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Sample Business ContractsHome: Sample Business Contracts:
LOAN NO.: 40656
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LOAN AGREEMENT
Dated June 3, 2003
BETWEEN
DIAMOND RUN CLUB, INC.
GREENBRIER COUNTRY CLUB, INC.
SHADOW RIDGE GOLF CLUB, INC.
BAY OAKS COUNTRY CLUB, INC.
and
WOODSIDE PLANTATION COUNTRY CLUB, INC.
BORROWERS
AND
GMAC COMMERCIAL MORTGAGE CORPORATION
LENDER
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS ..................................................... 3
1.1 Defined Terms ................................................... 3
ARTICLE 2 BORROWERS' REPRESENTATIONS, WARRANTIES AND COVENANTS ............15
2.1 Borrowers' Representations, Warranties and Covenants ............15
2.1.1 Accuracy of Recitals ...................................15
2.1.2 Existence and Ownership ................................15
2.1.3 No Litigation ..........................................15
2.1.4 Enforceability .........................................16
2.1.5 Compliance with Laws ...................................16
2.1.6 Access; Compliance with Laws ...........................16
2.1.7 Utilities ..............................................16
2.1.8 Leases .................................................17
2.1.9 Financial Information ..................................17
2.1.10 Consulting Agreement ...................................17
2.1.11 Adverse Effect .........................................17
2.1.12 Condition of Properties ................................17
2.1.13 No Material Change .....................................18
2.1.14 No Default .............................................18
2.1.15 No Violation ...........................................18
2.1.16 Physical Condition .....................................18
2.1.17 Survey .................................................18
2.1.18 Ownership ..............................................18
2.1.19 Operating Agreements ...................................18
2.1.20 Golf Course Operations .................................18
2.1.21 Tax Division ...........................................19
2.1.22 Non-Foreign Status of Borrowers ........................19
2.1.23 ERISA ..................................................19
2.1.24 Security Interest ......................................19
2.1.25 Bankruptcy .............................................19
2.1.26 No Illegal Activity as Source of Funds .................19
2.1.27 Compliance with Anti-Terrorism, Embargo, Sanctions and
Anti-Money Laundering Laws .............................19
2.1.28 Hazardous Substances ...................................19
2.1.29 Asbestos ...............................................20
2.1.30 Representations Remade .................................20
ARTICLE 3 GENERAL CONDITIONS OF LOAN ......................................20
3.1 Loan Documents ..................................................20
3.2 Additional Requirements .........................................20
3.2.1 Title Policy ...........................................20
3.2.2 Survey .................................................20
3.2.3 Opinion ................................................20
3.2.4 Insurance ..............................................20
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3.2.5 UCC Searches ...........................................21
3.2.6 Corporate Documentation ................................21
3.2.7 Environmental Assessment ...............................21
3.2.8 Subordination of Consulting Agreement ..................21
3.2.9 Leases/Subordination Agreements and Estoppels ..........21
3.2.10 Licenses, Permits and Approvals ........................21
3.2.11 Agreements .............................................21
3.2.12 Zoning .................................................21
3.2.13 Lender's Inspection ....................................22
3.2.14 Operating and Financial Statements .....................22
3.2.15 Other Items ............................................22
ARTICLE 4 FURTHER COVENANTS OF BORROWERS ..................................22
4.1 Further Covenants of Borrowers ..................................22
4.1.1 Taxes and Impositions ..................................22
4.1.2 Mortgage Taxes .........................................23
4.1.3 No Liens ...............................................24
4.1.4 Maintenance of Property ................................24
4.1.5 Personal Property ......................................24
4.1.6 Compliance .............................................25
4.1.7 Performance of Other Agreements ........................25
4.1.8 Lender's Expenses ......................................26
4.1.9 Loan Fee ...............................................26
4.1.10 Books and Records ......................................26
4.1.11 Annual Budget; Accounts ................................27
4.1.12 Management of the Properties ...........................28
4.1.13 Transfer or Encumbrance of the Properties ..............30
4.1.14 Certificates; Affidavits ...............................31
4.1.15 Leases .................................................31
4.1.16 Condemnation ...........................................32
4.1.17 Litigation .............................................32
4.1.18 Application of Gross Revenues; Distributions ...........32
4.1.19 Funds Deposited with Lender ............................33
4.1.20 Further Assurances .....................................33
4.1.21 Audit and Inspection by Lender .........................34
4.1.22 Single Purpose Entity; Authorization ...................35
4.1.23 Hazardous Substances ...................................36
4.1.24 Asbestos ...............................................37
4.1.25 Environmental Monitoring ...............................37
4.1.26 Handicapped Access .....................................38
4.1.27 ERISA ..................................................38
4.1.28 Compliance with Anti-Terrorism, Embargo, Sanctions and
Anti-Money Laundering Laws .............................39
4.1.29 Replacement Reserve ....................................39
4.1.30 Repair Reserve .........................................40
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4.1.31 Performance of Work ....................................40
4.1.32 Operations .............................................45
ARTICLE 5 AGREEMENT TO LEND ...............................................46
5.1 Agreement to Lend ...............................................46
5.2 Use of Loan Proceeds ............................................46
5.3 Partial Releases ................................................46
ARTICLE 6 INSURANCE AND CASUALTY; CONDEMNATION ............................47
6.1 Insurance Coverages .............................................47
6.2 Casualty ........................................................50
6.3 Condemnation ....................................................51
ARTICLE 7 BORROWERS' DEFAULT ..............................................53
7.1 Events of Default ...............................................53
7.2 Remedies ........................................................55
ARTICLE 8 MISCELLANEOUS ...................................................57
8.1 Indemnification .................................................57
8.2 Performance by Lender ...........................................57
8.3 Transfers .......................................................58
8.4 Lender's Actions ................................................58
8.5 Time is of the Essence ..........................................59
8.6 Waivers .........................................................59
8.7 Notice ..........................................................59
8.8 Successors and Assigns ..........................................60
8.9 No Partnership ..................................................60
8.10 Brokerage Claims ................................................60
8.11 Publicity .......................................................60
8.12 Remedies of Borrowers ...........................................60
8.13 Sole Discretion of Lender .......................................60
8.14 Non-Waiver ......................................................61
8.15 Entire Agreement ................................................61
8.16 Severability ....................................................61
8.17 No Third Party Beneficiary ......................................61
8.18 Choice of Law ...................................................61
8.19 Recourse and Indemnification ....................................62
8.20 Written Agreement ...............................................65
8.21 Construction ....................................................65
8.22 Waiver of Jury Trial ............................................65
8.23 Consent to Jurisdiction .........................................66
8.24 Agent for Receipt of Process ....................................66
8.25 Service of Process ..............................................66
8.26 Counterparts ....................................................67
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EXHIBITS
EXHIBIT A-1 Diamond Run Legal Description
EXHIBIT A-2 Greenbrier Legal Description
EXHIBIT A-3 Shadow Ridge Legal Description
EXHIBIT A-4 Bay Oaks Legal Description
EXHIBIT A-5 Woodside Legal Description
EXHIBIT B-1 Diamond Run Permitted Encumbrances to Title
EXHIBIT B-2 Greenbrier Permitted Encumbrances to Title
EXHIBIT B-3 Shadow Ridge Permitted Encumbrances to Title
EXHIBIT B-4 Bay Oaks Permitted Encumbrances to Title
EXHIBIT B-5 Woodside Permitted Encumbrances to Title
EXHIBIT C Repairs, Construction and Deferred Maintenance
EXHIBIT D Replacement and Capital Improvements
Schedule 1.1.66 Phase I Environmental Site Assessments
Schedule 2.1.19 Personal Property and Equipment not owned by Borrowers
Schedule 2.1.17 Physical Conditions
Schedule 4.1.22 SPE Requirements
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THIS LOAN AGREEMENT (this "Agreement") is dated June 3, 2003 between
DIAMOND RUN CLUB, INC., a Pennsylvania corporation ("Diamond Run Borrower"),
GREENBRIER COUNTRY CLUB, INC., a Virginia corporation ("Greenbrier Borrower"),
SHADOW RIDGE GOLF CLUB, INC., a California corporation ("Shadow Ridge
Borrower"), BAY OAKS COUNTRY CLUB, INC, a Texas corporation ("Bay Oaks
Borrower"), and WOODSIDE PLANTATION COUNTRY CLUB, INC., a South Carolina
corporation ("Woodside Borrower") each with a mailing address c/o ClubCorp,
Inc., 3030 LBJ Freeway, Suite 700, Dallas, Texas 75234-7703, Attn: Treasurer
(each a "Borrower" and together "Borrowers") and GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation having an address of 200 Witmer Road,
Horsham, PA 19044, Attention: Servicing - Executive Vice President ("Lender").
RECITALS
A. The Properties.
1. Diamond Run Borrower is the owner of the parcel of real property
commonly known as Diamond Run Country Club, in Sewickley, PA which property is
more particularly described on Exhibit A-1 attached hereto (the "Diamond Run
Land"), together with the 18-hole golf course on 208 acres, with an
approximately 15,442 sq. ft. clubhouse, an approximately 1,250 sq. ft. cart
storage shed and an approximately 7,200 sq. ft. maintenance building and all
other improvements located thereon (the "Diamond Run Improvements") and together
with all furniture, fixtures, equipment and other personal property now or
hereafter used in the management and operation of said golf course and athletic
facility. The Diamond Run Land and the Diamond Run Improvements are hereinafter
collectively referred to as the "Diamond Run Premises". The Diamond Run Premises
and the Personal Property at the Diamond Run Premises are hereinafter
collectively referred to as the "Diamond Run Property".
2. Greenbrier Borrower is the owner of the parcel of real property
commonly known as Greenbrier Country Club, Chesapeake, VA which property is more
particularly described on Exhibit A-2 attached hereto (the "Greenbrier Land"),
together with the 18-hole golf course on 203 acres, with a practice range, an
approximately 28,000 sq. ft. clubhouse, a covered cart storage area, tennis
facility with 8 tennis courts and a swimming pool, three maintenance buildings
aggregating approximately 7,100 sq. ft. and all other improvements located
thereon (the "Greenbrier Improvements") and together with all furniture,
fixtures, equipment and other personal property now or hereafter used in the
management and operation of said golf course and athletic facility. The
Greenbrier Land and the Greenbrier Improvements are hereinafter collectively
referred to as the "Greenbrier Premises". The Greenbrier Premises and the
Personal Property at the Greenbrier Premises are hereinafter collectively
referred to as the "Greenbrier Property".
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3. Shadow Ridge Borrower is the owner of the parcel of real property
commonly known as Shadow Ridge Country Club, Vista, CA which property is more
particularly described on Exhibit A-3 attached hereto (the "Shadow Ridge Land"),
together with the 18-hole golf course on 143 acres, with an 18 tee practice
range, an approximately 15,000 sq. ft. clubhouse, containing an approximately
5,775 sq. ft. cart storage area, an approximately 4,000 sq. ft. maintenance
building and a fitness center/snack bar and all other improvements located
thereon (the "Shadow Ridge Improvements") and together with all furniture,
fixtures, equipment and other personal property now or hereafter used in the
management and operation of said golf course and athletic facility. The Shadow
Ridge Land and the Shadow Ridge Improvements are hereinafter collectively
referred to as the "Shadow Ridge Premises". The Shadow Ridge Premises and the
Personal Property at the Shadow Ridge Premises are hereinafter collectively
referred to as the "Shadow Ridge Property".
4. Bay Oaks Borrower is the owner of the parcel of real property
commonly known as Bay Oaks Country Club, Houston, TX which property is more
particularly described on Exhibit A-4 attached hereto (the "Bay Oaks Land"),
together with the 18-hole golf course on 176 acres, with an approximately 25,000
sq. ft. clubhouse, with an approximately adjacent 5,000 sq. ft. cart storage
area, tennis facility with an approximately 2,000 sq. ft. tennis and swim club
with 9 lighted tennis courts and a swimming pool, and an approximately 5,000 sq.
ft. and an approximately 1,800 sq. ft. maintenance building, and all other
improvements located thereon (the "Bay Oaks Improvements") and together with all
furniture, fixtures, equipment and other personal property now or hereafter used
in the management and operation of said golf course and athletic facility. The
Bay Oaks Land and the Bay Oaks Improvements are hereinafter collectively
referred to as the "Bay Oaks Premises". The Bay Oaks Premises and the Personal
Property at the Bay Oaks Premises are hereinafter collectively referred to as
the "Bay Oaks Property".
5. Woodside Borrower is the owner of the parcel of real property
commonly known as Woodside Country Club, Aiken, SC which property is more
particularly described on Exhibit A-1 attached hereto (the "Woodside Land"),
together with two 18-hole golf courses and 9 hole "pitch and put" course on 255
acres, with an approximately 27,000 sq. ft. clubhouse, containing an
approximately 7,000 sq. ft. cart storage area, a tennis facility with 10 tennis
courts and a swimming pool and an approximately 10,600 sq. ft. maintenance
building and all other improvements located thereon (the "Woodside
Improvements") and together with all furniture, fixtures, equipment and other
personal property now or hereafter used in the management and operation of said
golf course and athletic facility. The Woodside Land and the Woodside
Improvements are hereinafter collectively referred to as the "Woodside
Premises". The Woodside Premises and the Personal Property at the Woodside
Premises are hereinafter collectively referred to as the "Woodside Property".
The Diamond Run Land, the Greenbrier Land, the Shadow Ridge Land, the Bay
Oaks Land and the Woodside Land are collectively referred to as the "Land." The
Diamond Run Premises, the Greenbrier Premises, the Shadow Ridge Premises, the
Bay Oaks Premises and the Woodside Premises are collectively referred to as the
"Premises." The Diamond Run Personal Property, the Greenbrier Personal Property,
the Shadow Ridge Personal Property, the Bay Oaks
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Personal Property and the Woodside Personal Property are collectively referred
to as the "Personal Property." The Diamond Run Property, the Greenbrier
Property, the Shadow Ridge Property, the Bay Oaks Property and the Woodside
Property are individually referred to as a "Property" and collectively referred
to as the "Properties."
B. The Loan. Borrowers desire to borrow from Lender $31,000,000, in the
Allocated Loan Amounts (hereinafter defined) in order to refinance existing debt
on the Properties and fund the cost of certain additional improvements on the
Properties.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, Borrowers and Lender agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. In this Agreement, the following terms shall have the
following meanings:
1.1.1 "Access Laws" - the Americans with Disabilities Act of 1990, all
state and local laws and ordinances related to handicapped access and all rules,
regulations, and orders issued pursuant thereto including, without limitation,
the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities.
1.1.2 "Accounts" - interest bearing accounts at one or more federally
insured institutions selected by Lender in connection with Section 4.1.11 of
this Agreement.
1.1.3 "Allocated Loan Amount" - $5,000,000 with respect to the Diamond
Run Property; $6,000,000 with respect to the Greenbrier Property; $6,000,000
with respect to the Shadow Ridge Property; $6,000,000 with respect to the Bay
Oaks Property; and $8,000,000 with respect to the Woodside Property.
1.1.4 "Advance" - an advance by Lender to Borrowers in accordance with
the terms and conditions of the Notes, this Agreement, the Mortgages or any
other Loan Documents.
1.1.5 "Affiliate" - with respect to any Borrower, shall mean any
entity owned or controlled by, controlling or under common control with any
Borrower or Guarantor; and with respect to any Borrower and any other Person,
shall mean any other Person which directly or indirectly controls, or is under
common control with, or is controlled by, such Person and, if such Person is an
individual, any family member (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is such individual or one
or more family members and any Person who is controlled by any such family
member or trust. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person
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which owns directly or indirectly 25% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation or 25% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control an entity or other Person. Notwithstanding the foregoing, no
individual shall be deemed to be an Affiliate of a corporation solely by reason
of his or her being an officer or director of an entity.
1.1.6 "Applicable Reserve" - as defined in Section 4.1.31.
1.1.7 "Asbestos" - asbestos or any substance containing asbestos.
1.1.8 "Bankruptcy Code" - the United States Bankruptcy Code and any
similar state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts.
1.1.9 "Budget" - the budget for the use and application of the Loan
and gross income derived from the operation of each Property, including all
expenses to be satisfied from the Accounts, as set forth in the budget delivered
by each Borrower to Lender on the date hereof with respect to the balance of the
current calendar year, and the annual budget to be delivered in accordance with
the terms hereof for each subsequent calendar year for so long as any portion of
the Debt remains outstanding.
1.1.10 "Business Day" - any day other than a Saturday, Sunday or legal
holiday on which commercial banks are authorized or required to be closed in
Pennsylvania or Texas.
1.1.11 "Closing" - the closing of the Loan contemplated by this
Agreement.
1.1.12 "Code" - the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder.
1.1.13 "Condemnation" - as defined in Section 6.3.
1.1.14 "Consulting Agreement" - the Consulting Agreement dated
December 25, 2002, between each Borrower and ClubCorp USA, Inc. ("Property
Consultant").
1.1.15 "Contract Assignment" - the Assignment of Contracts, Licenses,
Permits, Agreements, Warranties and Approvals dated the date hereof from each
Borrower to Lender.
1.1.16 "Cross Collateralizing Guaranty" - the Guaranty executed by
Diamond Run Borrower guarantying payment of the Greenbrier Note, the Shadow
Ridge Note, Bay Oaks Note and the Woodside Note; the Guaranty executed by
Greenbrier Borrower guarantying payment of the Diamond Run Note, the Shadow
Ridge Note, the Bay Oaks Note and the Woodside Note; the Guaranty executed by
Shadow Ridge Borrower guarantying payment of the Diamond Run Note, the
Greenbrier Note, the Bay Oaks Note and the Woodside Note; the Guaranty executed
by Bay Oaks Borrower guarantying payment of the Diamond Run Note, the Greenbrier
Note, the Shadow Ridge Note and the Woodside Note; the Guaranty executed by
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Woodside Borrower guarantying payment of the Diamond Run Note, the Greenbrier
Note, the Shadow Ridge Note and the Bay Oaks Note.
1.1.17 "Cross Collateralizing Mortgage" - Second Mortgage executed by
Diamond Run Borrower securing payment of the Cross Collateralizing Guaranty
executed by Diamond Run Borrower; Second Deed of Trust executed by Greenbrier
Borrower securing payment of the Cross-Collateralizing Guaranty executed by
Greenbrier Borrower; Second Deed of Trust executed by Shadow Ridge Borrower
securing payment of the Cross-Collateralizing Guaranty executed by Shadow Ridge
Borrower; the Second Deed of Trust executed by Bay Oaks Borrower securing
payment of the Cross-Collateralizing Guaranty executed by Bay Oaks Borrower; and
the Second Mortgage executed by Woodside Borrower securing payment of the
Cross-Collateralizing Guaranty executed by Woodside Borrower.
1.1.18 "Debt" - the outstanding principal balance of the Notes from
time to time, with all accrued and unpaid interest thereon, and all other sums
now or hereafter due under the Loan Documents.
1.1.19 "Debt Service Coverage Ratio" - the ratio, as determined by
Lender, of:
(i) the NOI produced by the operation of a Property or
Properties, as applicable, during the twelve (12) calendar month period
immediately preceding the calculation, to
(ii) the projected payments of principal and interest due under
the Note or Notes, as applicable, for the twelve (12) calendar month period
immediately following the calculation based on (i) an interest rate the greater
of the actual rate on the Notes at the time of determination or 10% and (ii) a
25 year amortization schedule,
as said coverage ratio is reasonably calculated by Lender in accordance with its
then-applicable underwriting standards.
1.1.20 "Default Rate" - as defined in the Notes.
1.1.21 "Deposit" - a deposit in the amount of $2,723,300 into the
Repair Escrow Account.
1.1.22 "Environmental Agreements" - the Environmental Indemnity
Agreements of even date herewith from each Borrower and Guarantor to Lender.
1.1.23 "Environmental Laws" - local, state, federal or other
governmental authority, statute, ordinance, code, order, decree, law, rule or
regulation or common law pertaining to or imposing liability or standards of
conduct concerning the protection of human health, environmental regulation,
contamination or clean-up including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the Resource
Conservation and Recovery Act, as amended, and any state super-lien and
environmental clean-up statutes.
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1.1.24 "Equipment" - as defined in the Mortgages.
1.1.25 "ERISA" - the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended.
1.1.26 "Event of Default" - the occurrence of any one or more of the
events set forth in Section 7.1.
1.1.27 "Expenses" - the aggregate of the following items actually
incurred by a Borrower, whether or not paid, during the twelve (12) month period
ending one (1) month prior to the date on which the NOI is to be calculated
(except that capital expenses and reserves set forth in subsection (xiv) below
shall be adjusted by Lender to reflect projected adjustments for the subsequent
twelve (12) month period beginning on the date on which the NOI is to be
calculated):
(i) departmental expenses incurred at departments within a
Property;
(ii) administrative and general expenses incurred by a Property;
(iii) marketing, advertising and business promotion expenses
incurred by a Property;
(iv) all utility costs including heat, light power, water,
telephone, and computer line charges;
(v) operations and maintenance expenses, which include the cost
of necessary repair or replacement of Improvements or replacement of Equipment
of like kind and quality or such kind or quality that is necessary to maintain a
Property to the standards are required under this Agreement or any of the Loan
Documents, as determined by Lender (to the extent such are paid for by a
Borrower from sources other than the Repair Escrow Agreement or Replacement
Reserve Account);
(vi) common area maintenance fees and improvement district
assessments;
(vii) consulting fees required under the Consulting Agreement and
Shared Services Agreement (not to exceed four percent (4%), in the aggregate, of
the gross income derived from the operation of the Properties, other than
membership initiation fees, if an Event of Default shall have occurred);
(viii) Taxes and Other Charges (to the extent such are paid by
each Borrower from sources other than the Tax and Insurance Escrow Account);
(ix) Insurance Premiums (to the extent such are paid by each
Borrower from sources other than the Tax and Insurance Escrow Account);
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(x) monthly installments (exclusive of the initial deposit made
by each Borrower) to the Tax and Insurance Escrow Account the and Replacement
Reserve Accounts;
(xi) lease payments and associated costs on any operating and
capital leases of Equipment;
(xii) rental payments pursuant to any ground lease;
(xiii) all costs and fees of independent professionals or other
third parties who are retained by a Property Consultant to perform services
required or permitted under the Consulting Agreement; and
(xiv) such other costs and expenses incurred by a Property
Consultant as are otherwise reasonably necessary for the proper and efficient
operation of the Properties.
1.1.28 "FF&E Financing" - any leases or other financing for Equipment.
1.1.29 "Financing Statements" - any and all UCC financing statements
filed by or on behalf of Lender as additional security hereunder.
1.1.30 "Fiscal Month" - a twenty-eight (28) day period, or a portion
thereof, commencing on the first day following the termination of the prior
Fiscal Month. The first Fiscal Month may be a short Fiscal Month ending on the
date which would have been the last date for such Fiscal Month if the first
Fiscal Year of the Term had begun on the Wednesday following the last Tuesday in
the December immediately preceding the date hereof.
1.1.31 "Fiscal Quarter" - the term "Fiscal Quarter" shall mean a
fourth of a Fiscal Year. There shall be four (4) Fiscal Quarters in each Fiscal
Year, the first three which shall consist of three (3) Fiscal Months and the
last of which shall consist of four (4) Fiscal Months. The first Fiscal Quarter
of each Fiscal Year shall commence on the first day of each Fiscal Year and the
last Fiscal Quarter shall end on the last day of the Fiscal Year; provided,
however, that for purposes hereof, the first Fiscal Quarter may be a short
Fiscal Quarter beginning on the first day of the first Fiscal Month beginning on
or after the Closing Date and ending on that date which would have been the
ending date for such Fiscal Quarter if such Fiscal Quarter had been part of a
Fiscal Year commencing on the Wednesday following the last Tuesday in the
December immediately preceding the Closing Date.
1.1.32 "Fiscal Year" - a period commencing on the Wednesday following
the last Tuesday in December of each calendar year and ending on the last
Tuesday of the next following December, provided, however, that the first Fiscal
Year may be a short Fiscal Year commencing on the date hereof and ending on the
last Tuesday of the following December.
1.1.33 "Force Majeure Event" - means any event beyond the reasonable
control of the party in question, including, but not limited to, war, invasion,
rebellion, revolution, insurrection, riots, an act of government or a
quasi-governmental authority, earthquakes, hurricanes, tidal waves, inclement
weather or any act of God or operation of forces of nature
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which reasonably foresight and ability on the part of the affected party could
not reasonably prevent or provide against, and strikes, lockouts or other
employee disturbances (except to the extent such strikes, lockouts or other
employee disturbances take place at the Premises only), but shall specifically
not include economic conditions, recessions, the effects of competition, acts or
omissions of a contractor or architect or shortages in or the unavailability of
materials, supplies, labor or equipment.
1.1.34 "GAAP" - generally accepted accounting principals consistently
applied.
1.1.35 "Governmental Authority" - the United States of America, the
states in which the Properties are located, the state under the laws of which
any Borrower is organized, any political subdivision of any of them, any court,
agency, department, commission, board, bureau or instrumentality of any of them,
and any Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to such government.
1.1.36 "Gross Revenues" - as defined in the definition of NOI.
1.1.37 "Guarantor" - C1ubCorp, Inc. a Delaware corporation.
1.1.38 "Guaranty" - the Guaranty of Recourse Obligations of even date
herewith from Guarantor to Lender in connection with the Loan.
1.1.39 "Hazardous Substances" - hazardous and/or toxic, dangerous
and/or regulated substances, solvents, wastes, materials, pollutants or
contaminants, petroleum, tremolite, anthlophylie or actinolite or
polychlorinated biphenyls (including, without limitation, any raw materials
which include hazardous constituents) and any other substances, materials or
solvents which are included under or regulated by Environmental Laws, including,
without limitation, Asbestos.
1.1.40 "Incipient Default" - any condition which with the giving of
notice by Lender or the passage of time, or both, would constitute an Event of
Default.
1.1.41 "Initial Disbursement" - the first disbursement of Loan
Proceeds.
1.1.42 "Insurance Premiums" - the premiums for Policies.
1.1.43 "Insured Casualty" - any insured damage to or destruction of
any Property or any part thereof.
1.1.44 "Intangibles" - as defined in the Mortgages.
1.1.45 "Investor" - each purchaser, transferee, assignee, servicer,
participant or investor in the Loans or any credit rating agency rating such
Securities involving the Loans.
1.1.46 "Lease" - any lease or other rental or occupancy agreement with
respect to a Property or any portion thereof.
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1.1.47 "Lease Assignments" - the Assignment of Leases and Rents and
Profits of even date herewith from each Borrower to Lender.
1.1.48 "Lender's Consultant" - the architect, engineer or other
consultant retained by Lender to inspect the Improvements on behalf of Lender;
in the event all or a portion of such functions are performed by Lender,
references in this Agreement to Lender's Consultant shall be deemed to be
references to Lender.
1.1.49 "Loan" - the loan evidenced by the Notes.
1.1.50 "Loan Documents" - this Agreement, the Notes, the Mortgages,
the Security Agreements, the Guaranty, the Environmental Agreements, the
Contract Assignments, the Lease Assignments, the Financing Statements, the Cross
Collateralizing Guaranties, the Cross Collateralizing Mortgages and such other
documents and agreements as Lender may require in connection with the Loan, each
as the same may be modified or amended from time to time.
1.1.51 "Loan Fee" - $310,000, i.e. one percent (1%) of the principal
amount of the loan
1.1.52 "Loan Month" - any full calendar month during the term of this
Agreement.
1.1.53 "Loan Party" - each Borrower and Guarantor.
1.1.54 "Loan-To-Value Ratio" means the ratio of: (i) the Debt, plus
all other debt (or other liquidated economic obligations) which is then
outstanding and secured by the Properties, to (ii) the appraised value of the
Properties as estimated by an appraiser acceptable to Lender. Any appraisal for
purposes of calculating the Loan-To-Value Ratio shall be performed in accordance
with the then-approved standards under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended.
1.1.55 "Maturity Date" - the Maturity Date (as such term is defined in
the Notes) or any earlier acceleration of sums due under the Notes pursuant to
Lender's declaration of an Event of Default.
1.1.56 "Monthly Deposits" - monthly deposits into each Replacement
Reserve Account as described in Section 4.1.11.
1.1.57 "Mortgages" - (a) Open End Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing of even date herewith from Diamond
Run Borrower to Lender on the Diamond Run Premises, securing the Diamond Run
Note and Diamond Run Borrower's obligations under the other Loan Documents; (b)
the Deed of Trust, Assignment of Leases and Profits, Security Agreement and
Fixture Filing of even date herewith from Greenbrier Borrower to Lender on the
Greenbrier Premises, securing the Greenbrier Note and Greenbrier Borrower's
obligations under the other Loan Documents; (c) the Deed of Trust, Assignment of
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Leases and Profits, Security Agreement and Fixture Filing of even date herewith
from Shadow Ridge Borrower to Lender on the Shadow Ridge Premises, securing the
Shadow Ridge Note and Shadow Ridge Borrower's obligations under the other Loan
Documents; (d) the Deed of Trust, Assignment of Leases and Profits, Security
Agreement and Fixture Filing of even date herewith from Bay Oaks Borrower to
Lender on the Bay Oaks Premises, securing the Bay Oaks Note and Bay Oaks
Borrower's obligations under the other Loan Documents; and (e) the Mortgage and
Security Agreement of even date herewith from Woodside Borrower to Lender on the
Woodside Premises, securing the Woodside Note and Woodside Borrower's
obligations under the other Loan Documents;
1.1.58 "NOI" - as of any date of determination, the aggregate amount
of the following (referred to as "Gross Revenues") derived from the operation of
a Property for the twelve (12) month period prior to each respective date of
determination, including, without limitation, golf club membership sale and
initiation payments, whether representing cash payments or payments of financed
membership and initiation fees, membership fees and dues (however, membership
initiation deposits and fees shall not exceed 10% of Gross Revenues), green
fees, golf cart fees, driving range fees, rentals, expense pass throughs, fees,
and service charges to users, members, tenants, subtenants, licensees or other
occupants of commercial or retail space in a Property, revenues from the
restaurant, bar, lounge, conference and banquet rooms, revenues from food and
beverage service and facilities, including off-site catering, telephone
services, vending, pro shop, snack bar, clubhouse, recreational and health club
facilities and parking in a Property and other items of revenue, receipts or
income, interest income, other fees and charges resulting from the operations of
a Property by a Borrower or Property Consultant in the ordinary course of
business, but not including (i) gratuities or service charges or other similar
receipts collected by a Borrower or Property Consultant which are to be paid
over to Property employees or persons occupying similar positions for performing
similar duties; (ii) proceeds of insurance or other money or credits received in
settlement for loss, theft, or damage to property relating to or used in a
Property; (iii) excise taxes, sales taxes, use taxes, admission taxes, gross
receipts taxes, value added taxes, entertainment taxes or other taxes or similar
charges collected by a Borrower payable to governmental authorities; (iv)
proceeds from any financing or refinancing of a Property; (v) condemnation
awards; (vi) proceeds of insurance received by a Borrower or Property Consultant
with respect to rent loss, use and occupancy or business interruption insurance;
(vii) deposits forfeited and not refunded; (viii) any amounts recovered in any
legal actions or proceedings, or settlements thereof, arising out of the
operation of a Property; (ix) receipts arising from the sale or other
disposition of furniture, fixtures or equipment other than pro shop revenue, and
(x) such other exclusions as may be required by Lender in its reasonable
discretion, less the aggregate amount of Expenses relating to a Property for the
twelve (12) month period prior to each respective date of determination,
adjusted as Lender deems reasonably necessary to reflect the actual net
operating income of a Property. NOI shall include only Profits and such other
income, including any rent loss, business interruption or business income
insurance proceeds, vending or concession income, late fees, forfeited security
deposits and other miscellaneous tenant charges, which are actually received and
Expenses actually incurred or payable during the period for which the NOI is
being calculated, as set forth on operating statements satisfactory to Lender.
NOI shall be calculated on an accrual basis with
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respect to Gross Revenues, and on an accrual basis with respect to Expenses, and
otherwise in accordance with generally accepted accounting principles
consistently applied.
1.1.59 "Notes" - the Promissory Note from Diamond Run Borrower to the
order of Lender of even date herewith in the stated principal amount of
$5,000,000, as the same may be modified or amended from time to time (the
"Diamond Run Note"); the Promissory Note from Greenbrier Borrower to the order
of Lender of even date herewith. in the stated principal amount of $6,000,000 as
the same may be modified or amended from time to time (the "Greenbrier Note");
the Promissory Note from Shadow Ridge Borrower to the order of Lender of even
date herewith in the stated principal amount of $6,000,000, as the same may be
modified or amended from time to time (the "Shadow Ridge Note"); the Promissory
Note from Bay Oaks Borrower to the order of Lender of even date herewith in the
stated principal amount of $6,000,000, as the same may be modified or amended
from time to time (the "Bay Oaks Note"); and the Promissory Note from Woodside
Borrower to the order of Lender of even date herewith in the stated principal
amount of $8,000,000, as the same may be modified or amended from time to time
(the "Woodside Note").
1.1.60 "O&M Plan" - an operations and maintenance plan for a Property
with respect to the presence of Asbestos in the Improvements.
1.1.61 "OFAC List" - the list of specially designated nationals and
blocked persons subject to financial sanctions that is maintained by the U.S.
Treasury Department, Office of Foreign Assets Control and any other similar list
maintained by the U.S. Treasury Department, Office of Foreign Assets Control
pursuant to any Requirements of Law, including, without limitation, trade
embargo, economic sanctions, or other prohibitions imposed by Executive Order of
the President of the United States. The OFAC List currently is accessible
through the internet website www.treas.gov/ofac.
1.1.62 "Operating Agreements" - any agreement or instrument affecting
or pertaining to a Property, including, without limitation, the Permitted
Exceptions, cart leases and equipment leases, documents relating to the
construction of Improvements, agreements and permits relating to the supply of
water for irrigation and other uses to the Properties.
1.1.63 "Other Charges" - all ground rents, maintenance charges, other
governmental impositions, and other charges including, without limitation, vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Land, now or hereafter levied, assessed or imposed against a
Property or any part thereof.
1.1.64 "Parent" - ClubCorp USA, Inc., a Delaware corporation, the sole
owner of Borrowers and a wholly owned subsidiary of Guarantor.
1.1.65 "Partial Release Conditions" - all of the following conditions
with respect to a proposed release of a Property from the lien of the Mortgage:
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(a) No Event of Default or Incipient Default shall have occurred and
be continuing;
(b) Borrowers shall either have paid Lender an amount equal to 115% of
the Allocated Loan Amount for such Property or shall have substituted a Property
satisfying all of the conditions for a "Substitute Property", subject to the
limitation that the option to provide a Substitute Property may be used only
twice during the term of the Loan;
(c) Borrowers shall have paid Lender a release fee equal to 3% of the
amount of the Loan prepaid if such prepayment occurs during loan months 25
through 36;
(d) The remaining Properties (after application of the release price)
shall have a Debt Service Coverage Ratio of 1.4x or greater, determined using
(i) an interest rate the greater of the actual rate on the Notes at the time of
determination or 10% and (ii) a 25 year amortization schedule and with NOI
adjusted so that payments of membership and initiation fees do not exceed 10% of
total Gross Revenues; and
(e) No Partial Release may occur until June 2, 2005.
1.1.66 "Permitted Encumbrances" - the liens, claims, assessments,
encumbrances and rights of others encumbering title to the Premises and the
Personal Property which are set forth on Exhibits B-1 through B-5.
1.1.67 "Person" - an individual, partnership, limited partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature.
1.1.68 "Personal Property" - as defined in the Mortgages.
1.1.69 "Phase I" - the Phase I Environmental I Site Assessments
described in Schedule 1.1.66.
1.1.70 "Policies" - all policies of insurance required by Section 6.1.
1.1.71 "Proceeds" - all proceeds, judgments, claims, compensation,
awards of damages and settlements with respect to or hereafter made as a result
of or in lieu of any condemnation or taking of the Premises by eminent domain or
any casualty loss of or damage to any of the Premises, the Equipment, the
Intangibles, the Leases or the Profits (each as defined in the Mortgages), all
refunds with respect to the payment of property taxes and assessments, and all
other proceeds of the conversion, voluntary or involuntary, of the Premises, the
Equipment, the Intangibles, the Leases or the Property Income, or any part
thereof, into cash or liquidated claims.
1.1.72 "Remedial Work" - any inspection, assessment, investigation,
site monitoring, containment, cleanup, removal, restoration, corrective action
or other work of any kind to prevent, cure or mitigate any release, spill,
emission, leaking, pumping, injection,
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deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including, without limitation, the movement of Hazardous
Substances through ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata, or which is reasonably necessary or desirable under
an applicable Environmental Law, and the matters described on Exhibit C as
Environmental Matters.
1.1.73 "Repair Escrow Account" - as defined in Section 4.1.11.
1.1.74 "Repairs" - the repairs, construction and deferred maintenance
at the Properties listed on Exhibit C.
1.1.75 "Replacement Reserve Account" - as defined in Section 4.1.11.
1.1.76 "Replacements" - the replacements and capital improvements at
the Properties listed on Exhibit D and such other replacements of Equipment (as
defined in the Mortgages) as Lender may approve from time to time.
1.1.77 "Request for Release" - as defined in Section 4.1.31.
1.1.78 "Required Improvements" as described in Exhibit C.
1.1.79 "Requirements of Law" - (a) the organizational documents of an
entity, and (b) any law, regulation, ordinance, code, decree, treaty, ruling or
determination of an arbitrator, court or other Governmental Authority, or any
Executive Order issued by the President of the United States, in each case
applicable to or binding upon such Person or to which such Person, any of its
property or the conduct of its business is subject including, without
limitation, laws, ordinances and regulations pertaining to the zoning, occupancy
and subdivision of real property.
1.1.80 "Securities" - one or more classes of mortgage-backed,
pass-through certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement.
1.1.81 "Securitization" as defined in Section 4.1.20.
1.1.82 "Security Agreements" - the Security Agreements of even date
herewith from each Borrower, as debtor, to Lender, as secured party.
1.1.83 "Shared Services Agreement" - the Shared Services Agreements
dated December 25, 2002, 2003 between ClubCorp Financial Management Company, a
Nevada corporation ("Service Provider") and each Borrower.
1.1.84 "Substitute Property" - a property which Borrowers propose to
substitute for a Property which meets all of the following requirements:
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(a) The appraised value allocated to the Substitute Property shall be
no less than the appraised value of the Property Borrowers propose to be
released;
(b) The Allocated Loan Amount for the Substitute Property shall not be
greater than the Allocated Loan Amount for the Released Property;
(c) The Debt Service Coverage Ratio of the Properties, excluding the
Release Property and adding the Substitute Property, shall be equal to or
greater than the Debt Service Coverage Ratio of the Properties immediately prior
to the proposed release and substitution;
(d) Borrowers shall have paid an asset substitution fee equal to 0.5%
of the Allocated Loan Amount for the Substitute Property established by Lender
and all costs and expenses of Lender, including, without limitation, legal fees
and expenses and title charges in connection with such substitution;
(e) No Event of Default or Incipient Default shall have occurred and
be continuing;
(f) Borrowers shall have the right to only two (2) Property
substitutions, and the total of the Allocated Loan Amounts for all Substitute
Properties shall not be greater than 40% of the aggregate Allocated Loan Amounts
on the date hereof;
(g) Lender shall have approved the Substitute Property, in its good
faith judgment, giving consideration to the operations, prospects, condition and
location of the Property and such other factors as Lender uses in underwriting
golf course properties; and
(h) Borrowers shall have executed such notes, mortgages, security
agreements, amendments to this Agreement and the Loan Documents as Lender may
request and satisfy all of the conditions set forth in this definition and the
definition of Partial Release with respect to such Substitute Property.
1.1.85 "Tax and Insurance Escrow Account" -as defined in Section
4.1.11.
1.1.86 "Tax and Insurance Escrow Fund" - all amounts collected under
Section 4.1.1.
1.1.87 "Taxes" - all taxes, assessments, water rates and sewer rents,
now or hereafter levied, assessed or imposed against any Property or any part
thereof.
1.1.88 "Title Company" - Stewart Title Guaranty Company.
1.1.89 "Title Policy" - a mortgagee's policy or policies of title
insurance issued on the 1970 ALTA form by the Title Company in the aggregate
face amount of $31,000,000, together with such reinsurance and direct access
agreements as Lender may request, guaranteeing as of the date of the Closing,
the Mortgages to be a valid first and prior lien on each Borrower's fee simple
interest in the Premises (including any easements appurtenant thereto)
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subject only to the Permitted Encumbrances. The Title Policy shall contain such
endorsements as Lender may reasonably require.
1.1.90 "Work" - Repairs or Replacements, as applicable.
1.1.91 In this Agreement, the word "including" shall mean "including
without limitation."
ARTICLE 2
BORROWERS' REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 Borrowers' Representations, Warranties and Covenants. Each Borrower
hereby represents, covenants and warrants as follows:
2.1.1 Accuracy of Recitals. Each of the recitals to this Agreement is
true and correct.
2.1.2 Existence and Ownership. Such Borrower is duly organized and
validly existing in good standing under the applicable laws of the state of its
creation as a corporation, and such Borrower is qualified to do business in and
is in good standing in its state of formation and in the state in which its
Property is located, with full power, right, authority and legal capacity to
enter into this Agreement, the Loan and the Loan Documents and to operate its
Property as contemplated hereunder. If the issuance of any interest in any
Borrower is subject to any so-called "Blue Sky Laws" and/or any federal
securities laws and regulations, each such issuance has been in compliance with
all such laws and regulations to which it is subject.
2.1.3 Execution. The execution, delivery and performance of the Loan
Documents executed or delivered by such Borrower and the consummation of the
transactions contemplated thereby: (i) have been duly authorized by all
requisite actions; (ii) have been approved or consented to by all of their
respective constituent entities whose approval or consent is required to be
obtained; (iii) do not require the approval or consent of any governmental
authority having jurisdiction over any of such Borrower or its Property; (iv) do
not and will not constitute a violation of, or default under, the governing
instruments of such Borrower or any applicable requirement of a governmental
authority; and (v) will not be in contravention of any court or administrative
order or ruling applicable to such Borrower or its Property, or any mortgage,
indenture, agreement, commitment or instrument to which such Borrower is a party
or by which it or its assets are bound, nor create or cause to be created any
mortgage, lien, encumbrance, or charge against the assets of such Borrower other
than those permitted by the Loan Documents.
2.1.4 No Litigation. There are no actions, suits or proceedings
pending, or, to the best knowledge of such Borrower, threatened, nor any pending
or, to the best knowledge of such Borrower, threatened labor disputes, against
or affecting such Borrower or its Property, or any other collateral covered by
the Loan Documents, or involving the validity or enforceability of the Loan
Documents or the priority of the liens created or to be created thereby, at law
or in
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equity, or before or by any governmental authority, which, if adversely
determined, would, in the determination of Lender, either individually or in the
aggregate, have a material adverse affect on (i) the operation of its Property
as contemplated hereunder, (ii) the ability of such Borrower to pay all of its
liabilities or to perform all of its obligations in the manner and within the
time periods required under the Loan Documents, (iii) the validity,
enforceability or consummation of the Loan Documents or the transactions
contemplated thereby, or (iv) the title to its Property, the permitted uses of
its Property or the value of the security provided by the Loan Documents. Such
Borrower has complied with all requirements of ERISA.
2.1.5 Enforceability. This Agreement and the other Loan Documents are
the legal, valid and binding obligations of such Borrower, and are not subject
to any right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor would the operation of any of the terms of the Notes, this
Agreement and the other Loan Documents, or the exercise of any right thereunder,
render this Agreement or the other Loan Documents unenforceable, in whole or in
part, or subject to any right of rescission, set-off, counterclaim or defense,
including the defense of usury.
2.1.6 Compliance with Laws. All certifications, permits, licenses and
approvals required for the legal use, occupancy and operation of the Properties
as a golf course with the amenities and appurtenances described in the Recitals,
including, without limitation, any applicable liquor license, certificate of
completion and occupancy permit, have been obtained and are in full force and
effect. The Properties are free of material damage and is in good repair, and
there is no proceeding pending or, to the best of such Borrower's best
knowledge, threatened for the total or partial condemnation of, or affecting,
the Properties.
2.1.7 Access; Compliance with Laws. Except as disclosed in the survey
and Permitted Encumbrances provided to Lender, all of the Improvements which
were considered in determining the appraised value of the Properties lie wholly
within the boundaries and building restriction lines of the Properties, no
improvements on adjoining properties encroach upon the Properties, and no
easements or other encumbrances upon the Land encroach upon any of the
Improvements, so as to affect the value or marketability of the Properties. Each
Property is contiguous to and has access to a physically and legally open
all-weather public street, has all necessary permits and approvals for ingress
and egress, is adequately serviced by public water, sewer systems and utilities
and is on one or more separate tax parcels, all of which are separate and apart
from any other property owned by such Borrower or any other person. Each
Property has all necessary access by public roads or easements which in each
case are not terminable and are not subordinate to any mortgage other than this
Agreement. Each Property and all of the Material Improvements comply or have
legally valid and enforceable exceptions to compliance with all laws, ordinances
or regulations pertaining to the use or operation of each Property, including,
without limitation, applicable zoning, subdivision and land use, fire, health
and safety laws, regulations and ordinances.
2.1.8 Utilities. All utility services necessary and sufficient for the
use or operation of each Property are available including water (including water
for irrigation), storm sewer, sanitary sewer, gas, electric and telephone
facilities.
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2.1.9 Leases. The Properties are not subject to any leases, licenses
or other use or occupancy agreements other than the Leases, the Consulting
Agreement, the Shared Services Agreement, the Permitted Exceptions and the
Operating Agreements disclosed and delivered to Lender in connection with this
Agreement. The Leases are in full force and effect and there is no default,
breach or violation existing thereunder by any party thereto and no event (other
than payments due but not yet delinquent) which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach or violation by any party thereunder.
2.1.10 Financial Information. The financial statements of such
Borrower and Guarantor heretofore furnished to Lender are, as of the date
specified therein, complete and correct in all material respects and fairly
present the financial condition of such Borrower and Guarantor and are prepared
in accordance with GAAP applied on a consistent basis, except for monthly
operating statements and for year end revenue adjustments with respect to
membership sales. Neither such Borrower nor Guarantor on the date hereof has any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
which in each case are known to such Borrower or Guarantor and which, in such
Borrower's opinion, are reasonably likely to result in a material adverse effect
on any Property or the operation thereof as a golf course and country club,
except as referred to or reflected or provided for in the financial statements
heretofore furnished to Lender or as otherwise disclosed to Lender herein. Since
the last date of such financial statements, there has been no material adverse
change in the financial condition, operations or business of such Borrower and
Guarantor from that set forth in such financial statements as of the dates
thereof.
2.1.11 Consulting Agreement; Shared Services Agreement. The Consulting
Agreement and Shared Services Agreement are in full force and effect and there
is no default, breach or violation existing thereunder by any party thereto and
no event (other than payments due but not yet delinquent) which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach or violation by any party thereunder.
2.1.12 Adverse Effect. Neither the execution and delivery of the Loan
Documents, such Borrower's performance thereunder, nor the exercise of any
remedies by Lender, will adversely affect (i) such Borrower's rights under its
Consulting Agreement, the Leases or the Operating Agreements or (ii) the
licenses, registrations, permits, certificates, authorizations and approvals
necessary for the operation of the Properties as golf courses with the amenities
described in the Recitals.
2.1.13 Condition of Properties. Since the date of the last inspection
of the Properties by Lender: (i) no material portion of the Properties has been
damaged and not repaired to Lender's satisfaction or has been taken in
condemnation or other similar proceedings; and (ii) no change has occurred in
the structure or physical condition of the Properties other than customary wear
and tear.
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2.1.14 No Material Change. Since the date of the information and
documentation relating to the Properties furnished to Lender, no material change
in the Properties has occurred. There exists no fact, event or disclosure in
connection with the Loan that reasonably could be expected to cause the Loan to
become delinquent or otherwise have a material adverse affect on the Loan or the
Properties.
2.1.15 No Default. No default has occurred and is continuing in
the performance of any obligation of such Borrower or any affiliate of such
Borrower which would be deemed an Event of Default under the Loan Documents if
they were in effect, or any instruments evidencing, securing or guaranteeing
any other loan.
2.1.16 No Violation. No notice of violation of any municipal
ordinances has been filed against the Properties by any Governmental Authority.
2.1.17 Physical Condition. Except as disclosed on Schedule
2.1.17, such Borrower has no knowledge of any latent or patent defects in the
roof, foundations, irrigation system, sprinkler mains, garage, structural,
mechanical and HVAC systems and masonry wall in any of the Improvements.
2.1.18 Survey. The surveys of the Properties delivered to
Lender in connection with this Agreement has been performed by a duly licensed
surveyor or registered professional engineer in the jurisdictions in which the
Properties are situated and does not fail to reflect any material matter
affecting the Properties or the title thereto.
2.1.19 Ownership. Such Borrower is the owner of all of Personal
Property and Equipment located on or used in connection with its Property,
except as described on Schedule 2.1.19.
2.1.20 Operating Agreements. Such Borrower has furnished Lender
with a true and complete copy of all Operating Agreements, all of which are in
full force and effect, free from default.
2.1.21 Golf Course Operations. The golf clubs operated at the
Properties are private golf clubs. The Borrowers have furnished Lender with all
membership documents and agreements, including marketing materials, application
forms, membership agreements, by-laws and organizational documents, and
financing notes and agreements relating to the sale and issuance of memberships
and the rights and privileges of members. The members have the rights,
privileges and benefits described in the membership agreements, bylaws and
marketing materials previously delivered to Lender, and no other rights. A true
and complete schedule of all accounts receivable with respect to the sale of
memberships has been furnished by Borrowers. All members are required to make
full payments for membership privileges, except as previously disclosed to
Lender. Borrowers have provided Lender with information that describes the
current schedule of membership initiation fees, initiation fee accounts
receivable, and other charges. There are no defaults of more than 30 days under
any membership sale receivables except as previously disclosed to Lender.
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2.1.22 Tax Division. A tax division has been effected with
respect to each Premises so that it is taxed for ad valorem taxation without
regard to or inclusion of any other property. No subdivision or other approval
is necessary with respect to any Premises in order for any Borrower to mortgage,
convey and otherwise deal with its Premises as a separate lot or parcel.
2.1.23 Non-Foreign Status of Borrowers. Such Borrower is not a
non-resident alien for purposes of U.S. income taxation and is not a foreign
corporation, partnership, foreign trust or foreign estate (as said terms are
defined in the Code).
2.1.24 ERISA. Such Borrower is not a party to any plan defined
and regulated under ERISA or Section 4975 of the Code. None of the assets of
such Borrower are "plan assets" as defined in 29 C.F.R. (S)2509.75-2 or
(S)2510.3-101.
2.1.25 Security Interest. The Security Agreements and the
Mortgages, together with the Financing Statements filed in connection therewith,
create a valid, enforceable and perfected first priority security interest in
the Collateral (as defined in the Security Agreements) including the Personal
Property, subject to no other interests, liens or encumbrances.
2.1.26 Bankruptcy. No petition in bankruptcy, whether voluntary
or involuntary, or assignment for the benefit of creditors, or any other action
involving debtors' and creditors' rights has ever been filed under the laws of
the United States of America or any state thereof, or threatened, against such
Borrower or any other Loan Party or against any other entity in which such
Borrower or any other Loan Party is a principal or general partner.
2.1.27 No Illegal Activity as Source of Funds. No portion of the
Properties has been or will be purchased, improved, equipped or furnished with
proceeds of any illegal activity.
2.1.28 Compliance with Anti-Terrorism, Embargo, Sanctions and
Anti-Money Laundering Laws. Such Borrower, and to the best of such Borrower's
knowledge, after having made diligent inquiry, (a) each Person owning an
interest of 20% or more in such Borrower, (b) Guarantor, (c) the Property
Consultant, (d) the Service Provider and (e) each tenant at a Property: (i) is
not currently identified on OFAC List, and (ii) is not a Person with whom a
citizen of the United States is prohibited to engage in transactions by any
trade embargo, economic sanction, or other prohibition of United States law,
regulation, or Executive Order of the President of the United States. Such
Borrower has implemented procedures, and will consistently apply those
procedures throughout the term of the Loan, to ensure the foregoing
representations and warranties remain true and correct during the term of the
Loan.
2.1.29 Hazardous Substances. To the best of such Borrower's
knowledge, after due inquiry and investigation, except as set forth in the Phase
I: (a) the Properties are not in direct or indirect violation of any
Environmental Laws; (b) the Properties are not subject to any private or
governmental lien or judicial or administrative notice or action relating to
Hazardous Substances; (c) no Hazardous Substances are or have been, prior to
such Borrower's acquisition of the Properties, discharged, generated, treated,
disposed of or stored on, incorporated in or
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removed or transported from the Properties other than in compliance with all
Environmental Laws; and (d) no underground storage tanks exist on any of the
Properties.
2.1.30 Asbestos. After due inquiry and investigation, no Asbestos is
located on the Properties.
2.1.31 Representations Remade. Such Borrower warrants and covenants
that the foregoing representations and warranties will be true and shall be
deemed remade as of the date of the Closing and as of the date of each other
Advance pursuant to Article 5. All representations and warranties made herein or
in any other Loan Document or in any certificate or other document delivered to
Lender by or on behalf of such Borrower pursuant to or in connection with this
Agreement or any other Loan Document shall be deemed to have been relied upon by
Lender, notwithstanding any investigation heretofore or hereafter made by or on
behalf of Lender. All such representations and warranties shall survive the
making of the Loan and any or all of the Advances contemplated hereby and shall
continue in full force and effect until such time as the Loan has been paid in
full.
ARTICLE 3
GENERAL CONDITIONS OF LOAN
3.1 Loan Documents. It shall be a condition precedent to Lender's
obligation to make the Loan that at or before the Closing, Borrowers shall
execute and deliver or cause to be duly executed and delivered to Lender all of
the Loan Documents and that all of the Loan Documents shall be satisfactory to
Lender in form and substance.
3.2 Additional Requirements. In addition to the Loan Documents, prior to
the Closing, Borrowers shall deliver or cause to be delivered to Lender each of
the following, all of which shall be in form and substance satisfactory to
Lender:
3.2.1 Title Policy. The Title Policy.
3.2.2 Survey. A survey of each of the Premises, certified to Lender
and the Title Company by a surveyor reasonably satisfactory to Lender, which
survey shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ASCM, and which survey shall comply with Lender's survey
requirements and shall contain Lender's standard form certification. Said survey
shall show no state of facts or conditions objectionable to Lender.
3.2.3 Opinion. An opinion each Borrower's and Guarantor's counsel
dated the date of the Closing and relating to such matters with respect to this
Agreement and the transaction contemplated hereby (including usury and
enforceability) as Lender may require. By its execution and delivery of this
Agreement, Borrowers authorize and directs such counsel to render such opinion.
3.2.4 Insurance. The insurance policies described in Section 6.1, or
certificates of insurance evidencing the same.
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3.2.5 UCC Searches. Uniform Commercial Code searches made in the
State(s) of Texas, Pennsylvania, Virginia, California, South Carolina and
Delaware showing no filings relating to (i) the Personal Property (other than
cart leases), (ii) any fixtures on the Premises, or (iii) the Collateral.
3.2.6 Corporate Documentation. Certified copies of each Borrower's and
Guarantor's articles of incorporation, by laws, certificates of good standing
for the States of Delaware, Pennsylvania, Virginia, California, Texas and South
Carolina, and original corporate resolutions and certificates of incumbency with
specimen signatures for the authorized officer. Certificates evidencing each
Borrower's qualification to do business in the state its Property is located.
3.2.7 Environmental Assessment. An environmental site assessment with
respect to each of the Premises prepared by an environmental consultant
satisfactory to Lender showing no matters unsatisfactory to Lender, a letter
from the consultant preparing the environmental site assessment stating that
Lender is authorized to rely on the information contained therein, and evidence
satisfactory to Lender of said environmental consultant's errors and omissions
insurance coverage.
3.2.8 Subordination of Consulting Agreement. A certified copy of the
Consulting Agreement and Shared Servicing Agreement for each Property, together
with a subordination of each Consulting Agreement whereby each Consulting
Agreement and Shared Services Agreement is subordinated to the Loan and Lender
is given the right to terminate each Consulting Agreement and Shared Services
Agreement or any replacement thereof upon the occurrence of an Event of Default,
without payment of any termination or other fee or other liability on the part
of Lender.
3.2.9 Leases/Subordination Agreements and Estoppels. Certified copies
of all Leases which shall be satisfactory to Lender in its sole discretion,
together with (i) an estoppel certificate executed by the tenant under each
Lease in form and substance satisfactory to Lender, and (ii) a subordination,
non-disturbance and attornment agreement executed by each such tenant.
3.2.10 Licenses, Permits and Approvals. A final, unconditional
certificate of occupancy issued with respect to each of the Premises, copies of
all water use permits and liquor licenses, together with such other applicable
licenses, permits and approvals as Lender or any Governmental Authority may
require.
3.2.11 Agreements. Certified copies of all Operating Agreements,
service contracts, cart leases and equipment leases, if any, relating to each
Borrower's ownership and operation of the Properties.
3.2.12 Zoning. Evidence satisfactory to Lender as to the zoning
compliance of each of the Premises.
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3.2.13 Lender's Inspection. A satisfactory inspection report of each
of the Premises prepared by an engineer or other consultant satisfactory to
Lender.
3.2.14 Operating and Financial Statements. Current financial
statements satisfactory to Lender for each Borrower and each other Loan Party,
together with operating and cash flow statements for each Property.
3.2.15 Other Items. Such other documents and instruments as Lender may
reasonably require.
ARTICLE 4
FURTHER COVENANTS OF BORROWERS
4.1 Further Covenants of Borrowers. Each Borrower hereby further covenants
and agrees with Lender as follows:
4.1.1 Taxes and Impositions.
(a) Such Borrower shall pay all Taxes and all Other Charges as they
become due and payable. Such Borrower will deliver to Lender evidence
satisfactory to Lender that the Taxes and Other Charges have been so paid, or
are not then delinquent, no later than thirty (30) days following the date on
which the Taxes and/or Other Charges would otherwise be delinquent if not paid.
Such Borrower shall not suffer, and shall promptly cause to be paid and
discharged, any lien or charge whatsoever which may be or become a lien or
charge against the Properties, and shall promptly pay for all utility services
provided to the Properties. Such Borrower shall furnish to Lender or its
designee receipts for the payment of the Taxes, Other Charges and charges for
utility services prior to the date that such obligations shall become
delinquent. Such Borrower shall be entitled to contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount of any Taxes or Other Charges. Notwithstanding the
preceding sentence, during the pendency of any such contest such Borrower shall
pay or cause to be paid all Taxes and Other Charges as and when due and payable,
or otherwise in accordance with this paragraph.
(b) Notwithstanding the provisions of Sections 4.1.1 (a) and 4.1.3
hereof, such Borrower shall not be in default for failure to pay or discharge
Taxes, Other Charges or a mechanic's or materialman's lien asserted against a
Property if, and so long as: (a) such Borrower shall have notified Lender of
such nonpayment and the reasons therefor within ten (10) days of obtaining
knowledge thereof; (b) such Borrower shall diligently and in good faith contest
such Taxes, Other Charges or lien by appropriate legal proceedings which shall
operate to prevent the enforcement or collection thereof and the sale of a
Property or any part thereof, in satisfaction thereof; (c) such Borrower shall
have furnished to Lender a cash deposit, or an indemnity bond satisfactory to
Lender with a surety satisfactory to Lender, in the amount of the Taxes, other
Charges or mechanic's or materialman's lien claim, plus a reasonable additional
sum to pay all costs, interest and penalties that may be imposed or incurred in
connection therewith, to assure payment of the matters under contest and to
prevent any sale or forfeiture of
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a Property or any part thereof; (d) such Borrower shall promptly upon final
determination thereof pay the amount of any such Taxes, Other Charges or claim
so determined, together with all costs, interest and penalties which may be
payable in connection therewith; and (e) the failure to pay the Taxes, Other
Charges or mechanic's or materialman's lien claim does not constitute a default
under any other deed of trust, mortgage or security interest covering or
affecting any part of a Property. Notwithstanding the foregoing, such Borrower
shall immediately upon request of Lender pay (and if such Borrower shall fail so
to do, Lender may, but shall not be required to, pay or cause to be discharged
or bonded against) any such Taxes, Other Charges or claim notwithstanding such
contest, if in the opinion of Lender, a Property or any part thereof or interest
therein may be in danger of being sold, forfeited, foreclosed, terminated,
canceled or lost. Lender may pay over any such cash deposit or part thereof to
the claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established.
(c) Such Borrower shall pay to Lender on the date hereof and
thereafter monthly on the first (lst) day of each calendar month: (a)
one-twelfth (1/12th) of an amount which would be sufficient to pay the Taxes and
Other Charges payable, or estimated by Lender to be payable, during the next
ensuing twelve (12) months; and (b) in the event any Borrower fails to pay any
Insurance Premium when due or allows any insurance coverage to lapse, or an
Event of Default occurs, one-twelfth (1/12th) of an amount which would be
sufficient to pay the Insurance Premiums due for the renewal of the coverage
afforded by the Policies upon the expiration thereof (the amounts described in
clauses (a) and (b) above, collectively, the "Tax and Insurance Escrow Fund").
The Tax and Insurance Escrow Fund and the monthly installments of principal and
interest payable under the Notes shall be added together and shall be paid as an
aggregate sum by such Borrower to Lender. Such Borrower hereby pledges to Lender
any and all monies now or hereafter deposited in the Tax and Insurance Escrow
Fund as additional security for the payment of the Debt. Lender will apply the
Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by such Borrower pursuant to Section 4.1.1(a) hereof. If the
amount of the Tax and Insurance Escrow Fund shall exceed the amounts due for
Taxes and Insurance Premiums pursuant to Section 4.1.1(a) hereof, Lender shall,
in its discretion, either return any excess to such Borrower or credit such
excess against future payments to be made to the Tax and Insurance Escrow Fund.
If the Tax and Insurance Escrow Fund is not sufficient to pay the items set
forth in Section 4.1.1(a) above, such Borrower shall promptly pay to Lender,
upon demand, an amount which Lender shall estimate as sufficient to make up the
deficiency. Upon the occurrence of an Event of Default, Lender may apply any
sums then comprising the Tax and Insurance Escrow Fund to the payment of the
Debt in any order in its sole discretion. Until expended or applied as above
provided, any amounts in the Tax and Insurance Escrow Fund shall constitute
additional security for the Debt. To the extent permitted by applicable law, the
Tax and Insurance Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by Lender. No earnings or interest on the Tax
and Insurance Escrow Fund shall be payable to such Borrower.
4.1.2 Mortgage Taxes. Such Borrower shall pay any and all taxes,
charges, filing, registration and recording fees, excises and levies imposed
upon Lender by reason of their respective interests in, or measured by amounts
payable under, the Notes executed by such Borrower, this Agreement, the
Mortgages or any other Loan Document (other than income,
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franchise and doing business taxes), and shall pay all stamp taxes and other
taxes required to be paid on the Notes, this Agreement, the Mortgages or the
other Loan Documents. If such Borrower fails to make such payment within five
days after notice thereof from Lender, Lender may (but shall not be obligated
to) pay the amount due, and such Borrower shall reimburse Lender on demand for
all such Advances. If applicable law prohibits such Borrower from paying such
taxes, charges, filing, registration and recording fees, excises, levies, stamp
taxes or other taxes, then Lender may declare the Debt then unpaid to be
immediately due and payable. In such event, no prepayment fee shall be charged.
4.1.3 No Liens. Except for Permitted Encumbrances and as otherwise
permitted under this Loan Agreement, the Properties shall be kept free and clear
of all liens, security interests and encumbrances of every nature or description
(whether for taxes or assessments, or charges for labor, materials, supplies or
services or any other thing). Other than the Permitted Encumbrances, such
Borrower will not cause or permit any instrument or document affecting any
Property to be recorded without Lender's prior written consent thereto.
4.1.4 Maintenance of Property. Such Borrower shall cause its Property
to be maintained in a good and safe condition and repair and in the same quality
and condition as of the date hereof. The Improvements and the Equipment shall
not be removed, demolished or materially altered (except for normal replacement
of the Equipment or retirement of Improvements and Equipment no longer needed
for the operation of Borrower's business) without the prior written consent of
Lender. Such Borrower shall promptly comply with all laws, orders and ordinances
affecting the Properties, or the use thereof, subject to such Borrower's right
to contest the same as provided in this Agreement or such Borrower has a valid
and legally enforceable exception to compliance. Such Borrower shall promptly
repair, replace or rebuild any part of the Properties which may be destroyed by
any casualty, or become damaged, worn or dilapidated, or which may be affected
by any proceeding of the character referred to in Section 4.1.16 hereof, and
shall complete and pay for any structure at any time in the process of
construction or repair on the Land. Except as expressly permitted in writing by
Lender, such Borrower shall not initiate, join in, acquiesce in, or consent to
any change in any private restrictive covenant, zoning law or other public or
private restriction limiting or defining the uses which may be made of the
Properties or any part thereof. If under applicable zoning provisions the use of
all or any portion of the Properties are or shall become a nonconforming use,
such Borrower will not cause or permit such nonconforming use to be discontinued
or abandoned without the prior written consent of Lender. Such Borrower shall
not without the prior written consent of Lender: (a) change the use of the Land
as currently configured and utilized; or (b) permit or suffer to occur any waste
on or to the Properties or to any portion thereof. Such Borrower shall not enter
into any license, easement, covenant or other agreement affecting the Properties
without the prior written consent of Lender.
4.1.5 Personal Property. All of the Personal Property and Equipment
(other than office equipment) for each Property, except as listed in Schedule
2.1.19 or replaced with leased property as contemplated elsewhere in this
Agreement, shall be owned by the applicable Borrower in such Borrower's name.
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4.1.6 Compliance. Such Borrower shall comply with all (i) building,
zoning, fire, health, environmental, disability and use laws, codes, ordinances,
rules and regulations, (ii) covenants and restrictions of record and (iii)
easements which are in any way applicable to the Premises, the Improvements or
any part thereof or to the construction of any improvements thereon and the use
or enjoyment thereof. Such Borrower shall provide Lender with copies of all
permit and license renewals on an annual basis.
4.1.7 Performance of Other Agreements.
(a) Such Borrower shall observe and perform each and every term to be
observed or performed by such Borrower pursuant to the terms of the Operating
Agreements. Upon written request by Lender, such Borrower shall deliver to
Lender estoppel certificates from each party to the Operating Agreements in form
and substance satisfactory to Lender; provided, however, that such Borrower
shall not be required to deliver such certificates more frequently than once in
any consecutive twelve (12) month period except upon any sale or transfer (or
proposed sale or transfer) of the Loan by Lender.
(b) Such Borrower will not surrender its interests under the Operating
Agreements or terminate, cancel, modify, change, supplement, alter or amend the
Operating Agreements orally or in writing without the express written consent of
Lender, and any such termination, cancellation, modification, change,
supplement, alteration or amendment of the Operating Agreements without the
prior written consent thereto of Lender shall be void and of no force or effect.
No release or forbearance of any of a Borrower's obligations under the Operating
Agreements, pursuant to the Operating Agreements or otherwise, shall release
such Borrower from any of its obligations under the Loan Documents, including
its obligations with respect to the payment of all sums as provided for in the
Operating Agreements and the performance of all of the terms, conditions and
agreements contained in the Operating Agreements to be kept, performed and
complied with by the applicable Borrower.
(c) Such Borrower shall observe and perform each and every term to be
observed or performed by such Borrower pursuant to the terms of the Operating
Agreements and shall:
(i) diligently proceed to cure any default and satisfy any demand
made upon it pursuant to the Operating Agreements;
(ii) promptly notify Lender in writing of any default notice
received by such Borrower under the Operating Agreements and provide Lender with
copies of any notices delivered in connection therewith;
(iii) promptly enforce the performance and observance of all of
the covenants and agreements required to be performed and/or observed by the
other party under the Operating Agreements; and
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(iv) grant Lender the right, but Lender shall be under no
obligation, to pay any sums and to perform any act or take any action as may be
appropriate to cause all the terms, covenants and conditions of the Operating
Agreements on the part of such Borrower to be performed or observed to be
promptly performed or observed on behalf of such Borrower, to the end that the
rights of such Borrower in, to and under said Operating Agreements shall be kept
free from default.
4.1.8 Lender's Expenses. Borrowers shall pay, on demand by Lender, all
expenses, charges, costs and fees in connection with the negotiation,
documentation and Closing of the Loan, including all registration and recording
fees, insurance consultant fees, if any, environmental consultant fees, costs of
appraisals, costs of engineering reports, fees and disbursements of all counsel
(both local and special) for Lender, escrow fees, cost of surveys, fees and
expenses of Lender's Consultant or others employed by Lender to inspect the
Premises from time to time, and reasonable out-of-pocket travel expenses
incurred by Lender and Lender's agents and employees in connection with the
Loan. At Closing, Lender may pay directly from the proceeds of the Loan each of
the foregoing expenses.
4.1.9 Loan Fee. Borrowers shall pay Lender upon the Closing the
Commitment Fee and a $7,500 underwriting fee. Lender acknowledges receipt of
$75,000 from Borrowers, which shall be applied toward payment of the Loan Fee.
4.1.10 Books and Records. Borrowers will maintain full and accurate
books of accounts and other records reflecting the operations of each Property.
Each Borrower will furnish, or cause to be furnished to Lender, within thirty
(30) days of the end of each Fiscal Month or the indicated period, the following
items, each certified by a senior financial officer of such Borrower as true,
correct and complete as of the end of and for such period (subject to normal
year-end adjustments), and as having been prepared in accordance with the
generally acceptable accounting principles, consistently applied: (a) Fiscal
Month and Fiscal Year to date operating statements detailing the total revenues
received and total expenses incurred in connection with the ownership and
operation of the Properties, including a comparison of the budgeted income and
expenses and the actual income and expenses for such Fiscal Month and the Fiscal
Year to date (which operating information shall include the Improvements) in a
form reasonably acceptable to Lender; (b) a report showing number of rounds
played, average revenue per round and green fees, with a breakdown of green fee,
food and beverage, driving range and pro shop revenue per round a form
reasonably acceptable to Lender; (c) a summary of membership sales, other
membership sales, total membership sales and Borrower's good faith estimate
remaining inventory of memberships available for sale (by membership category),
an accounting of all membership initiation fee proceeds collected, a summary of
member notes receivable as well as an accounting of all collections on
membership notes receivable in a form reasonably acceptable to Lender; and (d)
on or before April 30 of each year, annual financial statements of Guarantor
audited by KPMG or another "Big-4" certified public accountant firm acceptable
by Lender. Upon request by Lender, Borrowers will provide a detailed explanation
of any variances of ten (10%) percent or more between budgeted and actual
amounts for such periods. Borrowers shall furnish or cause to be furnished, by
April 30 of each year, a statement of the financial affairs and condition of the
Properties, including a statement of profit and loss
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and a balance sheet for the Properties for the immediately preceding fiscal year
and Borrowers shall deliver to Lender on or before December 20 of each Fiscal
Year capital expenditure budget for the Properties and a management plan for
each Property for the next succeeding Fiscal Year in such detail as Lender may
reasonably request including projections of number of rounds played, average
revenue per round and green fees, with a breakdown of green fee, food and
beverage, driving range and pro shop revenues per round, and a detailed
marketing plan in the form reasonably acceptable to Lender (specifying, among
other things, green fees being charged and rounds to be played at golf courses
similar in nature and in the general vicinity of the Properties) for the
Properties for the next year, a list of current members, a list of people
waiting to purchase memberships and a list of memberships to be refunded. At any
time and from time to time Borrowers shall deliver to Lender or its agents such
other financial data as Lender or its agents shall reasonably request with
respect to the ownership, maintenance, use and operation of the Properties,
within 30 days after request. All information required to be furnished to Lender
pursuant to this Section shall be on the form provided by Lender (which form
shall accompany Lender's request).
4.1.11 Annual Budget; Accounts.
(a) No later than November 20 of each year, each Borrower shall submit
to Lender, for Lender's approval, a form of budget for each Property for the
twelve (12) calendar months succeeding the term covered by the last approved
budget. Lender's approval of any proposed budget shall not be unreasonably
withheld or delayed. If Lender's approval or disapproval is not given prior to
the last Tuesday in December, each Borrower shall be deemed to be authorized to
operate each Property in accordance with the proposed form of budget.
(b) Lender shall this day, or as soon hereafter as is practicable,
establish and shall thereafter maintain the following Accounts, each of which
shall be in Lender's name and shall constitute additional security for the Loan:
(i) The Replacement Reserve Account, into which shall be
deposited at Closing and thereafter monthly on the first (1st) day of each
calendar month, pursuant to the Budget, shall be an amount, determined on each
July 1, equal to one twelfth (1/12th) of three percent (3%) of the Gross
Revenues derived from the operation of each of the Properties during the
preceding twelve months (excluding initiation deposits and fees) unless
Borrowers shall have provided Lender with evidence satisfactory to Lender that
each Borrower has spent a minimum of three percent (3%) of Gross Revenues
(excluding initiation deposits and fees) during such twelve (12) month period
for such purposes. In addition, if for any such twelve (12) month period
Borrowers shall not have spent such 3% of Gross Revenues Borrowers shall deposit
the deficiency with Lender for further deposit in this Replacement Reserve
Account. Borrower may request withdrawal from the Replacement Reserve Account
from time to time on a monthly basis to refurbish, repair or replace Equipment
at the Properties, all as more particularly set forth in Section 4.1.31 (the
"Replacement Reserve Account");
(ii) The Repair Escrow Account, into which shall be deposited at
Closing not less than the sum of Two Million Seven Hundred Twenty-Three Thousand
Three
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Hundred and No/100 Dollars ($2,723,300.00) for certain improvements at the
Properties, from which Borrowers may request withdrawals from time to time on a
semi-monthly basis to complete certain specified repairs and/or renovations, all
as more particularly set forth in Section 4.1.31 (the "Repair Escrow Account");
and
(iii) The Tax and Insurance Escrow Account, into which shall be
deposited at Closing and thereafter monthly on the first (1st) day of each
calendar month, pursuant to the budget, an amount sufficient to satisfy
Borrowers' obligations under Section 4.1.1 hereof (the "Tax and Insurance Escrow
Account").
(c) Lender shall have sole signatory authority with respect to any and
all withdrawals from the Accounts. All such withdrawals shall be made solely in
accordance with the budget approved by Lender, and by this instrument Borrowers
do hereby irrevocably each authorize and direct Lender to make all such
withdrawals on each Borrower's behalf to satisfy Borrowers' obligations
hereunder.
4.1.12 Management of the Properties. Each Borrower further covenants
and agrees with Lender as follows:
(a) Such Borrower shall cause the golf course located on its Property
to be operated pursuant to the Consulting Agreement and Shared Services
Agreement.
(b) Such Borrower shall:
(i) pay all sums required to be paid by such Borrower under the
Consulting Agreement and Shared Services Agreement and promptly perform and
observe all of the covenants and agreements required to be performed and
observed by it under the Consulting Agreement and Shared Services Agreement and
do all things necessary to preserve and to keep unimpaired its material rights
thereunder;
(ii) promptly notify Lender in writing of any default under
Consulting Agreement and Shared Services Agreement of which it is aware and
provide Lender with copies of any notices delivered in connection therewith;
(iii) promptly deliver to Lender a copy of each financial
statement, business plan, capital expenditures plan and report received by it
under the Consulting Agreement and Shared Services Agreement;
(iv) promptly enforce the performance and observance of all of
the covenants and agreements required to be performed or observed by the
Property Consultant under the Consulting Agreement and Shared Services
Agreement;
(v) assign to Lender any right it may have to modify the
Consulting Agreement and Shared Services Agreement;
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(vi) grant Lender the right, but Lender shall be under no
obligation, to pay any sums and to perform any act or take any action as may be
appropriate to cause all the terms, covenants and conditions of the Consulting
Agreement and Shared Services Agreement on the part of such Borrower to be
performed or observed to be promptly performed or observed on behalf of such
Borrower, to the end that the rights of such Borrower in, to and under the
Consulting Agreement and Shared Services Agreement shall be kept unimpaired and
free from default;
(vii) use its reasonable efforts to obtain, from time to time,
from the Property Consultant or Shared Service Provider, as applicable, such
certificates of estoppel with respect to compliance by such Borrower with the
terms of the Consulting Agreement and Shared Services Agreement as may be
requested by Lender;
(viii) exercise each individual option, if any, to extend or
renew the term of the Consulting Agreement and Shared Services Agreement upon
demand by Lender made at any time within one year of the last day upon which any
such option may be exercised, and such Borrower hereby expressly authorizes and
appoints Lender its attorney-in-fact to exercise any such option in the name of
and upon behalf of such Borrower, which power of attorney shall be irrevocable
and shall be deemed to be coupled with an interest; and
(ix) promptly notify Lender in writing and provide Lender with
copies of any notices delivered to such Borrower, including, without limitation,
any notice of violation of any laws, regulations, or ordinances or other notice
from any governmental or quasi-governmental authority, or any notice of default
under the Leases, the Consulting Agreement, the Shared Services Agreement or any
other document or agreement relating to its Property, which contain information
that, if true, might materially adversely affect the value, use or operation of
its Property.
(c) Such Borrower shall not, without Lender's prior written consent:
(i) surrender, terminate or cancel the Consulting Agreement or the Shared
Services Agreement; (ii) reduce or consent to the reduction of the term of the
Consulting Agreement or the Shared Services Agreement; (iii) increase or consent
to the increase of the amount of any charges under the Consulting Agreement or
the Shared Services Agreement; or (iv) otherwise modify, change, supplement,
alter or amend, or waive or release any of its rights and remedies under the
Consulting Agreement or the Shared Services Agreement in any material respect.
(d) Such Borrower shall not, without Lender's prior written consent,
enter into transactions with any affiliate including, without limitation, any
arrangement providing for the management of the golf course on its Property, the
rendering or receipt of services or the purchase or sale of inventory, except
any such transaction in the ordinary course of business of such Borrower if the
monetary or business consideration arising therefrom would be substantially as
advantageous to such Borrower as the monetary or business consideration which
would obtain in a comparable transaction with a person not an affiliate of such
Borrower.
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4.1.13 Transfer or Encumbrance of the Properties.
(a) Each Borrower acknowledges that Lender has examined and relied on
the creditworthiness and experience of such Borrower and Guarantor, as
applicable, in owning and operating properties such as the Properties in
agreeing to make the Loan, and that Lender will continue to rely on such
Borrower's ownership of its Property and Guarantor's indirect ownership of
Borrowers as a means of maintaining the value of the Properties as security for
repayment of the Debt. Each Borrower acknowledges that Lender has a valid
interest in maintaining the value of the Properties so as to ensure that, should
Borrowers default in the repayment of the Debt, Lender can recover the Debt by a
sale of the Properties. Except as otherwise provided in this Loan Agreement, no
Borrower shall, without the prior written consent of Lender, directly or
indirectly sell, convey, alienate, mortgage, encumber, pledge or otherwise
transfer any Property or any part thereof or any interest therein, or permit any
Property or any part thereof to be sold, conveyed, alienated, mortgaged,
encumbered, pledged or otherwise transferred, except for a sale of a Property
upon the satisfaction of all Partial Release Conditions in connection therewith.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section shall be deemed to include: (i) an
installment sales agreement wherein a Borrower agrees to sell a Property or any
part thereof for a price to be paid in installments; (ii) an agreement by a
Borrower leasing all or a substantial part of a Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, such Borrower's right, title and
interest in and to any Leases or any Profits; (iii) the merger, consolidation or
voluntary or involuntary sale, exchange, conveyance or transfer of Borrower's,
Parent's or Guarantor's stock (or the stock of any corporation directly or
indirectly (at any tier) controlling such corporation by operation of law or
otherwise) or the creation or issuance of new stock, in one or a series of
transactions, in any such case the result of which is that an aggregate of more
than forty-nine percent (49%) of such corporation's stock (or such controlling
corporation's stock) shall be vested, legally or beneficially, in a party or
parties who are not now stockholders, other than in connection with an initial
public offering of Guarantor; and (iv) the removal, resignation or substitution
of the Property Consultant or the merger, consolidation or voluntary or
involuntary sale, exchange, conveyance or direct or indirect (at any tier)
transfer of the controlling interest in the Property Consultant's stock,
partnership interests or membership interests, as applicable, from parties who
are not now currently holders of such ownership interests; and not to include:
(v) disposition of Property at retirement or obsolesce of the asset, (vi)
disposition of Property no longer needed in the operation of a Borrower's
business.
(c) No sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of a Land and Improvements, or of any interest therein, shall be
permitted during the term of the Loan without Lender's prior written approval.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon any Borrower's sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of a Land and Improvements without
Lender's written consent. This provision shall apply to every sale, conveyance,
alienation,
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mortgage, encumbrance, pledge or transfer of a Land and Improvements regardless
of whether voluntary or not, or whether or not Lender has consented to any
previous sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer
of a Land and Improvements.
(d) Lender's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of a Land and Improvements shall not be deemed
to be a waiver of Lender's right to require such consent in the future. Any
sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of a
Land and Improvements made in contravention of this Section shall be null and
void and of no force or effect.
(e) Borrowers agree to bear and shall pay or reimburse Lender on
demand for all expenses (including, without limitation, Lender's out-of-pocket
attorneys' fees and disbursements, title search costs and title insurance
endorsement premiums) incurred by Lender in connection with the review, approval
or disapproval, and documentation of any such sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer.
4.1.14 Certificates; Affidavits.
(a) Within ten (10) days after request by Lender, Borrowers shall
furnish Lender with a statement, duly acknowledged and certified, setting forth:
(i) the amounts of the original principal amount of the Notes; (ii) the then
outstanding principal balance of the Notes; (iii) the rate of interest of the
Notes; (iv) the date on which installments of interest and principal were last
paid; (v) any offsets or defenses to the payment of the Debt; and (vi) that the
Notes, this Agreement and the other Loan Documents are valid, legal and binding
obligations of Borrowers, which have not been modified or if modified, giving
particulars of such modification.
(b) Within ten (10) days after written request by Lender, Borrowers
shall furnish Lender with a certificate reaffirming all representations and
warranties of Borrowers set forth herein and in the other Loan Documents as of
the date requested by Lender or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(c) Borrowers shall deliver to Lender upon request, tenant estoppel
certificates from each tenant under a Lease in form and substance satisfactory
to Lender. However, Borrowers shall not be required to deliver such certificates
more frequently than once in any consecutive twelve (12) month period except
upon any sale or transfer (or proposed sale or transfer) of the Loan by Lender.
4.1.15 Leases. Borrowers shall furnish Lender with executed copies of
all Leases. All renewals of Leases and all proposed Leases shall provide for
rental rates comparable to existing local market rates and shall be arms-length
transactions and shall be subject to the prior written approval of Lender. All
Leases shall provide that they are subordinate to the Mortgages and that the
lessee agrees to attorn to Lender. Borrowers shall: (A) observe and perform all
the obligations imposed upon the lessor under the Leases and shall not do or
permit to be done anything to impair the value of the Leases as security for the
Debt; (B) promptly send to Lender copies of all notices of default which
Borrowers shall send or receive thereunder;
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(C) enforce all of the terms, covenants and conditions contained in the Leases
on the part of the lessee thereunder to be observed or performed, short of
termination thereof; (D) not collect any Profits (as defined in the Mortgages)
more than one (1) month in advance; (E) not execute any other assignment of the
lessor's interest in the Leases or Profits; (F) other than de minimis
non-financial amendments, not alter, modify or change the terms of the Leases
without the prior written consent of Lender, or, except if a lessee is in
default, cancel or terminate the Leases or accept a surrender thereof or convey
or transfer or suffer or permit a conveyance or transfer of any Property or of
any interest therein so as to effect a merger of the estates and rights of, or a
termination or diminution of the obligations of, lessees thereunder. However,
any Lease may be canceled if at the time of the cancellation thereof a new Lease
is entered into with a bona fide, independent third-party on substantially the
same terms or more favorable terms as the canceled Lease; (G) not alter, modify
or change the terms of any guaranty of the Leases or cancel or terminate such
guaranty without the prior written consent of Lender; (H) not consent to any
assignment of or subletting under the Leases not in accordance with their terms,
without the prior written consent of Lender; and (I) execute and deliver at the
request of Lender all such further assurances, confirmations and assignments in
connection with the Properties as Lender shall from time to time request.
4.1.16 Condemnation. Borrowers shall not enter into any agreement for
the taking of the Premises or any part thereof with anyone authorized to acquire
the same in or by condemnation proceedings, or by the exercise of any power of
eminent domain, unless and until Lender shall have consented thereto in writing.
4.1.17 Litigation. Borrowers shall promptly provide Lender with
written notice of any litigation in which Lender is named as a party or which is
in excess of $50,000, in which Borrowers, any other Loan Party or any Property
is named as defendant which is not fully covered by insurance for which the
insurer has assumed the defense and acknowledged coverage, and Borrowers shall
provide Lender with copies of all pleadings or orders filed or entered therein
or with respect thereto.
4.1.18 Application of Gross Revenues; Distributions. Borrowers shall
promptly apply all revenues from each Property to the payment of all current and
past due Expenses at such Property and to the repayment of all sums currently
due or past due under the Loan, including all payments of reserves. However, so
long as no Event of Default or Incipient Default exists, each Borrower may make
distributions to its shareholders from revenues after the payment of all current
and past due Expenses and all sums due and payable to Lender for its own account
or to be held by it, at or prior to the time of said distribution. All payments
made to Lender in respect of the Loan after payment of principal and interest
due and payable under the Notes shall be applied by Lender in the following
order of priority:
(i) first, to fund the Tax and Insurance Escrow Accounts;
(ii) next, to reimburse Lender for any unpaid costs, sums and
expenses incurred or advanced by Lender on Borrowers' behalf or in the
enforcement of Lender's rights hereunder;
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(iii) next, to fund the Repair Escrow Account;
(iv) next, to fund the Replacement Reserve Accounts;
(v) thereafter, one hundred percent (100%) of the balance, if
any, to reduce the outstanding principal balance of the Loan.
4.1.19 Funds Deposited with Lender. To secure all of Borrowers'
obligations to Lender under the Loan Documents, each Borrower hereby grants to
Lender a security interest in all funds now or hereafter deposited with Lender
or otherwise in Lender's possession, custody or control pursuant to the
provisions of this Agreement or any other Loan Document. So long as any Event of
Default exists, Lender shall have such rights with respect to such funds and any
interest accrued thereon as are provided by applicable law and may apply such
funds towards the satisfaction of Borrowers' obligations hereunder or under any
other Loan Documents. Without limiting any of the foregoing provisions, at the
request of Lender, Borrowers shall execute and deliver from time to time such
documents as may be necessary or appropriate, in Lender's sole judgment, to
assure Lender that it has a first priority perfected security interest in and
lien on all funds deposited pursuant to this Agreement.
4.1.20 Further Assurances.
(a) Borrowers will, at the cost of Borrowers, and without expense to
Lender, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, mortgages, assignments, notices of assignment, Financing
Statements or continuation statements, transfers and assurances as Lender shall,
from time to time, require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender the property and rights hereby
mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed,
confirmed, pledged, assigned and hypothecated or intended now or hereafter so to
be, or which Borrowers may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Agreement or for filing, registering or recording this
Agreement. Borrowers, on demand, will execute and deliver and hereby authorizes
Lender to execute in the name of Borrowers or without the signature of Borrowers
to the extent Lender may lawfully do so, one or more Financing Statements,
chattel mortgages or other instruments, to evidence more effectively the
security interest of Lender in the Properties. Each Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender at
law and in equity, including, without limitation, such rights and remedies
available to Lender pursuant to this Section, but so long as such Borrower is in
compliance with the terms and conditions of this Agreement, Lender will first
seek such Borrower's assistance in exercising and perfecting such rights and
remedies.
(b) Each Borrower acknowledges that Lender may sell the Loan and the
Loan Documents to a party who may pool the Loan with a number of other loans and
to have the holder of such loans grant participations therein or issue
securities (together with any other participation or syndication of the Loan, a
"Securitization"). The Securities may be rated by one
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or more national rating agencies. Each Borrower acknowledges and agrees that
Lender may, at any time, sell, transfer or assign the Notes, this Agreement and
the other Loan Documents, and any or all servicing rights with respect thereto,
or grant participations therein or issue mortgage-backed, pass-through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement. In this regard, each Borrower
agrees to make available to Lender all information concerning its business and
operations which Lender reasonably requests. Lender may share such information
with the investment banking firms, rating agencies, accounting firms, law firms
and other third-party advisory firms involved with the Loan or the Securities.
Lender may forward to Investor and each prospective Investor, all documents and
information which Lender now has or may hereafter acquire relating to Borrowers
and the Properties, whether furnished by Borrowers or otherwise, as Lender
determines necessary or desirable consistent with full disclosure for purposes
of marketing and underwriting the Loan. Borrowers shall furnish and hereby
consent to Lender furnishing to such Investors or such prospective Investors any
and all information concerning Borrowers and the Properties as may be requested
by Lender, any Investor or any prospective Investor in connection with any sale,
transfer or participation interest, other than third party costs. It is
understood that the information provided by Borrowers to Lender may ultimately
be incorporated into the offering documents for the Securities and thus such
information may be disclosed to Investors and prospective Investors. Lender and
all of the aforesaid third-party advisors and professional firms shall be
entitled to rely on the information supplied by, or on behalf of, Borrowers.
Lender, at its sole option, may also elect to split the Loans into multiple
loans, each secured by liens on the Properties, and sell, assign, pledge or
otherwise hypothecate one or more of such loans to third parties. Borrowers
shall cooperate in all such efforts by executing and delivering all such
documents, certificates, instruments and other things to evidence or confirm
Borrowers' obligations hereunder, and in no such event shall the Debt or
Borrowers' obligations hereunder be increased as a result thereof. Upon any
transfer or proposed transfer contemplated above and by the Loan Documents, at
Lender's request, Borrowers shall provide a reasonably customary estoppel
certificate to the Investor or any prospective Investor.
4.1.21 Audit and Inspection by Lender. Lender shall have the right,
and Borrowers shall permit and shall cooperate with Lender in arranging for, at
any reasonable time and from time to time, Lender and its representatives (i) to
inspect the Properties, and (ii) to review and audit all books, records and
financial statements of Borrowers. Borrowers shall make or cause their
applicable Affiliates to make all such books of account and records available
for such examination at the office where the same are regularly maintained.
Lender shall have the right to copy, duplicate and make abstracts from such
books and records as Lender may require. Borrowers shall pay Lender's costs and
expenses incurred in connection with an audit if an error in excess of 5% of
Expenses or Gross Revenues is determined. Borrowers acknowledge and agree that
(A) all of such audits, inspections and reports shall be made for the sole
benefit of Lender, and not for the benefit of Borrowers or any third party, and
neither Lender nor Lender's auditors or inspectors or any of Lender's
representatives, agents or contractors assumes any responsibility or liability
(except to Lender) by reason of such audits, inspections or reports, (B)
Borrowers will not rely upon any of such audits, inspections or reports for any
purpose
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whatsoever, and (C) the performance of such audits, inspections and reports will
not constitute a waiver of any of the provisions of this Agreement or any other
Loan Document or any of the obligations of Borrowers hereunder or thereunder.
Borrowers further acknowledge and agree that neither Lender nor Lender's
inspector, representatives, agents or contractors shall be deemed to be in any
way responsible for any matters related to design or construction of the
Improvements.
4.1.22 Single Purpose Entity; Authorization. Each Borrower represents
and warrants, and covenants for so long as any obligations secured by this
Agreement remain outstandin |
