UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Atlantic Gulf Communities Corporation
(Name of Issuer)
Common Stock, par value $.10 per share
(Title of Class of Securities)
048556104
(CUSIP Number)
Trevor S. Norwitz
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
(212)403-1000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 24, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box.
Page 1 of 27 Pages
Exhibit Index is on Page 27<PAGE>
CUSIP NO. 048556104
(1) Names of Reporting Persons. S.S. or I.R.S. Identification
Nos. of Above Persons
AP-AGC, LLC.
(2) Check the Appropriate Box if a Member (a)
of a Group (See Instructions)
(b)
(3) (SEC Use Only)
(4) Source of Funds (See Instructions) AF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization
Delaware
Number of Shares Bene- (7) Sole Voting Power
ficially Owned by Each 9,347,826 Common Shares
Reporting Person With (8) Shared Voting Power
(9) Sole Dispositive Power
9,347,826 Common Shares
(10) Shared Dispositive Power
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
9,347,826 Common Shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented by Amount in Row (11) 44.8%
(14) Type of Reporting Person (See Instructions) OO
Page 2 of 27 Pages<PAGE>
CUSIP NO. 048556104
(1) Names of Reporting Persons. S.S. or I.R.S. Identification
Nos. of Above Persons
Apollo Real Estate Investment Fund II, L.P.
(2) Check the Appropriate Box if a Member (a)
of a Group (See Instructions)
(b)
(3) (SEC Use Only)
(4) Source of Funds (See Instructions) WC, AF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization
Delaware
Number of Shares Benefi- (7) Sole Voting Power
cially Owned by Each 9,347,826 Common Shares
Reporting Person With (8) Shared Voting Power
(9) Sole Dispositive Power
9,347,826 Common Shares
(10) Shared Dispositive Power
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
9,347,826 Common Shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented by Amount in Row (11) 44.8%
(14) Type of Reporting Person (See Instructions) PN
Page 3 of 27 Pages<PAGE>
CUSIP NO. 048556104
(1) Names of Reporting Persons. S.S. or I.R.S. Identification
Nos. of Above Persons
Apollo Real Estate Advisors II, L.P.
(2) Check the Appropriate Box if a Member (a)
of a Group (See Instructions)
(b)
(3) (SEC Use Only)
(4) Source of Funds (See Instructions) AF
(5) Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization
Delaware
Number of Shares Bene- (7) Sole Voting Power
ficially Owned by Each 9,347,826 Common Shares
Reporting Person With (8) Shared Voting Power
(9) Sole Dispositive Power
9,347,826 Common Shares
(10) Shared Dispositive Power
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
9,347,826 Common Shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
(13) Percent of Class Represented by Amount in Row (11) 44.8%
(14) Type of Reporting Person (See Instructions) PN
Page 4 of 27 Pages<PAGE>
Item 1. Security and Issuer.
This statement on Schedule 13D relates to the Common
Stock, par value $.10 per share ("Common Shares"), of Atlantic
Gulf Communities Corporation, a Delaware corporation (the
"Issuer"). The address of the principal office of the Issuer
is 2601 South Bayshore Drive, Miami, Florida 33133-5461.
Item 2. Identity and Background.
(a), (b), (c), and (f). This statement on Schedule
13D is filed jointly by AP-AGC, LLC, a Delaware limited li-
ability company ("AP-AGC"), Apollo Real Estate Investment Fund
II, L.P., a Delaware limited partnership ("Apollo Fund II"),
and Apollo Real Estate Advisors II, L.P., a Delaware limited
partnership ("AREA II" and, collectively, the "Reporting
Persons").
AP-AGC was formed by Apollo Fund II for the purposes
of investing in securities of the Issuer. The address of the
principal business and principal office of AP-AGC is c/o AREA
II, Two Manhattanville Road, Purchase, New York 10577.
Apollo Fund II is a private real estate investment
fund, and, directly or indirectly, owns all of the outstanding
interests in AP-AGC. The address of the principal business and
principal office of Apollo Fund II is c/o AREA II, Two Manhat-
tanville Road, Purchase, New York 10577.
Page 5 of 27 Pages<PAGE>
AREA II is the general partner of Apollo Fund II, and
is principally engaged in the business of serving as Apollo
Fund II's general partner. The address of the principal busi-
ness and principal office of AREA II is Two Manhattanville
Road, Purchase, New York 10577.
The sole general partner of AREA II is Apollo Real
Estate Capital Advisors II, Inc., a Delaware corporation
("Capital Advisors II"). The manager of Apollo Fund II is
Apollo Real Estate Management II, L.P., a Delaware limited
partnership ("Management II"), the general partner of which is
Apollo Real Estate Management II, Inc. ("Management II Inc.").
Capital Advisors II is principally engaged in the business of
serving as general partner of AREA II, Management II is princi-
pally engaged in business of services as manager of Apollo Fund
II and Management II Inc. is principally engaged in the busi-
ness of serving as general partner of Management II. The ad-
dress of the principal business and principal office of Capital
Advisors II is c/o AREA II, Two Manhattanville Road, Purchase,
New York 10577 and of Management II and Management II, Inc. is
1301 Avenue of the Americas, New York, New York 10019.
The name, business address, present principal occupa-
tion or employment (and the name, principal business and ad-
dress of any corporation or other organization in which such
employment is conducted) and citizenship of each director and
Page 6 of 27 Pages<PAGE>
executive officer of those Reporting Persons which are corpora-
tions is set forth on Annex A hereto and is incorporated herein
by reference. Each of such persons is a citizen of the United
States. All such persons on Schedule I disclaim beneficial
ownership of any and all pecuniary interest in the Common
Shares of the Issuer.
(d) and (e). Neither any of the Reporting Persons
nor, to the best knowledge of the Reporting Persons, any of the
persons listed in Annex A hereto have, during the last five
years, been convicted in a criminal proceeding (excluding traf-
fic violations and similar misdemeanors) or were party to a
civil proceeding of a judicial or administrative body of compe-
tent jurisdiction as a result of which any such person was or
is subject to a judgment, decree or final order enjoining fu-
ture violations of, or prohibiting or mandating activities sub-
ject to, Federal or state securities laws or finding any viola-
tion with respect to such laws.
Item 3. Source and Amount of Funds or other Consideration.
On or about May 15, 1997 (the "Agreement Date"),
AP-AGC and the Issuer entered into an Amended and Restated
Investment Agreement dated as of February 7, 1997, amended as
of March 20, 1997 and amended and restated as of May 15, 1997
(the "Investment Agreement") which is included as Exhibit 1 to
this Statement and is incorporated herein by reference. On
Page 7 of 27 Pages<PAGE>
June 24, 1997 (the "Closing Date"), at the initial closing
under the Investment Agreement (the "Closing"), AP-AGC acquired
553,475 shares of a new series of preferred stock of the Issuer
designated 20% Cumulative Redeemable Convertible Preferred
Stock, Series A ("Series A Preferred Shares") and 1,106,950
Warrants to acquire Common Stock ("Warrants") for an aggregate
purchase price equal to $5,534,752. On June 30, 1997 (the
"Subsequent Issuance") AP-AGC acquired an additional 334,000
Series A Preferred Shares and 668,000 Warrants for an aggregate
purchase price of $3,340,000. AP-AGC obtained the funds
required to consummate the Closing and the Subsequent Issuance
from Apollo Fund II, which obtained such funds from capital
contributions from its partners.
On the terms and subject to the conditions set forth
in the Investment Agreement, AP-AGC has agreed to purchase from
the Issuer, and the Issuer has agreed to issue to AP-AGC, up to
2,500,000 Series A Preferred Shares and, on a pro rata basis,
up to 5,000,000 Warrants (including those Series A Preferred
Shares and Warrants acquired at the Closing and the Subsequent
Issuance) for an aggregate purchase price of up to $25,000,000.
Under the Investment Agreement, the additional Series A Pre-
ferred Shares and Warrants are to be acquired by AP-AGC (on a
pro rata basis) as and when appropriate real estate investment
opportunities are identified and approved by AP-AGC and the
Board of Directors of the Issuer (the "Issuer's Board"). If,
Page 8 of 27 Pages<PAGE>
however, the Issuer has not presented AP-AGC with real estate
development projects pursuant to which AP-AGC has invested
$25,000,000 on the terms and conditions set forth in the
Investment Agreement, AP-AGC has the option to acquire such
securities at any time. The Investment Agreement further
provides that, if the full $25,000,000 has not been invested by
June 30, 1998, the Company may, subject to the terms and
conditions set forth in the Investment Agreement, require AP-
AGC to invest the remaining amount not yet invested.
The funds for making additional acquisitions of
Series A Preferred Shares and Warrants pursuant to the Invest-
ment Agreement will be contributed to AP-AGC by Apollo Fund II,
which will obtain such funds from its partners.
As of the date of this Statement, the Reporting
Persons beneficially own an aggregate of 9,347,826 Common
Shares (including 1,543,435 Common Shares which may be acquired
upon the conversion of the 887,475 Series A Preferred Shares
currently owned and 1,774,950 Common Shares which may be
acquired upon the exercise of Warrants currently owned, as well
as Common Shares which may be acquired upon the conversion of
Series A Preferred Shares or the exercise of Warrants which are
not currently outstanding, but which AP-AGC has the right to
acquire under the Investment Agreement.)
Page 9 of 27 Pages<PAGE>
Item 4. Purpose of Transaction.
The Investment
AP-AGC is making its investment in the Issuer because
it believes that the acquisition of the Series A Preferred
Shares and the Warrants is an attractive investment opportu-
nity. In accordance with the terms of the Investment Agree-
ment, AP-AGC has three nominees on the Issuer's seven member
Board, and AP-AGC expects to be involved in and to influence
the management and direction of the Issuer.
The Series A Preferred Shares rank senior to Common
Shares with respect to dividends and distributions. Holders of
the Series A Preferred Shares are entitled to cash dividends on
a quarterly basis at a rate of 20% per annum. In the event
cash dividends are not paid, the dividends will accumulate.
As described below under certain circumstances, a
holder of Series A Preferred Shares may require the Issuer to
repurchase such shares for a repurchase price equal to their
liquidation preference (including accumulated dividends). The
holders' rights to receive such repurchase price are secured by
a first lien over the Issuer's stock in, and the assets of, a
newly formed special purpose subsidiary ("SP Subsidiary")
formed for the purpose of holding and investing the amounts
Page 10 of 27 Pages<PAGE>
received from AP-AGC and the proceeds thereof, and by a second
lien over substantially all the remaining assets of the Issuer.
As described in Item 3 above, on the Agreement Date,
AP-AGC and the Issuer entered into the Investment Agreement
which is included as an exhibit to this Statement and is incor-
porated herein by reference. The Statement of Preferences and
Rights of the Series A Preferred Shares (the "Series A
Certificate") and the form of Warrant are also included as
exhibits to this Statement and incorporated by reference
herein. This description of the Investment Agreement and the
transactions contemplated thereby (the "Transaction") sum-
marizes certain material provisions of the Investment
Agreement, the Series A Certificate, the form of Warrant and
the Transaction and is not intended to be complete, but is
qualified throughout by reference to such documents. Unless
otherwise noted, section references in this Statement refer to
sections of the Investment Agreement. In addition, the
Transaction (including the terms of the Series A Preferred
Shares and the Warrants) is described in the Proxy Statement of
the Issuer dated May 21, 1997 relating to its Annual Meeting of
Stockholders for 1997 (the "Proxy Statement"), which has been
filed with the Securities and Exchange Commission.
Page 11 of 27 Pages<PAGE>
Acquisition of Additional Securities of the Issuer
Pursuant to the Investment Agreement, AP-AGC has
agreed, subject to the terms and conditions therein set forth,
to acquire from the Issuer up to an aggregate of 2,500,000
Series A Preferred Shares at a price of $9.88 per share and, on
a pro rata basis with the Series A Preferred Shares, up to an
aggregate of 5,000,000 Warrants at a price of $.06 per Warrant
(including the Series A Preferred Shares and Warrants acquired
in the Closing), for an aggregate purchase price of up to
$25,000,000. The Warrants to be acquired by AP-AGC are to be
divided as nearly as possible into equal numbers of Class A,
Class B and Class C Warrants which are identical except that
they have different minimum exercise prices after the one-time
adjustment that may be made to the exercise price. Under the
Investment Agreement, the Series A Preferred Shares and War-
rants are to be acquired by AP-AGC (on a pro rata basis) as and
when appropriate real estate investment opportunities are iden-
tified and approved by AP-AGC and the Issuer's Board, although,
if the Issuer has not presented AP-AGC with real estate
development prospects pursuant to which AP-AGC has invested
$25,000,000, AP-AGC has the option to acquire such securities
at any time. The Investment Agreement further provides that,
if the full $25,000,000 has not been invested by June 30, 1998,
the Company may, subject to the terms and conditions set forth
in the Investment Agreement, require AP-AGC to invest the
Page 12 of 27 Pages<PAGE>
remaining amount not yet invested. The Investment Agreement
provides the AP-AGC will not be obligated to acquire additional
Series A Preferred Shares and Warrants if an Event of Default
(as defined, to include certain uncured breaches, material
adverse changes, and bankruptcy-related events) shall have
occurred and (except in the case of bankruptcy events) be
continuing. (Sections 2.5(c) and 3.4).
At the Closing on June 24, 1997, AP-AGC acquired
553,475 Series A Preferred Shares and 1,106,950 Warrants for an
aggregate price of $5,534,752. On June 30, 1997, AP-AGC
acquired an additional 334,000 Series A Preferred Shares and
668,000 Warrants for an aggregate price of $3,340,000. Based
on the Exchange Price of $5.75 (which is subject to certain
antidilution adjustments), the 2,500,000 Series A Preferred
Shares to be issued under the Investment Agreement are
currently convertible into 4,347,826 Common Shares. Based on
the Warrant Exercise Price of $5.75 (which is subject to
certain antidilution and other adjustments) the 5,000,000
Warrants are exercisable for 5,000,000 Common Shares. If
dividends on the Series A Preferred Shares are not paid in
cash, but are accrued and added to the liquidation preference,
the number of Common Shares into which the Series A Preferred
Shares are convertible shall increase accordingly.
Page 13 of 27 Pages<PAGE>
The Reporting Persons do not intend to amend or sup-
plement this Statement to reflect additional issuances of
Series A Preferred Shares and Warrants under the Investment
Agreement up to the amount disclosed as beneficially owned on
this Statement.
Disposition of Issuer Securities
Under the Investment Agreement, AP-AGC is not permit-
ted to transfer its Series A Preferred Shares or Warrants (or
Common Shares issuable upon conversion or exercise thereof,
respectively) for a period of two years from the Agreement
Date, although these restrictions lapse in certain events,
including certain events of default under the Investment Agree-
ment or certain change in control events. (Section 6.1.)
The Issuer may redeem the Series A Preferred Shares
at any time on or after June 24, 2000, in whole or in part,
at a redemption price equal to their liquidation preference
(which includes the compounded value of accumulated dividends).
(See Section 5 of the Series A Certificate, which is attached
hereto as an exhibit and incorporated herein by reference).
Except as described in the following sentence, the
Series A Preferred Shares are not redeemable at the option of
any holder thereof prior to June 24, 2001; provided that after
that date a holder may require the Issuer to repurchase from it
Page 14 of 27 Pages<PAGE>
(i) prior to June 23, 2002 up to one-third of the total number
of Series A Preferred Shares issued, (ii) prior to June 24,
2003 up to two-thirds of the total number of Series A Preferred
Shares issued and (iii) after June 24, 2003, all of its Series
A Preferred Shares. A holder's right to require the Issuer to
repurchase its Series A Preferred Shares will be accelerated
and immediately exercisable in the case of certain events of
default by the Issuer, including certain payment defaults, cer-
tain change of control events, certain bankruptcy-related
events and certain material breaches of the Investment Agree-
ment (in particular of covenants relating to the Issuer's obli-
gation to obtain AP-AGC's consent to engage in certain Major
Transactions, as described below). (See Section 8 of the
Series A Certificate.)
The Investment Agreement grants certain registration
rights to the holders of Series A Preferred Shares and Common
Shares issuable upon the conversion of Series A Preferred
Shares or upon the exercise of Warrants, including demand
registration rights, "piggyback" registration rights and the
right to require the Issuer to register such securities on a
"shelf" registration statement for continuous resale (Article
VIII).
Page 15 of 27 Pages<PAGE>
AP-AGC may decide to dispose of some or all of its
securities of the Issuer to the extent permitted by the Invest-
ment Agrement.
Changes in Issuer's Board
In accordance with the Investment Agreement and the
Series A Certificate, the Issuer's Board has been reduced to
seven directors. The Series A Certificate provides that
designees of the Series A Preferred Shares are entitled to
elect three of the seven directors. Pursuant to the Investment
Agreement as originally executed on February 7, 1997, one
designee of AP-AGC was elected to the Issuer's Board in February
1997. Contemporaneously with the Closing, nine of the eleven
incumbent members of the Issuer's Board (including the
original AP-AGC designee) resigned, the size of the board
was reduced to seven directors and three designees of the
holders of the Series A Preferred Shares and two new
independent directors were appointed. Information regarding
the AP-AGC-nominated directors and the other changes made to
the Issuer's Board in connection with the transactions
contemplated by the Investment Agreement, see the Proxy
Statement. AP-AGC may at any time cause any of its nominees to
the Issuer's Board to resign or be removed, and may replace
such resigning or removed director with a designee of its
election.
Page 16 of 27 Pages<PAGE>
In accordance with the Series A Certificate, the
three directors to be nominated by the holders of the Series A
Preferred Shares shall have terms of office of one year, al-
though the other four directors of the Company shall be classi-
fied into three classes and have terms of office of three years
each. If AP-AGC holds fewer than 500,000 Series A Preferred
Shares, the number of directors elected by the holders of
Series A Preferred Shares may be reduced if the number of out-
standing Series A Preferred Shares is reduced. The Issuer's
charter and bylaws were amended to implement the changes to the
Issuer's Board described above.
Designees of the holders of Series A Preferred Shares
currently serve on all of the committees of the Issuer's Board
and form a majority of certain of such committees.
Major Transactions
The Investment Agreement provides that so long as
AP-AGC holds at least 500,000 Series A Preferred Shares, the
Issuer shall not, except with the prior written approval of
AP-AGC, engage in, or enter into any agreement with respect to,
or resolve to engage in or to enter into any agreement with
respect to, any Major Transaction, including "any material
transaction which is not described in an Approved Business
Plan, including any (i) recapitalization, redemption or
Page 17 of 27 Pages<PAGE>
reclassification of, or distribution or dividend on, the Com-
pany's capital stock, (ii) amendment of its certificate of in-
corporation or by-laws, (iii) liquidation, winding-up or dis-
solution of the Company or any Significant Subsidiary (as de-
fined in SEC Regulation S-X) of the Company, (iv) consolidation
of the Company with, or merger of the Company with or into, any
other Person, except a merger of a wholly owned Subsidiary of
the Company into the Company, with the Company surviving such
merger, (v) sale, transfer, lease or encumbrance by the Company
or any Subsidiary of a significant amount of assets of the Com-
pany other than in respect of sales of Predecessor Assets (as
referred to in the Company's annual report on Form 10-K for the
year ended December 31, 1995), (vi) special dividend or
distribution with respect to, or repurchase, redemption or
other acquisition of, equity securities of the Company or any
rights, warrants or options in respect of such equity secu-
rities, (vii) capital expenditure or investment by the Company
or any Subsidiary in excess of $500,000, (viii) entering into
or materially amending (including by waiver) any material con-
tract, (ix) significant new financing or refinancing, (x)
issuance of securities (other than employee and director stock
options to acquire up to 2,000,000 shares of Common Stock and
the issuance of the Common Stock thereunder), (xi) transactions
which would result in a Change of Control, (xii) material
transaction the nature of which prevents specificity in the
Page 18 of 27 Pages<PAGE>
Approved Business Plan or (xiii) commencement, undertaking or
acquisition of a real estate development project by SP Subsid-
iary (whether independently, by joint venture or otherwise) and
related financing or joint venture arrangements. . ."
By virtue of its representation on the Issuer's
Board, its power to veto Major Transactions and its right to
require the Issuer to repurchase its Series A Preferred Shares,
in the case of certain material breaches of the Investment
Agreement, AP-AGC expects to be able to influence the
management and direction of the Issuer.
Because AP-AGC's consent would be required for any
transaction which would result in a Change in Control of the
Issuer and certain changes in control would permit the holders
of Series A Preferred Shares and Series B Preferred Shares (as
defined below) to require the Issuer to repurchase such
securities at their liquidation preference (including
accumulated dividends), the transactions effected and to be
effected pursuant to the Investment Agreement are likely to
impede the acquisition of control of the Issuer and to
discourage third parties from attempting to acquire control of
the Issuer.
On the Closing Date, the Issuer also sold to certain
investors in a private placement 1,776,199 Common Shares,
1,000,000 shares of a new series of preferred stock designated
Page 19 of 27 Pages<PAGE>
its 20% Cumulative Redeemable Convertible Preferred Stock,
Series B ("Series B Preferred Shares") and 2,000,000 warrants
to purchase Common Shares. The Series B Preferred Shares are
substantially similar to the Series A Preferred Shares, except
that the holders of Series B Preferred Shares will not be
entitled to elect any directors of the Issuer and will not have
consent rights with respect to Major Transactions, and that the
repurchase obligations of the Company will not be secured.
Further information regarding the terms of the Series B Pre-
ferred Shares is contained in the Proxy Statement. The
Investment Agreement contemplates that the Issuer will offer up
to 1,000,000 Series B Preferred Shares and 2,000,000 warrants
to purchase Common Shares to its shareholders in a rights
offering. The warrants to purchase Common Shares issued in the
private placement and to be issued in the rights offering will
be substantially similar to the Warrants, except for certain
differences necessitated by the broader holding of such war-
rants.
Amended and Restated Certificate of Incorporation
To facilitate the Transaction, the Issuer's share-
holders approved at their annual meeting held on June 23, 1997,
an Amended and Restated Certificate of Incorporation (which
included the Series A Certificate, the Statement of Preferences
and Rights of the Series B Preferred Shares and certain other
Page 20 of 27 Pages<PAGE>
changes) and such Amended and Restated Certificate of
Incorporation became effective on June 24, 1997 when it was
filed with the Secretary of State of Delaware. These changes
were necessary to facilitate the Transaction and included the
elimination of certain dividend preferences out of available
cash-flow in favor of the Common Shares, the elimination of a
prohibition on non-voting stock and an increase in the autho-
rized amount of Common Shares. For further details concerning
the Amended and Restated Certificate of Incorporation see the
Proxy Statement.
Other Plans or Proposals
The Investment Agreement also provides that AP-AGC
will have certain "first look" rights to participate with
Issuer in new joint venture community development projects pro-
posed to be entered into by the Issuer, until AP-AGC has in-
vested $60,000,000 in such projects (Section 6.12).
Except as set forth in this statement (including the
exhibits incorporated by reference herein), the Reporting Per-
sons have no present plans or proposals which relate to or
would result in any of the actions described in Item 4(a)
through (j) of Schedule 13D under Rule 13d-1(a). Depending
upon prevailing economic and investment considerations and
other factors that the Reporting Persons may deem relevant, the
Reporting Persons may purchase or sell Common Shares or other
Page 21 of 27 Pages<PAGE>
securities of the Issuer in the open market or in privately
negotiated transactions or otherwise, or engage in any other
transaction they deem appropriate.
Item 5. Interest in Securities of the Issuer.
(a) As of the date of this Statement, the Reporting
Persons beneficially own an aggregate of 9,347,826 Common
Shares (including 1,543,435 Common Shares which may be acquired
upon the conversion of the 887,475 Series A Preferred Shares
currently owned and 1,774,950 Common Shares which may be
acquired upon the exercise of Warrants currently owned, as well
as Common Shares which may be acquired upon the conversion of
Series A Preferred Shares or the exercise of Warrants which
AP-AGC has the right to acquire at any time under the
Investment Agreement.)
(b) For purposes of Section 13 of the Act, Apollo
Fund II may be deemed to control AP-AGC, AREA II may be deemed
to control Apollo Fund II and Capital Advisers II may be deemed
to control AREA II. Each of the Reporting Persons may thus be
considered to beneficially own and to have sole voting and dis-
positive power with respect to all the Common Shares held of
record by AP-AGC.
(c) Except as set forth above, there have been no
purchases or sales by any of the Reporting Persons of Common
Page 22 of 27 Pages<PAGE>
Shares during the last 60 days. To the best knowledge of the
Reporting Persons, no person identified on Annex A has effected
any transactions in Common Shares during the past 60 days.
(d) No other person is known by the Reporting Per-
sons to have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of,
the Common Shares beneficially owned by the Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relation-
ships with Respect to Securities of the Issuer.
Aside from the Investment Agreement and the related
documents and the transactions contemplated thereby, as de-
scribed in Item 3 and Item 4 above, the Reporting Persons know
of no other contracts, arrangements, understandings or
relationships required to be described herein.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Amended and Restated Investment Agreement dated
as of February 7, 1997, amended as of March 20,
1997 and amended and restated as of May 15,
1997, between AP-AGC, LLC, and Atlantic Gulf
Communities Corporation (incorporated by
reference to Exhibit 1 to the Current Report on
Page 23 of 27 Pages<PAGE>
Form 8-K filed by Atlantic Gulf Communities
Corporation on June 5, 1997 (File No. 1-8967)).
Exhibit 2: Statement of Preferences and Rights of 20% Cumu-
lative Redeemable Convertible Preferred Stock,
Series A (Annex A to the Amended and Restated
Certificate of Incorporation of Atlantic Gulf
Communities Corporation, attached as Exhibit A
to the Amended and Restated Investment Agreement
described above) (incorporated by reference to
Exhibit 3 to the Current Report on Form 8-K
filed by Atlantic Gulf Communities Corporation
on June 5, 1997 (File No. 1-8967)).
Exhibit 3: Form of Class A, Class B and Class C Warrants
for the Purchase of Common Stock (Exhibit 2 to
the Amended and Restated Investment Agreement
described above) (incorporated by reference to
Exhibit 5 to the Current Report on Form 8-K
filed by Atlantic Gulf Communities Corporation
on June 5, 1997 (File No. 1-8967)).
Exhibit 4: Secured Agreement dated as of February 7, 1997
and amended and restated as of May 15, 1997
between AP-AGC, LLC and Atlantic Gulf Communi-
ties Corporation.
Page 24 of 27 Pages<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the
knowledge and belief of the undersigned, the undersigned certi-
fies that the information set forth in this statement is true,
complete and correct.
Dated: July 7, 1997
AP-AGC, LLC.
By Kronus Property, Inc.
Manager
by
/s/ Ricardo Koenigsberger
Name: Ricardo Koenigsberger
Title: Vice-President
APOLLO REAL ESTATE INVESTMENT
FUND II, L.P.
By: Apollo Real Estate
Advisors II, L.P.,
Managing General Partner
By: Apollo Real Estate Capital
Advisors II, Inc.,
General Partner
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President
APOLLO REAL ESTATE ADVISORS II,
L.P.
By: Apollo Real Estate Capital
Advisors II, L.P.,
General Partner
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President
Page 25 of 27 Pages<PAGE>
ANNEX A TO SCHEDULE 13D
The following sets forth information with respect to
the executive officers and directors of Capital Advisors II,
which is the sole general partner of AREA II, and Management II
Inc., which is the sole general partner of Management II.
Messrs. Leon D. Black, John J. Hannan and William L.
Mack are executive officers and directors of Capital Advisors
II and Management II Inc. The principal occupation of each of
Messrs. Black and Hannan is to act as an executive officer and
director of Apollo Capital Management II, Inc., which, together
with its affiliates (collectively, "Apollo Management") manage
investment activities on behalf of the Apollo Investment Funds
(collectively, "Apollo"). Messrs. Black and Hannan are
founding principals of Apollo and, together with Mr. Mack, of
Apollo Real Estate Advisors II, L.P. The principal occupation
of Mr. Mack is to act as a consultant to Apollo and as a
principal to Apollo Real Estate Advisors, L.P. and to act as
President and Managing Partner of the Mack Organization, an
owner and developer of and investor in office and industrial
buildings and other commercial properties. The principal
business of Apollo Management is to provide advice regarding
investments in securities and the principal business of Apollo
Real Estate Advisors, L.P. is to provide advice regarding
investments in real estate and real estate-related investments.
The business address of each of Messrs. Black, Hannan and Mack
is c/o Apollo Real Estate Management II, L.P., 1301 Avenue of
the Americas, New York, New York 10019.
Page 26 of 27 Pages<PAGE>
Exhibit Index
Exhibit
1. Amended and Restated Investment Agreement
dated as of February 7, 1997, amended as
of March 20, 1997 and amended and restated
as of May 15, 1997, between AP-AGC, LLC,
and Atlantic Gulf Communities Corporation
(incorporated by reference to Exhibit 1 to the
Current Report on Form 8-K filed by Atlantic
Gulf Communities Corporation on June 5, 1997
(File No. 1-8967)).
2. Statement of Preferences and Rights of 20%
Cumulative Redeemable Convertible Preferred
Stock, Series A (Annex A to the Amended and
Restated Certificate of Incorporation of
Atlantic Gulf Communities Corporation, attached
as Exhibit A to the Amended and Restated Invest-
ment Agreement described above (incorporated
by reference to Exhibit 3 to the Current
Report on Form 8-K filed by Atlantic Gulf
Communities Corporation on June 5, 1997
(File No. 1-8967)).
3. Form of Class A, Class B and Class C Warrants
for the Purchase of Common Stock (Exhibit 2
to the Amended and Restated Investment
Agreement described above) (incorporated by
reference to Exhibit 5 to the Current Report
on Form 8-K filed by Atlantic Gulf Communities
Corporation on June 5, 1997 (File No. 1-8967)).
4. Secured Agreement dated as of February 7, 1997
and amended and restated as of May 15, 1997
between AP-AGC, LLC and Atlantic Gulf Communi-
ties Corporation.
Page 27 of 27 Pages
WLRK 6/19/97
EXECUTION COPY
_____________________________________
ATLANTIC GULF COMMUNITIES CORPORATION
-AND-
THE SUBSIDIARIES SET FORTH
ON THE SIGNATURE PAGES HEREOF
____________________________________
SECURED AGREEMENT
DATED AS OF FEBRUARY 7, 1997
AMENDED AND RESTATED AS OF MAY 15, 1997<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS................................. 1
1.1 Defined Terms........................ 1
1.2 Other Definitional Provisions........ 23
SECTION 2. ISSUANCE AND TERMS OF SECURED INSTRUMENT.... 24
2.1 Secured Instrument................... 24
2.2 Payment of Secured Instrument........ 24
2.3 Conversion of Secured Instrument
into
Preferred Stock.................... 25
2.4 Interest Rates and Interest
Payment Dates...................... 26
2.5 Computation of Interest and Fees..... 26
2.6 Pro Rata Treatment and Payments...... 26
2.7 Taxes................................ 27
2.8 Use of Proceeds...................... 27
2.9 Fees................................. 27
2.10 Maximum Interest Rate................ 27
SECTION 3. COLLATERAL.................................. 28
3.1 Liens in Subsidiary Stock,
Contract Receivables, Real Property
and Personal Property.............. 28
3.2 Security Documents................... 29
3.3 Section 365(j) Property.............. 33
3.4 [intentionally omitted].............. 33
3.5 Subordinations and Releases of
Mortgage and Related Personal
Property Liens..................... 33
3.6 Subsidiary Guaranties................ 34
3.7 Special Purpose Subsidiary........... 35
SECTION 4. REPRESENTATIONS AND WARRANTIES.............. 37
4.1 Financial Condition.................. 37
4.2 No Material Adverse Change........... 39
4.3 Corporate Existence; Complianc
with Law........................... 39
-i-<PAGE>
Page
4.4 Corporate Power; Authorization;
Enforceable Obligations............ 40
4.5 No Legal Bar......................... 41
4.6 No Material Litigation............... 41
4.7 No Default........................... 41
4.8 Ownership of Property; Liens......... 42
4.9 Intellectual Property................ 42
4.10 Taxes................................ 42
4.11 Federal Regulations.................. 42
4.12 ERISA................................ 43
4.13 Investment Company Act; Other
Regulations........................ 44
4.14 Subsidiaries and Joint Ventures...... 44
4.15 Environmental Matters................ 44
4.16 Indebtedness......................... 45
4.17 Contingent Obligations............... 46
4.18 Restitution Program and Final
Judgment........................... 46
4.19 Certain Fees......................... 46
4.20 Disclosure........................... 46
4.21 Insurance............................ 47
4.22 Total Real Property Matters.......... 47
4.23 Reorganization Proceedings........... 47
4.24 Excluded Subsidiaries; Unrestricted
Subsidiaries....................... 47
4.25 [intentionally omitted].............. 47
4.26 Bank Accounts........................ 47
4.27 Utility Fund Trusts.................. 48
4.28 [intentionally omitted].............. 48
4.29 SPUD Subsidiaries.................... 48
4.30 DRI and Zoning....................... 48
SECTION 5. CONDITIONS PRECEDENT........................ 48
5.1 Conditions to Issuance............... 48
5.2 [intentionally omitted].............. 53
SECTION 6. AFFIRMATIVE COVENANTS....................... 53
6.1 Financial Statements................. 54
6.2 Certificates; Other Information...... 56
6.3 Payment of Obligations............... 58
6.4 Conduct of Business and Maintenance
of Existence....................... 58
6.5 Maintenance of Property; Insurance... 58
6.6 Inspection of Collateral; Books and
Records; Appraisals................ 59
-ii-<PAGE>
Page
6.7 Notices.............................. 59
6.8 Environmental Laws................... 60
6.9 Business Plan........................ 61
6.10 Compliance with Other Transaction
Documents.......................... 61
6.11 Dividends from Subsidiaries.......... 61
6.12 Supplemental Reports Regarding
Real Property...................... 62
6.13 Compliance with Laws................. 62
6.14 Other Notices........................ 62
6.15 The Company Operating Account Control
Agreement.......................... 62
6.16 Foothill Reports..................... 63
SECTION 7. NEGATIVE COVENANTS.......................... 63
7.1 Maintenance of Consolidated
Net Worth; Interest Charge
Coverage Ratio..................... 63
7.2 Limitation of Indebtedness........... 64
7.3 Limitation on Liens.................. 66
7.4 Limitation on Guarantee Obligations.. 67
7.5 Limitations on Fundamental Changes... 68
7.6 Limitation on Sale of Assets......... 68
7.7 Limitation on Dividends.............. 69
7.8 Limitation on Capital Expenditures... 69
7.9 Limitation on Investments, Loans,
and Advances....................... 70
7.10 Limitation on Optional Payments and
Modifications of Debt Instruments.. 71
7.11 Transactions with Affiliates......... 71
7.12 Sale and Leaseback................... 72
7.13 Fiscal Year.......................... 72
7.14 Limitation on Negative Pledge
Clauses............................ 72
7.15 Deviation from Business Plan......... 72
7.16 Unsold Housing Inventory............. 72
7.17 Limitation of Bank Accounts.......... 72
7.18 Venture Subsidiaries and Joint
Ventures........................... 73
7.19 Excluded Subsidiaries;
Unrestricted Subsidiaries.......... 73
SECTION 8. EVENTS OF DEFAULT; REMEDIES................. 73
8.1 Events of Default; Remedies.......... 73
-iii-<PAGE>
Page
SECTION 9. THE COLLATERAL AGENT........................ 77
9.1 [intentionally omitted].............. 77
9.2 Appointment of Collateral Agent...... 77
9.3 [intentionally omitted].............. 78
9.4 Delegation of Duties................. 78
9.5 Exculpatory Provisions............... 79
9.6 Reliance by the Obligee.............. 79
9.7 Notice of Default.................... 80
9.8 Non-Reliance on Collateral Agent..... 80
9.9 Indemnification...................... 81
9.10 [intentionally omitted].............. 81
9.11 [intentionally omitted].............. 81
9.12 Successor Collateral Agent........... 81
SECTION 10. MISCELLANEOUS............................... 82
10.1 Amendments and Waivers............... 82
10.2 Notices.............................. 82
10.3 No Waiver; Cumulative Remedies....... 84
10.4 Survival of Certain Provisions....... 84
10.5 Payment of Expenses and Taxes........ 85
10.6 Successors and Assigns;
Participations; Purchasing Obligee. 86
10.7 Adjustments; Setoff.................. 89
10.8 Appointment of the Obligee
as the Company's Lawful Attorney... 90
10.9 Counterparts......................... 90
10.10 Severability......................... 90
10.11 Integration.......................... 90
10.12 GOVERNING LAW........................ 90
10.13 SUBMISSION TO JURISDICTION;
WAIVERS............................ 91
10.14 Acknowledgments...................... 92
10.15 WAIVERS OF JURY TRIAL................ 92
10.16 Confidentiality...................... 92
10.17 Controlling Agreement................ 93
SECTION 11 THE CO-MAKERS............................... 93
11.1 Certain Defined Terms................ 93
11.2 All Co-Makers Liable................. 93
11.3 Limitation on Obligations
of Subsidiaries; Contribution
among Subsidiaries................... 94
11.4 Liability of Co-Makers
Absolute............................. 94
11.5 Waivers by Co-Maker.................. 97
-iv-<PAGE>
Page
11.6 Payment by Mortgagor
Subsidiaries; Application of
Payments............................. 98
11.7 Co-Makers' Rights of
Subrogation, Contribution, Etc....... 99
11.8 Subordination of Other Obligations... 100
11.9 Expenses............................. 100
11.10 Continuing Agreement................. 100
11.11 Authority of the Co-Makers........... 100
11.12 Financial Condition of the Company... 100
11.13 Rights Cumulative.................... 101
11.14 Bankruptcy; Post-Petition Interest;
Reinstatement of Agreement........... 101
11.15 Setoff............................... 102
SECTION 12. MISCELLANEOUS............................... 102
12.1 Acknowledgement Regarding
Certain Environmental Obligations.... 102
-v-<PAGE>
SCHEDULES
Schedule E-1 Excluded Subsidiaries
Schedule N-1 Net Cash Flow
Schedule N-2 Net Operating Cash Flow
Schedule P-1 Principal Raw Land
Schedule U-1 Unrestricted Subsidiaries
Schedule V-1 Venture Subsidiaries
Schedule 4.1 Additional Liabilities of the Company; Pur-
chases and Dispositions by the Company
Schedule 4.2 Material Adverse Effect
Schedule 4.4 Consents and Authorizations
Schedule 4.5 Certain Contractual Obligations
Schedule 4.6 Litigation
Schedule 4.7 Defaults
Schedule 4.10 Tax
Schedule 4.12 ERISA
Schedule 4.14(A) Subsidiaries
Schedule 4.14(B) Joint Ventures
Schedule 4.15 Hazardous Materials
Schedule 4.16 Indebtedness
Schedule 4.17 Guaranties
Schedule 4.21 Insurance
Schedule 4.24 Unrestricted Subsidiaries' Assets and Busi-
nesses
Schedule 4.26 Bank Accounts
Schedule 4.29 SPUD Subsidiaries
Schedule 4.30 Representations and Warranties regarding DRI
and Zoning Matters
Schedule 5.1(k) Real Property Matters
Schedule 7.3 Liens
Schedule 7.17 Restricted Bank Accounts
-vi-<PAGE>
EXHIBITS
Exhibit A-1 Form of Deed of Trust
Exhibit B-1 Form of Mortgage and Security Agreement
Exhibit C-1 Form of Secured Instrument
Exhibit D-1 Form of Deposit Account Security Agreement
Exhibit E-1 Form of Due Diligence Fee Agreement
Exhibit F-1 Form of Monthly Management Business Plan
Update
Exhibit G-1 Form of Land Sales Report
Exhibit H-1 Form of Junior Assignment of Notes and Deeds
of Trust
Exhibit H-2 Form of Junior Assignment of Notes and Mort-
gages
Exhibit I-1 Form of Intercreditor Agreement
Exhibit J-1 Form of Joint Venture Pledge Agreement
Exhibit P-1 Form of Personal Property Security Agreement
Exhibit R-1 Copy of Reorganization Plan
Exhibit S-1 Form of Stock Pledge Agreement
Exhibit S-2 Form of Subsidiary Guaranty
-vii-<PAGE>
THIS SECURED AGREEMENT, dated as of February 7, 1997
and amended and restated as of May 15, 1997, among ATLANTIC
GULF COMMUNITIES CORPORATION, a Delaware corporation (the
"Company"), the Subsidiaries of the Company named on the signa-
ture pages hereof (the "Subsidiaries," and together with the
Company, the "Co-Makers"), AP-AGC, LLC, a Delaware limited li-
ability company (the "Obligee") and the entities named as col-
lateral agent on the signature pages hereof as collateral
agents for the Obligee (hereinafter, in such capacity, together
with any successors thereto in such capacity, referred to col-
lectively as "Collateral Agent").
RECITALS
WHEREAS, in accordance with an Investment Agreement
between the Company and the Obligee dated as of the date
hereof, the Co-Makers desire to be able to borrow up to
$10,000,000 from the Obligee on the terms hereinafter set forth
and the Obligee is willing, on the terms and subject to the
conditions set forth in this Agreement, to commit to lend up to
$10,000,000 to the Co-Makers; and
WHEREAS, the Obligee has agreed, on the terms and
subject to the conditions set forth in the Investment
Agreement, to purchase preferred stock to be issued by the
Company and, whether or not the Co-Makers have borrowed from
the Obligee under this Agreement, this Agreement provides for
the issuance of an instrument which will evidence certain
secured repurchase obligations of the Company and the other Co-
Makers in respect of such preferred stock and certain other
obligations of the Company and the other Co-Makers, and sets
forth certain obligations of the Co-Makers to Obligee relating
to such preferred stock and the rights of the Obligee and
obligations of the Co-Makers; and
WHEREAS, the execution and delivery of this Agreement
is a condition to the obligations of the Obligee under the In-
vestment Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the parties hereto
hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the fol-
lowing terms shall have the following meanings:<PAGE>
"Administrative Claims": as defined in Article I of
the Reorganization Plan.
"Affiliate": with respect to any Person, (a) any
other Person which is a Subsidiary of such Person, (b) any
other Person (and each Subsidiary thereof) of which such
Person is a Subsidiary, and (c) any other Person which is
under common control with such Person.
"AG Asia": Atlantic Gulf Asia Holdings N.V., a Neth-
erlands Antilles corporation.
"Agreement": this Secured Agreement, as amended,
supplemented or otherwise modified from time to time.
"Annual Net Income": income as shown on the consoli-
dated statements of income provided by the Company under
Section 6.1, but in no event less than 0.
"Assignments": the Junior Assignment of Notes and
Deeds of Trust and the Junior Assignment of Notes and
Mortgages, in the form of Exhibits H-1 and H-2 respec-
tively, to be executed on or before the Issuance Date, as
the same may be amended, supplemented or otherwise modi-
fied from time to time.
"Bank Accounts": any and all deposit accounts, money
market accounts and any other deposits and investments of
the Company or any Subsidiary held in any bank or other
financial institution, any brokerage firm or any other
Person and all money, instruments, securities, documents
and other investments held pursuant thereto, whether now
existing or owned or hereafter created or acquired (exclu-
sive of all but the residual, remainder or beneficial in-
terest of the Company and its Subsidiaries in the Reserve
Accounts, the Claims Disbursement Account and all other
escrow, restricted, custodial and fiduciary accounts the
pledge of which by the Company or any Subsidiary is pro-
hibited by agreements existing on the date hereof or by
law as set forth in Schedule 7.17, which may be amended
from time to time by written notice to the Obligee to in-
clude other restricted accounts).
"Bankruptcy Code": Title 11 of the United States
Code entitled "Bankruptcy" from time to time in effect, or
any successor statute.
"Bankruptcy Court": the United States Bankruptcy
Court for the Southern District of Florida or if such
-2-<PAGE>
court ceases to exercise jurisdiction over the Reorganiza-
tion Proceedings, the court that exercises jurisdiction
over the Reorganization Proceedings in lieu of the United
States Bankruptcy Court for the Southern District of
Florida.
"Beige Book": the book prepared by the Company dated
December 1994, setting forth the estimated fair market
value of the Real Property of the Company and its Subsid-
iaries.
"Book Value": with respect to a specified asset of a
specified Person, the carrying value of the specified as-
set on the balance sheet of such Person prepared in ac-
cordance with GAAP and delivered to the Obligee from time
to time pursuant to the Transaction Documents.
"Borrowing Base": as defined in the Revolving Loan
Agreement.
"Business Day": any day excluding Saturday, Sunday
and any day which either is a legal holiday under the laws
of the States of California or New York or is a day on
which banking institutions located in the States of Cali-
fornia or New York are authorized or required by law or
other governmental action to close.
"Business Plan": as of the Issuance Date and until a
new Business Plan is delivered to the Obligee in ac-
cordance with Section 6.9, the business plan of the Com-
pany and its Subsidiaries dated October 23, 1996, and
thereafter the business plan of the Company and its Sub-
sidiaries delivered to and approved by the Obligee in De-
cember of each year in accordance with Section 6.9.
"Capital Stock": with respect to any Person, any and
all shares, interests, or other equivalents (however des-
ignated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to pur-
chase any of the foregoing.
"Cash Collateral Accounts": any and all accounts
that Collateral Agent, for the benefit of the Obligee, may
from time to time require to be established and maintained
with financial institutions reasonably satisfactory to
Obligee and pledged to Collateral Agent pursuant to cash
collateral account agreements in form and substance rea-
sonably satisfactory to Obligee.
-3-<PAGE>
"Cash Equivalents": (a) securities issued or di-
rectly and fully guaranteed or insured by the United
States Government or any agency or instrumentality thereof
having maturities of not more than 90 days from the date
of acquisition, (b) time deposits and certificates of de-
posit having maturities of not more than 90 days from the
date of acquisition issued by any domestic commercial
bank, or non-domestic commercial bank provided that such
non-domestic commercial bank shall have offices in the
United States, having capital and surplus in excess of
$500,000,000, (c) repurchase obligations with a term of
not more than 30 days for underlying securities of the
types described in clauses (a) and (b) entered into with
any bank meeting the qualifications specified in clause
(b) above, and (d) commercial paper rated at least A-1 or
the equivalent thereof by Standard & Poor's Corporation or
P-1 or the equivalent thereof by Moody's Investors Ser-
vice, Inc. or which is issued by any domestic commercial
bank having capital and surplus in excess of $500,000,000
(or any holding company thereof) and, in any such case,
maturing within 90 days after the date of acquisition.
"Certificate of Designation": means the "Series A
Preferred Stock Certificate of Designation," as defined in
the Investment Agreement.
"Claims Disbursement Account": the segregated ac-
count established for purposes of holding funds borrowed
to pay Administrative Claims, Priority Claims and Conve-
nience Class Claims pursuant to Sections 3.2.4 and 8.1.1
of the Reorganization Plan.
"Code": the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral": as defined in Section 3.1.
"Collateral Agent": Foothill Capital Corporation and
The Bank of New York, each solely in its individual
capacity as collateral agent for the Obligee under the
Security Documents, and their respective successors in
such capacity. Unless otherwise agreed, Foothill Capital
Corporation and its successors shall serve as Collateral
Agent with respect to properties in which pursuant to the
Intercreditor Agreement the holders of the Foothill Debt
hold a senior lien and The Bank of New York and its
successors shall serve as Collateral Agent with respect to
properties in which pursuant to the Intercreditor
Agreement the Obligee holds a senior lien.
-4-<PAGE>
"Commercial Real Estate": all Real Property of the
Company and its Subsidiaries (including condominium and
cooperative units), other than Real Property reserved for
sale as single residential homes or lots.
"Commercial Receivables": all promissory notes and
mortgages and deeds of trust payable to, or held by, the
Company or any Subsidiary, and all other documents, in-
struments and agreements executed in connection therewith,
whether currently existing or hereafter created or ac-
quired, arising from the sale of single family homesites
or arising from the sale of other Real Property and all
cash and non-cash proceeds thereof.
"Commonly Controlled Entity": an entity, whether or
not incorporated, which is under common control with the
Company within the meaning of Section 4001 of ERISA or is
part of a group which includes the Company and which is
treated as a single employer under Section 414 of the
Code.
"Company Operating Account" means that certain de-
posit account number 6189189013641 maintained by the Com-
pany with Sun Trust Bank, Miami, N.A. or such other de-
posit account maintained by the Company at a financial
institution reasonably satisfactory to Obligee.
"Company Operating Account Control Agreement" means a
written agreement which may in the future be executed
among the Company, the Collateral Agent, the "Collateral
Agent" under the Foothill Loan Documents, and Operating
Account Bank, with respect to the Company Operating
Account, in form and substance reasonably satisfactory to
the Obligee, pursuant to which Operating Account Bank
acknowledges the security interests granted by the Company
to the Collateral Agent for the benefit of the Obligee in
the Company Operating Account, waives rights of setoff
with respect to the Company Operating Account, and agrees
to act upon the instructions of the Collateral Agent with
respect to the disposition of funds in the Company
Operating Account should Operating Account Bank receive
such instructions from the Collateral Agent. The Company
Operating Account Control Agreement will be executed and
delivered by the Company upon request of Obligee and in
any event will be executed and delivered by the Company in
the event it enters into a similar agreement for the
benefit of the holders of the Foothill Debt.
"Condemnation Awards": any and all proceeds (includ-
ing proceeds in the form of promissory notes or other
-5-<PAGE>
agreements for the payment of proceeds) from (i) the tak-
ing by eminent domain, condemnation or otherwise, or ac-
quisition pursuant to contract, of any property of the
Company or any Subsidiary by the United States of America,
the State of Florida or any political subdivision thereof,
or any agency, department, bureau, board, commission or
instrumentality of any of them, including any award and/or
other compensation awarded to or for the benefit of, or
received by or on behalf of, the Company or GDU, whether
as a result of litigation, arbitration, settlement or oth-
erwise, or (ii) any sale by the Company or any Subsidiary
of a water and utility system to a Person, whether now
owned or hereafter created or acquired.
"Confirmation Order": the order entered on March 27,
1992, by the Bankruptcy Court, confirming the Reorganiza-
tion Plan.
"Consolidated Net Worth": at any particular date,
all amounts which, in accordance with GAAP, would be in-
cluded as Shareholders' Equity on a consolidated balance
sheet of the Company and its consolidated Subsidiaries at
such date.
"Contractual Obligation": with respect to any Per-
son, any provision of any security issued by such Person
or of any agreement, instrument or other undertaking to
which that Person is a party or by which it or any of its
property is bound.
"Convenience Class Claims": as described in Subsec-
tion 2.13 of the Reorganization Plan.
"Deed of Trust": the Junior Deed of Trust and Secu-
rity Agreement to be executed on or before the Issuance
Date and from time to time thereafter between the Company
or a Subsidiary and Collateral Agent, in the form of Ex-
hibit A-1, as the same be amended, supplemented or oth-
erwise modified from time to time, pursuant to which the
Company and Subsidiaries grant a security interest in the
Real Property located in Tennessee (and such other juris-
dictions where "deeds of trust" are used to encumber real
property) and related Personal Property of the Company or
Subsidiaries to Collateral Agent, for the benefit of the
Obligee as required by this Agreement.
"Default": any of the events specified in Section
8.1, whether or not any requirement for the giving of no-
tice, the lapse of time, or both, or any other condition,
has been satisfied.
-6-<PAGE>
"Default Rate": has the meaning assigned that term
in Section 2.4(b).
"Deposit Account Security Agreement": the Deposit
Account Security Agreement, in the form of Exhibit D-1, to
be executed by the Company and each of its Subsidiaries in
favor of Collateral Agent on or before the Issuance Date,
for the benefit of the Obligee, as the same may be
amended, supplemented or otherwise modified from time to
time.
"Dollars" and "$": dollars in lawful currency of the
United States of America.
"Due Diligence Fee Agreement": the Due Diligence Fee
Agreement, in the form of Exhibit E-1, to be executed by
the Company and the Obligee, providing among other things
for payment of a fixed due diligence and investment analy-
sis fee on the last day of each calendar month as compen-
sation for the due diligence and investment analysis ser-
vices described therein.
"Environmental Laws": any and all applicable Fed-
eral, state, local or municipal laws, rules, orders, regu-
lations, statutes, ordinances, codes, decrees or require-
ments of any Governmental Authority regulating, relating
to or imposing liability or standards of conduct concern-
ing environmental protection matters, including, without
limitation, Hazardous Materials, as now or may at any time
hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Default": any of the events specified in
Section 8.1, provided that any requirement for the giving
of notice, the lapse of time, or both, or any other condi-
tion, has been satisfied.
"Excluded Property": (a) the Capital Stock of Gen-
eral Development Acceptance Corporation and GDV Financial
Corporation, (b) 34% of the Capital Stock of AG Asia, (c)
all money or property now or hereafter deposited into a
Reserve Account pursuant to the Reorganization Plan (ex-
clusive of the residual, remainder or beneficial interests
of the Company and its Subsidiaries therein), (d) any por-
tions of payments made on Homesite Contracts Receivable
which are, as a matter of law or pursuant to such Homesite
Contracts Receivable, required to be placed in a re-
stricted account for the payment of utility charges or
-7-<PAGE>
paid toward real estate taxes on the lots subject to the
respective Homesite Contracts Receivable giving rise to
such payments, and (e) the Trust Property.
"Excluded Subsidiaries": the direct or indirect sub-
sidiaries of the Company listed on Schedule E-1.
"Financing Lease": any lease of property, real or
personal, the obligations of the lessee in respect of
which are required in accordance with GAAP to be capital-
ized on a consolidated balance sheet of the Company and
Subsidiaries.
"Foothill Debt": Indebtedness outstanding under the
Foothill Loan Documents.
"Foothill Loan Documents": means, collectively, (i)
the Revolving Loan Agreement, (ii) the "Loan Documents,"
as defined in the Revolving Loan Agreement, (iii) the Se-
cured Floating Rate Note Agreement, and (iv) the "Secured
Floating Rate Note Documents," as defined in the Secured
Floating Rate Note Agreement, each of the foregoing as in
effect on the date hereof.
"GAAP": generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determi-
nation; provided that calculations in connection with the
definitions, covenants and other provisions of this Agree-
ment shall utilize accounting principles and policies in
conformity with those used to prepare the financial state-
ments referred to in Section 4.1.
"GDC": General Development Corporation, a Delaware
corporation, under which name the Company was formerly
known.
"GDU": the Company's Subsidiary, General Development
Utilities, Inc., a Florida corporation.
"Governmental Authority": any nation or government,
any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regu-
latory or administrative functions of, or pertaining to,
government.
-8-<PAGE>
"Guarantee Obligation": as to any Person (the "guar-
anteeing person"), any obligation of (a) the guaranteeing
person or (b) another Person (including any bank under any
letter of credit) as to which the guaranteeing person has
issued a reimbursement, counter indemnity or similar obli-
gation, in either case guaranteeing or in effect guaran-
teeing any Indebtedness, leases, dividends or other obli-
gations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether di-
rectly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property con-
stituting direct or indirect security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of
any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or other-
wise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or ser-
vices primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; pro-
vided, however, that, as used herein, the term "Guarantee
Obligation" shall neither include endorsements of instru-
ments for deposit or collection in the ordinary course of
business, nor constitute Indebtedness. The amount of any
Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing person may
be liable pursuant to the terms of the instrument embody-
ing such Guarantee Obligation, unless such primary obliga-
tion and the maximum amount for which such guaranteeing
person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall
be such guaranteeing person's maximum reasonably antici-
pated liability in respect thereof as reasonably deter-
mined by the Company in good faith.
"Hazardous Materials": any hazardous materials, haz-
ardous wastes, hazardous constituents, hazardous or toxic
substances, petroleum products (including crude oil or any
fraction thereof), defined or regulated as such in or un-
der any Environmental Law.
"Homesite Contracts Receivable": all contracts for
deed, promissory notes, mortgages, deeds of trust and
other agreements, currently existing or hereafter created
-9-<PAGE>
or acquired, pursuant to which the Company or any Subsid-
iary has the right to receive payment in any form whatso-
ever for the sale of single-family homesites (excluding
Commercial Receivables), including any and all accounts,
contract rights, chattel paper, general intangibles and
unpaid seller's rights, relating to the foregoing or aris-
ing therefrom, reserves and credit balances arising there-
under and cash and non-cash proceeds of any and all of the
foregoing.
"Homesite Program": as defined in Article I of the
Reorganization Plan.
"Housing Inventory": as at any date, the amount that
would be set forth under "housing units completed or under
construction" or other similar entry in the notes to a
consolidated balance sheet of the Company and its Subsid-
iaries prepared at such date in accordance with GAAP.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other
than incurred in the ordinary course of business and pay-
able in accordance with customary practices) or which is
evidenced by a note, bond, debenture or similar instru-
ment, (b) all obligations (contingent or otherwise) of
such Person arising out of letters of credit issued for
the account or upon the application of such Person, (c)
all obligations of such Person under Financing Leases, (d)
all obligations of such Person in respect of acceptances
issued or created for the account of such Person, (e) all
liabilities secured by any Lien on any property owned by
such Person even though such Person may have not assumed
or otherwise become liable for the payment thereof, and
(f) the Unsecured Cash Flow Notes. As used herein, the
term "Indebtedness" shall not include Guarantee Obliga-
tions.
"Insolvency": with respect to any Multi-employer
Plan, the condition that such plan is insolvent within the
meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insol-
vency.
"Intellectual Property": as defined in Section 4.9.
"Intercreditor Agreement": that certain Intercredi-
tor Agreement dated as of June 23, 1997 by and between the
Obligee, the Collateral Agent, the lenders party to the
-10-<PAGE>
Foothill Loan Documents, and the collateral agents for
such lenders, in the form of Exhibit I-1, as such agree-
ment may be supplemented, amended or otherwise modified
from time to time.
"Interest Charges": means, with respect to any pe-
riod, the sum (without duplication) of the following
(eliminating all intercompany items required to be elimi-
nated in the course of preparing consolidated financial
statements for the Company and its Subsidiaries in ac-
cordance with GAAP) (a) all interest in respect of the
Indebtedness of the Company and its Subsidiaries (includ-
ing imputed interest on Financing Leases) deducted in de-
termining consolidated net income for such period and (b)
all debt discount and expense amortized or required to be
amortized in the determination of consolidated net income
for such period.
"Interest Charges Coverage Ratio": at any time, the
ratio of (a) Net Operating Cash Flow for the period of
four fiscal quarters ending on, or most recently ended
prior to, such time, taken as a whole, to (b) Interest
Charges for such period.
"Interest Payment Date": the last day of each calen-
dar month to occur while any obligation evidenced by the
Secured Instrument is outstanding.
"Investment Agreement": that certain Investment
Agreement of even date herewith by and between the Company
and the Obligee, providing among other things for the ex-
ecution and delivery of this Agreement and the issuance of
the Preferred Stock.
"Investments": any and all promissory notes, Capital
Stock (other than Subsidiary Stock), bonds, debentures and
securities, held by the Company or any Subsidiary, whether
now owned or hereafter acquired.
"Issuance Date": the date on or before June 24, 1997
upon which all of the conditions set forth in Section 5
have been met or waived by the Obligee in its sole discre-
tion and the Secured Instrument is issued.
"Joint Ventures": collectively, (a) the joint ven-
tures identified on Schedule 4.14(B), and (b) any other
partnership, joint venture, limited liability company, or
other entity in which a Subsidiary acquires, after the
date hereof and as permitted under Section 7.9(g) and
7.18, equity interests therein representing 50% or less of
-11-<PAGE>
such entity's contributed capital; and "Joint Venture"
means any one of them.
"Joint Venture Pledge Agreement": the Junior Joint
Venture Pledge Agreement in the form of Exhibit J-1, to be
executed by each of the Venture Subsidiaries and Collat-
eral Agent on or before the Issuance Date, as the same may
be amended, supplemented or otherwise modified from time
to time, pursuant to which the Venture Subsidiaries pledge
all of their right, title, and interest in and to the
Joint Ventures to Collateral Agent for the benefit of the
Obligee.
"JV Real Property": any and all real property and
fixtures and interests in real property and fixtures now
owned or hereafter acquired by any Joint Venture.
"JV Receivables": all contracts for deed, promissory
notes, mortgages, deeds of trust and other agreements,
currently existing or hereafter created or acquired, pur-
suant to which any Joint Venture has the right to receive
payment in any form whatsoever for the sale of JV Real
Property, and cash and non-cash proceeds of any and all of
the foregoing.
"Lien": any mortgage, security interest, pledge,
hypothecation, assignment, deposit arrangement, encum-
brance, lien (statutory or other), or preference, priority
or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any Financing
Lease having substantially the same economic effect as any
of the foregoing, and the filing of any financing state-
ment under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing).
"Material Adverse Effect": a material adverse effect
on (a) the business, operations, property, condition (fi-
nancial or otherwise) or prospects of (i) the Company and
its Subsidiaries taken as a whole or (ii) Special Purpose
Subsidiary, (b) the ability of the Company to perform its
obligations under this Agreement, the Secured Instrument,
the Security Documents, or the other Transaction Documents
or (c) the validity or enforceability of this Agreement,
the Secured Instrument, the Security Documents or the
other Transaction Documents or the rights or remedies of
Collateral Agent or the Obligee hereunder or thereunder.
"Maturity Date": December 31, 1998.
-12-<PAGE>
"Mortgages": the Junior Mortgage and Security Agree-
ments to be executed on or before the Issuance Date and
from time to time thereafter by the Company or a Subsid-
iary in favor of Collateral Agent, substantially in the
form of Exhibit B-1, as the same may be amended, supple-
mented or otherwise modified from time to time, pursuant
to which the Company and Subsidiaries grant a security
interest in the Real Property located in Florida (and in
such other jurisdictions where "mortgages" are used to
encumber real property) and related Personal Property of
the Company or Subsidiaries to Collateral Agent, for the
benefit of the Obligee, as required by this Agreement.
"Multi-employer Plan": a Plan which is a multi-
employer plan as defined in Section 4001(a)(3) of ERISA.
"Negative Shareholder Vote": the "Stockholders Ap-
proval" (as defined in the Investment Agreement) not hav-
ing been obtained by May 22, 1997.
"Net Cash Proceeds": with respect to any sale of
assets, all cash payments (including any cash received by
way of deferred payment pursuant to, or monetization of, a
note receivable or otherwise, but only as and when so re-
ceived) received from such sale net of bona fide direct
costs of sale.
"Net Cash Flow": with respect to any fiscal period
of a Person, on a consolidated basis, the actual consoli-
dated pre-tax net cash flow as determined on the basis set
forth in Schedule N-1.
"Net Operating Cash Flow": with respect to any Per-
son for any applicable fiscal period, the actual consoli-
dated pre-tax net operating cash flow as determined on the
basis set forth in Schedule N-2.
"Obligations": all obligations of every nature
(whether of payment, of performance or otherwise) of the
Company and the other Co-Makers from time to time owed to
the Obligee or Collateral Agent or either of them under
any Transaction Document, whether for principal, interest
(including interest accruing after the commencement of a
bankruptcy case, whether or not enforceable in such case),
repurchase or redemption obligations, dividend obliga-
tions, fees, costs, expenses, indemnification liabilities
or other obligations, of whatsoever nature and whether now
or hereafter made, incurred or created, whether absolute
or contingent, liquidated or unliquidated, regardless of
class, whether due or not due, and however arising.
-13-<PAGE>
"Obligee": the Obligee, as defined in the Preamble
to this Agreement, whether in its capacity as obligee
hereunder, holder of the Preferred Stock, payee of any
Secured Obligation, or otherwise, together with its
permitted successors and assigns.
"Official Unsecured Creditors Committee": the of-
ficial committee of creditors appointed by the United
States Trustee in the Reorganization Proceedings.
"Operating Account Bank": Sun Trust Bank, Miami,
N.A. or such other domestic commercial bank having capital
and surplus in excess of $500,000,000 reasonably satisfac-
tory to holders of the Foothill Debt.
"PBGC": the Pension Benefit Guarantee Corporation
established pursuant to Subtitle A of Title IV of ERISA or
any successor thereto.
"Permitted Sale Asset" has the meaning assigned that
term in Section 7.6.
"Person": an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or
other entity of whatever nature.
"Personal Property": the following personal property
of the Company or any Subsidiary (exclusive of Homesite
Contracts Receivable and Commercial Receivables of the
Company or any Subsidiary):
(a) the Bank Accounts;
(b) the Investments;
(c) any and all accounts, contract rights, chattel
paper, instruments and documents, including any right to
payment for goods sold or leased or services rendered,
whether now owned or hereafter acquired;
(d) any and all machinery, apparatus, equipment,
fittings, furniture, fixtures, motor vehicles and other
tangible personal property of every kind and description,
whether now owned or hereafter acquired, and wherever lo-
cated, and all parts, accessories and special tools and
replacements therefor;
-14-<PAGE>
(e) any and all general intangibles, whether now
owned or hereafter created or acquired, including all cho-
ses in action, causes of action, rights in and to any and
all Condemnation Awards, corporate or other business
records, deposit accounts, inventions, designs, patents,
patent applications, trademarks, trade names, trade se-
crets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, tax refund claims, computer
programs, any other Intellectual Property, all claims un-
der guarantees, security interests or other security to
secure payment of any accounts by an account debtor, all
rights to indemnification and all other intangible prop-
erty of every kind and nature, including (i) the inter-
ests, if any, of the Company or any Subsidiary in pay-
ments, proceeds, residuals and remainders from, or as a
beneficiary of, the Reserve Accounts, Claims Disbursement
Account, or other such accounts, (ii) any and all benefi-
cial interests in the trusts pursuant to which title to
the Trust Property is held and (iii) any and all other
proceeds or choses in action with respect to, or rights to
receive proceeds from, any condemnation of any Real Prop-
erty or Personal Property of the Company or any Subsid-
iary, whether now in existence or hereafter created or
acquired;
(f) any and all goods which are, or may at any time
be, goods held for sale or lease or furnished under con-
tracts of service or raw materials, work-in-process or
materials used or consumed in business, wheresoever lo-
cated and whether now owned or hereafter created or ac-
quired, including all such property the sale or other dis-
position of which has given rise to accounts and which has
been returned to or repossessed or stopped in transit;
(g) all monies, cash, residues and property of any
kind, now or at any time hereafter in the possession or
under the control of the Obligee or Collateral Agent or
any agent or bailee of the Obligee or Collateral Agent,
any holder of Foothill Debt or any agent therefor, or any
other person;
(h) all accessions to, all substitutions for, and
all replacements, products and proceeds of, the foregoing,
including proceeds of insurance policies insuring the
aforesaid property and documents covering the aforesaid
property, all property received wholly or partly in trade
or exchange for such property, and all rents, revenues,
issues, profits and proceeds arising from the sale, lease,
license, encumbrance, correction or any other temporary or
permanent disposition of such items or any interest
-15-<PAGE>
therein whether or not they constitute "proceeds" as de-
fined in the Uniform Commercial Code; and
(i) all books, records, documents and ledger re-
ceipts pertaining to any of the foregoing, including cus-
tomer lists, credit files, computer records, computer pro-
grams, storage media and computer software used or ac-
quired in connection with generating, processing and stor-
ing such books and records or otherwise used or acquired
in connection with documenting information pertaining to
the aforesaid property.
"Personal Property Security Agreement": the Junior
Personal Property Security Agreement in the form of Ex-
hibit P-1, to be executed on or before the Issuance Date
by the Company and the Subsidiaries now or hereafter party
thereto in favor of Collateral Agent, for the benefit of
the Obligee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Plan": at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the
Company or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Preferred Stock": the Cumulative Redeemable Con-
vertible Preferred Stock, Series A, liquidation preference
$1,000 per share, of the Company to be issued pursuant to
the Investment Agreement.
"Principal Raw Land": the parcels of Real Property
of the Company and its Subsidiaries identified on Schedule
P-1.
"Priority Claims": as defined in Article I of the
Reorganization Plan.
"Real Property": any and all real property and fix-
tures and interests in real property and fixtures, now
owned or hereafter acquired by the Company or any Subsid-
iary.
"Reorganization": with respect to any Multi-employer
Plan, the condition that such plan is in reorganization
within the meaning of Section 4241 of ERISA.
-16-<PAGE>
"Reorganization Plan": the Restated Second Amended
Joint Plan of Reorganization of General Development Corpo-
ration jointly proposed in the Reorganization Proceedings
by the Company and the Official Unsecured Creditors' Com-
mittee, filed on October 9, 1991, with the Clerk of the
Bankruptcy Court, as modified by Modification filed March
9, 1992, a copy of which is attached hereto as Exhibit
R-1.
"Reorganization Proceedings": the cases commenced on
April 6 and April 12, 1990 under Chapter 11 of Title 11 of
the United States Code in the Bankruptcy Court by GDC
(Case No. 90-12231-BKC-AJC), General Development Financial
Services, Inc. (Case No. 90-12232-BKC-AJC), General Devel-
opment Resorts, Inc. (Case No. 90-12233 BKC-AJC), Town &
Country II, Inc. (formerly Florida Residential Communi-
ties, Inc.) (Case No. 90-12234-BKC-AJC), Five Star Homes
Group, Inc. (Case No. 90-12235-BKC-AJC), Five Star Homes,
Inc. (Case No. 90-12338-BKC-AJC), GDV Financial Corpora-
tion (Case No. 90-12236-BKC-AJC) and Environmental Quality
Laboratory, Incorporated (Case No. 90-12237-BKC-AJC).
"Reportable Event": any of the events set forth in
Section 4043(b) of ERISA, other than those events as to
which the thirty-day notice period is waived under Subsec-
tions .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section
2615.
"Requirement of Law": as to any Person, the charter,
the certificate of incorporation and bylaws or other orga-
nizational or governing documents of such Person, and any
law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its property or to which such Person or any of its
property is subject.
"Reserve Accounts": the Disbursement Account (as
defined in Section 8.4 of the Reorganization Plan); the
Disputed Claims Reserve Account (as defined in Section 8.7
of the Reorganization Plan); any reserve of securities,
utility-satisfied lots, cash or other assets that is es-
tablished pursuant to the Reorganization Plan, the Homes-
ite Program, or any agreement resolving a claim of the
State of Florida in the Reorganization Proceedings, to
satisfy requests for utility service; and any reserve of
securities or cash established to fund road or other im-
provements pursuant to any agreement resolving a claim of
the State of Florida in the Reorganization Proceedings,
including, without limitation: the Division Class 14
Utility Fund Trust Agreement and the Improvement Fund
-17-<PAGE>
Trust Agreement, executed by and among the State of
Florida, Department of Business Regulation, Division of
Florida Land Sales, Condominiums and Mobile Homes, the
Company and the Trustee, the Class 14 Utility Fund Trust
Agreement and the Homesite Program Utility Fund Trust
Agreement executed by and between the Company and the
Trustee, the Class 14 Utility Lot Trust Agreement executed
by and between the Company and the Trustee, as described
in Section 7.6 of the Reorganization Plan, if any.
"Responsible Officer": the chief executive officer
and the president of the Company, or with respect to cor-
porate proceedings, the secretary or any assistant secre-
tary of the Company, or, with respect to financial mat-
ters, the chief financial officer or treasurer of the Com-
pany.
"Reverse Stock Split": the proposal to amend the
Company's restated certificate of incorporation to effect,
if subsequently determined by the Company's board of di-
rectors, a reverse stock split of the Company's outstand-
ing common stock as of 5:00 p.m. (Florida time) on the
effective date of the amendment (the "Reverse Split Effec-
tive Date"), pursuant to which each 100 shares or 200
shares (as determined by the Company's board of directors
in its discretion) then outstanding will be converted into
one share (the "Reverse Stock Split"), and to effect a
forward split of the Company's common stock as of 6:00
a.m. (Florida time) on the day following the Reverse Split
Effective Date, pursuant to which each share of common
stock then outstanding as of such date will be converted
into the number of shares of the Company's common stock
that each share represented immediately prior to the Re-
verse Split Effective Date, all as set forth in the Com-
pany's proxy statement dated April 22, 1996, provided that
the Obligee consents thereto in writing in its sole and
absolute discretion prior to the commencement thereof.
"Revolving Loan Agreement": the Second Amended and
Restated Revolving Loan Agreement dated as of September
30, 1996 by and among the Company, the Revolving Loan
Bank, and Foothill Capital Corporation, a California cor-
poration, as collateral agent for the Revolving Loan Bank,
pursuant to which the Revolving Loan Bank has agreed to
make certain loans to the Company, together with all
amendments, modifications, extensions, substitutions and
renewals thereof.
"Revolving Loan Bank": Foothill Capital Corporation,
a California corporation, and its successors and assigns.
-18-<PAGE>
"Revolving Loans": the Revolving Loans outstanding
from time to time under the Revolving Loan Agreement.
"Sale and Leaseback": any arrangement with any Per-
son providing for the leasing by the Company or any Sub-
sidiary of real or personal property which has been or is
to be sold or transferred by the Company or such Subsid-
iary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the se-
curity of such property or rental obligations of the Com-
pany or Subsidiary.
"Section 365(j) Property": the property now or here-
after made subject to substitute Liens in favor of Homes-
ite Purchasers (as defined in the Reorganization Plan)
pursuant to Section 5.2.2 of the Reorganization Plan.
"Secured Floating Rate Note Agreement": the Second
Amended and Restated Secured Floating Rate Note Agreement
dated as of September 30, 1996 among the parties to the
Revolving Loan Agreement, together with all amendments,
modifications, extensions, substitutions and renewals
thereof.
"Secured Floating Rate Notes": the notes issued pur-
suant to the Secured Floating Rate Note Agreement.
"Secured Instrument": the Secured Evidence of Joint
and Several Repurchase Obligation to be issued by the
Company and the Subsidiaries under this Agreement in the
form of Exhibit C-1, and any further or additional similar
secured instruments issued by the Company and/or the
Subsidiaries to the Obligee under this Agreement, as any
of them may from time to time be amended, supplemented,
modified, renewed, extended, restated, or replaced.
"Secured Instrument Documents": this Agreement, the
Secured Instrument, the Due Diligence Fee Agreement, the
Subsidiary Guaranty and the Security Documents.
"Secured Obligations": collectively, all Obligations
now or hereafter owed under this Agreement, or any other
Secured Instrument Document together with, after the
issuance of the Preferred Stock, all Obligations owed
pursuant to Section 8 of the Certificate of Designation
or, after the occurrence of an Event of Default, as
defined in the Certificate of Designation, pursuant to
Section 7.2 of the Investment Agreement.
-19-<PAGE>
"Security Agreements": the Personal Property Secu-
rity Agreement, the Deposit Account Security Agreement,
and any other security agreements, between the Company
and/or a Subsidiary and the Obligee or Collateral Agent,
as the same may be amended supplemented or otherwise
modified from time to time, pursuant to which the Company
and Subsidiaries assign and grant a security interest in
Homesite Contracts Receivables and Commercial Receivables
and Personal Property of the Company or Subsidiaries to
the Obligee or Collateral Agent, for the benefit of the
Obligee, as required by this Agreement.
"Security Documents": the Stock Pledge Agreement,
the Joint Venture Pledge Agreement, the Security Agree-
ments, the Mortgages, the Deed of Trust, the Assignments,
the Company Operating Account Control Agreement, the Spe-
cial Purpose Subsidiary Security Documents, any cash col-
lateral account agreements, and any and all other agree-
ments, instruments, documents, financing statements, as-
signments, notices, mortgages and other written matter
necessary or reasonably required by the Obligee or Collat-
eral Agent at any time to create, perfect, maintain or
continue the Obligee's and Collateral Agent's Lien in the
Collateral, together with all amendments, modifications,
extensions, substitutions and renewals thereof.
"Shareholders' Equity": as to any corporation, an
amount equal to the excess of the assets of such corpora-
tion over its liabilities (including minority interests),
determined in accordance with GAAP, and as shown on the
most recently prepared applicable balance sheet of such
corporation.
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multi-employer Plan.
"Special Purpose Subsidiary": collectively, a newly
formed special purpose Subsidiary directly wholly owned by
the Company and each Subsidiary of Special Purpose Subsid-
iary.
"Special Purpose Subsidiary Security Documents": the
Security Documents in favor of Obligee or Collateral Agent
encumbering Collateral owned by Special Purpose Subsid-
iary.
"SP Sub Collateral": as defined in the Intercreditor
Agreement.
"SPUD Subsidiary": as defined in Section 7.2(h).
-20-<PAGE>
"Stock Pledge Agreement": the Junior Stock Pledge
Agreement, in the form of Exhibit S-1, to be executed on
or before the Issuance Date among the Company, each of its
Subsidiaries and Collateral Agent, as the same may be
amended, supplemented or otherwise modified from time to
time, pursuant to which the Company and Subsidiaries
pledge Subsidiary Stock to Collateral Agent for the ben-
efit of the Obligee.
"Subsidiary": as to any Person, a corporation, part-
nership, trust (exclusive of any trust created in connec-
tion with a Reserve Account) or other entity of which
shares of stock, partnership interests, beneficial inter-
ests or other ownership interests having ordinary voting
power (other than stock or such other ownership interests
having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors
or other managers of such corporation, partnership, trust
(exclusive of any trust created in connection with a Re-
serve Account) or other entity are at the time owned, or
the management of which is otherwise controlled, directly
or indirectly, through one or more intermediaries, or
both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of
the Company. Unless otherwise indicated, all references
to a Subsidiary or Subsidiaries of the Company (a) shall
not mean, include, or refer to the Unrestricted Subsidiar-
ies or the Joint Ventures, and (b) shall mean, include and
refer to Special Purpose Subsidiary.
"Subsidiary Guaranty": the Subsidiary Guaranty, in
the form of Exhibit S-2, to be executed by each Subsidiary
created or acquired after July 1, 1997 by the Company or
any Subsidiary, including unless Obligee shall consent
otherwise each such newly formed or newly acquired
Unrestricted Subsidiary or Special Purpose Subsidiary, in
favor of Collateral Agent, for the benefit of the Obligee,
as the same may be amended, supplemented or otherwise
modified from time to time.
"Subsidiary Property Under Development": collec-
tively, the Real Property of any Subsidiary which is ac-
quired for the purpose of being developed, or which is in
the process of being improved or developed, either by the
construction of roads, curb cuts, sewer and water facili-
ties or other improvements, or by the construction of
residential units and appurtenances thereto.
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"Subsidiary Stock": the Capital Stock of any and all
Subsidiaries (including the Unrestricted Subsidiaries).
"Tax Servicing Contracts": collectively, the tax
servicing contracts required to be delivered under the
Foothill Loan Documents, and all amendments, modifica-
tions, extensions, substitutions and renewals thereof.
"Total Real Property": collectively, the Real Prop-
erty and the JV Real Property.
"Total Unsecured Claims": as defined in Article I of
the Reorganization Plan.
"Transaction Documents": the Secured Instrument
Documents, the Intercreditor Agreement, the Investment
Agreement, the Preferred Stock, the Warrants, the
Certificate of Designation relating to the Preferred
Stock, and each exhibit, schedule, certificate and
document to be executed or delivered pursuant hereto or
thereto, each as from time to time amended, supplemented
or otherwise modified.
"Trust Property": the real property held in trust
pursuant to (a) Trust Agreement No. 06-01-009-6082101,
dated as of January 17, 1991, by and between NCNB National
Bank of Florida, as Trustee for the benefit of the Com-
pany, the Beneficiary, (b) Trust Agreement No. 06-01-009-
6081954, dated as of January 17, 1991, by and between NCNB
National Bank of Florida, as Trustee for the benefit of
the Company, the Beneficiary, (c) Trust Agreement No. 06-
01-009-6082655, dated as of January 17, 1991, by and be-
tween NCNB National Bank of Florida, as Trustee for the
benefit of the Company and General Development Financial
Services, Inc., the Beneficiaries, and (d) Trust Agreement
No. 2, dated as of May 31, 1991, by and between Jake
Gamble, Esquire, as successor Trustee for the benefit of
the Company and Cumberland Cove, Inc., the Beneficiaries.
"Unrestricted Subsidiaries": collectively, (a) the
direct or indirect subsidiaries of the Company listed on
Schedule U-1, and (b) any other direct or indirect subsid-
iary of the Company that is formed or acquired after the
date hereof, that does not have or make any investment in
any Joint Venture (nor was formed or acquired for the pur-
pose of having or making any such investment), and that
the Obligee agrees in writing shall constitute an Unre-
stricted Subsidiary under and for all purposes of this
Agreement and the other Loan Documents, upon which Sched-
ule U-1 automatically shall be deemed to be amended to
-22-<PAGE>
reflect the inclusion on such schedule of such new Unre-
stricted Subsidiary; and "Unrestricted Subsidiary" means
any one of them.
"Unsecured Cash Flow Notes": the "New Unsecured Cash
Flow Notes," as defined in Article I of the Reorganization
Plan.
"Unsold Housing Inventory": as at any date, all
Housing Inventory applicable to Unsold Residential Dwell-
ing Units.
"Unsold Residential Dwelling Units": single-family
dwelling units (whether detached or included within a
townhouse, villa or cluster containing more than one such
unit) or condominium units (excluding timeshare units)
completed or under construction by the Company or any Sub-
sidiary that are not subject to a contract for sale to any
third-party purchaser.
"Venture Subsidiaries": collectively, (a) the direct
or indirect subsidiaries of the Company listed on Schedule
V-1, and (b) any other direct or indirect subsidiary of
the Company that is formed or acquired after the date
hereof, that has or makes any investment in any Joint
Venture, and that the Obligee agrees in writing shall con-
stitute a Venture Subsidiary under and for all purposes of
this Agreement and the other Loan Documents, upon which
Schedule V-1 automatically shall be deemed to be amended
to reflect the inclusion on such schedule of such new
Venture Subsidiary; and "Venture Subsidiary" means any one
of them.
"Warrants": as defined in the Investment Agreement.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms
defined in this Agreement shall have such defined meanings when
used in the Secured Instrument or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in the Secured Instrument,
and any certificate or other document made or delivered
pursuant hereto, accounting terms relating to the Company and
its Subsidiaries not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP.
-23-<PAGE>
(c) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provi-
sion of this Agreement, and Section, Subsection, Schedule and
Exhibit references are to this Agreement unless otherwise spec-
ified.
(d) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of
such terms.
(e) References to "Sections", "subsections", Exhib-
its and Schedules are to Sections, Sections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise
specifically provided.
(f) Unless the context of this Agreement clearly
requires otherwise, the term "including" is not limiting.
(g) Except as may be expressly specified otherwise
herein, each reference to an agreement or instrument amended,
supplemented or otherwise modified from time to time means such
agreement or instrument as amended, supplemented or modified in
accordance with the terms hereof and thereof and the Inter-
creditor Agreement, if applicable.
(h) Each reference herein to a Security Document
shall mean, collectively, unless otherwise specified, such Se-
curity Document as executed by Foothill Capital Corporation or
its successors as Collateral Agent with respect to Collateral
other than SP Sub Collateral and such Security Document as ex-
ecuted by The Bank of New York or its successors as Collateral
Agent with respect to SP Sub Collateral.
SECTION 2. ISSUANCE AND TERMS OF SECURED INSTRUMENT
2.1 Secured Instrument. The Obligee hereby agrees that
on the Issuance Date, subject to the terms and conditions set
forth herein, the Company and the Subsidiaries shall execute
and deliver to the Obligee the Secured Instrument. If the
Obligee is making a loan hereunder to the Company and the
Subsidiaries on the Issuance Date: the original outstanding
principal amount of the Secured Instrument shall be the
principal amount of such loan as specified by the Company, up
to $10,000,000; there shall be only one borrowing hereunder;
and if such loan is less than $10,000,000 the Obligee's commit-
ment shall terminate with respect to any remaining portion of
such $10,000,000. If no loan is made hereunder prior to the
-24-<PAGE>
issuance of Preferred Stock pursuant to the Investment Agree-
ment, on the Issuance Date: there shall be no borrowings here-
under and the Secured Instrument shall evidence the joint and
several obligation of the Company and the other Co-Makers to
repurchase Preferred Stock under Section 8 of the Certificate
of Designation and pay all other Secured Obligations, all of
which shall be secured by the Security Documents.
2.2 Payment of Secured Instrument. (A) If the Obligee
has made a loan hereunder to the Company and the Subsidiaries
on the Issuance Date, the following provisions shall be
applicable: The then outstanding principal amount of the
Secured Instrument shall be due and payable, and shall be paid
in full by the Company and the Subsidiaries, on the Maturity
Date. In addition: (a) a principal installment in an amount
designated in writing by the Obligee in its sole discretion to
the Company on or before December 2, 1997, not to exceed the
lesser of (x) the outstanding amount due under the Secured
Instrument and (y) $5,000,000, shall be due with respect to the
Secured Instrument on December 31, 1997, provided that if the
Obligee shall fail to designate any amount by such date, the
amount of such installment shall be the lesser of (x) the out-
standing amount due under the Secured Instrument and (y)
$5,000,000, and (b) in the event of any acceleration of the
maturity of any of the principal of the Secured Instrument
pursuant to the provisions of Section 8 hereof or pursuant to
the terms of the Secured Instrument, such accelerated principal
shall be immediately due and payable. The principal of the
Secured Instrument may be prepaid in whole or in part, from
time to time, without premium or penalty. On any date that any
principal is due and payable hereunder, anything herein to the
contrary notwithstanding, all accrued and unpaid interest with
respect to such principal likewise shall be due and payable on
such date.
(B) If no loan is made hereunder prior to the issu-
ance of the Preferred Stock pursuant to the Investment Agree-
ment, the obligations evidenced by the Secured Instrument shall
be due and payable in accordance with the terms of the relevant
Transaction Document.
2.3 Conversion of Secured Instrument into Preferred
Stock. If the Obligee has made a loan hereunder to the Company
and the Subsidiaries on the Issuance Date, the following
provisions shall be applicable: The outstanding principal
amount of the Secured Instrument shall be convertible into
Preferred Stock on the terms and subject to the conditions set
forth in the Investment Agreement. All interest and other
amounts (other than principal) theretofore accrued and owing
hereunder or under the Due Diligence Fee Agreement shall be
-25-<PAGE>
paid in full prior to or concurrent with such conversion. If
the Secured Instrument is converted into Preferred Stock and
the Obligee purchases additional Preferred Stock as set forth
in the Investment Agreement, the Company will be obligated to
repurchase all such Preferred Stock on the happening of
certain conditions set forth in the Certificate of Designation.
From and after such conversion of the Secured Instrument into
Preferred Stock, the Secured Instrument shall no longer
evidence an indebtedness for borrowed money, and
notwithstanding anything herein to the contrary the term
Secured Obligations as used in this Agreement and each other
Transaction Document shall not mean or include any indebtedness
for principal or interest, but the Secured Instrument shall
remain in full force and effect to evidence the obligation of
the Company to repurchase all such Preferred Stock under
Section 8 of the Certificate of Designation and pay all other
Secured Obligations then outstanding and the joint and several
obligation of each and every Subsidiary to pay the Secured
Obligations then outstanding, all of which shall continue to be
secured by the Security Documents.
2.4 Interest Rates and Interest Payment Dates.
(a) From and after the Issuance Date, subject to
Sections 2.4(b) and 2.10, as well before as after judgment, the
outstanding principal amount of any loan made hereunder by the
Obligee on the Issuance Date at all times shall bear interest
at a rate per annum equal to twenty percent (20%).
(b) Section 2.4(a) notwithstanding, but subject to
Section 2.10, from and after the occurrence and during the con-
tinuance of an Event of Default and in any event at all times
after a Negative Shareholder Vote, all amounts due hereunder
and not paid when due shall bear interest at a per annum rate,
as well before as after judgment, equal to twenty-three percent
(23%) (the "Default Rate").
(c) Interest on the outstanding principal amount of
any loan made hereunder by the Obligee on the Issuance Date
shall be payable in arrears on each Interest Payment Date, pro-
vided that from and after the occurrence and during the con-
tinuance of an Event of Default interest accruing pursuant to
paragraph (b) of this Section 2.4 also shall be payable on de-
mand.
2.5 Computation of Interest and Fees.
(a) Interest and fees shall be calculated on the
basis of a 360-day year for the actual days elapsed.
-26-<PAGE>
(b) Each determination of an interest rate by the
Obligee pursuant to any provision of this Agreement shall be
conclusive and binding in the absence of manifest error.
2.6 Pro Rata Treatment and Payments. If the Secured
Instrument is replaced with multiple Secured Instruments
pursuant to Section 10.6, each payment (including each
prepayment) by the Company on account of such Secured
Instruments shall be made pro rata according to the respective
outstanding amounts of the Secured Instruments. All payments
(including prepayments) to be made by the Company hereunder and
under the Secured Instruments shall be made without setoff or
counterclaim and shall be made prior to noon, New York City
time, on the due date thereof, in Dollars and in immediately
available funds to the following account: FBO: Apollo Real
Estate Investment Fund II, L.P.-Operating Money Market Account,
Chase Manhattan Bank, 380 Madison Avenue, ABA #: 021-000-021,
Account #: 230-211755, or to such other account as Obligee may
specify in writing. If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with re-
spect to payments of principal, interest thereon shall be pay-
able at then-applicable rate during such extension.
2.7 Taxes. Any Obligee that is not organized under the
laws of the United States of America or a state thereof agrees
that it will deliver to the Company and the Obligee (a) two
duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may
be, and (b) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form. Each such Obligee also agrees to
deliver to the Company two further copies of the said Form 1001
or 4224 and Form W-8 or W-9, or successor applicable forms or
other manner of certification, as the case may be, on or before
the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the
most recent form previously delivered by it to the Company, and
such extensions or renewals thereof as may reasonably be
requested by the Company, unless in any such case any change in
treaty, law or regulation has occurred prior to the date on
which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent such
Obligee from duly completing and delivering any such form with
respect to it and such the Obligee so advises the Company and
any other Obligees. Such Obligee shall certify (a) in the case
of a Form 1001 or 4224, that it is entitled to receive payments
under this Agreement without deduction or withholding of any
United States federal income taxes, and (b) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax.
-27-<PAGE>
2.8 Use of Proceeds. The proceeds of any loan made by
the Obligee hereunder shall be used only for the lawful and
permitted corporate purposes relating to the Company's domestic
business specified pursuant to Section 5.1(z). The proceeds of
the issuance of Preferred Stock shall be used as specified in
the Investment Agreement.
2.9 Fees. The Company shall pay (a) to the Collateral
Agent such fees as may be required under any agreement between
the Company and the Collateral Agent with respect to compensa-
tion of the Collateral Agent in respect of its services, and
(b) to each other person or entity to whom the Company has
agreed to pay a fee in connection with this Agreement or the
other Transaction Documents and the transactions contemplated
hereby or thereby, such fees as may be required under such
agreement; provided in each case that such agreement has been
approved by the Obligee.
2.10 Maximum Interest Rate. Nothing contained in this
Agreement, the Secured Instrument or any other Transaction
Document shall require the Company or the Subsidiaries to pay
interest at a rate exceeding the maximum rate permitted by
applicable law. If the amount of interest paid or payable on
any date, computed pursuant to applicable law and the
Transaction Documents, would exceed the maximum amount
permitted by applicable law to be charged, the amount of
interest paid or payable on such date shall be automatically
reduced to such maximum permissible amount and the excess
applied to principal or, if no principal shall be outstanding
and such amount has been paid, returned to the payor. If the
amount of interest payable to the Obligee in respect of any
interest computation period is reduced pursuant to the
preceding sentence of this Section and the amount of interest
payable for its account in respect of any subsequent interest
computation period, computed pursuant to applicable law and the
Transaction Documents, would be less than the maximum amount
permitted by applicable law to be charged, then the amount of
interest payable to the Obligee in respect of such subsequent
interest computation period shall be automatically increased to
such maximum permissible amount; provided that at no time shall
the aggregate amount by which interest paid had been increased
pursuant to this sentence exceed the aggregate amount by which
interest has theretofore been reduced pursuant to the preceding
sentence of this Section.
SECTION 3. COLLATERAL
3.1 Liens in Subsidiary Stock, Contract Receivables, Real
Property and Personal Property. To secure the prompt payment
of the Secured Obligations, together with all costs, expenses,
-28-<PAGE>
fees and other obligations payable by the Company or the Sub-
sidiaries hereunder or under any Transaction Document with re-
spect to the Secured Obligations, on or before the Issuance
Date the Company shall grant, and shall cause each Subsidiary
to grant, to Collateral Agent a continuing Lien, junior to the
Lien created by, and securing the obligations of the Company
and Subsidiaries under, the Foothill Loan Documents with re-
spect to property of the Company and the Subsidiaries other
than the SP Sub Collateral and senior to the Lien created by,
and securing the obligations of the Company and Subsidiaries
under, the Foothill Loan Documents with respect to SP Sub Col-
lateral, in and to all of the following property and interests
in property of the Company and the Subsidiaries, except the
Excluded Property, whether now owned or existing or hereafter
acquired or arising, or in which the Company and the Subsidiar-
ies now or hereafter have any rights, and wheresoever located,
and all proceeds thereof ("Collateral"):
(a) the Subsidiary Stock;
(b) the Homesite Contracts Receivable;
(c) the Commercial Receivables;
(d) the Real Property; and
(e) the Personal Property.
At such times as any Excluded Property is freed of contractual
or legal restrictions against becoming subject to a Lien to
secure the Secured Obligations or upon the distribution of any
Trust Property to the Company or a Subsidiary (including an
Unrestricted Subsidiary or Joint Venture), such property shall,
automatically, become subject to the Liens created by the Secu-
rity Documents, and the Company shall notify the Obligee in
writing of such event and take such further actions as may be
required by the Obligee and/or Collateral Agent to evidence and
perfect such Liens; provided that, in no event, shall a Lien be
granted on any assets required to be placed in a Reserve Ac-
count pursuant to the Reorganization Plan or the Homesite Pro-
gram.
3.2 Security Documents. To evidence and perfect the
Liens of the Obligee and Collateral Agent in the Collateral in
accordance with applicable law, on or before the Issuance Date
the Company shall execute and deliver and will cause the Sub-
sidiaries to execute and deliver, to Collateral Agent the Secu-
rity Documents, which Security Documents will be delivered to
the Obligee and filed and recorded, and the Company will de-
liver, and shall cause the Subsidiaries to deliver (or, if such
-29-<PAGE>
Collateral shall be in the possession of the collateral agent
for the holders of the Foothill Debt, shall cause such agent to
acknowledge that it is holding such Collateral for the benefit
of the Obligee as well as the holders of the Foothill Debt) to
Collateral Agent any Collateral if the perfection of a Lien
against such Collateral requires possession thereof for pur-
poses of perfecting such Liens, all at the cost and expense of
the Company. Specifically, but without limiting the generality
of the foregoing, on or before the Issuance Date the Company
will do, and will cause the Subsidiaries to do, the following,
in the case of property of the Company and the Subsidiaries
other than the SP Sub Collateral subject to the senior and
prior Liens created by, and securing the obligations of the
Company and Subsidiaries under, the Foothill Loan Documents and
in the case of the SP Sub Collateral senior and prior to the
Liens created by, and securing the obligations of the Company
and Subsidiaries under, the Foothill Loan Documents:
(a) Stock Pledge. To evidence and perfect the Liens
of Collateral Agent in the Subsidiary Stock, the Company and
the Subsidiaries owning other Subsidiaries or Unrestricted Sub-
sidiaries shall execute and deliver the Stock Pledge Agreement
and will execute and deliver related undated stock powers ex-
ecuted in blank by the Company and shall deliver all original
certificates representing the Subsidiary Stock to Collateral
Agent and will cause all issuers of Subsidiary Stock to execute
and deliver pledge acknowledgments pursuant to the Stock Pledge
Agreement.
(b) Homesite Contracts Receivables and Commercial
Receivables. To evidence and perfect the Liens of Collateral
Agent in the Homesite Contracts Receivable and Commercial Re-
ceivables, the Company and the Subsidiaries will execute and
deliver to Collateral Agent the Security Agreements, together
with related financing statements, which will be filed and re-
corded in accordance with applicable law, and the Company and
Subsidiaries shall duly endorse any and all promissory notes
included in the Homesite Contracts Receivable and Commercial
Receivables to the order of Collateral Agent and shall deliver
such promissory notes and the related mortgages or deeds of
trust to Collateral Agent or its designee, and shall execute
and deliver assignments of promissory notes and mortgages or
deeds of trust, filed and recorded in accordance with appli-
cable law, and, as to Commercial Receivables acquired following
March 31, 1992, accompanied by ALTA title insurance policies
naming Collateral Agent as the insured mortgagee thereunder.
(c) Real Property. To evidence and perfect the
Liens of Collateral Agent in the Real Property, the Company
shall execute and deliver to Collateral Agent the Mortgages,
-30-<PAGE>
and the Subsidiaries shall execute and deliver to Collateral
Agent the Mortgages and Deed of Trust, as applicable, and re-
lated financing statements encumbering such Real Property,
which will be filed and recorded in accordance with applicable
law, accompanied by ALTA title insurance policies insuring the
Obligee's Lien represented thereby, and, if requested by the
Obligee, surveys of such Real Property.
(d) Joint Venture Pledge. To evidence and perfect
the Liens of Collateral Agent in the interests of the Venture
Subsidiaries in the Joint Ventures, the Company will cause the
Venture Subsidiaries to execute and deliver the Joint Venture
Pledge Agreement and all requisite consents in respect of such
Liens.
(e) Personal Property. To evidence and perfect the
Liens of Collateral Agent in the Personal Property, the Company
and Subsidiaries shall execute and deliver to Collateral Agent
the Security Agreements, together with related financing state-
ments, which have been or will be filed and recorded in ac-
cordance with applicable law, and, to the extent that the Per-
sonal Property comprises Investments or Bank Accounts, the Com-
pany and Subsidiaries shall take the following actions:
(i) with respect to any Investment or Bank Ac-
count which is or becomes evidenced by an agreement, in-
strument, certificate or document, including promissory
notes, stock certificates, bonds, debentures, securities
and certificates of deposit, the Company shall from time
to time deliver, or shall from time to time cause such
Subsidiary to deliver, the original thereof to the Col-
lateral Agent, together with appropriate assignments and
endorsements or other specific evidence of assignment
thereof to the Collateral Agent, in form and substance
acceptable to the Collateral Agent;
(ii) with respect to any Investment or Bank Ac-
count which is not certificated or otherwise evidenced as
described in clause (i) above, including uncertificated
securities and depository and other accounts maintained
with financial institutions and any other Persons, the
Company shall notify the Obligee thereof and take, or
cause such Subsidiary to take, any and all steps which are
required by the Obligee for purposes of perfecting the
Collateral Agent's Lien therein;
(iii) the Company shall keep the Obligee informed
of any and all Bank Accounts maintained by the Company or
any such Subsidiary with any financial institution or
other Person and, if requested by the Obligee, the Company
-31-<PAGE>
or any such Subsidiary shall execute a cash collateral
account agreement in form and substance satisfactory to
the Obligee, pursuant to which the Lien of Collateral
Agent in such Bank Accounts is perfected and preserved;
and
(iv) if deemed by the Obligee, in its sole dis-
cretion, to be necessary for purposes of perfecting the
Lien of the Collateral Agent in any Bank Account, the Com-
pany shall transfer to and maintain in a cash collateral
account, and shall cause the Subsidiaries to transfer to
and maintain in a cash collateral account, the funds in
each such Bank Account and, if deemed necessary by the
Obligee, shall execute and cause any such Subsidiary to
execute a cash collateral account agreement in form and
substance reasonably satisfactory to Collateral Agent,
pursuant to which the Lien of Collateral Agent in such
Bank Account shall be perfected and preserved; provided,
however, the Company shall not be required to deposit the
residual, remainder or beneficial interest of the Company
and any such Subsidiary in the Reserve Accounts, the
Claims Disbursement Accounts and other escrow, restricted,
custodial and fiduciary accounts until such time as all
amounts required to be disbursed to the intended benefi-
ciaries thereof have been disbursed and the residual or
remainder is available to the Company and its Subsidiaries
for deposit in an unrestricted account.
(f) Additional Acts. The Company shall, and shall
cause the Subsidiaries to, take all actions and execute all
documents deemed necessary by the Obligee or Collateral Agent
to ensure that, upon the issuance of the Secured Instrument,
the Obligee or Collateral Agent, for the benefit of the
Obligee, shall have a security interest in the Collateral
granted by the Security Documents (a) junior only to the Liens
thereon established under the Foothill Loan Documents in the
case of Collateral other than SP Sub Collateral and (b) senior
to all Liens thereon, including the Liens thereon established
under the Foothill Loan Documents, in the case of SP Sub
Collateral. If the perfection or recordation of Collateral
Agent's Lien or the Lien of the Obligee pursuant hereto upon
any Collateral acquired hereafter by the Company or any
Subsidiary requires any additional act of possession or filing
or recordation of any Security Document, the Company shall
notify the Obligee of the acquisition of such Collateral and,
at the Obligee's request, the Company shall execute and deliver
and shall cause the Subsidiaries to execute and deliver such
Security Documents for filing or recordation and deliver such
items of Collateral as Collateral Agent or the Obligee may
reasonably request for purposes thereof and the Company shall
-32-<PAGE>
pay the cost of preparing any such Security Documents and the
filing and recordation thereof. Without limiting the
generality of the foregoing, the Company agrees to, and to
cause each Subsidiary (other than with respect to property re-
quired to be released pursuant to Section 3.6) to notify the
Obligee upon the acquisition of any Real Property acquired
after the date hereof, except as provided by Section 3.6, and
upon request of the Obligee, to provide to the Obligee an
appraisal and an environmental report (each in form and
substance satisfactory to the Obligee) covering such property,
and to cause such Real Property to be subjected to a Mortgage
or Deed of Trust in favor of Collateral Agent for the benefit
of Obligee. With respect to any such Mortgages or Deed of
Trust, the Company or such Subsidiary shall deliver to the
Obligee the following, all in form and substance satisfactory
to the Obligee: (i) executed Mortgages or Deed of Trust and
financing statements encumbering such property and (ii) ALTA
lenders' extended coverage policies of title insurance on such
property, in liability, amount and form and issued by a title
company satisfactory to the Obligee showing the Mortgage or
Deed of Trust as a perfected lien upon the property, subject
only to Liens permitted pursuant to Section 7.3 and such other
exceptions as may be approved by the Obligee in writing,
together with endorsements reasonably required by the Obligee
and affirmative assurances that the improvements are wholly
located within the boundaries of the insured land.
3.3 Section 365(j) Property. Pursuant to the Reorganiza-
tion Plan and the Confirmation Order, the Company has desig-
nated the property which comprises the Section 365(j) Property,
which property, at the time of execution of the mortgage encum-
bering the Section 365(j) Property in favor of the trustee for
the holders of Section 365(j) Liens, had a value, as appraised
pursuant to the Company's land plan book dated May, 1991, no
greater than 120% of the value of the Section 365(j) Liens es-
tablished pursuant to the Reorganization Plan. The Liens
granted to Collateral Agent pursuant hereto in the Section
365(j) Property are subordinate to the Liens of the Section
365(j) Liens and Collateral Agent shall not be permitted to
exercise its rights or remedies of foreclosure against such
property or exercise any other rights with respect to such
property until such time as the Section 365(j) Liens have been
satisfied or have been transferred to other property acceptable
to the Bankruptcy Court.
3.4 [intentionally omitted]
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3.5 Subordinations and Releases of Mortgage and Related
Personal Property Liens.
(a) [intentionally omitted]
(b) Except with respect to SP Sub Collateral, at
such times as Liens are granted by the Company or any Subsid-
iary, as permitted pursuant to Section 7.3(n), so long as no
Default or Event of Default has occurred and is continuing or
would result therefrom, and provided the Obligee has received a
certificate of a Responsible Officer certifying and demonstrat-
ing that all of the conditions set forth in Section 7.3(n) have
been satisfied, the Obligee shall instruct Collateral Agent to
and Collateral Agent shall execute documentation subordinating
the Lien of the Mortgages to such Liens, in form and substance
satisfactory to the Obligee and Collateral Agent, unless such
Real Property qualifies for the release provisions in Section
3.5(c), in which event the provisions of Section 3.5(c) shall
apply.
(c) Except with respect to SP Sub Collateral, at
such time as Liens are granted by any Subsidiary, as permitted
by Section 7.3(n), so long as no Default or Event of Default
has occurred and is continuing or would result therefrom, and
provided the Obligee has received a certificate of a
Responsible Officer certifying and demonstrating that all of
the conditions set forth in Section 7.3(n) have been satisfied,
the Obligee shall instruct Collateral Agent to and Collateral
Agent shall release the Lien of the Mortgages on any Subsidiary
Property Under Development if (i)(x) such Real Property is
financed under the acquisition and project financing provisions
of Sections 7.2(f) or 7.2(j), and (y) the terms of such
financing prohibit subordinate Liens upon such Real Property,
or (ii) such Real Property is contributed by the Company to a
Subsidiary pursuant to Section 7.8(g). The Company shall use
reasonable efforts to cause any lender/seller providing the
acquisition and/or project financing on Subsidiary Property
Under Development to permit the subordination of Collateral
Agent's Liens on such Subsidiary Property Under Development,
and thereby to eliminate the need for Collateral Agent to
release its Liens on such Subsidiary Property Under
Development. In connection with the release of any Liens on
Subsidiary Property Under Development pursuant to this Section
3.5(c), upon the request of the Company, the Obligee shall
instruct Collateral Agent to, and Collateral Agent shall, re-
lease any Liens upon any Personal Property related to, and in-
tegral to the use of, the Real Property being released; pro-
vided that the Company provides a detailed list of such Per-
sonal Property to be released in form and substance satisfac-
tory to the Obligee. If such lender/seller will permit such
-34-<PAGE>
subordination, then, notwithstanding the foregoing provisions
of this Section 3.5(c), Collateral Agents's Liens on such
Subsidiary Property Under Development will not be released and
will become subordinate Liens pursuant to documentation in form
and substance satisfactory to the Obligee.
(d) [intentionally omitted]
3.6 Subsidiary Guaranties. The Company shall not create
or acquire any Subsidiary after the date hereof and prior to
July 1, 1997. The Company shall cause any entity becoming a
Subsidiary after July 1, 1997 to execute and deliver guarantees
in the form of the Subsidiary Guaranties and counterparts of
the Transaction Documents to which Subsidiaries of the Company
are parties (other than the Secured Instrument, the Secured
Agreement and the initial Mortgages recorded in Florida), and
to take all such steps as shall be necessary to create in favor
of the Collateral Agent duly perfected and recorded Liens
securing the Secured Obligations including by executing and
delivering additional Security Documents in substantially the
form of the Security Documents. In the case of any subsequent
Florida Mortgages executed by such subsequent Subsidiaries to
secure their obligations under the Subsidiary Guaranties, the
amount of recovery under such subsequent Mortgages shall be
limited to an amount not greater than the value of the
respective additional mortgaged property.
3.7 Special Purpose Subsidiary. Without the express
prior written consent of Obligee, Special Purpose Subsidiary
shall not, and the Company shall not permit Special Purpose
Subsidiary (which term, as used in this Agreement, includes
Special Purpose Subsidiary and its Subsidiaries) to, directly
or indirectly:
(a) create, incur, assume or suffer to exist any
Indebtedness, other than Indebtedness under the
Transaction Documents and, on a basis subordi-
nate to the Indebtedness under the Transaction
Documents consistent with the Intercreditor
Agreement, Indebtedness permitted by Section
7.2(b);
(b) create, incur, assume or suffer to exist any
Lien upon the Capital Stock of Special Purpose
Subsidiary or upon any of the property, assets
or revenues of Special Purpose Subsidiary,
whether now owned or hereafter acquired, other
than Liens under the Transaction Documents and,
on a basis subordinate to the Indebtedness under
the Transaction Documents consistent with the
-35-<PAGE>
Intercreditor Agreement, Liens securing Indebt-
edness permitted by Section 7.2(b);
(c) create, incur, assume or suffer to exist any
Guarantee Obligation, other than Guarantee Obli-
gations under the Transaction Documents and, on
a basis subordinate to the Guarantee Obligations
under the Transaction Documents consistent with
the Intercreditor Agreement, Guarantee Obliga-
tions in respect of Indebtedness permitted by
Section 7.2(b);
(d) except to the extent such merger, consolidation
or amalgamation is of a Subsidiary of Special
Purpose Subsidiary with and into Special Purpose
Subsidiary, or between or among wholly owned
Subsidiaries of Special Purpose Subsidiary, en-
ter into any merger, consolidation or amalgam-
ation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or
convey, sell, lease, assign, transfer or other-
wise dispose of, all or substantially all of its
property, business or assets;
(e) except as expressly approved by the Board of
Directors of the Company in connection with a
Board-approved real estate development project,
convey, sell, lease, assign, transfer or other-
wise dispose of any of its property, business or
assets (including receivables and leasehold in-
terests), whether now owned or hereafter ac-
quired;
(f) declare or pay any dividend on, or make any pay-
ment on account of, or set apart assets for a
sinking or other analogous fund for, the pur-
chase, redemption, defeasance, retirement or
other acquisition of any Capital Stock of the
Company other than the Preferred Stock, whether
now or hereafter outstanding, or make any other
distributions in respect thereof, either di-
rectly or indirectly, whether in cash or prop-
erty or in obligations of Special Purpose Sub-
sidiary, except for dividends declared and paid
by any Subsidiary of Special Purpose Subsidiary
to Special Purpose Subsidiary or any Subsidiary
of Special Purpose Subsidiary and except as per-
mitted by Section 6.14(d)(iii) or (d)(iv) of the
Investment Agreement;
-36-<PAGE>
(g) except as expressly approved by the Board of
Directors of the Company in connection with a
Board-approved real estate development project,
make, or enter into any agreement the perfor-
mance of the terms of which would require Spe-
cial Purpose Subsidiary to make (by way of the
acquisition of securities of a Person or other-
wise), any expenditures in respect of the pur-
chase or other acquisition of fixed or capital
assets;
(h) except as expressly approved by the Board of
Directors of the Company in connection with a
Board-approved real estate development project,
make any advance, loan, extension of credit or
capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of
or any assets constituting a business unit of,
or make any other Investment in, any Person;
(i) make any optional payment or optional prepayment
on, or optional redemption of, or purchase or
otherwise acquire any interest in, any Indebted-
ness other than any Indebtedness to Obligee;
amend, modify or change, or consent or agree to
any amendment, modification or change to any of
the terms of any Indebtedness, including Foot-
hill Debt, or any other agreement executed in
connection with any Indebtedness; or amend any
subordination provisions of any instrument gov-
erning any Indebtedness;
(j) except as permitted by Section 6.14(d)(iii) or
(d)(iv) of the Investment Agreement enter into
any transaction, including any purchase, sale,
lease, loan or transfer exchange of property or
the rendering of any service, with any Affiliate
(other than any Subsidiary of Special Purpose
Subsidiary), including the Company or any
Subsidiary other than a Subsidiary of Special
Purpose Subsidiary;
(k) enter into any Sale and Leaseback;
(l) enter into any agreement with any Person other
than the Obligee pursuant hereto which prohibits
or limits the ability of Special Purpose Subsid-
iary to create, incur, assume or suffer to exist
any Lien upon any of its property, assets or
-37-<PAGE>
revenues, whether now owned or hereafter ac-
quired;
(m) own any assets or properties (including cash,
Cash Equivalents and Investments) on which
Obligee does not have a perfected first lien
pursuant to the Security Documents; or
(n) create or permit to exist any Subsidiary.
SECTION 4. REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Obligee
that:
4.1 Financial Condition.
(a) The consolidated balance sheets of the Company
and its consolidated Subsidiaries as at December 31, 1996 and
the related consolidated statements of income and of cash flows
for the fiscal year ended on such date, reported on by Ernst &
Young, a copy of which has been furnished to the Obligee,
fairly and accurately present the consolidated financial
condition of the Company and its consolidated Subsidiaries as
at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then
ended.
(b) In the event the Issuance Date occurs after
May 15, 1997: The unaudited consolidated balance sheets of the
Company and its consolidated Subsidiaries as at March 31, 1997,
and the related consolidated statements of income and cash
flows for the three months then ended, a copy of which has been
delivered to the Obligee, fairly and accurately presents the
consolidated financial condition of the Company and its con-
solidated Subsidiaries as at such date, and the consolidated
results of their operations and their consolidated cash flows
for the three months, then ended (subject to normal year-end
adjustments) and a Responsible Officer has so certified to the
Obligee.
(c) All such financial statements described in
clauses (a) and (b) above, including the related schedules and
notes thereto, have been prepared in accordance with GAAP ap-
plied consistently throughout the periods involved (except for
such inconsistencies as approved by such accountants or Respon-
sible Officer, as the case may be, and as disclosed therein).
Neither the Company nor any of its consolidated Subsidiaries
had, at the date of the most recent balance sheet referred to
above, any material Guarantee Obligation, contingent liability
-38-<PAGE>
or liability for taxes, or any long-term lease or unusual for-
ward or long-term commitment, including any interest rate or
foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto
or in Schedule 4.1. Since December 31, 1996, there has been no
sale, transfer or other disposition or agreement therefor by
the Company or any of its consolidated Subsidiaries of any ma-
terial part of its business or property and no purchase or
other acquisition of any business or property (including any
capital stock of any other Person) which is material in rela-
tion to the consolidated financial condition of the Company and
its consolidated Subsidiaries at December 31, 1996, except as
described in Schedule 4.1 or consented to in writing by the
Obligee in its sole discretion.
(d) The three-year Management Business Plan update
for the period 1996-1998 delivered to the Obligee prior to the
date hereof (i) was prepared in good faith upon assumptions
believed by the Company to be reasonable, it being understood
that the projections therein contained as to future events are
subject to certain uncertainties and contingencies which are
beyond the control of the Company and may be significant, and
thus no assurance can be given that such projections will be
realized, and (ii) presents fairly, in all material respects,
the actual results of operations of the Company and Subsidiar-
ies for the period from January 1, 1996 through the date
thereof, in accordance with GAAP, subject to recurring year-end
audit adjustments and the absence of footnotes.
4.2 No Material Adverse Change. Since December 31, 1996,
(a) there has been no development or event nor any prospective
development or event, which has had or could reasonably be ex-
pected to have a Material Adverse Effect, except such devel-
opments or events or prospective developments or events as have
been disclosed by the Company in filings with the Securities
and Exchange Commission made prior to the date hereof and true
and correct copies of which have been delivered to the Obligee
or as set forth on Schedule 4.2, and (b) no dividends or other
distributions have been declared, paid or made upon the Capital
Stock of the Company nor has any of the Capital Stock of the
Company been redeemed, retired, purchased or otherwise acquired
for value by the Company or any of its Subsidiaries. As of the
date hereof and the Issuance Date, no motion for the conversion
of the case, appointment of a trustee, or dismissal is pending
or has been denied, the reversal of which on appeal would af-
fect the validity of this Agreement and no appeal has been
taken from the entry of the Confirmation Order in the Reorgani-
zation Proceedings, the reversal, modification, or affirmance
of which will affect the validity or enforceability, or change
-39-<PAGE>
the provisions, of this Agreement or any other Transaction Doc-
ument.
4.3 Corporate Existence; Compliance with Law. Each of
the Company and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdic-
tion of its organization, except, in the case of any such Sub-
sidiary, where all such failures to be in good standing are not
reasonably likely, in the aggregate, to have a Material Adverse
Effect, (b) has the corporate power and authority, and the le-
gal right, to own and operate its property, to lease the prop-
erty it operates as lessee and to conduct the business in which
it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each juris-
diction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, except
to the extent that all such failures to be so qualified and in
good standing are not reasonably likely, in the aggregate, to
have a Material Adverse Effect, and (d) is in compliance with
all Requirements of Law except to the extent that any failures
to comply therewith is not reasonably likely, in the aggregate,
to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obliga-
tions.
(a) The Company. The Company has the corporate
power and authority, and the legal right, to make, deliver and
perform this Agreement, the Secured Instrument and other
Transaction Documents, and has taken all necessary corporate
action to authorize the execution, delivery and performance of
this Agreement, the Secured Instrument and the other
Transaction Documents including the issuance of the Preferred
Stock and the Initial Warrants. Except as set forth on
Schedule 4.4, no consent or authorization of, filing with or
other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the borrowings
hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement, the Secured
Instrument or the other Transaction Documents, except such
consents, authorizations, filings or other acts as have been
obtained, made or performed, as the case may be, and as remain
in full force and effect. This Agreement and the other
Transaction Documents to which the Company is party have been
or will be, duly executed and delivered on behalf of the Com-
pany. This Agreement, and each other Transaction Document
executed and delivered constitutes, or when executed and deliv-
ered will constitute, a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with
-40-<PAGE>
its terms, except as enforceability may be limited by appli-
cable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the enforcement of creditors rights gen-
erally and by general equitable principles (whether enforcement
is sought by proceedings in equity or at law).
(b) Subsidiaries. Each of the Subsidiaries (includ-
ing Unrestricted Subsidiaries) party to the Transaction Docu-
ments has the corporate power and authority, and the legal
right, to make, deliver and perform the Transaction Documents
to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of
the Transaction Documents to which it is a party. Except as
set forth on Schedule 4.4, no consent or authorization of, fil-
ing with or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with
the execution, delivery, performance, validity or enforceabil-
ity of the Transaction Documents to which it is a party, except
such consents, authorizations, filings or other acts as have
been obtained, made or performed, as the case may be, and as
remain in full force and effect. Each Transaction Document to
which any Subsidiary (including Unrestricted Subsidiaries) is a
party has been or will be duly executed and delivered on behalf
of each such Subsidiary. Each Transaction Document to which
any Subsidiary (including Unrestricted Subsidiaries) is a
party, executed and delivered constitutes, or when executed and
delivered will constitute, a legal, valid and binding obliga-
tion of each such Subsidiary, enforceable against each such
Subsidiary in accordance with its terms, except as enforce-
ability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the en-
forcement of creditors rights generally and by general equi-
table principles (whether enforcement is sought by proceedings
in equity or at law).
4.5 No Legal Bar. The execution, delivery and perfor-
mance of this Agreement, the Secured Instrument and the other
Transaction Documents, and the use of the proceeds of the
Secured Instruments will not violate (i) any Requirement of Law
or (ii) except as disclosed on Schedule 4.5 hereto, any
material Contractual Obligation of the Company or of any of its
Subsidiaries or Unrestricted Subsidiaries and will not result
in, or require, the creation or imposition of any Lien on any
of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
4.6 No Material Litigation. No litigation, investigation
or proceeding of or before any arbitrator or Governmental Au-
thority is pending or, to the knowledge of the Company, threat-
ened by or against the Company or any of its Subsidiaries or
-41-<PAGE>
against any of its or their respective properties or revenues
(a) with respect to this Agreement, the Secured Instrument or
other Transaction Documents or any of the transactions
contemplated hereby or thereby or (b) which is reasonably
likely to have a Material Adverse Effect, which has not been
disclosed (including, estimates of the Dollar amounts involved)
in the Company's filings with the Securities and Exchange
Commission made prior to the date hereof, true and correct
copies of which have been delivered to the Obligee or on
Schedule 4.6 hereto.
4.7 No Default. Neither the Company nor any of its Sub-
sidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which is reasonably
likely to have a Material Adverse Effect, except as disclosed,
including estimates of the Dollar amounts involved, in the Com-
pany's filings with the Securities and Exchange Commission made
prior to the date hereof, true and correct copies of which have
been delivered to the Obligee or on Schedule 4.7. No Default
or Event of Default has occurred and is continuing. No default
has occurred and is continuing under any of the Foothill Loan
Documents or the indenture governing the Unsecured Cash Flow
Notes.
4.8 Ownership of Property; Liens. Each of the Company
and its Subsidiaries, as the case may be, has good record and
marketable title in fee simple to, or a valid leasehold inter-
est in, all of the Collateral and all its other real property,
and good title to all its other property necessary for the op-
eration of its business, and none of such property of the Com-
pany or such Subsidiaries is subject to any Lien except as per-
mitted by Section 7.3. To the best knowledge of the Company,
after diligent inquiry, the Collateral includes all property of
the Company and its Subsidiaries that is not Excluded Property.
4.9 Intellectual Property. The Company and each of its
Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, technology, know-how and processes nec-
essary for the conduct of its business as currently conducted
except for those the failure to own or license which is not
reasonably likely to have a Material Adverse Effect (the "In-
tellectual Property"). No claim has been asserted and is pend-
ing by any Person challenging or questioning the use of any
such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, nor does the Company know of
any valid basis for any such claim. The use of such Intel-
lectual Property by the Company and its Subsidiaries does not
infringe on the rights of any Person, except for such claims
and infringements that, in the aggregate, do not have a Mate-
rial Adverse Effect. To the knowledge of the Company, there
-42-<PAGE>
exists no infringement upon the Intellectual Property rights of
the Company and Subsidiaries by any other Person.
4.10 Taxes. Each of the Company and its Subsidiaries
(including Unrestricted Subsidiaries and Joint Ventures) has
filed or caused to be filed all tax returns which, to the
knowledge of the Company, are required to be filed and has paid
all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any taxes,
fees or other charges the amount or validity of which are cur-
rently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have
been provided on the books of the Company or its Subsidiaries
(including Unrestricted Subsidiaries and Joint Ventures), as
the case may be) except tax claims which are to be paid on a
deferred basis pursuant to the Reorganization Plan; no tax Lien
has been filed, and, to the knowledge of the Company, no claim
is being asserted, with respect to any such tax, fee or other
charge, except as disclosed on Schedule 4.10.
4.11 Federal Regulations. No part of the proceeds of the
Secured Instrument will be used for "purchasing" or "carrying"
any "margin stock" within the respective meanings of each of
the quoted terms under Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System as now and from time to
time hereafter in effect or for any purpose which violates the
provisions of the Regulations of such Board of Governors.
4.12 ERISA. Except as disclosed on Schedule 4.12 or by
letter to the Obligee referring to this Section 4.12 delivered
on or prior to the date hereof in accordance with Section
6.7(d), no Reportable Event has occurred during the five-year
period prior to the date on which this representation is made
or deemed made with respect to any Plan. The Company and each
Commonly Controlled Entity are in substantial compliance with
the applicable provisions of ERISA with respect to each Plan.
The present value of all accrued benefits under each Single
Employer Plan (based on the reasonable assumptions used by the
independent actuary for such Plan for purposes of establishing
the minimum funding requirements under Section 412 of the Code)
did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the
value of the assets of such Plan allocable to such accrued ben-
efits, individually or in the aggregate for all Single Employer
Plans (excluding for purposes of such computation any Single
Employer Plans with respect to which the value of the assets
exceed the present value of the accrued benefits), by more than
$4,600,000. Neither the Company nor any Commonly Controlled
-43-<PAGE>
Entity is liable under Title IV of ERISA by reason of the ter-
mination of a Single Employer Plan or the withdrawal from a
Single Employer Plan in which it was a "substantial employer"
within the meaning of Section 4001(a)(2) of ERISA. Each Plan
intended to be qualified under Section 401(a) of the Code, in-
cluding each Single Employer Plan, is qualified in operation
under Section 401(a) of the Code and is qualified in form under
Section 401(a) of the Code, except with respect to any required
amendments with respect to which the remedial amendment period
under Section 401(b) of the Code has not expired. Neither the
Company nor any Commonly Controlled Entity has had a complete
or partial withdrawal from any Multiemployer Plan and neither
the Company nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw from all Multiem-
ployer Plans in complete withdrawals within the meaning of Sec-
tion 4203 of ERISA as of the valuation dates for such plans
most closely preceding the date on which this representation is
made or deemed made. No Multiemployer Plan is in Reorganiza-
tion or Insolvent. Neither the Company nor any Commonly Con-
trolled Entity is liable for fines, penalties, taxes or related
charges under Chapter 43 of the Code or under Sections 409,
502(c), 502(i), 502(1) or 4071 of ERISA in an amount exceeding
$50,000 in the aggregate at any time. There are no material
claims (other than routine claims for benefits) against any
Plan (other than a Multiemployer Plan) or against the Company
or any Commonly Controlled Entity in connection with any such
Plan. Neither the Company nor any Commonly Controlled Entity
is liable for post retirement benefits to be provided to their
current and former employees under Plans which are welfare ben-
efit plans (as defined in Section 3(1) of ERISA) except as re-
quired by Section 4980B of the Code and Section 601 of ERISA.
4.13 Investment Company Act; Other Regulations. The Com-
pany is not an "investment company," or a company "controlled"
by an "investment company," within the meaning of the Invest-
ment Company Act of 1940, as amended. The Company is not sub-
ject to regulation under any Federal or state statute or regu-
lation which limits its ability to incur Indebtedness.
4.14 Subsidiaries and Joint Ventures. The Subsidiaries
listed on Schedule 4.14(A) constitute all of the Subsidiaries
and such schedule identifies the shareholders of such Subsid-
iary, the Joint Ventures listed on Schedule 4.14(B) constitute
all of the Joint Ventures and such schedule identifies all own-
ers of the Joint Venture interests thereof and the percentage
equity ownership of such owners, and neither the Company nor
any Subsidiary other than a Venture Subsidiary owns any Joint
Venture interest.
-44-<PAGE>
4.15 Environmental Matters. Each of the representations
and warranties set forth in paragraphs (a) through (g) of this
Section is true and correct, except as disclosed on Schedule
4.15 or described in the certificate regarding environmental
matters required pursuant to Section 5.1(i) or except to the
extent that the facts and circumstances giving rise to any such
failure to be so true and correct is not reasonably likely to
have a Material Adverse Effect:
(a) The Total Real Property does not contain, and
has not previously contained, therein, thereon, or thereunder,
including the soil and groundwater thereunder, any Hazardous
Materials in violation of any Environmental Law.
(b) The Company, its Subsidiaries, the Joint Ven-
tures, the Total Real Property, and all operations and facili-
ties at the Total Real Property, are in compliance with all
Environmental Laws, and there are no Hazardous Materials or
violations of any Environmental Law which could interfere with
the continued operation of any of the Total Real Property or
impair the fair saleable value of any thereof.
(c) Neither the Company nor any of its Subsidiaries
nor any of the Joint Ventures has received any complaint or any
notice of violation, alleged violation or investigation or of
potential liability or designating any of such Persons as a
potentially responsible party under any Environmental Law re-
garding environmental protection matters or environmental per-
mit compliance with regard to the Total Real Property, nor is
the Company aware that any Governmental Authority is contem-
plating delivering to the Company or any of its Subsidiaries or
any of the Joint Ventures any such notice. Neither the Company
nor any of its Subsidiaries nor any of the Joint Ventures has
reported any releases of Hazardous Materials to any Governmen-
tal Authority.
(d) Hazardous Materials have not been generated,
treated, stored or disposed of, at, on or under any of the To-
tal Real Property in violation of any Environmental Law, nor
have any Hazardous Materials been transferred from the Total
Real Property to any other location in violation of any Envi-
ronmental Law nor have there been any treatment, storage or
disposal operations on any of the Total Real Property requiring
any approval or permit from any Governmental Authority. Nei-
ther the Company nor any of its Subsidiaries nor any of the
Joint Ventures has ever owned or operated or currently owns or
operates any waste disposal or storage facilities, underground
storage tanks or surface impoundments except as disclosed on
Schedule 4.15.
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(e) There are no governmental or administrative
actions or judicial proceedings pending or, to the knowledge of
the Company, contemplated under any Environmental Laws to which
the Company or any of its Subsidiaries or any of the Joint Ven-
tures is or, to the knowledge of the Company, will be named as
a party with respect to the Total Real Property, nor are there
any consent decrees or other decrees, consent orders, adminis-
trative orders or other orders, or other administrative or ju-
dicial requirements outstanding under any Environmental Law
with respect to the Company or any of its Subsidiaries or any
of the Joint Ventures or to any of the Total Real Property.
(f) There is no environmental condition associated
with any of the Total Real Property which would impede the de-
velopment thereof, including the presence of endangered or
threatened species, or ecologically sensitive habitat or water
rights or quality issues.
(g) Copies of all permits, authorizations and envi-
ronmental reports for or with respect to the Total Real Prop-
erty have been made available to the Obligee.
4.16 Indebtedness. Schedule 4.16 lists all Indebtedness
(including available commitments) of the Company and its Sub-
sidiaries as existing on the date hereof.
4.17 Contingent Obligations. Schedule 4.17 lists all
Guarantee Obligations of the Company and all Guarantee Obliga-
tions of any of its Subsidiaries.
4.18 Restitution Program and Final Judgment. The Company
and its Subsidiaries are in compliance with the "Restitution
Program" and the "Final Judgment," as defined in the Reorgani-
zation Plan.
4.19 Certain Fees. No broker's or finder's fee or com-
mission will be payable with respect to this Agreement or any
other Transaction Document or any of the transactions contem-
plated hereby or thereby except for the fee payable by the Com-
pany to Banker's Trust pursuant to an engagement letter dated
August 3, 1995, as amended by a letter agreement dated February
29, 1996, which the Company agrees to pay, and the Company
hereby indemnifies the Obligee against, and agrees that it will
hold the Obligee harmless from, any claim, demand or liability
for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith and any expenses
(including reasonable fees, expenses and disbursements of coun-
sel) arising in connection with any such claim, demand or lia-
bility.
-46-<PAGE>
4.20 Disclosure. No representation or warranty of the
Company or any of its Subsidiaries contained in any Transaction
Document or in any other document, certificate or written
statement furnished to the Obligee by or on behalf of the Com-
pany or any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement or any other Trans-
action Document contains any untrue statement of a material
fact or omits to state a material fact (known to the Company in
the case of any document not furnished by it) necessary in or-
der to make the statements contained herein or therein not mis-
leading in light of the circumstances in which the same were
made. Any projections and pro forma financial information con-
tained in such materials are based upon good faith estimates
and assumptions believed by the Company to be reasonable at the
time made, it being recognized by the Obligee that such projec-
tions as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any
such projections may differ from the projected results. There
are no facts known (or which should upon the reasonable exer-
cise of diligence be known) to the Company (other than matters
of an economic nature affecting business enterprises generally)
that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect and have not
been disclosed herein or in such other written documents, cer-
tificates and statements furnished to the Obligee for use in
connection with the transactions contemplated hereby.
4.21 Insurance. The Company and each of its Subsidiaries
maintain, with financially sound and reputable insurers, insur-
ance with respect to its properties and business and the prop-
erties and business of its Subsidiaries, against loss and dam-
age of the kinds customarily insured against by corporations of
established reputation engaged in the same or similar business
of such types and in such amounts as are customarily carried
under similar circumstances by such other corporations. At-
tached as Schedule 4.21 is a complete and accurate description
of all policies of insurance that will be in effect as of the
Issuance Date for the Company and each of its Subsidiaries.
4.22 Total Real Property Matters. The Company and each
of its Subsidiaries (including the Joint Ventures) is in com-
pliance with all development orders obtained by the Company and
its Subsidiaries (including the Joint Ventures) with respect to
any Total Real Property, except to the extent noncompliance
could not reasonably be expected to have a Material Adverse
Effect.
4.23 Reorganization Proceedings. The Company has deliv-
ered to the Obligee true, correct and complete copies of the
-47-<PAGE>
Reorganization Plan and Confirmation Order, together with cop-
ies of any modifications thereto or subsequent proceedings with
the Bankruptcy Court. The Company and its Subsidiaries are in
all material respects in compliance with the Reorganization
Plan and Confirmation Order.
4.24 Excluded Subsidiaries; Unrestricted Subsidiaries.
(a) The Excluded Subsidiaries do not have, nor are
they anticipated to have, any assets or revenues. The Excluded
Subsidiaries do not currently conduct, nor are they anticipated
to begin to conduct, any business.
(b) The Unrestricted Subsidiaries do not have, nor
are they anticipated to have, any assets or revenues other than
the assets disclosed on Schedule 4.24 as being owned by them
and the revenues arising therefrom. The Unrestricted Subsid-
iaries do not currently conduct, nor are they anticipated to
begin to conduct, any business other than the businesses dis-
closed on Schedule 4.24 as being conducted by them.
4.25 [intentionally omitted]
4.26 Bank Accounts. Schedule 4.26 (as amended from time
to time by written notice to the Obligee) is a true and correct
list of all Bank Accounts of the Company and its Subsidiaries.
4.27 Utility Fund Trusts. All of the Company's obliga-
tions under each of the Class 14 Utility Fund Trust Agreement
and the Homesite Program Utility Fund Trust Agreement, each
dated December 8, 1992, and entered into by and between the
Company and First Union National Bank of Florida as Trustee
have been fully funded in the amount of $10,000,000.
4.28 [intentionally omitted]
4.29 SPUD Subsidiaries. Except as disclosed on Schedule
4.29, no Subsidiary is a SPUD Subsidiary.
4.30 DRI and Zoning. The representations and warranties
set forth in Schedule 4.30 are by this reference incorporated
herein as though fully set forth and made in this Section 4.30.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Issuance. The obligation of the
Obligee to accept the Secured Instrument and make the loan
contemplated hereby and/or purchase Preferred Stock pursuant to
the Investment Agreement is subject to the satisfaction, or
-48-<PAGE>
waiver by the Obligee, on or before May 22, 1997, of the
following conditions precedent:
(a) Secured Instrument Documents. The Obligee shall
have received (i) this Agreement, executed and delivered by a
duly authorized officer of the Company and the Subsidiaries,
(ii) a Secured Instrument conforming to the requirements hereof
and executed and delivered by a duly authorized officer of the
Company and the Subsidiaries, (iii) each other Secured
Instrument Document conforming to the requirements hereof and
executed and delivered by a duly authorized officer of the Com-
pany or each of its Subsidiaries (including each of the Unre-
stricted Subsidiaries as to its Acknowledgment under the Stock
Pledge Agreement), as the case may be, which are parties to
such Secured Instrument Document, (iv) each other Transaction
Document, executed and delivered by a duly authorized officer
of each party thereto and (v) copies, certified as true and
correct copies by a Responsible Officer, of the Security
Documents.
(b) Corporate Proceedings of the Company. The
Obligee shall have received a copy of the resolutions, in form
and substance satisfactory to the Obligee and dated on or prior
to the date hereof, of the Board of Directors of the Company
authorizing the execution, delivery and performance of this
Agreement, the Secured Instrument, and the other Transaction
Documents to which it is a party, certified by the secretary or
an assistant secretary of the Company as of the Issuance Date,
which certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded
and are in full force and effect and shall be in form and
substance satisfactory to the Obligee.
(c) Corporate Proceedings of the Subsidiaries. The
Obligee shall have received a copy of the resolutions, in form
and substance satisfactory to the Obligee and dated on or prior
to the date hereof, of the Board of Directors of each Subsid-
iary which is a party to any Transaction Document authorizing
the execution, delivery and performance of the Transaction Doc-
uments to which it is a party, certified by its secretary or an
assistant secretary as of the Issuance Date, which certificate
shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded and are in full
force and effect and shall be in form and substance satisfac-
tory to the Obligee.
(c) Corporate Documents. The Obligee shall have re-
ceived true and complete copies of (i) the certificate or ar-
ticles of incorporation of the Company and each of its Subsid-
iaries which is a party to any Transaction Document certified
-49-<PAGE>
by the Secretary of State of their respective jurisdictions of
incorporation as of a recent date prior to the Issuance Date,
(ii) the Bylaws of the Company and each of its Subsidiaries
which is a party to any Transaction Document certified as of
the Issuance Date by its secretary or an assistant secretary,
(iii) good standing certificates, including, in states which
provide such certificates, certification of tax status, of the
Company and each of its Subsidiaries which is a party to any
Transaction Document certified by the Secretary of State of
their respective jurisdictions of incorporation and of each
jurisdiction in which they are qualified to do business as a
foreign corporation dated as of a recent date prior to the Is-
suance Date and (iv) incumbency and signature certificates for
the Company and each Subsidiary executing any Transaction Docu-
ment as of the Issuance Date.
(e) Other Documents. The Obligee shall have
received copies, certified as true and correct by a Responsible
Officer, of (i) the indenture relating to the Unsecured Cash
Flow Notes and the Foothill Loan Documents, each as amended
through the Issuance Date, and (ii) the Business Plan and the
Beige Book.
(f) No Violation. The consummation of the transac-
tions contemplated hereby and by the other Transaction Docu-
ments shall not contravene, violate or conflict with, nor in-
volve the Obligee in any violation of, any Requirement of Law.
(g) Consents, Authorizations, and Filings. The
Obligee shall have received a certificate of a Responsible Of-
ficer (i) attaching copies of all consents, authorizations, and
filings referred to in Section 4.4 and in any similar provision
of any of the other Transaction Documents, and (ii) stating
that such consents, authorizations, and filings are in full
force and effect and each such consent, authorization, and fil-
ing shall be in form and substance satisfactory to the Obligee.
(h) Legal Opinions. The Collateral Agent and the
Obligee shall have received executed legal opinions dated as of
the Issuance Date in form and substance satisfactory to the
Obligee:
(i) Arent Fox Kintner Plotkin & Kahn, counsel
to the Company and its Subsidiaries;
(ii) corporate counsel to the Company and its
Subsidiaries;
-50-<PAGE>
(iii) Greenberg, Traurig, Hoffman, Lipoff, Rosen
& Quentel, P.A., special Florida counsel to the Company
and its Subsidiaries;
(iv) Chambliss & Bahner, special Tennessee coun-
sel to the Company and its Subsidiaries; and
(v) Carlton Fields Ward Emmanuel Smith & Cut-
ler, P.A., special Florida counsel to the Obligee.
Each such legal opinion shall cover such other matters incident
to the transactions contemplated by this Agreement and the
other Transaction Documents as the Obligee may reasonably re-
quire.
(i) Certification as to Environmental Matters. The
Obligee shall have received a certificate of a Responsible Of-
ficer (i) stating that the Company is not aware of any environ-
mental matters in connection with any of the Total Real Prop-
erty which could reasonably be expected to result in a liabil-
ity to the Company or any Subsidiary or any Joint Venture in
excess of $200,000 except as listed on a schedule attached to
such certificate and (ii) certifying that the Company has made,
and agreeing that the Company will continue to make, available
to the Obligee copies all notices, citations, requests for in-
formation and reports from the Environmental Protection Agency,
Florida Department of Environmental Regulation or other Fed-
eral, state or local environmental regulatory agency having
jurisdiction over any of the Total Real Property, and any re-
port or audit prepared by a private company with respect
thereto.
(j) Continued Perfection of Security Interests. The
Company and its Subsidiaries party to any of the Security Docu-
ments shall have taken or cause to be taken all such actions
deemed necessary or desirable by the Obligee to ensure that
Collateral Agent or the Obligee has and continues to have a
valid and perfected security interest in the Collateral granted
by the Security Documents subject to the Liens permitted
pursuant to this Agreement and the Security Documents (and the
Obligee and Collateral Agent shall have received satisfactory
evidence thereof). Such action shall include: (i) the
delivery by the Company pursuant to the Stock Pledge Agreement
of certificates (which certificates shall be registered in the
name of Collateral Agent or properly endorsed in blank for
transfer or accompanied by irrevocable undated stock powers
duly endorsed in blank, all in form and substance satisfactory
to Collateral Agent and the Obligee) representing all
Subsidiary Stock; (ii) the delivery to Collateral Agent of
Uniform Commercial Code financing statements, executed by each
-51-<PAGE>
of the Company and each of its Subsidiaries as to the Col-
lateral granted by each such party for all jurisdictions as may
be necessary or desirable to perfect or continue the perfection
of Collateral Agent's security interest in such Collateral; and
(iii) evidence reasonably satisfactory to Collateral Agent and
the Obligee that all other filings, recordings and other
actions Collateral Agent and the Obligee deems necessary or
advisable to establish, preserve and perfect the Liens and the
priority thereof granted to Collateral Agent and the Obligee
hereunder shall have been made.
(k) Real Property Matters. The Obligee shall have
received: (i) such Mortgages and Deeds of Trust as may be re-
quested by the Obligee, in each case in form and substance sat-
isfactory to the Obligee and its local counsel, to protect and
preserve the Lien and priority of the Mortgages and Deeds of
Trust as they secure the Secured Obligations and other amounts
due hereunder and under the other Transaction Documents, to-
gether with new ALTA lender's extended coverage policies of
title insurance or amendments of the existing ALTA lender's
extended coverage policies of title insurance on the Real Prop-
erty encumbered by the Mortgages and Deeds of Trust in liabil-
ity, amount and form issued by a title company satisfactory to
the Obligee showing the Mortgages and Deeds of Trust as first
Liens upon the respective Real Property, subject only to Liens
permitted hereunder and thereunder and such other exceptions or
exclusions as may be approved by the Obligee in its sole
discretion, together with any endorsements reasonably required
by the Obligee, and affirmative assurance that the improvements
are fully located within the boundaries of the insured land;
and (ii) in respect of the Total Real Property listed on
Schedule 5.1(k) and subject to Section 5.3(a), copies of such
appraisals, surveys, environmental audit reports, satisfactory
evidence of entitlements (including so-called "zoning
letters"), and other documents as the Obligee may request, each
as specified or contemplated on Schedule 5.1(k). The legal
descriptions of real property Collateral shall be satisfactory
to Obligee and its local counsel.
(l) [intentionally omitted]
(m) [intentionally omitted]
(n) [intentionally omitted]
(o) Evidence of Insurance. The Company shall have
delivered to the Obligee certificates of insurance naming Col-
lateral Agent on behalf of the Obligee as loss payee under the
casualty and surety policies required pursuant to Section 6.5.
-52-<PAGE>
(p) No Material Adverse Effect. On the Issuance
Date, the Obligee shall have received an officer's certificate
executed by a Responsible Officer stating that no Material Ad-
verse Effect has occurred since September 30, 1996.
(q) Intercreditor Agreement. The Intercreditor
Agreement shall have been executed and delivered by each of the
parties thereto, and the Obligee shall have received a fully
executed copy thereof in form and substance satisfactory to the
Obligee.
(r) Fees, Costs, and Expenses. The Company shall
have paid, when and as invoiced: (i) to the Obligee all fees,
costs, and expenses of the Obligee and its counsel incurred in
connection with the preparation, negotiation, and execution of
this Agreement, the other Transaction Documents, and any other
documents executed in connection herewith or therewith; and
(ii) to the Collateral Agent all fees, costs, and expenses of
Collateral Agent and its counsel incurred in connection with
the preparation, negotiation, and execution of this Agreement,
any other Transaction Documents to which it is a party and any
other documents executed in connection herewith or therewith.
(s) Borrowing Request. The Company shall have de-
livered a Borrowing Request, signed by a Responsible Officer,
specifying the amount of the borrowing requested and the date
such borrowing is to be made and certifying, as of the date of
such certificate and the date of such borrowing, to the fact
that no Default or Event of Default has occurred and that each
representation and warranty of the Company or any Subsidiary
contained in this Agreement and each other Transaction Document
was true and correct in all material respects when made and on
as of the date of such certificate and the date of such borrow-
ing.
(t) [intentionally omitted]
(u) Consents under Certain Loan Documents. Any con-
sents necessary under the terms of the Security Documents and
other Foothill Loan Documents in connection with the transac-
tions contemplated by the Transaction Documents shall have been
obtained and shall be in form and substance satisfactory to the
Obligee.
(v) Other Matters. The Company shall have made
available to the Obligee such other documents and information,
or taken such other actions, as the Obligee may reasonably re-
quest.
(w) [intentionally omitted]
-53-<PAGE>
(x) Tax Servicing Contracts. Provision reasonably
satisfactory to the Obligee shall have been made for delivery
to it of all reports and information delivered to the holders
of the Foothill Debt pursuant to any Tax Servicing Contracts
existing in favor of such holders in respect of Real Property
located in Florida and Tennessee.
(y) [intentionally omitted]
(z) Use of Proceeds. The Obligee shall have
received an officer's certificate executed by a Responsible
Officer specifically describing the use to be made of the
proceeds of the issuance of the Secured Instrument and the
Obligee shall approve such use, in its sole and absolute
discretion.
(aa) Collateral Agent. Persons reasonably satisfac-
tory to the Obligee shall have agreed to serve as Collateral
Agent under the Transaction Documents and shall have executed
and delivered each Transaction Document to which the Collateral
Agent is a party.
5.2 [intentionally omitted]
SECTION 6. AFFIRMATIVE COVENANTS
The Company hereby agrees that, from and after the date
hereof and until the "Closing Date" (as defined in the Invest-
ment Agreement) and thereafter at any time while there shall be
due and owing and unpaid any Repurchase Obligation under Sec-
tion 8 of the Certificate of Designation, the Company shall,
and shall cause each of its Subsidiaries (including the Special
Purpose Subsidiary, except to the extent that any agreement
between the Obligee and the Company with respect to the Special
Purpose Subsidiary shall provide to the contrary) to:
6.1 Financial Statements. Furnish to the Obligee:
(a) as soon as available, but in any event not later
than 90 days after the end of each fiscal year of the Company,
a copy of the consolidated balance sheet of the Company and its
consolidated Subsidiaries (including Unrestricted Subsidiaries)
as at the and of such year and the related consolidated state-
ments of income and retained earnings and of cash flows for
such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by Ernst & Young or
other independent certified public accountants of nationally
recognized standing acceptable to the Obligee;
-54-<PAGE>
(b) as soon as available, but in any event not later
than 90 days after the end of each fiscal year of the Company,
a copy of the consolidating balance sheet of the Company and
its consolidated Subsidiaries (including Unrestricted Subsid-
iaries) as at the end of such year and the related consolidat-
ing statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative
form the figures for the previous year, certified by a Respon-
sible Officer as being fairly stated in all material respects;
(c) as soon as available, but in any event not later
than 45 days after the end of each of the first three quarterly
periods of each fiscal year of the Company, the unaudited con-
solidated and consolidating balance sheet of the Company and
its consolidated Subsidiaries (including Unrestricted Subsid-
iaries) as at the end of such quarter and the related unaudited
consolidated and consolidating statements of income and re-
tained earnings and of cash flows of the Company and its con-
solidated Subsidiaries (including Unrestricted Subsidiaries)
for such quarter and the portion of the fiscal year through the
end of such quarter, setting forth in each case in comparative
form the figures for the previous year, certified by a Respon-
sible Officer as being fairly stated in all material respects
when considered in relation to the consolidated and consolidat-
ing financial statements of the Company and its consolidated
Subsidiaries (subject to normal year-end audit adjustments);
(d) as soon as available, but in any event not later
than 30 days after the end of each calendar month, the unau-
dited consolidated balance sheet of the Company and its con-
solidated Subsidiaries (including Unrestricted Subsidiaries) as
at the end of such month and the related unaudited consolidated
statements of income and retained earnings and of cash flows of
the Company and its consolidated Subsidiaries (including Unre-
stricted Subsidiaries) for such month, setting forth in each
case in comparative form the figures for such month as set
forth on the Business Plan and, beginning in fiscal year 1996,
with a comparison to the same calendar month of the preceding
fiscal year, certified by a Responsible Officer as being fairly
stated in all material respects when considered in relation to
the consolidated financial statements of the Company and its
consolidated Subsidiaries (including Unrestricted Subsidiaries)
(subject to normal year-end audit adjustments); and
(e) as soon as available, but in any event not later
than 45 days after the end of each fiscal quarter, projections
by the Company of the operating cash flow budget of the Company
and its Subsidiaries for (i) the following two fiscal quarters,
prepared on a monthly basis and (ii) the two fiscal quarters
-55-<PAGE>
thereafter, prepared on a quarterly basis, certified by a Re-
sponsible Officer as being prepared in good faith on the basis
of the assumptions stated therein, which assumptions were rea-
sonable in light of conditions existing at the time of delivery
thereof and represented, at the time of delivery, the Company's
best estimate of its future financial performance;
all such financial statements to be complete and cor-
rect in all material respects and to be prepared in reasonable
detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case
may be, and disclosed therein).
Furnish, or cause each Subsidiary with an investment
in a Borrowing Base Joint Venture to furnish, to the Obligee:
(f) as soon as available, but in any event not later
than 90 days after the end of each fiscal year of the relevant
Borrowing Base Joint Venture, a copy of the balance sheet of
such Joint Venture as at the end of such year and the related
consolidated statements of income and retained earnings and of
cash flows for such year, setting forth in each case in com-
parative form the figures for the previous year; if such finan-
cial statements are required under the relevant Borrowing Base
Joint Venture's governing or charter documents or other mate-
rial agreement (including financing agreements) to be audited,
then such financial statements shall be reported on without a
"going concern" or like qualification or exception, or qualifi-
cation arising out of the scope of the audit, by independent
certified public accountants acceptable to the Obligee;
(g) as soon as available, but in any event not later
than 45 days after the end of each of the first three quarterly
periods of the relevant Borrowing Base Joint Venture, the unau-
dited balance sheet of such Borrowing Base Joint Venture as at
the end of such quarter and the related unaudited statements of
income and retained earnings and of cash flows of such Borrow-
ing Base Joint Venture for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous
year, certified by the chief accounting officer or treasurer of
the relevant Venture Subsidiary as being fairly stated in all
material respects when considered in relation to the financial
statements of such Borrowing Base Joint Venture (subject to
normal year-end audit adjustments); and
-56-<PAGE>
(h) as soon as available, but in any event not later
than 30 days after the end of each calendar month, the unau-
dited balance sheet of the relevant Borrowing Base Joint Ven-
ture as at the end of such month and the related unaudited con-
solidated statements of income and retained earnings and of
cash flows of such Borrowing Base Joint Venture for such month,
certified by the chief accounting officer or treasurer of the
relevant Venture Subsidiary as being fairly stated in all mate-
rial respects when considered in relation to the financial
statements of such Borrowing Base Joint Venture (subject to
normal year-end audit adjustments);
all such financial statements to be complete and cor-
rect in all material respects and to be prepared in reasonable
detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case
may be, and disclosed therein).
6.2 Certificates; Other Information. Furnish to the
Obligee:
(i) concurrently with the delivery of the fi-
nancial statements referred to in Section 6.1(a), a cer-
tificate of the independent certified public accountants
reporting on such financial statements stating that in
making the examination necessary therefor such accounting
firm has obtained no knowledge that a Default or Event of
Default has occurred and is continuing, except as speci-
fied in such certificate;
(ii) concurrently with the delivery of the fi-
nancial statements referred to in Sections 6.1(a), (b) and
(c), a certificate of a Responsible Officer stating that,
to the best of such Responsible Officer's knowledge, the
Company and each Subsidiary during such period has ob-
served or performed the covenants of Section 7 and all
other of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and in the
Secured Instrument and in the other Transaction Documents
to which it is a party to be observed, performed or
satisfied by it, and that such Officer has obtained no
knowledge that a Default or Event of Default has occurred
and is continuing except as specified in such certificate,
and, if a Default or Event of Default exists, stating the
details thereof and what actions the Company proposes to
take with respect thereto;
(iii) within five Business Days after the same
are sent, copies of all financial statements and reports
-57-<PAGE>
which the Company sends to its stockholders and all finan-
cial statements and reports which the Company or any of
its Subsidiaries sends to the holders or trustee of any
Unsecured Cash Flow Notes, and within five Business Days
after the same are filed, copies of all financial state-
ments and reports which the Company may make to, or file
with, the Securities and Exchange Commission or any suc-
cessor or analogous Governmental Authority;
(iv) within 10 Business Days after the same are
delivered, copies of all financial statements and all ma-
terial reports, management letters or other financial in-
formation prepared for its Board of Directors;
(v) on a monthly basis and, in any event, by no
later than the 30th day of each month: (w) a detailed
calculation of the Borrowing Base; (x) a summary listing,
by Borrowing Base category, of the Total Real Property
included directly or indirectly in the Borrowing Base and,
by Joint Venture, of the investments of the Venture Sub-
sidiaries in Joint Ventures, with, in each case, a summary
reconciliation to such listing provided in respect of the
prior month; (y) a detailed aging, by total, of the Homes-
ite Commercial Receivables and of the Commercial Receiv-
ables and of the JV Receivables; and (z) a summary aging,
by vendor, of the Company's accounts payable and any book
overdraft; in each case, in form satisfactory to the
Obligee;
(vi) not later than the tenth Business Day of
every month, the monthly Management Business Plan update
for the previous month, in form substantially equivalent
to that attached hereto as Schedule F-1;
(vii) not later than the tenth Business Day of
every month, the "Land Sales Report" for the previous
month, in form substantially equivalent to that attached
hereto as Schedule G-1; and
(viii) promptly, such additional financial and
other information as the Obligee may from time to time
reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent,
as the case may be, all its obligations of whatever nature,
except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, and re-
serves in conformity with GAAP with respect thereto have been
provided on the books of the Company or its Subsidiaries, as
-58-<PAGE>
the case may be or where the terms of this Agreement or the
Reorganization Plan would prohibit such payment, discharge, or
satisfaction.
6.4 Conduct of Business and Maintenance of Existence.
Subject to Sections 7.5, 7.6, 7.7 and 7.9: continue (a) to
engage in business of the same general type as now conducted by
it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in
the normal conduct of its business; and (b) to comply with all
Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith is not reasonably
likely to, in the aggregate, have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. Keep all prop-
erty useful and necessary in its business in good working order
and condition; maintain with financially sound and reputable
insurance companies insurance on all its property in at least
such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged
in the same or a similar business; and furnish to the Obligee,
upon written request, full information as to the insurance car-
ried. Each such policy of insurance shall name Collateral
Agent as a loss payee thereunder and shall provide for at least
thirty days prior written notice to the Obligee of any material
modification or cancellation of such policies. On the Issuance
Date and on each anniversary thereafter, the Company and its
Subsidiaries shall submit to the Obligee certificates of insur-
ance evidencing compliance with this Section 6.5.
6.6 Inspection of Collateral; Books and Records; Apprais-
als. Keep proper books of records and account in which full,
true and correct entries in conformity with GAAP and all Re-
quirements of Law shall be made of all dealings and transac-
tions in relation to its business and activities; and permit
representatives of the Obligee with respect to the Company and
its Subsidiaries, to inspect the Collateral and related proper-
ties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably
be desired and to discuss the business, operations, properties
and financial and other condition of the Company and its Sub-
sidiaries with officers and employees of the Company and such
Subsidiaries and with its independent certified public accoun-
tants. From time to time, if the Obligee determines that ob-
taining appraisals is necessary or appropriate, the Obligee
will obtain appraisal reports from appraisers satisfactory to
the Obligee, stating then current fair market values of all or
any portion of the Total Real Property. Anything herein to the
contrary notwithstanding, the Company shall not be obligated to
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reimburse the Obligee with respect to appraisals of the same
particular item of Total Real Property that occur more fre-
quently than once in any year, unless an Event of Default has
occurred and is continuing or there has occurred a material
adverse change in the value of the Collateral, in which case
the Company shall be obligated to reimburse the Obligee with
respect to as many appraisals as the Obligee deems necessary to
conduct.
6.7 Notices. Promptly give notice to the Obligee of:
(a) the occurrence of any Default or Event of De-
fault;
(b) any (i) default or event of default under any
Contractual Obligation of the Company or, to the knowledge of
the Company, any of its Subsidiaries or (ii) litigation, inves-
tigation or proceeding which may exist at any time between the
Company or, to the knowledge of the Company, any of its Subsid-
iaries and any Governmental Authority, which in either case, if
not cured or if adversely determined, as the case may be, would
have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Com-
pany or, to the knowledge of the Company, any of its Subsidiar-
ies in which the amount involved is $250,000 or more and, not
covered by insurance or in which injunctive or similar relief
is sought;
(d) as soon as possible and in any event within 30
days after the Company knows or has reason to know thereof, the
occurrence or expected occurrence of any event or condition
described in Section 4.12 which could reasonably be expected to
result in liability of the Company or any Commonly Controlled
Entity in excess of $100,000 and which is not reflected in the
financial statements most recently delivered to the Obligee
pursuant to Section 6.1; and
(e) any development or event which could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be ac-
companied by a statement of a Responsible Officer setting forth
details of the occurrence referred to therein and stating what
action the Company proposes to take with respect thereto.
6.8 Environmental Laws.
(a) Comply with, and use its best efforts to insure
compliance by all tenants and subtenants, if any, with, all
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Environmental Laws and obtain and comply with and maintain, and
insure that all tenants and subtenants obtain and comply with
and maintain, any and all licenses, approvals, registrations or
permits required by Environmental Laws, except in each case to
the extent that failure to do so could not reasonably be ex-
pected to have a Material Adverse Effect;
(b) Conduct and complete all investigations, stud-
ies, sampling and testing, and all remedial, removal and other
actions required under Environmental Laws and promptly comply
with all lawful orders and directives of all Governmental Au-
thorities respecting Environmental Laws, except to the extent
that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not rea-
sonably be expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Obligee,
and its employees, agents, officers and directors, from and
against any and all claims, demands, penalties, fines, liabil-
ities, settlements, damages, costs and expenses of whatever
kind or nature known or unknown, contingent or otherwise, aris-
ing out of, or in any way relating to, the violation of or non-
compliance with any Environmental Laws applicable to the real
property owned or operated by the Company or any of its Subsid-
iaries, or any orders, requirements or demands of Governmental
Authorities related thereto, including attorney's and consult-
ant's fees, investigation and laboratory fees, court costs and
litigation expenses, except to the extent that any of the fore-
going arise out of the gross negligence or willful misconduct
of the party seeking indemnification therefor. The agreements
in this Section shall survive the payment of the Secured
Instrument and all other amounts payable hereunder.
6.9 Business Plan. Furnish to the Obligee on or before
the tenth day following approval by the Company's Board of Di-
rectors, but in no event later than December 31 of each fiscal
year and within 10 days (after approval by the Company's Board
of Directors, if applicable) of any amendment, modification or
update thereto, a Business Plan of the Company and its Subsid-
iaries for the next succeeding fiscal year in a form and in
substance satisfactory to the Obligee setting forth in reason-
able detail a projected statement for such fiscal year's income
and cash flow with a projected balance sheet as of the close of
the succeeding fiscal year end, accompanied by a statement of a
Responsible Officer that the Business Plan projected statements
of income, cash flow and balance sheet for the succeeding fis-
cal year have been adopted by the Board of Directors of the
Company. The Company and its Subsidiary shall at all times
conduct their business substantially in accordance with the
Business Plan and shall not materially modify or deviate from
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such Business Plan without the prior written approval of the
Obligee.
6.10 Compliance with Other Transaction Documents. Comply
with, and cause the Subsidiaries to comply with, all of the
Transaction Documents.
6.11 Dividends from Subsidiaries. Cause the Subsidiaries
(other than the Special Purpose Subsidiary, to the extent the
Transaction Documents provide to the contrary) to pay dividends
to the Company from the Net Cash Proceeds of any sales of as-
sets (including Real Property Sales) to the extent not prohib-
ited by law, including the proceeds of any utility condemna-
tions; provided that proceeds from the sale of residential
units, lots or tracts by Subsidiaries (a) from developed phases
of a multi-phase project comprising Subsidiary Property Under
Development may be used to pay all costs associated with devel-
opment of the same phase or additional phases of the same
project, including reasonable reserves for such anticipated
costs during the period commencing on the date of sale to the
date 180 days after the date of sale (excluding any costs which
are an allocated share of corporate general and administrative
expenses of the Company or any Subsidiary), and (b) from single
phase projects comprising Subsidiary Property Under Development
to the extent units, lots or tracts may be sold in accordance
with applicable laws and regulations prior to completion of the
projects may be used to pay all costs associated with develop-
ment of such project (excluding any costs which are an al-
located share of corporate general and administrative expenses
of the Company or any other Subsidiary), in either case until
the conclusion of the project, at and following which time all
such proceeds shall be distributed to the Company. For pur-
poses hereof, "conclusion of the project" shall mean the
completion of structure or infrastructure development of the
project (or, with multi-phase projects: (a) (i) the final
phase of the project, or (ii) the sale of substantially all
units thereon; and (b) the payment of the Indebtedness in re-
spect of Subsidiary Property Under Development that prohibits
such distributions) in accordance with the requirements of ap-
plicable laws and regulations.
6.12 Supplemental Reports Regarding Real Property.
(a) Furnish to the Obligee such supplemental title
reports on the Real Property subject to the Deed of Trust and
Mortgages as the Obligee may reasonably request from time to
time; provided the Company shall not be required to provide
such supplemental reports more than once per quarter.
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(b) No later than 60 days after the Issuance Date,
the Company shall deliver to the Obligee such third party ap-
praisals, environmental reports, surveys, and ALTA title poli-
cies, as would have complied with the provisions of Section
5.1(l) if delivered on the Issuance Date with respect to all
Real Property to the extent such reports were not required by
the Obligee to be delivered on or prior to the Issuance Date.
6.13 Compliance with Laws. The Company shall, and shall
cause each of its Subsidiaries to, comply with the requirements
of all applicable laws, rules, regulations and orders of any
Governmental Authority, noncompliance with which would or could
be reasonably expected to cause a Material Adverse Effect.
6.14 Other Notices. Promptly give notice to the Obligee
of:
(a) the creation of any new Deposit Account; and
(b) the organization or formation of any new Ven-
ture Subsidiary, any other Subsidiary, any Unrestricted Subsid-
iary, or any Joint Venture; or the disposition or dissolution
of any Excluded Subsidiary;
in each case, together with such information related
thereto as the Obligee may request.
6.15 The Company Operating Account Control Agreement.
Maintain in full force and effect the Company Operating Account
Control Agreement. At all times from and after the date
hereof, the Company shall continue to maintain the Company's
cash management system substantially as such system exists on
the date hereof, and shall continue to concentrate the funds of
the Company into the Company Operating Account except to the
extent that such funds reasonably are required to be held in
other accounts for permitted uses by the Company, and except to
the extent that such funds are invested in investments permit-
ted by Section 7.9.
6.16 Foothill Reports. Deliver to the Obligee a copy of
each report, certificate or other document or information de-
livered to the lenders or agent pursuant to the Foothill Loan
Documents, concurrently with the delivery thereof to such lend-
ers or agent, including all annexes or attachments thereto.
SECTION 7. NEGATIVE COVENANTS
The Company hereby agrees that, from and after the date
hereof and until the "Closing Date" (as defined in the Invest-
ment Agreement) and thereafter at any time while there shall be
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due and owing and unpaid any Repurchase Obligation under Sec-
tion 8 of the Certificate of Designation, the Company shall
not, and shall not permit any of its Subsidiaries (other than
the Special Purpose Subsidiary) to, directly or indirectly:
7.1 Maintenance of Consolidated Net Worth; Interest
Charge Coverage Ratio. Permit (i) Consolidated Net Worth at
any time to be less than the amounts set forth below (hereinaf-
ter referred to as the "Minimum Consolidated Net Worth") the
sum of: (a) $23,500,000; and (b) 50% of the Annual Net Income
for the prior fiscal year; provided, however, that the amount
determined under this clause (b) shall never be less than zero,
or (ii) permit the Interest Charges Coverage Ratio at any time
to be less than 1.5.
To demonstrate compliance with the Minimum Consoli-
dated Net Worth and the Interest Charges Coverage Ratio cov-
enants set forth in this Section, the Company shall furnish to
the Obligee (i) within 45 days of the close of each calendar
quarter a certificate of a Responsible Officer setting forth
Minimum Consolidated Net Worth and the Interest Charges Cover-
age Ratio for such date calculated in accordance with this Sec-
tion 7.1, and the calculation upon which it is based; and (ii)
within 90 days of the close of each fiscal year, a certificate
of a Responsible Officer setting forth Minimum Consolidated Net
Worth and the Interest Charges Coverage Ratio as of such date
calculated in accordance with this Section 7.1 and the calcula-
tion upon which it is based, reflecting in such annual certifi-
cate any addition to the Minimum Consolidated Net Worth that
the Company is required to maintain resulting from the Annual
Net Income for the fiscal year then ended, but only as calcu-
lated under clause (b) of this Section 7.1.
7.2 Limitation of Indebtedness. Create, incur, assume
or suffer to exist any Indebtedness, except:
(a) Indebtedness of the Company under or in respect
of the Transaction Documents;
(b) Indebtedness under or in respect of (i) the
Revolving Loan Agreement (including Indebtedness in respect of
Letters of Credit issued under the Revolving Loan Agreement),
and any replacement of the Revolving Loans, not to exceed
$45,000,000 in the aggregate principal amount outstanding at
any time (unless increased to an amount up to $50,000,000 pur-
suant to an increase in the Working Capital Loan Commitments
(as defined in the Revolving Loan Agreement) from $20,000,000
to an amount up to $25,000,000 in accordance with the terms of
the "Intercreditor Agreement" included in the Foothill Loan
Documents) or (ii) the Secured Floating Rate Note Agreement,
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and any replacement Indebtedness, not to exceed the amount then
outstanding under such Note Agreement, provided that any such
replacement loans shall be on terms and conditions collectively
no less favorable to the Company than those set forth in the
Revolving Loan Agreement or the Secured Floating Rate Note
Agreement, as applicable;
(c) [intentionally omitted];
(d) Indebtedness of the Company in respect of the
Unsecured Cash Flow Notes;
(e) Indebtedness of the Company and its Subsidiar-
ies at any time outstanding, whether recourse or nonrecourse
and whether incurred in connection with Subsidiary Property
Under Development or otherwise, not exceeding $55,000,000 (less
the face amount of all outstanding Guarantee Obligations per-
mitted under Section 7.4(c) in respect of Indebtedness of any
Unrestricted Subsidiary or Joint Venture) in the aggregate;
provided, however, that the proceeds of such Indebtedness used
to acquire, finance, or refinance Real Property shall not ex-
ceed 80% of the lesser of the purchase price or fair market
value of such Real Property at the time of application of such
proceeds;
(f) Indebtedness of the Company to any Subsidiary
or of any Subsidiary to the Company; provided that (i) such
intercompany Indebtedness shall not be evidenced by promissory
notes or any other instruments, and (ii) all Indebtedness of
Subsidiaries to the Company shall not exceed an aggregate prin-
cipal amount of $20,000,000 at any time;
(g) Indebtedness of the Company and its Subsidiar-
ies outstanding on the date hereof and listed on Schedule 4.16;
(h) The limitations otherwise imposed by Section
7.2(e) notwithstanding, Indebtedness of any Subsidiary to Per-
sons extending acquisition or project development financing in
connection with Subsidiary Property Under Development of the
Subsidiary (any Subsidiary incurring such Indebtedness shall be
referred to in this Section 7.2(h) as a "SPUD Subsidiary");
provided that (i) neither the Company nor any Subsidiary other
than that SPUD Subsidiary is liable for such Indebtedness in
respect of that Subsidiary Property Under Development, directly
or pursuant to a Guarantee Obligation or otherwise, (ii) such
outstanding Indebtedness permitted pursuant to this Section
7.2(h) shall not exceed in the aggregate $75,000,000 minus
other outstanding Indebtedness of the Company and Subsidiaries
permitted pursuant to Section 7.2(e), and (iii) the proceeds of
any such Indebtedness used to acquire, finance or refinance
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Real Property shall not exceed 80% of the purchase price or
fair market value of such property, whichever is less, at the
time of the application of such proceeds;
(i) [intentionally omitted];
(j) [intentionally omitted]; and
(k) Indebtedness of Subsidiaries for the develop-
ment of infrastructure, common areas, or recreational facili-
ties owing to quasi-governmental entities such as community
development and special districts to the extent financed
through the issuance of industrial revenue bonds or other simi-
lar public financing; provided that (except for Liens permitted
pursuant to Section 7.3(q)) there is no direct or indirect re-
course to the Company with respect to such Indebtedness (other
than inchoate Liens arising by operation of law in respect of
such Indebtedness) and such Indebtedness shall not exceed
$15,000,000 in the aggregate at any one time outstanding; pro-
vided further that the Company shall give the Obligee prior
written notice of the incurrence of any such Indebtedness under
this Section 7.2(k).
Anything to the contrary notwithstanding, in no
event shall the Company or any Subsidiary co-make, endorse,
guarantee (except to the extent permitted under Section
7.4(c)), or otherwise become liable or have any recourse with
respect to any Indebtedness of any of the Unrestricted Subsid-
iaries.
7.3 Limitation on Liens. Create, incur, assume or suf-
fer to exist any Lien upon any of its property, assets or rev-
enues, whether now owned or hereafter acquired, except for:
(a) Liens securing Indebtedness permitted by Sec-
tion 7.2(a);
(b) Liens securing Indebtedness permitted by Sec-
tion 7.2(b);
(c) [intentionally omitted];
(d) Liens against the Section 365(j) Property se-
curing the Section 365(j) Claims pursuant to the Reorganization
Plan;
(e) Liens for taxes (i) which are not yet delin-
quent, or (ii) which are not in an aggregate amount, as to the
Company and all Subsidiaries, of greater than $1,000,000, or
(iii) which are being contested in good faith by appropriate
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proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Company or its Sub-
sidiaries, as the case may be, in conformity with GAAP;
(f) carriers', warehousemen's, mechanics', con-
struction, materialmen's, repairmen's or other like Liens aris-
ing in the ordinary course of business which do not remain un-
satisfied or undischarged for a period of more than 60 days or
which are being contested in good faith by appropriate pro-
ceedings;
(g) pledges or deposits in connection with workers
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carri-
ers under insurance or self-insurance arrangements;
(h) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statu-
tory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary
course of business;
(i) easements, rights-of-way, restrictions, devel-
opment orders, plats, and other similar encumbrances incurred
in the ordinary course of business which, in the aggregate, are
not substantial in amount and which do not in any case materi-
ally detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business
of the Company or such Subsidiary;
(j) Liens granted by the Company or any Subsidiary,
as lessee, in the ordinary course of business on leased equip-
ment, leasehold improvements and furnishings;
(k) Liens created, incurred or assumed in connec-
tion with the acquisition of, or the refinancing or any subse-
quent refinancing of Indebtedness incurred in connection with
property, plant and equipment acquired after the date hereof
and attaching only to the property, plant and equipment being
acquired or refinanced, if the Indebtedness secured thereby
does not exceed (i) in any acquisition, 80% of the purchase
price or fair market value of any Real Property, whichever is
less, at the time of such acquisition and (ii) in any refinanc-
ing, the outstanding Indebtedness being refinanced;
(l) other Liens in existence on the date hereof
listed on Schedule 7.3, provided that no such Lien is spread to
cover any additional property after the date hereof and that
the amount of any Indebtedness or other obligations secured
thereby is not increased;
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(m) Liens granted pursuant to Section 7.7 of the
Reorganization Plan;
(n) Liens granted by the Company or Subsidiaries
upon Real Property and related Personal Property which is Sub-
sidiary Property Under Development and which is either financed
by Indebtedness incurred by Subsidiaries pursuant to Section
7.2(e) or 7.2(h), or contributed by the Company to a Subsidiary
pursuant to Section 7.9(g);
(o) [intentionally omitted];
(p) [intentionally omitted]; and
(q) inchoate Liens solely arising by operation of
law in respect of Indebtedness incurred pursuant to Section
7.2(k).
7.4 Limitation on Guarantee Obligations. Create, incur,
assume or suffer to exist any Guarantee Obligation, except:
(a) the Guarantee Obligations listed on Schedule 4.17; (b)
Guarantee Obligations made in the ordinary course of its busi-
ness by the Company of obligations (other than Indebtedness) of
any of its Subsidiaries, which obligations are otherwise per-
mitted under this Agreement; (c) Guarantee Obligations by the
Company of Indebtedness of any Subsidiary, Unrestricted Subsid-
iary, or Joint Venture; provided, however, that any outstanding
Guarantee Obligations permitted under this Section 7.4(c) in
respect of Indebtedness of any Unrestricted Subsidiary or Joint
Venture shall reduce on a dollar-for-dollar basis the
$55,000,000 limitation otherwise available for Indebtedness
permitted under Section 7.2(e) and that the sum of all Indebt-
edness permitted under Section 7.2(e) and all Guarantee Obliga-
tions permitted pursuant to this Section 7.4(c) shall not ex-
ceed $55,000,000 in the aggregate; provided further, that the
Company may not incur any Guarantee Obligation with respect to
Indebtedness of any Subsidiary permitted pursuant to Section
7.2(h).
7.5 Limitations on Fundamental Changes. Except to the
extent such merger, consolidation, or amalgamation is of a Sub-
sidiary with and into the Company, or between or among wholly
owned Subsidiaries, enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suf-
fer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially
all of its property, business or assets; provided that the Com-
pany or any Subsidiary may convey, sell, assign, transfer or
have condemned or otherwise disposed of assets to the extent
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permitted by Section 7.6 so long as the proceeds of any such
sale are applied in accordance with this Agreement.
7.6 Limitation on Sale of Assets. So long as no Default
or Event of Default has occurred and is continuing or would
result therefrom (unless the Permitted Sale Asset is the sub-
ject of a binding written contract of sale with an unaffiliated
third party entered into prior to the first date on which the
applicable Default or Event of Default occurred)), convey,
sell, lease, assign, transfer or otherwise dispose of any of
its property, business or assets (including receivables and
leasehold interests), whether now owned or hereafter acquired,
except the following ("Permitted Sale Assets"):
(a) raw land;
(b) homes or homesites in the ordinary course of
its business;
(c) obsolete or worn out property disposed of in
the ordinary course of business;
(d) Commercial Real Estate;
(e) (i) the sale or discount without recourse of
Commercial Receivables or Homesite Contract Receivables in the
ordinary course of business; and (ii) during the period com-
mencing on October 1, 1996 and ending on December 31, 1997, the
sale or discount with recourse of Commercial Receivables relat-
ing solely to homesites located in Tennessee in an aggregate
amount not to exceed $8,000,000;
(f) dispositions on or after October 1, 1996 not
otherwise permitted hereunder the proceeds of which, in the
aggregate, do not exceed $2,000,000 in any 12-month period;
(g) sales or other transfers of any partnership
interests or joint venture interests in entities that are not
wholly owned, collectively, by the Company and its Subsidiar-
ies; and
(h) transactions permitted under Section 7.5.
Upon any permitted sale as aforesaid, Collateral Agent shall
execute releases of Collateral Agent's Lien upon the Collateral
included in any such sale; provided that there exists no De-
fault or Event of Default hereunder and no Default or Event of
Default would result therefrom; and provided further, that Col-
lateral Agent's Lien shall continue against the proceeds of
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such sale, as evidenced by any and all documents and filings as
may be required by the Obligee.
7.7 Limitation on Dividends. Declare or pay any divi-
dend (other than dividends payable solely in common stock or
preferred stock of the Company) on, or make any payment on ac-
count of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any Capital Stock of the Company other
than the Preferred Stock, whether now or hereafter outstanding,
or make any other distributions in respect thereof, either di-
rectly or indirectly, whether in cash or property (other than
distributions or dividends in the form of common stock or pre-
ferred stock of the Company) or in obligations of the Company
or any Subsidiary, except for dividends declared and paid by
any Subsidiary to the Company or any Subsidiary.
7.8 Limitation on Capital Expenditures. Make, or enter
into any agreement the performance of the terms of which would
require the Company or any Subsidiary to make (by way of the
acquisition of securities of a Person or otherwise), any expen-
ditures in respect of the purchase or other acquisition of
fixed or capital assets (excluding any such asset acquired in
connection with nominal replacement and maintenance programs
properly charged to current operations), exceeding in the ag-
gregate $25,000,000 for the Company and its Subsidiaries during
any 12-month period from and after October 1, 1996.
7.9 Limitation on Investments, Loans, and Advances. Ex-
cept to the extent of assets in the Reserve Accounts, make any
advance, loan, extension of credit or capital contribution to,
or purchase any stock, bonds, notes, debentures or other secu-
rities of or any assets constituting a business unit of, or
make any other Investment in, any Person, except:
(a) extensions of trade credit in the ordinary
course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Company
or its Subsidiaries for travel, entertainment and relocation
expenses and for advances on salary prior to, and otherwise
payable during, an employee's vacation, in the ordinary course
of business in an aggregate amount for the Company and its Sub-
sidiaries not to exceed $500,000 in any one time outstanding;
(d) investments by the Company in any Subsidiary or
by any Subsidiary in the Company or any other Subsidiary in
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connection with cash management procedures in the ordinary
course of business;
(e) (i) loans by the Company to its Subsidiaries
or by any Subsidiary of the Company to the Company to the ex-
tent such Indebtedness is permitted pursuant to Section 7.2(f);
and (ii) capital contributions to Subsidiaries other than Ven-
ture Subsidiaries so long as the Company or its Subsidiary mak-
ing the capital contribution receives stock equal to the value
of the capital contributed as determined in accordance with
GAAP; provided, that Collateral Agent's Lien shall continue
against such stock received by the Company or its Subsidiary as
aforesaid, which Lien shall be evidenced by any and all docu-
ments and filings as may be required by Collateral Agent and
the Obligee;
(f) extensions of credit for sale of assets;
(g) capital contributions to Venture Subsidiaries
for the purpose of making investments in Joint Ventures and to
Unrestricted Subsidiaries so long as the Company or its Subsid-
iary making the capital contribution receives stock, partner-
ship interests, joint venture interests, or beneficial inter-
ests, respectively, equal to the value of the capital contrib-
uted as determined in accordance with GAAP (and upon any per-
mitted capital contribution as aforesaid, Collateral Agent
shall execute releases of Collateral Agent's Lien upon any Col-
lateral contributed); provided, (i) that no Default or Event of
Default exists hereunder or would result therefrom, (ii) that
Collateral Agent's Lien shall continue against such stock or
other interests received by the Company or its Subsidiary as
aforesaid, which Lien shall be evidenced by any and all docu-
ments and filings as may be required by Collateral Agent and
the Obligee, (iii) such capital contributions shall be limited
to assets (including cash) having fair market values for any
single enterprise or project no greater than $15,000,000 and
fair market values in the aggregate amount not greater than
$35,000,000 plus an amount equal to 75% of all dividends (with-
out duplication) paid to the Company by all Subsidiaries having
investments in Joint Ventures after October 1, 1996.
7.10 Limitation on Optional Payments and Modifications of
Debt Instruments.
(a) Make any optional payment or optional prepay-
ment on, or optional redemption of, or purchase or otherwise
acquire any interest in, any Indebtedness (including payments
on Indebtedness under the Unsecured Cash Flow Notes) other than
the Secured Instrument, except payments on the Foothill Debt.
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(b) Amend, modify or change, or consent or agree to
any amendment, modification or change to any of the terms of
any Unsecured Cash Flow Notes or any Indebtedness outstanding
under the Foothill Loan Documents or any other agreement exe-
cuted in connection with either thereof or otherwise in connec-
tion with any Indebtedness (other than: (1) terms other than
payment terms of Indebtedness permitted to be incurred pursuant
to subsections 7.2(e), (f), (g) (but exclusive of Indebtedness
permitted pursuant thereto consisting of intercompany Indebted-
ness among the Company and its Subsidiaries, the Unsecured Cash
Flow Notes, and Financing Leases), (h), and (k); and (2) other
than any such amendment, modification, or change to any such
other Indebtedness which would extend the maturity or reduce
the amount of any payment of principal thereof or which would
reduce the rate or the amount of interest payable or extend the
date for payment of interest thereon; but in the case of either
(1) or (2), solely to the extent the amendment, modification,
or change to any such Indebtedness is not prohibited by any
other provision in this Agreement or the other Transaction Doc-
uments; and
(c) Amend any subordination provisions of any in-
strument governing any Indebtedness (except for amendments pur-
suant to this Agreement and the Security Documents or the Re-
volving Loan Agreement and the security documents in respect
thereof).
7.11 Transactions with Affiliates. Enter into any trans-
action, including any purchase, sale, lease or exchange of
property or the rendering of any service, with any Affiliate
(other than any Subsidiary), unless such transaction is other-
wise permitted under this Agreement, is in the ordinary course
of the Company's or such Affiliate's business and is upon fair
and reasonable terms no less favorable to the Company or such
Affiliate, as the case may be, than it would obtain in a compa-
rable arms length transaction with a Person not an Affiliate.
7.12 Sale and Leaseback. Enter into any Sale and Lease-
back to the extent the aggregate Book Value of all assets sold
and leased under all such transactions exceeds $2,000,000 dur-
ing the period from October 1, 1996 through the termination of
this Agreement.
7.13 Fiscal Year. Permit the fiscal year of the Company
to end on a day other than December 31.
7.14 Limitation on Negative Pledge Clauses. Enter into
any agreement, other than the Foothill Loan Documents, any in-
dustrial revenue bonds, community development district financ-
ing, purchase money mortgages, Financing Leases, or agreements
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executed in connection with Indebtedness incurred in connection
with Subsidiary Property Under Development permitted by this
Agreement (in which cases, any prohibition or limitation shall
only be effective against the assets financed thereby), with
any Person other than the Obligee pursuant hereto which prohib-
its or limits the ability of the Company or any of its Subsid-
iaries to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
7.15 Deviation from Business Plan. Allow either:
(a) the actual Net Operating Cash Flow during any
fiscal year, to deviate from the Net Operating Cash Flow pro-
jected under the Business Plan by a negative margin equal to or
greater than 30 percent, as of the end of each fiscal quarter
on a cumulative basis; or
(b) the total actual Net Cash Flow for any fiscal
year, including major asset dispositions, to deviate from the
annual Net Cash Flow projected under the Business Plan for such
year by a negative margin equal to or greater than 40 percent.
7.16 Unsold Housing Inventory. Permit Unsold Housing
Inventory to exceed, in the aggregate, $10,000,000 at any one
time.
7.17 Limitation of Bank Accounts. So long as the Secured
Instrument is outstanding, allow cash and Cash Equivalents
maintained in Bank Accounts of the Company and Subsidiaries
other than in the Cash Collateral Account and the restricted
accounts set forth in Schedule 7.17 (including any beneficial
interest therein), less the amount of checks outstanding to pay
current expenses in the ordinary course of business or to
prepay expenses to be incurred in the immediately subsequent
three-month period consistent with past practices, to exceed
$5,000,000 in the aggregate at any time.
7.18 Venture Subsidiaries and Joint Ventures.
(a) Cause, suffer, or permit any Venture Subsidiary
to have any asset or revenues other than the Joint Venture in-
terests owned by such Venture Subsidiary as disclosed on Sched-
ule 4.14(B) and the revenues arising from such interests.
(b) Cause, suffer, or permit any Venture Subsidiary
to create, incur, assume, or suffer to exist any Lien (other
than Liens in favor of Collateral Agent for the benefit of the
Obligee and the holders of the Foothill Debt) upon any of such
Venture Subsidiary's property, assets, or revenues, whether now
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owned or hereafter acquired (including the Joint Venture inter-
ests owned by such Venture Subsidiary as disclosed on Schedule
4.14(B) and the revenues arising from such interests).
7.19 Excluded Subsidiaries; Unrestricted Subsidiaries.
Except as disclosed on Schedule 7.19, permit any Excluded Sub-
sidiary to own any assets, have any revenues or liabilities, or
conduct any business or except as specifically agreed in writ-
ing by the Obligee permit any Unrestricted Subsidiary to own
any assets, have any revenues or liabilities or conduct any
business.
SECTION 8. EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default; Remedies. If any of the follow-
ing events shall occur and be continuing:
(a) (i) The Company or any Subsidiary shall fail
to pay when due any amount payable to Obligee hereunder or
under any other Transaction Document; or
(b) Any representation or warranty made or deemed
made by the Company or any of its Subsidiaries herein or in any
other Transaction Document or which is contained in any cer-
tificate, document or financial or other statement furnished at
any time under or in connection with this Agreement shall prove
to have been incorrect in any material respect on or as of the
date made or deemed made; or
(c) The Company shall default in the observance or
performance of any agreement contained in Section 7; or
(d) The Company or any Subsidiary shall default in
the observance or performance of any other agreement contained
in this Agreement (other than as provided in paragraphs (a)
through (c) of this Section) or in any other Transaction Docu-
ment, and such default shall continue unremedied for a period
of thirty (30) days; or
(e) The Company shall fail to pay any obligations
under the Foothill Loan Documents or any principal of or inter-
est on any Unsecured Cash Flow Notes (whether at scheduled ma-
turity or by required prepayment, acceleration, demand or oth-
erwise) and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument
relating to such obligation under the Foothill Loan Documents
or any Unsecured Cash Flow Notes; or
(f) Any Foothill Debt or any Unsecured Cash Flow
Notes shall be declared to be due and payable, or required to
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be prepaid (other than by a regularly scheduled required pre-
payment), prior to the stated maturity thereof; or
(g) Any Subsidiary of the Company shall fail to pay
any principal of, or interest on, any Indebtedness or any Guar-
antee Obligation (other than any Guarantee Obligation created
pursuant to any Transaction Document) in excess of $1,000,000,
when due and payable (whether at scheduled maturity or by re-
quired prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument under which such
Indebtedness or Guarantee Obligation was created and, if such
agreement or instrument permits the acceleration of the matu-
rity of such Indebtedness or Guarantee Obligation as a result
of such failure, such Indebtedness or Guarantee Obligation
shall be declared to be due and payable, or required to be pre-
paid (other than by a regularly scheduled required prepayment),
prior to the stated maturity thereof; or any such Indebtedness
or Guarantee Obligation shall be declared to be due and pay-
able, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity;
or
(h) The Company shall (i) default in any payment of
principal of or interest on any Indebtedness (other than the
Secured Instrument, the Foothill Debt, or any Unsecured Cash
Flow Notes) or in the payment of any Guarantee Obligation in
excess of $1,000,000, beyond the period of grace, if any,
provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created; or (ii)
default in the observance or performance of any other agreement
or condition relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or
other event or condition is to cause, or permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of
such Guarantee Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness
to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or
(i) (i) The Company or any of its Subsidiaries
shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment,
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winding-up, liquidation, dissolution, composition or other re-
lief with respect to it or its debts, or (B) seeking appoint-
ment of a receiver, trustee, custodian or other similar of-
ficial for it or for all or any substantial part of its assets,
or the Company or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors, or (ii) there
shall be commenced against the Company or any of its Subsidiar-
ies any case, proceeding or other action of a nature referred
to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of
60 days, or (iii) there shall be commenced against the Company
or any of its Subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, dis-
traint or similar process against all or any substantial part
of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry
thereof, or (iv) the Company or any of its Subsidiaries shall
take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth
in clauses (i), (ii), or (iii) above, or (v) the Company or any
of its Subsidiaries shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as
they become due, provided that the Company or any of its Sub-
sidiaries may admit in writing that it is "insolvent" as such
term is defined in, and for purposes of, Section 108(a)(1)(8)
of the Code, or (vi) the Company or any of its Subsidiaries
shall cause to be reinstated the Reorganization Proceedings; or
(j) The Confirmation Order shall be reversed, with-
drawn, modified (in any manner adverse to the Company or any of
its Subsidiaries), or any rehearing shall be ordered with re-
spect thereto by the Bankruptcy Court or by any court having
jurisdiction over the Company; or
(k) (i) There occurs one or more events or condi-
tions described in Section 4.12 which individually or in the
aggregate result in liability of the Company or any Commonly
Controlled Entity in excess of $4,600,000; or the present value
of all accrued benefits under each Single Employer Plan (based
on the reasonable assumptions used by the independent actuary
for such Plan for purposes of establishing the minimum funding
requirements under Section 412 of the Code), as of the last
annual valuation date, exceed the value of the assets of such
plan allocable to such accrued benefits, individually or in the
aggregate for all Single Employer Plans with respect to which
the value of the assets exceed the present value of the accrued
benefits, by more than $4,600,000; or
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(l) One or more judgments or decrees shall be en-
tered against the Company or any of its Subsidiaries involving
in the aggregate a liability (not paid or fully covered by in-
surance) of $500,000 or more in the case of the Company or any
of its Subsidiaries and all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof; or
(m) (i) Any Subsidiary Guaranty or any Security
Document shall cease, for any reason, to be in full force and
effect or the Company or any of its Subsidiaries, as the case
may be, party thereto shall so assert in writing, or (ii) any
Security Document shall cease to be effective to grant a per-
fected Lien on the collateral described therein with the prior-
ity purported to be created thereby (other than as a result of
any action or inaction on the part of the Obligee or their
agents or bailees or other than with respect to Collateral hav-
ing an aggregate value of $100,000 or less); or
(n) Other than the Obligee or any Affiliate of the
Obligee and any Person acting in concert with the Obligee or
any Affiliate of the Obligee, any Person that is not a
transferee of the Obligee or of any Affiliate of the Obligee or
two or more such Persons acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended) of 30% or more of the
outstanding Capital Stock of the Company, or fewer than three
members of the Board of Directors of the Company shall be a
designee of the Obligee, other than as a result of the
Obligee's failure to nominate a successor to a designee who has
resigned or been removed for cause; or
(o) Any event or change shall occur that has caused
or evidences, either in any case or in the aggregate, a Mate-
rial Adverse Effect; or
(p) The Total Unsecured Claims shall exceed $1.5
Billion; or
(q) The Company or Special Subsidiary shall default
in the observance or performance of any agreement contained in
Section 3.7;
then, and in any such event: (A) if such event is an Event of
Default specified in clause (i), (ii), (iv), (v) or (vi) of
Section 8.1(i) above, automatically the entire amount of the
Secured Instrument and all other amounts owing under this
Agreement and the Secured Instrument shall immediately become
due and payable in full, which amount shall accrue interest or
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dividends, as applicable, at the Default Rate as well before as
after judgment, and the Obligee and Collateral Agent shall have
all rights and remedies given to the Obligee and Collateral
Agent pursuant to the Security Documents and all rights of a
secured party, mortgagee and pledgee under applicable law, all
of which rights and remedies shall be cumulative and non-
exclusive, to the extent permitted by law; and (B) if such
event is any other Event of Default, the Obligee may, by notice
of default to the Company, declare the entire amount of the
Secured Instrument and all other amounts owing under this
Agreement and the Secured Instrument to be due and payable in
full, which amount shall accrue interest or dividends, as
applicable, at the Default Rate as well before as after judg-
ment, and the Obligee and Collateral Agent shall have all
rights and remedies given to the Obligee and Collateral Agent
pursuant to the Security Documents and all rights of a secured
party, mortgagee and pledgee under applicable law, all of which
rights and remedies shall be cumulative and non-exclusive, to
the extent permitted by law.
SECTION 9. THE COLLATERAL AGENT
9.1 [intentionally omitted]
9.2 Appointment of Collateral Agent. The Obligee hereby
irrevocably designates and appoints each of The Bank of New
York and Foothill Capital Corporation as Collateral Agent under
this Agreement and the Security Documents to which the
Collateral Agent is a party with respect to the SP Sub
Collateral and the Collateral other than SP Sub Collateral,
respectively, and the Collateral Agent hereby accepts such ap-
pointment, subject to the terms and provisions of this Agree-
ment, the Intercreditor Agreement and the Security Documents to
which it is a party. The Obligee hereby further authorizes and
directs Collateral Agent to enter into the Security Documents,
the Intercreditor Agreement and all other documents, consents,
joinders, acknowledgments and other written matter to be exe-
cuted and delivered by Collateral Agent on the Issuance Date
and agrees to be bound by the terms thereof. The Obligee ir-
revocably authorizes the Collateral Agent, as Collateral Agent
for the Obligee, to take such action on its behalf under the
provisions of this Agreement, the Intercreditor Agreement and
the Security Documents to which Collateral Agent is a party,
and to exercise such powers and perform such duties as are ex-
pressly delegated to Collateral Agent by the terms of this
Agreement, the Intercreditor Agreement and the Security Doc-
uments to which it is a party, together with such other powers
as are reasonably incidental thereto; provided that Collateral
Agent shall not enter into any consent to any amendment, modi-
fication, termination or waiver of any provision contained in
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this Agreement or any Security Document to which it is party
without the prior written consent of the Obligee. The Obligee
hereby authorizes Collateral Agent to release Collateral only
as expressly permitted or required under this Agreement, the
Intercreditor Agreement or the Security Documents and agrees
that a certificate executed by Collateral Agent evidencing such
release of Collateral shall be conclusive evidence of such
release to any third party. Collateral Agent shall not
subordinate or release any Liens under any of the Security
Documents except as provided in this Agreement, the
Intercreditor Agreement or upon the written direction of the
Obligee. All notices and directions to Collateral Agent shall
be given in writing by the Obligee.
9.3 [intentionally omitted]
9.4 Delegation of Duties. Collateral Agent may execute
any of its duties under this Agreement and the other Secured
Instrument Documents by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Collateral Agent shall not
be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by it with reasonable care. Not-
withstanding any provision to the contrary elsewhere in this
Agreement, Collateral Agent shall not have any duties or re-
sponsibilities, except those expressly set forth herein, or any
fiduciary relationship with the Obligee, and no implied cov-
enants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Se-
cured Instrument Document or otherwise exist against Collateral
Agent; and Collateral Agent is acting hereunder and under the
other Secured Note Documents solely as the collateral agent of
the Obligee pursuant hereto and thereto, and Collateral Agent
is not acting as trustee for the Obligee.
9.5 Exculpatory Provisions. Neither the Obligee, Col-
lateral Agent nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (a)
liable for any action lawfully taken or omitted to be taken by
it or such Person under or in connection with this Agreement or
any other Transaction Document (except for its or such Persons
own gross negligence or willful misconduct) or (b) responsible
in any manner for any recitals, statements, representations or
warranties made by the Company or any officer thereof contained
in this Agreement or any other Transaction Document or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Obligee under or in connec-
tion with, this Agreement or any other Secured Floating Rate
Note Document or for the value, validity, effectiveness, genu-
ineness, enforceability or sufficiency of this Agreement or the
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Secured Instrument or any other Transaction Document or for any
failure of the Company to perform its obligations hereunder or
thereunder. Neither the Obligee nor Collateral Agent shall be
under any obligation to ascertain or to inquire as to the
observance or performance of any of the agreements contained
in, or conditions to, this Agreement or any other Transaction
Document or as to the use of proceeds of the Secured Instrument
or the Investment Agreement or of the existence or possible
existence of a Default or Event of Default, or to inspect the
properties, books or records of the Company.
9.6 Reliance by the Obligee.
(a) Each of the Obligee and Collateral Agent shall
be entitled to rely, and shall be fully protected in relying,
upon any Secured Instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal
counsel (including counsel to the Company), independent
accountants and other experts selected by the Obligee or
Collateral Agent, as the case may be.
(b) Collateral Agent shall be fully justified in
failing or refusing to take any action under this Agreement or
any other Transaction Document unless (i) it shall first re-
ceive such advice or concurrence as it deems appropriate from
the Obligee, or (ii) it shall first be indemnified to its
satisfaction by the Obligee against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action, except in the case of
Collateral Agent's gross negligence or willful misconduct.
Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement, the
Secured Instrument and the other Transaction Documents in
accordance with a request of the Obligee and such request and
any action taken or failure to act pursuant thereto shall be
binding upon the Obligee and all future holders of the Secured
Instrument.
9.7 Notice of Default. Neither the Obligee nor Collat-
eral Agent shall be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the
Obligee or Collateral Agent, as the case may be, has received
notice from the Obligee (in the case of Collateral Agent) or
the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a
"notice of default." If the Obligee receives such a notice,
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the Obligee shall promptly give notice thereof to Collateral
Agent. If Collateral Agent receives such a notice, Collateral
Agent shall promptly give notice thereof to the Obligee.
Collateral Agent shall take such action with respect to such
Default or Event of Default as shall be directed by the Obligee
(subject to the provisions of Section 9.6(b)); provided that
unless and until Collateral Agent shall have received such
directions, Collateral Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Obligee.
9.8 Non-Reliance on Collateral Agent. The Obligee ex-
pressly acknowledges that neither Collateral Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it
and that no act by Collateral Agent hereinafter taken, includ-
ing any review of the affairs of the Company or any of its Sub-
sidiaries, shall be deemed to constitute any representation or
warranty by Collateral Agent to the Obligee. The Obligee
represents to Collateral Agent that it has, independently and
without reliance upon Collateral Agent, and based on such
documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries and made
its own decision to enter into this Agreement. The Obligee
also represents that it will, independently and without
reliance upon Collateral Agent, and based on such documents and
information as it shall deem appropriate at the time, continue
to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other
Transaction Documents, and to make such investigation as it
deems necessary to inform itself as to the business,
operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries. Except
for the notices, reports and other documents expressly required
to be furnished by the Collateral Agent to the Obligee
hereunder, if any, Collateral Agent shall not have any duty or
responsibility to provide the Obligee with any credit or other
information concerning the business, operations, property,
condition (financial or otherwise), prospects or
creditworthiness of the Company or any of its Subsidiaries
which may come into the possession of Collateral Agent or any
of its officers, directors, employees, agents, attorneys-in-
fact or Affiliates.
9.9 Indemnification. The Obligee agrees to indemnify
Collateral Agent in its capacity as such (to the extent not
reimbursed by the Company and without limiting the obligation
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of the Company to do so) from and against any and all liabili-
ties, obligations, losses, damages, penalties, actions, judg-
ments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including at any time follow-
ing the payment of the Secured Instrument) be imposed on,
incurred by or asserted against Collateral Agent in any way
relating to or arising out of this Agreement, any of the other
Transaction Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by Collateral
Agent under or in connection with any of the foregoing;
provided that the Obligee shall not be liable for the payment
of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
or disbursements resulting solely from Collateral Agent's gross
negligence or willful misconduct. The agreements in this
Section shall survive the payment of the Secured Instrument and
all other amounts payable hereunder.
9.10 [intentionally omitted]
9.11 [intentionally omitted]
9.12 Successor Collateral Agent. Collateral Agent may
resign as Collateral Agent, upon 30 days' notice to the
Obligee. If Collateral Agent shall resign as Collateral Agent
under this Agreement and the other Transaction Documents, then
the Obligee shall appoint a successor collateral agent for the
Obligee, which successor collateral agent, except if an Event
of Default shall have occurred and be continuing, shall be
approved by the Company (which approval shall not be
unreasonably withheld), whereupon, effective upon acceptance of
its appointment as successor collateral agent, such successor
collateral agent shall succeed to the rights, powers and duties
of Collateral Agent and the term "Collateral Agent" shall mean
such successor collateral agent, and the former Collateral
Agent's rights, powers and duties as Collateral Agent shall be
terminated, without any other or further act or deed on the
part of such former Collateral Agent or any of the parties to
this Agreement or any holder of the Secured Instrument. If the
Obligee fails to appoint a successor collateral agent for the
Obligee as provided above within 30 days after the resignation
of Collateral Agent, then Collateral Agent may appoint a
successor collateral agent for the Obligee, which successor
collateral agent, except if an Event of Default shall have
occurred and be continuing, shall be approved by the Company
(which approval shall not be unreasonably withheld), whereupon,
effective upon acceptance of its appointment as successor
collateral agent, such successor collateral agent shall succeed
to the rights, powers and duties of Collateral Agent and the
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term "Collateral Agent" shall mean such successor collateral
agent and the former Collateral Agent's rights, powers and
duties as Collateral Agent, as the case may be, shall be
terminated, without any other or further act or deed on the
part of such former Collateral Agent or any of the parties to
this Agreement or any holder of the Secured Instrument. After
any retiring Collateral Agent's resignation as Collateral
Agent, the provisions of this Section 9 shall inure and survive
to its benefit as to any actions taken or omitted to be taken
(or any matter related thereto) by it while it was Collateral
Agent under this Agreement and the other Transaction Documents.
Notwithstanding anything herein to the contrary, the
resignation of Collateral Agent shall not be effective unless
and until a successor collateral agent has been appointed and
has accepted such appointment.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, the
Secured Instrument, any other Transaction Document, nor any
terms hereof or thereof may be amended, supplemented or
modified except with the prior written consent of the Obligee.
No such amendment, supplement or modification shall amend,
modify or waive any provision of Section 9 without the written
consent of then Collateral Agent affected thereby. Any such
waiver of a Default or Event of Default in accordance with the
terms hereof and any such amendment, supplement or modification
shall be binding upon the Company, the Obligee, Collateral
Agent and all future holders of the Secured Instrument. In the
case of any waiver, the Company, the Obligee, and Collateral
Agent shall be restored to their former position and rights
hereunder and under the outstanding Secured Instrument and any
other Transaction Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent
thereon.
10.2 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise ex-
pressly provided herein, shall be deemed to have been duly
given or made when delivered by hand, or five Business Days
after being deposited in the mail, postage prepaid, or, in the
case of telecopy notice, when the recipient has confirmed re-
ceipt, addressed as follows in the case of the Company, the
Obligee, and Collateral Agent:
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The Company: Atlantic Gulf Communities Corporation
2601 South Bayshore Drive
Miami, Florida 33133-5461
Attention: John H. Fischer,
Vice President and Treasurer
Telecopy: (305) 859-4623
Copy to: Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Attention: Carter Strong, Esquire
Telecopy: (202) 857-6395
The Obligee: AP-AGC, LLC
Two Manhattanville Road
Purchase, New York 10577
Attention: W. Edward Scheetz
Telecopy: (212) 261-4060
Copy to: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Philip Mindlin, Esquire
Trevor Norwitz, Esquire
Telecopy: (212) 403-2000
The Collateral
Agent With Respect
to Collateral Other
than SP Sub
Collateral: Foothill Capital Corporation
Suite 1500
11111 Santa Monica Boulevard
Los Angeles, California 90025
Attention: Jeffrey Nikorla
Telecopy: (310) 479-0461
Copy to: Brobeck, Phleger & Harrison LLP
Suite 2100
550 South Hope Street
Los Angeles, California 90071
Attention: Jeffrey S. Turner, Esquire
Telecopy: (213) 745-3345
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The Collateral
Agent With Respect
to SP Sub
Collateral: The Bank of New York
c/o The Bank of New York Trust Company
of Florida, N.A.
10161 Centurion Parkway
Jacksonville, Florida 32256
Attention: Janalee R. Scott
Telecopy: (904) 645-1998
and, in the case of the other parties hereto, as set forth un-
der that party's name on the signature pages hereof, or, in
each case, to such other address as may be hereafter notified
by the respective parties hereto and any future holders of the
Secured Instruments; provided, however, that any notice,
request or demand to or upon Collateral Agent or the Obligee
shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exer-
cise and no delay in exercising, on the part of Collateral
Agent or the Obligee, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any sin-
gle or partial exercise of any right, remedy, power or privi-
lege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
10.4 Survival of Certain Provisions. All representations
and warranties made hereunder or under any other Transaction
Document and in any document, certificate or statement deliv-
ered pursuant hereto or thereto or in connection herewith or
therewith, all indemnities made hereunder or under any thereof
agreements or undertakings herein or in any thereof in favor of
the Obligee, the Obligee or Collateral Agent and all agreements
or undertakings in Section 3 hereof or otherwise contained
herein or in any thereof relating to the Collateral shall sur-
vive the execution and delivery of this Agreement and the
Secured Instrument and the payment in full of the Secured
Instrument and all Obligations hereunder. Without limiting the
generality of the foregoing, the following agreements and
undertakings shall continue in full force and effect so long as
the Secured Instrument, any Preferred Stock or any unpaid
Repurchase Price or Optional Redemption Price (each as defined
in the Certificate of Designation) remains outstanding, whether
or not any loan shall be outstanding hereunder: (i) each term
and provision of the Secured Instrument, the Subsidiary
Guaranties, and the Security Documents, (ii) Section 3, (iii)
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Sections 6 and 7, but only during the period specified in the
introductory paragraph to each such Section, except that the
last paragraph of Section 7.6 shall remain in effect whether or
not the balance of Section 7 shall at the time be in effect and
(iv) Sections 9, 10 and 11 and (in each case) the relevant def-
initions.
10.5 Payment of Expenses and Taxes. The Company agrees
(a) to pay or reimburse the Obligee and Collateral Agent for
all its out-of-pocket costs and expenses incurred in connection
with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement, the
Secured Instrument, the Intercreditor Agreement, and the other
Transaction Documents and any other documents prepared in
connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the
reasonable fees and disbursements of counsel to the Obligee and
counsel to Collateral Agent, and the reasonable allocated costs
of in-house counsel to the Obligee and in-house counsel to Col-
lateral Agent, (b) to pay or reimburse the Obligee and
Collateral Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights
under this Agreement, the Secured Instrument, the Intercreditor
Agreement, the other Transaction Documents and any such other
documents, including fees and disbursements of counsel to the
Obligee and counsel to Collateral Agent, and the reasonable
allocated costs of in-house counsel to the Obligee and in-house
counsel to Collateral Agent, (c) to pay, indemnify, and hold
the Obligee and Collateral Agent harmless from, any and all
recording and filing fees, any and all Florida documentary
stamp taxes and Florida intangible personal property taxes and
any and all other stamp, excise and other taxes (other than any
taxes which are determined based solely upon the income or rev-
enues of the Obligee or Collateral Agent), if any, which may be
payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the
transactions contemplated by this Agreement, the Secured
Instrument, the other Transaction Documents, and any such other
documents, and any and all liabilities with respect to, or
resulting from any delay in paying any of such fees and taxes,
(d) to pay the costs of furnishing all opinions of counsel for
the Company, or obtaining technical assistance advisories,
required hereunder, (e) to pay the costs of obtaining any
required consents, amendments, waivers or other modifications
to the Foothill Loan Documents and the agreements governing the
Unsecured Cash Flow Notes, and any other agreements, (f) to pay
the costs and expenses incurred to continue the perfection of
any Liens in favor of the Obligee and Collateral Agent pursuant
to any of the Security Documents, including the costs of title
searches, title insurance premiums, UCC searches and UCC filing
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charges and (g) to pay, indemnify, and hold each the Obligee
and Collateral Agent harmless from and against any and all
other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this
Agreement, the Secured Instrument, the Intercreditor Agreement,
the other Transaction Documents, and any such other documents
(all the foregoing, collectively, the "indemnified
liabilities"), provided, that the Company shall have no
obligation hereunder to Collateral Agent or the Obligee, with
respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of Collateral Agent or the
Obligee, as to such party or (ii) as to the Obligee, legal
proceedings commenced against the Obligee by any Transferee (as
defined in Section 10.6). The agreements in this Section shall
survive repayment of the Secured Instrument and all other
amounts payable hereunder.
10.6 Successors and Assigns; Participations; Purchasing
Obligee.
(a) This Agreement shall be binding upon and inure
to the benefit of the Company, the Obligee, Collateral Agent,
all future holders of the Secured Instrument and their
respective successors and assigns, except that the Company may
not assign or transfer any of its rights or obligations under
this Agreement and the other Transaction Documents without the
prior written consent of the Obligee.
(b) Subject to Sections 10.6(h) and (k), the
Obligee may at any time sell to one or more banks or other
entities ("Participants") participating interests in the
Secured Instrument or any other interest of the Obligee
hereunder and under the other Transaction Documents. In the
event of any such sale by the Obligee of participating
interests to a Participant, the Obligee's obligations under
this Agreement to the other parties to this Agreement shall
remain unchanged, the Obligee shall remain solely responsible
for the performance thereof, the Obligee shall remain the
holder of its Secured Instrument for all purposes under this
Agreement and the other Transaction Documents, and the Company
and Collateral Agent shall continue to deal solely, and di-
rectly, with the Obligee in connection with the Obligee's
rights and obligations under this Agreement and the other
Transaction Documents. The Company agrees that if amounts
outstanding under this Agreement and the Secured Instrument are
due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of setoff in
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respect of its participating interest in amounts owing under
this Agreement and the Secured Instrument to the same extent as
if the amount of its participating interest were owing directly
to it as the Obligee under this Agreement or the Secured
Instrument, provided that such Participant shall only be
entitled to such right of setoff if it shall have agreed in the
agreement pursuant to which it shall have acquired its
participating interest to share with the Obligee the proceeds
thereof as provided in Section 10.7. The Company also agrees
that each Participant shall be entitled to the benefits of
Sections 2.7, 2.9 and 10.5 with respect to its participation in
the Secured Instrument outstanding from time to time; provided,
that no Participant shall be entitled to receive any greater
amount pursuant to such Sections than the transferor Obligee
would have been entitled to receive in respect of the amount of
the participation transferred by such transferor the Obligee to
such Participant had no such transfer occurred.
Notwithstanding anything herein to the contrary, participants
shall not be entitled to require the Obligee to take or omit to
take any action hereunder except with respect to amendments or
waivers resulting in (i) the extension of the regularly
scheduled maturity dates of any portion of a Secured Instrument
in which such Participant is participating (it being understood
that any waiver of an installment on, or the application of,
any prepayment or the method of application of any prepayment
to the amortization of the Secured Instruments shall not
constitute an extension of the regularly scheduled maturity
dates), (ii) a reduction of the amount of, or the rate of
interest or dividends, as applicable (except in connection with
a waiver of the applicability of any post-default increase in
interest rates or dividends, as applicable, or margins) or fees
payable on the Secured Instrument in which such participant is
participating, or (iii) the release of all or substantially all
of the Collateral or any Subsidiary Guaranty (except as
otherwise expressly provided in the Transaction Documents).
(c) Subject to Sections 10.6(h) and (k), the
Obligee may at any time sell to any bank or other entity
("Purchasing Obligee") all or any part of its rights and
obligations under this Agreement and the Secured Instrument and
other Transaction Documents, whereupon (i) the Purchasing
Obligee shall be a party hereto and have the rights and
obligations of a Obligee hereunder and under the other
Transaction Documents, and (ii) the transferor Obligee shall,
to the extent of such transfer, be released from its
obligations under this Agreement and under the other Trans-
action Documents (and, in the case of a transfer covering all
or the remaining portion of a transferor Obligee's rights and
obligations under this Agreement and under the other Secured
Instrument Documents, such transferor Obligee shall cease to be
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a party hereto and thereto). Such transfer shall be deemed to
amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Obligee
under this Agreement and the Secured Instrument and other
Secured Instrument Documents. On or prior to the transfer
effective date, the Company, at its own expense, shall execute
and deliver to the Obligee new Secured Instrument(s) to the
order of such Purchasing Bank in an amount equal to the Secured
Instrument or Secured Instrument portion acquired by it and, if
the transferor Obligee has retained a portion of the Secured
Instrument hereunder, new Secured Instrument(s) to the order of
the transferor Obligee in an amount equal to the portion re-
tained by it. Such new Secured Instrument(s) shall be dated
the same date as, and shall otherwise be in the form of, the
Secured Instrument(s) replaced thereby. The Secured
Instrument(s) replaced by the new Secured Instrument(s), marked
"renewed and replaced," shall be attached to the new Secured
Instrument(s); and a copy thereof shall be sent to the Company.
(d) [intentionally omitted]
(e) [intentionally omitted]
(f) Subject to Section 10.16, the Company autho-
rizes the Obligee to disclose to any Participant or Purchasing
Obligee (each, a "Transferee") and any prospective Transferee
any and all information in the Obligee's possession concerning
the Company and its Affiliates; provided, however, that such
Transferee agrees in writing to be bound by the terms of Sec-
tion 10.16.
(g) If, pursuant to this Section 10.6, any interest
in this Agreement or any Secured Instrument is transferred to
any Purchasing Obligee which is organized under the laws of any
jurisdiction other than the United States or any state thereof,
the Company will not be required to pay any increased
withholding taxes of the United States or any political
subdivision thereof unless, prior to the date of transfer, the
transferor Obligee shall cause such Purchasing Obligee to
comply with the requirements of Section 2.7.
(h) [intentionally omitted]
(i) Nothing herein shall prohibit any Obligee which
is a bank from pledging or assigning any Secured Instrument to
any Federal Reserve Bank in accordance with applicable law.
(j) Notwithstanding the foregoing provisions of
this Section 10.6, no holder of a Secured Instrument shall
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transfer such Secured Instrument in a manner which would
violate any Requirement of Law.
(k) Notwithstanding the foregoing provisions of
this Section 10.6, the initial Obligee hereunder agrees not to
sell or assign the Secured Instrument prior to the earliest of
(a) the second anniversary of the Issuance Date, (b) the
occurrence of an Event of Default and (c) a Negative
Shareholder Vote.
10.7 Adjustments; Setoff.
(a) If at any time when there is more than one
Obligee any Obligee (a "Benefitted Obligee") shall at any time
receive any payment of all or part of its Secured
Instrument(s), or interest thereon, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by
setoff, pursuant to events or proceedings of the nature
referred to in Section 8.1(i), or otherwise), in a greater
proportion than any such payment to or collateral received by,
any other Obligee, if any, in respect of such other Obligee's
Secured Instrument(s), or interest thereon, or fees due to it
hereunder, such Benefitted Obligee shall purchase for cash from
the other Obligee such portion of each such other Obligee's
Secured Instrument(s), or make such payment on account of such
fees, or shall provide such other Obligee with the benefits of
any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Obligee to share the excess
payment or benefits of such collateral or proceeds ratably with
each of the Obligees; provided, however, that if all or any
portion of such excess payment or benefits is thereafter
recovered from such Benefitted Obligee, such purchase shall be
rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest. The Company
agrees, that each Obligee purchasing a portion of another
Obligee's Secured Instrument(s) owing to it may exercise all
rights of payment (including, without limitation, rights of
setoff) with respect to such portion as fully as if such
Obligee were the direct holder of such portion.
(b) In addition to any rights and remedies of the
Obligee provided by law, each Obligee shall have the right,
without prior notice to the Company, any such notice being ex-
pressly waived by the Company to the extent permitted by ap-
plicable law, upon any Secured Obligations becoming due
(whether at the stated maturity, by acceleration or otherwise)
to set off and appropriate and apply against such amount any
and all deposits (general or special, time or demand, provi-
sional or final), in any currency, and any other credits, in-
debtedness or claims, in any currency, in each case whether
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direct or indirect, absolute or contingent, matured or unma-
tured, at any time held or owing by such Obligee to or for the
credit or the account of the Company. Each Obligee agrees
promptly to notify the Company and each other Obligee after any
such setoff and application made by such the Obligee, provided
that the failure to give such notice shall not affect the va-
lidity of such setoff and application.
10.8 Appointment of the Obligee as the Company's Lawful
Attorney. The Company irrevocably designates, makes, consti-
tutes and appoints the Obligee (and all Persons designated by
the Obligee) as the Company's true and lawful attorney (and
agent-in-fact) coupled with an interest, with the power to sign
the name of the Company on any instruments, documents and
agreements, including, without limitation, security agreements,
pledge agreements, mortgages, and financing statements, as
deemed by the Obligee as necessary or reasonably required by
the Obligee to grant, perfect, maintain and continue the Liens
in the Collateral or to monitor or administer the Secured
Instrument, together with any and all amendments, modifica-
tions, extensions, substitutions and renewals thereof and de-
liver any of such instruments, documents and agreements to such
persons as the Obligee, in its sole discretion, may elect, and
in such event copies thereof shall be delivered to the Company.
10.9 Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of sepa-
rate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. A
set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Obligee.
10.10 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the re-
maining provisions hereof, and any such prohibition or unen-
forceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11 Integration. This Agreement, together with the
other Transaction Documents represents the entire agreement of
the Company, Collateral Agent and the Obligee and supersedes
all prior agreements with respect to the subject matter hereof,
and there are no promises, undertakings, representations or
warranties by Collateral Agent or the Obligee relative to
subject matter hereof not expressly set forth or referred to
herein or in the other Transaction Documents.
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10.12 GOVERNING LAW. THIS AGREEMENT, THE SECURED
INSTRUMENTS AND THE RIGHTS AND OF THE PARTIES UNDER THIS
AGREEMENT AND THE SECURED INSTRUMENTS SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
10.13 SUBMISSION TO JURISDICTION; WAIVERS. THE COMPANY
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LE-
GAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE
OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY, OR FOR REC-
OGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO
THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE
STATES OF CALIFORNIA AND NEW YORK, THE COURTS OF THE UNITED
STATES OF AMERICA FOR THE CENTRAL DISTRICT OF CALIFORNIA AND
THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM
ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY
BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PRO-
CEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR
CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH AC-
TION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM
OF MAIL), POSTAGE PREPAID, TO THE COMPANY AT ITS ADDRESS SET
FORTH IN SECTION 10.2 OR AT SUCH OTHER ADDRESS OF WHICH THE
OBLIGEE SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS MANY OTHER MANNER PERMITTED
BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDIC-
TION;
(e) WAIVES (i) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF THE
SECURED INSTRUMENTS AND ALL OTHER SECURED INSTRUMENT DOCUMENTS
AND HEREBY RATIFIES AND CONFIRMS WHATEVER THE OBLIGEE OR
COLLATERAL AGENT MAY DO IN THIS REGARD, (ii) ALL RIGHTS TO
NOTICE OF A HEARING PRIOR TO THE OBLIGEE'S OR COLLATERAL
AGENT'S ATTACHMENT OR LEVY UPON THE COLLATERAL, AND ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
THE OBLIGEE OR COLLATERAL AGENT TO EXERCISE ANY OF THE
OBLIGEE'S OR COLLATERAL AGENT'S REMEDIES, AND (iii) THE BENEFIT
OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND
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(f) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL
ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
10.14 Acknowledgments. The Company hereby acknowledges
that:
(a) it has been advised by counsel in the negotia-
tion, execution and delivery of this Agreement, the Secured
Instrument and the other Transaction Documents;
(b) neither Collateral Agent nor the Obligee has
any fiduciary relationship to the Company, and the relationship
between the Obligee, on one hand, and the Company, on the other
hand, is solely that of debtor and creditor; and
(c) no joint venture exists between the Company and
the Obligee.
10.15 WAIVERS OF JURY TRIAL. THE COMPANY AND THE THE
OBLIGEE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREE-
MENT OR THE SECURED INSTRUMENT OR ANY OTHER TRANSACTION
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.16 Confidentiality. The Obligee agrees to take normal
and reasonable precautions and exercise due care to maintain
the confidentiality of all non-public information provided to
it by the Company or any of its Subsidiaries, or by Collateral
Agent on the Company's behalf, in connection with this Agree-
ment or any other Transaction Document and agrees and under-
takes that neither it nor any of its Affiliates shall use any
such information for any purpose or in any manner other than
pursuant to the terms contemplated by this Agreement and the
other Transaction Documents. The Obligee may disclose such in-
formation (a) at the request of any regulatory authority or in
connection with an examination of the Obligee by any such au-
thority; (b) pursuant to subpoena or other court process; (c)
when required to do so in accordance with the provisions of any
applicable law; (d) at the express direction of any other
agency of any State of the United States of America or of any
other jurisdiction, in which the Obligee conducts its business;
(e) to the Obligee's independent auditors and other
professional advisors; (f) following an Event of Default, in
connection with the sale or other realization on the Collateral
under the Security Documents; (g) in connection with any
litigation or dispute between (i) the Obligee and (ii) the
Company and/or any Subsidiary; and (h) in connection with any
litigation or dispute involving the Obligee if the disclosure
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is determined by the Obligee to be necessary for the defense or
protection of the Obligee's rights and/or interests. The
Obligee further agrees, upon receipt by the Obligee of a
request to disclose any information to a Governmental Authority
or courts (other than governmental bank examiners and
independent auditors of the Obligee, to notify the Company of
such request and to permit, to the extent practicable, the
Company to seek a protective order with respect thereto;
provided, however, that no the Obligee shall be requested to
notify the Company of any such request if (i) it is not
permitted to do so by applicable law and regulations, (ii) it
is requested not to notify the Company by any Person acting or
purporting to act on behalf of a Governmental Authority, or
(iii) it otherwise reasonably believes that it is not permitted
to so notify the Company.
10.17 Controlling Agreement. In the event of any con-
flict between the terms and conditions of this Agreement and
the terms and conditions of any other Secured Instrument
Document, the terms and conditions of this Agreement shall con-
trol.
SECTION 11. THE CO-MAKERS
11.1 Certain Defined Terms. As used in this Section, the
following terms shall have the following meanings unless the
context otherwise requires:
"payment in full," "paid in full" or any similar
term means payment in full in cash of the Secured Obligations
including all redemption or repurchase obligations, principal,
dividends, interest, costs, fees and expenses (including,
without limitation, reasonable legal fees and expenses) of
Obligee and Collateral Agent as required under the Transaction
Documents.
11.2 All Co-Makers Liable. Subject to the provisions of
subsection 11.3, all Co-Makers are jointly and severally irre-
vocably and unconditionally liable, as primary obligors and not
merely as sureties, for the due and punctual payment in full of
the Secured Obligations when the same shall become due, whether
at stated maturity, by required prepayment, declaration, accel-
eration, demand or otherwise (including amounts that would be-
come due but for the operation of the automatic stay under Sec-
tion 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)).
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11.3 Limitation on Obligations of Subsidiaries;
Contribution among Subsidiaries.
(a) Anything contained in this Agreement to the
contrary notwithstanding, the obligations of each Subsidiary
hereunder shall be limited to a maximum aggregate amount equal
to the largest amount that would not render its obligations
hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), in each case
after giving effect to all other liabilities of such
Subsidiary, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Subsidiary (i) in respect of
intercompany indebtedness to Company or other affiliates of
Company to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such
Subsidiary hereunder and (ii) under any guaranty of
subordinated indebtedness which guaranty contains a limitation
as to maximum amount similar to that set forth in this
subsection 11.3(a), pursuant to which the liability of such
Subsidiary hereunder is included in the liabilities taken into
account in determining such maximum amount) and after giving
effect as assets to the value (as determined under the ap-
plicable provisions of the Fraudulent Transfer Laws) of any
rights to subrogation, reimbursement, indemnification or con-
tribution of such Subsidiary pursuant to applicable law or pur-
suant to any agreement.
(b) The Co-Makers under this Agreement and each
guarantor under any Subsidiary Guaranty together desire to
allocate among themselves (collectively, the "Contributing
Parties"), in a fair and equitable manner, their obligations
arising under this Agreement and the Subsidiary Guaranties.
Accordingly, if any payment or distribution is made on any date
by any Co-Maker under this Agreement or a guarantor under a
Subsidiary Guaranty (a "Funding Party") that exceeds its Fair
Share (as defined below) as of such date, that Funding Party
shall be entitled to a contribution from each of the other
Contributing Parties in the amount of such Contributing Party's
Fair Share Shortfall (as defined below) as of such date, with
the result that all such contributions will cause each
Contributing Party's Aggregate Payments (as defined below) to
equal its Fair Share as of such date. "Fair Share" means, with
respect to a Contributing Party as of any date of
determination, an amount equal to (i) the ratio of (x) the
Adjusted Maximum Amount (as defined below) with respect to such
Contributing Party to (y) the aggregate of the Adjusted Maximum
Amounts with respect to all Contributing Parties, multiplied by
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(ii) the aggregate amount paid or distributed on or before such
date by all Funding Parties under this Agreement and the
Subsidiary Guaranties in respect of the Secured Obligations.
"Fair Share Shortfall" means, with respect to a Contributing
Party as of any date of determination, the excess, if any, of
the Fair Share of such Contributing Party over the Aggregate
Payments of such Contributing Party. "Adjusted Maximum Amount"
means, with respect to a Contributing Party as of any date of
determination, the maximum aggregate amount of the obligations
of such Contributing Party under this Agreement and the
Subsidiary Guaranties, determined as of such date in accordance
with subsection 11.3(a) or, if applicable, a similar provision
in the Subsidiary Guaranties; provided that, solely for
purposes of calculating the Adjusted Maximum Amount with
respect to any Contributing Party for purposes of this
subsection 11.3(b), any assets or liabilities of such
Contributing Party arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to
or obligations of contribution hereunder or under any similar
provision in a Subsidiary Guaranty shall not be considered as
assets or liabilities of such Contributing Party. "Aggregate
Payments" means, with respect to a Contributing Party as of any
date of determination, an amount equal to (i) the aggregate
amount of all payments and distributions made on or before such
date by such Contributing Party in respect of this Agreement
and the Subsidiary Guaranties (including, without limitation,
in respect of this subsection 11.3(b) or any similar provision
contained in a Subsidiary Guaranty) minus (ii) the aggregate
amount of all payments received on or before such date by such
Contributing Party from the other Contributing Parties as
contributions under this subsection 11.3(b) or any similar
provision contained in any Subsidiary Guaranty. The amounts
payable as contributions hereunder shall be determined as of
the date on which the related payment or distribution is made
by the applicable Funding Party. The allocation among
Contributing Parties of their obligations as set forth in this
subsection 11.3(b) or any similar provision contained in a
Subsidiary Guaranty shall not be construed in any way to limit
the liability of any Contributing Party hereunder or under a
Subsidiary Guaranty or to entitle any Funding Party or
Contributing Party to fail or refuse to make a payment to
Obligee otherwise required hereunder or under a Subsidiary
Guaranty. Without limiting the generality of the preceding
sentence, the failure of any Funding Party to receive a
contribution from Contributing Parties in the amount of their
respective Fair Share Shortfalls shall not excuse payment by it
of obligations to Obligee hereunder or under a Subsidiary
Guarantee or constitute a defense or offset to payment of such
obligations and no party shall pay its Fair Share Shortfall to
a Funding Party before Obligee has received payment of all sums
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due to it from such party. Each Contributing Party under a
Subsidiary Guaranty is a third-party beneficiary to the
contribution agreement set forth in this subsection 11.3(b).
The obligations of any party under a Subsidiary Guaranty are
not secured by any Mortgages made by the Co-Makers and recorded
in Florida, which Mortgages secure the direct obligations of
the Co-Makers rather than guaranties of the obligations of
others.
11.4 Liability of Co-Makers Absolute. Each Co-Maker
agrees that its obligations hereunder are irrevocable, abso-
lute, independent and unconditional and shall not be affected
by any circumstance which constitutes a legal or equitable dis-
charge of a co-maker other than indefeasible payment in full of
the Secured Obligations. In furtherance of the foregoing and
without limiting the generality thereof, each Co-Maker agrees
as follows:
(a) The obligation of each Co-Maker is independent,
primary and original, and not dependent upon failure of Obligee
to collect from any other Co-Maker.
(b) Obligee may enforce this Agreement against the
Subsidiaries notwithstanding the existence of any dispute be-
tween Obligee and Company or any Subsidiary with respect to the
existence of an Event of Default.
(c) The obligations of each Subsidiary hereunder
are independent of the obligations of Company under the Trans-
action Documents and the obligations of any other Co-Maker or
any guarantor, and a separate action or actions may be brought
and prosecuted against such Subsidiary whether or not any ac-
tion is brought against Company or any of such other Co-Makers
or guarantor and whether or not Company is joined in any such
action or actions.
(d) Payment by any Co-Maker of a portion, but not
all, of the Secured Obligations shall in no way limit, affect,
modify or abridge any other Co-Maker's liability for any por-
tion of the Secured Obligations which has not been paid. With-
out limiting the generality of the foregoing, if Obligee is
awarded a judgment in any suit brought to enforce any Co-
Maker's covenant to pay a portion of the Secured Obligations,
such judgment shall not be deemed to release such Co-Maker from
its covenant to pay the portion of the Secured Obligations that
is not the subject of such suit, and such judgment shall not,
except to the extent satisfied by such Co-Maker, limit, affect,
modify or abridge any other Co-Maker's liability hereunder in
respect of the Secured Obligations.
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(e) Obligee, upon such terms as it deems appropri-
ate, without notice or demand and without affecting the valid-
ity or enforceability of this Agreement or giving rise to any
reduction, limitation, impairment, discharge or termination of
any Co-Maker's liability hereunder, from time to time may (i)
renew, extend, accelerate, increase the rate of interest on, or
otherwise change the time, place, manner or terms of payment of
the Secured Obligations, (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with
respect to, or substitutions for, the Secured Obligations or
any agreement relating thereto and/or subordinate the payment
of the same to the payment of any other obligations; (iii) re-
quest and accept guaranties of the Secured Obligations and take
and hold security for the payment of this Agreement or the Se-
cured Obligations; (iv) release, surrender, exchange, substi-
tute, compromise, settle, rescind, waive, alter, subordinate or
modify, with or without consideration, any security for payment
of the Secured Obligations, any guaranties of the Secured Obli-
gations, or any other obligation of any Person (including any
other Co-Maker) with respect to the Secured Obligations; (v)
enforce and apply any security now or hereafter held by or for
the benefit of Obligee in respect of this Agreement or the Se-
cured Obligations and direct the order or manner of sale
thereof, or exercise any other right or remedy that Obligee may
have against any such security, as Obligee in its discretion
may determine consistent with this Agreement and any applicable
security agreement or mortgage, including foreclosure on any
such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commer-
cially reasonable, and even though such action operates to im-
pair or extinguish any right of reimbursement or subrogation or
other right or remedy of any Co-Maker against any other Co-
Maker or any security for the Secured Obligations; and (vi)
exercise any other rights available to it under the Transaction
Documents.
(f) This Agreement and the obligations of the Co-
Makers hereunder shall be valid and enforceable and shall not
be subject to any reduction, limitation, impairment, discharge
or termination for any reason (other than indefeasible payment
in full of the Secured Obligations), including the occurrence
of any of the following, whether or not any Co-Maker shall have
had notice or knowledge of any of them: (i) any failure or
omission to assert or enforce, or agreement or election not to
assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise, of the exercise or enforce-
ment of, any claim or demand or any right, power or remedy
(whether arising under the Transaction Documents, at law, in
equity or otherwise) with respect to the Secured Obligations or
any agreement relating thereto, or with respect to any guaranty
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of or security for the payment of the Secured Obligations; (ii)
any rescission, waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (in-
cluding provisions relating to events of default) of this
Agreement, any of the other Transaction Documents or any agree-
ment or instrument executed pursuant thereto, or of any guar-
anty or security for the Secured Obligations, in each case
whether or not in accordance with the terms of the Agreement or
such Transaction Document or any agreement relating to such
guaranty or security; (iii) the Secured Obligations, or any
agreement relating thereto, at any time being found to be il-
legal, invalid or unenforceable in any respect; (iv) the ap-
plication of payments received from any source (other than pay-
ments received pursuant to the other Transaction Documents or
from the proceeds of any security for the Secured Obligations,
except to the extent such security also serves as collateral
for indebtedness other than the Secured Obligations) to the
payment of indebtedness other than the Secured Obligations,
even though Obligee might have elected to apply such payment to
any part or all of the Secured Obligations; (v) Obligee's con-
sent to the change, reorganization or termination of the corpo-
rate structure or existence of Company or any of its Subsidiar-
ies and to any corresponding restructuring of the Secured Obli-
gations; (vi) any failure to perfect or continue perfection of
a security interest in any collateral which secures any of the
Secured Obligations; (vii) any defenses, setoffs or counter-
claims which any Co-Maker may allege or assert against Obligee
in respect of the Secured Obligations, including failure of
consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction and usury; and
(viii) any other act or thing or omission, or delay to do any
other act or thing, which may or might in any manner or to any
extent vary the risk of any Co-Maker as an obligor in respect
of the Secured Obligations.
11.5 Waivers by Co-Maker. Each Co-Maker hereby waives,
for the benefit of Obligee:
(a) any right to require Obligee, as a condition of
payment or performance by such Co-Maker, to (i) proceed against
Company, any Subsidiary or any guarantor of the Secured
Obligations or any other Person, (ii) proceed against or
exhaust any security held from Company, any other Subsidiary or
any guarantor of the Secured Obligations or any other Person,
(iii) proceed against or have resort to any balance of any
deposit account or credit on the books of Obligee in favor of
Company or any other Person, or (iv) pursue any other remedy in
the power of Obligee whatsoever;
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(b) any defense arising by reason of the incapac-
ity, lack of authority or any disability or other defense of
any Co-Maker including any defense based on or arising out of
the lack of validity or the unenforceability of the Secured
Obligations or any agreement or instrument relating thereto or
by reason of the cessation of the liability of any Co-Maker
from any cause other than indefeasible payment in full of the
Secured Obligations;
(c) any defense based upon any statute or rule of
law which provides that the obligation of a co-maker must be
neither larger in amount nor in other respects more burdensome
than that of any other obligor;
(d) any defense based upon Obligee's errors or
omissions in the administration of the Secured Obligations,
except behavior which amounts to bad faith;
(e) (i) any principles or provisions of law, statu-
tory or otherwise, which are or might be in conflict with the
terms of this Agreement or which result or might result in any
legal or equitable discharge of such Co-Maker's obligations
hereunder, (ii) the benefit of any statute of limitations af-
fecting such Co-Maker's liability hereunder or the enforcement
hereof, (iii) any rights to setoffs, recoupments and counter-
claims, and (iv) promptness, diligence and any requirement that
Obligee protect, secure, perfect or insure any security
interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, no-
tices of protest, notices of dishonor and notices of any action
or inaction, including acceptance of this Agreement, notices of
default under this Agreement or any agreement or instrument
related thereto, notices of any renewal, extension or modifica-
tion of the Secured Obligations or any agreement related
thereto, notices of any extension of credit to any other Co-
Maker and notices of any of the matters referred to in subsec-
tion 11.4 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exoner-
ate co-makers, guarantors or sureties, or which may conflict
with the terms of this Agreement.
11.6 Payment by Subsidiaries; Application of Payments.
Subject to the provisions of subsection 11.3(a), the Subsidiar-
ies hereby jointly and severally agree, in furtherance of the
foregoing and not in limitation of any other right which
Obligee or any other Person may have at law or in equity
against any Subsidiary by virtue hereof, that upon the failure
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of Company to pay any of the Secured Obligations when and as
the same shall become due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. Section 362(a)), the Subsidiaries
will upon demand pay, or cause to be paid, in cash, to Obligee,
an amount equal to all Secured Obligations then due as
aforesaid, including accrued and unpaid interest on such
Secured Obligations (including interest which, but for the
filing of a petition in bankruptcy with respect to Company,
would have accrued on such Secured Obligations, whether or not
a claim is allowed against Company for such interest in any
such bankruptcy proceeding) and all other Secured Obligations
then owed to Obligee as aforesaid. All such payments shall be
applied promptly from time to time by Obligee in accordance
with this Agreement.
11.7 Co-Makers' Rights of Subrogation, Contribution, Etc.
Each Co-Maker hereby waives any claim, right or remedy, direct
or indirect, that such Co-Maker now has or may hereafter have
against any other Co-Maker or any of its assets in connection
with this Agreement or the performance by such Co-Maker of its
obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute, under
common law or otherwise and including without limitation (a)
any right of subrogation, reimbursement or indemnification that
such Co-Maker now has or may hereafter have against Company,
(b) any right to enforce, or to participate in, any claim,
right or remedy that Obligee now has or may hereafter have
against any other Co-Maker, and (c) any benefit of, and any
right to participate in, any collateral or security now or
hereafter held by Obligee. In addition, until the Secured
Obligations shall have been indefeasibly paid in full, each Co-
Maker shall withhold exercise of any right of contribution such
Co-Maker may have against any guarantor of the Secured Obliga-
tions (including any such right of contribution under any guar-
anty). Each Co-Maker further agrees that, to the extent the
waiver or agreement to withhold the exercise of its rights of
subrogation, reimbursement, indemnification and contribution as
set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subroga-
tion, reimbursement or indemnification such Co-Maker may have
against any other Co-Maker or against any collateral or secu-
rity, and any rights of contribution such Co-Maker may have
against any such guarantor, shall be junior and subordinate to
any rights Obligee may have against Company and the other Co-
Makers, to all right, title and interest Obligee may have in
any such collateral or security, and to any right Obligee may
have against such guarantor. If any amount shall be paid to
-101-<PAGE>
any Co-Maker on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time when all
Secured Obligations shall not have been paid in full, such
amount shall be held in trust for Obligee and shall forthwith
be paid over to Obligee to be credited and applied against the
Secured Obligations, whether matured or unmatured, in
accordance with the terms hereof.
11.8 Subordination of Other Obligations. Any indebted-
ness of any Co-Maker now or hereafter held by any other Co--
Maker is hereby subordinated in right of payment to the obliga-
tions of such indebted Co-Maker in respect of the Secured Obli-
gations, and any such indebtedness of a Co-Maker to another Co-
Maker collected or received by such other Co-Maker after an
Event of Default has occurred and is continuing shall be held
in trust for Obligee and shall forthwith be paid over to
Obligee to be credited and applied against the Secured
Obligations but without affecting, impairing or limiting in any
manner the liability of any Co-Maker under any other provision
of this Agreement.
11.9 Expenses. Co-Makers jointly and severally agree to
pay, or cause to be paid, on demand, and to save Obligee harm-
less against liability for, any and all costs and expenses (in-
cluding reasonable fees and disbursements of counsel and al-
located costs of internal counsel) incurred or expended by
Obligee in connection with the enforcement of, or preservation
of any rights under, this Agreement.
11.10 Continuing Agreement. This Agreement shall remain
in effect as against each Co-Maker until all of the Secured
Obligations shall have been indefeasibly paid in full. Each
Co-Maker hereby irrevocably waives any right to revoke this
Agreement as to future transactions giving rise to any Secured
Obligations.
11.11 Authority of the Co-Makers. It is not necessary
for Obligee to inquire into the capacity or powers of any Co-
Maker or the officers, directors or any agents acting or pur-
porting to act on behalf of any of them.
11.12 Financial Condition of the Company. Any Secured
Obligations may be incurred by Company or continued from time
to time without notice to or authorization from any Subsidiary
regardless of the financial or other condition of Company at
the time of any such grant or continuation. The Obligee shall
have no obligation to disclose or discuss with any Subsidiary
its assessment, or any Subsidiary's assessment, of the finan-
cial condition of Company. Each Subsidiary has adequate means
-102-<PAGE>
to obtain information from Company on a continuing basis con-
cerning the financial condition of Company and its ability to
perform its obligations under the Transaction Documents, and
each Subsidiary assumes the responsibility for being and keep-
ing informed of the financial condition of Company and of all
circumstances bearing upon the risk of nonpayment of the Se-
cured Obligations. Each Subsidiary hereby waives and relin-
quishes any duty on the part of Obligee to disclose any matter,
fact or thing relating to the business, operations or condi-
tions of Company now known or hereafter known by lender.
11.13 Rights Cumulative. The rights, powers and remedies
given to Obligee by this Agreement are cumulative and shall be
in addition to and independent of all rights, powers and rem-
edies given to Obligee by virtue of any statute or rule of law
or in any of the other Transaction Documents or any agreement
between any Subsidiary and Obligee or between Company and
Obligee. Any forbearance or failure to exercise, and any delay
by Obligee in exercising, any right, power or remedy hereunder
shall not impair any such right, power or remedy or be con-
strued to be a waiver thereof, nor shall it preclude the fur-
ther exercise of any such right, power or remedy.
11.14 Bankruptcy; Post-Petition Interest; Reinstatement
of Agreement.
(a) So long as any Secured Obligations remain out-
standing, no Co-Maker shall, without the prior written consent
of Obligee in accordance with the Agreement, commence or join
with any other Person in commencing any bankruptcy, reorganiza-
tion or insolvency proceedings of or against any other Co-
Maker. The obligations of the Co-Makers under this Agreement
shall not be reduced, limited, impaired, discharged, deferred,
suspended or terminated by any proceeding, voluntary or invol-
untary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of any other or by
any defense which any other Co-Maker may have by reason of the
order, decree or decision of any court or administrative body
resulting from any such proceeding.
(b) Each Co-Maker acknowledges and agrees that any
interest on any portion of the Secured Obligations which ac-
crues after the commencement of any proceeding referred to in
clause (a) above (or, if interest on any portion of the Secured
Obligations ceases to accrue by operation of law by reason of
the commencement of said proceeding, such interest as would
have accrued on such portion of the Secured Obligations if said
proceedings had not been commenced) shall be included in the
Secured Obligations because it is the intention of Co-Makers
and Obligee that the Secured Obligations of each Co-Maker
-103-<PAGE>
pursuant to this Agreement should be determined without regard
to any rule of law or order which may relieve any other Co-
Maker of any portion of such Secured Obligations. The Co-
Makers will permit any trustee in bankruptcy, receiver, debtor
in possession, assignee for the benefit of creditors or similar
person to pay Obligee, or allow the claim of Obligee in respect
of, any such interest accruing after the date on which such
proceeding is commenced.
(c) If all or any portion of the Secured Obliga-
tions is paid by any Co-Maker, the obligations of the other Co-
Makers hereunder shall continue and remain in full force and
effect or be reinstated, as the case may be, in the event that
all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Obligee as a preference, fraudulent
transfer or otherwise, and any such payments which are so re-
scinded or recovered shall constitute Secured Obligations for
all purposes under this Agreement.
11.15 Setoff. In addition to any other rights Obligee may
have under law or in equity, if any amount shall at any time be
due and owing by any Co-Maker to Obligee under this Agreement,
Obligee is authorized at any time or from time to time, without
notice (any such notice being hereby expressly waived), to set
off and to appropriate and to apply any and all deposits (gen-
eral or special, including but not limited to indebtedness evi-
denced by certificates of deposit, whether matured or unma-
tured) and any other indebtedness of Obligee owing to such Co-
Maker and any other property of such Co-Maker held by Obligee
to or for the credit or the account of such Co-Maker against
and on account of the Secured Obligations and liabilities of
such Co-Maker to Obligee under this Agreement; provided,
however, that the foregoing shall not apply to Excluded
Property and the restricted Bank Accounts identified in
Schedule 7.17 of this Agreement.
SECTION 12. MISCELLANEOUS
12.1 Acknowledgment Regarding Certain Environmental Obli-
gations. Each Subsidiary hereby acknowledges and agrees that
the Secured Obligations includes Company's obligation under
this Agreement to comply with the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 and all other
Environmental Laws and to indemnify and hold harmless Obligee
and Collateral Agent from and against any and all liability
arising out of, or in connection with the presence of Hazardous
Materials at any property of Company or any Subsidiary given as
security for the Secured Obligations, and each Subsidiary
hereby expressly undertakes as Co-Maker the payment,
-104-<PAGE>
performance and discharge of such obligations and liabilities
of Company.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
-105-<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
ATLANTIC GULF COMMUNITIES CORPO-
RATION, a Delaware corporation
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Executive Vice President
and Chief Financial Of-
ficer
AG TITLE CORPORATION
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
AGC CL-LIMITED PARTNER, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
AGC HOMES, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
-106-<PAGE>
AGC SANCTUARY CORPORATION
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
AG SANCTUARY OF ORLANDO, INC.
By: /s/ John H. Fischer
Name: John H. Fischer
Title: Vice President
ATLANTIC GULF COMMUNITIES
MANAGEMENT CORPORATION
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
ATLANTIC GULF COMMERCIAL REALTY,
INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
-107-<PAGE>
ATLANTIC GULF COMMUNITIES
SERVICE CORPORATION
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
ATLANTIC GULF OF TAMPA, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
ATLANTIC GULF REALTY, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
ATLANTIC GULF UTILITIES, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
CUMBERLAND COVE, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
-108-<PAGE>
ENVIRONMENTAL QUALITY LABORATORY
INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
EQL ENVIRONMENTAL SERVICES, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
FIVE STAR HOMES, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
GENERAL DEVELOPMENT RESORTS, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
GENERAL DEVELOPMENT UTILITIES,
INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
-109-<PAGE>
HUNTER TRACE DEVELOPMENT
CORPORATION
By: /s/ John H. Fischer
Name: John H. Fischer
Title: Vice President
LAKESIDE DEVELOPMENT OF ORLANDO,
INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
OCEAN GROVE, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
PANTHER CREEK CORP.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
REGENCY ISLAND DUNES, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
-110-<PAGE>
SABAL TRACE DEVELOPMENT
CORPORATION
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
SUNSET LAKES DEVELOPMENT
CORPORATION
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: Vice President
TOWN & COUNTRY II, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
WEST BAY DEVELOPMENT CORPORATION
(f/k/a Estero Pointe Development
Corporation)
By: /s/ John H. Fischer
Name: John H. Fischer
Title: Vice President
WINDSOR PALMS CORPORATION
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President
-111-<PAGE>
AGC-SP, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President and Chief
Executive Officer
AGC-SP1, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President and Chief
Executive Officer
AGC-SP2, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President and Chief
Executive Officer
AGC-SP3, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President and Chief
Executive Officer
AGC-SP4, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President and Chief
Executive Officer
-112-<PAGE>
AGC-SP5, INC.
By: /s/ Thomas W. Jeffrey
Name: Thomas W. Jeffrey
Title: President and Chief
Executive Officer
AP-AGC, LLC, as Obligee
By: /s/ Ricardo Koenigsberger
Name: Ricardo Koenigsberger
Title: Vice President of Kronus
Property, Inc., its Man-
ager
THE BANK OF NEW YORK,
as Collateral Agent with
respect to SP Sub Collateral
By: /s/ Janalee R. Scott
Name: Janalee R. Scott
Title: Assistant Vice President
FOOTHILL CAPITAL CORPORATION,
as Collateral Agent with respect
to Collateral other than SP Sub
Collateral
By: /s/ Benjamin Silver
Name: Benjamin Silver
Title: Assistant Vice President
-113-
