Acquisition & Construction Cost Agreement

ACQUISITION AND CONSTRUCTION COST REIMBURSEMENT LOAN AGREEMENT


THIS ACQUISITION AND CONSTRUCTION COST REIMBURSEMENT LOAN AGREEMENT (as amended and supplemented from time to time, this "AGREEMENT"), dated as of December 1, 1999, is made by and between HELLER FINANCIAL, INC., a Delaware corporation ("LENDER"), whose address is 30th Floor, 500 West Monroe Street, Chicago, Illinois 60661, and BLUEGREEN VACATIONS UNLIMITED, INC., a Florida corporation ("BORROWER"), whose address is 4960 Blue Lake Drive, Boca Raton, Florida 33431.


RECITALS:


A. Borrower desires Lender to extend a secured loan to Borrower in accordance with the terms of this Agreement and that certain Master Agreement, dated as of October 15, 1998, between Lender and Bluegreen Corporation ("GUARANTOR"), a Massachusetts corporation (as amended and supplemented from time to time, the "MASTER AGREEMENT"), for the purpose of reimbursing Borrower for certain acquisition and construction costs incurred in connection with the acquisition and construction of the Shore Crest Phase II Resort (as defined herein).


B. Borrower's obligations hereunder and under the other Shore Crest Phase II Loan Documents (as defined herein) will be secured, INTER ALIA, by liens with the priority specified herein on certain real property, the improvements thereon, and related personal property and receivables owned or to be owned by Borrower in respect thereof (other than Shore Crest Phase II Note Receivables).


NOW, THEREFORE, in consideration of the foregoing premises and the agreements, provisions and covenants herein contained, Borrower and Lender agree as follows:


ARTICLE 1 - DEFINITIONS


1.1 DEFINED TERMS. All capitalized terms used herein, unless otherwise defined, shall have the meanings ascribed thereto in the appendix attached hereto and made a part hereof by this reference.


ARTICLE 2 - LOAN


2.1 DISBURSEMENT OF SHORE CREST PHASE II LOAN. On the date of this Agreement, and subject to the satisfaction of the conditions precedent specified in Section 2.2 of this Agreement, Lender shall disburse Thirteen Million Eight Hundred Sixty Thousand and 00/100 Dollars ($13,860,000), the entire amount of the Shore Crest Phase II Loan, directly to or for the account of Borrower, less any costs and fees set forth herein. The proceeds of the Shore Crest Phase II Loan shall be used to reimburse the Borrower for the costs and out-of-pocket disbursements paid by the Borrower in connection with the acquisition and construction of the Shore Crest Phase II Resort, and


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to pay closing costs incurred in connection with the making of the Shore Crest Phase II Loan. Shore Crest Phase II Resort shall be free and clear of all liens and encumbrances except for the liens created herein or in any of the other Shore Crest Phase II Loan Documents and except for any other Shore Crest Phase II Permitted Exceptions. There shall be no further advances or loans hereunder. The Shore Crest Phase II Loan shall be deemed to be, and shall be, a "Resort Loan" under, and as defined in, the Master Agreement.


2.2 TERM. The Shore Crest Phase II Loan shall mature and be due and payable on the Shore Crest Phase II Loan Maturity Date.


2.3 INTEREST RATE. The outstanding principal balance of the Shore Crest Phase II Loan shall bear interest at the Interest Rate; PROVIDED, HOWEVER, that upon the occurrence and during the continuance of an Event of Default the Shore Crest Phase II Loan will bear interest at the Default Rate. Interest on the Shore Crest Phase II Loan shall be paid by Borrower to Lender monthly in arrears, commencing on the 1st day of the first month following the date hereof, and continuing on the first day of each month thereafter until payment of the Shore Crest Phase II Loan in full.


2.4 PREPAYMENTS. The Shore Crest Phase II Loan may be prepaid in whole, but not in part, at any time upon five (5) days prior written notice to Lender. Any prepayment under this Section 2.4 shall be accompanied by all accrued and unpaid interest, if any, then due with respect to the Shore Crest Phase II Loan and all Costs and expenses then outstanding, and shall be applied in the following order: first to the payment of Costs and other expenses payable to Lender pursuant to this Agreement; second, to the payment of accrued but unpaid interest on the Shore Crest Phase II Loan; and thereafter to the reduction of the principal balance of the Shore Crest Phase II Loan. For the avoidance of doubt, no prepayment premium shall be due and payable under this Section 2.4.


2.5 GRANT OF SECURITY INTEREST. To secure the payment and performance of all of the Indebtedness and all of the obligations of Borrower under this Agreement and/or under any of the other Shore Crest Phase II Loan Documents and the Borrower's undertakings hereunder and under the other Shore Crest Phase II Loan Documents and the payment and performance of the obligations of Borrower or any other borrower under the Master Agreement in respect of any Resort Loan (as such term is defined in the Master Agreement) owing to Lender under any other Resort Loan Documents (as such term is defined in the Master Agreement) and the payment and performance of the obligations of the Borrower and/or the Guarantor under the Warehouse Facility, Borrower does hereby unconditionally and irrevocably assign, pledge and grant to Lender a continuing security interest and lien in and to all of the right, title and interest of Borrower in the following property of Borrower, whether now owned or existing or hereafter acquired regardless of where located (collectively, the "SHORE CREST PHASE II COLLATERAL"):


(a) all franchises, licenses, permits, trade names, trademarks
(and goodwill associated therewith)(provided that no lien is intended
to be granted in the trade name or trademark "Bluegreen" or any logo
used in connection therewith), approvals, leasehold


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interests (whether as lessor or lessee or sublessor or sublessee),
management contracts, marketing contracts, maintenance contracts,
utility contracts, security contracts, other servicing contracts,
licensing contracts or other similar contracts and all guaranties of
any of the foregoing relating, in each case, to the Shore Crest Phase
II Resort, the Shore Crest Phase II Intervals and/or the Common
Elements or Limited Common Elements (as such terms are defined in the
Shore Crest Phase II Master Deed);


(b) all other accounts, contract rights, general intangibles,
documents, instruments, chattel paper and proceeds of Borrower related
to the Shore Crest Phase II Resort or otherwise connected with, or
related to, the operation, management and use of the Shore Crest Phase
II Resort (other than the Shore Crest Phase II Note Receivables);


(c) all fixtures, inventory, supplies, fittings, machinery,
appliances, equipment, apparatus, furnishings, and personal Property of
every nature found on or used in connection with the Shore Crest Phase
II Resort, including, without limitation, guest room furnishings,
linens, dishware, blinds, floor coverings, hall and lobby equipment,
security systems, sprinkler systems, other fire prevention and
extinguishing apparatus, reservation system computer and related
equipment, artwork, paintings, prints, sculpture, and office
furnishings and equipment;


(d) (i) the Shore Crest Phase II Resort, including, without
limitation, all Shore Crest Phase II Intervals and Shore Crest Phase II
Residential Condominium Units (now existing or hereafter
created)(whether sold or unsold) and (ii) the Shore Crest Phase II
Master Deed (including, without limitation, Borrower's development and
declarant's rights (but not obligations) under applicable law);


(e) all judgments, settlements, claims, awards, insurance
proceeds and other proceeds and compensation, and any interest thereon
(collectively, "COMPENSATION"), now or hereafter made or payable in
connection with (i) any casualty or other damage to all or any part of
the Shore Crest Phase II Resort, (ii) any condemnation proceedings
affecting all or any part of any of the Shore Crest Phase II Resort or
any rights thereto or any interest therein, (iii) any damage to or
taking of all or any part of the Shore Crest Phase II Resort, or any
rights thereto or any interest therein arising from or otherwise
relating to any exercise of the power of eminent domain (including,
without limitation, any and all Compensation for change of grade of
streets or any other injury to or decrease in the value of any of the
Shore Crest Phase II Resort), or any conveyance in lieu of or under
threat of any such taking, (iv) any and all proceeds of any sale,
assignment or other disposition of all or any part of the Shore Crest
Phase II Resort or any rights thereto or any interest therein, (v) any
and all proceeds of any other conversion (whether voluntary or
involuntary) of all or any part of the Shore Crest Phase II Resort or
any rights thereto or any interest therein or to cash or any liquidated
claim, and (vi) any and all refunds and rebates of or with respect to
any insurance premium, any imposition or any other charge for utilities
relating to all or any part of the Shore Crest Phase II Resort
(including, without limitation, any and all refunds and rebates


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of or with respect to any deposit or prepayment relating to any such
insurance premium, imposition or charge), and any and all interest
thereon, whether now or hereafter payable or accruing; and


(f) All cash and other monies and property of Borrower in the
possession or under the control of Lender or any agent thereof;


(g) All books, records, ledger cards, files, correspondence,
computer tapes, disks and software relating to the Shore Crest Phase II
Resort or any other Shore Crest Phase II Collateral described herein;


(h) all of the collateral granted to Lender in the Shore Crest
Phase II Mortgage;;


(i) all of the collateral granted to Lender in the Shore Crest
Phase II Assignment of Leases and Rents and in any other Shore Crest
Phase II Loan Document; and


(j) All proceeds, extensions, amendments, additions,
improvements, betterments, renewals, substitutions and replacements of
the foregoing.


This Agreement shall be deemed a security agreement as defined in the Code, and the remedies for any violation of the covenants, terms and conditions of the agreements herein contained shall be cumulative and be as prescribed herein, or by general law, or as to such part of the Collateral which is also reflected in any filed financing statement, by the specific provisions of the Code now or hereafter enacted, all at Lender's sole election. All terms defined used herein and defined in the UCC shall have the meanings provided for therein, as the same may be amended from time to time.


2.6 SHORE CREST PHASE II RELEASES. Notwithstanding any provision of this Agreement or any other Shore Crest Phase II Loan Document to the contrary, the lien of the Shore Crest Phase II Mortgage, the Shore Crest Phase II Assignment of Leases and Rents and any and all related fixture filing(s) or other UCC-1 financing statements recorded in the real property records in favor of Lender in connection with the Shore Crest Phase II Loan shall be released contemporaneously with the conveyance by the Borrower of fee title to, or on behalf of, a Purchaser of a Shore Crest Phase II Interval in the ordinary course of Borrower's business if, but only if, (a) Lender receives a written request from Borrower not less than three (3) Business Days prior to the requested date of release together with all release documentation (including, without limitation, a partial release of the Shore Crest Phase II Mortgage) in form and substance reasonably satisfactory to Lender, (b) no Event of Default or event or circumstance that, with the giving of notice or passage of time or both, could give rise to an Event of Default has occurred and is continuing, (c) the applicable Shore Crest Phase II Interval Release Payment is paid to Lender in connection therewith and (d) all Costs and expenses of Lender in respect of any such releases, the filing of the same and any escrow conditions applicable in respect thereof shall have been paid by Borrower. For the avoidance of doubt, the Lender shall have no lien or security interest in any Shore Crest Phase II Note Receivable and no Shore Crest Phase II Note Receivable shall be included, or be deemed to be included, in any of the Shore Crest


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Phase II Collateral provided for herein or in any other Shore Crest Phase II Loan Documents. Borrower agrees to only sell Shore Crest Phase II Intervals and not Shore Crest Phase II Residential Units as "residential units."


2.7 CONDITIONS PRECEDENT TO DISBURSEMENT OF SHORE CREST PHASE II LOAN. The following conditions precedent to the disbursement of the Shore Crest Phase II Loan hereunder must be satisfied prior to the disbursement of the Shore Crest Phase II Loan:


(a) Borrower shall have executed and delivered to, procured
for and deposited with, and, if appropriate, recorded in the proper
records with all filing and recording fees and stamp and intangibles
taxes paid, the Shore Crest Phase II Mortgage, the Shore Crest Phase II
Assignment of Leases and Rents and the Shore Crest Phase II UCC
Financing Statements and such other documents, instruments, and
certificates as Lender or Title Company may require.


(b) The Title Company shall have issued or committed in
writing to issue to Lender the Title Insurance with satisfactory
insurance coverage over mechanics' liens arising from any construction
at the Shore Crest Phase II Resort together with such other coverage
and endorsements as Lender may reasonably require subject to the Shore
Crest Permitted Exceptions. Borrower shall disclose to Lender any
indemnity or other arrangement or agreement between Borrower and Title
Company entered into in order to induce Title Company to issue the
Title Insurance as required by this Agreement. Lender shall have also
received satisfactory evidence that all security interests and liens
granted to Lender pursuant to this Agreement or the other Shore Crest
Phase II Loan Documents have been duly perfected and constitute first
priority liens on the Collateral.


(c) The Borrower shall have executed and delivered to Lender a
collateral assignment of all contracts and agreements in respect of the
Shore Crest Phase II Resort.


(d) The Borrower shall have executed and delivered to Lender a
collateral assignment of all permits, licenses, and parking rights and
passes in respect of the Shore Crest Phase II Resort.


(e) The Borrower shall have executed and delivered to Lender a
collateral assignment of all of its rights as developer and/or
declarant (but not its obligations) under the Shore Crest Phase II
Master Deed.


(f) Lender shall have been paid the portion of the Commitment
Fee, as defined in the Master Agreement, as required by the Master
Agreement. Borrower and Lender agree that the portion of said
Commitment Fee due on the funding of the Shore Crest Phase II Loan is
$39,750. Borrower hereby requests and authorizes Lender to deduct said
fee from the proceeds of the Shore Crest Phase II Loan to be funded to
Borrower hereunder.


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(g) The Guarantor shall have executed and delivered to Lender
the Shore Crest Phase II Guaranty Agreement.


(h) Lender shall have received all documents, instruments and
information identified on Schedule 2, including, without limitation,
the Appraisal, PROVIDED that the items on Schedule 2 denoted with an
asterisk shall be delivered by the Borrower not later than 30 days
after the date hereof and such delivery shall be, and is hereby made,
an undertaking of the Borrower, the violation of which shall be an
immediate Event of Default hereunder.


(i) Lender shall have received, in form and substance
satisfactory to Lender, an executed legal opinion, issued by counsel to
Borrower and Guarantor acceptable to Lender, in form and content
acceptable to Lender, with respect to this Agreement and the other
Shore Crest Phase II Loan Documents and the Shore Crest Phase II
Resort.


(j) The representations and warranties contained herein and in
the other Shore Crest Phase II Loan Documents shall be true, correct
and complete in all material respects on and as of the date of funding
of the Shore Crest Phase II Loan.


(k) Borrower shall have performed in all material respects all
agreements, paid all fees, Costs and expenses and satisfied all
conditions which any Shore Crest Phase II Loan Document or the Master
Agreement provides shall be paid or performed by it as a condition to
the making of the Shore Crest Phase II Loan.


(l) Borrower shall have obtained all approvals, licenses,
permits and consents for Borrower's acquisition, construction,
timesharing, use and operation of the Shore Crest Phase II Resort.


(m) There shall then exist no Event of Default or event that
with the giving of notice or passage of time would constitute an Event
of Default.


(n) There shall then exist no Termination Event, as such term
is defined in the Master Agreement, or event that with the giving of
notice or passage of time would constitute a Termination Event.


ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
OF BORROWER


Borrower hereby represents and warrants as follows:


3.1 EXISTENCE. Borrower is in good standing under the laws of the State of Florida and is authorized to transact business in the State of South Carolina. The Guarantor owns 100% of the


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issued and outstanding stock of BG/RDI Acquisition Corp. and BG/RDI Acquisition Corp. owns 100% of the issued and outstanding stock of the Borrower.


3.2 AUTHORIZATION AND ENFORCEABILITY.


(a) EXECUTION. The Shore Crest Phase II Loan Documents have
been duly authorized, executed and delivered and constitute the duly
authorized, valid and legally binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms.


(b) OTHER AGREEMENTS.The execution, delivery and compliance
with the terms and provisions of the Shore Crest Phase II Loan
Documents will not (i) to the best of Borrower's knowledge, violate any
provisions of law or any applicable regulation, order or other decree
of any court or governmental entity, or (ii) conflict or be
inconsistent with, or result in any default under, any contract,
agreement or commitment to which Borrower is bound.


3.3 FINANCIAL STATEMENTS AND BUSINESS CONDITION. The financial statements of the Borrower and the Guarantor and the other consolidated companies therein fairly present the financial conditions and results of operations of such Persons as of the date or dates thereof and for the periods covered thereby. All such financial statements were prepared in accordance with GAAP. Except for any such changes heretofore expressly disclosed in writing to Lender, there has been no material adverse change in the financial condition of the Borrower, the Guarantor or any of its consolidated subsidiaries from the financial condition shown in such consolidated financial statements. Borrower is able to pay all of its debts as they become due, and Borrower shall maintain such solvent financial condition, giving effect to all obligations, absolute and contingent, of Borrower. Borrower's obligations under this Agreement will not render it unable to pay its debts as they become due. The present fair market value of Borrower's assets is greater than the amount required to pay its total liabilities.


3.4 TAXES. All ad valorem taxes and other taxes and assessments against the Shore Crest Phase II Resort have been paid and Borrower knows of no basis for any additional taxes or assessments against such property. Borrower has filed all required tax returns and has paid all taxes shown to be due and payable on such returns, including interest and penalties, and all other taxes which are payable by it, to the extent the same have become due and payable. Borrower shall collect and pay, or shall use commercially reasonable efforts to cause the Shore Crest Phase II Association to collect and pay, any applicable sales or rental tax respecting the sale or rental of any Shore Crest Phase II Intervals, and Shore Crest Phase II Residential Condominium units, in each case, owned by Borrower.


3.5 LITIGATION AND PROCEEDINGS. Except as set forth on Schedule 3 hereto, there are no actions, suits, proceedings, orders or injunctions pending or, to the best of Borrower's knowledge, threatened against or affecting Borrower, at law or in equity, or before or by any governmental entity


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which, if adversely determined, could have, either individually or in the aggregate, a Material Adverse Effect. Borrower has not received any notice from any court or governmental entity alleging that Borrower has violated any applicable Governmental Regulation, any of the rules or regulations thereunder, or any other applicable laws, the result of which, if adversely determined, would have, individually or in the aggregate, a Material Adverse Effect.


3.6 VALID AND BINDING OBLIGATION, NO BREACH OR DEFAULT. All of the Shore Crest Phase II Loan Documents, and all other documents referred to herein to which Borrower is a party, upon execution and delivery will constitute valid and binding obligations of Borrower, enforceable in accordance with their terms except as limited by Debtor Relief Laws. The consummation of the transactions contemplated hereby, and the performance of any of the terms and conditions hereof and of the other Shore Crest Phase II Loan Documents, will not result in a breach of, or constitute a default in Borrower's organizational documents or in any mortgage, deed of trust, lease, promissory note, loan agreement, credit agreement, partnership agreement, or other agreement to which Borrower is a party or by which Borrower may be bound or affected. To the best of its knowledge, the Borrower is not in default of any order of any court or any requirement of any governmental entity that would result in a Material Adverse Effect.


3.7 TITLE; LICENSES AND PERMITS. Borrower has good and marketable fee simple title to the real property constituting the Shore Crest Phase II Resort free and clear of all liens except for the Shore Crest Phase II Permitted Exceptions and good title to all personal property constituting the Shore Crest Phase II Resort free and clear of all liens except for the Shore Crest Phase II Permitted Exceptions. Borrower possesses all requisite franchises, certificates of convenience and necessity, operating rights, licenses, permits, consents, authorizations, exemptions and orders as are necessary to carry on its business as now being conducted, except where the failure to possess the same would not, individually or in the aggregate, have a Material Adverse Effect. There are no pending or threatened proceedings or actions to revoke, attack, invalidate, rescind or modify such franchises, certificates of convenience and necessity, operating rights, licenses, permits, consents, authorizations, exemptions and orders or any zoning in respect of the Shore Crest Phase II Resort or asserting that such zoning does not permit the occupancy, use or operation of the Shore Crest Phase II Resort as currently and proposed to be operated.


3.8 DISCLOSURE. There is no fact of which Borrower is aware that Borrower has not disclosed to Lender in writing that could materially adversely affect the property, business or financial condition of Borrower. Borrower has furnished Lender with a true and complete copy of all documents relating to the timesharing of the Shore Crest Phase II Resort.


3.9 EMPLOYEE BENEFIT PLANS. Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act, the Internal Revenue Code and all other applicable laws and the regulations and interpretations thereof with respect to all employee benefit plans adopted by Borrower for the benefit of its employees. No material liability has been incurred by Borrower which remains unsatisfied for any funding obligation, taxes or penalties with respect to any such employee benefit plan.


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3.10 SYSTEM COMPLIANCE AND ADEQUACY. To the best of Borrower's knowledge, the storm and sanitary sewer system, water system and all mechanical systems of the Shore Crest Phase II Resort comply with all applicable environmental, pollution control and ecological laws, ordinances, rules and regulations, and all governmental entities having jurisdiction over Shore Crest Phase II Resort have issued all necessary permits, licenses or other authorizations for the use and operation of such property. To the best of Borrower's knowledge, the Shore Crest Phase II Resort has adequate storm and sanitary sewage facilities, water and electrical supply, and other required public utilities.


3.11 SUBMITTALS. The Shore Crest Phase II Loan Documents and all financial statements, refurbishing plans, budgets, schedules, opinions, certificates, confirmations, contractor's statements, applications, rent rolls, affidavits, agreements, and other materials submitted to the Lender in connection with or in furtherance of the Shore Crest Phase II Loan Documents by or on behalf of the Borrower fully and fairly state in all material respects the matters with which they purport to deal, and neither misstate any material fact, nor, separately or in the aggregate, fail to state any material fact necessary to make the statements made not misleading; PROVIDED, HOWEVER, that such representation and warranty is made to the best of Borrower's knowledge with respect to such materials submitted to Lender which were prepared by parties other than Borrower, the Guarantor or their respective employees.


3.12 GOVERNMENTAL REQUIREMENTS. The Shore Crest Phase II Resort is and at all times during the Shore Crest Phase II Loan will be used, operated and sold in compliance with all zoning requirements (including parking and density requi ...