LOAN AGREEMENT
BY AND BETWEEN
THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO
AND
EL CONQUISTADOR PARTNERSHIP, L.P.
I N D E X
Article Page
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I. INCORPORATION OF RECITALS............................................................ x
II. DEFINITIONS.......................................................................II - 1
III. REPRESENTATIONS AND WARRANTIES...................................................III - 1
3.1 Partnership Existence; Compliance with Law.................... 1
3.2 Executive Offices............................................. 1
3.3 Subsidiaries.................................................. 2
3.4 Partnership Power; Authorization; Enforceable Obligations..... 2
3.5 Omitted....................................................... 2
3.6 Financial Information to Lender............................... 2
3.7 No Litigation................................................. 3
3.8 No Default.................................................... 3
3.9 Investment Company Act........................................ 4
3.10 Margin Regulations............................................ 4
3.11 Taxes......................................................... 5
3.12 Use of Loan Proceeds.......................................... 5
3.13 Omitted....................................................... 5
3.14 Reportable Event.............................................. 5
3.15 Environmental Matters......................................... 6
3.16 Condemnation.................................................. 6
3.17 Labor Matters................................................. 7
3.18 Other Ventures................................................ 7
3.19 No Contract Cancellations..................................... 7
3.20 Liens......................................................... 7
3.21 Omitted....................................................... 7
3.22 Sufficiency of Funds.......................................... 8
3.23 Title to Property............................................. 8
3.24 Possession of Premises........................................ 8
3.25 Utilities and Streets......................................... 8
3.26 General....................................................... 8
3.27 Survival of Warranties; Representations....................... 9
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IV. AMOUNT AND TERMS OF LOANS................................................IV - 1
4.1 Of the Interim Loans.......................................... 1
4.2 Of the Term Loan.............................................. 3
4.3 GDB Escrow.................................................... 5
4.4 Maximum Interest Rate......................................... 7
4.5 Release Provisions............................................ 8
4.6 Subordination and Standstill Agreement........................ 8
V. SECURITY..................................................................V - 1
5.1 The Security.................................................. 1
5.2 Preservation of Security...................................... 3
5.3 Non Recourse Obligations...................................... 3
VI. CONDITIONS PRECEDENT FOR INITIAL DISBURSEMENT........................... VI - 1
6.1 Conditions.................................................... 1
(a) Title to Premises.............................. 1
(b) Payment of Fee................................. 1
(c) Collateral..................................... 1
(d) Equity Contribution............................ 1
(e) Financial Information.......................... 1
(f) Appraisal...................................... 1
(g) Survey......................................... 1
(h) Environmental Report........................... 2
(i) Budget......................................... 2
(j) Special Report................................. 2
(k) Insurance...................................... 2
(l) Title Insurance................................ 3
(m) Contractor's Insurance......................... 3
(n) Utility Facilities............................. 3
(o) Construction Documents......................... 3
(p) Bonds.......................................... 4
(q) Construction Schedule.......................... 4
(r) Construction Permit............................ 4
(s) Plans and Specifications....................... 4
(t) Taxes.......................................... 4
(u) Federal Taxes.................................. 5
(v) Labor Contributions............................ 5
(w) Partnership Agreement.......................... 5
(x) Counsel Opinion................................ 5
VII. CONDITIONS PRECEDENT FOR ALL LOANS AND DISBURSEMENT REQUIREMENTS
AND PROCEDURES..........................................................VII - 1
7.1 .............................................................. 1
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VIII. AFFIRMATIVE COVENANTS .................................................VIII - 1
8.1 Application of Loan Proceeds.................................. 1
8.2 Books and Records............................................. 1
8.3 Financial Information......................................... 1
8.4 Construction Development of the Project....................... 2
8.5 Effectiveness of Permits; Approvals........................... 2
8.6 Access by Lender.............................................. 2
8.7 Maintain Rights; Franchises................................... 3
8.8 Filing of Tax Returns......................................... 3
8.9 Estoppel Certificates......................................... 3
8.10 Correctness of Representations; Warranties.................... 3
8.11 Maintenance of Existence and Conduct of Business.............. 4
8.12 Payment of Obligations........................................ 4
8.13 Agreements.................................................... 5
8.14 Litigation.................................................... 5
8.15 Insurance..................................................... 5
8.16 Compliance with Law........................................... 12
8.17 Supplemental Disclosure....................................... 12
8.18 Recording; Transfer Taxes and Fees............................ 13
8.19 Preservation of the Properties................................ 13
8.20 Environmental Matters......................................... 14
8.21 Notice........................................................ 15
8.22 Deficiency Loans.............................................. 16
8.23 Certification of Substantial Completion....................... 18
8.24 Permits and Licenses.......................................... 18
8.25 Of the Project................................................ 18
8.26 Deposit of Escrow Requirement................................. 20
8.27 Interest Rate Swap............................................ 20
8.28 Expropriation................................................. 20
IX. NEGATIVE COVENANTS........................................................IX- 1
9.1 Consent of Lender............................................. 1
X. EVENTS OF DEFAULT; RIGHTS AND REMEDIES....................................X - 1
10.1 Events of Default............................................. 1
10.2 Remedies...................................................... 4
10.3 Waiver of Defaults............................................ 6
10.4 Waivers by Borrower........................................... 6
10.5 Right of Set-Off.............................................. 6
10.6 Control....................................................... 7
XI. MISCELLANEOUS............................................................XI - 1
11.1 No Agency Relationship........................................ 1
11.2 Liability..................................................... 1
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11.3 Indemnity of Lender........................................... 2
11.4 Damage or Destruction......................................... 4
11.5 Taking of the Mortgaged Property.............................. 8
11.6 Application of Proceeds Upon Casualty or Substantial Taking .. 10
11.7 Complete Agreement; Modification of Agreement................. 11
11.8 Fees and Expenses............................................. 12
11.9 No Waiver by Lender........................................... 13
11.10 Remedies...................................................... 13
11.11 Parties....................................................... 13
11.12 Conflict of Terms............................................. 14
11.13 Authorized Signatories........................................ 14
11.14 Notices....................................................... 14
11.15 Captions...................................................... 16
11.16 Exhibits and Schedules........................................ 16
11.17 Omitted....................................................... 16
11.18 Governing Law and Venue....................................... 16
11.19 Severability.................................................. 16
11.20 Entire Agreement.............................................. 17
11.21 Survival of Representations................................... 17
11.22 GDB's Consent................................................. 18
11.23 Reliance by Lender............................................ 18
EXHIBITS
A. Description of Premises
B. Description of Condominium Parcels
C. Secured Promissory Note
D. Request for Disbursement
E. Disbursement Schedule
F. Escrow Agreement
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LOAN AGREEMENT
This AGREEMENT, entered into in the city of San Juan, Commonwealth of
Puerto Rico, this 7th day of February, 1991 by and between:
THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO, (hereinafter
indistinctively "GDB" or "LENDER," a banking institution of the Government of
the Commonwealth of Puerto Rico, created by Act 17 enacted on September 23,
1948, with principal offices in San Juan, Puerto Rico, represented herein by its
Executive Vice President, MR. GEORGE B. WILSON, of legal age, married, an
executive and resident of San Juan, Puerto Rico; and
EL CONQUISTADOR PARTNERSHIP, L.P., (hereinafter "THE BORROWER"), a
limited partnership organized and existing under the laws of the State of
Delaware, duly qualified and authorized to do business in and within the
Commonwealth of Puerto Rico, herein represented by its Partners, KUMAGAI
CARIBBEAN, INC., a corporation organized and existing under the laws of the
State of Texas, duly qualified and authorized to do business in and within the
Commonwealth of Puerto Rico, and by WKA EL CON ASSOCIATES, a general partnership
organized and existing under the laws of the State of New York, such Partners in
turn herein respectively represented by MR. SHUNSUKE NAKANE, who is of legal
age, married, an executive and resident of San Juan, Puerto Rico, and by MR.
NORMAN JULES MENELL, who is of legal age, married, and executive and resident of
Sarasota, Florida.
W I T N E S S E T H:
WHEREAS, the Borrower is the owner and holder of the fee simple title
("PLENO DOMINIO") to that certain real estate (hereinafter referred to as "THE
PREMISES", more fully described in EXHIBIT "A", which is attached hereto and
made a part hereof by reference; and
WHEREAS, the Borrower proposes to construct the Project (as hereafter
defined) on the Premises and has requested and applied to GDB for loans
("LOANS") aggregating TWENTY FIVE MILLION DOLLARS ($25,000,000.00) to be used
for financing part of the Improvements (as hereafter defined); and the parties
desire to execute this Agreement to set forth the terms and conditions of their
agreements in the premises;
NOW, THEREFORE, in consideration of the premises and of the mutual and
separate agreements, pledges, covenants and warranties of the parties hereto,
and for other good and valuable considerations, it is agreed, covenanted, and
warranted by the parties as follows:
ARTICLE 1
INCORPORATION OF RECITALS
1.1 Incorporation of Recitals. The foregoing preambles and all other
recitals set forth are made a part of this Agreement.
ARTICLE 2
DEFINITIONS
2.1 The following terms as used herein shall have the following
meanings:
"AGREEMENT" shall mean the this Loan Agreement, including all
amendments, modifications and supplements hereto and any appendices, exhibits or
schedules to any of the foregoing, and shall refer to this Agreement as the same
may be in effect at the time such reference becomes operative.
"AFICA" shall mean the Puerto Rico Industrial, Medical, Educational and
Environmental Pollution Control Facilities Financing Authority.
"AMK" shall mean AMK Conquistador, S.E., a Puerto Rico special
partnership.
"ANNUAL AGENTS FEE" shall have the meaning assigned in the Letter of
Credit and Reimbursement Agreement.
"ANNUAL LETTER OF CREDIT FEE" shall have the meaning assigned in the
Letter of Credit and Reimbursement Agreement.
"ANDREWS FAMILY" shall mean Hugh A. Andrews, his spouse and children.
"ARPE" shall mean the Administration of Regulations and Permits of the
Commonwealth of Puerto Rico.
"APPRAISAL" shall mean an appraisal in narrative form, assuming the
Improvements are completed in accordance with the Plans, prepared by Pannell,
Kerr & Forster for the Bank at Borrower's sole cost and expense setting forth a
fair market value of the Premises as so completed.
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"ARCHITECTS" shall mean Ray, Melendez and Associates, or any
successors engaged by Borrower with the prior written consent of Lender.
"ARCHITECTS' AGREEMENTS" shall mean those certain agreements
between Borrower and Architects, and Borrower and Consultant and Designers,
relating to the design of the Improvements and providing for architectural
services in connection with the construction of the Improvements, as more
specifically identified in Exhibit "A" to the Assignment Agreement.
"ASSIGNMENT" or "ASSIGNMENT AGREEMENTS" shall mean the
assignments to be made by Borrower in favor of Lender pursuant to Article Five
hereof.
"BANK" shall mean The Mitsubishi Bank, Limited, acting through
its New York Branch, its successors and assigns, a successor letter of credit
Bank or a lender providing refinancing for the loan evidenced by the Bank Loan
Documents.
"BANK COVERAGE REQUIREMENT" shall mean that either (i) the Net
Earnings for the 24 full calendar-month period next preceding the date of
determination has been an amount not less than the Annual Debt Service for such
24 full calendar-month period multiplied by 1.30 or (ii) the Net Earnings for
the 12 full calendar-month period next preceding the date of determination has
been an amount not less than the Annual Debt Service for such 12 full
calendar-month period multiplied by 1.50.
"BANK'S CONSULTANT" shall mean Merritt & Harris, Inc. or such
other Person or architectural or engineering consultant as may be designated and
engaged by the Bank, at Borrower's expense, to examine the Budget and the Plans,
any changes thereto, and cost breakdowns and estimates with respect to the
Project (including, without limitation, all cost breakdowns and estimates set
forth in any Request for Disbursement and all accompanying
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certifications), to make periodic inspections of the progress of the
Construction of the Improvements on behalf of the Bank and the Lender, to advise
and render reports to the Bank and the Lender concerning the foregoing and to
otherwise consult with the Bank and the Lender with respect to the Project.
"BANK'S CONSULTANT'S REPORT" shall mean a report by the Bank's
Consultant (i) to the effect that all of the work related to Construction of the
Project has been completed in a good and workmanlike manner, substantially in
accordance with the Plans and the Construction Schedule and in compliance with
the Legal Requirements, (ii) stating whether the work which is the basis of the
applicable Request for Disbursement has been completed within the applicable
Line Item therefor, (iii) stating whether the undisbursed amount of the Loan and
amounts available under the Bank Loan Documents allocable to the Construction of
the Improvements in accordance with the Plans, (iv) stating that ownership to
all material and fixtures incorporated in the Construction of the Improvements
and all materials stored on-site or off-site or in fabrication which are
included in any Request for Disbursement shall vest in the Borrower immediately
upon delivery thereof to the Project, and (v) addressing such other matters
reasonably requested by Lender to be addressed therein.
"BANK LOAN DOCUMENTS" shall have the meaning assigned in the
Subordination and Standstill Agreement.
"BUDGET" shall mean a budget prepared by Borrower setting forth
Total Project Costs in detail satisfactory to Lender (including a detailed trade
breakdown of such costs and
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specifying Hard Costs and Soft Costs), as such Budget may be amended, modified
or supplemented from time to time pursuant to the terms of the Bank Loan
Documents.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or other day on which banks in San Juan, Puerto Rico, New York City, or London
are authorized or required by law or executive order to close.
"CASUALTY" shall mean any damage to or destruction of the
Mortgaged Property, or any portion thereof.
"CHARGES" shall mean all federal, state, county, city, municipal,
local, or other governmental charges, taxes, assessments, user fees and
expenses, levies and similar charges applicable to Puerto Rico and the United
States and all levies, assessments or charges including assessments, user fees
and charges, utilities and those imposed by any other Person upon or relating to
(i) the Security, (ii) Borrower's withholding obligations in relation to
payroll, income or gross receipts, (iii) Borrower's ownership or use of the
Premises, or (iv) any other aspect of Borrower's businesses.
"CLOSING" shall mean the execution and delivery of this Agreement
and all other Loan Documents, which Closing shall take place at the office of
Lender at the address set forth in the beginning of this Agreement, or at such
other places as the parties may choose.
"CLOSING DATE" shall mean February 7th, 1991, by which date the
Closing shall have occurred.
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"COLLATERAL" shall mean all of the property, real or personal,
tangible or intangible, and all rights thereto, pledged, mortgaged or
hypothecated pursuant to the Security Documents.
"COMMITMENT" shall have the meaning assigned to it in Article
Four hereof.
"COMMONWEALTH" shall mean the Commonwealth of Puerto Rico and its
political subdivisions, municipalities, agencies and instrumentalities.
"COMPENSATION" shall mean, with respect to any Person, all
payments and accruals commonly considered to be compensation, including, without
limitation, all wages, salary, deferred payment arrangements, bonus payments and
accruals, profit sharing arrangements, payments in respect of stock options or
phantom stock options or similar arrangements, stock appreciation rights or
similar rights, incentive payments, pension or employment benefit contributions
or similar payments, made to or accrued for the account of such Person or
otherwise for the direct or indirect benefit of such Person.
"COMPLETION DATE" shall mean the date of Substantial Completion
of the Project which shall not be later than October 15, 1992, provided,
however, that the Completion Date may be extended by the Borrower to April 15,
1993, for any reason whatsoever, and, in the event of Unavoidable Delay, the
Completion Date may be extended by the Borrower to October 15, 1993.
"CONDOMINIUM PARCELS" shall mean the approximately 20-acre
portion of land shown on Exhibit "B" annexed hereto, which Condominium Parcels
have or are to be released from the GDB Mortgage in one or more segments.
II - 6
"CONDOMINIUM REVENUES" shall mean revenues derived by Borrower
from the Condominium Units through (i) the rental of the Condominium Units, (ii)
the use of the Premises by the occupants of the Condominium Units, and (iii) the
right of such occupants to use the Premises.
"CONDOMINIUM UNITS" shall mean up to 150 residential condominium
units that may be developed and construed on the Condominium Parcels.
"CONSTRUCTION or CONSTRUCT", when used with reference to the
Project, shall mean construction, renovation or development of the Improvements
or any portion thereof, the cost of which are included in the Budget as Hard
Costs.
"CONSTRUCTION DOCUMENTS" shall mean, collectively, the
Construction Management Agreement, the Architect's Agreements, all Trade
Contracts and all other agreements to which Borrower is party or beneficiary
pertaining to the Construction of the Improvements.
"CONSTRUCTION MANAGEMENT AGREEMENT" shall mean that certain
agreement between Borrower and the Construction Manager dated as of January 12,
1990 and amended by First Amendment thereto dated as of September 30, 1990 or
any permitted Amendments providing for the construction of the Improvements upon
the terms and conditions set forth therein.
"CONSTRUCTION MANAGER" shall mean KGCC or any successor engaged
by Borrower with the prior written consent of the Bank.
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"CONSULTANTS AND DESIGNERS" shall mean Edward D. Stone, Jr. and
Associates, Inc. and Jorge Rosello Associates, and or any successors engaged by
Borrower with the prior written consent of Lender.
"CONVERSION DATE" shall have the meaning given in paragraph
4.1(d) of this Agreement.
"COVERAGE REQUIREMENT" shall mean that the Net Earnings for the
preceding 24 month period is an amount not less than 1.30 times the preceding 24
month Debt Service.
"DEBT SERVICE" shall mean for any period for which Debt Service
is being determined, the sum of (i) any interest paid or payable under the loan
extended to Borrower by AFICA at the Bond Fixed Rate, as defined under the Bank
Loan Documents, with respect to such period (or to the extent the Bond Fixed
Rate is inapplicable to any portion of such loan, at the rate provided for with
respect to such portion of such loan), (ii) interest paid or payable under the
GDB Loan at the rate herein provided with respect to such period or, to the
extent interest swap arrangements are in place with respect to the GDB Loan, at
the GDB Fixed Rate with respect to such period, (iii) Annual Agents Fee and the
Annual Letter of Credit Fee payable with respect to such period, and (iv) any
fees arising in connection with the loan under the Bank Loan Documents and/or
the GDB Loan which are payable with respect to such period.
"DEBTOR RELIEF LAWS" shall mean the Bankruptcy code of the United
States of America, as amended from time to time, any bankruptcy or debtor relief
laws provided by the laws of Puerto Rico, and all other applicable liquidation,
conservatorship, bankruptcy,
II - 8
moratorium, rearrangement, receivership, insolvency, reorganization or similar
debtor relief laws from time to time in effect affecting the Rights of creditors
generally.
"DEFAULT" or "EVENT OF DEFAULT" shall have the meaning defined in
Article Ten hereof.
"DISBURSEMENT" shall mean each disbursement of all or any of the
proceeds of the Loan.
"DOLLARS" or the sign "$" shall mean dollars in the lawful
currency of the United States of America.
"ENVIRONMENTAL LAWS" shall mean all present or future, federal,
commonwealth and local laws, including statutes, regulations, ordinances, codes,
rules and other governmental restrictions and requirements, currently or
hereafter in effect, whether arising under the laws of the United States or
Puerto Rico, relating to the discharge of air pollutants, water pollutants or
process waste water or otherwise relating to the environment or Hazardous
Materials that are or may be applicable, in any way, to the Project, including
any such restrictions or requirements by the department of natural resources or
environmental protection agency now or at any time hereafter in effect.
"ENVIRONMENTAL REPORT" shall mean an environmental report
relating to the Premises and the Improvements, addressed to GDB and the Bank,
which report shall include, without limitation, geological, soil and hazardous
waste evaluations, prepared at Borrower's sole cost and expense by a certified
engineering and testing company, or by a firm of environmental consultants
acceptable to GDB and the Bank.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGREEMENT" or "GDB ESCROW" shall mean the Escrow
Agreement under which Borrower will deposit funds in escrow with a banking
institution mutually acceptable to Borrower and Lender, such funds to be pledged
solely for the benefit of Lender as provided in Article 4.3 hereof.
"FAJARDO PROPERTY" shall mean approximately 220 acres of land
located in Fajardo Puerto Rico, as more particularly described in the GDB
Mortgage.
"FINANCIAL INFORMATION" shall mean the financial information
required under the Agreement to be furnished by Borrower to Lender, all such
information prepared in accordance with generally accepted accounting principles
(GAAP), as appropriate.
"FISCAL YEAR" shall mean the twelve month period (or shorter
period with respect to the First Fiscal Year within the term hereof) that ends
on March 31st of any given year. Subsequent changes of the fiscal year of
Borrower shall not change the term "Fiscal Year", unless the Bank shall consent
in writing to such changes, which consent shall not be unreasonably denied.
"GDB" shall mean the Government Development Bank of Puerto Rico.
"GDB BASE RATE" shall mean for the first eight years of the term
of the GDB Loan an interest rate equal to the Libor Rate less 50 basis points,
and thereafter, as negotiated between Lender and Borrower to reflect changes in
Lender's cost of funds.
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"GDB ESCROW AGENT" or "ESCROW AGENT" shall mean the financial
institution which will serve as Escrow Agent for the GDB Escrow.
"GDB LEASEHOLD MORTGAGE" shall mean a second leasehold mortgage
in the principal amount of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00)
encumbering the Palominos Island Property.
"GDB LOAN " shall mean a loan by GDB to Borrower in the aggregate
principal amount of $25,000,000 to be used by Borrower to finance a portion of
the Total Project Costs, pursuant to the terms and conditions set forth in this
Agreement.
"GDB MORTGAGE" shall mean the mortgage, deed of trust or similar
security agreement in form reasonably satisfactory to GDB, made or to be made by
Borrower upon the Premises, to be encumbered in favor of GDB to secure the
payment of the GDB Loan, creating a second priority Lien on the Premises, more
particularly a second mortgage in the principal amount of $25,000,000.00,
encumbering the Premises, including all buildings, improvements, fixtures and
personal property presently located thereon and all buildings and improvements
to be erected and constructed thereon and all fixtures and personal property
owned by Borrower to be placed therein.
"GDB MORTGAGE NOTE" shall mean the mortgage note in the amount of
$25,000,000 secured by the GDB Mortgage, and the leasehold mortgage note in the
amount of $500,000 secured by the GDB Leasehold Mortgage.
"GDB STANDSTILL AGREEMENT" shall mean the Subordination and
Standstill Agreement, dated as of the date hereof, between GDB and the Bank.
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"GENERAL PARTNER" shall mean either Kumagai Caribbean, Inc.
("KGC") or WKA El Con Associates ("WKA"), the sole general partners of Borrower
(KGC and WKA together being the GENERAL PARTNERS).
"GOVERNMENT AUTHORITY" shall mean any court, agency, authority,
board (including, without limitation, any environmental protection, planning or
zoning board), bureau, commission, department, office or instrumentality of any
nature whatsoever of any governmental or quasi-governmental unit of the United
States, the Commonwealth of Puerto Rico, any State of the United States, or the
Municipality of Fajardo, whether now or hereafter in existence, having
jurisdiction over Borrower and/or Project.
"GROSS REVENUES" shall mean, for any period with respect to which
Gross Revenues are being determined, all revenues of any kind received by
Borrower from the ownership and operation of the Premises for such period,
including, without limitation, room, food and beverage, and other facility
revenues, Condominium Revenues, casino revenues, rentals or other payments for
leases and concession agreements, annual dues for golf memberships, revenues
derived from the resale of golf memberships, the proceeds of any business
interruption insurance, and, except as provided below, all revenues received by
Borrower from all other activities of the Premises less in each case actual
refunds made to customers, guests, or patrons. Gross Revenues shall not include
the proceeds of the sale of the Condominium Units, revenues derived from the
initial sale of golf memberships, tips, service charges added to a customer bill
or statement in lieu of gratuities which are payable to employees of the
Project, value of complimentary rooms, food and beverages, except those
purchased by the Casino, and any sales
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or other use or excise tax required by law to be collected with respect to the
operations of the Premises and remitted to taxing authorities.
"HARD COSTS" shall mean, collectively, the costs and expenses and
items thereof set forth in the Budget as Hard Costs with respect to the
acquisition of the Project and with respect to supplying goods, services,
materials and labor for the Construction of the Project.
"HAZARDOUS MATERIAL" shall mean asbestos, polychlorinated
biphenyls, petroleum products and any other substance or material that, whether
by its nature or use, is now or hereafter defined as hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Law, or which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and which is now or hereafter regulated under
any Environmental Law.
"HOSPITALITY" shall mean Hospitality Investor Group, S.E., a
Puerto Rico special partnership.
"IMPROVEMENTS" shall mean the improvements to be renovated or
constructed on the Premises pursuant to the Plans, consisting of approximately
750 guest rooms, approximately 50,000 square feet of meeting space (including
prefunctionary space) six restaurants, approximately 13,000 square feet of
retail space, an approximately 10,000 square feet casino, a marina,
approximately 100,000 square feet of swimming pools and water features, an
18-hole golf course, an approximately 40,000 square feet clubhouse and spa
facility, eight tennis courts, water sports facilities on the Palominos Island
Property and related amenities and facilities.
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"INCHOATE LIEN" means any lien for taxes not yet due and payable,
mechanic's Lien and materialmen's Lien, if any, for services or materials for
which payment is not yet due or which is being contested in good faith by
appropriate proceedings.
"INDEBTEDNESS" shall mean all liabilities, obligations and
indebtedness of any and every kind and nature, including without limitation, all
liabilities and all obligations to trade creditors, whether now or hereafter
owing, arising, due or payable from Borrower to any Person and howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise. Without in any way limiting the
generality of the foregoing, Indebtedness shall specifically include (a) all
obligations and indebtedness of Borrower for borrowed money or for notes, bonds,
debentures and other debt securities; (b) indebtedness represented by the
deferred purchase price of property or services acquired by such Person; (c)
rental payable by such Person under any leases of real or personal property
which shall have been, or should, under generally accepted accounting
principles, be classified as a capital lease; (d) obligations of such Person
under direct or indirect guarantees in respect of, and obligations (contingent
or otherwise) of such Person to purchase or otherwise acquire, or otherwise
assure a creditor against loss in respect of, indebtedness or obligations of
another Person of the type described in clause (a), (b) or (c) above, and (e)
liabilities of such Person in respect of unfunded vested benefits under, or
withdrawal liability in respect of, plans covered by Title IV of ERISA; (F) all
charges; and (g) all taxes.
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"INITIAL DISBURSEMENT" shall mean the first disbursement of the
proceeds of the GDB Loan.
"INITIAL DISBURSEMENT DATE" shall mean the date on which the
Initial Disbursement is made.
"INSURANCE POLICIES" shall mean the policies of insurance
required to be maintained pursuant to Article 8.15 hereof.
"INTEREST ADJUSTMENT DATES" shall mean the first day of January,
April, July and October.
"INTERNATIONAL TEXTILE" shall mean International Textile Products
of Puerto Rico, Inc., a Puerto Rico corporation.
"KGC" shall mean Kumagai Caribbean, Inc., a Texas corporation.
"KGCC" shall mean KG (Caribbean) Corporation, a Texas
corporation.
"KIUSA" shall mean Kumagai International USA Corporation, a Texas
corporation.
"KMA" shall mean KMA Associates of Puerto Rico, Inc., a Puerto
Rico corporation.
"KOFFMAN FAMILY" shall mean Burton I. Koffman, Richard E.
Koffman, their parents, issue (including adopted persons), wives, siblings and
direct descendants, and trusts organized for the benefit of any of the
foregoing.
"KUMAGAI" shall mean Kumagai Gumi Co., Ltd., a Japanese
Corporation.
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"LEASEHOLD MORTGAGE" shall mean the mortgage in form satisfactory
to GDB to be made by Borrower upon the Lease Agreement for the Palominos Island
Property.
"LEGAL REQUIREMENTS" shall mean, collectively, (i) all statutes,
laws, rules, rulings, orders, regulations, ordinances, judgments, decrees and
injunctions of any Governmental Authority (including, without limitation, fire,
health, handicapped access, sanitation, ecological, historic, zoning,
environmental protection, wetlands and building laws) in any way applicable to
Borrower or the Project, or any portion thereof, or to the ownership, use,
occupancy, possession, operation or maintenance of the Project; (ii) all
requirements of the local Board of Fire Underwriters or other similar body
acting in and for the locality in which the Premises are situated and all
requirements of each insurance policy covering or applicable to all or any
portion of the Project, or the use thereof, and all requirements of the issuer
of each such policy, including any which may require repairs, modifications or
alterations (structural or otherwise) in or to the Project, or any portion
thereof; and (iii) all requirements of each permit, license, authorization and
regulation relating to the Project, or any portion thereof, or to the ownership,
use, occupancy, possession, operation or maintenance thereof.
"LENDER" shall mean the Government Development Bank for Puerto
Rico.
"LIBOR" or "LIBOR RATE" shall mean the rate per annum quoted at
approximately 11:00 a.m. London time by Telerates Systems, (currently on page
3750 of the financial information reporting services furnished electronically by
Telerate Systems, Inc.) on each Interest Adjustment Date for the offering to
leading banks in the London interbank market of dollar deposits immediately
available funds for ninety (90) day periods.
II - 16
"LIEN" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, security interest, lien (statutory
or other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever including, without limitation, any
mechanic's lien, materialmen's lien, conditional sale agreement, title retention
agreement, any lease, which under applicable law is deemed to create a lien,
security interest or the equivalent.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the
Security Documents and any and all other agreements, documents and instruments
delivered by Borrower pertaining to the Loans pursuant to the terms of this
Agreement, as hereafter renewed, amended or supplemented from time to time.
"LOAN(S)" shall mean any draws or advances made by GDB to
Borrower pursuant to the terms of this Agreement.
"MAJOR CASUALTY" shall mean a Casualty, the Restoration of which
is reasonably estimated to cost more than $1,000,000.
"MANAGEMENT AGREEMENT" shall mean the January 12, 1990 Agreement
between Williams and Borrower, as amended by the First Amendment thereto dated
September 30,1990, and the second amendment thereto dated January 31st, 1991,
pursuant to which the former shall operate the Project.
"MARGIN" or "GDB MARGIN" shall mean:
(a) 1.40% for any portion of the GDB Loan which has been
disbursed until the Completion Date.
II - 17
(b) 1.25% after the Completion Date until the earlier of
maturity of the GDB Loan or such date as the Coverage
Requirement is achieved.
(c) 1.00% after the Coverage Requirement is achieved.
(d) Commencing with the fiscal year for the Project beginning
on April 1, 1999, and provided that the Net Earnings
from the Premises for the preceding 24 month period are
at least 1.50 times Debt Service for such period, then,
in lieu of the GDB Margin described above, the following
Margins will apply:
(i) For the fiscal year beginning April 1, 1999 -
1.50%;
(ii) For the fiscal year beginning April 1, 2000 -
2.00%;
(iii) For the fiscal year beginning April 1, 2001,
and for each fiscal year thereafter - 3.00%.
In any fiscal year in respect of which the 1.50 Coverage
Requirement for the preceding 24 month period described
above is not achieved, then for such fiscal year, the
Margins will be as described under (b) and (c).
"MATERIAL ADVERSE EFFECT" shall mean any set of circumstances or
event which (a) is or could reasonably be expected to have a material adverse
effect upon the validity or enforceability of any Loan Document; (b) is or could
reasonably be expected to become material and adverse to the financial condition
or business operations of Borrower; (c) does or could reasonably be expected to
materially impair Borrower's ability to fulfill its obligations under the
II - 18
terms and conditions of any of the Loan Documents; or (d) causes a Default or an
Event of Default.
"MATURITY DATE" shall mean the Loan Maturity Date, or such
earlier date as GDB shall declare the entire principal sum due and payable in
the exercise of its Rights under Article Ten hereof.
"MORTGAGED PROPERTY(IES)" shall mean the Premises and all rights,
interest and improvements appurtenant thereto encumbered by the Lien of the GDB
Mortgage, or the GDB Leasehold Mortgage.
"NOTE" or "SECURED PROMISSORY NOTE" shall mean the Note of
Borrower to GDB evidencing the Loan Proceeds.
"NET EARNINGS" shall mean Gross Revenues minus Operating
Expenses.
"NET PROCEEDS" shall mean the amount of all insurance proceeds
other than business interruption insurance paid pursuant to any Insurance Policy
as the result of a Casualty, after deduction of Lender's costs and expenses
(including, without limitation, attorneys' fees and expenses), if any, in
collecting the same.
"NET RESTORATION AWARD" shall mean the amount of all awards and
payments received from a condemnor on account of a Taking, after deduction of
the Lender's costs and expenses (including, without limitation, attorneys' fees
and expenses), if any, in collecting the same.
"OBLIGATION(S)" mean all present and future indebtedness,
obligations and liabilities, and all renewals and extensions thereof, or any
part thereof, now or hereafter owed
II - 19
to GDB by Borrower arising from, by virtue of, or pursuant to any Loan Document,
together with all interest accruing thereon and costs, expenses and attorneys'
fees incurred in the enforcement or collection thereof, whether such
Indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, determinate, undeterminate, joint, several or joint and several.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by a
General Partner.
"OPERATING EXPENSES" shall mean, with respect to any period for
which Operating Expenses are being determined, all expenses paid by or on behalf
of the Borrower in connection with the ownership and operation of the Premises
and the Condominium Units for such period, including, without limitation,
insurance, utilities, funding of reserves in amounts approved by the Bank and
GDB for maintenance, capital and non-capital repairs and the repair and
replacement of furniture, fixtures and equipment, but in any event commensurate
with the guidelines set forth in Section 4.5 of the Management Agreement;
general and special real property taxes on and assessments of the Premises;
equipment rentals; maintenance and non-capital repairs to the extent not paid
for from reserves established therefor; non-capital repair and replacement of
furniture, fixtures and equipment to the extent not paid for from reserves
established therefor; governmental and license fees; advertising and marketing;
payments under the Ground Lease; Basic Management Fees and expenses arising
under the Management Agreement; all other operating expenses reasonably
necessary for the proper and efficient operation of the Premises as a first
class destination resort hotel. Operating expenses shall not include Debt
Service or any item of expense incurred in the development, construction, sale
or financing of the Condominium Units.
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"PALOMINOS ISLAND PROPERTY" shall mean approximately 90 acres of
land located on an island approximately three (3) miles to the east of the
Fajardo Property, or more particularly described in the Leasehold Mortgage.
"PARTICIPATION" shall mean all shares, options, warrants,
interests, participations or other equivalents (regardless of how designated) of
or in a partnership or equivalent entity, whether voting or nonvoting,
including, without limitation, any other "equity security"
"PARTIES" shall mean Borrower and GDB.
"PARTY" shall mean either Borrower or GDB.
"PERMITTED LIENS OR ENCUMBRANCES" shall mean:
(a) The Liens in favor of GDB set forth in the Security Documents
(b) Liens arising out of judgments or awards with respect to
which Borrower or the Partnership shall in good faith be prosecuting an appeal
or proceedings for review and in respect to which the aforesaid shall have set
aside on its books reserves which GDB deems adequate with respect to each such
judgment or award.
(c) Liens for taxes, assessments, governmental charges or levies,
if payments of such taxes assessments, governmental charges or levies shall not
at the time be required to be made under the Loan Agreement or any other Loan
Document.
(d) Inchoate Liens.
(e) Existing easements, rights of way and servitudes on the
Mortgaged Properties as of the Closing Date and such future easements, rights of
way and servitudes as GDB shall approve as to the Mortgaged Properties.
II - 21
(f) Liens on personal property to be acquired by Borrower
subsequently to the commencement of hotel operations by the Borrower and which
do not replace the originally contemplated furniture and fixture or equipment to
be acquired for such operations, or to secure financing from non-GDB sources in
accordance with and to the extent permitted in this Agreement.
(g) Deposits and similar payments incurred in the ordinary course
of Borrower's business.
(h) Liens constituted under the Bank Loan Documents.
(i) Third mortgage lien on the Premises in favor of KGC.
(j) The necessary easements, rights of way, and servitude to
provide adequate access and services to the Condominium Parcels, which shall be
constituted simultaneously with the release of the Condominium Parcels from the
lien of the GDB Mortgage.
"PERMITS" shall mean, collectively, all applicable
authorizations, consents, licenses, approvals and permits of Government
Authorities for Construction of the Improvements in accordance with the Plans
and all Legal Requirements, and for the performance and observance of all
agreements, provisions and conditions herein contained.
"PERMITTED TRANSFERS" shall mean (a) any transfer, direct or
indirect, of the interests of or in KGC or KIUSA to Kumagai or to any entity
wholly owned and controlled by Kumagai; (b) any transfer, direct or indirect, of
the interests of or in WMS El Con to WMS Industries or any entity wholly owned
and controlled by WMS Industries; (c) any transfer, direct or indirect, of the
interests of or in International Textile, KMA or AMK to a member of the
II - 22
Koffman Family or to any entity which is wholly owned by one or more members of
the Koffman Family; (d) any transfer of the interests of Marcel Arroyo, Marcel
Arroyo, Jr. or David Melin in KMA which is not prohibited by any shareholder's
or similar agreement applicable to the transfer of such interests; (e) any
transfer, direct or indirect, of interests in Hospitality to members of the
Andrews Family or any entity wholly owned and controlled by one or more members
of the Andrews Family, provided that Hospitality shall at all times be
controlled by Hugh A. Andrews for so long as he shall be alive and competent;
(f) any transfer of a limited partner interest in Borrower approved by GDB in
writing, which approval shall not be unreasonably withheld, (g) any transfer of
publicly-traded ownership interests in WMS Industries or Kumagai; and (h)
collateral assignment of interests of WKA in the Borrower to secure a KG Loan,
as provided in Section 6.03 Borrower's Partnership Agreement, transfer of
Condominium Parcels.
"PERSON" shall mean an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"PLANS AND SPECIFICATIONS" OR "PLANS" shall mean the plans,
drawings and specifications for the Construction of the Improvements, including,
without limitation, the architectural, structural, mechanical and electrical
plans and specifications therefor prepared or to be prepared by Borrower, the
Architects and Borrower's engineers and contractors, as approved by GDB,
together with all revisions and addenda to such plans, drawings and
specifications, provided that such revisions and addenda have been approved by
GDB to the
II - 23
extent such approval is required pursuant to this Agreement, which Plans shall
include, without limitation, a description of the materials, equipment and
fixtures necessary for the Construction of the Improvements.
"PLEDGE" shall mean the pledge of the GDB Mortgage Note by
Borrower to GDB pursuant to the execution and delivery by the Parties of a
pledge agreement in form and substance satisfactory to GDB.
"PREMISES" shall mean the fee simple title to the Fajardo
Property (other than the Condominium Parcel) and the leasehold estate in the
Palominos Island Property.
"PROJECT" shall mean, collectively, the acquisition of the
Fajardo Property, the leasing as tenant of the Palominos Island Property and the
renovation, development, construction, furnishing, equipping of the Premises and
the Improvements.
"PROJECT DOCUMENTS" shall mean (a) the Construction Management
Agreement; (b) all licenses, easements or other agreements or instruments
pertaining to the Project and to be entered into by Borrower with the approval
of the Bank and Lender; and (c) all other documents listed as exceptions to
title in the Title Policy.
"REIMBURSEMENT AGREEMENT or "LETTER OF CREDIT REIMBURSEMENT
AGREEMENT" shall mean the agreement dated the date of this Agreement, between
the Borrower and the Bank for the issuance of the letter of credit to secure the
issuance of the AFICA industrial revenue Bonds to provide financing for the
Project, its amendments and/or replacements.
"RELEASE CONDITIONS" shall have the meaning ascribed thereto in
Article 11.4 hereof.
II - 24
"REPORTABLE EVENT" shall mean an event described in Section
4043(b) of ERISA (with respect to which the 30-day notice requirement has not
been waived by the PBGC).
"REQUEST FOR DISBURSEMENT" shall mean a written certified
statement of Borrower as more particularly set forth in Exhibit "D" hereto
setting forth the amount of the Disbursement sought, which shall constitute an
affirmation that the representations and warranties of Borrower with respect to
the Improvements set forth in Section 7.1 hereof and in the other Loan Documents
remain true and correct as of the date thereof and, except to the extent that
GDB is notified in writing to the contrary prior to the Disbursement, will be
true and correct on the date of such Disbursement.
"RESTORATION" shall mean, in case of a Casualty or Taking, the
restoration, replacement or rebuilding of the affected property such that when
such restoration, replacement or rebuilding is completed, the Improvements shall
have been constructed substantially in accordance with the Plans, and to the
extent any alterations or additions to the Improvements made in compliance with
the GDB Mortgage or this Agreement, with any such alterations or additions, or
in the event that the foregoing requirement cannot be satisfied as a result of
any Legal Requirements or, in the case of a Taking, as a result of the loss of
the use of the portion of the Mortgaged Property which was the subject of such
Taking, the Project when such restoration, replacement or rebuilding shall have
been completed, shall be an integral unit similar in condition, character and
scope to the Project prior to such Casualty or Taking, and the value of the
Project, when so restored, replaced or rebuilt, together with the amount of the
Net Proceeds or the Net Restoration Award, as the case may be, applied in
repayment of the
II - 25
principal indebtedness evidenced by the Note or the Bank Loan Documents, shall
be equal to or greater than the value and usefulness of the Project immediately
prior to such Casualty or Taking.
"RIGHTS" shall mean rights, remedies, powers and privileges.
"SECURITY" shall have the meaning assigned to it in Article Five
hereof.
"SECURITY DOCUMENTS" shall mean the Pledge, the GDB Mortgage, the
GDB Mortgage Note, the Assignments, the GDB Leasehold Mortgage, the Chattel
Mortgage, and the Title Policy.
""SOFT COSTS" shall mean, collectively, all costs set forth in
the Budget excluding Hard Costs.
"SUBORDINATION AND STANDSTILL AGREEMENT" shall mean the agreement
under which Lender subordinates its rights as a creditor of Borrower to the Bank
Loan Documents.
"SUBSIDIARY(IES)" shall mean, with respect to any Person, any
corporation, partnership or other entity of which a majority interest is owned
or is effectively controlled by Borrower.
"SUBSTANTIAL COMPLETION" shall mean the occurrence of all of the
following events: (i) the completion of the renovation and Construction
(excluding punchlist items) of the Improvements in accordance with all Legal
Requirements and substantially in accordance with the Plans as to any aspect of
Construction and the issuance of occupancy permits therefor satisfactory to GDB
and the Bank; and (ii) the delivery to GDB and the Bank of certificates, in the
form and content satisfactory to GDB and the Bank, from Borrower, the Architects
and the
II - 26
Bank's Consultant to the effect that all of the work required to be performed to
substantially complete the Improvements in accordance with all Legal
Requirements and in accordance with the Plans and Specifications has been
performed.
"SURVEY" shall mean a survey prepared for the Mortgaged
Properties substantially in accordance with the standards adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1986, known as the "Minimum Standard Detail Requirements of Land
Title Surveys" or showing equivalent detail and specifics, or otherwise
acceptable to Lender.
"TAKING" means any temporary or permanent taking by any public or
quasi-public authority of any Mortgaged Property or any part thereof through
eminent domain or other proceedings or by any settlement or compromise of such
proceedings, or any voluntary conveyance of such property in lieu of the
commencement of any such proceedings.
"TAXES" shall mean all taxes, assessments, fees, levies, imposts,
duties, deductions, withholdings, stamp taxes, mortgage taxes or charges,
recording charges, interest equalization taxes, real estate taxes or other
ad-valorem taxes, capital transaction taxes, foreign exchange taxes or charges
or other charges of any nature whatsoever from time to time or at any time
imposed by any Law or Court.
"TERM" shall mean that period from and including the Closing Date
through the Maturity Date.
"TERM LOAN" shall have the meaning assigned to it in Section (a)
hereof.
II - 27
"TITLE INSURER" shall mean The American Title Insurance Company
or any other issuer, approved by GDB, of the title insurance policy insuring the
GDB Mortgage and GDB Leasehold Mortgage.
"TITLE POLICY" shall have the meaning provided in Section (l)
hereof.
"TOTAL PROJECT COSTS" shall mean all items of cost and expense
arising out of or necessary for the acquisition and development of the Project
and the Construction of the Improvements, and which are included in the Budget,
including, without limitation, such incidents thereto as organizational costs,
financing costs, insurance premiums, legal and accounting fees, construction
management fees, development fees, furnishings, equipment, supplies, advertising
and marketing expenses and initial working capital.
"TRADE CONTRACT" shall mean any general construction contract
entered into by Borrower with respect to the Construction of the Improvements
that satisfies the conditions set forth in the Reimbursement Agreement, and
shall require the Trade Contractor to name GDB as an additional named insurer
under a payment and performance bond satisfactory to GDB as to form, content and
issuer with respect to such Trade Contractor's obligations under its respective
Trade Contract, and shall be otherwise satisfactory to GDB in form and content.
"TRADE CONTRACTOR" shall mean any contractor engaged in the
Construction of the Improvements under a Trade Contract.
"TRANSFER" shall mean (i) any sale or transfer by Borrower of the
Premises, or any portion thereof, or (ii) any transfer of any direct or indirect
equity interest in Borrower,
II - 28
including, without limitation, any sale or transfer of a direct or indirect
equity interest in the constituent Partners of the Borrower, of WKA, of KUSA or
of Kumagai.
"UNAVOIDABLE DELAY" shall mean any delay due to conditions beyond
the control of Borrower, including, without limitation, strikes, labor disputes,
acts of God, the elements, acts of sovereignty, enemy action, civil commotion,
fire, unavoidable casualty, mechanical breakdowns or shortages of, or inability
to obtain, labor, utilities or material; provided, however, that any lack of
funds shall not be deemed to be a condition beyond the control of Borrower.
"WILLIAMS" shall mean Williams Hospitality Management
Corporation, a Delaware corporation.
"WKA" shall mean WKA El Con Associates, a New York general
partnership.
"WMS EL CON" shall mean WMS El Con Corp., a Delaware corporation.
"WMS HOTEL" shall mean WMS Hotel Corporation, a Delaware
corporation.
"WMS INDUSTRIES" shall mean WMS Industries Inc., a Delaware
corporation.
"WORK CHANGE" shall mean any change order, any other amendment or
modification to any contract or subcontract and any revision, addendum,
modification to or amendment of the Plans for the Improvements, including minor
departures from the Plans for the Improvements pursuant to field orders.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
As an inducement to Lender to make Loans to Borrower, and also to make
the Permanent Loan to Borrower, Borrower represents and warrants to Lender that:
3.1 Partnership Existence; Compliance with Law. The Borrower (i) is a
limited partnership duly organized, existing and in good standing under the laws
of the State of Delaware, duly qualified to do business in and within the
Commonwealth of Puerto Rico, the latter being the only jurisdiction in which
Borrower owns real property or conducts business, (ii) has the requisite
partnership power and authority to own, pledge, mortgage or otherwise encumber
and operate its properties, and to conduct its business as now, heretofore and
proposed to be conducted; (iii) has or will have when required all licenses,
permits, consents or approvals from or by, and has or will have made when
required all filings with, and has or will have given all notice to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct (except for such licenses, and like, the
absence of which, and such filings and notices, as to which the failure to make
or give, would not reasonably be expected to have a Material Adverse Effect);
(iv) is in compliance with its Partnership Agreement; and (v) is in material
compliance with all applicable provisions of Law, and as of the date hereof,
except as disclosed in the Environmental Report, to the best knowledge of
Borrower, those relating to Environmental Laws where the failure to comply would
have a Material Adverse Effect.
3.2 Executive Offices. The location of Borrower's chief executive
offices is temporarily at Williams offices at the El San Juan Hotel & Casino,
Isla Verde Avenue, Carolina,
III - 2
Puerto Rico, and will eventually be located at El Conquistador Hotel and Resort,
Fajardo, Puerto Rico.
3.3 Subsidiaries. There exist no Subsidiaries of Borrower.
3.4 Partnership Power; Authorization; Enforceable Obligations. The
Borrower is the sole owner of the assets encumbered by the Security free from
any adverse lien, security interest or adverse claim of any kind whatsoever,
except the Permitted Liens and Encumbrances; has the Partnership power and
authority to execute, deliver and carry out this Agreement, the Notes, the GDB
Mortgage, the GDB Mortgage Note, the Assignments, the Pledge, the Chattel
Mortgage and any other Security or Loan Document to be delivered by Borrower
hereunder; each of said documents and instruments has been duly authorized by
all necessary partnership action of the authorized Person(s) of Borrower, and
this Agreement, the Notes, the Leasehold Mortgage, the Chattel Mortgage, the GDB
Mortgage, the GDB Mortgage Note, the Pledge, the Assignments, and generally, any
other Security or Loan Documents to be delivered by Borrower, when issued, will
be valid obligations of the Borrower enforceable in accordance with their
respective terms subject to any necessary filings or registrations which may be
a necessary pre-requisite to such enforcement.
3.5 Omitted
3.6 Financial Information to Lender.
(a) All the financial information and representations submitted
by Borrower to Lender based on which Lender approved the credit facilities
herein contemplated, are true and
III - 3
correct in all material aspects as the same have been amended and supplemented
as of the Closing Date.
3.7 No Litigation. No action, claim or proceeding is now pending or, to
the knowledge of Borrower, threatened against Borrower at Law, equity or
otherwise, before any court, board, commission, agency or instrumentality of the
Untied States or Puerto Rico or before any arbitrator or panel of arbitrators,
which, if determined adversely, would have a Material Adverse Effect. None of
the matters set forth therein questions the validity of any of the Loan
Documents or any action taken or to be taken pursuant thereto, or could
reasonably be expected to have either individually or in the aggregate a
Material Adverse Effect.
3.8 No Default. Neither the execution and delivery of this Agreement and
the Security Documents, the consummation of the transactions contemplated
hereunder, and the compliance with the terms, conditions and provisions of this
Loan Agreement, the Security Documents and of the other Loan Documents, will
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under, the Partnership Agreement of Borrower, or of any
indenture or other agreement or instrument to which the Borrower is a party or
by which it is bound, or result in the creation or imposition of any Lien,
charge or encumbrance of any nature whatsoever, upon any of the properties or
assets of the Borrower, except as permitted by the provisions hereof; and except
for the recording of the GDB Mortgage and the Chattel Mortgage, and except as
noted in this Agreement, the Borrower is not required to obtain any action,
approval, consent or authorization by any governmental or quasi-
III - 4
governmental agency, commission, board, bureau or instrumentality in order for
this Agreement to become a valid and binding obligation of Borrower enforceable
in accordance with its terms.
3.9 Investment Company Act. Borrower is not an "investment company" or
an "affiliated person" of, or a "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended. The funding of the Loans by Lender, the application of the
proceeds and repayment thereof by the Borrower and the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
not result in the violation by the Borrower of any provision of such act or any
rule, regulation or order applicable to Borrower issued by a court of competent
jurisdiction in the application of such act.
3.10 Margin Regulations. Borrower does not own any "margin security", as
that term is defined in Regulations G and U of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"), and the proceeds of the
Loan will be used only for the purposes contemplated hereunder. The Loans will
not be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security, for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which would cause any of the Loans under this Agreement to be
considered a "purpose credit" within the meaning of Regulations G, T, U or X of
the Federal Reserve Board. Borrower will not take or permit any agent acting on
its behalf to take any action which might cause this Agreement or any document
or instrument delivered pursuant hereto to violate any
III - 5
regulation of the Federal Reserve Board. The making of the loans will not
constitute a violation of such Regulations G, T, U or X.
3.11 Taxes. All federal, state, Commonwealth and foreign tax returns,
reports and statements required to be filed by Borrower and its partners, if the
said partners' failure to file would have a Material Adverse Effect on the
Borrower, (other than immaterial state, local and foreign filings), have been
filed with or extensions obtained from the appropriate governmental agencies and
all Charges and other impositions due and payable have been paid prior to the
date on which any fine, penalty, interest or late charge may be added thereto
for nonpayment thereof, or any such fine, penalty, interest, late charge or loss
has been paid if such failure to pay would have a Material Adverse Effect on the
Borrower, except such taxes, charges and other impositions which are being
diligently contested in good faith by Borrower.
3.12 Use of Loan Proceeds. The Loans to be made by Lender to the
Borrower hereunder shall be applied only for the purposes set forth in Article
Four hereof.
3.13 Omitted.
3.14 Reportable Event. No Reportable Event, as such term is defined in
Title IV of the Federal Employee Retirement Income Security Act of 1974
("ERISA"), has occurred and is continuing with respect to any employee benefit
plan or other plan now existing or which the Borrower may institute or maintain
for the employees of the Borrower or any Subsidiary of the Borrower covered by
ERISA (an "Employee's Plan").
III - 6
3.15 Environmental Matters.
(a) Except as set forth below, all facilities owned, leased, used
or operated by Borrower have been since the date hereof and continue to be,
owned, leased, used or operated in compliance in all material respects with all
applicable Environmental Laws. Some work relating to substances which may be
subject to Environmental Laws is presently being conducted and Borrower makes no
representations as to work performed prior to its acquisition of the Premises.
(b) The Environmental Report together with all previous reports
submitted to Lender by Borrower identified with respect to the Premises, to the
best knowledge of the Borrower, (i) all environmental audits, assessments or
occupational health studies undertaken by or at the direction of governmental
agencies within the past twelve (12) months; (ii) the results of the most recent
analyses of water (including groundwater analyses), soil, air or asbestos
samples where non-compliance or contamination is indicated; (iii) the most
recent inspection of each operating facility by any environmental protection
agency relating to issues of non-compliance or contamination; (iv) any claim or
complaint concerning environmental matters; and (v) all permits issued under any
Environmental Laws.
3.16 Condemnation. At the Closing Date, other than condemnation
proceedings related to the acquisition of the Premises by the Partnership
Borrower (i) no condemnation or other similar taking of any portion of the
Premises, (ii) no condemnation or relocation of any roadways abutting the
Premises, (iii) no denials of access to the Premises from any point of access to
the Premises, and (iv) no withdrawals, challenges, contests, denials or
revocations of
III - 7
permits, licenses, use agreements or other operating agreements or applications,
have been commenced, or taken or threatened to be taken by any Governmental
Authority, quasi-governmental authority, or public or private person, which
affects any portion of the Premises.
3.17 Labor Matters. The Borrowers at the Closing Date (i) is not a party
to any labor dispute; (ii) there are no strikes or walkouts relating to any
aspect of Borrowers' business or operations; (iii) there are no collective
bargaining agreements with the Borrower and/or no collective bargaining
agreements with the Borrower and/or any Subsidiary.
3.18 Other Ventures. Borrower is not, as of the Closing Date, engaged in
any joint venture or partnership with any other Person.
3.19 No Contract Cancellations. To Borrower's knowledge there exists no
actual or threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship of the Borrower under the
Construction Management Agreement, the Management Agreement, the Architects'
Agreements, the Trade Contracts and other Construction Documents as of Closing
Date.
3.20 Liens. The Liens granted to GDB pursuant to the Security Documents
will be, when filed, subject only to recording which will be effected in due
course, fully perfected second priority Liens in and to the Security described
therein, subject only to Permitted Liens and Encumbrances.
3.21 Omitted.
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3.22 Sufficiency of Funds. The Loans, together with Borrowers' own funds
and those to be borrowed under the Bank Loan Documents are sufficient for all
purposes, as determined by the Borrower, to complete the Project.
3.23 Title to Property. The Borrower has, and at all times will have,
good and insurable title in fee simple to the Premises subject to no liens,
charges, or encumbrances other than as stated in the Title Policy referred to in
Paragraph 6.1(l) hereof, and other than Permitted Liens and Encumbrances.
3.24 Possession of Premises. At Closing, to the extent represented by
seller to Borrower, there are no squatters on the Premises and that Borrower is
and will be at all times in complete and exclusive possession of the same,
except for such portions of the Premises which have been acquired through
expropriation and possession has not been surrendered to the Borrower.
3.25 Utilities and Streets. The Premises has vehicle and pedestrian
access to and from publicly dedicated roads, streets and highways, and all
utility services, including water, sanitary and storm sewers, electric, and
telephone service are or will be provided to the Premises or are located in
abutting streets and roads, and are or will be adequate to serve the
Improvements constructed and those proposed to be constructed thereon.
3.26 General. Neither the Loan Documents nor any other agreement,
document, certificate or statement furnished to Lender by or on behalf of the
Borrower or any Person in connection with the transactions contemplated in any
of the Loan Documents contains any untrue statement of material fact or omits to
state a material fact necessary in order to make statements
III - 9
contained herein or therein in light of the circumstances made not misleading.
To the knowledge of Borrower, there are no significant material facts or
conditions relating to the making of the Loans, any of the Security and/or the
financial condition and business of the Borrower which, collectively or
individually, cause a Material Adverse Effect, and which have not been fully
disclosed, in writing, to Lender. All writings heretofore or hereafter delivered
to Lender by or on behalf of the Borrower or any Person, are and will be genuine
and in all respects what they purport to be.
3.27 Survival of Warranties; Representations. All representations and
warranties made herein by Borrower or in any of the other Loan Documents, or in
any other certificate, document or instrument delivered pursuant thereto, shall
survive the making of the Loans transactions effected hereunder.
It is herein acknowledged and agreed by the Borrower that the above
warranties and representations are of the essence to the granting of the Loans
to Borrower and to this Agreement.
ARTICLE 4
AMOUNT AND TERMS OF LOANS
4.1 Of the Interim Loans:
a) Interim Loans. Subject to the terms and conditions hereof, and
relying on the representations, covenants, and warranties of the Borrower
contained herein, Lender agrees to make Interim Loans to the Borrower and to
advance to the Borrower monies so lent in a non-revolving line of credit of up
to TWENTY FIVE MILLION DOLLARS ($25,000,000.00) to finance part of the Total
Project Costs from time to time during the period commencing on the date of this
Agreement to and including the Completion Date.
b) Interest. Each Interim Loan under this Agreement shall bear
interest from the respective date of each such loan to the Conversion Date or
the date of payment in full at the annual rate resulting by adding One and Four
Tenths (1 4/10) Percentage Points to the GDB Base Rate. Any change in the
interest rate resulting from a change in the GDB Base Rate shall become
effective on the next Interest Adjustment Date following the effective date of
any such change in the GDB Base Rate. Such interest shall be payable quarterly
in arrears on the first day of each quarter and shall be computed only on
outstanding balances of each Loan on the basis of a year of three hundred sixty
(360) days and for the number of actual days elapsed. Interest accrued during
any quarter shall be payable on the first day of the following quarter.
c) Commitment Fee. In consideration of the commitment of Lender
to make to Borrower the Interim Loans, Borrower agrees to pay to the Lender a
commitment fee equal to ONE HUNDRED TWENTY FIVE THOUSAND DOLLARS ($125,000.00),
equivalent to
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One Half of One Percent (1/2%) of the maximum principal amount of the GDB Loan,
such fee to be paid on the date of this Agreement (any prior payment by Borrower
to Lender for the insurance of the commitment letter will be credited against
the Commitment Fee), and which fee shall not be reimbursable to Borrower, in
whole or in part, under any circumstance whatsoever.
d) Conversion Date. The date when Lender has disbursed the total
TWENTY FIVE MILLION DOLLARS ($25,000,000.00) shall be hereinafter referred to
as the "Conversion Date".
e) Evidence of Interim Loans. All Interim Loans made by Lender
under this Agreement shall be evidenced by a notation on the reverse side of the
Secured Promissory Note (the "Note") in the form attached hereto as Exhibit C,
dated the date of the respective Interim Loan, said notation shall be signed by
an authorized officer of Lender whom Borrower authorizes to make such notations,
however the failure to make such notation with respect to any Interim Loan shall
not limit or otherwise affect the obligations of Borrower under this Agreement
or the Note.
f) Proceeds of Interim Loans. The proceeds of the Interim Loans
will be used solely for the payment of Total Project Costs as such costs are
incurred in accordance with the Budget and the Construction Schedule. Attached
as Exhibit "E" is a Disbursement Schedule which consists of an estimate of when
such disbursements will be requested.
g) Notice of Borrowing and Making of Interim Loans. The Borrower
shall give Lender at least three (3) Business Days, prior written notice of each
borrowing it proposes to make hereunder, specifying the date and amount thereof.
Upon receipt of such notice and
IV - 3
the other documents required to be delivered pursuant to the applicable
provisions of Article Six and/or Seven of this Agreement with respect to such
borrowing, Lender shall, on the date specified in such notice, make a Loan to
the Borrower by the disbursing of the loan proceeds to Borrower and any other
person or entity specified in the documents delivered pursuant to the applicable
provisions of Article Six and/or Seven of this Agreement.
4.2 Of the Term Loan:
a) Principal of the Term Loan. On Conversion Date, and provided
Borrower has fully complied in all material respects with all terms and
conditions of this Agreement applicable to such date, Lender agrees, upon the
terms and conditions of this Agreement, to convert the Interim Loans into a term
loan to Borrower in the principal amount of TWENTY FIVE MILLION DOLLARS
($25,000,000) (the "TERM LOAN").
b) Interest. The Term Loan will bear interest from the Conversion
Date at the annual rate resulting from the adding of the Margin to the GDB Base
Rate. The resulting rate shall be adjusted every quarter in the same manner as
interest is adjusted on the Interim Loan, that is, it will continue to be
computed on the basis of a year of three hundred sixty (360) days and for the
number of actual days elapsed, shall be payable on the first day of each quarter
in arrears, and shall be adjusted on each Interest Adjustment Date.
c) Due Date of Principal. The entire principal and any accrued
interest on the Term Loan shall be paid one hundred eighty (180) months after
the Closing Date.
IV - 4
d) Note. The Term Loan shall be evidenced by and repaid in
accordance with a Secured Promissory Note of the Borrower. The notations on its
reverse side evidencing that the entire principal amount of the Loan has been
disbursed and received by Borrower.
e) Mandatory Prepayment. Upon any refinancing of the Borrower's
loan under the Bank Loan Documents, the GDB shall be repaid in whole or in part
from Excess Refinancing Proceeds, if any.
"Excess Refinancing Proceeds" shall mean the net amount of
refinancing proceeds available after full payment of the principal amount of the
Borrower's loan under the Bank Loan Documents and any other amounts required to
be paid in connection therewith.
f) Optional Prepayment. The GDB Loan may be prepaid in whole or
in part, at any time, plus accrued interest to the date of prepayment, but only
after the full payment of the loan to Borrower under the Bank Loan Documents,
except from the GDB Escrow.
g) Use of Proceeds. The proceeds of the Term Loan shall be used
by Borrower to convert all Interim Loans hereunder into the Term Loan.
h) Exit Fee: After the tenth anniversary of the Closing Date,
upon any optional prepayment of the GDB Loan or upon maturity, (excluding
prepayment as a result of Casualty or Condemnation) the Borrower shall pay GDB
as an "Exit Fee" the following percentage of the principal amounts being prepaid
or paid:
YEAR AFTER CLOSING IN PERCENTAGE OF
WHICH PAYMENT MADE AMOUNT PAID
--------------------- -------------
After Year 10 but
Before Year 11, 1.0%
IV - 5
After Year 11 but
Before Year 12, 1.5%
After Year 12 but
Before Year 13, 2.0%
After Year 13 but
Before Year 14, 2.5%
After Year 14 but
Before Year 15, 3.0%
provided that no Exit Fee shall be payable in respect of an optional prepayment
or at maturity if the Net Earnings from the Premises for the 24 months preceding
such prepayment or maturity is an amount less than 1.5 times Debt Service for
such 24 month period.
4.3 GDB Escrow. Borrower shall execute an Escrow Agreement substantially
in the form annexed hereto as EXHIBIT "F" and deposit with the Escrow Agent the
GDB Escrow Requirement, as defined below, for each Fiscal Year of the Borrower
commencing with the Fiscal Year beginning April 1st, 1993. The GDB Escrow
Requirement ("GDB ESCROW REQUIREMENT") will be determined as follows:
a) In the event Available Cash Flow is Two times 1/15th of the
outstanding principal amount of the GDB Loan or less in a fiscal year, then 50%
of such Available Cash Flow shall be paid into the GDB Escrow.
b) In the event Available Cash Flow is greater than two times
1/15th of the outstanding principal amount of the GDB Loan in a fiscal, then
1/15th of the outstanding principal amount of the GDB Loan shall be paid into
the GDB Escrow and an equal amount shall be retained by the Borrower. In
addition, there shall be paid into the GDB Escrow for such
IV - 6
Fiscal Year the Cumulative Deferred Escrow Requirement as defined below, if any,
plus 50% of Excess Available Cash Flow as defined below, if any.
c) "Excess Available Cash Flow" shall mean for each Fiscal Year
of the Borrower commencing with the Fiscal Year beginning April 1, 1993, the
Available Cash Flow in each such year in excess of the sum of (i) 1/15th of the
outstanding principal amount of the GDB Loan plus (ii) the Cumulative Deferred
Escrow Requirement paid for such year plus (iii) the partners preferred return
(as defined in the Partnership Agreement) for such year and cumulative deferred
partners preferred returns from prior years beginning April 1, 1993, paid in
such year, (iv) incentive management fees and cumulative deferred incentive
management fees (as defined in the Management Agreement) from prior years
beginning April 1, 1993, paid in such year.
d) If in any Fiscal Year, the amount of the Available Cash Flow
is less than two times 1/15th of the outstanding principal amount of the GDB
Loan, then the difference between (x) 1/15th of the outstanding principal amount
of the GDB Loan, and (y) the amount of the GDB Escrow Requirement for such
Fiscal Year, shall be, in each fiscal year, added to a "Cumulative Deferred
Escrow Requirement" and shall be paid into the GDB Escrow to the extent that
Available Cash Flow in any subsequent Fiscal Year is greater than two times
1/15th of the outstanding principal amount of the GDB Loan.
e) Payments into the GDB Escrow shall be made within 120 days of
the end of each Fiscal Year, or thirty (30) days after the Financial Statements
are delivered to the Bank. Amounts held in the GDB Escrow may be invested as the
Borrower may reasonably direct and
IV - 7
earnings therefrom shall be for the account of the Borrower, and if the Borrower
is not in default to GDB, paid to the Borrower not more frequently than once a
year. The GDB Escrow Requirement for any year shall not exceed an amount
necessary to make the aggregate amount in the GDB Escrow equal the outstanding
principal amount of the GDB Loan multiplied by a fraction, the numerator of
which is the number of Fiscal Years elapsed since the closing of the GDB Loan
and the denominator of which is 15.
f) At any time after the payment or the maturity of the loan
under the Bank Loan Documents, the Borrower may use amounts in the GDB Escrow to
prepay the principal amount outstanding with respect to the GDB Loan. The amount
held in the GDB Escrow shall be applied to the payment of the GDB Loan at
maturity.
g) "Available Cash Flow" means Net Earnings less: (i) payments
due for Debt Service, (ii) interest only on any loan, including but not limited
to operating deficiency loans and/or working capital loans, made by partners or
their affiliates to the Partnership, and (iii) amounts required for capital
improvements to the Project as reasonably determined by the Partnership.
4.4 Maximum Interest Rate: Anything herein to the contrary
notwithstanding, if the rate of interest required to be paid hereunder exceeds
the rate lawfully chargeable, the rate of interest to be paid shall be
automatically reduced to the maximum rate lawfully chargeable so that no amounts
shall be charged which are in excess thereof, and, in the event it should be
determined that any excess over such highest lawful rate has been charged or
received, the Lender shall promptly refund such excess to the undersigned;
provided, however, that, if lawful,
IV - 8
any such excess shall be paid by the undersigned to the Lender as additional
interest (accruing at a rate equal to the maximum legal rate minus the rate
provided for hereunder) during any subsequent period when regular interest is
accruing hereunder at less than the maximum legal rate.
4.5 Release Provisions: Upon request of the Borrower, and without any
payments other than to pay GDB any expenses incurred in connection therewith,
the GDB shall release the Lien of the Mortgage on the Condominium Parcels and
related access rights in connection with the Borrower's transfer of title to
such Parcels for the purpose of constructing all or a portion of the Condominium
Units. In connection with such release, Borrower shall furnish GDB with evidence
reasonably satisfactory to GDB of the existence and availability of adequate
financing for the completion of the Condominium Units to be built on the parcel
to be released. The GDB shall subordinate the GDB Mortgage to necessary
easements reasonably approved by the GDB for access roads to and utilities
serving the Condominium Parcels so released. The GDB shall execute, acknowledge
and deliver any and all documents and instruments necessary to effect such
release(s) and rights.
4.6 Subordination and Standstill Agreement: Lender shall enter into the
Subordination and Standstill Agreement and shall comply with the terms and
provisions thereof. Upon any refinancing of the indebtedness evidenced by the
Bank Loan Documents or any successor Letter of Credit Bank, Lender shall execute
and deliver directly to the party providing such refinancing or successor Letter
of Credit a Standstill and Subordination Agreement on terms substantially
IV - 9
similar but no more onerous to GDB than the GDB Standstill Agreement so as to
evidence the subordination of its rights under the Loan Documents as
contemplated hereby.
ARTICLE 5
SECURITY
5.1 The Security. As Security for the Loans and the performance and
observance of all of the Obligations, covenants and agreements of the Borrower
hereunder, the Borrower shall deliver, or cause to be delivered to the Lender,
in form and substance acceptable to the Lender, the following collateral (the
"SECURITY"):
5.1.1 The Pledge of the GDB Mortgage Note secured by the GDB
Mortgage and by the GDB Leasehold Mortgage to secure payment of the Note;
5.1.2 The valid Assignment of all intangible assets connected or
associated with the Project, including, but without limitation, the right in and
to the name "El Conquistador";
5.1.3 The valid Assignment to the extent permitted by law of (i)
all consulting and construction contracts, payment and performance bonds, plans
and specifications, warranties, licenses, permits and approvals of, for, or
related to the Premises, together with such consents by any contractors,
architects, surveyors, appraisers and other entities and persons as are
necessary to perfect such assignment, (ii) all operating licenses, permits
accreditations, approvals and rights granted to the Premises or to the Borrower
in connection or related to the Premises; (iii) the Surveys and the Preliminary
Development Plan, and (iv) all other contracts and contract rights, options,
agreements, deposits, leases, concessions, and any and all other rights or
privileges of Borrower, tangible or intangible, in connection with, arising from
or related to the Premises and/or their operation;
5.1.4 Valid and perfected personal property mortgage(s), subject
only to a prior lien under the Bank Loan Documents, in all personal properties
including all vehicles, furniture,
V - 2
furnishings, appliances, machinery, equipment, with all replacements,
accessories, parts and tools, now owned or hereafter acquired for or at the
Premises and which are not covered by the GDB Mortgage (the "CHATTEL
MORTGAGE[S]");
5.1.5 The valid and perfected Assignment of all space leases,
concessions, agreements and any other agreement relating to the Premises;
5.1.6 A valid Escrow Agreement;
5.1.7 The Title Policy.
5.1.8 The valid Assignment by the Borrower, as continuing
collateral security of the benefit of all the insurance policies required by the
Lender to be carried by the Borrower pursuant to the terms hereof, or the
appropriate mortgagee endorsements for such policies as may be approved by the
Lender;
5.1.9 The valid Assignment, as continuing collateral security of
Borrower's interest in the Management Agreement;
5.1.10 An assignment as collateral security, if and to the extent
permitted by law, of all rights of Borrower under the Casino License, and any
other license or permit required for the operation of the Project, further
provided that the Borrower shall commit as a binding obligation under the Loan
to make best efforts as is necessary or required to secure the written consent
to the assignment of the Casino License or such other license to the Lender or
its subsequent transfer or issuance to the Lender in the Event of Default by the
Borrower, all pursuant to, if and to the extent permitted by the Laws of Puerto
Rico, as amended, and the Regulations approved pursuant thereto;
V - 3
5.1.11 Such other Security documents as Borrower may hereafter be
bound to execute and deliver to Lender under the terms of this Agreement.
All of the above Security, except for the Escrow Agreement will
be subordinated under the Subordination and Standstill Agreement to the Bank
Loan Documents.
5.2 Preservation of Security. The Borrower shall take all action
necessary to protect and preserve the Security given hereunder, including
without limitation, (i) the proper filing and/or recording of GDB Mortgage, the
GDB Leasehold Mortgage, the Chattel Mortgage(s), the Assignments executed and/or
to be executed by Borrower as Security for the Loan, and at the Lender's
request, (ii) the extension of the Lien of the GDB Mortgage, the GDB Leasehold
Mortgage and/or the Chattel Mortgage(s) to cover future personal property of
Borrower, including vehicles, equipment and machinery to be placed or used in
connection with or in any way forming part of the Premises and the said GDB
Mortgage, the GDB Leasehold Mortgage, and the Chattel Mortgage(s) shall be
properly filed for record in the corresponding section of the Property Registry
of Puerto Rico and/or the Department of Transportation and Public Works of
Puerto Rico, as applicable.
5.3 Non Recourse Obligations: The obligations of the Borrower under the
Loan Documents shall be non-recourse, payable solely from those assets of
Borrower that secure the GDB Loan, except (i) in the case of fraud with respect
to the application of the Loan Proceeds, (ii) with respect to the responsibility
of Borrower under Article 8.20; (iii) with respect to the obligations of the
partners of Borrower to provide the Deficiency Loans as set forth in
V - 4
Article 8.22 herein, and (iv) Borrowers obligations guaranteed by its Partners
to deposit the Escrow Requirement with the Escrow Agent as provided for under
Article 4.3 herein.
ARTICLE 6
CONDITIONS PRECEDENT FOR INITIAL DISBURSEMENT
6.1 The obligation of Lender to make the Initial Disbursement to
Borrower is subject to the condition precedent that Lender shall have received
on or before the date of such Initial Disbursement each of the following in form
and substance satisfactory to Lender:
(a) Title to Premises: Evidence satisfactory that Borrower shall
have acquired a fee simple, good, valid, recordable and insurable title to the
Premises.
(b) Payment of Fee: Borrower shall have paid Lender the
Commitment Fee.
(c) Collateral: Delivery to Lender of the Security Documents.
(d) Equity Contribution: Evidence that Borrower shall have
invested at least $30,000,000 in form and substance satisfactory to Lender (the
aggregate amount so advanced being hereinafter referred to as the "Equity
Contribution") on account of Total Project Costs in the Project.
(e) Financial Information: Current unaudited balance sheet of
Borrower certified by the chief financial officer of Borrower.
(f) Appraisal: An Appraisal of the Premises indicating that the
value thereof is not less than ONE HUNDRED SEVENTY TWO MILLION SEVEN HUNDRED
THOUSAND DOLLARS ($172,700,000.00)
(g) Survey: A Survey of the Premises, certified and acceptable to
Lender and the Title Insurer showing (i) the location of the perimeter of the
Premises by courses and distances; (ii) all easements, rights of way, and
utility lines referred to in the Title Policy for
VI - 2
the GDB Mortgage or which actually service or cross the Premises; (iii) the
lines of the streets abutting the Premises and the width thereof, and any
established building lines; (iv) encroachments and the extent thereof upon the
Premises; (v) the Improvements to the extent constructed, and the relationship
of the Improvements as reflected by scale to the perimeter of the Premises,
established building lines and street lines.
(h) Environmental Report: A current Environmental Report.
(i) Budget: An up to date Budget for the Project.
(j) Special Report: A special written report by the Bank's
Consultant, satisfactory to Lender in form and context, setting forth that (i)
the Plans for the stages of the Project under construction or to be commenced
have been approved by it, by ARPE and all Government Authorities with
jurisdiction over the Premises and the Project; (ii) the necessary approval of
the Environmental Impact Statement for the Project has been obtained from the
Environmental Quality Control Board, as well as the necessary approval of the
site and master development plan for the Project from the Planning Board; (iii)
the Project as shown by the existing Plans will comply with applicable zoning
ordinances and regulations; (iv) all existing and proposed roads and utilities
necessary for the full utilization of the Project are or will be sufficient; (v)
the adequacy of the Budget for the Construction; (vi) its approval of a soil
report and (vii) such other reasonable matter that Lender may require.
(k) Insurance: Insurance policies, as required under Article 8.15
hereof, (together with evidence of the payment of the premiums therefor)
insuring Project (except for such portions that are not in existence).
VI - 3
(l) Title Insurance: A paid title insurance policy (the "Title
Policy"), in the full amount of the GDB Mortgage, in form approved by Lender,
issued by the Title Insurer which shall insure the GDB Mortgage and the GDB
Leasehold Mortgage to be a valid lien on the Premises free and clear of all
defects and encumbrances except Permitted Liens and Encumbrances, and to junior
liens or encumbrances previously reviewed and approved by Lender, which shall
contain a reference to the Survey but no survey exceptions except those
theretofore approved by Lender.
(m) Contractor's Insurance: Certificates from the insurance
carrier for the general contractor or contractors (and, if Borrower is not
adequately insured therein, from Borrower's insurance carrier) evidencing
workmen's compensation, disability and liability insurance (including
contractual liability) carried during the course of construction, naming Lender
as an additional insured, with liability insurance limits for death of or injury
to persons, satisfactory to GDB.
(n) Utility Facilities: Appropriate certifications from the
Architects evidencing that the Premises on which the Project is to be
constructed will have adequate water supply, storm and sanitary sewerage
facilities, fire protection, means of ingress and egress to and from the
Premises and public highways, and other required public utilities.
(o) Construction Documents: Executed copies of all Construction
Documents for the Project, including contracts, subcontracts, and purchase
orders for all fixtures and equipment to be installed as required for the
operation of the Project.
VI - 4
(p) Bonds: Performance bonds and labor and materials payments
bonds as may be required under the Construction Management Agreement or Trade
Contracts, each for penal sums equal to the amount of each such contract and a
Wage Payment Bond for 100% of the amount such contract, each naming Lender as
co-obligee and issued by insurance company(ies) acceptable to lender.
(q) Construction Schedule: A progress schedule or chart, showing
the interval of time over which each item included within the Budget is
projected to be incurred or paid.
(r) Construction Permit: Two photocopies of the construction
permit, and any special permits or licenses required, complete in all respects,
which shall authorize the construction of the Project and all Improvements in
accordance with the Plans and Specifications, issued by Governmental Authorities
with jurisdiction over the Project.
(s) Plans and Specifications: Detailed Plans and Specifications
for the Project, as approved, consistent with preliminary plans, if any,
satisfactory to Lender, including all changes to the date of submission thereof,
together with a certificate of the Architects containing a detailed listing of
said Plans and Specifications; a statement that said Plans and Specifications
fully comply with all applicable Legal Requirements; a statement that said Plans
and Specifications are complete in all respects, containing all detailed
requisite for the Improvements when built in accordance therewith, shall be
ready for occupancy.
(t) Taxes: Evidence of payment of real estate taxes on the
Premises for the last five (5) years and the current fiscal year.
VI - 5
(u) Federal Taxes: Certificate from the Clerk of the United
States District Court for the District of Puerto Rico, evidencing that there is
no tax liability owing by Borrower, and that no federal tax lien is registered
with the Clerk of the United States District Court for the District of Puerto
Rico under the Internal Revenue Code of 1986, as amended.
(v) Labor Contributions: Certificate from the Secretary of Labor
of the Commonwealth of Puerto Rico evidencing that there is no liability for
contributions of Puerto Rico evidencing that there is no liability for
contributions owing by Borrower under the provisions of the Employment Security
Act of 1956, as amended.
(w) Partnership Agreement: One (1) certified copy of the
partnership agreement of Borrower.
(x) Counsel Opinion: Lender shall receive the favorable written
opinion of counsel to Borrower, dated the date of this Agreement or thereafter,
and in form and substance satisfactory to GDB and its counsel, with respect to
such matters and Lender may reasonably require.
Since the Project will be constructed in phases or stages,
anything to the contrary notwithstanding, the documents required to be submitted
to Lender prior to Initial Disbursement under Paragraphs (m), (o), (p), (r) and
(s) above, shall be those relating to the stage under construction as of the
Initial Disbursement and Borrower shall deliver those related to the next stage
to be constructed, within a reasonable time prior to any request for
disbursement and in no event later than the date on which such documents are to
be delivered to the Bank.
ARTICLE 7
Conditions Precedent For All Loans
and Disbursement Requirements and Procedures
7.1 The obligation of Lender to make the Initial Disbursement and all
additional Disbursements hereunder is subject to the further conditions
precedent that:
a) On the date of each Disbursement under the Loan the
representations and warranties contained in this Agreement shall be true and
correct in all material respects on and as of the date of each Disbursement
hereunder with the same effect as though such representations and warranties had
been made on and as of such date; and on each such date, no Event of Default
specified in this Agreement, and no condition, event or act that with the filing
of notice or the lapse of time, or both, would constitute such an Event of
Default, shall have occurred and be continuing, or shall exist.
b) There shall be delivered to Lender, in form and satisfactory
to Lender:
(i) a Request for Disbursement, in the form of Exhibit
"D" hereto, with blanks appropriately filled, executed by a person properly
authorized to execute the same on behalf of Borrower.
(ii) a Banks' Consultant Report with respect to each
Request for Disbursement for Construction Costs, dated the date of each Request
for Disbursement, other than the monthly fee under the Construction Management
Agreement.
(iii) a Notation on the reverse side of the Secured
Promissory Note, dated the date of each Disbursement, executed by a person
properly authorized to execute such Notation on behalf of Borrower.
VII - 2
(iv) in the case of Requests for Disbursements to pay
costs which are shown as Soft Costs or the monthly fee payable under the
Construction Management Agreement in the Budget, such evidence as Lender may
require to the effect that such costs have been properly incurred and are due
and payable.
(v) evidence satisfactory to Lender that the full amount
of all prior Disbursements has been paid out by the Borrower in accordance with
this Agreement.
c) All Requests for Disbursements hereunder shall be submitted to
Lender not more often than once a month. Lender shall be allowed three (3)
Business Days following the date of each Request for Disbursement and all other
documents and evidence required in the preceding paragraph 7(b) in acceptable
form is delivered to Lender to make the requested Disbursement.
d) Borrower agrees that it will permit the Banks' Consultant to
inspect the periodic progress of the Construction of the Project, the cost
therefor to be borne by Borrower. In addition Lender may, at its option, from
time to time, during Construction of the Project and until its completion,
require, for its own information and protection, evidence from the Borrower of
the current and full payment of bills for all labor rendered and materials
furnished relating to the Construction of the Project, but Lender shall not be
required to ascertain that any bills are paid. The authority herein conferred
upon Lender, and any action taken by Lender in making inspections of the
Project, will be taken by Lender on its behalf for its own protection only, and
Lender shall not be deemed to have assumed any responsibility to Borrower with
respect to any such action herein authorized or taken by Lender or with respect
to the proper Construction of
VII - 3
the Improvements, performance of any Trade Contract, or prevention of claims for
mechanic's lien.
ARTICLE 8
AFFIRMATIVE COVENANTS
So long as Borrower shall be indebted to Lender hereunder or otherwise,
Borrower agrees that it will:
8.1 Application of Loan Proceeds. Apply the proceeds of the Loans
advanced hereunder as set forth in Article Four hereof.
8.2 Books and Records. Maintain proper books of record and account in
accordance with sound accounting practice in which full, true and correct
entries shall be made of its dealings and business affairs, and cause such books
to be audited at the end of each fiscal year by independent certified public
accountants satisfactory to Lender.
8.3 Financial Information.
(a) Furnish to Lender within fifty (50) days after the close of
each of the first three quarters of Borrower's Fiscal Year, unaudited quarterly
financial statements including but not limited to balance sheets, income
statements and statements of changes in financial position, together with a
certificate signed by the Managing Partner of Borrower certifying that no
default has occurred under this Agreement, and that no fact or circumstance
exists which, with the lapse of time or the giving of notice or both, would
result in an Event of Default hereunder; or if in its opinion, such Event of
Default has occurred, or there is in existence such condition, event or act,
such statement shall specify the nature thereof.
(b) Furnish to Lender within one hundred twenty five (125) days
after the end of each Fiscal Year of Borrower financial statements including but
not limited to, balance sheets and statements of income, and statements of
changes in financial position for such Fiscal Year,
VIII - 2
accompanied by the opinion of independent certified public accountants
satisfactory to Lender. The firm of Ernst & Young is acceptable to Lender. Each
such opinion of independent certified public accountants shall be accompanied by
a written statement from the Chief Financial Officer of Borrower certifying
that, during the Fiscal Year covered by the Financial Statements there has not
occurred or there is not in existence an Event of Default specified in Article
Ten hereof or of any condition, event or act which, with the giving of notice or
the lapse of time or both, would constitute such an Event of Default.
8.4 Construction Development of the Project. (a) Pursue the Construction
of the Improvements with diligence and continuity in order that said
Construction be completed in accordance with the Plans and Specifications of the
Project and (b) keep the Premises free and clear at all times of claims or
attachments for material supplied and for labor or services performed in
connection with the Construction of the Project, except Permitted Liens or
Encumbrances.
8.5 Effectiveness of Permits; Approvals. Keep in full force and effect
every license, permit, consent and approval necessary or appropriate for the
ownership, development and operation of the Premises and the Project, if failure
to do so will result in a Material Adverse Effect.
8.6 Access by Lender. Permit all officers, qualified employees and other
representatives of Lender designated by it to visit and inspect the Premises and
examine their books and discuss their affairs, finances and accounts with the
officers and auditors thereof, all at such reasonable times and as often as
Lender may reasonably request.
VIII - 3
8.7 Maintain Rights; Franchises. Maintain, preserve and renew all
rights, powers, privileges and franchises possessed by Borrower required or
necessary for the conduct of its business and operation of the Premises and the
Project.
8.8 Filing of Tax Returns. Timely file any and all tax returns and the
like and pay and discharge all lawful taxes, assessments, impositions, and
governmental fees charged upon Borrower and pay and discharge all taxes,
assessments and governmental charges against Borrower and any of its properties,
real or personal. It will likewise pay and discharge all social security taxes,
unemployment insurance, State Insurance Fund and the like imposed upon itself,
its income and profits or its assets and its payrolls. Borrower shall have the
right to contest such taxes in the manner and as provided in Article 8.12
hereof.
8.9 Estoppel Certificates. At any time or times, but in no event more
after than twice in any calendar year, within fifteen (15) days after written
demand by Lender therefor, Borrower shall deliver to Lender a certificate, duly
executed and in form satisfactory to Lender, stating and acknowledging the then
unpaid principal balance of the Loans and the fact that there are no defenses,
offsets or counterclaims hereunder.
8.10 Correctness of Representations; Warranties. All representations and
warranties contained in Article 3 of this Agreement shall, except those which by
the action of third parties may otherwise be than as represented, specifically
those set forth in Articles 3.7, ,3.15, 3.16 and 3.17 as specifically stated
otherwise in the said Articles, remain true and correct in all material respects
during the entire term of the Loan.
VIII - 4
8.11 Maintenance of Existence and Conduct of Business. Borrower shall
(a) do or cause to be done all things necessary to preserve and keep in full
force and effect its legal existence, rights and franchises; (b) continue to
conduct business substantially as now contemplated and as a going concern; and
(c) at all times maintain, preserve and protect all of its trademarks, service
marks and trade names.
8.12 Payment of Obligations.
(a) Subject to Paragraphs (b) and (c) of this Article 8.12,
Borrower shall (i) pay and discharge or cause to be paid and discharged all its
debts and obligations, including, without limitation, all the Obligations, as
and when due and payable; and (ii) pay and discharge or cause to be paid and
discharged promptly all (A) Charges and (B) lawful claims for labor, materials,
supplies and services or otherwise before any thereof shall become in default.
(b) Borrower may in good faith contest, by proper legal actions
or proceedings, the validity or amount of any debts or obligations, other than
the Obligations or any Charges, Liens or claims provided that Borrower gives
Lender advance notice of its intention to contest the validity or amount of any
such Charge, Lien or claim, and that at the time of commencement of any such
action or proceeding, and during the pendency thereof (i) no Default or Event of
Default shall have occurred; (ii) adequate reserves exist or are established
therefor; (iii) such contest operates to suspend collection of the contested
Charges, Liens or claims and is maintained and prosecuted continuously with
diligence; (iv) none of the Security would be subject to forfeiture or loss of
any Lien in favor of Lender by reason of the institution or prosecution of such
contents; (v) Borrower shall promptly pay or discharge such contested
VIII - 5
Charges and all additional charges, interest, penalties and expenses, if any,
and shall deliver to Lender evidence acceptable to Lender of such compliance,
payment or discharge, if such contest is terminated or discontinued adversely to
Borrower.
8.13 Agreements. Borrower shall perform, within any required time period
(after giving effect to any applicable grace periods), all of its Obligations
and enforce all of its rights under each agreement to which it is a Party
including, without limitation, leases to which Borrower is a Party, where the
failure to so perform and enforce would have a Material Adverse Effect. Borrower
shall not terminate or modify in any manner any agreement to which it is Party
which termination or modification would reasonably be expected to have a
Material Adverse Effect.
8.14 Litigation. Borrower shall notify Lender in writing, promptly upon
any executive officer of either general Partner of Borrower learning thereof, of
any litigation commenced against Borrower, and of the institution against it of
any suit or administrative proceeding that would have a Material Adverse Effect.
8.15 Insurance.
(a) Prior to the Date of Substantial Completion (as defined in
the Reimbursement Agreement), the Borrower, at its sole cost and expense, shall
keep the existing structures insured for the benefit of Lender against loss and
damage by Fire, Lightning, Collapse, Earthmovement, Flood, Tsunami, Boiler and
Machinery, and such other standard Extended Coverage perils as are customarily
included under standard "All Risk" policies for other property and buildings
similar to the Mortgage Property in nature, use, location, height
VIII - 6
and type of construction. The amount of such Insurance Policy(ies) shall be not
less than the full Replacement Cost of the then existing structures, with the
Agreed Amount and Replacement Cost Endorsements attached, waiving all
co-insurance provisions and eliminating the Vacancy and Unoccupied Clause. In
addition, prior to the Date of Substantial Completion, the Project shall be
covered under an "All Risk" Builder's Risk/Contract Works Policy for the 100%
Completed Value (replacement cost) of the contract(s) on a Non-Reporting Form,
subject to the same coverages as are required on the presently existing
structures, along with extensions of coverage for "Permission to Complete and
Occupy," Offsite Storage including Inland and Ocean Transit, "Hot and Cold"
Testing, Increased Cost of Construction and Contingent Liability from Building
Laws. On and after the Date of Substantial Completion, the Borrower shall secure
insurance to cover the Project against loss or damage by fire and such risks as
are customarily included in Extended Coverage, and from such other hazards
including, without limitation, Flood, Earthmovement, and Coastal Windstorm, as
may be covered by the "All Risk" insurance covering other property and buildings
similar to the Mortgaged Property in nature, use, location, height and type of
construction, in an amount not less than the greater of (A) full insurable
value, or (B) an amount sufficient to prevent the Borrower from becoming a
co-insurer within the terms of the applicable policies. Said Insurance Policy
shall include endorsements for Demolition, Contingent Liability and Increased
Cost of Construction. The term "full insurable value" as used in this Section
shall mean the cost of actual replacement, without deduction for depreciation,
less the costs of excavations, foundations and footings below the lowest
basement floor or, if there be no basement, below the level of the ground
determined as of the Date of
VIII - 7
Substantial Completion and as further determined on the date of each renewal or
replacement of such Insurance Policy, as hereinafter set forth. Full insurable
value shall be determined by an appraisal made at least once every three (3)
years, by an appraiser, appraisal company or insurance company selected by the
Borrower and approved by Lender in its sole discretion, and such determination
of full insurable value shall be binding and conclusive upon the parties hereto.
If any Insurance Policy covering Flood or Earthmovement shall contain annual
aggregate limits, such aggregate limits shall be replenished upon the occurrence
of a substantial loss, as determined by Lender in its sole discretion. The
Insurance Policies described above shall provide for deductions of not more than
$10,000 per occurrence for all peril except Flood, Earthmovement, and Coastal
Windstorm, for which deductions of not more than $25,000 per occurrence may be
made.
(b) The Borrower, at its sole cost and expense, shall maintain or
cause to be maintained for the benefit of Lender (i) prior to the Date of
Substantial Completion, Soft Costs/Additional Expense Incurred, Loss of Gross
Earnings and/or Loss of Rental Income on an Actual Loss Sustained Basis for an
amount not less than $24,000,000, with an "Extended Period of Indemnity"
Endorsement attached; (ii) upon and after the Date of Substantial Completion,
coverage for Loss of Gross Earnings and/or Loss of Rental Income, Business
Interruption and Additional Expense Incurred Insurance on an Actual Loss
Sustained Basis (if available) in the amount equal to the greater of (A) an
estimate reasonably satisfactory to Lender of the succeeding year's Gross
Revenues (as defined in the Reimbursement Agreement), or (B) $24,000,000 with
the Extended Period of Indemnity Endorsement attached; (iii) upon and after
VIII - 8
the installation of any boilers and/or machinery at the Project, Boiler and
Machinery Coverage for Rent Loss (including, without limitation, from both
retail space and nightly room rentals), with an "Extended Period of Indemnity"
and Improvements Loss in such amounts as are usually carried by Persons
operating property and buildings similar to the Mortgaged Property in nature,
use, location, height and type of construction.
(c) The Borrower, at its sole cost and expense, shall maintain or
cause to be maintained at all times (i) General Public Liability Insurance,
including, without limitation, the Broad Form Comprehensive General Liability
Endorsement, with the respective Primary Coverage as follows:
General Aggregate $ 1,000,000 Per Location
Products/Completed Operations
*(2 year Completed Operation
Extension $ 1,000,000
Personal & Advertising Injury $ 1,000,000
Each Occurrence (Bodily Injury
and Property Damage) $ 1,000,000
Fire Damage Legal $ 50,000
Medical Expense $ 10,000
Stop Gap Liability $ 1,000,000
(ii) Umbrella Liability Coverage in an amount of not less than $40,000,000 per
occurrence and in the aggregate prior to the Date of Substantial Completion and,
thereafter, in an amount of not less than $50,000,000 per occurrence and in the
aggregate or such greater amount as Lender shall reasonably require; (iii)
Worker's Compensation and Non-Occupational Disability Insurance
VIII - 9
as respect a Monopolistic State as required by applicable laws and regulations
of the Commonwealth of Puerto Rico; (iv) Marina Operator's Legal Liability,
Protection and Indemnity and Marina General Liability; (v) insurance covering
pilings, piers, wharves and docks, and environmental impairment coverage (if
available) with respect to the marina operation; and (vi) such other types and
amounts of insurance with respect to the Mortgaged Property and the operation
thereof which are commonly maintained in the case of other property and
buildings similar to the Mortgaged Property in nature, use, location, height and
type of construction, as may from time to time be required by Lender, including,
without limitation, Automobile Liability Insurance in amounts reasonably
required by Lender from time to time.
(d) All Insurance Policies shall be issued by an insurer
admitted and licensed to do business in the Commonwealth of Puerto Rico with an
A.M. Best Rating of AX or better and shall be otherwise satisfactory to Lender
in form and content. The Property and Business Interruption Insurance Policies
shall contain the Standard Mortgagee Non-Contribution Clause Endorsement or its
equivalent endorsement satisfactory to Lender, naming Lender as First Mortgagee
and providing Lender (except in the case of General Liability and other
Liability and Worker's Compensation) as the Person to whom all payments made by
such insurance company shall be paid and with whom all claims shall be adjusted,
except as otherwise provided in Article 11.4 hereof. All Liability Insurance
Policies shall name Lender as Additional Insured according to its respective
interest. Without Lender's prior written consent, the Borrower shall not carry
separate or additional insurance coverage concurrent in form or contributing in
the event of loss with that required by this Agreement or the Reimbursement
Agreement. Without
VIII - 10
Lender's prior written consent, the Borrower shall not name any Person as named
insured or loss payee under any Insurance Policy without Lender's prior written
consent. The Borrower shall pay the premiums for the Insurance Policies as the
same become due and payable. The Borrower shall deliver original binders and
certified copies of the Insurance Policies to Lender as further security for the
Borrower's performance of the terms and conditions contained herein, provided
that Lender shall not be deemed by reason of the custody of such Insurance
Policies to have knowledge of the contents thereof. In the event of a
foreclosure of either or both the GDB Mortgage and the GDB Leasehold Mortgage,
the purchaser of the Mortgaged Property will succeed to all of the rights of the
Borrower, including the rights to all unearned premiums paid, with respect to
the Insurance Policies, to the extent assignable. The Borrower also shall
deliver to Lender, within 10 days of such party's request, a certificate of
insurance issued by the Borrower's insurance agent/broker setting forth the
particulars as to all such Insurance Policies, that all premiums due thereon
have been paid and that the same are in full force and effect. Not later than 30
days prior to the expiration date of each of the Insurance Policies, the
Borrower shall deliver to Lender original binders and certified copies of a
renewal policy or policies marked "premium paid" or accompanied by other
evidence of payment of premium satisfactory to Lender.
(e) Each Insurance Policy to be carried hereunder shall contain
a provision whereby the insurer (i) agrees that such policy shall not be
cancelled or modified, and shall not fail to be renewed, without at least 60
days' prior written notice to Lender, (ii) waives any right to claim any
premiums and commissions against Lender and (iii) provides that Lender
VIII - 11
is permitted to make payments to effect the confirmation of such Policy upon
notice of cancellation due to nonpayment of premiums. In the event any Insurance
Policy (except for general public and other liability, boiler and machinery
explosion liability and worker's compensation insurance) shall contain breach of
warranty provisions, such Policy shall provide that with respect to the
interests of Lender, such Insurance Policy shall not be invalidated by and shall
insure Lender regardless of (A) any act, failure to act or negligence of or
violation of warranties, declarations or conditions contained in such Policy by
any named insured, (B) the occupancy or use of the Mortgage Property for
purposes more hazardous than permitted by the terms thereof, (C) any foreclosure
or other action or proceeding taken by the Lender pursuant to any provision of
this Agreement, or either or both of the GDB Mortgage and GDB Leasehold
Mortgage, or (D) any change in title to or ownership of all or any of the
Mortgaged Property.
(f) Any insurance maintained pursuant to this Article 8.15 may
be evidenced by blanket Insurance Policies covering the Mortgaged Property and
other properties or assets of the Borrower or any Affiliated Person (as the term
is defined in the Collateral Pledge Agreement of even date between Borrower,
AFICA and the Bank), provided that any such policy shall specify the portion, if
less than all, of the total coverage of such Policy that is allocated to the
Mortgaged Property and shall in other respects comply with the requirements of
this Article 8.15. Lender, in its sole discretion, shall determine whether such
blanket Policies provide sufficient limits of insurance.
(g) Notwithstanding anything to the contrary contained herein,
if at any time Lender is not in receipt of written evidence that all insurance
required hereunder is
VIII - 12
maintained in full force and effect, Lender shall have the right, upon notice to
the Borrower, to take such action as Lender may deem necessary to protect its
interests in the Mortgaged Property, including, without limitation, the
obtaining of such insurance coverage as Lender deems appropriate, and all
expenses incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by the Borrower promptly after
demand and be secured by this Agreement and by the GDB Mortgage and the GDB
Leasehold Mortgage.
8.16 Compliance with Law. Borrower shall comply with all United States and
Puerto Rican federal, state and local laws and regulations applicable to it,
including, without limitation, those regarding environmental matters where the
failure to comply would have a Material Adverse Effect.
8.17 Supplemental Disclosure. From time to time as may be necessary (in the
event that such information is not otherwise delivered by Borrower to Lender
pursuant to this Agreement), so long as there are Obligations outstanding
hereunder, Borrower will, as promptly as is reasonable under the circumstances
after the Borrower has knowledge with respect thereto, supplement or amend and
deliver to Lender (i) any and all material contracts, permits, licenses,
declarations and covenants, operating agreements, or any other agreements,
documents or instruments pertaining to the Premises; and (ii) any matter with
respect to any Exhibit or representation hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Exhibit or as an exception to such
VIII - 13
representation or which is necessary to correct any information in such Exhibit
or representation which has been rendered inaccurate thereby.
8.18 Recording; Transfer Taxes and Fees. Borrower shall pay all transfer,
excise, Mortgage recording or similar taxes and fees in connection with the
issuance, sale, delivery or transfer by Borrower to Lender of the GDB Mortgage
Note and the execution and delivery of the Security Documents and any other Loan
Documents and any other agreements and instruments contemplated hereby, and
shall save Lender harmless against any and all liabilities with respect to such
taxes. The obligations of Borrower under this Article 8.18 shall survive the
payment, prepayment or redemption of the GDB Loan and the termination of this
Agreement.
8.19 Preservation of the Properties. Borrower shall upon reaching Substantial
Completion of the Project, keep and preserve the Premises in good repair,
working order and condition as of the date thereof, normal wear and tear
excepted, and from time to time will cause to be made all necessary and proper
repair, replacements and renewals. Borrower shall not commit, nor permit any
other Person or event (whether by act of God or otherwise) to commit, waste or
damage upon the Premises, other than such damages which are covered under the
Casualty provisions of this Agreement, without promptly restoring the same to
the same or better condition than prior to such occurrence. In the event of any
material loss or damage to any portion of the Premises due to fire, floods,
wind, or other nature causes, whether alone or in combination, including
hurricanes and the effects thereof, Lender with the Bank's approval shall have
the right, at its sole discretion to call for a reappraisal of the Premises, the
cost
VIII - 14
thereof to be borne by Borrower. Borrower will keep the Mortgaged Property free
from squatters.
8.20 Environmental Matters.
(a) Borrower shall (i) in connection with the ownership and
operation of the Premises, comply strictly and in all respects with all
applicable Environmental Laws, (ii) promptly forward to Lender a copy of any
order, notice, permit, application, or any other communication or report in
connection with any release of any hazardous substance or any other matter
relating to Environmental Laws as they may affect the Premises and the Project.
(b) Borrower shall, pursuant to the terms set forth herein,
indemnify GDB and hold GDB harmless from and against any loss, liability, damage
or expense, including attorneys' fees, suffered or incurred by GDB, whether as
mortgagee pursuant to any Mortgage, as Mortgagee in possession, or a successor
in interest to Borrower as owner or lessee of Premises by virtue of foreclosure
or acceptance of deed in lieu of foreclosure (i) under or on account of the
Environmental Laws, including the assertion of any Lien thereunder; (ii) with
respect to any release of any hazardous substance affecting the Premises,
whether or not the same originates or emanates from such Premises or any
contiguous real estate, including any loss of value of such Premises as a result
of a release of any hazardous substance; and (iii) with respect to any other
environmental matter affecting such Premises within the jurisdiction of any
official administering the Environmental Laws.
(c) The obligations of Borrower under this Article 8.20 shall
not extend or apply to (i) any condition or state of facts existing in respect
of the Premises or the
VIII - 15
Improvements on the date the Borrower acquired title to the Fajardo Property
from the Puerto Rico Lands Administration or (ii) any condition caused by or
resulting from actions taken by or on behalf of the GDB or any failure by the
GDB to take any action it might have a duty to take in the event it takes
possession or control of the Premises. The Borrower shall make available to GDB
to the fullest extent permitted by law any and all rights available to the
Borrower against the Puerto Rico Lands Administration with respect to any
liability under any Environmental Law, any release of any hazardous substance
affecting the Premises or with respect to any other environmental matter
affecting the Premises and the Borrower hereby assigns such rights to the GDB
and authorizes the GDB to enforce such rights directly against the Puerto Rico
Lands Administration to the same extent as if the Borrower enforced such rights.
The procedure for Borrower to provide the foregoing indemnifications shall be
covered by the procedures set forth in Article 11.3 hereof.
8.21 Notice. Borrower shall promptly give written notice to Lender in the
manner provided in Article 11.14 hereof of (i) the occurrence of any Default or
Event of Default; (ii) any legal, judicial or regulatory proceedings affecting
Borrower or any of its properties or assets, in which the amount involved is
material and is not covered (subject to normal deductibles) by insurance and
that will have a Material Adverse Effect; (iii) any dispute between Borrower and
any governmental regulatory body or other Person that will have a Material
Adverse Effect; (iv) substantial damage, loss, or impairment in value, to any
part of the Security and/or the Premises, specifying the nature and extent of
damage, loss, or impairment in value, and whether such damage, loss, or
impairment in value is being repaired
VIII - 16
in due course or the total loss or destruction of any material part of the
Security and/or the Premises; (v) any other action, event or condition of any
nature of which it has knowledge which would result in any Material Adverse
Effect; and (vi) the voluntary or involuntary bankruptcy of, or any assignment
for the benefit of creditors or the seeking of any relief under any Debtor
Relief Law by Borrower.
8.22 Deficiency Loans. Any funds advanced to the Borrower as Deficiency Loans
(as defined in the Borrower's Partnership Agreement), whether or not at the
direction of the Bank or Lender, shall be applied only to the operating costs or
other fees and expenses related to the operation of the Project; provided,
however that (a) up to $6,000,000 of such funds available for Deficiency Loans
under Borrower's Partnership Agreement may be used by the Borrower to pay any
portion of the Total Project Costs for which the Borrower has insufficient funds
and (b) the foregoing restriction shall be of no effect from and after the date
in which the Coverage Requirement, as such term is defined under the Bank Loan
Documents, is met (the "Bank Coverage Date"). After the date of Substantial
Completion and until the Bank Coverage Date, in the event (i) Borrower has
failed to pay Interest to Lender as provided in Article IV hereof, and such
failure shall continue uncured beyond the first (1st) day of the following
calendar month in which such payment was due, and (ii) Borrower has paid all
interest and other fees due under the Bank Loan Documents on a current basis
through and including the 15th day of such month, then Lender shall have the
right to cause the Borrower, acting through WKA, to require the General Partners
to make Deficiency Loans in amounts of up to $20,000,000 in the aggregate (less
the principal amount of any Deficiency Loans previously
VIII - 17
made by the General Partners) and to apply such funds on account of Interest
then due to the Lender. The Lender shall have no right to cause Deficiency Loans
to be made to pay principal under the GDB Loan or under the Bank Loan Documents.
In the event that WKA does not make the Deficiency Loan required by the Lender
as aforesaid which WKA may be required to make pursuant to Section 6.02 of the
Borrower's Partnership Agreement, the Lender may require KGC to make the
Deficiency Loan on behalf of WKA through the making of a KG Loan (as defined in
the Borrower's Partnership Agreement). In the event of a default by KGC in its
obligations to make a KG Loan to fund any Deficiency Loan required by Lender as
aforesaid, the Lender shall have the right to cause the Borrower or WKA,
respectively, to exercise such rights and remedies with respect thereto as the
Lender shall determine. The Lender's right to require Deficiency Loans to be
made shall cease (x) during the pendency of any bankruptcy proceeding with
respect to the Borrower or (y) in the event of the commencement of any
foreclosure proceeding or the exercise of any rights in lieu of foreclosure with
respect to the Borrower's interest in the Project. The Lender acknowledges that
an aggregate of only $20 million in principal amount of Deficiency Loans is
available to the Borrower and, that the Borrower has the right to call upon such
Deficiency Loans and apply the proceeds thereof to Total Project Costs, interest
and fees in respect of the Loan Documents and Bank Loan Documents and operating
deficiencies and in certain circumstances the Bank has the right to call upon
such Deficiency Loans and apply the proceeds thereof to operating costs or other
fees or expenses related to the operation of the Project. Accordingly, the
availability of Deficiency
VIII - 18
Loans to pay Interest to the Lender as provided herein is subject to the prior
requests for or application of the proceeds of such Deficiency Loans to pay such
other permitted items.
8.23 Certification of Substantial Completion. The Borrower upon reaching
Substantial Completion of the Project shall submit to Lender a certification
from the Architects to that effect, and a certification of the Total Project
Costs incurred up to the date of Substantial Completion, signed by the chief
financial officer of the Borrower, together with the Financial Statements for
the Fiscal Year during which Substantial Completion is reached.
8.24 Permits and Licenses. Borrower possess or will possess when required, all
rights, accreditations, franchises patents, permits licenses and privileges
necessary for the conduct of its business as now conducted, and as necessary for
the ownership and management of the Premises, without known conflict with the
rights of any person.
8.25 Of the Project.
(a) On or prior to the date of this Agreement, the Borrower will
have obtained the approval of ARPE and/or of the Planning Board of Puerto Rico
to the site plan and prior to commencement of any stage of the Project, approval
to the final Plans and Specifications of such stage of the Project to be
commenced shortly thereafter, the approval of all other Governmental Authorities
having jurisdiction in the premises, and all permits or licenses necessary to
allow the Borrower to proceed with the Construction of the Project.
(b) The Project will be completed substantially in accordance
with the Plans and Specifications, and in accordance with the use permits and
all approvals by
VIII - 19
Governmental Authorities having jurisdiction with respect to the use of the
whole or any part of the Project will have been obtained on or before Completion
Date.
(c) The Construction shall be done in a workmanlike manner and
Borrower shall provide or cause to be provided all labor, material, and
equipment of every kind necessary for the completion of the Construction of the
Project, when once begun, and shall proceed continuously to complete the same
with all reasonable speed and dispatch. No substantial changes will be made in
the Plans and Specifications of any such construction or installations except
with prior written notice to and reasonable consent from Lender, and such
approvals as shall be necessary under the requirements of ARPE and/or of the
Planning Board of Puerto Rico. The Borrower shall make full payments for all
costs of all such constructions and installations, promptly as due, except as
diligently contested in good faith, and shall assure that no lien arises on
account of failure to pay wages of Construction workers.
(d) All materials contracted or purchased for delivery to the
Project, or for use in its installations or constructions, and all labor
contracted or hired for or in connection with said installations or
constructions shall be used and employed solely on said Project, and only in
accordance with the Plans and Specifications.
(e) No part of the Project shall be permitted to become occupied
until the applicable use permit required by law has been granted.
(f) The Borrower will manage or cause the Project to be managed
in conformity with the requirement of Governmental Authorities, and in
compliance with any and all rules and regulations affecting the Project.
VIII - 20
8.26 Deposit of Escrow Requirement. Deposit with the Escrow
Agent The Escrow Requirement when such deposit becomes due, which obligation is
hereby guaranteed by the respective general partners of the Borrower by their
execution of this Agreement.
8.27 Interest Rate Swap. The Borrower will, upon notice from GDB, promptly
enter into an interest rate swap arrangement between counter parties
satisfactory to the GDB and the Bank, for a period commencing on the date such
arrangement is entered into and ending on the seventh anniversary of the date
hereof, if, within a period of five years from the date hereof, quotes by the
Bank for a 90 day Libor based Fixed for Floating Rate Swap for a term of seven
years equal or exceed 9.5% per annum at a time when three month Libor equals or
exceeds 8.5% per annum.
8.28 Expropriation. Borrower agrees to take all actions, execute and deliver
all documents and pay all costs and expenses (including, without limitation,
payment of the purchase prices therefor) in connection with the acquisition,
including, if necessary, (i) the expropriation by the Lands Administration of
Puerto Rico and the subsequent sale to Borrower of those parcels of land
adjacent to the Project and presently owned by Justino Diaz Santini, and
identified on the Boundary Survey Map dated February 19, 1990, prepared by David
Lebron Lopez, P.L.S. as Tract and G-1c/1d, (ii) the spreading of the lien of the
GDB Mortgage to cover such property, or the granting of a separate mortgage to
cover such property and (iii) the endorsement of the Title Policy to include the
lien of the GDB Mortgage on such new mortgage with respect to such property.
ARTICLE 9
NEGATIVE COVENANTS
9.1 Consent of Lender. The Borrower covenants that it will not,
without the prior written consent of Lender, until full payment of the GDB Loan
and the performance of all other Obligations of the Borrower hereunder:
9.1.1 Create, assume, or suffer to exist any mortgage, pledge,
encumbrance or other lien on the Premises, except for the Permitted Liens and
Encumbrances;
9.1.2 Except as contemplated or permitted in this Agreement,
become a party to any transaction whereby all or any substantial part of the
properties, assets or undertakings of the Borrower (whether legally or
beneficially owned) would become the property of any other Person, whether by
ways or reorganization, amalgamation, merger, transfer, sale, lease, sale and
leaseback, or otherwise;
9.1.3 Permit any change in the legal or beneficial ownership of
the Premises, or permit any change in the ownership of the Borrower, except for
a Permitted Transfer;
9.1.4 Make any substantial change to the operation of the
Project as presently contemplated without the prior written approval of Lender;
9.1.5 Other than in relation to the Project, guaranty or
otherwise in any way become or be contingently liable or responsible for
obligations of any other Person, including without limitation, by agreement to
purchase the Indebtedness of another Person, by agreement for the furnishing of
funds to any other Person through the purchase of goods,
IX- 2
supplies or services (or by way of stock purchase, capital contribution, loan or
advance) for the purpose of paying or discharging the Indebtedness of any other
Person, or by agreement that net assets of any other Person, consolidated or
otherwise will be maintained in any amount;
9.1.6 Permit any distribution in the form of dividends or
withdrawal of any of the profits, funds or assets of the Borrower during the
term of this Agreement in respect of any Fiscal Year before the Financial
Statements for such Fiscal Year that Borrower has to submit to Lender in the
fashion and manner stated in this Agreement, are actually submitted to Lender
and at any time when such Financial Statements reveal that there does not exist
Distributable Cash, as the term is defined in the Borrowers' Partnership
Agreement;
9.1.7 Enter into or permit the entering into of any agreement or
arrangement for borrowed money, if such borrowing shall create any mortgage,
pledge, lien, hypothecation, charge (fixed or floating), security interest or
other encumbrance whatsoever over the Premises except Permitted Encumbrances;
9.1.8 Omitted.
9.1.9 Permit or be a party to any arrangement regarding the
dissolution of Borrower;
9.1.10 Borrower shall not directly or indirectly, assign,
transfer or attempt to so assign, transfer any of their Rights, duties or
Obligations under this Agreement or any other Loan Document except as required
under the Bank Loan Documents or as specifically permitted under this Agreement;
IX- 3
9.1.11 Agree to a substantial Work Change without the prior
written approval of Lender;
9.1.12 Cause any of the material licenses and permits for the
Project to be revoked or modified in any manner or form;
9.1.13 Except as permitted in this Article Nine, make any loans
and advances, (which terms do not include salaries, bonuses, or other customary
compensation as a result of employment) to any of its officers beyond what would
be considered reasonable or prudent;
9.1.14 Except Management Fees, make any loans, or advances to,
or make any investments in any General or Limited Partner of Borrower;
9.1.15 Permit the aggregate compensation (including salaries,
bonuses and other compensation) paid to officers, directors, and employees of
Borrower to exceed an amount which is proper and reasonable in relation to the
work performed and comparable to that paid by other Persons engaged in similar
type of business and producing comparable results from operations;
9.1.16 Engage in any activity not related to the Project or
which could not be reasonably regarded as necessary to the development and
management of the Project, or invest in any Person, or engage in new ventures or
business enterprises;
9.1.17 Engage in any "prohibited transaction" within the meaning
of Section 4975 of the Internal Revenue Code or Section 406 of ERISA with
respect to any "employee benefit plan", as defined in Section 3 of ERISA;
IX- 4
9.1.18 Create any direct or indirect Subsidiary or enter into
any partnership, joint venture, or similar arrangements, or make any material
change in its partnership structure other than Permitted Transfer;
9.1.19 Amend or materially modify in any material respect
Borrowers' Venture Agreement, in effect on the Date of Closing of this
Agreement;
9.1.20 Compromise, settle or discharge any action, suit,
proceeding or claim which seeks to restrain, prevent, change or otherwise
affect, or questions the validity or legality of, the transactions contemplated
by this Agreement, the Security Documents or any other Loan Documents, in whole
or in part or which seeks damages in connection with any of such transactions;
which compromise settlement or discharge affects the interest of Lender under
his Agreement;
9.1.21 Enter into any contract or agreement which would
materially and adversely affect Borrower or its business, property, assets,
operations, condition (financial or otherwise) or enter into any transaction
which would materially and adversely affect Borrowers' assets or ability to
perform all of their Obligations under this Agreement, the Security Documents or
any of the other Loan Documents, which could reasonably be expected to have
Material Adverse Effect;
9.1.22 Borrower shall not take or omit to take any action, which
act or omission would constitute (i) a Default or an Event of Default pursuant
to, or noncompliance with any of, the terms of any of the Loan Documents or (ii)
except as provided elsewhere in this Agreement, a material Default or an Event
of Default pursuant to, or non-compliance with any
IX- 5
other contract, lease, mortgage, deed of trust or instrument to which it is a
party or by which it or any of its property is bound, or any document creating a
Lien, unless, in either case, such Default, Event of Default or non-compliance
would not have a Material Adverse Effect.
ARTICLE 10
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute a "Default" or an "Event of Default"
hereunder:
(a) Borrower shall fail to make, within ten (10) calendar days of
written notice from Lender (by facsimile or otherwise), any payment of principal
of, or interest on, or within thirty (30) calendar days of written notice of any
other amount owing in respect of, the GDB Loan.
(b) Borrower shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan Documents, and
the same shall remain unremedied for a period ending thirty (30) days after
Borrower shall receive written notice of any such failure from Lender (by
facsimile or otherwise) provided that no Default shall exist under this
paragraph (b) so long as Borrower is proceeding diligently to cure such failure
and such delay would not have a Material Adverse Effect.
(c) Any representation or warranty herein or in any Loan Document
or in any written statement pursuant thereto or hereto, report, financial
statement or certificate made or delivered to Lender by Borrower, shall be
untrue or incorrect in any material respect as to Borrower, as of the date when
made or deemed made.
(d) Omitted.
(e) An unreasonable delay in the construction of the Project so
that the same may not, in Lender's sole judgment, be completed on or before the
Completion Date, provided such delay or discontinuance is not caused by an
Unavoidable Delay.
X - 2
(f) All or a substantial part of the assets of Borrower shall be
attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors of Borrower and shall remain unstayed or undismissed
for sixty (60) consecutive days; or any Person shall apply for the appointment
of a receiver, trustee or custodian for any of the assets of Borrower and shall
remained unstayed or undismissed for thirty (30) consecutive days; or Borrower
shall have concealed or removed, any part of its assets with intent to hinder,
delay or defraud its creditors or any of them or made or suffered an
unauthorized transfer of any of its assets or incurred an obligation which may
be fraudulent under any bankruptcy, fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against
Borrower in a court of competent jurisdiction seeking a decree or order in
respect of Borrower, (i) under Title 11 of the United States Code, as now
constituted or hereafter amended or any other applicable federal, Commonwealth,
state or foreign bankruptcy or other similar Law; (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
Borrower, or of any substantial part of its assets, or (iii) ordering the
winding-up or liquidation of the affairs of Borrower, and such case or
proceeding shall remain undismissed or unstayed for sixty (60) consecutive days
or such court shall enter a decree or order granting the relief sought in such
case or proceeding.
X - 3
(h) Borrower shall (i) file a petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other applicable federal, State or foreign bankruptcy or other similar Law, (ii)
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or taking possession by custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
Borrower of any substantial part of its assets; (iii) fail generally to pay its
debts as such debts become due, or (iv) take any action in furtherance of any
such action.
(i) Final judgment or judgments (after the expiration of all
times to appeal therefrom) for the payment of money in excess of $500,000.00
shall be rendered against Borrower and the same shall not (i) be fully covered
by insurance in accordance with the insurance provisions of this Agreement; or
(ii) within sixty (60) days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within five (5) days after the expiration of any such stay.
(j) The conveyance, transfer, or other disposition of the
Premises or the assignment or purported assignment of the Agreement, the
Security Documents or any of its rights thereunder shall have been made by
Borrower, except as required under the Bank Loan Documents or pursuant to any
Permitted Transfer.
(k) Any material provision of any Security Document after
delivery thereof shall for any reason cease to be valid or enforceable in
accordance with its terms, or any material security interest created under any
Security Document shall cease to be a valid and
X - 4
perfected second priority security interest or Lien (except as otherwise
permitted herein or therein) in any of the Security purported to be covered
thereby.
(l) Omitted.
(m) Any Reportable Event which Lender determines in good faith
might constitute grounds for the termination of any Employees' Plan or for the
appointment by the appropriate United States District Court of a trustee to
administer any Employees' Plan shall have occurred and be continuing sixty (60)
days after written notice to such effect shall have been given to Borrower by
Lender, or any Employees' Plan shall be involuntarily terminated, or a trustee
shall be appointed by an appropriate United States District Court to administer
any Employees' Plan, or proceedings to terminate any Employees' Plan or to
appoint a trustee to administer any Employees' Plan are commenced.
(n) Borrower shall be enjoined, restrained, or in any way
prevented by court order, or if any proceeding is filed or commenced seeking to
enjoin, restrain, or in any way prevent Borrower from conducting all or a
substantial part of its business affairs and/or proceeding with the Premises and
the Project and such action is not stayed, nullified or reversed within thirty
(30) days thereafter.
10.2 REMEDIES. Upon and during the continuation of any Event of Default
hereunder, the Lender shall have the absolute right, at its option and election,
to:
(a) Cancel this Agreement by written notice to Borrower;
(b) Institute appropriate proceedings to specifically enforce
performance hereof;
X - 5
(c) Withhold further disbursements hereunder;
(d) Apply for the appointment of a receiver, as a matter of
strict right without regard to the solvency of Borrower, for the purpose of
preserving the Premises, preventing waste, and to protect all rights accruing to
Lender by virtue of this Agreement. All expenses incurred in connection with the
appointment of said receiver, or in protecting and preserving the Premises,
shall be chargeable against Borrower and shall be enforced as a lien against the
Premises;
(e) Accelerate maturity of the Notes and demand payment of the
principal sums due thereunder, with interest and costs, and in default of said
payment or any part thereof, to foreclose and enforce collection of such payment
by foreclosure and/or other appropriate action in any Tribunal.
The said remedies and rights of Lender shall be cumulative and
not exclusive. Lender shall be privileged, and shall have the absolute right, to
resort to any or all of said remedies, none to limit or exclude any other. In
any Event of Default, Lender shall have the absolute right to refuse to disburse
the balance of the Loan Commitment, and no Person shall have any interest in the
undisbursed balance of the Loans and shall not have any right to require or
compel payment thereof toward discharge or satisfaction of any claim or lien
which they or any of them have or may have for work performance on, or materials
supplied to, the Improvements.
X - 6
10.3 WAIVER OF DEFAULTS. The waiver by Lender of any Event of Default
hereof shall not be deemed, nor shall the same constitute, a waiver of any
subsequent Event of Default.
10.4 WAIVERS BY BORROWER. Except as otherwise provided for in this
Agreement and applicable Law, Borrower waives to the fullest extent permitted by
law (i) presentment, demand and protest and notice of presentment, dishonor,
notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, comprise, settlement, extension or renewal of any
or all commercial paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by Lender on which Borrower may in
any way be liable and hereby ratifies and confirms whatever Lender may do in
this regard, (ii) all rights to notice and a hearing prior to Lender's taking
possession or control of, or to Lender's replevy, attachment or levy upon, the
Security or any bond or other collateral which might be required by any court
prior to allowing Lender to exercise any of its remedies, and (iii) the benefit
of all valuation, appraisal and exemption Laws.
10.5 RIGHT OF SET-OFF. Upon the occurrence and during the continuance of
any Event of Default and Lender's termination of this Agreement or Lender's
declaring all obligations to be forthwith due and payable pursuant to the
provisions of Section 10.2 hereof, Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by Law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other Indebtedness at any time owing by Lender to or for
the credit or the account of Borrower against any and all of the obligations of
Borrower now or hereafter existing under this Agreement, irrespective of whether
or not Lender shall have made any demand under this
X - 7
Agreement and although such Obligations may be unmatured. Lender agrees promptly
to notify Borrower after any such set-off and application may be Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off application.
10.6 CONTROL. None of the covenants or other provisions contained in
this Agreement shall, or shall be deemed to, given Lender under this Agreement
the right or power to exercise control over the affairs and/or management of
Borrower, the power of GDB under this Agreement being limited to the right to
exercise the remedies provided in this Article 10.
ARTICLE 11
MISCELLANEOUS
11.1 No Agency Relationship. The Borrower understands and agrees that
Lender is not the agent, representative, or partner of, or joint-venturer with
the Borrower, and this Agreement shall not be construed to make Lender liable to
materialmen, contractors, craftsmen, laborers, or others for goods or services
furnished by them in or into the Project, or for debts or claims accruing to the
said parties against the Borrower, and it is distinctly understood and agreed
that there is no contractual relation, either express or implied, between Lender
and any materialmen, subcontractors, craftsmen, laborers or other person or
persons supplying any work or materials in and to the Project, or of any part
thereof. This Agreement shall not give rise to the application of the doctrine
of third party beneficiary.
11.2 Liability. It is understood between the parties hereto that
Borrower has selected or will select all architects, engineers, contractors,
subcontractors, materialmen, as well as all others furnishing services or
materials for the Project and Lender has, and shall have, no responsibility
whatsoever for them or for the quality of their materials or workmanship, it
being understood that Lender's sole function is that of lender and the only
consideration passing from Lender to Borrower is the proceeds of the Loans in
accordance with and subject to the terms of this Agreement. It is also agreed
that Borrower shall have no right to rely on any procedures required by Lender
herein, such procedures being for the protection of Lender as Lender and no one
else. Borrower hereby agrees to hold and save Lender harmless and indemnify it
against and from claims, of any kind, of any persons, including but without
limiting the generality of the foregoing, employees of Borrower, any contractor
constructing the Improvements and the
XI - 2
employees of any such contractor, any tenant of Borrower, any subtenant or
concessionaire of any such tenant, and the employees and business invitees of
any such tenant, subtenant or concessionaire, arising from or out of the
construction, use, occupancy, or possession of the Improvements by or on behalf
of Borrower.
11.3 Indemnity of Lender. Borrower hereby indemnifies the Lender, and
its respective directors, officers, employees, Affiliates and agents
(collectively, "Indemnified Persons") against, and agrees to hold each such
Indemnified Person harmless from, any and all losses, claims, damages and
liabilities, and related expenses, including reasonable counsel fees and
expenses, incurred by such Indemnified Person arising out of any claim,
litigation, investigation or proceeding (whether or not such Indemnified Person
is a party thereto) relating to any transaction, services or matters that are
the subject of the Loan Documents; provided, however, that such indemnity shall
not apply to any such losses, claims, damages, or liabilities or related
expenses determined by a court of competent jurisdiction to have arisen from the
gross negligence or willful misconduct of such Indemnified Person and provided
further that Borrower's obligations with respect to environmental matters is
solely under Article 8.20 hereof and not under this Article 11.3. If any
litigation or proceeding is brought against any Indemnified Person in respect of
which indemnify may be sought against Borrower pursuant to this Article 11.3,
such Indemnified Person shall promptly notify Borrower in writing of the
commencement of such litigation or proceeding, but the omission so to notify
Borrower shall not relieve Borrower from any other obligation or liability which
it may have to any Indemnified Person otherwise than under this Article 11.3 or
Article 8.20. Failure of the Indemnified Person
XI - 3
to timely notify Borrower of the commencement of such litigation of proceeding
shall not relieve Borrower of its obligation under Article 11.3 or Article 8.20,
except where and to the extent such failure irrevocably prejudices any action to
hold such Indemnified Person harmless therefrom. In case any such litigation or
proceeding shall be bought against any Indemnified Person and such Indemnified
Person shall notify Borrower of the commencement of such litigation or
proceeding, Borrower shall be entitled to participate in such litigation or
proceeding and, after written notice from Borrower to such Indemnified Person,
to assume the defense of such litigation or proceeding with counsel of its
choice at its expense, provided that such counsel is satisfactory to the
Indemnified Person in the exercise of its reasonable judgment. Notwithstanding
the election of Borrower to assume the defense of such litigation or proceeding,
such Indemnified Person shall have the right to employ separate counsel and to
participate in the defense of such litigation or proceeding if (i) the use of
counsel chosen by Borrower to represent such Indemnified Person would present
such counsel with a material conflict of interest; (ii) the defendants in, or
targets of, any such litigation or proceeding include both and Indemnified
Person and Borrower, and such Indemnified Person shall have reasonable concluded
that there may be legal defenses available to it which are different from or
additional to those available to Borrower in which case Borrower shall not have
the right to direct the defense of such action on behalf of the Indemnified
Person); (iii) Borrower shall not have employed counsel satisfactory to such
Indemnified Person in the exercise of the Indemnified Person within a reasonable
time after notice of the institution of such litigation or proceeding; or (iv)
Borrower shall authorize in writing such Indemnified Person to employ separate
counsel at the expense of Borrower,
XI - 4
provided that Borrower shall not be liable for the fees, costs and expenses of
more than one separate counsel at the same time for all such Indemnified Persons
in connection with the same action and any separate but substantially similar or
related action in the same jurisdiction. Borrower shall not consent to the entry
of any judgment or enter into any settlement in any such litigation or
proceeding unless such judgment or settlement includes as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Person of a
release from all liability in respect to such claim or litigation.
The agreements of Borrower in the Article 11.3 shall be in addition to
any liability that Borrower may otherwise have and shall be continuing and
survive the repayment of the GDB Loan. All amounts due under this Article 11.3
shall be payable as incurred upon written demand therefor, and shall be
guaranteed by the Security.
11.4 Damage or Destruction.
(a) In case of a Casualty, the Borrower will immediately give
notice thereof to Lender generally describing the nature and extent of such
Casualty and setting forth the Borrower's best estimate of the cost of
Restoration and the Borrower shall, at its sole cost and expense, promptly
commence and diligently complete or cause to be commenced and diligently
completed, the Restoration in a good and workmanlike manner and in compliance
with all Legal Requirements.
(b) Lender shall be entitled to receive all insurance proceeds
payable on account of a Casualty. The Borrower hereby irrevocably assigns,
transfer and sets over to Lender all rights of the Borrower to any such
proceeds, award or payment and irrevocably
XI - 5
authorizes and empowers Lender, in the name of the Borrower or otherwise, to
file for and prosecute in its own name what would otherwise be the Borrower's
claim for any such proceeds. Notwithstanding the foregoing, so long as no
Default or Termination Payments (as the term is defined in the Collateral Pledge
Agreements of even date between Borrower, AFICA and the Bank) Event of Default
shall have occurred and shall then be continuing and provided the Borrower
promptly files all claims and diligently prosecutes same, the Borrower shall
have the right to file, adjust, settle and prosecute any claim for such
proceeds; provided that the Borrower shall not agree to any adjustment or
settlement of any such claim payable with respect to a Major Casualty without
Lender's prior written consent. The Borrower shall pay promptly after demand all
costs and expenses (including, without limitation, attorneys' fees and expenses)
incurred by Lender in connection with a Casualty and the seeking and obtaining
of any insurance proceeds, award or payment with respect thereto.
(c) In the event of a Major Casualty, the Net Proceeds shall be
held, at Lender's option, by Lender as additional collateral for the Note and
shall be applied or dealt with by Lender as follows:
(i) if the Release Conditions (as hereinafter defined)
are satisfied, all Net Proceeds shall be made available to the Borrower to be
applied towards the cost of the Restoration in accordance with paragraph (e) of
this Article 11.4; and
(ii) if the Release Conditions are not satisfied, all Net
Proceeds shall be applied in accordance with Article 11.6 hereof.
XI - 6
(d) In case of a Major Casualty, all Net Proceeds shall be
applied as provided in clause (i) of paragraph (c) of this Article 11.4 if all
of the following conditions are satisfied or otherwise waived by the Lender
(collectively, the "Release Conditions"):
(i) no Default or Termination Payments Event of Default
shall have occurred and be continuing;
(ii) the Borrower shall have delivered to Lender within
thirty (30) days after the occurrence of the Major Casualty, a notice of the
Borrower's desire to undertake the Restoration of the Project;
(iii) the Borrower shall have demonstrated to the
satisfaction of Lender that the Restoration of the Project can be completed at
least six months prior to the then current due date of the Term Loan;
(iv) the Borrower shall have demonstrated to the
satisfaction of Lender that sufficient funds are available to the Borrower
through revenues and/or business interruption insurance maintained pursuant to
Article 8.15 hereof, and/or a cash deposit, letter or credit or similar
cash-equivalent security (which in the case of a letter of credit or similar
cash-equivalent security shall be satisfactory to Lender as to form, content,
and issuer) and which shall be for the benefit of Lender, to pay all amounts
estimated to be paid with respect to the GDB Loan, and all other estimated
operating expenses with respect to the Project during the period estimated by
the Borrower and approved by Lender as necessary for the completion of the
Restoration;
(v) in the event that the estimated cost of Restoration
is greater than 25% of the full replacement cost of the Project (as specified in
the Borrower's Casualty
XI - 7
Insurance Policy), Borrower shall have provided Lender with a guaranty of
completion of the Restoration satisfactory to Lender as to form, content and
guarantor which, among other things, ensures that sufficient funds are and will
be available to complete the Restoration; and
(vi) to the extent, in Lender's judgment, that the Net
Proceeds are insufficient to pay the costs of the Restoration, the Borrower
shall have provided Lender with a cash deposit, letter of credit, or similar
cash-equivalent security in the amount of such deficiency (which in the case of
a letter of credit or similar cash-equivalent security shall be satisfactory to
Lender as to form, content and issuer).
(e) Provided that no Default or Termination Payments Event of
Default shall have occurred and be continuing, then, upon the occurrence of a
partial destruction of the Project that does not constitute a Major Casualty or
upon the occurrence of a Major Casualty in connection with which the Release
Conditions have been met, the Net Proceeds shall be paid over to the Borrower
for the Restoration of the Project. The Net Proceeds shall be disbursed
substantially in accordance with the requirements of Article 7 of this Agreement
such that the Net Proceeds shall be advanced in the same manner and subject to
the same conditions as the disbursements of the proceeds of the GDB Loan.
Notwithstanding the foregoing, after the Date of Substantial Completion, the Net
Proceeds from a Casualty that does not constitute a Major Casualty shall be paid
over to the Borrower for the Restoration of the Project without any requirement
that the Borrower comply with the provisions of Article 7 of this Agreement.
(f) All costs and expenses incurred by Lender in connection with
making the Net Proceeds or Net Restoration Awards available for the Restoration
(including, without
XI - 8
limitation, attorneys' fees and expenses and fees and expenses of the Bank's
Consultant) shall be paid by the Borrower. Any Net Proceeds or Net Restoration
Awards remaining after the Restoration and the payment in full of all costs
incurred in connection with the Restoration shall be applied to the repayment of
any outstanding obligations of the Borrower under the GB Loan.
11.5 Taking of the Mortgaged Property.
(a) In case of a Taking or the commencement of any proceeds or
negotiations that might result in a Taking, the Borrower immediately will give
notice thereof to Lender generally describing the nature and extent of such
Taking or the nature of such proceedings or negotiations and the nature and
extent of the Taking which might result therefrom. Lender shall be entitled
hereunder to all awards or compensation payable on account of a Taking. The
Borrower hereby irrevocably assigns, transfers and sets over to Lender all
rights of the Borrower to any such awards or compensation and irrevocably
authorizes and empowers Lender in the name of the Borrower or otherwise, to
collect and receive any such award or compensation and to file and prosecute any
and all claims for any such awards or compensation. Notwithstanding the
foregoing, so long as no Default or Termination Payments Event of Default shall
have occurred and shall then be continuing and provided the Borrower promptly
files and diligently prosecutes such claim or claims, the Borrower shall have
the right to prosecute and file any such claim or claims and the Borrower shall
cause any such award or compensation to be collected and promptly paid over to
Lender; provided, that, the Borrower shall not agree to or accept any ward or
compensation without Lender's prior written consent. Lender may participate in
such proceeds or negotiations, and the Borrower will deliver or cause to be
delivered to Lender all
XI - 9
instruments requested by Lender to permit such participation, provided that
Lender shall be under no obligation to question the amount of the award or
compensation. Although it is hereby expressly agreed that the same shall not be
necessary, in any event, the Borrower shall, upon demand of Lender, make,
execute and deliver any and all assignments and other instruments sufficient for
the purpose of assigning any such award or compensation to Lender, free and
clear of any encumbrances of any kind or nature whatsoever other than any junior
encumbrances arising as a result of the KGC Mortgage (as such term is defined in
the Reimbursement Agreement). The Borrower will pay promptly after demand all
costs and expenses (including, without limitation, attorneys' fees and expenses
and fees and expenses of the Bank's Consultant) incurred by Lender in connection
with any Taking and seeking and obtaining any award or payment on account
thereof.
(b) In case of a Taking such that, in Lender's judgment, the
Project can be restored substantially to its value and usefulness as it existed
prior to such Taking, then, the Borrower shall, at its sole cost and expense,
promptly commence and diligently complete the Restoration in a good and
workmanlike manner, and in compliance with all Legal Requirements.
(c) All Net Restoration Awards shall be held, at Lender's option,
by Lender as additional collateral for the Note and shall be applied or dealt
with by Lender as follows:
(i) Provided that no Default or Termination Payments
Event of Default shall have occurred and be continuing, then, in the case of a
Taking of the nature referred to in paragraph (b) of this Article 11.5 and, to
the extent necessary thereunder, if the Release Conditions are satisfied, all
Net Restoration Awards shall be applied to pay the cost of
XI - 10
Restoration of the portion of the Project remaining after such Taking, such
application to be effected substantially in the same manner as provided in
paragraph (e) of Article 11.5 hereof with respect to Net Proceeds and the
balance, if any, of such Net Restoration Awards shall be applied in the manner
set forth in Article 11.4(g) hereof.
(ii) In the case of any Taking other than a Taking of the
nature referred to in paragraph (b) of this Article 11.5, all Net Restoration
Awards actually received by the Bank shall be applied in accordance with Article
11.6 hereof.
(d) Notwithstanding anything to the contrary contained herein, in
the case of a Taking such that, in Lender's judgment, the Project is an
economically viable architectural whole notwithstanding such Taking, the
Borrower shall have no obligation to commence or complete Restoration and all
Net Restoration Awards shall be applied in the order specified in Article 11.6
hereof.
11.6 Application of Proceeds Upon Casualty or Substantial Taking . Upon
a Casualty, if the disposition of the Net Proceeds is governed by clause (ii) of
paragraph (c) of Article 11.4 hereof or upon a taking, if the disposition of the
Net Restoration Awards is governed by clause (ii) of paragraph (c) or paragraph
(d) of Article 11.5 hereof, Lender shall have the option, in Lender's sole
discretion to (a) make available the Net Proceeds or the Net Restoration Awards,
the case may be, to the Borrower for Restoration in the manner provided in
paragraph (e) of Article 11.4 hereof or (b) apply such Net Proceeds or Net
Restoration Awards to the payment of any outstanding obligations of the Borrower
under the Note.
XI - 11
If Lender shall receive and retain any Net Proceeds or Net
Restoration Awards, in trust or otherwise, the indebtedness evidenced by the
Note shall be reduced only by the amount thereof received and retained by Lender
and actually applied by Lender in reduction of the indebtedness evidenced by the
Note.
Notwithstanding anything contained in this Agreement to the
contrary, Lender shall release the proceeds of any business interruption
insurance maintained hereunder to the Borrower provided that the Borrower
satisfies the conditions set forth in Article 11.4(d)(i), (ii) and (iv) herein
and provided, further, that Lender shall retain that portion of such insurance
proceeds that Lender deems necessary to pay all amounts estimated to become
payable with respect to the Note during the period estimated by the Borrower and
approved by Lender as necessary for the completion of the Restoration, the
balance of such insurance proceeds to be released in accordance with the other
terms and conditions set forth herein, as applicable.
11.7 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the Parties with respect to the
subject matter hereof and may not be modified, altered or amended except by an
agreement in writing signed by the Borrower and the GDB.
No amendment or waiver of any provision of this Agreement, Notes
or any other Loan Document, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by GDB, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
XI - 12
11.8 Fees and Expenses. The Borrower shall pay all reasonable
out-of-pocket expenses of Lender in connection with the preparation of the Loan
Documents (including the fees and expenses of all of its counsel and consultants
retained in connection with the Loan Documents and the transactions contemplated
thereby). If, at any time or times, regardless of the existence of any Event of
Default (except with respect to paragraphs (iii) and (iv), which shall be
subject to an Event of Default having occurred and be continuing), the Lender
shall employ counsel for advice or other representation in connection with or
shall incur reasonable legal or other costs and expenses in connection with:
(i) any amendment, modification, termination or waiver, or
consent with respect to, any of the Loan Documents;
(ii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Lender, the Borrower, or any other Person) in any
way relating to the Security, any of the Loan Documents or any other
agreements to be executed or delivered in connection herewith;
(iii) any attempt to enforce any rights of GDB against the
Borrower, or any other Person, that may be obligated to the Lender by
virtue of any of the Loan Documents;
(iv) any attempt to verify, protect, collect, sell, liquidate or
otherwise dispose of the Security; then, and in any such event, the
reasonable attorneys' fees arising from such services, including those
of any appellate proceedings, and all reasonable expenses, costs,
charges and other fees incurred by such counsel in any way or respect
arising in
XI - 13
connection with or relating to any of the events or actions described in
this Section shall be payable, on demand, by the Borrower to Lender and
shall be additional Obligations secured under this Agreement and the
other Loan Documents. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: paralegal fees,
accountants' fees, court costs and expenses; court reporter fees, and
expenses for travel, paid or incurred in connection with the performance
of such legal services.
11.9 No Waiver by Lender. Lender's failure, at any time or times, to
require strict performance by the Borrower of any provisions of this Agreement
and any of the other Loan Documents shall not waive, affect or diminish any
right of the Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by the Lender of an Event of Default by the
Borrower under the Loan Documents shall not suspend, waive or affect any other
Event of Default by the Borrower under this Agreement and any of the other Loan
Documents whether the same is prior or subsequent thereto and whether the same
or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of the Borrower contained in this Agreement or
any of the other Loan Documents shall be deemed to have been suspended or
waived by the Lender, unless such suspension or waiver is by an instrument in
writing signed by an officer of the Lender and directed to the Borrower
specifying such suspension or waiver.
11.10 Remedies. Lender's rights and remedies under this Agreement shall
be cumulative and non-exclusive of any other rights and remedies which Lender
may have under
XI - 14
any other agreement, including without limitation, the Loan Documents, by
operation of law or otherwise. Recourse to the Security shall not be required.
11.11 Parties. This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, Lender's approved successors of the
Borrower, the Lender and the assigns, transferees and endorsees of the Lender.
Nothing in this Agreement or the other Loan Documents, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, any benefit or any legal or equitable right, remedy or claim under
this Agreement.
11.12 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
11.13 Authorized Signatories. Until Lender shall be notified by the
Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an authorized representative of the Borrower shall
bind the Borrower and be deemed to be the act of the Borrower affixed pursuant
to and in accordance with resolutions duly adopted by the Borrowers' authorized
representatives.
11.14 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
Parties by another, or whenever any of the Parties desires
XI - 15
to give or serve upon another any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be delivered in person with receipt
acknowledged, or telecopied and confirmed immediately in writing by a copy
mailed by registered or certified mail, return receipt requested, postage
prepaid, addressed as hereafter set forth, or mailed by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to Lender:
Governmental Development Bank for Puerto Rico
Box 42001
San Juan, Puerto Rico 00940-2001
Attention: President and Director of
Private Sector - Banking Services
With a copy to:
Melendez-Perez, Moran & Santiago
Box 19328
Santurce, Puerto Rico 00919
Attention: Ramon-Loubriel, Esq.
(b) If to Borrower:
El Conquistador Partnership L.P.
c/o Williams Hospitality Management Corp.
187 East Isla Verde Road
San Juan, Puerto Rico 00913
Attention: Mr. Hugh A. Andrews
Authorized Representative
With copy to:
Whitman & Ransom
200 Park Avenue
New York, New York 10166
Attention: Jeffrey N. Siegel, Esq.
XI - 16
and
Kumagai Caribbean, Inc.
c/o Williams Hospitality Management Corp.
187 East Isla Verde Road
San Juan, Puerto Rico 00913
Attention: Mr. Shunsuke Nakane
and
WMS Industries, Inc.
3401 North California Avenue
Chicago, Illinois 60618
Attention: Neil D. Nicastro
and
Messrs. Burton and Richard Koffman
c/o Richford American
950 Third Avenue
New York, New York 10022
11.15 Captions. The headings, captions and arrangements used herein and
in any of the Loan Documents are, unless specified otherwise, for convenience
only and shall not be deemed to limit, amplify or modify the terms of the Loan
Documents, nor affect the meaning thereof.
11.16 Exhibits and Schedules. The Preamble and all exhibits and
schedules attached hereto shall be and are hereby incorporated herein, and made
a part of this Agreement for all purposes.
11.17 Omitted.
11.18 Governing Law and Venue:
XI - 17
(a) The Loan Documents are being executed and delivered by
Borrower and Lender, and are intended to be performed, in the Commonwealth of
Puerto Rico, and (except as specifically provided otherwise in any Loan Document
or to the extent that the Laws of any other jurisdiction otherwise require) the
Laws of the Commonwealth of Puerto Rico shall govern the rights and duties of
the Parties and the validity, construction, enforcement, and interpretation of
the Loan Documents.
(b) Borrower hereby submits itself to the venue of the Superior
Court of Puerto Rico, Humacao Part, or any other court GDB may elect in any
litigation or dispute arising out of, connected with, related to or incidental
to the relationship established between Borrower and Lender in connection with
this Agreement, and whether arising in contract, tort, equity or otherwise.
11.19 Severability. If any provision of any of the Loan Documents is
held to be illegal, invalid or unenforceable under present or future Laws
effective during the term thereof, such provision shall be dully severable; the
appropriate Loan Document shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part thereof; and the
remaining provisions thereof shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance therefrom.
11.20 Entire Agreement. This Agreement embodies the entire agreement
among the Parties with respect to the subject matter hereof, supersedes all
prior agreements and understandings, if any, relating to the subject matter
hereof, and may be amended only by an instrument in writing executed jointly by
authorized Persons on behalf of each of the Borrower
XI - 18
and GDB, and supplemented only by documents delivered or to be delivered in
accordance with the express terms hereof.
11.21 Survival of Representations. All indemnities, representations and
warranties herein contained or made in writing in connection with this Agreement
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder and shall continue in full force and effect until the
Obligations shall have been paid in full. Further, as specifically provided
herein, certain indemnities, representations and warranties shall survive the
repayment of the loan, cancellation of the Notes and release of the Lender's
Lien.
11.22 GDB's Consent. Whenever under this Agreement the consent or
approval of GDB is required or necessary, GDB will diligently respond to any
request for such action, consent or approval and shall execute and deliver such
documents, instruments and agreements or give such instruction as may be
necessary to effect the terms and spirit of this agreement and the other Loan
Documents.
11.23 Reliance by Lender. The Lender may but shall be under no
obligation to rely upon the advice of its legal counsel and of the Bank's
Consultant, as well as of all other parties whose advice it obtains in
connection with all decisions made by the Lender in connection with any matters
discussed herein.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
date and year first above written.
XI - 19
EL CONQUISTADOR PARTNERSHIP, L.P. GOVERNMENT DEVELOPMENT BANK
FOR PUERTO RICO
By: WKA EL CON ASSOCIATES By: /s/
--------------------------
Its General Partner George Barr Wilson
Executive Vice President
Itself By: /s/
--------------------------
Norman Jules Menell
BY: KUMAGAI CARIBBEAN, INC.
Its General Partner
Itself By: /s/
--------------------------
Shunsuke Nakane
President
Affidavit Number:
-------------------
Sworn and subscribed to before me in San Juan, Puerto Rico, this 7th day
of February, 1991, by the above signed persons, of the personal circumstances
above mentioned and in their stated capacity and representation, personally
known to me.
/s/
---------------------------
Notary Public