PARTNERSHIP LOAN AGREEMENT
Agreement made as of this 5th day of May, 1992 by and among KUMAGAI
CARIBBEAN, INC. ("KGC"), a Delaware corporation, and WKA El Con Associates
("WKA"), a New York partnership (KGC and WKA are referred to herein as the
"Lenders"), and EL CONQUISTADOR PARTNERSHIP, L.P. (the "Partnership") a Delaware
limited partnership.
W I T N E S S E T H:
WHEREAS, the Lenders are the sole partners of the Partnership, and each is
a general and limited partner of the Partnership; and
WHEREAS, pursuant to the terms of that certain Letter of Credit and
Reimbursement Agreement dated February 7, 1991, as amended on the date hereof
(the "LC Agreement"), the Partnership is required to provide $24 million of
additional funds to cover certain cost overruns in the Budget (as defined in the
LC Agreement) and in satisfaction of the loan balancing provisions under
Paragraph 9(k) of the Reimbursement Agreement; and
WHEREAS, the Lenders intend to provide such $24 million to the Partnership
from $16 million of their own funds ($8 million from KGC and $8 million from
WKA) and from the proceeds of a loan obtained by the Lenders from the Government
Development Bank for Puerto Rico (the "GDB") pursuant to the terms of a facility
credit agreement of even date herewith (the "Facility Agreement") among the
Lenders and the GDB (capitalized terms used herein and not otherwise defined
shall have the same meaning ascribed to such terms in the Facility Agreement");
and
WHEREAS, the Lenders are making those funds available to the Partnership
through (1) additional capital contributions to the Partnership of $8 million
each under the terms of the First
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Amendment (the "First Amendment") to the Partnership Agreement and (ii) a loan
to the Partnership of $8 million, substantially on the terms and conditions of
the loan from the GDB to the Lenders under the Facility Agreement; and
WHEREAS, the parties hereto wish to set forth the terms and conditions
pursuant to which the Lenders will loan such $8 million to the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Upon the terms and subject to the conditions set forth herein, the
Lenders irrevocably commit to loan to the Partnership in equal amounts, up to an
aggregate of $8,000,000 (the "Partners Loan"). The Lenders have heretofore
advanced to the Partnership $7,099,701.70 for the payment of Project Costs which
amount represents the "Initial Disbursement" under the LC Agreement.
Concurrently herewith the Lenders are depositing $900,298.30 representing the
balance of such loan commitment amount with the Bank. As and to the extent the
Bank disburses such balance to the Partnership in accordance with the LC
Agreement, such disbursements shall be deemed advances under the Partners Loan.
2. Outstanding principal on the Partners Loan, together with accrued
interest thereon, shall be due and payable on the same terms and conditions and
same times as the Partners are required to pay principal and interest on the
Facility under the Facility Agreement, all of which terms are deemed
incorporated herein by reference. In addition, the Partnership shall be
responsible for and shall reimburse Lenders for all costs and expenses incurred
by Lenders in obtaining the Facility, including, without limitation, the
[$80,000] commitment fee (the "Commitment Fee") paid by the Lenders to GDB in
connection with the Facility and the
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expenses of counsel and other consultants incurred in connection therewith. Any
and all other costs incurred by the Lenders in connection with the Facility
shall be paid by the Partnership.
3. The Partnership shall be required to make deposits into the GDB
Facility Escrow by and on behalf of the Lenders in the amounts as and to the
extent provided in Paragraph 3 of the Facility Agreement, subject to the
availability of funds permitted to be used for such purpose under the LC
Agreement. Amounts deposited by the Partnership in the GDB Facility Escrow shall
not be deemed payments in respect of the Partners Loan unless and until such
amounts are actually applied in reduction of the Lenders' obligations under the
Facility and the Partnership hereby assigns and pledges to the Lenders all of
the Partnership's right, title and interest in such funds as collateral security
for the Partnership's obligations under the Partners Loan and this agreement.
4. The Partners Loan may be prepaid in whole or in part at any time
without premium or penalty but with interest on the amount prepaid. Anything
herein to the contrary notwithstanding the Partnership shall not pay or be
required to pay any principal with respect to the Partners Loan except deposits
into the GDB Facility Escrow and proceeds from the sale of Condominium Parcels
which are not Project revenues for purposes of the Bank Loan Documents. The
foregoing covenants and restrictions are for the benefit of the Bank.
5. The Partnership's obligations to repay the Lenders shall be evidenced
by a promissory note (the "Partnership Note") executed by the Partnership in the
form of Exhibit A annexed hereto and shall be assigned by the Lenders to the GDB
pursuant to the terms of the GDB Facility Documents and shall be subordinate to
the Facility and the other Obligations to the GDB as provided in the Facility
Agreement. The Lenders are hereby authorized to enter on
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the Schedule annexed to the Note any and all advances under the Partners Loan,
all costs and expenses required to be paid by the Partnership pursuant to
paragraph 2 above, and all payments made by the Partnership in respect thereof.
6. No change, modification, amendment, addition or termination of this
Agreement or any part thereof shall be valid unless in writing and signed by or
on behalf of the party to be charged therewith.
7. This Agreement may be executed in one or more counterparts, and shall
become effective when one or more counterparts has been signed by each of the
parties.
8. Any and all notices or other communications or deliveries required or
permitted to be given pursuant to any of the provisions of this Agreement shall
be deemed sufficiently given or furnished for all purposes if in writing and
delivered personally to such party; transmitted by confirmed fax; sent by
certified mail, in a sealed envelope with postage prepaid; or sent by
responsible overnight delivery service addressed in each case to such party at
its address set forth on Exhibit B annexed hereto or at such other address as
such party shall have designated by written notice as provided in this
paragraph; and shall be effective when personally delivered or transmitted, five
(5) business days after mailing or the next business day after delivery to a
responsible overnight delivery service.
9. No waiver of the provisions hereof shall be effective unless in writing
and signed by the party to be charged with such waiver. No waiver shall be
deemed a continuing waiver or waiver in respect of any subsequent breach of
default, either of the same or of a similar or different nature, unless
expressly so stated in writing.
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10. Should any clause, section or part of this Agreement be held or
declared to be void or illegal for any reason, all other clauses, sections or
parts of this Agreement which can be affected without such illegal clause,
section or part shall nevertheless continue in full force and effect.
11. This Agreement shall be governed, interpreted and construed in
accordance with the laws of the Commonwealth of Puerto Rico.
12. This Agreement and the various rights and obligations arising
hereunder shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
13. The obligations of the Partnership hereunder shall be nonrecourse to
the general partners of the Partnership except to the extent of the
Partnership's assets. The Partnership's obligations to KGC and WKA under this
Agreement or the Partnership Note shall be equal and all payments made by the
Partnership in respect of the Partnership Note shall be shared equally by WKA
and KGC except that if payments are made in respect of the Facility by or on
behalf of one of the Lenders and not the other, such Lender shall be entitled to
apply amounts paid under the Partnership Note or this Agreement in the same
proportion. Neither Lender shall have any claim against the other in respect of
this Agreement or the Partnership Note except to the extent that such Lender has
received more than its proportionate share of payments from the Partnership in
respect of the Partnership Note or this Agreement or paid more than its
proportionate share under the Facility Documents.
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IN WITNESS WHEREOF, this Agreement has been made and executed as of the
date and year first above written.
WKA EL CON ASSOCIATES:
By: Signed
--------------------------------
Hugh A. Andrews
Authorized Signatory
KUMAGAI CARIBBEAN, INC.
By: Signed
--------------------------------
Shunsuke Nakane,
President
EL CONQUISTADOR PARTNERSHIP L.P.
By: Signed
--------------------------------
Shunsuke Nakane,
Authorized Signatory
By: Signed
--------------------------------
Hugh A. Andrews
Authorized Signatory
Exhibit A
PROMISSORY NOTE
San Juan, Puerto Rico
May 5, 1992
On May 5, 2002 for value received, the undersigned (the "Borrower")
promises to pay to Kumagai Caribbean, Inc. ("KGC"), a Texas Corporation, and WKA
El Con Associates ("WKA"), a New York Partnership (the "Lenders"), the aggregate
sum of EIGHT MILLION DOLLARS ($8,000,000), or such lesser amount from time to
time outstanding of the aggregate unpaid principal amount of all advances made
by Lenders to the Borrower from time to time pursuant to the terms set forth in
the Partnership Loan Agreement of even date herewith (the "Loan Agreement")
pursuant to which this Note has been issued. Capitalized terms used in this Note
and not otherwise defined shall have the same meaning ascribed to such terms in
the Loan Agreement.
Each advance under this Note shall bear interest from the respective date
of each such advance to the date of its repayment at the Applicable Rate. Any
change in the Applicable Rate resulting from a change in LIBOR shall become
effective on the next Interest Adjustment Date following the effective date of
any such change in LIBOR. Except as otherwise provided herein, such interest
accrued during any Quarter shall be payable on the first day of the following
Quarter and shall be computed on the Outstanding Principal Amount on the basis
of a year of three hundred sixty (360) days and for the number of actual days
elapsed; provided, however, that, during the first sixty (60) months following
the date hereof, payment of accrued interest shall be deferred, and all such
amounts "Capitalized Interest") of deferred interest (i) shall, on the date they
otherwise would have become due and payable but for such deferral, be
capitalized and added to the Outstanding Principal Amount; and (ii) shall be
repaid in accordance with the provisions of Paragraphs 3.6, 3.7 and 3.8 of the
Facility Agreement.
Except as otherwise provided herein, the Borrower shall repay, on each
Interest Payment Date occurring on or after March 31, 2000 an amount of
principal equal to TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) (each such
payment, a "Scheduled Principal Payment"), as follows:
(i) for any Interest Payment Date prior to and including the Facility
Escrow Expiration Date, such Scheduled Principal Payment shall be deposited into
the GDB Facility Escrow; and
(ii) for any Interest Payment Date after the Facility Escrow Expiration
Date, such Scheduled Principal Payment shall be paid directly to GDB.
(a) If there are any Excess Revenues in any Fiscal Year, Borrower shall
pay an amount equal to the GDB Share of Excess Revenues on the first Interest
Payment Date to occur
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after the date that is thirty (30) days after delivery to the Bank of audited
financial statements of the Borrower demonstrating to the Bank the existence and
amount of Distributable Cash (as such term is define in the Partnership
Agreement) for such Fiscal Year, as follows:
(i) an amount equal to the GDB Share of Excess Revenues shall, to the
extent of any Capitalized Interest, be paid on behalf of the Lenders directly to
GDB; and
(ii) the amount of any remaining GDB Share of Excess Revenues after
payment of the amount provided for in subparagraph (a)(i) shall, (A) subject to
the provisions of Paragraph (b) below, on any date prior to an including the
Facility Escrow Expiration Date, be deposited on behalf of the Lenders into the
GDB Facility Escrow and (B) on any date after the Facility Escrow Expiration
Date, be paid on behalf of the Lenders directly to GDB until payment in full of
amounts due GDB under the Facility and then to the Lenders until payment in full
of this Note.
(b) On any Interest Payment Date prior to and including the Facility
Escrow Expiration Date, Borrower shall not be required to make the deposit
required under subparagraph (a)(ii)(A) above to the extent that, on such date,
such deposit would cause the amount in the GDB Facility Escrow to exceed the
Facility Escrow Cap as of such date.
(c) Upon any refinancing of the Borrower's loan under the Bank Loan
Documents, if any Excess Refinancing Proceeds shall remain after repayment of
the Existing GDB Loan and payment to the Bank of any amounts owed to it,
Borrower shall pay the obligations under the Partnership Loan Agreement in whole
or in part from and to the extent of such remaining Excess Refinancing Proceeds
which amount shall be applied immediately to the Lenders' obligations under the
Facility.
Amounts in the GDB Facility Escrow shall not be deemed payments under this
Note unless and until the same shall have been paid as follows:
(a) if, on any Interest Payment Date, the Borrower has paid all interest
and other fees due under the Bank Loan Documents on a current basis through and
including the 15th day prior to such Interest Payment Date, an amount shall be
paid to GDB from the GDB Escrow Account on behalf of the Lenders, on the last
day of such calendar month, which is equal to, if any, the sum of (i) accrued
but unpaid interest and (ii) Capitalized Interest; and
(b) any amounts remaining in the GDB Facility Escrow Account on the
Facility Escrow Expiration Date shall be paid directly to GDB on such date to
the extent of Lenders then outstanding obligations to the GDB under the GDB
Facility Documents or in the event that the Facility Escrow Expiration Date
occurs as to one Lender and not the other, as a result of the application of
clause (iv) of the definition thereof, the amounts to be paid to GDB shall not
exceed the amount of such Lender's remaining obligations and shall be deemed to
have been applied toward the Partnership's obligations to such Lender hereunder.
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Priority of Application of Payments to GDB All amounts paid by the
Partnership to the GDB on behalf of the Lenders in accordance with the above or
directly to the Lenders after the Facility has been paid in full shall be
applied first to accrued but unpaid interest, second to Capitalized Interest and
third to any remaining Outstanding Principal Amount.
Anything herein to the contrary notwithstanding, if the rate of interest
required to be paid hereunder exceeds the rate lawfully chargeable, the rate of
interest to be paid shall be automatically reduced to the maximum rate lawfully
chargeable so that no amounts in excess thereof shall be charged, and, in the
event it should be determined that any excess over such highest lawful rate has
been charged or received, the Lenders shall promptly refund such excess to the
Partnership; provided, however, that, if lawful, any such excess shall be paid
by the Borrower on behalf of the Lender as additional interest (accruing at a
rate equal to the maximum legal rate minus the rate provided for hereunder)
during any subsequent period when regular interest is accruing hereunder at less
than the maximum legal rate.
The holder hereof is hereby authorized to enter on the Schedule annexed
hereto the amount of the proceeds from the Partners Loan advanced to the
Borrower, all costs and expenses incurred by Lenders in connection with the
Facility required to be paid by the Borrower pursuant to paragraph 2 of the
Partnership Loan Agreement, and all payments made by the Borrower in respect
thereof, without further authorization on the part of the Borrower or any
endorser or guarantor of this Note, but the holder's failure to make such entry
shall not limit or affect the obligations of the Borrower or any endorser or
guarantor of this Note.
If this Note is not paid in full when due, the undersigned Borrower hereby
agrees to pay all costs and expenses of collection including reasonable
attorneys' fees and thereafter the unpaid balance hereunder shall bear interest
at LIBOR plus 6%.
This Note shall become immediately due and payable at the option of the
Lenders, without notice or demand, in the event that the Borrower is the subject
of a voluntary or involuntary application for the appointment of a receiver or a
petition filed under the Federal or local Bankruptcy Laws of the borrower fails
to make a payment when due and such failure shall continue for a period of ten
(10) days or the GDB shall accelerate the Facility.
This Note may be prepaid in whole or in part at any time and from time to
time prior to the maturity hereof without premium or penalty, but with accrued
interest on the principal amount prepaid to the date of prepayment. Any payment
under this Note is subject to the restrictions under the Facility Agreement and
the Bank Loan Documents applicable thereto. For purposes of the Bank Loan
Documents, this Note shall be treated as if it were the Facility or the "Note"
under the Facility Agreement. Anything in this Note to the contrary
notwithstanding, no payments of principal on this Note shall be made by the
Borrower except deposits into the GDB Facility Escrow in accordance with
Paragraph 3.7 of the Facility Agreement and any proceeds from the sale or
development of the Condominium Parcels which are not part of the Project
revenues for purposes of the Bank Loan Documents. The foregoing covenants and
restrictions are for the benefit of the Bank.
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The undersigned Borrower and all endorsers hereof, jointly and severally
waive presentment, demand for payment, notice of dishonor, notice of protest,
and all other notices or demands in connection herewith and assent to any
extension or postponement of the time or payment or other indulgence or release
of any party, whether by operation of law or otherwise.
No delay by the holder of this Note in exercising any power or right
hereunder shall operate as a waiver of any power or right, nor shall any single
or partial exercise of any power or right preclude other or further exercise
thereof, or the exercise of any other power or right hereunder or otherwise; and
no waiver whatever or modification of the terms hereof shall be valid unless set
forth in writing and signed by the holder of this Note. No waiver shall be
deemed a continuing waiver or waiver of any subsequent breach or default,
whether of the same or similar or different nature, unless expressly so stated
in writing.
This Note shall be assigned and pledged to the GDB pursuant to the
Proceeds Pledge Agreement.
This Note shall be governed by and construed in accordance with the
substantive law of the Commonwealth of Puerto Rico.
The Partnership's obligation under this Note are subject to the terms of
the Loan Agreement and are subject and subordinate to the Partnership's
obligations to GDB under the Loan Agreement, the Facility Agreement and the Bank
Loan Documents.
EL CONQUISTADOR PARTNERSHIP L.P.
By: _________________________
Shunsuke Nakane,
Authorized Signatory
By: _________________________
Hugh A. Andrews
Authorized Signatory
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PARTNERS LOAN AND PAYMENTS
Schedule B
AMOUNT OF
LOANS DEPOSIT PERSON
ADVANCED TO COSTS AND IN MAKING
DATE BORROWER EXPENSES ESCROW PAYMENTS NOTATION
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