BANK AGREEMENT
THIS BANK AGREEMENT, dated as of November 20, 1997 (as amended, modified
or supplemented from time to time, the "Bank Agreement"), is by and among Grand
Court Lifestyles, Inc., a Delaware corporation (the "Company"), and The Bank of
New York (the "Bank").
W I T N E S S E T H:
WHEREAS, the Company is issuing its Retirement Financing Notes-VII due
October 15, 2002 (the "Notes") pursuant to the Company's Confidential Private
Placement Memorandum, as the same may be from time to time amended (the
"Memorandum"); and
WHEREAS, the Company's private placement of the Notes (the "Offering")
will terminate on the earlier of (i) the date on which all the Notes are sold or
(ii) December 31, 1998 (the "Offering Termination Date"); and
WHEREAS, subscribers will purchase Notes at a closing (the "Initial
Closing") to be held at such time as the Company may determine in its discretion
and, thereafter, from time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of the Company, on
such day or days as may be determined by the Company, as subscriptions are
received and accepted (hereinafter the date of the Initial Closing and the date
of any Additional Closing are each referred to as a "Closing Date"); and
WHEREAS, the Company desires to deliver to the Bank amounts received by
the Company from subscribers for Notes (each, singly, a "Purchaser," and,
collectively, the "Purchasers"), in payment for the Notes, which amounts shall
be released to the Company at the Initial Closing and at each Additional
Closing; and
WHEREAS, each Purchaser shall be entitled to receive, on a monthly basis
prior to the Closing Date with respect to that Purchaser's Notes, distributions
representing interest accrued on that Purchaser's subscription payment at a rate
of 13.125% per annum; and
WHEREAS, the Company desires to establish an interest bearing escrow fund
to be called the Retirement Financing Notes-VII Escrow Fund Account (the "Fund")
with the Bank; and
WHEREAS, each Purchaser shall be entitled to receive, on a monthly basis
after the Closing Date with respect to that Purchaser's Notes, interest on his
Note at the rate of 13.125% per annum; and
WHEREAS, the Company wishes to appoint the Bank as Escrow Agent,
Authenticating Agent, Paying Agent, Registrar and Transfer Agent with respect to
the Notes and
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the Bank is willing to accept such appointments upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained and other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
Section 1.1 Appointment. The Company hereby appoints and designates the
Bank as Escrow Agent for the purposes set forth in this Section 1, and the Bank
hereby accepts such appointment.
Section 1.2 Escrow. The Company shall from time to time deliver amounts
received from Purchasers in payment for the Notes ("Subscription Payments") to
the Bank. The Bank shall deposit the Subscription Payments in the Fund to be
established in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in short term
certificates of deposit (including certificates of deposit issued by the Bank),
A-1 commercial paper, P-1 commercial paper, interest bearing money market
accounts, all as specified in writing by the Company and held in trust for the
benefit of Purchasers. In the event the Company should fail to so specify,
Subscription Payments delivered for deposit in the Fund shall be invested in the
Bank's Deposit Reserve, an interest-bearing account, for the benefit of the
Purchasers. The Bank is not responsible for interest, losses, taxes or other
charges on investments. All checks delivered to the Bank for deposit in the Fund
shall be payable to the order of "Retirement Financing Notes-VII - Escrow
Account." Concurrently with such delivery, the Company shall deliver to the Bank
a statement of the name, mailing address and tax identification number of each
Purchaser whose Subscription Payment is being delivered, and a schedule listing
the aggregate Notes and aggregate cumulative Subscription Payments to date
delivered for deposit in the Fund. For the purposes of this Bank Agreement, the
Company is authorized to make deposits and give instructions as to investments
of deposits and otherwise, as contemplated in this Bank Agreement, to the Bank.
Section 1.3 Interest. During the period (the "Escrow Period") commencing
upon the date that any Purchaser's Subscription Payment constitutes Cleared
Funds (as defined in Section 1.11 hereof) and ending on the day immediately
preceding the Closing Date with respect to that Purchaser's Notes, interest will
accrue on that Purchaser's Subscription Payment at a rate of 13.125% per annum,
computed on the basis of a year of 360 days consisting of 12 thirty day months.
Interest shall be payable on the fifteenth day of each month if such day is a
Business Day. If such day is not a Business Day, then the next Business Day
shall be deemed the Interest Payment Date (each, an "Interest Payment Date").
Four Business Days prior to each such Interest Payment Date, the Bank shall give
the Company written notice of the difference between the amount of interest
which will be payable on Subscription Payments on such Interest Payment Date and
the amount of interest accruing on the Fund which will be available for such
payment
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on such Interest Payment Date. Not later than 11:30 a.m. (New York time) on such
Interest Payment Date, the Company shall deposit with the Bank the amount of
such difference. On each Interest Payment Date, the Bank shall pay interest
which is due and payable to the respective Purchasers by mailing its check in
the appropriate amount to each Purchaser by first class mail to the Purchaser's
mailing address provided to the Bank pursuant to Section 1.2 hereof. In the
event that the Company shall default in its payment obligations to the Bank
under this Section 1.3, the Bank shall mail its check in the amount of each
Purchaser's pro rata share of interest earned and paid on the Fund's assets as
provided in this Section 1.3. For purposes of this Bank Agreement, "Business
Day" shall mean any day other than a day on which the Bank is authorized to
remain closed in New York City.
Section 1.4 The Initial Closing and Additional Closings. Upon the
scheduling of the Initial Closing and each Additional Closing, the Company shall
give written notice thereof to the Bank not less than one (1) Business Day prior
to the date scheduled for each such closing.
Section 1.5 Cancellation. The Company shall give the Bank notice of any
Purchaser who cancels his Subscription prior to his Closing Date or whose
Subscription Payment was deposited pursuant to Section 1.2 but whose
Subscription is rejected, setting forth the name and mailing address of the
Purchaser and the amount of the rejected or cancelled subscription. As promptly
as practicable thereafter, the Bank shall pay the amount of the cancelled or
rejected subscription from the Fund to the Purchaser whose Subscription was
cancelled or rejected as directed by the Company. Any interest earned thereon
and not theretofore distributed pursuant to Section 1.3 hereof shall be paid to
the Purchaser in accordance with Section 1.3 hereof. Payment shall be made by
check payable to the Purchaser mailed by the Bank by first class mail directly
to the Purchaser at the mailing address of the Purchaser.
Section 1.6 Payment. (a) The Bank, at the Initial Closing and each
Additional Closing, upon written instruction from either Xx. Xxxx Xxxxxxx and
Xx. Xxxxxxx X. Xxxxx, as the designated officers of the Company, shall transfer
to the Company or to such third party or parties as may be directed by Xx.
Xxxxxxx or Xx. Xxxxx the Cleared Funds then held in the Fund by the Bank. Any
interest earned thereon and not theretofore distributed in accordance with
Section 1.3 hereof shall be paid to the Purchasers in accordance with Section
1.3 hereof.
(b) In the event that the Bank should receive written instructions, as
contemplated in subparagraph (a) above, from any one other than Xx. Xxxxxxx or
Xx. Xxxxx, regardless of whether that person is an officer, director, employee,
agent or representative of the Company, those instructions are to be deemed to
be invalid and contrary to the intent of this Bank Agreement.
Section 1.7 Fees and Expenses. In addition to the fees set forth in
Section 7.3 hereof, the Bank shall be entitled to an administration fee as
compensation for its services under this Section 1 in the amount of $5,000
payable (i) upon the execution and delivery of this Bank Agreement and (ii)
subject to an adjustment as provided in the next succeeding sentence of this
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Section 1.7, on the first anniversary date of this Bank Agreement, provided
however, that the Bank shall not be entitled to payment of an administration fee
on such first anniversary date if all of the Notes have been sold prior thereto.
In the event the Offering terminates prior to December 31, 1998, the Company
shall be entitled to a refund payable ten days after the Offering Termination
Date, of that portion of the administration fee paid to the Bank on the first
anniversary date of the Bank Agreement, in an amount calculated as the
difference between (a) $5,000 and (b) the product of (x) $5,000 and (y) a
fraction, the numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering Termination Date,
inclusive, and the denominator of which is 365. In no event shall the Bank be
entitled to payment of an administration fee, as provided for in this Section
1.7, following the Offering Termination Date. The Company shall also pay the
Bank $5 for the preparation and execution of each Purchaser's account including
the calculation of interest accrued; $1 for the preparation of each Purchaser's
1099 tax form; $25 for each investment transaction in the Fund; $25 for each
returned "bounced" check of a Purchaser; and $500 for each Additional Closing,
payable within 10 days after the Bank gives the Company notice that any such
amounts are due and payable. Notwithstanding anything herein to the contrary,
the Bank shall not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on Subscription Payments.
No additional fee will be payable with respect to wire transfers of and
unreturned checks for Subscription Payments. In addition, the Company shall
reimburse the Bank for other actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1 (including, but not
limited to, actual expenses for stationery, postage, telephone, telex, wire
transfers, telecopy and retention of records, and reasonable fees and expenses
of counsel), payable within ten (10) days after the Bank gives notice to the
Company that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by the Company.
Amounts held in the Fund shall not be available to satisfy this obligation or
any other obligation of the Company to the Bank. The provisions of this Section
1.7 shall survive the termination of this Bank Agreement.
Section 1.8 Termination of Offering. If the Offering should be terminated,
the Company shall promptly so advise the Bank in writing, and shall authorize
and direct the Bank to return the Subscription Payments to the Purchasers. The
Bank thereupon shall return those Subscription Payments to the extent they have
not been distributed per Section 1.6 to the Purchasers from whom they were
received. Any interest earned on the Subscription Payments and not theretofore
distributed pursuant to Section 1.3 hereof shall be paid in accordance with
Section 1.3 hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and liabilities
under this Bank Agreement.
Section 1.9 Form 1099, etc. In compliance with the Internal Revenue Code
of 1986, as amended, the Company shall request that each Purchaser furnish to
the Bank such Purchaser's taxpayer identification number and a statement
certified under penalties of perjury that (a) such taxpayer identification
number is true and correct and (b) the Purchaser is not subject to withholding
of 31% of reportable interest, dividends or other payments.
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Section 1.10 Uncollected Funds. In the event that any funds, including
Cleared Funds, deposited in the Fund prove uncollectible after the funds
represented thereby have been released by the Bank pursuant to this Bank
Agreement, the Company shall reimburse the Bank upon request for the face amount
of such check or checks; and the Bank shall, upon instruction from the Company,
deliver the returned checks or other instruments to the Company. This section
shall survive the termination of this Bank Agreement.
Section 1.11 Cleared Funds. For the purpose of this Bank Agreement,
Subscription Payments shall constitute "Cleared Funds" in accordance with the
following:
(a) if paid by wire transfer, such funds shall constitute Cleared Funds on
the date received by the Bank;
(b) if paid by check drawn on a New York Clearing House Bank, such funds
shall constitute Cleared Funds on the second Business Day following the date
received by the Bank; and
(c) if paid by check drawn on any bank other than a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the third Business Day
following the date received by the Bank.
Section 2. Execution. The Notes shall be executed on behalf of the Company
by the manual or facsimile signature of an officer of the Company. All such
facsimile signatures shall have the same force and effect as if the officer had
manually signed the Notes. In case any officer of the Company whose signature
shall appear on a Note shall cease to be such officer before the delivery of
such Note or the issuance of a new Note following a transfer or exchange, such
signature or such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such officer had remained an officer until delivery.
Section 3. Authenticating Agent.
Section 3.1 Appointment. The Company hereby appoints and designates the
Bank as Authenticating Agent for the purposes set forth in this Section 3, and
the Bank hereby accepts such appointment.
Section 3.2 Authentication. Only such Notes as shall have the Certificate
of Authentication endorsed thereon in substantially the form set forth in the
form of Note attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any right or
benefit under this Bank Agreement. No Notes shall be valid or obligatory for any
purpose unless and until such Certificate of Authentication shall have been duly
executed by the Bank; and such executed certificate upon any such Note shall be
conclusive evidence that such Note has been authenticated and delivered under
this Bank
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Agreement. The Certificate of Authentication on any Note shall be deemed to have
been executed by the Bank if signed by an authorized signatory of the Bank, but
it shall not be necessary that the same person sign the Certificate of
Authentication on all of the Notes.
Section 4. Mutilated, Lost, Stolen or Destroyed Notes. Subject to
applicable law, in the event any Note is mutilated, lost, stolen or destroyed,
the Company may authorize the execution and delivery of a new Note of like date,
number, maturity and denomination as that mutilated, lost, stolen or destroyed,
provided, however, that in the case of any mutilated Note, such mutilated Note
shall first be surrendered to the Company, and in the case of any lost, stolen
or destroyed Note, there shall be first furnished to the Company and the Bank,
evidence of the ownership thereof and of such loss, theft or destruction
satisfactory to the Company and the Bank, together with indemnification through
a note of indemnity or otherwise as shall be satisfactory to the Company and the
Bank. The Company may charge the Purchaser of such Note with any amounts
satisfactory to the Company and the Bank and permitted by applicable law.
Section 5. Registrar and Transfer Agent.
Section 5.1 Appointment. The Company hereby appoints and designates the
Bank as Registrar and Transfer Agent for the purposes set forth in this Section
5, and the Bank hereby accepts such appointment.
Section 5.2 Registration, Transfer and Exchange of Notes. The Notes are
issuable only as registered Notes without coupons in the denomination of
$100,000 or any multiple or any fraction thereof at the sole discretion of the
Company. Each Note shall bear the following restrictive legend: "These
securities have not been registered under the Securities Act of 1933, as
amended, and may be offered and sold or otherwise transferred only if registered
pursuant to the provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust office a
register in which the Bank shall provide for the registration and transfer of
Notes. Upon surrender for registration of transfer of any Note at such office of
the Bank, the Company shall execute, pursuant to Section 2 hereof, and mail by
first class mail to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated transferee, or
transferees, one or more new Notes in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Note, registered in the name of the
designated transferee or transferees. Every Note presented or surrendered for
registration of transfer shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or his attorney
duly authorized in writing. Notwithstanding the preceding, the Notes may not be
transferred without an effective registration statement under the Securities Act
of 1933 covering the Notes or an opinion of counsel satisfactory to the Company
and its counsel that such registration is not necessary under the Securities Act
of 1933 (the "Securities Act"). At the option of the owner of any Note, such
Note may be exchanged for other Notes of any authorized denominations, in an
aggregate principal amount equal to the unpaid principal amount of such
surrendered Note, upon surrender of the Note to be exchanged at the principal
corporate trust office of the Bank;
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provided, however, that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the Company.
Whenever any Note is so surrendered for exchange, the Company shall execute,
pursuant to Section 2 hereof, and deliver to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first class mail to the
designated transferee, or transferees, the Note or Notes which the Note owner
making the exchange is entitled to receive. Any Note or Notes issued in exchange
for any Note or upon transfer thereof shall be dated the date to which interest
has been paid on such Note surrendered for exchange or transfer, and neither
gain nor loss of interest shall result from any such exchange or transfer. In
addition, each Note issued upon such exchange or transfer shall bear the
restrictive legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with the Securities
Act.
Section 5.3 Owner. The person in whose name any Note shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of or on account of the principal of or interest on such Note shall be
made only to or upon the order of the registered owner thereof or his duly
authorized legal representative. Such registration may be changed only as
provided in this Section 5, and no other notice to the Company or the Bank shall
affect the rights or obligations with respect to the transfer of a Note or be
effective to transfer any Note. All payments to the person in whose name any
Note shall be registered shall be valid and effectual to satisfy and discharge
the liability upon such Note to the extent of the sum or sums to be paid.
Section 5.4 Transfer Agent. The Bank shall send executed, authenticated
Notes to Purchasers on Closing Dates as required and to subsequent owners and
transferees who are entitled to receive Notes pursuant to the terms of this Bank
Agreement, by first class mail.
Section 5.5 Charges and Expenses. No service charge shall be made for any
transfer or exchange of Notes, but in all cases in which Notes shall be
transferred or exchanged hereunder, as a condition to any such transfer or
exchange, the owner of the Note shall, prior to the delivery of any new Note
pursuant to such transfer or exchange, reimburse the Company and the Bank for
their respective actual out-of-pocket expenses incurred in connection therewith
(including, but not limited to, any tax, fee or other governmental charge
required to be paid with respect to such transfer or exchange, actual expenses
for stationery, postage, telephone, telex, wire transfers, telecopy and
retention of records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.5 shall survive the termination of
this Bank Agreement.
Section 5.6 Redemption at the Option of the Company.
(a) Whenever the Company shall effect a redemption at the option of the
Company, at any time in its sole and absolute discretion, of part or all of the
Notes, which shall be without premium or penalty, the Company shall give written
notice thereof to the Bank at least forty (40) days prior to the date set forth
for redemption, the manner in which redemption
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shall be effected and all the relevant details thereof. The Bank shall give
written notice to the Purchasers of that redemption at least thirty (30) days
prior to the date set forth for redemption in the form included herewith as
Exhibit A. The Bank shall register the cancellation of the whole or a portion of
the unredeemed Notes, as appropriate. In any event, new Notes will not be issued
to reflect the non-redeemed portion of the Notes. No interest shall be payable
on the redeemed portion of a Note from and after the date of redemption.
(b) The Bank hereby acknowledges that the Company may effect a redemption
at the option of the Company, at any time in its sole and absolute discretion,
of part or all of the Notes without premium or penalty.
Section 5.7 Mandatory Redemption. The Company shall be obligated to redeem
100% of the Notes due October 15, 2002. When the Company shall effect the
mandatory redemption, the Company shall give written notice thereof to the Bank
at least forty (40) days prior to the date set forth for redemption, the manner
in which redemption shall be effected and all relevant details thereof. The Bank
shall give written notice to the Purchasers of that redemption at least thirty
(30) days prior to the date set forth for redemption in the form included
herewith as Exhibit B. The Bank shall register the cancellation of the whole of
the redeemed Notes.
Section 6. Paying Agent.
Section 6.1 Appointment. The Company hereby appoints and designates the
Bank as Paying Agent for the purposes set forth in this Section 6, and the Bank
hereby accepts such appointment.
Section 6.2 Payment Provisions.
(a) The Bank shall pay interest on Subscription Payments and principal of
and interest on the Notes to the persons in whose names the Notes are
registered, subject to the limitations contained in Section 5.6(a), Section 5.7
and in accordance with the terms and provisions of this Bank Agreement and the
Notes, by check mailed by first class mail to the registered owner of a Note at
his address as it appears in the register; provided that not later than 11:30
a.m. (New York time) on the Interest Payment Date or date on which principal of
any Note is due and payable, the Company shall provide the Bank with sufficient
funds to make those payments.
(b) Each Purchaser shall be entitled to receive with respect to that
Purchaser's Notes, interest from the Closing Date through October 15, 2002.
Section 6.3 Expenses. The Company shall reimburse the Bank for its actual
out-of-pocket expenses incurred in connection with its obligations pursuant to
this Section 6 (including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire
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transfers, telecopy and retention of records), payable within ten (10) days
after the Bank gives notice to the Company that it has incurred such expenses.
The obligation to pay such compensation and reimburse such expenses shall be
borne solely by the Company. Notwithstanding anything herein to the contrary,
the Bank shall not charge the Company any fees for the issuance of checks or
wire transfers to make payments of interest on or repayments of principal of the
Notes. The provisions of this Section 6.3 shall survive the termination of this
Bank Agreement.
Section 7. Rights and Duties of Bank.
Section 7.1 Duties of the Bank.
(a) Upon the occurrence and continuation of an Event of Default, the Bank
shall declare the entire outstanding aggregate principal balance of all the
Notes plus all accrued interest due and immediately payable.
(b) In the event that the Company shall default on its payment obligations
to the Bank under this Bank Agreement, the Bank shall be entitled to institute
action against the Company, jointly or severally, to collect payment under this
Bank Agreement.
Section 7.2 Events of Default.
If any of the following events (an "Event of Default") shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any part of the principal
of any Note when the same shall become due and payable on October 15,
2002, and such default shall have continued for more than 30 days; or
(ii) the Company defaults in the payment of any part of the interest
on any Note when the same shall become due and payable, and such default
shall have continued for more than 15 days;
then, the Bank, upon instruction by the owners of at least 50% of the principal
amount of the Notes, by notice to the Company, or the owners of at least 75% of
the principal amount of the Notes, by notice to the Company and to the Bank, may
declare the entire principal of and accrued interest on all Notes to become
immediately due and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.3 Fees and Expenses. In addition to the administration fee set
forth in Section 1.7 hereof, the Bank shall be entitled to compensation for its
services under this Section 7 in the amount of $2,500 as an acceptance fee,
payable upon execution and delivery
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of this Bank Agreement; and administrative fees, payable annually on the
anniversary date of this Bank Agreement, based upon the aggregate principal
amount of outstanding Notes ten days prior to the anniversary date, in the
following amounts:
$ 500,000 to $ 1,000,000 outstanding..................... $2,500.00
$ 1,000,001 to $ 2,000,000 outstanding..................... $3,000.00
$ 2,000,001 to $ 3,000,000 outstanding..................... $4,000.00
$ 3,000,001 to $ 4,000,000 outstanding..................... $5,000.00
$ 4,000,001 to $ 5,000,000 outstanding..................... $6,000.00
$ 5,000,001 to $ 6,000,000 outstanding..................... $7,000.00
The Company shall reimburse the Bank for its actual out-of-pocket expenses
incurred in connection with its obligations pursuant to this Section 7
(including, but not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy, retention of records, and the filing
of Financing Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company that it incurred
such expenses. The obligation to pay such compensation and reimburse such
expenses shall be borne solely by the Company. The provisions of this Section
7.3 shall survive the termination of this Bank Agreement.
Section 7.4 Other Rights and Duties of Bank.
(a) The Bank need exercise only those rights and need perform only those
duties that are contemplated or specifically set forth in this Bank Agreement
and no others.
(b) Notwithstanding anything herein to the contrary, the Bank may not be
relieved from liability for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct except that
(i) This paragraph does not limit the effect of paragraph (a) of this
Section.
(ii) The Bank shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a notice received by it
pursuant to the subscription agreements executed by the Purchasers in
connection with the purchase of the Notes.
(c) The Bank may rely on any document believed by it to be genuine and to
have been signed or presented by the proper person. The Bank need not
investigate any fact or matter stated in the document.
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(d) Before the Bank acts or refrains from acting, it may require an
officer's certificate or an opinion of counsel. The Bank shall not be liable for
any action it takes or omits to take in good faith in reliance on the
certificate or opinion.
(e) The Bank may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
Section 8. No Representations. The Bank makes no representation as to the
validity or adequacy of this Bank Agreement or the Notes delivered to it by the
Company; it shall not be accountable for the Company's use of the proceeds from
the Notes and it shall not be responsible for any statement in the Memorandum or
in the Notes other than its authentication.
Section 9. Indemnification. The Company shall indemnify, defend and hold
the Bank harmless from and against any and all loss, damage, liability, claim
and expense, including taxes (other than taxes based on the income of the Bank)
incurred by the Bank arising out of or in connection with its acceptance or
performance of its obligations under this Bank Agreement, including the legal
costs and expenses of defending itself against any claim or liability in
connection with its performance under this Bank Agreement. The Bank shall notify
the Company promptly of any claim for which it may seek indemnity. The Company
shall defend the claim and the Bank shall cooperate in the defense. The Bank may
have separate counsel and shall pay the fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Bank through gross negligence or bad faith. The
provisions of this Section 9 shall survive the termination of this Bank
Agreement.
Section 10. Replacement of Bank.
(a) A resignation or removal of the Bank and appointment of a successor
bank shall become effective only upon the successor bank's acceptance of
appointment as provided in this Section 10.
(b) The Bank may resign by so notifying the Company. The Company may
remove the Bank if:
(i) the Bank is adjudged a bankrupt or an insolvent;
(ii) a receiver or public officer takes charge of the Bank or its
property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed, the Company shall promptly
appoint a successor bank.
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(ii) A successor bank shall deliver a written acceptance of its
appointment to the retiring Bank and the Company. Thereupon the
resignation or removal of the retiring Bank shall become effective and the
successor bank shall have all the rights, powers and duties of the Bank
under this Bank Agreement. The successor bank shall mail a notice of its
succession to Note owners. Upon payment to the retiring Bank of all
amounts owed to it under this Bank Agreement, the retiring Bank shall
promptly transfer all property held by it under the terms of this Bank
Agreement.
(d) If the Bank consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor bank.
Section 11. Notices. All notices and other communications pursuant to this
Bank Agreement shall be in writing, subject to the terms of Section 1.6 hereof,
and shall be delivered by hand or sent by registered, certified, return receipt
requested, or first class mail, or by facsimile, confirmed by writing, delivered
by hand or sent by registered, certified, return receipt requested, or first
class mail delivered or sent on the date of the facsimile, addressed as follows:
(a) If to the Company:
Grand Court Lifestyles, Inc.
Xxx Xxxxxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxx Xxxxxxx, Esq.
With a copy to:
Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
(b) If to Note owners:
At the addresses of the registered owners appearing in the register
maintained by the Bank.
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(c) If to Bank:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: (000) 000-0000
or at such other address as a party shall have last furnished to the other
parties hereto in writing. Any notice provided for herein shall be deemed to
have been given on the date of the receipt of the notice by hand delivery or of
the facsimile or the third Business Day after the date of mailing, certified
mail, return receipt requested.
Section 12. Choice of Law. This Bank Agreement shall be governed by the
laws of the State of New York, without giving effect to the principles of
conflicts of law thereof.
Section 13. Prior Agreements; Amendment. This Bank Agreement sets forth
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, contracts, promises,
representations, warranties, statements, arrangements and understandings, if
any, among the parties hereto or their representatives with respect to the
subject matter hereof. No waiver, modification or amendment of any provision,
term or condition hereto shall be valid unless in writing and signed by all
parties hereto, and any such waiver, modification or amendment shall be valid
only to the extent therein set forth.
Section 14. Successors. This Bank Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
Section 15. Enforceability. Any provision of this Bank Agreement which may
by determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 16. Counterparts. This Bank Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
Section 17. Use of The Bank of New York Name.
(a) No printed or other material in any language, including prospectuses,
notices, reports, and promotional materials which mentions the Bank by name or
the rights, powers, or duties of the Bank under this Bank Agreement shall be
issued by any of the other parties hereto, or on such party's behalf, without
the prior written consent of the Bank.
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(b) Notwithstanding the above, the Bank hereby consents to the use of its
name and its rights, powers and duties under this Bank Agreement in the
Memorandum and any notices and reports required under applicable Federal and
state securities laws in connection therewith. In addition, the Bank hereby
consents to the use of its name and its rights, powers, and duties under this
Bank Agreement in the promotional material included herewith as Exhibit C.
[INTENTIONALLY LEFT BLANK]
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Section 18. Definitions. All terms used in this Bank Agreement and not
otherwise defined herein shall have the meanings ascribed to them in the
Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed this Bank Agreement
as of the date first above written.
GRAND COURT LIFESTYLES, INC. THE BANK OF NEW YORK
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
----------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxx X. Xxxxx
Title: President Title: Assistant Vice President
EXHIBIT A
TO BANK AGREEMENT
[FORM OF NOTICE]
Notice of Voluntary Redemption
of
Grand Court Lifestyles, Inc.
Retirement Financing Notes-VII
To holders of Grand Court Lifestyles, Inc. (the "Company") 13.125%
Retirement Financing Notes-VII due October 15, 2002 (the "Notes"):
Notice is hereby given by The Bank of New York (the "Bank"), as paying
agent for the Notes, that, pursuant to the voluntary redemption provision of
Section 5.6 of the Bank Agreement between the Company and the Bank, dated
_______________, 1997, the Company has elected to redeem and pay off on
__________________________________ (the "Redemption Date") [all] [a portion of]
the above mentioned Notes then outstanding, in accordance with the terms of the
Notes, and that [all] [a portion of] the Notes are called for redemption on the
Redemption Date.
The redemption price on the Redemption Date shall be $_______. Interest on
the Notes so redeemed shall cease from and after the Redemption Date.
Dated: [month] [day], [year]
------- ------ ------
The Bank of New York
EXHIBIT B
TO BANK AGREEMENT
[FORM OF NOTICE]
Notice of Mandatory Redemption
of
Grand Court Lifestyles, Inc.
Retirement Financing Notes-VII
To holders of Grand Court, Lifestyles, Inc. (the "Company") 13.125%
Retirement Financing Notes-VII due October 15, 2002 (the "Notes"):
Notice is hereby given by The Bank of New York (the "Bank"), as paying
agent for the Notes, that, pursuant to the mandatory redemption provision of
Section 5.7 of the Bank Agreement between the Company and the Bank, dated
____________________, 1997, the Company will redeem and pay off on October 15,
2002 (the "Redemption Date") 100% of the above mentioned Notes, in accordance
with the terms of the Notes, and that 100% of the Notes are called for
redemption on the Redemption Date.
Interest on the Notes so redeemed shall cease from and after the
Redemption Date.
Dated: [month] [day], [year]
------- ----- ------
The Bank of New York
EXHIBIT C
TO BANK AGREEMENT
GRAND COURT LIFESTYLES, INC.
RETIREMENT FINANCING NOTES - VII SUMMARY
OFFERING $6,000,000
13.125% NOTES DUE OCTOBER 15, 2002
INVESTMENT OBJECTIVE
13.125% Paid Monthly on the 15th of each month backed by the full faith and
credit of Grand Court Lifestyles, Inc.
RETURN OF PRINCIPAL
100% on October 15, 2002
THE INVESTMENTS
Denominations of $100,000 or any multiple or fraction thereof at the discretion
of the Company. All investors must be accredited investors.
PAYING AGENT & CUSTODIAN
The Bank of New York is authenticating agent, registrar, transfer agent
and paying agent of the Notes. The Bank of New York does not guarantee or
otherwise provide credit support for the Notes.
TAX IMPLICATIONS
All income is considered portfolio income; can be used for employee
benefit plans, IRAs and Keoghs.
GRAND COURT LIFESTYLES, INC.
RETIREMENT FINANCING NOTES - VII SUMMARY
================================================================================
28 Continuous Years of Successful Operation
Developed Partnerships Which Own and/or Operate Over 20,000 Apartments
Average Occupancy Rate of Over 90%
A Certified Net Worth in Excess of $30 Million
RISKS
INVESTORS SHOULD BE AWARE OF RISK FACTORS WHICH MAY AFFECT THE COMPANY'S ABILITY
TO SERVICE THE DEBT ON THE NOTES. THE NOTES WILL BE UNSECURED OBLIGATIONS OF
GRAND COURT LIFESTYLES, INC. THE NOTES ARE EFFECTIVELY SUBORDINATED TO CERTAIN
SECURED INDEBTEDNESS OF THE COMPANY. MARKET CONDITIONS MAY REDUCE THE COMPANY'S
CASH FLOW, THEREBY ADVERSELY AFFECTING GRAND COURT LIFESTYLES, INC.'S ABILITY TO
MAKE INTEREST AND PRINCIPAL PAYMENTS.
RISKS AFFECTING AN INVESTMENT IN THE NOTES ARE MORE FULLY DESCRIBED IN THE "RISK
FACTORS" SECTION OF THE PRIVATE PLACEMENT MEMORANDUM.
The offering will be made in compliance with relevant state securities
laws and Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended. Interested
persons should be informed that there are significant risks in this
transaction and that they should review the private placement
memorandum prior to making a decision to invest. This material is for
use by broker-dealers, attorneys, accountants, investment counsel and
qualified prospective investors. This material may not be reproduced or
recirculated. THIS SUMMARY DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY A SECURITY, WHICH MAY BE MADE ONLY BY
DELIVERY OF THE PRIVATE PLACEMENT MEMORANDUM.
GRAND COURT LIFESTYLES, INC.
XXX XXXXXXXXX XXXXX
XXXX XXX, XXX XXXXXX 00000
(000) 000-0000 or (000) 000-0000
