AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("Agreement") is entered into as of November 19, 1996, by and among FINOVA
Capital Corporation, a Delaware corporation, formerly known as Greyhound
Financial Corporation, a Delaware corporation ("Lender"), and Sea Gardens Beach
and Tennis Resort, Inc., a Florida corporation ("Sea Gardens"), Vacation Break
Resorts, Inc., a Florida corporation ("Vacation Break"), Vacation Break Resorts
at Cocoa Beach, Inc., a Florida corporation ("VB-Cocoa Beach"), and Palm
Vacation Group, a Florida general partnership (individually, "Palm Vacation",
and jointly and severally with Sea Gardens, Vacation Break, and VB-Cocoa Beach,
"Borrower").
I. 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 "Advance": an advance of the proceeds of the Loan by
Lender on behalf of Borrower in accordance with the terms and
provisions of this Agreement.
1.2 "Agents": the Servicing Agent and the Lockbox Agent.
1.3 "Aggregate Funding Limitation": Fifty Million Dollars
($50,000,000.00).
1.4 "Applicable Usury Law": the usury law chosen by the
parties pursuant to the terms of paragraph 8.10 or such other
usury law which is applicable if such usury law is not.
1.5 "Articles of Organization": the charter, articles,
agreements and other written documents evidencing the
formation, organization and continuing existence of an entity.
1.6 "Assignment": a written assignment of specific Instruments
and/or Purchaser Mortgages and their proceeds, delivered by
Borrower to Lender in the form of EXHIBIT A.
1.7 "Borrowing Base": with respect to an Eligible Instrument,
an amount equal to the lesser of:
(a) eighty-five percent (851) 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
Note or (ii) the Discount Rate.
1.8 "Borrowing Term": the period commencing on the date of
this Agreement and ending on the close of Lender's normal
business hours on the second anniversary of the date of this
Agreement.
1.9 "Business Day": any day other than a Saturday, Sunday or a
day on which banks in Phoenix, Arizona are required to close.
1.10 "Cocoa Beach Loan": any acquisition and renovation loan
Lender may make to VB-Cocoa Beach for the acquisition and
renovation of property in Cocoa Beach, Florida.
1.11 "Collateral": the Receivables Collateral, Insurance
Policies, and any and all other assets now or hereafter
serving as security for the Performance of the Obligations,
and all products and proceeds thereof.
1.12 "Construction Loan": $13,000,000 construction loan made
by SunTrust Bank to Sea Gardens for purposes of providing
financing for the construction of Ocean Palms, and in which
Lender holds a 40% ($5,200,000) participation interest.
1.13 "Construction Loan Documents": all documents and
instruments evidencing and/or securing the Construction Loan.
1.14 "Default Rate": as defined in the Note.
1.15 "Discount Rate": twelve and one-half percent (12.5%).
1.16 "Documents": the Note, the Guaranty, the Subordination
Agreement, the Assignment, the Lockbox Agreement, the
Servicing Agreement, the Services and Fees Agreement, the
Environmental Certificate, this Agreement and all other
documents executed in connection with the Loan, together with
any and all renewals, amendments, restatements or replacements
of such documents.
1.17 "Eligible Instrument": an Instrument which conforms to
the standards set forth in EXHIBIT B. An Instrument that has
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 59 days past due or (b) that
Instrument otherwise fails to continue to conform to the
standards set forth in EXHIBIT B.
1.18 "Environmental Certificate": an environmental certificate
executed by Borrower and such other persons or parties as
required by Lender in the form of EXHIBIT C.
1.19 "Event of Default": the meaning set forth in paragraph
7.1.
1.20 "The Fairways": a time-share resort included in the
Project as described in EXHIBIT F hereto.
2
1.21 "Guaranty": a primary, joint and several guaranty made by
a Guarantor or Guarantors of the Obligations.
1.22 "Guarantor": each person or entity now or hereafter
guaranteeing the Obligations, jointly and severally,
including, without limitation, Atlantic Marketing Realty,
Inc., and Vacation Break U.S.A., Inc.
1.23 "Incipient Default": an event which after notice and/or
lapse of time would constitute an Event of Default.
1.24 "Instrument": a promissory note which has arisen out of
the sale of a Time-Share Interest by Borrower to a Purchaser
and is secured by a Purchaser Mortgage.
1.25 "Insurance Policies": such insurance policies required
by, and written by insurers, and in amounts and form
satisfactory to, Lender.
1.26 "Loan": the loan made pursuant to this Agreement and the
other Documents.
1.27 "Loan Fee": a renewal fee for the Loan in the amount of
$100,000 payable by Borrower to Lender in accordance with
paragraph 6.14(a).
1.28 "Lockbox Agent ": Bank One of Arizona, N.A., or its
successor as lockbox agent under the Lockbox Agreement.
1.29 "Lockbox Agreement": an agreement in form and substance
satisfactory to Lender in its sole and absolute discretion to
be made between Lender, Borrower and Lockbox Agent, which
provides for the Lockbox Agent to collect through a lockbox
payments made on Instruments constituting part of the
Receivables Collateral and to remit them to Lender.
1.30 "Maturity Date": the date (or if not a Business Day, the
first Business Day thereafter) eighty-four (84) months after
the date of the last Advance.
1.31 "Maximum Loan Amount": Forty Million United States
Dollars ($40,000,000.00).
1.32 "Minimum Utilization Date": the first date upon which the
outstanding principal balance of the Loan reaches or exceeds
$20,000,000.
1.33 "New Projects ": the time-share resorts or portions of
such resorts identified as New Projects in EXHIBIT F.
1.34 "Note": the "Amended and Restated Promissory Note" issued
by Borrower in the form of EXHIBIT D to evidence the Loan.
1.35 "Obligations": all obligations, agreements, duties,
covenants and conditions that Borrower is now or hereafter
required to Perform under the Documents.
3
1.36 "Ocean Palms": a time-share resort included in the
Project as described in Exhibit F hereto.
1.37 "Opening Prepayment Date": the date (or if not a Business
Day, the first Business Day thereafter) two (2) years after
the date of the last Advance.
1.38 "Performance" or "'Perform": full, timely and faithful
performance.
1.39 "Permitted Encumbrances": the rights, restrictions,
reservations, encumbrances, easements and liens of record with
respect to each Project which Lender has agreed to accept as
set forth in Exhibit E.
1.40 "Prepayment Premium": an amount equal to (a) six percent
(6%) of the outstanding principal balance of the Loan in the
event of a prepayment of the Loan occurring prior to the
Opening Prepayment Date or (b) a percent, determined in
accordance with paragraph 5.3, of the outstanding principal
balance of the Loan in the event of a prepayment of the Loan
occurring subsequent to the Opening Prepayment Date.
1.41 "Presales Funding Limitation": Forty Million Dollars
($40,000,000.00).
1.42 "Presales Loan": a working capital loan to be made by
Lender to Sea Gardens in a principal amount up to $8,000,000
pursuant to a Loan and Security Agreement (Working Capital),
for purposes of providing working capital financing for the
start-up of Ocean Palms.
1.43 "Presales Loan Documents": all documents and instruments
which evidence and/or secure the Presales Loan.
1.44 "Project": individually or collectively (as the context
requires) the time-share resorts or portions of such resorts
described in EXHIBIT F and such other time-share resorts or
parts thereof as Lender may in its discretion from time to
time hereafter approve in writing.
1.45 "Purchaser": a purchaser of a Time-Share Interest from
Borrower.
1.46 "Purchaser Mortgage": the purchase money mortgage given
to secure an Instrument.
1.47 "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,
including, without limitation, Purchaser Mortgages and
purchase agreements; (c) all insurance policies and related
rights pertaining to the foregoing; (d) all rights under any
escrow agreements and accounts pertaining to the foregoing;
(e) all files, books and
4
records of Borrower pertaining to the foregoing; and (f) the
proceeds from the foregoing.
1.48 "Resolutions": the corporate resolution of a corporation
certified as true and correct by an authorized officer of such
corporation or a partnership certificate signed by all of the
general partners of such partnership.
1.49 "Security Interest ": a perfected, direct and exclusive
first priority security interest in and charge upon the
property intended to be covered by it.
1.50 "Servicing Agent": FINOVA Portfolio Services, Inc., an
Arizona corporation, or its successor as Servicing Agent under
the Servicing Agreement.
1.51 "Servicing Agreement ": an agreement in form and
substance satisfactory to Lender in its sole and absolute
discretion, to be made among Lender, Borrower 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.
1.52 "Subordination Agreement(s)": the subordination
agreement(s) made and delivered to Lender pursuant to
paragraph 6.11.
1.53 "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.
1.54 "Time-Share Interest": the estate described in EXHIBIT F
in a Project.
1.55 "Title Policy (Purchaser Mortgage)": a policy of title
insurance in an amount not less than Borrowing Base of an
Instrument secured by a Purchase Mortgage, insuring Lender's
interest in such Purchaser Mortgage as a valid first priority
lien subject only to the Permitted Encumbrances, issued by a
title company and in form and substance acceptable to Lender.
1.56 "Unit": a dwelling unit in a Project.
II. LOAN COMMITMENT; USE OF PROCEEDS
2.1 Lender hereby agrees, if Borrower has Performed all of the
Obligations then due, to make Advances to Borrower in amounts
equal to (a) the then Borrowing Base of the Eligible
Instruments comprising Receivables Collateral less (b) the
then unpaid principal balance of the Loan; PROVIDED, at no
time shall the unpaid principal balance of the Loan exceed the
Maximum Loan Amount, at no time shall the unpaid principal
balance of the Loan plus the unpaid principal balance of the
Presales Loan exceed the Presales Funding Limitation, and at
no time shall the sum of (i) the unpaid principal balance of
the Loan, (ii) the unpaid principal
5
balance of the Presales Loan, (iii) the Lender's $5,200,000
maximum commitment with respect to the Construction Loan
(whether or not funded, but with credit given to any
repayment), and (iv) the unpaid balance of the Cocoa Beach
Loan; exceed the Aggregate Funding Limitation. Lender shall
have no obligation to make any Advance after the Borrowing
Term has expired.
2.2 The Loan is a revolving line of credit; however, all of
the Advances shall be viewed as a single loan. Borrower shall
not be entitled to obtain Advances after the expiration of the
Borrowing Term unless Lender, in its sole and absolute
discretion, agrees in writing with Borrower to make Advances
thereafter on terms and conditions satisfactory to Lender.
This Agreement and Borrower's liability for Performance of the
Obligations shall continue, however, until the end of the
Term.
2.3 Borrower will use the proceeds of the Loan only for
Borrower's business purposes, which shall consist of use for
working capital.
2.4 Borrower shall pay to Lender at the time of each
Availability Advance against an Eligible Instrument a fee
equal to 1.0% of the amount of such Availability Advance. The
term "Availability Advance" means each Advance of the Loan
made against an Eligible Instrument after the first Advance
made against such Instrument; provided that in the case of an
Eligible Instrument substituted for an ineligible Instrument
pursuant to paragraph 3.2, an Availability Advance shall be
deemed made at the time of the first Advance made against such
substituted Instrument.
2.5 Borrower agrees that in the event there are amounts then
due and owing on the maturity date of the Presales Loan [which
if the Presales Loan is made, shall be the earlier of sixty
(60) days after Completion (as defined in Section 721.05 of
the Florida Statutes) or eighteen (18) months after the date
of the loan agreement evidencing the Presales Loan], then on
and after such maturity date of the Presales Loan, the
proceeds of all Advances hereunder shall be applied by Lender
to repayment of the Presales Loan prior to payment of -any
such Advance to Borrower. Notwithstanding the foregoing, all
Advances on Eligible Instruments from Ocean Palms shall be
applied by Lender to repayment of the Presales Loan prior to
payment of any such Advance to Borrower.
III. SECURITY
3.1 To secure the Performance of all of the Obligations
hereunder (collectively, the "Secured 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 Secured Obligations. All
of the Receivables Collateral shall secure repayment of the
Loan and the Performance of the Secured Obligations. Borrower
will unconditionally deliver to Lender, with full recourse,
all Instruments which
6
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.
3.2 If at any time the aggregate principal amount of the Loan
outstanding exceeds the Borrowing Base for all Eligible
Instruments then assigned to Lender, then within five (5)
Business Days thereafter, Borrower will either (i) pay to
Lender an amount equal to that necessary to restore the
Borrowing Base limitation, or (ii) provide Lender with an
Eligible Instrument or Eligible Instruments having a Borrowing
Base sufficient to restore the Borrowing Base to the required
level. Simultaneously with such payment or the delivery of the
replacement Instrument to Lender, 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. If
no Event of Default or Incipient Default has occurred and is
continuing, then upon the substitution of an Eligible
Instrument for an ineligible Instrument, Lender will reassign
to Borrower, without recourse or warranty of any kind, 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.
3.3 Borrower will deliver or cause to be delivered to Lender and
will maintain or cause to be maintained throughout the Term in
full force and effect the Guaranties, the Subordination
Agreement(s), and all other security agreements required
pursuant to the Documents.
IV. ADVANCES
4.1 Lender's obligation to make the initial Advance and
subsequent Advances shall be subject to and conditioned upon
the terms and conditions set forth in the following
subparagraphs and elsewhere in this Agreement being satisfied
and remaining satisfied during the Term.
(a) Borrower shall have delivered to Lender the
following Documents, duly executed, delivered and in
form and substance satisfactory to Lender:
(i) the Note;
(ii) the Guaranty;
(iii) the Subordination Agreement(s);
(iv) the Environmental Certificate;
7
(v) UCC financing statements for filing and/or
recording, as appropriate, where necessary to
perfect the Security Interest in the
Collateral subject to the UCC;
(vi) a favorable opinion from independent
counsel for Borrower in form and substance
substantially identical to EXHIBIT H;
(vii) a favorable opinion from independent
counsel for Guarantor in form and substance
substantially identical to EXHIBIT I;
(viii) Amendment No. 2 to Lockbox Agreement;
(ix) Amendment No. 2 to Servicing Agreement
and Amendment No. 2 to Services and Fees
Agreement;
(x) non-disturbance agreements or other
evidence satisfactory to Lender that each
Purchaser has a right to use its Time-Share
Interest and related amenities so long as the
Purchaser has performed its obligations under
the Purchaser Mortgage and the Project
governing documents; and
(xi) this Agreement.
(b) Borrower shall have delivered to Lender (or to any
agent of Lender pursuant to Lender's written
direction) at least ten (10) Business Days prior to
the date of the Advance, or in the case of the items
called for in item (x) at least five (5) Business
Days prior to the date of the Advance, all of which
shall be properly completed and executed and shall
otherwise be satisfactory tin form and substance to
Lender:
(i) the Articles of Organization of Borrower,
Guarantors, any other surety for the
Obligations and their respective partners, if
any, to the extent any such entity is not a
natural person;
(ii) the Resolutions of Borrower, Guarantors,
any other surety for the Obligations and their
respective partners, if any, to the extent any
such entity is not a natural person;
(iii) an environmental assessment of the New
Projects in form and substance satisfactory to
Lender in its sole discretion and such other
environmental information on the Projects as
is required by Lender;
(iv) unless waived in writing by Lender, a
1988 ALTA/ACSM survey and condominium map of
the Project prepared by a licensed land
8
surveyor acceptable to Lender, showing the
dimensions of each Unit and such other details
as Lender may reasonably require;
(v) a copy of the registrations/consents to
sell, the final subdivision public
reports/public offering statements and/or
prospectuses and approvals thereof required to
be issued by or used in the state where he
Project is located and other jurisdictions
where Time-Share Interests have been offered
for sale or sold;
(vi) if the Project has not been registered
under the Interstate Land Sales Full
Disclosure Act, and Lender requests such an
opinion, a copy of an advisory opinion issued
by the federal Office of Interstate Land Sales
Registration that the Project does not fall
within the purview of such act;
(vii) a copy of the form of the purchase
contract, deed, Instrument, Purchaser
Mortgage, credit applications and disclosures,
and other documents and exhibits which have
been or are being used by Borrower in
connection with the Project or the sale of
Time-Share Interests, together with the
Project governing documents, the Project
management agreement, the Project exchange
affiliation agreement(s) and advertising
materials;
(viii) the Insurance Policies;
(ix) evidence that the Project is not located
within a flood prone area or evidence of flood
insurance acceptable to Lender;
(x) the items described in EXHIBIT J;
(xi) current financial statements and budgets
for the owner's association for each Project;
(xii) 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) No material adverse change shall have occurred in
the Project or in Borrower's or any Guarantor's
business or financial condition since the date of the
latest financial and operating statements given to
Lender by or on behalf of Borrower or any Guarantor.
(d) There shall have been no change in the warranties
and representations made in the Documents by
Borrower, any Guarantor and/or any other surety for
the Performance of any of the Obligations.
9
(e) Neither an Event of Default nor Incipient Default
shall have occurred and be continuing.
(f) 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.
(g) Borrower shall have paid to Lender the portion of
the Loan Fee and all other fees required to be paid
at the time of the Advance.
(h) Borrower shall not be entitled to any Advance
unless on or before the date of closing of the
Construction Loan, all Documents have been executed
by the persons required to do so and delivered to
Lender.
(i) No Advance shall be made which would
cause the combined outstanding balance of
the Loan, the Presales Loan and the Cocoa
Beach Loan plus the Lender's maximum
$5,200,000 commitment under the Construction
Loan (whether or not funded, but with credit
for any repayments) to exceed the Aggregate
Funding Limitation.
4.2 Advances shall be requested in writing by Borrower and
shall not be made more frequently than (together with advances
of the Presales Loan) three times per month or in amounts less
than $100,000. In addition to all other fees required to be
paid pursuant to this Agreement, Borrower shall pay to Lender
at the time of the third Advance in a month a fee equal to the
greater of (a) 0.25% of such Advance or (b) $500.
4.3 Advances may be disbursed by checks, wire transfers or
drafts payable to Borrower; or at the option of Lender, to
others, either severally or jointly with Borrower, for the
credit or benefit of Borrower.
4.4 Although Lender shall have no obligation to make an
Advance unless and until all of the conditions precedent to
the Advance have been satisfied, Lender may, at its sole
discretion, make Advances prior to that time without waiving
or releasing any of the Obligations.
4.5 Borrower shall be entitled to Advances for Projects other
than The Fairways at Palm-Aire prior to satisfaction of
paragraph 4.1(iii) for The Fairways; provided, however, that
Borrower shall not be entitled to any Advances of the Loan
secured by Eligible Instruments from The Fairways until
Borrower has provided evidence of environmental conditions
satisfactory to Lender including, without limitation, a new
Level I environmental assessment of The Fairways, and such
other environmental testing and reports Lender deems necessary
in response to the above referenced Phase I, and/or as are
required to assure Lender of appropriate resolution of all
environmental issues raised by the February, 1991
Environmental
10
Audit performed by Shevenell, Gallen, & Fell, Inc. (including
without limitation, the nine underground storage tanks located
on the property, a state testing request for a tank located in
an easement area, and a contamination plume from a leaking
storage tank located on adjacent property).
4.6 Borrower shall be entitled to Advances for Projects other
than Ocean Palms prior to satisfaction of paragraphs 4.1(b)
(v), (vii) and (xi) as such sections relate to Ocean Palms;
provided, however, Borrower shall not be entitled to any
Advances of the Loan secured by Eligible Instruments from
Ocean Palms until Borrower has satisfied the requirements of
paragraph 4.1(b) (v), (vii), and (xi), and provided such other
information concerning Ocean Palms as required by Lender,
including, without limitation, a pro forma title policy and a
legal opinion regarding Ocean Palms' consumer documents.
4.7 Borrower may add as a project a resort in Cocoa Beach,
Florida which VB-Cocoa Beach is in the process of acquiring
and converting to a time-share resort, which shall be included
in the Project at such time as the conditions set forth in
paragraphs 4.1(a)(x), 4.1(b)(iii) through (ix) inclusive, (xi)
and (xii), 4.1(j) have been satisfied with respect to such
resort, and Borrower has restated all applicable
representations, warranties and covenants appearing in Article
6 with respect to such resort; such addition to be evidenced
by a formal amendment to EXHIBITS E AND F to this Agreement
and accompanied by a UCC financing statement, environmental
certificate, and such other documents as may be required by
Lender.
V. NOTE; MAINTENANCE OF BORROWING BASE; PAYMENTS; SERVICING AND
COLLECTION; MINIMUM UTILIZATION
5.1 The Loan shall be evidenced by the Note and shall be
repaid in immediately available funds according to the terms
of the Note.
5.2 Subject to Borrower's rights under paragraph 3.2 to
provide replacement Eligible Instruments, if for any reason
the aggregate principal amount of the 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.
5.3 (a) Borrower will not be entitled to prepay the
entire outstanding amount of the Loan until the
Opening Prepayment Date. Thereafter, if neither an
Event of Default nor an Incipient Default has
occurred and is continuing, then Borrower shall have
the option to prepay the Loan in full, but not in
part, upon 60 days prior written notice and the
simultaneous payment of the Prepayment Premium, which
is calculated by applying the percentage determined
in accordance with the following schedule to the
unpaid principal balance of the Loan on the Notice
Date:
11
YEARS AFTER OPENING PERCENTAGE OF
PREPAYMENT DATE PREPAYMENT
1 3.0%
2 2.0%
3 1.0%
4 - 5 None
Year 1 shall be the period of time commencing on the
Opening Prepayment Date and expiring twelve months
thereafter. Year 2 begins upon the expiration of Year
1 (i.e. the first anniversary of the Opening
Prepayment Date). If (a) there shall occur an Event
of Default and (b) such occurrence results in
acceleration or prepayment of the Loan, a Prepayment
Premium will be required in the amount which shall be
determined as of and due on the earlier of the date
of acceleration or prepayment.
(b) Following the Minimum Utilization Date, Borrower
will be entitled to make partial prepayments of the
Loan only if (i) neither an Event of Default nor an
Incipient Default has occurred and is continuing,
(ii) Borrower has given to Lender at least thirty
(30) days prior written notice of such partial
prepayment, (iii) such partial prepayment is in an
amount no less than $3,000,000, and is accompanied by
an exit fee equal to 0.75% of the principal amount
prepaid, and (iv) after giving effect to such partial
prepayment, the outstanding amount of the Loan is not
less than $20,000,000.00.
(c) The prohibition on full prepayment, the
requirement to pay a Prepayment Premium, and the
restrictions on partial prepayment shall not apply to
prepayment resulting from the application of payments
required from obligors on the Receivables Collateral
(unless solicited by Borrower in contravention of its
Obligations) or from performance by Borrower of its
Obligations under paragraph 3.2 or 5.2 (unless due to
a misrepresentation or breach of warranty concerning
the Receivables Collateral qualifying as Eligible
Instruments).
5.4 (a) Lockbox Agent shall collect payments on the
Instruments constituting part of the Receivables
Collateral and remit collected payments to Lender on
the last Business Day of each and every month after
the date of first 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 10th day of each month
commencing with the first full calendar month
following the
12
date of this Agreement, a report, substantially in
the format of Exhibit R, 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, interest, late charges and taxes,
(B) the opening and closing balances, (C) present
value, (D) average consumer interest rate, and (E)
extensions, refinances, prepayments, and other
similar adjustments; and (ii) indicates delinquencies
of 30, 60 and 90 days and in excess of 90 days. On
the basis of such reports, Lender will compute the
amount, if any, which was due and payable by Borrower
on the last Business Day of the preceding month and
will notify Borrower of any amount due. 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 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
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 require.
(b) Lender, subject to any restriction contained in
the Lockbox Agreement or the Servicing Agreement, as
the case may be, may at any time and from time to
time in its discretion substitute or require Borrower
to substitute a successor or successors to any Agent
acting under the Lockbox Agreement or the Servicing
Agreement.
5.5 Subject to Lender's rights under Article VII, all proceeds
from the Receivables Collateral (except payments which are
identified by Purchasers as tax and insurance impounds or
maintenance and other assessment payments and are required to
be so treated by Borrower) and the other security shall be
applied as follows: first to any past due accrued and unpaid
interest, then to current accrued and unpaid interest, then to
late charges, then to reimbursable fees and expenses, and the
balance, if any, to outstanding principal and any other
Obligations in such order and manner as Lender may determine.
Unless and until all the Obligations have been Performed,
Borrower shall have no right to any portion of the proceeds of
the Receivables Collateral.
5.6 Whether or not the proceeds from the Receivables Collateral
shall be sufficient for that purpose, Borrower will pay when
due all payments required to be made
13
pursuant to any of the Documents, Borrower's Obligation to
make such payments being absolute and unconditional.
5.7 Borrower covenants and agrees that it shall obtain
Advances of the Loan sufficient to cause the Minimum
Utilization Date to occur on or before the date one year after
the date of this Agreement.
VI. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 (a) Borrower is, and will remain at all times,
duly organized, validly existing and in good standing
under the laws of Florida and in each jurisdiction in
which it is selling Time-Share Interests or where the
location or nature of its properties or its business
makes such qualification necessary. Borrower has full
authority to Perform the Obligations and to carry on
its business and own its property.
(b) Borrower has full power and authority to grant
the Security Interest in the Receivables Collateral
and to execute and deliver the Documents and-to
Perform the Obligations. All action necessary and
required by the Articles of Organization and all
applicable laws for the obtaining of the Loan and for
the execution and delivery of the Documents executed
and delivered in connection with the Loan 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.
6.2 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 involving Borrower, its property or the
Project which might materially adversely affect the
Performance of the Obligations, the Project, the business or
financial condition of Borrower, or the ability of Borrower to
Perform the Obligations.
6.3 (a) Borrower has sold or has offered for sale
Time-Share Interests only in the state in which the
Project is located and the state(s) described in
Schedule 1 hereof and all sales have been made at the
Project. Before it sells or offers for sale
Time-Share Interests in jurisdictions other than the
state in which the Project is located and the
state(s) listed in the preceding sentence, Borrower
will promptly notify Lender and provide Lender with
evidence that it has complied with all laws of such
jurisdiction governing its proposed conduct.
14
(b) Borrower has complied, and will comply, with all
laws and regulations of the state in which the
Project is located and all other governmental
jurisdictions in which the Project is located or in
which Time-Share Interests have been sold or offered
for sale.
(c) The time-share use and occupancy of Units will not
violate or constitute a non-conforming use under any
private covenant or restriction or any zoning, use or
similar law, ordinance or regulation affecting the
use or occupancy of the Project.
6.4 (a) Each Instrument assigned to Lender pursuant
to this Agreement shall be an Eligible Instrument.
Borrower has Performed all its obligations to
Purchasers, and there are no executory obligations to
Purchasers to be Performed by Borrower. Borrower
further warrants and guarantees the enforceability of
the Receivables Collateral.
(b) Without the prior written consent of Lender,
Borrower will not cancel or materially modify, or
consent to or acquiesce in any material modification
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 owing by the Purchaser under any Instrument which
constitutes part of the Receivables Collateral.
(c) Borrower at all times will fulfill and will cause
its affiliates, agents and independent contractors at
all times to fulfill all obligations to Purchasers.
(d) True and complete copies of the Project governing
documents, the purchase contract form, the deed form,
the Instrument form, the Purchaser Mortgage form,
advertising materials and other documents and
exhibits thereto which have been and are being used
by Borrower in connection with the Project and the
sale or offering for sale of Time-Share Interests
have been delivered to Lender. Borrower, without the
prior written consent of Lender, will not cancel or
materially modify any such documents except as
required by law. .Borrower will perform all of its
obligations under the Project governing documents.
(e) Each Purchaser is a member of a Project owners'
association or associations having authority to levy
annual assessments to cover the costs of maintaining
and operating the Project. To Borrower's knowledge,
all owners' associations related to the Project are
solvent; currently levied assessments are adequate to
cover such costs and to establish and maintain a
reasonable reserve for capital improvements following
the two year reserve waiver period; and there are no
events which could give rise to a
15
material increase in such costs. Borrower will use
its best efforts to: (i) cause such owner's
association to (A) discharge its obligations under
the Project governing documents and (B) maintain the
reserve described above commencing with the
applicable association's third budget year; and (ii)
until the Borrower's loss of control of the Project's
owners' association, Borrower shall pay all operating
and maintenance expenses of the Project incurred in
excess of the maintenance fee assessments actually
collected from Purchasers other than the Borrower;
and (iii) shall timely pay to the proper governmental
authority the real property taxes currently due and
payable with respect to the unsold time-share
intervals, related common elements and common
recreational and support property and any additional
amounts required under Florida Statutes 718.116.
(f) Except as otherwise permitted and disclosed by
the Project governing documents, the Project owners'
association(s) or the owners of Time-Share Interests
in common own(s) (i) all the common areas in the
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 (ii) all access roads
and utilities and offsite improvements necessary to
the use of the Project have been dedicated to and/or
accepted by the responsible governmental authority or
utility company. Borrower will maintain or cause to
be maintained in good condition and repair all
amenities and common areas which have been promised
or represented as being available to Purchasers and
all roads and off-site improvements which are not the
responsibility of the Project owners' association(s)
to maintain and repair and have not been dedicated to
or accepted by the responsible governmental authority
or utility company. Borrower will maintain a
reasonable reserve to assure compliance with the
terms of the foregoing sentence.
6.5 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.
6.6 Lender may notify Purchasers of the existence of Lender's
interest as assignee in the Receivables Collateral and request
from Purchasers any information relating to the Receivables
Collateral. Borrower will deliver such notice under its
letterhead if requested.
6.7 Borrower, without the prior written consent of Lender,
will not: (a) sell, convey, pledge, hypothecate, encumber or
otherwise transfer any of the Collateral; (b) 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; (c) sell, lease, transfer or dispose of all
or
16
substantially all of its assets to another entity; or (d)
permit or suffer to exist any transfer of the ownership
interests or control of Borrower and, if Borrower is a
partnership, any general partner of Borrower.
6.8 Borrower will maintain and pay the cost of the Insurance
Policies and will deliver copies of the Insurance Policies to
Lender.
6.9 (a) The Documents and all certificates, financial
statements and written materials furnished to Lender
by or on behalf of Borrower in connection with the
Loan 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 or the
business or financial condition of Borrower or the
Project.
(b) Lender's examination, inspection, or receipt of
information pertaining to the Collateral or the
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.
6.10 (a) On or before the tenth (l0th) 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 of
Time-Share Interests, their aggregate dollar amount
and related down payments.
(b) 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 audited annual financial statements of each
entity comprising Borrower, each Guarantor and,
subject to the best efforts of Borrower, the Project
owners' association(s); and shall furnish or cause to
be furnished to Lender within forty five (45) days
after each interim quarterly fiscal period of each
entity comprising Borrower a copy of the current
financial statements of Borrower for the period
commencing with the first day of the fiscal year and
concluding with such quarter end.
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
required pursuant to this paragraph shall be
certified by the chief financial officer or general
partner, as the case may be, of the subject of such
statements. Annual statements of Borrower and
corporate Guarantors shall be audited and certified
by a recognized firm of certified public accountants
reasonably satisfactory to Lender. Together with such
17
financial statements, Borrower will deliver to Lender
a certificate signed by the chief financial officer
of Borrower 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.
(c) 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, final
subdivisions public reports/public offering
statements/prospectuses, purchase documents, and any
other items requested by Lender which relate to the
Time-Share Interests.
(d) Borrower will at its expense permit Lender and its
representatives at all reasonable times to inspect
the Project and to inspect, audit and copy Borrower's
records; and shall make available such further
information as Lender may from time to time
reasonably request.
(e) Borrower will submit to Lender annually, within
ten (10) days after each is available, proposed
annual maintenance and operating budgets of the
Project owners' association(s), certified to be
adequate by the managing agent for such
association(s) and a statement of the annual
assessment to be levied upon the Purchasers; 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 of account, logs and
records of the Project owners' association(s).
6.11 Borrower will cause any and all indebtedness owing by it
to its shareholders, directors, officers or partners, as the
case may be, Guarantor(s), or the relatives and affiliates of
Borrower or the foregoing to be subordinated in all aspects to
the Obligations; PROVIDED, -------- however, that if no Event
of Default is outstanding, such subordination shall not
require deferral of regularly scheduled payments on such
indebtedness, or extend to reasonable salaries or to fees at
normal and customary rates for services actually rendered.
6.12 Borrower is not in default of any payment on account of
indebtedness for borrowed money or of any repurchase
obligations in connection with a receivables purchase
financing, or in violation of or in default under any material
term in any agreement, order, decree or judgment of any court,
arbitration or governmental authority to which it is a party
or by which it is bound.
6.13 Borrower has filed all tax returns and paid 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 Project. Borrower will
provide to Lender not more than 30 days after such taxes and
assessments become due evidence that all taxes
18
and assessments on the Units and Project common areas and
related amenities have been paid in full.
6.14 (a) Borrower has paid to Lender (through
Lender's application of Borrower's good faith deposit
made at the time of its application for the Loan)
$10,000 of the Loan Fee. Borrower acknowledges that
the Loan Fee has been earned and is nonrefundable.
The remaining unpaid balance of the Loan Fee shall be
paid in 3 equal installments of $30,000 each, payable
on the date of Lender's first 3 Advances of the Loan
following the date hereof, provided, however, that if
not previously paid, the balance of the Loan Fee
shall be due and payable in full on the date falling
one-hundred twenty days following the date of this
Agreement. Borrower will pay on demand any and all
costs and expenses incurred by Lender in connection
with the initiation, documentation and closing of the
Loan, the making of Advances, the protection of the
Collateral or the enforcement of the Obligations
against Borrower or Guarantor(s), including, without
limitation, all attorneys' and other professionals'
fees, consumer credit reports, and revenue,
documentary stamp and intangible taxes.
(b) 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 for any Instrument which is
delivered to Lender pursuant to paragraphs 3.2 in
replacement of an Instrument for which Borrower has
paid a Custodial Fee. Once a Custodial Fee has been
paid to Lender, Borrow shall not be entitled to any
reimbursement of any portion thereof.
6.15 Borrower will INDEMNIFY, PROTECT, HOLD HARMLESS, AND
DEFEND Lender, its successors, assigns and shareholders
(including corporate shareholders), and the directors,
officers, employees, agents and servants of the foregoing,
for, from and against any and all losses, costs, expenses
(including, without limitation, and attorneys' fees), demands,
claims, suits, proceedings (whether civil or criminal),
orders, judgments, penalties, fines and other sanctions
arising from or brought in connection with (a) the Project,
the Collateral, Lender's status by virtue of the Assignments,
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,
contractors or agents, whether actual or alleged, and (b) any
and all brokers' commissions or finders' fees or other costs
of similar type by any party in connection with the Loan. 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
19
counsel satisfactory to the indemnitee, the defense of any
legal action or proceeding to which such person or entity
shall be a party. At Lenders option, Lender may at Borrower's
expense prosecute or defend any action involving the priority,
validity or enforceability of the Security Interests in the
Collateral.
6.16 Borrower will execute or cause to be executed all documents
and do or cause to be done all acts necessary for Lender to
perfect 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.
6.17 Borrower covenants and agrees that it shall not incur
Marketing Expenses (as defined below) during each twelve month
period terminating at the end of each fiscal quarter of
Borrower in excess of fifty percent (50%) of the net sales of
Time-Share Interests during such period. "Marketing Expenses"
shall mean the aggregate of all costs and expenses for
commissions and sales relating to the sale of Time-Share
Interests, including but not limited to all costs and expenses
for advertising, mailing, consumer premiums, referral and lead
generation.
6.18 Borrower covenants and agrees that Vacation Break U.S.A.,
Inc., a Florida corporation, the parent of Sea Gardens and
Vacation Break, shall maintain a minimum tangible net worth in
an amount not less than $18,000,000, measured quarterly
throughout the term of the Loan. As used in this Agreement,
the term "tangible net worth" means the worth of tangible
assets, such as plant equipment, and current assets (but
exclusive of intangibles such as good will) over liabilities,
all in accordance with generally accepted accounting
principles ("GAAP").
6.19 Borrower covenants and agrees that it shall not deny any
Purchaser access to any recreational amenities located at any
Project (including, without limitation, hotel lobby areas)
unless (a) such Purchaser has failed to pay assessments
required under the Declaration governing the Project and the
denial of access is made in accordance with Florida time-share
law, (b) Lender consents in writing to such denial of access
in Lender's sole and absolute discretion, or (c) such
Purchaser is physically endangering other users of the
recreational facilities.
6.20 Borrower represents and warrants that 559.927 Florida
Statutes, including without limitation, the 1992 amendments
thereto, has not had an adverse impact on the sale of
Time-Share Interests.
6.21 The representations, warranties and covenants contained in
this Article VI are in addition to, and not in derogation of,
the representations, warranties and covenants contained
elsewhere in the Documents and shall be deemed to be made and
reaffirmed prior to the making of each Advance.
20
VII. DEFAULT
7.1 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 (i) any amount payable under the Note or (ii)
any other payment due under the Documents, except for
the Note payment due at the Maturity Date for which
no grace period is allowed;
(b) any representation or warranty of Borrower
contained in the Documents or in any certificate
furnished under the Documents proves to be, in any
material respect, false or misleading as of the date
deemed made;
(c) a default in the Performance of the Obligations
set forth in paragraph 3.2, 6.7(a), 6.7(c), 6.7(d),
6.8 or 6.11;
(d) 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 five (5) Business Days
after notice of such default or violation to Borrower
in the case of a default under or violation of
paragraph 6.7(b) or any other default or violation
which can be cured by the payment of money alone or
(ii) for a period of twenty (20) Business Days after
notice to Borrower in the case of any other default
or violation;
(e) an "Event of Default", as defined elsewhere in any of
the Documents;
(f) 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 $50,000.00 to make a payment
of principal or interest or to repurchase receivables
or any other material default permitting the
acceleration of the repayment of the borrowed money
or the repurchase of receivables, which accelerated
repayment or repurchase obligations are in excess of
$50,000.00 in the aggregate;
(g) 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 $50,000.00;
(h) any party holding a lien or security interest in
the Collateral or a lien (other than a lien created
by Purchaser solely with respect to its Time-
21
Share Interest) on any part of the Project or its
related amenities commences foreclosure or similar
sale thereof;
(i) 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, (v) be adjudicated insolvent, (vi) dissolve
or commence to wind-up its affairs or (vii) take any
action for purposes of the foregoing;
(j) a material adverse change in the Project or in the
business or financial condition of Borrower or in the
Collateral, which change is not enumerated in this
paragraph 7.1 as the result of which Lender in good
xxxxx xxxxx the prospect of Performance of the
Obligations impaired or its Collateral imperiled;
(k) any of the events enumerated in paragraph 7.1(b),
(f), (g), (i) or (j) occurs with respect to any
Guarantor or surety for the Performance of the
Obligations;
(l) Any partial prepayment in violation of paragraph
5.3(b);
(m) the occurrence of a default by Borrower under the
Construction Loan Documents or the Presales Loan
Documents; or
(n) failure of Lender to receive from Borrower,
within twenty (20) days of the date Borrower knows or
should have known of such change, notice of any
material change in any representations or warranties
in the Documents or otherwise made in connection with
the Loan.
7.2 At any time after an Event of Default has occurred and while
it is continuing, Lender may but without obligation, in
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 Note, 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;
22
(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 for such actions 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) proceed to protect and enforce its rights and
remedies under the Documents, to foreclose or
otherwise realize upon the Collateral and/or to
exercise any other rights and remedies available to
it at law, in equity or by statute; and
(e) impose the Default Rate as defined in and described
in, the Note.
7.3 Notwithstanding anything in the Documents to the contrary,
while an Event of Default exists, any cash received and
retained by Lender in connection with the Collateral may be
applied to payment of the Obligations in the manner provided
in paragraph 7.5.
7.4 (a) Lender shall have all of the rights and
remedies of a secured party under the Uniform
Commercial Code of the State of Arizona and all other
rights and remedies accorded to a Secured Party at
equity or law. Any notice of sale or other
disposition of the Collateral given not less than 10
Business Days prior to such proposed action in
connection with the exercise of Lender's 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 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 may, in the name of Borrower or in its own
name, make and execute all conveyances, assignments
and transfers of the Collateral sold
23
in connection with the exercise of Lender's remedies;
and Lender is hereby appointed Borrower's
attorney-in-fact for this purpose.
(c) Upon request of Lender when an Event of Default
exists, Borrower shall assemble the Collateral not
already in Lender's possession and make it available
to Lender at a time and place designated by Lender.
7.5 The proceeds realized from any sale of all or any part of
the Collateral made in connection with the exercise of
Lender's 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 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; third, to the payment of any and all unsatisfied
obligations of Borrower under the Presales Loan Documents; and
fourth, to the payment to Borrower, its successors or assigns,
or to whomsoever 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 may, at its option, and without any obligation to
do so, pay, perform and discharge any and all liabilities
agreed to be paid or performed in the Documents by Borrower,
any Guarantor or any surety for the Performance of the
Obligations if the person obligated fails to do so, including,
without limitation, the obligation under paragraph 6.8 with
respect to maintenance of the Insurance Policies. For such
purposes Lender may use the proceeds of the 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 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 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 thereof,
24
marshalled on any foreclosure sale or other enforcement of
Lender's rights and remedies.
7.9 For the purpose of exercising its rights and remedies
under Paragraph 7.2(c) 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 sole and absolute discretion in the
accomplishment of such purposes.
VIII. CONSTRUCTION AND GENERAL TERMS
8.1 All moneys payable under the Documents shall be paid to
Lender at its address set forth on the signature page of this
Agreement in lawful monies of the United States of America,
unless otherwise designated in the Documents or by Lender by
notice.
8.2 The Documents exclusively and completely state the rights
and obligations of Lender and Borrower with respect to the
Loan. No modification, variation, termination, discharge,
abandonment or waiver of any of the terms 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.
8.3 The powers and agency granted to Lender by Borrower in the
Documents are coupled with an interest and are irrevocable and
are granted as cumulative to Lender's other remedies for
collection and enforcement of the Obligations.
8.4 Any Document may be executed simultaneously in any number
of identical copies each of which shall constitute an original
for all purposes.
8.5 All notices required or permitted to be given hereunder
shall be in writing, and shall be deemed delivered (a) one (1)
Business Day after such are deposited for delivery via Federal
Express or other nationally recognized overnight courier
service, or (b) three (3) Business Days after such are
deposited in the United States mails, certified or registered
mail, in either case, with all postage prepaid, and 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 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 24 hours by
hand delivery, courier delivery or mailing of a copy of such
notice in accordance with the requirements set forth above.
25
If to Lender: FINOVA Capital Corporation
(two copies) Vice President - Resort Finance
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Telecopy No.: 000-000-0000
with a copy to:
Vice President - Group Counsel
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Telecopy No.: 000-000-0000
with a copy to: XxXxxxxxx XxXxxxxx Xxxxxxx Yetwin
& Xxxx, P.C.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: 000-000-0000
If to Borrower: Sea Gardens Beach and Tennis Resort
Vacation Break Resorts, Inc.
Vacation Break at Cocoa Beach, Inc.
Palm Vacation Group
0000 Xxxxx Xxxxxxx Xxx.
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Cairo and
Xxxxxxxx Xxxxx, Esq.
Telecopy No. (000) 000-0000
8.6 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.
8.7 If any one or more of the provisions contained in any
Document shall be held invalid, illegal or unenforceable in
any respect, the validity, legality and
26
enforceability of the remaining provisions contained in the
Document shall not in any way be affected or impaired thereby.
8.8 Time is of the essence in the Performance of the Obligations.
8.9 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; the use of any gender shall be deemed to
include other genders, unless inappropriate; and reference to
a numbered or lettered subdivision of an Article, or paragraph
shall include relevant matter within the Article or 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.
8.10 (a) CHOICE OF LAW. 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 STATE OF ARIZONA AND TO THE
EXTENT THEY PREEMPT THE LAWS OF SUCH STATE, THE LAWS
OF THE UNITED STATES.
(b) CHOICE OF JURISDICTION AND 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 ANY OTHER DOCUMENT
OR THEIR SUBJECT MATTER, OR, IF LENDER INITIATES SUCH
ACTION, ANY COURT IN WHICH LENDER SHALL INITIATE SUCH
ACTION 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
27
SUIT, ACTION OR PROCEEDING IS IMPROPER. BORROWER
HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY
JUDGMENT OR ACTION IN ANY OTHER FORUM.
(c) WAIVER OF JURY TRIAL. LENDER AND BORROWER
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER ANY OF THE DOCUMENTS WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES AND THEREFORE, THE
PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY
SUCH CONTROVERSY SHALL BE TRIED BY A JUDGE SITTING
WITHOUT A JURY, AND BORROWER HEREBY KNOWINGLY AND
VOLUNTARILY WAIVES TRIAL BY JURY IN ANY SUCH
PROCEEDING.
(d) INDUCEMENT TO LENDER. ALL OF THE PROVISIONS SET
FORTH IN THIS PARAGRAPH ARE A MATERIAL INDUCEMENT FOR
LENDER'S MAKING THE LOAN TO BORROWER.
[Borrower (initial ____ ______ _______ ______)]
8.11 It is the intent of the parties hereto to comply with the
Applicable Usury Law. Accordingly, notwithstanding any
provision 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.
8.12 LENDER DOES NOT HEREBY ASSUME AND SHALL HAVE NO
RESPONSIBILITY, OBLIGATION OR LIABILITY TO PURCHASERS.
LENDER'S ONLY RELATIONSHIP TO PURCHASERS IS THAT OF A CREDITOR
WHO HAS TAKEN, AS SECURITY FOR INDEBTEDNESS OWED TO LENDER BY
BORROWER, A COLLATERAL ASSIGNMENT FROM BORROWER OF THE
INSTRUMENTS. EXCEPT AS REQUIRED BY LAW, 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.
IX. SPECIAL PROVISIONS.
9.1 The obligations of each entity comprising the Borrower
under this Agreement shall be joint and several, primary,
direct and immediate. Each such party shall be and remain
liable for all Obligations until the Obligations have been
fully paid and performed notwithstanding the previous
discharge (total or partial) of any other such party. Borrower
acknowledges that Advances will be made on Eligible
Instruments owned by less than all of the entities comprising
Borrower hereunder,
28
and that the Advances may be used by any such entity in
connection with a Project in which less than all of the
entities identified as Borrower hereunder have an interest.
Borrower represents and warrants to Lender that each entity
identified as Borrower hereunder will benefit both directly
and indirectly from the Loan. Borrower authorizes one or more
of the following persons or entities: Sea Gardens, Vacation
Break, VB-Cocoa Beach, or Palm Vacation (the "Authorized
Advance Signatory(ies)") to execute request for Advances
hereunder, and Borrower authorizes Lender to disburse Advances
at the direction of any Authorized Advance Signatory. All such
requests for Advance executed by any Authorized Advance
Signatory shall be binding upon Borrower (and each of them).
9.2 This Agreement is an amendment and restatement of, and is
executed in replacement and substitution for, that certain
Loan and Security Agreement dated as of August 16, 1993, as
amended by an Amendment No. 1 to Loan and Security Agreement
dated December 16, 1993, and an Amendment No. 2 to Loan and
Security Agreement dated December 7, 1994, a letter agreement
dated November 29, 1994, an Amendment No. 4 to Loan and
Security Agreement dated December 7, 1994, and an Amendment
No. 5 to Loan and Security Agreement dated March 1, 1996.
9.3 From the date hereof through the Borrowing Term, Lender
shall have an exclusive right to provide time-share
receivables financing for fifty percent (50%) of all Eligible
Instruments arising from Ocean Palms and Cocoa Beach on the
same terms as the Loan.
9.4 Borrower agrees that if an Event of Default occurs, then
Lender has the right, in Lender's sole and absolute
discretion, to make an Advance of the Loan for the sole
purpose of applying the amount of such Advance to the
outstanding obligations under the Presales Loan. Such Advance
amount may be up to, but not exceed (i) the unpaid principal
balance of all Eligible Instruments held by Lender, minus (ii)
the outstanding balance of the Loan prior to such Advance.
Lender's right to make such Advance shall not constitute a
waiver of any of the requirements for Advances set forth
herein.
29
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their respective names, personally or by their duly
authorized representatives as of the date above written.
"BORROWER"
Sea Gardens Beach and Tennis Resort, Inc., a Florida
corporation
By /S/ XXXXX X. CAIRO
--------------------------------------
Print Name: XXXXX X. CAIRO
--------------------------------------
Title: COO/CFO
--------------------------------------
Vacation Break Resorts, Inc., a Florida corporation
By /S/ XXXXX X. CAIRO
--------------------------------------
Print Name: XXXXX X. CAIRO
--------------------------------------
Title: COO/CFO
--------------------------------------
Vacation Break at Cocoa Beach, Inc., a Florida
corporation
By /S/ XXXXX X. CAIRO
-------------------------------------
Print Name: XXXXX X. CAIRO
-------------------------------------
Title: COO/CFO
-------------------------------------
Palm Vacation Group, a Florida general partnership
By: Vacation Break Resorts at
Palm-Aire, Inc., a Florida
corporation, its general partner
By /S/ XXXXX X. CAIRO
-------------------------------------
Print Name: XXXXX X. CAIRO
-------------------------------------
Title: COO/CFO
-------------------------------------
By: Palm Resort Group, Inc., a
Florida corporation, its general
partner
By /S/ XXXX X. XXXXXX
-------------------------------------
Print Name: XXXX X. XXXXXX
-------------------------------------
Title: GROUP VICE PRESIDENT
-------------------------------------
30
"LENDER"
FINOVA Capital Corporation, a
Delaware corporation, formerly known
as Greyhound Financial Corporation,
a Delaware corporation;
By__________________________________
Print Name:_________________________
Title:______________________________
31
LIST OF EXHIBITS
Schedule 1 Status of Sale of Time-Share Interests
Exhibit A Assignment of Mortgages
Exhibit B Conditions of Eligible Instrument
Exhibit C Environmental Certificate
Exhibit D Promissory Note
Exhibit E Permitted Encumbrances
Exhibit F Description of Time-Share Resort and Time-Share Interest
Exhibit G Borrower's Certificate
Exhibit G-1 Re-Assignment of Mortgages
Exhibit H Borrower's Opinion of Counsel
Exhibit I Guarantor's Opinion of Counsel
Exhibit J Additional Condition to Advances
Exhibit J-1 Request for advance and Certification
Exhibit K Borrower's Monthly Reports (Format)
