EXHIBIT 10.8.4
LOAN AND SECURITY AGREEMENT
BETWEEN
GRAND BEACH RESORT, LIMITED PARTNERSHIP
AND
GREYHOUND FINANCIAL CORPORATION
DATED AS OF OCTOBER 7, 1994
LOAN AND SECURITY AGREEMENT
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BY THIS LOAN AND SECURITY AGREEMENT entered into as of October 7, 1994
between GREYHOUND FINANCIAL CORPORATION, a Delaware corporation ("Lender") and
GRAND BEACH RESORT, LIMITED PARTNERSHIP, a Georgia limited partnership
("Borrower"), hereby confirm and agree as follows:
ARTICLE I
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INTRODUCTION
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1.1 Borrower desires to obtain a revolving line of credit from
Lender, the proceeds of which shall be used for working capital purposes to fund
development, sales and marketing expenses, and for purposes of paying and
satisfying certain construction indebtedness owing from Borrower to Lender.
1.2 Lender is willing to extend to Borrower a revolving line of
credit for the purposes stated in the preceding paragraph upon the terms and
conditions set forth herein.
ARTICLE II
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DEFINITIONS
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Except where the context clearly requires a different interpretation,
all capitalized terms used in this Agreement shall have the meanings assigned to
them above, immediately below, or elsewhere herein.
"Advance" shall mean the monies or funds advanced from time to time in
accordance with the terms and conditions of this Agreement.
"Advance Date" shall mean each date on which an Advance is made.
"Affiliate" shall mean any person or entity directly or indirectly
Controlling, Controlled by or under common Control with the person or entity to
whom the definition is applied, including blood relatives or spouse of the
person to whom the definition applies, if such person is a natural person.
"Agreement" shall mean this Loan and Security Agreement, as from time
to time modified, extended, renewed, replaced or restated.
"Applicable Environmental Laws" shall have the meaning set forth in
the Environmental Certificate.
"Applicable Usury Law" shall mean the usury law applicable pursuant to
the terms of Article XI, paragraph II.II hereof or such other usury law which is
applicable if the law chosen by the parties is not applicable.
"Argosy" shall mean Argosy Grand Beach, Inc., a Georgia corporation.
"Argosy/KGI" shall mean Argosy/KGI Grand Beach Investment Partnership,
a California general partnership.
"Argosy Partners" shall mean Argosy Partners, Inc., a Georgia
corporation.
"Assignments" shall mean written Assignments, in such form as Lender
shall prescribe, of specific Instruments and/or Purchaser Mortgages and the
proceeds thereof delivered to Lender concurrently with each Advance under the
terms of which Borrower transfers and assigns with full recourse all of
Borrower's right, title and interest in and to the Instrument and/or Purchaser
Mortgage, free and clear of all claims, demands, liens and encumbrances of third
parties, as collateral security for the Loan.
"Borrower" shall mean Grand Beach Resort, Limited Partnership, a
Georgia limited partnership.
"Borrowing Base" shall mean an amount equal to the lesser of (i) 90%
of the unpaid principal balance payable under the Eligible Instruments or (ii)
90% of the then present value assigned to the unmatured installments of
principal and interest payable under the Eligible Instruments discounted at
Lender's Prevailing Discount Rate.
"Borrowing Term" shall mean the period of time during which Lender is
committed to make Advances under this Agreement, which commitment shall
terminate on the earlier of (i) the date which occurs twelve (12) months after
the date of the first Advance or (ii) February 5, 1996. The Borrowing Term shall
be extended for any period of time that any Force Majeure delay prevents
commencement of construction of the Project.
"Business Day" shall mean a calendar day other than a Saturday, Sunday
or legal holiday.
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"Capital Expenditure" shall mean payments that are made by the
Borrower for the lease, purchase, improvement, construction or use of any
property, the value of which under GAAP is required to be capitalized and shall
include, without limitation, payments for the installment purchase of property
and payments under capitalized leases.
"Cash Flow" shall mean, for any period, the net income or loss of
Borrower, determined in accordance with GAAP (excluding the effect of any
extraordinary gains or losses from the sale of property not in the ordinary
course of business), plus each of the following items to the extent deducted
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from the revenues of Borrower in calculating the net income: (A) depreciation;
(B) amortization; and (C) interest and taxes during such period, and less
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Capital Expenditures to the extent paid in such period.
"Closing Date" shall have the meaning set forth in Paragraph 5.1
hereof.
"Commitment Fee" shall have the meaning set forth in Paragraph 8.16
hereof.
"Construction Loan" shall mean the loan made pursuant to the
Construction Loan Agreement.
"Construction Loan Agreement" shall mean that certain Construction
Loan Agreement of even date herewith, pursuant to which Lender has agreed,
subject to the terms and provisions thereof, to make a $5,900,000 construction
loan to Borrower, the proceeds of which are to be used to construct the Project.
"Construction Loan Documents" shall have the meaning set forth in the
Construction Loan Agreement.
"Construction Mortgage" shall mean the Mortgage, Assignment of Rents
and Proceeds and Security Agreement delivered by Borrower pursuant to the
Construction Loan Agreement.
"Control" or "Controlling" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of another person or entity by any means.
"Delinquencies" shall mean, individually and collectively, an Eligible
Instrument, against which an Advance has been made, under which an installment
payment due becomes more than 59 days past due.
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"Distribution" shall mean any distribution, advance, payment,
including but not limited to, loan repayments, dividends, bonuses, salary, other
compensation and management fees.
"Documents" shall mean this Agreement, the Note, the Construction
Mortgage, the Environmental Certificate, the Servicing Agreement, the Lockbox
Agreement, the Services and Fees Agreement, the Guarantee, the Assignments, the
Subordination Agreement, and each and every other document, instrument or
writing executed or delivered by Borrower to Lender in connection with the Loan.
"Eligible Instruments" shall mean the Instruments, each in
substantially the form of Exhibit "A" hereto, entered into by and between
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Borrower and those Persons who purchase a Time-Share Interest (at least 80% of
whom shall be United States, Canadian or Puerto Rican residents), which Eligible
Instruments shall conform to the criteria and standards set forth on Exhibit "B"
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hereto; provided, however, that an Instrument shall cease to be an Eligible
Instrument if (i) any installment payable thereunder becomes more than 59 days
past due and the Instrument under which such installment is payable is not
replaced within ninety (90) days following the due date of such installment or
(ii) the contract fails to continue to conform to the criteria and standards of
Exhibit "B".
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"Embassy" shall have the meaning set forth in the Construction Loan
Agreement.
"Environmental Certificate" shall mean that certain Environmental
Certificate with Representations, Covenants and Warranties of even date herewith
executed by Borrower and related to the Project.
"Event of Default" has the meaning set forth in Article IX hereof.
"Force Majeure" has the meaning set forth in Paragraph 9.2 of the
Construction Loan Agreement.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time, consistently applied, throughout the period involved
and with prior periods, which shall include the official interpretations thereof
by the Financial Accounting Standards Board or any successor thereto.
"GBP" shall mean Grand Beach Partners, L.P., a California limited
partnership.
"GPSI" shall mean GFC Portfolio Services, Inc., an Arizona
corporation, its successors and assigns.
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"Guarantee(s)" shall mean a written Guarantee and Subordination
Agreement, in such form as Lender shall prescribe, executed and delivered by a
Person (or Persons) to Lender, under the terms and conditions of which such
Person (or Persons), as Guarantor(s), shall individually and/or jointly and
severally guarantee Borrower's Performance of all of its Obligations under the
Documents and the Environmental Certificate and shall agree to subordinate any
indebtedness owed by Borrower to Guarantor(s) to the Obligations owed by
Borrower to Lender.
"Guarantor(s)" shall mean individually, a Person, and collectively
each and every Person, who executes and delivers to Lender a Guarantee pursuant
to the terms and conditions of this Agreement. The Guarantors of this Loan are
GBP, Argosy/KGI, Argosy, Argosy Partners and KGI.
"Impositions" shall mean any and all taxes (other than any tax
measured by net income payable by Lender to any state or political subdivision
thereof or to the U.S. under Section 11 or 1201 of the Internal Revenue Code, as
amended), in consequence of the receipt of payments provided for herein, license
fees, assessments, charges, fines, penalties, property, privilege, excise, real
estate or other taxes currently or hereafter levied or imposed by any state,
local or federal authority upon or in connection with or measured by the
Documents or the Receivables Collateral.
"Incentive Fee" shall having the meaning set forth in Paragraph 8.25
hereof.
"Incipient Default" shall mean any act or event which after the giving
of notice or the lapse of time (or both) would constitute an Event of Default.
"Instrument" shall mean a promissory note which has arisen out of the
sale of a Time-Share Interest in the Project by Borrower to a Purchaser, which
note is secured by a Purchaser Mortgage.
"KGI" shall mean KGI Grand Beach Investments, Inc., a California
corporation.
"Loan" shall mean the line of credit loan extended by Lender to
Borrower in accordance with the terms of this Agreement, in a principal amount
not to exceed at any time outstanding the sum of $15,000,000.
"Lockbox Agent" shall mean the entity designated as the Lockbox Agent
in the Lockbox Agreement, or should such entity cease to act as Lockbox Agent
under the Lockbox Agreement, such other entity as Lender may appoint.
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"Lockbox Agreement" shall mean the Lockbox Agreement, in such form as
Lender shall prescribe, to be made among Borrower, Lender and the Lockbox Agent,
as from time to time modified, replaced or restated.
"Maturity Date" shall mean that date which shall occur seven (7) years
after the date on which the last Advance is made under the terms of this
Agreement.
"Maximum Loan Amount" shall mean the sum of $15,000,000 less the
principal amount then outstanding under the Construction Loan.
"Net Income" shall mean the net income or loss of Borrower, determined
in accordance with GAAP (excluding the effect of any extraordinary gains or
losses from the sale of property not in the ordinary course of business).
"Nondisturbance Agreement" shall mean an agreement, in form and
substance satisfactory to Lender, pursuant to which the holders of any lien
interest on the streets, amenities, common areas, or other off-site improvements
forming a part of the Project agree that, notwithstanding a foreclosure or other
realization of such encumbrance, (i) the Purchasers shall have uninterrupted use
of such streets, amenities, common areas and other off-site improvements and
uninterrupted use and possession of their respective Time-Share Interests, (ii)
the rights and privileges of such Purchasers shall not be otherwise impaired,
and (iii) the governing documents of the Project, including any declarations of
condominium, shall not be modified.
"Note" shall mean the Promissory Note to be made and delivered by
Borrower to Lender pursuant hereto, in a form acceptable to Lender.
"Obligations" shall mean each and every obligation, duty, covenant,
undertaking and conditions which Borrower is required or has agreed to perform
under the Documents and under the Construction Loan Documents, and each and
every other obligation of Borrower now or hereafter owing to Lender.
"Opening Prepayment Date" shall mean the date which occurs twenty-four
(24) months after the last Advance hereunder.
"Overdue Rate" shall have the same meaning as set forth in the Note.
"Perform, Performed or Performance" shall mean the timely, faithful
and complete payment and performance of all Obligations by Borrower.
"Permitted Encumbrances" shall mean each and every restriction,
reservation and easement of record and liens for taxes and assessments securing
amounts not yet due and payable, which individually and in the aggregate do not
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render unmarketable the title to the property which they encumber, or liens
being contested in good faith by proceedings diligently contested, or any lien
against property to secure payment of all or a portion of the purchase price of
such property, and any encumbrance, lien or security interest described in
Exhibit "C" hereto.
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"Person" shall mean any adult individual, partnership, corporation or
other form of business entity whatsoever.
"Present Value" shall mean with respect to any Eligible Instrument the
present value of the unmatured and unpaid installments of principal and interest
due thereunder, calculated using a discount rate equal to the Prevailing
Discount Rate applicable to said Eligible Instrument as provided herein.
"Prevailing Discount Rate" shall mean Lender's prevailing discount
rate at the time each Advance is made, which rate shall be Prime Rate plus 2.0%
but in no event less than 11.5%.
"Prime Rate" shall mean the rate of interest publicly announced from
time to time by Citibank, N.A., New York, New York as its corporate base rate of
interest charged to its most creditworthy commercial borrowers notwithstanding
the fact that some such borrowers may borrow at lower rates. The initial Prime
Rate shall be the rate in effect as of the first Business Day of the month of
the initial Advance and, subsequently, the Prime Rate shall be redetermined as
of the first Business Day of each month.
"Project" shall mean the time-share condominium project known as
Embassy Vacation Resort at Grand Beach, to be constructed by Borrower on the
Real Property comprised of 48 time-share units and related amenities and
improvements.
"Purchaser" shall mean a Person who purchases a Time-Share Interest in
the Project from Borrower.
"Purchaser Mortgage" shall mean the purchase money mortgage given to
secure an Instrument.
"Real Property" shall mean that parcel of real property located in
Orange County, Florida and all existing and future improvements located thereon,
more fully described on the attached Exhibit "G".
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"Receivables Collateral" shall mean (i) all of the Instruments which
Borrower now or hereafter assigns, transfers, endorses or delivers to Lender in
consideration for an Advance made by Lender pursuant to the terms of this
Agreement and as collateral security for the Obligation; (ii) all Instruments
against which Lender
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makes an Advance pursuant to the terms of this Agreement, notwithstanding
whether or not such Instrument is assigned, transferred, endorsed or delivered
to Lender; (iii) all Purchaser Mortgages, purchase contracts, purchase
agreements, guarantees and other documents or instruments evidencing or securing
the obligations of the Purchasers and/or any other person primarily or
secondarily liable on the Instruments; (iv) all policies of insurance related to
the Instruments or delivered in connection with the Instruments (provided that
the inclusion of such policies of insurance as part of the Receivables
Collateral shall not be deemed to restrict or limit the Borrower's ability to
encumber such insurance to the extent relating to or delivered in connection
with Instruments pledged to another lender, subject, however, to the provisions
of paragraph 8.27); (v) all rights under escrow agreements relating to the
Instruments and all impound and/or reserve accounts related to the Instruments
(excluding, however, any escrows set aside for improvements to the Project);
(vi) all licenses, contracts, management contracts or agreements, franchise
agreements, permits, subordination or certificates now or hereafter required or
used in connection with the ownership, operation or maintenance of the Project
(provided that the inclusion of such licenses, contracts, management contracts
and other agreements or permits as part of the Receivables Collateral shall not
be deemed to restrict or limit the Borrower's ability to encumber such documents
and agreements to the extent relating to or delivered in connection with
Instruments pledged to another lender, subject, however, to the provisions of
paragraph 8.27); (vii) all files, books and records pertaining to any of the
foregoing; and (viii) cash and non-cash proceeds from all of the foregoing,
including, without limitation, all goods, instruments, documents, general
intangibles, chattel paper and accounts wherever located, which have been
acquired with cash proceeds from any of the foregoing and the proceeds thereof.
"Residual Collateral" shall mean all of Borrower's right, title and
interest in and to any and all proceeds remaining following the foreclosure or
other realization by or on behalf of Lender's lien or security interest in the
Real Property and improvements thereon.
"Resort Management" shall have the meaning set forth in the
Construction Loan Agreement.
"Resort Marketing" shall have the meaning set forth in the
Construction Loan Agreement.
"Security Interest" shall mean a direct and exclusive first security
interest which has been perfected under the Uniform Commercial Code of the
state(s) in which any such security interest must be perfected; provided that
with respect to any portion of the Receivables Collateral not covered by the
Uniform Commercial Code, it shall mean a direct and exclusive first lien on such
property which has been perfected in the manner provided by law.
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"Servicing Agent" shall mean GPSI or, should such entity cease to act
as Servicing Agent under the Servicing Agreement and Services and Fees
Agreement, such other entity as Lender may appoint.
"Servicing Agreement" shall mean the Servicing Agreement, in such form
as Lender shall prescribe, to be made among Borrower, Lender, and the Servicing
Agent, as from time to time modified, replaced or restated.
"Services and Fees Agreement" shall mean the Services and Fees
Agreement, in such form as Lender shall prescribe, to be made between Borrower
and Servicing Agent and acknowledged by Lender, as from time to time modified,
replaced or restated.
"Shell" shall have the meaning set forth in the Construction Loan
Agreement.
"Subordination Agreement" shall mean an agreement, in such form as
Lender shall prescribe, delivered to Lender pursuant to paragraph 5.2(v) hereof,
as from time to time modified, replaced or restated.
"Term" shall mean the duration of this Agreement commencing as of the
year and day first above written and terminating on the date Borrower has
Performed all of its Obligations under the Documents.
"Time-Share Interest" shall mean the rights sold to a Purchaser to the
exclusive use of a Unit in the Project and the Project common areas for a one
(1) week period each year or each alternate year.
"Unit" shall mean a condominium unit in the Project as shown on the
condominium plat therefor, attached to the Declaration of Condominium to be
recorded in connection with the Project.
ARTICLE III
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THE LOAN
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3.1 Lender hereby agrees that the Loan will be disbursed to
Borrower, from time to time, in periodic Advances, but in no event after the
Borrowing Term has expired, in amounts determined by subtracting from the
Borrowing Base the unpaid principal balance outstanding under the Loan at the
time of each Advance; provided that at no time shall the unpaid principal
balance of the Loan exceed the Maximum Loan Amount.
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3.2 (a) Advances shall not be made more frequently than twice per
month, and each Advance shall be in an amount of not less than One Hundred
Thousand Dollars ($100,000.00). Lender shall charge a fee of Five Hundred
Dollars ($500.00) for the second Advance made during any month and shall be
entitled to deduct such fee from the Advance so made. The foregoing fee is
to be paid to Lender strictly in consideration for Lender's agreement to
make a second Advance during any particular calendar month and shall not be
applied or credited against any other Obligations.
(b) The Loan is a revolving line of credit under the terms of
which Borrower, during the Borrowing Term, shall have the right to obtain
Advances, repay Advances, and obtain additional Advances so long as no
Event of Default has occurred and is continuing and so long as all other
conditions precedent to the making of a Advance have been satisfied.
(c) No Advances will be made after the Borrowing Term has
expired unless Lender, in its sole discretion, shall agree in writing to
make such Advances.
(d) Borrower shall use the proceeds of the Loan for working
capital purposes, to make Distributions to Affiliates to the extent
permitted under this Agreement and under the Construction Loan Documents
and to repay the Construction Loan in full.
(e) At no time during the term hereof shall the unpaid principal
balance of the Loan, together with the unpaid principal balance of the
Construction Loan exceed a total amount equal to Fifteen Million Dollars
($15,000,000.00), and Lender shall have no obligation to make any Advance
if such Advance would cause the foregoing limitation to be exceeded.
3.3 All Advances made pursuant to this Agreement shall be deemed to
be a single Loan.
ARTICLE IV
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SECURITY FOR THE LOAN
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4.1 As security for Borrower's payment and Performance of all
Obligations owed to Lender, other than those arising out of the Environmental
Certificate, Borrower hereby grants to Lender a first and exclusive Security
Interest in and to (a) the Receivables Collateral assigned, transferred,
endorsed or delivered to Lender under this Agreement or against which an Advance
is made hereunder, and (b)
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the Residual Collateral. Lender's Security Interest in such Receivables
Collateral and the Residual Collateral shall be absolute, continuing and
applicable to all existing and future Advances and shall secure the repayment of
the Loan and the Construction Loan and the Performance of all Obligations
throughout the Term of the Loan. At the time each Advance is made hereunder,
Borrower shall deliver to Lender (i) an executed Assignment against which an
Advance is requested; (ii) the original of each Instrument; and (iii) other
documents which comprise such Eligible Instruments. At such time as the
Construction Loan and the Incentive Fee have been paid in full and all other
obligations due and owing to Lender under the Construction Loan Documents have
been paid and satisfied in full, and Lender has no further obligation to make
any further advances of the Construction Loan, and provided there does not then
exist an Event of Default or Incipient Default, Lender shall release the
Construction Mortgage, as more fully set forth in the Construction Mortgage,
even though the Receivables Loan is then outstanding.
4.2 If an Eligible Instrument which comprises a part of the
Receivables Collateral shall cease to qualify as an Eligible Instrument,
Borrower shall, within 30 days thereafter, pay to Lender an amount equal to that
portion of the Loan, together with interest, costs, and expenses, if any,
attributable to such ineligible Instrument or shall replace such ineligible
Instrument with another Eligible Instrument having a value of not less than that
portion of the Loan together with interest, costs, and expenses, if any,
attributable to the Eligible Instrument being replaced. No prepayment premium
shall be payable with respect to the payment to be made by Borrower pursuant to
the previous sentence as long as Borrower did not cause the Instrument to cease
qualifying as an Eligible Instrument. Concurrently with the delivery of the
replacement Eligible Instrument to Lender, Borrower shall deliver to Lender all
pertinent items (except for a "Request for Advance and Certification") which
Borrower is required to deliver to Lender in connection with an Advance pursuant
to Article V hereof, together with a Borrower's Certificate in form and
substance identical to Exhibit "E" hereto. Upon substitution of the replacement
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Eligible Instrument for the ineligible Instrument, Lender will terminate its
Security Interest in and reassign and endorse to Borrower, without recourse or
warranty of any kind, the replaced ineligible Instrument, together with the
Purchaser Mortgage securing the same, provided that no Event of Default or
Incipient Default has occurred and is continuing. Such reassignment and
endorsement to Borrower shall constitute a warranty by the Lender that Lender
has not previously assigned such Instrument or Purchaser Mortgage to a third
party or voluntarily created any liens against such Instrument or Purchaser
Mortgage in favor of any third party.
4.3 Reserved.
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4.4 In connection with each Advance, Borrower shall, at its expense,
deliver to Lender, at the time of delivery of the Assignment, a policy or
policies of title
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insurance insuring Lender's interest in the Purchaser Mortgage which is the
subject of the Assignment. Such policy or policies shall be in the amount of the
Advances made against or, in the case of substitutions, a portion of the Loan
attributable to the Instruments secured by the insured Purchaser Mortgages and
shall be issued by a title insurer and be in form and substance satisfactory to
Lender in its sole discretion. The title insurance policies must reflect that
the Purchaser Mortgages constitute valid liens against the real property to
which they pertain subject only to the Permitted Encumbrances.
4.5 Borrower shall deliver or cause to be delivered to Lender, and
thereafter shall maintain in full force and effect according to the terms
thereof, Guarantees duly executed by the Guarantors identified in Article II
hereof.
4.6 Reserved.
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ARTICLE V
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ADVANCES
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5.1 Lender shall have no obligation to make any Advance hereunder
until all conditions precedent set forth in the following paragraphs and
elsewhere in this Agreement have been satisfied, at Borrower's sole expense, as
determined by Lender in its reasonable discretion. The date that Borrower
satisfies all of the conditions precedent to the making of the Loan shall be
referred to as the "Closing Date," which date shall not be later than December
15, 1994.
5.2 Borrower shall have delivered to Lender the following Documents,
duly executed in form and substance satisfactory to Lender (and, when required,
in recordable form):
(i) The Documents;
(ii) The Construction Loan Documents;
(iii) The Guarantees from the Guarantors;
(iv) All documents required to effectuate the purposes of
paragraphs 8.12 and 8.21 (ii) hereof;
(v) A Nondisturbance Agreement which shall be filed and
recorded in such offices as Lender shall designate;
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(vi) UCC Financing Statements for filing and recording, if
appropriate, as necessary to perfect Lender's Security Interest in the
Receivables Collateral and all other security for the Performance of
Borrower's Obligations which is subject to Article 9 of the Uniform
Commercial Code;
(vii) The title policy referred to in paragraph 4.4 hereof;
(viii) A favorable opinion from Borrower's independent counsel
as to such matters as Lender may reasonably require; and
(ix) A favorable opinion from each of Guarantor's independent
counsel as to such matters as Lender may reasonably require.
5.3 Not less than ten (10) Business Days before the date on which the
initial Advance is to be made, Borrower shall deliver or cause to be delivered
to Lender the following additional items:
(i) With respect to Borrower and each Guarantor or Person
which is a corporation or a general or limited partnership, certified
copies of their articles, certificates and agreements of general or limited
partnership or their articles of incorporation and by-laws (and all
amendments thereto), together with evidence that Borrower and each such
Guarantor or Person is duly organized, validly existing, and in good
standing under the laws of the jurisdiction in which they are organized,
and in each and every other jurisdiction where the nature of their
respective businesses require them to be so qualified;
(ii) With respect to Borrower and each Guarantor or Person
which is a corporation or a general or limited partnership, a copy of the
resolutions certified to be true and complete by the corporate secretary or
all of the general partners (as the case may be), authorizing the
execution, delivery and performance of the Documents, and evidencing the
authority of all Persons executing the Documents on behalf of Borrower, the
Guarantor, and such other Persons, and if Borrower, Guarantor or such
Persons are operating under a fictitious name, a copy of the recorded
certificate of fictitious name;
(iii) As a condition to making the initial Advance, such other
surveys and certifications by surveyors or engineers as may be required by
Lender, acceptable to Lender, showing the dimensions of the Units within
the Project, access thereto, street lines, easements and other details.
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(iv) Evidence satisfactory to Lender that the Project complies with
all applicable laws, rules and regulations and public and private restrictions
affecting the use of the Project;
(v) A copy of the registrations/consents to sell and the final
subdivision public reports/public offering statements/prospectuses and/or
approvals thereof required to be issued by or used in the State of Florida and
other jurisdictions where Time-Share Interests are or have been offered or sold,
together with all other approvals from regulatory agencies having jurisdiction
over the Project;
(vi) If the Project has not been registered under such act, an
opinion from Borrower's counsel that the Project does not fall within the
purview of the Interstate Land Sales Full Disclosure Act;
(vii) A copy of the purchase contract, deed, note, mortgage/deed of
trust and other documents in existence, including, without limitation, any
covenants running with the land comprising the Project, as well as any
covenants enforceable as equitable servitudes, the Project management agreement
and advertising materials, which have been or are being used by Borrower in
connection with the Project or the sale of Time-Share Interests therein;
(viii) Copies of the insurance policies required pursuant to paragraph
8.9 hereof;
(ix) Evidence that the Project is not located within a "special
flood hazard" area as such term is used in the National Flood Insurance Act of
1968, as amended and supplemented by the Flood Disaster Protection Act of 1973,
and in regulations, interpretations and rulings thereunder;
(x) The items described in Exhibit "E" hereto;
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(xi) Such other items as Lender requests which are reasonably
necessary to evaluate whether the request for the Advance satisfied the
requirements set forth herein;
(xii) Credit references, credit bureau reports and customer
references for Borrower; and UCC, tax lien, litigation and judgment searches for
Borrower and GBP.
(xiii) Copies of the forms of Instrument and Purchaser Mortgage; and
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(xiv) Satisfactory operating budget for the Project owner's
association.
5.4 No material adverse change shall have occurred in the Project or
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. Lender shall be satisfied (in Lender's sole and
absolute discretion) with the results of (i) Lender's physical inspection of the
Project and (ii) an environmental survey of the Project and, if deemed necessary
by Lender, a level one environmental assessment of the Project to be obtained at
Borrower's expense.
5.5 There shall have been no material adverse change in the warranties
and representations made by Borrower or any Guarantor in the Documents.
5.6 Neither an Event of Default nor an Incipient Default shall have
occurred and be continuing.
5.7 The interest rate applicable to the Advance (before giving effect to
any savings clause) will not exceed the maximum contract rate permitted by the
Applicable Usury Law.
5.8 Borrower has paid the entire Commitment Fee to Lender.
5.9 The Construction Loan shall have closed and Borrower shall have
satisfied all of the conditions precedent to the making of the first Advance (as
the term Advance is defined in the Construction Loan Agreement).
5.10 With respect to all Advances to be made after Borrower begins selling
Time-Shares Interests, Lender shall have approved the management agreement for
the Project.
5.11 Lender shall have no obligation to make any Advance until the
conditions specified in paragraphs 5.1 through 5.10 (as applicable to the
particular type of Advance) inclusive herein have been satisfied as determined
by Lender in its reasonable discretion. In the event the conditions specified
in Section 5.1 through 5.10 (as applicable to the particular type of Advance)
hereof have been satisfied as determined by Lender in its reasonable discretion,
on or before the Closing Date, Lender shall have no further obligation to make
the Loan or the Construction Loan and the entire Commitment Fee (as defined in
Paragraph 8.16) shall nevertheless be deemed earned by Lender in consideration
for Lender's issuing of the Commitment (as defined in Paragraph 8.16) and
holding itself ready and willing to make the Loan upon
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the terms and conditions set forth herein. Payment of the Commitment Fee is in
addition to Borrower's obligation under Paragraph 8.16.
5.12 Advances shall be requested in writing on the Request for Advance
and Certification, in the form of the attached Exhibit "E-1," executed by
------------
Borrower (or, if Borrower is a corporation or partnership, by those officers or
general partners, as the case may be, or agents of Borrower named in authorizing
resolutions of Borrower from time to time delivered to Lender and which are in
form and substance satisfactory to Lender).
5.13 Advances may be disbursed by checks, drafts or wire transfer
payable to Borrower; or, at the option of Lender after Borrower's written
request, to third parties, either severally or jointly with Borrower, for the
credit or benefit of Borrower. If Advances are made by wire transfer, Borrower
shall pay to Lender, Lender's usual and customary fee for wiring such funds.
Lender can withhold such fee from the Advance so made.
5.14 Although Lender shall have no obligation to make an Advance
unless and until all applicable conditions thereto set forth herein have been
satisfied, Lender may, at its sole discretion, make Advances before that time
without waiving or releasing any of the Obligations, but Borrower shall continue
to be required to strictly Perform all such Obligations.
5.15 The proceeds of the Loan are to be used, in part, to pay and
satisfy in full the Construction Loan and all amounts then due and owing to
Lender under the Construction Loan Documents. Therefore, Lender shall have the
right to disburse any Advance directly to Lender in payment or satisfaction of
then outstanding amounts due to Lender under the Construction Loan Documents.
ARTICLE VI
----------
RESERVED
--------
ARTICLE VII
-----------
NOTE; MAINTENANCE OF BORROWING BASE;
------------------------------------
PAYMENTS; SERVICING AND COLLECTION
----------------------------------
7.1 In no event shall the aggregate principal amount of the Loan
outstanding at any time exceed the Maximum Loan Amount and in the event for any
reason the aggregate principal amount of the Loan does not exceed the Maximum
Loan Amount, then Borrower, upon Lender's demand, shall immediately make a
principal
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payment to Lender in an amount equal to such excess plus accrued and unpaid
interest thereon.
7.2 If for any reason the aggregate principal amount of the Loan
outstanding as of the last Business Day of any month shall exceed the then
Borrowing Base, Borrower, upon Lender's demand, shall immediately make to Lender
a principal payment in an amount equal to such excess plus accrued and unpaid
interest thereon.
7.3 The Loan shall be evidenced by the Note and shall be repaid in
immediately available funds according to the terms thereof and such provisions
of this Agreement as are applicable.
7.4 Borrower is not entitled to prepay, in whole or in part, the Loan
until the Opening Prepayment Date. Thereafter, if (i) Borrower has paid all sums
due and payable to Lender in connection with the Loan and the Construction Loan,
and (ii) Borrower has given Lender at least thirty (30) days prior written
notice of the prepayment and has paid to Lender at the time of prepayment a
prepayment premium equal to a percentage, as set forth below, of the then
principal balance of the Loan, then Borrower shall have the option to prepay the
Loan in full, but not in part, on any date an installment is due on the Note:
PERIOD PREMIUM
------ -------
Through the Second Anniversary Date Closed to Prepayment
of the last Advance
After the Second Anniversary Date and 3%
through the Fourth Anniversary Date of
the Last Advance
After the Fourth Anniversary Date and 2%
through the Sixth Anniversary Date of
the last Advance
After the Sixth Anniversary Date and 1%
through the period ending 30 days prior
to the Seventh Anniversary Date of the
last Advance
Within 30 days prior to the Seventh 0%
Anniversary Date of the last Advance
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If there should occur an acceleration of maturity following an Event
of Default and such occurrence results in prepayment of the Loan, a prepayment
premium will be required in the amount specified above; or if occurring prior to
the Opening Prepayment Date, Borrower shall pay to Lender with the prepayment a
prepayment premium equal to 5% the then principal balance of the Loan being
prepaid. A Purchaser shall be permitted to prepay the amount owed on its
Instrument without penalty. If there should occur a casualty to or condemnation
of the Project and such occurrence results in a prepayment of the Loan, no
prepayment premium shall be payable in connection with such prepayment.
7.5 (a) Lockbox Agent, as agent for Lender, shall collect payments
on the Eligible Instruments used in making Borrowing Base computations or
otherwise constituting part of the Receivables Collateral and shall remit
them to Lender on the last Business Day of each and every month according
to the terms of the Lockbox Agreement; and Borrower shall immediately
forward all such payments received by it to Lockbox Agent for Lender.
However, the Obligation to make, or any requirement that Lender receives,
payments called for in the Documents shall not be deemed satisfied until
Lender actually receives such payments from Lockbox Agent. For the purpose
of determining the adequacy of such payments, Borrower will cause Servicing
Agent to furnish to Lender at Borrower's sole cost and expense, no later
than the tenth day of each month commencing with the first full calendar
month following the first Advance, a report meeting the following
requirements; (i) shows as of the end of the prior month with respect to
each Eligible Instrument which is used in making Borrowing Base
computations or otherwise constitutes part of the Receivables Collateral
(A) all payments received during the prior month on the Eligible
Instrument, allocated as between principal, interest, late charges, taxes,
and the like, (B) the opening and closing balances during the prior month
on each such Eligible Instrument, (C) present value of the cash flow (if
required by Lender) and (D) extensions, refinances, prepayments, and other
similar adjustments; and (ii) itemizes the Eligible Instrument which are
used in making Borrowing Base computations or otherwise constitute part of
the Receivables Collateral to show delinquencies of 30, 60, 90 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 day of
the preceding month and will notify Borrower as soon as possible of any
amount due. If such reports are not timely received, Lender may estimate
the amount which was due and payable; and, in such event, Borrower shall
pay upon demand the amount estimated by Lender to be due and payable. If
payment is made on the basis of Lender's estimate, and reports required by
this paragraph are thereafter 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
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demand and such refund to be made by Lender within five Business Days after
receipt by Lender of a written request therefor by Borrower. In addition,
at each calendar quarter, Borrower shall deliver to Lender a current list
of the names addresses and phone numbers of the Purchasers related to
Eligible Instruments.
(b) Subject to the following sentence, GPSI shall act as the
Servicing Agent during the Term. Lender, subject to any restriction
contained in the Services and Fees Agreement, the Servicing Agreement or
the Lockbox Agreement, may at any time and from time to time in its
discretion substitute a successor or successors to any Servicing Agent or
Lockbox Agent acting in such capacity under the Services and Fees
Agreement, the Servicing Agreement and Lockbox Agreement, if the Servicing
Agent or Lockbox Agent is not satisfactorily performing its respective
obligations thereunder. In the event Lender substitutes a successor
Servicing Agent or Lockbox Agent pursuant to the provisions of this
paragraph, Borrower shall have the right to approve the identity of such
successor Servicing Agent or Lockbox Agent; provided that there does not
-------- ----
then exist an Event of Default or an Incipient Default and further provided
------- --------
that Borrower shall not unreasonably withhold or unduly delay its consent.
----
7.6 Subject to Lender's rights upon the occurrence of an Event of
Default, all proceeds from the Receivables Collateral (except payments which are
identified by Purchasers as tax or maintenance and other assessment payments and
are required to be so treated by Borrower) during the Term hereof shall be
applied first to the payment of all costs, fees and expenses required by the
Documents to be paid by Borrower, second to accrued and unpaid interest due on
the Note, third to the unpaid principal balance of the Note, and then to the
other Obligations in such order and manner as Lender may determine. Unless and
until all such Obligations have been Performed, Borrower shall have no right to
any portion of the proceeds of the Receivables Collateral.
7.7 Whether or not the proceeds from the Receivables Collateral shall
be sufficient for that purpose, Borrower shall pay when due all payments
required to be made pursuant to the Note and other Documents; and any and all
amounts payable by Borrower under the Note and other Documents shall be paid
without notice (except as otherwise expressly provided therein), demand,
counterclaim, set-off, deduction, recoupment or defense, and without abatement,
suspension, deferment, diminution or proration by reason of any circumstance or
occurrence whatsoever, Borrower's Obligation to make such payments being
absolute and unconditional.
7.8 All payments to be made by Borrower under the Documents shall be
free of expense to Lender with respect to the amount of any Impositions, all of
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which Impositions Borrower assumes and shall pay on demand in addition to the
other payments provided for in the Documents to be made by it. Borrower's
Obligation to pay Impositions shall likewise include the Obligation to pay any
increase to Lender in federal, state, or local income tax as a result of
inclusion in income of Lender of any amount required by this paragraph to be
paid to or for Lender.
ARTICLE VIII
------------
BORROWER'S ADDITIONAL REPRESENTATIONS,
--------------------------------------
WARRANTIES AND COVENANTS
------------------------
8.1 (a) Borrower is, and will continue to be during the Term hereof,
a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Georgia and is, and will continue to be
during the Term hereof, qualified to do business and in good standing in
each jurisdiction in which it is selling Time-Share Interests or where the
location or nature of its properties or business makes such qualification
necessary (except where failure to do so would not adversely affect
Lender's ability to realize upon the Receivables Collateral or any other
security for the Performance of the Obligations or materially adversely
affect the business or financial condition of Borrower or the ability of
Borrower to complete Performance of the Obligations). Borrower has, and
will continue to have, powers adequate for making and Performing under the
Documents, for undertaking and Performing the Obligations, and for carrying
on its business and owning its property. GBP is, and will continue to be
during the Term hereof, a limited partnership, duly organized, validly
existing and in good standing under the laws of the State of California.
GBP is the general partner of Borrower. Argosy/KGI is, and will continue to
be during the Term hereof, a general partnership duly organized, validly
existing and in good standing under the laws of the State of California.
Argosy/KGI is the managing general partner of GBP. KGI is, and will
continue to be during the Term hereof, a corporation, duly organized,
validly existing and in good standing under the laws of the State of
California. KGI is the managing general partner of Argosy/KGI. Argosy is,
and will continue to be during the Term hereof, a corporation, duly
organized, validly existing and in good standing under the laws of the
State of Georgia. Argosy is a general partner of Argosy/KGI. Argosy
Partners is, and will continue to be during the Term hereof, a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Georgia. Argosy Partners is a general partner of Argosy/KGI.
(b) Borrower has good right and power to grant the Security
Interest in the Receivables Collateral and to execute and deliver this
Agreement and the other Documents and to Perform the Obligations. All
action necessary
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and required by Borrower's organization documents and all applicable laws
for the obtaining of the Loan and for the execution and delivery of this
Agreement and all other Documents executed and delivered in connection with
the Loan has been duly and effectively taken; and, to the best of
Borrower's knowledge, this Agreement is and shall be, and all other
Documents are and shall be, legal, valid, binding and enforceable against
Borrower in accordance with their respective terms, other than as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium, or similar laws relating to or affecting the
rights of creditors generally or general principles of equity (except to
the extent that such laws, rights, remedies or principles are waivable by
Borrower and have been waived in the Documents). To the best of Borrower's
knowledge, the Documents do not violate the Applicable Usury Law or any
other usury law known to Borrower. The execution, delivery and Performance
of the provisions of this Agreement and all the other Documents will not
violate, constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the properties or
assets of Borrower pursuant to any provision of: any law, regulation,
judgment, decree, order, franchise or permit applicable to Borrower;
Borrower's charter documents; or any contract or other agreement or
instrument to which Borrower is a party or by which Borrower or Borrower's
properties or assets are bound. No consent of any government or agency
thereof, or any other person, firm or entity not a party hereto, is or will
be required as a condition to the execution, delivery, Performance or
enforceability or the Documents.
8.2 (a) 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,
if adversely determined, might adversely affect Lender's ability to realize
upon the Receivables Collateral or any other security for the Performance
of the Obligations, or materially adversely affect the Project, the
business or financial condition of Borrower, or the ability of Borrower to
complete Performance of the Obligations; or which questions the validity of
the Documents.
(b) If Borrower or a Guarantor becomes a party to any action,
litigation or other proceeding which asserts a material claim against
Borrower or a Guarantor, or Borrower becomes the subject of an
investigation by a governmental agency or administrative body with respect
to the Project, then Borrower shall within 10 days after it obtains
knowledge thereof notify Lender of such action, litigation, proceeding or
investigation and the particulars thereof. Thereafter, if requested by
Lender, Borrower shall report to Lender with respect to the status of such
matter and the particulars thereof.
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8.3 (a) Borrower has sold or has offered for sale Time-Share Interests
which generate Eligible Instruments only in the State of Florida and all sales
have been made at the Project or in the private residences of potential
Purchasers. Before it sells or offers for sale Time-Share Interests outside the
State of Florida, Borrower shall promptly notify Lender and provide Lender with
evidence that Borrower has complied with all laws of such jurisdiction governing
the proposed conduct of Borrower.
(b) Except for violations which do not individually or in the
aggregate affect Lender's ability to realize upon the Receivables Collateral or
any other security for the Performance of the Obligations or do not materially
adversely affect the business or financial condition of Borrower or the ability
of Borrower to complete Performance of the Obligations, Borrower has complied,
and will comply, with all laws and regulations of the United States and every
state, county and municipal jurisdiction in which Time-Share Interests have
been sold or offered for sale.
(c) Without limiting the generality of any other representation or
warranty contained herein, Borrower will not violate any private covenant or
restriction or any zoning, use or similar law, ordinance or regulation affecting
the use or occupancy of the Project, the violation of which could have a
material adverse effect on Lender's ability to realize upon the Receivables
Collateral or any other security for the Performance of the Obligations or
materially adversely affect the business or financial condition of the Borrower
or the ability of Borrower to complete Performance of the Obligations.
8.4 (a) Each Instrument at the time it is assigned to Lender in
connection with the Loan and this Agreement shall be an Eligible Instrument. At
the time such Instrument is assigned to Lender, Borrower shall have performed
all of its obligations to Purchasers, and there shall be no executory
obligations to Purchasers to be Performed by Borrower. Borrower further warrants
and guarantees the value and enforceability of the Receivables Collateral.
(b) Borrower shall not, without the prior written consent of Lender,
cancel or materially modify, or consent to or acquiesce in any material
modification to, or solicit the prepayment of, any Eligible Instrument used in
making Borrowing Base computations or which otherwise constitutes part of the
Receivables Collateral; or waive the timely performance of the obligations of
the Purchaser thereunder. Borrower shall not pay or advance directly or
indirectly for the account of any Purchaser any sum owing by the Purchaser
-22-
under any of the Eligible Instruments used in making Borrowing Base computations
or which otherwise constitute part of the Receivables Collateral.
(c) Borrower at all times shall fulfill, and cause its affiliates,
agents and independent contractors at all times to fulfill, all obligations to
Purchasers under all Eligible Instruments which are used in making Borrowing
Base computations or otherwise constitute part of the Receivables Collateral.
(d) True and complete copies of the Project governing documents, the
purchase contract, deed, note, mortgage/deed of trust, the Instruments, 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 therein have been delivered to Lender. Such documents are
the only ones which have been used in connection with the Project and the sale
of Time-Share Interests therein. Borrower shall not, without the prior written
consent of Lender, cancel or materially modify any such documents, which consent
will not be unreasonably withheld. Borrower shall Perform all of its obligations
under the Project governing documents.
(e) All off-site roads and other off-site improvements contained
within the Project (other than private easements) will have been dedicated to
and accepted by the responsible governmental authority or utility prior to the
initial Advance. Borrower shall maintain or cause to be maintained in good
condition and repair all amenities, common areas and private easements which
have been promised or represented as being available to Purchasers and all
off-site roads and off-site improvements which have not been dedicated to or
accepted by the responsible governmental authority or utility.
(f) Each Purchaser shall automatically be a member of the Project's
owners association or associations, if any, and shall be entitled to vote on the
affairs thereof (subject, however, to any preferential voting rights in favor of
Borrower as permitted under Florida time-share laws). Each such owners
association shall be governed by a Board of Directors, which have the authority
to fix and levy pro rata upon each Purchaser annual assessments to cover the
costs of maintaining and operating the Project (including, without limitation,
taxes and assessments not levied by the appropriate taxing authority directly
against owners of Time-Share Interests) and to establish a reasonable reserve
for improvements, the replacement of items and furnishings, and contingencies.
If Borrower controls an owners association, Borrower will while it controls such
association: (i) cause such owners association to (A) discharge timely and
completely its obligations under the Project governing documents and maintain
the reserve described above; and (ii) pay to such
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owners association not less often than every twelve months hereafter the
difference between (A) the cumulative total amount of the maintenance and
operating expenses incurred by such association, together with the amount
of any installment of real property taxes currently due and payable with
respect to the Project not directly levied against owners of Time-Share
Interests, through the end of the calendar month preceding the month in
which such payment is made and (B) the cumulative total amount of
assessments (less amounts thereof allocated to reserve expenses) payable to
the association by Time-Share Interest owners other than Borrower through
the end of the calendar month preceding the month in which such payment is
made.
(g) Except as otherwise permitted by the Project governing
documents, the Project owners association or the owners of Time-Share
Interests in common shall own the furnishings in the Project Units and 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 the
Construction Mortgage; and no part of the Project is subject to partition
by owners of Time-Share Interests. Borrower will maintain or cause to be
maintained in good condition and repair all common areas in the Project and
other amenities which have been promised or represented as being available
to Purchasers and which are not the responsibility of the Project owners
association to maintain and repair. Borrower will maintain a reasonable
reserve to assure compliance of the terms of the foregoing sentence.
(h) The common areas and amenities and the streets and other
off-site improvements contained within the Project are free and clear of
all liens or other encumbrances of third parties, subject to the Permitted
Encumbrances. Borrower agrees that such common areas, amenities, streets
and other off-site improvements will not, during the Term hereof, be
encumbered.
8.5 LENDER DOES NOT ASSUME AND SHALL HAVE NO RESPONSIBILITY,
OBLIGATION OR LIABILITY TO PURCHASERS, LENDER'S RELATIONSHIP BEING SOLELY THAT
OF A CREDITOR WHO HAS TAKEN, AS SECURITY FOR INDEBTEDNESS OWED TO IT, A
COLLATERAL ASSIGNMENT FROM BORROWER OF INSTRUMENTS. EXCEPT AS REQUIRED BY LAW,
OR TO THE EXTENT NECESSARY IN ORDER FOR BORROWER TO OBTAIN A PERMIT TO SELL
TIME-SHARE INTERESTS IN A PARTICULAR STATE, BORROWER SHALL NOT, AT ANY TIME, USE
THE NAME OF OR MAKE REFERENCE TO LENDER WITH RESPECT TO THE PROJECT, THE SALE OF
TIME-SHARE INTERESTS OR OTHERWISE, WITHOUT THE EXPRESS WRITTEN CONSENT OF
LENDER.
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8.6 Borrower shall undertake the collection of amounts delinquent
under each Eligible Instrument which is used in making Borrowing Base
computations or otherwise constitutes part of the Receivables Collateral, shall
bear the entire expense of such collection work, and shall diligently and timely
do such work respecting collection, including forfeiture or foreclosure
proceedings. Lender shall have no obligation to undertake any collection,
eviction or foreclosure action against the obligor under any Eligible Instrument
or to otherwise realize upon any Eligible Instrument.
8.7 Borrower shall maintain in a secure place in its offices at the
address specified below proper and accurate books, records, ledgers,
correspondence and other papers relating to the Receivables Collateral. Lender
may notify the appropriate Purchasers of the existence of Lender's interest as
assignee in the Receivables Collateral and request from such Purchasers any
information relating to the Receivables Collateral. Borrower shall cooperate
with Lender in giving such notice and will do so under its letterhead if
requested. Borrower's chief executive office is as set forth on the signature
page of this Agreement. Borrower will not change its chief executive office
without giving Lender thirty (30) days prior written notice of such contemplated
change. Borrower has not operated under any names or fictitious names other than
Grand Beach Resort, Limited Partnership during the previous six (6) years.
Borrower will not change its name or operate under any fictitious names without
first giving Lender thirty (30) days prior written notice.
8.8 Borrower shall not, without the prior written consent of Lender
(except in connection with the furnishing of Borrower's sales center as
contemplated in the Construction Loan Agreement): (i) sell, convey, pledge,
hypothecate, encumber or otherwise transfer any security for the Performance of
the Obligations; or (ii) permit or suffer to exist any liens, security interests
or other encumbrances on any security for the Performance of the Obligations,
except with respect to either (i) or (ii) for the Permitted Encumbrances and
liens and security interests expressly granted to Lender.
8.9 Borrower shall obtain before funding, shall maintain during the
Term of the Loan, and shall deliver to Lender evidence of such insurance,
written by such insurers, and in such forms and such amounts, as Lender may
require.
8.10 (a) This Agreement and the other Documents, certificates,
financial statements, tax returns (including without limitation, the tax
returns of Borrower and Guarantors) and written materials furnished to
Lender by or on behalf of Borrower in connection with the transactions
contemplated herein do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact known to
Borrower which materially adversely
-25-
affects or in the future may (so far as Borrower can now foresee)
materially adversely affect the Receivables Collateral or any other
Security for the Performance of the Obligations or the business or
financial condition of Borrower or the Project which has not been set forth
in this Agreement or the other Documents, certificates, financial
statements or written materials furnished to Lender in connection with the
transactions contemplated herein.
(b) The fact that Lender's representatives may have made certain
examinations and inspections or received certain information pertaining to
the Receivables Collateral or the Project and the proposed operation
thereof does not in any way affect or reduce the full scope and protection
of the warranties, representations and Obligations contained herein, which
have induced Lender to enter into this Agreement.
8.11 (a) Borrower shall maintain a standard, modern system of
accounting and shall keep and maintain all books and records in accordance
with generally accepted accounting principles on a consistent basis.
(b) On or before the tenth day of each month, Borrower shall
furnish or cause to be furnished to Lender (i) the reports of the Servicing
Agent and Borrower required pursuant to paragraph 7.5 hereof and (ii) a
sales report for the prior month showing the number of sales of Time-Share
Interests and the aggregate dollar amount thereof, including down payments.
(c) Borrower shall furnish or cause to be furnished to Lender,
as soon as the same are available, and in any event within 110 days after
the end of each fiscal year and within 45 days after the end of each
interim quarterly fiscal period of the subject, a copy of the current
financial statement of Borrower, and within 110 days after the end of each
fiscal year, current financial statements of the Projects's owners
association (the "Association"). Such financial statements shall contain a
balance sheet as of the end of the relevant fiscal period and statements of
income and cash flows for such fiscal period (together, in each case, with
the comparable figures for the corresponding period of the previous fiscal
year, if available), all in reasonable detail, prepared in accordance with
generally accepted accounting principles consistently applied throughout
the period involved and with prior periods. All annual financial statements
of Borrower and the Association required pursuant hereto shall be audited
by a certified public accountant, and shall be certified to by said
certified public accountant. In addition to the foregoing, all financial
statements required pursuant hereto shall be certified correct by the
individual who is the subject of such statements, or the chief financial
officer or general partner, as the case may be, of the subject of such
statements. The financial statements of Borrower shall also contain in
reasonable detail a statement of
-26-
income and expenses covering the operation of the Project. Together with
such financial statements, Borrower shall deliver to Lender a certificate
signed by the chief financial officer or managing general partner, as the
case may be, of Borrower stating that to the best of his knowledge, after
inquiry, there exists no Event of Default and no condition, event or act
which, with notice or lapse of time or both, would become an Event of
Default or, if any such Event of Default or any such condition, event or
act exists, specifying the nature and period of existence thereof and what
action Borrower proposes to take with respect thereto. Together with such
financial statements, Borrower shall also deliver to Lender a certificate
of its chief executive officer certifying that Borrower is in compliance
with all Applicable Environmental Laws or in the event of noncompliance,
specifying the nature and period of the existence of such noncompliance.
(d) Borrower shall deliver to Lender from time to time, as
available, and promptly upon amendment or effective date,
registrations/consents to sell, final public reports/public offering
statements/prospectuses, and upon request, advertising materials, current
price lists and sales literature, and other items requested by Lender which
relate to the Project.
(e) So long as the same shall be pertinent to the Loan, the
Project, the documents or any transactions contemplated therein, Borrower
shall at its expense (i) permit Lender and its representatives at all
reasonable times to inspect, audit and copy, as appropriate, the Project,
Borrower's facilities, activities, books of account, logs and records; (ii)
cause its employees, agents and accountants to give their full cooperation
and assistance in connection with any such visits of inspection or
financial conferences; and (iii) make available such further information
concerning its business and affairs as Lender may from time to time
reasonably request.
(f) Borrower shall annually submit to Lender within 45 days
after each is available proposed annual maintenance and operating budgets
for the Project, the Association and Borrower, certified to be adequate by
Borrower and a statement of the annual assessment to be levied upon the
Purchasers.
(g) Borrower shall cause to be delivered to Lender as soon as
available, and in any event no later than forty-five (45) days following
its filing with the Internal Revenue Service, the signed income tax returns
for each Guarantor for the fiscal year then ended, as filed with the
Internal Revenue Service, together with all schedules thereto; provided,
that in the event a Guarantor obtains an extension of the date for filing
such tax returns, Borrower shall cause to be delivered to Lender a signed
copy of such extension within
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fifteen (15) days following the filing deadline for such return in the
absence of such extension.
8.12 Borrower shall cause any and all indebtedness owed by Borrower to
its partners, officers, any Guarantor, relatives or affiliates of Borrower or
any of the foregoing, or secured by the Project, to be subordinated to the
Obligations pursuant to subordination agreements satisfactory to Lender in form
and substance.
8.13 Borrower shall not, without Lender's prior written consent: (i)
(other than the sale of Time-Share Interests in the ordinary course of
Borrower's business or the rental of condominium units in the Project in the
ordinary course of Borrower's business) sell, lease, transfer or dispose of its
all or substantially all of its assets to another entity; or (ii) dissolve or
liquidate, or merge or consolidate with or into any other entity, transfer to
any person or entity, the right to control, Borrower or Guarantors, turn over
the management or operation of Borrower or Guarantors to any other person or
entity, or permit any of the foregoing to occur with respect to Borrower or
Guarantors. Borrower shall have the right to retain a third-party management
company to manage the operation of the Project, provided that Lender has first
approved the identity of such management company and the terms of the agreement
under which such company is to manage the Project.
8.14 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, instrument, order, decree or judgment of any
court, arbitration or governmental authority to which it is a part or by which
it is bound.
8.15 Borrower has filed all tax returns and paid all taxes,
assessments, levies and penalties, if any, in respect thereof required to be
filed by it or paid by it to any governmental or quasi-governmental authority.
All real estate taxes and assessments have been paid which are due and owing in
connection with the common areas and the Project and other amenities which have
been promised or represented as being available to Purchasers for use by them.
Borrower shall use its best efforts to provide to Lender not more than 30 days
after such taxes assessments would become delinquent if not paid evidence that
all taxes and assessments on the Project and common areas have been paid in
full.
8.16 Borrower shall pay to Lender on demand all reasonable
out-of-pocket costs and expenses incurred or to be incurred by Lender or its
counsel in connection with the initiation, documentation and closing of the
Loan, the making of Advances hereunder, the administration of the Loan, the
protection of the security for the Performance of the Obligations, or the
enforcement of the Obligations against Borrower or any Guarantor (including,
without limitation, travel costs, a non-
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refundable documentation fee of $20,000.00 (which documentation fee shall be
credited against Lender's attorneys' fees and is the same documentation fee due
and payable under the Construction Loan Agreement), all attorneys' fees, any
brokerage or similar fees, all filing and recording fees, all charges for
consumer credit reports and UCC, tax lien, judgment and litigation searches, all
revenue and documentary stamp and intangible taxes, and all fees and expenses of
the Servicing Agent and Lockbox Agent to perform the services contemplated
hereunder and under the terms of the Services and Fees Agreement, the Servicing
Agreement and Lockbox Agreement, respectively). Borrower shall pay to Lender a
non-refundable commitment fee (the "Commitment Fee") in the amount of One
Hundred Fifty Thousand Dollars and No/100 ($150,000.00), which fee was earned by
Lender upon issuance by Lender to Borrower of the Commitment Letter (the
"Commitment") in connection with the Loan, dated May 5, 1994, in consideration
of Lender holding itself ready, willing and able to make the Loan upon the terms
and conditions set forth herein. The entire Commitment Fee shall be due and
payable in full on the first to occur of the following dates: (a) the date upon
which Lender makes the second Advance of the Loan, or (b) the sixtieth (60th)
day following the Closing. In the event the Loan does not close on or before the
Closing Date, as such date may be extended by Lender, other than due solely to
the default of Lender; (i) the entire Commitment Fee shall nevertheless be
deemed fully earned by Lender in consideration for Lender's issuing of the
Commitment and holding itself ready and willing to make the Loan upon the terms
and conditions set forth herein and shall be due and payable upon demand and
(ii) Lender conditions set forth herein and shall be due and payable upon demand
and (ii) Lender shall have no further obligation to make the Loan or the
Construction Loan. The payment of the Commitment Fee is in addition to
Borrower's obligation to pay a commitment fee under the Construction Loan
Agreement. Lender acknowledges the receipt of a $3,000 application fee (which
application fee is also referenced in the Construction Loan Agreement) which has
been earned by Lender and shall not be applied against the Commitment Fee.
Lender shall act as custodian for purposes of holding Eligible Instruments and
Borrower shall pay to Lender on demand, a custodial fee of Ten Dollars ($10.00)
for each Eligible Instrument so held by Lender, exclusive of Eligible
Instruments that are substituted for ineligible Instruments (provided that such
custodial fee was paid in connection with such ineligible Instrument) and
exclusive of Instruments that have been cancelled by the Purchaser or the
Borrower. Notwithstanding the foregoing, Borrower shall have the right to select
an independent custodian to hold Eligible Instruments on Lender's behalf and as
Lender's agent, so long as (i) Borrower pays all costs charged by such
independent custodian, and (ii) such independent custodian is approved in
advance, in writing by Lender.
8.17 Borrower shall INDEMNIFY, DEFEND AND HOLD HARMLESS, Lender, its
successors, assigns and shareholders (including corporate shareholders), and the
directors, officers, employees, agents and servants of the foregoing, from any
and all losses, costs, expenses (including, without limitation, court costs and
attorneys' fees), demands, claims, suits, proceedings (whether civil or
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criminal), orders, judgments, penalties, fines and other sanctions arising from
or brought in connection with (i) the Project, the security for the Performance
of the Obligations, Lender's status by virtue of the Assignments, creation of
Security Interests, the terms of the Documents or the transactions related
hereto, or any act or omission of Borrower, the Servicing Agent or the Lockbox
Agent, or the employees or agents of any of them, whether actual or alleged, and
(ii) any and all brokers' commissions or finders' fees or other costs of similar
type, or claims by any broker, agent or other party in connection with this
transaction (other than fees claimed owed by a broker, finder, or other party
with whom Lender has a specific agreement). On written request by anyone covered
by the above agreement of indemnity, Borrower shall 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 the
indemnitee shall be a party, provided that such action or proceeding shall
result from, or grow or arise out of any of the events set forth in this
paragraph.
8.18 Borrower shall not directly or indirectly invest all or any part
of the proceeds of the Loan in any investment security subject to the margin
requirements of Regulation G of the Board of Governors of the Federal Reserve
System.
8.19 Borrower shall 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 Receivables Collateral
or the other security for the Performance of the Obligations or otherwise to
effect the intent and purposes of the Documents. Borrower shall prosecute or
defend any action involving the priority, validity or enforceability of the
Security Interest granted to lender; provided that, at Lender's option,
Lender may do so at Borrower's expense.
8.20 Borrower is fully familiar with all of the terms and conditions
of the Documents and is not in default thereunder. No act or event has occurred
which after notice and/or lapse of time would constitute such a default or an
Event of Default.
8.21
8.21.1 During the Term, Borrower shall not pay or make any
Distributions to its officers, partners, or any Guarantor or to any
relatives or Affiliates of Borrower, of any Guarantor or of any other of
the foregoing. The foregoing notwithstanding, on the condition that:
(i) There does not then exist an Event of Default or
an Incipient Default; and
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(ii) Prior to the incurring of any obligation to make a
Distribution, Borrower has caused the proposed recipient of such
Distribution (the "Affiliated Party") to have entered into a
Subordination Agreement in form and substance satisfactory to Lender
pursuant to which the Affiliated Party agrees (A) that is shall not
exercise any rights against Borrower or against any of the collateral
securing the Loan or the Construction Loan unless and until the date
that all of the obligations of Borrower under and with respect to the
Loan and the Construction Loan have been fully paid, performed and
discharged; (B) that any entitlement to a Distribution is and shall be
fully subordinated as to right and time of payment to the payment in
full of the Loan and the Construction Loan and (C) that upon and
during the continuance of an Event of Default or an Incipient Default,
no Distributions shall be permitted, made, demanded or accepted;
the following Distributions shall be permitted:
(v) Such Distribution is made to the partners of
Borrower no more frequently than quarterly in an amount sufficient for
the payment of federal and state income taxes payable by such partner
with respect to a tax year of Borrower (a "Tax Year") resulting from
the inclusion in such partners' taxable income of the partner's share
of taxable income of Borrower for that Tax Year, subject to reasonable
assumptions as to the marginal tax bracket to which the partners of
borrower generally are subject (the "Tax Amount"). Notwithstanding the
foregoing, if for any prior Tax Year of the Borrower, the Borrower had
a loss for tax purposes which, under tax law then in effect, would
offset taxable income (which loss has not been previously used to
offset taxable income in accordance with this sentence), then for
purposes of determining the Tax Amount for the current Tax Year shall
be reduced by the amount of such loss. On or about the fifth (5th) day
prior to each date on which estimated federal income tax payments are
required to be paid by the partners of Borrower, Borrower may make a
distribution to the partners which, together with prior distributions
for the Tax Year on account of the Tax Amount, shall not exceed the
applicable percentage (which shall be 25%, 50%, 75%, and 100% for the
first, second, third and fourth calendar quarters, respectively) of a
reasonable estimate of the Tax Amount. If, at the end of the Tax Year,
the aggregate estimated quarterly distributions exceed the actual Tax
Amount for such Tax Year, future quarterly tax distributions shall
cease with respect to the affected partners until such excess amount
has been fully recapture or until the
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excess amount has been repaid by the affected partners to the
Borrower; and
(w) Such Distribution is made to Argosy/KGI in an
amount not in excess of $70,000 per month to reimburse Argosy/KGI for
certain overhead costs and expenses incurred by Argosy/KGI (in the
amount of $60,000 per month) and for certain accounting and
legal expenses incurred by Argosy/KGI (in the amount of $10,000 per
month) in connection with the acquisition, development and operation
of the Project;
(x) Such Distribution is made to KPI Realty, Inc. in
an amount not in excess of $400,000 in consideration for the services
rendered by the foregoing entity in raising equity for Borrower;
provided that such Distribution is paid out of Borrower's Equity and
not out of the proceeds of the Construction Loan or Loan;
(y) Such Distribution is made in an amount equal to or
less than 100% of Borrower's Cash Flow or 100% of Borrower's Net
Income, whichever is less, with respect to the period in which such
Distribution is to be made; provided however, that no Distribution
-------- -------
shall be permitted under this clause (y) until such time as the
Construction Loan and all other obligations under the Construction
Loan Documents have been paid in full and until such time as Lender
has no further obligation to make any advances of the Construction
Loan.
(z) Such Distribution is made in an amount necessary
to reimburse or repay a general partner of Borrower who has made
an advance or loan for the benefit of Borrower to pay Project costs
for items and in amounts consistent with Borrower's budget as approved
by Lender.
The foregoing provisions shall not prevent Borrower from repaying
principal and interest due on loans made by any Affiliated Party to Borrower
provided that (i) such loans constitute a bona fide indebtedness for borrowed
money incurred by Borrower in favor of such Affiliated Party; (ii) prior to the
incurring of such indebtedness, Lender and the Affiliated Party advancing such
loan proceeds shall have entered into a subordination and standstill agreement
in a form acceptable to Lender; (iii) both before and after taking into account
the incurring of such indebtedness, there does not exist an Event of Default or
any act or event which with notice, passage of time or both would constitute an
Event of Default; (iv) both before and after taking into account the making of
such principal and interest payments, there does not exist an Event of Default
or any act or event which with notice, passage of time or both
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would constitute an Event of Default and (v) such principal and interest payment
are in an amount no greater than that set forth in the cash flow projections
submitted by Borrower to Lender and approved by Lender.
8.21.2 In the event by virtue of the provisions of Paragraph 8.21.2
hereof, Borrower is prohibited from making a Distribution to Resort Marketing or
Resort Management, the proceeds of which would be used to pay amounts due and
owing to Resort Marketing and/or by Resort Marketing to Shell under the
marketing agreements described in Paragraph 6.3(i)(m) of the Construction Loan
Agreements or to pay actual out-of-pocket expenses incurred by Resort Marketing,
such as office rent, materials, and supplies, or used to pay amounts due and
owing by Resort Management to Embassy under the management agreement described
in Section 6.3(i)(p) of the Construction Loan Agreement, Borrower shall
nevertheless be permitted to pay directly to Resort Marketing and/or Shell and
Embassy amounts otherwise payable to Resort Marketing or by Resort Marketing and
Resort Management, respectively, under the foregoing marketing agreements and
management agreement.
8.22 Borrower hereby covenant and agrees as follows during the
Term hereof:
(a) As of the end of each fiscal quarter of Borrower,
Borrower shall maintain a net worth, calculated in accordance with GAAP of
at lease $8,000,000.00. The foregoing covenant shall be tested quarterly
beginning with the quarter year ending September 30, 1994.
(b) Marketing Expenses associated with the marketing and sale
of Time-share Interests shall not exceed 50% of Net Sales, determined
quarterly. Net Sales shall mean gross sales of Time-share Interests during
such quarterly period reduced only by cancellations thereof. Marketing
Expenses shall mean the aggregate of all expenses incurred in the sale and
marketing of Time-share Interest, including without limitation, all costs
and expenses for advertising, mailing, consumer premiums, referral and lead
generation. The foregoing covenant shall be tested quarterly, commencing
September 30, 1994, and March 31, 1995 shall cover the period from the
Closing Date through the end of the relevant quarter. Commencing with the
test for June 30, 1995, and thereafter throughout the Term hereof, the
foregoing covenant shall be tested quarterly, on a rolling twelve (12)
month basis. Although the foregoing covenant shall be tested commencing
September 30, 1994, an Event of Default shall not be deemed to exist by
virtue of Borrower's violation of the foregoing covenant unless such
violation occurs based upon the tests conducted as of March, 1995 or
thereafter.
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(c) Borrower's general and administrative expenses shall not
exceed 10% of Net Sales. The foregoing covenant shall be tested quarterly,
commencing September 30, 1994. Each of the tests conducted as of the end of
September 1994, December 1994 and March 31, 1995 shall cover the period
from the Closing Date through the end of the relevant quarter. Commencing
with the test for June 30, 1995, and thereafter throughout the Term hereof,
the foregoing covenant shall be tested quarterly, on a rolling twelve (12)
month basis. Although the foregoing covenant shall be tested commencing
September 30, 1994, an Event of Default shall not be deemed to exist by
virtue of Borrower's violation of the foregoing covenant unless such
violation occurs based upon the tests conducted as of March, 1995 or
thereafter.
(d) Borrower shall not permit Delinquencies as of the end of any
three (3) consecutive calendar months during the Term to exceed three
percent (3%) of the aggregate then unpaid principal balance of all Eligible
Instruments against which an Advance has been made.
(e) Upon request by Lender, Borrower shall provide from time to
time such information as Lender may reasonably require to determining
compliance with the foregoing requirements.
8.23 Borrower shall not, without Lender's prior written consent: (1)
construct additional condominium or time-share units within or adjacent to the
Project (other than to the initial 48 Units) until such time as at least 50% of
the Time-Share Interests applicable to the initial 48 Units are sold in bona-
fide transactions to parties who are not Affiliates of Borrower or any
Guarantor; or (ii) sell any time-share intervals from such additional
condominium or time-share units until at least 50% of the Time-Share Interests
applicable to the initial 48 Units are sold in bona-fide transactions to parties
who are not Affiliates of Borrower or any Guarantor.
8.24 If there occurs a material adverse change in the Project or in
the financial condition of Borrower or any Guarantor or in the Receivables
Collateral or any other security for the Performance of the Obligations, which
change is not enumerated in paragraph 8.22 or 9.1, Borrower will promptly
provide Lender with assurance that neither the prospect of Performance of the
Obligations nor Lender's security therefore is imperiled. If Borrower fails to
provide Lender with assurance satisfactory to Lender in its reasonable
discretion, such failure will be considered an Event of Default.
8.25 As additional consideration to Lender, Borrower shall pay to
Lender an incentive fee (the "Incentive Fee") equal to Ninety Seven Thousand
Nine Hundred Twenty Dollars ($97,920,000) with respect to the Time-Share
Interests sold by Borrower in the Project. Such incentive fee shall be paid in
installments of Five
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Hundred Dollars ($500.00) per Time-Share Interest sold, (all as more fully
provided in the Construction Mortgage), commencing with all sales occurring
after the date upon which the Construction Loan is due and payable in full, and
shall continue until the entire incentive fee is paid in full. Notwithstanding
anything contained herein to the contrary, the incentive fee is payable in full
by Borrower on the first day of the 24th month after the initial advance of the
proceeds of the Construction Loan.
8.26 The Borrower is in compliance in all material respects with all
applicable federal, state or local environmental, health and safety statutes and
regulations. The Borrower has not filed any notice under any federal or state
law indicating past or present treatment, storage or disposal of a hazardous
waste or reporting a spill or release of a hazardous or toxic waste, substance
or constituent, or other substances into the environment. None of the operations
of Borrower are the subject of federal or state litigation or proceedings
involving, or any investigation evaluating whether any remedial action involving
a material expenditure is needed to respond to, any improper treatment, storage,
recycling, disposal or release into the environment of any hazardous or toxic
substance, waste or constituent, or other substance. The Borrower does not have
any material contingent liability in connection with any improper treatment,
storage, recycling, disposal or release into the environment of any hazardous or
toxic substance, waste or constituent. None of the operations of Borrower are
subject to any judicial or administrative proceeding alleging the violation of
any federal, state or local environmental, health or safety statute or
regulation. The Borrower does not transport any hazardous wastes, substances or
constituents.
8.27 Provided that Borrower has not then borrowed the Maximum Loan
Amount, Borrower shall not, during the Borrowing Term; pledge, assign, or
hypothecate any Eligible Instruments other than to Lender, without Lender's
prior written consent and without the execution by Lender and any and all other
lenders providing financing secured by Instruments of an intercreditor agreement
in form and substance satisfactory to Lender. After the expiration of the
Borrowing Term, Lender shall have the right of first negotiation with Borrower
in the event Borrower wishes to accept or seek an offer from a third party to
loan moneys to Borrower in exchange for a pledge, assignment or hypothecation of
any Instruments. In the event Borrower desires to seek or obtain such an offer,
Borrower shall first give Lender written notice to that effect and give Lender
the opportunity, within ten (10) Business Days thereafter, to issue a financing
proposal to Borrower, before Borrower enters into a binding agreement with such
third party with respect to such financing. Borrower shall have no obligation to
accept any proposal made by Lender with respect to such financing; provided that
if Borrower obtains any such financing from a lender other than Lender, any and
all such lenders providing financing secured by Instruments shall have entered
into an intercreditor agreement with Lender in form and substance reasonably
satisfactory to Lender and such other lender. The first right of negotiation
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described in this paragraph shall be inapplicable to the extent, but only to the
extent, the agreement with such third party lender pertains only to the pledge,
assignment or hypothecation of Instruments (hereinafter "Foreign Instruments")
from Persons who are not residents of the United States, Canada or Puerto Rico.
In the event Borrower obtains financing from a lender in exchange for a pledge,
assignment or hypothecation of Foreign Instruments, Lender will, upon written
request of Borrower and provided that there does not then exist an Event of
Default or Incipient Default, release its lien on any Eligible Instruments
constituing Foreign Instruments and reassign to Borrower such Instruments and
the Purchase Mortgages securing the same, on the conditon that Borrower replaces
such Foreign Instrument with another Eligible Instrument having a value not less
than the portion of the Loan together with interest, costs and expenses, if any,
attributable to the Foreign Instrument being replaced.
8.28 All representations and warranties contained in this Agreement
are continuing and shall be deemed to be made and reaffirmed prior to the making
of each Advance under this Agreement.
8.29 The representations, warranties and covenants contained in this
Agreement shall be applicable to and binding upon Borrower during the Term
hereof, notwithstanding the fact that no Advances have yet been made hereunder.
ARTICLE IX
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DEFAULT
-------
9.1 The occurrence of any of the following events or conditions shall
constitute an Event of Default by Borrower under the Documents:
(a) Lender fails to receive from Borrower when due and payable
any amount which Borrower is obligated to pay on the Note or any other
payment due under the Documents; and such failure shall continue for seven
(7) days, except for the payment of the final installment due at the
Maturity Date, for which no grace period is allowed;
(b) any material 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) there is a default in the Performance of the Obligations set
forth in paragraphs 8.8, 8.9 or 8.13 hereof or Borrower knowingly violates
or suffers or permits the violation of any of the warranties or conditions
of the policies of insurance required under paragraph 8.9
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(d) there is 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 9.1) and
such default or violation continues unremedied (i) for a period of five
days after the giving of notice thereof to Borrower in the case of a
default or violation which can be cured by the payment of money alone or
(ii) in the case of any other default or violation for a period of (A)
thirty (30) days after the giving of notice to Borrower, or (B) (in the
event such default is not capable of being cured within such thirty (30)
day period) for a period not exceeding sixty (60) days after the giving of
such notice provided Borrower is diligently and in good faith pursuing such
cure;
(e) an "Event of Default," as defined elsewhere herein or in any
of the other Documents, occurs, or an act or event occurs under any of the
Documents, which is not cured within applicable notice or grace periods,
whether or not denominated as an Event of Default, which expressly entitles
Lender to accelerate any of the Obligations or exercise its other remedies
upon the occurrence of an event of Default hereunder;
(f) the declaration of a material default by Borrower under any
other agreement evidencing, guaranteeing, or securing borrowed money or a
receivables purchase financing resulting in an acceleration of such
indebtedness or repurchase obligations, which accelerated repayment or
repurchase obligations are in excess of $100,000 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 30 days thereafter and when aggregated with all
other judgment(s) or decree(s) that have remained unpaid and undischarged
or not stayed for such period is in excess of $100,000;
(h) any party holding a lien or security interest in the
Receivables Collateral, or any other security for the Performance of the
Obligations or a lien on any common areas or other amenities in the
Project commences foreclosure or similar sale thereof;
(i) (i) Borrower or any Guarantor becomes insolvent or unable to
pay its debts when due; generally fails to pay its debts when due; files a
petition in any bankruptcy, reorganization, winding-up or liquidation
proceeding or other proceeding analogous in purpose or effect relating to
such entity; applies for or consents to the appointment of a receiver,
trustee or other custodian for the bankruptcy, reorganization, winding-up
or liquidation of such
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entity; makes an assignment for the benefit of creditors; or admits in
writing that it is unable to pay its debts; (ii) any court order or
judgment is entered confirming the bankruptcy or insolvency of Borrower or
any Guarantor or approving any reorganization, winding-up or liquidation of
such entity or a substantial portion of its assets; (iii) there is
instituted against Borrower or any Guarantor any bankruptcy,
reorganization, winding-up or liquidation proceeding or other proceeding
analogous in purpose or effect and the same is not dismissed within 90 days
after the institution thereof; or (iv) a receiver, trustee or other
custodian is appointed for any part of the Receivables Collateral or the
Project or all or a substantial portion of the assets of Borrower or any
Guarantor;
(j) Performance by Borrower or any Guarantor of any material
obligation under any Document or Guarantee, as the case may be, is rendered
unenforceable in any material respect, or any Guarantor repudiates,
rescinds, limits or annuls its Guarantee;
(k) An Event of Default, as defined in the Construction Loan
Agreement, occurs, or an act or event occurs under any of the Construction
Loan Documents, whether or not denominated as an Event of Default, which
expressly entitles the Lender to exercise its remedies; or
(l) Borrower breaches or defaults under that Embassy Vacation
Resorts License Agreement dated as of April 21, 1994 between Borrower and
Embassy Vacation Resorts, a division of Embassy Suites, Inc.
9.2 At any time after an Event of Default has occurred and while it
is continuing, Lender shall have the right to 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;
(c) with respect to the Receivables Collateral, (i) institute
collection actions against all Persons obligated thereon and in default
thereunder; (ii) enter into modification agreements and make extension
agreements with respect to payments and other performances; (iii)release
Persons liable for the payment and performance thereof or the securities
for such payment and performance; and (iv) settle and compromise disputes
with respect to payments and performances claimed due thereon all without
notice
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to Borrower, without being called to account therefor by Borrower and
without relieving Borrower from Performance of the Obligations;
(d) in the event Lender has previously agreed that Borrower may
act as Servicing Agent, remove Borrower as Servicing Agent and substitute
as Servicing Agent such other Person as Lender shall designate; and
(e) proceed to protect and enforce its rights and remedies under
this Agreement, the Construction Loan Documents or any other 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.
The rights and powers granted pursuant to this paragraph are not
intended to limit the rights and powers granted elsewhere herein.
9.3 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 Receivables Collateral may be applied to payment of the
Obligations in the manner provided in paragraph 9.5 hereof.
9.4 (a) Pursuant to its rights under paragraph 9.2 hereof, following
an Event of Default, and subject to the terms and conditions hereof, Lender
may sell, assign and deliver the Receivables Collateral, or any part
thereof, at public or private sale, conducted in a commercially reasonable
manner by an officer, or agent of, or auctioneer or attorney for, Lender
at Lender's place of business or elsewhere, for cash, upon credit or future
delivery, and at such price or prices as Lender shall reasonably determine,
and Lender may be the purchaser of any or all of the Receivables Collateral
so sold. Lender may, in its reasonable discretion, at any such sale,
restrict the prospective bidders or purchasers as to number, nature of
business and investment intention, and, without limitation, may require
that the persons making such purchases represent and agree to the
satisfaction of Lender that they are purchasing the Receivables Collateral
for their account, for investment, and not with a view to the distribution
or resale of any thereof. Lender shall have no obligation to delay sale of
any Receivables Collateral for the period of time necessary to permit such
Receivables Collateral to be registered for public sale under the
Securities Act of 1933, as amended, and any applicable state securities
laws. Private sales made without registration shall not be deemed to have
been made in a commercially unreasonable manner by virtue of any terms less
favorable to the seller resulting from the private nature of such sales.
-39-
(b) Without prejudice to the right Lender to make such sale
within such shorter period as may be reasonable under the circumstances,
foreclosure sale of all or any part of the Receivables Collateral shall be
deemed held pursuant to reasonable notice if held:
(i) 45 days after notice is given, based upon default
consisting of insolvency, bankruptcy or other default of a nature
which cannot be corrected by Borrower, or default for which no grace
period is specified herein; or
(ii) 60 days after notice of any other act, circumstance or
event which, if uncorrected, after expiration of any applicable grace
period, shall constitute a default hereunder.
Where any notice to Borrower and grace period thereafter is required under
this Agreement, such grace period shall be deducted from the 60 day notice
of foreclosure sale specified in item (ii) above, so that the maximum
period between notice to Borrower of any act, circumstance or event which,
if uncorrected after elapse of any applicable grace period, would
constitute an Event of Default and the foreclosure sale of the Receivables
Collateral based upon such Event of Default shall in no event be required
to exceed 60 days.
(c) At any sale following an Event of Default, the Receivable
Collateral may be sold as an entirety or in partial interests. Lender shall
not be obligated to make any sale pursuant to any notice previously given.
In case of any sale of all or any part of the Receivables Collateral on
credit or for future delivery, the Receivables Collateral so sold may be
retained by Lender until the selling price is paid by the purchaser
thereof, but Lender shall not incur any liability in case of the failure of
such purchaser to take up and pay for the collateral so sold; and in case
of any such failure, such Receivables Collateral may again be sold under
and pursuant to and in compliance with the provisions hereof.
(d) In connection with sales made following an Event of Default,
Lender may, in the name and stead of Borrower or in its own name, make and
execute all conveyances, assignments and transfers of the Receivables
Collateral sold pursuant to this Agreement; and Lender is hereby appointed
Borrower's attorney-in-fact for this purpose. Nevertheless, Borrower will,
if so requested by Lender, ratify and confirm any sale or sales by
executing and delivering to Lender, or to such purchaser or purchasers, all
such instruments as may, in the judgment of Lender, be advisable for that
purpose.
-40-
(e) The receipt by Lender of the purchase money paid at any sale
made following an Event of Default shall be a sufficient discharge
therefor to any purchaser of the Receivables Collateral or any portion
thereof, and no such purchaser, after paying such purchase money and
receiving such receipt, shall bound to see to the application of such
purchase money or any part thereof or in any manner whatsoever be
answerable for any loss, misapplication or nonapplication of any such
purchase money, or any part thereof, or be bound to inquire as to the
authorization, necessity, expediency or regularity of any such sale.
(f) Each purchaser at any sale following an Event of Default
shall hold the Receivables Collateral so sold absolutely free from every
claim or right of Borrower, including, without limitation, any equity or
right of redemption of Borrower, which Borrower hereby specifically waives
to the extent Borrower may lawfully do so. Lender, its employees and agents
shall after such sale be fully discharged from any liability or
responsibility in any matter relating to the Receivables Collateral and
such other security that is sold and resulting from any action or inaction
on the part of such purchaser or any successor-in-interest of such
purchaser.
9.5 The proceeds of any sale of all or any part of the Receivables
Collateral shall be applied in the following order or priorities: first, to the
payment of all reasonable costs and expenses of such sale, including, without
limitation, reasonable compensation to Lender and its agents, attorneys' fees,
and all other reasonable 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 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 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.
9.6 Lender may, at its option, and without any obligation to do so,
pay, perform and discharge any and all amounts, costs, expenses and liabilities
herein agreed to be paid or performed by Borrower if Borrower fails to do so
within 7 days following the giving of written notice of such failure; and for
such purposes Lender may use the proceeds of the Receivables Collateral and is
hereby appointed Borrower's attorney-in-fact. All amounts expended by Lender in
so doing or in exercising its remedies hereunder following an Event of Default
shall become part of the Obligations secured hereby, shall be immediately due
and payable by Borrower to Lender upon demand therefor, and shall bear interest
at the Overdue Rate from the
-41-
dates of such expenditures until paid. Exercise by Lender of its option under
this paragraph will not cure any default of Borrower.
9.7 No remedy herein or in other 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 hereunder, under any other Document or now or hereafter existing at
law or in equity. Notwithstanding anything herein to the contrary, in any non-
judicial, public or private sale or sales under the Uniform Commercial Code or
in any judicial foreclosure and sale of the Receivables Collateral, the
Receivables Collateral may be sold in any manner whatsoever not prohibited by
law. No delay or omission to exercise any right or power shall be construed to
be a waiver of any default or acquiescence therein 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. Lender's acceptance of any performance due
hereunder which does not comply strictly with the terms hereof shall not be
deemed to be a waiver of any right of Lender to strict Performance by Borrower.
Acceptance of past due amounts or partial payments shall not constitute a waiver
of full and timely payment of the Obligations. No Event of Default, declaration
of the unpaid principal of the Loan to be immediately due and payable or
exercise of any other right to remedy upon default shall stay, waive, or
otherwise affect Lender's right to receive payments on and other proceeds of the
Receivables Collateral.
9.8 Borrower, for itself and for all who may claim through or under
it, hereby expressly waives and releases all right to have the Receivables
Collateral or any other security for the Performance of the Obligations, or any
part thereof, marshalled on any foreclosure, sale or other enforcement hereof.
9.9 While an Event of Default exists, Borrower shall, on the request
of Lender, assemble the Receivables Collateral not already in Lender's
possession and make it available to Lender at a time and place reasonably
convenient to Lender.
ARTICLE X
---------
POWER OF ATTORNEY
-----------------
For the purpose of enabling Lender to protect and preserve its
Security Interest in the Receivables Collateral and its rights and remedies
under this Agreement and the Documents, Borrower does hereby constitute and
appoint Lender, and its successors and assigns, to be Borrower's true and lawful
attorney-in-fact upon the occurrence of an Event of Default, and during the
continuance thereof, to perform any act, take any action, execute and sign any
document, statement, instrument or other writing, and to do and perform any and
all deeds and things in the name, place, and
-42-
stead of Borrower, which Lender in its discretion shall determine necessary or
required to protect and preserve its Security Interest in the Receivables
Collateral and its rights and remedies under this Agreement and the Documents,
or which is required or obligated to perform under the terms of this Agreement
or the Documents.
ARTICLE XI
----------
CONSTRUCTION AND GENERAL RULES
------------------------------
11.1 All moneys payable hereunder or under the Documents shall be paid
to Lender at its address set forth below.
11.2 This Agreement and the other Documents exclusively and completely
state the rights and obligations of Lender and Borrower with respect to the
Loan. No modification, termination, variation, discharge or abandonment hereof
and no waiver of any of the provisions or conditions shall be valid unless in
writing and signed by duly authorized representatives of Lender and Borrower or
the successor, transfers or assigns of either, subject, however, to the
limitations on assignment herein by Borrower. This Agreement supersedes any and
all prior agreements or understandings, written or oral, between Borrower and
Lender (other than in the other Documents) concerning this transaction.
11.3 The powers and agency hereby granted by Borrower are coupled with
an interest and are irrevocable and are granted as cumulative to the remedies
for collection of the indebtedness secured hereby provided by law.
11.4 This Agreement may be executed simultaneously in any number of
identical copies each of which shall constitute an original for all purposes.
11.5 Any notice required or permitted to be given hereunder shall be
in writing and shall be (i) personally delivered to the party being notified if
an individual or to an officer or general partner if a corporation or
partnership, or (ii) transmitted by postage prepaid, certified or registered
mail (return receipt requested) to such party at its address after its signature
page hereof or such other address as the party being notified may have otherwise
designated in a notice given as provided in this paragraph. Such notice shall be
deemed to be given and effective, unless actual receipt is expressly elsewhere
specified herein, upon the date of receipt or the date delivery is first
attempted and refused if transmitted by registered or certified mail, whichever
shall first occur. A copy of any notices given to Borrower shall also be given
to:
-00-
Xxx Xxxx XXX, Xxx.
Xxxxxxxxx, Xxxxxxx & Xxxxx
The Xxxxxxx Building, 16th Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
and
Xxxx X. Xxxxxxxxx, Esq.
Stroock & Stroock & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
11.6 All the covenants, promises, stipulations and agreements of
Borrower and all the rights and remedies of the Lender in this Agreement
contained shall bind Borrower, and, subject to the restrictions on merger,
consolidation and assignment herein contained, 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 herein in whole or in part.
Except as may be expressly provided herein, no person or other entity shall be
deemed a third party beneficiary of this Agreement.
11.7 Subject to the provisions of Article IX hereof, if any one or
more of the provisions contained in this Agreement shall be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
11.8 Time is of the essence in the Performance of the Obligations.
11.9 All headings are inserted for convenience only and shall not
affect any construction or interpretation of this Agreement. The provisions of
this Agreement shall apply to the parties according to the context hereof and
without regard to the number or gender of words and expressions used herein.
Unless otherwise indicated, all references herein to clauses and other
subdivisions refer to the corresponding paragraphs, clauses and other
subdivisions of this Agreement; the words "herein", "hereof", "hereto",
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular paragraph, clause or other subdivision hereof; 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.
11.10 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF ARIZONA.
-44-
BORROWER HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY BORROWER AND
ARISING DIRECTLY OR INDIRECTLY OUT OF THE DOCUMENTS SHALL BE LITIGATED IN THE
SUPERIOR COURT OF ARIZONA, MARICOPA COUNTY DIVISION, OR THE UNITED STATES
DISTRICT COURT OF ARIZONA OR, IF LENDER INITIATES SUCH ACTION, IN ADDITION TO
THE FOREGOING COURTS, ANY COURT IN WHICH LENDER SHALL INITIATE SUCH ACTION, TO
THE EXTENT SUCH COURT HAS JURISDICTION. BORROWER HEREBY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
BY LENDER IN ANY OF SUCH COURTS, AND HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS TO
WHICH NOTICES ARE TO BE SENT PURSUANT TO THIS AGREEMENT. BORROWER WAIVES ANY
CLAIM THAT PHOENIX, ARIZONA OR THE DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM
OR AN IMPROPER FORUM BASED ON LACK OF VENUE. SHOULD BORROWER, AFTER BEING SO
SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO
SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF,
BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGEMENT MAY BE ENTERED
BY LENDER AGAINST BORROWER AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT,
PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR BORROWER SET FORTH IN THIS
PARAGRAPH SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY LENDER OF ANY
JUDGEMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING BY LENDER OF ANY ACTION TO
ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND BORROWER HEREBY
WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION. LENDER AND
BORROWER ACKNOWLEDGES AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY
OF THE DOCUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY 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 IN A COURT
OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
11.11 It is the intent of the parties hereto to comply with the
Applicable Usury Law. Accordingly, notwithstanding any provisions to the
contrary in this Agreement or in any of the other Documents in no event shall
this Agreement or the
-45-
Documents require the payment or permit the collection of interest in excess of
the maximum contract rate permitted by the Applicable Usury Law. If (i) any such
excess of interest otherwise would be contracted for, charged or received from
Borrower or otherwise in connection with the Obligations or (ii) the maturity of
the Obligations is accelerated in whole or in part, or (iii) all or part of the
principal or interest of the Obligations shall be prepaid, so that under any of
such circumstances the amount of interest contracted for, charged or received in
connection with the Obligations would exceed the maximum contract rate permitted
by the Applicable Usury Law, then in any such event (A) the provisions of this
paragraph shall govern and control, (B) neither Borrower nor any other person or
entity now or hereafter liable for the payment hereof will be obligated to pay
the amount of such interest to the extent that it is in excess of the maximum
contract rate permitted by the Applicable Usury Law, (C) any such excess which
may have been collected shall be either applied as a credit against the then
unpaid principal amount of the Obligations of Borrower or refunded to Borrower,
at Lender's option, and (D) the effective rate of interest will be automatically
reduced to the maximum contract rate permitted by the Applicable Usury Law.
Without limiting the generality of the foregoing, to the extent permitted by the
Applicable Usury Law: (x) all calculations of the rate of interest which are
made for the purpose of determining whether such rate would exceed the maximum
contract rate permitted by the Applicable Usury Law shall be made by amortizing,
prorating, allocating and spreading during the period of the full stated term of
the Obligations, all interest at any time contracted for, charged or received
from Borrower or otherwise in connection with the Obligations; and (y) in the
event that the effective rate of interest on the Obligations should at any time
exceed the maximum contract rate permitted by the Applicable Usury Law, such
excess interest that would otherwise have been collected had there been no
ceiling imposed by the Applicable Usury Law shall be paid to Lender from time to
time, if and when the effective interest rate on the Obligations otherwise falls
below the maximum contract rate permitted by the Applicable Usury Law, to the
extent that interest paid to the date of calculation does not exceed the maximum
contract rate permitted by the Applicable Usury Law, until the entire amount of
interest which would have otherwise been collected had there been no ceiling
imposed by the Applicable Usury Law has been paid in full. Should the maximum
contract rate permitted by the Applicable Usury Law be increased at any time
hereafter because of a change in the law, then to the extent not prohibited by
the Applicable Usury Law, such increases shall apply to all the Obligations
regardless of when incurred; but, again to the extent not prohibited by the
Applicable Usury Law, should the maximum contract rate permitted by the
Applicable Usury Law be decreased because of a change in the law, such decreases
shall not apply to the Obligations regardless if resulting from an advance of
the Loan made after the effective date of such decrease.
-46-
ARTICLE XII
-----------
SPECIAL PROVISIONS
------------------
12.1 Lender covenants and agrees that, notwithstanding
anything to the contrary herein or in any other Document, during the Term hereof
it shall take no action to disturb Purchasers in their use and possession of
their Time-Share Interests or otherwise to impair the rights and privileges of
such Purchasers under their Time-Share Interests or the governing documents of
the Project so long as such Purchasers are fulfilling their obligations under
their respective Instruments.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by Persons duly authorized on the day and year first above
written.
"Lender"
GREYHOUND FINANCIAL
CORPORATION, a Delaware corporation
By (to be confirmed)
-------------------------------------
Sr. Vice President
[CORPORATE SEAL]
Address:
Dial Xxxxxxxxx Xxxxxx
Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Vice-President-Law
With a copy to:
Dial Xxxxxxxxx Xxxxxx
Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Vice President - Operations
Management
-00-
"Xxxxxxxx"
XXXXX XXXXX RESORT, LIMITED
PARTNERSHIP, a Georgia limited
partnership
By: Grand Beach Partners, L.P., a
California limited partnership
Title: General Partner
By: Argosy/KGI Grand Beach
Investment Partnership, a
California general partnership
Title: General Partner
By: KGI Grand Beach
Investments, Inc., a
California corporation
Title: Managing General
Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------
Name: XXXXXX X. XXXXXXXXX
Title: PRESIDENT
[CORPORATE SEAL]
Address:
c/o Argosy/KGI Grand Beach
Investment Partnership
000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
-48-
FIRST AMENDMENT TO LOAN
-----------------------
AND SECURITY AGREEMENT
----------------------
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT ("First
Amendment") is made and entered into as of the 5th day of July, 1995, by and
between GRAND BEACH RESORT, LIMITED PARTNERSHIP, a Georgia limited partnership
("Borrower") and FINOVA CAPITAL CORPORATION, a Delaware corporation, formerly
known as Greyhound Financial Corporation, ("Lender").
WITNESSETH:
WHEREAS, as of October 7, 1994, Borrower and Lender entered into that
certain Loan and Security Agreement (the "Original Agreement") pursuant to which
Lender agreed to make a loan to Borrower for the purposes set forth therein;
and
WHEREAS, Borrower and Lender have agreed to amend the Original
Agreement, pursuant to the terms and provisions of this First Amendment to
include, among other things, a working capital loan facility.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. Except as specifically set forth in and/or modified
-----------
by this First Amendment, all capitalized terms set forth herein shall have the
same meanings as set forth in the Original Agreement. The following capitalized
terms, however, shall have the meanings set forth below, notwithstanding any
contrary definitions contained in the Original Agreement.
"Advance" shall mean, collectively and individually, a
Receivables Advance and a Working Capital Advance.
"Availability Advance" shall mean an additional Receivables
Advance advanced by Lender to Borrower from time to time with respect to an
Eligible Instrument that then constitutes Receivables Collateral against
which a previous Receivables Advance has been made.
"Borrowing Base (Receivables Loan)" shall mean an amount equal to
the lesser of (i) 90% of the unpaid principal balance payable under the
Eligible Instruments of (ii) 90% of the then present value assigned to the
unmatured installments of principal and interest payable under the Eligible
Instruments discounted at Lender's Prevailing Discount Rate.
"Borrowing Base (Working Capital Loan)" shall mean an amount
equal to the sum of (A) the lesser of (i) 55% of the unpaid principal balance
payable under the Eligible Instruments against which a Working Capital Advance
will be made or (ii) 55% of the then present value assigned to the unmatured
installments of principal and interest payable under the Eligible Instruments
against which a Working Capital Advance will be made, discounted at Lender's
Prevailing Discount Rate, (B) 55% of any cash down payments and principal and
interest payments then made by the Purchaser under such Eligible Instruments at
the time of such Working Capital Advance; and (C) 55% of any cash sales of Units
then made at the time of such Working Capital Advance, provided that the
proceeds of the cash sales and such cash down payments and principal and
interest payments are held and shall continue to be held in Escrow by Escrow
Agent.
"Borrowing Term (Receivables Loan)" shall mean the period of time
during which Lender is committed to make Receivables Advances under the
Receivables Loan Agreement, which commitment shall terminate on July 14, 1997.
"Borrowing Term (Working Capital Loan)" shall mean the period of
time during which Lender is committed to make Working Capital Advances under the
Receivables Loan Agreement, which commitment shall terminate on July 14, 1997.
"Collateral Assignment" shall mean that certain Collateral
Assignment, Security Agreement and Account Agreement of even date with the First
Amendment pursuant to which Borrower collaterally assigns to Lender all of the
Borrower's interest in the Escrow and in the agreement pursuant to which the
Escrow is maintained as security for the payment and Performance of the
Obligations.
"Construction Loan Agreement" shall mean that certain
Construction Loan Agreement dated as of October 7, 1994, between Borrower and
Lender, as modified and amended pursuant to that First Amendment to Construction
Loan Agreement dated as of May 3, 1995 and as further modified and amended
pursuant to that Second Amendment to Construction Loan Agreement of even date
herewith, pursuant to which Lender agreed, subject to the terms and provisions
thereof, to make an $8,000,000 revolving construction loan, the proceeds of
which are to be used to construct the Project.
-2-
"Construction Mortgage" shall mean, collectively, that certain
Mortgage, Assignment of Rents and Proceeds and Security Agreement dated as
of July 26, 1994, delivered by Borrower pursuant to the Construction Loan
Agreement, as amended by that certain First Amendment to Mortgage,
Assignment of Rents and Proceeds and Security Agreement dated May 3, 1995
between Borrower and Lender and as further amended by that certain Second
Amnedment to Mortgage, Assignment of Rents and Proceeds and Security
Agreement dated of even date herewith between Borrower and Lender.
"Documents" shall mean this Agreement, the Note, the Working
Capital Note, the Construction Mortgage, the Environmental Certificate, the
Servicing Agreement, the Lockbox Agreement, the Services and Fees
Agreement, the Guarantee, the Assignments, the Subordination Agreement, the
Collateral Assignment, and each and every other document, instrument or
writing executed or delivered by Borrower to Lender in connection with the
Loan.
"Escrow" shall mean that certain account in the name of Escrow
Agent in which the cash down payments and principal and interest payments
that are used in calculating the Borrowing Base (Working Capital Loan) are
deposited, pursuant to an agreement acceptable to Lender.
"Escrow Agent" shall mean the person who is not an Affiliate of
Borrower, in whose name the Escrow is maintained, the identify of whom
shall be acceptable to Lender.
"GPSI" shall mean FINOVA Portfolio Services, Inc., an Arizona
corporation, its successors and assigns, formerly known as GFC Portfolio
Services, Inc.
"Loan" shall mean, collectively and individually, the Receivables
Loan and the Working Capital Loan.
"Maturity Date" shall mean that date which shall occur ten (10)
years after the expiration of the Borrowing Term (Receivables Loan).
"Maximum Loan Amount" shall mean the lesser of (i) Thirty-Five
Million Dollars ($35,000,000.00) or (ii) the amount remaining when Forty
Million Dollars ($40,000,000.00) is reduced by the principal amount then
outstanding under each of the Working capital Loan and the Construction
Loan.
-3-
"Maximum Working Capital Loan Amount" shall mean the lesser of
(i) Four Million Dollars ($4,000,000.00) or (ii) the amount remaining when
Forty Million Dollars ($40,000,000.00) is reduced by the principal amount
then outstanding under each of the Receivables Loan and the Construction
Loan.
"Note" shall mean the First Amended and Restated Receivables
Promissory Note of even date herewith, in the amount of the Receivables
Loan, to be made and delivered by Borrower to Lender pursuant hereto, as
amended, renewed or restated.
"Opening Prepayment Date" shall mean the date which occurs
twenty-four (24) months after the date on which the last Receivables
Advance is made under the terms of the Original Agreement as amended by the
First Amendment.
"Phase" shall mean any of Phase I, Phase II, Phase III, Phase IV
or Phase V.
"Phase I" shall mean the initial twenty-four Units and related
amenities constructed on the Project.
"Phase II" shall mean the twenty-four Units and related amenities
to be constructed on the Project following Phase I.
"Phase III" shall mean the twenty-four Units and related
amenities to be constructed on the Project following Phase II.
"Phase IV" shall mean the twenty-four Units and related amenities
to be constructed on the Project following Phase III.
"Phase V" shall mean the thirty Units and related amenities to be
constructed on the Project following Phase IV.
"Prevailing Discount Rate" shall mean Lender's prevailing
discount rate at the time each Advance is made, which shall be the Prime
Rate plus 2.0% but in no event less than 12.5%.
"Project" shall mean the time-share condominium project known as
Embassy Vacation Resort at Grand Beach, constructed and to be constructed
by Borrower on the Real Property comprised of one hundred twenty-six (126)
time-share Units and related amenities and improvements.
-4-
"Real Property" shall mean that parcel of real property located
in Orange County, Florida and all existing and future improvements located
thereon, more fully described on Exhibit "G" of the Original Agreement
and on Exhibits "A", "B", and "C" of this First Amendment.
------------ --- ---
"Receivables Advance" shall mean an Advance of the Receivables
Loan advanced by Lender to Borrower from time to time in accordance with
the terms and provisions of this Agreement. Receivables Advance shall
include an Availablity Advance.
"Receivables Loan" shall mean the revolving line of credit loan
extended by Lender to Borrower in accordance with the terms of this
Agreement in an outstanding principal amount not to exceed at any time the
Maximum Loan Amount.
"Receivables Loan Agreement" shall mean, collectively, the
Original Agreement and the First Amendment.
"Working Capital Advance" shall mean an Advance of the Working
Capital Loan advanced by Lender to Borrower from time to time in accordance
with the terms and provisions of this Agreement.
"Working Capital Loan" shall mean a revolving line of credit loan
extended by Lender to Borrower in accordance with the terms of this
Agreement in an outstanding principal amount not to exceed at any time the
Maximum Working Capital Loan Amount.
"Working Capital Note" shall mean the Promissory Note, in the
amount of the Working Capital Loan, to be made and delivered by Borrower to
Lender pursuant hereto, in a form acceptable to Lender, as amended, renewed
or restated.
2. Subject to the satisfaction of all of the conditions precedent
set forth in Section 7 hereof, the Original Agreement is hereby amended in the
following respects:
2.1 The provisions of Section 3.1 of the Original Agreement
shall be amended and restated in their entirety to read as follows:
3.1 Lender hereby agrees that the Receivables Loan
(including Availability Advances) will be disbursed to Borrower, from
time to time, in periodic Receivables Advances, but in no event after
the Borrowing Term (Receivables Loan) has expired, in amounts
-5-
determined by subtracting from the Borrowing Base (Receivables Loan)
the unpaid principal balance outstanding under the Receivables Loan at
the time of each Receivables Advance;
(i) Receivables Advances shall not be made more
frequently than twice per month, and each Receivables Advance
shall be in an amount of not less than One Hundred Thousand
Dollars ($100,000.00). Lender shall charge a fee of Five Hundred
Dollars ($500.00) for the second Receivables Advance made during
any month and shall be entitled to deduct such fee from the
Receivables Advance so made. The foregoing fee is to be paid to
Lender strictly in consideration for Lender's agreement to make a
second Receivables Advance during any particular calendar month
and shall not be applied or credited against any other
Obligations.
(ii) The Receivables Loan is a revolving line of
credit under the terms of which Borrower, during the Borrowing
Term (Receivables Loan), shall have the right to obtain
Receivables Advances, repay Receivables Advances, and obtain
additional Receivables Advances so long as no Event of Default
has occurred and is continuing and so long as all other
conditions precedent to the making of a Receivables Advance have
been satisfied.
(iii) No Receivables Advances will be made after the
Borrowing Term (Receivables Loan) has expired unless Lender, in
its sole discretion, shall agree in writing to make such
Receivables Advances.
(iv) Borrower shall use the proceeds of the
Receivables Loan for working capital purposes, to make
Distributions to Affiliates to the extent permitted under this
Agreement and under the Construction Loan Documents and to repay
the Construction Loan and the Working Capital Loan, in full. The
proceeds of the Receivables Loan shall be used to pay and satisfy
the then unpaid principal balance and all accrued interest under
the Working Capital Loan before any portion of the Receivables
Loan is used to make Distributions or is paid in satisfaction of
any portion of the Construction Loan. The foregoing
notwithstanding, upon the occurrence of any Event of Default, the
proceeds of the Receivables Loan may be applied by
-6-
Lender in satisfaction of the Obligations in such order and
manner as Lender shall determine.
(v) At no time during the term hereof shall the
unpaid principal balance of the Receivables Loan, together with
the unpaid principal balance of the Construction Loan and the
Working Capital Loan, exceed a total amount equal to Forty
Million Dollars ($40,000,000.00), and Lender shall have no
obligation to make any Receivables Advance if such Advance would
cause the foregoing limitation to be exceeded.
2.2 The provisions of Section 3.2 of the Original Agreement
shall be amended and restated in their entirety to read as follows:
3.2 Lender agrees that the Working Capital Loan will be
disbursed to Borrower, from time to time, in periodic Working Capital
Advances, but in no event after the Borrowing Term (Working Capital
Loan) has expired, in an amount determined by subtracting from the
Borrowing Base (Working Capital Loan) the unpaid principal balance of
the Working Capital Loan at the time of each Working Capital Advance;
provided that at no time shall the unpaid principal balance of the
Working Capital Loan exceed the Maximum Working Capital Loan Amount.
(i) Working Capital Advances shall be made no more
frequently than twice per month and each Working Capital Advance
shall be in an amount not less than One Hundred Thousand Dollars
($100,000.00). Lender shall charge a fee of Five Hundred Dollars
($500.00) for the second Working Capital Advance made during any
month and shall be entitled to deduct such fee from the Working
Capital Advance made during any month and shall be entitled to
deduct such fee from the Working Capital Advance so made. The
foregoing fee is to be paid to Lender strictly in consideration
for Lender's agreement to make a second Working Capital Advance
during any particular calendar month and shall not be applied or
credited against any other Obligations.
(ii) The Working Capital Loan is a revolving line of
credit under the terms of which Borrower, during the Borrowing
Term (Working Capital Loan), shall have the right to obtain
Working Capital Advances, repay Working Capital Advances, and
obtain additional Working Capital Advances so long as no Event of
Default has occurred and is continuing and so long as all other
conditions precedent to the making of a
-7-
Working Capital Advance have been satisfied. The foregoing
notwithstanding, Borrower shall have no right to obtain a Working
Capital Advance against Eligible Instruments arising from Phase
I. In addition, Borrower shall have no right to obtain a Working
Capital Advance against Eligible Instruments arising from Phase
III until all Working Capital Advances against Eligible
Instruments arising from Phase II have been paid in full
including all accrued interest thereon. At such time as Borrower
has received a Working Capital Advance against Eligible
Instruments arising from Phase III, Borrower shall have no
further right to obtain any Working Capital Advances against
Eligible Instruments arising from Phase II. Furthermore, Borrower
shall have no right to obtain a Working Capital Advance against
Eligible Instruments arising from Phase IV until all Working
Capital Advances made against Eligible Instruments arising from
each of Phase II and Phase III have been paid in full including
all accrued interest thereon. At such time as Borrower has
received the Working Capital Advance against Eligible Instruments
arising from Phase IV, Borrower shall have no right to obtain any
Working Capital Advances against Eligible Instruments arising
from Phase II or Phase III. In addition, Borrower shall have no
right to obtain Working Capital Advances against Eligible
Instruments arising from Phase V until all Working Capital
Advances made against Eligible Instruments arising from each of
Phase II, Phase III and Phase IV have been paid in full,
including all interest thereon. At such time as Borrower has
received a Working Capital Advance against Eligible Instruments
arising from Phase V, Borrower shall have no right to obtain any
further Working Capital Advances against Eligible Instruments
arising from Phase II, Phase III or Phase IV.
(iii) No Working Capital Advances will be made after the
Borrower Term (Working Capital Loan) has expired unless Lender,
in its sole discretion, shall agree to make such Working Capital
Advances.
(iv) Borrower shall use the proceeds of the Working
Capital Loan for working capital purposes.
(v) Any cash down payments and principal and interest
payments made by a Purchaser under a particular Instrument that
are used in calculating the Borrowing Base
-8-
(Working Capital Loan) shall be held in Escrow by the Escrow
Agent and shall not be released to Borrower unless a principal
payment under the Working Capital Loan is made in an amount equal
to the amount of the Working Capital Advance originally made
against such cash down payment and principal and interest
payment.
(vi) At no time during the term hereof shall the
unpaid principal balance of the Working Capital Loan, together
with the unpaid principal balance of the Construction Loan and
Receivables Loan, exceed a total amount equal to Forty Million
Dollars ($40,000,000.00), and Lender shall have no obligation to
make any Working Capital Advance if such Advance would cause the
foregoing limitation to be exceeded.
2.3 The last sentence of Section 4.1 of the Original Agreement
shall be amended and restated in its entirety to read as follows:
At such time as the Construction Loan and Incentive Fee have
been paid in full and all other obligations due and owing to Lender
under the Construction Loan Documents have been paid and satisfied in
full, and Lender has no further obligation to make any further
advances of the Construction Loan, and provided there does not then
exist an Event of Default or Incipient Default, Lender shall release
the Construction Mortgage, as more fully set forth in the Construction
Mortgage, even though the Receivables Loan and the Working Capital
Loan are then outstanding.
2.4 The provisions of Section 4.4 of the Original Agreement
shall be amended and restated in their entirety to read as follows:
4.4 In connection with a Receivables Advance but not a
Working Capital Advance, Borrower shall, at its expense, deliver to
Lender, at the time of delivery of the Assignment, a policy or
policies of title insurance insuring Lender's interest in the
Purchaser Mortgage which is the subject of the Assignment. Such policy
or policies shall be in the amount of the Receivables Advances made
against or, in the case of substitutions, a portion of the Receivables
Loan attributable to the Instruments secured by the insured Purchaser
Mortgages and shall be issued by a title insurer and be in form and
substance satisfactory to Lender in its sole discretion. The title
insurance policies must reflect that the Purchaser Mortgages
constitute valid liens against the real
-9-
property to which they pertain subject only to the Permitted
Encumbrances.
2.5 The provisions of Section 5.3(x) of the Original Agreement
shall be amended and restated in their entirety to read as follows:
With respect to a Receivables Advances, the items described
in Exhibit "E" and with respect to a Working Capital Advance, the
-----------
items described in the following paragraphs of Exhibit "E" hereto:
-----------
(a), (b) (unrecorded copies only), (e), (f), (g), (h), and (i);
2.6 The provisions of Section 5.15 of the Original Agreement
shall be amended and restated in their entirety to read as follows:
5.15 The proceeds of the Receivables Loan from a particular
Phase are to be used, in part, to pay and satisfy in full the Working
Capital Loan in the same Phase, the Construction Loan as respects such
Phase and all amounts then due and owing to Lender under the
Construction Loan Documents as respects such Phase. Therefore, Lender
shall have the right to disburse any Receivables Advance in a
particular Phase directly to Lender in payment or satisfaction of then
outstanding Working Capital Advances in the same Phase, and interest
thereon, and any amounts then due to Lender under the Construction
Loan Documents as respects such Phase. The foregoing notwithstanding,
upon and during the continuance of an Event of Default, Lender shall
have the right to disburse Receivables Advances against the
Obligations in such order and manner as Lender deems appropriate.
2.7 The Original Agreement shall be amended with the addition of
a Section 5.16 reading as follows:
5.16 Working Capital Advances shall be made only against the
Borrowing Base (Working Capital Loan); provided that with respect to
Working Capital Advances only, the eligibility criteria set forth in
the following subparagraphs of Exhibit "B" need not be satisfied as
-----------
a condition to the making of such Advance; (j), (k), (m) and (n)
to the extent that such rescission rights described in subparagraph
(n) pertain only to Borrower's obligations under subparagraph (k)
thereof.
2.8 The provisions of Section 7.1 of the Original Agreement
shall be amended and restated in their entirety to read as follows:
-10-
7.1 In connection with the Receivables Loan:
(i) In no event shall the aggregate principal
amount of the Receivables Loan outstanding at any time exceed the
Maximum Loan Amount and in the event for any reason the aggregate
principal amount of the Receivables Loan does exceed the Maximum
Loan Amount, then Borrower upon demand, shall immediately make a
principal payment to Lender in an amount equal to such excess
plus accrued and unpaid interest thereon.
(ii) If for any reason the aggregate principal
amount of the Receivables Loan outstanding as of the last
Business Day of any month shall exceed the then Borrowing Base
(Receivables Loan), Borrower, upon demand, shall immediately make
to Lender a principal payment in an amount equal to such excess
plus accrued and unpaid interest thereon.
(iii) The Receivables Loan shall be evidenced by
the Note and shall be repaid in immediately available funds
according to the terms thereof and such provisions of this
Agreement as are applicable.
2.9 The provisions of Section 7.2 of the Original Agreement
shall be amended and restated in their entirety to read as follows:
7.2 In connection with the Working Capital Loan:
(i) In no event shall the aggregate principal
amount of the Working Capital Loan outstanding at any time exceed
the Maximum Working Capital Loan Amount and in the event for any
reason the aggregate principal amount of the Working Capital Loan
does exceed the Maximum Working Capital Loan Amount, then
Borrower upon demand, shall immediately make a principal payment
to Lender in an amount equal to such excess plus accrued and
unpaid interest thereon.
(ii) If for any reason the aggregate principal
amount of the Working Capital Loan outstanding as of the last
Business Day of any month shall exceed the then Borrowing Base
(Working Capital Loan), Borrower, upon demand, shall immediately
make to Lender a principal payment in an amount equal to such
excess plus accrued and unpaid interest thereon.
-11-
(iii) The Working Capital Loan shall be evidenced by
the Working Capital Note and shall be repaid in immediately
available funds according to the terms thereof and such
provisions of this Agreement as are applicable.
2.10 The provisions of Section 7.3 of the Original Agreement
shall be amended and restated in their entirety to read as follows:
7.3 RESERVED.
--------
2.11 The provisions of Section 7.4 of the Original Agreement
shall be amended by amending and restating the introductory paragraph to
read as follows:
7.4 For purposes of determining when a prepayment may
occur, the elapsed time of the term of the Receivables Loan shall be
measured from the date on which the last Receivables Advance is made
under the Original Agreement amended by the First Amendment Borrower
is not entitled to prepay, in whole or in part, the Receivables Loan
until the Opening Prepayment Date. Thereafter, if (i) Borrower has
paid all sums due and payable to Lender in connection with the
Receivables Loan, Working Capital Loan and the Construction Loan, and
(ii) Borrower has given Lender at least 30 days prior written notice
of the prepayment and has paid to Lender at the time of prepayment a
prepayment premium equal to a percentage, as set forth below, of the
then principal balance of the Receivables Loan, 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 Note:
2.12 The provisions of Section 7.4 of the Original Agreement
shall be further amended to provide for the following premium for
prepayment in the event the Receivables Loan is prepaid at any time after
the sixth anniversary of the last Receivables Advance made under the
Original Agreement as amended by this First Amendment:
PERIOD PREMIUM
------ -------
After the Sixth Anniversary Date and 1%
through the Seventh Anniversary Date of
the last Receivables Advance
Thereafter 0%
-12-
There shall be no prepayment premium payable in connection with
the prepayment, in whole or in part, of the Working Capital Loan.
2.13 The provisions of Section 7.4 of the Original Agreement
shall be further amended by substituting the words "Receivables Advance"
for the word "Advance", in each place, where the word "Advance" appears in
that paragraph and by substituting the words "Receivables Loan" for the
word "Loan" in each place where the word "Loan" appears in that paragraph
other than when the word Loan is preceded by the word "Construction" or the
words "Working Capital."
2.14 The provisions of Section 7.7 of the Original Agreement
shall be amended and restated in their entirety to read as follows:
7.7 Whether or not the proceeds from the Receivables
Collateral shall be sufficient for that purpose, Borrower shall pay
when due all payments required to be made pursuant to the Note,
Working Capital Note and other Documents; and any and all amounts
payable by Borrower under the Note, Working Capital Note and other
Documents shall be paid without notice (except as otherwise expressly
provided therein), demand, counterclaim, set-off, deduction,
recoupment or defense, and without abatement, suspension, deferment,
diminution or proration by reason of any circumstance or occurrence
whatsoever, Borrower's Obligation to make such payments being absolute
and unconditional.
2.15 The following language shall be added to the end of Section
8.4(a) of the Original Agreement, as a part thereof:
The foregoing notwithstanding, Lender acknowledges that with
respect to Instruments against which a Working Capital Advance has
been made, Borrower shall not, at the time of such Advance, have
completed the improvements that the Borrower has represented will be
available to Purchasers.
2.16 RESERVED.
--------
2.17 The provisions of Section 8.21.1(w) (appearing on page 32 of
the Original Agreement) shall be amended and restated in their entirety to
read as follows:
Such Distribution is made to Argosy/KGI in an amount not in
excess of $75,000 per month to reimburse Argosy/KGI for certain
-13-
overhead costs and expenses incurred by Argosy/KGI (in the amount of
$65,000 per month) and for certain accounting and legal expenses
incurred by Argosy/KGI (in the amount of $10,000 per month) in
connection with the acquisition, development and operation of the
Project;
2.18 The provisions of Section 8.21.1(x) (appearing on page 32 of
the Original Agreement) shall be amended adding the following sentence to
the end of such Section:
Borrower hereby advises Lender that the Distribution
described in this Section has been made.
2.19 The provisions of Section 8.21.1(y) (appearing on page 32 of
the Original Agreement) shall be amended and restated in its entirety to
read as follows:
(y) Such Distribution is made in an amount equal to or less
than 100% of Borrower's Cash Flow or 100% of Borrower's Net Income,
whichever is less, with respect to the period in which such
Distribution is to be made; provided however, that no Distribution
-------- --------
shall be permitted under this clause (y) until such time as the
Working Capital Loan, Construction Loan and all other obligations
under the Construction Loan Documents have been paid in full and until
such time as Lender has no further obligation to make any advances of
the Working Capital Loan and Construction Loan.
2.20 The provisions of Paragraph 8.23 of the Original Agreement
shall be amended and restated in its entirety to read as follows:
8.23 Borrower shall not, without Lender's prior written
consent: (i) construct additional condominium or time-share units
within or adjacent to the Project (other than the 126 time-share units
in Phase I, Phase II, Phase III, Phase IV and Phase V) until such time
as at least 70% of the Time-Share Interests contained within each of
Phase I and Phase II and at least 50% in the aggregate of the Time-
Share Interests contained within each of Phase III Phase IV and Phase
V, have been sold, in bona fide transactions, to parties who are not
Affiliates of Borrower or Guarantor; or (ii) sell any time-share
intervals from such additional condominium or time-share units until
at least 70% of the Time-Share Interests contained within Phase I and
II and at least 70% in the aggregate of the Time-Share Interests
contained within each of
-14-
Phase III, Phase IV and Phase V, have been sold, in bona fide
transactions, to parties who are not Affiliates of Borrower or
Guarantor.
2.21 Section 11.5 of the Original Agreement shall be amended to
provide that all notices sent to Lender shall be sent to Lender at the
following address:
FINOVA Capital Corporation
0000 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Vice President - Group Counsel
With a copy to:
FINOVA Capital Corporation
0000 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Vice President - Operations Management
2.22 Exhibit B to the Original Agreement, constituting the
Eligibility Criteria, shall be amended by inserting the following language
in each of subparagraphs (c) and (f) thereof, immediately prior to the
existing text of each of such subparagraphs:
Subject to the provisions of subparagraphs (o) and (p)
below,...
2.23 Exhibit B to the Original Agreement, constituting
Eligibility Criteria shall be further amended by amending and restating in
full the provisions of subparagraph (d) thereof to read as follows:
(d) Subject to the provisions of subparagraphs (o) and (p)
below, the Instrument provides for consecutive monthly installments of
principal and interest in U.S. funds over a term not exceeding eighty-
four (84) months from the date of its execution (provided that if the
Instrument arises from a sale of a Time-Share Interest to a Purchaser
who is not a United States, Canadian or Puerto Rican resident, the
Instrument shall provide for consecutive monthly automatic debits
against a major United States credit card over a term not exceeding
sixty (60) months); provided, however, that Instruments whose
--------- --------
aggregate unpaid principal balance is not more than twenty-five
percent (25%) of the aggregate unpaid balance of all Eligible
Instruments against which a Receivables Advance has been made may
provide for consecutive
-15-
monthly installments of principal and interest in U.S. funds over a
term in excess of eighty-four (84) months but not exceeding one
hundred twenty (120) months from the date of its execution.
2.24 Exhibit B of the Original Agreement, constituting the
Eligibility Criteria, shall be further amended by adding a subparagraph (o)
thereof to read as follows:
(o) Notwithstanding the provisions of subparagraphs (c),
(d) and (f) above or subparagraph (p) below, the Borrower has received
from the Purchaser, notwithstanding such Purchaser's country of
residence, a minimum cash down payment of no less than thirty-three
percent (33%) of the total sales price, no part of which has been
advanced or loaned to such Purchaser by Borrower or any Guarantor,
directly or indirectly and the Instrument with respect to which such
Purchaser is the obligor is noninterest bearing and provides for
consecutive monthly installments of principal and interest in U.S.
funds over a term not exceeding twenty-four (24) months from the date
of its execution.
2.25 Exhibit B of the Original Agreement, constituting the
Eligibility Criteria, shall be further amended by adding a subparagraph (p)
thereof to read as follows:
(p) Notwithstanding the provisions of subparagraphs (c),
(d), (f) and (o) above, the Borrower has received from the Purchaser,
notwithstanding that such Purchaser's country of residence, a minimum
cash downpayment of no less than twenty percent (20%) of the total
sales price, no part of which has been advanced or loaned to such
Purchaser by Borrower or any Guarantor, directly or indirectly, and
the instrument provides for consecutive monthly installments of
principal and interest in U.S. funds over a term not exceeding forty-
two (42) months from the date of its execution, provided, however,
--------- --------
that the unpaid principal balance of Instruments meeting the
eligibility criteria set forth in this subparagraph (p) shall not
exceed $1,500,000 and any such Instruments whose unpaid balance causes
the foregoing limitation to be exceeded shall not be deemed Eligible
Instruments.
2.26 Following full execution of this First Amendment, the
provisions of that certain Letter Agreement between Borrower and Lender,
dated May 3, 1995, shall be of no further force or effect.
-16-
2.27 The provisions of Section 9.1(a) shall be amended and
restated in their entirety to read as follows:
(a) Lender fails to receive from Borrower when due and
payable any amount which Borrower is obligated to pay on the Note or
the Working Capital Note or any other payment due under the Documents;
and such failure shall continue for seven (7) days, except for the
payment of the final installment due under the Note at the Maturity
Date, for which no grace period is allowed;
2.28 The provisions of Section 9.2(b) of the Original Agreement
shall be amended in their entirety to read as follows:
(b) declare each or either of the Note and the Working
Capital 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;
3. DOCUMENT REFERENCE. All references to the "Loan Agreement" in
-------------------
the Documents and to "this Agreement", "herein", "hereof", "hereto", and
"hereunder" in the Original Agreement are hereby amended to refer to the
Original Agreement as amended by this First Amendment.
4. FEES AND EXPENSES. In addition to the fees and expenses that
-----------------
have been paid or are payable by Borrower pursuant to the Original Agreement,
Borrower shall pay to Lender (i) a loan fee (the "Working Capital Loan Fee") in
the amount of $40,000.00, which fee was earned by Lender in consideration of
Lender holding itself ready, willing and able to amend the Original Agreement
upon the terms and conditions set forth herein and (ii) a loan fee (the
"Receivables Loan Fee") in the amount of $200,000.00, which fee was earned by
Lender in consideration of Lender holding itself ready, willing and able to
amend the Original Agreement upon the terms and conditions set forth herein. The
payment of the Working Capital Loan Fee and the Receivables Loan Fee is in
addition to Borrower's obligation to pay a loan fee to Lender in consideration
for the Lender's commitment to modify and amend the Construction Loan Agreement
and in addition to all other fees and expenses required to be paid by Borrower
pursuant to the First Amendment to Construction Loan Agreement of even date
herewith. One-half of the Working Capital Loan Fee shall be due and payable on
the earlier of July 28, 1995 or concurrently with the making of the first
Working Capital Advance after the date of this First Amendment. The remaining
one-half of the Working Capital Loan Fee shall be due and payable on the earlier
of August 31, 1995 or concurrently with the making of the second Working Capital
Advance after the date of this First Amendment. The first Fifty Thousand Dollars
of
-17-
the Receivables Loan Fee shall be due and payable concurrently with the making
of the Receivables Advance which causes the unpaid principal balance of the
Receivables Loan to exceed Fifteen Million Dollars ($15,000,000) and may be
withheld from Advance so made. An additional Fifty Thousand Dollars ($50,000,00)
of the Receivables Loan Fee shall be due and payable concurrently with the
making of the Receivables Advance which causes the unpaid principal balance of
the Receivables Loan to exceed Twenty Million Dollars ($20,000,000.00) and may
be withheld from the Advance so made. An additional Fifty Thousand Dollars
($50,000.00) of the Receivables Loan Fee shall be due and payable concurrently
with the making of the Receivables Advance which causes the unpaid principal
balance of the Receivables Loan to exceed Twenty-Five Million Dollars
($25,000,000.00) and may be withheld from the Advance so made. The remaining
Fifty Thousand Dollars ($50,000.00) of the Receivables Loan Fee shall be due and
payable concurrently with the making of the Receivables Advance which causes the
unpaid principal balance of the Receivables Loan to exceed Thirty Million
Dollars ($30,000,000.00) and may be withheld from the Advance so made. The
foregoing notwithstanding, unless sooner paid, the entire Receivables Loan Fee
shall be due and payable on full on July 14, 1997. Furthermore, Borrower shall
--
pay, on demand, all costs and expenses arising from the preparation of this
First Amendment and the closing of the amendment to the Construction Loan
Documents, or otherwise incurred by Lender in connection with this First
Amendment, including, but not limited to, title insurance premiums, other title
company charges, recording fees, all charges for consumer credit reports, and
U.C.C., tax lien, judgment and litigation searches, Lender's attorneys' fees and
costs, appraisal fees, if any, survey costs, if any, inspection costs and fees,
both during construction or otherwise, escrow disbursement expenses, any revenue
and/or documentary stamps, intangible or recording taxes, out-of-pocket travel
expenses incurred by Lender or its agents and employees, brokerage commissions,
all fees and expenses of the Servicing Agent and Collection Agent in connection
with this First Amendment, and any other costs, expenses or charges that may be
imposed on or incurred by Lender as a result of this Amendment. Borrower shall
indemnify and hold Lender harmless from any and all liability for payment of any
brokerage fees. Lender shall have the right to withhold from any Advance made
hereunder, any costs, fees, expenses or reimbursements due and owing to Lender.
5. CONFIRMATION OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
----------------------------------------------------------
Borrower hereby reaffirms, as if made as of the date hereof, all of Borrower's
representations and warranties contained in the Original Agreement. Borrower
furthermore reaffirms the validity, enforceability and legality of the
Documents, and all provisions of all provisions of the Documents, as modified,
are hereby confirmed and ratified, provided that with respect to enforceability,
Borrower makes such reaffirmation only to the best of its knowledge. Without
limiting the generality of the foregoing, Borrower hereby reaffirms the validity
and enforceability of the Security Interest granted to Lender in the Receivables
Collateral and the Residual Collateral as
-18-
security for Borrower's payment and Performance of all Obligations, other than
those Obligations arising out of the Environmental Certificate with
Representations, Covenants and Warranties delivered in connection with the
Construction Loan Agreement. Borrower hereby acknowledges and agrees that the
definition of Obligations includes, without limitation, each and every
obligation, duty, covenant, undertaking and condition which Borrower is required
or has agreed to perform under the Documents and under the Construction Loan
Documents, and each and every obligation of Borrower now or hereafter owing to
Lender. In the event of a conflict or inconsistency between the provisions of
the Original Agreement and the provisions of this First Amendment, the
provisions of this First Amendment shall prevail. All terms, conditions and
provisions of the Original Agreement are continued in full force and effect and
shall remain unaffected and unchanged except as specifically amended or modified
hereby. Borrower acknowledges that as of the date hereof, it has (i) no defense,
counterclaim, offset, cross-complaint, claim or demand of any nature whatsoever
which can be asserted as a basis to seek affirmative relief or damages from
Lender or as a basis to reduce or eliminate all or any part of its liability to
repay the Loan and (ii) no other claim against Lender with respect to any aspect
of the transaction in respect to which the Loan was made.
6. GUARANTOR'S RATIFICATION. As a condition precedent to the
------------------------
effectiveness of this First Amendment, Borrower shall cause the Guarantor to
execute a Ratification and Confirmation of Partnership Guarantee Agreement and a
Ratification and Confirmation of Corporate Guarantee Agreement, as applicable,
in a form acceptable to Lender, thereby acknowledging the making of the
agreements contained herein.
7. CONDITIONS PRECEDENT. The amendments and modifications to the
--------------------
Original Agreement contained herein and Lender's obligations in this regard are
subject to the following express conditions precedent, all of which Borrower
shall satisfy on or before July 28, 1995:
7.1 The following shall be delivered to Lender all in a form,
manner and substances satisfactory to Lender:
(a) An original of this First Amendment fully executed by
the Borrower;
(b) An original of the First Amended Receivables Promissory
Note in a form acceptable to Lender, fully executed by Borrower,
(c) An original of the Working Capital Promissory Note in a
form acceptable to Lender, fully executed by Borrower;
-19-
(d) An original Second Amendment to Mortgage, Assignment of
Rent and Proceeds and Security Agreement in a form acceptable to
Lender, fully executed by Borrower (the "Second Mortgage
Modification");
(e) Ratification and Confirmation of Partnership Guarantee
Agreement and Ratification and Confirmation of Corporate Guarantee
Agreement, as applicable, in a form approved by Lender, fully executed
by Guarantor;
(f) An acknowledgment from each Guarantor acknowledging the
continued subordination in favor of Lender of any indebtedness owed to
them by Borrower;
(g) The Collateral Assignment, fully executed by Borrower,
together with such modifications to Lender's financing statements as
are necessary in that regard;
(h) An Acknowledgement and Agreement form the Escrow Agent
in a form acceptable to Lender pursuant to which the Escrow Agent
agrees to abide by the provisions of Section 3.2(v) of the Original
Agreement, added to the Original Agreement pursuant to this First
Amendment.
(i) All documents required to be executed and delivered to
Lender in connection with the amendment and modification of the
Construction Loan Agreement;
(j) Such resolutions and authorizations and such other
documents as Lender may require relating to the existence and good
standing of the Borrower and Guarantor, and the authority of any
person executing this First Amendment or any document on behalf of the
Borrower or Guarantor;
(k) A commitment from First American Title Company, the
issuer of Lender's ALTA extended coverage title insurance policy
insuring the lien of the Construction Mortgage (the "Title Policy"),
to issue an endorsement, in form satisfactory to Lender, to the Title
Policy, insuring that the Construction Mortgage, as modified pursuant
to the Second Mortgage Modification, continues to be a first lien upon
the real property described therein, subject only to those
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exceptions contained in such title policy and to such additional
exceptions as Lender may specifically approve in writing.
(l) Updated UCC, tax lien, litigation and judgement
searches for the following parties; (i) Borrower, (ii) Guarantor, and
(iii) Embassy Vacation Resort at Grand Beach.
(m) Evidence that Borrower has good and marketable title to
the collateral pledge to Lender, that Lender's liens and security
interest in such collateral have been duly perfected as first and
prior liens and security interests, and that there are no other
financing statements or liens filed against Borrower or on the
property of Borrower except those that are approved by Lender.
(n) Evidence that any fee due to any broker utilized by
Borrower in connection with the subject transaction have been paid,
together with evidence of the payment by Borrower of any other costs,
fees and expenses then payable in connection with the Construction
Loan and the Loan, including, without limitation, those fees, cost and
expenses described in Section 4 hereof.
(o) A satisfactory legal opinion from counsel to Borrower
and Guarantor as to such matters as Lender shall require.
(p) Internally prepared balance sheet, income statement and
statement of cash flow of the Borrower, certificate correct by the
Borrower, which shall be current to within sixty (60) days prior to
the making of the first Advance following the date of this First
Amendment.
(q) Evidence that Borrower has included Phase III, Phase
IV and Phase V within the Public Offering Statement delivered to
Purchasers.
7.2 No Event of Default shall exist and no event condition shall
exist which after notice or lapse of time, or both, would constitute
an Event of Default.
7.3 There shall have occurred no material adverse change in the
Real Property or in the business or financial condition of Borrower
and Guarantor since the date of the last financial statement submitted
to Lender.
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7.4 Neither Borrower nor Guarantor shall have failed to
disclose to Lender any material information and no material information
supplied by Borrower or Guarantor shall be found to be misleading,
misrepresented or materially incorrect.
7.5 All representations and warranties by Borrower shall
remain true and correct, in all material respects, and all agreements the
Borrower is to have performed or complied with at such time shall have been
performed or complied with.
8. COUNTERPARTS. This First Amendment may be executed in any number
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of separate counterparts, each of which when taken together shall constitute one
and the same instrument notwithstanding the fact that all parties have not
signed the same counterpart.
IN WITNESS WHEREOF, these presents are executed as of the date first
indicated above.
"BORROWER"
GRAND BEACH RESORT, LIMITED
PARTNERSHIP, a Georgia limited partnership
By:Grand Beach Partners, L.P., a California
limited partnership
Title: General Partner
By:Argosy/KGI Grand Beach Investment
Partnership, a California general
partnership
Title: General Partner
By:KGI Grand Beach Investments,
Inc., a California corporation
Title: Managing General Partner
By:/s/ X.X. Xxxxxx
---------------------------------
Name: XXXXX X. XXXXXX
Title: VICE PRESIDENT
[CORPORATE SEAL]
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"LENDER"
FINOVA CAPITAL CORPORATION, a
Delaware corporation
By:/s/ Xxxx Xxxxxx
------------------------------------------
Its: GROUP VICE PRESIDENT
----------------------------------------
[CORPORATE SEAL]
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