LOAN AGREEMENT
Borrower: Xxxxxx Resorts, LLC
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
----------------------------
Address
$10,000,000
Amount of Loan
Date: November 30, 2001
TABLE OF CONTENTS
Page
1. DEFINITIONS....................................................................................................1
2. LOAN COMMITMENT; USE OF PROCEEDS..............................................................................13
2.1 Receivables Loan Commitment; Determination of Advance Amounts........................................13
2.2 Receivables Loan Revolver............................................................................13
2.3 Continuation of Obligations Throughout Term..........................................................13
2.4 Use of Advances......................................................................................13
2.5 Repayment of Receivables Loan........................................................................13
2.6 Interest.............................................................................................13
2.7 Receivables Loan Minimum Required Payments...........................................................13
2.8 Prepayment...........................................................................................13
2.9 Receivables Loan Fee; Availability Fee...............................................................14
2.10 Application of Proceeds of Collateral and Payments...................................................16
2.11 Borrower's Unconditional Obligation to Make Payments.................................................16
3. SECURITY 17
3.1 Security Interest in Receivables Collateral..........................................................17
3.2 Ineligible Instruments...............................................................................17
3.3 Lockbox Collections and Servicing....................................................................18
3.4 Replacement of Agents................................................................................18
3.5 Maintenance of Security..............................................................................18
3.6 Liability of Guarantors..............................................................................18
4. CONDITIONS PRECEDENT TO ADVANCES; MINIMUM AMOUNT AND MAXIMUM FREQUENCY OF ADVANCES; METHOD OF
DISBURSEMENT..................................................................................................19
4.1 Delivery of Receivables Loan Documents and Due Diligence Items Prior to Initial Advance..............19
4.2 Additional Conditions Precedent for Advances.........................................................23
4.3 General Conditions Precedent to All Advances.........................................................24
4.4 Conditions Satisfied at Borrower's Expense...........................................................25
4.5 Minimum Amount and Maximum Frequency of Advances.....................................................26
4.6 Disbursement of Advances.............................................................................26
4.7 No Waiver............................................................................................26
4.8 English Language.....................................................................................26
4.9 UCC Matters..........................................................................................26
5. BORROWER'S REPRESENTATIONS AND WARRANTIES.....................................................................26
5.1 Good Standing........................................................................................26
5.2 Power and Authority; Enforceability..................................................................26
5.3 Borrower's Principal Place of Business...............................................................27
5.4 No Litigation........................................................................................27
5.5 Compliance with Legal Requirements...................................................................27
5.6 No Misrepresentations................................................................................27
5.7 No Default for Third Party Obligations...............................................................27
5.8 Payment of Taxes and Other Impositions...............................................................28
5.9 Sales Activities.....................................................................................28
5.10 Time-Share Interest Not a Security...................................................................28
5.11 Zoning Compliance....................................................................................28
5.12 Eligible Instruments.................................................................................28
5.13 Assessments and Reserves.............................................................................28
5.14 Title to and Maintenance of Common Areas and Amenities...............................................29
5.15 Survival and Additional Representations and Warranties...............................................29
6. BORROWER'S COVENANTS..........................................................................................29
6.1 Borrower's Affirmative Covenants.....................................................................29
6.2 Borrower's Negative Covenants........................................................................38
6.3 Survival of Covenants................................................................................40
7. DEFAULT 40
7.1 Events of Default....................................................................................40
7.2 Remedies.............................................................................................43
7.3 Application of Proceeds During an Event of Default...................................................44
7.4 Remedies; Sale; Assembly of Receivables Collateral...................................................44
7.5 Application of Proceeds..............................................................................45
7.6 Lender's Right to Perform............................................................................45
7.7 Non-Exclusive Remedies...............................................................................46
7.8 Waiver of Marshalling................................................................................46
7.9 Attorney-in-Fact.....................................................................................46
7.10 Judgment Currency....................................................................................46
8. COSTS AND EXPENSES; INDEMNIFICATION...........................................................................47
8.1 Costs and Expenses...................................................................................47
8.2 Indemnification......................................................................................48
9. CONSTRUCTION AND GENERAL TERMS................................................................................48
9.1 Payment Location and Currency........................................................................48
9.2 Entire Agreement.....................................................................................48
9.3 Powers Coupled with an Interest......................................................................49
9.4 Counterparts, Facsimile Signatures...................................................................49
9.5 Notices..............................................................................................49
9.6 Successors and Assigns...............................................................................49
9.7 Severability.........................................................................................50
9.8 Time of Essence......................................................................................50
9.9 Miscellaneous........................................................................................50
9.10 CHOICE OF LAW........................................................................................50
9.11 CHOICE OF JURISDICTION; WAIVER OF VENUE..............................................................51
9.12 WAIVER OF JURY TRIAL.................................................................................51
9.13 INDUCEMENT TO LENDER.................................................................................51
9.14 Compliance With Applicable Usury Law.................................................................51
9.15 NO RELATIONSHIP WITH PURCHASERS......................................................................51
9.16 NO JOINT VENTURE.....................................................................................52
9.17 Standards Applied to Lender's Actions................................................................52
9.18 Meaning of Subordination.............................................................................52
9.19 Scope of Reimbursable Attorney's Fees................................................................52
9.20 Publicity............................................................................................53
9.21 Reliance.............................................................................................53
9.22 Confidentiality......................................................................................53
9.23 Service of Process...................................................................................53
Exhibit 1(A)...... Borrower's Certificate
Exhibit 1(B)...... Notice
Exhibit 1(C)...... Permitted Encumbrances
Exhibit 1(D)...... Request for Receivables Loan Advance and Certification
Exhibit 6.1.4.1... Borrower's Compliance Certificate
Exhibit 6.1.4.8(A) Indenture Excerpts
Exhibit 6.1.4.8(B) Certificate Regarding Indenture
Exhibit 9.1....... Payment Location
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LOAN AGREEMENT
This LOAN AGREEMENT is entered into for good and valuable consideration, by
and between RESORT CONDOMINIUMS INTERNATIONAL, LLC, a Delaware limited liability
company ("Lender") and XXXXXX RESORTS, LLC, a Nevada limited liability company
("Borrower").
1. DEFINITIONS
As used in this Agreement and the other Receivables Loan Documents unless
otherwise expressly indicated in this Agreement or the other Receivables Loan
Documents, the following terms shall have the following meanings (such meanings
to be applicable equally both to the singular and plural terms defined).
"Administration Trust": that certain Management Trust Agreement
(Fideicomiso de Administration) dated as of October 29, 2001 by and between
Club Xxxxxx as trustor and beneficiary and the Administration Trustee as
trustee, as the same may from time to time be amended, modified,
supplemented or otherwise restated.
"Administration Trustee": BankBoston, S.A., Institucion de Banca
Multiple, Grupo Financiero, Direccion Fiduciaria.
"Advance": an advance of the proceeds of the Receivables Loan by
Lender to, or on behalf of, Borrower in accordance with the terms and
conditions of this Agreement.
"Affiliate": with respect to any individual or entity, any other
individual or entity that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such individual or entity.
"Agreement": this Loan Agreement, as it may from time to time be
amended, modified, supplemented or otherwise restated.
"Applicable Usury Law": the usury law chosen by the parties pursuant
to the terms of paragraph 9.10 or such other usury law which is applicable
if such usury law is not.
"Articles of Organization": the public deed (escritura constitutiva),
charter, articles, operating agreement, joint venture agreement,
partnership agreement, by-laws and any other written documents evidencing
the formation, organization, governance and continuing existence of an
entity.
"Availability Advance": an Advance which is made against an Eligible
Instrument after the first Advance made against such Instrument and is
based upon the difference at such time between the Receivables Loan
Borrowing Base of such Instrument and the unpaid principal balance of the
Receivables Loan attributable to such Instrument; provided that the
substitution of an Eligible Instrument for an ineligible Instrument
pursuant to paragraph 3.2 shall not be deemed to be an Availability Advance
for purposes of this paragraph, but the first and every subsequent Advance
against such substituted Eligible Instrument shall be deemed to be an
Availability Advance.
"Basic Interest": the meaning given to it in paragraph 2.6.
"Basic Interest Rate": five percent (5%) per annum in excess of the
Libor Rate fluctuating monthly on the first day of each calendar month
based upon the Libor Rate in effect on such date. In no event, however,
shall the Basic Interest Rate be less than seven and one-half percent
(7.5%) per annum or be more than the maximum contract rate of interest
permitted by Applicable Usury Law.
"Borrower": Xxxxxx Resorts, LLC and, subject to the restrictions on
assignment and transfer contained in this Agreement, its successors and
assigns.
"Borrower's Certificate": a certificate from Borrower in favor of
Lender substantially in a form and substance to the attached Exhibit 1(A).
"Borrower's Knowledge": the actual, current knowledge of the chief
executive officers of Borrower.
"Business Day": any day other than a Saturday, a Sunday, a national
holiday in the United States of America or Mexico or a day on which banks
in Parsippany, New Jersey or Mexico City, Mexico are required to be closed.
"Club Xxxxxx": Club Xxxxxx, S.A. de C.V.
"CR Cancun": CR Resorts Cancun, S. de X.X. de C.V., a Mexican limited
responsibility corporation with variable capital.
"CR Los Cabos": CR Resorts Los Cabos, S. de X.X. de C.V., a Mexican
limited responsibility corporation with variable capital.
"CR Puerto Vallarta": CR Resorts Puerto Vallarta, S. de X.X. de C.V.,
a Mexican limited responsibility corporation with variable capital.
"Collateral": the Receivables Loan Collateral and the other collateral
pledged to Lender pursuant to the Receivables Loan Security Documents.
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"Default Rate": three percent (3%) per annum in excess of the Basic
Interest Rate, but in no event in excess of the maximum contract rate of
interest permitted by Applicable Usury Law.
"Dollars" or "$": shall mean lawful monies of the United States of
America.
"Eligible Instrument": an Instrument which conforms to the Eligibility
Criteria; however an Instrument that has qualified as an Eligible
Instrument shall cease to be an Eligible Instrument upon the date of the
first occurrence of either of the following: (a) any installment due with
respect to that Instrument becomes more than sixty (60) days past due or
(b) that Instrument otherwise fails to continue to conform to Eligibility
Criteria.
"Eligibility Criteria":
(a) Lender has the Mexican equivalent of a valid, direct and
perfected first lien/security interest in the Instrument and security
therefor and has a valid and perfected first priority right to
payments.
(b) The Instrument does not represent a sale by Borrower,
directly or indirectly, to any of its members, managers, shareholders,
directors, officers, partners, agents, employees or creditors, or any
relative or Affiliate of Borrower or the foregoing.
(c) The Purchaser has made a minimum down payment of ten percent
(10%) of the total sales price (no part of which has been advanced or
loaned to the Purchaser by Borrower, directly or indirectly), with
such down payment being represented by a cash or credit card payment;
provided, however, that with respect to up to five percent (5%) of all
Eligible Instruments, the Purchasers thereunder may have made either
no downpayment or a downpayment of less than ten percent (10%) of the
total sales price.
(d) The Instrument must provide for level consecutive monthly
installments of principal and interest in Dollars, Pesos or UDI's over
a term (from its effective date) not exceeding one hundred twenty
(120) months from the date of its execution, with interest accruing on
the unpaid principal balance at not less than twelve percent (12%) per
annum; provided, however, with respect to up to five percent (5%) of
all Eligible Instruments, the Instrument may accrue no interest as
long as all payments thereunder are required to be made within twelve
(12) months from the date of its execution. In determining the
interest rate payable under Instruments denominated in UDI's, the face
rate and the rate of Mexican inflation shall be taken into account.
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(e) The Purchaser in all respects, including, without limitation,
its creditworthiness, is acceptable to Lender; has obtained from
Borrower marketable rights to the purchased Time-Share Interest; and
has not purchased more than four (4) Time-Share Interests.
(f) The Instrument and any security for the payment of the amount
due under the Instrument are bona fide, in form and substance
satisfactory to Lender and valid and enforceable in accordance with
their terms; upon the obligor's default under the Instrument, subject
only to notice and a reasonable grace period, the purchase of the
Time-Share Interest which is the subject matter of such Instrument may
be rescinded and the Time-Share Interest resold; and the rights of the
Purchaser to the purchased Time-Share Interest(s) is subject only to
the Permitted Encumbrances.
(g) The Unit(s) and the amenities that have been promised to the
Purchasers have been completed, fully furnished and approved and ready
for occupancy and the furnishings in those Units are free of any lien
except for the Permitted Encumbrances; no Unit or other part of the
common areas of any Time-Share Project is subject to partition; and
the time-share use of the Units and amenities conform to all
applicable restrictions and laws, necessary approvals having been
obtained.
(h) The Instrument, any security for the payment of the amount
due under the Instrument, and the related sale transaction comply with
all applicable laws; Borrower (directly or indirectly) has Performed
all its obligations due to the Purchaser and there are no executory
obligations to the Purchaser to be Performed by Borrower; and the
Purchaser does not have any right of rescission, set-off, abatement,
counterclaim or the like.
(i) The Instrument has been transferred from either CR Los Cabos
or CR Puerto Vallarta in a manner that corresponds to the transfer
with respect to which Lender received the "choice of law", "true sale"
and "nonsubstantive consolidation" opinions pursuant to paragraph
4.1.1 hereof, with Lender reserving the right, as a further condition
of eligibility, to require further "true sale" and "nonsubstantive
consolidation" opinions with respect to the transfer which was the
subject matter of the previously-delivered opinion in the event
additional transferors are transferring Instruments to Borrower.
(j) Lender has received evidence satisfactory to it that the
collection rights under the Instrument and the Purchase Contract
pertaining thereto have been transferred and delivered by the Borrower
to the Payment Source Trustee, to be held under the Payment Source
Trust.
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(k) Lender has received evidence satisfactory to it that a notice
in the form attached hereto as Exhibit 1(B) has been sent to the
Purchaser.
(l) The Unit represented by the Time-Share Interest is part of
the Club Xxxxxx Multi-Resort System.
(m) The obligor under such Instrument is a Mexican resident;
provided, however, up to five percent (5%) of all Eligible Instruments
may be from obligors who are residents of countries other than Mexico
and further provided that under no circumstances shall any such
obligors be a U.S. Person.
"Event of Default": the meaning set forth in paragraph 7.1.
"GAAP": means generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Boards which are
applicable to the circumstances as of the date of determination
consistently applied, except that, for the financial covenants set forth in
this Agreement, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation
of the audited financial statements delivered to Lender prior to the date
hereof.
"Guarantor": at any time, a person or entity then required under the
terms of this Agreement to guarantee all or any part of the Obligations.
"Guaranty": a primary, joint and several guaranty or guarantee
agreement made by a Required Guarantor with respect to the Obligations, as
such Guaranty may from time to time be amended, modified, supplemented or
otherwise restated.
"Impositions": all real estate, personal property, excise, privilege,
transaction, documentary stamp and other taxes, charges, assessments and
levies (including non-governmental assessments and levies such as
maintenance charges, association dues and assessments under private
covenants, conditions and restrictions) and any interest, costs, fines or
penalties with respect thereto, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature whatsoever
which at any time prior to or after the execution hereof may be assessed,
levied or imposed. Impositions shall include any and all taxes, withholding
obligations, deduction, license fees, assessments, charges, fines,
penalties, or any property, privilege, excise, real estate or other taxes,
charges or assessments currently or hereafter levied or imposed by any
state, local or federal authority of Mexico upon or in connection with or
measured by the Receivables Loan Documents, the Collateral or the
principal, interest or other amounts payable by Borrower to Lender under
the Receivables Loan Documents, together with any amounts which must be
withheld from the proceeds of the Receivables
5
Collateral pursuant to, without limitation, Sections 871, 881 and 1442 of
the IRC. Imposition shall not include taxes payable to the United States of
America or to any state or political subdivision thereof measured by the
net income payable by Lender.
"Incipient Default": an event which after notice and/or lapse of time
would constitute an Event of Default.
"Indebtedness": means all of Borrower's present and future
obligations, liabilities, debts, claims and indebtedness, contingent, fixed
or otherwise, however evidenced, created, incurred, acquired, owing or
arising, whether under written or oral agreement, operation of law or
otherwise, and includes, without limiting the foregoing (i) the
Obligations, (ii) obligations and liabilities of any person or entity
secured by a lien, claim, encumbrance or security interest upon property
owned by Borrower, even though Borrower has not assumed or become liable
therefore, (iii) obligations and liabilities created or arising under any
lease (including capital leases) or conditional sales contract or other
title retention agreement with respect to property used or acquired by
Borrower, even though the rights and remedies of the lessor, seller or
lender are limited to repossession, (iv) receivables repurchase
obligations, (v) all unfunded pension fund obligations and liabilities, and
(vi) deferred taxes.
"Indebtedness Agreement": those certain Agreements Regarding
Indebtedness executed by each of Raintree Vacation, Club Xxxxxx, and
Desarollos Turisticos Xxxxxx, S. de X.X. de C.V. in favor of Lender, of
even date herewith, as such agreements may from time to time be amended,
modified, supplemented or otherwise restated.
"Indenture": the Indenture dated December 5, 1997, pursuant to which
the Redeemable Senior Notes were issued.
"Ineligibility Event": the meaning given to it in paragraph 3.2.
"Installment Date": the meaning given to it in paragraph 2.7.
"Instrument": collection and other rights deriving from Purchase
Agreements which have arisen out of a sale of a Time-Share Interest to a
Purchaser and has been assigned to Borrower.
"Insurance Policies": the insurance policies that Borrower is required
to maintain and deliver pursuant to paragraph 6.1.3.
"Intercompany Affiliation Agreements": those certain Affiliation
Agreements between Club Xxxxxx and each of XX Xxx Xxxxx, XX Xxxxxx, XX
Xxxxxx Xxxxxxxx and Promotora pursuant to which, among other things, Club
Xxxxxx has agreed to include each Time-Share Project within the
multi-resort system administered by Club
6
Xxxxxx, as such agreements may be from time to time amended, modified,
supplemented or otherwise restated.
"IRC": The United States Internal Revenue Code, as amended.
"Land Trustee": The Trustee under the applicable Land Trust.
"Land Trusts": collectively those certain Irrevocable Trust Agreements
previously established by CR Los Cabos, CR Cancun, CR Puerto Vallarta,
Xxxxx Xxxx Promotora and others to hold the use rights and the remainder
interests in each of the Time-Share Projects.
"Legal Requirements": (a) all present and future judicial decisions,
statutes, regulations, permits, licenses or certificates of any
governmental authority in any way applicable to Borrower or its property;
and (b) all contracts or agreements (written or oral) by which Borrower or
its property is bound or, if compliance therewith would otherwise be in
conflict with any of the Receivables Loan Documents, by which Borrower or
its property becomes bound with Lender's prior written consent.
"Lender": Resort Condominiums International, LLC, a Delaware limited
liability company, and its successors and assigns.
"Libor Rate": the per annum rate of interest which is ordinarily
reported on page 3750 of the Telerate Matrix (in Dollars) for a principal
then outstanding balance equal to the then unpaid principal balance of the
Receivables Loan and having a thirty (30) day maturity.
"Maximum Receivables Loan Amount": Ten Million Dollars ($10,000,000).
"Mexican GAAP": generally accepted accounting principles in Mexico in
accordance with the provisions established by the Mexican Accountants
Institute.
"Mexitur": means Corporacion Mexitur, S. de X.X. de C.V., a Mexican
limited responsibility corporation with variable capital.
"Minimum Required Time-Share Approvals": official communications
issued by the Mexican Consumer Protection Agency (Procuraduria Federal del
Consumidor) evidencing that the Purchase Contract and Time-Share Program
Consumer Documents were approved and registered by such government agency.
"Mirror Notes": those notes totaling, in the aggregate, Eighty Three
Million Three Hundred Forty Six Thousand Three Hundred Seventy Two and
70/100 Dollars ($83,346,372.70)
7
issued by CR Cancun, CR Cabos and CR Puerto Vallarta in favor of CR Resorts
Capital S. de X.X. de C.V.
"Negative Pledge": that certain letter of direction, in form and
substance satisfactory to Lender, given to each of the Land Trustees
prohibiting them from allowing the creation of any further consensual liens
against any of the Time-Share Projects (other than the Permitted
Encumbrances), without the prior written consent of Lender.
"Obligations": all obligations, agreements, duties, covenants and
conditions of Borrower to Lender which Borrower is now or hereafter
required to Perform under the Receivables Loan Documents.
"Official Exchange Rate": the official rate of exchange between the
Mexican Peso and the Dollar as reflected in the Wall Street Journal or
other reputable financial publication selected by Lender.
"Operating Agreements": each of the following: (a) that certain
Contrato de Operacion, dated as of March 18, 1998, by and between Starwood
Cancun, S. de X.X. de C.V., CR Cancun, CR Resorts Remainder Company, S. de
X.X. de C.V., and Bancomer, S.A., Institucion de Banca Multiple, Grupo
Financiero Bancomer, Division Fiduciaria, (b) that certain Contrato de
Operacion, dated as of March 18, 1998, by and between Starwood Los Cabos,
S. de X.X. de C.V., CR Cabos, CR Resorts Remainder Company, S. de X.X. de
C.V., and Bancomer, S.A., Institucion de Banca Multiple, Grupo Financiero
Bancomer, Division Fiduciaria, and (c) that certain Contrato de Operacion,
dated as of March 18, 1998, by and between Starwood Puerto Vallarta, S. de
X.X. de C.V., CR Puerto Vallarta, CR Resorts Remainder Company, S. de X.X.
de C.V., and Bancomer, S.A., Institucion de Banca Multiple, Grupo
Financiero Bancomer, Division Fiduciaria.
"Originators": each of CR Los Cabos, CR Puerto Vallarta and any other
Affiliates of Borrower that originate consumer receivables that are sold or
transferred to Borrower.
"Payment Source Trust": that certain Management and Payment Source
Trust Agreement (Contrato de Fideicomiso de Adminstracion y Fuente de Pago)
dated as of ______________, 2001, executed by the Payment Source Trustee,
as trustee, Club Xxxxxx, CR Cancun, CR Los Cabos, CR Puerto Vallarta and
Promotora, as the Time-Sharing Companies Trustors, CR Los Cabos and CR
Cancun in their capacity as partners of Borrower, Borrower, Lender and RCI
Mexico, as the same may be from time to time amended, modified,
supplemented or otherwise restated.
"Payment Source Trustee": Invex Banco S.A., Institucion de Banca
Multiple, Invex Grupo Financiero, Direccion Fiduciaria.
8
"Performance" or "Perform": full, timely and faithful performance.
"Permitted Encumbrances": the rights, restrictions, reservations,
encumbrances, easements and liens of record which Lender has agreed to
accept as set forth in Exhibit 1(C).
"Peso" or "M$": lawful monies of the United Mexican States.
"Pledge Agreement: that certain Pledge Agreement dated as of
______________, 2001, executed by the Payment Source Trustee as Pledgor,
Lender as Creditor and Borrower as borrower or beneficiary, pursuant to
which the Payment Source Trustee creates a pledge over the rights derived
from the Time Share Agreements and the corresponding Original Accounts
Receivable and Future Accounts Receivable, all as identified and described
therein, as it may from time to time be amended, modified, supplemented or
otherwise restated.
"Promotora": means Promotora Xxxxx Xxxx, S. de X.X. de C.V., a Mexican
limited responsibility corporation with variable capital.
"Purchase Contract": a purchase contract pursuant to which CR Cancun,
CR Los Cabos, CR Puerto Vallarta or Promotora have agreed to sell and a
Purchaser has agreed to purchase a Time-Share Interest.
"Purchaser": a purchaser who has executed a Purchase Contract.
"Quiet Enjoyment Rights": the meaning given to it in paragraph
4.1.2.12.
"Raintree": means Raintree Resorts International, Inc., a Nevada
corporation.
"Raintree Vacation": Raintree Vacation Exchange, LLC, a Texas limited
liability company and its successors and assigns.
"RCI Existing Affiliation Agreements": The following now-existing
affiliation agreements:
(i) Xxxxxx Resort Affiliation Agreement between RCI Mexico and
Club Xxxxxx, dated November 18, 1993. Master Agreement for Club
Xxxxxx;
(ii) Resort Affiliation Agreement between RCI Mexico and Club
Xxxxxx covering Hotel Xxxxxx Los Cabos, Baja California, Sur, Mexico,
with a term beginning December 24, 1993;
9
(iii) Resort Affiliation Agreement between RCI Mexico and Club
Xxxxxx covering Hotel Xxxxxx Puerto Vallarta, Jalisco, Mexico, with a
term beginning November 18, 1993;
(iv) Resort Affiliation Agreement between RCI Mexico and Club
Xxxxxx covering Hotel Xxxxxx Cancun, Xxxxxxxx Roo, Mexico with a term
beginning November 18, 1993;
(v) Resort Affiliation Agreement between RCI Mexico and Club
Xxxxxx covering Xxxxx Xxxx Hotel and Racquet Club Acapulco, Guerrero,
Mexico, with a term beginning March 11, 1998;
(vi) Resort Affiliation Agreement between RCI Mexico and Grupo
Constructor Ram, S.A. covering San Xxxxxx Resort in Sonora, Mexico,
with a term beginning June 11, 1991; and
(vii) Resort Affiliation between RCI Mexico and Grupo Xxxxxx,
S.A. de C.V. covering Xxxxx Xxxx Puerto Mio Zihuatanejo, Ixtapa in
Guerrero, Mexico.
"RCI Master Affiliation Agreement": that certain Master Affiliation
Agreement between Raintree Vacation, Club Xxxxxx, Lender and RCI Mexico
dated November __, 2001, as such agreement may from time to time be
amended, modified, supplemented or otherwise restated.
"RCI Mexico": Resort Condominiums International de Mexico, S. de X.X.
de C.V., a Mexican limited responsibility corporation with variable
capital.
"RCI Outsourcing Agreement": that certain Service Rendering Agreement
for Club Xxxxxx Member Service between RCI Mexico and Club Xxxxxx dated
_______________ as the same may from time to time be amended, modified,
supplemented or otherwise restated.
"Receivables Collateral": (a) the Instruments which are now or
hereafter assigned or delivered by the Borrower to the Payment Source
Trustee pursuant to this Agreement or against which an Advance has been
made; (b) all rights under all documents evidencing, securing or otherwise
pertaining to such Instruments, including, without limitation, Purchase
Contracts and escrow agreements, if any; (c) all collateral and other
security interests given to secure an Instrument; (d) all Borrower's rights
under all accounts pertaining to any of the foregoing; (e) Borrower's
interest in all computer software, files, books and records of Borrower
pertaining to any of the foregoing; and (f) the cash and non-cash proceeds
of all of the foregoing, including, without limitation
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(whether or not acquired with cash proceeds), all accounts, chattel paper,
contract rights, documents, general intangibles and instruments related
thereto.
"Receivables Loan": the line of credit loan made pursuant to Article
2.
"Receivables Loan Borrowing Base": (i) with respect to an Eligible
Instrument denominated in UDI's, an amount equal to sixty percent (60%) of
the unpaid principal balance of such Eligible Instrument, converted into
Dollars at the Official Exchange Rate in effect on the Business Day
immediately prior to the day such borrowing base is determined, (ii) with
respect to an Eligible Instrument denominated in Pesos, an amount equal to
sixty percent (60%) of the unpaid principal balance of such Eligible
Instrument, converted into Dollars at the Official Exchange Rate in effect
on the Business Day immediately prior to the day such borrowing base is
determined and (iii) with respect to Eligible Instruments denominated in
Dollars, an amount equal to eighty-three percent (83%) of the unpaid
principal balance of such Eligible Instrument.
"Receivables Loan Borrowing Base Shortfall": at any time, the amount
by which the unpaid principal balance of the Receivables Loan exceeds the
aggregate Receivables Loan Borrowing Base of all Eligible Instruments,
converted into Dollars at the Official Exchange Rate in effect on the
Business Day immediately prior to the day such shortfall is determined.
"Receivables Loan Borrowing Term": the period commencing on the date
of this Agreement and ending on the close of the Business Day on November
30, 2004.
"Receivables Loan Collateral": the Receivables Collateral and any and
all other property now or hereafter serving as security for the Performance
of the Obligations, and all products and proceeds thereof.
"Receivables Loan Documents": this Agreement, the Receivables Loan
Note, any and all Guaranties, any and all Subordination Agreements, the
Servicing Agreement, the Indebtedness Agreement, the Receivables Loan
Security Documents, and all other documents now or hereafter executed in
connection with the Receivables Loan, as they may from time to time be
amended, modified, supplemented or otherwise restated.
"Receivables Loan Maturity Date": the date which occurs sixty (60)
months from the last Advance, or if not a Business Day, the first Business
Day thereafter.
"Receivables Loan Note": the promissory note to be made and delivered
by Borrower to Lender having a face amount equal to the Maximum Receivables
Loan Amount, dated as of even date herewith, and made payable to Lender to
evidence the Receivables Loan, as it may from time to time be amended,
modified, supplemented or otherwise restated.
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"Receivables Loan Security Documents": the Payment Source Trust, the
Negative Pledge, this Agreement, the Pledge Agreement and all other
documents now or hereafter securing the Obligations, as they may from time
to be amended, modified, supplemented or otherwise restated.
"Receivables Purchase Agreement": that certain Assignment Agreement
between CR Puerto Vallarta, CR Los Cabos and Borrower dated November __,
2001, as the same may from time to time be amended, modified, supplemented
or otherwise restated.
"Redeemable Senior Notes": those Series A and Series B thirteen
percent (13%) senior notes due December 1, 2004 in the aggregate principal
amount of One Hundred Million Dollars ($100,000,000) issued by Raintree and
CR Resorts Capital, S. de X.X. de C.V. and held by IBJ Xxxxxxxx Bank and
Trust Company, as trustee.
"Request for Receivables Loan Advance and Certification": a written
request and certification from the Borrower in favor of Lender,
substantially in form and substance to the attached Exhibit 1(D).
"Required Closing Date": November 30, 2001.
"Required Guarantors": jointly and severally, Raintree, CR Puerto
Vallarta, CR Los Cabos, CR Cancun, Mexitur, Promotora and Xxxxx Xxxx.
"Resolution": a resolution of a corporation certified as true and
correct by an authorized officer of such corporation, a certificate signed
by the manager of a limited liability company and such members whose
approval is required, a partnership certificate signed by all of the
general partners of such partnership and such other partners whose approval
is required or a power of attorney signed by such officers whose approval
is required.
"Service of Process Agent": has the meaning set forth in paragraph
9.23 of this Agreement.
"Servicing Agent": RCI Mexico or its successor as Servicing Agent
under the Servicing Agreement.
"Servicing Agreement": the Loan Servicing Agreement to be made among
Lender, Borrower, Payment Source Trustee, CR Los Cabos, CR Puerto Vallarta,
CR Cancun, Promotora, Club Xxxxxx, and Servicing Agent, dated
______________, 2001, which provides for Servicing Agent to perform for the
benefit of Lender, accounting, reporting and other servicing functions with
respect to the UDI-, Peso- and Dollar-denominated consumer receivables
generated by Borrower or any Affiliates of Borrower
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from consumers who are not U.S. Persons, as it may from time to time be
amended, modified, supplemented or otherwise restated.
"Subordination Agreement": a subordination agreement made by a
Subordinator subordinating Indebtedness owed to it by Borrower to all or a
part of the Obligations, as it may from time to time be amended, modified,
supplemented or otherwise restated.
"Subordinator": at any time, a person or entity then required under
the terms of paragraph 6.1.5 to subordinate Indebtedness owed to it by
Borrower to all or any part of the Obligations.
"Term": the duration of this Agreement, commencing on the date as of
which this Agreement is entered into and ending when all of the Obligations
have been Performed and Lender has no further obligation to extend credit
in connection with the Receivables Loan.
"Third Party Consents": those consents which Lender requires Borrower
to obtain, or which Borrower is contractually or legally obligated to
obtain, from others in connection with the transaction contemplated by the
Receivables Loan Documents, including any necessary consents or assurances
from the existing lenders of Borrower's Affiliates.
"Time-Share Interest": a personal right to occupy and use a variable
Unit in a Time-Share Project at any time during the season to which it
relates for a period of at least seven (7) consecutive days every calendar
year or every other calendar year.
"Time-Share Program": the program under which Purchasers may own
Time-Share Interests, enjoy their respective Time-Share Interests on a
recurring basis, and share the expenses associated with the operation and
management of such program.
"Time-Share Program Consumer Documents": the Purchase Contract,
Instrument, deed of conveyance, credit application, credit disclosures (if
applicable), rescission right notices, final subdivision public
reports/prospectuses/public offering statements (if applicable), receipt
for public report, exchange affiliation agreement and other documents used
or to be used by Borrower and/or its Affiliates in connection with the sale
of Time-Share Interests.
"Time-Share Program Governing Documents": the Land Trusts; the
Purchase Contracts; the Instruments, the rules and regulations of the
Borrower and/or its Affiliates; the regulations for Club Regina's
Multi-Resort System; any and all rules and regulations from time to time
adopted by the Borrower and/or its Affiliates; the Operating Agreements;
and any subsidy agreement by which Borrower and/or its Affiliates are
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obligated to subsidize shortfalls in the budget of the Time-Share Program
in lieu of paying assessments.
"Time-Share Project" shall mean any one of the Time-Share Projects.
"Time-Share Projects": Club Xxxxxx Resort at Los Cabos, Club Xxxxxx
Resort at Puerto Vallarta, Club Xxxxxx Resort at Cancun and Xxxxx Xxxx
Hotel and Racquet Club.
"UDI": Unidad de Inversion.
"U.S. Person: as defined in the IRC.
"Unit": a dwelling unit in a Time-Share Project.
"Xxxxx Xxxx": means Xxxxx Xxxx Resort, S. de X.X. de C.V., a Mexican
limited responsibility corporation with variable capital.
2. LOAN COMMITMENT; USE OF PROCEEDS
2.1. Receivables Loan Commitment; Determination of Advance Amounts.
Lender hereby agrees, if Borrower has Performed all of the Obligations then
due, to make Advances to Borrower in accordance with the terms and
conditions of this Agreement for the purposes specified in paragraph 2.4.
The maximum amount of an Advance shall be equal to the aggregate
Receivables Loan Borrowing Base for all Eligible Instruments (including
those submitted in connection with the pending Advance) less (b) the then
unpaid principal balance of the Receivables Loan; provided, however, at no
time shall the unpaid principal balance of the Receivables Loan exceed the
Maximum Receivables Loan Amount. In the event at any time the unpaid
principal balance of the Receivables Loan exceeds the Maximum Receivables
Loan Amount, Borrower shall make a payment to Lender within one (1)
Business Day thereafter in an amount equal to such excess, without the need
for any prior demand or request by Lender.
2.2. Receivables Loan Revolver. The Receivables Loan will be a
non-revolving facility and in addition no Availability Advances shall be
permitted, until such time as Raintree has closed, on terms and conditions
satisfactory to Lender in its sole and absolute discretion, the transaction
pursuant to which the terms of repayment under those Redeemable Senior
Notes held by each of Trust Company of the West and Xxxxxxxxx & Company
have been modified. Such modification shall, at a minimum, result in a
reduction by at least one half in the interest payment obligations due
under the Redeemable Senior Notes. Thereafter, the Receivables Loan will
become a revolving line of credit and Availability Advances will be
permitted, subject to compliance with all other conditions precedent
hereunder to the making of Advances. However, even though the Receivables
Loan will become a revolving line of credit, all Advances shall be viewed
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as a single loan. Borrower shall not be entitled to obtain Advances after
the expiration of the Receivables Loan Borrowing Term unless Lender, in its
discretion, agrees in writing with Borrower to make Advances thereafter on
terms and conditions satisfactory to Lender.
2.3. Continuation of Obligations Throughout Term. Whether or not
Borrower's right to obtain Advances has terminated, this Agreement and
Borrower's liability for Performance of the Obligations shall continue
until the end of the Term.
2.4. Use of Advances. Borrower will use the proceeds of the
Receivables Loan for purposes of purchasing Instruments and Purchase
Contracts from CR Los Cabos and CR Puerto Vallarta. Borrower shall
thereafter cause such purchase price to be paid in satisfaction of amounts
owed under the Mirror Notes and thereafter cause such amounts paid under
the Mirror Notes to be paid in satisfaction of the interest payment due on
December 1, 2001 under the Redeemable Senior Notes. The remaining proceeds
of the Receivables Loan shall be used to pay any amounts then due and owing
by Borrower or its Affiliates to Lender or RCI Mexico in connection with
the various affiliation arrangements with Lender and RCI Mexico, then to
amounts required to be paid by Borrower under paragraph 8.1 hereof and
thereafter for working capital and other business purposes.
2.5. Repayment of Receivables Loan. The Receivables Loan shall be
evidenced by the Receivables Loan Note and shall be repaid in immediately
available funds according to the terms of the Receivables Loan Note and
this Agreement.
2.6. Interest. Except as otherwise provided in the Receivables Loan
Note or this Agreement, interest ("Basic Interest") shall accrue on the
unpaid principal balance of the Receivables Loan from time to time
outstanding at the Basic Interest Rate. Basic Interest shall be calculated
on the basis of the actual number of days elapsed during the period for
which interest is being charged predicated on a year consisting of three
hundred sixty (360) days. Payments of principal, Basic Interest (to the
extent permitted by applicable law) and any other amounts due and payable
under the Receivables Loan Documents shall earn interest after they are due
at the Default Rate. While an Event of Default exists, Basic Interest shall
accrue at the Default Rate.
2.7. Receivables Loan Minimum Required Payments. Commencing on the
last Business Day of the calendar month in which the initial Advance is
made and on the last Business Day of each succeeding month thereafter
("Installment Date") until the Receivables Loan Maturity Date or the date
on which the Receivables Loan is paid in full, whichever date first occurs,
Borrower will pay to Lender an installment payment of principal and
interest on the Receivables Loan equal to (i) one hundred percent (100%) of
all proceeds (except servicing fee payments made by consumers whose
principal and interest payments then due have been paid in full and
payments made by such consumers as tax and insurance impounds or
maintenance fees for the Time-Share Projects and other
15
assessment payments and which are required to be so treated by Lender) of
the Receivables Collateral collected during the month in which the payment
is required to be made and (ii) all such proceeds collected during any
preceding month during the Term and not previously paid to Lender,
including, without limitation, all payments collected under the Instruments
which constitute part of the Receivables Collateral. Regardless of whether
the proceeds of the Receivables Collateral are sufficient for that purpose,
interest on the principal balance of the Receivables Loan from time to time
outstanding shall be due and payable monthly in arrears on each Installment
Date.
2.8 Prepayment. The Receivables Loan may be prepaid in whole or in
part at any time without premium or penalty.
2.9. [Reserved]
2.10. Application of Proceeds of Collateral and Payments.
Notwithstanding anything in the Receivables Loan Documents to the contrary,
the amount of all payments or amounts received by Lender with respect to
the Receivables Loan shall be applied to the extent applicable under the
Receivables Loan Documents; (a) first, to any past due payments of interest
on the Receivables Loan and to accrued interest on the Receivables Loan
through the date of such payment, including any default interest; (b) then,
to any late fees, examination fees and expenses, collection fees and
expenses and any other fees and expenses due to Lender under the
Receivables Loan Documents in connection with the Receivables Loan; and (c)
last, the remaining balance, if any, to the unpaid principal balance of the
Receivables Loan; provided however, while an Event of Default or Incipient
Default exists, each payment received with respect to the Receivables Loan
shall be applied to such amounts owed to Lender by Borrower under the
Receivables Loan Documents as Lender in its discretion may determine. In
calculating interest and applying payments as set forth above: (a) interest
on the Receivables Loan shall be calculated and collected through the date
payment is actually received by Lender; (b) interest on the outstanding
balance of the Receivables Loan shall be charged during any grace period
permitted under the Receivables Loan Documents; (c) at the end of each
month, all past due interest and other past due charges provided for under
the Receivables Loan Documents with respect to the Receivables Loan shall
be added to the principal balance of the Receivables Loan in accordance
with the provisions of Article 363 of the Mexican Commercial Code; and (d)
to the extent that Borrower makes a payment or Lender receives any payment
or proceeds of the Collateral for Borrower's benefit that is subsequently
invalidated, set aside or required to be repaid to any other person or
entity, then, to such extent, the Obligations in connection with the
Receivables Loan intended to be satisfied shall be revived and continue as
if such payment or proceeds had not been received by Lender and Lender may
adjust the Receivables Loan balance as Lender, in its discretion, deems
appropriate under the circumstances. The provisions of this paragraph 2.10
are also subject to the parties' rights and obligations under the
Receivables Loan Documents as to the application of proceeds of the
Collateral following an Event of Default.
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2.11 Borrower's Unconditional Obligation to Make Payments. Whether or
not the proceeds from the Receivables Loan Collateral shall be sufficient
for that purpose, Borrower will pay when due all payments required to be
made pursuant to any of the Receivables Loan Documents, Borrower's
obligation to make such payments being absolute and unconditional.
3. SECURITY
3.1 Security Interest in Receivables Collateral. Borrower has placed
the Receivables Collateral within the Payment Source Trust. To secure the
Performance of all of the Obligations, Borrower has instructed the Payment
Source Trustee to grant, to Lender a pledge (prenda) in the Receivables
Collateral. Such pledge shall be absolute, continuing, perfected, direct,
first, exclusive and applicable to all existing and future Advances and to
all of the Obligations. Borrower will unconditionally assign and deliver to
the Payment Source Trustee, with full recourse, all Instruments which are
part of the Receivables Collateral. Borrower warrants and guarantees the
enforceability of the Receivables Collateral. Lender is hereby appointed
Borrower's attorney-in-fact to take any and all actions in Borrower's name
and/or on Borrower's behalf deemed necessary or appropriate by Lender with
respect to the collection and remittance of payments (including the
endorsement of payment items) received on account of the Receivables
Collateral; provided, however, that Lender shall not take any action which
is described in paragraph 7.2.3 unless an Event of Default exists and is
continuing. Lender may notify persons bound thereby of the existence of
Lender's interest as assignee in the Receivables Collateral and in the
normal course of the Servicing Agent's or Lender's servicing or collection
activities, Lender may request from any person bound by the Receivables
Collateral any information relating to him.
3.2 Ineligible Instruments. If an Instrument which is part of the
Receivables Collateral ceases to be an Eligible Instrument or is determined
not to be an Eligible Instrument ("Ineligibility Event") and as a result of
the occurrence of such Ineligibility Event, there exists a Receivables Loan
Borrowing Base Shortfall, then within ten (10) Business Days thereafter
Borrower will either (a) make to Lender a principal payment in an amount
equal to the Receivables Loan Borrowing Base Shortfall plus accrued and
unpaid interest on such principal payment or (b) replace such ineligible
Instruments with one or more Eligible Instruments having an aggregate
Receivables Loan Borrowing Base not less than the Receivables Loan
Borrowing Base Shortfall with such replacement to be effected by means of
endorsement and delivery of such Eligible Instruments to the Payment Source
Trustee to be held under the Payment Source Trust. Simultaneously with the
delivery of the replacement Eligible Instrument to Payment Source Trustee
for an ineligible Instrument, Borrower will deliver to Lender all of the
items (except for a Request for Receivables Loan Advance and Certification)
required to be delivered by Borrower to Lender pursuant to paragraph 4.2,
together with a Borrower's Certificate. Lender will instruct the Payment
Source Trustee to reassign to Borrower,
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without recourse or warranty of any kind (liberacion sin responsabilidad
para el Acreedor), the ineligible Instrument if: (a) no Event of Default or
Incipient Default exists; (b) Borrower has made any principal payment and
Performed any replacement obligations as required above in connection with
any Ineligibility Event caused by such ineligible Instrument; and (c)
Borrower has requested Lender in writing to release the ineligible
Instrument.
3.3 Collections and Servicing. The Payment Source Trustee shall
collect payments on the Instruments constituting part of the Receivables
Collateral and remit collected payments to Lender on the last day (or if
such day is not a Business Day, on the preceding Business Day) of each and
every month after the date of the first Receivables Loan Advance, according
to the terms of the Payment Source Trust. Payments shall not be deemed
received by Lender until Lender actually receives such payments from
Payment Source Trustee. Until such time as the Receivables Loan has been
paid in full, RCI Mexico shall service UDI-, Peso-, and Dollar-denominated
consumer receivables generated by Borrower or any Affiliate of Borrower
from consumers who are not U.S. Persons. The foregoing notwithstanding,
with respect to UDI-, Peso-, and Dollar-denominated consumer receivables
pledged to other lenders, Borrower shall use commercially reasonable
efforts to move the servicing of those receivables to the Servicing Agent
within sixty (60) days following the Required Closing Date. Servicing Agent
shall furnish to Lender, Borrower and the Payment Source Trustee at
Borrower's sole cost and expense, no later than the tenth (10th) day of
each month commencing with the first full calendar month following the date
of this Agreement, a report, in a format satisfactory to Lender, which: (a)
shows as of the end of the prior month with respect to each Instrument
which constitutes part of the Receivables Collateral (i) all payments
received, allocated between principal, interest, late charges and taxes;
(ii) the opening and closing balances; (iii) average consumer interest
rates; and (iv) extensions, refinances, prepayments and other similar
adjustments; and (b) indicates delinquencies of thirty (30), sixty (60),
ninety (90) days and in excess of ninety (90) days. At the end of each
calendar quarter, Borrower will deliver or use commercially reasonable
efforts to cause the Servicing Agent to deliver to Lender and the Payment
Source Trustee a current list of the names, addresses and phone numbers of
the obligors on each of the Instruments constituting part of the
Receivables Collateral. Borrower will also deliver or cause Servicing Agent
to deliver to Lender, Borrower and the Payment Source Trustee, promptly
after receipt of a written request for them, such other reports with
respect to Instruments constituting part of the Receivables Collateral as
Lender may from time to time reasonably require.
3.4 Replacement of Servicing Agent. If a default on the part of the
Servicing Agent exists under the Servicing Agreement or an Event of Default
exists, Lender, subject to any additional restriction thereon contained in
the Servicing Agreement, may at any time and from time to time, substitute
a successor or successors to the Servicing Agent acting under the Servicing
Agreement.
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3.5 Maintenance of Security. Borrower will deliver or cause to be
delivered to Lender and will maintain or cause to be maintained in full
force and effect throughout the Term (except as otherwise expressly
provided in such Receivables Loan Document), as security for the
Performance of the Obligations, the Receivables Loan Security Documents and
all other security required to be given to Lender pursuant to the terms of
this Agreement.
3.6 Liability of Guarantors. The payment and Performance of the
Obligations shall be jointly, severally, primarily and unconditionally
guaranteed by the Required Guarantors.
4. CONDITIONS PRECEDENT TO ADVANCES; MINIMUM AMOUNT AND MAXIMUM FREQUENCY
OF ADVANCES; METHOD OF DISBURSEMENT
4.1 Delivery of Receivables Loan Documents and Due Diligence Items
Prior to Initial Advance. Lender's obligation to make the initial Advance
shall be subject to and conditioned upon the terms and conditions set forth
in the following subparagraphs and elsewhere in this Agreement:
4.1.1. Receivables Loan Documents. Borrower shall have delivered
to Lender or caused to be delivered to Lender the following duly
executed, delivered (where appropriate) and in form and substance
satisfactory to Lender, not later than the Required Closing Date:
4.1.1.1. The Receivables Loan Documents;
4.1.1.2. A favorable opinion or opinions from independent
counsel for Borrower and all Required Guarantors which counsel
shall be satisfactory to Lender and which opinion shall cover
such matters as Lender may require. Without limiting the
generality of the foregoing, the Lender shall receive a
satisfactory "choice of law", "true sale" and "nonsubstantive
consolidation" opinion from Borrower's United States and Mexican
counsel with respect to the transfer of the Instruments to the
Borrower from CR Los Cabos and CR Puerto Vallarta pursuant to the
Receivables Purchase Agreement;
4.1.1.3. The Third Party Consents; and
4.1.1.4. Such other documents as Lender may reasonably
require to effect the intent and purposes of this Agreement.
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4.1.2. Organizational, Time-Share Project, Affiliation and Other
Due Diligence Documents. Borrower shall have delivered to Lender prior
to the earlier of (a) the date of the initial Advance or (b) the
Required Closing Date:
4.1.2.1. The Articles of Organization of Borrower, any and
all Required Guarantors and (if any) other sureties for the
Obligations and, if applicable, their respective managers,
members and partners, to the extent any such entity is not a
natural person;
4.1.2.2. The Resolutions of Borrower, any and all Required
Guarantors and (if any) other sureties for the Obligations and,
if applicable, their respective managers, members and partners,
to the extent any such entity is not a natural person,
authorizing the execution and delivery of the Receivables Loan
Documents, the transactions contemplated thereby and such other
matters as Lender may require;
4.1.2.3. A certificate or other evidence of good standing
for Borrower, any and all Required Guarantors and (if any) other
sureties for the Performance of the Obligations and, if
applicable, their respective managers, members and partners, to
the extent any such entity is not a natural person, from the
state of its organization together with evidence that the
Borrower, and those Required Guarantors which are Mexican
entities have made all necessary and appropriate filings and
recordations with the Mexican Public Registry of Commerce, the
Mexican Ministry of Finance and Public Credit, the Sistema de
Informacion Empresarial Mexicano, and the Instituto Nacional para
el Fondo de la Vivienda de los Trabajadores (INVONAVIT);
4.1.2.4. Evidence that Borrower and the Required Guarantor
have obtained all approvals, consents and business licenses which
are necessary to enable each of them, as applicable, to execute
the Receivables Loan Documents, consummate the Receivables Loan
and operate within Mexico;
4.1.2.5. Such evidence as Lender may reasonably require that
Purchasers whose Instruments are being assigned to the Payment
Source Trustee have good and marketable title to the Time-Share
Interests they have purchased;
4.1.2.6. All permits, licenses, approvals and certificates
for the occupancy, use and operation of each Time-Share Project
for time-share and other intended uses;
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4.1.2.7. Evidence each Time-Share Project is zoned for
time-share and other intended uses and that all approvals
required for such uses under any covenants, conditions and
restrictions have been obtained;
4.1.2.8. The Minimum Required Time-Share Approvals;
4.1.2.9. A copy of the Time-Share Program Consumer Documents
and the Time-Share Program Governing Documents;
4.1.2.10. The Insurance Policies;
4.1.2.11. A copy of all marketing contracts, management
contracts, service contracts, operating agreements, equipment
leases, space leases and other agreements pertaining to each
Time-Share Project and which are necessary for the sale,
operation and intended time-share use of such Time-Share Project
and are not otherwise required pursuant to another item in this
paragraph;
4.1.2.12. Evidence that each owner of a Time-Share Interest
will have available to it the quiet and peaceful enjoyment of the
Time-Share Interest (including promised amenities and necessary
easements) owned by it which cannot be disturbed so long as such
owner is not in default of its obligations to pay the purchase
price of its Time-Share Interest, to pay assessments to the
applicable time-share association, and to comply with reasonable
rules and regulations pertaining to the use of the Time-Share
Interest ("Quiet Enjoyment Rights");
4.1.2.13. A fully executed Administration Trust, in form and
substance satisfactory to Lender;
4.1.2.14. Evidence that the RCI Master Affiliation
Agreement, the Intercompany Affiliation Agreements, the RCI
Existing Affiliation Agreements, RCI Outsourcing Agreement and
the Servicing Agreement have been unconditionally assigned and
transferred to the Payment Source Trustee to be held under the
provisions of the Payment Source Trust;
4.1.2.15. Fully executed Intercompany Affiliation
Agreements, in form and substance satisfactory to Lender;
4.1.2.16. A fully executed RCI Master Affiliation Agreement
in form and substance satisfactory to Lender;
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4.1.2.17. A Letter of Direction to the Administration
Trustee, in form and substance satisfactory to Lender, pursuant
to which the Administration Trustee is prohibited from permitting
(i) a removal of the patrimony of the Administration Trust (ii)
or a modification to the Administration Trust, without, in each
case, Lender's prior written approval;
4.1.2.18. Evidence that the Negative Pledge has been
delivered to and accepted by each Land Trustee;
4.1.2.19. A fully executed Receivables Purchase Agreement in
form and substance satisfactory to Lender;
4.1.2.20. Evidence that the current collection procedures,
pursuant to which the service fees, renewal fees, maintenance
fees and other fees payable to RCI Mexico have been modified so
that such monies are collected by the Payment Source Trustee; and
4.1.2.21. Such other items as Lender requests which are
reasonably necessary to evaluate the request for the Advance and
the satisfaction of the conditions precedent to the Advance.
4.1.3. Credit Reports; Search Reports; Site Inspections.
Lender shall have received, in form and substance satisfactory to
Lender, the results of current UCC searches (or its equivalent
under Mexican law) with respect to Borrower and the Required
Guarantors and current lien, litigation, judgment and bankruptcy
searches (or its equivalent under Mexican law) for Borrower, any
and all Required Guarantors conducted in such jurisdictions as
Lender deems appropriate. In addition, a member of Lender's
credit department shall have visited each Time-Share Project and
shall be satisfied with the results of such inspection.
4.1.4 Operating Agreements. Lender shall have received
copies of the Operating Agreements.
4.1.5 Local Issues. Lender shall be satisfied with Mexican
laws governing all matters relating to the Receivables Loan,
including without limitation, the creation and perfection of a
security interest on the Receivables Loan Collateral and other
related matters.
4.1.6 Existing Debt. Lender shall have reviewed and approved
the terms and conditions of the Redeemable Senior Notes, the
Mirror Notes and any other Indebtedness owed by Borrower or any
Required Guarantor. There shall
22
exist no default, events of default or incipient defaults under
the Redeemable Senior Notes, the Mirror Notes or such other
Indebtedness.
4.1.7 Organizational Structure. Lender shall be satisfied
with the organizational structure of Borrower and Required
Guarantors.
4.1.8 Power of Attorney. Lender shall have received (i) a
copy of a notarized power of attorney from the Borrower and the
Required Guarantors in favor of the Service of Process Agent
referred to in paragraph 9.23 hereof and in the Guaranties
executed by the Required Guarantors, in form satisfactory to
Lender's Mexican counsel, (ii) evidence of the Service of Process
Agent's acceptance of its appointment, and (iii) a copy of a
notarized power of attorney from the Borrower in favor of Lender
referred to in paragraphs 3.1, 7.4.2 and 7.9 hereof, in form
satisfactory to special Mexican counsel to the Lender, empowering
the Lender to act as Borrower's attorney-in-fact to take any and
all actions in Borrower's name and/or on Borrower's behalf as
Lender may deem necessary or appropriate, in its sole discretion,
in the manner contemplated in said paragraphs 3.1, 7.4.2 and 7.9
hereof. The powers and agency granted by Borrower are coupled
with an interest and are irrevocable until the Obligations have
been paid in full and are granted as cumulative to Lender's other
remedies for collection and enforcement of the Obligations.
4.2 Additional Conditions Precedent for Advances. For each
Advance, other than an Availability Advance, Lender's obligation to
make such Advance shall be subject to Lender's receipt of the
following, in form and substance satisfactory to Lender:
4.2.1. A completed and executed Request for Receivables Loan
Advance and Certification
4.2.2 (i) a copy of the signed original Instruments which
qualify as Eligible Instruments which have been duly and
unconditionally endorsed to the Payment Source Trustee by
Borrower; (ii) copies of signed receipts for public offering
statements/property reports/prospectuses to the extent the same
are given or are required to be given to Purchasers in connection
with the sales of Time-Share Interests giving rise to such
Instruments; (iii) a copy of the Purchase Contracts, credit
disclosure statements and other items requested by Lender which
were signed by such Purchasers in connection with such sales; and
(iv) evidence that all rescission rights have expired and
Borrower or an Affiliate of Borrower has Performed all its
statutory and contractual obligations with respect thereto.
4.2.3. Evidence from the Payment Source Trustee
acknowledging its receipt of the original Instruments and
Purchase Contracts against which an Advance is being made, duly
assigned and endorsed in favor of the Payment Source Trustee.
23
4.2.4. If not previously furnished, evidence satisfactory to
Lender that: (i) all Time-Share Interests which are the subject
of the Instruments referenced in clause 4.2.3 above have all
necessary and promised on-site and off-site improvements thereto
and necessary and promised utilities are available; (ii) all
Units and amenities which are to be available to Purchasers
obligated on the Instruments referenced in clause 4.2.3 above
have been completed in accordance with all applicable building
codes and are fully furnished, necessarily equipped and will be
available for use by Purchasers without disturbance or
termination of their use rights so long as they are not in
default of their obligations under the Instruments; and (iii) all
furnishings in the Units and amenities are owned by one of the
Required Guarantors, free of charges, liens and security
interests other than the Permitted Encumbrances.
4.2.5. Written confirmation from the Servicing Agent that it
has not received notice of any complaint, demand, set-off, or
claim by any person, including, without limitation, any
Purchaser, with respect to the Instruments referenced in clause
4.2.3 above (other than as to routine matters involving the
servicing of an Instrument) and certifying the unpaid total
payments due under the unpaid principal balance of such
Instruments.
4.2.6. If available in Mexico, a credit report from a
recognized consumer credit reporting agency or other satisfactory
evidence of creditworthiness, on each Purchaser obligated under
an Instrument referenced in clause 4.2.3 above.
4.2.7. Evidence reasonably satisfactory to Lender that there
are no conflicting charges or security interests claimed in the
Receivables Collateral.
4.2.8. Following a material change of circumstances or not
more often than annually at Lender's discretion, an opinion from
independent counsel to Borrower satisfactory to Lender with
respect to the continued compliance of each Time-Share Project
and the sales and marketing activities with applicable laws, the
enforceability of the Instruments and such other matters as
Lender shall reasonably require.
4.2.9. Such other items which are reasonably necessary to
evaluate the request for the Receivables Loan Advance and the
satisfaction of the conditions precedent thereto.
4.3. General Conditions Precedent to All Advances. Lender's
obligation to fund any Advance is subject to and conditioned upon the
additional terms and conditions set forth in the following
subparagraphs being satisfied at the time of such Advance:
24
4.3.1. No material adverse change shall have occurred in any
of the Time-Share Projects, the Collateral, the business or
financial condition of Borrower or any Required Guarantor (since
the date of the latest financial and operating statements given
to Lender by or on behalf of Borrower or any such Required
Guarantor), or the ability of Borrower to Perform the
Obligations.
4.3.2. There shall have been no material, adverse change in
the warranties and representations made in the Receivables Loan
Documents by Borrower, any Required Guarantor and/or any surety
for the Performance of the Obligations.
4.3.3. Neither an Event of Default nor Incipient Default
shall have occurred and be continuing.
4.3.4. The interest rate applicable to the Advance (before
giving effect to any savings clause) will not exceed the maximum
rate permitted by the Applicable Usury Law.
4.3.5. Borrower shall have paid to Lender all fees and costs
which are required to be paid at the time of the Advance.
4.3.6. Lender is satisfied, in its discretion, that Lender
will incur no adverse foreign tax consequences as a result of the
making of the Advance and the performance of its obligations
under the Receivables Loan Documents. Lender shall be further
satisfied, in its discretion, that the principal and interest
payments being made to Lender with respect to the Receivables
Loan and any other monies payable to Lender under the Receivables
Loan Documents will not be subject to withholding or subject
Lender or Servicing Agent to a withholding requirement.
4.4. Conditions Satisfied at Borrower's Expense. The conditions
to Advances shall be satisfied by Borrower at its expense.
4.5. Minimum Amount and Maximum Frequency of Advances. Advances
shall be made in amounts of not less than Five Hundred Thousand
Dollars ($500,000). Advances shall be made no more frequently than
once in any Quarter Period, as defined below. Lender shall have no
obligation to make Advances at more frequent intervals but may do so
in its discretion upon the written request of Borrower. In addition to
other conditions that may be imposed by Lender, Lender shall have the
right to charge a Five Hundred Dollar ($500) fee for each Advance
after the first Advance in any Quarter Period, which fee may be
withheld from the proceeds of such Advance. For purposes hereof, a
"Quarter Period" shall mean the periods of December 1 through February
28, March 1 through May 31, June 1 through August 31 and September 1
through November 30 of each year during the Term.
25
4.6. Disbursement of Advances. Advances may be payable to
Borrower; or if requested by Borrower and approved in writing by
Lender, to others, either severally or jointly with Borrower, for the
credit or benefit of Borrower. Advances shall be disbursed in Dollars
by wire transfer or, at Borrower's option exercised by written request
to Lender, by check or drafts. Borrower will pay Lender's reasonable
charge in connection with any wire transfer. Lender may, at its
option, withhold from any Advance any sum (including costs and
expenses) then due to it under the terms of the Receivables Loan
Documents or which Borrower would be obligated to reimburse Lender
pursuant to the Receivables Loan Documents if first paid directly by
Lender.
4.7. No Waiver. Although Lender shall have no obligation to make
an Advance unless and until all of the conditions precedent to the
Advance have been satisfied, Lender may, at its discretion, make
Advances prior to that time without waiving or releasing any of the
Obligations.
4.8. English Language. All documents and instruments submitted to
Lender in satisfaction of a condition precedent contained in this
Agreement or in connection with an Advance (other than the Eligible
Instruments) shall be in the English language and shall be translated
into English and certified as a correct translation, at no cost to
Lender.
4.9. UCC Matters. Borrower hereby authorizes Lender to file UCC
financing statements and amendments thereto against Borrower in
connection with this Agreement.
5. BORROWER'S REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender that:
5.1. Good Standing. Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of
Nevada and is authorized to do business in and in good standing in
each jurisdiction where the location or nature of its properties or
its business makes such qualification necessary. Borrower has full
power and authority to carry on its business and own its property.
5.2. Power and Authority; Enforceability. Borrower has full power
and authority to execute and deliver the Receivables Loan Documents
and to Perform the Obligations. All action necessary and required by
Borrower's Articles of Organization and all other Legal Requirements
for Borrower to obtain the Receivables Loan, to execute and deliver
the Receivables Loan Documents which have been or will be executed and
delivered in connection with the Receivables Loan Documents and to
Perform the Obligations has been duly and effectively taken. The
Receivables Loan Documents are, and, to Borrower's Knowledge, shall
be, legal, valid, binding and enforceable against
26
Borrower; and do not violate the Applicable Usury Law or constitute a
default or result in the imposition of a lien under the terms or
provisions of any agreement to which Borrower is a party. Except for
the Third Party Consents delivered pursuant to paragraph 4.1.1 and the
consents evidenced by the Resolutions delivered pursuant to paragraph
4.1.2, no consent of any governmental agency or any other person not a
party to this Agreement is or will be required as a condition to the
execution, delivery or enforceability of the Receivables Loan
Documents.
5.3. Borrower's Principal Place of Business. Borrower's principal
place of business and chief executive office are located at 00000
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, 00000, Xxxxxx Xxxxxx of
America.
5.4. No Litigation. There is no action, litigation or other
proceeding pending or, to Borrower's Knowledge, threatened before any
arbitration tribunal, court, governmental agency or administrative
body against Borrower, which might materially adversely affect any
Time-Share Project, the Collateral, the business or financial
condition of Borrower or any Required Guarantor, or the ability of
Borrower to Perform the Obligations. Borrower will promptly notify
Lender if any such action, litigation or proceeding is commenced or
threatened.
5.5. Compliance with Legal Requirements. Borrower or Borrower's
Affiliates have complied with all Legal Requirements in all material
respects, including, without limitation, all Legal Requirements of the
states in which the Time-Share Projects are located and all other
governmental jurisdictions in which the Time-Share Projects are
located or in which Time-Share Interests will be sold or offered for
sale.
5.6. No Misrepresentations. The Receivables Loan Documents and
all certificates, financial statements and written materials furnished
to Lender by or on behalf of Borrower in connection with the
Receivables Loan do not contain as of the date furnished to Lender any
untrue statement of a material fact or omit to state a fact which
materially adversely affects or in the future may materially adversely
affect any Time-Share Project, the Collateral, the business or
financial condition of Borrower or any Required Guarantor, or the
ability of Borrower to Perform the Obligations.
5.7. No Default for Third Party Obligations. Neither Borrower nor
any Required Guarantor is in default under any other agreement
evidencing, guaranteeing or securing borrowed money or a receivables
purchase financing or in violation of or in default under any material
term in any other material agreement, instrument, order, decree or
judgment of any court, arbitration or governmental authority to which
it is a party or by which it is bound.
5.8. Payment of Taxes and Other Impositions. Borrower and the
Required Guarantors have filed all tax returns and have paid all
Impositions, if any, required to be filed by it or paid by it as of
the making of this representation and
27
warranty, including real estate taxes and assessments relating to the
Time-Share Projects or the Collateral.
5.9. Sales Activities. As of the date of this Agreement,
Time-Share Interests have been sold and offered for sale only in the
following jurisdictions: Mexico
5.10. Time-Share Interest Not a Security. Neither Borrower nor
any of Borrower's Affiliates have sold or offered for sale any
Time-Share Interest as an investment. Except for the sale to
Purchasers of Series B Shares of variable capital stock in any of CR
Cancun, CR Cabos and/or CR Puerto Vallarta (in connection with
Borrower's Club Xxxxxx B Shares sales program), neither the sale nor
the offering for sale of any Time-Share Interest will constitute the
sale or the offering for sale of a security under any applicable law.
5.11. Zoning Compliance. Neither time-share use nor other
transient use and occupancy of any of the Time-Share Project violates
or constitutes or will violate or constitute a non-conforming use or
require a variance under any private covenant or restriction or any
zoning, use or similar law, ordinance or regulation affecting the use
or occupancy of such Time-Share Project.
5.12. Eligible Instruments. Each Instrument which is assigned to
the Payment Source Trustee pursuant to this Agreement and against
which an Advance is requested or which is assigned in satisfaction of
Borrower's obligations under paragraph 3.2 shall be an Eligible
Instrument at the time of assignment. Borrower or Borrower's
Affiliates have Performed all of their respective obligations to
Purchasers, and there are no executory obligations to Purchasers to be
Performed by Borrower or Borrower's Affiliates, except for
non-delinquent and executory obligations disclosed to Purchasers in
their Purchase Contracts.
5.13 Assessments and Reserves. (a) CR Cabos, CR Cancun, CR Puerto
Vallarta, or Xxxxx Xxxx as appropriate, has authority to levy annual
assessments to cover the costs of maintaining and operating the
Time-Share Project with respect to the Time-Share Project to which it
holds the use rights under the corresponding Land Trust; (b) to
Borrower's Knowledge, levied assessments will be adequate to cover the
current costs of maintaining and operating each Time-Share Project and
to establish and maintain a reasonable reserve for capital
improvements to the extent and as required under the Operating
Agreements and Time-Share Program Consumer Documents; and (c) to
Borrower's Knowledge, there will be no events (other than inflation)
which could give rise to a material increase in such costs, except for
additions of subsequent phases of a Time-Share Project that will not
materially increase assessments.
5.14 Title to and Maintenance of Common Areas and Amenities. (a)
the Land Trustee will at all times own, under the applicable Land
Trust, the furnishings in the Units and all the common areas in each
Time-Share Project and other amenities which
28
have been promised or represented as being available to Purchasers,
free and clear of liens and security interests except for the
Permitted Encumbrances; (b) no part of any Time-Share Project is or
will be subject to partition by the owners of Time-Share Interests;
and (c) all access roads and utilities and off-site improvements
necessary to the use of each Time-Share Project will have been
dedicated to and/or accepted by the responsible governmental authority
or utility company or are owned by an association of owners of
property in a larger planned development or developments of which such
Time-Share Project is a part. Borrower is lawfully seized of a good
and marketable title to the Collateral. The Collateral is free from
liens, claims, restrictions or encumbrances, except the Permitted
Encumbrances. Borrower does hereby warrant and shall forever defend
the Collateral against the claims of all persons whatsoever, subject
however to the Permitted Encumbrances.
5.15 Master Affiliation Agreement. The Borrower represents,
warrants, acknowledges and agrees that the execution of the RCI Master
Affiliation Agreement by Club Xxxxxx and Raintree Vacation, Affiliates
of Borrower, the execution of the Servicing Agreement by Club Xxxxxx
and certain of the Required Guarantors and the execution of the RCI
Outsourcing Agreement by Club Xxxxxx, is a material consideration to
Lender for the making of the Receivables Loan and that Lender would
not have made the Receivables Loan but for the execution by Club
Xxxxxx and Raintree Vacation of the RCI Master Affiliation Agreement,
the execution by Club Xxxxxx and certain of the Required Guarantors of
the Servicing Agreement and the execution by Club Xxxxxx of the RCI
Outsourcing Agreement.
5.16 Survival and Additional Representations and Warranties. The
representations and warranties contained in this Article 5 are in
addition to, and not in derogation of, the representations and
warranties contained elsewhere in the Receivables Loan Documents and
shall be deemed to be made and reaffirmed prior to the making of each
Advance. All representations and warranties of the Borrower contained
in this Agreement and the other Receivables Loan Documents shall
survive the execution, delivery and acceptance of this Agreement by
the parties hereto. No termination of this Agreement shall affect or
impair the powers, obligations, duties, rights, representations,
warranties or liabilities of the Borrower, all of which shall survive
such termination.
6. BORROWER'S COVENANTS
6.1. Borrower's Affirmative Covenants.
6.1.1. Good Standing. Borrower will maintain its existence
as a limited liability company duly organized, validly existing
and in good standing under the laws of the state of Nevada and
remain authorized to do business and in good standing in each
jurisdiction where at any time the location or nature of its
properties or its business then makes such qualification
necessary. Borrower will
29
maintain full authority to Perform the Obligations and to carry
on its business and own its property.
6.1.2. Compliance with Legal Requirements. Borrower or
Borrower's Affiliates will comply or cause compliance with all
Legal Requirements in all material respects, including, without
limitation, all Legal Requirements of the states in which the
Time-Share Projects are located and all other governmental
jurisdictions in which the Time-Share Projects are located or in
which Time-Share Interests will be sold or offered for sale.
6.1.3. Insurance. Borrower will pay or cause the payment of
the cost of and will maintain and deliver or cause to be
maintained and delivered to Lender evidence of insurance policies
required by Lender which cover such risks, are written by
insurers and are in amounts and on forms satisfactory to Lender.
6.1.4. Reports.
6.1.4.1 Financial Information. During the Term,
Borrower shall be required to furnish or cause to be
furnished to Lender the following financial statements
prepared in reasonable detail, and certified as correct by
the principal financial officer of the subject of such
statement: (a) within forty-five (45) days after the end of
each fiscal quarter, a statement of profit and loss, a
balance sheet, and a cash flow statement as of the end of
such quarter, as to Borrower and the Required Guarantors
(prepared on a consolidated basis and translated into
English), showing operating results for such quarter for the
period from the beginning of the relevant fiscal year
through the end of such quarter and for the comparable
period of the preceding fiscal year, if any; (b) within one
hundred twenty (120) days after the end of each fiscal year,
a statement of profit and loss, a balance sheet and a cash
flow statement as of the end of such year, as to Borrower
and the Required Guarantors, and as to any time-share
association (if any such time-share associations exist); and
(c) within five (5) Business Days following their filing
with the United States Securities and Exchange Commission, a
copy of the 10-K and 10-Q reports as filed by Raintree. The
annual financial statements of the Borrower and those
Required Guarantors constituting Mexican entities shall be
prepared on a consolidated basis and shall be statutory
audited by a certified public accounting firm acceptable to
Lender in accordance with Mexican GAAP. The annual financial
statements of Raintree shall be audited by a certified
public accounting firm acceptable to Lender in accordance
with GAAP. The annual financial statements for the
time-share associations affiliated with the Time-Share
Projects (if any such time-share associations exist) shall
be statutory audited by a certified public accounting firm
acceptable to Lender in accordance with Mexican GAAP.
30
Borrower's and Required Guarantor's annual financial
statements shall be accompanied by a management letter from
the accountants detailing any deficiencies in accounting
practices and commenting on any other accounting-related
matters. Together with Borrower's and Required Guarantors'
quarterly financial statements, Borrower and Required
Guarantors will deliver to Lender a certificate in the form
attached hereto as Exhibit 6.1.4.1 signed by Borrower's and
Required Guarantors' respective chief executive officer and
chief financial officer stating that there exists no Event
of Default or Incipient Default or, if any such Event of
Default or Incipient Default exists, specifying the nature
and period of its existence and what action Borrower and
Required Guarantors propose to take with respect to it. Such
certificate shall state specifically that Borrower is in
compliance with paragraphs 6.1.3, 6.1.5, 6.1.18, 6.2.2 and
6.2.3 of this Agreement and that Raintree is in compliance
with paragraph 3.2(e) of the Guaranty executed by Raintree,
dealing with the financial covenants binding on Raintree.
Borrower shall require that Raintree supply to Lender copies
of any compliance certificates submitted by Raintree to the
holder of the Redeemable Senior Notes concurrently with the
submission of such certificate to such holder(s) and any
notices (other than notices of a routine nature) given by
the holder of the Redeemable Senior Notes to Raintree or
given by Raintree to the holder of the Redeemable Senior
Notes, concurrently with such giving or receipt. For
purposes of this paragraph, in the case of a partnership or
limited liability company, "chief executive officer" of an
entity shall mean the general partner, member or manager
having primary responsibility for the operations of such
entity; and "chief financial officer" of such an entity
shall mean the general partner, member or manager having
primary responsibility for the finances of such entity.
6.1.4.2. Litigation. Borrower will promptly notify
Lender if any action, litigation or other proceeding becomes
pending or, to Borrower's Knowledge, threatened before any
arbitration tribunal, court, governmental agency or
administrative body against Borrower or any Required
Guarantor, which might materially adversely affect any
Time-Share Project, the Collateral, the business or
financial condition of Borrower or any Required Guarantor,
or the ability of Borrower to Perform the Obligations.
6.1.4.3. Sales Reports. On or before the fifteenth
(15th) day after the end of each month, Borrower will cause
to be furnished to Lender, a sales report showing the number
of sales and closings of Time-Share Interests and the
aggregate dollar amount thereof, including down payments,
during such month.
31
6.1.4.4. Time-Share Project and Sales Information.
Borrower will cause to be delivered to Lender current price
lists for Time-Share Interests from time to time within ten
(10) Business Days after receipt of a written request from
Lender to do so. Borrower will cause to be delivered to
Lender from time to time, as available and promptly upon
amendment or effective date, sales literature,
registrations/consents to sell, and final subdivision public
reports/public offering statements/prospectuses. Borrower
will cause to be delivered to Lender any changes which
Borrower's Affiliates propose or any other person having the
power to do so proposes be made to the Time-Share Program
Consumer Documents and/or the Time-Share Program Governing
Documents last delivered to Lender, together with a
description and explanation of the changes; and other items
requested by Lender which relate to the Time-Share
Interests.
6.1.4.5. Right to Inspect. Borrower will at its expense
cause Borrower's Affiliates to permit Lender and its
representatives at all reasonable times to inspect any
Time-Share Project and to inspect, audit and copy Borrower's
books and records.
6.1.4.6. Time-Share Association Budgets. Within thirty
(30) days after the end of each fiscal year, Borrower will
submit to Lender proposed annual maintenance and operating
budgets of each Time-Share Project, certified to be adequate
by the Borrower, and a statement of the annual assessment to
be levied upon the owners of Time-Share Interests.
6.1.4.7. Material Increases to Assessments. If Borrower
has Knowledge or has reason to believe that an event (other
than general changes in the economy) has occurred or could
occur which could give rise to a material increase in
assessments to cover the then current costs of operating any
Time-Share Project and to establish and maintain a
reasonable reserve for capital improvements to such
Time-Share Project, it will notify Lender of the occurrence
of such event.
6.1.4.8. Indenture Limitations. Attached hereto as
Exhibit 6.1.4.8(A) is a copy of Section 4.09 of the
Indenture setting forth restrictions on the ability of
Raintree and those of its Affiliates constituting
"Restricted Subsidiaries" (as defined in the Indenture) to
incur Indebtedness. Concurrently with the delivery to Lender
of the quarterly financial statements for Borrower (or at
such more frequent times as Lender shall request upon
reasonable advanced written notice to Borrower), Raintree
shall supply to Lender a certification in the form attached
hereto as Exhibit 6.1.4.8(B) reflecting the extent to which
Raintree
32
and those of its Affiliates constituting "Restricted
Subsidiaries" are in compliance with the borrowing
limitations set forth in the Indenture.
6.1.4.9. Refinancing. No later than five (5) Business
Days prior to the projected closing dates of any refinancing
by Borrower or any of its Affiliates of any Indebtedness,
Borrower shall give, or cause its Affiliates to give,
written notice to Lender of such contemplated refinancing
and supply to Lender such information as Lender shall
request with respect to the same.
6.1.4.10 Additional Information. Borrower will deliver
to Lender the reports and other information required
pursuant to paragraph 3.3, and Borrower will make available
such further information as Lender may from time to time
reasonably request.
6.1.5 Subordination of Indebtedness Owing to Affiliates.
Borrower will cause any and all Indebtedness (other than the
Mirror Notes) owing by it to its shareholders, directors,
officers, partners, members or managers, as the case may be, to
the Required Guarantors, or to the relatives or Affiliates of
Borrower or any of the foregoing, and all liens, security
interests and other charges on the assets of Borrower to be fully
subordinated in all aspects to the Obligations pursuant to
written agreements satisfactory to Lender; provided, however,
that if neither an Event of Default nor an Incipient Default then
exists or will exist after giving effect to such payment, such
subordination shall not extend to (i) reasonable salaries and
fees at normal and customary rates for services actually rendered
so long as the payment of such salaries and fees is not
prohibited or otherwise limited pursuant to any provision of the
Receivables Loan Documents and (ii) payments expressly permitted
pursuant to the terms of this Agreement. If this paragraph 6.1.5,
or compliance with this paragraph 6.1.5, would cause or result
in, or constitute a Default or an Event of Default, in each case
under and as defined in the Indenture, then this paragraph 6.1.5
shall be deemed deleted, or modified to such extent as may be
necessary for this paragraph 6.1.5, or such compliance, as the
case may be, not to cause or result in, or constitute, such a
Default or Event of Default.
6.1.6. Payment of Taxes and Other Impositions. Borrower will
file all tax returns and will pay or cause the payment of all
taxes, if any, required to be filed by it or paid by it, together
with all real estate taxes and assessments relating to any
Time-Share Project or the Collateral. Borrower will provide to
Lender, not more than thirty (30) days after such taxes required
to be paid pursuant to the preceding sentence become delinquent,
evidence that all taxes required to be paid pursuant to the
preceding sentence on the Units, each Time-Share Project common
areas and related amenities have been paid in full.
33
6.1.7. Payment of Impositions. All payments to be made by
Borrower under the Receivables Loan Documents shall be free of
expense to Lender with respect to the amount of any Impositions,
all of which Impositions Borrower assumes and shall pay when due
pursuant to the laws of each of Mexico and the United States of
America, and in all events prior to the date on which penalties
apply, in addition to the other payments provided for in the
Receivables Loan Documents to be made by it. Borrower's
Obligation to pay Impositions shall likewise include the
Obligation to pay any increase to Lender in tax imposed by Mexico
or the United States of America (or any political subdivisions of
either) as a result of inclusion in income of Lender of any
amount required by this paragraph 6.1.7 to be paid to or for
Lender. In that regard, but without limiting the generality of
the foregoing, the Basic Interest, the Default Rate and any other
amounts payable under the Receivables Loan Documents on which
Impositions may be imposed shall be "grossed up" by any such
Impositions which may be imposed, in the way of withholding
payments or otherwise, so that after taking into account the
payment of such Impositions, Lender receives, at the times and
frequencies required under the Receivables Loan Documents, the
same amount of interest and other amounts as it would have
received had such Impositions not been imposed. Borrower shall
promptly make such withholding payments to the Mexican and United
States of America taxing authorities, shall obtain receipts from
such authorities as to the making of such withholding payments,
shall supply Lender with true and correct copies of such receipts
within five (5) Business Days following receipt thereof and shall
in all other respects comply with all applicable Mexican and
United States of America tax laws with respect to the making of
such Imposition payments.
6.1.8. Further Assurance. Borrower will execute or cause to
be executed all documents and do or cause to be done all acts
necessary for Lender to perfect or evidence and to continue the
perfection of the liens and security interest of Lender in the
Collateral or otherwise to effect the intent and purposes of the
Receivables Loan Documents.
6.1.9. Fulfillment of Obligations to Purchasers. Borrower
will cause its Affiliates, agents and independent contractors at
all times to fulfill, all their respective material obligations
to Purchasers. Borrower will cause its Affiliates to Perform all
of their material obligations under the Time-Share Program
Consumer Documents and the Time-Share Program Governing
Documents.
6.1.10 Material Increases to Assessments. Borrower (i) will
(A) cause to be discharged all of its Affiliates' obligations
under the Time-Share Program Governing Documents and (B) cause to
be maintained a reasonable reserve for capital improvements to
the each Time-Share Project to the extent and as required under
the Operating Agreements and Time-Share Program Consumer
34
Documents; and (ii) will cause to be paid not less often than
once every twelve (12) months, the difference between (A) the
cumulative total amount of the maintenance and operating expenses
incurred in the operation and maintenance of each Time-Share
Project, together with a reasonable reserve for capital
improvements to the extent and as required under the Operating
Agreements and Time-Share Program Consumer Documents; and the
amount of any installment of real property taxes currently due
and payable with respect to each Time-Share Project and related
amenities, through the end of the calendar month preceding the
month in which such payment is made and (B) the cumulative total
amount of assessments payable to that Affiliate of Borrower who
owns the applicable Time-Share Project, by owners (other than
such Affiliate) of Time-Share Interests therein through the end
of the calendar month preceding the month in which such payment
is made.
6.1.11. Maintenance of Time-Share Project and Other
Property. Borrower will cause to be maintained in good condition
and repair all common areas in each Time-Share Project and other
on-site amenities which have been promised or represented as
being available to Purchasers and, to the extent owned by an
Affiliate of Borrower, all portions of improvements in which
Units are located and are not part of a Time-Share Project.
Borrower will cause to be maintained a reasonable reserve to
assure compliance with the terms of the foregoing sentence.
6.1.12. Maintenance of Larger Tract. To the extent a
particular Time-Share Project is part of a larger common
ownership regime or planned development or parts of buildings in
which Units are located are not part of the Time-Share Project,
Borrower will cause to be paid a commercially reasonable share of
common expenses to be allocated to such Time-Share Project.
Borrower will use commercially reasonable efforts to cause all
such property which is not part of a Time-Share Project to be
professionally managed in a first class manner.
6.1.13. Collection of Receivables Collateral. Borrower will
undertake the diligent and timely collection of amounts
delinquent under each Instrument which constitutes part of the
Receivables Collateral and will bear the entire expense of such
collection. Lender shall have no obligation to undertake any
action to collect under any Instrument.
6.1.14. Notice of Lender's Interest. Borrower will deliver
under its letterhead notice of Lender's interest in the
Receivables Collateral to persons bound thereby, if requested,
and will cause such notice to comply with applicable law.
6.1.15. Modification of Material Agreements. Borrower shall
maintain or cause to be maintained in full force and effect the
following
35
agreements and shall not permit the making of any material
modifications to the same without the prior written consent of
Lender:
(i) each of the Operating Agreements;
(ii) each of the Intercompany Affiliation Agreements;
(iii) the Administration Trust;
(iv) the RCI Master Affiliation Agreement;
(v) each of the RCI Existing Affiliation Agreements;
(vi) the RCI Outsourcing Agreements; and
(vii) the Receivables Purchase Agreement.
6.1.16. Post-Closing Matters. Within ten (10) days following
the making of the first Advance, Borrower shall deliver to Lender
an opinion in form and substance satisfactory to Lender, from
counsel satisfactory to Lender as to the enforceability of the
Receivables Loan Documents under New Jersey law. Borrower shall
furthermore make and cause the Required Guarantor to make any
modifications to the Receivables Loan Documents requested by
Lender in order to enable counsel to render such opinion. Within
two (2) Business Days following the making of the first Advance,
Borrower shall deliver to Lender an amendment to the
Administration Trust, encompassing within the terms of the
Administration Trust, the matters contained in the Letter of
Direction delivered to the Administration Trustee pursuant to
paragraph 4.1.2.17 hereof together with evidence that the
agreements described on Exhibit C to the Administration Trust
have been unconditionally transferred to the Administration
Trustee to be held under the Administration Trust. Within two (2)
Business Days following the making of the first Advance, Borrower
will supply to Lender evidence satisfactory to it that each of
the Negative Pledges have been delivered to the appropriate Land
Trustees. Within three (3) Business Days following the making of
the first Advance, Borrower will deliver to Lender an insurance
certificate, in form and substance satisfactory to Lender,
reflecting each of Lender and RCI Mexico as additional insureds
on all relevant insurance policies held by Borrower or any of its
Affiliates.
6.1.17. Keeping and Marking of Records and Books. Borrower
will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate
records evidencing the Receivables Collateral in the event of the
destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably
36
necessary or advisable for the collection of all Receivables
Collateral (including, without limitation, records adequate to
permit the immediate identification of new Receivables Collateral
and all collections received on account of and any adjustments to
any Receivables Collateral). Borrower will give the Lender notice
of any material change in the administrative and operating
procedures referred to in the previous sentence.
6.1.18. Lender's Reliance. Borrower acknowledges that Lender
is entering into the transactions contemplated by this Agreement
in reliance upon Borrower's identity as a legal entity that is
separate from the Originators and from Raintree and its other
Affiliates. Therefore, from and after the date of execution and
delivery of this Agreement, Borrower shall take all reasonable
steps including, without limitation, all steps that the Lender
may from time to time reasonably request to maintain Borrower's
identity as a separate legal entity and to make it manifest to
third parties that Borrower is an entity with assets and
liabilities distinct from those of the Originators and Raintree
and any of their Affiliates and not just a division of the
Originators or Raintree or its other Affiliates. Without limiting
the generality of the foregoing and in addition to the other
covenants set forth herein, Borrower shall:
6.1.18.1. Conduct its own business in its own name and
require that all full-time employees of Borrower, if any,
identify themselves as such and not as employees of the
Originators or Raintree or its other Affiliates (including,
without limitation, by means of providing appropriate
employees with business or identification cards identifying
such employees as Borrower's employees);
6.1.18.2. Compensate all employees, consultants and
agents directly, from Borrower's bank accounts, for services
provided to Borrower by such employees, consultants and
agents and, to the extent any employee, consultant or agent
of Borrower is also an employee, consultant or agent of the
Originators or Raintree or its other Affiliates, allocate
the compensation of such employee, consultant or agent
between Borrower and such other entities on a basis which
reflects the services rendered;
6.1.18.3. Clearly identify its offices (by signage or
otherwise) as its offices and, if such office is located in
the offices of the Originators or Raintree or its other
Affiliates, Borrower shall lease such office at a fair
market rent;
6.1.18.4. Have a separate telephone number, which will
be answered only in its name, and separate stationery,
invoices and checks in its own name;
37
6.1.18.5. Conduct all transactions with the
Originators, Raintree and its other Affiliates and any
Guarantor strictly on an arm's-length basis, allocate all
overhead expenses (including, without limitation, telephone
and other utility charges) for items shared between Borrower
and the Originators, Raintree or its other Affiliates or any
Guarantor on the basis of actual use to the extent
practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual use;
6.1.18.6. At all times have at least one manager (the
"Independent Manager") who is not at such time, and has not
been at any time during the preceding five (5) years (A) a
director, officer, employee or Affiliate of the Originators
or Raintree or any of their subsidiaries or Affiliates, or
(B) the beneficial owner of more than one percent (1%) of
the outstanding common shares having general voting rights
of Raintree or any of its subsidiaries or Affiliates;
6.1.18.7. Observe all limited liability company
formalities as a distinct entity, and ensure that all
actions relating to (A) the selection, maintenance or
replacement of the Independent Manager, (B) the dissolution
or liquidation of Borrower or (C) the initiation or
participation in, acquiescence in or consent to any
bankruptcy, insolvency, reorganization or similar proceeding
involving Borrower, are duly authorized by unanimous vote of
its Managers (including the Independent Manager);
6.1.18.8. Maintain Borrower's books and records
separate from those of the Originators and Raintree and its
other Affiliates and otherwise readily identifiable as its
own assets rather than assets of any of such other entities;
6.1.18.9. Prepare its financial statements separately
from those of the Originators and Raintree and its other
Affiliates and insure that any consolidated financial
statements of the Originators or Raintree or any of their
Affiliates that include Borrower have notes clearly stating
that Borrower is a separate entity and that its assets will
be available first and foremost to satisfy the claims of the
creditors of Borrower;
6.1.18.10. Except as herein specifically otherwise
provided, not commingle funds or other assets of Borrower
with those of the Originators or Raintree or its other
Affiliates and not maintain bank accounts or other
depository accounts to which the Originators or Raintree or
any of its other Affiliates is an account party, into which
any such entity makes deposits or from which any such entity
38
has the power to make withdrawals;
6.1.18.11. Not permit the Originators or Raintree or
its other Affiliates to pay any of Borrower's operating
expenses (except pursuant to allocation arrangements that
comply with the requirements of this paragraph 6.1.18); and
6.1.18.12. Not permit Borrower to be named as an
insured on the insurance policy covering the property of the
Originators or Raintree or its other Affiliates or enter
into an agreement with the holder of such policy whereby in
the event of a loss in connection with such property,
proceeds are paid to Borrower.
6.1.19. Business Activities. Borrower shall conduct all
significant business activities solely within Mexico.
6.2 Borrower's Negative Covenants.
6.2.1. Change in Borrower's Name or Principal Place of
Business. Borrower will not change its name or move its principal
place of business or chief executive office except upon not less
than sixty (60) days prior written notice to Lender.
6.2.2. Nature of Business; Other Agreements; Other
Indebtedness. Borrower shall not engage in any business or
activity of any kind or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or other
undertaking other than the transactions contemplated and
authorized by this Agreement. Without limiting the generality of
the foregoing, Borrower shall not create, incur, guarantee,
assume or suffer to exist any Indebtedness or other liabilities,
whether direct or contingent, other than (i) as a result of the
endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business, (ii)
the incurrence of obligations under this Agreement, (iii) the
incurrence of operating expenses in the ordinary course of
business of the type otherwise contemplated in this Agreement and
(iv) the incurrence of indebtedness in favor of the Originators
is contemplated in the Receivables Purchase Agreement.
6.2.3 Restrictions on Liens or Transfers. Borrower, without
the prior written consent of Lender, will not: (i) sell, convey,
lease, pledge, hypothecate, encumber or otherwise transfer any
Collateral other than in favor of the Lender as contemplated by
the Receivables Loan Documents; (ii) permit or suffer to exist
any liens, security interests or other encumbrances on the
Collateral, except for the Permitted Encumbrances and liens and
security interests expressly
39
granted to Lender; (iii) sell, convey, lease, transfer or dispose
of all or substantially all of its assets to another entity; or
(iv) Borrower is an organization, permit or suffer to exist any
change in the legal or beneficial ownership of Borrower or any
person controlling Borrower (whether directly or indirectly,
through one (1) or more intermediaries) or any change in the
power to control it or any person-controlling Borrower (whether
directly or indirectly, through one or more intermediaries).
Without limiting Lender's right to withhold its approval for
other reasons, as a condition to approval of any lien, security
interest or other charge upon any of the Collateral, Lender may
require that the third party execute a subordination agreement
satisfactory to Lender and provide Quiet Enjoyment Rights to
owners of Time-Share Interests.
6.2.4 No Sales Activities Prior to Approval. Borrower will
cause its Affiliates not to permit the sale of any Time-Share
Interest or permit the offering of any Time-Share Interest for
sale in any jurisdiction, unless: (i) Borrower has delivered to
Lender true and complete copies of the Minimum Required
Time-Share Approvals required in such jurisdiction for the
proposed conduct and all other evidence required by Lender that
Borrower's Affiliates have complied with all Legal Requirements
of such jurisdiction governing the proposed conduct; and (ii)
Borrower has delivered to Lender the Time-Share Program Consumer
Documents and the Time-Share Program Governing Documents which
Borrower's Affiliates will be using in connection with the
subject Time-Share Project and the sale or offering for sale of
Time-Share Interests in such jurisdiction and such documents have
been approved by Lender, which approval shall not be unreasonably
withheld.
6.2.5 No Modification of Receivables Collateral or Payments
by Borrower. Borrower will not cancel or materially modify, or
consent to or acquiesce in any material modification (including,
without limitation, any change in the interest rate or amount,
frequency or number of payments) to, or solicit the prepayment
of, any Instrument which constitutes part of the Receivables
Collateral; or waive the timely performance of the obligations of
the Purchaser under any such Instrument or its security; or
release the security for any such Instrument. Borrower will not
pay or advance directly or indirectly for the account of any
Purchaser any sum required to be deposited or owing by the
Purchaser either under any Purchase Contract or under any
Instrument which constitutes part of the Receivables Collateral.
6.2.6 No Modification of Time-Share Documents. Borrower will
cause its Affiliates not to cancel or materially modify, or
consent to or suffer to exist any cancellation or material
modification of any Time-Share Program Consumer Document or any
Time-Share Program Governing Document.
40
6.2.7 Maintenance of Larger Tract. To the extent either a
Time-Share Project is part of a larger common ownership regime or
planned development or parts of buildings in which Units are
located are not part of a Time-Share Project, Borrower will cause
its Affiliates not to permit common expenses to be allocated to a
Time-Share Project in an unreasonably disproportionate manner.
6.2.8 Trust Corpus. Borrower will not remove or permit the
removal of any portion of the trust corpus from the
Administration Trust without the prior written consent of Lender.
6.2.9 Articles of Organization. Borrower will not amend its
Articles of Organization in any respect that would impair its
ability to comply with the terms of this Agreement or the other
Receivables Loan Documents.
6.3 Survival of Covenants. The covenants contained in this
Article 6 are in addition to, and not in derogation of, the covenants
contained elsewhere in the Receivables Loan Documents and shall be
deemed to be made and reaffirmed prior to the making of each Advance.
7. DEFAULT
7.1 Events of Default. The occurrence of any of the following
events or conditions shall constitute an Event of Default by Borrower
under the Receivables Loan Documents:
7.1.1 Failure of Lender to receive from Borrower within five
(5) Business Days of the date when due and payable (i) any amount
payable under the Receivables Loan Note, or (ii) any other
payment due under the Receivables Loan Documents, except for the
payment due at the Receivables Loan Maturity Date for which no
grace period is allowed;
7.1.2. Any representation or warranty which is made by a
person other than Lender and is contained in the Receivables Loan
Documents or in any certificate furnished to Lender under the
Receivables Loan Documents by or on behalf of Borrower proves to
be, in any material adverse respect, false or misleading as of
the date deemed made;
7.1.3. A default in the Performance of the Obligations set
forth in paragraph 3.2, 6.1.3, 6.1.5, 6.1.15, 6.1.16, 6.1.18,
6.2.2, 6.2.3.1, 6.2.3(i) or 6.2.3(iv) or in the Performance of
the covenant set forth in paragraph 3.2(e) of the Guaranty
executed by Raintree;
41
7.1.4 A default in the Performance of the Obligations or a
violation of any term, covenant or provision of the Receivables
Loan Documents (other than a default or violation referred to
elsewhere in this paragraph 7.1) which continues unremedied (i)
for a period of thirty (30) days after notice of such default or
violation to Borrower in the case of a default under or violation
of paragraph 6.2.3(ii) or any default or violation which can be
cured by the payment of money alone or (ii) for a period of
thirty (30) days after notice to Borrower in the case of any
other default or violation; provided, however, that the grace
period contained in this clause (ii) may be extended for an
additional thirty (30) days in the event Borrower is making
diligent and good faith efforts to remedy or cure the default or
violation at hand;
7.1.5. An "Event of Default" as defined in any of the other
Receivables Loan Documents or an event occurs under the
Receivables Loan Documents, whether or not denominated as an
Event of Default, which expressly entitles Lender to exercise its
remedies thereunder;
7.1.6. Any final, non-appealable judgment or decree for
money damages or for a fine or penalty against Borrower which is
not paid and discharged or stayed within thirty (30) days
thereafter and when aggregated with all other judgment(s) or
decree(s) that have remained unpaid and undischarged or are not
stayed for such period, such amount is in excess of Fifty
Thousand Dollars ($50,000);
7.1.7. Notwithstanding the fact that the mere presence of
such lien or security interest would constitute a separate Event
of Default, any party holding a lien on or security interest in
any Collateral owned by it commences foreclosure or similar sale
thereof;
7.1.8. A material adverse change in any Time-Share Project,
the Collateral or the business or financial condition of
Borrower, which change is not enumerated in this paragraph 7.1,
as the result of which Lender in good xxxxx xxxxx the prospect of
Performance of the Obligations impaired or the Collateral
imperiled;
7.1.9. Borrower shall (i) generally not be paying its debts
as they become due, (ii) file, or consent by answer or otherwise
to the filing against it of, a petition for relief or
reorganization, arrangement or liquidation or any other petition
in bankruptcy or insolvency under the laws of any jurisdiction
including, without limitation, the commencement of a bankruptcy
(quiebra), insolvency (concurso) or similar proceedings in
accordance with the Mexican Mercantile Insolvency Law (Ley de
Concursos Mercantiles), (iii) make an assignment for the benefit
of its creditors, (iv) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers for itself
or any substantial part of its
42
property, (v) be adjudicated insolvent, (vi) dissolve or commence
to wind-up its affairs, or (vii) take any action for purposes of
the foregoing; or a petition for relief or reorganization,
arrangement or liquidation or any other petition in bankruptcy or
insolvency or the appointment of a custodian under the laws of
any jurisdiction is filed against any Borrower or a custodian is
appointed for any Borrower, the Collateral or any material part
of any Borrower's property and such proceeding is not dismissed
and appointment vacated within sixty (60) days thereafter;
7.1.10 Any of the events enumerated in paragraphs 7.1.6,
7.1.8, or 7.1.9 occurs with respect to any general partner or
manager of Borrower, if Borrower is a partnership or limited
liability company, any Required Guarantor or other surety for the
Performance of the Obligations;
7.1.11 Any default, which continues beyond any applicable
cure period, by any Required Guarantor under (i) the Redeemable
Senior Notes or under the document and instruments executed in
connection therewith, (ii) the Mirror Notes or under the
documents and instruments executed in connection therewith, or
(iii) any other agreement evidencing, guaranteeing or securing
borrowed money or a receivables purchase financing involving an
obligation in excess of Fifty Thousand Dollars ($50,000) to make
a payment of principal or interest or to repurchase receivables;
or any other material default by any Required Guarantor
permitting the acceleration of any of the payment or repurchase
obligations of such Required Guarantor which, if accelerated,
will be in excess of Fifty Thousand Dollars ($50,000) in the
aggregate;
7.1.12 If by or under the authority of any governmental
authority the management of Borrower or any Required Guarantor or
its respective business is curtailed to the point of making it
effectively inoperative by any seizure or intervention or
proceedings of any nature;
7.1.13 If any of the Time-Share Projects are appropriated or
possession thereof is lost by the Affiliate of Borrower currently
owning the same;
7.1.14 If for any reason any Mexican authorities close any
Time-Share Project or enjoin the further sale of Time-Share
Interests therein and such condition continues for a period of
thirty (30) days;
7.1.15 Failure of Lender to receive from Borrower, within
thirty (30) days of the date Borrower knows of such event, notice
of any event which renders any representation or warranty in any
Receivables Loan Documents false in any material, adverse respect
were it made after the occurrence of such condition;
43
7.1.16 A default which continues beyond the applicable cure
periods by any party other than Lender, RCI Mexico or their
Affiliates, under the RCI Master Affiliation Agreement, the RCI
Existing Affiliation Agreements, the RCI Outsourcing Agreement or
the Servicing Agreement.
7.1.17 Any default which continues beyond applicable cure
periods, by any party under the Administration Trust Agreement or
the Intercompany Affiliation Agreement; or
7.1.18 Any default, which continues beyond the applicable
cure periods, by any Affiliate of Borrower under any of the
Operating Agreements.
7.2 Remedies. At any time after an Event of Default has occurred
and while it is continuing, Lender may but without obligation, in
addition to the rights and powers granted elsewhere in the Receivables
Loan Documents and not in limitation thereof, do any one or more of
the following:
7.2.1 Cease to make further Advances;
7.2.2 Declare the Receivables Loan Note and all other sums
owing by Borrower to Lender in connection with the Receivables
Loan, immediately due and payable without notice, presentment,
demand or protest, which are hereby waived by Borrower;
7.2.3 With respect to the Receivables Collateral, (i) after
any applicable delinquency on a Purchase Contract, institute
collection, foreclosure and other enforcement actions against
Purchasers and other persons obligated on the Receivables
Collateral, (ii) enter into modification agreements and make
extension agreements with respect to payments and other
performances, (iii) release persons liable for performance on
behalf of the Borrower or its respective Affiliates, settle and
compromise disputes with respect to payments and performances
claimed due, all without notice to Borrower, without being called
to account therefor by Borrower and without relieving Borrower
from Performance of the Obligations, and (iv) receive, collect,
open and read all mail of Borrower for the purpose of obtaining
all items pertaining to the Receivables Collateral;
7.2.4 Proceed to protect and enforce its rights and remedies
under the Receivables Loan Documents and to foreclose or
otherwise realize upon its security for the Performance of the
Obligations, or to exercise any other rights and remedies
available to it at law, in equity or by statute;
7.2.5 Without notice to Borrower, have a receiver appointed
for Borrower and/or its property; and
44
7.2.6 Exercise any and all other remedies of a secured party
with respect to the Collateral.
7.3 Application of Proceeds During an Event of Default.
Notwithstanding anything in the Receivables Loan Documents to the
contrary, while an Event of Default exists, any cash received and
retained by Lender in connection with the Receivables Collateral may
be applied to payment of the Obligations in the manner provided in
paragraph 7.5.
7.4 Remedies; Sale; Assembly of Receivables Collateral.
7.4.1 Sale of Receivables Collateral. Lender shall have all
of the rights and remedies accorded to a Secured Party at equity
or law. Any sale of the Receivables Loan Collateral may be for
cash or, unless prohibited by applicable law, upon such credit or
installment as Lender may determine. Borrower shall be credited
with the net proceeds of such sale only when such proceeds are
actually received by Lender in good current funds. Despite the
consummation of any such sale, Borrower shall remain liable for
any deficiency on the Obligations which remains outstanding
following such sale. All net proceeds recovered pursuant to a
sale shall be applied in accordance with the provisions of
paragraph 7.5.
7.4.2 Lender's Right to Execute Conveyances. Lender may, in
the name of Borrower or in its own name, make and execute all
conveyances, assignments and transfers of the Collateral sold in
connection with the exercise of Lender's rights and remedies; and
Lender is hereby appointed Borrower's attorney-in-fact for this
purpose.
7.4.3 Obligation to Assemble Receivables Collateral. Upon
request of Lender when an Event of Default exists, Borrower shall
assemble the Collateral and make it available to Lender at a time
and place designated by Lender, if it is not already in Lender's
or the Payment Source Trustee's possession.
7.4.4 Registration. Borrower recognizes that United States
or Mexican registration of certain of the Receivables Collateral
or other Collateral under the United States or Mexican federal
and state securities laws may be impractical because of the
expenses or delays involved in the registration process and that
in the absence of such registration, Lender may be unable to
effect a public sale of all or a part of the Collateral, but may
be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree,
among other things, to acquire such Collateral for their own
account, for investment and not with a view to the distribution
or resale thereof. Borrower agrees that private sales so made may
be at prices and other terms less favorable to the seller than if
such Collateral were sold at public sales, and that Lender has no
obligation to delay sale of any such Collateral for a period of
time necessary to
45
permit such Collateral to be registered for public sale under the
Securities Act of 1933, as amended, and any applicable Blue Sky
or other Mexican or United States state securities laws. Borrower
agrees that sales made under the foregoing circumstances shall
not be deemed to have been made in a commercially unreasonable
manner by virtue of any terms less favorable to the seller
resulting from the private nature of such sales.
7.5 Application of Proceeds. The proceeds of any sale of all or
any part of the Collateral made in connection with the exercise of
Lender's rights and remedies shall be applied in the following order
of priorities; first, to the payment of all costs and expenses of such
sale, including without limitation, compensation to Lender and its
agents, attorneys' fees, and all other expenses, liabilities and
advances incurred or made by Lender, its agents and attorneys, in
connection with such sale, and any other unreimbursed expenses for
which Lender may be reimbursed pursuant to the Receivables Loan
Documents; second, to the payment of all late charges required by the
Receivables Loan Documents to be paid by Borrower, in such order and
manner as Lender shall in its discretion determine; third, to the
payment of the Obligations, in such order and manner as Lender shall
in its discretion determine, with no amounts applied to payment of
principal until all interest has been paid, fourth, to the other
Obligations in such order and manner as Lender may determine; and
last, to the payment to Borrower, its successors or assigns, or to
whosoever may be lawfully entitled to receive the same, or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
7.6 Lender's Right to Perform. Lender may, at its option, and
without any obligation to do so, pay, perform and discharge any and
all obligations agreed to be paid or Performed in the Receivables Loan
Documents by Borrower or any surety for the Performance of the
Obligations if (a) such person fails to do so and (b) (i) an Event of
Default exists and at least five (5) Business Day's notice has been
given to such person of Lender's intention to take such action, (ii)
the action taken by Lender involves obtaining insurance which such
person has failed to maintain in accordance with the Receivables Loan
Documents or to deliver evidence thereof, or (iii) in the opinion of
Lender, such action must be taken because an emergency exists or to
preserve any of the Collateral or its value. For such purposes Lender
may use the proceeds of the Collateral. All amounts expended by Lender
in so doing or in exercising its remedies under the Receivables Loan
Documents following an Event of Default shall become part of the
Obligations, shall be immediately due and payable by Borrower to
Lender upon demand, and shall bear interest at the Default Rate from
the dates of such expenditures until paid.
7.7 Non-Exclusive Remedies. No remedy in any Receivables Loan
Document conferred on or reserved to Lender is intended to be
exclusive of any other remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other
remedy given under any Receivables Loan Document or now or hereafter
existing at law or in equity. No delay or omission to exercise any
right or power shall be construed to be a waiver of or acquiescence to
any default or a waiver of any
47
right or power; and every such right and power may be exercised from
time to time and as often as may be deemed expedient.
7.8 Waiver of Marshalling. Borrower, for itself and for all who
may claim through or under it, hereby expressly waives and releases
all right to have the Collateral, or any part of the Collateral,
marshalled on any foreclosure, sale or other enforcement of Lender's
rights and remedies.
7.9 Attorney-in-Fact. For the purpose of exercising its rights
and remedies under paragraphs 7.2.3 and 7.6, Lender may do so in
Borrower's name or its name and is hereby appointed as Borrower's
attorney-in-fact to take any and all actions in Borrower's name and/or
on Borrower's behalf as Lender may deem necessary or appropriate in
its discretion in the accomplishment of such purposes.
7.10 Judgment Currency. If, for the purpose of obtaining or
enforcing judgment against Borrower or any Required Guarantor in any
court in any jurisdiction, it becomes necessary to convert into any
other currency (such other currency being hereinafter referred to as
the "Judgment Currency") an amount due in Dollars under the
Receivables Loan Documents, the conversion shall be made at the
Official Exchange Rate on the Business Day immediately preceding (i)
the date of actual payment of the amount due, in the case of the
courts of any jurisdiction that will give effect to such conversion
being made on such date, or (ii) the date on which the judgment is
given, in the case of any proceeding in a court which will not permit
the conversion to be made on the date of actual payment (the
applicable date as of which such conversion is made pursuant to this
clause (ii) being hereinafter referred to as the "Judgment Conversion
Date"). If, in the case of any proceeding in a court which will not
permit the conversion to be made on the date of actual payment, there
is a change in the Official Exchange Rate between the Business Day
immediately preceding each of the Judgment Conversion Date and the
date of actual receipt of the amount due in immediately available
funds, Borrower or a Required Guarantor, as the case may be, shall pay
such additional amount (if any, but in any event not a lesser amount)
as may be necessary to ensure that the amount actually received in the
Judgment Currency, when converted at the Official Exchange Rate on the
Business Day immediately prior to the date of payment, will produce
the amount of Dollars, which could have been purchased with the amount
of the Judgment Currency at the Official Exchange Rate in effect on
the Business Day prior to the Judgment Conversion Date.
8. COSTS AND EXPENSES; INDEMNIFICATION
8.1 Costs and Expenses. Borrower will pay on demand any and all
costs and expenses incurred by Lender in connection with the
initiation, documentation and closing of the Receivables Loan, the
making of Advances, the protection of the Collateral, or the
enforcement of the Obligations against Borrower, including, without
limitation, all due diligence costs and expenses due and owing to all
persons and entities
47
performing due diligence in connection with the Receivables Loan,
including Deloitte Touche and Bank of America, all attorneys',
inspecting architect's/engineer's, trustee's, notary's and other
professionals' fees (including, without limitation, out-of-pocket
expenses and normal charges of such attorneys' and other professionals
for photocopy, telecopy and computer services, and clerical overtime),
consumer credit reports, and revenue, documentary stamp, transaction,
transfer and intangible taxes. Without limiting the generality of the
foregoing, if a bankruptcy proceeding is commenced by or against
Borrower or otherwise involving the Collateral, Lender shall, to the
extent not already provided for herein, be entitled to recover, and
Borrower shall be obligated to pay, Lender's attorneys' fees and costs
incurred in connection with: any determination of the applicability of
the bankruptcy laws to the terms of the Receivables Loan Documents or
Lender's rights thereunder; any attempt by Lender to enforce or
preserve its rights under the bankruptcy laws or to prevent Borrower
or any other person from seeking to deny Lender its rights thereunder;
any effort by Lender to protect, preserve or enforce its rights
against the Collateral, or seeking authority to modify the automatic
stay of 11 U.S.C. Section 362 and the comparable provision under
Mexican bankruptcy law or otherwise seeking to engage in such
protection, preservation or enforcement; or any proceeding(s) arising
under the bankruptcy laws, or arising in or related to a case under
the bankruptcy laws. Borrower agrees to cause the timely payment and
reimbursement to the Land Trustee for all of the Land Trustee's fees,
costs, expenses and other amounts incurred by or due and owing to the
Land Trustee under or in connection with the Land Trusts in the
performance by the Land Trustee of the services contemplated to be
performed by it under the Land Trusts. Borrower agrees to timely pay
and reimburse or cause the timely payment and reimbursement to the
Administration Trustee for all of the Administration Trustee's fees,
costs, expenses and other amounts incurred by or due and owing to the
Administration Trustee under or in connection with the Administration
Trust in the performance by the Administration Trustee of the services
contemplated to be performed by it under the Administration Trust.
Borrower agrees to timely pay and reimburse or to cause the timely
payment and reimbursement to the Payment Source Trustee for all of the
Payment Source Trustee's fees, costs, expenses and other amounts
incurred by or due and owing to the Payment Source Trustee under or in
connection with the Payment Source Trust in the performance by the
Payment Source Trustee of the services contemplated to be performed by
it under the Payment Source Trust.
8.2 Indemnification. Borrower will INDEMNIFY, PROTECT, HOLD
HARMLESS, and defend Lender, Lender's Affiliates, RCI Mexico and their
respective successors, assigns and shareholders (including corporate
shareholders), directors, officers, employees, servants and agents of
the foregoing (all of whom are made third party beneficiaries of the
provisions of this paragraph), for, from and against: (a) any and all
liabilities, damages, penalties, or fines, losses, costs or expenses
(including, without limitation, court costs and attorneys' fees),
claims, demands, suits, proceedings (whether civil or criminal),
orders, judgments, penalties, fines and other sanctions whatsoever
asserted against it and arising from or brought in connection with any
Time-Share Project, the Collateral, Lender's status by virtue of the
Receivables Loan Documents,
48
creation of liens and security interests, the terms of the Receivables
Loan Documents or the transactions related thereto, a breach of
Borrower's obligations under paragraph 6.1.7, any assertion or claim
that Lender is required to withhold any tax due on the proceeds of any
Instrument or Receivables Collateral, or any act or omission of
Borrower, the Servicing Agent, the Administration Trustee, the Payment
Source Trustee or the Land Trustee, or their respective employees or
agents, whether actual or alleged unless such act or omission is
caused by Lender's gross negligence or willful misconduct; and (b) any
and all brokers' commissions or finders' fees or other costs of
similar type by any party in connection with the Receivables Loan. On
written request by a person or other entity covered by the above
agreement of indemnity, Borrower will undertake, at its own cost and
expense, on behalf of such indemnitee, using counsel satisfactory to
the indemnitee, the defense of any legal action or proceeding to which
such person or entity shall be a party. However, at an indemnitee's
option, such indemnitee may, at Borrower's expense, prosecute or
defend any action within the scope of the indemnification contained in
this paragraph 8.2. No termination of this Agreement or the other
Receivables Loan Documents shall affect or impair the indemnification
provisions contained in this paragraph 8.2 and all such provisions
shall survive such termination.
9. CONSTRUCTION AND GENERAL TERMS
9.1 Payment Location and Currency. All monetary amounts for all
purposes hereunder shall be denominated in Dollars. All amounts
payable under the Receivables Loan Documents shall be payable solely
in Dollars at the Official Exchange Rate in effect on the Business Day
immediately prior to the date of Lender's receipt, in immediately
available funds, of Pesos. All amounts payable under the Receivables
Loan Document shall be deposited into Lender's bank account set forth
in the attached Exhibit 9.1 or such other account as Lender shall from
time to time indicate by written notice to Borrower.
9.2 Entire Agreement. The Receivables Loan Documents exclusively
and completely state the rights and obligations of Lender and Borrower
with respect to the Receivables Loan. No modification, variation,
termination, discharge, abandonment or waiver of any of the provisions
or conditions of the Receivables Loan Documents shall be valid unless
in writing and signed by a duly authorized representative of the party
sought to be bound by such action. The Receivables Loan Documents
supersede any and all prior representations, warranties and/or
inducements, written or oral, heretofore made by Lender, Borrower and
the Required Guarantors concerning this transaction, including any
commitment for financing.
9.3 Powers Coupled with an Interest. The powers and agency hereby
granted by Borrower are coupled with an interest and are irrevocable
until the Obligations have been paid in full and are granted as
cumulative to Lender's other remedies for collection and enforcement
of the Obligations.
49
9.4 Counterparts; Facsimile Signatures. Any Receivables Loan
Document may be executed in counterpart, and any number of copies of
such Receivables Loan Document which have been executed by all parties
shall constitute one (1) original. Delivery of an executed counterpart
of any Receivables Loan Document by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of such
Receivables Loan Document. Any party delivering an executed
counterpart of any Receivables Loan Document by telefacsimile shall
also deliver a manually executed counterpart of such Receivables Loan
Document, but the failure to deliver a manually executed counterpart
shall not affect the validity, enforceability, and binding effect of
such Receivables Loan Document.
9.5 Notices. All notices, requests or demands required or
permitted to be given under the Receivables Loan Documents shall be in
writing, and shall be deemed effective (a) upon hand delivery, if hand
delivered, or (b) two (2) Business Days after such are deposited for
delivery via Federal Express or other nationally recognized overnight
courier service, addressed as shown below, or to such other address as
the party being notified may have designated in a notice given to the
other party. Written notice may be given by telecopy to the telecopier
number shown below or to such other telecopier number as the party
being notified may have designated in a notice given to the other
party, which notice shall be effective on the day of receipt if
received during the recipient's normal business hours on the day of
receipt or otherwise on the next Business Day; provided that such
notice shall not be deemed effective unless not later than the next
Business Day, a copy of such notice is hand delivered or deposited for
delivery via courier in accordance with the requirements set forth
above. The notice addresses and telecopy numbers for Borrower and
Lender are set forth at the end of this Agreement following their
respective signatures.
9.6 Successors and Assigns. All the covenants of Borrower and all
the rights and remedies of the Lender contained in the Receivables
Loan Documents shall bind Borrower, and, subject to the restrictions
on merger, consolidation and assignment contained in the Receivables
Loan Documents, its successors and assigns, and shall inure to the
benefit of Lender, its successors and assigns, whether so expressed or
not. Borrower may not assign its rights in the Receivables Loan
Documents in whole or in part. Except as may be expressly provided in
a Receivables Loan Document, no person or other entity shall be deemed
a third party beneficiary of any provision of the Receivables Loan
Documents.
9.7 Severability. If any provision of any Receivables Loan
Document is held to be invalid, illegal or unenforceable under present
or future laws, the legality, validity and enforceability of the
remaining provisions of the Receivables Loan Documents shall not in
any way be affected or impaired thereby. In lieu of each such illegal,
invalid or unenforceable provision, there shall be added to the
Receivables Loan Document affected, a provision that is legal, valid
and enforceable and as similar in terms to such illegal, invalid and
unenforceable provision as may be possible.
50
9.8 Time of Essence. Time is of the essence in the Performance of
the Obligations.
9.9 Miscellaneous. All headings are inserted for convenience only
and shall not affect any construction or interpretation of the
Receivables Loan Documents. Unless otherwise indicated, all references
in a Receivables Loan Document to clauses and other subdivisions refer
to the corresponding paragraphs, clauses and other subdivisions of the
Receivables Loan Document; the words "herein," "hereof," "hereto,"
"hereunder" and words of similar import refer to the Receivables Loan
Document as a whole and not to any particular paragraph, clause or
other subdivision; and reference to a numbered or lettered subdivision
of an Article or paragraph shall include relevant matter within the
Article or paragraph which is applicable to but not within such
numbered or lettered subdivision. All Schedules and Exhibits referred
to in this Agreement are incorporated in this Agreement by reference
as if set forth at length herein. Whenever the words "including",
"include", or "includes" are used in the Receivables Loan Documents,
they shall be interpreted in a non-exclusive manner as though the
words, "without limitation," immediately followed the same.
9.10 CHOICE OF LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
THEREIN, THE RECEIVABLES LOAN DOCUMENTS AND THE RIGHTS, DUTIES AND
OBLIGATIONS OF THE PARTIES THERETO SHALL, BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW JERSEY
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD CALL FOR
THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION) AND TO THE
EXTENT THEY PREEMPT THE LAWS OF SUCH STATE, THE LAWS OF THE UNITED
STATES; PROVIDED, HOWEVER, THAT THE LAWS OF MEXICO SHALL GOVERN TO THE
EXTENT NECESSARY WITH RESPECT TO THE CREATION AND ENFORCEMENT OF LIENS
AND OTHER SECURITY INTERESTS ON COLLATERAL CONTAINED WITHIN MEXICO AND
FURTHER PROVIDED THAT THE LAWS OF MEXICO SHALL GOVERN ALL MATTERS
PERTAINING TO THE RECEIVABLES PURCHASE AGREEMENT AND THE SALE OF
RECEIVABLES FROM THE ORIGINATORS TO THE BORROWER.
9.11 CHOICE OF JURISDICTION; WAIVER OF VENUE. EACH OF BORROWER
AND LENDER: (A) HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS,
JURISDICTION AND VENUE OF THE COURTS OF THE STATE OF NEW JERSEY,
XXXXXX COUNTY, AND TO THE PROCESS, JURISDICTION, AND VENUE OF THE
NEWARK DIVISION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF NEW JERSEY, FOR THE PURPOSES OF SUIT, ACTION OR OTHER PROCEEDINGS
ARISING OUT OF OR RELATING TO ANY RECEIVABLES LOAN DOCUMENT OR THE
SUBJECT MATTER THEREOF; AND (B) WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, HEREBY
51
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, DEFENSE OR OTHERWISE
IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT
SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR
THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
52
9.12 WAIVER OF JURY TRIAL. LENDER AND BORROWER ACKNOWLEDGE AND
AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY RECEIVABLES LOAN
DOCUMENT WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES; AND
THEREFORE, THEY AGREE THAT ANY LAWSUIT ARISING OUT OF ANY SUCH
CONTROVERSY SHALL BE TRIED BY A JUDGE SITTING WITHOUT A JURY, AND
KNOWINGLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY SUCH PROCEEDING.
9.13 INDUCEMENT TO LENDER. ALL OF THE PROVISIONS SET FORTH IN THE
PARAGRAPHS REFERENCED BELOW ARE A MATERIAL INDUCEMENT FOR LENDER'S
MAKING ADVANCES TO BORROWER.
(BORROWER'S INITIALS RE: 9.10 - 9.13 _____)
53
9.14 Compliance With Applicable Usury Law. It is the intent of
the parties hereto to comply with the Applicable Usury Law.
Accordingly, notwithstanding any provisions to the contrary in the
Receivables Loan Documents, in no event shall the Receivables Loan
Documents require the payment or permit the collection of interest in
excess of the maximum contract rate permitted by the Applicable Usury
Law.
9.15 NO RELATIONSHIP WITH PURCHASERS. LENDER DOES NOT HEREBY
ASSUME AND SHALL HAVE NO RESPONSIBILITY, OBLIGATION OR LIABILITY TO
PURCHASERS, LENDER'S RELATIONSHIP BEING THAT ONLY OF A CREDITOR WHO
HAS TAKEN AN ASSIGNMENT FROM BORROWER OF THE INSTRUMENTS IN ORDER TO
FACILITATE PERFORMANCE OF THE OBLIGATIONS. EXCEPT AS REQUIRED BY LAW
AND FOR FILINGS MADE WITH THE SECURITIES & EXCHANGE COMMISSION OR ANY
STOCK EXCHANGE ON WHICH BORROWER'S OR ITS AFFILIATE'S STOCK OR DEBT IS
TRADED, BORROWER WILL NOT, AT ANY TIME, USE THE NAME OF OR MAKE
REFERENCE TO LENDER WITH RESPECT TO ANY TIME-SHARE PROJECT, THE SALE
OF TIME-SHARE INTERESTS OR OTHERWISE, WITHOUT THE EXPRESS WRITTEN
CONSENT OF LENDER.
9.16 NO JOINT VENTURE. THE RELATIONSHIP OF BORROWER AND LENDER IS
THAT OF DEBTOR AND CREDITOR, AND IT IS NOT THE INTENTION OF EITHER OF
SUCH PARTIES BY THIS OR ANY OTHER INSTRUMENT BEING EXECUTED IN
CONNECTION WITH THE RECEIVABLES LOAN TO ESTABLISH A PARTNERSHIP, AND
THE PARTIES HERETO SHALL NOT UNDER ANY CIRCUMSTANCES BE CONSTRUED TO
BE PARTNERS OR JOINT VENTURERS.
9.17 Standards Applied to Lender's Actions. Unless otherwise
specifically stipulated elsewhere in the Receivables Loan Documents,
if a matter is left in the Receivables Loan Documents to the decision,
requirement, request, determination, judgment, opinion, approval,
consent, satisfaction, acceptance, agreement, option or discretion of
Lender, its employees, Lender's counsel or any agent for or contractor
of Lender, such action shall be deemed to be exercisable by Lender or
such other person in its sole and absolute discretion and according to
standards established in its sole and absolute discretion.
9.18 Meaning of Subordination. Any subordination required to be
given under the Receivables Loan Documents to Lender shall include the
subordination of and the deferral of the right to receive payments on
the subordinated obligations except to the extent expressly permitted
in this Agreement; the remittances to Lender of all prohibited
payments received by the third party; the subordination of all liens,
security interests, assignments and other encumbrances and claims held
by the subordinating party on or against any of Borrower's property to
Lender's interest (whenever acquired) in such property; and an
agreement on the part of the third party not to exercise any remedies
54
against Borrower so long as all obligations under the Receivables Loan
Documents have not been fully satisfied.
9.19 Scope of Reimbursable Attorney's Fees. As used in the
Receivables Loan Documents, the term "attorneys' fees" includes the
reasonable fees of outside and Lender's in-house attorneys licensed to
practice law in any jurisdiction, outside and Lender's in-house law
clerks, paralegals, investigators and others not admitted to the bar
but performing services under the supervision of a licensed attorney,
and the expenses (including, without limitation, normal and customary
charges for telecopy and photocopy services and clerical overtime)
incurred by them in the performance of their services. As used in the
Receivables Loan Documents, attorneys' fees incurred by Lender in the
enforcement of any remedy or covenant include, without limitation,
attorneys' fees incurred in any foreclosure of the Receivables Loan
Security Documents, in protecting or sustaining the lien or priority
of the Collateral, or in any proceeding arising from or connected with
any such matter, including any bankruptcy, receivership, injunction or
other similar proceeding, or any appeal from or petition for review of
any such matter, and with or without litigation.
9.20 [Reserved]
9.21 Reliance. Lender's examination, inspection, or receipt of
information pertaining to Borrower, any Required Guarantor, the
Collateral or any Time-Share Project shall not in any way be deemed to
reduce the full scope and protection of the warranties,
representations and Obligations contained in the Receivables Loan
Documents.
9.22 Confidentiality. Borrower and Lender each agree to keep
confidential and each agree to cause its employees and officers, their
respective Affiliates, the Required Guarantors (as the Borrower) and
the employees and officers of the foregoing to keep confidential the
provisions of this Agreement and the other Receivables Loan Documents
including the terms and conditions of the Receivables Loan and the
pricing, payment and maturity date provisions. The foregoing
confidentiality provision shall also be binding upon the Borrower's
and Lender's outside accountants, attorneys and other advisors. Lender
and Borrower however consent to the disclosure of such confidential
information to Borrower's and Lender's outside accountants, attorneys
and other advisors provided that such persons are advised of the
confidential nature of such information. Lender and Borrower
furthermore consent to the disclosure of such confidential information
to the extent required by law, rule, regulation or pursuant to any
judicial or administrative proceeding.
9.23 Service of Process. Borrower has appointed
__________________, with an address of
___________________________________, as its agent for service of
process ("Service of Process Agent") who shall be responsible for
accepting service of process within the United States on behalf of
Borrower. Borrower shall not change its
55
Service of Process Agent without (i) sixty (60) days prior written
notice to Lender and (ii) the delivery to Lender of a power of
attorney in the form contemplated in paragraph 4.1.8 hereof, as to
such new Service of Process Agent (the "New Agent"). Borrower hereby
agrees that service of process upon the Service of Process Agent
appointed prior to the appointment of the New Agent shall continue to
be effective until the satisfaction of the conditions set forth in
clauses (i) and (ii) above.
[SIGNATURE PAGE FOLLOWS]
56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective name, personally or by their duly authorized
representatives as of November 30, 2001.
BORROWER:
XXXXXX RESORTS, LLC, a Nevada limited
liability company
By: CR Resorts Los Cabos, S. de X.X. de C.V.,
a Mexican limited responsibility
corporation with variable capital
Its: Managing Member
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx Xxxxxxxx
Title: Attorney-in-Fact
Borrower's Notice Address and Telecopy Number:
XXXXXX RESORTS, LLC
Blvd. Xxxxxx Xxxx Xxxxxxxx No. 3642-7
Col. Jardines del Xxxxxxxx
Xxxxxx, Xxxxxxxx Xxxxxxx 00000
Xxxxxx
Attention: Chief Financial Officer
Telecopy No.: 000-00 (000) 000-0000
with a copy to (which shall not
constitute notice):
Xxxxxxxxx Xxxxxxx, LLP
0000 Xxxxxxxx Xxxxxx, Xxxxx 000X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
LENDER
RESORT CONDOMINIUMS INTERNATIONAL, LLC,
a Delaware limited liability company
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
57
Lender's Notice Address and Telecopy Number:
Resort Condominiums International, LLC
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Resort Condominiums International, LLC
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to (which shall not
constitute notice):
Xxxxxxx & Xxxxxxx P.L.C.
Two Xxxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
58
EXHIBIT 1(A)
BORROWER'S CERTIFICATE
This Certificate is being delivered in connection with the Loan Agreement
between Xxxxxx Resorts, LLC, a Nevada limited liability company ("Borrower") and
Resort Condominiums International, LLC ("Lender") dated November ___ 2001, as
amended, (the "Agreement"). Borrower hereby certifies to Lender that (i) the
total due but unpaid payments under the Instruments described in Schedule A
attached hereto and by this reference incorporated herein and the unpaid
principal balance for each such Instrument is as set forth in Schedule A; (ii)
such Instruments are, individually and collectively, Eligible Instruments; (iii)
no material adverse change has occurred in the financial condition or in the
business and operations of Borrower or the Required Guarantors since
_______________, _____, the date of the last financial statements delivered to
Lender; (iv) all representations and warranties contained in the Agreement are
true and correct as of the date hereof; (v) neither an Event of Default nor an
Incipient Default exists; and (vi) Borrower has Performed and complied with all
agreements, covenants and conditions required by the Agreement to be Performed
and complied with prior to the date hereof.
Except as otherwise defined herein or the context otherwise requires, all
capitalized terms used herein have the meaning given to them in the Agreement.
DATED: ____________, ______.
BORROWER:
XXXXXX RESORTS, LLC, a Nevada limited
liability company
By: CR Resorts Los Cabos, S. de X.X. de C.V.,
a Mexican limited responsibility
corporation with variable capital
Its: Managing Member
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx Xxxxxxxx
Title: Attorney-in-Fact
SCHEDULE A
Instrument Reference No. Due But Unpaid Payments Unpaid Principal Balance
EXHIBIT 1(B)
NOTICE
EXHIBIT 1(C)
PERMITTED ENCUMBRANCES
NONE
EXHIBIT 1(D)
REQUEST FOR RECEIVABLES
LOAN ADVANCE AND CERTIFICATION
The undersigned ("Borrower") requests that RESORT CONDOMINIUMS
INTERNATIONAL, LLC ("Lender") make an Advance to Borrower of the Receivables
Loan in the sum of _____________________________ ______________ UNITED STATES
DOLLARS (U.S. $_____________) upon receipt hereof, pursuant to the Loan
Agreement between such parties dated as of November __, 2001 (with any
amendments, "Agreement").
Borrower hereby certifies to Lender that (i) the total due but unpaid
payments under the Instruments for which the requested disbursement of the
Receivables Loan is sought and the unpaid principal balance for each such
Eligible Instrument is as set forth on Schedule A attached hereto and by this
reference incorporated herein; (ii) the Instruments against which the requested
disbursement of the Receivables Loan is sought are, individually and
collectively, Eligible Instruments; (iii) no material adverse change has
occurred in the financial condition or in the business and operations of
Borrower or the Required Guarantors since _______________, _____, the date of
the last financial statements delivered to Lender; (iv) all representations and
warranties contained in the Agreement are true and correct as of the date
hereof; (v) neither an Event of Default nor an Incipient Default exists; and
(vi) Borrower has Performed and complied with all agreements, covenants and
conditions required by the Agreement to be Performed and complied with prior to
or at the date of the requested disbursement of the Receivables Loan.
Except as otherwise defined herein or the context otherwise requires, all
capitalized terms used herein have the meaning given to them in the Agreement.
DATED: ________________, ______.
BORROWER:
XXXXXX RESORTS, LLC, a Nevada limited
liability company
By: CR Resorts Los Cabos, S. de X.X. de C.V.,
a Mexican limited responsibility
corporation with variable capital
Its: Managing Member
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx Xxxxxxxx
Title: Attorney-in-Fact
SCHEDULE A
Instrument Reference No. Due But Unpaid Payments Unpaid Principal Balance
EXHIBIT 6.1.4.1
BORROWER'S AND RAINTREE'S COMPLIANCE CERTIFICATE
This Compliance Certificate is being delivered in connection with that
certain Loan Agreement between Xxxxxx Resorts, LLC, a Nevada limited liability
company ("Borrower") and Resort Condominiums International, LLC, dated
________________________, 2001, as amended (the "Loan Agreement"). Unless
otherwise defined herein, all capitalized terms used herein shall have the same
meaning as set forth in the Loan Agreement.
The undersign certify that as of __________________________, 2001 (i) they
are the Chief Executive Officers and Chief Financial Officers, as indicated
below, of the Borrower and the Required Guarantors; (ii) they are acting on
behalf of Borrower and the Required Guarantors, in his/her capacity as such
officers of the Borrower and Required Guarantors and are authorized to so act,
and (iii) there are no Events of Default of Incipient Defaults, except as
follows: ___________________________________
Without limiting the generality of the foregoing, the undersigned hereby
represents and warrants that, with respect to the Paragraph of the Loan
Agreement set forth below and the covenants contained therein, the Borrower is
in full compliance unless otherwise indicated.
Paragraph and Covenant In Full Compliance Not in Compliance
---------------------- ------------------ -----------------
6.1.3 Insurance
6.1.5. Subordination of Indebtedness,
owing to Affiliates
6.1.18 Lender's Reliance
6.2.2. Nature of Business; Other
Indebtedness
6.2.3. Restrictions on Liens or Transfers
3.2(e) Raintree Guaranty - Financial
Covenants
With respect to any item identified above as not being in compliance, the
undersigned has attached and certifies as to the accuracy of statements
specifying the violation, condition, or events which result in such
non-compliance, the nature and status thereof, and the actions which the
Borrower proposes to take with respect thereto to bring the Borrower into full
compliance with the Loan Agreement.
The foregoing representations and warranties are made by the undersigned
from hers/his personal knowledge, after diligent inquiry, and with full
knowledge that the Lender will rely thereon.
This Certificate is given pursuant to and in compliance with Paragraph
6.1.4.1. of the Loan Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Borrower's and
Raintree's Compliance Certificate as of the ________ day of
_____________________, 200___.
BORROWER:
XXXXXX RESORTS, LLC, a Nevada limited
liability company
By: CR Resorts Los Cabos, S. de X.X. de C.V.,
a Mexican limited responsibility
corporation with variable capital
Its: Managing Member
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx Xxxxxxxx
Title: Attorney-in-Fact
2
REQUIRED GUARANTORS:
CR RESORTS CANCUN, S. de X.X. de C.V.,
a Mexican limited responsibility corporation
with variable capital
By:
--------------------------
Type/Printed Name:
------------------------------
Chief Executive Officer
By:
--------------------------------------
Type/Printed Name:
------------------------------
Chief Financial Officer
CR RESORTS LOS CABOS, S. de X.X. de C.V.,
a Mexican limited responsibility corporation
with variable capital
By:
--------------------------
Type/Printed Name:
------------------------------
Chief Executive Officer
By:
--------------------------------------
Type/Printed Name:
------------------------------
Chief Financial Officer
CR RESORTS PUERTO VALLARTA, S. de X.X. de C.V.,
a Mexican limited responsibility corporation
with variable capital
By:
--------------------------
Type/Printed Name:
------------------------------
Chief Executive Officer
By:
--------------------------------------
Type/Printed Name:
------------------------------
Chief Financial Officer
3
CORPORACION MEXITUR, S.A. de C.V., a Mexican
corporation with variable capital
By:
--------------------------
Type/Printed Name:
------------------------------
Chief Executive Officer
By:
--------------------------------------
Type/Printed Name:
------------------------------
Chief Financial Officer
PROMOTORA XXXXX XXXX, S. de X.X. de C.V.,
a Mexican limited responsibility corporation
with variable capital
By:
--------------------------
Type/Printed Name:
------------------------------
Chief Executive Officer
By:
--------------------------------------
Type/Printed Name:
------------------------------
Chief Financial Officer
XXXXX XXXX RESORT, S. de X.X. de C.V.,
a Mexican limited responsibility corporation
with variable capital
By:
--------------------------
Type/Printed Name:
------------------------------
Chief Executive Officer
By:
--------------------------------------
Type/Printed Name:
------------------------------
Chief Financial Officer
4
RAINTREE RESORTS INTERNATIONAL, INC.,
a Nevada corporation
By:
--------------------------
Type/Printed Name:
------------------------------
Chief Executive Officer
By:
--------------------------------------
Type/Printed Name:
------------------------------
Chief Financial Officer
5
Attachment - Explaining Noncompliance
6
EXHIBIT 6.1.4.8(A)
INDENTURE EXCERPTS
EXHIBIT 6.1.4.8(B)
CERTIFICATION REGARDING INDENTURE
_________, 200__
Resort Condominiums International, LLC
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
The undersigned hereby certifies to you the following pursuant to the Loan
Agreement dated as of ____________, 2001, between ___________________________
and Resort Condominiums International, LLC (the "Loan Agreement"). Unless
otherwise defined herein, all capitalized terms used herein shall have the same
meaning as set forth in the Loan Agreement. The Loan Agreement requires that
Raintree certify to the Lender the extent to which Raintree and those of its
Affiliates that are "Restricted Subsidiaries" pursuant to the Indenture are in
compliance with the borrowing limitations set forth in the Indenture. This
Certification is being delivered to you in satisfaction of that requirement.
Paragraph reference Existing indebtedness allocated to Compliance?
from Indenture this paragraph
------------------- ------------------------------------ ------------------
4.09(a) $_________________ Yes ____ No _____
4.09(b)(i) $_________________ Yes ____ No _____
4.09 (b)(ii) $_________________ Yes ____ No _____
4.09(b)(iii) $_________________ Yes ____ No _____
4.09(b)(iv) $_________________ Yes ____ No _____
4.09(b)(v) $_________________ Yes ____ No _____
4.09(b)(vi) $_________________ Yes ____ No _____
4.09(b)(vii) $_________________ Yes ____ No _____
4.09(b)(viii) $_________________ Yes ____ No _____
4.09(b)(ix) $_________________ Yes ____ No _____
4.09(b)(x) $_________________ Yes ____ No _____
4.09(b)(xi) $_________________ Yes ____ No _____
Raintree Resorts International, Inc., a Nevada corporation
By:
-----------------------------------------
Name:
-----------------------------------
Title: Chief Financial Officer
EXHIBIT 9.1
PAYMENT LOCATION
Resort Condominiums International, LLC
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
