Exhibit 10.25
AMENDMENT TO REIMBURSEMENT AGREEMENT
AND RATIFICATION OF GUARANTIES
THIS AMENDMENT TO REIMBURSEMENT AGREEMENT AND RATIFICATION OF
GUARANTIES (this "Amendment") is made as of the 3rd day of November, 1998, by
and among EL CONQUISTADOR PARTNERSHIP L.P., a Delaware limited partnership,
having an address at 0000 Xx Xxxxxxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxx, Xxxxxx
Xxxx 00000 ("Borrower"), PATRIOT AMERICAN HOSPITALITY, INC., a Delaware
corporation. having an address at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Guarantor"), and CITICORP REAL ESTATE, INC., a Delaware corporation, having an
address at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Lender").
RECITALS:
A. Lender is the owner and holder of certain reimbursement obligations
in the principal amount of $90,000,000 (collectively, the "Reimbursement
Obligations") which are outstanding pursuant to that certain Letter of Credit
and Reimbursement Agreement, dated as of February 7, 1991, by and between The
Bank of Tokyo-Mitsubishi, Ltd. (f/k/a The Mitsubishi Bank, Limited) ("BTM") and
the Borrower (as amended by the Modification Agreement (as hereinafter defined)
and as otherwise heretofore amended, the "Reimbursement Agreement").
B. The Reimbursement Obligations are secured, in part, by certain
Collateral Pledge Agreements more particularly described in the Reimbursement
Agreement and by certain other notes, deeds of mortgage, assignments, guaranties
and other documents and instruments executed in connection with the
Reimbursement Agreement (including those documents executed in connection with
that certain Assignment and Modification Agreement dated as of August 3, 1998 by
and among the Borrower, the Lender, the Puerto Rico Industrial, Medical,
Educational and Environmental Pollution Control Facilities Financing Authority,
Banco Popular de Puerto Rico, as trustee, and BTM (the "Modification
Agreement")) or otherwise with respect to the Reimbursement Obligations. The
term "L/C Documents", as used herein, shall have the meaning ascribed thereto in
the Reimbursement Agreement.
C. The Reimbursement Obligations are guaranteed by Guarantor pursuant to
a Guaranty dated as of August 3, 1998 in favor of Lender (the "Patriot
Guaranty") and that certain Guaranty, dated as of May 5, 1992, made by WMS
Industries Inc., Xxxx Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx for the
benefit of BTM, as assumed in part by Guarantor pursuant to that certain
Assumption of Guaranty, dated as of March 31, 1998, executed by Guarantor, and
that certain guaranty by Guarantor dated as of March 31, 1998 to assume the
obligations of KGC under paragraph 4 of the First Amendment to Letter of Credit
and Reimbursement Agreement
(the "Deficiency Loan Guaranty"; the Patriot Guaranty and the Deficiency Loan
Guaranty are hereinafter sometimes collectively referred to as the
"Guaranties").
D. The Reimbursement Obligations are due and payable in full no later
than November 3, 1998 (the "Initial Maturity Date") and Borrower has requested
that Lender extend the Initial Maturity Date to January 29, 1999 (the "Extended
Maturity Date") notwithstanding the fact that the conditions to extension of the
Initial Maturity Date as set forth in the Reimbursement Agreement have not been
satisfied; and
E. Lender has agreed to extend the Initial Maturity Date to the Extended
Maturity Date but only on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lender, Borrower and Guarantor hereby agree as
follows:
1. Recitals; Definitions. The recitals set forth herein are true and
accurate and are incorporated herein by reference. Capitalized terms not
otherwise defined herein shall have the meaning ascribed thereto in the
Reimbursement Agreement.
2. Maturity Date. Section 1 of the Reimbursement Agreement is hereby
amended to delete the term "Maturity Date" and to substitute the following in
lieu thereof:
MATURITY DATE shall mean the earlier to occur of (a) January 29, 1999,
or (b) any earlier date on which the entire Reimbursement Amount is
required to be paid in full, by acceleration or otherwise, under this
Agreement or any of the other L/C Documents.
Notwithstanding anything to the contrary contained in the Reimbursement
Agreement, Borrower shall not be entitled to any further extension of the
Maturity Date beyond January 29, 1999.
3. Reserves. Notwithstanding any provision of the Reimbursement
Agreement or in the Replacement Reserve Agreement, Debt Service Reserve
Agreements or Required Repair Reserve Agreement, each dated as of August 3,
1998, between Borrower and Lender, on or before the date hereof and as a
condition to the extension of the Initial Maturity Date to the Extended Maturity
Date, Borrower has caused the cash balances in each of the following escrows and
reserves to equal the amounts set forth below:
Tax escrow established pursuant to
Section 7(uu) of the Reimbursement
Agreement $3,268,176
Replacement Reserve Fund created
pursuant to the Replacement Reserve
Agreement $0.00
Debt Service Reserve Fund pursuant to
the Debt Service Reserve Agreement $1,725,000
Debt Service Reserve Fund pursuant to
the Debt Service Reserve Agreement (re
GDB Loan) $525,000
4. Net Proceeds.
a. Deposit. Prior to the date hereof, Borrower has received
$3,285,575 in insurance proceeds with respect to damage to the Hotel caused by
Hurricane Georges (the "Hurricane Damage"). Of such amount, $3,285,575 has been
applied by Borrower in accordance with Draw Request No. 1 and $0.00 (the
"Deposited Amount") has been deposited by Borrower with Lender as Net Proceeds
arising as a result of the Hurricane Damage. Guarantor, Lender and other loss
payees are parties to an Insurance Escrow Agreement (the "Insurance Agreement")
dated as of October 29, 1998 which requires, among other things, that all
additional funds, based on the Borrower's Allocable Share (as set forth in the
Insurance Agreement), payable with respect to the Hurricane Damage to the Hotel
(collectively, the "Additional Deposits," and together with the Deposited
Amount, the "Net Proceeds Reserve") shall be disbursed to Lender for deposit and
disbursement in accordance with the Disbursement Procedures (as hereinafter
defined). The foregoing notwithstanding and provided that no Event of Default or
Default shall have occurred and be continuing, Lender agrees that upon receipt
of written request from Borrower and Guarantor, Lender shall disburse $1,875,571
from Additional Deposits made after the date hereof (the "Available Insurance
Funds") to or as directed by Guarantor to be applied to repay a portion of the
loan made by Guarantor to Borrower on the date hereof in the amount of
$3,308,917 (the "Patriot Subordinated Loan"). Borrower and Guarantor acknowledge
and agree that the Patriot Subordinated Loan is unsecured, may be repaid only
from and to the extent of any Available Insurance Funds and from any Available
Tax Funds (as hereinafter defined) as
provided in Section 7 hereof and, subject to repayment as provided herein, is
fully subordinated to the Reimbursement Obligations in all respects.
b. Net Proceeds Reserve Fund. Upon receipt of the Deposited
Amount and each of the Additional Deposits, Lender shall deposit the same in an
interest-bearing escrow account (the "Net Proceeds Reserve Fund"). Borrower
hereby acknowledges and confirms that (i) the Net Proceeds Reserve Fund shall
not constitute a trust fund and may be commingled with other monies held by
Lender; (ii) Lender or its designee shall have the sole right to make
withdrawals from the Net Proceeds Reserve; and (iii) Lender shall have no
responsibility or liability for the amount of interest earned on the Net
Proceeds Reserve. All interest earned from investment of the funds deposited in
the Net Proceeds Reserve Fund shall be credited to the Net Proceeds Reserve
Fund. Borrower shall include and report such interest in its income for Federal,
state, commonwealth and local income and franchise tax purposes.
c. Security Interest. As additional security for the payment of
the Reimbursement Obligations and all other sums due under the L/C Documents and
the performance by Borrower of its obligations thereunder, Borrower hereby
pledges, assigns and grants to Lender a continuing perfected security interest
(to the extent Lender maintains possession of same) in and to and a first lien
upon, the Net Proceeds Reserve Fund and the Net Proceeds Reserve; provided that,
Lender shall make disbursements from the Net Proceeds Reserve in accordance with
the Disbursement Procedures.
d. Net Proceeds Default. Borrower shall be in default under the
Reimbursement Agreement if it fails to make when due any Additional Deposit or
other payment required pursuant to the Disbursement Procedures. Upon the
occurrence of such a default and during the continuance thereof, in addition to
the remedies specified in the Reimbursement Agreement, Lender shall be able to
exercise all of its rights and remedies under any or all of the L/C Documents.
If Borrower defaults on any payment due under the Reimbursement Agreement or any
of the other L/C Documents, or if Borrower defaults under any other provision in
the L/C Documents, then, upon any such default and during the continuance
thereof, Borrower shall not be entitled to receive any funds from the Net
Proceeds Reserve Fund and Lender may, in its sole and absolute discretion, use
the Net Proceeds Reserve (or any portion thereof) for any purpose permitted
under the L/C Documents, including, but not limited to (i) payment of all or any
portion of the Reimbursement Obligations and other amounts due under the L/C
Documents; provided, however, that such application of funds shall not cure or
be deemed to cure any default; (ii) reimbursement of Lender for all losses and
expenses (including, without limitation, reasonable legal fees) suffered or
incurred by Lender as a result of such default; and/or (iii) payment of any
amount expended in exercising any of the rights and remedies available to Lender
under the L/C Documents, at law or in equity, all in such order, proportion and
priority as Lender may determine in its sole and absolute discretion. Lender's
right to withdraw and apply the Net Proceeds Reserve Fund as provided herein
shall be in addition to all other rights and remedies provided to Lender under
the L/C Documents at law or in equity.
e. Insufficient Funds in the Net Proceeds Reserve Fund. The
insufficiency of any balance in the Net Proceeds Reserve Fund for the completion
of the Restoration (as defined on Schedule 1 hereto) shall not relieve Borrower
from its obligations under the Reimbursement Agreement or any of the other L/C
Documents.
5. Restoration After Casualty.
a. Proceeds Made Available. Notwithstanding anything to the
contrary contained in the Reimbursement Agreement or in any of the other L/C
Documents, the Net Proceeds Reserve shall be disbursed in accordance with the
terms, provisions and conditions set forth in Schedule 1 attached hereto and
made a part hereof (collectively, the "Disbursement Procedures") or as may
otherwise be approved by Lender in its sole and absolute discretion.
b. Lender's Costs and Expenses. Borrower acknowledges that Lender
may deduct Lender's reasonable costs and expenses of collecting the Net
Proceeds, including, without limitation, attorneys fees and expenses, from the
Net Proceeds Reserve Fund.
c. Re-Opening for Business. Borrower's failure to cause, on or
before December 31, 1998, all guest rooms, the casino, pool and other amenities
of the Hotel to be fully re-open so as to permit Borrower to conduct its
business in the manner in which such business was conducted prior to the
Hurricane Damage shall constitute an Event of Default under the
Reimbursement Agreement without notice or demand and without the benefit of any
grace period provided for in any L/C Document.
d. Project Schedule. Borrower's failure to deliver to Lender, on
or before November 30, 1998, a detailed project schedule for completion of the
Restoration, which schedule must be consistent with Borrower's obligation to
re-open for business as provided in Paragraph 5(c) above, shall constitute an
Event of Default under the Reimbursement Agreement without notice or demand and
without the benefit of any grace period provided for in any L/C Document.
6. Insurance Reserve.
a. Deposits. Borrower has deposited with Lender the amount of
$2,000,000.00 (the "Initial Insurance Deposit") as additional collateral for
payment of all costs incurred or required in connection with completion of the
Restoration. Borrower shall deposit with Lender an additional $5,500,000 in two
installments of $1,833,333.33 and one installment of $1,833,333.34 (each, an
"Additional Insurance Deposit") on each of December 1, 1998, December 22, 1998
and January 12, 1999, respectively (each, an "Insurance Reserve Deposit Date").
The Initial Insurance Deposit and Additional Insurance Deposits are collectively
referred to herein as the "Insurance Reserve". No portion of the Insurance
Reserve shall be advanced to Borrower except upon satisfaction of each of the
following conditions (collectively, the "Termination Conditions"): (i) no Event
of Default or Default shall exist and (ii) Borrower shall have satisfied, or
with an application of the funds in the Insurance Reserve shall satisfy, all of
the
requirements for the final Disbursement for the Restoration as required in
Schedule 1 hereto. Borrower's failure to deposit with Lender any Additional
Insurance Deposit on the applicable Insurance Reserve Deposit Date shall
constitute an Event of Default under the Reimbursement Agreement without notice
or demand and without the benefit of any grace period provided for in any L/C
Document.
b. Insurance Reserve Fund. Lender shall deposit the Insurance
Reserve in an interest-bearing escrow account (the "Insurance Reserve Fund").
Borrower hereby acknowledges and confirms that (i) the Insurance Reserve shall
not constitute a trust fund and may be commingled with other monies held by
Lender; (ii) Lender or its designee shall have the sole right to make
withdrawals from the Insurance Reserve Fund; and (iii) Lender shall have no
responsibility or liability for the amount of interest earned on the Insurance
Reserve. All interest earned from investment of the funds deposited in the
Insurance Reserve Fund shall be credited to the Insurance Reserve Fund. Borrower
shall include and report such interest in its income for Federal, state,
commonwealth and local income and franchise tax purposes.
c. Security Interest. As additional security for the payment of
all sums due under the L/C Documents and the performance by Borrower of its
obligations thereunder, Borrower hereby pledges, assigns and grants to Lender a
continuing perfected security interest (to the extent Lender maintains
possession of same) in and to and a first lien upon, the Insurance Reserve Fund
and the Insurance Reserve.
d. Default. If Borrower defaults on any payment due under the
Reimbursement Agreement or any of the other L/C Documents, or if Borrower
defaults under any other provision in the L/C Documents, then, upon any such
default and during the continuance thereof, Borrower shall not be entitled to
receive any funds from the Insurance Reserve and Lender may, in its sole and
absolute discretion, use the Insurance Reserve (or any portion thereof) for any
purpose permitted under the L/C Documents, including, but not limited to (i)
payment of all or any portion of the Reimbursement Obligations and other amounts
due under the L/C Documents; provided, however, that such application of funds
shall not cure or be deemed to cure any default; (ii) reimbursement of Lender
for all losses and expenses (including, without limitation, reasonable legal
fees) suffered or incurred by Lender as a result of such default; and/or (iii)
payment of any amount expended in exercising any of the rights and remedies
available to Lender at law or in equity or under the L/C Documents, all in such
order, proportion and priority as Lender may determine in its sole discretion.
Lender's right to withdraw and apply the Insurance Reserve Fund as provided
herein shall be in addition to all other rights and remedies provided to Lender
under the L/C Documents and at law or in equity.
e. Insufficient Funds in the Insurance Reserve Fund. The
insufficiency of any balance in the Insurance Reserve Fund shall not relieve
Borrower from its obligations under the Reimbursement Agreement or any of the
other L/C Documents.
7. Tax Escrow. Notwithstanding anything to the contrary contained in the
Reimbursement Agreement, if Borrower shall hereafter deliver to Lender written
confirmation, in form reasonably acceptable to Lender, from the Municipal
Revenue Collection Center ("XXXX")
of the maximum amount of Taxes which are claimed by XXXX to be due and payable
with respect to the Hotel for the fiscal years 1994-95 through 1998-99 (the
"Maximum Tax Amount"), then, to the extent that the Maximum Tax Amount is less
than the amount then on deposit in the tax escrow established under Section
7(uu) of the Reimbursement Agreement (the "Tax Escrow Balance"), provided that
no Event of Default or Default shall have occurred and be continuing, Lender
shall, upon receipt of written request from Borrower and Guarantor, disburse an
amount equal to the lesser of (i) the positive difference between the Tax Escrow
Balance and the Maximum Tax Amount (the "Available Tax Funds") and (ii)
$1,433,346, to or as directed by Guarantor to be applied to repay a portion of
the Patriot Subordinated Loan; provided, further, that, in the event that the
amount of the Available Tax Funds exceeds $1,433,346, provided that no Event of
Default or Default shall have occurred and be continuing, Lender shall disburse
such excess funds to Borrower upon Borrower's written request therefor. Further,
notwithstanding anything to the contrary contained in Section 7(uu) of the
Reimbursement Agreement, Lender shall, upon the written request of the Borrower
and upon receipt of a final tax xxxx or other evidence reasonably satisfactory
to Lender that Borrower and XXXX have agreed upon the amount of Taxes due and
payable for fiscal years 1994-95 through 1998-99 (collectively, the "Tax Payment
Documents"), disburse directly to XXXX (in accordance with payment instructions
provided by XXXX), to the extent of any funds then held by Lender pursuant to
Section 7(uu) of the Reimbursement Agreement, the agreed upon tax payment, such
disbursement to be made by
Lender within the time period required by XXXX but no sooner than five (5)
Business Days following Lender's receipt of the Tax Payment Documents.
8. References. All references in the Reimbursement Agreement and each of
the other L/C Documents to the Reimbursement Agreement shall mean and refer to
the Reimbursement Agreement, as amended hereby.
9. Outstanding Indebtedness. Borrower and Guarantor represent and
warrant to Lender that, as of the date hereof, the outstanding principal balance
of the Reimbursement Obligations is $90,000,000 and that interest has been paid
through October 31, 1998.
10. Confirmation of Representations and Warranties. Except as set forth
in Schedule 2 hereto, each of Borrower and Guarantor hereby represents and
warrants to Lender that each of the representations and warranties of Borrower
or Guarantor, as the case may be, contained in the Modification Agreement and
each of the Additional Security Documents ( as such term is defined in the
Modification Agreement) to which it is a party are true, correct and complete as
of the date hereof and apply to the execution and delivery of this Amendment and
any other documents executed in connection herewith.
11. No Defenses. Each of Borrower and Guarantor hereby acknowledges,
confirms and warrants to Lender that as of the date hereof it has no defenses,
claims, rights of set-of or counterclaims against Lender under, arising out of,
or in connection with, this Amendment, the Reimbursement Agreement, the
Reimbursement Obligations, the Guaranties or any of the other L/C Documents, or
against any of the indebtedness evidenced, advanced or secured thereby or
under any other documents executed in connection therewith or relating thereto,
any and all of which Borrower and Guarantor hereby expressly waive.
12. Release. Each of Borrower and Guarantor acknowledges that it is
executing this Amendment as its own voluntary act and free from duress and undue
influence and upon and with the advice of counsel. Each of Borrower and
Guarantor hereby unconditionally and irrevocably forever releases, acquits and
discharges Lender, its predecessors, subsidiaries and affiliates and their
respective employees, officers, directors, shareholders, agents, servants and
counsel (collectively, the "Related Parties") from any and all claims, demands,
actions, causes of actions, suits, debts, costs, dues, sums of money, accounts,
bonds, bills, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments expenses and liabilities whatsoever,
known or unknown, at law or in equity, irrespective of whether such claims arise
out of contract, tort, violation of laws or regulations or otherwise, which
Borrower or Guarantor ever had, now has or hereafter can, shall or may have
against Lender or any of the Related Parties for, upon, or by reason of any
matter, cause or thing whatsoever from the beginning of the world to and
including the date hereof arising out of, in connection with, or related in any
manner to the Hotel, the Reimbursement Obligations, the Mortgaged Property (as
hereinafter defined), the Reimbursement Agreement, this Amendment, the
Guaranties or any of the other L/C Documents.
13. Confirmation of Mortgages and Liens.
a. Borrower acknowledges and agrees that the Fee Mortgage and
the Second Fee Mortgage (collectively, the "Fee Mortgages") constitute and
continue to be valid first mortgage liens and security interests upon the
Mortgaged Property (as defined therein) in favor of Lender, as the assignee of
BTM under the Collateral Pledge Agreement and the Second Collateral Pledge
Agreement, (collectively, the "Collateral Pledge Agreements"), and as the holder
of the Notes and the holder of the rights of BTM under the Reimbursement
Agreement, subject only to permitted encumbrances as provided therein, that the
obligations of the Borrower under the Reimbursement Agreement, as modified
hereby, are secured by, among other things, the Collateral Pledge Agreements,
the Notes, the Fee Mortgages and that the Fee Mortgages and each of the other
L/C Documents constitute valid and subsisting agreements and obligations of the
Borrower. Nothing herein is intended to, nor shall it, constitute a novation of
the indebtedness secured by the Collateral Pledge Agreements, the Notes or the
Fee Mortgages. The Mortgaged Property (as defined in each of the Fee Mortgages,
respectively) is and shall remain subject to and encumbered by the lien, charge
and encumbrance of the applicable Fee Mortgage, and nothing herein contained
shall affect or be construed to affect the lien or encumbrance of either of the
Fee Mortgages or the priority thereof over other liens or encumbrances.
b. The Borrower acknowledges and agrees that the Leasehold
Mortgage constitutes, and continues to be, a valid first mortgage lien and
security interest upon the Mortgaged Property (as defined therein) in favor of
Lender, as assignee of BTM under the Collateral Pledge Agreements and as the
holder of the Notes and the holder of the rights of BTM
under the Reimbursement Agreement, subject only to permitted encumbrances as
provided therein, that the obligations of the Borrower under the Reimbursement
Agreement, as modified hereby, are secured by, among other things, the
Collateral Pledge Agreements, the Notes and Leasehold Mortgage, and that the
Leasehold Mortgage and each of the other L/C Documents, constitute valid and
subsisting agreements and obligations of the Borrower. Nothing herein is
intended to, nor shall it, constitute a novation of the indebtedness secured by
the Collateral Pledge Agreements, the Notes or the Leasehold Mortgage. The
Mortgaged Property (as defined in the Leasehold Mortgage) is and shall remain
subject to and encumbered by the lien, charge and encumbrance of the Leasehold
Mortgage, and nothing herein contained shall affect or be construed to affect
the lien or encumbrance of the Leasehold Mortgage or the priority thereof over
other liens or encumbrances.
14. Consent and Reaffirmation. Guarantor hereby confirms its obligations
under each of the Guaranties and any other L/C Document to which it is a party
and consents to the terms of this Amendment and the transactions contemplated
herein. Nothing contained in this Amendment or any of the other L/C Documents or
any of the transactions contemplated herein or thereby shall be deemed to waive,
release, or limit any obligation of the Guarantor relating to or otherwise
connected with the Guaranties or any of the other L/C Documents, as modified
hereby. Nothing herein is intended to, nor shall it, constitute a novation of
the indebtedness secured by
the Guaranties. Except as expressly set forth in this Amendment, nothing herein
is intended to nor shall it expand the liability of Guarantor under the
Guaranties.
15. Affiliate Loans and Other Indebtedness. The Guarantor and Borrower
acknowledge and agree that any loan made by Guarantor (or any affiliate
thereof), directly or indirectly, to Borrower on or after August 3, 1998 and
outstanding on the date hereof (including, without limitation, that certain
unsecured loan in the amount of up to $5,000,000 made by Guarantor to Borrower
on or about August 3, 1998) shall be re-characterized on the books of the
Borrower and Guarantor (or affiliate) as a partnership contribution by one or
more of Borrower's partners to Borrower for all purposes and shall under no
circumstances constitute indebtedness of the Borrower. Except for the Patriot
Subordinated Loan, no further indebtedness shall be created or incurred by the
Borrower other than as expressly permitted in the L/C Documents. After the date
hereof, any and all monies funded, directly or indirectly, to the Borrower by
Guarantor (or any affiliate thereof), except to the extent such funding
represents repayment of indebtedness due Borrower, shall be funded as a
partnership contribution to the Borrower for all purposes and shall under no
circumstances constitute indebtedness of the Borrower.
16. Expenses of Transaction. Simultaneously upon the execution of this
Amendment, Borrower and Guarantor shall pay all fees, costs, expenses and
disbursements of Lender and Lender's counsel in connection with the preparation,
execution and delivery of this Amendment and each of the other documents
executed in connection herewith and in connection with the transactions
contemplated hereby.
17. No Oral Modification. This Amendment may not be amended except upon
the written agreement of all of the parties hereto.
18. Ratification. Except as expressly modified and amended herein, each
of Borrower and Guarantor covenants and agrees that all of the terms, covenants,
promises, warranties, representations and conditions of the Reimbursement
Agreement, the Guaranties, and each of the other L/C Documents shall remain in
full force and effect with respect to the Borrower and Guarantor. Borrower
hereby ratifies and confirms each of its obligations under the Reimbursement
Agreement, as modified hereby, and each of the other L/C Documents. Guarantor
hereby ratifies and confirms each of its obligations under the Guaranties and
each of the other L/C Documents to which it is a party.
19. Binding Upon Successors and Assigns. This Amendment shall inure to
the benefit of, and shall be binding upon, the parties hereto and their
respective successors and permitted assigns under the Reimbursement Agreement.
20. Headings. The headings of the sections and subsections of this
Amendment are for convenience of reference only and shall not be considered a
part hereof nor shall they be deemed to limit or otherwise affect any of the
terms or provisions hereof.
21. Validity of Provisions. Any provision of this Amendment which may
prove unenforceable under law shall not affect the validity of the other
provisions hereof.
22. Judicial Interpretation. Should any provision of this Amendment, the
Reimbursement Agreement or any of the L/C Documents require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any party by reason of the rule of construction that a
document is to be construed more strictly against the party who itself or
through its agent prepared the same, it being agreed that all parties hereto
have participated in the preparation of this Amendment.
23. Time; Construction; Exhibits and Schedules. Time is of the essence
of each provision of this Amendment. All references to the singular or plural
number or masculine, feminine or neuter gender shall, as the context requires,
include all others. All references to sections, paragraphs, and exhibits are to
this Amendment unless otherwise specifically noted. The use of the words
"hereof", "hereunder", "herein" and words of similar import shall refer to this
entire Amendment and not to any particular section, paragraph or portion of this
Amendment unless otherwise specifically noted. All exhibits and schedules
attached hereto are by this reference made a part of this Amendment for all
purposes.
24. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one agreement. It shall not be necessary for the same counterpart to
be signed by all of the parties in order for this instrument to be fully binding
upon any party signing at least one counterpart.
25. Governing Law. THIS AMENDMENT SHALL BE GOVERNED, CONSTRUED, APPLIED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
26. Conflicting Provisions. In the event of any conflict between this
Amendment and the terms of the Reimbursement Agreement or any of the other L/C
Documents, the terms of this Amendment shall govern and control. Whenever
possible, the provisions of this Amendment shall be deemed supplemental to and
not in derogation of the terms of the Reimbursement Agreement and the other L/C
Documents.
27. Entire Agreement. This Amendment and the documents executed and
delivered in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof, and all understandings (oral
or written) and agreements heretofore had among the parties are merged in or
contained in this Amendment and such documents.
28. Facsimile Execution. Delivery of an executed counterpart of a
signature page to this Amendment by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Amendment.
29. Waiver of Jury Trial. LENDER, BORROWER AND GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY, IRREVOCABLY AND
INTENTIONALLY FOREVER WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON THIS AMENDMENT OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AMENDMENT, THE REIMBURSEMENT AGREEMENT, OR ANY OTHER
DOCUMENTS EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY OR THE EXERCISE BY ANY PARTY OF ITS RIGHTS UNDER THIS AMENDMENT OR
ANY OF THE OTHER L/C DOCUMENTS OR IN ANY WAY ARISING OUT OF OR RELATED IN ANY
MANNER WITH THE HOTEL OR THE SUBJECT MATTER HEREOF OR THEREOF (INCLUDING,
WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AMENDMENT OR ANY OF THE
L/C DOCUMENTS AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AMENDMENT OR ANY
OTHER L/C DOCUMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE);
BORROWER AND GUARANTOR ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR
LENDER TO ENTER INTO AND ACCEPT THIS AMENDMENT.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK]
IN WITNESS WHEREOF, THIS AMENDMENT has been executed by Borrower,
Guarantor and Lender as of the day and year first above written.
BORROWER:
EL CONQUISTADOR PARTNERSHIP, L.P., a Delaware limited
partnership
By: Conquistador Holding, Inc., a Delaware
corporation, its general partner
By: /s/ Xxxxx Xxxxxx
-------------------------------
Xxxxx Xxxxxx
Vice President
LENDER:
CITICORP REAL ESTATE, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx
Authorized Signatory
GUARANTOR:
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Xxxxx Xxxxxx
Vice President
SCHEDULE 1
Disbursement Procedures
This Schedule 1 (all terms, provisions and conditions set forth herein
being collectively referred to as the "Disbursement Procedures") is attached to
and forms an integral part of that certain Amendment to Reimbursement Agreement
and Ratification of Guaranties dated as of November 3, 1998 by and among the
Borrower, the Guarantor and the Lender (the "Amendment"). All initially
capitalized terms used herein, unless otherwise specifically defined herein,
shall have the respective meanings assigned to such terms in the Amendment or,
if not otherwise specifically defined in the Amendment, in the Reimbursement
Agreement, as modified by the Amendment.
Section 1. Amount of Disbursements. Disbursements for the payment of
costs of labor, materials, and services supplied for the Restoration shall be
made by Lender, not more frequently than twice per calendar month (except as
otherwise specifically provided in Section 2(i) hereof), upon compliance by
Borrower with the Disbursement Procedures after actual commencement of the
Restoration for work actually completed during the preceding period or as
otherwise approved by Lender in its sole and absolute discretion. From time to
time, Borrower shall submit a Request for Disbursement to Lender requesting a
Disbursement for the payment of costs of labor, materials, and services supplied
or, subject to the approval of the Lender, to be
supplied, for the Restoration or for the payment of other costs and expenses
incident thereto, and specified in the Approved Construction Budget. All costs
for which a Disbursement is requested shall be evidenced by invoices or other
documentation acceptable to Lender submitted with the Request for Disbursement.
Lender may require an inspection of and favorable report on the Restoration and
review of the Request for Disbursement by Lender's Engineer prior to making any
Disbursement. Prior to each Disbursement, Borrower shall have furnished to
Lender and Lender shall have received and approved all of the documents,
materials and information required pursuant to this Schedule 1, including
without limitation, the Request for Disbursement, the Project Summary, the
Project Budget Reallocation Request, if applicable, and the change orders
contained therein (if applicable) and the projected disbursement schedule.
Disbursements for payment of costs of the Restoration shall not exceed the
aggregate of (a) the costs of labor, materials, and services incorporated (or,
as approved by the Lender, to be incorporated) into the Restoration in a manner
acceptable to Lender, plus (b) if approved by Lender, the purchase price of all
uninstalled materials to be utilized in the Restoration stored at the Hotel, or
elsewhere with the written consent of, and in a manner acceptable to, Lender,
less (c) retainage, if any, as set forth in Section 6 hereof, and less (d) all
prior Disbursements for payment of costs of labor, materials, and services with
respect to the Restoration. Each Request for Disbursement shall be submitted by
Borrower to Lender a reasonable time (but not less than five Business Days)
prior to the date on which a Disbursement is desired by Borrower, and Lender
shall make such Disbursement no later than five Business Days after receipt of a
complete Request for
Disbursement, subject to Lender's determination that the Request for
Disbursement satisfies the requirements set forth herein.
Section 2. Conditions Precedent to Disbursement of Net Proceeds Reserve.
Lender will have no obligation to make any disbursements of the Net Proceeds
Reserve (each, a "Disbursement" and collectively, the "Disbursements") unless
each and all of the following conditions precedent has been satisfied in a
manner satisfactory to Lender and the Lender's Engineer (sometimes collectively
referred to herein as the "Disbursement Conditions"):
(a) Borrower has submitted to and Lender has reviewed and
approved (i) any and all applicable Plans and Specifications for that
portion of the Restoration for which a Disbursement is being requested;
(ii) the Construction Manager's Agreement, (iii) the initial Approved
Construction Budget, and (iv) any building permits or permits and all
other approvals required by the Authorities with respect to that portion
of the Restoration for which a Disbursement is being requested.
(b) All Disbursement Procedures and other conditions provided
elsewhere in the Amendment or in the Reimbursement Agreement, as
modified by the Amendment, as a condition to any Disbursement have been
satisfied as determined by Lender in its sole and absolute discretion;
(c) Each of the Additional Disbursement Conditions shall have
been satisfied;
(d) Borrower shall deliver to Lender or its designated
representative a Request for Disbursement, requesting such Disbursement
at least five Business Days prior to the Business Day each Disbursement
is requested to be made;
(e) With respect to Disbursements relating to those portions of
the Restoration which are included within the scope of work described in
the Construction Manager's Agreement, the Construction Manager shall
deliver to Lender an Application and Certificate for Payment (AIA
Document G 702) together with accurate and complete Continuation Sheets
(AIA Document G 703) and a General Contractor's Affidavit in the form of
Exhibit "4" attached hereto, each dated within five (5) days of the
Request for Disbursement;
(f) Construction Manager and each Major Subcontractor (and any
other Subcontractor as requested by the Lender) supplying materials or
labor to the Hotel shall deliver to Lender an executed and acknowledged
cumulative lien release or waiver releasing or waiving all rights to
constitutional, statutory, contractual or common law Liens against the
Hotel for all labor or materials so supplied for all sums previously
funded to Borrower for payment to the Construction Manager or each such
Subcontractor;
(g) With respect to any Disbursements relating to the portion of
the Restoration more particularly described on Annex A attached hereto
(collectively, the "Construction Work"), Architect shall submit an
Architect's Certificate that the Construction Work is
being constructed in accordance with any applicable Plans and
Specifications therefor and in accordance with all applicable laws,
and the other information set forth in the Architect's Certificate;
(h) The requested Disbursement is within the Line Item limits,
both cumulatively and as to each particular payment to be funded under
the Disbursement, specified in the Approved Construction Budget and
consistent with Lender's inspection reports;
(i) No more than one other Disbursement shall have been made in
the same calendar month; provided, however, that weekly Disbursements
shall be permitted during the first 6 weeks following the date hereof;
(j) Such Disbursement, unless it is the final Disbursement (in
which case no minimum amount shall be required), shall be in an amount
not less than $500,000;
(k) Each Disbursement pertains to work that has been completed
or has otherwise been approved by Lender;
(l) All other conditions of the Reimbursement Agreement, as
amended by the Amendment, and the other L/C Documents have been
satisfied; and
(m) All matters related to such Disbursement are reasonably
satisfactory to Lender and its counsel.
Section 3. Additional Documents and Conditions for Disbursements.
(a) If requested by Lender, Borrower shall deliver to Lender
evidence substantiating any of the matters contained in this Schedule 1
which are necessary to enable Borrower to qualify for such Disbursement.
Lender, at its election, may make any Disbursement without having
received all items to be delivered as a condition precedent thereto,
but such action by Lender shall not be deemed to be a waiver of the
requirement that each such item be delivered as a condition precedent
to any subsequent Disbursement.
(b) Any Disbursement Conditions not satisfied on or prior to the
date of the Amendment or separately provided for in this Schedule 1 must
be supplied to and approved by Lender prior to any Disbursement of the
Net Proceeds Reserve.
(c) Notwithstanding anything to the contrary contained herein,
in the Amendment, the Reimbursement Agreement or any of the other L/C
Documents, Lender shall have no obligation to advance any of its own
funds for the completion of the Restoration and shall make Disbursements
only to the extent of available funds in the Net Proceeds Reserve Fund
and only upon satisfaction of the conditions for such disbursement as
provided herein.
Section 4. Direct Disbursements. With respect to the portion of each
Disbursement that is to be used to make payments to Persons, Lender may make
such portion of such Disbursement directly to each such Person, and the
execution of the Amendment by Borrower constitutes an irrevocable direction and
authorization to so advance, at the election of Lender.
No further direction or authorization from Borrower shall be necessary to make
such direct Disbursement to each such Person, and all such direct Disbursements
shall satisfy the obligations of Lender hereunder as if made directly to
Borrower, regardless of the disposition thereof by such Person.
Section 5. Conditions Precedent to Final Disbursement. In addition to
the conditions precedent stated elsewhere in this Schedule 1, Lender shall not
be obligated to make the final Disbursement for the Restoration until Lender
receives (or has previously received) each of the following with respect to the
Hotel:
(a) Evidence that all of the Substantial Completion requirements
have been satisfied;
(b) All bills for labor and material with respect to the
Restoration have been paid in full or adequate reserves satisfactory to
Lender have been established for payment of such bills;
(c) Certificate by both the Architect (if applicable) and
Lender's Engineer stating that the Restoration has been fully completed;
(d) All necessary completion documents as required herein or as
otherwise requested by Lender;
(e) Full and unconditional lien waivers or releases executed by
the Architect (if applicable), the Construction Manager, each
Subcontractor and Materialmen that has worked on the Restoration; and
(f) Approval of the sureties under any bonds.
Section 6. Retainages. With respect to that portion of each Disbursement
that is used to pay costs of the Restoration (other than professional fees,
non-construction related or "soft" costs and all fees, costs and expenses
payable by Borrower to Lender), Lender shall retain an amount equal to ten
percent (10%) of such Disbursement (each, the "Retainage"), as retainage for
completion of the Restoration. Lender will release the portion of the Retainage
being held with respect to the Construction Manager, Subcontractor or
Materialman engaged in the Restoration as of the date upon which the Lender's
Engineer certifies to Lender that the Construction Manager, Subcontractor or
Materialman has satisfactorily completed all work and has supplied all materials
in accordance with the provisions of the Construction Manager's Agreement,
Subcontractor's or Materialman's Contract, and the Construction Manager,
Subcontractor or Materialman delivers the lien waivers or releases and evidence
of payment in full of all sums due to the Construction Manager, Subcontractor or
Materialman as may be reasonably requested by Lender or by the title company
insuring the liens of the Fee Mortgages and Leasehold Mortgage (collectively,
the "Mortgages"). If required by Lender, the release of any such portion of the
Retainage shall be approved by the surety company, if any, which has issued a
payment and performance bond with respect to the Construction Manager,
Subcontractor or Materialman.
Section 7. Reallocation of Approved Construction Budget. Lender reserves
the right to make Disbursements which are allocated to any of the designated
items in the Approved Construction Budget for such other purposes or in such
different proportions as Lender may deem necessary or advisable under the
circumstances. Borrower may not reallocate items of cost or change the Approved
Construction Budget without the prior written consent of Lender. Any Cost
Savings in one budgeted Line Item may, with the approval of Lender, which
approval shall not be unreasonably withheld, be reallocated to another budgeted
Line Item.
Section 8. Payment and Performance Bonds; Insurance. A payment and
performance bond in an amount equal to at least 100% of the contract price with
respect to each Major Subcontract shall be required from the respective
Subcontractor and said payment and performance bond shall name Lender as a dual
obligee and shall be in form and content and issued by a company doing business
in the Commonwealth of Puerto Rico, all to the satisfaction of the Lender. In
addition, each such Subcontractor shall provide evidence of comprehensive
general public liability insurance, with a broad form contractual liability
endorsement insuring all obligations of such Subcontractor under its
Subcontract, with a combined single limit of not less than $1,000,000 per
occurrence for bodily injury and property damage, insuring such Subcontractor
and naming the Borrower and the Lender as additional insureds against any
injuries or damage to persons or property that may result from or are related to
work performed by such Subcontractor; such comprehensive general public
liability insurance shall be written on forms as Lender shall approve and by
insurance companies licensed in Puerto Rico and
acceptable to Lender. The Construction Manager shall not enter into any
Subcontract for which such a payment and performance bond and insurance, if
required hereunder, has not been provided without the prior written consent of
the Lender and the Lender's Engineer.
Section 9. Construction-Related Covenants. Borrower shall comply with
each of the following covenants:
(a) Commencement and Manner of Construction. Lender and Borrower
acknowledge that the Restoration has been commenced. Borrower shall
cause the Restoration to be prosecuted with diligence and continuity to
completion and in accordance with a completion schedule acceptable to
Lender and substantially in accordance with any and all Plans and
Specifications, and in full compliance with all applicable laws, good
building practices, all applicable restrictive covenants and similar
restrictions, the L/C Documents and the Approved Construction Budget.
(b) Inspection of Restoration. At all reasonable times and upon
reasonable notice, whether before or after completion of the
Restoration, Borrower shall permit Lender, Lender's Engineer and/or its
representatives to inspect the Hotel and the Restoration and any
location where materials intended to be utilized in the Restoration are
stored, and to examine all detailed plans and drawings that are or may
be kept at the construction site.
(c) Correction of Defects. Borrower shall correct or cause to be
corrected (a) any material defect in the Restoration, (b) any material
departure in the Restoration from the Plans and Specifications or the
requirements of any applicable laws or (c) any
encroachment by any part of the Restoration or any other structure
located on the Land on any building line, easement, property line, or
restricted area.
(d) Change Orders.
(i) Borrower shall promptly furnish to Lender true and
correct copies of all changes, amendments, or supplements to the
Plans and Specifications, the Approved Construction Budget, or of
the Construction Manager's Agreement, and Borrower shall not be
permitted to make any such changes, amendments, or supplements in
violation hereof.
(ii) Any and all Cost Savings realized by Borrower on any
items set forth in the Approved Construction Budget shall be
added to the Line Item entitled "Contingency" in the Approved
Construction Budget (such amounts in such line item being
hereinafter referred to as the "Contingency Amount"). The
Contingency Amount may be used to pay for any items set forth in
the Approved Construction Budget to the extent approved by Lender
in writing (which approval shall not be unreasonably withheld).
(e) Storage of Materials. Borrower shall cause all materials
supplied for, or intended to be utilized in, the Restoration, but not
affixed to or incorporated into the Improvements or the Hotel, to be
stored at the Hotel, or at such other location as may be approved by
Lender in writing, with adequate safeguards to protect Lender's security
therein and to prevent loss, theft, damage, or commingling with other
materials or projects. Unless Lender, in its sole and absolute
discretion, shall otherwise agree in writing, Lender shall have no duty
to make any Disbursement for any such materials until they are otherwise
incorporated into the Improvements.
(f) Subcontracts. Each Subcontract shall provide that it may,
and on demand by Lender to Construction Manager will, be assigned to
Lender by instruments Lender may deem necessary to effectuate such
assignment, and that on demand by Lender, the Subcontractor will perform
thereunder for the benefit of Lender.
(g) Construction Contracts. Except for those contracts more
particularly described on Annex B attached hereto and made a part hereof
and except for any contracts approved by the Insurance Adjuster,
Borrower shall become party to no contract, including the Construction
Manager's Agreement, for the performance of any work with respect to the
Restoration or for the supplying of any labor, materials, or services
for the Restoration except upon such terms and with such parties as
shall be approved in writing by Lender. The Construction Manager's
Agreement shall provide that all liens of the Construction Manager are
subordinate to the Mortgages and shall require all Subcontracts to
contain a provision subordinating the Subcontractors' liens to the
Mortgages. The Construction Manager's Agreement shall also provide that
no change orders to the Plans and Specifications for the Restoration
shall be effective without the prior written approval of Lender and
Lender's Engineer. No approval by Lender of any
construction contract or change order shall make Lender responsible
for the adequacy, form, or content of such construction contracts or
change orders.
(h) Material Changes. Borrower shall not make or permit to be
made any Material Change in any Plans and Specifications or the Approved
Construction Budget or execute, or permit the execution of, any change
orders with respect to any of the same, which would result in a
Material Change without Lender's prior written consent, which consent
may be withheld for any reason in Lender's sole and absolute
discretion.
(i) List of Contractors. Borrower shall deliver to Lender
simultaneously with each Request for Disbursement correct lists of all
Subcontractors and Materialmen employed in connection with the
Restoration. Borrower shall further deliver to Lender from time to time
not later than 30 days after Lender's demand therefor correct copies of
all contracts with Subcontractors and Materialmen. Each such list shall
show the name, address and telephone number of each such Subcontractor
and Materialman, a general statement of the nature of the work to be
done, the labor and materials to be supplied, the approximate dollar
value of such labor, work and materials itemized with respect to each
Subcontractor and Materialman, and the unpaid portion and status of such
work or whether such materials have been delivered. In the event that
Lender determines that any information provided to Lender is incomplete,
Lender shall have the right, without either the obligation or the duty,
to contact directly each such Subcontractor and Materialman to
verify the facts disclosed by such list or reflected in the relevant
contract or any other information provided by Borrower or relating to
the Hotel.
(j) Permits and Warranties. Borrower shall deliver to Lender
from time to time copies of: (i) all building and other permits,
approvals, and authorizations required in connection with the
Restoration and the reoccupancy of the Hotel promptly upon issuance and
receipt by Borrower thereof, and in any event before any act is done
which requires the issuance of the respective permit, approval or
authorization, and (ii) upon the request of Lender, all warranties and
guarantees received from any Person furnishing labor, materials,
equipment, fixtures or furnishings in connection with the Restoration.
(k) Physical Security of the Hotel. Borrower shall provide such
watchmen and take such other measures to protect the physical security
of the Restoration as Lender may from time to time require.
Section 10. No Waiver. No Disbursement shall constitute a waiver of any
condition precedent to the obligation of Lender to make any further
Disbursements or preclude Lender from thereafter declaring the failure of
Borrower to satisfy such condition precedent to be an Event of Default.
Section 11. Conditions Precedent for the Benefit of Lender. All
conditions precedent to the obligation of Lender to make any Disbursement are
imposed hereby solely for the benefit of Lender, and no other party may require
satisfaction of any such condition precedent or be entitled to assume that
Lender will refuse to make any Disbursement in the absence of strict
compliance with such conditions precedent. Any and all Disbursement Conditions
or other requirements or conditions provided herein may be waived by Lender, in
whole or in part, at any time.
Section 12. Definitions. As used in this Schedule 1, the following terms
shall have the meanings indicated:
"Additional Disbursement Conditions" means all of the following: (a)
there shall exist no Event of Default or Default (currently and after giving
effect to the requested disbursement); (b) the representations and warranties
contained in the Modification Agreement and all other Additional Security
Documents (as defined in the Modification Agreement) are true and correct; (c)
Borrower shall have paid Lender's costs and expenses in connection with such
Disbursement (including title charges, and costs and expenses of Lender's
Engineer and its attorneys); (d) no change shall have occurred in the financial
condition of the Borrower or any Guarantor or in the net operating income of the
Hotel, which would have a material adverse effect on the Hotel or on Borrower's
ability to pay the Reimbursement Amount or any other amounts due under the
Reimbursement Agreement or under any of the other L/C Documents as such amounts
become due or on the Borrower's or any Guarantor's ability to perform its
obligations under the L/C Documents as such obligations become due; (e) no
condemnation or adverse zoning or usage change shall have been commenced with
respect to the Hotel, or any portion thereof, and the Borrower shall not have
any knowledge of any Authority taking affirmative steps to condemn, adversely
zone or change the usage of the Hotel, or any portion thereof; (f) the Hotel
shall not
have suffered any damage by fire or other casualty which has not been repaired
or is not being restored in accordance with the terms hereof or, with respect to
any damage other than the Hurricane Damage, in accordance with the terms of the
Reimbursement Agreement, as amended hereby; (g) no law, regulation, ordinance,
moratorium, injunction proceeding, restriction, litigation, action, citation or
similar proceeding or matter shall have been enacted, adopted, or threatened by
any governmental authority, which would have, in Lender's reasonable judgment, a
material adverse effect on the Hotel or Borrower's or any Guarantor's ability to
perform its obligations under the L/C Documents; and (h) no litigation or appeal
therefrom shall be pending with respect to any permits or other approvals issued
in connection with the Restoration and no potential litigation is threatened
that may prevent the timely completion of the Restoration and utilization of the
Hotel.
"Affidavit of Borrower" means a sworn affidavit of Borrower (and such
other parties as Lender may require) to the effect that all statements,
invoices, bills, and other expenses incident to the Restoration incurred to a
specified date, whether or not specified in the Approved Construction Budget,
have been paid in full, except for (a) amounts retained pursuant to the
Construction Manager's Agreement, and (b) items to be paid from the proceeds of
the Disbursement then being requested or in another manner satisfactory to
Lender.
"Approved Construction Budget" means a budget or cost itemization
prepared by Borrower specifying the cost (direct and indirect) by item of all
labor, materials, and services necessary for the Restoration in accordance with
any and all applicable Plans and Specifications and all of the laws, rules and
regulations of all Authorities having jurisdiction over the Hotel and
all other expenses anticipated by Borrower incident to the Restoration. Prior to
any Disbursement hereunder, Lender shall have received and approved the initial
Approved Construction Budget.
"Architect" means an architect or architects as may be engaged by
Borrower from time to time in connection with the Restoration, with the Lender's
prior written approval.
"Architect's Agreement" means that certain agreement or agreements
between Borrower and the Architect(s) with respect to Borrower's retention of
the Architect(s) for the design of any of the Restoration, together with any
amendments thereto approved by Lender.
"Architect's Certificate" means a certificate from the appropriate
Architect in the form of Exhibit "5" annexed hereto.
"Authority" means any governmental and quasi-governmental authorities
(including, federal, state, commonwealth or local government entity and any
board, authority, commission, agency, or department) asserting jurisdiction over
Borrower, the Hotel or the Restoration.
"Construction Manager" means Welbro-E-D Consultants, LLC.
"Construction Manager's Agreement" means that certain construction
management contract between Borrower and the Construction Manager for the
Restoration which shall be submitted by Borrower to Lender for Lender's approval
in the sole and absolute discretion of Lender.
"Cost Savings" means the aggregate amount, if any, by which the amount
actually incurred or, as agreed upon by the Lender and Borrower, anticipated to
be incurred, in a Line Item of the Approved Construction Budget is or will be,
as the case may be, less than the maximum amount established for such Line Item
in the Approved Construction Budget.
"Disbursement" and "Disbursements" shall have the meaning ascribed
thereto in Section 2 hereof.
"Disbursement Conditions" shall have the meaning ascribed thereto in
Section 2 hereof.
"Insurance Adjuster" means McLarens Toplis North America, Inc. or its
designated representative.
"Lender's Engineer" means such engineering or architectural firm from
time to time selected by Lender (including any Affiliate of Lender) to perform
the services of "Lender's Engineer" as set forth herein. The Lender's Engineer
shall be responsible for and approve (i) the Plans and Specifications; (ii) the
Approved Construction Budget, the Project Summaries, the project budget
summaries, construction schedule, project budget reallocation requests and
change orders; and (iii) all Requests for Disbursements, and to complete such
other tasks as Lender may request from time to time, including periodically
inspecting the progress of the Restoration.
"Line Item" means any identified item set forth in the Approved
Construction Budget.
"Major Subcontract" means any Subcontract which provides for payments or
a contract sum in excess of $500,000.
"Major Subcontractor" means any Subcontractor who has executed a Major
Subcontract.
"Material Change" means a change in any document pertaining to the
Restoration, the Approved Construction Budget or the Plans and Specifications,
which: (i) increases or decreases (individually, solely as a result of any
single change) the costs for or related to the Restoration set forth in any Line
Item of the Approved Construction Budget by an amount greater than $10,000, (ii)
increases or decreases (individually, solely as a result of any single change)
the costs for the Restoration set forth in any Line Item of the Approved
Construction Budget by an amount greater than ten percent of such line item,
(iii) increases (cumulatively, as a result of all changes to date which have not
otherwise been previously approved by Lender) the total costs for the
Restoration set forth in the Approved Construction Budget, by an amount greater
than $200,000, (iv) causes a material adverse effect on the Hotel or the ability
of Borrower or any Guarantor to perform any of its obligations under the L/C
Documents, or (v) causes any of the Plans and Specifications to not comply with
all applicable laws and regulations.
"Materialmen" means any supplier of materials for the Restoration
executing a contract with the Construction Manager.
"Plans and Specifications" means all of the architectural, mechanical,
engineering, structural, electrical, grading, paving and landscaping plans and
specifications for the Restoration, as may be developed and approved pursuant to
the provisions of this Amendment.
"Project Budget Reallocation Request" means the Project Budget
Reallocation Request in the form of Exhibit "2" annexed hereto which shall, to
the extent applicable, accompany each Request for Disbursement.
"Project Summary" means the Project Summary in the form of Exhibit "3"
annexed hereto which shall accompany each Request for Disbursement.
"Request for Disbursement" means a written Request for Disbursement in
the form of Exhibit "1" annexed hereto executed by Xxxxx Xxxxxx and Xxxxxxx
Xxxxxx and/or any other duly authorized representative(s) of the Borrower
approved by Lender (and such other parties as Lender may request) and approved
by the Insurance Adjuster specifying by name, current address, and amount all
parties to whom Borrower is obligated for labor, materials, or services supplied
for the Restoration and all other expenses incident to the Hotel and the
Restoration, whether or not specified in the Approved Construction Budget,
requesting a Disbursement for the payment of such items, containing, if
requested by Lender, an Affidavit of Borrower, and accompanied by the American
Institute of Architects' Forms G-702 and G-703, Project Summary, Project Budget
Reallocation Request (to the extent applicable), Architect's Certificate (if
applicable) and such schedules, certificates, affidavits, releases, waivers,
statements, invoices, bills, and other documents referred to in the Request for
Disbursement or as Lender may reasonably request.
"Restoration" means the repair and restoration of the Hotel as nearly as
possible to the condition the Hotel was in immediately prior to the Hurricane
Damage, all in accordance with all
applicable Plans and Specifications and otherwise in accordance with the
provisions of the Reimbursement Agreement, as amended by the Amendment
(including, without limitation, the terms, provisions and conditions set forth
in this Schedule 1).
"Subcontractors" means all persons who have entered into a Subcontract
with the Construction Manager or with another Subcontractor; individually, a
"Subcontractor".
"Subcontracts" means the collective reference to all contracts for
demolition, site preparation, construction or any such similar activity in
connection with the Restoration entered into by the Construction Manager and a
Subcontractor and with respect to which Borrower is not a party; individually, a
"Subcontract".
"Substantial Completion" shall be deemed to have occurred when (i) the
Construction Manager shall have delivered and executed a certificate of
substantial completion for the Restoration in the form of AIA Document G704
(April, 1978 edition) or any successor or replacement certificates; (ii) if
applicable, there has been issued a final or, if not yet reasonably obtainable,
a temporary certificate of occupancy for the Restoration; (iii) the Lender shall
have received one set of any and all Plans and Specifications, containing all
changes thereto marked thereon by hand, which shall be acceptable to the Lender;
(iv) Lender shall have received an affidavit of Borrower in form and substance
satisfactory to the Lender certifying and warranting, to the best of Borrower's
knowledge, that the Restoration has been completed in a good and workmanlike
manner substantially in accordance with any and all Plans and Specifications,
and
that all improvements and other appurtenances necessary for the Restoration
and/or the operation of the Hotel have been fully installed, and (v)
Construction Manager shall have executed and delivered to Lender an affidavit
and a final waiver or release of lien in form and substance satisfactory to
Lender and its counsel and complying with all applicable legal requirements.
List of Exhibits:
Exhibit "1" -- Form of Request for Disbursement
Exhibit "2" -- Form of Project Budget Reallocation Request
Exhibit "3" -- Form of Project Summary
Exhibit "4" -- Form of General Contractor's Affidavit
Exhibit "5" -- Form of Architect's Certificate
List of Annexes:
Annex A -- Construction Work
Annex B -- El Con Subcontracts
ANNEX A
Construction Work
1. Water Cooling Tower
2. Curtain Wall at Las Brisas Restaurant
ANNEX B
El Con Subcontracts
None.
SCHEDULE 2
EXCEPTIONS TO REPRESENTATIONS
1. Guarantor will make a loan to the Borrower in the amount of
$3,308,917 in connection with the Amendment, which loan may be repaid as
provided in Section 4(a) and Section 7 of the Amendment.
2. Borrower has made oral arrangements with Grand Bay for the
installation and management of the new spa at the Hotel. The estimated cost of
construction is $4,700,000. The Borrower expects to pay Grand Bay a management
fee of 6% of the gross revenues of the spa and an incentive fee of 25% of the
operating income of the spa. Borrower acknowledges and agrees that any such
arrangements with Grand Bay will need to be memorialized in a written agreement
between the Borrower and Grand Bay which shall be subject to Lender's review and
approval in accordance with the terms of the Reimbursement Agreement and other
L/C Documents.
3. The Borrower plans to enter into an amended and restated management
agreement with Xxxxxxxx Hospitality Group Inc. effective January 1, 1999 as more
fully described in the Borrower's registration statement filed in connection
with the AFICA refinancing. Borrower acknowledges and agrees that any such
agreement shall be subject to Lender's review and approval in accordance with
the terms of the Reimbursement Agreement and other L/C Documents.
4. The Hotel has sustained Hurricane Damage.
