THIRD AMENDMENT TO LOAN AGREEMENT
Exhibit 10.12
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (the “Amendment”) is made and entered into this March
12, 2009, by and between SADDLEBROOK RESORTS, INC., whose address is 0000 Xxxxxxxxxxx Xxx, Xxxxxx
Xxxxxx, Xxxxxxx 00000 (the “Borrower”) and SUNTRUST BANK, a Georgia banking corporation, having
offices at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxxx Xxxxxxx – 00xx Xxxxx, Xxxxx, Xxxxxxx 00000
(“Lender”).
BACKGROUND
A. Borrower has applied to Lender for a modification of the Revolving Loan (as hereinafter
defined), the Term Loan (as hereinafter defined), and the Agreement (as hereinafter defined) to
refinance existing debt and support Borrower’s working capital and other general corporate needs.
B. Lender has agreed to modify the Revolving Loan, the Term Loan and the Agreement, and
Borrower has agreed to accept such modifications to the Revolving Loan, Term Loan and the Agreement
on the terms and conditions hereinafter set forth and as provided in the other Loan Documents (as
hereinafter defined), including the Commitment Letter (as hereinafter defined).
C. Simultaneously with the execution of this Amendment, Borrower has executed and delivered to
Lender the Notes (as hereinafter defined), which are secured by the Mortgage (as hereinafter
defined) that encumbers the Real Property (as hereinafter defined) and constitutes a first lien
thereon, and by other Loan Documents.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the making of the Loan, and the mutual
covenants, agreements, conditions, undertakings and warranties of the parties herein and in the
other Loan Documents, it is covenanted and agreed as follows:
1. Definitions. As used in this Amendment, the following terms shall have the
meanings indicated. To the extent that the following meanings differ from any meanings ascribed
under the Original Loan Agreement (as hereinafter defined), the following meanings shall control.
Capitalized terms not defined herein shall have the meanings ascribed to them in the Original Loan
Agreement:
“Agreement”: Collectively, that certain Loan Agreement dated November 1, 2004, between
Borrower and Lender, together with (a) that certain Addendum to Loan Agreement by and between
SunTrust Bank, as Lender and Saddlebrook Resorts, Inc., as Borrower, dated as of November 1, 2004
(the “Addendum”), (b) that certain First Amendment to Loan Agreement dated January 31, 2007, (c)
that certain Second Amendment to Loan Agreement dated as of November 6, 2008 (collectively, the
“Original Loan Agreement”), and (d) this Amendment.
“Commitment Letter”: The letter from Lender to Borrower dated February 24, 2009, outlining
the general terms of the Loan, the provisions of which letter are incorporated herein by reference
to the extent not inconsistent with this Agreement or the
other Loan Documents. Anything to the contrary contained herein notwithstanding, however, the
Commitment Letter shall not survive the closing of the Loan.
“Guarantor”: Saddlebrook International Tennis, Inc., a Florida corporation, pursuant to that
certain Unconditional Guaranty of even date herewith.
“Debt Service Coverage Ratio”: The debt service coverage for each fiscal year of Borrower, or
calendar year, as applicable, shall be equal to the quotient obtained via the formula whose
numerator is the total of Borrower’s net income plus Interest Expense (as hereinafter defined),
depreciation expense, amortization expense each determined for such fiscal year for Borrower and
Guarantor combined, minus (a) any unrealized gains or losses from liquid investments, (b)
distributions to shareholders (not including distributions made to shareholders to pay the pro rata
share of Federal Income Tax associated with their ownership in Saddlebrook Resorts, Inc. and
Saddlebrook International Tennis, Inc. during the prior fiscal year), (c) tax credits, (d)
increases in related entities receivables or notes (not including the increase in receivables for
the purpose of paying the pro-rata share of Federal Income Tax associated with the shareholder’s
ownership in Borrower and/or Guarantor during such fiscal year); and whose denominator is the sum
of (x) all capital lease payments made by Borrower and Guarantor during such fiscal year, (y) all
principal payments paid by Borrower and Guarantor on the Funded Debt (as hereinafter defined), plus
(z) Interest Expense, each determined for such fiscal year. For purposes of calculating the Debt
Service Coverage Ratio, “Interest Expense” shall mean interest expense (including without
limitation the interest component of any payments in respect of capital leases capitalized or
expensed during such period) determined for such fiscal year. For purposes of calculating the Debt
Service Coverage Ratio, “Funded Debt” shall mean (1) all of Borrower’s and Guarantor’s obligations
for money, (2) all of Borrower’s and Guarantor’s obligations evidenced by a bond, indenture, note,
letter of credit or similar instrument, (3) all of Borrower’s and Guarantor’s obligations under
capital leases, and (3) all other obligations of Borrower and Guarantor upon which interest charges
are customarily paid.
“Loan”: The Revolving Loan evidenced by the Revolving Note and the Term Loan evidenced by the
Term Note shall be collectively referred to herein as the “Loan”.
“Mortgage”: The Second Amended and Restated Mortgage, Security Agreement and Fixture Filing
dated as of November 1, 2004, as modified by that certain Third Amended and Restated Mortgage,
Security Agreement and Fixture Filing dated as of January 31, 2007, and as further modified by that
certain Fourth Amended and Restated Mortgage, Security Agreement and Fixture Filing dated as of
November 6, 2008, and as further modified by that certain Notice of Future Advance and Fifth
Amended and Restated Mortgage, Security Agreement and Fixture Filing of even date herewith,
encumbering the Real Property and other collateral, executed and delivered by Borrower to Lender to
secure the Notes.
“Notes”: Collectively, the Promissory Note dated November 1, 2004, from Borrower in favor of
Lender in the amount of $12,000,000.00, as modified by that certain Future Advance Promissory Note,
of even date herewith, from Borrower in favor of Lender in the amount of $2,500,000.00, and as
further modified by that certain Consolidated, Amended and Restated Promissory Note, of even date
herewith, from
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Borrower in favor of Lender in the amount of $10,600,000.00 (the “Term Note”), and the
Revolving Line of Credit Promissory Note dated November 1, 2004, from Borrower in favor of Lender
in the amount of $5,000,000.00, as modified by that certain Amended and Restated Revolving Line of
Credit Promissory Note dated January 31, 2007, from Borrower in favor of Lender in the amount of
$5,000,000.00, as modified by those certain letter agreements dated February 20, 2008, February 28,
2008, May 19, 2008, and August 12, 2008, and as further modified by that certain Second Amended and
Restated Revolving Line of Credit Promissory Note dated November 6, 2008, and as further modified
by that certain Third Amended and Restated Promissory Note of even date herewith, from Borrower in
favor of Lender in the amount of $2,500,000.00 (the “Revolving Note”).
“Title Endorsement Binder”: Commitment No. 200900912 (dated February 20, 2009, at 11:00
p.m.), as endorsed, issued to Lender by the Title Company, whereby the Title Company sets forth its
commitment to issue an endorsement to its Loan Policy No. 10 1034 107 00000012.
2. Representations and Warranties. Anything to the contrary contained in the
Agreement notwithstanding, except as hereinafter set forth, each of the representations and
warranties set forth in Section 2 of the Original Loan Agreement continues to be true as of the
date hereof, will be true on the date of each advance under the Loans, shall survive the making of
the Agreement and the issuance of the Revolving Note and the Term Note, and shall be deemed to
remain so represented and warranted pending contrary written notice to Lender. The acceptance of
any advance under the Loans by Borrower shall be deemed to be a reaffirmation of each and every one
of said representations and warranties. Borrower and Lender hereby acknowledge that changes to the
boundaries of the Property have resulted from that certain condemnation action in the Circuit Court
of the Sixth Judicial Circuit in and for Pasco County, Florida under Case No. 1-2008-CA-10429-ES,
to which Borrower has been a party.
3. Title Endorsement Binder. Anything to the contrary contained in the Agreement
notwithstanding, Borrower will furnish to Lender, at Borrower’s expense, forthwith and prior to the
disbursement of any Loan funds, the Title Endorsement Binder issued by the Title Company. Said
Binder shall insure that upon closing of the modification to the Revolving Loan and the Term Loan,
Borrower will be vested with a good, valid, and insurable fee simple title, free and clear of all
exceptions whatsoever, except for the Mortgage, current taxes not yet due and payable, and
covenants, restrictions and easements of record acceptable to Lender, and shall insure Lender, or
its nominee or assignee, that the Mortgage is a good and valid first lien on the Real Property,
subject only to the exceptions noted in the Agreement.
4. Depository Account to be Maintained by Xxxxxxx and Daughters, Inc. Anything to the
contrary contained in the Agreement notwithstanding, Xxxxxxx and Daughters, Inc., a Florida
corporation, shall open and maintain a commercial depository account with Lender and shall maintain
during the term of the Loan a minimum balance of not less than $2,000,000.00. Said account must be
in the form of a non-interest bearing FDIC insured checking account, SunTrust Bank commercial
savings account or money market fund. Closure of such account prior to the date which is two (2)
years
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after the date hereof, or such entity’s failure to maintain a minimum balance of not less than
$2,000,000.00 during such period, shall constitute an Event of Default under the Agreement and
shall trigger a repricing of the Loan of the loan spread to an applicable market spread at that
time, as determined by Lender in Lender’s sole discretion.
5. Debt Service Coverage Ratio. Anything to the contrary contained in the Agreement
notwithstanding, a minimum Debt Service Coverage Ratio of not less than 1.40:1.00 shall be
maintained during the term of the Loan. Debt Service Coverage Ratio shall be calculated annually
during the Loan term. Anything to the contrary contained herein or in Section 4 of the Original
Loan Agreement notwithstanding, Borrower’s failure to maintain the minimum Debt Service Coverage
Ratio required hereunder shall constitute an Event of Default under the Agreement and under the
Mortgage and shall entitle Lender to the remedies set forth in Section 4 of the Original Loan
Agreement; provided, however, that to the extent that there is no other pending Event of Default,
Borrower shall have the right to cure its failure to maintain the minimum Debt Service Coverage
Ratio within thirty (30) days by proposing and implementing such additional collateral, guarantees,
and further assurances as may be reasonably acceptable to Lender.
6. Annual Federal Income Tax Returns. Anything to the contrary contained in the
Agreement notwithstanding, during the Loan term, Lender shall be furnished with complete copies of
Borrower’s and Guarantor’s annual United States income tax returns (including all schedules) within
thirty (30) days after filing with the Internal Revenue Service, commencing with the December 31,
2008, fiscal year end United States income tax returns.
7. Annual Financial Statements. Anything to the contrary contained in the Agreement
notwithstanding, within one hundred twenty (120) days after each fiscal year end commencing with
the fiscal year ending December 31, 2009, Lender shall be furnished with annual audited financial
statements for Borrower, prepared by a certified public accountant acceptable to Lender in
accordance with generally accepted accounting principles, certified as true and correct by an
officer by Borrower, and including, at a minimum, a balance sheet, income statement, statement of
retained earnings, statement of cash flows, footnotes, appropriate supporting schedules, all in
reasonable detail, and such other information as may be requested by Lender. Anything to the
contrary contained in the Agreement notwithstanding, within one hundred twenty (120) days after
each fiscal year end commencing with the fiscal year ending December 31, 2009, Lender shall be
furnished with annual reviewed financial statements for Guarantor, prepared by a certified public
accountant acceptable to Lender in accordance with generally accepted accounting principles,
certified as true and correct by an officer by Borrower and Guarantor, as applicable, and
including, at a minimum, a balance sheet, income statement, statement of retained earnings,
statement of cash flows, footnotes, appropriate supporting schedules, all in reasonable detail, and
such other information as may be requested by Lender.
Anything to the contrary contained in the Agreement notwithstanding, within one hundred twenty
(120) days after each fiscal year end commencing with the fiscal year
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ending December 31, 2009, Lender shall be furnished with annual consolidated financial
statements for Borrower and Guarantor, prepared by Borrower’s Chief Financial Officer in accordance
with generally accepted accounting principles, certified as true and correct by such Chief
Financial Officer and including, at a minimum, a balance sheet, income statement, statement of
retained earnings, statement of cash flows, footnotes, appropriate supporting schedules, all in
reasonable detail, and such other information as may be requested by Lender.
8. Quarterly Financial Statements. Anything to the contrary contained in the
Agreement notwithstanding, within thirty (30) days after the close of each fiscal quarter of
Borrower and Guarantor during the Loan term, Lender shall be furnished with unaudited, internally
prepared quarterly financial statements of Borrower and Guarantor, certified as true and correct by
an authorized officer of Borrower and Guarantor, as applicable.
9. Additional Revolving Loan Commitment Fee. Borrower shall pay Lender a commitment
fee in the amount of 25bps on March 12, 2010, which commitment fee shall be applicable to the
thirteenth through twenty-fourth month of the term of the Revolving Loan.
10. Cross-Collateralization and Cross-Default. Anything to the contrary contained
herein notwithstanding, Borrower hereby agrees that any default under the Agreement and the other
Loan Documents shall constitute a default under each and every other loan or commitment issued by
Borrower, Guarantor, or any Mortgagor to Lender and that a default under any other loan or
commitment issued by Borrower, Guarantor, or any Mortgagor to Lender shall constitute a default
hereunder. The Real Property and other Collateral for the Loan shall also serve as security and
collateral for all other indebtedness of Borrower to Lender and the collateral for any other
indebtedness of Borrower to Lender shall serve as security and collateral for the Loan. Borrower
agrees to execute any documentation required by Lender to evidence such cross-collateralization and
cross-default.
11. Effect on Existing Documents. Where the terms of this Amendment and the Original
Loan Agreement and/or the Addendum conflict, the terms of this Amendment shall control. Except as
otherwise provided herein, all other terms, covenants, and conditions of the Original Loan
Agreement and the Addendum shall be unmodified and in full force and effect.
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered of the day and year
first above written.
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| LENDER: SUNTRUST BANK, a Georgia banking corporation |
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| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Xxxxxxx X. Xxxxxx | ||||
| Its Vice President | ||||
| BORROWER: SADDLEBROOK RESORTS, INC., a Florida corporation |
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| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Xxxxxx X. Xxxxxxx | ||||
| Its Chief Executive Officer | ||||
| GUARANTOR: SADDLEBROOK INTERNATIONAL TENNIS, INC., A Florida corporation |
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| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Xxxxxx X. Xxxxxxx | ||||
| Its Chief Executive Officer | ||||
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