EXHIBIT 10.8.7
LOAN AND SECURITY AGREEMENT
BETWEEN
LAKE TAHOE RESORT PARTNERS, LLC
AND
FINOVA CAPITAL CORPORATION
DATED AS OF APRIL 29, 1996
LOAN AND SECURITY AGREEMENT
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BY THIS LOAN AND SECURITY AGREEMENT entered into as of April 29, 1996,
FINOVA CAPITAL CORPORATION, a Delaware corporation ("Lender") and LAKE TAHOE
RESORT PARTNERS, LLC, a California limited liability company ("Borrower"),
hereby confirm and agree as follows:
ARTICLE I
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INTRODUCTION
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1.1 Borrower desires to obtain certain revolving lines of credit
from Lender, the proceeds of which shall be used for working capital purposes
and for purposes of paying and satisfying certain construction indebtedness
owing from Borrower to Lender.
1.2 Lender is willing to extend to Borrower certain revolving lines
of credit for the purposes stated in the preceding paragraph upon the terms and
conditions set forth herein.
ARTICLE II
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DEFINITIONS
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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.
"24-Unit Parcel" shall mean that parcel of real property located on
the southwest corner of U.S. Xxxxxxx Xx. 00 and Ski Run Boulevard, in South Lake
Tahoe, California, more fully described on the attached Exhibit "A".
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"186-Unit Parcel" shall mean that parcel of real property located on
the northeast corner of U.S. Xxxxxxx Xx. 00 and Ski Run Boulevard, in South Lake
Tahoe, California, more fully described on the attached Exhibit "B".
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"Advance" shall mean, collectively and individually, a Receivables
Advance and a Working Capital 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.
"Affiliate Debt Subordination Agreement" shall mean an agreement, in
such form as Lender shall prescribe, delivered to Lender pursuant to paragraph
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52(iii) hereof, as from time to time modified, replaced or restated.
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"Agreement" shall mean this Loan and Security Agreement, as from time
to time modified, extended, renewed, replaced or restated.
"AKGI" shall mean AKGI Lake Tahoe Investments, Inc., a California
corporation.
"Annexable Parcel" shall mean that parcel of real property located on
the southwest corner of U.S. Xxxxxxx Xx. 00 and Ski Run Boulevard, in South Lake
Tahoe, California, more fully described on the attached Exhibit "C".
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"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
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applicable if the law chosen by the parties is not applicable.
"Assignments" shall mean written Assignments, in such form as Lender
shall prescribe, of specific Instruments and/or Purchaser Mortgages 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/or Purchaser
Mortgage, free and clear of all claims, demands, liens and encumbrances of third
parties, as collateral security for the Loan.
"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.
"Biennial Time-Share Interest" shall mean a Time-Share Interest sold
to a Purchaser for the exclusive use of a Unit in the Project and Project common
area for a one (1) week period during each odd numbered calendar year or even
numbered calendar year.
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"Borrower" shall mean Lake Tahoe Resort Partners, LLC, a California
limited liability company.
"Borrowing Base" shall mean either the Borrowing Base (Receivables
Loan) or Borrowing Base (Working Capital Loan).
"Borrowing Base (Receivables Loan)" shall mean 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 Base (Working Capital Loan)" shall mean an amount equal to
the sum of (A) the lesser of (i) 55% of the unpaid principal balance payable
under the Eligible Instruments against which a Working Capital Advance will be
made or (ii) 55% of the then present value assigned to the unmatured
installments of principal and interest payable under the Eligible Instruments
against which a Working Capital Advance will be made, discounted at Lender's
Prevailing Discount Rate, (B) 55% of any cash down payments and principal and
interest payments then made by the Purchaser under such Eligible Instruments at
the time of such Working Capital Advance; and (C) 55% of any cash sales of Units
then made at the time of such Working Capital Advance, provided that the
proceeds of the cash sales and such cash down payments and principal and
interest payments are held and shall continue to be held in Escrow by Escrow
Agent.
"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 April 30, 1999.
"Borrowing Term (Working Capital Loan)" shall mean the period of time
during which Lender is committed to make Working Capital Advances under this
Agreement, which commitment shall terminate on April 30, 1999.
"Business Day" shall mean a calendar day other than a Saturday, Sunday
or legal holiday.
"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.
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"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
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from the revenues of 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.
"Chevron Easement" shall mean an easement executed by STRA in favor of
Borrower granting to Borrower, and its successors and assigns, a perpetual
easement over the parcel of real property located on the northeast corner of
U.S. Xxxxxxx Xx. 00 and Ski Run Boulevard, in South Lake Tahoe, California,
more fully described in the attached Exhibit "D".
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"Chevron Environmental Indemnity" shall mean certain Environmental
Agreement (Ski Run Site) dated as of July, 1995, by and among Chevron U.S.A.
Products Company, a division of Chevron U.S.A., Inc.; STRA; Xxxxxxx X. Xxxxxxx,
as Chapter 11 trustee of El Dorado Improvement Corporation and Argosy/KOAR
Group, Inc. a Georgia corporation, Argosy/KOAR Group, Inc.'s interest in which
was assigned to Lake Tahoe Resort Partners, L.P. on November 14, 1995, pursuant
to Assignment and Assumption of Environmental Agreement (Ski Run Site), and Lake
Tahoe Resort Partners L.P.'s interest in which was assigned to Borrower on March
1, 1996 pursuant to that certain Assignment and Assumption of Environmental
Agreement (Ski Run Site).
"City" shall mean the City of South Lake Tahoe, California, a
California municipal corporation.
"Closing Date" shall mean April 30, 1996.
"Collateral Assignment" shall mean that certain Collateral Assignment
of Material Contracts of even date herewith in a form acceptable to Lender.
Without limitation, the Collateral Assignment shall collaterally assign to
Lender all of Borrower's right, title and interest in each of the Material
Agreements and the other agreements referenced therein together with all of
Resort Management International, Inc.'s rights under its management agreement
with Borrower.
"Collateral Assignment of Escrow" shall mean that certain Collateral
Assignment, Security Agreement and Account Agreement, in a form acceptable to
Lender, pursuant to which Borrower collaterally assigns to Lender all of the
Borrower's interest in the Escrow and in the agreement pursuant to which the
Escrow is maintained as security for the payment and Performance of the
Obligations, which shall be executed prior to the working of the first Working
Capital Advance.
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"Construction Loan" shall mean the loan made pursuant to the
Construction Loan Agreement.
"Construction Loan Agreement" shall mean that certain Construction
Loan Agreement of even date herewith, pursuant to which Lender has agreed,
subject to the terms and provisions thereof, to make a $28,000,000 revolving
construction loan to Borrower, the proceeds of which are to be used to construct
the Project.
"Construction Loan Documents" shall have the meaning set forth in the
Construction Loan Agreement.
"Construction Mortgage" shall mean, collectively, the First Mortgage
and the Second Mortgage, as each of those terms is defined in the Construction
Loan Agreement.
"Construction Note" shall have the meaning set forth in the
Construction Loan Agreement.
"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.
"DDA" shall mean that certain First Amended Ski Run Project
Disposition and Development Agreement by and between STRA and Argosy/KOAR Group,
Inc., a Georgia corporation, dated as of August 4, 1995; as amended by that
certain First Addendum to First Amended Ski Run Project Disposition and
Development Agreement dated as of October, 1995 between STRA and Argosy/KOAR,
Inc., as further amended by the STRA Environmental Indemnity; as further amended
by the First Amended Ski Run Project Disposition and Development Agreement,
Operating Memorandum No. 2 dated as of April 26, 1996; and as further amended by
the First Amended Ski Run Project Disposition and Development Agreement,
Operating Memorandum No. 3 dated as of April 26, 1996, Argosy/KOAR Group, Inc.'s
interest in which was assigned to Lake Tahoe Resort Partners, L.P. on November
14, 1995, pursuant to that certain Assignment and Assumption of First Amended
Ski Run Project Disposition and Development Agreement, and Lake Tahoe Resort
Partners, L.P.'s interest in which was assigned to Borrower on March 1, 1996
pursuant to that certain Assignment and Assumption of First Amended Ski Run
Project Disposition and Development Agreement.
"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.
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"Development Agreement" shall mean that certain Ski Run Project
Development Agreement by and between the City and Argosy/KOAR Group, Inc., dated
as of November 21, 1995, as amended by that certain Ski Run Project Development
Agreement, Operating Memorandum No. A dated as of April 26, 1996, Argosy/KOAR
Group, Inc.'s interest in which was assigned to Lake Tahoe Resort Partners, L.P.
on November 14, 1995 pursuant to that certain Assignment and Assumption of
Development Agreement, and Lake Tahoe Resort Partners, L.P.'s interest in which
was assigned to Borrower on March 1, 1996 pursuant to that certain Assignment
and Assumption of Development Agreement.
"Distribution" shall mean any distribution, advance, payment, or loan
to any shareholder, officer, director, member or Affiliate of Borrower or of any
of the foregoing, including but not limited to, loan repayments, dividends,
bonuses, salary, other compensation and management fees.
"Dynamic Acquisition Documents" shall mean that certain Purchase and
Sale Agreement dated as of August 18, 1994, by and among KOAR Group, Inc. and
Argosy/KOAR Group, Inc. ("KOAR/Argosy"), Xxxxxxx X. Xxxxxxx as Trustee and
Dynamic Finance Corporation, as amended by that certain Implementation Agreement
relating to Purchase and Sale Agreement dated as of November 13, 1995,
KOAR/Argosy's interests in which it was assigned to Borrower by mesne
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conveyances.
"Dynamic Loan Documents" shall mean the documents evidencing and
securing the Dynamic Loan Facility.
"Dynamic Loan Facility" shall mean that certain One Million Eight
Hundred Thousand Dollar ($1,800,000.00) loan made by Dynamic Finance Corporation
to Borrower pursuant to the Dynamic Acquisition Document.
"Eligible Instruments" shall mean the Instruments, each in
substantially the form of Exhibit "E" hereto, entered into by and between
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Borrower and those Persons who purchase a Time-Share Interest (all of whom shall
be United States or Canadian residents), which Eligible Instruments shall
conform to the criteria and standards set forth on Exhibit "F" hereto; provided,
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however, that an Instrument 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 "F".
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"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.
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"Escrow" shall mean that certain account in the name of Escrow Agent
in which the cash payments and principal and interest payments that are used in
calculating the Borrowing Base (Working Capital Loan), together with the
original Instruments and Purchaser Mortgages pertaining thereto are deposited,
pursuant to an agreement acceptable to Lender.
"Escrow Agent" shall mean the person who is not an Affiliate of
Borrower, in whose name the Escrow is maintained, the identify of whom shall be
acceptable to Lender.
"Event of Default" has the meaning set forth in Article IX hereof.
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"Force Majeure" has the meaning set forth in the Construction Loan
Agreement.
"FPSI" shall mean FINOVA Portfolio Services, Inc., an Arizona
corporation, its successors and assigns.
"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.
"Garage Parcel" shall mean that parcel of real property located on the
southwest corner of U.S. Xxxxxxx Xx. 00 and Ski Run Boulevard, in South Lake
Tahoe, California, more fully described in the attached Exhibit "G".
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"General and Administrative Expenses" shall mean all expenses of
Borrower less (i) Marketing Expenses, (ii) interest on the Construction Loan,
the Working Capital Loan and the Receivables Loan and (iii) Borrower's cost of
Time-Share Interest sold.
"Guarantee(s)" shall mean, individually and collectively, a written
Guarantee Agreement, in such form as Lender shall prescribe, 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 Receivables Loan Documents.
"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 Guarantors of this Loan are
KGK and AKGI.
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"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
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amended), 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 upon or in connection with or measured by the
Receivables Loan Documents or the Receivables Collateral.
"Incentive Fee" shall have the meaning set forth in paragraph 8.25
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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 Phase I, Phase II or Phase III by Borrower to a
Purchaser, which note is secured by a Purchaser Mortgage.
"KGK" shall mean KGK Lake Tahoe Development, Inc., a California
corporation.
"Loan" shall mean, collectively and individually, the Receivables Loan
and the Working Capital Loan.
"Loan Balancing Equity" shall have the meaning set forth in
Construction Loan Agreement.
"Loan Fee" shall mean either of the Receivables Loan Fee or the
Working Capital Loan Fee.
"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.
"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 modified, replaced or restated.
"Maturity Date" shall mean that date which shall occur seven (7) years
after the expiration of the Borrowing Term (Receivables Loan).
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"Marketing Expenses" shall mean the aggregate of all expenses incurred
in the sale and marketing of Time-Share Interests, including without limitation,
all costs and expenses for advertising, mailing, consumer premiums, referral
lead generation, closing costs and sales commissions.
"Material Agreements" shall mean, individually and collectively, the
DDA (including, without limitation, the STRA Environmental Indemnity), the
Development Agreement and the Chevron Environmental Indemnity, and all
amendments, modifications and replacements thereof.
"Maximum Receivables Loan Amount" shall mean the lesser of (i) Thirty
Million Dollars ($30,000,000) or (ii) Forty Five Million Dollars ($45,000,000)
less the principal amount then outstanding under the Working Capital Loan and
the Construction Loan.
"Maximum Working Capital Loan Amount" shall mean the lesser of (i)
Four Million Dollars ($4,000,000) or (ii) Forty Five Million Dollars
($45,000,000) less the principal amount then outstanding under the Receivables
Loan and the Construction Loan.
"Net Income" shall mean 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).
"Net Sale" shall mean gross sales of Time-Share Interests during such
quarterly period reduced only by cancellations thereof.
"Nondisturbance Agreement" shall mean an agreement, in form and
substance satisfactory to Lender, pursuant to which the holders of any lien
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, (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 Receivables Loan Documents and under the Construction Loan Documents,
and each and every other obligation of Borrower now or hereafter owing to
Lender.
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"Opening Prepayment Date" shall mean the date which occurs thirty-six
(36) months from the Closing Date.
"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 matters set forth on the
attached Exhibit "H". Permitted Exceptions shall include, as to the 24-Unit
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Parcel and Annexable Parcel only, the lien in favor of Dynamic Finance
Corporation to secure the Dynamic Loan Facility.
"Person" shall mean any adult individual, partnership, corporation or
other form of business entity whatsoever.
"Phase" shall mean any of Phase I, Phase II or Phase III.
"Phase I" shall mean the initial 66 Units to be constructed on the
186-Unit Parcel, together with other improvements set forth in the plans and
specifications, approved by Lender, with respect to such Phase.
"Phase II" shall mean the second 40 Units to be constructed on the
186-Unit Parcel, together with other improvements set forth in the plans and
specifications, approved by Lender, with respect to such Phase.
"Phase III" shall mean the third 40 Units to be constructed on the
186-Unit Parcel, together with other improvements set forth in the plans and
specifications, approved by Lender, with respect to such Phase.
"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 2.0%
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
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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 project known as Embassy Vacation
Resort at Lake Tahoe, to be constructed by Borrower on the Real Property,
comprised of the 146 Units in Phase I, Phase II and Phase III.
"Project Documents" shall mean all operating, management, marketing,
supervision, nondisturbance cross-use, parking and other documents relating to
the ownership, development, construction, maintenance repair, leasing,
management, marketing and operation of the Project.
"Purchaser" shall mean a Person who purchases a Time-Share Interest in
the Project from Borrower.
"Purchaser Mortgage" shall mean the purchase money deed of trust given
to secure an Instrument.
"Real Property" shall mean, collectively, the 186-Unit Parcel, the
Chevron Easement, the Garage Parcel, the Annexable Parcel and the 24-Unit Parcel
and all existing and future improvements located thereon.
"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 Mortgages, 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
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8.28); (v) all rights under escrow agreements relating to the Instruments and
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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, 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
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8.28); (vii) all files, books and records pertaining to any of the foregoing;
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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 the 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 Receivables
Loan Amount.
"Receivables Loan Documents" shall mean this Agreement, the
Receivables Note, the Working Capital Note, the Construction Mortgage, the
Environmental Certificate, the Servicing Agreement, the Lockbox Agreement, the
Services and Fees Agreement, the Guarantee, the Assignments, the Collateral
Assignment of Escrow, the Collateral Assignment, the Affiliate Debt
Subordination Agreement, and each and every other document, instrument or
writing executed or delivered by Borrower to Lender in connection with the Loan.
"Receivables Loan Fee" shall have the meaning set forth in paragraph
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8.16.
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"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.
"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 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.
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"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 modified, 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 or restated.
"STRA" shall mean the South Lake Tahoe Redevelopment Agency, a
California municipal corporation.
"STRA Environmental Indemnity" shall mean that certain First Amended
Ski Run Project Disposition and Development Agreement, Operating Memorandum No.
1 dated March, 1996 between STRA and Borrower. The STRA Environmental Indemnity
is included within the DDA, as that term is defined in this Agreement.
"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 Receivables Loan Documents.
"Time-Share Interest" shall mean the rights sold 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. A Time-Share Interest shall include a Biennial Time-
Share Interest.
"Unit" shall mean a dwelling unit in the Project.
"Working Capital Advance" shall mean an Advance of the Working Capital
Loan advance by Lender to Borrower from time to time in accordance with the
terms and provisions of this Agreement.
"Working Capital 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 Working
Capital Loan Amount.
"Working Capital Loan Fee" shall have the meaning set forth in
paragraph 8.16.
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"Working Capital Note" shall mean the Working Capital Promissory Note,
in the amount of the Working Capital Loan, to be made and delivered by Borrower
to Lender pursuant hereto, in a form acceptable to Lender.
ARTICLE III
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THE LOAN
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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 (Receivables Loan) 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 Receivables 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
that One Hundred Thousand Dollars ($100,00000). Lender shall charge a fee
of Five Hundred Dollars ($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 and to repay the Construction Loan and the Working
Capital Loan, in full. The proceeds of the Receivables Loan from a
particular Phase shall be used to pay and satisfy the then unpaid principal
balance and all accrued interest under the Working Capital Loan from such
Phase before
- 14 -
any portion of the Receivables Loan is paid in satisfaction of any portion
of the Construction Loan with respect to such Phase. The foregoing
notwithstanding, upon the occurrence of any Event of Default, the proceeds
of the Receivables Loan may be applied by Lender in satisfaction of the
Obligations in such order and manner as Lender shall determine.
(v) At no time during the term hereof shall the unpaid
principal balance of the Receivables Loan, together with the unpaid
principal balance of the Construction Loan and the Working Capital Loan,
exceed a total amount equal to Forty Five Million Dollars ($45,000,000.00),
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 Working Capital Loan will be disbursed to
Borrower, from time to time, in periodic Working Capital Advances, but in no
event after the Borrowing Term (Working Capital Loan) has expired, in an amount
determined by subtracting from the Borrower Base (Working Capital Loan) the
unpaid principal balance of the Working Capital Loan at the time of each Working
Capital Advance; provided that at no time shall the unpaid principal balance of
the Working Capital Loan exceed the Maximum Working Capital Loan Amount.
(i) Working Capital Advances shall be made no more frequently
than twice per month and each Working Capital Advance shall be in an amount
not less than One Hundred Thousand Dollars ($100,000.00). Lender shall
charge a fee of Five Hundred Dollars ($500.00) for the second Working
Capital Advance made during any month and shall be entitled to deduct such
fee from the Working Capital Advance so made. The foregoing fee is to be
paid to Lender strictly in consideration for Lender's agreement to make a
second Working Capital Advance during any particular calendar month and
shall not be applied or credited against any other Obligations.
(ii) The Working Capital Loan is a revolving line of credit under
the terms of which Borrower, during the Borrowing Term (Working Capital
Loan), shall have the right to obtain Working Capital Advances, repay
Working Capital Advances, and obtain additional Working Capital 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 Working Capital Advance
have been satisfied. The foregoing notwithstanding, Borrower shall have no
right to obtain a Working Capital Advance against Eligible Instruments
arising from Phase II or Phase III until all Working Capital Advances made
against Eligible Instruments arising from Phase I have been paid in full,
including all accrued interest thereon. At such time as Borrower has
received a Working Capital Advance against Eligible Instruments arising
from Phase II, Borrower shall have
- 15 -
no further right to obtain any Working Capital Advances against Eligible
Instruments arising from Phase I. In addition, Borrower shall have no right
to obtain a Working Capital Advance against Eligible Instruments arising
from Phase III until all Working Capital Advances against Eligible
Instruments arising from Phase II have been paid in full, including all
accrued interest thereon. At such time as Borrower has received a Working
Capital Advance against Eligible Instruments arising from Phase III,
Borrower shall have no further right to obtain any Working Capital Advances
against Eligible Instruments arising from Phase I or Phase II.
(iii) No Working Capital Advances will be made after the Borrowing
Term (Working Capital Loan) has expired unless Lender, in its sole
discretion, shall agree to make such Working Capital Advances.
(iv) Borrower shall use the proceeds of the Working Capital Loan
for working capital purposes.
(v) Any cash down payments and principal and interest payments
made by Purchasers that are used in calculating the Borrowing Base (Working
Capital Loan) shall be held in Escrow by the Escrow Agent and shall not be
released to Borrower unless a principal payment under the Working Capital
Loan is made in an amount equal to the amount of the Working Capital Advance
originally made against such cash down payment and principal and interest
payment.
(vi) At no time during the term hereof shall the unpaid principal
balance of the Working Capital Loan, together with the unpaid principal
balance of the Construction Loan and Receivables Loan, exceed a total amount
equal to Forty Five Million Dollars ($45,000,000.00), and Lender shall have
no obligation to make any Working Capital Advance if such Advance would
cause the foregoing limitation to be exceeded.
(vii) Working Capital Advances made against Eligible Instruments
arising from a particular Phase shall be due and payable in full at such
time as such Phase has been Completed and the Escrow Agent has released from
Escrow the cash down payments and principal and interest payments that were
used in calculating the Borrowing Base (Working Capital Loan) as to such
Advances. The foregoing notwithstanding, all Working Capital Advances shall
be due and payable in full on the maturity date set forth in the Working
Capital Note.
3.3 All Advances made pursuant to this Agreement shall be deemed to be
a single Loan.
- 16 -
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 and to the Receivables Collateral assigned, transferred, endorsed or
delivered to Lender under this Agreement or against which an Advance is made
hereunder. Lender's Security Interest in such Receivables Collateral shall be
absolute, continuing and applicable to all existing and future Advances and
shall secure the repayment of the Loan and the Construction 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 (iii) other documents which comprise such Eligible Instruments.
In addition, Borrower's payment and Performance of the Working Capital Loan and
Receivables Loan shall be secured by the Construction 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 "I" 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 Mortgage securing the same, provided that no Event of Default or
Incipient Default has occurred and is continuing.
4.3 Reserved.
--------
4.4 In connection with a Receivables Advance but not a Working Capital
Advance, Borrower shall, at its expense, deliver to Lender, at the time of
- 17 -
delivery of the Assignment, a policy or policies of title insurance insuring
Lender's interest in the Purchaser Mortgage which is the subject of the
Assignment. Such policy or policies shall be in the amount of the Receivables
Advances made against or, in the case of substitutions, a portion of the
Receivables Loan attributable to the Instruments secured by the insured
Purchaser Mortgages and shall be issued by a title insurer and be in form and
substance satisfactory to Lender in its sole discretion. The title insurance
policies must reflect that the Purchaser Mortgages constitute valid liens
against the real property to which they pertain subject only to the Permitted
Encumbrances.
4.5 Borrower shall deliver or cause to be delivered to Lender, and
thereafter shall maintain in full force and effect according to the terms
thereof, Guarantees duly executed by the Guarantors.
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; provided, however, to the
-------- -------
extent such condition provides that it pertains only to a Receivables Advance
and not to a Working Capital Advance, such condition need not be satisfied as to
a Working Capital Advance.
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 Receivables Loan Documents;
(ii) The Construction Loan Documents;
(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 and all other security for the Performance of
Borrower's Obligations which is subject to Article 9 of the Uniform
---------
Commercial Code;
- 18 -
(vi) The title policy referred to in paragraph 4.4 hereof;
-------------
(vii) A favorable opinion from Borrower's independent counsel as to
such matters as Lender may reasonably require; and
(viii) A favorable opinion from each Guarantor's independent counsel
as to such matters as Lender may reasonably require.
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 each Guarantor or Person which is a
corporation, general or limited partnership or limited liability company,
certified copies of their articles, certificates and agreements of general
or limited partnership, their articles of incorporation and by-laws or
their articles of organization and operating agreement (and all amendments
thereto), together with evidence that Borrower and each such Guarantor or
Person is 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 each Guarantor or Person which is
a corporation, a general or limited partnership or limited liability
company, a copy of the resolutions certified to be true and complete by
the corporate secretary, all of the general partners or all of the members
(as the case may be), authorizing the execution, delivery and performance
of the Receivables Loan Documents, and evidencing the authority of all
Persons executing the Receivables Loan Documents on behalf of Borrower, the
Guarantor, and such other Persons, and if Borrower, Guarantor or such
Persons are operating under a fictitious name, a copy of the recorded
certificate of fictitious name;
(iii) [RESERVED]
(iv) Evidence satisfactory to Lender that the Project complies with
all applicable laws, rules and regulations and public and private
restrictions affecting the use of the Project;
(v) A copy of the Public Report containing such conditions are
acceptable to Lender issued by or used in the State of California and other
jurisdictions where Time-Share Interests are or have been offered or sold,
together with all other approvals from regulatory agencies having
jurisdiction over the Project;
- 19 -
(vi) If the Project has not been registered under such act, an
opinion from Borrower's counsel that the Project does not fall within the
purview of the Interstate Land Sales Full Disclosure Act;
(vii) A copy of the purchase contract, deed, note, mortgage/deed
of trust and other documents in existence, including, without limitation,
any covenants running with the land comprising the Project, as well as any
covenants enforceable as equitable servitudes, the Project management
agreement 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;
(viii) Copies of the insurance policies required pursuant to
paragraph 8.9 hereof;
-------------
(ix) Evidence that the Project is not located within a "special
flood hazard" area as such term is used 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;
(x) With respect to a Receivables Advance, the items described in
Exhibit "J" hereto;
-----------
(xi) With respect to a Working Capital Advance, the items
described in the following paragraphs of Exhibit "J" hereto: (a), (b)
-----------
(unrecorded copies only), (e), (f), (g), (h), and (i);
(xii) Such other items as Lender requests which are reasonably
necessary to evaluate whether the request for the Advance satisfied the
requirements set forth herein;
(xiii) Credit references and Dun and Bradstreet reports for
Borrower and Guarantor; and UCC, tax lien, litigation and judgment searches
for Borrower and Guarantor;
(xiv) Copies of the forms of Instrument and Purchaser Mortgage;
(xv) Satisfactory operating budget for the Project owner's
association; and
(xvi) With respect to a Working Capital Advance, the
establishment by Borrower of the Escrow, the approval by Lender of the
- 20 -
agreement pursuant to which the Escrow is established and execution by
Borrower and Lender of the Collateral Assignment of Escrow.
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.
5.5 Lender shall be satisfied (in Lender's sole and absolute
discretion) with the results of (i) Lender's physical inspection of the Project;
(ii) the most recent income statement, balance sheet and statement of cash flows
(dated no earlier than December 31, 1995 for Argosy/KOAR Group, Inc.; and (iii)
the operating performance during calendar year 1995 for all time share resorts
owned by Affiliates of Argosy/KOAR Group, Inc.
5.6 Lender shall receive evidence satisfactory to it that no less than
$10,000,000 of cash has been contributed to Borrower by its members, in the form
of equity. Lender shall be satisfied with the identity of the Persons who
contributed such equity.
5.7 There shall have been no material adverse change in the warranties
and representations made by Borrower or any Guarantor in the Receivables Loan
Documents.
5.8 Neither an Event of Default nor an Incipient Default shall have
occurred and be continuing.
5.9 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.
5.10 Borrower has paid to Lender the portion of the Loan Fee then due
to Lender.
5.11 The Construction Loan shall have closed and all conditions to
closing shall have been satisfied by Borrower or waived by Lender and, with
respect to a Receivables Advance, Borrower shall have satisfied all of the
conditions precedent to the making of the first Advance (as the term Advance is
defined in the Construction Loan Agreement).
5.12 Borrower has received and approved all Project Documents and has
received a collateral assignment of such of the Project Documents as Lender
shall
- 21 -
require which collateral assignment shall be accompanied consents of the other
parties thereto, if required by Lender.
5.13 Lender has received and approved all necessary approvals from all
regulatory agencies having jurisdiction over the Projects.
5.14 Lender and Lender's Inspector (as defined in the Construction
Loan Agreement) have approved the Construction Budget (as defined in the
Construction Loan Agreement) for Phase I and the Construction Budget shall
reflect a total cost of construction of Phase I (including hard costs and soft
costs) of an amount not in excess of $22,000,000.
5.15 Lender shall have received evidence satisfactory to it that the
Real Property is environmentally acceptable to Lender.
5.16 Lender shall have no obligation to make any Advance until the
conditions specified in paragraphs 5.1 through 5.15 (as applicable to the
-------------- ----
particular type of Advance) inclusive herein have been satisfied as determined
by Lender in its reasonable discretion.
5.17 Advances shall be requested in writing on the Request for Advance
and Certification, in the form of the attached Exhibit "X-x," executed by
--------------
Borrower (or, if Borrower is a corporation, partnership or limited liability
company, by those officers, general partners or members, 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).
5.18 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.
5.19 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.
5.20 The proceeds of the Receivables Loan are to be used, in part, to
pay and satisfy in full the Working Capital Loan, the Construction Loan and all
amounts then due and owing to Lender under the Construction Loan Documents. To
the extent
- 22 -
that the proceeds of the Receivables Loan arise from a particular Phase, such
proceeds shall be used to pay and satisfy in full the Working Capital Loan
arising from the same Phase, the Construction Loan with respect to such Phase
and all amounts then due and owing to Lender under the Construction Loan
Document with respect to such Phase. Lender shall have the right to disburse any
Receivables Advance directly to Lender in payment or satisfaction of Working
Capital Advances, and interest thereon, and any amounts then due to Lender under
the Construction Loan Documents. The foregoing notwithstanding, upon and during
the continuance of an Event of Default, Lender shall have the right to disburse
Receivables Advances against the Obligations in such order and manner as Lender
deems appropriate.
5.21 Working Capital Advances shall be made only against the Borrowing
Base (Working Capital Loan); provided that with respect to Working Capital
Advances only, the eligibility criteria set forth in the following subparagraphs
of Exhibit "F" need not be satisfied as a condition to the making of such
-----------
Advance: (j), only as to the requirement that the Purchaser Mortgage be
recorded, (k), (m) and (n) to the extent that such rescission rights pertain
only to Borrower's obligations under subparagraph (k) thereof.
----------------
5.22 Lender acknowledges that Borrower's Public Report from the
California Department of Real Estate contains, in substance, the following
conditions:
(i) recordation of a final map;
(ii) recordation of Declarations of Covenants, Conditions and
Restrictions;
(iii) the delivery to the California Department of Real Estate of
a preliminary title report with respect to the Real Property;
(iv) The filing of articles of incorporation for the Association;
(v) The delivery by Borrower of a Subsidy Agreement, an
Assessment Buydown Agreement and a Cost Sharing Agreement as well as
security therefor;
(vi) Evidence that Lake Tahoe Vacation Ownership Resort Owners
Association holds a fidelity bond in compliance with certain California
regulations; and
(vii) The receipt by the California Department of Real Estate of a
management agreement in compliance with certain California regulations.
- 23 -
Borrower warrants and represents and, with respect to clauses (iii),
(v), (vi) and (vii) above, covenants, that the conditions described in clauses
(i) and (ii) will be satisfied concurrently with the closing of Borrower's
acquisition of the Property; that the condition described in clause (iii) will
be satisfied within fourteen (14) days following Borrower's acquisition of the
Real Property; that the condition described in clause (iv) has been satisfied
and that the conditions described in clauses (v), (vi) and (vii) will be
satisfied within four (4) months following the Closing Date. In connection with
clause (v), Lender shall have the right to approve the agreements described
therein which approval will be reasonably exercised by Lender; provided,
---------
however, that to the extent that such agreements require the pledging of rental
-------
revenue from the Project, which pledge would be senior in priority to the
Construction Mortgage, Lender's approval shall be given or withheld in Lender's
sole discretion.
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 Receivables
Loan Amount and in the event for any reason the aggregate principal amount
of the Receivables Loan does exceed the Maximum Receivables 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 (Receivables Loan), 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.
- 24 -
7.2 In connection with the Working Capital Loan:
(i) In no event shall the aggregate principal amount of the
Working Capital Loan outstanding at any time exceed the Maximum Working
Capital Loan Amount and in the event for any reason the aggregate principal
amount of the Working Capital Loan does exceed the Maximum Working Capital
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
Working Capital Loan outstanding as of the last Business Day of any month
shall exceed the then Borrowing Base (Working Capital Loan), 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 Working Capital Loan shall be evidenced by the Working
Capital 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 all sums due and payable to Lender in connection with the Receivables
Loan, Working Capital Loan and the Construction Loan, and (ii) Borrower has
given Lender at least 30 days prior written notice of the prepayment 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:
- 25 -
Period Premium
------ -------
Through the third Anniversary Closed to Prepayment
Date of the Closing Date
After the third Anniversary Date 3%
and through the fourth
Anniversary Date of the Closing
Date
After the fourth Anniversary Date 2%
and through the fifth Anniversary
Date of the Closing Date
After the fifth Anniversary Date 1%
and through the sixth Anniversary
Date of the Closing Date
Thereafter 0%
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. There shall be no prepayment
premium payable in connection with the prepayment, in whole or in part, of the
Working Capital Loan. 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
week 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 Receivables Loan 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
- 26 -
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 reasonably
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 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 gender of a written request therefor by
Borrower. In addition, at each calendar quarter, upon request, 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.
----
- 27 -
7.5 Subject to 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
Receivables Loan 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 arising out of the
Receivables Loan Documents 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, Working Capital Note and
other Receivables Loan Documents; and any and all amounts payable by Borrower
under the Receivables Note, Working Capital Note and other Receivables Loan
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
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 Receivables Loan
Documents shall be free of expense to Lender with respect to the amount of any
Impositions, all of which Impositions Borrower assumes and shall pay on demand
in addition to the other payments provided for in the Receivables Loan Documents
to be made by it. Borrower's Obligation to pay Impositions shall likewise
include the Obligation to pay any increase to Lender in 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 liability company duly organized, validly existing and in
good standing under the laws of the State of California 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
- 28 -
where failure to do so would not adversely affect Lender's ability to
realize upon the Receivables 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 Receivables Loan
Documents, for undertaking and Performing the Obligations, and for carrying
on its business and owning its property. AKGI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of California 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 AKGI make such qualification necessary, to
the extent such qualification is required by such foreign jurisdiction
(except where failure to do so would not adversely affect Lender's ability
to realize upon the Receivables 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). AKGI is a member of Borrower. KGK is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California 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 KGK make such qualification
necessary, to the extent such qualification is required by such foreign
jurisdiction (except where failure to do so would not adversely affect
Lender's ability to realize upon the Receivables 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). KGK is a member of
Borrower.
(b) Borrower has good right and power to grant the Security
Interest in the Receivables Collateral and to execute and deliver this
Agreement and the other Receivables Loan Documents and to Perform the
Obligations. All action necessary and required by Borrower'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 Receivables Loan
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 Receivables Loan 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
- 29 -
and have been waived in the Receivables Loan Documents). To the best of
Borrower's knowledge, the Receivables Loan Documents do not violate the
Applicable Usury Law or any other usury law known to Borrower. The
execution, delivery and Performance of the provisions of this Agreement and
all the other Receivables Loan 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 of Borrower pursuant to
any provision or any law, regulation, judgment, decree, order, franchise or
permit applicable to Borrower; Borrower's charter documents; or any
contract or other agreement or instrument to which Borrower is a party or
by which Borrower or Borrower'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 Receivables Loan 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 which,
if adversely determined, might adversely affect Lender's ability to realize
upon the Receivables 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 the ability of Borrower to
complete Performance of the Obligations; or which questions the validity of
the Receivables Loan 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 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) Borrower has sold or has offered for sale Time-Share Interests
which generate Eligible Instruments only in the State of California 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 State of California, 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.
- 30 -
(b) Except for violations which do not individually or in the
aggregate affect Lender's ability to realize upon the Receivables
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 laws and
regulations of the United States 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 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.
Borrower further warrants and guarantees the value and enforceability of
the Receivables Collateral. The foregoing notwithstanding, Lender
acknowledges that with respect to Instruments against which a Working
Capital Advance has been made, Borrower shall not, at the time of such
Advance, have completed the improvements that the Borrower has represented
will be available to Purchasers.
(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 or 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.
- 31 -
(d) True and complete copies of the Project governing
documents, the purchase contract, deed, note, mortgage/deed of trust, the
Instruments, 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) Each Purchaser shall automatically be a member of the
Project's owners association or associations, if any, and shall be entitled
to vote on the affairs thereof (subject, however, to any preferential
voting rights in favor of Borrower as permitted under California time-share
laws). Each such owners association shall be governed by a Board of
Directors, which have the authority to fix and levy pro rata upon each
Purchaser annual assessments to cover the costs of maintaining and
operating the Project (including, without limitation, taxes and assessments
not levied by the appropriate taxing authority directly against owners of
Time-Share Interests) and to establish a reasonable reserve for
improvements, the replacement of items and furnishings, and contingencies.
If Borrower controls an owners association, Borrower will while it controls
such association: (i) cause such owners association to (A) discharge timely
and completely its obligations under the Project governing documents and
maintain the reserve described above; and (ii) pay to such owners
association not less often than every twelve months hereafter the
difference between (A) the cumulative total amount of the maintenance and
operating expenses incurred by such association, together with the amount
of any installment of real property taxes currently due and payable with
respect to the Project not directly levied against owners of Time-Share
Interests, through the end of the calendar month preceding the month in
which such payment is made and (B) the cumulative total amount of
assessments (less amounts thereof allocated to reserve expenses)
- 32 -
payable to association by Time-Share Interest owners other than Borrower
through the end of the calendar month preceding the month in which such
payment is made.
(g) Except as otherwise permitted by the Project governing
documents, the Project owners association or the owners of Time-Share
Interests in common shall own 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 Construction Mortgage; and no part of the Project is subject to
partition by owners of Time-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 and which are not the responsibility of the
Project owners association to maintain and repair. Borrower will maintain
or cause the owner's association for the Project to 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 OWED 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 STATE, 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
- 33 -
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. 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 office is as set forth on the signature
page of this Agreement. 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
Lake Tahoe Resort Partners 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
require.
8.10 (a) This Agreement and the other Receivables Loan Documents,
certificates, financial statements 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 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 Receivables Loan
Documents, certificates, financial statements or written materials
furnished to Lender in connection with the transactions contemplated
herein.
- 34 -
(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 on a consistent basis.
(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 110 days after
the end of each fiscal year and within 45 days after the end of each
interim quarterly fiscal period of the subject, a copy of the current
financial statements of each of Borrower, Guarantor and the 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 and the Association required pursuant
hereto shall be audited by a certified public accountant, shall be
certified to by said certified public accountant and shall be accompanied
by the accountant's work papers. 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 and shall be accompanied by the accountant's work papers.
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 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
- 35 -
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 (other than with respect to matters that are within the scope of the
Chevron Environmental Indemnity or the STRA Environmental Indemnity)
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 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.
8.12 Borrower shall cause any and all indebtedness owed by Borrower or
secured by the Project (other than the Permitted Encumbrances and other than the
lien of another construction lender who is financing the construction of
improvements on the Real Property, as contemplated by Paragraph 12.3 of the
--------------
Construction Loan Agreement), to be subordinated to the Obligations pursuant to
subordination agreements satisfactory to Lender in form and substance.
- 36 -
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 units in the Project in the ordinary course
of Borrower's business) sell, lease, transfer or dispose of 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 approves Embassy Vacation Resorts Suites, Inc. as the
present manager of the Project.
8.14 Borrower is 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 has 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 represented as being available to Purchasers for use by them.
Borrower shall, upon request of Lender, 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 attorneys' fees, any brokerage or similar fees, all filing and
recording fees, 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 non-refundable loan fee (the
"Working Capital Loan Fee") in the amount of one percent (1%) of each Working
Capital Advance, which fee was earned by Lender in consideration of Lender
holding
- 37 -
itself ready, willing and able to make the Working Capital Loan upon the terms
and conditions set forth herein. The Working Capital Loan Fee in the amount of
one percent (1%) of each Working Capital Advance shall be payable concurrently
with the making of such Working Capital Advance and may be withheld from the
Advance so made. Borrower shall also pay to Lender a nonrefundable loan fee (the
"Receivables Loan Fee") in the amount of Three Hundred Thousand Dollars
($300,000) which fee was earned by Lender in consideration of Lender holding
itself ready, willing and able to make the Receivables Loan upon the terms and
conditions set forth herein. The Ten Thousand Dollars ($10,000) deposit received
by Lender shall be applied against the Receivables Loan Fee. An additional
Ninety Thousand Dollars ($90,000) of the Receivables Loan Fee shall be due
concurrently with the making of the first Receivables Advance and may be
withheld from the Advance so made. An additional Fifty Thousand Dollars
($50,000) of the Receivables Loan Fee shall be due and payable concurrently with
the making of the Receivables Advance which causes the unpaid principal balance
of the Receivables Loan to exceed Ten Million Dollars ($10,000,000) and may be
withheld from the Advance so made. An additional Fifty Thousand Dollars
($50,000) of the Receivables Loan Fee shall be due and payable concurrently with
the making of the Receivables Advance which causes the unpaid principal balance
of the Receivables Loan to exceed Fifteen Million Dollars ($15,000,000) and may
be withheld from the Advance so made. An additional Fifty Thousand Dollars
($50,000) of the Receivables Loan Fee shall be due and payable concurrently with
the making of the Receivables Advance which causes the unpaid principal balance
of the Receivables Loan to exceed Twenty Million Dollars ($20,000,000) and may
be withheld from the Advance so made. An additional Fifty Thousand Dollars
($50,000) of the Receivables Loan Fee shall be due and payable concurrently with
the making of the Receivables Advance which causes the unpaid principal balance
of the Receivables Loan to exceed Twenty Five Million Dollars ($25,000,000) and
may be withheld from the Advance so made. The foregoing notwithstanding, unless
sooner paid, the entire Receivables Loan Fee shall be due and payable in full on
December 31, 1998, regardless of the amount of the then unpaid principal balance
of the Receivables Loan. 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 or the Construction Loan. The payment of the Loan
Fee is in addition to Borrower's obligation to pay a loan fee under the
Construction Loan Agreement. Lender shall act as custodian for purposes of
holding Eligible Instruments and Borrower shall pay to Lender on demand, a
custodial fee of Ten Dollars ($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 canceled by
the Purchaser or the Borrower. Notwithstanding the foregoing, Borrower shall
have the
- 38 -
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 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 Receivables Loan 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, and (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). 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 Federal Reserve
System.
8.19 Borrower shall execute or cause to be executed all Receivables
Loan 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 or the other security for the Performance of the
Obligations or otherwise to effect the intent and purposes of the Receivables
Loan 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 Receivables Loan 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.
- 39 -
8.21 During the Term, Borrower shall not pay or make any Distributions
to its officers, partners, or any Guarantor or to any relatives or Affiliates
of Borrower, of any 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 an Affiliate
Debt Subordination Agreement 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 Construction Loan, the Working Capital Loan
or the Receivables Loan unless and until the date that all of the
obligations of Borrower under and with respect to the Construction Loan,
Working Capital Loan and Receivables Loan 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 Construction Loan, the Working Capital 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 each of KGK and AKGI, in their
capacity as members of the Borrower, but not to any other members of
Borrower, no more frequently than quarterly in an amount sufficient for the
payment of federal and state income taxes payable by such member with
respect to a tax year of Borrower (a "Tax Year") resulting from the
inclusion in such members' taxable income of the member's share of taxable
income of Borrower for that Tax Year, subject to reasonable assumptions as
to the marginal tax bracket to which the members 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 members of Borrower, Borrower may make a
distribution to the members which, together with prior distributions for
the Tax Year on account of the Tax Amount, shall not exceed
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the applicable percentage (which shall be 25%, 50%, 75%, and 100% for the first,
second, third and fourth calendar quarters, respectively) of a 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 members until such excess amount has been fully recaptured or until the
excess amount has been repaid by the affected members to the Borrower;
(xi) Such Distribution is made in an amount equal to or less than 100%
of the lesser of Borrower's Net Income or Cash Flow, 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 Incentive Fee,
Working Capital Loan, Construction Loan and all other obligations under the
Construction Loan Documents have been paid in full and until such time as Lender
has no further obligation to make any advances of the Working Capital Loan; and
(xii) Such Distribution is made in an amount necessary to reimburse a
member or Affiliate of Borrower who has made an advance for the benefit of
Borrower to pay Project costs for items and in amounts consistent with the
Construction Budget as approved by Lender. The provisions of this subparagraph
shall not however be used as a basis to return to any member or Affiliate any
Loan Balancing Equity contributed to by such member or Affiliate to 'Borrower
unless and until each of the following conditions have been satisfied: (i) after
taking into account the making of such Distribution, Lender determines, in its
sole discretion, that the remaining undisbursed proceeds of the Construction
Loan, plus the then existing and undisbursed balance of the Loan Balancing
Equity will be sufficient to pay the total cost for completion of the
Improvements (as defined in the Construction Loan Agreement), (ii) the
Distribution is in the amount no greater than the then undisbursed amount of
Loan Balancing Equity and (iii) both before and after taking into account the
making of such Distribution there does not exist an Event of Default or
Incipient Default, including, without limitation, a default by virtue of
Borrower's failure to comply with the net worth covenant in Paragraph 8.22(a)
-----------------
hereof.
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
$7,500,000. The foregoing covenant shall be tested quarterly beginning with
the quarter year ending December 31, 1996.
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(b) Marketing Expenses associated with the marketing and sale
of Time-Share Interests shall not exceed 50% of Net Sales, determined
quarterly. The foregoing covenant shall be tested quarterly, commencing
December 31, 1996. Each of the tests conducted as of the end of December
31, 1996 and March 31, 1997 shall cover the period from the Closing Date
through the end of the relevant quarter. Commencing with the test for June
30, 1997, 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, 1996. Each of the tests conducted as of the end of
December 31, 1996 and March 31, 1997 shall cover the period from the
Closing Date through the end of the relevant quarter. Commencing with the
test for June 30, 1997, 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 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 Until such time as all of the Obligations under and arising out
of the Construction Loan Documents, together with the Working Capital Loan and
the Incentive Fee, excluding the Receivables Loan, have been paid and satisfied
in full, and Lender has no further obligation to make any advances of the
Construction Loan or Working Capital Loan, Borrower shall not, without the prior
written consent of Lender, develop or permit any of its Affiliates to develop a
time-share resort in or around the Lake Tahoe resort area.
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 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.
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8.25 As additional consideration to Lender, Borrower shall pay to
Lender an incentive fee (the "Incentive Fee") equal to Two Million Dollars
($2,000,000) with respect to the Time-Share Interests sold by Borrower in the
Project. Such Incentive Fee shall be paid in installments of $161 per Time-Share
Interest, sold (or $81 per Time-Share Interest sold if such Time-Share Interest
is a Biennial Time-Share Interest) until such time as Construction Loan has been
paid in full at a time when Lender has no further obligation to make any
advances of the Construction Loan whereupon the Incentive Fee shall be paid in
installments of $973 per Time-Share Interest sold (or $487 per Time-Share
Interest sold if such Time-Share Interest is a Biennial Time-Share Interest)
until such time as the Incentive Fee has been paid in full. The Incentive Fee
shall be payable in installments as provided above commencing with the first
sale. Notwithstanding anything contained herein to the contrary, the Incentive
Fee is payable in full by Borrower on December 31, 2000. A Time-Share Interest
shall be sold, for purposes of this paragraph 8.25, with respect to those Time-
--------------
Share Interests against which a Working Capital Advance has been made, at such
time as the proceeds of such sale have been released by the Escrow Agent to or
for the benefit of Borrower.
8.26 Lender hereby agrees that it will promptly release from the lien
of the Construction Mortgage, an individual Time-Share Interest which is sold by
Borrower in the ordinary course of business in bona-fide, arm's-length
---------
transactions upon the satisfaction of the following terms and conditions:
(a) Prior to the payment in full of the Construction Loan, and
prior to the termination of Lender's obligations to make advances of the
Construction Loan, the payment to Lender of an interval release payment
equal to the greater of (A) 30% of the gross sales price of such Time-Share
Interest or (B) $5,550 per Time-Share Interest (or $2,775 per Time-Share
Interest sold if such Time-Share Interest is a Biennial Time-Share
Interest), which amount shall be applied as an ordinary principal payment
under the Construction Loan;
(b) Following payment in full of the Construction Loan at a
time when Lender has no further obligation to make advances of the
Construction Loan, the payment to Lender of an interval release payment
equal to $973 per Time-Share Interest (or $487 per Time-Share Interest sold
if such Time-Share Interest is a Biennial Time-Share Interest) (which
amount shall be applied against the Incentive Fee) which payment shall
continue until the Incentive Fee has been paid in full;
(c) No Event of Default or Incipient Default shall have
occurred or be continuing;
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(d) The purchaser of the Time-Share Interest shall not be an
Affiliate of Borrower;
(e) Lender shall have received a written request for such
release in which Borrower certifies compliance with the items set forth
above and with all other requirements for such release; and
(f) Borrower has paid all of Lender's reasonable out-of-pocket
expenses incurred in connection with such release.
No release of a Time-Share Interest pursuant hereto shall impair or affect
Lender's remaining lien on the balance of the property subject to the
Construction Mortgage or any term or provision of the Receivables Loan Documents
as they pertain to those portions of the property remaining subject to the
Construction Mortgage. Principal payments otherwise made under the Construction
Loan, the Working Capital Loan or the Receivables Loan and interest payable
under any of the foregoing shall not be credited against the interval release
fee.
8.27 Except to the extent set forth in the Disclosure Schedule,
attached to the Environmental Certificate, the Borrower is in compliance in all
material respects 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 statute or regulation. The Borrower does not transport any
hazardous wastes, substances or constituents.
8.28 Provided that Borrower has not then borrowed the Maximum Loan
Receivables Amount, Borrower shall not, during the Borrowing Term (Receivables
Loan), pledge, assign, or hypothecate any Eligible Instruments arising from
Units constructed with the proceeds of the Construction Loan other than to
Lender; provided that that terms and conditions of the financing of such
Eligible Instruments is reasonably consistent with the terms and conditions set
forth in this Agreement. After the expiration of the Borrowing Term (Receivables
Loan), Lender
- 44 -
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 Eligible
Instruments arising from Units constructed with the proceeds of the Construction
Loan. 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 reasonably
satisfactory to Lender.
8.29 [RESERVED]
8.30 Within forty-five (45) days following the end of each quarterly
fiscal period of Borrower, Borrower shall deliver to Lender a report, certified
correct to the best of Borrower's knowledge, setting forth the remediation
progress being made under the Chevron Environmental Indemnity and, if
applicable, the STRA Environmental Indemnity and the expected delivery date of a
"No Further Action" letter from the applicable regulatory authorities (if any
such letter is expected or anticipated) with regard to the environmental
contamination on the Real Property, together with copies of reports, laboratory
results and communications with the applicable regulatory authorities concerning
such contamination, to the extent within the possession or control of Borrower.
8.31 Each of the Material Agreements are (i) in full force and effect;
and (ii) have not been modified, amended, altered or changed in any manner
except to the extent that such modifications, amendments, alterations or changes
have been delivered to Lender prior to the date hereof. Any conditions precedent
to STRA's obligation under the DDA, which are required to be satisfied on or
prior to the Closing Date, have been satisfied or waived. Any conditions
precedent to Chevron U.S.A. Inc.'s and Chevron U.S.A. Products Company's
obligation under the Chevron Environmental Indemnity, which are required to be
satisfied on or prior to the Closing Date, have been satisfied or waived. Any
conditions precedent to STRA's obligation under the STRA Environmental
Indemnity, which are required to be satisfied on or prior to the Closing Date,
have been satisfied or waived. Any conditions precedent to City's obligation
under the Development Agreement, which are required to be satisfied on or prior
to the Closing Date, have been satisfied or waived. The Borrower is not in
default under any of the Material Agreements and, to the best of Borrower's
knowledge, none of the other parties to the Material Agreements will be in
default of any of their respective obligations thereunder upon the Borrower's
acquisition of the Real Property. To the
- 45 -
best of Borrower's knowledge, STRA will not be in default in the performance of
any its obligations under the Project Documents (as defined in the DDA) upon the
Borrower's acquisition of the Real Property.
8.32 Borrower will keep and perform all of its material obligations to
be kept and performed by it under each of the Material Agreements and will
diligently enforce all material obligations to be kept and performed by each
other party under the Material Agreements. Without the prior written consent of
Lender, Borrower will not modify, amend, alter or change, in any material
respect, any of the Material Agreements or cancel or terminate the Material
Agreements. Borrower will do all things necessary and proper to keep each of the
Material Agreements in effect. Borrower will furnish Lender with copies of all
notices of default given or received by Borrower concurrently with the giving of
the same by Borrower or as soon as reasonably possible following the Borrower's
receipt thereof.
8.33 Borrower shall (i) keep and perform all obligations to be kept
and performed by it under the Dynamic Loan Documents; (ii) not modify, amend,
alter or change the Dynamic Loan Documents in any material respect; (iii) not
incur any indebtedness, which if incurred, would be secured by the Dynamic Loan
Document; and (iv) furnish Lender with copies of all notices given or received
by Borrower under the Dynamic Loan Documents concurrently with the giving of the
same or as soon as is reasonably following Borrower's receipt thereof.
8.34 In the event Borrower enters into a written agreement with Promus
Hotel Corporation or its affiliates (collectively "Promus") pursuant to which
Promus agrees to provide tours to the Project, Borrower shall use its reasonable
efforts to obtain an agreement from Promus that such agreement, to the extent
related to the Project, may be collaterally assigned to Lender as security for
the payment and performance of the Obligations and Borrower shall thereafter so
collaterally assign such agreement to Lender if consent to such assignment is
obtained from Promus.
8.35 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.
8.36 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.
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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 Receivables Loan
Documents:
(a) Lender fails to receive from Borrower when due and payable
any amount which Borrower is obligated to pay on the Note or any other
payment due under the Receivables Loan Documents; and such failure shall
continue for seven (7) days, except for the payment of the final
installment due at the Maturity Date, for which no grace period is allowed;
(b) any material representation or warranty of Borrower
contained in the Receivables Loan Documents or in any certificate furnished
under the Receivables Loan Documents proves to be, in any material respect,
false or misleading as of the date deemed made or restated;
(c) there is a default in the Performance of the Obligations
set forth in paragraphs 5.22, 8.8, 8.9, 8.13 or 8.29 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 Receivables Loan
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
pursuing such cure;
(e) an "Event of Default," as defined elsewhere herein or in
any of the other Receivables Loan Documents, occurs, or an act or event
occurs under any of the Receivables Loan 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;
- 47 -
(f) any material default by Borrower under any other agreement
evidencing, guaranteeing, or securing borrowed money or a receivables
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 $100,000 in the aggregate;
(g) any final, non-appealable judgment or decree for money
damages or for a fine or penalty against Borrower which is not paid and
discharged or stayed within 30 days thereafter and, when aggregated with
all other judgment(s) or decree(s) that have remained unpaid and
undischarged or not stayed for such period, the sum of such judgment and
decrees is in excess of $100,000;
(h) any party holding a lien or security interest in the
Receivables Collateral, or any other security for the Performance of the
Obligations or a lien on any common areas or 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; 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; makes an assignment for the benefit of
creditors; or admits in writing that it is unable to pay its debts; (ii)
any court order or judgment 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 60 days after the institution thereof, or (iv) a receiver, trustee
or other custodian is appointed with regard to Borrower or any Guarantor,
for any pan of the Receivables Collateral or the Project or for the assets
of Borrower or any Guarantor;
(j) Performance by Borrower or any Guarantor of any material
obligation under any Receivables Loan 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) An Event of Default, as defined in the Construction Loan
Agreement, occurs, or an act or event occurs under any of the Construction
Loan
- 48 -
Documents, whether or not denominated as an Event of Default, which
expressly entitles the Lender to exercise its remedies; or
(1) Notwithstanding the limitations in Paragraph 9. l(f),
-----------------
above, the declaration of default with regard to the obligations of the
Borrower under any of the Material Agreements or under the Dynamic Loan
Documents, beyond any applicable cure or grace periods contained therein.
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 of the Receivables Note and Working Capital
Note, together with prepayment premiums and all other sums owing by
Borrower to Lender in connection with the Receivables Loan 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 Construction Loan 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.
- 49 -
9.3 Notwithstanding anything in the Receivables Loan Documents to the
contrary, while an Event of Default exists, any cash received and retained by
Lender in connection with the Receivables Collateral may be applied to payment
of the Obligations in the manner provided in paragraph 9.5 hereof.
-------------
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
- 50 -
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.
(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
- 51 -
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, 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
Receivables Loan 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 Receivables Loan Document
conferred on or reserved to Lender is intended to be exclusive of any other
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder, under any other
Receivables Loan 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.
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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.
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. 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 its rights and remedies
under this Agreement and the Receivables Loan 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 its rights and
remedies under this Agreement and the Receivables Loan Documents, or
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which Borrower is required or obligated to perform under the terms of this
Agreement or the Receivables Loan Documents.
ARTICLE XI
----------
CONSTRUCTION AND GENERAL RULES
------------------------------
11.1 All moneys payable hereunder or under the Receivables Loan
Documents shall be paid to Lender at its address set forth below.
11.2 This Agreement and the other Receivables Loan 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
Receivables Loan Documents) concerning this transaction.
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.
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, or (ii) transmitted by postage
prepaid, certified or registered mail (return receipt requested) to such party
at its address after its signature on the signature page hereof or such other
address as the party being notified may have otherwise designated in a 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, whichever shall first occur. A copy
of any notices given to Borrower shall also be given to:
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Xxx Xxxx III, Esq.
Xxxxxxxxx, Xxxxxxx & Xxxxx
The Xxxxxxx Building, 16th Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
11.6 All the covenants, promises, stipulations and agreements of
Borrower and all the rights and remedies of the Lender in this Agreement
contained 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 GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF ARIZONA. BORROWER HEREBY AGREES THAT ALL ACTIONS OR
PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THE
RECEIVABLES LOAN DOCUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT OF ARIZONA,
MARICOPA COUNTY DIVISION, OR
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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 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 RECEIVABLES LOAN 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.
Initial /s/ illeg.
---------
Initial /s/ illeg.
---------
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 Receivables Loan Documents in
no event shall this
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Agreement or the Receivables Loan Documents require the payment or permit the
collection of interest in excess of the maximum contract rate permitted by the
Applicable Usury Law. 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 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
the 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.
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ARTICLE XII
-----------
SPECIAL PROVISIONS
------------------
12.1 Lender covenants and agrees that, notwithstanding anything to the
contrary herein or in any other Receivables Loan 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.
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
-----------------------------------
Vice President
XXXX XXXXXX, III
GROUP VICE PRESIDENT
Address:
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Vice-President-Resort Finance
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With a copy to:
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Vice-President-Group Counsel
[X] Check here to confirm that Paragraph 11.10
has been initialed.
"Borrower"
LAKE TAHOE RESORTS PARTNERS, LLC
a California limited liability company
By: AKGI Lake Tahoe Investments, Inc.
a California corporation
Its Members
By: /s/ [unreadable signature]
---------------------------------
Name:
Its:
Address:
x/x Xxxxxx/XXXX Group, Inc.
000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
[X] Check here to confirm that Paragraph 11.10
has been initialed.
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