trustee or other
officer with similar powers for itself or any
substantial part of its property,
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(v) be adjudicated insolvent, (vi) dissolve or commence
to wind-up its affairs or (vii) take any action for
purposes of the foregoing; or a petition for relief or
reorganization, arrangement or liquidation or any other
petition in bankruptcy or insolvency or the appointment
of a custodian under the laws of any jurisdiction is
filed against it or a custodian is appointed for
Borrower, the Collateral or any material part of its
properties and such proceeding is not dismissed and
appointment vacated within ninety (90) days thereafter:
(k) any of the events enumerated in paragraphs 7.1(b), (c),
(e), (g), (h), (i) or (j) occurs with respect to any
Guarantor or other surety for the Performance of the
Obligation:
(1) failure of Lender to receive from Borrower, within
thirty (30)days of the date Borrower knows of such
change, notice of any material change in any
representations or warranties in the Documents or
otherwise made in connection with either of the Loans;
(m) an order or decree has been entered by any court of
competent jurisdiction enjoining the construction or
intended use of the Time-Share Project or any portion
thereof as a time-share resort and judgment is not
vacated within ninety (90) days after Borrower has
obtained knowledge or notice thereof;
(n) at any time prior to Completion of the Work, Borrower
(i) abandons the Work or (ii) delays construction or
suffers construction to be delayed for any period of
time, for any reason whatsoever not covered by item (i)
above so that Completion of the Work cannot be
accomplished in the ordinary course of construction, in
the reasonable judgment of Lender, on or before the
Required Completion Date; or
(o) during three (3) consecutive months the unpaid principal
balance of Instruments which constitute part of the
Receivables Collateral and become more than fifty-nine
(59) days past due exceeds three percent (3%) of the
unpaid principal balance of all Eligible Instruments on
the first of such month; provided, however, that the
same shall not constitute an Event of Default hereunder
so long as such delinquent principal balance does not
exceed three percent (3%) of the unpaid principal
balance of all Eligible Instruments for any of the three
(3) consecutive months following the third month for
which such delinquency test was not met.
7.2 Remedies. At any time after an Event of Default has occurred and
while it is continuing, Lender may but without obligation, in
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addition to the rights and powers granted elsewhere in the
Documents and not in limitation thereof, do any one or more of
the following:
(a) cease to make further Advances;
(b) declare the Notes (or either of them), together with
prepayment premiums and all other sums owing by Borrower
to Lender in connection with the Documents, immediately
due and payable without notice, presentment, demand or
protest, which are hereby waived by Borrower;
(c) with respect to the Receivables Collateral, (i)
institute collection, foreclosure and other enforcement
actions against Purchasers and other persons obligated
on the Receivables Collateral, (ii) enter into
modification agreements and make extension agreements
with respect to payments and other performances, (iii)
release persons liable for performance, (iv) settle and
compromise disputes with respect to payments and
performances claimed due, all without notice to
Borrower, without being called to account therefor by
Borrower and without relieving Borrower from Performance
of the Obligations, and (v) receive, collect, open and
read all mail of Borrower for the purpose of obtaining
all items pertaining to the Receivables Collateral;
(d) apply the then balance of the Required Completion
Assurance Deposits to the satisfaction of the
Obligations in such order and manner as Lender may
determine:
(e) (i) continue and/or cause Completion of the Work: (ii)
take exclusive possession of the Property or any part
thereof: (iii) expend such funds as Lender may deem
appropriate, including the Required Completion Assurance
Deposit(s) (if any), any other funds of Borrower held by
Lender and any sums which may remain unadvanced
hereunder, to continue and/or cause Completion of the
Work; (iv) demand and receive performances due under the
Principal Work-Related Items and the other Contracts,
Intangibles, Licenses and Permits: (v) make such changes
to the scope of the Work and to the Principal
Work-Related Items and other Contracts, Intangibles,
Licenses and Permits as may be necessary or desirable in
Lender's judgment: (vi) file claims, institute
enforcement actions and otherwise prosecute and defend
all actions or proceedings relating to the Work, the
Principal Work-Related Items and the other Contracts,
Intangibles, Licenses and Permits as Lender may
determine to be necessary or desirable in Lender's
judgment; (vii) pay, settle or compromise all existing
bills and claims which are or may be liens against any
of the Property or as Lender may deem to be necessary or
desirable in Lender's
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judgment for the continuance or Completion of the Work
related thereto or the clearance of title, all without
notice to Borrower; (viii) execute in Borrower's name
all applications, certificates, notices and other
instruments and give all instructions and communications
which may be required or permitted by the Principal
Work-Related Items and other Contracts, Intangibles,
Licenses and Permits, as determined by Lender; (ix)
cancel or surrender any of the Principal Work-Related
Items and the other Contracts, Intangibles and Deposits
and enter into new contracts for the Completion of the
Work and any changes to the scope of the Work; (x) do
any and every act with respect to the Completion of the
Work, the Principal Work-Related Items and the other
Contracts, Intangibles, Licenses and Permits which
Borrower may do in its behalf; (xi) employ such
contractors, subcontractors, suppliers, agents,
attorneys, architects, accountants, appraisers, security
guards and inspectors as Lender may in its judgment deem
necessary or desirable to accomplish any of the above
purposes; and (xii) receive, collect, open and read all
mail of Borrower for the purpose of obtaining all items
pertaining to the Work, the Principal Work-Related Items
and the other Contracts, Intangibles, Licenses and
Permits; and
(f) proceed to protect and enforce its rights and remedies
under the Documents and to foreclose or otherwise
realize upon its security for the Performance of the
Obligations, or to exercise any other rights and
remedies available to it at law, in equity or by
statute.
7.3 Application of Proceeds During an Event of Default.
Notwithstanding anything in the Documents to the contrary, while
an Event of Default exists, any Required Completion Assurance
Deposits and any cash received and retained by Lender in
connection with the Receivables Collateral may be applied to
payment of the Obligations in the manner provided in paragraph
7.5.
7.4 Uniform Commercial Remedies: Sale: Assembly of Collateral.
(a) UCC Remedies; Sale of Receivables Collateral. Lender
shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code of the
Commonwealth of Virginia and all other rights and
remedies accorded to a Secured Party at equity or law.
Any notice of sale or other disposition of the
Receivables Collateral given not less than ten (10)
Business Days prior to such proposed action in
connection with the exercise of Lender's rights and
remedies shall constitute reasonable and fair notice of
such action. Lender may postpone or adjourn any such
sale from time to time by announcement at the time and
place of sale stated on the notice of sale or by
announcement of any adjourned sale, without being
required to give a further
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notice of sale. Any such sale may be for cash or, unless
prohibited by applicable law, upon such credit or
installment as Lender may determine. Borrower shall be
credited with the net proceeds of such sale only when
such proceeds are actually received by Lender in good
current funds. Despite the consummation of any such
sale, Borrower shall remain liable for any deficiency on
the Obligations which remains outstanding following such
sale. All net proceeds recovered pursuant to a sale
shall be applied in accordance with the provisions of
paragraph 7.5.
(b) Lender's Right to Execute Conveyances. Lender may, in
the name of Borrower or in its own name, make and
execute all conveyances, assignments and transfers of
the Receivables Collateral sold in connection with the
exercise of Lender's rights and remedies; and Lender is
hereby appointed Borrower's attorney-in-fact for this
purpose.
(c) Obligation to Assemble Collateral. Upon request of
Lender when an Event of Default exists, Borrower shall
assemble the Personal Property, Receivables Collateral
not already in Lender's possession and make it available
to Lender at a time and place designated by Lender.
7.5 Application of Proceeds. The proceeds of any sale of all or any
part of the Receivables Collateral made in connection with the
exercise of Lender's rights and remedies shall be applied in the
following order of priorities: first, to the payment of all
costs and expenses of such sale, including without limitation,
reasonable compensation to Lender and its agents, attorneys'
fees, and all other expenses, liabilities and advances incurred
or made by Lender, its agents and attorneys, in connection with
such sale, and any other unreimbursed expenses for which Lender
may be reimbursed pursuant to the Documents; second, to the
payment of all late charges required by the Documents to be paid
by Borrower, in such order and manner as Lender shall in its
discretion determine; third, to the payment of the other
Obligations, in such order and manner as Lender shall in its
discretion determine, with no amounts applied to payment of
principal until all interest has been paid; and third, to the
payment to Borrower, its successors or assigns, or to whosoever
may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
7.6 Lender's Right to Perform. Lender may, at its option, and
without any obligation to do so, pay, perform and discharge any
and all obligations (including, without limitation, the
Obligations under paragraph 6.10) agreed to be paid or performed
in the Documents by Borrower or any surety for the Performance
of the Obligations if (a) such person fails to do so and (b)(i)
an Event of Default exists or (ii) in the opinion of Lender,
such action must be taken because an emergency exists or to
preserve any of the Collateral
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or its value. For such purposes Lender may use the proceeds of
the Receivables Collateral. All amounts expended by Lender in so
doing or in exercising its remedies under the Documents
following an Event of Default shall become part of the
Obligations, shall be immediately due and payable by Borrower to
Lender upon demand, and shall bear interest at the Default Rate
from the dates of such expenditures until paid.
7.7 Non-Exclusive Remedies. No remedy in any Document conferred on
or reserved to Lender is intended to be exclusive of any other
remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given
under any Document or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power
shall be construed to be a waiver of or acquiescence to any
default or a waiver of any right or power; and every such right
and power may be exercised from time to time and as often as may
be deemed expedient.
7.8 Waiver of Marshalling. Borrower, for itself and for all who may
claim through or under it, hereby expressly waives and releases
all right to have the Collateral, or any part of the Collateral,
marshalled on any foreclosure, sale or other enforcement of
Lender's rights and remedies.
7.9 Attorney-in-Fact. For the purpose of exercising its rights and
remedies under paragraphs 7.2(c), 7.2(d) and 7.6. Lender may do
so in Borrower's name or its name and is hereby appointed as
Borrower's attorney-in-fact to take any and all actions in
Borrower's name and/or on Borrower's behalf as Lender may deem
necessary or appropriate in its discretion in the accomplishment
of such purposes.
8. LENDER'S INSPECTOR
8.1 Retention of Lender's Inspector. Lender may retain an
architectural/engineering firm ("Lender's Inspector") to do the
following: (a) until Completion of the Work and the making of
the last Work-Related Advance (including the disbursement of the
Basic Retainage and Additional Retainage), review the Principal
Work-Related Items, the other Contracts, Intangibles, Licenses
and Permits and the budget proposed to be the Construction
Budget and any changes to such items; (b) inspect the Real
Property prior to commencement of the Work for purposes of
determining the condition of the Real Property and any existing
improvements; (c) until Completion of the Work and the making of
the last Work-Related Advance (including the disbursement of the
Basic Retainage and Additional Retainage), make monthly
inspections of the Real Property and Work (whether or not
Development Loan proceeds are to be used to pay or reimburse
Borrower for the costs of such Work) so that Lender may monitor
whether Borrower is in compliance with the terms and conditions
of this Agreement, and certifying that each Development
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Loan Advance Request is not in excess of the Work completed and
the amount to which Borrower is entitled under the terms and
conditions of this Agreement; and (d) provide evidence
satisfactory to Lender prior to the funding of any Development
Loan Advance that (subject to completion thereof as part of the
Work as contemplated by this Agreement), all necessary street,
easements and utilities are available to the boundary of the
Real Property and that the respective lines and treatment or
generator plants are of adequate capacity and size for the
intended timeshare use of the Property. Furthermore, Lender may
require an inspection of the Work by Lender's Inspector (a)
prior to each Development Loan Advance; (b) at least once each
month during the course of Completion of the Work; (c) upon
Completion; and (d) until Completion of the Work and the making
of the last Work-Related Advance (including the disbursement of
the Basic Retainage and Additional Retainage), at such other
times as Lender may, in its judgment, deem necessary due to
actual or suspected noncompliance with the Plans and
Specifications, Construction Contract(s), the Documents, any
law, regulation or private restriction, sound architectural,
engineering or construction principles or commonly accepted
safety standards, or Borrower's failure to satisfy the
requirements of the Documents.
8.2 No Duty of Lender to Supervise, Etc. Lender shall have no duty
to supervise or to review and inspect the Principal Work-Related
Items, the other Contracts, Intangibles, Licenses and Permits,
any budget proposed to be the Construction Budget, any books and
records pertaining thereto or any changes to such items or the
construction of the Work. Any inspection made by Lender shall be
for the sole purpose of determining whether the Obligations are
being Performed and preserving Lender's rights under these
Documents. If Lender, or Lender's Inspector acting on behalf of
Lender, should review or inspect the Principal Work-Related
Items, the other Contracts, Intangibles, Licenses and Permits,
the Construction Budget, any books and records pertaining
thereto or any changes to such items or the construction of the
Work, Lender and Lender's Inspector shall have no liability or
obligation to Borrower or any third person arising out of such
inspection; and neither Borrower nor any third person shall be
entitled to rely upon any such inspection or review. Inspection
not followed by notice of an Event of Default shall not
constitute (a) waiver of any Event of Default then existing; (b)
an acknowledgment or representation by Lender or Lender's
Inspector that there has been or will be compliance with the
Principal Work-Related Items, the other Contracts, Intangibles,
Licenses and Permits, Construction Budget, applicable laws,
regulations and private restrictions, sound construction,
engineering or architectural principles or commonly accepted
safety standards, or that the construction is lien free or free
from defective materials or workmanship; or (c) a waiver of
Lender's right thereafter to insist that Completion of the Work
occur in accordance with the Principal Work-Related Items, the
other Contracts, Intangibles, Licenses and Permits,
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Construction Budget, the Documents, applicable laws, regulations
and restrictions, sound construction, engineering or
architectural principles or commonly-accepted safety standards
and free from defective materials and workmanship. Lender and
Lender's Inspector owe no duty of care to Borrower or any third
person to protect against, or inform Borrower or any third
person of, the existence of negligence, faulty, inadequate or
defective design or construction of the Work. Without limiting
the generality of the foregoing, Lender will deliver or cause to
be delivered to Borrower, within a reasonable time after their
delivery to Lender, copies of any written reports of Lender's
Inspector.
9. CONSTRUCTION AND GENERAL TERMS
9.1 Payment Location. All monies payable under the Documents shall
be paid to Lender at its address set forth in paragraph 9.5 of
this Agreement in lawful monies of the United States of America,
unless otherwise designated in the Documents or by Lender by
notice.
9.2 Entire Agreement. The Documents exclusively and completely state
the rights and obligations of Lender and Borrower with respect
to the Loans. No modification, variation, termination,
discharge, abandonment, or waiver of any of the provisions or
conditions of the Documents shall be valid unless in writing and
signed by duly authorized representatives of the party sought to
be bound by such action. The Documents supersede any and all
prior representations, warranties and/or inducements, written or
oral, heretofore made by Lender concerning this transaction,
including any commitment for financing.
9.3 Powers Coupled with an Interest. The powers and agency hereby
granted by Borrower are coupled with an interest and are
irrevocable until the Obligations have been paid in full and are
granted as cumulative to Lender's other remedies for collection
and enforcement of the Obligations.
9.4 Counterparts. Any Document may be executed in counterpart, and
any number of copies of such Document which have been executed
by all parties shall constitute one original.
9.5 Notices. All notices, requests or demands required or permitted
to be given under the Documents shall be in writing, and shall
be deemed effective (a) upon hand delivery, if hand delivered;
or (b) one (1) Business Day after such are deposited for
delivery via Federal Express or other nationally recognized
overnight courier service addressed as shown below, or to such
other address as either party may, from time to time, designate
in writing. Written notice may be given by telecopy to the
telecopier number shown below or to such other telecopier number
as either party may designate, from time to time, in writing,
provided that such notice shall not be deemed effective unless
it is confirmed within
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twenty-four (24) hours by hand delivery or courier delivery of a
copy of such notice in accordance with the requirements set
forth above.
If to Lender: FINOVA Capital Corporation
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Vice President-Group Counsel
Telecopy: (000) 000-0000
If to Borrower: Greensprings Associates
c/o Greensprings Plantation Resort, Inc.
0000 Xxxxxxxxx Xxxx. Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxx, President
Telecopy: (000) 000-0000
9.6 Successors and Assigns. All the covenants of Borrower and all
the rights and remedies of the Lender contained in the Documents
shall bind Borrower, and, subject to the restrictions on merger,
consolidation and assignment contained in the Documents, its
successors and assigns, and shall inure to the benefit of
Lender, its successors and assigns, whether so expressed or not.
Borrower may not assign its rights in the Documents in whole or
in part. Except as may be expressly provided in a Document, no
person or other entity shall be deemed a third party beneficiary
of any provision of the Documents.
9.7 Severability. If any provision of any Document is held to be
invalid, illegal or unenforceable under present or future laws,
the legality, validity and enforceability of the remaining
provisions of the Documents shall not in any way be affected or
impaired thereby. In lieu of each such illegal, invalid or
unenforceable provision, there shall be added to the Document
affected, a provision that is legal, valid and enforceable and
as similar in terms to such illegal invalid and unenforceable
provision as may be possible.
9.8 Time of Essence. Time is of the essence in the Performance of
the Obligations.
9.9 Miscellaneous. All headings are inserted for convenience only
and shall not affect any construction or interpretation of the
Documents. Unless otherwise indicated, all references in a
Document to clauses and other subdivisions refer to the
corresponding paragraphs, clauses and other subdivisions of the
Document; the words "herein," "hereof," "hereto," hereunder" and
words of similar import refer to the Document as a whole and not
to any particular paragraph, clause or other subdivision; and
reference to a numbered or lettered subdivision of an Article,
or paragraph shall include relevant matter within the Article or
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paragraph which is applicable to but not within such numbered or
lettered subdivision. All Schedules and Exhibits referred to
in this Agreement are incorporated in this Agreement by
reference.
9.10 (a) CHOICE OF LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
THEREIN, THE DOCUMENTS AND THE RIGHTS, DUTIES AND OBLIGATIONS OF
THE PARTIES THERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF
VIRGINIA AND TO THE EXTENT THEY PREEMPT THE LAWS OF SUCH
COMMONWEALTH, THE LAWS OF THE UNITED STATES; PROVIDED, HOWEVER,
THAT IF ANY COVENANT, AGREEMENT OR WAIVER ON THE PART OF
BORROWER OR RIGHT OR REMEDY OF LENDER SHALL BE INVALID OR
UNENFORCEABLE UNDER THE INTERNAL LAWS OF THE COMMONWEALTH OF
VIRGINIA, THEN THE INTERNAL LAWS OF THE STATE OF ARIZONA SHALL
APPLY.
(b) CHOICE OF JURISDICTION; WAIVER OF VENUE. BORROWER: (A)
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS, JURISDICTION
AND VENUE OF THE COURTS OF THE STATE OF ARIZONA, MARICOPA
COUNTY, AND TO THE PROCESS, JURISDICTION, AND VENUE OF THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA, FOR
THE PURPOSES OF SUIT, ACTION OR OTHER PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF
(EXCEPT AS MAY BE SPECIFICALLY PROVIDED TO THE CONTRARY IN
BORROWER'S MORTGAGE), AND, IF LENDER INITIATES SUCH ACTION, ANY
FEDERAL OR STATE COURT WHICH IS LOCATED IN THE COMMONWEALTH OF
VIRGINIA OR OTHER JURISDICTION WHERE BORROWER HAS ASSETS AND HAS
SUBJECT MATTER JURISDICTION, AND THE CHOICE OF SUCH VENUE SHALL
IN ALL INSTANCES BE AT LENDER'S ELECTION; AND (B) WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, HEREBY WAIVES AND
AGREES NOT TO ASSERT BY WAY OF MOTION, DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT BORROWER IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED
COURTS, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER. BORROWER HEREBY WAIVES THE RIGHT TO
COLLATERALLY ATTACK ANY JUDGMENT OR ACTION IN ANY OTHER FORUM.
(c) INDUCEMENT TO LENDER. ALL OF THE PROVISIONS SET FORTH IN
THIS PARAGRAPH ARE A MATERIAL INDUCEMENT FOR LENDER'S MAKING THE
LOANS TO BORROWER.
[Borrower (initials ________)]
9.11 Compliance With Applicable Usury Law. It is the intent of the
parties hereto to comply with the Applicable Usury Law.
Accordingly, notwithstanding any provisions to the contrary in
the Documents, in no event shall this Agreement or the Documents
require the payment or permit the collection of interest in
excess of the maximum contract rate permitted by the Applicable
Usury Law.
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9.12 NO RELATIONSHIP WITH PURCHASERS. LENDER DOES NOT HEREBY ASSUME
AND SHALL HAVE NO RESPONSIBILITY, OBLIGATION OR LIABILITY TO
PURCHASERS, LENDER'S RELATIONSHIP BEING THAT ONLY OF A CREDITOR
WHO HAS TAKEN, AS SECURITY FOR INDEBTEDNESS OWED TO IT, A
COLLATERAL ASSIGNMENT FROM BORROWER OF THE INSTRUMENTS. EXCEPT
AS REQUIRED BY LAW AND FOR FILINGS MADE WITH THE SECURITIES &
EXCHANGE COMMISSION OR ANY STOCK EXCHANGE ON WHICH BORROWER'S
STOCK IS TRADED, BORROWER WILL NOT, AT ANY TIME, USE THE NAME OF
OR MAKE REFERENCE TO LENDER WITH RESPECT TO THE TIME-SHARE
PROJECT, THE SALE OF TIME-SHARE INTERESTS OR OTHERWISE, WITHOUT
THE EXPRESS WRITTEN CONSENT OF LENDER.
9.13 NO JOINT VENTURE. THE RELATIONSHIP OF BORROWER AND LENDER IS
THAT OF DEBTOR AND CREDITOR, AND IT IS NOT THE INTENTION OF
EITHER OF SUCH PARTIES BY THIS OR ANY OTHER INSTRUMENT BEING
EXECUTED IN CONNECTION WITH THE LOANS TO ESTABLISH A
PARTNERSHIP, AND THE PARTIES HERETO SHALL NOT UNDER ANY
CIRCUMSTANCES BE CONSTRUED TO BE PARTNERS OR JOINT VENTURERS.
9.14 Standards Applied to Lender's Actions. Unless otherwise
specifically stipulated elsewhere in the Documents, if a matter
is left in the Documents to the decision, requirement, request,
determination, judgment, opinion, approval, consent,
satisfaction, acceptance, agreement, option or discretion of
Lender, its employees, Lender's counsel or any agent for or
contractor of Lender, such action shall be deemed to be
exercisable by Lender or such other person in its sole and
absolute discretion and according to standards established in
its sole and absolute discretion. Without limiting the
generality of the foregoing, "option" and "discretion" shall be
implied by use of the words "if" or "may."
9.15 Meaning of Subordination. "Any subordinations required to be
given under the Documents by third parties to Lender shall
include the subordination of and the deferral of the right to
receive payments on the subordinated obligations except to the
extent expressly permitted in this Agreement; the remittances to
Lender of all prohibited payments received by the third party;
the subordination of all liens, security interests, assignments
and other encumbrances and claims held by the third party on or
against any of Borrower's property to Lender's interest
(whenever acquired) in such property; and an agreement on the
part of the third party not to exercise any remedies against
Borrower so long as all obligations under the Documents have not
been fully satisfied.
9.16 Scope of Reimbursable Attorney's Fees. As used in the Documents,
the term "attorneys' fees" includes the reasonable fees of
attorneys licensed to practice law in any jurisdiction, law
clerks, paralegals, investigators and others not admitted to the
bar but performing services under the supervision of a licensed
attorney, and the expenses incurred by them in the performance
of their services. As used in the Documents, attorneys' fees
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incurred by Lender in the enforcement of any remedy or covenant
include, without limitation, attorneys' fees incurred in any
foreclosure of the Security Documents, in protecting or
sustaining the lien or priority of the collateral, or in any
proceeding arising from or connected with any such matter,
including any bankruptcy, receivership, injunction or other
similar proceeding, or any appeal from or petition for review of
any such matter, and with or without litigation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective name, personally or by their duly authorized
representatives as of the date above written.
LENDER FINOVA CAPITAL CORPORATION, a
Delaware corporation
By: /s/ XXXX XXXXXX, III
------------------------------------
Type/Print Name: Xxxx Xxxxxx, III
-----------------------
Title: Group Vice President
---------------------------------
BORROWER GREENSPRINGS ASSOCIATES. a Virginia
joint venture
BY: GREENSPRINGS PLANTATION RESORT,
INC., a Virginia corporation,
joint venturer
By: /s/ XXX X. XXX
------------------------------------
Xxx X. Xxx
President
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AMENDMENT TO DEVELOPMENT AND RECEIVABLES
LOAN AND SECURITY AGREEMENT AND
RELATED DOCUMENTS
BY THIS AMENDMENT TO DEVELOPMENT AND RECEIVABLES LOAN AND SECURITY
AGREEMENT AND RELATED DOCUMENTS ("Amendment"), dated as of July 15, 1996,
GREENSPRINGS ASSOCIATES, a Virginia joint venture ("Borrower") and FINOVA
CAPITAL CORPORATION, a Delaware corporation ("Lender"), for good and valuable
consideration, the receipt of which is hereby acknowledged, hereby confirm and
agree as follows:
ARTICLE
1. - INTRODUCTION
1.1 Lender and Borrower entered into a Development and Receivables Loan
and Security Agreement dated as of June 30, 1995 (the "Loan Agreement")
providing for, among other loans, a development loan ("Loan") in the maximum
amount of Six Million Eight Hundred Thousand Dollars ($6,800,000). As of June
30, 1996, $4,316,876.79 has been advanced under the Development Loan and
Borrower has made payments against such loan in an aggregate amount of
$1,215,995.80, leaving an outstanding principal balance, before giving effect to
the modifications contained herein, for the Development Loan of THREE MILLION
ONE HUNDRED THOUSAND EIGHT HUNDRED EIGHTY AND 99/100 DOLLARS ($3,100,880.99).
1.2 Borrower and Lender wish to amend the Loan Agreement and certain of
the other Documents, all as hereinafter provided.
ARTICLE 2. - AGREEMENT
2.1 Definitions. Except as otherwise defined herein, or unless the
context otherwise requires, capitalized terms used in this Amendment shall have
the meaning given to them in the Loan Agreement.
2.2 Amendment to Loan Agreement. The Loan Agreement is amended as
follows:
(a) Section 1.28 is deleted in its entirety and the following
is inserted in its place:
1.28 "Development Loan Borrowing Term": the period
commencing on the date of this Agreement and ending on May 31,
1997 (or if not a Business Day, on the first Business Day
thereafter).
(b) Section 1.29 is deleted in its entirety and the following is
inserted in its place:
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1.29 "Development Loan Components": the Facilities
Construction Component, the Time-Share Building (Phase I)
Construction Component and the Interest Reserve Fund; and
"Development Loan Component": one of the Development Loan
Components.
(c) Section 1.30 is deleted in its entirety, and the following
is inserted in its place:
1.30 "Development Loan Fee": Eighty-Eight Thousand
Dollars ($88,000).
(d) Section 1.31 is deleted in its entirety, and the following
is inserted in its place:
1.31 "Development Loan Maturity Date": the date (or if
not a Business Day, the first Business Day thereafter) which is
the earlier of (a) forty-eight (48) months from the date of the
last Development Loan Advance or (b) June 1, 2001.
(e) Section 1.54 is deleted in its entirety, and the following
is inserted in its place:
1.54 "Maximum Development Loan Amount": the sum of the
Maximum Time-Share Building (Phase I) Component Amount plus the
Maximum Facilities Construction Component Amount plus the
Interest Reserve Fund, which shall not exceed, in the aggregate,
Eight Million Eight Hundred Thousand Dollars ($8,800,000).
(f) Section 1.56 is deleted in its entirety, and the following is
inserted in its place:
1.56 "Maximum Facilities Construction Component Amount":
Seven Million Six Hundred Thousand Dollars ($7,600,000).
(g) Section 1.87 is deleted in its entirety, and the following
is inserted in its place:
1.87 "Required Completion Date": May 31, 1997, plus such
additional time which is necessary to achieve Completion of the
Work and is due solely to the occurrence of one or more Force
Majeure Events, but in no event later than the expiration of the
Development Loan Borrowing Term.
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(h) Section 5.2(a) is deleted in its entirety, and the following
is inserted in its place:
(a) Development Loan Minimum Required Principal
Payments. Until principal, interest and other sums due under the
Documents have been paid, exclusive of principal, interest and
other charges on the Receivables Loan Note, Borrower will make
to Lender at the time of each partial release of a Time-Share
Interest from the Borrower's Mortgage a principal payment equal
to the Partial Release Fee required to be paid in connection
with such partial release. On each of the first, second, third
and fourth annual anniversary dates of the last Advance under
the Development Loan, Borrower will make to Lender a principal
payment on the Development Loan in an amount equal to the
positive remainder, if any, obtained by subtracting the maximum
allowable Development Loan principal balance for such
anniversary date set forth below from the then outstanding
principal balance of the Development Loan.
Year After Last Maximum Outstanding
Advance Balance
-------------- -------------------
1 $6,000,000
2 $4,000,000
3 $2,000,000
4 $0
(i) The fourth sentence of Subsection 6.16(a) is amended by
adding at the end thereof, "...provided, any portion of the Development
Fee resulting from an increase in the Maximum Development Loan Amount
from $6,800,000 to $8,800,000 shall be paid on or before July 15, 1996.
(j) Exhibit D-1, the Development Loan Promissory Note, is
amended as provided in Section 2.3, below.
(k) Exhibit J-1 is amended by deleting subsections A(5) and A(7)
in their entirety and inserting the following in their respective place:
A(5) Waiver of Liens for the general contractor (Exhibit
J-1E) and all subcontractors paid in excess of $25,000 since the
previous Work-Related Advance (Exhibit J-1G).
****
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A(7) A requisition from subcontractors paid in excess of
$25,000 since the previous Work-Related Advance in form and
substance identical to Exhibit J1-G hereof.
2.3 Other Amendments. Except to the extent any of the other Loan
Documents have been expressly amended in connection with this Amendment, each
and all of such Loan Documents shall be and hereby are amended, such that any
and all references in any of the other Loan Documents to the 'Loan" or to any
other Loan Documents shall refer to the Loan as increased pursuant hereto and to
such Loan Documents, as amended pursuant hereto or in any of the documents
executed in connection herewith.
2.4 Expenses. Borrower will on demand pay or, at Lender's election,
reimburse Lender for all reasonable attorneys' fees (estimated at the amount of
$3,500) and other Out-of-pocket expenses of Lender in connection with the
documentation and closing of the transaction contemplated hereby. In reliance
upon the representation and warranty made by Lender in the following sentence,
Borrower will indemnify, hold harmless and defend Lender, and its officers,
directors, employees, agents, affiliates, successors and assigns for, from and
against loss, expense, demand and liability arising out of any claim for a
broker's fee with respect to the transaction contemplated by this Amendment.
Lender represents and warrants to Borrower that it has not dealt with any
broker.
2.5 Confirmation. Borrower confirms and restates to Lender as of the
date of execution of this Amendment of all its representations and warranties
set forth in the Loan Agreement and the other Documents. Borrower agrees that
all liens and security interests previously granted by it to Lender are
reaffirmed for the benefit of Lender and shall secure the Loan, as increased
pursuant hereto. Borrower further acknowledges as of the date of its actual
execution of this Amendment that Lender has performed and is not in default of
its obligations under the Loan Documents and that there are no offsets, defenses
or counterclaims with respect to any of Borrower's obligations under the Loan
Documents.
2.6 . This Amendment shall not be binding upon Lender unless and until
the following conditions have been satisfied on or before July 31, 1996:
(a) Borrower has delivered to Lender the following documents and
other items, all of which shall be properly completed and executed and
shall otherwise be satisfactory in form and substance to Lender in its
sole and absolute discretion:
(i) a resolution or certificate from each corporation or
partnership comprising Borrower authorizing (A) the execution
and delivery of this Amendment and the other documents called
for in this Amendment or requested by Lender pursuant to this
paragraph ("Modification Documents") and (B) the transaction
contemplated hereby;
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(ii)a resolution or certificate, as the case may be,
from each corporate or partnership Guarantor authorizing (A) the
execution and delivery of the documents required by this
Amendment to be executed by it and (B) the performance of its
obligations under those documents;
(iii) a "Consent of Guarantor and Amendment to
Guarantee" executed by each Guarantor;
(iv) a "Amendment No. 1 to Development Loan Promissory
Note" executed by Borrower in form and substance identical to
EXHIBIT A;
(v) a "Consent of Guarantor and Amendment to Guaranty"
executed by each Guarantor in form and substance substantially
identical to EXHIBIT B;
(vi) an "Amendment to Credit Line Deed of Trust and
Security Documents and Ratification and Confirmation of Powers
of Attorney" in form and substance identical to EXHIBIT C (the
"Deed of Trust Amendment");
(vii) an opinion from counsel to Borrower and each
Guarantor as to such matters as Lender may require, which
counsel shall be reasonably satisfactory to Lender; and
(viii) such other documents and items as Lender may
reasonably require.
(b) Lender shall have received an endorsement to Ticor Title
Insurance Company Policy No. L9 184517 ("Title Insurance Policy")
reflecting the Deed of Trust Amendment, and dating down the Title
Insurance Policy to the date of recording of the Deed of Trust
Amendment.
(c) Borrower shall have paid Lender the sum of $20,000 as and
for a portion of the Development Fee pursuant to Subsection 6.16(a) of
the Loan Agreement.
Waiver by Lender of any of the foregoing as a condition to the effectiveness of
this Amendment shall not relieve Borrower of the obligation to satisfy such
condition as promptly as possible thereafter.
2.7 Written Amendment. This Amendment may not be amended or otherwise
modified except in a writing duly executed by the parties hereto.
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2.8 Severability. If any one or more of the provisions of this Amendment
is held to be invalid, illegal or unenforceable in any respect or for any reason
(all of which invalidating laws are waived to the fullest extent possible), the
validity, legality and enforceability of any remaining portions of such
provision(s) in every other respect and of the remaining provisions) of this
Amendment shall not be in any respect impaired. In lieu of each such
unenforceable provision, there shall be added automatically as a part of this
Amendment a provision that is legal, valid and enforceable and is as similar in
terms to such unenforceable provisions as may be possible.
2.9 Entire Agreement. This Amendment constitutes the entire agreement
and understanding of the parties with respect to the subject matter hereof and
this Amendment, and the Loan Documents, as amended hereby, supersedes all prior
written or oral understandings and agreements between the parties in connection
with its subject matter.
2.10 Schedules. All Schedules and Exhibits referred to herein are herein
incorporated by this reference.
2.11 Counterparts. This Amendment may be executed in one or more
counterparts, and any number of which have been signed by all the parties hereto
shall be taken as one original.
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2.12 Loan Agreement. Borrower and Lender ratify and confirm the Loan
Agreement, as amended by this Amendment, in all respects; and, except as
expressly amended by this Amendment, the Loan Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, this instrument is executed to be effective as of
the date set forth above.
BORROWER: GREENSPRINGS ASSOCIATES,
a Virginia joint venture
BY: GREENSPRINGS PLANTATION RESORT,
INC., a Virginia corporation,
joint venturer
By: /s/ XXX X. XXX
----------------------------
Xxx X. Xxx
President
LENDER: FINOVA CAPITAL CORPORATION,
a Delaware corporation
By: /s/ XXXX XXXXXX, III
--------------------------------------
Type/Print Name: XXXX XXXXXX, III
-------------------------
Title: GROUP VICE PRESIDENT
-----------------------------------
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