<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] - Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 27, 1998
or
[ ] - Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-19292
BLUEGREEN CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 03-0300793
------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4960 Blue Lake Drive, Boca Raton, Florida 33431
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(561) 912-8000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of February 4, 1999, there were 23,877,005 shares issued, 812,100
treasury shares and 23,064,905 shares of Common Stock, $.01 par value per share,
outstanding.
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BLUEGREEN CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I - Financial Information (Unaudited)
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
March 29, 1998 and December 27, 1998 ........................................ 3
Condensed Consolidated Statements of Income - Three Months
Ended December 28, 1997 and December 27, 1998 ............................... 4
Condensed Consolidated Statements of Income - Nine Months
Ended December 28, 1997 and December 27, 1998 ............................... 5
Condensed Consolidated Statements of Cash Flows -Nine Months
Ended December 28, 1997 and December 27, 1998 ............................... 6
Notes to Condensed Consolidated Financial Statements ............................. 8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition ............................... 18
Item 3. Quantitative and Qualitative
Disclosures About Market Risk ............................................... 29
Part II - Other Information
Item 1. Legal Proceedings ................................................................ 29
Item 2. Changes in Securities ............................................................ 30
Item 3. Defaults Upon Senior Securities .................................................. 30
Item 4. Submission of Matters to a Vote of Security Holders .............................. 30
Item 5. Other Information ................................................................ 30
Item 6. Exhibits and Reports on Form 8-K ................................................. 30
Signatures................................................................................ 31
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLUEGREEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 27,
1998 1998
--------- ---------
(NOTE) (UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents (including restricted cash of
approximately $13.2 million and $18.0 million at
March 29, 1998 and December 27, 1998, respectively) ............... $ 31,065 $ 52,962
Contracts receivable, net ............................................ 15,484 13,259
Notes receivable, net ................................................ 81,293 69,591
Inventory, net ....................................................... 107,198 137,582
Investments in securities ............................................ 10,941 15,811
Other assets ......................................................... 9,759 18,250
Property and equipment, net .......................................... 17,223 24,601
--------- ---------
TOTAL ASSETS ...................................................... $ 272,963 $ 332,056
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable ..................................................... $ 5,265 $ 3,540
Accrued liabilities and other ........................................ 19,023 17,217
Receivable-backed notes payable ...................................... 48,694 12,750
Lines-of-credit and notes payable .................................... 72,396 17,998
Deferred income ...................................................... 8,392 5,693
Deferred income taxes ................................................ 8,011 16,409
10.50% senior secured notes payable .................................. -- 110,000
8.00% convertible subordinated notes payable to related
parties .......................................................... 6,000 6,000
8.25% convertible subordinated debentures ............................ 34,739 34,371
--------- ---------
TOTAL LIABILITIES ................................................. 202,520 223,978
Minority interest .................................................... 450 397
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 1,000 shares authorized;
none issued ....................................................... -- --
Common stock, $.01 par value, 90,000 shares
Authorized; 20,761 and 23,877 shares issued at March 29, 1998 and
December 27, 1998, respectively .................................. 208 239
Additional paid-in capital ........................................... 71,932 97,228
Treasury stock, 450 and 694 common shares at cost at
March 29, 1998 and December 27, 1998, respectively ............... (1,389) (2,791)
Net unrealized gains on investments available-for-sale, net
of income taxes ................................................... 405 377
Retained earnings (accumulated deficit) .............................. (1,163) 12,628
--------- ---------
TOTAL SHAREHOLDERS' EQUITY ........................................ 69,993 107,681
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ........................ $ 272,963 $ 332,056
========= =========
</TABLE>
Note: The condensed consolidated balance sheet at March 29, 1998 has been
derived from the audited consolidated financial statements at that date but does
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
3
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BLUEGREEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 28, DECEMBER 27,
1997 1998
------------ ------------
<S> <C> <C>
REVENUES:
Sales of real estate .................................... $ 44,490 $ 55,669
Other resort and golf operations revenue ................ 1,585 2,946
Interest income ......................................... 3,190 4,112
-------- --------
49,265 62,727
COSTS AND EXPENSES:
Cost of real estate sold ................................ 18,703 20,779
Cost of other resort and golf operations ................ 1,509 3,331
Selling, general and administrative expense ............. 21,610 28,879
Interest expense ........................................ 2,726 2,920
Provisions for losses ................................... 568 623
-------- --------
45,116 56,532
-------- --------
Income from operations ..................................... 4,149 6,195
Other income (expense) ..................................... (33) 1,053
-------- --------
Income before income taxes ................................. 4,116 7,248
Provision for income taxes ................................ 1,641 2,899
Minority interest in income of consolidated subsidiary ..... -- 76
-------- --------
NET INCOME ................................................. $ 2,475 $ 4,273
======== ========
EARNINGS PER COMMON SHARE:
Basic ...................................................... $ 0.12 $ 0.18
======== ========
Diluted .................................................... $ 0.11 $ 0.16
======== ========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES:
Basic ...................................................... 20,358 23,297
======== ========
Diluted .................................................... 26,744 29,879
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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BLUEGREEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 28, DECEMBER 27,
1997 1998
--------- ---------
<S> <C> <C>
REVENUES:
Sales of real estate ...................................... $ 122,902 $ 172,730
Other resort and golf operations revenue .................. 1,585 8,891
Interest income ........................................... 7,324 11,361
--------- ---------
131,811 192,982
COSTS AND EXPENSES:
Cost of real estate sold .................................. 55,277 63,187
Cost of other resort and golf operations .................. 1,509 8,606
Selling, general and administrative expense ............... 55,526 87,431
Interest expense .......................................... 6,512 10,028
Provisions for losses ..................................... 1,349 1,515
--------- ---------
120,173 170,767
--------- ---------
Income from operations ....................................... 11,638 22,215
Other income ................................................. 120 3,485
--------- ---------
Income before income taxes ................................... 11,758 25,700
Provision for income taxes ................................... 4,774 10,280
Minority interest in loss of consolidated subsidiary ......... -- (53)
--------- ---------
Income before extraordinary item ............................. 6,984 15,473
Extraordinary loss on early extinguishment of debt, net of
income taxes .............................................. -- (1,682)
--------- ---------
NET INCOME ................................................... $ 6,984 $ 13,791
========= =========
EARNINGS PER COMMON SHARE:
Basic:
Income before extraordinary item .......................... $ 0.35 $ 0.71
Extraordinary loss on early extinguishment of debt,
net of income taxes -- (0.08)
--------- ---------
Net income ................................................ $ 0.35 $ 0.63
========= =========
Diluted:
Income before extraordinary item .......................... $ 0.33 $ 0.59
Extraordinary loss on early extinguishment of debt,
net of income taxes -- (0.06)
--------- ---------
Net income ................................................ $ 0.33 $ 0.53
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES:
Basic ........................................................ 20,193 21,853
========= =========
Diluted ...................................................... 25,467 28,636
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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BLUEGREEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 28, DECEMBER 27,
1997 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income .......................................................... $ 6,984 $ 13,791
Adjustments to reconcile net income to net
cash flow provided (used) by operating activities:
Extraordinary loss on early extinguishment of debt, net of
taxes ..................................................... -- 1,682
Minority interest in loss of consolidated subsidiary .......... -- (53)
Depreciation and amortization ................................. 1,345 1,955
Gain on sale of notes receivable .............................. -- (3,145)
Gain on sale of property and equipment ........................ -- (268)
Provisions for losses ......................................... 1,349 1,515
Provision for deferred income taxes ........................... 4,774 10,280
Interest accretion on investment in securities ................ (1,047) (1,572)
Proceeds from sale of notes receivable ........................ -- 44,620
Proceeds from borrowings collateralized by notes
receivable ................................................. 26,495 4,137
Payments on borrowings collateralized by notes receivable ..... (11,440) (2,573)
CHANGE IN OPERATING ASSETS AND LIABILITIES:
Contracts receivable ............................................. 1,662 2,224
Notes receivable ................................................. (22,437) (43,490)
Inventory ........................................................ 3,944 (22,120)
Other assets ..................................................... (2,062) (3,594)
Accounts payable, accrued liabilities and other .................. 4,531 (6,102)
--------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ....................... 14,098 (2,713)
--------- ---------
INVESTING ACTIVITIES:
Acquisition of RDI Group, Inc. and Resort Title Agency, Inc.,
net of cash acquired ............................................. (2,421) --
Purchases of property and equipment ................................. (2,909) (9,385)
Proceeds from sales of property and equipment ....................... 225 954
Cash received from investment in securities ......................... 1,524 1,063
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES .................................. (3,581) (7,368)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of 10.50% senior secured notes payable ....... -- 110,000
Proceeds from issuance of 8% convertible subordinated notes
payable .......................................................... 6,000 --
Proceeds from borrowings under line-of-credit facilities
and other notes payable .......................................... 36,136 --
Payments under line-of-credit facilities and other notes payable .... (38,531) (95,718)
Payment of debt issuance costs ...................................... (900) (5,574)
Proceeds from issuance of Common Stock .............................. -- 24,298
Proceeds from exercise of employee and director stock options ....... 324 374
Payments for treasury stock ......................................... (19) (1,402)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES .............................. 3,010 31,978
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS .............................. 13,527 21,897
Cash and cash equivalents at beginning of period ....................... 11,597 31,065
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............................. 25,124 52,962
Restricted cash and cash equivalents at end of period .................. (13,300) (18,000)
--------- ---------
UNRESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD ................ $ 11,824 $ 34,962
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
BLUEGREEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - - CONTINUED
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 28, DECEMBER 27,
1997 1998
--------- ------
<S> <C> <C>
SUPPLEMENTAL SCHEDULE OF NON-CASH OPERATING, INVESTING
AND FINANCING ACTIVITIES
Inventory acquired through financing ....................... $ 22,974 $2,485
========= ======
Inventory acquired through foreclosure or
deedback in lieu of foreclosure ........................ $ 2,497 $5,778
========= ======
Property and equipment acquired through financing .......... $ 812 $ --
========= ======
Conversion of 8.25% convertible subordinated
debentures into common stock ........................... $ -- $ 368
========= ======
Sale of notes receivable in exchange for investment
in securities .......................................... $ -- $4,409
========= ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
BLUEGREEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 27, 1998
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
The financial information furnished herein reflects all adjustments consisting
of normal recurring accruals that, in the opinion of management, are necessary
for a fair presentation of the results for the interim periods. The results of
operations for the three- and nine-month periods ended December 27, 1998 are not
necessarily indicative of the results to be expected for the fiscal year ending
March 28, 1999. For further information, refer to the consolidated financial
statements and notes thereto included in Bluegreen Corporation's (the Company's)
Annual Report to Shareholders for the fiscal year ended March 29, 1998.
ORGANIZATION
The Company is a leading marketer of vacation and residential lifestyle choices
through its resort and residential land businesses which are located
predominantly in the Southeastern, Southwestern and Midwestern United States.
The Company's resort business (the Resorts Division) strategically acquires,
develops and markets Timeshare Interests in resorts generally located in
popular, high-volume, "drive-to" vacation destinations. Timeshare Interests
typically entitle the buyer to a fully-furnished vacation residence for an
annual one-week period in perpetuity (Timeshare Interests). The Company
currently develops, markets and sells Timeshare Interests in ten resorts located
in the United States and the Caribbean. The Company also markets and sells
Timeshare Interests at three off-site sales locations. The Company's residential
land business (the Residential Land Division) strategically acquires, develops
and subdivides property and markets the subdivided residential lots to retail
customers seeking to build a home in a high quality residential setting. During
the three months ended December 27, 1998, sales of real estate generated by the
Company's Resorts Division and Residential Land Division comprised approximately
45% and 52%, respectively, of the Company's total sales of real estate. The
sales mix for the nine months ended December 27, 1998 was 43% and 55%
contributed by the Resorts and Land Divisions, respectively. The Company also
generates significant interest income by providing financing to individual
purchasers of Timeshare Interests sold by the Resorts Division and, to a lesser
extent, land sold by the Residential Land Division.
Effective September 30, 1997, a wholly-owned subsidiary of the Company acquired
all of the issued and outstanding common stock of RDI Group, Inc. and Resort
Title Agency, Inc. (collectively RDI). The acquisition was accounted for using
the purchase method of accounting and, accordingly, the results of operations of
RDI have been included in the Company's condensed consolidated financial
statements from September 30, 1997.
On December 15, 1997, the Company acquired a 50% ownership interest in Bluegreen
Properties N.V. (BPNV), an entity organized in Aruba that previously had no
operations. BPNV then acquired from a third party approximately 8,000 unsold
timeshare intervals at the La Cabana Beach & Racquet Club, a fully developed
timeshare resort in Oranjestad, Aruba. In addition to its 50% ownership
interest, the Company will receive a quarterly management fee from BPNV equal to
7% of BPNV's net sales in exchange for the Companys involvement in the
day-to-day operations of BPNV. The Company also has majority control of BPNV's
board of directors and has a controlling financial interest in BPNV. Therefore,
the accounts of BPNV are included in the Company's consolidated financial
statements from December 15, 1997.
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of the
Company, all of its wholly-owned subsidiaries and entities in which the Company
holds a controlling financial interest. All significant intercompany balances
and transactions are eliminated.
8
<PAGE> 9
USE OF ESTIMATES
The preparation of the condensed consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the condensed
consolidated financial statements and accompanying notes. Actual results could
differ from those estimates.
EARNINGS PER COMMON SHARE
Basic earnings per common share is computed by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per
common share is computed in the same manner as basic earnings per share, but
also gives effect to all dilutive stock options using the treasury stock method
and includes an adjustment, if dilutive, to both net income and shares
outstanding as if the Company's 8.00% convertible subordinated notes payable and
8.25% convertible subordinated debentures were converted into common stock on
March 31, 1997 or the date of issuance, if later. See also Note 8, for
disclosure of other contingently issuable common shares.
The following table sets forth the computation of basic and diluted earnings per
share:
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 28, DECEMBER 27, DECEMBER 28, DECEMBER 27,
1997 1998 1997 1998
------- ------- -------- --------
<S> <C> <C> <C> <C>
Basic earnings per share - numerators:
Income before extraordinary item ....................... $ 2,475 $ 4,273 $ 6,984 $ 15,473
Extraordinary loss on early extinguishment of
debt, net of income taxes .......................... -- -- -- (1,682)
------- ------- -------- --------
Net income ............................................. $ 2,475 $ 4,273 $ 6,984 $ 13,791
======= ======= ======== ========
Diluted earnings per share - numerators:
Income before extraordinary item - basic ............... $ 2,475 $ 4,273 $ 6,984 $ 15,473
Effect of dilutive securities (net of tax effects) ..... 497 497 1,362 1,496
------- ------- -------- --------
Income before extraordinary item - diluted ............. 2,972 4,770 8,346 16,969
Extraordinary loss on early extinguishment of
debt, net of income taxes .......................... -- -- -- (1,682)
------- ------- -------- --------
Net income - diluted ................................... $ 2,972 $ 4,770 $ 8,346 $ 15,287
======= ======= ======== ========
Denominator:
Denominator for basic earnings per share -
weighted average shares ............................ 20,358 23,297 20,193 21,853
Effect of dilutive securities:
Stock options ....................................... 639 880 360 1,070
Convertible securities .............................. 5,747 5,702 4,914 5,713
Dilutive potential common shares ....................... 6,386 6,582 5,274 6,783
------- ------- -------- --------
Denominator for diluted earnings per share -
adjusted weighted-average shares and assumed
conversions ........................................ 26,744 29,879 25,467 28,636
======= ======= ======== ========
Basic earnings per common share:
Income before extraordinary item ........................ $ 0.12 $ 0.18 $ 0.35 $ 0.71
Extraordinary loss on early extinguishment
of debt, net of income taxes ......................... -- -- -- (0.08)
------- ------- -------- --------
Net income .............................................. $ 0.12 $ 0.18 $ 0.35 $ 0.63
======= ======= ======== ========
Diluted earnings per common share:
Income before extraordinary item ....................... $ 0.11 $ 0.16 $ 0.33 $ 0.59
Extraordinary loss on early extinguishment
of debt, net of income taxes ....................... -- -- -- (0.06)
------- ------- -------- --------
Net income ............................................. $ 0.11 $ 0.16 $ 0.33 $ 0.53
======= ======= ======== ========
</TABLE>
9
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COMPREHENSIVE INCOME
As of March 30, 1998, the Company adopted SFAS No. 130, REPORTING COMPREHENSIVE
INCOME. SFAS No. 130 establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of this Statement
had no impact on the Company's net income or shareholders' equity. SFAS No. 130
requires unrealized gains or losses on the Company's available-for-sale
securities, which prior to adoption were reported separately in shareholders'
equity, to be included in other comprehensive income. During the three- and
nine-month periods ended December 28, 1997 and December 27, 1998, total
comprehensive income did not differ materially from net income.
SEGMENT INFORMATION
Effective March 30, 1998, the Company adopted SFAS No. 131, DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 superseded SFAS
No. 14, FINANCIAL REPORTING FOR SEGMENTS OF A BUSINESS ENTERPRISE. SFAS No. 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports, other than in the initial year of adoption. SFAS No.
131 also establishes standards for related disclosures about products and
services, geographic areas, and major customers. The adoption of SFAS No. 131
did not affect the results of operations or financial position of the Company,
but will affect the disclosure of segment information in the Company's fiscal
1999 annual financial statements.
START-UP COSTS
In April, 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, REPORTING THE COSTS OF START-UP ACTIVITIES.
The SOP is effective for the Company's fiscal 2000, and requires that start-up
costs capitalized prior to January 1, 1999 be written-off and any future
start-up costs to be expensed as incurred. The Company estimates that adopting
this SOP will have no significant impact on its fiscal 2000 results of
operations.
RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform to the current
period presentation.
2. SALE OF NOTES RECEIVABLE
On June 26, 1998 and December 10, 1998, the Company sold approximately $32.4
million and $13.5 million, respectively, in aggregate principal amount of
timeshare notes receivable (the Receivables) to Bluegreen Receivables Finance
Corporation III, a wholly-owned special purpose subsidiary of the Company
(BRFC). Concurrently, BRFC sold the Receivables to an unaffiliated financial
institution (the Purchaser) pursuant to an Asset Purchase Agreement dated as of
June 26, 1998 (the Purchase Agreement).
A purchase price equal to approximately 97% of the principal balance of the
Receivables sold was paid by the Purchaser in cash. In addition, BRFC will be
entitled to receive a deferred payment after the Purchaser has received a return
equal to the weighted average term treasury rate plus 1.4%, (6.924% and 5.925%
for the June and December sales, respectively), all servicing, custodial and
similar fees and expenses have been paid and a cash reserve account has been
funded. The Receivables were sold without recourse to the Company or BRFC except
for breaches of representations and warranties made at the time of sale. The
Company will act as servicer for the Receivables and will be paid a fee. In
connection with the sales, the Company recognized an aggregate $3.1 million gain
which is included in other income in the condensed consolidated statement of
income for the nine months ended December 27, 1998 ($1.1 million of which was
recognized during the three-months ended December 27, 1998), and recorded a $4.4
million available-for-sale investment in the residual cash flow of the
receivable pool (i.e., the deferred payment) which is included in investments in
securities in the condensed consolidated balance sheet as of December 27, 1998.
Under the Purchase Agreement, BRFC is entitled to sell up to $100 million
aggregate principal amount of timeshare receivables to the Purchaser. The
purchase facility has detailed requirements with respect to the eligibility of
receivables for purchase and a two-year term. The Purchaser's obligation to
purchase under the
10
<PAGE> 11
purchase facility will terminate upon the occurrence of specified trigger
events. The purchase facility includes various conditions to purchase and other
provisions customary for transactions of this type.
3. PURCHASE OF NOTES RECEIVABLE
On October 7, 1998, Leisure Capital Corporation (LCC), a wholly-owned subsidiary
of the Company, acquired from a bank delinquent notes receivable issued by
Amclub, Inc. (Amclub) with an aggregate outstanding principal balance of $5.3
million (the Amclub Notes). LCC acquired the Amclub Notes for a purchase price
of approximately $2.9 million, which is included in notes receivable on the
December 27, 1998 condensed consolidated balance sheet. The Amclub Notes are
collateralized by mortgages receivable, real estate and fixed assets with an
estimated aggregate fair market value in excess of the purchase price paid by
LLC for the Amclub Notes. The Amclub Notes bear interest at Prime plus 4%. On
December 14, 1998, LCC notified Amclub that the Amclub Notes were in default and
due immediately. As the Amclub Notes are still outstanding as of February 4,
1999 the Company intends to foreclose on the underlying collateral. There can be
no assurances that the foreclosure will be completed as intended.
Amclub is a corporation owned by the former shareholders of RDI. Amclub owns a
timeshare resort in Charlottesville, Virginia known as Shenandoah Crossing Farm
& Club, which the Company currently manages.
4. INVENTORY
The Company's inventories by geographic region, which consist of real estate
acquired for sale, are summarized below (amounts in thousands).
MARCH 29, 1998
----------------------------------------------
GEOGRAPHIC REGION RESORTS LAND COMMUNITIES TOTAL
- ----------------- ------- ------- ----------- --------
Southeast .......... $35,846 $12,911 $2,674 $ 51,431
Southwest .......... -- 22,163 -- 22,163
Aruba .............. 17,113 -- -- 17,113
Midwest ............ 6,316 6 -- 6,322
Rocky Mountains .... -- 4,654 -- 4,654
Mid-Atlantic ....... -- 3,009 -- 3,009
West ............... -- 2,196 -- 2,196
Other .............. -- 310 -- 310
------- ------- ------ --------
Totals ............. $59,275 $45,249 $2,674 $107,198
======= ======= ====== ========
DECEMBER 27, 1998
----------------------------------------------
GEOGRAPHIC REGION RESORTS LAND COMMUNITIES TOTAL
- ----------------- ------- ------- ----------- --------
Southeast .......... $56,664 $15,944 $1,566 $ 74,174
Southwest .......... -- 28,567 -- 28,567
Aruba .............. 15,677 -- -- 15,677
Midwest ............ 10,267 498 -- 10,765
Rocky Mountains .... -- 1,654 -- 1,654
Mid-Atlantic ....... -- 1,526 -- 1,526
West ............... -- 4,559 -- 4,559
Other .............. -- 660 -- 660
------- ------- ------ --------
Totals ............. $82,608 $53,408 $1,566 $137,582
======= ======= ====== ========
On September 1, 1998, the Company acquired The Lodge Alley Inn, a
privately-held, 89-room resort in Charleston, South Carolina for approximately
$16.5 million in cash. The Company will market and sell the property as
Timeshare Interests, and has included the property in its Resorts Division
inventory as of December 27, 1998.
5. SENIOR SECURED NOTES
On April 1, 1998, the Company consummated a private placement offering (the
Offering) of $110 million in aggregate principal amount of 10.5% senior secured
notes due April 1, 2008 (the Notes). Interest on the Notes is
11
<PAGE> 12
payable semiannually on April 1 and October 1 of each year, commencing October
1, 1998. The Notes are unconditionally guaranteed, jointly and severally, by
each of the Company's subsidiaries (the Subsidiary Guarantors), with the
exception of Bluegreen Properties N.V., Resort Title Agency, Inc., any special
purpose finance subsidiary, any subsidiary which is formed and continues to
operate for the limited purpose of holding a real estate license and acting as a
broker, and certain other subsidiaries which have individually less then $50,000
of assets (collectively, Non-Guarantor Subsidiaries).
The net proceeds of the Offering were approximately $106.3 million. In
connection with the Offering, the Company repaid the $22.1 million short-term
borrowing from the two investment banking firms who were the initial purchasers
of the Notes, approximately $28.9 million of line-of-credit and notes payable
balances and approximately $36.3 million of the Company's receivable-backed
notes payable. In addition, the Company paid aggregate accrued interest on the
repaid debt of approximately $1 million and $2.7 million of prepayment
penalties. The remaining net proceeds of the Offering were used to repay other
obligations of the Company and for working capital purposes. In connection with
the Offering, the Company wrote-off approximately $692,000 of debt issuance
costs related to the extinguished debt and recognized a $1.7 million
extraordinary loss on early extinguishment of debt, net of taxes.
SUPPLEMENTAL GUARANTOR INFORMATION
Management has determined that separate, full financial statements for the
Subsidiary Guarantors and Non-Guarantor Subsidiaries are not required and,
accordingly, are not provided. Supplemental financial information for Bluegreen
Corporation, its combined Non-Guarantor Subsidiaries and its combined Subsidiary
Guarantors is presented below:
BLUEGREEN CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET AT DECEMBER 27, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMBINED COMBINED
BLUEGREEN NON-GUARANTOR SUBSIDIARY
CORPORATION SUBSIDIARIES GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents ......................... $ 31,538 $ 8,217 $ 13,207 $ -- $ 52,962
Contracts receivable, net ......................... 435 510 12,314 -- 13,259
Intercompany receivable ........................... 85,028 -- -- (85,028) --
Notes receivable, net ............................. 754 5,317 63,520 -- 69,591
Inventory, net .................................... 15,670 15,677 106,235 -- 137,582
Investment in securities .......................... -- 15,811 -- -- 15,811
Investments in subsidiaries ....................... 7,980 -- -- (7,980) --
Other assets ...................................... 8,001 3,590 9,659 (3,000) 18,250
Property and equipment, net ....................... 6,234 264 18,103 -- 24,601
--------- ------- -------- -------- --------
Total assets ................................... $ 155,640 $49,386 $223,038 $(96,008) $332,056
========= ======= ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable, accrued liabilities
and other ...................................... $ 4,592 $10,704 $ 11,154 $ -- $ 26,450
Intercompany payable .............................. -- 1,462 83,566 (85,028) --
Lines-of-credit and notes payable ................. 117,000 16,430 16,318 (3,000) 146,748
Deferred income taxes ............................. 1,311 1,387 13,711 -- 16,409
8.25% convertible subordinated debentures ......... 34,371 -- -- -- 34,371
--------- ------- -------- -------- --------
Total liabilities .............................. 157,274 29,983 124,749 (88,028) 223,978
Minority interest ................................. -- -- -- 397 397
Total shareholders' equity ......................... (1,634) 19,403 98,289 (8,377) 107,681
--------- ------- -------- -------- --------
Total liabilities and shareholders' equity ...... $ 155,640 $49,386 $223,038 $(96,008) $332,056
========= ======= ======== ======== ========
</TABLE>
12
<PAGE> 13
BLUEGREEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - - (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 28, 1997
----------------------------------------------------------------------
COMBINED COMBINED
BLUEGREEN NON-GUARANTOR SUBSIDIARY
CORPORATION SUBSIDIARIES GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales of real estate ........................ $ 7,227 $ -- $ 37,263 $ -- $ 44,490
Other resort and golf operations revenue .... -- 202 1,383 -- 1,585
Management fee revenue ...................... 4,181 -- -- (4,181) --
Interest income ............................. 238 453 2,499 -- 3,190
-------- ------- -------- -------- --------
11,646 655 41,145 (4,181) 49,265
COSTS AND EXPENSES
Cost of real estate sold .................... 4,947 -- 13,756 -- 18,703
Cost of other resort and golf operations .... -- 118 1,391 -- 1,509
Management fees ............................. -- 66 4,115 (4,181) --
Selling, general and administrative
expense .................................. 7,602 -- 14,008 -- 21,610
Interest expense ............................ 1,243 98 1,385 -- 2,726
Provisions for losses ....................... -- -- 568 -- 568
-------- ------- -------- -------- --------
13,792 282 35,223 (4,181) 45,116
-------- ------- -------- -------- --------
Income (loss) from operations ............... (2,146) 373 5,922 -- 4,149
Other income (expense) ...................... 19 49 (101) -- (33)
-------- ------- -------- -------- --------
Income (loss) before income taxes ........... (2,127) 422 5,821 -- 4,116
Provision (benefit) for income taxes ........ (870) 207 2,304 -- 1,641
-------- ------- -------- -------- --------
Net income (loss) ....................... $ (1,257) $ 215 $ 3,517 $ -- $ 2,475
======== ======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 27, 1998
-------------------------------------------------------------------
COMBINED COMBINED
BLUEGREEN NON-GUARANTOR SUBSIDIARY
CORPORATION SUBSIDIARIES GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales of real estate ......................... $ 8,589 $ 3,745 $ 43,335 $ -- $55,669
Other resort and golf operations revenue ..... -- 271 2,675 -- 2,946
Management fee revenue ....................... 5,375 -- -- (5,375) --
Interest income .............................. 394 759 2,959 -- 4,112
------- ------- -------- -------- -------
14,358 4,775 48,969 (5,375) 62,727
COSTS AND EXPENSES
Cost of real estate sold ..................... 2,870 1,138 16,771 -- 20,779
Cost of other resort and golf operations ..... -- 252 3,079 -- 3,331
Management fees .............................. -- 478 4,897 (5,375) --
Selling, general and administrative
expense ................................... 8,488 1,926 18,465 -- 28,879
Interest expense ............................. 2,451 469 -- -- 2,920
Provisions for losses ........................ -- 75 548 -- 623
------- ------- -------- -------- -------
13,809 4,338 43,760 (5,375) 56,532
------- ------- -------- -------- -------
Income from operations ....................... 549 437 5,209 -- 6,195
Other income (expenses) ...................... 8 1,068 (23) -- 1,053
------- ------- -------- -------- -------
Income before income taxes ................... 557 1,505 5,186 -- 7,248
Provision for income taxes ................... 223 602 2,074 -- 2,899
Minority interest in income of
consolidated subsidiary .................... -- -- -- 76 76
------- ------- -------- -------- -------
Net income ............................. $ 334 $ 903 $ 3,112 $ (76) $ 4,273
======= ======= ======== ======== =======
</TABLE>
13
<PAGE> 14
BLUEGREEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 28, 1997
---------------------------------------------------------------------------
COMBINED COMBINED
BLUEGREEN NON-GUARANTOR SUBSIDIARY
CORPORATION SUBSIDIARIES GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales of real estate ......................... $ 21,391 $ -- $ 101,511 $ -- $122,902
Other resort and golf operations revenues .... -- 202 1,383 -- 1,585
Management fee revenue ....................... 10,981 -- -- (10,981) --
Interest income .............................. 619 1,513 5,192 -- 7,324
-------- -------- --------- --------- --------
32,991 1,715 108,086 (10,981) 131,811
COSTS AND EXPENSES
Cost of real estate sold ..................... 10,599 -- 44,678 -- 55,277
Cost of other resort and golf operations ..... -- 118 1,391 -- 1,509
Management fees .............................. -- 172 10,809 (10,981) --
Selling, general and administrative
expense ................................... 21,568 -- 33,958 -- 55,526
Interest expense ............................. 3,013 330 3,169 -- 6,512
Provisions for losses ........................ -- -- 1,349 -- 1,349
-------- -------- --------- --------- --------
35,180 620 95,354 (10,981) 120,173
-------- -------- --------- --------- --------
Income (loss) from operations ................ (2,189) 1,095 12,732 -- 11,638
Other income (expense) ....................... 121 8 (9) -- 120
-------- -------- --------- --------- --------
Income (loss) before income taxes ............ (2,068) 1,103 12,723 -- 11,758
Provision (benefit) for income taxes ......... (846) 451 5,169 -- 4,774
-------- -------- --------- --------- --------
Net income (loss) ........................ $ (1,222) $ 652 $ 7,554 $ -- $ 6,984
======== ======== ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 27, 1998
------------------------------------------------------------------------
COMBINED COMBINED
BLUEGREEN NON-GUARANTOR SUBSIDIARY
CORPORATION SUBSIDIARIES GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales of real estate ......................... $26,721 $ 9,612 $ 136,397 $ -- $ 172,730
Other resort and golf operations revenue ..... -- 778 8,113 -- 8,891
Management fee revenue ....................... 16,460 -- -- (16,460) --
Interest income .............................. 1,661 2,069 7,631 -- 11,361
------- -------- --------- --------- ---------
44,842 12,459 152,141 (16,460) 192,982
COSTS AND EXPENSES
Cost of real estate sold ..................... 8,448 2,696 52,043 -- 63,187
Cost of other resort and golf operations ..... -- 771 7,835 -- 8,606
Management fees .............................. -- 1,246 15,214 (16,460) --
Selling, general and administrative
expense ................................... 25,895 5,655 55,881 -- 87,431
Interest expense ............................. 8,253 1,470 305 -- 10,028
Provisions for losses ........................ -- 227 1,288 -- 1,515
------- -------- --------- --------- ---------
42,596 12,065 132,566 (16,460) 170,767
------- -------- --------- --------- ---------
Income from operations ....................... 2,246 394 19,575 -- 22,215
Other income ................................. 296 3,121 68 -- 3,485
------- -------- --------- --------- ---------
Income before income taxes ................... 2,542 3,515 19,643 -- 25,700
Provision for income taxes ................... 1,017 1,406 7,857 -- 10,280
Minority interest in loss of consolidated
subsidiary ................................. -- -- -- (53) (53)
------- -------- --------- --------- ---------
Income before extraordinary item .............. 1,525 2,109 11,786 53 15,473
Extraordinary loss on early
extinguishment of debt, net ............... -- -- (1,682) -- (1,682)
------- -------- --------- --------- ---------
Net income ............................. $ 1,525 $ 2,109 $ 10,104 $ 53 $ 13,791
======= ======== ========= ========= =========
</TABLE>
14
<PAGE> 15
BLUEGREEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - - (CONTINUED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 28, 1997
--------------------------------------------------------
COMBINED COMBINED
BLUEGREEN NON-GUARANTOR SUBSIDIARY
CORPORATION SUBSIDIARIES GUARANTORS CONSOLIDATED
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ....... $ (4,174) $(6,970) $ 25,242 $ 14,098
-------- ------- -------- --------
INVESTING ACTIVITIES:
Acquisition of RDI Group, Inc. and Resort Title
Agency, Inc., net of cash acquired .............. (6,197) -- 3,776 (2,421)
Purchases of property and equipment ................. (663) (77) (2,169) (2,909)
Proceeds from sales of property and equipment ....... -- -- 225 225
Cash received from investment in securities ......... -- 1,524 -- 1,524
-------- ------- -------- --------
NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES ....... (6,860) 1,447 1,832 (3,581)
-------- ------- -------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of 8% convertible
subordinated notes payable ....................... 6,000 -- -- 6,000
Proceeds from borrowings under line-of-
credit facilities and other notes payable ........ 14,889 6,000 15,247 36,136
Payments under line-of-credit facilities
and other notes payable .......................... (1,940) -- (36,591) (38,531)
Payment of debt issuance costs ...................... (82) (4) (814) (900)
Proceeds from exercise of employee stock options .... 324 -- -- 324
Payments for treasury stock ......................... (19) -- -- (19)
-------- ------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES ....... 19,172 5,996 (22,158) 3,010
-------- ------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS .............. 8,138 473 4,916 13,527
Cash and cash equivalents at beginning of period ....... 3,353 3,442 4,802 11,597
-------- ------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............. 11,491 3,915 9,718 25,124
Restricted cash and cash equivalents at end
of period ........................................... 211 3,871 9,218 13,300
-------- ------- -------- --------
UNRESTRICTED CASH AND CASH EQUIVALENTS AT
END OF PERIOD ....................................... $ 11,280 $ 44 $ 500 $ 11,824
======== ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 27, 1998
---------------------------------------------------------
COMBINED COMBINED
BLUEGREEN NON-GUARANTOR SUBSIDIARY
CORPORATION SUBSIDIARIES GUARANTORS CONSOLIDATED
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES .... $ (81,110) $ 7,496 $ 70,901 $ (2,713)
--------- ------- -------- ---------
INVESTING ACTIVITIES:
Purchases of property and equipment ................. (3,878) (54) (5,453) (9,385)
Proceeds from sales of property and equipment ....... 923 -- 31 954
Cash received from investment in securities ......... -- 1,063 -- 1,063
--------- ------- -------- ---------
NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES ....... (2,955) 1,009 (5,422) (7,368)
--------- ------- -------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of 10.50% senior secured
notes payable .................................... 110,000 -- -- 110,000
Payments under line-of-credit facilities
and other notes payable ........................... (29,087) (4,639) (61,992) (95,718)
Payment of debt issuance costs ...................... (4,679) (835) (60) (5,574)
Proceeds from issuance of common stock .............. 24,298 -- -- 24,298
Proceeds from exercise of employee and
director stock options ........................... 374 -- -- 374
Payments for treasury stock ......................... (1,402) -- -- (1,402)
--------- ------- -------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES .............. 99,504 (5,474) (62,052) 31,978
--------- ------- -------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS .............. 15,439 3,031 3,427 21,897
Cash and cash equivalents at beginning of period ....... 16,100 5,186 9,779 31,065
--------- ------- -------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............. 31,539 8,217 13,206 52,962
Restricted cash and cash equivalents at end
of period ............................................ 2,899 7,994 7,107 18,000
--------- ------- -------- ---------
UNRESTRICTED CASH AND CASH EQUIVALENTS AT
END OF PERIOD ....................................... $ 28,640 $ 223 $ 6,099 $ 34,962
========= ======= ======== =========
</TABLE>
15
<PAGE> 16
6. CONVERTIBLE SUBORDINATED DEBENTURES
During the nine months ended December 27, 1998, holders of $368,000 in aggregate
principal amount of the Company's 8.25% convertible subordinated debentures
elected to convert said debentures into an aggregate 44,658 shares of the
Company's Common Stock.
7. LINE-OF-CREDIT
On September 23, 1998, the Company entered into a $5 million, unsecured
line-of-credit with a bank. Amounts borrowed under the line will bear interest
at LIBOR plus 1.5%. Interest is due monthly, with all principal amounts due on
July 31, 1999. Through December 27, 1998, the Company has not borrowed any
amounts under the line.
8. SALE OF COMMON STOCK
On August 14, 1998, the Company entered into a Securities Purchase Agreement
(the Stock Agreement) by and among the Company, Morgan Stanley Real Estate
Investors III, L.P., Morgan Stanley Real Estate Fund III, L.P., (MSREF), MSP
Real Estate Fund, L.P., and MSREF III Special Fund, L.P., (collectively, the
Funds) pursuant to which the Funds purchased 2,941,177 shares of the Company's
common stock, par value $.01 per share (the Common Stock), representing
approximately 12.6% of the outstanding Common Stock at August 14, 1998, for an
aggregate of $25 million.
Pursuant to the Stock Agreement, subject to certain conditions thereto, the
Company has the right to require the Funds, during the 18-month period
commencing on August 14, 1998 (the Commitment Period), to purchase from the
Company up to an additional 2,941,176 shares of Common Stock (the Remaining
Shares) at a purchase price per share equal to $8.50. If, on or prior to the
expiration of the Commitment Period, the Company has not offered to sell to the
Funds all of the Remaining Shares and the Company has achieved certain earnings
levels for the 12-month period ended June 27, 1999, or if a Change of Control of
the Company occurs (as defined in the Stock Agreement) during the Commitment
Period, the Funds will have the right to purchase any or all of the Remaining
Shares not previously sold to the Funds at a purchase price per share equal to
$8.50. Therefore, as the Company has not as yet achieved the necessary earnings
levels for the Funds to exercise their right to purchase the remaining $2.9
million shares, these shares have not been included in the Company's weighted
average shares outstanding for the purpose of computing diluted earnings per
share for the three- and nine-month periods ended December 27, 1998.
In accordance with the rules of the New York Stock Exchange, the Stock Agreement
required that the stockholders of the Company approve any issuance of shares of
Common Stock to the Funds which would result in the issuance of a number of
shares of Common Stock greater than 20% of the outstanding Common Stock on
August 14, 1998. The Company's shareholders approved the issuance of the
remaining unissued shares under the Stock Agreement at a special shareholders'
meeting held on November 20, 1998.
Subject to certain exceptions, the Funds have agreed not to offer, sell,
transfer, assign, pledge or hypothecate any shares of Common Stock issued to
them, prior to the earlier of (i) August 14, 2000 or (ii) nine months following
the date on which the Funds have purchased all the shares of Common Stock to be
purchased by them under the Stock Agreement, but in no event earlier than
February 14, 2000.
9. TREASURY STOCK
On October 1, 1998, the Board of Directors of the Company authorized a program
to repurchase up to 1 million shares of Bluegreen common stock in open market
transactions. During the three-months ended December 27, 1998, the Company
repurchased approximately 244,000 common shares at fair market value to be held
in treasury. At December 27, 1998, the Company held approximately 694,000 common
shares in treasury.
10. CONTINGENCIES
In the ordinary course of its business, the Company from time to time becomes
subject to claims or proceedings relating to the purchase, subdivision, sale
and/or financing of real estate. Additionally, from time to time, the Company
becomes involved in disputes with existing and former employees. The Company
believes that substantially all of the above are incidental to its business.
16
<PAGE> 17
In addition to its other ordinary course litigation, the Company has recently
become a defendant in two proceedings. First, an action was filed against the
Company on December 15, 1998. The plaintiff has asserted that the Company is in
breach of its obligations under, and has made certain misrepresentations in
connection with, a contract under which the Company acted as marketing agent for
the sale of undeveloped property owned by the plaintiff. The plaintiff also
alleges fraud, negligence and violation by the Company of an alleged fiduciary
duty owed to plaintiff. Among other things, the plaintiff alleges that the
Company failed to meet certain minimum sales requirements under the marketing
contract and failed to commit sufficient resources to the sale of the property.
The complaint seeks damages in excess of $18 million and certain other remedies,
including punitive damages.
Second, an action (the Action) was filed on July 10, 1998 against two
subsidiaries of the Company and various other defendants. The Company itself is
not named as a defendant. The Company's subsidiaries acquired certain real
property (the Property). The Property was acquired subject to certain alleged
oil and gas leasehold interests and rights (the Interests) held by the
plaintiffs in the Action (the Plaintiffs). The Company's subsidiaries developed
the Property and have resold parcels to numerous customers. The Plaintiffs
allege, among other things, breach of contract, slander of title and that the
Company's subsidiaries and their purchasers have unlawfully trespassed on
easements and otherwise violated and prevented the Plaintiffs from exploiting
the Interests. The Plaintiffs claim damages in excess of $40 million, as well as
punitive or exemplary damages in an amount of at least $50 million and certain
other remedies.
The Company is in the early stages of evaluating these actions and their
potential impact, if any, on the Company and accordingly cannot predict the
outcomes with any degree of certainty. However, based upon all of the facts
presently under consideration of management, the Company believes that it has
substantial defenses to the allegations in each of the actions and intends to
defend each of these matters vigorously. The Company does not believe that any
likely outcome of either case will have a material adverse effect on the
Company's financial condition or results of operations.
17
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Reform Act of 1995 (the Act) and is making the following
statements pursuant to the Act in order to do so. Certain statements under this
Item 2 and elsewhere in this report constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended. Any statements contained herein
that are not statements of historical fact may be deemed forward-looking
statements. Such forward-looking statements are risks and uncertainties, many of
which are beyond the Company's control, that could cause the actual results,
performance or achievements of the Company, or industry trends, to differ
materially from any future results, performance or achievements expressed or
implied by such forward-looking statements. Given these uncertainties, investors
are cautioned not to place undue reliance on such forward-looking statements and
no assurance can be given that the plans, estimates and expectations reflected
in such statements will be achieved. The Company wishes to caution readers that
the following important factors, among others, in some cases have affected, and
in the future could affect, the Company's actual results and could cause the
Company's actual consolidated results to differ materially from those expressed
in any forward-looking statements made by, or on behalf of, the Company:
a) Changes in national, international or regional economic conditions that can
affect the real estate market, which is cyclical in nature and highly
sensitive to such changes, including, among other factors, levels of
employment and discretionary disposable income, consumer confidence,
available financing and interest rates.
b) The imposition of additional compliance costs on the Company as the result
of changes in any environmental, zoning or other laws and regulations that
govern the acquisition, subdivision and sale of real estate and various
aspects of the Company's financing operation.
c) Risks associated with a large investment in real estate inventory at any
given time (including risks that real estate inventories will decline in
value due to changing market and economic conditions and that the
development and carrying costs of inventories may exceed those
anticipated).
d) Risks associated with an inability to locate suitable inventory for
acquisition.
e) Risks associated with delays in bringing the Company's inventories to
market due to, among other things, changes in regulations governing the
Company's operations, adverse weather conditions or changes in the
availability of development financing on terms acceptable to the Company.
f) Changes in applicable usury laws or the availability of interest deductions
or other provisions of federal or state tax law.
g) A decreased willingness on the part of banks to extend direct customer lot
financing, which could result in the Company receiving less cash in
connection with the sales of real estate and/or lower sales.
h) The inability of the Company to find external sources of liquidity on
favorable terms to support its operations, acquire, carry and develop land
and timeshare inventories and satisfy its debt and other obligations.
i) The inability of the Company to find sources of capital on favorable terms
for the pledge and/or sale of land and timeshare notes receivable.
j) An increase in prepayment rates, delinquency rates or defaults with respect
to Company-originated loans or an increase in the costs related to
reacquiring, carrying and disposing of properties reacquired through
foreclosure or deeds in lieu of foreclosure.
k) Costs to develop inventory for sale and/or selling, general and
administrative expenses exceeding those anticipated.
l) An increase or decrease in the number of land or resort properties subject
to percentage of completion accounting which requires deferral of profit
recognition on such projects until development is substantially complete.
18
<PAGE> 19
m) The failure of the Company to satisfy the covenants contained in the
indentures governing certain of its debt instruments and other credit
agreements which, among other things, place certain restrictions on the
Company's ability to incur debt, incur liens and pay dividends.
n) The failure of the Company's computer and non-information technology
systems to be "Year 2000" compliant.
The following discussion should be read in conjunction with the condensed
consolidated financial statements and related notes thereto included in the
Company's Annual Report to Shareholders for the fiscal year ended March 29,
1998.
GENERAL
Real estate markets are cyclical in nature and highly sensitive to changes in
national and regional economic conditions, including, among other factors,
levels of employment and discretionary disposable income, consumer confidence,
available financing and interest rates. A downturn in the economy in general or
in the market for real estate could have a material adverse effect on the
Company.
The Company recognizes revenue on residential land and Timeshare Interest sales
when a minimum of 10% of the sales price has been received in cash, the refund
or rescission period has expired, collectibility of the receivable representing
the remainder of the sales price is reasonably assured and the Company has
completed substantially all of its obligations with respect to any development
relating to the real estate sold. In cases where all development has not been
completed, the Company recognizes revenue in accordance with the percentage of
completion method of accounting. Under this method of revenue recognition,
income is recognized as work progresses. Measures of progress are based on the
relationship of costs incurred to date to expected total costs.
Costs associated with the acquisition and development of timeshare resorts and
residential land properties, including carrying costs such as interest and
taxes, are capitalized as real estate and development costs and allocated to
cost of real estate sold as the respective revenue is recognized.
Effective September 30, 1997, a wholly-owned subsidiary of the Company acquired
all of the issued and outstanding common stock of RDI Group Inc. and Resort
Title Agency, Inc. (collectively RDI) for a purchase price of $7.5 million,
consisting of $6 million cash and a $1.5 million, 9% promissory note due October
3, 1999. The acquisition was accounted for using the purchase method of
accounting and, accordingly, the results of operations of RDI have been included
in the Company's condensed consolidated financial statements from September 30,
1997.
On December 15, 1997, the Company invested $250,000 of capital in Bluegreen
Properties N.V. (BPNV), an entity organized in Aruba that previously had no
operations, in exchange for a 50% ownership interest. Concurrently, the Company
and an affiliate of the other 50% owner of BPNV (who is not an affiliate of the
Company), each loaned BPNV $3 million pursuant to promissory notes due on
December 15, 2000 and bearing interest at the prime rate plus 1%. BPNV then
acquired from a third party approximately 8,000 unsold timeshare intervals at
the La Cabana Beach & Racquet Club, a fully developed timeshare resort in
Oranjestad, Aruba in exchange for $6 million cash and the assumption of
approximately $16.6 million of interest-free debt from a bank in Aruba. The debt
was recorded by BPNV at approximately $12.5 million, which reflects a discount
based on an imputed interest rate of 12%. The debt is to be repaid over five
years through release-prices as intervals are sold, subject to minimum monthly
payments of approximately $278,000. In addition to its 50% ownership interest,
the Company will receive a quarterly management fee from BPNV equal to 7% of
BPNV's net sales in exchange for the Company's involvement in the day-to-day
operations of BPNV. The Company also has majority control of BPNV's board of
directors and has a controlling financial interest in BPNV. Therefore, the
accounts of BPNV are included in the Company's consolidated financial statements
from December 15, 1997.
The Company has historically experienced and expects to continue to experience
seasonal fluctuations in its gross revenues and net earnings. This seasonality
may cause significant fluctuations in the quarterly operating results of the
Company. As the Company's timeshare revenues grow as a percentage of total
revenues and in more diverse geographic areas, the Company believes that the
fluctuations in revenues due to seasonality may be mitigated. In addition, other
material fluctuations in operating results may occur due to the timing of
development and the Company's use of the percentage of completion method of
accounting. Management expects that the Company will
19
<PAGE> 20
continue to invest in multi-year, capital-intensive projects. No assurances can
be given that the amount of revenue deferred under the percentage of completion
accounting method will not increase.
The Company believes that inflation and changing prices have not had a material
impact on its revenues and results of operations during the nine months ended
December 28, 1997 or December 27, 1998. Based on the current economic climate,
the Company does not expect that inflation and changing prices will have a
material impact on the Company's revenues or results of operations. To the
extent inflationary trends affect short-term interest rates, a portion of the
Company's debt service costs may be affected as well as the rate the Company
charges on its new receivables.
During the periods covered by this discussion, the Company's real estate
operations were managed under three divisions and much of this discussion is
organized by such divisions. The Resorts Division manages the Company's
timeshare operations and the Residential Land Division acquires large tracts of
real estate which are subdivided, improved and sold, typically on a retail
basis. The Company's Communities Division, markets factory-built manufactured
homes and lot packages and undeveloped lots. In the first quarter of fiscal 1997
(June 1996), the Company decided to focus on the expansion of the Resorts
Division and the Residential Land Division in certain locations. Consistent with
this strategy, the Company does not intend to acquire any additional
communities-related inventories and present Communities Division inventories are
being liquidated through a combination of bulk sales and retail sales. As of and
for the nine-month period ended December 27, 1998, the Communities Division
represented less than 2% of consolidated inventory and sales of real estate.
Therefore, no separate discussion with respect to the Communities Division is
contained herein relative to the three- and nine-month periods ended December
27, 1998 due to immateriality.
Inventory is carried at the lower of cost, including costs of improvements and
amenities, incurred subsequent to acquisition, or fair value, net of costs to
dispose.
A portion of the Company's income historically has been comprised of gains on
sales of loans. In connection with sales under a $100 million timeshare
receivables purchase facility with a financial institution (the Purchase
Agreement) (more fully described in Note 2 to the December 27, 1998 Condensed
Consolidated Financial Statements appearing elsewhere herein), the Company
recognized $1.1 million and $3.1 million of such gains during the three- and
nine-month periods ended December 27, 1998. As $54.1 million of additional
timeshare receivables can be sold under the Purchase Agreement, subject to
customary conditions and eligible notes, the Company anticipates that gains on
sales of loans will comprise a portion of its income in future periods, although
there can be no assurances given. The amount of gains recorded is based in part
on management's estimates of future prepayment and default rates and other
considerations in light of then-current conditions. If actual prepayments with
respect to loans occur more quickly than was projected at the time such loans
were sold, interest would be less than expected and earnings would be charged in
the current period. If actual defaults and/or losses with respect to loans sold
are greater than estimated, charge-offs would exceed previously estimated
amounts and earnings would be charged in the current period.
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
RESORTS RESIDENTIAL LAND COMMUNITIES TOTAL
------------------ ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED DECEMBER 28, 1997
Sales of real estate $16,311 100.0% $27,028 100.0% $ 1,151 100.0% $44,490 100.0%
Cost of real estate sold 4,229 25.9% 13,328 49.3% 1,146 99.6% 18,703 42.0%
------- ------- ------- ------- ------- ------- ------- -------
Gross profit 12,082 74.1% 13,700 50.7% 5 0.4% 25,787 58.0%
Field selling, general and
administrative expense (1) 11,078 67.9% 7,453 27.6% 47 4.1% 18,578 41.8%
------- ------- ------- ------- ------- ------- ------- -------
Field operating profit (loss) (2) $ 1,004 6.2% $ 6,247 23.1% $ (42) (3.7)% $ 7,209 16.2%
======= ======= ======= ======= ======= ======= ======= =======
THREE MONTHS ENDED DECEMBER 27, 1998
Sales of real estate $25,024 100.0% $29,196 100.0% $ 1,449 100.0% $55,669 100.0%
Cost of real estate sold 6,243 24.9% 13,219 45.3% 1,317 90.9% 20,779 37.3%
------- ------- ------- ------- ------- ------- ------- -------
Gross profit 18,781 75.1% 15,977 54.7% 132 9.1% 34,890 62.7%
Field selling, general and
administrative expense (1) 17,509 70.0% 8,005 27.4% 190 13.1% 25,704 46.2%
------- ------- ------- ------- ------- ------- ------- -------
Field operating profit (loss) (2) $ 1,272 5.1% $ 7,972 27.3% $ (58) (4.0)% $ 9,186 16.5%
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
20
<PAGE> 21
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
RESORTS RESIDENTIAL LAND COMMUNITIES TOTAL
------------------ ------------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NINE MONTHS ENDED DECEMBER 28, 1997
Sales of real estate $39,880 100.0% $78,830 100.0% $ 4,192 100.0% $122,902 100.0%
Cost of real estate sold 10,301 25.8% 40,752 51.7% 4,224 100.8% 55,277 45.0%
------- ------ ------- ------ ------- ------ -------- -------
Gross profit 29,579 74.2% 38,078 48.3% (32) (0.8)% 67,625 55.0%
Field selling, general and
administrative expense (1) 25,706 64.5% 21,401 27.1% 177 4.2% 47,284 38.5%
------- ------ ------- ------ ------- ------ -------- -------
Field operating profit (loss) (2) $ 3,873 9.7% $16,677 21.2% $ (209) (5.0)% $ 20,341 16.5%
======= ======= ======= ====== ======= ====== ======== =======
NINE MONTHS ENDED DECEMBER 27, 1998
Sales of real estate $74,885 100.0% $94,523 100.0% $ 3,322 100.0% $172,730 100.0%
Cost of real estate sold 18,433 24.6% 41,888 44.3% 2,866 86.3% 63,187 36.6%
------- ------ ------- ------ ------- ------ -------- -------
Gross profit 56,452 75.4% 52,635 55.7% 456 13.7% 109,543 63.4%
Field selling, general and
administrative expense (1) 50,212 67.1% 25,855 27.4% 541 16.3% 76,608 44.4%
------- ------ ------- ------ ------- ------ -------- -------
Field operating profit (loss) (2) $ 6,240 8.3% $26,780 28.3% $ (85) (2.6)% $ 32,935 19.0%
======= ======= ======= ====== ======= ====== ======== =======
</TABLE>
(1) GENERAL AND ADMINISTRATIVE EXPENSES ATTRIBUTABLE TO CORPORATE OVERHEAD HAVE
BEEN EXCLUDED FROM THE TABLES. CORPORATE GENERAL AND ADMINISTRATIVE
EXPENSES TOTALED $3.0 MILLION AND $3.2 MILLION FOR THE THREE MONTHS ENDED
DECEMBER 28, 1997 AND DECEMBER 27, 1998, RESPECTIVELY, AND $8.2 MILLION AND
$10.8 MILLION FOR THE NINE MONTHS ENDED DECEMBER 28, 1997 AND DECEMBER 27,
1998, RESPECTIVELY.
(2) THE TABLES PRESENTED ABOVE OUTLINE SELECTED FINANCIAL DATA. INTEREST
INCOME, INTEREST EXPENSE, PROVISIONS FOR LOSSES, OTHER INCOME AND INCOME
TAXES HAVE BEEN EXCLUDED.
SALES. Consolidated sales of real estate increased 25.1% from $44.5 million for
the three-month period ended December 28, 1997 (the 1998 Quarter) to $55.7
million for the three-month period ended December 27, 1998 (the 1999 Quarter).
Consolidated sales of real estate increased 40.5% from $122.9 million for the
nine-month period ended December 28, 1997 (the 1998 Period) to $172.7 million
for the nine-month period ended December 27, 1998 (the 1999 Period).
As of December 27, 1998, approximately $11.6 million in sales or $5.7 million in
estimated income was deferred, primarily due to percentage of completion
accounting. At March 29, 1998, approximately $16.9 million of sales or $8.4
million in estimated income was deferred. These amounts are included on the
condensed consolidated balance sheets under the caption deferred income.
RESORTS DIVISION
During the 1998 and 1999 Quarters, sales of Timeshare Interests contributed
$16.3 million or 36.7% and $25.0 million or 45.0%, respectively, of the
Company's total consolidated revenues from the sale of real estate. During the
1998 and 1999 Periods, sales of Timeshare Interests contributed $39.9 million or
32.4% and $74.9 million or 43.4%, respectively, of the Company's total
consolidated revenues from the sale of real estate.
The following tables set forth information for sales of Timeshare Interests
associated with the Company's Resorts Division for the periods indicated, BEFORE
giving effect to the percentage of completion method of accounting.
<TABLE>
<CAPTION>
THREE MONTHS ENDED, NINE MONTHS ENDED,
-------------------------- -------------------------
DECEMBER 28, DECEMBER 27, DECEMBER 28, DECEMBER 27,
1997 1998 1997 1998
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Number of Timeshare Interests sold 2,068 2,969 4,903 9,074
Average sales price per Timeshare Interest $8,300 $8,619 $8,695 $8,675
Gross margin 74.1% 75.1% 74.2% 75.4%
</TABLE>
21
<PAGE> 22
The increase in Timeshare Interest sales during the 1999 Quarter was partially
due to BPNV, which commenced operations on December 15, 1997, and generated
approximately $3.7 million in Timeshare Interest sales (527 Timeshare Interests
sold) during the 1999 Quarter, with no comparable sales during the 1998 Quarter.
The increase in the number of Timeshare Interests sold during the 1999 Quarter
was also partially due to increased numbers of Timeshare Interests sold at the
Company's other resorts during the 1999 Quarter, as follows:
<TABLE>
<CAPTION>
# OF TIMESHARE INTERESTS SOLD
----------------------------------
RESORT OR ACQUISITION 1998 QUARTER 1999 QUARTER INCREASE
--------------------- ------------ ------------ --------
<S> <C> <C> <C>
Laurel Crest (Pigeon Forge, TN) 351 420 69
Shore Crest (Myrtle Beach, SC) 295 358 63
Harbour Lights (Myrtle Beach, SC) 203 257 54
RDI Group Inc. 543 644 101
</TABLE>
This increase in Timeshare Interest sales at existing resorts is primarily due
to the maturation of projects and the increased effectiveness of marketing
programs. In addition, the Company recently opened off-site sales offices (i.e.,
located separate from a resort location) in Cleveland, Ohio, and Jeffersonville,
Indiana, (serving the Louisville, Kentucky market). The Company also has an
existing off-site sales office in Indianapolis, Indiana. With the commencement
of development of the Company's Orlando Sunshine Resort in December, 1998, the
Company's Orlando, Florida sales office became an "on-site" operation. The new
off-site sales offices contributed an aggregate 116 Timeshare Interests sold
during the 1999 Quarter. The Company anticipates opening additional off-site
sales offices in selected major cities around the country to market and sell its
Timeshare Interests and points-based Vacation Club program. There can be no
assurances that the Company's off-site sales office program will continue to be
developed as planned or that the program will be successful.
The increase in Timeshare Interest sales during the 1999 Period was partially
due to the acquisition RDI, effective September 30, 1997, which contributed
approximately $16.3 million and $4.2 million in Timeshare Interest sales (1,991
and 543 Timeshare Interests sold) during the 1999 Period and 1998 Period,
respectively. Also, BPNV generated approximately $9.6 million in Timeshare
Interest sales (1,354 Timeshare Interests sold) during the 1999 Period with no
corresponding sales during the 1998 Period. The Company's new off-site sales
offices sold an aggregate of 177 Timehsare Interests during the 1999 Period. The
increase in the number of Timeshare Interests sold during the 1999 Period was
also partially due to increased numbers of Timeshare Interests sold at the
Company's other resorts during the 1999 Period, primarily due to factors
discussed above, as follows:
<TABLE>
<CAPTION>
# OF TIMESHARE INTERESTS SOLD
-----------------------------------
RESORT 1998 PERIOD 1999 PERIOD INCREASE
------ ----------- ----------- --------
<S> <C> <C> <C>
Laurel Crest (Pigeon Forge, TN) 966 1,348 382
Harbour Lights (Myrtle Beach, SC) 569 902 333
Falls Village (Branson, MO) 556 757 201
MountainLoft (Gatlinburg, TN) 1,109 1,238 129
Shore Crest (Myrtle Beach, SC) 1,160 1,307 147
</TABLE>
The increase in average sales price per Timeshare Interest during the 1999
Quarter was due primarily to increases in average selling prices between the
1998 Quarter and 1999 Quarter at the Company's Falls Village and Laurel Crest
resorts. The average sales price at Falls Village increased from $8,241 to
$9,678 during the 1998 Quarter and 1999 Quarter, respectively. The average sales
price at Laurel Crest increased from $8,453 to $9,590 during the 1998 Quarter
and 1999 Quarter, respectively. This increase in average sales price also
contributed to the increase in the gross profit margin for the Resorts division
from 74.1% to 75.1% during the 1998 Quarter and 1999 Quarter, respectively.
The decrease in average sales price per Timeshare Interest during the 1999
Period was due primarily to the sales of Timeshare Interests in Aruba, which
averaged sales prices per Timeshare Interest of $7,099 during the 1999 Period.
The Company's average sales price per Timeshare Interest, excluding Aruba, was
$8,873 during the 1999 Period.
Field operating profit (FOP) decreased from 6.2% to 5.1% during the 1998 Quarter
and 1999 Quarter, respectively, and from 9.7% to 8.3% during the 1998 Period and
1999 Period, respectively. The decrease in FOP during the 1999 Period was
primarily due to the deferral of revenues of $4.3 million and FOP of $1.5
million under percentage-of-completion accounting. Other factors include the
deferral of approximately $991,000 of revenues with no corresponding deferral of
commission expense under a sales and marketing agreement whereby BPNV sells
Timeshare Interests on behalf of a third-party in Aruba. In addition, start-up
operations at the Company's off-site sales offices in Cleveland, Ohio, Orlando,
Florida and Jeffersonville, Indiana generated a total field operating loss of
$1.7 million during the 1999 Period. The Resorts Division's FOP during the 1999
Quarter and 1999 Period excluding the impact of percentage-of-completion
accounting, the deferred revenue in Aruba and the start-up
22
<PAGE> 23
operations at the new off-site sales offices would have increased to 10.2% and
13.3%, respectively, from 7.0% and 10.9% for the 1998 Quarter and 1998 Period,
respectively.
During both the 1998 Quarter and 1998 Period, other resort and golf operations
revenue and related costs were approximately $1.6 million and $1.5 million,
respectively. During the 1999 Quarter, other resort and golf operations revenue
and related costs were approximately $2.9 million and $3.3 million,
respectively. During the 1999 Period, other resort and golf operations revenue
and related costs were approximately $8.9 million and $8.6 million,
respectively. Other resort services include the resort property management
services, resort title services and certain retail amenity and lodging
operations acquired in connection with the RDI. Golf revenues and costs include
the results of operating Bluegreen's daily fee golf courses.
RESIDENTIAL LAND DIVISION
During the 1998 and 1999 Quarters, residential land sales contributed $27.0
million or 60.8% and $29.2 million or 52.4%, respectively, of the Company's
total consolidated revenues from the sale of real estate. During the 1998 and
1999 Periods, residential land sales contributed $78.8 million or 64.1% and
$94.5 million or 54.7%, respectively, of the Company's total consolidated
revenues from the sale of real estate.
The table set forth below outlines the number of parcels sold and the average
sales price per parcel for the Residential Land Division for the periods
indicated, BEFORE giving effect to the percentage of completion method of
accounting:
<TABLE>
<CAPTION>
THREE MONTHS ENDED, NINE MONTHS ENDED,
-------------------------- --------------------------
DECEMBER 28, DECEMBER 27, DECEMBER 28, DECEMBER 27,
1997 1998 1997 1998
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Number of parcels sold 474 548 1,740 1,727
Average sales price per parcel $51,397 $43,344 $47,449 $46,686
Gross margin 50.7% 54.7% 48.3% 55.7%
</TABLE>
The aggregate number of parcels sold increased from the 1998 Quarter to the 1999
Quarter primarily due to the following:
o The Company began selling residential land lots in a new project known as
The Lookout at Brushy Creek commencing in October 1998. Located
approximately 20 minutes north of Austin, Texas, this over-500 acre
property features scenic hillsides, seven ponds and a 15-acre lake. The
Company sold 38 lots in this project during the 1999 Quarter.
o In April 1998, the Company opened a new property in the Texas Hill Country
known as Falcon Wood. Falcon Wood is located 30 minutes from Austin, Texas,
45 minutes from San Antonio, Texas, and is near the Blanco River and
Cypress Creek. The Company sold 16 Falcon Wood parcels during the 1999
Quarter.
o The Pinnacle, the Company's new project located 20 minutes from San
Antonio, Texas, began selling residential parcels in October 1998. The
project is also near the Guadaloupe River and Canyon Lake. During the 1999
Quarter, the Company sold 15 lots in the Pinnacle project.
The average sales price per parcel decreased during both the 1999 Quarter and
1999 Period as compared to the 1998 Quarter and 1998 Period. The Company began
selling lots with an average selling price of approximately $74,000 during the
1999 Quarter at its new property in Arizona (Mogollon Ranch), commencing in
October 1998. This project opened as the Company's successful Crossroads Ranch
project in Arizona was winding down sales operations. Crossroads Ranch averaged
sales prices per lot of $181,000 during the 1998 Quarter. As Mogollon Ranch
generated 24 lot sales during the 1999 Quarter and Crossroads Ranch generated 25
lot sales during the 1998 Quarter, the Company's overall average sales price per
parcel decreased.
In addition to the factors discussed above, overall sales for the Residential
Land Division increased due to the Company's ability to recognize $5.1 million
and $10.9 million of revenue during the 1999 Quarter and 1999 Period,
respectively, that was previously deferred under percentage-of-completion
accounting. The recognition of this revenue was due to certain major projects in
Texas and Tennessee reaching substantial completion.
23
<PAGE> 24
The average gross margin increased during both the 1999 Quarter and 1999 Period
from the respective prior periods primarily due to increased gross margins
generated by the Company's Winding River Plantation property in Southport, North
Carolina.
The Company's Investment Committee approves all property acquisitions. In order
to be approved for purchase by the Investment Committee, all residential land
properties are expected to achieve certain minimum economics including a minimum
gross margin. No assurances can be given that such minimum economics will be
achieved.
INTEREST INCOME
Interest income increased 28.9% from $3.2 million for the 1998 Quarter to $4.1
million for the 1999 Quarter. Interest income increased 55.1% from $7.3 million
for the 1998 Period to $11.4 million for the 1999 Period. The Company's interest
income is earned from its receivable portfolio, securities retained pursuant to
REMIC financings and timeshare note receivable sales and cash and cash
equivalents. The increase in interest income is primarily due to an increase in
the average note receivable balance during the 1999 Quarter and Period as
compared to the 1998 Quarter and Period. This increase in the average note
receivable balance is due primarily to the increase in the sales of Timeshare
Interests as the Company provides financing on approximately 89% of its
Timeshare Interest sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE (S,G&A EXPENSE)
The Company's S,G&A Expense consists primarily of marketing costs, advertising
expenses, sales commissions and corporate overhead. S,G&A Expense totaled $21.6
million and $28.9 million for the 1998 Quarter and the 1999 Quarter,
respectively. S,G&A Expense totaled $55.5 million and $87.4 million for the 1998
Period and the 1999 Period, respectively. A significant portion of S,G&A Expense
is variable relative to sales and profitability levels and, therefore, increases
with growth in sales of real estate. As a percentage of sales of real estate,
S,G&A Expense (including corporate administrative expense) increased from 48.6%
in the 1998 Quarter to 52% in the 1999 Quarter and from 45.2% to 51% in the 1998
Period and 1999 Period, respectively. This percentage increase is due primarily
to the increase in Resorts Division sales as a percentage of consolidated sales
of real estate, as selling and marketing expenses are greater for the timeshare
industry as compared to the residential land business. However, as Land Division
gross profits increased at a faster rate than the related S,G&A Expense, the
Company's operating margin increased from 9% in both the 1998 Quarter and Period
to 11% in the 1999 Quarter and 13% in the 1999 Period.
INTEREST EXPENSE
Interest expense totaled $2.7 million and $2.9 million for the 1998 Quarter and
1999 Quarter, respectively. Interest expense totaled $6.5 million and $10.0
million for the 1998 Period and 1999 Period, respectively. The 7.1% and 54.0%
increases in interest expense for the 1999 Quarter and 1998 Period,
respectively, were primarily due to an increase in the average outstanding debt
balance from $122.9 million to $171.4 million during the 1998 Period and 1999
Period, respectively. The increase in the average debt balance is primarily due
to approximately $15.5 million of debt incurred or assumed by BPNV, the $21.7
million net increase in debt in connection with the issuance of the Company's
$110 million senior secured notes payable, increased borrowings associated with
the Company's receivable-backed notes payable and debt incurred to fund the
acquisition and development of the Company's resort and residential land
projects since December 28, 1997.
PROVISIONS FOR LOSSES
The Company recorded provisions for loan losses and for real estate taxes and
other costs associated with delinquent customers of $568,000 and $623,000 during
the 1998 Quarter and 1999 Quarter, respectively, and $1.3 million and $1.5
million during the 1998 Period and 1999 Period, respectively. The increase in
the provision is attributable to the overall increase in the notes receivable
balance since December 28, 1997 caused by increased sales of Timeshare Interests
by the Resorts Division, offset by a decrease in Resorts Division loans due to
the sale of $45.9 million of timeshare notes receivable during the 1999 Period.
24
<PAGE> 25
The allowance for loan losses by division as of March 29, 1998 and December 27,
1998 is (amounts in thousands):
<TABLE>
<CAPTION>
CONSUMER MORTGAGES
--------------------------------
RESIDENTIAL
MARCH 29, 1998 RESORTS DIVISION LAND DIVISION OTHER TOTAL
- -------------- ---------------- ------------- ------ --------
<S> <C> <C> <C> <C>
Notes Receivable $ 67,430 $ 14,459 $1,508 $ 83,397
Less: Allowance for Loan Losses (1,635) (469) -- (2,104)
-------- -------- ------ --------
Notes Receivable, net $ 65,795 $ 13,990 $1,508 $ 81,293
======== ======== ====== ========
Allowance as a % of gross notes
receivable 2.4% 3.2% -% 2.5%
======== ======== ====== ========
DECEMBER 27, 1998
- -----------------
Notes Receivable $ 54,950 $ 11,767 $5,154 $ 71,871
Less: Allowance for Loan Losses (1,920) (360) -- (2,280)
-------- -------- ------ --------
Notes Receivable, net $ 53,030 $ 11,407 $5,154 $ 69,591
======== ======== ====== ========
Allowance as a % of gross notes
receivable 3.5% 3.1% -% 3.2%
======== ======== ====== ========
</TABLE>
Other notes receivable primarily include the AmClub notes (more fully described
in Note 3 to the December 27, 1998 Condensed Consolidated Financial Statements
appearing elsewhere herein) and secured promissory notes receivable from
commercial enterprises upon their purchase of bulk parcels from the Company's
Residential Land and Communities Divisions. The Company monitors the
collectibility of these notes and has deemed them to be collectible based on
various factors, including the value of the underlying collateral.
OTHER INCOME
Other income increased from $120,000 to $3.5 million during the 1998 Period and
1999 Period, respectively. The increase is primarily due to the $3.1 million
gain on sale of the timeshare notes receivable previously discussed and
approximately $268,000 of gains on sales of property and equipment, both
recorded during the 1999 Period.
EXTRAORDINARY ITEM
The Company recognized a $1.7 million extraordinary loss on early extinguishment
of debt, net of taxes, during the 1999 Period. See further discussion under
"Liquidity and Capital Resources - Note Offering".
SUMMARY
Based on the factors discussed above, the Company's net income increased from
$2.5 million to $4.3 million in the 1998 Quarter and 1999 Quarter, respectively,
and from $7.0 million to $13.8 million in the 1998 Period and 1999 Period,
respectively.
CHANGES IN FINANCIAL CONDITION
Cash and cash equivalents increased $13.5 million and $21.9 million during the
1998 Period and 1999 Period, respectively.
Net cash provided by the Company's operations was $14.1 million for the 1998
Period. Net cash used by operations was $2.7 million during the 1999 Period. The
decrease in cash flow from operations during the 1999 Period was primarily due
to the acquisition of Timeshare Interest inventory in Charleston, South Carolina
for approximately $16.5 million in cash.
Net cash used by investing activities was $3.6 million and $7.4 million for the
1998 Period and 1999 Period, respectively. The increase in cash used by
investing activities during the 1999 Period was primarily due to an additional
$6.5 million in purchases of property and equipment, primarily $2.2 million for
furniture and leasehold improvements at the Company's new corporate headquarters
and an additional $3.2 million in fixed asset spending related to the Company's
daily fee golf courses. This was partially offset by the fact that the Company
used $2.4 million of cash during the 1998 Period in connection with the
acquisition of RDI Group, Inc.
25
<PAGE> 26
Net cash provided by financing activities was $3.0 million and $32.0 million for
the 1998 Period and 1999 Period, respectively. The increase in net cash provided
by financing activities during the 1999 Period was due to the proceeds from the
issuance of the Company's $110.0 million senior secured notes and the issuance
of 2.9 million shares of the Company's Common Stock to affiliates of Morgan
Stanley Dean Witter and Company, Inc. for net cash proceeds of approximately
$24.3 million. These increases were partially offset by the payment of
approximately $5.6 million of debt issuance costs during the 1999 Period, the
early extinguishment of approximately $91.8 million of lines-of-credit and other
notes payable (including prepayment penalties and accrued interest),
approximately $4.0 million of payments on lines-of-credit in the normal course
of business and $1.4 million of treasury stock acquired during the 1999 Period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital resources are provided from both internal and external
sources. The Company's primary capital resources from internal operations are:
(i) cash sales of real estate, (ii) down payments on real estate and timeshare
sales which are financed, (iii) principal and interest payments on the purchase
money mortgage loans and contracts for deed arising from sales of Timeshare
Interests and residential land lots (collectively Receivables) and (iv) proceeds
from the sale of, or borrowings collateralized by, notes receivable.
Historically, external sources of liquidity have included borrowings under
secured lines-of-credit, seller and bank financing of inventory acquisitions and
the issuance of debt securities. The Company's capital resources are used to
support the Company's operations, including (i) acquiring and developing
inventory, (ii) providing financing for customer purchases, (iii) meeting
operating expenses and (iv) satisfying the Company's debt, and other
obligations. The Company anticipates that it will continue to require external
sources of liquidity to support its operations and satisfy its debt and other
obligations and to provide funds for future strategic acquisitions, primarily
for the Resorts Division.
NOTE OFFERING
On April 1, 1998, the Company consummated a private placement offering (the
Offering) of $110 million in aggregate principal amount of 10.5% senior secured
notes due April 1, 2008 (the Notes). The net proceeds of the Offering were
approximately $106.3 million. In connection with the Offering, the Company
repaid the $22.1 million short-term borrowing from the two investment banking
firms who were the initial purchasers of the Notes, approximately $28.9 million
of line-of-credit and notes payable balances and approximately $36.3 million of
the Company's receivable-backed notes payable. In addition, the Company paid
aggregate accrued interest on the repaid debt of approximately $1 million and
$2.7 million of prepayment penalties. The remaining net proceeds of the Offering
were used to repay other obligations of the Company and for working capital
purposes.
CREDIT FACILITIES FOR TIMESHARE RECEIVABLES AND TIMESHARE INVENTORIES
The Company has maintained various credit facilities with financial institutions
that provided for receivable financing for its timeshare projects. In connection
with the Offering, the Company retired all outstanding indebtedness related to
timeshare receivable and inventory financings, except for debt associated with
receivables previously sold to financial institutions with recourse by RDI and
debt related to Aruba, which were approximately $6.3 million and $13.4 million,
respectively at December 27, 1998. The Company terminated the existing credit
facilities for timeshare receivable and inventory financings concurrent with the
closing of the Offering.
The Company has obtained a two-year, $35 million timeshare receivables warehouse
loan facility with a financial institution. Loans under the warehouse facility
will bear interest at LIBOR plus 2.75%. The warehouse facility has detailed
requirements with respect to the eligibility of receivables for inclusion and
other conditions to funding. The borrowing base under the warehouse facility is
95% of the outstanding principal balance of eligible notes arising primarily
from the sale of completed Timeshare Interests. The warehouse facility includes
affirmative, negative and financial covenants, and events of default. As of
December 27, 1998, the Company has not incurred any debt under the warehouse
facility.
On June 26, 1998, the Company executed a timeshare receivables purchase facility
with the same financial institution. Under the purchase facility (the Purchase
Facility), a special purpose finance subsidiary of the Company will sell up to
$100 million aggregate principal amount of timeshare receivables to the
financial institution in a securitization transaction. The Purchase Facility has
detailed requirements with respect to the eligibility of receivables for
purchase. Under the Purchase Facility, a purchase price equal to approximately
97%
26
<PAGE> 27
(subject to adjustment in certain circumstances) of the principal balance of the
receivables sold will be paid at closing in cash, with a portion deferred until
such time as the purchaser has received a return equal to the weighted-average
term treasury rate plus 1.4% and all servicing, custodial and similar fees and
expenses have been paid and a cash reserve account has been funded. Should the
Company fail to sell to such financial institution during the term of the
Purchase Facility notes receivable with cumulative present value of at least
$100 million, the return to the purchaser will increase by .05% for each $10
million shortfall, to a maximum applicable margin of 1.60%. The Company's
special purpose finance subsidiary will be required to maintain a specified
overcollaterlization level and a cash reserve account. Receivables will be sold
without recourse to the Company or its special purpose finance subsidiary except
for breaches of representations and guaranties made at the time of sale. The
financial institution's obligation to purchase under the Purchase Facility will
terminate upon the occurrence of specified trigger events. The Company will act
as servicer under the Purchase Facility for a fee, and will be required to make
advances to the financial institution to the extent it believes such advances
will be recoverable. The Purchase Facility includes various conditions to
purchase and other provisions customary for a transaction of this type. The
Purchase Facility has a term of two years.
During the 1999 Period, the Company sold approximately $45.9 million in
aggregate principal amount of timeshare receivables for a purchase price equal
to 97% of the principal balance and recognized a $3.1 million gain. As a result
of the sales, the Company recorded a $4.4 million available-for-sale investment
in the residual cash flow of the receivable pools (i.e. the deferred payment).
In addition, the same financial institution referred to in the preceding
paragraphs has provided the Company with a $25 million acquisition and
development facility for its timeshare inventories. The facility includes a
two-year draw down period and has a term of seven years. Principal will be
repaid through agreed-upon release prices as Timeshare Interests are sold at the
financed resort, subject to minimum required amortization. The indebtedness
under the facility bears interest at the three-month LIBOR plus 3.0%. With
respect to any inventory financed under the facility, the Company will be
required to have provided equity of at least 15% of the approved project costs.
In connection with the facility, the Company will also be required to pay
certain fees and expenses to the financial institution. As of December 27, 1998,
the Company has not incurred any debt under the acquisition and development
facility.
CREDIT FACILITIES FOR RESIDENTIAL LAND RECEIVABLES AND RESIDENTIAL LAND
INVENTORIES
The Company has an existing $20.0 million revolving credit facility with a
financial institution for the pledge of Residential Land Division Receivables.
The Company uses the facility as a warehouse until it accumulates a sufficient
quantity of residential land receivables to sell under a private placement REMIC
transaction not registered under the Securities Act. Under the terms of this
facility, the Company is entitled to advances secured by eligible Residential
Land Division receivables up to 90% of the outstanding principal balance. In
addition, up to $8.0 million of the facility can be used for land acquisition
and development purposes. The interest rate charged on outstanding borrowings
ranges from prime plus 0.5% to 1.5%. At December 27, 1998, the outstanding
principal balances under the receivables and development portions of this
facility were $6.4 million and $1.1 million, respectively. All principal and
interest payments received on pledged Receivables are applied to principal and
interest due under the facility. The ability to borrow under the facility
expires in September 2000. Any outstanding indebtedness is due in September
2002.
Over the past three years, the Company has received 80% to 90% of its land sales
proceeds in cash. Accordingly, in recent years the Company has reduced the
borrowing capacity under credit agreements secured by land receivables. The
Company attributes the significant volume of cash sales to an increased
willingness on the part of certain local banks to extend more direct customer
lot financing. No assurances can be given that local banks will continue to
provide such customer financing.
Historically, the Company has funded development for road and utility
construction, amenities, surveys, and engineering fees from internal operations
and has financed the acquisition of residential land property through seller,
bank or financial institution loans. Terms for repayment under these loans
typically call for interest to be paid monthly and principal to be repaid
through lot releases. The release price is usually defined as a pre-determined
percentage of the gross selling price (typically 25% to 50%) of the parcels in
the subdivision. In addition, the agreements generally call for minimum
cumulative annual amortization. When the Company provides financing for its
customers (and therefore the release price is not available in cash at closing
to repay
27
<PAGE> 28
the lender), it is required to pay the creditor with cash derived from other
operating activities, principally from cash sales or the pledge of receivables
originated from earlier property sales.
The Company has obtained from a financial institution a $35 million revolving
credit facility. The Company expects to use this facility to finance the
acquisition and development of residential land projects and to finance land
receivables. The facility when drawn upon will be secured by the real property
(and personal property related thereto) with respect to which borrowings are
made, with the lender to advance up to a specified percentage of the value of
the mortgaged property and eligible pledged receivables, provided that the
maximum outstanding amount secured by pledged receivables may not exceed $20.0
million. The interest charged on outstanding borrowings is expected to be
approximately prime plus 1.5%. As of December 27, 1998, the Company has not
incurred any debt under the revolving credit facility.
OTHER CREDIT FACILITIES
On September 23, 1998, the Company entered into a $5 million, unsecured
line-of-credit with a bank. Amounts borrowed under the line will bear interest
at LIBOR plus 1.5%. Interest is due monthly, with all principal amounts due on
July 31, 1999. Through December 27, 1998, the Company has not borrowed any
amounts under the line.
SUMMARY
The Company intends to continue to pursue a growth-oriented strategy,
particularly with respect to its Resorts Division. In connection with this
strategy, the Company may from time to time acquire, among other things,
additional resort properties and completed Timeshare Interests; land upon which
additional resorts may be built; management contracts; loan portfolios of
Timeshare Interest mortgages; portfolios which include properties or assets
which may be integrated into the Company's operations; and operating companies
providing or possessing management, sales, marketing, development,
administration and/or other expertise with respect to the Company's operations
in the timeshare industry. In addition, the Company intends to continue to focus
the Residential Land Division on larger more capital intensive projects
particularly in those regions where the Company believes the market for its
products is strongest, such as the Southeast, Southwest, Rocky Mountains and
Western regions of the United States and to replenish its residential land
inventory in such regions as existing projects are sold-out.
The Company estimates that the total cash required to complete preparation for
the sale of its residential land and timeshare property inventory as of December
27, 1998 is approximately $197.2 million, expected to be incurred over a
five-year period. The Company plans to fund these expenditures primarily with
available capacity on existing or proposed credit facilities and cash generated
from operations. There can be no assurances that the Company will be able to
obtain the financing necessary to complete the foregoing plans.
The Company's credit facilities and the Indenture entered into in connection
with the Note Offering include certain covenants restricting, among other
things, the incurrence of debt, the payment of dividends and other restricted
payments, the incurrence of liens, and transactions with affiliates. Certain
current and future credit facilities do or will include financial covenants. No
assurances can be given that such covenants will not limit the Company's ability
to satisfy or refinance its obligations or otherwise adversely affect the
Company's operations.
The Company believes that the net proceeds from the Offering, anticipated cash
generated from operations, anticipated future permitted borrowings under
existing or proposed credit facilities and anticipated future sales of notes
receivable under existing purchase facilities will be sufficient to meet the
Company's working capital, capital expenditures and debt service requirements
for the foreseeable future. Based on outstanding borrowings at December 27,
1998, and the credit facilities described above, the Company has approximately
$112.4 million of available credit at its disposal, subject to customary
conditions and eligible collateral. This amount does not include the remaining
$54.1 million of capacity on its timeshare receivables purchase facility. The
Company may, in the future, require additional credit facilities or issuances of
other corporate debt or equity securities in connection with acquisitions or
otherwise. Any debt incurred or issued by the Company may be secured or
unsecured, bear fixed or variable rate interest and may be subject to such terms
as management deems prudent. There can be no assurance that the proposed credit
facilities will be consummated on the terms described herein, if at all, or that
sufficient funds will be available from operations or under existing, proposed
or future revolving credit or other borrowing arrangements or receivables
purchase facilities to meet the Company's cash needs, including, without
limitation, its debt service obligations. The Company's credit facilities
include customary conditions to funding, eligibility requirements for
collateral, certain financial and other affirmative and negative
28
<PAGE> 29
covenants, including, among others, limits on the incurrence of indebtedness,
covenants concerning net worth, fixed charge coverage requirements, debt to
equity ratios and events of default. In addition, the Company's future operating
performance and ability to meet its financial obligations will be subject to
future economic conditions and to financial, business and other factors, many of
which will be beyond the Company's control.
IMPACT OF YEAR 2000
Some of the Company's older computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer
programs have time-sensitive software that recognizes a date using "00" as the
year 1900 rather than the year 2000. This could cause a system failure and
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, or engage in similar
normal business activities.
The Company has completed an assessment relative to the modification or
replacement of portions of its software so that its computer systems will
function properly with respect to dates in the year 2000 and thereafter. The
Company is also in the process of identifying and reviewing its non-information
technology systems with respect to Year 2000 issues. In addition, the Company
has initiated communication with third parties to determine the extent to which
the Company's interface systems are vulnerable to those third parties' failure
to remediate their own Year 2000 issues. The total "Year 2000" project cost is
estimated at approximately $400,000, which consists of costs to be incurred to
acquire upgraded software that will be capitalized. It is anticipated that these
costs will be paid for using cash from operations.
The project is estimated to be completed not later than June 30, 1999, which is
prior to any anticipated impact on the Company's operating systems. The Company
believes that with modifications to existing software and conversions to new
software, the Year 2000 issue will not pose significant operational problems for
its computer systems. However, if such modifications and conversions are not
made, or are not completed timely, the Year 2000 issue could have a material
impact on the operations of the Company.
The Company is developing and will continue to develop contingency plans for
dealing with any adverse effects that become likely in the event that the
Company's remediation plans are not successful or third parties fail to
remediate their own Year 2000 issues.
The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of its business, the Company from time to time
becomes subject to claims or proceedings relating to the purchase,
subdivision, sale and/or financing of real estate. Additionally, from
time to time, the Company becomes involved in disputes with existing
and former employees. The Company believes that substantially all of
the above are incidental to its business.
Certain other litigation involving the Company is described in the
Company's Form 10-Q for the period ended September 27, 1998. Subsequent
to the filing of such Form 10-Q, no material developments have occurred
with respect to such litigation.
29
<PAGE> 30
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a Special Meeting of Stockholders held on November 20, 1998, the
stockholders voted on a proposal to approve a series of related
transactions resulting in the issuance and sale of up to an aggregate
of 5,882,354 shares of the Company's common stock at a price per share
equal to $8.50 to Morgan Stanley Real Estate Fund III, L.P., Morgan
Stanley Real Estate Investors III, L.P., MSP Real Estate L.P. and MSREF
III Special Fund L.P. (collectively, the Purchasers) pursuant to a
securities Purchase agreement dated as of August 14, 1998 by and among
the Company and the Purchasers, as more fully described in the proxy
materials dated October 21, 1998.
The results of voting were as follows:
<TABLE>
<CAPTION>
Shares Voted
---------------------------------------------------------------------
FOR AGAINST ABSTAIN TOTAL
---------- ------------ --------- -----------
<S> <C> <C> <C>
16,103,219 109,782 991,255 17,204,256
</TABLE>
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.133 Loan and Security Agreement dated October 20, 1998, by the
Registrant and Bluegreen Resorts, Inc. as Borrowers and
Heller Financial, Inc. as Lender.
10.134 Master Bluegreen Resort Loan Facility dated October 20, 1998,
by and between the Registrant and Heller Financial, Inc.
(b) Reports on Form 8-K
None.
30
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLUEGREEN CORPORATION
(Registrant)
Date: February 4, 1999 By: /s/ GEORGE F. DONOVAN
-----------------------------------
George F. Donovan
President and
Chief Executive Officer
Date: February 4, 1999 By: /s/ JOHN F. CHISTE
-----------------------------------
John F. Chiste
Senior Vice President,
Treasurer and Chief Financial Officer
(Principal Financial Officer)
Date: February 4, 1999 By: /s/ ANTHONY M. PULEO
-----------------------------------
Anthony M. Puleo
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
31
<PAGE> 1
EXHIBIT 10.133
[EXEMPT FROM ALL EXCISE TAXES AS A WHOLESALE WAREHOUSE MORTGAGE AGREEMENT UNDER
SECTION 201.21, F.S. COLLATERAL OBLIGATIONS GREATER THAN PRIMARY OBLIGATIONS.]
===============================================================================
LOAN AND SECURITY AGREEMENT
DATED AS OF OCTOBER 20, 1998
BY
BLUEGREEN CORPORATION
BLUEGREEN RESORTS, INC.,
AS BORROWERS,
AND
HELLER FINANCIAL, INC.
AS LENDER
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
RECITALS........................................................................................................-1-
SECTION 1 ..............................................................................................-1-
THE LOAN...............................................................................................-1-
1.1 LOAN AVAILABILITY.............................................................................-1-
1.2 TERM..........................................................................................-1-
1.3 INTEREST RATE.................................................................................-2-
1.4 FUNDING ADVANCES..............................................................................-2-
1.5 NOTE..........................................................................................-2-
1.6 PAYMENTS......................................................................................-2-
1.7 PREPAYMENTS...................................................................................-3-
1.8 FEES..........................................................................................-3-
1.9 INCREASED COSTS...............................................................................-3-
1.10 [OMITTED].....................................................................................-5-
1.11 INTEREST LOANS................................................................................-5-
SECTION 2 ..............................................................................................-6-
COLLATERAL.............................................................................................-6-
2.1 GRANT OF SECURITY INTEREST....................................................................-6-
2.2 EXCHANGE MECHANICS............................................................................-7-
2.3 SECURITY AGREEMENT............................................................................-7-
SECTION 3 ..............................................................................................-7-
CONDITIONS PRECEDENT TO ADVANCES.......................................................................-7-
3.1 CLOSING DELIVERIES............................................................................-7-
3.2 DELIVERIES PRIOR TO EACH ADVANCE..............................................................-8-
3.3 SECURITY INTERESTS............................................................................-8-
3.4 REPRESENTATIONS AND WARRANTIES................................................................-8-
3.5 NO DEFAULT....................................................................................-8-
3.6 PERFORMANCE OF AGREEMENTS.....................................................................-8-
3.7 GOVERNMENTAL APPROVALS........................................................................-8-
3.8 INTERCREDITOR AGREEMENTS......................................................................-8-
SECTION 4 ..............................................................................................-9-
GENERAL REPRESENTATIONS AND WARRANTIES.................................................................-9-
4.1 EXISTENCE.....................................................................................-9-
4.2 AUTHORIZATION AND ENFORCEABILITY..............................................................-9-
4.3 FINANCIAL STATEMENTS AND BUSINESS CONDITION...................................................-9-
4.4 TAXES........................................................................................-10-
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
4.5 LITIGATION AND PROCEEDINGS...................................................................-10-
4.6 LICENSES AND PERMITS.........................................................................-10-
4.7 FULL DISCLOSURE..............................................................................-10-
4.8 EMPLOYEE BENEFIT PLANS.......................................................................-11-
4.9 REPRESENTATIONS AS TO THE RESORTS AND ADDITIONAL RESORTS.....................................-11-
4.10 TIMESHARE INTERVAL EXCHANGE NETWORK..........................................................-12-
4.11 COLLATERAL...................................................................................-12-
4.12 INVESTMENT COMPANY ACT, ETC..................................................................-12-
4.13 TRADE NAMES..................................................................................-12-
4.14 MARGIN REGULATIONS...........................................................................-13-
4.15 [OMITTED]....................................................................................-13-
SECTION 5 .............................................................................................-13-
AFFIRMATIVE COVENANTS.................................................................................-13-
5.1 PAYMENT OF INDEBTEDNESS......................................................................-13-
5.2 MAINTENANCE OF INSURANCE.....................................................................-13-
5.3 INSPECTIONS AND AUDITS.......................................................................-13-
5.4 REPORTING REQUIREMENTS.......................................................................-14-
5.5 RECORDS......................................................................................-16-
5.6 MANAGEMENT; CONTRACTS........................................................................-16-
5.7 NET WORTH....................................................................................-16-
5.8 FIXED RATE COVERAGE RATIO....................................................................-16-
5.9 LEVERAGE RATIO TEST..........................................................................-16-
5.10 MAINTENANCE..................................................................................-16-
5.11 RELEASE AND BONDING OF LIENS.................................................................-16-
5.12 CLAIMS.......................................................................................-17-
5.13 USE OF LENDER NAME...........................................................................-17-
5.14 OTHER DOCUMENTS..............................................................................-17-
5.15 ADDITIONAL INDEBTEDNESS FOR BORROWED MONEY; ADDITIONAL OBLIGATIONS AFFILIATED
WITH SUBORDINATED OBLIGATIONS..............................................................-17-
5.16 LOAN SERVICING...............................................................................-17-
5.17 CUSTODIAN....................................................................................-17-
5.18 COMPLIANCE WITH LAWS.........................................................................-18-
5.19 COMPLIANCE DOCUMENTS.........................................................................-18-
5.20 REAL ESTATE TAXES............................................................................-18-
5.21 OMITTED......................................................................................-18-
5.22 OMITTED......................................................................................-18-
5.23 BORROWERS' FINANCIAL MAINTENANCE REQUIREMENT.................................................-18-
5.24 YEAR 2000....................................................................................-18-
5.25 AUTHORIZED SIGNATORY.........................................................................-18-
5.26 ALLONGE/ASSIGNMENT REQUIREMENTS..............................................................-18-
5.27 ENVIRONMENTAL................................................................................-19-
SECTION 6 .............................................................................................-19-
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
NEGATIVE COVENANTS....................................................................................-19-
6.1 CONSOLIDATION AND MERGER.....................................................................-19-
6.2 RESTRICTIONS ON TRANSFERS....................................................................-19-
6.3 COLLATERAL...................................................................................-20-
SECTION 7 .............................................................................................-20-
EVENTS OF DEFAULT.....................................................................................-20-
7.1 PAYMENTS.....................................................................................-20-
7.2 FAILURE TO PERMIT INSPECTIONS................................................................-20-
7.3 COVENANT DEFAULTS............................................................................-20-
7.4 WARRANTIES OR REPRESENTATIONS................................................................-20-
7.5 BANKRUPTCY...................................................................................-20-
7.6 ATTACHMENT, JUDGMENT, TAX LIENS..............................................................-21-
7.7 OMITTED......................................................................................-21-
7.8 DEFAULT BY BORROWERS IN OTHER AGREEMENTS.....................................................-21-
7.9 OMITTED......................................................................................-21-
7.10 TAX LIENS; ERISA LIENS.......................................................................-21-
7.11 LOAN EXCEEDS MAXIMUM EXPOSURE FOR FIVE DAYS..................................................-21-
7.12 VALIDITY OF TRANSACTION DOCUMENTS............................................................-21-
7.13 DEFAULT UNDER THE PROJECT LOAN...............................................................-21-
SECTION 8 .............................................................................................-22-
REMEDIES..............................................................................................-22-
8.1 REMEDIES UPON DEFAULT........................................................................-22-
8.2 APPLICATION OF COLLATERAL; TERMINATION OF AGREEMENTS.........................................-23-
8.3 WAIVERS......................................................................................-23-
8.4 SET OFF OF PAYMENTS..........................................................................-23-
8.5 CUMULATIVE RIGHTS............................................................................-24-
SECTION 9 .............................................................................................-24-
CERTAIN RIGHTS AND OBLIGATIONS OF LENDER..............................................................-24-
9.1 PROTECTION OF COLLATERAL.....................................................................-24-
9.2 PERFORMANCE BY LENDER........................................................................-24-
9.3 FEES AND EXPENSES............................................................................-24-
9.4 RELEASE OF SECURITY INTEREST.................................................................-24-
9.5 NOTICE TO OBLIGOR............................................................................-24-
9.6 COLLECTION OF RECEIVABLES...................................................................-24-
9.7 POWER OF ATTORNEY............................................................................-25-
9.8 INDEMNIFICATION OF LENDER....................................................................-25-
9.9 LENDER'S RIGHT TO PROVIDE FINANCING..........................................................-26-
SECTION 10 .............................................................................................-26-
PARTICIPATION AND ASSIGNMENTS.........................................................................-26-
10.1 PARTICIPATIONS IN LOAN AND ASSIGNMENTS IN LOAN...............................................-26-
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
SECTION 11 .............................................................................................-28-
MISCELLANEOUS.........................................................................................-28-
11.1 NOTICE.......................................................................................-28-
11.2 SURVIVAL.....................................................................................-29-
11.3 GOVERNING LAW................................................................................-29-
11.4 INVALID PROVISIONS...........................................................................-29-
11.5 COUNTERPARTS; EFFECTIVENESS..................................................................-29-
11.6 LENDER NOT FIDUCIARY.........................................................................-29-
11.7 ENTIRE AGREEMENT.............................................................................-29-
11.8 CONSENT TO ADVERTISING AND PUBLICITY.........................................................-30-
11.9 [OMITTED]....................................................................................-30-
11.10 HEADINGS.....................................................................................-30-
11.11 BROKER'S FEES................................................................................-30-
11.12 VENUE........................................................................................-30-
11.13 JURY TRIAL WAIVER............................................................................-30-
</TABLE>
<PAGE> 6
LIST OF EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Assignment of Pledged Receivables and Pledged
Receivables Collateral
Exhibit C Form of Reassignment of Pledged Receivables
Exhibit D Form of Request for Advances
Exhibit E Form of Allonge
Exhibit F Servicing Agreement
Exhibit G Reserved
Exhibit H List of Permitted Liens
(including therein the Condominium Declarations)
Exhibit I List of Resorts Encumbered by Resort Blanket Mortgages
Exhibit J List of Project Loan Documents
Exhibit K Structuring Fee Letter
Exhibit L Time Share Documents
Exhibit M Legal Description of Resorts
Exhibit N Commitment Letter dated March 30, 1998
Exhibit O Borrower Closing Checklist
Exhibit P Resort Closing Checklist
Exhibit Q Additional Resort Closing Checklist
Exhibit R Club Closing Checklist
LIST OF SCHEDULES
Schedule 2.1 Definition of "Material Project Loan Default" to be utilized
in the Project Loan Agreement
Schedule 3.2 List of Deliveries for all Advances
Schedule 4.5 List of Litigation Matters
Schedule 4.13(a) Trade Names Other than Name of Borrower
Schedule 4.13(b) Mergers and Corporate Reorganizations
Schedule 5.2 Insurance
Schedule 5.15 Additional Indebtedness for Borrowed Money;
Additional Obligations
<PAGE> 7
HSF Loan No. 98-087
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (this "AGREEMENT") dated as of
October 20, 1998, is made by and between Bluegreen Corporation, a Massachusetts
corporation whose address is 4960 Blue Lake Drive, Boca Raton, Florida 33431,
("BLUEGREEN CORPORATION") and Bluegreen Resorts, Inc., a Delaware corporation
whose address is 4960 Blue Lake Drive, Boca Raton, Florida 33431 ("BLUEGREEN
RESORTS" and together with Bluegreen Corporation and the Additional Borrowers
(as hereinafter defined) collectively referred to herein as the "BORROWERS" and
sometimes referred to herein individually as a "BORROWER"), and Heller
Financial, Inc., a Delaware corporation ("LENDER"), whose address is 500 West
Monroe Street, 31st Floor, Chicago, Illinois 60661.
RECITALS
A. Borrowers desire Lender to extend a revolving secured credit
facility to Borrowers in accordance with the terms of this Agreement.
B. Borrowers' obligations under the Loan Documents will be secured
INTER ALIA by a security interest in the Pledged Receivables (as hereinafter
defined).
C. All capitalized terms used herein shall have the meanings ascribed
thereto in the Appendix attached hereto and made a part hereof by this
reference.
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements, provisions and covenants herein contained, Borrowers and Lender
agree as follows:
SECTION 1
THE LOAN
1.1 LOAN AVAILABILITY. During the period commencing on the date hereof
and ending on June 26, 2000, Lender shall make Advances to the Borrowers not in
excess of Availability provided that the Borrowers satisfy all conditions, as
applicable, set forth in Section 3 hereof. Advances shall be (a) in minimum
amounts of $100,000 each or such lesser amount equal to Availability hereunder,
and (b) made no more frequently than four (4) times each month nor more than
one (1) time each week; provided, however, that, subject to Availability, any
request for an Advance of less than $100,000 or for any Advance in excess of
the number of Advances permitted in any week or month shall be honored by
Lender if accompanied by payment to Lender of a fee (the "SERVICE CHARGE") of
$3,000 for each such Advance. Except in connection with a prepayment mandated
under Section 1.7(b)(i) below, any amounts repaid during the Term may be
reborrowed during the Term.
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1.2 TERM. The Loan shall be for a term of two (2) years from June 26,
1998 to the end of the Fiscal Month of Bluegreen Corporation in which the date
hereof occurs (the "TERM").
1.3 INTEREST RATE. The outstanding principal balance of the Loan
together with all other Indebtedness shall bear interest at the Interest Rate;
provided, however, that after the occurrence and during the continuance of an
Event of Default the Loan will bear interest at the Default Rate which interest
shall be payable on a Payment Date.
1.4 FUNDING ADVANCES. Subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof with respect to Advances hereunder and
the limitations set forth in Section 1.1, the Lender shall make the proceeds of
an Advance available to the Borrowers by wiring funds to such account or such
other destination or directive as Bluegreen Corporation on its own behalf or on
behalf of the Borrowers as it may direct in writing.
1.5 NOTE. The Loan shall be evidenced by a promissory grid note
(herein, as amended, modified, extended or replaced from time to time, called
the "NOTE") substantially in the form set forth in EXHIBIT A, with appropriate
insertions, payable to the order of the Lender. The Borrowers hereby
irrevocably authorize the Lender to make (or cause to be made) appropriate
notations on the grid attached to the Note (or on any continuation of such
grid, or at the Lender's option, in its records), which notations, if made,
shall evidence, INTER ALIA, the date of, the outstanding principal of, and the
interest rate and interest period applicable to the Advance evidenced thereby.
Such notations shall be rebuttably presumptive evidence of the subject matter
thereof absent manifest error; PROVIDED, HOWEVER, that the failure to make any
such notations shall not limit or otherwise affect any obligations of the
Borrowers.
1.6 PAYMENTS.
(a) WEEKLY PAYMENTS. All funds collected by the Lockbox Bank from the
Pledged Receivables shall be paid to Lender at least weekly pursuant to the
Lockbox Agreement, and applied in the following order: first to the payment of
accrued and unpaid interest on the Indebtedness and then to the reduction of
the principal balance of the Loan; provided, however, that after the occurrence
and during the continuance of an Event of Default hereunder, such amounts shall
be applied in the following order: first to the payment of costs and expenses
incurred by Lender in collecting any amounts due in connection with the Loan;
second, to the payment of accrued but unpaid interest on the Loan; and
thereafter to the reduction of the principal balance of the Loan. If the funds
received by Lender from the Lockbox Bank with respect to any month are
insufficient to pay interest in full, Borrowers shall pay the difference to
Lender within five (5) Business Days of written notice from Lender. Payments
received by Borrowers directly from any Obligor shall be delivered to the
Lockbox Bank within two (2) Business Days. Notwithstanding anything in this
Section 1.6 to the contrary, in the event of the occurrence and during the
continuance of an Event of Default, Lender shall have sole discretion as to the
order in which said payments shall be applied.
(b) FINAL PAYMENT. The Indebtedness shall be payable in full on the
Maturity Date.
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1.7 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Borrowers may not make any voluntary
prepayments except (i) in accordance with Section 1.6(a), (ii) as may result
from the sale of Pledged Receivables financed under this Agreement into the
Purchase Facility, (iii) in the event the Purchase Limit is reached under the
Purchase Facility and Lender, in its capacity as Purchaser thereunder, has
refused to increase the Purchase Limit in accordance with Section 2.12(b) of
the Purchase Facility or (iv) in the event Lender has reviewed and rejected
Receivables associated with the Club. In connection with any sale to the
Purchase Facility of Pledged Receivables, Lender shall release its lien and
security interest in and to such Pledged Receivable and the related Pledged
Receivables Collateral if but only if the Repayment Price in respect to such
Pledged Receivable is paid to Lender. All Repayment Prices shall be applied as
prepayments of the Loan. From time to time Lender shall also cause to be
released from the lien of a Resort Blanket Mortgage those Intervals with
respect to which the related Pledged Receivable has been fully paid and fully
performed. Additionally, in the event a Pledged Receivable is no longer an
Eligible Completed Unit Receivable or an Eligible Uncompleted Unit Receivable
and the Borrowers take the action described in Section 1.7(b), the Lender will
release its lien on the Pledged Receivable. All out of pocket costs and
expenses in connection with any partial releases shall be for the expense of
the Borrowers.
(b) MANDATORY PREPAYMENTS. If at any time the outstanding principal
balance of the Loan exceeds the Maximum Exposure, Borrowers shall, within five
(5) Business Days after notice, prepay the Loan in an amount necessary to
reduce the principal balance of the Loan to the Maximum Exposure; provided,
however, that Borrowers, at their option within five (5) Business Days after
notice, may deliver to Lender one (1) or more Pledged Receivables such that,
after delivery of such Pledged Receivable(s), the outstanding principal balance
of the Loan does not exceed the Maximum Exposure.
1.8 FEES. The Borrowers shall pay to Lender the structuring fees as
described in the Structuring Fee Letter attached hereto as EXHIBIT K.
1.9 INCREASED COSTS. (a) If (i) any change in Regulation D of the
Board, or (ii) any Regulatory Change, in each case occurring after the date
hereof:
(A) shall subject the Affected Party to any additional tax, duty
or other charge with respect to Advances made hereunder or a
participation purchased hereunder, or shall change the basis
of taxation of payments to such party of the interest on
Advances funded by it or any participation purchased
hereunder in any material respect, or any other amounts due
under this Agreement in respect of any Advances made or
funded by it or participations purchased by it (except for
changes in the rate of tax on the overall net income of such
party imposed by the jurisdiction of such party's principal
executive office); or
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(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the
Board of Governors of the Federal Reserve System), but
excluding any reserve included in the determination of
interest rates, special deposit or similar requirement
against assets of, deposits with or for the account of, or
credit extended by, any Affected Party; or
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party;
or
(D) shall impose on any Affected Party any other condition
affecting any Advance or participation made or funded by any
Affected Party; and the result of any of the foregoing is or
would be to increase the cost to (or in the case of
Regulation D referred to above, to impose a cost on) (a) an
Affected Party funding or making or maintaining any Advances
or purchasing participations, or (b) the Lender for
continuing its relationship with the Borrowers, to reduce the
amount of any sum received or contracted by an Affected Party
under this Agreement, the Note, or any other Loan Document
with respect thereto, or in the good faith determination of
such Affected Party, to reduce the rate of return on the
capital of an Affected Party as a consequence of its
obligations hereunder or arising in connection herewith to a
level below that which such Affected Party would otherwise
have achieved, then within five Business Days after demand by
the Lender on behalf of such Affected Party to Borrowers
(which demand shall be accompanied by a written statement of
such Affected Party, subject to the second sentence of
subsection (e) below), Borrowers shall pay the Affected Party
such additional amount or amounts as will (in the reasonable
determination of such Affected Party) compensate such
Affected Party for such increased cost or such reduction.
Such written statement (which shall include calculations in
reasonable detail) shall, in the absence of manifest error,
be rebuttably presumptive evidence of the subject matter
thereof; and
(E) Each Affected Party will promptly notify the Lender (which
shall promptly notify the Borrowers) within 90 days after
such Affected Party has actual knowledge of any event
occurring after the date hereof that will entitle such
Affected Party to such additional amounts as compensation
pursuant to this Section 1.9. Such additional amounts shall
accrue from the date of such event (or if such notice is not
given within 90 days after such Affected Party's knowledge of
such event, from the date which is 90 days prior to
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the date such notice is given by such Affected Party).
(F) If any Lender requests compensation under this Section 1.9
which materially increases the Borrowers' cost of funds with
respect to the Loan or if any Lender defaults in its
obligation to fund loans hereunder, then the Borrowers may
upon five (5) Business Days notice to such Lender, require
such Lender to assign and delegate, without payment by
Borrowers of any prepayment fee or premium, all its
interests, rights and obligations under this Agreement to an
Eligible Assignee that shall assume such obligations (which
assignee may be another Lender, if another Lender accepts
such assignment); provided that (i) such transferring Lender
shall have received payment of an amount equal to the
outstanding principal amount of its loans, accrued interest
thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest) or Borrowers (in
the case of all other amounts) and (ii) in the case of any
such assignment resulting from a claim for compensation under
Section 1.9, such assignment will result in a reduction in
such compensation or payments. A Lender shall not be required
to make any such assignment and delegation if, prior thereto,
as a result of a waiver by such lender or otherwise, the
circumstances entitling Borrowers to require such assignment
and delegation ceases to apply.
1.10 [OMITTED]
1.11 INTEREST LOANS. Notwithstanding any provision to the contrary
contained in this Agreement or any other Loan Document, Borrowers shall not be
required to pay, and the Lender shall not be permitted to collect, any amount
of interest in excess of the maximum amount of interest permitted by applicable
law ("EXCESS INTEREST"). If any Excess Interest is provided for or determined
by a court of competent jurisdiction to have been provided for in this
Agreement or in any other Loan Document, then in such event: (1) the provisions
of this subsection shall govern and control; (2) the Borrowers shall not be
obligated to pay any Excess Interest; (3) any Excess Interest that the Lender
may have received hereunder shall be, at the Lender's option, (a) applied as a
credit against the outstanding principal balance of the Indebtedness or accrued
and unpaid interest (not to exceed the maximum amount permitted by law), (b)
refunded to the payor thereof, or (c) any combination of the foregoing; (4) the
interest rate(s) provided for herein shall be automatically reduced to the
maximum lawful rate allowed from time to time under applicable law (the
"MAXIMUM RATE"), and this Agreement and the other Loan Documents shall be
deemed to have been and shall be, reformed and modified to reflect such
reduction; and (5) the Borrowers shall not have any action against the Lender
for any damages arising out of the payment or collection of any Excess
Interest. Notwithstanding the foregoing, if for any period of time interest on
any Indebtedness is calculated at the Maximum Rate rather than the applicable
rate under this
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Agreement, and thereafter such applicable rate becomes less than the Maximum
Rate, the rate of interest payable on the Indebtedness shall remain at the
Maximum Rate until the Lender shall have received the amount of interest which
such Lender would have received during such period on the Indebtedness had the
rate of interest not been limited to the Maximum Rate during such period.
SECTION 2
COLLATERAL
2.1 GRANT OF SECURITY INTEREST. To secure the payment and performance
of the Indebtedness and, subject to the last sentence of this Section 2.1,
Project Indebtedness, Borrowers do hereby, subject to the terms of this
Agreement unconditionally and irrevocably assign, pledge and grant to Lender a
first priority continuing security interest and lien in and to the right, title
and interest of Borrowers in the following property of Borrowers with respect
to the Resorts and Additional Resorts, whether now owned or existing or
hereafter acquired regardless of where located (collectively, the
"COLLATERAL"):
(a) All Pledged Receivables;
(b) All Pledged Receivables Collateral;
(c) All Project Loan Collateral;
(d) All "MORTGAGED PROPERTY", as such term is defined in each of
the Resort Blanket Mortgages;
(e) All Club Collateral (except to the extent the assignment,
pledge or granting of a security interest in any Club
Collateral would constitute a default under any license or
lease of any such Club Collateral);
(f) All cash, other monies and property of Borrowers in the
possession or under the control of Lender other than cash and
other monies and property delivered to the Lender in error;
(g) All books, records, ledger cards, files, correspondence,
computer tapes, disks and software (subject to licensing
agreements) relating to the Pledged Receivables and Pledged
Receivable Collateral or any other Collateral (except to the
extent the assignment, pledge or granting of a security
interest in any Club Collateral would constitute a default
under any license or lease of any such Club Collateral); and
(h) All proceeds, extensions, amendments, additions,
improvements, betterments, renewals, substitutions and
replacements of the foregoing.
So long as there is no "MATERIAL PROJECT LOAN DEFAULT" (as the same is defined
on Schedule 2.1 hereto which definition shall be included in the Project Loan
Agreement), the Collateral shall not
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secure the Project Indebtedness and the Lender, upon the Borrowers' written
request, shall release its lien hereunder.
2.2 EXCHANGE MECHANICS. This Agreement contemplates the financing of
Pledged Receivables associated with the Club. The Borrowers anticipate
exchanging certain conditional land sale contracts for notes and Purchase Money
Mortgages to facilitate Obligors joining the Club. Notwithstanding anything to
the contrary contained herein, in no event shall such exchange affect the
Lender's first perfected security interest in a Pledged Receivable. Lender
hereby agrees to cooperate with Borrowers to facilitate the exchange
contemplated in the second sentence of this Section 2.2; provided such exchange
has no negative impact on the Lender's first priority perfected lien and
security interest on the Collateral (I.E. the Lender shall have a first
priority perfected lien and security interest in the new Pledged Receivable
which has been exchanged for the prior Pledged Receivable) and provided further
that the Borrowers pay all of Lender's reasonable costs (including but not
limited to legal expenses) associated with the exchange contemplated in the
second sentence of this Section 2.2.
2.3 SECURITY AGREEMENT. This Agreement shall be deemed a security
agreement as defined in the Code, and the remedies for any violation of the
covenants, terms and conditions of the agreements herein contained shall be
cumulative and be as prescribed (a) herein, or (b) by applicable law, or (c) as
to such part of the Collateral which is also reflected in any filed financing
statement, by the specific provisions of the Code now or hereafter enacted, all
at Lender's sole election.
SECTION 3
CONDITIONS PRECEDENT TO ADVANCES
The obligation of Lender to make Advances is subject to satisfaction
of all of the conditions set forth below (to the extent applicable to the
Pledged Receivables being financed hereby). Notwithstanding anything contained
in this Agreement to the contrary, in no event shall the execution of this
Agreement on the date hereof be deemed a waiver by Lender of any of the
conditions set forth below with respect to any Advance.
3.1 CLOSING DELIVERIES. (a) Lender shall have received, in form and
substance satisfactory to Lender, all documents, instruments and information
identified on the Closing Checklist attached hereto as EXHIBIT O, including,
without limitation, one or more executed legal opinions, issued by counsel
acceptable to Lender, in form and content acceptable to Lender.
(b) Lender shall have received, in form and substance satisfactory to
Lender, all documents, instruments and information identified on the Resort
Closing Checklist attached hereto as EXHIBIT P with respect to the Resorts
(including, without limitation, one or more executed legal opinions, issued by
counsel acceptable to Lender in each of the states wherein the
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Resorts are located, in form and content acceptable to Lender).
(c) Lender shall have received, in form and substance satisfactory to
Lender, all documents, instruments and information identified on the Additional
Resort Closing Checklist attached hereto as EXHIBIT Q including, without
limitation, one or more executed legal opinions, issued by counsel acceptable
to Lender in each of the states wherein the Additional Resorts are located, in
form and content acceptable to Lender).
(d) Lender shall have received, in form and substance satisfactory to
Lender, all documents, instruments and information identified on the Club
Closing Checklist attached hereto as EXHIBIT R with respect to the Club
(including, without limitation, one or more executed legal opinions, issued by
counsel acceptable to Lender in the state wherein the Club is located, in form
and content acceptable to Lender).
3.2 DELIVERIES PRIOR TO EACH ADVANCE. Prior to each Advance, Lender
shall have received all documents, instruments and information identified on
SCHEDULE 3.2 attached hereto. Requests for Advance ("ADVANCE REQUEST") shall be
made at least five (5) Business Days prior to the requested date of
disbursement and shall be in the form of EXHIBIT D hereto. Any Advance Request
given by a Borrower pursuant to this Section 3.2 shall be irrevocable and
binding on such Borrower. Such Advance Request shall designate a specific
account for the respective Borrower and designate the specific Resort relating
to the respective Borrower's Pledged Receivables.
3.3 SECURITY INTERESTS. Lender shall have received satisfactory
evidence that all security interests and liens granted to Lender pursuant to
this Agreement or the other Loan Documents have been duly perfected and
constitute first priority liens on the Collateral.
3.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained herein and in the Loan Documents shall be true, correct and complete
in all material respects on and as of the date of funding of each Advance
except for any representation or warranty limited by its terms to a specific
date or affected by the transactions permitted by this Agreement and taking
into account any amendments to the SCHEDULES or EXHIBITS as a result of any
disclosures made by the Borrowers to Lender after the date hereof and approved
by Lender, and except to the extent of changes occurring in the ordinary course
of business that, either singly or in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect.
3.5 NO DEFAULT. No Event of Default shall have occurred and be
continuing.
3.6 PERFORMANCE OF AGREEMENTS. Borrowers shall have performed in all
material respects all agreements, paid all fees, costs and expenses and
satisfied all conditions which any Loan Document provides shall be paid or
performed by it as of such date.
3.7 GOVERNMENTAL APPROVALS. Borrowers shall have obtained all
approvals, licenses, permits and consents for the sale of Intervals to Obligors
which are the subject of any requested Advance.
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3.8 INTERCREDITOR AGREEMENTS. To the extent the Borrowers or one of
their respective Affiliates has incurred, or will incur, debt for borrowed
money secured by the Resorts, Additional Resorts or Project Loan Collateral
from a source other than the Lender, the Lender shall have the opportunity to
review such other financing sources loan documentation and, to the extent
necessary to maintain its first perfected security interest in the Collateral,
shall have the opportunity to enter into a satisfactory Intercreditor Agreement
or other arrangement with the Borrowers and the party extending such credit.
Such Intercreditor Agreement or other arrangements shall provide satisfactory
assurances to the Lender that the Collateral shall not be adversely affected by
the security securing such other financing source.
SECTION 4
GENERAL REPRESENTATIONS AND WARRANTIES
Borrowers hereby jointly and severally represent and warrant to Lender
as follows, which representations and warranties shall remain true throughout
the term of the Loan:
4.1 EXISTENCE.
(a) Bluegreen Corporation is a corporation duly formed, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts with its principal place of business at Boca Raton, Florida.
Bluegreen Corporation is in good standing under the laws of the State of
Florida and is authorized to transact business in the States of Florida, and in
each other state where the failure to be so authorized would have a Material
Adverse Effect.
(b) Bluegreen Resorts, Inc., a Delaware corporation, is a corporation
duly formed, validly existing and in good standing under the laws of the State
of Delaware with its principal place of business at Boca Raton, Florida.
Bluegreen Resorts, Inc. is in good standing under the laws of the State of
Florida and is authorized to transact business in each state where the failure
to be so authorized would have a Material Adverse Effect.
4.2 AUTHORIZATION AND ENFORCEABILITY.
(a) EXECUTION. The Loan Documents have been duly authorized,
executed and delivered and constitute the duly authorized,
valid and legally binding obligations of the Borrowers,
enforceable against the Borrowers and the other parties
signatory thereto (other than Lender) in accordance with
their respective terms subject, as to enforceability, to the
effect of bankruptcy and other laws generally affecting
creditors' rights.
(b) OTHER AGREEMENTS. The execution, delivery and compliance with
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the terms and provisions of the Loan Documents will not (i)
to the best of Borrowers' knowledge, violate any provisions
of law or any applicable regulation, order or other decree of
any court or governmental entity, or (ii) conflict or be
inconsistent with, or result in any default under, any
material contract, agreement or commitment to which the
Borrowers are bound.
4.3 FINANCIAL STATEMENTS AND BUSINESS CONDITION. Bluegreen Corporation
has delivered to Lender its financial statements for the Fiscal Year ending
March 29, 1998. Such financial statements fairly present the financial
condition and (if applicable) results of operations of Bluegreen Corporation as
of the date or dates thereof and for the periods covered thereby. All such
financial statements were prepared in accordance with GAAP. Except for any such
changes heretofore expressly disclosed in writing to Lender, there has been no
material adverse change in the financial condition of Bluegreen Corporation
since March 29, 1998. Borrowers are able to pay all of their respective debts
as they become due, and Borrowers shall maintain such solvent financial
condition, giving effect to all obligations, absolute and contingent, of each
such Borrowers. Each such Borrower's obligations under this Agreement and under
the Loan Documents will not render the respective Borrower unable to pay its
debts as they become due. The present fair market value of each Borrower's
assets is greater than the amount required to pay its total liabilities.
4.4 TAXES. All ad valorem taxes and other taxes and assessments
against each Resort, Additional Resort and the Collateral have been paid and
the Borrowers know of no basis for any additional taxes or assessments against
any Resort, Additional Resort or the Collateral. Borrowers have filed all
required tax returns and has paid all taxes shown to be due and payable on such
returns, including interest and penalties, and all other taxes which are
payable by it, to the extent the same have become due and payable except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrowers have set aside on their books
adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected
to result in a Material Adverse Effect.
4.5 LITIGATION AND PROCEEDINGS. Except as disclosed in SCHEDULE 4.5
attached hereto, as of the date hereof there are no actions, suits,
proceedings, orders or injunctions pending or, to the best of Borrowers'
knowledge, threatened against or affecting the Borrowers, the Timeshare
Associations or any Affiliate thereof, at law or in equity, or before or by any
governmental authority the result of which, if adversely determined, would have
a Material Adverse Effect. The Borrowers have not received any notice from any
court or governmental authority alleging that such Person, any Affiliate or any
of the Timeshare Associations has violated the applicable timeshare act, any of
the rules or regulations thereunder, or any other applicable laws, the result
of which, if adversely determined, would have a Material Adverse Effect.
4.6 LICENSES AND PERMITS. Borrowers possess all requisite franchises,
certificates of convenience and necessity, operating rights, licenses, permits,
consents, authorizations,
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exemptions and orders as are necessary to carry on their businesses as now
being conducted, except where the failure to possess the same would not,
individually or in the aggregate, have a Material Adverse Effect.
4.7 FULL DISCLOSURE. No written information or written report
furnished by or on behalf of Borrowers to Lender in connection with the Loan,
when taken together with all other written information provided, contains any
untrue statement of a material fact or omits any material fact necessary to
make the statement contained herein or therein, in light of the circumstances
in which made, not misleading. Borrowers know of no legal or contractual
restriction which will prevent them from offering or selling Intervals in any
state where each Borrowers is selling Intervals.
4.8 EMPLOYEE BENEFIT PLANS. Each Borrower is in compliance in all
material respects with all applicable provisions of the Employee Retirement
Income Security Act, the Internal Revenue Code and all other applicable laws
and the regulations and interpretations thereof with respect to all employee
benefit plans adopted by such Borrower for the benefit of its employees. No
material liability has been incurred by either Borrower which remains
unsatisfied for any funding obligation, taxes or penalties with respect to any
such employee benefit plan.
4.9 REPRESENTATIONS AS TO THE RESORTS AND ADDITIONAL RESORTS.
Borrowers jointly and severally represent and warrant with respect to a Resort
or an Additional Resort the following:
(a) TITLE; PRIOR LIENS. Borrowers have good and marketable title
to the Resorts or Additional Resorts (excluding sold
Intervals and any equitable rights of the Obligors under
applicable state law to the Units under any conditional land
sales contracts which are the subject of any Pledged
Receivable). Borrowers are not in default under any of the
documents evidencing or securing any indebtedness for
borrowed money in an outstanding amount in excess of
$1,000,000 which is secured, wholly or in part, by the
Resorts or Additional Resorts, and no event has occurred
which with the giving of notice, the passage of time or both,
would constitute a default under any of the documents
evidencing or securing any such indebtedness. There are no
liens or encumbrances against the Resorts or Additional
Resorts and relating to the Collateral other than Permitted
Adverse Claims or Permitted Liens.
(b) ACCESS. The Resorts and Additional Resorts relating to
Eligible Completed Unit Receivables have direct access to a
publicly dedicated road over a recorded easement and all
roadways, if any, inside the Resorts and Additional Resorts
are or will be common areas under the Declaration after the
first Advance against Receivables originated at such Resort.
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(c) UTILITIES. Electric, gas, sewer, water facilities and other
necessary utilities are lawfully available in sufficient
capacity to service the Units relating to the Intervals in
the Resorts and Additional Resorts relating to Eligible
Completed Unit Receivables and any easements necessary to the
furnishing of such utility service have been obtained and
duly recorded.
(d) AMENITIES. All amenities described in the sales prospectus
and the "PUBLIC REPORTS" for the Resorts and Additional
Resorts relating to Eligible Completed Unit Receivables are
completed, or will be completed, in the time periods
described in the "PUBLIC REPORTS", or a bond insuring their
completion has been posted. Each Obligor has or will have, in
the time period described in the Public Reports, access to
and the use of all of the amenities and public utilities of
the Resorts and the Additional Resorts relating to Eligible
Completed Unit Receivables as and to the extent provided in
the Declaration and the "PUBLIC REPORTS".
(e) CONSTRUCTION. All costs arising from the construction of any
improvements and the purchase of any equipment, inventory, or
furnishings located in or on the Resorts and Additional
Resorts relating to the Units relating to the Intervals and
relating to Eligible Completed Unit Receivables have been
paid or will be paid when due.
4.10 TIMESHARE INTERVAL EXCHANGE NETWORK. Each Borrower is a member
and participant in respect to each Resort and Additional Resort, pursuant to a
validly executed and, to Borrower's knowledge, enforceable agreement in
writing, in Interval International, Inc. or Resorts Condominium International,
Inc. Borrowers has paid all fees and other amounts due and owing under such
agreement and is not otherwise in default in any respect, the effect of which
could reasonably be expected to have a Material Adverse Effect thereunder.
4.11 COLLATERAL. The Collateral, including without limitation, the
Pledged Receivables and the Pledged Receivables Collateral, in which a security
interest is to be granted to the Lender pursuant to this Agreement shall be
owned by Borrowers free and clear of any Adverse Claim (other than any
Permitted Adverse Claim or Permitted Liens). The Borrowers have a first
priority perfected ownership interest in the Collateral including but not
limited to the Pledged Receivables and the Pledged Receivables Collateral,
subject to Permitted Adverse Claims and Permitted Liens. This Agreement creates
a valid first priority security interest in favor of the Lender (for the
benefit of the Lender) in the Collateral granted by such Borrower, including
without limitation the Pledged Receivables and Pledged Receivables Collateral,
which security interest has been perfected (free and clear of any Adverse Claim
other than any Permitted Adverse Claim or Permitted Lien and any equitable
rights of the Obligors under applicable state law to the Units
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under any conditional land sales contracts which are the subject of any Pledged
Receivable) as security for the Indebtedness. No effective financing statement
or other instrument similar in effect covering any of the Collateral or any
interest therein is on file in any recording office except for financing
statements that may be filed (i) in favor of the Lender in accordance with the
Agreement or (ii) in favor of Borrowers and assigned to the Lender. Borrowers
shall defend Lender against and save it harmless from all claims of any Persons
other than Lender with respect to the Collateral, and this indemnity shall
include all reasonable attorneys' fees and legal expenses.
4.12 INVESTMENT COMPANY ACT, ETC. No Borrower is an "INVESTMENT
COMPANY" within the meaning of the Investment Company Act of 1940, as amended,
or a "HOLDING COMPANY," or a "SUBSIDIARY COMPANY," of a "HOLDING COMPANY," or
an "AFFILIATE" of a "HOLDING COMPANY," or of a "SUBSIDIARY COMPANY" of a
"HOLDING COMPANY," within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
4.13 TRADE NAMES. Except as disclosed on SCHEDULE 4.13(A), no Borrower
uses any trade name other than its actual corporate name. From and after the
date that fell five (5) years before the date hereof, the Borrowers have not
been known by any legal name other than their respective corporate names as of
the date hereof, nor have the Borrowers been the subject of any merger or other
corporate reorganization, except as set forth in SCHEDULE 4.13(B).
4.14 MARGIN REGULATIONS. The Borrowers are not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock, and
no proceeds of the Loan, directly or indirectly, will be used for a purpose
that violates, or would be inconsistent with, Regulations T, U and X
promulgated by the Board from time to time.
4.15 [OMITTED]
SECTION 5
AFFIRMATIVE COVENANTS
So long as any portion of the Indebtedness remains unpaid or Lender is
committed to make Advances hereunder, unless Lender otherwise consents in
writing, Borrowers jointly and severally covenant as follows:
5.1 PAYMENT OF INDEBTEDNESS. Borrowers shall pay all of the
Indebtedness hereunder and under the Loan Documents when due.
5.2 MAINTENANCE OF INSURANCE. For so long as the Borrowers control the
Resorts and Additional Resorts, the Resorts and Additional Resorts shall at all
times and for so long as any Indebtedness remains outstanding be kept insured
with such general liability coverage and such other coverages acceptable to
Lender, by carrier(s), in the amounts described on Schedule 5.2 hereto, which
carrier(s), amounts and form shall not be changed without the prior written
consent of Lender. All insurance required under the preceding sentence for each
Resort and Additional Resorts may be maintained by the Timeshare Association as
required by the applicable
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Declaration or Time Share Declaration, provided that in the event such
Timeshare Association fails to maintain any insurance required under this
Section 5.2, then the Borrowers shall be required to obtain and maintain such
insurance.
5.3 INSPECTIONS AND AUDITS. Borrowers shall, at such reasonable times
during normal business hours and as often as may be reasonably requested,
permit any agents or representatives of Lender to inspect the Resorts and
Additional Resorts and any of Borrowers' assets (including financial and
accounting books and records), to examine and make copies of and abstracts from
the records and books of account of the Borrowers or the Timeshare Association
(to the extent controlled by Borrowers) or serviced under the Servicing
Agreement and to discuss its affairs, finances and accounts with any of its
officers, employees or independent public accountants. Borrowers acknowledge
that Lender intends to conduct such audits and inspections on at least an
annual basis. Borrowers shall make available to Lender all credit information
in Borrowers' possession or under Borrowers' control with respect to Obligors
as Lender may reasonably request. Upon Lender's request, Borrowers shall
furnish to Lender evidence of payment of all real estate taxes relating to the
Resorts and the Additional Resorts. All audits, inspections of the Resorts,
Additional Resorts and credit investigations shall be at Borrowers' expense;
provided, however, that except with respect to any audits, inspections of the
Resorts, Additional Resorts or credit investigations conducted after and during
the continuance of an Event of Default hereunder, Borrowers shall not be
required to pay in excess of Ten Thousand Dollars ($10,000) in any calendar
year for audits performed during such year. After the occurrence and during the
continuance of an Event of Default, Borrowers shall be required to pay all
reasonable fees, costs and expenses incurred by Lender for any and all Resorts
and Additional Resorts inspections, audits and any other diligence relating to
Borrowers' finances or books or records.
5.4 REPORTING REQUIREMENTS. So long as the Indebtedness remains
unpaid, Borrowers shall furnish the following to Lender:
(a) MONTHLY REPORTS. To the extent not provided to Lender
pursuant to the requirements of the Servicing Agreement,
within twelve (12) Business Days after the end of each Fiscal
Month, reports showing through the end of the preceding
month, (i) the following information with respect to each
Pledged Receivable: (A) the opening and closing balances, (B)
all payments received allocated to interest, principal, late
charges, taxes or the like, (C) the rate of interest, (D) an
itemization of delinquencies, extensions, refinances,
prepayments, upgrades, payoffs, cancellations and other
adjustments, (E) the remaining term, (F) the nature and
status of any claims asserted or legal action pending with
respect thereto, and (G) any exchange of one form of Pledged
Receivable for another form of Pledged Receivable (I.E., any
exchange of a conditional sales contract to a note and
mortgage format required by the Club); and (ii) the weighted
average interest rate and the average remaining term of all
Pledged Receivables.
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(b) SALES AND INVENTORY REPORTS. Within twelve (12) Business Days
after the end of each quarter, a quarterly report showing all
sales and cancellations of sales of Intervals on Resorts and
Additional Resorts on a resort by resort basis, in form and
content satisfactory to Lender; and within thirty (30)
Business Days after the end of each fiscal year of Borrowers,
an annual sales and inventory report for the Resorts and
Additional Resorts detailing the sales of all Intervals on a
resort by resort basis during such fiscal year and the
available inventory of Units and Intervals, certified by each
Borrowers to be true, correct and complete and otherwise in
the form approved by Lender.
(c) QUARTERLY FINANCIAL REPORTS. Within forty-five (45) days
after the end of each of Borrowers' first three fiscal
quarterly periods each year (or, if later, that date by which
any Borrower is required to file financial statements with
the Securities and Exchange Commission), unaudited financial
statements of Borrowers certified by its chief financial
officer as well as, to the extent requested by the Lender and
available to Borrowers, unaudited financial statements of the
Timeshare Association.
(d) YEAR-END FINANCIAL REPORTS. As soon as available and in any
event within one hundred and twenty (120) days after the end
of each fiscal year of Bluegreen Corporation: (i) the balance
sheet of Bluegreen Corporation as of the end of such year and
the related statements of income and cash flow for such
Fiscal Year; (ii) a schedule of all outstanding indebtedness
of Bluegreen Corporation describing in reasonable detail each
such debt or loan outstanding and the principal amount and
amount of accrued and unpaid interest with respect to each
such debt or loan; and (iii) a copy of a report from a firm
of independent certified public accountants selected by
Bluegreen Corporation, which report shall be unqualified as
to going concern and scope of audit and shall state that such
financial statements present fairly the financial position of
Bluegreen Corporation as of the dates indicated and the
results of its operations and cash flow for the periods
indicated in conformity with GAAP.
(e) OFFICER'S CERTIFICATE. Each set of financial statements
delivered hereunder shall be accompanied by a certificate of
the Chief Financial Officer of the respective Borrower
setting forth to the extent applicable:
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(i) COVENANT COMPLIANCE. The information (including
detailed calculations) required in order to
establish whether the Borrower was in compliance
with the requirements of Sections 5.7, 5.8 and 5.9
hereof, during the quarterly or annual period
covered by the statements then being furnished;
(ii) EVENT OF DEFAULT. A statement that such officer has
reviewed the relevant terms hereof and has made, or
caused to be made, under his or her supervision, a
review of the transactions and conditions of the
Borrowers and their respective Subsidiaries from the
beginning of the quarterly or annual period covered
by the statements then being furnished to the date
of the certificate and that such review shall not
have disclosed the existence during such period of
any condition or event that constitutes an Event of
Default or, if any such condition or event existed
or exists, specifying the nature and period of
existence thereof and what action the respective
Borrowers shall have taken or proposed to take with
respect thereto.
(f) TIMESHARE ASSOCIATION REPORTS. To the extent the respective
Borrower controls the Resort or Additional Resort the
semiannual and annual financial statements of the Timeshare
Association and to the extent the Resort or Additional Resort
is not in a Borrower's control, the respective Borrower shall
make a good faith effort to obtain the same from the
respective Timeshare Association.
(g) AUDIT REPORTS. Promptly upon receipt thereof, one (1) copy of
each other report submitted to Bluegreen Corporation by their
independent public accountants in connection with any annual,
interim or special audit made by them of the books of
Bluegreen Corporation.
(h) OTHER REPORTS. Such other reports, statements, notices or
written communications relating to the Borrowers, the Time
Share Associations, the Resorts or the Additional Resorts as
are available to Borrowers and as Lender may reasonably
require.
(i) SEC REPORTS. Promptly upon their becoming publicly available,
one (1) copy of each financial statement, report, notice or
proxy statement sent by Borrowers to security holders
generally, and of
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each regular or periodic report and any registration
statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by Borrowers
with, or received by Borrowers in connection therewith from,
any securities exchange or the Securities and Exchange
Commission or any successor agency.
5.5 RECORDS. Borrowers shall keep adequate records and books of
account reflecting all financial transactions of Borrowers and (to the extent
available to the Borrowers) the Time Share Associations, including sales of
Intervals, in which complete entries will be made in accordance with GAAP.
5.6 MANAGEMENT; CONTRACTS. For so long as the Borrowers control the
Resorts and the Additional Resorts, the manager, related management contract
and master marketing and sale contract (if applicable) for each Resort shall at
all times be satisfactory to Lender. For so long as the Borrowers control the
Timeshare Association for the Resorts or Additional Resorts, and the Borrowers
or an Affiliate thereof is the manager, the management contracts and primary
marketing and sale contracts may be amended or modified only with the prior
written consent of Lender, which consent shall not be unreasonably withheld.
5.7 NET WORTH. At all times Indebtedness is outstanding or Lender is
obligated to make Advances, Bluegreen Corporation agrees to maintain a Tangible
Net Worth, determined in accordance with GAAP, of Eighty Million Dollars
($80,000,000).
5.8 FIXED RATE COVERAGE RATIO. Bluegreen Corporation's ratio of EBITDA
to Consolidated Fixed Charges shall not be less than 2.00 to 1.00.
5.9 LEVERAGE RATIO TEST. Bluegreen Corporation's ratio of Total
Indebtedness to Tangible Net Worth shall not be more than 2.00 to 1.00.
5.10 MAINTENANCE. For so long as the Borrowers control the Resorts and
Additional Resorts, the Borrowers shall maintain the Resorts and Additional
Resorts in good repair, working order and condition (ordinary wear and tear
excepted).
5.11 RELEASE AND BONDING OF LIENS. In the event any lien securing
indebtedness for borrowed money in an amount in excess of $250,000 attaches to
any Collateral (other than Permitted Adverse Claims), Borrowers shall, within
the earlier to occur of ten (10) days after such attachment or the respective
lienholder's action to foreclose on such lien, either (a) cause such lien to be
released of record, or (b) provide Lender with a bond in accordance with the
applicable laws of the state in which the Collateral is located, issued by a
corporate surety acceptable to Lender, in an amount and in form reasonably
acceptable to Lender, or (c) provide Lender with such other security as Lender
may reasonably require.
5.12 CLAIMS. Borrowers shall: (a) promptly notify Lender of (i) any
claim, action or proceeding affecting the Collateral, or any part thereof, or
any of the security interests granted
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hereunder which would have a Material Adverse Effect, and (ii) any action,
suit, proceeding, order or injunction of which Borrowers become aware after the
date hereof pending or threatened against or affecting Borrowers or any
Affiliate which would, if adversely determined, have a Material Adverse Effect;
(b) at the request of Lender, appear in and defend, at Borrowers' expense, any
such claim, action or proceeding which would, if adversely determined, have a
Material Adverse Effect; and (c) comply in all respects, and shall cause all
Affiliates to comply in all respects, with the terms of any orders imposed on
such Person by any governmental authority the failure to comply with which
would have a Material Adverse Effect.
5.13 USE OF LENDER NAME. Borrowers will not, and will not permit any
Affiliate to, without the prior written consent of Lender, use the name of
Lender or the name of any affiliates of Lender in connection with any of their
respective businesses or activities, except in connection with internal
business matters, administration of the Loan and as required in dealings with
governmental agencies including any reports required to be filed with the
Securities and Exchange Commission.
5.14 OTHER DOCUMENTS. To the extent not maintained by the Custodian,
Borrowers will maintain accurate and complete files relating to the Pledged
Receivables, the Pledged Receivables Collateral and other Collateral to the
satisfaction of Lender, and such files (to the extent not computerized) will
contain copies of each Pledged Receivable and the Pledged Receivable Collateral
together with the purchase agreements, truth-in-lending statements, all
relevant credit memoranda and all collection information and correspondence
relating to such Pledged Receivables.
5.15 ADDITIONAL INDEBTEDNESS FOR BORROWED MONEY; ADDITIONAL
OBLIGATIONS AFFILIATED WITH SUBORDINATED OBLIGATIONS. Borrowers will not,
directly or indirectly, permit any payment to be made in respect of any
indebtedness, liabilities or obligations, direct or contingent for borrowed
money (except any payments required or permitted with respect to the
indebtedness on SCHEDULE 5.15), to any Affiliates (excluding trade payables
incurred in the ordinary course of business), which payments shall and are
hereby made subordinate to the payment of principal of, and interest on, the
Note.
5.16 LOAN SERVICING. Borrowers may not amend or terminate the
Servicing Agreement attached hereto as EXHIBIT F without Lender's prior
approval. Borrowers agree not to interfere with a Successor Servicer's
performance of its duties under the Servicing Agreement or to take any action
that would be inconsistent with the terms of the Servicing Agreement. The
Servicing Agreement shall be cancelable by Lender, as applicable under the
terms of the Servicing Agreement. All servicing fees, and the costs and
expenses of the Servicer shall be paid by the Borrowers.
5.17 CUSTODIAN. Lender shall utilize a Custodian to maintain custody
of the Pledged Receivables and the Pledged Receivables Collateral. Borrowers
agree not to interfere with Custodian's performance of its duties under the
Custodial Agreement or to take any action that would conflict with the terms of
the Custodial Agreement. All custodial fees, and the costs and
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expenses of the Custodian, shall be paid by the Borrowers.
5.18 COMPLIANCE WITH LAWS. Borrowers, and each of the Resorts in which
Intervals are being sold, shall comply with, conform to and obey each and every
judgment, law, statute, rule and governmental regulation applicable to it and
each indenture, order, instrument, agreement or document to which it is a party
or by which it is bound except where the failure to comply would not have a
Material Adverse Effect.
5.19 COMPLIANCE DOCUMENTS. Upon request by Lender, Borrowers will
provide Lender with copies of all Compliance Documents relating to the sale of
any Intervals relating to Pledged Receivables outside of the States of South
Carolina, Missouri or Tennessee.
5.20 REAL ESTATE TAXES. Borrowers will pay when due all of the
Borrowers' liabilities in respect of real estate taxes relating to the Resorts
and the Additional Resorts.
5.21 OMITTED.
5.22 OMITTED
5.23 BORROWERS' FINANCIAL MAINTENANCE REQUIREMENT. For as long as any
Borrower controls a Resort or Additional Resort, such Borrower shall be
obligated to pay the Timeshare Association dues relating to such Resort or
Additional Resort and shall provide such monies as are necessary to maintain
services for a Resort or an Additional Resort which is equal to or greater than
one hundred percent (100%) of such Resort's or Additional Resort's total
operating expenses, taxes, utilities and associated reserve fund requirements.
5.24 YEAR 2000. Borrowers have made an assessment of the microchip and
computer-based systems and the software used in their respective businesses and
based upon such assessment believe that they will be "YEAR 2000 COMPLIANT" by
January 1, 2000. For purposes of this Section 5.24, "YEAR 2000 COMPLIANT" means
that all software, embedded microchips and other processing capabilities
utilized by, and material to the business operations or financial condition of,
the respective Borrower are able to interpret, store, transmit, receive and
manipulate data on and involving all calendar dates correctly and without
causing any abnormal ending scenarios in relation to dates in and after the
Year 2000. From time to time, at the request of the Lender, Borrowers shall
provide to Lender such updated information as is requested regarding the status
of its effort to become Year 2000 Compliant.
5.25 AUTHORIZED SIGNATORY. Any person signing an Advance Request on
behalf of such Borrower, as provided in Schedule 3.2 hereof shall have the
requisite power and authority to sign the same on behalf of the related
Borrower.
5.26 ALLONGE/ASSIGNMENT REQUIREMENTS. The Borrower will attach an
Allonge in the form attached hereto as Exhibit E to each Pledged Receivable
with respect to Pledged Receivables which take the form of a Note or other
instrument secured by a Purchase Money
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Mortgage or a master assignment with respect to Receivables which take the form
of conditional sales contracts (the "ASSIGNMENT DOCUMENT"). The signature of
the authorized signatory with respect to an Allonge or an Assignment Document
may be either an original signature, a signature stamp or a computer generated
signature.
5.27 ENVIRONMENTAL. So long as the Loan is outstanding, no Hazardous
Materials may be used, generated, treated, stored or disposed of by any Person
for any purpose upon any Collateral except in material compliance with all
applicable Environmental Laws except where the failure to comply would not have
a Material Adverse Effect. If the Lender, at any time, has a reasonable basis
to believe that Borrowers or any Resort or Additional Resort may be in
violation of any Environmental Law, then Borrowers agree, upon request from the
Lender to provide the Lender with such reports, certificates, engineering
studies or other written material or data as the Lender may require, in its
reasonable discretion, so as to satisfy the Lender that Borrowers, any Resort
or any Additional Resort are in compliance with all applicable Environmental
Laws and that the marketability and value of such Resort or Additional Resort
is adequately maintained.
SECTION 6
NEGATIVE COVENANTS
So long as any portion of the Indebtedness remains unpaid or Lender is
committed to lend hereunder, unless Lender otherwise consents in writing,
Borrowers hereby jointly and severally covenant and agree with Lender as
follows:
6.1 CONSOLIDATION AND MERGER. Each Borrower will not consolidate with
or merge into any other Person or permit any other Person to consolidate with
or merge into it or convey all or substantially all of its assets to any
person, unless (i) either the respective Borrowers shall be the continuing
corporation or the successor corporation or the person which acquires by sale
or conveyance substantially all the assets of the respective Borrowers shall be
a corporation organized under the laws of the United States of America or any
State thereof and shall expressly assume the due and punctual payment of the
Indebtedness hereunder, and the due and punctual performance and observance of
all of the covenants and conditions of this Agreement to be performed or
observed by the respective Borrowers, by an amendment hereto in form
satisfactory to the Lender, and (ii) the respective Borrowers or such successor
corporation, as the case may be, shall not, immediately after such merger or
consolidation, or such sale or conveyance, be in default in the performance of
any such covenant or condition.
6.2 RESTRICTIONS ON TRANSFERS. The Borrowers shall not, without
obtaining the prior written consent of Lender, which may be granted or withheld
in Lender's sole discretion, transfer, sell, pledge, convey, assign or encumber
all or any portion of the Collateral except with respect to the sales of
Pledged Receivables to the Purchase Facility and Permitted Adverse Claims and
Permitted Liens.
6.3 COLLATERAL. The Borrowers shall not take any action (nor permit or
consent to the
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taking of any action) which might reasonably be anticipated to impair the value
of the Collateral or any of the rights of Lender in the Collateral. Borrowers
shall not (i) except in connection with a so-called "UPGRADE" or a modification
of a Pledged Receivable with no change in financial terms or an exchange
contemplated by Section 2.2 hereof, provided the conditions in this Agreement
are met, modify or amend any of the Pledged Receivables or the Pledged
Receivables Collateral without Lender's prior written consent, or (ii) grant
extensions of time for the payment of, compromise for less than the full face
value, release in whole or in part any Obligor liable for the payment of, or
allow any credit whatsoever except for the cash to be paid upon, any Collateral
or any instrument or document representing the Collateral other than in the
ordinary course of business in accordance with accepted industry loan servicing
standards.
SECTION 7
EVENTS OF DEFAULT
An "EVENT OF DEFAULT" shall exist if any of the following shall occur:
7.1 PAYMENTS. Borrowers shall fail to make any payment of interest on
the Indebtedness within five (5) Business Days of the date such payment is due
and shall fail to make payments on the principal of the Indebtedness on the
date such payment is due.
7.2 FAILURE TO PERMIT INSPECTIONS. Borrowers shall fail to strictly
comply with the provisions of Section 5.3 of this Agreement.
7.3 COVENANT DEFAULTS. Borrowers shall fail to perform or observe any
covenant, agreement or obligation contained in this Agreement or in any of the
Loan Documents (other than any covenant or agreement obligating Borrowers to
pay the Indebtedness), and such failure shall continue for thirty (30) days
after Lender delivers written notice thereof to Borrowers, provided, however,
if the failure is incapable of cure within such thirty (30) day period and
Borrowers shall be diligently pursuing a cure, such thirty (30) day cure period
shall be extended by an additional period not to exceed sixty (60) days.
7.4 WARRANTIES OR REPRESENTATIONS. Any representation or other
statement made by or on behalf of Borrowers in this Agreement, in any of the
Loan Documents or in any instrument furnished in compliance with or in
reference to the Loan Documents, shall be false, misleading or incorrect in any
material respect as of the date made.
7.5 BANKRUPTCY. A petition under any Chapter of Title 11 of the United
States Code or any similar law or regulation is filed by or against any
Borrower, (and in the case of an involuntary petition in bankruptcy, such
petition is not discharged within sixty (60) days of its filing), or a
custodian, receiver or trustee for any of the Resorts or Additional Resorts is
appointed, or any Borrower makes an assignment for the benefit of creditors, or
any of them are adjudged insolvent by any state or federal court of competent
jurisdiction, or any of them admit
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their insolvency or inability to pay their debts as they become due or an
attachment or execution is levied against any of the Resorts or Additional
Resorts.
7.6 ATTACHMENT, JUDGMENT, TAX LIENS. The issuance, filing or levy
against the Borrowers of one or more attachments, injunctions, executions, tax
liens or judgments for the payment of money cumulatively in excess of
$1,000,000, which is not discharged in full or stayed within thirty (30) days
after issuance or filing.
7.7 OMITTED.
7.8 DEFAULT BY BORROWERS IN OTHER AGREEMENTS. Any default by a
Borrower in the payment of indebtedness for borrowed money in an aggregate
principal amount in excess of $1,000,000 (including, without limitation, any
default by a Borrower or any Affiliate in the payment of indebtedness for
borrowed money owing to Lender under any other agreement) which accelerates or
permits the acceleration (after the giving of notice or passage of time, or
both) of the maturity of such indebtedness.
7.9 OMITTED.
7.10 TAX LIENS; ERISA LIENS. The Internal Revenue Service shall file
notice of a lien pursuant to Section 6323 of the Internal Revenue Code with
regard to any of the assets of Borrowers, and such lien shall not have been
released within 30 days, or the Pension Benefit Guaranty Corporation shall file
notice of a lien pursuant to Section 4068 of ERISA with regard to any of the
assets of Borrowers, and such lien shall not have been released within 30 days.
7.11 LOAN EXCEEDS MAXIMUM EXPOSURE FOR FIVE DAYS. The provisions of
Section 1.7(b) hereof have not been met.
7.12 VALIDITY OF TRANSACTION DOCUMENTS. (a) Any Loan Document, or any
lien or security interest granted thereunder, shall (except in accordance with
its terms), in whole or in part, terminate, cease to be effective or cease to
be the legally valid, binding and enforceable obligation of Borrowers, (b)
Borrowers, or any other party shall, directly or indirectly, contest in any
manner such effectiveness, validity, binding nature or enforceability of any
Loan Document or (c) any security interest securing the Indebtedness shall, in
whole or in part, cease to be a perfected first priority security interest,
except as contemplated by this Agreement.
7.13 DEFAULT UNDER THE PROJECT LOAN. The occurrence and continuance of
an Event of Default under the Project Loan Documents.
SECTION 8
REMEDIES
8.1 REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuance of an
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Event of Default, Lender may take any one or more of the following actions,
without notice to Borrowers except as expressly stated below or required by
applicable law:
(a) ACCELERATION. Declare by written notice to Borrowers, (except
upon the occurrence of any event specified in Section 7.5
above, in which case the Indebtedness shall automatically be
accelerated simultaneously with the occurrence of such event)
the unpaid balance of the Indebtedness, or any part thereof,
immediately due and payable, whereupon the same shall be due
and payable.
(b) TERMINATION OF OBLIGATION TO ADVANCE. Terminate by written
notice to Borrowers any commitment of Lender to lend under
this Agreement in its entirety, or any portion of any such
commitment, to the extent Lender shall deem appropriate.
(c) JUDGMENT. Reduce Lender's claim to judgment, foreclose or
otherwise enforce Lender's security interest in all or any
part of the Collateral by any available judicial procedure.
(d) SALE OF COLLATERAL. Exercise all the rights and remedies of a
secured party on default under the Code (whether or not the
Code applies to the affected Collateral) including (i)
require the Borrowers to, and the Borrowers hereby agree that
they will, at their expense and upon request of Lender
forthwith, assemble all or part of the Collateral as directed
by Lender and make it available to Lender at a place to be
designated by Lender which is reasonably convenient to both
parties; (ii) enter upon any premises of the Borrowers and
take possession of the Collateral; and (iii) sell the
Collateral or any part thereof at public or private sale, at
any of the Lender's offices or elsewhere, at such time or
times, for cash, on credit or for future delivery, and at
such price or prices and upon such other terms as Lender may
deem commercially reasonable. Borrowers agree that, whether
or not notice of sale shall be required by law, ten (10) days
notice of the time and place of any sale shall constitute
reasonable notification. At any sale of the Collateral, if
permitted by law, Lender may bid (which bid may be, in whole
or in part, in the form of cancellation of indebtedness) for
the purchase of the Collateral or any portion thereof for the
account of Lender. Subject to compliance by Lender with all
applicable laws, Borrowers shall remain jointly and severally
liable for any deficiency. Lender shall not be required to
proceed against any Collateral but may proceed against the
Borrowers directly. To the extent permitted by law, the
Borrowers hereby specifically waive all rights of redemption,
stay or appraisal which it has or may have under any law now
existing or
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hereafter enacted.
(e) OMITTED.
(f) EXERCISE OF OTHER RIGHTS. Exercise any and all other rights
or remedies afforded by any applicable laws or by the Loan
Documents as Lender shall deem appropriate, at law, in equity
or otherwise, including the right to bring suit or other
proceeding, either for specific performance of any covenant
or condition contained in the Loan Documents or in aid of the
exercise of any right or remedy granted to Lender in the Loan
Documents.
8.2 APPLICATION OF COLLATERAL; TERMINATION OF AGREEMENTS. Upon the
occurrence and during the continuance of an Event of Default and subject to the
conditions provided in Section 2.1 hereof, Lender may apply against the
Indebtedness, any other indebtedness to Lender with respect to any Resort,
Additional Resort or any Project Indebtedness any and all Collateral in its
possession, other than any monies of the Borrowers received in error, any and
all balances, credits, deposits, accounts, reserves, indebtedness or other
moneys due or owing to Borrowers held by Lender hereunder or under any other
financing agreement or otherwise, whether accrued or not.
8.3 WAIVERS. No waiver by Lender of any Event of Default shall be
deemed to be a waiver of any other or subsequent Event of Default. No delay or
omission by Lender in exercising any right or remedy under the Loan Documents
shall impair such right or remedy or be construed as a waiver thereof or an
acquiescence therein, nor shall any single or partial exercise of any such
right or remedy preclude other or further exercise thereof, or the exercise of
any other right or remedy under the Loan Documents or otherwise. Further,
Borrowers waive notice of the occurrence of any Event of Default, presentment
and demand for payment, protest, and notice of protest, notice of intention to
accelerate, acceleration and nonpayment, and agree that their liability shall
not be affected by any renewal or extension in the time of payment of the
Indebtedness, or by any release or change in any security for the payment or
performance of the Indebtedness, regardless of the number of such renewals,
extensions, releases or changes. Borrowers also hereby waive the right to
assert any statute of limitations as a bar to the enforcement of the lien
created by any of the Loan Documents or to any action brought to enforce the
Note or any other obligation secured by the Loan Documents.
8.4 SET OFF OF PAYMENTS. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, the
Lender is hereby authorized by Borrowers at any time or from time to time, with
reasonably prompt subsequent notice to Borrowers or to any other Person (any
prior or contemporaneous notice being hereby expressly waived) to set off and
to appropriate and to apply any and all (A) balances held by the Lender or such
holder at any of its offices for the account of Borrowers (regardless of
whether such balances are then due to Borrowers), and (B) other property at any
time held or owing by the Lender or such holder to or
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for the credit or for the account of Borrowers, against and on account of any
of the Indebtedness which are not paid when due other than monies of the
Borrowers received by Lender in error.
8.5 CUMULATIVE RIGHTS. All rights and remedies available to Lender
under the Loan Documents shall be cumulative and in addition to all other
rights and remedies granted to Lender at law or in equity, whether or not the
Indebtedness is due and payable and whether or not Lender shall have instituted
any suit for collection or other action in connection with the Loan Documents.
SECTION 9
CERTAIN RIGHTS AND OBLIGATIONS OF LENDER
9.1 PROTECTION OF COLLATERAL. Lender may at any time and from time to
time take such actions as Lender deems necessary or appropriate to protect
Lender's liens and security interests in and to preserve the Collateral.
Borrowers agree to cooperate fully with all of Lender's efforts to preserve the
Collateral and Lender's liens and security interests therein.
9.2 PERFORMANCE BY LENDER. If Borrowers fail to perform any agreement
contained herein, Lender may, but shall not be obligated to, cause the
performance of, such agreement, and the expenses of Lender incurred in
connection therewith shall be payable by Borrowers pursuant to Section 9.3
below.
9.3 FEES AND EXPENSES. Borrowers agree to promptly pay all reasonable
Costs and all such Costs shall be included as additional Indebtedness .
9.4 RELEASE OF SECURITY INTEREST. Upon satisfaction in full of an
Obligor's obligations under a Receivable, Lender shall release its security
interest in such Obligor's Receivable and, in connection therewith, shall
execute such amendments or partial releases to the related Resort Blanket
Mortgage as shall be necessary to enable the applicable Borrower to convey an
unencumbered deed to the related Interval to such Obligor. Lender's security
interest in all other Pledged Receivables shall remain in full force and
effect. Lender's obligations under this Section 9.4 shall be unaffected by the
pendency of an Event of Default hereunder.
9.5 NOTICE TO OBLIGOR. After the occurrence of and during the
continuance of an Event of Default, Borrowers authorize both the Lender and the
Custodian (but neither the Lender nor the Custodian shall be obligated) to
communicate at any time and from time to time, after a sale of an Interval,
with any Obligor or any other Person primarily or secondarily liable under a
Pledged Receivable with regard to the lien of Lender thereon and any other
matter relating thereto.
9.6 COLLECTION OF RECEIVABLES. Following the occurrence of and during
the continuance of an Event of Default, Lender shall have the right to (a)
require that all payments due under the Pledged Receivables be paid directly to
Lender or to such party as Lender may
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designate, and to receive, collect, hold and apply the same in accordance with
the provisions of this Agreement or to such party as Lender may designate, and
(b) take such remedial action available to it for the enforcement of any
defaulted Pledged Receivables including the foreclosure of any Pledged
Receivable Collateral securing the payment thereof. Borrowers hereby further
irrevocably authorize, direct and empower Lender, after the occurrence and
during the continuance of an Event of Default, to collect and receive all
checks and drafts evidencing such payments and to endorse such checks or drafts
in the name of Borrowers and upon such endorsements, to collect and receive the
money therefor.
Upon payment and satisfaction in full of all Indebtedness and subject
to Section 2.1 hereof, Lender will, at Borrowers' request and sole expense,
give written notice as necessary to redirect payment of the Pledged Receivables
as requested by Borrowers.
9.7 POWER OF ATTORNEY. The Borrowers do hereby irrevocably constitute
and appoint Lender as Borrowers' true and lawful agent and attorney-in-fact,
with full power of substitution, for Borrowers and in Borrowers' name, place
and stead, or otherwise, to following the occurrence and during the continuance
of an Event of Default (a) endorse any checks or drafts payable to Borrowers in
the name of Borrowers and in favor of Lender as provided in Section 9.6 above;
(b) to demand and receive from time to time any and all property, rights,
titles, interests and liens hereby sold, assigned and transferred, or intended
so to be, and to give receipts for same; and (c) to institute and prosecute in
the name of Borrowers or otherwise, but for the benefit of Lender, any and all
proceedings at law, in equity, or otherwise, that Lender may deem proper in
order to collect, assert or enforce any claim, right or title, of any kind, in
and to the property, rights, titles, interests and liens hereby sold, assigned
or transferred, or intended so to be, and to defend and compromise any and all
actions, suits or proceedings in respect of any of the said property, rights,
titles, interests and liens. Borrowers hereby declare that the appointment made
and the powers granted pursuant to this Section are coupled with an interest
and are and shall be irrevocable by the Borrowers in any manner, or for any
reason, unless and until all obligations of the Borrowers to Lender have been
satisfied.
9.8 INDEMNIFICATION OF LENDER. Borrowers shall jointly and severally
indemnify Lender and hold Lender harmless from and against any and all
liabilities, indebtedness, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses, and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against Lender, in
any way relating to or arising out of (a) this Agreement and the Loan Documents
and/or (b) any of the transactions contemplated therein or thereby (including
those in any way relating to or arising out of the violation by Borrowers of
any federal or state laws including the Interstate Land Sales Full Disclosure
Act or any applicable timeshare acts) other than liabilities, indebtedness,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements which are caused by the Lender's material breach of, or gross
negligence or willful misconduct with respect to its actions or inactions under
this Agreement or any other Loan Document. Upon receiving knowledge of any
suit, claim or demand asserted by a third party that Lender believes is covered
by this indemnity, Lender shall give Borrowers notice of the matter and an
opportunity to defend
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it, at Borrowers' sole cost and expense, with legal counsel satisfactory to
Lender. Notwithstanding any defense by Borrowers of any such suit, claim or
demand, Lender shall have the right to participate in any material decision
affecting the conduct or settlement of any dispute or proceeding for which
indemnification may be claimed.
9.9 LENDER'S RIGHT TO PROVIDE FINANCING. Borrowers hereby covenant
with Lender that, from the date hereof until the first to occur of (a) the
Maturity Date, (b) the date on which an event occurs which relieves the
Purchaser from making purchases under the Asset Purchase Agreement and the
Purchaser ceases making purchases thereunder, (c) the acceleration of the
Indebtedness following an Event of Default, or (d) the termination of the
Lender's commitment under Section 8.1(b) of this Agreement, Lender shall have,
and Lender is hereby granted, the right and option, subject to the terms set
forth below (the "FUNDING OPTION") to provide secured financing for Eligible
Receivables (which for this purpose shall obligate the Borrowers, as well as
any Affiliate thereof, to disclose to Lender all resorts developed by the
Borrowers or any Affiliate thereof in order to provide Lender the opportunity
to make a determination whether such resort may be an Additional Resort).
Lender shall notify the Borrowers within forty-five (45) days of its receipt of
satisfactory information with respect to a resort whether such resort qualifies
as an Additional Resort.
The Funding Option may be exercised or not exercised in Lender's sole
discretion. If Lender declines to exercise the Funding Option, Lender shall
have no further Funding Option with respect to the Receivables; PROVIDED,
HOWEVER, Lender shall have no Funding Option with respect to (i) Receivables
relating to resorts for which Lender has reviewed and denied financing pursuant
to the terms of the Project Loan Agreement, (ii) Receivables from a resort that
does not qualify as an Additional Resort after Lender has reviewed such resort
in accordance with the preceding paragraph or (iii) Receivables associated with
the Club after the date on which Lender has reviewed and rejected the Club and
associated Receivables. Lender's decision to decline to exercise the Funding
Option shall be deemed to be a decision to decline to exercise the Purchase
Option (as defined in the Purchase Facility) under the Purchase Facility.
Notwithstanding anything contained herein to the contrary, it is expressly
agreed and understood that any financing to be extended pursuant to the Funding
Option shall be subject to approval by Lender's loan committees in accordance
with Lender's standard credit guidelines and it is further expressly understood
and agreed that Lender is under no obligation to exercise the Funding Option
and that nothing in this Section 9.9 shall be deemed or construed to create any
such obligation.
SECTION 10
PARTICIPATION AND ASSIGNMENTS
10.1 PARTICIPATIONS IN LOAN AND ASSIGNMENTS IN LOAN.
(A) Lender may sell Participations in all or any part of Advances made
hereunder to another Person; provided, that such Person is not a competitor of
the Borrowers as determined by
27
<PAGE> 34
the Borrowers in their reasonable discretion all amounts payable by Borrowers
hereunder shall be determined as if that Lender had not sold such
participation. Borrowers hereby acknowledges and agree that the participant
under each participation shall for purposes of subsection 1.9, 1.10, 1.11 and
9.8 be considered to be a "LENDER".
(B) Lender shall have the right to assign all or any portion of its
rights in this Agreement and the Loan hereunder to an Eligible Assignee;
provided that Lender and its Affiliates agree to retain 30 % of the Advances
hereunder at all times, and provided that there shall not be more than five (5)
Eligible Assignees at any time. Any Eligible Assignee may assign its rights and
delegate its obligations under this Agreement to any other Eligible Assignee;
provided that such assigning Eligible Assignee shall first obtain the written
consent of Lender. In all events Heller Financial, Inc. shall be the agent for
the Loan hereunder.
(C) Except as otherwise provided in this Section 10.1 the Lender shall
not, as between Borrowers and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loan or
other Indebtedness owed to the Lender.
(D) Lender agrees to take and to cause its Affiliates to take normal
and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "CONFIDENTIAL" or "secret" by
the Borrowers and neither Lender nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with the Borrowers; except to the extent
such information (i) was or becomes generally available to the public other
than as a result of disclosure by Lender, or (ii) was or becomes available on a
non-confidential basis from a source other than the Borrowers, provided that
such source is not bound by a confidentiality agreement with the Borrowers
known to the Lender; PROVIDED, HOWEVER, that the Lender may disclose such
information (A) at the request or pursuant to any request of a regulatory
authority of which Lender is subject or in connection with an examination of
such Lender by any such authority; (B) pursuant to subpoena or other court
process; (C) when required to do so in accordance with the provisions of any
applicable requirement of law; (D) to the extent reasonably required in
connection with any litigation or proceeding to which the Lender or any
Affiliates may be party in connection with the transactions contemplated by
this Agreement; (E) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other Loan Document; (F) to the
Lender's independent auditors and other professional advisors; (G) to any
participant or Eligible Assignee, actual or potential, provided that such
participant or Eligible Assignee agrees in writing to keep such information
confidential to the same extent required of the Lender hereunder; (H) as to the
Lender or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower is party
or is deemed party with the Lender as its Affiliates; and (I) to its Affiliates
provided such Affiliates agree in writing to be bound by the confidentiality
provisions hereof.
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SECTION 11
MISCELLANEOUS
11.1 NOTICE. Any notice or other communication required or permitted
to be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied or sent by overnight courier or
U.S. Mail and shall be deemed given: (a) if served in person, when served; (b)
if telecopied, on the date of transmission if before 3:00 p.m. (Chicago time)
on a Business Day, otherwise on the next Business Day; provided that a hard
copy of such notice is also sent pursuant to (c) or (d) below; (c) if by
overnight courier, on the first business day after delivery to the courier; or
(d) if by U.S. Mail, certified or registered mail, return receipt requested on
the fourth (4th) day after deposit in the mail postage prepaid.
Notices to Borrowers: Bluegreen Corporation
4960 Blue Lake Drive
Boca Raton, Florida 33431
Attn: Patrick E. Rondeau, Esq.
Telephone No.: (561) 912-8005
Telecopy: (561) 912-8100
Bluegreen Resorts, Inc.
4960 Blue Lake Drive
Boca Raton, Florida 33431
Attn: Patrick E. Rondeau, Esq.
Telephone No.: (561) 912-8005
Telecopy: (561) 912-8100
Notices to Lender: Heller Financial, Inc.
Attn: Portfolio Manager, Vacation Ownership
HSF Loan No. 98-087
500 West Monroe St., 31st Fl.
Chicago, Illinois 60661
Telecopy: (312) 441-7924
With a copy to: Heller Financial, Inc.
Vacation Ownership Finance
Attn: Legal Department - Relationship Manager
HSF Loan No. 98-087
500 West Monroe St., 31st Fl.
Chicago, Illinois 60661
Telecopy: (312) 441-7924
11.2 SURVIVAL. All representations, warranties, covenants and
agreements made by Borrowers herein, in the other Loan Documents or in any
other agreement, document, instrument
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or certificate delivered by or on behalf of Borrowers under or pursuant to the
Loan Documents shall be considered to have been relied upon by Lender and shall
survive the delivery to Lender of such Loan Documents and the extension of the
Indebtedness (and each part thereof), regardless of any investigation made by
or on behalf of Lender.
11.3 GOVERNING LAW. This Agreement shall be governed by and shall be
construed and enforced in accordance with the internal laws of the State of
Illinois, (without regard to conflicts of law principles) and applicable laws
of the United States.
11.4 INVALID PROVISIONS. If any provision of this Agreement or any of
the other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws effective during the term thereof, such provision shall
be fully severable, this Agreement and the other Loan Documents shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof or thereof, and the remaining provisions
hereof or thereof shall remain in full force and effect.
11.5 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signature thereto and hereto were on the same instrument. This
Agreement shall become effective upon Lender's receipt of one or more
counterparts hereof signed by Borrowers and Lender.
11.6 LENDER NOT FIDUCIARY. The relationship between Borrowers and
Lender is solely that of debtor and creditor, and Lender has no fiduciary or
other special relationship with Borrowers, and no term or provision of any of
the Loan Documents shall be construed so as to deem the relationship between
Borrowers and Lender to be other than that of debtor and creditor.
11.7 ENTIRE AGREEMENT. This Agreement, including the EXHIBITS,
SCHEDULES and other Loan Documents and agreements referred to herein embody the
entire agreement between the parties hereto, supersedes all prior agreements
and understandings between the parties whether written or oral relating to the
subject matter hereof and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no oral
agreements among Lender or Borrowers. This Agreement may be modified or changed
only in a writing executed by both Lender and Borrowers and/or the other
affected parties.
11.8 CONSENT TO ADVERTISING AND PUBLICITY. Lender may issue and
disseminate to the public information describing the credit accommodation
entered into pursuant to this Agreement; provided the Borrowers shall have
approved the description of such credit accommodation which approval shall not
be unreasonably withheld.
11.9 [OMITTED]
11.10 HEADINGS. Section headings have been inserted in the Agreement
as a matter of convenience of reference only; such section headings are not a
part of the Agreement and shall not be used in the interpretation of this
Agreement.
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11.11 BROKER'S FEES. There are no brokers, finders' or other similar
fees or commitments due with respect to the transactions described in the
Agreement. Borrowers shall defend Lender and save and hold it harmless from all
claims of any Persons for any such fees which indemnity shall include
reasonable attorneys' fees and legal expenses.
11.12 VENUE. BORROWERS HEREBY CONSENT TO THE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK STATE OF ILLINOIS. BORROWERS
EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND
WAIVE ANY DEFENSE OF FORUM NON CONVENIENS. BORROWERS HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE UPON BORROWERS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED TO BORROWERS, AT THE ADDRESS SET FORTH IN THIS AGREEMENT
AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN
POSTED.
11.13 JURY TRIAL WAIVER. BORROWERS AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. BORROWERS AND
LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON
THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWERS AND LENDER WARRANT AND
REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS.
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The parties hereto have executed this Agreement or has caused the same
to be executed by their duly authorized representatives as of the date first
above written.
BORROWERS:
BLUEGREEN CORPORATION
By: /S/ JOHN F. CHISTE
--------------------------------------
Printed Name: John F. Chiste
Its: Treasurer & Chief Financial Officer
BLUEGREEN RESORTS, INC.
By: /S/ ALLAN J. HERZ
--------------------------------------
Printed Name: Allan J. Herz
Its: Vice President
LENDER:
HELLER FINANCIAL, INC.
By: /S/ ROBERT J. DENNIS
--------------------------------------
Printed Name: Robert J. Dennis
Its: Executive Vice President
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APPENDIX
Defined Terms
The following terms used in this Agreement shall have the following
meanings:
ADDITIONAL BORROWERS. Such other Subsidiaries and/or Affiliates of the
Borrowers which may own a Resort or an Additional Resort and become a
"BORROWER" hereunder with the approval of Lender.
ADDITIONAL RESORTS. Those certain timeshare vacation resorts which the
Lender may approve in the future which Intervals may be financed hereunder,
which approval shall be in the Lender's reasonable discretion.
ADVANCE. Proceeds of the Loan advanced from time to time by Lender to
Borrowers in accordance with this Agreement.
ADVERSE CLAIM. A Lien, security interest, pledge, charge or
encumbrance, or similar right or claim of any Person.
AFFECTED PARTY. The Lender and any permitted assignee of Lender
including any person who purchases a Loan participation or an assignment of the
Loan pursuant to Section 10 hereof, an Eligible Assignee, the holding company
of any such Person and any successor holding company thereof; provided,
however, in no event shall Heller Financial, Inc. or its Affiliates be an
"AFFECTED PARTY."
AFFILIATE. Any individual, trust, estate, partnership, limited
liability company, corporation or any other incorporated or unincorporated
organization (each, a "PERSON") that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common control
with Borrowers; any officer, director or partner of Borrowers; or any relative
of any of the foregoing. The term "CONTROL" means possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
ASSIGNMENT. The Assignment of Pledged Receivables and Pledged
Receivables Collateral in the form set forth on EXHIBIT B of this Agreement.
AVAILABILITY. At all times during the term of this Agreement, the
lesser of (i) $35,000,000 minus outstanding Advances, or (ii) an amount equal
to 95% of the principal balance of Pledged Receivables; provided, that
notwithstanding anything to the contrary contained herein the amounts advanced
against Pledged Receivables relating to Eligible Uncompleted Unit Receivables
shall not at any time represent in the aggregate more than the lesser of
$5,000,000.00 or 30% of the aggregate principal amount of all Advances
outstanding under this Agreement. After the Maturity Date or at the option of
Lender in accordance with Section 8.10, after the occurrence
Appendix-1
<PAGE> 40
and during the continuance of an Event of Default hereunder, Availability shall
be zero ($0).
BOARD. Board of Governors of the Federal Reserve System.
BUSINESS DAY. Any day which is not a Saturday or Sunday or a legal
holiday under the laws of the State of Illinois, the Commonwealth of
Pennsylvania, the State of Florida or the United States and which is a London
Banking Day.
CAPITAL LEASE. At any time, a lease with respect to which the lessee
is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
CAPITALIZED LEASE OBLIGATIONS. With respect to any Person, all
outstanding obligations of such Person in respect of all Capital Leases, taken
at the capitalized amount thereof accounted for as indebtedness in accordance
with GAAP.
CLUB. The RDI Club formed pursuant to the RDI Vacation Club Trust
Agreement dated the 2nd day of August, 1995 by and among RDI Resources, Inc.,
Vacation Trust, Inc. and the beneficiaries named therein, as amended from time
to time as well as such other clubs as the Lender shall approve.
CLUB COLLATERAL. With respect to the Club, and to the extent owned by
a Borrower, the reservation systems and related computer software and hardware.
CODE. The Uniform Commercial Code as adopted and in force in the State
of Illinois as the same may be amended from time to time.
COLLATERAL. Has the meaning assigned in Section 2.1.
COMPLETED UNITS. A Unit at a Resort or Additional Resort which has
been fully constructed and furnished, has received a valid permanent
certificate of occupancy, is ready for occupancy and is subject to a Time Share
Declaration.
COMPLIANCE DOCUMENTS. With respect to sales of Intervals in any state
or jurisdiction: (i) evidence satisfactory to Lender that the governmental
authority of such state or jurisdiction having jurisdiction over sales of
timeshare intervals has issued all required approvals of Borrowers' offering
materials, sales and financing documents and sales practices, and (ii) copies
of Borrowers' offering materials, sales and financing documents as approved by
such state.
CONSOLIDATED FIXED CHARGE. The sum for Bluegreen Corporation and its
subsidiaries, determined on a consolidated basis in accordance with GAAP, of
all amounts which would be deducted in computing Consolidated Net Income on
account of interest on indebtedness (including imputed interest in respect of
Capitalized Lease Obligations and amortization of debt discount and expenses).
Appendix-2
<PAGE> 41
CONSOLIDATED NET INCOME. The net income of Bluegreen Corporation and
its subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, excluding:
(i) the proceeds of any life insurance policy,
(ii) any gains arising from (a) the sale or other disposition of
any assets (other than land, timeshare intervals, current
assets and other receivables sold in the ordinary course of
business, including without limitation under the Purchase
Facility, to the extent that the aggregate amount of the
gains during such period exceeds the aggregate amount of the
losses during such period from the sale, abandonment or other
disposition of assets (other than current assets and other
receivables sold in the ordinary course of business), (b) any
write-up of assets or (c) the acquisition of outstanding
securities of Bluegreen Corporation or any subsidiary,
(iii) any amount representing any interest in the undistributed
earnings of any other person (other than a subsidiary),
(iv) any earnings, prior to the date of acquisition, of any person
acquired in any manner, and any earnings of any subsidiary
acquired prior to its becoming a subsidiary,
(v) any earnings of a successor to or transferee of the assets of
Bluegreen Corporation prior to its becoming such successor or
transferee,
(vi) any deferred credit (or amortization of a deferred credit)
arising from the acquisition of any person, and
(vii) any extraordinary gains not covered by clause (ii) above.
CONSOLIDATED NET WORTH. On a consolidated basis for Bluegreen
Corporation and its subsidiaries, at any date, (i) the sum of (a) capital stock
taken at par or stated value plus (b) capital in excess of par or stated value
relating to capital stock plus (c) retained earnings (or minus any retained
earning deficit) minus (ii) the sum of treasury stock, capital stock subscribed
for and unissued and other contra-equity accounts, all determined in accordance
with GAAP.
COSTS. All expenditures and expenses which may be paid or incurred by
or on behalf of Lender in connection with the documentation, modification,
workout, collection or enforcement of the Loan or any of the Loan Documents.
Notwithstanding the foregoing, Costs payable on the date of the initial Advance
shall be limited to (i) the fees and costs of Lender's attorneys in connection
with the documentation of the Loan and the due diligence review of Borrowers'
deliveries; (ii) the costs of the Back-up Servicer, if applicable; and (iii)
all applicable title, filing
Appendix-3
<PAGE> 42
and recording fees and other closing costs. During the term of the Loan, Costs
payable by Borrowers shall include: payments to remove or protect against
liens; attorneys' fees; receivers' fees; engineers' fees; accountants' fees;
independent consultants' fees (including environmental consultants); fees of
the Custodian, the Servicer and the Back-up Servicer; all costs and expenses
incurred in connection with any of the foregoing; outlays for documentary and
expert evidence; stenographers' charges; stamp taxes; publication costs; and
costs (which may be estimates as to items to be expended after entry of an
order or judgment) for procuring all such abstracts of title, title and UCC
searches, and examination, title insurance policies, and similar data and
assurances with respect to title as Lender may deem reasonably necessary either
to prosecute any action or to evidence to bidders at any foreclosure sale a
true condition of the title to, or the value of, the Collateral.
CREDIT POLICY. Bluegreen's Credit Scoring Matrix dated July 7, 1997
and the collection policies with respect to the Receivables and the Receivables
Collateral, which policies may not be amended or supplemented without the
Lender's written approval, which shall not be unreasonably withheld.
CUSTODIAL AGREEMENT. An agency and custodial agreement; in such form
as shall be reasonably satisfactory to both the Lender and the Borrowers which
Agreement shall be by and among Borrowers, Lender and Custodian providing for
the maintenance of the Receivables File relating to the Pledged Receivables.
CUSTODIAN. Norwest Bank Minnesota, N.A. or such other Person
designated by Lender and approved by Borrowers to maintain physical possession
of the Pledged Receivables and the Pledged Receivables Collateral.
DECLARATION. With respect to each Resort, the Condominium Declaration
set forth on EXHIBIT H.
DEED OF TRUST. An instrument by which legal title to an Interval is
placed in one or more trustees to secure an Obligor's payment performance with
respect to a Pledged Receivable.
DEFAULT RATE. A per annum rate of interest equal to the Interest Rate
plus two percent (2%).
DETERMINATION DATE. The last day of each Fiscal Month.
DUE PERIOD. Each period consisting of a Fiscal Month.
EBITDA. Consolidated Net Income plus all amounts deducted in the
computation of Consolidated Net Income on account of (i) Consolidated Fixed
Charges, (ii) depreciation and amortization expenses and other non-cash charges
and (iii) income and profits taxes; provided, however, with respect to
Bluegreen Corporation's 1999 Fiscal Year (ending March 28, 1999) the
approximately $3,000,000 associated with prepayments penalties associated with
its
Appendix-4
<PAGE> 43
$110,000,000 Rule 144A debt offering shall be added back into income.
ELIGIBLE ASSIGNEE. Any of (a) a commercial bank organized under the
laws of the United States, or any state thereof or the District of Columbia,
and having total assets in excess of $1,000,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States, or
any state thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with GAAP; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
also a member of the OECD; and (d) the central bank of any country which is a
member of the OECD.
ELIGIBLE COMPLETED UNIT RECEIVABLE. A Receivable which satisfies all
of the following criteria:
(a) payments due under the Receivable shall be self-amortizing
and payable in monthly installments;
(b) the weighted average term to maturity of all Receivables
financed hereunder from the date when such receivable is
pledged to Lender as Collateral pursuant to this Agreement is
at least thirty-six (36) months at the time the Receivable is
pledged hereunder;
(c) as of the date of Funding, the Obligor thereunder has made a
cash down payment of at least 10% percent of the actual
purchase price of the Interval (which cash down payment may
be represented by the principal payments on such Receivable
since its date of origination) and no part of such payment
has been made or loaned to Obligor by Borrowers or an
Affiliate thereof;
(d) the weighted average interest rate of all Receivables
financed under this Agreement is not less than 13.90% per
annum at the time and inclusive of the Receivable to be
financed hereunder;
(e) no principal or interest with respect to the receivable is
more than thirty (30) days past due on a contractual basis at
the time of Lender's Advance against such Receivable
hereunder, nor becomes more than sixty (60) days past due;
(f) the Obligor is not an Affiliate of the Borrowers; provided
that an Obligor may be related to or employed by the
Borrowers if such Receivables do not, in the aggregate,
exceed $1,000,000, but only if such Obligor purchases the
Interval on no less than the same terms
Appendix-5
<PAGE> 44
and conditions offered to any non-Affiliate purchaser;
provided that solely for the purposes of this clause (f) a
relative of an employee of the Borrowers (or any of their
Affiliates) shall not be deemed to be an "AFFILIATE";
(g) the Receivable is free and clear of adverse claims, liens and
encumbrances and is not currently, subject to claims of
rescission, invalidity, unenforceability, illegality,
defense, offset or counterclaim;
(h) if the Receivable is evidenced by a promissory note separate
from the conditional sales contract, the Receivable is
secured directly by a first priority Purchase Money Mortgage
or Deed of Trust on the purchased Interval;
(i) if the Purchase Money Mortgage secures a Pledged Receivable,
the title to the Interval is insured under a mortgagee title
insurance policy in form and substance acceptable to Lender;
(j) no Receivable hereunder shall be in excess of $25,000 and no
Obligor shall be the payor of aggregate Receivables herein
and in the Purchase Facility in excess of $50,000;
(k) payments with respect to the Receivable are to be in legal
tender of the United States;
(l) at least 90% of the aggregate outstanding principal balance
of all Receivables arise from Obligors who are either
residents of the U.S. or Canada at the time the Pledged
Receivable is financed hereunder;
(m) all monthly payments on the Receivable have been made by the
Obligor and not by Borrowers or any Affiliate of Borrowers on
the Obligor's behalf;
(n) the Receivable relates to a Resort or any Additional Resort;
(o) the Receivable constitutes either "CHATTEL PAPER", a "GENERAL
INTANGIBLE" or an "INSTRUMENT" as defined in the Code as in
effect in all applicable jurisdictions;
(p) the assignment of the Receivable and the Receivables
Collateral does not contravene or conflict with any law, rule
or regulation or any contractual or other restriction,
limitation or encumbrance, and the sale or assignment of
Appendix-6
<PAGE> 45
the Receivable and Receivable Collateral does not require the
consent of the Obligor;
(q) the Receivable and Receivables Collateral is in full force
and effect, constitutes the legal, valid and binding
obligation of the Obligor thereof enforceable against such
Obligor in accordance with its terms subject to the effect of
bankruptcy, fraudulent conveyance or transfer, insolvency,
reorganization, assignment, liquidation, conservatorship and
moratorium laws, is not, to the Borrowers' actual knowledge,
subject to any dispute, offset, counterclaim, defense or
assignment whatsoever;
(r) the Receivable relates to a Completed Unit and the
Receivables Collateral does not contravene in any material
respect any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations
relating to usury, retail installment sales, truth in
lending, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy) and with respect
to which no party thereto is in violation of any such law,
rule or regulation in any material respect if such violation
would impair the collectibility of such Receivable and
Receivable Collateral;
(s) the Receivable and Receivable Collateral satisfies all
applicable requirements of the Credit Policy and was acquired
by Borrowers in compliance with the underwriting guidelines
set forth therein and has not been modified in any respect
due to the deteriorative credit quality of the Obligor;
(t) as to which to the Seller's knowledge (i) no bankruptcy is
currently existing with respect to the Obligor and (ii) as to
which the Obligor is not insolvent;
(u) the Receivable shall not have an initial term to maturity of
more than 120 months;
(v) the Receivable has not been pledged as Collateral under this
Agreement for more than one year;
(w) the Receivable shall not have a contractual interest rate
less than 12.90% per annum;
(x) if a Resort is subject to a construction loan, the
construction lender shall have signed and delivered a
non-disturbance agreement (which may be contained in such
lender's mortgage) pursuant to which such construction lender
agrees not to foreclose on any Intervals relating to Pledged
Receivables; and
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<PAGE> 46
(y) the Receivable shall meet the Minimum Credit Scoring
Standard.
ELIGIBLE RECEIVABLE. Shall mean Eligible Completed Unit Receivables
and Eligible Uncompleted Unit Receivables.
ELIGIBLE UNCOMPLETED UNIT RECEIVABLE. A Receivable in respect of an
Interval in and to an Uncompleted Unit at a Resort which satisfies all of the
following criteria:
(a) payments due under the Receivable (after the Receivable shall
have been released from any document or Payment Escrow in
respect thereof) shall be self-amortizing and payable in
monthly installments;
(b) the weighted average term to maturity of all Receivables
financed hereunder from the date when such receivable is
pledged to Lender as Collateral pursuant to this Agreement is
at least thirty-six (36) months at the time the Receivable is
pledged hereunder;
(c) as of the date of Funding, the Obligor thereunder has made a
cash down payment (in the Payment Escrow if required by
applicable law) of at least ten (10%) percent of the actual
purchase price of the Interval (which cash down payment may
be represented by the principal payments on such Receivable
since its date of origination) and no part of such payment
has been made or loaned to Obligor by Borrowers or an
Affiliate thereof;
(d) the weighted average interest rate of all Receivables
financed under this Agreement is not less than 13.90% per
annum at the time and inclusive of the Receivable to be
financed hereunder;
(e) no installment with respect to the Receivable (after the
Receivable shall have been released from any document or
Payment Escrow in respect thereof) is more than thirty (30)
days past due on a contractual basis at the time of such
release nor becomes more than sixty (60) days past due;
(f) the Obligor is not an Affiliate of the Borrowers; provided
that an Obligor may be related to or employed by the
Borrowers if such Receivables do not, in the aggregate,
exceed $1,000,000, but only if such Obligor purchases the
Interval on no less than the same terms and conditions
offered to any non-Affiliate purchaser; provided that solely
for the purposes of this clause (f), a relative of an
employee of the Borrowers (or any of their Affiliates) shall
not be deemed to
Appendix-8
<PAGE> 47
be an "Affiliate".
(g) the Receivable (after the Receivable shall have been released
from any document or Payment Escrow in respect thereof) is
free and clear of adverse claims, liens and encumbrances and
is not currently, nor shall it (after such release) be
potentially in the future, subject to claims of rescission,
invalidity, unenforceability, illegality, defense, offset or
counterclaim;
(h) if the Receivable is evidenced by a promissory note separate
from the conditional sales contract, the Receivable (after
the Pledged Receivable shall have been released from any
document or Payment Escrow in respect thereof) is secured
directly by a first priority Purchase Money Mortgage or Deed
of Trust on the purchased Interval;
(i) if the Purchase Money Mortgage secures a Receivable, the
title to the Interval is insured under a mortgagee title
insurance policy in form and substance acceptable to Lender;
(j) no Receivable hereunder shall be in excess of $25,000 and no
Obligor shall be the payor of aggregate Pledged Receivables
herein and in the Purchase Facility in excess of $50,000;
(k) payments with respect to the Pledged Receivable are to be in
legal tender of the United States;
(l) at least 90% of the aggregate outstanding principal balance
of all Receivables arise from Obligors who are either
residents of the U.S. or Canada at the time the Receivable is
financed hereunder;
(m) all monthly payments on the Receivable (including, without
limitation, any payments held in the Payment Escrow) have
been made by the Obligor and not by Borrowers or any
Affiliate of Borrowers on the Obligor's behalf;
(n) the Receivable constitutes either "CHATTEL PAPER", a "GENERAL
INTANGIBLE" or an "INSTRUMENT" as defined in the Code as in
effect in all applicable jurisdictions;
(o) the Assignment of the Receivable and the Receivables
Collateral does not contravene or conflict with any law, rule
or regulation or any contractual or other restriction,
limitation or encumbrance, and the Assignment of the
Receivable and Receivable Collateral does not require the
consent of the
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<PAGE> 48
Obligor, provided that any such Assignment shall be subject
to the terms of any document or Payment Escrow in respect of
such Receivable;
(p) the Receivable and Receivables Collateral after the
Receivable shall have been released from any document or
Payment Escrow in respect thereof is in full force and
effect, constitutes the legal, valid and binding obligation
of the Obligor thereof enforceable against such Obligor in
accordance with its terms subject to the effect of
bankruptcy, fraudulent conveyance or transfer, insolvency,
reorganization, assignment, liquidation, conservatorship and
moratorium laws, is after the Receivable shall have been
released from any document or Payment Escrow in respect
thereof is not to the Borrowers' actual knowledge, subject to
any dispute, offset, counterclaim, defense or assignment
whatsoever;
(q) the Receivable relates to an Uncompleted Unit at a Resort and
the Receivable and Receivables Collateral does not contravene
in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws,
rules and regulations relating to usury, retail installment
sales, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party
thereto is in violation of any such law, rule or regulation
in any material respect if such violation would impair the
collectibility of such Receivable and Receivable Collateral;
(r) the Receivable and Receivable Collateral satisfies all
applicable requirements of the Credit Policy and was acquired
by Borrowers in compliance with the underwriting guidelines
set forth therein and has not been modified in any respect
due to the deteriorative credit quality of the Obligor or
otherwise;
(s) as to which to the Seller's knowledge (i) no bankruptcy is
currently existing with respect to the Obligor and (ii) as to
which the Obligor is not insolvent;
(t) the Receivable shall not have an initial term to maturity of
more than 120 months;
(u) the Receivable has not been pledged under this Agreement for
more than one year;
(v) the Receivable shall not have a contractual interest rate
less than 12.90% per annum;
(w) a valid permanent certificate of occupancy in respect of the
Uncompleted
Appendix-10
<PAGE> 49
Unit related to the Receivable shall have been issued within
365 days of the date on which such Receivable was initially
pledged to Lender under this Agreement;
(x) at the time of the initial pledge of the Receivable to Lender
under this Agreement, the construction of the Resort in which
the Uncompleted Unit related to such Receivable is located
shall have commenced, all permits and licensing in respect of
such construction shall have been obtained (including,
without limitation, all construction permits, all zoning,
density, accommodation and design approvals, all subdivision
approvals, all utility approvals and all pre-sale marketing
approvals and registrations) and all acquisition and
construction financing, if any, shall have been obtained,
shall be available and in place and shall be sufficient to
acquire and fully construct and furnish the Resort and all
amenities in respect thereof.
If at any time during which a Receivable shall be held in
document or Payment Escrow such Receivable would, in the
opinion of the Lender and without giving effect to such
Payment Escrow, be subject to any Adverse Claims, liens or
encumbrances, be subject to claims of rescission, invalidity,
unenforceability, illegality, defense, offset or
counterclaim, not be in full force and effect, not constitute
the legal, valid and binding obligation of the Obligor
thereunder, be subject to any dispute, offset, counterclaim
or defense whatsoever, contravene in any material respect any
laws, rules or regulations applicable thereto so as to
materially impair the collectibility of such Pledged
Receivable, such Pledged Receivable shall be deemed not to
have satisfied this definition of "ELIGIBLE UNCOMPLETED UNIT
RECEIVABLE."
After the Receivable shall have been released from any
document or Payment Escrow in respect thereof and as soon as
such Receivable satisfies the requirements of an "ELIGIBLE
COMPETED UNIT RECEIVABLE" and Borrowers certify the same in
writing to Lender, such Pledged Receivable shall no longer be
considered an "ELIGIBLE UNCOMPLETED UNIT RECEIVABLE."; and
(y) the Receivable shall meet the Minimum Credit Scoring
Standard.
ENVIRONMENTAL LAWS. Means and includes the following as now in effect
or hereafter amended: the Comprehensive Environmental Response Compensation and
Liability Act, ("CERCLA"), 42 U.S.C. Section 9601 et. seq.; the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et. SEQ.; the Toxic Substances Control Act
("TSCA"), 15 U.S.C. Section 2601, et. seq.; the Clean Air Act, 42 U.S.C.
Section 7401 ET. SEQ.; the Federal Water Pollution Control Act ("CLEAN WATER
ACT"), 33 U.S.C. Section 1251 et. seq.; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001 et. seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et. seq.; the Atomic Energy Act, 42
U.S.C. Section 2011 et. seq.; the Safe Drinking Water Act, 42 U.S.C. Section
300f et. seq. and the state law
Appendix-11
<PAGE> 50
equivalents; any so-called "Superfund" or "Superlien" law; and any statute,
ordinance, code, rule, regulation, order, decree or requirement under
international, federal, state, regional, provincial or local law (including,
without limitation, administrative orders and consent decrees) in effect and as
amended regulating, relating to or imposing liability or standards of conduct
concerning public health and safety, protection of the environment, or any
pollutant or contaminant or hazardous, toxic or dangerous substance, waste,
chemical or material, as now or any time hereafter may be existing.
EVENT OF BANKRUPTCY. A petition under any Chapter of Title 11 of the
United States Code or any similar law or regulation is filed by or against an
Obligor (and in the case of an involuntary petition in bankruptcy, such
petition is not discharged within sixty (60) days of its filing), or a
custodian, receiver or trustee for an Obligor is appointed, or an obligor makes
an assignment for the benefit of creditors, or obligor is adjudged insolvent by
any state or federal court of competent jurisdiction, or Obligor admits its
insolvency or inability to pay its debts as they become due or an attachment or
execution is levied against the Unit by a creditor of an Obligor.
EVENT OF DEFAULT. Has the meaning set forth in Section 8.1 of this
Agreement.
FISCAL MONTH. With respect to any Fiscal Year, the monthly fiscal
periods utilized by the Borrowers as of the date hereof which may not be
modified without the Lender's written consent, which consent will not be
unreasonably withheld.
FISCAL QUARTER. With respect to any Fiscal Year, the quarterly fiscal
periods utilized by the Borrowers as of the date hereof which may not be
modified without the Lender's written consent, which consent will not be
unreasonably withheld.
FISCAL YEAR. The annual fiscal periods utilized by the Borrowers as of
the date hereof which may not be modified without the Lender's written consent,
which consent will not be unreasonably withheld.
GAAP. Generally accepted accounting principles, applied on a
consistent basis, set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board which are applicable in the
circumstances as of the date in question; and the requisite that such
principles be applied on a consistent basis means that the accounting
principles in a current period are comparable in all material respects to those
applied in a preceding period, with any exceptions thereto noted.
GUARANTY. With respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any indebtedness, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
Appendix-12
<PAGE> 51
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any
working capital or other balance sheet condition or any
income statement condition of any other Person or otherwise
to advance or make available funds for the purchase or
payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of any other Person
to make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor
under any Guaranty, the indebtedness or other obligations that are the subject
of such Guaranty shall be assumed to be direct obligations of such obligor.
HAZARDOUS MATERIALS. Means the following: hazardous substances;
hazardous wastes; polychlorinated biphenyls ("PCB'S") or any substance or
compound containing PCB's; asbestos or any asbestos-containing materials in any
form or condition; radon; any other radioactive materials including any source,
special nuclear or by-product material; petroleum, crude oil or any fraction
thereof which is liquid at standard conditions of temperature and pressure (60
degrees Fahrenheit and 14.7 pounds per square inch absolute); and any other
pollutant or contaminant or hazardous, toxic or dangerous chemicals, materials
or substances, as all such terms are defined by Environmental Laws.
INDEBTEDNESS. All payment obligations of Borrowers to Lender under the
Loan Documents.
INSURANCE PROCEEDS. Proceeds, paid by any insurer pursuant to any
insurance policy covering a Unit, Receivable or Receivables Collateral.
INTANGIBLE ASSET. A nonphysical, noncurrent right that gives Bluegreen
or any of its subsidiaries an exclusive or preferred position in the
marketplace including but not limited to a copyright, patent, trademark,
goodwill, organization costs, capitalized advertising cost, computer programs,
licenses for any of the preceding, government licenses (E.G., broadcasting or
the right to sell liquor), leases, franchises, mailing lists, exploration
permits, import and export permits, construction permits, and marketing quotas.
INTEREST RATE. A floating rate per annum equal to the Base Rate plus
2.75% (the
Appendix-13
<PAGE> 52
aggregate rate referred to as the "INTEREST RATE"). "BASE RATE" shall mean the
rate published each business day in THE WALL STREET JOURNAL for deposits
maturing ninety (90) days after issuance under the caption "MONEY RATES, LONDON
INTERBANK OFFERED RATES (LIBOR)" as the same may be adjusted by the Statutory
Reserve Rate. The Interest Rate for each Fiscal Month shall be fixed based upon
the Interest Rate published prior to and in effect on the first (1st) Business
Day of such Fiscal Month. Interest shall be calculated based on a 360 day year
and charged for the actual number of days elapsed.
INTERVAL. With respect to any Resort or Additional Resort, an
undivided fee simple ownership interest as a tenant in common with respect to
any Unit in such Resort or Additional Resort, with a right to use such Unit, or
a Unit of such type, generally for one week annually, together with all
appurtenant rights and interests as more particularly described in the
Timeshare Documents.
LIEN. With respect to any Collateral, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
LOAN. The Thirty-five Million Dollar ($35,000,000) credit facility
described in this Agreement.
LOAN DOCUMENTS. Collectively, this Agreement, the Note, the Servicing
Agreement, the Structuring Fee Letter, the Resort Blanket Mortgages and any and
all other agreements, documents, instruments and certificates delivered or
contemplated to be delivered in connection with this Agreement, as such may be
amended, renewed, extended, restated or supplemented from time to time.
LOCKBOX BANK. Such banking institution selected by Borrowers and
approved by Lender to act as the depositary of payments on the Pledged
Receivables and the Pledged Receivables Collateral under the Lockbox Agreement.
LOCKBOX AGREEMENT. An agreement among Bluegreen Corporation, Lender
and Lockbox Bank providing for the receipt by Lockbox Bank of payments on the
Pledged Receivables and the Pledged Receivables Collateral and disbursement of
such payments to Lender.
LONDON BANKING DAY. Any day on which dealings in deposits in U.S.
Dollars are transacted in the London interbank market.
MANDATORY PREPAYMENT. Any prepayment required by Section 1.7(b) of
this Agreement.
MATERIAL ADVERSE EFFECT. With respect to any event or circumstance, a
material adverse
Appendix-14
<PAGE> 53
effect on:
(a) the business, assets, financial condition or operations of
Borrowers and their respective subsidiaries, taken as a
whole;
(b) the ability of Borrowers or its direct or indirect
subsidiaries to perform their respective obligations under
this Agreement or any other Loan Document;
(c) the validity, enforceability or collectibility against
Borrowers of this Agreement or the other Loan Documents;
(d) the status, existence, perfection or priority of (i) the
Lender's security interest in the Collateral, or (ii)
Borrowers' ownership interest in the Pledged Receivables or
Pledged Receivables Collateral; or
(e) the validity, enforceability or collectibility of the Pledged
Receivables or Pledged Receivables Collateral.
MATURITY DATE. June 26, 2000.
MAXIMUM EXPOSURE. The lesser of (a) $35,000,000, or (b) ninety-five
percent (95%) of the outstanding principal balance of all Pledged Receivables;
PROVIDED, HOWEVER, notwithstanding anything to the contrary contained herein
the outstanding principal amount of Advances made with respect to Eligible
Uncompleted Unit Receivables shall not in the aggregate represent more than the
lesser of $5,000,000 or thirty percent (30%) of the aggregate principal amount
of Advances outstanding hereunder, and any such excess shall require a
prepayment of the Loan or the pledge of Eligible Receivables consistent with
Section 1.7(b) hereof.
MINIMUM CREDIT SCORING STANDARD. The Receivable does not have a "20,"
"25" or "99" designation under the Credit Policy provided that no more than
thirty percent (30%) of the Receivables shall have a designation of "10."
Notwithstanding the preceding sentence, any Receivable shall satisfy the
Minimum Credit Scoring Standard if the Obligor relating to such Receivable has
made the aggregate required payments over the most recent twelve (12) months
with respect to the Receivable.
MONTHLY REPORTS. The monthly reports required pursuant to Section
5.4(a) of this Agreement.
NOTE. The promissory note evidencing the Loan executed and delivered
by Borrowers to Lender concurrently herewith and attached hereto as EXHIBIT A.
OBLIGOR. Any Person who purchases one or more Intervals and finances
the purchase of the same.
Appendix-15
<PAGE> 54
PAYMENT DATE. Wednesday of each week; PROVIDED, HOWEVER, in the event
such date is not a Business Day the next succeeding Business Day.
PAYMENT ESCROW. An escrow into which payments made by an Obligor under
an Eligible Uncompleted Unit Receivable are required to be made pursuant to
applicable state law.
PERMITTED ADVERSE CLAIMS means (a) any Adverse Claim created under any
Loan Document; (b) any Adverse Claim for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable without
penalty, provided that no notice of Adverse Claim has been filed or recorded
under the Code of any of the states wherein the Resorts or Additional Resorts
are located; (c) carriers, warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Adverse Claims arising in the
ordinary course of business which are not delinquent or remain payable without
penalty; and (d) Permitted Liens.
PERMITTED LIENS. Each of the liens listed on EXHIBIT H attached
hereto.
PERSON. Natural persons, corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
PLEDGED RECEIVABLES. At any date of determination, (i) all Eligible
Receivables against which Lender shall have made an Advance which remains
outstanding as of such date, and (ii) all Receivables which are no longer
Eligible Receivables and for which a mandatory prepayment under Section
1.7(b)(i) is required and has not occurred; provided, however, in no event
shall the Receivables described in this clause (ii) be utilized in the
definition of "Availability" or in the definition of "Maximum Exposure" in
which case the references to "Pledged Receivable" therein shall be only to
Eligible Receivables.
PLEDGED RECEIVABLES COLLATERAL. Receivables Collateral relating to
Pledged Receivables.
PREFERRED STOCK. Shall mean stock that takes priority over common
stock in regard to the payment of dividends.
PROJECT INDEBTEDNESS. All payment obligations of Borrowers under or in
respect of any of the Project Loan Documents.
PROJECT LOAN. The Loan which may be made by Lender pursuant to the
Project Loan Agreement by and between Lender and Borrowers.
PROJECT LOAN AGREEMENT. The Agreement by and between Lender and
Borrowers pursuant to which the Project Loan may be made.
PROJECT LOAN COLLATERAL. Each of the Project Loan Mortgages associated
with the Project
Appendix-16
<PAGE> 55
Loans.
PROJECT LOAN MORTGAGES. The mortgages and deeds of trust made by
Borrowers for the benefit of Lender required pursuant to the Project Loan
Agreement.
PURCHASE DOCUMENTS. Any purchase agreement and related sale and escrow
documents executed and delivered by an Obligor to any Borrower or the
Additional Resort Owners with respect to the purchase of an Interval which is
the subject of a Pledged Receivable.
PURCHASE FACILITY. The Asset Purchase Agreement dated June 26, 1998 by
and among Bluegreen Receivables Finance Corporation III, as seller, BRFC III
Deed Corporation, as deed custodian solely for the benefit of Heller Financial,
Inc., Heller Financial, Inc., as purchaser, Bluegreen Corporation, as
originator and servicer, and U.S. Bank National Association, as cash
administrator.
PURCHASE LIMIT. $100,000,000, as such amount may be adjusted from time
to time pursuant to Section 2.12(b) of the Purchase Facility.
PURCHASE MONEY MORTGAGE. Any mortgage or deed of trust executed and
delivered by an Obligor to Borrowers or an Additional Resort Owner with respect
to the purchase of an Interval, encumbering all of the right, title and
interest of each such Obligor in and to the purchased Interval as security for
the Obligor's obligations under any Receivable.
REASSIGNMENT OF PLEDGED RECEIVABLES. The Reassignment of Receivables
and Receivables Collateral in the form set forth on EXHIBIT C of this
Agreement.
RECEIVABLES. A conditional sale contract or note and its related
security, including but not limited to any Purchase Money Mortgage, Deed of
Trust or security interest in the related Interval (any accessions thereto) and
any and all rights to payments thereunder.
RECEIVABLES COLLATERAL. The Receivables, including: (i) all interest,
finance charges, and principal received on or with respect to the Receivables;
(ii) the Receivables Files; (iii) property which secured a Receivable and which
has been acquired by repossession or otherwise; (iv) all rights to Insurance
Proceeds and Liquidation Proceeds; and (v) the proceeds of the foregoing and
the rights to enforce the foregoing.
RECEIVABLES FILE. With respect to a Receivable, such Receivable; the
Assignment of such Receivable; the Purchase Money Mortgage or UCC financing
statement, if any, evidencing that the security interest granted under such
Receivable has been perfected under applicable state law; the original of any
assumption agreement or any modification extension or refinancing agreement;
the application of the related Obligor to obtain the financing extended by such
Receivable; and the Purchase Documents.
REGULATORY CHANGE means relative to any Affected Party:
Appendix-17
<PAGE> 56
(a) any change in (or the adoption, implementation, change in the
phase-in or commencement of effectiveness of) any:
(i) United States Federal or state law or foreign law
applicable to such Affected Party,
(ii) regulation, interpretation, directive, requirement
or request (whether or not having the force of law)
applicable to such Affected Party of (A) any court
or government authority charged with the
interpretation or administration of any law referred
to in clause (a)(i), or of (B) any rating agency,
fiscal, monetary or other authority having
jurisdiction over such Affected Party, or
(iii) GAAP or regulatory accounting principles applicable
to such Affected Party and affecting the application
to such Affected Party of any law, regulation,
interpretation, directive, requirement or request
referred to in clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive,
requirement, request or accounting principles referred to in
clause (a)(i), (a)(ii) or (a)(iii) above.
REPAYMENT PRICE. With respect to any Receivable, 95% of the
outstanding principal amount of the Receivable at the time of any prepayment of
the same under Section 1.7(a) or such lesser amount as may be equal to
outstanding Advances provided Advances do not exceed Maximum Exposure.
RESORTS. Those certain timeshare vacation resorts commonly known as
Shore Crest (Myrtle Beach, South Carolina), Harbour Lights (Myrtle Beach, South
Carolina), Mountain Loft (Gatlinburg, Tennessee), Laurel Crest (Pigeon Forge,
Tennessee), Falls Village (Branson, Missouri) as more particularly described on
EXHIBIT M.
RESORT BLANKET MORTGAGE. Each of the mortgages and deeds of trust made
by Borrowers, or the Additional Resort Owners, for the benefit of Lender,
encumbering at each Resort or Additional Resort listed on EXHIBIT I the
Intervals which are the subject of a Pledged Receivable.
SERVICER. Initially means Bluegreen Corporation, a Massachusetts
corporation, together with its successors and assigns.
Appendix-18
<PAGE> 57
SERVICING AGREEMENT. A servicing agreement between Lender, Borrowers
and the Servicer approved by Lender providing for the servicing of the Pledged
Receivables and the Pledged Receivables Collateral in the form attached hereto
as EXHIBIT F.
STATUTORY RESERVE RATE. A fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board, for advances (currently referred to as "EUROCURRENCY
LIABILITIES" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D and shall be subject to
such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to the Lender
under such Regulation D or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
STRUCTURING FEE LETTER. That certain letter agreement between
Borrowers and Lender dated as of the date of this Agreement, a copy of which is
attached hereto as EXHIBIT K, setting forth therein the structuring fees
required to be paid by Borrowers to Lender.
SUBORDINATED INDEBTEDNESS. Indebtedness of Borrowers or its
subsidiaries, whether direct or indirect, to non-affiliated Persons which is
subordinated to the Indebtedness on a basis acceptable to the Lender. No
indebtedness shall be considered Subordinated Indebtedness unless the
obligations of each of the Borrowers or its subsidiaries (whether direct,
indirect or contingent) is subordinated on a basis acceptable to the Lender.
SUCCESSOR SERVICER. Any Servicer other than the Borrowers or an
Affiliate of the Borrowers appointed pursuant to the terms of the Servicing
Agreement.
TANGIBLE NET WORTH. Consolidated Net Worth minus Intangible Assets
plus Subordinated Indebtedness.
TERM. Has the meaning set forth in Section 1.2 of this Agreement.
TIME SHARE ASSOCIATION. A not-for-profit corporation under applicable
state law which is responsible for operating and maintaining a Resort or an
Additional Resort pursuant to the terms of the Declaration and/or Time Share
Declaration in respect thereof.
TIME SHARE DECLARATION. With respect to each Resort, the Time Share
Declaration set forth on EXHIBIT L.
TIME SHARE DOCUMENTS. With respect to any Resort, the documents
relating to the sale of Intervals by Borrowers, including without limitation
the documents on EXHIBIT L.
TOTAL INDEBTEDNESS. With respect to the Borrowers and its subsidiaries
means, at any
Appendix-19
<PAGE> 58
time, without duplication,
(a) its liabilities for borrowed money (exclusive of Advances
hereunder and Subordinated Indebtedness) and its redemption
obligations in respect of mandatorily redeemable Preferred
Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising
in the ordinary course of business but including all
liabilities created or arising under any conditional sale or
other title retention agreement with respect to any such
property);
(c) all Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such
liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for
its account by banks and other financial institutions
(whether or not representing obligations for borrowed money);
(f) Interest Rate Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
UNCOMPLETED UNIT. Any Unit that is not a Completed Unit.
UNIT. One individual air-space condominium unit within a Resort or
Additional Resort, together with all furniture, fixtures and furnishings
therein, and together with any and all interests in common elements appurtenant
thereto, as provided in a Declaration.
Appendix-20
<PAGE> 59
EXHIBIT A
NOTE
$35,000,000.00 October ___, 1998
FOR VALUE RECEIVED, BLUEGREEN CORPORATION AND BLUEGREEN RESORTS, INC.
("MAKERS") whose addresses are 4960 Blue Lake Drive, Boca Raton, Florida 33431,
jointly and severally promise to pay to the order of HELLER FINANCIAL, INC., a
Delaware corporation, and its successors and assigns ("HOLDER") the sum of up
to THIRTY-FIVE MILLION AND NO/100 DOLLARS ($35,000,000 OR, IF LESS, THE
AGGREGATE UNPAID AMOUNT OF ALL ADVANCES SHOWN ON THE SCHEDULE ATTACHED HERETO),
together with all other amounts added thereto pursuant to this Note or
otherwise payable to Holder (the "LOAN") (or so much thereof as may from time
to time be outstanding), together with interest thereon as hereinafter set
forth, payable in lawful money of the United States of America. Payments shall
be made to Holder at 500 West Monroe Street, 28th Floor, Chicago, Illinois
60661 (or such other address as Holder may hereafter designate in writing to
Makers).
The repayment of the Loan evidenced by this Note is secured by that
certain Loan and Security Agreement of even date herewith (the "AGREEMENT")
pursuant to which Makers have granted Lender a first priority lien on the
Collateral as of the Closing Date. This Note, the Agreement, and any other
documents evidencing or securing the Loan or executed in connection therewith,
and any modification, renewal or extension of any of the foregoing are
collectively called the "LOAN DOCUMENTS".
This Note has been issued pursuant to the Agreement, and all of the
terms, covenants and conditions of the Agreement (including all Exhibits
thereto), and all other instruments evidencing or securing the indebtedness
hereunder are hereby made a part of this Note and are deemed incorporated
herein in full. Defined terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement.
1. PRINCIPAL AND INTEREST.
Principal and Interest shall be payable as provided in the Agreement.
2. PAYMENT.
Makers shall make payments on the Loan as set forth in the Agreement.
If not sooner repaid, the entire outstanding principal amount of the Loan,
together with all accrued but unpaid interest, fees, and charges shall be
payable by the Maturity Date.
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<PAGE> 60
3. PREPAYMENT.
Makers may prepay the Loan as provided in the Agreement.
4. DEFAULT.
4.1 EVENTS OF DEFAULT.
Events of Default shall be as described in Section 7.1 of the
Agreement.
4.2 REMEDIES.
So long as an Event of Default remains outstanding and subject to the
terms of the Agreement: (a) interest shall accrue at a rate equal to the
Interest Rate plus two percent (2%) per annum; (b) Holder may, at its option
and without notice (such notice being expressly waived) except as provided in
the Agreement, declare the Loan immediately due and payable; and (c) Holder may
pursue all rights and remedies available under the Agreement, or any other Loan
Documents. Holder's rights, remedies and powers, as provided in this Note, and
the other Loan Documents are cumulative and concurrent, and may be pursued
singly, successively or together against Makers, the security described in the
Loan Documents, and any other security given at any time to secure the payment
hereof, all at the sole discretion of Holder. Additionally, Holder may resort
to every other right or remedy available at law or in equity without first
exhausting the rights and remedies contained herein, all in Holder's sole
discretion. Failure of Holder, for any period of time or on more than one
occasion, to exercise its option to accelerate the Maturity Date shall not
constitute a waiver of the right to exercise the same at any time during the
continued existence of any Event of Default or any subsequent Event of Default.
If any attorney is engaged: (i) to collect the Loan or any sums due
under the Loan Documents whether or not legal proceedings are thereafter
instituted by Holder; (ii) to represent Holder in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors' rights
and involving a claim under this Note; (iii) to protect the liens and security
interests of the Loan Agreement or any of the Loan Documents; (iv) to foreclose
on the Collateral; (v) to represent Holder in any other proceedings whatsoever
in connection with the Agreement or any of the Loan Documents including post
judgment proceedings to enforce any judgment related to the Loan Documents; or
(vi) in connection with seeking an out-of-court workout or settlement of any of
the foregoing, then Makers shall pay to Holder all costs, reasonable attorneys'
fees and expenses in connection therewith, in addition to all other amounts due
hereunder.
5. LATE CHARGE.
If payments of principal and/or interest, or any other amounts under
the Loan Documents are not timely made or remain overdue for a period of ten
(10) days, Makers, without notice or demand by Holder, promptly shall pay an
amount ("LATE CHARGE") equal to two percent (2%) of
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<PAGE> 61
each delinquent payment; provided, however, the Late Charge shall not be
applicable in the event the Default Rate shall be accruing; provided, further,
that nothing in this paragraph 5 shall give Holder the option to apply the Late
Charge if Holder is entitled to cause the Default Rate to accrue.
6. GOVERNING LAW; SEVERABILITY.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Illinois. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of the remainder of this Note, and to this
end, the provisions of this Note are declared to be severable.
7. WAIVER.
To the extent permitted by law, Makers, for themselves and all
endorsers, guarantors and sureties of this Note, and their heirs, successors
and assigns, legal representatives, hereby waive presentment for payment,
demand, notice of nonpayment, notice of dishonor, protest of any dishonor,
notice of protest and protest of this Note, and all other notices in connection
with the delivery, acceptance, performance, default or enforcement of the
payment of this Note, and agree that their respective liability shall be
unconditional and without regard to the liability of any other party and shall
not be in any manner affected by any indulgence, extension of time, renewal,
waiver or modification granted or consented to by Holder. Makers, for
themselves and all endorsers, guarantors and sureties of this Note, and their
heirs, legal representatives, successors and assigns, hereby consent to every
extension of time, renewal, waiver or modification that may be granted by
Holder with respect to the payment or other provisions of this Note, and to the
release of any makers, endorsers, guarantors or sureties, and of any collateral
given to secure the payment hereof, or any part hereof, with or without
substitution, and agrees that additional makers, endorsers, guarantors or
sureties may become parties hereto without notice to Makers or to any endorser,
guarantor or surety and without affecting the liability of any of them.
8. SECURITY, APPLICATION OF PAYMENTS.
This Note is secured by the liens, encumbrances and obligations
created hereby and by the other Loan Documents. Payments will be applied to any
fees, expenses or other costs Makers are obligated to pay under this Note or
the other Loan Documents, to interest due on the Loan and to the outstanding
principal balance of the Loan, in any order that Holder, at its sole option,
may deem appropriate.
9. MISCELLANEOUS.
9.1 AMENDMENTS.
This Note may not be terminated or amended orally, but only by a
termination or
A-3
<PAGE> 62
amendment in writing signed by Holder.
9.2 LAWFUL RATE OF INTEREST.
The maximum amount of interest paid or to be paid to Holder pursuant
to this Note or any Loan Document shall be governed by the Agreement.
9.3 CAPTIONS.
The captions of the Paragraphs of this Note are for convenience of
reference only and shall not be deemed to modify, explain, enlarge or restrict
any of the provisions hereof.
9.4 NOTICES.
Notices shall be given under this Note in conformity with the terms
and conditions of the Agreement.
9.5 JOINT AND SEVERAL.
The obligations of Makers under this Note shall be joint and several
obligations of each Maker and of each Maker's heirs, personal representatives,
successors and assigns.
9.6 TIME OF ESSENCE.
Time is of the essence of this Note and the performance of each of the
covenants and agreements contained herein.
10. VENUE.
MAKERS HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY LOCAL,
STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. MAKERS HEREBY
IRREVOCABLY APPOINT AND DESIGNATE CSC, WHOSE ADDRESS IS MAKERS, C/O CSC, 33
NORTH LASALLE STREET, CHICAGO, ILLINOIS 60602, AS ITS DULY AUTHORIZED AGENT FOR
SERVICE OF LEGAL PROCESS AND AGREE THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY
SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON MAKERS. IN THE EVENT SERVICE
IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO,
ILLINOIS, MAKERS SHALL, WITHIN TEN (10) DAYS AFTER HOLDER'S REQUEST, APPOINT A
SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON THEIR BEHALF AND WITHIN SUCH PERIOD
NOTIFY HOLDER OF SUCH APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY
APPOINTED, HOLDER SHALL, IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A
SUBSTITUTE AGENT UPON FIVE (5) DAYS NOTICE TO MAKERS. MAKERS HEREBY
A-4
<PAGE> 63
WAIVE ANY RIGHT THEY MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST THEM BY HOLDER ON THE LOAN DOCUMENTS OR RELATED LOAN DOCUMENTS
IN ACCORDANCE WITH THIS PARAGRAPH.
11. SALE OF LOAN.
Subject to the terms of the Agreement, Holder, at any time and without
the consent of Makers, may grant Participations in or sell, transfer, assign
and convey all or any portion of its right, title and interest in and to the
Loan, this Note, the Agreement and the other Loan Documents, any guaranties
given in connection with the Loan and any Collateral given to secure the Loan.
12. JURY TRIAL WAIVER.
MAKERS, AND HOLDER BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE BUSINESS RELATIONSHIP THAT
IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
MADE BY MAKERS AND BY HOLDER, AND MAKERS ACKNOWLEDGE THAT NEITHER HOLDER NOR
ANY PERSON ACTING ON BEHALF OF HOLDER HAS MADE ANY REPRESENTATIONS OF FACT TO
INCLUDE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY
MODIFY OR NULLIFY ITS EFFECT. MAKERS AND HOLDER ACKNOWLEDGE THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT MAKERS AND
HOLDER HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS NOTE AND THAT
EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. MAKERS AND HOLDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED
(OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS NOTE AND
IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
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<PAGE> 64
IN WITNESS WHEREOF, Makers have executed this Note or have caused the
same to be executed by its duly authorized representatives as of the date set
first forth above.
MAKERS:
BLUEGREEN CORPORATION
By:
----------------------------------
Printed Name:
--------------------
Title:
---------------------------
BLUEGREEN RESORTS, INC.
By:
----------------------------------
Printed Name:
--------------------
Title:
---------------------------
A-6
<PAGE> 1
EXHIBIT 10.134
MASTER BLUEGREEN RESORT LOAN FACILITY PRIVATE
THIS MASTER BLUEGREEN RESORT LOAN FACILITY (this "AGREEMENT") dated as
of October 20, 1998, is made by and between HELLER FINANCIAL, INC., a Delaware
corporation ("LENDER"), and BLUEGREEN CORPORATION, a Massachusetts corporation
("BLUEGREEN").
R E C I T A L S:
A. All capitalized terms used herein shall have the meanings ascribed
thereto in the Appendix attached hereto and made a part hereof by this
reference.
B. Bluegreen, directly or through one or more of its subsidiaries, is
in the business of acquiring, constructing and/or developing certain Resorts
for the purpose of selling Intervals therein and/or treating such Resorts as
Component Sites in connection with its Club.
C. Upon satisfaction of the terms and conditions set forth herein,
Lender may extend financing from time to time to Bluegreen or certain Eligible
Bluegreen Subsidiaries, the proceeds of which will be used to acquire,
construct and develop certain Eligible Resorts.
D. Bluegreen has agreed to guarantee all of the obligations of such
Eligible Bluegreen Subsidiaries under this Agreement and the other Resort Loan
Documents except in any case in which Bluegreen is the borrower, including,
without limitation, all of the obligations of the Eligible Bluegreen
Subsidiaries with respect to any financing provided from time to time by
Lender.
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements, provisions and covenants herein contained, Bluegreen and Lender
agree as follows:
1. EXTENSION OF FINANCING
1.1 FINANCING GENERALLY.
(A) EXTENSION OF RESORT LOANS. During the Eligibility Period
but subject to the requirements of this Section 1.1 and the requirements of
Sections 1.2, 1.3 and 2 hereof, Lender shall extend Resort Loans to either
Bluegreen or one or more Eligible Bluegreen Subsidiaries identified from time
to time by Bluegreen to Lender as being the owners and developers of particular
Eligible Resorts. Each such Resort Loan shall
(i) be made either to Bluegreen or to an Eligible Bluegreen
Subsidiary that is the owner and developer of an Eligible Resort whose
Resort Development Costs are to be financed, in part, by such Resort
Loan,
(ii) be disbursed in a series of Resort Advances during the
then remaining unexpired portion of the Eligibility Period (including,
where applicable, the Extension Period) to pay for not more than 85%
of Resort Development Costs incurred or to be
<PAGE> 2
incurred by Bluegreen or such Eligible Bluegreen Subsidiary in
acquiring, constructing and/or developing such Eligible Resort (each
such Resort Advance shall relate to particular line item or items
identified in the Approved Development Budget for such Resort; no more
than one Resort Advance per Resort Loan shall be made in any calendar
month),
(iii) be in a stated maximum principal amount of $2,500,000
or more,
(iv) shall have a final maturity date of not more than seven
(7) years from the Facility Closing Date,
(v) bear interest at the Interest Rate in effect from time to
time (which interest shall be computed on the unpaid principal balance
which exists from time to time with respect to each Resort Advance
under such Resort Loan only from the date on which such Resort Advance
is made and shall be paid by Bluegreen or such Eligible Bluegreen
Subsidiary, as the case may be, to Lender on a monthly basis as
provided in the applicable promissory note for such Resort Loan),
(vi) be guaranteed in full by Bluegreen, if such Resort Loan
shall have been extended to an Eligible Bluegreen Subsidiary, and, in
each case, be secured by all right, title and interest of Bluegreen or
such Eligible Bluegreen Subsidiary in and to the Eligible Resort
related to such Resort Loan, and in and to all leases, rents, products
and proceeds in respect thereof (including, without limitation, any
other collateral provided for in the applicable Resort Loan
Documents), PROVIDED that such Resort Loan shall not be secured by any
security interest or lien in respect of any receivable (including,
without limitation, any promissory note and mortgage or deed of trust
in respect thereof) arising from the sale of an Interval if the
applicable release price in respect of such sale, as provided in the
Resort Loan Documents for such Resort Loan, shall have been paid, and
(vii) be otherwise governed by the Resort Loan Documents for
such Resort Loan;
PROVIDED, that, in no event shall the maximum principal amount available under
such Resort Loan as of the Resort Loan Closing Date therefor exceed the Resort
Loan Limit determined at such time. It is the intention of Lender and Bluegreen
that the Resort Loan facility described herein not be a "revolving facility"
but rather a "multiple advance" facility that is permanently utilized as each
Resort Loan is made and that the sum of the original principal amount of all
Resort Advances made under all Resort Loans and the unutilized borrowing
availability under all Resort Loans not exceed, in the aggregate, $25,000,000.
It is further intended that each Resort Loan not be a "revolving facility" but
rather a "multiple advance" facility that is permanently utilized as each
Resort Advance is made thereunder.
(B) RESORT LOAN DOCUMENTS. On or prior to the Resort Loan
Closing Date for each Resort Loan, Lender and either Bluegreen or the Eligible
Bluegreen Subsidiary for such Resort Loan shall enter into the Resort Loan
Documents for such Resort Loan. Each
2
<PAGE> 3
Resort Loan Document shall be in Lender's then standard form with such changes
thereto as Lender may require in its sole discretion, including, without
limitation, such changes as may have been required as a condition to Lender's
granting approval of such Resort Loan.
1.2 REQUESTS FOR FINANCING. During the Eligibility Period (but not the
Extension Period), Bluegreen shall have the right to request Lender to make a
Resort Loan with respect to an Eligible Resort. Each such request shall be made
not less than sixty (60) days and not more than one hundred twenty (120) days
prior to the Resort Loan Closing Date requested by Bluegreen for such Resort
Loan, shall identify the Eligible Bluegreen Subsidiary and the Eligible Resort
in respect of such requested Resort Loan and shall be substantially in the form
of SCHEDULE 1.2 attached hereto and made a part hereof. Anything contained
herein to the contrary notwithstanding but subject to the last paragraph of
this Section 1.2, (a) Bluegreen acknowledges that Lender has reserved its right
to approve each request on a case-by-case basis in its sole discretion and that
Lender must apply its credit approval standards and processes to each such
request and each such Resort Loan and Eligible Resort that is the subject
thereof and (b) no Resort Loan Closing Date shall occur during the Extension
Period.
Upon the receipt of any such request and all information required to
be submitted in connection with such request (as set forth in SCHEDULE 1.2
attached hereto), Lender agrees to inform Bluegreen of its decision to approve
or reject such request within 45 days after its receipt of such request and all
of such information; if such request is approved, such approval shall be
subject to, on a post-approval basis, (a) the Lender's satisfactory verifying
of any or all information supplied in connection with such request, (b) a
satisfactory report in respect of any customary or otherwise necessary legal
due diligence in connection with such request and/or such information and (c)
the satisfying of the other terms and conditions of this Agreement.
Lender agrees to use its best efforts (but, in any case, without any
obligation on its part) to, within 15 days after the receipt of any such
request, determine whether it is likely that it will not approve such request.
If Lender shall make any such determination, Lender agrees to use its best
efforts to communicate the same to Bluegreen as soon as practicable. In
connection with any request in respect of which Lender has stated to Bluegreen
that it is likely that the same will not be approved, Lender will not continue
its approval process unless it receives a second request from Bluegreen to do
so.
1.3 CLOSING OF RESORT LOANS. Resort Advances under each Resort Loan
shall be advanced upon the satisfaction of the conditions precedent set forth
in the Resort Loan Documents in respect thereof. The first Resort Advance under
each Resort Loan shall be subject to the conditions set forth in Section 2
hereof and the conditions set forth in the Resort Loan Documents in respect of
such Resort Loan. All Resort Advances under each Resort Loan shall be disbursed
by Lender pursuant to customary construction loan disbursement procedures set
forth in the Resort Loan Documents in respect thereof which shall include,
among other things, general contractor certifications, mechanic's lien partial
or final (as the case may be) waivers, inspections and certifications by
Lender's Architect, mortgagee title insurance policy bringdown endorsements,
reconciliations of past contractor and subcontractor payments with work
completed and an "as built" certified survey (in the case of the last Resort
Advance under any Resort Loan).
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1.4 PAYMENT OF RESORT LOANS. Each Resort Loan shall be due and payable
in accordance with the Resort Loan Documents for such Resort Loan. Such Resort
Loan Documents shall provide that any security interest or lien granted
pursuant thereto upon any Interval in the Eligible Resort shall be released
from time to time by Lender from such security interest or lien only after
payment to Lender of a release price. Such release price shall be equal to the
amount, which shall be determined at the time of the first Resort Advance in
respect of such Resort Loan, necessary to fully repay such Resort Loan solely
through release payments in respect of eighty percent (80%) of the unsold
Intervals planned for such Eligible Resort and for which a deed shall not have
been conveyed at the time of such first Resort Advance (and if such Eligible
Resort is being developed in phases, the foregoing release price determination
shall be calculated in respect of each tranche of such Resort Loan and the
particular phase of the Eligible Resort to which it relates). Such Resort Loan
Documents shall also provide that either Bluegreen or the Eligible Bluegreen
Subsidiary under such Resort Loan shall make such principal payments of such
Resort Loan as shall be necessary so as to cause the outstanding principal
balance of such Resort Loan not to exceed certain maximum principal loan
amounts as of certain dates, which maximum principal loan amounts and dates
shall be in accordance with Lender's then existing guidelines for acquisition,
construction and development loans in the nature of such Resort Loan and shall
otherwise be agreed between Bluegreen and Lender (and if such Eligible Resort
is being developed in phases, the foregoing required principal payments shall
be calculated in respect of each tranche of such Resort Loan and the particular
phase of the Eligible Resort to which it relates).
1.5 COMMITMENT FEE. Bluegreen acknowledges and agrees that the
Commitment Fee of Two Hundred Fifty Thousand Dollars ($250,000) has been fully
earned by Lender. $100,000 of such Commitment Fee is due and payable on the
Facility Closing Date. The unpaid portion of the Commitment Fee shall be paid
by Bluegreen in installments equal to one percent (1%) of the amount of each
Resort Advance made with respect to each Resort Loan and, in any case, the
unpaid amount thereof shall be due and payable on the last day of the
Eligibility Period (which shall, for this purpose, exclude the Extension Period
and include, for the avoidance of doubt, the date on which this Facility shall
have been terminated under Section 7.1 as a result of the existence of a
Termination Event). Bluegreen hereby agrees that one percent (1%) of the amount
of each Resort Advance shall be retained by Lender and applied to the aforesaid
unpaid portion of the Commitment Fee (and Bluegreen shall instruct each
Eligible Bluegreen Subsidiary to consent to the same). Anything contained in
this Section 1.5 to the contrary notwithstanding, in no event shall the amount
payable in respect of the unpaid Commitment Fee after the Facility Closing Date
exceed One Hundred Fifty Thousand Dollars ($150,000).
2. FINANCING CLOSING CONDITIONS
The obligation of Lender to extend any Resort Loan hereunder to
Bluegreen or an Eligible Bluegreen Subsidiary in respect of an Eligible Resort
is subject to the satisfaction, in Lender's sole discretion, of all of the
conditions set forth below.
2.1 RESORT LOAN DOCUMENTS. Lender shall have received, in form and
substance satisfactory to Lender, counterparts of the Resort Loan Documents for
such Resort Loan
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executed by the Eligible Bluegreen Subsidiary and Bluegreen, as the case may
be, and each of such Resort Loan Documents shall be in form and substance
acceptable to Lender in Lender's sole discretion.
2.2 DELIVERIES PRIOR TO EACH RESORT LOAN. Prior to the extension of
such Resort Loan, Lender shall have received copies (certified to be true and
correct) of the Resort Purchase and Sale Agreement for such Eligible Resort,
the Resort Construction Contract for such Eligible Resort, the Resort
Architectural Contract for such Eligible Resort and all plans, specifications
and drawings for such Eligible Resort, the Approved Development Budget for such
eligible Resort, the Approved Sales and Marketing Budget for such Eligible
Resort, a Sources and Uses of Cash Projection for such Eligible Resort, all
other deliveries required to be delivered in order for Bluegreen to demonstrate
to Lender that such Eligible Resort satisfies Lender's requirements with
respect thereto and such other instruments and information applicable to such
Resort Loan as are identified on the form of closing checklist set forth on
SCHEDULE 2.2 attached hereto and made a part hereof. For the avoidance of
doubt, Bluegreen and Lender may mutually agree to waive any item currently
listed on Schedule 2.2 with respect to the closing of any Resort Loan or to
defer the satisfaction of any such item to after such closing or to otherwise
add items to said Schedule to be satisfied on either a pre- or post-closing
basis.
2.3 RESORT LOAN MORTGAGE. Lender shall have received satisfactory
evidence that the lien of the Resort Loan Mortgage constitutes a first priority
lien in the maximum amount of such Resort Loan in and to such Eligible Resort,
which satisfactory evidence shall include receipt by Lender of a mortgagee's
title insurance policy in form and content acceptable to Lender in Lender's
sole discretion in respect of such Resort Loan and such Eligible Resort
(together with such endorsements thereto as Lender may request in its sole
determination).
2.4 OTHER SECURITY DOCUMENTS. In addition to, but without duplication
of, the Resort Loan Documents in respect of such Resort Loan, Bluegreen and/or
such Eligible Bluegreen Subsidiary shall have executed and delivered to Lender
such other instruments as may be necessary or required by Lender in order to
create, maintain, perfect or protect a lien or security interest in any
collateral relating to such Eligible Resort, including, without limitation, an
assignment of rents from such Eligible Resort, an assignment of all
construction contracts, marketing contracts, construction management contracts,
master marketing and sales contracts, property management contracts, resort
affiliation contracts and Unit reservation contracts and other contracts
relating to, in each case, such Eligible Resort and UCC-1 financing statements
required in connection with such Resort Loan. For the avoidance of doubt, any
contract to be collaterally assigned under this Section 2.4 shall relate to a
specific Eligible Resort and shall act as collateral for the Resort Loan in
respect of such Eligible Resort and shall not be assigned prior to its actually
coming into existence, PROVIDED that no collateral assignment of the
reservation system of the Club shall be provided to the Lender. For the
avoidance of doubt, Bluegreen agrees not to allow the reservation system to be
encumbered at any time by any lien, security interest or other encumbrance.
2.5 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained herein and in the Resort Loan Documents for such Resort Loan shall be
true,
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correct and complete in all material respects on and as of the Resort Loan
Closing Date for such Resort Loan.
2.6 NO TERMINATION EVENTS. No Termination Event shall be in existence
as of the Resort Loan Closing Date for such Resort Loan.
2.7 PERFORMANCE OF AGREEMENTS. Bluegreen and the Eligible Bluegreen
Subsidiary shall have performed all agreements, paid all fees, costs and
expenses and satisfied all conditions which this Agreement or any Resort Loan
Document for such Resort Loan provides shall be paid, performed or satisfied as
of the Resort Loan Closing Date for such Resort Loan.
2.8 OPINIONS OF COUNSEL. Lender shall have received from independent
counsel for Bluegreen and such Eligible Bluegreen Subsidiary, one or more
closing opinions, each dated as of the Resort Loan Closing Date for such Resort
Loan as to such matters in respect of Bluegreen, such Eligible Bluegreen
Subsidiary, such Resort Loan, the Resort Loan Documents for such Resort Loan,
and such Eligible Resort as Lender may request in its sole discretion.
2.9 ELIGIBLE BLUEGREEN SUBSIDIARY. To the extent that an Eligible
Bluegreen Subsidiary shall be the borrower under such Resort Loan, such
Eligible Bluegreen Subsidiary shall be acceptable to Lender in Lender's sole
discretion, and Lender shall have received such financial statements, credit
reports, UCC searches and other similar background information relating to such
Eligible Bluegreen Subsidiary as Lender shall require in Lender's sole
discretion; such Eligible Bluegreen Subsidiary shall have also provided Lender
with copies of its organizational documents, and the same shall be acceptable
to Lender in Lender's sole discretion.
2.10 BLUEGREEN GUARANTEE AND EQUITY CONTRIBUTION. To the extent that
an Eligible Bluegreen Subsidiary shall be the borrower under such Resort Loan,
Bluegreen shall have executed and delivered to Lender a guarantee of such
Resort Loan and all obligations of such Eligible Bluegreen Subsidiary under the
Resort Loan Documents for such Resort Loan, and the guaranty agreement related
thereto shall be in form and substance acceptable to Lender in its sole
discretion. In addition thereto, Bluegreen shall have executed and delivered to
Lender a guarantee of the completion of the construction of such Eligible
Resort, and the guaranty agreement related thereto shall be in form and
substance acceptable to Lender in its sole discretion. To the extent that an
Eligible Bluegreen Subsidiary shall be the borrower under such Resort Loan,
Bluegreen shall have delivered to Lender proof of its contribution in cash to
such Eligible Bluegreen Subsidiary of the minimum capital and equity
contribution required by Lender and shall have delivered to Lender a copy of
its further agreement to contribute the remaining amount of capital or equity,
in cash, as shall have been agreed by Lender and Bluegreen (which agreement
shall be in form and substance satisfactory to Lender).
2.11 CROSS COLLATERALIZATION AND CROSS DEFAULTS. The Resort Loan
Documents for such Resort Loan shall provide that the collateral securing such
Resort Loan and the guarantee of Bluegreen in respect thereof, if any, shall
also secure all other past and future
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Resort Loans, all other past and future guarantees of Bluegreen in respect
thereof and the Warehouse Facility. The Resort Loan Documents for all
previously extended Resort Loans shall provide that the collateral securing
such previously extended Resort Loans and the guarantees of Bluegreen in
respect thereof, if any, shall also secure such Resort Loan and the guarantee
of Bluegreen in respect thereof and the Warehouse Facility. The Resort Loan
Documents for such Resort Loan shall provide that an event of default will
exist thereunder if any other default exists under any other past, current or
future Resort Loan Documents or exists under the Warehouse Facility.
Notwithstanding any right of Lender under the Warehouse Facility, Lender shall
not claim collateral under the Warehouse Facility as security for any Resort
Loan and/or the guarantee of Bluegreen in respect thereof unless there shall be
an actual principal amount outstanding under such Resort Loan and a "Material
Project Loan Default," as such term is defined in the Warehouse Facility, shall
exist in respect of such Resort Loan.
2.12 OTHER ELIGIBLE RESORT DUE DILIGENCE INFORMATION. Bluegreen and/or
the Eligible Bluegreen Subsidiary shall have submitted to Lender all other
documents, instruments and information as Lender typically requires in its sole
discretion for acquisition, construction and development loans in the nature of
such Resort Loan.
2.13 PERFORMANCE OF ELIGIBLE RESORTS. If any one or more of the
following events occur, then the Lender may suspend its consideration of
extending such Resort Loan or any other future Resort Loans until such events
and their effects on Bluegreen, such Eligible Bluegreen Subsidiary (with
respect to the particular Resort Loan at issue) or such Eligible Resort are
adequately addressed in the Lender's sole determination:
(i) the construction and development of any Eligible Resort
which is a subject of an outstanding Resort Loan, and/or the sales of
Intervals therein shall have failed to meet or exceed the performance
targets or timeline for such construction and development or sales set
forth in the Resort Loan Documents for such Resort Loan and/or
(ii) Bluegreen or any Eligible Bluegreen Subsidiary to which
an outstanding Resort Loan shall have been extended in respect of an
Eligible Resort shall have failed to achieve, for the most recent
applicable reporting period of such Eligible Bluegreen Subsidiary, the
Minimum Net Earnings for Bluegreen or such Eligible Bluegreen
Subsidiary (as the case may be) in respect of such Eligible Resort as
established in the Resort Loan Documents of such Resort Loan. "Minimum
Net Earnings" shall mean, with respect to any period, any Eligible
Bluegreen Subsidiary and any Eligible Resort owned by such Eligible
Bluegreen Subsidiary, such Eligible Bluegreen Subsidiary's pre-tax
income derived from such Eligible Resort, determined in accordance
with GAAP for such period, being not less than a mutually agreed upon
percentage of the total revenues of such Eligible Bluegreen Subsidiary
from such Eligible Resort for such period.
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For the avoidance of doubt, if any one or more of the events described
in clauses (i) and/or clause (ii) above shall exist with respect to
any outstanding Resort Loan, (A) no "Event of Default," as defined in
the Resort Loan Documents of such outstanding Resort Loan, will be
deemed to have occurred under such Resort Loan Documents solely by
virtue of the existence of any such events and such Resort Loan will
not be accelerated pursuant to such Resort Loan Documents solely by
virtue of the existence of any such events if, but only if, all
payments due under such outstanding Resort Loan are being paid when
due and no other "Event of Default" shall exist thereunder, (B) Lender
shall not be obligated under the Resort Loan Documents of such
outstanding Resort Loan to continue to make Resort Advances thereunder
for so long as any of such events shall exist and (C) no other Resort
Loan shall be affected by the occurrence of any such event.
2.14 EXPENSES. Bluegreen and such Eligible Bluegreen Subsidiary for
such Resort Loan shall have paid all costs and expenses incurred by or on
behalf of Lender in connection with such Resort Loan, including, without
limitation, all costs and expenses of Lender's counsel and Lender's Architect.
2.15 PROCEEDINGS SATISFACTORY. Such Resort Loan and such Eligible
Resort, all Resort Loan Documents in respect thereof, and all due diligence
information in respect thereof shall be satisfactory to Lender in Lender's sole
discretion. Lender and its counsel shall have received copies of such
documents, instruments and information as Lender or its counsel may request in
connection therewith, and all such documents, instruments and information shall
be in form and substance satisfactory to Lender and its counsel.
3. FINANCIAL COVENANTS
Bluegreen covenants that on and after the Facility Closing Date and so
long as any Resort Loan shall be outstanding or there are any outstanding
obligations of Bluegreen under any guarantee of any such Resort Loan, Bluegreen
will comply with the covenants set forth in Sections 5.7, 5.8 and 5.9 of the
Warehouse Facility, and such covenants and the definitions used therein are
hereby incorporated herein in their entirety as if set forth at length herein.
The Resort Loan Documents for each Resort Loan shall incorporate by reference
the aforesaid Sections 5.7, 5.8 and 5.9, as they pertain to Bluegreen, and
shall have such other covenants and undertakings of Bluegreen or the applicable
Eligible Bluegreen Subsidiary as may be agreed upon by Bluegreen and Lender,
including, without limitation, certain cash flow coverage and related liquidity
financial covenants and other customary financial and collateral related
covenants that prudent construction lenders customarily include in construction
and development loans. All covenants shall be tested no less frequently than
quarterly.
4. REPRESENTATIONS AND WARRANTIES
Bluegreen hereby represents and warrants to Lender as of the date
hereof and as of the date on which any Resort Loan is extended to an Eligible
Bluegreen Subsidiary hereunder:
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4.1 EXISTENCE. Bluegreen is a Massachusetts corporation duly formed,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts with its principal place of business at 4960 Blue Lake Drive,
Boca Raton, Florida 33431. Bluegreen is in good standing under the laws of the
State of Florida and is authorized to transact business in the States of
Florida and in each other state where the failure to so comply would have a
Material Adverse Effect.
4.2 AUTHORIZATION AND ENFORCEABILITY.
(A) EXECUTION. This Agreement has been duly authorized,
executed and delivered and constitutes the duly authorized, valid and
legally binding obligations of Bluegreen, enforceable against
Bluegreen in accordance with its terms.
(B) OTHER AGREEMENTS.The execution, delivery and compliance
with the terms and provisions of this Agreement, the Warehouse Facility or the
Purchase Facility will not (i) to the best of Bluegreen's knowledge, violate
any applicable law or regulation, order or other decree of any court or
governmental entity, or (ii) conflict or be inconsistent with, or result in any
default under, any contract, agreement or commitment to which Bluegreen is
bound.
4.3 FINANCIAL STATEMENTS AND BUSINESS CONDITION. The most recent
consolidated financial statements of Bluegreen and its consolidated
subsidiaries have been delivered to Lender and fairly present the financial
condition and (if applicable) results of operations of such Persons as of the
date or dates thereof and for the periods covered thereby. All such financial
statements were prepared in accordance with GAAP. Except for any such changes
heretofore expressly disclosed in writing to Lender, there has been no material
adverse change in the financial condition of Bluegreen or its consolidated
subsidiaries from the financial condition shown in such consolidated financial
statements. Bluegreen is able to pay all of its debts as they become due, and
Bluegreen shall maintain such solvent financial condition, giving effect to all
obligations, absolute and contingent, of Bluegreen. Bluegreen's obligations
under this Agreement will not render it unable to pay its debts as they become
due. The present fair market value of Bluegreen's assets is greater than the
amount required to pay its total liabilities.
4.4 LITIGATION AND PROCEEDINGS. Except as disclosed on Schedule 1
attached hereto, there are no actions, suits, proceedings, orders or
injunctions pending or, to the best of Bluegreen's knowledge, threatened
against or affecting Bluegreen or any Affiliate, at law or in equity, or before
or by any Governmental Authority which, if adversely determined, could have,
either individually or in the aggregate, a Material Adverse Effect. Neither
Bluegreen nor any Affiliate has received any notice from any court or
Governmental Authority alleging that such Person or any Affiliate has violated
any applicable Governmental Regulation, any of the rules or regulations
thereunder, or any other applicable laws, the result of which, if adversely
determined, would have, individually or in the aggregate, a Material Adverse
Effect.
4.5 NO BREACH OR DEFAULT. The consummation of the transactions
contemplated hereby, and the performance of any of the terms and conditions
hereof, will not result in a breach of, or constitute a default in, Bluegreen's
organizational documents or in any material
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mortgage, deed of trust, lease, promissory note, loan agreement, credit
agreement, partnership agreement or other agreement to which Bluegreen is a
party or by which Bluegreen may be bound or affected. Bluegreen is not in
default of any order of any court or any requirement of any Governmental
Authority.
4.6 LICENSES AND PERMITS. Bluegreen possesses all requisite
franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders as are
necessary to carry on its business as now being conducted, except where the
failure to possess the same would not, individually or in the aggregate, have a
Material Adverse Effect.
4.7 DISCLOSURE. There is no fact of which Bluegreen is aware that
Bluegreen has not disclosed to Lender in writing that could materially
adversely affect the property, business or financial condition of Bluegreen.
4.8 EMPLOYEE BENEFIT PLANS. Bluegreen is in compliance in all material
respects with all applicable provisions of the Employee Retirement Income
Security Act, the Internal Revenue Code and all other applicable laws and the
regulations and interpretations thereof with respect to all employee benefit
plans adopted by Bluegreen for the benefit of its employees. No material
liability has been incurred by Bluegreen which remains unsatisfied for any
funding obligation, taxes or penalties with respect to any such employee
benefit plan.
4.9 YEAR 2000 COMPLIANCE. Bluegreen has made an assessment of the
microchip and computer-based systems and the software used in its business and
based upon such assessment believes that it will be "Year 2000 Compliant" by
January 1, 2000. For purposes of this paragraph, "Year 2000 Compliant" means
all software, embedded microchips and other processing capabilities utilized by
and material to the business operations or financial conditions of Bluegreen
are able to interpret, store, transmit, receive and manipulate data on and
involving all calendar dates correctly and without causing any abnormal ending
scenarios in relation to dates in and after the Year 2000. From time to time,
at the request of Lender, Bluegreen shall provide to Lender such updated
information as is requested regarding the status of its efforts to become Year
2000 Compliant.
5. REPORTING REQUIREMENTS
So long as any Resort Loan is outstanding or there are any outstanding
obligations of Bluegreen under any guarantee in respect of a Resort Loan,
Bluegreen shall deliver to Lender the following:
(a) MONTHLY CONSTRUCTION ACTIVITY REPORTS. Within fifteen
(15) days after the end of each month, a summary of construction
activity at each Eligible Resort which is the subject of a Resort Loan
for such month, in form, content and detail acceptable to Lender in
Lender's sole discretion.
(b) MONTHLY SALES ACTIVITY REPORTS. Within fifteen (15) days
after the end of each month, a summary of sales activity at each
Eligible Resort which is the subject of
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a Resort Loan for such month, in form, content and detail acceptable
to Lender in Lender's sole discretion.
(c) QUARTERLY FINANCIAL REPORTS. Within forty-five (45) days
after the end of each fiscal quarterly period, unaudited financial
statements of Bluegreen and each Eligible Bluegreen Subsidiary that is
an obligor under a Resort Loan, certified by the chief financial
officer of Bluegreen to be true and correct.
(d) YEAR-END FINANCIAL REPORTS. As soon as available and in
any event within one hundred and twenty (120) days after the end of
each fiscal year of Bluegreen and each Eligible Bluegreen Subsidiary
that is an obligor under a Resort Loan: (i) the consolidated and
consolidating balance sheets of Bluegreen and its consolidated
subsidiaries and the balance sheets of each such Eligible Bluegreen
Subsidiary as of the end of such year and the related consolidated and
consolidating statements of income and cash flow for such fiscal year
for Bluegreen and its consolidated subsidiaries and the related
statements of income and cash flow for such fiscal year for each such
Eligible Bluegreen Subsidiary; (ii) a schedule of all outstanding
indebtedness of Bluegreen and such Eligible Bluegreen Subsidiary
describing in reasonable detail each such debt or loan outstanding and
the principal amount and amount of accrued and unpaid interest with
respect to each such debt or loan; (iii) in the case of Bluegreen,
copies of reports and any management letters from a firm of
independent certified public accountants, selected by Bluegreen, which
reports shall be unqualified as to going concern and scope of audit
and shall state that such financial statements present fairly the
financial position of Bluegreen and its consolidated subsidiaries, as
of the dates indicated and the results of Bluegreen's operations and
cash flow for the periods indicated in conformity with GAAP; and (iv)
in the case of each such Eligible Subsidiary, a certificate from the
chief financial officer of Bluegreen certifying that such financial
statements present fairly the financial position of such Eligible
Bluegreen Subsidiary, as of the dates indicated and the results of
such Eligible Bluegreen Subsidiary's operations and cash flow for the
periods indicated in conformity with GAAP;
(e) AUDIT REPORTS. Promptly upon receipt thereof, one (1)
copy of each other report or management letter submitted to Bluegreen
or such Eligible Bluegreen Subsidiary by independent public
accountants in connection with any annual, interim or special audit
made by them of the books of Bluegreen or such Eligible Bluegreen
Subsidiary.
(f) OTHER REPORTS. Such other reports, statements, notices or
written communications relating to Bluegreen or such Eligible
Bluegreen Subsidiary, as Lender may require, in its reasonable
discretion.
(g) SEC REPORTS. Promptly upon their becoming available one
(1) copy of each financial statement, report, notice or proxy
statement sent by Bluegreen to security holders generally, and of each
regular or periodic report and any registration statement, prospectus
or written communication (other than transmittal letters) in
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respect thereof filed by Bluegreen with, or received by Bluegreen in
connection therewith from, any securities exchange or the Securities
and Exchange Commission or any successor agency.
(h) TAX RECEIPTS. To the extent reasonably requested by the
Lender, Bluegreen or each Eligible Bluegreen Subsidiary, for so long
as such Person shall be in Control of an Eligible Resort, shall
furnish Lender with copies of receipts or tax statements marked "Paid"
to evidence the payment of all taxes levied on or in respect of each
such Eligible Resort prior to the date such taxes become delinquent.
With respect to any Eligible Resort in respect of which neither
Bluegreen nor any Eligible Bluegreen Subsidiary shall be in Control,
Bluegreen or such Eligible Bluegreen Subsidiary, as the case may be,
shall use their best efforts to obtain such evidence of payment of
taxes from the relevant Resort Association and forward the same to
Lender (if so requested by Lender).
(i) NOTICE OF LITIGATION, CLAIMS, AND FINANCIAL CHANGE.
Notice of (i) any litigation against Bluegreen or any Eligible
Bluegreen Subsidiary or affecting any Eligible Resort, which, if
determined adversely, might have a material adverse effect upon the
financial condition of Bluegreen or such Eligible Bluegreen Subsidiary
or upon such Eligible Resort, (ii) any claim or controversy which
might become the subject of such litigation, and (iii) any material
adverse change in the financial condition of Bluegreen or any Eligible
Bluegreen Subsidiary.
(j) SEMI-ANNUAL RESORT ASSOCIATION REPORTS. As soon as
available and in any event within ninety (90) days after the end of
each semiannual fiscal period of the Resort Association of each
Eligible Resort in respect of which there is an outstanding Resort
Loan (PROVIDED, THAT, to the extent any such Eligible Resort is not
Controlled by Bluegreen or an Eligible Bluegreen Subsidiary,
Bluegreen's obligation under this clause (j) shall be to use its best
efforts to obtain the following statements): (I) the balance sheet of
such Resort Association as of the end of such semiannual period and
the related statement of income and cash flow for such semiannual
period, prepared in accordance with GAAP and subject to normal
year-end adjustments; and (II) a schedule of all outstanding
indebtedness of such Resort Association describing in reasonable
detail each such debt or loan outstanding and the principal amount and
amount of accrued and unpaid interest with respect to each such debt
or loan.
(k) YEAR-END RESORT ASSOCIATION REPORTS. As soon as available
and in any event within one hundred and twenty (120) days after the
end of each fiscal year of the Resort Association of each Eligible
Resort for which there is an outstanding Resort Loan (PROVIDED, THAT,
to the extent any such Eligible Resort is not Controlled by Bluegreen
or an Eligible Bluegreen Subsidiary, Bluegreen's obligation under this
clause (k) shall be to use its best efforts to obtain the following
statements): (I) the balance sheet of such Resort Association as of
the end of such year and the related statement of income and cash flow
for such fiscal year; (II) a schedule of all outstanding indebtedness
of such Resort Association describing in reasonable detail each such
debt or loan outstanding and the principal amount and amount of
accrued and unpaid
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interest with respect to each such debt or loan; and (III) copies of
reports from a firm of independent certified public accountants, which
report shall be unqualified as to going concern and scope of audit and
shall state that such financial statements present fairly the
financial position of such Resort Association as of the dates
indicated and the results of its operations and cash flow for the
periods indicated in conformity with GAAP.
6. TERMINATION EVENTS
A "TERMINATION EVENT" shall exist hereunder upon the occurrence and
during the continuance of any one or more of the following:
(a) Any indebtedness evidenced, governed or secured by any of
the Resort Loan Documents is not paid within five (5) business days of
the date when due, whether by acceleration or otherwise.
(b) Any statement, representation or warranty in this
Agreement, any of the Resort Loan Documents, any financial statement
or any other writing delivered by Bluegreen or any Eligible Bluegreen
Subsidiary to Lender in connection with this Agreement is false,
misleading or incorrect in any material respect as of the date made,
PROVIDED that a Termination Event shall not exist in respect of this
clause (b) unless the effect or result of the truthful or accurate
facts that were so misrepresented would, individually or in the
aggregate, have a Material Adverse Effect.
(c) Bluegreen or any Eligible Bluegreen Subsidiary:
(1) does not pay its debts as they become due or
admits in writing its inability to pay its debts or makes a
general assignment for the benefit of creditors; or
(2) commences any case, proceeding or other action
seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any
Debtor Relief Laws; or
(3) in any involuntary case, proceeding or other
action commenced against it which seeks to have an order for
relief entered against it, as debtor, or seeks
reorganization, arrangement, liquidation, dissolution or
composition of it or its debts under any Debtor Relief Laws,
(i) fails to obtain a dismissal of such case, proceeding or
other action within sixty (60) days of its commencement, or
(ii) converts the case from one chapter of the Federal
Bankruptcy Code to another chapter, or (iii) is the subject
of an order for relief; or
(4) conceals, removes, or permits to be concealed or
removed any part of its property, with intent to hinder,
delay or defraud its creditors or any of them, or makes or
suffers a transfer of any of its property which may be
fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or
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makes any transfer of its property to or for the benefit of a
creditor at a time when other creditors similarly situated
have not been paid; or suffers or permits, while insolvent,
any creditor to obtain a lien upon any of its property
through legal proceedings which is not vacated within sixty
(60) days from the date thereof; or
(5) has a trustee, receiver, custodian or other
similar official appointed for, or take possession of, all or
any part of its property or has any court take jurisdiction
of any other of its property which continues for a period of
sixty (60) days (except where a shorter period is specified
in the immediately following subparagraph (6)); or
(6) fails to have discharged within a period of
thirty (30) days any attachment, sequestration, or similar
writ levied upon any property of such owner.
(d) The issuance, filing or levy against Bluegreen or any
Eligible Bluegreen Subsidiary of one or more attachments, injunctions,
executions, tax liens or judgments for the payment of money
cumulatively in excess of $1,000,000, which is not discharged in full
or stayed within thirty (30) days after issuance or filing.
(e) Any default by Bluegreen or any Affiliate in the payment
of indebtedness for borrowed money in an aggregate principal amount in
excess of $1,000,000 (including, without limitation, any default by
Bluegreen or any Affiliate in the payment of indebtedness for borrowed
money owing to Lender under the Warehouse Facility or any other
agreement) after the expiration of any applicable grace or cure
period; any other default under such indebtedness which accelerates or
permits the acceleration (after the giving of notice or passage of
time, or both) of the maturity of such indebtedness or any default
under such indebtedness which permits the holders of such indebtedness
to elect a majority of the Board of Directors of Bluegreen; or the
occurrence of any default (after the expiration of any applicable
grace or cure period) or any event of default under any of the Resort
Loan Documents. For the avoidance of doubt, a default or the
occurrence of an Event of Termination under the Purchase Facility
shall not constitute an Event of Termination under this Section 6(e).
(f) Purchases of receivables under the Purchase Facility
shall have been suspended, deferred or terminated or the Purchase
Facility shall have been terminated, PROVIDED that this clause (f)
shall not be deemed to have been activated if, but only if,
receivables cannot be purchased under the Purchase Facility by virtue
of the maximum limitation on the amount of purchases set forth in the
Purchase Facility having been reached, or because any Eligible Resort
hereunder shall not have been approved by Lender as an "Additional
Resort" under the Purchase Facility, or because Lender shall have
reviewed and rejected receivables associated with the Club.
(g) Any failure to comply with the reporting covenants set
forth in Section 5 hereof and such failure is not remedied within 30
days after the Lender shall have
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<PAGE> 15
delivered a written notice to an officer of Bluegreen pursuant to
Section 8.1 hereof informing the same of such failure, PROVIDED that,
if such failure is incapable of being remedied within such 30-day
period and Bluegreen shall have commenced and is diligently pursing
the process of remedying the same within said 30-day period, Bluegreen
shall have an additional 60 days after the end of said 30-day period
in which to remedy such failure and no Termination Event shall be
deemed to have occurred during such additional 60 days for so long as
Bluegreen is diligently pursuing the remedying of such failure.
(h) Any failure to comply with the financial covenants set
forth in Section 3 hereof.
7. RIGHTS AND REMEDIES OF LENDER
7.1 RIGHTS OF LENDER. Upon the occurrence of a Termination Event of
the type described in clause (c) of Section 6 hereof, (i) all of the Resort
Loans at the time outstanding shall automatically become immediately due and
payable, together with interest accrued thereon and, to the extent permitted by
law, any premium payable with respect thereto, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived, (ii)
Lender's obligation to extend future Resort Loans, Lender's obligations to make
Resort Advances under existing Resort Loans and all other obligations of Lender
hereunder and under the Resort Loan Documents shall be terminated, and (iii)
Lender shall have the right to exercise such remedies under or in respect of
the Resort Loan Documents as may be permitted thereunder or under applicable
law, all as more particularly set forth in the Resort Loan Documents. Upon the
occurrence of a Termination Event of any type other than the Termination Events
described in clause (c) of Section 6 hereof, Lender shall have the right, as
more particularly set forth in and in addition to any other right or remedy of
Lender set forth in the Resort Loan Documents, but not the obligation, to (a)
declare all of the then outstanding Resort Loans, including all interest
accrued thereon and, to the extent permitted by law, any premium payable with
respect thereto, immediately due and payable, (b) terminate Lender's obligation
to extend future Resort Loans and to make Resort Advances in respect of
existing Resort Loans and to terminate all other obligations of Lender
hereunder and under the Resort Loan Documents, and (c) exercise such remedies
under or in respect of the Resort Loan Documents as may be permitted thereunder
or under applicable law.
7.2 NO WAIVER OR EXHAUSTION. No waiver by Lender of any of its rights
or remedies hereunder, in the Resort Loan Documents, in the Warehouse Facility,
or otherwise, shall be considered a waiver of any other or subsequent right or
remedy of Lender; no delay or omission in the exercise or enforcement by Lender
of any rights or remedies shall ever be construed as a waiver of any right or
remedy of Lender; and no exercise or enforcement, of any such rights or
remedies shall ever be held to exhaust any right or remedy of Lender.
7.3 MARSHALLING WAIVER. Bluegreen waives any and all rights to require
the marshalling of assets in connection with the exercise of any of the
remedies hereunder.
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8. MISCELLANEOUS
8.1 NOTICES. Any notice or other communication required or permitted
to be given shall be in writing addressed to the respective party as set forth
below and may be personally served, telecopied, or sent by overnight courier,
or sent by registered or certified U.S. Mail return receipt requested, and
shall be deemed given: (a) if served in person, when served; (b) if telecopied,
on the date of transmission if before 3:00 p.m. (Chicago time) on a business
day otherwise, on the next business day; PROVIDED that a confirmation of the
receipt of any such telecopy is obtained and retained by the sending party and
that a hard copy of such notice is also sent pursuant to (c) or (d) below; (c)
if by overnight courier, on the first business day after delivery to the
courier; or (d) if by certified or registered U.S. Mail, return receipt
requested, on the fourth (4th) day after deposit in the mail postage prepaid.
Notices to Bluegreen: Bluegreen Corporation
4960 Blue Lake Drive
Boca Raton, Florida 33431
Attn: Patrick Rondeau, Esq.
Telephone No.: (561) 912-8005
Telecopy: (561) 912-8100
Notices to Lender: Heller Financial, Inc.
Heller Sales Finance
Attn: Portfolio Manager, Vacation Ownership
HSF Loan No. 98-087
500 West Monroe St., 31st Fl.
Chicago, Illinois 60661
Telecopy: (312) 441-7924
With a copy to: Heller Financial, Inc.
Heller Sales Finance
Attn: Vacation Ownership Legal Representative
HSF Loan No. 98-087
500 West Monroe St. 31st Fl.
Chicago, Illinois 60661
Telecopy: (312) 441-7924
8.2 ENTIRE AGREEMENT AND MODIFICATIONS. This Agreement and the Resort
Loan Documents constitute the entire understanding and agreement between the
undersigned with respect to the transactions arising in connection with the
Resort Loans and supersede all prior written or oral understandings and
agreements between the undersigned in connection therewith. No provision of
this Agreement or the Resort Loan Documents may be modified, waived,
terminated, supplemented, changed or amended except by a written instrument
executed by all parties hereto or thereto. Notwithstanding the foregoing, in
the event there is a conflict between this Agreement and the Resort Loan
Documents with respect to a certain Resort Loan, the terms of the Resort Loan
Documents for such Resort Loan shall govern.
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<PAGE> 17
8.3 SEVERABILITY. In case any of the provisions of this Agreement
shall for any reason be held to be invalid, illegal, or unenforceable, such
invalidity, illegality, or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
8.4 ELECTION OF REMEDIES. Lender shall have all of the rights and
remedies granted herein and in the Resort Loan Documents and available at law
or in equity, and these same rights and remedies shall be cumulative and may be
pursued separately, successively, or concurrently against Bluegreen, any
Eligible Bluegreen Subsidiary, or any property encumbered by the Resort Loan
Documents, at the sole discretion of Lender. The exercise or failure to
exercise any of the same shall not constitute a waiver or release thereof or of
any other right or remedy, and the same shall be nonexclusive.
8.5 FORM AND SUBSTANCE. All documents, certificates, insurance
policies, evidence, and other items required under this Agreement to be
executed and/or delivered to Lender shall be in form and substance satisfactory
to Lender in Lender's sole discretion.
8.6 NO THIRD PARTY BENEFICIARY. This Agreement is for the sole benefit
of Lender and Bluegreen and is not for the benefit of any third party.
8.7 BLUEGREEN IN CONTROL. In no event shall Lender's rights and
interests under the Resort Loan Documents be construed to give Lender the right
to, or be deemed to indicate that Lender is in control of the business,
management or properties of Bluegreen or any Eligible Bluegreen Subsidiary or
has power over the daily management functions and operating decisions made by
Bluegreen.
8.8 NUMBER AND GENDER. Whenever used herein, the singular number shall
include the plural and the plural the singular, and the use of any gender shall
be applicable to all genders.
8.9 CAPTIONS. The captions, headings, and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit,
amplify, or modify the terms and provisions hereof.
8.10 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois (without regard to
conflicts of law principles) and the laws of the United States applicable to
transactions within such state.
8.11 VENUE. BLUEGREEN HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN
SUCH COURTS. BLUEGREEN EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. BLUEGREEN
HEREBY WAIVES PERSONAL
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<PAGE> 18
SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE UPON BLUEGREEN BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED TO BLUEGREEN, AT THE ADDRESS SET FORTH IN THIS AGREEMENT
AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN
POSTED.
8.12 JURY TRIAL WAIVER. BLUEGREEN AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. BLUEGREEN AND LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH
WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BLUEGREEN
AND LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING
THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS.
8.13 ATTORNEYS' FEES. In any action hereunder between the parties
hereto, the prevailing party shall be entitled to reasonable attorneys' fees
and costs including those for pretrial, trial and appellate proceedings.
8.14 COUNTERPARTS. This Agreement may be signed in multiple
counterparts which taken together shall constitute the entire agreement between
the parties.
8.15 PARTICIPATING LENDERS. Lender may sell participations in any one
or more of the Resort Advances, PROVIDED that the Person acquiring such
participation is not a competitor of Bluegreen, as determined by Bluegreen in
its reasonable discretion, and Lender continues to function as the effective
administrative and collateral agent in respect of all such Resort Advances; all
amounts payable by Bluegreen or any Eligible Bluegreen Subsidiary in respect of
any Resort Advance shall be determined as if the Lender had not sold such
participations. The Lender shall have the right to assign all or any portion of
its rights in and to any Resort Loan to an Eligible Assignee (as such term is
defined in the Warehouse Facility), PROVIDED that Lender and its affiliates
agree to retain at all times not less than 30% of the Resort Advances under any
such Resort Loan for its own account or an account of an affiliate of Lender
and to otherwise function as the administrative and collateral agent in respect
of all of such Resort Loans and PROVIDED that there shall be no more than 5
such Eligible Assignees at any one time. Any Eligible Assignee may assign its
rights and delegate its obligations under any Resort Loan to any other Eligible
Assignee, PROVIDED that such assigning Eligible Assignee shall first obtain the
written consent of Lender. Except as provided in this Section 8.15, the Lender
shall not, as between Bluegreen and the Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participations in, all or any part of any Resort
Loan. The Lender agrees to take and cause its affiliates to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" or "secret" by Bluegreen or any
Eligible Bluegreen Subsidiary and neither Lender nor any of its affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement or any of the Resort Loan Documents
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<PAGE> 19
or in connection with other business now or hereafter existing or contemplated
with Bluegreen or any Eligible Bluegreen Subsidiary, except to the extent such
information
(a) was or becomes generally available to the public other
than as a result of disclosure by the Lender or any of its affiliates or
(b) was or becomes available on a non-confidential basis from
a source other than Bluegreen or an Eligible Bluegreen Subsidiary, PROVIDED
that such source is not bound by a confidentiality agreement with Bluegreen or
any Eligible Bluegreen Subsidiary known to the Lender;
PROVIDED, HOWEVER, that the Lender may disclose such information
(i) at the request or pursuant to any request of a regulatory
authority to which Lender is subject or in connection with an examination of
the Lender by such authority;
(ii) pursuant to subpoena or other court process;
(iii) when required to do so in accordance with the
provisions of any applicable requirement of law;
(iv) to the extent reasonably required in connection with any
litigation or proceeding to which the Lender or any affiliate may be party in
connection with the transactions contemplated by this Agreement;
(v) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any Resort Loan Documents;
(vi) to the Lender's independent auditors and other
professional advisors;
(vii) to any participant or Eligible Assignee, actual or
potential, PROVIDED that such participant or Eligible Assignee agrees in
writing to keep such information confidential to the same extent required of
the Lender hereunder;
(viii) as to the Lender or its affiliate, as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which Bluegreen or any Eligible Bluegreen Subsidiary is a
party or deemed party with the Lender and its affiliates; and
(ix) to its affiliates, PROVIDED that such affiliates agree
in writing to be bound by the confidentiality provisions hereof.
8.16 CONSENT TO ADVERTISING AND PUBLICITY. Lender may issue and
disseminate to the public press releases and other information describing the
credit accommodations entered into pursuant to this Agreement and/or pursuant
to any Resort Loan, PROVIDED that Bluegreen shall approve the description of
such credit accommodation, which approval shall not be unreasonably withheld.
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<PAGE> 20
IN WITNESS WHEREOF, the parties set their hands as of the date above
first written.
HELLER FINANCIAL, INC.
By: /S/ ROBERT J. DENNIS
-----------------------------------------
Name: Robert J. Dennis
Its: Executive Vice President
BLUEGREEN CORPORATION
By: /S/ JOHN F. CHISTE
-----------------------------------------
Name: John F. Chiste
Its: Treasurer & Chief Financial Officer
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<PAGE> 21
APPENDIX
DEFINED TERMS
For purposes of this Agreement, the following terms shall have the
respective meanings assigned to them:
AFFILIATE. Any individual, trust, estate, partnership, limited
liability company, corporation or any other incorporated or unincorporated
organization that directly or indirectly, through one or more intermediaries,
Controls or is Controlled by or is under common Control with Bluegreen, any
officer, director, partner or shareholder of Bluegreen, or any relative of any
of the foregoing. The term "Control" means possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person or a Resort, whether through the ownership of voting securities, by
contract or otherwise.
AGREEMENT. First paragraph of this Agreement.
APPROVED DEVELOPMENT BUDGET. As defined in clause (e) of the
definition of Eligible Resort.
APPROVED SALES AND MARKETING BUDGET. As defined in clause (f) of the
definition of Eligible Resort.
AVERAGE UNIT CONSTRUCTION COSTS. With respect to any Resort is the
quotient of (a) Resort Development Costs for such Resort DIVIDED BY (b) the
total number of Units in such Resort and to be constructed in respect of such
Resort Development Costs. If a Resort is to be developed in phases, "Average
Unit Construction" Costs shall be determined in respect of each phase of such
Resort.
BLUEGREEN. First paragraph of this Agreement.
CLUB. The RDI Vacation Club Trust, as established pursuant to that
certain RDI Vacation Club Trust Agreement (the "CLUB TRUST AGREEMENT") dated as
of May 18, 1994 by and among RDI Resources, Inc. and Vacation Trust, Inc., as
amended.
CLUB TRUST AGREEMENT. As defined in the definition of Club.
COMMITMENT FEE. A facility commitment fee with respect to Lender's
agreeing to make the Resort Loans upon and subject to the satisfaction of the
terms and conditions set forth herein equal to Two Hundred Fifty Thousand
Dollars ($250,000), One Hundred Thousand Dollars ($100,000) of which has been
paid to Lender on or before the Facility Closing Date and the balance of which
is payable in accordance with Section 1.5 hereof.
COMPONENT SITE. As defined in the Club Trust Agreement.
Appendix-1
<PAGE> 22
CONTROL. As defined in the definition of "Affiliate."
DEBTOR RELIEF LAWS. Any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization, or similar
laws affecting the rights or remedies of creditors generally, as in effect from
time to time.
DECLARATION. With respect to any Resort, that certain condominium
declaration to be recorded in the appropriate land records office of the state
in which such Resort is located, pursuant to which a condominium regimen will
be created in and to such Resort.
ELIGIBLE BLUEGREEN SUBSIDIARY. With respect to any Resort, a
subsidiary of Bluegreen (which may be a corporation, limited liability company
or limited partnership), (a) all of whose capital stock and other equity
interests and debt obligations (other than in respect of one or more Resort
Loans) are directly owned by or owed to Bluegreen, (b) whose sole business is
the ownership, construction, development and operation of one or more Eligible
Resorts and the sale of Intervals in respect thereof and (c) whose
paid-in-capital or equity, in cash, is not less than an amount which shall be
satisfactory to Lender in its sole discretion and which has an unconditional
and irrevocable obligation from Bluegreen to invest additional capital or
equity, in cash, such that the total amount of Bluegreen's cash paid-in-capital
or equity shall not be less than 15% of the Resort Development Costs for such
Resort (which obligation and the timing of the satisfaction thereof shall be
agreed upon by, and otherwise in form and substance satisfactory to, Bluegreen
and Lender).
ELIGIBLE RESORT. Any Resort which has satisfied the following
requirements (in the sole determination of Lender):
(a) such Resort is located in a state of the United States of
America;
(b) the acquisition and/or development of such Resort shall
be pursuant to a purchase and sale agreement (a "RESORT PURCHASE AND
SALE AGREEMENT") which shall have been delivered to Lender and shall
be satisfactory to Lender in its sole discretion; and title in such
Resort to be acquired by Bluegreen or the applicable Eligible
Bluegreen Subsidiary (including, without limitation, all title
exceptions set forth on Schedule B to an owner's mortgagee policy in
respect of such Resort) shall be satisfactory to Lender in its sole
discretion;
(c) the construction of such Resort shall be pursuant to a
contract (a "RESORT CONSTRUCTION CONTRACT") with a general contractor,
which contract shall have been delivered to Lender and which contract
and general contractor shall be satisfactory to Lender in its sole
discretion;
(d) the construction of such Resort shall be pursuant to an
architectural contract (a "RESORT ARCHITECTURAL CONTRACT") and certain
plans, specifications and designs prepared by an architect licensed in
the state in which such Resort is to be located, which contract,
plans, specifications and designs shall have been delivered to
Appendix-2
<PAGE> 23
Lender and shall be acceptable to Lender in its sole discretion and,
if Lender shall so elect, shall be satisfactory to Lender's Architect;
(e) a detailed construction budget (with respect to any
Resort, an "APPROVED DEVELOPMENT BUDGET") shall have been delivered to
Lender and shall be satisfactory to Lender in its sole discretion
(such budget shall include, among other things, all costs of
materials, fixtures, furnishings, personal property and labor to be
incurred in the construction and furnishing of such Resort, all common
elements and amenities in respect thereof and the provision of all
utilities to such Resort and shall, among other things, consist of
(i) a description of work (such work being
classified and shown on a line item basis reasonably
satisfactory to Lender for each building and the other
improvements to be built at such Resort; such classification
should include: "construction line items" for sitework,
concrete work, masonry work, rough carpentry work, finish
carpentry and cabinet work, architectural carpentry work,
waterproofing, insulation, fireproofing, drywall, ceiling
work, flooring and base work, painting and finishing work,
wall covering work, windows, ceramic tile work, bathroom
fixtures and hardware, kitchen fixtures and hardware, HVAC,
plumbing work, sprinkler work and electrical work;
"furniture, fixtures and equipment line items"; and
"professional fee line items" (including architectural,
engineering, accounting and legal services)),
(ii) an allocation to each construction line item of
a scheduled portion of the fixed construction price in the
Resort Construction Contract for such Resort, and
(iii) an estimated completion timeline for each
construction line item indicating when such item is
anticipated to be 25%, 50%, 75% and 100% completed);
(f) a detailed sales and marketing budget (with respect to
any Resort, an "APPROVED SALES AND MARKETING BUDGET") showing all
expenses and out-of-pocket costs to be incurred by Bluegreen or the
applicable Eligible Bluegreen Subsidiary in connection with selling
and marketing of the Intervals in respect of such Resort (together
with an estimated sales timeline indicating when 25%, 50%, 75% and
100% sell-out of such Resort is anticipated) shall have been delivered
to Lender and shall be satisfactory to Lender in its sole discretion
(such budget shall show "marketing costs line items;" "sale cost line
items"; "commissions payable line items"; and "professional fee line
items");
(g) (i) the total acquisition costs, construction costs
(including so-called "soft costs" but excluding any sales and
marketing costs) and furnishing costs of such Resort as set forth in
the Approved Development Budget for such Resort (collectively, with
respect to any Resort, the "RESORT DEVELOPMENT COSTS") shall be
estimated to be not in excess of $20,000,000, (ii) the Average Unit
Construction Costs for such Resort
Appendix-3
<PAGE> 24
shall exceed $75,000 but be less than $200,000, (iii) the Resort
Development Costs for such Resort shall not exceed 35% of the
Projected Resort Net Sales Proceeds for such Resort, (iv) the sum of
the paid-in-capital or equity, in cash, of the Eligible Bluegreen
Subsidiary that is to own such Resort together with the aggregate
amount of any future unconditional obligation of Bluegreen to make
additional cash contributions of capital or equity to such Eligible
Bluegreen Subsidiary shall not be less than 15% of the Resort
Development Costs of such Resort and (v) a detailed certificate of the
chief financial officer of Bluegreen shall have been received by
Lender confirming the correctness and calculations of clauses (i),
(ii), (iii) and (iv) above and shall be satisfactory to Lender in its
sole discretion;
(h) The portion of the Resort Development Costs attributable
to the amenities of such Resort (which shall be certified to Lender by
the chief financial officer of Bluegreen, which certificate shall be
acceptable to Lender in its sole discretion and which certificate
shall reasonably allocate such Resort Development Costs over any one
or more of the phases of such Resort if such Resort is to be developed
in phases) shall not exceed 30% of the maximum principal amount of the
Resort Loan being requested by Bluegreen for such Resort; if a Resort
is to be developed in phases, the determinations under this clause (h)
shall be made in respect of each phase of such Resort; the term
"amenities" used in this sub-clause (h) shall not include
infrastructural items (by way of an example only and not by way of
exclusion or inclusion, a sidewalk or a flower bed would be classified
as an infrastructural item for purposes of this sub-clause (h) while a
swimming pool, shuffle board court or miniature golf course would be
classified as an amenity for purposes of this sub-clause (h));
(i) A projected sources and uses of cash for such Resort and
the Eligible Bluegreen Subsidiary that will own it (presented in a
month-by-month format) for each year during which the requested Resort
Loan for such Resort is anticipated to be outstanding shall be
delivered to Lender together with a detailed statement of the
assumptions upon which such sources and uses statement was prepared
and such statement and such assumptions shall be satisfactory to
Lender in its sole discretion (with respect to any Resort, a "SOURCES
AND USES OF CASH PROJECTION") ; and
(j) The following additional deliveries shall be made to
Lender in respect of such Resort and shall be satisfactory to Lender
in its sole discretion: (i) a current phase I environmental survey in
respect of such Resort, (ii) a soil report in respect of such Resort,
(iii) copies of all payment and performance bonds in respect of the
general contractor under the Resort Construction Contract for such
Resort, (iv) copies of such general contractor's builder's risk
insurance policy, (v) copies of all excavation, foundation and
building permits for such Resort, (vi) copies of all zoning, density
and design approvals, waivers or variances, (vii) copies of all
organization documents, bylaws, operating agreements and other organic
documents of the Eligible Bluegreen Subsidiary that is to own such
Resort, (viii) a perimeter survey of the Resort by a licensed surveyor
that meets the ALTA/ACSM 1997 Minimum Survey Requirements (which shall
show any flood zones or plains in which such Resort may be located)
and
Appendix-4
<PAGE> 25
(ix) such other documents, reports or information as Lender may
reasonably request in order for Lender to make a credit/resort
determination in respect of such Resort.
ELIGIBILITY PERIOD. The period commencing on the Facility Closing Date
and ending on the earlier of (a) October 20, 2000 (subject to the extension of
such date set forth in the second sentence of this definition) or (b) the date
on which this Agreement is terminated under Section 7.1 as a result of the
existence of a Termination Event. The date stated in clause (a) above (being
October 20, 2000) shall be automatically extended to a date thereafter that is
365 days after the last Resort Loan Closing Date that shall have occurred on or
prior to October 20, 2000. The portion of the Eligibility Period, if any,
falling after October 20, 2000 by virtue of the aforesaid extension and
continuing to the date to which it has been so automatically extended, as
provided above, or its earlier termination pursuant to clause (b) above, is
referred to herein as the "EXTENSION PERIOD." For the avoidance of doubt, (i)
requests for new Resort Loans under Section 1.2 hereof may not be made during
the Extension Period and no Resort Loan Closing Dates may fall within the
Extension Period and (ii) Resort Advances (subject to the satisfaction of all
conditions precedent in respect thereof) shall be made by Lender during the
Extension Period in respect of Resort Loans whose Resort Loan Closing Dates
occurred on or prior to October 20, 2000.
ESTIMATED NET SALES PRICE. With respect to any Resort, the sales
prices for an Interval therein (giving effect to the type of Unit associated
with such Interval, the seasonality of such Interval and any other use
restrictions or advantages associated with such Interval) certified to Lender
by the chief financial officer of Bluegreen and the treasurer of the Eligible
Bluegreen Subsidiary in respect of such Resort (which certification shall be
acceptable to Lender in its sole discretion) less all estimated out-of-pocket
costs and expenses (including commissions) that would be incurred in
consummating the sale of such Interval, likewise certified to Lender (which
certification shall also be acceptable to Lender in its sole discretion). If a
Resort is to be developed in phases, "Estimated Sales Price" shall be
determined in respect of each phase of such Resort. If a Resort is to be a
Component Site, then the aforesaid sales prices for an Interval shall be based
on the purchase price of the number of points to be acquired in connection with
the contribution and/or conveyance of such Interval to the Club, all in
accordance with then current Club pricing policies (as certified by the chief
financial officer of Bluegreen and acceptable to Lender in its sole
discretion).
EXTENSION PERIOD. As defined in the definition of Eligibility Period.
FACILITY CLOSING DATE. October 20, 1998.
GAAP. Generally accepted accounting principles, applied on a
consistent basis, set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board which are applicable in the
circumstances as of the date in question; and the requisite that such
principles be applied on a consistent basis means that the accounting
principles in a current period are comparable in all material respects to those
applied in a preceding period, with any exceptions thereto noted.
Appendix-5
<PAGE> 26
GOVERNMENTAL AUTHORITY. The United States of America, the states and
counties in which any of the Eligible Resorts are located, and any other
governmental authorities having jurisdiction over Bluegreen or any Eligible
Bluegreen Subsidiary, any of the Eligible Resorts or any other property of
either Bluegreen or any Eligible Bluegreen Subsidiary, or the sale of Intervals
in any of the Eligible Resorts.
GOVERNMENTAL REGULATIONS. All Federal, State and local rules,
regulations, ordinances, laws and statutes which affect any one or more of the
Eligible Resorts or the right of Bluegreen or any Eligible Bluegreen Subsidiary
to sell Intervals.
INTEREST RATE. Floating rate per annum equal to the Base Rate plus
three percent (3.00%). "Base Rate" shall mean the rate published each business
day in THE WALL STREET JOURNAL for deposits maturing three (3) months after
issuance under the caption "Money Rates, London Interbank Offered Rates
(LIBOR)" as the same may be adjusted by the Statutory Reserve Rate (as such
term is defined in the Warehouse Facility). The Interest Rate for each calendar
month shall be fixed based upon the Interest Rate published prior to and in
effect on the first (1st) business day of such month. Interest shall be
calculated based on a 360 day year and charged for the actual number of days
elapsed.
INTERVAL. With respect to any Resort, an undivided fee simple
ownership interest as a tenant in common in and to a Unit located at such
Resort, with a right to use such Unit, or a Unit of such type, for one week
annually, together with all appurtenant rights and interests as more
particularly described in the Timeshare Declaration with respect to such
Resort.
LENDER. First paragraph of this Agreement.
LENDER'S ARCHITECT. With respect to any Eligible Resort, (a) an
architect or engineer licensed under the laws of the state in which such
Eligible Resort is located that has been hired by Lender or (b) any other
construction consultant selected and retained by Lender in its sole discretion.
MATERIAL ADVERSE EFFECT. With respect to any event or circumstance, a
material adverse effect on:
(a) the business, assets, financial condition or operations
of Bluegreen and its subsidiaries, taken as a whole;
(b) the ability of Bluegreen or any Eligible Bluegreen
Subsidiary to perform its respective obligations under this Agreement
or any Resort Loan Document to which it is a party;
(c) the validity, enforceability or collectibility against
Bluegreen or any Eligible Bluegreen Subsidiary of this Agreement or
any Resort Loan Document to which it is a party; or
Appendix-6
<PAGE> 27
(d) the status, existence, perfection or priority of (i)
Lender's security interest and lien in the collateral securing any
Resort Loan or (ii) the ownership interest in any Eligible Resort of
any Eligible Bluegreen Resort which is a borrower under a Resort Loan.
PERSON. Natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships,
joint stock companies, joint ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
PROJECTED RESORT NET SALES PROCEEDS. With respect to any Resort is the
product of (a) the number of Intervals in respect of the Units to be
constructed at such Resort that will be available for sale to the public TIMES
(b) the Estimated Net Sales Price in respect of such Intervals. If a Resort is
to be developed in phases, "Projected Resort Net Sales Proceeds" shall be
determined in respect of each phase of such Resort.
PURCHASE FACILITY. That certain Asset Purchase Agreement dated June
26, 1998 between the Lender and Bluegreen, as amended from time to time.
RESORT. Any property and the improvements and amenities existing or to
be constructed thereon that (a) is owned or is to be acquired by an Eligible
Bluegreen Subsidiary, (b) is to be made subject to a condominium and timeshare
regimen under applicable state law, (c) pursuant to such condominium and
timeshare regimen is to be divided into Intervals and (d) is to be directly
marketed and sold as a timeshare resort or marketed or sold indirectly as a
Component Site in the Club.
RESORT ADVANCE. As defined in the definition of Resort Loan.
RESORT ARCHITECTURAL CONTRACT. As defined in clause (d) of the
definition of Eligible Resort.
RESORT ASSOCIATION. A condominium, timeshare or homeowners'
association in which owners of Intervals in an Eligible Resort are members.
RESORT CONSTRUCTION CONTRACT. As defined in clause (c) of the
definition of Eligible Resort.
RESORT DEVELOPMENT COSTS. As defined in clause (g) of the definition
of Eligible Resort.
RESORT LOAN. With respect to any Resort, a loan from Lender to
Bluegreen or the Eligible Bluegreen Subsidiary that owns such Resort to fund
not more than 85% of the Resort Development Costs for such Resort, which loan
is to be advanced in a series of advances (each a "RESORT ADVANCE"); such loan
shall have a maturity not in excess of seven (7) years from the Facility
Closing Date, and Resort Advances in respect of such Resort Loan shall be
Appendix-7
<PAGE> 28
made available to Bluegreen or such Eligible Bluegreen Subsidiary (subject to
the satisfaction of the conditions precedent set forth in the Resort Loan
Documents in respect thereof) during the Eligibility Period (including the
Extension Period and with a maximum of one such Resort Advance to be extended
during each calendar month in the Eligibility Period and the Extension Period).
Lender shall have the right, in its sole discretion, to establish a maximum
loan amount for each Resort Loan which may be less than the aforesaid 85%
amount and to require that certain equity or capital moneys of Bluegreen or
such Eligible Bluegreen Subsidiary be contributed and utilized at the same time
as a Resort Advance is being made. If a Resort is to be developed in phases, a
"Resort Loan" shall be extended separately for each phase and such "Resort
Loan" may be referred to herein from time to time as tranche "A," "B", "C",
etc. with respect to each successive phase of such Resort.
RESORT LOAN CLOSING DATE. With respect to any Resort Loan, the date on
which the Resort Loan Documents for such Resort Loan are signed and delivered
and all conditions precedent in respect of the extension of such Resort Loan to
the applicable Eligible Bluegreen Subsidiary are satisfied or otherwise waived
by Lender.
RESORT LOAN DOCUMENTS. With respect to any Eligible Resort and the
Resort Loan in respect thereof, each of the following: (a) the acquisition and
construction loan agreement for such Resort Loan, (b) the
acquisition/construction promissory note or notes for such Resort Loan, (c) the
guarantee of Bluegreen in respect of such Resort Loan, if applicable, (d) the
guarantee of Bluegreen in respect of the completion of the construction of such
Eligible Resort, (e) the mortgage, security agreement and assignment of leases
and rents or the deed of trust, security agreement and assignment of leases and
rents in and to such Eligible Resort securing such Resort Loan (a "RESORT LOAN
MORTGAGE"), (f) the collateral assignment of the Resort Construction Contract
in respect of such Eligible Resort, (g) the collateral assignment of the Resort
Architectural Contract in respect of such Eligible Resort, (h) the collateral
assignment of Purchase and Sale Agreement in respect of such Eligible Resort,
(i) the hazardous material indemnity agreement in respect of such Eligible
Resort and (j) such other collateral security documents as are customarily
obtained by prudent construction lenders.
RESORT LOAN LIMIT. At any time during the Eligibility Period, the
remainder of (i) $25,000,000 MINUS the (ii) sum of (1) the aggregate original
principal amount of all Resort Advances made under all Resort Loans previously
extended hereunder and (2) the aggregate amount of unutilized borrowing
availability under all Resort Loans that have been previously extended
hereunder and which have not been fully drawn down. After expiration of the
Eligibility Period and applicable Extension Period, the Resort Loan Limit shall
be zero ($0).
RESORT LOAN MORTGAGE. As defined in the definition of Resort Loan
Documents.
RESORT PURCHASE AND SALE AGREEMENT. As defined in clause (b) of the
definition of Eligible Resort.
SOURCES AND USES OF CASH PROJECTION. As defined in clause (i) of the
definition of Eligible Resort.
Appendix-8
<PAGE> 29
TERMINATION EVENT. As defined in Section 6 hereof.
TIMESHARE DECLARATION. With respect to any Resort, that certain
timeshare declaration to be recorded in the appropriate land records office of
the state in which such Resort is located, pursuant to which a timeshare
regimen based on Intervals will be created in and to such Resort. The Timeshare
Declaration may be combined with, and made a part of, the Declaration.
UNIT. With respect to any Resort, an individual condominium unit
within such Resort, together with all furniture, fixtures and furnishings
therein, and together with any and all interest in common elements appurtenant
thereto, as provided in the Declaration of such Resort.
WAREHOUSE FACILITY. The Loan and Security Agreement dated as of
October 20, 1998 between Bluegreen and Lender, as amended from time to time.
Appendix-9
<PAGE> 30
SCHEDULE 1.2
[REQUEST FOR RESORT LOAN]
DATE:___________________________
Heller Financial, Inc.
Heller Sales Finance
Attn: Portfolio Manager, Vacation Ownership
500 West Monroe St., 28th Fl.
Chicago, Illinois 60661
RE: HSF Loan No. 98-087
$25,000,0000 Master Resort Loan Facility (the "AGREEMENT")
between Heller Financial, Inc. ("LENDER") and Bluegreen
Corporation ("BLUEGREEN")
Dear Sir or Madam:
Capitalized terms used herein shall have the meanings assigned thereto
in the Agreement.
In accordance with the terms of the Agreement, Bluegreen hereby
notifies Lender that it desires to obtain a new Resort Loan from Lender in a
maximum principal amount not to exceed $_______________________. The following
information is true and correct with respect to such Resort Loan:
(d) Borrower: [Name of Eligible Bluegreen Subsidiary].
(e) All of the equity of Borrower is owned directly by Bluegreen.
(f) Borrower's certificate of incorporation and bylaws are
attached hereto as Exhibit A hereto.
(g) The Borrower satisfies all of the eligibility requirements of
an "Eligible Bluegreen Subsidiary."
(h) The Resort to be acquired and/or developed by Borrower is
described on Exhibit B hereto and is located at
_____________.
(i) The Resort Purchase and Sale Agreement for such Resort is
attached hereto as Exhibit C.
(j) The Resort Construction Contract for such Resort is attached
hereto as Exhibit D.
Schedule 1.2-1
<PAGE> 31
(k) The Resort Architectural Contract for such Resort is attached
hereto as Exhibit E.
(l) The construction and sales and marketing budgets for such
Resort are attached hereto as Exhibit F (including, without
limitation, sales and marketing budgets that will form the
basis of the Approved Sales and Marketing Budget, a detailed
construction budget that will form the basis of the Approved
Development Budget and the necessary detail in respect of the
Resort Development Costs).
(m) The Sources and Uses of Cash Projection for such Resort is
attached hereto as Exhibit G.
(n) The total Resort Development Costs for the Resort are
estimated to be $_______________. Bluegreen intends to
provide cash equity contributions to the Borrower of
$____________ on or prior to the Resort Loan Closing Date and
an additional __________ thereafter, as more particularly
provided for on Exhibit H hereto. The maximum principal to be
obtained under the Resort Loan from Lender would not exceed
85% of the Resort Development Costs.
(o) The Resort satisfies all of the eligibility requirements of
an "Eligible Resort." All certificates required to be
provided pursuant to clause (g) and clause (h) of the
definition of "Eligible Resort" are attached hereto as
Exhibit H.
(p) A current phase I environmental survey of the Resort is
attached hereto as Exhibit I.
(q) A soil report in respect of the Resort is attached hereto as
Exhibit J.
(r) A perimeter survey of the Resort is attached hereto as
Exhibit K.
(s) A [preliminary] owner's title insurance policy is attached
hereto as Exhibit L.
(t) Bluegreen requests that the Resort Loan have a maturity date
of ____ [may not be later than 7 years from the Facility
Closing Date] and a draw period during which Resort Advances
will be available for ____ years [may not extend beyond
Eligibility Period (including the Extension Period)].
Bluegreen requests that the Resort Advances be made available
monthly.
Schedule 1.2-2
<PAGE> 32
(u) The Resort Loan Limit, without giving effect to the requested
Resort Loan, is $_________. The requested Resort Loan is
within the Resort Loan Limit.
(v) Bluegreen requests that the release price per Interval be as
set forth on Exhibit M hereto (subject to adjustment as
provided for in Section 1.4 of the Agreement) and that the
minimum amortization be as set forth on Exhibit N hereto.
(w) Bluegreen requests that the Resort Loan Closing Date for the
requested Resort Loan be ______ __, ____.
(x) The form of Declaration and Timeshare Declaration for the
Resort, all forms of property and other disclosure reports,
purchase agreements and consumer interval financing documents
and any franchise, management, sub-management or other
affiliate agreements are set forth on Exhibit O hereto.
(y) No Termination Event has occurred and is continuing and no
event under Section 2.13 of the Agreement shall then exist.
The Warehouse Facility is in full force and effect (after
giving effect to any extensions thereof).
(w) Bluegreen confirms that Intervals at the Resort will be sold
and financed on a deed basis using mortgage notes and
mortgages substantially in the form set forth on Exhibit O
hereto.
(x) Bluegreen confirms that the Resort [will][will not] be a
Component Site. [The points awarded to each Interval at the
Resort by the Club together with the purchase price thereof
are set forth on Exhibit P hereto.]
2. The representations and warranties contained in the Agreement are
true, correct and complete in all material respects on the date hereof.
3. Bluegreen is in compliance with each and every one of its
covenants, agreements and obligations in all material respects under the
Agreement and the Warehouse Facility.
4. Bluegreen has no knowledge of any defenses or offsets with respect
to the payment of any amounts due Lender.
5. Bluegreen acknowledges that this request is subject to approval by
Lender. Bluegreen requests that Lender use its best efforts to respond to this
request on or prior to ________ ___, ______.
Schedule 1.2-3
<PAGE> 33
BLUEGREEN CORPORATION
By:
--------------------------------------
Name:
Its:
Schedule 1.2-4
<PAGE> 34
SCHEDULE 2.2
------------
[Closing Checklist]
HFS No. 98-087
HELLER FINANCIAL, INC. $___________
RESORT LOAN TO [NAME OF ELIGIBLE BLUEGREEN SUBSIDIARY]
<TABLE>
<S> <C>
LENDER: Heller Financial, Inc.
500 West Monroe Street
Suite 2800
Chicago, Illinois 60640
Attention: Matthew Kirchner, Account Executive
Telephone: 312-441-7797
Facsimile: 312-441-7924
Vacation Ownership Legal Representative
Facsimile: 312-441-7924
LENDER'S COUNSEL: Hebb & Gitlin
1 State Street
Hartford, CT 06103
Attention: Jeffery S. Kuperstock, Esq.
Thomas J. O'Shea, Esq.
Telephone: 860-240-2742/2707
Facsimile: 860-278-2483
BORROWER: [Name of Eligible Bluegreen Subsidiary], a ____________ corporation
5925 Town Center Road
Boca Raton, Florida 33486
BORROWER'S COUNSEL: [To Be Supplied]
GUARANTOR: Bluegreen Corporation
4960 Blue Lake Drive
Boca Raton, Florida 33431
Telephone: 561-912-8000
Facsimile: 561-912-8100
RESORT: [Name of Eligible Resort]
</TABLE>
Schedule 2.2-1
<PAGE> 35
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
ITEM RESPONSIBILITY STATUS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. BORROWER/GUARANTOR BACKGROUND
DOCUMENTS
- -------------------------------------------------------------------------------------------------------------
a. UCC judgment and tax lien search Lender's
counsel
i. Borrower
ii. Guarantor
iii. Resort
- -------------------------------------------------------------------------------------------------------------
b. Borrower's/Guarantor's Certificate re: litigation and Borrower;
other matters affecting Borrower and Guarantor Guarantor
- -------------------------------------------------------------------------------------------------------------
c. Intercompany agreements and loans between Borrower;
Borrower, Guarantor or any other affiliate Guarantor
- -------------------------------------------------------------------------------------------------------------
d. Credit reports Lender
- -------------------------------------------------------------------------------------------------------------
2. ACQUISITION/CONSTRUCTION DOCUMENTS
- -------------------------------------------------------------------------------------------------------------
a. Resort Purchase and Sale Contract Borrower
i. Owner's policy of title insurance and
copies of all exceptions and liens on
Schedule B thereto
- -------------------------------------------------------------------------------------------------------------
b. Resort Architectural Contract Borrower
- -------------------------------------------------------------------------------------------------------------
c. Resort Construction Contract Borrower
i. Copies of major subcontracts Borrower
- -------------------------------------------------------------------------------------------------------------
d. Plans, Specifications and Drawings Borrower
- -------------------------------------------------------------------------------------------------------------
e. Approved Development Budget Borrower
i. Construction timeline Borrower
- -------------------------------------------------------------------------------------------------------------
f. Approved Sales and Marketing Budget Borrower
- -------------------------------------------------------------------------------------------------------------
g. Soil/Engineering Report Borrower
- -------------------------------------------------------------------------------------------------------------
h. Payment and Performance Bonds Borrower
i. Co-obligee endorsement in favor of Borrower
Lender
- -------------------------------------------------------------------------------------------------------------
i. Sources and Uses of Cash Projection Borrower
- -------------------------------------------------------------------------------------------------------------
j. Certificates re: Resort Development Costs, Borrower
Average Unit Construction Costs, Projected Resort
Net Sales Proceeds, Paid-in-capital to Borrower
and Percentage of Resort Loan to be used to
construct amenities
- -------------------------------------------------------------------------------------------------------------
k. Excavation, foundation and building permits; water Borrower
connection permit; storm sewer connection permit;
other permits
- -------------------------------------------------------------------------------------------------------------
3. RESORT DOCUMENTS
- -------------------------------------------------------------------------------------------------------------
a. Draft Condominium Declaration Borrower
i. Draft Condominium plat and Borrower
horizontal/vertical site drawings
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Schedule 2.2-2
<PAGE> 36
<TABLE>
- -----------------------------------------------------------------------------------------
<S> <C> <C>
b. Draft Timeshare Declaration Borrower
- -----------------------------------------------------------------------------------------
c. [PUD or other Horizontal Plan Documents] Borrower
- -----------------------------------------------------------------------------------------
d. [Copies of all Restrictive Covenants Running with Borrower
Land]
- -----------------------------------------------------------------------------------------
e. Draft Articles of Incorporation and Bylaws of Borrower
Condominium Homeowners' Association
- -----------------------------------------------------------------------------------------
f. Draft Articles of Incorporation and Bylaws of Borrower
Timeshare Owners' Association
- -----------------------------------------------------------------------------------------
g. Draft Condominium Rules and Regulations Borrower
- -----------------------------------------------------------------------------------------
h. Draft Timesharing Rules and Regulations Borrower
- -----------------------------------------------------------------------------------------
i. Draft Management Agreement for Resort Borrower
- -----------------------------------------------------------------------------------------
j. [Registration, Public Offering Statement and other Borrower
Filed Time Share Documents for Resort in
___________, __________, _________, and ________]
- -----------------------------------------------------------------------------------------
k. Form of purchaser credit application Borrower
- -----------------------------------------------------------------------------------------
l. Form of reservation agreement Borrower
- -----------------------------------------------------------------------------------------
m. Form of escrow agreement for pre-sales Borrower
i. Location of downpayment escrow deposit
- -----------------------------------------------------------------------------------------
n. Form of purchaser buy/sell agreement Borrower
- -----------------------------------------------------------------------------------------
o. Form of purchase money mortgage note Borrower
- -----------------------------------------------------------------------------------------
p. Form of purchase money mortgage Borrower
- -----------------------------------------------------------------------------------------
q. Form of Regulation Z Disclosure Statement Borrower
- -----------------------------------------------------------------------------------------
r. Form of Rescission Statement Borrower
- -----------------------------------------------------------------------------------------
s. Form of Regulation X Servicing Statement Borrower
- -----------------------------------------------------------------------------------------
t. Form of RESPA Settlement Statement Borrower
- -----------------------------------------------------------------------------------------
u. Pro-forma Mortgagee's Title Insurance Policy Borrower
- -----------------------------------------------------------------------------------------
v. Form of timeshare documents receipt Borrower
- -----------------------------------------------------------------------------------------
w. Purchaser's affidavit and acknowledgement Borrower
- -----------------------------------------------------------------------------------------
x. State timeshare filings (_____, _____ and Borrower
______)
i. Subdivision/Developer/Declaration licensing Borrower
- -----------------------------------------------------------------------------------------
y. Certificate from Guarantor that Receivables from Guarantor
Resort meet eligibility requirements for "Eligible
Completed Unit Receivables" or "Eligible
Uncompleted Unit Receivables" under Warehouse
Facility
- -----------------------------------------------------------------------------------------
z. Evidence that forms meet state and federal Borrower
requirements
- -----------------------------------------------------------------------------------------
aa. Sales/marketing contracts for intervals and/or Club Borrower
memberships
- -----------------------------------------------------------------------------------------
bb. All Affiliate contracts with respect to Resort (except Borrower/
as listed above) Guarantor
- -----------------------------------------------------------------------------------------
</TABLE>
Schedule 2.2-3
<PAGE> 37
<TABLE>
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
cc. Form of the transfer/conveyance documents from Borrower
Borrower to Guarantor for purposes of pledging
receivables under Warehouse Facility
i. [Form of lien release/subordination of Lender
Lender]
- ------------------------------------------------------------------------------------------
4. CLUB DOCUMENTATION
- ------------------------------------------------------------------------------------------
a. Memorandum of Bluegreen Vacation Club Guarantor
recorded in real property records of _________
- ------------------------------------------------------------------------------------------
b. [Registration, Public Offering Statement and other Guarantor
Filed Time Share Documents for Club in [state in
which Resort is located and with Division of
Florida Land Sales, Condominium and Mobile
Homes of the Department of Business &
Professional Regulation]
- ------------------------------------------------------------------------------------------
c. Qualification of Trustee as foreign corporation in Guarantor
[state in which Resort is located]
- ------------------------------------------------------------------------------------------
d. Qualification of Trust as "foreign trust" in [state in Guarantor
which Resort is located] (if applicable)
- ------------------------------------------------------------------------------------------
e. Trustee acknowledgement that Accommodations Guarantor
of Resort will constitute a Component Site under
the RDI Vacation Club
- ------------------------------------------------------------------------------------------
f. Form of RDI Owner Agreement to be used with Guarantor
purchasers of Intervals
- ------------------------------------------------------------------------------------------
g. Form of deed to be used for conveyance of Guarantor
Intervals by purchasers to the Trust
- ------------------------------------------------------------------------------------------
h. Schedule of Vacation Points allocated to Intervals Guarantor
at the Resort
- ------------------------------------------------------------------------------------------
i. Addenda to public offering statements used in Guarantor
other states in marketing the RDI Vacation Club to
reflect the Resort as a Component Site
- ------------------------------------------------------------------------------------------
j. Acknowledgement by Trustee and Club that the Guarantor
holder of purchase money mortgages on Intervals
at the Resort qualify as Interest Holder
Beneficiaries under the Trust Agreement
- ------------------------------------------------------------------------------------------
k. Certified copy of RDI Vacation Club Trust Guarantor
Agreement, rules and regulations for the RDI
Vacation Club and point guidelines
- ------------------------------------------------------------------------------------------
l. Certified copy of Trustee's certificate of Guarantor
incorporation and bylaws and good standing
certificates from state of incorporation and states
in which qualified as a foreign corporation
- ------------------------------------------------------------------------------------------
m. Certified copy of Club's certificate of incorporation Guarantor
and bylaws and good standing certificates from
state of incorporation and states in which qualified
as a foreign corporation
- ------------------------------------------------------------------------------------------
</TABLE>
Schedule 2.2-4
<PAGE> 38
<TABLE>
- -------------------------------------------------------------------------------
<S> <C> <C>
n. Certified copy of Vacation Club Managing Entity's Guarantor
certificate of incorporation and bylaws and
good standing certificates from state of
incorporation and states in which qualified as
a foreign corporation
- -------------------------------------------------------------------------------
o. Copy of management agreement between Club Guarantor
and Vacation Club Managing Entity
- -------------------------------------------------------------------------------
p. Copy of most recent audit and report prepared Guarantor
by independent accounting firm
- -------------------------------------------------------------------------------
q. Copy of most recent operating budget for Club Guarantor
(including operating fund budget and trust fund
budget)
- -------------------------------------------------------------------------------
r. Certificates of insurance maintained by the Guarantor
Trustee, the Trust and/or the Club
i. Business interruption insurance
- -------------------------------------------------------------------------------
5. RESORT ACQUISITION AND OTHER INFORMATION
- -------------------------------------------------------------------------------
a. Schedule of Acquisition Closing Costs and Borrower's
Expenses (if applicable) counsel
- -------------------------------------------------------------------------------
b. Conveyance Documents (if applicable) Borrower's
counsel
- -------------------------------------------------------------------------------
c. Resort Loan Request under Master Bluegreen Guarantor
Resort Loan Facility
- -------------------------------------------------------------------------------
d. Perimeter ALTA Survey for Resort Borrower
i. Surveyor's Certificate Borrower
ii. Flood zone classification (if applicable) Borrower
- -------------------------------------------------------------------------------
e. Phase I Environmental Survey for Resort Borrower
i. Heller Reliance Letter Borrower
- -------------------------------------------------------------------------------
f. Certificates of Insurance (including flood and Borrower
builder's risk) and proof of payment of premiums
i. Lender named as mortgage loss payee/co-insured Borrower
- -------------------------------------------------------------------------------
g. Other Resort Information Borrower
i. Receipts evidencing payment of property taxes Borrower
ii. Copies of utility contracts (if any) Borrower
iii. Certificates of occupancy (if any) Borrower
iv. Lender's Architect's Inspection Results Borrower
- -------------------------------------------------------------------------------
h. Appraisal Borrower
- -------------------------------------------------------------------------------
</TABLE>
Schedule 2.2-5
<PAGE> 39
<TABLE>
- -------------------------------------------------------------------------------
<S> <C> <C>
i. Mechanic's, materialmen's and supplier's lien Borrower
partial waivers and reconciliation of all
payments to date of closing (if applicable)
- -------------------------------------------------------------------------------
j. Licensing Borrower
i. Real estate broker licensing for sales Borrower
of intervals
ii. Amenities Borrower
- -------------------------------------------------------------------------------
k. Zoning compliance Borrower
- -------------------------------------------------------------------------------
l. ADA/HUD accessibility compliance (if applicable) Borrower
- -------------------------------------------------------------------------------
m. Financial statements of Borrower and Guarantor Borrower
- -------------------------------------------------------------------------------
n. Certificate or other evidence of satisfaction
of net worth requirement
i. Copy of agreement of Guarantor to make Guarantor
further net worth contributions to
Borrower
ii. Copy of completion of construction Guarantor
guarantee from Guarantor
- -------------------------------------------------------------------------------
6. RESORT LOAN DOCUMENTS
- -------------------------------------------------------------------------------
a. Promissory note Lender's
counsel
- -------------------------------------------------------------------------------
b. Acquisition and Construction Loan Agreement Lender's
counsel
- -------------------------------------------------------------------------------
c. Guarantee Lender's
counsel
- -------------------------------------------------------------------------------
d. Mortgage, Assignment of Rents and Security Lender's
Agreement counsel
i. Mortgagee's title insurance Borrower's
Commitment/Pro forma mortgagee's title counsel/title
Insurance policy company
ii. Endorsements: future advance, usury, Borrower's
condominium/pud, mechanic's lien, counsel/title
zoning, elimination of survey/easement company
exceptions
iii. Copies of all listed Schedule B exceptions Borrower's
counsel/title
company
- -------------------------------------------------------------------------------
e. UCC-1's - Borrower Lender's
i. Central/Local:____________ counsel
ii. Central/Local:____________
- -------------------------------------------------------------------------------
f. Hazardous Materials Indemnity Agreement Lender's
counsel
- -------------------------------------------------------------------------------
g. Collateral Assignment of Declarant's Rights Lender's
counsel
- -------------------------------------------------------------------------------
</TABLE>
Schedule 2.2 - 6
<PAGE> 40
<TABLE>
- ------------------------------------------------------------------------------------
<S> <C> <C>
h. Collateral Assignment of Resort-related contracts Lender's
counsel
i. Collateral Blanket Assignment of Pre-Sale
Contracts (if not assigned to Warehouse
Facility)
ii. Collateral Blanket Assignment of Notes
and Mortgages (if not assigned to
Warehouse Facility)
iii. Collateral Assignment of Resort
Construction Contract
iv. Collateral Assignment of Resort
Architectural Contract
v. [Other]
- ------------------------------------------------------------------------------------
i. [Escrow Arrangement Lender's
counsel
i. insured closing agent's letter]
- ------------------------------------------------------------------------------------
j. Corporate authorization for the Borrower and the Borrower
Guarantor
i. Good Standing Certificate from State of Borrower
Incorporation for the Borrower
ii. Massachusetts Good Standing Certificate Guarantor
for the Guarantor
iii. Foreign Authorization Certificates for the Borrower
Borrower from [state in which Resort is
located]
iv. Foreign Authorization Certificates for the Guarantor
Guarantor from Florida and [state in
which Resort is located]
v. Certificates of Incorporation for Borrower Borrower
vi. Articles of Incorporation for Guarantor Guarantor
vii. Bylaws of Borrower Borrower
viii. Bylaws of Guarantor Guarantor
- ------------------------------------------------------------------------------------
k. Opinion of counsel for Borrower and Guarantor Borrower
counsel
- ------------------------------------------------------------------------------------
l. Subordination agreement for subordinate affiliate Lender's
debt counsel
i. Copies of all documentation for
subordinate affiliate debt
- ------------------------------------------------------------------------------------
</TABLE>
Schedule 2.2-7
<PAGE> 41
<TABLE>
- ------------------------------------------------------------------------------
<S> <C> <C>
m. Custodial Agreement (if applicable) Lender's
counsel
- ------------------------------------------------------------------------------
n. Servicing and Lockbox Agreement (if applicable) Lender's
counsel
- ------------------------------------------------------------------------------
o. Borrower's officer's and secretary's Certificates Lender's
counsel
i. Resolutions attached
- ------------------------------------------------------------------------------
p. Guarantor's officer's and secretary's certificates Lender's
counsel
i. Resolutions attached
- ------------------------------------------------------------------------------
q. [Construction Disbursement Agreement Borrower's
counsel/
i. Form of Notice Lender's
counsel/title
ii. Wire instructions company
iii. Escrow Funding Account]
- ------------------------------------------------------------------------------
r. Form of Architect's Certificate for Lender's
disbursements counsel
- ------------------------------------------------------------------------------
s. Form of General Contractor's Certificate for Lender's
disbursements counsel
- ------------------------------------------------------------------------------
t. Payment of Commitment Fee Installment Borrower
- ------------------------------------------------------------------------------
u. Reimbursement of Lender's costs and expenses Borrower
- ------------------------------------------------------------------------------
v. Payment of Legal Fees of Lender Borrower
- ------------------------------------------------------------------------------
</TABLE>
Schedule 2.2-8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-28-1999
<PERIOD-START> MAR-30-1998
<PERIOD-END> DEC-27-1998
<CASH> 52,962
<SECURITIES> 15,811
<RECEIVABLES> 85,729
<ALLOWANCES> 2,878
<INVENTORY> 137,582
<CURRENT-ASSETS> 0<F1>
<PP&E> 33,040
<DEPRECIATION> 8,439
<TOTAL-ASSETS> 332,056
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 181,119
0
0
<COMMON> 239
<OTHER-SE> 107,442
<TOTAL-LIABILITY-AND-EQUITY> 332,056
<SALES> 172,730
<TOTAL-REVENUES> 192,982
<CGS> 63,187
<TOTAL-COSTS> 71,793
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,515
<INTEREST-EXPENSE> 10,028
<INCOME-PRETAX> 25,700
<INCOME-TAX> 10,280
<INCOME-CONTINUING> 15,473
<DISCONTINUED> 0
<EXTRAORDINARY> (1,682)
<CHANGES> 0
<NET-INCOME> 13,791
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.53
<FN>
<F1>THE COMPANY HAS AN UNCLASSIFIED BALANCE SHEET
</FN>
</TABLE>
