SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
JUNE 20, 1997
GOLF TRUST OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
Maryland 000-22091 33-0724736
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
14 North Adger's Wharf, Charleston, South Carolina 29401
(Address of principal executive offices) (Zip Code)
(803) 723-4653
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
Closing of Credit Facility
On June 20, 1997 Golf Trust of America, L.P. (the "Operating
Partnership"), a Delaware limited partnership in which a wholly-
owned subsidiary of Golf Trust of America, Inc. (the "Company")
is the sole general partner, closed a two-year, $100 million
secured revolving credit facility with a group of four commercial
banks led by NationsBank, N.A.
Borrowings under the facility will carry a floating interest
rate of LIBOR plus 1.75%-2.00%, with provisions for the rate to
be reduced upon the attainment of a Senior Debt Rating.
The closing of the credit facility was announced in a press
release on June 23, 1997.
Closing of Multi-Course Transaction
On June 23, 1997 the Operating Partnership closed and funded
an initial $69.9 million participating loan to Golf Host Resorts,
Inc., a Colorado corporation affiliated with Starwood Capital
Group LLC. The loan is secured by the Innisbrook Resort, a 63-
hole destination golf and conference facility located near Tampa,
Florida and the Tamarron Resort, an 18-hole destination golf and
conference facility located near Durango, Colorado.
The Operating Partnership funded the loan with net proceeds
from the Company's initial public offering which closed in
February 1997 and with borrowings under the credit facility from
NationsBank, N.A. described above.
The Company believes that the Innisbrook and Tamarron
facilities represent two of the preeminent, upscale destination
golf and conference facilities in the United States and
that this transaction reinforces Golf Trust's strategy of
acquiring or participating in the growth of upscale golf courses.
The transaction was structured in a participating loan format
that provides the Company with an accretive rate of return that
the Company believes is competitive with its purchase/leaseback
structure. Through the loan's structure, the Company will
participate in the growth in revenues through a participating
interest feature and will have the right to acquire the
Innisbrook Resort at the expiration of the loan term.
The initial loan of $69.9 million will be followed by a $9
million loan, a portion of which was funded at closing, which
will be used for a nine-hole expansion and other improvements to
the Innisbrook Resort facilities, currently underway. The loan
term is thirty (30) years, with an initial base interest rate of
9.63% per annum, annual increases (of at least 5% but no more
than 7%) in the interest payment for the first five years, and a
participating interest feature throughout the term based upon the
growth in revenues, if any, over the base year.
The closing of the loan was announced in a press release on
June 24, 1997.
Golf Host Resorts, Inc. has been admitted to the Operating
Partnership as a limited partner. Golf Host Resorts, Inc. used
$8,975,000 of the proceeds of the loan to purchase 274,039 units
of limited partnership interest in the Operating Partnership ("OP
Units") together with 159,326 shares of common stock of the
Company and an option to purchase an additional 150,000 shares of
common stock of the Company at a price (subject to certain
adjustments) of $26.00 per share, exercisable before December 31,
1997 (subject to extension in certain circumstances). The
purchase of shares and OP Units by Golf Host Resorts, Inc. gives
it an approximate 3.92% equity interest in the Company and an
approximate 3.23% limited partner's interest in the Operating
Partnership. Such interests represent an approximate 5.11%
ecomonic interest in the Company and the Operating Partnership,
considered as one entity. The Company retains an aggregate
approximate 47.99% limited and general partner's interest in the
Operating Partnership through its two wholly-owned subsidiaries,
GTA LP, Inc. and GTA GP, Inc.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) Exhibits
The following exhibits are part of this current report on
Form 8-K and are numbered in accordance with Item 601 of
Regulation S-K.
Exhibit No. Description
10.1 Credit Agreement, dated as of June 20, 1997, by
and among Golf Trust of America, L.P., as
Borrower, Golf Trust of America, Inc., GTA GP,
Inc. and GTA LP, Inc., as Guarantors, the Lenders
referred to therein, and NationsBank N.A., as
Agent.
10.2 Loan Agreement, dated as of June 20, 1997, by and
between Golf Host Resorts, Inc., as Borrower, and
Golf Trust of America, L.P., as Lender.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GOLF TRUST OF AMERICA, INC.
(Registrant)
Date: July 31, 1997 By: /s/ W. Bradley Blair, II
Name: W. Bradley Blair, II
Title: President and Chief
Executive Officer
EXHIBIT INDEX
Pursuant to Item 601(a)(2) of Regulation S-K, this exhibit
index immediately precedes the exhibits.
Exhibit No. Description
10.1 Credit Agreement, dated as of June 20, 1997, by
and among Golf Trust of America, L.P., as
Borrower, Golf Trust of America, Inc., GTA GP,
Inc. and GTA LP, Inc., as Guarantors, the Lenders
referred to therein, and NationsBank N.A., as
Agent.
10.2 Loan Agreement, dated as of June 20, 1997, by and
between Golf Host Resorts, Inc., as Borrower, and
Golf Trust of America, L.P., as Lender.
EXECUTION COPY
CREDIT AGREEMENT
dated as of June 20, 1997
by and among
GOLF TRUST OF AMERICA, L.P.,
as Borrower,
GOLF TRUST OF AMERICA, INC.,
GTA GP, INC. and GTA LP, INC.,
as Guarantors,
the Lenders referred to in this Agreement,
and
NATIONSBANK N.A.
as Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . 1
SECTION 1.2 General. . . . . . . . . . . . . . . . . . 19
SECTION 1.3 Other Definitions and Provisions . . . . . 19
ARTICLE II
REVOLVING CREDIT FACILITY. . . . . . . . . . . . . . . . . . . 19
SECTION 2.1 Loans. . . . . . . . . . . . . . . . . . . 19
SECTION 2.2 Procedure for Advances of Loans. . . . . . 20
SECTION 2.3 Repayment of Loans . . . . . . . . . . . . 20
SECTION 2.4 Notes. . . . . . . . . . . . . . . . . . . 21
SECTION 2.5 Termination of Credit Facility . . . . . . 21
SECTION 2.6 Use of Proceeds. . . . . . . . . . . . . . 21
ARTICLE IIA
LETTER OF CREDIT FACILITY. . . . . . . . . . . . . . . . . . . 21
SECTION 2A.1 Commitment . . . . . . . . . . . . . . . . 21
SECTION 2A.2 Procedure for Issuance of Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2A.3 Commissions and Other Charges. . . . . . . 22
SECTION 2A.4 L/C Participations . . . . . . . . . . . . 23
SECTION 2A.5 Reimbursement Obligation of the
Borrower . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2A.6 Obligations Absolute . . . . . . . . . . . 24
SECTION 2A.7 Effect of Application. . . . . . . . . . . 25
ARTICLE III
GENERAL LOAN PROVISIONS. . . . . . . . . . . . . . . . . . . . 25
SECTION 3.1 Interest . . . . . . . . . . . . . . . . . 25
SECTION 3.2 Notice and Manner of Conversion or
Continuation of Loans. . . . . . . . . . . 26
SECTION 3.3 Fees . . . . . . . . . . . . . . . . . . . 27
SECTION 3.4 Payment. . . . . . . . . . . . . . . . . . 27
SECTION 3.5 Right of Set-off; Adjustments. . . . . . . 28
SECTION 3.6 Nature of Obligations of Lenders
Regarding Extensions of Credit; Assump-
tion by the Agent. . . . . . . . . . . . . 29
SECTION 3.7 Indemnity. . . . . . . . . . . . . . . . . 29
SECTION 3.8 Increased Cost and Reduced Return. . . . . 30
SECTION 3.9 Limitation on Types of Loans . . . . . . . 31
SECTION 3.10 Illegality . . . . . . . . . . . . . . . . 31
SECTION 3.11 Treatment of Affected Loans. . . . . . . . 31
SECTION 3.12 Compensation . . . . . . . . . . . . . . . 32
SECTION 3.13 Taxes. . . . . . . . . . . . . . . . . . . 32
SECTION 3.14 REIT Status. . . . . . . . . . . . . . . . 34
ARTICLE IV
GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.1 Guaranty of Obligations of Borrower. . . . 34
SECTION 4.2 Nature of Guaranty . . . . . . . . . . . . 34
SECTION 4.3 Demand by the Agent. . . . . . . . . . . . 35
SECTION 4.4 Waivers. . . . . . . . . . . . . . . . . . 36
SECTION 4.5 Benefits of Guaranty . . . . . . . . . . . 36
SECTION 4.6 Modification of Loan Documents etc . . . . 36
SECTION 4.7 Reinstatement. . . . . . . . . . . . . . . 37
SECTION 4.8 Waiver of Subrogation and Contribution . . 37
SECTION 4.9 Remedies . . . . . . . . . . . . . . . . . 38
SECTION 4.10 Limit of Liability . . . . . . . . . . . . 38
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING . . . . . . . . . 38
SECTION 5.1 Closing. . . . . . . . . . . . . . . . . . 38
SECTION 5.2 Conditions to Closing and Initial Loan . . 38
SECTION 5.3 Conditions to All Loans. . . . . . . . . . 42
SECTION 5.4 Additional Appraisals. . . . . . . . . . . 43
SECTION 5.5 Participating Leases . . . . . . . . . . . 43
SECTION 5.6 Release of Collateral. . . . . . . . . . . 43
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 43
SECTION 6.1 Representations and Warranties . . . . . . 43
SECTION 6.2 Survival of Representations and
Warranties, Etc. . . . . . . . . . . . . . . . . . . 49
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES. . . . . . . . . . . . . . . 50
SECTION 7.1 Financial Statements and Projections . . . 50
SECTION 7.2 Officer's Compliance Certificate . . . . . 51
SECTION 7.3 Accountants' Certificate . . . . . . . . . 51
SECTION 7.4 Other Reports. . . . . . . . . . . . . . . 51
SECTION 7.5 Notice of Litigation and Other Matters . . 51
SECTION 7.6 Accuracy of Information. . . . . . . . . . 52
ARTICLE VIII
AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.1 Preservation of Existence and Related
Matters. . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.2 Maintenance of Property. . . . . . . . . . 53
SECTION 8.3 Insurance. . . . . . . . . . . . . . . . . 53
SECTION 8.4 Accounting Methods and Financial
Records. . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.5 Payment and Performance of Obligations.. . 54
SECTION 8.6 Compliance With Laws and Approvals.. . . . 54
SECTION 8.7 Environmental Laws.. . . . . . . . . . . . 54
SECTION 8.8 Compliance with ERISA. . . . . . . . . . . 54
SECTION 8.9 Compliance With Agreements.. . . . . . . . 54
SECTION 8.10 Borrowing Base Certificate . . . . . . . . 55
SECTION 8.11 Visits and Inspections . . . . . . . . . . 55
SECTION 8.12 Subsidiaries . . . . . . . . . . . . . . . 55
SECTION 8.13 Further Assurances . . . . . . . . . . . . 55
SECTION 8.14 Line of Business . . . . . . . . . . . . . 55
ARTICLE IX
FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.1 Minimum Tangible Net Worth . . . . . . . . 56
SECTION 9.2 Liabilities to Assets Ratio. . . . . . . . 56
SECTION 9.3 Interest Coverage Ratio. . . . . . . . . . 56
SECTION 9.4 Debt Service Coverage Ratio. . . . . . . . 56
ARTICLE X
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.1 Limitations on Debt. . . . . . . . . . . . 56
SECTION 10.2 Limitations on Contingent Obligations. . . 57
SECTION 10.3 Limitations on Liens . . . . . . . . . . . 57
SECTION 10.4 Limitations on Loans, Advances,
Investments and Acquisitions . . . . . . . 57
SECTION 10.5 Limitations on Mergers and Liquidation . . 59
SECTION 10.6 Limitations on Sale of Assets. . . . . . . 59
SECTION 10.7 Limitations on Dividends and
Distributions. . . . . . . . . . . . . . . . . . . . 60
SECTION 10.8 Transactions with Affiliates . . . . . . . 60
SECTION 10.9 Certain Accounting Changes . . . . . . . . 60
SECTION 10.10 [RESERVED] . . . . . . . . . . . . . . . . 60
SECTION 10.11 Limitations on Improvements. . . . . . . . 60
ARTICLE XI
DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.1 Events of Default. . . . . . . . . . . . . 60
SECTION 11.2 Remedies . . . . . . . . . . . . . . . . . 63
SECTION 11.3 Rights and Remedies Cumulative; Non-
Waiver; etc. . . . . . . . . . . . . . . . . . . . . 64
SECTION 11.4 Attornment of Participating Leases . . . . 64
ARTICLE XII
THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.1 Appointment, Powers, and Immunities. . . . 65
SECTION 12.2 Reliance by Agent. . . . . . . . . . . . . 65
SECTION 12.3 Defaults . . . . . . . . . . . . . . . . . 66
SECTION 12.4 Rights as Lender . . . . . . . . . . . . . 66
SECTION 12.5 Indemnification. . . . . . . . . . . . . . 66
SECTION 12.6 Non-Reliance on Agent and Other Lenders. . 67
SECTION 12.7 Resignation; Removal of Agent; Successor
Agents . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XIII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.1 Notices. . . . . . . . . . . . . . . . . . 68
SECTION 13.2 Expenses; Indemnification. . . . . . . . . 70
SECTION 13.3 Set-off. . . . . . . . . . . . . . . . . . 71
SECTION 13.4 Governing Law. . . . . . . . . . . . . . . 71
SECTION 13.5 Consent to Jurisdiction. . . . . . . . . . 71
SECTION 13.6 Waiver of Jury Trial.. . . . . . . . . . . 71
SECTION 13.7 Reversal of Payments . . . . . . . . . . . 71
SECTION 13.8 Injunctive Relief. . . . . . . . . . . . . 72
SECTION 13.9 Accounting Matters . . . . . . . . . . . . 72
SECTION 13.10 Assignments and Participations . . . . . . 72
SECTION 13.11 Amendments and Waivers . . . . . . . . . . 74
SECTION 13.12 Performance of Duties. . . . . . . . . . . 75
SECTION 13.13 All Powers Coupled with Interest . . . . . 75
SECTION 13.14 Survival of Indemnities. . . . . . . . . . 75
SECTION 13.15 Titles and Captions. . . . . . . . . . . . 75
SECTION 13.16 Severability of Provisions . . . . . . . . 75
SECTION 13.17 Counterparts . . . . . . . . . . . . . . . 75
SECTION 13.18 Term of Agreement. . . . . . . . . . . . . 75
<PAGE>
EXHIBITS
A - Form of Revolving Credit Note
B - Form of Notice of Borrowing
C - Form of Notice of Prepayment
D - Form of Conversion/Continuation
E - Form of Officer's Compliance Certificate
F - Form of Assignment and Acceptance
G - Form of Guaranty Supplement
H - Borrowing Base Certificate
SCHEDULES
1 - Lenders and Commitments
6.1(a) - Qualifications and Authorizations
6.1(b) - Capitalization
6.1(h) - Employee Benefit Plans
6.1(l) - Material Contracts
6.1(r) - Debt and Contingent Obligations
6.1(s) - Litigation
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of the 20th day of June, 1997, by
and among (i) GOLF TRUST OF AMERICA, L.P., a limited partnership
formed under the laws of Delaware (the "Borrower"), (ii) GOLF TRUST
OF AMERICA, INC., a Maryland corporation ("GTA"), GTA GP, INC. and
GTA LP, INC., each a Maryland corporation and a wholly-owned
subsidiary of GTA, Inc. (collectively with GTA, the "Guarantors"),
(iii) the Lenders who are or may become a party to this Agreement,
and (iv) NATIONSBANK, N.A., as Agent for the Lenders.
STATEMENT OF PURPOSE
The Guarantors and the Borrower have requested, and the
Lenders have agreed, to extend certain credit facilities to the
Borrower on the terms and conditions of this Agreement. GTA is the
sole shareholder of each of GTA GP, Inc. and GTA LP, Inc., which
are the general partner and limited partner of the Borrower,
respectively. All extensions of credit to the Borrower will inure
to the benefit of the Guarantors, directly or indirectly.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the
parties hereto, such parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms when used in
this Agreement shall have the meanings assigned to them below:
"Adjusted EBITDAR" means, for any period, with respect to any
Eligible Property, EBITDAR for such Eligible Property for such
period minus (i) the Management Expense and (ii) the Capital
Expenditure Allowance, each for such Eligible Property for such
period.
"Adjusted Eurodollar Rate" means, with respect to any
Eurodollar Loan, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
mathematically determined by Agent to be equal to the quotient
obtained by dividing (a) the Eurodollar Rate for such Interest
Period by (b) 1 minus the Reserve Requirement for such Interest
Period.
"Affiliate" means, with respect to any Person, any other
Person (other than a Subsidiary) which directly or indirectly
through one or more intermediaries, controls, or is controlled by,
or is under common control with, such first Person or any of its
Subsidiaries. The term "control" means (a) the lawful power to
vote five percent (5%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the
possession, directly or indirectly, of any other lawful power to
direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract
or otherwise.
"Agent" means NationsBank in its capacity as Agent under this
Agreement, and any successor thereto appointed pursuant to Section
12.7.
"Agent's Office" means the office of the Agent specified in or
determined in accordance with the provisions of Section 13.1.
"Aggregate Commitment" means the aggregate amount of the
Lenders' Commitments under this Agreement, as such amount may be
reduced or modified at any time or from time to time pursuant to
the terms of this Agreement. On the Closing Date, the Aggregate
Commitment shall be One Hundred Million Dollars ($100,000,000).
"Agreement" means this Credit Agreement, as amended or
modified from time to time.
"Applicable Law" means all applicable provisions of
constitutions, statutes, laws, rules, treaties, regulations and
orders of all Governmental Authorities and all orders and decrees
of all courts and arbitrators.
"Applicable Lending Office" means, for each Lender, the
"Lending Office" of such Lender (or of an Affiliate of such Lender)
designated on Schedule 1 of this Agreement or such other office of
such Lender (or an Affiliate of such Lender) as such Lender may
from time to time specify to the Agent and the Borrower by written
notice in accordance with the terms of this Agreement as the office
by which its Loans are to be made and maintained.
"Applicable Margin" shall have the meaning assigned thereto in
Section 3.1(b).
"Application" means an application, in the form specified by
the Issuing Lender from time to time, requesting the Issuing Lender
to issue a Letter of Credit.
"Appraised Value" means, with respect to any golf course
property the value of such golf course property based on the lower
of (a) a fee simple estate, unencumbered by any other interest or
Lien (other than governmental powers of taxation, eminent domain,
easements, and the like) or (b) a leased fee interest, consisting
of the ownership interest of the Borrower, with the right of use
and occupancy conveyed to a lessee (including, without limitation,
the Borrower's right to receive rent and right to repossession of
such golf course property upon expiration or termination of the
related lease), each as set forth in an MAI appraisal of such golf
course property. The Agent shall deliver to the Borrower copies of
each MAI appraisal upon the Borrower's written request therefor and
provided the Borrower shall have paid for the cost of such
appraisal.
"Assignment and Acceptance" shall have the meaning assigned
thereto in Section 13.10 of this Agreement.
"Available Commitment" means, as to any Lender at any time, an
amount equal to the excess, if any, of (a) such Lender's Commitment
over (b) such Lender's Extensions of Credit.
"Base Rate" means, at any time, the higher of (a) the rate per
annum equal to the rate announced by NationsBank as its "prime
rate" or (b) the Federal Funds Rate plus 0.5% for such day. Any
change in the Base Rate due to a change in the prime rate shall be
effective on the effective date of such change in the prime rate.
"Base Rate Loan" means any Loan that bears interest at the
Base Rate.
"Borrower" means Golf Trust of America, L.P. in its capacity
as borrower under this Agreement.
"Borrowing Base" means, as of any date of determination, an
amount equal to the sum of:
(a) an amount equal to the sum of the least of the
following amounts, calculated for each Eligible Property:
(i) Sixty percent (60%) of the lesser of (A) the
Appraised Value of such Eligible Property, and (B) the
Borrower's acquisition cost of such Eligible Property;
(ii) 4.25 times an amount equal to (A) the Base Rent
(as defined in the Participating Lease relating to such
Eligible Property) received by the Borrower pursuant to
such Participating Lease for the then most recently ended
fiscal quarter multiplied by 4 less (B) the sum of the
Management Expense and Capital Expenditure Allowance for
such Eligible Property, determined on the basis of the
then most recently ended period of four fiscal quarters;
or
(iii) 3.74 times the Adjusted EBITDAR for such
Eligible Property for the then most recently ended period
of four fiscal quarters; plus
(b) thirty percent (30%) of the aggregate Appraised
Value of the Royal New Kent golf course property; provided,
however, that such amount shall be excluded from the
determination of the Borrowing Base if it is greater than 3.74
times the Adjusted EBITDAR for such property, based on the
financial statements of the Lessee of the Royal New Kent golf
course property relating to such property for the year ending
December 31, 1997; provided, further, that when and if the
Royal New Kent golf course property is deemed by the Required
Lenders, in their sole, reasonable and good faith discretion,
to constitute a Stabilized Golf Course, it shall thereafter be
treated as an Eligible Property; plus
(c) thirty percent (30%) of the aggregate Appraised
Value of the Stonehouse golf course property; provided,
however, that such amount shall be excluded from the
determination of the Borrowing Base if it is greater than 3.74
times the Adjusted EBITDAR for such property, based on the
financial statements of the Lessee of the Stonehouse golf
course property relating to such property for the year ending
December 31, 1997; provided, further, that when and if the
Stonehouse golf course property is deemed by the Required
Lenders, in their sole, reasonable and good faith discretion,
to constitute a Stabilized Golf Course, it shall thereafter be
treated as an Eligible Property.
"Borrowing Base Certificate" means the Borrowing Base report
to be delivered by the Borrower, substantially in the form of
Exhibit H.
"Boundary Survey" shall have the meaning assigned thereto in
subparagraph (c) of the definition of Eligible Properties.
"Business Day" means (a) for all purposes other than as set
forth in clause (b) immediately below, any day other than a
Saturday, Sunday or legal holiday on which banks in Charlotte,
North Carolina and New York, New York, are open for the conduct of
their commercial banking business, and (b) with respect to all
notices and determinations in connection with, and payments of
principal and interest on, any Loan, any day that is a Business Day
described in clause (a) and that is also a day for trading by and
between banks in Dollar deposits in the London interbank market.
"Capital Expenditure Allowance" means, with respect to each
Eligible Property for any period, the greater of (a) actual
Maintenance Capital Expenditures made by the Borrower with respect
to such Eligible Property during such period and (b) an amount
equal to three percent (3%) of Gross Golf Revenues with respect to
such Eligible Property during such period.
"Capital Expenditures" means, with respect to any Person, the
aggregate cost of all capital assets acquired by such Person during
such period, determined in accordance with GAAP.
"Capital Lease" means, with respect to any Person, any lease
of any property that should, in accordance with GAAP, be classified
and accounted for as a capital lease on a Consolidated balance
sheet of such Person.
"Closing Date" means the date of this Agreement or such later
Business Day upon which each condition described in Article V shall
be satisfied or waived in all respects in a manner acceptable to
the Agent, in its sole discretion.
"Code" means the Internal Revenue Code of 1986, and the rules
and regulations thereunder, each as amended or supplemented from
time to time.
"Collateral" means all of the assets, property and interests
in property owned by the Borrower, whether now owned or hereafter
acquired, that shall, from time to time, secure the Obligations,
including, without limitation, the Collateral described in the
Security Documents and any property or interests provided in
addition to or in substitution for any of the foregoing.
"Commitment" means, as to any Lender, the obligation of such
Lender to make Loans to or to participate in Letters of Credit for
the benefit of the Borrower under this Agreement in an aggregate
principal amount at any time outstanding not to exceed the amount
set forth opposite such Lender's name on Schedule 1 to this
Agreement, or as set forth in any Assignment and Acceptance
relating to any assignment that has become effective pursuant to
Section 13.10, as the same may be reduced or modified at any time
or from time to time pursuant to the terms of this Agreement.
"Commitment Percentage" means, as to any Lender at any time,
the ratio of (a) the amount of the Commitment of such Lender to (b)
the Aggregate Commitment.
"Consolidated" means, when used with reference to financial
statements or financial statement items of the Credit Parties, such
statements or items on a consolidated basis in accordance with
applicable principles of consolidation under GAAP.
"Contingent Obligation" means, with respect to the Credit
Parties, without duplication, any obligation, contingent or
otherwise, of any such Person pursuant to which such Person has
directly or indirectly guaranteed any Debt or other obligation of
any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of any such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements,
by agreement to keep well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
condition or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided,
that the term Contingent Obligation shall not include endorsements
for collection or deposit in the ordinary course of business.
"Convert," "Conversion," and "Converted" shall refer to a
conversion pursuant to Section 3.2, 3.9 or 3.11 of a Eurodollar
Loan into a Base Rate Loan or vice versa.
"Credit Facility" means the revolving credit facility
established pursuant to Article II of this Agreement.
"Credit Parties" means the collective reference to the
Borrower and the Guarantors.
"Debt" means, with respect to the Credit Parties at any date
and without duplication, the sum of the following calculated in
accordance with GAAP: (a) all liabilities, obligations and
indebtedness including but not limited to obligations evidenced by
bonds, debentures, notes or other similar instruments of any such
Person, (b) all obligations to pay the deferred purchase price of
property or services of any such Person, except trade payables
arising in the ordinary course of business not more than one
hundred and twenty (120) days past due, (c) all obligations of any
such Person as lessee under Capital Leases, (d) all Contingent
Obligations of any such Person, (e) all obligations, contingent or
otherwise, of any such Person relative to the face amount of
letters of credit, whether or not drawn, and banker's acceptances
issued for the account of any such Person and (f) all obligations
incurred by any such Person pursuant to Hedging Agreements.
"Debt Service" means, for any fiscal quarter, (a) Interest
Expense of GTA and its Consolidated Subsidiaries for such quarter
plus (b) all principal payments of Debt of GTA and its Consolidated
Subsidiaries scheduled to be made during such quarter.
"Default" means any of the events specified in Section 11.1
which with the passage of time, the giving of notice or any other
condition, would constitute an Event of Default.
"Defaulting Lender" shall have the meaning assigned thereto in
Section 3.6.
"Dollars" or "$" means, unless otherwise qualified, dollars in
lawful currency of the United States.
"EBITDA" means, with respect to any Person for any period, (a)
Net Income of any Person for such period, excluding any
extraordinary gains or other non-recurring gains or non-cash losses
occurring outside the ordinary course of business including any
gains or losses from the sale or other disposition of assets other
than in the ordinary course of business, plus (b) the sum of the
following for such period to the extent properly deducted in the
determination of Net Income: (i) Interest Expense of such Person,
(ii) income and franchise taxes of such Person, and (iii)
amortization, depreciation and other non-cash charges (including
amortization of good will and other intangible assets) of such
Person.
"EBITDAR" means, for any period with respect to any Lessee of
an Eligible Property, EBITDA of such Lessee with respect to such
Eligible Property plus, without duplication, lease expense paid by
such Lessee under a Participating Lease with respect to such
Eligible Property for such period, to the extent deducted in
determining EBITDA of such Lessee.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of
a Lender; (iii) a financial institution or other entity that is an
"accredited investor" (as defined in Rule 501 under the Securities
Act of 1933, as amended) having (A) total assets of at least
$10,000,000,000, (B) a long-term unsecured debt rating of at least
BBB by S&P (or an equivalent rating by another nationally
recognized statistical ratings organization) and (C) an office in
the United States; and (iv) any other Person approved by the Agent
and, unless an Event of Default has occurred and is continuing at
the time any assignment is effected in accordance with Section
13.10, the Borrower, such approval not to be unreasonably withheld
or delayed by the Borrower and such approval to be deemed given by
the Borrower if no objection is received by the assigning Lender
and the Agent from the Borrower within two Business Days after
written notice of such proposed assignment has been provided by the
assigning Lender to the Borrower; provided, however, that neither
the Borrower nor an Affiliate of the Borrower shall qualify as an
Eligible Assignee.
"Eligible Properties" means those certain golf course
properties now or hereafter owned by the Borrower which the
Required Lenders deem to have satisfied each of the following
conditions:
(a) The Agent shall have received and approved each of
the following:
(i) A current MAI appraisal of the golf course
property prepared by an appraiser engaged by the Agent at
the expense of the Borrower;
(ii) A signed copy of the Participating Lease with
respect to such golf course property, the form and terms
of which shall be satisfactory to the Agent;
(iii) A written summary description of the
market in which the golf course property is located, a
summary of the conditions of such market and such other
information related thereto as the Agent shall reasonably
request, including information with respect to the prior
owner or owners of the golf course property and the
initial lessee under the Participating Lease;
(iv) Audited financial statements with respect to
the golf course property for each of the two fiscal years
immediately preceding acquisition by the Borrower;
provided that, with respect to any Lessee of any golf
course property (i) whose EBITDA (determined solely with
respect to such golf course property) was less than
$500,000 for the twelve-month period immediately
preceding acquisition of the golf course property by the
Borrower and (ii) for which the purchase price paid by
the Borrower (including all assumption of debt and other
consideration) does not exceed $5,000,000 individually
and $25,000,000 in the aggregate for all such golf course
properties, the Borrower may, at its election, provide in
lieu of audited financial statements, financial
statements reviewed by a certified public accounting firm
reasonably acceptable to the Agent; and
(v) (A) A letter (or other reliable written
confirmation, including, without limitation, a survey
certification or note) describing the land-use
classification, the permitted uses in that land-use
classification, the zoning classification and the uses
permitted in that zoning classification, of the golf
course property; (B) a certificate of occupancy for the
entire golf course property, if such a certificate is
required under applicable laws; and (C) any material
licenses and permits necessary for the use and operation
of the golf course property, including, without
limitation, those permits and licenses necessary to serve
food, beer, wine and liquor, if applicable.
(b) The Agent shall have received a current Phase I
Environmental Site Assessment report (an "Environmental
Assessment Report") addressed to the Agent on behalf of the
Lenders by a qualified environmental consultant, reasonably
acceptable to the Agent, in form and substance (including a
property condition survey) similar to the reports previously
delivered with respect to the Initial Eligible Properties and
the Legends of Virginia Golf Courses and otherwise
satisfactory to the Agent, indicating appropriate inquiry into
the previous ownership and use of the golf course property,
which use shall have been consistent with good commercial
practices, and indicating that except as set forth in such
report there are no material present or potential
environmental problems or material hazards on, under or about
such golf course property and confirming material compliance
by the golf course property with all applicable environmental
laws; such assessment to include at least the following:
historical research into previous ownership and uses,
comprehensive governmental records review at federal, state
and local levels, review of available aerial photographs and
topographical maps, on-site visual investigation, review of
surrounding land uses, and review of operating and
housekeeping practices of the Borrower (and previous owners)
at such golf course property.
(c) The Agent shall have received a current boundary
survey (a "Boundary Survey") of the golf course property
(prepared within sixty days of the date for designation as an
Eligible Property or earlier; provided that the Borrower
obtain a Title Insurance Commitment for such golf course
property without exception for matters of survey) prepared by
a registered surveyor or licensed professional civil engineer
in the State in which the golf course property is located.
The Survey, which shall be prepared at the Borrower's cost and
be subject to the reasonable approval of the Agent, shall show
the full legal description of the golf course property,
disclose the location of all encroachments, if any (which
shall be subject to the approval of the Agent), easements,
roads and rights-of-way, if any, and access to public streets.
The Survey shall be certified to the Agent and the title
insurance company issuing the Title Insurance Commitment to
the Agent for the benefit of the Lenders.
(d) The Agent shall have received, at the sole cost and
expense of the Borrower, an unconditional title insurance
commitment (a "Title Insurance Commitment"), in form and
issued by a title insurance company reasonably satisfactory to
the Agent, to ensure the Agent, for the benefit of the
Lenders, of a first lien on the golf course property in an
amount equal to the Appraised Value of the golf course
property, free and clear of all encumbrances, interests and
exceptions except those approved in writing by the Agent and
the Permitted Liens. There shall be no "exceptions" other
than routine utility easements and restrictions, current
year's taxes not yet due and payable and the applicable
Participating Lease. Copies of all exceptions, including, but
not limited to, easements, must be attached to the Title
Insurance Commitment, and shall be subject to the prior
written approval of the Agent. There shall be no "reverter"
provisions or possibilities affecting title, and no exceptions
for third-party rights or for matters of survey. The title
insurance policy shall contain such special endorsements and
affirmative insurance coverage as the Agent may reasonably
require, including, without limitation, endorsements for
future advances under this Agreement.
(e) The Agent, on behalf of the Lenders, shall have a
perfected first priority Lien in the golf course property and
a valid and enforceable assignment of all leases with respect
to such golf course property, together with any collateral
securing such leases.
(f) The golf course property shall at all times be a
Stabilized Golf Course; provided, however, if at any time any
Eligible Property shall fail to constitute a Stabilized Golf
Course other than solely because total revenues or EBITDAR of
such Eligible Property increase by fifteen percent (15%) or
more or total expenses decrease by fifteen percent (15%) or
more, such Eligible Property shall, at the option of the
Required Lenders, no longer constitute an Eligible Property
until such time as the Required Lenders determine in their
sole discretion that such golf course property constitutes a
Stabilized Golf Course.
(g) No more than fifty percent (50%) of (i) the number
of Eligible Properties and (ii) the aggregate appraised value
of the Eligible Properties may consist of properties located
(A) within the same golf market (as determined in the
reasonable discretion of the Agent) and (B) within seventy
(70) miles of any other Eligible Property.
(h) The limitations of subparagraph (g) notwithstanding,
the Myrtle Beach Golf Courses shall constitute Eligible
Properties; provided, however, that no other golf course
property located within the Myrtle Beach golf market (as
reasonably determined by the Agent) shall constitute an
Eligible Property unless the limitations of subparagraph (g)
are satisfied with respect to all Eligible Properties
(including the Myrtle Beach Golf Courses). The waiver
provided in this subparagraph with respect to the Myrtle Beach
Golf Courses shall not be applicable from and after the date
on which the Borrower initially complies with the limitations
of subparagraph (g) above.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for
employees of the Borrower or any ERISA Affiliate or (b) has at any
time within the preceding six years been maintained for the
employees of the Borrower or any current or former ERISA Affiliate.
"Environmental Assessment Report" shall have the meaning
assigned thereto in subsection (b) of the definition of Eligible
Properties.
"Environmental Laws" means any and all applicable federal,
state and local laws, statutes, ordinances, rules, regulations,
permits, licenses, approvals, interpretations and orders of courts
or Governmental Authorities, relating to the protection of human
health or the environment, including, but not limited to, require-
ments pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting,
licensing, permitting, investigation or remediation of Hazardous
Materials. Environmental Laws include, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. Section 9601 et. seq.), the Hazardous Material
Transportation Act (49 U.S.C. Section 331 et. seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.),
the Federal Water Pollution Control Act (33 U.S.C. Section 1251
et. seq.), the Clean Air Act (42 U.S.C. Section 7401 et. seq.),
the Toxic Substances Control Act (15 U.S.C. Section 2601 et.
seq.), the Safe Drinking Water Act (42 U.S.C. Section 300, et.
seq.), the Environmental Protection Agency's regulations relating
to underground storage tanks (40 C.F.R. Parts 280 and 281), and the
rules and regulations promulgated under each of these statutes,
each as amended or supplemented.
"ERISA" means the Employee Retirement Income Security Act of
1974, and the rules and regulations thereunder, each as amended or
modified from time to time.
"ERISA Affiliate" means any Person who together with the
Borrower is treated as a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate
based on the Adjusted Eurodollar Rate.
"Eurodollar Rate" means for any Eurodollar Loan for any
Interest Period, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period. If for any
reason such rate is not available, the term "Eurodollar Rate" shall
mean, for any Interest Period, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such
rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Event of Default" means any of the events specified in
Section 11.1, provided that any requirement for passage of time,
giving of notice, or any other condition, has been satisfied.
"Extensions of Credit" means, as to any Lender at any time, an
amount equal to the aggregate principal amount of all Loans made by
such Lender and all participations by such Lender in Letters of
Credit then outstanding.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded
upwards, if necessary, to the next higher 1/100th of 1%)
representing the daily effective federal funds as quoted by the
Agent and confirmed in Federal Reserve Board Statistical Release
H.15 (519) or any successor or substitute publication selected by
the Agent. If, for any reason, such rate is not available, then
"Federal Funds Rate" shall mean a daily rate which is determined,
in the opinion of the Agent, to be the rate at which federal funds
are being offered for sale in the national federal funds market at
9:00 a.m. (Charlotte time). Rates for weekends or holidays shall
be the same as the rate for the most immediate preceding Business
Day.
"Financing Statements" means any Uniform Commercial Code
financing statement on Form UCC-1 executed pursuant to the
provisions of this Agreement or any other Loan Document to describe
and perfect the security interests created in this Agreement or in
the other Loan Documents.
"Fiscal Year" means, with respect to any Credit Party, the
fiscal year of such Credit Party ending on December 31.
"Funds from Operations" means, with respect to the Credit
Parties on a Consolidated basis, Net Income less, to the extent
included in the determination of Net Income, (a) the income (or
loss) of any Person (other than a Subsidiary of a Credit Party) in
which such Credit Party has a minority ownership interest, (b) the
income (or loss) arising from the restructuring of any Debt or the
disposition of any asset (other than in the ordinary course of
business) plus, without duplication, real estate depreciation and
amortization (but excluding therefrom any amortization of financing
costs), in each case for the Credit Parties on a Consolidated basis
for the relevant period in accordance with GAAP.
"GAAP" means generally accepted accounting principles, as
recognized by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board,
consistently applied and maintained on a consistent basis for the
Borrower and its Subsidiaries throughout the period indicated and
consistent with the prior financial practice of the Borrower and
its Subsidiaries.
"Governmental Approvals" means all required authorizations,
consents, approvals, licenses and exemptions of, registrations and
filings with, and reports to, all Governmental Authorities.
"Governmental Authority" means any applicable nation,
province, state or political subdivision thereof, and any
government or any Person exercising executive, legislative,
regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any
of the foregoing.
"Gross Golf Revenues" means, with respect to any Lessee of an
Eligible Property for any period, all revenues accrued (whether by
the Lessee under a Participating Lease or any subtenants,
assignees, concessionaires or licensees of the Borrower) from or by
reason of the operation of the golf operations at the Eligible
Property to which the Borrower is entitled calculated in accordance
with GAAP (but excluding reasonable reserves for refunds,
allowances and bad debts applicable to such operations), including,
without limitation, (i) revenues from membership initiation fees,
to the extent provided in the applicable Participating Lease, (ii)
periodic membership dues, (iii) greens fees, (iv) fees to reserve
a tee time, (v) guest fees, (vi) golf cart rentals, (vii) parking
lot fees, (viii) locker rentals, (ix) fees for golf club storage,
(x) fees for the use of swim, tennis or other facilities, (xi)
charges for range balls, range fees or other fees for golf practice
facilities, (xii) 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 such
Eligible Property), (xiii) fees or other charges for fitness
centers, (xiv) forfeited deposits with respect to any membership
application, (xv) transfer fees imposed on any member in connection
with the transfer of any membership interest, (xvi) fees or other
charges paid to such Lessee by sponsors of golf tournaments at such
Eligible Property, to the extent provided in the applicable
Participating Lease, (xvii) advertising or placement fees paid by
vendors in exchange for exclusive use or name rights at such
Eligible Property, and (xviii) 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; provided, however, that Gross Golf Revenues shall
not include:
(a) Any revenue received from or by reason of such
Eligible Property relating to (i) the operation of snack bars,
restaurants, bars, catering functions, and banquet operations,
(ii) sale of merchandise and inventory on such Eligible
Property, and (iii) photography services.
(b) The amount of any city, county, state or federal
sales, admissions, usage, or excise tax on the item included
in Gross Golf Revenue, which is both added to or incorporated
in the selling price and paid to the taxing authority by such
Lessee;
(c) Revenues or proceeds from sales or trade-ins of
machinery, vehicles, trade fixtures or personal property owned
by such Lessee used in connection with the operation of such
Eligible Property; and
(d) Any other revenues or proceeds to which the Borrower
is not entitled.
"GTA" means Golf Trust of America, Inc., a Maryland
corporation and the managing general partner of the Borrower.
"GTA GP" means GTA GP, Inc., a Maryland corporation.
"GTA LP" means GTA LP, Inc., a Maryland corporation.
"Guaranteed Obligations" shall have the meaning assigned
thereto in Section 4.1.
"Guarantors" means, collectively, GTA, GTA GP and GTA LP,
together with any Subsidiaries of GTA that become Guarantors
pursuant to Section 8.12.
"Guaranty" means the Guarantors' obligations set forth in
Article IV.
"Hazardous Materials" means any substances or materials
(a) which are or become defined as hazardous wastes, hazardous
substances, pollutants, contaminants, chemical substances or
mixtures or toxic substances under any applicable Environmental
Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise
harmful to human health or the environment and are or become
regulated by any Governmental Authority with jurisdiction, (c) the
presence of which require investigation or remediation under any
applicable Environmental Law or common law, (d) the discharge or
emission or release of which requires a permit or license under any
Environmental Law or other Governmental Approval, (e) which are
deemed to constitute a nuisance, a trespass or pose a health or
safety hazard to persons or neighboring properties, (f) which are
materials consisting of underground or aboveground storage tanks,
whether empty, filled or partially filled with any toxic substance,
or (g) which contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil,
nuclear fuel, natural gas or synthetic gas, excepting, however, any
such materials lawfully operated and/or managed pursuant to
applicable Environmental Laws.
"Hedging Agreement" means any agreement with respect to an
interest rate swap, collar, cap, floor or a forward rate agreement
or other agreement regarding the hedging of interest rate risk
exposure executed in connection with hedging the interest rate
exposure of the Borrower under this Agreement, and any confirming
letter executed pursuant to such hedging agreement, all as amended,
restated or otherwise modified.
"Initial Eligible Properties" means, collectively, the
following six (6) properties: Heritage Club, the Legends of Myrtle
Beach Golf Courses, Oyster Bay, The Woodlands, Olde Atlanta and
Northgate Country Club.
"Interest Expense" means, with respect to any Person for any
period, the gross interest expense (including, without limitation,
interest expense attributable to Capital Leases) of such Person,
all determined for such period on a Consolidated basis in
accordance with GAAP.
"Interest Period" means each period of thirty (30) days, under
this Agreement, with respect to which the Eurodollar Rate shall be
determined; provided that:
(a) each Interest Period shall commence on the date of
advance of or Conversion to any Eurodollar Loan and, in the
case of immediately successive Interest Periods, each
successive Interest Period shall commence on the date on which
the next preceding Interest Period expires;
(b) if any Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day; provided, that if
any Interest Period would otherwise expire on a day that is
not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business Day;
(c) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of
the relevant calendar month at the end of such Interest
Period;
(d) no Interest Period shall be permitted to extend
beyond the Termination Date; and
(e) there shall be no more than five (5) Interest
Periods outstanding at any time.
"Issuing Lender" means NationsBank, in its capacity as issuer
of any Letter of Credit, or any successor thereto.
"L/C Commitment" means Ten Million Dollars ($10,000,000).
"L/C Facility" means the letter of credit facility established
pursuant to Article IIA
"L/C Participants" means the collective reference to all the
Lenders other than the Issuing Lender.
"Legends of Myrtle Beach Golf Courses" means Heathland,
Moorland and Parkland.
"Legends of Virginia Golf Courses" means Stonehouse Golf Club
and Royal New Kent.
"Lender" means each Person executing this Agreement as a
Lender set forth on the signature pages hereto and each Person that
hereafter becomes a party to this Agreement as a Lender pursuant to
Section 13.10.
"Lending Office" means, with respect to any Lender, the office
of such Lender maintaining such Lender's Commitment Percentage of
the Loans.
"Lessee" means the operator of a golf course property under a
Participating Lease.
"Letter of Credit Obligations" means at any time, an amount
equal to the sum of (a) the aggregate undrawn and unexpired amount
of the then outstanding Letters of Credit and (b) the aggregate
amount of drawings under Letters of Credit which have not then been
reimbursed pursuant to Section 2A.5.
"Letters of Credit" shall have the meaning assigned thereto in
Section 2A.1(a).
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease or other title
retention agreement relating to such asset.
"Loan" means any Loan made to the Borrower pursuant to Article
II and all such Loans collectively as the context requires.
"Loan Documents" means, collectively, this Agreement, the
Notes, any Hedging Agreement executed by any Lender, the Security
Documents and each other document, instrument and agreement
executed and delivered by any Credit Party or on behalf of such
entity by its counsel in connection with this Agreement or
otherwise referred to in this Agreement or contemplated hereby, all
as may be amended, restated or otherwise modified.
"Maintenance Capital Expenditures" means a Capital Expenditure
made by the Borrower for the purpose of repairing, replacing or
refurbishing a then-existing capital asset of the Borrower.
"Management Expense" means, with respect to any Eligible
Property for any period, an amount equal to three percent (3%) of
the Gross Golf Revenues during such period with respect to each
such Eligible Property.
"Material Adverse Effect" means, with respect to any Credit
Party, a material adverse effect on the properties, business,
prospects, operations or condition (financial or otherwise) of any
such Person or the ability of any such Person to perform its
material obligations under the Loan Documents, Participating Leases
or Material Contracts, in each case to which it is a party, after
the applicable notice and cure periods, if any, have elapsed.
"Material Contract" means (a) any contract or other agreement,
written or oral, of any Credit Party involving monetary liability
of or to any such Person in an amount in excess of $250,000 per
annum, or (b) any other contract or agreement, written or oral, of
any Credit Party the failure to comply with which could reasonably
be expected to have a Material Adverse Effect.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions within the preceding six years.
"Myrtle Beach Golf Courses" means collectively Heathland,
Moorland, Parkland, Heritage Golf Club and Oyster Bay.
"NationsBank" means NationsBank, N.A., a national banking
association, and its successors.
"Net Income" means, with respect to the Credit Parties for any
period, the Consolidated net income (or loss) of the Credit Parties
for such period determined in accordance with GAAP.
"Notes" means the separate Notes made by the Borrower payable
to the order of each of the Lenders, substantially in the form of
Exhibit A hereto, evidencing the Credit Facility, and any
amendments, modifications and supplements thereto, any substitutes
therefor, and any replacements, restatements, renewals or extension
thereof, in whole or in part; "Note" means any of such Notes.
"Notice of Prepayment" shall have the meaning assigned thereto
in Section 2.3(c).
"Notice of Borrowing" shall have the meaning assigned thereto
in Section 2.2(a).
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including
interest accruing after the filing of any bankruptcy or similar
petition) the Loans, (b) the Letter of Credit Obligations, (c) all
payment and other obligations owing by the Borrower to any Lender
or the Agent under any Hedging Agreement and (d) all other fees and
commissions (including attorney's fees), charges, indebtedness,
loans, liabilities, financial accommodations, obligations,
covenants and duties owing by the Borrower to the Lenders or the
Agent, of every kind, nature and description, direct or indirect,
absolute or contingent, due or to become due, contractual or
tortious, liquidated or unliquidated, and whether or not evidenced
by any note, and whether or not for the payment of money under or
in respect of this Agreement, any Note or any of the other Loan
Documents.
"Officer's Compliance Certificate" shall have the meaning
assigned thereto in Section 7.2.
"Other Taxes" shall have the meaning assigned thereto in
Section 3.13(b).
"Participating Lease" means the Lease between the Borrower as
lessor and the operator of each golf course property as the Lessee.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV
of ERISA or Section 412 of the Code and which (a) is maintained for
employees of the Borrower or any ERISA Affiliates or (b) has at any
time within the preceding six years been maintained for the
employees of the Borrower or any of their current or former ERISA
Affiliates.
"Permitted Liens" means any Liens permitted under Section
10.3.
"Person" means an individual, corporation, partnership,
association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated
organization, Governmental Authority or any other form of entity or
group thereof.
"Prime Rate" means, at any time, the rate of interest per
annum publicly announced from time to time by NationsBank as its
prime rate. Each change in the Prime Rate shall be effective as of
the opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced
publicly by NationsBank as its Prime Rate is an index or base rate
and shall not necessarily be its lowest or best rate charged to its
customers or other banks.
"Register" shall have the meaning assigned thereto in Section
13.10.
"Required Lenders" means, at any date, any combination of
holders other than Defaulting Lenders of at least sixty-six and
two-thirds percent (66-2/3%) of the aggregate unpaid principal
amount of the Notes exclusive of Notes held by Defaulting Lenders,
or if no amounts are outstanding under the Notes, any combination
of Lenders other than Defaulting Lenders whose Commitment
Percentages would aggregate at least sixty-six and two-thirds
percent (66-2/3%) if the Commitments of each Defaulting Lender were
excluded from the Aggregate Commitment.
"Reimbursement Obligation" means the obligation of the
Borrower to reimburse the Issuing Lender pursuant to Section 2A.5
for amounts drawn under Letters of Credit.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal,
special, supplemental, or emergency reserves) are required to be
maintained under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) by
member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member
banks with respect to (i) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar
Rate is to be determined, or (ii) any category of extensions of
credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Reserve Requirement.
"S&P" means Standard and Poors Ratings Group.
"Security Documents" means the collective reference to each
Mortgage, Deed of Trust or similar instrument, Security Agreement
and other agreement or writing pursuant to which the Borrower
conveys a Lien on or grants a security interest in any property or
assets as security for the Obligations or any Person guarantees the
payment and/or performance of the Obligations.
"Solvent" means, as to the Credit Parties on a particular
date, that any such Person (a) has capital sufficient to carry on
its business and transactions and all business and transactions in
which it is about to engage and is able to pay its debts as they
mature, (b) owns property having a value, both at fair valuation
and at present fair saleable value, greater than the amount
required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities
beyond its ability to pay such debts or liabilities as they mature.
"Stabilized Golf Course" means, as of any date of
determination, a golf course property for which the (a) total
revenues, (b) total expenses, and (c) EBITDAR of the Lessee of such
golf course property determined solely with regard to such golf
course property for the then most recently ended twelve-month
period do not deviate by more than fifteen percent (15%), positive
or negative, from the total revenues, total expenses and EBITDAR of
such Lessee, respectively, for such golf course property for the
twelve month period immediately preceding the then most recently
ended twelve month period.
"Stock" means all shares, options, interests or other
equivalents (howsoever designated) of or in a corporation, whether
voting or nonvoting, including, without limitation, common stock,
warrants, preferred stock, convertible debentures and all
agreements, instruments and documents convertible, in whole or in
part, into any one or more or all of the foregoing.
"Subordinated Debt" means Debt of any Credit Party
subordinated in right and time of payment to the Obligations on
terms satisfactory to the Agent and Required Lenders.
"Subsidiary" means as to any Person, any corporation, partner-
ship or other entity of which more than fifty percent (50%) of the
outstanding capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors
or other managers of such corporation, partnership or other entity
is at the time, directly or indirectly, owned by or the management
is otherwise controlled by such Person (irrespective of whether, at
the time, capital stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency). Unless otherwise qualified,
references to "Subsidiary" or "Subsidiaries" in this Agreement
shall refer to those of GTA.
"Tangible Net Worth" means Total Assets (but excluding
therefrom capitalized interest, debt discount and expense,
goodwill, patents, trademarks, copyrights, franchises, licenses,
amounts due from officers, directors, stockholders and Affiliates
and any other items which would be treated as intangibles under
GAAP), less Total Liabilities.
"Taxes" shall have the meaning assigned thereto in Section
3.13(a).
"Termination Date" means the earliest of the dates referred to
in Section 2.5.
"Termination Event" means: (a) a "Reportable Event" described
in Section 4043 of ERISA, or (b) the withdrawal of the Borrower or
any ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (c) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate, or the
appointment of a trustee with respect to, any Pension Plan by the
PBGC, or (e) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan, or
(f) the partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan, or (g) the imposition of a
Lien pursuant to Section 412 of the Code or Section 302 of ERISA,
or (h) any event or condition which results in the reorganization
or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA, or (i) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or
the institution by PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA.
"Title Insurance Commitment" shall have the meaning assigned
thereto in subparagraph (d) of the definition of Eligible
Properties.
"Total Assets" means, as of any date, the aggregate amount of
(a) all assets which would be reflected on a Consolidated balance
sheet of the Credit Parties prepared in accordance with GAAP (b)
plus accumulated depreciation in accordance with GAAP.
"Total Liabilities" means, as of any date, the aggregate
amount of all liabilities which would be reflected on a
Consolidated balance sheet of the Credit Parties prepared in
accordance with GAAP.
"Uniform Customs" the Uniform Customs and Practice for
Documentary Credits (1994 Revision), International Chamber of
Commerce Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the
State of North Carolina.
"United States" means the United States of America.
SECTION 1.2 General. Unless otherwise specified, a
reference in this Agreement to a particular section, subsection,
Schedule or Exhibit is a reference to that section, subsection,
Schedule or Exhibit of this Agreement. Wherever from the context
it appears appropriate, each term stated in either the singular or
plural shall include the singular and plural, and pronouns stated
in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Any reference in this
Agreement to "Charlotte time" shall refer to the applicable time of
day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined
therein, all capitalized terms defined in this Agreement shall have
the defined meanings when used in this Agreement, the Notes and the
other Loan Documents or any certificate, report or other document
made or delivered pursuant to this Agreement.
(b) Miscellaneous. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1 Loans. Subject to the terms and conditions of
this Agreement, each Lender severally agrees to make Loans to the
Borrower from time to time from the Closing Date through, but not
including, the Termination Date as requested by the Borrower in
accordance with the terms of Section 2.2; provided, that (a) the
aggregate principal amount of all outstanding Loans (after giving
effect to any amount requested) and Letter of Credit Obligations
shall not exceed the lesser of (i) the Aggregate Commitment and
(ii) the Borrowing Base, and (b) the principal amount of outstand-
ing Loans from any Lender to the Borrower plus such Lender's
Commitment Percentage of the Letter of Credit Obligations then
outstanding shall not at any time exceed such Lender's Commitment.
Each Loan by a Lender shall be in a principal amount equal to such
Lender's Commitment Percentage of the aggregate principal amount of
Loans requested on such occasion. Subject to the terms and
conditions of this Agreement, the Borrower may borrow, repay and
reborrow Loans under this Agreement until the Termination Date.
SECTION 2.2 Procedure for Advances of Loans.
(a) Requests for Borrowing. The Borrower shall give the
Agent irrevocable prior written notice in the form attached hereto
as Exhibit B (a "Notice of Borrowing") not later than 11:00 a.m.
(Charlotte time) (i) at least two (2) Business Days before each
Base Rate Loan and (ii) at least three (3) Business Days before
each Eurodollar Loan, of its intention to borrow, specifying (A)
the date of such borrowing, which shall be a Business Day, (B) the
amount of such borrowing, which shall be in an aggregate principal
amount of $500,000 or a whole multiple of $100,000 in excess
thereof, and (C) whether such Loan is to be a Eurodollar Loan or a
Base Rate Loan. Notices received after 11:00 a.m. (Charlotte time)
shall be deemed received on the next Business Day. The Agent shall
promptly notify the Lenders of each Notice of Borrowing.
(b) Disbursement of Loans. Not later than 2:00 p.m.
(Charlotte time) on the proposed borrowing date, each Lender will
make available to the Agent, for the account of the Borrower, at
the office of the Agent in funds immediately available to the
Agent, such Lender's Commitment Percentage of the Loans to be made
on such borrowing date. The Borrower hereby irrevocably authorizes
the Agent to disburse the proceeds of each borrowing requested
pursuant to this Section 2.2 in immediately available funds by
crediting such proceeds to a deposit account of the Borrower
maintained with the Agent or by wire transfer to such account as
may be agreed upon by the Borrower and the Agent from time to time.
Unless the Agent shall have received notice from a Lender that such
Lender will not make available to the Agent such Lender's
Commitment Percentage of the requested Loan, the Agent shall
disburse such Lender's Commitment Percentage of the Loans.
SECTION 2.3 Repayment of Loans.
(a) Repayment on Termination Date. The Borrower shall repay
the outstanding principal amount of all Loans in full, together
with all accrued but unpaid interest thereon, on the Termination
Date.
(b) Mandatory Repayments.
(A) If at any time the outstanding principal amount of
all Loans exceeds the lesser of (i) the Aggregate Commitment
less the Letter of Credit Obligations and (ii) the Borrowing
Base, the Borrower shall repay immediately upon written notice
from the Agent, by payment to the Agent for the account of the
Lenders, the Loans in an amount equal to such excess.
(B) The Loans shall also be prepaid by any amount
required to be paid under Section 5.6(c) or Section 10.6 of
this Agreement and by the amount of all casualty proceeds
required to be repaid under any Security Documents.
(C) Each such repayment under this Section 2.3(b) shall
be (i) accompanied by any amount required to be paid pursuant
to Section 3.12 of this Agreement, together with interest
accrued thereon to the date of repayment and (ii) applied
first to the outstanding Base Rate Loans up to the full amount
thereof and second to the outstanding Eurodollar Loans up to
the full amount thereof.
(c) Optional Repayments. The Borrower may at any time and
from time to time repay the Loans, in whole or in part, by giving
the Agent irrevocable notice in the form attached hereto as Exhibit
C (a "Notice of Prepayment") not later than 11:00 a.m. (Charlotte
time) at least three (3) Business Days before each prepayment of a
Loan specifying the date and amount of repayment, provided,
however, that the Borrower may not repay any Eurodollar Loan on any
day other than the last day of the Interest Period applicable
thereto unless such payment is accompanied by any amount required
to be paid pursuant to Section 3.12 of this Agreement. Upon
receipt of such notice, the Agent shall promptly notify each
Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such
notice. Partial repayments shall be in an aggregate amount of
$500,000 or a whole multiple of $100,000 in excess thereof. Each
such repayment shall be accompanied by any amount required to be
paid pursuant to Section 3.12 of this Agreement.
SECTION 2.4 Notes. Each Lender's Loans and the obligation
of the Borrower to repay such Loans shall be evidenced by a Note
executed by the Borrower payable to the order of such Lender
representing the Borrower's obligation to pay such Lender's
Commitment or, if less, the aggregate unpaid principal amount of
all Loans made and to be made by such Lender to the Borrower under
this Agreement, plus interest and all other fees, charges and other
amounts due thereon as required under this Agreement. Each Note
shall bear interest on the unpaid principal amount thereof at the
applicable interest rate per annum specified in Section 3.1.
SECTION 2.5 Termination of Credit Facility. The Credit
Facility shall terminate on the earlier of (a) the second
anniversary of the Closing Date, and (b) the date of termination by
the Agent on behalf of the Lenders pursuant to Section 11.2(a).
SECTION 2.6 Use of Proceeds. The Borrower shall use the
proceeds of the Loans and the Letters of Credit (a) to pay in full
the existing Debt under the Loan Agreement dated February 12, 1997
between the Borrower and NationsBank, and (b) to finance the
purchase of Stabilized Golf Courses which have otherwise been
approved in writing by the Agent; provided that (i) up to
$10,000,000 may be used to purchase golf courses which are not
Stabilized Golf Courses, and (ii) up to $10,000,000 less the Letter
of Credit Obligations may be used for working capital and general
corporate requirements of the Borrower, including the payment of
certain fees and expenses incurred in connection with this
transaction.
ARTICLE IIA
LETTER OF CREDIT FACILITY
SECTION 2A.1 Commitment. Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agree-
ments of the other Lenders set forth in Section 2A.4(a), agrees to
issue standby letters of credit ("Letters of Credit") for the
account of the Borrower on any Business Day from the Closing Date
through but not including the date which is sixty (60) days prior
to the Termination Date in such form as may be approved from time
to time by the Issuing Lender; provided, that the Issuing Lender
shall have no obligation to issue any Letter of Credit if, after
giving effect to such issuance, (a) the Letter of Credit
Obligations would exceed the lesser of (1) the L/C Commitment or
(2) the Borrowing Base or (b) the sum of the aggregate principal
amount of all outstanding Loans and Letter of Credit Obligations
would exceed the lesser of (1) the Aggregate Commitment or (2) the
Borrowing Base. Each Letter of Credit shall (i) be denominated in
Dollars, (ii) be a standby letter of credit issued to support
obligations of the Borrower, contingent or otherwise, incurred in
the ordinary course of business, (iii) expire on a date not more
than one year later in the case of a standby letter of credit but
in no event later than the Termination Date and (iv) be subject to
the Uniform Customs and Practice for Documentary Credits and, to
the extent not inconsistent therewith, the laws of the State of
North Carolina. The Issuing Lender shall not issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed
by any Applicable Law. References herein to "issue" and
derivations thereof with respect to Letters of Credit shall also
include extensions, modifications or confirmations of any existing
Letters of Credit, unless the context otherwise requires.
SECTION 2A.2 Procedure for Issuance of Letters of Credit.
The Borrower may from time to time request that the Issuing Lender
issue a Letter of Credit by delivering to the Issuing Lender at the
Agent's Office an Application therefor, completed to the reasonable
satisfaction of the Issuing Lender, and such other certificates,
documents and other papers and information as the Issuing Lender
may reasonably request. Upon receipt of any Application, the
Issuing Lender shall process such Application and the certificates,
documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures
and shall, subject to Section 2A.1 and Article V hereof, promptly
issue the Letter of Credit requested thereby (but in no event shall
the Issuing Lender be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and
other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Lender and the Borrower.
The Issuing Lender shall furnish to the Borrower a copy of such
Letter of Credit and furnish to each Lender a copy of such Letter
of Credit and the amount of each Lender's participation therein,
determined in accordance with Section 2A.4(a), all promptly
following the issuance of such Letter of Credit.
SECTION 2A.3 Commissions and Other Charges.
(a) The Borrower shall pay to the Agent, for the account of
the Issuing Lender and the L/C Participants, a letter of credit
commission on the face amount of each Letter of Credit in an amount
per annum equal to the then Applicable Margin, determined in
accordance with Section 3.1(b). Such commission shall be paid in
advance upon issuance of each Letter of Credit.
(b) The Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all
commissions received by the Agent in accordance with their
respective Commitment Percentages.
SECTION 2A.4 L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce the Issuing Lender
to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Lender, on the terms and conditions
hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Commitment
Percentage in the Issuing Lender's obligations and rights under
each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender
that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's
address for notices specified herein an amount equal to such L/C
Participant's Commitment Percentage of the amount of such draft, or
any part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by
any L/C Participant to the Issuing Lender pursuant to Section
2A.4(a) in respect of any unreimbursed portion of any payment made
by the Issuing Lender under any Letter of Credit, the Issuing
Lender shall notify each L/C Participant of the amount and due date
of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If
any such amount is paid to the Issuing Lender after the date such
payment is due, such L/C Participant shall pay to the Issuing
Lender on demand, in addition to such amount, the product of (i)
such amount, times (ii) the daily average Federal Funds Rate as
determined by the Agent during the period from and including the
date such payment is due to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a fraction
the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. A certificate of
the Issuing Lender with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error. With
respect to payment to the Issuing Lender of the unreimbursed
amounts described in this Section 2A.4(b), if the L/C Participants
receive notice that any such payment is due (A) prior to 2:00 p.m.
(Charlotte time) on any Business Day, such payment shall be due
that Business Day, and (B) after 2:00 p.m. (Charlotte time) on any
Business Day, such payment shall be due on the following Business
Day.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C
Participant its Commitment Percentage of such payment in accordance
with this Section 2A.4, the Issuing Lender receives any payment
related to such Letter of Credit (whether directly from the
Borrower or otherwise, or any payment of interest on account
thereof, the Issuing Lender will promptly distribute to such L/C
Participant its pro rata share thereof; provided, that in the event
that any such payment received by the Issuing Lender shall be
required to be returned by the Issuing Lender, such L/C Participant
shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
SECTION 2A.5 Reimbursement Obligation of the Borrower. The
Borrower agrees to reimburse the Issuing Lender on each date on
which the Issuing Lender notifies the Borrower of the date and
amount of a draft paid under any Letter of Credit for the amount of
(a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by the Issuing Lender in connection with
such payment. Each such payment shall be made to the Issuing
Lender at its address for notices specified herein in lawful money
of the United States and in immediately available funds. Interest
shall be payable on any and all amounts remaining unpaid by the
Borrower under this Article IIA from the date such amounts become
payable (whether at stated maturity, by acceleration or otherwise)
until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the
Borrower fails to timely reimburse the Issuing Lender on the date
the Borrower receives the notice referred to in this Section 2A.5,
the Borrower shall be deemed to have timely given a Notice of
Borrowing hereunder to the Agent requesting the Lenders to make a
Base Rate Loan on such date in an amount equal to the amount of
such drawing and, subject to the satisfaction or waiver of the
conditions precedent specified in Article V, the Lenders shall make
Base Rate Loans in such amount, the proceeds of which shall be
applied to reimburse the Issuing Lender for the amount of the
related drawing and costs and expenses.
SECTION 2A.6 Obligations Absolute. The Borrower's obliga-
tions under this Article IIA (including without limitation the
Reimbursement Obligation) shall be absolute and unconditional under
any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower may have or
have had against the Issuing Lender or any beneficiary of a Letter
of Credit. The Borrower also agrees with the Issuing Lender that
the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligation under Section 2A.5 shall not be affected
by, among other things, the validity or genuineness of documents or
of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute
between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be
transferred or any claims whatsoever of a Borrower against any
beneficiary of such Letter of Credit or any such transferee. The
Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions caused by the
Issuing Lender's gross negligence or willful misconduct or breach
under this Agreement. The Borrower agrees that any action taken or
omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the
absence of gross negligence or willful misconduct or breach under
this Agreement and in accordance with the standards of care
specified in the Uniform Customs and, to the extent not
inconsistent therewith, the UCC shall be binding on the Borrower
and shall not result in any liability of the Issuing Lender to the
Borrower. The responsibility of the Issuing Lender to the Borrower
in connection with any draft presented for payment under any Letter
of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining
that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in
conformity with such Letter of Credit.
SECTION 2A.7 Effect of Application. To the extent that any
provision of any Application related to any Letter of Credit is
inconsistent with the provisions of this Article IIA, the
provisions of this Article IIA shall apply.
ARTICLE III
GENERAL LOAN PROVISIONS
SECTION 3.1 Interest.
(a) Interest Rate Options. Subject to the provisions of this
Section 3.1, at the election of the Borrower in accordance with
Article II, the unpaid principal balance of any Loan shall bear
interest at (A) the Base Rate, or (B) the Adjusted Eurodollar Rate
plus, in either case, the Applicable Margin. The Borrower shall
select the type of interest rate applicable to any Loan at the time
a Notice of Borrowing is given pursuant to Section 2.2(a) or at the
time a Notice of Conversion/Continuation is given pursuant to
Section 3.2. Any Loan as to which the Borrower has not duly
specified an interest rate as provided immediately above shall be
deemed a Base Rate Loan.
(b) Applicable Margin. The Applicable Margin provided for in
Section 3.1(a) with respect to the Eurodollar Loans (the
"Applicable Margin") shall equal 2.00%; provided that:
(i) at any time the Borrowing Base is greater than or
equal to 1.30 times the Aggregate Commitment, the Applicable
Margin shall equal 1.75%; and
(ii) if at any time GTA obtains an investment-grade
senior debt rating by Moody's and S&P, then, irrespective of
the ratio of the Borrowing Base to the Aggregate Commitment,
the Applicable Margin shall be determined by reference to the
lower of Moody's or S&P's rating thereof in accordance with
the following pricing matrix:
Senior Debt Rating Applicable Margin Per Annum
BBB/Baa2 or higher 1.20%
BBB-/Baa3 1.30%
Adjustments, if any, in the Applicable Margin shall be made by the
Agent on the earlier of (A) the tenth (10th) Business Day after
receipt by the Agent of quarterly financial statements for the
Borrower and its Subsidiaries and the accompanying Borrowing Base
Certificate setting forth the Borrowing Base of the Borrower and
Officer's Compliance Certificate setting forth the ratings, if any,
of the senior Debt of the Borrower as of the most recent fiscal
quarter end, or (B) the third (3rd) Business Day following the
Agent's receipt of actual knowledge of a relevant change in such
ratings. At any time when GTA does not have an investment-grade
senior debt rating by Moody's and S&P and subject to Section
3.1(e), in the event the Borrower fails to deliver such financial
statements within the time required by Section 7.1(a) of this
Agreement, the Applicable Margin shall be the highest Applicable
Margin set forth above until the delivery of such financial
statements and certificate.
(c) Default Rate. Upon the occurrence and during the
continuance of an Event of Default, (i) the Borrower shall no
longer have the option to request or Convert to Eurodollar Loans,
(ii) all outstanding Eurodollar Loans may at the option of the
Agent and shall at the direction of the Required Lenders bear
interest at a rate per annum which shall be two percent (2%) in
excess of the rate then applicable to Eurodollar Loans, as
applicable, until the end of the applicable Interest Period and
thereafter at a rate equal to two percent (2%) in excess of the
rate then applicable to Base Rate Loans, and (iii) all outstanding
Base Rate Loans shall bear interest at a rate per annum equal to
two percent (2%) in excess of the rate then applicable to Base Rate
Loans. Interest shall continue to accrue on the Notes after the
filing by or against the Borrower of any petition seeking any
relief in bankruptcy or under any act or law pertaining to
insolvency or debtor relief, whether state, federal or foreign.
(d) Interest Payment and Computation. Interest on each Loan
shall be payable in arrears on the last Business Day of each month,
commencing July 31, 1997, and on the Termination Date. All
interest rates, fees and commissions provided under this Agreement
shall be computed on the basis of a 360-day year and assessed for
the actual number of days elapsed.
(e) Maximum Rate. In no contingency or event whatsoever
shall the aggregate of all amounts deemed interest under this
Agreement or under any of the Notes charged or collected pursuant
to the terms of this Agreement or pursuant to any of the Notes
exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. In the event that such a court determines
that the Lenders have charged or received interest under this
Agreement in excess of the highest rate permissible under
Applicable Law, the rate in effect under this Agreement shall
automatically be reduced to the maximum rate permitted by
Applicable Law and the Lenders shall at the Agent's option promptly
refund to the Borrower any interest received by Lenders in excess
of the maximum rate permitted by Applicable Law or shall apply such
excess to the principal balance of the Obligations if permitted by
Applicable Law (in either event, Agent shall advise Borrower in
writing promptly of its decision). It is the intent of this
Agreement that the Borrower not pay or contract to pay, and that
neither the Agent nor any Lender receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess
of that which may be paid by the Borrower under Applicable Law.
SECTION 3.2 Notice and Manner of Conversion or Continuation
of Loans. Provided that no Event of Default has occurred and is
then continuing, the Borrower shall have the option to (a) Convert
at any time all or any portion of its outstanding Base Rate Loans
in a principal amount equal to $500,000 or any whole multiple of
$100,000 in excess thereof into one or more Eurodollar Loans, and
(b) upon the expiration of any Interest Period, (i) Convert all or
any part of its outstanding Eurodollar Loans in a principal amount
equal to $500,000 or a whole multiple of $100,000 in excess thereof
into Base Rate Loans, or (ii) continue such Eurodollar Loans as
Eurodollar Loans. Whenever the Borrower desires to Convert or
continue Loans as provided immediately above, the Borrower shall
give the Agent irrevocable prior written notice in the form
attached as Exhibit D (a "Notice of Conversion/Continuation") not
later than 11:00 a.m. (Charlotte time) three (3) Business Days
before the day on which a proposed Conversion or continuation of
such Loan is to be effective specifying (A) the Loans to be
Converted or continued, and, in the case of any Eurodollar Loan to
be Converted or continued, the last day of the Interest Period
therefor, (B) the effective date of such Conversion or continuation
(which shall be a Business Day), and (C) the principal amount of
such Loans to be Converted or continued. The Agent shall promptly
notify the Lenders of such Notice of Conversion/Continuation.
SECTION 3.3 Fees.
(a) Unused Fee. Commencing on the Closing Date, the Borrower
shall pay to the Agent, for the account of the Lenders, a non-
refundable fee at a rate per annum equal to (i) 0.375% on the
average daily unused portion of the Aggregate Commitment, if the
average daily unused portion of the Aggregate Commitment is at
least 50% of the Aggregate Commitment during the applicable
quarter, and (ii) 0.250% on the average daily unused portion of the
Aggregate Commitment, if the average daily unused portion of the
Aggregate Commitment is less than 50% of the Aggregate Commitment
during the applicable quarter. The commitment fee shall be payable
quarterly in arrears on the last Business Day of each quarter
during the term of this Agreement commencing July 31, 1997, and on
the Termination Date. Such commitment fee shall be distributed by
the Agent to the Lenders pro rata in accordance with the Lenders'
respective Commitment Percentages.
(b) Agent's and Other Fees. The Borrower shall pay to the
Agent, for its account, the fees set forth in the separate fee
letter agreement executed by the Borrower and the Agent dated June
17, 1997.
SECTION 3.4 Payment.
(a) Manner of Payment. Each payment by the Borrower on
account of the principal of or interest on the Loans or of any fee,
commission or other amounts payable to the Lenders under this
Agreement or any Note shall be made not later than 1:00 p.m.
(Charlotte time) on the date specified for payment under this
Agreement to the Agent at the Agent's Office for the account of the
Lenders (other than as set forth below) pro rata in accordance with
their respective Commitment Percentages, in Dollars, in immediately
available funds and shall be made without any set-off, counterclaim
or deduction whatsoever. Any payment received after such time but
before 2:00 p.m. (Charlotte time) on such day shall be deemed a
payment on such date for the purposes of Section 11.1, but for all
other purposes shall be deemed to have been made on the next
succeeding Business Day. Any payment received after 2:00 p.m.
(Charlotte time) shall be deemed to have been made on the next
succeeding Business Day for all purposes. Upon receipt by the
Agent of each such payment, the Agent shall distribute to each
Lender at its address for notices set forth in this Agreement its
pro rata share of such payment in accordance with this Section 3.4
such Lender's Commitment Percentage and shall wire advice of the
amount of such credit to each Lender. Each payment to the Agent of
the Agent's fees or the expenses of the Agent or the Issuing
Lender shall be made for the account of the Agent. Each payment to
the Agent of the Issuing Lender's fees or L/C Participants'
commissions shall be made in like manner, but for the account of
the Issuing Lender or the L/C Participants, as the case may be.
Any amount payable to any Lender under Section 3.7, 3.8, 3.12 or
13.2 shall be paid to the Agent for the account of the applicable
Lender.
(b) Crediting of Payments and Proceeds. In the event that
the Borrower shall fail to pay any of the Obligations when due and
the Obligations have been accelerated pursuant to Section 11.2, all
payments received by the Lenders upon the Notes and the other
Obligations and all net proceeds from the enforcement of the
Obligations shall be applied first to all expenses then due and
payable by the Borrower under this Agreement, then to all indemnity
obligations then due and payable by the Borrower under this
Agreement, then to all Agent's fees then due and payable by
Borrower under this Agreement, then to all commitment and other
fees and commissions then due and payable by Borrower under this
Agreement, then to accrued and unpaid interest on the Notes, and
any termination payments due from Borrower in respect of a Hedging
Agreement with any Lender (pro rata in accordance with all such
amounts due), and then to the principal amount of the Notes, in
that order.
SECTION 3.5 Right of Set-off; Adjustments. (a) Upon the
occurrence and during the continuance of any Event of Default, each
Lender (and each of its Affiliates) is hereby authorized at any
time and from time to time, to the fullest extent permitted by law,
to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender (or any of its
Affiliates) to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement and the Note held by such
Lender, irrespective of whether such Lender shall have made any
demand under this Agreement or such Note and although such obliga-
tions may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such set-off and application made by such
Lender; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application. The
rights of each Lender under this section are in addition to other
rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
(b) If any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of the Loans owing to it, or
interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, or otherwise),
in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other
Lender's Loans owing to it, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's
Loans owing to it, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall
be necessary to cause such Benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with
each of the Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from
such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that any
Lender so purchasing a participation from a Lender pursuant to this
Section 3.5 may, to the fullest extent permitted by law, exercise
all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Person were the
direct creditor of the Borrower in the amount of such
participation.
SECTION 3.6 Nature of Obligations of Lenders Regarding
Extensions of Credit; Assumption by the Agent. The obligations of
the Lenders under this Agreement to make the Loans are several and
are not joint or joint and several. Unless the Agent shall have
received notice from a Lender prior to a proposed borrowing date
that such Lender will not make available to the Agent such Lender's
ratable portion of the amount to be borrowed on such date (which
notice shall not release such Lender of its obligations under this
Agreement), the Agent may assume that such Lender has made such
portion available to the Agent on the proposed borrowing date in
accordance with Section 2.2(b) and the Agent may, in reliance upon
such assumption, make available to the Borrower on such date a
corresponding amount. If such amount is made available to the
Agent on a date after such borrowing date, such Lender shall pay to
the Agent on demand an amount, until paid, equal to the product of
(a) the amount of such Lender's Commitment Percentage of such
borrowing, times (b) the daily average Federal Funds Rate during
such period as determined by the Agent, times (c) a fraction the
numerator of which is the number of days that elapse from and
including such borrowing date to the date on which such Lender's
Commitment Percentage of such borrowing shall have become
immediately available to the Agent and the denominator of which is
360. A certificate of the Agent with respect to any amounts owing
under this Section 3.6 shall be conclusive, absent manifest error.
If such Lender's Commitment Percentage of such borrowing is not
made available to the Agent by such Lender within three (3)
Business Days of such borrowing date, the Agent shall be entitled
to recover such amount made available by the Agent with interest
thereon at the Adjusted Eurodollar Rate, on demand, from the
Borrower. The failure of any Lender (a "Defaulting Lender") to
make its Commitment Percentage of any Loan available shall not
relieve it or any other Lender of its obligation, if any, under -
this Agreement to make its Commitment Percentage of such Loan
available to Borrower on such borrowing date, but no Lender shall
be responsible for the failure of any other Lender to make its
Commitment Percentage of such Loan available on the borrowing date.
SECTION 3.7 Indemnity. The Borrower hereby indemnifies
each of the Lenders against any reasonable and actually incurred
loss or expense which arises or is directly attributable to each
Lender's obtaining, liquidating or employing deposits or other
funds acquired to effect, fund or maintain any Loan (a) as a
consequence of any failure by the Borrower to make any payment when
due of any amount due under this Agreement in connection with a
Loan, (b) due to any failure of the Borrower to borrow on a date
specified therefor in a Notice of Borrowing, or (c) due to any
payment or prepayment of any Loan on a date other than the date
specified for such payment in the applicable Notice of Prepayment;
provided, however, the Borrower shall have no such obligation to
any Lender who is a Defaulting Lender. The amount of such
reasonable and actually incurred loss or expense shall be
determined, in the applicable Lender's sole reasonable discretion,
based upon the condition that such Lender funded its Commitment
Percentage of the Loans in the London interbank market and using
any reasonable attribution or averaging methods which such Lender
deems appropriate and practical. A certificate of such Lender
setting forth the basis for determining such amount or amounts
necessary to compensate such Lender shall be forwarded to the
Borrower through the Agent and shall be conclusively presumed to be
correct save for manifest error.
SECTION 3.8 Increased Cost and Reduced Return.
(a) If, after the date of this Agreement, the adoption of any
applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Lender (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency;
excepting, however, any such change occasioned by such Lender's
default or non-compliance with such applicable rules:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Letters of Credit, its Note, or its
obligation to make Eurodollar Loans, or change the basis of
taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Agreement or its Note in
respect of any Eurodollar Loans (other than taxes imposed on
the overall net income of such Lender by the jurisdiction in
which such Lender has its principal office or such Applicable
Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Reserve Requirement utilized in the
determination of the Adjusted Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Commitment of such
Lender under this Agreement; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or the London interbank market any other
condition affecting this Agreement or its Note or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to
such Lender (or its Applicable Lending Office) of making or
maintaining any Eurodollar Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under
this Agreement or its Note with respect to any Eurodollar Loans,
then the Borrower shall pay to such Lender on demand (and a full
written explanation for the increase) such amount or amounts solely
applicable to its Loan or in relationship of its Loan to other
loans of such Lender as will compensate such Lender for such
increased cost or reduction. If any Lender requests compensation
by the Borrower under this Section 3.8, the Borrower may, in its
sole discretion, by notice to such Lender (with a copy to the
Agent), suspend the obligation of such Lender to make or continue
Eurodollar Loans until the event or condition giving rise to such
request ceases to be in effect; provided that such suspension shall
not affect the right of such Lender to receive the compensation so
requested, if applicable, subject to the foregoing conditions and
caveats.
(b) If, after the date of this Agreement, any Lender shall
have determined that the adoption of any applicable law, rule, or
regulation regarding capital adequacy or any change therein or in
the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank, or
comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's
obligations under this Agreement to a level below that which such
Lender or such corporation could have achieved but for such
adoption, change, request, or directive (taking into consideration
its policies with respect to capital adequacy), then from time to
time upon demand the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for
such reduction.
(c) Each Lender shall promptly notify the Borrower and the
Agent in writing of any event of which it has knowledge, occurring
after the date of this Agreement, which will entitle such Lender to
compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Lender, be otherwise disadvantageous
to it. Any Lender claiming compensation under this Section shall
promptly furnish to the Borrower and the Agent a written statement
setting forth the additional amount or amounts to be paid to it
under this Agreement which (subject to the terms of this Agreement)
shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable
averaging and attribution methods.
SECTION 3.9 Limitation on Types of Loans. If on or prior
to the first day of any Interest Period the Agent reasonably
determines (which determination shall be conclusive) that by reason
of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period then the Agent shall give the Borrower
prompt written notice thereof specifying the relevant amounts or
periods, and so long as such condition remains in effect, the
Lenders shall be under no obligation to make additional Eurodollar
Loans or continue Eurodollar Loans, and the Borrower shall, at its
election, on the last day(s) of the then current Interest Period(s)
for the outstanding Eurodollar Loans, prepay such Eurodollar Loans,
or Convert such Eurodollar Loans into Base Rate Loans, or prepay
the Obligations in full and terminate this Agreement.
SECTION 3.10 Illegality. Notwithstanding any other
provision of this Agreement, in the event that it becomes unlawful
for any Lender or its Applicable Lending Office to make, maintain,
or fund Eurodollar Loans under this Agreement, then such Lender
shall promptly notify the Borrower thereof in writing and such
Lender's obligation to make or continue Eurodollar Loans shall be
suspended until such time as such Lender may again make, maintain,
and fund Eurodollar Loans (in which case the provisions of Section
3.11 shall be applicable).
SECTION 3.11 Treatment of Affected Loans. If the obligation
of any Lender to make or continue Eurodollar Loan shall be
suspended pursuant to Section 3.9 or 3.10 of this Agreement and
unless such Eurodollar Loans are paid, until such Lender gives
prior written notice to the Borrower as provided below that the
circumstances specified in Section 3.9 or 3.10 of this Agreement no
longer exist:
(a) to the extent that such Lender's Eurodollar Loans
have been so Converted into Base Rate Loans, all payments and
prepayments of principal that would otherwise be applied to
the Eurodollar Loans shall be applied instead to its Base Rate
Loans; and
(b) all Loans that would otherwise be made or continued
by such Lender as Eurodollar Loans shall be made or continued
instead as Base Rate Loans, and all Loans of such Lender that
would otherwise be Converted into Eurodollar Loans shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives written notice to the Borrower (with a copy to
the Agent) that the circumstances specified in Section 3.9 or 3.10
of this Agreement no longer exist (which such Lender agrees to do
promptly upon such circumstances ceasing to exist) such Lender's
Base Rate Loans may be Converted to Eurodollar Loans.
SECTION 3.12 Compensation. Upon the request of any Lender,
the Borrower shall pay to such Lender such amount or amounts as
shall be sufficient (in the reasonable, good faith opinion of such
Lender) to compensate it for any reasonable and actually incurred
loss, cost, or expense (including loss of anticipated profits)
incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a
Eurodollar Loan for any reason (including, without limitation,
the acceleration of the Loans pursuant to Section 11.2) on a
date other than the last day of the Interest Period for such
Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any condition
precedent specified in Article V to be satisfied) to borrow or
prepay a Eurodollar Loan on the date for such borrowing or
prepayment specified in the relevant Notice of Borrowing or
Notice of Prepayment under this Agreement.
SECTION 3.13 Taxes. (a) Any and all payments by the
Borrower to or for the account of any Lender or the Agent under
this Agreement or under any other Loan Document shall be made free
and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding,
in the case of each Lender and the Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any
political subdivision thereof (all such non-excluded taxes, duties,
levies, imposts, deductions, charges, withholdings, and liabilities
being hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any
sum payable under this Agreement or any other Loan Document to any
Lender or the Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
3.13) such Lender or the Agent receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law, and (iv) the
Borrower shall furnish to the Agent, at its address referred to in
Section 13.1, the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise
or property taxes or charges or similar levies which arise from any
payment made under this Agreement by the Borrower or any other Loan
Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter
referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the
Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 3.13)
properly paid by such Lender or the Agent (as the case may be) and
any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution
and delivery of this Agreement in the case of each Lender listed on
the signature pages of this Agreement and on or prior to the date
on which it becomes a Lender in the case of each other Lender, and
from time to time thereafter if requested in writing by the
Borrower or the Agent (but only so long as such Lender remains
lawfully able to do so), shall provide the Borrower and the Agent
with (i) Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is
a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or
business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service, and (iii) any other form or certificate
required by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal Revenue
Code), certifying to the Agent and the Borrower that such Lender is
entitled to an exemption from or a reduced rate of tax on payments
pursuant to this Agreement or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed
to provide the Borrower and the Agent with the appropriate form
pursuant to Section 3.13(d) (unless such failure is due to a change
in treaty, law, or regulation occurring subsequent to the date on
which a form originally was required to be provided), such Lender
shall not be entitled to indemnification under Section 3.13(a) or
3.13(b) with respect to Taxes imposed by the United States;
provided, however, that should a Lender, which is otherwise exempt
from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required
under this Agreement, the Borrower shall take such reasonable steps
as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
(f) If the Borrower is required to pay additional amounts to
or for the account of any Lender pursuant to this Section 3.13,
then such Lender will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of
Taxes, the Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement
of the Borrower arising in connection with this Agreement, the
agreements and obligations of the Borrower contained in this
Section 3.13 shall survive the termination of the Commitments and
the payment in full of the Notes.
SECTION 3.14 REIT Status. GTA will timely make an election
to be treated, commencing with its taxable year ending December 31,
1997, as a "real estate investment trust" under Sections 856
through 860 of the Code and will not thereafter (i) revoke such
election, (ii) take or fail to take any action that will cause such
election to be terminated or to cease to be valid at any time,
(iii) incur liability for any excise tax under Section 4981 of the
Code or (iv) incur liability for any prohibited transaction under
Section 857(b) of the Code.
ARTICLE IV
GUARANTY
SECTION 4.1 Guaranty of Obligations of Borrower. Each
Guarantor hereby unconditionally guaranties to the Agent for the
ratable benefit of the Agent and the Lenders, and their permissible
respective successors, endorsees, transferees and assigns, the
prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of all Obligations of the Borrower,
whether primary or secondary (whether by way of endorsement or
otherwise), whether now existing or hereafter arising, whether or
not from time to time reduced or extinguished (except by payment
thereof) or hereafter increased or incurred, whether or not
recovery may be or hereafter become barred by the statute of
limitations, whether enforceable or unenforceable as against the
Borrower, whether or not discharged, stayed or otherwise affected
by any bankruptcy, insolvency or other similar law or proceeding,
whether created directly with the Agent or any Lender or acquired
by the Agent or any Lender through assignment, endorsement or
otherwise as permitted under this Agreement, whether matured or
unmatured, whether joint or several, as and when the same become
due and payable (whether at maturity or earlier, by reason of
acceleration, mandatory repayment or otherwise), in accordance with
the terms of any such instruments evidencing any such obligations,
including all renewals, extensions or modifications thereof (all
Obligations of the Borrower to the Agent or any Lender, including
all of the foregoing, being hereinafter collectively referred to as
the "Guaranteed Obligations").
SECTION 4.2 Nature of Guaranty. Each Guarantor agrees that
this Guaranty is a continuing, unconditional guaranty of payment
and performance and not of collection, and that its obligations
under this Agreement shall be primary, absolute and unconditional,
irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforce-
ability or any future amendment of, or change in, this
Agreement or any other Loan Document or any other agreement,
document or instrument to which the Borrower is or may become
a party;
(b) the absence of any action to enforce this Agreement
or any other Loan Document or the waiver or consent by the
Agent or any Lender with respect to any of the provisions of
this Agreement or any other Loan Document;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security for or other guaranty
of the Guaranteed Obligations or any action, or the absence of
any action, by the Agent or any Lender in respect of such
security or guaranty (including, without limitation, the
release of any such security or guaranty); or
(d) any other action or circumstances which might
otherwise constitute a legal or equitable discharge or defense
of a surety or guarantor;
it being agreed by each Guarantor that its obligations under this
Guaranty shall not be discharged until the final and indefeasible
payment and performance, in full, of the Guaranteed Obligations and
the termination of the Aggregate Commitment. Each Guarantor
expressly waives all rights it may now or in the future have under
any statute (including, without limitation, North Carolina General
Statutes Section 26-7, et seq. or similar law), or at law or in
equity, or otherwise, to compel the Agent or any Lender to proceed
in respect of the Guaranteed Obligations against the Borrower or
any other party or against any security for or other guaranty of
the payment and performance of the Guaranteed Obligations before
proceeding against, or as a condition to proceeding against, such
Guarantor. Each Guarantor further expressly waives and agrees not
to assert or take advantage of any defense based upon the failure
of the Agent or any Lender to commence an action in respect of the
Guaranteed Obligations against the Borrower, any Guarantor or any
other party or any security for the payment and performance of the
Guaranteed Obligations. Each Guarantor agrees that any notice or
directive given at any time to the Agent or any Lender which is
inconsistent with the waivers in the preceding two sentences shall
be null and void and may be ignored by the Agent or Lender, and, in
addition, may not be pleaded or introduced as evidence in any
litigation relating to this Guaranty for the reason that such
pleading or introduction would be at variance with the written
terms of this Guaranty, unless the Agent and the Required Lenders
have specifically agreed otherwise in writing. The foregoing
waivers are of the essence of the transaction contemplated by the
Loan Documents and, but for this Guaranty and such waivers, the
Agent and Lenders would decline to enter into this Agreement.
SECTION 4.3 Demand by the Agent. In addition to the terms
set forth in Section 4.2, and in no manner imposing any limitation
on such terms, if all or any portion of the then outstanding
Guaranteed Obligations under this Agreement are declared to be
immediately due and payable in accordance with the terms of this
Agreement, then the Guarantors shall, upon demand in writing
therefor by the Agent to the Guarantors, pay all or such portion of
the outstanding Guaranteed Obligations then declared due and
payable. Payment by the Guarantors shall be made to the Agent, to
be credited and applied upon the Guaranteed Obligations, in immedi-
ately available federal funds to an account designated by the Agent
or at the address referenced in this Agreement for the giving of
notice to the Agent or at any other address that may be specified
in writing from time to time by the Agent.
SECTION Waivers. In addition to the waivers contained
in Section 4.3, each Guarantor waives, and agrees that it shall not
at any time insist upon, plead or in any manner whatever claim or
take the benefit or advantage of, any appraisal, valuation, stay,
extension, marshalling of assets or redemption laws, or exemption,
whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by such Guarantor of
its obligations under, or the enforcement by the Agent or the
Lenders of, this Guaranty. Each Guarantor further hereby waives
diligence, presentment, demand, protest and notice of whatever kind
or nature with respect to any of the Guaranteed Obligations and
waives the benefit of all provisions of law which are or might be
in conflict with the terms of this Guaranty. Each Guarantor
represents, warrants and agrees that its obligations under this
Guaranty are not and shall not be subject to any counterclaims,
offsets or defenses of any kind against the Agent, the Lenders or
the Borrower whether now existing or which may arise in the future.
SECTION 4.5 Benefits of Guaranty. The provisions of this
Guaranty are for the benefit of the Agent and the Lenders and their
respective successors, transferees, endorsees and assigns, and
nothing in this Agreement contained shall impair, as between the
Borrower, the Agent and the Lenders, the obligations of the
Borrower under the Loan Documents. In the event all or any part of
the Guaranteed Obligations are transferred, endorsed or assigned by
the Agent or any Lender to any Person or Persons, any reference to
any "Agent" or "Lenders" in this Agreement shall be deemed to refer
equally to such Person or Persons.
SECTION 4.6 Modification of Loan Documents etc. If the
Agent or the Lenders shall at any time or from time to time, with
or without the consent of, or notice to, the Guarantors:
(a) change or extend the manner, place or terms of
payment of, or renew or alter all or any portion of, the
Guaranteed Obligations;
(b) take any action under or in respect of the Loan
Documents in the exercise of any remedy, power or privilege
contained therein or available to it at law, in equity or
otherwise, or waive or refrain from exercising any such
remedies, powers or privileges;
(c) amend or modify, in any manner whatsoever, the Loan
Documents;
(d) extend or waive the time for performance by the
Guarantors, the Borrower or any other Person of, or compliance
with, any term, covenant or agreement (other than this
Guaranty) on its part to be performed or observed under a Loan
Document, or waive such performance or compliance or consent
to a failure of, or departure from, such performance or
compliance;
(e) take and hold security or collateral for the payment
of the Guaranteed Obligations or sell, exchange, release,
dispose of, or otherwise deal with, any property pledged,
mortgaged or conveyed, or in which the Agent or the Lenders
have been granted a Lien, to secure any Debt of any Guarantor
or the Borrower to the Agent or the Lenders;
(f) release anyone who may be liable in any manner for
the payment of any amounts owed by the Guarantors or the
Borrower to the Agent or any Lender;
(g) modify or terminate the terms of any intercreditor
or subordination agreement pursuant to which claims of other
creditors of the Guarantors or the Borrower are subordinated
to the claims of any Agent or any Lender; or
(h) apply any sums by whomever paid or however realized
to any amounts owing by the Guarantors or the Borrower to the
Agent or any Lender in such manner as the Agent or any Lender
shall determine in its discretion;
then neither the Agent nor any Lender shall incur any liability to
the Guarantors as a result thereof, and no such action shall impair
or release the obligations of the Guarantors under this Guaranty.
SECTION 4.7 Reinstatement. Each Guarantor agrees that, if
any payment made by the Borrower or any other Person applied to the
Obligations is at any time annulled, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid by any Agent or Lender to the
Borrower, their estate, trustee, receiver or any other party,
including, without limitation, such Guarantor, under any Applicable
Law or equitable cause, then, to the extent of such payment or
repayment, such Guarantor's liability under this Agreement shall be
and remain in full force and effect, as fully as if such payment
had never been made, and, if prior thereto, this Guaranty shall
have been canceled or surrendered, this Guaranty shall be
reinstated in full force and effect, and such prior cancellation or
surrender shall not diminish, release, discharge, impair or
otherwise affect the obligations of such Guarantor in respect of
the amount of such payment.
SECTION 4.8 Waiver of Subrogation and Contribution. Each
Guarantor hereby irrevocably waives any claims or other rights
which it may now or hereafter acquire against the Borrower that
arise from the existence or performance of such Guarantor's
obligations under this Guaranty, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of
the Agent or the Lenders against the Borrower security or
collateral which the Agent or the Lenders now have or may hereafter
acquire, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, by any payment
made under this Agreement or otherwise, including without
limitation, the right to take or receive from the Borrower,
directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim
or other rights.
SECTION 4.9 Remedies. Upon the occurrence of any Event of
Default, the Agent may enforce against any Guarantor its
obligations and liabilities under this Agreement and exercise such
other rights and remedies as may be available to the Agent under
this Agreement, under the Loan Documents or applicable law.
SECTION 4.10 Limit of Liability. The obligations of each
Guarantor under this Agreement shall be limited to an aggregate
amount equal to the largest amount that would not render its
obligations under this Agreement subject to avoidance under Section
548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state law.
ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1 Closing. The closing shall take place at the
offices of Kennedy Covington Lobdell & Hickman, L.L.P. in
Charlotte, North Carolina at 10:00 a.m. on June 20, 1997 or at such
other place and on such other date as the parties hereto shall
mutually agree.
SECTION 5.2 Conditions to Closing and Initial Loan. The
obligation of the Lenders to close this Agreement and to make the
initial Loan and of the Issuing Lender to issue any Letter of
Credit is subject to the satisfaction of each of the following
conditions:
(a) Executed Loan Documents. The following Loan
Documents, in form and substance satisfactory to the Agent and
each Lender:
(i) this Agreement;
(ii) the Notes;
(iii) the Security Documents; and
(iv) the Financing Statements
shall have been duly authorized, executed and delivered by the
Borrower and each other Credit Party, as applicable, shall be
in full force and effect and no Default or Event of Default
shall exist thereunder, and the Borrower and each other Credit
Party, as applicable, shall have delivered original
counterparts thereof to the Agent.
(b) Lien Search. The Borrower shall have delivered the
results of a Lien search of all filings made against the
Borrower under the Uniform Commercial Code as in effect in any
state in which any of the golf course properties are located,
indicating among other things that its respective assets are
free and clear of any Lien except for the Liens permitted by
Section 10.3.
(c) Insurance. The Agent shall have received certifi-
cates of insurance and, if requested, certified copies of
insurance policies in the form required under Section 8.3 and
the Security Documents and otherwise in form and substance
reasonably satisfactory to the Agent.
(d) Title Insurance. The Agent shall have received a
marked up Title Insurance Commitment for each of the Initial
Eligible Properties and the Legends of Virginia Golf Courses
dated the Closing Date (or an earlier date acceptable to the
Agent in its sole discretion). The binders shall be in an
amount not less than the aggregate Appraised Value of the
Initial Eligible Properties and of the Legends of Virginia
Golf Courses.
(e) Surveys. The Agent shall have received a Boundary
Survey for each of the Initial Eligible Properties and the
Legends of Virginia Golf Courses.
(f) Environmental Assessment of Realty. The Agent shall
have received an Environmental Assessment Report for each of
the Initial Eligible Properties and the Legends of Virginia
Golf Courses.
(g) Flood Certificates. The Agent shall have received
a certification in form and substance acceptable to the Agent
that no portion of any of the Initial Eligible Properties or
the Legends of Virginia Golf Courses is located in a flood
hazard area.
(h) Closing Certificates; etc.
(i) Certificate of GTA. The Agent shall have
received a certificate from the chief executive officer
or chief financial officer of GTA, in form and substance
reasonably satisfactory to the Agent, to the effect that
all representations and warranties of the Credit Parties
contained in this Agreement and the other Loan Documents
are true, correct and complete to the best knowledge of
such Person; that to the best knowledge of such Person
none of the Credit Parties is not in violation of any of
the covenants contained in this Agreement and the other
Loan Documents; that, after giving effect to the
transactions contemplated by this Agreement, no Default
or Event of Default has occurred and is continuing; and
that to the best knowledge of such Person the Borrower
has satisfied each of the closing conditions.
(ii) Certificate of Secretary of the General
Partner. The Agent shall have received a certificate of
the secretary or assistant secretary of GTA GP, in its
capacity as the Managing General Partner of the Borrower
certifying on behalf of the Borrower that attached
thereto is a true and complete copy of the Agreement of
Limited Partners of the Borrower and all amendments
thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of; that
attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of GTA
GP authorizing the execution, delivery and performance of
the Loan Documents to which the Borrower is a party; and
as to the incumbency and genuineness of the signature of
each officer of GTA GP executing Loan Documents to which
the Borrower is a party.
(iii) Certificate of Secretary of each
Guarantor. The Agent shall have received a certificate
of the secretary or assistant secretary of each Guarantor
certifying that attached thereto is a true and complete
copy of the articles of incorporation of such Guarantor
and all amendments thereto, certified as of a recent date
by the appropriate Governmental Authority in its juris-
diction of incorporation; that attached thereto is a true
and complete copy of the bylaws of such Guarantor as in
effect on the date of such certification; that attached
thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Guarantor
authorizing the borrowings contemplated under this
Agreement and the execution, delivery and performance of
this Agreement and the other Loan Documents to which it
is a party; and as to the incumbency and genuineness of
the signature of each officer of such Guarantor executing
Loan Documents to which it is a party.
(iv) Certificates of Existence. The Agent shall
have received long-form certificates as of a recent date
of the good standing of the Borrower and each Guarantor
under the laws of its jurisdiction of organization and
each other jurisdiction where such Person is qualified to
do business and a certificate of the relevant taxing
authorities of such jurisdictions certifying that such
Person has filed required tax returns and owes no
delinquent taxes.
(v) Opinions of Counsel. The Agent shall have re-
ceived favorable opinions of counsel to the Borrower and
the Guarantors addressed to the Agent and the Lenders
with respect to the Borrower and the Guarantors, the Loan
Documents and such other matters as the Lenders shall
reasonably request.
(vi) Tax Forms. The Agent shall have received
copies of the United States Internal Revenue Service
forms required by Section 3.13(d) of this Agreement.
(vii) Borrowing Base Certificate. The Agent
shall have received a Borrowing Base Certificate properly
completed and executed by the Borrower, setting forth the
Borrowing Base in an amount equal to or greater than the
amount of the Loans to be advanced to the Borrower on the
Closing Date.
(i) Consents; Defaults.
(i) Governmental and Third Party Approvals. All
necessary approvals, authorizations and consents, if any
be required, of any Person and of all Governmental
Authorities and courts having jurisdiction with respect
to the transactions contemplated by this Agreement and
the other Loan Documents shall have been obtained.
(ii) No Injunction, Etc. No action, proceeding,
investigation, regulation or legislation shall have been
instituted, threatened or proposed before any
Governmental Authority to enjoin, restrain, or prohibit,
or to obtain substantial damages in respect of, or which
is related to or arises out of this Agreement or the
other Loan Documents or the consummation of the transac-
tions contemplated hereby or thereby, or which, in the
Agent's reasonable discretion, would make it inadvisable
to consummate the transactions contemplated by this
Agreement and such other Loan Documents.
(iii) No Event of Default. No Default or Event
of Default shall have occurred and be continuing.
(j) Financial Matters.
(i) Financial Statements. The Agent shall have
received the most recent audited Consolidated financial
statements of the Credit Parties, all in form and
substance satisfactory to the Agent.
(ii) Financial Condition Certificate. GTA shall
have delivered to the Agent a certificate, in form and
substance satisfactory to the Agent, and certified as
accurate by the chief executive officer or chief
financial officer of GTA, that (A) the Credit Parties are
each Solvent, (B) the payables of each Credit Party are
current and not past due, (C) attached thereto is a pro
forma balance sheet of the Credit Parties setting forth
on a pro forma basis the financial condition of the
Credit Parties on a Consolidated basis as of that date,
reflecting a pro forma basis the effect of the
transactions contemplated in this Agreement, including
all fees and expenses in connection therewith, and
evidencing compliance on a pro forma basis with the
covenants contained in Articles IX and X of this
Agreement and (D) attached thereto are the financial
projections previously delivered to the Agent
representing the good faith opinions of GTA and senior
management thereof as to the projected results contained
therein.
(k) Payment at Closing; Fee Letter. There shall have
been paid by the Borrower to the Agent and the Lenders the
fees set forth or referenced in Section 3.3 and any other
accrued and unpaid fees or commissions due under this
Agreement (including, without limitation, legal fees and
expenses), and to any other Person such amount as may be due
thereto in connection with the transactions contemplated
hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, filing and
registration of any of the Loan Documents. The Agent shall
have received duly authorized and executed copies of the fee
letter agreement referred to in Section 3.3(b).
(l) Miscellaneous.
(i) Notice of Borrowing. The Agent shall have
received a Notice of Borrowing from the Borrower and
identification of the account or accounts into which the
proceeds of such Loans are to be disbursed.
(ii) Proceedings and Documents. All opinions,
certificates and other instruments and all proceedings in
connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and
substance to the Lenders. The Lenders shall have
received copies of all other instruments and other
evidence as the Lender may reasonably request, in form
and substance reasonably satisfactory to the Lenders,
with respect to the transactions contemplated by this
Agreement and the taking of all actions in connection
therewith.
(iii) Due Diligence and Other Documents. The
Borrower shall have delivered to the Agent such other
documents, certificates and opinions as the Agent
reasonably requests, certified by a secretary or
assistant secretary of GTA, in its capacity as the
Borrower's managing general partner as a true and correct
copy thereof.
SECTION 5.3 Conditions to All Loans. The obligation of the
Lenders to make any Loan and the obligation of the Issuing Lender
to issue any Letter of Credit are subject to the satisfaction of
the following conditions precedent on the relevant borrowing or
issuance date:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article VI shall
be true and correct in all material respects on and as of such
borrowing date with the same effect as if made on and as of
such date.
(b) No Existing Default. No Default or Event of Default
shall have occurred and be continuing under this Agreement (i)
on the borrowing date with respect to such Loan or after
giving effect to the Loans to be made on such date or (ii) on
the issue date with respect to any Letter of Credit or after
giving effect to such Letter of Credit on such date.
(c) Officer's Compliance Certificate; Additional
Documents. The Agent shall have received the current
Officer's Compliance Certificate and each additional document,
instrument, legal opinion or other item of information
reasonably requested by it.
(d) Availability. After giving effect to the requested
Loan or Letter of Credit, the outstanding Extensions of Credit
will not exceed (i) with respect to a Loan, the amount
available pursuant to Section 2.1 and (ii) with respect to a
Letter of Credit, the amount available pursuant to Section
2A.1.
SECTION 5.4 Additional Appraisals. The Agent shall have
the right to order new appraisals of the Eligible Properties no
more than once each eighteen months; provided that the Agent shall
have the right to order additional appraisals at any time with
respect to any Eligible Property which ceases to constitute a
Stabilized Golf Course. Agent shall use its reasonable, good faith
efforts to manage the costs of such additional appraisals.
SECTION 5.5 Participating Leases. All Participating Leases
hereafter entered into by the Borrower with the operator of any
golf course property shall include a capital expenditure reserve of
at least two percent (2%). The Borrower shall not materially amend
or modify any Participating Lease now or hereafter entered into
with respect to any golf course property which is subject to a Lien
in favor of the Agent for the benefit of the Lenders without the
prior written consent of the Agent (it being understood that any
amendment of the capital expenditure reserve provision shall be
material).
SECTION 5.6 Release of Collateral. Provided no Default or
Event of Default exists or would result therefrom, the Agent shall
file UCC termination statements and take such other action as shall
be necessary to terminate the Liens on any Eligible Property
(including real and personal property) in favor of the Agent,
promptly upon the written request of the Borrower; provided,
however, that:
(a) The aggregate principal amount of all Extensions of
Credit outstanding shall not exceed the Borrowing Base, after
giving effect to the release of such Eligible Property;
(b) At no time shall the Borrowing Base include fewer
than five (5) Eligible Properties; and
(c) If the Eligible Property which is released is
refinanced, the proceeds of such refinancing, net of ordinary
and customary transaction costs, shall be contemporaneously
applied to the prepayment of the outstanding principal balance
of the Credit Facility.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Representations and Warranties. To induce the
Agent to enter into this Agreement and the Lenders to make the
Loans and issue or participate in the Letters of Credit, the Credit
Parties hereby represent and warrant to the Agent and the Lenders
that:
(a) Organization; Power; Qualification. Each of the
Credit Parties is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation or formation, has the power and authority to own
its properties and to carry on its business as now being and
hereafter proposed to be conducted and is duly qualified and
authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business
requires such qualification and authorization and in which the
failure to qualify would have a Material Adverse Effect. The
jurisdictions in which the Credit Parties are qualified to do
business are described on Schedule 6.1(a).
(b) Ownership. The Borrower has no Subsidiaries. The
partners of the Borrower and the partnership interest of each
is described on Schedule 6.1(b). GTA owns no Subsidiary other
than GTA GP, GTA LP and the Borrower. Neither GTA GP nor GTA
LP owns any Subsidiary other than the Borrower. The
capitalization of the Guarantors is described on Schedule
6.1(b). All outstanding shares of stock of the Guarantors
have been duly authorized and validly issued and are fully
paid and nonassessable.
(c) Authorization of Agreement, Loan Documents and
Borrowing. Each of the Credit Parties has the right, power
and authority and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and
each of the other Loan Documents to which it is a party in
accordance with their respective terms. This Agreement and
each of the other Loan Documents have been duly executed and
delivered by the duly authorized officers of each Guarantor
and of the duly authorized general partner of the Borrower,
and each such document constitutes the legal, valid and
binding obligation of each of the Credit Parties, to the best
of its knowledge, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar state or
federal debtor relief laws from time to time in effect which
affect the enforcement of creditors' rights in general and the
availability of equitable remedies.
(d) Compliance of Agreement, Loan Documents and
Borrowing with Laws, Etc. The execution, delivery and perfor-
mance by each of the Credit Parties of the Loan Documents to
which such Person is a party, in accordance with their
respective terms, the borrowings under this Agreement and the
transactions contemplated by this Agreement do not and will
not, by the passage of time, the giving of notice or
otherwise, (i) require any Governmental Approval or violate
any Applicable Law relating to any Credit Party, (ii) conflict
with, result in a breach of or constitute a default under the
agreement of limited partnership of the Borrower, the articles
of incorporation, bylaws or other organizational documents of
any Guarantor or any indenture, agreement or other instrument
to which any Credit Party is a party or by which any of its
properties may be bound or any Governmental Approval relating
to any Credit Party, or (iii) result in or require the
creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by any Credit Party
other than Liens arising under the Loan Documents.
(e) Compliance with Law; Governmental Approvals. The
Borrower, to the best of its knowledge, (i) has all material
Governmental Approvals required by any Applicable Law for it
to conduct its business, each of which is in full force and
effect, is final and not subject to review on appeal and is
not the subject of any pending or, to the best of its
knowledge, threatened attack by direct or collateral proceed-
ing, and (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable
Laws relating to it or any of its respective properties, to
the extent such failure to comply would have a Material
Adverse Effect on the Borrower.
(f) Tax Returns and Payments. Each of the Credit
Parties has duly filed (or will duly file in accordance with
Applicable Laws) or caused (or will cause in accordance with
Applicable Laws) to be filed all federal, state, local and
other tax returns required by Applicable Law (including the
provisions of the Code and the regulations thereunder relating
to "real estate investment trusts") to be filed, and has paid
(or will pay in accordance with Applicable Laws), or made
adequate provision for the payment of, all federal, state,
local and other taxes, assessments and governmental charges or
levies upon it and its property, income, profits and assets
which are due and payable. No Governmental Authority has
asserted any Lien or other claim against any Credit Party with
respect to unpaid taxes which has not been discharged or
resolved. The charges, accruals and reserves on the books of
each of the Credit Parties in respect of federal, state, local
and other taxes for all Fiscal Years and portions thereof
since the organization of the Borrower are in the judgment of
such Person adequate, and such Person does not anticipate any
additional taxes or assessments for any of such years.
(g) Environmental Matters.
(i) The golf course properties of the Borrower do
not contain, and to its knowledge have not previously
contained, any Hazardous Materials in amounts or
concentrations which (A) constitute or constituted a
violation of, or (B) could give rise to liability under,
applicable Environmental Laws, except as otherwise set
forth in the Environmental Assessment Reports;
(ii) The golf course properties and all operations
conducted in connection therewith are in compliance, and
have been in compliance, with all applicable
Environmental Laws, and there is no contamination at,
under or about such golf course properties or such
operations which could interfere with the continued
operation of such golf course properties or impair the
fair saleable value thereof, except as otherwise set
forth in the Environmental Assessment Reports;
(iii) The Borrower has not received any notice
of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental
matters or compliance with Environmental Laws with regard
to any golf course property or the operations conducted
in connection therewith, nor does the Borrower have
knowledge or reason to believe that any such notice will
be received or is being threatened, except as otherwise
set forth in the Environmental Assessment Reports;
(iv) Hazardous Materials have not been transported
or disposed of from the golf course properties of the
Borrower in violation of, or in a manner or to a location
which could give rise to liability under, applicable
Environmental Laws, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under
any of such golf course properties in violation of, or in
a manner that could give rise to liability under, any
applicable Environmental Laws, except as otherwise set
forth in the Environmental Assessment Reports;
(v) No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of
the Borrower, threatened, under any applicable
Environmental Law to which the Borrower is or will be
named as a party with respect to such golf course
properties or operations conducted in connection
therewith, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
outstanding under any applicable Environmental Law with
respect to such golf course properties or such
operations, except as set forth in the Environmental
Assessment Reports; and
(vi) There has been no release, or to the best of
the Borrower's knowledge, the threat of release, of
Hazardous Materials at or from such properties, in
violation of or in amounts or in a manner that could give
rise to liability under applicable Environmental Laws,
except as set forth in the applicable Environmental
Assessment Reports.
(h) ERISA.
(i) Neither the Borrower nor any ERISA Affiliate
maintains or contributes to, or has any obligation under,
any Employee Benefit Plans other than those identified on
Schedule 6.1(h);
(ii) the Borrower and each ERISA Affiliate is in
material compliance with all applicable provisions of
ERISA and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans
except for any required amendments for which the remedial
amendment period as defined in Section 401(b) of the Code
has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code
has been determined by the Internal Revenue Service to be
so qualified, and each trust related to such plan has
been determined to be exempt under Section 501(a) of the
Code. No liability has been incurred by the Borrower or
any ERISA Affiliate which remains unsatisfied for any
taxes or penalties with respect to any Employee Benefit
Plan or any Multiemployer Plan;
(iii) No Pension Plan has been terminated, nor
has any accumulated funding deficiency (as defined in
Section 412 of the Code) been incurred (without regard to
any waiver granted under Section 412 of the Code), nor
has any funding waiver from the Internal Revenue Service
been received or requested with respect to any Pension
Plan, nor has the Borrower or any ERISA Affiliate failed
to make any contributions or to pay any amounts due and
owing as required by Section 412 of the Code, Section 302
of ERISA or the terms of any Pension Plan prior to the
due dates of such contributions under Section 412 of the
Code or Section 302 of ERISA, nor has there been any
event requiring any disclosure under Section
4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Pension Plan;
(iv) Neither the Borrower nor any ERISA Affiliate
has: (A) engaged in a nonexempt prohibited transaction
described in Section 406 of the ERISA or Section 4975 of
the Code, (B) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums
and there are no premium payments which are due and
unpaid, (C) failed to make a required contribution or
payment to a Multiemployer Plan, or (D) failed to make a
required installment or other required payment under
Section 412 of the Code;
(v) No Termination Event has occurred or is
reasonably expected to occur; and
(vi) No proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of
the Borrower after due inquiry, threatened concerning or
involving any (A) employee welfare benefit plan (as
defined in Section 3(1) of ERISA) currently maintained or
contributed to by the Borrower or any ERISA Affiliate,
(B) Pension Plan, or (C) Multiemployer Plan.
(i) [RESERVED].
(j) Margin Stock. The Borrower is not engaged
principally or as one of its activities in the business of
extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" (as each such term is defined or used in
Regulations G and U of the Board of Governors of the Federal
Reserve System). No part of the proceeds of any of the Loans
or the Letters of Credit will be used for purchasing or
carrying margin stock or for any purpose which violates, or
which would be inconsistent with, the provisions of Regulation
G, T, U or X of such Board of Governors.
Government Regulation. The Borrower is not an "in-
vestment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the
Investment Company Act of 1940, as amended) and neither the
Borrower nor any Subsidiary thereof is, or after giving effect
to any Extension of Credit will be, subject to regulation
under the Public Utility Holding Company Act of 1935 or the
Interstate Commerce Act, each as amended, or any other
Applicable Law which limits its ability to incur or consummate
the transactions contemplated hereby.
(l) Material Contracts. Schedule 6.1(l) sets forth a
complete and accurate list of all Material Contracts of the
Borrower in effect as of the Closing Date not listed on any
other Schedule hereto; other than as set forth in Schedule
6.1(l), each such Material Contract is, and after giving
effect to the consummation of the transactions contemplated by
the Loan Documents will be, to the best of the Borrower's
knowledge, in full force and effect in accordance with the
terms thereof. The Borrower has delivered to the Agent a true
and complete copy of each Material Contract required to be
listed on Schedule 6.1(l).
(m) Financial Statements. The (i) audited consolidated
balance sheet of the Credit Parties as of December 31, 1996
and the related statements of income and retained earnings and
cash flows for the period then ended and (ii) unaudited
consolidated balance sheet of the Credit Parties and as of
March 31, 1997 and related unaudited interim statements of
revenue and retained earnings, copies of which have been
furnished to the Agent and each Lender, are complete and
correct in all material respects and fairly present the
assets, liabilities and financial position of the Credit
Parties as at such dates, and the results of the operations
and changes of financial position for the periods then ended.
All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP.
The Credit Parties have no Debt, obligation or other unusual
forward or long-term commitment which is not fairly reflected
in the foregoing financial statements or in the notes thereto.
(n) No Material Adverse Change. Since December 31, 1996
there has been no material adverse change in the properties,
business, operations, prospects, or condition (financial or
otherwise) of the Credit Parties and no event has occurred or
condition arisen that could reasonably be expected to have a
Material Adverse Effect.
(o) Solvency. As of the Closing Date and after giving
effect to each Extension of Credit made under this Agreement,
each of the Credit Parties will be Solvent.
(p) Titles to Properties. The Borrower has such title
to the real property owned by it as is necessary or desirable
to the conduct of its business and valid and legal title to
all of its personal property and assets, including, but not
limited to, those reflected on the consolidated balance sheet
of the Credit Parties delivered pursuant to Section 6.1(m),
except those which have been disposed of by the Credit Parties
subsequent to such date which dispositions have been in the
ordinary course of business or as otherwise expressly
permitted under this Agreement.
(q) Liens. None of the properties and assets of the
Borrower is subject to any Lien, except Liens permitted
pursuant to Section 10.3. No financing statement under the
Uniform Commercial Code of any state which names the Borrower
or any of its trade names or divisions as debtor and which has
not been terminated, has been filed in any state or other
jurisdiction and the Borrower has not signed any such
financing statement or any security agreement authorizing any
secured party thereunder to file any such financing statement,
except to perfect those Liens permitted by Section 10.3 of
this Agreement.
(r) Debt and Contingent Obligations. Schedule 6.1(r) is
a complete and correct listing of all existing Debt and
Contingent Obligations of the Credit Parties. The Borrower
has performed and is in compliance with all of the terms of
such Debt and Contingent Obligations and all instruments and
agreements relating thereto, and no default or event of
default, or event or condition which with notice or lapse of
time or both would constitute such a default or event of
default on the part of the Borrower exists with respect to any
such Debt or Contingent Obligation.
(s) Litigation. Except as set forth on Schedule 6.1(s),
there are no actions, suits or proceedings pending after
service on any of the Credit Parties nor, to the knowledge of
the Credit Parties, threatened against or in any other way
relating adversely to or affecting any of the Credit Parties
or any of their properties in any court or before any
arbitrator of any kind or before or by any Governmental
Authority.
(t) Absence of Defaults. No event has occurred or is
continuing which constitutes a Default or an Event of Default,
or which constitutes, or which with the passage of time or
giving of notice or both would constitute, a default or event
of default by the Borrower under any Material Contract or
judgment, decree or order to which the Borrower is a party or
by which the Borrower or any of its properties may be bound or
which would require the Borrower to make any payment
thereunder prior to the scheduled maturity date therefor.
(u) Accuracy and Completeness of Information. All
written information, reports and other papers and data
prepared by or on behalf of the Credit Parties and furnished
to the Lenders were, at the time the same were so furnished,
complete and correct in all respects to the extent necessary
to give the recipient a true and accurate knowledge of the
subject matter. No such document furnished or written
statement made to the Agent or the Lenders by the Credit
Parties in connection with the negotiation, preparation or
execution of this Agreement or any of the Loan Documents
contains or will contain any untrue statement of a fact
material to the creditworthiness of the Borrower or omits or
will omit to state a material fact necessary in order to make
the statements contained therein not misleading. None of the
Credit Parties is aware of any facts which it has not
disclosed in writing to the Agent having a Material Adverse
Effect, or insofar as such Person can now foresee, could
reasonably be expected to have a Material Adverse Effect.
SECTION 6.2 Survival of Representations and Warranties,
Etc. All representations and warranties set forth in this Article
VI and all representations and warranties contained in any certifi-
cate, or any of the Loan Documents (including but not limited to
any such representation or warranty made in or in connection with
any amendment thereto) shall constitute representations and
warranties made under this Agreement. All representations and
warranties made under this Agreement shall be made or deemed to be
made at and as of the Closing Date, shall survive the Closing Date
and shall not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Lenders or
any borrowing under this Agreement.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly
paid and satisfied in full and the Commitments terminated, unless
consent has been obtained in the manner set forth in Section 13.11
of this Agreement, the Credit Parties will furnish or cause to be
furnished to the Lenders at their respective addresses as set forth
on Schedule 1, or such other office as may be designated by the
Lenders from time to time:
SECTION 7.1 Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable
and in any event within forty-five (45) days after the end of each
fiscal quarter, an unaudited Consolidated balance sheet of GTA and
the other Credit Parties as of the close of such fiscal quarter and
unaudited Consolidated statements of income, retained earnings and
cash flows for the fiscal quarter then ended and that portion of
the Fiscal Year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by
GTA in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of
operations of any change in the application of accounting
principles and practices during the period, and certified by the
chief financial officer of GTA to present fairly in all material
respects the financial condition of GTA and the other Credit
Parties as of their respective dates and the results of operations
of GTA and the other Credit Parties for the respective periods then
ended, subject to normal year end adjustments.
(b) Annual Financial Statements. As soon as practicable and
in any event within one hundred twenty (120) days after the end of
each Fiscal Year, an audited Consolidated balance sheet of GTA and
the other Credit Parties as of the close of such Fiscal Year and
audited Consolidated statements of income, retained earnings and
cash flows for the Fiscal Year then ended, including the notes
thereto, all in reasonable detail setting forth in comparative form
the corresponding figures for the preceding Fiscal Year and
prepared by an independent certified public accounting firm
reasonably acceptable to the Agent in accordance with GAAP and, if
applicable, containing disclosure of the effect on the financial
position or results of operation of any change in the application
of accounting principles and practices during the year, and
accompanied by a report thereon by such certified public
accountants that is not qualified with respect to scope limitations
imposed by GTA and the other Credit Parties or any of its
Subsidiaries or with respect to accounting principles followed by
GTA and the other Credit Parties not in accordance with GAAP.
(c) Quarterly Tenant Statements. Not later than sixty (60)
days after the end of each fiscal quarter, a statement of income of
each tenant under a Participating Lease for such quarter and for
the period beginning on the first day of the fiscal year and ending
on the last day of such quarter.
SECTION 7.2 Officer's Compliance Certificate. At each time
financial statements are delivered pursuant to Sections 7.1 (a) or
(b) and at such other times as the Agent shall reasonably request,
a certificate of the chief financial officer or the treasurer of
GTA in the form of Exhibit E attached hereto (an "Officer's
Compliance Certificate").
SECTION 7.3 Accountants' Certificate. At each time
financial statements are delivered pursuant to Section 7.1(b) of
this Agreement, a certificate of the Borrower's independent public
accountants certifying such financial statements addressed to the
Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for
the certification of such financial statements, they obtained
no knowledge of any Default or Event of Default or, if such is
not the case, specifying such Default or Event of Default and
its nature and period of existence;
(b) including the calculations prepared by such
independent public accountants required to establish whether
or not the Credit Parties are in compliance with the financial
covenants set forth in Article IX of this Agreement as at the
end of each respective period; and
(c) including a fully executed copy of a letter from
such accountants to GTA expressly authorizing the Lenders to
rely on the examination and report of such independent public
accountants with respect to the audited financial statements
of the Credit Parties as of and for such Fiscal Year then
ending.
SECTION 7.4 Other Reports.
(a) Within thirty (30) days after transmission thereof,
copies of all financial statements, proxy statements, reports and
any other general written communications which the Borrower sends
to its stockholders and copies of all registration statements and
all regular, special or periodic reports which GTA files with the
Securities and Exchange Commission (including each report made on
Form 8-K, 10-Q and 10-K) or with any securities exchange on which
any of its securities are then listed, and copies of all press
releases and other statements made available generally by GTA to
the public; and
(b) Such other information regarding the operations, business
affairs and financial condition of the Credit Parties as the Agent
or any Lender may reasonably request.
SECTION 7.5 Notice of Litigation and Other Matters. Prompt
(but in no event later than thirty (30) days after an executive
officer of GTA obtains knowledge thereof) telephonic and written
notice of:
(a) the commencement of all material proceedings and
material investigations by or before any Governmental
Authority and all actions and proceedings in any court or
before any arbitrator against or involving any Credit Party or
any of their respective properties, assets or businesses
exceeding $250,000;
(b) any notice of any material violation received by any
Credit Party from any Governmental Authority including,
without limitation, any notice of material violation of
Environmental Laws;
(c) any material labor controversy that has resulted in,
or threatens to result in, a strike or other work action
against any Credit Party;
(d) any attachment, judgment, lien, levy or order
exceeding $250,000 that may be assessed against or threatened
against any Credit Party;
(e) any Default or Event of Default, or any event which
constitutes or which with the passage of time or giving of
notice or both would constitute a default or event of default
under any Material Contract to which any Credit Party is a
party or by which any Credit Party or any of their respective
properties may be bound;
(f) (i) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an
Employee Benefit Plan under Section 401(a) of the Code (along
with a copy thereof), (ii) all written notices received by any
Credit Party or any ERISA Affiliate of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan, (iii) all written notices
received by any Credit Party or any ERISA Affiliate from a
Multi-employer Plan sponsor concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of
ERISA, and (iv) any Credit Party obtaining written notice that
any Credit Party or any ERISA Affiliate has filed or intends
to file a notice of intent to terminate any Pension Plan under
a distress termination within the meaning of Section 4041(c)
of ERISA;
(g) promptly after receipt thereof, any written
communication from the Internal Revenue Service which
challenges GTA's status as a "real estate investment trust"
within the meaning of Section 856 of the Code; and
(h) any event which makes any of the representations set
forth in Section 6.1 inaccurate in any material respect.
SECTION 7.6 Accuracy of Information. All written
information, reports, statements and other papers and data
furnished by or on behalf of any Credit Party to the Agent or any
Lender (other than financial forecasts) respecting any Credit Party
whether pursuant to this Article VII or any other provision of this
Agreement, or any of the Security Documents, shall be, at the time
the same is so furnished, to the best of such Credit Party's
knowledge, complete and correct in all material respects to the
extent necessary to give the Agent or any Lender complete, true and
accurate knowledge of the subject matter based on the Credit
Party's knowledge thereof.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and
indefeasibly paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner provided
for in Section 13.11, each Credit Party will, and will cause each
of its Subsidiaries to:
SECTION 8.1 Preservation of Existence and Related Matters.
Preserve and maintain its separate corporate or partnership
existence, as applicable, and all rights, franchises, licenses and
privileges necessary to the conduct of its business, and qualify
and remain qualified as a foreign corporation or partnership and
authorized to do business in each jurisdiction in which the failure
to so qualify would have a Material Adverse Effect.
SECTION 8.2 Maintenance of Property. Protect and preserve
all properties useful in and material to its business, including
copyrights, patents, trade names and trademarks; maintain in good
working order and condition all buildings, equipment and other
tangible real and personal property; and from time to time make or
cause to be made all renewals, replacements and additions to such
property necessary for the conduct of its business, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times.
SECTION 8.3 Insurance.
(a) Maintain insurance with financially sound and
reputable insurance companies against such risks and in such
amounts as are required to be maintained by the Security
Documents and as may be required by Applicable Law.
(b) Require each Lessee, pursuant to the related
Participating Lease, to maintain comprehensive public
liability insurance with amounts of coverage of not less than
$5,000,000 per occurrence and in the aggregate.
(c) On the Closing Date and from time to time thereafter
deliver to the Agent upon its request a detailed list of the
insurance then in effect, stating the names of the insurance
companies, the amounts and rates of the insurance, the dates
of the expiration thereof and the properties and risks covered
thereby. (In the event of any conflict between the terms of
any Security Document and this Section 8.3, the terms of the
Security Documents shall govern.)
SECTION 8.4 Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and
accounts (which shall be true and complete in all material
respects) as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP and in
compliance with the regulations of any Governmental Authority
having jurisdiction over it or any of its properties.
SECTION 8.5 Payment and Performance of Obligations. Pay
and perform all Obligations under this Agreement and the other Loan
Documents, and pay or perform (a) all taxes, assessments and other
governmental charges that may be levied or assessed upon it or any
of its property, and (b) all other indebtedness, obligations and
liabilities in accordance with customary trade practices; provided,
that each Credit Party may contest any item described in this
Section 8.5(a) in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 8.6 Compliance With Laws and Approvals. Observe
and remain in compliance with all Applicable Laws and maintain in
full force and effect all Governmental Approvals, in each case
applicable to the conduct of its business.
SECTION 8.7 Environmental Laws. In addition to and without
limiting the generality of Section 8.6, (a) comply with, and ensure
such compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply with and
maintain, and ensure that all tenants and subtenants obtain and
comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable
Environmental Laws, (b) conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other
actions required under Environmental Laws, and promptly comply with
all lawful orders and directives of any Governmental Authority
regarding Environmental Laws, and (c) defend, indemnify and hold
harmless the Agent and the Lenders, and their respective parents,
Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever
kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to the violation of, noncompliance
with or liability under any Environmental Laws applicable to the
operations of any Credit Party, or any orders, requirements or
demands of Governmental Authorities related thereto, including,
without limitation, reasonable and actually incurred attorney's and
consultant's fees, investigation and laboratory fees, response
costs, court costs and litigation expenses, except to the extent
that any of the foregoing directly result from the gross negligence
or willful misconduct of the party seeking indemnification
therefor.
SECTION 8.8 Compliance with ERISA. In addition to and
without limiting the generality of Section 8.6, (a) comply with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit
Plans, (b) not take any action or fail to take action the result of
which could be a liability to the PBGC or to a Multi-employer Plan,
(c) not participate in any prohibited transaction that could result
in any civil penalty under ERISA or tax under the Code, (d) operate
each Employee Benefit Plan in such a manner that will not incur any
tax liability under Section 4980B of the Code or any liability to
any qualified beneficiary as defined in Section 4980B of the Code,
and (e) furnish to the Agent upon the Agent's request such
additional information about any Employee Benefit Plan as may be
reasonably requested by the Agent.
SECTION 8.9 Compliance With Agreements. Comply in all
respects with each term, condition and provision of all leases,
agreements and other instruments entered into in the conduct of its
business including, without limitation, any Participating Lease or
Material Contract; provided, that each Credit Party may contest any
such lease, agreement or other instrument, including, without
limitation, any Material Contract, in good faith through applicable
proceedings so long as adequate reserves are maintained in
accordance with GAAP.
SECTION 8.10 Borrowing Base Certificate. The Borrower shall
deliver to the Agent within sixty (60) days after the end of each
quarter a Borrowing Base Certificate properly completed and
executed by the Borrower, setting forth the Borrowing Base as of
the most recent quarter-end.
SECTION 8.11 Visits and Inspections. Upon reasonable prior
notice, permit representatives of the Agent or any Lender, from
time to time during normal business hours, to visit and inspect its
properties; inspect, audit and make extracts from its books,
records and files, including, but not limited to, management
letters prepared by independent accountants; and discuss with its
principal officers, and its independent accountants, its business,
assets, liabilities, financial condition, results of operations and
business prospects.
SECTION 8.12 Subsidiaries. Concurrently with the creation
or acquisition of any Subsidiary (a) cause it to execute and
deliver to the Agent a supplement to the Guaranty substantially in
the form of Exhibit G hereto, and (b) cause to be delivered to the
Agent such other documents as the Agent or Required Lenders shall
reasonably request in connection therewith, including, without
limitation, officers' certificates, financial statements, opinions
of counsel, resolutions, charter documents, certificates of
existence and authority to do business and any other closing
certificates and documents described in Section 5.2.
SECTION 8.13 Further Assurances. Perform, make, execute and
deliver all such additional and further acts, things, deeds and
instruments as the Agent or any Lender may reasonably require to
document and consummate the transactions contemplated hereby and to
vest completely in and insure the Agent and the Lenders their
respective rights under this Agreement, the Notes, the Letters of
Credit and the other Loan Documents.
SECTION 8.14 Line of Business. Continue to have as its
primary business the acquisition but not construction of golf
courses and related improvements (such improvements not to include
accommodations) and the leasing of such golf courses and related
improvements to independent lessees; provided that to the extent
the improvements related to any golf course include a hotel, motel,
condominiums or other lodging (collectively, "accommodations"),
such accommodations shall not constitute a material portion of the
Appraised Value of the golf course and related improvements.
ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent
has been obtained in the manner set forth in Section 13.11 of this
Agreement, GTA and the other Credit Parties (on a Consolidated
basis) will not:
SECTION 9.1 Minimum Tangible Net Worth. As of the end of
any quarter, permit Tangible Net Worth of GTA and its Consolidated
Subsidiaries for such quarter to be less than $82,000,000 plus 80%
of the aggregate net cash proceeds of any issuance or offering of
capital stock received by any Credit Party after the Closing Date.
SECTION 9.2 Liabilities to Assets Ratio. As of the end of
any quarter, permit the ratio of Total Liabilities to Total Assets
to exceed 0.45 to 1.00.
SECTION 9.3 Interest Coverage Ratio. As of the end of any
quarter, permit the ratio of (a) EBITDA of GTA and its Consolidated
Subsidiaries for such quarter then ended to (b) Interest Expense of
GTA and its Consolidated Subsidiaries for the quarter then ended to
be less than 2.50 to 1.00.
SECTION 9.4 Debt Service Coverage Ratio. As of the end of
any quarter, permit the ratio of (a) EBITDA of GTA and its
Consolidated Subsidiaries for the quarter then ended to (b) Debt
Service of GTA and its Consolidated Subsidiaries for the quarter
then ended to be less than 2.00 to 1.00.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and
indefeasibly paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner set
forth in Section 13.11 of this Agreement, none of the Credit
Parties will:
SECTION 10.1 Limitations on Debt. Create, incur, assume or
suffer to exist any Debt except:
(a) The Obligations;
(b) Other secured Debt of the Borrower; provided that
there shall be no recourse to the Borrower or any other Credit
Party, directly or indirectly, for the payment of such Debt
and or to any property of the Borrower or any other Credit
Party, for the payment of such Debt; and
(c) Any other unsecured Debt of the Borrower.
SECTION 10.2 Limitations on Contingent Obligations. Create,
incur, assume or suffer to exist any Contingent Obligations except
Contingent Obligations in favor of the Agent for the benefit of the
Agent and the Lenders.
SECTION 10.3 Limitations on Liens. Create, incur, assume or
suffer to exist, any Lien on or with respect to any of its assets
or properties (including without limitation shares of capital stock
or other ownership interests), real or personal, whether now owned
or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental
charges or levies (excluding any Lien imposed pursuant to any
of the provisions of ERISA or Environmental Laws) not yet due
or as to which the period of grace (not to exceed thirty (30)
days), if any, related thereto has not expired;
(b) The claims of materialmen, mechanics, carriers,
warehousemen, processors or landlords for labor, materials,
supplies or rentals incurred in the ordinary course of
business, (i) which are not overdue for a period of more than
the greater of the applicable contractual period or sixty (60)
days or (ii) which are being contested in good faith and by
appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP;
(c) Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure
payment of, obligations under workers' compensation, unemploy-
ment insurance or similar legislation;
(d) Encumbrances on and exceptions to title contained in
any Title Insurance Commitment approved in writing by the
Agent and which shall in any event include Participating
Leases;
(e) Liens of the Agent for the benefit of the Agent and
the Lenders;
(f) Purchase money liens and equipment leases; and
(g) Liens Securing Debt permitted under Section 10.1(b).
SECTION 10.4 Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any capital stock, interests in any
partnership or joint venture (including, without limitation, the
creation or capitalization of any Subsidiary), evidence of Debt or
other obligation or security, substantially all or a portion of the
business or assets of any other Person or any other investment or
interest whatsoever in any other Person, or make or permit to
exist, directly or indirectly, any loans, advances or extensions of
credit to, or any investment in cash or by delivery of property in,
any Person, or enter into, directly or indirectly, any commitment
or option in respect of the foregoing except for the following:
(a) investments in (i) marketable direct obligations
issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within 120 days from
the date of acquisition thereof, (ii) commercial paper
maturing no more than 120 days from the date of creation
thereof and currently having the highest rating obtainable
from either S&P or Moody's, (iii) certificates of deposit
maturing no more than 120 days from the date of creation
thereof issued by commercial banks incorporated under the laws
of the United States of America, each having combined capital,
surplus and undivided profits of not less than $500,000,000
and having a rating of "A" or better by a nationally
recognized rating agency, or (iv) time deposits maturing no
more than 30 days from the date of creation thereof with
commercial banks or savings banks or savings and loan
associations each having membership either in the FDIC or the
deposits of which are insured by the FDIC and in amounts not
exceeding the maximum amounts of insurance thereunder; and
repurchase agreements issued by any Lender having a maturity
of less than one year;
(b) loans to officers of GTA not to exceed an aggregate
of $1,000,000 at any one time outstanding;
(c) investments in golf course properties and related
improvements;
(d) investments in unconsolidated partnerships and joint
ventures; the aggregate amount of such investment in such
partnerships and joint ventures (including investments
existing on the Closing Date) not to exceed five percent (5%)
of Total Assets at any time;
(e) loans to other Persons; provided that:
(i) the proceeds of such loans will be used to
construct improvements that are, or would become (as set
forth below), part of a Stabilized Golf Course owned by
the Borrower;
(ii) the aggregate outstanding amount of such loans
plus the amounts utilized for the construction of
improvements to golf course properties to the extent
permitted under Section 10.11 plus loans outstanding
under Section 10.4(b) plus any amount outstanding under
the Borrower's commitment to lend $9,000,000 to Golf
Hosts, Inc. to be used to make various capital
improvements to the Innisbrook golf course property shall
not exceed 10% of Total Assets at any time;
(iii) the Person receiving such Loan (the
"Recipient") shall have executed a promissory note in
favor of the Borrower, in form and substance satisfactory
to the Agent;
(iv) the Recipient shall have granted to the
Borrower and shall have recorded in the appropriate
office a first-priority lien on the related real property
(or on the Recipient's leasehold interest therein, as
applicable);
(v) the Agent shall have received an environmental
assessment report by a qualified environmental consultant
acceptable to the Agent, in form and substance
satisfactory to the Agent, which sets forth substantially
the information required by clause (b) of the definition
of Eligible Property;
(vi) the Agent shall have received an unconditional
title insurance commitment, in form and issued by a title
insurance company satisfactory to the Agent, to ensure
the Borrower of a first lien on the appropriate real
property and which otherwise complies with the
requirements of clause (d) of the definition of Eligible
Property;
(vii) Borrower shall own the property on which
the improvements are to be constructed or have a binding
contractual right to purchase such property; and
(viii) if the improvements will become part of an
Eligible Property that is already included in the
determination of the Borrowing Base, the Agent shall have
received an assignment of the promissory note required by
the provisions of Section 10.4(iii) above and of all
collateral for such promissory note.
(f) any other investment or acquisition, with the prior
written consent of the Required Lenders.
SECTION 10.5 Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other
Person or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution) except in cases where the Borrower is
the surviving party in the merger, consolidation or combination.
SECTION 10.6 Limitations on Sale of Assets. Convey, sell,
lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation, the
sale of any receivables and leasehold interests and any sale-
leaseback or similar transaction), whether now owned or hereafter
acquired except:
(a) the sale of inventory in the ordinary course of
business; and
(b) the sale of obsolete assets no longer used or usable
in the business of the Borrower; and
(c) the sale of any golf course property; provided that
the proceeds of such sale, net of ordinary and customary
closing costs (including, without limitation, professional
fees), are contemporaneously applied to the prepayment of the
outstanding principal balance of the Credit Facility.
SECTION 10.7 Limitations on Dividends and Distributions.
During any fiscal year, declare or pay any dividends upon any of
its capital stock, partnership units or other equity ownership
interests; purchase, redeem, retire or otherwise acquire, directly
or indirectly, any of its capital stock, partnership units or other
equity ownership interests, or make any distribution of cash,
property or assets among the holders of its capital stock,
partnership units or other equity ownership interests in an
aggregate amount exceeding ninety-five percent (95%) of the Funds
from Operations for such fiscal year, or if any Default shall have
occurred and be continuing or would result from such distribution.
SECTION 10.8 Transactions with Affiliates. Except as
permitted under Section 10.4, directly or indirectly: (a) make any
loan or advance to, or purchase or assume any note or other
obligation to or from, any of its officers, directors, shareholders
or other Affiliates, or to or from any member of the immediate
family of any of its officers, directors, shareholders or other
Affiliates, or subcontract any operations to any of its Affiliates,
or (b) enter into, or be a party to, any transaction with any of
its Affiliates, except pursuant to the reasonable requirements of
its business and upon fair and reasonable terms that are fully
disclosed to and approved in writing by the Required Lenders and
are no less favorable to it than it would obtain in a comparable
arm's length transaction with a Person not its Affiliate.
SECTION 10.9 Certain Accounting Changes. Change its Fiscal
Year end, or make any change in its accounting treatment and
reporting practices except as required by GAAP.
SECTION 10.10 [RESERVED].
SECTION 10.11 Limitations on Improvements. Permit more than
10% of Total Assets less the aggregate outstanding amount of loans
permitted under Section 10.4(e) at such time to be utilized at any
one time for the construction of improvements to golf course
properties.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any Governmental Authority or
otherwise:
(a) Default in Payment of Principal of Loans. The
Borrower shall default in any payment of principal of any Loan
or Note when and as due (whether at maturity, by reason of
acceleration or otherwise).
(b) Other Payment Default. The Borrower shall default
in the payment when and as due (whether at maturity, by reason
of acceleration or otherwise) of interest on any Loan or Note
or the payment of any other Obligation, and such default shall
continue unremedied for five (5) Business Days.
(c) Misrepresentation. Any representation or warranty
made or deemed to be made by any Credit Party under this
Agreement, any Loan Document or any amendment hereto or
thereto, shall at any time prove to have been incorrect or
misleading in any material respect when made or deemed made.
(d) Default in Performance of Certain Covenants. Any
Credit Party shall default in the performance or observance of
any covenant or agreement contained in Articles IX or X of
this Agreement.
(e) Default in Performance of Other Covenants and
Conditions. Any Credit Party shall default in the performance
or observance of any term, covenant, condition or agreement
contained in this Agreement (other than as specifically
provided for otherwise in this Section 11.1) or any other Loan
Document and such default shall continue for a period of
thirty (30) days after written notice thereof has been given
to such Credit Party by the Agent; or if such default cannot
reasonably be cured within such period, the Borrower does not
within such thirty (30)-day period commence such act or acts
as shall be necessary to remedy the default and shall not
cause such default to be cured within a reasonable time, not
to exceed, in any event, one hundred twenty (120) days.
(f) Hedging Agreement. Any termination payment shall be
due by the Borrower under any Hedging Agreement and such
amount is not paid within ten (10) Business Days of the due
date thereof.
(g) Debt Cross-Default. Any Credit Party shall (i)
default in the payment of any Debt (other than the Notes)
beyond the period of grace, if any, provided in the instrument
or agreement under which such Debt was created, or (ii) be in
material default in the observance or performance of any other
agreement or condition relating to any Debt (other than the
Notes) or contained in any instrument or agreement evidencing,
securing or relating thereto or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of
such Debt (or a trustee or agent on behalf of such holder or
holders) to cause, with the giving of notice if required, any
such Debt to become due prior to its stated maturity (any
applicable grace period having expired).
(h) Other Cross-Defaults. The Borrower shall default in
the payment when due, or in the performance or observance, of
any obligation or condition of any Material Contract unless,
but only as long as, the existence of any such default is
being contested by the Borrower in good faith by appropriate
proceedings and adequate reserves in respect thereof have been
established on the books of the Borrower to the extent
required by GAAP.
(i) Change in Control. (A) Any person or group of
persons (within the meaning of Section 13(d) of the Securities
Exchange Act of 1934, as amended) other than GTA or Larry D.
Young, shall obtain ownership or control, directly or
indirectly, in one or more series of transactions of more than
thirty percent (30%) of the partnership interests or other
equity interests of the Borrower, or (B) more than fifty
percent (50%) of the board of directors of GTA shall change
during any twelve month period, exclusive of any change of
members resulting from (1) the death or incompetency of board
members and (2) an increase in the number of members of the
board of directors from seven (7) to nine (9).
(j) Loss of REIT Status. GTA shall default in the
performance of the covenant contained in Section 3.14 of this
Agreement.
(k) Voluntary Bankruptcy Proceeding. Any Credit Party
shall (i) commence a voluntary case under the federal bank-
ruptcy laws (as now or hereafter in effect), (ii) file a
petition seeking to take advantage of any other laws, domestic
or foreign, relating to bankruptcy, insolvency, reorgani-
zation, winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to contest in a timely
and appropriate manner, the appointment of, or the taking of
possession by, a receiver, custodian, trustee, or liquidator
of itself or of a substantial part of its property, domestic
or foreign, (v) admit in writing its inability to pay its
debts as they become due, (vi) make a general assignment for
the benefit of creditors, or (vii) take any corporate action
for the purpose of authorizing any of the foregoing.
(l) Involuntary Bankruptcy Proceeding. A case or other
proceeding shall be commenced against any Credit Party in any
court of competent jurisdiction seeking (i) relief under the
federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or
adjustment of debts, or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like for the Borrower
or for all or any substantial part of their respective assets,
domestic or foreign, and such case or proceeding shall
continue undismissed or unstayed for a period of sixty (60)
consecutive days, or an order granting the relief requested in
such case or proceeding (including, but not limited to, an
order for relief under such federal bankruptcy laws) shall be
entered.
(m) Failure of Agreements. Any provision of this
Agreement or of any other Loan Document (other than any usury
savings clause, waiver or similar provision) shall for any
reason cease to be valid and binding on any Credit Party or
any such Person shall so state in writing, or this Agreement
or any other Loan Document shall for any reason cease to
create a valid and perfected first priority Lien on, or
security interest in, any of the collateral purported to be
covered thereby, in each case other than in accordance with
the express terms of this Agreement or thereof.
(n) Termination Event. The occurrence of any of the
following events: (i) the Borrower or any ERISA Affiliate
fails to make full payment when due of all amounts which,
under the provisions of any Pension Plan or Section 412 of the
Code, the Borrower or any ERISA Affiliate is required to pay
as contributions thereto, (ii) an accumulated funding
deficiency in excess of $1,000,000 occurs or exists, whether
or not waived, with respect to any Pension Plan, (iii) a
Termination Event, or (iv) the Borrower or any ERISA Affiliate
as employers under one or more Multi-employer Plan makes a
complete or partial withdrawal from any such Multi-employer
Plan and the plan sponsor of such Multi-employer Plans
notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments in an
amount exceeding $100,000.
(o) Judgment. A judgment or order for the payment of
money which causes the aggregate amount of all such judgments
to exceed $250,000 in any Fiscal Year shall be entered against
the Borrower by any court and such judgment or order shall
continue undischarged or unstayed for a period of thirty (30)
days.
(p) Execution or Attachment. Any writ of execution,
attachment or garnishment for an amount in excess of $250,000
shall be assessed against the assets of the Borrower and such
writ of execution, attachment or garnishment shall not be
dismissed, discharged, stayed or quashed within thirty (30)
days of issuance.
SECTION 11.2 Remedies. Upon the occurrence of an Event of
Default, with the consent of the Required Lenders, the Agent may,
or upon the request of the Required Lenders, the Agent shall, by
notice to the Borrower:
(a) Acceleration; Termination of Facilities. Declare
the principal of and interest on the Loans and the Notes at
the time outstanding, and all other amounts owed to the
Lenders and to the Agent under this Agreement or any of the
other Loan Documents (including, without limitation, all
Letter of Credit Obligations, whether or not the beneficiaries
of the then outstanding Letters of Credit shall have presented
the documents required thereunder) and all other Obligations,
to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the other Loan
Documents to the contrary notwithstanding, and terminate the
Credit Facility and any right of the Borrower to request
borrowings or the issuance of Letters of Credit hereunder;
provided, that upon the occurrence of an Event of Default
specified in Section 11.1(k) or (l), the Credit Facility and
the L/C Commitment shall be automatically terminated and all
Obligations shall automatically become due and payable.
(b) Letters of Credit. With respect to all Letters of
Credit with respect to which presentment for honor shall not
have occurred at the time of an acceleration pursuant to the
preceding paragraph, require the Borrower at such time to
deposit in a cash collateral account opened by the Agent an
amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash
collateral account shall be applied by the Agent to the
payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be
applied to repay the other Obligations. After all such
Letters of Credit shall have expired or been fully drawn upon,
the Reimbursement Obligation shall have been satisfied and all
other Obligations shall have been paid in full, the balance,
if any, in such cash collateral account shall be returned to
the Borrower.
(c) Rights of Collection. Exercise on behalf of the
Lenders all of its other rights and remedies under this
Agreement (including, without limitation, the Guaranty), the
other Loan Documents and Applicable Law, in order to satisfy
all of the Borrower's Obligations.
SECTION 11.3 Rights and Remedies Cumulative; Non-Waiver;
etc. The enumeration of the rights and remedies of the Agent and
the Lenders set forth in this Agreement is not intended to be
exhaustive and the exercise by the Agent and the Lenders of any
right or remedy shall not preclude the exercise of any other rights
or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given under this Agreement or
under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take
action on the part of the Agent or any Lender in exercising any
right, power or privilege shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the
exercise of any other right, power or privilege or shall be
construed to be a waiver of any Event of Default. No course of
dealing between the Borrower, the Agent and the Lenders or their
respective agents or employees shall be effective to change, modify
or discharge any provision of this Agreement or any of the other
Loan Documents or to constitute a waiver of any Event of Default.
SECTION 11.4 Attornment of Participating Leases. In the
event the Lenders take possession of any golf course property,
either as the result of foreclosure of the applicable Security
Document or accepting a deed to such golf course property in lieu
of foreclosure, or otherwise, or any golf course property shall be
purchased at such a foreclosure by a third party, provided that (i)
the Lessee shall have attorned to the Lenders or such third party,
(ii) the Lessee shall have recognized the Lenders or such third
party as its landlord under the related Participating Lease and
(iii) the Lessee is not in default under such Participating Lease,
the Lenders or such third party will recognize and accept the
Lessee as their tenant thereunder; provided, however, that the
Lenders or such third party shall not be:
(a) liable for any act or omission of any prior landlord
(including the Borrower); or
(b) subject to any offsets or defenses which the Lessee might
have against any prior landlord (including the Borrower);
(c) bound by any rent or additional rent which the Lessee
might have paid for more than two months in advance to any prior
landlord (including the Borrower); or
(d) bound by any material amendment to such Participating
Lease that has not been approved by the Agent in writing pursuant
to the provisions of Section 5.5.
ARTICLE XII
THE AGENT
SECTION 12.1 Appointment, Powers, and Immunities.
(a) Each Lender hereby irrevocably appoints and authorizes
the Agent to act as its agent under this Agreement and the other
Loan Documents with such powers and discretion as are specifically
delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably
incidental thereto.
(b) The Agent shall administer the Credit Facility in the
same manner as if the entire Aggregate Commitment were held by the
Agent in its own portfolio. The Agent shall forward to the Lenders
all documents received by it from the Borrower pursuant to the
terms of this Agreement, unless the Borrower is obligated under
this Agreement to make delivery of such documents to the Lenders.
(c) The Agent (which term as used in this sentence and in
Section 12.5 and the first sentence of Section 12.6 of this
Agreement shall include its Affiliates and its own and its
Affiliates' officers, directors, employees, and agents): (a) shall
not have any duties or responsibilities except those expressly set
forth in this Agreement and shall not be a trustee or fiduciary for
any Lender; (b) shall not be responsible to the Lenders for any
recital, statement, representation, or warranty (whether written or
oral) made in or in connection with any Loan Document or any
certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability, or
sufficiency of any Loan Document, or any other document referred to
or provided for therein or for any failure by any Credit Party or
any other Person to perform any of its obligations under this
Agreement; (c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of
any covenants or agreements by any Credit Party or the satisfaction
of any condition or to inspect the property (including the books
and records) of any Credit Party or any of its Subsidiaries or
Affiliates; (d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted to be
taken by it under or in connection with any Loan Document, except
for its own gross negligence or willful misconduct. The Agent may
employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-
in-fact selected by it with reasonable care.
SECTION 12.2 Reliance by Agent. The Agent shall be entitled
to rely upon any certification, notice, instrument, writing, or
other communication (including, without limitation, any thereof by
telephone or telecopy) reasonably believed by it to be genuine and
correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel for any Credit Party), independent
accountants, and other experts selected by the Agent. The Agent
may deem and treat the payee of any Note as the holder thereof for
all purposes of this Agreement unless and until the Agent receives
and accepts an Assignment and Acceptance executed in accordance
with Section 13.10 of this Agreement. As to any matters not
expressly provided for by this Agreement, the Agent shall not be
required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall
be binding on all of the Lenders; provided, however, that the Agent
shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to any Loan Document or
applicable law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking any such
action.
SECTION 12.3 Defaults. The Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default or Event of
Default unless the Agent has received written notice from a Lender
or the Borrower specifying such Default or Event of Default and
stating that such notice is a "Notice of Default". In the event
that the Agent receives such a notice of the occurrence of a
Default or Event of Default, the Agent shall give prompt notice
thereof to the Lenders and the Borrower. The Agent shall (subject
to Section 12.2 of this Agreement) take such action with respect to
such Default or Event of Default as shall reasonably be directed by
the Required Lenders, provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall not
be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it
shall deem advisable in the best interest of the Lenders.
SECTION 12.4 Rights as Lender. With respect to its
Commitment and the Loans made by it, NationsBank (and any successor
acting as Agent) in its capacity as a Lender under this Agreement
shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not acting
as the Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Agent in its individual
capacity. NationsBank (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender)
accept deposits from, lend money to, make investments in, provide
services to, and generally engage in any kind of lending, trust, or
other business with any Credit Party or Affiliates as if it were
not acting as Agent, and NationsBank (and any successor acting as
Agent) and its Affiliates may accept fees and other consideration
from any Credit Party or any of its Subsidiaries or Affiliates for
services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
SECTION 12.5 Indemnification. The Lenders agree to
indemnify the Agent (to the extent not reimbursed under Section 3.7
of this Agreement, but without limiting the obligations of the
Borrower under such Section) ratably in accordance with their
respective Commitments, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or
asserted against the Agent (including by any Lender) in any way
relating to or arising out of any Loan Document or the transactions
contemplated thereby or any action taken or omitted by the Agent
under any Loan Document; provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified.
Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of
any costs or expenses payable by the Borrower under Section 13.2,
to the extent that the Agent is not promptly reimbursed for such
reasonable and actually incurred costs and expenses by the
Borrower. The agreements contained in this Section shall survive
payment in full of the Loans and all other amounts payable under
this Agreement.
SECTION 12.6 Non-Reliance on Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on
the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of the Credit Parties and their Subsidiaries and decision
to enter into this Agreement, to make Loans hereunder and to issue
or participate in Letters of Credit hereunder and that it will,
independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents.
Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Agent
under this Agreement, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or
business of any Credit Party or Affiliates that may come into the
possession of the Agent or any of its Affiliates.
SECTION 12.7 Resignation; Removal of Agent; Successor
Agents.
(a) Resignation of Agent. The Agent may resign at any time
by giving prior written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the
retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be an Eligible Assignee having total assets of at least
$25,000,000,000.
(b) Removal of Agent. The Lenders may remove NationsBank as
Agent hereunder and appoint a successor Agent upon not less than
thirty (30) days' prior written notice signed by Lenders whose
Commitment Percentages equal sixty six and two thirds percent
(66.67%) of the Aggregate Commitment exclusive of NationsBank's
Commitment, if (i) NationsBank's Commitment is less than twenty
million dollars ($20,000,000) and no Event of Default has occurred
and is continuing or (ii) NationsBank is grossly negligent or is
guilty of willful misconduct in the performance of its duties
hereunder, as determined in the reasonable discretion of the
Lenders signing the foregoing written notice.
(c) Successor Agents. Upon the acceptance of any appointment
as Agent under this Agreement by a successor, such successor shall
thereupon succeed to and become vested with all the rights, powers,
discretion, privileges, and duties of the retiring Agent upon
written notice thereof to Borrower, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement
excepting with respect to its willful misconduct or gross
negligence occurring prior to its discharge. After any retiring
Agent's resignation or removal under this Agreement as Agent, the
provisions of this Article 12 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices.
(a) Method of Communication. Except as otherwise provided in
this Agreement, all notices and communications under this Agreement
shall be in writing, or by telephone subsequently confirmed in
writing. Any notice shall be effective if delivered by hand
delivery or sent via telecopy, recognized overnight courier service
or certified mail, return receipt requested, and shall be presumed
to be received by a party hereto (i) on the date of delivery if
delivered by hand or sent by telecopy, (ii) on the next Business
Day if sent by recognized overnight courier service, and (iii) on
the third Business Day following the date sent by certified mail,
return receipt requested. A telephonic notice to the Agent as
understood by the Agent will be deemed to be the controlling and
proper notice in the event of a discrepancy with or failure to
receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be
sent to it at the following addresses, or any other address as to
which all the other parties are notified in writing.
If to the Borrower: Golf Trust of America, L.P.
c/o GTA
14 North Adgers Wharf
Charleston, South Carolina 29401
Attention: W. Bradley Blair, III
and Scott D. Peters
Telephone No.: 803/723-4653
Telecopy No.: 803/723-0479
With copies to: O'Melveny & Myers LLP
275 Battery Street, 26th Floor
San Francisco, California 94105
Attention: Peter T. Healy, Esq.
Telephone No.: (415) 984-8833
Telecopy No.: (415) 984-8701
If to GTA: Golf Trust of America, Inc.
c/o GTA
14 North Adgers Wharf
Charleston, South Carolina 29401
Attention: W. Bradley Blair, III
and Scott D. Peters
Telephone No.: 803/723-4653
Telecopy No.: 803/723-0479
If to GTA GP: GTA GP, Inc.
c/o GTA
14 North Adgers Wharf
Charleston, South Carolina 29401
Attention: W. Bradley Blair, III
and Scott D. Peters
Telephone No.: 803/723-4653
Telecopy No.: 803/723-0479
If to GTA LP: GTA LP, Inc.
c/o GTA
14 North Adgers Wharf
Charleston, South Carolina 29401
Attention: W. Bradley Blair, III
and Scott D. Peters
Telephone No.: 803/723-4653
Telecopy No.: 803/723-0479
If to NationsBank as NationsBank, N.A.
Agent or as Issuing Lender: Commercial Banking
2501 Oak Street, 2nd Floor
Myrtle Beach, South Carolina 29577-0807
Attention: Dale Zeglin
Telephone No.: (803) 946-3259
Telecopy No.: (803) 946-3211
If to any Lender: To the Address set forth on
Schedule 1 hereto
(c) Agent's Office. The Agent hereby designates its office
located at the address set forth above, or any subsequent office
which shall have been specified for such purpose by written notice
to the Borrower and Lenders, as the Agent's Office referred to in
this Agreement, to which payments due are to be made and at which
Loans will be disbursed and Letters of Credit issued.
SECTION 13.2 Expenses; Indemnification. (a) The Borrower
agrees to pay on demand all reasonably and actually incurred costs
and expenses of the Agent, NationsBanc Capital Markets, Inc. and
the Lenders in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of
this Agreement, the other Loan Documents, and the other documents
to be delivered under this Agreement, including, without
limitation, the reasonable fees and expenses of counsel for the
Agent, NationsBanc Capital Markets, Inc. and the Lenders (including
the cost of internal counsel) with respect thereto and with respect
to advising the Agent or any Lender as to its rights and
responsibilities under the Loan Documents. The Borrower further
agrees to pay on demand all reasonably and actually incurred costs
and expenses of the Agent and the Lenders, if any (including,
without limitation, reasonable and actually incurred attorneys'
fees and expenses and the reasonably and actually incurred cost of
internal counsel), in connection with the enforcement (whether
through negotiations, legal proceedings, or otherwise) of the Loan
Documents and the other documents to be delivered under this
Agreement.
(b) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender and each of their Affiliates (including,
without limitation, NationsBanc Capital Markets, Inc.) and their
respective officers, directors, employees, agents, and advisors
(each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including,
without limitation, reasonable and actually incurred attorneys'
fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection
with or by reason of (including, without limitation, in connection
with any investigation, litigation, or proceeding or preparation of
defense in connection therewith) the Loan Documents, any of the
transactions contemplated in this Agreement or the actual or
proposed use of the proceeds of the Loans, except to the extent
such claim, damage, loss, liability, cost, or expense is found in
a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an investigation,
litigation or other proceeding to which the indemnity in this
Section 13.2 applies, such indemnity shall be effective whether or
not such investigation, litigation or proceeding is brought by the
Borrower, its directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is
otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated. The Borrower agrees not to
assert any claim against the Agent, any Lender, any of their
Affiliates, or any of their respective directors, officers,
employees, attorneys, agents, and advisers, on any theory of
liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Loan Documents,
any of the transactions contemplated in this Agreement or the
actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement
of the Borrower under this Agreement, the agreements and
obligations of the Borrower contained in this Section 13.2 shall
survive the payment in full of the Loans and all other amounts
payable under this Agreement.
SECTION 13.3 Set-off. In addition to any rights now or
hereafter granted under Applicable Law and not by way of limitation
of any such rights, upon and after the occurrence of any Event of
Default and during the continuance thereof, the Lenders and any
assignee or participant of a Lender in accordance with Section
13.10 are hereby authorized by the Borrower at any time or from
time to time, without notice to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off
and to appropriate and to apply any and all deposits (general or
special, time or demand, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness at any time held or owing
by the Lenders, or any such assignee or participant to or for the
credit or the account of the Borrower against and on account of the
Obligations irrespective of whether or not (a) the Lenders shall
have made any demand under this Agreement or any of the other Loan
Documents or (b) the Agent shall have declared any or all of the
Obligations to be due and payable as permitted by Section 11.2 and
although such Obligations shall be contingent or unmatured.
SECTION 13.4 Governing Law. This Agreement, the Notes and
the other Loan Documents, unless otherwise expressly set forth
therein, shall be governed by, construed and enforced in accor-
dance with the laws of the State of North Carolina, without
reference to the conflicts or choice of law principles thereof.
SECTION 13.5 Consent to Jurisdiction. The Borrower hereby
irrevocably consents to the personal jurisdiction of the state and
federal courts located in Mecklenburg County, North Carolina, in
any action, claim or other proceeding arising out of any dispute in
connection with this Agreement, the Notes and the other Loan
Documents, any rights or obligations under this Agreement or
thereunder, or the performance of such rights and obligations. The
Borrower hereby irrevocably consents to the service of a summons
and complaint and other process in any action, claim or proceeding
brought by the Agent or any Lender in connection with this
Agreement, the Notes or the other Loan Documents, any rights or
obligations under this Agreement or thereunder, or the performance
of such rights and obligations, on behalf of itself or its
property, in the manner specified in Section 13.1. Nothing in this
Section 13.5 shall affect the right of the Agent or any Lender to
serve legal process in any other manner permitted by Applicable Law
or affect the right of the Agent or any Lender to bring any action
or proceeding against the Borrower or its properties in the courts
of any other jurisdictions.
SECTION 13.6 Waiver of Jury Trial. TO THE EXTENT PERMITTED
BY LAW, THE AGENT, EACH LENDER AND THE BORROWER HEREBY IRREVOCABLY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 13.7 Reversal of Payments. To the extent the
Borrower makes a payment or payments to the Agent for the ratable
benefit of the Lenders or the Agent receives any payment or
proceeds of the collateral which payments or proceeds or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of
such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full
force and effect as if such payment or proceeds had not been
received by the Agent.
SECTION 13.8 Injunctive Relief; Punitive Damages.
(a) The Borrower recognizes that, in the event the Borrower
fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Lenders. Therefore, the Borrower agrees
that the Lenders, at the Lenders' option, shall be entitled to
temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
(b) The Agent, Lender and Borrower (on behalf of itself and
its Subsidiaries) hereby agrees that no such Person shall have a
remedy of punitive or exemplary damages against any other party to
a Loan Document and each such Person hereby waives any right or
claim to punitive or exemplary damages that they may now have or
may arise in the future in connection with any judicial proceeding,
dispute, claim or controversy arising out of, connected with or
relating to the Notes or any other Loan Documents ("Disputes"),
whether such Dispute is resolved through arbitration or judicially.
(c) The parties agree that they shall not have a remedy of
punitive or exemplary damages against any other party in any
Dispute and hereby waive any right or claim to punitive or
exemplary damages they have now or which may arise in the future in
connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
SECTION 13.9 Accounting Matters. All financial and
accounting calculations, measurements and computations made for any
purpose relating to this Agreement, including, without limitation,
all computations utilized by GTA, the Borrower or any Subsidiary
thereof to determine compliance with any covenant contained in this
Agreement, shall, except as otherwise expressly contemplated hereby
or unless there is an express written direction by the Agent to the
contrary agreed to by the Borrower, be performed in accordance with
GAAP as in effect on the Closing Date. In the event that changes
in GAAP shall be mandated by the Financial Accounting Standards
Board, or any similar accounting body of comparable standing, or
shall be recommended by the Borrower's certified public
accountants, to the extent that such changes would modify such
accounting terms or the interpretation or computation thereof, such
changes shall be followed in defining such accounting terms only
from and after the date the Borrower and the Lenders shall have
amended this Agreement to the extent necessary to reflect any such
changes in the financial covenants and other terms and conditions
of this Agreement.
SECTION 13.10 Assignments and Participations. (a) Each
Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Loans, its
Note, and its Commitment); provided, however, that
(i) so long as no Default or Event of Default has
occurred and is continuing, NationsBank's Commitment shall not
be less than $20,000,000 and provided, further, that
NationsBank shall promptly notify each of the other Lenders in
writing if NationsBank's Commitment is less than $20,000,000;
(ii) each such assignment shall be to an Eligible
Assignee;
(iii) except in the case of an assignment to another
Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, any such partial assignment
shall be in an amount at least equal to $10,000,000 or an
integral multiple of $1,000,000 in excess thereof;
(iv) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under this Agreement and the Note;
(v) the parties to such assignment shall execute and
deliver to the Agent for its acceptance an Assignment and
Acceptance in the form of Exhibit F hereto, together with any
Note subject to such assignment and a processing fee of
$3,500; and
(vi) Borrower shall receive prior written notice thereof.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to
the extent of such assignment, have the obligations, rights, and
benefits of a Lender under this Agreement and the assigning Lender
shall, to the extent of such assignment, relinquish its rights and
be released from its obligations under this Agreement excepting
with respect to any gross negligence or willful misconduct on the
part of such assigning Lender prior to the date of such assignment
. Upon the consummation of any assignment pursuant to this
Section, the assignor, the Agent and the Borrower shall make
appropriate arrangements so that, if required, new Notes are issued
to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a
state thereof, it shall deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding of
Taxes in accordance with Section 3.13.
(b) The Agent shall maintain at its address referred to in
Section 13.1 a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower,
the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender under this Agreement for all
purposes of this Agreement. The Register shall be available for
inspection by the Borrower (or any of its agents or advisors) or
any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed
by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Agent shall, if
such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit F hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt written notice
thereof to the parties thereto and to the Borrower.
(d) Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and
its Loans); provided, however, that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participant shall be
entitled to the benefit of the yield protection provisions
contained in Article III and the right of set-off contained in
Section 3.5, and (iv) the Borrower shall continue to deal solely
and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Borrower
relating to its Loans and its Note and to approve any amendment,
modification, or waiver of any provision of this Agreement (other
than amendments, modifications, or waivers decreasing the amount of
principal of or the rate at which interest is payable on such Loans
or Note, extending any scheduled principal payment date or date
fixed for the payment of interest on such Loans or Note, increasing
the Aggregate Commitment or, except as set forth in Section 5.6,
changing the calculation or method of determination of the
Borrowing Base Availability).
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment
shall release the assigning Lender from its obligations under this
Agreement.
(f) Any Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such
Lender from time to time to assignees and participants (including
prospective assignees and participants).
SECTION 13.11 Amendments and Waivers. Any provision of this
Agreement or any other Loan Document may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed
by the Borrower and the Required Lenders (and, if Article XI or the
rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by
all the Lenders (other than Defaulting Lenders), (i) increase the
Commitments of the Lenders, (ii) extend the time of the obligation
of the Lenders to make Loans or to issue or participate in Letters
of Credit, (iii) reduce the principal of or rate of interest on any
Loan or any fees or other amounts payable under this Agreement,
(iv) postpone any date fixed for the payment of any scheduled
installment of principal of or interest on any Loan or
Reimbursement Obligation or any fees or other amounts payable
hereunder or for termination of any Commitment, (v) change the
percentage of the Commitments or of the unpaid principal amount of
the Notes, or the number of Lenders, which shall be required for
the Lenders or any of them to take any action under this Section or
any other provision of this Agreement, (vi) except as set forth in
Section 5.6, modify the calculation or method of determination of
the Borrowing Base availability, (vii) release any Guarantor or,
except as set forth in Section 5.6, all or substantially all of the
Collateral, (viii) modify the provisions of Section 10.1 or (ix)
modify the provisions of Section 10.3. In addition, no amendment,
waiver or consent to the provisions of Article IIA shall be made
without the written consent of the Issuing Lender.
SECTION 13.12 Performance of Duties. The Borrower's
obligations under this Agreement and each of the Loan Documents
shall be performed by the Borrower at its sole cost and expense.
SECTION 13.13 All Powers Coupled with Interest. All powers
of attorney and other authorizations granted to the Lenders, the
Agent and any Persons designated by the Agent or any Lender
pursuant to any provisions of this Agreement or any of the other
Loan Documents shall be deemed coupled with an interest and shall
be irrevocable so long as any of the Obligations remain unpaid or
unsatisfied or the Credit Facility has not been terminated.
SECTION 13.14 Survival of Indemnities. Notwithstanding any
termination of this Agreement, the indemnities to which the Agent
and the Lenders are entitled under the provisions of this Article
XIII and any other provision of this Agreement and the Loan Docu-
ments shall continue in full force and effect and shall protect the
Agent and the Lenders against events arising after such termination
as well as before.
SECTION 13.15 Titles and Captions. Titles and captions of
Articles, Sections and subsections in this Agreement are for conve-
nience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 13.16 Severability of Provisions. Any provision of
this Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unen-
forceability without invalidating the remainder of such provision
or the remaining provisions of this Agreement or thereof or
affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 13.17 Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and shall be binding upon all parties,
their successors and assigns, and all of which taken together shall
constitute one and the same agreement.
SECTION 13.18 Term of Agreement. This Agreement shall remain
in effect from the Closing Date through and including the date upon
which all Obligations shall have been indefeasibly and irrevocably
paid and satisfied in full. No termination of this Agreement shall
affect the rights and obligations of the parties hereto arising
prior to such termination.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers, all as
of the day and year first written above.
[CORPORATE SEAL] GOLF TRUST OF AMERICA, L.P., a
Delaware limited partnership
By: GTA, GP, Inc., a Maryland
corporation, its general
partner
By: /s/ W. Bradley Blair, II
W. Bradley Blair, II
Its Chief Executive
Officer and President
[CORPORATE SEAL] GOLF TRUST OF AMERICA, INC., a
Maryland corporation
By: /s/ W. Bradley Blair, II
W. Bradley Blair, II
Its Chief Executive
Officer and President
[CORPORATE SEAL] GTA GP, INC., a Maryland corporation
By: /s/ W. Bradley Blair, II
W. Bradley Blair, II
Its Chief Executive
Officer and President
<PAGE>
[CORPORATE SEAL] GTA LP, INC., a Maryland corporation
By: /s/ W. Bradley Blair, II
W. Bradley Blair, II
Its Chief Executive
Officer and President
NATIONSBANK, N.A., as Agent and
Lender
By: /s/ Dale C. Zeglin
Name: Dale C. Zeglin
Title: Senior Vice President
<PAGE>
FIRST UNION NATIONAL BANK
By: /s/ Michael S. Hunter
Name: Michael S. Hunter
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Joseph Asciolla
Name: Joseph Asciolla
Title: Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Kent Howard
Name: Kent Howard
Title: Vice President
<PAGE>
SCHEDULE 1: LENDERS AND COMMITMENTS
<TABLE>
<S> <C>
COMMITMENT
AND COMMITMENT
LENDER PERCENTAGE
NationsBank N.A. $40,000,000
40%
Attention: Syndication Agency Services
Telephone No.: (704) ________
Telecopy No.: (704) ________
First Union National Bank
$20,000,000
301 South Tryon Street 20%
Second Floor
Charlotte, North Carolina 28288
Attention: Mike Hunter
Telephone No.: (704) 383-5277
Telecopy No.: (704) 374-4000
Credit Lyonnais New York Branch
$20,000,000
1301 Avenue of the Americas 20%
18th Floor
New York, New York 10019
Attention: Ms. Jan Hazelton
Telephone No.: (212) 261-3723
Telecopy No.: (212) 261-7890
Societe Generale, Southwest Agency $20,000,000
2001 Ross Avenue 20%
Suite 4900
Dallas, Texas 75201
Attention: Kent Howard
Telephone No.: (214) 979-2744
Telecopy No.: (214) 979-2727
</TABLE>
EXECUTION COPY
LOAN AGREEMENT
between
GOLF HOST RESORTS, INC.
"Borrower"
and
GOLF TRUST OF AMERICA, L.P.
"Lender"
<PAGE>
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
<PAGE>
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
<PAGE>
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 Mayer, Brown & Platt.
"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., Stanley D. Wadsworth,
Brenton Wadsworth, C. James McCormick 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,
Stewart Title of Tampa, Florida and as to the Tamarron Property,
Basin Title Insurance Agency, Inc., Durango, Colorado, as agent
for Stewart 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, abate 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 2001
Sixth Avenue, Seattle, Washington 98121. 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, bill 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.
14 North Adger's Wharf
Charleston, South Carolina 29401
Tel.: (803) 723-4653
Fax: (803) 723-0479
Attn: W. Bradley Blair, II
Copy to:
O'Melveny & Myers LLP
Embarcadero Center West
275 Battery Street
San Francisco, California 94111
Attn: Peter T. Healy, Esq.
Tel.: (415) 984-8833
Fax: (415) 984-8701
If to the Borrower:
Mr. Merrick R. Kleeman
Starwood Capital Group, L.P.
Three Pickwick Plaza, Ste. 250
Greenwich, Connecticut 06830
Tel.: 203-861-2100
Fax: 203-861-2101
Copy to:
James B. Carlson, Esq.
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
Tel.: 212-506-2515
Fax: 212-262-1910
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/ Merrick R. Kleeman
Merrick R. Kleeman
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. Bradley Blair
W. Bradley Blair
Its: President
