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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended October 31,1999 Commission file number: 0-17517
SEA PINES ASSOCIATES, INC.
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(Exact name of registrant as specified in its charter)
South Carolina 57-0845789
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
32 Greenwood Drive
Hilton Head Island, South Carolina 29928
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (843) 785-3333
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock (No Par)
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(Title of Class)
Series A Cumulative Preferred Stock ($0.722 Dividend
Rate/$7.60 Liquidation Preference and Redemption Price)
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
There is presently no established public trading market for shares of
the registrant's common stock, no par value, and there has been very limited
trading in such shares since their original issuance in 1987. Accordingly,
trading activity in the common stock of the registrant does not currently
represent a reliable indicator of the aggregate market value of the common stock
of the registrant held by non-affiliates of the registrant and the registrant is
unable to estimate such value.
The number of shares outstanding of the registrant's common stock as of January
20, 2000 was 1,842,525.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement in connection with its 2000 Annual
Meeting of Shareholders to be held on March 16, 2000 are incorporated by
reference into Part III.
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PART I
THIS REPORT ON FORM 10-K AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME
BY THE COMPANY OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933,
AS AMENDED , AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THOSE
STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT
EXPECTATIONS OF THE COMPANY AND MEMBERS OF ITS MANAGEMENT TEAM, AS WELL AS THE
ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE
CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.
IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS INCLUDE THOSE SET
FORTH IN THIS REPORT, AND THOSE CONTAINED IN THE SAFE HARBOR COMPLIANCE
STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO THIS REPORT
ON FORM 10-K, WHICH FACTORS ARE HEREBY INCORPORATED BY REFERENCE. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD- LOOKING STATEMENTS TO
REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES
TO FUTURE OPERATING RESULTS OVER TIME.
ITEM 1. BUSINESS.
(a) GENERAL DEVELOPMENT OF BUSINESS. Sea Pines Associates, Inc. was
incorporated under South Carolina law on May 4, 1987. As used in this report on
Form 10- K, except where the context otherwise indicates, the "Company" means
Sea Pines Associates, Inc. and its subsidiaries. The Company was principally
organized to acquire, own and operate certain resort assets located in Sea
Pines, a 5,300 acre master planned resort community on Hilton Head Island, South
Carolina.
Subsidiaries of the Company include Sea Pines Company, Inc. ("SPC"),
Sea Pines Real Estate Company, Inc. ("SPREC") and Fifth Golf Course Club, Inc.,
all of which are wholly owned.
SPC is a full-service resort which owns and operates three golf
courses, tennis and various other recreational facilities, home and villa rental
management, and food and beverage services. SPREC provides real estate brokerage
services for buyers and sellers of real estate on Hilton Head Island and its
neighboring communities. Fifth Golf Course Club, Inc. owns certain acreage which
could be used for outdoor recreational uses.
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(b) FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS. See Note 13 to
the consolidated financial statements contained elsewhere herein for business
segment information.
(c) NARRATIVE DESCRIPTION OF BUSINESS. The Company's operations are
conducted primarily in two reportable business segments for the year ended
October 31, 1999. These segments are organized by the type of operations and for
the year ended October 31, 1999, included: (1) resort activities, including home
and villa rental management operations, golf course operations, food and
beverage operations, and various other recreational activities; and (2) real
estate brokerage for buyers and sellers of real estate in the Hilton Head, South
Carolina area. Additionally, prior to the year ended October 31, 1999, the
Company had a third reportable segment, which included all activities related to
the Company's investment in TidePointe Partners and the related healthcare
operations. During fiscal 1998, the Company sold its investment in TidePointe
Partners and therefore this is not a reportable segment for the year ended
October 31, 1999.
1. RESORT OPERATIONS. Resort operations consist primarily of
the operation of three resort golf courses, a racquet club facility, a home and
villa rental management company, retail outlets, food service operations, and
other recreational facilities. For fiscal year 1999, resort operations accounted
for approximately $28,941,000 (62%) of the Company's total revenues, with golf
and tennis activities responsible for revenues of approximately $15,075,000
(32%) and home and villa rental management activities responsible for revenues
of approximately $11,471,000 (25%). For fiscal year 1998, resort operations
accounted for approximately $26,554,000 (69%) of the Company's total revenues,
with golf and tennis activities responsible for revenues of approximately
$15,064,000 (39%) and home and villa rental management activities responsible
for revenues of approximately $10,168,000 (26%). For fiscal year 1997, resort
operations accounted for approximately $26,322,000 (73%) of the Company's total
revenues, with golf and tennis activities responsible for revenues of
approximately $14,688,000 (41%) and home and villa rental management activities
responsible for revenues of approximately $10,001,000 (28%).
During each of the fiscal years 1999, 1998 and 1997, approximately 70%
of golf and tennis revenues and 90% of home and villa rentals were derived from
vacation and conference use at Sea Pines. As a result, the Company believes its
future success is dependent upon Hilton Head (in general) and Sea Pines (in
particular) continuing to be considered as prime destination resort areas, with
appropriate lodging and conference facilities. The remaining golf and tennis
revenues, approximately 30%, were generated from Hilton Head Island residents.
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During fiscal years 1999, 1998 and 1997, residents and vacationers
utilizing accommodations at Sea Pines accounted for approximately 85-90% of the
use of the Company's golf and tennis facilities, with the remainder attributable
to use by persons residing outside Sea Pines. Fees charged to the general public
for use of the Company's facilities are typically higher than the fees charged
to persons residing within Sea Pines. The Company is also a party to certain use
and access agreements terminable at will with several developments and hotels
located both inside and outside of Sea Pines. These agreements generally provide
the management and guests of those particular developments and hotels with
access to the Company's facilities at rates slightly lower than those available
to the general public. In addition, the Company will occasionally offer special
discounts and package rates as part of its ongoing promotional activities. Use
of the Company's facilities resulting from such agreements and discounts does
not represent a material portion of overall resort usage and has no significant
impact on the Company's golf and tennis revenues.
Vacation use is seasonal with the highest period being from March
through November and the lowest period from December through February. In spite
of reduced levels of use during the non-peak period, the Company continues to
experience substantial fixed costs, such as payroll and occupancy costs.
The Company believes that its resort operations are relatively stable.
Economic conditions and other factors which adversely affect tourism on Hilton
Head in general may have a negative impact on the resort operations of the
Company. Because of its location on the Atlantic coast, Hilton Head is
susceptible to adverse weather conditions and resulting damage from hurricanes,
as well as the potential for damage from a major oil or hazardous waste spill.
Although the Island's location away from major oil drilling operations and
industrial sites greatly reduces the risk of the latter occurrence, there can be
no assurance that such damage will not occur in the future. The Company
maintains property and casualty insurance in amounts that it believes to be
adequate including coverage for business interruption. Furthermore, access to
the Company's facilities is dependent upon adequate means of transportation at a
reasonable cost. In the future, fuel shortages, increases in fuel costs and
other events which might inhibit or restrict airplane or automobile travel could
have a negative impact on the Company's operations, depending on the severity
and duration of the interruption.
The Company is generally subject to various local and regional land use
and environmental regulations, ordinances and restrictive covenants. The Company
believes that it is currently in compliance with all such applicable regulations
and covenants and does not expect that compliance in the future will have any
material effect on the operations or the profitability of the Company.
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Resort operations are subject to significant competition from various
competing facilities on Hilton Head, as well as other destination resorts in
South Carolina, Georgia and Florida. Specifically, the Company believes its golf
courses are directly competitive with approximately 16 golf courses located on
Hilton Head outside of Sea Pines. However, in as much as golf course play is in
large part dictated by the number of guests utilizing accommodations within Sea
Pines, the overall success of the Company's operations will continue to be
dependent on Sea Pines maintaining its reputation as a premier golf and tennis
resort. The Company believes that its rates are competitive compared to other
facilities of comparable quality on the Island and expects that its facilities
will continue to compete favorably with neighboring and regional resorts due to
their location, quality and design, as well as the established reputation of Sea
Pines.
The Company's golf and tennis facilities are hosts to several national
tournaments, including the annual MCI Classic and the annual Family Circle
Magazine Cup. Although facility usage fees for these tournaments do not
constitute a major source of income, the extensive media coverage generated from
these tournaments provides the Company with substantial marketing benefits
resulting in the enhanced national reputation of Sea Pines and the Company's
facilities. Other than this benefit, however, the Company does not believe that
tournaments have a significant financial impact on its operations and,
accordingly, does not believe its operations are dependent upon one or more of
such tournaments or their sponsors.
The Company's golf and tennis operations consist primarily of marketing
and maintaining of the Company's facilities. The Company receives court fees,
greens fees, cart rental fees, and income from merchandise sales. The Company's
tennis facility and the three resort golf courses are open to the general
public. Maintenance and overhead expenses associated with the Company's golf and
tennis operations remain generally stable despite the volume of facility usage.
As a result, the Company's current and future financial results are
substantially dependent upon the revenues generated from the usage of its
facilities, which revenues are a function of both the volume of usage and the
fee levels the Company is in a position to charge in its market area.
The Company's resort operations employed approximately 340 people as of
October 31, 1999.
2. REAL ESTATE BROKERAGE. SPREC is engaged primarily in the
brokerage of residential real estate on Hilton Head Island and its neighboring
communities. The Company competes with other real estate brokerage firms in the
Hilton Head Island area.
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SPREC maintains fourteen offices; seven located within Sea Pines and
eight located outside of Sea Pines in the Hilton Head Island area.
For fiscal year 1999, real estate brokerage operations accounted for
approximately $17,473,000 (38%) of the Company's total revenue. For fiscal year
1998, real estate brokerage operations accounted for approximately $11,952,000
(31%) of the Company's total revenue. For fiscal year 1997, real estate
brokerage operations accounted for approximately $9,574,000 (27%) of the
Company's total revenue.
While brokerage activities are not tied directly to vacation and
conference activities, general downturns with respect to visitors to Hilton Head
Island can result in slower residential real estate sales. Furthermore, rising
interest rates and other economic conditions which adversely affect real estate
sales in general are anticipated to continue to have a significant impact on
real estate brokerage revenues in the future.
SPREC employed 30 people and had approximately 85 non-employee sales
agents as of October 31, 1999.
3. TIDEPOINTE RETIREMENT COMMUNITY. On January 14, 1994, Sea
Pines/TidePointe, Inc., a subsidiary of the Company, entered into a general
partnership, TidePointe Partners (the "Partnership"), with Providers
Enterprises, Inc., for the purpose of constructing, developing and operating a
continuing care retirement community on Hilton Head Island, South Carolina, to
be known as TidePointe. The Company contributed $850,000 of certain
predevelopment costs for a 17.5% interest in the Partnership, and the other
partner made an initial cash contribution of $6,000,000 for an 82.5% interest in
the Partnership. In addition the Company loaned $1,505,000 to the Partnership.
In 1998, the Partnership sold the assets associated with the TidePointe
development and the Company released its rights in those assets. The Company is
no longer involved in TidePointe, other than through a license agreement. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations - 1998 Compared to 1997.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES. All of the Company's operations are confined to Beaufort County,
South Carolina. See Item 1(a).
ITEM 2. PROPERTIES.
(a) GOLF FACILITIES. SPC directly owns three 18-hole resort golf
courses known as the Harbour Town Golf Links, the Ocean Course and the Sea Marsh
Course, all of
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which are located within Sea Pines. Each of the Company's golf courses is
substantially utilized during the peak occupancy period on Hilton Head Island,
which is March through November.
The Harbour Town Golf Links property consists of approximately 136
acres, including a driving range. Harbour Town is the site of the MCI Classic, a
regular stop on the PGA Tour. The Company is planning a major renovation of the
Harbour Town Golf Links. The renovation is tentatively scheduled to commence in
May 2000 with an estimated construction cost of $3,300,000. During the
construction and grow-in period, the course will be closed for approximately
nine months. Adjacent to the Harbour Town Golf Links is the Heritage Clubhouse
which contains a pro shop, restaurant space, and other small meeting and dining
facilities.
The Sea Marsh Golf Course contains approximately 92 acres and the Ocean
Course contains approximately 97 acres. There is a driving range located
adjacent to, and shared by, the Ocean and Sea Marsh golf courses. The Ocean
Course reopened in September of 1995 after undergoing an extensive renovation
project costing approximately $2,900,000.
(b) TENNIS FACILITIES. SPC owns and operates a tennis complex in the
Harbour Town area of Sea Pines known as the Sea Pines Racquet Club. This
facility is currently undergoing a major renovation project which has been
divided into two phases. Phase I of the Sea Pines Racquet Club renovation
includes a complete reconfiguration and reconstruction of the tennis court
facilities and surrounding area. Total construction costs of Phase I have been
estimated at $1,100,000. As of October 31, 1999, $273,000 has been spent.
Completion of Phase I is scheduled for the spring of 2000. Phase II of the
project includes a permanent 3,800 square-foot facility containing an expanded
pro shop, club offices and meeting room. The cost of Phase II is estimated at
$900,000 although no firm start date has been determined. The Family Circle
Magazine Cup is held at the Sea Pines Racquet Club annually.
(c) INN AT HARBOUR TOWN. The Company is currently constructing a small
inn in the Harbour Town area. The Inn at Harbour Town will be a 47,000
square-foot facility featuring 60 inn rooms and will be adjacent to and provide
views of the Harbour Town Golf Links. Total construction costs are estimated at
$10,600,000. As of October 31, 1999, $1,482,000 has been spent. Completion is
scheduled for the fall of 2000.
(d) HERITAGE CONFERENCE CENTER. The Company is also currently
constructing a conference facility located adjacent to the Harbour Town Golf
Links Clubhouse. The Heritage Conference Center will be a 16,000 square-foot
facility. Total construction costs
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are estimated at $5,500,000. As of October 31, 1999, $1,952,000 has been spent.
Completion is scheduled for the spring of 2000.
(e) EQUESTRIAN FACILITIES. SPC owns a tract of land known as Lawton
Stables which contains approximately 21.8 acres. The stables are leased to a
stable operator who provides boarding, lessons, and trail rides.
(f) PLANTATION CLUB. SPC owns a tract of land with improvements thereon
known as the Plantation Club site containing approximately 9.4 acres. It
includes the golf pro shop associated with the Ocean and Sea Marsh golf courses
and a parking lot utilized by patrons on such courses. In addition, the
Plantation Club contains conference facilities, food and beverage facilities, a
health and fitness center, a swimming pool, and a bike rental store.
During 1999, the Company completed a major renovation of the conference
and food and beverage facilities located at the Plantation Club.
(g) OTHER RECREATIONAL FACILITIES. In the vicinity of the Harbour Town
Golf Links, SPC owns and operates recreational areas containing a playground, a
swimming pool, and a snack bar.
SPC also owns and operates a Beach Club in the vicinity of the
Plantation Club, containing a retail shop, parking area, an outdoor food and
beverage facility and a real estate office.
(h) UNDEVELOPED TRACTS/DEVELOPMENT RIGHTS. SPC owns a number of
undeveloped tracts of land within Sea Pines briefly described as follows:
1. Sea Pines Academy Tract - approximately 3 acres;
2. Sea Pines Center Residual - approximately 1.4 acres;
3. Harbour Town Main Parking Tract - approximately 3.21
acres;
4. Artists Area Tract - approximately 1.5 acres;
5. Cordillo Parkway Tract - 6 acres; and
6. Outdoor Recreation Tract - approximately 8 acres.
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Development plans for these tracts are undetermined at the present time.
In addition to the foregoing tracts, SPC owns the right to construct
approximately 66 dwelling units within Sea Pines along with the right to
construct 100 hotel rooms at the Plantation Club site.
(i) FOREST PRESERVE/FIFTH GOLF COURSE CLUB, INC. SPC owns a 495 acre
tract of land known as the Sea Pines Forest Preserve. Various recreational
activities are permitted to be conducted on 181 of these acres and the Fifth
Golf Course Club, Inc. is investigating various possibilities. Among such
possibilities is the development of a golf course. However, construction of such
a golf course would require the approval of 75% of Sea Pines property owners
voting on such issue. The balance of the Forest Preserve is generally limited to
use as a wildlife preserve, although certain sanitation uses are permitted. In
August 1993, the Company made a commitment to donate approximately 404 acres of
the wildlife preserve to a not-for-profit organization on Hilton Head Island,
South Carolina. As of October 31, 1999, approximately 90 of the 404 acres had
been donated and title transferred. The remaining 314 acres are leased to the
same not-for-profit organization for a minimal amount.
(j) WELCOME CENTER. SPC owns a 6 acre tract of land which is the site
of the Sea Pines Welcome Center. This is a 23,000 square foot facility which
contains the Company's Executive and Administrative offices, the lodging front
office facilities, and the main office facility for Sea Pines Real Estate
Company.
(k) LIBERTY OAK CAFE. SPC owns a 1.6 acre tract of land and
improvements known as the Liberty Oak Cafe. This is an outdoor food and beverage
facility used for catering functions.
(l) LEASES. SPC currently leases approximately 31,000 square feet of
space used for the golf maintenance facilities, and Sea Pines Real Estate
Company, Inc. leases approximately 12,000 square feet of office space in 10
locations throughout the Hilton Head Island, South Carolina, area.
(m) OTHER REAL ESTATE. SPC owns a small office building in the Harbour
Town area known as the Saddlebag Building, the majority of which is currently
leased to The Family Circle Magazine Cup, and three small commercial buildings
in Harbour Town, two of which currently serve as sales offices for Sea Pines
Real Estate Company.
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ITEM 3. LEGAL PROCEEDINGS.
The Company has signed a written settlement agreement with the
plaintiffs in a lawsuit relating to title of real and personal property. The
Plaintiff alleged ownership of certain parcels of real property and various
personal property. As part of the settlement, the parties have quit-claimed the
disputed properties to each other. The Company quick- claimed four properties to
the plaintiffs. These were properties that were not recorded on the books of the
Company. The settlement will have no material effect on the Company's assets or
operations.
The Company is a defendant in a lawsuit filed in November 1995 in
Beaufort County, South Carolina by Greg Point Associates, Inc. and its
principals relating to a contractual relationship. The plaintiff alleges breach
of contract and seeks unspecified damages. The Company has answered the suit and
filed a counter-claim for unspecified damages. The Company intends to defend its
position vigorously and pursue its counterclaim against the plaintiff. The suit
is presently dormant. However, neither the Company nor its legal counsel can
form an opinion as to the outcome of this matter at this time.
The Company is subject to other claims and suits in the ordinary course
of business. In management's opinion, such currently pending claims and suits
against the Company will not, in the aggregate, have a material adverse effect
on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
(a) MARKET INFORMATION. The Company's capital stock was originally
issued in 1987 in units consisting of 750 shares of voting common stock and 500
shares of Series A preferred stock. Virtually all transactions of the Company's
common stock and preferred stock have been in units as originally issued.
Transactions in units of the Company's capital stock trade on a bid and ask
basis through the over-the-counter market at Robinson-Humphrey Company in
Atlanta, Georgia. However, there is no established public trading market for the
common stock.
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Set forth below are the high and low closing sales price for units of
the Company's stock for each quarter of the last two fiscal years as reported to
the Company by Robinson Humphrey Company in Atlanta:
Fiscal Year Ended
October 31, 1999 High Low
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Fourth Quarter $5,650.00 $5,600.00
Third Quarter $5,650.00 $5,500.00
Second Quarter $5,500.00 $5,400.00
First Quarter $5,600.00 $5,400.00
Fiscal Year Ended
October 31, 1998 High Low
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Fourth Quarter $5,500.00 $5,400.00
Third Quarter $5,400.00 $5,400.00
Second Quarter $5,400.00 $5,400.00
First Quarter $5,400.00 $5,400.00
(b) HOLDERS. As of January 20, 2000 there were approximately 575
holders of record of shares of common stock. Most of the holders hold units
consisting of shares of both common stock and shares of preferred stock
(generally in units of 750 shares of common stock and 500 shares of preferred
stock).
(c) DIVIDENDS. The Articles of Incorporation of the Company provide for
dividends on the preferred stock of $.722 per share per annum. The Company has
paid all accrued dividends on the preferred stock through the fiscal year ended
October 31, 1998.
At its December 13,1999, Board of Directors meeting, the Company
declared a cash dividend to holders of Series A Cumulative Preferred Stock of
$.722 per share. This dividend is payable in equal quarterly installments of
approximately $.18 per share on January 17, 2000, April 17, 2000, July 17, 2000,
and October 17, 2000, to shareholders of record on January 4, 2000, April 3,
2000, July 3, 2000 and October 2, 2000 respectively, and represents the accrued
dividend for the fiscal year ended October 31, 1999.
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Historically, the Company has not paid dividends on its common stock
and has no present intention of paying such dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data is included on Exhibit 27 which is attached
and filed as part of this report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's operations are conducted primarily through two wholly
owned subsidiaries. Sea Pines Company, Inc. operates all of the resort assets,
including three resort golf courses, a tennis center, a home and villa rental
management business, retail sales outlets, food service operations and other
resort recreational facilities. Sea Pines Real Estate Company, Inc. is an
independent real estate brokerage firm with fourteen offices serving Hilton Head
Island and its neighboring communities.
1999 COMPARED TO 1998
The Company reported consolidated revenues for fiscal year 1999 of
$46,414,000, a 20% increase over fiscal year 1998. Resort revenues totaled
$28,941,000 for fiscal 1999 reflecting an increase of $2,387,000 or 9.0% over
fiscal 1998. Real estate brokerage revenues totaled $17,473,000 for the year, an
increase of $5,521,000 or 46% as compared to fiscal 1998.
Guest occupied home and villa unit nights in the Company's lodging
division totaled 63,176 for fiscal 1999, a 7.0% increase over fiscal 1998. The
average daily rate of $181 in fiscal 1999 increased 10% over the fiscal 1998
average daily rate of $164. This increase resulted primarily from the higher
quality ocean oriented units the Company has been able to attract to its rental
program. Units available for rental on the Company's rental program have
increased from 441 in fiscal 1998 to 517 in fiscal 1999. Revenues and operating
margins from golf operations continue to increase. The Company increased its
average rate per round by 5.9% by replacing discounted rounds with higher rate
rounds. The golf division produced operating margins of over 54% in fiscal 1999.
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The Company's real estate brokerage operations closed over $395 million
in transactions for the year, a 44% increase over fiscal 1998. Many of the
factors that contributed to a successful fiscal 1998 continued for fiscal 1999.
These included favorable mortgage interest rates, the strong local and national
economy and the continued strong market demand for second homes. The Company
increased its market share of sales and listings of real estate from 20% in
fiscal 1998 to over 25% in 1999. The Company attributes this substantial
increase to its extensive marketing campaigns, aggressive positioning in the
market and by attracting and retaining professional real estate sales
executives. The operating margin from brokerage operations was over 11% in
fiscal 1999.
Sales and marketing expenses were $1,957,000 in fiscal 1999,
representing a 52% increase from fiscal 1998. The increase is partially
attributable to pre-opening sales and marketing expenses associated with the Inn
and Conference Center currently under construction, as the Company starts to
place greater emphasis on the group meeting business. Additional increases
relate to costs associated with growing the lodging, food and beverage and real
estate businesses.
General and Administrative expenses increased by 11.7%, or $535,000,
totaling $5,114,000 for the year. The increase is primarily attributable to
higher property taxes and the increased costs of medical claims paid by the
Company's self-funded medical plan.
Depreciation and amortization expense decreased by 7%, or $101,000, and
totaled $1,307,000 in fiscal 1999. The decrease is attributable to assets that
have become fully depreciated.
Interest income remained relatively constant at $164,000 and $154,000
in fiscal 1999 and fiscal 1998, respectively.
Interest expense on the Company's long and short term debt decreased by
$246,000, or 18%, in 1999 as compared to 1998. The decrease results from the
favorable interest rates obtained as part of the October 1998 refinancing and
swap agreements and from the capitalization of $129,000 of interest in
connection with the Harbour Town construction projects.
The Company reported a net gain on the sale or disposal of assets of
$359,000 in fiscal 1999. The three major components of this net gain are: (1) a
gain on the sale of the South Beach swimming pool property, (2) the write-off of
the remaining basis of property razed in connection with the Harbour Town
construction projects and (3) proceeds from a legal settlement relating to real
property.
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1998 COMPARED TO 1997
The Company reported consolidated revenues for the fiscal year 1998 of
$38,506,000, a 7.3% increase over fiscal year fiscal 1997. Resort revenues
totaled $26,554,000 for fiscal 1998 reflecting an increase of $232,000 over
fiscal 1997. Real estate brokerage revenues totaled $11,952,000 for the year, an
increase of $2,378,000 or 24.8% as compared to fiscal 1997.
Guest occupied home and villa unit nights in the Company's lodging
division totaled 59,066 for fiscal 1998, a 1.4% increase over fiscal 1997. The
average daily rate of $164 in fiscal 1997 was maintained in fiscal 1998 after
significant price increases were implemented in fiscal 1997. Both revenues and
operating margins from golf operations continued to increase. The golf division
produced operating margins of over 53% in fiscal 1998. The average rate per
round increased by 6.8% in fiscal 1998. The increase in average rate results
from the combined effect of price increases and yield management resulting in
fewer discounted rounds. The Company continues to maintain its market share of
golf rounds despite increased competition.
The Company's real estate brokerage operations closed over $275 million
in transactions for the year, a 27% increase over fiscal 1997. Many factors
contributed to a successful fiscal 1998. These included favorable mortgage
interest rates, the strong local and national economy and the continued strong
market demand for second homes. The operating margin from brokerage operations
in fiscal 1998 was 12.46%, an 11% increase over the prior year. The trend of
increasing gross revenues has lead to higher operating margins as many of the
costs associated with the real estate offices are fixed. The Company has
continued to maintain its island-wide market share of sales and listing of real
estate through creative marketing campaigns, aggressive positioning in the
market and by attracting and retaining professional real estate sales
executives.
Sales and marketing expenses were $1.3 million in fiscal 1998,
representing a 6.3% decrease from fiscal 1997. The decrease was attributable to
more cost-effective selective targeted marketing. The Company has planned future
increases in marketing expenses as it brings additional lodging and conference
facilities on line.
General and Administrative expenses increased by 2.3%, or $104,000,
totaling $4,579,000 for the year. The increase can primarily be attributable to
higher property taxes and the increased costs associated with maintaining the
Company's older facilities. These increases were partially offset by significant
reductions in the Company's property and casualty insurance premiums.
14
<PAGE> 15
Due to the sale of all of the TidePointe assets in June 1998, which
included the healthcare facilities, the Company recognized the remaining gain of
$179,375, which had been deferred at the time of the sale of the healthcare
facility in July 1997. The Company has also entered into a 26-year license and
use agreement with CC-Hilton Head, Inc. for the use of the Company's logo, trade
name, a non-compete agreement and other services and amenity use in connection
with the TidePointe community. Under this agreement, the Company will receive
fixed annual license fees, ranging from $125,000 to $325,000 and totaling
$4,125,000 over the 26-year term. Approximately $67,000 of license fee income
has been recognized by the Company in fiscal year 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $443,000 during fiscal 1999 and
totaled approximately $3,042,000 at October 31, 1999, of which $2,380,000 is
restricted. This increase results from higher levels of advance deposits related
to future lodging reservations and pending real estate brokerage transactions
and increased operating cash on hand at year-end. Working capital increased
during the current year by $101,000 resulting in a working capital deficit of
$565,000 at October 31, 1999, compared to a deficit of $666,000 at October 31,
1998.
In fiscal 1999 the Company invested approximately $5,823,000 in resort
capital expenditures. Capital investments including construction in progress on
the Harbour Town projects, extensive renovation work at the Plantation Club
along with normal expenditures for equipment replacement and resort facility
improvements. During the 12-year period from November 1, 1987 through October
31, 1999, the Company has invested over $39 million in capital purchases,
property acquisitions and property improvements thereby significantly enhancing
the resort assets originally acquired in 1987.
Under a Master Credit Agreement with its principal corporate lender,
the Company maintains a term loan, a revolving line of credit and a seasonal
line of credit. Available funds under these facilities total $36,000,000, of
which $19,883,000 was outstanding at October 31, 1999.
The term loan in the principal sum of $18,500,000 matures on October
31, 2008. As of October 31, 1999, $18,133,000 was outstanding under the term
loan.
The $15,000,000 revolving line of credit has been pre-approved by the
bank for use in the construction of the Company's inn and conference center. As
of October 31, 1999, $1,750,000 was outstanding under the revolving line of
credit.
15
<PAGE> 16
The seasonal line of credit in the principal amount of $2,500,000 is
used to meet cash requirements during the Company's off-season winter months. As
of October 31, 1999, there was no outstanding balance on the seasonal line of
credit.
The Company has an interest swap agreement which effectively fixed the
interest rate on an $18 million notional principal amount under the term loan
described above at 5.24% per annum plus a credit margin ranging from 1.25% to
1.5%, based on the calculation of certain financial ratios, for a period ending
November 10, 2005. The lender has the option of calling the swap agreement on
November 10, 2003.
The Company expects that available cash, cash provided by operations,
and existing short term and long term lines of credit will be sufficient to meet
its cash requirements through at least October 31, 2000.
BUSINESS OUTLOOK AND RECENT DEVELOPMENTS
The Company has entered into construction contracts and has commenced
construction on The Inn at Harbour Town, The Heritage Conference Center and the
court reconstruction phase of the Sea Pines Racquet Club renovation.
Construction contracts signed to date total approximately $12,539,000. Total
construction costs are estimated at $17,230,000 for all three projects. As of
October 31, 1999, total combined construction costs incurred to date are
$3,707,000.
The Inn at Harbour Town will be a 47,000 square-foot facility featuring
60 inn rooms and will be adjacent to and provide views of the Harbour Town Golf
Links. Total construction costs are estimated at $10,600,000. As of October 31,
1999, $1,482,000, has been spent. Completion is scheduled for the fall of 2000.
The Heritage Conference Center will be a 16,000 square-foot facility
adjacent to the existing Harbour Town Clubhouse. Total construction costs are
estimated at $5,500,000. As of October 31, 1999, $1,952,000 has been spent.
Completion is scheduled for the spring of 2000.
Additionally, the Company is starting work on Phase I of the Sea Pines
Racquet Club renovation. Phase I includes a complete reconfiguration and
reconstruction of the tennis court facilities and surrounding area. Total
construction costs of Phase I have been estimated at $1,100,000. As of October
31, 1999, $273,000 has been spent. Completion of Phase I is scheduled for the
spring of 2000. Phase II of the project includes a permanent 3,800 square-foot
facility containing an expanded pro shop, club offices and
16
<PAGE> 17
meeting room. The cost of Phase II is estimated at $900,000 although no firm
start date has been determined.
The Company also is in the planning stages of a major renovation of the
Harbour Town Golf Links. This renovation is tentatively scheduled to commence in
May 2000 with an estimated construction cost of $3,300,000. During the
construction and grow-in period, the course will be closed for approximately
nine months.
On December 21, 1999, the Company mailed to its shareholders and filed
with the Securities and Exchange Commission an Exchange Offer Prospectus. This
Prospectus offers holders of the Company's preferred stock the right to exchange
some or all of their preferred stock for either shares of common stock or a new
financial debt instrument, Trust Preferred Securities. Shareholders have until
January 31, 2000 to respond.
YEAR 2000 ISSUE
The year 2000 issue is the result of computer programs having been
written using two digits rather than four to define the applicable year. Any of
the Company's computer programs that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than year 2000. This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send invoices
or engage in similar normal business activities.
Based on a 1998 assessment of its computerized systems, the Company
determined that it would be required to modify or replace portions of its
existing software so that its computer systems would properly utilize dates
beyond December 31, 1999.
The Company believes that it completed and tested all necessary
software modifications and conversions prior to December 31, 1999. As a result
of its year 2000 readiness, the Company has experienced no significant year 2000
problems.
The Company presently believes that it has very limited continued
exposure to year 2000 related issues. However, if the Company did not address
and remedy all of its year 2000 issues, these issues could have a material
impact on the operations of the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
On September 30, 1998, the Company entered into an interest rate swap
agreement, which effectively fixed the interest rate on an $18 million notional
principal amount under the term note that the Company maintains with its
corporate lender at 5.24%
17
<PAGE> 18
plus a credit margin ranging from 1.25% to 1.5%, based on the calculation of
certain financial ratios, for a period ending November 10, 2005. The lender has
the option of calling the swap agreement on November 10, 2003.
The Company has minimal interest rate risks. A change in the LIBOR rate
would affect the rate at which the Company could borrow funds in excess of the
$18 million notional principal amount, which is effectively fixed by the above
swap agreement.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The audited Consolidated Financial Statements of the Company are
attached hereto beginning at page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information called for by Part III (Items 10, 11, 12 and 13) has been
omitted as the Company intends to file with the Securities and Exchange
Commission not later than 120 days after the close of its fiscal year ended
October 31, 1999 a definitive Proxy Statement pursuant to Regulation 14A. Such
information is set forth in such Proxy Statement (i) with respect to Item 10,
under the caption "Election of Directors," "Section 16(a) Beneficial Ownership
Reporting Compliance" and "Executive Officers" (ii) with respect to Item 11,
under the caption "Executive Compensation," (iii) with respect to Item 12, under
the caption "Principal Shareholders," and (iv) with respect to Item 13, under
the caption "Certain Transactions" and is hereby incorporated by reference.
18
<PAGE> 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a)(1)-(2) Financial Statements and Schedules:
The financial statements and schedules listed in the accompanying Index
to Consolidated Financial Statements at page F-1 herein are filed as part of
this report.
All other schedules for which provision is made in the applicable
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
(3) Exhibits:
The exhibits listed on the accompanying Exhibit Index at pages E-1 to
E-5 are filed as part of this report.
(b) Reports on Form 8-K:
None.
19
<PAGE> 20
SEA PINES ASSOCIATES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
Report of Ernst & Young LLP................................................F-2
Consolidated Balance Sheets at October 31, 1999 and 1998............F-3 thru 4
Consolidated Statements of Operations for the years
ended October 31, 1999, 1998 and 1997....................................F-5
Consolidated Statements of Shareholders' Equity
for the years ended October 31, 1999, 1998 and 1997 ....................F-6
Consolidated Statements of Cash Flows for the years
ended October 31, 1999, 1998 and 1997.............................F-7 thru 8
Notes to Consolidated Financial Statements.........................F-9 thru 27
Report on Financial Statement Schedule....................................F-28
Schedule II - Valuation and Qualifying Accounts
for the years ended October 31, 1999, 1998 and 1997.....................F-29
<PAGE> 21
Report of Independent Auditors
Board of Directors and Shareholders of
Sea Pines Associates, Inc.
We have audited the accompanying consolidated balance sheets of Sea Pines
Associates, Inc. (the "Company") as of October 31, 1999 and 1998, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended October 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Sea Pines
Associates, Inc. at October 31, 1999 and 1998, and the results of its operations
and its cash flows for each of the three years in the period ended October 31,
1999 in conformity with generally accepted accounting principles.
Atlanta, Georgia
November 19, 1999
F-2
<PAGE> 22
Sea Pines Associates, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
OCTOBER 31
1999 1998
--------------------------------------------------
(In Thousands of Dollars)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents
Unrestricted $ 662 $ 591
Restricted 2,380 2,008
--------------------------------------------------
3,042 2,599
Accounts receivable, less allowance for doubtful
accounts of $41 and $50 at October 31, 1999 and 1998,
respectively 1,189 1,027
Current portion of notes receivable 373 441
Income tax refund receivable 346 --
Inventories 737 653
Prepaid expenses 140 132
--------------------------------------------------
Total current assets 5,827 4,852
Notes receivable, less current portion 1,687 1,767
Deferred income taxes 83 316
Deferred loan fees, net 36 70
Other assets, net 78 82
--------------------------------------------------
1,884 2,235
Real estate assets
Construction in progress 6,575 1,135
Operating properties, net 23,765 22,680
Properties held for future development 4,623 7,023
--------------------------------------------------
34,963 30,838
--------------------------------------------------
Total assets $ 42,674 $ 37,925
==================================================
</TABLE>
F-3
<PAGE> 23
Sea Pines Associates, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
OCTOBER 31
1999 1998
------------------------------------------------
(In Thousands of Dollars)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,300 $ 2,469
Advance deposits 2,155 1,946
Income taxes payable -- 113
Current portion of deferred revenue and other
liabilities 537 623
Current portion of long-term debt 400 367
------------------------------------------------
Total current liabilities 6,392 5,518
Long-term debt, less current portion 19,483 16,792
Deferred revenue and other long-term liabilities 905 897
------------------------------------------------
Total liabilities 26,780 23,207
Commitments and contingencies
Shareholders' equity:
Series A cumulative preferred stock, no par
value, 2,000,000 shares authorized;
1,228,350 shares issued and outstanding
(liquidation preference $9,335,460) 7,218 7,218
Series B junior cumulative preferred stock, no
par value, 3,000 shares authorized, none
issued or outstanding -- --
Common stock, 23,000,000 shares authorized, no par
value, 1,842,525 shares issued and outstanding 2,166 2,166
Retained earnings 6,510 5,334
------------------------------------------------
Total shareholders' equity 15,894 14,718
------------------------------------------------
Total liabilities and shareholders' equity $ 42,674 $ 37,925
================================================
</TABLE>
See accompanying notes.
F-4
<PAGE> 24
Sea Pines Associates, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1999 1998 1997
-----------------------------------------------------------
(In Thousands of Dollars, Except Per Share Amounts)
<S> <C> <C> <C>
Revenues, other than healthcare $46,414 $38,506 $35,896
Cost and expenses, other than healthcare:
Cost of revenues 34,185 27,068 24,752
Sales and marketing expenses 1,957 1,290 1,376
General and administrative expenses 5,114 4,579 4,475
Depreciation and amortization 1,307 1,408 1,586
-----------------------------------------------------------
42,563 34,345 32,189
-----------------------------------------------------------
Income from operations, other than healthcare 3,851 4,161 3,707
Healthcare income (expense)
Revenue -- -- 345
Cost of revenues -- -- (989)
-----------------------------------------------------------
-- -- (644)
-----------------------------------------------------------
Income from operations 3,851 4,161 3,063
Other income (expense):
Gain on sale or disposal of assets, net 359 -- --
Interest income 164 154 325
Interest expense, net of amounts capitalized:
Healthcare -- -- (381)
Resort (1,099) (1,345) (1,476)
Equity in loss and write down of investment in
and advances to TidePointe Partners -- -- (2,658)
Gain on sale of healthcare business and assets -- 179 846
-----------------------------------------------------------
(576) (1,012) (3,344)
-----------------------------------------------------------
Income (loss) before income taxes 3,275 3,149 (281)
Provision for (benefit from) income taxes 1,212 1,099 (215)
-----------------------------------------------------------
Net income (loss) 2,063 2,050 (66)
Preferred stock dividend requirements 887 887 887
-----------------------------------------------------------
Net income (loss) attributable to common stock $ 1,176 $ 1,163 $ (953)
===========================================================
Per share of common stock
Net income (loss) $ 0.64 $ 0.63 $ (0.52)
===========================================================
</TABLE>
See accompanying notes.
F-5
<PAGE> 25
Sea Pines Associates, Inc.
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
SERIES A
PREFERRED STOCK COMMON STOCK
----------------------- ---------------------- RETAINED
SHARES AMOUNT SHARES AMOUNT EARNINGS TOTAL
---------- ------------ ---------- ----------- ----------------- ------------
(In Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1996 1,228 $7,218 1,843 $2,166 $5,124 $14,508
Net loss -- -- -- -- (66) (66)
Declaration of preferred stock
dividend of $0.722 per share
-- -- -- -- (887) (887)
---------- ------------ ---------- ----------- ----------------- ------------
Balance at October 31, 1997 1,228 7,218 1,843 2,166 4,171 13,555
Net income -- -- -- -- 2,050 2,050
Declaration of preferred stock
dividend of $0.722 per share
-- -- -- -- (887) (887)
---------- ------------ ---------- ----------- ----------------- ------------
Balance at October 31, 1998 1,228 7,218 1,843 2,166 5,334 14,718
Net income -- -- -- -- 2,063 2,063
Declaration of preferred stock
dividend of $0.722 per share
-- -- -- -- (887) (887)
---------- ------------ ---------- ----------- ----------------- ------------
Balance at October 31, 1999 1,228 $7,218 1,843 $2,166 $6,510 $15,894
========== ============ ========== =========== ================= ============
</TABLE>
See accompanying notes.
F-6
<PAGE> 26
Sea Pines Associates, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1999 1998 1997
---------------------------------------------
(In Thousands of Dollars)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 2,063 $ 2,050 $ (66)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,307 1,408 1,586
Allowance for doubtful accounts (9) (23) 46
Deferred income taxes 233 489 (1,217)
Gain on sale and disposal of assets (359) -- (170)
Equity in loss and write down of investment in and
advances to TidePointe Partners -- -- 2,658
Changes in assets and liabilities:
Restricted cash (372) (43) (769)
Accounts and notes receivable (5) 49 (317)
Inventories (84) (36) 116
Prepaid expenses (8) 108 53
Deferred loan fees 34 (70) (41)
Accounts payable and accrued expenses 831 659 (227)
Deferred revenue 8 119 564
Advance deposits 209 66 657
Income taxes payable (113) (53) 24
Income tax refund receivable (346) -- --
Current portion of deferred revenue (86) 184 68
---------------------------------------------
Net cash provided by operating activities 3,303 4,907 2,965
INVESTING ACTIVITIES
Proceeds from sale of assets 754 -- 529
Capital expenditures and property acquisitions (5,823) (1,617) (1,378)
Increase in note receivable and accrued interest from
TidePointe Partners -- -- (155)
---------------------------------------------
Net cash used in investing activities (5,069) (1,617) (1,004)
</TABLE>
F-7
<PAGE> 27
Sea Pines Associates, Inc.
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1999 1998 1997
---------------------------------------------
(In Thousands of Dollars)
<S> <C> <C> <C>
FINANCING ACTIVITIES
Reductions to line of credit with bank -- (467) (308)
Additions to long-term debt 3,091 -- --
Principal repayments of debt (367) (1,560) (783)
Dividends paid (887) (887) (887)
---------------------------------------------
Net cash provided by (used in) financing activities 1,837 (2,914) (1,978)
---------------------------------------------
Net increase (decrease) in unrestricted cash and cash
equivalents 71 376 (17)
Unrestricted cash and cash equivalents at beginning
of year 591 215 232
=============================================
Unrestricted cash and cash equivalents at end of year $ 662 $ 591 $ 215
=============================================
</TABLE>
See accompanying notes.
F-8
<PAGE> 28
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements
October 31, 1999, 1998 and 1997
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Sea Pines Associates, Inc. ("SPA" or the "Company") was incorporated in South
Carolina on May 4, 1987. The Company was principally organized to acquire, own
and operate certain resort assets in Sea Pines Plantation on Hilton Head Island,
South Carolina.
The wholly-owned subsidiaries of the Company are Sea Pines Company, Inc.
("SPCI"), Sea Pines Real Estate Company ("SPREC"), Sea Pines/TidePointe, Inc.,
Sea Pines Senior Living Center, Inc. ("SPSLC") and Fifth Golf Course Club, Inc.
SPCI is a full-service resort, which provides guests with the use of three golf
courses, tennis facility, various other recreational facilities, home and villa
rental management, and food-and-beverage services. SPREC provides real estate
brokerage services for buyers and sellers of real estate in the Hilton Head
Island, South Carolina area (see Note 13 for business segment information). Sea
Pines/TidePointe, Inc. was formed to invest in a general partnership, TidePointe
Partners, which was formed to develop a continuing care retirement community
(see Note 8). Sea Pines/TidePointe, Inc. is now dormant. SPSLC was established
to construct a healthcare facility within the TidePointe community (see Note 8).
SPSLC is also now dormant. Fifth Golf Course Club, Inc. owns certain acreage
which could be used for outdoor recreational activities.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All intercompany accounts and transactions have
been eliminated.
The Company accounted for its general partner interest in the TidePointe
Partners Partnership (see Note 8) using the equity method of accounting.
F-9
<PAGE> 29
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the Company considers all
short-term investments with maturities of 90 days or less at the time of
purchase to be cash equivalents.
REVENUE RECOGNITION
Revenues and expenses from resort operations are recognized as goods are sold
and services are provided. Real estate brokerage revenues are recognized upon
closing of the sale. Advance deposits are required for certain resort
reservations, but in general the Company's accounts receivable are unsecured.
Sales of new Country Club memberships and commissions on sales of reissued
memberships are recognized as income pursuant to the terms of an agreement with
the Club, which rotates sales of new and reissued memberships between the
Company and the Club according to a pre-set schedule. At the members' request,
such sales and resales are financed by the Company over periods of one to seven
years under interest-bearing notes. Payments to the Club on resales are made as
the Company collects from the members.
Revenues from long-term service contracts are recognized during the periods in
which the services are provided.
COST OF REVENUES
Cost of revenues includes payments to home and villa owners, real estate sales
commissions, cost of inventories sold, credit-card commissions and costs
incurred to operate and maintain operating properties.
F-10
<PAGE> 30
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
CONCENTRATION OF CREDIT RISK
The Company maintains substantially all of its cash with one financial
institution. Account balances greater than $100,000 are not federally insured
and are subject to an accounting loss if the financial institution fails.
Management believes such risk is minimal based on the current financial
condition of the financial institution.
CASH HELD IN ESCROW
Cash includes cash held in escrow pending real estate closings, advance deposits
for home and villa rentals, and rental receipts to be paid to home and villa
owners.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out method) or
market.
REAL ESTATE ASSETS
Real estate assets are recorded at cost less any impairment losses. The costs of
new development, additions and improvements which substantially extend the
useful lives of assets are capitalized. Capitalized costs include costs of
construction, property taxes, interest and miscellaneous expenses incurred
during the construction period. Capitalized construction period interest
totalled approximately $129,000, $0, and $6,000 in 1999, 1998 and 1997,
respectively. Repairs and maintenance costs are expensed as incurred.
The Company provides depreciation for financial reporting purposes when the
asset is placed in operation using straight-line and certain accelerated methods
over the estimated useful lives of the assets, which range from five to 39
years.
F-11
<PAGE> 31
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
OTHER ASSETS
Intangible assets are amortized using the straight line method over ten years.
Deferred loan fees are amortized over the lives of the corresponding debt.
IMPAIRMENT OF LONG-LIVED ASSETS
An impairment loss is recognized whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
Company considers historical performances and future estimated results in its
evaluation of potential impairment and then compares the carrying amount of the
asset to the estimated future cash flows expected to result from the use of the
asset. If the carrying amount of the asset exceeds the estimated expected future
cash flows, the Company measures the amount of the impairment by comparing the
amount of the asset to its fair value.
FINANCIAL INSTRUMENTS
The Company accounts for its interest rate swap by recording differences in
interest on the notational amount up to the amount of debt outstanding as
interest expense. Differences in fair value related to the excess of the
notional amount over the debt outstanding are recorded in the balance sheet and
as current period expense. Such excess fair value fluctuations were not material
at October 31, 1999 and October 31, 1998.
INCOME TAXES
The Company accounts for income taxes using the liability method, which requires
recognition of deferred tax liabilities and assets based on temporary
differences between the financial statement and tax bases of assets and
liabilities using current statutory tax rates. A valuation allowance is
established against net deferred tax assets if, based upon the available
evidence, it is more likely than not that some or all of the deferred tax assets
will not be realized.
F-12
<PAGE> 32
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INCOME (LOSS) PER SHARE
Income (loss) per share of common stock is calculated by dividing net income or
loss after preferred stock dividend requirements by the weighted average number
of outstanding shares of common stock. Furthermore, basic and diluted earnings
per share are identical for all periods presented. Potentially dilutive
securities consist of additional shares of common stock issuable when the stock
rights become exercisable. These contingently issuable shares have not been
included in basic or diluted earnings per share as the stock rights are not yet
exercisable. (See Note 7.)
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities, which the Company will be
required to adopt, effective November 1, 2000. Statement 133 requires the
recognition of all derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through income. If the
derivatives are hedges, depending on the nature of the hedge, changes in the
fair value of derivatives will either be offset against the change in fair value
of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The effective portion of a derivative's change in fair value will be
immediately recognized in earnings.
Currently, the Company has entered into an interest rate swap agreement as
described in Note 5, which would be subject to the new Statement.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
F-13
<PAGE> 33
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
RECLASSIFICATIONS
Certain amounts in the prior years financial statements have been reclassified
to conform to the current year presentation.
2. STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flows information follows (in thousands of
dollars):
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1999 1998 1997
-----------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Interest, net of amounts capitalized $1,022 $1,352 $1,452
Income taxes 1,438 662 965
</TABLE>
F-14
<PAGE> 34
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
3. INVENTORIES
Inventories consist of the following (in thousands of dollars):
OCTOBER 31
1999 1998
-----------------------------------
Merchandise $ 628 $ 580
Supplies, parts and accessories 37 35
Food and beverages 44 10
Other 28 28
-----------------------------------
$ 737 $ 653
===================================
4. REAL ESTATE ASSETS
Construction in progress of $6,575,000 and $1,135,000 at October 31, 1999 and
1998, consists primarily of costs related to the Inn and Conference Center in
1999, and renovations on existing properties in 1998.
Operating properties consist of the following (in thousands of dollars):
OCTOBER 31
1999 1998
-----------------------------------
Land and improvements $ 19,047 $ 20,140
Buildings 8,466 7,103
Machinery and equipment 7,308 6,399
Property held under capital leases -- 251
-----------------------------------
34,821 33,893
Less accumulated depreciation (11,056) (11,213)
-----------------------------------
$ 23,765 $ 22,680
===================================
Properties held for future development of $4,623,000 and $7,023,000 at October
31, 1999 and 1998 respectively, consist primarily of land and certain future
development rights. The decrease relates to amounts transferred to construction
in progress.
F-15
<PAGE> 35
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
5. LONG-TERM DEBT AND LINE OF CREDIT AGREEMENTS
Long-term debt consists of the following (in thousands of dollars):
<TABLE>
<CAPTION>
OCTOBER 31
1999 1998
----------------------------------
<S> <C> <C>
Term note payable to bank, bearing interest at various
London Interbank Offered Rates (LIBOR) (5.41% at
October 31, 1999), plus 1.25% to 1.5% collateralized
by substantially all assets of the Company. Principal
is payable monthly from May through October each year
in amounts ranging from $66,602 in 2000 to $220,979
in 2008. Interest is payable monthly. The note
matures November 1, 2008. $ 18,133 $ 17,159
$15 million revolving line of credit to bank, pre-approved
for use in construction of the Company's inn and
conference center, bearing interest at various London
Interbank Offered Rates (LIBOR) (5.41% at October 31,
1999), plus 1.25% to 1.5% collateralized by
substantially all assets of the Company. Interest is
payable monthly. The line matures October 31, 2003. 1,750 --
----------------------------------
19,883 17,159
Less current portion of long-term debt (400) (367)
----------------------------------
Total long-term debt $ 19,483 $ 16,792
==================================
</TABLE>
F-16
<PAGE> 36
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
5. LONG-TERM DEBT AND LINE OF CREDIT AGREEMENTS (CONTINUED)
Scheduled maturities of long-term debt as of October 31, 1999 are as follows (in
thousands of dollars):
Year ending October 31
2000 $ 400
2001 733
2002 796
2003 868
2004 946
Thereafter 16,140
------------------
Total $ 19,883
==================
The loan agreements contain provisions and covenants which impose certain
restrictions on the use of the Company's assets. The more significant of these
restrictions include limitations as to new indebtedness, the sale or disposal of
certain assets, capital contributions and investments, and new lines of
business.
The Company has an interest rate swap agreement, which effectively fixes the
interest rate on an $18 million notional principal amount under the term note
described above at 5.24% plus a credit margin ranging from 1.25% to 1.5% for a
period ending November 10, 2005. The lender has the option of calling the swap
agreement on November 10, 2003.
In addition, the Company maintains a $2,500,000 seasonal line of credit (the
"Seasonal Line") with the same bank. Interest is payable monthly at LIBOR plus
1.5% and the Seasonal Line expires October 31, 2003. Borrowings under the
Seasonal Line are also collateralized by substantially all of the assets of the
Company. There was no outstanding balance as of October 31, 1999.
F-17
<PAGE> 37
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
6. INCOME TAXES
The provision (benefit) for income taxes consists of the following (in thousands
of dollars):
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1999 1998 1997
---------------------------------------------
<S> <C> <C> <C>
Current taxes:
Federal $ 839 $ 506 $ 856
State 140 104 146
---------------------------------------------
979 610 1,002
Deferred income taxes (benefit):
Federal 202 423 (1,053)
State 31 66 (164)
---------------------------------------------
233 489 (1,217)
---------------------------------------------
$ 1,212 $ 1,099 $ (215)
=============================================
</TABLE>
The reconciliation between actual income tax expense (benefit) and the amount
calculated by applying the federal statutory rates to income (loss) before
income taxes follows (in thousands of dollars):
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1999 1998 1997
---------------------------------------------
<S> <C> <C> <C>
Tax at statutory federal income tax rates $ 1,113 $ 1,071 $ (95)
State income taxes, net of federal income tax benefit 108 116 --
Decrease in valuation allowance (168) (80) (121)
Charitable contribution expiration 140 -- --
Other 19 (8) 1
---------------------------------------------
$ 1,212 $ 1,099 $(215)
=============================================
</TABLE>
F-18
<PAGE> 38
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
6. INCOME TAXES (CONTINUED)
The tax effects of the types of temporary differences and carryovers, which give
rise to deferred income tax assets (liabilities) at October 31, 1999, 1998 and
1997, are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
OCTOBER 31
1999 1998 1997
---------------------------------------------
<S> <C> <C> <C>
Deferred revenue:
Country club membership sales $ 38 $ 43 $ 48
Health care transfer -- -- 67
Charitable contribution carryover -- 235 295
License and fee income 200 200 --
Reserve for investment in and advances to TidePointe
Partners -- -- 805
Accrued liabilities 167 141 110
Other assets 15 19 26
---------------------------------------------
Gross deferred income tax assets 420 638 1,351
Less: Valuation allowance (23) (191) (271)
---------------------------------------------
Deferred income tax assets 397 447 1,080
---------------------------------------------
Depreciation (231) (78) (91)
Equity loss from TidePointe Partners -- -- (97)
Other liabilities (83) (53) (87)
---------------------------------------------
Gross deferred income tax liabilities (314) (131) (275)
---------------------------------------------
Net deferred income tax assets $ 83 $ 316 $ 805
=============================================
</TABLE>
These net amounts are included in the consolidated balance sheets as noncurrent
assets.
7. SHAREHOLDERS' EQUITY
The Company's capital stock generally trades in units, each consisting of 500
preferred shares and 750 voting common shares. The preferred and common shares
were issued on December 22, 1987.
PREFERRED STOCK
Of the 5,000,000 authorized shares of preferred stock, 2,000,000 shares are
designated as Series A cumulative preferred stock and 3,000 shares are
designated as Series B junior
F-19
<PAGE> 39
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
7. SHAREHOLDERS' EQUITY (CONTINUED)
PREFERRED STOCK (CONTINUED)
cumulative preferred stock. The Board of Directors has the authority to approve
the issuance amount, rights and powers of an additional 2,997,000 shares of
non-Series A preferred stock except that such rights and powers shall not be
superior to those of the Series A cumulative preferred shares.
The Series A cumulative preferred shares provide for a cumulative dividend of
$0.722 per share per annum, payable in arrears as declared by the Board of
Directors. These shares have a liquidation value of $7.60 per share plus
accumulated but unpaid dividends. If four or more years of dividends are in
arrears, the Series A cumulative preferred shareholders shall be entitled to
elect a majority of the Board of Directors of the Company. All or any part of
such shares may be redeemed at the option of the Company at liquidation value.
As of October 31, 1999, all preferred stock dividends through October 31, 1998
have been declared and paid.
The Series B Junior cumulative preferred shares are subject to the prior and
superior rights of the holders of the Series A and all other classes of
preferred shares. These Series B shares provide for a cumulative dividend of the
greater of $0.25 per share or an amount as adjusted for the Antidilution Number
(initially 1,000). Each share of the Series B also entitles the holder to the
number of votes equal to the Antidilution Number. Generally, the Series B and
common shareholders shall vote together as one class on all matters submitted to
a vote. The Series B shares have a liquidation value of $100 per share, plus
dividends thereon. The Series B shares are not redeemable. No shares of the
Series B junior cumulative preferred stock have been issued (see Stock Purchase
Rights Plan).
COMMON STOCK
Of the 23,000,000 authorized shares of common stock, 2,000,000 shares are
designated as special common stock and 1,000,000 are designated as nonvoting
common stock. All other shares are voting. The 1,842,525 shares of common stock
outstanding are all voting common stock.
Each share of common stock (regardless of class) shall participate on an equal
and pro rata basis in all dividends and other distributions, including
liquidation, subject to the rights of the preferred shareholders.
F-20
<PAGE> 40
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
7. SHAREHOLDERS' EQUITY (CONTINUED)
COMMON STOCK (CONTINUED)
Holders of shares of voting common stock shall be entitled to one vote per
share. Holders of special common shares (if issued) shall have such voting
rights as specified by the Board of Directors, except that such rights shall not
be superior to the voting common stock.
In September 1999, the Board of Directors of the Company approved in concept a
plan to offer the holders of the Company's preferred stock the right to exchange
some or all of their Preferred Stock shares for either shares of common stock or
a new financial instrument, Trust Preferred Securities. The exchange offer is
expected to be made in December 1999, with holders required to elect by January
31, 2000.
STOCK PURCHASE RIGHTS PLAN
On August 23, 1993 the Company's Board of Directors approved a Stock Purchase
Rights Plan ("Plan") and declared a dividend distribution of one right ("Right")
for each share of the Company's outstanding common stock. Each Right entitles a
shareholder to purchase one one-thousandth of a share of Series B junior
cumulative preferred stock at a price of $50 per Right, subject to adjustment.
The Rights become exercisable after any person or group of affiliated or
associated persons (an "Acquirer") acquires 20% percent or more of the Company's
outstanding common stock or commences a tender offer that would result in the
Acquirer owning 20% or more of the Company's outstanding common stock or an
Acquirer has been designated an Adverse Person, as such term is defined in the
Plan. In the event the Rights become exercisable, a Right will entitle the
holder to receive shares of the Company's common stock having a value equal to
twice the exercise price of the Right. In the event that the Company is acquired
in a merger or other business combination or sale of 50% or more of its assets
or earning power, a Right will entitle the holder to receive shares of the
surviving company's common stock having a market value equal to twice the
exercise price of the Right. The Board of Directors has the flexibility to lower
the 20% threshold to not less than 10% under certain circumstances.
F-21
<PAGE> 41
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
7. SHAREHOLDERS' EQUITY (CONTINUED)
STOCK PURCHASE RIGHTS PLAN (CONTINUED)
In general, the Rights may be redeemed by the Company at $.01 per Right at
anytime before certain events occur. One Right is attached to and trades with
each share of common stock. The Rights will not trade separately unless they
become exercisable. All Rights expire on August 23, 2003.
8. TIDEPOINTE PARTNERS
In 1994, a subsidiary of the Company entered into a general partnership,
TidePointe Partners (the Partnership), with Providers Enterprises, Inc., for the
purpose of constructing, developing and operating a continuing care retirement
community on Hilton Head Island, South Carolina, to be known as TidePointe. The
Company contributed $850,000 of certain predevelopment costs for a 17.5%
interest in the Partnership, and the other partner made an initial cash
contribution of $6,000,000 for an 82.5% interest in the Partnership.
The Partnership developed phase one of the TidePointe community. The community
also included an assisted living and skilled nursing healthcare facility, which
a subsidiary of the Company developed and operated until July 31, 1997, when the
Partnership purchased the facility. Due to the Company's partial ownership of
the Partnership, $179,375 of the gain on this sale was not recognized in 1997
but was recorded as deferred gain at the time of the 1997 sale.
As of October 31, 1997, the Company had loaned the Partnership $1,505,000, which
accrued interest at prime plus two percent (totaling $344,000 at October 31,
1997).
In December 1997, the Company learned that its partner had financial
difficulties. Based on this information, the significant uncertainties created
by the majority partner's financial problems and the significant losses incurred
in the 1997 results of operations of the TidePointe project, the Company
recorded a writedown representing all of its remaining investment in and
advances to TidePointe Partners, which when combined with its equity share of
the fiscal 1997 TidePointe Partners' operating loss, totaled $2,658,000.
During 1998, the Partnership explored its options and on June 30, 1998,
TidePointe Partners closed on the sale of all of the TidePointe project assets
to CC-Hilton Head, Inc.,
F-22
<PAGE> 42
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
8. TIDEPOINTE PARTNERS (CONTINUED)
(an affiliate of Classic Residences by Hyatt) for a sales price of $23,200,000.
At closing, the Company received no cash funds or other consideration and
released its mortgage on the TidePointe property, which secured its investments
and loans to the project. The Company has no ownership interest in CC-Hilton
Head, Inc. and no longer has any ownership interest in the TidePointe community.
TidePointe Partners, the Partnership, has wound-up its affairs and has been
liquidated.
Due to the sale of all of the Partnership's assets, which included the
healthcare facility, the Company recognized the remaining gain of $179,375 in
June 1998. The Company has also entered into a 26-year license and use agreement
with CC-Hilton Head, Inc. for the use of the Company's logo, trade name, a
non-compete agreement and other services and amenity use in connection with the
TidePointe community. Under this agreement, the Company will receive fixed
annual license fees, ranging from $125,000 to $325,000 and totaling $4,125,000
over the 26-year term. Approximately $200,000 and $67,000 of license fee income
has been recognized by the Company in fiscal year 1999 and 1998 respectively.
9. COMMITMENTS
Rent expense aggregated $694,591, $554,077 and $585,000 for the years ended
October 31, 1999, 1998 and 1997, respectively. Operating leases relate primarily
to office space and equipment. Minimum annual rental commitments remaining at
October 31, 1999, under noncancelable operating leases with original terms of at
least one year are as follows (in thousands of dollars):
Year ending October 31
2000 $524,199
2001 493,066
2002 316,112
2003 283,394
2004 115,642
Thereafter 750,350
------------------
$2,482,763
==================
In 1993, the Company made a commitment to donate approximately 404 acres of the
wildlife preserve to a not-for-profit organization on Hilton Head Island, South
Carolina.
F-23
<PAGE> 43
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
9. COMMITMENTS (CONTINUED)
As of October 31, 1999 approximately 90 of the 404 acres have been donated and
title transferred. The remaining 314 acres have been leased to the same
not-for-profit organization for a nominal amount.
In 1999, the Company entered into a $12,539,000 construction contract for the
construction of the Inn and Conference Center and the renovation of the
Company's tennis facility. As of October 31, 1999, $1,220,406 has been paid
under this contract. Total construction costs of these facilities are estimated
at $17,230,000.
10. CONTINGENCIES
The Company has reached a written settlement agreement with the plaintiffs that
filed a lawsuit against the Company relating to the construction of a new
conference center in the Harbour Town area. The settlement agreement requires
the plaintiffs to dismiss their appeal and agree to be bound by the trial
court's order of March 4, 1998 if the Company proceeds with the construction of
a 60-room inn adjacent to the conference center site and meets certain
construction timelines. The Company also paid $15,000 to the plaintiffs for
legal fees incurred in the appeal. Construction of both the conference center
and the inn began in the third quarter of 1999 and both facilities are expected
to be completed and operational before the end of fiscal year 2000.
The Company also signed a written settlement agreement with the plaintiffs in a
lawsuit filed by thirteen condominium rental companies and two individuals
relating to an alleged tying arrangement regarding access to the Company's pools
and parking facilities. The plaintiffs have dismissed all claims against the
Company and conveyed by quit-claim deeds any interest they have in all of the
properties involved in the lawsuit. The Company is required to allow access to
the Company's swimming pools under certain conditions to guests of the
plaintiffs.
The Company is a defendant in a lawsuit relating to a contractual relationship
related to its investment in TidePointe Partners. The plaintiff alleges breach
of contract and seeks unspecified damages. The Company has answered the suit and
filed a counterclaim for unspecified damages. The Company intends to defend its
position vigorously and pursue its counterclaim against the plaintiff. However,
neither the Company nor its legal counsel can form an opinion as to the outcome
of this matter at this time.
F-24
<PAGE> 44
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
10. CONTINGENCIES (CONTINUED)
The Company is a defendant in a lawsuit relating to title of real and personal
property. The Plaintiff alleges ownership of certain parcels of real property
and various personal property. The parties have been involved in extensive
settlement discussions and are proceeding with the work required to document a
possible settlement of all issues. The potential settlement, as currently being
discussed, will have no material effect on the Company's assets or operations.
If no settlement is reached, the case will proceed to trial in early 2000.
Neither the Company nor its legal counsel can form an opinion as to the possible
outcome of a trial at this time.
The Company is subject to other claims and suits in the ordinary course of
business. In management's opinion, such currently pending claims and suits
against the Company will not, in the aggregate, have a material adverse effect
on the Company.
11. EMPLOYEE SAVINGS PLAN
Effective January 1, 1989, the Company adopted a 401(k) defined contribution
plan for all eligible employees with a minimum of six months of service and who
meet certain age requirements, as defined. The Company matches 50% of the first
6% of the participants' compensation. The Company's contributions to the plan
were $126,000, $119,000 and $106,000 for the years ended October 31, 1999, 1998
and 1997, respectively.
12. FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, trade receivables, notes
receivable, other current assets, accounts payable, line of credit with bank,
long-term debt and accruals meeting the definition of financial instruments
approximate their fair values, as of October 31, 1999 and 1998. As of October
31, 1999 and 1998, the estimated fair value of the interest rate swap agreement
was $681,000 and negative $411,000, respectively. Fair value of the interest
rate swap was determined through a combination of management estimates and
information obtained from third parties using market data such as bid/ask
spreads, available on the last day of the business year.
F-25
<PAGE> 45
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
13. BUSINESS SEGMENT INFORMATION
The Company had two reportable business segments for the year ended October 31,
1999, and prior to that the Company had three operating segments. The Company's
reportable segments are organized by the type of operations and for the year
ended October 31, 1999, included: (1) resort activities, including home and
villa management operations, golf course operations, food and beverage
operations, and various other recreational activities; and (2) real estate
brokerage for buyers and sellers of real estate in the Hilton Head, South
Carolina, area. Additionally, prior to the year ended October 31, 1999, the
Company had a third reportable segment, which included all activities related to
the Company's investment in TidePointe Partners and the related healthcare
operations. During 1998, the Company sold its investment in TidePointe Partners
and therefore this is not a reportable segment for the year ended October 31,
1999.
The Company evaluates performance and allocates resources based on earnings
before interest, depreciation and other non-cash items. The accounting policies
of the reportable segment are the same as those described in the summary of
significant accounting policies (Note 1). All intercompany transactions between
segments have been eliminated upon consolidation.
F-26
<PAGE> 46
Sea Pines Associates, Inc.
Notes to Consolidated Financial Statements (continued)
13. BUSINESS SEGMENT INFORMATION (CONTINUED)
Segment information as of and for the years ended October 31, 1999, 1998 and
1997 are as follows: (Dollars in Thousands)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
1999 1998 1997
----------------------------------------------------
<S> <C> <C> <C>
Revenues:
Resort $28,941 $26,554 $26,322
Real estate brokerage 17,473 11,952 9,574
TidePointe Partners and healthcare
operations -- -- 345
----------------------------------------------------
46,414 38,506 36,241
----------------------------------------------------
Interest expense:
Resort 1,099 1,345 1,476
TidePointe Partners and healthcare
operations -- -- 381
----------------------------------------------------
1,099 1,345 1,857
----------------------------------------------------
Depreciation and amortization expense:
Resort 1,263 1,378 1,411
Real estate brokerage 44 30 175
----------------------------------------------------
1,307 1,408 1,586
----------------------------------------------------
Segment income before income taxes:
Resort 1,368 1,511 1,660
Real estate brokerage 1,907 1,459 896
TidePointe Partners and healthcare
operations -- 179 (2,837)
----------------------------------------------------
3,275 3,149 (281)
----------------------------------------------------
Identifiable assets:
Resort 40,218 35,769 35,933
Real estate brokerage 2,456 2,156 1,881
----------------------------------------------------
$42,674 $37,925 $37,814
----------------------------------------------------
</TABLE>
F-27
<PAGE> 47
Report of Independent Auditors
Board of Directors and Shareholders of
Sea Pines Associates, Inc.
We have audited the consolidated financial statements of Sea Pines Associates,
Inc. as of October 31, 1999 and 1998, and for each of the three years in the
period ended October 31, 1999, and have issued our report thereon dated November
19, 1999, included elsewhere in this Annual Report on Form 10-K. Our audits also
included the financial statement schedule listed in Item 14(a)(1) and (2). This
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statement schedule based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/Ernst & Young, LLP
Atlanta, Georgia
November 19, 1999
F-28
<PAGE> 48
Sea Pines Associates, Inc.
Valuation and Qualifying Accounts
Schedule II
(Amounts in Thousands)
<TABLE>
<CAPTION>
Additions Net
Balance at charged to deductions Balance
beginning costs and and at end
of year expenses expenses of year
----------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts receivable:
For the year ended
October 31, 1997 $ 27 $76 ($ 30) $ 73
For the year ended
October 31, 1998 $ 73 $ 6 ($ 29) $ 50
For the year ended
October 31, 1999 $ 50 $ 0 ($ 9) $ 41
Deferred tax asset
valuation allowance:
For the year ended
October 31, 1997 $392 $ 0 ($121) $271
For the year ended
October 31, 1998 $271 $ 0 ($ 80) $191
For the year ended
October 31, 1999 $191 $ 0 ($168) $ 23
</TABLE>
F-29
<PAGE> 49
EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
Exhibit No.
3(a) Articles of Incorporation of Registrant (Incorporated by reference
to Exhibit 3 to Registration Statement on Form 10 filed March 1,
1989)
3(b) Articles of Amendment to Articles of Incorporation of Registrant
(Incorporated by reference to Exhibit 3(b) to the Registrants' Form
10-K for the fiscal year ended December 31, 1989 filed on January
29, 1990)
3(c) Articles of Amendment to Articles of Incorporation of Registrant
(Incorporated by reference to Exhibit 3(c) to Form 10-K filed
January 26, 1994)
3(d) Amended Bylaws of Registrant Revised October 25, 1999
4(a) First Amended and Restated Rights Agreement between Sea Pines
Associates, Inc. and EquiServe Trust Company, NA dated as of August
23, 1993 and Amended and Restated as of July 20, 1999 (Incorporated
by reference to Form 8A12G/A filed August 8, 1999)
10(a) Adjustable Rate Promissory Note between Sea Pines Company, Inc. and
Carolina Center Building Corp. dated October 31, 1996 (Incorporated
by reference to Exhibit 10(t) to Form 10-K filed January 29, 1997)
E-1
<PAGE> 50
Exhibit No.
- -----------
10(b) Mortgage Assignment and Security Agreement between Sea Pines
Company, Inc. and Carolina Center Building Corp. dated October 31,
1996 (Incorporated by reference to Exhibit 10(u) to Form 10-K filed
January 29, 1997)
10(c) Master Credit Agreement dated as of October 31, 1998 between Sea
Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia
Bank, N.A. (Incorporated by reference to Exhibit 10 (l) to Form
10-K filed January 29, 1999)
10(d) Amended and Restated Term Note between Sea Pines Associates, Inc.
and Sea Pines Company, Inc. and Wachovia Bank, N.A. in the
principal sum of $18,500,000 dated October 31, 1998 with respect to
the Credit Agreement in 10(c) above. (Incorporated by reference to
Exhibit 10 (m) to Form 10-K filed January 29, 1999)
10(e) Amended and Restated Revolving Line of Credit Note between Sea
Pines Associates, Inc. and Sea Pines Company, Inc. and Wachovia
Bank, N.A. in the principal sum of $15,000,000 dated October 31,
1998 with respect to the Credit Agreement in 10(c) above.
(Incorporated by reference to Exhibit 10 (n) to Form 10-K filed
January 29, 1999)
10(f) Amended and Restated Seasonal Line of Credit Note between Sea Pines
Associates, Inc. and Sea Pines Company, Inc. and Wachovia Bank,
N.A. in the principal sum of $2,500,000 dated October 31, 1998 with
respect to the Credit Agreement in 10(c) above. (Incorporated by
reference to Exhibit 10 (o) to Form 10-K filed January 29, 1999)
E-2
<PAGE> 51
Exhibit No.
- -----------
10(g) Mortgage Modification and Restatement Agreement dated October 31,
1998 between Sea Pines Associates, Inc. and Sea Pines Company, Inc.
and Wachovia Bank, N.A. with respect to the note in 10(d) above.
(Incorporated by reference to Exhibit 10 (m) to Form 10-K filed
January 29, 1999)
10(h) Mortgage Modification and Restatement Agreement dated October 31,
1998 between Sea Pines Associates, Inc. and Sea Pines Company, Inc.
and Wachovia Bank, N.A. with respect to the note in 10(e) above.
(Incorporated by reference to Exhibit 10 (q) to Form 10-K filed
January 29, 1999)
10(i) Mortgage Modification and Restatement Agreement dated October 31,
1998 between Sea Pines Associates, Inc. and Sea Pines Company, Inc.
and Wachovia Bank, N.A. with respect to the note in 10(f) above.
(Incorporated by reference to Exhibit 10 (r) to Form 10-K filed
January 29, 1999)
10(j) Swap Transaction confirmation between Sea Pines Company, Inc. and
Wachovia Bank, N.A. dated September 30, 1998. (Incorporated by
reference to Exhibit 10 (s) to Form 10-K filed January 29, 1999)
10(k) License and Use Agreement dated June 30, 1998 between Sea Pines
Company, Inc. and CC-Hilton Head, Inc. (Incorporated by reference
to Exhibit 10 (t) to Form 10-K filed January 29, 1999)
10(l) Asset Purchase Agreement dated July 31, 1997 between Sea Pines
Senior Living Center, Inc. and The Rogers Center, L.L.C.
(Incorporated by reference to Exhibit 10(w) to Form 10-K filed
February 13, 1998)
E-3
<PAGE> 52
Exhibit No.
- -----------
10(m) First Master Credit Agreement Modification Agreement dated October
31, 1999 between Sea Pines Associates, Inc. and Sea Pines Company,
Inc. and Wachovia Bank, NA
10(n) First Revolving Line of Credit Modification Agreement dated October
31, 1999 between Sea Pines Associates, Inc. and Sea Pines Company,
Inc. and Wachovia Bank, NA
10(o) First Seasonal Line of Credit Note Modification Agreement dated
December 20, 1999 between Sea Pines Associates, Inc. and Sea Pines
Company, Inc. and Wachovia Bank, NA
10(p) First Term Note Modification Agreement dated December 20, 1999
between Sea Pines Associates, Inc. and Sea Pines Company, Inc. and
Wachovia Bank, NA
10(q) Standard Form of Agreement between Owner and Contractor dated June
17, 1999 between Sea Pines Company, Inc. and Harden
21 Subsidiaries of the Registrant
24 Powers of Attorney
27 Financial Data Schedules (for SEC use only)
99.1 Safe Harbor Disclosure
E-4
<PAGE> 53
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant, Sea Pines Associates, Inc., has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SEA PINES ASSOCIATES, INC.
Dated: January 27, 2000 By: /s/ Norman P. Harberger
------------------------------
Norman P. Harberger
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant, Sea Pines Associates, Inc., and in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/Norman P. Harberger Chairman and Director January 27, 2000
- ---------------------------------
Norman P. Harberger
/s/Michael E. Lawrence Chief Executive Officer January 27, 2000
- --------------------------------- and Director
Michael E. Lawrence
/s/Thomas C. Morton Treasurer (Principal January 27, 2000
- --------------------------------- Financial and
Thomas C. Morton Accounting Officer)
and Director
/s/James L. Gray Vice Chairman and January 27, 2000
- --------------------------------- Director
James L. Gray
/s/Angus Cotton Secretary and January 27 ,2000
- --------------------------------- Director
Angus Cotton
<PAGE> 54
/s/Paul B. Barringer, II Director January 27, 2000
- ---------------------------------
Paul B. Barringer, II
/s/Thomas G. Daniels Director January 27, 2000
- ---------------------------------
Thomas G. Daniels
/s/Ralph L. Dupps, Jr. Director January 27, 2000
- ---------------------------------
Ralph L. Dupps, Jr.
/s/P.R. Easterlin, Jr. Director January 27, 2000
- ---------------------------------
P. R. Easterlin, Jr.
/s/Charles W. Flynn Director January 27, 2000
- ---------------------------------
Charles W. Flynn
/s/John G. McGarty Director January 27, 2000
- ---------------------------------
John G. McGarty
/s/Robert W. Siler, Jr. Director January 27, 2000
- ---------------------------------
Robert W. Siler, Jr.
/s/Arthur P. Sundry Director January 27, 2000
- ---------------------------------
Arthur P. Sundry
/s/Joseph F. Vercellotti Director January 27, 2000
- ---------------------------------
Joseph F. Vercellotti
/s/Frank E. Zimmerman, Jr. Director January 27, 2000
- ---------------------------------
Frank E. Zimmerman, Jr.
*By: /s/Angus Cotton
- ---------------------------------
Angus Cotton
Attorney-in-Fact for each
of the persons indicated
<PAGE> 1
EXHIBIT 3(d)
BY-LAWS
OF
SEA PINES ASSOCIATES, INC.
REVISED OCTOBER 25, 1999
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
I. NAME AND PURPOSES
1. Name........................................................1
2. Purposes....................................................1
II. OFFICES
1. Principal Office............................................1
2. Registered Office...........................................1
III. SHAREHOLDERS
1. Place of Meetings...........................................1
2. Annual Meeting..............................................1
3. Special Meetings............................................3
4. Notice of Meetings of Shareholders..........................4
5. Waiver of Notice............................................4
6. Quorum of Shareholders......................................5
7. Adjournment.................................................5
8. Record Date.................................................5
9. Voting of Shares............................................5
10. Proxies.....................................................6
11. Written Consent of Shareholders.............................6
12. Conduct of Meeting..........................................6
IV. BOARD OF DIRECTORS
1. General.....................................................6
2. Qualifications..............................................7
3. Committees..................................................7
4. Newly Created Directorships and Vacancies...................7
5. Quorum......................................................7
6. Action of the Board of Directors............................7
7. Resignation and Removal.....................................7
8. Place of Board Meetings.....................................7
9. Meeting by Conference Call..................................7
10. Regular Annual Meeting......................................8
i
<PAGE> 3
PAGE
----
11. Notice of Meetings of the Board.............................8
12. Adjournment.................................................8
13. Chairman for Board Meetings.................................8
14. Compensation................................................8
15. Consent of Directors........................................8
16. Advisory Directors..........................................9
V. OFFICERS
1. Number......................................................9
2. Election and Term of Office.................................9
3. Removal.....................................................9
4. Execution of Instruments....................................9
5. Compensation................................................9
6. Sureties and Bonds..........................................9
7. Chairman....................................................9
8. Vice Chairman..............................................10
9. Secretary..................................................10
10. Treasurer..................................................10
11. Assistant Officers.........................................10
12. Chief Executive Officer....................................11
VI. CERTIFICATES FOR SHARES
1. Certificates...............................................11
2. Lost or Destroyed Certificates.............................11
3. Transfer of Shares.........................................11
VII. GENERAL PROVISIONS
1. Seal.......................................................12
2. Indemnification and Insurance..............................12
3. Designated Key Executives..................................12
4. References to Articles of Incorporation....................12
5. Fiscal Year................................................12
6. By-Laws Amendments.........................................12
7. Redemption of Control Shares...............................13
ii
<PAGE> 4
BY-LAWS
OF
SEA PINES ASSOCIATES, INC.
ARTICLE I
NAME AND PURPOSES
Section 1. Name. The name of the corporation is Sea Pines Associates,
Inc. ("Corporation").
Section 2. Purposes. The Corporation is organized under the South
Carolina Business Corporation Code for those purposes set out in the Articles of
Incorporation of the Corporation.
ARTICLE II
OFFICES
Section 1. Principal Office. The principal office of the Corporation is
located at Sea Pines Welcome Center, 32 Greenwood Drive, Hilton Head Island,
South Carolina 29928. The Corporation may have such other offices either within
or without the State of South Carolina as the Board of Directors may designate
from time to time.
Section 2. Registered Office. The registered office of the Corporation
required by the South Carolina Business Corporation Code to be maintained in the
State of South Carolina may be, but need not be, identical with the principal
office and the address of the registered office may be changed from time to time
by the Board of Directors. In the absence of any action by the Board, the
registered office shall be as set forth in the Articles of Incorporation of the
Corporation.
ARTICLE III
SHAREHOLDERS
Section 1. Place of Meetings. Meetings of the shareholders shall be
held at the principal office of the Corporation or at such other place within or
outside the State of South Carolina as the Board of Directors shall authorize.
Section 2. Annual Meetings. The annual meeting of the shareholders for
the election of directors and for the transaction of such other business as may
properly be brought before the
1
<PAGE> 5
meeting shall be held at such time as is specified in the notice of the meeting
on either the first Saturday in the month of March of each year or on such other
date as may be fixed by the Board of Directors prior to the giving of the notice
of such meeting. The Board of Directors acting by resolution may postpone and
reschedule any previously scheduled annual meeting of shareholders.
Nominations of persons for election to the Board of Directors and the
proposal of business to be considered by the shareholders may be made at an
annual meeting of shareholders (a) by or at the direction of the Board of
Directors or (b) by any shareholder of the Corporation who was a shareholder of
record at the time of giving of notice by such shareholder provided for in this
By-Law, who is entitled to vote at the meeting and who complied with the notice
procedures set forth below in this By-Law.
For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (b) of the foregoing
paragraph of this By-Law, the shareholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to and received by the Secretary at the principal
office of the Corporation not less than sixty (60) days nor more than ninety
(90) days prior to the first anniversary of the preceding year's annual meeting;
provided, however, that if the date of the annual meeting is advanced by more
than thirty (30) days or delayed by more than sixty (60) days from such
anniversary date, notice by the shareholder to be timely must be so delivered
not earlier than the 90th day prior to such annual meeting and not later than
the close of business on the later of the 60th day prior to such annual meeting
or the 10th day following the day on which public announcement of the date of
such meeting is first made. Such shareholder's notice shall set forth (a) as to
each person whom the shareholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected) and a description of all arrangements and understandings
between the nominating shareholder and the nominee or any other person (naming
such person) relating to the nomination; (b) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the proposal is
made; (c) as to the shareholder giving the notice and the beneficial owner, if
any, on whose behalf the nomination or proposal is made (i) the name and address
of such shareholder, as they appear on the Corporation's books, and of such
beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such shareholder and such
beneficial owner.
Notwithstanding anything in the second sentence of the preceding
paragraph to the contrary, if the number of directors to be elected to the Board
of Directors is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors
made by the Corporation at least seventy (70) days prior to the first
anniversary of the
2
<PAGE> 6
preceding year's annual meeting, a shareholder's notice required by this By-Law
shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to and received by
the Secretary at the principal office of the Corporation not later than the
close of business on the 10th day following the day on which a public
announcement is made by the Corporation.
Only such persons who are nominated in accordance with the procedures
set forth in these By-Laws shall be eligible to serve as directors and only such
business shall be conducted at an annual meeting of shareholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this By-Law. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this By-Law and,
if any proposed nomination or business is not in compliance with this By-Law, to
declare that such defective proposal shall be disregarded.
For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service, or in a document mailed to all
shareholders of record or in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of
the Exchange Act.
Notwithstanding the foregoing provisions of this By-Law, a shareholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
By-Law. Nothing in this By-Law shall be deemed to affect any rights (i) of
shareholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of preferred stock to elect directors under specified
circumstances.
Section 3. Special Meetings. Special meetings of the shareholders shall
be called upon the request of the Chairman of the Board of Directors, upon the
request of a majority of the members of the Board of Directors or if the holders
of at least 10% of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting sign, date and deliver to the
Secretary of the Corporation one or more written demands for the meeting
describing the purpose for which it is to be held. Business transacted at a
special meeting shall be confined to the specific purpose or purposes of the
persons authorized to request such special meeting as set forth in this By-Law
and only such purpose or purposes shall be set forth in the notice of such
meeting. The Board of Directors acting by resolution may postpone and reschedule
any previously scheduled special meeting of shareholders.
Directors are to be elected at a special meeting of shareholders only
(a) if the Board of Directors so determines or (b) to fill a vacancy created by
the removal of a director at such special meeting. Nominations of persons for
election to the Board of Directors may be made at a special meeting of
shareholders at which directors are to be elected (a) by or at the direction of
the Board
3
<PAGE> 7
of Directors or (b) by any shareholder of the Corporation who was a shareholder
of record at the time of giving of notice by such shareholder provided for in
this By-Law, who is entitled to vote at the meeting and who complied with the
notice procedures set forth below in this By-Law. Nominations by a shareholder
of persons for election to the Board of Directors may be made at such a special
meeting of shareholders at which directors are to be elected if the
shareholder's notice required by the third paragraph of Section 2 of Article III
of these By-Laws shall be delivered to and received by the Secretary of the
Corporation at the principal office of the Corporation not earlier than the 90th
day prior to such special meeting and not later than the close of business on
the later of the 60th day prior to such special meeting or the 10th day
following the day on which public announcement (as defined in Section 2 of
Article III of these By-Laws) is first made of the date of the special meeting
and of the nominees proposed by the Board of Directors to be elected at such
meeting.
Only such persons who are nominated in accordance with the procedures
set forth in these By-Laws shall be eligible to serve as directors and only such
business shall be conducted at a special meeting of shareholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this By-Law. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
special meeting was made in accordance with the procedures set forth in this
By-Law and, if any proposed nomination or business is not in compliance with
this By-Law, to declare that such defective proposal shall be disregarded.
Notwithstanding the foregoing provisions of this By-Law, a shareholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
By-Law. Nothing in this By-Law shall be deemed to affect any rights (i) of
shareholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of preferred stock to elect directors under specified
circumstances.
Section 4. Notice of Meetings of Shareholders. Written notice of any
shareholders meeting shall be delivered either personally or by first class mail
to each shareholder entitled to vote on any matter to be addressed at such
meeting. Such notice shall be delivered not less than ten (10) nor more than
sixty (60) days before the meeting. Notice of each meeting shall state the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. If mailed, such notice
shall be deemed delivered when deposited in the United States mail, with postage
prepaid, addressed to the shareholder at his address as it appears on the
Corporation's records.
Section 5. Waiver of Notice. Notice of meetings need not be given to
any shareholder who signs a waiver of notice, either in person or by proxy,
either before or after the meeting. The attendance, whether in person or by
proxy, of any shareholder at a meeting without protesting the sufficiency of
notice of the meeting prior to the conclusion of such meeting shall constitute a
waiver of notice by such shareholder.
4
<PAGE> 8
Section 6. Quorum of Shareholders. A majority of the outstanding shares
of the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders for the transaction of
business. If a quorum is present at any meeting, the affirmative vote of a
majority of the shares represented and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by class is otherwise required by these By-Laws or the Articles of
Incorporation. Once a quorum is present, it shall not be broken by the
subsequent withdrawal of any shareholder, and the shareholders remaining may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 7. Adjournment. Upon the affirmative vote of a majority in
interest of shareholders present at a shareholder meeting, the meeting may be
adjourned from time to time to a fixed date for any valid business reason
without further notice as to the time and place of such adjourned meeting, but
such adjournment shall be for a period not in excess of one hundred twenty (120)
days. At any such adjourned meeting at which a quorum shall be present or
represented, only such business may be transacted which might have been
transacted at the meeting as originally scheduled, unless all shares are
represented and do not object.
Section 8. Record Date. For the purpose of determining the shareholders
qualified or entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders qualified or
entitled to receive payment of any dividend or the allotment of any rights, or
for any other proper purpose, the Board records shall fix, in advance, a date as
the record date for any such determination of shareholders. Such date shall be
not more than seventy (70) nor less than ten (10) days before the date of such
meeting or action. If no record date is fixed by the Board, the record date for
any such purposes shall be ten (10) days before the date of such meeting or
action. When such determination of qualified or entitled shareholders has been
made as provided above, such determination shall also apply to any adjourned
meeting, unless the Board fixes a new record date.
Section 9. Voting of Shares. At all meetings, shareholders' voting will
be conducted and recorded by mailed proxies prior to the meeting, or by proxies
personally delivered on the day of the meeting. However, any qualified voter may
demand a record vote, whereupon such vote shall be taken by ballot, and the
Secretary shall record the name of each shareholder voting, the number of shares
voted by each shareholder and, if such vote shall be by proxy, the name of the
proxy holder. A complete list of shareholders entitled to vote at a shareholder
meeting or any adjournment thereof, arranged in alphabetical order and setting
forth the number of voting shares held by each shareholder, shall be prepared by
the Secretary of the Corporation or the transfer agent of the Corporation who
shall have charge of the stock ledger and stock transfer books for the
Corporation. Such list shall be subject to inspection by any shareholder at the
principal office of the Corporation during business hours for ten (10) days
prior to such meeting and throughout the meeting or any adjournment thereof.
There shall be no cumulative voting.
5
<PAGE> 9
Section 10. Proxies. Every shareholder entitled to vote at a meeting of
the shareholders or to express consent or dissent to action without a meeting
may authorize another person or persons to act for him by proxy. Every proxy
must be signed by the shareholder or his attorney-in-fact and delivered to the
Secretary at the meeting prior to or during the roll call, or be returned to the
corporation with the signed consent or dissent to action without a meeting. No
proxy shall be valid after the date of the next meeting of the shareholders or
any adjournment thereof. Every proxy shall be revocable at the pleasure of the
shareholder executing it, except as otherwise provided by law.
Section 11. Written Consent of Shareholders. Any action required to be
taken at a meeting of the shareholders may be taken without a meeting if consent
in writing setting forth the action so taken shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Section 12. Conduct of Meeting. Meetings of shareholders shall be
presided over by the Chairman of the Board or, in his absence, by the Vice
Chairman of the Board or, in the absence of the foregoing persons, by a chairman
designated by the Board of Directors or, in the absence of such designation, by
a chairman chosen at the meeting by the vote of a majority in interest of the
shareholders present in person or represented by proxy and entitled to vote
thereat. The Secretary or, in his absence, an Assistant Secretary or, in the
absence of the Secretary and all Assistant Secretaries, a person whom the
chairman of the meeting shall appoint shall act as secretary of the meeting and
keep a record of the proceedings thereof.
The Board of Directors shall be entitled to make such rules,
regulations and procedures for the conduct of meetings of shareholders as it
shall deem necessary, appropriate or convenient. Subject to such rules,
regulations and procedures of the Board of Directors, if any, the chairman of
the meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are necessary, appropriate or convenient for the proper conduct of the
meeting, including, without limitation, establishing (a) an agenda or order of
business for the meeting, (b) rules, regulations and procedures for maintaining
order at the meeting and the safety of those present, (c) limitations on
participation in such meeting to shareholders of record of the Corporation and
their duly authorized and constituted proxies and such other persons as the
chairman shall permit, (d) restrictions on entry to the meeting after the time
fixed for the commencement thereof, (e) limitations on the time allotted to
questions or comments by participants and (f) rules, regulations and procedures
governing the opening and closing of the polls for balloting and matters which
are to be voted on by ballot. Unless and to the extent determined by the Board
of Directors or the chairman of the meeting, meetings of shareholders shall not
be required to be held in accordance with rules of parliamentary procedure.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. General. The business and affairs of the Corporation shall
be managed under
6
<PAGE> 10
the direction of its Board of Directors.
Section 2. Qualifications. Each director shall be at least eighteen
(18) years of age. Directors need not be shareholders nor residents of the State
of South Carolina. The mandatory retirement age for Directors is age 75.
Nominees, under the age of 75, may be elected and re-elected despite their 75th
birthday falling during their elected term; provided, however, a Director who
has reached his 75th birthday must resign at the annual meeting immediately
following his or her 75th birthday.
Section 3. Committees. The Board of Directors may create one or more
committees of the Board of Directors and appoint members of the Board of
Directors to serve on them. Each committee must have two or more members. To the
extent specified by the Board of Directors, between meetings of the Board of
Directors and subject to such limitations as may be required by law, the
Corporation's Articles of Incorporation, these By-laws or imposed by resolution
of the Board of Directors, such committees may exercise all of the authority of
the Board of Directors in the management of the Corporation. Meetings of the
committees may be held at any time on call of the Chief Executive Officer or of
any member of the committee. A majority of the members of a committee shall
constitute a quorum for all meetings. Committees shall keep minutes of their
proceedings and submit them to the next succeeding meeting of the Board.
Section 4. Newly Created Directorships and Vacancies. Newly created
directorships resulting from an increase in the number of directors or vacancies
occurring in the Board of Directors for any reason may be filled by a vote of a
majority of the directors then in office although less than a quorum may exist.
Directors appointed pursuant to this section shall hold office until the next
annual meeting of shareholders and until their successors have been elected and
qualified, or until their death, resignation or removal.
Section 5. Quorum. A majority of the members of the Board of Directors
shall constitute a quorum for the transaction of business or of any specified
item of business.
Section 6. Action of the Board of Directors. Unless otherwise required
by law, the vote of a majority of the members of the Board of Directors present
at the time of the vote, if a quorum is present at such time, shall be an act of
the Board of Directors.
Section 7. Resignation and Removal. A director may resign from the
Board of Directors, at any time, by giving written notice to the Board, the
Chairman, or the Secretary of the Corporation. Unless otherwise specified in the
notice, the resignation shall take effect upon receipt thereof by the Board or
such officer, and the acceptance of the resignation shall not be necessary to
make it effective. Any director may be removed at any time for cause upon the
vote of shareholders holding a majority of the outstanding shares with voting
rights.
Section 8. Place of Board Meetings. The Board of Directors may hold its
meetings at the principal office of the Corporation or at such other places,
either within or without the State of
7
<PAGE> 11
South Carolina, as it may from time to time determine.
Section 9. Meeting by Conference Call. Members of the Board of
Directors or any committee may participate in a meeting of the Board or
committee by means of conference telephone or similar communications equipment
by which all persons participating in the meeting can hear each other at the
same time. Such participation shall constitute presence in person at the
meeting.
Section 10. Regular Annual Meeting. The regular annual meeting of the
Board of Directors shall be held immediately following the annual meeting of the
shareholders at the place of such annual meeting of the shareholders.
Section 11. Notice of Meetings of the Board. Regular meetings of the
Board may be held without notice at such time and place, as the Board shall from
time to time determine. Special meetings of the Board shall be held upon notice
to the directors and may be called by the Chairman upon not less than 24 hours
notice to each director either personally or by mail, telegraph, telephone,
cable or wireless, facsimile transmission, courier service, or electronic mail,
and such notice shall include the date, time, place and purpose of the special
meeting. Special meetings shall be called by the Chairman or by the Secretary in
a like manner upon the written request of at least two (2) directors. Notice of
a meeting need not be given to any director who submits a waiver of notice,
either before or after the meeting, or who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him.
Section 12. Adjournment. A majority of the directors present, whether
or not a quorum is present, may adjourn any meeting to another time and place.
Notice of the adjournment shall be given to all directors who were absent at the
time of the adjournment and, unless such time and place are announced at the
meeting, to all other directors.
Section 13. Chairman For Board Meetings. At all meetings of the Board
of Directors, the Chairman of the Board, if one has been elected, shall preside.
In the absence of the Chairman, the Vice Chairman shall preside. If no duly
elected Chairman or Vice Chairman is present, the Directors present shall elect
a chairman for the meeting.
Section 14. Compensation. No compensation shall be paid to directors,
as such, for their services but, by resolution of the Board, a fixed sum and
expense for actual attendance at each regular and special meeting of the Board
may be authorized. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 15. Consent of Directors. Any action that may be taken at a
meeting of the Board of Directors may be taken without a meeting if such action
is assented to by all members of the Board. The action may be evidenced by one
or more written consents describing the action so taken, signed by all the
directors and filed with the minutes of the proceedings of the Board.
8
<PAGE> 12
Section 16. Advisory Directors. The Board of Directors may appoint any
number of advisory directors who may attend all meetings of the Board of
Directors and participate in all discussions at such meetings; provided,
advisory directors may not vote on matters coming before the Board.
ARTICLE V
OFFICERS
Section 1. Number. The Board of Directors shall elect a Chairman who
shall also act as Chairman of the Board of Directors, a Vice-Chairman who shall
also act as Vice-Chairman of the Board of Directors, a Chief Executive officer,
a Secretary, a Treasurer, and one or more assistant officers. Any two or more
offices may be held by the same person, except that the Chairman, Vice Chairman,
and Secretary must be three different persons.
Section 2. Election and Term of Office. An officer shall remain in
office until his or her successor shall have been duly elected and shall have
qualified or until his or her death or until he or she shall resign or shall
have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer may be removed by the Board whenever in
its judgment the best interest of the Corporation will be served thereby. Any
such removal in violation of any written employment agreement with any officer
shall not limit the power of the Board of Directors to remove such officer, but
the Corporation shall remain liable to the officer for the payment of all sums
due under any such agreement.
Section 4. Execution of Instruments. Contracts, deeds, checks and other
instruments shall be executed by the officer or those officers as shall be
determined by resolution of a majority of the Board of Directors.
Section 5. Compensation. The compensation of officers shall be fixed by
resolution of the Board of Directors and may include salary, insurance, expense
accounts, auto expense or other prerequisites deemed appropriate by the Board.
Section 6. Sureties and Bonds. If so required by the Board of
Directors, any officer or agent of the Corporation shall execute a bond in favor
of the Corporation in such sum and with such surety or sureties as the Board may
direct.
Section 7. Chairman. The Chairman shall oversee the work of the Board
of Directors and assure that the Board's responsibilities are carried out,
consistent with such policies and procedures as the Board may adopt. He shall,
when present, preside at all meetings of the shareholders and all meetings of
the Board of Directors. He may sign, with the Secretary or any other proper
officer of the Corporation authorized by the Board of Directors, certificates
for shares of the Corporation, and any deeds, mortgages, bonds, contracts or
other instruments which the Board
9
<PAGE> 13
of Directors authorizes to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by at least a majority of the
Board of Directors or by these By-Laws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise signed or executed. The
Chairman shall have primary responsibility for shareholder relations and
shareholder communication. He shall represent the Corporation at external
functions requiring Board representation. In general, the Chairman shall perform
all duties incident to the office and such other duties as may be prescribed by
the Board of Directors from time to time.
Section 8. Vice Chairman. In the absence of the Chairman or in the
event of his death, inability or refusal to act, the Vice Chairman, shall
perform the duties of the Chairman and, when so acting, shall have all the
powers of and be subject to all the restrictions that apply to the Chairman. The
Vice Chairman shall perform such other duties as from time to time may be
assigned to him by the Chairman or by the Board of Directors.
Section 9. Secretary. The Secretary shall attend all meetings of the
Board of Directors and of the shareholders and record all votes and minutes of
all proceedings in a book or books to be kept for that purpose. He shall keep in
safe custody the seal of the Corporation and affix it to any instrument when
authorized, and he shall keep all the documents and records of the Corporation
as required by law or otherwise in a proper and safe manner. When required, he
shall prepare or cause to be prepared and available at each meeting of
shareholders entitled to vote thereat, a list of shareholders indicating the
number of shares of each respective class held by each. In general, he shall
perform all duties incident to the office of Secretary and such other duties as
may be prescribed from time to time by the Chairman or the Board of Directors.
Section 10. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in the corporate books. He shall deposit all monies
and other valuables in the name and to the credit of the Corporation in such
depositories as may be designated by the Board and disburse the funds of the
Corporation as may be ordered or authorized by the Board and preserve proper
vouchers for such disbursements. He shall render to the Chairman and Board at
the regular meetings of the Board or whenever they require it, an account of all
of his transactions as Treasurer and of the financial condition of the
Corporation, and he shall render a full financial report at the annual meeting
of the shareholders if so requested by the Board. The Treasurer shall be
furnished, at his request, with such reports and statements as he may require
from the corporate officers and agents as to all financial transactions of the
Corporation. In general, he shall perform all duties as are given to him by
these By-Laws or as from time to time are assigned to him by the Board of
Directors or the Chairman.
Section 11. Assistant Officers. The Board of Directors may elect (or
delegate to the Chairman of the Board or to the Chairman the right to appoint)
such other officers and agents as may be necessary or desirable for the business
of the Corporation. Such other officers may include one or more assistant
secretaries and treasurers who have the power and authority to act in place of
the officer to whom they are elected or appointed as an assistant in the event
of the officer's inability or unavailability to act in his official capacity.
10
<PAGE> 14
Section 12. Chief Executive Officer. The Chief Executive Officer,
subject to the control of the Board of Directors and any limitations the Board
may choose to impose, shall direct the business and affairs of the Corporation
including its subsidiaries.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. Certificates. Each owner of stock of the Corporation shall
be entitled to have a certificate, in such form as shall be approved by the
Board of Directors, certifying the number of shares of stock of the Corporation
owned by him. The certificates representing shares of stock shall be signed in
the name of the Corporation by the Chairman or a Vice Chairman and by the
Treasurer or an assistant Treasurer or by the Secretary or an assistant
Secretary of the Corporation. Any or all of the signatures upon a certificate
may be facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or an employee of
the Corporation. In case any officer who shall have signed such certificates
shall have ceased to be such officer before such certificate shall be issued,
they may nevertheless be issued by the Corporation with the same effect as if
such officers were still in office at the date of their issue.
Section 2. Lost or Destroyed Certificates. The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost or destroyed, if permitted by applicable law, upon the making of
an affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board may so long as permitted by applicable law, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates or his legal representative, to advertise
the same in such manner as it shall require and give the Corporation a bond in
such sum and with such surety or sureties as it may direct as indemnity against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
Section 3. Transfer of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only upon
authorization by the registered holder thereof, or by his attorney thereunto
authorized by a power of attorney duly executed and filed with the Secretary or
with a transfer agent or a transfer clerk, and on surrender of the certificate
or certificates for such shares properly endorsed or accompanied by a duly
executed stock transfer power. The Corporation shall be entitled to treat the
holder of record of any share as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person whether or not it shall have express
or other notice thereof except as expressly provided by the laws of South
Carolina.
11
<PAGE> 15
ARTICLE VII
GENERAL PROVISIONS
Section 1. Seal. The seal of the Corporation shall be in such form as
the Board of Directors may from time to time determine. In the event that it is
inconvenient to use such a seal at any time, the signature of the Corporation
following the words "seal" enclosed in parenthesis shall be deemed the seal of
the Corporation. The seal shall be in the custody of the Secretary.
Section 2. Indemnification and Insurance. The Corporation shall
indemnify every officer, director and designated key executives against any and
all expenses, including attorney's fees, reasonably incurred by or imposed upon
any officer, director or designated key executive in connection with any action,
suit or other proceeding (including settlement of any suit or proceeding if
approved by the then Board of Directors) to which he or she may be a party by
reason of having been an officer, director or designated key executive. The
officers, directors and designated key executives shall not be liable for any
mistake of judgment, negligent or otherwise, except for their own individual or
willful misfeasance, malfeasance, misconduct or bad faith. The officers,
directors and designated key executives shall have no personal liability with
respect to any contract or other commitment made by the Board, in good faith, on
behalf of the Corporation, and the Corporation shall indemnify and forever hold
each such officer, director or designated key executive free and harmless
against any and all liability to others on account of any such contract or
commitment. Any right to indemnification provided for herein shall not be
exclusive of any other rights to which any officer, director, designated key
executive or former officer or director, may be entitled. The Corporation shall
maintain adequate general liability and officers and directors liability
insurance to fund this obligation, if such insurance is available at a
reasonable cost as determined by the Board of Directors.
Section 3. Designated Key Executives. The following positions shall be
designated as key executives for the purposes of Section 2 above. These
positions may be amended by a resolution of the Board of Directors: President,
Chief Executive Officer, Chief Financial Officer, Director of Sports and Retail
Operations, Controller, Director of Information Services, Director of
Hospitality, Director of Human Resources, Director of Corporate and Community
Service, Director of Marketing and Broker-in-Charge.
Section 4. References to Articles of Incorporation. References to the
Articles of Incorporation of the Corporation in these By-Laws shall include all
amendments thereto unless otherwise stated.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution by the Board of Directors.
Section 6. By-Laws Amendments. These By-Laws may be amended by the
affirmative vote of a majority of the Board of Directors or by the affirmative
vote of shareholders holding a majority of the votes eligible to be cast and
present or represented by proxy at a duly called meeting
12
<PAGE> 16
of the shareholders; provided, no amendment to the By-Laws adopted by a vote of
the shareholders in the manner provided above may be modified by the Board of
Directors.
Section 7. Redemption of Control Shares. To the fullest extent
permitted by South Carolina Code of Laws (1976), as amended, Sections 35-2-101
et seq. (the "Control Share Acquisition Provisions"), the Corporation may redeem
"control shares" acquired in a "control share acquisition" upon appropriate
resolution adopted by the Board of Directors. The terms "control shares" and
"control share acquisition" shall have the meanings set forth in the Control
Share Acquisition Provisions.
CERTIFICATION
I the undersigned, do hereby certify that I am the duly elected and
acting Secretary of Sea Pines Associates, Inc., a South Carolina corporation;
and
That the foregoing By-Laws constitute the By-Laws of the Corporation
reflecting amendments duly adopted at a meeting of the Board of Directors
thereof held on the 25th day of January 1988. And again amended and adopted by
the Board of Directors on the 7th day of December 1992. And again amended and
adopted by the Board of Directors on the 26th day of February 1996. And again
amended and adopted by the Board of Directors on the 30th day of January 1998.
And again amended and adopted by the Board of Directors on the 29th day of
March, 1999 and again amended and adopted by the Board of Directors on the 25th
day of October, 1999.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of the Corporation this 25th day of October 1999.
/s/ Angus Cotton
--------------------------------
Secretary
(SEAL)
13
<PAGE> 1
EXHIBIT 10(m)
[WACHOVIA Logo]
FIRST MASTER CREDIT AGREEMENT
MODIFICATION AGREEMENT
THIS AGREEMENT, made as of the 31st day of October, 1999, by
and among WACHOVIA BANK, N.A. (the "Lender"), SEA PINES ASSOCIATES, INC. and SEA
PINES COMPANY, INC. (if more than one, collectively, the "Borrower").
WITNESSETH:
WHEREAS, the Borrower has made and issued to the Lender: (1)
an Amended and Restated Revolving Line of Credit Note, dated the 31st day of
October, 1998, evidencing an original indebtedness of FIFTEEN MILLION AND NO/100
DOLLARS ($15,000,000.00); (2) an Amended and Restated Term Note, dated the 31st
day of October, 1998, evidencing an original indebtedness of EIGHTEEN MILLION,
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($18,500,000.00); and (3) an Amended
and Restated Seasonal Line of Credit Note, dated the 31st day of October, 1998,
evidencing an original indebtedness of TWO MILLION, FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($2,500,000.00), (such documents, as same may have been
heretofore amended, being herein referred to as the "Notes"); and
WHEREAS, the Borrower and the Lender have executed and
delivered a Master Credit Agreement dated October 31, 1998, made a part hereof
by this reference as fully as if set out herein verbatim (such document, as same
may have been heretofore amended, being herein referenced to as the "Master
Credit Agreement"), which establishes uniform agreements, obligations, and
covenants and other matters concerning the Notes and other Obligations (as
defined in the Master Credit Agreement) of the Borrower to the Lender; and
WHEREAS, to secure the Notes and other Obligations, the
Borrower has executed and delivered certain Mortgages and Assignments (as those
terms are defined in the Master Credit Agreement) made a part hereof by this
reference as fully as if set out herein verbatim (such documents as same may
have been heretofore amended, being herein referred to as the "Security
Instruments"); and
WHEREAS, the Borrower has requested the Lender make certain
modifications to the Master Credit Agreement; and
WHEREAS, the Lender, as party to the Master Credit Agreement,
and the Borrower mutually desire to modify and amend the provisions of the same
in the manner hereinafter set out, it being specifically understood that except
as herein modified and amended, the terms and provisions of the Master Credit
Agreement shall remain unchanged and continue in full force and effect as
therein written.
NOW, THEREFORE, the Lender and the Borrower in consideration
of One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each, and each does hereby agree
that the Master Credit Agreement should be, and the same hereby is, modified and
amended as follows:
1. The definition of "Facility Fee" contained in Section
1.01(n) of the Master Credit Agreement is hereby deleted and the following added
in substitute therefor:
"Facility Fee" means (i) such nonrecurring fees as
may be agreed upon between the Borrower and the Bank from time
to time, (ii) a fee of Twenty-five Thousand ($25,000.00)
Dollars paid annually (November 1st) by the Borrower to the
Bank for the Revolving Line of Credit Facility, and (iii) any
additional fees charged for any extension of any of the
Facilities; all of which fees shall be fully earned when paid
and nonrefundable.
<PAGE> 2
2. The first sentence of Section 3.01 of the Master Credit
Agreement is hereby deleted and the following sentence is added in substitute
therefor:
Subject to the terms and conditions of this Agreement, the
Bank agrees to lend to the Borrower and the Borrower agrees to
borrow from the Bank up to EIGHTEEN MILLION, THREE HUNDRED
THOUSAND ($18,300,000.00) DOLLARS on a revolving line of
credit basis (the "Revolving Line of Credit Facility"),
provided that such amount shall be reduced by the amount of
the annual principal reduction payments provided for by the
Revolving Line of Credit Note, to be made as of the end of
each Fiscal Year beginning October 31, 2001, as such payments
become due and payable.
3. The first sentence of Section 4.01 of the Master Credit
Agreement is hereby deleted and the following sentence is added in substitute
therefor:
Subject to the terms and conditions of this Agreement, the
Bank agrees to lend to the Borrower and the Borrower agrees to
borrow from the Bank up to TWO MILLION, FIVE HUNDRED THOUSAND
($2,500,000.00) DOLLARS on a seasonal line of credit basis
(the "Seasonal Line of Credit Facility"); provided, that such
amount shall be increased by the additional amount of TWO
MILLION ($2,000,000.00) DOLLARS (the "Emergency
Reserve/Over-Line Amount") until October 31, 2001, upon which
date the amount outstanding under the Seasonal Line of Credit
Facility shall be reduced to no more than TWO MILLION, FIVE
HUNDRED THOUSAND ($2,500,000.00) DOLLARS and the availability
of the Emergency Reserve/Over-Line Amount shall be terminated;
and, provided further, that no advances or re-advances of the
Emergency Reserve/Over-Line Amount shall be made after May 31,
2001. Funds from the Emergency Reserve/Over-Line Amount will
be available only after the occurrence of an act of God, such
as a hurricane or other natural disaster, which prevents
Borrower from operating its business in the ordinary course or
causes substantial damage to the Collateral. In such cases,
the funds may be used by the Borrower to pay operating
expenses until Borrower can return to normal operations and
cash flows for the period affected or to pay for repairs of
damage to the Collateral caused by the act of God. The funds
from the Emergency Reserve/Over-line amount will not be
available under any other circumstances.
IT IS MUTUALLY AGREED by and between the parties hereto that
this Agreement shall become a part of the Master Credit Agreement by reference
and that nothing herein contained shall impair the security now held for said
indebtedness, nor shall waive, annul, vary or affect any provision, condition,
covenant or agreement contained in the Notes or Master Credit Agreement except
as herein amended, nor affect or impair any rights, powers or remedies under the
Notes or Master Credit Agreement as hereby amended. Furthermore, the Lender does
hereby reserve all rights and remedies it may have as against all parties who
may be or may hereafter become primarily or secondarily liable for the repayment
of the indebtedness evidenced by the Notes.
The Borrower promises and agrees to pay the indebtedness
evidenced by the Notes in accordance with the terms thereof and agrees to
perform all of the requirements, conditions and obligations under the terms of
the Notes and Master Credit Agreement as hereby modified and amended, said
documents being hereby ratified and affirmed. The execution and delivery hereof
shall not constitute a novation or modification of the lien, encumbrance or
security title of the Security Instruments, which Security Instruments shall
retain their priority as originally filed for record. Borrower expressly agrees
that the Notes are in full force and effect and that Borrower has no right to
setoff, counterclaim or defense to the payment thereof.
Any reference contained in the Notes, Security Instruments or
Master Credit Agreement, as amended herein, to the Master Credit Agreement shall
hereinafter be deemed to be a reference to such document as amended hereby.
15
<PAGE> 3
Borrower acknowledges that Lender may reproduce (by electronic
means or otherwise) any of the documents evidencing and/or securing the Notes
and thereafter may destroy the original documents. Borrower does hereby agree
that any document so reproduced shall be the binding obligation of Borrower,
enforceable and admissible in evidence against it to the same extent as if the
original documents had not been destroyed.
This Agreement shall be closed without cost to the Lender and
all expenses incurred in connection with this closing (including, without
limitation, all attorneys' fees) are to be paid by the Borrower. The Lender is
not providing legal advice or services to the Borrower.
This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina without regard to
principles of conflict of laws.
This Agreement shall be binding upon and inure to the benefit
of any assignee or the respective heirs, executors, administrators, successors
and assigns of the parties hereto.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute any of such counterparts.
IN WITNESS WHEREOF, this instrument has been executed under
seal by the parties hereto and delivered on the date and year first above
written.
LENDER:
WACHOVIA BANK, N.A.
[CORPORATE SEAL] By: /s/ Dan S. Vroon
---------------------------------
Its: Banking Officer
--------------------------
SEA PINES ASSOCIATES, INC.
[CORPORATE SEAL] By: /s/ Michael E. Lawrence
---------------------------------
Its: President
--------------------------
SEA PINES COMPANY, INC.
[CORPORATE SEAL] By: /s/ Steven P. Birdwell
---------------------------------
Its: Chief Financial Officer
--------------------------
<PAGE> 1
EXHIBIT 10(n)
[WACHOVIA Logo]
FIRST REVOLVING LINE OF CREDIT NOTE
MODIFICATION AGREEMENT
THIS AGREEMENT, made as of the 31st day of October, 1999, by
and among WACHOVIA BANK, N.A. (the "Lender"), SEA PINES ASSOCIATES, INC. and SEA
PINES COMPANY, INC. (if more than one, collectively, the "Borrower").
WITNESSETH:
WHEREAS, the Borrower has made and issued an Amended and
Restated Revolving Line of Credit Note, dated the 31st day of October, 1998,
made a part hereof by this reference as fully as if set out herein verbatim
(such document, as same may have been heretofore amended, being herein referred
to as the "Note"), evidencing an original indebtedness of FIFTEEN MILLION AND
NO/100 DOLLARS ($15,000,000.00); and
WHEREAS, the Borrower and the Lender have executed and
delivered a Master Credit Agreement dated October 31, 1998, made a part hereof
by this reference as fully as if set out herein verbatim (such document, as same
may have been heretofore amended, being herein referenced to as the "Master
Credit Agreement"), which establishes uniform agreements, obligations, and
covenants and other matters concerning the Note and other Obligations (as
defined in the Master Credit Agreement) of the Borrower to the Lender; and
WHEREAS, to secure the Note and other Obligations, the
Borrower has executed and delivered certain Mortgages and Assignments (as those
terms are defined in the Master Credit Agreement) made a part hereof by this
reference as fully as if set out herein verbatim (such documents as same may
have been heretofore amended, being herein referred to as the "Security
Instruments"); and
WHEREAS, the Borrower has requested the Lender make certain
modifications to the Note; and
WHEREAS, the Lender, as holder and owner of the Note, and the
Borrower mutually desire to modify and amend the provisions of the same in the
manner hereinafter set out, it being specifically understood that except as
herein modified and amended, the terms and provisions of the Note shall remain
unchanged and continue in full force and effect as therein written.
NOW, THEREFORE, the Lender and the Borrower in consideration
of One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each, and each does hereby agree
that the Note should be, and the same hereby is, modified and amended as
follows:
1. The principal sum payable under the Note is increased to
EIGHTEEN MILLION, THREE HUNDRED THOUSAND ($18,300,000.00) DOLLARS.
2. The following sentence is added after the first sentence of
the third paragraph of the Note:
Beginning on October 31, 2001, an annual principal reduction
payment shall be due and payable on each October 31 in the
amount necessary to reduce the principal balance outstanding
under the Note to no more than the following amounts:
October 31, Maximum Principal Balance Outstanding
----------- -------------------------------------
2001 $17,750,000.00
2002 $17,000,000.00
2003 $16,000,000.00
16
<PAGE> 2
IT IS MUTUALLY AGREED by and between the parties hereto that
this Agreement shall become a part of the Note by reference and that nothing
herein contained shall impair the security now held for said indebtedness, nor
shall waive, annul, vary or affect any provision, condition, covenant or
agreement contained in the Note, except as herein amended, or Master Credit
Agreement, nor affect or impair any rights, powers or remedies under the Note as
hereby amended or Master Credit Agreement. Furthermore, the Lender does hereby
reserve all rights and remedies it may have as against all parties who may be or
may hereafter become primarily or secondarily liable for the repayment of the
indebtedness evidenced by the Note, as hereby amended.
The Borrower promises and agrees to pay the indebtedness
evidenced by the Note, as hereby amended, in accordance with the terms thereof
and agrees to perform all of the requirements, conditions and obligations under
the terms of the Note, as hereby modified and amended, and Master Credit
Agreement, said documents being hereby ratified and affirmed. The execution and
delivery hereof shall not constitute a novation or modification of the lien,
encumbrance or security title of the Security Instruments, which Security
Instruments shall retain their priority as originally filed for record. Borrower
expressly agrees that the Note is in full force and effect and that Borrower has
no right to setoff, counterclaim or defense to the payment thereof.
Any reference contained in the Note, as amended herein,
Security Instruments or Master Credit Agreement, to the Note shall hereinafter
be deemed to be a reference to such document as amended hereby.
Borrower acknowledges that Lender may reproduce (by electronic
means or otherwise) any of the documents evidencing and/or securing the Note and
thereafter may destroy the original documents. Borrower does hereby agree that
any document so reproduced shall be the binding obligation of Borrower,
enforceable and admissible in evidence against it to the same extent as if the
original documents had not been destroyed.
This Agreement shall be closed without cost to the Lender and
all expenses incurred in connection with this closing (including, without
limitation, all attorneys' fees) are to be paid by the Borrower. The Lender is
not providing legal advice or services to the Borrower.
This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina without regard to
principles of conflict of laws.
This Agreement shall be binding upon and inure to the benefit
of any assignee or the respective heirs, executors, administrators, successors
and assigns of the parties hereto.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute any of such counterparts.
<PAGE> 3
IN WITNESS WHEREOF, this instrument has been executed under
seal by the parties hereto and delivered on the date and year first above
written.
LENDER:
WACHOVIA BANK, N.A.
[CORPORATE SEAL] By: /s/ Dan S. Vroon
---------------------------------
Its: Banking Officer
--------------------------
SEA PINES ASSOCIATES, INC.
[CORPORATE SEAL] By: /s/ Michael E. Lawrence
---------------------------------
Its: President
--------------------------
SEA PINES COMPANY, INC.
[CORPORATE SEAL] By: /s/ Steven P. Birdwell
---------------------------------
Its: Chief Financial Officer
--------------------------
<PAGE> 1
EXHIBIT 10(o)
[WACHOVIA Logo]
FIRST SEASONAL LINE OF CREDIT NOTE
MODIFICATION AGREEMENT
THIS AGREEMENT, made as of the 20th day of December, 1999, by
and among WACHOVIA BANK, N.A. (the "Lender"), SEA PINES ASSOCIATES, INC. and SEA
PINES COMPANY, INC. (if more than one, collectively, the "Borrower").
WITNESSETH:
WHEREAS, the Borrower has made and issued an Amended and
Restated Seasonal Line of Credit Note, dated the 31st day of October, 1998, made
a part hereof by this reference as fully as if set out herein verbatim (such
document, as same may have been heretofore amended, being herein referred to as
the "Note"), evidencing an original indebtedness of TWO MILLION, FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($2,500,000.00); and
WHEREAS, the Borrower and the Lender have executed and
delivered a Master Credit Agreement dated October 31, 1998, made a part hereof
by this reference as fully as if set out herein verbatim (such document, as same
may have been heretofore amended, being herein referenced to as the "Master
Credit Agreement"), which establishes uniform agreements, obligations, and
covenants and other matters concerning the Note and other Obligations (as
defined in the Master Credit Agreement) of the Borrower to the Lender; and
WHEREAS, to secure the Note and other Obligations, the
Borrower has executed and delivered certain Mortgages and Assignments (as those
terms are defined in the Master Credit Agreement) made a part hereof by this
reference as fully as if set out herein verbatim (such documents as same may
have been heretofore amended, being herein referred to as the "Security
Instruments"); and
WHEREAS, the Borrower has requested the Lender make certain
modifications to the Note; and
WHEREAS, the Lender, as holder and owner of the Note, and the
Borrower mutually desire to modify and amend the provisions of the same in the
manner hereinafter set out, it being specifically understood that except as
herein modified and amended, the terms and provisions of the Note shall remain
unchanged and continue in full force and effect as therein written.
NOW, THEREFORE, the Lender and the Borrower in consideration
of One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each, and each does hereby agree
that the Note should be, and the same hereby is, modified and amended as
follows:
1. The principal sum payable under the Note is increased to
FOUR MILLION, FIVE HUNDRED THOUSAND ($4,500,000.00) DOLLARS.
2. The following sentence is added after the first sentence of
the third paragraph of the Note:
Any principal amounts outstanding under this Note in excess of
TWO MILLION, FIVE HUNDRED THOUSAND ($2,500,000.00) shall be
due and payable on October 31, 2001. Any such amounts shall
not be advanced or re-advanced after May 31, 2001.
IT IS MUTUALLY AGREED by and between the parties hereto that
this Agreement shall become a part of the Note by reference and that nothing
herein contained shall impair the security now held for said indebtedness, nor
shall waive, annul, vary or affect any provision, condition, covenant or
agreement contained in the Note or Master Credit Agreement except as herein
amended, nor affect or impair any rights, powers or remedies under the Note, as
hereby amended,
17
<PAGE> 2
or Master Credit Agreement. Furthermore, the Lender does hereby reserve all
rights and remedies it may have as against all parties who may be or may
hereafter become primarily or secondarily liable for the repayment of the
indebtedness evidenced by the Note, as hereby amended.
The Borrower promises and agrees to pay the indebtedness
evidenced by the Note, as hereby amended, in accordance with the terms thereof
and agrees to perform all of the requirements, conditions and obligations under
the terms of the Note, as hereby modified and amended, and Master Credit
Agreement, said documents being hereby ratified and affirmed. The execution and
delivery hereof shall not constitute a novation or modification of the lien,
encumbrance or security title of the Security Instruments, which Security
Instruments shall retain their priority as originally filed for record. Borrower
expressly agrees that the Note is in full force and effect and that Borrower has
no right to setoff, counterclaim or defense to the payment thereof.
Any reference contained in the Note, as amended herein,
Security Instruments or Master Credit Agreement, to the Note shall hereinafter
be deemed to be a reference to such document as amended hereby.
Borrower acknowledges that Lender may reproduce (by electronic
means or otherwise) any of the documents evidencing and/or securing the Note and
thereafter may destroy the original documents. Borrower does hereby agree that
any document so reproduced shall be the binding obligation of Borrower,
enforceable and admissible in evidence against it to the same extent as if the
original documents had not been destroyed.
This Agreement shall be closed without cost to the Lender and
all expenses incurred in connection with this closing (including, without
limitation, all attorneys' fees) are to be paid by the Borrower. The Lender is
not providing legal advice or services to the Borrower.
This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina without regard to
principles of conflict of laws.
This Agreement shall be binding upon and inure to the benefit
of any assignee or the respective heirs, executors, administrators, successors
and assigns of the parties hereto.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute any of such counterparts.
<PAGE> 3
IN WITNESS WHEREOF, this instrument has been executed under
seal by the parties hereto and delivered on the date and year first above
written.
LENDER:
WACHOVIA BANK, N.A.
[CORPORATE SEAL] By: /s/ Dan S. Vroon
---------------------------------
Its: Banking Officer
--------------------------
SEA PINES ASSOCIATES, INC.
[CORPORATE SEAL] By: /s/ Michael E. Lawrence
---------------------------------
Its: President
--------------------------
SEA PINES COMPANY, INC.
[CORPORATE SEAL] By: /s/ Steven P. Birdwell
---------------------------------
Its: Chief Financial Officer
--------------------------
<PAGE> 1
EXHIBIT 10(p)
[WACHOVIA Logo]
FIRST TERM NOTE MODIFICATION AGREEMENT
THIS AGREEMENT, made as of the 20th day of December, 1999, by
and among WACHOVIA BANK, N.A. (the "Lender"), SEA PINES ASSOCIATES, INC. and SEA
PINES COMPANY, INC. (if more than one, collectively, the "Borrower").
WITNESSETH:
WHEREAS, the Borrower has made and issued an Amended and
Restated Term Note, dated the 31st day of October, 1998, made a part hereof by
this reference as fully as if set out herein verbatim (such document, as same
may have been heretofore amended, being herein referred to as the "Note"),
evidencing an original indebtedness of EIGHTEEN MILLION, FIVE HUNDRED THOUSAND
AND NO/100 DOLLARS ($18,500,000.00); and
WHEREAS, the Borrower and the Lender have executed and
delivered a Master Credit Agreement dated October 31, 1998, made a part hereof
by this reference as fully as if set out herein verbatim (such document, as same
may have been heretofore amended, being herein referenced to as the "Master
Credit Agreement"), which establishes uniform agreements, obligations, and
covenants and other matters concerning the Note and other Obligations (as
defined in the Master Credit Agreement) of the Borrower to the Lender; and
WHEREAS, to secure the Note and other Obligations, the
Borrower has executed and delivered certain Mortgages and Assignments (as those
terms are defined in the Master Credit Agreement) made a part hereof by this
reference as fully as if set out herein verbatim (such documents as same may
have been heretofore amended, being herein referred to as the "Security
Instruments"); and
WHEREAS, the Borrower has requested the Lender make certain
modifications to the Note; and
WHEREAS, the Lender, as holder and owner of the Note and the
Borrower mutually desire to modify and amend the provisions of the same in the
manner hereinafter set out, it being specifically understood that except as
herein modified and amended, the terms and provisions of the Note shall remain
unchanged and continue in full force and effect as therein written.
NOW, THEREFORE, the Lender and the Borrower in consideration
of One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each, and each does hereby agree
that the Note should be, and the same hereby is modified and amended as follows:
1. The fourth paragraph of the Note concerning monthly
seasonal principal payments is deleted hereby and the following paragraph
substituted in its place:
<PAGE> 2
The outstanding principal balance shall be repaid with monthly
seasonal principal payments due on the first (1st) day of each month from May
through October of each year as follows:
Year $ Monthly Payments
---- ------------------
1999 61,193
2000 66,602
2001 122,245
2002 133,050
2003 144,810
2004 157,610
2005 171,542
2006 186,704
2007 203,207
2008 220,979
IT IS MUTUALLY AGREED by and between the parties hereto that
this Agreement shall become a part of the Note by reference and that nothing
herein contained shall impair the security now held for said indebtedness, nor
shall waive, annul, vary or affect any provision, condition, covenant or
agreement contained in the Note except as herein amended, nor affect or impair
any rights, powers or remedies under the Note as hereby amended. Furthermore,
the Lender does hereby reserve all rights and remedies it may have as against
all parties who may be or may hereafter become primarily or secondarily liable
for the repayment of the indebtedness evidenced by the Note, as hereby amended.
The Borrower promises and agrees to pay the indebtedness
evidenced by the Note, as hereby amended, in accordance with the terms thereof
and agrees to perform all of the requirements, conditions and obligations under
the terms of the Note as hereby modified and amended, said documents being
hereby ratified and affirmed. The execution and delivery hereof shall not
constitute a novation or modification of the lien, encumbrance or security title
of the Security Instruments, which Security Instruments shall retain their
priority as originally filed for record. Borrower expressly agrees that the Note
is in full force and effect and that Borrower has no right to setoff,
counterclaim or defense to the payment thereof.
Any reference contained in the Note as amended herein, to the
Note shall hereinafter be deemed to be a reference to such document as amended
hereby.
Borrower acknowledges that Lender may reproduce (by electronic
means or otherwise) any of the documents evidencing and/or securing the Note and
thereafter may destroy the original documents. Borrower does hereby agree that
any document so reproduced shall be the binding obligation of Borrower,
enforceable and admissible in evidence against it to the same extent as if the
original documents had not been destroyed.
This Agreement shall be closed without cost to the Lender and
all expenses incurred in connection with this closing (including, without
limitation, all attorneys' fees) are to be paid by the Borrower. The Lender is
not providing legal advice or services to the Borrower.
This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina without regard to
principles of conflict of laws.
This Agreement shall be binding upon and inure to the benefit
of any assignee or the respective heirs, executors, administrators, successors
and assigns of the parties hereto.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute any of such counterparts.
18
<PAGE> 3
IN WITNESS WHEREOF, this instrument has been executed under
seal by the parties hereto and delivered on the date and year first above
written.
LENDER:
WACHOVIA BANK, N.A.
[CORPORATE SEAL] By: /s/ Dan S. Vroon
---------------------------------
Its: Banking Officer
--------------------------
SEA PINES ASSOCIATES, INC.
[CORPORATE SEAL] By: /s/ Michael E. Lawrence
---------------------------------
Its: President
--------------------------
SEA PINES COMPANY, INC.
[CORPORATE SEAL] By: /s/ Steven P. Birdwell
---------------------------------
Its: Chief Financial Officer
--------------------------
<PAGE> 1
EXHIBIT 10(q)
T H E A M E R I C A N I N S T I T U T E O F A R C H I T E C T
- --------------------------------------------------------------------------------
AIA Document A111
STANDARD FORM OF AGREEMENT
BETWEEN OWNER AND CONTRACTOR
where the basis of payment is the
COST OF THE WORK PLUS A FEE
with or without a Guaranteed Maximum Price
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
The 1987 Edition of AIA Document A201, General Conditions of the Contract for
Construction, is adopted in this document by reference. Do not use with other
general conditions unless this document is modified.
This document has been approved and endorsed by the Associated General
Contractors of America.
- --------------------------------------------------------------------------------
AGREEMENT
made as of the SEVENTH day of JUNE in the year of Nineteen Hundred and
NINETY-NINE
BETWEEN the Owner:
(Name and address) SEA PINES COMPANY, INC.
Post Office Box 7000
Hilton Head Island, South Carolina 29938
and the Contractor:
(Name and address) HARDEN FRASER CONSTRUCTION, INC.
Post Office Box 7844
Hilton Head Island, South Carolina 29938
the Project is:
(Name and address) THE INN AT HARBOUR TOWN
HERITAGE CONFERENCE CENTER
AND SEA PINES RACQUET CLUB
Hilton Head Island, South Carolina
the Architect is:
(Name and address) THOMAS & HUTTON ENGINEERING CO.
3 Oglethorpe Professional Building
Savannah, Georgia 31406
The Owner and Contractor agree as set forth below.
- --------------------------------------------------------------------------------
Copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, (c)1987 by The
American Institute of Architects, 1735 New York Avenue, N.W., Washington, D.C.
20006. Reproduction of the material herein or substantial quotation of its
provisions without written permission of the AIA violates the copyright laws of
the United States and will be subject to legal prosecution.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(c)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE,
N.W., WASHINGTON, D.C. 20006
A111-1987 1
<PAGE> 2
ARTICLE 1
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, Conditions of the Contract
(General, Supplementary and other Conditions), Drawings, Specifications, Addenda
issued prior to execution of this Agreement, other documents listed in this
Agreement and Modifications issued after execution of this Agreement; these form
the Contract, and are as fully a part of the Contract as if attached to this
Agreement or repeated herein. The Contract represents the entire and integrated
agreement between the parties hereto and supersedes prior negotiations,
representations or agreements, wither written of oral. An enumeration of the
Contract Documents, other than Modifications, appears in Article 16. If anything
in the other Contract Documents is inconsistent with this Agreement, this
Agreement shall govern.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract Documents
to be the responsibility of others, or as follows:
THE CONSTRUCTION OF A SINGLE LEVEL CONFERENCE CENTER OVER PARKING ADJACENT TO
THE HERITAGE GOLF CLUBHOUSE, A SIXTY ROOM, THREE LEVEL OVER PARKING INN AND
RENOVATION OF THE EXISTING TENNIS CENTER TOGETHER WITH ALL RELATED SITEWORK AND
LANDSCAPE CONSTRUCTION MORE FULLY DESCRIBED ELSEWHERE IN THIS AGREEMENT AND THE
CONTRACT DOCUMENTS REFERENCED HEREIN.
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with the Architect
and utilize the Contractor's best skill, efforts and judgment in furthering the
interests of the Owner; to furnish efficient business administration and
supervision; to make best efforts to furnish at all times an adequate supply of
workers and materials; and to perform the Work in the best way and most
expeditious and economical manner consistent with the interests of the Owner.
The Owner agrees to exercise best efforts to enable the Contractor to perform
the Work in the best way most expeditious manner by furnishing and approving in
a timely way information required by the Contractor and making payments to the
Contractor in accordance with requirements of the Contract Documents.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract Time of
Subparagraph 4.2 is measured; it shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement, if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed.)
THE DATE OF COMMENCEMENT FOR THE HERITAGE CONFERENCE CENTER SHALL BE JUNE 7,
1999. THE INN AT HARBOUR TOWN SHALL BE COMMENCED UPON RECEIPT OF THE BUILDING
PERMIT AND COMPLETED CONSTRUCTION DOCUMENTS.
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner in writing not less that five
days before commencing the Work to permit the timely filing of mortgages,
mechanic's liens and other security interests.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 2
<PAGE> 3
4.2 The Contractor shall achieve Substantial Completion of the entire Work not
later than
(Insert the calendar date or number of calendar days after the date of
commencement. Also insert any requirements for earlier Substantial Completion of
certain portions of the Work, if not stated elsewhere in the Contract
Documents.)
SUBSTANTIAL COMPLETION ON THE SEA PINES RACQUET CLUB RENOVATIONS SHALL BE
ACHIEVED NO LATER THAN JANUARY 31, 2000. SUBSTANTIAL COMPLETION SHALL BE
ACHIEVED ON THE HERITAGE CONFERENCE CENTER NO LATER THAN APRIL 7, 2000.
SUBSTANTIAL COMPLETION ON THE INN AT HARBOUR TOWN SHALL BE ACHIEVED NO LATER
THAN JULY 31, 2000.
, subject to adjustments of this Contract Time as provided in the Contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time.)
THIS CONTRACT IS NOT SUBJECT TO LIQUIDATED DAMAGES.
ARTICLE 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum consisting of the Cost of the Work
as defined in Article 7 and the Contractor's Fee determined as follows:
(State a lump sum, percentage of Cost of the Work or other provision for
determining the Contractor's Fee, and explain how the Contractor's Fee is to be
adjusted for changes in the Work.)
A FEE OF 8% OF THE COST OF THE WORK AS DEFINED IN ARTICLES 7 AND 8 OF THIS
AGREEMENT.
5.1.1 For changes in the Work the Contractor's Fee shall be adjusted as follows:
a. FOR ADDITIONAL WORK: A FEE OF 8% OF THE TOTAL CHANGE IN THE
COST OF THE WORK AS DEFINED IN ARTICLES 7 AND 8.
b. FOR DEDUCTIVE WORK: A REDUCTION IN FEE OF 8% OF THE TOTAL
DEDUCTIVE CHANGE IN THE COST OF THE WORK AS DEFINED IN
ARTICLES 7 AND 8.
5.2 GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is guaranteed by
the Contractor not to exceed TWELVE MILLION, FIVE HUNDRED THIRTY-NINE THOUSAND
AND ONE HUNDRED AND TWELVE DOLLARS ($12,539,112.00), subject to additions and
deductions by Change Order as provided in the Contract Documents. Such maximum
sum is referred to in the Contract Documents as the Guaranteed Maximum Price.
Costs which would cause the Guaranteed Maximum Price to be exceeded shall be
paid by the Contractor without reimbursement by the Owner.
(Insert specific provisions if the Contractor is to participate in any savings.)
5.2.1.a SAVINGS SHALL BE DISTRIBUTED 75% TO THE OWNER AND 25% TO THE CONTRACTOR.
SAVINGS SHALL EQUAL THE CONTRACT SUM PLUS APPROVED CHANGE ORDERS LESS COST OF
THE WORK AND LESS CONTRACTOR'S FEE.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 3
<PAGE> 4
5.2.2 The Guaranteed Maximum Price is based upon the following alternates, if
any, which are described in the Contract Documents and are hereby accepted by
the Owner:
(State the numbers or other identification of accepted alternates, but only if a
Guaranteed Maximum Price is inserted Subparagraph 5.2.1. If decisions on other
alternates are to be made by the Owner subsequent to the execution of this
Agreement, attach a schedule of such other alternates showing the amount for
each and the date until which that amount is valid.)
SEE ATTACHMENT A.
5.2.3 The amounts agreed to for unit prices, if any, are as follows:
(State unit prices only if a Guaranteed Maximum Price is inserted in
Subparagraph 5.2.1.)
NONE
ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Guaranteed Maximum Price on account of changes in the
Work may be determined by any of the methods listed in Subparagraph 7.3.3 of the
General Conditions.
6.1.2 In calculating adjustments to subcontracts (except those awarded with the
Owner's prior consent on the basis of cost plus a fee), the terms "cost" and
"fee" as used in Clause 7.3.3.3 of the General Conditions and the terms "costs"
and "a reasonable allowance for overhead and profit" as used in Subparagraph
7.3.6 of the General Conditions shall have the meanings assigned to them in the
General Conditions and shall not be modified by Articles 5, 7 and 8 of this
Agreement. Adjustments to subcontracts awarded with the Owner's prior consent on
the basis of cost plus a fee shall be calculated in accordance with the terms of
those subcontracts.
6.1.3 In calculating adjustments to this Contract, the terms "cost" and "costs"
as used in the above-referenced provisions of the General Conditions shall mean
the Cost of the Work as defined in Article 7 of this Agreement and the terms
"fee" and "a reasonable allowance for overhead and profit" shall mean the
Contractor's Fee as defined in Paragraph 5.1 of this Agreement.
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 4
<PAGE> 5
6.2 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
6.2.1 Increased costs for the items set forth in Article 7 which result from
changes in the Work shall become part of the Costs of the Work, and the
Contractor's Fee shall be adjusted as provided in Paragraph 5.1.
6.3 ALL CONTRACTS
6.3.1 If no specific provision is made in Paragraph 5.1 for adjustment of the
Contractor's Fee in the case of changes in the Work, or if the extent of such
changes in such, in the aggregate, that application of the adjustment provisions
of Paragraph 5.1 will cause substantial inequity to the Owner or Contractor, the
Contractor's Fee shall be equitably adjusted on the basis of the Fee established
for the original Work.
ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at rates
not higher than the standard paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the items set
forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site, or with the Owner's agreement,
at off-site workshops. THE PROJECT MANAGER'S COST WILL BE PRORATED AMONG ALL
JOBS HE IS WORKING ON BASED ON ACTUAL TIME SPENT ON EACH JOB REGARDLESS OF WHERE
THE PROJECT MANAGER IS STATIONED.
7.1.1.2 Wages or salaries of the Contractor's supervisory and administrative
personnel when stationed at the site with the Owner's agreement.
(If it is intended that the wages or salaries of certain personnel stationed at
the Contractor's principal or other offices shall be included in the Cost of the
Work, identify in Article 14 the personnel to be included and whether for all or
only part of their time.)
7.1.1.3 Wages and salaries of the Contractor's supervisory or administrative
personnel engaged, at factories, workshops or on the road, in expediting the
production or transportation of materials or equipment required for the Work,
but only for that portion of their time required for the Work.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective bargaining
agreements and, for personnel not covered by such agreements, customary benefits
such as sick leave, medical and health benefits, holidays, vacations and
pensions, provided such costs are based on wages and salaries included in the
Cost of the Work under Clauses 7.1.1.1 through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of the subcontracts.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment incorporated
or to be incorporated in the completed construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials, if any, shall be handed over to
the Owner at the completion of the Work or, at the Owner's option, shall be sold
by the Contractor; amounts realized, if any, from such sales shall be credited
to the Owner as a deduction from the Cost of the Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED
ITEMS
- --------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 5
<PAGE> 6
7.1.4.1 Costs, including transportation, installation, maintenance, dismantling
and removal of materials, supplies, temporary facilities, machinery, equipment,
and hand tools not customarily owned by the construction workers, which are
provided by the Contractor at the site and fully consumed in the performance of
the Work; and cost less salvage value on such items if not fully consumed,
whether sold to others or retained by the Contractor. Cost for items previously
used by the Contractor shall mean fair market value.
7.1.4.2 Rental charges for temporary facilities, machinery, equipment, and hand
tools not customarily owned by the construction workers, which are provided by
the Contractor at the site, whether rented from the Contractor or others, and
costs of transportation, installation, minor repairs and replacements,
dismantling and removal thereof. Rates and quantities of equipment rented shall
be subject tot he Owner's prior approval. CONTRACTOR OWNED EQUIPMENT MAY BE
RENTED TO THE JOB AT 85% OF THE MONTHLY RATES LISTED IN THE BLUE BOOK.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage and parcel
delivery charges, telephone service at the site and reasonable petty cash
expenses of the site office.
7.1.4.5 That portion of the reasonable travel and subsistence expenses of the
Contractor's personnel incurred while traveling in discharge of duties connected
with the Work.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and bonds.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Contractor is required by the Contract
Documents to pay.
7.1.5.4 Fees of testing laboratories for tests required by the Contract
Documents, except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or
other provisions of the Contract Documents and which do not fall within the
scope of Subparagraphs 13.5.3 of the General Conditions or other provisions of
the Contract Documents and which do not fall within the scope of Subparagraphs
7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner's consent; provided, however, that such cost of
legal defenses, judgment and settlements shall not be included in the
calculation of the Contractor's Fee or of a Guaranteed Maximum Price, if any,
and provided that such royalties, fees and costs are not excluded by the last
sentence of Subparagraph 3.17.1 of the General Conditions or other provisions of
the Contract Documents.
7.1.5.6 Deposits lost for causes other that the Contractor's fault or
negligence.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the extent
approved in advance in writing by the Owner.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE ON NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in case of
an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 6
<PAGE> 7
7.2.2 In repairing or correcting Work damaged or improperly executed by
construction workers in the employ of the Contractor, provided such damage or
improper execution did not result from the fault or negligence of the Contractor
or the Contractor's foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work other than that described in Subparagraph 7.2.2,
provided such damage did not result from the fault or negligence of the
Contractor or the Contractor's personnel, and only to the extent that the cost
of such repairs is not recoverable by the Contractor from others and the
Contractor is not compensated therefor by insurance or otherwise.
7.2.4 In correcting defective or nonconforming Work performed or supplied by a
Subcontractor or material supplier and not corrected by them, provided such
defective or nonconforming Work did not result from the fault or neglect of the
Contractor or the Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor of material supplier, and only to the extent that the
cost of correcting the defective or nonconforming Work is not recoverable by the
Contractor from the Subcontractor or material supplier.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel stationed at
the Contractor's principal office or offices other than the site office, except
as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may be provided in
Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other that the
site office.
8.1.3 Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4 The Contractor's capital expenses, including interest on the Contractor's
capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically provided
in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and Paragraph 13.5
of this Agreement, costs due to the fault or negligence of the Contractor,
Subcontractors, or anyone directly or indirectly employed by any of them, or for
whose acts any of them may be liable, including but not limited to costs for the
correction of damaged, defective or nonconforming Work, disposal and replacement
of materials and equipment incorrectly ordered or supplied, and making good
damage to property not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be
exceeded.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall accrue to
the Owner if (1) before making the payment, the Contractor included them in an
Application for Payment and received payment therefor from the Owner, or (2) the
Owner has deposited funds with the Contractor with which to make payments;
otherwise, cash discounts shall accrue to the Contractor. Trade discounts,
rebates, refunds and amounts received from sales of surplus materials and
equipment shall accrue to the Owner, and the Contractor shall make provisions so
that they can be secured.
9.2 Amounts which accrue to the Owner in accordance with the provisions of
Paragraph 9.1 shall be credited to the Owner as a deduction from the Cost of the
Work.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 7
<PAGE> 8
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily perform
with the Contractor's own personnel shall be performed under subcontracts or by
other appropriate agreements with the Contractor. The Contractor shall obtain
bids from Subcontractors and from suppliers of materials or equipment fabricated
especially for the Work and shall deliver such bids to the Architect. The Owner
will then determine, with the advice of the Contractor and subject to the
reasonable objection of the Architect, which bids will be accepted. The Owner
may designate specific persons or entities from whom the Contractor shall obtain
bids; however, if a Guaranteed Maximum Price has been established, the Owner may
not prohibit the Contractor from obtaining bids from others. The Contractor
shall be required to contract with anyone to whom the Contractor has reasonable
objection.
10.2 If a Guaranteed Maximum Price has been established and a specific bidder
among those whose bids are delivered by the Contractor to the Architect (1) is
recommended to the Owner by the Contractor; (2) is qualified to perform that
portion of the Work; and (3) has submitted a bid which conforms to the
requirements of the Contract Documents without reservations or exceptions, but
the Owner requires that another bid be accepted; then the Contractor may require
that a Change Order be issued to adjust the Guaranteed Maximum Price by the
difference between the bid of the person or entity recommended to the Owner by
the Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity designated by the Owner.
10.3 Subcontract or other agreements shall conform to the payment provisions of
Paragraphs 12.7 and 12.8, and shall not be awarded on the basis of cost plus a
fee without the prior consent of the Owner.
ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract; the accounting and control systems shall be satisfactory to the Owner.
The Owner and the Owner's accountants shall be afforded access ALL OF to the
Contractor's records, books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
this Contract, and the Contractor shall preserve these for a period of three
years after final payment, or for such longer period as may be required by law.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the Architect by the
Contractor and Certificates for Payment issued by the Architect, the Owner shall
make progress payments on account of the Contract Sum to the Contractor as
provided below and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment shall be one calendar
month ending on the last day of the month, or as follows:
12.3 Provided an Application for Payment is received by the Architect not later
than the 25TH day of a month, the Owner shall make payment to the Contractor not
later than the TENTH (10TH) day of the FOLLOWING month. If an Application for
Payment is received by the Architect after the application date fixed above,
payment shall be made by the Owner not later than FIFTEEN (15) days after the
Architect received the Application for Payment.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 8
<PAGE> 9
12.4 With each Application for Payment the Contractor shall submit payrolls,
petty cash accounts, receipted invoices or invoices with check vouchers
attached, and any other evidence required by the Owner or Architect to
demonstrate that cash disbursements already made by the Contractor on account of
the Cost of the Work equal or exceed (1) progress payments already received by
the Contractor; less (2) that portion of those payments attributable to the
Contractor's Fee; plus (3) payrolls for the period covered by the present
Application for Payment; plus (4) retainage provided in Subparagraph 12.5.4, if
any, applicable to prior progress payments.
12.5 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
12.5.1 Each Application for Payment shall be based upon the most recent schedule
of values submitted by the Contractor in accordance with the Contract Documents.
The schedule of values shall allocate the entire Guaranteed Maximum Price among
the various portions of the Work, except that the Contractor's Fee shall be
shown as a single separate item. The schedule of values shall be prepared in
such form and supported by such data to substantiate its accuracy as the
Architect may require. This schedule, unless objected to by the Architect, shall
be used as a basis for reviewing the Contractor's Applications for Payment.
12.5.2 Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the lesser of (1) the percentage of
that portion of the Work which has actually been completed or (2) the percentage
obtained by dividing (a) the expense which has actually been incurred by the
Contractor on account of that portion of the Work for which the Contractor has
made or intends to make actual payment prior to the next Application for Payment
by (b) the share of the Guaranteed Maximum Price allocated to that portion of
the Work in the schedule of values.
12.5.3 Subject to other provisions of the Contract Documents, the amount of each
progress payment shall be computed as follows:
12.5.3.1 Take that portion of the Guaranteed Maximum Price properly allocable to
completed Work as determined by multiplying the percentage completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to
that portion of the Work in the schedule of values. Pending final determination
of cost to the Owner of changes in the Work, amounts not in dispute may be
included as provided in Subparagraph 7.3.7 of the General Conditions, even
though the Guaranteed Maximum Price has not yet been adjusted by Change Order.
12.5.3.3 Add the Contractor's Fee, less retainage of TEN percent (10%). The
Contractor's Fee shall be computed upon the Cost of the Work described in the
two preceding Clauses at the rate stated in Paragraph 5.1 or, if the
Contractor's Fee is stated as a fixed sum in that Paragraph, shall be an amount
which bears the same ratio to that fixed-sum Fee as the Cost of the Work in the
two preceding Clauses bears to a reasonable estimate of the probable Cost of the
Work upon its completion.
12.5.3.4 Subtract the aggregate of previous payments made by the Owner.
12.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.5.3.6 Subcontract amounts, if any, for which the Architect has withheld or
nullified a Certificate for Payment as provided in Paragraph 9.5 of the General
Conditions.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 9
<PAGE> 10
12.5.4 Additional retainage, if any, shall be as follows:
(If it is intended to retain additional amounts from progress payments to the
Contractor beyond (1) the retainage from the Contractor's Fee provided in Clause
12.5.3.3. (2) the retainage from Subcontractors provided in Paragraph 12.7
below, and (3) the retainage, if any, provided by other provisions of the
Contract, insert provision for such additional retainage here. Such provision,
if made, should also describe any arrangement for limiting or reducing the
amount retained after the Work reaches a certain state of completion.)
UNTIL THE WORK IS FIFTY (50%) COMPLETE, THE OWNER WILL DEDUCT TEN PERCENT (10%)
RETAINAGE. THEREAFTER, UNTIL COMPLETION, THE OWNER WILL NOT DEDUCT ANY
ADDITIONAL RETAINAGE SO THAT AT COMPLETION, THE RETAINAGE AMOUNT SHALL BE FIVE
PERCENT (5%).
WITHIN THIRTY (30) DAYS OF THE ISSUANCE OF THE CERTIFICATE OF SUBSTANTIAL
COMPLETION FOR THE SEA PINES RACQUET CLUB RENOVATIONS, HERITAGE CONFERENCE
CENTER AND INN AT HARBOUR TOWN, RETAINAGE FOR THAT PORTION OF THE WORK SHALL BE
PAID TO THE CONTRACTOR.
12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
Not Applicable.
12.7 Except with the Owner's prior approval, payments to Subcontractors included
in the Contractor's Applications for Payment shall not exceed an amount for each
Subcontractor calculated as follows:
12.7.1 Take that portion of the Subcontract Sum properly allocable to completed
Work as determined by multiplying the percentage completion of each portion of
the Subcontractor's Work by the share of the total Subcontract Sum allocated to
that portion in the Subcontractor's schedule of values, less retainage as
INDICATED IN ARTICLE 12.5.4.1 percent ( %). Pending final determination of
amounts to be paid to the Subcontractor for changes in the Work, amounts not in
dispute may be included as provided in Subparagraph 7.3.7 of the General
Conditions even though the Subcontract Sum has not yet been adjusted by Change
Order.
12.7.2 Add that portion of the Subcontract Sum properly allocable to materials
and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing, less retainage as
INDICATED IN ARTICLE 12.5.4 percent ( %).
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 10
<PAGE> 11
12.7.3 Subtract the aggregate of previous payments made by the Contractor to the
Subcontractor.
12.7.4 Subtract amounts, if any, for which the Architect has withheld or
nullified a Certificate for Payment by the Owner to the Contractor for reasons
which are the fault of the Subcontractor.
12.8 Except with the Owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site.
12.9 In taking action on the Contractor's Applications for Payment, the
Architect shall be entitled to rely on the accuracy and completeness of the
information furnished by the Contractor and shall not be deemed to represent
that the Architect has made a detailed examination, audit or arithmetic
verification of the documentation submitted in accordance with Paragraph 12.4 or
other supporting data; that the Architect has made exhaustive or continuous
on-site inspections or that the Architect has make examinations to ascertain how
or for what purposes the Contractor has used amounts previously paid on account
of the Contract. Such examinations, audits and verifications, if required by the
Owner, will be performed by the Owner's accountants acting in the sole interest
of the Owner.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor when (1) the
Contract has been fully performed by the Contractor except for the Contractor's
responsibility to correct defective or nonconforming Work, as provided in
Subparagraph 12.2.2 of the General Conditions, and to satisfy other
requirements, if any, which necessarily survive final payment; (2) a final
Applications for Payment and a final accounting for the Cost of the Work have
been submitted by the Contractor and reviewed by the Owner's accountants; and
(3) a final Certificate for Payment has then been issued by the Architect; such
final payment shall be made by the Owner not more than 30 days after the
issuance of the Architect's final Certificate for Payment, or as follows:
UNLESS THE OWNER TAKES EXCEPTION TO THE ARCHITECT'S DETERMINATION OF FINAL
COMPLETION; HOWEVER, THE OWNER'S APPROVAL SHALL NOT BE UNREASONABLY WITHHELD.
13.2 The amount of the final payment shall be calculated as follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the Contractor's
final accounting and the Contractor's Fee; but not more than the Guaranteed
Maximum Price, if any.
13.2.2 Subtract amounts, if any, for which the Architect withholds, in whole or
in part, a final Certificate for Payment as provided in Subparagraph 9.5.1 of
the General Conditions or other provisions of the Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner.
If the aggregate of previous payments made by the Owner exceeds the amount due
the Contract, the Contractor shall reimburse the difference to the Owner.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 11
<PAGE> 12
13.3 The Owner's accountants will review and report in writing on the
Contractor's final accounting within 30 days after delivery of the final
accounting to the Architect by the Contractor. Based upon such Cost of the Work
as the Owner's accountants report to be substantiated by the Contractor's final
accounting, and provided the other conditions of Paragraph 13.1 have been met,
the Architect will, within seven days after receipt of the written report of the
Owner's accountants, either issue to the Owner a final Certificate for Payment
with a copy to the Contractor, or notify the Contractor and Owner in writing of
the Architects reasons for withholding a certificate provided in Subparagraph
9.5.1 of the General Conditions. The time periods stated in this Paragraph 13.3
supersede those stated in Subparagraph 9.4.1 of the General Conditions.
13.4 If the Owner's accountants report the Cost of the Work as substantiated by
the Contractor's final accounting to be less than claimed by the Contractor, the
Contractor shall be entitled to demand arbitration of the disputed amount
without a further decision of the Architect. Such demand for arbitration shall
be made by the Contractor within 30 days after the Contractor's receipt of a
copy of the Architect's final Certificate for Payment; failure to demand
arbitration within this 30-day period shall result in the substantiated amount
reported by the Owner's accountants becoming binding on the Contractor. Pending
a final resolution by arbitration, the Owner shall pay the Contractor the amount
certified in the Architect's final Certificate for Payment.
13.5 If, subsequent to final payment and at the Owner's request, the Contractor
incurs costs described in Article 7 and not excluded by Article 8 to correct
defective or nonconforming Work, the Owner shall reimburse the Contractor such
costs and the Contractor's Fee applicable thereto on the same basis as if such
costs had been incurred prior to final payment, but not in excess of the
Guaranteed Maximum Price, if any. If the Contractor has participated in savings
as provided in Paragraph 5.2, the amount of such savings shall be recalculated
and appropriate credit given to the Owner in determining the net amount to be
paid by the Owner to the Contractor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made to this Agreement to a provision of the General
Conditions or another Contract Document, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from the
date payment is due at the rate stated below, or in the absence thereof, at the
legal rate prevailing from time to time at the place where the Project is
located.
(Insert rate of interest agreed upon, if any.)
PAYMENTS DUE THE CONTRACTOR NOT PAID WITHIN FIVE (5) DAYS OF THE DATE DUE IN
ACCORDANCE WITH ARTICLE 12.1 SHALL BEAR INTEREST AT WACHOVIA BANK OF SOUTH
CAROLINA PRIME RATE PLUS TWO PERCENT (2%).
(Ursury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
14.3 Other provisions:
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in Article 14
of the General Conditions; however, the amount to be paid to the Contractor
under Subparagraph 14.1.2 of the General Conditions shall not exceed the amount
the Contractor would be entitled to receive under Paragraph 15.3 below, except
that the Contractor's Fee shall be calculated as if the Work had been fully
completed by the Contractor, including a reasonable estimate of the Cost of the
Work for Work not actually completed.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 12
<PAGE> 13
15.2 If a Guaranteed Maximum Price is established in Article 5, the Contract may
be terminated by the Owner for cause as provided in Article 14 of the General
Conditions; however, the amount , if any, to be paid to the Contractor under
Subparagraph 14.2.4 of the General Conditions shall not cause the Guaranteed
Maximum Price to be exceeded, nor shall it exceed the amount the Contractor
would be entitled to receive under Paragraph 15. 3 below.
15.3 If no Guaranteed Maximum Price is established in Article 5, the Contract
may be determined by the Owner for cause as provided in Article 14 of the
General Conditions; however, the Owner shall then pay the Contractor an amount
calculated as follows:
15.3.2 Add the Contractor's Fee computed upon the Cost of the Work to the date
of termination at the rate stated in Paragraph 5.1 or, if the Contractor's Fee
is stated as a fixed sum in that Paragraph, an amount which bears the same
ration to that fixed-sum Fee as the Cost of the Work at the time of termination
bears to a reasonable estimate of the probable Cost of the Work upon its
completion.
15.3.3 Subtract the aggregate of previous payments made by the Owner.
The Owner shall also pay the Contractor fair compensation, either by purchase or
rental at the election of the Owner, for any equipment owned by the Contractor
which the Owner elects to retain and which is not otherwise included in the Cost
of the Work under Subparagraph 15.3.1. To the extent that the Owner elects to
take legal assignment of subcontracts and purchase orders (including rental
agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 15, execute and deliver all such papers and take all
such steps, including the legal assignment of such subcontract and other
contractual rights of the Contractor, as the Owner may require for the purpose
of fully vesting in the Owner the rights and benefits of the Contractor under
such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions; in such case, the Guaranteed Maximum Price, if any, shall be
increased as provided in Subparagraph 14.3.2 of the General Conditions except
that the term "cost of performance of the Contract" in that Subparagraph shall
be understood to mean the Cost of the Work and the term "profit" shall be
understood to mean the Contractor's Fee as described in Paragraphs 5.1 and 6.3
of this Agreement.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Standard Form of Agreement Between Owner
and Contractor, AIA Document A111, 1987 Edition.
16.1.2 The General Conditions are the General conditions of the Contract for
Construction, AIA Document A201, 1987 Edition AS MODIFIED AND ATTACHED TO THIS
AGREEMENT.
16.1.3 The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated , and are as follows:
SEE ATTACHMENT A
16.1.4 The Specifications are those contained in the Project Manual dated as in
Paragraph 16.1.3, and are as follows:
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)
SEE ATTACHMENT A
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 13
<PAGE> 14
16.1.5 The Drawings are as follows, and are dated unless a different
date is shown below:
(Either list the Drawings here or refer to an exhibit attached to
this Agreement.)
SEE ATTACHMENT A
16.1.6 The Addenda, if any, are as follows:
NONE
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in this
Article 16.
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 14
<PAGE> 15
16.1.7 Other Documents, if any, forming part of the Contract Documents are as
follows:
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only if intended to be
part of the Contract Documents.)
a. GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION, 1987 EDITION, AIA
DOCUMENT A201 AS MODIFIED BELOW AND WITHIN THE ATTACHED:
PARAGRAPH 3.5.1 IN THE FOURTH LINE AFTER "SEQUENCES", INSERT
"SAFETY"
PARAGRAPH 3.4.2 IN THE FIRST LINE AFTER "DISCIPLINE", ADD
"SAFETY".
16.1.8 QUALIFICATIONS AND CLARIFICATIONS (ATTACHMENT A)
16.1.9 SCHEDULE OF VALUES (ATTACHMENT B)
16.1.10 OWNER'S FINANCING (ATTACHMENT C)
16.1.11 DOCUMENT OF DIFFERENTIATION (ATTACHMENT D)
16.1.12 INTERIOR FINISH DESCRIPTIVE NARRATIVE (ATTACHMENT E)
16.1.13 LANDSCAPE COST ESTIMATE FOR HERITAGE CONFERENCE CENTER (ATTACHMENT F)
16.1.14 LANDSCAPE COST ESTIMATE FOR THE INN AT HARBOUR TOWN (ATTACHMENT G)
16.1.15 LANDSCAPE COST ESTIMATE FOR SEA PINES RACQUET CLUB (ATTACHMENT H)
This Agreement is entered into as the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
OWNER CONTRACTOR
SEA PINES COMPANY, INC. HARDEN FRASER CONSTRUCTION, INC.
/s/ Michael E. Lawrence /s/ Joseph B. Fraser III
- ------------------------------------- -------------------------------------
BY: MICHAEL E. LAWRENCE BY: JOSEPH B. FRASER III
ITS: PRESIDENT ITS: PRESIDENT
DATE: 6/16/99 DATE:
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AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA(R) -
(C)1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 15
<PAGE> 16
ATTACHMENT A
INN AT HARBOUR TOWN
HERITAGE CONFERENCE CENTER
SEA PINES RACQUET CLUB
QUALIFICATIONS AND CLARIFICATIONS
JUNE 7, 1999
A. GENERAL
1. The Guaranteed Maximum Price (GMP) is based on the terms and conditions of
the executed Contract dated June 7, 1999, except as modified herein.
2. The GMP is based upon the Specifications, Drawings, Allowances and
Qualifications listed in this Attachment A.
3. It is understood that since the Architect's documents for the Inn at
Harbour Town have not been revised to incorporate all of the accepted value
engineering items listed in this Attachment A, the Owner, Architect and
Harden Fraser Construction, Inc. will work together to complete the design
in accordance with the intent and scope of the accepted value engineering
that form the basis of the GMP. Should an increase in the GMP be indicated
due to deviations from such intent and scope during document completion,
the GMP shall be increased to cover the increased cost and the associated
General Conditions and Fee. It is understood that any value engineering
accepted by Owner will also be accepted by the Architect and will be
incorporated into the construction drawings and specifications as if they
were part of the original design.
4. The GMP line item costs include items of work that will be subcontracted,
as well as Harden Fraser Construction, Inc. reimbursement costs. No
guarantee exists on any separate line. Savings in any line item may be
transferred to cover possible overruns of other line items.
5. It is intended that this project include no proprietary vendors. Where a
single vendor is designated, this is to serve as a reference relative to
performance criteria for the equipment/system described. This is applicable
throughout the project, other than where the documents specifically
stipulate that only a particular vendor may be considered.
6. The GMP is based on the premise that the design will meet all laws,
ordinances, rules, and regulations in effect at the time the GMP was
prepared. The GMP will be adjusted should any discrepancies between design
and the aforementioned laws and ordinances result in or required an
increase in the Cost of the Work.
7. Harden Fraser Construction, Inc. does not assume design responsibility for
any component of the project.
Page 1 of 13
<PAGE> 17
8. Except for the fire protection system and wood trusses, the GMP does not
include the cost of the professional engineer's stamp on any
subcontractor's or vendor's shop/ fabrication drawings unless specifically
stipulated by prevailing jurisdictional requirements.
9. The GMP does not include Builder's Risk Insurance nor Owner's Protective
Liability Insurance. Deductibles are understood to be Owner's
responsibility. Difference in coverage (Harden Fraser Construction, Inc.
policy limits versus contract requirements) cost are not included in the
GMP.
10. The GMP includes a 12-month warranty of all work that begins with the date
of the certification of occupancy. The cost of any extended warranties
required by the Specifications is included in the GMP. However, any
extended warranties required by the Specifications will be exclusively
between the manufacturer/subcontractor and the Owner.
11. The GMP does not include any funds for damages caused by the Architect's
errors and omissions or failure to carry adequate Professional Liability
Insurance.
12. Use of Union labor/prevailing wage is not mandatory.
13. The cost for temporary construction heating required for finishes is
included. Harden Fraser Construction, Inc. will pay for utility consumption
costs.
14. Utility bills will be paid by the Owner after receipt of Certificate of
Occupancy and the sooner of the issuance of the Certificate of Substantial
Completion or commencement of installation of furnishings, fixtures and
equipment for each building.
15. Payment & Performance Bonds are typically included in the cost for
subcontracts that exceed $100,000, but are not included for Harden Fraser
Construction, Inc.
16. The GMP does not include removal of asbestos or other hazardous materials.
Should this type of material be discovered, we will stop work and notify
Owner for the correction directions. Further, Harden Fraser Construction,
Inc. will not assume any liability for its removal.
17. The GMP does not include any furnishings or distribution/installations of
furnishings except as described in the "Documentation of Differentiation"
prepared by Design Continuum, Inc. and included in Attachment D.
18. The GMP is based on receiving the Building Permit together with the
completed issued for construction plans for the Inn at Harbour Town no
later than July 15, 1999.
19. All surveying and layout verifications by independent agencies are
understood to be the responsibility of the Owner. Only surveying and layout
integral to installation of the work of the new construction is included in
the GMP.
Page 2 of 13
<PAGE> 18
20. Off-site construction is not included other than that necessary to the
execution of on-site construction operations and specifically identified in
the sitework drawings prepared by Thomas & Hutton Engineering Company
referenced in this Attachment A.
21. Consulting services (material, systems, equipment) are not included.
22. The schedule float is not considered the possession of the Owner in that
the schedule is the Contractor's methodology of how to meet only the
required occupancy dates and not incremental activity dates.
23. Sales taxes are included including the new 6% Beaufort County, South
Carolina sales tax.
24. Our price is based upon existing soils conditions adequate to the
structural requirements and free of concealed interference's, subsurface
water intrusion, and/or contaminants requiring removal. No unsuitable soil
removal is included.
25. The GMP does not include any development fees, assessment fees, water and
sewer connection fees, or any other fees other than the Town of Hilton Head
Island building permits.
26. Except for the temporary project signs, all signage, graphics, and/or
directories are not included except for the site signage allowance included
in the Landscape Construction portion of this Attachment A.
27. The GMP does not include any architectural, structural, mechanical,
electrical and/or plumbing modification due to variances between actual
Owner equipment purchased and what is shown on the contract documents.
28. The GMP does not include handing of Owner furnished equipment including the
disposal of the furnishings generated rubbish.
29. The GMP includes only the equipment connections specifically indicated by
the construction documents.
30. The GMP includes a total of 21 weather days in the construction schedule
for inclement weather. Weather days are a combined total of actual
rain/weather days and weather impact days. Weather impact days are days
lost due to inclement weather and may occur on the day(s) or night(s)
before or after a weather day. The Contractor will report the status of any
weather delays monthly to the Owner. The contract completion time will be
extended for each weather day encountered beyond those identified below:
January - 4 days July - 0 days
February - 3 days August - 0 days
March - 2 days September - 2 days
April - 2 days October - 2 days
Page 3 of 13
<PAGE> 19
May - 0 days November - 3 days
June - 0 days December - 3 days
31. Allowances, as noted herein, are included in our price for those items that
could not be priced at the time the GMP was established. Unless otherwise
noted, all Allowances include furnishing of material, delivery, unloading,
installation, taxes, insurance and administrative costs. Material furnished
by others only includes installation and does not include delivery,
unloading and applicable Sales Tax.
32. Owner shall locate or identify on drawings all underground utilities in the
work area. The GMP does not include the repair of utilities not located and
identified by the Owner.
B. HERITAGE CONFERENCE CENTER SITEWORK
1. The Heritage Conference Center Sitework potion of this is based on the
following documents prepared by Thomas and Hutton Engineering Co. titled
"Sea Pines Heritage Center at Sea Pines Plantation".
Sheet No. Description Issue Date Revision Date
- --------- ----------- ---------- -------------
1 Cover Sheet 2/10/97
2 Demolition Plan 2/10/97 8/14/97
3 Site Development Plan 2/10/97 8/14/97
4 Heritage Setup and Staging Area 8/14/97
5 Artist Area Graveled Parking Lot 4/11/97 8/14/97
6 Details 2/10/97 6/17/97
7 Details 2/10/97 7/29/97
2. The sitework portion of this contract does not include the Work shown on
the sitework drawings listed above completed under the previous sitework
contract dated October 6, 1998.
3. The Heritage Conference Center specifically includes the following:
a. Irrigation repair is not included.
b. Tree protection, if required, is not included.
C. HERITAGE CONFERENCE CENTER LANDSCAPING WORK
1. The Heritage Conference Center Landscaping Work portion of this proposal is
based on the following documents prepared by Wood + Partners, Inc. titled
"The Heritage Conference Center".
Page 4 of 13
<PAGE> 20
Sheet No. Description Issue Date Revision Date
- --------- ----------- ---------- -------------
Cover Sheet 3/19/99
L1 Layout Plan 3/17/99
L2 Grading Plan & Detail 3/17/99
L3 Planting Plan 3/17/99
2. The following Allowances are included in the Heritage Conference Center
Landscape Work:
a. Landscape Mounding $2,500.00
b. Site Signage $2,000.00
c. Irrigation System $10,747.00
3. The scope and quantity of work included in this portion of the contract is
shown on the attached Attachment F as the Phase I Work. Value Engineering
changes accepted by the Owner and included in the GMP include the
following:
a. Delete the textured concrete with brick banding at the auto drop off.
b. Delete the brick headers and dividers at the rear paving
c. Change the size of the Parson's Juniper and Evergreen Giant Liriope to
1 gal.
d. Delete the annuals planting which will be included in the operations
budget.
e. No site electrical is included.
D. HERITAGE CONFERENCE CENTER BUILDING CONSTRUCTION
1. The Heritage Conference Center building construction portion of this
proposal is based on the following documents prepared by Lee & Parker
Architects titled "Harbour Town Conference Center".
<TABLE>
<CAPTION>
Sheet No. Description Issue Date Revision Date
- --------- ----------- ---------- -------------
Architectural
- -------------
<S> <C> <C> <C>
A.0.1 Title Sheet & Index 10/10/97
D.1.1 Not Issued
A.1.1 Ground Floor Plan 10/10/97 9/22/97
A.1.2 Second Floor Plan 10/10/97 10/16/97
A.1.3 Roof Plan and Detail 10/10/97
A.2.1 Interior Finish Schedule 10/10/97
A.2.2 Door & Frame Schedule & Types 10/10/97
A.2.3 Door & Frame Details 10/10/97
A.3.1 Building Elevations 10/10/97
A.4.1 Ground Floor Reflected Ceiling Plan 10/10/97 8/26/97
A.4.2 Second Floor Reflected Ceiling Plan 10/10/97 10/16/97
A.5.1 Building Cross Sections 10/10/97
A.5.2 Building Sections 10/10/97
A.6.1 Ground Floor Partial Plans 10/10/97
A.6.2 Not Issued
A.6.3 Second Floor Partial Plans No Date
A.6.4 Not Issued
</TABLE>
Page 5 of 13
<PAGE> 21
<TABLE>
<S> <C> <C> <C>
A.7.1 Vertical Circulation, Stair #1 Plan & Section 10/10/97
Guardrail Details
A.7.2 Vertical Circulation, Stair #1 Plan & Section 10/10/97
Guardrail Details
A.7.3 Not Issued
A.8.1 Not Issued
A.8.2 Not Issued
A.9.1 Not Issued
A.9.1 Not Issued
Structural
- ----------
S.1 Foundation Plan 5/23/97
S.2 Second Floor Framing Plan/Slab Reinforcements 5/23/97
S.3 Second Floor Framing Plan/Beam Reinforcements 5/23/97
S.4 Floor Slabs and Beams Schedule 5/23/97
S.5 Roof Framing Plan
S.6 Structural Detail 5/23/97
S.7 Structural Detail 5/23/97
S.8 General Notes & Details 5/23/97
S.9 Structural Details
Plumbing
- --------
P.0.1 Kitchen Equipment & Fixture Schedules 10/10/97
P.1.1 First Floor Soil, Waste & Vent Plan 10/10/97 10/09/97
P.1.2 Second Floor Soil, Waste & Vent Plan 10/10/97 10/9/97
P.2.1 First Floor Hot & Cold Water & Gas Plans 10/10/97
P.2.2 Second Floor Hot & Cold Water & Gas Plans 10/10/97
P.3.1 Kitchen Soil, Waste, Vent Plan 10/10/97
P.3.2 Kitchen Hot & Cold water & Gas Plan 10/10/97
P.4.1 Plumbing Details 10/10/97
Fire Protection
- ---------------
F.0.1 Fire Sprinkler Specification & Details 10/10/97
F.1.1 First and Second Floor Fire Protection Plan 10/10/97
Mechanical
- ----------
M.0.1 Schedule and Details 10/10/97 9/30/97
M.1.1 First Floor Plan - HVAC 10/10/97
M.1.2 Second Floor Plan - HVAC 10/10/97 9/30/97
Electrical
- ----------
E.0.1 Schedule, Legend & Notes 10/10/97
E.0.2 Electrical Site Plan 10/10/97
E.1.1 First Floor Plan - Lighting 10/10/97
</TABLE>
Page 6 of 13
<PAGE> 22
<TABLE>
<S> <C> <C> <C>
E.1.2 Second Floor Plan - Lighting 10/10/97
E.2.1 First Floor Plan - Power & Signal 10/10/97
E.2.2 Second Floor Plan -Power & Signal 10/10/97
E.3.1 Kitchen Plan - Electrical 10/10/97
E.3.2 Service Station - Electrical & Detail 10/10/97
E.4.1 Electrical Detail 10/10/97
Kitchen/Food Service Equipment
- ------------------------------
K.1 General 10/10/97 6/3/97
K.2 Kitchen Plans - Equipment 10/10/97
K.3 Kitchen Plans - Plumbing 10/10/97
K.4 Kitchen Plans - Electrical 10/10/97
K.5 Wall Support for Equipment 10/10/97
K.6 Refrigerator/Freezer Plan & Specification & Exhaust 10/10/97
Hood Details & Specifications
K.7 Kitchen Elevations 10/10/97
K.8 Kitchen Elevations 10/10/97
K.9 Kitchen Elevations 10/10/97
K.10 Kitchen Elevations 10/10/97
Interior Design
- ---------------
ID-C Drawing Index & General Notes 10/10/97
ID-100 Second Floor Key Plan 10/10/97
ID-101 Second Floor Key Plan 10/10/97
ID-200 Second Floor Reflected Ceiling Plan 10/10/97
ID-201 Second Floor Reflected Ceiling Plan 10/10/97
ID-300 Second Floor Power & Communications 10/10/97
ID-301 Second Floor Power & Communications 10/10/97
ID-400 Second Floor Finish Plan 10/10/97
ID-401 Second Floor Finish Plan 10/10/97
ID-500 Second Floor Furniture Plan 10/10/97
ID-501 Second Floor Furniture Plan 10/10/97
ID-600 Finish Notes & Description 10/10/97
ID-601 Not Issued
ID-700 Interior Elevations 10/10/97
ID-701 Interior Elevations 10/10/97
ID-702 Interior Elevations 10/10/97
ID-703 Interior Elevations 10/10/97
ID-704 Interior Elevations 10/10/97
ID-705 Interior Elevations 10/10/97
ID-706 Interior Elevations 10/10/97
ID-707 Interior Elevations 10/10/97
ID-708 Interior Elevations 10/10/97
ID-709 Interior Elevations 10/10/97
</TABLE>
Page 7 of 13
<PAGE> 23
2. Specifications titled Harbourtown Conference Center, Sea Pines, Hilton Head
Island, SC prepared by Lee & Parker Architects dated October 10, 1997.
3. The following Allowances are included in the Heritage Conference Center
Building Construction:
a. Carpet and pad $109,500.00
b. Wall coverings at moveable partitions $ 14,418.00
c. Audio-visual system $ 31,364.00
d. Finish Hardware material & labor $ 27,244.00
e. Connector bridge to clubhouse $ 5,686.00
f. Heritage Locker Room finish allowance $100,000.00
4. The Heritage Conference Center Building Construction specifically includes
the following:
a. The Building Permit Fee for the Conference Center has already been
paid and is not included.
b. De-watering and 2 ft. of stone under continuous footing concrete are
included, similar to the plan requirements for the spread footing
concrete.
c. Operable Panel Partitions are included as Modernfold Acousti-Seal 932
(STC50) as an equal product to Holcombe & Hoke (no STC rating
specified).
E. INN AT HARBOUR TOWN AND SEA PINES RACQUET CLUB SITEWORK
1. The Inn at Harbour Town and Sea Pines Racquet Club sitework portion of this
proposal is based on the following documents prepared by Thomas & Hutton
Engineering Co. titled "The Inn at Harbour Town".
<TABLE>
<CAPTION>
Sheet No. Description Issue Date Revision Date
- --------- ----------- ---------- -------------
<C> <C> <C> <C>
1 Coversheet 5/12/98 5/5/99
2 Sheet Index 5/5/98 5/5/99
3 Demolition Plan 10/21/98 5/4/99
4 Paving, Grading & Drainage 3/17/98 4/30/99
5 Paving, Grading & Drainage 3/17/98 4/30/99
6 Water & Sewer Plan 3/17/98 4/30/99
7 Water & Sewer Plan 3/17/98 4/30/99
8 Sewer Profiles 5/5/98
9 Details 5/5/98 5/5/99
10 Details 5/5/98 11/9/98
11 Details 5/5/98 1/7/99
12 Composite Harbour Town Inn & Conference
Center Plan
13 Composite Site Development Plan
</TABLE>
Page 8 of 13
<PAGE> 24
2. The sitework portion of this contract does not include the Work shown on
the sitework drawings listed above completed under the previous sitework
contract dated October 6, 1998.
3. The Inn at Harbour Town and Sea Pines Racquet Club Sitework specifically
includes the following:
a. Sanitary Sewer shall be completed as shown on sheet 5, revision date
10/28/98 of the above listed drawings and does not include re-routing
the sanitary sewer through the tennis center.
b. No sitework for the future tennis shop is included.
c. Removal of tennis court fences is not included.
d. Replacement of bollards, benches, etc. is not included except as
included in the site furnishings allowance.
e. Irrigation repair is not included.
f. Tree protection is not included.
g. Repair of utilities not located by Owner or identified on the Contract
Documents.
F. INN AT HARBOUR TOWN AND SEA PINES RACQUET CLUB LANDSCAPE WORK
1. The Inn at Harbour Town and Sea Pines Racquet Club Landscape Development
work portion of this proposal is based on the following documents prepared
by Wood + Partners, Inc. titled "The Inn at Harbour Town and Stan Smith
Tennis Center".
<TABLE>
<CAPTION>
Sheet No. Description Issue Date Revision Date
- --------- ----------- ---------- -------------
<S> <C> <C> <C>
Cover Sheet 3/19/99
L-1 Layout Sheet - Area 1 3/19/99
L-2 Layout Sheet - Area 2 3/19/99
L-3 Layout Sheet 3 3/19/99
L-4 Grading Plan 3/19/99
L-5 Grading Plan 3/19/99
L-6 Detail Sheet 3/19/99
L-7 Tennis Monument Construction Details
Lighting Schedule 3/19/99
L-8 Detail Sheet 3/19/99
L-9 Maintenance Area Site Plan/Layout Plan 3/19/99
L-10 Gazebo Details 3/19/99
L-11 Planting Plan 1 3/19/99
L-12 Planting Plan 2 3/19/99
L-13 Planting Plan 3 3/19/99
L-14 Lighting Plan Area 1 3/19/99
L-15 Lighting Plan Area 1 3/19/99
</TABLE>
2. The following Allowances are included in the Inn at Harbour Town and Sea
Pines Racquet Club Landscape Work:
a. Landscape Mounding $2,000.00
Page 9 of 13
<PAGE> 25
b. Site Signage $6,860.00
c. Site Electrical $60,500.00
d. Site Furnishings $3,800.00
e. Irrigation System $24,992.00
f. Champions Monument $14,000.00
g. Misc. electrical services $10,000.00
h. Repair existing tree lights $ 2,000.00
i. Tennis court lights electrical service $10,000.00
j. Terrace Fountain $50,000.00
2. The scope and quantity of work included in this portion of the contract is
shown on the attached Attachments F and G as the Phase I Work. Value
Engineering changes accepted by the Owner and included in the GMP include
the following:
a. Defer until Phase II the painting of the stucco retaining wall on
Lighthouse Lane.
b. Delete textured paving at the entrance area.
c. Defer until Phase II the Entry Feature on Lighthouse Road.
d. Defer the Site Furnishings swings until Phase II.
e. Defer the Lighthouse Road signs until Phase II.
f. Change the size of the Parson's Juniper and Evergreen Giant Liriope to
1 gal.
g. Defer the Lighthouse Road site lighting until Phase II.
h. Defer the Lighthouse Road landscaping until Phase II.
i. Delete the annuals which will be included in the operations budget.
j. Trench drains at the tennis courts are included in sitework.
k. Street lights to be furnished and installed by Palmetto Electric and
leased them to the Owner.
l. Tennis courts shall be renovated in accordance with the Howard B.
Jones proposal dated May 14, 1999.
m. Defer Tennis Gazebos until phase II.
F. INN AT HARBOUR TOWN BUILDING CONSTRUCTION
1. The Inn at Harbour Town Building Construction work portion of this proposal
is based on the following documents prepared by Lee & Parker Architects
titled "The Inn at Harbour Town".
<TABLE>
<CAPTION>
Sheet No. Description Issue Date Revision Date
- --------- ----------- ---------- -------------
<S> <C> <C> <C>
Architectural
- -------------
A.1.1 Parking Level Plan 5/24/99
A.1.2 First Floor Plan 5/24/99
A.1.3 Second Floor Plan 5/24/99
A.1.4 Third Floor Plan 5/24/99
A.1.5 Roof Plan 5/24/99
A.2.1 Front/Right Elevation Plan 5/24/99
A.2.2 Golf Course/Left Elevation Plan 5/24/99
</TABLE>
Page 10 of 13
<PAGE> 26
<TABLE>
<S> <C> <C> <C>
A.5.1 Building Section 5/24/99
A.5.2 Building Section 5/24/99
A.5.3 Wall Section 5/24/99
Structural
- ----------
S1.0 Foundation Plan 5/17/99
S1.1 Foundation Plan 5/17/99
S1.2 Shear Wall Plan 5/17/99
S2.0 First Floor Framing/Slabs Plan 5/17/99
S2.1 First Floor Framing/Beams Plan 5/17/99
S3.0 Beams & Slabs Schedule 5/17/99
Plumbing
- --------
P0.1 Legend, Schedule, Notes 5/17/99
P0.2 Detail 5/17/99
P1.0 Parking Floor Soil, Water & Vent Plan 5/17/99
P1.1 Parking Floor Hot & Cold Water Plan 5/17/99
P1.2 First Floor Plan 5/17/99
P1.3 Second Floor Plan 5/17/99
P1.4 Third Floor Plan 5/17/99
P2.0 Detail 5/17/99
P2.1 Detail 5/17/99
P3.0 Waste & Vent Riser 5/17/99
P3.1 Waste & Vent Riser 5/17/99
P3.2 Water Service Riser 5/17/99
Mechanical
- ----------
M0.1 Schedule, Legend 5/10/99
M1.0 Parking Floor Plan - HVAC 5/10/99
M1.2 First Floor Plan - HVAC 5/10/99
M1.3 Second Floor Plan - HVAC 5/10/99
M1.4 Third Floor Plan - HVAC 5/10/99
M2.1 Detail 5/10/99
Electrical
- ----------
E.0.0 Legend 3/8/98
E.0.1 Electrical Site Plan 3/8/98
E1.0 Parking Floor Plan 3/8/98
E.1.1 First Floor Plan 3/8/98
E.1.2 Second Floor Plan 3/8/98
E.1.3 Third Floor Plan 3/8/98
E.2.0 Partial Plan 3/8/98
E.3.0 Food Prep Plan 3/8/98
E.4.0 Riser Plan 3/8/98
E.4.1 Riser Details 3/8/98
E.4.2 Riser Details 3/8/98
</TABLE>
Page 11 of 13
<PAGE> 27
<TABLE>
<S> <C> <C> <C>
E.4.3 Riser Details 3/8/98
Kitchen/Food Service Plan
- -------------------------
K.1 Equipment Plan 1/27/99
K.2 Symbols, Data & Notes 1/27/99
K.3 Symbols, Data & Notes 1/27/99
K.4 Elevations/Notes 2/99
K.5 Elevations/Sections 2/16/99
</TABLE>
2. Specifications titled The Inn at Harbourtown, Sea Pines, Hilton Head
Island, SC prepared by Lee & Parker Architects dated June 4, 1999.
3. The following Allowances are included in the Inn at Harbour Town Building
Construction. The interior finishes allowances listed below were based on
the "Interior Finish Descriptive Narrative" prepared by Design Continuum,
Inc. dated March 19, 1999 and included in Attachment E as qualified in
below.
a. Guest Room Door Locking System $ 20,956.00
b. Finish Hardware $ 10,775.00
c. Sliding Automatic Entry Doors $ 12,000.00
d. Ceramic Tile $136,239.00
e. Stone Floors and Walls $ 40,650.00
f. Toilet Accessories $ 18,187.00
g. Carpet Pad and Installation Labor $ 46,561.00
h. Vinyl Wall Covering Installation Labor $ 54,285.00
i. Plexture Wall Finish $ 66,152.00
j.. Painting $134,709.00
k.. Finish Carpentry, Millwork and Casework $429,533.00
l.. Cupolas $ 17,900.00
m. Stone Vanity Tops $ 30,200.00
4. The Inn at Harbour Town Building Construction specifically includes the
following:
a. No Metal Louvers are included at the Parking Level.
b. Paint finish is included at all interior walls and columns at the
Parking Level. Stucco not included on the interior of parking level
columns.
c. No ceiling finish or insulation is included at the Parking Level.
d. No Fire Pump or Emergency Generator is included.
e. Exit Stairs are included as steel construction.
f. Entry Canopy is included as wood structure with exposed trusses and
roof deck.
g. No skylight is included at the Canopy walkway.
h. No custom millwork is included at the Elevator car. Elevators are
included as Dover. Oildraulic 2,500#, "Marquis 25". Stainless steel
jambs and doors at the Parking Level.
Page 12 of 13
<PAGE> 28
Elevator #1 has bronze doors on floors 1,2,3, and model DAP car
finish. Elevator #2 has painted steel doors, jambs, and car finish.
i. Mini Bars are not included.
j. Lighted magnifying mirrors are not included.
k. Room Safes are not included.
l. The Costs of blueprinting is not included.
m. No Lobby Planters or Plants are included.
n. Roofing is included as specified for the Heritage Conference Center.
o. Guest Room shower doors are included as Alumax 3/8" glass frameless
construction.
p. All Guest Room doors except the Corridor entry door are included as
standard paint grade flush doors in the configuration indicated.
Louver doors are included at closets.
q. It is noted that the Finish Carpentry Allowance is compiled including
all Guest Room finish carpentry as paint grade in standard shapes.
Ceiling Beams at the Guest Rooms and Brackets at the Corridors are
eliminated.
r. Two chutes are included in lieu of the three shown.
s. Handrails are included as mechanically fastened instead of welded
aluminum.
t. Stair #1 shall have heart pine trim with carpet treads and risers.
Page 13 of 13
<PAGE> 29
ATTACHMENT B
INN AT HARBOUR TOWN
HERITAGE CONFERENCE CENTER
SEA PINES RACQUET CLUB
SCHEDULE OF VALUES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
INN AT HERITAGE SEA PINES
ITEM DESCRIPTION HARBOUR TOWN CONF. CENTER RACQUET CLUB TOTAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BUILDING CONSTRUCTION
1 Building Sitework $21,580 $108,545 0 $130,125
2 Concrete Foundation 235,684 165,335 0 401,019
3 Concrete Suspended Slabs 996,138 331,253 0 1,327,392
4 Masonry 8,500 36,226 0 44,726
5 Structural Steel 36,215 170,640 0 206,855
6 Railings 29,285 17,444 0 46,729
7 Rough Carpentry 47,152 53,337 0 100,489
8 Exterior Carpentry 40,733 52,556 0 93,289
9 Millwork 471,438 281,408 0 752,846
10 Granite Tops 30,200 13,425 0 43,625
11 Skylight 10,780 0 0 10,780
12 Cupola 17,900 0 0 17,900
13 Waterproofing Balconies 11,000 3,244 0 14,244
14 Flat Roof 71,800 0 0 71,800
15 Metal Roof 120,000 173,077 0 293,077
16 Flashing & Sheet Metal 32,200 6,315 0 38,515
17 Caulking 13,400 2,750 0 16,150
18 Waterproof Foundation 8,745 4,146 0 12,891
19 Tectum Deck 15,657 0 0 15,657
20 Hollow Metal 34,821 13,825 0 48,646
21 Flood Doors 0 35,700 0 35,700
22 Wood Doors 87,982 27,405 0 115,387
23 Storefront System 26,090 41,415 0 67,505
24 Windows 176,851 0 0 176,851
25 Mirrors 10,200 0 0 10,200
26 Shower Doors 42,000 500 0 42,500
27 Hardware 10,775 27,244 0 38,019
28 Entry Lock System 20,956 0 0 20,956
29 Drywall 581,779 227,695 0 809,473
30 Stucco 215,000 97,082 0 312,082
31 Acoustical Ceiling Tile 6,474 18,632 0 25,106
32 Carpet 46,561 109,500 0 156,061
33 Stone Floors 40,650 0 0 40,650
34 Ceramic Tile 136,240 38,920 0 175,160
35 Quarry Tile 5,588 0 0 5,588
36 Heart Pine Floors 46,236 0 0 46,236
37 Vinyl Flooring 2,182 1,900 0 4,082
38 Paint 134,710 36,736 0 171,446
39 Wallcovering 54,285 38,081 0 92,366
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE> 30
ATTACHMENT B
INN AT HARBOUR TOWN
HERITAGE CONFERENCE CENTER
SEA PINES RACQUET CLUB
SCHEDULE OF VALUES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
INN AT HERITAGE SEA PINES
ITEM DESCRIPTION HARBOUR TOWN CONF. CENTER RACQUET CLUB TOTAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BUILDING CONSTRUCTION
--------------------------------------------------------------------
40 Special Wall Finishes 66,152 0 0 66,152
41 Heritage Locker Room Allowance 0 100,000 0 100,000
42 FRP Wall Panels 6,130 14,150 0 20,280
43 Final Cleaning 13,471 8,458 0 21,929
44 Specialties 55,344 58,367 0 113,710
45 Kitchen Equipment 16,799 249,367 0 266,166
46 Elevators 107,127 55,092 0 162,219
47 Fire Sprinkler System 144,840 46,240 0 191,080
48 HVAC & Plumbing 979,700 287,245 0 1,266,945
49 Electrical 451,375 350,386 0 801,761
------------------------------------------------------------------
50 BUILDING SUB-TOTAL 5,738,722 3,303,640 0 9,042,362
51 LANDSCAPE CONSTRUCTION
52 Temp. Tennis Center (Allow) 0 0 59,800 59,800
53 Landscape Earthwork 9,484 10,613 7,720 27,816
54 Gen. Landscape Construction 262,482 30,385 131,352 424,220
55 Site Signage 3,800 0 5,010 8,810
56 Site Furnishings 6,860 2,260 5,200 14,320
57 Landscape Development 167,432 52,895 70,265 290,592
58 Site Electrical 29,900 0 15,770 45,670
59 Tennis Court Construction 0 0 422,285 422,285
------------------------------------------------------------------
60 LANDSCAPE SUB-TOTAL 479,958 96,152 717,403 1,293,513
61 SITEWORK
62 Sitework 226,591 146,000 255,517 628,108
63 0 0 0 0
------------------------------------------------------------------
64 SITEWORK SUB-TOTAL 226,591 146,000 255,517 628,108
65 GENERAL REQUIREMENTS
66 General Conditions 283,992 136,570 0 420,562
67 Building Permits 39,767 6,482 6,041 52,290
68 Taxes & Insurance 106,211 66,102 1,141 173,454
69 Payment & Performance Bonds 0 0 0 0
------------------------------------------------------------------
70 GENERAL REQUIREMENTS SUB-TOTAL 429,969 209,154 7,182 646,306
------------------------------------------------------------------
71 TOTAL COST OF THE WORK 6,875,241 3,754,946 980,102 11,610,289
72 CONTRACTOR'S FEE 8.0% 550,019 300,396 78,408 928,823
------------------------------------------------------------------
73 GUARANTEED MAXIMUM PRICE $7,425,260 $4,055,342 $1,058,510 $12,539,112
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE> 1
EXHIBIT 21
TO FORM 10-K OF
SEA PINES ASSOCIATES, INC.
Subsidiaries of Sea Pines Associates, Inc.
Sea Pines Company, Inc., a South Carolina corporation, is a wholly
owned, and the only subsidiary of Sea Pines Associates, Inc. The significant
active subsidiaries of Sea Pines Company, Inc. are:
(a) Sea Pines Real Estate Company, Inc., a South Carolina
corporation doing business as Sea Pines Real Estate Company.
(b) Fifth Golf Course Club, Inc., a Delaware Corporation.
<PAGE> 1
EXHIBIT 24
SEA PINES ASSOCIATES, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of SEA PINES ASSOCIATES, INC., a South Carolina corporation
(hereinafter referred to as the "Company"), does hereby constitute and appoint
Norman P. Harberger, and Angus Cotton, respectively, and each of them severally,
with full power of substitution, his true and lawful attorneys and agents (each
with authority to act alone), to do any and all acts and things and to execute
any and all instruments which said attorneys and agents or any of them may deem
necessary or advisable to enable the Company to comply with the Securities
Exchange Act of 1934, as amended (the "Act"), and any rules, regulations and
requirements of the Securities and Exchange Commission (the "Commission") in
respect thereof, in connection with the filing under the Act of the Company's
Annual Report on Form 10-K for the Company's fiscal year ended October 31, 1999,
including all amendments thereto (the "Form 10-K"), and including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign for and on behalf of the undersigned the name of the undersigned as officer
and/or director of the Company to the Form 10-K filed with the Commission and to
any instrument or document filed as a part of, as an exhibit to, or in
connection with said Form 10-K; and the undersigned does hereby ratify and
confirm as his own act and deed all that said attorneys and agents, and each of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents, this
27th day of January, 2000.
/s/ Angus Cotton
-----------------------------------
(Signature)
Angus Cotton
-----------------------------------
(Print Name)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE OCTOBER 31, 1999 FORM 10K AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH OCTOBER 31, 1999 FORM 10K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> OCT-31-1999
<CASH> 3,042
<SECURITIES> 0
<RECEIVABLES> 3,249
<ALLOWANCES> 41
<INVENTORY> 737
<CURRENT-ASSETS> 5,827
<PP&E> 46,019
<DEPRECIATION> 11,056
<TOTAL-ASSETS> 42,674
<CURRENT-LIABILITIES> 6,392
<BONDS> 0
0
7,218
<COMMON> 2,166
<OTHER-SE> 6,510
<TOTAL-LIABILITY-AND-EQUITY> 42,674
<SALES> 46,414
<TOTAL-REVENUES> 46,414
<CGS> 34,185
<TOTAL-COSTS> 34,185
<OTHER-EXPENSES> 8,378
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,099
<INCOME-PRETAX> 3,275
<INCOME-TAX> 1,212
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<PAGE> 1
EXHIBIT 99.1
TO FORM 10-K OF
SEA PINES ASSOCIATES, INC.
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. Sea Pines Associates, Inc. ("Sea Pines" or the
"Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe harbor
provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward- looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of Sea Pines. The Company
undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, Sea Pines undertakes no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over
time.
Sea Pines provides the following risk factor disclosure in connection
with its continuing effort to qualify its written and oral forward-looking
statements for the safe harbor protection of the Reform Act and other similar
safe harbor provisions. Important factors currently known to management that
could cause actual results to differ materially from those in forward-looking
statements include the disclosures contained in the Annual Report on Form 10-K
to which this statement is appended as an exhibit and also include the
following:
RISKS RELATED TO RESORT OPERATIONS. The risks associated with the
Company's resort operations include the intense competition among local,
regional and national
<PAGE> 2
resorts, the dependence upon Sea Pines and Hilton Head continuing to be
considered as prime destination resort areas, the seasonality of the resort
business, economic or other conditions which may adversely affect tourism,
vacation resorts or the vacation or retirement home industries, generally,
adverse weather conditions, the possibility of oil or hazardous waste spills
offshore, the impact of increased fuel or other transportation costs on travel,
adverse changes in applicable environmental regulation and the possible loss of
one or more of the Company's national golf or tennis tournaments. There can be
no assurance that the Company will be able to compete successfully in the future
with existing and future competitors, or that the Company and Hilton Head Island
will be able to continue to attract the level of resort business the Company has
experienced in the past.
RISKS RELATED TO REAL ESTATE BROKERAGE OPERATIONS. Risks associated
with the Company's real estate brokerage operations include general reductions
in resort visitors, rising interest rates, other economic conditions which may
adversely affect real estate sales in general or vacation or second-home sales
in particular, competition from other real estate brokerage firms and the loss
of key brokers or sales executives.
RISKS RELATED TO LITIGATION AND OTHER FACTORS. Other factors which
could affect the Company's operations include the risk of adverse outcomes on
pending litigation, the availability of adequate capital to finance possible
future capital improvements and repairs, and the loss of key members of
management.
RISKS RELATED TO POTENTIAL "YEAR 2000" PROBLEMS. There can be no
assurance that the Company identified all year 2000 problems in its computer
systems in advance of their occurrence or that the Company will be able to
successfully remedy any problems that are discovered. The Company cannot
estimate the expenses to which the Company may become subject as a result of
such problems, or that such expenses will not, ultimately have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, failure of the Company to identify and remedy all year
2000 problems could put the Company at a competitive disadvantage relative to
companies that have corrected such problems.
