August 9, 1995
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Orangemen Club Limited Partnership
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
Phoenix, AZ 85016
Re: Orangemen Club Limited Partnership
Dear ▇▇. ▇▇▇▇▇▇▇:
This shall serve as a commitment on the part of Resort Service Company, Inc.
("RSC") to provide an Acquisition and Development Loan ("Loan") to Orangemen
Club Limited Partnership, a New York limited partnership ("OC"), to develop a
Project known as Orangemen Club at The Hotel Syracuse in Syracuse, New York
("Project"). In addition, this letter shall also constitute a commitment on the
part of RSC to purchase from OC certain eligible promissory notes and mortgages
resulting from the sale of timeshare intervals in the Project ("Notes"). This
shall also constitute a commitment on the part of OC to enter into the Loan and
sell the Notes to RSC, all under the terms and conditions set forth below.
Acquisition and Development Loan
1. Intent: It is the understanding of RSC that OC
------ desires to borrow funds from RSC for the
purpose of acquiring floors seven, eight and
nine of The Hotel Syracuse to be developed
and sold as timeshare intervals in the
Project.
2. Borrower: OC
--------
3. Loan Amount: The amount of the Loan shall not exceed
----------- Five Million Dollars ($5,000,000.00). One
Million Six Hundred Thousand Dollars
($1,600,000.00) shall be used to acquire the
Project and the remaining Three Million Four
Hundred Thousand Dollars ($3,400,000.00)
shall be used for development and conversion
costs and operating capital.
4. Rate: Interest rate on the Loan during
---- construction shall be at twelve percent (12%)
per annum or Prime (as issued by Chemical
Bank, N.A.) plus three and one- quarter
percent (3.25%), whichever is greater, to be
adjusted semi-annually. Upon receipt of the
final Certificate of Occupancy the interest
rate on the Loan shall be fixed at twelve
percent (12%) per annum or the Prime rate
plus three and one-quarter percent (3.25%),
whichever is greater.
5. Loan Term: The Loan shall be non-revolving and funded
--------- in a series of advances ("Advance") to an
Escrow Agent approved by RSC. The Loan shall
mature forty-eight (48) months from the date
of the distribution of the final Loan
proceeds (Term"). RSC must approve the
anticipated draw schedule prior to the
initial Advance and each draw prior to each
subsequent Advance. Advances shall be only
made during the initial eighteen (18) months
of construction. During the Term, interest
shall accrue on a daily basis. Monthly
payments of interest shall begin thirty (30)
days after approval from the State of New
York is received to sell timeshare intervals
therein. Interest and principal will be paid
according to the release mechanism set forth
below. At maturity the outstanding principal
and interest balance shall be due and
payable. It is clearly understood that this
commitment is being issued based on OC's
representation to sell timeshare intervals in
the Project.
6. Release Fee: Release fee payments shall be paid by OC to
----------- RSC in the amount of $1,350.00 for each
annual timeshare interval at the closing of
the sale of each timeshare period in the
Project. RSC shall apply each release fee to
reduce the principal balance due under the
Loan. The monthly installments of interest
shall be recalculated each month based on the
principal reduction.
7. Security: To secure OC's payment and performance
-------- under the Loan a First Position Priority
Mortgage on the improvements and property of
the Project including all unsold timeshare
interval inventory owned by OC shall be
required.
8. Closing The following conditions must be met by OC
------- to the satisfaction of RSC prior to the
Conditions closing date of the Loan:
----------
(a) OC must provide evidence that it is
properly registered with the state of
Arizona and provide RSC with a
Certificate of Good Standing and all
other documents relating to that
registration;
(b) The negotiation, execution and
elivery of documentation satisfactory
to RSC containing all required
representations and warranties,
conditions, covenants, and events of
default;
(c) The receipt by OC and its general
partner, Syracuse Project Incorporated,
an Arizona corporation ("SPI") of all
necessary regulatory approvals from the
State of Arizona and the State of New
York and evidence of compliance with
all local, state and federal laws
applicable to each transaction prior to
the sale of any timeshare intervals in
the Project;
(d) RSC's receipt of satisfactory evidence
of appropriate corporate approval of
all proposed transactions as well as
opinions of counsel satisfactory to
RSC;
(e) Delivery of satisfactory title
insurance for the mortgage provided to
RSC;
(f) Execution of a Contract of Sale of
Timeshare Receivables With Recourse
for the purchase of timeshare
intervals between RSC and OC,
including compliance with all terms
and conditions set forth herein;
(g) OC agrees that all funds shall be kept
in a segregated account and not
commingled with the general operating
accounts of OC, SPI or any subsidiary
or affiliate of OC or SPI; and
(h) OC will provide to RSC all other items
reasonably requested by RSC in
connection with the transactions
contemplated hereunder.
9. Special (a) In the event the Loan is not closed by
------- September 15, 1995, RSC reserves the
Conditions: right to withdraw this commitment.
----------
(b) OC must provide RSC with copies of all
documents relating to the purchase from
of the property constituting the
Project as well as all releases of
mortgage, lien and UCC-1's from any
other entity which has an interest in
the property which will be satisfied by
the proceeds of the Loan.
10. Governing Law: All documents, including this
------------- commitment, shall be construed in
accordance with the laws of the State
of New York without regard to the
principles of conflicts of laws.
11. Indemnification: Except for instances of RSC's gross
--------------- egligence or misconduct, OC agrees to
indemnify and hold RSC and its
shareholders, directors agents,
officers, subsidiaries and affiliates
harmless from and against any and all
damages, losses, settlement payments,
obligations, liabilities, claims, or
causes of action, and to pay all
reasonable costs and expenses incurred,
suffered, sustained or required to be
paid by an indemnified party by reason
of or resulting from the transactions
contemplated hereby.
Contract of Sale of Timeshare Receivables with Recourse
1. Seller: The Seller of the Notes shall be the
------ OC. No other sales or asset ownership
entities exist in connection with the
transactions contemplated hereunder.
2. Amount: The amount of this commitment shall not
------ exceed Ten Million Dollars
($10,000,000.00) per year for, subject
to annual reviews and renewals pursuant
to the terms hereof, for a period of
three (3) years from the date of the
issuance of a final Certificate of
Occupancy for the Project. ▇▇ agrees
that RSC has the right of first refusal
with respect to all Notes generated by
the sale of timeshare periods in the
Project even in the event that OC
exceeds the Ten Million Dollar
($10,000,000.00) annual commitment
limitation hereunder. RSC agrees to
renew this commitment, upon sixty (60)
days prior written notice, on the
anniversary date of the execution of
the Contract for an additional twelve
(12) months and an additional Ten
Million Dollars ($10,000,000.00) with
the following conditions:
(a) The performance of the portfolio
meets the standards of RSC as
outlined in the Contract; and
(b) The financial condition of OC must
meet the standards of RSC as
outlined in the Contract.
3. Purchase Price: For purposes of calculating the
-------------- purchase price of the Notes the monthly
payments to be made pursuant to the
Note shall be discounted at the rate of
thirteen percent (13%) and, for those
Notes paid by electronic funds, the
discount rate to be applied shall be
twelve percent (12%). These rates will
be reviewed on a semi- annual basis and
adjusted to Prime plus three and
three-quarter percent (3.75%) or two
and three-quarter percent (2.75%) for
those Notes paid through electronic
funds.
4. Payment of Upon the acceptance of eligible Notes,
---------- RSC shall pay eighty-five percent (85%)
Purchase Price: of the aggregate purchase price of the
-------------- Notes to OC. The remaining fifteen
percent (15%) of the aggregate purchase
price for each Note shall be paid
within thirty (30) days of RSC's
receipt of full and final payment due
under that Note.
5. Contract: The terms and conditions of the sale of
-------- Notes shall be incorporated into a
Contract of Sale of Timeshare
Receivables with Recourse ("Contract").
6. Effective Date: The effective date of the Contract
-------------- shall be the date of date of the first
funding execution thereof.
7. Term: The initial term of the Contract is for
---- twelve (12) months from the effective
date.
8. Notes: OC shall warrant that the Notes sold to
----- RSC are free and clear of all liens and
encumbrances.
9. Expenses: The costs of acquiring title insurance,
-------- mortgage recording and related taxes,
UCC- 1 filing fees, and all other
similar expenses shall be paid by OC.
10. Prepayment: The entire outstanding amount due under
---------- this Contract may be prepaid at any
time by OC or a third party mutually
agreed upon in writing by OC and RSC,
upon not less than thirty (30) days
prior irrevocable written notice to
RSC. Any prepayment of principal must
be accompanied by all interest accrued
as of the date of prepayment, any fees
or expenses payable and a prepayment
penalty consisting of the weighted of
the outstanding principal of the Notes
as follows:
1st year 7%
2nd year 6%
3rd year 5%
4th year 4%
5th year 3%
6th year 2%
7th year 1%
In the event the individual purchasers
of timeshare intervals in the Project
elect to prepay their obligation within
ninety (90) days of RSC's funding to OC
for same, then OC will pay a processing
fee to RSC in the amount of $50.00 per
account prepaid.
At no time shall the individual
purchasers of timeshare intervals be
obligated to pay any prepayment penalty
to either OC or RSC.
11. Security: In order to secure payment and
-------- performance under the Notes each
original Note shall be assigned,
endorsed and delivered to RSC. The
corresponding mortgage shall be filed,
recorded and then assigned to RSC.
12. Recourse: The purchase of Notes shall be with
-------- full recourse to OC. Accordingly, any
Note that is more than ninety (90) days
past due or has a first payment default
shall be charged back to OC which must
either pay off the remaining principal
balance at the original discount to
yield percentage, accrued interest due
under said Note, as outlined in the
Contract, or substitute the Note with a
new Note of equal or greater value. In
the event that RSC charges back a Note
to OC, then RSC agrees to reassign the
Note and related mortgage to OC.
13. Documentation: Loan documentation will be prepared by
------------- RSC on RSC's standard forms. All
documentation must be satisfactory in
all respects to RSC and must contain
all provisions which it deems necessary
to adequately monitor the ownership and
operations of OC.
14. Closing The following conditions must be met by
------- OC to the satisfaction of RSC prior to
Conditions: the closing date:
----------
(a) RSC must be satisfied that the
financial information delivered
fairly presents the business and
financial condition of OC and the
results of operations; and that
there has been no material adverse
change in the business, assets or
financial condition of OC since
the date of that financial
information;
(b) The negotiation, execution and
delivery of documentation
satisfactory to RSC containing all
required representations and
warranties, conditions, covenants,
and events of default;
(c) Evidence that OC has the approval
and is authorized to sell
timeshare intervals in those
States in which OC has sold or
intends to sell timeshare
intervals;
(d) RSC's receipt of satisfactory
evidence of appropriate corporate
approval of all proposed
transactions as well as opinions
of counsel satisfactory to RSC;
(e) ▇▇ agrees to engage a title
company acceptable to RSC to
conduct a title search and provide
a title report on an annual basis
for the Project to RSC; and
(f) OC shall offer RSC an exclusive
first right of refusal to purchase
all Notes offered by OC.
15. Brokerage Fees: OC hereby acknowledges no brokerage
-------------- fees are due for any of the
transactions contemplated hereunder.
16. Special (a) It is clearly understood that this
Conditions: commitment is being issued on the
---------- basis of OC's intent to sell
timeshare intervals in the
Project.
(b) Prior to the funding of any Notes
pursuant to the terms of the
Contract, the receipt by OC of all
necessary regulatory approvals and
evidence of compliance with all
local, state and federal laws
applicable to each transaction
including but not limited to all
applicable Securities and Banuing
Acts, any Unit Ownership Act,
Timeshare Act and or applicable
Real Estate Act.
17. Governing Law: All documents shall be governed by the
------------- laws of the State of New York, without
regard to the principles of conflicts
of laws.
18. Indemnification: Except for instances of RSC's gross
--------------- negligence or misconduct, OC agrees to
indemnify and hold RSC and its
shareholders, directors, agents,
officers, subsidiaries and affiliates
harmless from and against any and all
damages, losses, settlement payments,
obligations, liabilities, claims,
actions or causes of actions, and
reasonable costs and expenses incurred,
suffered, sustained or required to be
paid by an indemnified party by reason
of or resulting from the transactions
contemplated hereby.
OC agrees that the contents of this letter are confidential and are provided
solely for the purpose described herein, subject to any requirements relating to
federal securities laws or regulations. This letter may be relied on by any
third-party without RSC's prior written consent and OC or any of the parties
hereto shall not deliver, display or otherwise disclose the contents of this
letter to any third-party without RSC's prior written consent. Neither this
letter nor the proposals herein may be assigned by OC. The proposals contained
herein are expressly contingent upon OC obtaining and maintaining approval to
sell timeshare intervals in the State of New York. This letter supersedes all
previous negotiations, proposals, and understandings either written or oral, of
any nature whatsoever.
This commitment may be executed in on or more counterparts (which may be
originals or copies sent by facsimile transmission), each of which counterparts
shall be an original, and together shall constitute one and the same document.
If the foregoing represents your concurrence with the proposed financing
structures, please so indicate by signing and delivering to RSC at the above
address an executed copy of this letter on or before 5:00 P.M. (EST) August 15,
1995. Your failure to return an executed copy of this letter within the above
stated time frame shall result in the termination of RSC's commitment to lend.
Very truly yours,
Resort Service Company, Inc.
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Accounting Officer
Accepted and agreed to this
15th day of August, 1995.
Orangemen Club Limited Partnership
Syracuse Project Incorporated, General Partner
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
