EXECUTION COPY
LOAN AGREEMENT
between
GOLF HOST RESORTS, INC.
"Borrower"
and
GOLF TRUST OF AMERICA, L.P.
"Lender"
TABLE OF CONTENTS
Page
R E C I T A L S. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . 1
1.2 Rules of Construction . . . . . . . . . . . . 19
ARTICLE II
THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1 Agreement to Lend and Borrow. . . . . . . . . 20
2.2 Evidence of Indebtedness. . . . . . . . . . . 21
2.3 Tranche I Loan Interest . . . . . . . . . . . 21
(a) Base Interest.. . . . . . . . . . . . . . 21
(b) Increase in Base Interest.. . . . . . . . 21
(c) Participating Interest. . . . . . . . . . 22
(d) Annual Reconciliation of
Participating Interest. . . . . . . . . . 22
(e) Record-keeping. . . . . . . . . . . . . . 23
2.4 Tranche II Loan Interest. . . . . . . . . . . 23
2.5 Additional Charges. . . . . . . . . . . . . . 23
2.6 Late Payment of Interest. . . . . . . . . . . 23
2.7 No Deductions . . . . . . . . . . . . . . . . 24
2.8 Payment of Principal. . . . . . . . . . . . . 24
2.9 Prepayment. . . . . . . . . . . . . . . . . . 24
2.10 Security. . . . . . . . . . . . . . . . . . . 25
2.11 Partial Release . . . . . . . . . . . . . . . 25
ARTICLE III
LOAN CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.1 Loan Documents. . . . . . . . . . . . . . . . 27
3.2 Borrower's Deliveries . . . . . . . . . . . . 27
3.3 Representations, Warranties and
Covenants . . . . . . . . . . . . . . . . . . 27
3.4 Title Insurance . . . . . . . . . . . . . . . 28
3.5 Title to Property . . . . . . . . . . . . . . 28
3.6 Condition of Property . . . . . . . . . . . . 28
3.7 Utilities . . . . . . . . . . . . . . . . . . 28
3.8 Liquor License. . . . . . . . . . . . . . . . 28
3.9 Partnership Agreement . . . . . . . . . . . . 28
3.10 Certification of Non-Foreign Status . . . . . 28
3.11 Legal Opinions. . . . . . . . . . . . . . . . 28
3.12 Satisfaction or Waiver of Conditions
Precedent to Merger Agreement.. . . . . . . . 28
ARTICLE IV
DISBURSEMENTS OF THE LOAN. . . . . . . . . . . . . . . . . . . 29
4.1 Disbursement on Closing Date . . . . . . . . 29
4.2 Requests for Subsequent Disbursements
of the Tranche I Loan . . . . . . . . . . . . 29
4.3 Requests for Subsequent Disbursements
of the Tranche II Loan. . . . . . . . . . . . 29
ARTICLE V
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 30
5.1 Organization and Power. . . . . . . . . . . . 30
5.2 Authorization and Execution . . . . . . . . . 30
5.3 Noncontravention. . . . . . . . . . . . . . . 30
5.4 No Special Taxes. . . . . . . . . . . . . . . 31
5.5 Compliance with Existing Laws . . . . . . . . 31
5.6 Real Property . . . . . . . . . . . . . . . . 32
5.7 Personal Property . . . . . . . . . . . . . . 32
5.8 Warranties and Guaranties . . . . . . . . . . 32
5.9 Insurance . . . . . . . . . . . . . . . . . . 32
5.10 Condemnation Proceedings; Roadways. . . . . . 33
5.11 Litigation. . . . . . . . . . . . . . . . . . 33
5.12 Labor Disputes and Agreements . . . . . . . . 33
5.13 Financial Information . . . . . . . . . . . . 34
5.14 Organizational Documents. . . . . . . . . . . 34
5.15 Land Use. . . . . . . . . . . . . . . . . . . 34
5.16 Hazardous Materials . . . . . . . . . . . . . 34
5.17 Utilities . . . . . . . . . . . . . . . . . . 34
5.18 Curb Cuts . . . . . . . . . . . . . . . . . . 35
5.19 Leased Property . . . . . . . . . . . . . . . 35
5.20 Defects and Hazards . . . . . . . . . . . . . 35
5.21 Principal Place of Business . . . . . . . . . 35
5.22 Single Purpose Entity . . . . . . . . . . . . 35
5.23 Removal of Collateral . . . . . . . . . . . . 35
5.24 Rights in Escrow Account. . . . . . . . . . . 35
5.25 Notices Under Merger Agreement. . . . . . . . 36
ARTICLE VI
COVENANTS OF BORROWER. . . . . . . . . . . . . . . . . . . . . 36
6.1 Obligation to Withhold Distributions. . . . . 36
6.2 Impositions . . . . . . . . . . . . . . . . . 37
(a) Payment of Impositions. . . . . . . . . . 37
(b) Information and Reporting.. . . . . . . . 37
(c) Refunds.. . . . . . . . . . . . . . . . . 37
(d) Utility Charges.. . . . . . . . . . . . . 37
(e) Assessment Districts. . . . . . . . . . . 37
6.3 Maintenance of the Collateral . . . . . . . . 38
(a) Maintenance of Property.. . . . . . . . . 38
(b) Borrower's Obligations. . . . . . . . . . 38
6.4 Use of Property . . . . . . . . . . . . . . . 38
(a) Use.. . . . . . . . . . . . . . . . . . . 38
(b) Specific Prohibited Uses. . . . . . . . . 38
(c) Membership Sales. . . . . . . . . . . . . 39
(d) Grant of Easements, Etc.. . . . . . . . . 39
(e) Borrower's Additional Covenants as
to Use. . . . . . . . . . . . . . . . . . 40
6.5 Hazardous Materials . . . . . . . . . . . . . 40
(a) Remediation.. . . . . . . . . . . . . . . 40
(b) Borrower's Indemnification of
Lender. . . . . . . . . . . . . . . . . . 40
(c) Survival of Indemnification
Obligations.. . . . . . . . . . . . . . . 41
(d) Environmental Violations at
Expiration or Termination of
Agreement.. . . . . . . . . . . . . . . . 41
(e) Environmental Statements. . . . . . . . . 41
6.6 Maintenance and Repair. . . . . . . . . . . . 42
(a) Borrower's Obligations. . . . . . . . . . 42
(b) Mechanic's Liens. . . . . . . . . . . . . 42
6.7 Borrower's Right to Modify Property . . . . . 43
(a) Borrower's Right to Construct. . . . . . 43
(b) Scope of Right. . . . . . . . . . . . . . 44
6.8 Lender's Right to Audit Calculation of
. . . . . . . . . . . . . . . . . . . . . . . 44
6.9 Annual Budget . . . . . . . . . . . . . . . . 45
6.10 Financial Statements. . . . . . . . . . . . . 47
6.11 Liens, Encroachments and Other Title
Matters . . . . . . . . . . . . . . . . . . . 48
(a) Liens.. . . . . . . . . . . . . . . . . . 48
(b) Encroachments and Other Title
Matters.. . . . . . . . . . . . . . . . . 48
(c) Survey. . . . . . . . . . . . . . . . . . 49
6.12 Permitted Contests. . . . . . . . . . . . . . 49
(a) Authorization.. . . . . . . . . . . . . . 49
(b) Indemnification of Lender.. . . . . . . . 50
6.13 Legal Requirements. . . . . . . . . . . . . . 51
6.14 Actions Affecting Property. . . . . . . . . . 51
6.15 Material Agreements . . . . . . . . . . . . . 51
6.16 Lender Inspections. . . . . . . . . . . . . . 51
6.17 Trade Names . . . . . . . . . . . . . . . . . 52
6.18 Officer's Certificates. . . . . . . . . . . . 52
6.19 Protective Advances . . . . . . . . . . . . . 53
6.20 Reporting of Original Issue Discount. . . . . 53
ARTICLE VII
INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.1 General Insurance Requirements. . . . . . . . 54
(a) All Risk. . . . . . . . . . . . . . . . . 54
(b) Liability.. . . . . . . . . . . . . . . . 54
(c) Flood.. . . . . . . . . . . . . . . . . . 54
(d) Worker's Compensation.. . . . . . . . . . 55
7.2 Other Insurance . . . . . . . . . . . . . . . 55
7.3 Replacement Cost. . . . . . . . . . . . . . . 55
7.4 Waiver of Subrogation . . . . . . . . . . . . 55
7.5 Form Satisfactory, Etc. . . . . . . . . . . . 55
7.6 Change in Limits. . . . . . . . . . . . . . . 56
7.7 Blanket Policy. . . . . . . . . . . . . . . . 56
7.8 Insurance Proceeds. . . . . . . . . . . . . . 56
7.9 Disbursement of Proceeds. . . . . . . . . . . 57
7.10 Excess Proceeds, Deficiency of
Proceeds. . . . . . . . . . . . . . . . . . . 58
7.11 Reconstruction Covered by Insurance . . . . . 58
(a) Destruction Rendering Property
Unsuitable for its Primary Use. . . . . . 58
(b) Destruction Not Rendering Property
Unsuitable for its Primary Use. . . . . . 58
7.12 Reconstruction Not Covered by
Insurance . . . . . . . . . . . . . . . . . . 59
7.13 No Abatement of Obligations . . . . . . . . . 59
7.14 Damage Near End of Term . . . . . . . . . . . 59
ARTICLE VIII
CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.1 Total Taking. . . . . . . . . . . . . . . . . 59
8.2 Partial Taking. . . . . . . . . . . . . . . . 60
8.3 Restoration . . . . . . . . . . . . . . . . . 60
8.4 Award-Distribution. . . . . . . . . . . . . . 60
8.5 Temporary Taking. . . . . . . . . . . . . . . 60
ARTICLE IX
CAPITAL REPLACEMENT FUND . . . . . . . . . . . . . . . . . . . 61
9.1 Capital Replacement Fund. . . . . . . . . . . 61
9.2 Capital Replacement Fund to Be Held
Pursuant to the Terms of the Westin
Management Agreement. . . . . . . . . . . . . 61
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . 62
10.1 Events of Default . . . . . . . . . . . . . . 62
10.2 Payment of Costs. . . . . . . . . . . . . . . 64
10.3 Appointment of Receiver . . . . . . . . . . . 64
10.4 Waiver. . . . . . . . . . . . . . . . . . . . 64
10.5 Prepayment Premium. . . . . . . . . . . . . . 64
10.6 Application of Funds. . . . . . . . . . . . . 64
ARTICLE XI
PURCHASE OPTION. . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE XII
SALE, LEASING AND ASSIGNMENT . . . . . . . . . . . . . . . . . 66
12.1 Prohibition Against . . . . . . . . . . . . . 66
12.2 Leases. . . . . . . . . . . . . . . . . . . . 66
(a) Permitted Leases. . . . . . . . . . . . . 66
(b) Terms of Leases.. . . . . . . . . . . . . 66
(c) Copies. . . . . . . . . . . . . . . . . . 67
(d) Assignment of Rights in Leases. . . . . . 67
(e) Licenses, Etc.. . . . . . . . . . . . . . 67
12.3 Transfers . . . . . . . . . . . . . . . . . . 67
12.4 REIT Limitations. . . . . . . . . . . . . . . 68
12.5 Management Agreement. . . . . . . . . . . . . 68
ARTICLE XIII
ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . . 68
13.1 Arbitration . . . . . . . . . . . . . . . . . 68
13.2 Arbitration Procedures. . . . . . . . . . . . 69
ARTICLE XIV
LENDER'S RIGHT TO PLEDGE THE NOTES; BORROWER'S AND LENDER'S
RIGHT OF FIRST OFFER . . . . . . . . . . . . . . . . . . . . . 69
14.1 Lender May Grant Liens. . . . . . . . . . . . 69
14.2 Borrower's Right of First Offer to
Purchase. . . . . . . . . . . . . . . . . . . 69
14.3 Lender's Right of First Offer to
Purchase. . . . . . . . . . . . . . . . . . . 70
ARTICLE XV
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 70
15.1 Borrower's Indemnification of Lender. . . . . 70
15.2 Lender's Indemnification of Borrower. . . . . 71
15.3 Mechanics of Indemnification. . . . . . . . . 72
15.4 Survival of Indemnification
Obligations; Available Insurance
Proceeds. . . . . . . . . . . . . . . . . . . 72
ARTICLE XVI
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 72
16.1 Notices . . . . . . . . . . . . . . . . . . . 72
16.2 Authority to File Notices . . . . . . . . . . 73
16.3 Inconsistencies with Loan Documents . . . . . 73
16.4 No Waiver; Remedies Cumulative. . . . . . . . 74
16.5 Lender Approval of Instruments and
Parties . . . . . . . . . . . . . . . . . . . 74
16.6 Lender Determination of Facts . . . . . . . . 74
16.7 Incorporation of Preamble, Recitals
and Exhibits. . . . . . . . . . . . . . . . . 74
16.8 Entire Agreement. . . . . . . . . . . . . . . 74
16.9 Further Assurances. . . . . . . . . . . . . . 75
16.10 Changes, Waivers, Discharge and
Modifications in Writing. . . . . . . . . . . 75
16.11 Choice of Law . . . . . . . . . . . . . . . . 75
16.12 Disbursements in Excess of Loan
Amount. . . . . . . . . . . . . . . . . . . . 75
16.13 Counterparts. . . . . . . . . . . . . . . . . 75
16.14 Time is of the Essence. . . . . . . . . . . . 75
16.15 Attorneys' Fees . . . . . . . . . . . . . . . 76
16.16 Severability. . . . . . . . . . . . . . . . . 76
16.17 Interest Rate Limitation. . . . . . . . . . . 76
16.18 Brokers . . . . . . . . . . . . . . . . . . . 76
16.19 Non-Recourse as to Lender and
Borrower. . . . . . . . . . . . . . . . . . . 77
16.20 No Relationship . . . . . . . . . . . . . . . 78
16.21 Successors and Assigns. . . . . . . . . . . . 78
16.22 Competition Between Lender and
Borrower. . . . . . . . . . . . . . . . . . . 78
16.23 Waiver of Jury Trial. . . . . . . . . . . . . 78
16.24 Right of First Offer to Lease
Additional Golf Courses Proximate to
the Innisbrook Property.. . . . . . . . . . . 79
EXHIBITS:
EXHIBIT A LEGAL DESCRIPTION OF INNISBROOK PREMISES
EXHIBIT B LEGAL DESCRIPTION OF TAMARRON PREMISES
EXHIBIT C CALCULATION OF NET OPERATING INCOME
EXHIBIT D CALCULATION OF GROSS REVENUE DURING
BASE YEAR
EXHIBIT E BUDGET
EXHIBIT F DESCRIPTION OF PROPOSED SANDPIPER AND HOTEL
COMMON AREA IMPROVEMENTS
EXHIBIT G DISBURSEMENT PROCEDURES
EXHIBIT H OPINION OF BORROWER'S COUNSEL
EXHIBIT I FORM OF PLEDGE AGREEMENT
EXHIBIT J FORM OF NOTE
EXHIBIT K FORM OF SECURITIES PURCHASE AGREEMENT
EXHIBIT L FORM OF SECURITY AGREEMENT
EXHIBIT M FORM OF DEED OF TRUST/MORTGAGE
EXHIBIT N FORM OF GUARANTY
EXHIBIT O FORM OF BORROWER'S CLOSING CERTIFICATE
EXHIBIT P FORM OF PARTNERSHIP AGREEMENT
EXHIBIT Q SPECIFIC CHANGE IN USE PROVISIONS FOR INNISBROOK
EXHIBIT R WARRANTY DISCLOSURE SCHEDULE
EXHIBIT S PERSONAL PROPERTY SCHEDULE
EXHIBIT T FAIR MARKET VALUE DETERMINATION PROCEDURES
EXHIBIT U ADDITIONAL COLLATERAL-INNISBROOK PROPERTY
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "AGREEMENT") is made as of
______________, 1997 by and between GOLF HOST RESORTS, INC., a
Colorado corporation ("BORROWER"), and GOLF TRUST OF AMERICA,
L.P., a Delaware limited partnership ("LENDER").
R E C I T A L S
A. On the Closing Date (as defined below), Borrower
will own (i) that certain real property located in the County of
Pinellas, State of Florida described on Exhibit A attached hereto
(the "INNISBROOK PREMISES"), together with certain Tangible
Personal Property (as defined below) and Intangible Personal
Property (as defined below) associated therewith (collectively
with the Innisbrook Premises, the "INNISBROOK PROPERTY") and (ii)
that certain real property located in the County of La Plata,
State of Colorado described on Exhibit B attached hereto (the
"TAMARRON PREMISES"), together with certain Tangible Personal
Property and Intangible Personal Property associated therewith
(collectively with the Tamarron Premises, the "TAMARRON
PROPERTY").
B. Borrower has applied to Lender for the loan
described herein for the purpose of (i) purchasing certain
Lender's Shares (as defined below) pursuant to the Securities
Purchase Agreement (as defined below) and (ii) acquisition of the
Innisbrook Property and the Tamarron Property.
C. Lender is willing to make the loan described
herein, upon the terms and subject to the conditions set forth
herein. Each of the parties acknowledges and agrees that the
transaction contemplated hereby creates a creditor/debtor
relationship and not that of a landlord/tenant or partnership.
NOW, THEREFORE, in consideration of the covenants and
conditions herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the following
terms have the respective meanings set forth below:
"AAA" has the meaning provided in Section 13.1.
"ADDITIONAL BASE INTEREST" means interest, payable
monthly, on each dollar of the Tranche I Loan in excess of Sixty-
Nine Million Nine Hundred Seventy-Five Thousand Dollars
($69,975,000), accruing at the rate of 9.75% per annum.
"ADDITIONAL CHARGES" has the meaning provided in
Section 2.5.
"ADDITIONAL COLLATERAL" means collectively:
(a) the Tamarron Property;
(b) Improvements located on the Tamarron Premises;
(c) those portions of the Innisbrook Property and
those Improvements located on the Innisbrook Premises that
are not directly associated with the operation of the golf
course located on the Innisbrook Premises, as more
particularly shown on Exhibit U attached hereto;
(d) any rights of Golf Hosts, Inc., a Florida
corporation (the parent of Borrower) ("GOLF HOSTS") in and
to any amounts held in the escrow account established
pursuant to the Escrow Agreement (as defined in the Merger
Agreement); and
(e) the Lender's Shares, exclusive of the Pledged
Lender's Shares (and provided such shares shall not be
pledged to Lender and do not constitute security for
Borrower's obligations hereunder or otherwise under this
Agreement or any of the other Loan Documents).
"ADDITIONAL INTEREST AMOUNT" means an amount of
additional interest lent to Borrower upon the date of the
Transfer Triggering Event, calculated as Seventeen Million Four
Hundred Two Thousand Dollars ($17,402,000) on the scheduled
Maturity Date, discounted to present value using a discount rate
of 11.50%.
"ADJUSTED NET OPERATING INCOME" has the meaning set
forth in Exhibit C of this Agreement.
"ADVISORY ASSOCIATION" means that certain association
of lessees operating golf courses under a lease with Lender or
any Affiliate of Lender.
"AFFILIATE" means, as applied to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with, that Person.
"ANNUAL BUDGET" has the meaning provided in Section
6.9.
"ASSIGNEE" means any entity to which Lender assigns all
or any part of the Loans or the Notes.
"ASSIGNMENT OF CONTRACTS AND PERMITS" means a first
priority assignment of, and a first priority security interest
in, the Innisbrook Agreements and the Tamarron Agreements,
executed by Borrower in favor of Lender, together with all
necessary third party consents to such assignment and such other
parties as Lender may require, all in form and substance
satisfactory to Lender.
"AUTHORIZATIONS" means all material licenses, permits
and approvals required by any governmental or quasi-governmental
agency, body or officer for the ownership, operation and use of
the Property or any part thereof.
"AWARD" means all compensation, sums or anything of
value awarded, paid or received on a total or partial
Condemnation.
"BANKRUPTCY EVENT OF DEFAULT" means any Event of
Default described in Section 10.1(c), (d) or (e).
"BASE INTEREST" means, from time to time, (a) the
Initial Base Interest, plus (b) the Additional Base Interest,
plus (c) the Tranche II Interest (if applicable), in each case as
increased from time to time pursuant to the terms of this
Agreement.
"BASE INTEREST ESCALATOR" has the meaning provided in
Section 2.3(b).
"BASE YEAR" means the calendar year 1996. A quarter-
by-quarter calculation of Gross Revenue in the Base Year is
attached hereto as Exhibit D.
"BORROWER" means Golf Host Resorts, Inc. and any
successor thereto, or assignee thereof, as permitted by the terms
of this Agreement.
"BORROWER'S COUNSEL" means Xxxxx, Xxxxx & Xxxxx.
"BORROWER'S ORGANIZATIONAL DOCUMENTS" means the
partnership agreement, articles of incorporation or operating
agreement creating Borrower, all other organizational documents
of Borrower, and any and all amendments, supplements and
modifications thereto.
"BUSINESS DAY" means a day other than Saturday, Sunday
or any day on which banking institutions in the City of New York,
New York are authorized or required by law or other governmental
action to be closed.
"CAPITAL BUDGET" has the meaning provided in Section
6.9.
"CAPITAL EXPENDITURES" means expenditures that are
properly capitalized under GAAP; provided that Capital
Expenditures shall exclude the Tranche I Capital Expenditures .
"CAPITAL REPLACEMENT FUND" means the amount of the
Capital Replacement Reserve, together with interest thereon as
provided in Section 9.1, less amounts withdrawn from the Capital
Replacement Fund as provided in Section 9.1.
"CAPITAL REPLACEMENT RESERVE" means an amount equal to
$1,076,850 for Fiscal Year 1997 (pro rated from the Closing
Date), $2,000,000 for Fiscal Year 1998 and for each Fiscal Year
thereafter such amount increased by 3% per annum, compounded
annually, through 2001 and 4% per annum thereafter, or such
lesser amount as may be mutually agreed to by Borrower and
Lender. Such amount shall be deposited by Borrower quarterly as
part of the Capital Replacement Fund, as provided in Section 9.1
hereof.
"CERTIFICATION OF NON-FOREIGN STATUS" means a
representation and warranty contained in the Deed of Trust or in
a separate affidavit, signed under penalty of perjury by an
authorized representative of Borrower stating (a) that Borrower
is not a "foreign corporation", "foreign partnership", "foreign
trust", or "foreign estate", as those terms are defined in the
Code and the regulations promulgated thereunder, (b) that
Borrower is duly qualified to do business in the States of
Florida and Colorado, (c) Borrower's U.S. employer identification
number, and (d) the address of Borrower's principal place of
business. Such affidavit shall be consistent with the
requirements of the regulations promulgated under Section 1445 of
the Code, as amended, and shall otherwise be in form and
substance acceptable to Lender.
"CHANGE OF CONTROL" means:
(a) the issuance and/or sale by Borrower or the sale
by any stockholder or partner of Borrower of a Controlling
interest in Borrower to a Person other than to a Person that
is an Affiliate of Borrower, which shall include spouses and
lineal descendants of any stockholder of Borrower as well as
any trusts created for estate planning purposes where such
stockholder and/or spouses and lineal descendants are
beneficiaries;
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Borrower (whether by
operation of law or otherwise), other than to a Person that
is an Affiliate of Borrower;
(c) any other transaction, or series of transactions,
which results in the shareholders or partners who control
Borrower as of the date hereof no longer having Control of
Borrower; or
(d) any transaction pursuant to which Borrower is
merged with or consolidated into another entity (other than
an entity owned and Controlled by an Affiliate of Borrower),
and Borrower is not the surviving entity.
Notwithstanding the foregoing, a Change of Control
shall not be deemed to have occurred for purposes of this
Agreement if the shareholders or partners who Control Borrower as
of the date hereof remain in Control of Borrower through an
agreement or equity interest.
"CLOSING DATE" or "CLOSING" means the date upon which
all of the conditions set forth in Article III are satisfied and
the proceeds of the Tranche I Loan are disbursed to Borrower,
which date shall in no event be later than the Termination Date.
"CODE" means the Internal Revenue Code of 1986, as the
same may be amended or supplemented, and the rules and
regulations promulgated thereunder.
"COLLATERAL" has the meaning given such term in the
Security Agreement.
"COMPANY" means GTA, Inc. and any subsidiaries thereof,
including GTA LP and GTA GP.
"CONDEMNATION" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by
a Condemnor, and (b) a voluntary sale or transfer by Lender to
any Condemnor, either under threat of condemnation or while legal
proceedings for condemnation are pending.
"CONDEMNOR" means any public or quasi-public authority,
or private corporation or individual, having the power of
condemnation.
"CONDOMINIUMS" means the residential condominiums
located on the Innisbrook Property.
"CONTROL" means (including, with correlative meanings,
the terms "Controlling" and "Controlled by"), as applied to any
Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities,
by contract or otherwise.
"CONVERSION DATE" means the date Borrower elects, in
its sole discretion, to receive additional Lender's Shares,
purchased with the Tranche II Loan, in accordance with the rights
of Borrower provided in the Securities Purchase Agreement.
"CONVERSION DATE CAPITALIZATION RATE" has the meaning
given such term in the Securities Purchase Agreement.
"CPI" means the United States Consumer Price Index, All
Urban Consumers, U.S. City Average, All Items (1982-84=100).
"DATE OF TAKING" means the date the Condemnor has the
right to possession of the property being condemned.
"DEBT SERVICE" means all Interest and principal payable
by Borrower to Lender pursuant to the terms of this Agreement.
"DEED OF TRUST" means, collectively, one or more deeds
of trust or mortgages, with assignments of rents, fixture filings
and memorandums of option to purchase, in substantially the form
attached hereto as Exhibit M, executed by Borrower, as trustor or
mortgagor, for the benefit of Lender as beneficiary or mortgagee,
creating a first priority lien, subject only to Permitted
Exceptions, on the Innisbrook Premises and the Tamarron Premises
and all buildings, fixtures and improvements now or hereafter
owned or acquired by Borrower and situated thereon, and all
rights and easements appurtenant thereto, in the amount of the
Loan Amount.
"DRAW REQUEST DOCUMENTS" means the documents listed in
clauses (a) through (g), inclusive, of Exhibit G attached hereto.
"EMPLOYMENT AGREEMENTS" shall mean all employment
agreements, written or oral, between Borrower and the persons
employed with respect to the Property in effect as of the date
hereof.
"ENVIRONMENTAL LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.;
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq.; the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Section 1801, et seq.; the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. 99-499 and 99-563; the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
Section 651, et seq.; the Clean Air Act, as amended, 42 U.S.C.
Section 7401, et seq.; the Safe Drinking Water Act, as amended,
42 U.S.C. Section 201, et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1251, et seq.; and all
federal, state and local environmental health and safety
statutes, ordinance, codes, rules, regulations, orders and
decrees regulating, relating to or imposing liability or
standards concerning or in connection with Hazardous Materials.
"EVENT OF DEFAULT" means the occurrence of any of the
events listed in Section 10.1 and the expiration of any
applicable cure period provided therein.
"FAIR MARKET VALUE" means the market value of the
applicable Property on the date of determination, as established
pursuant to the procedures identified on Exhibit T.
"FINANCING STATEMENT" means a UCC-1 financing statement
executed by Borrower in favor of Lender, perfecting Lender's
security interest in the Collateral, in form and substance
satisfactory to Lender.
"FISCAL QUARTER" means the three-month periods (or
applicable portions thereof) in any Fiscal Year from January 1
through March 31, April 1 through June 30, July 1 through
September 30 and October 1 through December 31.
"FISCAL YEAR" means the twelve (12) month period from
January 1 to December 31 of each year; provided that for purposes
of the Term and the Pledge Agreement, the first Fiscal Year shall
be deemed to include the period from the Closing Date to December
31, 1997.
"FIXTURES" means all permanently affixed equipment,
machinery, fixtures, and other items of real and/or personal
property, including all components thereof, now or hereafter
located in, on or used in connection with and permanently affixed
to or incorporated into the Property, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems
and apparatus, sprinkler systems and fire and theft protection
equipment, all of which, to the greatest extent permitted by law,
are hereby deemed by the parties hereto to constitute real
estate, together with all replacements, modifications,
alterations and additions thereto.
"FULL REPLACEMENT COST" means the actual replacement
cost from time to time of the improvement being insured,
including the increased cost of a construction endorsement, less
exclusions provided in the fire insurance policy.
"GAAP" means generally accepted accounting principles,
consistently applied.
"GOLF HOSTS GUARANTY" means the payment and performance
guaranty to be executed at Closing by Golf Hosts, Inc., a Florida
corporation, as guarantor.
"GROSS REVENUE" means all revenues accrued by Borrower
(whether by Borrower or any subtenants, assignees,
concessionaires or licensees) from or by reason of the operation
of the operations at the Innisbrook Property calculated in
accordance with GAAP (but excluding reasonable reserves for
refunds, allowances and bad debts applicable to such operations),
including (i) revenues received from the operation of the hotel
at the Innisbrook Property excluding payments made by Borrower
pursuant to the Master Lease, (ii) revenues from membership
initiation fees (to the extent described in Exhibit E attached
hereto), (iii) periodic membership dues, (iv) greens fees, (v)
fees to reserve a tee time, (vi) guest fees, (vii) golf cart
rentals, (viii) parking lot fees, (ix) locker rentals, (x) fees
for golf club storage, (xi) fees for the use of swim, tennis or
other facilities, (xii) charges for range balls, range fees or
other fees for golf practice facilities, (xiii) fees or other
charges paid for golf or tennis lessons (except where retained by
or paid to a USTA or PGA professional in accordance with
historical practice at the Innisbrook Property), (xiv) fees or
other charges for fitness centers, (xv) forfeited deposits with
respect to any membership application, (xvi) transfer fees
imposed on any member in connection with the transfer of any
membership interest, (xvii) fees or other charges paid to
Borrower by sponsors of golf tournaments at the Innisbrook
Property, (xviii) advertising or placement fees paid by vendors
in exchange for exclusive use or name rights at the Innisbrook
Property, (xvix) fees received in connection with any golf
package sponsored by any hotel group, condominium group, golf
association, travel agency, tourist or travel association or
similar payments, (xx) the operation of snack bars, restaurants,
bars, catering functions, and banquet operations, (xxi) sale of
merchandise and inventory on the Innisbrook Property, and (xxii)
photography services
provided, however, that Gross Revenue shall not include:
(a) The amount of all taxes, assessments,
Impositions and other governmental charges and assessments
of every kind and nature, including, without limitation,
city, county, state or federal taxes, including all sales,
admissions, usage, or excise tax on the items included in
Gross Revenue, which is both added to or incorporated in the
selling price and paid to the taxing authority by Borrower;
(b) Revenues or proceeds from sales or trade-ins
of machinery, vehicles, trade fixtures or personal property
owned by Borrower used in connection with Borrower's
operation of the Innisbrook Property;
(c) Interest or other income derived from the
investment of surplus funds or reserves;
(d) Any amounts recovered in any litigation
against third parties except for amounts awarded to
compensate for lost revenues otherwise includable in Gross
Revenue;
(e) Any condemnation or taking proceeds, whether
or not such proceeds are characterized as compensation for
lost rent;
(f) Insurance proceeds, unless (and except to the
extent that) such proceeds are characterized as business
interruption and/or loss of "rental value" insurance
proceeds (except for such proceeds attributable to a Lease
if (and for so long as) the tenant thereunder has the right
to terminate such Lease as a result of the casualty in
question);
(g) Any proceeds resulting from the sale,
exchange, transfer, financing or refinancing of all or any
part of the Real Property, Tangible Personal Property or
Intangible Personal Property;
(h) Any capital or equity contributions or other
infusions of capital or equity to the Borrower or the sale
of any Property, Collateral or Lender's Shares;
(i) Any proceeds of any other indebtedness of the
Borrower;
(j) Forfeited security deposits and other
security deposits received or surrender or termination
payment made or other amounts received from tenants or
guests to compensate for damage to or loss of all or
portions of the Real Property or Tangible Personal Property;
and
(k) Gratuities to employees if separately
itemized on the customer's bills or checks.
"GTA GP" means GTA GP, Inc. and any successor thereto.
"GTA, INC." means Golf Trust of America, Inc., a
Maryland corporation, an Affiliate of Lender.
"GTA LP" means GTA LP, Inc. and any successor thereto.
"GUARANTOR" means Westin Hotel Company.
"HAZARDOUS MATERIAL" means any substance, material,
waste, gas or particulate matter which is regulated by any local,
state or federal governmental authority, including but not
limited to any material or substance which is (i) defined as a
"hazardous waste", "hazardous material", or "restricted hazardous
waste" or words of similar import under any provision of any
Environmental Law; (ii) petroleum or petroleum products; (iii)
asbestos; (iv) polychlorinated biphenyl; (v) radioactive
material; (vi) radon gas; (vii) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33
U.S.C. Section 1251, et seq. (42 U.S.C. Section 1317); (viii)
defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq. (42 U.S.C. Section 6903); or (ix) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq. (42 U.S.C. Section 9601).
"HILTON MANAGEMENT AGREEMENT - INNISBROOK" means the
management agreement dated as of March 25, 1993 by and between
Hilton Hotels Corporation and Borrower, whereby Hilton Hotels
Corporation manages the Innisbrook Property.
"HILTON MANAGEMENT AGREEMENT - TAMARRON" means the
management agreement dated as of November 20, 1995 by and between
Hilton Hotels Corporation and Borrower, whereby Hilton Hotels
Corporation manages the Tamarron Property.
"IMPARTIAL APPRAISER" means the casualty insurance
company which is then carrying the largest amount of casualty
insurance carried on the Property.
"IMPOSITIONS" means collectively:
(a) all taxes (including all real and personal
property, ad valorem, sales and use, single business, gross
receipts, transaction privilege, rent or similar taxes);
(b) assessments and levies (including all
assessments for public improvements or benefits, whether or
not commenced or completed prior to the date hereof and
whether or not to be completed within the Term);
(c) excises;
(d) fees (including license, permit, inspection,
authorization and similar fees); and
(e) all other governmental charges;
in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in
respect of the Property and/or the Interest or Additional Charges
(including all interest and penalties thereon due to any failure
in payment by Borrower), which at any time during or in respect
of the Term hereof may be assessed or imposed on or in respect of
or be a lien upon (i) Lender or Lender's interest in the
Property; (ii) the Property or any part thereof or any therefrom
or any estate, right, title or interest therein; or (iii) any
operation, use or possession of, or sales from or activity
conducted on or in connection with the Property or the leasing or
use of the Property or any part thereof; provided, however, that
Impositions shall not include:
(aa) any taxes based on net income (whether
denominated as an income, franchise, capital stock or other
tax) imposed on Lender or any other Person other than
Borrower;
(bb) any transfer or net revenue tax of Lender or
any other Person other than Borrower; or
(cc) any tax imposed with respect to any principal
or interest on any indebtedness on the Property.
"IMPROVEMENTS" means the golf course, driving range,
putting greens, clubhouse facilities, snack bar, restaurant, pro
shop, buildings, structures, parking lots, improvements, Fixtures
and other items of real estate located on (a) the Innisbrook
Premises as more particularly described in Exhibit A attached
hereto, and (b) the Tamarron Premises as more particularly
described on Exhibit B attached hereto; provided that the
Improvements shall exclude any portion of the Additional
Collateral released in accordance with the terms of the Loan
Documents.
"INITIAL BASE INTEREST" means interest payments of
$561,588.58 per month (pro rated for any partial months),
totaling $6,739,063 per annum.
"INNISBROOK AGREEMENTS" means the Master Lease, the
Hilton Management Agreement - Innisbrook, the Westin Management
Agreement and Merger Agreement.
"INNISBROOK HOTEL" means the existing hotel facility on
the Innisbrook Property, including all common areas and common
facilities, as the same may be altered, added to or reconstructed
from time to time.
"INNISBROOK PREMISES" means that certain real property
located in the City of Tarpon Springs, County of Pinellas, State
of Florida described on Exhibit A attached hereto.
"INNISBROOK PROPERTY" has the meaning given in Recital
A.
"INSURANCE REQUIREMENTS" mean all terms of any
insurance policy required by this Agreement and all requirements
of the issuer of any such policy.
"INTANGIBLE PERSONAL PROPERTY" means all intangible
personal property owned by Borrower and used solely in connection
with the ownership, operation, leasing or maintenance of the Real
Property or the Tangible Personal Property, and any and all
trademarks and copyrights, guarantees, Authorizations, general
intangibles, business records, plans and specifications, surveys,
all licenses, permits and approvals solely with respect to the
construction, ownership, operation or maintenance of the
Property.
"INTEREST" means, collectively, the Base Interest (as
increased by the Base Rent Escalator) and the Participating
Interest.
"LEGAL REQUIREMENTS" means all federal, state, county,
municipal and other governmental statutes, laws (including the
Americans with Disabilities Act and any Environmental Laws),
rules, orders, regulations, ordinances, judgments, decrees and
injunctions affecting either the Property or the construction,
use or alteration thereof, whether now or hereafter enacted and
in force, including any which (i) require repairs, modifications,
or alterations in or to the Property; (ii) in any way adversely
affect the use and enjoyment thereof, and all permits, licenses
and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in
any instruments, either of record or known to Borrower (other
than encumbrances created by Lender without the consent of
Borrower), at any time in force affecting the Property; or (iii)
require the cleanup or other treatment of any Hazardous Material.
"LENDER" means Golf Trust of America, L.P., and any
successor or assignee permitted in accordance with the terms of
this Agreement.
"LENDER ASSIGNEE" has the meaning given in Article XIV.
"LENDER'S SHARES" means partnership units of Lender and
common stock of GTA, Inc.
"LENDER'S SHARES/PURCHASE PRICE" means an amount equal
to 400,000 partnership units of Lender; provided such amount
shall be reduced to 125,000 partnership units of Lender upon a
Transfer Triggering Event; and further provided in either event
such partnership units shall be immediately convertible, on a one
for one basis, into shares of common stock of GTA, Inc.
"LENDER'S TITLE POLICY" means a title insurance policy
in the form of an American Land Title Association Extended
Coverage Loan Policy - 1970 (without modification, revision or
amendment) with ALTA Endorsement Form 1 Coverage (LP 10), if
available insuring that on the Closing Date, Borrower owns fee
simple title to the Real Property (or with respect to the land
described in Exhibit F relating to the expansion of the Sandpiper
golf course, an irrevocable easement over such land) and that the
Deed of Trust is a valid first lien on the Property in the amount
of the Loan Amount. The Lender's Title Policy shall, if
available, contain CLTA Endorsements (or equivalent) 100, 103.7,
104.6, 111.5, 116.1, a shared appreciation/participating mortgage
endorsement in form and substance satisfactory to Lender, and
such other endorsements as Lender requires. Except as approved
by Lender in writing prior to the Closing Date, the Lender's
Title Policy shall not contain any exceptions for rights of
parties in possession, easements not of record or unpaid
installments of special assessments, or any other exceptions to
coverage not approved by Lender. The Lender's Title Policy shall
contain such reinsurance agreements and direct access agreements
as Lender may require. During the term of the Loans, Lender may
reasonably require, if available, other endorsements to the
Lender's Title Policy, including CLTA Endorsements 101.2 and 122
(or equivalent).
"LOAN OR LOANS" means the participating loans described
in this Agreement in the maximum principal amount of the Loan
Amount, consisting of the Tranche I Loan, the Tranche II Loan and
the Additional Interest Amount.
"LOAN AMOUNT" means the Tranche I Loan Amount, the
Tranche II Loan Amount and the Additional Interest Amount.
"LOAN DOCUMENTS" means this Agreement, the Notes and
the documents described in Section 2.10
"MASTER LEASE" means, (i) with respect to the
Innisbrook Property, the master lease adopted August 1, 1990 and
amended and restated August 1, 1992, September 15, 1993 and
July 17, 1995, and (ii) with respect to the Tamarron Property,
the master lease dated July 15, 1993 as amended on September 15,
1994, in each case between Borrower and certain of the owners of
the condominiums at the Innisbrook Property and the Tamarron
Property, respectively, as the same may be modified, amended or
supplemented from time to time.
"MATURITY DATE" means _______________, 2027, or such
earlier date as the principal balance of the Loan is due
following an Event of Default hereunder.
"MERGER AGREEMENT" means the Stock Purchase and Merger
Agreement by and among Golf Hosts, Inc., Xxxxxxx X. Xxxxxxxxx,
Xxxxxxx Xxxxxxxxx, C. Xxxxx XxXxxxxxx and TM Golf Hosts, Inc.
"NET OPERATING INCOME" has the meaning set forth in
Exhibit C of this Agreement. Interest accruing on the Additional
Interest Amount shall not be included for the purposes of
calculating Net Operating Income under this Agreement or any of
the other Loan Documents, including, without limitation, the
Securities Purchase Agreement and the Pledge Agreement.
"NON-COMPLYING PARTY" has the meaning provided in
Section 13.2.
"NOTE A" has the meaning provided in Section 2.2.
"NOTE B" has the meaning provided in Section 2.2.
"NOTES" means each secured promissory note evidencing
the Loan, executed by Borrower, payable to the order of Lender,
in an original principal amount equal to, in the case of Note A,
the Tranche I Loan Amount and, in the case of Note B, the Tranche
II Loan Amount, each in the form attached hereto as Exhibit J.
"OFFICER'S CERTIFICATE" means a certificate of Borrower
signed by an officer authorized to so sign by the board of
directors or by-laws, or if Borrower is a partnership, by an
officer authorized to so sign by the general partners.
"OFFICIAL RECORDS" means the Official Records of a
particular State and County.
"OPERATING BUDGET" has the meaning provided in Section
6.9.
"OTHER LEASED PROPERTIES" means the property or
properties leased or hereafter leased to Borrower or an Affiliate
of Borrower by Lender or an Affiliate of Lender, or mortgaged by
Borrower or an Affiliate of Borrower to Lender or an Affiliate of
Lender, other than pursuant to this Agreement.
"OVERDUE RATE" means, on any date, a rate equal to the
Prime Rate plus an additional five percent (5%) per annum, but in
no event greater than the maximum rate then permitted under
applicable law.
"PARTICIPATING INTEREST" means, for any Fiscal Year
during the Term, a percentage of the positive difference between
that year's Gross Revenue and the Gross Revenue for the Base
Year, pro rated for any partial periods. For purposes of
calculating the Participating Interest, the following threshold
amounts (excepting the Base Year Gross Revenue) shall each be
increased (but not decreased) each year beginning in 1998 in an
amount equal to the increase in the CPI for 1997 (pro rated from
the Closing Date). The Participating Interest shall be
calculated as follows:
(i) Seventeen percent (17%) of the positive difference
between that year's Gross Revenue and the Base Year Gross Revenue
in excess of $39,968,000, but less than or equal to $43,000,000
(as increased by the CPI);
(ii) Twenty percent (20%) of the positive difference
between that year's Gross Revenue and the Base Year Gross Revenue
in excess of $43,000,000 (as increased by the CPI) but less than
$50,000,000 (as increased by the CPI); and
(iii) Twenty-five percent (25%) of the positive
difference between that year's Gross Revenue and the Base Year
Gross Revenue in excess of $50,000,000 (as increased by the CPI).
"PARTNERSHIP" means Golf Trust of America, L.P., a
Delaware limited partnership.
"PERMITTED ASSIGNEE" means a Person or an Affiliate of
a Person meeting one or more of the following standards:
(a) an existing lessee under a lease with Lender
or any Affiliate of Lender who is not then in default under
its lease;
(b) any entity affiliated with an entity
acquiring from Borrower or an Affiliate of Borrower its
resort and related operations located at or adjacent to the
Innisbrook Property or the Tamarron Property, and provided
such entity (i) is not generally recognized in the community
as being of ill-repute or as being in any other manner a
Person with whom or with which a prudent business person
would not wish to associate in a commercial venture and (ii)
shall have the financial resources sufficient to enable it
to satisfy the obligations of Borrower under this Agreement
(provided for purposes of this subsection (ii) such entity
shall not be required to have financial resources in excess
of those of Borrower at the time of such transfer);
(c) a list of pre-approved assignees prepared by
Lender from time to time in consultation with the Advisory
Association.
"PAYMENT AND PERFORMANCE GUARANTY" means an Agreement
Re Guaranty of Funds executed by Guarantor in the form attached
hereto as Exhibit N.
"PERMITS" means, collectively, (a) all authorizations,
approvals, permits, variances and land use entitlements relating
to the Property and (b) all permits, licenses and agreements
required for the use, occupancy or operation of the Property.
"PERMITTED EXCEPTIONS" means those exceptions to title
contained in the Lender's Title Policy as accepted and approved
by Lender on the Closing Date, which approval shall not be
unreasonably withheld or delayed, together with any other
exceptions permitted by this Agreement or the Loan Documents.
"PERSON" means and includes natural persons,
corporations, limited partnerships, limited liability companies,
general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land
trusts, business trusts, Indian tribes or other organizations,
whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"PLEDGE AGREEMENT" means that certain pledge agreement
dated as of the date of this Agreement, by and between Borrower
and Lender, in the form attached hereto as Exhibit I.
"PLEDGED LENDER'S SHARES" means the Lender's Shares
pledged pursuant to the Pledge Agreement.
"POTENTIAL DEFAULT" means the existence of any
circumstance or the occurrence of any event which, with the
giving of notice, the passage of time or both would constitute an
Event of Default under any of the Loan Documents.
"PRELIMINARY TITLE REPORT" means a current preliminary
title report issued by the Title Company covering the Real
Property and showing all exceptions to title and accompanied by
legible copies of all recorded documents referred to in such
exceptions.
"PREPAYMENT DIFFERENTIAL" shall mean the interest rate
that is equal to (a) the Base Interest then payable, together
with any increases as herein provided, plus the amount of
Participating Interest payable for the immediately prior calendar
year calculated as a percentage yield, minus the Reinvestment
Yield, divided by (b) twelve (12), provided the Prepayment
Differential shall in no event be less than zero.
"PRIMARY INTENDED USE" means the operation of a golf
course and the operation of the related resort and conference
facilities and other uses and activities incidental or related to
the operation thereof, including development and sale of adjacent
single or multi-family home sites, commercial properties and
condominium and timeshare units.
"PRIME RATE" means on any date, a rate equal to the
annual rate on such date announced by Citibank, N.A., or its
successor entity, to be its prime rate or, if the prime rate is
discontinued, the base rate for a 90-day unsecured loan to its
corporate borrowers of the highest credit standing.
"PROPERTY" means, collectively, the Innisbrook Property
and the Tamarron Property; provided that the Property shall
exclude any portion of the Additional Collateral released in
accordance with the terms of the Loan Documents.
"PURCHASE OPTION" has the meaning specified in Article
XI.
"PURCHASE PRICE FOR THE CONTINGENT ADDITIONAL OP UNITS"
has the meaning set forth in the Securities Purchase Agreement.
"REAL PROPERTY" means, collectively, the Innisbrook
Premises and the Tamarron Premises, together with all
Improvements thereon, and all easements and appurtenances
attached thereto; provided that the Real Property shall exclude
any portion of the Additional Collateral released in accordance
with the terms of the Loan Documents.
"REINVESTMENT YIELD" shall mean the yield on the U.S.
Treasury issue (primary issue) with a maturity date closest to
the scheduled Maturity Date, with such yield based on the bid
price for such issue as published in the Wall Street Journal on
the date that is fourteen (14) days prior to such prepayment date
(or if such bid price is not published on that date, the next
preceding date when such bid price is published), less two
hundred (200) basis points.
"RELEASE DATE" has the meaning set forth in Section
2.11(b). The term "Release Date" shall also include the date
upon which the Loan is repaid in full and Borrower has fully
discharged its obligations under the Loan Documents.
"SECURITIES PURCHASE AGREEMENT" means the Purchase
Agreement between Borrower and Lender in the form attached hereto
as Exhibit K.
"SECURITY AGREEMENT" means a security agreement,
executed by Borrower in favor of Lender, creating a first
priority security interest in the Collateral, in the form
attached hereto as Exhibit L.
"STATE" means, collectively, each State or Commonwealth
in which the Property is located.
"TANGIBLE PERSONAL PROPERTY" means all items of
tangible personal property and fixtures (if any) owned by
Borrower and located on or used solely in connection with the
Real Property, including, but not limited to, machinery,
equipment, furniture, furnishings, movable walls or partitions,
phone systems, restaurant equipment, computers or trade fixtures,
golf course operation and maintenance equipment, including
mowers, tractors, aerators, sprinklers, sprinkler and irrigation
facilities and equipment, valves or rotors, driving range
equipment, athletic training equipment, office equipment or
machines, antiques or other decorations, furniture, computers or
other control systems, and equipment or machinery of every kind
or nature, including all warranties and guaranties associated
therewith.
"TAMARRON AGREEMENTS" means the Master Lease respecting
the Tamarron Property and the Hilton Management Agreement -
Tamarron.
"TAMARRON PREMISES" means that certain real property
located in the City of Durango, County of La Plata, State of
Colorado described on Exhibit B attached hereto.
"TAMARRON PROPERTY" has the meaning given in Recital A.
"TERM" means the period from the Closing Date through
the earlier of (a) the Maturity Date, or (b) such other date as
this agreement is terminated due to a default by Borrower or
otherwise.
"TERMINATION DATE" means September 30, 1997.
"TITLE COMPANY" means as to the Innisbrook Property,
Xxxxxxx Title of Tampa, Florida and as to the Tamarron Property,
Basin Title Insurance Agency, Inc., Durango, Colorado, as agent
for Xxxxxxx Title Guaranty Company.
"TRANCHE I CAPITAL EXPENDITURES" means the costs to be
incurred in connection with the development of a nine-hole
expansion of the Sandpiper golf course on to adjacent property
described on Exhibit F on which Borrower has an irrevocable
easement and improvements to the common areas and common
facilities of the Innisbrook Hotel described on Exhibit F hereto
(which shall be funded through a borrowing of the Tranche I
Loan). The Tranche I Capital Expenditures shall also be deemed to
include up to $1,000,000.00 to be used by Borrower for working
capital purposes.
"TRANCHE I LOAN" means the Loan made pursuant to
Sections 2.1(a) and (b), evidenced by Note A, in a principal
amount not to exceed the Tranche I Loan Amount.
"TRANCHE I LOAN AMOUNT" means Seventy-Eight Million
Nine Hundred Seventy-Five Thousand Dollars ($78,975,000).
"TRANCHE II INTEREST" means the interest accruing on
the Tranche II Loan Amount, initially at the rate of the
Conversion Date Capitalization Rate, as increased by the Base
Rent Escalator on the date of disbursement of such loan and for
each of the next four (4) years.
"TRANCHE II LOAN" means the Loan made pursuant to
Section 2.1(c), evidenced by Note B in the principal amount of
the Tranche II Loan Amount.
"TRANCHE II LOAN AMOUNT" means the dollar amount of the
Purchase Price for the Contingent Additional OP Units pursuant to
the Securities Purchase Agreement.
"TRANSFER TRIGGERING EVENT" means:
(a) the issuance and/or sale by Borrower (which for
purposes of this definition includes Golf Hosts, Inc., which
owns a one hundred percent (100%) interest in Borrower) of
any interest in Borrower, including any common stock,
preferred stock or otherwise, or the issuance and/or sale by
Borrower of any debt instrument, option, warrant or other
instrument convertible into an equity interest in Borrower,
including the entering into an agreement to do the
foregoing;
(b) the sale, pledge, transfer, assignment,
hypothecation, gift or devise by any five percent (5%) or
greater stockholder or partner of Borrower of any interest
in Borrower (including any such transfers by any stockholder
or partner of any Person which owns a five percent (5%) or
greater interest in Borrower), to any Person regardless of
whether following such transfer the transferor retains an
interest in Borrower, including transfers by will, intestate
succession, gift, devise, interspousal transfer or transfers
to a trust, regardless of whether such trust is controlled
by the transferor; transfers by operation or law, and any
and all other transfers whether voluntary or involuntary,
including the entering into an agreement to do the
foregoing;
(c) the sale, pledge, conveyance or other transfer of
all or substantially all of the assets of Borrower (whether
by operation of law or otherwise, voluntary or involuntary),
including transfers to an Affiliate of Borrower, including
the entering into an agreement to do the foregoing,
excluding, however, transfers to Lender to secure Borrower's
obligations hereunder;
(d) any transaction pursuant to which Borrower is
merged with or consolidated into another entity (including,
without limitation, transfers to entities owned and
Controlled by an Affiliate of Borrower as of the date
hereof), including the entering into an agreement to do the
foregoing; and
(e) any and all other transfers which have the effect
of transferring or alienating any interest of a five percent
(5%) holder of Borrower or any entity which owns Borrower,
including the entering into an agreement to do the
foregoing.
"UNSUITABLE FOR ITS PRIMARY INTENDED USE" means a state
of condition of the Property such that in the good faith,
reasonable judgment of Borrower, the Property cannot be operated
on a commercially practicable basis for its Primary Intended Use.
"UTILITIES" means public sanitary and storm sewers,
natural gas, telephone, public water facilities, electrical
facilities and all other utility facilities and services
necessary for the operation and occupancy of the Property.
"WESTIN MANAGEMENT AGREEMENT" means that certain
Management Agreement by and between Westin and Borrower dated as
of May 7, 1997 wherein Westin will manage the Innisbrook Property
for an initial term of twenty (20) years, commencing upon
expiration of the Hilton Management Agreement - Innisbrook.
1.2 Rules of Construction. The following rules shall
apply to the construction and interpretation of this Agreement:
(a) Singular words shall connote the plural
number as well as the singular and vice versa, and the masculine
shall include the feminine and the neuter.
(b) All references herein to particular articles,
sections, subsections, clauses or exhibits are references to
articles, sections, subsections, clauses or exhibits of this
Agreement.
(c) The table of contents and headings contained
herein are solely for convenience of reference and shall not
constitute a part of this Agreement nor shall they affect its
meaning, construction or effect.
(d) "Including" and variants thereof shall be
deemed to mean "including without limitation."
(e) All accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with
generally accepted accounting principles then in effect.
(f) Each party hereto and its counsel have
reviewed and revised (or requested revisions of) this Agreement
and have participated in the preparation of this Agreement, and
therefore any usual rules of construction requiring that
ambiguities are to be resolved against a particular party shall
not be applicable in the construction and interpretation of this
Agreement or any exhibits hereto.
ARTICLE II
THE LOAN
2.1 Agreement to Lend and Borrow. Subject to the
terms and conditions of this Agreement, Lender agrees to lend to
Borrower, and Borrower agrees to borrow from Lender, up to the
Loan Amount. The Loan proceeds shall be used for (a) the
purchase of the Innisbrook Property and the Tamarron Property,
(b) payment of the purchase price for the Lender's Shares
pursuant to the Securities Purchase Agreement, (c) in the case of
the Tranche II Loan, payment of the Purchase Price for the
Contingent Additional OP Units, and (d) subject to the
satisfaction of the conditions set forth in Section 4.2, the
development of a nine-hole expansion of the Sandpiper golf course
and improvements to the common areas of the Innisbrook Hotel that
constitute a portion of the Innisbrook Property, as more
particularly described on Exhibit F hereto. All payments by
Borrower to Lender hereunder shall be made to the address
specified in the Notes, or as otherwise specified in writing to
Borrower. Loan proceeds shall be disbursed at the following
times and in the following amounts:
(a) If Borrower has fully satisfied the
conditions of Article III, Lender shall disburse Loan proceeds in
the principal amount of $69,975,000 on the Closing Date.
(b) If Borrower has fully satisfied the
conditions to additional disbursements in Section 4.2, Lender
shall disburse additional Loan proceeds in an aggregate amount,
together with all other amounts disbursed pursuant to this
Section 2.1(b), not to exceed the principal amount of $9,000,000,
when requested by Borrower in accordance with the terms and
conditions of Article IV.
(c) If Borrower elects to buy the Contingent
Additional OP Units, then Lender shall, subject to Borrower
having fully satisfied the conditions to additional disbursements
in Section 4.3, disburse to Borrower the Tranche II Loan in the
Tranche II Loan Amount.
(d) If the Loan is not prepaid upon a Transfer
Triggering Event, then Lender shall loan to Borrower the
Additional Interest Amount. Such amount shall be added to the
outstanding principal balance of the Loan, shall be evidenced by
a separate instrument, shall accrue interest at 11.50% and shall
not be prepayable in whole or in part. No interest shall be
payable with respect to the Additional Interest Amount until the
Maturity Date.
The aggregate principal amount of the Tranche I Loan shall not
under any circumstances exceed the Tranche I Loan Amount. The
aggregate principal amount of the Tranche II Loan shall not under
any circumstances exceed the Tranche II Loan Amount.
Notwithstanding anything in this agreement to the contrary, no
further disbursements of the Tranche I Loan shall be made
following December 31, 2000.
2.2 Evidence of Indebtedness. The Tranche I Loan
shall be evidenced by a promissory note in the form of Exhibit J-
1 hereto ("NOTE A"). Disbursements of the Tranche I Loan shall
be charged and funded under Note A. The Tranche II Loan shall be
evidenced by a promissory note in the form of Exhibit J-2 hereto
("NOTE B"). Disbursements of the Tranche II Loan shall be
charged and funded under Note B. Disbursements of the Additional
Interest Amount shall be evidenced by a separate note and shall
be charged and funded thereunder.
2.3 Tranche I Loan Interest. Borrower will pay to
Lender, in lawful money of the United States of America, Interest
until the Tranche I Loan is repaid in full on the outstanding
principal amount of the Tranche I Loan in accordance with the
following terms of this Section 2.3. If any payment owing
hereunder shall otherwise be due on a day that is not a Business
Day, such payment shall be due on the next succeeding Business
Day:
(a) Base Interest. Payments of Base Interest
shall be paid monthly, on the first Business Day of each month in
arrears.
(b) Increase in Base Interest. Beginning on
January 1, 1998 and on each January 1 thereafter through and
including January 1, 2002, the Base Interest payments for the
year then-commencing shall be increased by five percent (5%) over
the aggregate Base Interest payments for the previous year (the
"BASE INTEREST ESCALATOR"); provided the January 1, 1998 increase
shall be pro rated for the number of days in the Term in 1997.
In addition, if the Tranche II Loan is funded, then the Base
Interest Escalator shall equal three percent (3%) effective
immediately and shall continue to apply to each of the four (4)
years following such increase, with the increase effective on the
anniversary of the increase in Base Interest as provided in
Section 2.3(e) in lieu of increases on January of each year
(after which time no increase will be applicable).
(c) Participating Interest. In addition to Base
Interest, Borrower shall pay Participating Interest as provided
herein. Beginning in the first year of the Term and continuing
throughout the Term, Borrower shall calculate the Gross Revenue
for each Fiscal Quarter (or shorter period, if applicable) within
fifteen (15) days of the end of such Fiscal Quarter (or shorter
period, if applicable) and submit such calculation in writing to
Lender by way of an Officer's Certificate. If the Gross Revenue
for that Fiscal Quarter (or shorter period, if applicable) is
greater than the Gross Revenue for the same Fiscal Quarter (or
shorter period, if applicable) in the Base Year (and, following
the Fiscal Quarter ending March 31, on a year-to-date basis), on
a pro rata basis, then Borrower shall pay to Lender the
Participating Interest upon submittal of the Officer's
Certificate. During any period in which the Participating
interest is subject to a ceiling, such ceiling shall apply to
each of the Participating Interest payments due during any Fiscal
Quarter. The Participating Interest payable in any period in any
Fiscal Year shall be adjusted to reflect the Participating
Interest paid on a year-to-date cumulative basis for the Fiscal
Year (pro rated for any partial periods) and the limits set forth
in the next two sentences on a pro rated basis. The increase in
Interest resulting from the payment of Participating Interest
(together with any increase in Base Interest pursuant to Section
2.3(b)) payable, if any, during each of the first five (5) full
calendar years of the Term shall be limited to seven percent (7%)
of the aggregate Interest payable for the prior calendar year, or
in the case of 1997, of the Base Interest pro rated. Borrower's
obligation to pay Participating Interest shall be reduced during
each Fiscal Quarter by an amount equal to the increase in the
Base Interest over the Initial Base Interest during such Fiscal
Quarter (excluding from such calculation any such increase
attributable to the payment of Additional Base Interest as a
result of additional Loans, but including increases in Base
Interest applicable from time to time as a result of the
application of the Base Interest Escalator to any such Additional
Base Interest).
(d) Annual Reconciliation of Participating
Interest. Within sixty (60) days after the end of each Fiscal
Year, or after the expiration or termination of this Agreement,
Borrower shall deliver to Lender an Officer's Certificate setting
forth (i) the Gross Revenue for the Fiscal Year just ended, and
(ii) a comparison of the amount of the Participating Interest
actually paid during such Fiscal Year versus the amount of
Participating Interest actually owing on the basis of the annual
calculation of the Gross Revenue. If the Participating Interest
for such Fiscal Year exceeds the sum of the quarterly payments of
Participating Interest previously paid by Borrower, Borrower
shall pay such deficiency to Lender along with such Officer's
Certificate. If the Participating Interest for such Fiscal Year
is less than the amount of Participating Interest previously paid
by Borrower, Lender shall, at Borrower's option, either (i) remit
to Borrower its funds in an amount equal to such difference, or
(ii) grant Borrower a credit against the payment of Interest next
coming due. Lender shall have the right to audit all of
Borrower's business operations at the Property so as to determine
the calculation of Participating Interest as provided in Section
6.8.
(e) Record-keeping. Borrower shall utilize an
accounting system for the Property in accordance with its usual
and customary practices and in accordance with GAAP which will
accurately record all Gross Revenue. Borrower shall retain all
accounting records for each Fiscal Year conforming to such
accounting system until at least five (5) years after the
expiration of such Fiscal Year.
2.4 Tranche II Loan Interest. Borrower will pay to
Lender, in lawful money of the United States of America, Interest
until the Tranche II Loan is repaid in full on the outstanding
principal amount of the Tranche II Loan at a rate per annum equal
to the Conversion Date Capitalization Rate. If any payment owing
under this Section 2.4 shall otherwise be due on a day that is
not a Business Day, such payment shall be due on the next
succeeding Business Day.
2.5 Additional Charges. In addition to the Base
Interest, the Participating Interest and the Tranche II Interest,
(a) Borrower shall also pay and discharge when due and payable
all other amounts, liabilities, obligations and Impositions which
Borrower assumes or agrees to pay under this Agreement, including
the Capital Replacement Reserve, and (b) in the event of any
failure on the part of Borrower to pay any of those items
referred to in clause (a) above, Borrower shall also pay and
discharge every fine, penalty, interest and cost which may be
added for non-payment or late payment of such items (the items
referred to in clauses (a) and (b) above being referred to herein
collectively as the "ADDITIONAL CHARGES"). Except as otherwise
provided in this Agreement, all Additional Charges shall become
due and payable at the earlier of (i) thirty (30) days after
either Lender or the applicable third party delivers an invoice
to Borrower, or (ii) the date of delinquency with respect to
Impositions.
2.6 Late Payment of Interest. Borrower hereby
acknowledges that late payment by Borrower to Lender of Base
Interest, Participating Interest or Additional Charges will cause
Lender to incur costs not contemplated under the terms of this
Agreement, the exact amount of which is presently anticipated to
be extremely difficult to ascertain. Accordingly, if any
installment of Interest shall not be paid on or before the date
such payment is due, Borrower will pay Lender on demand, as
Additional Charges, a late charge equal to the lesser of five
percent (5%) of such late payment or $10,000. The parties agree
that this late charge represents a fair and reasonable estimate
of the costs that Lender will incur by reason of late payment by
Borrower and is not a penalty. In addition, if any installment
of Interest or Additional Charges (but only as to those
Additional Charges which are payable directly to Lender) shall
not be paid within five (5) days after the due date with respect
to Base Interest or Participating Interest or delivery of an
invoice to Borrower with respect to the Additional Charge, the
amount unpaid shall bear interest, from such due date to the date
of payment thereof, computed at the Overdue Rate on the amount of
such installment, and Borrower will pay such interest to Lender
as Additional Charges. The acceptance of any late charge or
interest shall not constitute a waiver of, nor excuse or cure,
any default under this Agreement, nor prevent Lender from
exercising any other rights and remedies available to Lender.
2.7 No Deductions. All payments of principal or
interest under the Notes shall be made without deduction of any
present or future taxes, levies, imposts, deductions, charges or
withholdings, which amounts shall be paid by Borrower (except as
to amounts which are applicable to Lender based on Lender's
specific operations and not generally applicable to similarly
situated lenders). Borrower will pay the amounts necessary such
that the gross amount of the principal and interest received by
Lender is not less than that required by the Notes. If Borrower
shall be required by law to deduct any such amounts from or in
respect of any principal or interest payment under the Notes,
then (a) the sum payable to Lender shall be increased as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this
provision) Lender receives an amount equal to the sum it would
have received had no deductions been made, (b) Borrower shall
make such deductions, and (c) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law. All stamp and documentary taxes
shall be paid by Borrower. If, notwithstanding the foregoing,
Lender pays such taxes, Borrower will reimburse Lender for the
amount paid. Borrower will furnish Lender official tax receipts
or other evidence of payment of all taxes within thirty (30) days
following the date upon which such taxes are due and payable.
2.8 Payment of Principal. (a) The Tranche I Loan
Amount, or so much thereof as has been disbursed and remains
outstanding under Note A, together with all unpaid interest
accrued thereon, and all other amounts payable by Borrower with
respect to Note A under the terms of the Loan Documents, and (b)
the Tranche II Loan Amount, or so much thereof as has been
disbursed and remains outstanding under Note B, together with all
unpaid interest accrued thereon, and all other amounts payable by
Borrower with respect to Note B under the terms of the Loan
Documents, shall be due and payable on the Maturity Date.
2.9 Prepayment. Borrower shall have no right to
prepay the Loans during the first ten years following the Closing
Date, except upon a Transfer Triggering Event. On the tenth
(10th) anniversary of the Closing Date, on each five (5) year
anniversary thereafter, and upon a Transfer Triggering Event,
Borrower shall have the right to prepay the Loan, provided each
such prepayment shall (i) include the prepayment amount set forth
in Section 10.5, and (ii) shall be preceded by not less than one
hundred eighty (180) days prior written notice. Following a
Transfer Triggering Event, and provided the Loans are not repaid
on such date, Borrower shall no longer be permitted to prepay the
Loans.
2.10 Security. Payment of the Notes shall be secured
by the following:
(a) the Deed of Trust;
(b) the Security Agreement and the Financing
Statement;
(c) the Assignment of Contracts and Permits;
(d) the Pledge Agreement;
(e) the Golf Hosts Guaranty; and
(f) the Payment and Performance Guaranty.
2.11 Partial Release.
(a) The Pledged Lender's Shares shall be released
(and Lender shall release common stock of GTA Inc. prior to the
release of partnership units of Lender unless otherwise directed
by Borrower), and shall no longer constitute collateral security
for the loan, at the following times and in accordance with the
following provisions:
(i) One-third (1/3) of the Pledged Lender's
Shares (or an equivalent dollar amount if held in cash
or other securities) at such time as the Net Operating
Income with respect to the Innisbrook Property shall
have been, for each of the two (2) prior Fiscal Years,
at least one hundred twenty percent (120%) of the Debt
Service payable by Borrower for each such Fiscal Year.
(ii) An aggregate of two-thirds (2/3) of the
Pledged Lender's Shares (or an equivalent dollar amount
if held in cash or other securities) at such time as
the Net Operating Income with respect to the Innisbrook
Property shall have been, for each of the two (2) prior
Fiscal Years, at least one hundred and thirty percent
(130%) of Debt Service payable by Borrower for each
such Fiscal Year.
(iii) All of the Pledged Lender's Shares (or
an equivalent dollar amount if held in cash or other
securities) provided that the Net Operating Income with
respect to the Innisbrook Property shall have been, for
each of the two (2) prior Fiscal Years, one hundred and
forty percent (140%) of the Debt Service payable by
Borrower for each such Fiscal Year.
This release of Pledged Lender's Shares shall occur
simultaneously with the circumstances triggering such an
adjustment as described above, without the necessity for any
further action on the part of Pledgor or Secured Party (other
than the execution by Secured Party of any documentation of
release required pursuant to the terms of the Pledge Agreement).
Notwithstanding the foregoing, in no event shall any of the
Pledged Lender's Shares be released until prior to the expiration
of Lender's obligation to make disbursements of the Tranche II
Loan, including without limitation, termination of such
obligation at Borrower's election, in its sole discretion.
(b) The Additional Collateral shall be released,
and shall no longer constitute collateral security for the Loans,
on the date that the audited financial statements delivered
pursuant to Section 6.10(c) demonstrate that the ratio of the Net
Operating Income of the Innisbrook Property during such year
(after required funding of the Capital Replacement Fund) to Debt
Service, is equal to or greater than 1.135 to 1.00 on a trailing
twelve (12) months basis, and Borrower has provided an Officer's
Certificate to Lender certifying to that effect (such date, the
"RELEASE DATE"). In addition, on the Release Date the Payment
and Performance Guaranty and the Golf Hosts Guaranty and all of
the obligations thereunder shall terminate and be of no further
effect. Subject to the terms of the last sentence of the
succeeding subparagraph, Borrower shall have the continuing right
to cause the Tamarron Premises to be released prior to the
Release Date upon delivery to Lender of $250,000, which amount
shall be held by Lender as Additional Collateral pursuant to the
terms of this Agreement.
(c) Borrower shall be permitted to sell,
transfer, encumber, pledge or otherwise dispose of any portion of
the Additional Collateral subject to the requirements of this
subparagraph. The proceeds of any Additional Collateral shall be
invested in Collateral, Additional Collateral or, to the extent
not included within the Additional Collateral, the Innisbrook
Premises or held by Lender as Additional Collateral pursuant to
arrangements reasonably acceptable to Lender, all as more
particularly set forth in the Security Agreement. Provided no
Event of Default or Potential Event of Default then exists
hereunder, Lender shall execute any and all necessary release
documents to evidence such release upon receipt by Lender of an
Officer's Certificate certifying to Lender that (i) such property
is being sold or, with respect to any Lender's Shares, pledged,
to a third-party unrelated to Borrower or any affiliate of
Borrower or any affiliate of any officer, director or employee of
Borrower or any affiliate of Borrower, or if an affiliate,
identifying the affiliate relationship, (ii) the transaction was
undertaken in good faith and on an arm's length basis, and (iii)
the property is being sold or transferred for consideration that
equals or exceeds eighty percent (80%) of the property's fair
market value (ninety-five percent (95%) if the property is being
sold to an affiliate). Without limiting the foregoing, in the
event the Tamarron Property is sold or refinanced prior to the
Release Date, the net proceeds therefrom, after repayment of the
Permitted Exceptions, shall be considered Additional Collateral.
ARTICLE III
LOAN CLOSING
Lender's obligation to make the Loans and to perform
the remainder of its obligations under this Agreement are
expressly conditioned upon the occurrence of all of the following
on or before the Termination Date:
3.1 Loan Documents. Borrower's delivery to Lender of
the following documents, in form and substance satisfactory to
Lender, duly executed (and acknowledged where necessary) by the
appropriate parties thereto:
(a) This Agreement;
(b) The Notes;
(c) The Deed of Trust, which shall be duly
recorded in such Official Records as are acceptable to
Lender;
(d) The Security Agreement, together with the
Financing Statement which shall be duly filed in the Office
of the Florida Secretary of State and the Office of the
Colorado Secretary of State;
(e) The Assignment of Contracts and Permits;
(f) The Securities Purchase Agreement;
(g) The Pledge Agreement;
(h) The Payment and Performance Guaranty; and
(i) The Golf Hosts Guaranty.
3.2 Borrower's Deliveries. Borrower shall have
delivered to or for the benefit of Lender, as the case may be, on
or before the Closing Date, all other documents and other
information required of Borrower pursuant to this Agreement.
3.3 Representations, Warranties and Covenants. All of
Borrower's representations and warranties made in this Agreement
shall be true and correct as of the Closing Date as if then made,
and there shall have occurred no material adverse change in the
condition or financial results of the operation of the Property
since January 1, 1997. Borrower shall have performed all of its
covenants and other obligations under this Agreement and Borrower
shall have executed and delivered to Lender on the Closing Date a
certificate dated as of the Closing Date to the foregoing effect
in the form attached hereto as Exhibit O.
3.4 Title Insurance. The Title Company shall have
delivered the Lender's Title Policy to Lender.
3.5 Title to Property. Lender shall have determined
that Borrower is the sole owner of good and marketable fee simple
title to the Real Property and to the Tangible Personal Property,
free and clear of all liens, encumbrances, restrictions,
conditions and agreements except for Permitted Exceptions as
evidenced by issuance of the Lender's Title Policy.
3.6 Condition of Property. The Real Property and the
Tangible Personal Property (including but not limited to the golf
course, driving range, putting greens, mechanical systems,
plumbing, electrical wiring, appliances, fixtures, heating, air
conditioning and ventilating equipment, elevators, boilers,
equipment, roofs, structural members and furnaces) shall be in
condition acceptable to Lender.
3.7 Utilities. All of the Utilities shall be
installed in and operating at the Property, and service shall be
available for the removal of garbage and other waste from the
Property.
3.8 Liquor License. Borrower, or Borrower's nominee,
shall possess all liquor licenses, alcoholic beverage licenses
and other material Permits and Authorizations necessary to
operate the restaurant, bars, snack shops and lounges presently
located at the Property.
3.9 Partnership Agreement. Borrower shall have
delivered to Lender a countersigned copy of the Partnership
Agreement of Lender in a form prepared by Lender, which shall be
in substantially the form attached hereto as Exhibit P.
3.10 Certification of Non-Foreign Status. Borrower
shall have delivered to Lender a duly executed Certification of
Non-Foreign Status.
3.11 Legal Opinions. Borrower shall have delivered to
Lender a favorable opinion of Borrower's Counsel in the form
attached hereto as Exhibit H.
3.12 Satisfaction or Waiver of Conditions Precedent to
Merger Agreement. Borrower shall provide Lender with written
certification that each of the conditions precedent set forth in
Article IX of the Merger Agreement have been satisfied or waived
by Borrower.
Each of the conditions and additional covenants contained in this
Section are intended for the benefit of Lender and may be waived
in whole or in part by Lender, but only by an instrument in
writing signed by Lender.
ARTICLE IV
DISBURSEMENTS OF THE LOAN
4.1 Disbursement on Closing Date . Lender shall
disburse Loan proceeds in the principal amount of Sixty-Nine
Million Nine Hundred Seventy-Five Thousand Dollars ($69,975,000)
on the Closing Date, together with Tranche I Capital Expenditures
incurred prior to the Closing Date for improvements to the
Sandpiper golf course.
4.2 Requests for Subsequent Disbursements of the
Tranche I Loan. Borrower shall request disbursements of the
Tranche I Loan for the Tranche I Capital Expenditures not more
frequently than monthly and not closer together than fifteen (15)
days after the date on which the immediately preceding
disbursement request was submitted to Lender. Upon satisfaction
of the following conditions precedent:
(a) Lender has received and approved true,
correct and complete copies of all of the items listed in Part I
of Exhibit G, including the Draw Request Documents; and
(b) Borrower shall have evidenced to Lender's
reasonable satisfaction that the cost to complete the
improvements to made with such disbursements, together with the
undisbursed loan proceeds and any funds separately set aside by
Borrower, are sufficient to complete such work:
(c) No Event of Default or Potential Default
shall have occurred and be continuing; and
(d) Lender has received an endorsement or
endorsements to the Lender's Title Policy reasonably satisfactory
to the Lender in connection with the additional advance
requested.
Lender shall disburse within ten (10) Business Days after receipt
of the Draw Request Documents, the Loan disbursement of the
Tranche I Loan requested by Borrower therein; provided, however,
that in no event shall the aggregate amount disbursed by Lender
pursuant to this Section 4.2 exceed Nine Million Dollars
($9,000,000).
4.3 Requests for Subsequent Disbursements of the
Tranche II Loan. Borrower shall request disbursements of the
Tranche II Loan in accordance with the procedures set forth in
the Securities Purchase Agreement and upon satisfaction of the
following conditions precedent:
(a) no Event of Default or Potential Default
shall have occurred and be continuing; and
(b) Lender has received an endorsement or
endorsements to the Lender's Title Policy reasonably satisfactory
to the Lender in connection with the additional advance
requested.
In no event shall the aggregate amount disbursed by Lender
pursuant to this Section 4.3 exceed the Purchase Price for the
Contingent Additional OP Units on the Conversion Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement, Borrower
hereby makes the following representations, warranties and
covenants with respect to the Property, subject to the Warranty
Disclosure Schedule attached hereto as Exhibit R, upon each of
which Borrower acknowledges and agrees that Lender is entitled to
rely and has relied:
5.1 Organization and Power. Borrower is duly formed
or organized, validly existing and in good standing under the
laws of the state of its formation and is qualified to transact
business in the State and has all requisite powers and all
governmental licenses, authorizations, consents and approvals to
carry on its business as now conducted and to enter into and
perform its obligations hereunder and under any document or
instrument required to be executed and delivered by or on behalf
of Borrower hereunder.
5.2 Authorization and Execution. This Agreement has
been, and each of the agreements and certificates of Borrower to
be delivered to Lender on the Closing Date as provided in Article
IV will be, duly authorized by all necessary action on the part
of Borrower, has been duly executed and delivered by Borrower,
constitutes the valid and binding agreement of Borrower and is
enforceable against Borrower in accordance with its terms,
subject, in each case, to applicable bankruptcy, insolvency,
moratorium or similar laws in effect from time to time. There is
no other person or entity whose consent is required in connection
with Borrower's performance of its obligations hereunder which
consent has not been received or obtained. All action required
pursuant to this Agreement necessary to effectuate the
transactions contemplated herein has been, or will on the Closing
Date be, taken promptly and in good faith by Borrower and its
representatives and agents.
5.3 Noncontravention. The execution and delivery of,
and the performance by Borrower of its obligations under, this
Agreement do not and will not contravene, or constitute a default
under, any provision of applicable law or regulation, Borrower's
Organizational Documents or any agreement, judgment, injunction,
order, decree or other instrument binding upon Borrower, or
result in the creation of any lien or other encumbrance on any
asset of Borrower other than as set forth in this Agreement or
which otherwise have no material adverse effect on the use and
operation of the Property. There are no outstanding agreements
(written or oral) pursuant to which Borrower (or any predecessor
to or representative of Borrower) has agreed to contribute or has
granted an option or right of first refusal to purchase the
Property or any part thereof (other than in favor of Lender as
set forth in Article XI). There are no purchase contracts,
options or other agreements of any kind, written or oral,
recorded or unrecorded, whereby any person or entity other than
Borrower will have acquired or will have any basis to assert any
right, title or interest in, or right to possession, use,
enjoyment or proceeds of, all or any portion of the Property
except as set forth on the Lender's Title Policy or which
otherwise have no material adverse effect on the use and
operation of the Property. There are no rights, subscriptions,
warrants, options, conversion rights or agreements of any kind
outstanding to purchase or to otherwise acquire any interest or
profit participation of any kind in the Property or any part
thereof other than as set forth in this Agreement or which
otherwise have no material adverse effect on the use and
operation of the Property.
No Special Taxes. Borrower has no knowledge of,
nor has it received any notice of, any special taxes or
assessments relating to the Property or any part thereof,
including taxes relating to the business of the Property, or any
planned public improvements that may result in a special tax or
assessment against the Property, that are not otherwise disclosed
in the Lender's Title Policy. To the best of Borrower's
knowledge, there is not any proposed increase in the assessed
valuation of the Real Property for tax purposes.
5.5 Compliance with Existing Laws. Borrower possesses
all Authorizations, each of which is valid and in full force and
effect, and no provision, condition or limitation of any of the
Authorizations has been breached or violated, except where the
failure to possess such Authorizations would not have a material
adverse effect on the operations of the Property. Borrower has
not misrepresented or failed to disclose any material relevant
fact in obtaining all Authorizations, and Borrower has no
knowledge of any change in the circumstances under which any of
those Authorizations were obtained that result in their
termination, suspension, modification or limitation. Borrower
has not taken any action (or failed to take any action), the
omission of which would result in the revocation of any of the
Authorizations. Borrower has no knowledge, nor has it received
notice within the past three years, of any material existing or
threatened violation of any provision of any applicable building,
zoning, subdivision, environmental or other governmental
ordinance, resolution, statute, rule, order or regulation,
including but not limited to those of environmental agencies or
insurance boards of underwriters, with respect to the ownership,
operation, use, maintenance or condition of the Property or any
part thereof, or requiring any material repairs or alterations
other than those that have been made prior to the date hereof
which might have a material adverse effect on the ownership or
operation of the Property.
5.6 Real Property. To the best of Borrower's
knowledge, (i) the Improvements conform in all material respects
to all legal requirements, (ii) all easements necessary or
appropriate for the use or operation of the Property have been
obtained, (iii) all contractors and subcontractors retained by
Borrower who have performed work on or supplied materials to the
Property have been fully paid, and all materials used at or on
the Property have been fully paid for, (iv) the Improvements have
been completed in all material respects in a workmanlike manner
of first-class quality, and (v) all equipment necessary or
appropriate for the use or operation of the Property has been
installed and is presently operative in good working order.
Borrower has not received any written notice which is still in
effect that there is, and, to the best of Borrower's knowledge,
there does not exist, any material violation of a condition or
agreement contained in any easement, restrictive covenant or any
similar instrument or agreement effecting the Real Property, or
any portion thereof.
5.7 Personal Property. All of the Tangible Personal
Property and Intangible Personal Property being conveyed by
Borrower to Lender is free and clear of all liens and
encumbrances on the Closing Date, other than liens and
encumbrances specifically permitted by this Agreement, and
Borrower has good, merchantable title thereto and the right to
convey same in accordance with the terms of this Agreement.
5.8 Warranties and Guaranties. Borrower shall not
before or after the Closing Date, release or materially modify in
a manner adverse to Borrower any warranties or guarantees, if
any, of manufacturers, suppliers and installers relating to the
Improvements and the Personal Property or any part thereof,
except with the prior written consent of Lender.
5.9 Insurance. All of Borrower's insurance policies
are valid and in full force and effect, all premiums for such
policies were paid when due and all future premiums for such
policies (and any replacements thereof) shall be paid by Borrower
on or before the due date therefor. Borrower shall pay all
premiums on, and shall not cancel or voluntarily allow to expire,
any of Borrower's insurance policies unless such policy is
replaced, without any lapse of coverage, by another policy or
policies providing coverage at least as extensive as the policy
or policies being replaced. Borrower has not received any notice
from any insurance company of any defect or inadequacies in the
Property to any part thereof which would adversely affect the
insurability of the Property, or which would increase the cost of
insurance beyond that which would ordinarily and customarily be
charged for similar properties in the vicinity of the Real
Property. The Property is fully insured in accordance with the
requirements of Section 7.1.
5.10 Condemnation Proceedings; Roadways. Borrower has
received no notice of any condemnation or eminent domain
proceeding pending or threatened against the Property or any part
thereof. Borrower has no knowledge of any change or proposed
change in the route, grade or width of, or otherwise affecting,
any street or road adjacent to or serving the Property which
would materially adversely affect the Property. To the best of
Borrower's knowledge, no fact or condition exists which would
result in the termination or material impairment of access to the
Property from adjoining public or private streets or ways or
which could result in discontinuation of presently available or
otherwise necessary sewer, water, electric, gas, telephone or
other utilities or services.
5.11 Litigation. Except as disclosed in writing to
Borrower, there is no action, suit or proceeding pending or known
to be threatened against or affecting Borrower or any of its
properties in any court, before any arbitrator or before or by
any federal state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign which reasonably could be expected to (a) in any manner
raise any question affecting the validity or enforceability of
this Agreement or any other agreement executed in connection
herewith, (b) materially and adversely affect the business,
financial position or results of operations of Borrower, (c)
materially and adversely affect the ability of Borrower to
perform its obligations hereunder, or under any document to be
delivered pursuant hereto, (d) create a lien on the Property, any
part thereof or any interest therein in violation of the terms of
this Agreement, (e) otherwise adversely materially affect the
Property, any part thereof or any interest therein or the use,
operation, condition or occupancy thereof.
5.12 Labor Disputes and Agreements. There are no labor
disputes pending or, to the best of Borrower's knowledge,
threatened as to the operation or maintenance of the Property or
any part thereof which could reasonably be expected to adversely
materially affect the Property, any part thereof or any interest
therein or the use, operation, condition or occupancy thereof.
Borrower is not a party to any union or other collective
bargaining agreement with employees employed in connection with
the ownership, operation or maintenance of the Property.
Borrower is not a party to any employment contracts or
agreements, other than the Employment Agreements, and Borrower
will not, between the date hereof and the Closing Date, enter
into any new employment contracts or agreements, amend any
existing Employment Agreement, except in the ordinary course of
the operations of the Property. To the best of Borrower's
knowledge, Borrower has complied with the requirements of the
federal Immigration and Reform Control Act respecting the
employment of undocumented workers.
5.13 Financial Information. To the best of Borrower's
knowledge, all of Borrower's financial information, including all
books and records and financial statements, is correct and
complete in all material respects and presents and will present
accurately the results of the operations of the Property for the
periods indicated.
5.14 Organizational Documents. Borrower's
Organizational Documents are in full force and effect and have
not been modified or supplemented, and no fact or circumstance
has occurred that, by itself or with the giving of notice or the
passage of time or both, would constitute a default thereunder.
5.15 Land Use. The current use and occupancy of the
Property for golfing, hospitality and all other related purposes
(including the sale of merchandise and food and beverages) do not
require any special use permit, special exception or other
special permit, permission or consent which has not been
obtained, and Borrower is not aware of any proposal to change or
restrict such use. Borrower has all necessary certificates of
occupancy or completion to operate the Property as presently
operated.
5.16 Hazardous Materials. Except as may be disclosed
in the Phase I environmental assessment report for the Property,
to the best of Borrower's knowledge, (i) no Hazardous Materials
are located on (except in immaterial amounts used in the ordinary
course for the operation or maintenance of the Property by
Borrower in accordance with all applicable laws), in or under the
Property or have been released into the environment, or
discharged, placed or disposed of at, on or under the Property
except in accordance with applicable law; and (ii) no underground
storage tanks are located at the Property except in accordance
with applicable law. To the best of Borrower's knowledge, there
currently exist no facts or circumstances that could reasonably
be expected to give rise to a material non-compliance with
Environmental Laws, material environmental liability or material
environmental claim.
5.17 Utilities. All Utilities required for the
operation of the Property either enter the Property through
adjoining streets, or they pass through adjoining land and do so
in accordance with valid public easements or private easements,
and all of said Utilities are installed and are in good working
order and repair and operating as necessary for the operation of
the Property and all installation and connection charges therefor
have been paid in full. The sewage, sanitation, plumbing, water
retention and detention, refuse disposal and utility facilities
in and on and/or servicing the Real Property are adequate to
service the Real Property as it is currently being used and the
Real Property's utilization of such facilities is in material
compliance with all applicable governmental and environmental
protection authorities' laws, rules, regulations and
requirements.
5.18 Curb Cuts. All curb cut street opening permits or
licenses required for vehicular access to and from the Property
from any adjoining public street have been obtained and paid for
and are in full force and effect.
5.19 Leased Property. The Personal Property identified
on Exhibit S is all of the material leased property at the
Property, and such exhibit reflects the date of each such lease,
the name of the lessor, the name of the lessee, the term of each
such lease, the lease payment terms and a description of the
property demised by each such lease. To the best of Borrower's
knowledge, all leases of such property are in good standing and
free from any material default.
5.20 Defects and Hazards. Borrower does not know of
any defects, facts or conditions affecting the Real Property that
would make it unsuitable for the use contemplated hereunder or of
any earth movement or slippage affecting the Real Property.
5.21 Principal Place of Business. Borrower's principal
place of business is in the State of Florida at the address set
forth in the preamble hereof. Borrower does not do business
under any trade name or fictitious business names other than Golf
Hosts, Inc., Golf Host Resorts, Inc., Golf Host Development, Inc.
and Golf Host Securities, Inc.
5.22 Single Purpose Entity. Borrower (a) shall not
engage, directly or indirectly, in any business or venture other
than the ownership of the Property and (b) is not and shall not
become liable on any guaranty for the obligations of another
person or entity and has not pledged any of its assets except
pursuant to or permitted by the Loan Documents. Borrower shall
maintain and preserve its respective existence and all rights and
franchises material to its business. Prior to the release of the
Additional Collateral, Borrower shall evidence that the property
to be released shall thereafter be owned and operated by a legal
entity separate and apart from Borrower.
Removal of Collateral. Except as otherwise
provided herein and as provided in the Annual Budget, the
Tangible Property will be kept on or at the Real Property and
Borrower will not, without the prior written consent of Lender,
remove any material portion of the Collateral therefrom except
such portions or items of Collateral which are consumed or worn
out in ordinary usage, all of which shall be promptly replaced by
Borrower with collateral of similar nature and of equal or
greater value.
5.24 Rights in Escrow Account. Borrower shall grant,
or cause to be granted, to Lender, to the extent permitted by
law, a perfected first lien security interest in the rights of
Borrower or Borrower's Affiliate, into the proceeds payable, if
any, to Borrower or Borrower's Affiliate under the Escrow
Account, as such term is defined in the Merger Agreement;
provided Lender acknowledges and agrees that such right shall be
subordinate and subject to the rights of the parties to the
escrow, including the escrow holder.
5.25 Notices Under Merger Agreement. From and after
the date hereof Borrower shall deliver to lender copies of all
written notices given by or to Borrower (or Golf Hosts, Inc.)
under the Merger Agreement promptly, but in no event later than
Ten (10) Business Days of the date such notices are received or
sent.
Each of the representations, warranties and covenants
contained in this Article III are intended for the benefit of
Lender. Each of said representations, warranties and covenants
shall survive the Closing Date. No investigation, audit,
inspection, review or the like conducted by or on behalf of
Lender shall be deemed to terminate the effect of any such
representations, warranties and covenants, it being understood
that Lender has the right to rely thereon and that each such
representation, warranty and covenant constitutes a material
inducement to Lender to execute this Agreement and to close the
transaction contemplated hereby
ARTICLE VI
COVENANTS OF BORROWER
As an inducement to Lender to execute this Agreement
and to make each disbursement of the Loan, Borrower hereby
covenants as set forth in this Article VI.
6.1 Obligation to Withhold Distributions. If the
ratio of (a) the Net Operating Income (after payment of any
required deposit into the Capital Replacement Fund) for the
Innisbrook Property to (b) Debt Service falls below 1.20 to
1.00, at any time following the release of any Pledged Lender's
Shares (or securities held by Lender in lieu thereof), then
Borrower shall thereafter retain, and not make dividends or
distributions (except as may be necessary to pay any applicable
taxes attributable to the income of Borrower) to its
shareholders, partners or members, as applicable, until such time
as Borrower has accumulated six (6) months of Base Interest at
the then current level. Such accumulated Base Interest shall be
maintained at all times until Borrower has again maintained such
coverage ratios for two (2) consecutive Fiscal Years. Borrower
shall provide Lender with such documentation, including Officer's
Certificates, within forty-five (45) days after the end of each
Fiscal Quarter as are necessary to establish Borrower's
compliance with the foregoing requirements.
6.2 Impositions.
(a) Payment of Impositions. Borrower will pay,
or cause to be paid, all Impositions before any fine, penalty,
interest or cost may be added for non-payment, such payments to
be made directly to the taxing authorities where feasible. All
payments of Impositions shall be subject to Borrower's right of
contest pursuant to the provisions of Section 6.12. Upon
request, Borrower shall promptly furnish to Lender copies of
official receipts, if available, or other satisfactory proof
evidencing such payments, such as cancelled checks.
(b) Information and Reporting. Lender shall give
prompt notice to Borrower of all Impositions payable by Borrower
hereunder of which Lender at any time has actual knowledge, but
Lender's failure to give any such notice shall in no way diminish
Borrower's obligations hereunder to pay such Impositions. Lender
and Borrower shall, upon reasonable request of the other, provide
such data as is maintained by the party to whom the request is
made with respect to the Property as may be necessary to prepare
any required returns and reports. In the event any applicable
governmental authorities classify any property covered by this
Agreement as personal property, Borrower shall file all personal
property tax returns in such jurisdictions where it must legally
so file. Each party, to the extent it possesses the same, will
provide the other party, upon reasonable request, with cost and
depreciation records necessary for filing returns for any
property so classified as personal property.
(c) Refunds. If any refund shall be due from any
taxing authority in respect of any Imposition paid by Borrower,
the same shall be paid over to or retained by Borrower if no
Event of Default shall have occurred hereunder and be continuing.
Any such funds retained by Lender due to an Event of Default
shall be applied to the obligations of Borrower to Lender in such
order as Lender may elect in its sole discretion.
(d) Utility Charges. Borrower shall pay or cause
to be paid prior to delinquency charges for all utilities and
services, including electricity, telephone, trash disposal, gas,
oil, water, sewer, communication and all other utilities used in
the Property during the Term.
(e) Assessment Districts. Borrower shall not
voluntarily consent to or agree in writing to (i) any special
assessment or (ii) the inclusion of any material portion of the
Property into a special assessment district or other taxing
jurisdiction unless Lender shall have consented thereto, which
consent shall not be unreasonably withheld or delayed, or unless
Borrower agrees to pay the cost thereof prior to the Maturity
Date.
6.3 Maintenance of the Collateral.
(a) Maintenance of Property. Borrower shall
maintain all of the Property necessary for the operation of
Borrower's business, whether now existing or hereafter acquired
by Borrower, in good condition and repair, normal wear and tear
excepted. Upon the loss, destruction or obsolescence of any
Tangible Personal Property, Borrower shall replace such property
with replacements of the same type and quality as initially in
place. If any of such Tangible Personal Property is stored away
from the Property, Borrower will provide Lender with proper
access to the storage facility.
(b) Borrower's Obligations. Borrower shall
provide and maintain, or cause to be provided and maintained,
during the Term, all Tangible Personal Property, as well as
merchandise for sale to the public, and food and beverage, as
shall be necessary in order to operate the Property in compliance
with (a) all applicable Legal Requirements, (b) customary
practices in the golf industry, and (c) the requirements of this
Agreement.
6.4 Use of Property.
(a) Use. After the Closing Date and during the
Term, Borrower shall use or cause to be used the Property and the
Improvements for its Primary Intended Use and shall operate the
Property to maximize its long-term value. Borrower shall not use
the Property or any portion thereof for any other use without the
prior written consent of Lender, in Lender's absolute discretion.
No use shall be made or permitted to be made of the Property, and
no acts shall be done, which will cause the cancellation of any
insurance policy covering the Property or any part thereof, nor
shall Borrower sell or otherwise provide to patrons, or permit to
be kept, used or sold in or about the Property any article which
may be prohibited by law or by the standard form of fire
insurance policies, or any other insurance policies required to
be carried hereunder, or fire underwriters regulations. Borrower
shall, at its sole cost, comply with all of the requirements
pertaining to the Property or other improvements of any insurance
board, association, organization or company necessary for the
maintenance of insurance, as herein provided, covering the
Property. Lender specifically consents to the proposed
reconfiguration of the existing holes adjacent to one of the
driving ranges at the Innisbrook Property and the construction of
condominiums, homesites or homes, all as more particularly
described on Exhibit Q attached hereto. In addition, Borrower
shall have the right to relocate or reconfigure or eliminate the
existing Island Course driving range at the Innisbrook Property
provided the same does not adversely affect the long-term value
of the Innisbrook Property.
(b) Specific Prohibited Uses. Borrower shall not
use or occupy or permit the Property to be used or occupied, nor
do or permit anything to be done in or on the Property, in a
manner which would (i) violate or fail to comply with any law,
rule or regulation or Legal Requirement, (ii) cause structural
injury to any of the Improvements or (iii) constitute a public or
private nuisance or waste. Borrower shall not allow any
Hazardous Material to be located in, on or under the Property, or
any adjacent property, or incorporated in the Property or any
improvements thereon except in compliance with applicable law
(including any Environmental Laws). Borrower shall not allow the
Property to be used as a landfill or a waste disposal site, or a
manufacturing, distribution or disposal facility for any
Hazardous Materials. Borrower shall neither suffer nor permit
the Property or any portion thereof to be used in such a manner
as (i) might reasonably tend to impair Lender's title thereto or
to any portion thereof, or (ii) may reasonably make possible a
claim or claims of adverse usage or adverse possession by the
public, as such, or of implied dedication of the Property or any
portion thereof, or (iii) is in material violation of any
applicable Environmental Law.
(c) Membership Sales. Borrower shall not sell
and/or classify or reclassify memberships, or set initiation fees
or other charges which results in a reduction in the individual
membership dues payable by members at the Innisbrook Property
without the consent of the Lender, which consent shall not be
unreasonably withheld or delayed. In addition, Borrower shall
not materially increase the number of golfing memberships in any
calendar year at the Innisbrook Property if such sales would
diminish the long-term value of the Property.
(d) Grant of Easements, Etc. Borrower may, from
time to time, so long as no Event of Default has occurred and is
continuing, at Borrower's cost and expense: (i) grant easements
and other rights in the nature of easements; (ii) release
existing easements or other rights in the nature of easements
which are for the benefit of the Property; (iii) dedicate or
transfer unimproved portions of the Property for road, highway or
other public purposes; (iv) execute petitions to have the
Property annexed to any municipal corporation or utility
district; (v) execute amendments to any covenants and
restrictions affecting the Property; and (vi) execute and deliver
to any person any instrument appropriate to confirm or effect
such grants, releases, dedications and transfers (to the extent
of its interest in the Property), but only upon delivery to
Lender of an Officer's Certificate (which Officer's Certificate,
if contested by Lender, shall not be binding on Lender) stating
that such grant, release, dedication, transfer, petition or
amendment is not detrimental to the proper conduct of the
business of Borrower on the Property and does not materially
reduce its value or usefulness for the Primary Intended Use.
Borrower shall not grant, release, dedicate or execute any of the
foregoing items in this Section 6.4(d) without obtaining Lender's
prior written approval, which approval shall not be unreasonably
withheld or delayed; provided no such approvals shall be required
for Borrower to grant easements in the normal course of
operations and which do not materially adversely affect the value
of the Property.
(e) Borrower's Additional Covenants as to Use.
Borrower shall (a) join the Advisory Association and cooperate in
the reasonable activities of such association; and (b) at its
election, engage in reasonable cross-marketing endeavors with the
members of the Advisory Association.
6.5 Hazardous Materials.
(a) Remediation. If Borrower becomes aware of the
presence of any Hazardous Material in a quantity sufficient to
require remediation or reporting under any Environmental Law in,
on or under any portion of the Property or if Borrower, Lender,
or any portion of the Property becomes subject to any order of
any federal, state or local agency to investigate, remove,
remediate, repair, close, detoxify, decontaminate or otherwise
clean up any portion of the Property, Borrower shall, at its sole
expense, but subject to the last sentence of Section 6.5(b),
carry out and complete any required investigation, removal,
remediation, repair, closure, detoxification, decontamination or
other cleanup of the Property. If Borrower fails to implement
and diligently pursue any such repair, closure, detoxification,
decontamination or other cleanup of the Property in a timely
manner, Lender shall have the right, but not the obligation, to
carry out such action and to recover its costs and expenses
therefor from Borrower as Additional Charges.
(b) Borrower's Indemnification of Lender.
Borrower shall pay, protect, indemnify, save, hold harmless and
defend Lender, the Company, Affiliates of the Company and Lender
(including their respective officers, directors and controlling
persons), and any Lender Assignee (collectively, the "LENDER
INDEMNITEES") from and against all liabilities, obligations,
claims, damages (including punitive or consequential damages),
penalties, causes of action, demands, judgments, costs and
expenses (including reasonable attorneys' fees and expenses), to
the extent permitted by law, imposed upon or incurred by or
asserted against Lender or any other Lender Indemnitee or the
Property by reason of any Environmental Law (irrespective of
whether there has occurred any violation of any Environmental
Law) in respect of the Property howsoever arising, without regard
to fault on the part of Borrower, including (a) liability for
response costs and for costs of removal and remedial action
incurred by the United States Government, any state or local
governmental unit to any other Person, or damages from injury to
or destruction or loss of natural resources, including the
reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to any Environmental Law, (b) liability for
costs and expenses of abatement, investigation, removal,
remediation, correction or clean-up, fines, damages, response
costs or penalties which arise from the provisions of any
Environmental Law, (c) liability for personal injury or property
damage arising under any statutory or common-law tort theory,
including damages assessed for the maintenance of a public or
private nuisance or for carrying on of a dangerous activity, or
(d) by reason of a breach of a representation or warranty of this
Agreement. Notwithstanding the foregoing or any other provision
of this Agreement (including Section 6.5(d) and Article 12),
Borrower shall not be liable, or otherwise be required to
indemnify Lender or any Lender Indemnitee for any matters or
events that arise after the Closing Date that are caused by a
breach by Lender of the terms of this Agreement.
(c) Survival of Indemnification Obligations.
Borrower's obligations and/or liability under this Section 6.5
arising during the Term shall survive any termination of this
Agreement.
(d) Environmental Violations at Expiration or
Termination of Agreement. Notwithstanding any other provision of
this Agreement (except the last sentence of Section 6.5(b)), if,
at a time when the Term would otherwise terminate or expire, a
violation of any Environmental Law has been asserted by Lender
and has not been resolved in a manner reasonably satisfactory to
Lender, or has been acknowledged by Borrower to exist or has been
found to exist at the Property or has been asserted by any
governmental authority and Borrower's failure to have completed
all action required to correct, xxxxx or remediate such a
violation of any Environmental Law materially impairs the value
or leaseability of the Property upon the expiration of the Term,
then, at the option of Lender, the Purchase Option shall be
automatically extended with respect to the Property beyond the
date of termination or expiration until the earlier to occur of
(i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) 12 months beyond such
expiration or termination date.
(e) Environmental Statements. Immediately upon
Borrower's learning, or having reasonable cause to believe, that
any Hazardous Material in a quantity sufficient to require
remediation or reporting under applicable law is located in, on
or under the Property or any adjacent property, Borrower shall
notify Lender in writing of (a) the existence of any such
Hazardous Material; (b) any enforcement, cleanup, removal, or
other governmental or regulatory action instituted, completed or
threatened; (c) any claim made or threatened by any Person
against Borrower or the Property relating to damage,
contribution, cost recovery, compensation, loss, or injury
resulting from or claimed to result from any Hazardous Material;
and (d) any reports made to any federal, state or local
environmental agency arising out of or in connection with any
Hazardous Material in or removed from the Property, including any
complaints, notices, warnings or asserted violations in
connection therewith.
6.6 Maintenance and Repair.
(a) Borrower's Obligations. Borrower, at its
expense, will operate and maintain the Property in good order,
repair and appearance (whether or not the need for such repairs
occurs as a result of Borrower's use, any prior use, the elements
or the age of the Property or any portion thereof) and in
accordance with any applicable Legal Requirements, and, except as
otherwise provided in Article VII, with reasonable promptness,
make all necessary and appropriate repairs thereto of every kind
and nature, whether interior or exterior, structural or non-
structural, ordinary or extraordinary, foreseen or unforeseen or
arising by reason of a condition existing prior to the Closing
Date (concealed or otherwise). Borrower shall maintain the
Property in accordance with the maintenance practices of the
Property at the Closing Date and otherwise in a manner comparable
to other comparable golf courses (including the related resort
and conference facilities) in the vicinity of the Property.
Lender may consult with the Advisory Association from time to
time with respect to Borrower's compliance with its maintenance
and operation obligations under this Section 6.6(a), and Lender
and representatives of Advisory Association shall have the right
from time to time to enter the Property for the purpose of
inspecting the Property. If Lender, in consultation with the
Advisory Association, determines that Borrower has failed to
comply with its maintenance obligations under this Section
6.6(a), Lender shall provide written notice to Borrower setting
forth a list of remedial work and/or steps to be performed by
Borrower. Borrower shall promptly and diligently perform such
remedial work and/or steps as recommended by Lender, provided if
Borrower objects to one or more of the remedial obligations
proposed by Lender, then the matter shall be submitted to the
dispute resolution procedure set forth in Article XIII. Borrower
will not take or omit to take any action the taking or omission
of which could reasonably be expected to impair the value or the
usefulness of the Property or any part thereof for its Primary
Intended Use. In no event shall Borrower be deemed to be in
violation of this Section 6.6(a) if Borrower has requested that
Lender disburse available funds from the Capital Replacement
Reserve to cure such default by making capital repairs,
improvements or replacements and Lender has not consented to such
disbursement.
(b) Mechanic's Liens. Nothing contained in this
Agreement and no action or inaction by Lender shall be construed
as (i) constituting the consent or request of Lender expressed or
implied, to any contractor, subcontractor, laborer, materialman
or vendor to or for the performance of any labor or services or
the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to
the Property or any part thereof; or (ii) giving Borrower any
right, power or permission to contract for or permit the
performance of any labor or services or the furnishing of any
materials or other property, in either case, in such fashion as
would permit the making of any claim against Lender in respect
thereof or to make any agreement that may create, or in any way
be the basis for, any right, title, interest, lien, claim or
other encumbrance upon the estate of Lender in the Property, or
any portion thereof.
6.7 Borrower's Right to Modify Property.
(a) Borrower's Right to Construct. Subject to
the prior written approval of Lender in its reasonable
discretion, during the Term Borrower may make alterations,
additions, changes and/or improvements to the Innisbrook Property
(individually, a "BORROWER IMPROVEMENT," and collectively,
"BORROWER IMPROVEMENTS"), provided any Borrower Improvements
costing $250,000 or less shall not require the approval of
Lender. Any such Borrower Improvement shall be made at
Borrower's sole expense and shall not affect Lender's option to
purchase the Innisbrook Property pursuant to the terms of Article
XI. Unless made on an emergency basis to prevent injury to
Person or property, Borrower will submit plans and specifications
for any Borrower Improvements, in the form necessary for any
required building permits, to Lender for Lender's prior written
approval, such approval not to be unreasonably withheld or
delayed and shall not be withheld so long as such alterations,
additions, changes and/or improvements do not have a material
adverse affect on the value of the Innisbrook Property. Borrower
shall not modify any of the Additional Collateral so as to
materially diminish the value thereof or materially diminish the
value of the Innisbrook Property. Borrower may make alterations,
additions, changes and/or improvements to the Tamarron Property
without the written consent of Lender, provided that such
alterations do not materially diminish the value of the Tamarron
Property.
Upon approval by Lender:
(i) Borrower shall diligently seek all
governmental approvals and any other necessary private
approvals (e.g., ground lessor, mortgagee, etc.)
relating to the construction of any Borrower
Improvement; and
(ii) once Borrower begins the construction of
any Borrower Improvement, Borrower shall diligently
prosecute any such Borrower Improvement to completion
in accordance with applicable insurance requirements
and the laws, rules and regulations of all governmental
bodies or agencies having jurisdiction over the
Property; and
(iii) Borrower shall not suffer or permit any
mechanics' liens exceeding Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate at any one time to
exist against the Property (and with respect to such
liens will cause them to be removed of record or bonded
over not less than thirty (30) days prior to any
scheduled foreclosure pursuant to such lien) or suffer
or permit any other claims or demands arising from the
work of construction of any Borrower Improvement to be
enforced against the Property or any part thereof, and
Borrower agrees to hold Lender and the Property free
and harmless from all liability from any such liens,
claims or demands, together with all costs and expenses
in connection therewith; and
(iv) all work shall be performed in a good
and workmanlike manner.
(b) Scope of Right. Subject to Section 6.7(a),
at Borrower's cost and expense, Borrower shall have the right to:
(i) seek any governmental approvals,
including building permits, licenses, conditional use
permits and any certificates of need that Borrower
requires to construct any Borrower Improvement;
(ii) erect upon the Property such Borrower
Improvements as Borrower deems desirable; and
(iii) engage in any other lawful activities
that Borrower determines are necessary or desirable for
the development of the Property in accordance with its
Primary Intended Use.
Lender shall have the right at any time and from time
to time to post and maintain upon the Property such notices as
may be necessary to protect Lender's interest from mechanics'
liens, materialmen's liens or liens of a similar nature.
6.8 Lender's Right to Audit Calculation of Gross
Revenue. Lender, at its own expense except as provided
hereinbelow, shall have the right from time to time directly or
though its accountants to audit the information set forth in the
Officer's Certificate referred to in Section 2.3(d) for a period
of five (5) years from receipt of such Officer's Certificate and
in connection with such audits to examine Borrower's book and
records with respect thereto (including supporting data, sales
tax returns and Borrower's work papers). If any such audit
discloses a deficiency in the payment of Participating Interest,
Borrower shall forthwith pay to Lender the amount of the
deficiency as finally agreed or determined, together with
interest on such amount at the Overdue Rate from the date when
said payment should have been made to the date of payment
thereof; provided, however, that as to any audit that is
commenced more than twelve (12) months after the date Gross
Revenue for any Fiscal Year is reported by Borrower to Lender in
the Officer's Certificate, the deficiency, if any, with respect
to such Gross Revenue shall bear interest as permitted herein
only from the date such determination of deficiency is made
unless such deficiency is the result of gross negligence or
willful misconduct on the part of Borrower. If any such audit
discloses that the Gross Revenue actually received by Borrower
for any Fiscal Year exceeds the Gross Revenue reported by
Borrower in the Officer's Certificate by more than two percent
(2%), then Borrower shall pay all reasonable costs of such audit
and examination; provided Borrower shall have the right to submit
the audit determination to arbitration in accordance with the
procedures set forth in Article XIII. Lender shall also have the
right to review and audit from time to time Borrower's business
operations including all books, records and financial statements
of Borrower. Borrower shall promptly provide to Lender copies of
all such books, records, financial statements or any other
documentation of Borrower's business operations reasonably
requested by Lender. Lender shall keep confidential the contents
of such books, records, financial statements and other
documentations, provided Lender shall be permitted to disclose
the foregoing to its attorneys, accountants and advisors who
agree to maintain the confidentiality of such information, and
shall also be permitted to disclose the foregoing as may be
necessary or appropriate in any public filings of the Company or
GTA, Inc. or in any litigation proceedings.
6.9 Annual Budget. Not later than forty-five (45)
days prior to the commencement of each Fiscal Year, Borrower
shall prepare and submit to Lender an operating budget (the
"OPERATING BUDGET") and a capital budget (the "CAPITAL BUDGET")
prepared in accordance with the requirements of this Section 6.9.
The Operating Budget and the Capital Budget (together, the
"ANNUAL BUDGET") shall be prepared in a form approved by Lender
for use throughout the Term and show by quarter and for the year
as a whole the following:
(a) Borrower's reasonable estimate of Gross
Revenue and Gross Expenses itemized on schedules on a quarterly
basis as approved by Lender and Borrower, together with
assumptions, in narrative form, forming the basis of such
schedules.
(b) An estimate of any amounts Lender will be
requested to fund for Capital Expenditures during the next two
Fiscal Years, subject to the limitations set forth in Article IX.
(c) A cash flow projection.
(d) A narrative description of any anticipated
significant events, including, if requested by Lender, a
narrative description of any category of operating expenses that
decrease or increase by five percent (5%) or more from the prior
year's expenses.
(e) Borrower's reasonable estimate for each
Fiscal Quarter of the Participating Interest to be paid for such
quarter.
Lender shall have thirty (30) days after the date on which it
receives the Annual Budget to review, approve or disapprove the
Annual Budget, which approval shall not be withheld so long as
such Annual Budget is reasonably designed to enhance the long-
term value of the Innisbrook Property. If the parties are not
able to reach agreement on the Annual Budget for any Fiscal Year
during Lender's thirty (30) day review period, the parties shall
attempt in good faith during the subsequent thirty (30) day
period to resolve any disputes, which attempts shall include, if
requested by either party, at least one (1) meeting of executive-
level officers of Lender and Borrower and one (1) meeting with
the directors of the Advisory Association. In the event the
parties are still not able to reach agreement on the Annual
Budget for any particular Fiscal Year after complying with the
foregoing requirements of this Section 6.9, the parties shall
adopt such portions of the Operating Budget and the Capital
Budget as they may have agreed upon, and any matters not agreed
upon shall be referred to a dispute resolution committee composed
of three (3) members of the Advisory Association unaffiliated
with Borrower and two (2) members of the board of directors of
the Company. Such committee shall be responsible for resolving
any such disagreement and the parties agree that the
determination of such dispute resolution committee shall be
binding on the parties. In resolving such dispute the committee
shall base its determination on whether the Annual Budget is
reasonably designed to enhance the long-term value of the
Innisbrook Property. Pending the results of such resolution or
the earlier agreement of the parties, (i) if the Operating Budget
has not been agreed upon, the Property will be operated in a
manner consistent with the prior year's Operating Budget until a
new Operating Budget is adopted, and (ii) if the Capital Budget
has not been agreed upon, no Capital Expenditures shall be made
unless the same are set forth in a previously approved Capital
Budget or are specifically required by Lender or are otherwise
required to comply with Legal Requirements or Insurance
Requirements. Borrower shall operate the Property in a manner
reasonably consistent with the Annual Budget. For purposes of
1997, the Annual Budget and the Operating Budget shall be the
Budget attached hereto as Exhibit E, provided such Budget shall
be updated by Borrower and approved by Lender not later than
forty-five (45) days following the Closing Date.
(f) During the period in which the Innisbrook
Property is being managed by Westin Hotel Company pursuant to the
Westin Management Agreement, the Annual Budget and the Operating
Budget shall be determined in accordance with the provisions of
Section 2.3 and 2.4 of the Westin Management Agreement; provided
Lender and Westin Hotel Company shall enter into a separate
agreement respecting their respective rights.
6.10 Financial Statements.
(a) Borrower shall utilize, or cause to be
utilized, an accounting system for the Property in accordance
with its usual and customary practice, and in accordance with
GAAP, that will accurately record all data necessary to compute
Participating Interest, and Borrower shall retain for at least
five (5) years after the expiration of each Fiscal Year,
reasonably adequate records conforming to such accounting system
showing all data necessary to compute Participating Interest.
The books of account and all other records relating to or
reflecting the operation of the Property shall be kept at either
the Property, Borrower's offices or Westin's offices at 0000
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000. Such books and records
shall be available to Lender and its representatives for
examination, audit, inspection and transcription.
(b) Borrower shall furnish to Lender within
thirty (30) days of the end of each Fiscal Quarter (i) unaudited
financial statements for the Fiscal Quarter and year to date,
together with the same information for the comparable prior
Fiscal Quarter and year to date, including the following: results
of operations, a balance sheet, statements of cash flows and
statement of changes in owner's equity. If Lender requests,
Borrower shall provide reviewed financial statements for such
Fiscal Quarter at Borrower's expense. Each quarterly report
shall also include a narrative explaining any deviation in any
major revenue or expense category or operating expenses (by
category) of more than ten percent (10%) from the amounts set
forth on the Annual Budget, together with, if appropriate a
revised Annual Budget, which budget shall be subject to Lender's
review and approval as provided in Section 6.9. Each quarterly
report shall also forecast any projected Participating Interest
payable for the following Fiscal Quarter.
(c) For each Fiscal Year, Borrower shall deliver
to Lender within seventy-five (75) days of the end of such Fiscal
Year financial statements prepared in accordance with GAAP and
audited by any nationally recognized independent accounting firm
licensed to practice in front of the Securities and Exchange
Commission.
(d) If requested by Lender, Borrower will make
available to Lender and the Company and their respective lenders,
underwriters, counsel, accountants and advisors such additional
information and financial statements with respect to Borrower and
the Property as Lender may reasonably request without any
additional cost to Borrower, and Borrower agrees to reasonably
cooperate with Lender and the Company in effecting public or
private debt or equity financings by the Lender or the Company,
without any additional cost to Borrower, modifications to this
Agreement or the requirement of additional collateral from
Borrower.
6.11 Liens, Encroachments and Other Title Matters.
(a) Liens. Subject to the provisions of Section
6.12 relating to permitted contests, Borrower will not directly
or indirectly create or allow to remain, and will promptly
discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Property or any attachment,
levy, claim or encumbrance emanating from Borrower's actions or
negligence, not including, however:
(i) this Agreement and other liens permitted
by the Loan Documents;
(ii) the matters, if any, that existed as of
the Closing Date, as set forth on the title policy
received (and approved in its sole discretion) by
Lender;
(iii) restrictions, liens and other
encumbrances which are consented to in writing by
Lender, or any easements granted pursuant to the
provisions of Section 6.4(d) of this Agreement;
(iv) liens for those taxes of Lender which
Borrower is not required to pay hereunder;
(v) leases or licenses permitted by Article
XII;
(vi) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so
long as such liens are in the process of being
contested as permitted by Section 6.12;
(vii) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either
disputed (provided that such liens are in the process
of being contested as permitted by Section 6.12) or not
yet due; and
(viii) the mortgage lien on the Tamarron
Property to secure the obligations of Golf Hosts, Inc.
under the Escrow Agreement and the obligations of
Borrower with respect to additional improvements which
may be made in the future.
(b) Encroachments and Other Title Matters.
Excepting any matters granted or created by Lender after the
Closing Date, if any of the Improvements shall, at any time,
encroach upon any property, street or right-of-way adjacent to
the Property, or shall violate the agreements or conditions
contained in any lawful restrictive covenant or other agreement
affecting the Property, or any part thereof, or shall impair the
rights of others under any easement or right-of-way to which the
Property is subject, or the use of the Property is impaired,
limited or interfered with by reason of the exercise of the right
of surface entry or any other rights under a lease or reservation
of any oil, gas, water or other minerals, then promptly upon
request of Lender or at the behest of any person affected by any
such encroachment, violation or impairment, Borrower, at its sole
cost and expense (subject to its right to contest the existence
of any such encroachment, violation or impairment), shall
protect, indemnify, save harmless and defend Lender, the Company
and any other Lender Indemnitee from and against all losses,
liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including reasonable attorneys' fees
and expenses) based on or arising by reason of any such
encroachment, violation or impairment and in such case, in the
event of an adverse final determination, either (i) obtain valid
and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or
impairment, whether the same shall affect Lender or Borrower; or
(ii) make such changes in the Improvements, and take such other
actions, as Borrower in the good faith exercise of its judgment
deems reasonably practicable, to remove such encroachment, and to
end such violation or impairment, including, if necessary, the
alteration of any of the Improvements, and in any event take all
such actions as may be necessary in order to be able to continue
the operation of the Improvements for the Primary Intended Use
substantially in the manner and to the extent the Improvements
were operated prior to the assertion of such violation or
encroachment. Borrower's obligation under this Section 6.11
shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other
insurance and Borrower shall be entitled to a credit for any sums
recovered by Lender under any such policy of title or other
insurance.
(c) Survey. Borrower shall, promptly following
the Closing Date, undertake to provide Lender with an ALTA/ACSM
survey of the Innisbrook Premises with such certifications as
Lender shall reasonably require.
6.12 Permitted Contests.
(a) Authorization. Borrower may contest, by
appropriate legal proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or
in part, of any Imposition or any Legal Requirement or Insurance
Requirement, or any lien, attachment, levy, encumbrance, charge
or claim not otherwise permitted by Section 6.11(a); provided,
however, that nothing in this Section 6.12 shall limit the right
of Lender to contest the amount, validity or application, in
whole or in part, of any Imposition, Legal Requirement, Insurance
Requirement, or any lien, attachment, levy, encumbrance, charge
or claim with respect to the Property (and Borrower shall
reasonably cooperate with Lender with respect to such contest),
and, further provided that:
(i) in the case of an unpaid Imposition,
lien, attachment, levy, encumbrance, charge or claim,
the commencement and continuation of such proceedings
shall suspend the collection thereof from Lender and
from the Property, and neither the Property nor any
income therefrom nor any part thereof or interest
therein would be in any danger of being sold,
forfeited, attached or lost pending the outcome of such
proceedings;
(ii) in the case of a Legal Requirement,
Lender would not be subject to criminal or material
civil liability for failure to comply therewith pending
the outcome of such proceedings. Nothing in this
Section 6.12(a)(ii), however, shall permit Borrower to
delay compliance with any requirement of an
Environmental Law to the extent such non-compliance
poses an immediate threat of injury to any Person or to
the public health or safety or of material damage to
any real or personal property;
(iii) in the case of a Legal Requirement
and/or an Imposition, lien, encumbrance or charge,
Borrower shall give such reasonable security, if any,
as may be demanded by Lender to insure ultimate payment
of the same and to prevent any sale or forfeiture of
the affected Property or the Interest by reason of such
non-payment or noncompliance, provided, however, the
provisions of this Section 6.12 shall not be construed
to permit Borrower to contest the payment of Interest
or any other sums payable by Borrower to Lender
hereunder;
(iv) no such contest shall interfere in any
material respect with the use or occupancy of the
Property;
(v) in the case of an Insurance Requirement,
the coverage required by Article VII shall be
maintained; and
(vi) if such contest be finally resolved
against Lender or Borrower, Borrower shall, as
Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest
and penalties accrued thereon, or comply with the
applicable Legal Requirement or Insurance Requirement.
(b) Indemnification of Lender. If Lender so
desires, Lender shall be permitted to join as a party in any
contest permitted pursuant to this Section 6.12. Borrower shall
indemnify and save Lender harmless against any liability, cost or
expense of any kind that may be imposed upon Lender in connection
with any such contest and any loss resulting therefrom.
6.13 Legal Requirements. Subject to Section 6.12
regarding permitted contests, Borrower, at its expense, shall
promptly (a) comply with all Legal Requirements and Insurance
Requirements in respect of the use, operation, maintenance,
repair and restoration of the Property, whether or not compliance
therewith shall require structural changes in any of the
Improvements or interfere with the use and enjoyment of the
Property; and (b) procure, maintain and comply with all material
licenses and other authorizations required for any use of the
Property then being made, and for the proper erection,
installation, operation and maintenance of the Property or any
party thereof.
6.14 Actions Affecting Property. Borrower shall give
Lender prompt written notice of the assertion of any claim with
respect to, or the filing of any action or proceeding purporting
to affect the Property, any of the Loan Documents or the rights
or powers of Lender. Borrower shall appear in and contest any
such action or proceeding and shall pay all costs and expenses,
including cost of evidence of title and attorneys' fees, in any
such action or proceeding in which Lender may appear.
6.15 Material Agreements. Borrower agrees not to
terminate or materially modify the Master Lease or the Westin
Management Agreement or any interest therein without the prior
written consent of Lender, which consent shall not be
unreasonably withheld or delayed. Any subsequent manager of the
Innisbrook Property shall be a first-class upscale hotel operator
with relevant experience in the operation and management of
first-class golf facilities. Consent to one amendment, change,
agreement or modification shall not be deemed to be a waiver of
the right to require consent to other, future or successive
amendments, changes, agreements or modifications. Borrower shall
perform all obligations and agreements under the Master Lease and
the Westin Management Agreement and shall not take any action or
omit to take any action which would effect or permit the
termination of any of said agreements. Borrower shall promptly
notify Lender in writing with respect to any default or alleged
default by any party thereto and to deliver to Lender copies of
all notices, demands, complaints or other communications received
or given by Borrower with respect to any such default or alleged
default. Lender shall have the option, but no obligation, to
cure any such default and to perform any or all of Borrower's
obligations thereunder. All sums expended by Lender in curing
any such default shall be secured by the Loan Documents and shall
be immediately due and payable without demand or notice and shall
bear interest from date of expenditure at the Overdue Rate.
6.16 Lender Inspections. At any time that any material
Capital Expenditure individually in excess of $100,000 is being
incurred during the Term, during normal business hours, Borrower
shall permit Lender and Lender's representatives, inspectors and
consultants to enter upon the Real Property, to inspect any
construction and materials to be used therein and to examine all
contracts, records, plans and shop drawings which are kept at the
construction site or at Borrower's offices. Lender shall keep
confidential the information obtained from such inspections,
provided Lender shall be permitted to disclose such information
to its attorneys, accountants and advisors who agree to maintain
the confidentiality of such information, and shall also be
permitted to disclose such information as may be necessary or
appropriate in any public filing of the Company or GTA, Inc. or
in any litigation proceedings.
6.17 Trade Names. Borrower shall immediately notify
Lender in writing of any change in the place of business of, or
the change in the legal, trade or fictitious business names used
by, Borrower, any of its constituent general partners or
Guarantor and shall, upon Lender's request, execute any
additional financing statements and other certificates necessary
to reflect any change in trade names or fictitious business
names.
6.18 Officer's Certificates. At any time, and from
time to time upon Borrower's receipt of not less than ten (10)
days' prior written request by Lender, Borrower will furnish to
Lender an Officer's Certificate certifying that:
(a) this Agreement is unmodified and in full
force and effect (or that this Agreement is in full force and
effect as modified and setting forth the modifications);
(b) the dates to which the Interest has been
paid;
(c) whether or not to the best knowledge of
Borrower, Lender is in default in the performance of any
covenant, agreement or condition contained in this Agreement and,
if so, specifying each such default of which Borrower may have
knowledge;
(d) that, except as otherwise specified, there
are no proceedings pending or, to the knowledge of the signatory,
threatened, against Borrower before or by any court or
administrative agency which, if adversely decided, would
materially and adversely affect the financial condition and
operations of Borrower; and
(e) responding to such other questions or
statements of fact as Lender shall reasonably request.
Borrower's failure to deliver such Officer's
Certificate within such time shall constitute an acknowledgement
by Borrower that this Agreement is unmodified and in full force
and effect except as may be represented to the contrary by
Lender, Lender is not in default in the performance of any
covenant, agreement or condition contained in this Agreement and
the other matters set forth in such request, if any, are true and
correct. Any such Officer's Certificate furnished pursuant to
this Section 6.18 may be relied upon by Lender and any
prospective lender or purchaser.
6.19 Protective Advances. If Borrower shall at any
time fail to perform or comply with any of the terms, covenants
and conditions required on Borrower's part to be performed and
complied with under this Agreement, any of the other Loan
Documents or any other agreement that, under the terms of this
Agreement, Borrower is required to perform, then Lender, without
waiving or releasing Borrower from any of its obligations
hereunder, may, in its sole discretion upon ten (10) days prior
written notice to Borrower (except in an emergency in which case
no notice shall be required):
(a) make any payments hereunder or thereunder
payable by Borrower and take out, pay for and maintain any of the
insurance policies provided for herein; and/or
(b) after the expiration of any applicable grace
period and subject to Borrower's rights to contest certain
obligations specifically granted hereby, perform any such other
acts hereunder or thereunder on the part of Borrower to be
performed and enter upon the Property for such purpose; and/or
(c) perform any act in such manner and to such
extent as Lender may deem necessary to protect the security
hereof, Lender being authorized to enter upon the Property for
such purpose; appear in and defend any action or proceeding
purporting to affect, in any manner whatsoever, the obligations
of Borrower hereunder, the security therefor or the rights or
powers of Lender; pay, purchase or compromise any encumbrance,
charge or lien that in the judgment of Lender is prior or
superior to any mortgage granted Lender.
All sums so paid out of Lender's own funds and all reasonable
out-of-pocket costs and expenses incurred and paid by Lender in
connection with the performance of any such act, including,
without limitation, attorneys' fees and any allocated costs of
in-house counsel (provided such services are not redundant with
the services of any outside counsel), together with interest on
unpaid balances thereof at the Overdue Rate from the respective
dates of Lender's making of each such payment, shall be added to
the principal of the Note, shall be secured by the Loan Documents
and by the lien of any mortgage granted Lender, prior to any
right, title or interest in or claim upon the Property attaching
or accruing subsequent to the lien of any mortgage or security
interest granted Lender and shall be payable by Borrower to
Lender on demand.
6.20 Reporting of Original Issue Discount. Borrower
agrees that it will report for purposes of calculating original
issue discount interest accruing at an annual rate of 11.5% for
the term of the Loan.
ARTICLE VII
INSURANCE
7.1 General Insurance Requirements. During the Term,
Borrower shall at all times keep the Property, and all property
located in or on the Property, including any Borrower
Improvements, insured with the kinds and amounts of insurance
described below. Lender and Borrower acknowledge that the
Condominiums are not owned by Borrower and, except as may be set
forth in the Master Lease, Borrower shall have no obligation
pursuant to this Agreement or the other Loan Documents to insure
and/or rebuild the Condominiums following any damage or
destruction. This insurance shall be written by companies
authorized to do insurance business in the State, and shall
otherwise meet the requirements set forth in Section 7.5 of this
Agreement. The policies must name Lender as an additional
insured or loss payee, as applicable, by way of a standard form
of mortgagee's loss payable endorsement. Losses shall be payable
to Lender and/or Borrower as provided in this Article VII. In
addition, the policies shall name as a loss payee any Lender
Assignee by way of a standard form of mortgagee's loss payable
endorsement. Any loss adjustment in excess of $250,000 shall
require the written consent of Lender, Borrower, and each Lender
Assignee, if any. Evidence of insurance shall be deposited with
Lender and, if requested, with any Lender Assignee(s). The
policies on the Property, including the Improvements, Fixtures,
Tangible and Intangible Personal Property and any Borrower
Improvements, shall insure against the following risks:
(a) All Risk. Loss or damage by all risks or
perils including, but not limited to, fire, vandalism, malicious
mischief and extended coverages, including sprinkler leakage, in
an amount not less than 100% of the then Full Replacement Cost
thereof covering all structures built on the Property and all
Tangible Personal Property; and further provided the Tangible
Personal Property may be insured at its fair market value.
(b) Liability. Claims for personal injury or
property damage under a policy of comprehensive general public
liability insurance with amounts not less than five million
dollars ($5,000,000) per occurrence and in the aggregate.
(c) Flood. Flood insurance (when the Property is
located in whole or in material part a designated flood plain
area) in an amount similar to the amount insured by comparable
golf course properties in the area. Notwithstanding the
foregoing, Borrower shall not be required to participate in the
National Flood Insurance Program or otherwise obtain flood
insurance to the extent not available at commercially reasonable
rates; provided Borrower shall give Lender written notice thereof
prior to cancelling or not obtaining any flood insurance.
Borrower may opt to insure the structures only, and not the Land,
subject to the approval of Lender, in Lender's reasonable
discretion.
(d) Worker's Compensation. Adequate worker's
compensation insurance coverage for all Persons employed by
Borrower on the Property in accordance with the requirements of
applicable federal, state and local laws. Borrower shall have
the option to self-insure up to five thousand dollars ($5,000) of
the amount of insurance required in the event State law permits
such self-insurance, subject to the approval of Lender, in
Lender's sole and absolute discretion.
7.2 Other Insurance. Such other insurance on or in
connection with any of the Property as Lender or any Lender
Assignee may reasonably require, which at the time is usual and
commonly obtained in connection with properties similar in type
of building size and use to the Property and located in the
geographic area where the Property is located.
7.3 Replacement Cost. In the event either party
believes that the Full Replacement Cost of the insured property
has increased or decreased at any time during the Term, it shall
have the right to have such Full Replacement Cost redetermined by
the Impartial Appraiser. The party desiring to have the Full
Replacement Cost so redetermined shall forthwith, on receipt of
such determination by such Impartial Appraiser, give written
notice thereof to the other party hereto. The determination of
such Impartial Appraiser shall be final and binding on the
parties hereto, and Borrower shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this
Section 7.3, as the case may be, to the amount so determined by
the Impartial Appraiser. Each party shall pay one-half of the
fee, if any, of the Impartial Appraiser.
7.4 Waiver of Subrogation. All insurance policies
carried by either party covering the Property including contents,
fire and casualty insurance, shall expressly waive any right of
subrogation on the part of the insurer against the other party
(including any Lender Assignee). The parties hereto agree that
their policies will include such waiver clause or endorsement so
long as the same are obtainable without extra cost, and in the
event of such an extra charge the other party, at its election,
may pay the same, but shall not be obligated to do so.
7.5 Form Satisfactory, Etc. All of the policies of
insurance referred to in this Article VII shall be written in a
form reasonably satisfactory to Lender and by insurance companies
rated not less than B+, XI by A.M. Best's Insurance Guide.
Borrower shall pay all premiums for the policies of insurance
referred to in Sections 7.1 and 7.2 and shall deliver
certificates thereof to Lender prior to their effective date (and
with respect to any renewal policy, at least ten (10) days prior
to the expiration of the existing policy). In the event Borrower
fails to satisfy its obligations under this Article VII, Lender
shall be entitled, but shall have no obligation, to effect such
insurance and pay the premiums therefor, which premiums shall be
repayable to Lender upon written demand as Additional Charges.
Each insurer issuing policies pursuant to this Article VII shall
agree, by endorsement on the policy or policies issued by it, or
by independent instrument furnished to Lender, that it will give
to Lender thirty (30) days' written notice before the policy or
policies in question shall be altered, allowed to expire or
cancelled. Each such policy shall also provide that any loss
otherwise payable thereunder shall be payable notwithstanding (i)
any act or omission of Lender or Borrower which might, absent
such provision, result in a forfeiture of all or a part of such
insurance payment, (ii) the occupation or use of the Property for
purposes more hazardous than those permitted by the provisions of
such policy, (iii) any foreclosure or other action or proceeding
taken by any Lender Assignee pursuant to any provision of a
mortgage, note, assignment or other document evidencing or
securing a loan upon the happening of an event of default therein
or (iv) any change in title to or ownership of the Property.
7.6 Change in Limits. In the event that Lender shall
at any time reasonably determine on the basis of prudent industry
practice that the liability insurance carried by Borrower
pursuant to Sections 7.1 and 7.2 is either excessive or
insufficient, the parties shall endeavor to agree on the proper
and reasonable limits for such insurance to be carried; and such
insurance shall thereafter be carried with the limits thus agreed
on until further changed pursuant to the provisions of this
Article VII; provided, however, that the deductibles for such
insurance or the amount of such insurance which is self-retained
by Borrower shall be as reasonably determined by Borrower so long
as Borrower can reasonably demonstrate its ability to satisfy
such deductible or amount of such self-retained insurance.
7.7 Blanket Policy. Notwithstanding anything to the
contrary contained in this Article VII, Borrower's obligations to
carry the insurance provided for herein may be brought within the
coverage of a so-called blanket policy or policies of insurance
carried and maintained by Borrower; provided, however, that the
coverage afforded Lender will not be reduced or diminished or
otherwise be different from that which would exist under a
separate policy meeting all other requirements of this Agreement
by reason of the use of such blanket policy of insurance, and
provided further that the requirements of this Article VII are
otherwise satisfied. The amount of this total insurance
allocated to each of the Innisbrook Facility and the Tamarron
Facility, which amount shall be not less than the amounts
required pursuant to Sections 7.1 and 7.2, shall be specified
either (i) in each such "blanket" or umbrella policy or (ii) in a
written statement, which Borrower shall deliver to Lender and
Lender Assignee, from the insurer thereunder. A certificate of
each such "blanket" or umbrella policy shall promptly be
delivered to Lender and Lender Assignee.
7.8 Insurance Proceeds. All proceeds of insurance
payable by reason of any loss or damage to the Property, or any
portion thereof, and insured under any policy of insurance
required by this Article VII shall (i) if greater than $250,000,
be paid to Lender and held by Lender and (ii) if less than such
amount, be paid to Borrower and held by Borrower. All such
proceeds shall be held in trust and deposited in an interest
bearing account and shall be made available, together with any
interest, for reconstruction or repair, as the case may be, of
any damage to or destruction of the Property, or any portion
thereof.
7.9 Disbursement of Proceeds. Any proceeds held by
Lender or Borrower shall be paid out by Lender or Borrower from
time to time for the reasonable costs of such reconstruction or
repair; provided, however, that Lender shall disburse proceeds
subject to the following requirements:
(a) prior to commencement of restoration, (i) the
architects, contracts, contractors, plans and specifications for
the restoration shall have been approved by Lender, which
approval shall not be unreasonably withheld or delayed and
(ii) appropriate waivers of mechanics' and materialmen's liens
shall have been filed;
(b) Borrower shall have obtained and delivered to
Lender copies of all necessary governmental and private approvals
necessary to complete the reconstruction or repair, including
building permits, licenses, conditional use permits and
certificates of need;
(c) at the time of any disbursement, subject to
Section 6.12, no mechanics' or materialmen's liens shall have
been filed against any of the Property and remain undischarged,
unless a satisfactory bond shall have been posted in accordance
with the laws of the State;
(d) disbursements shall be made from time to time
in an amount not exceeding the cost of the work completed since
the last disbursement, upon receipt of (i) satisfactory evidence
of the stage of completion, the estimated total cost of
completion and performance of the work to date in a good and
workmanlike manner in accordance with the contracts, plans and
specifications, (ii) waivers of liens, (iii) a satisfactory bring
down of title insurance and (iv) other evidence of cost and
payment so that Lender and Lender Assignee can verify that the
amounts disbursed from time to time are represented by work that
is completed, in place and free and clear of mechanics' and
materialmen's lien claims;
(e) each request for disbursement shall be
accompanied by a certificate of Borrower, signed by a senior
member or officer of Borrower, describing the work for which
payment is requested, stating the cost incurred in connection
therewith, stating that Borrower has not previously received
payment for such work and, upon completion of the work, also
stating that the work has been fully completed and complies with
the applicable requirements of this Agreement; and
(f) to the extent actually held by Lender and not
a Lender Assignee, (1) the proceeds shall be held in a separate
account and shall not be commingled with Lender's other funds,
and (2) interest shall accrue on funds so held at the money
market rate of interest and such interest shall constitute part
of the proceeds.
7.10 Excess Proceeds, Deficiency of Proceeds. Any
excess proceeds of insurance remaining after the completion of
the restoration or reconstruction of the Property (or in the
event neither Lender nor Borrower is required to or elects to
repair and restore) shall be paid to Borrower. All salvage
resulting from any risk covered by insurance shall belong to
Borrower.
If the costs of restoration or reconstruction exceeds
the amount of proceeds received by Lender or Borrower from
insurance, Borrower shall pay for such excess cost of restoration
or reconstruction, except that Borrower shall be entitled to
withdraw from the Capital Replacement Fund an amount necessary to
cover some or all of such excess subject; provided any amount so
withdrawn must be restored by Borrower to the Capital Replacement
Fund within two (2) years of such withdrawal.
7.11 Reconstruction Covered by Insurance.
(a) Destruction Rendering Property Unsuitable for
its Primary Use. If during the term the Property is totally or
partially destroyed from a risk covered by the insurance
described in Article VII and the Property thereby is rendered
Unsuitable For Its Primary Intended Use, Borrower shall, at its
election, either (i) diligently restore the Property to
substantially the same condition as existed immediately before
the damage or destruction, or (ii) prepay the Loans.
(b) Destruction Not Rendering Property Unsuitable
for its Primary Use. If during the term, the Property is totally
or partially destroyed from a risk covered by the insurance
described in Article VII, but the Property is not thereby
rendered Unsuitable For Its Primary Intended Use, Borrower shall
diligently restore the Property to substantially the same
condition as existed immediately before the damage or
destruction; provided, however, Borrower shall not be required to
restore certain Tangible Personal Property and/or any Borrower
Improvements if failure to do so does not adversely affect the
amount of Interest payable hereunder or the Primary Intended Use
in substantially the same manner immediately prior to such damage
or destruction. Such damage or destruction shall not terminate
this Agreement; provided further, however, if Borrower cannot
within eighteen (18) months obtain all necessary governmental
approvals, including building permits, licenses, conditional use
permits and any certificates of need, after diligent efforts to
do so in order to be able to perform all required repair and
restoration work and to operate the Property for its Primary
Intended Use in substantially the same manner immediately prior
to such damage or destruction, Borrower may prepay the Loans.
7.12 Reconstruction Not Covered by Insurance. If
during the Term, the Property is totally or materially destroyed
from a risk not covered by the insurance described in Article
VII, whether or not such damage or destruction renders the
Property Unsuitable For Its Primary Intended Use, Borrower shall
restore the Property to substantially the same condition as
existed immediately before the damage or destruction. Borrower
shall have the right to use proceeds from the Capital Replacement
Fund to perform such work, subject to the conditions set forth in
Article IX hereof.
7.13 No Abatement of Obligations. This Agreement shall
remain in full force and effect and Borrower's obligation to make
interest payments and to pay all other charges required by this
Agreement shall remain unabated during the period required for
repair and restoration.
7.14 Damage Near End of Term. Notwithstanding any
other provision to the contrary in this Article VII, if damage to
or destruction of the Property occurs during the last twenty-four
(24) months of the Term, and if such damage or destruction cannot
reasonably be expected by Lender to be fully repaired or restored
prior to the date that is twelve (12) months prior to the end of
the Term, then either Lender or Borrower shall have the right to
accelerate the Maturity Date on thirty (30) days' prior notice to
the other by giving notice thereof within sixty (60) days after
the date of such damage or destruction. Upon any such
termination, Lender shall be entitled to retain all insurance
proceeds, grossed up by Borrower to account for the deductible or
any self-insured retention. If Lender shall give Borrower a
notice under this Section 7.14 that it seeks to terminate this
Agreement at a time prior to the end of the Term, then such
termination notice shall be of no effect if Borrower shall so
notify Lender within thirty (30) days.
ARTICLE VIII
CONDEMNATION
8.1 Total Taking. If at any time during the Term the
Innisbrook Premises are totally and permanently taken by
Condemnation, this Agreement shall terminate on the Date of
Taking and Borrower shall promptly pay all outstanding Interest,
principal and other charges through the date of termination.
Lender shall be entitled to immediately exercise its purchase
option pursuant to Article XI, with the exercise of such option
deemed to have taken place immediately prior to the effectiveness
of any such condemnation action. If at any time during the Term
and prior to the Release Date the Tamarron Premises are totally
and permanently taken by Condemnation, this Agreement shall
continue in full force and effect, and Lender shall be entitled
to the first $250,000 of proceeds therefrom together with any
additional amounts payable to Borrower after repayment of the
Permitted Exceptions with respect to the Tamarron Premises, which
amount Lender shall hold as Additional Collateral in accordance
with the terms hereof. Amounts so held as Additional Collateral
pursuant to this Section 8.1 from time to time shall be deemed to
accrue interest at a money market rate as reasonably determined
by Lender and such interest shall be credited to such cash
collateral account.
8.2 Partial Taking. If a portion of the Property is
taken by Condemnation, this Agreement shall remain in effect if
the Innisbrook Property is not thereby rendered Unsuitable For
Its Primary Intended Use, but if the Innisbrook Property is
thereby rendered Unsuitable For Its Primary Intended Use, this
Agreement shall terminate on the Date of Taking.
8.3 Restoration. If there is a partial taking of the
Property and this Agreement remains in full force and effect
pursuant to Section 8.2, Borrower at its cost shall accomplish
all necessary restoration up to but not exceeding the amount of
the Award payable to Borrower, as provided herein. If the
partial taking affects the Tamarron Property, and restoration is
not feasible, the proceeds of the applicable Award shall be
treated as cash collateral in accordance with the terms set forth
in Section 8.1.
8.4 Award-Distribution. The entire Award shall belong
to and be paid to Lender, except that, subject to the rights of
the Lender Assignee, Borrower shall be entitled, in the event
that Borrower restores the Property, to receive from the Award
disbursements in the same manner as the disbursement of insurance
proceeds pursuant to Section 7.9. Borrower shall also be
entitled to disbursement from any Award, if and to the extent
such Award specifically includes such item, a sum attributable to
the value of the loss of Borrower's business during the remaining
term, less the amount of any such value in which Lender would
have participated pursuant to the terms of this Agreement.
8.5 Temporary Taking. The taking of the Property, or
any part thereof, by military or other public authority shall
constitute a taking by Condemnation only when the use and
occupancy by the taking authority has continued for longer than
six (6) months. During any such six (6) month period, which
shall be a temporary taking, all the provisions of this Agreement
shall remain in full force and effect. In the event of any such
temporary taking, the entire amount of any such Award made for
such temporary taking allocable to the Term, whether paid by way
of damages, rent or otherwise, shall be paid to Borrower.
ARTICLE IX
CAPITAL REPLACEMENT FUND
9.1 Capital Replacement Fund. Borrower shall be
obligated to pay to Lender, and Lender shall be obligated to
accrue, the Capital Replacement Reserve. Amounts in the Capital
Replacement Fund shall be and remain the property of Borrower,
shall be subject to the rights of Lender as herein provided, and
shall be additional security for Borrower's obligations
hereunder. The Capital Replacement Reserve shall be paid to
Lender by Borrower on the last day of each Fiscal Quarter of
Borrower. Amounts in the Capital Replacement Fund from time to
time shall be deemed to accrue interest at a money market rate as
reasonably determined by Lender and such interest shall be
credited to the Capital Replacement Fund. Upon the written
request by Borrower to Lender stating the specific use to be made
and subject to the reasonable approval of Lender, the Capital
Replacement Fund shall be made available to Borrower for Capital
Expenditures. Borrower shall have no rights with respect to any
amounts in the Capital Replacement Fund except as provided
herein. Subject to Lender's approval of the Capital Expenditures
(which approval shall not be unreasonably withheld and which
shall be granted provided such improvements are reasonably
expected to increase the long-term value of the Property), Lender
shall make available to Borrower amounts from the Capital
Replacement Fund under the following conditions:
(a) No Event of Default exists and is continuing;
(b) Borrower presents paid qualifying receipts or
invoices;
(c) Such expenditures are included in the Capital
Budget submitted to and approved by Lender in accordance with
Section 6.9 or will enhance the long-term value of the Property;
and
(d) If from time to time Borrower shall expend
monies beyond the balance in the Capital Replacement Fund, then
Borrower shall be afforded the opportunity to present such paid
invoices for reimbursement at later dates when the Borrower's
reserve balance shall be replenished to a level that can support
such expenditure.
9.2 Capital Replacement Fund to Be Held Pursuant to
the Terms of the Westin Management Agreement. During the period
Westin Hotel Company is managing the Innisbrook Property pursuant
to the Westin Management Agreement, the Capital Replacement Fund
shall be held by Westin Hotel Company pursuant to the terms of
the Westin Management Agreement; provided Lender and Westin Hotel
Company shall enter into a separate agreement respecting their
respective rights.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. If any one or more of the
following events (individually, an "Event of Default") shall
occur:
(a) if Borrower shall fail to make payment of the
Interest payable by Borrower under this Agreement when the same
becomes due and payable and such failure is not cured by Borrower
within a period of ten (10) days after receipt by Borrower of
notice thereof from Lender; provided, however, Borrower is only
entitled to three (3) such notices per twelve (12) month period
and that such notice shall be in lieu of and not in addition to
any notice required under applicable law;
(b) if Borrower shall fail to observe or perform
any material term, covenant or condition of this Agreement and
such failure is not cured by Borrower within a period of thirty
(30) days after receipt by Borrower of notice thereof from
Lender, unless such failure cannot with due diligence be cured
within a period of thirty (30) days, in which case such failure
shall not be deemed to continue if Borrower proceeds promptly and
with due diligence to cure the failure and diligently completes
the curing thereof as soon as reasonably practicable following
receipt of notice from Lender of the default; provided, however,
that such notice shall be in lieu of and not in addition to any
notice required under applicable law; provided further, however,
that the cure period shall not extend beyond thirty (30) days as
otherwise provided by this Section 10.1(b) if the facts or
circumstances giving rise to the default are creating a further
harm to Lender or the Property and Lender makes a good faith
determination that Borrower is not undertaking remedial steps
that Lender would cause to be taken if this Agreement were then
to terminate;
(c) if Borrower shall:
(i) admit in writing its inability to pay
its debts as they become due,
(ii) file a petition in bankruptcy or a
petition to take advantage of any insolvency act,
(iii) make an assignment for the benefit of
its creditors,
(iv) be unable to pay its debts as they
mature,
(v) consent to the appointment of a
receiver of itself or of the whole or any substantial
part of its property, or
(vi) file a petition or answer seeking
reorganization or arrangement under the Federal
bankruptcy laws or any other applicable law or statute
of the United States of America or any state thereof;
(d) if Borrower shall, on a petition in
bankruptcy filed against it, be adjudicated as bankrupt or a
court of competent jurisdiction shall enter an order or decree
appointing, without the consent of Borrower, a receiver of
Borrower or of the whole or substantially all of its property, or
approving a petition filed against it seeking reorganization or
arrangement of Borrower under the federal bankruptcy laws or any
other applicable law or statute of the United States of America
or any state thereof, and such judgment, order or decree shall
not be vacated or set aside or stayed within sixty (60) days from
the date of the entry thereof;
(e) if Borrower shall be liquidated or dissolved,
or shall begin proceedings toward such liquidation or
dissolution;
(f) if the estate or interest of Borrower in the
Property or any part thereof shall be levied upon or attached in
any proceeding and the same shall not be vacated or discharged or
bonded within the later of ninety (90) days after commencement
thereof or thirty (30) days after receipt by Borrower of notice
thereof from Lender (unless Borrower shall be contesting such
lien or attachment in accordance with Section 6.12); provided,
however, that such notice shall be in lieu of and not in addition
to any notice required under applicable law;
(g) if, except as a result of damage, destruction
or a partial or complete Condemnation Borrower voluntarily ceases
operations on the Property;
(h) any representation or warranty made by
Borrower herein or in any certificate, demand or request made
pursuant hereto proves to be incorrect, now or hereafter, in any
material respect and the same has not been cured or remedied
within a period of thirty (30) days after receipt by Borrower of
notice thereof from Lender; or
(i) an "Event of Default" (as defined in any
lease or loan) by any Affiliate of Borrower in any other lease or
loan by and between such party and Lender or any Affiliate of
Lender, or an "Event of Default" under the Pledge Agreement;
THEN, Borrower shall be declared to have breached this
Agreement. Lender may accelerate Borrower's obligations
hereunder by giving Borrower not less than ten (10) days' notice
(or no notice for clauses (c), (d), (e), (f) and (g)) of such
termination and upon the expiration of the time fixed in such
notice, all amounts due and payable hereunder or under any of the
Loan Documents shall become immediately due and payable and all
rights of Borrower under this Agreement shall cease. Lender
shall have all rights at law and in equity available to Lender
and to secured lenders generally as a result of Borrower's breach
of this Agreement.
10.2 Payment of Costs. Borrower shall, to the extent
permitted by law, pay as Additional Charges all costs and
expenses incurred by or on behalf of Lender, including reasonable
attorneys' fees and expenses, as a result of any Event of Default
hereunder.
10.3 Appointment of Receiver. Upon the occurrence of
an Event of Default, and upon filing of a suit or other
commencement of judicial proceedings to enforce the rights of
Lender hereunder, Lender shall be entitled, as a matter or right,
to the appointment of a receiver or receivers acceptable to
Lender of the Property and of the revenues, earnings, income,
products and profits thereof, pending such proceedings, with such
powers as the court making such appointment shall confer.
10.4 Waiver. If this Agreement is terminated pursuant
to Section 10.1, Borrower waives, to the extent permitted by
applicable law (a) any right of redemption, re-entry or
repossession.
10.5 Prepayment Premium. Upon acceleration of the
obligations of Borrower hereunder, whether before or after an
Event of Default, then in addition to payment of all other
amounts due and owing under this Agreement or the other Loan
Documents, Borrower shall pay to Lender, as prepayment
consideration, an amount equal to the greater of (a) ten (10%)
percent of the outstanding Loan balance, or (b) the present value
of a series of payments each equal to the Payment Differential
payable on each monthly payment date over the balance of the term
of the Note discounted at the Reinvestment Yield.
Notwithstanding the foregoing, no prepayment premium shall be due
and owing upon the repayment of the Loan as a result of a
prepayment in accordance with Article VII or Article VIII.
10.6 Application of Funds. Any payments received by
Lender under any of the provisions of this Agreement during the
existence or continuance of any Event of Default (and such
payment is made to Lender rather than Borrower due to the
existence of an Event of Default) shall be applied to Borrower's
obligations in the order which Lender may determine or as may be
prescribed by the laws of the State.
ARTICLE XI
PURCHASE OPTION
Upon the expiration or sooner termination of this
Agreement for any purpose whatsoever (including in the event of
an Event of Default and the exercise by Lender of its remedies
under the Loan Documents), and without limiting any other rights
or remedies available to Lender hereunder, Lender shall have the
right to acquire the Innisbrook Property from Borrower (the
"PURCHASE OPTION") for either of the following forms of
consideration:
(a) The payment by Lender to Borrower, in cash, of the
Fair Market Value of the Innisbrook Property on the date of
exercise of the Purchase Option (subject to Borrower's obligation
to pay the outstanding principal amount of the Loan and accrued
interest, together with any other payments due and owing under
this Agreement or the Loan Documents, including the Additional
Interest Amount); or
(b) Cancellation of the outstanding principal balance
of the Loan, including any obligation to pay the Additional
Interest Amount, and the issuance by Lender to Borrower of the
Purchase Price/Lender's Shares (as increased by any stock splits
or stock dividends issued by GTA Inc. during the term of this
Agreement and adjusted for any successor entity to GTA by way of
merger or otherwise based on the exchange rate at the time of
such merger).
Upon notice of exercise by Lender of the Purchase Option,
Borrower shall execute a special warranty deed, xxxx of sale, and
such other documents and instruments as Lender reasonably
requires, and shall take all other actions reasonably necessary
or desirable to convey good and marketable title to the
Innisbrook Property to Lender, subject only to Permitted
Exceptions. Borrower shall not remove any Tangible Personal
Property from the Property upon termination of the Agreement and
any amounts remaining in the Capital Replacement Reserve shall be
paid over to Lender. Borrower shall pay for an owner's title
insurance policy for Lender, in customary form, and shall pay for
all transfer and recording taxes applicable to such purchase and
sale. The purchase option granted to Lender herein shall be
memorialized and recorded in the Deed of Trust. Upon
consummation of Lender's option to purchase the Innisbrook
Property pursuant to this Article XI, Borrower shall vacate and
surrender the Innisbrook Property to Lender in the condition in
which the Innisbrook Property was in on the Closing Date, except
as repaired, rebuilt, restored, altered or added to as permitted
or required by the provisions of this Agreement and except for
ordinary wear and tear (subject to the obligation of Borrower to
maintain the Property in good order and repair during the Term).
Lender shall cooperate with Borrower to minimize any adverse tax
impact to Borrower upon Lender's exercise of the Purchase Option,
including, without limitation, the purchase of the stock of the
entity owning the Innisbrook Property; provided such cooperation
shall be at no additional cost to Lender, shall not result in
Lender having a different tax basis in the Innisbrook Property,
shall not subject Lender to additional liabilities, nor delay the
conveyance of the Innisbrook Property to Lender.
ARTICLE XII
SALE, LEASING AND ASSIGNMENT
12.1 Prohibition Against Sale. Borrower shall not,
without the prior written consent of Lender, which consent Lender
may withhold in its reasonable discretion, sell, assign, or
otherwise transfer (except to an Affiliate of Borrower or a
Permitted Assignee) the Property or any interest therein, whether
voluntarily, involuntarily or by operation of law. For purposes
of this Article 12, a Change in Control of the Borrower shall
constitute a sale of the Property. In no event shall Borrower be
permitted to place junior encumbrances on all or any part of the
Innisbrook Property, except to the extent specially permitted by
Section 2.11(c).
12.2 Leases.
(a) Permitted Leases. In no event shall
Borrower lease all or any portion of the Property in a manner
which is inconsistent with Borrower's obligation to enhance the
long-term value of the Property, nor shall Lender withhold its
consent to any assignment or sublease of the Property which is
consistent with such obligation. Lender hereby approves all
existing leases and licenses on the Property which are set forth
in Schedule 6.9 of the Stock Purchase and Merger Agreement.
Borrower's proposed lease or any of the following transfers shall
require Lender's prior written consent, which consent Lender may
withhold in its reasonable discretion provided Lender determines
that such lease or transfer is inconsistent with Borrower's
obligation to enhance the long-term value of the Property:
(i) lease or license to operate golf
courses;
(ii) lease or license to operate golf
professionals' shops;
(iii) lease or license to operate golf
driving ranges;
(iv) lease or license to operate hotel and
conference facilities; and
(v) lease or license to operate any other
portions (but not the entirety) of the Property
customarily associated with or incidental to the
operation of the golf course which provide for an
annual lease or license payment of in excess of $25,000
(which amount shall be increased by increases in the
CPI from the Commencement Date).
(b) Terms of Leases. Each lease with respect to
the Property shall be subject and subordinate to the lien of the
Lender in the Property. No lease made as permitted by this
Section 12.2 shall affect or reduce any of the obligations of
Borrower hereunder, and all such obligations shall continue in
full force and effect as if no lease had been made. No lease
shall impose any additional obligations on Lender under this
Agreement.
(c) Copies. Borrower shall, not less than sixty
(60) days prior to any proposed assignment or lease, deliver to
Lender written notice of its intent to assign or lease, which
notice shall identify the intended assignee or sublessee by name
and address, shall specify the effective date of the intended
assignment or lease, and shall be accompanied by an exact copy of
the proposed assignment or lease. Borrower shall provide Lender
with such additional information or documents reasonably
requested by Lender with respect to the proposed transaction and
the proposed assignee or subtenant, and an opportunity to meet
and interview the proposed assignee or subtenant, if requested.
(d) Assignment of Rights in Leases. As security
for performance of its obligations under this Agreement, Borrower
hereby grants, conveys and assigns to Lender all right, title and
interest of Borrower in and to all leases now in existence or
hereinafter entered into for any or all of the Property, and all
extensions, modifications and renewals thereof and all rents,
issues and profits therefrom. Lender hereby grants to Borrower a
license to collect and enjoy all rents and other sums of money
payable under any lease of any of the Property; provided,
however, that Lender shall have the absolute right at any time
after the occurrence and continuance of an Event of Default upon
notice to Borrower and any subtenants to revoke said license and
to collect such rents and sums of money and to retain the same.
Borrower shall not (i) consent to, cause or allow any material
modification or alteration of any of the terms, conditions or
covenants of any of the leases or the termination thereof,
without the prior written approval of Lender nor (ii) accept any
rents (other than customary security deposits) more than ninety
(90) days in advance of the accrual thereof nor permit anything
to be done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach of or
default in the terms of any of the leases.
(e) Licenses, Etc. For purposes of this Section
12.2, leases shall be deemed to include any licenses, concession
arrangements, management contracts (except to an Affiliate of the
Lessee) or other arrangements relating to the possession or use
of all or any part of the Property.
12.3 Transfers. No assignment or lease shall in any
way impair the continuing primary liability of Borrower
hereunder, as a principal and not as a surety or guarantor, and
no consent to any assignment or lease in a particular instance
shall be deemed to be a waiver of the prohibition set forth in
Section 12.1. Any assignment or other transfer of all or any
portion of Borrower's interest in the Property in contravention
of the terms of this Agreement shall be voidable at Lender's
option. Anything in this Agreement to the contrary
notwithstanding, Borrower shall not lease all or any portion of
the Property which is inconsistent with Borrower's obligation to
maximize the long-term value of the Property, nor shall Lender
withhold its consent to any assignment or sublease of the
Property which is consistent with such obligation.
12.4 REIT Limitations. Anything contained in this
Agreement to the contrary notwithstanding, Borrower shall not (i)
lease or assign or enter into other arrangements such that the
amounts to be paid by the sublessee or assignee thereunder would
be based, in whole or in part, on the income or profits derived
by the business activities of the sublessee or assignee;
(ii) lease or assign the Property or this Agreement to any person
that Lender owns, directly or indirectly (by applying
constructive ownership rules set forth in Section 856(d)(5) of
the Code), a 10% or greater interest; or (iii) lease or assign
the Property or this Agreement in any other manner or otherwise
derive any income which could cause any portion of the amounts
received by Lender pursuant to this Agreement or any lease to
fail to qualify as "interest on obligations secured by mortgages
on real property, or on interests in real property" within the
meaning of Section 856(c)(3)(B) of the Code, or which could cause
any other income received by Lender to fail to qualify as income
described in Section 856(c)(2) of the Code. The requirements of
this Section 12.4 shall likewise apply to any further subleasing
by any subtenant.
12.5 Management Agreement. Borrower shall not enter
into any management agreement that provides for the management
and operation of the Innisbrook Property by an unaffiliated third
party without the prior written consent of Lender, which consent
shall not be unreasonably withheld. Borrower agrees not to
terminate or materially modify the Master Lease - Innisbrook or
the Westin Management Agreement or any interest therein without
the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed. Any subsequent manager of the
Innisbrook Property shall be a first-class upscale hotel operator
with relevant experience in the operation and management of
first-class golf facilities.
ARTICLE XIII
ARBITRATION
13.1 Arbitration. In each case specified in this
Agreement in which it shall become necessary to resort to
arbitration, such arbitration shall be determined as provided in
this Section 13.1. The party desiring such arbitration shall
give notice to that effect to the other party, and an arbitrator
shall be selected by mutual agreement of the parties, or if they
cannot agree within thirty (30) days of such notice, by
appointment made by the American Arbitration Association ("AAA")
from among the members of its panels who are qualified and who
have experience in resolving matters of a nature similar to the
matter to be resolved by arbitration.
13.2 Arbitration Procedures. In any arbitration
commenced pursuant to Section 13.1 a single arbitrator shall be
designated and shall resolve the dispute. The arbitrator's
decision shall be binding on all parties and shall not be subject
to further review or appeal except as otherwise allowed by
applicable law. Upon the failure of either party (the "NON-
COMPLYING PARTY") to comply with his decision, the arbitrator
shall be empowered, at the request of the other party, to order
such compliance by the non-complying party and to supervise or
arrange for the supervision of the non-complying party. To the
maximum extent practicable, the arbitrator and the parties, and
the AAA if applicable, shall take any action necessary to insure
that the arbitration shall be concluded within ninety (90) days
of the filing of such dispute. The fees and expenses of the
arbitrator shall be shared equally by Lender and Borrower except
as otherwise specified above in this Section 13.2. Unless
otherwise agreed in writing by the parties or required by the
arbitrator or AAA, if applicable, arbitration proceedings
hereunder shall be conducted in the State. Notwithstanding
formal rules of evidence, each party may submit such evidence as
each party deems appropriate to support its position and the
arbitrator shall have access to and right to examine all books
and records of Lender and Borrower regarding the Property during
the arbitration.
ARTICLE XIV
LENDER'S RIGHT TO PLEDGE THE NOTES; BORROWER'S AND LENDER'S
RIGHT OF FIRST OFFER
14.1 Lender May Grant Liens. Without the consent of
Borrower, Lender may, from time to time, directly or indirectly,
create or otherwise cause to exist any lien on, or assignment of,
its interest in the Loan, the Notes, or any portion thereof or
interest therein, whether to secure any borrowing or other means
of financing or refinancing (the holder of any such assignment or
lien, a "LENDER ASSIGNEE"). Upon Lender's reasonable request,
Borrower shall provide written acknowledgement of any such
assignment to any Lender Assignee. Following the Closing Date,
Lender intends to assign its interest in the Loan and the Notes
to NationsBank, N.A. as agent. In connection therewith, Borrower
agrees to provide to NationsBank, N.A., as agent, a Phase I
Environmental Report Certified to NationsBank, N.A., as agent, in
conformity with the reasonable requirements of NationsBank, N.A.
Borrower shall pay the first $10,000 of the cost thereof and any
amounts in excess thereof shall be paid equally by Borrower and
Lender.
14.2 Borrower's Right of First Offer to Purchase.
Except for assignments permitted or contemplated by Section 14.1,
including conveyances by any lender following the exercise of any
remedies it may have, and excluding any financing transactions
wherein Lender retains any interest in a Note, if Lender intends
to sell a Note, and provided no Event of Default then exists,
Borrower shall have a right of first offer to purchase a Note
("Borrower's Right of First Offer to Purchase") on the terms and
conditions at which Lender proposes to sell the Note to an
unaffiliated third party. Lender shall give Borrower written
notice of its intent to sell and shall indicate the terms and
conditions (including the sale price) upon which Lender intends
to sell such Note to a third party. Borrower shall thereafter
have sixty (60) days to elect in writing to purchase such Note on
the terms and conditions set forth in the notice provided by
Lender to Borrower. If Borrower does not elect to purchase such
Note, then Lender shall be free to sell the Note to a third party
for a period of two hundred seventy (270) days. However, if the
price at which Lender intends to sell the Note to a third party
is less than 95% of the price set forth in the notice provided by
Lender to Borrower or otherwise are on terms which are materially
more favorable than the terms and conditions set forth in the
notice, then Lender shall again offer Borrower the right to
acquire the Note upon the same terms and conditions, provided
that Borrower shall have only thirty (30) days thereafter to
complete the acquisition at such price, terms and conditions.
14.3 Lender's Right of First Offer to Purchase. If
Borrower intends to sell the Innisbrook Property, Borrower shall
have a right of first offer to purchase the Innisbrook Property
("Lender's Right of First Offer to Purchase") on the terms and
conditions at which Borrower proposes to sell the Innisbrook
Property to an unaffiliated third party. Borrower shall give
Lender written notice of its intent to sell and shall indicate
the terms and conditions (including the sale price) upon which
Borrower intends to sell the Innisbrook Property to a third
party. Lender shall thereafter have sixty (60) days to elect in
writing to purchase the Innisbrook Property on the terms and
conditions set forth in the notice provided by Borrower to
Lender. If Lender does not elect to purchase the Innisbrook
Property, then Borrower shall be free to sell the Innisbrook
Property to a third party for a period of two hundred seventy
(270) days. However, if the price at which Borrower intends to
sell the Innisbrook Property to a third party is less than 95% of
the price set forth in the notice provided by Borrower to Lender
or otherwise are on terms which are materially more favorable
than the terms and conditions set forth in the notice, then
Borrower shall again offer Lender the right to acquire the
Innisbrook Property upon the same terms and conditions, provided
that Lender shall have only thirty (30) days thereafter to
complete the acquisition at such price, terms and conditions.
ARTICLE XV
INDEMNIFICATION
15.1 Borrower's Indemnification of Lender. Except as
otherwise provided in Section 6.5(b) and notwithstanding the
existence of any insurance provided for in Article VII, and
without regard to the policy limits of any such insurance,
Borrower will protect, indemnify, save harmless and defend any
Lender Indemnitee from and against all liabilities, obligations,
claims, actual damages (but excluding consequential damages),
penalties, causes of action, costs and expenses (including
reasonable attorneys' fees and expenses), to the extent permitted
by law, imposed upon or incurred by or asserted against any
Lender Indemnitee by reason of:
(a) any accident, injury to or death of persons
or loss of or damage to property occurring on or about the
Property or adjoining property, including, but not limited to,
any accident, injury to or death of Person or loss of or damage
to property resulting from golf balls, golf clubs, golf shoes,
lawn mowers or other equipment, pesticides, fertilizers or other
substances, golf carts, tractors or other motorized vehicles
present on or adjacent to the Property;
(b) any use, misuse, non-use, condition,
maintenance or repair of the Property;
(c) any Impositions (which are the obligations of
Borrower to pay pursuant to the applicable provisions of this
Agreement);
(d) any failure on the part of Borrower to
perform or comply with any of the terms of this Agreement;
(e) any so-called "dram shop" liability
associated with the sale and/or consumption of alcohol at the
Property;
(f) the non-performance of any of the terms and
provisions of any and all existing and future leases of the
Property to be performed by the landlord (Borrower) thereunder;
(g) the negligence or alleged negligence of
Lender with respect to the Property;
(h) any liability Lender may incur or suffer as a
result of any permitted contest by Borrower pursuant to Section
6.12;
(i) any other loss, damage or liability to any
Lender Indemnitee arising out of this Agreement or in connection
herewith, unless such suit, claim or damage is caused by the
gross negligence or willful misconduct of such Lender Indemnitee.
15.2 Lender's Indemnification of Borrower. Lender
shall protect, indemnify, save harmless and defend Borrower from
and against all liabilities, obligations, claims, actual or
consequential damages, penalties, causes of action, costs and
expenses (including reasonable attorneys' fees and expenses)
imposed upon or incurred by or asserted against Borrower as a
result of Lender's gross negligence or willful misconduct.
15.3 Mechanics of Indemnification. As soon as
reasonably practicable after receipt by the indemnified party of
notice of any liability or claim incurred by or asserted against
the indemnified party that is subject to indemnification under
this Article XV, the indemnified party shall give notice thereof
to the indemnifying party. The indemnified party may at its
option demand indemnity under this Article XV as soon as a claim
has been threatened by a third party, regardless of whether an
actual loss has been suffered, so long as the indemnified party
shall in good faith determine that such claim is not frivolous
and that the indemnified party may be liable for, or otherwise
incur, a loss as a result thereof and shall give notice of such
determination to the indemnifying party. The indemnified party
shall permit the indemnifying party, at its option and expense,
to assume the defense of any such claim by counsel selected by
the indemnifying party and reasonably satisfactory to the
indemnified party, and to settle or otherwise dispose of the
same; provided, however, that the indemnified party may at all
times participate in such defense at its expense, and provided
further, however, that the indemnifying party shall not, in
defense of any such claim, except with the prior written consent
of the indemnified party, consent to the entry of any judgment or
to enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or
plaintiff in question to the indemnified party and its affiliates
a release of all liabilities in respect of such claims, or that
does not result only in the payment of money damages by the
indemnifying party. If the indemnifying party shall fail to
undertake such defense within thirty (30) days after such notice,
or within such shorter time as may be reasonable under the
circumstances, then the indemnified party shall have the right to
undertake the defense, compromise or settlement of such liability
or claim on behalf of and for the account of the indemnifying
party.
15.4 Survival of Indemnification Obligations; Available
Insurance Proceeds. Borrower's or Lender's liability for a
breach of the provisions of this Article XV arising during the
term hereof shall survive any termination of this Agreement.
Notwithstanding anything herein to the contrary, each party
agrees to look first to the available proceeds from any insurance
it carries in connection with the Property prior to seeking
indemnification or otherwise seeking to recover any amounts to
compensate a party for its damages and then to seek
indemnification only to the extent of any loss not covered by
their available insurance proceeds.
ARTICLE XVI
MISCELLANEOUS
16.1 Notices. All notices, demands, requests,
consents, approvals and other communications hereunder shall be
in writing and delivered or mailed (by registered or certified
mail, return receipt requested and postage prepaid), addressed to
the respective parties, as set forth below:
If to Lender:
Golf Trust of America, L.P.
00 Xxxxx Xxxxx'x Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attn: W. Xxxxxxx Xxxxx, XX
Copy to:
O'Melveny & Xxxxx LLP
Embarcadero Center West
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
If to the Borrower:
Xx. Xxxxxxx X. Xxxxxxx
Starwood Capital Group, L.P.
Three Pickwick Plaza, Ste. 250
Xxxxxxxxx, Xxxxxxxxxxx 00000
Tel.: 000-000-0000
Fax: 000-000-0000
Copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Tel.: 000-000-0000
Fax: 000-000-0000
16.2 Authority to File Notices. Borrower irrevocably
appoints Lender as its attorney-in-fact, with full power of
substitution, to file for record, at Borrower's cost and expense
and in Borrower's name, any notices of completion, notices of
cessation of labor, or any other notices that Lender considers
necessary or desirable to protect its security.
16.3 Inconsistencies with Loan Documents. In the event
of any inconsistencies between the terms of this Agreement and
any terms of any of the Loan Documents, the terms of this
Agreement shall govern and prevail.
16.4 No Waiver; Remedies Cumulative. No disbursement
of proceeds of the Loan shall constitute a waiver of any
conditions to Lender's obligation to make further disbursements,
and if Borrower is unable to satisfy any such conditions, the
existence of any such waiver shall not preclude Lender from
thereafter declaring such inability to constitute a default under
this Agreement. No failure or delay on the part of Lender in the
exercise of any power, right or privilege hereunder or under any
other Loan Document shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. All rights
and remedies existing under this Agreement and the other Loan
Documents are cumulative to and not exclusive of any rights or
remedies provided by law or otherwise available.
16.5 Lender Approval of Instruments and Parties. All
proceedings taken in accordance with transactions provided for
herein; all waivers of lien, surveys, appraisals and documents
required or contemplated by this Agreement and the Persons
responsible for the execution and preparation thereof shall be
satisfactory to, and subject to approval by, Lender. Lender's
counsel shall be provided with copies of all documents which they
may reasonably request in connection with this Agreement.
16.6 Lender Determination of Facts. Lender shall at
all times be free to hire such independent consultants as it
deems reasonably necessary to independently establish the
existence or nonexistence of any fact or facts, the existence or
nonexistence of which is a condition of this Agreement or of any
disbursement of Loan proceeds hereunder. The costs of such
consultants are to be paid by Borrower, provided such consultants
are hired in the ordinary course of Lender's business and similar
consultants are generally engaged to review all properties in
which Lender owns a fee, leasehold or mortgagee's interest.
Provided no Event of Default then exists (in which case the
foregoing limitation shall not apply) the annual cost of Lender's
regular consultants shall not exceed on average Two Thousand Five
Hundred Dollars ($2,500) per year, which amount shall be
increased to reflect increases in the CPI from the date hereof.
Incorporation of Preamble, Recitals and Exhibits.
The preamble, recitals and exhibits hereto are hereby
incorporated into this Agreement and made a part hereof.
16.8 Entire Agreement. This Agreement and the other
Loan Documents constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and
thereof and supersedes all prior agreements between the parties
with respect to the matters contained in this Agreement and the
other Loan Documents. All prior or contemporaneous
understandings, oral representations or agreements had among the
parties with respect to this subject matter are merged and
contained in this Agreement and the other Loan Documents.
16.9 Further Assurances. Borrower shall execute and
deliver from time to time, promptly after any request therefor by
Lender, any and all instruments, agreements and documents and
shall take such other action as may be necessary or desirable in
the opinion of Lender to maintain, perfect or insure Lender's
security provided for herein and in the other Loan Documents,
including the execution of UCC-1 renewal statements, the
execution of such amendments to the Deed of Trust and the other
Loan Documents, the delivery of such endorsements to the Title
Company and any and all documents or instruments in respect of
any revenues from the Property, all as Lender shall reasonably
require, and shall pay all fees and expenses (including
reasonable attorneys' fees) related thereto or incurred by Lender
in connection therewith.
16.10 Changes, Waivers, Discharge and Modifications
in Writing. No provision of this Agreement may be changed,
waived, discharged or terminated except by an instrument in
writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
16.11 Choice of Law. THIS AGREEMENT AND THE
TRANSACTION CONTEMPLATED HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16.12 Disbursements in Excess of Loan Amount. If
the total disbursements by Lender exceed the amount of the Loan,
to the extent permitted by the laws of the State of New York, the
total of all disbursements shall be secured by the Loan
Documents. All other sums expended by Lender pursuant to this
Agreement or any other Loan Documents shall be deemed to have
been paid to Borrower and shall be secured by the Loan Documents.
Funds advanced in the reasonable exercise of Lender's judgment
that the same are needed to complete the Improvements or to
protect its security are to be deemed obligatory advances
hereunder and are to be added to the total indebtedness due under
the Note and secured by the Loan Documents and said indebtedness
shall be increased accordingly.
16.13 Counterparts. This Agreement and all other
Loan Documents may be executed in any number of counterparts each
of which shall be deemed an original, but all such counterparts
together shall constitute but one agreement. Signature and
acknowledgement pages may be detached from the counterparts and
attached to a single copy of the document to physically form one
document.
16.14 Time is of the Essence. Time is of the
essence of this Agreement.
16.15 Attorneys' Fees. For the purpose of this
Agreement and the other Loan Documents, the terms "ATTORNEYS'
FEES" and "ATTORNEYS' FEES AND COSTS" shall each mean the fees
and expenses of counsel to the parties hereto, which may include
printing, photostating, duplicating and other expenses, air
freight charges, and fees billed for law clerks, paralegals,
librarians and others not admitted to the bar but performing
services under the supervision of an attorney. The terms
"ATTORNEYS' FEES" and "ATTORNEYS' FEES AND COSTS" shall also each
include all such fees and expenses incurred with respect to
appeals, arbitrations and bankruptcy proceedings, and whether or
not any action or proceeding is brought with respect to the
matter for which said fees and expenses were incurred and shall
also include all such fees and expenses incurred in enforcing any
judgment. In the event of any dispute between the parties hereto
involving the covenants or conditions contained in this Agreement
or arising out of the subject matter of this Lease, the
prevailing party shall be entitled to recover against the other
party reasonable attorneys' fees and court costs.
16.16 Severability. Should any portion of this
Agreement be declared invalid and unenforceable, then such
portion shall be deemed to be severed from this Agreement and
shall not affect the remainder thereof.
16.17 Interest Rate Limitation. It is the intent
of Borrower and Lender in the execution of this Agreement and the
other Loan Documents that the Loans be exempt from the usury laws
of the State of New York. In the event that, for any reason, it
should be determined that the New York usury law is applicable to
the Loans, Lender and Borrower stipulate and agree that none of
the terms and provisions contained herein or in any of the other
Loan Documents shall ever be construed to create a contract for
the use, forbearance or detention of money requiring payment of
interest at a rate in excess of the maximum interest rate
permitted to be charged by the laws of the State of New York. In
such event, if Lender shall collect any monies which are deemed
to constitute interest which would otherwise increase the
effective interest rate on the Loans to a rate in excess of the
maximum interest rate permitted to be charged by the laws of the
State of New York, all such sums deemed to constitute interest in
excess of such maximum rate shall, at the option of Lender, be
credited to the payment of sums due hereunder or under the other
Loan Documents or shall be returned to Borrower.
16.18 Brokers. Borrower hereby represents and
warrants to Lender that there are no brokerage commissions or
finders' fees due or claimed by any party to be due in connection
with or with respect to the transaction contemplated hereby as a
result of any agreements or understandings, including alleged
agreements and understandings, with Borrower or any affiliate of
Borrower or anyone claiming to represent Borrower or any
affiliate of Borrower. Lender hereby represents and warrants to
Borrower that there are no brokerage commissions or finders' fees
due or claimed by any party to be due in connection with or with
respect to the transaction contemplated hereby as a result of any
agreements or understandings, including alleged agreements and
understandings, with Lender or any affiliate of Lender or anyone
claiming to represent Lender or any affiliate of Lender.
16.19 Non-Recourse as to Lender and Borrower.
(a) Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any
liability of Lender under this Agreement shall be enforced only
against Lender's interest in the Collateral and not against any
other assets, properties or funds of (a) Lender, (b) any
director, officer, general partner, limited partner, employee or
agent of Lender, or any general partner of Lender, any of their
respective general partners or stockholders (or any legal
representative, heir, estate, successor or assign of any
thereof), (c) any predecessor or successor partnership or
corporation (or other entity) of Lender, or any of their
respective general partners, either directly or through either
Lender or their respective general partners or any predecessor or
successor partnership or corporation or their stockholders,
officers, directors, employees or agents (or other entity), or
(d) any other Person affiliated with any of the foregoing, or any
director, officer, employee or agent of any thereof. Borrower
shall have the right of setoff against payments due under the
Note following a judicial determination of a court of competent
jurisdiction of Lender's liability for the breach of one or more
of its obligations hereunder.
(b) Except as expressly set forth below, the
recourse of Lender with respect to the obligations evidenced by
the Note and the Loan Documents shall be solely to the Property.
Notwithstanding the foregoing, nothing shall be deemed in any way
to impair, limit or prejudice the rights of Lender:
(i) in foreclosure proceedings or in any
ancillary proceedings brought to facilitate Lender's foreclosure
on the Property or the Pledged Lender's Shares or any portion
thereof, provided such exception shall not expand Lender's
ability to seek recourse against assets in which it has no
security interest;
(ii) to recover from Borrower any
condemnation or insurance proceeds attributable to the Property
which were not paid to Lender or used to restore the Property in
accordance with the terms of this Agreement;
(iii) to recover from Borrower any rents,
profits, security deposits, advances, rebates, prepaid rents,
room or other hotel or golf course revenues or other similar sums
attributable to the Property collected by or for Borrower
following an Event of Default and not properly applied to the
reasonable fixed and operating expenses of the Property,
including payments of the Loan; and
(iv) to recover any damages as a result of
any fraud or misrepresentation by Borrower in connection with the
Property or the Loan Documents.
16.20 No Relationship. Lender shall in no event be
construed for any purpose to be a partner, landlord, fee owner,
joint venturer or associate of Borrower or of any tenant,
operator, concessionaire or licensee of Borrower with respect to
the Property or any of the Other Leased Properties or otherwise
in the conduct of their respective businesses. Without limiting
the foregoing, Borrower confirms that this Agreement creates a
creditor/debtor relationship and not that of a landlord/tenant or
partnership.
16.21 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the permitted heirs,
executors, administrators, legal representatives, successors and
assigns of the parties.
16.22 Competition Between Lender and Borrower.
Lender and Borrower agree that neither party shall be restricted
as to other relationships and competition. Affiliates of
Borrower shall be allowed to own, lease and/or manage other golf
courses or golf resorts that are not affiliated with Lender,
provided that such other ownership, leasing or management
arrangements are disclosed to Lender in writing. Subject to the
provisions of Section 16.24, Lender may acquire or own golf
courses that may be geographically proximate to one or more golf
courses that Borrower or Affiliates of Borrower may own, manage
or lease.
16.23 Waiver of Jury Trial. BORROWER AND LENDER
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND
THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all encompassing of any
and all disputes that may be filed in any court and that relate
to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims, and all other common
law and statutory claims. Borrower and Lender acknowledge that
this waiver is a material inducement to enter into a business
relationship, that each has already relied on the waiver in
entering into this Agreement, and that each will continue to rely
on the waiver in their related future dealings. Borrower and
Lender further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
16.24 Right of First Offer to Lease Additional Golf
Courses Proximate to the Innisbrook Property. Neither Lender nor
any of its Affiliates, either individually or with any other
Person, shall at any time while the Loan is outstanding own,
lease, finance and/or manage an existing property containing a
golf course which is located within a twenty-five mile radius
(the "RESTRICTED RADIUS") of the Innisbrook Premises except in
accordance with the terms of this Section 16.24. If at any time
while the Loan is outstanding, Lender or any of its Affiliates
shall be given the opportunity with an unrelated third-party
(each such party, a "THIRD PARTY") to own or lease a golf course
that is within the Restricted Radius, which opportunity Lender or
any of its Affiliates intends to accept, then Lender shall send
notice to Borrower of such opportunity together with a copy of
the proposed agreement or term sheet (the "PROPOSED AGREEMENT")
between Lender or its Affiliate and the Third-Party pertaining to
such opportunity. Within forty-five days of delivery of such
notice to Borrower, Borrower and Lender shall endeavor in good
faith to execute and deliver to the other a mutually satisfactory
agreement setting forth such agreement, in lieu of the Third-
Party, with the Lender or its Affiliate, on substantially the
same terms and conditions in the Proposed Agreement. If
agreement is not executed and delivered as aforesaid, then Lender
and its Affiliates shall be free for a period of two hundred and
seventy days to enter into such opportunity with the Third-Party
on generally the same terms and conditions as set forth in the
Proposed Agreement. Notwithstanding the foregoing, if any
opportunity is presented to Lender or any of its Affiliates to
own or lease a property that is within the Restricted Area and
that has an existing and operating golf course, then Lender shall
have no obligation to provide Borrower with the notice specified
in this Section or to comply with the other requirements of this
Section during the period that such property has a pre-existing
arrangement with another owner, operator or manager, provided,
that upon the expiration or termination of such pre-existing
arrangement, Lender shall offer such opportunity to Borrower in
accordance with the terms of this Section.
IN WITNESS WHEREOF, Lender and Borrower have caused
this Agreement to be duly executed and delivered as of the date
first above written.
BORROWER:
GOLF HOST RESORTS, INC.,
a Colorado corporation
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Its: President
By:
Its:
LENDER:
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland corporation
Its: General Partner
By: /s/ W. Xxxxxxx Xxxxx
W. Xxxxxxx Xxxxx
Its: President
