EXHIBIT 10.8.6
LOAN AND SECURITY AGREEMENT
between
AKGI-ROYAL PALM C.V.o.a.
and
FINOVA CAPITAL CORPORATION
DATED AS OF JULY 12, 1995
LOAN AND SECURITY AGREEMENT
---------------------------
BY THIS LOAN AND SECURITY AGREEMENT entered into as of July 12, 1995
between FINOVA CAPITAL CORPORATION, a Delaware corporation ("Lender") and AKGI -
ROYAL PALM C.V.o.a, a Netherlands Antilles limited partnership with its capital
divided into shares ("Borrower"), hereby confirm and agree as follows:
ARTICLE I
---------
INTRODUCTION
------------
1.1 Borrower desires to obtain a Receivables Loan from Lender, the
proceeds of which shall be used for working capital purposes.
1.2 Borrower furthermore desires to obtain an Acquisition Loan from
Lender, the proceeds of which shall be used for the purposes set forth herein.
1.3 Lender is willing to extend to Borrower the Receivables Loan and
the Acquisition Loan for the purposes stated in the preceding paragraph upon the
terms and conditions set forth herein.
ARTICLE II
----------
DEFINITIONS
-----------
Except where the context clearly requires a different interpretation,
all capitalized terms used in this Agreement shall have the meanings assigned to
them above, immediately below, or elsewhere herein.
"Acquisition" shall mean the transaction pursuant to which Borrower
acquired from ITOCHU all of ITOCHU's right, title and interest in and to certain
loans made to Pelican Beach Resort N.V. and to certain of its affiliates which
loans are secured by, among other things, a security interest in the Project.
"Acquisition Advance" shall mean an Advance of the Acquisition Loan
advanced by Lender to Borrower from time to time in accordance with the terms
and provisions of this Agreement.
"Acquisition Loan" shall mean a term loan extended by Lender to
Borrower in accordance with the terms of this Agreement, total advances of which
shall not at any time exceed U.S. $4,400,000.
"Acquisition Note" shall mean the Promissory Note, in the amount of
the Acquisition Loan, to be made and delivered by Borrower to Lender pursuant
hereto, in a form acceptable to Lender, as from time to time modified, extended,
renewed, replaced or restated.
"Advance" shall mean, individually and collectively, a Receivables
Advance and an Acquisition Advance.
"Advance Date" shall mean each date on which an Advance is made.
"Affiliate" shall mean any person or entity directly or indirectly
Controlling, Controlled by or under common Control with the person or entity to
whom the definition is applied, including blood relatives or spouse of the
person to whom the definition applies, if such person is a natural person.
"Agreement" shall mean this Loan and Security Agreement, as from time
to time modified, extended, renewed, replaced or restated.
"Applicable Environmental Laws" shall have the meaning set forth in
the Environmental Certificate.
"Applicable Usury Law" shall mean the usury law applicable pursuant
to the terms of Article XI, paragraph 11.11 hereof or such other usury law
which is applicable if the law chosen by the parties is not applicable.
"Assignment of Leases" shall mean that certain Assignment of Leases
and Rents of even date herewith, pursuant to which, among other things, Borrower
collaterally assigns to Lender all of Borrower's right, title and interest in
and to all leases, licenses and occupancy agreements of whatever form now or
hereafter affecting all or any portion of the Project (other than the Purchaser
Leases) and all of Borrower's right, title and interest in and to all rents,
issues, properties, revenues, royalties, rights, benefits, income and deposits
of every nature of, from or relating to the Project (other than arising from the
Purchaser Leases).
"Assignments" shall mean written Assignments, in such form as Lender
shall prescribe, of specific Instruments and Purchaser Leases and the proceeds
thereof delivered to Lender concurrently with each Advance under the terms of
which Borrower transfers and assigns with full recourse all of Borrower's right,
title and interest in and to the Instrument and Purchaser Lease, free and clear
of all claims, demands, liens and encumbrances of third parties, as collateral
security for the Loan.
-2-
"Availability Advance" shall mean an additional Receivables Advance
advanced by Lender to Borrower from time to time with respect to an Eligible
Instrument that then constitutes Receivables Collateral against which a previous
Receivables Advance has been made.
"Borrower" shall mean AKGI - ROYAL PALM C.V.o.a., a Netherlands
Antilles limited partnership with its capital divided into shares.
"Borrowing Base" shall mean, prior to the Transition Date, an amount
equal to the lesser of (i) 85% of the unpaid principal balance payable under the
Eligible Instruments or (ii) 85% of the then present value assigned to the
unmatured installments of principal and interest payable under the Eligible
Instruments discounted at Lender's Prevailing Discount Rate and, after the
Transition Date but retroactive to the beginning of the Term, an amount equal to
the lesser of (i) 90% of the unpaid principal balance payable under the Eligible
Instruments or (ii) 90% of the then present value assigned to the unmatured
installments of principal and interest payable under the Eligible Instruments
discounted at Lender's Prevailing Discount Rate.
"Borrowing Term (Receivables Loan)" shall mean the period of time
during which Lender is committed to make Receivables Advances under this
Agreement, which commitment shall terminate on the earlier of (i) the date which
occurs eighteen (18) months after the date of the first Receivables Advances or
(ii) April 14, 1997.
--
"Borrowing Term (Acquisition Loan)" shall mean the period of time
during which Lender is committed to make Acquisition Advances under this
Agreement (including advances of the interest reserve established under the
Acquisition Loan), which commitment shall terminate on the date which occurs six
(6) months after the date of the first Acquisition Advance.
"Business Day" shall mean a calendar day other than a Saturday, Sunday
or legal holiday under the laws of the State of Arizona.
"Capital Expenditure" shall mean payments that are made by the
Borrower for the lease, purchase, improvement, construction or use of any
property, the value of which under GAAP is required to be capitalized and shall
include, without limitation, payments for the installment purchase of property
and payments under capitalized leases.
"Cash Flow" shall mean, for any period, the net income or loss of
Borrower, determined in accordance with GAAP (excluding the effect of any
extraordinary gains or losses from the sale of property not in the ordinary
course of business), plus each of the following items to the extent deducted
----
from the revenues of
-3-
Borrower in calculating the net income: (A) depreciation; (B) amortization; and
(C) interest and taxes during such period, and less Capital Expenditures to
----
the extent paid in such period.
"Closing Date" shall mean July 14, 1995, or such later date as Lender
shall designate in writing.
"Collateral Assignment" shall mean that certain Collateral Assignment
of Material Contracts, of even date herewith, as from time to time modified,
extended, renewed, replaced or restated, pursuant to which Borrower shall
collaterally assign to Lender, as further security for the payment and
Performance of the Obligations, all of the Project Documents.
"Control" or "Controlling" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of another person or entity by any means.
"Delinquencies" shall mean, individually and collectively, an Eligible
Instrument, against which an Advance has been made, under which an installment
payment due becomes more than 59 days past due.
"Distribution" shall mean any distribution, advance, payment,
including but not limited to, loan repayments, dividends, bonuses, salary, other
compensation and management fees.
"Documents" shall mean this Agreement, the Receivables Note, the
Acquisition Note, the Mortgage, the Supplemental Agreement, the Collateral
Assignment, the Environmental Certificate, the Servicing Agreement, the Lockbox
Agreement, the Services and Fees Agreement, the Guarantee, the Assignments, the
Subordination Agreement, the Assignment of Leases, and each and every other
document, instrument or writing executed or delivered by Borrower to Lender in
connection with the Loan.
"Dollars" or "$" shall mean United States Dollars.
"Eligible Foreign Instruments" shall mean a Eligible Instrument that
has been delivered by a Purchaser who is not a United States or Canadian
resident.
"Eligible Instruments" shall mean the Instruments, each in
substantially the form of Exhibit "A" hereto, entered into by and between
----------
Borrower and those Persons who purchase a Time-Share Interest (at least 80% of
whom shall be United States or Canadian residents), which Eligible Instruments
shall conform to the criteria and standards set forth on Exhibit "B" hereto;
----------
provided, however, that an Instrument
-4-
shall cease to be an Eligible Instrument if (i) any installment payable
thereunder becomes more than 59 days past due and the Instrument under which
such installment is payable is not replaced within ninety (90) days following
the due date of such installment or (ii) the contract fails to continue to
conform to the criteria and standards of Exhibit "B".
-----------
"Environmental Certificate" shall mean that certain Environmental
Certificate with Representations, Covenants and Warranties of even date
herewith executed by Borrower and related to the Project, as from time to time
modified, extended, renewed, replaced or restated.
"Event of Default" has the meaning set forth in Article IX hereof.
"FPSI" shall mean FINOVA Portfolio Services, Inc., an Arizona
corporation, its successors and assigns, a wholly-owned subsidiary of Lender
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time, consistently applied, throughout the period involved
and with prior periods, which shall include the official interpretations thereof
by the Financial Accounting Standards Board or any successor thereto.
"Guarantee(s)" shall mean a written Guarantee and Subordination
Agreement, in such form as Lender shall prescribe, as from time to time
modified, extended, renewed, replaced or restated, executed and delivered by a
Person (or Persons) to Lender, under the terms and conditions of which such
Person (or Persons), as Guarantor(s), shall individually and/or jointly and
severally guarantee Borrower's Performance of all of its Obligations under the
Documents and shall agree to subordinate any indebtedness owed by Borrower to
Guarantor(s) to the Obligations owed by Borrower to Lender.
"Guarantor(s)" shall mean individually, a Person, and collectively
each and every Person, who executes and delivers to Lender a Guarantee pursuant
to the terms and conditions of this Agreement. The Guarantor of this Loan is
AKGI-Sint Maarten, N.V., a Netherlands Antilles corporation with limited
liability.
"Impositions" shall mean any and all taxes (other than any tax
measured by net income payable by Lender to any state or political subdivision
thereof or to the U.S. under Section 11 or 1201 of the Internal Revenue Code, as
amended (the "IRC")), or withholding obligations in consequence of the receipt
of payments provided for herein, license fees, assessments, charges, fines,
penalties, property, privilege, excise, real estate or other taxes currently or
hereafter levied or imposed by any state, local or federal authority (including,
without limitation, any state, local or federal authority of the United States
of America or of the Netherlands Antilles) upon
-5-
or in connection with or measured by the Documents, the Receivables Collateral
or the Real Estate Collateral. Impositions shall include any amounts which must
be withheld from the proceeds of the Receivables Collateral pursuant to, without
limitation, Sections 881 and 1442 of the IRC.
"Incentive Fee" shall have the meaning set forth in Section 8.25
hereof.
"Incipient Default" shall mean any act or event which after the giving
of notice or the lapse of time (or both) would constitute an Event of Default.
"Instrument" shall mean a promissory note which has arisen out of the
sale of a Time-Share Interest in the Project by Borrower to a Purchaser, which
note is cross-defaulted with the Purchaser Lease executed by Borrower in favor
of the Purchaser delivering the Instrument.
"ITOCHU" shall mean, ITOCHU Corporation, a Japan corporation.
"Loan" shall mean, collectively and individually, the Receivables Loan
and the Acquisition Loan.
"Lockbox Agent" shall mean the entity designated as the Lockbox Agent
in the Lockbox Agreement, or should such entity cease to act as Lockbox Agent
under the Lockbox Agreement, such other entity as Lender may appoint or approve.
"Lockbox Agreement" shall mean the Lockbox Agreement, in such form as
Lender shall prescribe, to be made among Borrower, Lender and the Lockbox Agent,
as from time to time, as from time to time modified, extended, renewed, replaced
or restated.
"Loan Fee" shall have the meaning set forth in Paragraph 8.16 hereof.
"Master Lease" shall mean that certain Long Lease between the
Lieutenant Governor of the Island Territory of Sint Maarten on behalf of said
Island Territory and Pelican Beach Resort, N.V., dated December 21, 1990, and
recorded December 24, 1990 in the Public Registers of Sint Maarten at register
C, volume 107, number 13, which has been assigned by Borrower pursuant to the
Declaration of Public Auction dated July 6, 1995 with respect to the Project and
that certain Instrument de Command dated July 11, 1995 with respect to the
Project.
"Maturity Date" shall mean that date which shall occur seven (7) years
after the date on which the last Receivables Advance is made under the terms of
this Agreement.
-6-
"Maximum Loan Amount" shall mean the sum of U.S. $10,000,000.00.
"Mortgage" shall mean the Deed of Mortgage of even date herewith, as
from time to time modified, extended, renewed, replaced or restated, made,
executed and delivered by Borrower to Lender, in a form acceptable to Lender,
recorded or intended to be recorded as a lien against the Project and Real
Property.
"Net Income" shall mean the net income or loss of Borrower, determined
in accordance with GAAP (excluding the effects of any extraordinary gains or
losses from the sale of property not in the ordinary course of business).
"Nondisturbance Agreement" shall mean an agreement, in form and
substance satisfactory to Lender, pursuant to which the holders of any lien or
leasehold interest on the streets, amenities, common areas, or other off-site
improvements forming a part of the Project agree that, notwithstanding a
foreclosure or other realization of such encumbrance and notwithstanding a
termination of such leasehold realization of such encumbrance and
notwithstanding a termination of such leasehold interest, (i) the Purchasers
shall have uninterrupted use of such streets, amenities, common areas and other
off-site improvements and uninterrupted use and possession of their respective
Time-Share Interests, (ii) the rights and privileges of such Purchasers shall
not be otherwise impaired, and (iii) the governing documents of the Project,
including any declarations of condominium, shall not be modified.
"Obligations" shall mean each and every obligation, duty, covenant,
undertaking and conditions which Borrower is required or has agreed to perform
under the Documents and each and every other obligation of Borrower now or
hereafter owing to Lender.
"Opening Prepayment Date" shall mean the date which occurs twenty-four
(24) months after the last Receivables Advance hereunder.
"Overdue Rate" shall have the same meaning as set forth in the
Receivables Note.
"Perform, Performed or Performance" shall mean the timely, faithful
and complete payment and performance of all Obligations by Borrower.
"Permitted Encumbrances" shall mean those encumbrances, liens and
security interests described in Exhibit "C" hereto.
-----------
"Person" shall mean any adult individual, partnership, corporation or
other form of business entity whatsoever.
-7-
"Present Value" shall mean with respect to any Eligible Instrument the
present value of the unmatured and unpaid installments of principal and interest
due thereunder, calculated using a discount rate equal to the Prevailing
Discount Rate applicable to said Eligible Instrument as provided herein.
"Prevailing Discount Rate" shall mean Lender's prevailing discount
rate at the time each Advance is made, which rate shall be Prime Rate plus the
Rate Spread but in no event less than 12.5%.
"Prime Rate" shall mean the rate of interest publicly announced from
time to time by Citibank, N.A., New York, New York as its corporate base rate of
interest charged to its most creditworthy commercial borrowers notwithstanding
the fact that some such borrowers may borrow at lower rates. The initial Prime
Rate shall be the rate in effect as of the first Business Day of the month of
the initial Advance and, subsequently, the Prime Rate shall be redetermined as
of the first Business Day of each month.
"Project" shall mean the time-share condominium project known as Royal
Palm Beach Club, located on the Real Property and containing, at the date
hereof, 2,783 unsold Time-Share Interests.
"Project Documents" shall mean all management, shared use, access,
engineering, marketing, construction, operating, owners association and other
agreements relating to the use, ownership, or operation of the Project and all
of Borrower's rights, as a "declarant", "developer", "owner" and/or otherwise
under the governing documents and restrictive covenants affecting the Real
Property, including, without limitation, the deed or declaration of division,
owners' association charters or articles or certificates of incorporation,
bylaws and rules and regulations relating thereto whether now existing or
hereafter created.
"Purchaser" shall mean a Person who purchases a Time-Share Interest in
the Project from Borrower.
"Purchaser Lease" shall mean a lease delivered by Borrower, as Lessor,
to a Purchaser, as Lessee, entitling the Purchaser to use the Time-Share
Interest purchased by such Purchaser for a designated number of years.
"Rate Spread" shall mean, prior to the Transition Date, 3% per annum
and subsequent to the Transition Date, but subject to the provisions of Section
3.4 hereof, 2.5% per annum.
"Real Estate Collateral" shall mean:
-8-
(i) the Real Property:
(ii) all buildings and other improvements now or hereafter
erected on the Real Property, all building materials at any time intended to be
incorporated into the improvements now or hereafter erected on the Real Property
and all fixtures, equipment, machinery, appliances, furniture, furnishings and
other articles of personal property of every kind and nature whatsoever now or
hereafter located on the Real Property, and used, intended for use or usable in
connection with the operation of the Real Property, including, without
limitation, all heating, lighting, laundry, incinerating and power equipment,
engines, pipes, pumps, tanks, motors, conduits, switchboards, plumbing,
lighting, cleaning, fire prevention, fire extinguishing, refrigerating,
ventilating and communications apparatus, air cooling and air conditioning
apparatus, elevators, escalators, shades, awnings, screens, storm doors and
windows, wall beds, stoves, ranges, refrigerators, freezers, food and beverage
preparation and serving equipment, cabinets, partitions, ducts, compressors,
canopies, furnishings, garbage and rubbish disposals, counters, bathtubs, sinks
basins, carpets, floor and wall coverings, drapes, swimming pool equipment,
inventory, merchandise and proceeds therefrom and all substitutions and
replacements therefor; it being understood and agreed that all such property is
part and parcel of the Real Property and appropriate to the use thereof, and
whether affixed or annexed to the Real Property or not, shall for the purpose of
the Documents be deemed conclusively to be a portion of the security for the
Performance of the Obligations;
(iii) all right, title and interest of Borrower, now or
hereafter acquired, to use, occupy and enjoy the Real Property;
(iv) all of Borrower's right, title and interest, now owned
or hereafter acquired, in and to all goods, materials, supplies, fixtures,
equipment, machinery, furniture, furnishings and other personal property that
are now or hereafter may be appropriate for use on (whether such items are
stored on the Real Property or elsewhere), located on, or used in connection
with the Real Property;
(v) all other property and assets of Borrower, whether now
existing or hereafter acquired or arising, and whether in any way relating to or
arising from the Real Property, including, without limitation, all personal
property, accounts, accounts receivable, contract rights, chattel paper,
inventory, instruments, documents, agreements, general intangibles, trade names,
trademarks, service marks, copyrights, designs, patents, patent applications,
patent rights, tax refund claims, computer programs of Borrower,
-9-
machinery, equipment, furniture, fixtures, royalties, notes, drafts,
letters of credit, insurance policies;
(vi) all of the right, title and interest of Borrower, now
or hereafter acquired in and to all and singular the appurtenances,
tenements, hereditaments, rights of way, easements, riparian rights, water
and water rights and water rights applications as well as all rights in
ditches for the irrigation of the Real Property and shares of stock
evidencing such rights, and such other rights, liberties and privileges now
or hereafter belonging or appertaining thereto;
(vii) all income, rents, royalties, revenues, accounts,
issues, profits, fees, deposits and other proceeds of the Real Property,
together with all of the right, title and interest of Borrower, now or
hereafter acquired, as lessor or seller, as the case may be, in and to all
sales contracts, installment sales agreements and purchase money notes
pertaining to the Real Property, or any part thereof, all security
documents related to any of the foregoing, all existing and future lease
agreements, occupancy agreements, and use agreements relating to the Real
Property or any part thereof, all extensions and renewals of such leases or
other agreements, all security for the obligations of the lessees or
occupants thereunder and any and all guaranties or indemnities of or surety
or similar arrangements with respect to any such obligations;
(viii) all right, title and interest of Borrower, now or
hereafter acquired, in and to any and all strips and gores of land adjacent
to and used in connection with the Real Property and all right, title and
interest of Borrower, now owned or hereafter acquired, in, to and under the
ways, streets, sidewalks and alleys now or hereafter adjoining the Real
Property;
(ix) any licenses, contracts, consents, approvals,
management contracts or agreements, franchise agreements, insurance
policies, permits, authorizations or certificates, necessary or appropriate
for, or now or hereafter required or used in connection with the ownership,
operation, construction or maintenance of the Real Property;
(x) all intangibles, choses in action, names, logos,
trademarks, trade names and copyrights now or hereafter used in connection
with the Real Property including, without limitation, the name Port Royal
Beach Club and all variations thereof, and logos, marks and trademarks
associated therewith;
-10-
(xi) all replacements, substitutions or renewals of, or
additions to, all products of, and all books, records and files relating
to, any of the foregoing;
(xii) all proceeds and payments of the conversion, voluntary
or involuntary, of any of the foregoing, into cash or otherwise, including,
without limitation, all accounts, all condemnation awards in respect to any
taking by eminent domain or otherwise payable to the extent hereinafter
provided and all proceeds of any insurance required to be maintained by
Borrower pursuant to the Documents, whether payable to Borrower or
otherwise.
Real Estate Collateral shall not include the Purchaser Leases or the rent or
other amounts payable thereunder.
"Real Property" shall mean the parcel of real property and all
existing and future improvements located thereon, located in St. Maarten,
Netherlands Antilles and more fully described on the attached Exhibit "G",
-----------
including, without limitation, the leasehold estate created by the Master Lease.
"Receivables Advance" shall mean an Advance of the Receivables Loan
advanced by Lender to Borrower from time to time in accordance with the terms
and provisions of this Agreement. A Receivables Advance shall include an
Availability Advance.
"Receivables Collateral" shall mean (i) all of the Instruments which
Borrower now or hereafter assigns, transfers, endorses or delivers to Lender in
consideration for an Advance made by Lender pursuant to the terms of this
Agreement and as collateral security for the Obligation; (ii) all Instruments
against which Lender makes an Advance pursuant to the terms of this Agreement,
notwithstanding whether or not such Instrument is assigned, transferred,
endorsed or delivered to Lender; (iii) all Purchaser Leases, purchase
contracts, purchase agreements, guarantees and other documents or instruments
evidencing or securing the obligations of the Purchasers and/or any other person
primarily or secondarily liable on the Instruments; (iv) all policies of
insurance related to the Instruments or delivered in connection with the
Instruments (provided that the inclusion of such policies of insurance as part
of the Receivables Collateral shall not be deemed to restrict or limit the
Borrower's ability to encumber such insurance to the extent relating to or
delivered in connection with Instruments pledged to another lender, subject,
however, to the provisions of paragraph 8.27); (v) all rights under escrow
agreements relating to the Instruments and all impound and/or reserve accounts
related to the Instruments (excluding, however, any escrows set aside for
improvements to the Project); (vi) all licenses, contracts, management contracts
or agreements, franchise agreements, permits, subordination or certificates now
or hereafter required or used in connection with the ownership,
-11-
operation or maintenance of the Project (provided that the inclusion of such
licenses, contracts, management contracts and other agreements or permits as
part of the Receivables Collateral shall not be deemed to restrict or limit the
Borrower's ability to encumber such documents and agreements to the extent
relating to or delivered in connection with Instruments pledged to another
lender, subject, however, to the provisions of paragraph 8.27); (vii) all files,
books and records pertaining to any of the foregoing; and (viii) cash and non-
cash proceeds from all of the foregoing including, without limitation, all
goods, instruments, documents, general intangibles, chattel paper and accounts
wherever located, which have been acquired with cash proceeds from any of the
foregoing and the proceeds thereof.
"Receivables Loan" shall mean a revolving line of credit loan
extended by Lender to Borrower in accordance with the terms of this Agreement
in an outstanding principal amount not to exceed at any time the Maximum Loan
Amount.
"Receivables Note" shall mean the Receivables Promissory Note, in the
amount of the Receivables Loan, to be made and delivered by Borrower to Lender
pursuant hereto, in a form acceptable to Lender, as from time to time modified,
extended, renewed, replaced or restated.
"Required Sales Payments" shall have the meaning set forth in Section
5.13 of the Supplemental Agreement.
"Security Interest" shall mean a direct and exclusive first security
interest which has been perfected under the Uniform Commercial Code of the
state(s) in which any such security interest must be perfected; provided that
with respect to any portion of the Receivables Collateral or Real Estate
Collateral not covered by the Uniform Commercial Code, it shall mean a direct
and exclusive first lien on such property which has been perfected in the manner
provided by law.
"Servicing Agent" shall mean FPSI or, should such entity cease to act
as Servicing Agent under the Servicing Agreement and Services and fees
Agreement, such other entity as lender may appoint.
"Servicing Agreement" shall mean the Servicing Agreement, in such form
as Lender shall prescribe, to be made among Borrower, Lender, and the Servicing
Agent, as from time to time, as from time to time modified, extended, renewed,
replaced or restated.
"Services and Fees Agreement" shall mean the Services and Fees
Agreement, in such form as Lender shall prescribe, to be made between Borrower
and Servicing Agent and acknowledged by lender, as from time to time modified,
replaced, renewed or restated.
-12-
"Subordination Agreement" shall mean an agreement, in such form as
Lender shall prescribe, delivered to Lender pursuant to paragraph 5.2(iii)
hereof, as from time to time, as from time to time modified, extended, renewed,
replaced or restated.
"Supplemental Agreement" shall mean that Supplemental Agreement
regarding Real Estate Collateral, of even date herewith, as from time to time
modification extended, renewed, replaced or restated made, executed and
delivered by Borrower to Lender, in a form acceptable to Lender.
"Term" shall mean the duration of this Agreement commencing as of the
year and day first above written and terminating on the date Borrower has
Performed all of its Obligations under the Documents.
"Time-Share Interest" shall mean the rights sold (whether by lease or
fee title) to a Purchaser to the exclusive use of a Unit in the Project and the
Project common areas for a one (1) week period each year.
"Transition Date" shall mean the payment in full of the Acquisition
Note; provided that if upon the occurrence of the event described above, there
-------- ----
exists an Event of Default or Incipient Default, the Transition Date shall not
occur until such Event of Default or Incipient Default has been cured or waived
in writing by Lender.
"Unit" shall mean a right of apartment as described in the Declaration
of Division.
ARTICLE III
-----------
THE LOAN
--------
3.1 Lender hereby agrees that the Receivables Loan (including
Availability Advances of the Receivables Loan) will be disbursed to Borrower,
from time to time, in periodic Receivables Advances, but in no event after the
Borrowing Term (Receivables Loan) has expired, in amounts determined by
subtracting from the Borrowing Base the unpaid principal balance outstanding
under the Receivables Loan at the time of each Receivables Advance; provided
that at no time shall the unpaid principal balance of the Receivables Loan
exceed the Maximum Loan Amount.
(i) Receivables Advances shall not be made more frequently than
twice per month, and each Receivables Advance shall be in an amount of not
less than Xxx Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars (U.S. $100,000.00).
Lender shall charge a fee of Five Hundred United States Dollars
-13-
(U.S. $500.00) for the second Receivables Advance made during any month and
shall be entitled to deduct such fee from the Receivables Advance so made.
The foregoing fee is to be paid to Lender strictly in consideration for
Lender's agreement to make a second Receivables Advance during any
particular calendar month and shall not be applied or credited against any
other Obligations.
(ii) The Receivables Loan is a revolving line of credit under
the terms of which Borrower, during the Borrowing Term (Receivables Loan),
shall have the right to obtain Receivables Advances, repay Receivables
Advances, and obtain additional Receivables Advances so long as no Event of
Default has occurred and is continuing and so long as all other conditions
precedent to the making of a Receivables Advance have been satisfied.
(iii) No Receivables Advances will be made after the Borrowing
Term (Receivables Loan) has expired unless Lender, in its sole discretion,
shall agree in writing to make such Receivables Advances.
(iv) Borrower shall use the proceeds of the Receivables Loan
for working capital purposes, which shall include, without limitation, the
permitted Distributions under Section 8.21 hereof.
(v) At no time during the term hereof shall the unpaid
principal balance of the Receivables Loan exceed the Maximum Loan Amount,
and Lender shall have no obligation to make any Receivables Advance if such
Advance would cause the foregoing limitation to be exceeded.
3.2 Lender agrees that the Acquisition Loan will be disbursed to
Borrower, from time to time, in periodic Acquisition Advances, but in no event
after the Borrowing Term (Acquisition Loan) has expired. In no event shall total
Advances of the Acquisition Loan exceed U.S. $4,400,000 and Lender shall have no
obligation to make an Acquisition Advance if the foregoing limit would be
exceeded.
(i) No Acquisition Advances will be made after the Borrowing
Term (Acquisition Loan) has expired unless Lender, in its sole discretion,
shall agree to make such Acquisition Advances.
(ii) Borrower shall use the proceeds of the Acquisition Loan
for the following purposes:
-14-
U.S. $2,500,000 Closing the Acquisition
U.S. $ 250,000 Closing, legal and other transaction
costs incurred in connection with the
Loan
U.S. $1,200,000 Operating costs shortfalls in connection
with the Project
U.S. $ 400,000 Working capital
U.S. $ 50,000 Interest reserve
On the Closing Date, Lender will fund U.S. $2,750,000 of the
Acquisition Loan to close the Acquisition and pay closing, legal and
other transaction costs incurred in connection with the Loan. Lender
shall disburse to Borrower the portion of the Acquisition Loan to be
used for working capital and operating costs shortfalls as requested
from time-to-time by Borrower in writing (but no more frequently than
once per calendar month) provided there does not then exist an Event
of Default or Incipient Default and such request, which shall be
certified correct by the Borrower, and which shall be in such form as
Lender shall reasonably prescribe, shall be accompanied by a detailed
list of obligations which Borrower desires to pay from such Advance
and, upon request of Lender, supporting documentation. The portion of
the Acquisition Loan set aside for interest reserve may be drawn by
Lender and applied against interest payments due and owing under the
Acquisition Loan upon the occurrence during the continuance of an
Event of Default and the absence of an Event of Default, only if
Lender has received written notice from Borrower within five (5) days
prior to the due date of a particular interest payment that Lender is
to make such interest payment from the interest reserve. At such time
as the interest reserve has been exhausted, any further interest
payments due under the Acquisition Loan shall be paid by Borrower from
Borrower's own funds.
3.3 All monies payable hereunder and under the Receivables Note, the
Acquisition Note and the other Documents shall be paid in United States Dollars.
3.4 The Rate Spread shall not reduce from 3% per annum to 2.5% per
annum on the Transition Date if, at any time between the date of this Agreement
and the Transition Date, there has occurred an Event of Default by reason of the
failure of Borrower to abide by the provisions of Sections 8.21 or 8.22 hereof
or there has occurred an Event of Default as described in Section 9.1(a) hereof,
notwithstanding the fact that such Events of Default may have subsequently been
cured.
3.5 All Advances made pursuant to this Agreement shall be deemed to
be a single Loan.
-15-
ARTICLE IV
----------
SECURITY FOR THE LOAN
---------------------
4.1 As security for Borrower's payment and Performance of all
Obligations owed to Lender, other than those arising out of the Environmental
Certificate, Borrower hereby grants to Lender a first and exclusive Security
Interest in all right, title, interest of Borrower in and to the (i) Receivables
Collateral assigned, transferred endorsed or delivered to Lender under this
Agreement or against which an Advance is made hereunder and (ii) Real Estate
Collateral. Lender's Security Interest in such Receivables Collateral and the
Real Estate Collateral shall be absolute, continuing and applicable to all
existing and future Advances and shall secure the repayment of the Loan and the
Performance of all Obligations throughout the Term of the Loan. At the time
each Advance is made hereunder, Borrower shall deliver to Lender (i) an executed
Assignment against which an Advance is requested; (ii) the original of each
Instrument and Purchaser Lease; and (iii) other documents which comprise such
Eligible Instruments. In addition, Borrower's payment and Performance of all
Obligations owed to Lender, other than those arising out of the Environmental
Certificate, shall be secured by the Mortgage.
4.2 If an Eligible Instrument which comprises a part of the
Receivables Collateral shall cease to qualify as an Eligible Instrument,
Borrower shall, within 30 days thereafter, pay to Lender an amount equal to that
portion of the Loan, together with interest, costs, and expenses, if any,
attributable to such ineligible Instrument or shall replace such ineligible
Instrument with another Eligible Instrument having a value of not less than that
portion of the Loan together with interest, costs, and expenses, if any,
attributable to the Eligible Instrument being replaced. No prepayment premium
shall be payable with respect to the payment to be made by Borrower pursuant to
the previous sentence as long as Borrower did not cause the Instrument to cease
qualifying as an Eligible Instrument. Concurrently with the delivery of the
replacement Eligible Instrument to Lender, Borrower shall deliver to Lender all
pertinent items (except for a "Request for Advance and Certification") which
Borrower is required to deliver to Lender in connection with an Advance pursuant
to Article V hereof, together with a Borrower's Certificate in form and
substance identical to Exhibit "D" hereto. Upon substitution of the replacement
-----------
Eligible Instrument for the ineligible Instrument, Lender will terminate its
Security Interest in and reassign and endorse to Borrower, without recourse or
warranty of any kind, the replaced ineligible Instrument, together with the
Purchaser Lease pertaining thereto, provided that no Event of Default or
Incipient Default has occurred and is continuing.
-16-
4.3 Borrower shall deliver or cause to be delivered to Lender, and
thereafter shall maintain in full force and effect according to the terms
thereof, the Guarantee duly executed by the Guarantor.
ARTICLE V
---------
ADVANCES
--------
5.1 Lender shall have no obligation to make any Advance hereunder
until all conditions precedent set forth in the following paragraphs and
elsewhere in this Agreement have been satisfied, at Borrower's sole expense, as
determined by Lender in its reasonable discretion, except as otherwise set forth
herein.
5.2 Borrower shall have delivered to Lender the following Documents,
duly executed in form and substance satisfactory to Lender (and, when required,
in recordable form):
(i) The Documents;
(ii) A permit from the Netherlands Antilles Central Bank with
respect to Borrower's incurring of and servicing the Acquisition Loan;
(iii) All documents required to effectuate the purposes of
paragraphs 8.12 and 8.21(ii) hereof;
(iv) A Nondisturbance Agreement which shall be filed and
recorded in such offices as Lender shall designate;
(v) UCC Financing Statements for filing and recording, if
appropriate, as necessary to perfect Lender's Security Interest in the
Receivables Collateral, Real Estate Collateral, and all other security for
the Performance of Borrower's Obligations which is subject to Article 9 of
the Uniform Commercial Code. Such Financing Statements shall be recorded
with, without limitation, the California Secretary of State and the Florida
Secretary of State;
(vi) A certificate of admeasurement for the Project together
with evidence satisfactory to Lender (which evidence shall be a
certification from a Netherlands Antilles civil notary) that Lender's
Mortgage is a lien upon the Real Property and Project in a first priority
position subject only to such matters as are acceptable to Lender;
-17-
(vii) A favourable opinion from Borrower's and Guarantor's
United States and Netherlands Antilles counsel as to such matters as Lender
may reasonably require;
(viii) A favourable opinion from Lender's Netherlands
Antilles counsel as to such matters as Lender may reasonably require; and
(ix) A budget and funding schedule with respect to the
advances of that portion of the Acquisition Loan identified for working
capital and operating shortfall purposes.
5.3 Not less than ten (10) Business Days before the date on which the
initial Advance is to be made, Borrower shall deliver or cause to be delivered
to Lender the following additional items:
(i) With respect to Borrower and Guarantor, certified
copies of their articles, certificates and agreements of general or limited
partnership or their articles of incorporation and by-laws (or their
equivalent under Netherlands Antilles law) (and all amendments thereto),
together with evidence that Borrower and Guarantor are duly organized,
validly existing, and in good standing under the laws of the jurisdiction
in which they are organized, and in each and every other jurisdiction where
the nature of their respective businesses require them to be so qualified;
(ii) With respect to Borrower and Guarantor, a copy of the
resolutions certified to be true and complete by the corporate secretary or
all of the general partners (as the case may be), authorizing the
execution, delivery and performance of the Documents, and evidencing the
authority of all Persons executing the Documents on behalf of Borrower and
Guarantor and such other Persons, and if Borrower or Guarantor or such
Persons are operating under a fictitious name, a copy of the recorded
certificate of fictitious name;
(iii) Evidence satisfactory to Lender that the Project
complies with all applicable laws, bylaws, rules and regulations and public
and private restrictions affecting the use of the Project and that the
Project is zoned for its intended use, which zoning shall be final and not
subject to challenge;
(iv) Prior to sale of any Time-Share Interest within the
United States, a copy of the registrations/consents to sell and the final
subdivision public reports/public offering statements/prospectuses and/or
approvals thereof required to be issued by or used in the Netherlands
Antilles, United States and other jurisdictions where Time-Share Interests
are or have been offered or sold,
-18-
together with all other approvals from regulatory agencies having
jurisdiction over the Project;
(v) Any covenants running with the land comprising the
Project, any covenants enforceable as equitable servitudes, the Project
Documents and advertising materials which have been or are being used by
Borrower in connection with the Project or the sale of Time-Share Interests
therein;
(vi) Copies of the insurance policies required pursuant to
paragraph 8.9 hereof;
(vii) Evidence that the Project is not located within a
"special flood hazard" area as such term is defined in the National Flood
Insurance Act of 1968, as amended and supplemented by the Flood Disaster
Protection Act of 1973, and in regulations, interpretations and rulings
thereunder;
(viii) With respect to a Receivables Advance, the items
described in Exhibit "E" hereto;
-----------
(ix) A schedule of completion of deferred maintenance as
respects the Project and schedule of the manner in which Borrower will fund
the Project owner's association operating shortfalls;
(x) UCC, tax lien, litigation and judgment searches under
the names of the Borrower, Guarantor, AK - St. Maarten, LLC and Project.
(xi) Copies of the forms of Instrument and Purchaser Lease
together with a copy of the purchase contract, and other documents used in
connection with the sale of the Time-Share Interests. The Purchaser Lease
shall be in the name of the Borrower as Lessor, shall be cross-defaulted
with the Instrument, shall permit the Lessor thereunder recover clear title
to the Time-Share Interests to which it relates upon the occurrence of an
Event of Default under the Purchaser Lease or the Instruments and shall
otherwise be in form and substance satisfactory to Lender. The Instrument
shall be in favor of the Borrower as payor, shall be cross-defaulted with
the Purchaser Lease and shall otherwise be in form and substance
satisfactory to Lender; and
(xii) Evidence as to the environmental condition of the
Project. In connection therewith, the Lender shall have the right to
require the Borrower to retain the services of a firm acceptable to the
Lender and knowledgeable in environmental matters to perform an
environmental investigation of the Project and of the surrounding area.
-19-
(xiii) Evidence that equity has been invested in Borrower in
an amount equal to U.S. $1,500,000, which equity shall not constitute the
same monies that were paid by Borrower in connection with the purchase of
the loan encumbering the Flamingo Beach Resort.
(xiv) Such other items as Lender requests which are
reasonably necessary to evaluate whether the request for the Advance
satisfied the requirements set forth herein;
5.4 No material adverse change shall have occurred in the
Project or Borrower's or any Guarantor's business or financial condition since
the date of the latest financial and operating statements given to Lender by or
on behalf of Borrower or any Guarantor. Lender shall be satisfied (in Lender's
sole and absolute discretion) with the results of Lender's physical inspection
of the Project.
5.5 There shall have been no material adverse change in the
warranties and representations made by Borrower or any Guarantor in the
Documents.
5.6 Neither an Event of Default nor an Incipient Default shall
have occurred and be continuing.
5.7 The interest rate applicable to the Advance (before giving
effect to any savings clause) will not exceed the maximum contract rate
permitted by the Applicable Usury Law.
5.8 Borrower has paid the entire Loan Fee to Lender.
5.9 Lender is satisfied, in its sole discretion, that Lender
will incur no adverse foreign tax consequences as a result of the making of the
Loan and the performance of its obligations under the Documents. Lender shall be
further satisfied, in its sole discretion, that the principal and interest
payments being made to Lender as respects the Loan and any other monies payable
to Lender under the Documents will not be subject to withholding or subject the
Lender to a withholding requirement.
5.10 Evidence satisfactory to Lender that Borrower has closed the
Acquisition, completed the foreclosure of the lien (against the Project) which
is the subject matter of the Acquisition and that Borrower owns fee simple title
to the Project (or as to that portion of the Project subject to the Master
Lease, the lessee's interest in such lease) subject only to the Permitted
Encumbrances.
5.11 Lender shall have no obligation to make any Advance until
the conditions specified in paragraphs 5.1 through 5.10 inclusive herein have
been
-20-
satisfied as determined by Lender. In the event the conditions specified in
Sections 5.1 through 5.10 hereof have not been satisfied as determined by Lender
in its reasonable discretion, on or before the Closing Date, Lender shall have
no further obligation to make the Loan and the entire Loan Fee shall
nevertheless be deemed earned by Lender in consideration for Lender's and
holding itself ready and willing to make the Loan upon the terms and conditions
set forth herein. Payment of the Loan Fee is in addition to Borrower's
obligations under Paragraph 8.16.
5.12 Advances shall be requested in writing on the Request for
Advance and Certification, in the form of the attached Exhibit "E-1," executed
--------------
by Borrower (or, if Borrower is a corporation or partnership, by those officers
or general partners, as the case may be, or agents of Borrower named in
authorizing resolutions of Borrower from time to time delivered to Lender and
which are in form and substance satisfactory to Lender).
5.13 Advances may be disbursed by checks, drafts or wire transfer
payable to Borrower; or, at the option of Lender after Borrower's written
request, to third parties, either severally or jointly with Borrower, for the
credit or benefit of Borrower. If Advances are made by wire transfer, Borrower
shall pay to Lender, Lender's usual and customary fee for wiring such funds.
Lender can withhold such fee from the Advance so made.
5.14 Although Lender shall have no obligation to make an Advance
unless and until all applicable conditions thereto set forth herein have been
satisfied, Lender may, at its sole discretion, make Advances before that time
without waiving or releasing any of the Obligations, but Borrower shall continue
to be required to strictly Perform all such Obligations.
5.15 On or before August 31, 1995, Borrower shall deliver to Lender a
survey of Real Property, reasonably satisfactory to Lender, showing that all of
the improvements constituted in the Project are located within the confines of
the Real Property. On or before September 15, 1995, Borrower shall deliver to
Lender evidence that Borrower has obtained a business license to operate within
the Netherlands, Antilles.
5.16 Prior to the making of a Receivables Advance, Borrower shall
deliver to Lender evidence that Borrower has qualified to do business within the
state of Florida together with an opinion, satisfactory in form and content to
Lender, from Borrower's Netherlands, Antilles counsel as to the sufficiency of
the consumer documents under Netherlands, Antilles law.
5.17 On or before July 31, 1995 and as a condition precedent to
Lender's obligation to make any Advance other than the initial Advance, Borrower
-21-
shall deliver to Lender a permit from the Netherlands Antilles Central Bank with
respect to Borrower's incurring of and servicing the Loan, in a form
satisfactory to Lender, or evidence satisfactory to Lender that such permit is
not required.
ARTICLE VI
----------
RESERVED
--------
ARTICLE VII
-----------
NOTE: MAINTENANCE OF BORROWING BASE;
------------------------------------
PAYMENTS: SERVICING AND COLLECTION
----------------------------------
7.1 In connection with the Receivables Loan:
(i) In no event shall the aggregate principal amount of the
Receivables Loan outstanding at any time exceed the Maximum Loan Amount and
in the event for any reason the aggregate principal amount of the
Receivables Loan does exceed the Maximum Loan Amount, then Borrower upon
demand, shall immediately make a principal payment to Lender in an amount
equal to such excess plus accrued and unpaid interest thereon.
(ii) If for any reason the aggregate principal amount of the
Receivables Loan outstanding as of the last Business Day of any month shall
exceed the then Borrowing Base, Borrower, upon demand, shall immediately
make to Lender a principal payment in an amount equal to such excess plus
accrued and unpaid interest thereon.
(iii) The Receivables Loan shall be evidenced by the Receivables
Note and shall be repaid in immediately available funds according to the
terms thereof and such provisions of this Agreement as are applicable.
7.2 In connection with the Acquisition Loan:
(i) In no event shall the total aggregate Advances of the
Acquisition Loan at any time exceed U.S. $4,400,000 and in the event for
any reason the total aggregate Advances of the Acquisition Loan exceed such
limit, then Borrower upon demand, shall immediately make a principal
payment to Lender in an amount equal to such excess plus accrued and unpaid
interest thereon.
-22-
(ii) The Acquisition Loan shall be evidenced by the Acquisition
Note and shall be repaid in immediately available funds according to the
terms thereof and such provisions of this Agreement as are applicable.
7.3 Borrower is not entitled to prepay, in whole or in part, the
Receivables Loan until the Opening Prepayment Date. Thereafter, if (i) Borrower
has paid or concurrently therewith is paying the Acquisition Loan and the
Incentive Fee in full and has paid or concurrently therewith is paying in full
all other obligations, and (ii) Borrower has given Lender at least 30 days prior
written notice of the prepayment of the Receivables Loan and has paid to Lender
at the time of prepayment a prepayment premium equal to a percentage, as set
forth below, of the then principal balance of the Receivables Loan, then
Borrower shall have the option to prepay the Receivables Loan in full, but not
in part, on any date an installment is due on the Receivables Note:
Period Premium
------ -------
Through the Second Anniversary Closed to Prepayment
Date of the last Receivables
Advance
After the Second Anniversary Date 3%
and through the Fourth Anniversary
Date of the last Receivables Advance
After the Fourth Anniversary Date 2%
and through the Sixth Anniversary
Date of the last Receivables Advance
After the Sixth Anniversary Date and 1%
through the period ending 30 days
prior to the Seventh Anniversary Date
of the last Receivables Advance
Within 30 days prior to the Seventh 0%
Anniversary Date of the last Receivables
Advance
-23-
If there should occur an acceleration of maturity following an Event
of Default and such occurrence results in prepayment of the Receivables Loan, a
prepayment premium will be required in the amount specified above; or if
occurring prior to the Opening Prepayment Date, Borrower shall pay to Lender
with the prepayment a prepayment premium equal to 5% the then principal balance
of the Receivables Loan being prepaid. A Purchaser shall be permitted to prepay
the amount owed on its Instrument without penalty. The Acquisition Loan may be
prepaid in part but not in whole prior to the payment in full of the Incentive
Fee, without penalty. The Acquisition Loan may be prepaid in whole at any time
after the payment in full of the Incentive Fee, without penalty. If there should
occur a casualty to or condemnation of the Project and such occurrence results
in a prepayment of the Receivables Loan, no prepayment premium shall be payable
in connection with such prepayment.
7.4 (a) Lockbox Agent, as agent for Lender, shall collect payments
on the Eligible Instruments used in making Borrowing Base computations or
otherwise constituting part of the Receivables Collateral and shall remit
them to Lender on the last Business Day of each and every month according
to the terms of the Lockbox Agreement; and Borrower shall immediately
forward all such payments received by it to Lockbox Agent for Lender.
However, the Obligation to make, or any requirement that Lender receives,
payments called for in the Documents shall not be deemed satisfied until
Lender actually receives such payments from Lockbox Agent. For the purpose
of determining the adequacy of such payments, Borrower will cause Servicing
Agent to furnish to Lender at Borrower's sole cost and expense, no later
than the tenth day of each month commencing with the first full calendar
month following the first Advance, a report meeting the following
requirements: (i) shows as of the end of the prior month with respect to
each Eligible Instrument which is used in making Borrowing Base
computations or otherwise constitutes part of the Receivables Collateral
(A) all payments received during the prior month on the Eligible
Instrument, allocated as between principal, interest, late charges, taxes,
and the like, (B) the opening and closing balances during the prior month
on each such Eligible Instrument, (C) present value of the cash flow (if
required by Lender) and (D) extensions, refinances, prepayments, and other
similar adjustments; and (ii) itemizes the Eligible Instrument which are
used in making Borrowing Base computations or otherwise constitute part of
the Receivables Collateral to show delinquencies of 30, 60, 90 and in
excess of 90 days. On the basis of such reports, Lender will compute the
amount, if any, which was due and payable by Borrower on the last day of
the preceding month and will notify Borrower as soon as possible of any
amount due. If such reports are not timely received, Lender may estimate
the amount which was due and payable; and, in such event, Borrower shall
pay upon demand the amount estimated by Lender to be due and payable. If
payment is made on the basis of Lender's estimate, and reports required by
this
-24-
paragraph are thereafter received by Lender, the estimated payment amount
shall be adjusted by an additional payment or a refund to the correct
amount, as the reports may indicate; such additional amount to be paid by
Borrower upon demand and such refund to be made by Lender within five
Business Days after receipt by Lender of a written request therefor by
Borrower. In addition, at each calendar quarter, Borrower shall deliver to
Lender a current list of the names addresses and phone numbers of the
Purchasers related to Eligible Instruments.
(b) Subject to the following sentence, FPSI shall act as the
Servicing Agent during the Term. Lender, subject to any restriction
contained in the Services and Fees Agreement, the Servicing Agreement or
the Lockbox Agreement, may at any time and from time to time in its
discretion substitute a successor or successors to any Servicing Agent or
Lockbox Agent acting in such capacity under the Services and Fees
Agreement, the Servicing Agreement and Lockbox Agreement, if the Servicing
Agent or Lockbox Agent is not satisfactorily performing its respective
obligations thereunder. In the event Lender substitutes a successor
Servicing Agent or Lockbox Agent pursuant to the provisions of this
paragraph, Borrower shall have the right to approve the identity of such
successor Servicing Agent or Lockbox Agent; provided that there does not
-------- ----
then exist an Event of Default or an Incipient Default and further provided
------- --------
that Borrower shall not unreasonably withhold or unduly delay its consent.
----
7.5 Subject to the Lender's rights upon the occurrence of an Event of
Default, all proceeds from the Receivables Collateral (except payments which are
identified by Purchasers as tax or maintenance and other assessment payments and
are required to be so treated by Borrower) during the Term hereof shall be
applied first to the payment of all costs, fees and expenses required by the
Documents to be paid by Borrower, second to accrued and unpaid interest due on
the Receivables Note, third to the unpaid principal balance of the Receivables
Note, and then to the other Obligations in such order and manner as Lender may
determine. Unless and until all such Obligations have been Performed, Borrower
shall have no right to any portion of the proceeds of the Receivables
Collateral.
7.6 Whether or not the proceeds from the Receivables Collateral shall
be sufficient for that purpose, Borrower shall pay when due all payments
required to be made pursuant to the Receivables Note, Acquisition Note and other
Documents; and any and all amounts payable by Borrower under the Receivables
Note, Acquisition Note and other Documents shall be paid without notice (except
as otherwise expressly provided therein), demand, counterclaim, set-off,
deduction, recoupment or defense, and without abatement, suspension, deferment,
diminution or proration by reason of
-25-
any circumstance or occurrence whatsoever, Borrower's Obligation to make such
payments being absolute and unconditional.
7.7 All payments to be made by Borrower under the 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 on demand in addition to the
other payments provided for in the Documents to be made by it. Borrower's
Obligation to pay Impositions shall likewise include the Obligation to pay any
increase to Lender in federal, state, or local income tax as a result of
inclusion in income of Lender of any amount required by this paragraph to be
paid to or for Lender.
ARTICLE VIII
------------
BORROWER'S ADDITIONAL REPRESENTATIONS.
--------------------------------------
WARRANTIES AND COVENANTS
------------------------
8.1 (a) Borrower is, and will continue to be during the Term hereof,
a limited partnership with its capital divided into shares, duly organized,
validly existing and in good standing under the laws of the Netherlands
Antilles and is, and will continue to be during the Term hereof, qualified
to do business and in good standing in each jurisdiction in which it is
selling Time-Share Interests or where the location or nature of its
properties or business makes such qualification necessary (except where
failure to do so would not adversely affect Lender's ability to realize
upon the Receivables Collateral, Real Estate Collateral or any other
security for the Performance of the Obligations or materially adversely
affect the business or financial condition of Borrower or the ability of
Borrower to complete Performance of the Obligations). Borrower has, and
will continue to have, powers adequate for making and Performing under the
Documents, for undertaking and Performing the Obligations, and for carrying
on its business and owning its property. Guarantor is a general partner of
Borrower and is a corporation with limited liability, duly organized,
validly existing and in good standing under the laws of the Netherlands
Antilles and is, and will continue during the Term hereof, qualified to do
business and in good standing in each jurisdiction where Borrower is
selling Time-Share Interests or where the location or nature of the
properties or business of Guarantor make such qualification necessary
(except where failure to do so would not adversely affect Lender's ability
to realize upon the Receivables Collateral, Real Estate Collateral or any
other security for the Performance of the Obligations or materially
adversely affect the business or financial condition of Borrower or the
ability of Borrower to complete Performance of the Obligations).
(b) Borrower has good right and power to grant the Security
Interest in the Receivables Collateral, Real Estate Collateral and other
security
-26-
for the Performance of the Obligations and to execute and deliver this
Agreement and the other Documents and to Perform the Obligations. All
action necessary and required by Borrower's and Guarantor's organization
documents and all applicable laws for the obtaining of the Loan and for the
execution and delivery of this Agreement and all other Documents executed
and delivered in connection with the Loan has been duly and effectively
taken; and, to the best of Borrower's knowledge, this Agreement is and
shall be, and all other Documents are and shall be, legal, valid, binding
and enforceable against Borrower in accordance with their respective terms,
other than as such enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium, or similar laws relating to or
affecting the rights of creditors generally or general principles of equity
(except to the extent that such laws, rights, remedies or principles are
waivable by Borrower and have been waived in the Documents). To the best of
Borrower's knowledge, the Documents do not violate the Applicable Usury
Law or any other usury law applicable to Borrower. The execution, delivery
and Performance of the provisions of this Agreement and all the other
Documents will not violate, constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
properties or assets or Borrower pursuant to any provision of: any law,
regulation, judgment, decree, order, franchise or permit applicable to
Borrower or Guarantor, Borrower's or Guarantor's charter documents; or any
contract or other agreement or instrument to which Borrower or Guarantor is
a party or by which Borrower or Guarantor or Borrower's or Guarantor's
properties or assets are bound. No consent of any government or agency
thereof, or any other person, firm or entity not a party hereto, is or will
be required as a condition to the execution, delivery, Performance or
enforceability of the Documents.
8.2 (a) 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 or
Guarantor which, if adversely determined, might adversely affect Lender's
ability to realize upon the Receivables Collateral, Real Estate Collateral
or any other security for the Performance of the Obligations, or materially
adversely affect the Project, the business or financial condition of
Borrower or Guarantor, of the ability of Borrower to complete Performance
of the Obligations; or which questions the validity of the Documents.
(b) If Borrower or a Guarantor becomes a party to any action,
litigation or other proceeding which asserts a material claim against
Borrower or a Guarantor, or Borrower becomes the subject of an
investigation by a governmental agency or administrative body with respect
to the Project, then Borrower shall within 10 days after it obtains
knowledge thereof notify Lender
-27-
of such action, litigation, proceeding or investigation and the particulars
thereof. Thereafter, if requested by Lender, Borrower shall report to
Lender with respect to the status of such matter and the particulars
thereof.
8.3 (a) Except as set forth in Exhibit "F" hereto, Borrower has sold
-----------
or has offered for sale Time-Share Interests which generate Eligible
Instruments only in the Netherlands Antilles and all sales have been made
at the Project or in the private residences of potential Purchasers. Before
it sells or offers for sale Time-Share Interests outside the NetherLands
Antilles and those listed in Exhibit "F" hereto, Borrower shall promptly
-----------
notify Lender and provide Lender with evidence that Borrower has complied
with all laws of such jurisdiction governing the proposed conduct of
Borrower.
(b) Except for violations which do not individually or in the
aggregate affect Lender's ability to realize upon the Receivables
Collateral, the Real Estate Collateral or any other security for the
Performance of the Obligations or do not materially adversely affect the
business or financial condition of Borrower or the ability of Borrower to
complete Performance of the Obligations, Borrower has complied, and will
comply, with all applicable laws and regulations of the United States and
the Netherlands Antilles and every state, county and municipal jurisdiction
in which Time-Share Interests have been sold or offered for sale.
(c) Without limiting the generality of any other representation
or warranty contained herein, Borrower will not violate any private
covenant or restriction or any zoning, use or similar law, ordinance or
regulation affecting the use or occupancy of the Project, the violation of
which could have a material adverse effect on Lender's ability to realize
upon the Receivables Collateral, the Real Estate Collateral or any other
security for the Performance of the Obligations or materially adversely
affect the business or financial condition of the Borrower or the ability
of Borrower to complete Performance of the Obligations.
8.4 (a) Each Instrument at the time it is assigned to Lender in
connection with the Loan and this Agreement shall be an Eligible
Instrument. At the time such Instrument is assigned to Lender, Borrower
shall have performed all of its obligations to Purchasers, and there shall
be no executory obligations to Purchasers to be Performed by Borrower
(other than the obligations of Lender under the Purchaser Lease in favor of
such Purchaser). Borrower further warrants and guarantees the value and
enforceability of the Receivables Collateral.
-28-
(b) Borrower shall not, without the prior written consent of
Lender, cancel or materially modify, or consent to or acquiesce in any
material modification to, or solicit the prepayment of, any Eligible
Instrument used in making Borrowing Base computations or which otherwise
constitutes part of the Receivables Collateral; or waive the timely
performance of the obligations of the Purchaser thereunder. Borrower shall
not pay or advance directly of indirectly for the account of any Purchaser
any sum owing by the Purchaser under any of the Eligible Instruments used
in making Borrowing Base computations or which otherwise constitute part of
the Receivables Collateral.
(c) Borrower at all times shall fulfill, and cause its
Affiliates, agents and independent contractors at all times to fulfill, all
obligations to Purchasers under all Eligible Instruments which are used in
making Borrowing Base computations or otherwise constitute part of the
Receivables Collateral.
(d) True and complete copies of the Project governing documents,
the purchase contract, Purchaser Lease, the Instrument, advertising
materials and other documents and exhibits thereto which have been and are
being used by Borrower in connection with the Project and the sale or
offering for sale of Time-Share Interests therein have been delivered to
Lender. Such documents are the only ones which have been used in connection
with the Project and the sale of Time-Share Interests therein. Borrower
shall not, without the prior written consent of Lender, cancel or
materially modify any such documents, which consent will not be
unreasonably withheld. Borrower shall Perform all of its obligations under
the Project governing documents.
(e) All off-site roads and other off-site improvements contained
within the Project (other than private easements) will have been dedicated
to and accepted by the responsible governmental authority or utility prior
to the initial Receivables Advance. Borrower shall maintain or cause to be
maintained in good condition and repair all amenities, common areas and
private easements which have been promised or represented as being
available to Purchasers and all off-site roads and off-site improvements
which have not been dedicated to or accepted by the responsible
governmental authority or utility.
(f) RESERVED.
--------
(g) Borrower owns the furnishings in the Project Units and all
the common areas in the Project and other amenities which have been
promised or represented as being available to Purchasers, free and clear of
liens and security interests, except for the Permitted Encumbrances and the
Mortgage; and no part of the Project is subject to partition by owners of
Time-
-29-
Share Interests. Borrower will maintain or cause to be maintained in good
condition and repair all common areas in the Project and other amenities
which have been promised or represented as being available to Purchasers.
Borrower will maintain a reasonable reserve to assure compliance of the
terms of the foregoing sentence.
(h) The common areas and amenities and the streets and other
off-site improvements contained within the Project are free and clear of
all liens or other encumbrances of third parties, subject to the Permitted
Encumbrances. Borrower agrees that such common areas, amenities, streets
and other off-site improvements will not, during the Term hereof, be
encumbered.
8.5 LENDER DOES NOT ASSUME AND SHALL HAVE NO RESPONSIBILITY,
OBLIGATION OR LIABILITY TO PURCHASERS, LENDER'S RELATIONSHIP BEING SOLELY THAT
OF A CREDITOR WHO HAS TAKEN, AS SECURITY FOR INDEBTEDNESS OWNED TO IT, A
COLLATERAL ASSIGNMENT FROM BORROWER OF INSTRUMENTS. EXCEPT AS REQUIRED BY LAW,
OR TO THE EXTENT NECESSARY IN ORDER FOR BORROWER TO OBTAIN A PERMIT TO SELL
TIME-SHARE INTERESTS IN A PARTICULAR JURISDICTION, BORROWER SHALL NOT, AT ANY
TIME, USE THE NAME OF OR MAKE REFERENCE TO LENDER WITH RESPECT TO THE PROJECT,
THE SALE OF TIME-SHARE INTERESTS OR OTHERWISE, WITHOUT THE EXPRESS WRITTEN
CONSENT OF LENDER.
8.6 Borrower shall undertake the collection of amounts delinquent
under each Eligible Instrument which is used in making Borrowing Base
computations or otherwise constitutes part of the Receivables Collateral, shall
bear the entire expense of such collection work, and shall diligently and timely
do such work respecting collection, including forfeiture or foreclosure
proceedings. Lender shall have no obligation to undertake any collection,
eviction or foreclosure action against the obligor under any Eligible Instrument
or to otherwise realize upon any Eligible Instrument.
8.7 Borrower shall maintain in a secure place in its offices at the
address specified below proper and accurate books, records, ledgers,
correspondence and other papers relating to the Receivables Collateral, Real
Estate Collateral and other security for the Performances of the Obligations.
Lender may notify the appropriate Purchasers of the existence of Lender's
interest as assignee in the Receivables Collateral and request from such
Purchasers any information relating to the Receivables Collateral. Borrower
shall cooperate with Lender in giving such notice and will do so under its
letterhead if requested. Borrower's chief executive
-30-
office is as set forth in Section 11.5 hereof. Borrower will not change its
chief executive office without giving Lender thirty (30) days prior written
notice of such contemplated change. Borrower has not operated under any names or
fictitious names other than Royal Palm Beach Club during the previous six (6)
years. Borrower will not change its name or operate under any fictitious names
without first giving Lender thirty (30) days prior written notice.
8.8 Borrower shall not, without the prior written consent of Lender:
(i) sell, convey, pledge, hypothecate, encumber or otherwise transfer any
security for the Performance of the Obligations; or (ii) permit or suffer to
exist any liens, security interests or other encumbrances on any security for
the Performance of the Obligations, except with respect to either (i) or (ii)
for the Permitted Encumbrances and liens and security interests expressly
granted to Lender.
8.9 Borrower shall obtain before funding, shall maintain during the
Term of the Loan, and shall deliver to Lender evidence of such insurance,
written by such insurers, and in such forms and such amounts, as Lender may
reasonably require.
8.10 (a) This Agreement and the other Documents, certificates,
financial statements, tax returns (including without limitation, the tax
returns of Borrower and Guarantors) and written materials furnished to
Lender by or on behalf of Borrower in connection with the transactions
contemplated herein do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact known to
Borrower which materially adversely affects or in the future may (so far as
Borrower can now foresee) materially adversely affect the Receivables
Collateral or the Real Estate Collateral or any other security for the
Performance of the Obligations or the business or financial condition of
Borrower or the Project which has not been set forth in this Agreement or
the other Documents, certificates, financial statements or written
materials furnished to Lender in connection with the transactions
contemplated herein.
(b) The fact that Lender's representatives may have made certain
examinations and inspections or received certain information pertaining to
the Receivables Collateral or the Project and the proposed operation
thereof does not in any way affect or reduce the full scope and protection
of the warranties, representations and Obligations contained herein, which
have induced Lender to enter into this Agreement.
8.11 (a) Borrower shall maintain a standard, modern system of
accounting and shall keep and maintain all books and records in accordance
with generally accepted accounting principles, applied on a consistent
basis.
-31-
(b) On or before the tenth day of each month, Borrower shall
furnish or cause to be furnished to Lender (i) the reports of the Servicing
Agent and Borrower required pursuant to paragraph 7.4 hereof and (ii) a
sales report for the prior month showing the number of sales of Time-Share
Interests and the aggregate dollar amount thereof, including down payments.
(c) Borrower shall furnish or cause to be furnished to Lender,
as soon as the same are available, and in any event within 120 days after
the end of each fiscal year and within 30 days after the end of each
interim quarterly fiscal period of the subject, a copy of the current
financial statements of Borrower, and within 120 days after the end of each
fiscal year of the subject, current financial statements of the Guarantor
and Project's owners association (the "Association"). Such financial
statements shall contain a balance sheet as of the end of the relevant
fiscal period and statements of income and cash flows for such fiscal
period (together, in each case, with the comparable figures for the
corresponding period of the previous fiscal year, if available), all in
reasonable detail, prepared in accordance with generally accepted
accounting principles consistently applied throughout the period involved
and with prior periods. All annual financial statements of Borrower
required pursuant hereto shall be audited by a certified public accountant
acceptable to Lender, and shall be certified to by said certified public
accountant. The annual financial statements of the Association required
pursuant hereto for first fiscal year ending after the Closing Date shall
show the results of the operations of the Association from July 6, 1995
through the end of such fiscal year and shall be audited by certified
public accountants acceptable to Lender, and shall be certified to by said
certified public accountant. All subsequently delivered annual financial
statements of the Association shall be reviewed by certified public
accountants; provided, however, that upon the giving of written notice by
-------- -------
Lender to each of the Borrower and the Association, the annual financial
statements of the Association thereafter supplied to Lender (commencing
with the fiscal year ending at least 30 days beyond the giving of such
notice) shall be audited by a certified public accountant and shall be
certified to by said certified public accountant. All annual financial
statements of Guarantor shall be reviewed by a certified public accountant;
provided, however, that upon the giving of written notice by Lender to each
-------- -------
of Borrower and Guarantor, the annual financial statements of Guarantor
thereafter supplied to Lender (commencing with the fiscal year ending at
least 30 days beyond the giving of such notice) shall be audited by a
certified public accountant and shall be certified to by said certified
public accountant. In addition to the foregoing, all financial statements
required pursuant hereto shall be certified correct by the individual who
is the subject of such statements, or the chief financial officer or
general
-32-
partner, as the case may be, of the subject of such statements. The
financial statements of Borrower shall also contain in reasonable detail a
statement of income and expenses covering the operation of the Project.
Together with such financial statements, Borrower shall deliver to Lender a
certificate signed by the chief financial officer or managing general
partner, as the case may be, of Borrower stating that to the best of his
knowledge, after inquiry, there exists no Event of Default and no
condition, event or act which, with notice or lapse of time or both, would
become an Event of Default or, if any such Event of Default or any such
condition, event or act exists, specifying the nature and period of
existence thereof and what action Borrower proposes to take with respect
thereto. Together with such financial statements, Borrower shall also
deliver to Lender a certificate of its chief executive officer certifying
that Borrower is in compliance with all Applicable Environmental Laws or in
the event of noncompliance, specifying the nature and period of the
existence of such noncompliance.
(d) Upon written request of Lender, Borrower shall deliver to
Lender from time to time, as available, and promptly upon amendment or
effective date, current price lists, sales literature,
registrations/consents to sell, final public reports/public offering
statements/prospectuses, and other items requested by Lender which relate
to the Project.
(e) So long as the same shall be pertinent to the Loan, the
Project, the documents or any transactions contemplated therein, Borrower
shall at its expense (i) permit Lender and its representatives at all
reasonable times to inspect, audit and copy, as appropriate, the Project,
Borrower's facilities, activities, books of account, logs and records; (ii)
cause its employees, agents and accountants to give their full cooperation
and assistance in connection with any such visits of inspection or
financial conferences; and (iii) make available such further information
concerning its business and affairs as Lender may from time to time
reasonably request.
(f) Borrower shall annually submit to Lender within 45 days
after each is available proposed annual maintenance and operating budgets
for the Project, certified to be adequate by Borrower and a statement of
the annual assessment to be levied upon the Purchasers.
(g) Borrower shall cause to be delivered to Lender as soon as
available, and in any event no later than forty-five (45) days following
its filing with the Internal Revenue Service, the signed income tax returns
for each Guarantor for the fiscal year then ended, as filed with the
Internal Revenue Service, together with all schedules thereto; provided,
that in the event a Guarantor obtains an extension of the date for filing
such tax returns, Borrower
-33-
shall cause to be delivered to Lender a signed copy of such extension
within fifteen (15) days following the filing deadline for such return in
the absence of such extension.
(h) Within sixty (60) days following the Closing Date,
Borrower shall deliver to Lender internally prepared financial statements
of the Association, current to within sixty (60) days prior to the
delivery, which statements shall be in reasonable detail, prepared in
accordance with generally accepted accounting principles consistently
applied, include a balance sheet, statement of income and statement of cash
flows and be certified correct by the Borrower. Within sixty (60) days
following the Closing Date, Borrower shall also deliver to Lender a current
operating budget for the Association which budget shall be certified
current by Borrower.
8.12 Borrower shall cause any and all indebtedness owed by Borrower
or secured by the Project to be subordinated to the Obligations pursuant to
subordination agreements satisfactory to Lender in form and substance.
8.13 Borrower shall not, without Lender's prior written consent: (i)
(other than the sale of Time-Share Interests in the ordinary course of
Borrower's business or the rental of condominium units in the Project in the
ordinary course of Borrower's business) sell, lease, transfer or dispose of its
all or substantially all of its assets to another entity; or (ii) dissolve or
liquidate, or merge or consolidate with or into any other entity, transfer to
any person or entity, the right to control, Borrower or Guarantor, turn over the
management or operation of Borrower or Guarantor to any other person or entity,
or permit any of the foregoing to occur with respect to Borrower or Guarantor.
Borrower shall have the right to retain a third-party management company to
manage the operation of the Project, provided that Lender has first approved the
identity of such management company. Lender hereby approves the management of
the Project by RMI - Royal Palm C.V.o.a, an Affiliate of Borrower.
8.14 Borrower and Guarantor are not in default of any payment on
account of indebtedness for borrowed money or of any repurchase obligations in
connection with a receivables purchase financing, or in violation of or in
default under any material term in any agreement, instrument, order, decree or
judgment of any court, arbitration or governmental authority to which it is a
part or by which it is bound.
8.15 Borrower and Guarantor have filed all tax returns and paid all
taxes, assessments, levies and penalties, if any, in respect thereof required to
be filed by it or paid by it to any governmental or quasi-governmental
authority. All real estate taxes and assessments have been paid which are due
and owing in connection with the common areas and the Project and other
amenities which have been promised or
-34-
represented as being available to Purchaser for use by them. Borrower shall use
its best efforts to provide to Lender not more than 30 days after such taxes and
assessments would become delinquent if not paid evidence that all taxes and
assessments on the Project and common areas have been paid in full.
8.16 Borrower shall pay to Lender on demand all reasonable
out-of-pocket costs and expenses incurred or to be incurred by Lender or its
counsel in connection with the initiation, documentation and closing of the
Loan, the making of Advances hereunder, the administration of the Loan, the
protection of the security for the Performance of the Obligations, or the
enforcement of the Obligations against Borrower or any Guarantor (including,
without limitation, travel costs, all charges for consumer credit reports and
UCC, tax lien, judgment and litigation searches, all revenue and documentary
stamp and intangible taxes, and all fees and expenses of the Servicing Agent and
Lockbox Agent to perform the services contemplated hereunder and under the terms
of the Services and Fees Agreement, the Servicing Agreement and Lockbox
Agreement, respectively). Borrower shall pay to Lender a loan fee (the "Loan
Fee") in the amount of Xxx Xxxxxxx Xxxxx-Xxxx Xxxxxxxx xxx XX/000 Xxxxxx Xxxxxx
Dollars (U.S. $144,000.00), which fee was earned by Lender, in consideration of
Lender holding itself ready, willing and able to make the Loan upon the terms
and conditions set forth herein. Lender acknowledges the receipt of a deposit in
the amount of U.S. $20,000 which shall be credited against the Loan Fee at the
closing. An additional U.S. $74,000 of the Loan Fee shall be due and payable
concurrently with the making of the first Advance and may be withheld from the
Advance so made. The balance of the Loan Fee shall be due and payable on the
earlier of (i) August 31, 1995 or (ii) concurrently with the making of the first
Receivables Advance and may be withheld from the Advance so made. In the event
the Loan does not close on or before the Closing Date, as such date may be
extended by Lender, other than due solely to the default of Lender; (i) the
entire Loan Fee shall nevertheless be deemed fully earned by Lender in
consideration for Lender's holding itself ready and willing to make the Loan
upon the terms and conditions set forth herein and shall be due and payable upon
demand and (ii) Lender shall have no further obligation to make the Loan. Lender
acknowledges the receipt of a U.S. $3,000 application fee which has been earned
by Lender and shall not be applied against the Loan Fee. lender shall act as
custodian for purposes of holding Eligible Instruments and Borrower shall pay to
Lender on demand, a custodial fee of Ten United States Dollars (U.S. $10.00) for
each Eligible Instrument so held by Lender, exclusive of Eligible Instruments
that are substituted for ineligible Instruments (provided that such custodial
fee was paid in connection with such ineligible Instrument) and exclusive of
Instruments that have been cancelled by the Purchaser or the Borrower.
Notwithstanding the foregoing, Borrower shall have the right to select an
independent custodian to hold Eligible Instruments on Lender's behalf and as
Lender's agent, so long as (i) Borrower pays all costs charged by such
-35-
independent custodian, and (ii) such independent custodian is approved in
advance, in writing by Lender.
8.17 Borrower shall INDEMNIFY, DEFEND AND HOLD HARMLESS, Lender, its
successors, assigns and shareholders (including corporate shareholders), and the
directors, officers, employees, agents and servants of the foregoing, from any
and all losses, costs, expenses (including, without limitation, court costs and
attorneys' fees), demands, claims, suits, proceedings (whether civil or
criminal), orders, judgments, penalties, fines and other sanctions arising from
or brought in connection with (i) the Project, the security for the Performance
of the Obligations, Lender's status by virtue of the Assignments, creation of
Security Interests, the terms of the Documents or the transactions related
hereto, or any act or omission of Borrower, the Servicing Agent or the Lockbox
Agent, or the employees or agents of any of them, whether actual or alleged,
(ii) any and all brokers' commissions or finders' fees or other costs of similar
type, or claims by any broker, agent or other party in connection with this
transaction (other than fees claimed owed by a broker, finder, or other party
with whom Lender has a specific agreement) and (iii) any liability which Lender
may have to withhold U.S. or foreign income or other taxes of Borrower from
payments received by the Lender as respects the Loan. On written request by
anyone covered by the above agreement of indemnity, Borrower shall 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 the indemnitee shall be a party, provided that such action or proceeding
shall result from, or grow or arise out of any of the events set forth in this
paragraph.
8.18 Borrower shall not directly or indirectly invest all or any part
of the proceeds of the Loan in any investment security subject to the margin
requirements of Regulation G of the Board of Governors of the United States
Federal Reserve System.
8.19 Borrower shall execute or cause to be executed all Documents and
do or cause to be done all acts necessary for Lender to perfect and to continue
the perfection of the Security Interest of Lender in the Receivables Collateral,
Real Estate Collateral, or the other security for the Performance of the
Obligations or otherwise to effect the intent and purposes of the Documents.
Borrower shall prosecute or defend any action involving the priority, validity
or enforceability of the Security Interest granted to lender; provided that, at
Lender's option, Lender may do so at Borrower's expense.
8.20 Borrower is fully familiar with all of the terms and conditions
of the Documents and is not in default thereunder. No act or event has occurred
which after notice and/or lapse of time would constitute such a default or an
Event of Default.
-36-
8.21 During the Term, Borrower shall not pay or make any
Distributions to its officers, partners, or Guarantor or to any relatives or
Affiliates of Borrower, of Guarantor or of any other of the foregoing. The
foregoing notwithstanding, on the condition that:
(i) There does not then exist an Event of Default or an
Incipient Default; and
(ii) Prior to the incurring of any obligation to make a
Distribution, Borrower has caused the proposed recipient of such
Distribution (the " Affiliated Party") to have entered into a Subordination
Agreement in form and substance satisfactory to Lender pursuant to which
the Affiliated Party agrees (A) that it shall not exercise any rights
against Borrower or against any of the collateral securing the Obligations
unless and until the date that all of the Obligations have been fully paid,
performed and discharged; (B) that any entitlement to a Distribution is and
shall be fully subordinated as to right and time of payment to the payment
in full of the Acquisition Loan and the Receivables Loan and (C) that upon
and during the continuance of an Event of Default or an Incipient Default,
no Distributions shall be permitted, made, demanded or accepted;
the following Distributions shall be permitted:
(x) Such Distribution is made to the partners of Borrower no
more frequently than quarterly in an amount sufficient for the payment of
federal and state income taxes payable by such partner with respect to a
tax year of Borrower (a "Tax Year") resulting from the inclusion in such
partners' taxable income of the partner's share of taxable income of
Borrower for that Tax Year, subject to reasonable assumptions as to the
marginal tax bracket to which the partners of Borrower generally are
subject (the "Tax Amount"). Notwithstanding the foregoing, if for any prior
Tax Year of the Borrower, the Borrower had a loss for tax purposes which,
under tax laws then in effect, would offset taxable income (which loss has
not been previously used to offset taxable income in accordance with this
sentence), then for purposes of determining the Tax Amount for the current
Tax Year, the taxable income of the Borrower for the current Tax Year shall
be reduced by the amount of such loss. On or about the fifth (5th) day
prior to each date on which estimated federal income tax payments are
required to be paid by the partners of Borrower, Borrower may make a
distribution to the partners which, together with prior distributions for
the Tax Year on account of the Tax Amount, shall not exceed the applicable
percentage (which shall be 25%, 50%, 75%, and 100% for the first, second,
third and fourth calendar quarters, respectively) of a
-37-
reasonable estimate of the Tax Amount. If, at the end of the Tax Year, the
aggregate estimated quarterly distributions exceed the actual Tax Amount
for such Tax Year, future quarterly tax distributions shall cease with
respect to the affected partners until such excess amount has been fully
recaptured or until the excess amount has been repaid by the affected
partners to the Borrower. Borrower shall be permitted to make a
Distribution under the provisions of this clause (x) notwithstanding the
fact that the Acquisition Loan is not then paid in full.
(x) Such Distribution is made in an amount equal to or less
than 100% of Borrower's Cash Flow or 100% of Borrower's Net Income,
whichever is less, reduced by the Distribution made under clause (x) above
and clause (xii) below, with respect to the period in which such
Distribution is to be made; provided however, that no Distribution shall be
-------- -------
permitted under this clause (xi) until such time as the Acquisition Loan
has been paid in full.
(xii) Such Distribution is made in an amount equal to or less
than 100% of Borrower's Cash Flow or 100% of Borrower's Net Income,
whichever is less, reduced by the Distribution made under clause (x) and
clause (xi) above, with respect to the period in which such Distribution is
made, the proceeds of which shall be used solely to satisfy principal and
interest (at a rate not exceeding 15% per annum) accruing on bonafide
indebtedness of the Borrower to an Affiliate arising by virtue of a loan
made by such Affiliate to Borrower. Distributions permitted under this
clause (xii) may be made prior to such time as the Acquisition Loan has
been paid in full.
8.22 Borrower hereby covenants and agrees as follows during the Term
hereof:
(a) As of the end of each fiscal quarter of Borrower, Borrower
shall maintain a net worth, calculated in accordance with GAAP of at least
U.S. $1,000,000. The foregoing covenant shall be tested quarterly beginning
with the quarter year ending December 31, 1995.
(b) Marketing Expenses associated with the marketing and sale
of Time-Share Interests shall not exceed 50% of Net Sales, determined
quarterly. Net Sales shall mean gross sales of Time-Share Interests during
such quarterly period reduced only by cancellations thereof, increased by
closing cost revenues. Marketing Expenses shall mean the aggregate of all
expenses incurred in the sale and marketing of Time-Share Interest,
including without limitation, all costs and expenses for advertising,
mailing, consumer premiums, referral and lead generation. The foregoing
covenant shall be tested quarterly, commencing December 31, 1995. Each of
the tests conducted as of the end of
-38-
December 31, 1995, March 31, 1996 and June 30, 1996 shall cover the period
from the Closing Date through the end of the relevant quarter. Commencing
with the test for September 30, 1996, and thereafter throughout the Term
hereof, the foregoing covenant shall be tested quarterly, on a rolling
twelve (12) month basis.
(c) Borrower's general and administrative expenses shall not
exceed 10% of Net Sales. The foregoing covenant shall be tested quarterly,
commencing December 31, 1995. Each of the tests conducted as of the end of
December 31, 1995, March 31, 1996 and June 30, 1996 shall cover the period
from the Closing Date through the end of the relevant quarter. Commencing
with the test for September 30, 1996, and thereafter throughout the Term
hereof, the foregoing covenant shall be tested quarterly, on a rolling
twelve (12) month basis.
(d) Borrower shall not permit the aggregate unpaid principal
balance of Delinquencies, as of the end of any three (3) consecutive
calendar months during the Term, to exceed three percent (3%) of the
aggregate then unpaid principal balance of all Eligible Instruments against
which a Receivables Advance has been made.
(e) Upon request by Lender, Borrower shall provide from time
to time such information as Lender may reasonably require to determining
compliance with the foregoing requirements.
8.23 Although responsibility for the payment of Impositions lies with
Borrower, as provided in Section 7.7, Borrower shall, throughout the Term, take
all steps necessary in order to avoid the imposition of a withholding tax
obligation under the United States Internal Revenue Code on the proceeds of
Receivables Collateral. Such steps shall include, without limitation, (i) the
qualification of the Borrower to conduct business within a state of the United
States and the maintenance of such qualification in good standing; (ii) the
maintenance by Borrower of bonafide office within such state, from which
Borrower shall conduct bonafide business activities with respect to Borrower's
operation, including, without limitation, the performance of marketing,
solicitation and other sales related activities associated with the sale of
Time-Share Units and the maintenance of certain coordinating, oversight and
decision making activities with respect to marketing, arranging for the
financing on the sale of Time-Share Units and supervision of the collection
activities with respect to the Instruments, and (iii) the providing to any
withholding agent, to Servicing Agent and to Lender, prior to the making of the
first Receivables Advance and prior to the commencement of each of Borrower's
tax years thereafter, a duly executed and completed copy of the United States
Internal Revenue Code Form 4224, Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a U.S.
-39-
Trade or Business in the United States, which shall be certified correct by the
Borrower. Lender shall have no responsibility for the accuracy of the
information set forth in the Form 4224. Concurrently with the delivery of the
form 4224 to the Servicing Agent and to Lender, Borrower shall deliver to the
Servicing Agent and to Lender a certification that Borrower is in compliance
with the provisions of clauses (i) and (ii) above.
8.24 If there occurs a material adverse change in the Project or
in the financial condition of Borrower or any Guarantor or in the Receivables
Collateral, the Real Estate Collateral or any other security for the Performance
of the Obligations, which change is not enumerated in paragraph 8.22 or 9.1,
Borrower will promptly provide Lender with assurance that neither the prospect
of performance of the Obligations nor Lender's security therefore is imperiled.
If Borrower fails to provide Lender with assurance satisfactory to Lender in its
reasonable discretion, such failure will be considered an Event of Default.
8.25 As additional consideration to Lender, Borrower shall pay
to Lender an incentive fee (the "Incentive Fee") equal to Xxx Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx Xxxxxx Dollars (U.S. $111,000.00) with respect to the Time-Share
Interest sold by Borrower in the Project. Such incentive fee shall be paid in
installments of Xxx Xxxxxxxx Xxxx Xxxxxxx Xxxxxxx-Xxx Xxxxxx Xxxxxx Dollars
(U.S. $1,976.00) per Time-Share Interest sold, (all as more fully provided in
the Supplemental Agreement), commencing with all sales occurring after the date
upon which the Acquisition Loan paid in full, and continuing until the entire
Incentive Fee is paid in full. Notwithstanding anything contained herein to the
contrary, the Incentive Fee is due and payable in full by Borrower on January 14
--
1998.
8.26 The Borrower is in compliance in all material respect with
all applicable federal, state or local environmental, health and safety statutes
and regulations. The Borrower has not filed any notice under any federal or
state law indicating past or present treatment, storage or disposal of a
hazardous waste or reporting a spill or release of a hazardous or toxic waste,
substance or constituent, or other substances into the environment. None of the
operations of Borrower are the subject of federal or state litigation or
proceedings involving, or any investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to, any improper
treatment, storage, recycling, disposal or release into the environment of any
hazardous or toxic substance, waste or constituent, or other substance. The
Borrower does not have any material contingent liability in connection with any
improper treatment, storage, recycling, disposal or release into the environment
of any hazardous or toxic substance, waste or constituent. None of the
operations of Borrower are subject to any judicial or administrative proceeding
alleging the violation of any federal, state or local environmental, health or
safety
-40-
statute or regulations. The Borrower does not transport any hazardous wastes,
substances or constituents.
8.27 Provided that Borrower has not then borrowed the Maximum Loan
Amount, Borrower shall not, during the Borrowing Term (Receivables Loan),
pledge, assign, or hypothecate any Eligible Instruments other than to Lender,
without Lender's prior written consent and without the execution by Lender and
any and all other lenders providing financing secured by Instruments of an
intercreditor agreement in form and substance satisfactory to Lender. After the
expiration of the Borrowing Term (Receivables Loan), Lender shall have the right
of first negotiation with Borrower in the event Borrower wishes to accept or
seek an offer from a third party to loan moneys to Borrower in exchange for a
pledge, assignment or hypothecation of any Instruments. In the event Borrower
desires to seek or obtain such an offer, Borrower shall first give Lender
written notice to that effect and give Lender the opportunity, within 10
Business Days thereafter, to issue a financing proposal to Borrower, before
Borrower enters into a binding agreement with such third party with respect to
such financing. Borrower shall have no obligation to accept any proposal made by
Lender with respect to such financing; provided that if Borrower obtains any
such financing from a lender other than Lender, any and all such lenders
providing financing secured by Instruments shall have entered into an
intercreditor agreement with Lender in form and substance satisfactory to
Lender.
8.28 All representations and warranties contained in this Agreement
are continuing and shall be deemed to be made and reaffirmed prior to the making
of each Advance under this Agreement.
8.29 The representations, warranties and covenants contained in this
Agreement shall be applicable to and binding upon Borrower during the Term
hereof, notwithstanding the fact that no Advances have yet been made hereunder.
ARTICLE IX
----------
DEFAULT
-------
9.1 The occurrence of any of the following events or conditions
shall constitute an Event of Default by Borrower under the Documents:
(a) Lender fails to receive from Borrower when due and payable
any amount which Borrower is obligated to pay on the Receivables Note or
Acquisition Note or any other payment due under the Documents; and such
failure shall continue for seven (7) days, except for the payment of the
final installment due under each of the Receivables Note and Acquisition
Note for which no grace period is allowed;
-41-
(b) any material representation or warranty of Borrower
contained in the documents or in any certificate furnished under the
Documents proves to be, in any material respect, false or misleading as of
the date deemed made;
(c) there is a default in the Performance of the Obligations set
forth in paragraphs 8.8, 8.9 or 8.13 hereof or Borrower knowingly violates
or suffers or permits the violation of any of the warranties or conditions
of the policies of insurance required under paragraph 8.9;
(d) there is a default in the Performance of the Obligations or
a violation of any term, covenant or provision of the Documents (other than
a default or violation referred to elsewhere in this paragraph 9.1) and
such default or violation continues unremedied (i) for a period of five
days after the giving of notice thereof to Borrower in the case of a
default or violation which can be cured by the payment of money alone or
(ii) in the case of any other default or violation, for a period of (A)
thirty (30) days after the giving of notice to Borrower, or (B) (in the
event such default is not capable of being cured within such thirty (30)
day period) for a period not exceeding sixty (60) days after the giving of
such notice provided Borrower is diligently and in good faith pursing such
cure;
(e) an "Event of Default," as defined elsewhere herein or in any
of the other Documents, occurs, or an act or event occurs under any of the
Documents which is not cured within applicable notice or grace periods,
whether or not denominated as an Event of Default, which expressly entitles
Lender to accelerate any of the Obligations or exercise its other remedies
upon the occurrence of an Event of Default hereunder;
(f) any material default by Borrower under any other agreement
evidencing, guaranteeing, or securing borrowed money or a receivable
purchase financing has occurred and there has been an acceleration of such
indebtedness or repurchase obligations, which accelerated repayment or
repurchase obligations are in excess of U.S. $100,000 in the aggregate;
(g) any final, non-appealable judgement or decree for money
damages or for a fine or penalty against Borrower which is not paid and
discharged or stayed within 30 days thereafter and when aggregated with
all other judgement(s) or decree(s) that have remained unpaid and
undischarged or not stayed for such period is in excess of U.S. $100,000;
-12-
(h) any party holding a lien or security interest in the
Receivables Collateral, Real Estate Collateral, or any other security for
the Performance of the Obligations or a lien on any common areas of other
amenities in the Project commences foreclosure or similar sale thereof;
(i) (i) Borrower or any Guarantor becomes insolvent or unable
to pay its debts when due; generally fails to pay its debts when due;
petitions for official moratorium, files a petition in any bankruptcy,
reorganization, winding-up or liquidation proceeding or other proceeding
analogous in purpose or effect relating to such entity; applies for or
consents to the appointment of a receiver, trustee or other custodian for
the bankruptcy, reorganization, winding-up or liquidation of such entity;
make an assignment for the benefit of creditors; or admits in writing that
it is unable to pay its debts; (ii) any court order or judgement is entered
confirming the bankruptcy or insolvency of Borrower or any Guarantor or
approving any reorganization, winding-up or liquidation of such entity or a
substantial portion of its assets; (iii) there is instituted against
Borrower or any Guarantor any bankruptcy, reorganization, winding-up or
liquidation proceeding or other proceeding analogous in purpose or effect
and the same is not dismissed within 90 days after the institution thereof;
or (iv) a receiver, trustee or other custodian is appointed for any part of
the Receivable Collateral, the Real Estate Collateral or any Project or all
or a substantial portion of the assets of Borrower or any Guarantor;
(j) Performance by Borrower or any Guarantor of any material
obligation under any Document or Guarantee, as the case may be, is rendered
unenforceable in any material respect, or any Guarantor repudiates,
rescinds, limits or annuls its Guarantee;
(k) There occurs an Event of Default under the Master Lease or
the Master Lease is terminated prior to the payment and performance in full
of all of the Obligations;
(l) Any party holding a mortgagee's or beneficiary's interest
under a mortgage or deed of trust or any other lien or security interest
on any portion of the Real Estate Collateral commences a foreclosure or
sale thereof;
(m) Borrower vacates or abandons the Real Estate Collateral;
(n) The whole or a material part (as determined in Lender's sole
but reasonable discretion) of the Real Property or Project is seized or
expropriated; or
-13-
(o) The survey to be delivered to Lender pursuant to Section
5.15 hereof indicates that less than all of the improvements constituted in
the Project are located within the confines of the Real Property.
9.2 At any time after an Event of Default has occurred and while it
is continuing, Lender shall have the right to do any one or more of the
following:
(a) cease to make further Advances;
(b) declare each (or either, at Lender's option) of the
Receivables Note and Acquisition Note, together with prepayment premiums
and all other sums owing by Borrower to Lender in connection with the
Documents, immediately due and payable without notice, presentment, demand
or protest, which are hereby waived by Borrower;
(c) with respect to the Receivables Collateral, (i) institute
collection actions against all Persons obligated thereon and in default
thereunder; (ii) enter into modification agreements and make extension
agreements with respect to payments and other performances; (iii) release
Persons liable for the payment and performance thereof or the securities
for such payment and performance; and (iv) settle and compromise disputes
with respect to payments and performances claimed due thereon, all without
notice to Borrower, without being called to account therefor by Borrower
and without relieving Borrower from Performance of the Obligations;
(d) in the event Lender has previously agreed that Borrower may
act as Servicing Agent, remove Borrower as Servicing Agent and substitute
as Servicing Agent such other Person as Lender shall designate; and
(e) proceed to protect and enforce its rights and remedies under
this Agreement, the Documents or any other 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.
The rights and powers granted pursuant to this paragraph are not
intended to limit the rights and powers granted elsewhere herein.
9.3 Notwithstanding anything in the 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 9.5 hereof.
-44-
9.4 (a) Pursuant to its rights under paragraph 9.2 hereof, following
an Event of Default, and subject to the terms and conditions hereof, Lender may
sell, assign and deliver the Receivables Collateral, or any part thereof, at
public or private sale, conducted in a commercially reasonable manner by an
officer, or agent of, or auctioneer or attorney for, Lender at Lender's place of
business or elsewhere, for cash, upon credit or future delivery, and at such
price or prices as Lender shall reasonably determine, and Lender may be the
purchaser of any or all of the Receivables Collateral so sold. Lender may, in
its reasonable discretion, at any such sale, restrict the prospective bidders or
purchasers as to number, nature of business and investment intention, and,
without limitation, may require that the persons making such purchases represent
and agree to the satisfaction of Lender that they are purchasing the Receivables
Collateral for their account, for investment, and not with a view to the
distribution or resale of any thereof. Lender shall have no obligation to delay
sale of any Receivables Collateral for the period of time necessary to permit
such Receivables Collateral to be registered for public sale under the
Securities Act of 1933, as amended, and any applicable state securities laws.
Private sales made without registration 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.
(b) Without prejudice to the right of Lender to make such sale
within such shorter period as may be reasonable under the circumstances,
foreclosure sale of all or any part of the Receivables Collateral shall be
deemed held pursuant to reasonable notice if held:
(i) 45 days after notice is given, based upon default
consisting of insolvency, bankruptcy or other default of a nature which
cannot be corrected by Borrower, or default for which no grace period is
specified herein; or
(ii) 60 days after notice of any other act, circumstance or
event which, if uncorrected, after expiration of any applicable grace
period, shall constitute a default hereunder.
Where any notice to Borrower and grace period thereafter is required under this
Agreement, such grace period shall be deducted from the 60 day notice of
foreclosure sale specified in item (ii) above, so that the maximum period
between notice to Borrower of any act, circumstance or event which, if
uncorrected after elapse of any applicable grace period, would constitute an
Event of Default and the foreclosure sale of the Receivables Collateral based
upon such Event of Default shall in no event be required to exceed 60 days.
-45-
(c) At any sale following an Event of Default, the Receivables
Collateral may be sold as an entirety or in partial interests. Lender shall
not be obligated to make any sale pursuant to any notice previously given.
In case of any sale of all or any part of the Receivables Collateral on
credit or for future delivery, the Receivables Collateral so sold may be
retained by Lender until the selling price is paid by the purchaser
thereof, but Lender shall not incur any liability in case of the failure of
such purchaser to take up and pay for the collateral so sold; and in case
of any such failure, such Receivables Collateral may again be sold under
and pursuant to and in compliance with the provisions hereof.
(d) In connection with sales made following an Event of Default,
Lender may, in the name and stead of Borrower or in its own name, make and
execute all conveyances, assignments and transfers of the Receivables
Collateral sold pursuant to this Agreement; and Lender is hereby appointed
Borrower's attorney-in-fact for this purpose. Nevertheless, Borrower will,
if so requested by Lender, ratify and confirm any sale or sales by
executing and delivering to Lender, or to such purchaser or purchasers, all
such instruments as may, in the judgment of Lender, be advisable for that
purpose.
(e) The receipt by Lender of the purchase money paid at any sale
made following an Event of Default shall be a sufficient discharge therefor
to any purchaser of the Receivables Collateral or any portion thereof, and
no such purchaser, after paying such purchase money and receiving such
receipt, shall be bound to see to the application of such purchase money or
any part thereof or in any manner whatsoever be answerable for any loss,
misapplication or nonapplication of any such purchase money, or any part
thereof, or be bound to inquire as to the authorization, necessity,
expediency or regularity of any such sale.
(f) Each purchaser at any sale following an Event of Default
shall hold the Receivables Collateral so sold absolutely free from every
claim or right of Borrower, including, without limitation, any equity or
right of redemption of Borrower, which Borrower hereby specifically waives
to the extent Borrower may lawfully do so. Lender, its employees and agents
shall after such sale be fully discharged from any liability or
responsibility in any matter relating to the Receivables Collateral and
such other security that is sold and resulting from any action or inaction
on the part of such purchaser or any successor-in-interest of such
purchaser.
9.5 The proceeds of any sale of all or any part of the Receivables
Collateral shall be applied in the following order or priorities: first, to the
payment of all reasonable costs and expenses of such sale, including, without
limitation,
-46-
reasonable compensation to Lender and its agents, attorneys' fees, and all other
reasonable 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 Documents; second,
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; and third, to the payment to Borrower, its
successors or assigns, or to whomsoever 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.
9.6 Lender may, at its option, and without any obligation to do so,
pay, perform and discharge any and all amounts, costs, expenses and liabilities
herein agreed to be paid or performed by Borrower if Borrower fails to do so
within 7 days following the giving of written notice of such failure; and for
such purposes Lender may use the proceeds of the Receivables Collateral and is
hereby appointed Borrower's attorney-in-fact. All amounts expended by Lender in
so doing or in exercising its remedies hereunder following an Event of Default
shall become part of the Obligations secured hereby, shall be immediately due
and payable by Borrower to Lender upon demand therefor, and shall bear interest
at the Overdue Rate from the dates of such expenditures until paid. Exercise by
Lender of its option under this paragraph will not cure any default of Borrower.
9.7 No remedy herein or in any other 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 hereunder, under any other Document or now or hereafter
existing at law or in equity. Notwithstanding anything herein to the contrary,
in any non-judicial, public or private sale or sales under the Uniform
Commercial Code or in any judicial foreclosure and sale of the Receivables
Collateral, the Receivables Collateral may be sold in any manner whatsoever not
prohibited by law. No delay or omission to exercise any right or power shall be
construed to be a waiver of any default or acquiescence therein or a waiver of
any right or power, and every such right and power may be exercised from time to
time and as often as may be deemed expedient. Lender's acceptance of any
performance due hereunder which does not comply strictly with the terms hereof
shall not be deemed to be a waiver of any right of Lender to strict Performance
by Borrower. Acceptance of past due amounts or partial payments shall not
constitute a waiver of full and timely payment of the Obligations. No Event of
Default, declaration of the unpaid principal of the Loan to be immediately due
and payable or exercise of any other right to remedy upon default shall stay,
waive, or otherwise affect Lender's right to receive payments on and other
proceeds of the Receivables Collateral.
-47-
9.8 Borrower, for itself and for all who may claim through or under
it, hereby expressly waives and releases all right to have the Receivables
Collateral or any other security for the Performance of the Obligations, or any
part thereof, marshalled on any foreclosure, sale or other enforcement hereof.
9.9 While an Event of Default exists, Borrower shall, on the request
of Lender, assemble the Receivables Collateral not already in Lender's
possession and make it available to Lender at a time and place reasonably
convenient to Lender.
9.10 In the event that Borrower at any time fails to do or perform
any act, or pay any amount, or take any action, when such performance, payment
or action is required hereunder (and, if applicable, following the lapse of any
grace or compliance period in which such payment, performance or action may be
taken by Borrower hereunder), then Lender may make such payment or cause such
performance or action to be taken, and all amounts expended by Lender in making
such payment or causing such performance or action to be taken, together with
all expenses incurred by Lender in connection therewith shall be immediately due
and payable by Borrower to Lender, the payment performance of which shall be an
Obligation hereunder, and shall be secured by the Receivables Collateral and
Real Estate Collateral. All such amounts expended by Lender in making such
payment or causing such performance or action to be taken, together with all
expenses incurred by Lender in connection therewith, shall bear interest at the
Overdue Rate from the date incurred by Lender until paid.
ARTICLE X
---------
POWER OF ATTORNEY
-----------------
For the purpose of enabling Lender to protect and preserve its
Security Interest in the Receivables Collateral and Real Estate Collateral and
its rights and remedies under this Agreement and the Documents, Borrower does
hereby constitute and appoint Lender, and its successors and assigns, to be
Borrower's true and lawful attorney-in-fact upon the occurrence of an Event of
Default, and during the continuance thereof, to perform any act, take any
action, execute and sign any document, statement, instrument or other writing,
and to do and perform any and all deeds and things in the name, place, and stead
of Borrower, which Lender in its discretion shall determine necessary or
required to protect and preserve its Security Interest in the Receivables
Collateral and Real Estate Collateral and other security for the Performance of
the Obligations and its rights and remedies under this Agreement and the
Documents, or which Borrower is required or obligated to perform under the terms
of this Agreement or the Documents.
-48-
ARTICLE XI
----------
CONSTRUCTION AND GENERAL RULES
------------------------------
11.1 All moneys payable hereunder or under the Documents shall be paid
to Lender at its address set forth below.
11.2 This Agreement and the other Documents exclusively and completely
state the rights and obligations of Lender and Borrower with respect to the
Loan. No modification, termination, variation, discharge or abandonment hereof
and no waiver of any of the provisions or conditions shall be valid unless in
writing and signed by duly authorized representatives of Lender and Borrower or
the successor, transfers or assigns of either, subject, however, to the
limitations on assignment herein by Borrower. This Agreement supersedes any and
all prior agreements or understandings, written or oral, between Borrower and
Lender (other than in the other Documents) concerning this transaction. Solely
with respect to enforcement of the Documents within the United States of America
and solely with respect to collateral located within the United States of
America, any conflict between the Mortgage and the Supplemental Agreement shall
be resolved in favor of the Supplement Agreement; provided, however, that the
Mortgage shall control and prevail over the Supplemental Agreement with respect
to the exercise by Lender of its remedies against Borrower within the
Netherlands, Antilles or against collateral located within the Netherlands,
Antilles.
11.3 The powers and agency hereby granted by Borrower are coupled with
an interest and are irrevocable and are granted as cumulative to the remedies
for collection of the indebtedness secured hereby provided by law.
11.4 This Agreement may be executed simultaneously in any number of
identical copies each of which shall constitute an original for all purposes.
Delivery of an executed counterpart of any Document by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart thereof. Any
party delivering an executed counterpart of any Document by telefacsimile shall
also deliver a manual executed counterpart, but the failure to deliver a manual
executed counterpart shall not effect the validity, enforceability or binding
effect of such Document.
11.5 Any notice required or permitted to be given hereunder shall be
in writing and shall be (i) personally delivered to the party being notified if
an individual or to an officer, general partner or member if a corporation,
partnership or limited liability company, (ii) transmitted by postage prepaid,
certified or registered mail (return receipt requested) or (iii) transmitted by
a nationally recognized overnight courier service such as Federal Express, to
such party at its address set forth below or such other address as the party
being notified may have otherwise designated in a
-19-
notice given as provided in this paragraph. Such notice shall be deemed to be
given and effective, unless actual receipt is expressly elsewhere specified
herein, upon the date of receipt or the date delivery is first attempted and
refused if transmitted by registered or certified mail, or by overnight courier
service, whichever shall first occur.
If to Borrower:
c/o Koar Group, Inc.
000 Xxxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
With copies to:
Xxx Xxxx III, Esq.
Xxxxxxxxx, Xxxxxxx & Xxxxx
The Xxxxxxx Building, 16th Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
and
Xxxx X. Xxxxxxxxx, Esq.
Jeffer, Mangels, Xxxxxx & Marmaro
Tenth Floor
2121 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
If to Lender:
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Vice-President - Group Counsel
With a copy to:
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Vice-President - Operation Management
11.6 All the covenants, promises, stipulations and agreements of
Borrower and all the rights and remedies of the Lender in this Agreement
contained
-50-
shall bind Borrower, and, subject to the restrictions on merger, consolidation
and assignment herein contained, 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 herein in whole or in part. Except as
may be expressly provided herein, no person or other entity shall be deemed a
third party beneficiary of this Agreement.
11.7 Subject to the provisions of Article IX hereof, if any one or
more of the provisions contained in this Agreement shall be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
11.8 Time is of the essence in the Performance of the Obligations.
11.9 All headings are inserted for convenience only and shall not
affect any construction or interpretation of this Agreement. The provisions of
this Agreement shall apply to the parties according to the context hereof and
without regard to the number or gender of words and expressions used herein.
Unless otherwise indicated, all references herein to clauses and other
subdivisions refer to the corresponding paragraphs, clauses and other
subdivisions of this Agreement; the words "herein", "hereof", "hereto",
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular paragraph, clause or other subdivision hereof; 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.
11.10 THIS AGREEMENT SHALL BE GOVERENED BY AND CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF ARIZONA, PROVIDED, HOWEVER, THAT THE INTERNAL LAWS OF
THE NETHERLANDS ANTILLES SHALL APPLY TO THE CREATION OF LIENS AND TO ANY
FORECLOSURE, FORECLOSURE SALE OR OTHER REMEDY WITH RESPECT TO THAT PORTION OF
THE REAL ESTATE COLLATERAL CONSISTING OF REAL PROPERTY. BORROWER HEREBY AGREES
THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR
INDIRECTLY OUT OF THE DOCUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT OF
ARIZONA, MARICOPA COUNTY DIVISION, OR THE UNITED STATES DISTRICT COURT OF
ARIZONA OR, IF LENDER INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING
COURTS, ANY COURT IN WHICH LENDER SHALL INITIATE SUCH ACTION, TO THE EXTENT SUCH
COURT HAS JURISDICTION. BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER IN
ANY OF SUCH COURTS, AND HEREBY
-51-
WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS
ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO
BORROWER AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO THIS
AGREEMENT. BORROWER WAIVES ANY CLAIM THAT PHOENIX, ARIZONA OR THE DISTRICT OF
ARIZONA IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE.
SHOULD BORROWER AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS,
COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY
LAW AFTER THE MAILING THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED BY LENDER AGAINST BORROWER AS DEMANDED OR PRAYED
FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF
FORUM FOR BORROWER SET FORTH IN THIS PARAGRAPH SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT, BY LENDER OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE
TAKING BY LENDER OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY
SUCH JUDGMENT OR ACTION. LENDER AND BORROWER ACKNOWLEDGE AND AGREE THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE DOCUMENTS OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX
ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY
SUCH CONTROVERSY SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.
/s/ JVM INITIAL
-------
/s/ JF INITIAL
-------
11.11 It is the intent of the parties hereto to comply with the
Applicable Usury Law. Accordingly, notwithstanding any provisions to the
contrary in this Agreement or in any of the other Documents in no event shall
this Agreement or the Documents require the payment or permit the collection of
interest in excess of the maximum contract rate permitted by the Applicable
Usury Law. If (i) any such excess of interest otherwise would be contracted
for, charged or received from Borrower or otherwise in connection with the
Obligations or (ii) the maturity of the Obligations is accelerated in whole or
in part, or (iii) all or part of the principal or interest of the Obligations
shall be prepaid, so that under any of such circumstances the amount of interest
contracted for, charged or received in connection with the Obligations would
-52-
exceed the maximum contract rate permitted by the Applicable Usury Law, then in
any such event (A) the provisions of this paragraph shall govern and control,
(B) neither Borrower nor any other person or entity now or hereafter liable for
the payment hereof will be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum contract rate permitted by the
Applicable Usury Law, (C) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal amount of the
Obligations of Borrower or refunded to Borrower, at Lender's option and (D) the
effective rate of interest will be automatically reduced to the maximum contract
rate permitted by the Applicable Usury Law. Without limiting the generality of
the foregoing, to the extent permitted by the Applicable Usury Law: (x) all
calculations of the rate of interest which are made for the purpose of
determining whether such rate would exceed the maximum contract rate permitted
by the Applicable Usury Law shall be made by amortizing, prorating, allocating
and spreading during the period of the full stated term of Obligations, all
interest at any time contracted for, charged or received from Borrower or
otherwise in connection with the Obligations; and (y) in the event that the
effective rate of interest on the Obligations should at any time exceed the
maximum contract rate permitted by the Applicable Usury Law, such excess
interest that would otherwise have been collected had there been no ceiling
imposed by the Applicable Usury Law shall be paid to Lender from time to time,
if and when the effective interest rate on the Obligations otherwise falls below
the maximum contract rate permitted by the Applicable Usury Law, to the extent
that interest paid to the date of calculation does not exceed the maximum
contract rate permitted by the Applicable Usury Law, until the entire amount of
interest which would have otherwise been collected had there been no ceiling
imposed by the Applicable Usury Law has been paid in full. Should the maximum
contract rate permitted by the Applicable Usury Law be increased at any time
hereafter because of a change in the law, then to the extent not prohibited by
the Applicable Usury Law, such increases shall apply to all the Obligations
regardless of when incurred; but, again to the extent not prohibited by the
Applicable Usury Law, should the maximum contract rate permitted by the
Applicable Usury Law be decreased because of a change in the law, such decreases
shall not apply to the Obligations regardless if resulting from an advance of
the Loan made after the effective date of such decrease.
11.12 In the event this Agreement or any of the Documents is signed
by more than one party as Borrower, the covenants, obligations, representations
and warranties of Borrower shall be joint and several as to all entities
constituting Borrower.
-53-
ARTICLE XII
-----------
SPECIAL PROVISIONS
------------------
12.1 Lender covenants and agrees that, notwithstanding anything to the
contrary herein or any in other Document, during the Term hereof it shall take
no action to disturb Purchasers in their use and possession of their Time-Share
Interests or otherwise to impair the rights and privileges of such Purchasers
under their Time-Share Interests or the governing documents of the Project so
long as such Purchasers are fulfilling their obligations under their respective
Instruments and the Purchaser Leases relating thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by Persons duly authorized on the day and year first above written.
"Lender"
FINOVA CAPITAL CORPORATION, a Delaware
corporation
By /s/ Xxxx Xxxxxx, III
--------------------------------------
Name: XXXX XXXXXX, III
Title: GROUP VICE PRESIDENT
"Borrower"
AKGI - ROYAL PALM C.V.o.a, a Netherlands
Antilles limited partnership with its
capital divided into shares
By: AKGI-Sint Maarten, N.V., a
Netherlands Antilles corporation
with limited liability
Its: Partner
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Its: MANAGING DIRECTOR
-----------------------------
X Check here to verify that Section
-----
11.10 has been initialed.
-54-
