SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 0-27270
VACATION BREAK U.S.A., INC.
FLORIDA 59-2581811
State or other jurisdiction of (I.R.S. Employer
Incorporation or organization Identification No.)
6400 N. ANDREWS AVENUE
PLAZA SUITE 200
FT. LAUDERDALE, FL 33309
Registrant's telephone number (954) 351-8500
----------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No ____
The number of shares outstanding of registrant's common stock at August 9, 1996
was 8,570,000 shares.
<PAGE>
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
VACATION BREAK U.S.A., INC.
INDEX
Page
NO.
PART I FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Operations for the
three and six month periods ended June 30, 1996 and 1995 4
Condensed Consolidated Statement of Cash Flows for the
six month periods ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTER TO A VOTE OF SECURITY-HOLDERS 19
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 19
Signatures 20
2
<PAGE>
Part I FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS
VACATION BREAK U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $7,745,361 $8,499,386
Certificates of deposit 118,310 747,817
Restricted cash 3,034,344 4,090,766
Cash in escrow from vacation ownership interests sales 15,418,569 10,580,907
Mortgages receivable on vacation ownership interests sales - net 61,550,037 45,423,680
Receivables - net 4,344,964 3,381,460
Vacation ownership interests held for sale 11,862,090 16,550,392
Vacation ownership interests - real estate and development costs 8,736,539 1,752,230
Prepaid expenses and other assets 4,938,886 4,529,952
Investment in Port Lucaya Resort Company Limited 1,659,417 1,584,417
Due from unconsolidated affiliate 109,273 84,050
Property and equipment - net 10,729,332 9,866,702
----------- -----------------
TOTAL ASSETS $130,247,122 $107,091,759
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1996 1995
(Unaudited)
Accounts payable and accrued liabilities $ 14,620,048 $10,240,733
Due to unconsolidated affiliates 492,552 522,607
Notes and mortgages payable 41,535,333 28,900,694
Note payable to unconsolidated affiliate 560,000 560,000
Capital lease obligations 1,591,795 1,320,695
Deferred income taxes 5,908,683 2,498,088
Advance deposits 3,388,152 4,369,244
Deferred revenues - vacation packages 21,967,959 20,534,417
Deferred revenues - vacation ownership interests 1,512,968 9,233,181
Due to affiliate of joint ventures 7,125,457 6,227,875
Tax distribution payable to majority stockholder 2,257,412 3,388,205
Minority interest in joint ventures 2,418,345 37,222
------------- ---------------
Total Liabilities 103,378,704 87,832,961
============== ===============
Commitments and contingencies
Stockholders' Equity:
Preferred stock ($ .01 par value; 25,000,000 shares authorized;
no shares issued and outstanding)
Common stock ($ .01 par value; 25,000,000 shares authorized; 8,570,000 shares
issued and outstanding at June 30, 1996 and
8,300,000 shares issued and outstanding at December 31, 1995) 85,700 83,000
Additional paid in capital 13,269,257 12,089,288
Retained earnings 13,513,461 7,086,510
--------------- ---------------
Total Stockholders' Equity 26,868,418 19,258,798
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $130,247,122 $107,091,759
================== =================
See accompanying notes to condensed consolidated financial statements
</TABLE>
3
<PAGE>
VACATION BREAK U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ------------------------------
1996 1995 1996 1995
---------------------------- --------------------------------
REVENUES:
<S> <C> <C> <C> <C>
Vacation ownership interests $32,908,826 $9,876,872 $48,825,826 $17,967,872
Vacation packages 17,759,659 14,500,458 34,195,659 28,298,458
Resort operations and other 3,543,025 2,802,268 7,547,025 4,931,268
Interest earned on mortgages receivable 1,998,721 976,815 3,732,720 1,851,815
Commissions earned on marketing agreements 526,957 1,536,280 1,068,957 3,297,280
-------------- -------------- --------------- ----------------
56,737,188 29,692,693 95,370,187 56,346,693
-------------- --------------- --------------- -----------------
COSTS AND OPERATING EXPENSES:
Vacation ownership interests 18,610,954 5,500,810 26,971,954 9,920,810
Vacation packages 20,964,715 15,496,572 39,954,715 28,491,572
Resort operations and other 3,657,138 2,777,700 7,558,138 4,800,700
Interest expense on financed mortgages receivable 499,557 381,918 1,028,557 732,918
Commissions and related expenses on marketing agreements 399,698 1,019,248 695,698 2,025,248
Interest expense - other 119,282 130,811 585,282 228,811
General and administrative 3,593,209 1,839,760 6,432,209 3,983,760
Provision for doubtful accounts 458,208 662,808 655,208 776,808
Depreciation and amortization 519,680 413,501 1,088,680 740,501
--------------- -------------- ----------------- ----------------
48,822,441 28,223,128 84,970,441 51,701,128
--------------- ---------------- ----------------- ---------------
INCOME FROM OPERATIONS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY IN EARNINGS (LOSS) OF AFFILIATES 7,914,747 1,469,565 10,399,746 4,645,565
Minority interest in earnings of joint ventures (208,964) - (578,964)
Equity in earnings of Port Lucaya Resort Company Limited 45,000 40,925 75,000 80,925
---------------- --------------- ---------------- ---------------
Income before income taxes 7,750,783 1,510,490 9,895,782 4,726,490
Income tax (expense) benefit (2,811,833) 279,000 (3,468,833) 561,000
Pro forma income tax provision (expense) - (853,000) (2,305,000)
---------------- ---------------- --------------- ---------------
NET INCOME $4,938,950 $936,490 $6,426,949 $2,982,490
============= ================== ============== =================
NET INCOME PER SHARE - PRIMARY $0.56 $0.14 $0.73 $0.46
============= ================== ============== =================
NET INCOME PER SHARE - FULLY DILUTED $0.55 $0.14 $0.72 $0.46
============= ================== ============== =================
Weighted average common shares and common stock equivalents
outstanding
- Primary 8,865,391 6,500,000 8,756,236 6,500,000
============= ================== ================ ===============
- Fully diluted 8,978,918 6,500,000 8,914,403 6,500,000
============== ================= ================ ===============
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
VACATION BREAK U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
June 30,
<TABLE>
<CAPTION>
1996 1995
--------------- ------------
cash flows from operating Activities:
<S> <C> <C>
Net Income $ 6,426,949 $5,287,490
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 1,088,680 740,501
Equity in (earnings) of Port Lucaya Resort Company Limited (75,000) (80,925)
Provision for deferred taxes 3,410,595
Changes in operating assets and liabilities:
Mortgages receivable on vacation ownership interests sales - net (16,126,357) (7,678,339)
Receivables - net (963,504) (633,903)
Vacation ownership interests held for sale 4,688,302 1,644,967
Vacation ownership interests - real estate and development costs (6,984,309) (7,724,644)
Prepaid expenses and other assets (408,934) (2,059,049)
Due to/from unconsolidated affiliates - net (55,278) 234,077
Accounts payable and accrued liabilities 4,379,985 1,594,162
Deferred revenues - vacation ownership interests (7,720,213) 4,424,130
Deferred income - vacation packages 1,433,542 1,185,501
Deferred tax assets -- (549,400)
Income tax receivable -- (11,600)
Advance deposits (981,092) 1,699,387
Minority interest in earnings of joint ventures 578,964 --
------------ ------------
Net cash used in operating activities (11,307,670) (1,927,645)
------------ ------------
Cash Flows from Investing Activities:
Purchases of property and equipment (1,951,310) (2,291,888)
Additions to restricted cash (2,478,894) (3,816,546)
Releases of restricted cash 3,535,316 2,567,148
Increase in cash in escrow for vacation ownership interests
sales - net (4,837,662) (3,148,005)
Maturities of certificates of deposit 629,507 313,634
------------ ------------
Net cash used in investing activities (5,103,043) (6,375,657)
------------ ------------
Cash Flows from Financing Activities:
Borrowings of notes and mortgages payable 23,887,334 10,871,851
Repayments of notes and mortgages payable (11,252,695) (2,757,725)
Borrowings from affiliate of joint ventures 897,583 2,686,725
Joint venture partner's capital contributions 1,802,159
Borrowing on capital lease obligations 457,272 --
Payments on capital lease obligations (186,172) (171,603)
Stockholder's contributions (976,250)
Stockholder's income tax distributions (1,130,793) --
Proceeds from issuance of common stock 1,182,000 1,500
------------ ------------
Net cash provided by financing activities 15,656,688 9,654,498
------------ ------------
Net (decrease) increase in cash and cash equivalents (754,025) 1,351,196
Cash and cash equivalents at beginning of period 8,499,386 616,906
------------ ------------
Cash and cash equivalents at end of period $ 7,745,361 $ 1,968,102
================ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
VACATION BREAK U.S.A., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
Vacation Break U.S.A., Inc. and its subsidiaries (the "Company") are
engaged in the sale of vacation packages, hotel operations and the
renovation, construction, sale and financing of vacation ownership
interests (VOIs). At June 30, 1996, the consolidated financial
statements include the accounts of Vacation Break U.S.A., Inc. and its
subsidiaries.
During the six months ended June 30, 1996, two new companies were
included in the consolidated financial statements.
In January 1996, Vacation Break Resorts at Ocean Ranch, Inc., a
Florida Corporation wholly-owned by the Company was formed for the
purpose of acquiring a 55% interest in Ocean Ranch Vacation Group,
a Florida general partnership (the "Ocean Ranch Vacation Group").
During January 1996, Ocean Ranch Vacation Group, acquired the
Ocean Ranch resort located in Pompano, Florida, for a purchase
price of $ 3.3 million. This property was acquired for the purpose
of constructing 5,148 VOI weeks. The Company anticipates
commencing presales in the fall of 1996. During the six month
period ended June 30, 1996, the venture refinanced its acquisition
debt with a lender to provide a $ 12.7 million construction and
renovation loan and anticipates construction to commence in
September 1996 with completion in the summer of 1997.
For the year ended December 31, 1995, Vacation Break Resorts at Ocean
Ranch, Inc. and Ocean Ranch Vacation Group (a Florida general
partnership) had not been formed and, accordingly, did not form part of
the consolidated 1995 financial statements.
In the opinion of management, the unaudited consolidated financial
statements include all adjustments and accruals necessary to present
fairly the Company's consolidated financial position at June 30, 1996
and the consolidated results of its operations for the six months ended
June 30, 1996 and 1995. The interim results of operations are not
necessarily indicative of the results which may occur for the year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. All significant
intercompany accounts and transactions are eliminated in consolidation.
These condensed consolidated financial statements and notes thereto
should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report to
Stockholders for the year ended December 31, 1995.
2. ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
6
<PAGE>
VACATION BREAK U.S.A., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. EARNINGS PER SHARE
Earnings per share are calculated based on the weighted average number
of shares of common stock outstanding during each period and, if
dilutive, common stock equivalents. The dilutive effect of common stock
equivalents for the computation of earnings per share was greater than
3% for the three and six months ended June 30, 1996 and, accordingly,
the earnings per share are separately stated as primary and fully
diluted. Options and warrants were not granted or outstanding during
the six months ended June 30, 1995. During the six months ended June
30, 1996, approximately 200,000 options were granted to employees and
8,000 options were granted to outside directors, none of which were
exercised during the period.
4. COMMITMENTS AND CONTINGENCIES
The Company has entered into a marketing and purchase agreement with a
developer whereby the Company sells VOIs on a presales basis. Revenues
relating to presales are recorded as "Deferred Revenues - VOIs" until
the project is completed and certificates of occupancy are available
for the buyers. At such time, the Company will be required to purchase
from the developer all units presold. The units will be simultaneously
deeded to the buyers and the related revenues and costs recognized by
the Company. At June 30, 1996, the Company was contingently liable to
the developer in the amount of $ 262,000 for presold VOIs which sales
have been recorded as "Deferred revenue - VOIs" as of June 30, 1996.
Such liability has not been reflected in the June 30, 1996 balance
sheet.
In May 1996, the Company entered into an agreement to acquire a
minimum of ninety five (with a maximum of one hundred and eight)
condominium units on the east coast of Central Florida for the purpose
of converting the condominium units into VOIs. If conditions precedent
to closing are met, the condominium units will be acquired in the fall
of 1996 with sales to commence later in the year. Acquisition,
renovation and receivable financing is in the process of being obtained
although the Company has not entered into a definitive agreement with
respect to such financing.
7
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements, including the notes thereto,
contained elsewhere herein.
INTRODUCTION
Prior to 1993, substantially all of the Company's revenues were derived from the
sale of vacation packages and from commissions earned on the sale of VOIs in
properties owned by other developers. In 1993, the Company began to develop its
own properties and sell VOIs in these properties while continuing to sell VOIs
in properties owned by other developers, thereby adding a substantial new source
of revenues and earnings.
The following table presents key statistics representing VOI activities in
properties owned by the Company or are subject to a purchase agreement:
<TABLE>
<CAPTION>
Sea Santa Star Ocean
Gardens(2) Barbara Palm Aire Island Ranch(1) Total
---------- --------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Number of VOIs available 11,388 4,680 5,564 5,200 5,148 31,980
Net number of VOIs sold through
June 30, 1996 6,719 2,507 1,295 * 1,460 * - 11,981
Percent sold through
June 30, 1996 59 % 54 % 23 % * 28 % * 0 % 37 %
Net number of VOIs sold during the
three months ended June 30, 1996 268 489 424 * 552 * - 1,733
Net number of VOIs sold during the
six months ended June 30, 1996 573 1,115 808 * 927 * - 3,423
* Includes units sold at properties where revenue and income recognition were
deferred or partially deferred for financial reporting purposes.
<FN>
(1) Acquired in January 1996 with construction to commence in September 1996 and
sales to commence later in 1996.
(2) Includes 4,368 VOI weeks in a planned 84-unit phase, construction of which
is intended to commence in September 1996 with sales to commence later in the
fall of 1996.
</FN>
</TABLE>
The Company's primary means of attracting prospective purchasers of VOIs is
through the sale of its discounted, high-quality vacation packages. In effect,
the Company utilizes its vacation package as a major marketing component of its
VOI program. As part of the Company's vacation packages, travelers typically
take a Company-operated tour of a full amenity vacation resort. Historically,
approximately 85% of all vacation packages utilized resulted in a tour of a
vacation resort. During the three years ended December 31, 1995 and the six
months ended June 30, 1996, approximately 10.0% of all tours taken resulted in
the sale of a VOI, and since the Company began selling VOIs in its own
properties in March 1993, approximately 11.5% of tours of resort properties
owned by the Company resulted in the sale of a VOI. Historically, the total
costs of selling and fulfilling the Company's vacation packages approximated or
exceeded revenues derived from the sale of such vacation packages, including
revenues recognized from vacation packages that are purchased but not utilized
upon expiration of the 18 month period following the sale. The Company's
vacation package may be utilized by the customer at any time, subject to
availability, during the 18 month period following the sale. The Company
believes that its vacation package enables the Company to generate quality leads
for the sale of VOIs at a significantly lower cost per lead than the majority of
its competition. Lead generation is typically a significant cost factor for a
VOI developer. Increases in vacation package sales in one year have resulted, in
the following year, in increases in the number of vacations taken and, because
VOI sales results are related to vacations taken, increased VOI sales.
Historically,
8
<PAGE>
approximately 55% of purchasers of vacation packages have not taken their
vacations. As of June 30, 1996, approximately 160,000 vacation packages sold by
the Company remained unused. Based on the Company's historical experience,
approximately 72,000 of such vacation packages are expected to be utilized prior
to expiration. The Company encourages usage of the vacation package through
continuously upgrading the quality and flexibility in utilizing the package
while maintaining the price at a fairly constant rate. Through these practices
the Company encourages increased usage of the package and expects to continue to
incur increased costs of marketing, selling and fulfilling the package. As a
result, costs of the package are expected to continue to exceed revenue
recognized from vacation package sales. The Company expects that this shortfall
will be more than offset by earnings from increased levels of VOI sales. The
Company experienced decreases in vacation packages sold during the last quarter
of 1995 and the first six months of 1996 and expects this trend to continue. As
a result, the Company is continuing to diversify its marketing programs beyond
the sale of its vacation package certificates and is emphasizing other marketing
programs such as referrals, third party certificate programs, in-house and other
moderate cost traditional lead procurement programs with the primary goal to
produce a high quality, low to moderate cost tour at a resort property and
increase VOI sales. The Company fully expects its lead generation costs to
increase modestly while remaining below the majority of its competition.
The Company accounts for the sale of vacation packages by recognizing the
revenue from the sale of each vacation package as such vacation is taken, and
recognizes the revenue from vacations which are not taken upon expiration of the
18 month period during which the vacations may be taken. To the extent that the
18 month period is extended by the Company, revenues and related expenses from
the sales of such extended vacation packages, including the nominal extension
fees, are not recognized until either the time that the vacation is taken or
upon expiration of the applicable extension period. Because a significant
percentage of the vacations sold are not taken by customers, and the right to
take vacations expires 18 months after the sale, increases or decreases in
vacation package sales levels during any fiscal period will have a corresponding
effect on the Company's statement of operations during the period 18 months
following the sale of such vacation packages. Although the Company generates
substantial revenues from the sale of vacation packages, including the sale of
vacations that are not taken, the Company's earnings are primarily derived from
the sale of VOIs.
Generally, VOIs are sold under contracts requiring a 10% down payment and
monthly installments for periods of up to 7 years. VOI revenue is primarily
recognized when a 10% down payment has been received and the 10 day rescission
period has expired. During the 10 day rescission period, a customer may cancel
for any reason and have the down payment returned. Revenue relating to sales of
VOIs in projects under development is recognized using the percentage of
completion method. Under this method, the portion of revenues applicable to
costs incurred, as compared to total estimated construction and acquisition
costs, is recognized in the period of sale. The remaining revenue is deferred
and recognized as the remaining costs are incurred. As the Company is currently
in the early stage of development of several new projects, it is anticipated
that certain VOI sales in these projects will generate deferred revenue as the
Company is selling at a more rapid pace then the completion of the related VOI
units.
On October 31, 1995, the status of certain affiliated companies as S
Corporations terminated for federal and state income tax purposes. At such time,
income taxes primarily relating to installment sales and deferred revenue became
a net liability of the Company. As of December 31, 1995 and June 30, 1996, such
liability was approximately $3.1 million and $ 2.2 million, respectively. It is
anticipated that the Company will pay these taxes over the next seven years as
the installments to which the deferred revenues relate are received.
9
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
The following table sets forth for the periods indicated key items of the
Company's financial statements expressed as a percentage of the Company's total
revenues:
PERCENTAGE OF TOTAL REVENUES
THREE MONTHS ENDED JUNE 30,
---------------------------
1996 1995
-------- -----------
Vacation ownership interests 58.0% (1) (3) 33.3% (1)
Vacation packages 31.3 48.8
Resort operations and other 6.2 9.4
Interest earned on mortgages receivable 3.5 3.3
Commissions earned on marketing agreements 1.0 5.2
Net income/Pro forma net income 8.7 (1) (3) 3.2 (1) (2)
GROSS PROFIT PERCENTAGES
THREE MONTHS ENDED JUNE 30,
---------------------------
1996 1995
-------- -----------
Vacation ownership interests 43.4% (1) (3) 44.3% (1)
Vacation packages (18.0) (6.9)
Resort operations and other (3.2) .9
Interest earned on mortgages receivable 75.0 60.9
Commissions earned on marketing agreements 24.1 33.7
(1) Does not include deferred revenues and related net income from sales of VOIs
deferred for financial statement reporting purposes. (2) Reflects the effect on
historical statement of operations data, assuming the Company had been treated
as a C corporation rather than as an S corporation for income tax purposes. (3)
Includes the recognition of sales deferred at the beginning of the period.
The Company's total revenues for the three months ended June 30, 1996 were $56.7
million, an increase of $27.0 million or 90.9% from revenues of $29.7 million
for the comparable period in 1995. In addition, the Company sold 17,256 vacation
packages during the three months ended June 30, 1996, compared to 44,328 during
the three months ended June 30, 1995 reflecting the Company's increased use of
third party vacation packages. As of June 30, 1996, the Company had
approximately 160,000 unused vacations included in deferred revenues-vacation
packages which, combined with the utilization of new vacation packages to be
sold by the Company, expects to generate substantially increasing VOI sales over
the next eighteen months if inventory is available and the Company's efficiency
in generating sales is maintained. Although the Company experienced a 24.7%
increase in the number of vacation packages used during the second quarter of
1996 compared to the second quarter of 1995, the Company continued to experience
an increasing level of VOI sales from Company-owned resort properties as the
result of tours generated from marketing sources other than the Company's
vacation packages. Approximately 20% of tours taken during the three month
period ended June 30, 1996 were from sources other than the Company's vacation
packages.
The Company recognized revenues from the sale of vacation packages of $ 17.8
million during the second quarter of 1996, an increase of approximately $ 3.3
million or 22.8% from $ 14.5 million during the second quarter of 1995. This
increased revenue was due to an increase in the number of vacations taken (24.7%
increase), as well as an increase in revenues derived from various vacation
upgrades. These increases include the recognition of greater revenues upon the
expiration of vacation packages in the second quarter of 1996 as compared to the
second quarter of 1995. Vacation package revenues decreased as a percentage of
total revenues to 31.3% in the second quarter of 1996 compared to 48.8% during
the second quarter of 1995,
10
<PAGE>
primarily due to a $ 23.0 million increase in the sale of VOIs in Company owned
resorts. The cost of vacation packages increased to $ 21.0 million in the
quarter ended June 30, 1996 from $15.5 million in the quarter ended June 30,
1995 partially due to the increase in costs associated with fulfilling vacation
packages sold by third parties. Included in the cost of vacation packages are
the direct cost of providing hotel accommodations and cruises, commissions paid
to telephone marketing representatives, mailing and telephone costs, rent,
salaries paid to employees involved in reservations, verification and
confirmation activities and customer service, processing fees and expenses
relating to lead generation. As a result of the foregoing, the Company recorded
a loss of $ 3.2 million from the sale of vacation packages during the three
months ended June 30, 1996, compared to a loss from the sale of vacation
packages of $ 996,000 in the comparable quarter of 1995. The Company will
continue to emphasize customer service and incur increased fulfillment costs
provided that the results are an increased tour flow and more efficient VOI
sales. The Company sold 17,256 vacation packages in the three months ended June
30, 1996, a decrease of 27,072 vacation packages sold or 61.1% from the
comparable period in 1995. If, as has been the case in the past, a significant
number of vacations are not taken, the revenue from such vacation packages will
be recognized during the fourth quarter of 1997. The number of vacations taken
in the second quarter of 1996 increased by 24.7% to 17,520 from 14,052 vacations
taken during the second quarter of 1995. During the quarter ended June 30, 1996,
approximately 80% of all vacation package travelers toured Company owned
resorts, a decrease of approximately 5% from the Company's historical
experience. The decrease in tours was primarily the result of the Company's
reservation system conversion and a fire aboard a third party vendor's cruise
ship, which materially altered the itinerary of vacation package travelers. The
Company has taken measures to rectify these problems although it expects there
will be a less dramatic, but lingering effect into the third quarter of 1996.
The Company sold an aggregate of 1,733 VOIs in completed units and
pre-construction units at Company owned properties and at a third party-owned
property pursuant to a purchase agreement during the quarter ended June 30,
1996, compared to 686 VOIs in Company-owned completed units during the second
quarter of 1995. This represents an increase in sales volume of Company owned
VOIs of 152.6% (including pre-construction sales) in the second quarter of 1996
compared to the second quarter of 1995 and represents 58.0% of total revenues in
the 1996 quarter (exclusive of deferred revenues from sales in pre-construction
units) and 33.3 % of total revenues in the 1995 quarter. This increase reflects
the acquisition and development by the Company of additional resort properties
beginning in 1994 and the shift in the Company's emphasis from selling VOIs in
resort properties owned by other developers to selling VOIs in its own resort
properties, which VOI sales are more profitable. The Company recognized revenues
from the sale of VOIs of $ 32.9 million in the three months ended June 30, 1996,
of which $ 21.0 million was derived from the sales of VOIs in completed units
and was recorded as earned revenue and $ 11.9 million was derived from the sales
of VOIs in pre-construction units which had been recorded as deferred
revenue-VOIs on the Company's balance sheet at March 31, 1996. In comparison,
the Company derived revenues of $ 11.1 million from the sales of VOIs in
completed units in the quarter ended June 30, 1995, of which $ 9.9 million was
recognized as earned revenue and $ 1.2 million was record as "Deferred revenues
- - VOIs" on the Company's balance sheet at June 30, 1995. The costs of the VOIs
sold by the Company and recorded as earned revenues increased to $ 18.6 million
exclusive of deferred costs related to pre-construction VOI sales in the second
quarter of 1996 from $ 5.5 million in the second quarter of 1995, reflecting the
higher level of VOI sales. The deferred costs related to VOIs under development
were approximately $ 780,000. In addition, the expenses relating to providing
tours to the Star Island resort have been recorded as vacation package costs
while a portion of the VOI sales revenues generated from these tours have been
deferred. The cost of VOIs sold consists primarily of the direct costs of the
units in which VOIs are sold, marketing expenses, including sales commissions
and other marketing costs and sales and support expenses directly related to the
sale of VOIs. The cost of VOIs sold as a percentage of revenues derived from the
sale of VOIs increased slightly to 56.6% in the three months ended June 30, 1996
from 55.7% in the three months ended June 30, in 1995, due in part to slightly
higher product costs on completed VOI units (primarily at the Star Island
Resort).
11
<PAGE>
The reconciliation of VOI sales revenue recorded and deferred revenues is as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
<S> <C> <C>
JUNE 30, 1996 JUNE 30, 1995
-------------- --------------
VOI sales revenues recorded during the period $ 20,973,618 $ 19,153,373
VOI sales revenues deferred at the beginning of the period 13,448,176 -
VOI sales revenues deferred at the end of the period (1,512,968) (1,185,501)
-------------- ---------------
VOI sales revenues recognized during the period $ 32,908,826 $ 17,967,872
============== ================
</TABLE>
The Company's continued emphasis on development of resort properties and the
sale of VOIs in such properties resulted in a decrease in commissions received
in connection with the sale of VOIs for other developers. The Company derived
commission revenues of $ 527,000 in the three months ended June 30, 1996, a
decrease of $1.0 million or 65.7% from the three months ended June 30, 1995.
Furthermore, commissions as a percentage of revenues decreased to 1.0% in the
three months ended June 30, 1996 from 5.2% in the three months ended June 30,
1995. Commissions and related expenses under marketing agreements decreased to
$ 400,000 in the second quarter of 1996 from $1.0 million in the second quarter
of 1995. Such expenses as a percentage of commission revenues increased to 75.9%
in the second quarter of 1996 from 66.3% in the second quarter of 1995 as a
result of a sustained level of fixed expenses and a decrease in commission
revenue, reflecting the Company's shift in emphasis from selling VOIs in
properties owned by other developers to selling VOIs in Company-owned resort
properties.
The Company's revenues from resort and other operations increased to $ 3.5
million in the quarter ended June 30, 1996 from $2.8 million in the quarter
ended June 30, 1995, primarily as a result of an increase in the occupancy rate
and food and beverage sales at the PORT LUCAYA RESORT AND YACHT CLUB,
commencement of operations at the PALM AIRE RESORT & SPA, which was acquired in
the second quarter of 1995, and the commencement of operations at the SANTA
BARBARA RESORT AND YACHT CLUB. The cost of resort operations increased to $ 3.7
million in the second quarter of 1996 from $ 2.8 million in the second quarter
of 1995. Such costs as a percentage of revenues from resort and other operations
increased to 103.2% in the three months ended June 30, 1996 from 99.1% in the
comparable quarter of 1995. This increase in costs was primarily the result of
the Company's commencement of operations at the PALM AIRE RESORT AND SPA and at
the SANTA BARBARA RESORT AND YACHT CLUB. Historically, the Company has incurred
losses during the start-up phase of a new resort.
General and administrative expenses, consisting primarily of expenses related
to corporate overhead including substantial costs related to the Company's
expansion of its information systems department, as well as executive
compensation, increased to $ 3.6 million in the three months ended June 30, 1996
compared to $ 1.8 million in the three months ended June 30, 1995, and amounted
to approximately 6.3% of the Company's total revenues during the quarter ended
June 30, 1996 as compared to approximately 6.2% of the Company's total revenues
during the quarter ended June 30, 1995.
The provision for doubtful accounts decreased to $ 458,000 for the three months
ended June 30, 1996 from $ 663,000 for the three months ended June 30, 1995.
This provision includes an allowance for doubtful accounts on mortgages
receivable as well as commissions receivable on marketing contracts. The portion
of the provision for mortgages receivable increased during the three months
ended June 30, 1996 as compared to the three months ended June 30, 1995 as a
result of the increased mortgage receivables related to increased VOI sales
volume. However, during the three months ended June 30, 1996, the portion of the
provision for doubtful accounts on commissions receivable decreased
significantly from the three months ended June 30, 1995, as the Company
continued to deemphasize its sale of VOIs in properties owned by other
developers.
Depreciation and amortization expense increased 25.6% to $ 520,000 for the
quarter ended June 30, 1996 from $ 414,000 for the quarter ended June 30, 1995,
primarily due to increased purchases of computer hardware, software and other
equipment.
12
<PAGE>
As a result of the continued increase in sales of VOIs sold in
Company-owned properties, the Company's interest income from financing
activities increased to $ 2.0 million for the quarter ended June 30, 1996 from $
977,000 for the quarter ended June 30, 1995. This approximated 3.5% of revenues
during the second quarter of 1996 as compared to 3.3% of revenues during the
similar period of the prior year. This increase was partially offset by interest
paid on increased borrowings against loans hypothecated by the Company to
unaffiliated lenders of $ 500,000 during the second quarter of 1996 compared to
$ 382,000 during the second quarter of 1995. At June 30, 1996, the Company had a
portfolio of 9,194 loans to VOI purchasers, which loans had a weighted average
maturity of 5.6 years and a weighted average interest rate of 16.2%, compared
to a weighted average interest rate of 10.8% on Company borrowings from
unaffiliated lenders secured by VOI mortgages receivable. The Company has
historically derived substantial income from its financing activities.
The Company provides a provision for income taxes at an effective rate of 38% of
the consolidated net income of Vacation Break U.S.A., Inc. and its consolidated
United States subsidiaries. A portion of the consolidated net income includes
income from non-taxable Bahamian Corporations. After giving effect to the
non-taxable portion of the consolidated net income, the effective tax rate for
the three months ended June 30, 1996 was 36.3%.
As a result of the foregoing, the Company's net income was $ 4.9 million for the
quarter ended June 30, 1996, an increase of $ 4.0 million or 427% from Pro forma
net income of $ 936,000 for the quarter ended June 30, 1995.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
The following table sets forth for the periods indicated key items of the
Company's financial statements expressed as a percentage of the Company's total
revenues:
PERCENTAGE OF TOTAL REVENUES
SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1995
-------- -----------
Vacation ownership interests 51.2% (1) (3) 31.9% (1)
Vacation packages 35.9 50.2
Resort operations and other 7.9 8.7
Interest earned on mortgages receivable 3.9 3.3
Commissions earned on marketing agreements 1.1 5.9
Net income/Pro forma net income 6.7 (1) (3) 5.3 (1) (2)
GROSS PROFIT PERCENTAGES
SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1995
------- ----------
Vacation ownership interests 44.8% (1) (3) 44.8% (1)
Vacation packages (16.8) (0.7)
Resort operations and other (0.1) 2.6
Interest earned on mortgages receivable 72.4 60.4
Commissions earned on marketing agreements 34.9 38.6
(1) Does not include deferred revenues and related net income from sales of VOIs
deferred for financial statement reporting purposes.
(2) Reflects the effect on historical statement of operations data, assuming the
Company had been treated as a C corporation rather than as an S corporation for
income tax purposes.
(3) Includes the recognition of sales deferred at the beginning of the period.
13
<PAGE>
The Company's total revenues for the six months ended June 30, 1996 were $95.4
million, an increase of $39.1 million or 69.4% from revenues of $56.3 million
for the comparable period in 1995. The Company sold 43,598 vacation packages
during the six months ended June 30, 1996, compared to 83,078 during the six
months ended June 30, 1995 reflecting the Company's change to increased use of
third party vacation packages. As of June 30, 1996, the Company had
approximately 160,000 unused vacations included in deferred revenues-vacation
packages which, combined with the utilization of new vacation packages to be
sold by the Company as well as sales tours generated from marketing sources
other than the Companies vacation packages, are expected to generate
substantially increasing VOI sales over the next eighteen months if inventory is
available and the Company's efficiency in generating sales is maintained. The
Company experienced a 22.4% increase in the number of vacation packages used
during the first six months of 1996 compared to the first six months of 1995 and
continued to experience an increasing level of VOI sales from Company-owned
resort properties. Approximately 20% of tours taken during the six months ended
June 30, 1996 were from sources other than the Company's vacation packages.
The Company recognized revenues from the sale of vacation packages of $34.2
million during the first six months of 1996, an increase of approximately $5.9
million or 20.8% from $28.3 million during the first six months of 1995. This
increased revenue was due to an increase in the number of vacations taken (22.4%
increase), as well as an increase in revenues derived from various vacation
upgrades. These increases include the recognition of greater revenues upon the
expiration of vacation packages in the first six months of 1996 as compared to
the first six months of 1995. Vacation package revenues decreased as a
percentage of total revenues to 35.9% in the first six months of 1996 compared
to 50.2% during the first six months of 1995, primarily due to a $30.9 million
increase in the sale of VOIs in Company owned resorts. The cost of vacation
packages increased to $40.0 million in the six months ended June 30, 1996 from
$28.5 million in the six months ended June 30, 1995 primarily due to the
increase in costs associated with fulfilling vacations sold by third parties.
Included in the cost of vacation packages are the direct cost of providing hotel
accommodations and cruises, commissions paid to telephone marketing
representatives, mailing and telephone costs, rent, salaries paid to employees
involved in reservations, verification and confirmation activities and customer
service, processing fees and expenses relating to lead generation. As a result
of the foregoing, the Company recorded a loss of $5.8 million from the sale of
vacation packages during the first six months of 1996, compared to a loss from
the sale of vacation packages of $193,000 in the first six months of 1995. The
Company will continue to emphasize customer service and incur increased
fulfillment costs provided that the results are an increased tour flow and more
efficient VOI sales. The Company sold 43,598 vacation packages in the six months
ended June 30, 1996, a decrease of 39,480 vacation packages sold or 47.5% from
the comparable period in 1995. If, as has been the case in the past, a
significant number of vacations are not taken, the revenue from such vacation
packages will be recognized during the third and fourth quarters of 1997. The
number of vacations taken in the first six months of 1996 increased by 22.4% to
32,200 from 26,294 vacations taken during the first six months of 1995. During
the six months ended June 30, 1996, approximately 80% of all vacation package
travelers toured Company owned resorts, a decrease of approximately 5% from the
Company's historical experience. The decrease in tours was primarily the result
of the Company's reservation system conversion and a fire aboard a third party
vendor's cruise ship, which materially altered the itinerary of vacation package
travelers. The Company has taken measures to rectify these problems although it
expects there will be a less dramatic, but lingering effect into the third
quarter of 1996.
The Company sold an aggregate 3,423 VOIs in completed and pre-construction units
at Company owned properties and at a third party owned property pursuant to a
purchase agreement during the six months ended June 30, 1996, compared to 1,761
VOIs in Company-owned completed units during the first six months of 1995. This
represents an increase in sales volume of Company owned VOIs of 94.4% (including
pre-construction sales) in the first six months of 1996 compared to the first
six months of 1995 and represents 51.2% of total revenues in the first six
months of 1996 (exclusive of deferred revenues from sales in pre-construction
units) and 31.9 % of total revenues in the similar period of 1995. This increase
reflects the acquisition and development by the Company of additional resort
properties beginning in 1994 and the shift in the Company's emphasis from
selling VOIs in resort properties owned by other developers to selling VOIs in
its own resort properties, which VOI sales are more profitable. The Company
recognized revenues from the sale of VOIs of $48.8 million in the six months
ended June 30, 1996, of which $41.1 million was derived from the sales of VOIs
in completed units and was recorded as earned revenue and $7.7 million was
derived from the sales of VOIs in pre-construction units which was recorded as
deferred revenue-VOIs on the Company's balance sheet at December 31, 1995. In
comparison, the Company derived revenues of $ 19.2 million from the sales of
VOIs in completed units in the six months ended June 30, 1995, of which $ 18.0
million was derived from the sales of VOIs in completed units and was recorded
as earned revenue and $ 1.2 million was derived from the sales of VOIs in
pre-construction units
14
<PAGE>
which was recorded as deferred revenue on the Company's balance sheet at June
30, 1995. The costs of the VOIs sold by the Company and recorded as earned
revenues increased to $ 27.0 million exclusive of deferred costs related to
pre-construction VOI sales in the first six months of 1996 from $ 9.9 million in
the first six months of 1995, reflecting the higher level of VOI sales. The
deferred costs related to VOIs under development at June 30, 1996 were
approximately additional $ 780,000. The cost of VOIs sold consists primarily of
the direct costs of the units in which VOIs are sold, marketing expenses,
including sales commissions and other marketing costs and sales and support
expenses directly related to the sale of VOIs. The cost of VOIs sold as a
percentage of revenues derived from the sale of VOIs remained consistent at
55.2% in the six months ended June 30, 1996 and 1995.
The reconciliation of VOI sales revenue recorded and deferred revenues is as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JUNE 30, 1996 JUNE 30, 1995
-------------- --------------
<S> <C> <C>
VOI sales revenues recorded during the period $ 41,105,613 $ 19,153,373
VOI sales revenues deferred at the beginning of the period 9,233,181 -
VOI sales revenues deferred at the end of the period (1,512,968) (1,185,501)
------------- -------------
VOI sales revenues recognized during the period $ 48,825,826 $ 17,967,872
=============== ==================
</TABLE>
The Company's continued emphasis on the development of resort properties and the
sale of VOIs in such properties resulted in a decrease in commissions received
in connection with the sale of VOIs for other developers. The Company derived
commission revenues of $ 1.1 million in the six months ended June 30, 1996, a
decrease of $2.2 million or 66.7% from the six months ended June 30, 1995.
Furthermore, commissions as a percentage of revenues decreased to 1.1% in the
six months ended June 30, 1996 from 5.9% in the six months ended June 30, 1995.
Commissions and related expenses under marketing agreements decreased to
$696,000 in the first six months of 1996 from $ 2.0 million in the first six
months of 1995. Such expenses as a percentage of commission revenues increased
to 65.1% in the first six months of 1996 from 61.4% in the first six months of
1995 as a result of a sustained level of fixed expenses and a decrease in
commission revenue, reflecting the Company's shift in emphasis from selling VOIs
in properties owned by other developers to selling VOIs in Company-owned resort
properties.
The Company's revenues from resort and other operations increased to $7.5
million in the six months ended June 30, 1996 from $ 4.9 million in the six
months ended June 30, 1995, primarily as a result of an increase in the
occupancy rate and food and beverage sales at the PORT LUCAYA RESORT AND YACHT
CLUB, commencement of operations at the PALM AIRE RESORT & SPA, which was
acquired in the second quarter of 1995, and the commencement of operations at
the SANTA BARBARA RESORT AND YACHT CLUB in January 1996. The cost of resort
operations increased to $ 7.6 million in the first six months of 1996 from $ 4.8
million in the first six months of 1995. Such costs as a percentage of revenues
from resort and other operations increased to 100.1% in the first six months of
1996 from 97.4% in the first six months of 1995. This increase in costs was
primarily the result of the Company's commencement of operations at the PALM
AIRE RESORT AND SPA and at SANTA BARBARA RESORT AND YACHT CLUB. Historically,
the Company has incurred losses during the start-up phase of a new resort.
General and administrative expenses, consisting primarily of expenses related
to corporate overhead including substantial costs related to the Company's
expansion of its information systems department, as well as executive
compensation, increased to $ 6.4 million in the six months ended June 30, 1996
compared to $ 4.0 million in the six months ended June 30, 1995, and amounted to
approximately 6.7% of the Company's total revenues during the six months ended
June 30, 1996 as compared to approximately 7.1% of the Company's total revenues
during the six months ended June 30, 1995.
15
<PAGE>
The provision for doubtful accounts decreased to $ 655,000 for the six months
ended June 30, 1996 from $ 777,000 for the six months ended June 30, 1995. This
provision includes an allowance for doubtful accounts on mortgages receivable as
well as commissions receivable on marketing contracts. The portion of the
provision for mortgages receivable increased during the six months ended June
30, 1996 as compared to the six months ended June 30, 1995 as a result of the
increased mortgage receivables related to increased VOI sales volume. However,
during the six months ended June 30, 1996, the portion of the provision for
doubtful accounts on commissions receivable decreased significantly from the six
months ended June 30, 1995, as the Company continued to deemphasize its sale of
VOIs in properties owned by other developers.
Depreciation and amortization expense increased 48.4% to $ 1.1 million for the
six months ended June 30, 1996 from $741,000 for the six months ended June 30,
1995, primarily due to increased purchases of computer hardware, software and
other equipment.
As a result of the continued increase in sales of VOIs in Company-owned
properties, the Company's interest income from financing activities increased to
$ 3.7 million for the six months ended June 30, 1996 from $ 1.9 million for the
six months ended June 30, 1995. This approximated 3.9% of revenues during the
first six months of 1996 as compared to 3.3% of revenues during the similar
period of the prior year. This increase was partially offset by interest paid on
increased borrowings against loans hypothecated by the Company to unaffiliated
lenders of $ 1.0 million during the first six months of 1996 compared to $
733,000 during the first six months of 1995. At June 30, 1996, the Company had a
portfolio of 9,194 loans to VOI purchasers, which loans had a weighted average
maturity of 5.6 years and a weighted average interest rate of 16.2%, compared
to a weighted average interest rate of 10.8% on Company from unaffiliated
lenders secured by VOI mortgages receivable. The Company has historically
derived substantial income from its financing activities.
The Company provides a provision for income taxes at an effective rate of 38% of
the consolidated net income of Vacation Break U.S.A., Inc. and its consolidated
United States subsidiaries. A portion of the consolidated net income includes
income from non-taxable Bahamian Corporations. After giving effect to the
non-taxable portion of the consolidated net income, the effective tax rate for
the six months ended June 30, 1996 was 35.1%.
As a result of the foregoing, the Company's net income was $ 6.4 million for the
six months ended June 30, 1996, an increase of $ 3.4 million or 113.3% from Pro
forma net income of $ 3.0 million for the six months ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company offers financing to the purchasers of VOIs in Company owned resort
properties who make a down payment generally equal to at least 10% of the
purchase price. This financing bears interest at fixed rates, unless the down
payment equals at least 50% of the purchase price and the purchaser agrees to
pay the balance of the purchase price within one year from the date of purchase,
in which case the Company's loan bears no interest. This financing is
collateralized by a mortgage on the underlying VOI. The Company has entered into
agreements with three lenders for the financing of customer receivables which
provide an aggregate of up to approximately $78.0 million of available financing
by the Company bearing interest at variable rates tied to the "prime" rate or
LIBOR. As of June 30, 1996, approximately $26.6 million was outstanding under
such financing agreements. A significant portion of this indebtedness has been
guaranteed by Ralph Muller, the Chairman of the Board, Chief Executive Officer
and majority shareholder of the Company. Under these financing arrangements, the
Company hypothecates, or pledges as security, qualified purchaser promissory
notes to these lenders, who lend the Company 75% to 85% of the principal amount
of such notes or, in the case of pre-sale financing, 60% to 65% of the principal
amount of such notes. Payments under these promissory notes are made by the
purchaser borrowers directly to a 'lockbox,' or payment processing center, and
such payments are credited against the Company's outstanding balance with the
respective lenders. Of the aggregate availability of $78.0 million, $30.0
million of such availability is a revolving loan with scheduled availability
until December 1997; $15.0 million of such availability is a revolving loan with
scheduled
16
<PAGE>
availability until June 1997; $15.0 million of such availability is a revolving
loan with scheduled availability until March 1998; and $5.0 million of such
availability is a revolving loan with scheduled availability until September
1997. In addition, during the six months ended June 30, 1996, the Company did
not extend $12.5 million of availability of which $11.7 million was outstanding
at June 30, 1996 and will be repaid through customer receivable collections.
Following termination of the availability period of each of the respective
agreements, borrowings under the aggregate agreements are required to be repaid
over a period of between five and eight years. The Company believes that it has
substantial loan availability to provide financing of new VOI purchases through
mid 1997 for the four presently active selling resorts. Although the Company
believes it can obtain additional financing from other lenders if necessary,
other than as set forth herein, it does not presently have binding agreements to
extend the terms of such financing or for any replacement financing, and there
can be no assurance that alternative or additional arrangements can be made on
terms that are satisfactory to the Company. Accordingly, future sales of VOIs
may be limited by both the availability of funds to finance the initial negative
cash flow that results from sales that are financed by the Company and by
reduced demand which may result if the Company is unable to provide financing to
purchasers of VOIs. If the Company is required to sell its customer receivables,
discounts from the face value of such receivables may be required. At June 30,
1996, the Company had a portfolio of 9,194 loans to VOI purchasers, which loans
had a weighted average maturity of approximately 5.6 years, and a weighted
average interest rate of 16.3%, compared to a weighted average interest rate of
10.5% on borrowings against loans hypothecated by the Company to unaffiliated
lenders. The Company has historically derived substantial income from its
financing activities.
The Company also requires funds to finance the future purchases of and
improvements to resort properties. Such capital has been, and is anticipated to
continue to be, provided from operations and from secured term loans under
existing and future credit facilities, as well as from the proceeds of the
Company's initial public offering of Common Stock in December 1995 ("IPO"). The
Company presently has no commitments to make capital expenditures other than (i)
the payment of $3.4 million to fund construction expenses relating to the KEY
WEST phase at the SEA GARDENS BEACH AND TENNIS RESORT, which funds are being
provided to the Company under a credit facility by Sun Trust /South Florida,
N.A. ("Sun Trust"), (ii) $4.75 million to finance the estimated expenses related
to the conversion of units at the PALM AIRE RESORT AND SPA for sale as VOIs,
which funds are being provided to the Company pursuant to a credit facility by
Bank Atlantic, and (iii) $12.7 million to finance the estimated expenses related
to the conversion costs of the OCEAN RANCH resort for sale as VOIs, which funds
being provided to the Company pursuant to a credit facility by Bank Atlantic.
The indebtedness under the credit facility provided by Sun Trust as well as a $
1.2 million construction facility loan provided by Sun Trust for the SANTA
BARBARA RESORT AND YACHT CLUB, has been personally guaranteed by Mr. Muller. The
Company is in the process of financing the estimated $13.0 million of new
construction costs at a planned 84-unit phase of the Sea Gardens property with
Sun Trust and a participant, although it has not entered into a definitive
agreement with respect to such financing. Similarly, the Company is in the
process of financing the estimated $11.0 million acquisition and renovation
costs for a Central Florida, East Coast property under contract with one of its
third party lenders, although it has not entered into a definitive agreement
with respect to such financing.
The Company intends to continue to provide financing to purchasers of VOIs and
to obtain funds to finance the negative cash flow resulting from the payment of
sales commissions and other selling expenses and to make release payments on
bank indebtedness relating to development of its resort properties. For the six
months ended June 30, 1996 and 1995, the Company derived interest income of
$ 3.7 million and $ 1.9 million, respectively, from the financing of purchaser
notes receivable, and incurred interest expenses of $ 1.0 million and $ 733,000,
respectively, relating to loans secured by notes hypothecated to these
unaffiliated lenders.
During the six months ended June 30, 1996 and 1995, the Company's operating
activities used approximately $11.3 million and $2.0 million, respectively, in
cash, and its investing activities used approximately $5.1 million and $6.4
million, respectively, in cash. During these periods $15.7 million and $9.7
million, respectively, was provided through the Company's financing activities,
resulting in a net decrease in cash and
17
<PAGE>
cash equivalents of $750,000 in the second quarter of 1996 and a net increase in
cash and cash equivalents of $1.4 million during the second quarter of 1995.
The Company completed an IPO of its Common Stock in December 1995, which
provided net proceeds to the Company of approximately $8.1 million. In January
1996, the Company received additional net proceeds of approximately $1.2 million
in connection with the underwriter's exercise of its over-allotment option.
At December 31, 1995, the Company recorded an accrued distribution for taxes in
the amount of approximately $3.4 million. This accrual, payable to the majority
shareholder, was the result of the conversion of all of the Company's affiliated
S corporations to C corporations. This amount represents taxes, payable by the
majority shareholder, resulting from earnings of the S corporations prior to the
termination of such elections. The Company will be required to fund this
distribution during 1996. During the first six months of 1996, the Company
funded approximately $ 1.1 million of such distributions. The Company believes
that it will be able to pay the balance of this amount from funds generated by
operations.
The Company believes that funds from operating and financing activities,
borrowings under its existing credit facilities and the net proceeds from the
IPO are sufficient to satisfy its contemplated cash requirements through the
remainder of 1996, and that its long-term financing requirements will be met
through operating and financing activities in the normal course of its business
and, if deemed necessary or appropriate, through additional financing.
The foregoing Management's Discussion and Analysis contains various "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933 which represent the Company's expectations or beliefs concerning future
events, including, but not limited to, statements regarding increased sales of
VOIs in Company owned resorts and the sufficiency of the Company's cash flow, as
well as receivables financing, for its future liquidity and capital resource
needs. These forward looking statements are further qualified by important
factors that could cause actual results to differ materially from those in the
forward looking statements. These factors include, without limitation, the
Company's ability to continue to develop and market resort properties, increases
in marketing costs, the availability of favorable financing agreements,
increases in sales of vacation packages, fluctuations in interest rates and the
effects of governmental regulation. Results actually achieved may differ
materially from expected results included in these statements as a result of
these or other factors.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company's Annual Meeting of Shareholders was held on June 14, 1996.
At the meeting, each of Ralph P. Muller, Kevin Sheehan, Joyce North, Henry M.
Cairo, Richard Adrey, Ronald Korn, Arthur Weinstein and Allen C. Harper were
re-elected as directors of the Company. The following table indicates the number
of votes cast by shareholders of the Company for, against or withheld in
connection with the election of each of the directors:
------------------------VOTES------------------------
DIRECTOR FOR AGAINST WITHHELD
----------- ---------- --------------- -------------------
Ralph P. Muller 8,248,072 -- 1,000
Kevin Sheehan 8,248,047 -- 1,025
Joyce North 8,248,047 -- 1,025
Henry M. Cairo 8,248,047 -- 1,025
Richard Adrey 8,248,122 -- 950
Ronald Korn 8,248,122 -- 950
Arthur Weinstein 8,248,122 -- 950
Allen C. Harper 8,248,122 -- 950
In addition, the shareholders approved the Company's adoption of a Directors'
Stock Option Plan and the reservation of 40,000 share of Common Stock for
issuance pursuant to such plan. The number of votes cast by shareholders of the
Company for or against or abstained, as well as the number of broker non-votes,
respecting the approval of the Company's adoption of the Directors' Stock Option
Plan were 8,224,097, 15,470, 3,685 and 5,820, respectively.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits:
10.76 Loan Agreement, dated June 13,1996, by and between Ocean Ranch
Vacation Group and BankAtlantic.
10.77 Absolute Unconditional and Continuing Guaranty, dated as of June 13,
1996, by Vacation Break U.S.A., Inc. (the "Registrant") in favor of
BankAtlantic
10.78 Promissory Note, dated June 13,1996, by Ocean Ranch Vacation Group
to BankAtlantic
10.79 Agreement for the Purchase and Sale of Real Property, dated May 2,
1996, by and between Labree, Inc ("Labree") and the Registrant
10.80 First Amendment to Agreement for the Purchase and Sale of Real
Property, dated June 14, 1996, by and between Labree and the
Registrant
10.81 Second Amendment to Agreement for the Purchase and Sale of Real
Property, dated July 23, 1996, by and between Labree and the Registrant
11.1 Statement regarding computation of per share earnings
27.1 Financial Data Schedule
b. Reports on Form 8-K:
NONE
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
VACATION BREAK U.S.A., INC.
By: /S/ RALPH P. MULLER
---------------------
Ralph P. Muller
Chairman of the Board and Chief Executive Officer
Date: August 14, 1996
By: /S/ KEVIN M. SHEEHAN
----------------------
Kevin M. Sheehan
President
Date: August 14, 1996
By: /S/ HENRY M. CAIRO
----------------------
Henry M. Cairo
Chief Financial Officer and Chief Operating Officer
Date: August 14, 1996
20
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NOS.
<S> <C> <C>
10.76 Loan Agreement, dated June 13, 1996, by and between Ocean Ranch
Vacation Group and BankAtlantic
10.77 Absolute and Unconditional Continuing Guaranty, dated as of June
13, 1996, by Vacation Break U.S.A., Inc. (the "Registrant") in favor of
BankAtlantic.
10.78 Promissory Note, dated June 13, 1996, by Ocean Ranch Vacation
Group to BankAtlantic
10.79 Agreement for the Purchase and Sale of Real Property, dated May 2,
1996, by and between Labree, Inc. ("Labree") and the Registrant
10.80 First Amendment to Agreement for the Purchase and Sale of Real
Property, dated June 14, 1996, by and between Labree and the
Registrant
10.81 Second Amendment to Agreement for the Purchase and Sale of Real
Property, dated July 23, 1996, by and between Labree and the
Registrant
11.1 Statement regarding computation of per share earnings
27.1 Financial Data Schedule
</TABLE>
EXHIBIT 10.76
LOAN AGREEMENT
THIS AGREEMENT is made and entered into this 13 day of June, 1996
by and between OCEAN RANCH VACATION GROUP, a Florida General Partnership
("Borrower"), and BANKATLANTIC, a Federal Savings Bank ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower is the owner in fee simple of certain lands situate
and lying in Broward County, Florida, as more particularly described on Exhibit
"A" attached hereto and made a part hereof (the "Property"); and
WHEREAS, Borrower intends to construct certain improvements in the
nature of renovations to an existing hotel (the "Improvements") in connection
with the development of time share units upon the Property in accordance with
the plans and specifications to be approved by Lender (the "Plans and
Specifications"); and
WHEREAS, Borrower has requested of Lender and Lender is willing to lend
Borrower the sum of up to $12,700,000.00 to finance the acquisition of the
Property and construction of the Improvements (the "Loan").
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth herein and other good and valuable consideration exchanged
between the parties, the receipt and adequacy of which is hereby acknowledged,
it is agreed as follows:
Article 1
RECITALS AND DEFINITIONS
1.1 RECITALS. The foregoing recitals are acknowledged by the
parties to be true and correct, and are incorporated herein by reference.
1.2 DEFINITIONS. As used in this Agreement, the terms listed below
shall have the following meanings:
"ACCOUNT TO RECEIVE ADVANCES": That bank account established with Lender
which shall be designated by Borrower or by Borrower's agent as the
account to which Advances hereunder may be made by Lender.
"ADDITIONAL ADVANCE": Those Advances following the Initial Advance.
"ADVANCE": A disbursement by Lender of a portion of the Loan proceeds to
provide funds for the payment of Construction Costs or such other
purposes, in accordance with the terms and provisions of this Agreement.
"AGREEMENT" or "LOAN AGREEMENT": This Loan Agreement.
<PAGE>
"ARCHITECT": Arc Avenue, Inc. and any successor architect employed by
Borrower and approved by Lender, in writing, for preparation of the
Plans and Specifications for the construction of the Improvements.
"ASSIGNMENT OF RENTS, LEASES AND DEPOSITS": An Assignment of Rents,
Leases and Deposits of even date herewith from Borrower, assigning to
Lender, among other items, all of its right, title and interest in and
to all agreements for the lease of the Property, or any part thereof, if
any, and any rents, issues and profits derived or to be derived from the
Property.
"ASSIGNMENTS": Collectively, (i) the Assignment of Rents, Leases and
Deposits and (ii) the Collateral Assignment of Rights and Agreements
Affecting Real Estate, (iii) the Collateral Assignment of Sales
Contracts and (iv) the Collateral Assignment of Management Contract.
"BIENNIAL WEEK": A period of seven (7) consecutive days during either an
odd numbered calendar year or an even number calendar year during which
time the Unit Week owner has the right to use the applicable time share
unit.
"BUSINESS DAY": Any day ending at 5:00 p.m. during which Lender is open
for business.
"CLOSING": The time of the execution and delivery of this Agreement by
Borrower and Lender.
"COLLATERAL ASSIGNMENT OF MANAGEMENT CONTRACT": An Assignment,
Subordination and Termination Agreement executed or to be executed by
the entity entering into the management contract with Borrower for
management of the Property, to be acknowledged by Borrower, which shall
assign to Lender among other items, all of such party's right, title and
interest in and to its management contract for the management of the
Property.
"COLLATERAL ASSIGNMENT OF RIGHTS AND AGREEMENTS AFFECTING REAL ESTATE":
A Collateral Assignment of Rights and Agreements Affecting Real Estate
of even date herewith from Borrower, assigning to Lender, among other
items, all of its right, title and interest in and to certain agreements
entered into by Borrower with respect to the Property and certain
licenses, permits and agreements affecting the Property.
"COLLATERAL ASSIGNMENT OF SALES CONTRACTS": A Collateral Assignment of
Sales Contracts executed contemporaneously herewith by Borrower,
assigning to Lender, among other items, all of Borrower's right, title
and interest in and to any Sales Contracts entered into by Borrower with
respect to the Property.
"COMPLETION DATE": The date construction of the Improvements is to be
completed,
2
<PAGE>
which date shall be in accordance with a construction schedule to be
submitted by Borrower to Lender for approval by Lender and Lender's
Construction Advisor which must be approved prior to any Advances for
Construction Costs hereunder.
"CONSTRUCTION COSTS": The approved out-of-pocket hard costs of labor,
materials, demolition, land improvements, utility installation and other
work to be performed and approved out-of-pocket soft costs incurred in
connection with the construction and completion of the Improvements in
accordance with the Plans and Specifications. Land acquisition costs and
other soft costs shall not be included in Construction Costs.
"CONSTRUCTION PERIOD": The period of time commencing as of the date of
this Agreement through and including the Completion Date.
"CONTRACTOR": HDL Construction Co., Inc., and any successor general
contractor approved by Lender in writing.
"CREDIT FACILITY LETTER": That certain letter executed by and between
Lender and Borrower dated April 11, 1996, and all amendments thereto,
the terms and conditions of which are hereby incorporated by reference
herein, but in the event of any conflict or discrepancy between the
terms of this Agreement and the Credit Facility Letter, the terms of
this Agreement shall control.
"DEFAULT RATE": The rate of interest after a default as set forth in the
Note.
"ENGINEER" OR "BORROWER'S ENGINEER": Any engineer retained directly or
through the Architect and any successor engineer approved by Lender in
writing for preparation of engineering plans and specifications and
performance of engineering services in connection with the construction
of the Improvements.
"FINANCING STATEMENTS": Financing Statements from Borrower to Lender to
perfect Lender's security interest in the personal property described in
the Mortgage.
"GAAP": Generally accepted accounting principles, consistently applied.
"GENERAL CONTRACT": Any written contract between Borrower and a general
contractor for the construction of the Improvements.
"GOVERNMENTAL AUTHORITY": Any federal, state, county, municipal or other
governmental department, commission, board, bureau, court, agency, or
any instrumentality of any other governmental entity having jurisdiction
over the Property.
"GOVERNMENTAL REQUIREMENTS": Any law, statute, code, ordinance, order,
rule, regulation, judgment, decree, writ, injunction, franchise, permit,
certificate, license,
3
<PAGE>
authorization, or other direction or requirement of any Governmental
Authority now existing or hereafter enacted, adopted, promulgated,
entered or issued applicable to the construction of the Improvements or
to the Borrower.
"GUARANTOR": Vacation Break U.S.A., Inc., a Florida corporation, who
shall guarantee repayment of the Loan and performance of Borrower
hereunder and under the Loan Documents.
"GUARANTOR SUBSIDIARIES": The entities listed on Exhibit "B" attached
hereto and made a part hereof which are subsidiaries of and wholly owned
by Guarantor.
"GUARANTY": Absolute Unconditional and Continuing Guaranty to be
executed by Guarantor guaranteeing (a) repayment of the Note and all
other indebtedness of Borrower to Lender and (b) performance by Borrower
of all of Borrower's obligations under the Note, this Agreement and the
other Loan Documents.
"IMPOSITIONS": All (i) real estate and personal property taxes and other
taxes and assessments, public or private; utility rates and charges
including those for water and sewer; all other governmental and
non-governmental charges and any interest or cost or penalties with
respect to any of the foregoing; and charges for any public improvement,
easement or agreement maintained for the benefit of or involving the
Property of any kind and nature whatsoever that at any time prior to or
after the executed of the Loan Documents may be assessed, levied or
imposed against the Property, (ii) other taxes, assessments, fees and
governmental and non-governmental charges levied, imposed or assessed
upon or against Borrower or any of its properties and (iii) taxes levied
or assessed upon the Mortgage and the Note, or either.
"IMPROVEMENTS": The improvements to be constructed upon the Land in
accordance with the Plans and Specifications, including any existing or
future buildings, and all internal improvements contemplated, including
all common areas, parking areas, utility hook-ups, together with the
electrical, plumbing and other work necessary for the operation of the
foregoing improvements, such as landscaping, flooring, etc., and all
other improvements constructed or to be constructed on the Property in
accordance with the Plans and Specifications.
"INITIAL ADVANCE": The first advance of the Loan proceeds.
"LEASE": A legally enforceable Lease Agreement, in form and content
approved by Lender.
"LENDER'S CONSTRUCTION ADVISOR": A firm or individual approved by Lender
(which will be an independent third party).
4
<PAGE>
"LOAN DOCUMENTS": Those documents executed or submitted in connection
with the Loan, including without limitation, (i) that certain Promissory
Note in the principal amount of $12,700,000.00 (the "Note"), (ii) the
Mortgage Deed and Security Agreement, (iii) this Loan Agreement, (iv)
each Guaranty, (v) the Financing Statements, (vi) the Assignments, (vii)
the Hazardous Substance Certificate and Indemnification Agreement,
(viii) the Americans With Disabilities Certificate and Indemnification
Agreement, (ix) the PPM Pledge Agreement, (x) the Security Agreement and
(xi) all other documents and instruments executed by Borrower in
connection with the Loan and/or as may be required by Lender or Lender's
counsel.
"LOAN IN BALANCE": or "IN BALANCE": That the unadvanced portion of the
Loan, in the aggregate and in each item of Construction Costs, equals or
exceeds the estimated remaining costs, in the aggregate and per item to
complete the Improvements and to pay for all other items described in
Exhibit "C", annexed hereto and made a part hereof. Lender's estimate of
the remaining costs shall be determinative and binding upon Borrower.
"MATURITY DATE": The date the Loan matures in accordance with the Note.
"MORTGAGE": That certain Mortgage Deed and Security Agreement from
Borrower to Lender securing the Note and the indebtedness of Borrowe
to Lender thereunder in the amount of $12,700,000.00, which is a valid
first mortgage lien on the Property and all fixtures and personal
property owned by Borrower to be located on or used in connection with
the Property.
"NOTE": The Promissory Note executed by Borrower in favor of Lender in
the principal amount of $12,700,000.00, evidencing the Loan.
"PPM PLEDGE AGREEMENT": That certain Hypothecation and Pledge Agreement
executed by PPM Brokerage Services, Inc. ("PPM") in favor of Lender,
whereby PPM collaterally assigns, hypothecates and pledges in favor of
Lender that certain promissory note in the original principal amount of
$8,000,000.00, executed by Palm Vacation Group, a Florida Joint Venture,
in favor of PPM.
"SALES CONTRACT": A legally enforceable contract for purchase and sale
in form and content satisfactory to Lender and its counsel, executed
between Borrower and a bonafide third party purchaser for the purchase
and sale of a Unit Week or a Biennial Week.
"SURVEY": A survey of the Land, acceptable to Lender, prepared by a
registered Florida land surveyor acceptable to Lender.
"TITLE INSURANCE COMPANY": Commonwealth Land Title Insurance Company or
such
5
<PAGE>
other title insurance company as shall be acceptable to Lender.
"TITLE INSURANCE POLICY": An American Land Title Association Loan Policy
- 1970 (Amended October 17, 1970 and October 17, 1984) acceptable to
Lender, issued to Lender by the Title Insurance Company.
"UNIT WEEK": A period of seven (7) consecutive days each calendar year
during which time the owner thereof has the right to use the applicable
time share unit.
1.3 OTHER DEFINITIONAL PROVISIONS. (a) The terms "material" and
"materially" shall have the meanings ascribed to such terms under GAAP as such
would be applied to the business of the Borrower, except as the context shall
clearly otherwise set forth; (b) all of the terms defined in this Agreement
shall have such defined meanings when used in other documents issued under, or
delivered pursuant to, this Agreement, unless the context shall otherwise
require; (c) all terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and vice versa; (d) accounting
terms to the extent not otherwise defined shall have the respective meanings
given them under, and shall be construed in accordance with GAAP; (e) the words
"hereby", "hereto", "hereof", "herein", "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; (f) the masculine and neuter genders
are used herein and whenever used shall include the masculine, feminine and
neuter as well; and (g) whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the heirs, personal
representatives, successors and assigns of such parties unless the context shall
expressly provide otherwise.
Article 2
THE LOAN
2.1 PROCEEDS OF THE LOAN. A portion of the Loan in the maximum amount of
$1,500,000.00 is available to reimburse Borrower for costs incurred in
connection with the acquisition of the Property. The balance of the Loan, after
deduction for (i) the amount of the "Interest Reserve" (as described below) and
(ii) the allocation for the land cost, in the amount of $10,500,000.00, shall be
available to finance construction of the Improvements; provided, however, that
no Advances shall be disbursed for Construction Costs unless and until Borrower
has first expended, from its own funds, an amount of not less than $1,000,000.00
against Construction Costs for the Improvements ("Borrower's Additional
Equity"). Borrower will be renovating the Property in connection with the
development of 99 or 100 time share units (the "Units") on the Property.
Provided there does not exist an Event of Default and no event which with notice
or lapse of time or both would become an Event of Default and subject to the
terms of this Agreement, Lender will lend and advance for the account of
Borrower from time to time under the Loan such sums as may be required to
finance construction of the Improvements in accordance with the construction
budget to be prepared by
6
<PAGE>
Borrower and submitted to Lender for Lender's approval in Lender's sole
discretion (after Borrower has funded, and Lender has approved, Borrower's
Additional Equity). The Loan shall mature on a "Maturity Date" as set forth in
the note evidencing the Loan and no advances shall be available thereunder after
the Maturity Date.
2.2 INTEREST RESERVE. A sum equal to $700,000.00 as and for an interest
reserve (the "Interest Reserve") shall be established out of the Loan proceeds
to be used for the sole purpose of paying the interest due and owing under the
Note until such time as the Interest Reserve is fully expended; provided,
however, that no such funding of interest owing under the Note will occur under
the Interest Reserve unless and until Borrower has first expended from
Borrower's own funds the total amount of $500,000.00 in payment of interest
accruing under the Note. Borrower hereby authorizes Lender to draw upon the
Interest Reserve for interest payments due under the Note on a monthly basis.
Notwithstanding the establishment of the Interest Reserve, Borrower shall be
responsible for all interest payments due under the Note, and, upon the Interest
Reserve being fully expended, or, upon the occurrence of any default under the
Note, this Agreement or in any of the Loan Documents, Borrower shall make all
interest payments using Borrower's own funds.
2.3 SECURITY FOR THE LOAN. Borrower's obligation to repay the Loan is
evidenced by the Note executed simultaneously herewith, which sets forth the
method for payment, rate of interest, and such further terms as are therein set
forth. The repayment of the Note is to be secured by the Loan Documents, which
documents Borrower shall deliver, or cause to be delivered, to Lender
simultaneously with the execution of the Note.
Article 3
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender that so long as credit
remains available to Borrower or there is any outstanding balance due under the
Note:
(a) Borrower has the power to engage in all the transactions
contemplated by this Agreement and has full power, authority and legal
right to execute and deliver, and to comply with its respective
obligations under the Loan Documents, which documents constitute the
legally binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms.
(b) To the best of its knowledge and belief, there is no suit,
action, or proceeding pending or threatened against or affecting
Borrower, the Land or the Improvements before or by any court,
administrative agency or other Governmental Authority which brings into
question the validity of the transactions contemplated hereby or would
interfere with the ability of Borrower to comply with the terms hereof.
(c) Neither the execution nor delivery of any of the Loan
Documents, nor
7
<PAGE>
any other document relating hereto, will conflict with or result in a
breach of any of the provisions of the Charter, Articles of
Incorporation or By-Laws or the Partnership Agreement, where applicable,
of Borrower or of any Guarantor or of any applicable law, judgment,
order, writ, injunction, decree, rule or regulation of any court,
administrative agency or other Governmental Authority, or of any
agreement or other instrument to which Borrower or any Guarantor is a
party or by which any of them are bound or constitute a default under
any thereof, or result in the creation or imposition of any lien, charge
or encumbrance upon any property of Borrower or the Land and/or
Improvements, other than those created under this transaction in favor
of Lender.
(d) No consent, approval or other authorization of or by any
Governmental Authority is required in connection with the execution or
delivery by Borrower of the Loan Documents, or compliance with the
provisions hereof or thereof.
(e) All approvals from Governmental Authorities having
jurisdiction over the Land and Improvements and all other entities,
including, but not limited to, those approvals involving access, zoning,
permits, and use, have been or will be obtained relative to the
construction of the Improvements and remain in full force and effect
without restriction or modification.
(f) Borrower has good and marketable title to the Land and the
collateral as defined in the Mortgage, the Security Agreement, the
Financing Statements and the Assignments given as security to the
Lender, free and clear of all mortgages, pledges, liens, security
interests or other encumbrances, except for those exceptions appearing
in the title insurance commitment pursuant to which the Title Insurance
Policy will be issued, approved and accepted by Lender and Lender's
counsel as to form and content. Borrower will warrant and defend the
Land and the aforesaid collateral against the claims and demands of all
third parties.
(g) Subject to any limitation stated thereon or by Borrower or
Guarantor in writing and accepted by Lender, all balance sheets,
earnings statements and other financial data which have been or shall
hereafter be furnished to Lender to induce it to enter into this
Agreement or otherwise in connection with the Loan, do or will fairly
represent the financial condition of Borrower and Guarantor as of the
dates thereon and are the results of their operations for the period for
which the same are furnished to Lender. Such financial documentation has
been or will be prepared in accordance with GAAP, and all other
information, reports and other papers and data furnished to Lender are
or will be, at the time the same are so furnished, accurate and correct
in all material respects and complete insofar as completeness may be
necessary to give Lender a true and accurate knowledge of the subject
matter. There are no material liabilities of any kind of Borrower or
Guarantor as of the date of the most recent financial statements which
are not reflected therein. There have been no materially adverse changes
in the financial condition or operation of Borrower or Guarantor since
8
<PAGE>
the date of such financial statements.
(h) Borrower will pay all Impositions and obligations, including
tax claims, when due, except such as Borrower contests in good faith by
an appropriate proceeding, in which event Borrower shall furnish to
Lender, if requested, a bond or other security satisfactory to Lender
in an amount sufficient to protect Lender and its interest herein.
(i) Borrower will not change the Title Insurance Company, the
Contractor, the Architect or the Engineer, without the prior written
consent of Lender.
(j) The construction, if any, heretofore performed on the
Improvements has been performed in accordance with the Plans and
Specifications as approved by Lender, and, to Borrower's knowledge,
there are no structural defects in the Improvements and no violation of
any applicable zoning, building or any other local, state or federal
laws, ordinances and regulations existing with respect to the
anticipated use and construction thereof, and Borrower has obtained or
shall obtain prior to any funds being advanced hereunder for the
construction of the Improvements, all Governmental Requirements required
by all Governmental Authorities regulating such construction and use,
and Borrower is in compliance with all laws, regulations, ordinance and
orders of all Governmental Authorities.
(k) All utility services necessary for the construction of the
Improvements and the operation thereof for their intended purpose are
available at the boundaries of the Land, including water supplies, storm
and sanitary sewer facilities, and gas, electric and telephone
facilities, and Borrower has obtained all necessary permits and
permissions required from Governmental Authorities for unrestricted
access to the use of such services in connection with the construction
and subsequent use of the Improvements.
(l) The Property is not now damaged or injured as a result of any
fire, explosion, accident, flood or other casualty, and there are no
soil conditions which would interfere with the construction of the
Improvements.
(m) Borrower has not made any contract or arrangement of any
kind, the performance of which by the other party thereto would give
rise to a lien on the Property, except for the contracts with the
Architect, the Contractor and any subcontractors whose lien rights will
be subordinate to the lien of the Mortgage. There have been no
amendments or modifications to the General Contract or the contract with
the Architect or Engineer or any other contract approved by Lender,
except as approved by Lender; there is in existence no default or
grounds for default under any contract, and, the General Contract and
all other contracts are in full force and effect.
9
<PAGE>
(n) All roads necessary for the full utilization of the
Improvements for their intended purposes have either been completed or
the necessary rights of way therefor have either been acquired by the
appropriate local authorities or have been dedicated to public use and
accepted by such local authorities, and all necessary steps have been
taken by Borrower and such local authorities to assure the complete
construction and installation thereof.
(o) There is no default on the part of Borrower under this
Agreement, the Note or the Mortgage, or any other Loan Document, and no
event has occurred and is continuing which with notice, or the passage
of time, or either, would constitute a default under any provision
hereof or thereof.
(p) Borrower has dealt with no broker or finder in connection
with the Loan. Borrower hereby agrees to indemnify Lender and to hold
the Lender harmless of and from any and all claims for broker's or
finder's fees or commissions in connection with the Loan and agrees to
pay all expenses (including but not limited to attorney's fees and
expenses) incurred by Lender in connection with the defense of any
action or proceeding brought to collect any such fees and commissions,
or otherwise relating to any such broker's claims resulting from or
arising out of any claim that Borrower consulted, dealt or negotiated
with the person or entity making such brokerage claim.
(q) Borrower has filed or caused to be filed all tax returns,
which to the knowledge of Borrower, are required to be filed, and has
fully paid all taxes shown to be due and payable on said returns or any
assessments made against it or its property, and all other taxes, fees,
or other charges imposed on it or any of its property by any
Governmental Authority. No tax liens have been filed and, to the
knowledge of Borrower, no claims are being made or may hereafter be
asserted with respect to any such taxes, fees or other charges except
for those, the amount or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which
reserves have been established in conformity with GAAP; provided,
however, that such failure to file or pay such tax liens or claims do
not, in the aggregate, have a material adverse effect on the business
operations, property or financial or other condition of Borrower, and
cannot reasonably be expected to have an adverse effect on the ability
of Borrower to perform any of its obligations in any material respect
under this Agreement, the other Loan Documents, or under any other
contractual obligation.
(r) All warranties and representations contained in the
Mortgage and the other Loan Documents are true and correct and are
incorporated herein by reference as if set out in full.
(s) The Plans and Specifications have been approved by Borrower,
each Governmental Authority and the City of Pompano Beach and Lender.
10
<PAGE>
(t) To the best of Borrower's knowledge, there is (i) no plan,
study or effort by any Governmental Authority or any non-governmental
person or agency which may adversely affect the current or planned use
of the Property or (ii) no intended or proposed Governmental
Requirements (including, but not limited to, zoning changes) which may
adversely affect the current or planned use of the Property.
(u) There is no moratorium or like governmental order or
restriction now in effect with respect to the Property and to the best
of Borrower's knowledge, no moratorium or similar ordinance or
restriction is now contemplated.
(v) All permits, approvals and consents of Governmental
Authorities and public and private utilities having jurisdiction
necessary in connection with the Property are available for issue and
will be issued upon the application therefor by Borrower.
(w) No defect or condition of the Land or soil or geology thereof
exists which will impair the construction, use or operation of the
Improvements or the Property for its intended purpose.
(x) All labor and materials contracted for in connection with the
construction of the Improvements shall be used and employed solely on
the Land in said construction and only in accordance with the Plans and
Specifications.
(y) To the best of Borrower's knowledge, the Survey and all plot
plans and other documents heretofore furnished by Borrower to Lender
with respect to the Property are accurate and complete as of their
respective dates. There are no encroachments onto the Land and no
improvements on the Land encroaching onto any adjoining property.
(z) The amount of the Construction Costs are accurate, true
and correct and are satisfactory to Borrower.
All of the representations and warranties of Borrower as set forth in
this Agreement shall survive the making of this Agreement and the full repayment
of the Loan; accordingly, in the event of any claims against Lender, resulting
in the breach of any of the foregoing warranties and representations, Borrower
shall and hereby agrees to indemnify Lender for any such claims notwithstanding
the full repayment of the Loan. Each and every requisition submitted by Borrower
for funds under this Agreement shall constitute a new and independent
representation and warranty to Lender with respect to all of the matters set
forth in this Agreement, as of the date of such application.
Article 4
AFFIRMATIVE COVENANTS OF BORROWER
11
<PAGE>
4.1 COMPLIANCE WITH LAWS. Borrower shall do, or cause to be done, all of
the things necessary to preserve, renew and keep in full force and effect, its
existence as a general partnership and its rights, licenses and permits and
shall comply with all laws applicable to it, operate its business in a proper
and efficient manner and substantially as presently operated or proposed to be
operated, and at all times shall maintain, preserve and protect all franchises
and trade names and preserve all property used or useful in the conduct of its
business, and keep the same in good repair, working order and condition, and
from time to time make or cause to be made any needed and proper repairs,
renewals, replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times.
4.2 BOOKS, RECORDS AND FINANCIAL STATEMENTS. Borrower shall (with
respect to the Property and otherwise) keep and maintain all books, records and
accounts in accordance with GAAP, and shall furnish, and shall have Guarantor
furnish to Lender, such financial statements as may be required by Lender on an
annual and interim basis and as set forth in other parts of this Agreement.
Annual financial statements (consolidating and consolidated) of Vacation Break
U.S.A., Inc. (which shall include Borrower and the Guarantor Subsidiaries), all
prepared in accordance with GAAP, by a certified public accountant approved by
Lender, shall be submitted to Lender on an annual basis throughout the term of
the Loan, within one hundred twenty (120) days after the end of each calendar
year. Copies of all tax returns with attached schedules of Borrower and
Guarantor shall be submitted to Lender within fifteen (15) days of the timely
filing of the same. Internally prepared financial statements as to Borrower
shall be furnished to Lender within one hundred twenty (120) days of the end of
each calendar year. In addition, such other financial information relating to
Borrower and Guarantor as Lender may reasonably require during the term of the
Loan, shall be submitted upon request.
4.3 OPERATING AND RENT STATEMENTS: Borrower shall submit to Lender
financial statements of income and expenses accurately setting forth the
operations of the Property on a quarterly and annual, consolidated basis.
4.4 AUDIT: Lender shall have the right, at Borrower's sole cost and
expense, to audit the books and records relating to the Property, at such times
as required by Lender, in Lender's sole and absolute discretion. Notwithstanding
the foregoing, in the event that Lender exercises its right to audit the books
and records of Borrower relating to the Property and such audit does not reveal
any material discrepancies, then in that event the audit shall be at Lender's
expense provided, however, that if at the time of the audit there has been an
event of default under the Loan, then such audit shall be at Borrower's expense
regardless of the results.
4.5 LIENS AND ASSESSMENTS. Borrower shall properly pay and discharge (a)
all taxes, assessments and governmental charges filed upon or against Borrower
or its assets prior to the date on which penalties are attached thereto, unless,
and to the extent, such taxes,
12
<PAGE>
assessments or charges are being diligently contested in good faith by
appropriate proceedings and appropriate reserves therefor have been established;
and (b) all lawful claims for labor, materials, supplies, services or anything
else which might or could, if unpaid, become a lien or charge upon the
properties or assets of Borrower (including the Land or the Improvements),
unless and only to the extent that the same are transferred to bond, being
diligently contested in good faith and by appropriate proceedings and
appropriate reserves therefor have been established.
4.6 INSURANCE REQUIREMENTS. Borrower shall, at its expense, comply
with all of the insurance requirements set forth in this Agreement and the
Mortgage throughout the term of the Loan.
4.7 LENDER INSPECTIONS. Borrower shall allow Lender and/or any
representatives or agents of Lender, including Lender's Construction Advisor, to
enter onto and inspect the Property, and such other premises as Borrower may use
in its business operations to examine the books and the records of Borrower and
to review the progress of the construction of the Improvements with Borrower's
officers and employees, all at such reasonable times and as often as the Lender
may request. Borrower shall provide to Lender, its representatives and Lender's
Construction Advisor, incident to its request and at its option, adequate
facilities at all times for inspection of the construction work by the Lender's
Construction Advisor and Lender's other authorized representatives and Borrower
shall afford full and free access to the Land and the Improvements to such
persons as may be designated from time to time by Lender. Borrower shall cause
the Contractor and other contractors to cooperate with Lender, Lender's
Construction Advisor and such agents and representatives of Lender in the
exercise of the performance of their duties hereunder. Lender will conduct
monthly inspections (and additional inspections, as needed) by Lender's
Construction Advisor on behalf of Lender and Borrower shall be responsible for
the cost of such third party inspection and to reimburse Lender for all
out-of-pocket expenses incurred in connection therewith. All inspections and
other services rendered by or on behalf of Lender shall be rendered solely for
the protection and benefit of Lender. Neither Borrower nor any third person
shall have the right to rely on such inspections or be entitled to claim any
loss or damage against Lender or against its agents or employees for failure to
properly discharge their duties. These provisions shall not, in any way, impose
on Lender any obligation to inspect or to correct any defects discovered or to
notify any person with respect thereto.
Borrower shall, within one (1) week after notice has been given by
Lender to Borrower, proceed to remove all fixtures, equipment, and other
materials, howsoever affixed or completed, which do not conform to the Plans and
Specifications or which Lender otherwise determines, in its reasonable
discretion, to be unsatisfactory. Borrower shall immediately thereafter and from
its own funds make all necessary repairs thereto.
4.8 BORROWER COMPLIANCE. Borrower shall: (a) make full and timely
payments of the principal and interest due and owing under the Note and all
other indebtedness of Borrower to Lender, whether now existing or hereafter
arising; (b) duly comply with all of the terms and
13
<PAGE>
covenants contained in each of the Loan Documents; and (c) at all times maintain
the liens and security interest provided for under or pursuant to this Agreement
and the Loan Documents as valid and perfected liens and security interests on
the property intended to be covered thereby.
4.9 HAZARDOUS WASTE. Borrower shall keep and maintain the Land in
compliance with, and shall not cause or permit the Land to be in violation of
any, federal, state or local laws, ordinances or regulations including, without
limitation, those relating to zoning, building, occupational safety and health,
industrial hygiene or to the environmental conditions on, under or about the
Land, including, but not limited to soil and ground water conditions. Borrower
shall not use, generate, manufacture, store or dispose of, on, under or about
the Land or transport to or from the Land any flammable explosives, radioactive
materials, including, without limitation, any substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," and "toxic substances" under any applicable federal or state laws or
regulations (collectively, the "Hazardous Materials"). The provisions set forth
in the Mortgage and the other Loan Documents relating to Hazardous Materials and
indemnification of Lender in connection therewith are hereby incorporated by
reference herein. Lender may require that all violations of law with respect to
Hazardous Materials be corrected and that Borrower obtain all necessary
environmental permits before Lender shall fund the Initial Advance or any
subsequent Advance under the Loan, at Lender's sole option.
4.10 ACTIONS AGAINST BORROWER. Borrower will promptly notify Lender upon
the commencement of any material action (i.e. involving more than $10,000.00),
suit or claim or counterclaim or proceeding against Borrower (except when such
alleged liability is fully covered by insurance). Borrower shall also promptly
notify Lender in writing of (a) any material assessments by any taxing
authorities for unpaid taxes as soon as Borrower has knowledge thereof; (b) any
alleged default by Borrower in the performance of or any modification of any of
the terms and conditions contained in any agreement, mortgage or indenture or
instrument to which the Borrower is a party, or which is binding upon Borrower,
and upon any default by Borrower in the payment of any of its indebtedness; (c)
any contemplated change in the construction work being performed on the
Improvements which may result in an increase in the budgeted cost therefor of
more than $2,500.00; (d) any action or proceeding instituted by or against
Borrower in any Court or by any Governmental Authority or of any such
proceedings threatened against Borrower which might result in a judgment or
judgments; and (e) any other action, event or condition of any material nature
(i.e. involving more than $10,000.00) known to Borrower or of which it should
have knowledge which constitutes an Event of Default, or a default of Borrower
under any contract, instrument or agreement to which it is a party or by which
it or any of its properties or assets may be bound or to which they may be
subject, which default may have a material adverse effect upon the business,
operations, properties, assets or conditions (financial or otherwise) of
Borrower.
Borrower shall furnish to Lender a copy of any notice, claim or demand
given by
14
<PAGE>
Borrower to or received by Borrower from any contractor, subcontractor or
material supplier, promptly upon the giving or receipt of such notice, claim or
demand, if such notice, claim or demand is material (i) to the performance of
Borrower hereunder or under any other Loan Documents; (ii) to the performance of
Borrower or any contractor under any contract or subcontract for materials or
labor; or (iii) to the acquisition or maintenance of any building or
development, license, permit or similar matter required in connection with the
completion of the Improvements.
4.11 PUBLICITY/SIGNAGE. Lender shall have the right to secure printed
publicity through newspapers and other media concerning the Property and the
financing provided by Lender. At Lender's request, during construction, Borrower
shall place upon the Property a sign or signs announcing that financing is being
provided by Lender. Lender shall furnish the sign at Lender's expense and
Borrower shall install the sign at Borrower's expense. The sign shall be
installed at the same location as the project sign, if any, or at such other
location acceptable to Lender. Borrower shall be responsible for obtaining any
permit required for the sign and for any other expenses regarding the sign.
4.12 DEPOSITORY RELATIONSHIP. Borrower shall establish a satisfactory
depository relationship with Lender and shall cause Guarantor to establish a
satisfactory depository relationship with Lender. Borrower shall maintain all of
Borrower's accounts with regard to the Property with Lender inclusive of all
sales deposits. To the extent that sales deposits are escrowed, Borrower shall
cause the Escrow Agent to maintain such escrow accounts with Lender. Borrower
acknowledges that the maintenance of the depository relationship by Borrower and
Guarantor with Lender is a requirement in consideration of the Loan and the
interest rate thereunder and Borrower agrees that (a) the aggregate deposits
maintained by Borrower, Guarantor and their affiliates with Lender (inclusive of
Palm Vacation Group and the Guarantor Subsidiaries listed on Exhibit "B") shall
be no less than $2,000,000.00 prior to Closing and through the term of the Loan
(provided, however, that in the event that the existing loan by Lender to Palm
Vacation Group is repaid in full, such deposit requirement shall be reduced to
$1,000,000.00) and (b) a sum of not less than $1,000,000.00 shall be placed by
Guarantor in an account with Lender representing proceeds from a recent initial
public offering (Lender acknowledges that such proceeds may be utilized by
Borrower from time to time for acquisitions and other expenses).
4.13 SALES REPORTS. Borrower shall throughout the term of the Loan, on a
monthly basis, submit to Lender sales reports identifying the status of all
Sales Contracts, which reports shall include, without limitation, the following
information: (i) identification of the Units and Unit Week; (ii) the purchase
price(s) therefor; (iii) the deposit amount(s); (iv) the identity of the escrow
agent holding the deposit(s); (v) the name and address of each purchaser (vi)
reservations and other sales activities and (vii) any other information relating
to the sales program of Borrower as may be requested by Lender from time to
time. Borrower shall provide to Lender (if requested by Lender) duplicate
originals or certified copies of each Sales Contract entered into prior to or
subsequent to the date of closing.
15
<PAGE>
Article 5
NEGATIVE COVENANTS OF BORROWER
Borrower covenants and agrees that, from the date hereof and until
payment in full of the Note and all other indebtedness to Lender under this
Agreement, Borrower agrees to not do any of the following without Lender's prior
written consent, which shall be in Lender's sole and absolute discretion:
(a) After approval by Lender, amend, or permit to be amended or
modified, cancelled or terminated, the Plans and Specifications, the
General Contract (if applicable) or any of the other contracts relating
to the construction of the Improvements, or any other document referred
to herein including, without limitation, any Lease or Sales Contract
except in the ordinary course of business; or
(b) Assign, pledge or encumber this Agreement; or
(c) Cause, permit the filing or occurrence of or allow to remain
any lien, security interest or encumbrance against the Land in favor of
any third party with respect to the Land and/or the Improvements or any
item of property, whether or not a fixture, installed thereon or stored
on such site, and Borrower shall keep such property free from any such
lien, security interest or encumbrance. Borrower acknowledges that no
Advances will be made while any liens encumber the Land or the Property;
or
(d) Transfer, assign, pledge, mortgage or hypothecate its
interest in the Land and/or the Improvements; or
(e) Change the entity comprising Borrower or any ownership
interest therein, whether by conveyance, by transfer of stock, by
transfer of partnership interest by transfer of beneficial or equitable
interest in any trust or otherwise; or
(f) Undertake additional financing to be secured by any lien or
security interest on the Land and/or the Improvements or any additional
financing on any other real or personal property encumbered in favor of
Lender to secure the Loan. Specifically excluded from the foregoing
shall be any notes receivable obtained by Borrower in connection with
the sale of time share units, to the extent such notes receivable have
been pledged to an hypothecation lender. Additionally, Borrower, in
connection with the sale of time share weeks for each Unit, shall have
the right to borrow from Borrower's hypothecation lender against Sales
Contracts as to Unit Weeks which have not yet been released from the
Mortgage provided, however, that the following conditions have been met:
(i) the aggregate principal amount of such borrowings may not exceed
$5,000,000.00; (ii) Borrower may obtain such financing only during a
period of fourteen (14) months commencing from the date of Closing,
16
<PAGE>
and (iii) there has been no default by Borrower under the Loan. Prior to
any funding by the hypothecation lender, Borrower, Lender and the
hypothecation lender shall enter into a tri-party agreement which shall
more particularly set forth the rights of the respective parties in
connection with such pre-sale financing, which agreement shall be
satisfactory to Lender and its counsel, in their sole and absolute
discretion. Borrower shall furnish to Lender concurrent with the Sales
Reports provided for hereunder, a report as to all financing against
Sales Contracts with regard to Unit Weeks which have not been released
from the Mortgage; or
(g) Guarantee or otherwise in any way become or be
contingently liable or responsible for the obligations of any other
person, except for guaranties given to Lender; or
17
<PAGE>
(h) Enter into any leases of the Land or the Improvements, or any
portion thereof or amend any existing leases which had been previously
approved by Lender except in the ordinary course of business; or
(i) Publicize or advertise in any signs, advertising materials,
sales brochures or other sales offering materials, the name of Lender as
a source of financing; or
(j) Violate or permit to be violated any of the negative
covenants described in the Mortgage or other Loan Documents; or
(k) Make or cause to be made any contract or subcontract for, or
use or permit to be used, materials, equipment or fixtures of any kind
which are to be incorporated in or become a part of the Improvements if
title to such materials, equipment or fixtures is (i) reserved under a
conditional sales contract or similar title retention agreement; (ii)
subject to a security interest in favor of any third person or (iii)
subject to a lease agreement. All materials, equipment and fixtures used
in connection with the Improvements shall be free and clear of and from
all liens. All materials, equipment and fixtures delivered upon the Land
for the purpose of being used in the construction of the Improvements
shall be considered annexed thereto and shall become a part of the Land
as if actually incorporated in the Improvements and shall be subject to
this Agreement. Nothing herein contained shall be construed to make
Lender responsible for any loss, damage or injury to such materials,
equipment or fixtures nor for payment of the same unless payment is
specifically allocated therefor in an ordinary request for Advance; or
(l) Change the entities comprising the General Partners or any
ownership interest therein, whether by conveyance, by transfer of stock
or otherwise.
Article 6
CONSTRUCTION OF IMPROVEMENTS
(a) COMMENCEMENT OF CONSTRUCTION. Borrower shall cause the
Contractor to commence the construction of the Improvements in
accordance with the Plans and Specifications.
(b) COMPLETION OF CONSTRUCTION. Borrower shall proceed diligently
in connection with the construction of the Improvements, employing
sufficient workmen and supplying sufficient materials for that purpose,
so that the Improvements shall be completed (including landscaping,
parking, street improvements, curbs, sidewalks, grading, utilities, and
connections as may be required for normal use thereof) in accordance
with the Plans and Specifications and ready for occupancy and use by no
later than the Completion Date, free and clear of all liens or claims
for materials, labor, services or other items furnished in the
construction of the Improvements, and in
18
<PAGE>
full compliance with all building, zoning, environmental, concurrency
and all other applicable local, state and federal ordinances and
regulations. Provided, however, that in the event of strikes or other
labor disputes, shortages of material, accidents, acts of God or other
occurrence or occurrences beyond the reasonable control of Borrower
which shall necessitate a delay in such completion, the Completion Date
shall be extended for such time or times as shall be necessary, but in
no event for more than ninety (90) days in the aggregate beyond the
anticipated Completion Date.
In the event that Borrower does not, on or before the Completion
Date, obtain a final Certificate of Occupancy for the Improvements from
the City of Pompano Beach and a certificate of completion from Lender's
Construction Advisor, Engineer (as applicable) or Architect, at the
option of Lender, the same shall be and constitute an Event of Default
hereunder.
(c) ADDITIONAL CONSTRUCTION PROVISIONS. Borrower additionally
covenants and agrees that:
(i) A complete set of the Plans and Specifications shall
have been delivered to Lender, each page of which has been
initialed or otherwise identified by the Lender, the Contractor
and the Borrower prior to beginning any work on the Improvements.
All changes in the Plans and Specifications, including, without
limitation, change orders under the General Contract, must be
requested in writing by Borrower and shall be conditioned upon
the written consent of Lender, which consent may be subject to
such conditions and qualifications as Lender, in its sole
discretion, may require.
(ii) The construction of the Improvements will be
performed in strict conformity with the Plans and Specifications,
all Governmental Requirements of all Governmental Authorities,
including, without limitation, applicable environmental laws,
rules, statutes, resolutions, ordinances, regulations and codes,
having jurisdiction over the Land and the Improvements.
(iii) All materials and labor to be used in the
construction of the Improvements shall be first quality and,
regardless of performance by the Contractor, the construction of
the Improvements shall proceed diligently and continuously and
such construction will be completed on or before the Completion
Date.
(iv) Borrower shall fully pay for all the Improvements,
including, without limitation, all buildings, appurtenances and
fixtures, equipment, landscaping, walls, driveways, approaches
and walks which may be called for in the Plans and
Specifications, and all materials contracted or purchased and all
labor contracted or hired for or in connection with the
construction of the
19
<PAGE>
Improvements. Borrower further covenants to use the funds
advanced in connection with the Loan in payment of material
bills, labor and services in and for the construction of the
Improvements on the Land and for no other purpose, except as set
forth in other parts of this Agreement. Borrower shall comply
with the Construction Contract Prompt Payment Law contained in
the Florida Construction Lien Law notwithstanding Lender's
failure or delay in funding any requests for Advances or Lender's
cessation of funding any such request in accordance with the
terms of this Agreement. Prior to the commencement of
construction of the Improvements and throughout the construction
of the Improvements, Borrower shall provide to Lender a true,
correct and complete list of the names and addresses of all
contractors, subcontractors, major contract materialmen,
suppliers and actual or potential lienors (as defined in the
Florida Construction Lien Law), which list shall be certified by
Borrower. Borrower shall, at all times during the construction of
the Improvements provide to Lender, within five (5) days of
Borrower's receipt thereof, copies of all Notices to Owner,
claims of lien and demands for sworn statements of account,
issued by any party whether pursuant to any Notice of
Commencement or otherwise, in connection with the construction of
the Improvements.
(v) The Improvements when erected will be wholly within
the building setback lines however established, and the
Improvements will not violate applicable use, construction or
other restrictions, zoning laws or regulations. Borrower will
furnish satisfactory evidence with respect thereto, together with
a Survey by a registered land surveyor, showing that the
construction is entirely on the Land and free from such
violations, and does not encroach upon or over any easements,
rights-of-way or lands of others.
(vi) On or before the Completion Date, Borrower shall
deliver to Lender a certificate or certificates of occupancy or
their equivalent issued by the Governmental Authorities having
jurisdiction over the Land and Improvements and confirming that
construction of the Improvements has been completed in accordance
with all applicable requirements.
(vii) Subsequent to the staking out of any building, and
prior to the excavation for installation of subsurface structures
(including footings, piles and the like) or disturbances to
existing contours, Borrower shall provide to Lender a
certification of the registered land surveyor, in form and
substance satisfactory to Lender, to the effect that (i) the
property lines have been properly established; (ii) each building
as staked out, will be located within the property lines of the
Land and otherwise in accordance with the Plans and
Specifications; and (iii) the location of each building, as
staked out, complies with all applicable zoning ordinances and
regulations and/or the requirements or conditions contained in
restrictions of record or those of public authorities.
20
<PAGE>
(viii) Borrower and all contractors shall satisfy and
comply with all Governmental Requirements applying to and
affecting the construction of the Improvements and shall obtain
and maintain in full force and effect until the Loan has been
repaid in full, all necessary licenses, permits and similar
matters with respect to the Improvements without cost or expense
to Lender. In the event any such license, permit or similar
matter is threatened in writing by any Governmental Authority or
subjected to any action before any Governmental Authority, Lender
may refuse to make further Advances hereunder until such license,
permit or similar matter is reinstated or such action is
terminated.
(d) EXTRA WORK. No extra work nor change in the approved Plans
and Specifications or supplements thereto which involves an expenditure
in an amount exceeding $5,000.00 shall be permitted or authorized by
Borrower without first obtaining written approval of Lender. Before
Lender shall be required to consider any such change in the Plans and
Specifications, firm bids, and other information or documentation
respecting the proposed extras or change shall be furnished by Borrower
to Lender, and it shall be within the sole discretion of Lender to
determine if such extra, change or alteration shall be approved. If
Lender does approve any proposed extra work, change, alteration or
addition, and if Lender deems the same necessary after taking into
account Borrower's Equity in the Property, Borrower shall immediately
deposit with Lender, as an addition to the Construction Fund, the full
cost of such extra work, change, alteration and addition as estimated by
Lender, and the sum of money shall be held and disbursed by the Lender
upon the same terms and conditions as provided herein with respect to
other payments from the Construction Fund or Advances. No material shall
be purchased or work or labor performed in connection with the extra
work, change or alteration or addition until the full cost thereof has
been paid to Lender and deposited in the Construction Fund as required
hereunder.
Article 7
CONDITIONS PRECEDENT TO FIRST AND ADDITIONAL ADVANCES
The obligations of Lender to make the Initial Advance and all additional
Advances under the Loan are subject to the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations,
covenants and warranties made by Borrower in this Agreement and all Loan
Documents shall be true and correct on and as of the date of such
Advance.
(b) NO DEFAULT. There shall be no default under this Agreement,
the Note, the Mortgage, or any other Loan Document, nor shall there be
an event which would be a default but for the passage of time or the
giving of notice or both.
21
<PAGE>
(c) DELIVERY OF LOAN DOCUMENTS. All of the Loan Documents
shall have been duly executed and delivered to Lender, and the Mortgage,
Financing Statements, the Assignments and other recordable Loan
Documents, shall have been recorded in the appropriate public offices.
(d) DELIVERY OF OTHER DOCUMENTATION. Borrower shall have
delivered, or caused to be delivered to Lender, at least five (5) days
prior to the intended date of the Initial Advance those items set forth
on Exhibit "D" annexed hereto and made a part hereof.
(e) EQUITY. Borrower shall deliver to Lender satisfactory
evidence of payment of that portion of the total Construction Costs
which are not being funded under the Loan ("Borrower's Equity") and
shall deliver to Lender such other and detailed information concerning
the components of the Construction Costs as may be required by Lender.
Any portion of the total Construction Costs allocated to Borrower's
Equity, and not paid or otherwise accounted for to Lender's
satisfaction, shall, at Lender's option, be deposited by Borrower with
Lender (in an interest bearing account at prevailing demand deposit
rates) together with any other funds required to be so deposited under
this Agreement ("Equity Funds"); such funds to be held and disbursed by
Lender as provided in this Agreement. In the event the total
Construction Costs increase, Borrower's Equity will increase
accordingly, and Borrower shall deliver to Lender additional
satisfactory evidence of payment. There shall be at all times
undisbursed funds sufficient to complete the Improvements; otherwise
Lender has the option to require expenditures of such additionally
required funds by Borrower prior to any subsequent disbursement by
Lender.
If at any time prior to funding or during the term of the Loan,
Lender determines, in its sole and absolute judgment, that the portion
of the Loan then undisbursed, together with Borrower's Equity, is
insufficient to fully complete the construction of the Improvements and
to pay the Construction Costs, as well as all interest and all other
charges to be incurred on the Loan, including, without limitation, the
fees of Lender's Construction Advisor or the Architect and Lender's
counsel, then Borrower shall, upon the demand of Lender, deposit with
Lender, in cash, such Equity Funds as Lender determines will be
necessary for such purpose in excess of the undisbursed portion of the
Loan. No interest will accrue on such Equity Funds but the same will be
maintained by Lender in a separate account and held for the performance
of Borrower's obligations hereunder.
Borrower agrees that the Equity Funds to be deposited by Borrower
with Lender in accordance with the applicable provisions hereof shall be
advanced by Lender prior to the advance of any proceeds of the Loan,
upon the same terms and conditions as herein provided with reference to
other payments.
22
<PAGE>
Notwithstanding anything in the foregoing to the contrary, prior
to any Advances under the Loan other than the initial Advance allocated
to the land and advances under the Interest Reserve, Borrower shall
furnish Lender with satisfactory evidence of the expenditure of
Borrower's Additional Equity as provided above.
(f) FEES, CHARGES AND PREMIUMS. Borrower shall have paid for
all recording, filing and conveyancing in connection with the closing
and for any other charges, including, without limitation, Lender's fees
and costs, transfer taxes and title insurance fees, costs or premiums
and legal fees and disbursements of Lender's attorneys in connection
with this Loan.
(g) IN BALANCE. That the Loan shall at all times be In Balance.
Borrower shall furnish to Lender or to Lender's Construction Advisor,
upon written request of Lender or Lender's Construction Advisor, within
five (5) days of such request, evidence satisfactory to Lender of the
estimated total cost of completing the Improvements. If Lender shall
determine that the Loan is not In Balance, Lender shall have no further
obligation to make any Advances of Loan proceeds hereunder, unless
Borrower shall, within ten (10) days after date of demand by Lender,
deposit with Lender such cash amounts as are required in order to place
the Loan In Balance. Such amounts deposited with Lender shall be held in
a non-interest bearing account with Lender and shall be disbursed in the
same manner herein provided for Advances of Loan proceeds towards the
cost of completing the Improvements and such funds of Borrower will be
utilized prior to any further utilization of the Loan proceeds for such
costs.
(h) OTHER. Borrower shall have complied with any other
requirements set forth by Lender.
Article 8
DISBURSEMENTS AND CONDITIONS TO EACH ADVANCE
8.1 DISBURSEMENT PROCEDURES. All Advances hereunder shall be based upon
work in place in accordance with Lender's standard schedules and shall be made
by Lender in accordance with a schedule of payments and construction budget
established by Lender, but in no event more often than once per each calendar
month. All matters with respect to each Advance shall be satisfactory to Lender.
Borrower shall make monthly applications for an Advance of Loan proceeds from
Lender on a form approved by Lender, and each such application shall be made at
least ten (10) business days prior to the date of such anticipated Advance in
order to permit Lender to make or cause such inspections as it, from time to
time, considers appropriate. All Advances shall be made at the principal office
of Lender or at such other place as Lender may from time to time designate. At
Lender's option, disbursements may be made by the Title Insurance Company. Such
Advances shall be made as the construction progresses upon written orders or
vouchers of the Contractor, subcontractors, or
23
<PAGE>
materialmen, as determined by Lender, which orders or vouchers, in every case,
shall be countersigned by Borrower and, at Lender's option, by Lender's
Construction Advisor. Each request for Advance, as so submitted, shall
constitute a representation by Borrower that: (i) the work done and the
materials supplied to date are in accordance with the Plans and Specifications;
(ii) the work and materials for which payment is requested have been physically
incorporated into the Improvements; (iii) the value is as stated; (iv) the work
and materials conform with all applicable rules and regulations of the
Governmental Authorities having jurisdiction of the Land and Improvements; and
(v) that payment for the work or materials described in such voucher(s) has been
made or will be made with the proceeds of the Advance in connection with which
the voucher is submitted. Borrower shall provide to Lender (i) an owner's
affidavit certifying that all funds disbursed to date by Lender have been paid
to the appropriate parties and (ii) copies of lien waivers and/or releases,
cancelled checks, paid receipts and/or other evidence satisfactory to Lender
establishing proper payment of such obligations and the proper expenditure of
Advances made or to be made to Borrower hereunder. All Advances shall be subject
to the prior approval of Lender or its representatives inspecting the Land and
the Improvements, and no Advance shall be made or due unless Lender determines
that all work completed at the time of the application for the Advance has been
performed in a good and workmanlike manner and all materials and fixtures
usually furnished and installed at that stage of construction have been
furnished and installed and Borrower's foregoing representations are
substantiated in every respect (but such determination shall not thereafter be
binding upon Lender except to the extent that the facts are as actually
represented). It is acknowledged that the forms required by Lender may be
modified by Lender from time to time during the course of the Loan. Lender shall
have the right to make payments directly to Borrower and/or the Contractor or
any subcontractor, materialman, laborer or supplier.
Loan disbursements shall be made in accordance with the following
standards:
(a) The value of work performed or completed to the reasonable
satisfaction of Lender and materials supplied in place on the
Improvements, minus the amount of previous Loan disbursements and equity
contributions therefor; plus
(b) The value of materials and equipment incorporated into the
work to the reasonable satisfaction of Lender, minus the amount of the
previous Loan disbursements and equity contributions therefor; less
(c) A sum equal to ten percent (10%) of the items described in
(a) and (b) above, which amount shall be held by Lender until the work
is completed from the final draw disbursement.
The "values" of the work described in subparagraph "a" above and
the "values" of the materials and equipment described in subparagraph
"b" above shall be computed substantially in accordance with the amounts
assigned thereto in any trade payment
24
<PAGE>
breakdown or other schedule of payments approved by Lender. No Advances
under the Loan will be available for other than Construction Costs
approved by Lender.
No Loan disbursement, for any purpose, will be made after a date which
is any time after the Completion Date or if construction of the Improvements has
not proceeded in accordance with a construction schedule satisfactory to Lender
(the "Construction Schedule"), unless otherwise approved by Lender. In the event
that Borrower causes a contractor to be paid prior to the Advance to Borrower,
then Borrower shall furnish evidence of such payment to Lender and the Advance
will be used to reimburse Borrower for such advance payments.
8.2 NO ADVANCE UPON EVENT OF DEFAULT. If, at the time any Advance is
requested, there exists any Event of Default or any event shall have occurred
and be continuing which, with the passage of time or the giving of notice or
both, could be an Event of Default hereunder or in any other of the Loan
Documents, then Lender shall have no further obligation to make such Advance or
any further Advances unless and until such default is cured within any
applicable grace period.
8.3 LIEN RELEASES. Each request for an Advance submitted by Borrower to
Lender shall include duly executed and notarized lien releases from each
Contractor, subcontractor, materialmen, supplier or other potential "lienor"
within the meaning of the Florida Construction Lien Law, evidencing receipt of
payment for all work performed through the immediately preceding Advance. If any
lien or claim of lien shall be filed against the Land and/or the Improvements or
any interest therein by reason of work, labor, services, or materials supplied
or claimed to have been supplied, and if such lien or claim of lien is not fully
and finally discharged as a lien against the Land and/or the Improvements or
fully and finally transferred to bond in accordance with all applicable
requirements of the Florida Construction Lien Law from a lien against the Land
and/or the Improvements to a lien against other security posted by Borrower
within fifteen (15) days after such lien or claim of lien shall have been filed,
then Lender, at its option, may (a) upon written notification to Borrower pay
and discharge the lien, in which case the sum which Lender shall have so paid
will be accepted by Borrower as part of the Loan then due or thereafter to
become due hereunder, and/or (b) treat such occurrence as an Event of Default
hereunder. Furthermore, notwithstanding anything in the foregoing to the
contrary, no Advances will be made to Borrower in the event of and for so long
as any lien is filed and remains outstanding against the Land or any portion
thereof.
8.4 NO APPROVAL BY LENDER. The making of any Advance by Lender shall
under no circumstances be deemed an approval or acceptance by Lender of any work
done prior thereto.
8.5 CONSTRUCTION LIEN LAW.
(a) In consideration of the making of the Loan by Lender,
Borrower does hereby agree to indemnify and hold the Lender harmless
from any and all losses,
25
<PAGE>
claims, and damages, including interest, and attorneys fees, which
Lender may suffer by virtue of Lender having failed to comply with any
of the provisions of the Florida Construction Lien Law (i.e. Chapter
713, Florida Statutes). Borrower shall make or cause to be made only
such payments to the Contractor, or any subcontractors,
sub-subcontractors, laborers or materialmen, as are "proper payments"
under the Florida Construction Lien Law, as amended. Borrower shall
supply Lender with a complete list of all contractors, suppliers,
materialmen or other potential "lienors" (as defined in the Florida
Construction Lien Law) as to the Improvements.
(b) Borrower and Lender stipulate and agree that for purposes of
Chapter 713.3471(1)(a), Florida Statutes, Lender shall not be deemed to
have made a "final determination, prior to the distribution of all funds
available under a construction loan, that the lender will cease further
advances pursuant to the loan" unless Lender notifies Borrower in
writing that any cessation or delay, or withholding of any Advance is,
and constitutes a "final determination" under the statute. The parties
specifically acknowledge and agree that a denial or delay of a request
for a Advance which is denied or delayed pursuant to the terms of this
Agreement or any of the Loan Documents shall not constitute a "final
determination" under the statute unless Lender provides the written
notice described herein. Borrower hereby authorizes Lender to provide to
any general contractor, subcontractors, materialmen, and other parties
who have the potential to place a lien on the Property notification that
Lender has made a "final determination" that Lender will make no
additional advances under the Agreement, pursuant to Chapter 713.3471,
Florida Statutes.
(c) Borrower and Lender stipulate and agree that for purposes of
Section 713.3471(2), Florida Statutes, none of the Loan proceeds under
the Loan have been designated and none of such proceeds shall constitute
"designated construction loan proceeds" within the meaning of such
Section 713.3471(2), Florida Statutes. Lender shall have the right to
determine the amount of the Loan proceeds available for Construction
Costs and other costs and Lender shall have the right to make
disbursements in accordance with such determinations. In the event
Lender does designate portions of the Loan proceeds relating to
construction, Borrower's consent will be required prior to any
allocation or reallocation of such proceeds and in connection with such
consent, Borrower shall provide applicable notices to any Contractor and
all other appropriate or affected parties, in accordance with the
Florida Construction Lien Law.
If any request for advances requires an amendment to any
breakdown of Construction Costs or a reallocation of any portion of the
construction loan proceeds in accordance with the provisions of Chapter
713.3471(2), Florida Statutes, such reallocation request will be
considered in accordance with the terms and conditions of this
Agreement, and the Borrower shall fully and timely comply with all of
the Borrower's obligations under Chapter 713.3471(2)(a), Florida
Statutes, including, but
26
<PAGE>
not limited to, the providing of all notices required thereby, and
Borrower shall provide to Lender written sworn statements executed by
the general contractor and all other actual or potential lienors
confirming that the general contractor or other lienor or third party
has received the written notice required by Chapter 713.3471(2)(a),
Florida Statutes. Lender shall not be obligated to approve a
reallocation requested by Borrower, or to disburse funds pursuant to an
approved reallocation request made by the Borrower, until and unless
Borrower has complied with all of its obligations relating to such
disbursement under the terms and provisions of this Agreement and
Chapter 713.3471, Florida Statutes. Nothing contained herein shall be
deemed to constitute a waiver by the Lender of any of its rights
relating to the approval of disbursement requests or construction budget
or allocations provided elsewhere in this Agreement.
8.6 ADDITIONAL REQUIREMENTS. Prior to each or certain disbursement(s)
of Advances, Lender may require the following:
(a) TITLE INSURANCE ENDORSEMENT: That Borrower cause the
Title Insurance Company to issue an endorsement to the Title Insurance
Policy updating the effective date of the Title Insurance Policy and
increasing its coverage to include the amount of the disbursement.
(b) EQUITY: Evidence of compliance with the Equity Funds
requirement set forth herein.
(c) SLAB OR FOUNDATION SURVEY: Immediately upon the completion of
the construction of the slab or foundations of the Improvements, a
survey shall be submitted to Lender which shall show, and certify to
Lender, the locations of such slab(s) or foundation(s). Also, the
surveyor shall submit a certification as to the absence of encroachments
from, or onto, the Land and compliance of the Improvements, as
then-constructed, with zoning laws and other relevant restrictions.
(d) CONCRETE, SOIL AND OTHER TESTS: A report as to concrete tests
shall be submitted to Lender when so requested. A concrete testing firm
should make the tests on the concrete used in the Improvements at the
times such concrete is being poured. The tests shall not be made by any
of the contractors working on the Improvements. The frequency of such
tests shall be in accordance with the recommendations of the firm making
the tests. A report as to the compaction or other soil tests made on the
Land by a soil testing firm should also be submitted to Lender when so
requested. The number and locations of such soil tests shall be in
accordance with the recommendations of the soil testing firm. Borrower
shall promptly submit to Lender copies of reports of all other physical
tests made on the Land, the Improvements or the materials to be
incorporated into the Improvements and shall, at Borrower's expense,
cause to be made such additional tests from time to time as Lender may
reasonably require.
27
<PAGE>
(e) PREVIOUS CONDITIONS. That Borrower shall have satisfied
all conditions precedent for the making of the Initial Advance and all
conditions precedent set forth elsewhere in this Agreement and in any
Loan Document.
(f) LITIGATION. That no litigation, arbitration or other
proceeding shall have been commenced against Borrower or any contractor
which in Lender's judgment, materially impairs or is likely to impair
Borrower's ability to complete the
Improvements.
(g) INSPECTIONS. That Lender shall have received written
evidence, in form and substance satisfactory to Lender to the effect
that all work requiring inspection by Governmental Authorities has been
duly inspected and approved by such Governmental Authorities and by any
rating or inspection organization, bureau, association or office having
or claiming jurisdiction.
28
<PAGE>
Article 9
REQUIREMENTS FOR FINAL LOAN DISBURSEMENT
Prior to the final Loan disbursement, the following items must be
submitted to and approved by Lender:
(a) AS-BUILT SURVEY: Three (3) copies of an as-built Survey
of the Property.
(b) CERTIFICATE(S) OF OCCUPANCY: Certificate(s) of occupancy
or completion (or its or their equivalent) from the appropriate
Governmental Authorities.
(c) CONTRACTOR'S CERTIFICATION: Certification from the
Contractor that all Improvements required to be constructed have been
completed in accordance with the Plans and Specifications.
(d) ARCHITECT'S CERTIFICATION: Certification from the
Architect that all Improvements required to be constructed have been
completed in accordance with the Plans and Specifications.
(e) ENGINEER'S CERTIFICATION: Certification from the
Engineer that the applicable portion of the Improvements overseen by the
Engineer has been completed in accordance with the Plans and
Specifications.
(f) LIEN RELEASES/AFFIDAVITS: Borrower shall supply Lender with
final lien waivers and releases from each Contractor, subcontractor,
materialman, supplier or other "potential lienor" within the meaning of
the Florida Construction Lien Law, together with a final Contractor's
Affidavit, an Owner's Affidavit and such other sworn affidavits as may
be required under the Florida Construction Lien Law or otherwise
required by Lender or its counsel. Such releases and/or affidavits shall
certify that such entities or persons and all parties in privity with
them have been paid in full and waiving their lien rights against the
Property.
(g) TITLE ENDORSEMENT: An endorsement to the Title Insurance
Policy updating the effective date of the Title Insurance Policy through
the final construction draw and increasing its coverage to include the
amount of such disbursement.
(h) INSURANCE: At such time as the Improvements are occupied, an
"all-risk" permanent insurance policy shall be submitted to Lender,
which policies shall conform to the requirements of Lender, as more
fully set forth in the Mortgage.
(i) AS-BUILT PLANS AND SPECIFICATIONS: Two sets of detailed
as-built Plans and Specifications, which must be approved and identified
as such in writing by
29
<PAGE>
Borrower, the Architect and the Contractor. The two sets must include
plans and specifications for architectural, structural, mechanical,
plumbing, electrical and site development (including storm drainage,
utility lines and landscaping) work.
Article 10
EVENTS OF DEFAULT
Each of the following is an event of default hereunder ("Event of
Default"):
(a) If Borrower fails to pay any installment of interest or
principal due under the Note within the grace period, if any, therein
set forth; or
(b) If there occurs any default under any other term of this
Agreement, the Note, the Mortgage, or any of the other Loan Documents
relating hereto or thereto; or
(c) If any representation or warranty of Borrower hereunder
shall prove to be incorrect in any material respect; or
(d) The injury, loss, damage, destruction, condemnation or other
act of eminent domain affecting all or a substantial part of the Land
and/or the Improvements; or
(e) Borrower or any general partner of Borrower or any Guarantor
(i) files a voluntary petition in bankruptcy or a petition or answer
seeking or acquiescing in any reorganization or for an arrangement,
composition, readjustment, liquidation, dissolution, or similar relief
for itself pursuant to the United States Bankruptcy Code or any similar
law or regulation, federal or state, relating to any relief for debtors,
now or hereafter in effect; or (ii) makes an assignment for the benefit
of creditors or admits in writing its inability to pay or fails to pay
its debts as they become due; or (iii) suspends payment of its
obligations or takes any action in furtherance of the foregoing; or (iv)
consents to or acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator or other similar official of
Borrower, a general partner of Borrower, or any Guarantor, for all or
any part of the Collateral or other assets of such party, or either; or
(v) has filed against it an involuntary petition, arrangement,
composition, readjustment, liquidation, dissolution, or an answer
proposing an adjudication of it as bankrupt or insolvent, or is subject
to reorganization pursuant to the United States Bankruptcy Code, an
action seeking to appoint a trustee, receiver, custodian, or conservator
or liquidator, or any similar law, federal or state, now or hereinafter
in effect, and such action is approved by any court of competent
jurisdiction and the order approving the same shall not be vacated or
stayed within thirty (30) days from entry; or (vi) consents to the
filing of any such petition or answer, or shall fail to deny the
material allegations of the same in a timely manner; or
30
<PAGE>
(f) (1) A final judgment is entered against Borrower, or any
Guarantor, or any general partner of Borrower, that (i) adversely
affects the value, use or operation of the Property, in Lender's sole
judgment, or (ii) adversely affects, or may adversely affect, the
validity, enforceability or priority of the lien or security interest
created by the Mortgage or any other Loan Document in Lender's sole
judgment, or both; or
(g) There shall have occurred any substantial adverse change
in the financial condition of Borrower or any Guarantor; or
(h) If the progress of the work in the construction of the
Improvements is unsatisfactory in the reasonable judgment of Lender's
Construction Advisor to achieve completion of the Improvements before
the Completion Date and in the manner contemplated herein in accordance
with the Construction Schedule; or
(i) If Borrower fails to continuously and diligently construct
the Improvements in a timely manner in accordance with the Construction
Schedule for and in accordance with the Plans and Specifications or
permits or allows any interruption of construction of the Improvements
or fails to cause the construction of the Improvements to be completed
and a certificate of occupancy or its equivalent to be issued therefor
on or before the Completion Date; or
(j) If Borrower fails to satisfy all conditions precedent to
the Initial Advance or any Additional Advance; or
(k) If any building or other permit, license or other approval of
any Governmental Authority required in connection with the construction
of the Improvements or the operation of the Property is not maintained
in full force and effect or is cancelled; or
(l) If any of the materials, fixtures or articles used in the
construction of the Improvements or the appurtenances thereto, or to be
used in the operation thereof are not in strict accordance with the
Plans and Specifications; or
(m) If any party obtains an order or decree in any court of
competent jurisdiction enjoining or delaying the construction or
completion of the Improvements or enjoining or prohibiting Borrower or
Lender from carrying out the provisions of this Agreement and such order
or decree is not vacated within fifteen (15) days after the issuance
thereof; or
(n) If Borrower fails to duly and promptly observe, perform and
discharge any covenant, term, condition or agreement contained in this
Loan Agreement (other than a covenant, term, condition or agreement
requiring the payment of money) or
31
<PAGE>
violates any negative covenant contained herein and such failure or
violation is not curable, or if curable continues for a period of ten
(10) days after written notice thereof from Lender to Borrower; or
(o) If Borrower fails to pay all Impositions when due, except
such as Borrower contests, in good faith, by an appropriate proceeding,
in which event Borrower shall furnish to Lender, if requested, a bond or
other security satisfactory to Lender in an amount sufficient to protect
Lender and its interest in the Property; or
(p) If at any time Lender deems itself insecure for any reason
whatsoever (notwithstanding any grace period in any Loan Documents), or
if any change or event shall occur which in Lender's exclusive judgment
impairs any security for the Loan, increases Lender's risk in connection
with the Loan, or indicates that Borrower or Guarantor may be unable to
perform their respective obligations under any Loan Document; or
(q) Any federal, state or local tax lien or any claim of lien for
labor or materials or any other lien or encumbrance of any nature
whatsoever is recorded against Borrower or the Property and is not
removed by payment or transferred to substitute security in the manner
provided by law, within fifteen (15) days after it is recorded in
accordance with applicable law, or is not contested by Borrower in the
manner permitted by the Mortgage; or
(r) Borrower's default in the performance of its obligations as
lessor under any lease of all or any portion of the Property, which
default could result, in Lender's sole judgment, in the termination of
said lease; or
(s) In the event there is no valid building permit for the
construction of the Improvements in effect for a period of three (3)
months (after the permit has been obtained) or in the event any site
plan, zoning or any developmental permit or approval with respect to the
Property is revoked for any reason; or
(t) The death of any Guarantor, or any default in the payment or
performance of any obligation of any Guarantor arising under the
Guaranty or pursuant to any other Loan Document; or
(u) Borrower shall cease to exist or to be qualified to do or
transact business in the State in which the Property is located, or
shall be dissolved or shall be a party to a merger or consolidation, or
shall sell all or substantially all of its assets; or
(v) If, without the prior written consent of Lender in Lender's
sole discretion, any partnership interest of Borrower or any shares of
stock of any partner of Borrower are issued, sold, transferred,
conveyed, assigned, mortgaged, pledged, or
32
<PAGE>
otherwise disposed of, whether voluntarily or by operation of law, and
whether with or without consideration, or any agreement for any of the
foregoing is entered into; or, if any general partnership interest or
other equity interest in Borrower is issued, sold, transferred,
assigned, conveyed, mortgaged, pledged, orotherwise disposed or, whether
voluntarily or by operation of law, and whether with or without
consideration, or any agreement for any of the foregoing is entered
into, or any general partner of Borrower withdraws from the partnership;
or
(w) Any sale, conveyance, transfer, assignment, or other
disposition of all or any part of the Property or any ownership interest
in Borrower or any Guarantor except as otherwise permitted hereby or in
any Guaranty; or
(x) Any statement or representation of Borrower or any Guarantor
contained in the Loan application or any financial statements or other
materials furnished to Lender or any other lender prior or subsequent to
the making of the Loan secured hereby are discovered to have been false
or incorrect or incomplete; or
(y) Borrower or any Guarantor shall default under any obligation
imposed by any indemnity whether contained within any of the Loan
Documents, the Hazardous Waste Certification and Indemnification
Agreement, Americans with Disabilities Act Certificate and
Indemnification Agreement or otherwise; or
(z) Any default by Borrower under any other documents or
instruments evidencing any other loans by Lender to Borrower (or by
Lender to any Guarantor) or in any mortgages or other collateral
documents securing such loans; or
(aa) The cessation of the construction of the Improvements for
more than ten (10) consecutive days without the written consent of
Lender; or
(bb) Failure of any of the materials supplied for the
construction of the Improvements to comply with the Plans and
Specifications or any Governmental Requirements of any Governmental
Authority unless Borrower undertakes and diligently pursues the
correction of such failure; or
(cc) A determination by Lender or Lender's Construction
Consultant that construction of the Improvements will not be completed
on or before the Completion Date; or
(dd) Borrower is generally not paying its debts as such debts
become due; or
(ee) If there is any change in the executive management (i.e.
Presidents or C.E.O.'s of the General Partners of Borrower) of Borrower
without the express prior written consent of Lender; or
33
<PAGE>
(ff) Any sale, conveyance, transfer, assignment or other
disposition of the Guarantor's ownership interest in and to any of the
Guarantor Subsidiaries; or
(gg) Borrower's default in the performance or payment of
Borrower's obligations under any other note, or under any other mortgage
encumbering all or any part of the Property, if such other mortgage is
permitted by Lender, whether such other note or mortgage is held by
Lender or by any other party.
Article 11
LENDER'S REMEDIES IN THE EVENT OF DEFAULT
11.1 REMEDIES. If an Event of Default shall have occurred, Lender may,
at its option, exercise any, some or all of the following remedies, concurrently
or consecutively:
(a) TERMINATION OF ADVANCES. Lender may cease making Loan
Advances hereunder.
(b) REMEDIES UNDER NOTE, MORTGAGE AND OTHER LOAN DOCUMENTS.
Lender may exercise any and all of its rights and remedies provided
under the Note, the Mortgage and any other Loan Documents and as may be
available to Lender under Florida Law.
(c) COMPLETION OF IMPROVEMENTS. Lender may do any or all of
the following to the maximum extent permitted under the laws of the
State of Florida, either in the name of Lender or in the name of
Borrower:
i. Elect to complete the Improvements or cause same
to be completed in accordance with the terms of this Agreement
and the Plans and Specifications, but with such changes,
alterations, or modifications as Lender may deem appropriate.
ii. Enforce all rights of Borrower under any contracts
made by Borrower in connection with the Property or may, if
Lender deems it advisable, cancel any or all of such contracts.
iii. Take over and use in the completion of the
Improvements all or any part of the materials, supplies,
fixtures, equipment and other personal property contracted for
by Borrower, whether or not previously incorporated into the
Improvements.
iv. In connection with any construction undertaken to
complete the Improvements: (A) employ builders, contractors,
subcontractors, architects, engineers, inspectors and others for
the purpose of furnishing labor, materials,
34
<PAGE>
supplies, fixtures, equipment and other personal property in
connection with the completion of the Improvements; (B) purchase
all items necessary, proper, or convenient for completing the
Improvements; (C) pay, settle or compromise all bills and claims
that are or may become liens against the Property or any portion
thereof, or which have been or may be incurred in any manner in
connection with completing the Improvements and discharge any
lien or encumbrance on, or defect in the title of, the Property
or any portion thereof; (D) execute all applications and
certificates in the name of Borrower which may be required in
completing the Improvements; (E) institute such legal or other
proceedings and defend such actions or proceedings as Lender
shall deem appropriate in connection with completing the
Improvements; or (F) take, delay in, or refrain from taking, such
action hereunder as Lender may from time to time determine.
v. At any time and from time to time, discontinue any work
commenced with respect to completion of the Improvements or
abandon completion of the Improvements or change any course of
action undertaken by it.
(d) SECURITY GUARDS. Lender may employ security guards to
protect and preserve the Property and the materials, supplies, fixtures,
equipment and any other personal property located thereon.
11.2 PROCEED AGAINST GUARANTOR. Lender may proceed directly against any
Guarantor, with or without exercising its rights against Borrower, and to seek
and obtain judgment against any Guarantor, which liability shall be joint and
several if more than one Guarantor.
11.3 REMEDIES CUMULATIVE AND CONCURRENT. All of the remedies herein
given to Lender or otherwise available to it shall be cumulative and may be
exercised concurrently. Failure to exercise any of the remedies herein provided
shall not constitute a waiver thereof by Lender, nor shall use of any such
remedies prevent the subsequent or concurrent resort to any other remedy or
remedies which shall be vested in Lender by this Agreement, under the Loan
Documents, or at law or in equity. To be effective, any waiver by Lender must be
in writing and such waiver shall be limited in its effect to the condition or
default specified therein; but no such waiver shall extend to any subsequent
condition or default or impair any right consequent thereon.
11.4 WAIVER, DELAY OR OMISSION. No waiver of any Event of Default
hereunder shall extend to or affect any subsequent Event of Default or any other
Event of Default then existing, or impair any rights, powers or remedies
consequent thereon, and no delay or omission of Lender to exercise any right,
power or remedy shall be construed to waive any such Event of Default or to
constitute acquiescence therein.
35
<PAGE>
11.5 BORROWER'S LIABILITY FOR EXPENDITURES AND ADVANCES. Borrower shall
pay Lender for all costs, charges, expenses, and reasonable attorneys' fees paid
or incurred by Lender in connection with the completion of the Improvements or
in connection with the employment of security guards as herein set forth. A
statement of such costs, charges, expenses, and fees, verified by the affidavit
of an officer of Lender, shall be conclusive of the amounts so expended and of
the propriety or the necessity for such expenditure. Lender shall have the right
to apply the Loan proceeds agreed to be advanced hereunder, including, but not
limited to, any retainages and monies in escrow, toward completion of the
Improvements and toward all costs, charges, expenses and legal fees incurred
incident thereto. Any costs, charges, expenses and fees incurred by Lender in
excess of available Loan proceeds, shall earn interest at the Default Rate from
and after the date incurred by Lender. Borrower agrees that any and all
expenditures incurred, shall be deemed to have been advanced by Lender to
Borrower and that all such sums shall be deemed a portion of the Loan and shall
be secured by the lien of the Mortgage and the other Loan Documents.
11.6 LENDER APPOINTED ATTORNEY-IN-FACT. For the purpose of Lender
exercising its rights hereunder, Borrower hereby constitutes and appoints Lender
its true and lawful attorney-in-fact with full power of substitution, and
empowers said attorney or attorneys to execute, acknowledge and deliver any
instruments and to do and perform any acts referred to in this Article in the
name of and on behalf of Borrower. The powers vested in said attorney-in-fact
are and shall be deemed to be coupled with an interest and cannot be revoked.
11.7 DISBURSING AGENT FOR BORROWER. At any and all times while an Event
of Default exists under this Agreement, Lender or its agents, at its or their
option (without further authorization from Borrower), may (but shall not be
required to) act as disbursing agent for Borrower with respect to the Loan
proceeds. Borrower covenants and agrees to pay any and all reasonable fees and
charges payable to such disbursing agent.
Article 12
MISCELLANEOUS
12.1 EXCESS FUNDS. Borrower represents, warrants and covenants that
Borrower shall be responsible for any funds needed in excess of the Loan for
completion of the Improvements.
12.2 ESTABLISH EXISTENCE OF FACTS. Any condition of this Agreement which
requires the submission of evidence of the existence or non-existence of a
specified fact or facts implies as a condition the existence or non-existence,
as the case may be, of such fact or facts, and Lender shall, at all times, be
free independently to establish to its satisfaction and in its absolute
discretion such existence or non-existence.
12.3 ATTACHMENT OR LEVY BY CREDITOR. No part of the Loan will be, at any
time,
36
<PAGE>
subject or liable to attachment or levy at the suit of any creditor of Borrower
or of any other interested or non-interested party, or at the suit of any
contractor, subcontractor, sub- subcontractors or materialman, or any of their
creditors.
12.4 INDEMNIFICATION. Borrower does hereby and shall indemnify and hold
Lender, its directors, officers, employees, agents, successors and assigns
harmless of and from any and all loss or damage, of whatsoever kind, and defend
Lender and such other indemnified parties of, from and against any suits, claims
or demands, including, without limitation, Lender's reasonable legal fees,
paralegal fees, costs and expenses at all trial, appellate, supplemental and
bankruptcy proceedings or levels, on account of any matters or anything arising
out of this Agreement or in connection with the Loan. Such obligations shall
survive completion of the Improvements and repayment of the Loan.
12.5 NO THIRD PARTY BENEFICIARY. All conditions of Lender hereunder are
imposed solely and exclusively for the benefit of Lender and its successors and
assigns, and no other person shall have standing to require satisfaction of said
conditions or be entitled to assume that Lender will make Advances in the
absence of strict compliance of any or all thereof, and no other person shall,
under any circumstances, be deemed to be a beneficiary of this Agreement or the
Loan Documents, any provisions of which may be freely waived in whole or in part
by Lender at any time if, in its sole discretion, it deems it desirable to do
so. In particular, Lender makes no representations and assumes no duties or
obligations as to third parties concerning the quality of the construction by
Borrower of the Improvements or the absence therefrom of defects.
12.6 APPLICATION OF FUNDS. Nothing contained in this Agreement or any
Loan Document shall impose upon Lender any obligation to oversee the proper use
or application of any disbursements or Advances of funds made pursuant to the
Loan.
12.7 INVALID PROVISIONS. If performance of any provision hereof or any
transaction related hereto is limited by law, then the obligation to be
performed shall be reduced accordingly, and if any clause or provision herein
contained operates or would operate to invalidate this Agreement in part, then
the invalid part of said clause or provisions only shall be held for naught as
though not contained herein, and the remainder of this Agreement shall remain
operative and in full force and effect.
12.8 WAIVER. If Lender shall waive any provisions of this Agreement or
any of the Loan Documents, or shall fail to enforce any of the conditions or
provisions of this Agreement, such waiver shall not be deemed to be a continuing
waiver, and shall never be construed as such, and Lender shall thereafter have
the right to insist upon the enforcement of such conditions or provisions.
12.9 ENTIRE AGREEMENT. This Agreement and the documents expressly
referred to herein or otherwise executed in connection herewith embody the
entire agreement and
37
<PAGE>
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to the
subject matter.
12.10 NOTICE. All notices given hereunder shall be in writing and
addressed as follows:
(a) Lender: BankAtlantic
1750 East Sunrise Boulevard
Fort Lauderdale, FL 33304
Attn: Marcia K. Snyder,
Executive Vice President
with copy to: Conrad J. Boyle, Esq.
Mombach, Boyle & Hardin, P.A.
500 East Broward Boulevard
Suite 1950
Fort Lauderdale, Florida 33394
(b) Borrower: OCEAN RANCH VACATION GROUP
6400 N. Andrews Avenue
Fort Lauderdale, FL 33309
Attn: Henry Cairo, Chief Operating Officer
and: c/o Vacation Break at Ocean Ranch, Inc.
3015 North Ocean Boulevard
Suite 121
Fort Lauderdale, FL 33308
Attn: Marc Landau, Vice President
with copy to: Leonard Lubart, Esq.
Greenspoon, Marder, Hirschfeld & Rafkin
100 West Cypress Creek Road
Suite 700
Fort Lauderdale, FL 33309
(a) Any notice, report, demand or other instrument authorized or
required to be given or furnished under this Agreement to Borrower or
Lender shall be deemed given or furnished when addressed to the party
intended to receive the same, at the above address and delivered at such
address (by hand delivery or by expedited courier) or deposited in the
United States mail as first class certified mail, return receipt
requested, postage paid, whether or not the same is actually received by
such party.
(b) Each party may change the address to which any such notice,
report,
38
<PAGE>
demand or other instrument is to be delivered or mailed, by furnishing
written notice of such change to the other party, but no such notice of
change shall be effective unless and until received by such other party.
12.11 HEADINGS. The headings preceding the text of the sections of
this Agreement are used solely for convenience or reference and shall not affect
the meaning, construction, or effect of this Agreement.
12.12 ASSIGNMENT BY LENDER. Lender shall have the right at any time to
convey or assign the Loan, or any portion thereof, and, additionally, shall have
the right to sell a participation in the Loan to another lending institution at
any time that the Loan is outstanding, in any amount as solely determined by
Lender. Borrower agrees to execute such documentation as may be reasonably
requested by Lender in connection with any such sale or assignment.
12.13 ASSIGNMENT BY BORROWER. Borrower shall not assign this Agreement
without the prior written consent of Lender, and any assignment in violation
hereof shall be of no force and effect and shall constitute an Event of Default
herein. Subject to the previous sentence, this Agreement shall extend to and
bind the parties hereto, and their respective successors and assigns.
12.14 FLORIDA LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the laws of conflicts) of the
State of Florida.
12.15 NO PARTNERSHIP. In no event shall Lender's rights hereunder or
under any of the Loan Documents, grant to Lender the right to or be deemed to
indicate that Lender is in control of the business, management or properties of
Borrower, or has power over the daily management functions and operating
decisions made by Borrower. Lender is the lender only and shall not be
considered a shareholder, joint venturer or partner of Borrower. Borrower and
Lender intend that the relationship created under the Note, the Mortgage and all
other Loan Documents, including this Agreement, be solely that of debtor and
creditor, mortgagor and mortgagee or borrower and lender, as the case may be.
Nothing herein or in any of the Loan Documents is intended to create a joint
venture, partnership, tenancy in common or joint tenancy relationship between
Borrower and Lender, nor to grant to Lender any interest in the Property other
than that of creditor or mortgagee, it being the intent of the parties hereto
that Lender shall have no liability whatsoever for any losses generated by or
incurred with respect to the Property nor shall Lender have any control over the
day to day management or operation of the Property. The terms and provisions of
this paragraph shall control and supersede over every other provision and all
other agreements between Borrower and Lender. Borrower hereby agrees to
indemnify and hold Lender, its directors, officers, employees, agents,
successors and assigns harmless and defend Lender and such other indemnified
parties from and against any loss, liability, cost or expense (including,
without limitation, reasonable attorneys fees, paralegal fees, costs, expenses
and disbursements) and all claims, actions, procedures and suits arising out of
or in connection with any construction of the relationship of
39
<PAGE>
Borrower and Lender as to that of joint venturers, partners, tenants in common,
joint tenants or any relationship other than that of debtor and creditor or any
assertion that such a construction should be made. The foregoing indemnity shall
survive the repayment of the Note and the satisfaction of the Mortgage and shall
continue for so long as any liability for which the indemnify is given may exist
or arise.
12.16 NO REPRESENTATIONS BY LENDER. Lender has no obligations in
connection with the Property except to advance the proceeds of the Loan as
herein provided, and Lender shall not be liable for the performance of any
contractor, subcontractor, or supplier of materials, fixtures, equipment and any
other personal property, or for the failure to construct, complete, protect or
insure the Improvements, or for the payment of any cost or expenses incurred in
connection therewith, or for the performance or non-performance or delay in
performance of any obligation of Borrower to Lender. Any inspection by Lender or
Lender's Construction Advisor of the Improvements, approval of the Plans and
Specifications or other activities in the nature thereof shall only be for the
sole benefit of Lender and for the purpose of protecting the security of Lender,
and the same shall in no way be construed as a representation on the part of
Lender that there is compliance on the part of Borrower with the Plans and
Specifications or that the construction of the Improvements is free from faulty
material, fixtures, equipment, and other personal property, or workmanship. The
fact that Lender or Lender's Construction Advisor makes such inspections shall
not relieve Borrower from its duty to independently ascertain that the
Improvements are being completed in strict accordance with the Plans and
Specifications, and Borrower has no right to rely on any procedures required or
utilized by Lender.
12.17 ATTORNEYS' FEES AND EXPENSES. Any reference in this Agreement to
legal fees or attorneys' or counsels' fees paid or incurred by Lender shall be
deemed to include paralegals' fees and legal assistants' fees. Moreover,
wherever provision is made herein for payment of attorneys' or counsels' fees or
expenses incurred by the Lender, said provision shall include, but not be
limited to, such fees or expenses incurred in any and all judicial, bankruptcy,
reorganization, administrative, supplemental or other proceedings, including
appellate proceedings, whether such fees or expenses arise before proceedings
are commenced or after entry of a final judgment.
12.18 LOAN EXPENSES. Borrower shall pay all costs and expenses in
connection with the Loan and the preparation, execution, delivery and
performance of this Agreement and the other Loan Documents including, but not
limited to: (i) Loan fees, (ii) fees and disbursements of counsel for Lender (in
connection with the preparation of and the enforcement and protection of rights
of Lender) and Borrower, (iii) broker's fees and commissions, (iv) documentary
stamps, intangible taxes (recurring and non-recurring) and other taxes; (v)
recording costs and expenses, (vi) costs for environmental audits, reports or
inspections, building or property inspections or reports, surveys and
appraisals, (vii) travel expenses, photocopying and long distance telephone
charges of Lender's counsel, (viii) abstracting charges, title update fees and
premiums related to title insurance commitments and policies,
40
<PAGE>
(ix) fees for inspections and title examination, (x) the cost of corporate or
entity verifications, judgment, tax or lien searches or the cost of due
diligence activities conducted or ordered by Lender or its counsel, (xi) fees of
Lender's Construction Advisor, (xii) insurance premiums, and (xiii) license and
permit fees, and Borrower shall indemnify and hold Lender harmless from and
against any and all costs, losses, liabilities and expenses arising in
connection with any of the foregoing. Borrower hereby authorizes Lender to
utilize the proceeds of the Loan to satisfy any and all of the costs and
expenses referred to herein and no further direction or authorization from
Borrower shall be necessary to warrant disbursements in payment of the
foregoing, and all such disbursements shall earn interest as provided in the
Note and shall be secured by the Mortgage.
12.19 GOVERNMENTAL REGULATION OF LENDER. Lender is subject to various
Governmental Authorities and the laws, rules and regulations enacted, adopted
and promulgated by them. To the extent that Lender's power and authority to
perform the obligations on the part of Lender to be performed under this
Agreement, now or hereafter, may be limited or regulated thereby, Lender is
hereby excused from such performance. Notwithstanding the foregoing, Lender
warrants and represents to Borrower that it is authorized to make and fund the
Loan under the terms of the Loan Documents.
12.20 MODIFICATION, WAIVER, CONSENT. Any modification, consent, change,
waiver, discharge, amendment or termination of any provision of this Agreement
or any consent to any departure by Borrower therefrom shall not be effective
unless the same is in writing and signed by an authorized officer of Lender, and
then such modification, consent, change, waiver, discharge, amendment or
termination shall be effective only in the specific instance and for the
specific purpose given. Any notice to or demand on Borrower not specifically
required of Lender hereunder shall not entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances unless specifically
required hereunder. Any Advance of Loan proceeds hereunder shall not constitute
a waiver of any of the conditions of Lender's obligations to make an Additional
Advance nor, in the event Borrower is unable to satisfy any such condition,
shall any such waiver have the effect of precluding Lender from thereafter
declaring such inability to be an Event of Default hereunder as elsewhere
provided in this Agreement.
12.21 STRICT PERFORMANCE. Time is of the essence as to all matters
provided for in this Agreement.
12.22 ACCRUAL OF INTEREST UNDER THE NOTE. Interest under the Note shall
commence to accrue as of the date of disbursal or wire transfer by Lender,
notwithstanding whether Borrower shall receive the benefits of such monies as of
such date and even if such monies are held in escrow pursuant to the terms of
any escrow arrangement or agreement. When monies are disbursed by wire transfer,
then such monies shall be considered advanced at the time of the transmission of
the wire rather than at the time of receipt thereof by the receiving bank.
41
<PAGE>
12.23 FURTHER ASSURANCES. On demand by Lender, Borrower will do any act
and execute any additional documents reasonably required by Lender to secure the
Loan, to confirm or perfect the lien of the Mortgage and the other Loan
Documents or to comply with the Credit Facility Letter, including, but not
limited to, additional financing statements or continuation statements, new or
replacement notes and/or loan documents and agreements supplementing, extending
or otherwise modifying the Loan Documents and certificates as to the amount of
the indebtedness evidenced by the Note from time to time.
12.24 PARTIAL RELEASES. Provided there is no event of default by
Borrower under the Loan, Borrower shall be entitled to the partial release of a
Unit Week from the lien and encumbrance of the Mortgage upon the payment of the
"Partial Release Price" calculated as provided hereinbelow. Partial releases
will be available for Unit Weeks provided that at least 50% of the Unit Weeks
available in the applicable Unit have been sold, as evidenced by fully executed
and binding Sales Contracts for those Unit Weeks. Partial releases will be
available for Biennial Weeks provided that an aggregate of at least twenty-six
(26) Unit Weeks in the applicable Unit (consisting of sales of Unit Weeks and
Biennial Weeks) have been sold, as evidenced by fully executed and binding Sales
Contracts. For purposes of calculating the number of "sold" Unit Weeks under
this paragraph, each Biennial Week shall count as one-half (1/2) of a Unit Week,
such that the sale of 2 Biennial Weeks shall equal the sale of 1 Unit Week. The
partial release of any Unit Week or any Biennial Week from the lien of the
Mortgage shall include a partial release as to all security interests with
regard to that Unit including Lender's security interest in Sales Contracts and
personal property as reflected in the UCC-1 Financing Statements and other Loan
Documents.
The "Partial Release Price" for a Unit Week shall be an amount equal to
the greater of: (i) 28% of the gross sales price of the Unit Week or (ii)
$3,053.00. The "Partial Release Price" for a Biennial Week shall be an amount
equal to the greater of: (i) 28% of the gross sales price of the Biennial Week
or (ii) $1,526.50. To the extent that Borrower requests that an entire Time
Share Unit be released prior to the sale of at least 50% of the Unit Weeks
contained in such Unit, the "Partial Release Price" for such Unit shall be equal
to the greater of: (i) $158,756.00 or (ii) 28% of the average gross sales price
of Unit Weeks (as set forth in existing Sales Contracts) with respect to the
subject Unit. In the event the Project consists of 99 Units rather than 100
Units such that there is an aggregate of 5,148 Unit Weeks, in that event the
minimum release price for each Unit Week will be increased from $3,053.00 to
$3,084.00, the minimum release price for a Biennial Week will be increased from
$1,526.50 to $1,542.00 and the minimum Partial Release Price for a Unit will be
increased from $158,756.00 to $160,360.00.
12.25 LEASE APPROVAL. Borrower acknowledges and agrees that the
approval (directly or indirectly) of any lease by Lender shall not be construed
in any manner to create any liability or responsibility as to Lender in the
event that such lease or the tenant thereunder should default. The review of any
lease by Lender shall be solely for Lender's own purposes, shall not constitute
any representation by Lender as to the subject lease and may not be relied
42
<PAGE>
upon by Borrower in any manner. Borrower shall independently review and approve
any lease prior to execution thereof by Borrower.
WAIVER OF TRIAL BY JURY. BORROWER AND LENDER HEREBY MUTUALLY
KNOWINGLY, WILLINGLY AND VOLUNTARILY WAIVE THEIR RIGHT TO TRIAL BY JURY, AND,
NO PARTY, NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL RE PRESENTATIVE OF THE
PARTIES (ALL OF WHOM ARE HEREINAFTER REFERRED TO AS THE "PARTIES") SHALL SEEK A
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION
PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE LOAN DOCUMENTS, OR
ANY INSTRUMENT EVIDENCING, SECURING, OR RELATING TO THE LOAN, ANY RELATED
AGREEMENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR THE LOAN OR ANY COURSE OF
ACTION, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
RELATING TO THE LOAN OR TO THIS AGREEMENT. THE PARTIES ALSO WAIVE ANY RIGHT TO
CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES. THE WAIVER CONTAINED HEREIN
IS IRREVOCABLE, CONSTITUTES A KNOWING AND VOLUNTARY WAIVER, AND SHALL BE SUBJECT
TO NO EXCEPTIONS. LENDER HAS IN NO WAY AGREED WITH OR REPRESENTED TO BORROWER OR
TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
Signed, sealed and delivered OCEAN RANCH VACATION GROUP, a
in the presence of: Florida General Partnership
By: Ocean Ranch Development, Inc., a
Florida corporation, General Partner
__________________________ By: /s/____________________________
Print Name:_______________
__________________________ Its:____________________________
Print Name:________________
(Corporate Seal)
By: Vacation Break at Ocean Ranch, Inc.,
43
<PAGE>
a Florida corporation, General Partner
____________________________ By: /s/__________________________
Print Name:_________________
____________________________ Its:___________________________
Print Name:_________________
(Corporate Seal)
BANKATLANTIC, a Federal Savings Bank
____________________________ By: /s/__________________________________
Print Name:_________________ Marcia K. Snyder,
Executive Vice President
____________________________
Print Name:_________________
44
EXHIBIT 10.77
ABSOLUTE UNCONDITIONAL AND CONTINUING GUARANTY
THIS ABSOLUTE UNCONDITIONAL AND CONTINUING GUARANTY, dated as of the 13
day of June, 1996 (the "Guaranty"), is executed by VACATION BREAK U.S.A., INC.,
a Florida corporation (whether one or more, herein referred to as the
"Guarantor"), in favor of BankAtlantic, a Federal Savings Bank ("Creditor").
W I T N E S S E T H :
WHEREAS, OCEAN RANCH VACATION GROUP, a Florida General Partnership
("Borrower") is or may become indebted to Creditor; and
WHEREAS, Guarantor is affiliated with Borrower; and
WHEREAS, without this Guaranty, Creditor would be unwilling to extend
credit to Borrower; and
WHEREAS, because of the direct benefit to Guarantor from any and all
loan(s) to be made by Creditor in favor of Borrower, and as an inducement to
Creditor to make said loan(s) to Borrower, Guarantor agrees to guarantee to
Creditor the obligations of Borrower as set forth herein.
NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Guarantor hereby, jointly and severally, with each other and with other
guarantors of the Guaranteed Indebtedness, as applicable, guarantees to Creditor
the prompt and full payment of the Guaranteed Indebtedness (hereinafter
defined), as and when the same shall be due and payable, whether by lapse of
time, by acceleration of maturity or otherwise, and at all times thereafter, and
performance of all obligations of Borrower in connection with the Guaranteed
Indebtedness, this Guaranty being upon the following terms and conditions:
1. The term "Guaranteed Indebtedness", as used herein, includes all
indebtedness of every kind and character, without limit as to amount, whether
now existing or hereafter arising, of Borrower to Creditor, regardless of
whether evidenced by notes, drafts, acceptances, discounts, overdrafts, or
otherwise, and whether such indebtedness be fixed, contingent, joint, several,
or joint and several, including, but not limited to: (a) the indebtedness
arising under that certain Promissory Note in the principal amount of
$12,700,000.00 (the "Note") executed or to be executed by Borrower in favor of
Creditor; (b) interest on any of the indebtedness described in the preceding;
(c) any and all costs, attorneys fees, and expenses incurred by Creditor by
reason of Borrower's default in payment of any of the foregoing indebtedness;
(d) any renewal, extension or rearrangement of the indebtedness, costs, or
expenses described above, or any part thereof; (e) any amount paid by Borrower
to Creditor which is later set aside in a bankruptcy proceeding; and (f) the
indebtedness and obligations arising under the Loan Agreement or other Loan
Documents (as each/such term is hereinafter defined), plus all costs and legal
fees associated therewith incurred by Creditor in connection with enforcement
of and collection of the same.
<PAGE>
2. This instrument shall be an absolute and continuing guaranty of
payment and performance and, not one of collection, and shall cover all of the
Guaranteed Indebtedness, and it shall apply to and secure any ultimate balance
due or remaining unpaid to Creditor, notwithstanding any interruptions in the
business relations of Borrower with Creditor.
3. If Guarantor becomes liable for any indebtedness owing by Borrower to
Creditor, by endorsement or otherwise, other than under this Guaranty, such
liability shall not be in any manner impaired or affected hereby, and the rights
of Creditor hereunder shall be cumulative of any and all other rights that
Creditor may ever have against Guarantor. The exercise by Creditor of any right
or remedy hereunder or under any other instrument, or at law or in equity, shall
not preclude the concurrent or subsequent exercise of any other right or remedy.
If, for any reason whatsoever, Borrower is now, or hereafter becomes, indebted
to Guarantor, such indebtedness and all interest thereon shall, at all times, be
subordinate in all respects to the Guaranteed Indebtedness, and Guarantor shall
not be entitled to enforce or receive payment thereof until the Guaranteed
Indebtedness has been fully paid. Furthermore, any right of subrogation of
Guarantor against Borrower shall likewise be subordinate in all respects to the
Guaranteed Indebtedness and Guarantor shall not be entitled to enforce any
subrogation rights until the Guaranteed Indebtedness has been fully paid.
4. In the event of default by Borrower in payment of the Guaranteed
Indebtedness, or any part thereof, when such indebtedness becomes due, either by
its terms or as the result of the exercise of any power to accelerate, Guarantor
shall, on demand and without further notice of nonpayment or of dishonor,
without any notice having been given to Guarantor previous to such demand of the
acceptance by Creditor of this Guaranty, and, without any notice having been
given to Guarantor previous to such demand of the creating or incurring of such
indebtedness, pay the amount due thereon to Creditor, and it shall not be
necessary for Creditor, in order to enforce such payment by Guarantor, first to
institute suit or exhaust its remedies against Borrower or others liable on such
indebtedness, or to enforce its rights against any security which shall ever
have been given to secure such indebtedness. Suit may be brought or demand may
be made against all parties who have signed this Guaranty, or against any one or
more of them, separately or together, without impairing the rights of Creditor
against any other party hereto.
5. Guarantor hereby agrees that Guarantor's obligations under the terms
of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events: (a) the
taking or accepting of any other security or guaranty for any or all of the
Guaranteed Indebtedness; (b) any release, surrender, exchange, subordination, or
loss of any security at any time existing in connection with any or all of the
Guaranteed Indebtedness; (c) any partial release of the liability of Guarantor
hereunder or, if there is more than one person or entity signing this Guaranty,
the complete or partial release of any one or more of them hereunder; (d) the
death, insolvency, bankruptcy, disability, dissolution, termination,
receivership, reorganization or lack of corporate, partnership or other power of
Borrower, any of the undersigned, or any party at any time liable for the
payment of any or all of the Guaranteed Indebtedness, whether now existing or
hereafter occurring; (e) renewal, extension, modification or rearrangement of
the payment of any or all of the Guaranteed Indebtedness, either with or without
notice to or consent of Guarantor, or any adjustment, indulgence, forbearance,
or compromise that may be granted or given by Creditor to Borrower or Guarantor;
(f) any neglect, delay, omission,
2
<PAGE>
failure, or refusal of Creditor to take or prosecute any action for the
collection of any of the Guaranteed Indebtedness or to foreclose or take or
prosecute any action to foreclose upon any security therefor or to take or
prosecute any action in connection with any instrument or agreement evidencing
or securing all or any part of the Guaranteed Indebtedness; (g) any failure of
Creditor to notify Guarantor of any renewal, extension, rearrangement,
modification or assignment of the Guaranteed Indebtedness or any part thereof,
or of any instrument evidencing or securing the Guaranteed Indebtedness or any
part thereof, or of the release of or change in any security or of any other
action taken or refrained from being taken by Creditor against Borrower or of
any new agreement between Creditor and Borrower, it being understood that
Creditor shall not be required to give Guarantor any notice of any kind under
any circumstances with respect to or in connection with the Guaranteed
Indebtedness; (h) the unenforceability of all or any part of the Guaranteed
Indebtedness against Borrower, whether because the Guaranteed Indebtedness
exceeds the amount permitted by law, the act of creating the Guaranteed
Indebtedness, or any part thereof, is ULTRA VIRES, the officers or persons
creating same acted in excess of their authority, or otherwise, it being agreed
that Guarantor shall remain liable hereon regardless of whether Borrower or any
other person be found not liable on the Guaranteed Indebtedness, or any part
thereof, for any reason; or (i) any payment by Borrower to Creditor is held to
constitute a preference under the bankruptcy laws or if for any other reason
Creditor is required to refund such payment or pay the amount thereof to someone
else. It is the intent of Guarantor and Creditor that the obligations and
liabilities of Guarantor hereunder are absolute and unconditional under any and
all circumstances and that until the Guaranteed Indebtedness is fully and
finally paid, such obligations and liabilities shall not be discharged or
released, in whole or in part, by any act or occurrence which might, but for the
provisions of this Guaranty, be deemed a legal or equitable discharge or release
of a guarantor.
6. Creditor is hereby authorized and empowered at its option to
appropriate any and all deposits of the Guarantor in the possession or custody
of Creditor and apply any and all thereof and the proceeds thereof to the
payment and extinguishment of the liability and indebtedness hereby created at
any time after such liability and indebtedness becomes payable.
7. This Guaranty is for the benefit of Creditor and Creditor's
successors and assigns, and in the event of an assignment of the Guaranteed
Indebtedness, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty is binding not only on Guarantor, but on Guarantor's
heirs, personal representatives and/or successors and assigns, and, if this
Guaranty is signed by more than one person or entity, then all of the
obligations of Guarantor arising herein shall be jointly and severally binding
on each of the undersigned, and their respective heirs, personal
representatives, successors and assigns. This Guaranty shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of Florida, and is intended to be performed in accordance with, and
only to the extent permitted by, such laws. If any provision of this Guaranty or
the application thereof to any person or circumstance shall, for any reason and
to any extent, be invalid or unenforceable, neither the remainder of this
Guaranty nor the application of such provision to any other person or
circumstances shall be affected thereby, but rather the same shall be enforced
to the greatest extent permitted by law. Guarantor hereby agrees with Creditor
that all rights, remedies and recourses afforded to Creditor by reason of this
Guaranty or otherwise are separate and cumulative and may be pursued separately,
successively or concurrently, as occasion therefor shall arise, and are
nonexclusive and shall in no way limit or prejudice any other
3
<PAGE>
legal or equitable right, remedy or recourse which Creditor may have. Guarantor
shall pay the reasonable attorneys' fees and all other costs and expenses which
may be incurred by Creditor in the enforcement of this Guaranty.
8. It is not the intention of Creditor or Guarantor to obligate
Guarantor to pay interest in excess of that legally permitted to be paid by
Guarantor under applicable law. Should it be determined that any portion of the
Guaranteed Indebtedness constitutes interest in excess of the maximum amount of
interest which Guarantor (in such capacity) may lawfully be required to pay
under applicable law, the obligation of Guarantor to pay such interest shall
automatically be limited to the payment thereof at the maximum rate so permitted
under applicable law.
9. Guarantor does hereby and shall indemnify and hold Creditor harmless
of and from any and all loss or damage of whatsoever kind and from any suits,
claims or demands, including without limitation, Creditor's legal fees and
expenses through all trial and appellate levels, on account of any matters or
anything arising out of this Guaranty (provided that Creditor is the prevailing
party in any such litigation) or in connection herewith on account of any such
acts or omissions to act by Creditor in connection with this Guaranty, which
obligations shall survive termination of this Guaranty, other than any of the
foregoing arising out of the gross negligence of willful misconduct of Creditor.
10. Guarantor will deliver to Creditor, within one hundred twenty (120)
days after the close of each calendar year, financial statements of Guarantor
in such form and containing such content as shall be acceptable to Creditor.
Guarantor shall also deliver to Creditor copies of all tax returns (with all
attached schedules) of Guarantor within fifteen (15) days of the filing due
date. All financial statements of Guarantor shall be prepared in accordance with
generally accepted accounting principles, consistently applied, and shall be
prepared by such certified public accountant(s) as may be approved by Creditor.
In addition to the above, Guarantor shall submit to Creditor, upon request, such
other financial information relating to Guarantor as Creditor may require until
the Guaranteed Indebtedness has been paid in full.
11. Upon the filing of a petition in bankruptcy, with respect to
Borrower, any assignment for the benefit of creditors of Borrower, or, any other
circumstances necessitating Creditor to file its claim against Borrower,
Guarantor agrees that notwithstanding any stay, injunction or other prohibition
preventing the maturity, acceleration or collection of all or any portion of the
Guaranteed Indebtedness, the Guaranteed Indebtedness (whether or not then due
and payable by Borrower) shall forthwith become due and payable by Guarantor for
purposes of this Guaranty on demand. The obligation of Guarantor to pay the
Guaranteed Indebtedness of Guarantor hereunder shall not be affected or impaired
by Creditor's omission or failure to prove its claim against Borrower.
Accordingly, the rights of Creditor under this Guaranty, shall not be affected
or impaired by its election to prove its claim(s) or its election not to pursue
such claim(s), as it sees fit, without in any way releasing, reducing or
otherwise affecting the liability to Creditor of any of the undersigned
Guarantor(s).
12. Notwithstanding that this Guaranty may have been cancelled or
terminated, in the event that all or any part of the Guaranteed Indebtedness is
paid by or on behalf of Borrower and because of any bankruptcy or other laws
relating to creditor rights, Creditor repays any amounts to
4
<PAGE>
Borrower or to any trustee, receiver or otherwise, then the amount so repaid
shall again become part of the Guaranteed Indebtedness, the repayment of which
is guaranteed hereby, and the undersigned Guarantor(s) shall immediately repay
all such amounts to Creditor. If the original of this Guaranty was marked
"Cancelled" by Creditor and returned to the undersigned guarantor(s), for the
purposes of this Section, a photocopy or other reproduction of this Guaranty
shall constitute the original of this Guaranty.
13. Unless otherwise provided, all notices required to be given
hereunder shall be in writing and shall be deemed served on the earlier of (i)
receipt or (ii) forty-eight (48) hours after deposit in certified United States
mail, postage prepaid, and addressed to the parties at the following addresses,
or such other addresses as may from time to time be designated by written notice
given as herein required:
to Guarantor:
Vacation Break U.S.A., Inc.
6400 North Andrews Avenue
Fort Lauderdale, FL 33309
Attn: Hank Cairo
to Creditor:
BankAtlantic
1750 East Sunrise Boulevard
Fort Lauderdale, FL 33304
Attn: Marcia K. Snyder
Executive Vice President
Personal delivery to a party or to any officer, partner, agent or employee of
such party, or if a proper person, to a member of his family, at its address
herein shall constitute receipt. Rejec tion or other refusal to accept or
inability to deliver because of changed address of which no notice has been
received shall also constitute receipt. Notwithstanding the foregoing, no notice
of change of address shall be effective until the date of receipt thereof. This
section shall not be construed in any way to affect or impair any waiver of
notice or demand herein provided or to require giving of notice or demand to or
upon Guarantor in any situation or for any reason.
14. Guarantor irrevocably and unconditionally (a) agrees that any suit,
action or other legal proceeding arising out of or relating to this Guaranty may
be brought, at the option of Creditor, in a court of competent jurisdiction of
the State of Florida or any United States District Court; (b) consents to the
jurisdiction of each such court in any such suit, action or proceeding; (c)
waives any and all personal rights under the laws of any state to object to the
laying of venue of any such suit, action or proceeding in the State of Florida;
and (d) agrees that service of any court paper may be effected on Guarantor by
mail, addressed and mailed as provided herein or in such other manner as may be
provided under applicable laws or court rules in the State of Florida. Nothing
contained herein, however, shall prevent Creditor from bringing an action or
exercising any rights against any security or against Guarantor personally, and
against any property of Guarantor, within any other state. Initiating such
proceeding or taking such action in any other state shall in no event
5
<PAGE>
constitute a waiver of the agreement contained herein that the law of the State
of Florida shall govern the rights and obligations of Guarantor and Creditor
hereunder or of the submission herein made by Guarantor to personal jurisdiction
within the State of Florida. The aforesaid means of obtaining personal
jurisdiction and perfecting service of process are not intended to be exclusive
but are cumulative and in addition to all other means of obtaining personal
jurisdiction and perfecting service of process now or hereafter provided by the
law of the State of Florida.
15. The Guaranteed Indebtedness includes, without limitation, all sums
now or hereafter due and owing pursuant to the terms of the Note, executed or to
be executed by Borrower payable to the order of Creditor, a Construction Loan
Agreement (the "Loan Agreement"), a Mortgage Deed and Security Agreement, an
Assignment of Leases, Rents and Deposits, UCC-1 Financing Statements and all
other loan documents evidencing and/or securing the Guaranteed Indebtedness and
executed or to be executed by Borrower in connection therewith, and any of the
other loan documents referred to in the Loan Agreement (collectively "Loan
Documents"), the terms and provisions of which are agreed to, accepted and
acknowledged by Guarantor. Terms used and not defined herein have the meanings
given them in the Loan Agreement or the other Loan Documents.
16. Guarantor represents and warrants to Creditor that, at the time of
the execution and delivery of this Guaranty, nothing exists to impair the
effectiveness of the liability of Guarantor to Creditor hereunder, or the
immediate taking effect of this Guaranty as the sole agreement between Guarantor
and Creditor with respect to guaranteeing the Guaranteed Indebtedness. Guarantor
further represents and warrants that, if a corporation, it is now and will
continue to be duly organized, validly existing and in good standing under the
laws of the state or country of its incorporation; has the corporate power and
authority to own its properties and to carry on its business as now being
conducted and to enter into and perform its obligations under this Guaranty; all
of its issued and outstanding stock has been duly and validly issued and is
fully paid and nonassessable; there are no outstanding rights or options to
acquire any additional stock and its stock has not been pledged or encumbered in
any manner (excepted from the foregoing shall be any transfers in connection
with the public stock offering or an employees' stock ownership plan); is
qualified to do business and is in good standing in the State of Florida; and it
has not amended or modified its articles or certificate of incorporation or its
bylaws except as previously disclosed to Creditor in writing prior to the
execution hereof and that no amendment, change or modification thereto shall be
binding upon Creditor or affect this Guaranty unless said amendment, change or
modification has been agreed to in writing by Creditor. Guarantor represents and
warrants that, if a partnership, it is now and will continue to be duly formed,
validly existing and in good standing under the laws of the state or country of
its creation; is qualified to do business in the State of Florida; has the
partnership power and authority to own its properties and to carry on its
business as now being conducted and to enter into and perform its obligations
under this Guaranty; and it has not amended, changed or modified its certificate
of partnership or partnership agreement except as previously disclosed to
Creditor in writing prior to the execution hereof and that no amendment, change
or modification thereto shall be binding upon Creditor or affect this Guaranty
unless said amendment, change or modification has been agreed to in writing by
Creditor. Guarantor further represents and warrants to Creditor that this
Guaranty when executed and delivered by Guarantor will constitute the legal,
valid and binding obligations of Guarantor enforceable in accordance with the
terms hereof; that the execution, delivery and performance by
6
<PAGE>
Guarantor of this Guaranty will not violate any indenture, agreement or other
instrument (or, if Guarantor is a corporation or partnership, its articles of
incorporation or bylaws or its partnership agreement) to which Guarantor is a
party or by which it or any of its property is bound, or be in conflict with,
result in a breach of or constitute (with due notice or the lapse of time, or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of its property or assets, except as contemplated by
the provisions of this Guaranty; that, if Guarantor is a corporation or
partnership, the execution, delivery and performance by Guarantor of this
Guaranty is within its corporate or partnership powers and purposes and has been
duly authorized by all requisite corporate or partnership action of Guarantor,
that there are no judgments outstanding against Guarantor and there is no
action, suit, proceeding, or investigation now pending (or to the best of
Guarantor' s knowledge, after diligent inquiry, threatened) against, involving
or affecting Guarantor or any of its properties or any part thereof, at law, in
equity or before any governmental authority that if adversely determined as to
Guarantor, would result in a material adverse change in the business or
financial condition of Guarantor, or Guarantor's operation and ownership of any
of its properties, nor is there any basis for such action, suit, proceeding, or
investigation; and that Guarantor is not insolvent and will not be rendered
insolvent by the execution, delivery, payment and performance of this Guaranty.
17. The liability of Guarantor hereunder shall be joint and several with
Borrower and all other guarantors of the Guaranteed Indebtedness.
18. Guarantor represents and warrants to Creditor that the entities
listed on Exhibit "A" attached hereto and made a part hereof are subsidiaries of
and/or wholly owned by Guarantor (the "Related Entities"). Guarantor covenants
and agrees that so long as the Guaranteed Indebtedness or any portion thereof
remains outstanding, Guarantor shall not transfer, sell or otherwise dispose of
all or any portion of its ownership interest in any one or more of the Related
Entities. Guarantor acknowledges and agrees that but for the foregoing
representation, Creditor would require that each of the Related Entities execute
in favor of Creditor a separate Guaranty to guarantee the performance of all the
obligations of Borrower under the Loan Documents and the repayment of the
Guaranteed Indebtedness. Guarantor acknowledges and agrees that any breach of
the foregoing covenant related to the Related Entities shall constitute a
default under the Loan Documents and entitle Creditor to exercise any and all
remedies under the Loan Documents and this Guaranty.
19. Guarantor additionally unconditionally guarantees to Creditor the
timely performance of all other obligations of Borrower under all of the Loan
Documents, including, without limiting the generality of the foregoing, that:
(a) the Improvements will be constructed upon the Property in accordance
with the Loan Agreement and with the Plans and Specifications (as said terms are
defined in the Loan Agreement); and
(b) the Improvements will be completed and ready for occupancy,
including delivery of any certificates, licenses, and permits required by law or
the Loan Agreement, on or before the date required in the Loan Agreement.
7
<PAGE>
In the event the foregoing obligations of Borrower are not timely performed
in any respect whatsoever, Guarantor, without the necessity of any notice from
Creditor to Guarantor, agrees to (i) assume all responsibility for the
completion of the Improvements and, at Guarantor's own cost and expense, to
cause the Improvements to be fully completed in accordance with the Plans and
Specifications and in accordance with the Loan Agreement; (ii) pay all bills,
costs, and expenses in connection with the construction and completion of the
Improvements; (iii) indemnify and hold Creditor harmless from any and all loss,
cost, liability or expense Creditor may suffer by reason of any such acts or
omissions of Borrower, and (iv) indemnify Creditor for any costs, liabilities
and claims asserted by contractors, subcontractors, materialmen and suppliers in
connection with construction of the Improvements. If, after the occurrence of an
Event of Default under the Loan Agreement by Borrower, Guarantor has not caused
construction to progress as required by the Loan Agreement, Creditor may, at its
option, after first having given notice to Guarantor at the address set forth
above in the manner prescribed above for giving notice, complete the
Improvements either before or after commencement of foreclosure proceedings or
before or after any other remedy of Creditor against Borrower or Guarantor, with
such changes or modifications in the Plans and Specifications which Creditor
reasonably deems necessary and expend such sums as Creditor, in its discretion,
reasonably deems necessary and proper in order to so complete the Improvements,
and Guarantor hereby waives any right to contest any such expenditures.
WAIVER OF TRIAL BY JURY. GUARANTOR AND CREDITOR HEREBY MUTUALLY
KNOWINGLY, WILLINGLY AND VOLUNTARILY WAIVE THEIR RIGHT TO TRIAL BY JURY, AND
AGREE THAT NO PARTY, NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE
OF THE PARTIES (ALL OF WHOM ARE HEREINAFTER REFERRED TO AS THE "PARTIES") SHALL
SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER
LITIGATION PROCEEDING BASED UPON OR ARISING OUT OF THIS GUARANTY OR THE LOAN
DOCUMENTS OR ANY INSTRUMENT EVIDENCING, SECURING, OR RELATING TO THE GUARANTEED
INDEBTEDNESS OR OTHER OBLIGATIONS EVIDENCED HEREBY OR ANY RELATED AGREEMENT OR
INSTRUMENT, ANY OTHER COLLATERAL FOR THE INDEBTEDNESS EVIDENCED HEREBY OR ANY
COURSE OF ACTION, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTION RELATING TO THIS GUARANTY. THE PARTIES ALSO WAIVE ANY RIGHT TO
CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES. THE WAIVER CONTAINED HEREIN
IS IRREVOCABLE, CONSTITUTES A KNOWING AND VOLUNTARY WAIVER, AND SHALL BE SUBJECT
TO NO EXCEPTIONS. CREDITOR HAS IN NO WAY AGREED WITH OR REPRESENTED TO GUARANTOR
OR TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
EXECUTED at ____________, ____________, this 13th day of June, 1996.
VACATION BREAK U.S.A., INC.
a Florida corporation
8
<PAGE>
By: /s/_________________________________
Its;_________________________________
(Corporate Seal)
9
<PAGE>
STATE OF FLORIDA )
COUNTY OF _________ )
On this _________ day of June, 1996, personally appeared
_________________________________ as ________________ of Vacation Break U.S.A.,
Inc., a Florida corporation, who is personally known to me or has produced
____________ driver's license as identification.
/s/ _______________________________
NOTARY PUBLIC
Typed/Printed Name:
Notary Public - State of Florida
My Commission Expires:
Commission Number:
10
EXHIBIT 10.78
PROMISSORY NOTE
$12,700,000.00 Fort Lauderdale, Florida
June 13, 1996
The undersigned, OCEAN RANCH VACATION GROUP, a Florida General
Partnership (hereinafter called "Maker"), whose address is 6400 N. Andrews
Avenue, Fort Lauderdale, FL 33309, promises to pay to the order of BankAtlantic,
a Federal Savings Bank (hereinafter, together with any holder hereof, called
"Payee"), at its office at 1750 E. Sunrise Boulevard, Fort Lauderdale, Florida
33304 or at such other place as Payee may from time to time designate, the
principal sum of Twelve Million Seven Hundred Thousand and no/100
($12,700,000.00) Dollars, together with interest thereon from the date hereof at
the interest rate set forth below, which sums are to be repaid as follows:
This Note shall bear interest at a floating rate of 1% above the
"Prime Rate" as hereinafter defined in effect from time to time adjusted
daily with any change in the Prime Rate. Monthly payments of interest
only shall be due and payable hereunder beginning July 1, 1996 and
continuing on the first day of each month thereafter until June 12, 2000
(the "Maturity Date") at which time the entire principal balance
hereunder together with any and all accrued and unpaid interest thereon
shall be due and payable in full.
The proceeds of this Note to the extent not advanced as of this
date shall be advanced in accordance with the terms and provisions of
the Construction Loan Agreement executed by Maker and Payee of even date
herewith as the same may be amended from time to time (the "Loan
Agreement"), the terms and provisions of which are incorporated by
reference herein.
Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed. All payments hereunder shall be made in
such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private
debts, and shall be applied first to interest and lawful charges and
expenses then accrued and then to principal.
"Prime Rate" shall mean that certain rate of interest announced from
time to time by Payee as its Prime Rate, which rate is purely discretionary and
is not necessarily the best or lowest rate charged to borrowing customers of
Payee. Payee shall not be required to notify Maker of any changes in the Prime
Rate, which shall be reflected solely by the billing thereof to Maker.
Regardless of the above, said interest rate shall never exceed the maximum rate
permitted by applicable law.
In order to compensate Payee for loss and expense occasioned by handling
the delinquent payments, which include but are not limited to the cost of
processing and collecting delinquencies, Maker shall pay to Payee, in addition
to any interest or other sums payable under this Note, a service charge equal to
five percent (5%) of the amount of any payment received by Payee ten (10)
<PAGE>
days or more after the due date thereof.
This Note may be prepaid in whole or in part at any time without premium
or penalty. Any partial prepayment will be applied in inverse order of maturity
and will not reduce or delay the payment of the next regularly scheduled
payment.
From and after the date upon which any payment of principal or interest
hereunder becomes due and payable (whether by acceleration or otherwise) if the
same is not timely paid, or upon the occurrence of any other default under this
Note or any default under any of the Loan Documents, interest shall be payable
on all sums outstanding hereunder, at the maximum rate permitted by applicable
law, and shall be due and payable ON DEMAND.
This Note is secured by certain security documents encumbering the
property described therein including, without limitation, the following:
A. Mortgage Deed and Security Agreement.
B. UCC-1 Financing Statements.
C. Assignment of Rents, Leases and Deposits.
D. Collateral Assignment of Rights and Agreements
Affecting Real Estate.
E. Construction Loan Agreement.
F. Miscellaneous Collateral Assignments.
G. Security Agreement.
H. Pledge, Assignment and Hypothecation of Note.
I. Associated affidavits, disclosures and miscellaneous
loan documentation.
This Note, all documents listed above and any other documents executed in
connection with this Note are hereinafter collectively referred to as the "Loan
Documents".
In the event of the continuation of any default in the payment of any
interest or principal under this Note for a period of ten (10) days after such
payment becomes due, or upon the occurrence of any other event of default under
the terms and provisions of this Note or any of the Loan Documents, or any other
documents delivered to Payee in connection with this loan, or any other
obligation of Maker to Payee, then Payee may declare the entire unpaid principal
amount outstanding hereunder, together with interest accrued thereon and any
other lawful charges accrued hereunder, immediately due and payable.
Maker and any endorsers, sureties, guarantors, and all others who are or
at some future date may become liable for the payments required hereunder, grant
a continuing first lien security interest in and to, and authorize Payee, in its
sole discretion at any time after an event of default hereunder, in such order
as Payee may elect, to apply to the payment of obligations due and owing
hereunder, or to the payment of any and all indebtedness, liabilities and
obligations of such parties to Payee, whether now existing or hereafter created,
any and all monies, general or specific deposits, or collateral of whatsoever
nature of any of the above noted parties, now or hereafter in the possession of
Payee. All property described in this paragraph above, along with all property
2
<PAGE>
secured by the Loan Documents, including all proceeds thereof and rights in
connection therewith, together with additions and substitutions, are hereinafter
collectively referred to as the "Collateral".
Additions to, releases, reductions or exchanges of or substitutions for
the Collateral, payments on account of this loan or increases of the same, or
other loans made partially or wholly upon the Collateral, may from time to time
be made without affecting the provisions of this Note or the liabilities of any
party hereto. If any of the Collateral is personal property, Payee shall
exercise reasonable care in the custody and preservation of the Collateral in
its possession, and shall be deemed to have exercised reasonable care if it
takes such action for that purpose as Maker shall reasonably request in writing,
but no omission to comply with any request of Maker shall of itself be deemed a
failure to exercise reasonable care. Payee shall not be bound to take any steps
necessary to preserve any rights in the Collateral against prior parties, and
Maker shall take all necessary steps for such purposes. Payee or its nominee
need not collect interest on or principal of any Collateral or give any notice
with respect thereto.
Upon the happening of any of the following events, each of which shall
constitute a default hereunder, all sums due hereunder shall thereupon or
thereafter, at Payee's option, without notice or demand, become immediately due
and payable: (a) failure of any Obligor (which term shall mean and include each
Maker, Endorser, Surety, Guarantor or other party liable for payment of or
pledging collateral or security under this Note) to pay any sum due hereunder
or due by any Obligor to Payee under any other promissory note or under any
security instrument or written obligation of any kind now existing or hereafter
created; (b) occurrence of default under any of the Loan Documents or any other
loan agreement or security instrument now or hereafter in effect which by its
terms covers this Note or the indebtedness evidenced hereby; (c) death of any
Obligor; (d) filing of any petition under the Bankruptcy Code or any similar
federal or state statute by or against any Obligor or the insolvency of any
Obligor; (e) making of a general assignment by any Obligor for the benefit of
creditors, appointment of or taking possession by a receiver, trustee or
custodian or similar official for any Obligor or for any assets of any such
Obligor or institution by or against any Obligor of any kind of insolvency
proceedings or any proceeding for dissolution or liquidation of any Obligor; (f)
entry of a final judgment against any Obligor in an amount in excess of
$50,000.00; however, as to Maker, any final judgment whatsoever shall be
satisfied or transferred to bond within thirty (30) days of the date thereof;
(g) material falsity in any certificate, statement, representation, warranty or
audit at any time furnished to Payee by or on behalf of any Obligor pursuant to
or in connection with this Note, the Loan Documents or any loan agreement or
security agreements now or hereafter in effect, which by its terms covers this
Note for the indebtedness evidenced hereby or otherwise including any omission
to disclose any substantial contingent or liquidated liabilities or any material
adverse change in any facts disclosed by any certificate, statement,
representation, warranty or audit furnished to Payee; (h) issuance of any writ
of attachment or writ of garnishment or filing of any lien against any
Collateral or the property of any Obligor; (i) taking of possession of any
material Collateral or of any substantial part of the property of any Obligor at
the instance of any governmental authority; (j) dissolution, merger,
consolidation, or reorganization of any Obligor; (k) assignment or sale by any
Obligor of any equity in any collateral securing payment of this Note without
the prior written consent of Payee except, however, any financing regarding
purchase money notes received by Maker in connection with the
3
<PAGE>
sale of time share units as more specifically provided in the Loan Agreement;
(l) cancellation of any guaranty with respect hereto without the prior written
consent of Payee hereof; (m) the determination by Payee that a material adverse
change has occurred in the financial condition of any Obligor from the condition
set forth in the most recent financial statements of such Obligor heretofore
furnished to Payee or from the condition of such Obligor as heretofore most
recently disclosed to Payee in any manner; or (n) occurrence of any default
under any of the Loan Documents or obligation of Maker or of any Obligor to
Payee.
Payee shall have all of the rights and remedies of a creditor, mortgagee
and secured party under all applicable law. Without limiting the generality of
the foregoing, upon the occurrence of any default hereunder, Payee may, at its
option, and without notice or demand (i) declare the entire unpaid principal and
accrued interest accelerated and due and payable at once, together with any and
all other liabilities of Maker or any of such liabilities selected by Payee; and
(ii) set-off against this Note all monies owed by Payee in any capacity to
Maker, whether or not due, and also set-off against all other liabilities of
Maker to Payee all monies owed by Payee in any capacity to Maker, and Payee
shall be deemed to have exercised such right of set-off, and to have made a
charge against any such money immediately upon the occurrence of such default,
although made or entered on the books subsequent thereto. To the extent that any
of the Collateral is personal property and Payee elects to proceed with respect
to it in accordance with the Uniform Commercial Code, then, unless that
collateral is perishable or threatens to decline speedily in value, or is of a
type customarily sold on a recognized market, Payee will give Maker reasonable
notice of the time and place of any public or private sale thereof. The
requirement of reasonable notice shall be met if such notice is, at the option
of Payee, hand delivered, sent via expedited courier, or mailed, postage
pre-paid to Maker, at the address given to Payee by Maker, or at any other
address shown on the records of Payee at least five (5) days before the time of
sale. Upon disposition of any Collateral after the occurrence of any default
hereunder, Maker shall be and shall remain liable for any deficiency; and Payee
shall account to Maker for any surplus, but Payee shall have the right to apply
all or part of such surplus (or to hold the same as reserve) against any and all
other liabilities of Maker to Payee.
Payee may, at any time, whether or not this Note is due: (i) pledge or
transfer this Note and its interest in the Collateral, and the pledgee or the
transferee shall, for all purposes, stand in the place of Payee hereunder and
have all the rights of Payee hereunder; (ii) transfer the whole or any part of
the Collateral into the name of itself or its nominee; (iii) notify Maker to
make payment to Payee of any amounts due or to become due thereon; (iv) demand,
sue for, collect, or make any compromise or settlement it deems desirable with
reference to the Collateral; (v) take possession or control of any proceeds of
the Collateral; and (vi) exercise all other rights necessary or required, in
Payee's discretion, in order to protect its interests hereunder.
In no event shall Payee be entitled to unearned or unaccrued interest or
other charges or rebates, except as may be authorized by law, and should any
interest or other charges paid by Maker or other parties liable for the payment
of this Note result in the computation or earning of interest in excess of the
maximum rate of interest that is legally permitted under applicable law, then
any and all such excess shall be and the same is hereby waived by Payee, and any
and all such excess shall be automatically credited against and reduce the
balance due under this indebtedness, and the
4
<PAGE>
portion of said excess which exceeds the balance due under this indebtedness,
shall be paid by Payee to Maker and parties liable for the payment of this Note.
Payee may, in determining the maximum rate permitted under applicable law in
effect from time to time, take advantage of (i) the maximum rate of interest
permitted under Florida law or federal law, whichever is higher, including any
laws regarding parity among lenders; and (ii) any other law, rule or regulation
in effect from time to time available to Payee, which exempts Payee from any
limit upon the rate of interest it may charge, or grants to Payee the right to
charge a higher rate of interest than that permitted by Chapter 687, Florida
Statutes.
The provisions of this Note and the Loan Documents shall be construed
according to the internal laws (and not the law of conflicts) of the State of
Florida; except as set forth above, if Federal law would allow the payment of
interest hereunder at a higher maximum rate than would be applicable under
Florida law, in which case such Federal law shall apply to the determination of
the highest applicable lawful rate of interest hereunder.
No delay or omission on the part of Payee in exercising any right
hereunder shall operate as a waiver of such right or of any other rights under
this Note. Presentment, demand, protest, notice of dishonor and all other
notices are hereby waived by Maker. Maker promises and agrees to pay all costs
of collection and attorney's fees, which shall include reasonable attorneys'
fees in connection with any suit, out of court, in trial, on appeal, in
bankruptcy proceedings or otherwise, incurred or paid by Payee in enforcing this
Note or preserving any right or interest of Payee hereunder. Any notice to Maker
shall be sufficiently served for all purposes if placed in the mail, postage
prepaid, addressed to, or left upon the premises at the address of Maker as
provided to Payee.
This Note is not assumable without Payee's prior written consent, which
consent may be granted by Payee or denied by Payee, in Payee's sole and absolute
discretion.
Maker agrees that Broward County, Florida shall be the proper venue for
any and all legal proceedings arising out of this Note or any of the Loan
Documents.
WAIVER OF TRIAL BY JURY. MAKER AND PAYEE HEREBY MUTUALLY, KNOWINGLY,
WILLINGLY AND VOLUNTARILY WAIVE THEIR RIGHT TO TRIAL BY JURY, AND, NO PARTY, NOR
ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF THE PARTIES (ALL OF
WHOM ARE HEREINAFTER REFERRED TO AS THE "PARTIES") SHALL SEEK A JURY TRIAL IN
ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEEDING BASED
UPON OR ARISING OUT OF THIS NOTE OR THE LOAN DOCUMENTS, OR ANY INSTRUMENT
EVIDENCING, SECURING, OR RELATING TO THE INDEBTEDNESS AND OTHER OBLIGATIONS
EVIDENCED HEREBY OR ANY RELATED AGREEMENT OR INSTRUMENT, ANY OTHER COLLATERAL
FOR THE INDEBTEDNESS EVIDENCED HEREBY OR ANY COURSE OF ACTION, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS RELATING TO THE LOAN
OR TO THIS NOTE. THE PARTIES ALSO WAIVE ANY RIGHT TO CONSOLIDATE ANY ACTION IN
WHICH A JURY TRIAL HAS BEEN
5
<PAGE>
WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. THE
PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES. THE
WAIVER CONTAINED HEREIN IS IRREVOCABLE, CONSTITUTES A KNOWING AND VOLUNTARY
WAIVER, AND SHALL BE SUBJECT TO NO EXCEPTIONS. PAYEE HAS IN NO WAY AGREED WITH
OR REPRESENTED TO MAKER OR ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH
WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
OCEAN RANCH VACATION GROUP,
a Florida General Partnership
By: Ocean Ranch Development, Inc., a
Florida corporation, General Partner
By: /s/________________________________
Its:________________________________
(Corporate Seal)
By: Vacation Break at Ocean Ranch, Inc.,
a Florida corporation, General Partner
By: /s/ ________________________________
Its:________________________________
(Corporate Seal)
STATE OF FLORIDA )
COUNTY OF _______ )
The foregoing instrument was acknowledged before me this _____ day of
June, 1996 by _________________________________, as __________, on behalf of
Ocean Ranch Development, Inc., a Florida corporation, General Partner of
Ocean Ranch Vacation Group,
a Florida General Partnership, who is personally known to me or who has produced
a __________ driver's license as identification.
--------------------------------
Typed/Printed Name:
6
<PAGE>
Notary Public - State of Florida
My Commission Expires:
Commission Number:
STATE OF FLORIDA )
COUNTY OF _______ )
The foregoing instrument was acknowledged before me this _____ day of
June, 1996 by _________________________________, as __________, on behalf of
Vacation Break at Ocean Ranch, Inc., a Florida corporation, General Partner of
Ocean Ranch Vacation Group,
a Florida General Partnership, who is personally known to me or who has produced
a __________ driver's license as identification.
/s/ ___________________________
Typed/Printed Name:
Notary Public - State of Florida
My Commission Expires:
Commission Number:
7
EXHIBIT 10.79
AGREEMENT FOR THE PURCHASE AND SALE OF
REAL PROPERTY
This Agreement is made and entered into this 2nd day of May, 1996, by
and between LABREE, INC., a Florida corporation (hereinafter referred to as
"Seller") and VACATION BREAK USA, INC., a Florida corporation (hereinafter
referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller desires to sell and Purchaser desires to purchase all or
that hereinafter specified portion of that certain improved real property known
as Royal Mansion, a Condominium, as described on Exhibit A-1 of the Declaration
of Condominium of Royal Mansion, a Condominium, which Declaration is recorded in
Official Record Book 2899, Page 799, ET SEQ., of the Public Records of Brevard
County, Florida and as more particularly hereinafter described, upon the terms
and conditions hereinafter set forth;
NOW THEREFORE, for and in consideration of the covenants and agreements
hereinafter set forth, the sum of Ten Dollars ($10.00) and other good and
valuable consideration in hand paid by Purchaser to Seller, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser hereby
covenant and agree as follows:
1. DEFINITIONS. In addition to the other terms defined in this
Agreement, the following terms when used in this Agreement shall have the
meanings set forth below.
(a) "AGREEMENT" means this Agreement for the Purchase and Sale
of Real Property entered into between Seller and Purchaser as of the date first
set forth above.
(b) "CLOSING" means the act of consummating on the Closing
Date the purchase and sale of the Property as contemplated by this Agreement.
(c) "CLOSING DATE" means the date whereon the Closing occurs
or is scheduled to occur pursuant to the terms of this Agreement.
(d) "CONDOMINIUM" means Royal Mansion, a Condominium.
(e) "CONDOMINIUM UNIT OR UNIT" means each of the separate and
identified units and, as an appurtenance thereto, an undivided share of all
common elements of the Condominium, which include all space within the
boundaries of Units as provided for in the Declaration.
(f) "DECLARATION OR DECLARATION OF CONDOMINIUM" means the
Declaration of Condominium of Royal Mansion, a Condominium, which Declaration
is recorded in Official
<PAGE>
Record Book 2899, Page 799, ET SEQ. of the Public Records of Brevard County,
Florida, as amended from time to time.
(g) "DEVELOPER'S RIGHTS" means all of the rights of the
Developer as provided for in the Declaration.
(h) "GOVERNING DOCUMENTS" means all instruments and documents
relating to the establishment, formation and operation of the Condominium,
including but not limited to the Declaration in any Condominium Public Offering
Statement related thereto.
(i) "INTANGIBLES" means, to the extent assignable, all of the
Seller's right, title and interest, subject to the rights of the Royal Mansion
Condominium Association, Inc., and owners of Units in the Condominium, in and to
the trade name "Royal Mansion Condominium," and any service mark or trade style
associated therewith.
(j) "MANAGEMENT CONTRACT" means and refers to that certain
agreement between Labree Management, Inc. and Royal Mansion Condominium
Association, Inc., which provides for the management of the Condominium.
(k) "MANAGEMENT RIGHTS" shall include any and all rights of
the Seller and/or Labree Management, Inc. to occupy, use or enjoy any space
within the Condominium or otherwise exercise any rights or privileges in respect
to the Condominium and its management, operation and administration.
(l) "PERMITTED TITLE EXCEPTIONS" means certain matters
affecting or encumbering Seller's title to the Property, as more fully set forth
on Exhibit "B", attached hereto and made a part hereof by this reference; which
Purchaser has agreed to accept at Closing.
(m) "PERSONALTY" means all of Seller's right, title and
interest in and to all furniture, fixtures, equipment, appliances, books and
records and other tangible personal property now located at the Condominium. In
addition, Personalty, as used herein, shall mean and include any and all
furniture, fixtures, equipment, appliances, books and records and other tangible
personal property owned, controlled, held or used by Labree Management, Inc. for
management, operation and administration of the Condominium.
(n) "PROPERTY" means all of Seller's right, title and interest
in and to, collectively, the Condominium Units, Developer Rights, Management
Rights, Personalty and the Intangibles.
(o) "PURCHASE PRICE" means the Purchase Price to be paid by
Purchaser for the purchase of the Property, as more fully specified in section
6.
- 2 -
<PAGE>
(p) "RENTAL AGREEMENTS" means the existing Rental Agreements
for occupancy identified on Exhibit "C", attached hereto and made a part hereof
by this reference.
(q) "SERVICE CONTRACTS" means those certain agreements which
provide for the services of the Condominium.
(r) "THIRD PARTY OWNER" means any person or entity other than
Seller which owns one or more Units.
2. SALE OF PROPERTY. Seller hereby agrees to sell to Purchaser and
Purchaser hereby agrees to purchase from Seller, upon the terms and conditions
hereinafter set forth, the Property as defined in Section 1, which term
includes, without limitation, all easements, appurtenances, hereditaments and
rights appurtenant thereto or otherwise arising in connection therewith.
3. CONTINGENCIES TO PURCHASE OF PROPERTY. Purchaser shall not be
required to purchase the Property unless all of the following conditions shall
have been fulfilled to Purchaser's satisfaction, in its sole discretion, by the
time provided hereinbelow or if no time is so provided, by the Closing Date:
(a) Adoption of appropriate amendments to the Declaration, the
Articles of Incorporation and Bylaws of Royal Mansion Condominium Association,
Inc. (the "Association") and related Governing Documents, which amendments
specifically shall permit timeshare estates to be created in any Unit of the
Condominium pursuant to Florida law, including but not limited to Section
718.110(8), Florida Statutes, which provides that no amendment to the
Declaration may permit timeshare estates to be created in any Unit of the
Condominium unless the record owner of each Unit of the Condominium and the
record owners of liens on each Unit of the Condominium join in the execution of
the amendment. Seller shall warrant to Purchaser that all of the aforesaid
amendments have been validly and properly adopted, and shall provide, at
Seller's expense, to Purchaser, an opinion of Seller's Florida counsel that such
amendments have been properly adopted and such adoption was valid, and is
enforceable and in compliance with Chapter 718, Florida Statutes.
(b) Review and acceptance by Purchaser during the Due Diligence
period defined in Section 4 hereinbelow, of the recorded Declaration, all
amendments thereto, all Governing Documents, and all floor plans and all surveys
pertaining to the Property, copies of which shall have been delivered to
Purchaser by Seller on or before fifteen (15) days after execution of this
Agreement.
(c) There shall have been delivered to Purchaser by Seller any
and all certificates, licenses or permits as may be necessary to permit the
occupancy and use of the Property for seven (7) night occupancy, and such other
evidence that Purchaser may reasonably
- 3 -
<PAGE>
require that the Property fully complies with all applicable zoning, building,
fire, health, pollution, subdivision, environmental protection, hazardous waste,
waste disposal and other governmental laws, ordinances, codes and regulations,
and that the improvements and Property comply with any and all private
restrictive covenants as may be applicable to the Property, including the
Permitted Title Exceptions; provided, however, the parties acknowledge and agree
(a) there is currently pending an administrative proceeding by the State of
Florida Case No. 04-94-007, in which it is contended, INTER ALIA, that the
Condominium lacks a required sprinkler system, which contentions are disputed by
Seller, and (b) a local city or municipal administrative proceeding, No.
_________________, contending, INTER ALIA, that Seller may not rent Units for
less than a seven (7) night stay, was recently resolved adversely to Seller, and
(c) the existence or pendency of the aforesaid proceedings shall not operate to
relieve Purchaser of any obligation or duty under this Agreement.
(d) No part of the Property shall have been damaged and not
repaired to Purchaser's satisfaction or taken in condemnation or other like
proceedings, nor shall any proceeding be pending.
(e) Seller shall provide Purchaser with a certificate, dated on
the Closing Date, confirming that the representations of Seller are true,
correct and complete as of the Closing Date; provided, however, that in the
event such certificate is not provided, nevertheless, such representations shall
survive the Closing and be deemed true, correct and accurate as of the Closing
Date.
(f) Seller shall have delivered to Purchaser, on or before
fifteen (15) days after execution of this Agreement, a copy of each Service
Contract affecting the Property, and a statement certified by Seller that Seller
has furnished Purchaser a true and complete copy of all Service Contracts
affecting the Property. With regard to such Service Contracts, if any, Purchaser
shall have the option, on or before the Closing Date, to require Seller to have
such Contracts cancelled and terminated on or prior to the Closing Date; Service
Contracts entered into subsequent to the date of this Agreement, as well as any
amendments to any Contracts, shall be subject to the prior written approval of
Purchaser; and Seller will assign all of said Service Contracts approved by
Purchaser to Purchaser at the Closing, provided Purchaser receives reasonable
evidence that such agreements are in good standing and that Seller is not in
default thereunder.
(g) Seller shall have delivered to Purchaser, on or before
fifteen (15) days after execution of this Agreement, a copy of the Management
Agreement affecting the Property, which agreement shall be terminated as of the
Closing Date. Purchaser shall not be required to assume any management
agreements relative to the Property with any third party. Consent to such
termination by the Association shall be obtained by Seller.
- 4 -
<PAGE>
(h) Seller shall have delivered to Purchaser, on or before
fifteen (15) days after execution of this Agreement, a list of any and all
Management Rights, together with a list of all Personalty, which Management
Rights and Personalty shall be transferred unencumbered and free and clear of
any and all indebtedness. Seller shall cause all Seller-appointed or Seller-
controlled officers and directors of the Association to resign prior to Closing.
(i) All aspects of the transactions contemplated by this
Agreement shall not violate any restrictive covenants and the Permitted Title
Exceptions.
(j) All documents required in connection with the transactions
hereby contemplated are subject to the reasonable approval of Purchaser and
Seller as to form, substance and legal sufficiency. Copies of all such documents
prepared by one party shall be delivered to the other party and its counsel at
least ten (10) days prior to Closing.
(k) Seller shall have acquired, or shall have obtained
commitments to acquire, on or before the Closing Date, the Units as described on
Exhibit "A", in the percentage and mix as contained therein.
(l) The condition of all Units and furnishings being purchased
from Seller by Purchaser shall be in the same condition on the Closing Date as
upon the execution of this Agreement, normal wear and tear excepted.
(m) Determination by Purchaser prior to the expiration of the Due
Diligence period, at Purchaser's sole expense, that the Property may, under
applicable law, including but not limited to zoning and building laws,
ordinances and regulations, be used, marketed and sold for condominium timeshare
purposes. In the event Purchaser does not provide written notice to Seller prior
to expiration of the Due Diligence period of Purchaser's election to terminate
this Agreement under this paragraph 3(m), then the contingencies set forth in
this paragraph 3(m) shall be deemed to have been fulfilled to Purchaser's
satisfaction.
(n) Seller shall have delivered to Purchaser, on or before
fifteen (15) days after execution of this Agreement, copies of all minutes of
the Condominium Association since its inception, which shall include by way of
example and not limitation, a copy of all budgets for the Condominium
Association, inclusive of budgets for 1995 and 1996 and copies of all tax
returns and financial statements of the Condominium through the year 1994, and
for the year 1995, when available.
4. DUE DILIGENCE. Purchaser and Seller agree that Purchaser shall be
provided forty-five (45) days for a Due Diligence period, which forty-five (45)
days shall be from the date of execution of this Agreement by Purchaser and
Seller. During such Due Diligence period, Purchaser shall be entitled to inspect
the Property and be given an adequate opportunity to make such legal, factual
and other inquiries and investigations as Purchaser, in its sole discretion,
deems
- 5 -
<PAGE>
necessary, desirable or appropriate with respect to the Property. Such inquiries
and investigations of Purchaser shall be deemed to include, but not be limited
to, any leases and contracts pertaining to the Property, Management Rights, the
physical components of all portions of the Property, the condition of the
Property, the existence and condition of all personal property, the existence of
any wood-destroying organisms on the Property, such state of facts as an
accurate survey and inspection would show, zoning ordinances, resolutions and
regulations of the city, county and state where the Property is located and the
value and marketability of the Property. Should Purchaser discover a problem,
Purchaser shall advise Seller in writing, within seven (7) days from expiration
of the Due Diligence period, wherein Seller shall have a thirty (30) day
extension of this Agreement to remedy the problems to Purchaser's satisfaction.
Seller shall cooperate fully with Purchaser in the course of due diligence.
5. EARNEST MONEY DEPOSIT. Prior to the expiration of the forty five (45)
day Due Diligence period, Purchaser shall notify Seller that Purchaser is either
satisfied with the inspections and studies of the Property performed by
Purchaser pursuant to section 4 above, or that Purchaser is unsatisfied with
said inspections and studies. If Purchaser is satisfied, then Purchaser shall,
within seven (7) working days after the expiration of the forty-five (45) day
Due Diligence period, place Seven Hundred Fifty Thousand and No/100 Dollars
($750,000.00) into the escrow account of Weinstock & Scavo, P.C., Atlanta,
Georgia, pending Closing. If Purchaser is dissatisfied with the inspections
performed by Purchaser, at Purchaser's option, it may elect to withdraw from
this Agreement without depositing Seven Hundred Fifty Thousand and No/100
Dollars ($750,000.00) in the escrow account and without any other obligation to
Seller. The foregoing sum may sometimes hereinafter be referred to as "Earnest
Money." The parties hereto agree that all Earnest Money shall be held and
disbursed in accordance with the terms and conditions of this Agreement. The
Earnest Money shall be held in escrow, in an interest-bearing account, to the
benefit of Purchaser, such that the Earnest Money shall be credited to the
benefit of Purchaser at the time of Closing.
6. PURCHASE PRICE AND PAYMENT. The total Purchase Price payable
hereunder shall be apportioned and allocated among the Property and assets
being sold by Seller to Purchaser hereunder as follows:
PATIO ATRIUM PENTHOUSE
----- ------ ---------
Real Property (Units) $ 84,410.00 $ 71,610.00 $ 126,710.00
Furniture and Fixtures
("Personalty") $ 7,590.00 $ 7,390.00 $ 9,290.00
Intangibles $ 0.00 $ 0.00 $ 0.00
Developer Rights $ 0.00 $ 0.00 $ 0.00
Management Rights $ 0.00 $ 0.00 $ 0.00
TOTAL $ 92,000.00 $ 79,000.00 $ 136,000.00
- 6 -
<PAGE>
The parties hereto make this allocation with the knowledge and
understanding that it will be used by all parties for income tax purposes. The
Total amount set forth above is provided on a per-Condominium Unit basis as set
forth on Exhibit "A", although such amount is inclusive of each of the itemized
amounts hereinabove set forth, and such total amount on a per-Condominium Unit
basis is to be allocated as set forth hereinabove.
The Purchase Price shall be subject to the prorations and adjustments as
hereinafter provided, and shall be paid to Seller at the Closing as follows:
(1) Purchaser shall receive a credit for the amount of the
Earnest Money plus interest accrued thereon; and
(2) The balance of the Purchase Price shall be paid on the
Closing Date, in cash, wire transfer of funds or by federal reserve check made
payable to the order of Seller.
Unless Seller shall deliver to Purchaser at Closing, an affidavit
qualifying under Section 1445 of the United States Internal Revenue Code that
withholding is not required, in a form provided by Seller and satisfactory to
Purchaser, Purchaser shall, at the Closing, withhold from the cash payable at
Closing, the amount required to be withheld under Section 1444 of the United
States Internal Revenue Code.
7. SURVEY. On or before the expiration of the forty-five (45) day Due
Diligence period, Seller shall deliver to Purchaser all plans, surveys, and
surveyor certificates in Seller's possession or as recorded relating to the
Condominium or the Units to be acquired by Seller and purchased by Purchaser in
accordance with Exhibit "A", which plats and plans shall be legible. Should
additional surveys of any portion of the Property be required by Purchaser's
title insurer or mortgagee, if any, Seller shall obtain such surveys at Seller's
expense, which expense shall not exceed Ten Thousand and No/100 Dollars
($10,000.00). All surveys and/or surveyor certificates shall have been prepared
to the satisfaction of Purchaser's title insurer and mortgagee, if any, and in
accordance with the Florida Condominium Act, F.S., Chapter 718, and the Florida
Vacation and Timesharing Act, F.S., Chapter 721. Seller shall provide to
Purchaser, at Seller's expense, an opinion of Seller's Florida counsel that the
Condominium validly exists.
8. TERMITE INSPECTION AND BOND. At least ten (10) but not more than
thirty (30) days prior to Closing, Seller shall cause to be made, at Seller's
expense, an inspection of the improvements on the Property by a Florida
Certified Pest Control Operator to determine if there is any active termite
infestation or visible existing damage from termite infestation. If visible
evidence of active or previous infestation is indicated, Seller agrees, prior to
Closing to (a) treat said infestation and correct structural damages resulting
from said infestation, and provide documentation evidencing correction of same
and/or (b) provide a letter on a standard form in accordance with the
regulations of the Florida Pest Control Act, stating that the improvements have
been inspected and found to be free from visible evidence of active infestation
caused by termites or
- 7 -
<PAGE>
other wood-destroying organisms. Additionally, Seller, at Seller's expense,
shall provide Purchaser with a termite bond covering all improvements on the
Property, which bond shall be both a retreatment and damage bond, and which
shall be in full force and effect for one (1) year following the Closing Date;
provided, however, such termite bond shall be renewable for successive yearly
periods at Purchaser's option and at Purchaser's sole expense.
- 8 -
<PAGE>
9. OBJECTIONS TO TITLE. Purchaser shall have forty-five (45) days
after the date hereof to object to any defect in Seller's title to said
Property, other than the Permitted Title Exceptions applicable to the Property,
which Permitted Title Exceptions are listed on Exhibit "B", attached hereto and
made a part hereof by this reference. Seller shall, at or prior to Closing, pay
all taxes and assessments which constitute a lien upon the Property (other than
those not then due and payable) and pay all indebtedness secured by the
Property. Seller shall cure all other valid title objections at or prior to the
Closing. In the event that such title exceptions cannot be cured or cannot be
cured within the permitted time period, then, at the option of Purchaser, either
(a) Seller shall pay the applicable Earnest Money and all interest accrued
thereon to Purchaser and this Agreement shall immediately terminate as to the
Property, and neither party shall have any further rights or obligations
hereunder with respect to such Property, or (b) the purchase and sale of the
Property shall be closed and such title exception as cannot be cured within the
permitted time period shall be deemed Permitted Title Exceptions. Purchaser
shall have thirty (30) days from the date of notice by Seller that Seller is
unable to cure any such other title exceptions in which to elect the option set
forth above in this section 9, and Purchaser may extend the time for the Closing
to the extent necessary to provide said thirty (30) day period. As to title
matters arising after the date hereof, Purchaser shall be entitled to object
thereto at any time prior to the Closing, and Seller shall have a reasonable
time, not to exceed thirty (30) days, to cure the same upon the conditions set
forth above, and the Closing Date shall be extended to the extent necessary to
provide said thirty (30) day period.
10. DELIVERY TO PURCHASER. Seller has, or within fifteen (15) days
following execution of this Agreement shall, furnish to Purchaser true and
complete copies of:
(a) The most recent title insurance policy or policies issued
with respect to the Property or any portion thereof, together with all
exceptions to title noted thereon;
(b) All tax bills, including real estate intangible tax bills
pertaining to the calendar year 1995 as affecting the Property, as well as
evidence of payment of such taxes, together with any and all bills or invoices
related to the Property and any special assessments, governmental assessments,
private assessments or costs and expenses otherwise to be assessed against the
Property, together with evidence of payment of the foregoing through the date of
Closing; and
(c) All hazard insurance policies issued with respect to the
Property;
(d) Any other material reasonably requested by Purchaser with
respect to the Property or any portion thereof to the extent the same are in
possession of Seller or obtainable by Seller in the exercise of reasonable
efforts.
- 9 -
<PAGE>
11. REPRESENTATION AND WARRANTIES OF SELLER AND OTHERS. Seller and
the others referred to hereinbelow, represent and warrant to Purchaser, as of
the date hereof, which representations and warranties shall be deemed continuing
and true and accurate as of the Closing Date, that:
(a) Seller has the right, power and authority to enter into
this Agreement for Seller to sell and convey the Property in accordance with the
terms hereof.
(b) Seller has granted no option to any other person or entity
to purchase the Property; provided, however, that the parties hereto acknowledge
that Seller, at the time of execution of this Agreement, does not have titled
ownership to certain portions of the Property, but is acquiring said titled
ownership from several third parties, or shall obtain commitments from several
third parties to sell said portions of the Property on the terms and conditions
set forth herein.
(c) Seller or said third parties shall acquire the Property
prior to the Closing and upon such acquisition, Seller or said third parties
shall obtain such Property free and clear of all encumbrances with the title
thereto, and being good, marketable and insurable, consistent with the terms of
this Agreement, so as to allow Seller or said third parties to convey title to
Purchaser free, clear and unencumbered, subject to only Permitted Title
Exceptions, in accordance with the terms of this Agreement.
(d) Except as otherwise disclosed in Paragraph 3(c), the
Property complies with and conforms to all laws, ordinances, rules, regulations
and requirements of all governmental authorities or agencies having jurisdiction
over the Property, and any requirement contained in any hazard insurance policy
covering the Property or board of fire underwriters or other body exercising
similar functions which are applicable to the Property or to any part thereof,
or which are applicable to use or manner of use, occupancy, possession or
operation of the Property.
(e) All insurance policies existing in respect to the Property
are in compliance with the Florida Condominium Act and the Declaration.
(f) Except as otherwise disclosed in Paragraph 3(c), neither
the Property nor any portion thereof when used as a condominium, violates any
zoning, building, fire, health, pollution, subdivision, environmental
protection, hazardous waste or waste disposal ordinance, code, law or regulation
or any requirement contained in any hazard insurance policy covering the
Property to be conveyed to Purchaser pursuant to this Agreement, and there are
no suits, claims or judgments relating to the Property or threatened in respect
to any of the foregoing.
(g) Except as otherwise disclosed in Paragraph 3(c), there is
no suit, proceeding or judgment existing, presently pending or threatened
affecting the Property or any part thereof.
- 10 -
<PAGE>
(h) There is unobstructed and complete rights of ingress and
egress to and from the Property and adjoining public ways, and such rights of
ingress and egress are not restricted or limited in any manner.
(i) The use of the Property is governed by the zoning ordinance
of Brevard County, Florida, and that such zoning ordinance permits the use of
the Property for condominium purposes. That there are no deed restrictions or
encumbrances prohibiting the use of a condominium regime. Except for the
Permitted Title Exceptions, there is no agreement currently in effect with
Brevard County, Florida, or any other entity, public or private, which will be
binding upon Purchaser and which will prevent use of the Property as a
condominium. Seller shall not enter into any such agreement without Purchaser's
written consent.
(j) There are no pending changes in the present status of
zoning of the Property known to Seller;
(k) Seller is not involved in any bankruptcy, reorganization
or insolvency proceeding.
(l) All taxes, assessments, water charges and sewer charges
affecting the Property due and payable at the time of Closing, shall have been
paid. All special assessments which are or which will become a lien at the time
of Closing of the Property or any part of either thereof, shall also have been
paid and discharged, whether or not payable in installments.
(m) All of the items of Personalty are or shall be at the time of
Closing, free and clear of any security interests, conditional sales agreement
or title retention agreement.
(n) All Rental Agreements in existence on the date hereof are
enforceable as written.
(o) Publicly owned and operated utility systems for the
transmission and conveyance of electrical energy, natural gas, telephone, water
and sanitary and storm sewers adequate to serve the Property are available
thereto.
(p) All work done or material furnished for the improvement of
the Property has been completed and paid for in full, or shall be completed and
paid for in full at the time of the Closing.
(q) That the Seller has complied with all laws, ordinances,
regulations or requirements, related to the establishment of the condominium
regime.
- 11 -
<PAGE>
(r) Except as otherwise pre-approved by Purchaser, in writing, as
of the Closing, there shall be no service, supply, utility, management or other
related agreement which in any way affects or otherwise relates to the Property
(hereinafter referred to collectively as the "Service Contract") in existence
and applicable to the Property.
(s) The use of the Property as a condominium complies with and is
not in violation of any restrictive covenants, declarations of covenants or any
Permitted Title Exceptions, as may otherwise be applicable to the Property.
(t) Seller does not owe any owner association, including but not
limited to the Association, for any association assessments, is not obligated
for any deficit or guarantee, and has adequately funded all reserves required by
F.S. Chapter 718.
(u) All Management Rights and Developer Rights are held,
possessed and controlled by Seller and that the same are freely assignable to
Purchaser.
(v) The Seller and the Association represent to the Purchaser
that all assessments, fees and other amounts as may be claimed due by the
Association in respect to the Units and the Property have been fully paid
through and including the Closing Date and that no amounts for such assessments
are due, which assessments include but are not limited to any monthly fees,
deficits or other amounts due the Association in respect to the Units and the
Property, and the same shall be confirmed by the Association. The Seller hereby
agrees to indemnify and hold harmless Purchaser, its mortgagees, successors and
assigns, from and against any liability, loss, damage, cost or expense,
including attorneys fees, by reason of any unpaid assessments, fees or other
amounts claimed due by the Association in respect to the Units and the Property.
(w) That the Units in the Property are in compliance with the
Declaration and all Governing Documents and all rules and regulations of the
Association and the same shall be confirmed by the Condominium Association. The
Seller hereby agrees to indemnify and hold harmless Purchaser, its mortgagees,
successors and assigns, from and against any liability, loss, damage, cost or
expense, including attorneys fees, by reason of any violation, prior to the
Closing Date, of the Declaration and all Governing Documents and all rules and
regulations of the Association.
(x) That the Condominium Association is not a conversion
condominium pursuant to the terms of the Florida Condominium Act. Seller agrees
to indemnify and hold harmless Purchaser, its mortgagees, successors and
assigns, from and against any liability, loss, damage, cost or expense,
including attorneys fees, resulting from non-compliance with the Florida
Condominium Act should the Property be deemed by the Division of Florida Land
Sales, Condominiums and Mobile Homes, or any other governing body, to be a
conversion condominium pursuant to Section 718,604, ET SEQ., Florida Statutes.
- 12 -
<PAGE>
12. CONVEYANCE OF PROPERTY. At the Closing, Seller will convey, or cause
to be conveyed, to Purchaser, by warranty deed, good, marketable and insurable
fee simple title to the Property, free and clear of all liens, encumbrances and
restrictions (including condemnation proceedings, of any kind and nature), other
than the Permitted Title Exceptions applicable to the Property and such other
matters as may be approved by Purchaser. At the Closing, Seller will convey to
Purchaser, with warranty of title, all Personal Property, including all
fixtures, equipment and other personal property and convey by assignment, with
warranty of title, all Intangible and Developer Rights. To the extent
assignable, at the Closing, Seller will deliver to Purchaser all warranties in
respect to construction on the Property, including, without limitation, any
warranty from the general contractor that may still remain in effect, and all
warranties in respect to the fixtures, equipment and Personal Property. At the
Closing, Seller shall also deliver an affidavit of ownership in the form
generally used in the State of Florida, which affidavit shall provide, among
other things, documentation as may be required by Purchaser's title insurer to
insure mechanics and materials lien free coverage and Purchaser's title
insurance policy in a first priority interest in a lender of Purchaser's
choosing. To the extent assignable, at the Closing, Seller shall transfer and
assign to Purchaser, all rights of Seller under Service Contracts approved by
Purchaser and applicable to the Property. At the Closing, Seller shall also
grant and convey to Purchaser the exclusive right to the name of Royal Mansion,
a Condominium, and shall further assign all Management Rights to Purchaser. To
the extent that Labree Management, Inc. is necessary to perfect a conveyance of
any and all of the Property, including Management Rights, then Seller agrees
that it will have Labree Management, Inc. execute such conveyancing instruments
as are necessary to vest in Purchaser the Property.
13. CLOSING COSTS. Purchaser shall pay the legal fees of its own counsel
and all stamp taxes and recording fees resulting from any purchase financing
arranged by Purchaser. Seller shall pay all other closing costs, including
owners title insurance premiums (which policy shall be issued by American
Pioneer Title Insurance Company through its agent, Resort Title, Inc., and which
premium shall not exceed $34,325.00), mortgagee's title insurance premiums, if
any, state and local transfer tax, any other taxes or fees assessed in
connection with the Closing, the recording fees and related taxes for the
warranty deed, if any, the legal fees of its own counsel, and any and all "title
clearance" documentation.
14. PRORATIONS. All matters involving prorations or adjustments to
be made in connection with the Closing and not specifically provided for in some
other section of this Agreement shall be pro-rated as of midnight of the day
before Closing as follows:
(a) TAXES. At the Closing, county and state real and personal
property ad valorem taxes with respect to the Property shall be pro-rated based
upon the amount of the most recent tax bills, or if available, based upon the
then current year's valuation or assessments in the last-known millage rate. If
the actual amount of taxes for the year of Closing is more or less than the
amount pro-rated, then Purchaser and Seller, promptly upon receipt by either of
them of notice for bills for such taxes, shall make the proper adjustments so
that the proration will be accurate,
- 13 -
<PAGE>
based upon the actual amount of such taxes for the year of the Closing, and the
payment shall be made promptly by Seller or Purchaser, whichever will be
required to make such payment to the other party for the purpose of making such
adjustment. Purchaser shall have the right, in the name and at the expense of
Purchaser, to contest and appeal any such taxes or assessments, and any
adjustment and proration to be made pursuant to this section shall be based and
made promptly upon the amount of such taxes as finally determined at the
conclusion of such contest or appeal.
(b) UTILITIES. Seller and Purchaser agree that Seller shall pay
all charges for utilities accrued to the time of the Closing Date, and Purchaser
shall pay all charges for utilities accruing from and after. Such proration
amounts shall include charges for water, gas, electricity and other utility
services as may exist.
(c) ASSESSMENTS. At the Closing, continuing maintenance
assessments shall be prorated based upon the 1996 Condominium budget for the
time left in the calendar year 1996.
(d) POSSESSION OF PROPERTY. Seller shall deliver possession of
the Property to be purchased at the time of Closing subject to the Permitted
Title Exceptions.
(e) BROKERAGE. Purchaser represents to Seller that it has not
dealt with any broker or other persons who may be entitled to a real estate
broker's commission or a finder's fee in connection with this transaction, other
than Jack Cummings, broker with Cummings & Regas, Real Estate Consultants for
Fort Lauderdale, (hereinafter collectively called "Broker"), and in accordance
with a previous agreement, if, as and when the Closing has occurred, Broker
shall be paid from the Purchase Price a commission equal to four percent (4%) of
the Purchase Price paid by Purchaser to Seller. Said commission is to be
withheld by the closing agent from proceeds to Seller and paid to Broker as
disbursement at Closing. Broker shall accept said commission in full
satisfaction of all claims for compensation in connection with the transactions
contemplated by this Agreement. Seller shall defend, indemnify and hold
Purchaser harmless against all damages, liability, losses, costs and expenses
incurred as a result of any claim for commission or fee by any broker, agent,
finder or person who shall have dealt or claimed to have dealt with Seller in
connection with this transaction.
15. COVENANTS OF SELLER. In the event that Seller shall (i) receive any
notice of violation by the Property or any portion thereof of any zoning,
building, fire, health, pollution, environmental protection, hazardous waste or
waste disposal ordinance, code, law or regulation; or (ii) receive notice of any
violations or alleged violations of any of the Permitted Title Exceptions or
restrictive covenants as are applicable to the Property, including the
Declaration of Condominium; or (iii) receive notice of any suit or judgment
which would affect the Property in the hands of the Purchaser after Closing; or
(iv) receive a request from any insurance company or board of fire underwriters,
or any organization exercising functions similar thereto, or from Brevard
County, Florida requesting any work or alteration to the Property, which notice
or request has not been previously disclosed in Paragraph 3(c), then Seller
shall take such action necessary to cure such
- 14 -
<PAGE>
violation, prevent, remove or satisfy the suit or judgment and perform such work
and alteration prior to Closing of the Property. In the event such actions
cannot be reasonably completed prior to Closing, then a reasonable period for
the completion of said action, not to exceed thirty (30) days shall, at the
option of Seller, be added to the time provided for Closing, so as to allow
Seller the opportunity to complete such actions. Notwithstanding the foregoing,
in respect to any notices of violations set forth hereinabove, then Seller shall
fully and completely cooperate with Purchaser in resolving such notice of
violation. In all events set forth hereinabove, any notice of violation received
by Seller shall be immediately delivered to Purchaser. In the event that actions
of cure as set forth hereinabove cannot be completed within the time permitted,
and said required expenditures DO NOT EXCEED the amount of $50,000.00, then at
the option of Purchaser either (a) Seller shall pay the applicable Earnest Money
and all interest accumulated thereon to Purchaser under this Agreement, and all
rights and obligations hereunder shall immediately terminate as to such
Property, or (b) the purchase and sale contemplated hereby shall be closed as
provided herein, except that Purchaser shall accept the Property, subject to the
notices and requests set forth in this section, and Purchaser shall be assigned
and shall assume any and all contracts for compliance with said requests which
were made in good faith by Seller under which Seller is not in default, and
copies of which have been presented to Purchaser at Closing; provided, however,
that if Purchaser elects option (b), then Purchaser shall receive a credit
against the Purchase Price equal to the amount of funds which would have been
required to be expended by Seller, the balance of funds which Purchaser is
required to expend. However, in the event that actions of cure as set forth
hereinabove require expenditures which EXCEED the amount of $50,000.00
(regardless of whether or not the actions of cure can be completed within the
time permitted), then at the option of Purchaser either (a) Seller shall pay the
applicable Earnest Money and all interest accumulated thereon to Purchaser under
this Agreement, and all rights and obligations hereunder shall immediately
terminate as to such Property, or (b) the purchase and sale contemplated hereby
shall be closed as provided herein, except that Purchaser shall accept the
Property, subject to the notices and requests set forth in this section, and
Purchaser shall be assigned and shall assume any and all contracts for
compliance with said requests which were made in good faith by Seller under
which Seller is not in default, and copies of which have been presented to
Purchaser at Closing; provided, however, that if Purchaser elects option (b),
then Purchaser shall receive a $50,000.00 credit against the Purchase Price, the
balance of funds which Purchaser is required to expend.
16. ENTRY. From and after the date hereof, Purchaser, its title insurer,
mortgagee, if any, and their architects, engineers, agents and representatives
may at any time, and from time to time while this Agreement is in effect (i)
enter upon the Property in order to examine and inspect the same and the
conditions thereof; (ii) conduct test borings and other soil tests of the
Property, and (iii) make surveys thereof; provided, however, that Purchaser
shall repair any damage to Property resulting therefrom. Any such entry by
Purchaser, its title insurer, mortgagee or its representatives or agents shall
be during normal business hours. Purchaser shall not contact any existing owner
at the Property.
- 15 -
<PAGE>
17. CLOSING. Notwithstanding any other provision contained herein to the
contrary, the Purchaser and Seller acknowledge that the Seller is not the fee
simple title owner of certain portions of the Property at the time of execution
of this Agreement. Seller, however, represents and warrants that Seller will use
its best efforts to acquire such Property or to obtain commitments from third
parties to sell said portions of the Property on the terms and conditions set
forth herein, and that to Seller's knowledge, no other party has the right to
acquire the Property except Seller. Seller shall not be required to close unless
Seller has acquired, or obtained commitments from third party owners for sale to
Purchaser hereunder, the requisite number of Units as described on Exhibit "A".
The Closing of the Property shall be held on or before July 15,
1996, as determined solely by Purchaser. The Closing shall be held at the
offices of Vacation Break USA, Inc., 6400 North Andrews Avenue, Suite 200, Fort
Lauderdale, Florida 33309. At the Closing, Seller and Purchaser will execute and
deliver all deeds and other documents reasonably necessary to consummate the
transaction contemplated by this Agreement pursuant to the terms hereof,
including without limitation the following:
(a) A closing statement.
(b) A warranty deed from Seller and Third Party Owners to
Purchaser in the form attached hereto as Exhibit "D", conveying fee simple
title to the Property, subject only to the Permitted Title Exceptions and other
matters to which Purchaser shall accept title to the Property in accordance with
section 9.
(c) Real Estate Transfer Tax Declarations in the customary
form with respect to the warranty deed.
(d) Assignment and assumption of existing Rental Agreements
in the form attached hereto as Exhibit "E".
(e) Bill of Sale With Warranty in the form attached hereto as
Exhibit "F" conveying the Personalty.
(f) An Assignment and Assumption of any Service Contracts in
substantially the form attached hereto as Exhibit "G".
(g) An affidavit of ownership in the form attached hereto as
Exhibit "H".
(h) Evidence of Seller's authority to consummate the
transaction contemplated in this Agreement, as reasonably required by
Purchaser's title insurer.
- 16 -
<PAGE>
(i) Affidavit regarding IRC /section/1445 withholding tax in
the form attached as Exhibit "I", and all other documentation necessary for
compliance with the Internal Revenue Code, including, without limitation, Form
1099 and Form W-4.
(j) Recorded copy of the Amendment to the Declaration
permitting timeshare estates to be created in any Unit of the Condominium,
together with legal opinion referred to hereinabove.
(k) An assignment of all Intangibles, Developer Rights and
Management Rights in substantially the form attached hereto as Exhibit "J".
(l) Execution of such documents as Labree Management, Inc. is
requested to execute in order to consummate the transaction contemplated herein.
18. TERMINATION. Any prior or subsequent provision to this Agreement
to the contrary notwithstanding, in addition to all other rights of Purchaser
under this Agreement or as provided by law, and not in lieu of any such rights,
Purchaser, at Purchaser's sole election, may cancel and terminate this
Agreement, by written notice to Seller, and this Agreement shall be null and
void if any one or more of the following conditions or a state of facts shall
exist at the time of the Closing:
(a) Failure of Seller to deliver to Purchaser at or before
the Closing the instruments described herein.
(b) Failure of Seller to deliver to Purchaser on the Closing
Date a certificate of sale, in a form reasonably acceptable to Purchaser, dated
as of the Closing Date, certifying that the Seller has given any and all notices
which Seller is required to give to Purchaser under the provisions herein.
(c) The failure of Seller to comply in all material respects
with any provision of this Agreement or the fact that any representation or
warranty of Seller set forth in this Agreement was materially inaccurate at the
time made.
(d) Any notice that shall have been given or proceedings
filed or commenced by any governmental authority having the power to rezone the
Property, proposes to rezone the Property, so as to preclude the use thereof for
any of its uses intended by Purchaser.
(e) Any notice that shall have been given or proceedings
filed or commenced by any governmental authority, or private person, contesting
the right of Purchaser to use the Property for its intended purposes, including
but not limited to a vacation plan pursuant to F.S. Chapter 721.
- 17 -
<PAGE>
(f) Any notice that shall have been given or proceeding filed
or commenced by any governmental authority having powers of condemnation or
other entity having powers of condemnation and concerning prospective
condemnation of any portion of the Property unless Purchaser determines in its
sole discretion that such taking shall not be detrimental to the Property and
its proposed uses, in which event the condemnation award shall be paid to
Purchaser.
(g) Any notice of bankruptcy is filed by or against Seller,
or Seller makes any general assignment for the benefit of its creditors, or
admits to insolvency or otherwise has a receiver of its assets or property
appointed because of insolvency.
In the event Purchaser elects to cancel this Agreement pursuant to the terms of
this section, Seller shall pay the Earnest Money on deposit, together with any
interest accumulated thereto to Purchaser, as Purchaser's sole right and remedy.
19. DEFAULTS. In the event that the purchase and sale contemplated
hereby is not closed by reason of Seller's inability, failure or refusal to
perform any of Seller's obligations hereunder, then Purchaser shall be entitled,
as its sole right and remedy and at its sole election, (a) to have this
Agreement specifically enforced against the Seller, or (b) to cancel this
Agreement and have immediate return by the Seller to the Purchaser of the Escrow
Money deposit of Seven Hundred Fifty Thousand and No/100 Dollars ($750,000.00)
together with any interest earned by that deposit, and the payment of reasonable
attorneys fees and costs of collection, if litigation ensues. In the event that
the purchase and sale contemplated hereby is not closed by reason of Purchaser's
inability, failure or refusal to perform any of Purchaser's obligations
hereunder, the Earnest Money, plus reasonable attorneys fees and costs of
collection, if litigation ensues, shall be paid to Seller as fixed and full
liquidated damages, and Seller hereby agrees that Purchaser shall have no
further liability hereunder or by reason of Purchaser's breach hereof. Purchaser
and Seller recognize that it will be difficult to ascertain the actual damages
suffered by Seller as a result of such failure to close, it being specifically
acknowledged and agreed by Seller and Purchaser that such liquidated damages are
reasonable and that Purchaser retains and shall be entitled to the remedy of
specific performance against Seller in the event Seller defaults in any of its
obligations hereunder. Seller shall not be entitled to specific enforcement.
20. RISK OF LOSS. Seller shall bear all risk of casualty loss to
Property, including but not limited to loss or damage due to hurricanes,
occurring prior to Closing and shall maintain in full force and effect all
hazard insurance now in force and insuring the Property against loss and damage
or destruction through the Closing Date. In the event of any damage or
destruction to the Property prior to Closing, not restored by the Closing Date,
Purchaser shall have the option to either: (a) terminate this Agreement; or (b)
close this transaction and be entitled to receive the full amount of any
proceeds of such insurance payable on the account of loss, damage or
destruction. If Purchaser shall elect to cancel this Agreement pursuant to the
foregoing, Seller shall promptly return the Earnest Money, together with any
interest earned
- 18 -
<PAGE>
thereon, to Purchaser and thereafter all parties shall be relieved and released
of and from any further liability hereunder. In the event Purchaser elects to
close this transaction under subparagraph (b) of this section, any loss shall be
settled with insurers only with the written consent of Purchaser, and, if at
Closing there shall be any losses which shall not have been settled or adjusted,
Seller shall transfer and assign the insurance claim to Purchaser, and this
transaction shall be consummated in the same manner as if there had been no
damage or destruction to Property. The determination of the insurance adjuster
for the respective insurance carrier regarding the extent of such loss shall be
determinative as between Purchaser and Seller relative to the value placed on
such loss. Seller shall give Purchaser immediate notice of any damage or
destruction to all or any portion of the Property.
21. CONDEMNATION. Seller represents to Purchaser that Seller has not
received any notice or communication from any governmental authority or other
body having the power of eminent domain that all or part of the Property has or
may be taken or condemned. If, prior to Closing, all or any part of the Property
or any interest therein shall be taken or condemned as a result of the exercise
of the power of eminent domain, then, at Purchaser's sole election, either
(a)(i) Purchaser shall have the sole right, in the name of Seller if Purchaser
so elects, in its sole discretion, to negotiate for, claim, contest and receive
all damages on account thereof; (ii) Seller shall be relieved of its obligation
to convey to Purchaser the Property or portion thereof so taken or condemned;
(iii) at Closing, Seller shall assign to Purchaser all of the Seller's rights to
all damages payable for such taking or injury of the Property and shall pay to
Purchaser all damages theretofore paid to Seller by reason thereof; and (iv)
following Closing, Seller shall give Purchaser such further assurances of such
rights and assignments as Purchaser may from time to time reasonably request; OR
(b) Purchaser may refuse to close and this Agreement shall be void.
22. CONDOMINIUM ASSOCIATION. Seller warrants that the Association is in
good standing in accordance with Florida law, including but not limited to the
Florida Condominium Act, and the Florida Non-Stock Corporation Code and such
other laws as are applicable to the Association. The foregoing shall include, by
way of example and not limitation, all rules and regulations of the Division of
Florida Land Sales as applied to condominium associations. Seller hereby agrees
to indemnify and hold harmless Purchaser, its mortgagees, successors and
assigns, from and against any liability, loss, damage, cost or expense,
including attorneys fees, resulting from the failure of the Association to
maintain its good standing prior to the Closing Date as set forth above.
The Seller shall be responsible for assuring that the condominium
association files all tax returns and related filings, including audited
financial statements as required by the rules and regulations pertaining to
condominium associations for all time periods through and including 1995. Seller
hereby agrees to indemnify and hold harmless Purchaser, its mortgagees,
successors and assigns, from and against any liability, loss, damage, cost or
expense, including attorneys fees, resulting from the failure of the Association
to file said tax returns and related filings.
- 19 -
<PAGE>
Purchaser agrees to take reasonable actions and to cooperate with
Seller regarding the Royal Mansion Condominium Association, Inc. and Seller's
activities with respect thereto. At Closing, Purchaser shall assume any rights,
privileges and prerogatives of Seller under the provisions of the Declaration,
as amended, as well as with respect to the Association and under the Articles of
Incorporation and Bylaws relating thereto.
All capital improvement, maintenance or similar reserves
maintained by the Association shall be expended in accordance with the
applicable reserve category, with the exception of those amounts required to be
maintained in said reserve accounts by Chapters 718 and 721, Florida Statutes.
23. EXISTING RENTAL AGREEMENTS. Seller will deliver to Purchaser no
later than fifteen (15) days after execution of this Agreement, true, correct,
complete and legible copies of each of the existing Rental Agreements, including
any and all modifications and amendments to each existing Rental Agreement,
whether by formal amendment or letter, to the extent same are written. Purchaser
shall have the time period referred to hereinabove as the Due Diligence period
to review said existing Rental Agreements to determine if the foregoing are
acceptable to it. A complete and correct list of all Rental Agreements to be
provided to Purchaser for any portion of the Property and effective on the date
of this Agreement is attached as Exhibit "C" which is incorporated herein by
this reference. So long as this Agreement is in effect, Seller agrees not to
amend or modify the existing Rental Agreements without the prior written consent
of Purchaser; nor shall Seller enter into any new Rental Agreements relating to
the Property or any portion thereof without the prior written consent of
Purchaser. Any amendment or modification to an existing Rental Agreement made by
Seller with the prior written consent of Purchaser or any new Rental Agreement
pertaining to the Property entered into by Seller with the prior written consent
of Purchaser, shall for the purposes of this Agreement be deemed to be an
existing "Rental Agreement." At the Closing, Purchaser and Seller shall execute
and deliver, each to the other, an assignment and assumption of the existing
Rental Agreements whereby Seller shall assign to Purchaser the existing Rental
Agreements, and whereby Purchaser shall assume and agree to perform all of
Seller's obligations and responsibilities under the existing Rental Agreements
to the tenants and any broker who negotiated such Rental Agreements. Seller
shall also assign at Closing all security deposits, if any, being held by Seller
in connection with the existing Rental Agreements to Purchaser, and Purchaser
shall agree in writing to assume all of Seller's responsibilities and
obligations with respect to such security deposits. Notwithstanding anything in
this Agreement contained to the contrary, Seller shall retain, without claim or
demand by or credit to Purchaser for, any and all rentals (excepting any
pre-paid rents for periods of time following Closing) paid under the Rental
Agreements through the month of Closing, except that rent paid for the month of
Closing will be prorated between the parties.
24. CERTIFICATE OF ESTOPPEL. Seller shall deliver to Purchaser a
certificate of estoppel signed by each tenant renting a Unit with a remaining
term greater than thirty (30) days as of the Closing Date, stating that: (a) as
of the Closing Date no default exists under the
- 20 -
<PAGE>
terms of the Rental Agreement by either owner or tenant; (b) no rental payments
have been made in advance; and (c) that the tenant has no defense or offsets
against rent accruing under the terms of his Rental Agreement.
25. PURCHASER'S INTENDED USE OF PROPERTY. The parties hereto agree that
Purchaser has disclosed to Seller its intended use of the Property . In
furtherance thereof, and not as a limitation thereto, Purchaser further
discloses to Seller, who acknowledges receipt of such information by execution
hereof, that Purchaser intends to use the Property which is the subject matter
of this Agreement as a condominium subject to F.S. Chapter 718 and that such
condominium shall have established therein a timeshare estate vacation plan, as
the same is defined pursuant to the terms of F.S. Chapter 721. Purchaser, from
and after receipt of the executed documents as required by paragraph 3(a)
herein, shall be responsible for obtaining, and shall use its best efforts to
obtain, at its sole expense, any and all approvals from the State of Florida or
any other applicable governmental entity needed in order to sell and operate the
Units and the Property under a timeshare plan.
26. TIMESHARE REGIME. Seller acknowledges that Purchaser's obligation
under this Agreement shall be subject to the contingencies set forth in
paragraph 3(a) herein; provided, however, Purchaser shall not be obligated under
this Agreement should circumstances beyond its control occur, including without
limitation, any third party action, the occurrence of which would prevent
Purchaser's establishment of a timeshare regime pursuant to F.S. Chapter 721.
Notwithstanding the above, Purchaser's obligation under this Agreement shall not
be contingent upon Purchaser receiving approval by the Florida Department of
Business and Professional Regulation, Bureau of Timeshare, for a submitted
timeshare filing. Seller shall in no way interfere with the establishment,
operation and administration of a timeshare estate regime which timeshare
documentation shall be prepared at Purchaser's own expense, following the
amendment to the Declaration of Condominium permitting the establishment of the
timeshare estate regime, which shall be prepared at Purchaser's own expense.
27. FURNITURE AND FIXTURES. Purchaser's and Seller's obligations under
this Agreement shall be expressly contingent upon the owners of Condominium
Units who do not offer Unit Weeks in their Units for sale as timeshare weeks in
the timeshare plan, nevertheless, (i) agreeing to the amendment to the
Declaration to allow the timeshare plan; (ii) agreeing to pay weekly assessed
timeshare maintenance fees, for each week established in a respective Unit, or
some alternative amount acceptable to Purchaser, and (iii) agreeing to be part
of the timeshare association.
28. NOTICES. All notices, demands or requests required or permitted to
be given pursuant to this Agreement shall be in writing and shall be deemed to
have been properly given or served and shall be effective upon personal
delivery, or upon being deposited in the United States mail, postage prepaid,
and registered or certified with return receipt requested, provided, however,
the time period in which a response to any notice, demand or request must be
given
- 21 -
<PAGE>
shall commence on the date of receipt by the addressee thereof. Rejection or
other refusal to accept or inability to deliver because of changed address of
which no notice has been given shall constitute receipt of the notice, demand or
request sent. Any such notice, demand or requests, if given to Seller shall be
addressed as follows:
Labree, Inc.
5901 "C" Peachtree-Dunwoody Road
Suite 445
Atlanta, Georgia 30328
with copy to:
Mr. Jack Cummings
3111 N.E. 22 Street
Ft. Lauderdale, Florida 33305
with copy to:
Mr. J. Robert Williamson
Scroggins & Williamson
3343 Peachtree Road, N.E.
Suite 750
Atlanta, Georgia 30326
and, if given to Purchaser, addressed as follows:
Mr. Hank Cairo
Vacation Break USA, Inc.
6400 North Andrews Avenue
Suite 200
Ft. Lauderdale, Florida 33309
with copy to:
Mr. James J. Scavo
Weinstock & Scavo, P.C.
3405 Piedmont Road, N.E.
Suite 300
Atlanta, Georgia 30305
29. SUCCESSORS AND ASSIGNS. This Agreement shall apply to, and is to the
benefit of and shall be binding upon and enforceable against the parties hereto
and their respective
- 22 -
<PAGE>
successors and permitted assigns, to the same extent as if specified at length
throughout this Agreement. This Agreement may not be assigned by Seller or
Purchaser without the prior written consent of the other party hereto.
30. RECORDING. This Agreement shall not be recorded or otherwise filed
or made a matter of public record by either Purchaser or Seller. Any attempt by
any party to record or file this Agreement prior to Closing may be deemed a
default and that the option of the party entitled to claim a default may void
this Agreement, in which event the remedies regarding default, as set forth
hereinabove, shall be applicable.
31. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of such
counterparts together shall constitute one and the same instrument.
32. HOLIDAYS. Wherever this Agreement provides for a date, day or
period of time on or prior to which action or events are to occur or not occur,
and if such date, day or last day of such period of time falls on a Saturday,
Sunday or legal holiday, then same shall be deemed to fall on the immediately
following business day.
33. TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
34. GOVERNING LAW. This Agreement and all issues arising hereunder
shall be governed by the laws of the State of Florida and venue shall be in
Brevard County, Florida.
35. WHOLE AGREEMENT AND AMENDMENT. This Agreement sets forth all of
the agreements, representations, warranties and conditions of the parties hereto
with respect to the subject matter hereof, and supersedes all prior or
contemporaneous agreement, representations, warranties and conditions. The
Exhibits referred to above constitute parts of this Agreement. No alteration,
amendment, modification or waiver of any of the terms or provisions hereof, and
no future representation or warranty by either party with respect to this
transaction, shall be valid unless the same is in writing and signed by the
party against whom enforcement is sought.
36. JUDICIAL INTERPRETATION. Should any provision of this Agreement
require judicial interpretation, it is agreed that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against one party by reason of the rule of construction
that a document is to be construed more strictly against the party who itself or
through its agent prepared the same, it being agreed that the agents of all
parties have participated in the preparation hereof.
37. SURVIVAL OF CONTRACT. The covenants, agreements, representations
and warranties contained in this Agreement shall not be impaired by any
investigation or other act by
- 23 -
<PAGE>
Purchaser, shall survive the Closing and shall not be merged into the documents
of conveyance executed at the Closing.
38. PARAGRAPH HEADINGS. The paragraph headings are inserted into
this Agreement only for convenience, and in no way define, limit or describe the
scope or intent of any provision of this Agreement.
39. UNENFORCEABLE PROVISIONS. If any term, covenant, warranty,
paragraph, section, clause, condition or provision of this Agreement is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the provisions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is the
intention of the parties hereto that in lieu of each term, covenant, warranty,
paragraph, section, clause, condition or provision of this Agreement that is so
held invalid, void or unenforceable, there be deemed to have been added as a
part of this Agreement provision(s) as similar in terms to the provision(s) so
held invalid, void or unenforceable, as may be possible, and at the same time
be valid, legal and enforceable. If any provision held invalid, void or
unenforceable is in the determination of either party essential to the rights
of the parties hereto, either party may terminate this Agreement on ten (10)
days' written notice to the other party.
40. NO WAIVER OF RIGHTS. Failure by the Seller or Purchaser to insist
or enforce any of their respective rights shall not constitute a waiver of those
rights by the Seller or Purchaser, and nothing shall constitute a waiver of
Seller's rights to insist on strict compliance with the provisions of this
Agreement.
41. INTERPRETATION OF PRONOUNS. Whenever in this Agreement words,
including pronouns, are used in the masculine, they shall be read and construed
in the feminine or neuter whenever they would so apply; and whenever in this
Agreement words, including pronouns, are used in the singular or plural, they
shall be read or construed in the plural or singular, respectively, wherever
they would so apply.
42. RADON DISCLOSURE. Purchaser is hereby advised that radon is a
naturally occurring radioactive gas that, when it has accumulated in a building
in sufficient quantities may present health risks to persons who are exposed to
it over time. Levels of radon that exceed federal and state guidelines have been
found in buildings in Florida. Additional information regarding radon and radon
testing may be obtained from your County Public Health Unit. The foregoing
disclosure is provided to comply with state law and is for informational
purposes only. Seller has not conducted radon testing with respect to the
Property and specifically disclaims any and all representations and warranties
as to the absence of radon gas or radon producing conditions in connection with
any building and the Property.
43. CERTIFICATION OF NON-FOREIGN STATUS. For purposes of /section/1445
of the United States Internal Revenue Code, as amended, Seller hereby represents
and certifies to Purchaser that: (a) Seller is not a foreign corporation,
foreign partnership, foreign trust, foreign
- 24 -
<PAGE>
estate or non-resident alien (as those terms are defined in the Internal
Revenue Code and applicable Income Tax Regulations), (b) Seller's U.S. Tax
Payer Identifying Number (i.e. Employer I.D. Number or Social Security Number,
as applicable) is 58-1724907 and/or N/A, N/A (c) Seller's correct address as set
forth above, and (d) withholding of tax is not required by the Internal Revenue
Code upon the transfer of the Property in accordance with this Agreement. The
certification may be disclosed by Purchaser to the Internal Revenue Service.
44. JOINT UNDERTAKING. In addition to the obligations expressly
required to be performed hereunder by Seller and Purchaser, each party agrees
to cooperate with the other and to perform such other acts and to execute,
acknowledge and deliver, prior to and at Closing, such other instruments,
documents and materials as the party may reasonably request and as shall be
necessary in order to effect the consummation of the transactions contemplated
hereby, to vest title to the Property in Purchaser; provided that no such other
instrument, document or material either extends or enlarges the obligations of
the non-requesting party beyond the express undertakings of this Agreement or
requires or could require the non-requesting party to make any payment or
expend any funds which are not expressly provided for herein.
45. ENVIRONMENTAL INDEMNIFICATIONS.
(a) DEFINITIONS. The following definitions shall apply for
purposes of this section:
(i) "Environmental Law" shall mean any federal, state
or local statute, regulation or ordinance or any judicial or administrative
decree or decision, whether now existing or hereinafter enacted, promulgated or
issued, with respect to any Hazardous Materials, drinking water, groundwater,
wetlands, landfills, open dumps, storage tanks, underground storage tanks,
solid waste, waste water, storm water runoff, waste emissions or wells. Without
limiting the generality of the foregoing, the term shall encompass each of the
following statutes, and regulations promulgated thereunder, and amendments and
successors to such statutes and regulations as may be enacted and promulgated
from time to time: (A) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (codified in scattered sections of 26 U.S.C., 33
U.S.C., 42 U.S.C. and 42 U.S.C. /section/9601 ET SEQ.); (B) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. /section/6901 ET SEQ.);
(C) the Hazardous Materials Transportation Act (49 U.S.C. /section/1801 ET
SEQ.); (D) the Toxic Substances Control Act (15 U.S.C. /section/2061 ET SEQ.);
(E) the Clean Water Act (33 U.S.C. /section/1251 ET SEQ.); (F) the Clean Air
Act (42 U.S.C. /section/7401 ET SEQ.); (G) the Safe Drinking Water Act (21
U.S.C. /section/349, 42 U.S.C. /section/201 and /section/300f ET SEQ.); (H) the
National Environmental Policy Act of 1969 (42 U.S.C. 432); (I) the Superfund
Amendment and Reauthorization Act of 1986 (codified in scattered sections of 10
U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); and (J) Title III of the Superfund
Amendment and Reauthorization Act (40 U.S.C. /section/1101 ET SEQ.).
- 25 -
<PAGE>
(ii) "Hazardous Materials" shall mean each and every
element, compound, chemical mixture, contaminant, pollutant, material, waste or
other substance which is defined, determined or identified as hazardous or toxic
under any Environmental Law. Without limiting the generality of the foregoing,
the term shall mean and include:
a) "Hazardous Substances" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendment and reauthorization Act of 1986, or Title III of the
Superfund Amendment and Reauthorization Act, each as amended, and regulations
promulgated thereunder;
b) "Hazardous Waste" as defined in the Resource
Conservation and Recovery Act of 1976, as amended, and regulations promulgated
thereunder;
c) "Hazardous Materials" as defined in the
Hazardous Materials Transportation Act, as amended, and regulations promulgated
thereunder;
d) "Chemical Substance or Mixture" as defined
in the Toxic Substances Control Act, as amended, and regulations promulgated
thereunder.
(iii) "Indemnified Parties" shall mean Purchaser,
Purchaser's mortgagee, their subsidiaries and affiliates, each of their
respective shareholders, directors, employees and agents, and the successors and
assigns of any of them; and "Indemnified Party" shall mean any one of the
Indemnified Parties.
(iv) "Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, storing, escaping,
leaching, dumping or discarding, burying, abandoning or disposing into the
environment.
(v) "Threat of Release" shall mean a substantial
likelihood of a Release which requires action to prevent or mitigate damage to
the environment which may result from such Release.
(b) INDEMNITY AGREEMENT.
(i) Seller covenants and agrees, at its sole cost and
expense, to indemnify, defend (at trial and appellate levels and with attorneys,
consultants and experts acceptable to Purchaser and Purchaser's mortgagee) and
hold each Indemnified Party harmless against and from any and all liens,
damages, losses, liabilities, obligations, settlement payments, penalties,
assessments, citations, directives, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, disbursements or expenses of any kind or
of any nature whatsoever (including, without limitation, reasonable attorneys'
fees, consultants' fees and experts' fees, and disbursements actually incurred
in investigating, defending against, settling or prosecuting any
- 26 -
<PAGE>
claim, litigation or proceeding) which may at any time be imposed upon, incurred
by or asserted or awarded against such Indemnified Party or the Property, and
arising directly or indirectly from or out of any act, condition or omission
existing or occurring on or before the Closing Date which results in: (A) the
Release or Threat of Release of any Hazardous Materials on, in, under or
affecting all or any portion of the Property or any surrounding areas,
regardless of whether or not caused by or within the control of Seller; (B) the
violation of any Environmental Laws relating to or affecting the Property; (C)
the violation of any Environmental Laws in connection with other real property
of Seller which gives or may give rise to any rights whatsoever in any party
with respect to the Property by virtue of any Environmental Laws; or (D) the
enforcement of this Agreement including, without limitation, (i)the costs of
assessment, containment and/or removal of any and all Hazardous Materials from
all or any portion of the Property or any surrounding areas, (ii) the costs of
any actions taken in response to a Release or Threat of Release of any Hazardous
Materials on, in, under or affecting all or any portion of the Property or any
surrounding areas to prevent or minimize such Release or Threat of Release so
that it does not migrate or otherwise cause or threaten danger to present or
future public health, safety, welfare or the environment, and (iii) costs
incurred to comply with the Environmental Laws in connection with all or any
portion of the Property or any surrounding areas.
(ii) Purchaser covenants and agrees, at its sole cost
and expense, to indemnify, defend (at trial and appellate levels and with
attorneys, consultants and experts acceptable to Seller and Seller's mortgagee)
and hold each Indemnified Party harmless against and from any and all liens,
damages, losses, liabilities, obligations, settlement payments, penalties,
assessments, citations, directives, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, disbursements or expenses of any kind or
of any nature whatsoever (including, without limitation, reasonable attorneys'
fees, consultants' fees and experts' fees, and disbursements actually incurred
in investigating, defending against, settling or prosecuting any claim,
litigation or proceeding) which may at any time be imposed upon, incurred by or
asserted or awarded against such Indemnified Party or the Property, and arising
directly or indirectly from or out of any act, condition or omission existing or
occurring after the Closing Date which results in: (A) the Release or Threat of
Release of any Hazardous Materials on, in, under or affecting all or any portion
of the Property or any surrounding areas, regardless of whether or not caused by
or within the control of Purchaser; (B) the violation of any Environmental Laws
relating to or affecting the Property; (C) the violation of any Environmental
Laws in connection with other real property of Purchaser which gives or may give
rise to any rights whatsoever in any party with respect to the Property by
virtue of any Environmental Laws; or (D) the enforcement of this Agreement
including, without limitation, (i) the costs of assessment, containment and/or
removal of any and all Hazardous Materials from all or any portion of the
Property or any surrounding areas, (ii) the costs of any actions taken in
response to a Release or Threat of Release of any Hazardous Materials on, in,
under or affecting all or any portion of the Property or any surrounding areas
to prevent or minimize such Release or Threat of Release so that it does not
migrate or otherwise cause or threaten danger to present or future public
health, safety, welfare or
- 27 -
<PAGE>
the environment, and (iii) costs incurred to comply with the Environmental Laws
in connection with all or any portion of the Property or any surrounding areas.
(c) SURVIVAL.
(i) The indemnity set forth above in subsection (b) shall
survive the Closing of the Property and any exercise by Seller or Purchaser or
its mortgagee of any rights under this Indemnity or otherwise provided for in
this Agreement and shall not merge with any deed given by Seller to Purchaser.
(ii) It is agreed and intended by Seller and Purchaser that the
indemnity set forth above in subsection (b) may be assigned or otherwise
transferred by Purchaser to its successors and assigns (and transferred by
Purchaser's mortgagee to its successors and assigns), and to any subsequent
purchaser of all or any portion of the Property without notice to Seller and
without any further consent of Seller. To the extent consent of any such
assignment or transfer is required by law, advance consent to any such
assignment or transfer is hereby given by Seller in order to maximize the extent
and effect of the indemnity given hereby.
(d) NO WAIVER. Notwithstanding any of the terms of this Agreement to the
contrary, the liability of Seller and Purchaser under this subsection shall in
no way be limited or impaired by any extension of time for performance required
under the terms of this Agreement, the accuracy or inaccuracy of the
representations and warranties made by Seller or Purchaser hereunder, the
release of Seller or Purchaser from performance or observance of any of the
agreements, covenants, terms and conditions otherwise contained in this
Agreement by operation of law, Seller's or Purchaser's or its mortgagee's
voluntary act, or otherwise.
(e) DELAY. No delay on Seller's or Purchaser's or its mortgagee's part
in exercising any right, power or privilege under this paragraph shall operate
as a waiver of any privilege, power or right hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
PURCHASER:
VACATION BREAK USA, INC., a Florida
corporation
- 28 -
<PAGE>
By: S/HANK CAIRO
-------------------
Hank Cairo, COO/CFO
[Signatures continue on next page]
SELLER:
LABREE, INC., a Florida corporation
By: S/W.M. HITSON
----------------------------
William M. Hitson, President
The foregoing Agreement is consented to by LABREE MANAGEMENT, INC., a
Florida corporation, and the Royal Mansion Condominium Association, Inc., a
Florida not-for- profit corporation, to the extent that their agreement is
necessary to consummate the transaction provided for hereinabove.
LABREE MANAGEMENT, INC., a Florida
corporation
By: S/W.M. HITSON
__________________________, President
ROYAL MANSION CONDOMINIUM
ASSOCIATION, a Florida not-for-profit
corporation
By:___________________________________
__________________________, President
- 29 -
EXHIBITS 10.80
FIRST AMENDMENT TO AGREEMENT FOR
THE PURCHASE AND SALE OF REAL PROPERTY
This Amendment to the Agreement for the Purchase and Sale of
Real Property ("Amendment") is made and entered into this 14th day of June,
1996, by and between LABREE, INC., a Florida corporation (hereinafter referred
to as "Seller") and VACATION BREAK U.S.A., INC., a Florida corporation
(hereinafter referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser entered into that certain
Agreement for the Purchase and Sale of Real Property executed on May 2, 1996
("Agreement"), said real property being that certain improved real property
known as Royal Mansion, a Condominium, as described on Exhibit "A-1" of the
Declaration of Condominium of Royal Mansion, a Condominium, which Declaration is
recorded in Official Record Book 2899, Page 799,et. seq., of the Public Records
of Brevard County, Florida; and
WHEREAS, Seller and Purchaser desire to amend the Agreement in
order to extend the due diligence period and clarify the payment of closing
costs by the Seller;
NOW, THEREFORE, for and in consideration of the covenant and
agreements hereinafter set forth, the sum of Ten Dollars ($10.00) and other good
and valuable consideration in hand paid by Purchaser to Seller, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser hereby amend
the Agreement as follows:
<PAGE>
1. The first sentence of paragraph 4 thereof
is hereby deleted in its entirety and the following substituted in its place:
"Purchaser and Seller agree that
Purchaser shall be provided fifty-three (53)
days for a Due Diligence period, which
fifty-three (53) days began on May 3, 1996."
2. The words "forty-five (45)" in the first
and second sentences of paragraph 5 thereof are hereby deleted and the words
"fifty-three (53)" are substituted in their place.
3. The words "forty-five (45)" in the first
sentence of paragraph 7 thereof are hereby deleted and the words "fifty-three
(53)" are substituted in their place.
4. The words "forty-five (45)" in the first
sentence of paragraph 9 thereof are hereby deleted and the words "fifty-three
(53)" are substituted in their place.
5. The second sentence of paragraph 13 thereof
is hereby deleted in its entirety and the following substituted in its place:
"Seller shall pay all other closing costs,
for each closing necessary to transfer the
required number of Units to Purchaser
pursuant to this Agreement, including owners
title insurance premiums (which policy shall
be issued by American Pioneer Title
Insurance
- 2 -
<PAGE>
Company through its agent, Resort
Title, Inc., and which premium shall not
exceed Thirty-Four Thousand Three Hundred
Twenty- Five and No/100 Dollars
($34,325.00), mortgagee's title insurance
premiums, if any, state and local transfer
tax, any other taxes or fees assessed in
connection with the Closing, the recording
fees and related taxes for the warranty
deeds, if any, the legal fees of its own
counsel, and any and all "title clearance"
documentation."
This document can be executed in multiple counterparts, each
of which shall be deemed an original and together which shall constitute one
instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment
under seal as of the date first above written.
PURCHASER:
VACATION BREAK USA, INC., a Florida
corporation
By: /s/ HANK CAIRO
--------------------------------
Hank Cairo,
SELLER:
LABREE, INC.,
a Florida corporation
By: /s/ W.M. HITSON
-----------------------------
- 3 -
<PAGE>
William M. Hitson, President
The foregoing Amendment is consented to by Labree Management,
Inc., a Florida corporation and the Royal Mansion Condominium Association, Inc.,
a Florida not-for-profit corporation, to the extent that their consent is
necessary to amend the Agreement.
LABREE MANAGEMENT, INC.,
a Florida corporation
By: /s/ W.M. HITSON
--------------------------------
William M. Hitson, President
ROYAL MANSION
CONDOMINIUM ASSOCIATION, INC.,
a Florida not-for-profit corporation
By:
-----------------------------------
, President
- 4 -
EXHIBITS 10.81
SECOND AMENDMENT TO AGREEMENT FOR
THE PURCHASE AND SALE OF REAL PROPERTY
This Amendment to the Agreement for the Purchase and Sale of
Real Property ("Amendment") is made and entered into this 23rd day of July,
1996, by and between LABREE, INC., a Florida corporation (hereinafter referred
to as "Seller") and VACATION BREAK U.S.A., INC., a Florida corporation
(hereinafter referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser entered into that certain
Agreement for the Purchase and Sale of Real Property executed on May 2, 1996
("Agreement"), said real property being that certain improved real property
known as Royal Mansion, a Condominium, as described on Exhibit "A-1" of the
Declaration of Condominium of Royal Mansion, a Condominium, which Declaration is
recorded in Official Record Book 2899, Page 799,et. seq., of the Public Records
of Brevard County, Florida; and
WHEREAS, the Agreement was amended by that certain First
Amendment to Agreement for the Purchase and Sale of Real Property ("First
Amendment") executed on June 14, 1996; and
WHEREAS, Seller and Purchaser further desire to amend the
Agreement in order to extend the Closing Date;
NOW, THEREFORE, for and in consideration of the covenant and
agreements hereinafter set forth, the sum of Ten Dollars ($10.00) and other good
and valuable consideration in hand paid by
<PAGE>
Purchaser to Seller, the receipt and sufficiency of which are hereby
acknowledged, Seller and Purchaser hereby amend the Agreement as follows:
1. The first sentence of the second paragraph
of paragraph 17 thereof is hereby amended as follows:
The Closing of the Property shall be held on or
before August 31, 1996, as determined solely by
Purchaser.
This document can be executed in multiple counterparts, each
of which shall be deemed an original and together which shall constitute one
instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment
under seal as of the date first above written.
PURCHASER:
VACATION BREAK USA, INC., a Florida
corporation
By: /s/ HANK CAIRO
--------------------------------
Hank Cairo,
SELLER:
LABREE, INC.,
a Florida corporation
By: /s/ W.M. HITSON
-----------------------------
William M. Hitson, President
-2-
<PAGE>
The foregoing Amendment is consented to by Labree Management,
Inc., a Florida corporation and the Royal Mansion Condominium Association, Inc.,
a Florida not-for-profit corporation, to the extent that their consent is
necessary to amend the Agreement.
LABREE MANAGEMENT, INC.,
a Florida corporation
By: /s/
--------------------------------
William M. Hitson, President
ROYAL MANSION
CONDOMINIUM ASSOCIATION, INC.,
a Florida not-for-profit corporation
By: /s/
-----------------------------------
, President
- 3 -
EXHIBIT 11.1
VACATION BREAK U.S.A., INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30
Three months ended
------------------
June 30, 1996 June 30, 1995
------------- -------------
Fully Primary and
Primary Diluted Fully Diluted
------- ------- -------------
Actual number of common shares outstanding 8,570,000 8,570,000 6,500,000
--------- --------- ---------
Weighted average number of common
shares issued and outstanding 8,570,000 8,570,000 6,500,000
Common stock equivalents completed under
the Treasury Stock method 295,391 408,918 -
--------- --------- ---------
8,865,391 8,978,918 6,500,000
--------- --------- ---------
Net income $4,938,950 $4,938,950 $ 936,490
--------- --------- ---------
Net income per share $0.56 $0.55 $0.14
--------- --------- ---------
Six months ended
------------------
June 30, 1996 June 30, 1995
------------- -------------
Fully Primary and
Primary Diluted Fully Diluted
------- ------- -------------
Weighted average number of common
shares issued and outstanding 8,555,000 8,555,000 6,500,000
Common stock equivalents computed under
the Treasury Stock method 201,236 359,403 -
--------- --------- ---------
8,756,236 8,914,403 6,500,000
--------- --------- ---------
Net income $6,426,949 $6,426,949 $2,982,490
--------- --------- ---------
Net income per share $0.73 $0.72 $0.46
--------- --------- ---------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 10,780
<SECURITIES> 118
<RECEIVABLES> 68,094
<ALLOWANCES> (2,199)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 14,233
<DEPRECIATION> (3,504)
<TOTAL-ASSETS> 130,247
<CURRENT-LIABILITIES> 103,379
<BONDS> 0
0
0
<COMMON> 86
<OTHER-SE> 26,783
<TOTAL-LIABILITY-AND-EQUITY> 130,247
<SALES> 91,637
<TOTAL-REVENUES> 95,370
<CGS> 0
<TOTAL-COSTS> 82,701
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 655
<INTEREST-EXPENSE> 1,614
<INCOME-PRETAX> 9,896
<INCOME-TAX> 3,469
<INCOME-CONTINUING> 6,427
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,427
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.72
</TABLE>
