SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Golf Trust of America, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
38168B-10-3
(CUSIP Number)
Merrick R. Kleeman
Golf Hosts, Inc.
c/o Starwood Capital
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
(203)861-2100
Copy to:
James B. Carlson
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, New York 10019
(212) 506-2500
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 23, 1997
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Statement because of Rule
13d-1(b)(3) or (4), check the following: ( )
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SCHEDULE 13D
CUSIP No. 38168B-10-3
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Golf Hosts, Inc.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
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(3) SEC USE ONLY
(4) SOURCE OF FUNDS
00 (See response to Item 3)
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Florida
(7) SOLE VOTING POWER
NUMBER OF 309,326
SHARES
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY None
EACH
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 309,326
WITH
(10) SHARED DISPOSITIVE POWER
None
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
309,326
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
( )
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
7.4%
(14) TYPE OF REPORTING PERSON
CO
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Item 1. Security and Issuer.
This statement on Schedule 13D (the "Statement") relates to the common
stock, par value $.01 per share ("Company Common Stock"), of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which has its principal
executive offices at 14 North Adger's Wharf, Charleston, SC 29401.
Item 2. Identity and Background.
This Statement is being filed by Golf Hosts, Inc., a Florida
corporation ("GHI"). GHI is a wholly owned subsidiary of Golf Host Holdings,
Inc., a Delaware corporation ("Holdings"). Holdings is owned by more than twenty
individual shareholders; no single shareholder exercises control over Holdings.
The directors of GHI and Holdings are Barry Sternlicht, Merrick Kleeman and
Madison Grose (collectively, the "Directors"), all of whom are United States
citizens. The officers of GHI and Holdings are Barry Sternlicht, Chairman and
CEO; Merrick Kleeman, President and Treasurer; and Madison Grose, Secretary
(collectively the "Officers"). The principal executive office of GHI is 36750
U.S. Highway 19 North, Palm Harbor, FL 34684. The principal executive office of
Holdings and the business address of the Directors and Officers is c/o Starwood
Capital Group, Three Pickwick Plaza, Suite 250, Greenwich, CT 06830. GHI and
Holdings are each a holding company with subsidiaries that are primarily engaged
in the business of owning golf resorts and operating rental pools. Each of the
Directors and Officers principal employment is as a managing director of
Starwood Capital Group, LLC, Three Pickwick Plaza, Greenwich, CT 06830.
During the last five years, none of GHI, the Directors or the Officers
have been convicted in any criminal proceeding (excluding traffic violations or
similar misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The funds to purchase the securities to which this report relates were
borrowed pursuant to a Loan Agreement, dated as of June 20, 1997, between Golf
Host Resorts, Inc. (a wholly owned subsidiary of GHI)("Resorts"), as the
borrower, and Golf Trust of America, L.P. (a subsidiary of the Company)(the
"Partnership"), as lender. Resorts borrowed an aggregate of $8,975,000 from the
Partnership in order to fund the acquisition of the securities to which this
report relates as well as certain additional securities. The securities to which
this report relates were transferred from Resorts to GHI simultaneously with
their issuance.
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The foregoing summary of the provisions of the Loan Agreement does not
purport to be complete, and is qualified in its entirety by reference to the
Loan Agreement attached as an exhibit hereto.
Item 4. Purpose of Transaction.
The securities to which this report relates and certain additional
securities were purchased pursuant to a Securities Purchase Agreement, dated as
of June 20, 1997, between the Company, the Partnership and Resorts. The shares
of Company Common Stock to which this Statement relates are held by GHI as an
investment. Except as otherwise set forth in this Statement, neither GHI nor any
Director or Officer presently has any plans or proposals which relate to or
would result in: (i) the acquisition by any person of additional securities of
the Company, or the disposition of securities of the Company; (ii) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; (iii) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; (iv) any change in the present Board of Directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on such Board of Directors; (v) any
material change in the present capitalization or dividend policy of the Company;
(vi) any other material change in the Company's business or corporate structure;
(vii) changes in the Company's Certificate of Incorporation or By-laws or other
actions which may impede the acquisition of control of the Company by any
person; (viii) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(ix) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or
(x) any action similar to any of those enumerated above.
Subject to applicable law, GHI, the Directors or the Officers may,
individually or jointly, acquire shares of Company Common Stock or sell some or
all of the shares of the Company Common Stock which may be owned by them from
time to time, depending on their evaluation of the Company's business, prospects
and financial condition, the market for the shares, other opportunities
available to GHI, the Directors or the Officers, general economic conditions,
money and stock market conditions and other future developments.
Lost Oaks, L.P., a Delaware limited partnership ("Lost Oaks")
affiliated with GHI, Holdings, the Officers and Directors, has the right to
receive an indeterminate number of shares of Company Common Stock after March 1,
1999, based upon the economic
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performance of certain assets comprising the Tarpon Woods Golf and Country Club,
which is owned by the Partnership and leased to Lost Oaks.
Item 5. Interest in Securities of the Issuer.
GHI beneficially owns 309,326 shares of Company Common Stock (the
"Shares"). The Shares constitute approximately 7.4% of the shares of Company
Common Stock issued and outstanding as of January 12, 1998 (based upon a total
of 4,161,000 shares of Company Common Stock issued and outstanding on January
12, 1998).
159,326 of the Shares are owned directly by GHI. 150,000 of the Shares
may be issued upon exercise of an option ("Option") held by GHI at any time
prior to December 31, 1998 (subject to extension in certain circumstances). GHI
has sole voting and disposition power with respect to the Shares. None of the
Directors or Officers beneficially own any shares of Company Common Stock.
The foregoing summary of the Option does not purport to be complete and
is qualified in its entirety to the Securities Purchase Agreement as amended to
date which is attached as an exhibit hereto.
Except as set forth in this Statement, GHI, the Directors and Officers
have not affected any transactions in shares of Company Common Stock during the
past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
GHI, Resorts and the Company are party to the following agreements with
respect to the Shares: (a)a Shareholder Agreement, a Pledge Agreement and three
(3) Proxies, each dated as of June 20, 1997, and (b) an Additional Pledge
Agreement and a Stock Options Pledge Agreement, each dated as of October 3,
1997.
Pursuant to the Pledge Agreement one-half (79,663) of the shares of
Common Stock are pledged to the Partnership to secure the borrowings of Resorts
under the Loan Agreement.
Pursuant to the Proxies, GHI has granted the Company a proxy to vote
the Shares which expires as follows: 53,108 shares of Common Stock (one-third of
the Common Stock) are released from the Proxy on June 20, 1998, and 53,109
shares of Common Stock are released from the Proxy on each of June 20, 1999 and
June 20, 2000.
Pursuant to the Shareholder Agreement, none of the shares of Common
Stock may be transferred (subject to certain exceptions) until June 20, 1998 and
one-half (79,663) of the shares may not be transferred until June 20, 1999.
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Pursuant to the Additional Pledge Agreement, 70,980 shares of Common
Stock are pledged to the Partnership to secure the borrowings of Lost Oaks under
its lease with respect to the Tarpon Woods Golf and Country Club.
Pursuant to the Stock Options Pledge Agreement, the Option is pledged
to the Partnership to secure the borrowings of Lost Oaks under its lease with
respect to the Tarpon Woods Golf and Country Club.
In addition, in the event that the Partnership elects to exercise the
purchase option under the Loan Agreement by canceling the indebtedness payable
thereunder, Resorts will receive an additional 125,000 shares of Company Common
Stock. Reference is hereby made to the discussion of the Option set forth above
in response to Item 5, including the summary of provisions thereof, which is
incorporated by reference in its entirety herein.
The foregoing summary of the provisions of the Shareholder Agreement,
the Pledge Agreement, the Proxies, the Additional Pledge Agreement and the Stock
Options Pledge Agreement does not purport to be complete, and is qualified in
its entirety to the respective agreements which are attached as exhibits hereto.
Except as set forth in this Statement, none of GHI, the Directors or
the Officers have any contracts, arrangements, understandings or relationships
(legal or otherwise) with each other or with any person with respect to any
securities of the Company, including but not limited to the transfer or voting
of any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit A Loan Agreement, dated as of June 20, 1997
Exhibit B Securities Purchase Agreement, dated as of
June 20, 1997
Exhibit C Shareholder Agreement, dated as of June 20, 1997
Exhibit D Proxies, dated as of June 20, 1997
Exhibit E Pledge Agreement, dated as of June 20, 1997
Exhibit F Letter Agreement, dated as of October 3, 1997
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Exhibit G Additional Pledge Agreement, dated as of October
3, 1997
Exhibit H Stock Options Pledge Agreement, dated as of
October 3, 1997
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
Dated: January 13, 1998
GOLF HOSTS, INC.
By:/s/ Merrick R. Kleeman
--------------------------
Merrick R. Kleeman
President
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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.
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"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.
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"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;
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(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,
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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. ss.9601, et seq.;
the Resource Conservation and Recovery Act, 42 U.S.C. ss.6901, et seq.; the
Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. ss.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.
ss. 651, et seq.; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et seq.; the
Safe Drinking Water Act, as amended, 42 U.S.C. ss.201, et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. ss.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.
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"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
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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;
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(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
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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:
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<PAGE>
(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
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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
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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.
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"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).
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<PAGE>
"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.
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"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
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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.
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"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
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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
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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
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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
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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
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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
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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
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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.
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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
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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;
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(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,
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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
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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
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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,
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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.
5.4 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
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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
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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.
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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
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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.
5.23 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.
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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
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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
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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
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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
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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.
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(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
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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,
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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
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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
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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,
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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:
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(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
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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
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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.
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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
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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
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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
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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.
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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
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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.
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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.
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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
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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
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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.
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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.
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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
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(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
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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
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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.
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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
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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
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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
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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 "noncomplying 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
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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
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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)
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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.
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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
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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.
16.7 Incorporation of Preamble, Recitals and Exhibits. The preamble,
recitals and exhibits hereto are hereby incorporated into this Agreement and
made a part hereof.
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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
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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
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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;
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(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
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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.
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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:
Its:
By:
Its:
Lender:
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland corporation
Its: General Partner
By: __________________________
Its: __________________________
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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
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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
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(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
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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
iv
<PAGE>
(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
v
<PAGE>
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
vi
<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
vii
<PAGE>
EXECUTION COPY
LOAN AGREEMENT
between
GOLF HOST RESORTS, INC.
"Borrower"
and
GOLF TRUST OF AMERICA, L.P.
"Lender"
<PAGE>
GOLF TRUST OF AMERICA, L.P.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of
June 20, 1997 by and between (A) GOLF TRUST OF AMERICA, L.P., a Delaware limited
partnership (the "Partnership"), and GOLF TRUST OF AMERICA, INC., a Maryland
corporation (the "REIT", and together with the Partnership, the "Company"), with
their respective principal offices located at 14 North Adger's Wharf,
Charleston, South Carolina 29401 and (B) GOLF HOST RESORTS, INC., a Colorado
corporation ("Buyer"), with its principal offices located at 36750 U.S. Highway
19 North, Palm Harbor, Florida 34684.
The parties enter this Agreement on the basis of the following facts,
understandings and intentions:
A. The Partnership is a limited partnership whose general
partner is GTA GP, Inc., a wholly-owned subsidiary of the REIT, a
public company currently listed on the American Stock Exchange;
B. The REIT desires to sell and convey to Buyer 159,326 shares
(the "Common Shares") of its common stock, par value $0.01 per share
("Common Stock") together with the option to purchase up to an
additional 150,000 shares of Common Stock under the terms herein
provided (the "Option") and the Partnership desires to sell and convey
to Buyer an aggregate of 274,039 units of partnership interest in the
Partnership (the "Units", and together with the Common Shares and the
Option, the "Securities") aggregating a total of 433,365 Units and
Common Shares in a private placement offering, together with the right
to acquire the Contingent Additional Securities, as hereinafter
provided (the "Offering"), and Buyer desires to acquire the Securities,
and subject to the terms hereof the Contingent Additional Securities;
and
C. The Partnership is prepared to make a loan to Buyer in the
original principal amount of Sixty-Nine Million Nine Hundred
Seventy-Five Thousand Dollars ($69,975,000) in accordance with the
terms and conditions of the Loan Agreement dated of even date herewith
(the "Loan Agreement"), a portion of which will be used to acquire the
Securities. For purposes of this Agreement, the term "Closing Date"
shall mean and refer to the date such loan is funded in accordance with
the terms of the Loan Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
ACQUISITION OF SECURITIES AND AMOUNT AND METHOD OF PAYMENT
1.1 Upon the terms and subject to the conditions hereinafter set forth,
Buyer hereby agrees to purchase from the Company the Securities at an aggregate
purchase
<PAGE>
price of Eight Million Nine Hundred Seventy-five Thousand Dollars ($8,975,000)
(the "Purchase Price") and the Company hereby agrees to sell such Securities to
Buyer for the Purchase Price. The rights and preferences of holders of the
Common Shares and the Units are summarized in the final Prospectus of the REIT
dated February 6, 1997 (the "Prospectus") and the documents incorporated therein
(collectively, the "Offering Documents"). The Purchase Price is payable by wire
transfer of immediately available funds on the Closing Date.
1.2 The Units shall be evidenced by amendment to Exhibit A of the First
Amended and Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"); the Common Stock shall be evidenced by a stock
certificate of the Company. Neither the Units nor the Option shall be separately
evidenced by certificates. A revised Exhibit A to the Partnership Agreement will
be delivered by the Partnership on the Closing Date to Buyer or its designee
evidencing such ownership interest in the Units and Buyer will be admitted to
the Partnership as a limited partner and will execute the Partnership Agreement.
1.3 The Option granted hereby shall be subject to the following terms
and conditions:
(a) Buyer shall have the right to purchase up to 150,000
shares of Common Stock of the REIT (the "Option Shares") at a price of
$26.00 per share (the "Strike Price"), subject to increase as provided
below. In the event that any change is made to the Common Stock by
reason of any stock split, stock dividend, recapitalization,
combination of shares or other change affecting the outstanding Common
Stock as a class effected without the REIT's receipt of consideration,
the number and or class of the Option Shares subject to the Option
shall be adjusted so as to prevent any dilution or enlargement of the
economic rights and benefits of Buyer hereunder.
(b) The Option shall be exercisable commencing on the date
hereof and shall expire at 5:00 p.m., New York City time, on December
31, 1997, subject to Buyer's right to delay delivery and purchase of
the Option Shares as provided below. During such period, the Option may
be exercised at any time (but not more than once) upon notice by the
Buyer to the REIT (with a copy to Peter T. Healy, Esq, of O'Melveny &
Myers LLP), setting forth (i) the number of Option Shares as to which
the Buyer is exercising the Option (which number may not include any
fractional shares), and (ii) the names and denominations in which the
Option Shares are to be registered (the "Option Notice"). The Option
Notice shall also state whether Buyer is electing to delay the
effectiveness of the Option Notice until after the effectiveness of the
Shelf Registration Statement (as defined below). If the Option Notice
is so delayed, Buyer shall have the continuing right to withdraw the
Option Notice, provided once withdrawn, Buyer shall have no further
right to purchase the Option Shares hereunder.
<PAGE>
(c) The closing price of the Company's Common Stock on the
American Stock Exchange on the day the Company receives the Option
Notice (or if such date is not a business day, the closing price on the
immediately preceding business day) shall be referred to herein as the
"Trigger Price". If on the business day immediately preceding the date
Buyer receives the Option Shares the five-day average closing price
(the "Closing Price") of the Company's Common Stock on the American
Stock Exchange is in excess of the Trigger Price, then the Strike Price
shall be increased by an amount equal to the positive difference
between the Closing Price and the Trigger Price. For example, if Buyer
gives the Company the Option Notice on December 15, 1997 and the
closing price of the Company's Common Stock on such date is $30.00 per
share, and on the date the Option Shares are delivered to Buyer the
five-day average closing price of the Company's Common Stock is $32.00,
then the Strike Price shall be $28.00 per share.
(d) Buyer shall have the right to delay the date it purchases
all or any portion of the Option Shares to the date ninety (90) days
following the date that the Commission (as defined below) first
declares effective a registration statement (the "Shelf Registration
Statement") filed by the REIT for an offering of its Common Stock on a
delayed or continuous basis pursuant to Rule 415 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). At the
Buyer's election, any Option Shares sold to the Buyer shall be
registered under the Shelf Registration Statement. The Company shall
promptly notify Buyer of the filing and effectiveness of the Shelf
Registration Statement.
(e) Upon receipt of the Option Notice, the REIT shall arrange
to sell the Option Shares to Buyer, which arrangements may require
several days and which may include, without limitation, the preparation
of a prospectus supplement. The REIT shall endeavor in good faith to
complete such arrangements as quickly as is commercially reasonable.
The REIT shall pay all expenses associated with registering and selling
the Option Shares under the Securities Act. Upon the completion of such
arrangements, delivery of the Option Shares shall be made promptly by
the REIT to Buyer, against the irrevocable release of immediately
available funds for the amount of the purchase price therefor to such
account as the REIT shall specify. Buyer agrees that it shall pay all
stock transfer taxes, stamp duties and other similar taxes, if any,
payable upon the sale or delivery of the Option Shares together with
any commissions or underwriting discounts payable in connection
therewith.
(f) This Option shall be neither transferable nor assignable
by Buyer (other than to its corporate parent, Golf Hosts, Inc.
("GHI")).
(g) Prior to delivery of the Option Shares, Buyer shall not
have any of the rights of a shareholder with respect to the Option
Shares.
<PAGE>
1.4 In addition to the acquisition of the Securities, Buyer, or at
Buyer's option, GHI, shall have the right to acquire additional shares of Common
Stock in the REIT in accordance with the procedures set forth in Exhibit A
attached hereto (the "Contingent Securities").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BUYER
2.1 Buyer represents that it is an "accredited investor" as such term
is defined in Rule 501 ("Rule 501") of Regulation D promulgated under the
Securities Act and that it is able to bear the economic risk of an investment in
the Securities.
2.2 Buyer acknowledges that it has prior investment experience,
including investment in non-listed and non-registered securities, and the
ability and expertise to evaluate the merits and risks of such an investment on
its behalf.
2.3 Buyer hereby represents that it has (i) received the Offering
Documents and (ii) carefully reviewed the Offering Documents.
2.4 Buyer hereby represents that it has been furnished by the Company
during the course of this transaction with all information regarding the Company
which it has requested or desired to know; that it has been afforded the
opportunity to ask questions of, and receive answers from, duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering, and has received any additional information which it
has requested.
2.5 Buyer hereby acknowledges that the offering of Securities has not
been reviewed by, and the fairness of such Securities has not been determined
by, the United States Securities and Exchange Commission ("Commission") or any
state regulatory authority, since the Offering is intended to be a nonpublic
offering pursuant to Section 4(2) of the Act. Buyer represents that the
Securities being purchased by it are being purchased for its own account, for
investment and not for distribution of the Securities to others.
2.6 Buyer understands that the Securities have not been registered
under the Securities Act or any state securities or "blue sky" laws and are
being sold in reliance on exemptions from the registration requirements of such
Act and such laws. Buyer further understands that resale of the Units is
restricted pursuant to the terms of the Partnership Agreement.
2.7 The undersigned, if acting in a representative or fiduciary
capacity, has full power and authority to execute and deliver this Agreement, to
make the representations and warranties specified herein, and to consummate the
transactions contemplated herein on behalf of the subscribing partnership,
trust, corporation or other entity for which the undersigned is acting and such
partnership, trust, corporation, or other entity has full right and power to
subscribe for Securities and perform its obligations pursuant to this Agreement.
<PAGE>
2.8 The Company may rely, and shall be protected in acting upon, any
papers or other documents which may be submitted to it by the Buyer in
connection with the Securities and which are believed by it to be genuine and to
have been signed or presented by the proper party or parties, and the Company
shall not have any liability or responsibility with respect to the form,
execution or validity thereof.
2.9 Buyer hereby represents that the address set forth on Page 1 is
Buyer's principal business address.
2.10 Buyer represents that all funds used to purchase the Securities
satisfy one of the following:
(a) no part of such funds constitutes assets of any "employee
benefit plan," as such term is defined in section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"); or
(b) to the extent that any part of such funds constitutes
assets of any employee benefit plan (or its related trust), the use of
such funds would not constitute a nonexempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Internal Revenue
Code.
2.11 The foregoing representations, warranties and agreements, together
with all other representations and warranties made or given by the undersigned
to the Company in any other written statement or document delivered in
connection with the transactions contemplated hereby, shall be true and correct
in all respects on and as of the date of this Agreement as if made on and as of
such date and shall survive such date and if there should be any material change
in such information prior to the Closing Date of the sale of the Securities, the
undersigned will immediately furnish such revised or corrected information to
the Company. Buyer understands that the Company will rely upon the accuracy and
truth of the foregoing representations, warranties and agreements, and Buyer
hereby consents to such reliance.
2.12 At the Closing, and as a condition thereto, Buyer and Golf Hosts,
Inc., a Florida corporation and the parent company of Buyer, shall execute and
deliver to the Company a shareholder agreement providing that Buyer and Golf
Hosts, Inc. shall vote the Common Shares for a period of time in accordance with
the recommendations of the Board of Directors of the Company, in the form of
Exhibit B, attached hereto.
<PAGE>
ARTICLE III
REPRESENTATIONS BY, AND COVENANTS OF, THE
PARTNERSHIP AND THE REIT
The Partnership and the REIT, jointly and severally, represent, warrant
and, where applicable, covenant to Buyer that prior to the consummation of the
Offering and at the Closing Date:
3.1 Each of the Partnership and the REIT is duly formed or organized,
validly existing and in good standing under the laws of the state of its
formation and has all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and to enter into
and perform its obligations under this Agreement and any document or instrument
required to be executed and delivered on behalf of the Partnership and the REIT
hereunder.
3.2 The execution and delivery of this Agreement and the performance by
each of the Partnership and the REIT of its obligations hereunder do not and
will not contravene, or constitute a default under, any provisions of applicable
law or regulation, any agreement, judgment, injunction, order, decree or other
instrument binding upon the Partnership or the REIT or result in the creation of
any lien or other encumbrance on any asset of the Partnership or the REIT.
3.3 There is no action, suit or proceeding, pending or known to be
threatened, against or affecting the Partnership or the REIT in any court or
before any arbitrator or before any administrative panel or otherwise that (a)
could materially and adversely affect the business, financial position or
results of operations of the Partnership or the REIT, or (b) could materially
and adversely affect the ability of the Partnership or the REIT to perform its
obligations hereunder, or under any document to be delivered pursuant hereto.
3.4 No act of bankruptcy has occurred with respect to the Partnership
or the REIT.
3.5 This Agreement has been, and each of the agreements and
certificates of the Partnership or the REIT to be delivered to Buyer at Closing
as provided herein will be, duly authorized by all necessary action on the part
of the Partnership or the REIT, has been duly executed and delivered by the
Partnership or REIT, as applicable, constitutes the valid and binding agreement
of the Partnership or REIT, as applicable, and is enforceable against the
Partnership or REIT, as applicable, in accordance with its terms. All action
required pursuant to this Agreement necessary to effectuate the transactions
contemplated herein has been, or will at Closing be, taken promptly and in good
faith by the Partnership and the REIT, as applicable, and their representatives
and agents.
3.6 The Units, and both the Common Shares and the Option Shares have
been duly and validly authorized by the Partnership and the Company,
respectively, and, when issued and delivered against payment of the purchase
price as provided herein, will be duly and validly issued, fully paid and
nonassessable. The Company has made all necessary filings in accordance with the
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
<PAGE>
3.7 The foregoing representations, warranties and agreements, together
with all other representations and warranties made or given by the Partnership
and the REIT to Buyer in any other written statement or document delivered in
connection with the transactions contemplated hereby, shall be true and correct
in all respects on and as of the date of this Agreement as if made on and as of
such date and shall survive such date and if there should be any material change
in such information prior to the Closing Date of the sale of the Securities, the
undersigned will immediately furnish such revised or corrected information to
Buyer. The Partnership and the REIT understand that Buyer will rely upon the
accuracy and truth of the foregoing representations, warranties and agreements,
and the Partnership and the REIT hereby consent to such reliance.
ARTICLE IV
MISCELLANEOUS
4.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor, or
sent by facsimile transmission and confirmed by telephone, to the following
addresses, or such other address as may be furnished to the other parties as
herein provided:
To the Company:
Golf Trust of America, Inc.
14 North Adger's Wharf
Charleston, South Carolina 29401
Tel.: (803) 723-4653
Fax: (803) 723-0479
Copy to:
O'Melveny & Myers LLP
Embarcadero Center West
275 Battery Street
San Francisco, CA 94111
Attn: Peter T. Healy, Esq.
Tel.: (415) 984-8833
Fax: (415) 984-8701
<PAGE>
To the Buyer:
Golf Host Resorts, Inc.
36750 U.S. Highway 19 North
Palm Harbor, Florida 34684
Attn: President
Tel.: (813) 942-2000
Fax: (813) 942-5579
Copies 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
Mr. Merrick R. Kleeman
Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, Connecticut 06830
Tel.: (203) 861-2100
Fax: (203) 861-2101
Unless otherwise expressly provided herein, notices shall be deemed to
have been given on the date of mailing, except notice of change of address,
which shall be deemed to have been given when received.
4.2 This Agreement shall not be changed, modified or amended except by
a writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
4.3 The undersigned hereby acknowledges and agrees that this Agreement
shall survive the death, incompetence, merger, disability, liquidation,
dissolution or other termination of the undersigned and shall be binding upon
and inure to the benefit of the parties and their respective heirs, executors,
administrators, successors, legal representatives and assigns. If the
undersigned is more than one person, the obligations of the undersigned
hereunder shall be joint and several and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and his or her heirs, executors,
administrators, successors, legal representatives and assigns.
4.4 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
<PAGE>
4.5 In order to discourage frivolous claims, the parties agree that
unless a claimant in any proceeding succeeds in establishing his or her claim
and recovering a judgment against another party (regardless of whether such
claimant succeeds against one of the other parties to the action), then the
other party shall be entitled to recover from such claimant all of its/their
legal costs and expenses relating to such proceeding and/or incurred in
preparation therefor.
4.6 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
4.7 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
4.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
4.9 This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Buyer:
GOLF HOST RESORTS, INC.,
a Colorado corporation
By:
Its:
By:
Its:
Partnership:
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc.,
a Maryland corporation
Its: General Partner
By:
Its:
REIT:
GOLF TRUST OF AMERICA, INC.,
a Maryland corporation
By:
Its:
<PAGE>
EXHIBIT A
PURCHASE PRICE FOR THE CONTINGENT ADDITIONAL
SECURITIES FORMULA
The purchase price for the Contingent Additional Securities shall be
calculated as provided in this Exhibit A.
A. Definitions. For purposes of this Exhibit A, the following terms
shall have the following meanings:
(1) "Adjusted Net Operating Income" means the Conversion Date
Net Operating Income divided by 1.135.
(2) "Applicable Twelve (12) Month Period" means the Conversion
Year.
(3) "Capitalization Rate" shall mean 10.47%.
(4) "Company" means Golf Trust of America, Inc.
(5) "Company's First Call FFO" means the consensus FFO per
share estimate for the Company for the calendar year which includes the
Conversion Date, subtracting the Company's capital expenditure reserve
per share as estimated for that year as such estimate is reported by
First Call (or, if First Call is no longer in general use within the
securities industry, by such other reporting service as is then in
general use within the securities industry) divided by the average of
the Company's closing share price for the thirty (30) trading days
immediately preceding the Conversion Date.
(6) "Conversion Date" means the April 30 following the date on
which the Company receives written notice that the Buyer has
irrevocably elected to receive the Contingent Additional Securities.
(7) "Conversion Date Capitalization Rate" shall mean the
Company's First Call FFO, plus 200 basis points (but in no event less
than the Capitalization Rate).
(8) "Conversion Date Net Operating Income" means the Gross
Operating Revenue for the Property less the Gross Operating Expenses
for the Property for the Conversion Year.
(9) "Conversion Year" means the calendar year immediately
preceding the Conversion Date.
<PAGE>
(10) "Conversion Notice" shall mean a written notice delivered
by Buyer to the Company whereby Buyer elects to receive the Contingent
Additional Securities. The Conversion Notice may only be given once and
must be given on or before April 15 of a calendar year. If the
Conversion Notice is not given on or before April 15, 2002, Buyer's
right to receive the Contingent Additional Units shall automatically
and irrevocably terminate. The Conversion Notice may not be given prior
to March 1, 1999.
(11) "Gross Operating Expenses" means the gross operating
expenses of the Property for the Applicable Twelve (12) Month Period,
calculated in accordance with generally accepted accounting principles
consistently applied. For purposes of calculating Gross Operating
Expenses, the Company may make discretionary adjustments on a line item
basis to reflect stabilized Gross Operating Expenses, including the
following adjustments:
(a) annual capital replacement reserves shall be
included, as reasonably determined by the Company;
(b) annual cash expenditures (including depreciation
to the extent not adjusted pursuant to subsection (a)) for
golf carts shall be included, as reasonably determined by the
Company;
(c) extraordinary expenditures (such as to repair
storm damage) which are not anticipated to recur in the
ordinary course shall be excluded, as reasonably determined by
the Company;
(d) other adjustments to reflect stabilized Gross
Operating Expenses, as reasonably determined by the Company
shall be made; and
(e) depreciation, amortization and debt service shall
be excluded.
For purposes of determining the Purchase Price for the Contingent
Additional Securities, Gross Operating Expenses will be adjusted upward
by the Company to the extent such expenses (or any major component
thereof) have decreased at a compound annual rate greater than 2% per
annum from the Base Year to the Conversion Year or more than 3% (on a
year-to-year basis) from the year immediately preceding the Conversion
Year, unless, the Company shall determine that such expense reductions
were of a nature so as to be reasonably expected to be sustained. Buyer
has advised the Company that it expects to reduce Gross Operating
Expenses at the Property as the result of the installation of new
management at the Property.
(12) "Gross Operating Revenue" means the gross operating
revenue of the Property, including revenue related to hotel operations,
the golf course operations, food and beverage operations and sale of
merchandise, for the Applicable Twelve (12) Month Period, calculated in
accordance with generally accepted accounting principles consistently
applied and calculated in accordance with the adjustments provided in
the Loan Agreement.
<PAGE>
For purposes of determining the Contingent Additional Securities, Gross
Operating Revenue will be adjusted downward to the extent such revenue
has increased by more than 5.0% from the year immediately preceding the
Conversion Year to the Conversion Year, unless the Company shall have
reasonably determined that such revenue increase can reasonably be
expected to be sustained. Factors to determine sustainability shall
include factors such as the creation of new demand generators (i.e.,
hotel development or condominium development) and the non-recurring
nature of any revenue (i.e., a one-time tournament fee). The Company
shall further retain the right to make downward adjustments to Gross
Operating Revenue so as to establish reasonable expectations of future
cash flow results.
(13) "Net Incremental Income Available for Contingent
Additional Securities" means the Adjusted Net Operating Income for the
Applicable Twelve (12) Month Period preceding the Conversion Date less
the mortgage payment made by the mortgagor of the Property for the same
period.
(14) "Property" means the operating golf courses and related
facilities commonly known as Innisbrook Golf Course.
(15) "Purchase Price for the Contingent Additional Securities"
means the Net Incremental Income Available for Contingent Additional
Securities divided by the Conversion Date Capitalization Rate.
B. Contingent Additional Securities
(1) Buyer shall have the right to purchase the number of
additional Securities (the "Contingent Additional Securities") by
delivering the Conversion Notice to Company; provided that the Buyer,
as mortgagor under the mortgage at the Property shall have paid
participating mortgage payments on an annual basis for the prior
calendar year. The number of Contingent Additional Securities shall
equal the Purchase Price for the Contingent Additional Securities
divided by the per share common stock price of the Company on the
Conversion Date.
(2) Within forty-five (45) days of the Conversion Date, the
Company shall deliver to Buyer the number of additional Securities in
the Company that equals the Purchase Price for the Contingent
Additional Securities divided by the per share common stock price of
the Company on the Conversion Date.
(3) Buyer or, at its option, GHI, shall have the right to
receive common stock of the Company as the Additional Securities
(rather than Units), to the extent the receipt of such common stock
does not violate the ownership limitations contained in the Articles of
Incorporation of the REIT or violate any restrictions on the pledge of
securities as security for borrowings under Regulation G issued by the
Board of Governors of the Federal Reserve Board.
<PAGE>
EXHIBIT B
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is dated as of June 20,
1997 and entered into by and between (A) GOLF TRUST OF AMERICA, INC., a Maryland
corporation ("Company"), and (B) GOLF HOST RESORTS, INC., a Colorado corporation
("Golf Host Resorts"), and GOLF HOSTS, INC., a Florida corporation and the
parent corporation of Golf Host Resorts ("Golf Hosts" and, together with Golf
Host Resorts, "Shareholders").
Preliminary Statements
WHEREAS, Company and Golf Host Resorts have entered into that certain
Securities Purchase Agreement, dated as of the date hereof (the "Securities
Purchase Agreement"), providing for the purchase of 159,326 shares (the "Common
Shares") of the common stock of the Company, par value $0.01 per share, by Golf
Host Resorts from Company;
WHEREAS, Golf Host Resorts intends to transfer the Common Shares to
Golf Hosts and the Company consents to such transfer; and
WHEREAS, it is a condition precedent to the sale of the Common Shares
under the Securities Purchase Agreement that Golf Hosts shall have granted the
Board of Directors a proxy to vote the Common Shares for the period set forth
herein and Shareholders shall have otherwise agreed to vote for such period the
Common Shares in accordance with the recommendation of the Board of Directors.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Company to enter into the Securities
Purchase Agreement and to make the sale of the Common Shares thereunder, the
parties hereto, intending legally to be bound, hereby covenant and agree as
follows:
SECTION I. DEFINITIONS. Except as otherwise herein expressly provided,
the following terms and phrases shall have the meanings set forth below:
"Board of Directors" means the Board of Directors of the
Company.
"Collateral" shall have the meaning given it in the Loan
Agreement.
<PAGE>
"Dispose" or "Disposition" (and any derivatives thereof) mean
and refer to (i) a voluntary or involuntary (including in connection
with death, divorce, bankruptcy or otherwise) sale, offer, assignment,
transfer, conveyance, pledge, hypothecation, contract or grant of any
option to sell (including, without limitation, any short sale),
establishment of an open "put equivalent position" within the meaning
of Rule 16a-1(h) under the Securities Exchange Act of 1934, or other
disposition of the subject securities, and (ii) any agreement, contract
or commitment to do any of the foregoing.
"Loan Agreement" means that certain loan agreement of even
date herewith by and between Golf Trust of America, L.P., a Delaware
limited partnership in which the Company is the sole general partner,
as lender, and Golf Host Resorts, as borrower.
"Person" means any individual, partnership, limited liability
company, corporation, trust or other entity.
"Pledged Shares" means 79,663 shares of the Common Shares.
"Proceeds" means whatever is receivable or received when the
Common Shares or proceeds are sold, exchanged, collected or otherwise
Disposed of, whether such Disposition is voluntary or involuntary, and
includes, without limitation, proceeds of any loan secured in whole or
in part by a pledge of the Common Shares.
"Release Date" shall have the meaning given it in the Loan
Agreement.
"Unpledged Shares" means 79,663 shares of the Common Shares.
SECTION II. VOTING
A. Grant of Proxy.
1. With regard to 53,108 shares of the Common Shares, Golf Hosts shall
grant to the Board of Directors a proxy, substantially in the form attached
hereto as Exhibit A, which according to its terms both shall remain in effect
and shall be irrevocable by Golf Hosts until the one (1) year anniversary of the
date of the sale of the Common Shares under the Securities Purchase Agreement.
2. With regard to 53,109 shares of the Common Shares not made the
subject of the proxy referred to in the immediately preceding subsection II.A.1,
Golf Hosts shall grant to the Board of Directors a proxy, substantially in the
form attached hereto as Exhibit B, which according to its terms both shall
remain in effect and shall be irrevocable by Golf Hosts until the two (2) year
anniversary of the date of the sale of the Common Shares under the Securities
Purchase Agreement.
3. With regard to 53,109 shares of the Common Shares not made the
subject of the proxy referred to in the immediately preceding subsections II.A.1
and II.A.2,
<PAGE>
Golf Hosts shall grant to the Board of Directors a proxy, substantially in the
form attached hereto as Exhibit C, according to its terms both shall remain in
effect and shall be irrevocable by Golf Hosts until the three (3) year
anniversary of the date of the sale of the Common Shares under the Securities
Purchase Agreement.
B. Shareholders Agreement. Without in any way limiting Golf Hosts'
obligations under the preceding subsection II.A, Shareholders agree that if for
any reason the right to vote any of the Common Shares that would otherwise be
the subject of a proxy grant pursuant to subsection II.A is nonetheless
exercisable by either Shareholder or other holder of the Common Shares, such
Shareholder or such other holder of the Common Shares will vote (or cause to be
voted) all of such Common Shares in accordance with the recommendation of the
Board of Directors.
C. Restrictions on Other Agreements. Shareholders shall not grant any
proxy or enter into or agree to be bound by any voting trust with respect to the
Common Shares nor shall Shareholders enter into any agreement or arrangement of
any kind with any Person with respect to the Common Shares on terms inconsistent
with the provisions of this Agreement, including, without limitation, agreements
or arrangements with respect to the voting of the Common Shares that are then
subject to the terms of Section II.A.
SECTION III. RESTRICTIONS ON DISPOSITION
A. Lock-Up. Except as expressly permitted under the Loan Agreement,
including Section 2.11(c) thereof, and Section III.B below, Shareholders hereby
agree that they will not, without the prior written consent of Company (which
consent may be withheld in Company's sole discretion), directly or indirectly,
Dispose of the Common Shares or publicly announce the undersigned's intention to
do any of the foregoing, for a period commencing on the date hereof and
continuing (i) with respect to 100% of the Common Shares through the close of
trading on the one (1) year anniversary of the date of the sale of the Common
Shares under the Securities Purchase Agreement, and (ii) with respect to 50% of
the Common Shares through the close of trading on the two (2) year anniversary
of the date of the sale of the Common Shares under the Securities Purchase
Agreement. The Company acknowledges that Shareholder intends to transfer the
Common Shares to its corporate parent company, Golf Hosts, Inc., a Florida
corporation, and the Company consents to such transfer.
B. Release of Lock-Up and Voting Proxy. The restrictions on voting and
sale provided in Section II and Section III shall not apply following any bona
fide transfer of any shares of the Pledged Shares or the Unpledged Shares
(including transfers following the exercise of any rights of any pledgee of any
such shares).
SECTION IV. MISCELLANEOUS
A. General Disposition Restriction. Subject to the rights of
Shareholders set forth in Section 2.11(c) of the Loan Agreement, Shareholders
covenant and agree that they
<PAGE>
will not Dispose or cause the Disposition of any of the Common Shares or any
interest therein except in accordance with the terms of this Agreement. Any
attempted disposition not in accordance with the terms of this Agreement shall
be null and void and of no force or effect. Shareholders also agree and hereby
consent to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of shares of Common Shares or
securities convertible into or exchangeable or exercisable for Common Shares
held by Shareholders except in compliance with this Agreement.
B. Legend on Certificates. Shareholder agrees that a legend
substantially to the following effect shall be imprinted on every certificate
evidencing ownership of any of the Common Shares, and that Shareholders shall
not Dispose or cause the Disposition of any of the Common Shares unless such
legend is displayed on the certificates evidencing ownership thereof:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN A SHAREHOLDER AGREEMENT DATED AS
OF JUNE 20, 1997 AND/OR THE PROVISIONS OF A LOAN AGREEMENT DATED AS OF
JUNE 20, 1997. ANY PURPORTED TRANSFER IN VIOLATION OF SUCH RESTRICTIONS
SHALL BE NULL, VOID AND OF NO EFFECT WHATSOEVER."
C. Further Assurances. From time to time after the date hereof, the
parties will, at their expense, and without further consideration, execute and
deliver such other documents and instruments and take such other actions as may
be reasonably requested to effect the purposes and intent of this Agreement.
D. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered, overnight couriered, or telecopied and confirmed to
the parties hereto as follows:
If to Company:
Golf Trust of America, Inc.
14 North Adger's Wharf
Charleston, SC 29401
Facsimile: (803) 723-0479
Attention: Mr. W. Bradley Blair, II
<PAGE>
with a copy to:
O'Melveny & Myers LLP
275 Battery Street, Suite 2600
San Francisco, CA 94111-3305
Facsimile: (415) 984-8701
Attention: Peter T. Healy, Esq.
If to Shareholders:
Golf Host Resorts, Inc.
36750 U.S. Highway 19 North
Palm Harbor, Florida 34684
Facsimile: (313) 942-5579
Attn: President
with copies to:
Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Facsimile: (203) 861-2101
Attn: Mr. Merrick R. Kleeman
and
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, NY 10019
Facsimile: (212) 262-1910
Attn: James B. Carlson, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
E. Rules of Construction. The following rules shall apply to the
construction and interpretation of this Agreement:
1. 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.
2. All references herein to particular articles, sections,
subsections, clauses or exhibits are references to articles, sections,
subsections, clauses or exhibits of this Agreement.
<PAGE>
3. The descriptive 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.
4. 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.
F. Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be severed and enforced to the extent possible or modified in
such a way as to make it enforceable, and the invalidity, illegality or
unenforceability thereof shall not affect the validity, legality or
enforceability of the remaining provisions of this Agreement.
G. Entire Agreement; Modification or Amendment. This Agreement
constitutes the entire agreement of the parties to this Agreement and supersedes
all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended or modified unless in writing by all of the parties
hereto, and no condition herein (express or implied) may be waived unless in
writing by the party whom the condition is meant to benefit.
H. Governing Law. This Agreement shall be governed in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed in such state.
I. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, and permitted assigns.
J. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
K. Equitable Relief. The parties hereto acknowledge and agree that in
the event of any breach of Section II by either of them, the other would be
irreparably harmed and could not be made whole by monetary damages. Accordingly,
the parties hereto agree (1) to waive the defense in any action for specific
performance that a remedy at law would be adequate, and (2) that the parties
hereto, in addition to any other remedy to which they may be entitled at law or
in equity, shall be entitled to compel specific performance of Section II in any
action to enforce it.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
GOLF TRUST OF AMERICA, INC.,
as Company
By: ____________________________
Its: ___________________________
GOLF HOST RESORTS, INC.,
as Shareholder
By: ____________________________
Its: ___________________________
GOLF HOSTS, INC.,
as Shareholder
By: ____________________________
Its: ___________________________
<PAGE>
EXHIBIT A
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of _______ by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the one (1) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate.
DATED: ____________________________, 19___.
No. of Shares: 53,108
GOLF HOSTS, INC.
By: ______________________________
Name: ____________________________
Its: _____________________________
<PAGE>
EXHIBIT B
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of _____________ by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the two (2) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate,
unless it shall have sooner terminated in whole or in part in accordance with
the terms and provisions of the Shareholder Agreement.
DATED: ____________________________, 19___.
No. of Shares: 53,109
GOLF HOSTS, INC.
By: _______________________________
Name: _____________________________
Its: ______________________________
<PAGE>
EXHIBIT C
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of _____________ by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the three (3) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate,
unless it shall have sooner terminated in whole or in part in accordance with
the terms and provisions of the Shareholder Agreement.
DATED: ____________________________, 19___.
No. of Shares: 53,109
GOLF HOSTS, INC.
By: _______________________________
Name: _____________________________
Its: ______________________________
<PAGE>
EXHIBIT K
SECURITIES PURCHASE AGREEMENT
GOLF TRUST OF AMERICA, L.P.
and
GOLF TRUST OF AMERICA, INC.
as Seller,
and
GOLF HOST RESORTS, INC.,
as Buyer
Dated: June 20, 1997
<PAGE>
EXECUTION COPY
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is dated as of June 20,
1997 and entered into by and between (A) GOLF TRUST OF AMERICA, INC., a Maryland
corporation ("Company"), and (B) GOLF HOST RESORTS, INC., a Colorado corporation
("Golf Host Resorts"), and GOLF HOSTS, INC., a Florida corporation and the
parent corporation of Golf Host Resorts ("Golf Hosts" and, together with Golf
Host Resorts, "Shareholders").
Preliminary Statements
WHEREAS, Company and Golf Host Resorts have entered into that certain
Securities Purchase Agreement, dated as of the date hereof (the "Securities
Purchase Agreement"), providing for the purchase of 159,326 shares (the "Common
Shares") of the common stock of the Company, par value $0.01 per share, by Golf
Host Resorts from Company;
WHEREAS, Golf Host Resorts intends to transfer the Common Shares to
Golf Hosts; and
WHEREAS, it is a condition precedent to the sale of the Common Shares
under the Securities Purchase Agreement that Golf Hosts shall have granted the
Board of Directors a proxy to vote the Common Shares for the period set forth
herein and Shareholders shall have otherwise agreed to vote for such period the
Common Shares in accordance with the recommendation of the Board of Directors.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Company to enter into the Securities
Purchase Agreement and to make the sale of the Common Shares thereunder, the
parties hereto, intending legally to be bound, hereby covenant and agree as
follows:
SECTION I. DEFINITIONS. Except as otherwise herein expressly provided,
the following terms and phrases shall have the meanings set forth below:
"Board of Directors" means the Board of Directors of the Company.
"Collateral" shall have the meaning given it in the Loan Agreement.
<PAGE>
"Dispose" or "Disposition" (and any derivatives thereof) mean and refer
to (i) a voluntary or involuntary (including in connection with death, divorce,
bankruptcy or otherwise) sale, offer, assignment, transfer, conveyance, pledge,
hypothecation, contract or grant of any option to sell (including, without
limitation, any short sale), establishment of an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
or other disposition of the subject securities, and (ii) any agreement, contract
or commitment to do any of the foregoing.
"Loan Agreement" means that certain loan agreement of even date
herewith by and between Golf Trust of America, L.P., a Delaware limited
partnership in which the Company is the sole general partner, as lender, and
Golf Host Resorts, as borrower.
"Person" means any individual, partnership, limited liability company,
corporation, trust or other entity.
"Pledged Shares" means 79,663 shares of the Common Shares.
"Proceeds" means whatever is receivable or received when the Common
Shares or proceeds are sold, exchanged, collected or otherwise Disposed of,
whether such Disposition is voluntary or involuntary, and includes, without
limitation, proceeds of any loan secured in whole or in part by a pledge of the
Common Shares.
"Release Date" shall have the meaning given it in the Loan Agreement.
"Unpledged Shares" means 79,663 shares of the Common Shares.
SECTION II. VOTING
A. Grant of Proxy.
1. With regard to 53,108 shares of the Common Shares, Golf Hosts shall
grant to the Board of Directors a proxy, substantially in the form attached
hereto as Exhibit A, which according to its terms both shall remain in effect
and shall be irrevocable by Golf Hosts until the one (1) year anniversary of the
date of the sale of the Common Shares under the Securities Purchase Agreement.
2. With regard to 53,109 shares of the Common Shares not made the
subject of the proxy referred to in the immediately preceding subsection II.A.1,
Golf Hosts shall grant to the Board of Directors a proxy, substantially in the
form attached hereto as Exhibit B, which according to its terms both shall
remain in effect and shall be irrevocable by Golf Hosts until the two (2) year
anniversary of the date of the sale of the Common Shares under the Securities
Purchase Agreement.
3. With regard to 53,109 shares of the Common Shares not made the
subject of the proxy referred to in the immediately preceding subsections II.A.1
and
<PAGE>
II.A.2, Golf Hosts shall grant to the Board of Directors a proxy, substantially
in the form attached hereto as Exhibit C, according to its terms both shall
remain in effect and shall be irrevocable by Golf Hosts until the three (3) year
anniversary of the date of the sale of the Common Shares under the Securities
Purchase Agreement.
B. Shareholders Agreement. Without in any way limiting Golf Hosts'
obligations under the preceding subsection II.A, Shareholders agree that if for
any reason the right to vote any of the Common Shares that would otherwise be
the subject of a proxy grant pursuant to subsection II.A is nonetheless
exercisable by either Shareholder or other holder of the Common Shares, such
Shareholder or such other holder of the Common Shares will vote (or cause to be
voted) all of such Common Shares in accordance with the recommendation of the
Board of Directors.
C. Restrictions on Other Agreements. Shareholders shall not grant any
proxy or enter into or agree to be bound by any voting trust with respect to the
Common Shares nor shall Shareholders enter into any agreement or arrangement of
any kind with any Person with respect to the Common Shares on terms inconsistent
with the provisions of this Agreement, including, without limitation, agreements
or arrangements with respect to the voting of the Common Shares.
SECTION III. RESTRICTIONS ON DISPOSITION
A. Lock-Up. Except as expressly permitted under the Loan Agreement and
Section III.B below, Shareholders hereby agree that they will not, without the
prior written consent of Company (which consent may be withheld in Company's
sole discretion), directly or indirectly, Dispose of the Common Shares or
publicly announce the undersigned's intention to do any of the foregoing, for a
period commencing on the date hereof and continuing (i) with respect to 100% of
the Common Shares through the close of trading on the one (1) year anniversary
of the date of the sale of the Common Shares under the Securities Purchase
Agreement, and (ii) with respect to 50% of the Common Shares through the close
of trading on the two (2) year anniversary of the date of the sale of the Common
Shares under the Securities Purchase Agreement.
B. Release of Lock-Up and Voting Proxy. The restrictions on voting and
sale provided in Section II and Section III shall not apply following any bona
fide transfer of any shares of the Pledged Shares or the Unpledged Shares
(including transfers following the exercise of any rights of any pledgee of any
such shares).
<PAGE>
SECTION IV. MISCELLANEOUS
A. General Disposition Restriction. Subject to the rights of
Shareholders set forth in Section 2.11(c) of the Loan Agreement, Shareholders
covenant and agree that they will not Dispose or cause the Disposition of any of
the Common Shares or any interest therein except in accordance with the terms of
this Agreement. Any attempted disposition not in accordance with the terms of
this Agreement shall be null and void and of no force or effect. Shareholders
also agree and hereby consent to the entry of stop transfer instructions with
the Company's transfer agent and registrar against the transfer of shares of
Common Shares or securities convertible into or exchangeable or exercisable for
Common Shares held by Shareholders except in compliance with this Agreement.
B. Legend on Certificates. Shareholder agrees that a legend
substantially to the following effect shall be imprinted on every certificate
evidencing ownership of any of the Common Shares, and that Shareholders shall
not Dispose or cause the Disposition of any of the Common Shares unless such
legend is displayed on the certificates evidencing ownership thereof:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN A SHAREHOLDER AGREEMENT DATED AS
OF ______________ AND/OR THE PROVISIONS OF A LOAN AGREEMENT DATED AS OF
_________, 1997. ANY PURPORTED TRANSFER IN VIOLATION OF SUCH
RESTRICTIONS SHALL BE NULL, VOID AND OF NO EFFECT WHATSOEVER."
C. Further Assurances. From time to time after the date hereof, the
parties will, at their expense, and without further consideration, execute and
deliver such other documents and instruments and take such other actions as may
be reasonably requested to effect the purposes and intent of this Agreement.
D. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to Company:
Golf Trust of America, Inc.
14 North Adger's Wharf
Charleston, SC 29401
Facsimile: (803) 723-0479
Attention: Mr. W. Bradley Blair, II
<PAGE>
with a copy to:
O'Melveny & Myers LLP
275 Battery Street, Suite 2600
San Francisco, CA 94111-3305
Facsimile: (415) 984-8701
Attention: Peter T. Healy, Esq.
If to Shareholders:
Golf Host Resorts, Inc.
36750 U.S. Highway 19 North
Palm Harbor, Florida 34684
Facsimile: (313) 942-5579
Attn: President
with copies to:
Starwood Capital Group, L.P.
Three Pickwick Plaza, Suite 250
Greenwich, CT 06830
Facsimile: (203) 861-2101
Attn: Mr. Merrick R. Kleeman
and
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, NY 10019
Facsimile: (212) 262-1910
Attn: James B. Carlson, Esq.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
E. Rules of Construction. The following rules shall apply to the
construction and interpretation of this Agreement:
1. 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.
2. All references herein to particular articles, sections,
subsections, clauses or exhibits are references to articles, sections,
subsections, clauses or exhibits of this Agreement.
<PAGE>
3. The descriptive 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.
4. 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.
F. Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be severed and enforced to the extent possible or modified in
such a way as to make it enforceable, and the invalidity, illegality or
unenforceability thereof shall not affect the validity, legality or
enforceability of the remaining provisions of this Agreement.
G. Entire Agreement; Modification or Amendment. This Agreement
constitutes the entire agreement of the parties to this Agreement and supersedes
all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended or modified unless in writing by all of the parties
hereto, and no condition herein (express or implied) may be waived unless in
writing by the party whom the condition is meant to benefit.
H. Governing Law. This Agreement shall be governed in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed in such state.
I. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, and permitted assigns.
J. Counterparts. This Agreement may be executed in one ore more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
K. Equitable Relief. The parties hereto acknowledge and agree that in
the event of any breach of Section II by either of them, the other would be
irreparably harmed and could not be made whole by monetary damages. Accordingly,
the parties hereto agree (1) to waive the defense in any action for specific
performance that a remedy at law would be adequate, and (2) that the parties
hereto, in addition to any other remedy to which they may be entitled at law or
in equity, shall be entitled to compel specific performance of Section II in any
action to enforce it.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
GOLF TRUST OF AMERICA, INC.,
as Company
By: ________________________________
Its: _______________________________
GOLF HOST RESORTS, INC.,
as Shareholder
By: _________________________________
Its: ________________________________
GOLF HOSTS, INC.,
as Shareholder
By: _________________________________
Its: ________________________________
<PAGE>
EXHIBIT A
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of _____________ by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the one (1) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate.
DATED: ____________________________, 19___.
Number
Certificate No. of Shares Class Shareholder
- --------------- --------- ----- -----------
53,108
GOLF HOSTS, INC.
By: ______________________________
Name: ____________________________
Its: _____________________________
<PAGE>
EXHIBIT B
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of _____________ by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the two (2) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate,
unless it shall have sooner terminated in whole or in part in accordance with
the terms and provisions of the Shareholder Agreement.
DATED: ____________________________, 19___.
Number
Certificate No. of Shares Class Shareholder
- --------------- --------- ----- -----------
53,109
GOLF HOSTS, INC.
By: ______________________________
Name: ____________________________
Its: _____________________________
<PAGE>
EXHIBIT C
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of _____________ by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the three (3) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate,
unless it shall have sooner terminated in whole or in part in accordance with
the terms and provisions of the Shareholder Agreement.
DATED: ____________________________, 19___.
Number
Certificate No. of Shares Class Shareholder
- --------------- --------- ----- -----------
53,109
GOLF HOSTS, INC.
By: ______________________________
Name: ____________________________
Its: _____________________________
<PAGE>
PROXY (ONE YEAR)
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of June 20, 1997 by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the one (1) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate.
DATED: ____________________________, 19___.
No. of Shares: 53,108
GOLF HOSTS, INC.
By: ______________________________
Name: ____________________________
Its: _____________________________
<PAGE>
PROXY (TWO YEAR)
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of June 20, 1997 by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the two (2) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate,
unless it shall have sooner terminated in whole or in part in accordance with
the terms and provisions of the Shareholder Agreement.
DATED: ____________________________, 19___.
No. of Shares: 53,109
GOLF HOSTS, INC.
By: ______________________________
Name: ____________________________
Its: _____________________________
<PAGE>
PROXY (THREE YEAR)
The undersigned, as record owner of the securities of Golf Trust of
America, Inc., a Maryland corporation (the "Company"), which are described
below, hereby revokes any previous proxies and appoints the Board of Directors
of the Company (the "Board") as the proxy of the undersigned to attend any and
all meetings of the shareholders of the corporation and to represent, vote,
execute consents and waivers and otherwise to act for the undersigned in the
same manner and with the same effect as if the undersigned were personally
present at any such meeting and voting the shares or personally acting on any
matters submitted to shareholders for approval or consent.
The undersigned authorizes such proxy to substitute any other person to
act hereunder, to revoke any such substitution, and to file this proxy and any
substitution or revocation with the Secretary of the Company.
This proxy is granted pursuant to that certain Shareholder Agreement,
dated as of June 20, 1997 by and between Company and the undersigned in order to
induce Company to sell shares of its common stock to the undersigned pursuant to
that certain Securities Purchase Agreement, of even date therewith. The
undersigned hereby acknowledges that the Board has a continuing interest in the
shares to be voted under the proxy and in the Company generally and in its
assets and liabilities.
This proxy shall be irrevocable and shall remain in force and effect
until the three (3) year anniversary of the sale of shares which are the subject
hereof by the Company to the undersigned, at which time it shall terminate,
unless it shall have sooner terminated in whole or in part in accordance with
the terms and provisions of the Shareholder Agreement.
DATED: ____________________________, 19___.
No. of Shares: 53,109
GOLF HOSTS, INC.
By: ______________________________
Name: ____________________________
Its: _____________________________
<PAGE>
EXHIBIT G
STOCK OPTIONS PLEDGE AGREEMENT
THIS STOCK OPTIONS PLEDGE AGREEMENT (this "Agreement") is entered into
as of this 3rd day of October, 1997, by and between (i) GOLF TRUST OF AMERICA,
L.P., a Delaware limited partnership ("Secured Party"), and (ii) GOLF HOSTS,
INC., a Florida corporation ("Pledgor").
RECITALS:
This Agreement is entered into based on the following understandings:
A. Secured Party and Lost Oaks, L.P. have entered into a lease dated as
of October 3, 1997, relating to the Tarpon Woods Golf and Country Club (the
"Lease").
B. Pledgor has an option to acquire Landlord's Shares (as defined
below) pursuant to a Securities Purchase Agreement with Secured Party (the
"Option Agreement").
C. As a condition to Secured Party entering into the Lease, Secured
Party has required that Pledgor pledge the Landlord's Shares (as hereinafter
defined) as security for the Obligations (as hereinafter defined).
1. DEFINITIONS
a. Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Lease.
b. The following terms shall have the indicated meanings:
"Agreement" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Common Stock" means shares of common stock, par value $0.01,
of Golf Trust of America, Inc., a Maryland corporation.
"Event of Default" has the meaning set forth in Section 13(a)
of this Agreement.
"Landlord's Shares" means, collectively, the option held by
Pledgor to purchase 150,000 shares of Common Stock that Pledgor may
acquire upon the exercise of the Option Agreement, as such number of
Common Stock and partnership units
G-1
<PAGE>
may be increased or decreased pursuant to the terms hereof. Upon the
purchase by Pledgor of any of the shares of Common Stock, under said
option, only the Profit Portion of such stock shall be included in
Landlord's Shares.
"Obligations" has the meaning set forth in Section 2(a) of
this Agreement.
"Pledged Landlord's Shares" has the meaning set forth in
Section 2(a) of this Agreement.
"Pledgor" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Profit Portion" means, with respect to shares acquired by
Pledgor under its stock option agreement, that portion of such shares
acquired calculated by multiplying the total number of shares acquired
by a fraction, the numerator of which is the excess, if any, of the
market value of the stock on the acquisition date (the "Market Price")
over $26.00, and the denominator of which is the Market Price.
"Secured Party" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Security Fund" has the meaning set forth in Section 2(a) of
this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Secured Party and Pledgor hereby
agree as follows:
2. GRANT OF SECURITY INTEREST.
a. As security for the payment and performance of all obligations and
liabilities (including, without limitation, indemnities, fees and interest
thereon) of Pledgor, or any of Pledgor's direct or indirect subsidiaries or
Affiliates arising under the Lease, or in connection with any agreement,
instrument or extension contemplated by the Lease (collectively, the
"Obligations"), Pledgor hereby pledges, hypothecates and grants to Secured Party
a first and prior security interest in the Landlord's Shares owned by Pledgor
(the "Pledged Landlord's Shares"), together with, after an occurrence and during
the continuance of an Event of Default hereunder, any and all proceeds thereof,
including without limitation, any and all dividends, income, interest and
distributions earned from or attributable to the investment or deposit of the
Pledged Landlord's Shares (the Pledged Landlord's Shares, together with all of
the foregoing being collectively referred to herein as the "Security Fund").
Pledgor shall have the right to pledge, as
G-2
<PAGE>
substitute collateral, cash or other security in an amount equal to the fair
market value of the substituted shares. Prior to an Event of Default (defined
below) all dividends, income, interest and/or distributions earned from or
attributable to the investment or deposit of the Security Fund shall be payable
to Pledgor; following an Event of Default under the Lease such amounts shall be
added to and become a part of the Security Fund and shall only be disbursed in
accordance with the terms of this Agreement. The word "Obligations" is used
herein in its most comprehensive sense and includes without limitation any and
all debts, obligations and liabilities of Pledgor, Pledgor or any of Pledgor's
direct or indirect subsidiaries arising under the Lease or this Agreement, now
or hereafter made, incurred or created, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether Pledgor, Pledgor or any of
Pledgor's direct or indirect subsidiaries may be liable individually or jointly,
or whether recovery upon such Obligations may be or hereafter become
unenforceable.
b. Pledgor shall execute and deliver to Secured Party such financing
and continuation statements covering the Security Fund and take such other
actions as Secured Party may from time to time require to perfect and continue
the perfection of Secured Party's security interest in the Security Fund.
3. CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS.
This is a continuing agreement and all rights, powers and remedies hereunder
shall apply to all past, present and future obligations of Pledgor to Secured
Party under the Lease. This Agreement shall not terminate except in accordance
with its terms or Secured Party's written release of Pledgor from its
Obligations under this Agreement.
4. SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF
LIABILITY. This Agreement is in full force and effect and is binding on Pledgor
as of the date written below, regardless of whether Secured Party obtains
additional collateral or any guaranties from others or takes any other action
contemplated by Pledgor. Pledgor waives the benefit of any statute of
limitations affecting Pledgor's liability hereunder or the enforcement thereof,
and Pledgor agrees that any payment of any Obligations or other act which shall
toll any statute of limitations applicable thereto shall similarly operate to
toll such statute of limitations applicable to Pledgor's liability under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES.
a. Pledgor represents and warrants to Secured Party that: (i) Pledgor
is the owner, directly or indirectly, and has possession or control of the
Pledged Landlord's Shares; (ii) Pledgor has the right to pledge the Pledged
Landlord's Shares; (iii) the Pledged Landlord's Shares are genuine, free from
liens, adverse claims, setoffs, default, prepayment,
G-3
<PAGE>
defenses and conditions precedent of any kind or character, except as previously
disclosed to Secured Party in writing by Pledgor; (iv) specifically with respect
to Pledged Landlord's Shares consisting of investment securities, instruments,
chattel paper, documents, contracts, insurance policies or any like property,
all persons appearing to be obligated thereon have authority and capacity to
contract and are bound as they appear to be, and the same comply with applicable
laws concerning form, content and manner of preparation and execution; (v) all
statements contained herein and, where applicable, in the Pledged Landlord's
Shares are true and complete; (vi) no financing statement covering any of the
Pledged Landlord's Shares and naming any secured party other than Secured Party,
is on file in any public office; and (vii) the pledge, assignment and delivery
of the Pledged Landlord's Shares pursuant to this Agreement creates a valid lien
and a security interest in the Pledged Landlord's Shares.
6. COVENANTS OF PLEDGOR.
a. Pledgor Agrees in General: (i) to indemnify Secured Party against
all losses, claims, demands, liabilities and expenses of every kind caused by
property subject hereto, excepting losses relating to the decrease in the market
value of the Pledged Landlord's Shares; (ii) to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Secured Party any time after
the occurrence of an Event of Default in the realization, enforcement and
exercise of its rights, powers and remedies hereunder; (iii) to permit Secured
Party to exercise its powers; (iv) to execute and deliver such documents as
Secured Party deems necessary to create, perfect and continue the security
interests contemplated hereby; and (v) not to change its chief place of business
or the place where Pledgor keeps any records concerning the Pledged Landlord's
Shares without first giving Secured Party written notice of the address to which
Pledgor is moving same.
b. Pledgor Agrees with Regard to the Security Fund: (i) not to permit
any lien on the Security Fund except in favor of Secured Party; (ii) not to
withdraw any funds from any deposit account pledged to Secured Party hereunder
without Secured Party's prior written consent; (iii) not to sell, hypothecate or
otherwise dispose of any of the Pledged Landlord's Shares or any interest
therein, without the prior written consent of Secured Party; (iv) to keep, in
accordance with generally accepted accounting principles, complete and accurate
records regarding all Pledged Landlord's Shares and to permit Secured Party to
inspect the same at any reasonable time; (v) if requested by Secured Party
following an Event of Default to receive and use reasonable diligence to collect
proceeds from the Pledged Landlord's Shares, in trust and as part of the
Security Fund to be held in accordance with Section 2(a) above; (vi) not to
commingle Pledged Landlord's Shares with other property; (vii) to provide any
service and do any other acts or things necessary to keep the Pledged Landlord's
Shares free and clear of all
G-4
<PAGE>
defenses, rights of offset and counterclaims; and (viii) if the Pledged
Landlord's Shares consists of securities and so long as no Event of Default
exists, to vote said securities and to give consents, waivers and ratifications
with respect thereto, provided that no vote shall be cast or consent, waiver or
ratification given or action taken which would impair Secured Party's interest
in the Security Fund or be inconsistent with or violate any provisions of this
Agreement.
7. POWERS OF SECURED PARTY. Pledgor appoints Secured Party its true
attorney in fact to perform any of the following powers, which are coupled with
an interest and are irrevocable until this Agreement has been terminated
pursuant to its terms and may be exercised from time to time by Secured Party's
officers and employees: (a) to perform any obligation of Pledgor hereunder in
Pledgor's name or otherwise; (b) to notify any person obligated on any security,
instrument or other document subject to this Agreement of Secured Party's rights
hereunder; (c) to collect by legal proceedings or otherwise all dividends,
interest, principal or other sums now or hereafter payable upon or on account of
the Security Fund; (d) to enter into any extension, reorganization, deposit,
merger or consolidation agreement, or any other agreement relating to or
affecting the Security Fund and in connection therewith to deposit or surrender
control of the Security Fund to accept other property in exchange for the
Security Fund, and to do and perform such acts and things as Secured Party may
deem proper, with any money or property received in exchange for the Security
Fund at Secured Party's option, to be applied to the Obligations or held by
Secured Party under this Agreement; (e) to make any compromise or settlement
Secured Party deems desirable or proper in respect of the Security Fund; (f) to
insure, process and preserve the Security Fund; (g) to exercise all rights,
powers and remedies which Pledgor would have, but for this Agreement, under all
the Pledged Landlord's Shares subject to this Agreement; (h) to do all acts and
things and execute all documents in the name of Pledgor or otherwise that are
deemed by Secured Party as necessary, proper or convenient in connection with
the preservation, perfection or enforcement of its rights hereunder; and (i) to
execute and file in Pledgor's name any financing statements and amendments
thereto required to perfect Secured Party's security interest hereunder;
provided, however, that until the occurrence and only during the continuation of
an Event of Default shall Secured Party have the right to exercise the power of
attorney for the purposes described in paragraphs (a), (c), (d), (e), (f), (g),
or (h). If an Event of Default has occurred and is continuing, any or all of the
Security Fund consisting of securities may be registered, without notice, in the
name of Secured Party or its nominee, and thereafter Secured Party or its
nominee may exercise, without notice, all voting and partnership rights at any
meeting of the partners of the issuer thereof, any and all rights of conversion,
exchange or subscription, or any other rights, privileges or options pertaining
to any Pledged Landlord's Shares all as if it were the absolute owner thereof.
The foregoing shall include, without limitation, the right of Secured Party or
its nominee to
G-5
<PAGE>
exchange, at its discretion, any and all Pledged Landlord's Shares upon the
merger, consolidation, reorganization, recapitalization or other readjustment of
the issuer thereof, or upon the exercise by the issuer thereof or Secured Party
of any right, privilege or option pertaining to any Pledged Landlord's Shares
and in connection therewith, the right to deposit and deliver any and all of the
Pledged Landlord's Shares with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as Secured
Party may determine. All of the foregoing rights, privileges or options may be
exercised without liability except to account for property actually received by
Secured Party. Secured Party shall have no duty to exercise any of the
foregoing, or any other rights, privileges or options with respect to the
Pledged Landlord's Shares and shall not be responsible for any failure to do so
or delay in so doing.
8. CASH COLLATERAL ACCOUNT.
Any money received by Secured Party in respect of the Security Fund
will be retained by Secured Party in an interest-bearing cash collateral account
and the same shall, for all purposes, be deemed part of the Security Fund
hereunder.
9. SECURED PARTY'S CARE AND DELIVERY OF PLEDGED LANDLORD'S SHARES;
ADDITIONAL PLEDGE AND RELEASE.
Secured Party's obligation with respect to the Security Fund in its
possession shall be strictly limited to the duty to exercise reasonable care in
the custody and preservation of the Security Fund. Such duty shall not include
any obligation to ascertain or to initiate any action with respect to maturity
dates, conversion, call or exchange rights, or offers to purchase the Pledged
Landlord's Shares or any similar matters; provided, however, that Secured Party
shall be obligated to inform Pledgor, in writing, of maturity dates, conversion,
call or exchange rights, or offers to purchase the Pledged Landlord's Shares or
any similar matters of which it has knowledge. Secured Party shall have no duty
to take any steps necessary to preserve the rights of Pledgor against prior
parties, or to initiate any action to protect against the possibility of a
decline in the market value of the Pledged Landlord's Shares. Secured Party
shall not be obligated to take any actions with respect to the Pledged
Landlord's Shares requested by Pledgor unless such request is made in writing
and Secured Party determines, in its reasonable discretion, that the requested
action would not unreasonably jeopardize the value of the Pledged Landlord's
Shares as security for the Obligations. Secured Party may at any time deliver
the Security Fund, or any part thereof, to Pledgor, and the receipt thereof by
Pledgor shall be a complete and full acquittance for the Security Fund so
delivered, and Secured Party shall thereafter be discharged from any liability
or responsibility therefor.
G-6
<PAGE>
10. PLEDGOR'S WAIVERS.
Pledgor waives any right to require Secured Party to (i) give notice of
the terms, time and place of any public or private sale of personal property
security held from Pledgor or any other person or otherwise comply with any
other provisions of Section 9-504 Uniform Commercial Code; (ii) pursue any other
remedy in Secured Party's power, including the disposition of any other
Collateral; or (iii) make any presentments or demands for performance, or give
any notices of nonperformance, protests, notices of protest or notices of
dishonor in connection with any obligations or evidences of indebtedness held by
Secured Party as security or which constitute in whole or in part the
Obligations secured hereunder, or in connection with the creation of new or
additional Obligations.
11. AUTHORIZATIONS TO SECURED PARTY. Pledgor authorizes Secured Party
either before or after revocation hereof, without notice or demand and without
affecting Pledgor's liability hereunder, from time to time to: (a) take and hold
security, other than the Pledged Landlord's Shares, for the payment of the
Obligations or any part thereof and exchange, enforce, waive and release the
Pledged Landlord's Shares, or any part thereof, or any such other security; (b)
after an Event of Default, apply the Pledged Landlord's Shares or any other
security and direct the order or manner of sale thereof, including without
limitation, a non-judicial sale permitted by the terms of this Agreement, as
Secured Party in its discretion may determine; (c) release or substitute any one
or more of the endorsers or guarantors of the Obligations, or any part thereof,
or any other parties thereto; and (d) apply payments received by Secured Party
from Pledgor to any Obligations of Pledgor to Secured Party, in such order as
Secured Party shall determine in its sole discretion, whether or not any such
Obligations is covered by this Agreement, and Pledgor hereby waives any
provision of law regarding application of payments which specifies otherwise.
12. PAYMENT OF TAXES, CHARGES, LIENS AND ASSESSMENTS.
Pledgor agrees to pay, prior to delinquency, all taxes, charges, liens
and assessments against the Security Fund, and upon the failure of Pledgor to do
so, Secured Party at its option may pay any of them and shall be the sole judge
of the legality or validity thereof and the amount necessary to discharge the
same. Any such payments made by Secured Party shall be obligations of Pledgor to
Secured Party, due and payable immediately upon demand, together with interest
at a rate determined in accordance with the provisions of Section 16 of this
Agreement, and shall be secured by the Security Fund, subject to all terms and
conditions of this Agreement.
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<PAGE>
13. EVENTS OF DEFAULT.
The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement: (a) any Event of Default under the Lease; or (b)
any representation or warranty made by Pledgor herein shall prove to be
incorrect in any material respect when made; or (c) Pledgor shall fail to
observe or perform any obligation or agreement contained herein after Secured
Party has provided written notice describing such failure and Pledgor has failed
within thirty (30) days of receipt of such notice to cure such failure, provided
if such cure cannot be completed within such thirty (30) day period, then such
cure period shall be extended for so long as Pledgor is diligently prosecuting
such cure to completion up to a maximum of ninety (90) days.
14. REMEDIES.
Upon the occurrence of any Event of Default, Secured Party shall have
and may exercise without demand any and all rights, powers, privileges and
remedies granted to a secured party upon default under the Uniform Commercial
Code or otherwise provided to Secured Party by law. All rights, powers,
privileges and remedies of Secured Party shall be cumulative. Secured Party may
exercise its right of setoff with respect to the Obligations in the same manner
as if the Obligations were unsecured. No delay, failure or discontinuance of
Secured Party in exercising any right, power, privilege or remedy hereunder
shall affect or operate as a waiver of such right, power, privilege or remedy;
nor shall any single or partial exercise of any such right, power, privilege or
remedy preclude, waive or otherwise affect any other or further exercise thereof
or the exercise of any other right, power, privilege or remedy. Any waiver,
permit, consent or approval of any kind by Secured Party of any default
hereunder, or any such waiver of any provisions or conditions hereof, must be in
writing and shall be effective only to the extent set forth in writing. While an
Event of Default exists: (a) Secured Party may, at any time and at Secured
Party's sole option, liquidate any time deposits pledged to Secured Party
hereunder, whether or not said time deposits have matured and notwithstanding
the fact that such liquidation may give rise to penalties for early withdrawal
of funds; (b) Secured Party may appropriate the Security Fund and apply all
proceeds toward repayment of the Obligations in such order as Secured Party may
from time to time elect or, at Secured Party's sole option, place any proceeds
in a cash collateral account; and (c) at Secured Party's request, Pledgor will
assemble and deliver all Pledged Landlord's Shares not already in the possession
of Secured Party, and books and records pertaining thereto, to Secured Party at
a reasonably convenient place designated by Secured Party. It is agreed that
public or private sales, for cash or on credit, to a wholesaler or retailer or
investor, or user of property of the types subject to this Agreement, or public
auction, are all commercially reasonable since differences in the sales prices
generally realized in the different kinds of sales are ordinarily offset by the
differences in the costs and credit risks of such sales. For any part of the
Security Fund consisting of
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<PAGE>
securities, Secured Party shall be under no obligation to delay a sale of any
portion thereof for the period of time necessary to permit the issuer thereof to
register such securities for public sale under any applicable state or federal
law, even if the issuer thereof would agree to do so.
15. DISPOSITION OF PLEDGED LANDLORD'S SHARES.
Secured Party shall not transfer all or any part of the Pledged
Landlord's Shares or Security Fund except in connection with the exercise of
remedies as provided in Section 14 above. Any proceeds of any disposition of any
of the Pledged Landlord's Shares or any part thereof, shall be applied by
Secured Party to the payment of expenses incurred by Secured Party in connection
with the foregoing, including reasonable attorneys' fees, and the balance of
such proceeds shall be applied by Secured Party toward the payment of the
Obligations in such order of application as Secured Party may from time to time
elect.
16. COSTS, EXPENSES AND ATTORNEYS' FEES.
Pledgor shall pay to Secured Party immediately upon demand the full
amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys' fees incurred by Secured Party after the occurrence and
during the continuance of any Event of Default in exercising any right, power,
privilege or remedy conferred by this Agreement or in the enforcement thereof,
including any of the foregoing incurred in connection with any bankruptcy
proceeding relating to Pledgor or the valuation of the Pledged Landlord's Shares
including without limitation, the seeking of relief from or modification of the
automatic stay or the negotiation and drafting of a cash collateral order. All
of the foregoing shall be paid to Secured Party by Pledgor with interest at a
rate per annum equal to the lesser of ten percent (10%) or the maximum rate
permitted by law.
17. GOVERNING LAW; SUCCESSORS, ASSIGNS.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without reference to principles of conflicts
of laws (other than Section 5-1401 of the New York General Obligations Law) and
shall be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties.
18. SEVERABILITY OF PROVISIONS.
If any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such
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<PAGE>
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of
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<PAGE>
such provision or any remaining provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
PLEDGOR
GOLF HOSTS, INC., a Florida
corporation
By:
Name:
Its:
SECURED PARTY
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland
corporation
Its: General Partner
By:
Name:
Its:
By:
Name:
Its:
Agreed and Acknowledged:
GOLF HOSTS, INC.,
a Florida corporation
By:
Name:
Its:
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<PAGE>
EXHIBIT I
ADDITIONAL PLEDGE AGREEMENT
THIS ADDITIONAL PLEDGE AGREEMENT (this "Agreement") is entered into as
of this 3rd day of October, 1997, by and between (i) GOLF TRUST OF AMERICA,
L.P., a Delaware limited partnership ("Secured Party"), and (ii) GOLF HOSTS,
INC. ("Pledgor").
RECITALS:
This Agreement is entered into based on the following understandings:
A. Pursuant to that certain Lease (the "Lease") dated as of October 3,
1997, by and between Secured Party and Lost Oaks, L.P., a Delaware limited
partnership ("Lessee"), Secured Party has agreed to lease certain property to
Lessee.
B. As a condition to Secured Party entering into the Lease, Secured
Party has required that Pledgor pledge the Landlord's Shares (as hereinafter
defined) as security for the Obligations (as hereinafter defined).
1. DEFINITIONS
(a) Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Lease.
(b) The following terms shall have the indicated meanings:
"Agreement" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Common Stock" means shares of common stock, par value $0.01,
of Golf Trust of America, Inc., a Maryland corporation.
"Event of Default" has the meaning set forth in Section 13(a)
of this Agreement.
"Landlord's Shares" means, 70,980 shares of Common Stock.
"Obligations" has the meaning set forth in Section 2(a) of
this Agreement.
"Pledged Landlord's Shares" has the meaning set forth in
Section 2(a) of this Agreement.
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<PAGE>
"Pledgor" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Secured Party" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Security Fund" has the meaning set forth in Section 2(a) of
this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Secured Party and Pledgor hereby
agree as follows:
2. GRANT OF SECURITY INTEREST.
(a) As security for the payment and performance of all obligations and
liabilities (including, without limitation, indemnities, fees and interest
thereon) of Pledgor, or any of Pledgor's direct or indirect subsidiaries or
Affiliates arising under the Lease or in connection with any agreement,
instrument or extension contemplated by the Lease (collectively, the
"Obligations"), Pledgor hereby pledges, hypothecates and grants to Secured Party
a first and prior security interest in the Landlord's Shares owned by Pledgor
(the "Pledged Landlord's Shares"), together with, after an occurrence and during
the continuance of an Event of Default hereunder, any and all proceeds thereof,
including without limitation, any and all dividends, income, interest and
distributions earned from or attributable to the investment or deposit of the
Pledged Landlord's Shares (the Pledged Landlord's Shares, together with all of
the foregoing being collectively referred to herein as the "Security Fund").
Pledgor shall have the right to pledge, as substitute collateral, cash or other
security in an amount equal to the fair market value of the substituted shares.
Prior to an Event of Default (defined below) all dividends, income, interest
and/or distributions earned from or attributable to the investment or deposit of
the Security Fund shall be payable to Pledgor; following an Event of Default
under the Loan Agreement such amounts shall be added to and become a part of the
Security Fund and shall only be disbursed in accordance with the terms of this
Agreement. The word "Obligations" is used herein in its most comprehensive sense
and includes without limitation any and all debts, obligations and liabilities
of Pledgor, Pledgor or any of Pledgor's direct or indirect subsidiaries arising
under the Loan Agreement or this Agreement, now or hereafter made, incurred or
created, whether voluntary or involuntary and however arising, whether due or
not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether Pledgor, Pledgor or any of Pledgor's direct or
indirect subsidiaries may be liable individually or jointly, or whether recovery
upon such Obligations may be or hereafter become unenforceable.
(b) Pledgor shall execute and deliver to Secured Party such financing
and continuation statements covering the Security Fund and take such other
actions as Secured Party may from time to time require to perfect and continue
the perfection of Secured Party's security interest in the Security Fund.
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<PAGE>
3. CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS.
This is a continuing agreement and all rights, powers and remedies hereunder
shall apply to all past, present and future obligations of Pledgor to Secured
Party under the Loan Agreement. This Agreement shall not terminate except in
accordance with its terms or Secured Party's written release of Pledgor from its
Obligations under this Agreement.
4. SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF
LIABILITY. This Agreement is in full force and effect and is binding on Pledgor
as of the date written below, regardless of whether Secured Party obtains
additional collateral or any guaranties from others or takes any other action
contemplated by Pledgor. Pledgor waives the benefit of any statute of
limitations affecting Pledgor's liability hereunder or the enforcement thereof,
and Pledgor agrees that any payment of any Obligations or other act which shall
toll any statute of limitations applicable thereto shall similarly operate to
toll such statute of limitations applicable to Pledgor's liability under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES.
(a) Pledgor represents and warrants to Secured Party that: (i) Pledgor
is the owner, directly or indirectly, and has possession or control of the
Pledged Landlord's Shares; (ii) Pledgor has the right to pledge the Pledged
Landlord's Shares; (iii) the Pledged Landlord's Shares are genuine, free from
liens, adverse claims, setoffs, default, prepayment, defenses and conditions
precedent of any kind or character, except as previously disclosed to Secured
Party in writing by Pledgor; (iv) specifically with respect to Pledged
Landlord's Shares consisting of investment securities, instruments, chattel
paper, documents, contracts, insurance policies or any like property, all
persons appearing to be obligated thereon have authority and capacity to
contract and are bound as they appear to be, and the same comply with applicable
laws concerning form, content and manner of preparation and execution; (v) all
statements contained herein and, where applicable, in the Pledged Landlord's
Shares are true and complete; (vi) no financing statement covering any of the
Pledged Landlord's Shares and naming any secured party other than Secured Party,
is on file in any public office; and (vii) the pledge, assignment and delivery
of the Pledged Landlord's Shares pursuant to this Agreement creates a valid lien
and a security interest in the Pledged Landlord's Shares.
6. COVENANTS OF PLEDGOR.
(a) Pledgor Agrees in General: (i) to indemnify Secured Party against
all losses, claims, demands, liabilities and expenses of every kind caused by
property subject hereto, excepting losses relating to the decrease in the market
value of the Pledged Landlord's Shares; (ii) to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Secured Party any time after
the occurrence of an Event of Default in the realization, enforcement and
exercise of its rights, powers and remedies hereunder; (iii) to permit Secured
Party to exercise its powers; (iv) to execute and deliver such documents as
Secured Party deems necessary to create, perfect and continue the security
interests
I-3
<PAGE>
contemplated hereby; and (v) not to change its chief place of business or the
place where Pledgor keeps any records concerning the Pledged Landlord's Shares
without first giving Secured Party written notice of the address to which
Pledgor is moving same.
(b) Pledgor Agrees with Regard to the Security Fund: (i) not to permit
any lien on the Security Fund except in favor of Secured Party; (ii) not to
withdraw any funds from any deposit account pledged to Secured Party hereunder
without Secured Party's prior written consent; (iii) not to sell, hypothecate or
otherwise dispose of any of the Pledged Landlord's Shares or any interest
therein, without the prior written consent of Secured Party; (iv) to keep, in
accordance with generally accepted accounting principles, complete and accurate
records regarding all Pledged Landlord's Shares and to permit Secured Party to
inspect the same at any reasonable time; (v) if requested by Secured Party
following an Event of Default to receive and use reasonable diligence to collect
proceeds from the Pledged Landlord's Shares, in trust and as part of the
Security Fund to be held in accordance with Section 2(a) above; (vi) not to
commingle Pledged Landlord's Shares with other property; (vii) to provide any
service and do any other acts or things necessary to keep the Pledged Landlord's
Shares free and clear of all defenses, rights of offset and counterclaims; and
(viii) if the Pledged Landlord's Shares consists of securities and so long as no
Event of Default exists, to vote said securities and to give consents, waivers
and ratifications with respect thereto, provided that no vote shall be cast or
consent, waiver or ratification given or action taken which would impair Secured
Party's interest in the Security Fund or be inconsistent with or violate any
provisions of this Agreement.
7. POWERS OF SECURED PARTY. Pledgor appoints Secured Party its true
attorney in fact to perform any of the following powers, which are coupled with
an interest and are irrevocable until this Agreement has been terminated
pursuant to its terms and may be exercised from time to time by Secured Party's
officers and employees: (a) to perform any obligation of Pledgor hereunder in
Pledgor's name or otherwise; (b) to notify any person obligated on any security,
instrument or other document subject to this Agreement of Secured Party's rights
hereunder; (c) to collect by legal proceedings or otherwise all dividends,
interest, principal or other sums now or hereafter payable upon or on account of
the Security Fund; (d) to enter into any extension, reorganization, deposit,
merger or consolidation agreement, or any other agreement relating to or
affecting the Security Fund and in connection therewith to deposit or surrender
control of the Security Fund to accept other property in exchange for the
Security Fund, and to do and perform such acts and things as Secured Party may
deem proper, with any money or property received in exchange for the Security
Fund at Secured Party's option, to be applied to the Obligations or held by
Secured Party under this Agreement; (e) to make any compromise or settlement
Secured Party deems desirable or proper in respect of the Security Fund; (f) to
insure, process and preserve the Security Fund; (g) to exercise all rights,
powers and remedies which Pledgor would have, but for this Agreement, under all
the Pledged Landlord's Shares subject to this Agreement; (h) to do all acts and
things and execute all documents in the name of Pledgor or otherwise that are
deemed by Secured Party as necessary, proper or convenient in connection with
the preservation, perfection or enforcement of its rights hereunder; and (i) to
execute and file in Pledgor's name any financing statements and amendments
thereto required to perfect Secured Party's security interest hereunder;
provided, however, that until the occurrence and only during the continuation of
an Event of Default
I-4
<PAGE>
shall Secured Party have the right to exercise the power of attorney for the
purposes described in paragraphs (a), (c), (d), (e), (f), (g), or (h). If an
Event of Default has occurred and is continuing, any or all of the Security Fund
consisting of securities may be registered, without notice, in the name of
Secured Party or its nominee, and thereafter Secured Party or its nominee may
exercise, without notice, all voting and partnership rights at any meeting of
the partners of the issuer thereof, any and all rights of conversion, exchange
or subscription, or any other rights, privileges or options pertaining to any
Pledged Landlord's Shares all as if it were the absolute owner thereof. The
foregoing shall include, without limitation, the right of Secured Party or its
nominee to exchange, at its discretion, any and all Pledged Landlord's Shares
upon the merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof, or upon the exercise by the issuer thereof
or Secured Party of any right, privilege or option pertaining to any Pledged
Landlord's Shares and in connection therewith, the right to deposit and deliver
any and all of the Pledged Landlord's Shares with any committee, depository,
transfer agent, registrar or other designated agent upon such terms and
conditions as Secured Party may determine. All of the foregoing rights,
privileges or options may be exercised without liability except to account for
property actually received by Secured Party. Secured Party shall have no duty to
exercise any of the foregoing, or any other rights, privileges or options with
respect to the Pledged Landlord's Shares and shall not be responsible for any
failure to do so or delay in so doing.
8. CASH COLLATERAL ACCOUNT. Any money received by Secured Party in
respect of the Security Fund will be retained by Secured Party in an
interest-bearing cash collateral account and the same shall, for all purposes,
be deemed part of the Security Fund hereunder.
9. SECURED PARTY'S CARE AND DELIVERY OF PLEDGED LANDLORD'S SHARES;
ADDITIONAL PLEDGE AND RELEASE.
(a) Secured Party's obligation with respect to the Security Fund in its
possession shall be strictly limited to the duty to exercise reasonable care in
the custody and preservation of the Security Fund. Such duty shall not include
any obligation to ascertain or to initiate any action with respect to maturity
dates, conversion, call or exchange rights, or offers to purchase the Pledged
Landlord's Shares or any similar matters; provided, however, that Secured Party
shall be obligated to inform Pledgor, in writing, of maturity dates, conversion,
call or exchange rights, or offers to purchase the Pledged Landlord's Shares or
any similar matters of which it has knowledge. Secured Party shall have no duty
to take any steps necessary to preserve the rights of Pledgor against prior
parties, or to initiate any action to protect against the possibility of a
decline in the market value of the Pledged Landlord's Shares. Secured Party
shall not be obligated to take any actions with respect to the Pledged
Landlord's Shares requested by Pledgor unless such request is made in writing
and Secured Party determines, in its reasonable discretion, that the requested
action would not unreasonably jeopardize the value of the Pledged Landlord's
Shares as security for the Obligations. Secured Party may at any time deliver
the Security Fund, or any part thereof, to Pledgor, and the receipt thereof by
Pledgor shall be a complete and full acquittance for the Security Fund so
delivered, and Secured Party shall thereafter be discharged from any liability
or responsibility therefor.
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<PAGE>
(b) The Pledged Landlord's Shares shall be released from the lien of
the Secured Party under this agreement at the times and in the manner specified
in Exhibit A.
10. PLEDGOR'S WAIVERS.
Pledgor waives any right to require Secured Party to (i) give notice of
the terms, time and place of any public or private sale of personal property
security held from Pledgor or any other person or otherwise comply with any
other provisions of Section 9-504 Uniform Commercial Code; (ii) pursue any other
remedy in Secured Party's power, including the disposition of any other
Collateral; or (iii) make any presentments or demands for performance, or give
any notices of nonperformance, protests, notices of protest or notices of
dishonor in connection with any obligations or evidences of indebtedness held by
Secured Party as security or which constitute in whole or in part the
Obligations secured hereunder, or in connection with the creation of new or
additional Obligations.
11. AUTHORIZATIONS TO SECURED PARTY. Pledgor authorizes Secured Party
either before or after revocation hereof, without notice or demand and without
affecting Pledgor's liability hereunder, from time to time to: (a) take and hold
security, other than the Pledged Landlord's Shares, for the payment of the
Obligations or any part thereof and exchange, enforce, waive and release the
Pledged Landlord's Shares, or any part thereof, or any such other security; (b)
after an Event of Default, apply the Pledged Landlord's Shares or any other
security and direct the order or manner of sale thereof, including without
limitation, a non-judicial sale permitted by the terms of this Agreement, as
Secured Party in its discretion may determine; (c) release or substitute any one
or more of the endorsers or guarantors of the Obligations, or any part thereof,
or any other parties thereto; and (d) apply payments received by Secured Party
from Pledgor to any Obligations of Pledgor to Secured Party, in such order as
Secured Party shall determine in its sole discretion, whether or not any such
Obligations is covered by this Agreement, and Pledgor hereby waives any
provision of law regarding application of payments which specifies otherwise.
12. PAYMENT OF TAXES, CHARGES, LIENS AND ASSESSMENTS. Pledgor agrees to
pay, prior to delinquency, all taxes, charges, liens and assessments against the
Security Fund, and upon the failure of Pledgor to do so, Secured Party at its
option may pay any of them and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same. Any such
payments made by Secured Party shall be obligations of Pledgor to Secured Party,
due and payable immediately upon demand, together with interest at a rate
determined in accordance with the provisions of Section 17 of this Agreement,
and shall be secured by the Security Fund, subject to all terms and conditions
of this Agreement.
13. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement: (a) any Event of Default
under the Lease; or (b) any representation or warranty made by Pledgor herein
shall prove to be incorrect in any material respect when made; or (c) Pledgor
shall fail to observe or perform any obligation or agreement contained herein
after Secured Party has provided written notice
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<PAGE>
describing such failure and Pledgor has failed within thirty (30) days of
receipt of such notice to cure such failure, provided if such cure cannot be
completed within such thirty (30) day period, then such cure period shall be
extended for so long as Pledgor is diligently prosecuting such cure to
completion up to a maximum of ninety (90) days.
14. REMEDIES. Upon the occurrence of any Event of Default, Secured
Party shall have and may exercise without demand any and all rights, powers,
privileges and remedies granted to a secured party upon default under the
Uniform Commercial Code or otherwise provided to Secured Party by law. All
rights, powers, privileges and remedies of Secured Party shall be cumulative.
Secured Party may exercise its right of setoff with respect to the Obligations
in the same manner as if the Obligations were unsecured. No delay, failure or
discontinuance of Secured Party in exercising any right, power, privilege or
remedy hereunder shall affect or operate as a waiver of such right, power,
privilege or remedy; nor shall any single or partial exercise of any such right,
power, privilege or remedy preclude, waive or otherwise affect any other or
further exercise thereof or the exercise of any other right, power, privilege or
remedy. Any waiver, permit, consent or approval of any kind by Secured Party of
any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. While an Event of Default exists: (a) Secured Party may, at any time
and at Secured Party's sole option, liquidate any time deposits pledged to
Secured Party hereunder, whether or not said time deposits have matured and
notwithstanding the fact that such liquidation may give rise to penalties for
early withdrawal of funds; (b) Secured Party may appropriate the Security Fund
and apply all proceeds toward repayment of the Obligations in such order as
Secured Party may from time to time elect or, at Secured Party's sole option,
place any proceeds in a cash collateral account; and (c) at Secured Party's
request, Pledgor will assemble and deliver all Pledged Landlord's Shares not
already in the possession of Secured Party, and books and records pertaining
thereto, to Secured Party at a reasonably convenient place designated by Secured
Party. It is agreed that public or private sales, for cash or on credit, to a
wholesaler or retailer or investor, or user of property of the types subject to
this Agreement, or public auction, are all commercially reasonable since
differences in the sales prices generally realized in the different kinds of
sales are ordinarily offset by the differences in the costs and credit risks of
such sales. For any part of the Security Fund consisting of securities, Secured
Party shall be under no obligation to delay a sale of any portion thereof for
the period of time necessary to permit the issuer thereof to register such
securities for public sale under any applicable state or federal law, even if
the issuer thereof would agree to do so.
15. DISPOSITION OF PLEDGED LANDLORD'S SHARES. Secured Party shall not
transfer all or any part of the Pledged Landlord's Shares or Security Fund
except in connection with the exercise of remedies as provided in Section 14
above. Any proceeds of any disposition of any of the Pledged Landlord's Shares
or any part thereof, shall be applied by Secured Party to the payment of
expenses incurred by Secured Party in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds shall be applied by
Secured Party toward the payment of the Obligations in such order of application
as Secured Party may from time to time elect.
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16. COSTS, EXPENSES AND ATTORNEYS' FEES. Pledgor shall pay to Secured
Party immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees incurred by
Secured Party after the occurrence and during the continuance of any Event of
Default in exercising any right, power, privilege or remedy conferred by this
Agreement or in the enforcement thereof, including any of the foregoing incurred
in connection with any bankruptcy proceeding relating to Pledgor or the
valuation of the Pledged Landlord's Shares including without limitation, the
seeking of relief from or modification of the automatic stay or the negotiation
and drafting of a cash collateral order. All of the foregoing shall be paid to
Secured Party by Pledgor with interest at a rate per annum equal to the lesser
of ten percent (10%) or the maximum rate permitted by law.
17. GOVERNING LAW; SUCCESSORS, ASSIGNS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without reference to principles of conflicts of laws (other than Section 5-1401
of the New York General Obligations Law) and shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties.
18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
PLEDGOR
GOLF HOSTS,INC.,
a Delaware corporation
By: ___________________________
Name: _________________________
Its: __________________________
SECURED PARTY
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland corporation
Its: General Partner
By: ___________________________
Name: _________________________
Its: __________________________
By: ___________________________
Name: _________________________
Its: __________________________
Agreed and Acknowledged:
LOST OAKS, L.P.,
a Delaware limited partnership
By: ___________________________
Name: _________________________
Its: __________________________
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<PAGE>
EXHIBIT I-1
Release of Pledged Landlord's Shares.
1. The Pledged Landlord's Shares shall be released, and shall no longer
constitute collateral security for the Lease, at the following times and in
accordance with the following provisions:
(i) One-third (1/3) of the Pledged Landlord'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 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 Lessee or
the Borrower or the Lessee for each such Fiscal Year.
(ii) An aggregate of two-thirds (2/3) of the Pledged
Landlord'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 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 Lessee or the Borrower for each such Fiscal Year.
(iii) All of the Pledged Landlord'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 and the
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
Lessee or the Borrower for each such Fiscal Year.
Upon Pledgor's request, and at Pledgor's expense, Secured Party shall
execute a written instrument of release with respect to any Pledged Landlord's
Shares that are released in accordance with the foregoing.
2. Notwithstanding the provisions of paragraph 1 above, in the event
Landlord receives, on or before December 1, 1997, (i) a pledge of the shares of
Condocorp as provided in Section 5.3 of the Lease, and (ii) a pledge of 89.1%
the shares of Golf Hosts Resorts, Inc., in a form acceptable to Landlord,
Landlord agrees to execute an amendment of this Additional Pledge Agreement to
provide that 59,302 shares of the Pledged Landlord's Shares would be released,
and would no longer constitute collateral security for the Lease, at such time
as the Net Operating Income with respect to the Innisbrook Property and the
Property shall have been, for each of the two (2) prior Fiscal Years, one
hundred and thirteen and one-half percent (113.5%) of the Debt Service payable
by Lessee or the Borrower for each such Fiscal Year. The balance of Pledged
Landlord's Shares shall be released in accordance with paragraph 1 above.
I-1-1
<PAGE>
EXHIBIT J
TARPON WOODS
CAPITAL IMPROVEMENT BUDGET
Preliminary (7/15/97 Revised
-------------------- ---------
(8/27/97)
Parking Lots $ 30,000 $ 30,000
Tennis Court/Pool Demo $ 10,000 $ 10,000
Restaurant Interior w/Demo $150,000 $400,000*1
Clubhouse Facade $100,000 $ 50,000*1
Cart Area Landscaping $ 10,000 $ 10,000
General Landscaping $ 50,000 $ 30,000
Expand Putting Green $ 10,000 $ 10,000
Golf Shop Interior $ 30,000 $130,000*1
Golf Hole Improvements $275,000 $150,000
Sinage $ 10,000 $ 10,000
Computer System, etc. $ 25,000 $ 25,000
Cart Barn Upgrade $140,000
On Course Restrooms $ 60,000
Name Change Adv. &
Promos ________ $ 30,000
New Equipment $100,000
Irrigation $ 65,000
TOTALS $700,000 $1,250,000
*1 There may be an opportunity to reduce these costs
through the use of a pre-fabricated building.
J-1
<PAGE>
EXHIBIT J-1
TARPON WOODS
REMODEL SCHEDULE
1. Acquisition 09/26/97
2. Plans 10/01/97-11/30/97
3. Permits 12/01/97-12/31/97
4. Demolition 01/01/98-01/15/98
5. Reconstruction 01/16/98-04/30/98
6. Grand Reopening 05/01/98
J-1-1
<PAGE>
EXHIBIT K
CONTINGENT CONSIDERATION FORMULA
A. Definitions. For purposes of this Exhibit K, the following terms
shall have the following meanings:
(1) "Adjusted Net Operating Income" means the Conversion Date
Net Operating Income divided by 1.135.
(2) "Applicable Twelve (12) Month Period" means the Conversion
Year.
(3) "Capitalization Rate" shall mean 10.50%.
(4) "Company" means Golf Trust of America, Inc.
(5) "Company's First Call FFO" means the consensus FFO per
share estimate for the Company for the calendar year which includes the
Conversion Date, subtracting the Company's capital expenditure reserve
per share as estimated for that year as such estimate is reported by
First Call (or, if First Call is no longer in general use within the
securities industry, by such other reporting service as is then in
general use within the securities industry) divided by the average of
the Company's closing share price for the thirty (30) trading days
immediately preceding the Conversion Date.
(6) "Conversion Date" means the April 30 following the date on
which Landlord receives written notice that Tenant has irrevocably
elected to receive the Contingent Consideration.
(7) "Conversion Date Capitalization Rate" shall mean the
Company's First Call FFO, plus 200 basis points (but in no event less
than the Capitalization Rate).
(8) "Conversion Date Net Operating Income" means the Gross
Operating Revenue for the Property less the Gross Operating Expenses
for the Conversion Year.
(9) "Conversion Year" means the calendar year immediately
preceding the Conversion Date.
(10) "Conversion Notice" shall mean a written notice delivered
by Tenant to Landlord whereby Tenant elects to receive the Contingent
Consideration. The Conversion Notice may only be given once and must be
given on or before April 15 of calendar years 2000, 2001 and 2002. If
the Conversion Notice is not given on or before April 15, 2002,
Tenant's right to receive the Contingent Consideration shall
automatically and irrevocably terminate. The Conversion Notice may not
be given prior to March 1, 1999.
K-1
<PAGE>
(11) "Gross Operating Expenses" means the gross operating
expenses of the Property for the Applicable Twelve (12) Month Period,
calculated in accordance with generally accepted accounting principles
consistently applied. For purposes of calculating Gross Operating
Expenses, the Florida State Sales/Lease Tax shall be excluded, and
Landlord may make discretionary adjustments on a line item basis to
reflect stabilized Gross Operating Expenses, including the following
adjustments:
(a) annual capital replacement reserves shall be
including, as reasonably determined by Landlord;
(b) annual cash expenditures (including depreciation)
for golf carts shall be included, as reasonably determined by
Landlord;
(c) extraordinary expenditures (such as to repair
storm damage) which are not anticipated to recur in the
ordinary course shall be excluded, as reasonably determined by
Landlord;
(d) other adjustments to reflect stabilized Gross
Operating Expenses, as reasonably determined by Landlord shall
be made; and
(e) depreciation, amortization and debt service shall
be excluded.
For purposes of determining the Contingent Consideration,
Gross Operating Expenses will be adjusted upward by Landlord to the
extent such expenses (or any major component thereof) have decreased at
a compound annual rate greater than 2% per annum from the Base Year to
the Conversion Year or more than 3% (on a year-to-year basis) from the
year immediately preceding the Conversion Year, unless, Landlord shall
determine that such expense reductions were of a nature so as to be
reasonably expected to be sustained.
(12) "Gross Operating Revenue" means the gross operating
revenue of the Property, including revenue related to the golf course
operations, food and beverage operations and sale of merchandise, for
the Applicable Twelve (12) Month Period, calculated in accordance with
generally accepted accounting principles consistently applied. For
purposes of determining the Contingent Consideration, Gross Operating
Revenue will be adjusted downward to the extent such revenue has
increased by more than 5.0% from the year immediately preceding the
Conversion Year to the Conversion Year. Factors to determine
sustainability shall include factors such as the creation of new demand
generators (i.e., hotel development or condominium development) and the
non-recurring nature of any revenue (i.e., a one-time tournament fee).
(13) "Net Incremental Income Available for Contingent
Consideration" means the Adjusted Net Operating Income for the
Applicable Twelve (12) Month Period, increased by the annual capital
replacement reserve included in the payment of base rent, preceding the
Conversion Date less the rental payment made by the lessee of the
Property for the same period.
K-2
<PAGE>
(14) "Net Operating Income" means the Gross Operating Revenue
of the Property for the Applicable Twelve (12) Month Period less the
Gross Operating Expenses for the same period.
B. Contingent Consideration.
(1) Tenant shall have the right to receive the Contingent
Consideration by delivering the Conversion Notice to Landlord; provided
that the tenant under the lease at the Property shall have paid
percentage rent on an annual basis for the prior calendar year. The
Contingent Consideration shall equal the Net Incremental Income
Available for Contingent Consideration divided by the Conversion Date
Capitalization Rate.
(2) Within forty-five (45) days of the Conversion Date,
Landlord shall deliver to Tenant the number of shares of common stock
of Golf Trust of America, Inc. that equals the Contingent Consideration
divided by the per share common stock price of the Company on the
Conversion Date.
K-3
<PAGE>
- --------------------------------------------------------------------------------
L E A S E
GOLF TRUST OF AMERICA, L.P.
Landlord
and
LOST OAKS, L.P., a Delaware Limited Partnership
Tenant
Dated as of October 3, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
LEASED PROPERTY..................................................... 1
ARTICLE 2
DEFINITIONS, RULES OF CONSTRUCTION.................................. 2
2.1 Definitions........................................... 2
ARTICLE 3
TERM................................................................ 14
3.1 Initial Term...................................... 14
3.2 Extension Options................................. 15
3.3 Right of First Offer to Lease..................... 15
ARTICLE 4
RENT................................................................ 15
4.1 Rent.............................................. 15
4.2 Increase in Initial Base Rent..................... 16
4.3 Percentage Rent................................... 16
4.4 Annual Reconciliation of Percentage Rent.......... 17
4.5 Increase in Base Rent Following Conversion Date... 17
4.6 Record-keeping.................................... 17
4.7 Additional Charges................................ 17
4.8 Late Payment of Rent.............................. 18
4.9 Net Lease......................................... 18
4.10 Allocation of Revenues............................ 18
ARTICLE 5
SECURITY DEPOSIT.................................................... 19
5.1 Pledge of Stock Options, Stock and Owners Shares.. 19
5.2 Obligation to Withhold Distributions.............. 19
5.3 Pledge of Stock for Condominiums.................. 19
5.4 Landlord's Lien................................... 19
5.5 Rental Pool....................................... 20
5.6 Partial Release................................... 20
ARTICLE 6
IMPOSITIONS......................................................... 20
6.1 Payment of Impositions............................ 20
6.2 Information and Reporting......................... 20
6.3 Refunds........................................... 21
6.4 Utility Charges................................... 21
6.5 Assessment Districts.............................. 21
(i)
<PAGE>
ARTICLE 7
TENANT WAIVERS...................................................... 21
7.1 No Termination, Abatement, Etc.................... 21
7.2 Condition of the Property......................... 22
ARTICLE 8
OWNERSHIP OF TANGIBLE PERSONAL PROPERTY............................. 23
8.1 Property.......................................... 23
8.2 Tenant's Personal Property........................ 24
8.3 Tenant's Obligations.............................. 24
8.4 Landlord's Waivers................................ 24
ARTICLE 9
USE OF PROPERTY..................................................... 24
9.1 Use............................................... 24
9.2 Specific Prohibited Uses.......................... 25
9.3 Membership Sales.................................. 25
9.4 Landlord to Grant Easements, Etc.................. 25
9.6 Valuation of Remainder Interest in Lease.......... 26
ARTICLE 10
HAZARDOUS MATERIALS................................................. 26
10.1 Intentionally Deleted............................. 26
10.2 Intentionally Deleted............................. 26
10.3 Intentionally Deleted............................. 26
10.4 Intentionally Deleted............................. 26
10.5 Intentionally Deleted............................. 26
10.6 Remediation....................................... 26
10.7 Tenant's Indemnification of Landlord.............. 27
10.8 Survival of Indemnification Obligations........... 28
10.9 Environmental Violations at Expiration
or Termination of Lease........................... 28
10.10 Environmental Statements.......................... 28
ARTICLE 11
MAINTENANCE AND REPAIR.............................................. 28
11.1 Tenant's Obligations.............................. 28
11.2 Waiver of Statutory Obligations................... 29
11.3 Mechanic's Liens.................................. 30
11.4 Surrender of Property............................. 30
ARTICLE 12
TENANT IMPROVEMENTS; SUBMITTAL OF BUDGETS; FINANCIAL
STATEMENTS.......................................................... 30
12.1 Tenant's Right to Construct....................... 30
12.2 Scope of Right.................................... 31
12.3 Cooperation of Landlord........................... 31
12.4 Capital Replacement Fund.......................... 32
(ii)
<PAGE>
12.5 Rights in Tenant Improvements..................... 32
12.6 Landlord's Right to Audit Calculation
of Gross Golf Revenue............................. 33
12.7 Annual Budget..................................... 33
12.8 Financial Statements.............................. 35
12.9 Landlord Improvements............................. 36
ARTICLE 13
LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS........................ 36
13.1 Liens............................................. 36
13.2 Encroachments and Other Title Matters............. 37
ARTICLE 14
PERMITTED CONTESTS.................................................. 38
14.1 Authorization..................................... 38
14.2 Indemnification of Landlord....................... 39
ARTICLE 15
INSURANCE........................................................... 39
15.1 General Insurance Requirements.................... 39
15.2 Other Insurance................................... 40
15.3 Replacement Cost..................................... 40
15.4 Waiver of Subrogation............................. 41
15.5 Form Satisfactory, Etc............................ 41
15.6 Change in Limits.................................. 41
15.7 Blanket Policy.................................... 42
15.8 Insurance Proceeds................................ 42
15.9 Disbursement of Proceeds.......................... 42
15.10 Excess Proceeds, Deficiency of Proceeds........... 43
15.11 Reconstruction Covered by Insurance............... 44
15.12 Reconstruction Not Covered by Insurance........... 44
15.13 No Abatement of Rent.............................. 44
15.14 Waiver............................................ 45
15.15 Damage Near End of Term........................... 45
ARTICLE 16
CONDEMNATION........................................................ 45
16.1 Total Taking...................................... 45
16.2 Partial Taking.................................... 45
16.3 Restoration....................................... 45
16.4 Award-Distribution................................ 46
16.5 Temporary Taking.................................. 46
ARTICLE 17
EVENTS OF DEFAULT................................................... 46
17.1 Events of Default................................. 46
17.2 Payment of Costs.................................. 48
17.3 Certain Remedies.................................. 48
(iii)
<PAGE>
17.4 Damages........................................... 48
17.5 Additional Remedies............................... 50
17.6 Appointment of Receiver........................... 50
17.7 Waiver............................................ 50
17.8 Application of Funds.............................. 50
17.9 Impounds.......................................... 50
ARTICLE 18
LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT........................... 50
ARTICLE 19
LEGAL REQUIREMENTS.................................................. 51
ARTICLE 20
HOLDING OVER........................................................ 51
ARTICLE 21
RISK OF LOSS........................................................ 52
ARTICLE 22
INDEMNIFICATION..................................................... 52
22.1 Tenant's Indemnification of Landlord.............. 52
22.2 Landlord's Indemnification of Tenant.............. 53
22.3 Mechanics of Indemnification...................... 53
22.4 Survival of Indemnification Obligations;
Available Insurance Proceeds...................... 54
ARTICLE 23
SUBLETTING AND ASSIGNMENT........................................... 54
23.1 Prohibition Against Assignment.................... 54
23.2 Subleases......................................... 54
23.3 Transfers......................................... 56
23.4 REIT Limitations.................................. 56
23.5 Right of First ................................... 56
23.6 Bankruptcy Limitations............................ 57
23.7 Management Agreement.............................. 59
ARTICLE 24
OFFICER'S CERTIFICATES AND OTHER STATEMENTS......................... 59
24.1 Officer's Certificates............................ 59
24.2 Environmental Statements.......................... 59
ARTICLE 25
LANDLORD MORTGAGES.................................................. 60
25.1 Landlord May Grant Liens.......................... 60
25.2 Tenant's Non-Disturbance Rights................... 60
25.3 Facility Mortgage Protection...................... 60
(iv)
<PAGE>
ARTICLE 26
SALE OF FEE INTEREST................................................ 61
26.1 Right of First Offer to Purchase.................. 61
26.2 Conveyance by Landlord............................ 61
ARTICLE 27
ARBITRATION......................................................... 61
27.1 Arbitration....................................... 62
27.2 Arbitration Procedures............................ 62
ARTICLE 28
MISCELLANEOUS....................................................... 62
28.1 Landlord's Right to Inspect....................... 62
28.2 Breach by Landlord................................ 63
28.3 Competition Between Landlord and Tenant........... 63
28.4 No Waiver......................................... 63
28.5 Remedies Cumulative............................... 63
28.6 Acceptance of Surrender........................... 63
28.7 No Merger of Title................................ 64
28.8 Quiet Enjoyment................................... 64
28.9 Notices........................................... 64
28.10 Survival of Claims................................ 65
28.11 Invalidity of Terms or Provisions................. 65
28.12 Prohibition Against Usury......................... 65
28.13 Amendments to Lease............................... 65
28.14 Successors and Assigns............................ 65
28.15 Titles............................................ 65
28.16 Governing Law..................................... 65
28.17 Memorandum of Lease............................... 65
28.18 Attorneys' Fees................................... 65
28.19 Non-Recourse as to Landlord and Tenant............ 66
28.20 No Relationship................................... 67
28.21 Reletting......................................... 67
28.22 Landlord's Determination of Facts................. 67
28.23 Time is of the Essence............................ 68
(v)
<PAGE>
Exhibits
Exhibit A - Legal Description of the Land
Exhibit B - Schedule of Improvements
Exhibit C - Other Leased Property
Exhibit D - Pledge Agreement
Exhibit E - Intentionally Deleted
Exhibit F - Calculation of Gross Golf Revenue for
the Base Year by Quarter
Exhibit G - Stock Options Pledge Agreement
Exhibit H - Disbursement Procedures
Exhibit I - Additional Pledge Agreement
Exhibit J - Tarpon Woods Capital Improvement Budget
Exhibit K - Contingent Contribution Formula
(vi)
<PAGE>
October 10, 1997
Golf Host Resorts, Inc.
36750 U.S. Highway 19 North
Palm Harbor, Florida 34684
Attn: President
Re: Option Shares Extension
Reference is made to that certain Securities Purchase Agreement between
Golf Trust of America, L.P., and Golf Trust of America, Inc., as Seller, and
Golf Host Resorts, Inc., as Buyer, dated June 20, 1997 (the "Securities Purchase
Agreement").
The reference in the first sentence of Section 1.3(b) of the Securities
Purchase Agreement to December 31, 1997, is hereby amended to read December 31,
1998. All other provisions of the Securities Purchase Agreement shall remain
unchanged.
Partnership Golf Trust of America, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland corporation
Its: General Partner
By
Its
REIT Golf Trust of America, Inc.,
a Maryland corporation
By
Its
Buyer Golf Host Resorts, Inc., a Colorado corporation
By
Its
<PAGE>
EXHIBIT G
STOCK OPTIONS PLEDGE AGREEMENT
THIS STOCK OPTIONS PLEDGE AGREEMENT (this "Agreement") is entered into
as of this 3rd day of October, 1997, by and between (i) GOLF TRUST OF AMERICA,
L.P., a Delaware limited partnership ("Secured Party"), and (ii) GOLF HOSTS,
INC., a Florida corporation ("Pledgor").
RECITALS:
This Agreement is entered into based on the following understandings:
A. Secured Party and Lost Oaks, L.P. have entered into a lease dated as
of October 3, 1997, relating to the Tarpon Woods Golf and Country Club (the
"Lease").
B. Pledgor has an option to acquire Landlord's Shares (as defined
below) pursuant to a Securities Purchase Agreement with Secured Party (the
"Option Agreement").
C. As a condition to Secured Party entering into the Lease, Secured
Party has required that Pledgor pledge the Landlord's Shares (as hereinafter
defined) as security for the Obligations (as hereinafter defined).
1. DEFINITIONS
a. Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Lease.
b. The following terms shall have the indicated meanings:
"Agreement" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Common Stock" means shares of common stock, par value $0.01,
of Golf Trust of America, Inc., a Maryland corporation.
"Event of Default" has the meaning set forth in Section 13(a)
of this Agreement.
"Landlord's Shares" means, collectively, the option held by
Pledgor to purchase 150,000 shares of Common Stock that Pledgor may
acquire upon the exercise of the Option Agreement, as such number of
Common Stock and partnership units
G-1
<PAGE>
may be increased or decreased pursuant to the terms hereof. Upon the purchase by
Pledgor of any of the shares of Common Stock, under said option, only the Profit
Portion of such stock shall be included in Landlord's Shares.
"Obligations" has the meaning set forth in Section 2(a) of
this Agreement.
"Pledged Landlord's Shares" has the meaning set forth in
Section 2(a) of this Agreement.
"Pledgor" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Profit Portion" means, with respect to shares acquired by
Pledgor under its stock option agreement, that portion of such shares
acquired calculated by multiplying the total number of shares acquired
by a fraction, the numerator of which is the excess, if any, of the
market value of the stock on the acquisition date (the "Market Price")
over $26.00, and the denominator of which is the Market Price.
"Secured Party" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Security Fund" has the meaning set forth in Section 2(a) of
this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Secured Party and Pledgor hereby
agree as follows:
2. GRANT OF SECURITY INTEREST.
a. As security for the payment and performance of all obligations and
liabilities (including, without limitation, indemnities, fees and interest
thereon) of Pledgor, or any of Pledgor's direct or indirect subsidiaries or
Affiliates arising under the Lease, or in connection with any agreement,
instrument or extension contemplated by the Lease (collectively, the
"Obligations"), Pledgor hereby pledges, hypothecates and grants to Secured Party
a first and prior security interest in the Landlord's Shares owned by Pledgor
(the "Pledged Landlord's Shares"), together with, after an occurrence and during
the continuance of an Event of Default hereunder, any and all proceeds thereof,
including without limitation, any and all dividends, income, interest and
distributions earned from or attributable to the investment or deposit of the
Pledged Landlord's Shares (the Pledged Landlord's Shares, together with all of
the foregoing being collectively referred to herein as the "Security Fund").
Pledgor shall have the right to pledge, as
G-2
<PAGE>
substitute collateral, cash or other security in an amount equal to the fair
market value of the substituted shares. Prior to an Event of Default (defined
below) all dividends, income, interest and/or distributions earned from or
attributable to the investment or deposit of the Security Fund shall be payable
to Pledgor; following an Event of Default under the Lease such amounts shall be
added to and become a part of the Security Fund and shall only be disbursed in
accordance with the terms of this Agreement. The word "Obligations" is used
herein in its most comprehensive sense and includes without limitation any and
all debts, obligations and liabilities of Pledgor, Pledgor or any of Pledgor's
direct or indirect subsidiaries arising under the Lease or this Agreement, now
or hereafter made, incurred or created, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether Pledgor, Pledgor or any of
Pledgor's direct or indirect subsidiaries may be liable individually or jointly,
or whether recovery upon such Obligations may be or hereafter become
unenforceable.
b. Pledgor shall execute and deliver to Secured Party such financing
and continuation statements covering the Security Fund and take such other
actions as Secured Party may from time to time require to perfect and continue
the perfection of Secured Party's security interest in the Security Fund.
3. CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS.
This is a continuing agreement and all rights, powers and remedies hereunder
shall apply to all past, present and future obligations of Pledgor to Secured
Party under the Lease. This Agreement shall not terminate except in accordance
with its terms or Secured Party's written release of Pledgor from its
Obligations under this Agreement.
4. SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF
LIABILITY. This Agreement is in full force and effect and is binding on Pledgor
as of the date written below, regardless of whether Secured Party obtains
additional collateral or any guaranties from others or takes any other action
contemplated by Pledgor. Pledgor waives the benefit of any statute of
limitations affecting Pledgor's liability hereunder or the enforcement thereof,
and Pledgor agrees that any payment of any Obligations or other act which shall
toll any statute of limitations applicable thereto shall similarly operate to
toll such statute of limitations applicable to Pledgor's liability under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES.
a. Pledgor represents and warrants to Secured Party that: (i) Pledgor
is the owner, directly or indirectly, and has possession or control of the
Pledged Landlord's Shares; (ii) Pledgor has the right to pledge the Pledged
Landlord's Shares; (iii) the Pledged Landlord's Shares are genuine, free from
liens, adverse claims, setoffs, default, prepayment,
G-3
<PAGE>
defenses and conditions precedent of any kind or character, except as previously
disclosed to Secured Party in writing by Pledgor; (iv) specifically with respect
to Pledged Landlord's Shares consisting of investment securities, instruments,
chattel paper, documents, contracts, insurance policies or any like property,
all persons appearing to be obligated thereon have authority and capacity to
contract and are bound as they appear to be, and the same comply with applicable
laws concerning form, content and manner of preparation and execution; (v) all
statements contained herein and, where applicable, in the Pledged Landlord's
Shares are true and complete; (vi) no financing statement covering any of the
Pledged Landlord's Shares and naming any secured party other than Secured Party,
is on file in any public office; and (vii) the pledge, assignment and delivery
of the Pledged Landlord's Shares pursuant to this Agreement creates a valid lien
and a security interest in the Pledged Landlord's Shares.
6. COVENANTS OF PLEDGOR.
a. Pledgor Agrees in General: (i) to indemnify Secured Party against
all losses, claims, demands, liabilities and expenses of every kind caused by
property subject hereto, excepting losses relating to the decrease in the market
value of the Pledged Landlord's Shares; (ii) to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Secured Party any time after
the occurrence of an Event of Default in the realization, enforcement and
exercise of its rights, powers and remedies hereunder; (iii) to permit Secured
Party to exercise its powers; (iv) to execute and deliver such documents as
Secured Party deems necessary to create, perfect and continue the security
interests contemplated hereby; and (v) not to change its chief place of business
or the place where Pledgor keeps any records concerning the Pledged Landlord's
Shares without first giving Secured Party written notice of the address to which
Pledgor is moving same.
b. Pledgor Agrees with Regard to the Security Fund: (i) not to permit
any lien on the Security Fund except in favor of Secured Party; (ii) not to
withdraw any funds from any deposit account pledged to Secured Party hereunder
without Secured Party's prior written consent; (iii) not to sell, hypothecate or
otherwise dispose of any of the Pledged Landlord's Shares or any interest
therein, without the prior written consent of Secured Party; (iv) to keep, in
accordance with generally accepted accounting principles, complete and accurate
records regarding all Pledged Landlord's Shares and to permit Secured Party to
inspect the same at any reasonable time; (v) if requested by Secured Party
following an Event of Default to receive and use reasonable diligence to collect
proceeds from the Pledged Landlord's Shares, in trust and as part of the
Security Fund to be held in accordance with Section 2(a) above; (vi) not to
commingle Pledged Landlord's Shares with other property; (vii) to provide any
service and do any other acts or things necessary to keep the Pledged Landlord's
Shares free and clear of all
G-4
<PAGE>
defenses, rights of offset and counterclaims; and (viii) if the Pledged
Landlord's Shares consists of securities and so long as no Event of Default
exists, to vote said securities and to give consents, waivers and ratifications
with respect thereto, provided that no vote shall be cast or consent, waiver or
ratification given or action taken which would impair Secured Party's interest
in the Security Fund or be inconsistent with or violate any provisions of this
Agreement.
7. POWERS OF SECURED PARTY. Pledgor appoints Secured Party its true
attorney in fact to perform any of the following powers, which are coupled with
an interest and are irrevocable until this Agreement has been terminated
pursuant to its terms and may be exercised from time to time by Secured Party's
officers and employees: (a) to perform any obligation of Pledgor hereunder in
Pledgor's name or otherwise; (b) to notify any person obligated on any security,
instrument or other document subject to this Agreement of Secured Party's rights
hereunder; (c) to collect by legal proceedings or otherwise all dividends,
interest, principal or other sums now or hereafter payable upon or on account of
the Security Fund; (d) to enter into any extension, reorganization, deposit,
merger or consolidation agreement, or any other agreement relating to or
affecting the Security Fund and in connection therewith to deposit or surrender
control of the Security Fund to accept other property in exchange for the
Security Fund, and to do and perform such acts and things as Secured Party may
deem proper, with any money or property received in exchange for the Security
Fund at Secured Party's option, to be applied to the Obligations or held by
Secured Party under this Agreement; (e) to make any compromise or settlement
Secured Party deems desirable or proper in respect of the Security Fund; (f) to
insure, process and preserve the Security Fund; (g) to exercise all rights,
powers and remedies which Pledgor would have, but for this Agreement, under all
the Pledged Landlord's Shares subject to this Agreement; (h) to do all acts and
things and execute all documents in the name of Pledgor or otherwise that are
deemed by Secured Party as necessary, proper or convenient in connection with
the preservation, perfection or enforcement of its rights hereunder; and (i) to
execute and file in Pledgor's name any financing statements and amendments
thereto required to perfect Secured Party's security interest hereunder;
provided, however, that until the occurrence and only during the continuation of
an Event of Default shall Secured Party have the right to exercise the power of
attorney for the purposes described in paragraphs (a), (c), (d), (e), (f), (g),
or (h). If an Event of Default has occurred and is continuing, any or all of the
Security Fund consisting of securities may be registered, without notice, in the
name of Secured Party or its nominee, and thereafter Secured Party or its
nominee may exercise, without notice, all voting and partnership rights at any
meeting of the partners of the issuer thereof, any and all rights of conversion,
exchange or subscription, or any other rights, privileges or options pertaining
to any Pledged Landlord's Shares all as if it were the absolute owner thereof.
The foregoing shall include, without limitation, the right of Secured Party or
its nominee to
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exchange, at its discretion, any and all Pledged Landlord's Shares upon the
merger, consolidation, reorganization, recapitalization or other readjustment of
the issuer thereof, or upon the exercise by the issuer thereof or Secured Party
of any right, privilege or option pertaining to any Pledged Landlord's Shares
and in connection therewith, the right to deposit and deliver any and all of the
Pledged Landlord's Shares with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and conditions as Secured
Party may determine. All of the foregoing rights, privileges or options may be
exercised without liability except to account for property actually received by
Secured Party. Secured Party shall have no duty to exercise any of the
foregoing, or any other rights, privileges or options with respect to the
Pledged Landlord's Shares and shall not be responsible for any failure to do so
or delay in so doing.
8. CASH COLLATERAL ACCOUNT.
Any money received by Secured Party in respect of the Security Fund
will be retained by Secured Party in an interest-bearing cash collateral account
and the same shall, for all purposes, be deemed part of the Security Fund
hereunder.
9. SECURED PARTY'S CARE AND DELIVERY OF PLEDGED LANDLORD'S SHARES;
ADDITIONAL PLEDGE AND RELEASE.
Secured Party's obligation with respect to the Security Fund in its
possession shall be strictly limited to the duty to exercise reasonable care in
the custody and preservation of the Security Fund. Such duty shall not include
any obligation to ascertain or to initiate any action with respect to maturity
dates, conversion, call or exchange rights, or offers to purchase the Pledged
Landlord's Shares or any similar matters; provided, however, that Secured Party
shall be obligated to inform Pledgor, in writing, of maturity dates, conversion,
call or exchange rights, or offers to purchase the Pledged Landlord's Shares or
any similar matters of which it has knowledge. Secured Party shall have no duty
to take any steps necessary to preserve the rights of Pledgor against prior
parties, or to initiate any action to protect against the possibility of a
decline in the market value of the Pledged Landlord's Shares. Secured Party
shall not be obligated to take any actions with respect to the Pledged
Landlord's Shares requested by Pledgor unless such request is made in writing
and Secured Party determines, in its reasonable discretion, that the requested
action would not unreasonably jeopardize the value of the Pledged Landlord's
Shares as security for the Obligations. Secured Party may at any time deliver
the Security Fund, or any part thereof, to Pledgor, and the receipt thereof by
Pledgor shall be a complete and full acquittance for the Security Fund so
delivered, and Secured Party shall thereafter be discharged from any liability
or responsibility therefor.
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10. PLEDGOR'S WAIVERS.
Pledgor waives any right to require Secured Party to (i) give notice of
the terms, time and place of any public or private sale of personal property
security held from Pledgor or any other person or otherwise comply with any
other provisions of Section 9-504 Uniform Commercial Code; (ii) pursue any other
remedy in Secured Party's power, including the disposition of any other
Collateral; or (iii) make any presentments or demands for performance, or give
any notices of nonperformance, protests, notices of protest or notices of
dishonor in connection with any obligations or evidences of indebtedness held by
Secured Party as security or which constitute in whole or in part the
Obligations secured hereunder, or in connection with the creation of new or
additional Obligations.
11. AUTHORIZATIONS TO SECURED PARTY. Pledgor authorizes Secured Party
either before or after revocation hereof, without notice or demand and without
affecting Pledgor's liability hereunder, from time to time to: (a) take and hold
security, other than the Pledged Landlord's Shares, for the payment of the
Obligations or any part thereof and exchange, enforce, waive and release the
Pledged Landlord's Shares, or any part thereof, or any such other security; (b)
after an Event of Default, apply the Pledged Landlord's Shares or any other
security and direct the order or manner of sale thereof, including without
limitation, a non-judicial sale permitted by the terms of this Agreement, as
Secured Party in its discretion may determine; (c) release or substitute any one
or more of the endorsers or guarantors of the Obligations, or any part thereof,
or any other parties thereto; and (d) apply payments received by Secured Party
from Pledgor to any Obligations of Pledgor to Secured Party, in such order as
Secured Party shall determine in its sole discretion, whether or not any such
Obligations is covered by this Agreement, and Pledgor hereby waives any
provision of law regarding application of payments which specifies otherwise.
12. PAYMENT OF TAXES, CHARGES, LIENS AND ASSESSMENTS.
Pledgor agrees to pay, prior to delinquency, all taxes, charges, liens
and assessments against the Security Fund, and upon the failure of Pledgor to do
so, Secured Party at its option may pay any of them and shall be the sole judge
of the legality or validity thereof and the amount necessary to discharge the
same. Any such payments made by Secured Party shall be obligations of Pledgor to
Secured Party, due and payable immediately upon demand, together with interest
at a rate determined in accordance with the provisions of Section 16 of this
Agreement, and shall be secured by the Security Fund, subject to all terms and
conditions of this Agreement.
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13. EVENTS OF DEFAULT.
The occurrence of any of the following shall constitute an "Event of
Default" under this Agreement: (a) any Event of Default under the Lease; or (b)
any representation or warranty made by Pledgor herein shall prove to be
incorrect in any material respect when made; or (c) Pledgor shall fail to
observe or perform any obligation or agreement contained herein after Secured
Party has provided written notice describing such failure and Pledgor has failed
within thirty (30) days of receipt of such notice to cure such failure, provided
if such cure cannot be completed within such thirty (30) day period, then such
cure period shall be extended for so long as Pledgor is diligently prosecuting
such cure to completion up to a maximum of ninety (90) days.
14. REMEDIES.
Upon the occurrence of any Event of Default, Secured Party shall have
and may exercise without demand any and all rights, powers, privileges and
remedies granted to a secured party upon default under the Uniform Commercial
Code or otherwise provided to Secured Party by law. All rights, powers,
privileges and remedies of Secured Party shall be cumulative. Secured Party may
exercise its right of setoff with respect to the Obligations in the same manner
as if the Obligations were unsecured. No delay, failure or discontinuance of
Secured Party in exercising any right, power, privilege or remedy hereunder
shall affect or operate as a waiver of such right, power, privilege or remedy;
nor shall any single or partial exercise of any such right, power, privilege or
remedy preclude, waive or otherwise affect any other or further exercise thereof
or the exercise of any other right, power, privilege or remedy. Any waiver,
permit, consent or approval of any kind by Secured Party of any default
hereunder, or any such waiver of any provisions or conditions hereof, must be in
writing and shall be effective only to the extent set forth in writing. While an
Event of Default exists: (a) Secured Party may, at any time and at Secured
Party's sole option, liquidate any time deposits pledged to Secured Party
hereunder, whether or not said time deposits have matured and notwithstanding
the fact that such liquidation may give rise to penalties for early withdrawal
of funds; (b) Secured Party may appropriate the Security Fund and apply all
proceeds toward repayment of the Obligations in such order as Secured Party may
from time to time elect or, at Secured Party's sole option, place any proceeds
in a cash collateral account; and (c) at Secured Party's request, Pledgor will
assemble and deliver all Pledged Landlord's Shares not already in the possession
of Secured Party, and books and records pertaining thereto, to Secured Party at
a reasonably convenient place designated by Secured Party. It is agreed that
public or private sales, for cash or on credit, to a wholesaler or retailer or
investor, or user of property of the types subject to this Agreement, or public
auction, are all commercially reasonable since differences in the sales prices
generally realized in the different kinds of sales are ordinarily offset by the
differences in the costs and credit risks of such sales. For any part of the
Security Fund consisting of
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securities, Secured Party shall be under no obligation to delay a sale of any
portion thereof for the period of time necessary to permit the issuer thereof to
register such securities for public sale under any applicable state or federal
law, even if the issuer thereof would agree to do so.
15. DISPOSITION OF PLEDGED LANDLORD'S SHARES.
Secured Party shall not transfer all or any part of the Pledged
Landlord's Shares or Security Fund except in connection with the exercise of
remedies as provided in Section 14 above. Any proceeds of any disposition of any
of the Pledged Landlord's Shares or any part thereof, shall be applied by
Secured Party to the payment of expenses incurred by Secured Party in connection
with the foregoing, including reasonable attorneys' fees, and the balance of
such proceeds shall be applied by Secured Party toward the payment of the
Obligations in such order of application as Secured Party may from time to time
elect.
16. COSTS, EXPENSES AND ATTORNEYS' FEES.
Pledgor shall pay to Secured Party immediately upon demand the full
amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys' fees incurred by Secured Party after the occurrence and
during the continuance of any Event of Default in exercising any right, power,
privilege or remedy conferred by this Agreement or in the enforcement thereof,
including any of the foregoing incurred in connection with any bankruptcy
proceeding relating to Pledgor or the valuation of the Pledged Landlord's Shares
including without limitation, the seeking of relief from or modification of the
automatic stay or the negotiation and drafting of a cash collateral order. All
of the foregoing shall be paid to Secured Party by Pledgor with interest at a
rate per annum equal to the lesser of ten percent (10%) or the maximum rate
permitted by law.
17. GOVERNING LAW; SUCCESSORS, ASSIGNS.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without reference to principles of conflicts
of laws (other than Section 5-1401 of the New York General Obligations Law) and
shall be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties.
18. SEVERABILITY OF PROVISIONS.
If any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such
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provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of
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such provision or any remaining provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
PLEDGOR
GOLF HOSTS, INC., a Florida
corporation
By:
Name:
Its:
SECURED PARTY
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland
corporation
Its: General Partner
By:
Name:
Its:
By:
Name:
Its:
Agreed and Acknowledged:
GOLF HOSTS, INC.,
a Florida corporation
By:
Name:
Its:
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EXHIBIT I
ADDITIONAL PLEDGE AGREEMENT
THIS ADDITIONAL PLEDGE AGREEMENT (this "Agreement") is entered into as
of this 3rd day of October, 1997, by and between (i) GOLF TRUST OF AMERICA,
L.P., a Delaware limited partnership ("Secured Party"), and (ii) GOLF HOSTS,
INC. ("Pledgor").
RECITALS:
This Agreement is entered into based on the following understandings:
A. Pursuant to that certain Lease (the "Lease") dated as of October 3,
1997, by and between Secured Party and Lost Oaks, L.P., a Delaware limited
partnership ("Lessee"), Secured Party has agreed to lease certain property to
Lessee.
B. As a condition to Secured Party entering into the Lease, Secured
Party has required that Pledgor pledge the Landlord's Shares (as hereinafter
defined) as security for the Obligations (as hereinafter defined).
1. DEFINITIONS
(a) Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Lease.
(b) The following terms shall have the indicated meanings:
"Agreement" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Common Stock" means shares of common stock, par value $0.01,
of Golf Trust of America, Inc., a Maryland corporation.
"Event of Default" has the meaning set forth in Section 13(a)
of this Agreement.
"Landlord's Shares" means, 70,980 shares of Common Stock.
"Obligations" has the meaning set forth in Section 2(a) of
this Agreement.
"Pledged Landlord's Shares" has the meaning set forth in
Section 2(a) of this Agreement.
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"Pledgor" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Secured Party" has the meaning set forth in the introductory
Paragraph of this Agreement.
"Security Fund" has the meaning set forth in Section 2(a) of
this Agreement.
NOW, THEREFORE, for and in consideration of the mutual
covenants contained herein and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Secured Party
and Pledgor hereby agree as follows:
2. GRANT OF SECURITY INTEREST.
(a) As security for the payment and performance of all obligations and
liabilities (including, without limitation, indemnities, fees and interest
thereon) of Pledgor, or any of Pledgor's direct or indirect subsidiaries or
Affiliates arising under the Lease or in connection with any agreement,
instrument or extension contemplated by the Lease (collectively, the
"Obligations"), Pledgor hereby pledges, hypothecates and grants to Secured Party
a first and prior security interest in the Landlord's Shares owned by Pledgor
(the "Pledged Landlord's Shares"), together with, after an occurrence and during
the continuance of an Event of Default hereunder, any and all proceeds thereof,
including without limitation, any and all dividends, income, interest and
distributions earned from or attributable to the investment or deposit of the
Pledged Landlord's Shares (the Pledged Landlord's Shares, together with all of
the foregoing being collectively referred to herein as the "Security Fund").
Pledgor shall have the right to pledge, as substitute collateral, cash or other
security in an amount equal to the fair market value of the substituted shares.
Prior to an Event of Default (defined below) all dividends, income, interest
and/or distributions earned from or attributable to the investment or deposit of
the Security Fund shall be payable to Pledgor; following an Event of Default
under the Loan Agreement such amounts shall be added to and become a part of the
Security Fund and shall only be disbursed in accordance with the terms of this
Agreement. The word "Obligations" is used herein in its most comprehensive sense
and includes without limitation any and all debts, obligations and liabilities
of Pledgor, Pledgor or any of Pledgor's direct or indirect subsidiaries arising
under the Loan Agreement or this Agreement, now or hereafter made, incurred or
created, whether voluntary or involuntary and however arising, whether due or
not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether Pledgor, Pledgor or any of Pledgor's direct or
indirect subsidiaries may be liable individually or jointly, or whether recovery
upon such Obligations may be or hereafter become unenforceable.
(b) Pledgor shall execute and deliver to Secured Party such financing
and continuation statements covering the Security Fund and take such other
actions as Secured Party may from time to time require to perfect and continue
the perfection of Secured Party's security interest in the Security Fund.
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<PAGE>
3. CONTINUING AGREEMENT; REVOCATION; OBLIGATION UNDER OTHER AGREEMENTS.
This is a continuing agreement and all rights, powers and remedies hereunder
shall apply to all past, present and future obligations of Pledgor to Secured
Party under the Loan Agreement. This Agreement shall not terminate except in
accordance with its terms or Secured Party's written release of Pledgor from its
Obligations under this Agreement.
4. SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF
LIABILITY. This Agreement is in full force and effect and is binding on Pledgor
as of the date written below, regardless of whether Secured Party obtains
additional collateral or any guaranties from others or takes any other action
contemplated by Pledgor. Pledgor waives the benefit of any statute of
limitations affecting Pledgor's liability hereunder or the enforcement thereof,
and Pledgor agrees that any payment of any Obligations or other act which shall
toll any statute of limitations applicable thereto shall similarly operate to
toll such statute of limitations applicable to Pledgor's liability under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES.
(a) Pledgor represents and warrants to Secured Party that: (i) Pledgor
is the owner, directly or indirectly, and has possession or control of the
Pledged Landlord's Shares; (ii) Pledgor has the right to pledge the Pledged
Landlord's Shares; (iii) the Pledged Landlord's Shares are genuine, free from
liens, adverse claims, setoffs, default, prepayment, defenses and conditions
precedent of any kind or character, except as previously disclosed to Secured
Party in writing by Pledgor; (iv) specifically with respect to Pledged
Landlord's Shares consisting of investment securities, instruments, chattel
paper, documents, contracts, insurance policies or any like property, all
persons appearing to be obligated thereon have authority and capacity to
contract and are bound as they appear to be, and the same comply with applicable
laws concerning form, content and manner of preparation and execution; (v) all
statements contained herein and, where applicable, in the Pledged Landlord's
Shares are true and complete; (vi) no financing statement covering any of the
Pledged Landlord's Shares and naming any secured party other than Secured Party,
is on file in any public office; and (vii) the pledge, assignment and delivery
of the Pledged Landlord's Shares pursuant to this Agreement creates a valid lien
and a security interest in the Pledged Landlord's Shares.
6. COVENANTS OF PLEDGOR.
(a) Pledgor Agrees in General: (i) to indemnify Secured Party against
all losses, claims, demands, liabilities and expenses of every kind caused by
property subject hereto, excepting losses relating to the decrease in the market
value of the Pledged Landlord's Shares; (ii) to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Secured Party any time after
the occurrence of an Event of Default in the realization, enforcement and
exercise of its rights, powers and remedies hereunder; (iii) to permit Secured
Party to exercise its powers; (iv) to execute and deliver such documents as
Secured Party deems necessary to create, perfect and continue the security
interests
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contemplated hereby; and (v) not to change its chief place of business or the
place where Pledgor keeps any records concerning the Pledged Landlord's Shares
without first giving Secured Party written notice of the address to which
Pledgor is moving same.
(b) Pledgor Agrees with Regard to the Security Fund: (i) not to permit
any lien on the Security Fund except in favor of Secured Party; (ii) not to
withdraw any funds from any deposit account pledged to Secured Party hereunder
without Secured Party's prior written consent; (iii) not to sell, hypothecate or
otherwise dispose of any of the Pledged Landlord's Shares or any interest
therein, without the prior written consent of Secured Party; (iv) to keep, in
accordance with generally accepted accounting principles, complete and accurate
records regarding all Pledged Landlord's Shares and to permit Secured Party to
inspect the same at any reasonable time; (v) if requested by Secured Party
following an Event of Default to receive and use reasonable diligence to collect
proceeds from the Pledged Landlord's Shares, in trust and as part of the
Security Fund to be held in accordance with Section 2(a) above; (vi) not to
commingle Pledged Landlord's Shares with other property; (vii) to provide any
service and do any other acts or things necessary to keep the Pledged Landlord's
Shares free and clear of all defenses, rights of offset and counterclaims; and
(viii) if the Pledged Landlord's Shares consists of securities and so long as no
Event of Default exists, to vote said securities and to give consents, waivers
and ratifications with respect thereto, provided that no vote shall be cast or
consent, waiver or ratification given or action taken which would impair Secured
Party's interest in the Security Fund or be inconsistent with or violate any
provisions of this Agreement.
7. POWERS OF SECURED PARTY. Pledgor appoints Secured Party its true
attorney in fact to perform any of the following powers, which are coupled with
an interest and are irrevocable until this Agreement has been terminated
pursuant to its terms and may be exercised from time to time by Secured Party's
officers and employees: (a) to perform any obligation of Pledgor hereunder in
Pledgor's name or otherwise; (b) to notify any person obligated on any security,
instrument or other document subject to this Agreement of Secured Party's rights
hereunder; (c) to collect by legal proceedings or otherwise all dividends,
interest, principal or other sums now or hereafter payable upon or on account of
the Security Fund; (d) to enter into any extension, reorganization, deposit,
merger or consolidation agreement, or any other agreement relating to or
affecting the Security Fund and in connection therewith to deposit or surrender
control of the Security Fund to accept other property in exchange for the
Security Fund, and to do and perform such acts and things as Secured Party may
deem proper, with any money or property received in exchange for the Security
Fund at Secured Party's option, to be applied to the Obligations or held by
Secured Party under this Agreement; (e) to make any compromise or settlement
Secured Party deems desirable or proper in respect of the Security Fund; (f) to
insure, process and preserve the Security Fund; (g) to exercise all rights,
powers and remedies which Pledgor would have, but for this Agreement, under all
the Pledged Landlord's Shares subject to this Agreement; (h) to do all acts and
things and execute all documents in the name of Pledgor or otherwise that are
deemed by Secured Party as necessary, proper or convenient in connection with
the preservation, perfection or enforcement of its rights hereunder; and (i) to
execute and file in Pledgor's name any financing statements and amendments
thereto required to perfect Secured Party's security interest hereunder;
provided, however, that until the occurrence and only during the continuation of
an Event of Default
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shall Secured Party have the right to exercise the power of attorney for the
purposes described in paragraphs (a), (c), (d), (e), (f), (g), or (h). If an
Event of Default has occurred and is continuing, any or all of the Security Fund
consisting of securities may be registered, without notice, in the name of
Secured Party or its nominee, and thereafter Secured Party or its nominee may
exercise, without notice, all voting and partnership rights at any meeting of
the partners of the issuer thereof, any and all rights of conversion, exchange
or subscription, or any other rights, privileges or options pertaining to any
Pledged Landlord's Shares all as if it were the absolute owner thereof. The
foregoing shall include, without limitation, the right of Secured Party or its
nominee to exchange, at its discretion, any and all Pledged Landlord's Shares
upon the merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof, or upon the exercise by the issuer thereof
or Secured Party of any right, privilege or option pertaining to any Pledged
Landlord's Shares and in connection therewith, the right to deposit and deliver
any and all of the Pledged Landlord's Shares with any committee, depository,
transfer agent, registrar or other designated agent upon such terms and
conditions as Secured Party may determine. All of the foregoing rights,
privileges or options may be exercised without liability except to account for
property actually received by Secured Party. Secured Party shall have no duty to
exercise any of the foregoing, or any other rights, privileges or options with
respect to the Pledged Landlord's Shares and shall not be responsible for any
failure to do so or delay in so doing.
8. CASH COLLATERAL ACCOUNT. Any money received by Secured Party in
respect of the Security Fund will be retained by Secured Party in an
interest-bearing cash collateral account and the same shall, for all purposes,
be deemed part of the Security Fund hereunder.
9. SECURED PARTY'S CARE AND DELIVERY OF PLEDGED LANDLORD'S SHARES;
ADDITIONAL PLEDGE AND RELEASE.
(a) Secured Party's obligation with respect to the Security Fund in its
possession shall be strictly limited to the duty to exercise reasonable care in
the custody and preservation of the Security Fund. Such duty shall not include
any obligation to ascertain or to initiate any action with respect to maturity
dates, conversion, call or exchange rights, or offers to purchase the Pledged
Landlord's Shares or any similar matters; provided, however, that Secured Party
shall be obligated to inform Pledgor, in writing, of maturity dates, conversion,
call or exchange rights, or offers to purchase the Pledged Landlord's Shares or
any similar matters of which it has knowledge. Secured Party shall have no duty
to take any steps necessary to preserve the rights of Pledgor against prior
parties, or to initiate any action to protect against the possibility of a
decline in the market value of the Pledged Landlord's Shares. Secured Party
shall not be obligated to take any actions with respect to the Pledged
Landlord's Shares requested by Pledgor unless such request is made in writing
and Secured Party determines, in its reasonable discretion, that the requested
action would not unreasonably jeopardize the value of the Pledged Landlord's
Shares as security for the Obligations. Secured Party may at any time deliver
the Security Fund, or any part thereof, to Pledgor, and the receipt thereof by
Pledgor shall be a complete and full acquittance for the Security Fund so
delivered, and Secured Party shall thereafter be discharged from any liability
or responsibility therefor.
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(b) The Pledged Landlord's Shares shall be released from the lien of
the Secured Party under this agreement at the times and in the manner specified
in Exhibit A.
10. PLEDGOR'S WAIVERS.
Pledgor waives any right to require Secured Party to (i) give notice of
the terms, time and place of any public or private sale of personal property
security held from Pledgor or any other person or otherwise comply with any
other provisions of Section 9-504 Uniform Commercial Code; (ii) pursue any other
remedy in Secured Party's power, including the disposition of any other
Collateral; or (iii) make any presentments or demands for performance, or give
any notices of nonperformance, protests, notices of protest or notices of
dishonor in connection with any obligations or evidences of indebtedness held by
Secured Party as security or which constitute in whole or in part the
Obligations secured hereunder, or in connection with the creation of new or
additional Obligations.
11. AUTHORIZATIONS TO SECURED PARTY. Pledgor authorizes Secured Party
either before or after revocation hereof, without notice or demand and without
affecting Pledgor's liability hereunder, from time to time to: (a) take and hold
security, other than the Pledged Landlord's Shares, for the payment of the
Obligations or any part thereof and exchange, enforce, waive and release the
Pledged Landlord's Shares, or any part thereof, or any such other security; (b)
after an Event of Default, apply the Pledged Landlord's Shares or any other
security and direct the order or manner of sale thereof, including without
limitation, a non-judicial sale permitted by the terms of this Agreement, as
Secured Party in its discretion may determine; (c) release or substitute any one
or more of the endorsers or guarantors of the Obligations, or any part thereof,
or any other parties thereto; and (d) apply payments received by Secured Party
from Pledgor to any Obligations of Pledgor to Secured Party, in such order as
Secured Party shall determine in its sole discretion, whether or not any such
Obligations is covered by this Agreement, and Pledgor hereby waives any
provision of law regarding application of payments which specifies otherwise.
12. PAYMENT OF TAXES, CHARGES, LIENS AND ASSESSMENTS. Pledgor agrees to
pay, prior to delinquency, all taxes, charges, liens and assessments against the
Security Fund, and upon the failure of Pledgor to do so, Secured Party at its
option may pay any of them and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same. Any such
payments made by Secured Party shall be obligations of Pledgor to Secured Party,
due and payable immediately upon demand, together with interest at a rate
determined in accordance with the provisions of Section 17 of this Agreement,
and shall be secured by the Security Fund, subject to all terms and conditions
of this Agreement.
13. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement: (a) any Event of Default
under the Lease; or (b) any representation or warranty made by Pledgor herein
shall prove to be incorrect in any material respect when made; or (c) Pledgor
shall fail to observe or perform any obligation or agreement contained herein
after Secured Party has provided written notice
I-6
<PAGE>
describing such failure and Pledgor has failed within thirty (30) days of
receipt of such notice to cure such failure, provided if such cure cannot be
completed within such thirty (30) day period, then such cure period shall be
extended for so long as Pledgor is diligently prosecuting such cure to
completion up to a maximum of ninety (90) days.
14. REMEDIES. Upon the occurrence of any Event of Default, Secured
Party shall have and may exercise without demand any and all rights, powers,
privileges and remedies granted to a secured party upon default under the
Uniform Commercial Code or otherwise provided to Secured Party by law. All
rights, powers, privileges and remedies of Secured Party shall be cumulative.
Secured Party may exercise its right of setoff with respect to the Obligations
in the same manner as if the Obligations were unsecured. No delay, failure or
discontinuance of Secured Party in exercising any right, power, privilege or
remedy hereunder shall affect or operate as a waiver of such right, power,
privilege or remedy; nor shall any single or partial exercise of any such right,
power, privilege or remedy preclude, waive or otherwise affect any other or
further exercise thereof or the exercise of any other right, power, privilege or
remedy. Any waiver, permit, consent or approval of any kind by Secured Party of
any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. While an Event of Default exists: (a) Secured Party may, at any time
and at Secured Party's sole option, liquidate any time deposits pledged to
Secured Party hereunder, whether or not said time deposits have matured and
notwithstanding the fact that such liquidation may give rise to penalties for
early withdrawal of funds; (b) Secured Party may appropriate the Security Fund
and apply all proceeds toward repayment of the Obligations in such order as
Secured Party may from time to time elect or, at Secured Party's sole option,
place any proceeds in a cash collateral account; and (c) at Secured Party's
request, Pledgor will assemble and deliver all Pledged Landlord's Shares not
already in the possession of Secured Party, and books and records pertaining
thereto, to Secured Party at a reasonably convenient place designated by Secured
Party. It is agreed that public or private sales, for cash or on credit, to a
wholesaler or retailer or investor, or user of property of the types subject to
this Agreement, or public auction, are all commercially reasonable since
differences in the sales prices generally realized in the different kinds of
sales are ordinarily offset by the differences in the costs and credit risks of
such sales. For any part of the Security Fund consisting of securities, Secured
Party shall be under no obligation to delay a sale of any portion thereof for
the period of time necessary to permit the issuer thereof to register such
securities for public sale under any applicable state or federal law, even if
the issuer thereof would agree to do so.
15. DISPOSITION OF PLEDGED LANDLORD'S SHARES. Secured Party shall not
transfer all or any part of the Pledged Landlord's Shares or Security Fund
except in connection with the exercise of remedies as provided in Section 14
above. Any proceeds of any disposition of any of the Pledged Landlord's Shares
or any part thereof, shall be applied by Secured Party to the payment of
expenses incurred by Secured Party in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds shall be applied by
Secured Party toward the payment of the Obligations in such order of application
as Secured Party may from time to time elect.
I-7
<PAGE>
16. COSTS, EXPENSES AND ATTORNEYS' FEES. Pledgor shall pay to Secured
Party immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees incurred by
Secured Party after the occurrence and during the continuance of any Event of
Default in exercising any right, power, privilege or remedy conferred by this
Agreement or in the enforcement thereof, including any of the foregoing incurred
in connection with any bankruptcy proceeding relating to Pledgor or the
valuation of the Pledged Landlord's Shares including without limitation, the
seeking of relief from or modification of the automatic stay or the negotiation
and drafting of a cash collateral order. All of the foregoing shall be paid to
Secured Party by Pledgor with interest at a rate per annum equal to the lesser
of ten percent (10%) or the maximum rate permitted by law.
17. GOVERNING LAW; SUCCESSORS, ASSIGNS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without reference to principles of conflicts of laws (other than Section 5-1401
of the New York General Obligations Law) and shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties.
18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Agreement.
I-8
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
PLEDGOR
GOLF HOSTS,INC.,
a Delaware corporation
By: ___________________________
Name: _________________________
Its: __________________________
SECURED PARTY
GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland corporation
Its: General Partner
By: ___________________________
Name: _________________________
Its: __________________________
By: ___________________________
Name: _________________________
Its: __________________________
Agreed and Acknowledged:
LOST OAKS, L.P.,
a Delaware limited partnership
By: ___________________________
Name: _________________________
Its: __________________________
I-9
<PAGE>
EXHIBIT I-1
Release of Pledged Landlord's Shares.
1. The Pledged Landlord's Shares shall be released, and shall no longer
constitute collateral security for the Lease, at the following times and in
accordance with the following provisions:
(i) One-third (1/3) of the Pledged Landlord'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 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 Lessee or
the Borrower or the Lessee for each such Fiscal Year.
(ii) An aggregate of two-thirds (2/3) of the Pledged
Landlord'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 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 Lessee or the Borrower for each such Fiscal Year.
(iii) All of the Pledged Landlord'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 and the
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
Lessee or the Borrower for each such Fiscal Year.
Upon Pledgor's request, and at Pledgor's expense, Secured Party shall
execute a written instrument of release with respect to any Pledged Landlord's
Shares that are released in accordance with the foregoing.
2. Notwithstanding the provisions of paragraph 1 above, in the event
Landlord receives, on or before December 1, 1997, (i) a pledge of the shares of
Condocorp as provided in Section 5.3 of the Lease, and (ii) a pledge of 89.1%
the shares of Golf Hosts Resorts, Inc., in a form acceptable to Landlord,
Landlord agrees to execute an amendment of this Additional Pledge Agreement to
provide that 59,302 shares of the Pledged Landlord's Shares would be released,
and would no longer constitute collateral security for the Lease, at such time
as the Net Operating Income with respect to the Innisbrook Property and the
Property shall have been, for each of the two (2) prior Fiscal Years, one
hundred and thirteen and one-half percent (113.5%) of the Debt Service payable
by Lessee or the Borrower for each such Fiscal Year. The balance of Pledged
Landlord's Shares shall be released in accordance with paragraph 1 above.
I-1-1
<PAGE>
EXHIBIT J
TARPON WOODS
CAPITAL IMPROVEMENT BUDGET
Preliminary (7/15/97 Revised
-------------------- ---------
(8/27/97)
Parking Lots $ 30,000 $ 30,000
Tennis Court/Pool Demo $ 10,000 $ 10,000
Restaurant Interior w/Demo $150,000 $400,000*1
Clubhouse Facade $100,000 $ 50,000*1
Cart Area Landscaping $ 10,000 $ 10,000
General Landscaping $ 50,000 $ 30,000
Expand Putting Green $ 10,000 $ 10,000
Golf Shop Interior $ 30,000 $130,000*1
Golf Hole Improvements $275,000 $150,000
Sinage $ 10,000 $ 10,000
Computer System, etc. $ 25,000 $ 25,000
Cart Barn Upgrade $140,000
On Course Restrooms $ 60,000
Name Change Adv. &
Promos ________ $ 30,000
New Equipment $100,000
Irrigation $ 65,000
TOTALS $700,000 $1,250,000
*1 There may be an opportunity to reduce these costs
through the use of a pre-fabricated building.
J-1
<PAGE>
EXHIBIT J-1
TARPON WOODS
REMODEL SCHEDULE
1. Acquisition 09/26/97
2. Plans 10/01/97-11/30/97
3. Permits 12/01/97-12/31/97
4. Demolition 01/01/98-01/15/98
5. Reconstruction 01/16/98-04/30/98
6. Grand Reopening 05/01/98
J-1-1
<PAGE>
EXHIBIT K
CONTINGENT CONSIDERATION FORMULA
A. Definitions. For purposes of this Exhibit K, the following terms
shall have the following meanings:
(1) "Adjusted Net Operating Income" means the Conversion Date
Net Operating Income divided by 1.135.
(2) "Applicable Twelve (12) Month Period" means the Conversion
Year.
(3) "Capitalization Rate" shall mean 10.50%.
(4) "Company" means Golf Trust of America, Inc.
(5) "Company's First Call FFO" means the consensus FFO per
share estimate for the Company for the calendar year which includes the
Conversion Date, subtracting the Company's capital expenditure reserve
per share as estimated for that year as such estimate is reported by
First Call (or, if First Call is no longer in general use within the
securities industry, by such other reporting service as is then in
general use within the securities industry) divided by the average of
the Company's closing share price for the thirty (30) trading days
immediately preceding the Conversion Date.
(6) "Conversion Date" means the April 30 following the date on
which Landlord receives written notice that Tenant has irrevocably
elected to receive the Contingent Consideration.
(7) "Conversion Date Capitalization Rate" shall mean the
Company's First Call FFO, plus 200 basis points (but in no event less
than the Capitalization Rate).
(8) "Conversion Date Net Operating Income" means the Gross
Operating Revenue for the Property less the Gross Operating Expenses
for the Conversion Year.
(9) "Conversion Year" means the calendar year immediately
preceding the Conversion Date.
(10) "Conversion Notice" shall mean a written notice delivered
by Tenant to Landlord whereby Tenant elects to receive the Contingent
Consideration. The Conversion Notice may only be given once and must be
given on or before April 15 of calendar years 2000, 2001 and 2002. If
the Conversion Notice is not given on or before April 15, 2002,
Tenant's right to receive the Contingent Consideration shall
automatically and irrevocably terminate. The Conversion Notice may not
be given prior to March 1, 1999.
K-1
<PAGE>
(11) "Gross Operating Expenses" means the gross operating
expenses of the Property for the Applicable Twelve (12) Month Period,
calculated in accordance with generally accepted accounting principles
consistently applied. For purposes of calculating Gross Operating
Expenses, the Florida State Sales/Lease Tax shall be excluded, and
Landlord may make discretionary adjustments on a line item basis to
reflect stabilized Gross Operating Expenses, including the following
adjustments:
(a) annual capital replacement reserves shall be
including, as reasonably determined by Landlord;
(b) annual cash expenditures (including depreciation)
for golf carts shall be included, as reasonably determined by
Landlord;
(c) extraordinary expenditures (such as to repair
storm damage) which are not anticipated to recur in the
ordinary course shall be excluded, as reasonably determined by
Landlord;
(d) other adjustments to reflect stabilized Gross
Operating Expenses, as reasonably determined by Landlord shall
be made; and
(e) depreciation, amortization and debt service shall
be excluded.
For purposes of determining the Contingent Consideration,
Gross Operating Expenses will be adjusted upward by Landlord to the
extent such expenses (or any major component thereof) have decreased at
a compound annual rate greater than 2% per annum from the Base Year to
the Conversion Year or more than 3% (on a year-to-year basis) from the
year immediately preceding the Conversion Year, unless, Landlord shall
determine that such expense reductions were of a nature so as to be
reasonably expected to be sustained.
(12) "Gross Operating Revenue" means the gross operating
revenue of the Property, including revenue related to the golf course
operations, food and beverage operations and sale of merchandise, for
the Applicable Twelve (12) Month Period, calculated in accordance with
generally accepted accounting principles consistently applied. For
purposes of determining the Contingent Consideration, Gross Operating
Revenue will be adjusted downward to the extent such revenue has
increased by more than 5.0% from the year immediately preceding the
Conversion Year to the Conversion Year. Factors to determine
sustainability shall include factors such as the creation of new demand
generators (i.e., hotel development or condominium development) and the
non-recurring nature of any revenue (i.e., a one-time tournament fee).
(13) "Net Incremental Income Available for Contingent
Consideration" means the Adjusted Net Operating Income for the
Applicable Twelve (12) Month Period, increased by the annual capital
replacement reserve included in the payment of base rent, preceding the
Conversion Date less the rental payment made by the lessee of the
Property for the same period.
K-2
<PAGE>
(14) "Net Operating Income" means the Gross Operating Revenue
of the Property for the Applicable Twelve (12) Month Period less the
Gross Operating Expenses for the same period.
B. Contingent Consideration.
(1) Tenant shall have the right to receive the Contingent
Consideration by delivering the Conversion Notice to Landlord; provided
that the tenant under the lease at the Property shall have paid
percentage rent on an annual basis for the prior calendar year. The
Contingent Consideration shall equal the Net Incremental Income
Available for Contingent Consideration divided by the Conversion Date
Capitalization Rate.
(2) Within forty-five (45) days of the Conversion Date,
Landlord shall deliver to Tenant the number of shares of common stock
of Golf Trust of America, Inc. that equals the Contingent Consideration
divided by the per share common stock price of the Company on the
Conversion Date.
K-3
<PAGE>
- --------------------------------------------------------------------------------
L E A S E
GOLF TRUST OF AMERICA, L.P.
Landlord
and
LOST OAKS, L.P., a Delaware Limited Partnership
Tenant
Dated as of October 3, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
LEASED PROPERTY........................................................ 1
ARTICLE 2
DEFINITIONS, RULES OF CONSTRUCTION..................................... 2
2.1 Definitions.............................................. 2
ARTICLE 3
TERM................................................................... 14
3.1 Initial Term......................................... 14
3.2 Extension Options.................................... 15
3.3 Right of First Offer to Lease........................ 15
ARTICLE 4
RENT................................................................... 15
4.1 Rent................................................. 15
4.2 Increase in Initial Base Rent........................ 16
4.3 Percentage Rent...................................... 16
4.4 Annual Reconciliation of Percentage Rent............. 17
4.5 Increase in Base Rent Following Conversion Date...... 17
4.6 Record-keeping....................................... 17
4.7 Additional Charges................................... 17
4.8 Late Payment of Rent................................. 18
4.9 Net Lease............................................ 18
4.10 Allocation of Revenues............................... 18
ARTICLE 5
SECURITY DEPOSIT....................................................... 19
5.1 Pledge of Stock Options, Stock and Owners Shares..... 19
5.2 Obligation to Withhold Distributions................. 19
5.3 Pledge of Stock for Condominiums..................... 19
5.4 Landlord's Lien...................................... 19
5.5 Rental Pool.......................................... 20
5.6 Partial Release...................................... 20
ARTICLE 6
IMPOSITIONS............................................................ 20
6.1 Payment of Impositions............................... 20
6.2 Information and Reporting............................ 20
6.3 Refunds.............................................. 21
6.4 Utility Charges...................................... 21
6.5 Assessment Districts................................. 21
(i)
<PAGE>
ARTICLE 7
TENANT WAIVERS......................................................... 21
7.1 No Termination, Abatement, Etc....................... 21
7.2 Condition of the Property............................ 22
ARTICLE 8
OWNERSHIP OF TANGIBLE PERSONAL PROPERTY................................ 23
8.1 Property............................................. 23
8.2 Tenant's Personal Property........................... 24
8.3 Tenant's Obligations................................. 24
8.4 Landlord's Waivers................................... 24
ARTICLE 9
USE OF PROPERTY........................................................ 24
9.1 Use.................................................. 24
9.2 Specific Prohibited Uses............................. 25
9.3 Membership Sales..................................... 25
9.4 Landlord to Grant Easements, Etc..................... 25
9.6 Valuation of Remainder Interest in Lease............. 26
ARTICLE 10
HAZARDOUS MATERIALS.................................................... 26
10.1 Intentionally Deleted................................ 26
10.2 Intentionally Deleted................................ 26
10.3 Intentionally Deleted................................ 26
10.4 Intentionally Deleted................................ 26
10.5 Intentionally Deleted................................ 26
10.6 Remediation.......................................... 26
10.7 Tenant's Indemnification of Landlord................. 27
10.8 Survival of Indemnification Obligations.............. 28
10.9 Environmental Violations at Expiration or
Termination of Lease................................. 28
10.10 Environmental Statements............................. 28
ARTICLE 11
MAINTENANCE AND REPAIR................................................. 28
11.1 Tenant's Obligations................................. 28
11.2 Waiver of Statutory Obligations...................... 29
11.3 Mechanic's Liens..................................... 30
11.4 Surrender of Property................................ 30
ARTICLE 12
TENANT IMPROVEMENTS; SUBMITTAL OF BUDGETS; FINANCIAL
STATEMENTS............................................................. 30
12.1 Tenant's Right to Construct.......................... 30
12.2 Scope of Right....................................... 31
12.3 Cooperation of Landlord.............................. 31
12.4 Capital Replacement Fund............................. 32
(ii)
<PAGE>
12.5 Rights in Tenant Improvements........................ 32
12.6 Landlord's Right to Audit Calculation of Gross
Golf Revenue......................................... 33
12.7 Annual Budget........................................ 33
12.8 Financial Statements................................. 35
12.9 Landlord Improvements................................ 36
ARTICLE 13
LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS........................... 36
13.1 Liens................................................ 36
13.2 Encroachments and Other Title Matters................ 37
ARTICLE 14
PERMITTED CONTESTS..................................................... 38
14.1 Authorization........................................ 38
14.2 Indemnification of Landlord.......................... 39
ARTICLE 15
INSURANCE.............................................................. 39
15.1 General Insurance Requirements....................... 39
15.2 Other Insurance...................................... 40
15.3 Replacement Cost........................................ 40
15.4 Waiver of Subrogation................................ 41
15.5 Form Satisfactory, Etc............................... 41
15.6 Change in Limits..................................... 41
15.7 Blanket Policy....................................... 42
15.8 Insurance Proceeds................................... 42
15.9 Disbursement of Proceeds............................. 42
15.10 Excess Proceeds, Deficiency of Proceeds.............. 43
15.11 Reconstruction Covered by Insurance.................. 44
15.12 Reconstruction Not Covered by Insurance.............. 44
15.13 No Abatement of Rent................................. 44
15.14 Waiver............................................... 45
15.15 Damage Near End of Term.............................. 45
ARTICLE 16
CONDEMNATION........................................................... 45
16.1 Total Taking......................................... 45
16.2 Partial Taking....................................... 45
16.3 Restoration.......................................... 45
16.4 Award-Distribution................................... 46
16.5 Temporary Taking..................................... 46
ARTICLE 17
EVENTS OF DEFAULT...................................................... 46
17.1 Events of Default.................................... 46
17.2 Payment of Costs..................................... 48
17.3 Certain Remedies..................................... 48
(iii)
<PAGE>
17.4 Damages.............................................. 48
17.5 Additional Remedies.................................. 50
17.6 Appointment of Receiver.............................. 50
17.7 Waiver............................................... 50
17.8 Application of Funds................................. 50
17.9 Impounds............................................. 50
ARTICLE 18
LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT.............................. 50
ARTICLE 19
LEGAL REQUIREMENTS..................................................... 51
ARTICLE 20
HOLDING OVER........................................................... 51
ARTICLE 21
RISK OF LOSS........................................................... 52
ARTICLE 22
INDEMNIFICATION........................................................ 52
22.1 Tenant's Indemnification of Landlord................. 52
22.2 Landlord's Indemnification of Tenant................. 53
22.3 Mechanics of Indemnification......................... 53
22.4 Survival of Indemnification Obligations;
Available Insurance Proceeds......................... 54
ARTICLE 23
SUBLETTING AND ASSIGNMENT.............................................. 54
23.1 Prohibition Against Assignment....................... 54
23.2 Subleases............................................ 54
23.3 Transfers............................................ 56
23.4 REIT Limitations..................................... 56
23.5 Right of First ...................................... 56
23.6 Bankruptcy Limitations............................... 57
23.7 Management Agreement................................. 59
ARTICLE 24
OFFICER'S CERTIFICATES AND OTHER STATEMENTS............................ 59
24.1 Officer's Certificates............................... 59
24.2 Environmental Statements............................. 59
ARTICLE 25
LANDLORD MORTGAGES..................................................... 60
25.1 Landlord May Grant Liens............................. 60
25.2 Tenant's Non-Disturbance Rights...................... 60
25.3 Facility Mortgage Protection......................... 60
(iv)
<PAGE>
ARTICLE 26
SALE OF FEE INTEREST................................................... 61
26.1 Right of First Offer to Purchase..................... 61
26.2 Conveyance by Landlord............................... 61
ARTICLE 27
ARBITRATION............................................................ 61
27.1 Arbitration.......................................... 62
27.2 Arbitration Procedures............................... 62
ARTICLE 28
MISCELLANEOUS.......................................................... 62
28.1 Landlord's Right to Inspect.......................... 62
28.2 Breach by Landlord................................... 63
28.3 Competition Between Landlord and Tenant.............. 63
28.4 No Waiver............................................ 63
28.5 Remedies Cumulative.................................. 63
28.6 Acceptance of Surrender.............................. 63
28.7 No Merger of Title................................... 64
28.8 Quiet Enjoyment...................................... 64
28.9 Notices.............................................. 64
28.10 Survival of Claims................................... 65
28.11 Invalidity of Terms or Provisions.................... 65
28.12 Prohibition Against Usury............................ 65
28.13 Amendments to Lease.................................. 65
28.14 Successors and Assigns............................... 65
28.15 Titles............................................... 65
28.16 Governing Law........................................ 65
28.17 Memorandum of Lease.................................. 65
28.18 Attorneys' Fees...................................... 65
28.19 Non-Recourse as to Landlord and Tenant............... 66
28.20 No Relationship...................................... 67
28.21 Reletting............................................ 67
28.22 Landlord's Determination of Facts.................... 67
28.23 Time is of the Essence............................... 68
(v)
<PAGE>
Exhibits
Exhibit A - Legal Description of the Land
Exhibit B - Schedule of Improvements
Exhibit C - Other Leased Property
Exhibit D - Pledge Agreement
Exhibit E - Intentionally Deleted
Exhibit F - Calculation of Gross Golf Revenue for the
Base Year by Quarter
Exhibit G - Stock Options Pledge Agreement
Exhibit H - Disbursement Procedures
Exhibit I - Additional Pledge Agreement
Exhibit J - Tarpon Woods Capital Improvement Budget
Exhibit K - Contingent Contribution Formula
(vi)
