OPERATING CREDIT AND TERM LOAN AGREEMENT
US$35,500,000
between
Pasadas de Puerto Rico Associates, Incorporated
Borrower
and
Scotiabank de Puerto Rico
Lender
Dated: August 30, 1988
- ------------------------------------------------------------------------------
Brown, Newsom & Cordova
Plaza Scotiabank
273 Ponce de Leon Avenue
Hato Rey, Puerto Rico 00917
OPERATING CREDIT AND TERM LOAN AGREEMENT
TABLE OF CONTENTS
PAGE
----
ARTICLE I - Terms and Conditions
Section 1.1. General................................................ 2
Section 1.2. Borrower's Representations and Warranties.............. 2
Section 1.3. Commission............................................. 9
Section 1.4. Eligible Activities.................................... 9
ARTICLE II - The Loan
Section 2.1. The Term Loan Advances................................. 9
Section 2.2. Making the Operating Credit Advances................... 10
Section 2.3. Fees................................................... 10
Section 2.4. Interest and Repayment................................. 11
Section 2.5. Optional Prepayments of the Term Loan Notes............ 15
Section 2.6. Mandatory Supplemental Prepayments and
Reserves............................................. 17
Section 2.7. Payments and Interest Computations..................... 19
Section 2.8. Business Day........................................... 20
Section 2.9. Funding Procedure...................................... 20
Section 2.10. Increased Costs........................................ 20
Section 2.11. Illegality............................................. 21
Section 2.12. Increase and Costs Limitation.......................... 21
Section 2.13. 936 Indemnity.......................................... 22
ARTICLE III - Conditions of Lending
Section 3.1. Conditions Precedent to Initial Advances............... 23
Section 3.2. Conditions Precedent to All Advances................... 26
ARTICLE IV - The Collateral
Section 4.1. The Security........................................... 27
ARTICLE V - Borrower's Affirmative Covenants
Section 5.1. Corporate Existence.................................... 27
Section 5.2. Business............................................... 27
Section 5.3. Licenses, Permits and Franchises....................... 28
Section 5.4. Properties............................................. 28
Section 5.5. Insurance.............................................. 28
(i)
Section 5.6. Records - Financial Statements........................ 29
Section 5.7. Inspection............................................ 29
Section 5.8. Payment of Taxes...................................... 30
Section 5.9. Laguna Wing........................................... 30
Section 5.10. Statutory Compliance.................................. 30
Section 5.11. Contractual Compliance................................ 31
Section 5.12. Cost Overruns. ...................................... 31
Section 5.13. Full Compliance....................................... 31
Section 5.14. The Collateral Documentation. ....................... 31
Section 5.15. Preservation of Rank.................................. 31
ARTICLE VI - Borrower's Negative Covenants
Section 6.1. Liens................................................. 32
Section 6.2. Guarantees............................................ 33
Section 6.3. Properties............................................ 33
Section 6.4. Merger, Consolidated.................................. 33
Section 6.5. Conditional Sales..................................... 33
Section 6.6. Investments........................................... 33
Section 6.7. Leases................................................ 34
Section 6.8. Dividends............................................. 34
Section 6.9. Operation of Business................................. 34
ARTICLE VII - Notices
Section 7.1. Addresses............................................. 34
Section 7.2. Change of Address..................................... 35
Section 7.3. Borrower's Mandatory Notices and/or
Communications...................................... 36
Section 7.4. Waiver................................................ 38
ARTICLE VIII - Default
Section 8.1. Events of Default..................................... 39
Section 8.2. Acceleration.......................................... 42
Section 8.3. Other Remedies........................................ 43
ARTICLE IX - Charges and Expenses
Section 9.1. Fees and Expenses..................................... 44
Section 9.2. Collection Fees and Expenses.......................... 44
ARTICLE X - Miscellaneous
Section 10.1. Mortgage Title Insurance.............................. 45
(ii)
Section 10.2. Borrower's Right to Contest........................... 45
Section 10.3. Set Off............................................... 45
Section 10.4. No Joint Venture...................................... 45
Section 10.5. Lender's Optional Right to Pay or Perform
in Borrower's Stead................................. 46
Section 10.6. Assignment and Participation.......................... 46
Section 10.7 No Waiver, Cumulative Remedies........................ 47
Section 10.8. Survival.............................................. 48
Section 10.9. Applicable Law........................................ 48
Section 10.10. Jurisdiction.......................................... 48
Section 10.11. Interpretation........................................ 48
Section 10.12. Modification, Amendment............................... 49
Section 10.13. Entire Understanding.................................. 49
(iii)
LIST OF EXHIBITS
Exhibit Description
- ------- -----------
A Ocean Front Property Description
B Laguna Wing Property Description
C Permitted Exceptions
D List of Documents delivered by Borrower to Lender in
support of its Credit Application
E List of Concessions Agreements
F Fee Mortgage Deed
G Leasehold Mortgage Deed
H Subordination Agreement
I Deed of Attornment and Non Disturbances to Constitution
of Leasehold Mortgage
J Borrower's Counsel Legal Opinion
K Ruling Request
L 936 Representation Letter
(iv)
OPERATING CREDIT AND TERM LOAN AGREEMENT
At San Juan, Puerto Rico, on the date stated at the end of this Loan
Agreement.
APPEAR
AS PARTY OF THE FIRST PART: POSADAS DE PUERTO RICO ASSOCIATES,
INCORPORATED, D/B/A CONDADO PLAZA HOTEL AND CASINO, a corporation organized and
existing under the laws of the State of Delaware, United States of America, duly
authorized to do business within the Commonwealth of Puerto Rico, with its
principal office and place of business in Puerto Rico at 999 Ashford Avenue
(Condado), Santurce, Puerto Rico 00902, as debtor herein, hereinafter
interchangeably referred to as "Borrower" and "Posadas", represented by its
President, Mister Norman Jules Menell, of legal age, married, a business
executive and resident of New York, New York.
AS PARTY OF THE SECOND PART: SCOTIABANK DE PUERTO RICO, a banking
institution organized and existing under the laws of the Commonwealth of Puerto
Rico, with main offices in the Plaza Scotiabank, 273 Ponce de Leon Avenue, Hato
Rey, San Juan, Puerto Rico 00917, hereinafter interchangeably referred to as the
"lender" and the "Bank", represented by its President, Mr. Arnold Van Der Kley,
of legal age, married, a business executive and resident of San Juan, Puerto
Rico.
WITNESSETH
WHEREAS, Borrower is the owner in fee simple of the real estate property
more fully described in Exhibit A and the Lessee of the real estate property
more fully described in Exhibit V, which Exhibits are attached hereto and made a
part hereof, wherein it operates the hotel complex known as the Condado Plaza
Hotel and Casino;
WHEREAS, Borrower desires to borrow funds in order to liquidate an
existing debt and make certain payments to shareholders, capital expenditures,
and for general operating requirements;
WHEREAS, Borrower has requested a loan from the Lender in the aggregate
principal amount of US$35,500,000 consisting of a US$35,000,000 non-revolving
term facility and a US$500,000 operating credit, hereinafter collectively
referred to as the "Loan";
WHEREAS, the Lender is willing to extend the Loan requested by Borrower in
consideration of the various representations, warranties, covenants, collateral
security and other undertakings hereinafter set forth, made or agreed to by the
Borrower;
NOW, THEREFORE, the appearing parties covenant and agree to the following:
TERMS AND CONDITIONS
ARTICLE I
REPRESENTATIONS AND WARRANTIES
Section 1.1. General. In order to induce the Lender to grant the Loan
Borrower has agreed to enter into this Loan Agreement.
Section 1.2. Borrower's Representations and Warranties. Borrower states,
represents and warrants to the Lender that, except as otherwise stated in
Exhibit C, hereof:
2
a. Borrower is a corporation duly organized, existing, and in good
standing under the laws of the State of Delaware, United States of America, with
a registered office in the City of Wilmington, County of New Castle, of said
State. Borrower is duly qualified to do business and is in current good standing
in every jurisdiction in which the nature of its business requires such
qualification, particularly in the Commonwealth of Puerto Rico. Borrower's
principal office and place of business is located at 999 Ashford Avenue, Condado
Ward, Santurce, Puerto Rico 00902.
b. Borrower's Charter does not limit the number of stockholders that
Borrower may have.
c. The borrowing made or to be made hereunder does not violate any
usury laws nor any other laws regulating the rate of interest as of the date of
this Loan Agreement.
d. Borrower has the necessary capacity and power to own its assets
and properties, to mortgage, lien and/or encumber the same, and to operate the
business being operated until this date, and more particularly, the hotel
complex known as the Condado Plaza Hotel and Casino.
e. Borrower has the necessary capacity and power to execute and
deliver this Loan Agreement and the other Loan Documents and to comply
thereafter with the terms and conditions thereof, and to perform under, the same
without consent or approval by any governmental entity or authority, or by any
third party, except as contemplated under this Loan Agreement.
3
f. Borrower is not subject to any legal restriction of any kind that
may directly or indirectly prevent it from executing and delivering this Loan
Agreement and the other Loan Documents and/or, thereafter, from complying and
performing under the same.
g. Borrower further represents and warrants that the execution,
delivery and performance of this Loan Agreement and the other Loan Documents:
(i) has been duly authorized by the Borrower's Board of
Directors. All requisite corporate action has been duly taken. All resolutions
of the Borrower and/or its Board of Directors, and any signature on the Loan
Documents purporting to be the signature of its president, director and/or any
other officer, were, are and will properly and with due authority be passed,
executed and/or made;
(ii) Benefits itself, its businesses, stockholders,
affiliates, and subsidiaries since it has a substantial investment interest in
the success and/or proper financing of its operations;
(iii) Does not violate any provision of law or any applicable
regulations; nor its Charter or By-Laws; nor any judgment, resolution, order or
decree issued by any Court or any other governmental entity or authority; nor
any licenses, permits, grants (including tax exemption grants) and franchises
that it may enjoy, particularly those pertaining to the hotel and the casino it
currently operates;
(iv) Does not conflict with, nor violate, nor result in a
breach of, nor constitute (with or without notice and/or through the lapse of
time) a default or a breach of any indenture, agreement, contract or other
instrument to which it is a party or which may affect its assets or properties;
4
(v) Shall not result in the creation of any lien or
encumbrance upon any of the assets or properties of the Borrower other than
those liens and encumbrances constituted pursuant to this Loan Agreement and the
other Loan Documents;
(vi) Shall validly bind the Borrower in accordance with their
terms and conditions.
h. The copy of: (i) Borrower's corporate documents, including its
Charter and By-Laws; (ii) Borrower's pro forma balance sheet as of March 31,
1988, and its audited financial statements of September 30, 1987 (said audited
financial statements hereinafter referred to as "Financial Statement") for the
year then ended, (such financial statement includes a balance sheet, statement
of income and an auditor's report); (iii) Laventhol & Horwath valuation report
dated May 1, 1987, regarding the real estate property described in Exhibit A
hereto; (iv) the lease agreement regarding the real estate property described in
Exhibit B hereto; (v) Borrower's casino license and (vi) the documents
identified in Exhibit D hereto, that the Borrower has delivered to the Lender,
are true, authentic and complete correct copies of the originals, together with
all amendments thereto up to the date of this Loan Agreement, and to Borrower's
knowledge, the originals were duly and properly approved, issued, executed,
made, authorized and/or signed.
i. The Financial Statement identified in the prior subparagraph
above was prepared in conformity with generally accepted accounting principles
applied on a basis consistent with that of the preceding fiscal year and in
accordance with the Uniform System of Accounts for Hotels adopted by the
American Hotel and Motel Association and accurately
5
represents Borrower's financial condition as of its date and the results of its
operations for the periods then ended.
j. It does not have any material obligations and/or liabilities of
any nature or amount, neither accrued, absolute, contingent, or otherwise, other
than those shown in the aforesaid financial statements and/or reports, other
than those incurred since the date thereof in the ordinary course of business.
k. To the best of Borrower's knowledge, the valuation of the real
estate properties prepared by Laventhol & Horwath referred to in subparagraph
(h)(iii) above is accurate.
l. It has good and marketable title to all its assets and properties
as shown or reported in its Financial Statement and all such assets and
properties are free and clear of any liens, encumbrances, mortgages, pledges,
charges, leases, security interest and any other type of lien, encumbrance
and/or title restriction, except those reflected in the Financial Statement or
in Exhibit C hereto and those constituted pursuant to this Loan Agreement and
the other Loan Documents.
m. The condition of the real estate properties described on Exhibit
A and Exhibit V hereof it owns and/or leases conforms to all applicable laws and
regulations, federal, state and municipal, particularly those pertaining and/or
applicable to buildings, fire and other hazards, hotels, casinos, zoning and the
like, and no notice of any outstanding violations or complaints regarding the
same has been received by the Borrower.
n. The Borrower, has not received any notice nor has it any
knowledge of any default in the performance, observance or fulfillment of any of
its obligations under any
6
material indenture, agreement, contract or other instrument that would entitle
the other parties to the same to accelerate the due date of any obligations
under, or to resolve, rescind and/or terminate the same.
o. The Borrower is in compliance as of this date with the terms,
conditions and requirements of its hotel permits, its casino licenses, its
franchises and the tax exemption grant that Borrower now enjoys. Borrower has
not incurred any act and to the knowledge of the Borrower no event has occurred
or is continuing that could warrant the cancellation and/or termination of said
licenses, permits, franchises or tax exemption grant.
p. Since the date of the Financial Statement and of pro forma
balance sheet to which reference is made in subparagaph (h) of this Section,
there has been no material adverse change in Borrower's business operations,
assets, properties or condition (financial or otherwise) because of any
statutory or regulatory change, condemnation, acquisition, renegotiation, price
determination, revocation of any license, permit, franchise, tax exemption grant
or right to do business, nor due to any loss or damage, nor because of any other
incident or accident.
q. There are no pending or, to the knowledge of Borrower,
threatened, proceedings, complaints, disputes, contests, charges, accusations
and/or investigations, neither judicial nor administrative, nor any arbitration
proceedings, by or before any governmental entity or authority, or before an
arbitrator, against or affecting Borrower, (i) seeking a money award in an
amount exceeding any insurance coverage or seeking a money award in an amount
exceeding $100,000; (ii) seeking to foreclose or realize upon its rights, assets
or properties, real or personal; (iii) affecting its licenses, permits and/or
franchises and/or its tax exemption grant;
7
(iv) seeking a relief which might result, if granted, in a material adverse
change in its operations, business, assets, properties, licenses, permits,
franchises, tax exemption grant (subject to such changes as may result from the
on-going conversion of tax grant negotiations with the Secretary of the Treasury
of Puerto Rico) or in its condition, financial or otherwise, or (v) materially
affecting any of the collateral securing the Loan or the Loan Documents.
r. Borrower has filed all federal, state and municipal tax returns
which it was or it is required to file. Borrower has paid any and all federal,
state and municipal taxes, impositions, excise taxes, "patentes", fees and
assessments (including, but not limited to, any income taxes, real estate and
personal property taxes, social security, unemployment and State Insurance Fund
premiums) to the extent that the same have become due, except such items as may
be contested in good faith and subject to the provisions of Section 10.2 of this
Loan Agreement.
s. Borrower enjoys a long term lease, the extended term of which
expires on March 31, 2004, in connection with the property described in Exhibit
B hereto. The copy of the Deed of Lease regarding said real estate property that
Borrower has delivered to the Lender is a true and correct copy of the existing
lease agreement. Borrower is in full compliance with all of the terms and
conditions of the said lease agreement. It has not incurred any act that could
warrant the cancellation and/or termination of said lease agreement and to its
knowledge, no event that could warrant the cancellation of the same has
occurred; nor has Borrower received any notice as to any such act or event from
the landlord under the lease.
8
t. There are no options to purchase and/or leases outstanding in
connection with the real estate property described in Exhibit A hereof, or any
of them, except those leases itemized in Exhibit E hereto.
Section 1.3. Commission. The parties hereto further represent and warrant
to each other that they have not entered into any agreement nor taken any action
which may cause anyone to become entitled to a commission as a finder's fee or
as a result of the granting or making of this Loan, except for fees payable to
Lender pursuant to Section and the commission that the Borrower is bound to pay
to Merrill Lynch Capital Markets.
Section 1.4. Eligible Activities. A portion of Term Credit Advances in the
amount of US$21,500,000 will be employed by Borrower in "eligible activities" as
per Section 2(j) of the Puerto Rico Industrial Incentives Act, and the Puerto
Rico Tax Incentives Act and the regulations promulgated thereunder. This is a
continuing representation, consequently, the Borrower will endeavor to continue
to conduct its operations in such a manner that the portion of the Term Loan
funded with 936 Funds will continue to qualify as an "eligible activity" failing
which the provisions of Section hereof shall apply.
ARTICLE II
THE LOAN
Section 2.1. The Term Loan Advances. The Lender agrees, on the terms and
conditions hereinabove and hereinafter set forth, to make a term loan advance
(the "Term Loan Advance") to the Borrower on the date of this Agreement in the
aggregate amount of US$35,000,000.
9
Section 2.2. Making the Operating Credit Advances. The Lender agrees, on
the terms and conditions hereinabove and hereinafter set forth, to make
operating credit advances (each an "Operating Credit Advance", collectively the
"Operating Credit Advances", the Operating Credit Advance and the Term Loan
Advance are hereinafter sometimes collectively referred to as the "Advances") to
the Borrower from time to time during the period from the date hereof in an
aggregate principal amount not to exceed at any time outstanding the amount of
US$500,000. Each borrowing under this Section shall be in a principal amount of
not less than US$100,000.
Each Operating Credit Advance shall be made on at least one (1) Business
Day notice from the Borrower to the Bank specifying the date (which shall be a
Business Day) and amount thereof. Not later than 11:00 a.m. (San Juan, Puerto
Rico time) on the date of such Operating Credit Advance, the Bank shall make
available the Operating Credit Advance to the Borrower at its address referred
to in Section , hereof in immediately available funds.
Section 2.3. Fees.
a. The Borrower agrees to pay to the Bank at the date and time of
the closing a fee in respect to the Term Loan in the sum of US$375,000 which is
the balance owing of the front end fee of US$525,000, of which Borrower has paid
to the Lender the sum of US$150,000.
b. The Borrower agrees to pay to the Bank a standby fee on the
average daily unused portion of the Term Loan portion of the Loan from the date
of the Loan Agreement until maturity at the rate of 1/2% per annum, payable
monthly in arrears on the last day of each
10
month. This provision shall not apply if on the date hereof Borrower takes down
the entire proceeds of the Term Loan.
Section 2.4. Interest and Repayment.
a. The Term Loan Advance made by the Bank to the Borrower shall be
evidenced by promissory notes to the order of the Bank in substantially the form
of Schedule I hereto (individually, the "Term Loan Note", collectively, the
"Term Loan Notes").
The Term Loan Notes shall be in the aggregate principal amount of
US$35,000,000.00 and shall be payable in 20 consecutive, semi-annual
installments commencing approximately 6 months from the date of the initial Term
Loan Advance as follows:
Aggregate
Installment Balance of
Installment Number and Date Amount Loan
--------------------------- ------ ----
(1) March 1, 1989 $500,000.00 $34,500,000
(2) September 1, 1989 500,000.00 34,000,000
(3) March 1, 1990 550,000.00 33,450,000
(4) September 1, 1990 550,000.00 32,900,000
(5) March 1, 1991 600,000.00 32,300,000
(6) September 1, 1991 600,000.00 31,700,000
(7) March 1, 1992 700,000.00 31,000,000
(8) September 1, 1992 700,000.00 30,300,000
(9) March 1, 1993 750,000.00 29,550,000
(10) September 1, 1993 750,000.00 28,800,000
(11) March 1, 1994 850,000.00 27,950,000
(12) September 1, 1994 850,000.00 27,100,000
(13) March 1, 1995 950,000.00 26,150,000
(14) September 1, 1995 950,000.00 25,200,000
11
(15) March 1, 1996 1,050,000.00 24,150,000
(16) September 1, 1996 1,050,000.00 23,100,000
(17) March 1, 1997 1,200,000.00 21,900,000
(18) September 1, 1997 1,200,000.00 20,700,000
(19) March 1, 1998 1,350,000.00 19,350,000
(20) September 1, 1998 1,350,000.00 18,000,000
The residential balance outstanding on the Term Loan, ($18,000,000)
together with any and all the funds owed by the Borrower under this Agreement or
under the Loan Documents, shall be due and payable by the Borrower to the Lender
concurrently with the due date of the 20th installment of the Term Loan Notes.
For purposes of this Agreement the terms "936" Funds, "Base Rate",
"LIBOR", "Funding Period", and "Business Day", shall have the following
meanings:
"936" Funds are deposits of eligible funds by exempted businesses as per
the Puerto Rico Industrial Incentives Acts and the Puerto Rico Tax Incentive
Act, as amended.
"Base Rate" is the variable per annum referee rate of interest (as
announced and adjusted by The Bank of Nova Scotia from time to time in the City
of New York) for United States dollar loans made by said Bank in the United
States and Puerto Rico. No representation is made by the Lender that the said
rate is the lowest or most favoured rate offered by said bank or Scotiabank de
Puerto Rico.
"LIBOR" means the rate of interest per annum at which deposits of equal or
like amounts in USA dollars are offered by the principal office of The Bank of
Nova Scotia in London, England, to prime banks in the London interbank market at
11:00 A.M. (London time),
12
2 business days before the first day of such Funding Period for a period equal
to such Funding Period.
"Business Day" means (i) as to the LIBOR funded portions of the Loan a day
of the year on which dealings are carried on in the London interbank market and
banks are open for business in London and not required or authorized to close in
Puerto Rico and (ii) as to the 936 Funds and Base Rate portions of the Loan, a
day in which the Bank is not required or authorized to close for business in
Puerto Rico.
"Funding Period" the period between the day hereof and the day of payment
in full of the principal amount of the Term Note shall be divided into
successive periods, the first such period to commence on the date hereof, each
such period being a Funding Period.
The Term Loan Note shall bear interest from the date hereof until full
payment of the unpaid balance of principal thereof at an annual rate of interest
quoted by the Lender not less than 2 days prior to the first day of a Funding
Period and chosen by the Borrower not later than 10:00 a.m. of the first day of
a Funding Period for such intervals quoted by the Bank and acceptable to the
Borrower. The Bank shall quote to the Borrower as aforesaid the following rates
of interest (i) subject to the availability to the Bank of 936 Funds, an
indication of a rate based on 2 percentage points over the Bank's net cost of
said 936 Funds and (ii) if 30, 60, 90 or 180 days LIBOR Funds are available to
the Bank for such Funding Period, 2 percentage points over and above LIBOR, and
(iii) a fluctuating annual rate equal to 1 1/2 percentage points over and above
Base Rate, each change in such fluctuating rate to take effect simultaneously
with the corresponding change in the Base Rate. In the event that Borrower does
not notify the Bank of the desired interest rate option by 10:00 a.m. of the
first day of a Funding Period, the rate
13
applicable to such Funding Period shall be a fluctuating annual rate equal to 1
1/2 percentage points over and above the Base Rate, each change in such
fluctuating rate to take effect simultaneously with the corresponding change in
the Base Rate. The preceding notwithstanding, the parties hereto may agree to a
fixed rate of interest on the Term Loan or on a portion thereof.
Interest rates under this Section will be reduced by 1/2 of 1% on that
portion of the loan which is secured by the purchase and subsequent pledge of
The Bank of Nova Scotia and/or Scotiabank de Puerto Rico Certificates of Deposit
pursuant to the provisions of Section hereof.
Anything herein to the contrary notwithstanding, the interest rate
applicable to any overdue principal under the Term Loan Note after the
expiration of the 30 day grace period provided in Section (a) hereof, shall be a
fluctuating annual rate equal to 4 percentage points over and above the Base
Rate, each change in such fluctuating rate to take effect simultaneously with
the corresponding change in the Base Rate.
Interest due on the Term Loan Note shall be payable on the 22nd day of
each month in arrears.
Upon reaching an agreement with, or upon notifying the Bank as
contemplated in this Section as to the rate of interest which is to apply to a
particular Term Credit Advance or Funding Period, as the case may be, such
notice and agreement shall be irrevocable and binding on the Borrower.
b. Each Operating Credit Advances made by the Bank to the Borrower
shall be evidenced by a promissory note of the Borrower to the order of such
Bank in substantially
14
the form of Schedule II hereto (an "Operating Credit Note"; the Operating Credit
Notes and the Term Loan Notes are hereinafter sometimes collectively referred to
as the "Notes").
Operating Credit Advances made under each Operating Credit Note
shall be payable on demand. The Operating Line of Credit is subject to: (i) the
Bank's favorable periodic (but not less frequent than annual) review to verify
Borrower's compliance with the terms and conditions of this Loan Agreement and
the Loan Documents, the favorable fluctuation of borrower's account and the
absence of materially adverse change to the Borrower's financial condition and
(ii) that said facility shall be covered at all times by inventory and good
accounts receivable (up to 90 days) with a 50% margin.
Each Operating Credit Advance made by the Bank under an Operating Credit
Note shall bear interest from its date until full payment on the unpaid balance
of principal existing from time to time at a fluctuating annual rate equal to
one (1) percentage point over and above the Base Rate, each change in such
fluctuating rate to take effect simultaneously with the corresponding change in
the Base Rate.
Interest due on each Operating Credit Note shall be payable on the 22nd
day of each month.
Section 2.5. Optional Prepayments of the Term Loan Notes.
a. The Borrower may, upon at least 5 Business Days' prior written
notice to the Bank, prepay the Base Rate funded portion of the Term Loan Notes,
in whole or ratably in part with accrued interest to the date of such prepayment
on the amount prepaid, provided, that each such partial prepayment shall be in
principal amount of not less than $50,000.00. The prepayment of the portion of
the Term Loan Notes funded with 936 Funds or LIBOR Funds may
15
only be made on the last day of the corresponding Funding Period and only upon
at least 5 Business Days' prior written notice of the Borrower to the Bank.
Prepayments shall be applied to the principal installments of the Notes in the
inverse order of maturity.
Subject to the preceding paragraph, if the portion of the Loan being
prepaid consists of more than one interest rate option, the Borrower may
designate which portion of the Term Loan shall be prepaid.
b. In view of the fact that a prepayment by Borrower in whole or in
part of the Term Loan would result in an undue burden and cost to the Bank under
the terms of its commitment to secure funds, Borrower agrees that in the event
Borrower makes such a prepayment, or in the event that the Lender declares all
sums due and payable under Section hereof, then Borrower agrees to promptly
indemnify the Bank in an amount equal to the difference between (i) the interest
cost to the Bank expressed in basis points of the funds then being prepaid by
the Borrower, and (ii) the interest cost to the Bank expressed in basis points
at the time of such prepayment for like funds with (a) a maturity equal to the
maturity date of the Funding Period being prepaid and (b) for an amount
substantially equal to the amount being prepaid (New Loan). For the purpose of
determining such penalty, the excess of (i) over (ii) shall first be multiplied
by the amount of the prepayment, the product thereof divided by 360 days or 365
days as appropriate and quotient thereof in turn multiplied by the days
remaining of the applicable Funding Period.
c. Additional Prepayment Penalty.
The Borrower shall, in addition to any amounts due under subsection
(b) above, pay to the Lender a fixed one (1) percentage point prepayment penalty
on the amount prepaid.
16
Section 2.6. Mandatory Supplemental Prepayments and Reserves. Anything in
this Loan Agreement or in the Term Loan Note(s) to the contrary notwithstanding,
in the event that there exists Excess Net Free Cash Flow, as said term is
hereinafter defined, as of the end of any of Borrower's fiscal years, Borrower
shall, (i) within 150 days after the end of each of said fiscal years, apply 30%
of the Excess Net Free Cash Flow up to a maximum of US$1,000,000 in any fiscal
year (the "Annual Amount") and up to an aggregate amount of US$8,000,000 during
the term of the Loan to the prepayment of the Term Loan Note, or (ii) place said
Annual Amount up to the aforesaid maximum amounts in Acceptable Investments, as
said term is hereinafter defined. In the event the Borrower elects to place the
Annual Amount in Acceptable Investments, Borrower shall furnish to Bank proof of
the purchase of such investments on or before the aforesaid 150th day and
thereafter on the 211th day after the end of Borrower's fiscal year pledge the
instruments evidencing such Acceptable Investments to the Bank pursuant to
pledge agreements in form of Schedule III hereof as security for the repayment
of the Term Loan.
Any prepayments of the term Loan Note made pursuant to this Section shall
be applied to the principal installments of the Term Loan Note in the inverse
order of maturity.
Subject to the preceding paragraph, if the portion of the Loan being
prepaid consists of more than one interest rate option, the Borrower may
designate which portion of the Loan shall be prepaid.
Borrower agrees that during each of Borrower's fiscal years during the
term of this Loan, Borrower shall utilize or hold in reserve as hereinafter
provided, an amount at least equal to 5% of Borrower's annual revenues (net of
promotional allowances) for the replacement of
17
Borrower's furniture, fixtures and equipment (hereinafter "F.F.&E."). From the
date hereof and not later than 150 days after the end of each Borrower's fiscal
years, Borrower shall retain an amount, if any, equal to the difference between
the amount actually expended by Borrower in the prior fiscal year for F.F.&E.
and 5% of the Borrower's annual revenues (net of promotional allowances) as
shown on the audited financial statements required to be furnished by Borrower
to Bank pursuant to the provisions of Section (a) hereof, such funds to be held
by the Borrower as a separate reserve account on its books and records for the
future replacement of Borrower's F.F.&E. used in its hotel and casino operations
(the amount so expended in the prior fiscal year and the reserve money being
hereinafter collectively referred to as the "Replacement Reserve").
The term "Excess Net Free Cash Flow" means the amount of Borrower's net
after-tax profits for a given fiscal year, plus depreciation, less the debt
service of this Loan and the Banco de Ponce, Citibank N.A. and the Merrill Lynch
indebtedness and the amount of the Replacement Reserve.
"Fiscal Year" of the Borrower shall mean the period comprised between July
1 to June 30.
The term "Acceptable Investments" shall mean readily realizable securities
and instruments acceptable to the Bank carrying an AA or better rating assigned
to that given type of security by Standard & Poors Corporation or Moody's
Investor Service, Inc., provided however, that no single issue or security shall
account for more than 50% of the Acceptable Investments, excluding investments
in FDIC-insured bank certificates of deposit.
18
Section 2.7. Payments and Interest Computations. The Borrower shall make
each payment of principal and/or interest due hereunder not later than 12:00
noon (San Juan, Puerto Rico time) on the Business Day when due in lawful money
of the United States of America to the Lender at its address referred to in
Section hereof, by checks drawn against banks having a local office.
The Borrower shall pay any taxes, levies, imposts, duties or other charges
of any nature, other than the Bank's income taxes or any tax, levy, impost, duty
or other charge in the nature of income tax, imposed on the Bank by reason of
its ownership of the Notes or the pledge to it of the Mortgages.
In the event that the Borrower is obligated at any time to make any
payment of additional amounts pursuant to this Section, the Lender shall give
notice thereof to Borrower, and Lender agrees thereupon promptly to negotiate in
good faith with the Borrower with a view to finding a satisfactory alternative
method of payment to avoid payment of such additional amounts. If at the end of
such negotiations the parties hereto have been unable to achieve a mutually
acceptable method to avoid such payments by the Borrower, then the Borrower
shall have the right to prepay the Term Loan Note in its entirety upon 30 days
notice to the Lender subject to the provisions of Section (b). This payment
provision shall survive the repayment of the Loan and shall remain in full force
and effect until the applicable statute of limitations has elapsed.
The Borrower hereby authorizes the Bank, after the occurrence of an Event
of Default if and to the extent payment owed to the Bank is not made when due
under any Loan Document to charge from to time against any account of the
Borrower with such Bank the amount so due.
19
All computations of interest under the Notes and fees hereunder shall be
made by the Bank on the basis of a year of 360 days for the 936 and LIBOR funded
Advances and of a 365 day year for conventionally funded advances, both for the
actual number of days elapsed.
Section 2.8. Business Day. Whenever any payment to be made hereunder shall
be stated to be due, or whenever the last day of a Funding Period would
otherwise occur, on a day other than a Business Day, such payment may be made,
and the last day of such Funding Period shall occur, on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest or fees, as the case may be.
Section 2.9. Funding Procedure. The Borrower hereby acknowledges that, in
the even that any Advance is funded as hereinabove provided with LIBOR funds or
with 936 Funds, the Bank, at its discretion and in order to fund such Advance,
may purchase deposits consisting of LIBOR funds or 936 Funds, as the case may
be, in an aggregate amount equal to the Advance being so funded and with a
maturity coterminous with the maturity of such Advance or of the corresponding
Funding Period.
Section 2.10. Increased Costs. If, due to either (i) the introduction of
or any change (including, without limitation, any change by way of imposition or
increase of any reserve requirements) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to the Bank of agreeing to make or
making, funding or maintaining Advances made to the Borrower hereunder, then the
Borrower shall from time to time, upon demand by the Bank, pay the Bank
additional amounts sufficient to indemnify the Bank against such increased cost.
A certificate supported with the
20
appropriate data as to the amount of such increased cost submitted to the
Borrower by the Bank, absent manifest error, shall be conclusive and binding for
all purposes.
Section 2.11. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful for the Bank to perform
its obligations hereunder to fund or maintain Advances hereunder with 936 Funds
or LIBOR Funds, as the case may be, then, on notice thereof and demand therefor
by the Bank to the Borrower, (i) the obligation of the Bank to fund or maintain
such Advances with 936 Funds or LIBOR Funds, as the case may be, shall terminate
and (ii) the Bank shall immediately convert all outstanding Advances funded with
936 Funds or LIBOR Funds, as the case may be, into Advances funded with funds
other than 936 Funds or LIBOR Funds.
In the event that the Bank suffers any loss or expense as a result of the
conversion of the Advances as aforesaid, the Borrower shall, upon demand by the
Bank, pay to the Bank additional amounts sufficient to cover said loss or
expense. A certificate, supported with appropriate data as to the amount of such
loss or expense submitted to the Borrower by the Bank, absent manifest error,
shall be conclusive and binding for all purposes.
Section 2.12. Increased Cost Exception. Nothing contained in Sections and
above shall be construed as requiring payment by the Borrower of (i) an amount
due thereunder and already paid by Borrower to Lender, or; (ii) an amount
otherwise due thereunder if the increased cost or the unlawfulness of the
performance is caused by the Lender's acts or omissions.
21
Section 2.13. 936 Indemnity. In the event the use given by the Borrower to
the Term Credit Advances funded with 936 Funds or the conduct of its business
were to disqualify said portion of the Loan as an "eligible activity", the
Borrower shall indemnify the Lender for any and all taxes, damages, fees, costs
and expenses as may result from said disqualification.
22
ARTICLE III
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to Initial Advances. The obligation of
Bank to make its initial Advance is subject to the conditions precedent that the
Bank shall have received on or before the day of the initial Advance the
following, each dated such day, all in form and substance satisfactory to the
Bank:
a. The Note(s) properly executed by the Borrower to the order of the
Bank.
b. The following security instruments, duly executed by the parties
identified below:
(i) a Collateral Assignment of the rents payable under the
concessions, agreements and leases listed in Exhibit E hereof and of Borrower's
accounts receivable creating a continuing first priority security interest
covering all of said assigned collateral and a corresponding Statement of
Assignment of Accounts Receivable;
(ii) a legally valid pledge of: (x) the first demand mortgage note
(the "Fee Mortgage Note") in the principal amount of US$30,000,000 secured by a
recordable first mortgage on real property described in Exhibit A hereof and (y)
the first demand mortgage note (the "Leasehold Mortgage Note") in the principal
amount of US$5,500,000 secured by a recordable first mortgage of the lease of
the real property described on Exhibit B hereof; said
23
Leasehold Mortgage Note and Fee Mortgage Note, being hereinafter collectively
referred to as the "Mortgage Notes".
(iii) a recordable first mortgage (the "Fee Mortgage") substantially
in the form of Exhibit F hereof on the real property described in Exhibit A
hereof securing the Fee Mortgage Note.
(iv) a recordable first leasehold mortgage (the "Leasehold
Mortgage") substantially in the form of Exhibit G hereof on the lease of the
real property described on Exhibit B hereof securing the Leasehold Mortgage
Note.
(v) A subordination agreement from Williams Hospitality Management
Corp. ("Williams"), in form of Exhibit H hereof (the "Subordination Agreement").
(vi) A recordable Deed of Attornment and Non Disturbance and Consent
to Constitution of Leasehold Mortgage ("Deed of Attornment") in the form of
Exhibit I hereof.
All instruments listed in subparagraph (b)(i) through (vi) (both
inclusive) and any amendments, waivers or substitutions thereof, hereinafter
referred to as the "Loan Documents".
c. evidence that all other actions necessary or, in the opinion of the
Bank, desirable to perfect and protect the security interests created by the
foregoing security instruments have been taken.
d. Certified copies of the resolutions of the Board of Directors of the
Borrower approving the transaction contemplated hereunder and the execution and
delivery of the Loan Documents.
24
e. A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of such Loan
Party authorized to sign each Loan Document to which it is a party and the other
documents to be delivered by it hereunder.
f. A favorable opinion of Messrs. Ledesma, Palou and Miranda, counsel for
the Borrower, in substantially the form of Exhibit J and as to such other
matters as the Bank may reasonably request.
g. A certified copy of the Management Agreement between Borrower and
Williams Hospitality Management Corp., with an unconditional acknowledgement
that (i) said Management Agreement is in full force and effect and that no event
of default has occurred thereunder and (ii) that said agreement may be
terminated by the Lender pursuant to the terms of the Subordination Agreement
appearing as Exhibit H hereof.
h. A certificate of good standing dated not more than 30 days prior to the
execution of this Agreement showing that Borrower is in good standing in the
jurisdiction of its incorporation and in all other jurisdictions in which it is
required to be qualified to transact business.
i. As to the portion of the Term Loan funded with 936 Funds, a copy of the
ruling issued by the Department of the Treasury of the Commonwealth of Puerto
Rico as requested by the Borrower under certain ruling request letter marked as
Exhibit K hereof.
j. Evidence of the insurance required by Section hereof in the form of
certified copies or duplicate originals thereof and a broker's certificate that
said policies are in full force and effect with the premiums prepaid and the
Standard Mortgage endorsements attached thereto.
25
k. A duly executed 936 representation letter substantially in the form of
Exhibit L hereof.
Section 3.2. Conditions Precedent to All Advances.
(a) The obligations of the Bank to make an Advance on the occasion of each
borrowing (including the initial Advance) shall be subject to the further
conditions precedent that on the date of such Advance the following statements
shall be true and the Bank shall have received a certificate signed by the chief
executive officer or executive vice president of the Borrower, dated the date of
such Advance, stating that:
(i) The representations and warranties contained in Section of this
Agreement and in the Loan Documents to which it is a party are correct in all
material respects on and as of the date of such Advance as though made on and as
of such date, and
(ii) No event has occurred and is continuing, or would result from
such Advance, which constitutes an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time lapse or both.
(b) The Bank shall have received such other approvals, opinions or
documents as the Bank may reasonable request.
26
ARTICLE IV
THE COLLATERAL
Section 4.1. The Security. The Loan Documents shall secure the full and
complete payment of the Loan as evidenced by this Loan Agreement, the Notes, as
well as all interest thereon, any costs, expenses and reasonable attorneys' fees
that may become due and payable upon the occurrence of an Event of Default and
any other amounts payable and/or reimbursable to the Lender pursuant to this
Loan Agreement and the other Loan Documents. The Lender, with or without notice
to or consent of the Borrower, may take (but Borrower shall not be obligated to
furnish) from any other person or persons additional securities for the Loan,
without impairing, by so doing, any other collateral guarantees and securities
Lender may hold.
ARTICLE V
BORROWER'S AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof and until
payment in full of the principal of and the interest on the Loan, as evidenced
by the Notes and secured by the Mortgage Notes, and the discharge of all other
obligations hereunder and under the other Loan Documents, Borrower shall, unless
the Lender otherwise consents in writing:
Section 5.1. Corporate Existence. Preserve and keep in full force and
effect its corporate existence, its qualification to do business and its good
standing in the Commonwealth of Puerto Rico.
Section 5.2. Business. Continue to conduct and operate its business
substantially as conducted and operated during the present calendar year,
maintaining a substantial portion of
27
its banking and banking related business with the Lender, it being understood
that Borrower's payroll accounts may be maintained at other banks.
Section 5.3. Licenses, Permits and Franchises. Maintain, preserve and
protect at all times all licenses, permits and franchises, particularly those
pertaining to the hotel and casino it currently operates and the tax exemption
grant it enjoys (subject to on-going tax grant conversion negotiations with the
Secretary of the Treasury of Puerto Rico). Comply with each and all of the
terms, conditions and requirements of such licenses, permits, franchises, and
grants.
Section 5.4. Properties. Preserve all of its assets and properties that
are used in the conduct of its business particularly those securing the Loan,
and keep the same in good repair, working order and condition, and from time to
time make or cause to be made all needed and proper repairs, renewals,
replacements, betterments and improvements thereto to preserve and maintain
their value, normal wear and tear excepted, so that the business carried on in
connection therewith may be properly conducted at all times.
Section 5.5. Insurance. Maintain all properties (real and personal)
insured at all times by responsible, reputable and financially sound insurance
companies or associations in such amounts and covering loss or damage by fire,
earthquake and windstorm, casualty, and such other risks as are usually carried
by companies engaged in similar businesses and owning similar properties in
Puerto Rico as the Borrower and maintain adequate (in the reasonable opinion of
the Bank) business interruption insurance and insurance against liability to
persons for such risks and hazards and in such amounts as are usually carried by
companies engaged in similar businesses; all such policies shall name the Bank
as insured party and provide for payment of
28
the proceeds thereof to the Borrower and the Bank, and shall contain an
endorsement providing that the insurance shall not be cancelable except upon 10
days prior written notice to the Bank and from time to time at the request of
the Bank, Borrower shall deliver to the Bank a detailed schedule indicating all
insurance policies then in force; provided, however, that if an Event of Default
has not occurred hereunder, under the Notes or under the other Loan Documents,
proceeds received or to be received under the aforesaid policies shall be made
available to the Borrower for restoration subject to the relevant provisions of
the Fee Mortgage and/or the Leasehold Mortgage.
Section 5.6. Records - Financial Statements. Keep at all times in Puerto
Rico complete books of record and accounts, and an accounting system, in
conformity with generally accepted accounting principles and with the Uniform
System of Accounts for Hotels adopted by the American Hotel and Motel
Association, as revised from time to time, with full, true and correct entries
of all dealings and transactions in relation to its business and affairs.
Reasonably protect such books and accounts against loss or damage. During the
term of the Loan have its books and accounts audited and the financial
statements showing its financial condition and the results of its operations
during the preceding fiscal year, together with any supporting schedules,
certified by Ernst & Whinney or by an independent certified public accountants
of recognized national standing selected by Borrower and reasonably acceptable
to the Lender.
Section 5.7. Inspection. Permit the Lender, its agents and/or
representatives to visit and inspect at reasonable times, upon prior notice,
Borrower's assets, properties, books of record and accounts, and to discuss the
same with Borrower's chief operating officer.
29
Section 5.8. Payment of Taxes. Timely file or cause to be filed any and
all federal, state and municipal tax returns and reports. Timely pay and
discharge or cause to be paid and discharged any and all taxes and assessments,
and any and all federal, state and municipal governmental impositions, fees,
charges and/or levies (including but not limited to: any income taxes, municipal
taxes, "patentes", real estate and personal property taxes, social security,
unemployment State Insurance Fund premiums, and the like) imposed upon itself,
its operations, or upon its income and profits, or upon any of its properties,
real, personal or mixed, or upon any part thereof, or upon its payroll, within
30 days from the date the pertinent invoice is issued or the last day on which
such taxes may be paid without incurring any penalty. Borrower shall provide
Lender with evidence acceptable to Lender of the aforesaid payments.
Notwithstanding this clause, Borrower shall have no obligation to pay such taxes
as long as it shall be contesting the validity or amount of any such taxes in
good faith and by appropriate proceedings pursuant to and in compliance with the
provisions of Section 10.2 hereof.
Section 5.9. Laguna Wing. Comply in all material respects with each and
all of the terms and conditions of the lease it enjoys in connection with the
real estate property described in Exhibit B hereto and do all things necessary
to keep and maintain such lease in full force and effect and free of defaults.
Section 5.10. Statutory Compliance. Comply in all material respects with
all applicable statutes, regulations, judgments, decrees, resolutions and orders
of, and all applicable restrictions imposed by, any and all governmental
entities and/or authorities, federal, state or municipal, judicial or
administrative, applicable to the conduct of its businesses and activities, the
ownership of its properties, its licenses, permits, franchises and/or its tax
exemption grants, and with the
30
terms of the same, particularly those pertaining to the hotel and the casino it
currently operates, unless it is contesting by appropriate proceedings the
validity and/or enforceability of the same with respect to itself.
Section 5.11. Contractual Compliance. Pay and discharge all of its
indebtedness, trade bills and obligations promptly and in accordance with their
terms and/or the normal and customary trade terms unless it is contesting the
same by appropriate proceedings. Substantially comply with the terms and
conditions of any indentures, agreements, contracts or other instruments to
which it is a party or which may affect its assets or properties.
Section 5.12. Cost Overruns. Promptly pay and discharge from its own
resources any and all construction cost overruns incidental to the Casino
expansion project.
Section 5.13. Full Compliance. Comply with each and all of the terms of
this Loan Agreement and the other Loan Documents.
Section 5.14. The Collateral Documentation. Borrower, at its own cost and
expense, shall forthwith and without any delay, execute, deliver, file and
refile any certifications, statements, deeds, and other documents and
instruments that may be required, necessary and proper to record and perfect the
Loan Documents which are required to be recorded by this Loan Agreement and the
other Loan Documents, or delivered in connection with the same, and shall also
forthwith and without any delay take any required, necessary and/or proper
actions to attain such purposes, upon being informed of the need to do so or
upon being so required by the Registrar through the Lender or its counsel or
reasonably required by the Lender.
Section 5.15. Preservation of Rank. Borrower, at its own cost and expense,
shall forthwith and without any delay, take all required, necessary and proper
actions as may be
31
required by the Registrar or reasonably required by the Lender to protect and
preserve the existence and first rank (subject to the Permitted Exceptions
listed in Exhibit C hereof and to the prior assignment of the incremental
revenue from slot machines made to Bancode Ponce dated June 28, 1988 under
affidavit 646 of notary W. Del Valle Armstrong) of the Loan Documents requiring
recordation by this Loan Agreement, other than Deed of Subordination and the
Deed of Attornment.
ARTICLE VI
BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees that from the date hereof and until payment
in full of the principal of and the interest on the Loan as evidenced by the
Mortgage Notes, and all other obligations hereunder and under the other Loan
Documents, that Borrower shall not, unless the Lender otherwise consents to in
writing:
Section 6.1. Liens. Incur, create, assume or suffer to exist any real or
personal property mortgage, pledge, title retention lien, charge, security
interest, financing statement, or any other lien or encumbrance of any nature
whatsoever other than the Permitted Exceptions appearing on Exhibit C hereof,
any legal, voluntary, involuntary or consensual liens or encumbrances, on any of
its assets or properties now or hereafter owned with a rank preferential to any
liens and encumbrances securing the Loan, except liens incurred in the ordinary
course of its hotel and casino business and the pre-existing Merrill Lynch and
Banco de Ponce indebtedness of US$3,500,000 each and the Citibank, N.A.
indebtedness of US$715,000, provided, however, that the Borrower may refinance
said pre-existing indebtedness, said
32
refinancing to be for the same amounts and substantially for similar terms and
conditions and prevailing interest rates.
Section 6.2. Guarantees. Except for the guarantee in favor of Banco de
Ponce in the principal amount of $2,000,000 currently outstanding, guarantee,
assume, endorse or otherwise become or be responsible in any way for the
obligations of any other person, natural or juridical without the prior written
consent of the Lender, which consent shall not be unreasonable withheld.
Section 6.3. Properties. Sell, lease, sublease, transfer or alienate in
any manner a substantial part of its assets or stock. Dispose of, alter,
destroy, abandon, remove or use its assets or properties for any purpose other
than that for which it is now used, unless in the ordinary course of its hotel
and casino business.
Section 6.4. Merger, Consolidation. Liquidate, dissolve, merge into or
consolidate with any other corporation or entity.
Section 6.5. Conditional Sales. Incur any obligations under a purchase or
otherwise acquire any property subject to any conditional sale or title
retention agreement, unless in the ordinary course of its hotel and casino
business.
Section 6.6. Investments. Except as provided in Section , invest in,
purchase or hold any stock, other securities or any other evidence of
indebtedness of, lend or advance monies or credit to, any other person, natural
or juridical in excess of US$1,000,000, except in the ordinary course of its
hotel and casino business and except for direct obligations of the United States
of America, the Commonwealth of Puerto Rico and/or banks with a recognized sound
financial condition with a maturity date of less than a year from the date of
acquisition.
33
No such investment shall be made unless the payments of Sections and hereof are
current.
Section 6.7. Leases. Lease or assume any lease for the use of any property
of any other person, natural or juridical, or enter into a similar agreement,
except those leases, subleases and/or concessions listed in Exhibit C hereof, or
leases, subleases and/or concessions entered into in the ordinary course of its
hotel and casino business.
Section 6.8. Dividends. Borrower shall not pay or declare any dividends or
make any advances to any parent, shareholder or affiliate of Borrower unless the
Borrower is at the time of any such payment or advance in compliance with the
provisions of Section and hereof. The provisions of the preceding sentence shall
not apply to up to US$15,500,000 of the proceeds of this Loan or the collateral
being returned to Borrower in connection with the refinancing of the existing
loan held by Ponce Federal.
Section 6.9. Operation of Business. Lease to a third party the operation
of its hotel and/or casino.
ARTICLE VII
NOTICES
Section 7.1. Addresses. Any and all notices, requests demands and other
communications that may be necessary, proper and/or convenient under this Loan
Agreement or any of the other Loan Documents shall conclusively be deemed given,
when given in writing (including telex, telecopier or similar writing), on the
date it is delivered to the officer set forth
34
below and receipt acknowledged or if by mail on the fifth day after it is
deposited in the mail, postage prepaid, certified-return receipt requested,
addressed as set forth below:
a. If to the Lender
Scotiabank de Puerto Rico
Plaza Scotiabank
273 Ponce de Leon Avenue
Hato Rey, Puerto Rico 00917
Attention: A. Van Der Kley, President
FAX Number (809) 756-5410
with a copy to:
Brown, Newsom & Cordova
Plaza Scotiabank - 6th Floor
273 Ponce de Leon Avenue
Hato Rey, Puerto Rico 00917
Attention: E. Cordova Diaz, Esq.
FAX Number (809) 758-1030
b. If to Borrower
Posadas de Puerto Rico Associates, Incorporated
999 Ashford Avenue (Condado)
Santurce, Puerto Rico 00902
Attention: H. Andrews
FAX Number (809) 721-0968
with a copy to:
WMS Industries Inc.
767 Fifth Avenue - 23rd Floor
New York, New York
Attention: Barbara M. Norman, Esq.
FAX Number (212) 319-9789
Section 7.2. Change of Address. Any of the parties may change the officer
and/or agent authorized to receive any notices, requests, demands and other
communication and/or its
35
mailing address, by giving notice to the other party pursuant to this paragraph,
as long as the mailing address is within the United States of America.
Section 7.3. Borrower's Mandatory Notices and/or Communications. Borrower
shall, during the term of the Loan and until full and final payment of all
amounts due thereunder:
a. Furnish to the Lender, not later than 90 days after the end of
Borrower's fiscal year (currently, June 30th of each year), an audited financial
statement, including a balance sheet, a statement of income and auditor's
report, covering the operations of the Condado Plaza Hotel and Casino.
b. Furnish to the Lender, each year, beginning with the fiscal year
commencing July 1, 1988, with evidence from the Borrower's accounting records,
that the Borrower has filed all returns and paid all taxes except those being
contested pursuant to Section 10.2 hereof due on its properties and operations
for the prior year and with a letter issued by the Borrower's certified public
accountants and/or auditors to the effect that they have examined the accounting
records of the Borrower and based on their examination of such financial
accounting records have determined that all federal (if applicable), Puerto Rico
and municipal income and property tax returns were filed, and the corresponding
taxes due were paid. Further, that all additional assessments of which the
certified public accountants have been informed have been paid in full.
c. Furnish to the Lender a copy of its quarterly financial
statements within 45 days after the end of each quarter. Such interim statements
shall include a summarized aging of accounts receivable and inventories report,
a balance sheet and a statement of income and surplus for such quarter and for
the fiscal year to date, and shall, except for casino receivables,
36
be in reasonable detail, subject to year end and audit adjustments, unaudited
but certified by Borrower's chief financial officer or chief operating officer.
The listing of casino accounts receivable shall be held by the Borrower and
remain, in the absence of the occurrence of an Event of Default hereunder,
confidential provided however, that if an Event of Default shall occur said list
shall be delivered to the Bank immediately upon demand.
d. Furnish to the Lender upon delivery of the annual and quarterly
financial statements, a certification issued and signed by its chief financial
officer or its chief operating officer to the effect that to the knowledge of
such officer no event of default specified in Article VIII hereof has occurred,
and that no event, which upon notice or lapse of time, or both, would constitute
an Event of Default as specified in said paragraph has occurred. In case that
any such Event of Default has occurred, the certification shall describe and
specify the nature of such condition, act or event, indicate when it occurred
and state the actions being taken or to be taken to cure the same.
e. Furnish to the Lender a copy of any pleadings and/or notices
within 10 days after receiving service of summons or written notice regarding
any proceedings, judicial or administrative, including any arbitration
proceedings, by or before any governmental entity or authority, or before an
arbitrator, against or affecting Borrower: (i) seeking a money award in excess
of US$100,000; (ii) seeking to foreclose or realize upon Borrower's rights,
assets or properties, real or personal; (iii) materially and adversely affecting
any licenses, permits and/or franchises (including the use of the bridge
connecting the properties described in Exhibit A and B hereof) and/or the tax
exemption grant that Borrower may enjoy; (iv) seeking a relief which might
result, if granted, in any material adverse change in Borrower's operations,
business,
37
assets, properties, licenses, permits, franchises, tax exemption grant or in its
condition, financial or otherwise; or (v) materially and adversely affecting any
of the collateral or the Loan Documents securing the Loan.
f. Furnish to the Lender a broker or issuer certified copy or
duplicate originals of each of its insurance policies required under Section
hereof, together with any endorsements thereto.
g. Furnish promptly to the Lender any information related to this
Loan Agreement and/or the other Loan Documents it may reasonably request
regarding Borrower's operations, business affairs, financial condition, and/or
any of Borrower's covenants, agreements and/or undertakings under this Loan
Agreement and/or any of the Loan Documents and/or any proceedings mentioned in
subparagraph (e) hereinbefore.
h. Notify the Lender in writing of any condition, act or event which
constitutes an Event of Default under this Loan Agreement or any of the other
Loan Documents, or which with notice and/or lapse of time, would constitute an
Event of Default, within the 10 days following Borrower obtaining knowledge of
the occurrence of the same.
Section 7.4. Waiver. Except as provided in this Loan Agreement or in any
of the Loan Documents, Borrower, does hereby waive any right of presentment,
protest and/or demand for payment, any right to any notices of protest, default,
dishonor, payment, nonpayment, extension, change in the time of payment and/or
the manner, place or terms of payment, exchange, release and/or surrender of all
or any of the collateral securities or any parts thereof, compromise and/or
settlement with the debtors or any of them and/or any other person or persons,
or of subordination of any payments or any other rights under this Loan
Agreement or any of the
38
other Loan Documents, or any part thereof, to the payment of any other
obligation, debt or claim which may at any time be due or owing to the Lender
and/or to any other person or persons, and/or of the sale and/or purchase of all
or any part of the collateral securities at any public, private or notarial sale
or at any broker's board, and any and all other formalities to which it might
otherwise be entitled to, subject to any notices required hereinafter.
ARTICLE VIII
DEFAULT
Section 8.1. Events of Default. Each of the following shall continue an
event of default (herein an "Event of Default"):
a. If the Borrower fails to pay any installment of principal and/or
interest for a term in excess of 30 days after its due date.
b. If Borrower fails to pay any monthly rent under the lease
agreement regarding the real estate property described in Exhibit B hereto when
required within applicable grace periods.
c. If Borrower's use permit regarding either the real estate
property described in Exhibit A or the lease it enjoys over the real estate
property described in Exhibit B hereto is cancelled and/or terminated.
d. If the casino license is cancelled or otherwise impaired or
terminated and Borrower is unable to have the same reissued or to obtain a new
one within the 6 months following such cancellation or termination.
e. Any material representation or warranty made by Borrower in any
of the Loan Documents or by Borrower (or any of its officers) in any
certificate, agreement, instrument
39
or statement contemplated by or made or delivered pursuant to or in connection
with any of the Loan Documents, shall prove to have been incorrect in any
material respect when made;
f. Borrower shall fail to perform or observe any other term,
covenant or agreement contained in any of the Loan Documents on its part to be
performed or observed and any such failure remains unremedied for 30 days after
written notice thereof shall have been given to Borrower by the Lender, provided
however, that if Borrower has commenced and is actively pursuing the cure of the
default, and said delay does not otherwise materially adversely affect or impair
the Bank's position hereunder, said 30 day term shall be extended until such
term as may be reasonably required to cure said default; or
g. Borrower shall fail to pay any material indebtedness (other than
under the Loan Documents or other than representing the deferred purchase price
of property or services except where the obligation to pay such deferred
purchase price is evidenced by a promissory note or any other type of documented
suppliers credit) owing by Borrower, of any interest or premium thereon, when
due (or, if permitted by the terms of the relevant document, within any
applicable grace period), whether such indebtedness shall become due by
scheduled maturity, by required prepayment, by acceleration, by demand or
otherwise; or Borrower shall fail to perform any material term, covenant or
agremeent on its part to be performed under any material agreement or instrument
(other than the Loan Documents) evidencing or securing or relating to any
indebtedness owing by Borrower when required to be performed (or, if permitted
by the terms of the relevant document, within any applicable grace period), if
the effect of such failure is to accelerate, or to permit the holder or holders
of such indebtedness or the trustee or
40
trustees under any such agreement or instrument to accelerate, the maturity of
such indebtedness;
or
h. Any of the Loan Documents shall, at any time after their
respective execution and delivery and for any reason, cease to be in full force
and effect or shall be declared to be null and beyond final appeal, or the
validity or enforceability thereof shall be successfully contested by the
Commonwealth of Puerto Rico, or any agency or instrumentality thereof; or
i. Borrower shall become insolvent, or admit in writing its
inability to pay its debts as they mature, or make any assignment for the
benefit or creditors, or Borrower shall apply for or consent to the appointment
of any receiver, trustee, or similar officer for it or for all or any
substantial part of its property, or such receiver, trustee or similar officer
shall be appointed without the application or consent of Borrower and such
appointment shall continue undischarged for a period of 60 days, or Borrower
shall institute (by petition, application, answer, consent or otherwise) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceeding relating to it under the laws of
any jurisdiction or any such proceeding shall be instituted (by petition,
application or otherwise) against Borrower and shall remain undismissed for a
period of 60 days, or any judgment, writ, warrant of attachment or execution or
similar process shall be issued or levied against material assets of Vorrower
and such judgment, writ or similar process shall not be released, vacated or
fully bonded within 30 days after its issue or levy; or
j. If the Borrower fails for a term in excess of 15 days after being
so requested in writing to reimburse to the Lender any amounts that the latter
has properly
41
incurred, expended and/or disbursed becauseof the Borrower's failure to comply
with any of its obligations, covenants and/or undertakings under this Loan
Agreement or under the Mortgage.
k. Other than as may be reasonably required by an event of force
majeure or to restore and/or repair after a casualty loss, if Borrower's usual
hotel business and/or operation is liquidated, sold, would up, terminated or
suspended (including suspension due to construction of new facilities) or if
Borrower is otherwise unable to continue with the same.
l. If any judgment, injunction and/or decree is entered and/or
issued and becomes final and beyond appeal against Borrower, preventing the same
from continuing to operate a material part or all of its business affairs in the
normal course of business.
m. If any writ to secure the effectiveness of a judgment is issued
against Borrower affecting a material portion of its assets and/or properties or
preventing it from operating its business in the normal course, and Borrower
fails to have the same stayed, quashed, cancelled and/or set aside for a term in
excess of 60 days after being served with a copy of the same.
n. If a judgment, decree or order final and beyond appeal is entered
and/or issued against Borrower in an amount in excess of $100,000 remains
unsatisfied and becomes executory.
Section 8.2. Acceleration.
a. If Borrower fails to pay any installment of principal or interest
within the 30 days following its due date, the Lender may, at its option, during
the continuance of such dafault, notify the Borrower that it has accelerated the
due date of the Loan and, upon such notice, the balance of the Loan including
anya ccrued interest shall become immediately due,
42
liquid and payable and the Lender may proceed thereafter to enforce collection
by summaryproceedings or otherwise and to foreclose any and all collateral
guarantees.
b. If an Event of Default occurs, except a failure to pay any
installment of principal or interest, the Lender may, at its option, during the
continuance of such Event of Default, notify the Borrower of its intention to
accelerate the due date of the Loan and, thus, to declare the balance of the
Loan as evidenced by the Mortgage Note to be due and payable. If the Event of
Default is not cured within the 10 days following the notice, then the balance
of the Loan, including any accrued interest, shall become immediately due and
payable and the Lender may proceeed thereafter to enforce collection by summary
proceedings or otherwise and to foreclose any and all collateral guarantees.
Section 8.3. Other Remedies. If an Event of Default occurs, in addition to
the remedies provided in the above Section the Lender shall also be entitled to:
a. Under court proceedings for the foreclosure of the Mortgage or a
collection action hereunder have a receiver appointed as a matter of right
withut regard to Borrower's solvency, without having to post a bond, which right
is hereby waived, for the purpose of preserving the hotel and casino and related
operations and/or any collateral securities and preventing any waste of assets.
All expneses incurred in connection with such appointment, or in the protection
and preservation fo the hotel and/or the casino and/or any of the collateral
securities shall be chargeable to and payable by the Borrower.
b. Refuse to disburse any amounts under this Loan Agreement that has
not been disbursed and/or to stop the payment of any checks issued pursuant to
the same that hasnot been cashed.
43
c. Any other remedies and rights provided in this Loan Agreement or
any of the other Loan Documents.
d. Any other remedies at law or equity.
ARTICLE IX
CHARGES AND EXPENSES
Section 9.1. Fees and Expenses. Any and all legal fees, internal revenue
stamps and vouchers, notarial fees, charges and expenses directly or indirectly
related to the execution and/or the issuance of any certified copies and/or the
recordation in thepertinent REgistry of any deeds of mortgage, cancellation,
and/or subordination, of any aclaratory deeds related thereto or of any of the
other Loan Documents or related or incidental to this Loan Agreement and to the
issuance of any title-mortgage insurance policies, as well as any fees, charges
and expenses to be incurred in order to comply with the terms and conditions of
the Loan Agreement and the other Loan Documents, shall be for the exclusive
account of the Borrower and shall be due and payable at the closing fo this Loan
Agreement.
The Lender shall be entitled to select the Notary Public before whom any
deeds and documents shall be executed at the closing fo the Loan.
Section 9.2. Collection Fees and Expenses. In the event the Lender resorts
to any court to colelct in full or in part the principal amount of the Loan
and/or any interest accrued thereon or othermonies due thereunder, the Borrower
shall pay to the Lender the aggregate cost of the disbursements, expenses and
reasonable attorneys' fees which may be incurred by the Lender, which amount
shall immediately become payable upon the filing of the petition or complaint
and shall become due and payable upon the entry of judgment in favor of the
Lender.
44
ARTICLE X
MISCELLANEOUS
Section 10.1. Mortgage Title Insurance. Prior to the disbursement of the
Loan, Borrower shall deliver to the Lender a mortgage title insurance policy in
favor of the Lender, issued by a title insurance company acceptable to the
Lender, free and clear of any exceptions and any prior liens, encumbrances,
clouds and/or defects on the title (except as may be otherwise stated in Exhibit
C hereof) for the full amount of the Mortgage Notes and any credits provided in
the Mortgage, provided however, that the mortgage title insurance applicable to
the Mortgage on the real property described in Exhibit A hereof shall be insured
by Chicago Title Insurance Company and reinsured with First American Title
Insurance Company, for 50% of the full amount of the Mortgage.
Section 10.2. Borrower's Right to Contest. Borrower's right to contest
hereunder shall be governed by the provisions of Paragraph TENTH of the Fee
Mortgage and related provisions.
Section 10.3. Set Off. Upon the occurrence of an Event of Default and upon
due acceleration of the Loan, or upon the maturity of the Loan or of any amount
due hereunder, the Lender may, at its option, with or without Borrower's
consent, set off against any interest or other amounts owed by the same and
thereafter to the principal of the Loan as evidenced by the Mortgage Note, any
and all obligations and/or liabilities of the Lender to the Borrower, direct or
indirect, absolute or contingent, now existing or hereafter arising.
Section 10.4. No Joint Venture. Nothing herein contained shall constitute
or be construed to be or to create a joint venture and/or a partnership between
the Borrower and the
45
Lender. The Lender does not assume and shall not bear any business risks
directly or indirectly related to the Borrower.
Section 10.5. Lender's Optional Right to Pay or Perform in Borrower's
Stead. If the Borrower fails or has failed to make any payment or to perform any
act required to be made or performed under this Loan Agreement or any of the
other Loan Documents, the Lender may, subject to the provisions of Section
above, in the use of its sole discretion, upon 15 days prior notice to or demand
upon the Borrower, make such payment or perform such act. In such event, any
amounts properly paid and any expenses properly incurred by the Lender shall be
reimbursed by the Borrower with interest at a rate to be determined as provided
in this Loan Agreement for the principal balance, such payment by the Lender
shall not cure the Borrower's default because of its failure to make such
payment or to perform such act.
Section 10.6. Assignment and Participation.
a. The Lender may negotiate and/or assign the Notes and/or the
Mortgage Notes provided any such assignee, holder or participant is an "eligible
institution", as said term is defined in the Puerto Rico Tax Incentives Act and
regulations promulgated thereunder. In that event, the Lender shall give prompt
written notice of any such negotiation and/or assignment, specifying the
assignee's name and address, to the Borrower. If it does so, such negotiation
and/or assignment shall include all rights, powers, privileges and collateral
securities under this Loan Agreement and the other Loan Documents and Lender
shall obtain, and deliver a copy thereof to Borrower, the agreement of any such
assignee, participant or future holder to be bound by the terms and conditions
of this Loan AGreement as if said party were a "Lender" hereunder.
46
b. Whenever any of the parties hereto is referred to in this
Loan AGreement and other Loan Documents, such reference shall be deemed to
include its successors and assigns.
c. This Loan Agreement and other Loan Documents shall bind an
dinure to the benefit of the Lender, its successors and assigns, and shall bind
and inure to the benefit of the Borrower, its successors and assigns and all
subsequent owners of the collateral.
d. The Lender shall have the unrestricted right to sell
participations in the Loan, the Notes and/or Mortgage Notes. Any such
participants shall comply with the provisons of Section (a) above and enjoy and
be protected in their respective participations by any collateral securities
and/or guarantees hereunder.
Section 10.7. No Waiver, Cumulative Remedies. No failure or delay by the
Lender in exercising any right, remedy, power and/or privilege under this Loan
Agreement or any of the other Loan Documents shall operate as a waiver thereof.
The partial or single exercise of any right, remedy, power and/or privilege
under this Loan Agremeent or any of the other Loan Documents shall not operate
as a waiver nor as a estoppel regarding any rights under the same. All rights
and remedies provided inthe Loan AGreement and the other Loan Documents are
cumulative and may be exercised contemporaneously or successively, and are in
addition and not exclusive of any other rights and remedies provided by law.
No waiver by the Lender shall be effective nor binding unless it is in
writing, signed by a duly authorized officer of the Lender and the specific
intent of waiving any rights, causes of action and privileges is stated therein.
Any such waiver shall not include any instances not specified therein nor any
acts or events that have not occurred as of the date thereof.
47
Section 10.8. Survival. All representations and warranties made by the
Borrower in this Loan Agreement and the other Loan Documents, their covenants
and undertakings therein, shall survive the execution of the same and the
disbursements of the Loan, and shall continue in full force and effect until the
loan is paid in full.
Section 10.9. Applicable Law. The Loan Agreement and theother Loan
Documents shall be construed and enforced in accordance with, and governed by,
the laws of the Commonwealth of Puerto Rico.
Section 10.10. Jurisdiction. Each of the appearing parties submits itself
to the jurisdiction of the Superior Court of Puerto Rico, San Juan Part.
Section 10.11. Interpreation.
a. The Loan Agreement and each of the other Loan Documents
supplement each other.
b. The titles of the paragraphs and sections of this Loan Agreement
and the other Loan Documents have been given for convenience only and shall not
be attributed any effect in its interpretation.
c. If any of the paragraphs, sections and/or clauses of this Loan
AGreement or of the other Loan Documents or any of the Loan Documents is
declared by judicial interpretation or construction to be null, void and/or
unenforceable in any respect, such paragraph, section, clause and/or document
shall be ineffective to the extent of such declaration without affecting the
remaining paragraphs, sectios and/or clauses of the same or the other documents.
48
d. Whenever used in this Agreement, the term "Lender" includes
Scotiabank de Puerto Rico, its successors and assigns, and such participating
entity and the present or future owner, holder and/or bearer of the Notes or of
the Mortgage Note.
Section 10.12. Modification, Amendment. The Loan Agreement and the other
Loan Documents may not be modified, altered nor amended in any manner
whatsoever, except by another written agreement executed by the parties with the
same solemnities as the document being modified, altered and/or amended.
Section 10.13. Entire Understanding. The Loan Agreement and the other Loan
Documents contain all of the representations and warranties, undertakings,
covenants and agreements between the parties. All prior negotiations,
understandings, undertakings, covenants, representations and agreements, whether
oral or written, in connection wth the Loan aremerged herein.
This 30th day of August, 1988.
49
POSADAS DE PUERTO RICO SCOTIABANK DE PUERTO RICO
ASSOCIATES
By: /s/ _________________________ By: /s/ ________________________
Affidavit Number: 2246
Subscribed to before me by Norman Jules Menell of legal age, married, as
President of Posadas de Puerto Rico Associates, Incorporated and a resident of
New York, New York, and Arnold Van Der Kley, of legal age, married, a resident
of San Juan, Puerto Rico, as President of Scitiabank de Puerto Rico, both to me
personally known. In San Juan, Puerto Rico this 30th day of August 1988.
/s/ _______________________________
Notary Public
50
CERTIFICATE ISSUED BY BORROWER UNDER THE
PROVISIONS OF SECTION OF THE
OPERATING CREDIT AND TERM LOAN
The undersigned, as Executive Vice President of Posadas de Puerto Rico
Associates, Incorporated (the "Borrower"), DOES HEREBY CERTIFY, as follows:
The representatios and warranties of the Borrower contained in the
Operating Credit and Term Loan Agreement ("Loan Agreement") of even date between
the Borrowe and Scotiabank de Puerto Rico are to the best of undersigned's
knowledge and belief correct on and as of the date hereof, and no even thas
occurred and is continuing which constitutes an Event of Default under the Loan
Agreement and/or under the Loan Documents (as said term is defined in the Loan
Agreement) or would constitute an Event of Defult but for the requirement that
notice be given or time elapse of both.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of August
1988.
POSADAS DE PUERTO RICO
ASSOCIATES, INCORPORATED
By: /s/ ___________________________
AMENDMENT TO OPERATING CREDIT AND TERM LOAN AGREEMENT
AND TO COLLATERAL ASSIGNMENT OF ACCOUNTS RECEIVABLE AGREEMENT
This Amendment entered into in San Juan, Puerto Rico, this 12th day of
June, 1989, between POSADAS DE PUERTO RICO ASSOCIATES, INCORPORATED, a Delaware
Corporation with principal offices at 999 Ashford Avenue, Condado, Santurce,
Puerto Rico (the "Borrower") and SCOTIABANK DE PUERTO RICO, a Puerto Rico
banking institution with offices at 273 Ponce de Leon Ave., Hato Rey, Puerto
Rico, (the "Lender").
WITNESSETH
WHEREAS, the appearing parties entered into certain Operating Credit and
Term Loan Agreement (hereinafter, the "Loan Agreement") and a Collateral
Assignment of Accounts Receivable Agreement (the "Collateral Assignment"), both
dated August 30, 1988, whereby the Lender made available to the Borrower certain
credit facilities in the aggregate sum of US$35,500,000 and the Borrower secured
the same, pursuant to, among other collateral, the Collateral Assignment;
WHEREAS, the Borrower has requested and the Lender has agreed to amend
the Loan Agreement in order to increase the operating credit facilities
available to the Borrower under the Loan Agreement from US$500,000 to
US$1,000,000;
WHEREAS, the preceding Amendment requires an amendment to the Collateral
Agreement;
NOW THEREFORE, the parties hereto for good an valuable consideration
AMEND the Loan Agreement and the Collateral agreement as follows:
1. The parties agree that the operating credit facilities originally in
the amount of
US$500,000 shall be increased as of the date hereof to a US$1,000,000 facility
under the same terms and conditions and to the same extent and force as if said
amend credit facilities had been originally incorporated in the Loan Agreement
as the operating credit facility referred to therein.
2. The parties agree that the security and, more particularly, the
Collateral Agreement afforded to the Lender under the provisions of Section 3 of
the Loan Agreement shall be deemed amended accordingly, and shall extend and be
applicable to the amended credit facilities made available pursuant to the
Agreement.
3. The parties agree that all the covenants, terms and conditions of the
Loan Agreement not expressly amended, deleted or substituted hereunder shall
remain in full force and effect and shall be deemed extensive to the credit
facilities made available to the Buyer pursuant to the terms of this Amendment
to Loan Agreement.
IN WITNESS WHEREOF, the parties execute the foregoing instrument at the
place and at the date above stated.
POSADAS DE PUERTO RICO SCOTIABANK DE PUERTO RICO
ASSOCIATES INCORPORATED
By: /s/ By: /s/
---------------------------------- ---------------------------
2
AFFIDAVIT NO. 5206
Subscribed to before me by Hugh A. Andrews, of legal age, married,
executive and resident of San Juan, Puerto Rico, in his capacity as Executive
Vice President, of Posadas de Puerto Rico Associates, Incorporated, to me
personally known in San Juan, Puerto Rico, this 9th day of June, 1989.
/s/
-----------------------------
NOTARY PUBLIC
AFFIDAVIT NO. 12,275
Subscribed to before me by Carlos Irizarry -------------, of legal age,
married, executive and resident of San Juan, Puerto Rico, as authorized
signature for Scotiabank de Puerto Rico, this 12 day of June, 1989.
/s/
-----------------------------
NOTARY PUBLIC
3
SECOND AMENDMENT TO OPERATING CREDIT AND
TERM LOAN AGREEMENT
This Second Amendment to the Loan Agreement, as amended, referred to
below, entered to in San Juan, Puerto Rico, this 28th day of September 1990,
between POSADAS DE PUERTO RICO ASSOCIATES, INCORPORATED, a Delaware corporation
with principal offices at 999 Ashford Avenue, Condado, Santurce, Puerto Rico
(the "Borrower") and SCOTIABANK DE PUERTO RICO, a Puerto Rico banking
institution with offices at 273 Ponce de Leon Avenue, Hato Rey, Puerto Rico,
(the "Lender").
WITNESSETH:
WHEREAS, the appearing parties entered into a certain Operating Credit and
Term Loan Agreement (hereinafter, the "Loan Agreement") dated August 30, 1988,
whereby the Lender made available to the Borrower certain credit facilities in
the aggregate sum of US$35,500,000 and the Borrower secured the same, with the
Collateral listed and as provided in the Loan Agreement.
WHEREAS, on June 9th, 1989 Lender and Borrower amended the Loan Agreement
by increasing the Operating Credit Facilities from US$500,000 to $1,000,000
under the same terms and conditions and secured by the same Collateral as the
original Operating Credit Facilities provided in the Loan Agreement.
WHEREAS, the Borrower has requested a further increase in the Operating
Credit Facilities available to the Borrower under the Loan Agreement from
US$1,000,000 to US$1,500,000;
NOW, THEREFORE, the parties hereto for good and valuable consideration
AMEND the Loan Agreement, as amended as follows:
1. The parties agree that the Operating Credit Facilities originally in
the amount of US$500,000 increased to $1,000,000 by the First Amendment of June
9, 1989 shall be further increased to the total sum of US$1,500,000 under and
subject to the same terms and conditions and to the same extent and force as if
said Amended Credit Facilities so increased had been incorporated in the
original Loan Agreement as the Operating Credit Facility referred to therein.
2. Lender and Borrower agree that all the Collateral now constituted and
existing (or hereafter constituted) serving (or which may serve) as security for
the obligations of Borrower to Lender under the Loan Agreement shall extend and
apply to the increased Operating Credit Facilities made available to Borrower
hereunder as if said increased Operating Credit Facility had been incorporated
in the Loan Agreement of August 30, 1988 for the principal sum of US$1,500,000.
3. The parties agree that all the covenants, terms and conditions of the
Loan Agreement, as heretofore amended, not expressly amended, deleted or
substituted hereunder shall remain in full force and effect and shall be deemed
extensive to the credit facilities made available to the Borrower pursuant to
the terms of this Second Amendment to Loan Agreement.
IN WITNESS WHEREOF, the parties execute the foregoing instrument at the
place and at the date above stated.
POSADAS DE PUERTO RICO SCOTIABANK DE PUERTO RICO
ASSOCIATES INCORPORATED
By: _____________________________ By: _______________________________
Executive Vice President
2
SECRETARY'S CERTIFICATE
The undersigned, Jose C. Arenas, the duly elected Secretary of Posadas de
Puerto Rico Associates, Incorporated, a Delaware corporation (the "Corporation")
hereby certifies that the Board of Directors of the Corporation duly and validly
adopted the following Resolution on September 10, 1990 and said Resolution is in
full force and effect and has not been modified, amended, or revoked in any
respect:
"Resolved that the President, N.J. Menell or the Executive Vice President,
H.A. Andrews, be and they are hereby authorized on behalf of the
Corporation, acting singly, to execute a Second Amendment to the Loan
Agreement of August 30th, 1988, as amended on June 9th, 1989 between the
Corporation and the Scotiabank de Puerto Rico (the "Bank") further
increasing the Operating Credit Facilities to the Corporation under said
Loan Agreement, as amended, to US$1,500,000.
Resolved, further that said officers, acting singly, may execute said
Second Amendment to the said Loan Agreement, as amended, under and subject
to the same terms and conditions and secured by the same collateral as
provided and listed in the Loan Agreement, as amended, and to take such
other action on behalf of the Corporation as they, acting singly, may deem
appropriate to complete this transaction."
IN WITNESS WHEREOF, I have hereto set may hand and affixed the seal of the
Corporation as of this 28 day of September 1990.
/s/ ____________________________
Secretary
********************************************************************************
AMENDMENT TO OPERATING CREDIT AND TERM LOAN AGREEMENT
POSADAS DE PUERTO RICO ASSOCIATES INCORPORATED
Borrower
and
SCOTIABANK DE PUERTO RICO
Lender
********************************************************************************
Dated as of April 26, 1991
********************************************************************************
Brown, Newsom & Cordova
Plaza Scotiabank-Sixth Floor
273 Ponce de Leon Avenue
Hato Rey, Puerto Rico 00917
AMENDMENT TO OPERATING CREDIT AND TERM LOAN AGREEMENT
This Amendment to Operating Credit and Term Loan Agreement dated as of
April 26, 1991, between POSADAS DE PUERTO RICO ASSOCIATES, INCORPORATED, a
corporation organized, existing and in good standing under the laws of the State
of Delaware, United States of America (the "Borrower") and SCOTIABANK DE PUERTO
RICO, a Puerto Rico banking corporation organized, existing and duly authorized
to do business in Puerto Rico (the "Bank").
W I T N E S S E T H
WHEREAS, the Borrower and the Bank entered into certain Operating Credit
and Term Loan Agreement dated August 30, 1988 (the "Operating Credit Agreement")
whereby the Bank granted the Borrower certain credit facilities more fully
described therein; and
WHEREAS, Borrower now desires to borrow additional funds from the Bank to
make certain inter-company loans, to cancel existing overdrafts and for working
capital purposes; and
WHEREAS, the Bank has agreed to make available to the Borrower a
non-revolving credit facility in the amount of $3,000,000 and an increase to the
existing operating facility up to $2,000,000, upon the terms and subject to the
conditions set forth in this Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the parties hereto hereby agree to amend the
Operating Credit Agreement as follows:
2
ARTICLE 1. DEFINITIONS
Section 1.1. Certain Defined Terms.
As used in this Agreement, the following terms have the following meanings
(all other capitalized terms shall have the meanings given to them in the
Operating Credit Agreement):
"Additional Collateral Security" means the collateral security afforded by
the Borrower to the Bank under the Operating Credit Agreement and all
amendments, substitutions, supplements, additions or extensions thereof or
thereto, which collateral security shall constitute additional security for all
amounts as may be owed by the Borrower to the Bank under this Agreement.
"Advance" means the additional advances by the Bank to the Borrower
pursuant to the provisions of Article 2 hereof.
"Agreement" means this Amendment to Operating Credit and Term Loan
Agreement, including all amendments, modifications and supplements and any
exhibits and schedules hereto, and shall refer to this Agreement as the same may
be in effect at the time such reference becomes effective.
"Guarantee" means the limited guarantee in the principal amount of up to
$3,000,000 issued by the Guarantor, supported by the appropriate corporate
resolution.
"Guarantor" means WMS Industries Inc. a corporation organized and in good
standing under the laws of the State of Delaware, United States of America.
"Hazardous Substance" shall mean (a) any "hazardous substance",
"pollutant" or "contaminant" as said terms are defined by the Comprehensive
Environmental Response, Compensation and Liability Act; (b) any "hazardous
waste" as said term is defined in the Puerto
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Rico Environmental Quality Board Regulation for the Control of Hazardous and
Non-Hazardous Solid Waste, as amended from time to time; (c) any toxic or
hazardous substance, material or waste (whether solid, liquid or gaseous), or
(e) any other substance for which any Governmental Authority requires special
handling in its collection, storage, treatment or disposal.
"Lending Office" means the Bank's branch located at Plaza Scotiabank, 273
Ponce de Leon Avenue, Hato Rey, Puerto Rico.
"Line A" means a non-revolving, term credit facility in the principal
amount of $3,000,000 made available by the Bank to the Borrower hereunder for
the sole purpose of making certain inter-company loan to WMS Industries Inc. for
the purchase and cancellation of certain promissory note due by WMS Games, Inc.
to Bally Midway Manufacturing Co. and Bally Manufacturing and Distributing Corp.
"Line B" means an operating credit facility to be made available by the
Bank to the Borrower hereunder up to a maximum of $2,000,000 for working capital
proposes and for the cancellation of a $500,000 temporary overdraft facility.
"Loan Documents" means this Agreement, the Pledge Agreement, the Note(s),
the Mortgage Note and the Real Estate Mortgage, the Guarantee and all documents
and instruments to be delivered by the Borrower to the Lender pursuant to the
provisions of the Security Section hereof, including any and all amendments,
substitutions, supplements and replacements thereof.
"Mortgage Note" means the demand promissory note in the principal amount
of $4,000,000 encumbering the Property in favor of the Bank.
"Note" or "Notes" means promissory note(s) executed by the Borrower in
favor of and acceptable to the Bank for the principal amount of each Advance.
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"Pledge Agreement" means the Pledge Agreement of the Borrower pledging the
Mortgage Note, as the same may be hereafter amended, modified or supplemented
from time to time.
"Property" means the property described in Schedule I hereof, including a
certain 559 room hotel and casino facility located thereon and such improvements
or additions as may be hereafter constructed thereon.
"Real Property Mortgage" means the mortgage securing the payment of the
principal and interest and other credits under the Mortgage Note.
"Title Company" means Hato Rey Title Company, a Puerto Rico corporation,
as agent for Chicago Title Insurance Company.
"Title Policy" means the loan policy of title insurance in the amount of
$4,000,000, in form and substance satisfactory to Bank and issued by the Title
Company insuring that Bank has a third priority lien on and/or a security
interest in the Property with no exceptions to title, printed or otherwise,
which policy has an initial effective date on the execution date of the Loan
Documents.
ARTICLE 2. AMOUNTS AND TERMS OF THE ADDITIONAL ADVANCES
Section 2.1. The Additional Advances.
The Bank agrees, in addition to the advances made available to the
Borrower under the Operating Credit Agreement and on the terms and conditions
hereinafter set forth, to make Line A and Line B Advances to the Borrower from
time to time on any Business Day during the period from the date hereof until
__________, 19__, in aggregate amounts not to exceed the amount set forth in the
definition of the particular credit facility.
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Each Advance made to the Borrower by the Bank and the amount of principal
and the maturity thereof, shall be evidenced by a Note.
Section 2.2. Making the Additional Advances.
(a) Each advance shall be made on notice delivered by the Borrower to the
Bank not later than 11:00 A.M. (San Juan time) on the same Business Day of such
proposed borrowing.
Advances available hereunder shall at no time exceed the sum of $3,000,000
for the Line A facility and $2,000,000 for the Line B facility.
The Bank shall make available the amount of the Advance by crediting the
account of the Borrower at the Lending Office.
(b) Anything in Section 2.2(a) to the contrary notwithstanding, if the
Bank shall, at least one (1) Business Day before the first day of any requested
borrowing, notify the Borrower that the introduction of or any change in or in
the interpretation of any law or regulation makes it unlawful, or that a central
bank or other Governmental Authority asserts that it is unlawful for the Bank or
its Lending Office to perform its obligations hereunder, the right of the
Borrower to avail itself of an Advance hereunder shall be suspended until the
Bank shall notify the Borrower that the circumstances causing such suspension no
longer exist.
(c) Each notice of borrowing shall be irrevocable and binding on the
Borrower
Section 2.3. Fees.
(a) As to Line A, the Borrower agrees to pay the Bank a front end fee of
$60,000, of which the Bank has already received the sum of $30,000, and the
balance, to wit, the sum of $30,000, shall be due and payable simultaneously
with the execution of this Agreement.
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(b) As to Line B, the Borrower agrees to pay the Bank a front end fee of
$20,000 of which the Bank acknowledges receipt of $10,000 and the balance, the
sum of $10,000 to be payable at the closing of this Agreement.
(c) The Borrower shall pay the Bank a stand-by fee equal to 1/4 of 1% per
annum on the undrawn portion of the Line A facility, commencing 30 days from the
acceptance of the Commitment Letter, said amount to be paid monthly in arrears.
ARTICLE 3. PAYMENTS & INDEMNITIES
Section 3.1. Repayment.
The Borrower shall repay the Bank the outstanding principal amount due
hereunder in full as follows:
a) Advances made available under the Line A facility shall be repaid
in full within 5 years commencing two (2) years from the date of the
first Advance or commencing on the date of the repayment or
refinancing of the existing Ponce Federal loan currently having an
outstanding balance of $_____, whichever is earlier, in equal,
consecutive quarterly installments, the amount of which shall be
determined based upon the time remaining of the original five year
amortization, plus interest thereon. b) Advances made available
under Line B shall be repaid on demand and the account should show
satisfactory fluctuations.
Section 3.2. Interest.
The Borrower shall pay interest as follows:
a) Line A facility....11/2percentage points over the Base Rate.
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b) Line B facility....1 percentage point over the Base Rate.
Interest shall be payable to the Bank in arrears on the twenty second day of
each month calculated on the basis of the actual daily unpaid principal amount
of each Advance made by the Bank from the date of such Advance until the
principal amount thereof shall be paid in full at the Base Rate. Any such
fluctuation in the interest rate pursuant to the provisions hereof, shall be
effective simultaneously with the corresponding change in the Base Rate.
Section 3.3. Taxes on Payments.
Any and all payments by the Borrower hereunder or under the Note shall be
made, in accordance with the provisions hereof, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
franchise taxes and taxes imposed on the Bank's net or gross income. If the
Borrower shall be required by Law to deduct any taxes from or in respect of any
sum payable hereunder or under any Note, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions, the Bank
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with the applicable Law. Notwithstanding, the
aforesaid, such gross-up provisions shall not apply to any tax withholding
requirement imposed as a result from any decision of the Bank to change its
place of business or surrender its authorization to conduct business in the
Commonwealth of Puerto Rico or otherwise due to any change in the manner in
which the Bank conducts its business in the Commonwealth of Puerto Rico.
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Section 3.4. Prepayments of Principal.
The Borrower may, without premium or penalty, prepay the outstanding
principal amount of the Line A and the Line B facilities Advances in whole or
ratably in part together with accrued interest to the date of such prepayment on
the principal amount so prepaid. Any such prepayments shall be applied and
credited to the outstanding balance hereunder in inverse order of their
maturities.
Section 3.5. Payments and Computations.
(a) All computations of rates of interest, additional interest and fees
shall be made by the Bank on the basis of a 365 day year for the actual number
of days elapsed.
Each determination by the Bank of an interest rate or fee hereunder shall
be, in the absence of manifest error, as determined by the Bank in its sole
discretion, conclusive and binding on the Borrower for all purposes.
(b) Whenever any payment hereunder or under the Notes shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and in such case, such extension of time shall be
included in the computation of payment of interest.
Section 3.6. Capital Adequacy.
In the event that the Bank shall determine that the adoption of any
requirement of law regarding capital adequacy, reserve requirements, or any
change therein or in the interpretation or application thereof or compliance by
the Bank with any request or directive regarding capital adequacy (whether or
not having the force of law) from any central bank or other Governmental
Authority, does or shall have the effect of reducing the rate of return on the
Bank's capital as
9
a consequence of its obligations hereunder to a level below that which the Bank
could have achieved but for such adoption, change or compliance (taking into
consideration the Bank's policies with respect to capital adequacy), then from
time to time, upon written demand by the Bank accompanied by a certificate by
the Bank in reasonable detail stating the basis for such determination, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such reduction as a consequence of its obligations
hereunder.
Section 3.7. General Indemnity.
The Borrower will at all times indemnify and hold harmless the Bank
against any and all losses, costs, damages, expenses and liabilities
(collectively referred to hereinafter as "Losses") of whatever nature (including
but not limited to reasonable attorneys' fees, litigation and court costs,
amounts paid in settlement, and amounts paid to discharge judgments) directly or
indirectly resulting from, arising out of, or related to one or more Claims, as
hereinafter defined. The word "Claims" as used herein shall mean all claims,
lawsuits, causes of action and other legal actions and proceedings, involving
bodily or personal injury or death of any person or damage to any property
(including but not limited to persons employed by the Borrower or any other
person) brought against the Bank or to which the Bank is a party (except any
such claim as may arise or be due to the Bank's negligence or that of its
officers, employees, or agents), that directly or indirectly result from, arise
out of, or relate to (a) the operation, use, occupancy, maintenance or ownership
of the Property or any part thereof or (b) the execution, delivery or
performance of the Loan Documents, or any related instruments or documents or
(c) any untrue statement or alleged untrue statement of a material fact
contained in this Agreement or in the Loan Documents (other than statements made
by the Bank), or in
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any application made in connection therewith or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made. The obligations of the Borrower under this Section
3.6 shall apply to all Losses or Claims, or both which are asserted prior to
termination of this Agreement or thereafter. In case any action shall be brought
against the Bank in respect of which indemnity may be sought against the
Borrower, the Bank shall promptly notify the Borrower in writing and the
Borrower shall have the right to assume the investigation and defense thereof
including the employment of counsel and the payment of all expenses. The Bank
shall have the right to employ separate counsel in any such action and
participate in the investigation and defense thereof, and the fees and expenses
of such counsel shall be paid by the Borrower. The Borrower shall not be liable
for any settlement of any such action without its consent but, if any such
action is settled with the consent of the Borrower or if there be a final
unappealable judgment for the plaintiff in any such action, the Borrower agrees
to indemnify and hold harmless the Bank from and against any such Losses or
Claims. Nothing herein shall be construed as requiring the Bank to acquire or
maintain insurance of any form or nature with respect to the Property or any
portion thereof or with respect to any phrase, term, provision, condition or
obligation of this Agreement or any other matter in connection herewith.
The provisions of this Section shall survive the expiration or termination
of this Agreement.
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ARTICLE 4. THE SECURITY
Section 4.1. The Security.
All funds advanced to or owed by the Borrower pursuant to this Agreement
shall be secured by the following documents, all of which shall be duly executed
by the appropriate parties thereto and acceptable to the Bank:
a) The Mortgage Note.
b) The Real Property Mortgage.
c) The Pledge Agreement.
d) The Guarantee.
e) The Title Policy.
f) The Additional Collateral Security.
The aforesaid loan documents shall secure the full and complete payment of
the Line A and Line B facilities (except that the Guarantee shall secure the
Line A facility only) under this Agreement, the Notes, as well as all interest
thereon, any costs, expenses and reasonable attorneys' fees that may become due
and payable upon the occurrence of a Default or an Event of Default and any
other amounts payable and/or reimbursable to the Bank pursuant to this Agreement
and the other loan documents. The Bank, with or without notice to or consent of
the Borrower, may take (but Borrower shall not be obligated to furnish) from any
other person or persons additional securities for the Loan, without impairing,
by so doing, any other collateral guarantees and securities Bank may hold.
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ARTICLE 5. CONDITIONS OF LENDING
Section 5.1. Conditions Precedent to the Advances. This Agreement shall
become effective, when and only when the Borrower and the Bank have executed
this Agreement subject to the following conditions precedent:
(a) The Bank shall have received on the date of execution of this
Agreement, the following, each dated the closing date, in form and substance
satisfactory to the Bank:
(i) A Note to the order of the Bank, substantially in the form of Exhibit
"A" hereto;
(ii) certified copy of A) the pertinent Board of Director's resolution and
of such other consent, resolutions and documents as may have been approved
authorizing the negotiation, execution and delivery of this Agreement, the
Notes, the Loan Documents and all other documents to be delivered
hereunder or thereunder to which it is a party and other document and
instruments evidencing other necessary action, if any, with respect to
Loan Documents and B) certified copies of the Articles of Incorporation
and By Laws of the Borrower;
(iii) certificate of the Borrower certifying the names and true signatures
of the persons authorized to execute and deliver this Agreement and each
Loan Document to which it is a party and the other documents to be
delivered by it hereunder or thereunder;
(iv) favorable opinions of (a) outside counsel for the Borrower,
substantially in the form of Exhibit "B" hereto, and (b) of the Bank's
counsel as to the validity and enforceability of this Agreement;
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(v) the Financial Statements of the Borrower and the financial statements
of the Guarantor, for the last fiscal year; (vi) the Security instruments
listed and described in Article 4 of this Agreement;
(vi) As of the date of this Agreement, there shall have been no material
adverse change in the business, operations, properties, assets, prospects
or condition (financial or otherwise) of the Borrower, or litigation which
might have a material adverse effect thereon.
(vii) On or before the date of this Agreement, the Bank shall have
received such other approvals, opinions or documents as the Bank may
reasonably request.
(viii) the representations and warranties of the Borrower contained in
Article 6 hereof and in the Loan Documents are true and correct in all
material respects on and as of the date of such Advance as though made on
and as of such date; and
(ix) no event has occurred and is continuing, or would result from such
Advance, which constitutes a Default or an Event of Default.
Section 5.2. Additional Review Conditions to Advances and Maintaining of
Facility.
The Line A and Line B credit facilities made available hereunder are
subject to periodic (but not less frequent than annual) reviews by the Bank,
which include, but are not limited to, verification of Borrower's compliance
with the terms and conditions of this Agreement of same is dependent on no
materially adverse changes occurring in the Borrower's financial conditions;
provided, however, that a material adverse change in the Guarantor's financial
condition can only affect the Line A facility.
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties of the Borrower.
The Borrower represents and warrants to the Bank that the representations
and warranties made by the Borrower under the Operating Credit Agreement remain
correct in all material respects on and as of this date and the Borrower
restates the aforesaid representations and warranties for purposes of this
Agreement.
ARTICLE 7. SPECIAL COVENANTS
Section 7.1. Covenants as to Environmental Compliance.
(a) Borrower covenants and agrees to Bank that it:
(i) has not and will not use, generate, treat, store, discharge,
spill, dispense, dispose or otherwise release any Hazardous Substance or
any waste of any kind in, on or under the Property and it will not cause,
suffer, allow or permit any other person or entity to do so, except as
provided in sub-paragraph (ii) below;
(ii) has not and will not generate, store or use any Hazardous
Substance in a manner so as to create any undue risk of its release on the
Property;
(iii) will promptly take all measures necessary to contain and
remove any and all on-site discharges, spills, disposals and other
releases of any Hazardous Substance or waste of any kind and remedy and
mitigate any and all threats to health, property and the environment in a
manner consistent with all applicable laws;
15
(iv) will provide immediate verbal notice and written notice within
one week to bank of any and all discharges, spills, disposals or other
releases of any Hazardous Substance that are not completely cleaned up and
removed within one Business Day following such release on the Property;
(b) Borrower covenants and agrees to Bank that Bank and its authorized
representatives may enter an inspect and assess the Property at reasonable times
to determine Borrower's compliance with the above conditions. The cost of
performing such inspections and assessments shall be paid by the Borrower upon
demand by the Bank and any such obligations shall constitute an indebtedness
secured by this Agreement.
ARTICLE 8. MISCELLANEOUS
Section 8.1. Non-Revocation.
All the covenants, terms and conditions of Operating Credit Agreement not
expressly amended or otherwise in conflict with the provisions of this Agreement
(including the Events of Default provisions as the same may be deemed amended or
supplemented hereby) shall remain in full force and effect.
The parties hereto agree that the provisions of this Agreement supplement
the terms and conditions of the Operating Credit Agreement.
Section 8.2. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which when
taken together shall constitute one and the same
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agreement; provided, however, that the Borrower and the Bank shall execute and
deliver each such counterpart.
Section 8.3. Headings.
The headings contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not part of the
agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
POSADAS DE PUERTO RICO ASSOCIATES, INCORPORATED
By: /S/________________________________
Hugh Alanson Andrews
SCOTIABANK DE PUERTO RICO
By: /S/________________________________
Arnold Francis Van Der Kley
Affidavit Number: 2765
Subscribed to before me by Hugh Alanson Andrews, of legal age, married and
resident of San Juan, Puerto Rico, as Vice-President of Posadas de Puerto Rico
Associates Incorporated and by A.F. Van Der Kley, of legal age, single, resident
of Rio Piedras, Puerto Rico, as Authorized Signatory of Scotiabank de Puerto
Rico, both to me personally known. At San Juan, Puerto Rico, this 26th day of
April, 1991
/S/______________________________
Notary
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