Preview of our top selling Commitment Letters
American Leisure Holdings - Commitment Letter, Phase I
ROBERT F. CARMICHAEL
Senior Vice President
200 E. Robinson Street
Suite 555
Orlando, Florida 32801
Tel. (407) 241-3738
Fax (407) 241-3749
August 15, 2005
Tierra del Sol Resorts, L.P. c/o Resorts Development Group, LLC 2462 Sand Lake Road Orlando, FL 32809 Attn.: Malcolm J. Wright
Dear Mr. Wright:
KeyBank National Association (hereinafter "KeyBank", or "Lender") hereby offers, subject to the terms and conditions hereinafter set forth, to make the following commercial real estate mortgage construction loan (the "Loan"):
BORROWERS: (i) Tierra del Sol Resort, L.P., a limited
partnership organized under the laws of the State
of Florida; (ii) TDS Townhomes, LLC, a limited
liability company organized under the laws of the
State of Florida; (iii) Costa Blanca Real Estate,
Inc., a corporation organized under the laws of
the State of Florida; (iv) TDS Clubhouse, Inc., a
corporation organized under the laws of the State
of Florida, (v) TDS Amenities, Inc., a corporation
organized under the laws of the State of Florida;
(vi) Costa Blanca II Real Estate, LLC, a limited
liability company organized under the laws of the
State of Florida; (vii) Costa Blanca III Real
Estate, LLC, a limited liability company organized
under the laws of the State of Florida and (viii)
Tierra del Sol Resorts, Inc., a corporation
organized under the laws of the State of Florida
(the foregoing entities sometimes hereinafter
collectively referred to as the "Borrowers"). The
Borrowers shall be established in a manner
satisfactory to Lender, to be special purpose
entities (i.e., bankruptcy remote) and are
required to have an independent director.
REPAYMENT Malcolm J. Wright ("Wright"), American GUARANTORS: Leisure Holdings, Inc., a corporation organized
under the laws of the State of Florida ("ALH");
and LLC-6, a to-be-formed Florida limited
liability company, jointly and severally.
PERFORMANCE AND Wright, ALH, and LLC-6, an entity to be formed by COMPLETION PCL, jointly and severally. GUARANTORS:
COMPLETION PCL Construction Enterprises, Inc., a GUARANTORS: corporation organized under the laws of the State
of Colorado ("PCL").
(The Repayment Guarantors, Performance and
Completion Guarantors and Completion Guarantor
collectively referred to as "Guarantors")
DESCRIPTION OF PROJECT: The Loan (sometimes referred to herein as the
"Phase I Loan") is being committed for the
construction of a development known as "Tierra del
Sol" (the "Project"). The Loan which is the
subject of this Commitment is for Phase I of the
Project.
Additionally, an entity related to the
Lender, KeyBanc Capital Markets, is underwriting
the issuance of a Community Development District
("CDD") bonds, with net proceeds in the amount of
approximately $21,139,322, which will be used for
the payment of Project costs and to purchase
common land. Borrowers shall comply with all
requirements of KeyBanc with respect to the CDD
issuance.
USE OF PROCEEDS: The Loan proceeds are to be used solely for
the development of Phase 1 of Tierra del Sol
Resort (hereinafter called "Phase I") consisting
of a luxury townhouse/condominium community
consisting of 250 townhomes and 180 mid-rise
condominiums along with project infrastructure
(roadways, sewer, water, electric) and amenities
including a 100,000 square foot Clubhouse (85,000
sf under air) with concierge, casual and fine
dining restaurants, private theater, shops, a
world-class spa & fitness center, and other
improvements (the "Improvements") on land located
in Polk County, Florida (the "Land") (the Land,
Improvements and all related fixtures and personal
property are referred to as the "Project"), in
accordance with the Schedule of sources and uses
of funds and the Project budget set forth in
Exhibit "A", attached hereto, approved by the
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Lender hereunder, as the same may be modified with
the prior written approval of the Lender, and to
pay such other related expenses and costs as shall
be approved in writing by the Lender.
LOAN AMOUNT: The principal amount of the Loan shall not
exceed NINETY-SIX MILLION SIX HUNDRED THOUSAND AND
NO/100 DOLLARS ($96,600,000.00) or so much thereof
as may be advanced from time to time to or for the
benefit of the Borrower subject to the terms and
conditions of the Construction Loan Agreement (the
"Loan Amount").
TERM /PRINCIPAL REPAYMENT: If not sooner paid, the entire principal
balance outstanding, together with all unpaid
interest thereon, fees, and costs and expenses
incurred by Lender, shall be due and payable in
full on the twenty-four ( 24 ) calendar month
anniversary of the Date of Closing ("Maturity").
PROJECT EQUITY REQUIREMENT: Borrowers shall provide evidence reasonably
satisfactory to the Lender that the project equity
("Project Equity") invested in the Project is not
less than the difference between the total Project
Cost as set forth in the Budget and the maximum
Phase I Loan amount; provided, however, in no
event shall the Project Equity be less than 44% of
the total cost of the Project as set out in the
Budget approved by the Lender hereunder or
$75,003,930, whichever is greater. The Project
Equity must be either (i) deposited with Lender
prior to the Date of Closing, and disbursed prior
to the first advance of the Loan or (ii) used to
pay Project costs approved by Lender, with
evidence of payment delivered to Lender prior to
the first advance of the Loan.
RELEASE PRICE: Release Price for the Loan shall be the
greater of (i) 100% of net sales proceeds or (ii)
individual unit release prices per a
to-be-determined stacking plan (acceptable to
Lender) that produces not less than a 1.20x
acceleration on the Loan.
INTEREST RATE: Advances of the proceeds of the Loan shall
bear interest at the 30-Day Daily Adjustable LIBOR
Rate plus the LIBOR Rate Margin. The LIBOR Rate
Margin shall be 2.75%. The LIBOR Rate shall be the
average rate as shown in Dow Jones Markets
(formerly Telerate) (Page 3750) at which deposits
in United States Dollars are offered by first
class banks in the London Interbank Market at
approximately 11:00 a.m. (London time) two (2)
business days prior to the date an advance is made
in an amount of the advance and with a maturity
equal to the applicable Interest Period. The LIBOR
Rate will be adjusted for any applicable reserves
and taxes if required by future regulations.
Interest shall be calculated on the basis of
a 360-day year for the actual number of days
elapsed.
DEFAULT RATE: In the event of any default, the interest
rate shall be the greater of (i) three percent
(3%) in excess of the Interest Rate otherwise
applicable on each outstanding advance or (ii)
eighteen percent (18%), but shall not at any time
exceed the highest rate permitted by law.
INTEREST PAYMENTS: Interest on the principal balance outstanding
on the Loan from time to time shall be due and
payable monthly beginning on the 5th day of the
first calendar month following the Date of Closing
(as hereinafter defined) and continuing on the 5th
day of each consecutive calendar month thereafter.
INTEREST RATE PROTECTION: Borrowers may be required to institute an
interest rate hedging program through the purchase
of an interest rate swap, cap, or other such
interest rate protection product ("Interest Rate
Protection Product") with respect to the Loan. The
Interest Rate Protection Product, the portion of
the Loan (if less than the Loan Amount) to which
the Interest Rate Protection Product shall apply,
and the financial institution providing the
Interest Rate Protection Product shall be subject
to the prior approval of the Lender.
If Borrowers purchases the Interest Rate
Protection Product from the Lender, Borrowers
shall enter into the Lender's customary form
agreement for such purposes and any indebtedness
or other obligations of Borrowers arising under
such agreement shall be indebtedness secured by
the Mortgage and the other Loan Documents.
LOAN FEES: At Closing, fees shall be payable by
Borrowers to the Lender as follows:
1. COMMITMENT FEE: Upon the Borrowers'
acceptance of this Commitment, a Commitment
Fee of NINE HUNDRED SIXTY-SIX THOUSAND AND
NO/100 DOLLARS ($966,000.00) (1% of the Loan
amount) shall be paid on or before the Date
of Closing. $50,000.00 of this amount shall
be paid at the signing of this Commitment
Letter and shall be non-refundable.
2. LOAN ADMINISTRATION FEE: A Loan
Administration Fee of ONE HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($150,000.00)
shall be paid on or before the Date of
Closing and annually, in advance, thereafter
during the term of the Loan.
Borrowers acknowledge that each such Fees
shall be for the applicable services rendered,
supported by good, valuable and adequate
consideration. The Commitment Fee and the Loan
Administration Fee shall be deemed to be earned by
the Lender on the date of this Commitment and
shall not be refundable for any reason.
EXPENSES: Borrowers shall pay all costs and expenses
including (by way of illustration and not
limitation): recording fees, title insurance
costs, escrow fees, flood zone determination fee,
survey fees, appraisal costs, the Lender's outside
and in -house attorney's costs and fees, the
Lender's document preparation fee, engineer's fee,
inspecting architect's fee, environmental audit
and site inspection fees, and any and all other
costs of the Lender in connection with this
Commitment and the Loan.
LATE FEE: For any payment of principal or interest made
later than five (5) days following the due date,
Borrowers shall pay a late fee equal to the
greater of four percent (4%) of the amount of such
payment or Twenty-five Dollars ($25.00).
LOAN DOCUMENTS AND SECURITY FOR THE LOAN: The Loan shall be evidenced by a promissory
note (the "Note") for the Loan Amount and a
Construction Loan Agreement, and shall be secured
by:
1. A mortgage, assignment of leases and
rents, security agreement and fixture filing
(the "Mortgage") which Mortgage shall convey
to Lender (a) a first lien upon the
unencumbered fee simple title to the Land and
the Improvements and easements and rights of
way appurtenant thereto, which Land shall be
more fully described in a legal description
to be provided by the Borrowers to
satisfaction of the Lender, and (b) a first
lien and security interest in all fixtures
and personal property owned by Borrowers and
relating to or located on the Project, and
(c) assigning all leases, subleases and other
agreements relating to the use and occupancy
of all or any portion of the Project, and to
all present and future rents, leases, issues
and profits therefrom;
2. A Guaranty of Payment executed by each
Repayment Guarantor and pursuant to which the
Repayment Guarantors jointly and severally
guarantee payment of principal, interest and
other amounts due under the Loan;
3. A Guaranty of Performance and Completion
executed by each Performance and Completion
Guarantor and pursuant to which the
Performance and Completion Guarantors jointly
and severally guarantee the lien-free and
timely completion of the Project and
Borrowers' obligation to keep the Loan "in
balance" and to pay for all cost overruns;
4. A Guaranty of Completion executed by the
Completion Guarantor and pursuant to which
the Completion Guarantor guarantee the
lien-free and timely completion of the
Project.
5. Such UCC Financing Statements describing
the personal property relating to the Project
as Lender's counsel determines are necessary
to perfect or notify third parties of the
security interest intended to be created in
such property by the Loan Documents;
6. An Environmental Indemnity Agreement
executed by Borrowers and the Guarantors,
jointly and severally;
7. An assignment of construction documents,
including, without limitation, the General
Contract, all architecture and engineering
contracts, Plans and Specifications, permits,
licenses, approvals and development rights,
together with consents to the assignment and
construction agreements from the Genera
Contractor, the architect and other parties
specified by Lender.
8. A collateral assignment of all contracts
and agreements related to sale of each
condominium unit (as applicable).
9. A collateral assignment of all purchase
deposits.
10. An assignment of any management and/or
operating agreements.
11. A Subordination, Nondisturbance and
Attornment Agreement between Lender and each
of the tenants under any lease(s), if
applicable; and
12. Such other documents, instruments or
certificates as the Lender and its counsel
may reasonably require, including such
documents as Lender in its sole discretion
deems necessary or appropriate to effectuate
the terms and conditions of the Construction
Loan Agreement and the other Loan Documents,
and to comply with the laws of this State.
All of the foregoing documents (the "Loan
Documents") shall be in form and substance
acceptable to the Lender and shall remain
effective for as long a period of time as any part
of the Loan is unpaid.
In addition, at Closing, Borrowers shall
deliver the opinions of Borrowers' legal counsel,
in form and substance acceptable to Lender and
Lender's counsel, that
With respect to the Borrowers, the
Guarantors, the Land, and the Project, that:
(a) the transactions contemplated by this
Commitment do not violate any provision of
any law, restriction or the document
affecting the Borrowers, the Guarantor(s),
the Land, or the Project; (b) the Loan
Documents have been duly executed and
delivered, constitute legal, valid and
binding obligations of the Borrowers and
Guarantor and are enforceable in accordance
with their terms; (c) the Borrowers are
validly organized and existing corporations
and/or limited liability companies under the
laws of the State of Florida and qualified to
do business in the State of Florida, that
each has the legal capacity to own, develop
and operate the Land and the Project and to
perform its obligations under the Loan
Documents, and that the Loan has been duly
authorized by the Borrowers; (d) the
Guarantors, as applicable, are validly
organized and existing corporations and/or
limited liability companies under the laws of
the State of Florida and qualified to do
business in the State of Florida and are duly
authorized to execute and deliver the
Guaranties; (e) there is no threatened or
pending litigation that might affect the
Loan, the Guarantor(s), the Land, the Project
or the Borrowers; and (f) such other matters
(including an opinion with respect to zoning
of the Land and the Project) concerning the
Loan, the Loan Documents, the Land, the
Project, the Borrowers, or the Guarantor, as
the Lender or its counsel may require.
A non-consolidation opinion confirming that the
structure of the Loans and the organization of the
Borrowers and Guarantors is such that the Borrower will
constitute a "special purpose, bankruptcy remote
entity", separate from ALH and any other related or
commonly owned entities.
PRE-SALE REQUIREMENT: Borrowers shall deliver to Lender prior to Closing
fully executed Qualified Contracts which will produce
aggregate net sales proceeds sufficient to cover 120%
of the Loan Amount. Qualified Contracts shall have the
following characteristics: (i) must be non-assignable;
(ii) must indicate 20% non-refundable deposits; and
(iii) Units sold pursuant to Qualified Contracts must
be deliverable within the timeframe required by the
contract. Furthermore, not more than 35 Phase I units
can be sold to individuals/entities associated with the
Project.
In addition, and as part of the Project Equity
requirement, Borrowers shall deliver to Lender, to be
held by, and pledged to Lender, Usable Deposits
totaling at least $25,498,108.00; or provide such
evidence to Lender, acceptable in Lender's sole
discretion, such Usable Deposits have been utilized in
accordance with the sources and uses of funds attached
as EXHIBIT "A". If Usable Deposits are not equal to or
greater than $25,498,108.00, in the aggregate,
Borrower's equity requirement shall be increased on a
dollar for dollar basis for each dollar that Usable
Deposits are less than $25,498,108.00. Usable Deposits
are defined as: (i) 10% (2nd 10% deposits) of the gross
sales contract price of each Phase I condominium unit;
or (ii) 20% of the gross sales contract price of each
Phase I townhome unit.
Furthermore, prior to funding Phase I Loan
proceeds for a particular condominium building,
Borrowers shall deliver to Lender contracts of sale,
sufficient to Lender, for at least thirty-three (33)
units with evidence, sufficient to Lender, that
Borrowers have received full twenty percent (20%)
deposits for each of said contracts of sale.
APPRAISAL: Lender has received a written appraisal from
Integra Realty Resources dated March 15, 2005
reflecting an appraised value of $123,600,000.00. The
appraisal shall be updated, at Borrowers' cost, as and
when reasonably requested by Lender.
TITLE INSURANCE POLICY: Counsel for Lender shall obtain, at Borrowers'
expense, an ALTA extended coverage lender's policy of
title insurance meeting the requirements set out in
Exhibit "D" attached hereto by a title company
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satisfactory to the Lender in the Loan Amount, insuring
the Lender that it has a first lien upon the Project,
and including insurance against construction liens and
encroachments by or upon the Project and with such
endorsements as may be required by the Lender, with all
so-called "Standard" exceptions deleted and containing
no exceptions other than those specifically approved by
the Lender (the foregoing hereinafter referred to as
the "ALTA Policy").
INSURANCE: Borrowers shall obtain and maintain either
Builder's Risk insurance coverage or permanent All Risk
insurance coverage as appropriate, satisfactory to the
Lender, on the real estate and personal property
securing this Phase I Loan. All insurance policies
shall be issued by carriers with a Best's Insurance
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Reports policy holder's rating of A and a financial
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size category of Class X and shall include a standard
mortgage clause (without contribution) in favor of and
acceptable to the Lender. The policies shall provide
for the coverages set forth in Exhibit "F" attached and
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any other coverage that the Lender may from time to
time deem necessary:
Each policy shall provide that it may not be
cancelled, reduced or terminated without at least
thirty (30) days prior written notice to Lender. The
initial policies shall be prepaid and delivered to the
Lender prior to closing and all renewal policies shall
be deposited with Lender as evidence of such insurance.
ENVIRONMENTAL ASSESSMENT: Borrowers shall provide evidence (including a
"Phase I" environmental assessment) indicating that the
Land is free from risk, in the Lender's sole judgment,
from all hazardous substances, toxic substances or
hazardous wastes as defined by any federal, state, or
local law, statute, ordinance or regulation and is free
of all other contamination which, even if not so
regulated, is known to pose a hazard to the health of
any person on or about the Land, and that the Land is
not in a "Wetlands" or "Flood Plain" area, and contains
no underground storage tanks or oil or gas wells. The
environmental consultant must be acceptable to the
Lender and shall be directly engaged by Borrowers at
Borrowers' cost. The Lender reserves the right, at
Borrowers' expense, to retain an independent consultant
to review any such evidence submitted by Borrowers or
to conduct its own investigation of the Land.
In addition, the Lender may, under appropriate
circumstances consider the use of environmental
insurance to mitigate the risks of certain conditions.
CONSTRUCTION INSPECTIONS: The Lender shall require the services of an
outside consulting engineer (the "Lender's
Consultant"), to be engaged by the Lender at the cost
and expense of the Borrowers, to perform the following
services on behalf of the Lender:
a. To make an initial pre-cost analysis
verifying that the Improvements can be completed
for the amount available for construction from the
Loan budget established by the Lender for the
Borrowers;
b. To review and advise the Lender whether, in
the opinion of the Lender's Consultant, the final
plans and specifications are satisfactory for the
intended purposes thereof;
c. To make monthly inspections and certify that
construction is in accordance with the original
plans and specifications approved by the Lender to
certify that construction has reached the stated
percentage of completion, that the monthly
requisitions actually reflect the degree of work
performed to date and that the undisbursed
proceeds of the Loan are sufficient to complete
the construction;
d. To review and approve construction contracts
entered into by the Borrowers or the General
Contractor in connection with the construction of
the Project, for the purpose of providing the
Lender with an opinion as to the costs of
construction to be incurred to complete the
Project, and also for the purpose of assuring the
Lender that all such contracts deal adequately
with and include the work required to be performed
by the approved final plans and specifications.
NON-ASSIGNABILITY OF COMMITMENT: This Commitment is made exclusively to the
Borrowers and is not assignable nor transferable
voluntarily or involuntarily by the Borrowers and any
such assignment or transfer or attempted assignment, or
transfer shall be null and void and shall result in
this Commitment being automatically and simultaneously
terminated.
LENDER PARTICIPATION/ SYNDICATION CONTINGENCY: Borrowers acknowledges that the Lender will hold
$35,000,000.00 of the Loan and will need to syndicate
and/or participate the remaining $61,600,000.00 of its
interest in the Loan before closing, and as a condition
of closing, and Borrowers agree to, at Lender's
request, execute such additional promissory notes and
other instruments as...
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