<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________
Commission file number: 001-13003
SILVERLEAF RESORTS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2259890
(State of incorporation) (I.R.S. Employer
Identification No.)
1221 RIVERBEND DRIVE, SUITE 120
DALLAS, TEXAS 75247
(Address of principal executive offices, including zip code)
214-631-1166
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Number of shares of common stock outstanding of the issuer's Common
Stock, par value $0.01 per share, as of November 10, 1998: 12,889,417
<PAGE> 2
SILVERLEAF RESORTS, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION (Unaudited)
Item 1. Condensed Consolidated Statements of Income for the three months
and nine months ended September 30, 1998 and 1997 ....................... 1
Condensed Consolidated Balance Sheets as of September 30, 1998 and
December 31, 1997 ....................................................... 2
Condensed Consolidated Statement of Shareholders' Equity for the
nine months ended September 30, 1998 .................................... 3
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1998 and 1997 ....................................... 4
Notes to Condensed Consolidated Financial Statements .................... 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................... 10
PART II. OTHER INFORMATION
Item 5. Other Matters ........................................................... 18
Item 6. Exhibits and Reports on Form 8-K ........................................ 18
Signatures .............................................................. 19
</TABLE>
<PAGE> 3
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Vacation Interval sales $ 37,409 $ 18,337 $ 100,281 $ 51,963
Interest income 4,262 2,407 11,244 6,435
Interest income from affiliates 16 16 47 220
Management fee income 725 752 1,819 1,753
Lease income 682 278 1,685 1,153
Other income 2,125 1,112 4,333 2,347
------------ ------------ ------------ ------------
Total revenues 45,219 22,902 119,409 63,871
COSTS AND OPERATING EXPENSES:
Cost of Vacation Interval sales 5,605 1,916 16,154 5,131
Sales and marketing 19,260 8,219 47,692 21,720
Provision for uncollectible notes 4,489 2,523 12,346 8,048
Operating, general and administrative 4,225 3,401 12,336 8,506
Depreciation and amortization 1,029 471 2,280 1,255
Interest expense to affiliates -- -- -- 422
Interest expense to unaffiliated entities 1,756 463 5,088 3,421
------------ ------------ ------------ ------------
Total costs and operating expenses 36,364 16,993 95,896 48,503
Income before provision for income taxes 8,855 5,909 23,513 15,368
Provision for income taxes (3,435) (2,186) (9,019) (5,687)
------------ ------------ ------------ ------------
NET INCOME $ 5,420 $ 3,723 $ 14,494 $ 9,681
============ ============ ============ ============
NET INCOME PER COMMON SHARE:
BASIC $ 0.42 $ 0.33 $ 1.16 $ 1.05
============ ============ ============ ============
DILUTED $ 0.42 $ 0.33 $ 1.14 $ 1.04
============ ============ ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 13,054,380 11,311,517 12,543,544 9,247,048
============ ============ ============ ============
DILUTED 13,054,380 11,403,192 12,664,871 9,341,065
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE> 4
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1998 1997
------------- ------------
<S> <C> <C>
Cash and equivalents $ 7,516 $ 4,970
Restricted cash 200 200
Notes receivable, net of allowance for doubtful accounts of
$20,590 and $12,261, respectively 155,261 92,036
Amounts due from affiliates 2,990 1,389
Inventory 52,267 28,310
Land, equipment and utilities, net 31,256 21,629
Prepaid and other assets 18,368 7,867
--------- ---------
Total Assets $ 267,858 $ 156,401
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 10,943 $ 5,106
Unearned revenues 4,810 3,122
Income taxes payable 3,494 1,500
Deferred income taxes, net 20,074 14,037
Notes payable and capital lease obligations 14,846 48,871
Senior subordinated notes 75,000 --
--------- ---------
Total Liabilities 129,167 72,636
SHAREHOLDERS' EQUITY
Common stock, par value $0.01 per share, 100,000,000
shares authorized, 13,311,517 shares issued and 12,972,517
shares outstanding at September 30, 1998 and 11,311,517
shares issued and outstanding at December 31, 1997 133 113
Additional paid-in capital 109,339 64,577
Retained earnings 33,569 19,075
Treasury stock, at cost, 339,000 shares (4,350) --
--------- ---------
Total Shareholders' Equity 138,691 83,765
--------- ---------
Total Liabilities and Shareholders' Equity $ 267,858 $ 156,401
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 5
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
------------------------ Additional Treasury Stock
Number of Par Paid-in Retained -------------------------------
Shares Issued Value Capital Earnings Shares Cost Total
------------- ------- ---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1998 11,311,517 $ 113 $ 64,577 $ 19,075 -- $ -- $ 83,765
Issuance of common stock 2,000,000 20 44,762 -- -- -- 44,782
Treasury stock -- -- -- -- 339,000 (4,350) (4,350)
Net income -- -- -- 14,494 -- -- 14,494
---------- ----- --------- -------- ------- -------- ---------
September 30, 1998 13,311,517 $ 133 $ 109,339 $ 33,569 339,000 $ (4,350) $ 138,691
========== ===== ========= ======== ======= ======== =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 6
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 14,494 $ 9,681
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,280 1,255
Discontinued operations -- 917
Deferred income taxes 6,037 5,016
Increase (decrease) in cash from changes in
assets and liabilities:
Restricted cash -- (200)
Amounts due from affiliates (1,601) 4,240
Inventory (23,957) (5,951)
Prepaid and other assets (10,631) (1,607)
Accounts payable and accrued expenses 5,837 1,143
Amounts due to affiliates -- 284
Unearned revenues 1,688 (217)
Income taxes payable 1,994 690
--------- ---------
Net cash provided by (used in) operating activities (3,859) 15,251
--------- ---------
INVESTING ACTIVITIES:
Purchases of land, equipment and utilities (10,676) (4,649)
Proceeds from sale of land, equipment and utilities -- 420
Notes receivable, net (63,225) (26,200)
--------- ---------
Net cash used in investing activities (73,901) (30,429)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from borrowings from unaffiliated entities 118,682 27,279
Payments on borrowings to unaffiliated entities (78,808) (45,408)
Proceeds from borrowings from affiliates -- 25
Payments on borrowings to affiliates -- (15,074)
Net proceeds from issuance of common stock 44,782 51,143
Purchase of treasury stock (4,350) --
Discontinued operations -- (228)
--------- ---------
Net cash provided by financing activities 80,306 17,737
--------- ---------
Net increase in cash 2,546 2,559
CASH AND CASH EQUIVALENTS:
Beginning of period 4,970 973
--------- ---------
End of period $ 7,516 $ 3,532
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 2,216 $ 3,019
Income taxes paid $ 988 $ --
Equipment acquired under capital lease or note $ 2,065 $ 1,813
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 7
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BACKGROUND
The condensed consolidated financial statements of Silverleaf Resorts, Inc. and
subsidiaries ("the Company") presented herein do not include certain information
and disclosures required by generally accepted accounting principles for
complete financial statements. However, in the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998.
These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's Form 10-K/A (File No. 001-13003) as filed with the Securities and
Exchange Commission. The accounting policies used in preparing the condensed
consolidated financial statements presented herein are the same as those
described in such Form 10-K/A. Certain previously reported amounts, however,
have been reclassified to conform to the 1998 presentation.
The Company has adopted Statement of Financial Accounting Standards No. 130,
"Reporting on Comprehensive Income", effective January 1, 1998. The Company had
no items classified as other comprehensive income in the periods presented.
The Company has adopted Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
No. 131"). SFAS No. 131 redefines how operating segments are determined and
requires disclosures of certain financial and descriptive information about a
company's operating segments. It establishes standards for reporting and
displaying information about operating segments in annual financial statements
and requires that enterprises report selected information about operating
segments in interim reports. SFAS No. 131 may require additional disclosures and
will be applied by the Company for its 1998 annual financial statements.
In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities", was issued, which
establishes standards for and disclosures of derivative instruments and hedging
activities. The Company currently has no derivative instruments in place.
On April 3, 1998, the Accounting Standards Executive Committee issued Statement
of Position ("SOP") 98-5, "Reporting on Costs of Start-Up Activities", effective
for fiscal years beginning after December 15, 1998. SOP 98-5 requires that costs
for start-up activities, including organization costs, be charged to expense as
incurred. The Company currently follows the practice of charging start-up costs
to expense as incurred. The adoption of SOP 98-5, therefore, will have no effect
on results of operations or financial position of the Company.
NOTE 2 - EARNINGS PER SHARE
The following table illustrates the reconciliation between basic and diluted
weighted average shares outstanding for the three and nine months ended
September 30, 1998 and 1997:
5
<PAGE> 8
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ---------------------------
1998 1997 1998 1997
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Weighted average shares outstanding - basic 13,054,380 11,311,517 12,543,544 9,247,048
Issuance of shares from stock options proceeds -- 545,193 728,887 558,463
Repurchase of shares from stock options proceeds -- (453,518) (607,560) (464,446)
---------- ---------- ---------- ---------
Weighted average shares outstanding - diluted 13,054,380 11,403,192 12,664,871 9,341,065
========== ========== ========== =========
</TABLE>
For the three months ended September 30, 1998, the weighted average shares
outstanding assuming dilution was anti-dilutive.
NOTE 3 - PUBLIC OFFERINGS
Effective April 3, 1998, the Company completed the sale of 2,000,000 shares of
Company common stock at a price of $24.375 per share. On the same date, the
majority shareholder of the Company sold 875,000 additional shares of Company
common stock.
Also effective April 3, 1998, the placement of $75 million aggregate principal
amount of 10 1/2% senior subordinated notes due 2008 ("Senior Subordinated
Notes") was completed by the Company. The Senior Subordinated Notes are general
unsecured obligations of the Company, ranking subordinate in right of payment to
all senior indebtedness of the Company, including indebtedness under the
Company's revolving credit facilities. The Company received proceeds from these
two offerings in an aggregate net amount of $118,940,000. Costs incurred in
connection with the offerings were approximately $4.4 million. The Company has
utilized the proceeds primarily for the repayment of notes payable and capital
lease obligations, and its construction and acquisition programs.
The following unaudited condensed pro forma financial information for the nine
months ended September 30, 1998 and 1997 was prepared from the consolidated
financial statements of the Company by adjusting for the effect of all public
offerings in 1998 and 1997, which includes the Company's initial public offering
completed in June 1997 and the equity and debt offerings completed in April
1998, including debt repaid from proceeds of such offerings, as if all of these
transactions had occurred on January 1, 1997. The pro forma information is for
informational purposes only and not necessarily indicative of the financial
position or results of operations that would have resulted had these offerings
actually occurred on January 1, 1997, nor does it purport to represent future
financial position or results of operations of the Company (in thousands, except
per share amounts):
6
<PAGE> 9
<TABLE>
<CAPTION>
Pro Forma Condensed Consolidated
Statements of Income
(Unaudited)
--------------------------------
Nine Months Ended September 30,
--------------------------------
1998 1997
------------ --------------
<S> <C> <C>
Revenues $ 119,362 $ 63,651
Expenses 95,442 50,654
------------ ------------
Income before provision for income taxes 23,920 12,997
Provision for income taxes (9,175) (4,810)
------------ ------------
Net income $ 14,745 $ 8,187
============ ============
Net income per share:
Basic $ 1.11 $ 0.71
============ ============
Diluted $ 1.10 $ 0.70
============ ============
Weighted average shares outstanding:
Basic 13,311,517 11,553,116
============ ============
Diluted 13,432,844 11,644,711
============ ============
</TABLE>
7
<PAGE> 10
NOTE 4 - DEBT
Notes payable, captial lease obligations, and Senior Subordinated Notes consist
of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
--------------- ---------------
<S> <C> <C>
$40 million revolving loan agreement, which contains certain financial
covenants, due October 2005, principal and interest
payable from the proceeds obtained from customer notes
receivable which are pledged as collateral for the note,
at an interest rate of LIBOR plus 2.5% ................................ $ 10,992 $ 22,137
$12 million revolving loan agreement, which contains certain
financial covenants, due May 2003, principal and
interest payable from the proceeds obtained from
customer notes receivable which are pledged as
collateral for the note, at an interest rate of Base plus
2.75% (11.25% at December 31, 1997) ................................... -- 4,122
$60 million revolving loan agreement, which contains
certain financial covenants, due December 1999,
principal and interest payable from the proceeds obtained
on customer notes receivable pledged as collateral for
the note, at an interest rate of LIBOR plus 2.55% ..................... -- 1,529
$15 million revolving loan agreement, which contains certain financial
covenants, due November 2002, principal and interest
payable from the proceeds obtained from customer notes
receivable which are pledged as collateral for the note,
at an interest rate of Prime plus 2% .................................. 720 12,596
$10 million line of credit, due January 2000, with drawings permitted
until December 1998, at a variable rate of LIBOR plus 3%, secured
by land, improvements, and equipment of various existing resorts
and new resorts ....................................................... -- 4,070
Various notes, due from April 1998 through October 2002,
collateralized by various assets with interest rates ranging
from 4.3% to 24.7% at September 30, 1998 and 4.2% to
14.0% at December 31, 1997 ............................................ 660 1,785
--------------- ---------------
Total notes payable ........................................... 12,372 46,239
Capital lease obligations ............................................... 2,474 2,632
--------------- ---------------
Total notes payable and capital lease obligations ............. 14,846 48,871
10 1/2% Senior Subordinated Notes, due 2008, interest payable semi-
annually on April 1 and October 1, guaranteed by all of the
Company's present and future domestic restricted subsidiaries ........ 75,000 --
--------------- ---------------
Total ........................................................ $ 89,846 $ 48,871
=============== ===============
</TABLE>
Prime rate at September 30, 1998 and December 31, 1997 was 8.50%.
Applicable LIBOR rates at September 30, 1998 and December 31, 1997 ranged from
5.25% to 5.38% and 5.72% to 5.81%, respectively.
The Company's credit facilities provide for loans of up to $125 million.
8
<PAGE> 11
NOTE 5 - SUBSIDIARY GUARANTEES
All subsidiaries of the Company have guaranteed the $75.0 million of Senior
Subordinated Notes. The separate financial statements and other disclosures
concerning each guaranteeing subsidiary (each, a "Guarantor Subsidiary") are not
presented herein because management had determined that such information is not
material to investors. The guarantee of each Guarantor Subsidiary is full and
unconditional and joint and several, and each Guarantor Subsidiary is a
wholly-owned subsidiary of the Company, and together comprise all direct and
indirect subsidiaries of the Company. During the second quarter, the Company
liquidated several subsidiaries with nominal operations.
Combined summarized operating results of the Guarantor Subsidiaries for the nine
months ended September 30, 1998 and 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
September 30,
-----------------
1998 1997
------ ------
<S> <C> <C>
Revenues $ 81 365
Expenses (188) (444)
----- -----
Net income (loss) $(107) $ (79)
===== =====
</TABLE>
Combined summarized balance sheet information as of September 30, 1998 for the
Guarantor Subsidiaries is as follows (in thousands):
<TABLE>
<CAPTION>
September 30,
-------------
1998
---------
<S> <C>
Land, equipment, inventory and utilities, net $ 10
Other assets 17
---------
Total assets $ 27
=========
Investment by parent (includes equity and
amounts due to parent) $ 88
Other liabilities (61)
---------
Total liabilities and equity $ 27
=========
</TABLE>
NOTE 6 - ACQUISITIONS
On May 29, 1998, the Company consummated an agreement with Crown Resort Co., LLC
("Crown") acquiring timeshare management rights and unsold Vacation Intervals at
eight resorts in Alabama, Mississippi, North Carolina, Pennsylvania, South
Carolina, Tennessee, and Texas for $4.8 million. The acquisition was accounted
for under the purchase method of accounting based on preliminary information,
and is subject to final allocation of the purchase price.
The Company acquired a golf course and undeveloped land near Atlanta, Georgia,
for approximately $4.1 million. The undeveloped land was acquired in September
1998 for $0.6 million and the golf course was acquired in October 1998 for $3.5
million. The Company also acquired undeveloped land near Kansas City, Missouri,
for approximately $1.5 million in September 1998. These acquisitions are
accounted for under the purchase method of accounting based on preliminary
information, and are subject to final allocation of purchase price.
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain matters discussed throughout this Form 10-Q filing are forward looking
statements that are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Such risks and uncertainties
include, but are not limited to, those discussed in the Company's Form 10-K/A
(File No. 001-13003) which is incorporated herein by reference.
The Company currently owns and/or operates 20 resorts in various stages of
development. These resorts offer a wide array of country club-like amenities,
such as golf, swimming, horseback riding, boating, and many organized activities
for children and adults. The Company represents an owner base of over 72,000
owners. The condensed consolidated financial statements of the Company include
the accounts of Silverleaf Resorts, Inc. and its subsidiaries, all of which are
wholly-owned.
RESULTS OF OPERATIONS
The following table sets forth certain operating information for the Company.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ------------------------------
1998 1997 1998 1997
-------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
As a percentage of Total Revenues:
Vacation Interval sales 82.7% 80.1% 84.0% 81.4%
Interest income 9.5% 10.5% 9.5% 10.4%
Management fee income 1.6% 3.3% 1.5% 2.7%
Lease income 1.5% 1.2% 1.4% 1.8%
Other income 4.7% 4.9% 3.6% 3.7%
-------------- ------------- ------------- ---------------
Total revenues 100.0% 100.0% 100.0% 100.0%
As a percentage of Vacation Interval sales:
Cost of Vacation Interval sales 15.0% 10.4% 16.1% 9.9%
Sales and marketing 51.5% 44.8% 47.6% 41.8%
Provision for uncollectible notes 12.0% 13.8% 12.3% 15.5%
As a percentage of Interest Income:
Interest expense 41.0% 19.1% 45.1% 57.7%
As a percentage of Total Revenues:
Operating, general and administrative 9.3% 14.9% 10.3% 13.3%
Depreciation and amortization 2.3% 2.1% 1.9% 2.0%
Total costs and operating expenses 80.4% 74.2% 80.3% 75.9%
</TABLE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Revenues
Revenues for the three months ended September 30, 1998 were $45.2 million,
representing a $22.3 million or 97.4% increase over revenues of $22.9 million
for the three months ended September 30, 1997. The increase was primarily due to
a $19.1 million increase in Vacation Interval sales, a $1.9 million increase in
interest income, and a $1.0 million increase in other income. The strong
increase in Vacation Interval sales primarily resulted from increased sales at
existing resorts and sales at three new resorts, Timber Creek near St. Louis,
Missouri, and Fox River near Chicago, Illinois, which both opened sales offices
in the fourth quarter of 1997, and Oak N' Spruce near Boston, Massachusetts,
which opened a sales office in the second quarter of 1998. In the 1998 third
quarter, the number of Vacation Intervals sold, exclusive of upgraded
10
<PAGE> 13
Vacation Intervals, increased 90.4% to 3,608 from 1,895 in the same period of
1997; the average price per Vacation Interval sold increased 10.8% to $8,046
from $7,263. Total Vacation Interval sales for the third quarter of 1998
included 1,030 biennial intervals (counted as 515 Vacation Intervals) compared
to 518 (259 Vacation Intervals) in the third quarter of 1997. The Company
experienced increased revenues generated from sales of upgraded Vacation
Intervals at the existing resorts through the continued implementation of
marketing and sales programs focused on selling upgraded intervals to the
Company's existing Vacation Interval owners. In addition, Vacation Interval
sales at existing resorts increased as a result of enhanced telemarketing
capacity, arising from investments in computer and automated dialing technology.
Interest income increased to $4.3 million for the three months ended September
30, 1998, from $2.4 million for the respective 1997 period. This increase
resulted from an increase in notes receivable due to increased sales, as well as
interest income generated from the proceeds of the debt and equity offerings
completed on April 3, 1998.
Management fee income remained virtually flat at $0.7 million for the 1998 third
quarter as compared to $0.8 million for the same period of 1997.
Lease income, which relates to the Company's sampler program, increased to $0.7
million for the three months ended September 30, 1998, compared to $0.3 million
for the same period in 1997. The increase resulted from increased sales of
overnight samplers offered at new resorts.
Other income increased to $2.1 million for the quarter ended September 30, 1998,
from $1.1 million for the quarter ended September 30, 1997. The increase is
primarily the result of increased filing fees per Vacation Interval sold, from
$35 per contract during 1997 to $500 per contract by September 30, 1998. This
increase was also due to higher amenity usage fees and higher water and sewer
income from resort utility operations.
Cost of Sales
Cost of sales as a percentage of Vacation Interval sales increased to 15.0% in
the third quarter of 1998 from 10.4% for the same period of 1997. As the Company
continues to deplete its inventory of low cost Vacation Intervals acquired
primarily in 1995 and 1996, the Company's sales mix has shifted to more recently
constructed units, which were built at a higher average cost per Vacation
Interval. Hence, the cost of sales as a percentage of Vacation Interval sales
has increased in comparison with the respective prior year period.
Sales and Marketing
Sales and marketing costs as a percentage of Vacation Interval sales increased
to 51.5% for the three months ended September 30, 1998, from 44.8% for the same
period of 1997. This increase is due primarily to the implementation of new
marketing programs, start up costs in recently opened markets or markets yet to
open where sales have not yet reached mature levels to offset costs, and the
deferred sales recognition associated with sales at resorts under construction
whereby only the direct sales commissions costs related to such sales have been
similarly deferred.
Provision for Uncollectible Notes
The provision for uncollectible notes as a percentage of Vacation Interval sales
decreased to 12.0% for the three months ended September 30, 1998, from 13.8% for
the same period of 1997. This is the result of improvements in the Company's
collection efforts, including increased staffing as well as improved collections
administrative software, the implementation of a program through which
delinquent loans are assumed by existing owners with a solid credit record, and
an increase in receivables related to upgrade sales, which typically represent
better performing accounts, resulting in fewer delinquencies.
11
<PAGE> 14
Operating, General and Administrative
Operating, general and administrative expenses as a percentage of total revenues
decreased to 9.3% for the three months ended September 30, 1998, as compared to
14.9% for the three months ended September 30, 1997, however, increased $0.8
million in 1998 compared to 1997. The decrease in operating, general and
administrative expenses as a percentage of total revenues is the result of the
Company's ability to increase sales without proportionate increases in overhead.
The dollar increase is attributable to additional salaries and other increased
costs resulting from growth and the Company's publicly traded status effective
June 1997.
Depreciation and Amortization
For the three months ended September 30, 1998, depreciation and amortization
expense as a percentage of total revenues was 2.3% as compared to 2.1% for the
same period of 1997. Overall, depreciation and amortization expense increased
$0.6 million for the third quarter of 1998 as compared to 1997, primarily due to
investments in a new automated dialer, telephone system, and central marketing
facility.
Interest Expense
Interest expense as a percentage of interest income increased to 41.0% for the
third quarter of 1998 from 19.1% for the same period of 1997. This increase is
primarily a result of interest incurred on the $75 million Senior Subordinated
Notes issued in the second quarter 1998.
Income before Provision for Income Taxes
Income before provision for income taxes increased 49.9% to $8.9 million for the
quarter ended September 30, 1998, from $5.9 million for the quarter ended
September 30, 1997, as a result of the above mentioned operating results.
Provision for Income Taxes
Income tax expense as a percentage of income before provision for income taxes
increased to 38.8% in the third quarter of 1998 as compared to 37.0% in the
third quarter of 1997. This increase resulted from an increase in state income
taxes due to additional operations commencing in Illinois, Missouri, and
Massachusetts.
Net Income
Net income increased $1.7 million, or 45.6%, for the three months ended
September 30, 1998, compared to the respective 1997 period as a result of the
results of operations discussed above.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Revenues
Revenues for the nine months ended September 30, 1998 were $119.4 million,
representing a $55.5 million or 87.0% increase over revenues of $63.9 million
for the nine months ended September 30, 1997. The increase was primarily due to
a $48.3 million increase in Vacation Interval sales, a $4.6 million increase in
interest income, and a $2.0 million increase in other income. The strong
increase in Vacation Interval sales primarily resulted from increased sales at
existing resorts and sales at three new resorts, Timber Creek near St. Louis,
Missouri, and Fox River near Chicago, Illinois, which both opened sales offices
in the fourth quarter of 1997, and Oak N' Spruce near Boston, Massachusetts,
which opened a sales office in the second quarter of 1998. For the nine months
ended September 30, 1998, the number of Vacation Intervals sold, exclusive of
upgraded Vacation Intervals, increased 83.1% to 9,651 from 5,271 in the same
period of 1997; the average price per Vacation Interval sold increased 6.6% to
$8,039 from $7,539. Total Vacation Interval sales for the first nine months of
1998 included 2,582 biennial intervals (counted as 1,291 Vacation
12
<PAGE> 15
Intervals) compared to 1,422 (711 Vacation Intervals) during the respective 1997
period. The Company experienced increased revenues generated from sales of
upgraded Vacation Intervals at the existing resorts through the continued
implementation of marketing and sales programs focused on selling upgraded
intervals to the Company's existing Vacation Interval owners. In addition,
Vacation Interval sales at existing resorts increased as a result of enhanced
telemarketing capacity, arising from investments in computer and automated
dialing technology.
Interest income increased 69.7% to $11.3 million for the nine months ended
September 30, 1998, from $6.7 million for the respective 1997 period. This
increase resulted from an increase in notes receivable due to increased sales,
as well as interest income generated from the proceeds of the debt and equity
offerings completed on April 3, 1998.
Management fee income remained flat at $1.8 million for the nine months ended
September 30, 1998 as compared to $1.8 million for the comparative 1997 period.
Lease income, which relates to the Company's sampler program, increased to $1.7
million for the nine months ended September 30, 1998, compared to $1.2 million
for the same period in 1997. The increase resulted from increased sales of
overnight samplers offered at new resorts.
Other income increased to $4.3 million for the nine months ended September 30,
1998, from $2.3 million for the nine months ended September 30, 1997. The
increase is primarily the result of increased filing fees per Vacation Interval
sold, which increased from $35 per contract during 1997 to $500 per contract by
September 30, 1998. This increase was also due to higher amenity usage fees and
higher water and sewer income from resort utility operations.
Cost of Sales
Cost of sales as a percentage of Vacation Interval sales increased to 16.1% in
the first nine months of 1998 from 9.9% for the comparative 1997 period. As the
Company continues to deplete its inventory of low cost Vacation Intervals
acquired primarily in 1995 and 1996, the Company's sales mix has shifted to more
recently constructed units, which were built at a higher average cost per
Vacation Interval. Hence, the cost of sales as a percentage of Vacation Interval
sales has increased in comparison with the respective prior year period.
Sales and Marketing
Sales and marketing costs as a percentage of Vacation Interval sales increased
to 47.6% for the nine months ended September 30, 1998, from 41.8% for the same
period of 1997. This increase is due primarily to the implementation of new
marketing programs, start up costs in recently opened markets or markets yet to
open where sales have not yet reached mature levels to offset costs, and the
deferred sales recognition associated with sales at resorts under construction
whereby only the direct sales commissions costs related to such sales have been
similarly deferred.
Provision for Uncollectible Notes
The provision for uncollectible notes as a percentage of Vacation Interval sales
decreased to 12.3% for the nine months ended September 30, 1998, from 15.5% for
the same period of 1997. This is the result of improvements in the Company's
collection efforts, including increased staffing as well as improved collections
administrative software, the implementation of a program through which
delinquent loans are assumed by existing owners with a solid credit record, and
an increase in receivables related to upgrade sales, which typically represent
better performing accounts, resulting in fewer delinquencies.
Operating, General and Administrative
Operating, general and administrative expenses as a percentage of total revenues
decreased to 10.3% for the nine months ended September 30, 1998, as compared to
13.3% for the nine months ended September 30,
13
<PAGE> 16
1997, however, increased $3.8 million in 1998 compared to 1997. The decrease in
operating, general and administrative expenses as a percentage of total revenues
is the result of the Company's ability to increase sales without proportionate
increases in overhead. The dollar increase is attributable to additional
salaries and other increased costs resulting from growth and the Company's
publicly traded status effective June 1997.
Depreciation and Amortization
For the nine months ended September 30, 1998, depreciation and amortization
expense as a percentage of total revenues decreased to 1.9% from 2.0% for the
same period of 1997. Overall, depreciation and amortization expense increased
$1.0 million for the first nine months of 1998 as compared to 1997, primarily
due to investments in a new automated dialer, telephone system, and central
marketing facility.
Interest Expense
Interest expense as a percentage of interest income decreased to 45.1% for the
nine months ended September 30, 1998, compared to 57.7% for the same period of
1997. This decrease was due to the payment of indebtedness with proceeds from
the Company's equity and debt offerings in the second quarter of 1998, which
resulted in lower interest expense on outstanding indebtedness, as well as the
increase in interest income discussed above.
Income before Provision for Income Taxes
Income before provision for income taxes increased 53.0% to $23.5 million for
the nine months ended September 30, 1998, from $15.4 million for the same period
of 1997, as a result of the above mentioned operating results.
Provision for Income Taxes
Income tax expense as a percentage of income before provision for income taxes
increased to 38.4% in the nine months ended September 30, 1998 as compared to
37.0% in the comparable period of 1997. This increase resulted from an increase
in state income taxes due to additional operations commencing in Illinois,
Missouri, and Massachusetts.
Net Income
Net income increased $4.8 million, or 49.7%, for the nine months ended September
30, 1998, compared to the respective 1997 period as a result of the results of
operations discussed above.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES OF CASH. The Company generates cash primarily from the sale of Vacation
Intervals, the financing of customer notes receivable from Vacation Interval
owners, management fees, sampler sales, and resort and utility operations.
During the nine months ended September 30, 1998, cash used in operations was
$3.9 million. The Company generates cash from financing of customer notes
receivable (i) by borrowing at an advance rate of 70% of eligible customer notes
receivable and (ii) from the spread between interest received on customer notes
receivable and interest paid on related borrowings. The Company uses significant
amounts of cash in the development and marketing of Vacation Intervals, however,
collects cash on customer notes receivable over a seven-year period. Therefore,
borrowing against receivables has historically been a necessary part of normal
operations.
For the nine months ended September 30, 1998 and 1997, cash provided by
financing activities was $80.3 million and $17.7 million, respectively. The
increase in net cash provided by financing activities was mainly attributable to
the issuance, in the second quarter of 1998, of $75 million of Senior
Subordinated
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<PAGE> 17
Notes due 2008. The Company's credit facilities provide for loans of up to $125
million. At September 30, 1998, approximately $11.7 million of principal and
interest related to advances under the credit facilities was outstanding.
For regular Federal income tax purposes, the Company reports substantially all
of the Vacation Interval sales it finances under the installment method. Under
this method, income on sales of Vacation Intervals is not recognized until cash
is received, either in the form of a down payment or as installment payments on
customer notes receivable. The deferral of income tax liability conserves cash
resources on a current basis. Interest will be imposed, however, on the amount
of tax attributable to the installment payments received after the year of sale
for the period beginning on the date of sale and ending on the date the
installment payments are received. If the Company is otherwise not subject to
tax in a particular year, no interest is imposed since the interest is based on
the amount of tax paid in that year. The condensed consolidated financial
statements do not contain an accrual for any interest expense, which would be
paid on the deferred taxes related to the installment method, as the interest
expense is not estimable. In addition, the Company is subject to current
alternative minimum tax ("AMT") as a result of the deferred income, which
results from the installment sales treatment. Payment of AMT reduces the future
regular tax liability attributable to Vacation Interval sales, and creates a
deferred tax asset. In April 1998, the Internal Revenue Service issued a letter
ruling to the Company granting a requested AMT accounting adjustment effective
as of January 1, 1997. As a result, the Company's alternative minimum taxable
income for 1997 through 2000 will be increased each year by an estimated amount
of approximately $9 million per year, which will result in the Company paying
substantial additional federal and state taxes in those years. The Company's net
operating loss carryforwards, which also may be used to offset installment sales
income, expire beginning in 2007 through 2012. Realization of the deferred tax
asset arising from net operating losses is dependent on generating sufficient
taxable income prior to the expiration of the loss carryforwards and other
factors.
USES OF CASH. Investing activities typically reflect a net use of cash as a
result of loans to customers in connection with the Company's Vacation Interval
sales, capital additions, and property acquisitions. Net cash used in investing
activities for the nine months ended September 30, 1998 and 1997 was $73.9
million and $30.4 million, respectively. The increase was primarily due to the
increased level of customer notes receivable resulting from higher sales volume
and the purchase of Crown for $4.8 million.
YEAR 2000 ISSUES
Many of the world's computer systems record years in a two-digit format. Such
computer systems will be unable to properly interpret dates beyond the year
1999, which could potentially lead to disruptions in the Company's operations.
The Company has conducted a review of its information technology ("IT") systems
currently utilized and is in the process of identifying and assessing non-IT
systems in order to determine its potential year 2000 deficiencies. This study
included reviewing all applicable reports, files, inquiry screens, maintenance
screens, batch programs, software, hardware, and other interactive applications.
Non-IT systems are generally more difficult to assess because they often contain
embedded technology that may be subject to year 2000 problems. In completing its
assessment, the Company has identified several primary computer systems that are
currently not year 2000 compliant. Each of these computer systems and its year
2000 compliance status are discussed below:
Marketing system - The current Marketing system requires modifications in order
to be year 2000 compliant. These modifications are anticipated to be completed
during the second quarter of 1999.
Sales and Credit system - The Sales and Credit system will need to be
redeveloped in order to be year 2000 compliant. The redevelopment of the Sales
and Credit system is scheduled to be completed by February 1999.
Accounts Receivable system - The Accounts Receivable system will need to be
redeveloped in order to be year 2000 compliant. The redevelopment of the
Accounts Receivable system is scheduled to be completed during the first quarter
of 1999.
15
<PAGE> 18
Inventory system - The Inventory system is currently being redeveloped to be
year 2000 compliant, among other enhancements. The redevelopment of the
Inventory system should be completed in the second quarter of 1999.
Finance Administration system - The Finance Administration system will need to
be redeveloped in order to be year 2000 compliant. The redevelopment of the
Finance Administration system is scheduled to be completed during the first
quarter of 1999.
Sales Commissions system - The Sales Commissions system is currently being
redeveloped to be year 2000 compliant, among other enhancements. The
redevelopment of the Sales Commissions system should be completed during the
first quarter of 1999.
Predictive dialer software - The Company's predictive dialer software should be
year 2000 compliant with an upgrade scheduled for the fourth quarter of 1998.
The General Ledger and Accounts Payable systems are currently not year 2000
compliant as well. However, these systems should be year 2000 compliant by the
first quarter of 1999 as the Company converts to new accounting software.
In the redevelopment phase of each module, the system being modified will be
tested by the appropriate programmers to ensure proper handling of dates. Test
procedures have already been developed as well as a complete test environment.
The necessary personnel and processing resources have been determined and
assigned to the appropriate projects. All major redeveloped systems will be run
parallel with the existing systems to ensure completeness and accuracy. All
redeveloped systems will be verified and accepted by the appropriate users prior
to eliminating the existing systems. Any other primary computer systems
currently utilized by the Company, that are not mentioned above, are already
year 2000 compliant.
In addition to the major computer systems described above, the Company primarily
utilizes standardized Microsoft Office products that are year 2000 compliant.
All personal computer ("PC") applications that are not in Microsoft Office are
written in Visual Basic and programmed to handle year 2000 issues. All operating
systems utilized by the Company, which include Novell, Intranetware, OS/400,
Windows 95, and Windows NT, are year 2000 compliant. The Company's AS400
hardware and related Network servers are year 2000 compliant as well. The
Company is in the process of inspecting and evaluating all data communications
equipment, including PCs, and should complete this evaluation process by January
1999. The Company has located a minimal number of PCs requiring replacement and
anticipates that no significant deficiencies of data communications equipment
will be found.
The Company has made inquiries of its major vendors, consisting primarily of
financial institutions, regarding their year 2000 compliance status and its
potential impact to the Company's business. Based on these discussions, the
Company does not anticipate year 2000 difficulties associated with its major
vendors. The Company, however, has made contingency plans to change vendors if
year 2000 problems at its existing vendors create interruptions to its business.
Company management believes that the total cost of the aforementioned year 2000
computer system and equipment enhancements will be less than $300,000, including
an estimate of internal payroll committed to the projects, of which
approximately $150,000 has already been incurred. The Company will utilize both
internal and external resources to achieve year 2000 compliance. The Company
estimates that its identification and assessment activities are approximately
90% complete and that its remediation is approximately 20% complete.
The failure to correct a material year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity, and financial condition. Due to the general
uncertainty inherent in the year 2000 problem, resulting in part from the
uncertainty of year 2000 readiness of third party vendors, the Company is unable
to determine at this time whether the consequences of year 2000 failures will
have a material impact on the Company's results of operations, liquidity, or
financial condition. The
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<PAGE> 19
Company believes, however, that its year 2000 compliance plan and time line
provide adequate staffing, resources, and time to mitigate and proactively
respond to any unforeseen year 2000 problems in a timely and preemptive manner.
The cost of year 2000 compliance and the estimated date of completion of
necessary modifications, however, are based on the Company's best estimates,
which were derived from various assumptions of future events. There can be no
assurance that these estimates will be achieved and actual results could differ
materially from those anticipated.
SUBSEQUENT EVENTS
In October 1998, the company acquired a golf course near Atlanta, Georgia, for
approximately $3.5 million and undeveloped land near Kansas City, Missouri, for
approximately $1.5 million, utilizing proceeds from its available lines of
credit.
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<PAGE> 20
PART II. OTHER INFORMATION
ITEM 5. OTHER MATTERS
On September 15, 1998, the Board of Directors of the Company amended its Stock
Repurchase Program originally authorized on June 26, 1998, increasing the number
of shares the Company may repurchase under such program from 300,000 to 430,000
shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Contract of Sale by and between Terry Adair and George R.
Bedell, as Trustee, dated March 27, 1998. (Sale closed
September 28, 1998.)
10.2 Contract of Sale by and between Great Atlantic Properties Corp.
and George R. Bedell, as Trustee, dated August 12, 1998.
10.3 Contract of Sale, dated February 25, 1998 (as amended in
October 1998), by and between the Company and J. Phillip
Ballard, Jr. and Eagle Greens Ltd., f/k/a Northeast Georgia
Recreational Development Co., Inc. (Sale closed October 15,
1998.)
10.4 Amendment to Contract of Sale, dated October 14, 1998, by and
between the Company and J. Phillip Ballard, Jr. and Eagle
Greens Ltd., f/k/a Northeast Georgia Recreational Development
Co., Inc.
10.5 Second Amendment to Contract of Sale, dated October 14, 1998,
by and between the Company and J. Phillip Ballard, Jr. and
Eagle Greens Ltd., f/k/a Northeast Georgia Recreational
Development Co., Inc.
10.6 Management Agreement, dated October 13, 1998, by and between
the Company and Eagle Greens Ltd.
10.7 First Amendment to Employment Agreement between the Company and
Jim Oestreich, dated June 12, 1998.
10.8 Second Amendment to Employment Agreement between the Company
and Jim Oestreich, dated September 29, 1998.
10.9 Non-Qualified Stock Option Agreement, dated June 12, 1998, with
Jim Oestreich.
10.10 First Amendment to Employment Agreement between the Company and
David T. O'Connor, dated August 31, 1998.
10.11 Non-Qualified Stock Option Agreement, dated August 31, 1998,
with David T. O'Connor.
10.12 One to Four Family Residential Contract (Resale) between the
Company and Thomas C. Franks, dated July 30, 1998.
27.0 Financial Data Summary.
(b) Reports on Form 8-K
none
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 1998 By: /s/ ROBERT E. MEAD
----------------------------------
Robert E. Mead
Chairman of the Board and
Chief Executive Officer
Dated: November 13, 1998 By: /s/ HARRY J. WHITE JR.
----------------------------------
Harry J. White Jr.
Chief Financial Officer
19
<PAGE> 22
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.1 Contract of Sale by and between Terry Adair and George R. Bedell, as
Trustee, dated March 27, 1998. (Sale closed September 28, 1998.)
10.2 Contract of Sale by and between Great Atlantic Properties Corp. and
George R. Bedell, as Trustee, dated August 12, 1998.
10.3 Contract of Sale, dated February 25, 1998 (as amended in October
1998), by and between the Company and J. Phillip Ballard, Jr. and
Eagle Greens Ltd., f/k/a Northeast Georgia Recreational Development
Co., Inc. (Sale closed October 15, 1998.)
10.4 Amendment to Contract of Sale, dated October 14, 1998, by and between
the Company and J. Phillip Ballard, Jr. and Eagle Greens Ltd., f/k/a
Northeast Georgia Recreational Development Co., Inc.
10.5 Second Amendment to Contract of Sale, dated October 14, 1998, by and
between the Company and J. Phillip Ballard, Jr. and Eagle Greens Ltd.,
f/k/a Northeast Georgia Recreational Development Co., Inc.
10.6 Management Agreement, dated October 13, 1998, by and between the
Company and Eagle Greens Ltd.
10.7 First Amendment to Employment Agreement between the Company and Jim
Oestreich, dated June 12, 1998.
10.8 Second Amendment to Employment Agreement between the Company and Jim
Oestreich, dated September 29, 1998.
10.9 Non-Qualified Stock Option Agreement, dated June 12, 1998, with Jim
Oestreich.
10.10 First Amendment to Employment Agreement between the Company and David
T. O'Connor, dated August 31, 1998.
10.11 Non-Qualified Stock Option Agreement, dated August 31, 1998, with
David T. O'Connor.
10.12 One to Four Family Residential Contract (Resale) between the Company
and Thomas C. Franks, dated July 30, 1998.
27.0 Financial Data Summary.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
CONTRACT OF SALE
This Agreement is entered into by and between TERRY ADAIR ("Seller")
and GEORGE R. BEDELL, Trustee ("Purchaser").
W I T N E S S E T H :
FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:
ARTICLE I
PROPERTY
The conveyance by Seller to Purchaser shall include the following
described tracts or parcels of land, together with all and singular the rights
and appurtenances pertaining to such land including any right, title and
interest of Seller in and to adjacent strips or gores, streets, alleys, or
rights-of-way and all rights of ingress and egress thereto:
That certain tract of land lying and being situated in Land
Lots Nos. 92 and 120 of the 12th Land District, Habersham County,
Georgia, containing approximately 30 acres, more or less, and being
outlined in red in Exhibit "A" attached hereto and made a part hereof
for all purposes; the exact acreage shall be determined by placing the
southern-most boundary line parallel to the northern-most boundary
line.
Hereafter the aforesaid real property is referred to as the "Land."
The conveyance by Seller to Purchaser shall also include all buildings
and other improvements on the Land, including specifically, without limitation,
the house which is located on that portion of the Land which is more
particularly described in Exhibit "B" attached hereto and made a part hereof for
all purposes (the "Improvements").
<PAGE> 2
ARTICLE II
PURCHASE PRICE
The purchase price to be paid by Purchaser to Seller for the Subject
Property shall be the sum of (i) Two Hundred Thousand and No/100 Dollars
($200,000.00) for the 2-acre tract which is more particularly described in
Exhibit "B" plus (ii) the product obtained by multiplying the number of acres
shown on the survey of the Subject Property to be provided by Purchaser in
accordance with Article IV hereinbelow (excluding, however, the 2-acre tract
described in Exhibit "B") times Twelve Thousand and No/100 Dollars ($12,000.00).
The purchase price shall be payable all in cash at the closing.
ARTICLE III
EARNEST MONEY
Within two (2) business days after final execution of this Contract by
all parties hereto, Purchaser shall deliver Purchaser's check in the amount of
Twenty-Five Thousand and No/100 Dollars ($25,000.00) to Safeco Land Title of
Dallas, 5220 Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270, Attn: John
Kerr (the "Title Company"). The Title Company shall immediately cash the earnest
money check and deposit the proceeds thereof in an interest bearing account, the
earnings from which shall accrue to the benefit of Purchaser (hereinafter the
proceeds of the earnest money check shall be referred to as the "earnest
money"). If Purchaser does not terminate this Contract during the Inspection
Period (as defined in Article VI hereinbelow), then, within two (2) business
days after the expiration of the Inspection Period, the Title Company shall
immediately disburse the entire $25,000.00 earnest money deposit to Seller; upon
such disbursement the $25,000.00 earnest money deposit shall be non-refundable
to the Purchaser except in the event of a default by Seller hereunder, but, if
this Contract closes, then the entire $25,000.00 earnest money deposit shall be
applied in partial satisfaction of the purchase price payable at closing.
In the event that this Contract is closed, then all earnest money shall
be applied in partial satisfaction of the purchase price. In the event that this
Contract is not closed, then the earnest money shall be disbursed in the manner
provided for elsewhere herein. Notwithstanding the
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<PAGE> 3
foregoing or anything to the contrary contained elsewhere in this Contract, it
is understood and agreed that One Hundred Dollars ($100.00) of the earnest money
shall in all events be delivered to Seller as valuable consideration for the
Inspection Period described in Article VI hereinbelow and the execution of this
Contract by Seller.
ARTICLE IV
PRE-CLOSING OBLIGATIONS OF PURCHASER
During the Inspection Period (defined hereinbelow), Purchaser, at his
sole cost and expense, shall obtain and deliver to Seller copies of the
following (collectively the "Purchaser Due Diligence Items"):
a. An updated survey of the Subject Property dated subsequent
to the date of execution of this Contract and prepared by a licensed
professional engineer or surveyor acceptable to Purchaser, which Survey
shall: (a) include a metes and bounds legal description of the Subject
Property; (b) accurately show all improvements, encroachments and uses
and accurately show all easements and encumbrances visible or listed on
the Title Commitment (identifying each by recording reference if
applicable); (c) recite the number of acres included in the Subject
Property as well as that portion of the Subject Property which is
described in Exhibit "B"; (d) state whether the Subject Property (or
any portion thereof) lies within a flood zone, or flood prone area; and
(e) contain a certificate verifying that the Survey was made on the
ground, that the Survey is correct, that there are no improvements,
encroachments, easements, uses or encumbrances except as shown on the
survey plat, that the area represented for the Subject Property has
been certified by the surveyor as being correct, and that the Subject
Property does not lie within any flood zone or flood prone area, except
as indicated thereon. Unless otherwise agreed by Seller and Purchaser,
the metes and bounds description contained in the Survey shall be the
legal description employed in the documents of conveyance of the
Subject Property; and
b. A current commitment (the "Title Commitment") for the
issuance of an owner's policy of title insurance to the Purchaser from
the Title Company, together with good and legible copies of all
documents constituting exceptions to Seller's title as reflected in the
Title Commitment.
ARTICLE V
TITLE INSPECTION PERIOD
Purchaser shall have a period of time commencing on the date of
execution of this Contract and expiring on the date of expiration of the
Inspection Period (as defined hereinbelow) within which to review and approve
the status of Seller's title to the Subject Property (the "Title Review
Period"). If the information to be provided to or obtained by Purchaser pursuant
to the provisions of Article IV hereinabove reflects or discloses any defect,
exception or other matter
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<PAGE> 4
affecting the Subject Property ("Title Defects") that is unacceptable to
Purchaser, then prior to the expiration of the Title Review Period Purchaser
shall provide Seller with written notice of Purchaser's objections. Seller may,
at his sole option, elect to cure or remove the objections raised by Purchaser;
provided, however, that Seller shall have no obligation to do so. Should Seller
elect to attempt to cure or remove the objections, Seller shall have ten (10)
days from the date of Purchaser's written notice of objections (the "Cure
Period") in which to accomplish the cure. In the event Seller either elects not
to cure or remove the objections or is unable to accomplish the cure prior to
the expiration of the Cure Period, then Seller shall so notify Purchaser in
writing specifying which objections Seller does not intend to cure, and then
Purchaser shall be entitled, as Purchaser's sole and exclusive remedies, either
to terminate this Agreement by providing written notice of termination to Seller
within ten (10) days from the date on which Purchaser receives Seller's no-cure
notice or waive the objections and close this transaction as otherwise
contemplated herein. If Purchaser shall fail to notify Seller in writing of any
objections to the state of Seller's title to the Subject Property as shown by
the Survey and Title Commitment, then Purchaser shall be deemed to have no
objections to the state of Seller's title to the Subject Property as shown by
the Survey and Title Commitment, and any exceptions to Seller's title which have
not been objected to by Purchaser and which are shown on the Survey or described
in the Title Commitment shall be considered to be "Permitted Exceptions." It is
further understood and agreed that any Title Defects which have been objected to
by Purchaser and which are subsequently waived by Purchaser shall be Permitted
Exceptions.
ARTICLE VI
INSPECTION PERIOD
Purchaser, at Purchaser's sole expense, shall have the right to conduct
a feasibility, environmental, engineering and physical study of the Subject
Property for a period of time commencing on the date of execution of this
Contract and expiring sixty (60) days thereafter (the "Inspection Period").
Purchaser and Purchaser's duly authorized agents or representatives shall be
permitted to enter upon the Subject Property at all reasonable times during the
Inspection Period in order to conduct engineering studies, soil tests and any
other inspections and/or tests
- 4 -
<PAGE> 5
that Purchaser may deem necessary or advisable; provided, however, that no
drilling or other ground penetrations or physical sampling in any building shall
be done without Seller's prior written consent, which consent shall not be
unreasonably withheld or delayed. Purchaser further agrees to indemnify and hold
Seller harmless from any claims or damages, including reasonable attorneys'
fees, resulting from Purchaser's inspection of the Subject Property. In the
event that the review and/or inspection conducted by this paragraph shows any
fact, matter or condition to exist with respect to the Subject Property that is
unacceptable to Purchaser, in Purchaser's sole discretion, or if for any reason
Purchaser determines that purchase of the Subject Property is not feasible, then
Purchaser shall be entitled, as Purchaser's sole remedy, to cancel this Contract
by providing written notice of cancellation to Seller prior to the expiration of
the Inspection Period. If Purchaser shall provide written notice of cancellation
prior to the expiration of the Inspection Period, then this Contract shall be
cancelled, all earnest money (less $100.00) shall be immediately returned to
Purchaser by the Title Company, and thereafter neither Seller nor Purchaser
shall have any continuing obligations one unto the other. If no notice of
cancellation is provided by Purchaser prior to the expiration of the Inspection
Period, then this Contract shall remain in full force and effect.
ARTICLE VII
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER
Seller represents and warrants to Purchaser that at closing Seller will
have good and indefeasible fee simple title to the Subject Property free and
clear of all liens, encumbrances, covenants, restrictions, rights-of-way,
easements, and any other matters affecting title to the Subject Property except
for the Permitted Exceptions, and at closing, Seller will be in a position to
convey the Subject Property to Purchaser free and clear of all liens,
encumbrances, covenants, restrictions, rights-of-way, easements and other such
matters affecting title except for the Permitted Exceptions.
Seller further covenants and agrees with Purchaser that, from the
date hereof until the closing, Seller shall not sell, assign, or convey any
right, title, or interest whatsoever in or to the Subject Property, or create or
permit to exist any lien, security interest, easement,
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<PAGE> 6
encumbrance, charge, or condition affecting the Subject Property (other than the
Permitted Exceptions) without promptly discharging the same prior to closing.
All of the foregoing representations and warranties of Seller are made
by Seller both as of the date hereof and as of the date of the closing
hereunder. Notwithstanding the foregoing or anything to the contrary contained
herein, it is understood and agreed that the representations and warranties set
forth hereinabove shall survive the closing of this Contract only for a period
of two (2) years following the closing date, but not thereafter, and Seller
shall have no liability of any kind whatsoever for any breach thereof except to
the extent a claim is asserted against Seller within such two (2) year period.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
The obligation of Purchaser to close this Contract shall, at the option
of Purchaser, be subject to the following conditions precedent:
a. All of the representations, warranties and agreements of
Seller set forth in this Contract shall be true and correct in all
material respects as of the date hereof and at closing, and Seller
shall not have on or prior to closing, failed to meet, comply with or
perform in any material respect any conditions or agreements on
Seller's part as required by the terms of this Contract;
b. There shall be no change in the matters reflected in the
Title Commitment, and there shall not exist any encumbrance or title
defect affecting the Subject Property not described in the Title
Commitment except for the Permitted Exceptions;
c. There shall be no changes in the matters reflected in the
Survey, and there shall not exist any easement, right-of-way,
encroachment, waterway, pond, flood plain, conflict or protrusion with
respect to the Subject Property not shown on the Survey; and
d. No material and substantial change shall have occurred with
respect to the Subject Property which would in any way affect the
findings made in the inspection of the Subject Property described in
Article VI hereinabove.
If any such condition is not fully satisfied by closing, Purchaser may
terminate this Contract by written notice to Seller whereupon this Contract
shall be cancelled, the earnest money deposit (less $100.00) shall be returned
to Purchaser and thereafter neither Seller nor Purchaser shall have any
continuing obligations one unto the other.
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<PAGE> 7
ARTICLE IX
CLOSING
The closing hereunder shall take place at the offices of the Title
Company. The closing shall occur on or before sixty (60) days from the date of
expiration of the Inspection Period. Purchaser shall notify Seller at least five
(5) days in advance of the exact time and date of closing. Purchaser shall have
the right to obtain one sixty (60) day extension of the deadline for closing by
delivering directly to Seller, prior to the then scheduled closing deadline, an
additional Twenty-Five Thousand and No/100 Dollars ($25,000.00) in
non-refundable earnest money. If Purchaser exercises this right, then the
deadline for closing of this Contract shall be extended by sixty (60) days; the
additional $25,000.00 in earnest money which is paid by Purchaser in order to
extend the deadline for closing of this Contract shall be non-refundable to
Purchaser except in the event of a default by Seller hereunder, but, if this
Contract closes, then such additional earnest money shall be applied in partial
satisfaction of the purchase price payable hereunder. Upon the expiration of the
first sixty (60) day extension, Purchaser shall have the right to obtain a
second sixty (60) day extension of the deadline for closing by delivering
directly to Seller, prior to the then scheduled closing deadline, an additional
Twenty- Five Thousand and No/100 Dollars ($25,000.00) in non-refundable earnest
money. If Purchaser exercises this right, then the deadline for closing of this
Contract shall be extended by sixty (60) days; the additional $25,000.00 in
earnest money which is paid by Purchaser in order to extend the deadline for
closing of this Contract shall be non-refundable to Purchaser except in the
event of default by Seller hereunder, but if this Contract closes, then such
additional earnest money shall be applied in partial satisfaction of the
purchase price payable hereunder.
ARTICLE X
SELLER'S OBLIGATIONS AT CLOSING
At the closing, Seller shall do the following:
a. Deliver to Purchaser a deed covering the Subject Property,
duly signed and acknowledged by Seller, which deed shall be in form
reasonably acceptable to Purchaser for recording and shall convey to
Purchaser good and marketable title to the Subject Property, free and
clear of all liens, rights-of-way, easements, and other matters
affecting title to the Subject Property, except for the Permitted
Exceptions.
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<PAGE> 8
b. Deliver or cause to be delivered to Purchaser an ALTA
owner's form of title insurance policy (the "Title Policy") insuring
Purchaser in the amount of the purchase price that Purchaser has
acquired good and marketable title to the Subject Property, subject
only to the Permitted Exceptions. Purchaser shall be entitled to
request the Title Company to provide, at Purchaser's sole cost and
expense, such endorsements (or amendments) to the Title Policy as
Purchaser may reasonably require so long as such endorsements or
amendments impose no additional liability on Seller or delay the
closing. Purchaser acknowledges and agrees that the Title Policy may be
actually delivered within a reasonable time following the closing so
long as Purchaser has received at closing a current binding title
commitment obligating the Title Company to deliver the Title Policy.
Purchaser shall pay the premium for a standard owner's form of title
insurance policy in the amount of the purchase price, and Purchaser
shall pay the cost of any title endorsements required by Purchaser and
the cost of any reinsurance required by Purchaser.
c. Deliver a non-withholding statement that will satisfy the
requirements of Section 1445 of the Internal Revenue Code so that
Purchaser is not required to withhold any portion of the purchase price
for payment to the Internal Revenue Service.
d. Deliver to Purchaser any other documents or items necessary
or convenient in the reasonable judgment of Purchaser to carry out the
intent of the parties under this Contract.
ARTICLE XI
PURCHASER'S OBLIGATIONS AT CLOSING
At the closing, Purchaser shall deliver to Seller the purchase price in
cash.
ARTICLE XII
COSTS AND ADJUSTMENTS
At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:
a. Any real estate transfer taxes or sales taxes payable in
connection with the sale of the Subject Property shall be paid in full
by Seller.
b. Ad valorem taxes for the Subject Property for the current
calendar year shall be prorated as of the date of closing, and Seller
shall pay to Purchaser in cash at closing Seller's pro rata portion of
such taxes. Seller's pro rata portion of such taxes shall be based upon
taxes actually assessed for the current calendar year or, if for any
reason such taxes for the Subject Property have not been actually
assessed, such proration shall be based upon the amount of such taxes
for the immediately preceding calendar year, and adjusted by cash
settlement when exact amounts are available. However, anything herein
to the contrary notwithstanding, any tax abatement or refund for a
period of time prior to closing shall belong to Seller.
c. All other closing costs, including but not limited to,
recording and escrow fees shall be paid by the Purchaser; provided,
however, that Seller and Purchaser shall each be responsible for the
fees and expenses of their respective attorneys.
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<PAGE> 9
Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Contract specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property, and
all expenses related thereto, including, but not limited to, court costs and
attorneys' fees.
Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties and based on events occurring subsequent to the
date of closing and which are in any way related to the ownership, maintenance
or operation of the Subject Property, and all expenses related thereto,
including, but not limited to, court costs and attorneys' fees.
Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XII shall survive the closing hereunder.
ARTICLE XIII
ENTRY ON PROPERTY
Purchaser, Purchaser's agents, employees, servants, or nominees, are
hereby granted the right to enter upon the Subject Property at any time prior to
closing for the purpose of inspecting the Subject Property and conducting such
engineering and mechanical tests as Purchaser may deem necessary or advisable,
any such inspections and tests to be made at Purchaser's sole expense. Purchaser
agrees to indemnify and hold Seller harmless from and against any and all
losses, damages, costs, or expenses incurred by Seller as a result of any
inspections or tests made by Purchaser.
ARTICLE XIV
POSSESSION OF PROPERTY
Possession of the Property free and clear of all uses and
encroachments, except the Permitted Exceptions, shall be delivered to Purchaser
at closing.
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<PAGE> 10
ARTICLE XV
DAMAGE OR DESTRUCTION PRIOR TO CLOSING
In the event that the Subject Property should be damaged by any
casualty prior to closing, then if the cost of repairing such damage, as
estimated by an architect or contractor retained pursuant to the mutual
agreement of Seller and Purchaser, is:
a. Less than Twenty-Five Thousand and No/100 Dollars
($25,000.00), then at Purchaser's option, either (i) the Seller shall
repair such damage as promptly as is reasonably possible, restoring the
damaged property at least to its condition immediately prior to such
damage; and, in the event such repairs have not been completed prior to
closing, then the closing shall nevertheless proceed as scheduled, and
Purchaser may have the Title Company withhold from Seller the funds
necessary to make such repairs until Seller has repaired such damage
pursuant to the provisions hereof, at which time such funds shall be
distributed to Seller or (ii) Purchaser may take an assignment of
Seller's insurance proceeds and a credit for Seller's deductible and
repair such damage itself;
or if said cost is:
b. greater than Twenty-Five Thousand and No/100 Dollars
($25,000.00), then, at Purchaser's election, Seller shall pay to
Purchaser, at closing, all insurance proceeds payable for such damage,
and the sale shall be closed without Seller's repairing such damage,
or, if Purchaser does not elect to accept such insurance proceeds, then
either Seller or Purchaser may elect to terminate this Contract, in
which case the earnest money (less $100.00) shall be returned to
Purchaser and thereafter neither party shall have any further
obligations one unto the other.
ARTICLE XVI
NOTICES
All notices, demands, or other communications of any type given by the
Seller to the Purchaser, or by the Purchaser to the Seller, whether required by
this Contract or in any way related to the transaction contracted for herein,
shall be void and of no effect unless given in accordance with the provisions of
this paragraph. All notices shall be in writing and delivered to the person to
whom the notice is directed, either in person, by facsimile transmission, or by
United States Mail, as a registered or certified item, return receipt requested.
Notices delivered by mail shall be deemed given when deposited in a post office
or other depository under the care or custody of the United States Postal
Service, enclosed in a wrapper with proper postage affixed, addressed as
follows:
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<PAGE> 11
Seller: Terry Adair
1288 Rockford Creek Road
Clarkesville, Georgia 30523
Purchaser: George R. Bedell
901 Main Street, Suite 3700
Dallas, Texas 75202
Telephone No.: (214) 749-2448
Facsimile No.: (214) 747-3732
ARTICLE XVII
REMEDIES
In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, it shall be an event of default
and Purchaser shall have the option (i) to terminate this Contract by providing
written notice thereof to Seller, in which event the earnest money (less
$100.00) shall be returned immediately to Purchaser by the Title Company and the
parties hereto shall have no further liabilities or obligations one unto the
other; (ii) to waive any defect or requirement and close this Contract; or (iii)
to sue Seller for specific performance or for damages. The exercise of any of
the foregoing remedies of Purchaser shall not in any manner be construed as a
waiver of Purchaser's right to seek specific performance or to sue for damages,
and in the event of a default by Seller hereunder, Purchaser shall be entitled
to enforce specific performance hereunder or sue Seller for damages.
In the event that Purchaser fails to timely comply with all conditions,
covenants, and obligations Purchaser has hereunder, such failure shall be an
event of default, and Seller's sole remedy shall be to receive the Earnest
Money. The Earnest Money is agreed upon by and between the Seller and Purchaser
as liquidated damages due to the difficulty and inconvenience of ascertaining
and measuring actual damages, and the uncertainty thereof, and no other damages,
rights, or remedies shall in any case be collectible, enforceable, or available
to the Seller other than in this paragraph defined, and Seller shall accept the
Earnest Money as Seller's total damages and relief.
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<PAGE> 12
ARTICLE XVIII
ASSIGNMENT
Purchaser shall have the right to nominate who shall take title and who
shall succeed to Purchaser's duties and obligations hereunder, or assign this
Contract to any person, firm, corporation, or other entity which Purchaser may,
at Purchaser's sole option, choose, and from and after such nomination or
assignment, wherever in this Contract reference is made to Purchaser such
reference shall mean the nominee or assignee who shall succeed to all the
rights, duties, and obligations of Purchaser hereunder.
ARTICLE XIX
INTERPRETATION AND APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with
the laws of the State of Georgia. Where required for proper interpretation,
words in the singular shall include the plural; the masculine gender shall
include the neuter and the feminine, and vice versa. The terms "successors and
assigns" shall include the heirs, administrators, executors, successors, and
assigns, as applicable, of any party hereto.
ARTICLE XX
AMENDMENT
This Contract may not be modified or amended, except by an agreement in
writing signed by the Seller and the Purchaser. The parties may waive any of the
conditions contained herein or any of the obligations of the other party
hereunder, but any such waiver shall be effective only if in writing and signed
by the party waiving such conditions and obligations.
ARTICLE XXI
AUTHORITY
Each person executing this Contract warrants and represents that he is
fully authorized to do so.
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<PAGE> 13
ARTICLE XXII
ATTORNEYS' FEES
In the event it becomes necessary for either party to file a suit to
enforce this Contract or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.
ARTICLE XXIII
DESCRIPTIVE HEADINGS
The descriptive headings of the several paragraphs contained in this
Contract are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
ARTICLE XXIV
ENTIRE AGREEMENT
This Contract (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement, or condition not expressed in this Contract shall
be binding upon the parties hereto or shall affect or be effective to interpret,
change, or restrict the provisions of this Contract.
ARTICLE XXV
MULTIPLE ORIGINALS ONLY
Numerous copies of this Contract may be executed by the parties hereto.
Each such executed copy shall have the full force and effect of an original
executed instrument.
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<PAGE> 14
ARTICLE XXVI
ACCEPTANCE
Seller shall have until 5:00 o'clock p.m., April 3, 1998, to execute
and return a fully executed original of this Contract to Purchaser, otherwise
this Contract shall become null and void. Time is of the essence of this
Contract. The date of execution of this Contract by Seller shall be the date of
execution of this Contract. If the final date of any period falls upon a
Saturday, Sunday, or legal holiday under the laws of the State of Georgia, then
in such event the expiration date of such period shall be extended to the next
day which is not a Saturday, Sunday, or legal holiday under the laws of the
State of Georgia.
ARTICLE XXVII
REAL ESTATE COMMISSION
In the event that this Contract closes, but not otherwise, Seller and
Purchaser shall pay at closing a real estate commission to Century 21 Farish
Realty ("Broker"), such commission to be in the amount of four percent (4%) of
the purchase price payable hereunder and to be divided equally between Seller
and Purchaser. Seller represents and warrants to Purchaser that Seller has not
contacted or entered into any agreement with any other real estate broker,
agent, finder, or any other party in connection with this transaction, and that
Seller has not taken any action which would result in any other real estate
broker's, finder's, or other fees or commissions being due and payable to any
other party with respect to the transaction contemplated hereby. Purchaser
hereby represents and warrants to Seller that Purchaser has not contracted or
entered into any agreement with any other real estate broker, agent, finder, or
any other party in connection with this transaction, and that Purchaser has not
taken any action which would result in any other real estate broker's, finder's,
or other fees or commissions being due or payable to any other party with
respect to the transaction contemplated hereby. Each party hereby indemnifies
and agrees to hold the other party harmless from any loss, liability, damage,
cost, or expense (including reasonable attorneys' fees) resulting to the other
party by reason of a breach of the representation and warranty made by such
party herein. Notwithstanding
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<PAGE> 15
anything to the contrary contained herein, the indemnities set forth in this
Article XXVII shall survive the closing.
EXECUTED on this the _________ day of April, 1998.
SELLER:
/s/ TERRY ADAIR 3-30-98
-----------------------------------------
TERRY ADAIR
EXECUTED on this the 27th day of March, 1998.
PURCHASER:
/s/ GEORGE R. BEDELL
-----------------------------------------
GEORGE R. BEDELL, TRUSTEE
RECEIPT OF EARNEST MONEY AND ONE (1) EXECUTED COUNTERPART OF THIS CONTRACT IS
HEREBY ACKNOWLEDGED:
TITLE COMPANY:
SAFECO LAND TITLE OF DALLAS
By: /s/ J.G. KERR
--------------------------------
Name: J. G. Kerr, V.P.
-----------------------------------------
Its: Special Projects
------------------------------------------
Senior Commercial Escrow Officer
Special Stipulations
1. Seller to maintain possession of the house & shop for 30 days after
closing.
2. This counter offer is open and valid for acceptance until 5:00 p.m.
April 9, 1998.
Exhibits:
Exhibit A--Plat
Exhibit B--Legal Description
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<PAGE> 1
EXHIBIT 10.2
CONTRACT OF SALE
This Agreement is entered into by and between GREAT ATLANTIC PROPERTIES
CORPORATION ("Seller") and GEORGE R. BEDELL, Trustee ("Purchaser").
W I T N E S S E T H :
FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:
ARTICLE I
PROPERTY
The conveyance by Seller to Purchaser shall include the following
described tracts or parcels of land, together with all and singular the rights
and appurtenances pertaining to such land including any right, title and
interest of Seller in and to adjacent strips or gores, streets, alleys, or
rights-of-way and all rights of ingress and egress thereto:
3.31 acres, more or less, located in Sandy Township,
Clearfield County, Pennsylvania, and being more particularly described
in Exhibit "A" attached hereto and made a part hereof for all purposes.
Hereafter the aforesaid real property is referred to as the "Land." The
conveyance by Seller to Purchaser shall also include all buildings and other
improvements on the Land ("Improvements").
The conveyance by Seller to Purchaser shall also include the following
townhouses located in Sandy Township, Clearfield County, Pennsylvania:
Seven (7) townhouses described as Units A, B, C and D in
Section 4, Block 5; Unit B in Section 4, Block 6; and Units A and C in
Section 4, Block 4, as recorded in the Recorder of Deeds office in
Miscellaneous Map Docket File 159, Square 110.
Hereinafter the aforesaid property is referred to as the "Townhouses."
Hereinafter all property being conveyed to Purchaser by Seller pursuant
to this Contract including the Land, the Improvements and the Townhouses is
sometimes referred to collectively as the "Subject Property."
<PAGE> 2
ARTICLE II
PURCHASE PRICE
The purchase price to be paid by Purchaser to Seller for the Subject
Property shall be the sum of Five Hundred Seventy-Five Thousand and No/100
Dollars ($575,000.00). The purchase price shall be payable all in cash at the
closing.
ARTICLE III
EARNEST MONEY
Within two (2) business days after final execution of this Contract by
all parties hereto, Purchaser shall deliver Purchaser's check in the amount of
Ten Thousand and No/100 Dollars ($10,000.00) to Safeco Land Title of Dallas,
5220 Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270, Attn: John Kerr
(the "Title Company"). The Title Company shall immediately cash the earnest
money check and deposit the proceeds thereof in an interest bearing account, the
earnings from which shall accrue to the benefit of Purchaser (hereinafter the
proceeds of the earnest money check shall be referred to as the "earnest
money").
In the event that this Contract is closed, then all earnest money shall
be applied in partial satisfaction of the purchase price. In the event that this
Contract is not closed, then the earnest money shall be disbursed in the manner
provided for elsewhere herein. Notwithstanding the foregoing or anything to the
contrary contained elsewhere in this Contract, it is understood and agreed that
One Hundred Dollars ($100.00) of the earnest money shall in all events be
delivered to Seller as valuable consideration for the Inspection Period
described in Article VI hereinbelow and the execution of this Contract by
Seller.
ARTICLE IV
PRE-CLOSING OBLIGATIONS OF PURCHASER
During the Inspection Period (defined hereinbelow), Purchaser, at
Purchaser's sole cost and expense, shall obtain and deliver to Seller copies of
the following (collectively the "Purchaser Due Diligence Items"):
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<PAGE> 3
a. An updated survey of the Subject Property dated subsequent
to the date of execution of this Contract and prepared by a licensed
professional engineer or surveyor acceptable to Purchaser, which Survey
shall: (a) include a metes and bounds legal description of the Subject
Property; (b) accurately show all improvements, encroachments and uses
and accurately show all easements and encumbrances visible or listed on
the Title Commitment (identifying each by recording reference if
applicable); (c) recite the number of acres included in the Subject
Property as well as that portion of the Subject Property which is
described in Exhibit "B"; (d) state whether the Subject Property (or
any portion thereof) lies within a flood zone, or flood prone area; and
(e) contain a certificate verifying that the Survey was made on the
ground, that the Survey is correct, that there are no improvements,
encroachments, easements, uses or encumbrances except as shown on the
survey plat, that the area represented for the Subject Property has
been certified by the surveyor as being correct, and that the Subject
Property does not lie within any flood zone or flood prone area, except
as indicated thereon. Unless otherwise agreed by Seller and Purchaser,
the metes and bounds description contained in the Survey shall be the
legal description employed in the documents of conveyance of the
Subject Property; and
b. A current commitment (the "Title Commitment") for the
issuance of an owner's policy of title insurance to the Purchaser from
the Title Company, together with good and legible copies of all
documents constituting exceptions to Seller's title as reflected in the
Title Commitment.
ARTICLE V
TITLE INSPECTION PERIOD
Purchaser shall have a period of time commencing on the date of
execution of this Contract and expiring on the date of expiration of the
Inspection Period (as defined hereinbelow) within which to review and approve
the status of Seller's title to the Subject Property (the "Title Review
Period"). If the information to be provided to or obtained by Purchaser pursuant
to the provisions of Article IV hereinabove reflects or discloses any defect,
exception or other matter affecting the Subject Property ("Title Defects") that
is unacceptable to Purchaser, then prior to the expiration of the Title Review
Period Purchaser shall provide Seller with written notice of Purchaser's
objections. Seller may, at his sole option, elect to cure or remove the
objections raised by Purchaser; provided, however, that Seller shall have no
obligation to do so. Should Seller elect to attempt to cure or remove the
objections, Seller shall have ten (10) days from the date of Purchaser's written
notice of objections (the "Cure Period") in which to accomplish the cure. In the
event Seller either elects not to cure or remove the objections or is unable to
accomplish the cure prior to the expiration of the Cure Period, then Seller
shall so notify Purchaser in writing specifying which objections Seller does not
intend to cure, and then Purchaser shall be entitled, as Purchaser's sole and
exclusive remedies, either to terminate this
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<PAGE> 4
Agreement by providing written notice of termination to Seller within ten (10)
days from the date on which Purchaser receives Seller's no-cure notice or waive
the objections and close this transaction as otherwise contemplated herein. If
Purchaser shall fail to notify Seller in writing of any objections to the state
of Seller's title to the Subject Property as shown by the Survey and Title
Commitment, then Purchaser shall be deemed to have no objections to the state of
Seller's title to the Subject Property as shown by the Survey and Title
Commitment, and any exceptions to Seller's title which have not been objected to
by Purchaser and which are shown on the Survey or described in the Title
Commitment shall be considered to be "Permitted Exceptions." It is further
understood and agreed that any Title Defects which have been objected to by
Purchaser and which are subsequently waived by Purchaser shall be Permitted
Exceptions.
ARTICLE VI
INSPECTION PERIOD
Purchaser, at Purchaser's sole expense, shall have the right to conduct
a feasibility, environmental, engineering and physical study of the Subject
Property for a period of time commencing on the date of execution of this
Contract and expiring thirty (30) days thereafter (the "Inspection Period").
Purchaser and Purchaser's duly authorized agents or representatives shall be
permitted to enter upon the Subject Property at all reasonable times during the
Inspection Period in order to conduct engineering studies, soil tests and any
other inspections and/or tests that Purchaser may deem necessary or advisable;
provided, however, that no drilling or other ground penetrations or physical
sampling in any building shall be done without Seller's prior written consent,
which consent shall not be unreasonably withheld or delayed. Purchaser further
agrees to indemnify and hold Seller harmless from any claims or damages,
including reasonable attorneys' fees, resulting from Purchaser's inspection of
the Subject Property. In the event that the review and/or inspection conducted
by this paragraph shows any fact, matter or condition to exist with respect to
the Subject Property that is unacceptable to Purchaser, in Purchaser's sole
discretion, or if for any reason Purchaser determines that purchase of the
Subject Property is not feasible, then Purchaser shall be entitled, as
Purchaser's sole remedy, to cancel this Contract by providing written notice of
cancellation to Seller prior to the expiration
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<PAGE> 5
of the Inspection Period. If Purchaser shall provide written notice of
cancellation prior to the expiration of the Inspection Period, then this
Contract shall be cancelled, all earnest money (less $100.00) shall be
immediately returned to Purchaser by the Title Company, and thereafter neither
Seller nor Purchaser shall have any continuing obligations one unto the other.
If no notice of cancellation is provided by Purchaser prior to the expiration of
the Inspection Period, then this Contract shall remain in full force and effect.
However, in the event that the Inspection Period has expired without written
notice of cancellation, then Purchaser shall be obligated to follow through with
full performance of its obligations under this Contract and, should Purchaser
fail to close hereunder, Seller shall be entitled to receive the Earnest Money
as Seller's sole remedy for a default by Purchaser hereunder.
ARTICLE VII
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER
Seller represents and warrants to Purchaser that at closing Seller will
have good and indefeasible fee simple title to the Subject Property free and
clear of all liens, encumbrances, covenants, restrictions, rights-of-way,
easements, and any other matters affecting title to the Subject Property except
for the Permitted Exceptions, and at closing, Seller will be in a position to
convey the Subject Property to Purchaser free and clear of all liens,
encumbrances, covenants, restrictions, rights-of-way, easements and other such
matters affecting title except for the Permitted Exceptions.
Seller further covenants and agrees with Purchaser that, from the date
hereof until the closing, Seller shall not sell, assign, or convey any right,
title, or interest whatsoever in or to the Subject Property, or create or permit
to exist any lien, security interest, easement, encumbrance, charge, or
condition affecting the Subject Property (other than the Permitted Exceptions)
without promptly discharging the same prior to closing.
Seller hereby further represents and warrants to Purchaser, to the best
of Seller's knowledge, as follows:
a. There are no actions, suits, or proceedings pending or, to
the best of Seller's knowledge, threatened against Seller or otherwise
affecting any portion of the Subject Property, at law or in equity, or
before or by any federal, state, municipal, or
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<PAGE> 6
other governmental court, department, commission, board, bureau,
agency, or instrumentality, domestic or foreign;
b. The execution by Seller of this Contract and the
consummation by Seller of the sale contemplated hereby have been duly
authorized, and do not, and, at the closing date, will not, result in a
breach of any of the terms or provisions of, or constitute a default
under any indenture, agreement, instrument, or obligation to which
Seller is a party or by which the Subject Property or any portion
thereof is bound, and do not, and at the closing date will not,
constitute a violation of any regulation affecting the Subject
Property;
c. Seller has not received any notice of any violation of any
ordinance, regulation, law, or statute of any governmental agency
pertaining to the Subject Property or any portion thereof;
d. The Subject Property and the current operation thereof
comply in all material respects with all laws, regulations, ordinances,
rules, orders and other requirements of all governmental authorities
having jurisdiction over the Subject Property or affecting all or any
part thereof or bearing on its construction or operation, and with all
private covenants or restrictions;
e. From the date of execution of this Contract through the
date of closing, Seller shall continue to maintain the Subject Property
in its present condition, subject to ordinary wear and tear and Article
XV hereof, and shall continue to manage the Subject Property in the
same manner as it is currently being managed; and
f. That, at closing, there will be no unpaid bills, claims, or
liens in connection with any construction or repair of the Subject
Property except for ones which will be paid in the ordinary course of
business or which have been bonded around or the payment of which has
otherwise been adequately provided for to the complete satisfaction of
Purchaser.
All of the foregoing representations and warranties of Seller are made by Seller
both as of the date hereof and as of the date of the closing hereunder.
Notwithstanding the foregoing or anything to the contrary contained herein, it
is understood and agreed that the representations and warranties set forth
hereinabove shall survive the closing of this Contract only for a period of two
(2) years following the closing date, but not thereafter, and Seller shall have
no liability of any kind whatsoever for any breach thereof except to the extent
a claim is asserted against Seller within such two (2) year period.
Purchaser agrees that, having had the opportunity to inspect the
Subject Property for defects and having had the right to terminate this Contract
in the event any defects are found, Purchaser will accept at closing the Subject
Property in an "as is, where is" condition, and, except for the representations
and warranties set forth hereinabove, Seller shall not be required to give any
further representations or warranties at closing with respect to the condition
of the Subject Property or the income that may be generated by the Subject
Property.
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<PAGE> 7
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
The obligation of Purchaser to close this Contract shall, at the option
of Purchaser, be subject to the following conditions precedent:
a. All of the representations, warranties and agreements of
Seller set forth in this Contract shall be true and correct in all
material respects as of the date hereof and at closing, and Seller
shall not have on or prior to closing, failed to meet, comply with or
perform in any material respect any conditions or agreements on
Seller's part as required by the terms of this Contract;
b. There shall be no change in the matters reflected in the
Title Commitment, and there shall not exist any encumbrance or title
defect affecting the Subject Property not described in the Title
Commitment except for the Permitted Exceptions;
c. There shall be no changes in the matters reflected in the
Survey, and there shall not exist any easement, right-of-way,
encroachment, waterway, pond, flood plain, conflict or protrusion with
respect to the Subject Property not shown on the Survey; and
d. No material and substantial change shall have occurred with
respect to the Subject Property which would in any way affect the
findings made in the inspection of the Subject Property described in
Article VI hereinabove.
If any such condition is not fully satisfied by closing, Purchaser may
terminate this Contract by written notice to Seller whereupon this Contract
shall be cancelled, the earnest money deposit (less $100.00) shall be returned
to Purchaser and thereafter neither Seller nor Purchaser shall have any
continuing obligations one unto the other.
ARTICLE IX
CLOSING
The closing hereunder shall take place at the offices of the Title
Company. The closing shall occur on or before thirty (30) days from the date of
expiration of the Inspection Period. Purchaser shall notify Seller at least five
(5) days in advance of the exact time and date of closing.
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<PAGE> 8
ARTICLE X
SELLER'S OBLIGATIONS AT CLOSING
At the closing, Seller shall do the following:
a. Deliver to Purchaser a special warranty deed covering the
Subject Property, duly signed and acknowledged by Seller, which deed
shall be in form reasonably acceptable to Purchaser for recording and
shall convey to Purchaser good and marketable title to the Subject
Property, free and clear of all liens, rights-of-way, easements, and
other matters affecting title to the Subject Property, except for the
Permitted Exceptions.
b. Deliver or cause to be delivered to Purchaser an ALTA
owner's form of title insurance policy (the "Title Policy") insuring
Purchaser in the amount of the purchase price that Purchaser has
acquired good and marketable title to the Subject Property, subject
only to the Permitted Exceptions. Purchaser shall be entitled to
request the Title Company to provide, at Purchaser's sole cost and
expense, such endorsements (or amendments) to the Title Policy as
Purchaser may reasonably require so long as such endorsements or
amendments impose no additional liability on Seller or delay the
closing. Purchaser acknowledges and agrees that the Title Policy may be
actually delivered within a reasonable time following the closing so
long as Purchaser has received at closing a current binding title
commitment obligating the Title Company to deliver the Title Policy.
Seller shall pay the premium for a standard owner's form of title
insurance policy in the amount of the purchase price, and Purchaser
shall pay the cost of any title endorsements required by Purchaser and
the cost of any reinsurance required by Purchaser.
c. Deliver such evidence or other documents that may be
reasonably required by the Title Company evidencing the status and
capacity of Seller and the authority of the person or persons who are
executing the various documents on behalf of Seller in connection with
the sale of the Subject Property.
d. Deliver a non-withholding statement that will satisfy the
requirements of Section 1445 of the Internal Revenue Code so that
Purchaser is not required to withhold any portion of the purchase price
for payment to the Internal Revenue Service.
e. Deliver to Purchaser any other documents or items necessary
or convenient in the reasonable judgment of Purchaser to carry out the
intent of the parties under this Contract.
ARTICLE XI
PURCHASER'S OBLIGATIONS AT CLOSING
At the closing, Purchaser shall deliver to Seller the purchase price in
cash.
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<PAGE> 9
ARTICLE XII
COSTS AND ADJUSTMENTS
At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:
a. Any real estate transfer taxes or sales taxes payable in
connection with the sale of the Subject Property shall be shared
equally between Seller and Purchaser.
b. Ad valorem taxes for the Subject Property for the current
tax year shall be prorated as of the date of closing, and Seller shall
pay to Purchaser in cash at closing Seller's pro rata portion of such
taxes. Seller's pro rata portion of such taxes shall be based upon
taxes actually assessed for the current tax year or, if for any reason
such taxes for the Subject Property have not been actually assessed,
such proration shall be based upon the amount of such taxes for the
immediately preceding tax year, and adjusted by cash settlement when
exact amounts are available.
c. All other closing costs, including but not limited to,
recording and escrow fees shall be divided equally between Seller and
Purchaser; provided, however, that Seller and Purchaser shall each be
responsible for the fees and expenses of their respective attorneys.
Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Contract specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property, and
all expenses related thereto, including, but not limited to, court costs and
attorneys' fees.
Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties and based on events occurring subsequent to the
date of closing and which are in any way related to the ownership, maintenance
or operation of the Subject Property, and all expenses related thereto,
including, but not limited to, court costs and attorneys' fees.
Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XII shall survive the closing hereunder.
It is hereby acknowledged by the parties that Seller has been actively
engaged in the business of rental of the townhouse units described herein and
that Seller has or may have contracted for rental of these units to third
parties for time periods following the scheduled date of closing. Purchaser
hereby agrees to accept assignment of and honor all rental agreements
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<PAGE> 10
made by the Seller prior to the date of execution of this Contract for rental
terms which conclude no later than December 31, 1998. Seller may continue
actively renting properties through the date of closing, however, Seller shall
not enter into any additional rental agreements for which rental terms terminate
later than September 30, 1998. Purchaser shall be entitled to receive payment
for all rental terms following the date of closing.
ARTICLE XIII
ENTRY ON PROPERTY
Purchaser, Purchaser's agents, employees, servants, or nominees, are
hereby granted the right to enter upon the Subject Property at any time prior to
closing for the purpose of inspecting the Subject Property and conducting such
engineering and mechanical tests as Purchaser may deem necessary or advisable,
any such inspections and tests to be made at Purchaser's sole expense. Purchaser
agrees to indemnify and hold Seller harmless from and against any and all
losses, damages, costs, or expenses incurred by Seller as a result of any
inspections or tests made by Purchaser.
ARTICLE XIV
POSSESSION OF PROPERTY
Possession of the Property free and clear of all uses and
encroachments, except the Permitted Exceptions, shall be delivered to Purchaser
at closing.
ARTICLE XV
DAMAGE OR DESTRUCTION PRIOR TO CLOSING
In the event that the Subject Property should be damaged by any
casualty prior to closing, then if the cost of repairing such damage, as
estimated by an architect or contractor retained pursuant to the mutual
agreement of Seller and Purchaser, is:
a. Less than Twenty-Five Thousand and No/100 Dollars
($25,000.00), then at Purchaser's option, either (i) the Seller shall
repair such damage as promptly as is reasonably possible, restoring the
damaged property at least to its condition immediately prior to such
damage; and, in the event such repairs have not been completed prior to
closing, then the closing shall nevertheless proceed as scheduled, and
Purchaser may have the Title Company withhold from Seller the funds
necessary to make such repairs
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<PAGE> 11
until Seller has repaired such damage pursuant to the provisions
hereof, at which time such funds shall be distributed to Seller or (ii)
Purchaser may take an assignment of Seller's insurance proceeds and a
credit for Seller's deductible and repair such damage itself;
or if said cost is:
b. greater than Twenty-Five Thousand and No/100 Dollars
($25,000.00), then, at Purchaser's election, Seller shall pay to
Purchaser, at closing, all insurance proceeds payable for such damage,
and the sale shall be closed without Seller's repairing such damage,
or, if Purchaser does not elect to accept such insurance proceeds, then
either Seller or Purchaser may elect to terminate this Contract, in
which case the earnest money (less $100.00) shall be returned to
Purchaser and thereafter neither party shall have any further
obligations one unto the other.
ARTICLE XVI
NOTICES
All notices, demands, or other communications of any type given by the
Seller to the Purchaser, or by the Purchaser to the Seller, whether required by
this Contract or in any way related to the transaction contracted for herein,
shall be void and of no effect unless given in accordance with the provisions of
this paragraph. All notices shall be in writing and delivered to the person to
whom the notice is directed, either in person, by facsimile transmission, or by
United States Mail, as a registered or certified item, return receipt requested.
Notices delivered by mail shall be deemed given when deposited in a post office
or other depository under the care or custody of the United States Postal
Service, enclosed in a wrapper with proper postage affixed, addressed as
follows:
Seller: Great Atlantic Properties Corporation
P.O. Box 550
Leominster, Massachusetts 01453
Purchaser: George R. Bedell
901 Main Street, Suite 3700
Dallas, Texas 75202
Telephone No.: (214) 744-3700
Facsimile No.: (214) 747-3732
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<PAGE> 12
ARTICLE XVII
REMEDIES
In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, it shall be an event of default
and Purchaser shall have the option (i) to terminate this Contract by providing
written notice thereof to Seller, in which event the earnest money (less
$100.00) shall be returned immediately to Purchaser by the Title Company and the
parties hereto shall have no further liabilities or obligations one unto the
other; (ii) to waive any defect or requirement and close this Contract; or (iii)
to sue Seller for specific performance or for damages. The exercise of any of
the foregoing remedies of Purchaser shall not in any manner be construed as a
waiver of Purchaser's right to seek specific performance or to sue for damages,
and in the event of a default by Seller hereunder, Purchaser shall be entitled
to enforce specific performance hereunder or sue Seller for damages.
In the event that Purchaser fails to timely comply with all conditions,
covenants, and obligations Purchaser has hereunder, such failure shall be an
event of default, and Seller's sole remedy shall be to receive the Earnest
Money. The Earnest Money is agreed upon by and between the Seller and Purchaser
as liquidated damages due to the difficulty and inconvenience of ascertaining
and measuring actual damages, and the uncertainty thereof, and no other damages,
rights, or remedies shall in any case be collectible, enforceable, or available
to the Seller other than in this paragraph defined, and Seller shall accept the
Earnest Money as Seller's total damages and relief.
ARTICLE XVIII
ASSIGNMENT
Purchaser shall have the right to nominate who shall take title and who
shall succeed to Purchaser's duties and obligations hereunder, or assign this
Contract to any person, firm, corporation, or other entity which Purchaser may,
at Purchaser's sole option, choose, and from and after such nomination or
assignment, wherever in this Contract reference is made to Purchaser such
reference shall mean the nominee or assignee who shall succeed to all the
rights, duties, and obligations of Purchaser hereunder.
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<PAGE> 13
ARTICLE XIX
INTERPRETATION AND APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with
the laws of the Commonwealth of Pennsylvania. Where required for proper
interpretation, words in the singular shall include the plural; the masculine
gender shall include the neuter and the feminine, and vice versa. The terms
"successors and assigns" shall include the heirs, administrators, executors,
successors, and assigns, as applicable, of any party hereto.
ARTICLE XX
AMENDMENT
This Contract may not be modified or amended, except by an agreement in
writing signed by the Seller and the Purchaser. The parties may waive any of the
conditions contained herein or any of the obligations of the other party
hereunder, but any such waiver shall be effective only if in writing and signed
by the party waiving such conditions and obligations.
ARTICLE XXI
AUTHORITY
Each person executing this Contract warrants and represents that he is
fully authorized to do so.
ARTICLE XXII
ATTORNEYS' FEES
In the event it becomes necessary for either party to file a suit to
enforce this Contract or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.
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<PAGE> 14
ARTICLE XXIII
DESCRIPTIVE HEADINGS
The descriptive headings of the several paragraphs contained in this
Contract are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
ARTICLE XXIV
ENTIRE AGREEMENT
This Contract (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement, or condition not expressed in this Contract shall
be binding upon the parties hereto or shall affect or be effective to interpret,
change, or restrict the provisions of this Contract.
ARTICLE XXV
MULTIPLE ORIGINALS ONLY
Numerous copies of this Contract may be executed by the parties hereto.
Each such executed copy shall have the full force and effect of an original
executed instrument.
ARTICLE XXVI
ACCEPTANCE
Seller shall have until 5:00 o'clock p.m., August 18, 1998, to execute
and return a fully executed original of this Contract to Purchaser, otherwise
this Contract shall become null and void. Time is of the essence of this
Contract. The date of execution of this Contract by Seller shall be the date of
execution of this Contract. If the final date of any period falls upon a
Saturday, Sunday, or legal holiday under the laws of the State of Pennsylvania,
then in such
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<PAGE> 15
event the expiration date of such period shall be extended to the next day which
is not a Saturday, Sunday, or legal holiday under the laws of the State of
Pennsylvania.
ARTICLE XXVII
REAL ESTATE COMMISSION
In the event that this Contract closes, but not otherwise, Seller
agrees to pay at closing a real estate commission to Jakki Strickland, such
commission to be in the amount of six percent (6%) of the purchase price payable
hereunder. Seller represents and warrants to Purchaser that Seller has not
contacted or entered into any agreement with any other real estate broker,
agent, finder, or any other party in connection with this transaction, and that
Seller has not taken any action which would result in any other real estate
broker's, finder's, or other fees or commissions being due and payable to any
other party with respect to the transaction contemplated hereby. Purchaser
hereby represents and warrants to Seller that Purchaser has not contracted or
entered into any agreement with any real estate broker, agent, finder, or any
other party in connection with this transaction, and that Purchaser has not
taken any action which would result in any real estate broker's, finder's, or
other fees or commissions being due or payable to any other party with respect
to the transaction contemplated hereby. Each party hereby indemnifies and agrees
to hold the other party harmless from any loss, liability, damage, cost, or
expense (including reasonable attorneys' fees) resulting to the other party by
reason of a breach of the representation and warranty made by such party herein.
Notwithstanding anything to the contrary contained herein, the indemnities set
forth in this Article XXVII shall survive the closing.
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<PAGE> 16
EXECUTED on this the 12th day of August, 1998.
SELLER:
GREAT ATLANTIC PROPERTIES CORPORATION
By: /s/ LOUIS G. BURATTI
----------------------------------------
Name: Louis G. Buratti, Jr.
--------------------------------------
Its: President
---------------------------------------
EXECUTED on this the 16th day of July, 1998.
PURCHASER:
/s/ GEORGE R. BEDELL
-------------------------------------------
George R. Bedell, Trustee
RECEIPT OF EARNEST MONEY AND ONE (1) EXECUTED COUNTERPART OF THIS CONTRACT IS
HEREBY ACKNOWLEDGED:
TITLE COMPANY:
SAFECO LAND TITLE OF DALLAS
By: /s/ J.G. KERR
----------------------------------
Name: J.G. Kerr, Vice President
-------------------------------------
Its: Senior Commercial Escrow Officer
-----------------------------------------
Exhibits:
Ex A--Legal Description
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<PAGE> 1
EXHIBIT 10.3
CONTRACT OF SALE
This Agreement is entered into by and between J. PHILLIP BALLARD, JR.
("Seller") and EAGLE GREENS LTD, formerly known as Northeast Georgia
Recreational and Development Co., Inc. and SILVERLEAF RESORTS, INC., a Texas
corporation ("Purchaser").
W I T N E S S E T H :
FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:
ARTICLE I
PROPERTY
The conveyance by Seller to Purchaser shall include the following
described tracts or parcels of land, together with all and singular the rights
and appurtenances pertaining to such land including any right, title and
interest of Seller in and to adjacent strips or gores, streets, alleys, or
rights-of-way and all rights of ingress and egress thereto:
Those certain tracts of land located in the 12th Land
District, Habersham County, Georgia, commonly known as "Hollywood Hills
Golf Club," containing approximately 220 acres, more or less, and being
more particularly described in Exhibit "A" attached hereto and made a
part hereof for all purposes.
Hereafter the aforesaid real property is referred to as the "Land."
The conveyance by Seller to Purchaser shall also include all buildings
and other improvements on the Land, including specifically, without limitation,
the club house, all storage buildings, all recreational facilities, lakes and
parks located thereon (the foregoing property is herein referred to collectively
as the "Improvements").
The conveyance by Seller to Purchaser shall also include all fixtures
and personal property, tangible or intangible, of any kind whatsoever owned by
Seller and used in connection with the Land and/or Improvements, including but
not limited to, the following items:
a. All machinery, equipment, fixtures, furniture and other
personal property of every kind and character owned by Seller and
located on or used in connection with the operation of the Land and
Improvements including all golf carts;
<PAGE> 2
b. If and to the extent owned by Seller, the name "Hollywood
Hills Golf Club," as used in the ownership or operation of the Land and
Improvements;
c. All licenses, franchises and permits used in or relating to
the ownership, occupancy or operation of the golf club being operated
by Seller on the Land including, in particular, any water permits or
other utility permits;
d. Any developer's, declarant's, or owner's interests under
any operating agreements or reciprocal easement agreements or other
similar agreements affecting and/or benefiting the Land;
e. All service, maintenance, management or other contracts
respecting the ownership, maintenance, operation, provisioning or
equipping of the golf club being operated on the Land by Seller,
including warranties and guaranties relating thereto; and
f. All outstanding receivables and membership agreements, if
any, owned by Seller which have been generated from the sale of
membership or use rights at the golf club being operated by Seller on
the Land.
The foregoing items are hereinafter collectively referred to as the "Golf Course
Assets."
Hereinafter all property being conveyed to Purchaser by Seller pursuant
to this Contract including the Land, the Improvements and the Golf Course Assets
are sometimes referred to collectively as the "Subject Property."
ARTICLE II
PURCHASE PRICE
The purchase price to be paid by Purchaser to Seller for the Subject
Property shall be the sum of Three Million Five Hundred Twenty-Five Thousand and
No/100 Dollars ($3,525,000.00). The purchase price shall be payable all in cash
at the closing.
ARTICLE III
EARNEST MONEY
Within two (2) business days after final execution of this Contract by
all parties hereto, Purchaser shall deliver Purchaser's check in the amount of
Fifty Thousand and No/100 Dollars ($50,000.00) to Safeco Land Title of Dallas,
5220 Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270, Attn: Bobbie Irwin
(the "Title Company"). The Title Company shall immediately cash the earnest
money check and deposit the proceeds thereof in an interest bearing account, the
earnings from which shall accrue to the benefit of Purchaser (hereinafter the
proceeds of the earnest money check shall be referred to as the "earnest
money"). If Purchaser
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<PAGE> 3
does not terminate this Contract during the Inspection Period (as defined in
Article VI hereinbelow), then, within two (2) business days after the expiration
of the Inspection Period, the Title Company shall immediately disburse the
entire $50,000.00 earnest money deposit to Seller; upon such disbursement the
$50,000.00 earnest money deposit shall be non-refundable to the Purchaser except
in the event of a default by Seller hereunder, but, if this Contract closes,
then the entire $50,000.00 earnest money deposit shall be applied in partial
satisfaction of the purchase price payable at closing.
In the event that this Contract is closed, then all earnest money shall
be applied in partial satisfaction of the purchase price. In the event that this
Contract is not closed, then the earnest money shall be disbursed in the manner
provided for elsewhere herein. Notwithstanding the foregoing or anything to the
contrary contained elsewhere in this Contract, it is understood and agreed that
One Hundred Dollars ($100.00) of the earnest money shall in all events be
delivered to Seller as valuable consideration for the Inspection Period
described in Article VI hereinbelow and the execution of this Contract by
Seller.
ARTICLE IV
PRE-CLOSING OBLIGATIONS OF SELLER AND PURCHASER
Within ten (10) days from the date of execution of this Contract,
Seller shall furnish to Purchaser, each of the following (collectively, the "Due
Diligence Items"):
a. Copies of all licenses, permits, applications,
authorizations, certificates of occupancy, governmental approvals and
other entitlements relating to the Subject Property and the operation
thereof in the possession of Seller, if any, including, in particular,
copies of all permits relating to utilities;
b. A schedule of all current or pending litigation with
respect to the Subject Property or any part thereof, if any, together
with a brief description of each proceeding;
c. An accurate and complete schedule reflecting with respect
to the golf club being operated by Seller at the Subject Property for
the calendar year ending immediately preceding the date of this
Contract: (i) ad valorem taxes, (ii) expenses incurred for such period
for water, electricity, natural gas and other utility charges, and
(iii) all other income or expenses of operation of the golf club being
operated on the Land by Seller. Said operating schedule shall be
accompanied by Seller's statement that said operating schedule is true,
complete and correct as of the date provided;
d. A list of all service contracts, warranties, management,
maintenance, or other agreements affecting the Subject Property, if
any, together with copies of same. Seller agrees not to enter into any
additional contracts, warranties, or agreements prior to closing which
would be binding on Purchaser and which cannot be cancelled by
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<PAGE> 4
Purchaser upon thirty (30) days written notice without cost, penalty,
or obligation unless such service contracts or other agreements are
approved in writing by Purchaser;
e. All site plans, drawings, environmental, mechanical,
electrical, structural, soils and similar reports and/or audits and
plans and specifications relative to the Subject Property in the
possession of Seller, if any;
f. True and correct copies of the tax statements covering the
Subject Property or any part thereof for each of the two (2) years
prior to the current year and, if available, for the current year;
g. A schedule of all Golf Course Assets (specifying if any
such Golf Course Assets are leased);
h. A list of any unwritten agreements affecting the Subject
Property to which Seller is a party or of which Seller has knowledge;
and
During the Inspection Period (defined hereinbelow), Purchaser, at its
sole cost and expense, shall obtain and deliver to Seller copies of the
following (collectively the "Purchaser Due Diligence Items"):
a. An updated survey of the Subject Property dated subsequent
to the date of execution of this Contract and prepared by a licensed
professional engineer or surveyor acceptable to Purchaser, which Survey
shall: (a) include a metes and bounds legal description of the Subject
Property; (b) accurately show all improvements, encroachments and uses
and accurately show all easements and encumbrances visible or listed on
the Title Commitment (identifying each by recording reference if
applicable); (c) recite the number of acres included in the Subject
Property; (d) state whether the Subject Property (or any portion
thereof) lies within a flood zone, or flood prone area; (e) contain a
certificate verifying that the Survey was made on the ground, that the
Survey is correct, that there are no improvements, encroachments,
easements, uses or encumbrances except as shown on the survey plat,
that the area represented for the Subject Property has been certified
by the surveyor as being correct, that the Subject Property does not
lie within any flood zone or flood prone area, except as indicated
thereon; and (f) otherwise be in form sufficient for the amendment of
the boundary exception by the Title Company. Unless otherwise agreed by
Seller and Purchaser, the metes and bounds description contained in the
Survey shall be the legal description employed in the documents of
conveyance of the Subject Property; and
b. A current commitment (the "Title Commitment") for the
issuance of an owner's policy of title insurance to the Purchaser from
the Title Company, together with good and legible copies of all
documents constituting exceptions to Seller's title as reflected in the
Title Commitment.
ARTICLE V
TITLE INSPECTION PERIOD
Purchaser shall have a period of time commencing on the date of
execution of this Contract and expiring on the date of expiration of the
Inspection Period (as defined hereinbelow) within which to review and approve
the status of Seller's title to the Subject Property (the "Title Review
Period"). If the information to be provided to or obtained by Purchaser pursuant
to the
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<PAGE> 5
provisions of Article IV hereinabove reflects or discloses any defect, exception
or other matter affecting the Subject Property ("Title Defects") that is
unacceptable to Purchaser, then prior to the expiration of the Title Review
Period Purchaser shall provide Seller with written notice of Purchaser's
objections. Seller may, at its sole option, elect to cure or remove the
objections raised by Purchaser; provided, however, that Seller shall have no
obligation to do so. Should Seller elect to attempt to cure or remove the
objections, Seller shall have thirty (30) days from the date of Purchaser's
written notice of objections (the "Cure Period") in which to accomplish the
cure. In the event Seller either elects not to cure or remove the objections or
is unable to accomplish the cure prior to the expiration of the Cure Period,
then Seller shall so notify Purchaser in writing specifying which objections
Seller does not intend to cure, and then Purchaser shall be entitled, as
Purchaser's sole and exclusive remedies, either to terminate this Agreement by
providing written notice of termination to Seller within thirty (30) days from
the date on which Purchaser receives Seller's no-cure notice or waive the
objections and close this transaction as otherwise contemplated herein. If
Purchaser shall fail to notify Seller in writing of any objections to the state
of Seller's title to the Subject Property as shown by the Survey and Title
Commitment, then Purchaser shall be deemed to have no objections to the state of
Seller's title to the Subject Property as shown by the Survey and Title
Commitment, and any exceptions to Seller's title which have not been objected to
by Purchaser and which are shown on the Survey or described in the Title
Commitment shall be considered to be "Permitted Exceptions." It is further
understood and agreed that any Title Defects which have been objected to by
Purchaser and which are subsequently waived by Purchaser shall be Permitted
Exceptions.
ARTICLE VI
INSPECTION PERIOD
Purchaser, at Purchaser's sole expense, shall have the right to conduct
a feasibility, environmental, engineering and physical study of the Subject
Property for a period of time commencing on the date of execution of this
Contract and expiring sixty (60) days from that date. Purchaser and Purchaser's
duly authorized agents or representatives shall be permitted to enter upon the
Subject Property at all reasonable times during the Inspection Period in order
to
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<PAGE> 6
conduct engineering studies, soil tests and any other inspections and/or tests
that Purchaser may deem necessary or advisable; provided, however, that no
drilling or other ground penetrations or physical sampling in any building shall
be done without Seller's prior written consent, which consent shall not be
unreasonably withheld or delayed. Purchaser further agrees to indemnify and hold
Seller harmless from any claims or damages, including reasonable attorneys'
fees, resulting from Purchaser's inspection of the Subject Property. In the
event that the review and/or inspection conducted by this paragraph shows any
fact, matter or condition to exist with respect to the Subject Property that is
unacceptable to Purchaser, in Purchaser's sole discretion, or if for any reason
Purchaser determines that purchase of the Subject Property is not feasible, then
Purchaser shall be entitled, as Purchaser's sole remedy, to cancel this Contract
by providing written notice of cancellation to Seller prior to the expiration of
the Inspection Period. If Purchaser shall provide written notice of cancellation
prior to the expiration of the Inspection Period, then this Contract shall be
cancelled, all earnest money (less $100.00) shall be immediately returned to
Purchaser by the Title Company, and thereafter neither Seller nor Purchaser
shall have any continuing obligations one unto the other. If no notice of
cancellation is provided by Purchaser prior to the expiration of the Inspection
Period, then this Contract shall remain in full force and effect.
ARTICLE VII
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER
Seller represents and warrants to Purchaser that at closing Seller will
have good and indefeasible fee simple title to the Subject Property free and
clear of all liens, encumbrances, covenants, restrictions, rights-of-way,
easements, and any other matters affecting title to the Subject Property except
for the Permitted Exceptions, and at closing, Seller will be in a position to
convey the Subject Property to Purchaser free and clear of all liens,
encumbrances, covenants, restrictions, rights-of-way, easements and other such
matters affecting title except for the Permitted Exceptions.
Seller further covenants and agrees with Purchaser that, from the date
hereof until the closing, Seller shall not sell, assign, or convey any right,
title, or interest whatsoever in or to
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<PAGE> 7
the Subject Property, or create or permit to exist any lien, security interest,
easement, encumbrance, charge, or condition affecting the Subject Property
(other than the Permitted Exceptions) without promptly discharging the same
prior to closing.
Seller hereby further represents and warrants to Purchaser, to the best
of Seller's knowledge, as follows:
a. There are no actions, suits, or proceedings pending or, to
the best of Seller's knowledge, threatened against Seller or otherwise
affecting any portion of the Subject Property, at law or in equity, or
before or by any federal, state, municipal, or other governmental
court, department, commission, board, bureau, agency, or
instrumentality, domestic or foreign;
b. The execution by Seller of this Contract and the
consummation by Seller of the sale contemplated hereby have been duly
authorized, and do not, and, at the closing date, will not, result in a
breach of any of the terms or provisions of, or constitute a default
under any indenture, agreement, instrument, or obligation to which
Seller is a party or by which the Subject Property or any portion
thereof is bound, and do not, and at the closing date will not,
constitute a violation of any regulation affecting the Subject
Property;
c. Seller has not received any notice of any violation of any
ordinance, regulation, law, or statute of any governmental agency
pertaining to the Subject Property or any portion thereof;
d. The Subject Property and the current operation thereof
comply in all material respects with all laws, regulations, ordinances,
rules, orders and other requirements of all governmental authorities
having jurisdiction over the Subject Property or affecting all or any
part thereof or bearing on its construction or operation, and with all
private covenants or restrictions;
e. From the date of execution of this Contract through the
date of closing, Seller shall continue to maintain the Subject Property
in its present condition, subject to ordinary wear and tear and Article
XV hereof, and shall continue to manage the Subject Property in the
same manner as it is currently being managed; Seller shall not remove
any fixtures, equipment, furnishings or other personal property from
the Subject Property unless replaced with items of equal or greater
quality and quantity, nor shall Seller in any manner neglect the
Subject Property;
f. That, at closing, there will be no unpaid bills, claims, or
liens in connection with any construction or repair of the Subject
Property except for ones which will be paid in the ordinary course of
business or which have been bonded around or the payment of which has
otherwise been adequately provided for to the complete satisfaction of
Purchaser; and
g. The assets and other items to be conveyed to Purchaser by
Seller pursuant to this Contract comprise all of the assets and
properties of Seller that are used in the operation of the Subject
Property in the ordinary course of business and consistent with current
practice; notwithstanding anything to the contrary contained herein, in
the event that either Seller or Purchaser discovers after closing that
any asset or item used in connection with the operation of the Subject
Property has not been conveyed to Purchaser at closing, then Seller
will immediately, upon demand by Purchaser, convey such asset or other
item to Purchaser for no additional consideration of any kind
whatsoever.
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<PAGE> 8
All of the foregoing representations and warranties of Seller are made by Seller
both as of the date hereof and as of the date of the closing hereunder.
Notwithstanding the foregoing or anything to the contrary contained herein, it
is understood and agreed that the representations and warranties set forth
hereinabove shall survive the closing of this Contract only for a period of one
(1) year following the closing date, but not thereafter, and Seller shall have
no liability of any kind whatsoever for any breach thereof except to the extent
a claim is asserted against Seller within such one (1) year period.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
The obligation of Purchaser to close this Contract shall, at the option
of Purchaser, be subject to the following conditions precedent:
a. All of the representations, warranties and agreements of
Seller set forth in this Contract shall be true and correct in all
material respects as of the date hereof and at closing, and Seller
shall not have on or prior to closing, failed to meet, comply with or
perform in any material respect any conditions or agreements on
Seller's part as required by the terms of this Contract;
b. There shall be no change in the matters reflected in the
Title Commitment, and there shall not exist any encumbrance or title
defect affecting the Subject Property not described in the Title
Commitment except for the Permitted Exceptions;
c. There shall be no changes in the matters reflected in the
Survey, and there shall not exist any easement, right-of-way,
encroachment, waterway, pond, flood plain, conflict or protrusion with
respect to the Subject Property not shown on the Survey; and
d. No material and substantial change shall have occurred with
respect to the Subject Property which would in any way affect the
findings made in the inspection of the Subject Property described in
Article VI hereinabove.
If any such condition is not fully satisfied by closing, Purchaser may
terminate this Contract by written notice to Seller whereupon this Contract
shall be cancelled, the earnest money deposit (less $100.00) shall be returned
to Purchaser and thereafter neither Seller nor Purchaser shall have any
continuing obligations one unto the other.
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<PAGE> 9
ARTICLE IX
CLOSING
The closing hereunder shall take place at the offices of the Title
Company. The closing shall occur on or before sixty (60) days from the date of
expiration of the Inspection Period. Purchaser shall notify Seller at least five
(5) days in advance of the exact time and date of closing. Purchaser shall have
the right to obtain one sixty (60) day extension of the deadline for closing by
delivering directly to Seller, prior to the then scheduled closing deadline, an
additional Twenty-Five Thousand and No/100 Dollars ($25,000.00) in
non-refundable earnest money. If Purchaser exercises this right, then the
deadline for closing of this Contract shall be extended by sixty (60) days; the
additional $25,000.00 in earnest money which is paid by Purchaser in order to
extend the deadline for closing of this Contract shall be non-refundable to
Purchaser except in the event of a default by Seller hereunder, but, if this
Contract closes, then such additional earnest money shall be applied in partial
satisfaction of the purchase price payable hereunder. Upon the expiration of the
first sixty (60) day extension, Purchaser shall have the right to obtain a
second sixty (60) day extension of the deadline for closing by delivering
directly to Seller, prior to the then scheduled closing deadline, an additional
Twenty-Five Thousand and No/100 Dollars ($25,000.00) in non-refundable earnest
money. If Purchaser exercises this right, then the deadline for closing of this
Contract shall be extended by sixty (60) days; the additional $25,000.00 in
earnest money which is paid by Purchaser in order to extend the deadline for
closing of this Contract shall be non-refundable to Purchaser except in the
event of default by Seller hereunder, but if this Contract closes, then such
additional earnest money shall be applied in partial satisfaction of the
purchase price payable hereunder.
ARTICLE X
SELLER'S OBLIGATIONS AT CLOSING
At the closing, Seller shall do the following:
a. Deliver to Purchaser a limited warranty deed covering the
Subject Property, duly signed and acknowledged by Seller, which deed
shall be in form reasonably acceptable to Purchaser for recording and
shall convey to Purchaser good and marketable title to the Subject
Property, free and clear of all liens, rights-of-way, easements, and
other matters affecting title to the Subject Property, except for the
Permitted Exceptions.
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<PAGE> 10
b. Deliver or cause to be delivered to Purchaser an ALTA
owner's form of title insurance policy (the "Title Policy") insuring
Purchaser in the amount of the purchase price that Purchaser has
acquired good and marketable title to the Subject Property, subject
only to the Permitted Exceptions. Purchaser shall be entitled to
request the Title Company to provide, at Purchaser's sole cost and
expense, such endorsements (or amendments) to the Title Policy as
Purchaser may reasonably require so long as such endorsements or
amendments impose no additional liability on Seller or delay the
closing. Purchaser acknowledges and agrees that the Title Policy may be
actually delivered within a reasonable time following the closing so
long as Purchaser has received at closing a current binding title
commitment obligating the Title Company to deliver the Title Policy.
Seller shall pay the premium for a standard owner's form of title
insurance policy in the amount of the purchase price, and Purchaser
shall pay the cost of any title endorsements required by Purchaser and
the cost of any reinsurance required by Purchaser.
c. Deliver a bill of sale and a blanket assignment in form
reasonably acceptable to Purchaser, duly executed and acknowledged by
Seller, conveying and/or assigning to Purchaser the Golf Course Assets.
d. Deliver a non-withholding statement that will satisfy the
requirements of Section 1445 of the Internal Revenue Code so that
Purchaser is not required to withhold any portion of the purchase price
for payment to the Internal Revenue Service.
e. Deliver to Purchaser any other documents or items necessary
or convenient in the reasonable judgment of Purchaser to carry out the
intent of the parties under this Contract.
ARTICLE XI
PURCHASER'S OBLIGATIONS AT CLOSING
At the closing, Purchaser shall deliver to Seller the purchase price in
cash. In addition, if Purchaser elects to continue to use the Yamaha golf carts
now leased by Seller for use at the Subject Property, then Purchaser must assume
all obligations outstanding under any such lease at the time of closing.
ARTICLE XII
COSTS AND ADJUSTMENTS
At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:
a. Any real estate transfer taxes or sales taxes payable in
connection with the sale of the Subject Property shall be paid in full
by Seller.
b. Ad valorem taxes for the Subject Property for the current
calendar year shall be prorated as of the date of closing, and Seller
shall pay to Purchaser in cash at closing Seller's pro rata portion of
such taxes. Seller's pro rata portion of such taxes shall be based upon
taxes actually assessed for the current calendar year or, if for any
reason such taxes for the Subject Property have not been actually
assessed, such proration
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<PAGE> 11
shall be based upon the amount of such taxes for the immediately
preceding calendar year, and adjusted by cash settlement when exact
amounts are available. However, anything herein to the contrary
notwithstanding, any tax abatement or refund for a period of time prior
to closing shall belong to Seller.
c. All other income and ordinary operating expenses for or
pertaining to the Subject Property including, but not limited to,
public utility charges, maintenance, service charges, and all other
normal operating charges of the Subject Property shall be prorated as
of the closing date. Seller will assign to Purchaser all of Seller's
right, title and interest in and to utility deposits and other deposits
heretofore made by Seller in connection with the operation of the
Subject Property.
d. All other closing costs, including but not limited to,
recording and escrow fees shall be divided equally between Seller and
Purchaser; provided, however, that Seller and Purchaser shall each be
responsible for the fees and expenses of their respective attorneys.
Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Contract specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property, and
all expenses related thereto, including, but not limited to, court costs and
attorneys' fees.
Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties and based on events occurring subsequent to the
date of closing and which are in any way related to the ownership, maintenance
or operation of the Subject Property, and all expenses related thereto,
including, but not limited to, court costs and attorneys' fees.
Notwithstanding anything to the contrary contained herein, the
indemnities set forth in this Article XII shall survive the closing hereunder.
ARTICLE XIII
ENTRY ON PROPERTY
Purchaser, Purchaser's agents, employees, servants, or nominees, are
hereby granted the right to enter upon the Subject Property at any time prior to
closing for the purpose of inspecting the Subject Property and conducting such
engineering and mechanical tests as Purchaser may deem necessary or advisable,
any such inspections and tests to be made at Purchaser's sole expense. Purchaser
agrees to indemnify and hold Seller harmless from and against any and all
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<PAGE> 12
losses, damages, costs, or expenses incurred by Seller as a result of any
inspections or tests made by Purchaser.
ARTICLE XIV
POSSESSION OF PROPERTY
Possession of the Property free and clear of all uses and
encroachments, except the Permitted Exceptions, shall be delivered to Purchaser
at closing.
ARTICLE XV
DAMAGE OR DESTRUCTION PRIOR TO CLOSING
In the event that the Subject Property should be damaged by any
casualty prior to closing, then if the cost of repairing such damage, as
estimated by an architect or contractor retained pursuant to the mutual
agreement of Seller and Purchaser, is:
a. Less than One Hundred Thousand Dollars ($100,000.00), then
at Purchaser's option, either (i) the Seller shall repair such damage
as promptly as is reasonably possible, restoring the damaged property
at least to its condition immediately prior to such damage; and, in the
event such repairs have not been completed prior to closing, then the
closing shall nevertheless proceed as scheduled, and Purchaser may have
the Title Company withhold from Seller the funds necessary to make such
repairs until Seller has repaired such damage pursuant to the
provisions hereof, at which time such funds shall be distributed to
Seller or (ii) Purchaser may take an assignment of Seller's insurance
proceeds and a credit for Seller's deductible and repair such damage
itself;
or if said cost is:
b. greater than One Hundred Thousand Dollars ($100,000.00),
then, at Purchaser's election, Seller shall pay to Purchaser, at
closing, all insurance proceeds payable for such damage, and the sale
shall be closed without Seller's repairing such damage, or, if
Purchaser does not elect to accept such insurance proceeds, then either
Seller or Purchaser may elect to terminate this Contract, in which case
the earnest money (less $100.00) shall be returned to Purchaser and
thereafter neither party shall have any further obligations one unto
the other.
ARTICLE XVI
NOTICES
All notices, demands, or other communications of any type given by the
Seller to the Purchaser, or by the Purchaser to the Seller, whether required by
this Contract or in any way related to the transaction contracted for herein,
shall be void and of no effect unless given in
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<PAGE> 13
accordance with the provisions of this paragraph. All notices shall be in
writing and delivered to the person to whom the notice is directed, either in
person, by facsimile transmission, or by United States Mail, as a registered or
certified item, return receipt requested. Notices delivered by mail shall be
deemed given when deposited in a post office or other depository under the care
or custody of the United States Postal Service, enclosed in a wrapper with
proper postage affixed, addressed as follows:
Seller: J. Phillip Ballard, Jr.
P.O. Box 520
330 Foster Street
Cornelia, Georgia 30531
Telephone No: (706) 778-7062
Fax No: (706) 778-7061
Purchaser: Silverleaf Resorts, Inc.
1221 Riverbend Drive
Suite 120
Dallas, Texas 75247
Attn: Robert E. Mead
Telephone No.: (214) 631-1166
Facsimile No.: (214) 905-0514
With Required Copy to: Meadows, Owens, Collier, Reed,
Cousins & Blau, L.L.P.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Attn: George R. Bedell, Esq.
Telephone No.: (214) 749-2448
Facsimile No.: (214) 747-3732
ARTICLE XVII
REMEDIES
In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, it shall be an event of default
and Purchaser shall have the option (i) to terminate this Contract by providing
written notice thereof to Seller, in which event the earnest money (less
$100.00) shall be returned immediately to Purchaser by the Title Company and the
parties hereto shall have no further liabilities or obligations one unto the
other; (ii) to waive any defect or requirement and close this Contract; or (iii)
to sue Seller for specific performance. The exercise of any of the foregoing
remedies of Purchaser shall not in any manner be construed as a waiver of
Purchaser's right to seek specific performance, and in the
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<PAGE> 14
event of a default by Seller hereunder, Purchaser shall be entitled to enforce
specific performance hereunder.
In the event that Purchaser fails to timely comply with all conditions,
covenants, and obligations Purchaser has hereunder, such failure shall be an
event of default, and Seller's sole remedy shall be to receive the Earnest
Money. The Earnest Money is agreed upon by and between the Seller and Purchaser
as liquidated damages due to the difficulty and inconvenience of ascertaining
and measuring actual damages, and the uncertainty thereof, and no other damages,
rights, or remedies shall in any case be collectible, enforceable, or available
to the Seller other than in this paragraph defined, and Seller shall accept the
Earnest Money as Seller's total damages and relief.
ARTICLE XVIII
ASSIGNMENT
Purchaser shall have the right to nominate who shall take title and who
shall succeed to Purchaser's duties and obligations hereunder, or assign this
Contract to any person, firm, corporation, or other entity which Purchaser may,
at Purchaser's sole option, choose, and from and after such nomination or
assignment, wherever in this Contract reference is made to Purchaser such
reference shall mean the nominee or assignee who shall succeed to all the
rights, duties, and obligations of Purchaser hereunder.
ARTICLE XIX
INTERPRETATION AND APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with
the laws of the State of Georgia. Where required for proper interpretation,
words in the singular shall include the plural; the masculine gender shall
include the neuter and the feminine, and vice versa. The terms "successors and
assigns" shall include the heirs, administrators, executors, successors, and
assigns, as applicable, of any party hereto.
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<PAGE> 15
ARTICLE XX
AMENDMENT
This Contract may not be modified or amended, except by an agreement in
writing signed by the Seller and the Purchaser. The parties may waive any of the
conditions contained herein or any of the obligations of the other party
hereunder, but any such waiver shall be effective only if in writing and signed
by the party waiving such conditions and obligations.
ARTICLE XXI
AUTHORITY
Each person executing this Contract warrants and represents that he is
fully authorized to do so.
ARTICLE XXII
ATTORNEYS' FEES
In the event it becomes necessary for either party to file a suit to
enforce this Contract or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.
ARTICLE XXIII
DESCRIPTIVE HEADINGS
The descriptive headings of the several paragraphs contained in this
Contract are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
ARTICLE XXIV
ENTIRE AGREEMENT
This Contract (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior
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<PAGE> 16
and contemporaneous agreements and understandings of the parties in connection
therewith. No representation, warranty, covenant, agreement, or condition not
expressed in this Contract shall be binding upon the parties hereto or shall
affect or be effective to interpret, change, or restrict the provisions of this
Contract.
ARTICLE XXV
MULTIPLE ORIGINALS ONLY
Numerous copies of this Contract may be executed by the parties hereto.
Each such executed copy shall have the full force and effect of an original
executed instrument.
ARTICLE XXVI
ACCEPTANCE
Seller shall have until 5:00 o'clock p.m., February 25, 1998, to
execute and return a fully executed original of this Contract to Purchaser,
otherwise this Contract shall become null and void. Time is of the essence of
this Contract. The date of execution of this Contract by Seller shall be the
date of execution of this Contract. If the final date of any period falls upon a
Saturday, Sunday, or legal holiday under the laws of the State of Georgia, then
in such event the expiration date of such period shall be extended to the next
day which is not a Saturday, Sunday, or legal holiday under the laws of the
State of Georgia.
ARTICLE XXVII
REAL ESTATE COMMISSION
In the event that this Contract closes, but not otherwise, Seller
agrees to pay at closing a real estate commission to Century 21 Farish Realty
("Broker"), such commission to be in the amount of four percent (4%) of the
purchase price payable hereunder. Seller represents and warrants to Purchaser
that Seller has not contacted or entered into any agreement with any real estate
broker, agent, finder, or any other party in connection with this transaction,
and that Seller has not taken any action which would result in any real estate
broker's, finder's, or other fees or commissions being due and payable to any
other party with respect to the transaction
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<PAGE> 17
contemplated hereby. Purchaser hereby represents and warrants to Seller that
Purchaser has not contracted or entered into any agreement with any real estate
broker, agent, finder, or any other party in connection with this transaction,
and that Purchaser has not taken any action which would result in any real
estate broker's, finder's, or other fees or commissions being due or payable to
any other party with respect to the transaction contemplated hereby. Each party
hereby indemnifies and agrees to hold the other party harmless from any loss,
liability, damage, cost, or expense (including reasonable attorneys' fees)
resulting to the other party by reason of a breach of the representation and
warranty made by such party herein. Notwithstanding anything to the contrary
contained herein, the indemnities set forth in this Article XXVII shall survive
the closing.
ARTICLE XXVIII
EXCHANGE
Seller wishes to have the option to effect an exchange of real property
pursuant to the provisions of Section 1031 of the Internal Revenue Code, as
amended, in connection with the sale of the Subject Property to Purchaser.
Consequently, if, prior to the closing hereunder, Seller designates a property
or properties as exchange property, Purchaser will use Purchaser's best efforts
to acquire the exchange property for use in an exchange with Seller.
Alternatively, in the event Seller has not identified the exchange property by
the date of closing, this transaction shall close in such manner as will not
defeat a like kind exchange with respect to property later identified and
purchased within the qualifying time period. Purchaser agrees to cooperate with
Seller in consummating a like kind exchange provided that in doing so Purchaser
incurs no additional cost and the closing of this Contract is not thereby
delayed.
EXECUTED on this the 25th day of February, 1998, 9:40 a.m.
SELLER:
/s/ J.P. Ballard
--------------------------------
J. PHILLIP BALLARD, JR.
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<PAGE> 18
EXECUTED on this the 19th day of February, 1998.
PURCHASER:
SILVERLEAF RESORTS, INC., a Texas corporation
By: /s/ Robert E. Mead
-----------------------------------------
Name: Robert E. Mead
---------------------------------------
Its: CEO
----------------------------------------
RECEIPT OF EARNEST MONEY AND ONE (1) EXECUTED COUNTERPART OF THIS CONTRACT IS
HEREBY ACKNOWLEDGED:
TITLE COMPANY:
SAFECO LAND TITLE OF DALLAS
By: /s/ J.G. Kerr
------------------------------------
Name: J. G. Kerr, V.P.
-----------------------------------
Its: Special Projects
-----------------------------------
Senior Commercial Escrow Officer
Exhibits:
Ex A: Legal Description
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<PAGE> 1
EXHIBIT 10.4
AMENDMENT TO CONTRACT OF SALE
This Amendment is made and entered into this the 14th day of October,
1998 by and between J. PHILLIP BALLARD, JR. and EAGLE GREENS LTD., f/k/a
NORTHEAST GEORGIA RECREATIONAL AND DEVELOPMENT CO., INC., a Georgia corporation,
hereinafter collectively referred to as "Seller," and SILVERLEAF RESORTS, INC.,
a Texas corporation, hereinafter referred to as "Purchaser," and is as follows:
WITNESSETH:
WHEREAS, Seller and Purchaser made and entered into that certain
Contract of Sale, dated February 25, 1998, hereinafter referred to as the
"Contract," covering those certain tracts of land located in the 12th Land
District, Habersham County, Georgia, commonly known as "Hollywood Hills Golf
Club" containing approximately 220 acres, more or less, as more fully described
within the Contract; and
WHEREAS, the Contract provided, pursuant to the terms and provisions of
Article XXVII thereof, that Seller agrees to pay at closing a real estate
commission to Century 21 Farish Realty (the "Broker") in the amount of four
percent (4%) of the purchase price under the Contract; and
WHEREAS, Seller and Purchaser have agreed to modify Article XXVII of
the Contract to reduce the amount of commission payable to the Broker;
NOW, THEREFORE, for and in consideration of the terms and provisions
hereof, the receipt, adequacy and sufficiency of which is hereby acknowledged
and confessed, Seller and Purchaser shall, and do hereby, covenant, stipulate,
acknowledge and agree as follows:
1. Notwithstanding anything to the contrary contained in the
Contract, Seller and Purchaser agree that in the event the
Contract closes, but not otherwise, Seller shall pay at
closing a real estate commission to the Broker in the amount
of $119,000.00.
2. All of the other terms, provisions, requirements, limitations
and obligations of Seller and Purchaser as set forth,
contained, or referenced within the Contract shall be and are
hereby ratified, confirmed and adopted as being in full force
and legal effect, except as specifically modified and amended
herein.
3. This Amendment shall inure to the benefit of and be binding
upon each of Seller and Purchaser, its and their successors
and assigns.
EXECUTED on this the 14th day of October, 1998.
SELLER:
/s/ J. P. Ballard
-----------------------------------
J. PHILLIP BALLARD, JR.
EAGLE GREENS LTD., a Georgia
corporation
By: /s/ J. P. Ballard
-------------------------------
<PAGE> 2
Name: J. Phillip Ballard
-----------------------------
Its: President
------------------------------
PURCHASER:
SILVERLEAF RESORTS, INC., a Texas
corporation
By: /s/ Robert E. Mead
-------------------------------
Name: Robert E. Mead
-----------------------------
Its: Chief Executive Officer
------------------------------
2
<PAGE> 1
EXHIBIT 10.5
SECOND AMENDMENT TO CONTRACT OF SALE
This Second Amendment is made and entered into this the 14th day of
October, 1998 by and between J. PHILLIP BALLARD, JR. and EAGLE GREENS LTD.,
f/k/a NORTHEAST GEORGIA RECREATIONAL AND DEVELOPMENT CO., INC., a Georgia
corporation, hereinafter collectively referred to as "Seller," and SILVERLEAF
RESORTS, INC., a Texas corporation, hereinafter referred to as "Purchaser," and
is as follows:
WITNESSETH:
WHEREAS, Seller and Purchaser made and entered into that certain
Contract of Sale, dated February 25, 1998, hereinafter referred to as the
"Contract," covering those certain tracts of land located in the 12th Land
District, Habersham County, Georgia, commonly known as "Hollywood Hills Golf
Club," containing approximately 220 acres, more or less, as more fully
described within the Contract; and
WHEREAS, on or about October 14, 1998, Seller and Purchaser entered
into that certain Amendment to Contract of Sale (the "Amendment"), providing
for certain changes to Article XXVII of the Contract; and
WHEREAS, Seller and Purchaser have agreed to amend the Contract again
to provide for the payment of a consulting fee by Seller to Brad Nycum;
NOW, THEREFORE, for and in consideration of the terms and provisions
hereof, the receipt, adequacy and sufficiency of which is hereby acknowledged
and confessed, Seller and Purchaser shall, and do hereby, covenant, stipulate,
acknowledge and agree as follows:
1. Notwithstanding anything to the contrary contained in the
Contract or the Amendment, Seller and Purchaser agree that
Seller shall pay to Brad Nycum at closing a consulting fee in
the amount of $22,000.00.
2. All of the other terms, provisions, requirements, limitations
and obligations of Seller and Purchaser as set forth,
contained, or referred to within the Contract and the
Amendment shall be and are hereby ratified, confirmed and
adopted as being in full force and legal effect, except as
specifically modified and amended herein.
3. This Second Amendment shall inure to the benefit of and be
binding upon each of Seller and Purchaser, its and their
successors and assigns.
EXECUTED on this the 14th day of October, 1998.
SELLER:
/s/ J.P. Ballard
----------------------------------------
J. PHILLIP BALLARD, JR.
EAGLE GREENS LTD., a Georgia corporation
By:/s/ J.P. Ballard
---------------------------------------
Name: J. Phillip Ballard
---------------------------------------
Its: President
---------------------------------------
<PAGE> 2
PURCHASER:
SILVERLEAF RESORTS, INC., a Texas
corporation
By:/s/ Robert E. Mead
---------------------------------------
Name: Robert E. Mead
---------------------------------------
Its: Executive Officer
---------------------------------------
2
<PAGE> 1
EXHBIT 10.6
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is executed as of the
13th day of October, 1998, by and between SILVERLEAF RESORTS, INC., a Texas
corporation (hereinafter called "Owner"), and EAGLE GREENS LTD., a Georgia
corporation (hereinafter called "Manager").
R E C I T A L S:
A. Pursuant to that certain Contract of Sale by and between J.
Philip Ballard, Jr., Manager and Owner dated February 25, 1998, Owner has
agreed to purchase certain real property (the "Site") located in Habersham
County, Georgia, and more particularly described on Exhibit "A" attached hereto
and made a part hereof, which Site is improved by a golf course commonly
referred to as Hollywood Hills Golf Course located thereon (the "Property").
B. Manager and Owner desire to enter into this Agreement for the
purpose of establishing the obligations of Owner and Manager with respect to
the Property in an effort to continue to operate the Property in a manner that
is consistent with the current operation of the Property as a public daily fee
golf course. Owner and Manager desire to maintain the Property in a manner
that is consistent with or better than the current condition of the Property.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, including the
mutual benefits to Owner and Manager, the receipt and sufficiency of which is
hereby acknowledged, Owner and Manager hereby agree as follows:
ARTICLE I
OBLIGATIONS OF OWNER AND MANAGER
Section 1.1. Obligations of Owner. Upon the transfer of ownership of the
Property from Manager to Owner, the following shall be Owner's obligations with
respect to the Property:
(a) all current employees of the Property shall become employees
of Owner or an entity designated and controlled by Owner;
(b) Owner shall assume responsibility for all existing vendor
accounts and the transfer of same into Owner's name;
(c) Owner shall assume responsibility for all accounting functions
including, but not limited to, accounts payable, accounts
receivable and payroll;
(d) Owner shall provide an operating budget for the Property;
(e) Owner shall provide a capital budget for the Property;
(f) Owner shall provide operating policies for the Property that
are consistent with its existing policies or will consent to
the use of and adopt management policies currently in effect
for the operation of the Property;
(g) Owner shall provide copies of its employee policies and/or
handbooks which include information concerning employee
behavior, work hours, general rules,
MANAGEMENT AGREEMENT
HOLLYWOOD HILLS GOLF COURSE Page (1) of (6)
<PAGE> 2
performance reports and all other policies and procedures
normally associated with employees who work at a golf course;
(h) Owner shall provide a "petty cash account" in an amount that
is adequate and consistent with other similar golf course
properties;
(i) Owner shall provide complimentary golf privileges to Manager
and Manager's family members and guests, which golf privileges
shall be consistent with the policy in effect at the time of
the transfer of ownership of the Property;
(j) Owner shall provide Manager with a reporting format, software
forms, etc., that Owner intends Manager to use in reporting
the interim results of operations to Owner which reporting
formats, software forms, etc., shall include the following:
1. Point of sale software and hardware Owner
desires Manager to use for daily operations;
2. Types of payment acceptable to Owner and
details of electronic reporting of credit card sales;
3. Procedures for daily deposits and the banking
relationship Owner intends to use to accomplish the deposits;
and
4. Any other reporting forms Owner intends to
use for periodic reporting from Manager.
(k) Owner shall provide Manager with a current copy of a
Certificate of Insurance providing for the following
insurance:
1. Comprehensive General Liability insurance in
an amount not less than $1,000,000, with Manager named as an
additional insured on the policy.
2. Workers' Compensation insurance for employees
meeting the statutory requirements for the State of Georgia
with Manager named as an additional insured on the policy; and
3. Property coverage with limits meeting Owner's
objectives;
(l) Owner shall provide any and all proposed list of fees and
charges or will ratify the fees and charges as proposed by
Manager;
(m) Owner shall provide Manager with information regarding the
proposed use of the Property by customers associated with the
surrounding Apple Mountain Development and/or Silverleaf
Resorts; and
(n) Owner shall delegate to Manager full authority to supervise
and manage all employees working directly on the Property.
Section 1.2. Obligations of Manager. The following shall be Manager's
obligations subsequent to the date of the transfer of ownership of the Property
from Manager to Owner:
(a) Manager shall provide oversight and management duties of all
of the Property's employees and staff.
(b) Manager's upper level management structure shall include the
following:
1. the President of Manager;
MANAGEMENT AGREEMENT Page (2) of (6)
HOLLYWOOD HILLS GOLF COURSE
<PAGE> 3
2. the Chief Financial Officer of Manager;
3. the General Manager of Manager; and
4. the Marketing Director of Manager;
(c) Manager shall include the managers of the Property in staff
meetings and training sessions consistent with other property
locations owned by Manager;
(d) Manager shall participate in the development of an annual
monthly budget for the operation of the Property;
(e) Manager shall monitor and report compliance with Owner's
budget for the Property;
(f) Manager shall monitor compliance with Owner's adopted policies
and procedures relating to the operation of the Property;
(g) Manager shall provide input regarding capital budgeting and
improvement issues relating to the Property;
(h) Manager shall provide interim financial reporting to Owner as
desired by Owner and mutually agreed upon by both parties;
(i) Manager shall provide Owner with a current copy of a
Certificate of Insurance providing for Comprehensive General
Liability Insurance in an amount not less than $1,000,000;
(j) Manager's primary contact shall be with the Chief Financial
Officer of Manager.
(k) Manager shall provide Owner with the following items:
1. A detailed listing of open accounts payable
items.
2. A detailed listing of all pro shop inventory.
3. A Golf Course Maintenance Plan and Schedule for
1999; and
(l) Manager shall provide Owner with a copy of the resume and
qualification of the current Pro/Manager and Superintendent;
and
(m) Manager shall inform Owner of any significant personnel issues
involving the Superintendent and Pro/Manager, who shall report
directly to Manager, and shall consult Owner prior to any
disciplinary actions or other actions involving those
positions. The Superintendent and Pro/Manager shall have full
authority to supervise and manage all employees designated or
assigned to them and under their direction.
Section 1.3. Compensation.
A. Amount. Owner agrees to pay Manager an amount equal to
$3.00 per round of golf played on the Property for Manager's services provided
to Owner pursuant to this Agreement. The number of rounds of golf shall be
determined from the daily sign-in sheets and shall include all rounds played by
Apple Mountain Resort customers, guests, employees and guests of Owner. All
players shall be required to register. All complimentary rounds played by
Manager, its family and friends, shall be excluded from the determination of
Manager's compensation.
MANAGEMENT AGREEMENT
HOLLYWOOD HILLS GOLF COURSE Page (3) of (6)
<PAGE> 4
B. Payment. Manager's compensation shall be payable on a
monthly basis and shall be based upon the number of rounds of golf shown from
the previous month's daily play sheets. If the total annual rounds played
falls below 30,000 for any reason not caused by Manager's negligence, then the
minimum annual compensation shall be $90,000. If this Agreement is terminated
prior to the annual renewal date, as provided hereinbelow, then the Manager's
compensation shall be prorated according to the number of months in the year
this Agreement has been performed.
C. Incidental Expenses. Owner shall reimburse Manager for
all incidental and out-of-pocket expenses not associated with the normal
management duties described in this Agreement. Manager shall make all
reasonable efforts to identify all incidental and out-of-pocket expenses to
Owner prior to those expenses being incurred by Manager.
Section 1.4. Indemnification of Owner. Owner and Manager shall indemnify
and hold each other harmless from any and all damages, liabilities, costs,
claims, or expenses, including attorneys' fees, arising out of or in connection
with the operation of the Property herein, due to the gross negligence, wilful
misconduct or violation of any legal requirement by the other party. If the
damage, liability, costs, claim or expense is attributable to Manager's gross
negligence, wilful misconduct, violation of any legal requirements or breach of
this Agreement, the cost of such indemnification shall be borne solely by
Manager. If the damage, liability, cost, claim or expense is attributable to
Owner's gross negligence, wilful misconduct, violation of any legal
requirements or breach of this Agreement, the cost of such indemnification
shall be borne solely by Owner. Notwithstanding the foregoing, it is
understood and agreed that the indemnification obligation of Owner and Manager
as set forth in this Section shall apply only to claims, damages, losses and
expenses for which insurance has not been obtained or is not applicable. The
provisions of this Section 1.4 shall survive the expiration or earlier
termination of this Agreement.
ARTICLE II
MISCELLANEOUS
Section 2.1. Term and Termination. The term of this Agreement shall
commence upon the mutual execution and delivery of this Agreement by the
parties hereunder and shall continue in full force and effect for a period of
one (1) year, unless this Agreement is terminated by either party notifying the
other at least forty-five (45) days prior to the end of the term of its intent
to terminate this Agreement. This Agreement shall automatically renew upon the
anniversary date of each term, unless notice of termination is given by either
party in accordance with this Section.
Section 2.2. Successors and Assigns
A. Assignment by Manager. Manager shall not have the right
to assign its rights and obligations under this Agreement without the prior
written consent of Owner, which consent may be arbitrarily withheld. It is
understood and agreed that any approval given by Owner to any assignment shall
not be deemed a waiver of the covenant herein contained against assignment in
any subsequent case. Any assignee who succeeds to the interests of Manager
hereunder (or to the interest of any assignee of Manager hereunder) shall be
deemed to be Manager hereunder for all purposes.
B. Assignment by Owner. Owner shall have the right to
lease, sell, hypothecate or convey the Property or any portion thereof, or to
assign its interest in this Agreement, without obtaining the approval of
Manager. Any assignee shall expressly assume in writing the obligations of
Owner hereunder.
MANAGEMENT AGREEMENT
HOLLYWOOD HILLS GOLF COURSE Page (4) of (6)
<PAGE> 5
C. Binding on Successors. The terms, provisions,
covenants, undertakings, agreements, obligations and conditions of this
Agreement shall be binding upon and shall inure to the benefit of its
successors and interests of the assigns of the parties hereto with the same
effect as if mentioned in each instance where the party hereto is named or
referred to.
Section 2.3. Notices. All notices to be given hereunder shall be given in
writing and shall be deemed given when delivered by messenger or by U.S. Mail
(and if by mail, shall be deemed received two (2) business days after the
postmarked date thereof) with postage prepaid, registered or certified and, if
intended for Silverleaf Resorts, Inc., delivered or addressed to:
Silverleaf Resorts, Inc.
1221 Riverbend, Suite 120
Dallas, Texas 75247
Attention: Robert E. Mead
Telephone No. (214) 631-1166
Facsimile No. (214) 905-0514
And, if intended for Manager, delivered or addressed to:
Eagle Greens Ltd.
117 Foster Street
P.O. Box 520
Cornelia, Georgia 30531
Telephone No. (706) 778-7062
Facsimile No. (706) 778-7061
Either party may change the address for Notices hereunder by
such party giving notice of such change to the other party hereto in the manner
hereinabove provided.
Section 2.4. Applicable Law. This Agreement shall be governed in all
respects by the internal laws of the State of Georgia.
Section 2.5. Survival and Continuance. Notwithstanding the termination of
this Agreement or Manager's management of the Property in accordance with this
Agreement, all terms, provisions and obligations of either party contained
herein, which in order to give them effect and accomplish their intent and
purpose need to survive such termination shall survive and continue until they
have been fully satisfied or performed.
Section 2.6. Entire Agreement. This Agreement constitutes the entire
understanding of the parties and supersedes all prior understandings, whether
written or oral, between the parties with respect to the subject matter of this
Agreement.
Section 2.7. Severability of Provisions. If any term or provision of this
Agreement is illegal or invalid for any reason, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Section 2.8. Headings. No heading or caption contained in this Agreement
shall be considered in interpreting any of its terms or provisions.
MANAGEMENT AGREEMENT
HOLLYWOOD HILLS GOLF COURSE Page (5) of (6)
<PAGE> 6
Section 2.9. Execution in Counterparts. This Agreement and any amendments
may be executed in any number of counterparts, with the same effect as if all
parties had signed the same document.
Section 2.10. Attorneys' Fees. If any action at law or in equity, including
any action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs and expenses of litigation from the
other party, which amounts may be set by the court in the trial of such action
or may be enforced in a separate action brought for that purpose, and which
amount shall be in addition to any other relief which may be awarded.
Section 2.11. Amendment. No amendment, modification or alteration of the
terms of this Agreement shall be binding unless in writing, dated subsequent to
the date of this Agreement, and executed by the parties.
Section 2.12. Strict Construction. This Agreement shall not be strictly
construed against any party hereto.
Section 2.13. Effective Date. This Agreement is executed on the date set
opposite the signatures below, but effective as of the 13th day of October,
1998.
OWNER:
SILVERLEAF RESORTS, INC., a Texas
corporation
Date: 10-15-98 By: /s/ Robert E. Mead
----------------------------- -----------------------------------
Name: Robert E. Mead
----------------------------------
Its: Chief Executive Officer
-----------------------------------
MANAGER:
-------
EAGLE GREENS LTD, a Georgia corporation
Date: 10/13/98 By: /s/ J.P. Ballard
----------------------------- -----------------------------------
J. Philip Ballard, Jr., Pres.
MANAGEMENT AGREEMENT
HOLLYWOOD HILLS GOLF COURSE Page (6) of (6)
<PAGE> 1
EXHIBIT 10.7
===============================================================================
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
SILVERLEAF RESORTS, INC.
AND
JIM OESTREICH
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Page
----
R E C I T A L S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A M E N D M E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Amendment of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Base Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Bonus Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Additional Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3. Ratification and Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
</TABLE>
(i)
<PAGE> 3
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
WITH SILVERLEAF RESORTS, INC.
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "First Amendment")
is made between SILVERLEAF RESORTS, INC., a Texas corporation ("Silverleaf"),
and JIM OESTREICH (the "Employee").
R E C I T A L S:
A. Silverleaf and Employee have previously entered into that certain
Employment Agreement dated effective as of December 30, 1997 (the
"Employment Agreement"); and
B. Silverleaf and Employee now desire to amend certain terms of the
Employment Agreement.
NOW, THEREFORE, in consideration of the premises and terms hereinafter
set forth, the parties agree as follows:
A M E N D M E N T S:
SECTION 1. AMENDMENT OF COMPENSATION. The compensation
provisions of the Employment Agreement are hereby amended as of the Effective
Date of this First Amendment as follows:
(a) BASE COMPENSATION: Section 3(a) of the Employment
Agreement is hereby amended to provide base compensation computed at
the annual rate of Three Hundred Fifty Thousand and No/100 Dollars
($350,000.00), rather than Three Hundred Thousand and No/100 Dollars
($300,000.00).
(b) BONUS COMPENSATION: Section 3(b) of the Employment
Agreement is hereby amended to reduce the weekly commissions to
two-tenths percent (0.2%), rather than one-half percent (1/2%).
(c) ADDITIONAL STOCK OPTIONS: A new Section 3(g) is
hereby added to the Employment Agreement to read as follows:
(g) ADDITIONAL STOCK OPTIONS. Employee shall be
granted 25,000 additional Non-Qualified Stock Options pursuant
to Silverleaf's 1997 Stock Option Plan, one-quarter of which
will vest on the date which is one year after the grant and a
like amount to vest on the same date during each of the three
years which follow thereafter, such options to be exercised
before a period of ten years from the date of grant, at the
price of EIGHTEEN AND NO/100 Dollars ($18.00) per share of
Silverleaf's $0.01 par value common stock, the grant date to be
the same as the Effective date of the First Amendment to
Employee's Employment Agreement.
<PAGE> 4
SECTION 2. EFFECTIVE DATE. This First Amendment shall be
effective as of May 26, 1998.
SECTION 3. RATIFICATION AND CONFIRMATION. Except as amended by
this First Amendment, Silverleaf and Employee hereby ratify and confirm in all
respects the terms and provisions of the Employment Agreement and agree to be
bound thereby.
Executed this 6th day of June, 1998.
"SILVERLEAF"
SILVERLEAF RESORTS, INC.
By: /s/ Robert E. Mead, CEO
----------------------------
Authorized Officer
"EMPLOYEE"
/s/ Jim Oestreich
-------------------------------
JIM OESTREICH
2
<PAGE> 1
EXHIBIT 10.8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
SILVERLEAF RESORTS, INC.
AND
JIM OESTREICH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
R E C I T A L S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A M E N D M E N T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Amendment of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Ratification and Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
(i)
<PAGE> 3
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
WITH SILVERLEAF RESORTS, INC.
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment")
is made between SILVERLEAF RESORTS, INC., a Texas corporation ("Silverleaf"),
and JIM OESTREICH (the "Employee").
R E C I T A L S:
A. Silverleaf and Employee have previously entered into that certain
Employment Agreement dated effective as of December 30, 1997, and
that certain First Amendment to Employment Agreement dated
effective May 26, 1998 (collectively, the "Employment Agreement");
and
B. Silverleaf and Employee now desire to amend certain terms of the
Employment Agreement.
NOW, THEREFORE, in consideration of the premises and terms hereinafter set
forth, the parties agree as follows:
A M E N D M E N T:
SECTION 1. AMENDMENT OF COMPENSATION. Section 3(b) of the Employment
Agreement is hereby deleted and replaced with the following new Section 3(b) as
of the Effective Date of this Second Amendment:
SECTION 3. (b) BONUS COMPENSATION: Employee shall also be paid
weekly commissions equal to the following percentages of Silverleaf's
gross sales from timeshare and vacation contracts attributable to tours
produced by the telemarketing division of Silverleaf for which Employee is
directly responsible for the management: (1) two-tenths percent (0.2%)
for contracts attributable to tours under Silverleaf's mini-vacation
program; and (2) one-tenth percent (0.1%) for contracts attributable to
Silverleaf's discovery program. The bonus compensation payable on such
gross sales for each week shall be paid on the second Friday thereafter.
This bonus compensation shall also be subject to adjustment from time to
time by Silverleaf on a prospective basis.
SECTION 2. EFFECTIVE DATE. This Second Amendment shall be effective
as of ________________________________, 1998.
SECTION 3. RATIFICATION AND CONFIRMATION. Except as amended by this
Second Amendment, Silverleaf and Employee hereby ratify and confirm in all
respects the terms and provisions of the Employment Agreement and agree to be
bound thereby.
<PAGE> 4
Executed this 29th day of September, 1998.
"SILVERLEAF"
SILVERLEAF RESORTS, INC.
By: /s/ Robert E. Mead
---------------------------
Authorized Officer
"EMPLOYEE"
/s/ Jim Oestreich
-------------------------------
JIM OESTREICH
2
<PAGE> 1
EXHIBIT 10.9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NONQUALIFIED STOCK OPTION AGREEMENT
BETWEEN
SILVERLEAF RESORTS, INC.
AND
JIM OESTREICH
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I.
GRANT OF OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Grant of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4. Time for Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5. Partial Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.6. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.7. Method of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.8. Termination of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
RESTRICTIONS AND LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1. Outstanding Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2. Effect on Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3. Shares as Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4. Reclassification, Consolidation, or Merger . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.5. Limitations Upon Transfer of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.6. Limitations Upon Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.7. Rights as Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
ADMINISTRATIVE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.3. Nonqualified Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.4. Incorporation of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.5. Conditioned on Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
(i)
<PAGE> 3
NONQUALIFIED STOCK OPTION AGREEMENT
BETWEEN
SILVERLEAF RESORTS, INC.
AND
JIM OESTREICH
This Nonqualified Stock Option Agreement (the "Option Agreement") is
made between SILVERLEAF RESORTS, INC., a Texas Corporation (the "Company"), and
JIM OESTREICH ("Optionee") effective as of the date specified below.
RECITALS:
A. As Optionee is a valuable Officer and Employee of Silverleaf
Resorts, Inc., and has recognized leadership and experience in the business of
the Company, the Company deems it to be in its interest and in the interest of
its shareholders to provide an incentive to Optionee by granting Optionee an
additional proprietary interest in the Company, and the Company desires to
enter into this Option Agreement with Optionee under the terms and conditions
hereinafter set forth and to grant Optionee an option to purchase additional
common shares of the Corporation; and
B. The stock options granted hereunder are granted pursuant to
the terms of the 1997 Stock Option Plan for Silverleaf Resorts, Inc., which was
adopted by the Company and approved by the shareholders effective as of May 15,
1997, (the "Plan") and are intended to be Nonqualified Options as defined in
the Plan and not Incentive Options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"),
AGREEMENT:
NOW, THEREFORE, in consideration of the promises and the mutual
agreements hereinafter contained, and for other good and valuable
consideration, the Parties agree as follows:
ARTICLE I.
GRANT OF OPTION
SECTION 1.1. GRANT OF OPTION. The Company hereby grants to
Optionee the right and option to purchase from it, on the terms and conditions
following, all or any part of an aggregate of TWENTY FIVE THOUSAND (25,000)
shares of the authorized $0.01 par value common shares of the Company.
SECTION 1.2. FAIR MARKET VALUE. The fair market value of the
Company's $0.01 par value common shares as of the effective date of this Option
Agreement is EIGHTEEN AND NO/100 DOLLARS ($18.00) per share, as determined by
the Company's Board of Directors pursuant to Section 7.3 of the Plan.
SECTION 1.3. PURCHASE PRICE. The purchase price for each share
purchasable hereunder shall be EIGHTEEN AND NO/100 DOLLARS ($18.00).
<PAGE> 4
SECTION 1.4. TIME FOR EXERCISE. Optionee may elect to exercise
the options at the times and for the number of shares indicated as follows:
(a) On or after May 26, 1999, to and including May 25, 2000, 6,250
shares;
(b) On or after May 26, 2000, to and including May 25, 2001, 6,250
shares;
(c) On or after May 26, 2001, to and including May 25, 2002, 6,250
shares; and
(d) On or after May 26, 2002, to and including May 25, 2008 (the
"Option Termination Date"), 6,250 shares.
However, if Optionee does not purchase the full number of shares to
which Optionee is entitled in either period (a), (b) or (c) above, Optionee is
permitted to purchase those remaining shares in a later period through and
including the Option Termination Date in addition to those shares which
Optionee may otherwise be entitled to purchase.
SECTION 1.5. PARTIAL EXERCISE. No partial exercise of such option
may be for less than 100 full shares.
SECTION 1.6. FRACTIONAL SHARES. In no event shall the Company be
required to transfer fractional shares to the Optionee.
SECTION 1.7. METHOD OF EXERCISE. The option shall be exercised by
Optionee as to all or part of the shares covered by the option by giving
written notice of such exercise to the Company, specifying the number of shares
to be purchased and specifying a business day not more than fifteen (15) days
from the date such notice is given, for the payment of the purchase price
against delivery of the shares being purchased. Such notice shall set forth a
statement, if required by Section 8.8 of the Plan and Section 2.3 of this
Option Agreement, that the shares are being acquired for investment.
Subject to any applicable laws or regulations and to the terms of
Sections 8.8, 11.5, and 12.1 of the Plan, the Company shall cause certificates
for the Shares so purchased to be delivered to Optionee at the principal
business office of the Company, against payment of the full purchase price, on
the date specified in the notice of exercise, such payment to be made in cash
or by certified check or by transfer and delivery of shares of the common stock
of the Company as provided in Section 7.4 of the Plan.
SECTION 1.8. TERMINATION OF OPTION. The option and all rights
granted by this Option Agreement, to the extent those rights have not been
exercised, will terminate and become null and void on the sooner of:
(a) Such date as is ten (10) years from the date of this Option
Agreement;
(b) The Option Termination Date as defined in Section 1.4 hereof;
2
<PAGE> 5
(c) The date which is three months after the date Optionee ceases
to continually serve as an Officer or Employee of the Company,
if such cessation is by disability, retirement, or dismissal
other than for cause, as defined in Section 9.4 of the Plan,
provided that in the event of Optionee's cessation of office
or employment under such terms, Optionee may exercise such
option only to the extent that Optionee was entitled to
exercise it on the date of Optionee's cessation of office or
employment;
(d) The date Optionee ceases to continually serve as an Officer or
Employee of the Company if such cessation is by voluntary
termination or dismissal for cause as defined in Sections 9.3
and 9.4 of the Plan; or
(e) The date which is one year following the death of Optionee if
Optionee dies while serving as an Officer or Employee of the
Company or within the three-month period following the
termination of such office or employment if such termination
was by disability, retirement, or dismissal other than for
cause. In the event of Optionee's death under such terms, the
person or persons to whom Optionee's rights under the option
shall pass, whether by will or by the applicable laws of
descent and distribution, may exercise such option pursuant to
Section 8.7 of the Plan only to the extent that Optionee was
entitled to exercise it on the date of Optionee's death.
For purposes of the foregoing provisions, serving as an Officer or Employee of
a subsidiary of the Company shall be deemed to be serving as an Officer or
Employee of the Company.
ARTICLE II
RESTRICTIONS AND LIMITATIONS
SECTION 2.1. OUTSTANDING OPTIONS. The option granted to Optionee
under this Option Agreement shall in no event be exercised while there is
outstanding any Incentive Option previously granted to Optionee to purchase
common shares of the Company at a price higher than the option price under the
option herein granted to Optionee.
SECTION 2.2. EFFECT ON OTHER AGREEMENTS. Nothing herein contained
shall be deemed to modify the terms of any other agreement between the Company
and Optionee.
SECTION 2.3. SHARES AS INVESTMENT. By accepting this option and
if required by the Plan, Optionee acknowledges for Optionee, Optionee's heirs,
and legatees that any and all shares purchased under this Option Agreement
shall be acquired for investment and not for or with a view towards
distribution, and upon the transfer of any or all of the shares subject to the
option granted hereunder, Optionee, or Optionee's heirs or legatees receiving
such shares, shall deliver to the Company a representation in writing that such
shares are being acquired in good faith for investment and not for or with a
view towards distribution.
3
<PAGE> 6
SECTION 2.4. RECLASSIFICATION, CONSOLIDATION, OR MERGER.
Adjustments to the number of shares subject to the option and the option price
for them shall be proportionately adjusted, pursuant to Section 10.1 of the
Plan.
SECTION 2.5. LIMITATIONS UPON TRANSFER OF OPTION. During the
lifetime of Optionee, the option and all rights granted in this Option
Agreement shall be exercisable only by the Optionee, and except as Section
1.8(e) of this Option Agreement otherwise provides, the option and all rights
granted under this Option Agreement shall not be transferred, assigned,
pledged, or hypothecated in any way (whether by operation of law or otherwise),
and shall not be subject to execution, attachment, or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of such
option or of such rights contrary to the provisions in this Option Agreement,
or upon the levy of any attachment or similar process upon such option or such
rights, such option and such rights shall immediately become null and void.
SECTION 2.6. LIMITATIONS UPON TRANSFER OF SHARES. No shares
acquired by Optionee pursuant to this Option Agreement shall be sold or
disposed of within six (6) months following the date of acquisition of such
shares, unless either the grant of this Non-Qualified Option is approved by the
Board of Directors, or a committee of the Board of Directors that is composed
solely of two or more non-employee directors as defined in Rule 16b-3 of the
Exchange Act, or the grant of this Non-Qualified Option is approved or
ratified, in compliance with section 14 of the Exchange Act, by either: the
affirmative votes of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the state or other jurisdiction in which
the Company is incorporated, or the written consent of the holders of a
majority of the securities of the Company entitled to vote, provided that such
ratification occurs no later than the date of the next annual meeting of the
shareholders. Any attempted sale, disposal or transfer of such shares shall be
without effect. All shares transferred to Optionee pursuant to the exercise of
the option granted hereby shall be clearly marked with the foregoing
restrictions on transfer.
SECTION 2.7. RIGHTS AS SHAREHOLDER. Neither Optionee nor
Optionee's executor, administrator, heirs, or legatees, shall be or have any
rights or privileges of a shareholder of the Company in respect of the shares
transferable upon exercise of the option granted under this Option Agreement,
unless and until certificates representing such shares shall have been
endorsed, transferred, and delivered and the Optionee, or the Optionee's
executor, administrator, heirs or legatees, as the case may be, has caused his
name to be entered as the shareholder of record on the books of the Company.
4
<PAGE> 7
ARTICLE III
ADMINISTRATIVE PROVISIONS
SECTION 3.1. NOTICES. Any notice to be given under the terms of
this Option Agreement shall be addressed to the Parties as follows:
If to the Company:
Silverleaf Resorts, Inc.
Attn: Robert E. Mead, Chief Executive Officer
1221 Riverbend Drive, Suite 120
P.O.Box 358
Dallas, Texas 75221
If to Optionee:
JIM OESTREICH
----------------------------------------------
----------------------------------------------
Any Party may change its address by giving notice in writing, stating
its new address, to the other Party as provided in the foregoing manner. Any
notice shall be deemed duly given when enclosed in a properly sealed envelope
or wrapper addressed as herein required certified and deposited (postage and
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.
SECTION 3.2. BINDING EFFECT. This Option Agreement shall be
binding upon the heirs, executors, administrators, and successors of the
parties hereto.
SECTION 3.3. NONQUALIFIED OPTIONS. The options granted hereunder
are intended to be Nonqualified Options as defined in the Plan.
SECTION 3.4. INCORPORATION OF THE PLAN. The terms, conditions and
limitations contained in the Plan are incorporated herein by reference and such
provisions shall control to the extent they are not specifically contrary to a
provision of this Option Agreement.
5
<PAGE> 8
EXECUTED this 12th day of June, 1998, but EFFECTIVE the 26th day of May, 1998.
SILVERLEAF RESORTS, INC., the Company
By: /s/ Robert E. Mead, CEO
----------------------------
Authorized Officer
/s/ Jim Oestreich
---------------------------
JIM OESTREICH, Optionee
6
<PAGE> 1
EXHIBIT 10.10
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
WITH SILVERLEAF RESORTS, INC.
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "First Agreement") is
made between SILVERLEAF RESORTS, INC., a Texas corporation ("Silverleaf"), and
DAVID T. O'CONNOR (the "Employee").
R E C I T A L S:
A. Employee and Silverleaf have previously entered into that
certain Employment Agreement between them, dated effective as
of May 12, 1997 (the "Employment Agreement"); and
B. Silverleaf and Employee now desire to amend certain provisions
of the Employment Agreement.
NOW, THEREFORE, in consideration of the premises and terms hereinafter
set forth, the parties agree as follows:
A G R E E M E N T:
SECTION 1. AMENDMENT OF BASE COMPENSATION. Section 3(a) of the
Employment Agreement is amended to provide for base compensation computed as
follows:
(a) July and August, 1998. Effective as of July 1, 1998, and
through August 31, 1998, the percentage used to compute
Employee's weekly commissions under Section 3(a) shall be
reduced to one percent (1.00%) from 1.35 percent (1.35%).
(b) Thereafter. Effective as of January 1, 1999, the percentage
used to compute Employee's weekly commissions under Section
3(a) shall be further reduced to one percent (1.00%) of
in-house sales and six-tenths percent (0.60%) of outside
sales.
SECTION 2. ELIMINATION OF INCENTIVE COMPENSATION FOR UPGRADE SALES.
Effective as of January 1, 1999, Section 3(b) of the Employment is deleted, with
the result that Employee shall no longer be paid the incentive compensation
described therein for upgrade sales.
SECTION 3. RATIFICATION. Except as amended by this First Amendment,
Silverleaf and Employee hereby ratify and confirm in all respects the terms and
conditions of the Employment Agreement.
<PAGE> 2
Executed this 31st day of August, 1998.
"SILVERLEAF"
SILVERLEAF RESORTS, INC.
By: /s/ ROBERT E. MEAD
----------------------------------------
Robert E. Mead, Chief Executive Officer
"EMPLOYEE"
/s/ DAVID T. O'CONNOR
-------------------------------------------------
DAVID T. O'CONNOR
2
<PAGE> 1
EXHIBIT 10.11
================================================================================
NONQUALIFIED STOCK OPTION AGREEMENT
BETWEEN
SILVERLEAF RESORTS, INC.
AND
DAVID T. O'CONNOR
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I.
GRANT OF OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Grant of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4. Time for Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5. Partial Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.6. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.7. Method of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.8. Termination of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
RESTRICTIONS AND LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1. Outstanding Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2. Effect on Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3. Shares as Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4. Reclassification, Consolidation, or Merger . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.5. Limitations Upon Transfer of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.6. Limitations Upon Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.7. Rights as Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
ADMINISTRATIVE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.3. Nonqualified Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.4. Incorporation of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.5. Conditioned on Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
(i)
<PAGE> 3
NONQUALIFIED STOCK OPTION AGREEMENT
BETWEEN
SILVERLEAF RESORTS, INC.
AND
DAVID T. O'CONNOR
This Nonqualified Stock Option Agreement (the "Option Agreement") is
made between SILVERLEAF RESORTS, INC., a Texas Corporation (the "Company"), and
DAVID T. O'CONNOR ("Optionee") effective as of the date specified below.
RECITALS:
A. As Optionee is a valuable Officer and Employee of Silverleaf
Resorts, Inc., and has recognized leadership and experience in the business of
the Company, the Company deems it to be in its interest and in the interest of
its shareholders to provide an incentive to Optionee by granting Optionee an
additional proprietary interest in the Company, and the Company desires to
enter into this Option Agreement with Optionee under the terms and conditions
hereinafter set forth and to grant Optionee an option to purchase additional
common shares of the Corporation; and
B. The stock options granted hereunder are granted pursuant to
the terms of the 1997 Stock Option Plan for Silverleaf Resorts, Inc., which was
adopted by the Company and approved by the shareholders effective as of May 15,
1997, (the "Plan") and are intended to be Nonqualified Options as defined in
the Plan and not Incentive Options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"),
AGREEMENT:
NOW, THEREFORE, in consideration of the promises and the mutual
agreements hereinafter contained, and for other good and valuable
consideration, the Parties agree as follows:
ARTICLE I.
GRANT OF OPTION
SECTION 1.1. GRANT OF OPTION. The Company hereby grants to
Optionee the right and option to purchase from it, on the terms and conditions
following, all or any part of an aggregate of ONE HUNDRED THOUSAND (100,000)
shares of the authorized $0.01 par value common shares of the Company.
SECTION 1.2. FAIR MARKET VALUE. The fair market value of the
Company's $0.01 par value common shares as of the effective date of this Option
Agreement is TWELVE AND 3,125/100,000 DOLLARS ($12.03125) per share, as
determined by the Company's Board of Directors pursuant to Section 7.3 of the
Plan.
SECTION 1.3. PURCHASE PRICE. The purchase price for each share
purchasable hereunder shall be SIXTEEN AND NO/100 DOLLARS ($16.00).
<PAGE> 4
SECTION 1.4. TIME FOR EXERCISE. Optionee may elect to exercise
the options at the times and for the number of shares indicated as follows:
(a) On or after August 14, 1999, to and including August 13, 2000,
25,000 shares;
(b) On or after August 14, 2000, to and including August 13, 2001,
25,000 shares;
(c) On or after August 14, 2001, to and including August 13, 2002,
25,000 shares; and
(d) On or after August 14, 2002, to and including August 13, 2008
(the "Option Termination Date"), 25,000 shares.
However, if Optionee does not purchase the full number of shares to
which Optionee is entitled in either period (a), (b) or (c) above, Optionee is
permitted to purchase those remaining shares in a later period through and
including the Option Termination Date in addition to those shares which
Optionee may otherwise be entitled to purchase.
SECTION 1.5. PARTIAL EXERCISE. No partial exercise of such option
may be for less than 100 full shares.
SECTION 1.6. FRACTIONAL SHARES. In no event shall the Company be
required to transfer fractional shares to the Optionee.
SECTION 1.7. METHOD OF EXERCISE. The option shall be exercised by
Optionee as to all or part of the shares covered by the option by giving
written notice of such exercise to the Company, specifying the number of shares
to be purchased and specifying a business day not more than fifteen (15) days
from the date such notice is given, for the payment of the purchase price
against delivery of the shares being purchased. Such notice shall set forth a
statement, if required by Section 8.8 of the Plan and Section 2.3 of this
Option Agreement, that the shares are being acquired for investment.
Subject to any applicable laws or regulations and to the terms of
Sections 8.8, 11.5, and 12.1 of the Plan, the Company shall cause certificates
for the Shares so purchased to be delivered to Optionee at the principal
business office of the Company, against payment of the full purchase price, on
the date specified in the notice of exercise, such payment to be made in cash
or by certified check or by transfer and delivery of shares of the common stock
of the Company as provided in Section 7.4 of the Plan.
SECTION 1.8. TERMINATION OF OPTION. The option and all rights
granted by this Option Agreement, to the extent those rights have not been
exercised, will terminate and become null and void on the sooner of:
(a) Such date as is ten (10) years from the date of this Option
Agreement;
2
<PAGE> 5
(b) The Option Termination Date as defined in Section 1.4 hereof;
(c) The date which is three months after the date Optionee ceases
to continually serve as an Officer or Employee of the Company,
if such cessation is by disability, retirement, or dismissal
other than for cause, as defined in Section 9.4 of the Plan,
provided that in the event of Optionee's cessation of office
or employment under such terms, Optionee may exercise such
option only to the extent that Optionee was entitled to
exercise it on the date of Optionee's cessation of office or
employment;
(d) The date Optionee ceases to continually serve as an Officer or
Employee of the Company if such cessation is by voluntary
termination or dismissal for cause as defined in Sections 9.3
and 9.4 of the Plan; or
(e) The date which is one year following the death of Optionee if
Optionee dies while serving as an Officer or Employee of the
Company or within the three-month period following the
termination of such office or employment if such termination
was by disability, retirement, or dismissal other than for
cause. In the event of Optionee's death under such terms, the
person or persons to whom Optionee's rights under the option
shall pass, whether by will or by the applicable laws of
descent and distribution, may exercise such option pursuant to
Section 8.7 of the Plan only to the extent that Optionee was
entitled to exercise it on the date of Optionee's death.
For purposes of the foregoing provisions, serving as an Officer or Employee of
a subsidiary of the Company shall be deemed to be serving as an Officer or
Employee of the Company.
ARTICLE II
RESTRICTIONS AND LIMITATIONS
SECTION 2.1. OUTSTANDING OPTIONS. The option granted to Optionee
under this Option Agreement shall in no event be exercised while there is
outstanding any Incentive Option previously granted to Optionee to purchase
common shares of the Company at a price higher than the option price under the
option herein granted to Optionee.
SECTION 2.2. EFFECT ON OTHER AGREEMENTS. Nothing herein contained
shall be deemed to modify the terms of any other agreement between the Company
and Optionee.
SECTION 2.3. SHARES AS INVESTMENT. By accepting this option and
if required by the Plan, Optionee acknowledges for Optionee, Optionee's heirs,
and legatees that any and all shares purchased under this Option Agreement
shall be acquired for investment and not for or with a view towards
distribution, and upon the transfer of any or all of the shares subject to the
option granted hereunder, Optionee, or Optionee's heirs or legatees receiving
such shares, shall deliver
3
<PAGE> 6
to the Company a representation in writing that such shares are being acquired
in good faith for investment and not for or with a view towards distribution.
SECTION 2.4. RECLASSIFICATION, CONSOLIDATION, OR MERGER.
Adjustments to the number of shares subject to the option and the option price
for them shall be proportionately adjusted, pursuant to Section 10.1 of the
Plan.
SECTION 2.5. LIMITATIONS UPON TRANSFER OF OPTION. During the
lifetime of Optionee, the option and all rights granted in this Option
Agreement shall be exercisable only by the Optionee, and except as Section
1.8(e) of this Option Agreement otherwise provides, the option and all rights
granted under this Option Agreement shall not be transferred, assigned,
pledged, or hypothecated in any way (whether by operation of law or otherwise),
and shall not be subject to execution, attachment, or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of such
option or of such rights contrary to the provisions in this Option Agreement,
or upon the levy of any attachment or similar process upon such option or such
rights, such option and such rights shall immediately become null and void.
SECTION 2.6. LIMITATIONS UPON TRANSFER OF SHARES. No shares
acquired by Optionee pursuant to this Option Agreement shall be sold or
disposed of within six (6) months following the date of acquisition of such
shares, unless either the grant of this Non-Qualified Option is approved by the
Board of Directors, or a committee of the Board of Directors that is composed
solely of two or more non-employee directors as defined in Rule 16b-3 of the
Exchange Act, or the grant of this Non-Qualified Option is approved or
ratified, in compliance with section 14 of the Exchange Act, by either: the
affirmative votes of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the state or other jurisdiction in which
the Company is incorporated, or the written consent of the holders of a
majority of the securities of the Company entitled to vote, provided that such
ratification occurs no later than the date of the next annual meeting of the
shareholders. Any attempted sale, disposal or transfer of such shares shall be
without effect. All shares transferred to Optionee pursuant to the exercise of
the option granted hereby shall be clearly marked with the foregoing
restrictions on transfer.
SECTION 2.7. RIGHTS AS SHAREHOLDER. Neither Optionee nor
Optionee's executor, administrator, heirs, or legatees, shall be or have any
rights or privileges of a shareholder of the Company in respect of the shares
transferable upon exercise of the option granted under this Option Agreement,
unless and until certificates representing such shares shall have been
endorsed, transferred, and delivered and the Optionee, or the Optionee's
executor, administrator, heirs or legatees, as the case may be, has caused his
name to be entered as the shareholder of record on the books of the Company.
4
<PAGE> 7
ARTICLE III
ADMINISTRATIVE PROVISIONS
SECTION 3.1. NOTICES. Any notice to be given under the terms of
this Option Agreement shall be addressed to the Parties as follows:
If to the Company:
Silverleaf Resorts, Inc.
Attn: Robert E. Mead, Chief Executive Officer
1221 Riverbend Drive, Suite 120
P.O.Box 358
Dallas, Texas 75221
If to Optionee:
David T. O'Connor
620 Elmridge Drive
Tyler, Texas 75703
Any Party may change its address by giving notice in writing, stating
its new address, to the other Party as provided in the foregoing manner. Any
notice shall be deemed duly given when enclosed in a properly sealed envelope
or wrapper addressed as herein required certified and deposited (postage and
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.
SECTION 3.2. BINDING EFFECT. This Option Agreement shall be
binding upon the heirs, executors, administrators, and successors of the
parties hereto.
SECTION 3.3. NONQUALIFIED OPTIONS. The options granted hereunder
are intended to be Nonqualified Options as defined in the Plan.
SECTION 3.4. INCORPORATION OF THE PLAN. The terms, conditions and
limitations contained in the Plan are incorporated herein by reference and such
provisions shall control to the extent they are not specifically contrary to a
provision of this Option Agreement.
5
<PAGE> 8
EXECUTED this 31st day of August, 1998, but EFFECTIVE the 14th day of
August, 1998.
SILVERLEAF RESORTS, INC., the Company
By: /s/ Robert E. Mead
---------------------------------------------
Robert E. Mead, Chief Executive Officer
/s/ David T. O'Connor
-------------------------------------------------
DAVID T. O'CONNOR
6
<PAGE> 1
EXHIBIT 10.12
[LOGO] PROMULGATED BY THE TEXAS REAL ESTATE COMMISSION (TREC) 9-22-97
ONE TO FOUR FAMILY RESIDENTIAL CONTRACT (RESALE)
ALL CASH, ASSUMPTION, THIRD PARTY CONVENTIONAL OR SELLER FINANCING
NOTICE: NOT FOR USE FOR CONDOMINIUM TRANSACTIONS
1. PARTIES: Silverleaf Resorts, Inc. (Seller) agrees to sell and convey to
Thomas C. Franks (Buyer) and Buyer agrees to buy from Seller the property
described below.
2. PROPERTY: Lot 008, Box 07797, Cottonwood Valley Phase 2 Addition, City of
Irving, _________________ County, Texas, known as 1504 Cottonwood Valley
Circle (Address/Zip Code), or as described on attached exhibit, together
with the following items, if any: curtains and rods, draperies and rods,
valances, blinds, window shades, screens, shutters, awnings, wall-to-wall
carpeting, mirrors fixed in place, ceiling fans, attic fans, mail boxes,
television antennas and satellite dish system with controls and equipment,
permanently installed heating and air-conditioning units, window
air-conditioning units, built-in security and fire detection equipment,
plumbing and lighting fixtures including chandeliers, water softener,
stove, built-in kitchen equipment, garage door openers with controls,
built-in cleaning equipment, all swimming pool equipment and maintenance
accessories, shrubbery, landscaping, permanently installed outdoor cooking
equipment, built-in fireplace screens, artificial fireplace logs and all
other property owned by Seller and attached to the above described real
property except the following property which is not included:
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All property sold by this contract is called the "Property." The Property
[X] is [ ] is not subject to mandatory membership in an owners'
association. The TREC Addendum For Property Subject To Mandatory Membership
In An Owners' Association [ ] is [ ] is not attached.
3. SALES PRICE:
<TABLE>
<S> <C>
A. Cash portion of Sales Price payable by Buyer at closing .................... $ -0-
B. Sum of all financing described below
(excluding any private mortgage insurance [PMI] premium) ................. $ 544,488.05*
C. Sales Price (Sum of A and B) ............................................... $ 544,488.05*
</TABLE>
4. FINANCING: Within 10 days after the effective date of this contract Buyer
shall apply for all third party financing or noteholder's approval of any
assumption and make every reasonable effort to obtain financing or
assumption approval. Financing or assumption approval will be deemed to
have been obtained when the lender determines that Buyer has satisfied all
of lender's financial requirements (those items relating to Buyer's net
worth, income and creditworthiness). If financing (including any financed
PMI premium) or assumption approval is not obtained within 45 days after
the effective date hereof, this contract will terminate and the earnest
money will be refunded to Buyer. Each note to be executed hereunder must be
secured by vendor's and deed of trust liens.
The portion of Sales Price not payable in cash will be paid as follows:
(Check applicable boxes below)
[ ] A. THIRD PARTY FINANCING:
[ ] (1) This contract is subject to approval for Buyer of a
third party first mortgage loan having a loan-to-value
ratio not to exceed ___% as established by such third
party (excluding any financed PMI premium), due in
full in _____ year(s), with interest not to exceed
____% per annum for the first _____ year(s) of the
loan. The loan will be [ ] with [ ] without PMI.
<TABLE>
<S> <C> <C>
Initialed for identification by Buyer /s/ TCF and Seller /s/ REM O1A TREC NO. 20-3
</TABLE>
*plus $24.76 per diem for each day after August 15, 1998 until closing.
<PAGE> 2
<TABLE>
<S> <C> <C>
One to Four Family Residential Contract Concerning 1504 Cottonwood Valley Circle Page Two 9-22-97
(Address of Property)
</TABLE>
[ ] (2) This contract is subject to approval for Buyer of a third
party second mortgage loan having a loan-to-value ratio not to
exceed ____ % as established by such third party (excluding any
financed PMI premium), due in full in _____ year(s), with
interest not to exceed _______ % per annum for the first
_______ year(s) of the loan. The loan will be [ ] with [ ]
without PMI.
[ ] B. TEXAS VETERANS' HOUSING ASSISTANCE PROGRAM LOAN: This contract
is subject to approval for Buyer of a Texas Veterans' Housing
Assistance Program Loan (the Program Loan) of $__________ for a
period of at least _______ years at the interest rate established
by the Texas Veterans' Land Board at the time of closing.
[xx] C. SELLER FINANCING: A promissory note from Buyer to Seller
of $128,515.05 bearing 8% interest per annum, secured by vendor's
and deed of trust liens, in accordance with the terms and
conditions set forth in the attached TREC Seller Financing
Addendum. If an owner policy of title insurance is furnished, Buyer
shall furnish Seller with a mortgagee policy of title insurance.
[xx] D. ASSUMPTION:
[ ](1) Buyer shall assume the unpaid principal balance of a first
lien promissory note payable to Home Savings of America,
F. S. B. which unpaid balance at closing will be
$415,973.00. The total current monthly payment including
principal, interest and any reserve deposits is $3,771.00
Buyer's initial payment will be the first payment due after
closing.
[ ](2) Buyer shall assume the unpaid principal balance of a
second lien promissory note payable to_____________________
__________ which unpaid balance at closing will be
$______________. The total current monthly payment
including principal, interest and any reserve deposits is
$_____________. Buyer's initial payment will be the first
payment due after closing.
Buyer's assumption of an existing note includes all obligations
imposed by the deed of trust securing the note.
If the unpaid principal balance(s) of any assumed loan(s) as of the
Closing Date varies from the loan balance(s) stated above, the
promissory note from Buyer to Seller will be adjusted by the amount
of any variance.
If the noteholder requires (a)
payment of an assumption fee in excess of $4,176.00 in D(1) above
or $____________ in D(2) above and Seller declines to pay such
excess, or (b) an increase in the interest rate to more than ____%
in D(1) above, or ___% in D(2) above, or (c) any other modification
of the loan documents, Buyer may terminate this contract and the
earnest money will be refunded to Buyer. A vendor's lien and deed
of trust to secure assumption will be required which shall
automatically be released on execution and delivery of a release by
noteholder. If Seller is released from liability an any assumed
note, the vendor's lien and deed of trust to secure assumption will
not be required.
NOTICE TO BUYER: The monthly payments, interest rates or other
terms of some loans may be adjusted by the lender at or after
closing. If you are concerned about the possibility of future
adjustments, do not sign the contract without examining the notes
and deeds of trust.
NOTICE TO SELLER: Your liability to pay the note assumed by Buyer
will continue unless you obtain a release of liability from the
lender. If you are concerned about future liability, you should use
the TREC Release of Liability Addendum.
[ ] E. CREDIT APPROVAL ON ASSUMPTION OR SELLER FINANCING: Within ___ days
after the effective date of this contract, Buyer shall deliver to
Seller [ ] credit report [ ] verification of employment, including
salary [ ] verification of funds on deposit in financial
institutions [ ] current financial statement to establish Buyer's
creditworthiness for assumption approval or seller financing and
[ ]________________________________________________________________
__________________________________________________________________.
If Buyers documentation is not delivered within the specified time,
Seller may terminate this contract by notice to Buyer within 7 days
after expiration of the time for delivery, and the earnest money
will
<TABLE>
<S> <C> <C>
Initialed for identification by Buyer /s/ TCF and Seller /s/ REM O1A TREC NO. 20-3
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
One to Four Family Residential Contract Concerning 1504 Cottonwood Valley Circle Page Three 9-22-97
(Address of Property)
</TABLE>
be paid to Seller. If this contract is not so terminated, Seller will
be deemed to have accepted Buyer's credit. If the documentation is
timely delivered, and Seller determines in Seller's sole discretion
that Buyer's credit is unacceptable, Seller may terminate this contract
by notice to Buyer within 7 days after expiration of the time for
delivery and the earnest money will be refunded to Buyer. If Seller
does not so terminate this contract, Seller will be deemed to have
accepted Buyer's credit. Buyer hereby authorizes any credit reporting
agency to furnish to Seller at Buyer's sole expense copies of Buyer's
credit reports.
5. EARNEST MONEY: Buyer shall deposit $100.00 as earnest money with Sandy
Cearley 214-631-1166 at 1221 Riverbend Drive, Suite 120 (Address), as
escrow agent, upon execution of this contract by both parties. Additional
earnest money of $ _________________ must be deposited by Buyer with escrow
agent on or before _____________, 19 ___. If Buyer fails to deposit the
earnest money as required by this contract, Buyer will be in default.
6. TITLE POLICY AND SURVEY:
[ ] A. TITLE POLICY: Seller shall furnish to Buyer at [ ] Seller's [ ]
Buyer's expense an owner policy of title insurance (the Title
Policy) issued by ______________________________________ (the
Title Company) in the amount of the Sales Price, dated at or
after closing, insuring Buyer against loss under the provisions
of the Title Policy, subject to the promulgated exclusions
(including existing building and zoning ordinances) and the
following exceptions:
(1) Restrictive covenants common to the platted subdivision in
which the Property is located.
(2) The standard printed exception for standby fees, taxes and
assessments.
(3) Liens created as part of the financing described in
Paragraph 4.
(4) Utility easements created by the dedication deed or plat of
the subdivision in which the Property is located.
(5) Reservations or exceptions otherwise permitted by this
contract or as may be approved by Buyer in writing.
(6) The standard printed exception as to discrepancies,
conflicts, shortages in area or boundary lines,
encroachments or protrusions, or overlapping improvements.
(7) The standard printed exception as to marital rights.
(8) The standard printed exception as to waters, tidelands,
beaches, streams, and related matters.
Within 20 days after the Title Company receives a copy of this
contract, Seller shall furnish to Buyer a commitment for title
insurance (the Commitment) and, at Buyer's expense, legible copies of
restrictive covenants and documents evidencing exceptions in the
Commitment other than the standard printed exceptions. Seller
authorizes the Title Company to mail or hand deliver the Commitment and
related documents to Buyer at Buyer's address shown below. If the
Commitment is not delivered to Buyer within the specified time, the
time for delivery will be automatically extended up to 15 days. Buyer
will have 7 days after the receipt of the Commitment to object in
writing to matters disclosed in the Commitment.
[ ] B. SURVEY: (Check one box only)
[ ] (1) Within ____ days after Buyer's receipt of a survey
furnished to a third-party lender at [ ] Seller's [ ]
Buyer's expense, Buyer may object in writing to any
matter shown on the survey which constitutes a defect
or encumbrance to title.
[X] (2) Within 10 days after the effective date of this
contract, Buyer may object in writing to any matter
which constitutes a defect or encumbrance to title
shown on a survey obtained by Buyer at Buyer's expense.
The survey must be made by a Registered Professional Land
Surveyor acceptable to the Title Company and any lender. Utility
easements created by the dedication deed and plat of the
subdivision in which the Property is located will not be a basis
for objection.
Buyer may object to existing building and zoning ordinances, items 6A(1)
through (8) above and matters shown on the survey if Buyer determines that
any such ordinance, items or matters prohibits the following use or
activity:
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<TABLE>
<S> <C> <C>
Initialed for identification by Buyer /s/ TCF and Seller /s/ REM O1A TREC NO. 20-3
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
One to Four Family Residential Contract Concerning 1504 Cottonwood Valley Circle Page Four 9-22-97
(Address of Property)
</TABLE>
Buyer's failure to object under Paragraph 6A or 6B within the time allowed will
constitute a waiver of Buyer's right to object: except that the requirements in
Schedule C of the Commitment will not be deemed to have been waived. Seller
shall cure the timely objections of Buyer or any third party lender within 15
days from the date Seller receives the objections and the Closing Date will be
extended as necessary. If objections are not cured by the extended Closing Date,
this contract will terminate and the earnest money will be refunded to Buyer
unless Buyer elects to waive the objections.
NOTICE TO SELLER AND BUYER:
(1) Broker advises Buyer to have an abstract of title covering the
Property examined by an attorney of Buyer's selection, or Buyer
should be furnished with or obtain a Title Policy. If a Title Policy
is furnished, the Commitment should be promptly reviewed by an
attorney of Buyer's choice due to the time limitations on Buyer's
right to object.
(2) If the Property is situated in a utility or other statutorily
created district providing water, sewer, drainage, or flood control
facilities and services, Chapter 49 of the Texas Water Code requires
Seller to deliver and Buyer to sign the statutory notice relating to
the tax rate, bonded indebtedness, or standby fee of the district
prior to final execution of this contract.
(3) If the Property abuts the tidally influenced waters of the state,
Section 33.135, Texas Natural Resources Code, requires a notice
regarding coastal area property to be included in the contract. An
addendum either promulgated by TREC or required by the parties
should be used.
(4) Buyer is advised that the presence of wetlands, toxic substances,
including asbestos and wastes or other environmental hazards or the
presence of a threatened or endangered species or its habitat may
affect Buyer's intended use of the Property. If Buyer is concerned
about these matters, an addendum either promulgated by TREC or
required by the parties should be used.
(5) Unless expressly prohibited in writing by the parties, Seller may
continue to show the Property for sale and to receive, negotiate
and accept back up offers.
(6) Any residential service contract that is purchased in connection
with this transaction should be reviewed for the scope of coverage,
exclusions and limitations. THE PURCHASE OF A RESIDENTIAL SERVICE
CONTRACT IS OPTIONAL. SIMILAR COVERAGE MAY BE PURCHASED FROM VARIOUS
COMPANIES AUTHORIZED TO DO BUSINESS IN TEXAS.
7. PROPERTY CONDITION:
A. INSPECTIONS, ACCESS AND UTILITIES: Buyer may have the Property
inspected by an inspector selected by Buyer, licensed by TREC or
otherwise permitted by law to make such inspections. Seller shall
permit access to the Property at reasonable times for inspection,
repairs and treatment and for reinspection after repairs and
treatment have been completed. Seller shall pay for turning on
utilities for inspection and reinspection.
B. SELLER'S DISCLOSURE NOTICE PURSUANT TO SECTION 5.008, TEXAS
PROPERTY CODE
(Notice) (check one box only):
[ ] (1) Buyer has received the Notice.
[X] (2) Buyer has not received the Notice. Within 10 days after the
effective date of this contract, Seller shall deliver the
Notice to Buyer. If Buyer does not receive the Notice, Buyer
may terminate this contract at any time prior to the
closing. If Seller delivers the Notice, Buyer may terminate
this contract for any reason within 7 days after Buyer
receives the Notice or prior to the closing, whichever first
occurs.
[ ] (3) The Texas Property Code does not require this Seller to
furnish the Notice.
C. SELLER'S DISCLOSURE OF LEAD-BASED PAINT AND LEAD-BASED PAINT HAZARDS
is required by Federal law for a residential dwelling constructed
prior to 1978. An addendum providing such disclosure [ ] is [X] is
not attached.
D. ACCEPTANCE OF PROPERTY CONDITION: (check one box only):
[ ] (1) In addition to any earnest money deposited with escrow
agent, Buyer has paid Seller $_______ (the "Option Fee") for
the unrestricted right to terminate this contract by giving
notice of termination to Seller within ___ days after the
effective date of this contract. If Buyer gives notice of
termination within the time specified, the Option Fee will
not be refunded, however, any earnest money will be refunded
to Buyer. If Buyer does not give notice of
<TABLE>
<S> <C> <C>
Initialed for identification by Buyer /s/ TCF and Seller /s/ REM O1A TREC NO. 20-3
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
One to Four Family Residential Contract Concerning 1504 Cottonwood Valley Circle Page Five 9-22-97
(Address of Property)
</TABLE>
termination within the time specified, Buyer will be deemed
to have accepted the Property in its current condition and
the Option Fee [ ] will [ ] will not be credited to the
Sales Price at closing.
[ ] (2) Buyer accepts the Property in its present condition;
provided Seller, at Seller's expense, shall complete the
following repairs and treatment: None
E. LENDER REQUIRED REPAIRS AND TREATMENTS (REPAIRS): Unless otherwise
agreed in writing, neither party is obligated to pay for lender
required repairs or treatments for wood destroying insects. If the
cost of lender required repairs exceeds 5% of the Sales Price,
Buyer may terminate this contract.
F. COMPLETION OF REPAIRS AND TREATMENT. Unless otherwise agreed by the
parties in writing, Seller shall complete all agreed repairs and
treatment prior to the Closing Date. Repairs and treatments must be
performed by persons who regularly provide such repairs or
treatments. At Buyer's election, any transferable warranties
received by Seller with respect to the repairs will be transferred
to Buyer at Buyer's expense. If Seller fails to complete any agreed
repairs and treatment prior to the Closing Date, Buyer may do so
and the Closing Date will be extended up to 15 days, if necessary,
to complete repairs and treatment or treatments for wood destroying
insects.
8. BROKERS' FEES: All obligations of the parties for payment of brokers' fees,
are contained in separate written agreements.
9. CLOSING: The closing of the sale will be on or before September 15, 1998, or
within 7 days after objections to matters disclosed in the Commitment or by
the survey have been cured, whichever date is later (the Closing Date). If
financing or assumption approval has been obtained pursuant to Paragraph 4,
the Closing Date will be extended up to 15 days if necessary to comply with
lender's closing requirements (for example, appraisal, survey, insurance
policies, lender-required repairs, closing documents). If either party fails
to close this sale by the Closing Date, the non-defaulting party will be
entitled to exercise the remedies contained in Paragraph 15. At closing
Seller shall furnish tax statements or certificates showing no delinquent
taxes and a general warranty deed conveying good and indefeasible title
showing no additional exceptions to those permitted in Paragraph 6.
10. POSSESSION: Seller shall deliver possession of the Property to Buyer on
closing in its present or required repaired condition, ordinary wear and
tear excepted. Any possession by Buyer prior to closing or by Seller after
closing which is not authorized by a temporary lease form promulgated by
TREC or required by the parties will establish a tenancy at sufferance
relationship between the parties. Consult your insurance agent prior to
change of ownership or possession as insurance coverage may be limited or
terminated. The absence of a written lease or appropriate insurance coverage
may expose the parties to economic loss.
11. SPECIAL PROVISIONS: (Insert only factual statements and business details
applicable to this sale. TREC rules prohibit licensees from adding factual
statements or business details for which a contract addendum, lease or other
form has been promulgated by TREC for mandatory use.)
<TABLE>
<S> <C> <C>
Initialed for identification by Buyer /s/ TCF and Seller /s/ REM O1A TREC NO. 20-3
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
One to Four Family Residential Contract Concerning 1504 Cottonwood Valley Circle Page Six 9-22-97
(Address of Property)
</TABLE>
12. SETTLEMENT AND OTHER EXPENSES:
A. The following expenses must be paid at or prior to closing:
(1) Appraisal fees will be paid by Buyer.
(2) The total of loan discount fees (including any Texas Veterans'
Housing Assistance Program Participation Fee) may not exceed 1% of
the loan of which Seller shall pay -0- and Buyer shall pay the
remainder. The total of any buydown fees may not exceed ____________
which will be paid by _____________________.
(3) Seller's Expenses: Releases of existing liens, including prepayment
penalties and recording fees; release of Seller's loan liability; tax
statements or certificates; preparation of deed; one-half of escrow
fee; and other expenses stipulated to be paid by Seller under other
provisions of this contract.
(4) Buyer's Expenses: Loan application, origination and commitment fees;
loan assumption costs; preparation and recording of deed of trust to
secure assumption; lender required expenses incident to new loans,
including PMI premium, preparation of loan documents, loan related
inspection fee, recording fees, tax service and research fees,
warehouse or underwriting fees, copies of restrictions and easements,
amortization schedule, premiums for mortgagee title policies and
endorsements required by lender, credit reports, photos; required
premiums for flood and hazard insurance; required reserve deposit for
insurance premiums and ad valorem taxes; interest on all monthly
installment notes from date of disbursements to one month prior to
dates of first monthly payments; customary Program Loan costs for
Buyer; one-half of escrow fee; and other expenses stipulated to be
paid by Buyer under other provisions of this contract.
B. If any expense exceeds an amount expressly stated in this contract
for such expense to be paid by a party, that party may terminate this
contract unless the other party agrees to pay such excess. In no
event will Buyer pay charges and fees expressly prohibited by the
Texas Veterans' Housing Assistance Program or other governmental loan
program regulations.
13. PRORATIONS: Interest, maintenance fees, assessments, dues and rents will be
prorated through the Closing Date. Buyer shall pay the premium for a new
insurance policy. Buyer will be obligated to pay taxes for the current year,
and such taxes will not be prorated through the Closing Date. However,
Seller agrees to pay $8,251.29 of taxes at the end of 1998.
14. CASUALTY LOSS: If any part of the Property is damaged or destroyed by fire
or other casualty loss after the effective date of the contract, Seller
shall restore the Property to its previous condition as soon as reasonably
possible, but in any event by the Closing Date. If Seller fails to do so due
to factors beyond Seller's control. Buyer may either (a) terminate this
contract and the earnest money will be refunded to Buyer (b) extend the time
for performance up to 15 days and the Closing Date will be extended as
necessary or (c) accept the Property in its damaged condition and accept an
assignment of insurance proceeds. Seller's obligations under this paragraph
are independent of any obligations of Seller under Paragraph 7.
15. DEFAULT: If Buyer fails to comply with this contract, Buyer will be in
default, and Seller may either (a) enforce specific performance, seek such
other relief as may be provided by law, or both, or (b) terminate this
contract and receive the earnest money as liquidated damages, thereby
releasing both parties from this contract. If, due to factors beyond
Seller's control, Seller fails within the time allowed to make any
noncasualty repairs or deliver the Commitment, Buyer may either (a) extend
the time for performance up to 15 days and the Closing Date will be extended
as necessary or (b) terminate this contract as the sole remedy and receive
the earnest money. If Seller fails to comply with this contract for any
other reason, Seller will be in default and Buyer may terminate this
contract and receive the earnest money, thereby releasing both parties from
this contract.
<TABLE>
<S> <C> <C>
Initialed for identification by Buyer /s/ TCF and Seller /s/ REM O1A TREC NO. 20-3
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
One to Four Family Residential Contract Concerning 1504 Cottonwood Valley Circle Page Seven 9-22-97
(Address of Property)
</TABLE>
16. DISPUTE RESOLUTION: It is the policy of the State of Texas to encourage the
peaceable resolution of disputes through alternative dispute resolution
procedures. The parties are encouraged to use an addendum approved by TREC
to submit to mediation disputes which cannot be resolved in good faith
through informal discussion.
17. ATTORNEY'S FEES: The prevailing party in any legal proceeding brought under
or with respect to the transaction described in this contract is entitled
to recover from the non-prevailing party all costs of such proceeding and
reasonable attorney's fees.
18. ESCROW: The earnest money is deposited with escrow agent with the
understanding that escrow agent is not (a) a party to this contract and
does not have any liability for the performance or nonperformance of any
party to this contract, (b) liable for interest on the earnest money and
(c) liable for any loss of earnest money caused by the failure of any
financial institution in which the earnest money has been deposited unless
the financial institution is acting as escrow agent. At closing, the
earnest money must be applied first to any cash down payment, then to
Buyer's closing costs and any excess refunded to Buyer. If both parties
make written demand for the earnest money, escrow agent may require payment
of unpaid expenses incurred on behalf of the parties and a written release
of liability of escrow agent from all parties. If one party makes written
demand for the earnest money, escrow agent shall give notice of the demand
by providing to the other party a copy of the demand. If escrow agent does
not receive written objection to the demand from the other party within 30
days after notice to the other party, escrow agent may disburse the earnest
money to the party making demand reduced by the amount of unpaid expenses
incurred on behalf of the party receiving the earnest money and escrow
agent may pay the same to the creditors. If escrow agent complies with the
provisions of this paragraph, each party hereby releases escrow agent from
all adverse claims related to the disbursal of the earnest money. Escrow
agent's notice to the other party will be effective when deposited in the
U. S. Mail, postage prepaid, certified mail, return receipt requested,
addressed to the other party at such party's address shown below. Notice of
objection to the demand will be deemed effective upon receipt by escrow
agent.
19. REPRESENTATIONS: Seller represents that as of the Closing Date (a) there
will be no liens, assessments, or security interests against the Property
which will not be satisfied out of the sales proceeds unless securing
payment of any loans assumed by Buyer and (b) assumed loans will not be in
default. If any representation in this contract is untrue on the Closing
Date, this contract may be terminated by Buyer and the earnest money will
be refunded to Buyer. All representations contained in this contract will
survive closing.
20. FEDERAL TAX REQUIREMENT: If Seller is a "foreign person," as defined by
applicable law, or if Seller fails to deliver an affidavit that Seller is
not a "foreign person," then Buyer shall withhold from the sales proceeds
an amount sufficient to comply with applicable tax law and deliver the same
to the Internal Revenue Service together with appropriate tax forms. IRS
regulations require filing written reports if cash in excess of specified
amounts is received in the transaction.
21. AGREEMENT OF PARTIES: This contract contains the entire agreement of the
parties and cannot be changed except by their written agreement. Addenda
which are a part of this contract are (list): -------------------------
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22. CONSULT YOUR ATTORNEY: Real estate licensees cannot give legal advice.
This contract is intended to be legally binding. READ IT CAREFULLY. If you
do not understand the effect of this contract, consult your attorney BEFORE
signing.
Buyer's Attorney is: Seller's Attorney is:
Fielder F. Nelms
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<S> <C> <C>
Initialed for identification by Buyer /s/ TCF and Seller /s/ REM O1A TREC NO. 20-3
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
One to Four Family Residential Contract Concerning 1504 Cottonwood Valley Circle Page Eight 9-22-97
(Address of Property)
23. NOTICES: All notices from one party to the other must be in writing and are effective when mailed to, hand-delivered at, or
transmitted by facsimile machine as follows:
TO BUYER AT: TO SELLER AT:
Thomas C. Franks Silverleaf Resorts, Inc.
- ----------------------------------------------------- ------------------------------------------------
1504 Cottonwood Valley Circle 1221 Riverbend Drive, Suite 120
- ----------------------------------------------------- ------------------------------------------------
Irving, Texas 75038 Dallas, Texas 75247
- ----------------------------------------------------- ------------------------------------------------
Telephone:( ) Telephone:(214) 631-1166
----------------------------------------- --------------------------------------
Facsimile:( ) Facsimile:(214) 905-0514
----------------------------------------- --------------------------------------
EXECUTED the 30th day of July, 1998 (THE EFFECTIVE DATE). (BROKER: FILL IN THE DATE OF FINAL ACCEPTANCE.)
SILVERLEAF RESORTS, INC.
/s/ THOMAS C. FRANKS BY: /s/ ROBERT E. MEAD
- ----------------------------------------------------- ------------------------------------------------
Buyer Seller Robert E. Mead - Chief Executive Officer
- ----------------------------------------------------- ------------------------------------------------
Buyer Seller
The form of this contract has been approved by the Texas Real Estate
Commission. Such Approval relates to this contract form only. No
representation is made as to the legal validity or adequacy of any
provision in any specific transaction. It is not suitable for complex
transactions. Extensive riders or additions are not to be used. Texas
Real Estate Commission, P.O. Box 12188, Austin, TX 78711-2188.
1-800-250-8732 or (512) 459-6544 (http://www.trec.state.tx.us) TREC NO.
20-3. This form replaces TREC NO. 20-2.
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
BROKER INFORMATION AND RATIFICATION OF FEE
Listing Broker has agreed to pay Other Broker ____________________of the total sales price when Listing Broker's fee is
received. Escrow Agent is authorized and directed to pay Other Broker from Listing Broker's fee at closing.
- ----------------------------------------------------- ------------------------------------------------
Other Broker License No. Listing Broker License No.
represents [ ] Seller as Listing Broker's subagent represents [ ] Seller and Buyer as an intermediary
[ ] Buyer only as Buyer's agent [ ] Seller only as Seller's agent
------------------------------------------------
Listing Associate Telephone
- ----------------------------------------------------- ------------------------------------------------
Associate Telephone Selling Associate Telephone
- ----------------------------------------------------- ------------------------------------------------
Broker Address Broker Address
- ----------------------------------------------------- ------------------------------------------------
Telephone Facsimile Telephone Facsimile
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RECEIPT
Receipt of [ ] Contract and [ ] $_________ Earnest Money in the form of _____________________is acknowledged.
Escrow Agent:
---------------------------------------- Date:________________, 19__
By:
--------------------------------------------------
- ----------------------------------------------------- Telephone:( )
Address --------------------------------------
- ----------------------------------------------------- Facsimile:( )
City State Zip Code --------------------------------------
O1A TREC NO. 20-3
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<PAGE> 9
[LOGO] SELLER FINANCING ADDENDUM 10-25-93
PROMULGATED BY THE TEXAS REAL ESTATE COMMISSION (TREC)
NOTICE: NOTE FOR USE FOR COMPLEX TRANSACTIONS
ADDENDUM TO EARNEST MONEY CONTRACT BETWEEN THE UNDERSIGNED PARTIES CONCERNING
THE PROPERTY IDENTIFIED AS 1504 COTTONWOOD VALLEY CIRCLE
A. PROMISSORY NOTE. The promissory note (the Note) described in Paragraph 4
of the Earnest Money Contract payable by Buyer (Maker) to the order of
Seller (Payee) shall be payable at the place designated by Payee. The Note
may be prepaid in whole or in part at any time without penalty. Any
prepayments are to be applied to the payment of the installments of
principal last maturing and interest shall immediately cease on the prepaid
principal. The lien securing payment of the Note will be inferior to any
lien securing any superior note described in the contract. The Note shall
be payable as follows:
[X] (1) In one payment due five years after the date of the Note with
interest payable in fives years.
[ ] (2) In __________________ installments of $______________ [ ] including
interest [ ] plus interest beginning ____________________ after the
date of the Note and continuing at ______________________________
intervals thereafter for ____________________ when the entire balance
of the Note shall be due and payable.
[ ] (3) Interest only in __________________________ installments for the first
______________ year(s) and thereafter in installments of
$___________________ [ ] including interest [ ] plus interest
beginning ____________ after the date of the Note and continuing at
_____________________ intervals thereafter for ______________________
when the entire balance of the Note shall be due and payable.
B. DEED OF TRUST. The deed of trust securing the Note shall provide for the
following:
(1) ASSUMPTION OF NOTE OR PROHIBITIONS AGAINST ASSUMPTION: (check only
one)
[ ] (a) Assumption Without Consent: The Property may be sold without the
consent of the Payee, provided any subsequent buyer assumes the
Note.
[ ] (b) Assumption With Consent: The Property may be sold to a subsequent
Buyer who assumes the Note, with no change in interest rate or
terms; provided the subsequent buyer obtains prior written
consent from the Payee. Consent will be based on the subsequent
Buyer's credit history, and shall not be unreasonably withheld.
If all or any part of the Property is sold, conveyed, leased for
a period longer than 3 years, leased with an option to purchase,
or otherwise sold (including by contract for deed), without the
prior written consent of the Payee, then the Payee may at his
option declare the outstanding principal balance of the Note,
plus accrued interest, to be immediately due and payable. The
creation of a subordinate lien, any sale thereunder, any deed
under threat or order of condemnation, any conveyance solely
between makers, or the passage of title by reason of the death of
a maker or by operation of law shall not be construed as a sale
or conveyance of the Property.
[X] (c) Prohibition Against Assumption: If all or any part of the
Property is sold, conveyed, leased for a period longer than 3
years, leased with an option to purchase, or otherwise sold
(including any contract for deed), without the prior written
consent of the Payee, then the Payee may at his option declare
the outstanding principal balance of the Note, plus accrued
interest, to be immediately due and payable. The creation of a
subordinate lien, any sale thereunder, any deed under threat or
order of condemnation, any conveyance solely between makers, the
passage of title by reason of the death of a maker or by
operation of law shall not be construed as a sale or conveyance
of the Property.
(2) TAX AND INSURANCE PAYMENTS: (check only one)
[X] (a) Without Escrow: Maker shall furnish to Payee annually, before the
taxes become delinquent, copies of tax receipts showing that all
taxes on the Property have been paid. Maker shall furnish to
Payee annually evidence of current paid-up insurance naming Payee
as an insured.
[ ] (b) With Escrow: Maker shall, in addition to the principal and
interest installments, deposit with the Payee a pro rata part of
the estimated annual ad valorem taxes on the Property and a pro
rata part of the estimated annual insurance premiums for the
improvements on the Property. These tax and insurance deposits
are only estimates and may be insufficient to pay total taxes and
insurance premiums. Maker shall pay any deficiency within 30 days
after notice from Payee. Maker's failure to pay the deficiency
shall constitute a default under the Deed of Trust. In the event
any superior lienholder on the Property is collecting escrow
payments for taxes and insurance, this Paragraph shall be
inoperative so long as payments are being made to the superior
lienholder.
(3) CROSS-DEFAULT: Any act or occurrence which would constitute default
under the terms of any lien superior to the lien securing the Note
shall constitute a default under the Deed of Trust securing the Note.
The Note and Deed of Trust shall be subordinate and inferior to the
Note and Deed of Trust held by Home Savings of America, FSB.
<TABLE>
<S> <C>
/s/ THOMAS C. FRANKS
- ----------------------------------------------------- -------------------------------------------------------
Buyer/Maker Seller/Payee Silverleaf Resorts, Inc.
/s/ ROBERT E. MEAD
- ------------------------------------------------------ ------------------------------------------------------
Buyer/Maker Seller/Payee Robert E. Mead - Chief Executive Officer
</TABLE>
- --------------------------------------------------------------------------------
The form of this Addendum has been approved by the Texas Real Estate Commission
for use with similarly approved or promulgated contract forms. Such approval
relates to this form only. No representation is made as to the legal validity or
adequacy of any provision in any specific transactions. It is not suitable for
complex transactions. (10-93) TREC No. 26-2. This form replaces TREC No. 26-1.
- --------------------------------------------------------------------------------
No. 011
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> SEP-30-1998 SEP-30-1997
<CASH> 7,516,000 3,532,000
<SECURITIES> 0 0
<RECEIVABLES> 175,851,000 95,108,000
<ALLOWANCES> 20,590,000 13,114,000
<INVENTORY> 52,267,000 16,251,000
<CURRENT-ASSETS> 81,341,000 27,813,000
<PP&E> 38,293,000 22,281,000
<DEPRECIATION> 7,037,000 4,861,000
<TOTAL-ASSETS> 267,858,000 127,227,000
<CURRENT-LIABILITIES> 19,247,000 10,212,000
<BONDS> 89,846,000 25,670,000
0 0
0 0
<COMMON> 133,000 113,000
<OTHER-SE> 138,558,000 81,373,000
<TOTAL-LIABILITY-AND-EQUITY> 267,858,000 127,227,000
<SALES> 100,281,000 51,963,000
<TOTAL-REVENUES> 119,409,000 63,871,000
<CGS> 16,154,000 5,131,000
<TOTAL-COSTS> 78,462,000 36,612,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 12,346,000 8,048,000
<INTEREST-EXPENSE> 5,088,000 3,843,000
<INCOME-PRETAX> 23,513,000 15,368,000
<INCOME-TAX> 9,019,000 5,687,000
<INCOME-CONTINUING> 14,494,000 9,681,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 14,494,000 9,681,000
<EPS-PRIMARY> 1.16 1.05
<EPS-DILUTED> 1.14 1.04
</TABLE>
