SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 3, 1998
GOLF VENTURES, INC.
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(Exact name of registrant as specified in its charter)
Utah 0-21337 87-0403864
- ----------------------------- --------------------- -------------------
(State or other jurisdiction (Commission File No.) (IRS Employer ID #)
of incorporation)
255 South Orange Avenue, Suite 1515, Orlando, Florida 32801
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(Address and zip code of principal executive offices)
407-245-7557
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Registrant's telephone number
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Item 2. Acquisition or Disposition of Assets
On September 3, 1998, Golf Ventures, Inc. (the "Company") purchased a partially
developed approximately 970 buildable-acre real estate property located in
Arlington, Texas from Metrovest Partners, Ltd (the "seller"), an unrelated third
party, for a total purchase price of $47,971,635. The property will be held by
the Company's newly formed 100% owned subsidiaries, Arlington Lakes, L.P. as the
99% limited partner and GCA Texas Development, Inc. as the 1% general partner.
The property is entitled for 2.4 million square feet of commercial space and a
residential development with approximately 920 homesites. The Company plans to
develop the property into a residential golf course community and is considering
entering into a joint venture arrangement with Credit Suisse First Boston
Mortgage Capital LLC ("CSFB") for the development and operation of the
commercial real estate parcel. The contemplated joint venture arrangement will
include the Company's contribution of the commercial real estate parcel in
exchange for 33% of the ownership interest in the joint venture entity.
The purchase price consisted of cash paid to the seller of $4,165,000, the
issuance of convertible notes payable to the seller of $17,804,583, payment of
the seller's bank mortgage of $18,944,920 and the assumption of trade accounts
payable of $7,057,132. The convertible notes payable consist of a $15,000,000
and a $2,804,583 note payable to the seller. The notes and any related accrued
interest are convertible, at any date through maturity, into 10,000,000 and
1,400,000 shares of the Company's common stock, respectively. The conversion
rates are either equal to or above the average market value of the Company's
common stock for five days prior to the transaction. The $15,000,000 and
$2,804,583 convertible notes payable bear interest at 5.42% and 10% per annum,
respectively, and principal and accrued interest are due in full on April 30,
1999, unless earlier converted. Upon conversion of the notes, such shares of
common stock will not be registered under the securities act of 1933, as
amended, and may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements. If the notes are
converted into common stock, the underlying common stock carries piggyback
registration rights and the Company has agreed to use its best efforts to
register such shares under the securities act of 1933, on or before March 31,
1999.
The purchase price was financed through funding from CSFB in the form of a
$50,000,000 addition to the Company's previously existing $50,950,000 financing
facility, which increased the aggregate outstanding balance of the Company's
loan to $100,950,000. The loan proceeds were used to pay the sellers mortgage of
$18,944,920, financing costs of $7,487,210(including structuring and advisory
fees of $6,825,000 paid to CSFB), $5,713,629 of outstanding trade accounts
payable, the cash portion of the purchase price of $4,165,000 and miscellaneous
unrelated payments of $174,875. In addition, residential construction, interest,
tax and insurance escrow accounts totaling $13,514,366 were established with the
loan proceeds. The financing costs of $7,487,210 will be recorded as loan costs
to be amortized over the remaining term of the loan.
The Company has agreed to issue 3,812,000 shares of the Company's common stock
to CSFB as additional consideration for structuring and advisory fees related to
the financing used to fund the purchase. In addition, the Company has also
agreed to issue 400,000 shares of the Company's common stock to two real estate
brokers involved with the purchase as broker fees related to the loan. The CSFB
and the broker shares will be valued at $5,718,000 and $600,000, respectively,
based upon the average market value of the Company's common stock for five days
prior to the transaction, and recorded as additional loan costs to be amortized
over the remaining term of the loan.
The aggregate loan, along with an additional $35,600,000 related to Pelican
Strand LTD, has also been amended to increase the annual interest rate from 4.5
percentage points over the London Interbank Offerred Rate ("LIBOR"), as defined
in the promissory note, to 5.6 percentage points over the LIBOR. The remaining
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prior terms of the loan continue, with interest on the borrowing paid monthly
and minimum principal repayments of $14,050,000 due on or before July 1, 1999,
$36,550,000 on or before July 1, 2000 and the remainder due at maturity on July
1, 2001.
The Company's cash management agreement remains intact as a provision of the
original loan agreement whereby the management of the various tax, insurance,
interest and operating accounts is specified.
Also on September 3, 1998, the Company entered into a note consolidation and
severance agreement with CSFB, whereby the aggregate principal balance of the
Company's financing facility of $100,950,000 was severed into a $48,456,000
Class A promissory note, a $26,247,000 Class B promissory note and a $26,247,000
Class C promissory note. A similar note severance agreement was entered into to
sever the Pelican Strand LTD promissory note in the amount of $35,600,000 into a
$17,088,000 Class A promissory note, a $9,256,000 Class B promissory note and a
$9,256,000 Class C promissory note. The individual and aggregate terms of the
severed notes are equivalent to those of the former $100,950,000 and $35,600,000
notes as described above.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed herewith or are incorporated by reference to
exhibits previously filed with the Securities and Exchange Commission. The
Company shall furnish copies of exhibits for a reasonable fee (covering the
expense of furnishing copies) upon request.
Exhibit No. Exhibit Name
10.1 Amendment to loan agreement, dated as of September 3, 1998,
between Cutter Sound Development, Ltd., Montverde Property,
Ltd., Northshore Golf Partners, Ltd., Northshore Development,
Ltd., U.S. Golf Pelican Strand, Inc., U.S. Golf Pinehurst
Plantation, Ltd., FSD Golf Club, Ltd., RH Holdings, Inc.,
Wedgefield Limited Partnership, Arlington Lakes, L.P. and
Credit Suisse First Boston Mortgage Capital LLC.
10.2 Amendment to loan agreement, dated as of September 3, 1998,
between Pelican Strand, Ltd. and Credit Suisse First Boston
Mortgage Capital LLC.
10.3 Note modification agreement, dated as of September 3, 1998,
between Pelican Strand, Ltd. and Credit Suisse First Boston
Mortgage Capital LLC.
10.4 $50,000,000 promissory note, dated as of September 3, 1998,
between Cutter Sound Development, Ltd., Montverde Property,
Ltd., Northshore Golf Partners, Ltd., Northshore Development,
Ltd., U.S. Golf Pinehurst Plantation, Ltd., FSD Golf Club,
Ltd., RH Holdings, Inc., Wedgefield Limited Partnership,
Arlington Lakes, L.P. and Credit Suisse First Boston Mortgage
Capital LLC.
10.5 Note consolidation and severance agreement, dated as of
September 3, 1998, between Cutter Sound Development, Ltd.,
Montverde Property, Ltd., Northshore Golf Partners, Ltd.,
Northshore Development, Ltd., U.S. Golf Pinehurst Plantation,
Ltd., FSD Golf Club, Ltd., RH Holdings, Inc., Wedgefield
Limited Partnership, Arlington Lakes, L.P. and Credit Suisse
First Boston Mortgage Capital LLC.
10.6 $48,456,000 Class A promissory note, dated as of September 3,
1998, between Cutter Sound Development, Ltd., Montverde
Property, Ltd., Northshore Golf Partners, Ltd., Northshore
Development, Ltd., U.S. Golf Pinehurst Plantation, Ltd., FSD
Golf Club, Ltd., RH Holdings, Inc., Wedgefield Limited
Partnership, Arlington Lakes, L.P. and Credit Suisse First
Boston Mortgage Capital LLC.
10.7 $26,247,000 Class B promissory note, dated as of September 3,
1998, between Cutter Sound Development, Ltd., Montverde
Property, Ltd., Northshore Golf Partners, Ltd., Northshore
Development, Ltd., U.S. Golf Pelican Strand, Inc., U.S. Golf
Pinehurst Plantation, Ltd., FSD Golf Club, Ltd., RH Holdings,
Inc., Wedgefield Limited Partnership, Arlington Lakes, L.P.
and Credit Suisse First Boston Mortgage Capital LLC.
10.8 $26,247,000 Class C promissory note, dated as of September 3,
1998, between Cutter Sound Development, Ltd., Montverde
Property, Ltd., Northshore Golf Partners, Ltd., Northshore
Development, Ltd., U.S. Golf Pinehurst Plantation, Ltd., FSD
Golf Club, Ltd., RH Holdings, Inc., Wedgefield Limited
Partnership and Credit Suisse First Boston Mortgage Capital
LLC.
10.9 Note severance agreement, dated as of September 3, 1998,
between Pelican Strand, Ltd. and Credit Suisse First Boston
Mortgage Capital LLC.
10.10 $17,088,000 Class A promissory note, dated as of September 3,
1998, between Pelican Strand, Ltd. and Credit Suisse First
Boston Mortgage Capital LLC.
10.11 $9,256,000 Class B promissory note, dated as of September 3,
1998, between Pelican Strand, Ltd. and Credit Suisse First
Boston Mortgage Capital LLC.
10.12 $9,256,000 Class C promissory note, dated as of September 3,
1998, between Pelican Strand, Ltd. and Credit Suisse First
Boston Mortgage Capital LLC.
10.13 Convertible note agreement, dated as of September 3, 1998,
between Golf Ventures, Inc. and Jocie L. Salim.
10.14 Contribution agreement, dated as of September 3, 1998, between
Golf Ventures, Inc. and Metrovest Partners, Ltd.
GOLF VENTURES, INC.
/s/ Warren Stanchina
---------------------------
Warren Stanchina, President
Dated: September 18, 1998
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AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT TO LOAN AGREEMENT ("Amendment"), dated as of
September 3, 1998, between CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, a
Delaware limited liability company having an address at 11 Madison Avenue, New
York, New York 10010 ("Lender") and CUTTER SOUND DEVELOPMENT, LTD., MONTVERDE
PROPERTY, LTD., NORTHSHORE GOLF PARTNERS, LTD., NORTHSHORE DEVELOPMENT, LTD.,
U.S. GOLF PELICAN STRAND, INC., U.S. GOLF PINEHURST PLANTATION, LTD., FSD GOLF
CLUB, LTD., RH HOLDINGS, INC. and WEDGEFIELD LIMITED PARTNERSHIP (collectively,
"Original Borrower") and ARLINGTON LAKES, L.P. ("New Borrower"), each having an
address at c/o Golf Communities of America, 255 South Orange Avenue, Firstate
Tower, Suite 1515, Orlando, Florida 32801 (Original Borrower and New Borrower,
collectively, hereinafter referred to as "Borrower").
W I T N E S S E T H :
WHEREAS, Original Borrower and Lender were parties to that
certain Loan Agreement, dated as of July 2, 1998 (the "Loan Agreement");
WHEREAS, concurrently herewith, Lender has made an additional
loan to Original Borrower and New Borrower in the original principal amount of
$50,000,000 (the "New Loan");
WHEREAS, New Borrower has agreed to assume the Obligations (as
such term is defined in the Loan Agreement) under the Loan Agreement;
WHEREAS, Borrower, New Borrower and Lender have agreed to
amend the terms of the Loan Agreement in order to reflect the New Loan, the
assumption of the Obligations by New Borrower and to modify and amend certain
other terms and provisions of the Loan Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants, agreements, representations and warranties hereinafter contained, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree the Loan Agreement is hereby amended as follows:
1. All capitalized terms not otherwise defined herein shall
have the meanings provided in the Loan Agreement.
2. The New Borrower hereby jointly and severally assumes the
obligations of the Original Borrower for the performance of the Original
Borrower's obligations under the Loan Agreement.
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3. The reference in the definition of "Spread Maintenance
Premium" to "four and one-half percent (4.5%)" is hereby modified to read to
"five and six tenths percent (5.6%)".
4. The definition of "Borrower" is hereby deleted in its
entirety and all references to "Borrower" shall mean, collectively, Original
Borrower and New Borrower and each of their respective successors and assigns."
5. The definition of "Individual Borrower" is hereby deleted
in its entirety and all references to "Individual Borrower" shall mean each
Original Borrower and New Borrower and their respective successors and assigns.
6. The definition of "Loan" is hereby deleted in its entirety
and all references to "Loan" shall mean the loan in the maximum principal amount
of $100,950,000 which shall be advanced by Lender in accordance with the terms
and conditions of the Loan Agreement, as hereby amended by this Amendment, and
which is evidenced by the Note and is secured by each Mortgage and all of the
other Loan Documents.
7. The definition of "Note" is hereby deleted in its entirety
and all references to "Note" shall mean those certain three (3) notes of even
date herewith in the principal amounts of $48,456,000, $26,247,000 and
$26,247,000, respectively, as the same may be amended, restated replaced
supplemented or otherwise modified from time to time.
8. The definition of "Payment Date" is hereby deleted in its
entirety and all references to "Payment Date" shall mean the eleventh (11th)
calendar day of each calendar month commencing with September, 1998.
9. The reference in Section 2.3 of the Loan Agreement to
"$1,298,250" is hereby deleted in its entirety and replaced with "$2,048,250."
10. Section 2.1 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"Section 2.1 The Loan. Subject to the terms and
conditions set forth herein, Lender hereby agrees to make the
Loan to Borrower on the Closing Date in the principal amount
not to exceed One Hundred Million Nine Hundred Fifty Thousand
And No/100 Dollars ($100,950,000)."
11. Section 2.2 of the Loan Agreement is hereby amended as to
include the following final sentence:
"Notwithstanding anything contained herein to the contrary,
the Subsequent Advance in the amount of $6,500,000 shall be
made from the Class C Note (as defined in the Note)."
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12. A new Section 8.6.6 is hereby added to the Loan Agreement
as follows:
"Section 8.6.6 No Obligation of Lender to
Provide Additional Financing. Other than as specifically
set forth in this Agreement, Lender shall have no
obligation to provide Borrower with additional financing
for all or any part of the Property or Properties."
13. A new Section 8.16 is hereby added to the Loan Agreement
as follows:
Section 8.16 Lakes of Arlington Property. (a) The
Individual Property owned by Arlington Lakes, L.P. (the "Lakes
Property") is made up of a commercial parcel(s) (the
"Commercial Parcel"), a residential parcel(s) (the
"Residential Parcel") and a golf facility parcel(s) (the "Golf
Parcel"), each as more particularly described as set forth on
Exhibit L, attached hereto. The Allocated Loan Amount for the
Lakes Property and each of the Commercial Parcel, the
Residential Parcel and the Golf Parcel is set forth on Exhibit
M attached hereto.
(b) Lender hereby acknowledges that
Arlington Lakes, L.P., has informed Lender that it is
considering entering into a joint venture agreement with a
regional developer in connection with the development of the
Residential Parcel or portions thereof; provided, however,
that such joint venture partner, joint venture agreement and
the terms and conditions thereof are reasonably acceptable to
both Lender and Borrower.
(c) Lender and Borrower hereby also
acknowledge that, at the request of Lender, Arlington Lakes,
L.P., will contribute the Commercial Parcel or portions
thereof to a to-be-formed entity, with thirty-three percent
(33%) of the ownership interest in such entity being held by
Arlington Lakes, L.P. and sixty-seven (67%) of the ownership
interest in such entity being held by Lender or its designee
and such development partners as Lender shall determine;
provided, however, Lender shall have no obligation to make an
equity contribution in the entity owning the Commercial Parcel
and, since Lender shall not be obligated to provide any
additional financing pursuant to Section 8.6.6 hereof, if such
additional financing is required, it is expected to be
provided by the development partners of Lender or a
construction lender; provided, further, that such development
shall be subject to the approval of Lender and Borrower, which
approval with respect to Borrower shall not be unreasonably
withheld.
(d) Lender hereby further acknowledges that
Arlington Lakes, L.P., has informed Lender that it is
considering contributing the Golf Parcel to a to-be-formed
third party golf development and/or management company, with
an ownership interest in the
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newly formed entity being retained by Arlington Lakes, L.P.;
provided, however, that such development, management company
and the terms and conditions of such development shall be
approved by Lender in its sole discretion.
(e) Lender shall have, in its sole and
absolute discretion, final approval with respect to any and
all development transactions concerning the Commercial Parcel
and the Residential Parcel, including, without limitation, the
approval of all prospective partners.
(f) It is contemplated that Arlington Lakes,
L.P. shall diligently seek to develop, market and sell lots of
the Residential Parcel, the Commercial Parcel and the Golf
Parcel. In connection therewith, Arlington Lakes, L.P. shall
periodically provide Lender with such informational reports
with respect to such development, marketing and sales,
including personnel conducting same, as Lender may reasonably
request.
(g) If within any calendar year, Arlington
Lakes, L.P., has not sold at least one hundred and fifty (150)
lots, Lender shall have the option to purchase a number of
lots not to exceed an amount equal to one hundred and fifty
(150) less the number of lots actually sold in such calendar
year for a purchase price per lot equal to seventy-five
percent (75%) of the Projected Price for such lots as set
forth on Exhibit N attached hereto.
(h) Borrower shall cause there to be
established on the Closing Date an interest reserve initially
funded in the amount of $__________________ on the date
hereof, with additional fundings by Borrower to take place
within one year from the date hereof until the interest
reserve shall reach the sum of $14,353,500. The failure of the
Borrower to fund such reserve shall constitute an Event of
Default hereunder.
14. Section 8.7.3 of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:
"8.7.3 Application of Release Price; Credits.
(a) Upon the release of a Release Parcel or Lot from the lien
of the Mortgage, the Release Proceeds shall be deposited in the Cash Collateral
Account and an amount equal to the Release Price for such Release Parcel or Lot
shall be applied first to the Interest Reserve Account in an amount sufficient
to bring the balance of such account to the sum of $14,353,500 and, thereafter,
such remaining Release Proceeds shall, at the option of Lender, either (i) be
allocated to the Monthly Debt Service Subaccount and disbursed to Lender on the
Payment Date next following such release in accordance with the Cash Management
Agreement and, upon receipt of such Release Price, Lender shall apply such
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amount to the reduction of the outstanding principal balance of the Loan without
any prepayment premium or charge or (ii) be applied to the satisfaction of
Borrower's obligation under Section 8.12."
15. Exhibit A to the Loan Agreement is amended to include
Exhibit A attached hereto.
16. Exhibit E to the Loan Agreement is hereby deleted in its
entirety and replaced with Exhibit E attached hereto.
17. Exhibit K to the Loan Agreement is hereby deleted in its
entirety and replaced with Exhibit K attached hereto.
18. A new Exhibit L is hereby added to the Loan Agreement in
the form of Exhibit L attached hereto.
19. A new Exhibit M is hereby added to the Loan Agreement in
the form of Exhibit M attached hereto.
20.. A new Exhibit N is hereby added to the Loan Agreement in
the form of Exhibit N attached hereto.
21. As hereinabove amended, the Loan Agreement is hereby
ratified and remains in full force and effect.
22. This Amendment may be signed in any number of counterparts
by the parties hereto, all of which taken together shall constitute one and the
same instrument.
23. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
26. At the request of Lender, Borrower shall execute such new
Notes, consolidations of the Notes and modifications and amendments to the Notes
and the other Loan Documents as may be requested by Lender provided that the
Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would change the interest rate or the stated maturity
date of the Loan. Borrower hereby agrees that Lender shall have the right to
unilaterally adjust the interest rate payable under the Notes so long as the
weighted average interest rate payable by Borrower under the Notes shall at all
times equal five and six tenths percent (5.6%) over LIBOR. Borrower's failure to
execute any such documents shall constitute an Event of Default.
27. Notwithstanding anything to the contrary contained in the
Notes, he Borrwer and Lender agree that the weighted average interest rate
payable by Borrower under the Notes shall at all times equal five and six tenths
percent (5.6%) over LIBOR.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
LENDER:
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
a Delaware limited liability company
By:
-------------------------------------------
Name:
Title:
BORROWER:
CUTTER SOUND DEVELOPMENT, LTD.,
a Florida limited partnership
By: U.S. Golf (Cutter Sound), Inc.,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
MONTVERDE PROPERTY, LTD.,
a Florida limited partnership
By: U.S. Golf (Montverde), Inc.,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
6
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NORTHSHORE GOLF PARTNERS, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE DEVELOPMENT, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
U.S. GOLF PELICAN STRAND, INC.,
a Florida corporation
By:
------------------------------------
Name: Warren Stanchina
Title: President
U.S. GOLF PINEHURST PLANTATION, LTD.,
a Florida limited partnership
By: U.S. Golf (Plantation), Inc.,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
7
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FSD GOLF CLUB, LTD.,
a Florida limited partnership
By: U.S. Golf (FSD), Inc.,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
RH HOLDINGS, INC., a Utah corporation
By:_______________________________
Name: Warren Stanchina
Title: President
WEDGEFIELD LIMITED PARTNERSHIP,
a Michigan limited partnership
By: U.S. Golf (Wedgefield), Inc.,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
ARLINGTON LAKES, L.P.,
a Texas limited partnership
By: GCA Texas Development, Inc.,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
8
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Exhibit A
Allocated Loan Amount, Appraised Values, Minimum Release Prices
(See Attached)
9
<PAGE>
Exhibit E
Structure of Borrower
10
<PAGE>
Exhibit K
Reserve Data
At Closing By 1/1/2000
Initial Advance (Section 1.1): $44,450,000
Construction Escrow Account (Section 2.8.1) $ 3,232,861.36 $4,267,138.64
Tax and Insurance Deposit (Section 8.1.1) $ 223,784.08
Replacement Reserve Contribution (Sec. 8.2.1) $ 4,863.73
Replacement Reserve Cap (Section 8.2.1) $ 58,367.09
Interest Reserve (Section 8.3.1) $ 6,000,000
Working Capital Reserve (Section 8.5.1) $ 1,500,000
11
<PAGE>
Exhibit L
(See attached)
12
<PAGE>
Exhibit M
Allocated Loan Amount
Commercial Parcel $30,000,000
Residential Parcel $ 8,500,000
Golf Parcel $ 3,000,000
13
<PAGE>
Exhibit N
Projected Price
14
AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT TO LOAN AGREEMENT ("Amendment"), dated as of
September 3, 1998, between CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, a
Delaware limited liability company having an address at 11 Madison Avenue, New
York, New York 10010 ("Lender") and PELICAN STRAND, LTD., having an address at
c/o Golf Communities of America, 255 South Orange Avenue, Firstate Tower, Suite
1515, Orlando, Florida 32801 ("Borrower").
W I T N E S S E T H :
WHEREAS, Borrower and Lender are parties to that certain Loan
Agreement, dated as of July 2, 1998 (the "Loan Agreement");
WHEREAS, Borrower and Lender have agreed to amend the terms of
the Loan Agreement in order to modify and amend certain other terms and
provisions of the Loan Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants, agreements, representations and warranties hereinafter contained, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree the Loan Agreement is hereby amended as follows:
1. The definition of "Note" is hereby deleted in its entirety
and all references to "Note" shall mean those certain three (3) notes of even
date herewith in the principal amounts of $17,088,000, $9,256,000 and
$9,256,000, respectively, as the same may be amended, restated replaced
supplemented or otherwise modified from time to time.
2. The reference in the definition of "Spread Maintenance
Premium" to "four and one-half percent (4.5%)" is hereby modified to read to
"five and six tenths percent (5.6%)".
3. As herein amended, the Loan Agreement is hereby ratified
and remains in full force and effect.
4. This Amendment may be signed in any number of counterparts
by the parties hereto, all of which taken together shall constitute one and the
same instrument.
5. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
6. Section 2.2 of the Loan Agreement is hereby amended as to
include the following final sentence:
"Notwithstanding anything contained herein to the contrary,
the Subsequent Advance in the amount of $6,500,000 shall be
made from the Class C Note (as defined in the Note)."
7. Section 8.7.3 of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:
"8.7.3 Application of Release Price; Credits.
(a) Upon the release of a Release Parcel or Lot from the lien
of the Mortgage, the Release Proceeds shall be deposited in the Cash Collateral
Account and an amount equal to the Release Price for such Release Parcel or Lot
shall be applied first to the Interest Reserve Account in an amount sufficient
to bring the balance of such account to the sum of $14,353,500 and, thereafter,
such remaining Release Proceeds shall, at the option of Lender, either (i) be
allocated to the Monthly Debt Service Subaccount and disbursed to Lender on the
Payment Date next following such release in accordance with the Cash Management
Agreement and, upon receipt of such Release Price, Lender shall apply such
amount to the reduction of the outstanding principal balance of the Loan without
any prepayment premium or charge or (ii) be applied to the satisfaction of
Borrower's obligation under Section 8.12."
<PAGE>
8. At the request of Lender, Borrower shall execute such new
Notes, consolidations of the Notes and modifications and amendments to the Notes
and the other Loan Documents as may be requested by Lender provided that the
Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would change the interest rate or the stated maturity
date of the Loan. Borrower hereby agrees that Lender shall have the right to
unilaterally adjust the interest rate payable under the Notes so long as the
weighted average interest rate payable by Borrower under the Notes shall at all
times equal five and six tenths percent (5.6%) over LIBOR. Borrower's failure to
execute any such documents shall constitute an Event of Default.
9. Notwithstanidng anything to the contrary contained in the
Notes, he Borrwer and Lender agree that the weighted average interest rate
payable by Borrower under the Notes shall at all times equal five and six tenths
percent (5.6%) over LIBOR.
[NO FURTHER TEXT ON THIS PAGE]
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
LENDER:
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
a Delaware limited liability company
By:
------------------------------------
Name:
Title:
BORROWER:
PELICAN STRAND, LTD.,
a Florida limited partnership
By: Pelican Strand Development Corporation,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
3
NOTE MODIFICATION AGREEMENT
THIS NOTE MODIFICATION AGREEMENT (this "Agreement") made as of
this 3rd day of September 1998, by and between PELICAN STRAND, LTD., a Florida
limited partnership having an address at c/o Golf Communities of America, 255
South Orange Avenue, Firstate Tower, Suite 1515, Orlando, Florida 32801
(hereinafter referred to as "Borrower") and CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC ("CSFB"), a Delaware limited liability company, its successors and
assigns, at its principal place of business at 11 Madison Avenue, New York, New
York 10010 (CSFB and each successor or assign being hereinafter referred to as
"Lender").
W I T N E S S E T H:
WHEREAS, Lender is the lawful owner and holder of that certain
note entered into between Borrower, as Maker, and Lender, as Payee, dated July
2, 1998 (the "Note"), which Note evidences Borrower's obligation to pay the
aggregate principal amount of $35,600,000.00 or so much thereof as shall have
been advanced under the Loan Agreement (as defined in the Note) (the "Debt"),
together with interest thereon; and
WHEREAS, Lender and Borrower have agreed to modify the Note as
hereinafter set forth.
NOW, THEREFORE, in consideration of the agreements herein
expressed and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto covenant and agree as
follows:
1. The definition of "Base Rate" appearing on the first page
of the Note is hereby modified to read as follows:
"The rate per annum equal to five and six tenths percentage
points (5.6%) in excess of the Treasury Rate. Any interest
rate based on the Base Rate shall be adjusted as of the date
of any change in the Base Rate. The determination of the Base
Rate shall be made by Lender and shall be conclusive and
binding upon Borrower, absent manifest error."
2. The reference in Paragraph 2 of the note to "four and
one-half percent (4.5%)" is hereby modified to read to "five and six tenths
percent (5.6%)".
After given effect to the modifications described herein, the
aggregate outstanding indebtedness evidenced by the Note is THIRTY FIVE MILLION
SIX HUNDRED THOUSAND AND 00/100 DOLLARS ($35,600,000.00), it being understood
that no interest under the Note is accrued and unpaid for the period prior to
the date hereof, but that interest shall accrue from and after the date hereof
at the rate or rates provided herein.
Borrower hereby renews and extends its covenant and agreement
to pay the indebtedness evidenced by the Note, as modified pursuant to this
Agreement, and Borrower hereby renews and extends its covenant and agreement to
perform, comply with and be bound by each and every term and provision of the
Note as modified by the terms of this Agreement.
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Borrower confirms and agrees that the Note is, and shall
continue to be, secured by the Mortgage and Security Agreement and by any other
deeds of trust executed by Borrower to secure the Note. All of the provisions of
the Mortgage and Security Agreement executed by Borrower are hereby ratified and
affirmed in all respects. Without in any way limiting the generality of the
foregoing, Lender has, and shall continue to enjoy, all of the rights and
remedies provided for in the Mortgage and Security Agreement.
The Note is secured by the Mortgage and Security Agreement and
the Loan Documents and in no way acts as a release or relinquishment of the
liens created by the Mortgage and Security Agreement or Loan Documents. The
Mortgage and Security Agreement liens and all liens securing payment of the Note
are hereby confirmed by Borrower in all respects and shall remain in full force
and effect until the amount of the Note, as modified by this Agreement, then
payable in accordance with the terms thereof, all accrued but unpaid interest,
and all extensions, renewals and rearrangements thereof and all sums secured by
the Loan Documents shall be fully and finally paid.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
BORROWER:
PELICAN STRAND, LTD.,
a Florida limited partnership
By: Pelican Strand Development Corporation,
its General Partner
By:
------------------------------------
Name: Warren Stanchina
Title: President
LENDER
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
a Delaware limited liability company
By:
------------------------------------
Name:
Title:
3
PROMISSORY NOTE
U.S. $50,000,000.00 September 3, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, CUTTER SOUND DEVELOPMENT,
LTD., MONTVERDE PROPERTY, LTD., NORTHSHORE GOLF PARTNERS, LTD., NORTHSHORE
DEVELOPMENT, LTD., U.S. GOLF PINEHURST PLANTATION, LTD., FSD GOLF CLUB, LTD., RH
HOLDINGS, INC., WEDGEFIELD LIMITED PARTNERSHIP and ARLINGTON LAKES, L.P., each
having an address at c/o Golf Communities of America, 255 South Orange Avenue,
Firstate Tower, Suite 1515, Orlando, Florida 32801 ("Borrower"), hereby promises
and agrees to pay to the order of CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL
LLC, a Delaware limited liability company, its successors and assigns
("Lender"), at its office at 11 Madison Avenue, New York, New York 10010, on the
Maturity Date (as defined below) the principal sum of FIFTY MILLION AND NO/100
DOLLARS ($50,000,000.00) or so much thereof as shall have been advanced under
the Loan Agreement (as hereinafter defined) and shall be outstanding hereunder
together with interest thereon as hereinafter set forth, such payment to be made
in lawful money of the United States of America in immediately available funds.
1. Definitions. The following terms used in this Note shall
have the following meanings:
"Base Rate"- The rate per annum equal to five and six
tenths and one-half percentage points (5.6%)
in excess of the Treasury Rate. Any interest
rate based on the Base Rate shall be
adjusted as of the date of any change in the
Base Rate. The determination of the Base
Rate shall be made by Lender and shall be
conclusive and binding upon Borrower, absent
manifest error.
"Borrower"- Shall have the meaning ascribed to such
term in the initial paragraph hereof. The
term "Borrower" shall include the respective
successors and assigns of Borrower, but the
foregoing is not intended to vary or negate
the effect of Section 5.1 of the Loan
Agreement.
"Capital Adequacy Events"- Shall have the meaning ascribed to such term
in Section 3(d) hereof.
"Cash Management Agreement"- That certain Cash
Management Agreement, dated as of July 2,
1998, as same may have been or may be
amended, modified or extended, from time to
time, by and between Borrower and Lender,
with respect to the
Loan.
"Default Rate"- Shall have the meaning ascribed to such term
in Section 5(a) hereof.
"Domestic Business Day"- Any day except a Saturday,
Sunday or other day on which commercial
banks are required or permitted by law to
close in New York City.
"Eurodollar Business Day"- Any day on which commercial banks are open
for international business (including
dealings in dollar deposits) in London,
England.
"Event of Default"- Shall have the meaning ascribed to such
term in the Loan Agreement.
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"Excess Interest"- Shall have the meaning ascribed to such term
in Section 9 hereof.
"Funding Losses"- Shall have the meaning ascribed to such term
in Section 3(a) hereof.
"Funding Party"- Any bank or other entity, if any,
which is indirectly or directly funding
Lender with respect to the Loan, in whole or
in part, including, without limitation, any
direct or indirect assignee of, or
participant in, the
Loan.
"Governmental Authority"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Interest Accrual Period"- With respect to any Payment Date, from the
eleventh (11th) day of the calendar month
preceding such Payment Date until the tenth
(10th) day of current month, provided, that
no Interest Accrual Period shall end later
than the Maturity Date (other than for
purposes of calculating Default Interest),
and the initial Interest Accrual Period
shall begin on the date of this Note.
"Law Change"- Shall have the meaning ascribed to
such term in Section 12(c) hereof.
"Lender"- Shall have the meaning ascribed to such
term in the introductory paragraph hereof.
"LIBOR Interest Rate"- Shall have the meaning ascribed to such term
in Section 2(a) hereof.
"LIBOR"- With respect to the relevant Interest
Accrual Period, the rate per annum (rounded
upwards, if necessary, to the nearest
one-one-thousandth (1/1000) of one percent
1%) reported, with respect to the initial
Interest Accrual Period, at 11:00 a.m.
London time on the date of this Note (or if
such date is not a Eurodollar Business Day,
the immediately preceding Eurodollar
Business Day), and thereafter, at 11:00 a.m.
London time on the date two (2) Eurodollar
Business Days prior to the first day of such
Interest Accrual Period, on Telerate Access
Service Page 3750 (British Bankers
Association Settlement Rate) as the
non-reserve adjusted London Interbank
Offered Rate for U.S. dollar deposits having
a 30 day term and in an amount of $1,000,000
or more (or on such other page as may
replace Telerate Page 3750 on that service
or such other service or services as may be
nominated by the British Bankers'
Association for the purpose of displaying
such rate all as determined by Lender in its
sole but good faith discretion). In the
event that (i) more than one such LIBOR is
provided, the average of such rates shall
apply or (ii) no such LIBOR is published,
then LIBOR shall be determined from such
comparable financial reporting company as
Lender in its sole but good faith discretion
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shall determine. LIBOR for any Interest
Accrual Period shall be adjusted from time
to time, by increasing the rate thereof to
compensate Lender and any Funding Party for
any aggregate reserve requirements
(including, without limitation, all basic,
supplemental, marginal and other reserve
requirements and taking into account any
transitional adjustments or other scheduled
changes in reserve requirements during any
Interest Accrual Period) which are required
to be maintained by Lender or such Funding
Party with respect to "Eurocurrency
liabilities" (as presently defined in
Regulation D of the Board of Governors of
the Federal Reserve System) of the same term
under Regulation D, or any other regulations
of a Governmental Authority having
jurisdiction over Lender or such Funding
Party of similar effect.
"Loan"- The loan from Lender to Borrower which is
evidenced by (a) this Note and (b) that
certain Promissory Note, dated July 2, 1998,
made by Cutter Sound Development, Ltd.,
Montverde Property, Ltd., Northside Golf
Partners, Ltd., Northside Development, Ltd.,
U.S. Golf Pinehurst Plantation, Ltd., FSD
Golf Club, Ltd., RH Holdings, Inc. and
Wedgefield Limited Partnership in favor of
Lender in the amount of $50,950,000.00, as
same may have been or may be amended,
modified or extended, from time to time, in
the aggregate amount of $100,950,000.00.
"Loan Agreement"- That certain Loan Agreement,
dated as of July 2, 1998, as same may have
been and may be amended, modified or
extended, from time to time, made by and
between Borrower and Lender, with respect to
the Loan.
"Loan Documents"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Loan Taxes"- Shall have the meaning ascribed to such
term in Section 12(a) hereof.
"Maturity Date"- July 1, 2001.
"Mortgage"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Net Proceeds"- The amount allocated to the Monthly Debt
Service Account under Section 3(a)(A)(vii)
or Section 3(a)(B)(vii) of the Cash
Management Agreement during any Collection
Period (as defined therein) plus the amount
allocated to the Monthly Debt Service
Account upon the sale of a Release Parcel or
Lot (each as defined in the Loan Agreement)
under Section 3(a)(C) thereof.
"Note"- This Promissory Note.
"Payment Date"- September 11, 1998 and the eleventh
day of each month thereafter during the term
of this Note, if the eleventh day is not a
Domestic Business Day then on the next
preceding Domestic Business Day.
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"Pelican Strand Note"- The note of July 2, 1998, made by Pelican
Strand, Ltd. to Lender in the amount of
$35,600,000.
"Person"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Treasury Rate"- A rate per annum equal to the yield, as
of the related determination date,
calculated by linear interpolation (rounded
to the nearest one-thousandth of one percent
(i.e., 0.001%)) of the yields of noncallable
United States Treasury obligations with
terms (one longer and one shorter) most
nearly approximating the period from such
determination date to the Maturity Date, as
determined in good faith by Lender on the
basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the
heading U.S. Governmental Security/Treasury
Constant Maturities, or other recognized
source of financial market information
selected by Lender.
"U.S. Person"- Any Person that is (i) a citizen or resident
of the United States, (ii) a corporation,
partnership or other entity created or
organized under the laws of the United
States or any State thereof or (iii) any
estate or trust that is subject to U.S.
federal income taxation regardless of the
source of its income.
2. Interest and Principal Payments. (a) Subject to the further
provisions of this Note, including Sections 3 and 5 below, the principal amount
outstanding hereunder shall bear interest at a rate per annum (the "LIBOR
Interest Rate") equal to five and six tenths percent (5.6%) in excess of LIBOR
for the relevant Interest Accrual Period.
(b) Prior to the Maturity Date (or the date the unpaid
principal balance otherwise becomes due, whether by acceleration or otherwise),
interest accruing during each Interest Accrual Period shall be payable monthly
in arrears on each Payment Date. In addition, Borrower shall pay, in reduction
of the outstanding principal amount of the Loan,
(i) on each Payment Date an amount equal to the Net
Proceeds for the preceding calendar month,
(ii) on July 1, 1999, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twelve (12) calendar months, excluding
Net Proceeds attributable to the sale of an Individual
Property or Release Parcel during such period, plus (y) the
aggregate payments to Lender under Sections 2(b)(i), (ii) or
(iii) of the Pelican Strand Note during the preceding twelve
(12) calendar months (including payments on July 1, 1999),
shall be less than $14,050,000 and
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(iii) on July 1, 2000, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twenty-four (24) calendar months,
excluding Net Proceeds attributable to the sale of an
Individual Property or Release Parcel during such period, plus
(y) the aggregate payments to Lender under Sections 2(b)(i),
(ii) or (iii) of the Pelican Strand Note during the preceding
twenty-four (24) calendar months (including payments on July
1, 2000), shall be less than $36,550,000.
The entire unpaid principal balance of this Note together with
all accrued and unpaid interest, if not sooner paid, shall be payable in full on
the Maturity Date.
(c) All interest payable hereunder shall be computed on the
basis of a 360-day year for the actual number of days elapsed. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall, subject to paragraph (d)
below, be excluded. Interest shall accrue on each payment of principal hereunder
through the date on which such payment is credited, as provided below.
(d) All sums payable to Lender hereunder shall be payable,
without setoff, deduction or counterclaim, in immediately available funds, no
later than noon New York time on the date when due by wire transfer to such
account or address as Lender may from time to time designate in a written notice
to Borrower. Payments received by Lender in immediately available funds on any
day after noon New York time shall be treated for all purposes of the Loan as
having been paid and received by Lender on the next Domestic Business Day.
Notwithstanding anything to the contrary contained herein, when any payment is
due hereunder or under any of the other Loan Documents on a day which is not a
Domestic Business Day, such payment shall be made on the next succeeding
Domestic Business Day.
3. Funding Losses; Change in Law, Etc.
(a) Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate hereon) (collectively,
"Funding Losses") sustained by Lender or any Funding Party: (i) if this Note, or
any portion hereof, is repaid for any reason whatsoever on any date other than a
Payment Date (including, without limitation, from condemnation or insurance
proceeds, unless due to Lender's election to apply same to this Note on such
date), (ii) upon the conversion of the interest rate on the Loan to the Base
Rate in accordance with subsection (b) below, and/or (iii) as a consequence of
(x) any increased costs (without duplication of any costs used in calculating
LIBOR) that Lender or any Funding Party may sustain in maintaining the borrowing
evidenced hereby or (y) the reduction of any amounts received or receivable from
Borrower, in either case, due to the introduction of, or any change in, law or
applicable regulation or treaty (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having jurisdiction.
Payment of Funding Losses hereunder shall be in addition to any obligation to
pay a prepayment premium under Section 4 hereof in circumstances where such
prepayment premium would be due and owing.
(b) If Lender determines (which determination shall be
conclusive and binding upon Borrower, absent manifest error) (i) that Dollar
deposits in an amount approximately equal to the principal balance outstanding
hereunder are not generally available at such time in the London Interbank
Market for deposits in Eurodollars, (ii) that the rate at which such deposits
are being offered will not adequately and fairly reflect the cost to Lender or a
Funding Party of maintaining a LIBOR Interest Rate on the Loan (or the portion
of the Loan being funded by such Funding Party) or of funding the same in such
market for such Interest Accrual Period due to circumstances affecting the
London Interbank Market generally, (iii) that reasonable means do not exist for
ascertaining LIBOR, or (iv) that a LIBOR Interest Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then, in any such event,
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Lender shall immediately notify Borrower of such circumstance and as of the date
of such notification with respect to an event described in clause (ii) or (iv)
above, or as of the expiration of the applicable Interest Accrual Period with
respect to an event described in clause (i) or (iii) above, interest shall
accrue at the Base Rate until such time as the situations described above are no
longer in effect or as otherwise provided in Section 5 hereof; provided,
however, if the situation described in clause (ii) above occurs, (x) Borrower
shall have the option, to be exercised by written notice to Lender, to pay
Lender (in the manner reasonably required by Lender) for such increased cost of
maintaining a LIBOR Interest Rate and (y) if the same only affects a portion of
the Loan, then only such portion shall have interest accrue at the Base Rate
(provided the remaining portion is at least $1,000,000) and interest shall
continue to accrue on the remaining portion at the LIBOR Interest Rate.
Notwithstanding anything to the contrary herein, with respect to an event
described in clauses (i) through (iv) above, provided that no Event of Default
shall then exist, Borrower shall have the right, on thirty (30) days prior
written notice to Lender given within thirty (30) days after Lender gives notice
to Borrower of such event, to pay the entire outstanding principal balance of
the Loan and all accrued and unpaid interest thereon on the next Payment Date
together with the Spread Maintenance Premium (as defined in the Loan Agreement)
thereon.
(c) If the introduction of, or any change in, any law,
regulation or treaty, or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof after the
date of this Note, shall make it unlawful for Lender or any Funding Party to
maintain the LIBOR Interest Rate with respect to the Loan, or any portion
thereof, or to fund the Loan, or any portion thereof, in Eurodollars in the
London Interbank Market, then the Loan (or such portion of the Loan) shall
thereafter bear interest at the Base Rate (unless the Default Rate shall be
applicable) and Borrower shall pay to Lender the amount of Funding Losses (if
any) incurred in connection with such conversion. The accrual of interest at the
Base Rate shall continue until such Payment Date, if any, as the situation
described in this subsection (c) is no longer in effect.
(d) If Lender or the Funding Party, as the case may be, shall
have determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption of any other law, rule, regulation or guideline (including but not
limited to any United States law, rule, regulation or guideline) coming into
existence after the date of this Note regarding capital adequacy, or any change
becoming effective after the date of this Note in any of the foregoing or in the
enforcement or interpretation or administration of any of the foregoing by any
court or any domestic or foreign governmental authority, central bank or
comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by Lender or its holding company or a
Funding Party or its holding company, as the case may be, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency (excluding, however, any
such laws, rules, regulations, and guidelines giving rise to the reserve
requirement used in calculating LIBOR), has or would have the effect of reducing
the rate of return on the capital of Lender, the Funding Party's or such Funding
Party's holding company, as the case may be, to a level below that which Lender
or its holding company or the Funding Party or its holding company, as the case
may be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration Lender's or its holding company's or the
Funding Party's or its holding company's, as the case may be, policies with
respect to capital adequacy) (the foregoing being hereinafter referred to as
"Capital Adequacy Events"), then, upon demand by Lender, Borrower shall, pay to
Lender, from time to time, such additional amount or amounts as will compensate
Lender or such Funding Party for any such reduction suffered.
(e) Any amount payable by Borrower under subsection (a) or
subsection (d) of this Section 3 shall be paid to Lender within five (5)
Business Days of receipt by Borrower of a certificate signed by an officer of
Lender setting forth the amount due and the basis for the determination of such
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amount, which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from Borrower
for any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to Borrower prompt
notice of any event described in subsection (a) or (d) above and of the amount
to be paid under this Section 3 as a result thereof; provided, however, any
failure by Lender to so notify Borrower shall not affect Borrower's obligation
to make the payments to be made under this Section 3 as a result thereof. All
amounts which may become due and payable by Borrower in accordance with the
provisions of this Section 3 shall constitute additional interest hereunder and
shall be secured by the Mortgage and the other Loan Documents.
(f) If Lender or any Funding Party requests compensation for
any losses or costs to be reimbursed pursuant to any one or more of the
provisions of subsections (a) (iii) or (iv) or subsection (d) of this Section 4,
or if any event occurs as described in subsections (b) or (c) above which would
cause the Note no longer to bear interest at the LIBOR Interest Rate then, upon
request of Borrower, Lender or such Funding Party shall use reasonable efforts
in a manner consistent with such institution's practice in connection with loans
like the Loan to designate a different lending office for funding or booking the
Transaction Indebtedness or assign its rights and obligations under this Note to
another of its offices, branches or affiliates if such designation or assignment
in Lender's sole but good faith judgment (i) would eliminate, mitigate or reduce
amounts payable by Borrower in connection with Funding Losses or Capital
Adequacy Events or, with respect to an event described in subsection (b) or (c)
above would allow this Note to continue to bear interest at the LIBOR Interest
Rate without additional cost to Lender and (ii) would not be otherwise
prejudicial to Lender; Borrower hereby agreeing to pay all reasonably incurred
costs and expenses incurred by Lender or any Funding Party in connection with
any such designation or assignment.
4. Prepayment. Borrower expressly waives any right to prepay
this Note, in whole or in part, except as otherwise expressly provided in the
Loan Documents. Notwithstanding, anything contained in the Loan Documents to the
contrary, no prepayments will be permitted from the twelfth day of any month
through the fifteenth day of any month, unless such prepayment is accompanied by
the payment of any interest due for the next succeeding Interest Accrual Period.
5. Default Interest; Late Charge. (a) If any payment of
principal, interest or other sum payable hereunder or under any of the other
Loan Documents is not paid when due (including by reason of failure to pay all
principal, interest and all other amounts due hereunder and under the other Loan
Documents on the Maturity Date (or such earlier date as the same may become due,
whether by acceleration or otherwise)), such principal amount, interest or other
sum shall bear interest at a rate per annum (the "Default Rate") equal to five
percent (5%) in excess of the interest rate on the Loan determined in accordance
with Section 2(a) above, which Default Rate shall so apply from the date due
until the date such amount is indefeasibly paid to Lender. Without limiting the
foregoing, upon the occurrence of and during the continuance of an Event of
Default hereunder, the entire principal balance of this Note shall bear interest
at the Default Rate. Interest at the Default Rate shall be paid immediately upon
demand, which demand may be made as frequently as Lender shall elect.
(b) If any installment of interest or principal is not paid
when due, Borrower shall pay to Lender a late charge of four percent (4%) of the
amount so overdue in order to defray part of the expense incident to handling
such delinquent payment or payments. Such late charge shall be immediately due
and payable without notice or demand by Lender. Such late charge shall be in
addition to and separate from any increase in interest due hereunder as a result
of calculation of interest due hereunder at the Default Rate. Acceptance by
Lender of any late charge or interest at the Default Rate shall not be deemed a
waiver of any of Lender's rights hereunder or under the other Loan Documents
with respect to such late payment.
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6. Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter if any such Event of Default shall then be
continuing, Lender may, without additional notice to Borrower, declare the
principal of, and accrued interest on, this Note to be immediately due,
whereupon the same shall forthwith become immediately due and payable without
presentment, demand, protest or other notice of any kind and Lender may proceed
to exercise any rights and remedies available to Lender under the Mortgage and
the other Loan Documents or which Lender may have at law, in equity or
otherwise.
7. Expenses. Borrower hereby agrees to pay to Lender on demand
all costs and expenses of Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the enforcement and
collection hereof, whether or not any suit is brought on this Note or any
foreclosure or other proceeding is brought. The provisions of this Section 7 are
not intended to limit in any manner Borrower's obligations to pay costs and
expenses of Lender as may be elsewhere provided herein, in the Loan Agreement,
in the Mortgage or in any other Loan Document.
8. Security. This Note is secured by the Mortgage, the
Assignment of Leases (as defined in the Loan Agreement) and the other Loan
Documents.
9. Excess Interest. It is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of the other Loan
Documents, no such provision shall require the payment or permit the collection
of any amount ("Excess Interest") in excess of the maximum amount of interest
permitted by law to be charged for the use or detention, or the forbearance in
the collection, of all or any portion of the indebtedness evidenced by this
Note. If any Excess Interest is provided for, or is adjudicated to be provided
for, in this Note or any of the other Loan Documents, then in such event:
(a) the provisions of this Section 9 shall govern and
control;
(b) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall be obligated to pay
any Excess Interest;
(c) any Excess Interest that Lender may have received
hereunder shall, at the option of Lender, be (i) applied as a credit against the
then outstanding principal balance (without payment of prepayment premium) due
under this Note, accrued and unpaid interest thereon not to exceed the maximum
amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii)
any combination of the foregoing;
(d) the applicable interest rate or rates shall be
automatically subject to reduction to the maximum lawful rate and this Note, the
Mortgage, and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in such interest rate or
rates; and
(e) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall have any action or
remedy against Lender for any damages whatsoever or any defense to enforcement
of the Note, Mortgage or any of the other Loan Documents arising out of the
payment or collection of any Excess Interest.
10. Waiver. Borrower expressly waives presentment for payment,
demand, notice of demand and of dishonor and nonpayment of this Note, protest
and notice of protest, diligence in collecting, and the bringing of suit against
any other party.
11. Governing Law. THIS NOTE SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IT IS THE INTENT OF THE
PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK APPLY TO THIS NOTE.
8
<PAGE>
12. Loan Taxes. (a) Any and all payments by Borrower to Lender
hereunder and under the other Loan Documents shall, provided that Lender
complies with the requirements of subsection (c) below, be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto except for the following for which Borrower shall not be responsible:
(A) taxes imposed on or measured by Lender's net income or net receipts, or (B)
franchise taxes imposed on Lender, by the jurisdiction in which (i) Lender is
organized, (ii) Lender is "doing business" (unless such determination of "doing
business" is made solely as a result of Lender's interest in the Loan and the
security therefor) or (iii) Lender's applicable lending office is located (all
such taxes, levies, imposts, deductions, charges or withholdings and liabilities
(except those described in clauses (A) and (B)) being hereinafter referred to as
"Loan Taxes"). If Borrower shall be required by law to deduct or withhold any
Loan Taxes from or in respect of any sum payable hereunder or under any other
Loan Document, then (x) any such sum payable hereunder or under any other Loan
Document shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions applicable to
additional sums payable under this Section 12), Lender receives an amount equal
to the sum it would have received had no such deductions or withholdings
(including deductions applicable to additional sums payable under this Section
12) been made, (y) Borrower shall make such deductions or withholdings and (z)
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority in accordance with applicable law. Borrower will indemnify Lender for
the full amount of any Loan Taxes (including, without limitation, any Loan Taxes
(as well as taxes described in clauses (A) and (B) above) imposed by any
jurisdiction on any amounts payable under this Section 12) paid or payable by
Lender and any liability (including, without limitation, penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Loan
Taxes were correctly or legally asserted. A certificate as to the amount of such
payment or liability delivered to Borrower by Lender shall be conclusive absent
manifest error. The agreements and obligations of Borrower contained in this
Section 12 shall survive the payment in full of principal and interest under
this Note.
(b) Within 30 days after the date of any payment of
Loan Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt or other
evidence reasonably satisfactory to the Agent evidencing payment thereof.
(c) If Lender is a U.S. Person (other than the Lender
originally named herein), Lender shall deliver to Borrower upon request a Form
W-9 (unless it establishes to the reasonable satisfaction of Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
withholding tax). If Lender is not a U.S. Person, Lender shall deliver to
Borrower upon request a Form W-8 and either (i) a Form 1001 which indicates a 0%
rate of tax or (ii) a Form 4224. If Lender is not a U.S. Person, Lender further
undertakes to deliver to Borrower additional Forms W-8, 1001, 4224 (or any
successor forms) or other manner of certification, as the case may be, (i) on or
before the date that any such form expires or becomes obsolete, (ii) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to Borrower, and (iii) such extensions or renewals thereof as
may reasonably be requested by Borrower, certifying that Lender is entitled to
receive payments hereunder without deduction or withholding of any Loan Taxes.
However, in the event that any change in law, rule, regulation, treaty or
directive, or in the interpretation or application thereof (a "Law Change"), has
occurred after the date hereof and prior to the date on which any delivery
pursuant to the preceding sentence would otherwise be required which renders
such form inapplicable, or which would prevent Lender from duly completing and
delivering any such form or if such Law Change results in Lender being unable to
deliver a Form W-9 (or other satisfactory evidence that it is otherwise eligible
for an exemption from backup withholding tax or other withholding tax), Lender
shall not be obligated to deliver such forms but shall, promptly following such
Law Change, but in any event prior to the time the next payment hereunder is due
following such Law Change, advise Borrower in writing whether it is capable of
receiving payments without any deduction or withholding of Loan Taxes. In the
event of such Law Change, the Borrower shall have the obligation to make the
Lender whole and to "gross-up" under Section 12(a) despite the failure by the
Lender to deliver such forms.
9
<PAGE>
(d) If Lender receives a refund in respect of Loan
Taxes paid by Borrower, it shall promptly pay such refund, together with any
other amounts paid by Borrower pursuant to subsection (a). above in connection
with such refunded Loan Taxes, to Borrower; provided, however, that Borrower
agrees to promptly return such refund to Lender if it receives notice from
Lender that it is required to repay such refund. Nothing contained herein shall
be construed to require Lender to seek any refund and Lender shall have no
obligation to Borrower to do so.
(e) All amounts payable under this Section 12 shall
constitute additional interest hereunder and shall be secured by the Mortgage
and the other Loan Documents. The provisions of this Section 12 shall survive
any payment or prepayment of this Note and any foreclosure or satisfaction of
the Mortgage.
(f) Any reference under this Section 12 to "Lender"
shall be deemed to include any participants and assignees.
13. Modification, etc. This Note can be extended, modified or
amended only in writing by an instrument executed by Lender and Borrower and
none of the rights or benefits of Lender hereunder can be waived except in a
written document executed by Lender.
14. Binding Effect. This Note shall be binding upon and inure
to the benefit of Lender, Borrower and their respective successors and assigns.
15. Notices. All notices and other communications hereunder
shall be delivered as set forth in Section 7.6 of the Loan Agreement.
16. Interpretation. The headings of sections and paragraphs in
this Note are for convenience only and shall not be construed in any way to
limit or define the content, scope, or intent of the provisions hereof. As used
in this Note, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so
requires. The parties hereto intend and believe that each provision in this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties to the fullest
possible extent that it is legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void or unenforceable
provision were not contained therein, and that the rights, obligations and
interests of Borrower and Lender under the remainder of this Note shall continue
in full force and effect; provided, however, that if any provision of this Note
which is found to be in violation of any applicable law concerning the
imposition of interest hereunder, the rights, obligations and interests of
Borrower and Lender with respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of Section 9 hereof. Time is of the
essence of this Note.
17. Limited Recourse. The provisions of Section 7.20 of the
Loan Agreement shall apply to Borrower's obligations under this Note and are
incorporated herein as if fully set forth herein.
18. No Oral Agreements. THIS NOTE AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
Note as of the day and year first above written.
BORROWER:
CUTTER SOUND DEVELOPMENT, LTD.,
a Florida limited partnership
By: U.S. Golf (Cutter Sound), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
MONTVERDE PROPERTY, LTD.,
a Florida limited partnership
By: U.S. Golf (Montverde), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE GOLF PARTNERS, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE DEVELOPMENT, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
U.S. GOLF PINEHURST PLANTATION, LTD.,
a Florida limited partnership
By: U.S. Golf (Plantation), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
11
<PAGE>
FSD GOLF CLUB, LTD.,
a Florida limited partnership
By: U.S. Golf (FSD), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
RH HOLDINGS, INC., a Utah corporation
By:
---------------------------------
Name: Warren Stanchina
Title: President
WEDGEFIELD LIMITED PARTNERSHIP,
a Michigan limited partnership
By: U.S. Golf (Wedgefield), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
ARLINGTON LAKES, L.P.,
a Texas limited partnership
By: GCA Texas Development, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
12
NOTE CONSOLIDATION AND SEVERANCE AGREEMENT
THIS NOTE CONSOLIDATION AND SEVERANCE AGREEMENT (this
"Agreement") made as of the 3rd day of September, 1998, between CUTTER SOUND
DEVELOPMENT, LTD., MONTVERDE PROPERTY, LTD., NORTHSHORE GOLF PARTNERS, LTD.,
NORTHSHORE DEVELOPMENT, LTD., U.S. GOLF PINEHURST PLANTATION, LTD., FSD GOLF
CLUB, LTD., RH HOLDINGS, INC., WEDGEFIELD LIMITED PARTNERSHIP and ARLINGTON
LAKES, L.P., each having an address at c/o Golf Communities of America, 255
South Orange Avenue, Firstate Tower, Suite 1515, Orlando, Florida 32801
("Borrower") and CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, having an
address at 11 Madison Avenue, New York, New York 10010 ("Lender").
W I T N E S S E T H:
WHEREAS, Lender is the lawful owner and holder of (i) those
certain mortgages and deeds of trust described in Schedule A hereto
(collectively, the "Deeds of Trust") encumbering the premises more particularly
described in the Deeds of Trust together with all improvements now or hereafter
located hereon and all other property intended to be encumbered by the Deeds of
Trust (collectively, the "Premises") and (ii) the two notes in the original
principal amount of $50,590,000 and $50,000,000, respectively, secured by the
Deeds of Trust (the "Notes"); and
WHEREAS, as of the date hereof, the unpaid aggregate principal
amount of the Notes which are secured by the Deeds of Trust is $100,590,000,
plus interest thereon; and
WHEREAS, Lender, as the holder of the Notes and Deeds of
Trust, and Trustor, as the owner of the Premises, have agreed to consolidate the
indebtedness evidenced by the Notes into a single consolidated indebtedness of
$100,590,000 (the "Consolidated Indebtedness"); and
WHEREAS, Lender, as the holder of the Notes and Deeds of
Trust, and Borrower, as the owner of the Premises, have agreed to sever the
Notes, as consolidated, into three separate indebtednesses of $48,456,000,
$26,247,000 and $26,247,000, respectively, and, in connection therewith,
Borrower has agreed to execute and deliver to Lender simultaneously herewith:
(i) a note to be dated as of the date hereof in the amount of
$48,456,000 ("Class A Note") to evidence the indebtedness in like amount; and
(ii) a note to be dated as of the date hereof in the amount of
$26,247,000 ("Class B Note") to evidence the indebtedness in like amount; and
(iii) a note to be dated as of the date hereof in the amount
of $26,247,000 ("Class C Note") to evidence the indebtedness in like amount; and
WHEREAS, Class A Note, Class B Note and Class C Note are
intended to be given in substitution of and are intended to evidence the same
indebtedness as evidenced by the Notes in the aggregate amount of $100,590,000,
which Notes were secured by the Deeds of Trust in the aggregate original
principal amount of $100,590,000; and
NOW THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. The Notes and the indebtedness evidenced thereby
are hereby consolidated so that together they shall hereafter evidence a single
indebtedness in the aggregate principal amount of the Consolidated Indebtedness,
together with interest thereon.
2. Borrower hereby represents and warrants to Lender
that there exists no defense, offset or counterclaim with respect to Borrower's
obligations under the Notes.
<PAGE>
3. Borrower hereby acknowledges that it is indebted
to Lender in accordance with the Notes, as consolidated, and that the aggregate
principal amount of the Notes is $100,950,000.00, with a current outstanding
balance of $100,950,000.
4. (a) The principal indebtedness of $100,950,000
evidenced by the Notes, as consolidated hereby, hereby is severed into three
portions as follows:
(i) a principal indebtedness of $48,456,000 to be evidenced
by Class A Note which will be executed and delivered by Cutter Sound
Development, Ltd., Montverde Property, Ltd., Northshore Golf Partners, Ltd.,
Northshore Development, Ltd., U.S. Golf Pinehurst Plantation, Ltd., FSD Golf
Club, Ltd., RH Holdings, Inc., Wedgefield Limited Partnership and Arlington
Lakes, L.P., simultaneously herewith; and
(ii) a principal indebtedness of $26,247,000 to be evidenced
by Class B Note which will be executed and delivered by Cutter Sound
Development, Ltd., Montverde Property, Ltd., Northshore Golf Partners, Ltd.,
Northshore Development, Ltd., U.S. Golf Pinehurst Plantation, Ltd., FSD Golf
Club, Ltd., RH Holdings, Inc., Wedgefield Limited Partnership and Arlington
Lakes, L.P., simultaneously herewith; and
(iii) a principal indebtedness of
$26,247,000 to be evidenced by Class C Note which will be executed and delivered
by Cutter Sound Development, Ltd., Montverde Property, Ltd., Northshore Golf
Partners, Ltd., Northshore Development, Ltd., U.S. Golf Pinehurst Plantation,
Ltd., FSD Golf Club, Ltd., RH Holdings, Inc., Wedgefield Limited Partnership and
Arlington Lakes, L.P., simultaneously herewith;
(b) Class A Note, Class B Note and Class C Note will
be executed and delivered simultaneously herewith, in substitution for the
Notes, as consolidated. The principal indebtedness of $48,456,000 evidenced by
Class A Note, the principal indebtedness of $26,247,000 evidenced by Class B
Note and the principal indebtedness of $26,247,000 evidenced by Class C Note
constitute, in the aggregate, the same principal indebtedness evidenced by the
Notes, as consolidated, and secured by the Deeds of Trust and do not create or
secure any new or further indebtedness.
5. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of law.
6. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument.
7. This Agreement shall be binding upon Borrower, its
successors and assigns, and shall be binding upon and inure to the benefit of
Lender, its successors and assigns, including any subsequent holder of all or
any portion of the Notes or the Deeds of Trust.
2
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
CUTTER SOUND DEVELOPMENT, LTD.,
a Florida limited partnership
By: U.S. Golf (Cutter Sound), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
MONTVERDE PROPERTY, LTD.,
a Florida limited partnership
By: U.S. Golf (Montverde), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE GOLF PARTNERS, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE DEVELOPMENT, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
U.S. GOLF PINEHURST PLANTATION, LTD.,
a Florida limited partnership
By: U.S. Golf (Plantation), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
3
<PAGE>
FSD GOLF CLUB, LTD.,
a Florida limited partnership
By: U.S. Golf (FSD), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
RH HOLDINGS, INC., a Utah corporation
By:
---------------------------------
Name: Warren Stanchina
Title: President
WEDGEFIELD LIMITED PARTNERSHIP,
a Michigan limited partnership
By: U.S. Golf (Wedgefield), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
ARLINGTON LAKES, L.P.,
a Texas limited partnership
By: GCA Texas Development, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
By:
---------------------------------
Name:
Title:
4
<PAGE>
SCHEDULE A
1. Deed of Trust and Security Agreement, dated July 2, 1998, by RH Holdings,
Inc. ("Trustor") to First American Title Insurance Company ("Trustee") for
the benefit of Credit Suisse First Boston Mortgage Capital LLC
("Beneficiary")
2. Mortgage and Security Agreement, dated July 2, 1998, by Wedgefield Limited
Partnership ("Mortgagor") in favor of Credit Suisse First Boston Mortgage
Capital LLC ("Mortgagee").
3. Deed of Trust and Security Agreement, dated July 2, 1998, by U.S. Golf
Pinehurst Plantation, Ltd ("Trustor") to First American Title Insurance
Company ("Trustee") for the benefit of Credit Suisse First Boston Mortgage
Capital LLC ("Beneficiary").
4. Mortgage and Security Agreement, dated July 2, 1998, by Montverde Property,
Ltd. ("Mortgagor") in favor of Credit Suisse First Boston Mortgage Capital
LLC ("Mortgagee").
5. Mortgage and Security Agreement, dated July 2, 1998, by FSD Golf Club, Ltd.
("Mortgagor") in favor of Credit Suisse First Boston Mortgage Capital LLC
("Mortgagee").
6. Deed of Trust and Security Agreement, dated July 2, 1998, by Northshore
Development, Ltd., and Northshore Golf Partners, Ltd. (collectively,
"Trustor") to Kim Sobieski ("Trustee") for the benefit of Credit Suisse
First Boston Mortgage Capital LLC ("Beneficiary").
7. Mortgage and Security Agreement, dated July 2, 1998, by Cutter Sound
Development, Ltd. ("Mortgagor") in favor of Credit Suisse First Boston
Mortgage Capital LLC ("Mortgagee").
5
CLASS A PROMISSORY NOTE
U.S. $48,456,000.00 September 3, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, CUTTER SOUND DEVELOPMENT,
LTD., MONTVERDE PROPERTY, LTD., NORTHSHORE GOLF PARTNERS, LTD., NORTHSHORE
DEVELOPMENT, LTD., U.S. GOLF PINEHURST PLANTATION, LTD., FSD GOLF CLUB, LTD., RH
HOLDINGS, INC., WEDGEFIELD LIMITED PARTNERSHIP and ARLINGTON LAKES, L.P., each
having an address at c/o Golf Communities of America, 255 South Orange Avenue,
Firstate Tower, Suite 1515, Orlando, Florida 32801 ("Borrower"), hereby promises
and agrees to pay to the order of CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL
LLC, a Delaware limited liability company, its successors and assigns
("Lender"), at its office at 11 Madison Avenue, New York, New York 10010, on the
Maturity Date (as defined below) the principal sum of FORTY EIGHT MILLION FOUR
HUNDRED FIFTY SIX AND NO/100 DOLLARS ($48,456,000.00) or so much thereof as
shall have been advanced under the Loan Agreement (as hereinafter defined) and
shall be outstanding hereunder together with interest thereon as hereinafter set
forth, such payment to be made in lawful money of the United States of America
in immediately available funds.
This Note evidences a portion of a loan (the "Loan") in the
aggregate principal sum of One Hundred Million Nine Hundred Fifty Thousand And
No/100 Dollars ($100,950,000.00), the other portion of which Loan is evidenced
by a Class B Promissory Note (the "Class B Note") in the principal sum of Twenty
Six Million Two Hundred Forty Seven Thousand And No/100 Dollars
($26,247,000.00), dated the date of this Note, made by Borrower to Lender, and
by a Class C Promissory Note (the "Class C Note") in the principal sum of Twenty
Six Million Two Hundred Forty Seven Thousand And No/100 Dollars
($26,247,000.00), dated the date of this Note, made by Borrower to Lender. This
Note, together with the Class B Note and the Class C Note, are hereinafter,
collectively, referred to as the "Notes".
1. Definitions. The following terms used in this Note shall
have the following meanings:
"Base Rate"- The rate per annum equal to one and one
half percentage points (1.5%) in excess of
the Treasury Rate. Any interest rate based
on the Base Rate shall be adjusted as of the
date of any change in the Base Rate. The
determination of the Base Rate shall be made
by Lender and shall be conclusive and
binding upon Borrower, absent manifest
error.
"Borrower"- Shall have the meaning ascribed to such term
in the initial paragraph hereof. The term
"Borrower" shall include the respective
successors and assigns of Borrower, but the
foregoing is not intended to vary or negate
the effect of Section 5.1 of the Loan
Agreement.
"Capital Adequacy Events"- Shall have the meaning ascribed to such term
in Section 3(d) hereof.
"Cash Management Agreement"- That certain Cash
Management Agreement, dated as of July 2,
1998, as same may have been or may be
amended, modified or extended, from time to
time, by and between Borrower and Lender,
with respect to the
Loan.
"Default Rate"- Shall have the meaning ascribed to such term
in Section 5(a) hereof.
<PAGE>
"Domestic Business Day"- Any day except a Saturday,
Sunday or other day on which commercial
banks are required or permitted by law to
close in New York City.
"Eurodollar Business Day"- Any day on which commercial
banks are open for international business
(including dealings in dollar deposits) in
London, England.
"Event of Default"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Excess Interest"- Shall have the meaning ascribed to such
term in Section 9 hereof.
"Funding Losses"- Shall have the meaning ascribed to such term
in Section 3(a) hereof.
"Funding Party"- Any bank or other entity, if any, which
is indirectly or directly funding Lender
with respect to the Loan, in whole or in
part, including, without limitation, any
direct or indirect assignee of, or
participant in, the Loan.
"Governmental Authority"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Interest Accrual Period"- With respect to any Payment Date, from the
eleventh (11th) day of the calendar month
preceding such Payment Date until the tenth
(10th) day of current month, provided, that
no Interest Accrual Period shall end later
than the Maturity Date (other than for
purposes of calculating Default Interest),
and the initial Interest Accrual Period
shall begin on the date of this Note.
"Law Change"- Shall have the meaning ascribed to
such term in Section 12(c) hereof.
"Lender"- Shall have the meaning ascribed to such
term in the introductory paragraph hereof.
"LIBOR Interest Rate"- Shall have the meaning ascribed to such term
in Section 2(a) hereof.
"LIBOR"- With respect to the relevant Interest
Accrual Period, the rate per annum (rounded
upwards, if necessary, to the nearest
one-one-thousandth (1/1000) of one percent
1%) reported, with respect to the initial
Interest Accrual Period, at 11:00 a.m.
London time on the date of this Note (or if
such date is not a Eurodollar Business Day,
the immediately preceding Eurodollar
Business Day), and thereafter, at 11:00 a.m.
London time on the date two (2) Eurodollar
Business Days prior to the first day of such
Interest Accrual Period, on Telerate Access
Service Page 3750 (British Bankers
Association Settlement Rate) as the
non-reserve adjusted London Interbank
Offered Rate for U.S. dollar deposits having
a 30 day term and in an amount of $1,000,000
2
<PAGE>
or more (or on such other page as may
replace Telerate Page 3750 on that service
or such other service or services as may be
nominated by the British Bankers'
Association for the purpose of displaying
such rate all as determined by Lender in its
sole but good faith discretion). In the
event that (i) more than one such LIBOR is
provided, the average of such rates shall
apply or (ii) no such LIBOR is published,
then LIBOR shall be determined from such
comparable financial reporting company as
Lender in its sole but good faith discretion
shall determine. LIBOR for any Interest
Accrual Period shall be adjusted from time
to time, by increasing the rate thereof to
compensate Lender and any Funding Party for
any aggregate reserve requirements
(including, without limitation, all basic,
supplemental, marginal and other reserve
requirements and taking into account any
transitional adjustments or other scheduled
changes in reserve requirements during any
Interest Accrual Period) which are required
to be maintained by Lender or such Funding
Party with respect to "Eurocurrency
liabilities" (as presently defined in
Regulation D of the Board of Governors of
the Federal Reserve System) of the same term
under Regulation D, or any other regulations
of a Governmental Authority having
jurisdiction over Lender or such Funding
Party of similar effect.
"Loan"- The loan from Lender to Borrower which is
evidenced by (i) this Note, (ii) the Class B
Note and (iii) the Class C Note.
"Loan Agreement"- That certain Loan Agreement,
dated as of July 2, 1998, as same may have
been and may be amended, modified or
extended, from time to time, made by and
between Borrower and Lender, with respect to
the Loan.
"Loan Documents"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Loan Taxes"- Shall have the meaning ascribed to such
term in Section 12(a) hereof.
"Maturity Date"- July 1, 2001.
"Mortgage"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Net Proceeds"- The amount allocated to, or required to be
allocated to, the Monthly Debt Service
Account under Section 3(a)(A)(vii) or
Section 3(a)(B)(vii) of the Cash Management
Agreement during any Collection Period (as
defined therein) plus the amount allocated
to the Monthly Debt Service Account upon the
sale of a Release Parcel or Lot (each as
defined in the Loan Agreement) under Section
3(a)(C) thereof, less interest due on the
Loan, other than default interest.
"Note"- This Promissory Note.
3
<PAGE>
"Payment Date"- September 11, 1998 and the eleventh
day of each month thereafter during the term
of this Note, if the eleventh day is not a
Domestic Business Day then on the next
preceding Domestic Business Day.
"Pelican Strand Notes"- The three (3) notes, of even
date herewith, made by Pelican Strand, Ltd.,
to Lender in the amounts of $17,088,000,
$9,256,000 and $9,256,000, respectively.
"Person"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Treasury Rate"- A rate per annum equal to the yield, as of
the related determination date, calculated
by linear interpolation (rounded to the
nearest one-thousandth of one percent (i.e.,
0.001%)) of the yields of noncallable United
States Treasury obligations with terms (one
longer and one shorter) most nearly
approximating the period from such
determination date to the Maturity Date, as
determined in good faith by Lender on the
basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the
heading U.S. Governmental Security/Treasury
Constant Maturities, or other recognized
source of financial market information
selected by Lender.
"U.S. Person"- Any Person that is (i) a citizen o resident
of the United States, (ii) a corporation,
partnership or other entity created or
organized under the laws of the United
States or any State thereof or (iii) any
estate or trust that is subject to U.S.
federal income taxation regardless of the
source of its income.
2. Interest and Principal Payments. (a) Interest on the
outstanding principal of the Loan evidenced by the Notes shall accrue from the
date hereof at the rate per annum (the "Loan Interest Rate") equal five and six
tenths percent (5.6%) in excess of LIBOR for the relevant Interest Accrual
Period.
(b) Subject to the further provisions of this Note, including
Sections 3 and 5 below, interest on the principal sum evidenced by this Note
shall accrue from the date hereof at the rate per annum (the "Class A Interest
Rate") equal to one and one half percent (1.5%) in excess of LIBOR for the
relevant Interest Accrual Period.
(c) Prior to the Maturity Date (or the date the unpaid
principal balance of the Loan otherwise becomes due, whether by acceleration or
otherwise), interest accruing at the Loan Interest Rate during each Interest
Accrual Period shall be payable monthly in arrears on each Payment Date.
(d) In addition, Borrower shall pay, in reduction of the
outstanding principal amount of the Loan, the following:
(i) on each Payment Date an amount equal to the Net
Proceeds for the preceding calendar month,
4
<PAGE>
(ii) on July 1, 1999, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twelve (12) calendar months, excluding
Net Proceeds attributable to the sale of an Individual
Property or Release Parcel during such period, plus (y) the
aggregate payments to Lender under Sections 2(b)(i), (ii) or
(iii) of the Pelican Strand Notes during the preceding twelve
(12) calendar months (including payments on July 1, 1999),
shall be less than $14,050,000, and
(iii) on July 1, 2000, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twenty-four (24) calendar months,
excluding Net Proceeds attributable to the sale of an
Individual Property or Release Parcel during such period, plus
(y) the aggregate payments to Lender under Sections 2(b)(i),
(ii) or (iii) of the Pelican Strand Notes during the preceding
twenty-four (24) calendar months (including payments on July
1, 2000), shall be less than $36,550,000.
The entire unpaid principal balance of the Loan together with
all accrued and unpaid interest, if not sooner paid, shall be payable in full on
the Maturity Date.
(e) All amounts tendered by Borrower or otherwise available
for payment of the Loan shall be applied in the following order of priority:
(i) to accrued interest and unpaid interest on this
Note at the Class A Interest Rate;
(ii) to accrued interest and unpaid interest on the
Class B Note;
(iii) to accrued interest and unpaid interest on the
Class C Note;
(iv) to the principal of this Note until such
principal has been paid in full;
(v) prior to the occurrence of an Event of Default,
pro rata to the principal of the Class B Note and to the
principal of the Class C Note until such principal has been
paid in full; after the occurrence and during the continuance
of an Event of Default, (a) to the principal of the Class B
Note until such principal has been paid in full and (b) to the
principal of the Class C Note until such principal has been
paid in full;
(vi) to any default interest in excess of the
interest paid in accordance with clauses (i), (ii) and (iii)
above on this Note, the Class B Note and the Class C Note, pro
rata in accordance with the outstanding principal balance of
each such Note;
(vii) to late charges (applied to the Notes depending
on the proportion of the related late payment applicable to
each Note); and
(viii) to any other amounts payable under the
Mortgage or any of the other Loan Documents.
(f) All interest payable hereunder shall be computed on the
basis of a 360-day year for the actual number of days elapsed. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall, subject to paragraph (g)
below, be excluded. Interest shall accrue on each payment of principal hereunder
through the date on which such payment is credited, as provided below.
5
<PAGE>
(g) All sums payable to Lender hereunder shall be payable,
without setoff, deduction or counterclaim, in immediately available funds, no
later than noon New York time on the date when due by wire transfer to such
account or address as Lender may from time to time designate in a written notice
to Borrower. Payments received by Lender in immediately available funds on any
day after noon New York time shall be treated for all purposes of the Loan as
having been paid and received by Lender on the next Domestic Business Day.
Notwithstanding anything to the contrary contained herein, when any payment is
due hereunder or under any of the other Loan Documents on a day which is not a
Domestic Business Day, such payment shall be made on the next succeeding
Domestic Business Day.
3. Funding Losses; Change in Law, Etc.
(a) Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate hereon) (collectively,
"Funding Losses") sustained by Lender or any Funding Party: (i) if this Note, or
any portion hereof, is repaid for any reason whatsoever on any date other than a
Payment Date (including, without limitation, from condemnation or insurance
proceeds, unless due to Lender's election to apply same to this Note on such
date), (ii) upon the conversion of the interest rate on the Loan to the Base
Rate in accordance with subsection (b) below, and/or (iii) as a consequence of
(x) any increased costs (without duplication of any costs used in calculating
LIBOR) that Lender or any Funding Party may sustain in maintaining the borrowing
evidenced hereby or (y) the reduction of any amounts received or receivable from
Borrower, in either case, due to the introduction of, or any change in, law or
applicable regulation or treaty (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having jurisdiction.
Payment of Funding Losses hereunder shall be in addition to any obligation to
pay a prepayment premium under Section 4 hereof in circumstances where such
prepayment premium would be due and owing.
(b) If Lender determines (which determination shall be
conclusive and binding upon Borrower, absent manifest error) (i) that Dollar
deposits in an amount approximately equal to the principal balance outstanding
hereunder are not generally available at such time in the London Interbank
Market for deposits in Eurodollars, (ii) that the rate at which such deposits
are being offered will not adequately and fairly reflect the cost to Lender or a
Funding Party of maintaining a LIBOR Interest Rate on the Loan (or the portion
of the Loan being funded by such Funding Party) or of funding the same in such
market for such Interest Accrual Period due to circumstances affecting the
London Interbank Market generally, (iii) that reasonable means do not exist for
ascertaining LIBOR, or (iv) that a LIBOR Interest Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then, in any such event,
Lender shall immediately notify Borrower of such circumstance and as of the date
of such notification with respect to an event described in clause (ii) or (iv)
above, or as of the expiration of the applicable Interest Accrual Period with
respect to an event described in clause (i) or (iii) above, interest shall
accrue at the Base Rate until such time as the situations described above are no
longer in effect or as otherwise provided in Section 5 hereof; provided,
however, if the situation described in clause (ii) above occurs, (x) Borrower
shall have the option, to be exercised by written notice to Lender, to pay
Lender (in the manner reasonably required by Lender) for such increased cost of
maintaining a LIBOR Interest Rate and (y) if the same only affects a portion of
the Loan, then only such portion shall have interest accrue at the Base Rate
(provided the remaining portion is at least $1,000,000) and interest shall
continue to accrue on the remaining portion at the LIBOR Interest Rate.
Notwithstanding anything to the contrary herein, with respect to an event
described in clauses (i) through (iv) above, provided that no Event of Default
shall then exist, Borrower shall have the right, on thirty (30) days prior
6
<PAGE>
written notice to Lender given within thirty (30) days after Lender gives notice
to Borrower of such event, to pay the entire outstanding principal balance of
the Loan and all accrued and unpaid interest thereon on the next Payment Date
together with the Spread Maintenance Premium (as defined in the Loan Agreement)
thereon.
(c) If the introduction of, or any change in, any law,
regulation or treaty, or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof after the
date of this Note, shall make it unlawful for Lender or any Funding Party to
maintain the LIBOR Interest Rate with respect to the Loan, or any portion
thereof, or to fund the Loan, or any portion thereof, in Eurodollars in the
London Interbank Market, then the Loan (or such portion of the Loan) shall
thereafter bear interest at the Base Rate (unless the Default Rate shall be
applicable) and Borrower shall pay to Lender the amount of Funding Losses (if
any) incurred in connection with such conversion. The accrual of interest at the
Base Rate shall continue until such Payment Date, if any, as the situation
described in this subsection (c) is no longer in effect.
(d) If Lender or the Funding Party, as the case may be, shall
have determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption of any other law, rule, regulation or guideline (including but not
limited to any United States law, rule, regulation or guideline) coming into
existence after the date of this Note regarding capital adequacy, or any change
becoming effective after the date of this Note in any of the foregoing or in the
enforcement or interpretation or administration of any of the foregoing by any
court or any domestic or foreign governmental authority, central bank or
comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by Lender or its holding company or a
Funding Party or its holding company, as the case may be, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency (excluding, however, any
such laws, rules, regulations, and guidelines giving rise to the reserve
requirement used in calculating LIBOR), has or would have the effect of reducing
the rate of return on the capital of Lender, the Funding Party's or such Funding
Party's holding company, as the case may be, to a level below that which Lender
or its holding company or the Funding Party or its holding company, as the case
may be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration Lender's or its holding company's or the
Funding Party's or its holding company's, as the case may be, policies with
respect to capital adequacy) (the foregoing being hereinafter referred to as
"Capital Adequacy Events"), then, upon demand by Lender, Borrower shall, pay to
Lender, from time to time, such additional amount or amounts as will compensate
Lender or such Funding Party for any such reduction suffered.
(e) Any amount payable by Borrower under subsection (a) or
subsection (d) of this Section 3 shall be paid to Lender within five (5)
Business Days of receipt by Borrower of a certificate signed by an officer of
Lender setting forth the amount due and the basis for the determination of such
amount, which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from Borrower
for any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to Borrower prompt
notice of any event described in subsection (a) or (d) above and of the amount
to be paid under this Section 3 as a result thereof; provided, however, any
failure by Lender to so notify Borrower shall not affect Borrower's obligation
to make the payments to be made under this Section 3 as a result thereof. All
amounts which may become due and payable by Borrower in accordance with the
provisions of this Section 3 shall constitute additional interest hereunder and
shall be secured by the Mortgage and the other Loan Documents.
7
<PAGE>
(f) If Lender or any Funding Party requests compensation for
any losses or costs to be reimbursed pursuant to any one or more of the
provisions of subsections (a) (iii) or (iv) or subsection (d) of this Section 4,
or if any event occurs as described in subsections (b) or (c) above which would
cause the Note no longer to bear interest at the LIBOR Interest Rate then, upon
request of Borrower, Lender or such Funding Party shall use reasonable efforts
in a manner consistent with such institution's practice in connection with loans
like the Loan to designate a different lending office for funding or booking the
Transaction Indebtedness or assign its rights and obligations under this Note to
another of its offices, branches or affiliates if such designation or assignment
in Lender's sole but good faith judgment (i) would eliminate, mitigate or reduce
amounts payable by Borrower in connection with Funding Losses or Capital
Adequacy Events or, with respect to an event described in subsection (b) or (c)
above would allow this Note to continue to bear interest at the LIBOR Interest
Rate without additional cost to Lender and (ii) would not be otherwise
prejudicial to Lender; Borrower hereby agreeing to pay all reasonably incurred
costs and expenses incurred by Lender or any Funding Party in connection with
any such designation or assignment.
4. Prepayment. Borrower expressly waives any right to prepay
this Note, in whole or in part, except as otherwise expressly provided in the
Loan Documents. Notwithstanding, anything contained in the Loan Documents to the
contrary, no prepayments will be permitted on other than a Payment Date unless
such repayment is accompanied by the payment of any interest to the next Payment
Date.
5. Default Interest; Late Charge. (a) If any payment of
principal, interest or other sum payable hereunder or under any of the other
Loan Documents is not paid when due (including by reason of failure to pay all
principal, interest and all other amounts due hereunder and under the other Loan
Documents on the Maturity Date (or such earlier date as the same may become due,
whether by acceleration or otherwise)), such principal amount, interest or other
sum shall bear interest at a rate per annum (the "Default Rate") equal to five
percent (5%) in excess of the interest rate on the Loan determined in accordance
with Section 2(a) above, which Default Rate shall so apply from the date due
until the date such amount is indefeasibly paid to Lender. Without limiting the
foregoing, upon the occurrence of and during the continuance of an Event of
Default hereunder, the entire principal balance of this Note shall bear interest
at the Default Rate. Interest at the Default Rate shall be paid immediately upon
demand, which demand may be made as frequently as Lender shall elect.
(b) If any installment of interest or principal is not paid
when due, Borrower shall pay to Lender a late charge of four percent (4%) of the
amount so overdue in order to defray part of the expense incident to handling
such delinquent payment or payments. Such late charge shall be immediately due
and payable without notice or demand by Lender. Such late charge shall be in
addition to and separate from any increase in interest due hereunder as a result
of calculation of interest due hereunder at the Default Rate. Acceptance by
Lender of any late charge or interest at the Default Rate shall not be deemed a
waiver of any of Lender's rights hereunder or under the other Loan Documents
with respect to such late payment.
6. Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter if any such Event of Default shall then be
continuing, Lender may, without additional notice to Borrower, declare the
principal of, and accrued interest on, this Note to be immediately due,
whereupon the same shall forthwith become immediately due and payable without
presentment, demand, protest or other notice of any kind and Lender may proceed
to exercise any rights and remedies available to Lender under the Mortgage and
the other Loan Documents or which Lender may have at law, in equity or
otherwise.
7. Expenses. Borrower hereby agrees to pay to Lender on demand
all costs and expenses of Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the enforcement and
collection hereof, whether or not any suit is brought on this Note or any
8
<PAGE>
foreclosure or other proceeding is brought. The provisions of this Section 7 are
not intended to limit in any manner Borrower's obligations to pay costs and
expenses of Lender as may be elsewhere provided herein, in the Loan Agreement,
in the Mortgage or in any other Loan Document.
8. Security. This Note is secured by the Mortgage, the
Assignment of Leases (as defined in the Loan Agreement) and the other Loan
Documents.
9. Excess Interest. It is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of the other Loan
Documents, no such provision shall require the payment or permit the collection
of any amount ("Excess Interest") in excess of the maximum amount of interest
permitted by law to be charged for the use or detention, or the forbearance in
the collection, of all or any portion of the indebtedness evidenced by this
Note. If any Excess Interest is provided for, or is adjudicated to be provided
for, in this Note or any of the other Loan Documents, then in such event:
(a) the provisions of this Section 9 shall govern and
control;
(b) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall be obligated to pay
any Excess Interest;
(c) any Excess Interest that Lender may have received
hereunder shall, at the option of Lender, be (i) applied as a credit against the
then outstanding principal balance (without payment of prepayment premium) due
under this Note, accrued and unpaid interest thereon not to exceed the maximum
amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii)
any combination of the foregoing;
(d) the applicable interest rate or rates shall be
automatically subject to reduction to the maximum lawful rate and this Note, the
Mortgage, and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in such interest rate or
rates; and
(e) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall have any action or
remedy against Lender for any damages whatsoever or any defense to enforcement
of the Note, Mortgage or any of the other Loan Documents arising out of the
payment or collection of any Excess Interest.
10. Waiver. Borrower expressly waives presentment for payment,
demand, notice of demand and of dishonor and nonpayment of this Note, protest
and notice of protest, diligence in collecting, and the bringing of suit against
any other party.
11. Governing Law. THIS NOTE SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IT IS THE INTENT OF THE
PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK APPLY TO THIS NOTE.
12. Cross Default. A default under the Class B Note, the Class
C Note or any other note now or hereafter secured by the Mortgage constitutes a
default under this Note and under the other Loan Documents. When the default
under the Class B Note, the Class C Note or any such other note constitutes an
Event of Default under that note, an Event of Default also will exist under this
Note and the other Loan Documents.
13. Loan Taxes. (a) Any and all payments by Borrower to Lender
hereunder and under the other Loan Documents shall, provided that Lender
complies with the requirements of subsection (c) below, be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
9
<PAGE>
thereto except for the following for which Borrower shall not be responsible:
(A) taxes imposed on or measured by Lender's net income or net receipts, or (B)
franchise taxes imposed on Lender, by the jurisdiction in which (i) Lender is
organized, (ii) Lender is "doing business" (unless such determination of "doing
business" is made solely as a result of Lender's interest in the Loan and the
security therefor) or (iii) Lender's applicable lending office is located (all
such taxes, levies, imposts, deductions, charges or withholdings and liabilities
(except those described in clauses (A) and (B)) being hereinafter referred to as
"Loan Taxes"). If Borrower shall be required by law to deduct or withhold any
Loan Taxes from or in respect of any sum payable hereunder or under any other
Loan Document, then (x) any such sum payable hereunder or under any other Loan
Document shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions applicable to
additional sums payable under this Section 13), Lender receives an amount equal
to the sum it would have received had no such deductions or withholdings
(including deductions applicable to additional sums payable under this Section
13) been made, (y) Borrower shall make such deductions or withholdings and (z)
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority in accordance with applicable law. Borrower will indemnify Lender for
the full amount of any Loan Taxes (including, without limitation, any Loan Taxes
(as well as taxes described in clauses (A) and (B) above) imposed by any
jurisdiction on any amounts payable under this Section 13) paid or payable by
Lender and any liability (including, without limitation, penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Loan
Taxes were correctly or legally asserted. A certificate as to the amount of such
payment or liability delivered to Borrower by Lender shall be conclusive absent
manifest error. The agreements and obligations of Borrower contained in this
Section 13 shall survive the payment in full of principal and interest under
this Note.
(b) Within 30 days after the date of any payment of
Loan Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt or other
evidence reasonably satisfactory to the Agent evidencing payment thereof.
(c) If Lender is a U.S. Person (other than the Lender
originally named herein), Lender shall deliver to Borrower upon request a Form
W-9 (unless it establishes to the reasonable satisfaction of Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
withholding tax). If Lender is not a U.S. Person, Lender shall deliver to
Borrower upon request a Form W-8 and either (i) a Form 1001 which indicates a 0%
rate of tax or (ii) a Form 4224. If Lender is not a U.S. Person, Lender further
undertakes to deliver to Borrower additional Forms W-8, 1001, 4224 (or any
successor forms) or other manner of certification, as the case may be, (i) on or
before the date that any such form expires or becomes obsolete, (ii) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to Borrower, and (iii) such extensions or renewals thereof as
may reasonably be requested by Borrower, certifying that Lender is entitled to
receive payments hereunder without deduction or withholding of any Loan Taxes.
However, in the event that any change in law, rule, regulation, treaty or
directive, or in the interpretation or application thereof (a "Law Change"), has
occurred after the date hereof and prior to the date on which any delivery
pursuant to the preceding sentence would otherwise be required which renders
such form inapplicable, or which would prevent Lender from duly completing and
delivering any such form or if such Law Change results in Lender being unable to
deliver a Form W-9 (or other satisfactory evidence that it is otherwise eligible
for an exemption from backup withholding tax or other withholding tax), Lender
shall not be obligated to deliver such forms but shall, promptly following such
Law Change, but in any event prior to the time the next payment hereunder is due
following such Law Change, advise Borrower in writing whether it is capable of
receiving payments without any deduction or withholding of Loan Taxes. In the
event of such Law Change, the Borrower shall have the obligation to make the
Lender whole and to "gross-up" under Section 13(a) despite the failure by the
Lender to deliver such forms.
(d) If Lender receives a refund in respect of Loan
Taxes paid by Borrower, it shall promptly pay such refund, together with any
other amounts paid by Borrower pursuant to subsection (a). above in connection
with such refunded Loan Taxes, to Borrower; provided, however, that Borrower
10
<PAGE>
agrees to promptly return such refund to Lender if it receives notice from
Lender that it is required to repay such refund. Nothing contained herein shall
be construed to require Lender to seek any refund and Lender shall have no
obligation to Borrower to do so.
(e) All amounts payable under this Section 13 shall
constitute additional interest hereunder and shall be secured by the Mortgage
and the other Loan Documents. The provisions of this Section 13 shall survive
any payment or prepayment of this Note and any foreclosure or satisfaction of
the Mortgage.
(f) Any reference under this Section 13 to "Lender"
shall be deemed to include any participants and assignees.
14. Modification, etc. This Note can be extended, modified or
amended only in writing by an instrument executed by Lender and Borrower and
none of the rights or benefits of Lender hereunder can be waived except in a
written document executed by Lender.
15. Binding Effect. This Note shall be binding upon and inure
to the benefit of Lender, Borrower and their respective successors and assigns.
16. Notices. All notices and other communications hereunder
shall be delivered as set forth in Section 7.6 of the Loan Agreement.
17. Interpretation. The headings of sections and paragraphs in
this Note are for convenience only and shall not be construed in any way to
limit or define the content, scope, or intent of the provisions hereof. As used
in this Note, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so
requires. The parties hereto intend and believe that each provision in this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties to the fullest
possible extent that it is legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void or unenforceable
provision were not contained therein, and that the rights, obligations and
interests of Borrower and Lender under the remainder of this Note shall continue
in full force and effect; provided, however, that if any provision of this Note
which is found to be in violation of any applicable law concerning the
imposition of interest hereunder, the rights, obligations and interests of
Borrower and Lender with respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of Section 9 hereof. Time is of the
essence of this Note.
18. Limited Recourse. The provisions of Section 7.20 of the
Loan Agreement shall apply to Borrower's obligations under this Note and are
incorporated herein as if fully set forth herein.
19. No Oral Agreements. THIS NOTE AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
Note as of the day and year first above written.
BORROWER:
CUTTER SOUND DEVELOPMENT, LTD.,
a Florida limited partnership
By: U.S. Golf (Cutter Sound), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
MONTVERDE PROPERTY, LTD.,
a Florida limited partnership
By: U.S. Golf (Montverde), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE GOLF PARTNERS, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE DEVELOPMENT, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
U.S. GOLF PINEHURST PLANTATION, LTD.,
a Florida limited partnership
By: U.S. Golf (Plantation), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
12
<PAGE>
FSD GOLF CLUB, LTD.,
a Florida limited partnership
By: U.S. Golf (FSD), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
RH HOLDINGS, INC., a Utah corporation
By:
---------------------------------
Name: Warren Stanchina
Title: President
WEDGEFIELD LIMITED PARTNERSHIP,
a Michigan limited partnership
By: U.S. Golf (Wedgefield), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
ARLINGTON LAKES, L.P.,
a Texas limited partnership
By: GCA Texas Development, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
13
CLASS B PROMISSORY NOTE
U.S. $26,247,000.00 September 3, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, CUTTER SOUND DEVELOPMENT,
LTD., MONTVERDE PROPERTY, LTD., NORTHSHORE GOLF PARTNERS, LTD., NORTHSHORE
DEVELOPMENT, LTD., U.S. GOLF PINEHURST PLANTATION, LTD., FSD GOLF CLUB, LTD., RH
HOLDINGS, INC., WEDGEFIELD LIMITED PARTNERSHIP and ARLINGTON LAKES, L.P., each
having an address at c/o Golf Communities of America, 255 South Orange Avenue,
Firstate Tower, Suite 1515, Orlando, Florida 32801 ("Borrower"), hereby promises
and agrees to pay to the order of CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL
LLC, a Delaware limited liability company, its successors and assigns
("Lender"), at its office at 11 Madison Avenue, New York, New York 10010, on the
Maturity Date (as defined below) the principal sum of TWENTY SIX MILLION TWO
HUNDRED FORTY SEVEN AND NO/100 DOLLARS ($26,247,000.00) or so much thereof as
shall have been advanced under the Loan Agreement (as hereinafter defined) and
shall be outstanding hereunder together with interest thereon as hereinafter set
forth, such payment to be made in lawful money of the United States of America
in immediately available funds.
This Note evidences a portion of a loan (the "Loan") in the
aggregate principal sum of One Hundred Million Nine Hundred Fifty Thousand And
No/100 Dollars ($100,950,000.00), the other portion of which Loan is evidenced
by a Class A Promissory Note (the "Class A Note") in the principal sum of Forty
Eight Million Four Hundred Fifty Six Thousand No/100 Dollars ($48,456,000.00),
dated the date of this Note, made by Borrower to Lender, and by a Class C
Promissory Note (the "Class C Note") in the principal sum of Twenty Six Million
Two Hundred Forty Seven Thousand And No/100 Dollars ($26,247,000.00), dated the
date of this Note, made by Borrower to Lender. This Note, together with the
Class A Note and the Class C Note, are hereinafter, collectively, referred to as
the "Notes".
1. Definitions. The following terms used in this Note shall
have the following meanings:
"Base Rate"- The rate per annum equal to three and one
half percentage points (3.5%) in excess of
the Treasury Rate. Any interest rate based
on the Base Rate shall be adjusted as of the
date of any change in the Base Rate. The
determination of the Base Rate shall be made
by Lender and shall be conclusive and
binding upon Borrower, absent manifest
error.
"Borrower"- Shall have the meaning ascribed to such
term in the initial paragraph hereof. The
term "Borrower" shall include the respective
successors and assigns of Borrower, but the
foregoing is not intended to vary or negate
the effect of Section 5.1 of the Loan
Agreement.
"Capital Adequacy Events"- Shall have the meaning ascribed to such term
in Section 3(d) hereof.
"Cash Management Agreement"- That certain Cash
Management Agreement, dated as of July 2,
1998, as same may have been or may be
amended, modified or extended, from time to
time, by and between Borrower and Lender,
with respect to the
Loan.
"Default Rate"- Shall have the meaning ascribed to such term
in Section 5(a) hereof.
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"Domestic Business Day"- Any day except a Saturday,
Sunday or other day on which commercial
banks are required or permitted by law to
close in New York City.
"Eurodollar Business Day"- Any day on which commercial
banks are open for international business
(including dealings in dollar deposits) in
London, England.
"Event of Default"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Excess Interest"- Shall have the meaning ascribed to such
term in Section 9 hereof.
"Funding Losses"- Shall have the meaning ascribed to such term
in Section 3(a) hereof.
"Funding Party"- Any bank or other entity, if any,
which is indirectly or directly funding
Lender with respect to the Loan, in whole or
in part, including, without limitation, any
direct or indirect assignee of, or
participant in, the
Loan.
"Governmental Authority"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Interest Accrual Period"- With respect to any Payment Date, from the
eleventh (11th) day of the calendar month
preceding such Payment Date until the tenth
(10th) day of current month, provided, that
no Interest Accrual Period shall end later
than the Maturity Date (other than for
purposes of calculating Default Interest),
and the initial Interest Accrual Period
shall begin on the date of this Note.
"Law Change"- Shall have the meaning ascribed to
such term in Section 12(c) hereof.
"Lender"- Shall have the meaning ascribed to such
term in the introductory paragraph hereof.
"LIBOR Interest Rate"- Shall have the meaning ascribed to such term
in Section 2(a) hereof.
"LIBOR"- With respect to the relevant Interest
Accrual Period, the rate per annum (rounded
upwards, if necessary, to the nearest
one-one-thousandth (1/1000) of one percent
1%) reported, with respect to the initial
Interest Accrual Period, at 11:00 a.m.
London time on the date of this Note (or if
such date is not a Eurodollar Business Day,
the immediately preceding Eurodollar
Business Day), and thereafter, at 11:00 a.m.
London time on the date two (2) Eurodollar
Business Days prior to the first day of such
Interest Accrual Period, on Telerate Access
Service Page 3750 (British Bankers
Association Settlement Rate) as the
non-reserve adjusted London Interbank
Offered Rate for U.S. dollar deposits having
a 30 day term and in an amount of $1,000,000
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or more (or on such other page as may
replace Telerate Page 3750 on that service
or such other service or services as may be
nominated by the British Bankers'
Association for the purpose of displaying
such rate all as determined by Lender in its
sole but good faith discretion). In the
event that (i) more than one such LIBOR is
provided, the average of such rates shall
apply or (ii) no such LIBOR is published,
then LIBOR shall be determined from such
comparable financial reporting company as
Lender in its sole but good faith discretion
shall determine. LIBOR for any Interest
Accrual Period shall be adjusted from time
to time, by increasing the rate thereof to
compensate Lender and any Funding Party for
any aggregate reserve requirements
(including, without limitation, all basic,
supplemental, marginal and other reserve
requirements and taking into account any
transitional adjustments or other scheduled
changes in reserve requirements during any
Interest Accrual Period) which are required
to be maintained by Lender or such Funding
Party with respect to "Eurocurrency
liabilities" (as presently defined in
Regulation D of the Board of Governors of
the Federal Reserve System) of the same term
under Regulation D, or any other regulations
of a Governmental Authority having
jurisdiction over Lender or such Funding
Party of similar effect.
"Loan"- The loan from Lender to Borrower which is
evidenced by (i) this Note, (ii) the Class A
Note and (iii) the Class C Note.
"Loan Agreement"- That certain Loan Agreement,
dated as of July 2, 1998, as same may have
been and may be amended, modified or
extended, from time to time, made by and
between Borrower and Lender, with respect to
the Loan.
"Loan Documents"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Loan Taxes"- Shall have the meaning ascribed to
such term in Section 12(a) hereof.
"Maturity Date"- July 1, 2001.
"Mortgage"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Net Proceeds"- The amount allocated to, or required to be
allocated to, the Monthly Debt Service
Account under Section 3(a)(A)(vii) or
Section 3(a)(B)(vii) of the Cash Management
Agreement during any Collection Period (as
defined therein) plus the amount allocated
to the Monthly Debt Service Account upon the
sale of a Release Parcel or Lot (each as
defined in the Loan Agreement) under Section
3(a)(C) thereof, less interest due on the
Loan, other than default interest.
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"Note"- This Promissory Note.
"Payment Date"- September 11, 1998 and the eleventh
day of each month thereafter during the term
of this Note, if the eleventh day is not a
Domestic Business Day then on the next
preceding Domestic Business Day.
"Pelican Strand Notes"- The three (3) notes, of even
date herewith, made by Pelican Strand, Ltd.,
to Lender in the amounts of $17,088,000,
$9,256,000 and $9,256,000, respectively.
"Person"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Treasury Rate"- A rate per annum equal to the yield, as
of the related determination date,
calculated by linear interpolation (rounded
to the nearest one-thousandth of one percent
(i.e., 0.001%)) of the yields of noncallable
United States Treasury obligations with
terms (one longer and one shorter) most
nearly approximating the period from such
determination date to the Maturity Date, as
determined in good faith by Lender on the
basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the
heading U.S. Governmental Security/Treasury
Constant Maturities, or other recognized
source of financial market information
selected by Lender.
"U.S. Person"- Any Person that is (i) a citizen or resident
of the United States, (ii) a corporation,
partnership or other entity created or
organized under the laws of the United
States or any State thereof or (iii) any
estate or trust that is subject to U.S.
federal income taxation regardless of the
source of its income.
2. Interest and Principal Payments. (a) Interest on the
outstanding principal of the Loan evidenced by the Notes shall accrue from the
date hereof at the rate per annum (the "Loan Interest Rate") equal five and six
tenths percent (5.6%) in excess of LIBOR for the relevant Interest Accrual
Period.
(b) Subject to the further provisions of this Note, including
Sections 3 and 5 below, interest on the principal sum evidenced by this Note
shall accrue from the date hereof at the rate per annum (the "Class B Interest
Rate") equal to three and one half percent (3.5%) in excess of LIBOR for the
relevant Interest Accrual Period.
(c) Prior to the Maturity Date (or the date the unpaid
principal balance of the Loan otherwise becomes due, whether by acceleration or
otherwise), interest accruing at the Loan Interest Rate during each Interest
Accrual Period shall be payable monthly in arrears on each Payment Date.
(d) In addition, Borrower shall pay, in reduction of the
outstanding principal amount of the Loan, the following:
(i) on each Payment Date an amount equal to the Net
Proceeds for the preceding calendar month,
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(ii) on July 1, 1999, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twelve (12) calendar months, excluding
Net Proceeds attributable to the sale of an Individual
Property or Release Parcel during such period, plus (y) the
aggregate payments to Lender under Sections 2(b)(i), (ii) or
(iii) of the Pelican Strand Notes during the preceding twelve
(12) calendar months (including payments on July 1, 1999),
shall be less than $14,050,000 and
(iii) on July 1, 2000, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twenty-four (24) calendar months,
excluding Net Proceeds attributable to the sale of an
Individual Property or Release Parcel during such period, plus
(y) the aggregate payments to Lender under Sections 2(b)(i),
(ii) or (iii) of the Pelican Strand Notes during the preceding
twenty-four (24) calendar months (including payments on July
1, 2000), shall be less than $36,550,000.
The entire unpaid principal balance of the Loan together with
all accrued and unpaid interest, if not sooner paid, shall be payable in full on
the Maturity Date.
(e) All amounts tendered by Borrower or otherwise available
for payment of the Loan shall be applied in the following order of priority:
(i) to accrued interest and unpaid interest on the
Class A Note at the Class A Interest Rate;
(ii) to accrued interest and unpaid interest on the
Class B Note;
(iii) to accrued interest and unpaid interest on the
Class C Note;
(iv) to the principal of the Class A Note until such
principal has been paid in full;
(v) prior to the occurrence of an Event of Default,
pro rata to the principal of this Note and to the principal of
the Class C Note until such principal has been paid in full;
after the occurrence and during the continuance of an Event of
Default, (a) to the principal of this Note until such
principal has been paid in full and (b) to the principal of
the Class C Note until such principal has been paid in full;
(vi) to any default interest in excess of the
interest paid in accordance with clauses (i), (ii) and (iii)
above on this Note, the Class A Note and the Class C Note, pro
rata in accordance with the outstanding principal balance of
each such Note;
(vii) to late charges (applied to the Notes depending
on the proportion of the related late payment applicable to
each Note); and
(viii) to any other amounts payable under the
Mortgage or any of the other Loan Documents.
(f) All interest payable hereunder shall be computed on the
basis of a 360-day year for the actual number of days elapsed. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall, subject to paragraph (g)
below, be excluded. Interest shall accrue on each payment of principal hereunder
through the date on which such payment is credited, as provided below.
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(g) All sums payable to Lender hereunder shall be payable,
without setoff, deduction or counterclaim, in immediately available funds, no
later than noon New York time on the date when due by wire transfer to such
account or address as Lender may from time to time designate in a written notice
to Borrower. Payments received by Lender in immediately available funds on any
day after noon New York time shall be treated for all purposes of the Loan as
having been paid and received by Lender on the next Domestic Business Day.
Notwithstanding anything to the contrary contained herein, when any payment is
due hereunder or under any of the other Loan Documents on a day which is not a
Domestic Business Day, such payment shall be made on the next succeeding
Domestic Business Day.
3. Funding Losses; Change in Law, Etc.
(a) Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate hereon) (collectively,
"Funding Losses") sustained by Lender or any Funding Party: (i) if this Note, or
any portion hereof, is repaid for any reason whatsoever on any date other than a
Payment Date (including, without limitation, from condemnation or insurance
proceeds, unless due to Lender's election to apply same to this Note on such
date), (ii) upon the conversion of the interest rate on the Loan to the Base
Rate in accordance with subsection (b) below, and/or (iii) as a consequence of
(x) any increased costs (without duplication of any costs used in calculating
LIBOR) that Lender or any Funding Party may sustain in maintaining the borrowing
evidenced hereby or (y) the reduction of any amounts received or receivable from
Borrower, in either case, due to the introduction of, or any change in, law or
applicable regulation or treaty (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having jurisdiction.
Payment of Funding Losses hereunder shall be in addition to any obligation to
pay a prepayment premium under Section 4 hereof in circumstances where such
prepayment premium would be due and owing.
(b) If Lender determines (which determination shall be
conclusive and binding upon Borrower, absent manifest error) (i) that Dollar
deposits in an amount approximately equal to the principal balance outstanding
hereunder are not generally available at such time in the London Interbank
Market for deposits in Eurodollars, (ii) that the rate at which such deposits
are being offered will not adequately and fairly reflect the cost to Lender or a
Funding Party of maintaining a LIBOR Interest Rate on the Loan (or the portion
of the Loan being funded by such Funding Party) or of funding the same in such
market for such Interest Accrual Period due to circumstances affecting the
London Interbank Market generally, (iii) that reasonable means do not exist for
ascertaining LIBOR, or (iv) that a LIBOR Interest Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then, in any such event,
Lender shall immediately notify Borrower of such circumstance and as of the date
of such notification with respect to an event described in clause (ii) or (iv)
above, or as of the expiration of the applicable Interest Accrual Period with
respect to an event described in clause (i) or (iii) above, interest shall
accrue at the Base Rate until such time as the situations described above are no
longer in effect or as otherwise provided in Section 5 hereof; provided,
however, if the situation described in clause (ii) above occurs, (x) Borrower
shall have the option, to be exercised by written notice to Lender, to pay
Lender (in the manner reasonably required by Lender) for such increased cost of
maintaining a LIBOR Interest Rate and (y) if the same only affects a portion of
the Loan, then only such portion shall have interest accrue at the Base Rate
(provided the remaining portion is at least $1,000,000) and interest shall
continue to accrue on the remaining portion at the LIBOR Interest Rate.
Notwithstanding anything to the contrary herein, with respect to an event
described in clauses (i) through (iv) above, provided that no Event of Default
shall then exist, Borrower shall have the right, on thirty (30) days prior
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written notice to Lender given within thirty (30) days after Lender gives notice
to Borrower of such event, to pay the entire outstanding principal balance of
the Loan and all accrued and unpaid interest thereon on the next Payment Date
together with the Spread Maintenance Premium (as defined in the Loan Agreement)
thereon.
(c) If the introduction of, or any change in, any law,
regulation or treaty, or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof after the
date of this Note, shall make it unlawful for Lender or any Funding Party to
maintain the LIBOR Interest Rate with respect to the Loan, or any portion
thereof, or to fund the Loan, or any portion thereof, in Eurodollars in the
London Interbank Market, then the Loan (or such portion of the Loan) shall
thereafter bear interest at the Base Rate (unless the Default Rate shall be
applicable) and Borrower shall pay to Lender the amount of Funding Losses (if
any) incurred in connection with such conversion. The accrual of interest at the
Base Rate shall continue until such Payment Date, if any, as the situation
described in this subsection (c) is no longer in effect.
(d) If Lender or the Funding Party, as the case may be, shall
have determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption of any other law, rule, regulation or guideline (including but not
limited to any United States law, rule, regulation or guideline) coming into
existence after the date of this Note regarding capital adequacy, or any change
becoming effective after the date of this Note in any of the foregoing or in the
enforcement or interpretation or administration of any of the foregoing by any
court or any domestic or foreign governmental authority, central bank or
comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by Lender or its holding company or a
Funding Party or its holding company, as the case may be, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency (excluding, however, any
such laws, rules, regulations, and guidelines giving rise to the reserve
requirement used in calculating LIBOR), has or would have the effect of reducing
the rate of return on the capital of Lender, the Funding Party's or such Funding
Party's holding company, as the case may be, to a level below that which Lender
or its holding company or the Funding Party or its holding company, as the case
may be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration Lender's or its holding company's or the
Funding Party's or its holding company's, as the case may be, policies with
respect to capital adequacy) (the foregoing being hereinafter referred to as
"Capital Adequacy Events"), then, upon demand by Lender, Borrower shall, pay to
Lender, from time to time, such additional amount or amounts as will compensate
Lender or such Funding Party for any such reduction suffered.
(e) Any amount payable by Borrower under subsection (a) or
subsection (d) of this Section 3 shall be paid to Lender within five (5)
Business Days of receipt by Borrower of a certificate signed by an officer of
Lender setting forth the amount due and the basis for the determination of such
amount, which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from Borrower
for any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to Borrower prompt
notice of any event described in subsection (a) or (d) above and of the amount
to be paid under this Section 3 as a result thereof; provided, however, any
failure by Lender to so notify Borrower shall not affect Borrower's obligation
to make the payments to be made under this Section 3 as a result thereof. All
amounts which may become due and payable by Borrower in accordance with the
provisions of this Section 3 shall constitute additional interest hereunder and
shall be secured by the Mortgage and the other Loan Documents.
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(f) If Lender or any Funding Party requests compensation for
any losses or costs to be reimbursed pursuant to any one or more of the
provisions of subsections (a) (iii) or (iv) or subsection (d) of this Section 4,
or if any event occurs as described in subsections (b) or (c) above which would
cause the Note no longer to bear interest at the LIBOR Interest Rate then, upon
request of Borrower, Lender or such Funding Party shall use reasonable efforts
in a manner consistent with such institution's practice in connection with loans
like the Loan to designate a different lending office for funding or booking the
Transaction Indebtedness or assign its rights and obligations under this Note to
another of its offices, branches or affiliates if such designation or assignment
in Lender's sole but good faith judgment (i) would eliminate, mitigate or reduce
amounts payable by Borrower in connection with Funding Losses or Capital
Adequacy Events or, with respect to an event described in subsection (b) or (c)
above would allow this Note to continue to bear interest at the LIBOR Interest
Rate without additional cost to Lender and (ii) would not be otherwise
prejudicial to Lender; Borrower hereby agreeing to pay all reasonably incurred
costs and expenses incurred by Lender or any Funding Party in connection with
any such designation or assignment.
4. Prepayment. Borrower expressly waives any right to prepay
this Note, in whole or in part, except as otherwise expressly provided in the
Loan Documents. Notwithstanding, anything contained in the Loan Documents to the
contrary, no prepayments will be permitted on other than a Payment Date unless
such prepayment is accompanied by the payment of any interest due to the next
Payment Date.
5. Default Interest; Late Charge. (a) If any payment of
principal, interest or other sum payable hereunder or under any of the other
Loan Documents is not paid when due (including by reason of failure to pay all
principal, interest and all other amounts due hereunder and under the other Loan
Documents on the Maturity Date (or such earlier date as the same may become due,
whether by acceleration or otherwise)), such principal amount, interest or other
sum shall bear interest at a rate per annum (the "Default Rate") equal to five
percent (5%) in excess of the interest rate on the Loan determined in accordance
with Section 2(a) above, which Default Rate shall so apply from the date due
until the date such amount is indefeasibly paid to Lender. Without limiting the
foregoing, upon the occurrence of and during the continuance of an Event of
Default hereunder, the entire principal balance of this Note shall bear interest
at the Default Rate. Interest at the Default Rate shall be paid immediately upon
demand, which demand may be made as frequently as Lender shall elect.
(b) If any installment of interest or principal is not paid
when due, Borrower shall pay to Lender a late charge of four percent (4%) of the
amount so overdue in order to defray part of the expense incident to handling
such delinquent payment or payments. Such late charge shall be immediately due
and payable without notice or demand by Lender. Such late charge shall be in
addition to and separate from any increase in interest due hereunder as a result
of calculation of interest due hereunder at the Default Rate. Acceptance by
Lender of any late charge or interest at the Default Rate shall not be deemed a
waiver of any of Lender's rights hereunder or under the other Loan Documents
with respect to such late payment.
6. Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter if any such Event of Default shall then be
continuing, Lender may, without additional notice to Borrower, declare the
principal of, and accrued interest on, this Note to be immediately due,
whereupon the same shall forthwith become immediately due and payable without
presentment, demand, protest or other notice of any kind and Lender may proceed
to exercise any rights and remedies available to Lender under the Mortgage and
the other Loan Documents or which Lender may have at law, in equity or
otherwise.
7. Expenses. Borrower hereby agrees to pay to Lender on demand
all costs and expenses of Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the enforcement and
collection hereof, whether or not any suit is brought on this Note or any
foreclosure or other proceeding is brought. The provisions of this Section 7 are
not intended to limit in any manner Borrower's obligations to pay costs and
expenses of Lender as may be elsewhere provided herein, in the Loan Agreement,
in the Mortgage or in any other Loan Document.
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8. Security. This Note is secured by the Mortgage, the
Assignment of Leases (as defined in the Loan Agreement) and the other Loan
Documents.
9. Excess Interest. It is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of the other Loan
Documents, no such provision shall require the payment or permit the collection
of any amount ("Excess Interest") in excess of the maximum amount of interest
permitted by law to be charged for the use or detention, or the forbearance in
the collection, of all or any portion of the indebtedness evidenced by this
Note. If any Excess Interest is provided for, or is adjudicated to be provided
for, in this Note or any of the other Loan Documents, then in such event:
(a) the provisions of this Section 9 shall govern and
control;
(b) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall be obligated to pay
any Excess Interest;
(c) any Excess Interest that Lender may have received
hereunder shall, at the option of Lender, be (i) applied as a credit against the
then outstanding principal balance (without payment of prepayment premium) due
under this Note, accrued and unpaid interest thereon not to exceed the maximum
amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii)
any combination of the foregoing;
(d) the applicable interest rate or rates shall be
automatically subject to reduction to the maximum lawful rate and this Note, the
Mortgage, and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in such interest rate or
rates; and
(e) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall have any action or
remedy against Lender for any damages whatsoever or any defense to enforcement
of the Note, Mortgage or any of the other Loan Documents arising out of the
payment or collection of any Excess Interest.
10. Waiver. Borrower expressly waives presentment for payment,
demand, notice of demand and of dishonor and nonpayment of this Note, protest
and notice of protest, diligence in collecting, and the bringing of suit against
any other party.
11. Governing Law. THIS NOTE SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IT IS THE INTENT OF THE
PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK APPLY TO THIS NOTE.
12. Cross Default. A default under the Class A Note, the Class
C Note or any other note now or hereafter secured by the Mortgage constitutes a
default under this Note and under the other Loan Documents. When the default
under the Class A Note, the Class C Note or any such other note constitutes an
Event of Default under that note, an Event of Default also will exist under this
Note and the other Loan Documents.
13. Loan Taxes. (a) Any and all payments by Borrower to Lender
hereunder and under the other Loan Documents shall, provided that Lender
complies with the requirements of subsection (c) below, be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto except for the following for which Borrower shall not be responsible:
(A) taxes imposed on or measured by Lender's net income or net receipts, or (B)
franchise taxes imposed on Lender, by the jurisdiction in which (i) Lender is
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organized, (ii) Lender is "doing business" (unless such determination of "doing
business" is made solely as a result of Lender's interest in the Loan and the
security therefor) or (iii) Lender's applicable lending office is located (all
such taxes, levies, imposts, deductions, charges or withholdings and liabilities
(except those described in clauses (A) and (B)) being hereinafter referred to as
"Loan Taxes"). If Borrower shall be required by law to deduct or withhold any
Loan Taxes from or in respect of any sum payable hereunder or under any other
Loan Document, then (x) any such sum payable hereunder or under any other Loan
Document shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions applicable to
additional sums payable under this Section 13), Lender receives an amount equal
to the sum it would have received had no such deductions or withholdings
(including deductions applicable to additional sums payable under this Section
13) been made, (y) Borrower shall make such deductions or withholdings and (z)
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority in accordance with applicable law. Borrower will indemnify Lender for
the full amount of any Loan Taxes (including, without limitation, any Loan Taxes
(as well as taxes described in clauses (A) and (B) above) imposed by any
jurisdiction on any amounts payable under this Section 13) paid or payable by
Lender and any liability (including, without limitation, penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Loan
Taxes were correctly or legally asserted. A certificate as to the amount of such
payment or liability delivered to Borrower by Lender shall be conclusive absent
manifest error. The agreements and obligations of Borrower contained in this
Section 13 shall survive the payment in full of principal and interest under
this Note.
(b) Within 30 days after the date of any payment of
Loan Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt or other
evidence reasonably satisfactory to the Agent evidencing payment thereof.
(c) If Lender is a U.S. Person (other than the Lender
originally named herein), Lender shall deliver to Borrower upon request a Form
W-9 (unless it establishes to the reasonable satisfaction of Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
withholding tax). If Lender is not a U.S. Person, Lender shall deliver to
Borrower upon request a Form W-8 and either (i) a Form 1001 which indicates a 0%
rate of tax or (ii) a Form 4224. If Lender is not a U.S. Person, Lender further
undertakes to deliver to Borrower additional Forms W-8, 1001, 4224 (or any
successor forms) or other manner of certification, as the case may be, (i) on or
before the date that any such form expires or becomes obsolete, (ii) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to Borrower, and (iii) such extensions or renewals thereof as
may reasonably be requested by Borrower, certifying that Lender is entitled to
receive payments hereunder without deduction or withholding of any Loan Taxes.
However, in the event that any change in law, rule, regulation, treaty or
directive, or in the interpretation or application thereof (a "Law Change"), has
occurred after the date hereof and prior to the date on which any delivery
pursuant to the preceding sentence would otherwise be required which renders
such form inapplicable, or which would prevent Lender from duly completing and
delivering any such form or if such Law Change results in Lender being unable to
deliver a Form W-9 (or other satisfactory evidence that it is otherwise eligible
for an exemption from backup withholding tax or other withholding tax), Lender
shall not be obligated to deliver such forms but shall, promptly following such
Law Change, but in any event prior to the time the next payment hereunder is due
following such Law Change, advise Borrower in writing whether it is capable of
receiving payments without any deduction or withholding of Loan Taxes. In the
event of such Law Change, the Borrower shall have the obligation to make the
Lender whole and to "gross-up" under Section 13(a) despite the failure by the
Lender to deliver such forms.
10
<PAGE>
(d) If Lender receives a refund in respect of Loan
Taxes paid by Borrower, it shall promptly pay such refund, together with any
other amounts paid by Borrower pursuant to subsection (a). above in connection
with such refunded Loan Taxes, to Borrower; provided, however, that Borrower
agrees to promptly return such refund to Lender if it receives notice from
Lender that it is required to repay such refund. Nothing contained herein shall
be construed to require Lender to seek any refund and Lender shall have no
obligation to Borrower to do so.
(e) All amounts payable under this Section 13 shall
constitute additional interest hereunder and shall be secured by the Mortgage
and the other Loan Documents. The provisions of this Section 13 shall survive
any payment or prepayment of this Note and any foreclosure or satisfaction of
the Mortgage.
(f) Any reference under this Section 13 to "Lender"
shall be deemed to include any participants and assignees.
14. Modification, etc. This Note can be extended, modified or
amended only in writing by an instrument executed by Lender and Borrower and
none of the rights or benefits of Lender hereunder can be waived except in a
written document executed by Lender.
15. Binding Effect. This Note shall be binding upon and inure
to the benefit of Lender, Borrower and their respective successors and assigns.
16. Notices. All notices and other communications hereunder
shall be delivered as set forth in Section 7.6 of the Loan Agreement.
17. Interpretation. The headings of sections and paragraphs in
this Note are for convenience only and shall not be construed in any way to
limit or define the content, scope, or intent of the provisions hereof. As used
in this Note, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so
requires. The parties hereto intend and believe that each provision in this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties to the fullest
possible extent that it is legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void or unenforceable
provision were not contained therein, and that the rights, obligations and
interests of Borrower and Lender under the remainder of this Note shall continue
in full force and effect; provided, however, that if any provision of this Note
which is found to be in violation of any applicable law concerning the
imposition of interest hereunder, the rights, obligations and interests of
Borrower and Lender with respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of Section 9 hereof. Time is of the
essence of this Note.
18. Limited Recourse. The provisions of Section 7.20 of the
Loan Agreement shall apply to Borrower's obligations under this Note and are
incorporated herein as if fully set forth herein.
19. No Oral Agreements. THIS NOTE AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
Note as of the day and year first above written.
BORROWER:
CUTTER SOUND DEVELOPMENT, LTD.,
a Florida limited partnership
By: U.S. Golf (Cutter Sound), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
MONTVERDE PROPERTY, LTD.,
a Florida limited partnership
By: U.S. Golf (Montverde), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE GOLF PARTNERS, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE DEVELOPMENT, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
U.S. GOLF PINEHURST PLANTATION, LTD.,
a Florida limited partnership
By: U.S. Golf (Plantation), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
12
<PAGE>
FSD GOLF CLUB, LTD.,
a Florida limited partnership
By: U.S. Golf (FSD), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
RH HOLDINGS, INC., a Utah corporation
By:
---------------------------------
Name: Warren Stanchina
Title: President
WEDGEFIELD LIMITED PARTNERSHIP,
a Michigan limited partnership
By: U.S. Golf (Wedgefield), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
ARLINGTON LAKES, L.P.,
a Texas limited partnership
By: GCA Texas Development, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
13
CLASS C PROMISSORY NOTE
U.S. $26,247,000.00 September 3, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, CUTTER SOUND DEVELOPMENT,
LTD., MONTVERDE PROPERTY, LTD., NORTHSHORE GOLF PARTNERS, LTD., NORTHSHORE
DEVELOPMENT, LTD., U.S. GOLF PINEHURST PLANTATION, LTD., FSD GOLF CLUB, LTD., RH
HOLDINGS, INC., WEDGEFIELD LIMITED PARTNERSHIP and ARLINGTON LAKES, L.P., each
having an address at c/o Golf Communities of America, 255 South Orange Avenue,
Firstate Tower, Suite 1515, Orlando, Florida 32801 ("Borrower"), hereby promises
and agrees to pay to the order of CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL
LLC, a Delaware limited liability company, its successors and assigns
("Lender"), at its office at 11 Madison Avenue, New York, New York 10010, on the
Maturity Date (as defined below) the principal sum of TWENTY SIX MILLION TWO
HUNDRED FORTY SEVEN AND NO/100 DOLLARS ($26,247,000.00) or so much thereof as
shall have been advanced under the Loan Agreement (as hereinafter defined) and
shall be outstanding hereunder together with interest thereon as hereinafter set
forth, such payment to be made in lawful money of the United States of America
in immediately available funds.
This Note evidences a portion of a loan (the "Loan") in the
aggregate principal sum of One Hundred Million Nine Hundred Fifty Thousand And
No/100 Dollars ($100,950,000.00), the other portion of which Loan is evidenced
by a Class A Promissory Note (the "Class A Note") in the principal sum of Forty
Eight Million Four Hundred Fifty Six Thousand No/100 Dollars ($48,456,000.00),
dated the date of this Note, made by Borrower to Lender, and by a Class B
Promissory Note (the "Class B Note") in the principal sum of Twenty Six Million
Two Hundred Forty Seven Thousand And No/100 Dollars ($26,247,000.00), dated the
date of this Note, made by Borrower to Lender. This Note, together with the
Class A Note and the Class B Note, are hereinafter, collectively, referred to as
the "Notes".
1. Definitions. The following terms used in this Note shall
have the following meanings:
"Base Rate"- The rate per annum equal to fifteen and
twenty seven hundredths percentage points
(15.27%) in excess of the Treasury Rate. Any
interest rate based on the Base Rate shall
be adjusted as of the date of any change in
the Base Rate. The determination of the Base
Rate shall be made by Lender and shall be
conclusive and binding upon Borrower, absent
manifest error.
"Borrower"- Shall have the meaning ascribed to such
term in the initial paragraph hereof. The
term "Borrower" shall include the respective
successors and assigns of Borrower, but the
foregoing is not intended to vary or negate
the effect of Section 5.1 of the Loan
Agreement.
"Capital Adequacy Events"- Shall have the meaning ascribed to such term
in Section 3(d) hereof.
"Cash Management Agreement"- That certain Cash
Management Agreement, dated as of July 2,
1998, as same may have been or may be
amended, modified or extended, from time to
time, by and between Borrower and Lender,
with respect to the
Loan.
<PAGE>
"Default Rate"- Shall have the meaning ascribed to such term
in Section 5(a) hereof.
"Domestic Business Day"- Any day except a Saturday,
Sunday or other day on which commercial
banks are required or permitted by law to
close in New York City.
"Eurodollar Business Day"- Any day on which commercial
banks are open for international business
(including dealings in dollar deposits) in
London, England.
"Event of Default"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Excess Interest"- Shall have the meaning ascribed to such
term in Section 9 hereof.
"Funding Losses"- Shall have the meaning ascribed to such term
in Section 3(a) hereof.
"Funding Party"- Any bank or other entity, if any,
which is indirectly or directly funding
Lender with respect to the Loan, in whole or
in part, including, without limitation, any
direct or indirect assignee of, or
participant in, the
Loan.
"Governmental Authority"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Interest Accrual Period"- With respect to any Payment Date, from the
eleventh (11th) day of the calendar month
preceding such Payment Date until the tenth
(10th) day of current month, provided, that
no Interest Accrual Period shall end later
than the Maturity Date (other than for
purposes of calculating Default Interest),
and the initial Interest Accrual Period
shall begin on the date of this Note.
"Law Change"- Shall have the meaning ascribed to
such term in Section 12(c) hereof.
"Lender"- Shall have the meaning ascribed to such
term in the introductory paragraph hereof.
"LIBOR Interest Rate"- Shall have the meaning ascribed to such term
in Section 2(a) hereof.
"LIBOR"- With respect to the relevant Interest
Accrual Period, the rate per annum (rounded
upwards, if necessary, to the nearest
one-one-thousandth (1/1000) of one percent
1%) reported, with respect to the initial
Interest Accrual Period, at 11:00 a.m.
London time on the date of this Note (or if
such date is not a Eurodollar Business Day,
the immediately preceding Eurodollar
Business Day), and thereafter, at 11:00 a.m.
London time on the date two (2) Eurodollar
Business Days prior to the first day of such
Interest Accrual Period, on Telerate Access
Service Page 3750 (British Bankers
Association Settlement Rate) as the
non-reserve adjusted London Interbank
2
<PAGE>
Offered Rate for U.S. dollar deposits having
a 30 day term and in an amount of $1,000,000
or more (or on such other page as may
replace Telerate Page 3750 on that service
or such other service or services as may be
nominated by the British Bankers'
Association for the purpose of displaying
such rate all as determined by Lender in its
sole but good faith discretion). In the
event that (i) more than one such LIBOR is
provided, the average of such rates shall
apply or (ii) no such LIBOR is published,
then LIBOR shall be determined from such
comparable financial reporting company as
Lender in its sole but good faith discretion
shall determine. LIBOR for any Interest
Accrual Period shall be adjusted from time
to time, by increasing the rate thereof to
compensate Lender and any Funding Party for
any aggregate reserve requirements
(including, without limitation, all basic,
supplemental, marginal and other reserve
requirements and taking into account any
transitional adjustments or other scheduled
changes in reserve requirements during any
Interest Accrual Period) which are required
to be maintained by Lender or such Funding
Party with respect to "Eurocurrency
liabilities" (as presently defined in
Regulation D of the Board of Governors of
the Federal Reserve System) of the same term
under Regulation D, or any other regulations
of a Governmental Authority having
jurisdiction over Lender or such Funding
Party of similar effect.
"Loan"- The loan from Lender to Borrower which is
evidenced by (i) this Note, (ii) the Class A
Note and (iii) the Class B Note.
"Loan Agreement"- That certain Loan Agreement,
dated as of July 2, 1998, as same may have
been and may be amended, modified or
extended, from time to time, made by and
between Borrower and Lender, with respect to
the Loan.
"Loan Documents"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Loan Taxes"- Shall have the meaning ascribed to
such term in Section 12(a) hereof.
"Maturity Date"- July 1, 2001.
"Mortgage"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Net Proceeds"- The amount allocated to, or required to be
allocated to, the Monthly Debt Service
Account under Section 3(a)(A)(vii) or
Section 3(a)(B)(vii) of the Cash Management
Agreement during any Collection Period (as
defined therein) plus the amount allocated
to the Monthly Debt Service Account upon the
sale of a Release Parcel or Lot (each as
defined in the Loan Agreement) under Section
3(a)(C) thereof, less interest due on the
Loan, other than default interest.
3
<PAGE>
"Note"- This Promissory Note.
"Payment Date"- September 11, 1998 and the eleventh
day of each month thereafter during the term
of this Note, if the eleventh day is not a
Domestic Business Day then on the next
preceding Domestic Business Day.
"Pelican Strand Notes"- The three (3) notes, of even
date herewith, made by Pelican Strand, Ltd.,
to Lender in the amounts of $17,088,000,
$9,256,000 and $9,256,000, respectively.
"Person"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Treasury Rate"- A rate per annum equal to the yield, as
of the related determination date,
calculated by linear interpolation (rounded
to the nearest one-thousandth of one percent
(i.e., 0.001%)) of the yields of noncallable
United States Treasury obligations with
terms (one longer and one shorter) most
nearly approximating the period from such
determination date to the Maturity Date, as
determined in good faith by Lender on the
basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the
heading U.S. Governmental Security/Treasury
Constant Maturities, or other recognized
source of financial market information
selected by Lender.
"U.S. Person"- Any Person that is (i) a citizen or resident
of the United States, (ii) a corporation,
partnership or other entity created or
organized under the laws of the United
States or any State thereof or (iii) any
estate or trust that is subject to U.S.
federal income taxation regardless of the
source of its income.
2. Interest and Principal Payments. (a) Interest on the
outstanding principal of the Loan evidenced by the Notes shall accrue from the
date hereof at the rate per annum (the "Loan Interest Rate") equal five and six
tenths percent (5.6%) in excess of LIBOR for the relevant Interest Accrual
Period.
(b) Subject to the further provisions of this Note, including
Sections 3 and 5 below, interest on the principal sum evidenced by this Note
shall accrue from the date hereof (i) at the rate per annum equal to five and
six tenths percent (5.6%) in excess of LIBOR for the relevant Interest Accrual
Period on the outstanding principal balance of this Note, (ii) at the rate per
annum equal to four and one tenth percent (4.1%) in excess of LIBOR for the
relevant Interest Accrual Period on the outstanding principal balance of the
Class A Note, and (iii) at the rate per annum equal to two and one tenth percent
(2.1%) in excess of LIBOR for the relevant Interest Accrual Period on the
outstanding principal balance of the Class B Note.
(c) Prior to the Maturity Date (or the date the unpaid
principal balance of the Loan otherwise becomes due, whether by acceleration or
otherwise), interest accruing at the Loan Interest Rate during each Interest
Accrual Period shall be payable monthly in arrears on each Payment Date.
(d) In addition, Borrower shall pay, in reduction of the
outstanding principal amount of the Loan, the following:
4
<PAGE>
(i) on each Payment Date an amount equal to the Net
Proceeds for the preceding calendar month,
(ii) on July 1, 1999, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twelve (12) calendar months, excluding
Net Proceeds attributable to the sale of an Individual
Property or Release Parcel during such period, plus (y) the
aggregate payments to Lender under Sections 2(b)(i), (ii) or
(iii) of the Pelican Strand Notes during the preceding twelve
(12) calendar months (including payments on July 1, 1999),
shall be less than $14,050,000, and
(iii) on July 1, 2000, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twenty-four (24) calendar months,
excluding Net Proceeds attributable to the sale of an
Individual Property or Release Parcel during such period, plus
(y) the aggregate payments to Lender under Sections 2(b)(i),
(ii) or (iii) of the Pelican Strand Notes during the preceding
twenty-four (24) calendar months (including payments on July
1, 2000), shall be less than $36,550,000.
The entire unpaid principal balance of this Note together with
all accrued and unpaid interest, if not sooner paid, shall be payable in full on
the Maturity Date.
(e) All amounts tendered by Borrower or otherwise available
for payment of the Loan shall be applied in the following order of priority:
(i) to accrued interest and unpaid interest on the
Class A Note at the Class A Interest Rate;
(ii) to accrued interest and unpaid interest on the
Class B Note;
(iii) to accrued interest and unpaid interest on this
Class C Note;
(iv) to the principal of the Class A Note until such
principal has been paid in full;
(v) prior to the occurrence of an Event of Default,
pro rata to the principal of the Class B Note and to the
principal of this Note until such principal has been paid in
full; after the occurrence and during the continuance of an
Event of Default, (a) to the principal of the Class B Note
until such principal has been paid in full and (b) to the
principal of this Note until such principal has been paid in
full;
(vi) to any default interest in excess of the
interest paid in accordance with clauses (i), (ii) and (iii)
above on this Note, the Class A Note and the Class B Note, pro
rata in accordance with the outstanding principal balance of
each such Note;
(vii) to late charges (applied to the Notes depending
on the proportion of the related late payment applicable to
each Note); and
(viii) to any other amounts payable under the
Mortgage or any of the other Loan Documents.
5
<PAGE>
(f) All interest payable hereunder shall be computed on the
basis of a 360-day year for the actual number of days elapsed. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall, subject to paragraph (g)
below, be excluded. Interest shall accrue on each payment of principal hereunder
through the date on which such payment is credited, as provided below.
(g) All sums payable to Lender hereunder shall be payable,
without setoff, deduction or counterclaim, in immediately available funds, no
later than noon New York time on the date when due by wire transfer to such
account or address as Lender may from time to time designate in a written notice
to Borrower. Payments received by Lender in immediately available funds on any
day after noon New York time shall be treated for all purposes of the Loan as
having been paid and received by Lender on the next Domestic Business Day.
Notwithstanding anything to the contrary contained herein, when any payment is
due hereunder or under any of the other Loan Documents on a day which is not a
Domestic Business Day, such payment shall be made on the next succeeding
Domestic Business Day.
3. Funding Losses; Change in Law, Etc.
(a) Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate hereon) (collectively,
"Funding Losses") sustained by Lender or any Funding Party: (i) if this Note, or
any portion hereof, is repaid for any reason whatsoever on any date other than a
Payment Date (including, without limitation, from condemnation or insurance
proceeds, unless due to Lender's election to apply same to this Note on such
date), (ii) upon the conversion of the interest rate on the Loan to the Base
Rate in accordance with subsection (b) below, and/or (iii) as a consequence of
(x) any increased costs (without duplication of any costs used in calculating
LIBOR) that Lender or any Funding Party may sustain in maintaining the borrowing
evidenced hereby or (y) the reduction of any amounts received or receivable from
Borrower, in either case, due to the introduction of, or any change in, law or
applicable regulation or treaty (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having jurisdiction.
Payment of Funding Losses hereunder shall be in addition to any obligation to
pay a prepayment premium under Section 4 hereof in circumstances where such
prepayment premium would be due and owing.
(b) If Lender determines (which determination shall be
conclusive and binding upon Borrower, absent manifest error) (i) that Dollar
deposits in an amount approximately equal to the principal balance outstanding
hereunder are not generally available at such time in the London Interbank
Market for deposits in Eurodollars, (ii) that the rate at which such deposits
are being offered will not adequately and fairly reflect the cost to Lender or a
Funding Party of maintaining a LIBOR Interest Rate on the Loan (or the portion
of the Loan being funded by such Funding Party) or of funding the same in such
market for such Interest Accrual Period due to circumstances affecting the
London Interbank Market generally, (iii) that reasonable means do not exist for
ascertaining LIBOR, or (iv) that a LIBOR Interest Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then, in any such event,
Lender shall immediately notify Borrower of such circumstance and as of the date
of such notification with respect to an event described in clause (ii) or (iv)
above, or as of the expiration of the applicable Interest Accrual Period with
respect to an event described in clause (i) or (iii) above, interest shall
accrue at the Base Rate until such time as the situations described above are no
longer in effect or as otherwise provided in Section 5 hereof; provided,
however, if the situation described in clause (ii) above occurs, (x) Borrower
shall have the option, to be exercised by written notice to Lender, to pay
6
<PAGE>
Lender (in the manner reasonably required by Lender) for such increased cost of
maintaining a LIBOR Interest Rate and (y) if the same only affects a portion of
the Loan, then only such portion shall have interest accrue at the Base Rate
(provided the remaining portion is at least $1,000,000) and interest shall
continue to accrue on the remaining portion at the LIBOR Interest Rate.
Notwithstanding anything to the contrary herein, with respect to an event
described in clauses (i) through (iv) above, provided that no Event of Default
shall then exist, Borrower shall have the right, on thirty (30) days prior
written notice to Lender given within thirty (30) days after Lender gives notice
to Borrower of such event, to pay the entire outstanding principal balance of
the Loan and all accrued and unpaid interest thereon on the next Payment Date
together with the Spread Maintenance Premium (as defined in the Loan Agreement)
thereon.
(c) If the introduction of, or any change in, any law,
regulation or treaty, or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof after the
date of this Note, shall make it unlawful for Lender or any Funding Party to
maintain the LIBOR Interest Rate with respect to the Loan, or any portion
thereof, or to fund the Loan, or any portion thereof, in Eurodollars in the
London Interbank Market, then the Loan (or such portion of the Loan) shall
thereafter bear interest at the Base Rate (unless the Default Rate shall be
applicable) and Borrower shall pay to Lender the amount of Funding Losses (if
any) incurred in connection with such conversion. The accrual of interest at the
Base Rate shall continue until such Payment Date, if any, as the situation
described in this subsection (c) is no longer in effect.
(d) If Lender or the Funding Party, as the case may be, shall
have determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption of any other law, rule, regulation or guideline (including but not
limited to any United States law, rule, regulation or guideline) coming into
existence after the date of this Note regarding capital adequacy, or any change
becoming effective after the date of this Note in any of the foregoing or in the
enforcement or interpretation or administration of any of the foregoing by any
court or any domestic or foreign governmental authority, central bank or
comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by Lender or its holding company or a
Funding Party or its holding company, as the case may be, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency (excluding, however, any
such laws, rules, regulations, and guidelines giving rise to the reserve
requirement used in calculating LIBOR), has or would have the effect of reducing
the rate of return on the capital of Lender, the Funding Party's or such Funding
Party's holding company, as the case may be, to a level below that which Lender
or its holding company or the Funding Party or its holding company, as the case
may be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration Lender's or its holding company's or the
Funding Party's or its holding company's, as the case may be, policies with
respect to capital adequacy) (the foregoing being hereinafter referred to as
"Capital Adequacy Events"), then, upon demand by Lender, Borrower shall, pay to
Lender, from time to time, such additional amount or amounts as will compensate
Lender or such Funding Party for any such reduction suffered.
(e) Any amount payable by Borrower under subsection (a) or
subsection (d) of this Section 3 shall be paid to Lender within five (5)
Business Days of receipt by Borrower of a certificate signed by an officer of
Lender setting forth the amount due and the basis for the determination of such
amount, which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from Borrower
for any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to Borrower prompt
notice of any event described in subsection (a) or (d) above and of the amount
7
<PAGE>
to be paid under this Section 3 as a result thereof; provided, however, any
failure by Lender to so notify Borrower shall not affect Borrower's obligation
to make the payments to be made under this Section 3 as a result thereof. All
amounts which may become due and payable by Borrower in accordance with the
provisions of this Section 3 shall constitute additional interest hereunder and
shall be secured by the Mortgage and the other Loan Documents.
(f) If Lender or any Funding Party requests compensation for
any losses or costs to be reimbursed pursuant to any one or more of the
provisions of subsections (a) (iii) or (iv) or subsection (d) of this Section 4,
or if any event occurs as described in subsections (b) or (c) above which would
cause the Note no longer to bear interest at the LIBOR Interest Rate then, upon
request of Borrower, Lender or such Funding Party shall use reasonable efforts
in a manner consistent with such institution's practice in connection with loans
like the Loan to designate a different lending office for funding or booking the
Transaction Indebtedness or assign its rights and obligations under this Note to
another of its offices, branches or affiliates if such designation or assignment
in Lender's sole but good faith judgment (i) would eliminate, mitigate or reduce
amounts payable by Borrower in connection with Funding Losses or Capital
Adequacy Events or, with respect to an event described in subsection (b) or (c)
above would allow this Note to continue to bear interest at the LIBOR Interest
Rate without additional cost to Lender and (ii) would not be otherwise
prejudicial to Lender; Borrower hereby agreeing to pay all reasonably incurred
costs and expenses incurred by Lender or any Funding Party in connection with
any such designation or assignment.
4. Prepayment. Borrower expressly waives any right to prepay
this Note, in whole or in part, except as otherwise expressly provided in the
Loan Documents. Notwithstanding, anything contained in the Loan Documents to the
contrary, no prepayments will be permitted on other than a Payment Date unless
such prepayment is accompanied by the payment of any interest due to the next
Payment Date.
5. Default Interest; Late Charge. (a) If any payment of
principal, interest or other sum payable hereunder or under any of the other
Loan Documents is not paid when due (including by reason of failure to pay all
principal, interest and all other amounts due hereunder and under the other Loan
Documents on the Maturity Date (or such earlier date as the same may become due,
whether by acceleration or otherwise)), such principal amount, interest or other
sum shall bear interest at a rate per annum (the "Default Rate") equal to five
percent (5%) in excess of the interest rate on the Loan determined in accordance
with Section 2(a) above, which Default Rate shall so apply from the date due
until the date such amount is indefeasibly paid to Lender. Without limiting the
foregoing, upon the occurrence of and during the continuance of an Event of
Default hereunder, the entire principal balance of this Note shall bear interest
at the Default Rate. Interest at the Default Rate shall be paid immediately upon
demand, which demand may be made as frequently as Lender shall elect.
(b) If any installment of interest or principal is not paid
when due, Borrower shall pay to Lender a late charge of four percent (4%) of the
amount so overdue in order to defray part of the expense incident to handling
such delinquent payment or payments. Such late charge shall be immediately due
and payable without notice or demand by Lender. Such late charge shall be in
addition to and separate from any increase in interest due hereunder as a result
of calculation of interest due hereunder at the Default Rate. Acceptance by
Lender of any late charge or interest at the Default Rate shall not be deemed a
waiver of any of Lender's rights hereunder or under the other Loan Documents
with respect to such late payment.
6. Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter if any such Event of Default shall then be
continuing, Lender may, without additional notice to Borrower, declare the
principal of, and accrued interest on, this Note to be immediately due,
whereupon the same shall forthwith become immediately due and payable without
presentment, demand, protest or other notice of any kind and Lender may proceed
to exercise any rights and remedies available to Lender under the Mortgage and
the other Loan Documents or which Lender may have at law, in equity or
otherwise.
8
<PAGE>
7. Expenses. Borrower hereby agrees to pay to Lender on demand
all costs and expenses of Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the enforcement and
collection hereof, whether or not any suit is brought on this Note or any
foreclosure or other proceeding is brought. The provisions of this Section 7 are
not intended to limit in any manner Borrower's obligations to pay costs and
expenses of Lender as may be elsewhere provided herein, in the Loan Agreement,
in the Mortgage or in any other Loan Document.
8. Security. This Note is secured by the Mortgage, the
Assignment of Leases (as defined in the Loan Agreement) and the other Loan
Documents.
9. Excess Interest. It is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of the other Loan
Documents, no such provision shall require the payment or permit the collection
of any amount ("Excess Interest") in excess of the maximum amount of interest
permitted by law to be charged for the use or detention, or the forbearance in
the collection, of all or any portion of the indebtedness evidenced by this
Note. If any Excess Interest is provided for, or is adjudicated to be provided
for, in this Note or any of the other Loan Documents, then in such event:
(a) the provisions of this Section 9 shall govern and
control;
(b) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall be obligated to pay
any Excess Interest;
(c) any Excess Interest that Lender may have received
hereunder shall, at the option of Lender, be (i) applied as a credit against the
then outstanding principal balance (without payment of prepayment premium) due
under this Note, accrued and unpaid interest thereon not to exceed the maximum
amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii)
any combination of the foregoing;
(d) the applicable interest rate or rates shall be
automatically subject to reduction to the maximum lawful rate and this Note, the
Mortgage, and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in such interest rate or
rates; and
(e) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall have any action or
remedy against Lender for any damages whatsoever or any defense to enforcement
of the Note, Mortgage or any of the other Loan Documents arising out of the
payment or collection of any Excess Interest.
10. Waiver. Borrower expressly waives presentment for payment,
demand, notice of demand and of dishonor and nonpayment of this Note, protest
and notice of protest, diligence in collecting, and the bringing of suit against
any other party.
11. Governing Law. THIS NOTE SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IT IS THE INTENT OF THE
PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK APPLY TO THIS NOTE.
12. Cross Default. A default under the Class A Note, the Class
B Note or any other note now or hereafter secured by the Mortgage constitutes a
default under this Note and under the other Loan Documents. When the default
under the Class B Note, the Class C Note or any such other note constitutes an
Event of Default under that note, an Event of Default also will exist under this
Note and the other Loan Documents.
9
<PAGE>
13. Loan Taxes. (a) Any and all payments by Borrower to Lender
hereunder and under the other Loan Documents shall, provided that Lender
complies with the requirements of subsection (c) below, be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto except for the following for which Borrower shall not be responsible:
(A) taxes imposed on or measured by Lender's net income or net receipts, or (B)
franchise taxes imposed on Lender, by the jurisdiction in which (i) Lender is
organized, (ii) Lender is "doing business" (unless such determination of "doing
business" is made solely as a result of Lender's interest in the Loan and the
security therefor) or (iii) Lender's applicable lending office is located (all
such taxes, levies, imposts, deductions, charges or withholdings and liabilities
(except those described in clauses (A) and (B)) being hereinafter referred to as
"Loan Taxes"). If Borrower shall be required by law to deduct or withhold any
Loan Taxes from or in respect of any sum payable hereunder or under any other
Loan Document, then (x) any such sum payable hereunder or under any other Loan
Document shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions applicable to
additional sums payable under this Section 13), Lender receives an amount equal
to the sum it would have received had no such deductions or withholdings
(including deductions applicable to additional sums payable under this Section
13) been made, (y) Borrower shall make such deductions or withholdings and (z)
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority in accordance with applicable law. Borrower will indemnify Lender for
the full amount of any Loan Taxes (including, without limitation, any Loan Taxes
(as well as taxes described in clauses (A) and (B) above) imposed by any
jurisdiction on any amounts payable under this Section 13) paid or payable by
Lender and any liability (including, without limitation, penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Loan
Taxes were correctly or legally asserted. A certificate as to the amount of such
payment or liability delivered to Borrower by Lender shall be conclusive absent
manifest error. The agreements and obligations of Borrower contained in this
Section 13 shall survive the payment in full of principal and interest under
this Note.
(b) Within 30 days after the date of any payment of
Loan Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt or other
evidence reasonably satisfactory to the Agent evidencing payment thereof.
(c) If Lender is a U.S. Person (other than the Lender
originally named herein), Lender shall deliver to Borrower upon request a Form
W-9 (unless it establishes to the reasonable satisfaction of Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
withholding tax). If Lender is not a U.S. Person, Lender shall deliver to
Borrower upon request a Form W-8 and either (i) a Form 1001 which indicates a 0%
rate of tax or (ii) a Form 4224. If Lender is not a U.S. Person, Lender further
undertakes to deliver to Borrower additional Forms W-8, 1001, 4224 (or any
successor forms) or other manner of certification, as the case may be, (i) on or
before the date that any such form expires or becomes obsolete, (ii) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to Borrower, and (iii) such extensions or renewals thereof as
may reasonably be requested by Borrower, certifying that Lender is entitled to
receive payments hereunder without deduction or withholding of any Loan Taxes.
However, in the event that any change in law, rule, regulation, treaty or
directive, or in the interpretation or application thereof (a "Law Change"), has
occurred after the date hereof and prior to the date on which any delivery
pursuant to the preceding sentence would otherwise be required which renders
such form inapplicable, or which would prevent Lender from duly completing and
delivering any such form or if such Law Change results in Lender being unable to
deliver a Form W-9 (or other satisfactory evidence that it is otherwise eligible
for an exemption from backup withholding tax or other withholding tax), Lender
shall not be obligated to deliver such forms but shall, promptly following such
Law Change, but in any event prior to the time the next payment hereunder is due
following such Law Change, advise Borrower in writing whether it is capable of
receiving payments without any deduction or withholding of Loan Taxes. In the
event of such Law Change, the Borrower shall have the obligation to make the
Lender whole and to "gross-up" under Section 13(a) despite the failure by the
Lender to deliver such forms.
10
<PAGE>
(d) If Lender receives a refund in respect of Loan
Taxes paid by Borrower, it shall promptly pay such refund, together with any
other amounts paid by Borrower pursuant to subsection (a). above in connection
with such refunded Loan Taxes, to Borrower; provided, however, that Borrower
agrees to promptly return such refund to Lender if it receives notice from
Lender that it is required to repay such refund. Nothing contained herein shall
be construed to require Lender to seek any refund and Lender shall have no
obligation to Borrower to do so.
(e) All amounts payable under this Section 13 shall
constitute additional interest hereunder and shall be secured by the Mortgage
and the other Loan Documents. The provisions of this Section 13 shall survive
any payment or prepayment of this Note and any foreclosure or satisfaction of
the Mortgage.
(f) Any reference under this Section 13 to "Lender"
shall be deemed to include any participants and assignees.
14. Modification, etc. This Note can be extended, modified or
amended only in writing by an instrument executed by Lender and Borrower and
none of the rights or benefits of Lender hereunder can be waived except in a
written document executed by Lender.
15. Binding Effect. This Note shall be binding upon and inure
to the benefit of Lender, Borrower and their respective successors and assigns.
16. Notices. All notices and other communications hereunder
shall be delivered as set forth in Section 7.6 of the Loan Agreement.
17. Interpretation. The headings of sections and paragraphs in
this Note are for convenience only and shall not be construed in any way to
limit or define the content, scope, or intent of the provisions hereof. As used
in this Note, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so
requires. The parties hereto intend and believe that each provision in this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties to the fullest
possible extent that it is legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void or unenforceable
provision were not contained therein, and that the rights, obligations and
interests of Borrower and Lender under the remainder of this Note shall continue
in full force and effect; provided, however, that if any provision of this Note
which is found to be in violation of any applicable law concerning the
imposition of interest hereunder, the rights, obligations and interests of
Borrower and Lender with respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of Section 9 hereof. Time is of the
essence of this Note.
18. Limited Recourse. The provisions of Section 7.20 of the
Loan Agreement shall apply to Borrower's obligations under this Note and are
incorporated herein as if fully set forth herein.
19. No Oral Agreements. THIS NOTE AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
Note as of the day and year first above written.
BORROWER:
CUTTER SOUND DEVELOPMENT, LTD.,
a Florida limited partnership
By: U.S. Golf (Cutter Sound), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
MONTVERDE PROPERTY, LTD.,
a Florida limited partnership
By: U.S. Golf (Montverde), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE GOLF PARTNERS, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
NORTHSHORE DEVELOPMENT, LTD.,
a Texas limited partnership
By: Northshore U.S. Golf, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
U.S. GOLF PINEHURST PLANTATION, LTD.,
a Florida limited partnership
By: U.S. Golf (Plantation), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
FSD GOLF CLUB, LTD.,
a Florida limited partnership
By: U.S. Golf (FSD), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
12
<PAGE>
RH HOLDINGS, INC., a Utah corporation
By:
---------------------------------
Name: Warren Stanchina
Title: President
WEDGEFIELD LIMITED PARTNERSHIP,
a Michigan limited partnership
By: U.S. Golf (Wedgefield), Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
ARLINGTON LAKES, L.P.,
a Texas limited partnership
By: GCA Texas Development, Inc.,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
13
NOTE SEVERANCE AGREEMENT
THIS NOTE SEVERANCE AGREEMENT (this "Agreement") made as of
the 3rd day of September, 1998, between PELICAN STRAND, LTD., having an address
at c/o Golf Communities of America, 255 South Orange Avenue, Firstate Tower,
Suite 1515, Orlando, Florida 32801 ("Borrower") and CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC, having an address at 11 Madison Avenue, New York, New York
10010 ("Lender").
W I T N E S S E T H:
WHEREAS, Lender is the lawful owner and holder of (i) that
certain Mortgage and Security Agreement dated July 2, 1998 (the "Mortgage")
encumbering the premises more particularly described in the Mortgage together
with all improvements now or hereafter located hereon and all other property
intended to be encumbered by the Mortgage (the "Premises") and (ii) the note in
the original principal amount of $35,600,000 secured by the Mortgage (the
"Note"); and
WHEREAS, as of the date hereof, the unpaid aggregate principal
amount of the Note which is secured by the Mortgage is $35,600,000 plus interest
thereon; and
WHEREAS, Lender, as the holder of the Note and Mortgage, and
Borrower, as the owner of the Premises, have agreed to sever the Note, as
consolidated, into three separate indebtednesses of $17,088,000, $9,256,000 and
$9,256,000, respectively, and, in connection therewith, Borrower has agreed to
execute and deliver to Lender simultaneously herewith:
(i) a note to be dated as of the date hereof in the amount of
$17,088,000 ("Class A Note") to evidence the indebtedness in like amount; and
(ii) a note to be dated as of the date hereof in the amount of
$9,256,000 ("Class B Note") to evidence the indebtedness in like amount; and
(iii) a note to be dated as of the date hereof in the amount
of $9,256,000 ("Class C Note") to evidence the indebtedness in like amount; and
WHEREAS, Class A Note, Class B Note and Class C Note are
intended to evidence the same indebtedness as evidenced by the Note in the
aggregate amount of $35,600,000, which Note is secured by the Mortgage in the
aggregate original principal amount of $35,600,000; and
NOW THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Borrower hereby represents and warrants to Lender
that there exists no defense, offset or counterclaim with respect to Borrower's
obligations under the Note.
2. Borrower hereby acknowledges that it is indebted
to Lender in accordance with the Note, and that the aggregate principal amount
of the Note is $35,600,000.00, with a current outstanding balance of
$35,600,000.00.
3. (a) The principal indebtedness of $35,600,000.00
evidenced by the Note hereby is severed into three portions as follows:
(i) a principal indebtedness of $17,088,000 to be evidenced
by Class A Note which will be executed and delivered by Pelican Strand, Ltd.
simultaneously herewith;
(ii) a principal indebtedness of $9,256,000 to be evidenced
by Class B Note which will be executed and delivered by Pelican Strand, Ltd.
simultaneously herewith; and
<PAGE>
(i) a principal indebtedness of $9,256,000 to be evidenced by
Class C Note which will be executed and delivered by Pelican Strand, Ltd.
simultaneously herewith.
(b) Class A Note, Class B Note and Class C Note will
be executed and delivered simultaneously herewith, in substitution for the Note.
The principal indebtedness of $17,088,000 evidenced by Class A Note, the
principal indebtedness of $9,256,000 evidenced by Class B Note and the principal
indebtedness of $9,256,000 evidenced by Class C Note constitute, in the
aggregate, the same principal indebtedness evidenced by the Note, and secured by
the Mortgage and do not create or secure any new or further indebtedness.
4. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of law.
5. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument.
6. This Agreement shall be binding upon Borrower, its
successors and assigns, and shall be binding upon and inure to the benefit of
Lender, its successors and assigns, including any subsequent holder of all or
any portion of the Notes or the Mortgage.
2
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
PELICAN STRAND, LTD.,
a Florida limited partnership
By: Pelican Strand Development Corporation,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
By:
---------------------------------
Name:
Title:
3
CLASS A PROMISSORY NOTE
U.S. $17,088,000.00 September 3, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, PELICAN STRAND, LTD, a
Florida limited partnership, having an address at c/o Golf Communities of
America, 255 South Orange Avenue, Firstate Tower, Suite 1515, Orlando, Florida
32801 ("Borrower"), hereby promises and agrees to pay to the order of CREDIT
SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, a Delaware limited liability company,
its successors and assigns ("Lender"), at its office at 11 Madison Avenue, New
York, New York 10010, on the Maturity Date (as defined below) the principal sum
of SEVENTEEN MILLION EIGHTY EIGHT THOUSAND AND NO/100 DOLLARS ($17,088,000.00)
or so much thereof as shall have been advanced under the Loan Agreement (as
hereinafter defined) and shall be outstanding hereunder together with interest
thereon as hereinafter set forth, such payment to be made in lawful money of the
United States of America in immediately available funds.
This Note evidences a portion of a loan (the "Loan") in the
aggregate principal sum of Thirty Five Million Six Hundred Thousand And No/100
Dollars ($35,600,000.00), the other portion of which Loan is evidenced by a
Class B Promissory Note (the "Class B Note") in the principal sum of Nine
Million Two Hundred Fifty Six Thousand And No/100 Dollars ($9,256,000.00), dated
the date of this Note, made by Borrower to Lender, and by a Class C Promissory
Note (the "Class C Note") in the principal sum of Nine Million Two Hundred Fifty
Six Thousand And No/100 Dollars ($9,256,000.00), dated the date of this Note,
made by Borrower to Lender. This Note, together with the Class B Note and the
Class C Note, are hereinafter, collectively, referred to as the "Notes".
1. Definitions. The following terms used in this Note
shall have the following meanings:
"Base Rate"- The rate per annum equal to one and one
half percentage points (1.5%) in excess of
the Treasury Rate. Any interest rate based
on the Base Rate shall be adjusted as of the
date of any change in the Base Rate. The
determination of the Base Rate shall be made
by Lender and shall be conclusive and
binding upon Borrower, absent manifest
error.
"Borrower"- Shall have the meaning ascribed to such
term in the initial paragraph hereof. The
term "Borrower" shall include the respective
successors and assigns of Borrower, but the
foregoing is not intended to vary or negate
the effect of Section 5.1 of the Loan
Agreement.
"Capital Adequacy Events"- Shall have the meaning ascribed to such term
in Section 3(d) hereof.
"Cash Management Agreement"- That certain Cash
Management Agreement, dated as of the date
hereof, made by and between Borrower and
Lender, with respect to the Loan as same may
be amended, modified or extended, from time
to time.
"Default Rate"- Shall have the meaning ascribed to such term
in Section 5(a) hereof.
"Domestic Business Day"- Any day except a Saturday,
Sunday or other day on which commercial
banks are required or permitted by law to
close in New York City.
<PAGE>
"Eurodollar Business Day"- Any day on which commercial
banks are open for international business
(including dealings in dollar deposits) in
London, England.
"Event of Default"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Excess Interest"- Shall have the meaning ascribed to such
term in Section 9 hereof.
"Funding Losses"- Shall have the meaning ascribed to such term
in Section 3(a) hereof.
"Funding Party"- Any bank or other entity, if any,
which is indirectly or directly funding
Lender with respect to the Loan, in whole or
in part, including, without limitation, any
direct or indirect assignee of, or
participant in, the
Loan.
"Governmental Authority"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Interest Accrual Period"- With respect to any Payment Date, from the
eleventh (11th) day of the calendar month
preceding such Payment Date until the tenth
(10th) day of current month, provided, that
no Interest Accrual Period shall end later
than the Maturity Date (other than for
purposes of calculating Default Interest),
and the initial Interest Accrual Period
shall begin on the date of this Note.
"Law Change"- Shall have the meaning ascribed to
such term in Section 12(c) hereof.
"Lender"- Shall have the meaning ascribed to such
term in the introductory paragraph hereof.
"LIBOR Interest Rate"- Shall have the meaning ascribed to such term
in Section 2(a) hereof.
"LIBOR"- With respect to the relevant Interest
Accrual Period, the rate per annum (rounded
upwards, if necessary, to the nearest
one-one-thousandth (1/1000) of one percent
1%) reported, with respect to the initial
Interest Accrual Period, at 11:00 a.m.
London time on the date of this Note (or if
such date is not a Eurodollar Business Day,
the immediately preceding Eurodollar
Business Day), and thereafter, at 11:00 a.m.
London time on the date two (2) Eurodollar
Business Days prior to the first day of such
Interest Accrual Period, on Telerate Access
Service Page 3750 (British Bankers
Association Settlement Rate) as the
non-reserve adjusted London Interbank
Offered Rate for U.S. dollar deposits having
a 30 day term and in an amount of $1,000,000
or more (or on such other page as may
replace Telerate Page 3750 on that service
or such other service or services as may be
nominated by the British Bankers'
Association for the purpose of displaying
2
<PAGE>
such rate all as determined by Lender in its
sole but good faith discretion). In the
event that (i) more than one such LIBOR is provided, the
average of such rates shall apply or (ii) no such LIBOR is
published, then LIBOR shall be determined from such
comparable financial reporting company as
Lender in its sole but good faith discretion
shall determine. LIBOR for any Interest
Accrual Period shall be adjusted from time
to time, by increasing the rate thereof to
compensate Lender and any Funding Party for
any aggregate reserve requirements
(including, without limitation, all basic,
supplemental, marginal and other reserve
requirements and taking into account any
transitional adjustments or other scheduled
changes in reserve requirements during any
Interest Accrual Period) which are required
to be maintained by Lender or such Funding
Party with respect to "Eurocurrency
liabilities" (as presently defined in
Regulation D of the Board of Governors of
the Federal Reserve System) of the same term
under Regulation D, or any other regulations
of a Governmental Authority having
jurisdiction over Lender or such Funding
Party of similar effect.
"Loan"- The loan from Lender to Borrower which is
evidenced by (i) this Note, (ii) the Class B
Note and (iii) the Class C Note.
"Loan Agreement"- That certain Loan Agreement,
dated as of the date hereof, made by and
between Borrower and Lender, with respect to
the Loan as same may be amended, modified or
extended, from time to time.
"Loan Documents"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Loan Taxes"- Shall have the meaning ascribed to
such term in Section 12(a) hereof.
"Maturity Date"- July 1, 2001.
"Mortgage"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Net Proceeds"- The amount allocated to, or required to be
allocated to, the Monthly Debt Service
Account under Section 3(a)(A)(vii) or
Section 3(a)(B)(vii) of the Cash Management
Agreement during any Collection Period (as
defined therein) plus the amount allocated
to the Monthly Debt Service Account upon the
sale of a Release Parcel or Lot (each as
defined in the Loan Agreement) under Section
3(a)(C) thereof, less interest due on the
Loan, other than default interest.
"Note"- This Promissory Note.
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"Payment Date"- September 11, 1998 and the eleventh
day of each month thereafter during the term
of this Note, if the eleventh day is not a
Domestic Business Day then on the next
preceding Domestic Business Day.
"Person"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Treasury Rate"- A rate per annum equal to the yield, as
of the related determination date,
calculated by linear interpolation (rounded
to the nearest one-thousandth of one percent
(i.e., 0.001%)) of the yields of noncallable
United States Treasury obligations with
terms (one longer and one shorter) most
nearly approximating the period from such
determination date to the Maturity Date, as
determined in good faith by Lender on the
basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the
heading U.S. Governmental Security/Treasury
Constant Maturities, or other recognized
source of financial market information
selected by Lender.
"U.S. Person"- Any Person that is (i) a citizen or resident
of the United States, (ii) a corporation,
partnership or other entity created or
organized under the laws of the United
States or any State thereof or (iii) any
estate or trust that is subject to U.S.
federal income taxation regardless of the
source of its income.
2. Interest and Principal Payments. (a) Interest on the
outstanding principal of the Loan evidenced by the Notes shall accrue from the
date hereof at the rate per annum (the "Loan Interest Rate") equal five and six
tenths percent (5.6%) in excess of LIBOR for the relevant Interest Accrual
Period.
(b) Subject to the further provisions of this Note, including
Sections 3 and 5 below, interest on the principal sum evidenced by this Note
shall accrue from the date hereof at the rate per annum (the "Class A Interest
Rate") equal to one and one half percent (1.5%) in excess of LIBOR for the
relevant Interest Accrual Period.
(c) Prior to the Maturity Date (or the date the unpaid
principal balance of the Loan otherwise becomes due, whether by acceleration or
otherwise), interest accruing at the Loan Interest Rate during each Interest
Accrual Period shall be payable monthly in arrears on each Payment Date.
d) In addition, Borrower shall pay, in reduction of the
outstanding principal amount of the Loan, the following:
(i) on each Payment Date an amount equal to the Net
Proceeds for the preceding calendar month,
(ii) on July 1, 1999, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twelve (12) calendar months, excluding
Net Proceeds attributable to the sale of an Individual
Property or Release Parcel during such period, plus (y) the
aggregate payments to Lender under Sections 2(b)(i), (ii) or
(iii) of the Pelican Strand Notes during the preceding twelve
(12) calendar months (including payments on July 1, 1999),
shall be less than $14,050,000, and
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<PAGE>
(iii) on July 1, 2000, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twenty-four (24) calendar months,
excluding Net Proceeds attributable to the sale of an
Individual Property or Release Parcel during such period, plus
(y) the aggregate payments to Lender under Sections 2(b)(i),
(ii) or (iii) of the Pelican Strand Notes during the preceding
twenty-four (24) calendar months (including payments on July
1, 2000), shall be less than $36,550,000.
The entire unpaid principal balance of the Loan together with
all accrued and unpaid interest, if not sooner paid, shall be payable in full on
the Maturity Date.
(e) All amounts tendered by Borrower or otherwise available
for payment of the Loan shall be applied in the following order of priority:
(i) to accrued interest and unpaid interest this
Class A Note;
(ii) to accrued interest and unpaid interest on this
Note;
(iii) to accrued interest and unpaid interest on the
Class C Note;
(iv) to the principal of this Note until such
principal has been paid in full;
(v) prior to the occurrence of an Event of Default,
pro rata to the principal of the Class B Note and to the
principal of the Class C Note until such principal has been
paid in full; after the occurrence and during the continuance
of an Event of Default, (a) to the principal of the Class B
Note until such principal has been paid in full and (b) to the
principal of the Class C Note until such principal has been
paid in full;
(vi) to any default interest in excess of the
interest paid in accordance with clauses (i), (ii) and (iii)
above on this Note, the Class B Note and the Class C Note, pro
rata in accordance with the outstanding principal balance of
each such Note;
(vii) to late charges (applied to the Notes depending
on the proportion of the related late payment applicable to
each Note); and
(viii) to any other amounts payable under the
Mortgage or any of the other Loan Documents.
The entire unpaid principal balance of the Note together with
all accrued and unpaid interest, if not sooner paid, shall be payable in full on
the Maturity Date.
(f) All interest payable hereunder shall be computed on the
basis of a 360-day year for the actual number of days elapsed. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall, subject to paragraph (g)
below, be excluded. Interest shall accrue on each payment of principal hereunder
through the date on which such payment is credited, as provided below.
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<PAGE>
(g) All sums payable to Lender hereunder shall be payable,
without setoff, deduction or counterclaim, in immediately available funds, no
later than noon New York time on the date when due by wire transfer to such
account or address as Lender may from time to time designate in a written notice
to Borrower. Payments received by Lender in immediately available funds on any
day after noon New York time shall be treated for all purposes of the Loan as
having been paid and received by Lender on the next Domestic Business Day.
Notwithstanding anything to the contrary contained herein, when any payment is
due hereunder or under any of the other Loan Documents on a day which is not a
Domestic Business Day, such payment shall be made on the next succeeding
Domestic Business Day.
3. Funding Losses; Change in Law, Etc.
(a) Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate hereon) (collectively,
"Funding Losses") sustained by Lender or any Funding Party: (i) if this Note, or
any portion hereof, is repaid for any reason whatsoever on any date other than a
Payment Date (including, without limitation, from condemnation or insurance
proceeds, unless due to Lender's election to apply same to this Note on such
date), (ii) upon the conversion of the interest rate on the Loan to the Base
Rate in accordance with subsection (b) below, and/or (iii) as a consequence of
(x) any increased costs (without duplication of any costs used in calculating
LIBOR) that Lender or any Funding Party may sustain in maintaining the borrowing
evidenced hereby or (y) the reduction of any amounts received or receivable from
Borrower, in either case, due to the introduction of, or any change in, law or
applicable regulation or treaty (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having jurisdiction.
Payment of Funding Losses hereunder shall be in addition to any obligation to
pay a prepayment premium under Section 4 hereof in circumstances where such
prepayment premium would be due and owing.
(b) If Lender determines (which determination shall be
conclusive and binding upon Borrower, absent manifest error) (i) that Dollar
deposits in an amount approximately equal to the principal balance outstanding
hereunder are not generally available at such time in the London Interbank
Market for deposits in Eurodollars, (ii) that the rate at which such deposits
are being offered will not adequately and fairly reflect the cost to Lender or a
Funding Party of maintaining a LIBOR Interest Rate on the Loan (or the portion
of the Loan being funded by such Funding Party) or of funding the same in such
market for such Interest Accrual Period due to circumstances affecting the
London Interbank Market generally, (iii) that reasonable means do not exist for
ascertaining LIBOR, or (iv) that a LIBOR Interest Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then, in any such event,
Lender shall immediately notify Borrower of such circumstance and as of the date
of such notification with respect to an event described in clause (ii) or (iv)
above, or as of the expiration of the applicable Interest Accrual Period with
respect to an event described in clause (i) or (iii) above, interest shall
accrue at the Base Rate until such time as the situations described above are no
longer in effect or as otherwise provided in Section 5 hereof; provided,
however, if the situation described in clause (ii) above occurs, (x) Borrower
shall have the option, to be exercised by written notice to Lender, to pay
Lender (in the manner reasonably required by Lender) for such increased cost of
maintaining a LIBOR Interest Rate and (y) if the same only affects a portion of
the Loan, then only such portion shall have interest accrue at the Base Rate
(provided the remaining portion is at least $1,000,000) and interest shall
continue to accrue on the remaining portion at the LIBOR Interest Rate.
Notwithstanding anything to the contrary herein, with respect to an event
described in clauses (i) through (iv) above, provided that no Event of Default
shall then exist, Borrower shall have the right, on thirty (30) days prior
written notice to Lender given within thirty (30) days after Lender gives notice
to Borrower of such event, to pay the entire outstanding principal balance of
the Loan and all accrued and unpaid interest thereon on the next Payment Date
together with the Spread Maintenance Premium (as defined in the Loan Agreement)
thereon.
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<PAGE>
(c) If the introduction of, or any change in, any law,
regulation or treaty, or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof after the
date of this Note, shall make it unlawful for Lender or any Funding Party to
maintain the LIBOR Interest Rate with respect to the Loan, or any portion
thereof, or to fund the Loan, or any portion thereof, in Eurodollars in the
London Interbank Market, then the Loan (or such portion of the Loan) shall
thereafter bear interest at the Base Rate (unless the Default Rate shall be
applicable) and Borrower shall pay to Lender the amount of Funding Losses (if
any) incurred in connection with such conversion. The accrual of interest at the
Base Rate shall continue until such Payment Date, if any, as the situation
described in this subsection (c) is no longer in effect.
(d) If Lender or the Funding Party, as the case may be, shall
have determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption of any other law, rule, regulation or guideline (including but not
limited to any United States law, rule, regulation or guideline) coming into
existence after the date of this Note regarding capital adequacy, or any change
becoming effective after the date of this Note in any of the foregoing or in the
enforcement or interpretation or administration of any of the foregoing by any
court or any domestic or foreign governmental authority, central bank or
comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by Lender or its holding company or a
Funding Party or its holding company, as the case may be, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency (excluding, however, any
such laws, rules, regulations, and guidelines giving rise to the reserve
requirement used in calculating LIBOR), has or would have the effect of reducing
the rate of return on the capital of Lender, the Funding Party's or such Funding
Party's holding company, as the case may be, to a level below that which Lender
or its holding company or the Funding Party or its holding company, as the case
may be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration Lender's or its holding company's or the
Funding Party's or its holding company's, as the case may be, policies with
respect to capital adequacy) (the foregoing being hereinafter referred to as
"Capital Adequacy Events"), then, upon demand by Lender, Borrower shall, pay to
Lender, from time to time, such additional amount or amounts as will compensate
Lender or such Funding Party for any such reduction suffered.
(e) Any amount payable by Borrower under subsection (a) or
subsection (d) of this Section 3 shall be paid to Lender within five (5)
Business Days of receipt by Borrower of a certificate signed by an officer of
Lender setting forth the amount due and the basis for the determination of such
amount, which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from Borrower
for any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to Borrower prompt
notice of any event described in subsection (a) or (d) above and of the amount
to be paid under this Section 3 as a result thereof; provided, however, any
failure by Lender to so notify Borrower shall not affect Borrower's obligation
to make the payments to be made under this Section 3 as a result thereof. All
amounts which may become due and payable by Borrower in accordance with the
provisions of this Section 3 shall constitute additional interest hereunder and
shall be secured by the Mortgage and the other Loan Documents.
(f) If Lender or any Funding Party requests compensation for
any losses or costs to be reimbursed pursuant to any one or more of the
provisions of subsections (a) (iii) or (iv) or subsection (d) of this Section 4,
or if any event occurs as described in subsections (b) or (c) above which would
cause the Note no longer to bear interest at the LIBOR Interest Rate then, upon
request of Borrower, Lender or such Funding Party shall use reasonable efforts
in a manner consistent with such institution's practice in connection with loans
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<PAGE>
like the Loan to designate a different lending office for funding or booking the
Transaction Indebtedness or assign its rights and obligations under this Note to
another of its offices, branches or affiliates if such designation or assignment
in Lender's sole but good faith judgment (i) would eliminate, mitigate or reduce
amounts payable by Borrower in connection with Funding Losses or Capital
Adequacy Events or, with respect to an event described in subsection (b) or (c)
above would allow this Note to continue to bear interest at the LIBOR Interest
Rate without additional cost to Lender and (ii) would not be otherwise
prejudicial to Lender; Borrower hereby agreeing to pay all reasonably incurred
costs and expenses incurred by Lender or any Funding Party in connection with
any such designation or assignment.
4. Prepayment. Borrower expressly waives any right to prepay
this Note, in whole or in part, except as otherwise expressly provided in the
Loan Documents. Notwithstanding, anything contained in the Loan Documents to the
contrary, no prepayments will be permitted of any month through the fifteenth
day of any month, unless such prepayment is accompanied by the payment of any
interest due to the next payment date.
5. Default Interest; Late Charge. (a) If any payment of
principal, interest or other sum payable hereunder or under any of the other
Loan Documents is not paid when due (including by reason of failure to pay all
principal, interest and all other amounts due hereunder and under the other Loan
Documents on the Maturity Date (or such earlier date as the same may become due,
whether by acceleration or otherwise)), such principal amount, interest or other
sum shall bear interest at a rate per annum (the "Default Rate") equal to five
percent (5%) in excess of the interest rate on the Loan determined in accordance
with Section 2(a) above, which Default Rate shall so apply from the date due
until the date such amount is indefeasibly paid to Lender. Without limiting the
foregoing, upon the occurrence of and during the continuance of an Event of
Default hereunder, the entire principal balance of this Note shall bear interest
at the Default Rate. Interest at the Default Rate shall be paid immediately upon
demand, which demand may be made as frequently as Lender shall elect.
(b) If any installment of interest or principal is not paid
when due, Borrower shall pay to Lender a late charge of four percent (4%) of the
amount so overdue in order to defray part of the expense incident to handling
such delinquent payment or payments. Such late charge shall be immediately due
and payable without notice or demand by Lender. Such late charge shall be in
addition to and separate from any increase in interest due hereunder as a result
of calculation of interest due hereunder at the Default Rate. Acceptance by
Lender of any late charge or interest at the Default Rate shall not be deemed a
waiver of any of Lender's rights hereunder or under the other Loan Documents
with respect to such late payment.
6. Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter if any such Event of Default shall then be
continuing, Lender may, without additional notice to Borrower, declare the
principal of, and accrued interest on, this Note to be immediately due,
whereupon the same shall forthwith become immediately due and payable without
presentment, demand, protest or other notice of any kind and Lender may proceed
to exercise any rights and remedies available to Lender under the Mortgage and
the other Loan Documents or which Lender may have at law, in equity or
otherwise.
7. Expenses. Borrower hereby agrees to pay to Lender on demand
all costs and expenses of Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the enforcement and
collection hereof, whether or not any suit is brought on this Note or any
foreclosure or other proceeding is brought. The provisions of this Section 7 are
not intended to limit in any manner Borrower's obligations to pay costs and
expenses of Lender as may be elsewhere provided herein, in the Loan Agreement,
in the Mortgage or in any other Loan Document.
8. Security. This Note is secured by the Mortgage, the
Assignment of Leases (as defined in the Loan Agreement) and the other Loan
Documents.
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<PAGE>
9. Excess Interest. It is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of the other Loan
Documents, no such provision shall require the payment or permit the collection
of any amount ("Excess Interest") in excess of the maximum amount of interest
permitted by law to be charged for the use or detention, or the forbearance in
the collection, of all or any portion of the indebtedness evidenced by this
Note. If any Excess Interest is provided for, or is adjudicated to be provided
for, in this Note or any of the other Loan Documents, then in such event:
(a) the provisions of this Section 9 shall govern and
control;
(b) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall be obligated to pay
any Excess Interest;
(c) any Excess Interest that Lender may have received
hereunder shall, at the option of Lender, be (i) applied as a credit against the
then outstanding principal balance (without payment of prepayment premium) due
under this Note, accrued and unpaid interest thereon not to exceed the maximum
amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii)
any combination of the foregoing;
(d) the applicable interest rate or rates shall be
automatically subject to reduction to the maximum lawful rate and this Note, the
Mortgage, and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in such interest rate or
rates; and
(e) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall have any action or
remedy against Lender for any damages whatsoever or any defense to enforcement
of the Note, Mortgage or any of the other Loan Documents arising out of the
payment or collection of any Excess Interest.
10. Waiver. Borrower expressly waives presentment for payment,
demand, notice of demand and of dishonor and nonpayment of this Note, protest
and notice of protest, diligence in collecting, and the bringing of suit against
any other party.
11. Governing Law. THIS NOTE SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IT IS THE INTENT OF THE
PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK APPLY TO THIS NOTE.
12. Cross Default. A default under the Class B Note, the Class
C Note or any other note now or hereafter secured by the Mortgage constitutes a
default under this Note and under the other Loan Documents. When the default
under the Class B Note, the Class C Note or any such other note constitutes an
Event of Default under that note, an Event of Default also will exist under this
Note and the other Loan Documents.
13. Loan Taxes. (a) Any and all payments by Borrower to Lender
hereunder and under the other Loan Documents shall, provided that Lender
complies with the requirements of subsection (c) below, be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto except for the following for which Borrower shall not be responsible:
(A) taxes imposed on or measured by Lender's net income or net receipts, or (B)
franchise taxes imposed on Lender, by the jurisdiction in which (i) Lender is
organized, (ii) Lender is "doing business" (unless such determination of "doing
business" is made solely as a result of Lender's interest in the Loan and the
security therefor) or (iii) Lender's applicable lending office is located (all
such taxes, levies, imposts, deductions, charges or withholdings and liabilities
(except those described in clauses (A) and (B)) being hereinafter referred to as
"Loan Taxes"). If Borrower shall be required by law to deduct or withhold any
9
<PAGE>
Loan Taxes from or in respect of any sum payable hereunder or under any other
Loan Document, then (x) any such sum payable hereunder or under any other Loan
Document shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions applicable to
additional sums payable under this Section 13), Lender receives an amount equal
to the sum it would have received had no such deductions or withholdings
(including deductions applicable to additional sums payable under this Section
12) been made, (y) Borrower shall make such deductions or withholdings and (z)
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority in accordance with applicable law. Borrower will indemnify Lender for
the full amount of any Loan Taxes (including, without limitation, any Loan Taxes
(as well as taxes described in clauses (A) and (B) above) imposed by any
jurisdiction on any amounts payable under this Section 13) paid or payable by
Lender and any liability (including, without limitation, penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Loan
Taxes were correctly or legally asserted. A certificate as to the amount of such
payment or liability delivered to Borrower by Lender shall be conclusive absent
manifest error. The agreements and obligations of Borrower contained in this
Section 13 shall survive the payment in full of principal and interest under
this Note.
(b) Within 30 days after the date of any payment of
Loan Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt or other
evidence reasonably satisfactory to the Agent evidencing payment thereof.
(c) If Lender is a U.S. Person (other than the Lender
originally named herein), Lender shall deliver to Borrower upon request a Form
W-9 (unless it establishes to the reasonable satisfaction of Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
withholding tax). If Lender is not a U.S. Person, Lender shall deliver to
Borrower upon request a Form W-8 and either (i) a Form 1001 which indicates a 0%
rate of tax or (ii) a Form 4224. If Lender is not a U.S. Person, Lender further
undertakes to deliver to Borrower additional Forms W-8, 1001, 4224 (or any
successor forms) or other manner of certification, as the case may be, (i) on or
before the date that any such form expires or becomes obsolete, (ii) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to Borrower, and (iii) such extensions or renewals thereof as
may reasonably be requested by Borrower, certifying that Lender is entitled to
receive payments hereunder without deduction or withholding of any Loan Taxes.
However, in the event that any change in law, rule, regulation, treaty or
directive, or in the interpretation or application thereof (a "Law Change"), has
occurred after the date hereof and prior to the date on which any delivery
pursuant to the preceding sentence would otherwise be required which renders
such form inapplicable, or which would prevent Lender from duly completing and
delivering any such form or if such Law Change results in Lender being unable to
deliver a Form W-9 (or other satisfactory evidence that it is otherwise eligible
for an exemption from backup withholding tax or other withholding tax), Lender
shall not be obligated to deliver such forms but shall, promptly following such
Law Change, but in any event prior to the time the next payment hereunder is due
following such Law Change, advise Borrower in writing whether it is capable of
receiving payments without any deduction or withholding of Loan Taxes. In the
event of such Law Change, the Borrower shall have the obligation to make the
Lender whole and to "gross-up" under Section 13(a) despite the failure by the
Lender to deliver such forms.
(d) If Lender receives a refund in respect of Loan
Taxes paid by Borrower, it shall promptly pay such refund, together with any
other amounts paid by Borrower pursuant to subsection (a). above in connection
with such refunded Loan Taxes, to Borrower; provided, however, that Borrower
agrees to promptly return such refund to Lender if it receives notice from
Lender that it is required to repay such refund. Nothing contained herein shall
be construed to require Lender to seek any refund and Lender shall have no
obligation to Borrower to do so.
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(e) All amounts payable under this Section 13 shall
constitute additional interest hereunder and shall be secured by the Mortgage
and the other Loan Documents. The provisions of this Section 13 shall survive
any payment or prepayment of this Note and any foreclosure or satisfaction of
the Mortgage.
(f) Any reference under this Section 13 to "Lender"
shall be deemed to include any participants and assignees.
14. Modification, etc. This Note can be extended, modified or
amended only in writing by an instrument executed by Lender and Borrower and
none of the rights or benefits of Lender hereunder can be waived except in a
written document executed by Lender.
15. Binding Effect. This Note shall be binding upon and inure
to the benefit of Lender, Borrower and their respective successors and assigns.
16. Notices. All notices and other communications hereunder
shall be delivered as set forth in Section 7.6 of the Loan Agreement.
17. Interpretation. The headings of sections and paragraphs in
this Note are for convenience only and shall not be construed in any way to
limit or define the content, scope, or intent of the provisions hereof. As used
in this Note, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so
requires. The parties hereto intend and believe that each provision in this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties to the fullest
possible extent that it is legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void or unenforceable
provision were not contained therein, and that the rights, obligations and
interests of Borrower and Lender under the remainder of this Note shall continue
in full force and effect; provided, however, that if any provision of this Note
which is found to be in violation of any applicable law concerning the
imposition of interest hereunder, the rights, obligations and interests of
Borrower and Lender with respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of Section 9 hereof. Time is of the
essence of this Note.
18. Limited Recourse. The provisions of Section 7.20 of the
Loan Agreement shall apply to Borrower's obligations under this Note and are
incorporated herein as if fully set forth herein.
19. No Oral Agreements. THIS NOTE AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
Note as of the day and year first above written.
BORROWER:
PELICAN STRAND, LTD.,
a Florida limited partnership
By: Pelican Strand Development Corporation,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
12
CLASS B PROMISSORY NOTE
U.S. $9,256,000.00 September 3, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, PELICAN STRAND, LTD., a
Florida limited partnership, having an address at c/o Golf Communities of
America, 255 South Orange Avenue, Firstate Tower, Suite 1515, Orlando, Florida
32801 ("Borrower"), hereby promises and agrees to pay to the order of CREDIT
SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, a Delaware limited liability company,
its successors and assigns ("Lender"), at its office at 11 Madison Avenue, New
York, New York 10010, on the Maturity Date (as defined below) the principal sum
of NINE MILLION TWO HUNDRED FIFTY SIX THOUSAND AND NO/100 DOLLARS
($9,256,000.00) or so much thereof as shall have been advanced under the Loan
Agreement (as hereinafter defined) and shall be outstanding hereunder together
with interest thereon as hereinafter set forth, such payment to be made in
lawful money of the United States of America in immediately available funds.
This Note evidences a portion of a loan (the "Loan") in the
aggregate principal sum of Thirty Five Million Six Hundred Thousand And No/100
Dollars ($35,600,000.00), the other portion of which Loan is evidenced by a
Class A Promissory Note (the "Class A Note") in the principal sum of Seventeen
Million Eighty Eight Thousand And No/100 Dollars ($17,088,000.00), dated the
date of this Note, made by Borrower to Lender, and by a Class C Promissory Note
(the "Class C Note") in the principal sum of Nine Million Two Hundred Fifty Six
Thousand And No/100 Dollars ($9,256,000.00), dated the date of this Note, made
by Borrower to Lender. This Note, together with the Class A Note and the Class C
Note, are hereinafter, collectively, referred to as the "Notes".
1. Definitions. The following terms used in this Note shall
have the following meanings:
"Base Rate"- The rate per annum equal to three and one
half percentage points (3.5%) in excess of
the Treasury Rate. Any interest rate based
on the Base Rate shall be adjusted as of the
date of any change in the Base Rate. The
determination of the Base Rate shall be made
by Lender and shall be conclusive and
binding upon Borrower, absent manifest
error.
"Borrower"- Shall have the meaning ascribed to such
term in the initial paragraph hereof. The
term "Borrower" shall include the respective
successors and assigns of Borrower, but the
foregoing is not intended to vary or negate
the effect of Section 5.1 of the Loan
Agreement.
"Capital Adequacy Events"- Shall have the meaning ascribed to such term
in Section 3(d) hereof.
"Cash Management Agreement"- That certain Cash
Management Agreement, dated as of the date
hereof, made by and between Borrower and
Lender, with respect to the Loan as same may
be amended, modified or extended, from time
to time.
"Default Rate"- Shall have the meaning ascribed to such term
in Section 5(a) hereof.
"Domestic Business Day"- Any day except a Saturday,
Sunday or other day on which commercial
banks are required or permitted by law to
close in New York City.
<PAGE>
"Eurodollar Business Day"- Any day on which commercial
banks are open for international business
(including dealings in dollar deposits) in
London, England.
"Event of Default"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Excess Interest"- Shall have the meaning ascribed to such
term in Section 9 hereof.
"Funding Losses"- Shall have the meaning ascribed to such term
in Section 3(a) hereof.
"Funding Party"- Any bank or other entity, if any,
which is indirectly or directly funding
Lender with respect to the Loan, in whole or
in part, including, without limitation, any
direct or indirect assignee of, or
participant in, the
Loan.
"Governmental Authority"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Interest Accrual Period"- With respect to any Payment Date, from the
eleventh (11th) day of the calendar month
preceding such Payment Date until the tenth
(10th) day of current month, provided, that
no Interest Accrual Period shall end later
than the Maturity Date (other than for
purposes of calculating Default Interest),
and the initial Interest Accrual Period
shall begin on the date of this Note.
"Law Change"- Shall have the meaning ascribed to
such term in Section 12(c) hereof.
"Lender"- Shall have the meaning ascribed to such
term in the introductory paragraph hereof.
"LIBOR Interest Rate"- Shall have the meaning ascribed to such term
in Section 2(a) hereof.
"LIBOR"- With respect to the relevant Interest
Accrual Period, the rate per annum (rounded
upwards, if necessary, to the nearest
one-one-thousandth (1/1000) of one percent
1%) reported, with respect to the initial
Interest Accrual Period, at 11:00 a.m.
London time on the date of this Note (or if
such date is not a Eurodollar Business Day,
the immediately preceding Eurodollar
Business Day), and thereafter, at 11:00 a.m.
London time on the date two (2) Eurodollar
Business Days prior to the first day of such
Interest Accrual Period, on Telerate Access
Service Page 3750 (British Bankers
Association Settlement Rate) as the
non-reserve adjusted London Interbank
Offered Rate for U.S. dollar deposits having
a 30 day term and in an amount of $1,000,000
or more (or on such other page as may
replace Telerate Page 3750 on that service
or such other service or services as may be
nominated by the British Bankers'
Association for the purpose of displaying
2
<PAGE>
such rate all as determined by Lender in its
sole but good faith discretion). In the
event that (i) more than one such LIBOR is provided, the
average of such rates shall apply or (ii) no such LIBOR is
published, then LIBOR shall be determined from such
comparable financial reporting company as
Lender in its sole but good faith discretion
shall determine. LIBOR for any Interest
Accrual Period shall be adjusted from time
to time, by increasing the rate thereof to
compensate Lender and any Funding Party for
any aggregate reserve requirements
(including, without limitation, all basic,
supplemental, marginal and other reserve
requirements and taking into account any
transitional adjustments or other scheduled
changes in reserve requirements during any
Interest Accrual Period) which are required
to be maintained by Lender or such Funding
Party with respect to "Eurocurrency
liabilities" (as presently defined in
Regulation D of the Board of Governors of
the Federal Reserve System) of the same term
under Regulation D, or any other regulations
of a Governmental Authority having
jurisdiction over Lender or such Funding
Party of similar effect.
"Loan"- The loan from Lender to Borrower which is
evidenced by (i) this Note, (ii) the Class A
Note and (iii) the Class C Note.
"Loan Agreement"- That certain Loan Agreement,
dated as of the date hereof, made by and
between Borrower and Lender, with respect to
the Loan as same may be amended, modified or
extended, from time to time.
"Loan Documents"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Loan Taxes"- Shall have the meaning ascribed to
such term in Section 12(a) hereof.
"Maturity Date"- July 1, 2001.
"Mortgage"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Net Proceeds"- The amount allocated to, or required to be
allocated to, the Monthly Debt Service
Account under Section 3(a)(A)(vii) or
Section 3(a)(B)(vii) of the Cash Management
Agreement during any Collection Period (as
defined therein) plus the amount allocated
to the Monthly Debt Service Account upon the
sale of a Release Parcel or Lot (each as
defined in the Loan Agreement) under Section
3(a)(C) thereof, less interest due on the
Loan, other than default interest.
"Note"- This Promissory Note.
3
<PAGE>
"Payment Date"- September 11, 1998 and the eleventh
day of each month thereafter during the term
of this Note, if the eleventh day is not a
Domestic Business Day then on the next
preceding Domestic Business Day.
"Person"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Treasury Rate"- A rate per annum equal to the yield, as
of the related determination date,
calculated by linear interpolation (rounded
to the nearest one-thousandth of one percent
(i.e., 0.001%)) of the yields of noncallable
United States Treasury obligations with
terms (one longer and one shorter) most
nearly approximating the period from such
determination date to the Maturity Date, as
determined in good faith by Lender on the
basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the
heading U.S. Governmental Security/Treasury
Constant Maturities, or other recognized
source of financial market information
selected by Lender.
"U.S. Person"- Any Person that is (i) a citizen or resident
of the United States, (ii) a corporation,
partnership or other entity created or
organized under the laws of the United
States or any State thereof or (iii) any
estate or trust that is subject to U.S.
federal income taxation regardless of the
source of its income.
2. Interest and Principal Payments. (a) Interest on the
outstanding principal of the Loan evidenced by the Notes shall accrue from the
date hereof at the rate per annum (the "Loan Interest Rate") equal five and six
tenths percent (5.6%) in excess of LIBOR for the relevant Interest Accrual
Period.
(b) Subject to the further provisions of this Note, including
Sections 3 and 5 below, interest on the principal sum evidenced by this Note
shall accrue from the date hereof at the rate per annum (the "Class B Interest
Rate") equal to five and one half percent (5.5%) in excess of LIBOR for the
relevant Interest Accrual Period.
(c) Prior to the Maturity Date (or the date the unpaid
principal balance of the Loan otherwise becomes due, whether by acceleration or
otherwise), interest accruing at the Loan Interest Rate during each Interest
Accrual Period shall be payable monthly in arrears on each Payment Date.
(d) In addition, Borrower shall pay, in reduction of the
outstanding principal amount of the Loan, the following:
(i) on each Payment Date an amount equal to the Net
Proceeds for the preceding calendar month,
(ii) on July 1, 1999, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twelve (12) calendar months, excluding
Net Proceeds attributable to the sale of an Individual
Property or Release Parcel during such period, plus (y) the
aggregate payments to Lender under Sections 2(b)(i), (ii) or
(iii) of the Pelican Strand Notes during the preceding twelve
(12) calendar months (including payments on July 1, 1999),
shall be less than $14,050,000 and
4
<PAGE>
(iii) on July 1, 2000, the amount (if any) by which
the sum of (x) the aggregate Net Proceeds paid to Lender
during the preceding twenty-four (24) calendar months,
excluding Net Proceeds attributable to the sale of an
Individual Property or Release Parcel during such period, plus
(y) the aggregate payments to Lender under Sections 2(b)(i),
(ii) or (iii) of the Pelican Strand Notes during the preceding
twenty-four (24) calendar months (including payments on July
1, 2000), shall be less than $36,550,000.
The entire unpaid principal balance of the Loan together with
all accrued and unpaid interest, if not sooner paid, shall be payable in full on
the Maturity Date.
(e) All amounts tendered by Borrower or otherwise available
for payment of the Loan shall be applied in the following order of priority:
(i) to accrued interest and unpaid interest on the
Class A Note;
(ii) to accrued interest and unpaid interest on this
Note;
(iii) to accrued interest and unpaid interest on the
Class C Note;
(iv) to the principal of the Class A Note until such
principal has been paid in full;
(v) prior to the occurrence of an Event of Default,
pro rata to the principal of this Note and to the principal of
the Class C Note until such principal has been paid in full;
after the occurrence and during the continuance of an Event of
Default, (a) to the principal of this Note until such
principal has been paid in full and (b) to the principal of
the Class C Note until such principal has been paid in full;
(vi) to any default interest in excess of the
interest paid in accordance with clauses (i), (ii) and (iii)
above on this Note, the Class A Note and the Class C Note, in
that order;
(vii) to late charges (applied to the Notes depending
on the proportion of the related late payment applicable to
each Note); and
(viii) to any other amounts payable under the
Mortgage or any of the other Loan Documents.
(f) All interest payable hereunder shall be computed on the
basis of a 360-day year for the actual number of days elapsed. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall, subject to paragraph (g)
below, be excluded. Interest shall accrue on each payment of principal hereunder
through the date on which such payment is credited, as provided below.
(g) All sums payable to Lender hereunder shall be payable,
without setoff, deduction or counterclaim, in immediately available funds, no
later than noon New York time on the date when due by wire transfer to such
account or address as Lender may from time to time designate in a written notice
to Borrower. Payments received by Lender in immediately available funds on any
day after noon New York time shall be treated for all purposes of the Loan as
having been paid and received by Lender on the next Domestic Business Day.
Notwithstanding anything to the contrary contained herein, when any payment is
due hereunder or under any of the other Loan Documents on a day which is not a
Domestic Business Day, such payment shall be made on the next succeeding
Domestic Business Day.
5
<PAGE>
3. Funding Losses; Change in Law, Etc.
(a) Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate hereon) (collectively,
"Funding Losses") sustained by Lender or any Funding Party: (i) if this Note, or
any portion hereof, is repaid for any reason whatsoever on any date other than a
Payment Date (including, without limitation, from condemnation or insurance
proceeds, unless due to Lender's election to apply same to this Note on such
date), (ii) upon the conversion of the interest rate on the Loan to the Base
Rate in accordance with subsection (b) below, and/or (iii) as a consequence of
(x) any increased costs (without duplication of any costs used in calculating
LIBOR) that Lender or any Funding Party may sustain in maintaining the borrowing
evidenced hereby or (y) the reduction of any amounts received or receivable from
Borrower, in either case, due to the introduction of, or any change in, law or
applicable regulation or treaty (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having jurisdiction.
Payment of Funding Losses hereunder shall be in addition to any obligation to
pay a prepayment premium under Section 4 hereof in circumstances where such
prepayment premium would be due and owing.
(b) If Lender determines (which determination shall be
conclusive and binding upon Borrower, absent manifest error) (i) that Dollar
deposits in an amount approximately equal to the principal balance outstanding
hereunder are not generally available at such time in the London Interbank
Market for deposits in Eurodollars, (ii) that the rate at which such deposits
are being offered will not adequately and fairly reflect the cost to Lender or a
Funding Party of maintaining a LIBOR Interest Rate on the Loan (or the portion
of the Loan being funded by such Funding Party) or of funding the same in such
market for such Interest Accrual Period due to circumstances affecting the
London Interbank Market generally, (iii) that reasonable means do not exist for
ascertaining LIBOR, or (iv) that a LIBOR Interest Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then, in any such event,
Lender shall immediately notify Borrower of such circumstance and as of the date
of such notification with respect to an event described in clause (ii) or (iv)
above, or as of the expiration of the applicable Interest Accrual Period with
respect to an event described in clause (i) or (iii) above, interest shall
accrue at the Base Rate until such time as the situations described above are no
longer in effect or as otherwise provided in Section 5 hereof; provided,
however, if the situation described in clause (ii) above occurs, (x) Borrower
shall have the option, to be exercised by written notice to Lender, to pay
Lender (in the manner reasonably required by Lender) for such increased cost of
maintaining a LIBOR Interest Rate and (y) if the same only affects a portion of
the Loan, then only such portion shall have interest accrue at the Base Rate
(provided the remaining portion is at least $1,000,000) and interest shall
continue to accrue on the remaining portion at the LIBOR Interest Rate.
Notwithstanding anything to the contrary herein, with respect to an event
described in clauses (i) through (iv) above, provided that no Event of Default
shall then exist, Borrower shall have the right, on thirty (30) days prior
written notice to Lender given within thirty (30) days after Lender gives notice
to Borrower of such event, to pay the entire outstanding principal balance of
the Loan and all accrued and unpaid interest thereon on the next Payment Date
together with the Spread Maintenance Premium (as defined in the Loan Agreement)
thereon.
(c) If the introduction of, or any change in, any law,
regulation or treaty, or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof after the
date of this Note, shall make it unlawful for Lender or any Funding Party to
maintain the LIBOR Interest Rate with respect to the Loan, or any portion
thereof, or to fund the Loan, or any portion thereof, in Eurodollars in the
6
<PAGE>
London Interbank Market, then the Loan (or such portion of the Loan) shall
thereafter bear interest at the Base Rate (unless the Default Rate shall be
applicable) and Borrower shall pay to Lender the amount of Funding Losses (if
any) incurred in connection with such conversion. The accrual of interest at the
Base Rate shall continue until such Payment Date, if any, as the situation
described in this subsection (c) is no longer in effect.
(d) If Lender or the Funding Party, as the case may be, shall
have determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption of any other law, rule, regulation or guideline (including but not
limited to any United States law, rule, regulation or guideline) coming into
existence after the date of this Note regarding capital adequacy, or any change
becoming effective after the date of this Note in any of the foregoing or in the
enforcement or interpretation or administration of any of the foregoing by any
court or any domestic or foreign governmental authority, central bank or
comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by Lender or its holding company or a
Funding Party or its holding company, as the case may be, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency (excluding, however, any
such laws, rules, regulations, and guidelines giving rise to the reserve
requirement used in calculating LIBOR), has or would have the effect of reducing
the rate of return on the capital of Lender, the Funding Party's or such Funding
Party's holding company, as the case may be, to a level below that which Lender
or its holding company or the Funding Party or its holding company, as the case
may be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration Lender's or its holding company's or the
Funding Party's or its holding company's, as the case may be, policies with
respect to capital adequacy) (the foregoing being hereinafter referred to as
"Capital Adequacy Events"), then, upon demand by Lender, Borrower shall, pay to
Lender, from time to time, such additional amount or amounts as will compensate
Lender or such Funding Party for any such reduction suffered.
(e) Any amount payable by Borrower under subsection (a) or
subsection (d) of this Section 3 shall be paid to Lender within five (5)
Business Days of receipt by Borrower of a certificate signed by an officer of
Lender setting forth the amount due and the basis for the determination of such
amount, which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from Borrower
for any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to Borrower prompt
notice of any event described in subsection (a) or (d) above and of the amount
to be paid under this Section 3 as a result thereof; provided, however, any
failure by Lender to so notify Borrower shall not affect Borrower's obligation
to make the payments to be made under this Section 3 as a result thereof. All
amounts which may become due and payable by Borrower in accordance with the
provisions of this Section 3 shall constitute additional interest hereunder and
shall be secured by the Mortgage and the other Loan Documents.
(f) If Lender or any Funding Party requests compensation for
any losses or costs to be reimbursed pursuant to any one or more of the
provisions of subsections (a) (iii) or (iv) or subsection (d) of this Section 4,
or if any event occurs as described in subsections (b) or (c) above which would
cause the Note no longer to bear interest at the LIBOR Interest Rate then, upon
request of Borrower, Lender or such Funding Party shall use reasonable efforts
in a manner consistent with such institution's practice in connection with loans
like the Loan to designate a different lending office for funding or booking the
Transaction Indebtedness or assign its rights and obligations under this Note to
another of its offices, branches or affiliates if such designation or assignment
in Lender's sole but good faith judgment (i) would eliminate, mitigate or reduce
amounts payable by Borrower in connection with Funding Losses or Capital
Adequacy Events or, with respect to an event described in subsection (b) or (c)
7
<PAGE>
above would allow this Note to continue to bear interest at the LIBOR Interest
Rate without additional cost to Lender and (ii) would not be otherwise
prejudicial to Lender; Borrower hereby agreeing to pay all reasonably incurred
costs and expenses incurred by Lender or any Funding Party in connection with
any such designation or assignment.
4. Prepayment. Borrower expressly waives any right to prepay
this Note, in whole or in part, except as otherwise expressly provided in the
Loan Documents. Notwithstanding, anything contained in the Loan Documents to the
contrary, no prepayments will be permitted unless such prepayment is accompanied
by the payment of any interest due to the next Payment Date.
5. Default Interest; Late Charge. (a) If any payment of
principal, interest or other sum payable hereunder or under any of the other
Loan Documents is not paid when due (including by reason of failure to pay all
principal, interest and all other amounts due hereunder and under the other Loan
Documents on the Maturity Date (or such earlier date as the same may become due,
whether by acceleration or otherwise)), such principal amount, interest or other
sum shall bear interest at a rate per annum (the "Default Rate") equal to five
percent (5%) in excess of the interest rate on the Loan determined in accordance
with Section 2(a) above, which Default Rate shall so apply from the date due
until the date such amount is indefeasibly paid to Lender. Without limiting the
foregoing, upon the occurrence of and during the continuance of an Event of
Default hereunder, the entire principal balance of this Note shall bear interest
at the Default Rate. Interest at the Default Rate shall be paid immediately upon
demand, which demand may be made as frequently as Lender shall elect.
(b) If any installment of interest or principal is not paid
when due, Borrower shall pay to Lender a late charge of four percent (4%) of the
amount so overdue in order to defray part of the expense incident to handling
such delinquent payment or payments. Such late charge shall be immediately due
and payable without notice or demand by Lender. Such late charge shall be in
addition to and separate from any increase in interest due hereunder as a result
of calculation of interest due hereunder at the Default Rate. Acceptance by
Lender of any late charge or interest at the Default Rate shall not be deemed a
waiver of any of Lender's rights hereunder or under the other Loan Documents
with respect to such late payment.
6. Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter if any such Event of Default shall then be
continuing, Lender may, without additional notice to Borrower, declare the
principal of, and accrued interest on, this Note to be immediately due,
whereupon the same shall forthwith become immediately due and payable without
presentment, demand, protest or other notice of any kind and Lender may proceed
to exercise any rights and remedies available to Lender under the Mortgage and
the other Loan Documents or which Lender may have at law, in equity or
otherwise.
7. Expenses. Borrower hereby agrees to pay to Lender on demand
all costs and expenses of Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the enforcement and
collection hereof, whether or not any suit is brought on this Note or any
foreclosure or other proceeding is brought. The provisions of this Section 7 are
not intended to limit in any manner Borrower's obligations to pay costs and
expenses of Lender as may be elsewhere provided herein, in the Loan Agreement,
in the Mortgage or in any other Loan Document.
8. Security. This Note is secured by the Mortgage, the
Assignment of Leases (as defined in the Loan Agreement) and the other Loan
Documents.
9. Excess Interest. It is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of the other Loan
Documents, no such provision shall require the payment or permit the collection
of any amount ("Excess Interest") in excess of the maximum amount of interest
permitted by law to be charged for the use or detention, or the forbearance in
8
<PAGE>
the collection, of all or any portion of the indebtedness evidenced by this
Note. If any Excess Interest is provided for, or is adjudicated to be provided
for, in this Note or any of the other Loan Documents, then in such event:
(a) the provisions of this Section 9 shall govern and
control;
(b) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall be obligated to pay
any Excess Interest;
(c) any Excess Interest that Lender may have received
hereunder shall, at the option of Lender, be (i) applied as a credit against the
then outstanding principal balance (without payment of prepayment premium) due
under this Note, accrued and unpaid interest thereon not to exceed the maximum
amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii)
any combination of the foregoing;
(d) the applicable interest rate or rates shall be
automatically subject to reduction to the maximum lawful rate and this Note, the
Mortgage, and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in such interest rate or
rates; and
(e) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall have any action or
remedy against Lender for any damages whatsoever or any defense to enforcement
of the Note, Mortgage or any of the other Loan Documents arising out of the
payment or collection of any Excess Interest.
10. Waiver. Borrower expressly waives presentment for payment,
demand, notice of demand and of dishonor and nonpayment of this Note, protest
and notice of protest, diligence in collecting, and the bringing of suit against
any other party.
11. Governing Law. THIS NOTE SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IT IS THE INTENT OF THE
PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK APPLY TO THIS NOTE.
12. Cross Default. A default under the Class A Note, the Class
C Note or any other note now or hereafter secured by the Mortgage constitutes a
default under this Note and under the other Loan Documents. When the default
under the Class A Note, the Class C Note or any such other note constitutes an
Event of Default under that note, an Event of Default also will exist under this
Note and the other Loan Documents.
13. Loan Taxes. (a) Any and all payments by Borrower to Lender
hereunder and under the other Loan Documents shall, provided that Lender
complies with the requirements of subsection (c) below, be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto except for the following for which Borrower shall not be responsible:
(A) taxes imposed on or measured by Lender's net income or net receipts, or (B)
franchise taxes imposed on Lender, by the jurisdiction in which (i) Lender is
organized, (ii) Lender is "doing business" (unless such determination of "doing
business" is made solely as a result of Lender's interest in the Loan and the
security therefor) or (iii) Lender's applicable lending office is located (all
such taxes, levies, imposts, deductions, charges or withholdings and liabilities
(except those described in clauses (A) and (B)) being hereinafter referred to as
"Loan Taxes"). If Borrower shall be required by law to deduct or withhold any
Loan Taxes from or in respect of any sum payable hereunder or under any other
Loan Document, then (x) any such sum payable hereunder or under any other Loan
Document shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions applicable to
additional sums payable under this Section 13), Lender receives an amount equal
9
<PAGE>
to the sum it would have received had no such deductions or withholdings
(including deductions applicable to additional sums payable under this Section
13) been made, (y) Borrower shall make such deductions or withholdings and (z)
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority in accordance with applicable law. Borrower will indemnify Lender for
the full amount of any Loan Taxes (including, without limitation, any Loan Taxes
(as well as taxes described in clauses (A) and (B) above) imposed by any
jurisdiction on any amounts payable under this Section 13) paid or payable by
Lender and any liability (including, without limitation, penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Loan
Taxes were correctly or legally asserted. A certificate as to the amount of such
payment or liability delivered to Borrower by Lender shall be conclusive absent
manifest error. The agreements and obligations of Borrower contained in this
Section 13 shall survive the payment in full of principal and interest under
this Note.
(b) Within 30 days after the date of any payment of
Loan Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt or other
evidence reasonably satisfactory to the Agent evidencing payment thereof.
(c) If Lender is a U.S. Person (other than the Lender
originally named herein), Lender shall deliver to Borrower upon request a Form
W-9 (unless it establishes to the reasonable satisfaction of Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
withholding tax). If Lender is not a U.S. Person, Lender shall deliver to
Borrower upon request a Form W-8 and either (i) a Form 1001 which indicates a 0%
rate of tax or (ii) a Form 4224. If Lender is not a U.S. Person, Lender further
undertakes to deliver to Borrower additional Forms W-8, 1001, 4224 (or any
successor forms) or other manner of certification, as the case may be, (i) on or
before the date that any such form expires or becomes obsolete, (ii) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to Borrower, and (iii) such extensions or renewals thereof as
may reasonably be requested by Borrower, certifying that Lender is entitled to
receive payments hereunder without deduction or withholding of any Loan Taxes.
However, in the event that any change in law, rule, regulation, treaty or
directive, or in the interpretation or application thereof (a "Law Change"), has
occurred after the date hereof and prior to the date on which any delivery
pursuant to the preceding sentence would otherwise be required which renders
such form inapplicable, or which would prevent Lender from duly completing and
delivering any such form or if such Law Change results in Lender being unable to
deliver a Form W-9 (or other satisfactory evidence that it is otherwise eligible
for an exemption from backup withholding tax or other withholding tax), Lender
shall not be obligated to deliver such forms but shall, promptly following such
Law Change, but in any event prior to the time the next payment hereunder is due
following such Law Change, advise Borrower in writing whether it is capable of
receiving payments without any deduction or withholding of Loan Taxes. In the
event of such Law Change, the Borrower shall have the obligation to make the
Lender whole and to "gross-up" under Section 13(a) despite the failure by the
Lender to deliver such forms.
(d) If Lender receives a refund in respect of Loan
Taxes paid by Borrower, it shall promptly pay such refund, together with any
other amounts paid by Borrower pursuant to subsection (a). above in connection
with such refunded Loan Taxes, to Borrower; provided, however, that Borrower
agrees to promptly return such refund to Lender if it receives notice from
Lender that it is required to repay such refund. Nothing contained herein shall
be construed to require Lender to seek any refund and Lender shall have no
obligation to Borrower to do so.
(e) All amounts payable under this Section 13 shall
constitute additional interest hereunder and shall be secured by the Mortgage
and the other Loan Documents. The provisions of this Section 13 shall survive
any payment or prepayment of this Note and any foreclosure or satisfaction of
the Mortgage.
10
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(f) Any reference under this Section 13 to "Lender"
shall be deemed to include any participants and assignees.
14. Modification, etc. This Note can be extended, modified or
amended only in writing by an instrument executed by Lender and Borrower and
none of the rights or benefits of Lender hereunder can be waived except in a
written document executed by Lender.
15. Binding Effect. This Note shall be binding upon and inure
to the benefit of Lender, Borrower and their respective successors and assigns.
16. Notices. All notices and other communications hereunder
shall be delivered as set forth in Section 7.6 of the Loan Agreement.
17. Interpretation. The headings of sections and paragraphs in
this Note are for convenience only and shall not be construed in any way to
limit or define the content, scope, or intent of the provisions hereof. As used
in this Note, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so
requires. The parties hereto intend and believe that each provision in this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties to the fullest
possible extent that it is legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void or unenforceable
provision were not contained therein, and that the rights, obligations and
interests of Borrower and Lender under the remainder of this Note shall continue
in full force and effect; provided, however, that if any provision of this Note
which is found to be in violation of any applicable law concerning the
imposition of interest hereunder, the rights, obligations and interests of
Borrower and Lender with respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of Section 9 hereof. Time is of the
essence of this Note.
18. Limited Recourse. The provisions of Section 7.20 of the
Loan Agreement shall apply to Borrower's obligations under this Note and are
incorporated herein as if fully set forth herein.
19. No Oral Agreements. THIS NOTE AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
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IN WITNESS WHEREOF, the undersigned has duly executed this
Note as of the day and year first above written.
BORROWER:
PELICAN STRAND, LTD.,
a Florida limited partnership
By: Pelican Strand Development Corporation,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
12
CLASS C PROMISSORY NOTE
U.S. $9,256,000.00 September 3, 1998
New York, New York
FOR VALUE RECEIVED, the undersigned, PELICAN STRAND, LTD., a
Florida limited partnership, having an address at c/o Golf Communities of
America, 255 South Orange Avenue, Firstate Tower, Suite 1515, Orlando, Florida
32801 ("Borrower"), hereby promises and agrees to pay to the order of CREDIT
SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, a Delaware limited liability company,
its successors and assigns ("Lender"), at its office at 11 Madison Avenue, New
York, New York 10010, on the Maturity Date (as defined below) the principal sum
of NINE MILLION TWO HUNDRED FIFTY SIX AND NO/100 DOLLARS ($9,256,000.00) or so
much thereof as shall have been advanced under the Loan Agreement (as
hereinafter defined) and shall be outstanding hereunder together with interest
thereon as hereinafter set forth, such payment to be made in lawful money of the
United States of America in immediately available funds.
This Note evidences a portion of a loan (the "Loan") in the
aggregate principal sum of Thirty Five Million Six Hundred Thousand And No/100
Dollars ($35,600,000.00), the other portion of which Loan is evidenced by a
Class A Promissory Note (the "Class A Note") in the principal sum of Seventeen
Million Eighty Eight Thousand And No/100 Dollars ($17,088,000.00), dated the
date of this Note, made by Borrower to Lender, and by a Class B Promissory Note
(the "Class B Note") in the principal sum of Nine Million Two Hundred Fifty Six
Thousand And No/100 Dollars ($9,256,000.00), dated the date of this Note, made
by Borrower to Lender. This Note, together with the Class A Note and the Class B
Note, are hereinafter, collectively, referred to as the "Notes".
1. Definitions. The following terms used in this Note shall
have the following meanings:
"Base Rate"- The rate per annum equal to fifteen and
twenty seven hundredths percentage points
(15.27%) in excess of the Treasury Rate. Any
interest rate based on the Base Rate shall
be adjusted as of the date of any change in
the Base Rate. The determination of the Base
Rate shall be made by Lender and shall be
conclusive and binding upon Borrower, absent
manifest error.
"Borrower"- Shall have the meaning ascribed to such
term in the initial paragraph hereof. The
term "Borrower" shall include the respective
successors and assigns of Borrower, but the
foregoing is not intended to vary or negate
the effect of Section 5.1 of the Loan
Agreement.
"Capital Adequacy Events"- Shall have the meaning ascribed to such term
in Section 3(d) hereof.
"Cash Management Agreement"- That certain Cash
Management Agreement, dated as of the date
hereof, made by and between Borrower and
Lender, with respect to the Loan as same may
be amended, modified or extended, from time
to time.
"Default Rate"- Shall have the meaning ascribed to such term
in Section 5(a) hereof.
"Domestic Business Day"- Any day except a Saturday,
Sunday or other day on which commercial
banks are required or permitted by law to
close in New York City.
"Eurodollar Business Day"- Any day on which commercial
banks are open for international business
(including dealings in dollar deposits) in
London, England.
"Event of Default"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Excess Interest"- Shall have the meaning ascribed to such
term in Section 9 hereof.
"Funding Losses"- Shall have the meaning ascribed to such term
in Section 3(a) hereof.
"Funding Party"- Any bank or other entity, if any,
which is indirectly or directly funding
Lender with respect to the Loan, in whole or
in part, including, without limitation, any
direct or indirect assignee of, or
participant in, the
Loan.
"Governmental Authority"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Interest Accrual Period"- With respect to any Payment Date, from the
eleventh (11th) day of the calendar month
preceding such Payment Date until the tenth
(10th) day of current month, provided, that
no Interest Accrual Period shall end later
than the Maturity Date (other than for
purposes of calculating Default Interest),
and the initial Interest Accrual Period
shall begin on the date of this Note.
"Law Change"- Shall have the meaning ascribed to
such term in Section 12(c) hereof.
"Lender"- Shall have the meaning ascribed to such
term in the introductory paragraph hereof.
"LIBOR Interest Rate"- Shall have the meaning ascribed to such term
in Section 2(a) hereof.
"LIBOR"- With respect to the relevant Interest
Accrual Period, the rate per annum (rounded
upwards, if necessary, to the nearest
one-one-thousandth (1/1000) of one percent
1%) reported, with respect to the initial
Interest Accrual Period, at 11:00 a.m.
London time on the date of this Note (or if
such date is not a Eurodollar Business Day,
the immediately preceding Eurodollar
Business Day), and thereafter, at 11:00 a.m.
London time on the date two (2) Eurodollar
Business Days prior to the first day of such
Interest Accrual Period, on Telerate Access
Service Page 3750 (British Bankers
Association Settlement Rate) as the
non-reserve adjusted London Interbank
Offered Rate for U.S. dollar deposits having
a 30 day term and in an amount of $1,000,000
or more (or on such other page as may
replace Telerate Page 3750 on that service
or such other service or services as may be
nominated by the British Bankers'
Association for the purpose of displaying
such rate all as determined by Lender in its
sole but good faith discretion). In the
event that (i) more than one such LIBOR is
provided, the average of such rates shall
apply or (ii) no such LIBOR is published,
then LIBOR shall be determined from such
comparable financial reporting company as
Lender in its sole but good faith discretion
shall determine. LIBOR for any Interest
Accrual Period shall be adjusted from time
to time, by increasing the rate thereof to
compensate Lender and any Funding Party for
any aggregate reserve requirements
(including, without limitation, all basic,
supplemental, marginal and other reserve
requirements and taking into account any
transitional adjustments or other scheduled
changes in reserve requirements during any
Interest Accrual Period) which are required
to be maintained by Lender or such Funding
Party with respect to "Eurocurrency
liabilities" (as presently defined in
Regulation D of the Board of Governors of
the Federal Reserve System) of the same term
under Regulation D, or any other regulations
of a Governmental Authority having
jurisdiction over Lender or such Funding
Party of similar effect.
"Loan"- The loan from Lender to Borrower which is
evidenced by (i) this Note, (ii) the Class A
Note and (iii) the Class B Note.
"Loan Agreement"- That certain Loan Agreement,
dated as of the date hereof, made by and
between Borrower and Lender, with respect to
the Loan as same may be amended, modified or
extended, from time to time.
"Loan Documents"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Loan Taxes"- Shall have the meaning ascribed to
such term in Section 12(a) hereof.
"Maturity Date"- July 1, 2001.
"Mortgage"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Net Proceeds"- The amount allocated to, or required to be
allocated to, the Monthly Debt Service
Account under Section 3(a)(A)(vii) or
Section 3(a)(B)(vii) of the Cash Management
Agreement during any Collection Period (as
defined therein) plus the amount allocated
to the Monthly Debt Service Account upon the
sale of a Release Parcel or Lot (each as
defined in the Loan Agreement) under Section
3(a)(C) thereof, less interest due on the
Loan, other than default interest.
"Note"- This Promissory Note.
"Payment Date"- September 11, 1998 and the eleventh
day of each month thereafter during the term
of this Note, if the eleventh day is not a
Domestic Business Day then on the next
preceding Domestic Business Day.
"Person"- Shall have the meaning ascribed to such
term in the Loan Agreement.
"Treasury Rate"- A rate per annum equal to the yield, as
of the related determination date,
calculated by linear interpolation (rounded
to the nearest one-thousandth of one percent
(i.e., 0.001%)) of the yields of noncallable
United States Treasury obligations with
terms (one longer and one shorter) most
nearly approximating the period from such
determination date to the Maturity Date, as
determined in good faith by Lender on the
basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the
heading U.S. Governmental Security/Treasury
Constant Maturities, or other recognized
source of financial market information
selected by Lender.
"U.S. Person"- Any Person that is (i) a citizen or resident
of the United States, (ii) a corporation,
partnership or other entity created or
organized under the laws of the United
States or any State thereof or (iii) any
estate or trust that is subject to U.S.
federal income taxation regardless of the
source of its income.
2. Interest and Principal Payments. (a) Interest on the
outstanding principal of the Loan evidenced by the Notes shall accrue from the
date hereof at the rate per annum (the "Loan Interest Rate") equal five and six
tenths percent (5.6%) in excess of LIBOR for the relevant Interest Accrual
Period.
(b) Subject to the further provisions of this Note, including
Sections 3 and 5 below, interest on the principal sum evidenced by this Note
shall accrue from the date hereof (i) at the rate per annum equal to five and
six tenths percent (5.6%) in excess of LIBOR for the relevant Interest Accrual
Period on the outstanding principal balance of this Note, (ii) at the rate per
annum equal to four and one tenth percent (4.1%) in excess of LIBOR for the
relevant Interest Accrual Period on the outstanding principal balance of the
Class A Note, and (iii) at the rate per annum equal to two and one tenth percent
(2.1%) in excess of LIBOR for the relevant Interest Accrual Period on the
outstanding principal balance of the Class B Note.
(c) Prior to the Maturity Date (or the date the unpaid
principal balance of the Loan otherwise becomes due, whether by acceleration or
otherwise), interest accruing at the Loan Interest Rate during each Interest
Accrual Period shall be payable monthly in arrears on each Payment Date.
(d) In addition, Borrower shall pay, in reduction of the
outstanding principal amount of the Loan the following:
(i) on each Payment Date an amount equal to the Net
Proceeds for the preceding calendar month,
(ii) on July 1, 1999, the amount (if any) by which
the aggregate Net Proceeds paid to Lender during the preceding
twelve (12) calendar months, excluding Net Proceeds
attributable to the sale of the Property or a Release Parcel
during such period, shall be less than $5,778,765 and
(iii) on July 1, 2000, the amount (if any) by which
the aggregate Net Proceeds paid to Lender during the preceding
twenty-four (24) calendar months, excluding Net Proceeds
attributable to the sale of the Property or a Release Parcel
during such period, shall be less than $15,033,015.
The entire unpaid principal balance of the Loan together with
all accrued and unpaid interest, if not sooner paid, shall be payable in full on
the Maturity Date.
e) All amounts tendered by Borrower or otherwise available for
payment of the Loan shall be applied in the following order of priority:
(i) to accrued interest and unpaid interest on the
Class A Note;
(ii) to accrued interest and unpaid interest on the
Class B Note;
(iii) to accrued interest and unpaid interest on this
Note;
(iv) to the principal of the Class A Note until such
principal has been paid in full;
(v) prior to the occurrence of an Event of Default,
pro rata to the principal of the Class B Note and to the
principal of this Note until such principal has been paid in
full; after the occurrence and during the continuance of an
Event of Default, (a) to the principal of the Class B Note
until such principal has been paid in full and (b) to the
principal of this Note until such principal has been paid in
full;
(vi) to any default interest in excess of the
interest paid in accordance with clauses (i), (ii) and (iii)
above on this Note, the Class A Note and the Class B Note, pro
rata in accordance with the outstanding principal balance of
each such Note;
(vii) to late charges (applied to the Notes depending
on the proportion of the related late payment applicable to
each Note); and
(viii) to any other amounts payable under the
Mortgage or any of the other Loan Documents.
(f) All interest payable hereunder shall be computed on the
basis of a 360-day year for the actual number of days elapsed. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall, subject to paragraph (g)
below, be excluded. Interest shall accrue on each payment of principal hereunder
through the date on which such payment is credited, as provided below.
(g) All sums payable to Lender hereunder shall be payable,
without setoff, deduction or counterclaim, in immediately available funds, no
later than noon New York time on the date when due by wire transfer to such
account or address as Lender may from time to time designate in a written notice
to Borrower. Payments received by Lender in immediately available funds on any
day after noon New York time shall be treated for all purposes of the Loan as
having been paid and received by Lender on the next Domestic Business Day.
Notwithstanding anything to the contrary contained herein, when any payment is
due hereunder or under any of the other Loan Documents on a day which is not a
Domestic Business Day, such payment shall be made on the next succeeding
Domestic Business Day.
3. Funding Losses; Change in Law, Etc.
(a) Borrower hereby agrees to pay to Lender any amount
necessary to compensate Lender and any Funding Party for any losses or costs
(including, without limitation, the costs of breaking any "LIBOR" contract, if
applicable, or funding losses determined on the basis of Lender's or such
Funding Party's reinvestment rate and the interest rate hereon) (collectively,
"Funding Losses") sustained by Lender or any Funding Party: (i) if this Note, or
any portion hereof, is repaid for any reason whatsoever on any date other than a
Payment Date (including, without limitation, from condemnation or insurance
proceeds, unless due to Lender's election to apply same to this Note on such
date), (ii) upon the conversion of the interest rate on the Loan to the Base
Rate in accordance with subsection (b) below, and/or (iii) as a consequence of
(x) any increased costs (without duplication of any costs used in calculating
LIBOR) that Lender or any Funding Party may sustain in maintaining the borrowing
evidenced hereby or (y) the reduction of any amounts received or receivable from
Borrower, in either case, due to the introduction of, or any change in, law or
applicable regulation or treaty (including the administration or interpretation
thereof), whether or not having the force of law, or due to the compliance by
Lender or the Funding Party, as the case may be, with any directive, whether or
not having the force of law, or request from any central bank or domestic or
foreign governmental authority, agency or instrumentality having jurisdiction.
Payment of Funding Losses hereunder shall be in addition to any obligation to
pay a prepayment premium under Section 4 hereof in circumstances where such
prepayment premium would be due and owing.
(b) If Lender determines (which determination shall be
conclusive and binding upon Borrower, absent manifest error) (i) that Dollar
deposits in an amount approximately equal to the principal balance outstanding
hereunder are not generally available at such time in the London Interbank
Market for deposits in Eurodollars, (ii) that the rate at which such deposits
are being offered will not adequately and fairly reflect the cost to Lender or a
Funding Party of maintaining a LIBOR Interest Rate on the Loan (or the portion
of the Loan being funded by such Funding Party) or of funding the same in such
market for such Interest Accrual Period due to circumstances affecting the
London Interbank Market generally, (iii) that reasonable means do not exist for
ascertaining LIBOR, or (iv) that a LIBOR Interest Rate would be in excess of the
maximum interest rate which Borrower may by law pay, then, in any such event,
Lender shall immediately notify Borrower of such circumstance and as of the date
of such notification with respect to an event described in clause (ii) or (iv)
above, or as of the expiration of the applicable Interest Accrual Period with
respect to an event described in clause (i) or (iii) above, interest shall
accrue at the Base Rate until such time as the situations described above are no
longer in effect or as otherwise provided in Section 5 hereof; provided,
however, if the situation described in clause (ii) above occurs, (x) Borrower
shall have the option, to be exercised by written notice to Lender, to pay
Lender (in the manner reasonably required by Lender) for such increased cost of
maintaining a LIBOR Interest Rate and (y) if the same only affects a portion of
the Loan, then only such portion shall have interest accrue at the Base Rate
(provided the remaining portion is at least $1,000,000) and interest shall
continue to accrue on the remaining portion at the LIBOR Interest Rate.
Notwithstanding anything to the contrary herein, with respect to an event
described in clauses (i) through (iv) above, provided that no Event of Default
shall then exist, Borrower shall have the right, on thirty (30) days prior
written notice to Lender given within thirty (30) days after Lender gives notice
to Borrower of such event, to pay the entire outstanding principal balance of
the Loan and all accrued and unpaid interest thereon on the next Payment Date
together with the Spread Maintenance Premium (as defined in the Loan Agreement)
thereon.
(c) If the introduction of, or any change in, any law,
regulation or treaty, or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof after the
date of this Note, shall make it unlawful for Lender or any Funding Party to
maintain the LIBOR Interest Rate with respect to the Loan, or any portion
thereof, or to fund the Loan, or any portion thereof, in Eurodollars in the
London Interbank Market, then the Loan (or such portion of the Loan) shall
thereafter bear interest at the Base Rate (unless the Default Rate shall be
applicable) and Borrower shall pay to Lender the amount of Funding Losses (if
any) incurred in connection with such conversion. The accrual of interest at the
Base Rate shall continue until such Payment Date, if any, as the situation
described in this subsection (c) is no longer in effect.
(d) If Lender or the Funding Party, as the case may be, shall
have determined that the applicability of any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption of any other law, rule, regulation or guideline (including but not
limited to any United States law, rule, regulation or guideline) coming into
existence after the date of this Note regarding capital adequacy, or any change
becoming effective after the date of this Note in any of the foregoing or in the
enforcement or interpretation or administration of any of the foregoing by any
court or any domestic or foreign governmental authority, central bank or
comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by Lender or its holding company or a
Funding Party or its holding company, as the case may be, with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency (excluding, however, any
such laws, rules, regulations, and guidelines giving rise to the reserve
requirement used in calculating LIBOR), has or would have the effect of reducing
the rate of return on the capital of Lender, the Funding Party's or such Funding
Party's holding company, as the case may be, to a level below that which Lender
or its holding company or the Funding Party or its holding company, as the case
may be, could have achieved but for such applicability, adoption, change or
compliance (taking into consideration Lender's or its holding company's or the
Funding Party's or its holding company's, as the case may be, policies with
respect to capital adequacy) (the foregoing being hereinafter referred to as
"Capital Adequacy Events"), then, upon demand by Lender, Borrower shall, pay to
Lender, from time to time, such additional amount or amounts as will compensate
Lender or such Funding Party for any such reduction suffered.
(e) Any amount payable by Borrower under subsection (a) or
subsection (d) of this Section 3 shall be paid to Lender within five (5)
Business Days of receipt by Borrower of a certificate signed by an officer of
Lender setting forth the amount due and the basis for the determination of such
amount, which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from Borrower
for any such amount attributable to any particular period shall not constitute a
waiver of Lender's right to demand payment of such amount for any subsequent or
prior period. Lender shall use reasonable efforts to deliver to Borrower prompt
notice of any event described in subsection (a) or (d) above and of the amount
to be paid under this Section 3 as a result thereof; provided, however, any
failure by Lender to so notify Borrower shall not affect Borrower's obligation
to make the payments to be made under this Section 3 as a result thereof. All
amounts which may become due and payable by Borrower in accordance with the
provisions of this Section 3 shall constitute additional interest hereunder and
shall be secured by the Mortgage and the other Loan Documents.
(f) If Lender or any Funding Party requests compensation for
any losses or costs to be reimbursed pursuant to any one or more of the
provisions of subsections (a) (iii) or (iv) or subsection (d) of this Section 4,
or if any event occurs as described in subsections (b) or (c) above which would
cause the Note no longer to bear interest at the LIBOR Interest Rate then, upon
request of Borrower, Lender or such Funding Party shall use reasonable efforts
in a manner consistent with such institution's practice in connection with loans
like the Loan to designate a different lending office for funding or booking the
Transaction Indebtedness or assign its rights and obligations under this Note to
another of its offices, branches or affiliates if such designation or assignment
in Lender's sole but good faith judgment (i) would eliminate, mitigate or reduce
amounts payable by Borrower in connection with Funding Losses or Capital
Adequacy Events or, with respect to an event described in subsection (b) or (c)
above would allow this Note to continue to bear interest at the LIBOR Interest
Rate without additional cost to Lender and (ii) would not be otherwise
prejudicial to Lender; Borrower hereby agreeing to pay all reasonably incurred
costs and expenses incurred by Lender or any Funding Party in connection with
any such designation or assignment.
4. Prepayment. Borrower expressly waives any right to prepay
this Note, in whole or in part, except as otherwise expressly provided in the
Loan Documents. Notwithstanding, anything contained in the Loan Documents to the
contrary, no prepayments will be permitted on other than a Payment Date unless
such prepayment is accompanied by the payment of any interest due to the next
Payment Date.
5. Default Interest; Late Charge. (a) If any payment of
principal, interest or other sum payable hereunder or under any of the other
Loan Documents is not paid when due (including by reason of failure to pay all
principal, interest and all other amounts due hereunder and under the other Loan
Documents on the Maturity Date (or such earlier date as the same may become due,
whether by acceleration or otherwise)), such principal amount, interest or other
sum shall bear interest at a rate per annum (the "Default Rate") equal to five
percent (5%) in excess of the interest rate on the Loan determined in accordance
with Section 2(a) above, which Default Rate shall so apply from the date due
until the date such amount is indefeasibly paid to Lender. Without limiting the
foregoing, upon the occurrence of and during the continuance of an Event of
Default hereunder, the entire principal balance of this Note shall bear interest
at the Default Rate. Interest at the Default Rate shall be paid immediately upon
demand, which demand may be made as frequently as Lender shall elect.
(b) If any installment of interest or principal is not paid
when due, Borrower shall pay to Lender a late charge of four percent (4%) of the
amount so overdue in order to defray part of the expense incident to handling
such delinquent payment or payments. Such late charge shall be immediately due
and payable without notice or demand by Lender. Such late charge shall be in
addition to and separate from any increase in interest due hereunder as a result
of calculation of interest due hereunder at the Default Rate. Acceptance by
Lender of any late charge or interest at the Default Rate shall not be deemed a
waiver of any of Lender's rights hereunder or under the other Loan Documents
with respect to such late payment.
6. Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter if any such Event of Default shall then be
continuing, Lender may, without additional notice to Borrower, declare the
principal of, and accrued interest on, this Note to be immediately due,
whereupon the same shall forthwith become immediately due and payable without
presentment, demand, protest or other notice of any kind and Lender may proceed
to exercise any rights and remedies available to Lender under the Mortgage and
the other Loan Documents or which Lender may have at law, in equity or
otherwise.
7. Expenses. Borrower hereby agrees to pay to Lender on demand
all costs and expenses of Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the enforcement and
collection hereof, whether or not any suit is brought on this Note or any
foreclosure or other proceeding is brought. The provisions of this Section 7 are
not intended to limit in any manner Borrower's obligations to pay costs and
expenses of Lender as may be elsewhere provided herein, in the Loan Agreement,
in the Mortgage or in any other Loan Document.
8. Security. This Note is secured by the Mortgage, the
Assignment of Leases (as defined in the Loan Agreement) and the other Loan
Documents.
9. Excess Interest. It is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of the other Loan
Documents, no such provision shall require the payment or permit the collection
of any amount ("Excess Interest") in excess of the maximum amount of interest
permitted by law to be charged for the use or detention, or the forbearance in
the collection, of all or any portion of the indebtedness evidenced by this
Note. If any Excess Interest is provided for, or is adjudicated to be provided
for, in this Note or any of the other Loan Documents, then in such event:
(a) the provisions of this Section 9 shall govern and
control;
(b) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall be obligated to pay
any Excess Interest;
(c) any Excess Interest that Lender may have received
hereunder shall, at the option of Lender, be (i) applied as a credit against the
then outstanding principal balance (without payment of prepayment premium) due
under this Note, accrued and unpaid interest thereon not to exceed the maximum
amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii)
any combination of the foregoing;
(d) the applicable interest rate or rates shall be
automatically subject to reduction to the maximum lawful rate and this Note, the
Mortgage, and the other Loan Documents shall be deemed to have been, and shall
be, reformed and modified to reflect such reduction in such interest rate or
rates; and
(e) neither Borrower nor any of the other Persons
required to pay any amounts with respect to the Loan shall have any action or
remedy against Lender for any damages whatsoever or any defense to enforcement
of the Note, Mortgage or any of the other Loan Documents arising out of the
payment or collection of any Excess Interest.
10. Waiver. Borrower expressly waives presentment for payment,
demand, notice of demand and of dishonor and nonpayment of this Note, protest
and notice of protest, diligence in collecting, and the bringing of suit against
any other party.
11. Governing Law. THIS NOTE SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. IT IS THE INTENT OF THE
PARTIES HERETO THAT THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK APPLY TO THIS NOTE.
12. Cross Default. A default under the Class A Note, the Class
B Note or any other note now or hereafter secured by the Mortgage constitutes a
default under this Note and under the other Loan Documents. When the default
under the Class A Note, the Class B Note or any such other note constitutes an
Event of Default under that note, an Event of Default also will exist under this
Note and the other Loan Documents.
13. Loan Taxes. (a) Any and all payments by Borrower to Lender
hereunder and under the other Loan Documents shall, provided that Lender
complies with the requirements of subsection (c) below, be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto except for the following for which Borrower shall not be responsible:
(A) taxes imposed on or measured by Lender's net income or net receipts, or (B)
franchise taxes imposed on Lender, by the jurisdiction in which (i) Lender is
organized, (ii) Lender is "doing business" (unless such determination of "doing
business" is made solely as a result of Lender's interest in the Loan and the
security therefor) or (iii) Lender's applicable lending office is located (all
such taxes, levies, imposts, deductions, charges or withholdings and liabilities
(except those described in clauses (A) and (B)) being hereinafter referred to as
"Loan Taxes"). If Borrower shall be required by law to deduct or withhold any
Loan Taxes from or in respect of any sum payable hereunder or under any other
Loan Document, then (x) any such sum payable hereunder or under any other Loan
Document shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions applicable to
additional sums payable under this Section 13), Lender receives an amount equal
to the sum it would have received had no such deductions or withholdings
(including deductions applicable to additional sums payable under this Section
13) been made, (y) Borrower shall make such deductions or withholdings and (z)
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority in accordance with applicable law. Borrower will indemnify Lender for
the full amount of any Loan Taxes (including, without limitation, any Loan Taxes
(as well as taxes described in clauses (A) and (B) above) imposed by any
jurisdiction on any amounts payable under this Section 13) paid or payable by
Lender and any liability (including, without limitation, penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Loan
Taxes were correctly or legally asserted. A certificate as to the amount of such
payment or liability delivered to Borrower by Lender shall be conclusive absent
manifest error. The agreements and obligations of Borrower contained in this
Section 13 shall survive the payment in full of principal and interest under
this Note.
(b) Within 30 days after the date of any payment of
Loan Taxes withheld by Borrower in respect of any payment to Lender, Borrower
will furnish to Lender the original or a certified copy of a receipt or other
evidence reasonably satisfactory to the Agent evidencing payment thereof.
(c) If Lender is a U.S. Person (other than the Lender
originally named herein), Lender shall deliver to Borrower upon request a Form
W-9 (unless it establishes to the reasonable satisfaction of Borrower that it is
otherwise eligible for an exemption from backup withholding tax or other
withholding tax). If Lender is not a U.S. Person, Lender shall deliver to
Borrower upon request a Form W-8 and either (i) a Form 1001 which indicates a 0%
rate of tax or (ii) a Form 4224. If Lender is not a U.S. Person, Lender further
undertakes to deliver to Borrower additional Forms W-8, 1001, 4224 (or any
successor forms) or other manner of certification, as the case may be, (i) on or
before the date that any such form expires or becomes obsolete, (ii) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to Borrower, and (iii) such extensions or renewals thereof as
may reasonably be requested by Borrower, certifying that Lender is entitled to
receive payments hereunder without deduction or withholding of any Loan Taxes.
However, in the event that any change in law, rule, regulation, treaty or
directive, or in the interpretation or application thereof (a "Law Change"), has
occurred after the date hereof and prior to the date on which any delivery
pursuant to the preceding sentence would otherwise be required which renders
such form inapplicable, or which would prevent Lender from duly completing and
delivering any such form or if such Law Change results in Lender being unable to
deliver a Form W-9 (or other satisfactory evidence that it is otherwise eligible
for an exemption from backup withholding tax or other withholding tax), Lender
shall not be obligated to deliver such forms but shall, promptly following such
Law Change, but in any event prior to the time the next payment hereunder is due
following such Law Change, advise Borrower in writing whether it is capable of
receiving payments without any deduction or withholding of Loan Taxes. In the
event of such Law Change, the Borrower shall have the obligation to make the
Lender whole and to "gross-up" under Section 13(a) despite the failure by the
Lender to deliver such forms.
(d) If Lender receives a refund in respect of Loan
Taxes paid by Borrower, it shall promptly pay such refund, together with any
other amounts paid by Borrower pursuant to subsection (a). above in connection
with such refunded Loan Taxes, to Borrower; provided, however, that Borrower
agrees to promptly return such refund to Lender if it receives notice from
Lender that it is required to repay such refund. Nothing contained herein shall
be construed to require Lender to seek any refund and Lender shall have no
obligation to Borrower to do so.
(e) All amounts payable under this Section 13 shall
constitute additional interest hereunder and shall be secured by the Mortgage
and the other Loan Documents. The provisions of this Section 13 shall survive
any payment or prepayment of this Note and any foreclosure or satisfaction of
the Mortgage.
(f) Any reference under this Section 13 to "Lender"
shall be deemed to include any participants and assignees.
14. Modification, etc. This Note can be extended, modified or
amended only in writing by an instrument executed by Lender and Borrower and
none of the rights or benefits of Lender hereunder can be waived except in a
written document executed by Lender.
15. Binding Effect. This Note shall be binding upon and inure
to the benefit of Lender, Borrower and their respective successors and assigns.
16. Notices. All notices and other communications hereunder
shall be delivered as set forth in Section 7.6 of the Loan Agreement.
17. Interpretation. The headings of sections and paragraphs in
this Note are for convenience only and shall not be construed in any way to
limit or define the content, scope, or intent of the provisions hereof. As used
in this Note, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so
requires. The parties hereto intend and believe that each provision in this Note
comports with all applicable law. However, if any provision in this Note is
found by a court of law to be in violation of any applicable law, and if such
court should declare such provision of this Note to be unlawful, void or
unenforceable as written, then it is the intent of all parties to the fullest
possible extent that it is legal, valid and enforceable, that the remainder of
this Note shall be construed as if such unlawful, void or unenforceable
provision were not contained therein, and that the rights, obligations and
interests of Borrower and Lender under the remainder of this Note shall continue
in full force and effect; provided, however, that if any provision of this Note
which is found to be in violation of any applicable law concerning the
imposition of interest hereunder, the rights, obligations and interests of
Borrower and Lender with respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of Section 9 hereof. Time is of the
essence of this Note.
18. Limited Recourse. The provisions of Section 7.20 of the
Loan Agreement shall apply to Borrower's obligations under this Note and are
incorporated herein as if fully set forth herein.
19. No Oral Agreements. THIS NOTE AND THE OTHER LOAN DOCUMENTS
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
Note as of the day and year first above written.
BORROWER:
PELICAN STRAND, LTD.,
a Florida limited partnership
By: Pelican Strand Development Corporation,
its General Partner
By:
---------------------------------
Name: Warren Stanchina
Title: President
CONVERTIBLE NOTE AGREEMENT
between
GOLF VENTURES, INC.,
a Utah corporation ("GVI")
and
JOCIE L. SALIM
("Salim")
Dated as of September 3, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions........................................................1
2. Agreement to Issue Note............................................3
3. Conditions to Closing..............................................3
4. Closing............................................................4
5. Closing Costs and Expenses.........................................4
6. Salim's Representations and Warranties.............................4
7. GVI's Representations and Warranties...............................6
8. Cooperation........................................................6
9. Non-Consummation of the Transaction................................6
10. Miscellaneous......................................................7
List of Schedules
3.2 Related Transactions
List of Exhibits
A Promissory Note and Conversion Agreement
B Subscription Documents
C Registration Rights Agreement
ii
<PAGE>
CONVERTIBLE NOTE AGREEMENT
THIS CONVERTIBLE NOTE AGREEMENT (this "Agreement") is dated as of the
Effective Date (as defined in Section 1 of this Agreement) by and between GOLF
VENTURES, INC., a Utah corporation ("GVI"), and JOCIE L. SALIM ("Salim"). (GVI
and Salim are each referred to as a "Party" and collectively as the "Parties.")
RECITALS
A. Salim is owed $2,804,583.31 (the "Metrovest Debt") by Metrovest Partners,
Ltd. ("Metrovest"), the owner of certain real estate and related property
located in Arlington, Texas, commonly known as "The Lakes of Arlington" (the
"Property"), and the Metrovest Debt relates to, but is not a lien on, the
Property.
B. Metrovest wishes to transfer the Property to GVI and Metrovest has required
GVI to enter into this Agreement with Salim as part of the consideration for the
transfer of the Property to GVI.
C. GVI shall issue its promissory note in the amount of $2,804,583.31, which
shall be convertible to 1,400,000 shares of common stock of GVI, subject to the
terms and conditions of this Agreement and in full satisfaction of the Metrovest
Debt.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and promises contained in this Agreement, and other
valuable consideration, the receipt and sufficiency of which is acknowledged,
the Parties agree as follows:
1. Definitions. Terms used in this Agreement shall have the meanings set
forth in this Section 1.
1.1 Actual Knowledge of GVI (or GVI's Actual Knowledge). The knowledge
of the Responsible Individual of GVI, without duty of inquiry.
1.2 Actual Knowledge of Salim (or Salim's Actual Knowledge). The
knowledge of Salim, without duty of inquiry.
1.3 Agreement. This Agreement between Salim and GVI, including all
Schedules and Exhibits that are attached to this Agreement, which are
incorporated herein by reference.
1.4 Closing. The delivery of the documents required to be delivered
under this Agreement.
1.5 Closing Date. September 3, 1998, subject to extension as provided
in this Agreement.
1.6 Creditors' Rights Laws. All bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally,
1
<PAGE>
as well as general equitable principles whether or not their
enforcement is considered to be a proceeding at law or in equity.
1.7 Effective Date. The date this Agreement is signed by Salim and GVI,
whichever signs last.
1.8 Exhibit. Unless stated otherwise, the indicated Exhibit that is
attached to this Agreement, which is incorporated herein by reference.
1.9 GVI. Golf Ventures, Inc., a Utah corporation.
1.10 GVI's Conditions Precedent. Conditions precedent to GVI's
obligation to consummate this transaction, as set forth in Section 3.1.
1.11 Maturity Date. The maturity date of the Note: April 30, 1999.
1.12 Metrovest. Metrovest Partners, Ltd., a Texas limited liability
company.
1.13 Metrovest Debt. As defined in the first recital.
1.14 Note. The Promissory Note and Conversion Agreement in the amount
of $2,804,583.31 to be issued by GVI and agreed to by Salim in
accordance with Section 2, a form of which is attached as Exhibit A.
1.15 Parties. GVI and Salim.
1.16 Property. As defined in the first recital.
1.17 Registration Rights Agreement. The Registration Rights Agreement
to be signed by the Parties pursuant to Section 3.2.2, a form of which
is attached as Exhibit C.
1.18 Related Transactions. The transactions contemplated by the
agreements described on Schedule 3.2 attached hereto.
1.19 Responsible Individual. With respect to GVI: Warren J. Stanchina.
1.20 Salim. Jocie L. Salim.
1.21 Schedule. Unless stated otherwise, the indicated Schedule that is
attached to this Agreement, which is incorporated herein by reference.
1.22 Shares. One million four hundred thousand (1,400,000) shares of
common stock of GVI, par value $0.001.
1.23 Subscription Documents. The documents that Salim must complete and
present to GVI prior to Salim's subscription to the Shares pursuant to
Section 3.2.3, forms of which are attached as Exhibit B.
2
<PAGE>
2. Agreement to Issue Note. Subject to the terms and conditions set forth in
this Agreement, GVI agrees to issue the Note to Salim in the amount of
$2,804,583.31 which shall be delivered on the Closing by GVI to Salim in the
form of the Note attached as Exhibit A. The Note shall mature on the Maturity
Date. The Note shall accrue interest at 10% per annum with interest due on the
Maturity Date. The Note shall be convertible to 1,400,000 shares of common stock
of GVI (par value $0.001) (the "Shares") in accordance with the terms and
conditions set forth in the Note. Once the shareholders of GVI, at the annual
meeting to be held in September, authorize the stock necessary to issue the
Shares, Salim shall have the right to convert the Note to the Shares. Once GVI
has obtained approval to register the Shares, and if Salim has not already
converted the Note to the Shares, then both GVI and Salim shall each
individually have the right to convert the Note to the registered Shares. GVI
shall use its best efforts to register the Shares no later than March 31, 1999.
If the Note is not converted to Shares by the Maturity Date, it shall mature and
become due and payable.
3. Conditions to Closing.
3.1 GVI's Conditions Precedent. GVI's Conditions Precedent as set forth
below are precedent to GVI's obligations pursuant to this Agreement.
The GVI's Conditions Precedent are intended solely for the benefit of
GVI. If any of the GVI's Conditions Precedent is not satisfied, GVI
shall have the right in its sole discretion either to waive the GVI's
Condition Precedent and proceed with the transaction or terminate this
Agreement as described below, by written notice to Salim.
3.1.1 Representations and Warranties. The representations and
warranties of Salim contained herein shall be true and correct
in all material respects as of the Closing Date as though made
at and as of the Closing Date, and Salim's covenants under
this Agreement shall be in all material respects satisfied or
waived by GVI as of the Closing Date (to the extent such
covenants are to be satisfied as of the Closing Date).
3.2 Closing of Related Transactions. The simultaneous closing of all of
the Related Transactions set forth in Schedule 3.2 (and including the
transactions described in this Section 3.2) with the Closing of this
transaction is a condition precedent to both Salim's and GVI's
obligations under this Agreement. This condition precedent is for the
benefit of both Salim and GVI, and if it is not satisfied by a Party,
then that Party shall be deemed in default, and the other Party may
terminate this Agreement by written notice to the defaulting Party and
the non-defaulting Party shall be entitled to the rights and remedies
set forth in Section 9. Notwithstanding the above, both Parties, each
in their sole discretion, may waive this condition precedent and elect
to proceed with the transaction.
3.2.1 Execution of the Note. Both Parties shall execute the
Note, a form of which is attached as Exhibit A, in duplicate,
and each Party shall receive an original version of the Note.
3
<PAGE>
3.2.2 Execution of the Registration Rights Agreement. Both
Parties shall execute the Registration Rights Agreement, a
form of which is attached as Exhibit C, in duplicate, and each
Party shall receive an original version.
3.2.3 Execution of the Subscription Documents. Salim shall
fully complete, execute, and deliver the original version of
the Subscription Documents, forms of which are attached as
Exhibit B.
3.3 Deemed Approval of Conditions. In the event that any Party having
the right of cancellation hereunder based on failure of a condition
precedent set forth herein does not inform the other Party in writing
of its disapproval of any condition precedent prior to the Closing,
such condition precedent shall be deemed to have been satisfied,
approved or waived, effective as of the Closing; provided that a Party
shall not be deemed to have waived any claim for breach of any
representation or warranty by the other Party unless such Party has
Actual Knowledge of such breach prior to Closing.
4. Closing.
4.1 Closing Date. The Closing shall be conducted on or before the
Closing Date.
4.2 Salim's Deliveries to GVI. At or before the Closing, Salim shall
deliver to GVI the following:
4.2.1 a duly executed Registration Rights Agreement
4.2.2 a duly executed Note; and
4.2.3 duly executed Subscription Documents.
4.3 GVI's Deliveries to Salim. At or before the Closing, GVI shall
deliver or cause to be delivered to escrow the following:
4.3.1 a duly executed Note;
4.3.2 a duly executed Registration Rights Agreement.
4.4 Deposit of Other Instruments. Salim and GVI shall each execute such
other instruments as are reasonably required to close and consummate
the transactions described herein in accordance with the terms hereof.
5. Closing Costs and Expenses. Each Party shall pay its own legal fees and
expenses.
6. Salim's Representations and Warranties. Salim hereby represents and warrants
to GVI as follows:
6.1 Authorization.
4
<PAGE>
6.1.1 Salim has full power and authority to execute and
deliver this Agreement and to perform all of the terms and
conditions hereof to be performed by Salim and to consummate
the transactions contemplated hereby. This Agreement and all
documents executed by Salim which are to be delivered to GVI
at Closing have been duly executed and delivered by Salim and
are or at the time of Closing will be the legal, valid and
binding obligations of Salim and are enforceable against Salim
in accordance with their terms, except as the enforcement
thereof may be limited by applicable Creditors' Rights Laws.
Salim is not presently subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar proceeding.
6.1.2 Salim has the legal power, right and actual authority to
bind Salim to the terms and conditions hereof and thereof.
6.1.3 Neither the execution and delivery of this Agreement,
the consummation of the transactions contemplated by this
Agreement, nor the compliance with the terms and conditions
hereof will (a) violate or conflict, in any material respect,
with any statute, regulation or rule, or, any injunction,
judgment, order, decree, ruling, charge or other restrictions
of any government, governmental agency or court to which Salim
is subject, or (b) result in any material breach or the
termination of any agreement or other instrument or obligation
to which Salim is a party. Salim is not a party to any
contract or subject to any other legal restriction that would
prevent fulfillment by Salim of all of the terms and
conditions of this Agreement or compliance with any of the
obligations under it.
6.1.4 All material consents required from any governmental
authority or third party in connection with the execution and
delivery of this Agreement by Salim or the consummation by
Salim of the transactions contemplated hereby have been made
or obtained or shall have been made or obtained by the Closing
Date.
6.2 Miscellaneous.
6.2.1 Notice of Change. Salim shall inform GVI in writing of
any significant adverse change in the representations and
warranties of Salim promptly after Salim obtains Actual
Knowledge.
6.2.2 Timeliness of Representations and Warranties. All
representations and warranties set forth herein shall be
deemed to be given as of the Effective Date and the Closing
Date unless Salim otherwise notifies GVI in writing prior to
the Closing.
6.2.3 Continuation and Survival of Representations and
Warranties, Etc. All representations and warranties by the
respective Parties contained herein or made in writing
pursuant to this Agreement are intended to, and shall, remain
true and correct as of the time of Closing, and, together with
all conditions, covenants and indemnities made by the
respective Parties contained herein or made in writing
5
<PAGE>
pursuant to this Agreement (except as otherwise expressly
limited or expanded by the terms of this Agreement), shall
survive the execution and delivery of this Agreement and shall
survive the Closing for a period of one (1) year after the
Closing, or, to the extent the context requires, beyond any
termination of this Agreement for a period of one (1) year.
7. GVI's Representations and Warranties. GVI hereby represents and warrants to
Salim as follows:
7.1 GVI is a duly organized and validly existing corporation in good
standing under the laws of the State of Utah. This Agreement is duly
authorized, executed and delivered by GVI, and is and at the Closing
will be legal, valid and binding obligations of GVI, and does not and
at the time of Closing will not violate any provisions of any agreement
or judicial order to which GVI is subject. All documents executed by
GVI which are to be delivered to Salim at the Closing at the time of
Closing will be duly authorized, executed and delivered by GVI, and at
the Closing will be legal, valid and binding obligations of GVI, and at
the time of Closing will not violate any provisions of any agreement or
judicial order to which GVI is subject.
7.2 There is no litigation pending or, to GVI's knowledge, threatened,
against GVI or any basis therefor that might materially and
detrimentally affect the ability of GVI to perform its obligations
under this Agreement. GVI shall notify Salim promptly of any such
litigation of which GVI becomes aware.
7.3 All representations and warranties set forth herein shall be true
as of the Effective Date and the Closing Date.
8. Cooperation. Salim and GVI shall cooperate and do all acts as may be
reasonably required or requested by the other with regard to the fulfillment of
any condition precedent or the consummation of the transactions contemplated
hereby including execution of any documents.
9. Non-Consummation of the Transaction. If the transaction is not consummated on
or before the Closing Date, the following provisions shall apply:
9.1 Default by Salim. If the transaction is not consummated as a result
of a default by Salim, then GVI may, as its sole and exclusive remedy,
either (i) terminate this Agreement by delivery of notice of
termination to Salim; or (ii) continue this Agreement pending GVI's
action for specific performance of Salim's obligations hereunder.
9.2 Default by GVI. If the Closing does not occur as a result of a
default by GVI, then Salim's sole remedy shall be to terminate this
Agreemetn by delivery of notice of termination to GVI.
9.3 Cure Rights. Prior to the exercise of any right or remedy for a
default hereunder as contained in this Section 9, the Party alleging a
default hereunder shall give the defaulting Party written notice of
nature of such default (with such specificity as to enable the
defaulting Party to identify the cure of such default), and a five (5)
6
<PAGE>
day period in which to cure such default. If such cure has not been
effected within such five (5) day period, then the Party alleging a
default hereunder may proceed pursuant to this Section 9, and no
further cure periods shall apply to such default.
10. Miscellaneous.
10.1 Disclosure of Transaction. GVI shall have the right to publicly
announce the execution of this Agreement or the transaction
contemplated hereby if the dissemination of such information by GVI is
required by applicable law (including any rules or regulations of the
SEC or any state equivalent).
10.2 Notices. Any notice, consent or approval required or permitted to
be given under this Agreement shall be in writing and shall be deemed
to have been given upon (i) hand delivery or transmitted by facsimile
telecopy together with reasonable attempts to provide telephonic notice
of the sending of such facsimile telecopy, (ii) one (1) day after being
deposited with FedEx or another reliable overnight courier service or
(iii) three (3) days after being deposited in the United States mail,
registered or certified mail, postage prepaid, return receipt required,
and addressed as indicated below, or such other address as either party
may from time to time specify in writing to the other.
If to GVI: If to Salim:
Golf Ventures, Inc. Jocie L. Salim
255 South Orange Avenue, Suite 1515 1526 Bluebird Lane
Orlando, FL 32801 La Jolla, CA 92037
Telephone: (407) 245-7557 Telephone: (619) 551-2565
Facsimile: (407) 245-7585 Facsimile: (619) 551-2568
Attn: Warren J. Stanchina
with a copy to: with a copy to:
Haynes and Boone, L.L.P.
901 Main Street, Suite 3100
Dallas, TX 75202-3789
Telephone: (214) 651-5672 Telephone:
Facsimile: (214) 200-0607 Facsimile:
Attn: J. Kirk Standly Attn:
10.3 Brokers and Finders. Neither Party has had any contact or dealings
regarding this Agreement, or any communication in connection with the
subject matter of this transaction through any real estate broker or
other person who can claim a right to a commission or finder's fee in
connection with the transfer contemplated herein. In the event that any
broker or finder perfects a claim for a commission or finder's fee
based upon any such contact, dealings or communication, the Party
through whom the broker or finder makes its claim shall be responsible
for the commission or fee and shall indemnify and hold harmless the
other Party from and against all liabilities, losses, costs and
expenses (including reasonable attorneys' fees) arising in connection
with such claim for a commission or finder's fee. The provisions of
this Subsection shall survive the Closing.
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10.4 Successors and Assigns. Subject to the following, this Agreement
shall be binding upon, and inure to the benefit of, the parties and
their respective successors, heirs, administrators and assigns. Neither
Party shall have the right to assign its interest in this Agreement.
10.5 Amendments. Except as otherwise provided herein, this Agreement
may be amended or modified only by a written instrument executed by
Salim and GVI.
10.6 Governing Law. The substantive laws of the State of Texas, without
reference to its conflict of laws provisions, will govern the validity,
construction, and enforcement of this Agreement.
10.7 Merger of Prior Agreements. This Agreement and its Exhibits and
Schedules constitute the entire agreement between the Parties and
supersede all prior agreements and understandings between the Parties
relating to the subject matter hereof.
10.8 Enforcement. If either Party fails to perform any of its
obligations under this Agreement or if a dispute arises between the
Parties concerning the meaning or interpretation of any provision of
this Agreement, then the defaulting Party or the Party not prevailing
in such dispute shall pay arbitration or court costs and attorneys'
fees and disbursements reasonably incurred by the prevailing Party. Any
such attorneys' fees and other expenses incurred by either Party in
enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount
included in such judgment, and such attorneys' fees obligation is
intended to be severable from the other provisions of this Agreement
and to survive and not be merged into any such judgment.
10.9 Time of the Essence. Time is of the essence of this Agreement.
10.10 Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be
held by a court of competent jurisdiction to be invalid, unenforceable
or void, the remainder of this Agreement and such provisions as applied
to other persons, places and circumstances shall remain in full force
and effect.
10.11 Confidentiality. Salim shall maintain as confidential any
non-public information about GVI. This provision shall survive the
termination of this Agreement or the Closing.
10.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
10.13 Construction. Headings at the beginning of each section and
subsection are solely for the convenience of the Parties and are not a
part of the Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural and the masculine
shall include the feminine and vice versa. This Agreement shall not be
construed as if it had been prepared by one of the Parties, but rather
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<PAGE>
as if both Parties had prepared the same. In the event the date on
which Salim or GVI is required to take any action under the terms of
this Agreement is not a business day, the action shall be taken on the
next succeeding business day.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
"GVI" GOLF VENTURES, INC.,
a Utah corporation
By:
Warren J. Stanchina,
President
Date: September , 1998
"SALIM"
JOCIE L. SALIM
Date: September , 1998
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<PAGE>
Schedule 3.2
Related Transactions
1. A $50,000,000 acquisition and development loan to be made by Credit
Suisse First Boston Mortgage Capital LLC to GVI.
2. Contribution Agreement and related transactions between GVI and
Metrovest, whereby Metrovest will receive a note from GVI in the amount
of $15,000,000.00 and such note shall be convertible to 10,000,000
shares of common stock of GVI.
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<PAGE>
EXHIBIT A
PROMISSORY NOTE
AND CONVERSION AGREEMENT
$2,804,583.31 Dallas, Texas September 3, 1998
FOR VALUE RECEIVED, GOLF VENTURES, INC., a Utah corporation ("Maker"),
promises to pay to the order of JOCIE L. SALIM ("Payee") at 1526 Bluebird Lane,
La Jolla, California 92037 (or such other place of payment as the Payee may
hereafter designate in writing), in immediately available funds and in lawful
money of the United States of America, the principal sum of TWO MILLION EIGHT
HUNDRED FOUR THOUSAND FIVE HUNDRED EIGHTY-THREE AND NO/100 DOLLARS
($2,804,583.31), together with interest at the Stated Rate on the principal
balance of this Note until the Maturity Date (as defined below).
1. Definitions. As used in this Note, the following terms shall
have the respective meanings indicated:
(a) "Business Day" means a day when banks are open for
business in Dallas, Texas.
(b) "Convertible Note Agreement" means the Agreement entered
into between Maker and Payee on September 3, 1998.
(c) "Debt" means the indebtedness evidenced by this Note.
(d) "Maker" means Golf Ventures, Inc., a Utah corporation, the
party issuing this Note.
(e) "Maturity Date" means the maturity date of this Note,
April 30, 1999.
(f) "Note" means this Promissory Note and Conversion
Agreement.
(g) "Payee" means Jocie L. Salim.
(h) "SEC" means the Securities and Exchange Commission.
(i) "Shareholders Meeting" means the annual shareholders
meeting of Maker to be held on approximately October 15, 1998.
(j) "Shares" means one million four hundred thousand
(1,400,000) shares of common stock of Maker, par value $0.001.
(k) "Stated Rate" means a rate equal to 10% per annum.
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<PAGE>
2. Computation of Interest. Interest shall be computed for the actual
number of days elapsed in a year consisting of 360 days.
3. Payment of Principal and Interest. Unless this Note is converted to
Shares pursuant to Section 4 below, the principal of this Note, together with
accrued interest on the Note, shall be finally due and payable on the Maturity
Date.
4. Conversion of Note to Shares. Once, and if, the Shares have been
authorized and approved at the Shareholders Meeting, the Note may be converted
to Shares in accordance with the following provisions:
4.1 Conversion prior to the Registration of the Shares. Prior
to authorization by the SEC and the subsequent registration of the Shares, Payee
may convert the Note to Shares at any time during the term of the Note, by
complying with the procedure set forth in Section 4.3. Upon conversion of the
Note, the total amount of principal and all accrued interest shall be converted.
No partial conversion of the Note shall be permitted.
4.2 Conversion after the Registration of the Shares. At any
time after Maker has obtained approval to register the Shares and the Shares are
registered, either Payee or Maker may cause the Note to be converted to Shares
(if Payee has not already converted the Note to Shares pursuant to Section 4.1)
prior to the Maturity Date. Maker and Payee shall carry out the conversion
pursuant to the procedure set forth in Section 4.3. Upon conversion of the Note,
the total amount of principal and all accrued interest shall be converted. No
partial conversion of the Note shall be permitted.
4.3 Conversion Procedure. Payee may convert the Note to Shares
pursuant to Section 4.1 and either Payee or Maker may convert the Note to Shares
pursuant to Section 4.2 by providing the other party with fifteen (15) days
prior written notice of its desire to convert. The notice shall contain the
proposed conversion date, which shall be a Business Day that is no later than
the Maturity Date. Notice shall be provided in accordance with Section 16. The
conversion shall be carried out in accordance with the applicable terms and
conditions resolved at the Shareholders Meeting, if any. The closing for the
conversion shall take place at Maker's principal office, or at such other place
as shall be mutually agreeable between Payee and Maker. At the closing for the
conversion, Maker shall deliver to Payee the share certificate or certificates
that represent the Shares, or request that the transfer agent enter Payee's name
on the transfer books and records of Maker, and Payee shall deliver to Maker
Payee's original version of this Note. Each of the parties shall pay their
respective expenses in connection with the conversion of the Note for Shares.
5. Registration of Shares. GVI shall use its best efforts to register
the Shares with the SEC no later than March 31, 1999.
6. No Waiver by the Payee. No delay or omission of Payee or Maker to
exercise any power, right or remedy accruing to Payee or Maker shall impair any
such power, right or remedy or shall be construed to be a waiver of the right to
exercise any such power, right or remedy.
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<PAGE>
7. Costs and Attorneys' Fees. Each party agrees to pay its own costs
and attorney's fees associated with the execution and delivery of this Note.
8. Section Headings. Section headings appearing in this Note are for
convenient reference only and shall not be used to interpret or limit the
meaning of any provision of this Note.
9. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Texas and the United States of America
from time to time in effect excluding the conflicts of laws provisions. Dallas
County, Texas shall be the proper place of venue for suit hereon. Maker and any
and all co-makers, endorsers, guarantors and sureties irrevocably agree that any
legal proceeding in respect of this Note shall be brought in the district courts
of Dallas County, Texas, or the United States District Court for the Northern
District of Texas.
10. Successors and Assigns. This Note and all the covenants and
agreements contained herein shall be binding upon, and shall inure to the
benefit of, the respective legal representatives, heirs, trustees,
beneficiaries, successors and assigns of Maker and Payee.
11. Severability. If any provision of this Note shall be determined by
any court of competent jurisdiction to be illegal, invalid or unenforceable,
then that provision only shall be of no force and effect and shall be deemed
excised herefrom, and the remainder of the provisions of this Note shall be
unaffected thereby; the provisions of this Note being severable in each and
every instance. Furthermore, in lieu of any illegal, unenforceable or invalid
provision, there shall be automatically added to this Note a provision as
similar to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
12. Sale and Assignment. Neither party may, without the other party's
prior written consent, sell or assign its interest in all or any part of this
Note.
13. Prepayment. Maker may at no time prepay the full amount or any part
of this Note without Payee's prior written consent.
14. Entire Agreement. This Note and the Convertible Note Agreement
embody the entire agreement and understanding between Payee and Maker with
respect to this Note and supersede all prior conflicting or inconsistent
agreements, consents and understandings relating to such subject matter. Maker
acknowledges and agrees that there are no oral agreements between Maker and
Payee which have not been incorporated in this Note and the Convertible Note
Agreement.
15. Nonrecourse Provisions. If default occurs in the timely and proper
payment of all or any portion of the Debt, or in the timely performance of any
such covenants, any judicial proceedings brought by Payee against Maker shall be
limited to the enforcement of the conversion to Shares pursuant to Section 4,
and no attachment, execution or other writ or process shall be sought, issued or
levied upon any assets, properties or funds of Maker.
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<PAGE>
16. Notices. Any notice, consent or approval required or permitted to
be given under this Note shall be in writing and shall be deemed to have been
given upon (i) hand delivery or transmitted by facsimile telecopy together with
reasonable attempts to provide telephonic notice of the sending of such
facsimile telecopy, (ii) one (1) day after being deposited with FedEx or another
reliable overnight courier service or (iii) three (3) days after being deposited
in the United States mail, registered or certified mail, postage prepaid, return
receipt required, and addressed as indicated below, or such other address as
either party may from time to time specify in writing to the other.
If to Maker: If to Payee:
Golf Ventures, Inc. Jocie L. Salim
255 South Orange Avenue, Suite 1515 1526 Bluebird Lane
Orlando, FL 32801 La Jolla, CA 92037
Telephone: (407) 245-7557 Telephone: (619) 551-2565
Facsimile: (407) 245-7585 Facsimile: (619) 551-2568
Attn: Warren J. Stanchina
with a copy to:
Haynes and Boone, L.L.P.
901 Main Street, Suite 3100
Dallas, TX 75202-3789
Telephone: (214) 651-5672
Facsimile: (214) 200-0607
Attn: J. Kirk Standly
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOLLOWS.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Note as of the date
first set forth above.
"MAKER":
GOLF VENTURES, INC.,
a Utah corporation
By:
Warren J. Stanchina,
President
ACCEPTED AND AGREED TO BY:
PAYEE:
JOCIE L. SALIM
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<PAGE>
EXHIBIT B
SUBSCRIPTION DOCUMENTS
<PAGE>
Name of Subscriber: Jocie L. Salim
Golf Ventures, Inc.,
a Utah corporation
SUBSCRIPTION DOCUMENTS
Golf Ventures, Inc.
255 South Orange Avenue, Suite 1515
Orlando, FL 32801
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<PAGE>
Golf Ventures, Inc.,
a Utah corporation
Instructions for Completion of Subscription Documents
To: Jocie L. Salim
In connection with your subscription for shares in Golf Ventures, Inc.,
a Utah corporation ("GVI"), please complete, sign and return the following
enclosed documents:
SUBSCRIPTION AGREEMENT. Sign "Counterpart Signature Page".
INVESTOR INFORMATION SHEET (Exhibit A). No signature required.
ACCOUNT INFORMATION SHEET (Exhibit B). Complete, if applicable.
SPOUSAL CONSENT (Exhibit C). If you are married, your spouse must complete and
sign.
ACCREDITED INVESTOR QUESTIONNAIRE (Exhibit D). Complete.
SUBSCRIBER REPRESENTATIVE CERTIFICATE (Exhibit E). If you have a Subscriber
Representative, they must complete and sign.
COMPLETED ORIGINALS OF THE FULLY EXECUTED SUBSCRIPTION AGREEMENT AND
ALL OF THE EXHIBITS LISTED ABOVE SHOULD BE DELIVERED TO THE FOLLOWING
ADDRESS:
Golf Ventures, Inc.
255 South Orange Avenue, Suite 1515
Orlando, FL 32801
Attn: Warren J. Stanchina, President
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<PAGE>
NOTE TO CORPORATE, PARTNERSHIP AND TRUST SUBSCRIBERS:
(a) Corporations. Corporations will be required to provide a copy and
the filing date of the articles of incorporation and a corporate resolution
authorizing the investment in GVI and evidence of the authority of the person(s)
signing the subscription documentation to do so.
(b) Partnerships. Partnerships will be required to provide a copy of
the agreement of partnership and any certificate of partnership.
(c) Trusts. Trusts will required to provide a copy of the trust
agreement showing the date of formation and evidence of the authority of the
person(s) signing the subscription documentation to do so.
NO SUBSCRIPTION WILL BE BINDING ON GVI UNTIL ACCEPTED IN WRITING BY
GVI. GVI HAS RESERVED THE RIGHT TO REJECT ANY AND ALL SUBSCRIPTIONS IN
ITS SOLE DISCRETION, WITH OR WITHOUT CAUSE, AT ANY TIME PRIOR TO THE
CLOSING.
THE SECURITIES WHICH ARE THE SUBJECT OF THE SUBSCRIPTION AGREEMENT HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS
AND ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM SUCH REGISTRATION
OR QUALIFICATION. ALL SECURITIES ISSUED WILL BE RESTRICTED SECURITIES
AND WILL NOT BE FREELY TRANSFERABLE. BOTH BECAUSE THE SECURITIES ARE
UNREGISTERED AND BECAUSE OF CONTRACTUAL RESTRICTIONS, ANY SECURITIES
RECEIVED WILL BE SUBJECT TO RESTRICTIONS ON TRANSFER, WHETHER BY
ISSUANCE, GIFT, HYPOTHECATION OR OTHERWISE.
NO OFFER OR ISSUANCE OF SECURITIES IS MADE IN ANY JURISDICTION WHERE
THE OFFER OR ISSUANCE WOULD BE UNLAWFUL.
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<PAGE>
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made in connection
with the issuance by GOLF VENTURES, INC., a Utah corporation ("GVI"), of its
common stock (the "Shares") to the person or entity who has signed this
Agreement in the space provided below as "Subscriber."
In addition to the terms defined in the first paragraph of this
Agreement, the Agreement also uses the terms "Subscriber's Representative" which
shall mean any representative or personal advisor of Subscriber who has assisted
Subscriber in evaluating the merits and risks of an investment in the Shares.
1. Subscription
(a) Subscription. Subscriber hereby subscribes for the number of Shares
set forth herein. In respect of this subscription, Subscriber delivers
to GVI, together with this Agreement: (i) two original signature pages
of this Agreement signed by Subscriber, (ii) two original spousal
consents in the form attached as Exhibit C signed by Subscriber's
spouse if Subscriber is married, and (iii) a fully completed Investor
Information Sheet, Account Information Sheet if applicable, Accredited
Investor Questionnaire, and Subscriber Representative's Certificate if
applicable, attached as Exhibits A, B, D, and E respectively.
(b) Acceptance or Rejection of Subscription. Subscriber understands and
agrees that GVI may accept this subscription at its discretion and may
reject this subscription, in whole but not in part, if (1) Subscriber
fails to make the deliveries to GVI set forth in Section 1(a) above on
or before September 3, 1998, or (2) GVI, in its sole discretion,
determines that the offer or issuance of Shares to Subscriber would not
qualify for the federal securities law exemption described in Section
2(c)(i) below. If GVI rejects this subscription for either of these
reasons, Subscriber understands and agrees that GVI shall have no
further obligation under this Agreement.
2. Investor Representations and Warranties. Subscriber hereby
acknowledges, represents and warrants to, and agrees with, GVI as follows, both
as of now and as of the Closing Date:
(a) Authorization. This Agreement is a valid and legally binding
obligation of Subscriber, enforceable in accordance with its terms
except as affected by (i) bankruptcy law, and (ii) equitable
principles. Subscriber represents that Subscriber has full power and
authority to enter into this Agreement.
(b) No Advertisement or Solicitation. Subscriber acknowledges that the
offer and issuance of the Shares to Subscriber has not been
accomplished by any form of general solicitation or general
advertising, including, but not limited to, (i) any advertisement,
article, notice or other communication published in any newspaper,
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<PAGE>
magazine or similar media, or broadcast over television or radio, and
(ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(c) Restrictions on Transfer.
(i) Subscriber understands and acknowledges that the Shares
have not been registered under the federal Securities Act of
1933, as amended (the "Securities Act"), by reason of a
specific exemption from the registration provisions thereof.
(ii) Subscriber understands and acknowledges that the Shares
must be held indefinitely unless they are subsequently
registered under the Securities Act or are exempt from such
registration. Subscriber understands and acknowledges that
Subscriber may bear the economic risks of the investment in
Shares for an indefinite period of time.
(iii) Subscriber understands and acknowledges that any
issuance, transfer or other disposition of the Shares by
Subscriber is further restricted by the provisions of this
Agreement and a Registration Rights Agreement (herein so
called) between Subscriber and GVI, dated the same date as the
date of this Agreement.
(iv) Subscriber is aware of the provisions of Rule 144 under
the Securities Act, which permits limited public reissuances
of securities acquired in a nonpublic offering (like this
one), subject to certain conditions. Subscriber understands
that these conditions include, among other things: the
existence of a public market for the securities; the
availability of certain current public information about the
issuer; the reissuance occurring at least two years after the
party has purchased and paid for the securities to be sold;
the issuance being made through a broker in an unsolicited
"broker's transaction"; and the amount of securities being
sold during any three-month period not exceeding certain
limitations. In this connection, Subscriber understands that
it is unlikely Subscriber would ever be able to publicly sell
the Shares under Rule 144, because among other things the
Securities and Exchange Commission has expressed its opinion
that persons proposing to sell restricted securities received
in a nonpublic offering like this one will have a substantial
burden of proof in meeting the conditions outlined above, and
that such persons and the brokers who participate in the
transactions do so at their own risk.
(d) Disclosure of Information. Subscriber, alone or together with
Subscriber's Representative, as the case may be:
(i) has been furnished any documents which may have been made
available upon request, has carefully read such documents, and
understands and has evaluated the risks of an acquisition of
the Shares, and has relied solely (except as indicated in
subsections (ii) and (iii) below) on the information contained
in such documents;
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<PAGE>
(ii) has been provided an opportunity to obtain any additional
information requested concerning the Shares and GVI;
(iii) has been given the opportunity to ask questions of, and
receive answers from, GVI concerning the terms and conditions
of this subscription, and other matters pertaining to this
investment;
(iv) has been given the opportunity to obtain additional
information necessary to verify the accuracy of the
information provided, in order for Subscriber to evaluate the
merits and risks of an investment in GVI, and has not been
furnished any other offering literature or prospectus with
respect to this transaction, except as mentioned herein; and
(v) has determined that the Shares are a suitable investment
for Subscriber, and that at this time Subscriber could bear a
complete loss of the investment.
(e) Investment Experience. Subscriber represents and acknowledges
that Subscriber:
(i) has such knowledge and experience in financial and
business matters as to be capable of (i) evaluating, alone or
together with Subscriber's Representative, the merits and
risks of an investment in the Shares, and (ii) protecting
Subscriber's own interests in connection with the investment;
(ii) has obtained, in the judgment of Subscriber alone or
together with Subscriber's Representative, sufficient
information from GVI to evaluate the merits and risks of an
investment in the Shares;
(iii) has not used a Subscriber's Representative in connection
with evaluation of such risks and merits or, if Subscriber has
used a Subscriber's Representative, Subscriber's
Representative has executed the Subscriber Representative's
Certificate attached as Exhibit E to this Agreement;
(iv) has the financial ability to bear the economic risk of
Subscriber's investment in GVI (including Subscriber's
possible loss), has adequate means for providing for
Subscriber's current needs and personal contingencies and has
no need for liquidity with respect to the investment in GVI;
and
(v) if Subscriber is not an individual, has not been organized
solely for the purpose of acquiring the Shares.
(f) Purchase Entirely for Own Account. GVI is relying on Subscriber's
representation to GVI, which Subscriber hereby confirms by signing this
Agreement, that: (i) the Shares to be received by Subscriber will be
acquired for investment for Subscriber's own account, not as a nominee
or agent, and not with a view to the reissuance or distribution of any
part thereof, and (ii) except as otherwise disclosed to GVI prior to
the delivery of the Shares to the Subscriber, Subscriber has no present
intention of selling, granting any participation in, or otherwise
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<PAGE>
distributing the Shares except as allowed under Section 2(g) below. By
executing this Agreement, Subscriber further represents that Subscriber
does not have any understanding with any person to sell, transfer or
grant participations to such person or to any third person, with
respect to any of the Shares, except as disclosed to GVI prior to the
delivery of the Shares to Subscriber.
(g) Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Subscriber further agrees not to make
any disposition (other than to GVI) of all or any portion of the Shares
unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) (a) Subscriber has notified GVI of the proposed
disposition including a detailed statement of the
circumstances thereof, and (b) if requested by GVI, Subscriber
has furnished GVI with an opinion of counsel, reasonably
satisfactory to GVI and its counsel, that such disposition
will not require registration of such securities under the
Securities Act.
(h) Investor Awareness. Subscriber acknowledges, represents, agrees and
is aware that:
(i) no federal or state agency has passed upon the Shares or
made any finding or determination as to the fairness of this
investment;
(ii) there are substantial risks of loss of investment
incidental to the purchase of the Shares;
(iii) the Shares are an illiquid investment, and Subscriber
must bear the economic risk of investment in the Shares for an
indefinite period of time;
(iv) the Registration Rights Agreement contains substantial
restrictions on transferability of the Shares;
(v) neither GVI nor any of its affiliates, representatives or
attorneys has provided Subscriber with any investment, tax,
legal, regulatory or accounting advice with respect to the
investment in or ownership of the Shares; and
(vi) the representations, warranties. agreements, undertakings
and acknowledgments made by Subscriber in this Agreement
(including without limitation the Exhibits hereto) are made
with the intent that they be relied upon by GVI in determining
Subscriber's suitability as an acquirer of the Shares. In
addition, Subscriber undertakes to notify GVI immediately of
any change in any representation, warranty or other
information relating to Subscriber set forth herein.
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<PAGE>
3. Miscellaneous
(a) Modification. Neither this Agreement nor any provisions hereof
shall be waived, modified, discharged or terminated except by a written
instrument signed by both GVI and Subscriber.
(b) Notices. All communications given hereunder shall be deemed to have
been given and received (i) upon personal delivery, or (ii) in the case
of mailing by registered or certified mail, return receipt requested,
as of the date shown on the return receipt, or (iii) the first
succeeding business day after deposit with FedEx or other equivalent
air courier delivery service.
(c) Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, successors, legal representatives and
permitted assigns. If Subscriber is more than one person, the
obligation of Subscriber shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall
be deemed to be made by and be binding upon each such person and his or
her heirs, executors, administrators and successors.
(d) Entire Agreement. This Agreement together with the Registration
Rights Agreement and the Convertible Note Agreement between GVI and
Subscriber dated September 3, 1998, and the agreements and documents
referred to therein contain the entire agreement of the parties with
respect to this subscription, and there are no representations,
covenants or other agreements except as stated or referred to herein or
therein.
(e) Assignability. This Agreement is not transferable or assignable by
Subscriber.
(f) Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
(g) Counterparts. This Agreement may be executed through the use of
separate signature pages or in counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding
on the parties hereto, notwithstanding that the parties hereto are not
signatories to the same counterpart.
(h) Further Assurances. Subscriber will, from time to time, execute and
deliver to GVI all such other and further instruments and documents and
take or cause to be taken all such other and further action as GVI may
reasonably request in order to effect the transactions contemplated by
this Agreement.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS.
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<PAGE>
SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
Subscriber, desiring to enter into this Agreement for the subscription
of the number of Shares indicated below, hereby agrees to all of the terms and
provisions of this Agreement and agrees to be bound by all such terms and
provisions.
Subscriber has executed this Agreement as of the _______ day
of________________, 1998.
No. of Shares being Subscribed: 1,400,000
JOCIE L. SALIM
AGREED AND ACCEPTED this day of September, 1998.
GOLF VENTURES, INC.,
a Utah corporation
By:
Warren J. Stanchina,
President
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<PAGE>
EXHIBIT A
INVESTOR INFORMATION SHEET
Instructions: Please print or type and complete fully. If additional space is
needed for the response to any Item, attach a rider identifying the Item to
which the response is being made.
GENERAL INFORMATION
Name of Subscriber: Name of spouse (if married):
Jocie L. Salim
Tax I.D. Number (if an entity): Social Security No. (if an individual):
N/A
Telephone Number: (619) 551-2565
Mailing Address: 1526 Bluebird Lane, La Jolla, California 92037
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EXHIBIT B
ACCOUNT INFORMATION SHEET
To the extent that you are NOT acting solely for your own account complete the
following:
You are acting as Agent, Trustee, Partner, Joint Tenant, Tenant in Common or
otherwise for another person (circle appropriate answer). The names, addresses
and telephone numbers of all other persons that you represent are:
NOTE: Upon request of GVI you will be required to provide evidence of your
authority to represent the person(s) named above (i.e., Partnership Agreement,
Trust Agreement, Corporate Resolution, etc.) and if the proposed Subscriber is a
corporation, partnership, trust, or other entity, attach evidence that the
proposed investment in the Partnership has been authorized by such entity (i.e.,
minutes of meeting, corporate resolution, provisions of partnership agreement or
trust agreement, etc.).
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EXHIBIT C
CONSENT OF SPOUSE
I, the undersigned, certify as follows:
1. I am the spouse of Jocie L. Salim.
2. I have received, read and approved the provisions of the documents
entered into between Jocie L. Salim and Golf Ventures, Inc. ("GVI").
3. I agree to be bound by and accept the provisions of these documents as
they may be amended from time to time insofar as those provisions may
affect any interest I may have in GVI, whether the interest is
community property or otherwise.
Executed as of September ___, 1998.
By:
(Signature)
Name (Print or Type)
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EXHIBIT D
ACCREDITED INVESTOR QUESTIONNAIRE
I. INFORMATION TO DETERMINE QUALIFICATION.
o Please put a check or other mark in each space which applies to you
("Subscriber"):
Subscriber is an "Accredited Investor," based upon the following (check
all that apply):
1. _____ Subscriber is a natural person whose individual net worth, or
joint net worth with his or her spouse, exceeds $1,000,000 at the time of
acquisition of Shares; or
2. _____ Subscriber is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years, or joint income with
Subscriber's spouse in excess of $300,000 in each of those years, and reasonably
expects to reach the same income level in the current year; or
3. _____ Subscriber is a private business development company as
defined in section 202(a)(22) of the Investment Advisors Act of 1940; or
4. _____ Subscriber is either (a) a bank as defined in section 3(a)(2)
of the Securities Act of 1933, or a savings and loan association or other
institution as defined in section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; (b) a broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; (c) an insurance company as
defined in section 2(13) of the Act; (d) an investment company registered under
the Investment Company Act of 1940 or a business development company as defined
in section 2(a)(48) of that Act; (e) a Small Business Investment Company
licensed by the U.S. Small Business Administration under section 301(c) or (d)
of the Small Business Investment Act of 1958; or (f) an employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are Accredited Investors; or
5. _____ Subscriber is (i) an organization described in section
501(c)(3) of the Internal Revenue Code, (ii) a corporation, (iii) a real estate
investment trust or similar business trust, (iv) a partnership, or (v) a limited
liability company, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000; or
6. _____ Subscriber is any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as described in
Regulation 230.506(b)(2)(ii) promulgated under the Act; or
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7. _____ Subscriber is a trust with respect to which the grantor(s) has
retained absolute power in his or her sole discretion to amend or revoke the
trust at any time and such grantor(s) is an accredited investor as indicated in
paragraphs 1 or 2 above; or
8. _____ Subscriber is an entity in which all of its equity owners meet
one or more of the standards set forth in the preceding paragraphs numbers 1
through 6.
o The following information must be completed if Subscriber is (i) an
individual or (ii) a grantor of a revocable or irrevocable trust.
Describe your investment and business experience:
o The following information must be completed if Subscriber is (i) an
individual or (ii) a grantor of a revocable trust.
A. Income:
Together
Alone with Spouse
-------------- ---------------
1996: $ $
1997: $ $
--------------
Expected 1998: $ $
-------------- ---------------
B. Net Worth (alone or with spouse): $_________________
II. CERTAIN REPRESENTATIONS
Please read and acknowledge the following by initialing each.
Subscriber represents that:
________ (a) The information supplied by Subscriber herein is
complete and accurate and may be relied upon for the
purposes of determining exemption status under
federal and state securities laws.
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________ (b) Subscriber will notify GVI immediately of any
material adverse change in any such information
occurring prior to the acceptance of his/her/its
subscription.
________ (c) Subscriber understands that the representations
contained herein are made for the purpose of
determining whether Subscriber qualifies as an
"accredited investor" under Regulation D. Subscriber
hereby represents that the statement or statements
initialed and completed below are true and correct in
all respects.
IN WITNESS WHEREOF, Subscriber has initialed the foregoing statements
and executed this Questionnaire this ____ day of September, 1998.
Signature:
JOCIE L. SALIM
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EXHIBIT E
SUBSCRIBER REPRESENTATIVE'S CERTIFICATE
Name of Subscriber:
Please complete the following questionnaire fully, attaching additional sheets
if necessary.
1. Name:
Age:
Business Address:
2. Present occupation or position, indicating period of such practice
or employment and field of professional specialization, if any:
3. List any business or professional education, indicating degrees
received if any:
4. Have you had prior experience in advising clients with respect to
investments of this type?
Yes________ No________
5. List any professional licenses or registrations, including bar
admissions, accounting, certifications, real estate brokerage licenses and SEC
or state broker-dealer registrations held by you:
6. Describe generally any business, financial or investment experience
that would help you to evaluate the merits and risks of this investment:
7. State how long you have known the Subscriber and in what capacity:
8. In advising the Subscriber in connection with the Subscriber's
prospective investment in Golf Ventures, Inc., a Utah corporation ("GVI"), will
you be relying in part on the Subscriber's own expertise in certain areas?
Yes________ No________
If "Yes," which areas:
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9. In advising the Subscriber in connection with the Subscriber's
prospective investment in GVI, will you be relying in part on the expertise of
an additional Subscriber representative or representatives?
Yes________ No________
If "Yes," give the name and address of each additional representative:
---------
I understand that GVI will be relying on the accuracy and completeness
of my responses to the foregoing questions and I represent and warrant to GVI as
follows:
A. I am acting as Subscriber Representative for the Subscriber in
connection with the Subscriber's prospective investment in GVI
and have been acknowledged in writing by the Subscriber to be
her/his/its Subscriber representative in evaluating the merits
and risks of his respective investment in GVI;
B. The answers to the above questions are complete and correct
and may be relied upon by GVI in determining whether the
offering in connection with which I have executed this
questionnaire is exempt from registration under the Securities
Act of 1933;
C. I will notify GVI immediately of any material change in any
statement made herein occurring prior to the closing of any
purchase by the Subscriber of any Shares in GVI;
D. I am not an affiliate, general partner or other employee of
GVI;
E. Neither I nor any of my affiliates has a material relationship
with GVI or any of their affiliates;
F. I personally (or, if I have checked "yes" in answer to
question 8 above, together with the Subscriber or the
additional Subscriber representative or representatives
indicated above) have such knowledge and experience in
financial and business matters that I am capable of evaluating
the merits and risks of the Subscriber's prospective
investment in GVI.
In witness whereof, I have executed this Certificate this _______ day
of September, 1998.
(Signature of Subscriber Representative)
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EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
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Table of Contents
1. Definitions........................................................C-1
2. Sale Restriction...................................................C-2
3. Requested Registration.............................................C-2
4. "Piggyback" Registration Rights....................................C-3
5. Suspension of Offering.............................................C-4
6. Additional Registration Rights.....................................C-4
7. Expenses of Registration...........................................C-5
8. Registration Procedures............................................C-5
9. Indemnification....................................................C-6
10. Information Furnished by Holders...................................C-9
11. Sale Without Registration..........................................C-9
12. Exchange Act Reporting by GVI......................................C-9
13. Lockup Agreement..................................................C-10
14. Transfer of Registration Rights...................................C-10
15. Right of First Refusal............................................C-10
16. Miscellaneous.....................................................C-10
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of September 3, 1998, by and between JOCIE L. SALIM ("Salim") and GOLF
VENTURES, INC., a Utah corporation ("GVI").
Recitals
A. Salim and GVI are parties to that certain Convertible Note Agreement
(herein so called).
B. The Convertible Note Agreement provides for GVI to issue its
promissory note, which is convertible to 1,400,000 shares of common stock of
GVI.
C. If the promissory note is converted to Shares, the parties desire to
provide for certain registration rights pertaining to these Shares, all as more
fully set forth below in this Agreement
Agreement
Now, therefore for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Definitions. Terms used in this Agreement shall have the meanings set
forth below:
(a) Exercise Notice. As defined in Section 15 of this Agreement.
(b) GVI Share and GVI Shares. One or more, as the case may be, shares
of common stock of GVI.
(c) Holder. (i) Salim; or (ii) any person to whom the registration
rights provided for in this Agreement shall have been properly assigned
in accordance with Section 16(d) hereof.
(d) Note. The Promissory Note and Conversion Agreement in the amount of
$2,804,583.31 issued by GVI and agreed to by Salim, which Salim may
convert for 1,400,000 shares of common stock of GVI.
(e) Offered Shares. As defined in Section 15 of this Agreement.
(f) Register, Registered and Registration. A registration effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
(g) Registrable Securities. (i) any Shares owned by a Holder; (ii) any
other GVI Shares issued as a dividend or other distribution with
respect to, or in exchange for, such shares; provided, however, that
such shares or other securities shall not be treated as Registrable
Securities (A) if they have been sold by the Holder to or through a
broker or dealer or underwriter in a public distribution or a public
securities transaction pursuant to an effective registration statement
or pursuant to Rule 144 promulgated by the SEC (or any successor
provision) under the Securities Act ("Rule 144"); or (B) if in the
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opinion of counsel to GVI (which shall be subject to the concurrence of
counsel to the Holder), the Holder, can sell all Registrable Securities
held by such Holder in the manner proposed by such Holder without
registration under the Securities Act pursuant to Rule 144; and
provided, further, that the term "Registrable Securities" shall not
include securities sold in a transaction in which the rights under this
Agreement shall not have been transferred as provided in Section 14
hereof.
(h) SEC. The Securities and Exchange SEC or any other federal agency at
the time administering the Securities Act.
(i) Securities Act. The Securities Act of 1933, as amended, and the
rules and
regulations promulgated thereunder.
(j) Shares. The 1,400,000 shares of common stock of GVI to which the
Note may be converted by Salim.
2. Sale Restriction. At all time on and after the date that Holder converts the
Note to Shares, and before GVI has obtained authorization from the SEC to
register the Shares and the Shares are registered, then Holder, together with
all persons whose holdings of Registrable Securities must be aggregated with
such Holder, for a period of two years from the date of the conversion, shall
not offer, sell, grant, any option to purchase, or otherwise dispose of, the
Shares without the prior written consent of GVI.
3. Requested Registration. Each Holder of Registrable Securities shall have the
right to offer for sale pursuant to a shelf registration statement the Shares as
provided in this Section 3.
(a) Notice by Holder. If a Holder desires to exercise its registration
rights granted under this Section 3 with respect to its Registrable
Securities, such Holder shall deliver to GVI a written notice informing
GVI of such exercise and specifying the number of Registrable
Securities to be offered by Holder. Such notice may be given at any
time after the date a notice of conversion may first be delivered by
Holder to GVI pursuant to the terms of the Note.
(b) Effectuation of Registration. Upon receipt of such notice of
exercise of registration rights hereunder, GVI, if it has not yet
caused such Holder's Registrable Securities to be included in any shelf
registration statement (which registration statement shall then be
deemed to have been requested under this Section 3 and GVI shall be
deemed to have satisfied its registration obligation for purposes of
this Agreement) and related prospectus GVI then has on file with the
SEC, GVI will use its best efforts to effect such shelf registration on
Form S-3 and all qualifications and evidences of compliance as may be
so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's Registrable
Securities as are specified
D-560030.2
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in such request; provided, however, that GVI shall not be obligated to
effect any such registration, qualification or compliance, pursuant to
this Section 3:
(i) if Form S-3 (or any substantially equivalent registration
form under the Securities Act subsequently adopted by the SEC
that permits inclusion or incorporation by reference to other
documents filed by GVI with the SEC) is not available to GVI
for such offering by the Holders;
(ii) if GVI shall furnish to the Holders a certificate signed
by the President of GVI stating that, in the good faith
judgment of the Board of Directors of GVI, it would be
seriously detrimental to GVI and its shareholders for such
Form S-3 registration to be effected at such time, in which
event GVI shall have the right to defer the filing of the Form
S-3 registration for one or more periods determined by GVI to
be reasonably necessary to avoid such seriously detrimental
effect; provided, however, that in no event shall the number
of days included in such periods exceed, in the aggregate, 120
days in any twelve month period;
(iii) if GVI has already effected one registration under this
Agreement at the request of such Holder;
(iv) in any particular jurisdiction in which GVI would be
required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance;
(v) if the filing of such registration statement would require
the preparation of any special audit in advance of the time in
which GVI would otherwise be required by law to be completed,
in which case GVI may delay such registration until such audit
has been completed in the ordinary course of business; or
(vi) if the intended method of disposition of the GVI Shares
involves an underwritten offering.
4. "Piggyback" Registration Rights.
(a) Notice of Registration. If at any time or from time to time
commencing upon the date upon which the Note has been converted to GVI
Shares, GVI shall determine to register GVI Shares for the account of a
security holder or holders (other than the Holders), GVI will:
(i) promptly give to the Holders written notice thereof; and
(ii) include in such registration all the Registrable
Securities specified in a written request or requests made
within twenty (20) days after receipt by the Holders of such
written notice from GVI.
(b) Exclusion of Certain Registrations. No piggyback registration
rights shall be available with respect to (i) a registration relating
to a primary offering of GVI Shares by GVI for its own account, (ii) a
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registration relating solely to employee stock option or purchase
plans, or (iii) a registration on Form S-4 or otherwise relating solely
to a Rule 145 transaction.
5. Suspension of Offering.
(a) GVI's Right to Suspend. Notwithstanding Sections 3 and 4 hereof,
GVI shall be entitled to postpone the filing of a registration
statement, and from time to time require Holder not to sell under a
registration statement or to suspend the effectiveness thereof, if the
negotiation or consummation of a transaction by GVI or its subsidiaries
is pending or an event has occurred, which negotiation, consummation or
event would require additional disclosure by GVI in the registration
statement of material information which GVI has a bona fide business
purpose for keeping confidential and the nondisclosure of which in the
registration statement might cause the registration statement to fail
to comply with applicable disclosure requirements; provided, however,
that GVI may not delay, suspend or withdraw the registration statement
for such reason more than once in any 12- month period or for more than
sixty (60) days at any one time.
(b) Discontinuance of Sales by Holder. Upon receipt of any notice from
GVI of the happening of any event during the period a registration
statement is effective which is of a type specified in Subsection (a)
above, or as a result of which such registration statement or related
prospectus contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made (in the case of the prospectus) not misleading, Holder
agrees that it will immediately discontinue offers and sales of the
Registrable Securities under such registration statement until Holder
receives either:
(i) copies of a supplemented or amended prospectus (which GVI
agrees to promptly prepare) that corrects the misstatement(s)
or omission(s) referred to above and receives notice that any
post-effective amendment has become effective; or
(ii) notice from GVI that the required disclosure has been
filed with the SEC as part of a Current Report on Form 8-K
(which GVI agrees to promptly prepare) that corrects the
misstatement(s) or omission(s) referred to above by same being
incorporated by reference into such registration statement and
related prospectus. If so directed by GVI, Holder will deliver
to GVI all copies of the prospectus covering the Registrable
Securities current at the time of receipt of such notice.
6. Additional Registration Rights. GVI reserves the right, at any time or from
time to time hereafter, to grant registration rights to other holders of GVI
Shares, or holders of securities convertible into or exchangeable for GVI
Shares, which registration shall be pari passu with the registration rights
granted hereunder, unless the agreement or instrument granting such rights
specifically states that such rights shall be junior and subordinate to the
rights granted hereunder.
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7. Expenses of Registration. All expenses incurred in connection with any
registration, qualification or compliance pursuant hereto, including, without
limitation, all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for GVI, shall be borne by GVI, except that
GVI shall not be required to pay underwriters' discounts, SECs, or stock
transfer taxes relating to Registrable Securities or the fees and disbursements
of any counsel retained by Holders, or any other selling expenses, discounts or
SECs incurred in connection with the sale of Registrable Securities.
8. Registration Procedures. In the case of each registration, qualification or
evidence of compliance effected by GVI pursuant to this Agreement, GVI will keep
Holders participating therein advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense (except as otherwise provided in Section 7 above) GVI will:
(a) keep such registration, qualification or evidence of compliance
effective for a period of (i) 120 days with respect to a registration
statement filed pursuant to Section 4, or until Holder has completed
the distribution described in the registration statement relating
thereto, whichever first occurs; or (ii) one year with respect to a
registration statement filed pursuant to Section 3 above, or until the
Holder has completed the distribution described in the registration
statement relating thereto or, if earlier, when the shares subject to
said registration statement cease to be Registrable Securities;
provided, however, that:
(i) if GVI shall furnish to Holders a certificate signed by
the President of GVI stating that, in the good faith judgment
of the Board of Directors of GVI, it would be seriously
detrimental to GVI and its shareholders to keep such
registration, qualification or evidence of compliance
effective for the period in (i) or (ii) above, as the case may
be, and that it is therefore essential to discontinue the
effectiveness of such registration, qualification or evidence
of compliance, then GVI may so terminate or otherwise
discontinue the effectiveness of such registration,
qualification or evidence of compliance, but not more than one
time in any 12-month period, and for a period not to exceed
six (6) months; and
(ii) if GVI exercises its right under the foregoing proviso at
such time as the Holders shall not have completed the
distribution described in the registration statement relating
thereto, (x) such Holder or Holders requesting such
registration shall be granted one additional registration
under Section 3 hereof, and (y) GVI shall reimburse Holders
for all of their documented out-of-pocket expenses incurred in
connection with the terminated or discontinued registration
statement (which shall include, without limitation, attorneys'
fees and expenses, but which shall not include underwriters'
discounts, SECs or stock transfer taxes relating to
Registrable Securities actually sold prior to such termination
or discontinuance of effectiveness).
(b) furnish such number of prospectuses and other documents incident
thereto as Holders from time to time may reasonably request;
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(c) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(d) notify the Holders at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, in which event GVI will promptly comply
with the provisions of Section 8(c) or exercise its rights to suspend
the registration under Section 8(a);
(e) use all reasonable efforts to cause all such Registrable Securities
covered by such registration statement to be listed on each securities
exchange or the Nasdaq National Market, as applicable, on which similar
securities issued by GVI are then listed, if the listing of such
Registrable Securities is then permitted under the rules and
regulations of such exchange or the Nasdaq National Market, as
applicable; and
(f) reserve from its authorized but unissued shares, the number of
Shares which may be issuable by GVI upon conversion of the Note. Upon
issuance of the Shares, they shall be duly authorized, validly issued,
fully paid and non-assessable.
9. Indemnification.
(a) Indemnification by GVI. GVI will indemnify each Holder, each of its
officers and directors, and each person controlling (within the meaning
of Section 15 of the Securities Act) Holder, with respect to which
registration, qualification or compliance has been effected pursuant to
this Agreement, against all claims, losses, damages, costs, expenses
and liabilities whatsoever (or actions in respect thereof) arising out
of or based on (A) any untrue statement, (or alleged untrue statement)
of a material fact contained in any registration statement, prospectus,
offering circular or other similar document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made
or (B) any violation by GVI of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any state
securities law or of any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law applicable
to GVI and relating to action or inaction required of GVI in connection
with any such registration, qualification or compliance, and will
reimburse Holder, each of its officers and directors and each person
controlling Holder, for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action; provided, however, that (X) GVI will
not be liable in any such case to the extent that any such claim, loss,
damage, liability, or action arises out of or is based on any untrue
statement (or alleged untrue statement) or omission (or
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alleged omission) based upon written information furnished to GVI by an
instrument duly executed by Holder and stated to be specifically for
use therein or furnished by Holder to GVI in response to a request by
GVI stating specifically that such information will be used by GVI
therein, and (Y) in the event an underwritten public offering is not
involved, such indemnity agreement shall not inure to the benefit of
Holder, insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the
preliminary prospectus or prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration
statement becomes effective or in the amended prospectus filed with the
SEC pursuant to Rule 424(b) under the Securities Act or in any
subsequent amended prospectus filed with the SEC prior to the written
confirmation of the sale of the Registrable Securities at issue
(collectively, the "Final Prospectus"), if a copy of the Final
Prospectus was not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act.
(b) Indemnification by Holders. Holders will, if Registrable Securities
held by or issuable to such Holders are included in the securities to
which such registration, qualification or compliance is being effected,
indemnify GVI, each of its directors and officers, each underwriter, if
any, of GVI's securities covered by such registration statement, and
each person who controls GVI within the meaning of the Securities Act
against all claims, losses, damages, costs, expenses and liabilities
whatsoever (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering
circular or other similar document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and will
reimburse GVI, such directors, officers, persons or underwriters for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, costs,
expense, liability or action, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to GVI by an instrument
duly executed by Holders and stated to be specifically for use therein
or furnished by any Holder to GVI in response to a request by GVI
stating specifically that such information will be used by GVI therein,
provided, however, that the foregoing indemnity agreement is subject to
the condition that in the event an underwritten public offering is
involved, such indemnity agreement shall not inure to the benefit of
GVI or any underwriter insofar as it relates to any such untrue
statements (or alleged untrue statements) or omission (or alleged
omission) made in the preliminary prospectus or prospectus but
eliminated or remedied in the Final Prospectus, if a copy of the Final
Prospectus was not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act. The liability of Holders under this
Section 9(b) shall be limited to the amount of net proceeds received by
them for the sale of Registrable Securities pursuant to such
registration, qualification or compliance.
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(c) Indemnification Procedures. Each party entitled to indemnification
under this Section 9 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld). The failure of any Indemnified Party to give
notice as provided herein shall relieve the Indemnifying Party of its
obligations under this Agreement only to the extent that such failure
to give notice shall materially prejudice the Indemnifying Party in the
defense of any such claim or any such litigation. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except
with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that attributes any liability to
the Indemnified Party, unless the settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect to
such claim or litigation. If any such Indemnified Party shall have been
advised by counsel chosen by it that there may be one or more legal
defenses available to such Indemnified Party that are different from or
additional to those available to the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of
such action on behalf of such Indemnified Party and will reimburse such
Indemnified Party and any person controlling such Indemnified Party for
the reasonable fees and expenses of any counsel retained by the
Indemnified Party, it being understood that the Indemnifying Party
shall not, in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for each
Indemnified Party or controlling person (and all other Indemnified
Parties and controlling persons which may be represented without
conflict by one counsel), which firm shall be designated in writing by
the Indemnified Party (or Indemnified Parties, if more than one
Indemnified Party is to be represented by such counsel) to the
Indemnifying Party. The Indemnifying Party shall not be subject to any
liability for any settlement made without its consent, which shall not
be unreasonably withheld.
(d) Contribution in Lieu of Indemnification. If the indemnification
provided for in this Section 9 from the Indemnifying Party is
unavailable to an Indemnified Party hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Parties in connection
with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Parties, and the
parties' relative intent, knowledge, access to information and
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<PAGE>
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding. No party shall be
required to contribute to any settlement effected without its consent,
which consent shall not be unreasonably withheld.
(e) No Pro Rata Allocation. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
10. Information Furnished by Holders. Holders shall furnish to GVI such
information regarding Holders and the distribution proposed by Holders as shall
be required in connection with any registration, qualification or compliance
referred to in this Agreement.
11. Sale Without Registration. If at the time of any transfer of any Registrable
Securities, such Registrable Securities shall not be registered under the
Securities Act, GVI may require, as a condition of allowing such transfer, that
Holders or transferee furnish to GVI (i) such information as is necessary in
order to establish that such transfer may be made without registration under the
Securities Act; and (ii) (if the transfer is not made in compliance with Rule
144) at the expense of Holder or transferee, an opinion by legal counsel
designated by Holder or transferee and reasonably satisfactory in form and
substance to GVI, to the effect that such transfer may be made without
registration under the Securities Act, except that nothing contained in this
Section 11 shall relieve GVI from complying with any request for registration,
qualification or compliance made pursuant to the other provisions of this
Agreement. Notwithstanding the foregoing, Holder shall have the right to pledge
or margin the Registrable Securities, provided, however, that the transaction
giving rise to the pledge or margin is exempt from registration under the
Securities Act.
12. Exchange Act Reporting by GVI. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of Registrable Securities to the public without registration or
pursuant to a registration statement on Form S-3, GVI agrees to:
(a) make and keep current public information available, as those terms
are understood and defined in Rule 144, under the Securities Act, at
all times after the date hereof:
(b) file with the SEC in a timely manner all reports and other
documents required of GVI under the Securities Act and the Exchange
Act;
(c) furnish to each Holder, so long as such Holder owns any Registrable
Securities, forthwith upon written request a written statement by GVI
that it has complied with the available information and reporting
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<PAGE>
requirements of Rule 144(c) and Rule 144A(d)(4) under the Securities
Act, a copy of the most recent annual or quarterly report of GVI, and
such other reports and documents so filed by GVI as Holder may
reasonably request in availing itself of any rule or regulation of the
SEC permitting Holder to sell any such securities without registration;
and
(d) if it is eligible to do so and upon the request of any Holder, take
such reasonable action as is necessary to enable said Holder to utilize
Form S-3 for the sale of the Registrable Securities.
13. Lockup Agreement. Each Holder holding more than 5,000 GVI Shares agrees, in
connection with any underwritten public offering of GVI's securities, not to
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities (other than those included in
the registration), without the prior written consent of GVI or underwriters, if
any, as the case may be, for a period beginning on the effective date of such
registration and ending 180 days thereafter if Holder is a selling stockholder
in such public offering or for 30 days after the effective date of such
registration (or, if earlier, the date on which all securities under such
registration have been sold) if Holder is not a selling stockholder; provided,
however, that the foregoing restrictions shall not apply to the extent Holder is
prohibited by applicable law from agreeing to withhold the Registrable
Securities from sale.
14. Transfer of Registration Rights. Except as otherwise provided herein, the
rights to cause GVI to register securities granted by GVI under Sections 3 and 4
may not be assigned or otherwise conveyed, without GVI's consent; provided,
however, if a Holder makes a transfer of Registrable Securities in compliance
with state and federal securities laws, the rights granted under Sections 3 and
4 shall be automatically deemed assigned to the transferee who shall be a
"Holder" for all purposes hereunder.
15. Right of First Refusal. Holder grants to GVI a right of first refusal to
repurchase any of the GVI Shares that Holder wishes to sell (the "Offered
Shares.") Prior to any proposed sale, Holder shall notify GVI in writing of its
desire to sell the Offered Shares and provide to GVI information regarding the
number of Offered Shares, the price per Share, and the proposed date of sale.
GVI shall have a period of two (2) business days from the receipt of Holder's
notice to notify Holder of GVI's desire to exercise its right of first refusal
and repurchase all or any portion of the Offered Shares (the "Exercise Notice")
at the same price as that set forth in Holder's notice. GVI shall have a period
of two (2) business days from the date of the Exercise Notice to pay to Holder
the total purchase price of the Offered Shares to be repurchased by GVI. The
Offered Shares repurchased by GVI shall be exchanged for the purchase price at a
closing mutually agreed to by the parties. Holder may then sell as originally
intended any remaining Offered Shares not repurchased by GVI.
16. Miscellaneous.
(a) Amendment. Subject to applicable law, this Agreement may be amended
or supplemented only by written agreement of the parties.
(b) Waiver of Compliance. Any failure of any party to comply with any
provision of this Agreement may be expressly waived in writing by
another party to whom performance is owed, but such waiver or failure
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<PAGE>
to insist upon strict compliance with such provision shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other
failure. No failure to exercise and no delay in exercising any right,
remedy, or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, or power hereunder
preclude any other or further exercise thereof or the exercise of any
other right, remedy, or power provided herein or by law or in equity.
The waiver by any party of the time for performance of any act or
condition hereunder does not constitute a waiver of the act or
condition itself.
(c) Attorney's Fees. If any legal action, arbitration or other
proceeding is brought to interpret or enforce the terms of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and any other costs incurred in that proceeding, in
addition to any other relief to which it is entitled.
(d) Assignment; Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement may be assigned by any
Holder of Registrable Securities, and shall be deemed to be assigned
(subject to Section 14 in the case of the registration rights set forth
in Section 3 and 4 hereof) in connection with any sale or transfer of
Registrable Securities. Any assignment, transfer or other disposition
of the Registrable Securities not in compliance with the restrictions
of this Agreement shall be null and void and of no force and effect.
Except for those enumerated above, this Agreement does not create, and
shall not be construed as creating, any rights or claims enforceable by
any person or entity not a party to this Agreement.
(e) Governing Law. The validity, interpretation, enforceability, and
performance of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to
the conflicts of laws provisions.
(f) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(g) Headings. The headings of the Sections of this Agreement are for
reference purposes only and shall not constitute a part hereof or
affect the meaning or interpretation of this Agreement.
(h) Entire Agreement. The parties intend that the terms of this
Agreement shall be the final expression of their agreement with respect
to the express subject matter set forth herein and may not be
contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement shall constitute the
complete and exclusive statement of its terms and that no extrinsic
evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding involving this Agreement.
(i) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be
held by a court of competent jurisdiction to be invalid, unenforceable,
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<PAGE>
or void, the remainder of this Agreement and such provisions as applied
to other persons, places, and circumstances shall remain in full force
and effect.
(j) Notices. Any notice, demand or request which may be permitted,
required or desired to be given in connection herewith shall be given
in writing and directed to the parties as follows:
If to GVI: If to Salim:
Golf Ventures, Inc. Jocie L. Salim
255 South Orange Avenue, Suite 1515 1526 Bluebird Lane
Orlando, FL 32801 La Jolla, CA 92037
Telephone: (407) 245-7557 Telephone: (619) 551-2565
Facsimile: (407) 245-7585 Facsimile: (619) 551-2568
Attn: Warren J. Stanchina
with a copy to:
Haynes and Boone, L.L.P.
901 Main Street, Suite 3100
Dallas, TX 75202-3789
Telephone: (214) 651-5672
Facsimile: (214) 200-0607
Attn: J. Kirk Standly
Notices shall be either (i) personally delivered (including
delivery by FedEx or other courier service) to the offices set forth
above, in which case they shall be deemed delivered on the date of
delivery to said offices; (ii) sent by telecopy, in which case they
shall be deemed delivered on the date sent; provided, however, that any
notices sent by telecopy shall also be sent by overnight courier on the
same day; or (iii) sent by certified mail, return receipt requested, in
which case they shall be deemed delivered on the date shown on the
receipt unless delivery is refused or delayed by the addressee, in
which event they shall be deemed delivered on the date of deposit in
the U.S. Mail.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOLLOWS.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
"GVI" GOLF VENTURES, INC.,
a Utah corporation
By:
Warren J. Stanchina,
President
"SALIM"
JOCIE L. SALIM
C-13
CONTRIBUTION AGREEMENT
between
GOLF VENTURES, INC.,
a Utah corporation ("GVI")
and
METROVEST PARTNERS, LTD.,
a Texas limited liability company ("Metrovest")
relating to the property
commonly known as
"The Lakes of Arlington"
Dated as of September 3, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions.........................................................1
2. Agreement to Acquire and Contribute.................................5
3. Consideration.......................................................5
4. GVI's Due Diligence.................................................6
5. Conditions to Closing...............................................7
6. Closing.............................................................9
7. Closing Costs and Expenses.........................................11
8. Metrovest's Representations and Warranties.........................12
9. GVI's Representations and Warranties...............................16
10. Risk of Loss.......................................................17
11. Metrovest's Continued Operation of the Property....................17
12. Cooperation........................................................18
13. Non-Consummation of the Transaction................................19
14. Miscellaneous......................................................20
i
<PAGE>
List of Schedules
3.1.5 Accounts Payable
4.3 Due Diligence Materials
4.4 Contracts to be Assumed by GVI
5.2 Related Transactions
8.2.1 Loan Description
8.3.1 Description of Land
8.3.2 Material Defects
8.3.3 Compliance with Laws
8.3.4 Proceedings
8.3.7 Environmental Reports
8.4.1 Personal Property
8.4.2 Litigation
8.4.3 Contracts for Improvements
8.4.4 Other Interests
d-547622.3
ii
<PAGE>
List of Exhibits
A Promissory Note and Conversion Agreement
B Assignment and Assumption of Service Contracts, Warranties and
Guaranties, and Other General Intangibles
C FIRPTA Affidavit
D Closing Certificate
E Registration Rights Agreement
F Subscription Documents
G Special Warranty Deed
H Warranty Bill of Sale
d-547622.3
iii
<PAGE>
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is dated as of the
Effective Date (as defined in Section 1 of this Agreement) by and between GOLF
VENTURES, INC., a Utah corporation ("GVI"), and METROVEST PARTNERS, LTD., a
Texas limited liability company ("Metrovest"). (GVI and Metrovest are each
referred to as a "Party" and collectively as the "Parties.")
RECITALS
A. Metrovest is the owner of certain real estate and related property located in
Arlington, Texas, commonly known as "The Lakes of Arlington".
B. Metrovest wishes to transfer this property to GVI in exchange for a
promissory note in the amount of $15,000,000, which shall be convertible to
10,000,000 shares of common stock of GVI, and GVI wishes to receive this
property in exchange for the promissory note, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and promises contained in this Agreement, and other
valuable consideration, the receipt and sufficiency of which is acknowledged,
the Parties agree as follows:
1. Definitions. Terms used in this Agreement shall have the meanings set
forth in this Section 1.
1.1 Actual Knowledge of GVI (or GVI's Actual Knowledge). The knowledge
of the Responsible Individual of GVI, without duty of inquiry.
1.2 Actual Knowledge of Metrovest (or Metrovest's Actual Knowledge).
The knowledge of the Responsible Individual of Metrovest, without duty
of inquiry.
1.3 Agreement. This Agreement between Metrovest and GVI, including all
Schedules and Exhibits that are attached to this Agreement, which are
incorporated herein by reference.
1.4 Approval Date. The end of the Due Diligence Period.
1.5 Assignment of Contracts. An Assignment and Assumption of Service
Contracts, Guaranties and Warranties, and Other Intangible Property, a
form of which is attached as Exhibit B.
1.6 Bill of Sale. A Warranty Bill of Sale, in a form of which is
attached as Exhibit H.
1.7 Closing. The delivery of the Deed and the other documents required
to be delivered under this Agreement and the payment of the
Consideration.
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1.8 Closing Certificate. The certificate to be delivered by Metrovest
to GVI at the Closing, pursuant to Section 6.4.1.1, a form of which is
attached as Exhibit D.
1.9 Closing Date. September 3, 1998, subject to extension as provided
in this Agreement.
1.10 Consideration. The total consideration to be paid by GVI to
Metrovest as described in Section 3.
1.11 Contracts. The service contracts, construction contracts for work
in progress, any warranties thereunder, management contracts,
unrecorded reciprocal easement agreements, operating agreements,
maintenance agreements, and other similar agreements relating to the
Property that GVI wishes to assume as listed on Schedule 4.4 attached
hereto.
1.12 Creditors' Rights Laws. All bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally, as well as general equitable principles whether or
not their enforcement is considered to be a proceeding at law or in
equity.
1.13 Deed. A special warranty deed, a form of which is attached as
Exhibit G.
1.14 Due Diligence Materials. The materials set forth on Schedule 4.3.
1.15 Due Diligence Period. A period of time commencing upon the
Effective Date, and expiring at 5:00 P.M. (Central Standard Time) on
September 3, 1998.
1.16 Effective Date. The date this Agreement is signed by Metrovest and
GVI, whichever signs last.
1.17 Environmental Laws. All federal, state, local or administrative
agency ordinances, laws, rules, regulations, orders or requirements
relating to Hazardous Materials.
1.18 Environmental Reports. All environmental reports and
investigations relating to the Property that are in the possession or
control of Metrovest, which are listed on Schedule 8.3.7.
1.19 Exhibit. Unless stated otherwise, the indicated Exhibit that is
attached to this Agreement, which is incorporated herein by reference.
1.20 Expenses. All operating expenses normal to the operation and
maintenance of the Property, including without limitation real property
taxes and assessments; current installments of any improvement bonds or
assessments which are a lien on the Property or which are pending and
may become a lien on the Property; water, sewer and utility charges;
amounts payable under any Contract for any period in which the Closing
occurs; permits, licenses and inspection fees; and interest on the
Loan.
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<PAGE>
1.21 FIRPTA Certificate. The affidavit of Metrovest that it is not a
foreign entity, a form of which is attached as Exhibit C.
1.22 General Intangibles. All general intangibles relating to design,
development, operation, management and use of the Real Property; all
zoning variances, building, use, or other permits, approvals,
authorizations, licenses and consents obtained from any governmental
authority or other person in connection with the development, use,
operation or management of the Real Property; all soil tests,
engineering reports, appraisals, architectural drawings, plans and
specifications relating to all or any portion of the Real Property, and
all payment and performance bonds or warranties or guarantees relating
to the Real Property; and all of Metrovest's right, title and interest
in and to any and all of the following to the extent assignable:
trademarks, service marks, logos or other source and business
identifiers, trademark registration and applications for registration
used at or relating to the Real Property and any written agreement
granting to Metrovest any right to use any trademark or trademark
registration at or in connection with the Real Property.
1.23 GVI. Golf Ventures, Inc., a Utah corporation.
1.24 GVI's Conditions Precedent. Conditions precedent to GVI's
obligation to consummate this transaction, as set forth in Section 5.1.
1.25 Hazardous Materials. Hazardous or toxic materials, substances
or wastes, or other materials injurious to human health or the
environment.
1.26 Improvements. All structures, parking lots, signs, walks and
walkways, fixtures and equipment and all other improvements located at
or on or affixed to the Land to the full extent that such items are
owned by Metrovest and constitute realty under the laws of the State of
Texas.
1.27 Land. The land described in Schedule 8.3.1, together with all
appurtenances, including without limitation easements and mineral and
water rights.
1.28 Laws. All restrictive covenants, building codes, environmental,
zoning and land use laws, and other local, state and federal laws and
regulations applicable to the Property.
1.29 Lender. The financial institution serving as lender under the
Loan.
1.30 Loan. The mortgage loan described on Schedule 8.2.1.
1.31 Loan Documents. All notes or other evidence of indebtedness, loan
agreements, mortgages, guaranty agreements, and any and all other
documents entered into by Metrovest in relation to the Loan and all
amendments, modifications, and supplements relating to the Loan.
1.32 Major Loss. Any damage or destruction to, or condemnation of, any
Real Property as to which the cost to repair, or the value of the
portion taken, as the case may be, exceeds the insurance coverage
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<PAGE>
proceeds available as compensation for such loss (plus the amount of
any deductible), or the condemnation proceeds paid, as the case may be.
1.33 Material Damage. Damage in excess of $5,000 suffered by GVI as a
result of any inaccuracy in or breach of any representation or warranty
or covenants (on a cumulative basis and not per occurrence) by
Metrovest.
1.34 Maturity Date. The maturity date of the Note: April 30, 1999.
1.35 Metrovest. Metrovest Partners, Ltd., a Texas limited liability
company.
1.36 Minor Loss. Any such damage, destruction or condemnation that is
not a Major Loss.
1.37 Note. The Promissory Note and Conversion Agreement in the amount
of Fifteen Million Dollars ($15,000,000) to be issued by GVI and agreed
to by Metrovest in accordance with Section 3.1.1, a form of which is
attached as Exhibit A.
1.38 Other Interests. Any and all assets, rights, claims, interests or
other things of value which are to be conveyed by Metrovest to GVI
hereunder (other than the Real Property, the Contracts, the General
Intangibles, and the Personal Property), as set forth on Schedule
8.4.4.
1.39 Parties. GVI and Metrovest.
1.40 Permitted Exceptions. The exceptions to title approved by GVI
during the Due Diligence Period and any exceptions waived, cured or not
objected to by GVI under Section 5.1.1.
1.41 Personal Property. All of Metrovest's right, title and interest in
and to the personal property and any interest therein owned by
Metrovest or held directly for the benefit of Metrovest, if any,
located on the Real Property and used in the operation or maintenance
of the Real Property, including all Property marketing and advertising
materials, all camera ready art, and any security systems as described
on Schedule 8.4.1.
1.42 Property. The Real Property, together with the Personal Property,
the General Intangibles, the Contracts, and the Other Interests.
1.43 Real Property. The Land and Improvements.
1.44 Registration Rights Agreement. The Registration Rights Agreement
to be signed by the Parties pursuant to Section 5.2.2, a form of which
is attached as Exhibit E.
1.45 Related Transactions. The transactions contemplated by the
agreements described on Schedule 5.2 attached hereto.
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<PAGE>
1.46 Required Endorsements. The title insurance endorsements reasonably
requested by GVI prior to the Approval Date, to the extent available in
the state of Texas.
1.47 Responsible Individuals. (i) with respect to GVI: Warren J.
Stanchina, and (ii) with respect to Metrovest: James R. Salim.
1.48 Schedule. Unless stated otherwise, the indicated Schedule that is
attached to this Agreement, which is incorporated herein by reference.
1.49 Shares. Ten million (10,000,000) shares of common stock of GVI,
par value $0.001.
1.50 Subscription Documents. The documents that Metrovest must complete
and present to GVI prior to Metrovest's subscription to the Shares
pursuant to Section 5.2.3, forms of which are attached as Exhibit F.
1.51 Title Company. Safeco Land Title of Dallas, 1999 Bryan St., Suite
2323 LB 133, Dallas, Texas.
1.52 Title Policy. A policy of standard coverage Owner's Title
Insurance in the general form used in the State of Texas, including the
Required Endorsements (except to the extent such Required Endorsements
are not available due to the action or inaction of GVI), issued by
Title Company in the amount of the Consideration, showing title vested
in GVI subject only to the Permitted Exceptions.
2. Agreement to Acquire and Contribute. Subject to the terms and conditions set
forth in this Agreement, Metrovest agrees to contribute the Property to GVI, and
GVI agrees to acquire the Property from Metrovest, subject to the Loan, in
exchange for the Note.
3. Consideration.
3.1 Components of Consideration. Metrovest and GVI agree that the total
Consideration for the Property shall include the following, which may
be subject to adjustment in accordance with the terms of Section 10.3:
3.1.1 Note. Fifteen Million Dollars ($15,000,000) which shall
be paid on the Closing by GVI to Metrovest in the form of the
Note attached as Exhibit A. The Note shall mature on the
Maturity Date. The Note shall accrue interest at 5.42% per
annum with interest due on the Maturity Date. The Note shall
be convertible to 10,000,000 shares of common stock of GVI
(par value $0.001) (the "Shares") in accordance with the terms
and conditions set forth in the Note. Once the shareholders of
GVI, at the annual meeting to be held in October, authorize
the stock necessary to issue the Shares, Metrovest shall have
the right to convert the Note to the Shares. Once GVI has
obtained approval to register the Shares, and if Metrovest has
not already converted the Note to the Shares, then both GVI
and Metrovest shall each individually have the right to
5
<PAGE>
convert the Note to the registered Shares. GVI shall use its
best efforts to register the Shares no later than March 31,
1999. If the Note is not converted to Shares by the Maturity
Date, it shall mature and become due and payable.
3.1.2 Cash. Immediately available funds, in an amount equal to
$4,165,000.00, subject to adjustment for any prorations to be
allocated to the Parties as set forth herein.
3.1.3 Reimbursement and Payment of Legal Fees. In connection
with Metrovest's prior loan negotiations with Credit Suisse
First Boston Mortgage Capital LLC, Metrovest paid an amount of
$100,000 in addition to $25,000.00 in legal fees. GVI shall
reimburse Metrovest in cash for this total amount of $125,000
upon the Closing.
3.1.4 Assignment of Contracts. GVI shall assume certain of
Metrovest's contractual rights and obligations pursuant to the
Assignment and Assumption of Service Contracts, Guaranties and
Warranties, and other Intangible Property in the form of
Exhibit B, to be executed by the Parties upon the Closing.
3.1.5 Payment of Accounts Payable and Assumption of Taxes. GVI
shall pay the existing accounts payable to vendors, equalling
the amount of $7,057,131.63, as detailed on Schedule 3.1.5,
and shall assume the payment obligation for the 1998 property
taxes for the Property.
3.1.6 Note to Jocie Salim. Two Million Eight Hundred Four
Thousand Five Hundred Eighty Three and 31/100 Dollars
($2,804,583.31) which shall be paid on the Closing by GVI to
Jocie L. Salim pursuant to a Convertible Note Agreement
between GVI and Ms. Salim.
3.2 Withholding if Metrovest a Foreign Person. GVI does not intend to
withhold any portion of the Consideration if Metrovest executes the
FIRPTA Certificate, a form of which is attached as Exhibit C.
4. GVI's Due Diligence. As more fully provided below, Metrovest agrees to assist
and cooperate with GVI in obtaining access to the Property and certain documents
relating to the Property for purposes of inspection and due diligence.
4.1 Physical Inspection of the Property. At any time(s) reasonably
requested by GVI following the Effective Date and prior to Closing, but
in any event upon 24 hours prior written notice, Metrovest shall afford
authorized representatives of GVI reasonable access to the Property for
purposes of GVI's due diligence investigations, including without
limitation the taking of soil borings by a reputable consultant. GVI
hereby agrees to indemnify and hold Metrovest harmless from any and all
losses, claims, expenses, and liabilities directly or indirectly
arising from GVI's or its authorized representatives' entry and
investigations prior to the Closing. GVI shall immediately restore the
Property to substantially the condition in which it was found. This
indemnity shall survive the termination of this Agreement or the
Closing, as applicable.
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4.2 Contacts with Property Managers and Agents. At any time(s)
reasonably requested by GVI following the Effective Date and prior to
Closing, GVI may contact and interview the contractors of Metrovest,
provided that such contacts or interviews shall occur only after
reasonable prior oral or written notice to Metrovest and Metrovest may
be present during any interview.
4.3 Delivery of Documents and Records. Metrovest shall deliver the Due
Diligence Materials described on Schedule 4.3 to GVI within three (3)
days after the Effective Date.
4.4 Rejection of Service Contracts. GVI shall be deemed to have
rejected all Contracts unless, on or before the Approval Date, GVI has
notified Metrovest in writing that GVI wishes to assume any such
Contracts and identifying which of such Contracts are to be assumed.
The foregoing notwithstanding, GVI will assume at Closing the Contracts
listed on Schedule 4.4.
4.5 GVI's Right to Terminate. At any time up to the Approval Date, GVI
has the unqualified right to terminate this Agreement, subject to GVI's
obligations to return Due Diligence Materials to Metrovest as provided
in Section 13.5.
5. Conditions to Closing.
5.1 GVI's Conditions Precedent. GVI's Conditions Precedent as set forth
below are precedent to GVI's obligation to acquire the Property. The
GVI's Conditions Precedent are intended solely for the benefit of GVI.
If any of the GVI's Conditions Precedent is not satisfied, GVI shall
have the right in its sole discretion either to waive the GVI's
Condition Precedent and proceed with the acquisition or terminate this
Agreement as described below, by written notice to Metrovest and the
Title Company, with the under standing that Metrovest shall be in
default, and GVI shall have the rights and remedies set forth in
Section 13.2.
5.1.1 Approval of Title. Prior to the Approval Date, GVI shall
advise Metrovest what exceptions to title, if any, will be
accepted by GVI (the "Permitted Exceptions"). Metrovest shall
have the shorter of five (5) business days or one half of the
time period between the Approval Date and the Closing Date
after receipt of GVI's objections to give to GVI: (A) written
notice that Metrovest will remove such objectionable
exceptions on or before the Closing Date; or (B) written
notice that Metrovest elects not to cause such exceptions to
be removed. Metrovest's failure to give notice to GVI within
the time period referenced shall be deemed to be Metrovest's
election not to cause such exceptions to be removed. If
Metrovest gives GVI notice or is otherwise deemed to have
elected to proceed under clause (B), GVI shall have until the
sooner of five (5) business days after receipt of Metrovest's
notice or deemed notice that it elects not to cure such
objections or the Closing Date to (i) waive the exceptions and
proceed with the transaction or (ii) terminate this Agreement.
If GVI fails to give Metrovest notice of its election on or
before the end of the time period set forth above and the
Closing does not otherwise occur, GVI shall be deemed to have
elected to terminate this Agreement. If Metrovest gives notice
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pursuant to clause (A) and fails to remove any such
objectionable exceptions from title prior to the Closing Date,
and GVI is unwilling to take title subject thereto, GVI may
terminate this Agreement.
5.1.2 Representations and Warranties. The representations and
warranties of Metrovest contained herein shall be true and
correct in all material respects as of the Closing Date as
though made at and as of the Closing Date, and Metrovest's
covenants under this Agreement shall be in all material
respects satisfied or waived by GVI as of the Closing Date (to
the extent such covenants are to be satisfied as of the
Closing Date), and GVI shall have received at the Closing a
Certificate from Metrovest in the form of Exhibit D, dated as
of the Closing Date and executed by Metrovest's Responsible
Individual, certifying as to the fulfillment of the conditions
set forth in this Subsection 5.1.
5.1.3 Conveyances by Metrovest. At the Closing, Metrovest
shall convey to GVI all of its right, title and interest to
the Property by executing and delivering all documents
required to be delivered by Metrovest pursuant to this
Agreement.
5.1.4 Title Policy. Title Company shall be committed to issue
the Title Policy (with the Required Endorsements, unless the
failure to obtain the Required Endorsements resulted from the
action or inaction of GVI) at Closing, showing title to the
Real Property vested in GVI, subject only to the Permitted
Exceptions.
5.1.5 No Financing Statements. GVI shall be satisfied that, as
of the Closing, there is no outstanding financing statement
showing Metrovest as debtor filed in accordance with the
Uniform Commercial Code of any applicable jurisdiction with
respect to the Property except for any financing statements
approved by GVI prior to the Approval Date or relating to the
Loan.
5.1.6 Property Condition. The physical condition of the Real
Property shall be substantially the same on the Closing Date
as on the Approval Date, reasonable wear and tear excepted.
5.1.7 Termination of Agreements. Prior to or contemporaneously
with the Closing, Metrovest shall give written notice of
termination of all Contracts (except those specifically
assumed by GVI in writing and those listed as being assumed by
GVI on Schedule 4.4) affecting and binding the Property and
GVI as of the Closing Date, and such termination shall be
without cost or expense to GVI.
5.1.8 Loan Payoff Demands. As for the Loan, not later than
three (3) business days prior to the Closing, the Lender shall
have submitted a written and binding payoff demand to the
Title Company, Metrovest and GVI, indicating with specificity
reasonably acceptable to these parties, the amounts of funds
necessary to completely pay off the Loan and obtain a
reconveyance/release of all security held therefor.
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5.2 Closing of Related Transactions. The simultaneous closing of all of
the Related Transactions set forth in Schedule 5.2 (and including the
transactions described in this Section 5.2) with the Closing of this
transaction is a condition precedent to both Metrovest's and GVI's
obligations under this Agreement. This condition precedent is for the
benefit of both Metrovest and GVI, and if it is not satisfied by a
Party, then that Party shall be deemed in default, and the other Party
may terminate this Agreement by written notice to the defaulting Party
and Title Company and the non-defaulting Party shall be entitled to the
rights and remedies set forth in Section 14. Notwithstanding the above,
both Parties, each in their sole discretion, may waive this condition
precedent and elect to proceed with the transaction.
5.2.1 Execution of the Note. Both Parties shall execute the
Note, a form of which is attached as Exhibit A, in duplicate,
and each Party shall receive an original version of the Note.
5.2.2 Execution of the Registration Rights Agreement. Both
Parties shall execute the Registration Rights Agreement, a
form of which is attached as Exhibit E, in duplicate, and each
Party shall receive an original version.
5.2.3 Execution of the Subscription Documents. Metrovest shall
fully complete, execute, and deliver the original version of
the Subscription Documents, forms of which are attached as
Exhibit F.
5.3 Deemed Approval of Conditions. In the event that any Party having
the right of cancellation hereunder based on failure of a condition
precedent set forth herein does not inform the other Party and Title
Company in writing of its disapproval of any condition precedent prior
to the Closing, such condition precedent shall be deemed to have been
satisfied, approved or waived, effective as of the Closing; provided
that a Party shall not be deemed to have waived any claim for breach of
any representation or warranty by the other Party unless such Party has
Actual Knowledge of such breach prior to Closing.
6. Closing.
6.1 Closing Date. The Closing shall be conducted through, and all items
to be delivered shall be delivered to, the Title Company, on or before
the Closing Date.
6.2 Deposit of Agreement and Escrow Instructions. The Parties shall
promptly deposit a fully executed copy of this Agreement with Title
Company and this Agreement shall serve as escrow instructions to Title
Company for consummation of the transactions contemplated hereby. The
Parties agree to execute such additional escrow instructions as may be
appropriate to enable Title Company to comply with the terms of this
Agreement; provided, however, that in the event of any conflict between
the provisions of this Agreement and any supplementary escrow
instructions, the terms of this Agreement shall control unless a
contrary intent is expressly indicated in such supplementary
instructions.
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6.3 Metrovest's Deliveries to Escrow. At or before the Closing,
Metrovest shall deliver to the Title Company the following, to the
extent they have not already been delivered:
6.3.1 the duly executed and acknowledged Deed for the Property
in the form attached as Exhibit G;
6.3.2 a duly executed Bill of Sale for the Property in the
form attached as Exhibit H;
6.3.3 a duly executed Assignment of Contracts for the Property
in the form attached as Exhibit B;
6.3.4 a duly executed FIRPTA Certificate in the form attached
as Exhibit C;
6.3.5 a duly executed Registration Rights Agreement in the
form attached as Exhibit E;
6.3.6 any other instruments, records or correspondence called
for hereunder which have not previously been delivered.
6.4 Metrovest's Deliveries to GVI.
6.4.1 Deliveries at Closing. At or before the Closing,
Metrovest shall deliver to GVI the following, to the extent
they have not already been delivered:
6.4.1.1 a Closing Certificate in the form attached
hereto as Exhibit D;
6.4.1.2 operating statements for that portion of the
current year ending at the end of the calendar month
preceding the month in which the Closing Date occurs,
certified by an authorized officer of Metrovest;
6.4.1.3 such original resolutions, authorizations,
operating agreement or limited liability company
documents or agreements relating to Metrovest
reasonably required by the Title Company;
6.4.1.4 a duly executed Note;
6.4.1.5 a duly executed Registration Rights
Agreement; and
6.4.1.6 duly executed Subscription Documents.
6.4.2 Deliveries After Closing. On the first business day
following the Closing, Metrovest shall deliver to GVI the
following, to the extent in Metrovest's possession or control,
and to the extent they have not already been delivered. If
originals of any of these items is not available, then legible
copies will be provided:
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6.4.2.1 originals of the Contracts not previously
delivered to GVI;
6.4.2.2 originals of any and all building permits and
certificates of occupancy for the Real Property that
are in the possession or control of Metrovest and/or
an affiliate of Metrovest;
6.4.2.3 originals of all other matters described in
Schedule 4.3; and
6.4.2.4 any other instruments, records or
correspondence called for under this Agreement which
have not previously been delivered.
6.5 GVI's Deliveries to Metrovest. At or before the Closing, GVI shall
deliver or cause to be delivered to escrow the following:
6.5.1 executed Assignment of Contracts;
6.5.2 a duly executed Note;
6.5.3 the total amount of $125,000 to reimburse Metrovest for
certain expenses described in Section 3.1.2; and
6.5.4 a duly executed Registration Rights Agreement.
6.6 Deposit of Other Instruments. Metrovest and GVI shall each deposit
such other instruments as are reasonably required by Title Company or
otherwise required to close the escrow and consummate the transactions
described herein in accordance with the terms hereof.
7. Closing Costs and Expenses.
7.1 Allocation of Closing Costs. Closing costs shall be allocated as
set forth below:
7.1.1 Escrow charges: 50% to Metrovest and 50% to GVI.
7.1.2 Recording fees: 50% to Metrovest and 50% to GVI.
7.1.3 Title insurance premium: 100% to Metrovest for the base
premium for the Title Policy and 100% to GVI for any extended
coverages/endorsements requested by GVI.
7.1.4 Survey fees: Metrovest shall provide GVI with copies of
existing surveys of the Property, and GVI shall pay 100% of
the costs to update any such surveys.
7.1.5 Legal fees: Each Party shall pay its own legal fees.
7.2 Post-Closing Expenses. With respect to any invoice received by GVI
after the Closing Date for Expenses that relate to the period prior to
when the Closing occurred, GVI will either, at GVI's option, (A) pay
the entire amount of the invoice and either bill Metrovest for
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Metrovest's share, or (B) compute GVI's pro rata share, write a check
for that amount in favor of the vendor, and then send the invoice and
check to Metrovest, in which case Metrovest agrees that it will pay for
its share and forward the invoice and the two payments to the vendor.
This obligation shall survive the Closing.
8. Metrovest's Representations and Warranties. Metrovest hereby represents and
warrants to GVI as follows:
8.1 Organization and Authorization.
8.1.1 Metrovest is a limited liability company, duly
organized, validly existing, and in good standing under the
laws of the State of Texas, and is qualified to do business in
the State of Texas.
8.1.2 Metrovest has full power and authority to execute and
deliver this Agreement and to perform all of the terms and
conditions hereof to be performed by Metrovest and to
consummate the transactions contemplated hereby. This
Agreement and all documents executed by Metrovest which are to
be delivered to GVI at Closing have been duly executed and
delivered by Metrovest and are or at the time of Closing will
be the legal, valid and binding obligations of Metrovest and
are enforceable against Metrovest in accordance with their
terms, except as the enforcement thereof may be limited by
applicable Creditors' Rights Laws. Metrovest is not presently
subject to any bankruptcy, insolvency, reorganization,
moratorium, or similar proceeding.
8.1.3 The individuals executing this Agreement and the
instruments referenced herein on behalf of Metrovest and its
constituent entities, if any, have the legal power, right and
actual authority to bind Metrovest to the terms and conditions
hereof and thereof.
8.1.4 Neither the execution and delivery of this Agreement,
the consummation of the transactions contemplated by this
Agreement, nor the compliance with the terms and conditions
hereof will (a) violate or conflict, in any material respect,
with any provision of Metrovest's organizational documents or
any statute, regulation or rule, or, any injunction, judgment,
order, decree, ruling, charge or other restrictions of any
government, governmental agency or court to which Metrovest is
subject, and which violation or conflict would have a material
adverse effect on the ownership and operation of the Property,
or (b) result in any material breach or the termination of any
agreement or other instrument or obligation to which Metrovest
is a party or by which any of the Property may be subject, or
cause a lien or other encumbrance to attach to any of the
Property. Metrovest is not a party to any contract or subject
to any other legal restriction that would prevent fulfillment
by Metrovest of all of the terms and conditions of this
Agreement or compliance with any of the obligations under it.
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8.1.5 All material consents required from any governmental
authority or third party in connection with the execution and
delivery of this Agreement by Metrovest or the consummation by
Metrovest of the transactions contemplated hereby have been
made or obtained or shall have been made or obtained by the
Closing Date. Complete and correct copies of all such consents
shall be delivered to GVI.
8.2 Title Matters
8.2.1 Loan and Loan Documents. Schedule 8.2.1 contains an
accurate description of the mortgage loan encumbering the
Property (the "Loan") and there are no other loans or liens
encumbering the Property. There is no current default or
breach under the terms and provisions of any of the Loan
Documents; the Loan Documents have not been, and will not be,
amended or modified except as consented to by GVI; and no
acceleration events have occurred relative to the Loan
Documents.
8.2.2 Other Rights to Property. Other than the Lender under
the Loan, Metrovest has not entered into any unrecorded
purchase contracts, options or other agreements of any kind,
written or oral, whereby any person or entity other than GVI
will have acquired or will have any basis to assert any right,
title or interest in, or right to possession, use, enjoyment
or proceeds of, all or any portion of the Property.
8.3 Property Description, Condition, Use, and Compliance
8.3.1 Description of Land. Schedule 8.3.1 contains a full and
accurate legal description of the land commonly known as "The
Lakes of Arlington." Metrovest owns good and marketable title
to this land, together with all appurtenances, including,
without limitation, easements and mineral rights, free and
clear of any encumbrances, other than the Loan.
8.3.2 No Material Defects. Except as set forth on Schedule
8.3.2, there are no material defects with respect to the
Property, including, without limitation, no material defects
in the structural and load-bearing components of the
Improvements. For purposes of this representation and
warranty, material defects shall be defined as those defects
that would cost in excess of $5,000 to repair or remedy.
8.3.3 Compliance with Laws. Except as set forth on Schedule
8.3.3, the use and operation of the Property is in compliance
in all material respects with all applicable Laws, and
Metrovest has received no notice that the use or operation of
the Property is in material violation of any applicable Laws.
8.3.4 No Regulatory Proceedings. Except as set forth on
Schedule 8.3.4, there are no condemnation, environmental,
zoning or other land-use regulation proceedings that have been
instituted, and Metrovest has not received any notice of any
such proceeding that is planned to be instituted, which would
detrimentally and materially affect the use, operation or
value of any of the Property, nor has Metrovest received
notice of any special assessment proceedings affecting any of
the Property. Metrovest shall notify GVI promptly of any such
proceedings of which Metrovest receives written notice.
8.3.5 Utilities. All water, sewer, gas, electric, telephone,
and drainage facilities and all other utilities required by
any Laws or by the normal use and operation of the Property
are installed to the property lines of the Property, and are
connected pursuant to valid permits, and are adequate to
service the Property as presently operated and to permit
compliance with all Laws. No fact or condition exists which
would result in the termination or impairment in the
furnishing of utility services to the Property.
8.3.6 Licenses, Permits, Access, etc. Metrovest has not
received any written notice that Metrovest has failed to
obtain all licenses, permits, variances, approvals,
authorizations, easements and rights of way, including proof
of dedication, required from all governmental authorities
having jurisdiction over the Property or from private parties
for the construction, development, present use, operation and
occupancy of the Property and to insure vehicular and
pedestrian ingress to and egress from the Property to and from
the public streets and roads.
8.3.7 Environmental Matters. Listed on Schedule 8.3.7 are all
environmental reports and investigations relating to the
Property which are in the possession and control of Metrovest
(the "Environmental Reports.") Metrovest has delivered all
Environmental Reports to GVI. Except as set forth in the
Environmental Reports: (i) the Property is not, and Metrovest
has not received any written notice that any real estate in
the vicinity of the Property is, in violation of any
Environmental Laws; (ii) neither Metrovest, nor to Metrovest's
Actual Knowledge, any third party, has installed, used or
removed any storage tank on or from the Property except in
full compliance with all Environmental Laws; (iii) the
Property does not consist of any building materials that
contain Hazardous Materials; and (iv) no claim, action, suit
or proceeding relating to Hazardous Materials is pending or
threatened against Metrovest, before any court or other
governmental authority or arbitration tribunal, and there is
no outstanding judgment, order, writ, injunction, decree or
award against Metrovest or otherwise having a material adverse
effect on the Property with respect to the same.
8.4 Other Matters
8.4.1 Personal Property. Schedule 8.4.1 lists all of the
Personal Property. Except as shown on Schedule 8.4.1,
Metrovest owns good and marketable title to the Personal
Property, free and clear of any liens or encumbrances except
for the Loan.
8.4.2 No Litigation. Except as set forth on Schedule 8.4.2,
there is no litigation pending or threatened against Metrovest
that arises out of the ownership of the Property or that might
materially and detrimentally affect the value or the use or
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operation of any of the Property for its intended purpose or
the ability of Metrovest to perform its obligations under this
Agreement. Metrovest shall notify GVI promptly of any
litigation of which Metrovest becomes aware.
8.4.3 No Contracts for Improvements. Except as set forth on
Schedule 8.4.3, at the time of Closing there will be no
outstanding written or oral contracts made by Metrovest for
any improvements to the Property which have not been fully
paid for. Metrovest shall cause to be discharged all mechanics
and materialmen's liens arising from any labor or materials
furnished to the Property prior to the time of Closing.
8.4.4 Other Interests. Schedule 8.3.4 contains a complete list
of all assets, rights, claims, interests or other things of
value which are to be conveyed by Metrovest to GVI (other than
the Real Property, the Contracts, the General Intangibles and
the Personal Property). Metrovest owns good and marketable
title to the Other Interests, free and clear of any
encumbrances other than the Loan.
8.4.5 Contracts. With the exception of any Contract rejected
by GVI as provided herein, each of the Contracts (i) is legal,
valid, binding, and, enforceable in accordance with its terms
and in full force and effect, except as may be limited by
applicable Creditors' Rights Laws, and has not been amended,
modified or supplemented except as disclosed to GVI, and (ii)
Metrovest is not, and, to Metrovest's Actual Knowledge, no
other party to the Contract is, in breach or default under any
obligation thereunder or any provisions thereof which would
have material adverse affect upon the Property, and no event
has occurred which, with notice or lapse of time, would
constitute a breach or default, or permit any termination
under the Contract which would have a material adverse effect
upon the Property.
8.4.6 General Intangibles. Metrovest's right and use of the
General Intangibles does not violate and third party's rights.
Upon Metrovest's conveyance of the General Intangibles to GVI,
GVI will have the same interest in and right to use the
General Intangibles as Metrovest had prior to the conveyance.
8.4.7 Schedules. The Schedules attached hereto, as provided by
or on behalf of Metrovest, completely and correctly present in
all material respects the information required by this
Agreement to be set forth therein. Metrovest has delivered to
GVI true and correct copies of all of the Due Diligence
Materials pertaining to the Property which are in the
possession or control of Metrovest. No representation or
warranty by Metrovest and no information disclosed in the
Schedules supplied by or on behalf of Metrovest contains any
untrue statement of a material fact or omits to state a fact
necessary to make the statements contained herein or therein
not materially misleading.
8.4.8 Metrovest Not a Foreign Person. Metrovest is not a
"foreign person" within the meaning of Section 1445(f)(3) of
the Internal Revenue Code.
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8.5 Miscellaneous
8.5.1 Notice of Change. Metrovest shall inform GVI in writing
of any significant adverse change in the representations and
warranties of Metrovest promptly after Metrovest obtains
Actual Knowledge.
8.5.2 Responsible Individuals. Metrovest has provided a copy
of the representations and warranties set forth in this
Section 8 to its Responsible Individual, and the Responsible
Individual has reviewed such copy of the representations and
warranties and concurred in the same.
8.5.3 Timeliness of Representations and Warranties. All
representations and warranties set forth herein shall be
deemed to be given as of the Effective Date and the Closing
Date unless Metrovest otherwise notifies GVI in writing prior
to the Closing.
8.5.4 Materiality Limitation. Except as provided under Section
13, GVI shall not be entitled to any right or remedy for any
inaccuracy in or breach of any representation, warranty or
covenant under this Agreement or any conveyance document
unless the amount of damages proximately caused thereby
exceeds the amount of Material Damage.
8.5.5 Continuation and Survival of Representations and
Warranties, Etc. All representations and warranties by the
respective Parties contained herein or made in writing
pursuant to this Agreement are intended to, and shall, remain
true and correct as of the time of Closing, and, together with
all conditions, covenants and indemnities made by the
respective Parties contained herein or made in writing
pursuant to this Agreement (except as otherwise expressly
limited or expanded by the terms of this Agreement), shall
survive the execution and delivery of this Agreement and shall
survive the Closing for a period of one (1) year after the
Closing, or, to the extent the context requires, beyond any
termination of this Agreement for a period of one (1) year.
9. GVI's Representations and Warranties. GVI hereby represents and warrants to
Metrovest as follows:
9.1 GVI is a duly organized and validly existing corporation in good
standing under the laws of the State of Utah. This Agreement is duly
authorized, executed and delivered by GVI, and is and at the Closing
will be legal, valid and binding obligations of GVI, and does not and
at the time of Closing will not violate any provisions of any agreement
or judicial order to which GVI is subject. All documents executed by
GVI which are to be delivered to Metrovest at the Closing at the time
of Closing will be duly authorized, executed and delivered by GVI, and
at the Closing will be legal, valid and binding obligations of GVI, and
at the time of Closing will not violate any provisions of any agreement
or judicial order to which GVI is subject.
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9.2 There is no litigation pending or, to GVI's knowledge, threatened,
against GVI or any basis therefor that might materially and
detrimentally affect the ability of GVI to perform its obligations
under this Agreement. GVI shall notify Metrovest promptly of any such
litigation of which GVI becomes aware.
9.3 All representations and warranties set forth herein shall be true
as of the Effective Date and the Closing Date.
10. Risk of Loss.
10.1 Notice of Loss. If, prior to the Closing Date, any portion of the
Property suffers a Minor or Major Loss, Metrovest shall immediately
notify GVI of that fact, which notice shall include sufficient detail
to apprise GVI of the current status of the Property following such
loss.
10.2 Minor Loss. GVI's obligations hereunder shall not be affected by
the occurrence of a Minor Loss, provided that insurance or condemnation
proceeds available to Metrovest are sufficient to cover the cost of
restoration; the insurance carrier has admitted liability for the
payment of such costs; and the Loan is not accelerated or defaulted by
reason of such casualty or condemnation. If the proceeds or awards have
not been collected and the necessary repairs, if applicable, carried
out as of the Closing, then, at the Closing, Metrovest shall assign its
right, title and interest to such proceeds or awards to GVI.
10.3 Major Loss. In the event of a Major Loss, Metrovest shall
immediately notify GVI. GVI may, at its option to be exercised by
written notice to Metrovest within twenty (20) days of the notification
of the occurrence, elect to either (i) terminate this Agreement as to
the damaged or condemned Property (in which event the Note shall be
amended so that the amount of the Note is reduced by the fair market
value of the damaged or condemned Property prior to the damage or
condemnation, and the number of Shares to which the Note may be
converted is reduced proportionately), or (ii) consummate the
contribution of the Property provided that (a) GVI at Closing is
assigned Metrovest's right, title, and interest in any insurance
awards, condemnation awards, and any other amounts to be collected by
Metrovest as a result of such Major Loss and (b) the Note is amended so
that the Note is reduced by the remaining amount not covered by the
proceeds assigned by Metrovest to GVI, and the number of Shares to
which the Note may be converted is reduced proportionately. If GVI
fails to give Metrovest notice within such 20-day period, then the
Parties will be deemed to have elected to terminate this Agreement as
to the damaged or condemned Property and neither Party will be liable
for any penalties or damages for non-consummation of the transaction.
11. Metrovest's Continued Operation of the Property
11.1 General. Except as otherwise contemplated or permitted by this
Agreement or approved by GVI in writing, from the Effective Date to the
Closing Date, Metrovest will operate, maintain and repair the Property
in a prudent manner, in the ordinary course of business, on an
arm's-length basis and consistent with its past practices, and pay all
costs and expenses of the Property, including, without limitation, debt
service, real estate taxes and assessments, maintain insurance and pay
and perform obligations under the Loan Documents. Metrovest shall not
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dispose of or encumber any of the Property, except for dispositions of
personal property in the ordinary course of business. Between the
Effective Date and the Closing, Metrovest shall continue to undertake
capital improvements with respect to the Property in the ordinary
course of business.
11.2 Actions Requiring GVI's Consent. Notwithstanding the above terms
of this Section, Metrovest shall not, without the prior written
approval of GVI, take any of the following actions:
11.2.1 Contracts. Except as otherwise required under this
Agreement, enter into, execute or terminate any operating
agreement, reciprocal easement agreement, management agreement
or any contract, agreement or other commitment of any sort
(including any contract for capital items or expenditures),
with respect to the Property requiring payments to or by
Metrovest that will not be terminated as of the Closing Date;
or
11.2.2 Loan Documents. Waive or modify any material term under
any Loan Document.
11.3 Pre and Post Closing Liabilities. As between Metrovest and GVI,
Metrovest shall be solely responsible for, and GVI does not assume, any
claims, demands, liabilities, cost, expenses, penalties, damages and/or
losses arising out of any personal injury or property damage occurring
in, on or under the Property during Metrovest's ownership, from any
cause whatsoever other than as a consequence of the acts or omissions
of GVI. From and after the Closing Date, GVI shall be solely
responsible for any claims, demands, liabilities, cost, expenses,
penalties, damages and/or losses arising out of any personal injury or
property damage occurring in, on or under the Property during GVI's
ownership thereof, from any cause whatsoever other than as a
consequence of the acts or omissions of Metrovest.
12. Cooperation
12.1 Before Closing. Metrovest and GVI shall cooperate and do all acts
as may be reasonably required or requested by the other with regard to
the fulfillment of any condition precedent or the consummation of the
transactions contemplated hereby including execution of any documents,
applications or permits. Subject to the confidentiality provisions
contained herein, Metrovest hereby irrevocably authorizes GVI and its
agents to make all inquiries of any third party, including any
governmental authority, as GVI may reasonably require to complete its
due diligence.
12.2 After Closing. During the first year after the Closing, Metrovest
will provide to GVI on a timely and complete basis such historical
financial information with respect to the acquisition, ownership and
operation of the Property as GVI may reasonably request in connection
with any reports which GVI is required to file with the Securities and
Exchange Commission or any Stock Exchange.
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13. Non-Consummation of the Transaction. If the transaction is not consummated
on or before the Closing Date, the following provisions shall apply:
13.1 No Default. If the transaction is not consummated for a reason
other than a default by one of the Parties, then (i) Title Company and
each party shall return to the depositor all amounts and items which
were deposited pursuant to this Agreement, and (ii) Metrovest and GVI
shall each bear one-half of any escrow cancellation charges. Any return
of funds or other items by the Title Company or any party as provided
herein shall not relieve either party of any liability it may have for
its wrongful failure to close.
13.2 Default by Metrovest. If the transaction is not consummated as a
result of a default by Metrovest, then GVI may, as its sole and
exclusive remedy, either (i) terminate this Agreement by delivery of
notice of termination to Metrovest, whereupon (A) amounts deposited
into escrow shall be immediately returned to GVI, and (B) Metrovest
shall pay to GVI any title, escrow, legal and inspection fees incurred
by GVI and any other expenses actually incurred by GVI in connection
with the performance of its review under Section 4 (including, without
limitation, environmental and engineering consultants' fees and
expenses); or (ii) continue this Agreement pending GVI's action for
specific performance of Metrovest's obligations hereunder.
13.3 Default by GVI. If the Closing does not occur as a result of a
default by GVI, then GVI shall pay all escrow cancellation charges as
its full and complete liquidated damages and its sole and exclusive
remedy for GVI's default, and Title Company shall return to GVI all
amounts and other items deposited in escrow. THE PARTIES HAVE AGREED
THAT METROVEST'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY GVI,
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE,
THE PARTIES ACKNOWLEDGE THAT GVI'S PAYMENT OF THE ESCROW CANCELLATION
FEE SHALL BE METROVEST'S EXCLUSIVE REMEDY AGAINST GVI, AT LAW OR IN
EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF
GVI.
13.4 Cure Rights. Prior to the exercise of any right or remedy for a
default hereunder as contained in this Section 13, the Party alleging a
default hereunder shall give the defaulting Party written notice of
nature of such default (with such specificity as to enable the
defaulting Party to identify the cure of such default), and a five (5)
day period in which to cure such default. If such cure has not been
effected within such five (5) day period, then the Party alleging a
default hereunder may proceed pursuant to this Section 13, and no
further cure periods shall apply to such default.
13.5 Return of Due Diligence Materials. If the transactions
contemplated by this Agreement are not consummated, GVI shall return to
Metrovest all Due Diligence Materials in GVI's possession, and shall
maintain as confidential any non-public information about Metrovest or
the Property. Metrovest shall maintain as confidential any non-public
information about GVI.
19
<PAGE>
14. Miscellaneous
14.1 Disclosure of Transaction. Metrovest and GVI shall consult with
each other before any public announcement relating to the transfer of
the Property and must approve the timing, content and manner of
dissemination of any public announcement prior to the Closing, which
approval shall not be unreasonably withheld or delayed. The foregoing
notwithstanding, GVI shall have the right to publicly announce the
execution of this Agreement or the transaction contemplated hereby if
the dissemination of such information by GVI is required by applicable
law (including any rules or regulations of the SEC or any state
equivalent).
14.2 Possession. Except as set forth in this Agreement, possession of
the Property shall be delivered to GVI upon the Closing.
14.3 Notices. Any notice, consent or approval required or permitted to
be given under this Agreement shall be in writing and shall be deemed
to have been given upon (i) hand delivery or transmitted by facsimile
telecopy together with reasonable attempts to provide telephonic notice
of the sending of such facsimile telecopy, (ii) one (1) day after being
deposited with FedEx or another reliable overnight courier service or
(iii) three (3) days after being deposited in the United States mail,
registered or certified mail, postage prepaid, return receipt required,
and addressed as indicated below, or such other address as either party
may from time to time specify in writing to the other.
If to GVI: If to Metrovest:
Golf Ventures, Inc. Metrovest Partners, Ltd.
255 South Orange Avenue, Suite 1515 3510 Turtle Creek Blvd., No. 2D
Orlando, FL 32801 Dallas, Texas 75219
Telephone: (407) 245-7557 Telephone: (214) 526-0205
Facsimile: (407) 245-7585 Facsimile: (214) 526-0435
Attn: Warren J. Stanchina Attn: James R. Salim
with a copy to: with a copy to:
Haynes and Boone, L.L.P. Godwin & Carlton PC
901 Main Street, Suite 3100 901 Main Street
Dallas, TX 75202-3789 Dallas, Texas 75202
Telephone: (214) 651-5672 Telephone: (214) 939-4400
Facsimile: (214) 200-0607 Facsimile: (214) 760-7332
Attn: J. Kirk Standly Attn:
14.4 Brokers and Finders. Neither Party has had any contact or dealings
regarding the Property, or any communication in connection with the
subject matter of this transaction through any real estate broker or
other person who can claim a right to a commission or finder's fee in
connection with the transfer contemplated herein. In the event that any
broker or finder perfects a claim for a commission or finder's fee
based upon any such contact, dealings or communication, the Party
through whom the broker or finder makes its claim shall be responsible
for the commission or fee and shall indemnify and hold harmless the
other Party from and against all liabilities, losses, costs and
20
<PAGE>
expenses (including reasonable attorneys' fees) arising in connection
with such claim for a commission or finder's fee. The provisions of
this Subsection shall survive the Closing.
14.5 Joint and Several Liability. If Metrovest consists of two (2) or
more parties, each of such parties (and each of their respective
general partners if applicable) shall be liable for Metrovest's
obligations under this Agreement, and all documents executed in
connection herewith, and the liability of such parties shall be joint
and several.
14.6 Successors and Assigns. Subject to the following, this Agreement
shall be binding upon, and inure to the benefit of, the parties and
their respective successors, heirs, administrators and assigns. GVI
shall have the right, with notice to Metrovest (but without the
necessity of Metrovest's consent), to assign its right, title and
interest in and to this Agreement to one or more assignees affiliated
with, under common control, or controlled by GVI at any time before the
Closing Date; provided, however that such assignee(s) shall assume all
obligations of GVI, and such assignment and assumption shall not
release GVI from any obligation hereunder. Metrovest shall not have the
right to assign its interest in this Agreement.
14.7 Amendments. Except as otherwise provided herein, this Agreement
may be amended or modified only by a written instrument executed by
Metrovest and GVI.
14.8 Governing Law. The substantive laws of the State of Texas, without
reference to its conflict of laws provisions, will govern the validity,
construction, and enforcement of this Agreement.
14.9 Merger of Prior Agreements. This Agreement and its Exhibits and
Schedules constitute the entire agreement between the Parties and
supersede all prior agreements and understandings between the Parties
relating to the subject matter hereof.
14.10 Enforcement. If either Party fails to perform any of its
obligations under this Agreement or if a dispute arises between the
Parties concerning the meaning or interpretation of any provision of
this Agreement, then the defaulting Party or the Party not prevailing
in such dispute shall pay arbitration or court costs and attorneys'
fees and disbursements reasonably incurred by the prevailing Party. Any
such attorneys' fees and other expenses incurred by either Party in
enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount
included in such judgment, and such attorneys' fees obligation is
intended to be severable from the other provisions of this Agreement
and to survive and not be merged into any such judgment.
14.11 Time of the Essence. Time is of the essence of this Agreement.
14.12 Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be
held by a court of competent jurisdiction to be invalid, unenforceable
or void, the remainder of this Agreement and such provisions as applied
to other persons, places and circumstances shall remain in full force
and effect.
21
<PAGE>
14.13 Marketing. Metrovest agrees not to market or show the Property to
any other prospective purchasers during the term of this Agreement.
14.14 Confidentiality. Prior to the Closing Date, GVI and Metrovest
shall each maintain as confidential any and all material or information
about the other or, in the case of GVI and its agents, employees,
consultants and contractors, about the Property, and shall not disclose
such information to any third party, except, in the case of information
about the Property and Metrovest, to GVI's investment bankers, lender
or prospective lenders, insurance and reinsurance firms, attorneys,
environmental assessment and remediation service firms and consultants
and real estate advisors/consultants as may be reasonably required for
the consummation of the transaction contemplated hereunder and/or as
required by law.
14.15 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
14.16 Construction. Headings at the beginning of each section and
subsection are solely for the convenience of the Parties and are not a
part of the Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural and the masculine
shall include the feminine and vice versa. This Agreement shall not be
construed as if it had been prepared by one of the Parties, but rather
as if both Parties had prepared the same. In the event the date on
which Metrovest or GVI is required to take any action under the terms
of this Agreement is not a business day, the action shall be taken on
the next succeeding business day.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS.
22
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
"GVI" GOLF VENTURES, INC.,
a Utah corporation
By:
Warren J. Stanchina,
President
Date: September 3, 1998
"METROVEST" METROVEST PARTNERS, LTD.,
a Texas limited liability company
By:
James R. Salim,
Manager
Date: September 3, 1998
23
<PAGE>
Schedule 3.1.5
Accounts Payable
T. J. Lambrecht Construction, Inc. $6,743,502.63
(dirt work and infrastructure)
Schrickel, Rollins and Associates, Inc. 257,405.00
(engineering)
S. J. Stovall 27,000.00
(development consultant)
Terra-Mar, Inc. 15,783.00
(engineering consultant)
R. J. Brandes Company 13,441.00
(engineering consultant)
Total Accounts Payable $7,057,131.63
24
<PAGE>
Schedule 4.3
Due Diligence Materials to be Delivered
by Metrovest to GVI
(to the extent in the possession or control of Metrovest)
1. Contracts: Copies of all existing Contracts.
2. Inspection of Title, Survey, Use and Zoning Matters: Copies of
occupancy permits/certificates, preliminary title reports, all
underlying title documents, ALTA surveys, a current ADA compliance
survey prepared by a licensed architect, easements and other
encumbrances, CC&Rs and any governmental correspondence or other
documentation and notices related to use, zoning, building code or any
other regulatory matters. Metrovest shall be responsible for updating
preliminary title reports and existing ALTA surveys. In each instance
in which there is no existing ALTA survey suitable for updating,
Metrovest shall provide such ALTA survey.
3. Historical Income, Expenses and Capital Expenditure Data: Current
operating budgets and historical operating information related to the
Property during the period that it was owned by Metrovest, specifically
including: (i) records confirming operating expenses, capital
expenditures, commissions and fees, all of which shall be certified in
writing by a manager of Metrovest and as having been prepared in
accordance with Metrovest's customary accounting practices in the
ordinary course of business, are not materially misleading, and
accurately reflect the operations of the Property; together with (ii)
related correspondence, notices, existing audits, tax filings,
contracts, and associated books and records.
4. Collateral Material: Copies of property tax bills, utility bills,
service contracts, building inspection reports, seismic compliance
reports (if applicable), aerial photos, assessment district
information, and appraisals.
5. Hazardous Material and Environmental Matters: Copies of existing Phase
I and Phase II environmental inspection reports, and any asbestos
surveys.
6. Other: Construction plans and specifications, site plans, copies of
licenses, permits and approvals, soils reports, list of capital
improvements made in the past three years; list of planned improvements
and all associated drawings, modifications, add-ons, etc. for the
Property.
25
<PAGE>
Schedule 4.4
Contracts to be Assumed by GVI
Contract No. 97091 between Metrovest Partners, Ltd. and T. J. Lambrecht
Construction, Inc., dated November 11, 1997, regarding construction of water and
sanitary sewer systems.
26
<PAGE>
Schedule 5.2
Related Transactions
1. A $50,000,000 acquisition and development loan to be made by Credit
Suisse First Boston Mortgage Capital LLC to GVI.
2. Convertible Note Agreement between GVI and Jocie L. Salim, whereby Ms.
Salim will receive a note from GVI in the amount of $2,804,583.31 and
such note shall be convertible to 1,400,000 shares of common stock of
GVI.
27
<PAGE>
Schedule 8.2.1
Loan Description
A first lien loan encumbering the Property made by Beal Bank, S.S.B. to
Metrovest, with a balance of $18,690,791.13 plus accrued and unpaid interest of
$254,129.01, for a total payoff amount of $18,944,920.14.
28
<PAGE>
Schedule 8.3.1
Description of Land
29
<PAGE>
Schedule 8.3.2
Material Defects
None.
30
<PAGE>
Schedule 8.3.3
Compliance with Laws
None.
31
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Schedule 8.3.4
Proceedings
None.
32
<PAGE>
Schedule 8.3.7
Environmental Reports
None.
33
<PAGE>
Schedule 8.4.1
Personal Property
None.
34
<PAGE>
Schedule 8.4.2
Litigation
None.
35
<PAGE>
Schedule 8.4.3
Contracts for Improvements
Contract No. 97091 between Metrovest Partners, Ltd. and T. J. Lambrecht
Construction, Inc., dated November 11, 1997, regarding construction of water and
sanitary sewer systems.
36
<PAGE>
Schedule 8.4.4
Other Interests
None.
37
<PAGE>
EXHIBIT A
PROMISSORY NOTE
AND CONVERSION AGREEMENT
$15,000,000.00 Dallas, Texas September 3, 1998
FOR VALUE RECEIVED, GOLF VENTURES, INC., a Utah corporation ("Maker"),
promises to pay to the order of METROVEST PARTNERS, LTD., a Texas limited
liability company ("Payee"), at 3510 Turtle Creek Blvd., No. 2D, Dallas, Texas
75219 (or such other place of payment as the Payee may hereafter designate in
writing), in immediately available funds and in lawful money of the United
States of America, the principal sum of FIFTEEN MILLION AND NO/100 Dollars
($15,000,000.00), together with interest at the Stated Rate on the principal
balance of this Note until the Maturity Date (as defined below).
1. Definitions. As used in this Note, the following terms shall
have the respective meanings indicated:
(a) "Business Day" means a day when banks are open for
business in Dallas, Texas.
(b) "Contribution Agreement" means the Contribution Agreement
entered into between Maker and Payee on September 3, 1998, for the conveyance of
certain real estate commonly known as "The Lakes of Arlington", and other rights
and interests related thereto.
(c) "Debt" means the indebtedness evidenced by this Note.
(d) "Maker" means Golf Ventures, Inc., a Utah corporation, the
party issuing this Note.
(e) "Maturity Date" means the maturity date of this Note,
April 30, 1999.
(f) "Note" means this Promissory Note and Conversion
Agreement.
(g) "Payee" means Metrovest Partners, Ltd., a Texas limited
liability company.
(h) "Property" has the meaning set forth in the Contribution
Agreement.
(i) "SEC" means the Securities and Exchange Commission.
(j) "Shareholders Meeting" means the annual shareholders
meeting of Maker to be held on approximately October 15, 1998.
(k) "Shares" means ten million (10,000,000) shares of Common
Stock of Maker, par value $0.001.
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(l) "Stated Rate" means a rate equal to 5.42% per annum.
2. Computation of Interest. Interest shall be computed for the actual
number of days elapsed in a year consisting of 360 days.
3. Payment of Principal and Interest. Unless this Note is converted to
Shares pursuant to Section 4 below, the principal of this Note, together with
accrued interest on the Note, shall be finally due and payable on the Maturity
Date.
4. Conversion of Note to Shares. Once, and if, the Shares have been
authorized and approved at the Shareholders Meeting, the Note may be converted
to Shares in accordance with the following provisions:
4.1 Conversion prior to the Registration of the Shares. Prior
to authorization by the SEC and the subsequent registration of the Shares, Payee
may convert the Note to Shares at any time during the term of the Note, by
complying with the procedure set forth in Section 4.3. Upon conversion of the
Note, the total amount of principal and all accrued interest shall be converted.
No partial conversion of the Note shall be permitted.
4.2 Conversion after the Registration of the Shares. At any
time after Maker has obtained approval to register the Shares and the Shares are
registered, either Payee or Maker may cause the Note to be converted to Shares
(if Payee has not already converted the Note to Shares pursuant to Section 4.1)
prior to the Maturity Date. Maker and Payee shall carry out the conversion
pursuant to the procedure set forth in Section 4.3. Upon conversion of the Note,
the total amount of principal and all accrued interest shall be converted. No
partial conversion of the Note shall be permitted.
4.3 Conversion Procedure. Payee may convert the Note to Shares
pursuant to Section 4.1 and either Payee or Maker may convert the Note to Shares
pursuant to Section 4.2 by providing the other party with fifteen (15) days
prior written notice of its desire to convert. The notice shall contain the
proposed conversion date, which shall be a Business Day that is no later than
the Maturity Date. Notice shall be provided in accordance with Section 17. The
conversion shall be carried out in accordance with the applicable terms and
conditions resolved at the Shareholders Meeting, if any. The closing for the
conversion shall take place at Maker's principal office, or at such other place
as shall be mutually agreeable between Payee and Maker. At the closing for the
conversion, Maker shall deliver to Payee the share certificate or certificates
that represent the Shares, or request that the transfer agent enter Payee's name
on the transfer books and records of Maker, and Payee shall deliver to Maker
Payee's original version of this Note. Each of the parties shall pay their
respective expenses in connection with the conversion of the Note for Shares.
5. Registration of Shares. GVI shall use its best efforts to register
the Shares with the SEC no later than March 31, 1999.
6. No Waiver by the Payee. No delay or omission of Payee or Maker to
exercise any power, right or remedy accruing to Payee or Maker shall impair any
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<PAGE>
such power, right or remedy or shall be construed to be a waiver of the right to
exercise any such power, right or remedy.
7. Costs and Attorneys' Fees. Each party agrees to pay its own costs
and attorney's fees associated with the execution and delivery of this Note.
8. Section Headings. Section headings appearing in this Note are for
convenient reference only and shall not be used to interpret or limit the
meaning of any provision of this Note.
9. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Texas and the United States of America
from time to time in effect excluding the conflicts of laws provisions. Dallas
County, Texas shall be the proper place of venue for suit hereon. Maker and any
and all co-makers, endorsers, guarantors and sureties irrevocably agree that any
legal proceeding in respect of this Note shall be brought in the district courts
of Dallas County, Texas, or the United States District Court for the Northern
District of Texas.
10. Successors and Assigns. This Note and all the covenants and
agreements contained herein shall be binding upon, and shall inure to the
benefit of, the respective legal representatives, heirs, trustees,
beneficiaries, successors and assigns of Maker and Payee.
11. Severability. If any provision of this Note shall be determined by
any court of competent jurisdiction to be illegal, invalid or unenforceable,
then that provision only shall be of no force and effect and shall be deemed
excised herefrom, and the remainder of the provisions of this Note shall be
unaffected thereby; the provisions of this Note being severable in each and
every instance. Furthermore, in lieu of any illegal, unenforceable or invalid
provision, there shall be automatically added to this Note a provision as
similar to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
12. Sale and Assignment. Neither party may, without the other party's
prior written consent, sell or assign its interest in all or any part of this
Note.
13. Prepayment. Maker may at no time prepay the full amount or any part
of this Note without Payee's prior written consent.
14. Entire Agreement. This Note and the Contribution Agreement embody
the entire agreement and understanding between Payee and Maker with respect to
this Note and supersede all prior conflicting or inconsistent agreements,
consents and understandings relating to such subject matter. Maker acknowledges
and agrees that there are no oral agreements between Maker and Payee which have
not been incorporated in this Note and the Contribution Agreement.
15. Reservation of Claims. Maker reserves any rights to offset the
payment due under this Note against any damages suffered by Maker arising out of
Payee's conveyance of the Property to Maker pursuant to the Contribution
Agreement.
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16. Nonrecourse Provisions. If default occurs in the timely and proper
payment of all or any portion of the Debt, or in the timely performance of any
such covenants, any judicial proceedings brought by Payee against Maker shall be
limited to the enforcement of the conversion to Shares pursuant to Section 4,
and no attachment, execution or other writ or process shall be sought, issued or
levied upon any assets, properties or funds of Maker.
17. Notices. Any notice, consent or approval required or permitted to
be given under this Note shall be in writing and shall be deemed to have been
given upon (i) hand delivery or transmitted by facsimile telecopy together with
reasonable attempts to provide telephonic notice of the sending of such
facsimile telecopy, (ii) one (1) day after being deposited with FedEx or another
reliable overnight courier service or (iii) three (3) days after being deposited
in the United States mail, registered or certified mail, postage prepaid, return
receipt required, and addressed as indicated below, or such other address as
either party may from time to time specify in writing to the other.
If to Maker: If to Payee:
Golf Ventures, Inc. Metrovest Partners, Ltd.
255 South Orange Avenue, Suite 1515 3510 Turtle Creek Blvd., No. D
Orlando, FL 32801 Dallas, Texas 75219
Telephone: (407) 245-7557 Telephone: (214) 526-0205
Facsimile: (407) 245-7585 Facsimile: (214) 526-0435
Attn: Warren J. Stanchina Attn: James R. Salim
with a copy to: with a copy to:
Haynes and Boone, L.L.P. Godwin & Carlton PC
901 Main Street, Suite 3100 901 Main Street
Dallas, TX 75202-3789 Dallas, Texas 75202
Telephone: (214) 651-5672 Telephone: (214) 939-4400
Facsimile: (214) 200-0607 Facsimile: (214) 760-7332
Attn: J. Kirk Standly Attn:
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOLLOWS.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Note as of the date
first set forth above.
"MAKER":
GOLF VENTURES, INC.,
a Utah corporation
By:
Warren J. Stanchina,
President
Date: September 3, 1998
ACCEPTED AND AGREED TO BY:
"PAYEE":
METROVEST PARTNERS, LTD.,
a Texas limited liability company
By:
James R. Salim,
Manager
Date: September 3, 1998
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<PAGE>
EXHIBIT B
ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,
WARRANTIES AND GUARANTIES, AND OTHER GENERAL INTANGIBLES
THIS ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS, WARRANTIES AND
GUARANTIES, AND OTHER GENERAL INTANGIBLES (this "Assignment") is made and
entered into as of September 3, 1998, by METROVEST PARTNERS, LTD., a Texas
limited liability company ("Assignor"), to ARLINGTON LAKES, L.P., a Texas
limited partnership ("Assignee"), pursuant to that certain Contribution
Agreement (the "Agreement") between Golf Ventures, Inc., a Utah corporation, and
Assignee relating to the real property commonly known as "The Lakes of
Arlington" (the "Property"), dated as of September 3, 1998.
For good and valuable consideration, the receipt of which is hereby
acknowledged, effective as of the Closing Date (as defined in the Agreement),
Assignor hereby assigns and transfers unto Assignee all of its right, title,
claim and interest in and under the following items:
(a) all warranties and guaranties made by or received from any third
party with respect to any structure, fixture, machinery, equipment, or material
situated on, or other improvement situated on, or comprising a part of any other
improvement situated on, any part of the Property (collectively, "Warranties");
(b) all of the Service Contracts listed in Schedule 1 attached
hereto; and
(c) any General Intangibles (as defined in the Agreement).
Assignor and Assignee further hereby agree and covenant as follows:
1. Effective as of the Closing Date, except as otherwise set forth in
the Agreement, Assignee hereby assumes all of Assignor's obligations under the
Service Contracts arising after the date hereof (but not those obligations
arising before the date hereof, which shall remain the sole responsibility of
Assignor).
2. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
3. Assignor hereby covenants that Assignor will, at no cost to
Assignor, at any time and from time to time, upon written request therefor,
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execute and deliver to Assignee any new or confirmatory instruments which
Assignee may reasonably request in order to fully assign, transfer to and vest
in Assignee, and to protect Assignee's right, title and interest in and to, any
of the items assigned herein or to otherwise realize upon or enjoy such rights
in and to those items.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
5. This Assignment shall be governed by and construed and in accordance
with the laws of the State of Texas.
6. This Assignment may be executed in counterparts, each of which shall
be deemed an original, but all of which taken together shall constitute one and
the same instrument.
REMAINDER OF PAGE INTENTIONALLY LEFT BANK,
SIGNATURE PAGE FOLLOWS.
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<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
the day and year first above written.
ASSIGNOR:
METROVEST PARTNERS, LTD.,
a Texas limited liability company
By:
James R. Salim
ASSIGNEE:
ARLINGTON LAKES, L.P.,
a Texas limited partnership
By: GCA Texas Development, Inc.,
a Texas corporation,
its general partner
By:
Warren J. Stanchina,
President
B-3
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Schedule 1
to
Assignment and Assumption of Service Contracts,
Warranties and Guaranties, and Other General Intangibles
Service Contracts
Contract No. 97091 between Metrovest Partners, Ltd. and T. J. Lambrecht
Construction, Inc., dated November 11, 1997, regarding construction of water and
sanitary sewer systems.
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EXHIBIT C
FIRPTA AFFIDAVIT
Section 1445 of the Internal Revenue Code provides that a transferee of
a U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform LAKES OF ARLINGTON, L.P., a Texas limited partnership
("Transferee"), the transferee of certain real property owned by Transferor (as
hereinafter defined) that withholding of tax is not required upon the
disposition of such U.S. real property interest by METROVEST PARTNERS, LTD., a
Texas limited liability company ("Transferor"), the undersigned hereby certifies
the following on behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is 880285870; and
3. Transferor's office address is
James R. Salim
3510 Turtle Creek Blvd., No. 2 D
Dallas, Texas 75219
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by Transferee and that any false statement contained
herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this
certificate and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of Transferor.
Dated: September 3, 1998.
TRANSFEROR:
METROVEST PARTNERS, LTD.,
a Texas limited liability company
By:
James R. Salim,
Manager
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SWORN AND SUBSCRIBED, before me
this 2nd day of September, 1998
NOTARY PUBLIC IN AND FOR THE
STATE OF NEW YORK
[SEAL]
C-2
<PAGE>
EXHIBIT D
CLOSING CERTIFICATE
The Manager signing this certificate on behalf of METROVEST PARTNERS,
LTD., a Texas limited liability company ("Transferor"), hereby certifies that he
is the duly appointed and acting Manager of Transferor, and that he is duly
authorized to execute and deliver this Closing Certificate on behalf of
Transferor. Transferor hereby certifies that this certificate is executed for
the purpose of complying with Section 6.4.1.1 of that certain Contribution
Agreement (the "Agreement") between Transferor and GOLF VENTURES, INC., a Utah
corporation, relating to the real property commonly known as "The Lakes of
Arlington". Transferor hereby certifies that: (i) the representations and
warranties of Transferor contained in the Agreement are true and correct as of
the date hereof as though made at and as of the date hereof (or as of the date
originally made, to the extent such representations and warranties may refer to
matters as of a specific date that is referenced in the Agreement), and (ii)
Transferor's covenants under the Agreement have been satisfied as of the date
hereof, to the extent such covenants are to be satisfied as of the date hereof
in accordance with the provisions of the Agreement.
Dated: September 3, 1998
TRANSFEROR:
METROVEST PARTNERS, INC.,
a Texas limited liability company
By:
James R. Salim,
Manager
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EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
-------
Table of Contents
1. Definitions.........................................................E-1
2. Sale Restriction and Volume Limitation..............................E-2
3. Requested Registration..............................................E-2
4. "Piggyback" Registration Rights.....................................E-4
5. Suspension of Offering..............................................E-4
6. Additional Registration Rights......................................E-5
7. Expenses of Registration............................................E-5
8. Registration Procedures.............................................E-5
9. Indemnification.....................................................E-6
10. Information Furnished by Holders....................................E-9
11. Sale Without Registration...........................................E-9
12. Exchange Act Reporting by GVI......................................E-10
13. Lockup Agreement...................................................E-10
14. Transfer of Registration Rights....................................E-10
15. Right of First Refusal.............................................E-10
16. Miscellaneous......................................................E-11
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of September 3, 1998, by and between METROVEST PARTNERS, LTD. a Texas limited
liability company ("Metrovest"), and GOLF VENTURES, INC., a Utah corporation
("GVI").
Recitals
A. Metrovest and GVI are parties to that certain Contribution Agreement
relating to the real property commonly known as "The Lakes of Arlington" (the
"Contribution Agreement").
B. The Contribution Agreement provides for Metrovest to transfer all
right, title and interest in and to certain Property (as such term is defined in
the Contribution Agreement) to GVI in exchange for a promissory note, which is
convertible to 10,000,000 shares of common stock of GVI.
C. If the promissory note is converted to Shares, the parties desire to
provide for certain registration rights pertaining to these Shares, all as more
fully set forth below in this Agreement
Agreement
Now, therefore for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Definitions. Terms used in this Agreement shall have the meanings set
forth below:
(a) Exercise Notice. As defined in Section 15 of this Agreement
(b) GVI Share and GVI Shares. One or more, as the case may be, shares
of common stock of GVI.
(c) Holder. (i) Metrovest; or (ii) any person to whom the registration
rights provided for in this Agreement shall have been properly assigned
in accordance with Section 16(d) hereof.
(d) Note. The Promissory Note and Conversion Agreement in the amount of
Fifteen Million Dollars ($15,000,000) issued by GVI and agreed to by
Metrovest, which Metrovest may convert for 10,000,000 shares of common
stock of GVI.
(e) Offered Shares. As defined in Section 15 of this Agreement.
(f) Register, Registered and Registration. A registration effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
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(g) Registrable Securities. (i) any Shares owned by a Holder; (ii) any
other GVI Shares issued as a dividend or other distribution with
respect to, or in exchange for, such shares; provided, however, that
such shares or other securities shall not be treated as Registrable
Securities (A) if they have been sold by the Holder to or through a
broker or dealer or underwriter in a public distribution or a public
securities transaction pursuant to an effective registration statement
or pursuant to Rule 144 promulgated by the SEC (or any successor
provision) under the Securities Act ("Rule 144"); or (B) if in the
opinion of counsel to GVI (which shall be subject to the concurrence of
counsel to the Holder), the Holder, can sell all Registrable Securities
held by such Holder in the manner proposed by such Holder without
registration under the Securities Act pursuant to Rule 144; and
provided, further, that the term "Registrable Securities" shall not
include securities sold in a transaction in which the rights under this
Agreement shall not have been transferred as provided in Section 14
hereof.
(h) SEC. The Securities and Exchange SEC or any other federal agency at
the time administering the Securities Act.
(i) Securities Act. The Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(j) Shares. The 10,000,000 shares of common stock of GVI to which the
Note may be converted by Metrovest.
2. Sale Restriction and Volume Limitation.
(a) Sale Restriction. At all time on and after the date that Holder
converts the Note to Shares, and before GVI has obtained authorization
from the SEC to register the Shares and the Shares are registered, then
Holder, together with all persons whose holdings of Registrable
Securities must be aggregated with such Holder, for a period of two
years from the date of the conversion, shall not offer, sell, grant,
any option to purchase, or otherwise dispose of, the Shares without the
prior written consent of GVI.
(b) Volume Limitation. If the Shares are later registered by GVI, or
the Note is converted to Shares that already have been registered by
GVI, then Section 2(a) will not be applicable, and Holder together with
all persons whose holdings of Registrable Securities must be aggregated
with such Holder, for a period of five years from the date of the
conversion or registration, whichever is later, shall not offer, sell,
grant any option to purchase, or otherwise dispose of, whether pursuant
to a registration statement filed pursuant to Section 3 below or
otherwise, (i) more than 1,000,000 (adjusted for splits, etc.) of
Shares within any given calendar quarter after the date of the
registration of the Shares, or (ii) more than 100,000 Shares on any
particular trading day following the date of the registration of the
Shares.
3. Requested Registration. Each Holder of Registrable Securities shall have the
right to offer for sale pursuant to a shelf registration statement the Shares as
provided in this Section 3.
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(a) Notice by Holder. If a Holder desires to exercise its registration
rights granted under this Section 3 with respect to its Registrable
Securities, such Holder shall deliver to GVI a written notice informing
GVI of such exercise and specifying the number of Registrable
Securities to be offered by Holder. Such notice may be given at any
time after the date a notice of conversion may first be delivered by
Holder to GVI pursuant to the terms of the Note.
(b) Effectuation of Registration. Upon receipt of such notice of
exercise of registration rights hereunder, GVI, if it has not yet
caused such Holder's Registrable Securities to be included in any shelf
registration statement (which registration statement shall then be
deemed to have been requested under this Section 3 and GVI shall be
deemed to have satisfied its registration obligation for purposes of
this Agreement) and related prospectus GVI then has on file with the
SEC, GVI will use its best efforts to effect such shelf registration on
Form S-3 and all qualifications and evidences of compliance as may be
so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's Registrable
Securities as are specified in such request; provided, however, that
GVI shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 3:
(i) if Form S-3 (or any substantially equivalent registration
form under the Securities Act subsequently adopted by the SEC
that permits inclusion or incorporation by reference to other
documents filed by GVI with the SEC) is not available to GVI
for such offering by the Holders;
(ii) if GVI shall furnish to the Holders a certificate signed
by the President of GVI stating that, in the good faith
judgment of the Board of Directors of GVI, it would be
seriously detrimental to GVI and its shareholders for such
Form S-3 registration to be effected at such time, in which
event GVI shall have the right to defer the filing of the Form
S-3 registration for one or more periods determined by GVI to
be reasonably necessary to avoid such seriously detrimental
effect; provided, however, that in no event shall the number
of days included in such periods exceed, in the aggregate, 120
days in any twelve month period;
(iii) if GVI has already effected one registration under this
Agreement at the request of such Holder;
(iv) in any particular jurisdiction in which GVI would be
required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance;
(v) if the filing of such registration statement would require
the preparation of any special audit in advance of the time in
which GVI would otherwise be required by law to be completed,
in which case GVI may delay such registration until such audit
has been completed in the ordinary course of business; or
(vi) if the intended method of disposition of the GVI Shares
involves an underwritten offering.
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<PAGE>
4. "Piggyback" Registration Rights.
(a) Notice of Registration. If at any time or from time to time
commencing upon the date upon which the Note has been converted to GVI
Shares, GVI shall determine to register GVI Shares for the account of a
security holder or holders (other than the Holders), GVI will:
(i) promptly give to the Holders written notice thereof; and
(ii) include in such registration all the Registrable
Securities specified in a written request or requests made
within twenty (20) days after receipt by the Holders of such
written notice from GVI.
(b) Exclusion of Certain Registrations. No piggyback registration
rights shall be available with respect to (i) a registration relating
to a primary offering of GVI Shares by GVI for its own account, (ii) a
registration relating solely to employee stock option or purchase
plans, or (iii) a registration on Form S-4 or otherwise relating solely
to a Rule 145 transaction.
5. Suspension of Offering.
(a) GVI's Right to Suspend. Notwithstanding Sections 3 and 4 hereof,
GVI shall be entitled to postpone the filing of a registration
statement, and from time to time require Holder not to sell under a
registration statement or to suspend the effectiveness thereof, if the
negotiation or consummation of a transaction by GVI or its subsidiaries
is pending or an event has occurred, which negotiation, consummation or
event would require additional disclosure by GVI in the registration
statement of material information which GVI has a bona fide business
purpose for keeping confidential and the nondisclosure of which in the
registration statement might cause the registration statement to fail
to comply with applicable disclosure requirements; provided, however,
that GVI may not delay, suspend or withdraw the registration statement
for such reason more than once in any 12- month period or for more than
sixty (60) days at any one time.
(b) Discontinuance of Sales by Holder. Upon receipt of any notice from
GVI of the happening of any event during the period a registration
statement is effective which is of a type specified in Subsection (a)
above, or as a result of which such registration statement or related
prospectus contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made (in the case of the prospectus) not misleading, Holder
agrees that it will immediately discontinue offers and sales of the
Registrable Securities under such registration statement until Holder
receives either:
(i) copies of a supplemented or amended prospectus (which GVI
agrees to promptly prepare) that corrects the misstatement(s)
or omission(s) referred to above and receives notice that any
post-effective amendment has become effective; or
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<PAGE>
(ii) notice from GVI that the required disclosure has been
filed with the SEC as part of a Current Report on Form 8-K
(which GVI agrees to promptly prepare) that corrects the
misstatement(s) or omission(s) referred to above by same being
incorporated by reference into such registration statement and
related prospectus. If so directed by GVI, Holder will deliver
to GVI all copies of the prospectus covering the Registrable
Securities current at the time of receipt of such notice.
6. Additional Registration Rights. GVI reserves the right, at any time or from
time to time hereafter, to grant registration rights to other holders of GVI
Shares, or holders of securities convertible into or exchangeable for GVI
Shares, which registration shall be pari passu with the registration rights
granted hereunder, unless the agreement or instrument granting such rights
specifically states that such rights shall be junior and subordinate to the
rights granted hereunder.
7. Expenses of Registration. All expenses incurred in connection with any
registration, qualification or compliance pursuant hereto, including, without
limitation, all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for GVI, shall be borne by GVI, except that
GVI shall not be required to pay underwriters' discounts, SECs, or stock
transfer taxes relating to Registrable Securities or the fees and disbursements
of any counsel retained by Holders, or any other selling expenses, discounts or
SECs incurred in connection with the sale of Registrable Securities.
8. Registration Procedures. In the case of each registration, qualification or
evidence of compliance effected by GVI pursuant to this Agreement, GVI will keep
Holders participating therein advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense (except as otherwise provided in Section 7 above) GVI will:
(a) keep such registration, qualification or evidence of compliance
effective for a period of (i) 120 days with respect to a registration
statement filed pursuant to Section 4, or until Holder has completed
the distribution described in the registration statement relating
thereto, whichever first occurs; or (ii) one year with respect to a
registration statement filed pursuant to Section 3 above, or until the
Holder has completed the distribution described in the registration
statement relating thereto or, if earlier, when the shares subject to
said registration statement cease to be Registrable Securities;
provided, however, that:
(i) if GVI shall furnish to Holders a certificate signed by
the President of GVI stating that, in the good faith judgment
of the Board of Directors of GVI, it would be seriously
detrimental to GVI and its shareholders to keep such
registration, qualification or evidence of compliance
effective for the period in (i) or (ii) above, as the case may
be, and that it is therefore essential to discontinue the
effectiveness of such registration, qualification or evidence
of compliance, then GVI may so terminate or otherwise
discontinue the effectiveness of such registration,
qualification or evidence of compliance, but not more than one
time in any 12-month period, and for a period not to exceed
six (6) months; and
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<PAGE>
(ii) if GVI exercises its right under the foregoing proviso at
such time as the Holders shall not have completed the
distribution described in the registration statement relating
thereto, (x) such Holder or Holders requesting such
registration shall be granted one additional registration
under Section 3 hereof, and (y) GVI shall reimburse Holders
for all of their documented out-of-pocket expenses incurred in
connection with the terminated or discontinued registration
statement (which shall include, without limitation, attorneys'
fees and expenses, but which shall not include underwriters'
discounts, SECs or stock transfer taxes relating to
Registrable Securities actually sold prior to such termination
or discontinuance of effectiveness).
(b) furnish such number of prospectuses and other documents incident
thereto as Holders from time to time may reasonably request;
(c) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(d) notify the Holders at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, in which event GVI will promptly comply
with the provisions of Section 8(c) or exercise its rights to suspend
the registration under Section 8(a);
(e) use all reasonable efforts to cause all such Registrable Securities
covered by such registration statement to be listed on each securities
exchange or the Nasdaq National Market, as applicable, on which similar
securities issued by GVI are then listed, if the listing of such
Registrable Securities is then permitted under the rules and
regulations of such exchange or the Nasdaq National Market, as
applicable; and
(f) reserve from its authorized but unissued shares, the number of
Shares which may be issuable by GVI upon conversion of the Note. Upon
issuance of the Shares, they shall be duly authorized, validly issued,
fully paid and non-assessable.
9. Indemnification.
(a) Indemnification by GVI. GVI will indemnify each Holder, each of its
officers and directors, and each person controlling (within the meaning
of Section 15 of the Securities Act) Holder, with respect to which
registration, qualification or compliance has been effected pursuant to
this Agreement, against all claims, losses, damages, costs, expenses
and liabilities whatsoever (or actions in respect thereof) arising out
of or based on (A) any untrue statement, (or alleged untrue statement)
of a material fact contained in any registration statement, prospectus,
offering circular or other similar document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made
or (B) any violation by GVI of the Securities Act, the Securities
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Exchange Act of 1934, as amended (the "Exchange Act"), or any state
securities law or of any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law applicable
to GVI and relating to action or inaction required of GVI in connection
with any such registration, qualification or compliance, and will
reimburse Holder, each of its officers and directors and each person
controlling Holder, for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action; provided, however, that (X) GVI will
not be liable in any such case to the extent that any such claim, loss,
damage, liability, or action arises out of or is based on any untrue
statement (or alleged untrue statement) or omission (or alleged
omission) based upon written information furnished to GVI by an
instrument duly executed by Holder and stated to be specifically for
use therein or furnished by Holder to GVI in response to a request by
GVI stating specifically that such information will be used by GVI
therein, and (Y) in the event an underwritten public offering is not
involved, such indemnity agreement shall not inure to the benefit of
Holder, insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the
preliminary prospectus or prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration
statement becomes effective or in the amended prospectus filed with the
SEC pursuant to Rule 424(b) under the Securities Act or in any
subsequent amended prospectus filed with the SEC prior to the written
confirmation of the sale of the Registrable Securities at issue
(collectively, the "Final Prospectus"), if a copy of the Final
Prospectus was not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act.
(b) Indemnification by Holders. Holders will, if Registrable Securities
held by or issuable to such Holders are included in the securities to
which such registration, qualification or compliance is being effected,
indemnify GVI, each of its directors and officers, each underwriter, if
any, of GVI's securities covered by such registration statement, and
each person who controls GVI within the meaning of the Securities Act
against all claims, losses, damages, costs, expenses and liabilities
whatsoever (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering
circular or other similar document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and will
reimburse GVI, such directors, officers, persons or underwriters for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, costs,
expense, liability or action, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
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conformity with written information furnished to GVI by an instrument
duly executed by Holders and stated to be specifically for use therein
or furnished by any Holder to GVI in response to a request by GVI
stating specifically that such information will be used by GVI therein,
provided, however, that the foregoing indemnity agreement is subject to
the condition that in the event an underwritten public offering is
involved, such indemnity agreement shall not inure to the benefit of
GVI or any underwriter insofar as it relates to any such untrue
statements (or alleged untrue statements) or omission (or alleged
omission) made in the preliminary prospectus or prospectus but
eliminated or remedied in the Final Prospectus, if a copy of the Final
Prospectus was not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act. The liability of Holders under this
Section 9(b) shall be limited to the amount of net proceeds received by
them for the sale of Registrable Securities pursuant to such
registration, qualification or compliance.
(c) Indemnification Procedures. Each party entitled to indemnification
under this Section 9 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld). The failure of any Indemnified Party to give
notice as provided herein shall relieve the Indemnifying Party of its
obligations under this Agreement only to the extent that such failure
to give notice shall materially prejudice the Indemnifying Party in the
defense of any such claim or any such litigation. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except
with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that attributes any liability to
the Indemnified Party, unless the settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect to
such claim or litigation. If any such Indemnified Party shall have been
advised by counsel chosen by it that there may be one or more legal
defenses available to such Indemnified Party that are different from or
additional to those available to the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of
such action on behalf of such Indemnified Party and will reimburse such
Indemnified Party and any person controlling such Indemnified Party for
the reasonable fees and expenses of any counsel retained by the
Indemnified Party, it being understood that the Indemnifying Party
shall not, in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for each
Indemnified Party or controlling person (and all other Indemnified
Parties and controlling persons which may be represented without
conflict by one counsel), which firm shall be designated in writing by
the Indemnified Party (or Indemnified Parties, if more than one
Indemnified Party is to be represented by such counsel) to the
Indemnifying Party. The Indemnifying Party shall not be subject to any
liability for any settlement made without its consent, which shall not
be unreasonably withheld.
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(d) Contribution in Lieu of Indemnification. If the indemnification
provided for in this Section 9 from the Indemnifying Party is
unavailable to an Indemnified Party hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Parties in connection
with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Parties, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding. No party shall be
required to contribute to any settlement effected without its consent,
which consent shall not be unreasonably withheld.
(e) No Pro Rata Allocation. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
10. Information Furnished by Holders. Holders shall furnish to GVI such
information regarding Holders and the distribution proposed by Holders as shall
be required in connection with any registration, qualification or compliance
referred to in this Agreement.
11. Sale Without Registration. If at the time of any transfer of any Registrable
Securities, such Registrable Securities shall not be registered under the
Securities Act, GVI may require, as a condition of allowing such transfer, that
Holders or transferee furnish to GVI (i) such information as is necessary in
order to establish that such transfer may be made without registration under the
Securities Act; and (ii) (if the transfer is not made in compliance with Rule
144) at the expense of Holder or transferee, an opinion by legal counsel
designated by Holder or transferee and reasonably satisfactory in form and
substance to GVI, to the effect that such transfer may be made without
registration under the Securities Act, except that nothing contained in this
Section 11 shall relieve GVI from complying with any request for registration,
qualification or compliance made pursuant to the other provisions of this
Agreement. Notwithstanding the foregoing, Holder shall have the right to pledge
or margin the Registrable Securities, provided, however, that the transaction
giving rise to the pledge or margin is exempt from registration under the
Securities Act.
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12. Exchange Act Reporting by GVI. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of Registrable Securities to the public without registration or
pursuant to a registration statement on Form S-3, GVI agrees to:
(a) make and keep current public information available, as those terms
are understood and defined in Rule 144, under the Securities Act, at
all times after the date hereof:
(b) file with the SEC in a timely manner all reports and other
documents required of GVI under the Securities Act and the Exchange
Act;
(c) furnish to each Holder, so long as such Holder owns any Registrable
Securities, forthwith upon written request a written statement by GVI
that it has complied with the available information and reporting
requirements of Rule 144(c) and Rule 144A(d)(4) under the Securities
Act, a copy of the most recent annual or quarterly report of GVI, and
such other reports and documents so filed by GVI as Holder may
reasonably request in availing itself of any rule or regulation of the
SEC permitting Holder to sell any such securities without registration;
and
(d) if it is eligible to do so and upon the request of any Holder, take
such reasonable action as is necessary to enable said Holder to utilize
Form S-3 for the sale of the Registrable Securities.
13. Lockup Agreement. Each Holder holding more than 5,000 GVI Shares agrees, in
connection with any underwritten public offering of GVI's securities, not to
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Registrable Securities (other than those included in
the registration), without the prior written consent of GVI or underwriters, if
any, as the case may be, for a period beginning on the effective date of such
registration and ending 180 days thereafter if Holder is a selling stockholder
in such public offering or for 30 days after the effective date of such
registration (or, if earlier, the date on which all securities under such
registration have been sold) if Holder is not a selling stockholder; provided,
however, that the foregoing restrictions shall not apply to the extent Holder is
prohibited by applicable law from agreeing to withhold the Registrable
Securities from sale.
14. Transfer of Registration Rights. Except as otherwise provided herein, the
rights to cause GVI to register securities granted by GVI under Sections 3 and 4
may not be assigned or otherwise conveyed, without GVI's consent; provided,
however, if a Holder makes a transfer of Registrable Securities in compliance
with state and federal securities laws, the rights granted under Sections 3 and
4 shall be automatically deemed assigned to the transferee who shall be a
"Holder" for all purposes hereunder.
15. Right of First Refusal. Holder grants to GVI a right of first refusal to
repurchase any of the GVI Shares that Holder wishes to sell (the "Offered
Shares.") Prior to any proposed sale, Holder shall notify GVI in writing of its
desire to sell the Offered Shares and provide to GVI information regarding the
number of Offered Shares, the price per Share, and the proposed date of sale.
GVI shall have a period of two (2) business days from the receipt of Holder's
notice to notify Holder of GVI's desire to exercise its right of first refusal
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<PAGE>
and repurchase all or any portion of the Offered Shares (the "Exercise Notice")
at the same price as that set forth in Holder's notice. GVI shall have a period
of two (2) business days from the date of the Exercise Notice to pay to Holder
the total purchase price of the Offered Shares to be repurchased by GVI. The
Offered Shares repurchased by GVI shall be exchanged for the purchase price at a
closing mutually agreed to by the parties. Holder may then sell as originally
intended any remaining Offered Shares not repurchased by GVI.
16. Miscellaneous.
(a) Amendment. Subject to applicable law, this Agreement may be amended
or supplemented only by written agreement of the parties.
(b) Waiver of Compliance. Any failure of any party to comply with any
provision of this Agreement may be expressly waived in writing by
another party to whom performance is owed, but such waiver or failure
to insist upon strict compliance with such provision shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other
failure. No failure to exercise and no delay in exercising any right,
remedy, or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, or power hereunder
preclude any other or further exercise thereof or the exercise of any
other right, remedy, or power provided herein or by law or in equity.
The waiver by any party of the time for performance of any act or
condition hereunder does not constitute a waiver of the act or
condition itself.
(c) Attorney's Fees. If any legal action, arbitration or other
proceeding is brought to interpret or enforce the terms of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and any other costs incurred in that proceeding, in
addition to any other relief to which it is entitled.
(d) Assignment; Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement may be assigned by any
Holder of Registrable Securities, and shall be deemed to be assigned
(subject to Section 14 in the case of the registration rights set forth
in Section 3 and 4 hereof) in connection with any sale or transfer of
Registrable Securities. Any assignment, transfer or other disposition
of the Registrable Securities not in compliance with the restrictions
of this Agreement shall be null and void and of no force and effect.
Except for those enumerated above, this Agreement does not create, and
shall not be construed as creating, any rights or claims enforceable by
any person or entity not a party to this Agreement.
(e) Governing Law. The validity, interpretation, enforceability, and
performance of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to
the conflicts of laws provisions.
(f) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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<PAGE>
(g) Headings. The headings of the Sections of this Agreement are for
reference purposes only and shall not constitute a part hereof or
affect the meaning or interpretation of this Agreement.
(h) Entire Agreement. The parties intend that the terms of this
Agreement shall be the final expression of their agreement with respect
to the express subject matter set forth herein and may not be
contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement shall constitute the
complete and exclusive statement of its terms and that no extrinsic
evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding involving this Agreement.
(i) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be
held by a court of competent jurisdiction to be invalid, unenforceable,
or void, the remainder of this Agreement and such provisions as applied
to other persons, places, and circumstances shall remain in full force
and effect.
(j) Notices. Any notice, demand or request which may be permitted,
required or desired to be given in connection herewith shall be given
in writing and directed to the parties as follows:
If to GVI: If to Metrovest:
Golf Ventures, Inc. Metrovest Partners, Ltd.
255 South Orange Avenue, Suite 1515 3510 Turtle Creek Blvd., No. 2D
Orlando, FL 32801 Dallas, Texas 75219
Telephone: (407) 245-7557 Telephone: (214) 526-0205
Facsimile: (407) 245-7585 Facsimile: (214) 526-0435
Attn: Warren J. Stanchina Attn: James R. Salim
with a copy to: with a copy to:
Haynes and Boone, L.L.P. Godwin & Carlton PC
901 Main Street, Suite 3100 901 Main Street
Dallas, TX 75202-3789 Dallas, Texas 75202
Telephone: (214) 651-5672 Telephone: (214) 939-4400
Facsimile: (214) 200-0607 Facsimile: (214) 760-7332
Attn: J. Kirk Standly Attn:
Notices shall be either (i) personally delivered (including
delivery by FedEx or other courier service) to the offices set forth
above, in which case they shall be deemed delivered on the date of
delivery to said offices; (ii) sent by telecopy, in which case they
shall be deemed delivered on the date sent; provided, however, that any
notices sent by telecopy shall also be sent by overnight courier on the
same day; or (iii) sent by certified mail, return receipt requested, in
which case they shall be deemed delivered on the date shown on the
receipt unless delivery is refused or delayed by the addressee, in
which event they shall be deemed delivered on the date of deposit in
the U.S. Mail.
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<PAGE>
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOLLOWS.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
"GVI" GOLF VENTURES, INC.,
a Utah corporation
By:
Warren J. Stanchina,
President
"METROVEST" METROVEST PARTNERS, LTD.,
a Texas limited liability company
By:
James R. Salim,
Manager
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<PAGE>
EXHIBIT F
SUBSCRIPTION DOCUMENTS
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<PAGE>
Name of Subscriber: Metrovest Partners, Ltd.
Golf Ventures, Inc.,
a Utah corporation
SUBSCRIPTION DOCUMENTS
Golf Ventures, Inc.
255 South Orange Avenue, Suite 1515
Orlando, FL 32801
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<PAGE>
Golf Ventures, Inc.,
a Utah corporation
Instructions for Completion of Subscription Documents
To: Metrovest Partners, Ltd.
In connection with your subscription for shares in Golf Ventures, Inc.,
a Utah corporation ("GVI"), please complete, sign and return the following
enclosed documents:
SUBSCRIPTION AGREEMENT. Sign "Counterpart Signature Page".
INVESTOR INFORMATION SHEET (Exhibit A). No signature required.
ACCOUNT INFORMATION SHEET (Exhibit B). Complete, if applicable.
SPOUSAL CONSENT (Exhibit C). If you are married, your spouse must complete and
sign.
ACCREDITED INVESTOR QUESTIONNAIRE (Exhibit D). Complete.
SUBSCRIBER REPRESENTATIVE CERTIFICATE (Exhibit E). If you have a Subscriber
Representative, they must complete and sign.
COMPLETED ORIGINALS OF THE FULLY EXECUTED SUBSCRIPTION AGREEMENT AND
ALL OF THE EXHIBITS LISTED ABOVE SHOULD BE DELIVERED TO THE FOLLOWING
ADDRESS:
Golf Ventures, Inc.
255 South Orange Avenue, Suite 1515
Orlando, FL 32801
Attn: Warren J. Stanchina, President
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<PAGE>
NOTE TO CORPORATE, PARTNERSHIP AND TRUST SUBSCRIBERS:
(a) Corporations. Corporations will be required to provide a copy and
the filing date of the articles of incorporation and a corporate resolution
authorizing the investment in GVI and evidence of the authority of the person(s)
signing the subscription documentation to do so.
(b) Partnerships. Partnerships will be required to provide a copy of
the agreement of partnership and any certificate of partnership.
(c) Trusts. Trusts will required to provide a copy of the trust
agreement showing the date of formation and evidence of the authority of the
person(s) signing the subscription documentation to do so.
NO SUBSCRIPTION WILL BE BINDING ON GVI UNTIL ACCEPTED IN WRITING BY
GVI. GVI HAS RESERVED THE RIGHT TO REJECT ANY AND ALL SUBSCRIPTIONS IN
ITS SOLE DISCRETION, WITH OR WITHOUT CAUSE, AT ANY TIME PRIOR TO THE
CLOSING.
THE SECURITIES WHICH ARE THE SUBJECT OF THE SUBSCRIPTION AGREEMENT HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS
AND ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM SUCH REGISTRATION
OR QUALIFICATION. ALL SECURITIES ISSUED WILL BE RESTRICTED SECURITIES
AND WILL NOT BE FREELY TRANSFERABLE. BOTH BECAUSE THE SECURITIES ARE
UNREGISTERED AND BECAUSE OF CONTRACTUAL RESTRICTIONS, ANY SECURITIES
RECEIVED WILL BE SUBJECT TO RESTRICTIONS ON TRANSFER, WHETHER BY
ISSUANCE, GIFT, HYPOTHECATION OR OTHERWISE.
NO OFFER OR ISSUANCE OF SECURITIES IS MADE IN ANY JURISDICTION WHERE
THE OFFER OR ISSUANCE WOULD BE UNLAWFUL.
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<PAGE>
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made in connection
with the issuance by GOLF VENTURES, INC., a Utah corporation ("GVI"), of its
common stock (the "Shares") to the person or entity who has signed this
Agreement in the space provided below as "Subscriber."
In addition to the terms defined in the first paragraph of this
Agreement, the Agreement also uses the terms "Subscriber's Representative" which
shall mean any representative or personal advisor of Subscriber who has assisted
Subscriber in evaluating the merits and risks of an investment in the Shares.
1. Subscription
(a) Subscription. Subscriber hereby subscribes for the number of Shares
set forth herein. In respect of this subscription, Subscriber delivers
to GVI, together with this Agreement: (i) two original signature pages
of this Agreement signed by Subscriber, (ii) two original spousal
consents in the form attached as Exhibit C signed by Subscriber's
spouse if Subscriber is married, and (iii) a fully completed Investor
Information Sheet, Account Information Sheet if applicable, Accredited
Investor Questionnaire, and Subscriber Representative's Certificate if
applicable, attached as Exhibits A, B, D, and E respectively.
(b) Acceptance or Rejection of Subscription. Subscriber understands and
agrees that GVI may accept this subscription at its discretion and may
reject this subscription, in whole but not in part, if (1) Subscriber
fails to make the deliveries to GVI set forth in Section 1(a) above on
or before September 3, 1998, or (2) GVI, in its sole discretion,
determines that the offer or issuance of Shares to Subscriber would not
qualify for the federal securities law exemption described in Section
2(c)(i) below. If GVI rejects this subscription for either of these
reasons, Subscriber understands and agrees that GVI shall have no
further obligation under this Agreement.
2. Investor Representations and Warranties. Subscriber hereby
acknowledges, represents and warrants to, and agrees with, GVI as follows, both
as of now and as of the Closing Date:
(a) Authorization. This Agreement is a valid and legally binding
obligation of Subscriber, enforceable in accordance with its terms
except as affected by (i) bankruptcy law, and (ii) equitable
principles. Subscriber represents that Subscriber has full power and
authority to enter into this Agreement.
(b) No Advertisement or Solicitation. Subscriber acknowledges that the
offer and issuance of the Shares to Subscriber has not been
accomplished by any form of general solicitation or general
advertising, including, but not limited to, (i) any advertisement,
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<PAGE>
article, notice or other communication published in any newspaper,
magazine or similar media, or broadcast over television or radio, and
(ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(c) Restrictions on Transfer.
(i) Subscriber understands and acknowledges that the Shares
have not been registered under the federal Securities Act of
1933, as amended (the "Securities Act"), by reason of a
specific exemption from the registration provisions thereof.
(ii) Subscriber understands and acknowledges that the Shares
must be held indefinitely unless they are subsequently
registered under the Securities Act or are exempt from such
registration. Subscriber understands and acknowledges that
Subscriber may bear the economic risks of the investment in
Shares for an indefinite period of time.
(iii) Subscriber understands and acknowledges that any
issuance, transfer or other disposition of the Shares by
Subscriber is further restricted by the provisions of this
Agreement and a Registration Rights Agreement (herein so
called) between Subscriber and GVI, dated the same date as the
date of this Agreement.
(iv) Subscriber is aware of the provisions of Rule 144 under
the Securities Act, which permits limited public reissuances
of securities acquired in a nonpublic offering (like this
one), subject to certain conditions. Subscriber understands
that these conditions include, among other things: the
existence of a public market for the securities; the
availability of certain current public information about the
issuer; the reissuance occurring at least two years after the
party has purchased and paid for the securities to be sold;
the issuance being made through a broker in an unsolicited
"broker's transaction"; and the amount of securities being
sold during any three-month period not exceeding certain
limitations. In this connection, Subscriber understands that
it is unlikely Subscriber would ever be able to publicly sell
the Shares under Rule 144, because among other things the
Securities and Exchange Commission has expressed its opinion
that persons proposing to sell restricted securities received
in a nonpublic offering like this one will have a substantial
burden of proof in meeting the conditions outlined above, and
that such persons and the brokers who participate in the
transactions do so at their own risk.
(d) Disclosure of Information. Subscriber, alone or together with
Subscriber's Representative, as the case may be:
(i) has been furnished any documents which may have been made
available upon request, has carefully read such documents, and
understands and has evaluated the risks of an acquisition of
the Shares, and has relied solely (except as indicated in
subsections (ii) and (iii) below) on the information contained
in such documents;
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<PAGE>
(ii) has been provided an opportunity to obtain any additional
information requested concerning the Shares and GVI;
(iii) has been given the opportunity to ask questions of, and
receive answers from, GVI concerning the terms and conditions
of this subscription, and other matters pertaining to this
investment;
(iv) has been given the opportunity to obtain additional
information necessary to verify the accuracy of the
information provided, in order for Subscriber to evaluate the
merits and risks of an investment in GVI, and has not been
furnished any other offering literature or prospectus with
respect to this transaction, except as mentioned herein; and
(v) has determined that the Shares are a suitable investment
for Subscriber, and that at this time Subscriber could bear a
complete loss of the investment.
(e) Investment Experience. Subscriber represents and acknowledges
that Subscriber:
(i) has such knowledge and experience in financial and
business matters as to be capable of (i) evaluating, alone or
together with Subscriber's Representative, the merits and
risks of an investment in the Shares, and (ii) protecting
Subscriber's own interests in connection with the investment;
(ii) has obtained, in the judgment of Subscriber alone or
together with Subscriber's Representative, sufficient
information from GVI to evaluate the merits and risks of an
investment in the Shares;
(iii) has not used a Subscriber's Representative in connection
with evaluation of such risks and merits or, if Subscriber has
used a Subscriber's Representative, Subscriber's
Representative has executed the Subscriber Representative's
Certificate attached as Exhibit E to this Agreement;
(iv) has the financial ability to bear the economic risk of
Subscriber's investment in GVI (including Subscriber's
possible loss), has adequate means for providing for
Subscriber's current needs and personal contingencies and has
no need for liquidity with respect to the investment in GVI;
and
(v) if Subscriber is not an individual, has not been organized
solely for the purpose of acquiring the Shares.
(f) Purchase Entirely for Own Account. GVI is relying on Subscriber's
representation to GVI, which Subscriber hereby confirms by signing this
Agreement, that: (i) the Shares to be received by Subscriber will be
acquired for investment for Subscriber's own account, not as a nominee
or agent, and not with a view to the reissuance or distribution of any
part thereof, and (ii) except as otherwise disclosed to GVI prior to
the delivery of the Shares to the Subscriber, Subscriber has no present
intention of selling, granting any participation in, or otherwise
distributing the Shares except as allowed under Section 2(g) below. By
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<PAGE>
executing this Agreement, Subscriber further represents that Subscriber
does not have any understanding with any person to sell, transfer or
grant participations to such person or to any third person, with
respect to any of the Shares, except as disclosed to GVI prior to the
delivery of the Shares to Subscriber.
(g) Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Subscriber further agrees not to make
any disposition (other than to GVI) of all or any portion of the Shares
unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(ii) (a) Subscriber has notified GVI of the proposed
disposition including a detailed statement of the
circumstances thereof, and (b) if requested by GVI, Subscriber
has furnished GVI with an opinion of counsel, reasonably
satisfactory to GVI and its counsel, that such disposition
will not require registration of such securities under the
Securities Act.
(h) Investor Awareness. Subscriber acknowledges, represents, agrees and
is aware that:
(i) no federal or state agency has passed upon the Shares or
made any finding or determination as to the fairness of this
investment;
(ii) there are substantial risks of loss of investment
incidental to the purchase of the Shares;
(iii) the Shares are an illiquid investment, and Subscriber
must bear the economic risk of investment in the Shares for an
indefinite period of time;
(iv) the Registration Rights Agreement contains substantial
restrictions on transferability of the Shares;
(v) neither GVI nor any of its affiliates, representatives or
attorneys has provided Subscriber with any investment, tax,
legal, regulatory or accounting advice with respect to the
investment in or ownership of the Shares; and
(vi) the representations, warranties. agreements, undertakings
and acknowledgments made by Subscriber in this Agreement
(including without limitation the Exhibits hereto) are made
with the intent that they be relied upon by GVI in determining
Subscriber's suitability as an acquirer of the Shares. In
addition, Subscriber undertakes to notify GVI immediately of
any change in any representation, warranty or other
information relating to Subscriber set forth herein.
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<PAGE>
3. Miscellaneous
(a) Modification. Neither this Agreement nor any provisions hereof
shall be waived, modified, discharged or terminated except by a written
instrument signed by both GVI and Subscriber.
(b) Notices. All communications given hereunder shall be deemed to have
been given and received (i) upon personal delivery, or (ii) in the case
of mailing by registered or certified mail, return receipt requested,
as of the date shown on the return receipt, or (iii) the first
succeeding business day after deposit with FedEx or other equivalent
air courier delivery service.
(c) Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, successors, legal representatives and
permitted assigns. If Subscriber is more than one person, the
obligation of Subscriber shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall
be deemed to be made by and be binding upon each such person and his or
her heirs, executors, administrators and successors.
(d) Entire Agreement. This Agreement together with the Registration
Rights Agreement and the Contribution Agreement between GVI and
Subscriber dated September 3, 1998, and the agreements and documents
referred to therein contain the entire agreement of the parties with
respect to this subscription, and there are no representations,
covenants or other agreements except as stated or referred to herein or
therein.
(e) Assignability. This Agreement is not transferable or assignable by
Subscriber.
(f) Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
(g) Counterparts. This Agreement may be executed through the use of
separate signature pages or in counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding
on the parties hereto, notwithstanding that the parties hereto are not
signatories to the same counterpart.
(h) Further Assurances. Subscriber will, from time to time, execute and
deliver to GVI all such other and further instruments and documents and
take or cause to be taken all such other and further action as GVI may
reasonably request in order to effect the transactions contemplated by
this Agreement.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS.
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<PAGE>
SUBSCRIPTION AGREEMENT
COUNTERPART SIGNATURE PAGE
Subscriber, desiring to enter into this Agreement for the subscription
of the number of Shares indicated below, hereby agrees to all of the terms and
provisions of this Agreement and agrees to be bound by all such terms and
provisions.
Subscriber has executed this Agreement as of the 3rd day of September,
1998.
No. of Shares being Subscribed: 10,000,000
METROVEST PARTNERS, LTD.,
a Texas limited liability company
By:
James R. Salim,
Manager
AGREED AND ACCEPTED this 3rd day of September, 1998.
GOLF VENTURES, INC.,
a Utah corporation
By:
Warren J. Stanchina,
President
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<PAGE>
EXHIBIT A
INVESTOR INFORMATION SHEET
Instructions: Please print or type and complete fully. If additional space is
needed for the response to any Item, attach a rider identifying the Item to
which the response is being made.
GENERAL INFORMATION
Name of Subscriber: Name of spouse (if married):
Metrovest Partners, Ltd. N/A
Tax I.D. Number (if an entity): Social Security No. (if an individual):
88 02 85 870 N/A
Date of Formation of Entity: June 16, 1992
State of Formation: Texas
Telephone Number: (214) 526-0435
Mailing Address:
Metrovest Partners, Ltd.
3510 Turtle Creek Blvd., No. 2D
Dallas, Texas 75219
Telephone: (214) 526-0205
Facsimile: (214) 526-0435
Attn: James R. Salim
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<PAGE>
EXHIBIT B
ACCOUNT INFORMATION SHEET
To the extent that you are NOT acting solely for your own account complete the
following:
You are acting as Agent, Trustee, Partner, Joint Tenant, Tenant in Common or
otherwise for another person (circle appropriate answer). The names, addresses
and telephone numbers of all other persons that you represent are:
NOTE: Upon request of GVI you will be required to provide evidence of your
authority to represent the person(s) named above (i.e., Partnership Agreement,
Trust Agreement, Corporate Resolution, etc.) and if the proposed Subscriber is a
corporation, partnership, trust, or other entity, attach evidence that the
proposed investment in the Partnership has been authorized by such entity (i.e.,
minutes of meeting, corporate resolution, provisions of partnership agreement or
trust agreement, etc.).
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EXHIBIT C
CONSENT OF SPOUSE
I, the undersigned, certify as follows:
1. I am the spouse of James R. Salim, Manager of Metrovest Partners, Ltd.
2. I have received, read and approved the provisions of the documents
entered into between Metrovest Partners, Ltd. and Golf Ventures, Inc.
("GVI").
3. I agree to be bound by and accept the provisions of these documents as
they may be amended from time to time insofar as those provisions may
affect any interest I may have in GVI, whether the interest is
community property or otherwise.
Executed as of September 3, 1998.
By:
(Signature)
Name (Print or Type)
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<PAGE>
EXHIBIT D
ACCREDITED INVESTOR QUESTIONNAIRE
I. INFORMATION TO DETERMINE QUALIFICATION.
o Please put a check or other mark in each space which applies to you
("Subscriber"):
Subscriber is an "Accredited Investor," based upon the following (check
all that apply):
1. X Subscriber is a natural person whose individual net worth, or
joint net worth with his or her spouse, exceeds $1,000,000 at the time of
acquisition of Shares; or
2. X Subscriber is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years, or joint income with
Subscriber's spouse in excess of $300,000 in each of those years, and reasonably
expects to reach the same income level in the current year; or
3. ____ Subscriber is a private business development company as defined
in section 202(a)(22) of the Investment Advisors Act of 1940; or
4. _____ Subscriber is either (a) a bank as defined in section 3(a)(2)
of the Securities Act of 1933, or a savings and loan association or other
institution as defined in section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; (b) a broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; (c) an insurance company as
defined in section 2(13) of the Act; (d) an investment company registered under
the Investment Company Act of 1940 or a business development company as defined
in section 2(a)(48) of that Act; (e) a Small Business Investment Company
licensed by the U.S. Small Business Administration under section 301(c) or (d)
of the Small Business Investment Act of 1958; or (f) an employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are Accredited Investors; or
5. _____ Subscriber is (i) an organization described in section
501(c)(3) of the Internal Revenue Code, (ii) a corporation, (iii) a real estate
investment trust or similar business trust, (iv) a partnership, or (v) a limited
liability company, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000; or
6. _____ Subscriber is any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as described in
Regulation 230.506(b)(2)(ii) promulgated under the Act; or
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<PAGE>
7. _____ Subscriber is a trust with respect to which the grantor(s) has
retained absolute power in his or her sole discretion to amend or revoke the
trust at any time and such grantor(s) is an accredited investor as indicated in
paragraphs 1 or 2 above; or
8. _____ Subscriber is an entity in which all of its equity owners meet
one or more of the standards set forth in the preceding paragraphs numbers 1
through 6.
o The following information must be completed if Subscriber is (i) an
individual or (ii) a grantor of a revocable or irrevocable trust.
Describe your investment and business experience:
o The following information must be completed if Subscriber is (i) an
individual or (ii) a grantor of a revocable trust.
A. Income:
Together
Alone with Spouse
----------- ------------
1996: $ $
1997: $ $
----------- ------------
Expected 1998: $ $
----------- ------------
B. Net Worth (alone or with spouse): $_________________
F-14
<PAGE>
II. CERTAIN REPRESENTATIONS
Please read and acknowledge the following by initialing each.
Subscriber represents that:
X (a) The information supplied by Subscriber herein is
complete and accurate and may be relied upon for the
purposes of determining exemption status under
federal and state securities laws.
X (b) Subscriber will notify GVI immediately of any
material adverse change in any such information
occurring prior to the acceptance of his/her/its
subscription.
X (c) Subscriber understands that the representations
contained herein are made for the purpose of
determining whether Subscriber qualifies as an
"accredited investor" under Regulation D. Subscriber
hereby represents that the statement or statements
initialed and completed below are true and correct in
all respects.
IN WITNESS WHEREOF, Subscriber has initialed the foregoing statements
and executed this Questionnaire this 3rd day of September, 1998.
Signature:
James R. Salim
F-15
<PAGE>
EXHIBIT E
SUBSCRIBER REPRESENTATIVE'S CERTIFICATE
Name of Subscriber:
Please complete the following questionnaire fully, attaching additional sheets
if necessary.
1. Name:
Age:
Business Address:
2. Present occupation or position, indicating period of such practice
or employment and field of professional specialization, if any:
3. List any business or professional education, indicating degrees
received if any:
4. Have you had prior experience in advising clients with respect to
investments of this type?
Yes________ No________
5. List any professional licenses or registrations, including bar
admissions, accounting, certifications, real estate brokerage licenses and SEC
or state broker-dealer registrations held by you:
6. Describe generally any business, financial or investment experience
that would help you to evaluate the merits and risks of this investment:
7. State how long you have known the Subscriber and in what capacity:
8. In advising the Subscriber in connection with the Subscriber's
prospective investment in Golf Ventures, Inc., a Utah corporation ("GVI"), will
you be relying in part on the Subscriber's own expertise in certain areas?
Yes________ No________
If "Yes," which areas:
F-16
<PAGE>
9. In advising the Subscriber in connection with the Subscriber's
prospective investment in GVI, will you be relying in part on the expertise of
an additional Subscriber representative or representatives?
Yes________ No________
If "Yes," give the name and address of each additional representative:
---------
I understand that GVI will be relying on the accuracy and completeness
of my responses to the foregoing questions and I represent and warrant to GVI as
follows:
A. I am acting as Subscriber Representative for the Subscriber in
connection with the Subscriber's prospective investment in GVI
and have been acknowledged in writing by the Subscriber to be
her/his/its Subscriber representative in evaluating the merits
and risks of his respective investment in GVI;
B. The answers to the above questions are complete and correct
and may be relied upon by GVI in determining whether the
offering in connection with which I have executed this
questionnaire is exempt from registration under the Securities
Act of 1933;
C. I will notify GVI immediately of any material change in any
statement made herein occurring prior to the closing of any
purchase by the Subscriber of any Shares in GVI;
D. I am not an affiliate, general partner or other employee of
GVI;
E. Neither I nor any of my affiliates has a material relationship
with GVI or any of their affiliates;
F. I personally (or, if I have checked "yes" in answer to
question 8 above, together with the Subscriber or the
additional Subscriber representative or representatives
indicated above) have such knowledge and experience in
financial and business matters that I am capable of evaluating
the merits and risks of the Subscriber's prospective
investment in GVI.
In witness whereof, I have executed this Certificate this _______ day
of September, 1998.
(Signature of Subscriber Representative)
F-17
<PAGE>
EXHIBIT G
SPECIAL WARRANTY DEED
STATE OF TEXAS ss.
ss. KNOW ALL PERSONS BY THESE PRESENTS THAT:
COUNTY OF TARRANT ss.
METROVEST PARTNERS, LTD., a Texas limited liability company
("Grantor"), for good and valuable consideration in hand paid by ARLINGTON
LAKES, L.P., a Texas limited partnership (Grantee"), whose mailing address is
c/o Golf Communities of America, 255 South Orange Avenue, Suite 1515, Orlando,
Florida 32801, the receipt and sufficiency of which are hereby acknowledged, has
GRANTED, SOLD AND CONVEYED and by these presents does GRANT, SELL AND CONVEY
unto Grantee that certain real property situated in Tarrant County, Texas and
more particularly described on Exhibit A attached hereto, together with
Grantor's rights and interests in all improvements, structures and fixtures
located thereon, if any, and all rights, titles and interests of Grantor
appurtenant thereto (collectively, the "Property"). This conveyance is made and
accepted subject to (a) general real estate taxes on the Property for the
current year which Grantee assumes and agrees to pay, (b) zoning laws and
regulations and ordinances of municipal and other governmental authorities, if
any, affecting the Property, and (c) the matters set forth on Exhibit B attached
hereto (collectively, the "Permitted Encumbrances").
TO HAVE AND TO HOLD the Property, together with all and singular the
rights and appurtenances thereto in any wise belonging unto Grantee, its
successors and assigns forever and subject to the Permitted Encumbrances,
Grantor does hereby bind itself, its successors and assigns, to WARRANT AND
FOREVER DEFEND all and singular the Property unto Grantee, its successors and
assigns, against every person whomsoever lawfully claiming or to claim the same
or any part thereof, by, through or under Grantor, but not otherwise.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOLLOWS.
G-1
<PAGE>
EXECUTED as of the 2nd day of September, 1998.
GRANTOR:
METROVEST PARTNERS, LTD.,
a Texas limited liability company
By:
James R. Salim,
Manager
EXHIBITS:
Exhibit A - Description of the Land
Exhibit B - Permitted Encumbrances
STATE OF NEW YORK ss.
ss.
COUNTY OF NEW YORK ss.
This instrument was acknowledged before me on this 2nd day of
September, 1998, by James R. Salim, Manager of METROVEST PARTNERS, LTD., a Texas
limited liability company, known to me to be the person whose name is subscribed
to the foregoing instrument, and acknowledged to me that he executed the same
for the purposes and consideration therein expressed, in the capacity therein
stated and as the act and deed of said limited liability company.
[SEAL]
Notary Public
G-2
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
G-3
<PAGE>
EXHIBIT B
PERMITTED ENCUMBRANCES
G-4
<PAGE>
EXHIBIT H
WARRANTY BILL OF SALE
For good and valuable consideration the receipt of which is hereby
acknowledged, METROVEST PARTNERS LTD., a Texas limited liability company, does
hereby transfer and convey to ARLINGTON LAKES, L.P., a Texas limited partnership
("Transferee"), all personal property owned by Transferor and located on or in
or used in connection with the Property (as defined in that certain Contribution
Agreement relating to the real property commonly known as "The Lakes of
Arlington" between Transferor and Transferee), including, without limitation,
those items described in Schedule 1 attached hereto.
Transferor represents and warrants to Transferee that Transferor is the
lawful owner of such personal property, that such personal property is free and
clear of all encumbrances, and that Transferor has good right to sell the same
as aforesaid and will warrant and defend the title thereto unto Transferee, its
successors and assigns, against the claims and demands of all persons
whomsoever.
Dated: September 3rd, 1998.
TRANSFEROR
METROVEST PARTNERS, LTD.,
a Texas limited liability company
By:
James R. Salim,
Manager
H-1
<PAGE>
Schedule 1
Personal Property
None.
H-2
