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CREDIT FACILITY AGREEMENT
BY AND BETWEEN
THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO
AND
KUMAGAI CARIBBEAN, INC.
AND
WKA EL CON ASSOCIATES
DATED AS OF MAY 5, 1992
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TABLE OF CONTENTS
ARTICLE 1 INCORPORATION OF RECITALS............................................................ 3
1.1 Incorporation of Recitals................................................... 3
ARTICLE 2 DEFINITIONS.......................................................................... 4
2.1 ............................................................................ 4
"Additional Security"................................................................ 4
"Additional Security Documents"...................................................... 4
"Affiliate".......................................................................... 4
"AFICA".............................................................................. 4
"AFICA Loan Agreement"............................................................... 4
"Aggregate Revenues"................................................................. 4
"Agreement".......................................................................... 6
"AMK"................................................................................ 6
"Annual Agent's Fee"................................................................. 6
"Annual Letter of Credit Fee"........................................................ 6
"Applicable Rate".................................................................... 6
"Appraisal".......................................................................... 6
"Architects"......................................................................... 6
"Architects' Agreement".............................................................. 6
"ARPE"............................................................................... 7
"Assignment or "Assignment Agreement"................................................ 7
"Bank"............................................................................... 7
"Bank Consultant's Report"........................................................... 7
"Bank Loan Documents"................................................................ 8
"Bank's Consultant".................................................................. 8
"Basic Management Fee"............................................................... 8
"Borrowers".......................................................................... 8
"Borrowers' Share of Excess Revenues"................................................ 8
"Budget"............................................................................. 8
"Budget Line Item"................................................................... 8
"Business Day"....................................................................... 9
"Capitalized Interest"............................................................... 9
"Casino License"..................................................................... 9
"Casualty"........................................................................... 9
"Charges"............................................................................ 9
"Closing"............................................................................ 9
"Closing Date"....................................................................... 9
"Collateral"......................................................................... 9
"Commitment"......................................................................... 9
"Commonwealth".......................................................................10
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"Compensation".......................................................................10
"Completion Date"....................................................................10
"Completion Guaranty"................................................................10
"Condominium Construction Documents".................................................10
"Condominium Developer"..............................................................10
"Condominium First Mortgage Holder"..................................................10
"Condominium Lien"...................................................................11
"Condominium Parcels"................................................................11
"Condominium Revenues"...............................................................11
"Condominium Units"..................................................................12
"Construction" or "Construct"........................................................12
"Construction Documents".............................................................12
"Construction Management Agreement"..................................................12
"Construction Management Fee"........................................................13
"Construction Manager"...............................................................13
"Construction Permit"................................................................13
"Construction Schedule"..............................................................13
"Consultants and Designers"..........................................................13
"Control"............................................................................13
"Coverage Date"......................................................................13
"Date of Substantial Completion".....................................................14
"Debt Service".......................................................................14
"Debtor Relief Laws".................................................................14
"Default"............................................................................14
"Deficiency Loan"....................................................................15
"Development Fee"....................................................................15
"Disbursement".......................................................................15
"Dollars"............................................................................15
"Employees' Plan"....................................................................15
"Environmental Laws".................................................................15
"Environmental Report"...............................................................15
"ERISA"..............................................................................16
"ERISA Affiliate"....................................................................16
"Escrow Requirement".................................................................16
"Event of Default"...................................................................16
"Excess Refinancing Proceeds"........................................................16
"Excess Revenues"....................................................................16
"Existing GDB Loan"..................................................................17
"Facility"...........................................................................17
"Facility Escrow Agent"..............................................................17
"Facility Escrow Cap"................................................................17
"Facility Escrow Expiration Date"....................................................17
"Facility Mortgage on the Premises"..................................................18
"Facility-Mortgaged Properties"......................................................18
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"Facility Standstill Agreement"......................................................18
"Fair Value Contract"................................................................18
"▇▇▇▇▇▇▇ Property"...................................................................19
"Financial Information"..............................................................19
"Fiscal Quarter".....................................................................19
"Fiscal Year"........................................................................19
"GDB"................................................................................19
"GDB Escrow Agent"...................................................................19
"GDB Escrow".........................................................................20
"GDB Escrow Agreement"...............................................................20
"GDB Facility Documents".............................................................20
"GDB Facility Escrow"................................................................20
"GDB Facility Escrow Agreement"......................................................20
"GDB Facility Guaranties"............................................................20
"GDB Guaranty Mortgages".............................................................20
"GDB Guaranty Mortgage Notes"........................................................21
"GDB Loan Agreement".................................................................21
"GDB Mortgage".......................................................................21
"GDB Share of Excess Revenues".......................................................21
"GDB Standstill Agreement"...........................................................21
"General Partner"....................................................................21
"Government Authority"...............................................................22
"Gross Revenues".....................................................................22
"Ground Lease".......................................................................22
"Guaranties".........................................................................22
"Guarantors".........................................................................22
"HASN"...............................................................................22
"Hard Costs".........................................................................22
"Hazardous Material".................................................................22
"Hospitality"........................................................................22
"Improvements".......................................................................23
"Inchoate Lien"......................................................................23
"Indebtedness".......................................................................23
"Institutional First Mortgage Lien"..................................................24
"Insurance Policy"...................................................................24
"Interest Adjustment Dates"..........................................................24
"Interest Payment Date"..............................................................24
"KGC"................................................................................24
"KGCC"...............................................................................24
"Kumagai"............................................................................24
"LC Agreement".......................................................................25
"Legal Requirements".................................................................25
"Letter of Credit"...................................................................25
"LIBOR" or "LIBOR Rate"..............................................................25
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"Lien"...............................................................................26
"Loan"...............................................................................26
"Loan Documents".....................................................................26
"Major Casualty".....................................................................26
"Management Agreement"...............................................................26
"Managing Partner"...................................................................26
"Material Adverse Effect"............................................................26
"Maturity Date"......................................................................27
"Mortgage Property"..................................................................27
"Net Proceeds".......................................................................28
"Net Restoration Award"..............................................................28
"Note"...............................................................................28
"Obligation".........................................................................28
"Officer's Certificate"..............................................................28
"Operating Expenses".................................................................28
"Operative Documents"................................................................30
"Outstanding Principal Amount".......................................................30
"Palominos Island Property"..........................................................31
"Participation"......................................................................31
"Parties"............................................................................31
"Partner"............................................................................31
"Partnership"........................................................................31
"Partnership Agreement"..............................................................31
"Partnership Mortgage Note"..........................................................31
"Partnership Pledge Agreement".......................................................31
"Partnership Proceeds"...............................................................32
"Partnership Returns"................................................................32
"Party"..............................................................................33
"Permits"............................................................................33
"Permitted Indebtedness".............................................................33
"Permitted Liens and Encumbrances"...................................................34
"Person".............................................................................36
"Planning Board".....................................................................36
"Plans"..............................................................................36
"Pledge of the GDB Guaranty Mortgage Notes"..........................................36
"Pledge of the Partnership Mortgage Note"............................................36
"Pledges"............................................................................36
"Premises"...........................................................................37
"Proceeds Pledge Agreement"..........................................................37
"Project"............................................................................37
"Project Costs"......................................................................37
"Quarter"............................................................................38
"Release Conditions".................................................................38
"Reportable Event"...................................................................38
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"Request for Disbursement"...........................................................38
"Restoration"........................................................................38
"Rights".............................................................................39
"Security"...........................................................................39
"Security Documents".................................................................39
"Soft Costs".........................................................................39
"Subsidiary".........................................................................39
"Substantial Completion".............................................................39
"Survey".............................................................................40
"Taking".............................................................................40
"Taxes"..............................................................................40
"Term"...............................................................................40
"Threshold Amount"...................................................................40
"Title Insurer"......................................................................41
"Title Policy".......................................................................41
"Trade Contract".....................................................................41
"Trade Contractor"...................................................................41
"Transfer"...........................................................................41
"▇▇▇▇▇▇▇▇"...........................................................................41
"WKA"................................................................................41
"WMS El Con".........................................................................42
"WMS Industries".....................................................................42
"Work Change"........................................................................42
ARTICLE 3 AMOUNT AND TERMS OF CREDIT FACILITY..................................................42
3.1 Advances........................................................................42
3.2 Interest........................................................................42
3.3 Commitment Fee..................................................................43
3.4 Intentionally Omitted...........................................................43
3.5 Proceeds of Advances under the Facility.........................................43
3.6 Repayment of Principal..........................................................43
3.7 Mandatory Prepayment............................................................44
3.8 Optional Prepayment.............................................................45
3.9 Payments from GDB Facility Escrow...............................................45
3.10 Priority of Application of Payments to GDB......................................47
3.11 Note............................................................................47
3.12 GDB Facility Escrow.............................................................47
3.13 Maximum Interest Rate...........................................................48
ARTICLE 4 SECURITY.............................................................................48
4.1 The Security....................................................................48
4.2 Additional Security.............................................................50
4.3 Preservation of Security........................................................52
4.4 Condominium Development.........................................................53
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4.5 Recourse and Non-Recourse Obligations...........................................55
ARTICLE 5 CONDITIONS PRECEDENT.................................................................57
5.1 Conditions Precedent to Making Facility Available...............................57
(a) Title to Premises..........................................................57
(b) Payment of Fees and Expenses...............................................57
(c) Collateral.................................................................57
(d) Escrow Agreements..........................................................58
(e) Equity and Other Contributions.............................................58
(f) Financial Information......................................................58
(g) Updated Appraisals, Surveys, Etc...........................................58
(h) Budget.....................................................................58
(i) Special Report.............................................................59
(j) Insurance..................................................................59
(l) Utility Facilities.........................................................60
(m) Construction Documents.....................................................60
(n) Bonds......................................................................60
(p) Permits....................................................................61
(q) Plans......................................................................61
(r) Taxes......................................................................61
(s) Federal Taxes..............................................................61
(t) Labor Contributions........................................................62
(u) Trade Contracts............................................................62
(v) Partnership Agreement......................................................62
(w) Counsel Opinion............................................................62
(x) Intentionally Omitted......................................................62
(y) Interest on Existing GDB Loan..............................................62
(z) Bank Consent...............................................................62
(aa) Initial Disbursement.......................................................63
(bb) Certification by Bank......................................................63
(cc) Facility Standstill Agreement..............................................63
(dd) No Defaults................................................................63
(ee) Notation on Note...........................................................63
5.2 Payment of Bills................................................................64
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.......................................................64
6.1 Partnership Existence; Compliance with Law......................................64
6.2 Borrowers' Existence; Compliance with Law.......................................65
6.3 Executive Offices...............................................................66
6.4 Subsidiaries....................................................................66
6.5 Partnership Power; Authorization; Enforceable Obligations.......................66
6.6 Financial Statements............................................................68
6.7 No Litigation...................................................................68
6.8 No Defaults.....................................................................68
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6.9 Consents......................................................................69
6.10 Investment Company Act........................................................70
6.11 Margin Regulations............................................................70
6.12 Taxes.........................................................................71
6.13 Use of Facility Proceeds......................................................71
6.14 Compliance with ERISA.........................................................71
6.15 Environmental Matters.........................................................72
6.16 Condemnation..................................................................72
6.17 Labor Matters.................................................................73
6.18 Other Ventures................................................................73
6.19 No Contract Cancellations.....................................................73
6.20 Liens.........................................................................73
6.21 Sufficiency of Funds..........................................................74
6.22 Title to Property.............................................................74
6.23 Possession of Premises........................................................74
6.24 Utilities and Streets.........................................................75
6.25 General.......................................................................75
6.26 Plans; Construction...........................................................75
6.27 Intentionally Omitted.........................................................76
6.28 No Liens......................................................................76
6.29 Compliance with Building Codes, Zoning Laws, Etc..............................76
6.30 Budget........................................................................77
6.31 Security Documents and Additional Security Documents..........................77
6.32 Commissions...................................................................77
6.33 Survival of Representations and Warranties....................................77
ARTICLE 7 AFFIRMATIVE COVENANTS................................................................78
7.1 ..............................................................................78
7.1.1 Application of Loan Proceeds..................................................78
7.1.2 Books and Records.............................................................78
7.1.3 Financial Information.........................................................78
7.1.4 Construction and Development of the Project...................................79
7.1.5 Effectiveness of Permits: Approvals...........................................79
7.1.6 Access by GDB.................................................................79
7.1.7 Maintain Rights; Franchises...................................................80
7.1.8 Filing of Tax Returns.........................................................80
7.1.9 Estoppel Certificates.........................................................80
7.1.10 Insurance.....................................................................80
7.1.12 Environmental Matters.........................................................87
7.1.11 Preservation of the Properties................................................88
7.1.13 Notices.......................................................................89
7.1.14 Certification of Substantial Completion.......................................90
7.1.15 Approval of the Project.......................................................90
7.1.16 Deposit of Escrow Requirements................................................92
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7.1.17 Condominium Lien..............................................................92
7.2 Correctness of Representations;Warranties.....................................92
7.3 Maintenance of Existence and Conduct of Business..............................93
7.4 Payment of Obligations........................................................93
7.5 Agreements....................................................................94
7.6 Litigation....................................................................95
7.7 Compliance with Law...........................................................95
7.8 Supplemental Disclosure.......................................................95
7.9 Recording; Transfer Taxes and Fees............................................96
7.10 Permits and Licenses..........................................................96
7.11 Fair Value Contracts..........................................................96
7.12 Other Agreements..............................................................97
7.13 Japanese Counsel Opinion......................................................97
7.14 Federal Taxes.................................................................97
ARTICLE 8 NEGATIVE COVENANTS...................................................................97
8.1 Actions by the Borrowers or the Partnership...................................97
8.2 Actions by the Partnership...................................................101
ARTICLE 9 EVENTS OF DEFAULT, RIGHTS AND REMEDIES..............................................102
9.1 Events of Default............................................................102
9.2 Remedies.....................................................................106
9.3 Waiver of Defaults...........................................................108
9.4 Waivers by Borrowers.........................................................109
9.5 Right of Set-Off.............................................................109
9.6 Control......................................................................110
9.7 Exercise of Remedies.........................................................110
ARTICLE 10 MISCELLANEOUS.......................................................................111
10.1 No Agency Relationship.......................................................111
10.2 Liability....................................................................111
10.3 Indemnity of GDB.............................................................112
10.4 Damage or Destruction........................................................114
10.5 Taking of the Mortgaged Properties...........................................118
10.6 Application of Proceeds upon Casualty or Substantial Taking..................121
10.7 Complete Agreement, Modification of Agreement................................122
10.8 Fees and Expenses............................................................122
10.9 No Waiver by GDB.............................................................124
10.10 Remedies.....................................................................124
10.11 Parties......................................................................124
10.12 Conflict of Terms............................................................125
10.13 Authorized Signatories.......................................................125
10.14 Notices......................................................................125
10.15 Captions.....................................................................127
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10.16 Exhibits and Schedules.......................................................128
10.17 Governing Law and Venue......................................................128
10.18 Severability.................................................................128
10.19 Entire Agreement.............................................................129
10.20 Survival of Representations..................................................129
10.21 GDB Consent..................................................................129
10.22 Reliance by GDB..............................................................130
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Credit Facility Agreement (this "Agreement"), dated as of May 5, 1992
between THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO, ("GDB" or the
"Lender"), a banking institution of the Government of the Commonwealth of Puerto
Rico, created by Act 17, enacted on September 23, 1948, and KUMAGAI CARIBBEAN,
INC. (a corporation organized and existing under the laws of the State of Texas)
and WKA EL CON ASSOCIATES (a general partnership organized and existing under
the laws of the State of New York) (each, a "Borrower" and, collectively, the
"Borrowers").
W I T N E S S E T H:
WHEREAS, El Conquistador Partnership L.P. (the "Partnership") is the
owner and holder of the fee simple title ("Pleno Dominio") to the Premises, has
commenced and proposes to complete the development, construction and equipment
of a first-class destination resort hotel and related facilities to be located
in Fajardo, Puerto Rico and to be known as El Conquistador Resort and Country
Club (as more fully defined hereinafter, the "Project") and has previously
obtained financing for the Project from GDB; and
WHEREAS, each of the Borrowers is a general and limited partner of the
Partnership and collectively are the only partners of the Partnership; and
WHEREAS, the initial financing for the construction and development of
the Project consisted of $30 million of equity contributed by the Borrowers, a
$25 million loan to the Partnership from the GDB and $120,000,000 of the
proceeds from the sale of industrial revenue bonds issued by AFICA (the "Bond
Proceeds") payment of which is secured by an irrevocable
letter of credit issued by the Mitsubishi Bank Limited (the "Bank") pursuant to
the LC Agreement; and
WHEREAS, the Partnership has identified cost overruns in the Budget
which require the Partnership to provide $24 million of additional funds to the
Project as a condition to the disbursement of the $120 million of Bond Proceeds
by the Bank in accordance with the loan balancing provisions of the LC
Agreement; and
WHEREAS, in order to provide such funds the Borrowers will each provide
$8 million to the Partnership and they have requested a loan from GDB in the
principal amount of EIGHT MILLION DOLLARS (U.S. $8,000,000) (the "Facility"),
the proceeds of which will be provided by the Borrowers to the Partnership to be
used by the Partnership to pay Project Costs including, without limitation, part
of the construction cost of the Improvements and accrued and accruing interest
on the Existing GDB Loan and to satisfy the loan balancing provisions of the LC
Agreement; and
WHEREAS, GDB has agreed to make the Facility available to the Borrowers
on the terms and conditions set forth herein provided that the proceeds of the
Facility are provided to the Partnership to be used to pay Project Costs; and
WHEREAS, concurrently herewith the Borrowers will deposit their $16
million (net of amounts previously advanced by the Borrowers for Project Costs)
plus the $8 million of the proceeds of the Facility with the Bank and will
authorize the Bank to disburse such funds to the Partnership under the terms of
the LC Agreement to pay Project Costs; and
WHEREAS, as security for the repayment of the Facility, KGC, Kumagai,
WKA and WMS are furnishing to GDB payment guaranties in respect of principal
under the Facility
2
(limited, in each case, as described herein and supported, in the case of WKA,
by certain additional collateral described below); and
WHEREAS, in consideration of the Borrowers providing to the Partnership
the proceeds of the Facility, and as additional security for repayment of
interest on the Facility, the Partnership will deliver a mortgage on the
Premises; and
WHEREAS, GDB has agreed to make the Facility available to the Borrowers
on such terms with the understanding that (i) Borrowers consider the additional
financing to be provided under this Facility, together with the Bond Proceeds
and the additional $16 million in financing provided to the Partnership by the
Borrowers on the date hereof, to be sufficient to permit the completion of the
Project and (ii) neither the Borrowers nor the Partnership will make any further
request for additional funding from GDB in connection with the Project; and
WHEREAS, the parties desire to execute this Agreement to set forth the
terms and conditions of their agreement;
NOW THEREFORE, in consideration of the premises and of the mutual and
separate agreements of the Parties contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE 1
INCORPORATION OF RECITALS
1.1 Incorporation of Recitals. The foregoing preambles and all other
recitals set forth are hereby made a part of this Agreement.
3
ARTICLE 2
DEFINITIONS
2.1 As used in this Agreement, and unless otherwise expressly
indicated, or unless the context clearly requires otherwise:
"Additional Security" shall have the meaning assigned to it in
Paragraph 4.2 hereof.
"Additional Security Documents" shall mean the mortgages, liens,
assignments and other documents required to be delivered pursuant to Paragraph
4.2 hereof.
"Affiliate" shall mean, with respect to any Person, (i) any other
Person directly or indirectly Controlling, Controlled by or under common Control
with the first Person or (ii) any parent, child (including an adopted Person),
spouse, sibling or direct descendant or ancestor of such Person or any Person
described in clause (i), or (iii) any trust or other entity organized for the
benefit of the foregoing.
"AFICA" shall mean the Puerto Rico Industrial, Medical, Educational and
Environmental Pollution Control Facilities Financing Authority.
"AFICA Loan Agreement" shall mean the Loan Agreement between AFICA and
the Partnership, dated as of February 7, 1991.
"Aggregate Revenues" shall mean, for any period with respect to which
Aggregate Revenues are being determined, all revenues of any kind received,
directly or indirectly, during such period by any of the Borrowers, the
Partnership, or any of their Affiliates from the ownership, operation or sale,
as the case may be, of the Premises, the Project, the Condominium Parcels or the
Condominium Units or any interest therein or rights with respect thereto,
4
including, without limitation, room, food and beverage, and other facility
revenues, casino net wins, rents or other payments from leases and concession
agreements, annual dues for golf memberships, revenues derived from the initial
sale or resale of golf memberships, the proceeds of any rental loss or business
interruption insurance, Condominium Revenues (to the extent not already included
in the foregoing items), and, except as provided below, all revenues received
during such period by any of the Borrowers, the Partnership, or any of their
Affiliates from all other activities of the Premises, the Project, the
Condominium Parcels or the Condominium Units, less, in each case, actual refunds
made during such period to customers, guests, or patrons. Aggregate Revenues
shall not include tips, service charges added to a customer ▇▇▇▇ or statement in
lieu of gratuities which are payable to employees of the Project, the value of
complimentary rooms, food and beverages, except those purchased by the casino,
and any sales or other use or excise tax required by law to be collected with
respect to the operation of the Premises and which is actually remitted to
taxing authorities. To the extent that revenues received by any of Borrowers,
the Partnership or any of their Affiliates (a "Payee") have been (i) paid to the
Payee by another of the Borrowers, the Partnership or any of their Affiliates (a
"Payor") and (ii) already included herein as Aggregate Revenues received by the
Payor thereof, such revenues to the Payee shall not be included as Aggregate
Revenues (Except to the extent that, in the determination of Excess Revenues,
such revenues have been or are deducted from Aggregate Revenues, whether as
Operating Expenses or otherwise). Aggregate Revenues shall not include amounts
that have been paid to the Borrowers or their Affiliates by the Partnership
under Fair Value Contracts for Operating Expenses if such amounts are paid by
the Partnership out of revenues already included herein as Aggregate Revenues of
the Partnership. The receipt
5
by ▇▇▇▇▇▇▇▇ of the Basic Management Fee and the Development Fee and the receipt
by KGCC of the Construction management Fee shall not be included in Aggregate
Revenues.
"Agreement" shall mean this Credit Facility 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 it may
be in effect at the time such reference becomes operative.
"AMK" shall mean AMK Conquistador, S.E., a Puerto Rico special
partnership.
"Annual Agent's Fee" shall have the meaning assigned thereto in the LC
Agreement.
"Annual Letter of Credit Fee" shall have the meaning assigned thereto
in the LC Agreement.
"Applicable Rate" shall mean, for any period, an annual rate equal to
the LIBOR Rate for such period (expressed on an annualized basis) plus one and
seventy-five one-hundredths percentage points (1.75%). The Applicable Rate shall
be adjusted quarterly to reflect changes in LIBOR, as provided in Paragraph 3.2
hereof.
"Appraisal" shall mean, with respect to any property, an appraisal
prepared in a form and by an appraiser acceptable to GDB, conducted at the sole
cost and expense of the Borrowers (or the Partnership or an Affiliate of the
Borrowers designated by the Borrowers), setting forth a fair market value of
such property.
"Architects" shall mean Ray, ▇▇▇▇▇▇▇▇ and Associates, or any successors
engaged by the Partnership with the prior written consent of GDB.
"Architects' Agreement" shall mean those certain agreements between the
Partnership and Architects, and between the Partnership and Consultants and
Designers, relating to the
6
design of the Improvements and providing for architectural services in
connection with the Improvements.
"ARPE" shall mean the Administration of Regulations and Permits of the
Commonwealth of Puerto Rico.
"Assignment or "Assignment Agreement" shall mean any of the assignments
to be made by the Partnership in favor of GDB pursuant to Paragraphs 4.1 and 4.2
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 Consultant's Report" shall mean a report by the Bank's Consultant
relating to one or more of the following items: (i) stating whether all or any
portion of the work relating to construction has been completed in a good and
workmanlike manner, substantially in accordance with the Plans and the
Construction Schedule and in compliance with Legal Requirements; (ii) stating
whether the work which is the basis of a Request for Disbursement has been
completed within the amount allocated for such work in the Budget Line Item
therefor; (iii) stating whether the amounts available under the Bank Loan
Documents allocable to the Construction are sufficient to complete the
construction in accordance with the Plans; (iv) stating whether ownership of all
material and fixtures incorporated in the Construction and all materials stored
on-site or off-site or in fabrication which are included in any Request for
Disbursement shall vest in the Partnership immediately upon delivery thereof to
the Project; and (v) addressing such other matters as GDB may reasonably request
to be addressed therein.
7
"Bank Loan Documents" shall have the meaning assigned thereto in the
GDB Standstill Agreement.
"Bank's Consultant" shall mean ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. or such other
Person or architectural or engineering consultant as may be designated and
engaged by the Bank, at the expense of the Partnership (or an Affiliate of the
Partnership designated by the Borrowers), 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 certifications), to
make periodic inspections of the progress of the Construction on behalf of the
Bank and GDB, to advise and render reports to the Bank and GDB concerning the
foregoing and otherwise to consult with the Bank and GDB with respect to the
Project.
"Basic Management Fee" shall have the meaning assigned thereto in the
Management Agreement.
"Borrowers" shall have the meaning assigned thereto in the title of
this Agreement.
"Borrowers' Share of Excess Revenues" shall mean, for any fiscal
period, Excess Revenues, reduced by the GDB Share of Excess Revenues for such
fiscal period.
"Budget" shall mean a budget prepared by the Partnership setting forth
Project Costs in detail satisfactory to GDB (including a detailed trade
breakdown of such costs and 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.
"Budget Line Item" shall mean an item of Project Cost as identified in
the Budget.
8
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in London, England, New York, New York or San ▇▇▇▇,
Puerto Rico are authorized or required by law or executive order to close.
"Capitalized Interest" shall have the meaning assigned thereto in
Paragraph 3.2 hereof.
"Casino License" shall have the meaning assigned thereto in Paragraph
4.2.8 hereof.
"Casualty" shall mean any damage to or destruction of any of the
Mortgaged Properties or any portion thereof.
"Charges" shall mean all Taxes and all federal, state, county, city,
municipal, local, or other governmental charges, user fees and expenses, levies
and similar charges assessed by Puerto Rico or the United States and all levies,
assessments or charges, including assessments, user fees and charges or
utilities upon or relating to (i) the Project, (ii) the Security, (iii) the
Additional Security, (iv) the Partnership's withholding obligations in relation
to payroll, income or gross receipts, (v) the Partnership's ownership or use of
the Premises or (vi) any other aspect of the Partnership's businesses.
"Closing" shall mean the execution and delivery of this Agreement and
all other GDB Facility Documents, which closing shall take place at the offices
of GDB or at such other place or places as the parties may agree.
"Closing Date" shall mean May 5, 1992, by which date the Closing shall
have occurred.
"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 and the Additional Security Documents.
"Commitment" shall have the meaning assigned thereto in Paragraph 3.3
hereof.
9
"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, Partnership Returns, payments
in respect of loans made by a partner to a partnership or by a stockholder to a
corporation, 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 or such
Person.
"Completion Date" shall mean the date of Substantial Completion of the
Project, which shall occur not later than November 15, 1993.
"Completion Guaranty" shall have the meaning assigned thereto in the LC
Agreement.
"Condominium Construction Documents" shall mean all contracts and other
agreements pertaining to the development of the Condominium Parcels or the
construction or development of the Condominium Units.
"Condominium Developer" shall mean the Person that has agreed to
develop and construct the Condominium Units in accordance with the provisions of
Paragraph 4.4 hereof and Paragraph 6 of the LC Agreement.
"Condominium First Mortgage Holder" shall mean an institutional lender
(other than the Borrowers, the Partnership or any of their Affiliates) that (i)
has made a loan to develop the
10
Condominium Untis secured by a first mortgage thereon, (ii) is engaged in the
business of making such mortgage loans and (ii) is acceptable to the Bank.
"Condominium Lien" shall have the meaning assigned thereto in Paragraph
4.1.3 hereof.
"Condominium Parcels" shall mean the approximately 20-acre portion of
land shown on Exhibit "1" annexed hereto, which Condominium Parcels have been or
are to be released from the Lien of the GDB Mortgage in accordance with the
terms of the GDB Loan Agreement and from the Lien of the Facility Mortgage on
the Premises in accordance with Paragraph 4.4 hereof.
"Condominium Revenues" shall mean, with respect to any period for which
Condominium Revenues are being determined, revenues received by any of the
Borrowers, the Partnership or any of their Affiliates (except, in the case of an
Affiliate, to the extent provided in Paragraph 4.4(c) hereof) in connection with
the ownership, development, financing, construction or sale, as the case may be,
of the Condominium Parcels or the Condominium Units, including, without
limitation, revenues received from or through (i) the sale of the Condominium
Parcels or the Condominium Units or the right to develop, construct or operate
the Condominium Units or otherwise to develop or use the Condominium Parcels,
(ii) the rental of the Condominium Units, (iii) the use of any part of the
Premises by the occupants of the Condominium Units or Condominium Parcels, (iv)
the right of such occupants to use any part of the Premises or (v) any
contractual or other arrangements with respect to the Condominium Parcels or
Condominium Units, reduced (provided that the Partnership shall not be the
Condominium Developer) by reasonable expenses, to the extent incurred directly
by the Borrowers, the Partnership or any of their Affiliates, associated with
the development, financing,
11
construction or sale of the Condominium Parcels and the Condominium Units;
provided, however, that reasonable expenses associated with the development,
financing, construction or sale of the Condominium Parcels and the Condominium
Units incurred directly by any of the Borrowers, the Partnership or their
Affiliates during any prior period may be used to reduce Condominium Revenues,
to the extent not previously deducted, in any subsequent period; and provided,
further that "Condominium Revenues" shall not include revenues received by the
Condominium Developer which are used to pay any Condominium First Mortgage
Holder to satisfy the obligations of the Condominium Developer under a loan by
such Condominium First Mortgage Holder to develop the Condominium Parcels.
"Condominium Units" shall mean any residential condominium units that
may be developed and constructed 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 costs of which are included in the Budget as Hard Costs.
"Construction Documents" shall mean, collectively, the Construction
Management Agreement, the Architects' Agreements, all Trade Contracts and all
other agreements pertaining to the Construction to which any of the Borrowers,
the Partnership or any of their Affiliates is party or beneficiary.
"Construction Management Agreement" shall mean that certain agreement
between the Partnership and the Construction Manager dated as of January 12,
1990 and amended by the first amendment thereto dated as of September 30, 1990,
the second amendment thereto dated January
12
31, 1991 and any subsequent permitted amendments providing for the construction
upon the terms and conditions set forth therein.
"Construction Management Fee" shall have the meaning assigned thereto
in the Construction Management Agreement.
"Construction Manager" shall mean KGCC or any successor engaged by the
Partnership with the prior written consent of the Bank.
"Construction Permit" shall mean any authorization, consent, license,
approval or permit required by any Governmental Authority with jurisdiction over
the Project in order to carry out the construction in accordance with the
existing Plans and all Legal Requirements.
"Construction Schedule" shall have the meaning assigned thereto in
Paragraph 5.1(o) hereof.
"Consultants and Designers" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and
Associates, Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Associates, or any successors engaged by the
Partnership with the Prior written consent of GDB.
"Control" shall mean, with respect to any Person, (i) the ownership of
a majority interest (or, when used as a verb in any form, including "Controlled"
or "Controlling", to own a majority interest), whether in the form of stock,
partnership interest or otherwise, in such Person or (ii) the ability (or, when
used as a verb in any form, including "Controlled" or "Controlling", to have the
ability) otherwise to direct, determine, manage or otherwise control, directly
or indirectly, the business, operations, activities or management of such
Person.
"Coverage Date" shall have the meaning assigned thereto in the LC
Agreement.
13
"Date of Substantial Completion" shall mean the date which is 30 days
following the date upon which the Partnership first delivers to GDB evidence
satisfactory to GDB that Substantial Completion has been achieved.
"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 AFICA
Loan 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 Existing GDB Loan at the
rate provided by the GDB Loan Agreement with respect to such period, (iii)
interest paid or payable under the Facility at the rate provided herein with
respect to such period, (iv) the annual Agent's Fee and the Annual Letter of
Credit Fee paid or payable with respect to such period, (v) any fees arising in
connection with the Loan under the Bank Loan Documents or the Existing GDB Loan
which are paid or payable with respect to such period and (vi) any interest paid
or payable on Permitted Indebtedness of the Partnership to Persons other than
the Borrowers or any Affiliate of the Borrowers or the Partnership.
"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, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the Rights of creditors generally.
"Default" shall mean any event, condition or act, which, with the
giving of notice or lapse of time or both, would constitute an Event of Default.
14
"Deficiency Loan" shall have the meaning assigned thereto in the
Partnership Agreement.
"Development Fee" shall have the meaning assigned thereto in the
Management Agreement.
"Disbursement" shall mean each disbursement of all or any of the
proceeds of the Facility.
"Dollars" shall mean dollars in the lawful currency of the United
States of America.
"Employees' Plan" shall mean any multiemployer plan or single employer
plan, as defined in Section 4001 and subject to Title IV of ERISA, which is
maintained, or at any time during the five calendar years preceding the date of
this Agreement was maintained, for employees of any of the Borrowers, the
Partnership or any of their Affiliates or an ERISA Affiliate.
"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, relating to the discharge of solid waste, 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 imposed by any federal,
state or Commonwealth department of nature resources or environmental protection
agency that may now or at any time hereafter be 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 Material
evaluations, prepare at the sole cost and
15
expense of the Partnership by a certified engineering and testing company, or by
a firm of environmental consultants acceptable to GDB and the Bank.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with any of the Borrowers, the Partnership or any
of their Affiliates, would be deemed to be a "single employer" within the
meaning of Section 4001 of ERISA.
"Escrow Requirement" shall mean the funds required to be deposited in
escrow with a banking institution mutually acceptable to the Bank, the
Borrowers, the Partnership and GDB, such funds to be pledged solely for the
benefit of GDB, pursuant to the GDB Escrow Agreement and the GDB Facility Escrow
Agreement.
"Event of Default" shall have the meaning assigned thereto in Article
Nine hereof.
"Excess Refinancing Proceeds" shall mean the net amount of refinancing
proceeds available after full payment of the principal amount of the Loan and
all amounts payable to the Bank under the LC Agreement and any other amounts
required to be paid in connection therewith.
"Excess Revenues" shall mean, for any period for which Excess Revenues
are being determined, Aggregate Revenues, reduced by (a) Operating Expenses, (b)
Debt Service that is due, payable and paid; (c) amounts paid into the GDB
Escrow; and (d) amounts actually paid out for reasonably necessary capital
improvements relating to the Project not included in Operating Expenses;
provided, however, that if in any Fiscal Year the aggregate amount paid for such
capital improvements exceeds five hundred thousand Dollars ($500,000), then GDB
shall have the right to approve, for purposes of calculating Excess Revenues,
the deduction of
16
any capital expenditure for such capital improvements in excess of five hundred
thousand Dollars ($500,000) from Aggregate Revenues, which approval shall not be
unreasonably withheld and shall be granted or denied by GDB within thirty (30)
days of its receiving a request therefor. If GDB shall not have denied such
request within such thirty (30) day period, such approval shall be deemed
granted. In determining Excess Revenues, there shall in no event be any
deduction for Partnership Returns.
"Existing GDB Loan" shall mean a loan by GDB to the Partnership in the
aggregate principal amount of twenty-five million dollars (U.S. $25,000,000)
pursuant to the terms and conditions set forth in the GDB Loan Agreement.
"Facility" shall have the meaning assigned thereto in the recitals set
out at the beginning of this Agreement.
"Facility Escrow Agent" shall mean the financial institution that will,
under the terms of the GDB Facility Escrow Agreement, serve as the escrow agent
for the GDB Facility Escrow.
"Facility Escrow Cap" shall mean, as of any Interest Payment Date, the
sum of (i) accrued but unpaid interest owed by the Borrowers as of such date,
(ii) the Outstanding Principal Amount as of such date, and (iii) two times the
product of (a) one-quarter of the Applicable Rate for the fiscal Quarter ending
on such date and (b) Outstanding Principal Amount on such date.
"Facility Escrow Expiration Date" shall mean the earliest to occur of
(i) the later of (A) the Termination Date (as defined in the LC Agreement), and
(B) the date when no amounts are owing to the Bank under the LC Agreement; (ii)
commencement by the Bank of a foreclosure action with respect to the Premises or
any Security Document (as defined in the LC Agreement); (iii) an unreimbursed
drawing under the Letter of Credit (as defined in the LC Agreement) for
17
principal or any other failure to pay amounts due under the LC Agreement on or
prior to the Termination Date, which shall remain uncured for a period of 18
months following its occurrence; (iv) as to either Borrower, either (A) the
filing of a voluntary petition in bankruptcy or (B) the entry of an order for
relief or appointment of a receiver in an involuntary bankruptcy filed by a
party other than GDB; or (v) as to the Partnership, either (A) the filing of a
voluntary petition in bankruptcy or (B) the entry of an order for relief or
appointment of a receiver in an involuntary bankruptcy or similarly proceeding
filed by a party other than GDB.
"Facility Mortgage on the Premises" shall mean the mortgage, deed of
trust or similar security agreement, substantially in the form of Exhibit "2"
hereto, made or to be made by the Partnership upon the premises, to be
encumbered in favor of GDB, subject to the Facility Standstill Agreement, to
secure the obligations of the Partnership (under the Partnership Mortgage Note)
with respect to interest on the Facility, creating a third-priority Lien on the
Premises;
"Facility-Mortgaged Properties" shall mean the properties referred to
in Exhibits "3" and "4" hereto, each to be encumbered in favor of GDB to secure
the obligations of WKA with respect to principal as provided for herein and in
the Security Documents.
"Facility Standstill Agreement" shall mean the Facility Subordination
and Standstill Agreement, dated as of the date hereof, between GDB, AFICA, the
Trustee and the Bank.
"Fair Value Contract" shall mean a contract for services or for the
acquisition, lease or use of goods or merchandise reasonably necessary for the
ownership or operation of the Premises or the Project, entered into by the
Partnership and any Borrower or any Affiliate of a Borrower or the Partnership
whose terms and conditions are no less favorable to the
18
Partnership than the terms and conditions that would have been given to the
Partnership if such contract had been with an unrelated person, if payments
under such contract would constitute Operating Expenses.
"Fajardo Property" shall mean the parcel of 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 any of the GDB Facility Documents to be furnished by the Borrowers or the
Partnership to GDB, all such information prepared in accordance with generally
accepted accounting principles (GAAP) as appropriate.
"Fiscal Quarter" shall mean the three-month period that ends each March
31, June 30, September 30 and December 31 of any given Fiscal Year. Subsequent
changes of the Fiscal Year of the Partnership shall not change the term "Fiscal
Quarter", unless GDB shall have consented in writing to such changes, which
consent shall not be unreasonably withheld.
"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 the Partnership
shall not change the term "Fiscal Year", unless GDB shall have consented in
writing to such changes, which consent shall not be unreasonably withheld.
"GDB" shall mean the Government Development Bank for Puerto Rico.
"GDB Escrow Agent" shall mean the financial institution that will serve
as agent for the GDB Escrow.
19
"GDB Escrow" shall mean the escrow established pursuant to the GDB
Escrow Agreement.
"GDB Escrow Agreement" shall mean the escrow agreement under which the
Partnership will deposit funds in escrow with a banking institution mutually
acceptable to the Partnership and GDB, such funds to be pledged solely for the
benefit of GDB as provided for pursuant to Paragraph 4.3 of the GDB Loan
Agreement.
"GDB Facility Documents" shall mean this Agreement, the Note, the
Security Documents, the Additional Security Documents and any and all other
agreements, documents and instruments (other than Trade Contracts) delivered by
the Borrowers and the Partnership pursuant to the terms of this Agreement, as
hereafter renewed, amended or supplemented from time to time.
"GDB Facility Escrow" shall mean the escrow to be established pursuant
to the GDB Facility Escrow Agreement.
"GDB Facility Escrow Agreement" shall mean an escrow agreement,
substantially in the form of Exhibit "5" hereto, under which funds will be
deposited by or on behalf of the Borrowers in the GDB Facility Escrow, such
funds to be pledged solely for the benefit of GDB.
"GDB Facility Guaranties" shall mean the guaranties to be provided
pursuant to Paragraph 4.1.1 hereof.
"GDB Guaranty Mortgages" shall mean the mortgages, deeds of trust or
similar security agreements, substantially in the form of Exhibits "6" and "7"
hereto, to be encumbered in favor of GDB to secure the payment of the
obligations of WKA with respect to principal hereunder and under the guaranty
provided for in Paragraph 4.1 hereof, each creating a second-priority
20
Lien on the Facility-Mortgaged Property to which it refers, more particularly a
second mortgage in the aggregate principal amounts of $3,750 and $1,500,000
respectively, encumbering the respective Facility-Mortgaged Properties,
including all buildings, improvements and fixtures located thereon or used in
connection therewith and all buildings and improvements to be erected and
constructed thereon.
"GDB Guaranty Mortgage Notes" shall mean the mortgage notes, in the
form of Exhibits "8" and "9" hereto, secured by the GDB Guaranty Mortgages.
"GDB Loan Agreement" shall mean the Loan Agreement between GDB and the
Partnership, dated as of February 7, 1991, as amended at any time, and the Loan
Documents, as defined therein.
"GDB Mortgage" shall have the meaning assigned thereto in the GDB Loan
Agreement.
"GDB Share of Excess Revenues" shall mean, for any Fiscal Year, (i)
fifty percent (50%) of Excess Revenues for such Fiscal Year to the extent that
the sum of all Excess Revenues for such Fiscal Year is less than or equal to the
Threshold Amount and (ii) ninety percent (90%) of Excess Revenues for such
Fiscal Year to the extent that the sum of all Excess Revenues for such Fiscal
Year exceeds the Threshold Amount.
"GDB Standstill Agreement" shall mean the Subordination and Standstill
Agreement, dated as of February 7, 1991, between GDB, AFICA, the Trustee and the
Bank.
"General Partner" shall mean either Kumagai Caribbean, Inc. ("KGC") or
WKA El Con Associates ("WKA"), the sole general partners of the Partnership (KGC
and WKA together being the General Partners).
21
"Government Authority" shall mean any court, agency, authority, board
(including, without limitation, any environmental protection, planning or zoning
board), bureau, commission, department, office, branch 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 Borrowers, the Partnership or the Project.
"Gross Revenues" shall have the meaning assigned thereto in the GDB
Loan Agreement.
"Ground Lease" shall have the meaning assigned thereto in the LC
Agreement.
"Guaranties" shall mean the GDB Facility Guaranties and the completion
Guaranties.
"Guarantors" shall mean, Kumagai, KGC, WKA and WMS Industries.
"HASN" shall mean HASN, Inc., a Puerto Rico corporation.
"Hard Costs" shall mean 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.
"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 a 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 Investment Group, S.E., a Puerto
Rico special partnership.
22
"Improvements" shall mean the destination resort hotel and related
resort facilities 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 suare feet of retail space, and an approximately 10,000
square-foot casino, a marina, approximately 100,000 square feet of swimming
pools and water features, an 18-hole golf course, an approximately 40,000
square-foot clubhouse and spa facility, eight tennis courts, water sports
facilities on the Palominos Island Property and related amenities and
facilities.
"Inchoate Lien" shall mean (i) any Lien for Charges not yet due and
payable or (ii) any mechanic's Lien or materialmen's Lien for services or
materials (A) for which payment is not yet due or (B) which is being contested
in good faith by appropriate proceedings, so long as no imminent risk of sale or
forfeiture of any interest in the Mortgaged Properties or any part thereof
arises during the pendency of such 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 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 for
borrowed money or for notes, bonds, debentures and other debt securities; (b)
indebtedness represented by the deferred purchase price of property or services;
(c) rentals payable under any lease of real or personal property which shall
have been, or should, under generally accepted accounting principles, be
23
classified as a capital lease; (d) obligations under direct or indirect
guarantees in respect of, and obligations (contingent or otherwise) 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; (e) liabilities in respect of unfunded vested benefits
under, or withdrawal liability in respect of, plans covered by Title IV of
ERISA; and (f) all obligating in the nature of Charges.
"Institutional First Mortgage Lien" shall mean a Lien on the
Condominium Parcels or the Condominium Units granted by the Partnership to a
Condominium first Mortgage Holder in connection with a loan, the proceeds of
which are used to finance the development, construction and operation of the
Condominium Parcels and the Condominium Units.
"Insurance Policy" shall mean any of the policies of insurance required
to be maintained pursuant to Paragraph 7.1.10 hereof.
"Interest Adjustment Dates" shall mean each January 1, April 1, July 1
and October 1 until the Facility is repaid in full.
"Interest Payment Date" shall mean any date on which interest is
payable under Paragraph 3.2 (including any such date on which interest would
become payable but for the deferral provisions thereof).
"KGC" shall mean Kumagai Caribbean, Inc., a Texas corporation.
"KGCC" shall mean KG (Caribbean) Corporation, a Texas corporation.
"Kumagai" shall mean Kumagai Gumi Co., Ltd. a Japanese corporation.
24
"LC Agreement" shall mean the Letter of Credit and Reimbursement
Agreement between the Partnership and the bank, dated as of February 7, 1991 and
the amendment thereto of even date herewith.
"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
the Borrowers, the partnership 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 and regulation relating to
the Project, or any portion thereof, or to the ownership, use, occupancy,
possession, operation or maintenance thereof.
"Letter of Credit" shall have the meaning assigned thereto in the LC
Agreement.
"LIBOR" or "LIBOR Rate" shall mean the ninety (90) day offered rate, as
quoted by Telerate Systems, Inc. (currently on page 3750 of the financial
information reporting services furnished electronically by Telerate Systems,
Inc.) at approximately 11:00 a.m., London time, on each Interest Adjustment Date
for Dollar deposits of immediately available funds to leading banks in the
London interbank market or, if such offered rate is not so quoted on any
Interest
25
Adjustment Date, LIBOR shall mean the corresponding offered rate quoted at the
close of business on the Business Day next preceding such Interest Adjustment
Date by Telerate Systems, Inc. or such other source of reliable financial
information as GDB shall in its discretion select.
"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
or lease, which under applicable law is deemed to create a lien, security
interest or the equivalent.
"Loan" shall mean the loan made to the Partnership pursuant to the
AFICA Loan Agreement.
"Loan Documents" shall mean the bank Loan Documents
"Major Casualty" shall mean a Casualty, the Restoration of which is
reasonably estimated to cost more than $1,000,000.
"Management Agreement" shall mean that certain agreement between
▇▇▇▇▇▇▇▇ and the Partnership dated as of January 12, 1990, as amended by the
first amendment thereto dated as of September 30,1990, and the second amendment
thereto dated as of January 31, 1991, pursuant to which ▇▇▇▇▇▇▇▇ shall operate
the Project.
"Managing Partner" shall mean the Partner designated to manage and
control the business affairs of the Partnership pursuant to Section 4.02 of the
Partnership Agreement.
"Material Adverse Effect" shall mean, with respect to any set of
circumstance or events, that such set of circumstances or events, alone or in
the aggregate, (a) has or could reasonably
26
be expected to have a material adverse effect upon the validity or
enforceability of, or the authority or ability of the Borrowers, the Guarantors
or the Partnership to perform, their respective obligating under this Agreement,
any material Operative Document (other than the GDB Loan Agreement, as to which
the provisions thereof shall apply), any material Project Document or any
material Construction Document to which the Borrowers, or the Partnership or any
of their Affiliates is a party; (b) has or could reasonably be expected to have
a material adverse effect on the properties (including, without limitation, the
Project), business, condition (financial or otherwise) or results of the
operations of any of the Borrowers, the Guarantors or the Partnership, each
taken as a whole; (c) has or could reasonably be expected to have a material
adverse effect on the transactions contemplated by this Agreement, any Operative
Document (other than the GDB Loan Agreement, as to which the provisions thereof
shall apply), any Project Document or any Construction Document to which any of
the Borrowers or the Partnership is a party; (d) results or could reasonably be
expected to result in losses or damages of $500,000 or more; or (e) causes or
could reasonably be expected to cause an Event of Default.
"Maturity Date" shall mean the tenth anniversary of the Closing Date or
such earlier date as GDB shall declare the entire principal sum due and payable
in the exercise of its Rights under Article Nine hereof.
"Mortgage Property" shall mean the Facility-Mortgaged Properties and
the Premises and all rights, interest and improvements appurtenant thereto
encumbered by Liens provided for hereunder, including under the Security
Documents and Additional Security Documents.
27
"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 GDB's costs and expenses
(including, without limitation, attorneys' fees and expenses), if any, in
collecting such proceeds.
"Net Restoration Award" shall mean the amount of all awards and
payments received from a condemnor on account of a Taking, after deduction of
GDB's costs and expenses (including, without limitation, attorneys' fees and
expenses), if any, in collecting such awards and payments.
"Note" shall mean a secured promissory note, substantially in the form
of Exhibit "10" hereto, issued by KGC and WKA to GDB evidencing the Borrowers'
Indebtedness under the Facility.
"Obligation" shall mean all present and future Indebtedness,
obligations and liabilities, and all renewals and extensions thereof, or any
part thereof, now or hereafter owed to the Bank or GDB by any of the Borrowers
arising from, by virtue of, or pursuant to the Bank Loan Documents, the GDB Loan
Agreement or any of the GDB Facility Documents, 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 Partnership in connection with the ownership and operation of the Premises
for such period, including, without
28
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; and reasonable expenses paid to a person other
than a Partner, the Partnership or any of their Affiliates that are directly
related to the sale of initial golf club memberships and similar memberships,
even if such expenses are incurred prior to the Date of Substantial Completion.
To the extent not already included herein, Operating Expenses shall, for the
purposes of the definition of Excess Revenues, include reasonable expenses of
the type described in the preceding sentence incurred by any of the Borrowers or
their Affiliates (other than the Partnership) directly related to the generation
of revenues that are included in the definition of, and counted for purposes of
this Agreement as Aggregate Revenues; provided, however, that such Operating
Expenses shall not include any amounts paid for general overhead or general
operating expenses that exceed a reasonable allocation of such overhead or
expenses to the generation of such Aggregate Revenues; and provided, further,
that the amount of such Operating Expenses shall not include any expenses
associated with the development, financing,
29
construction or sale of Condominium Parcels and the Condominium Units to the
extent already deducted in the calculation of Condominium Revenues; and
provided, further, that the amount of such Operating Expenses shall be limited,
in the case of any such Borrower or Affiliate, to the amount of revenues of such
Borrowers or Affiliate, as the case may be, derived from such Operating Expenses
and actually included in the definition of Aggregate Revenues for such Fiscal
Year, and that GDB shall have the right to inspect the books and records of such
Borrower or Affiliate with respect to such Revenues and Operating Expenses to
confirm the amounts of such Operating Expenses and Aggregate Revenues. Operating
Expenses shall not include Debt Service or Incentive Management Fees under the
Management Agreement.
"Operative Documents" shall mean the GDB Facility Documents, the GDB
Loan Agreement, the LC Agreement, The Letter of Credit, the Trust Agreement, the
AFICA Loan Agreement, the Note, the Security Documents, the Additional Security
Documents, the Bond Purchase Agreement, the GDB Standstill Agreement, the
Facility Standstill Agreement, the Four Party Agreement, the Management
Subordination Agreement, the Construction Manager Consent and Agreement, the
Architect's Letter, the Official Statement, the GDB Investment Agreement, the
Bond Swap Agreement, the Termination Payment Guaranty and the Bond Pledge
Agreement. Each capitalized term in this paragraph not otherwise defined herein
shall have the meaning assigned thereto in the Bank Loan Documents.
"Outstanding Principal Amount" shall mean the total amount of all
advances disbursed under the Facility, increase, from time to time, by the total
amount of unpaid interest under the Facility that is capitalized and added to
principal pursuant to Paragraph 3.2 hereof and reduced, from time to time, by
any repayments of principal or Capitalized Interest made by Borrowers
30
directly to GDB pursuant to Paragraphs 3.6 or 3.8 hereof. Any reduction in the
Outstanding Principal Amount resuling from repayment directly to GDB shall be
applied in the order specified in Paragraph 3.10. Amounts deposited in the GDB
Facility Escrow shall not be deemed paid for purposes of determining the
Oustanding Principal Amount until withdrawn from the GDB Facility Escrow and
paid directly to GDB, as provided in Paragraph 3.9(b).
"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, more particularly described in the GDB Loan Agreement.
"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 Borrowers and GDB.
"Partner" shall mean (i) any of the General Partners of the Partnership
or (ii) any other partner of the Partnership.
"Partnership" shall mean El Conquistador Partnership L.P., a limited
partnership organized and existing under the laws of the State of Delaware.
"Partnership Agreement" shall mean that certain agreement among the
Partners, dated February 7, 1991, as amended by the first amendment thereto,
dated April 30, 1992.
"Partnership Mortgage Note" shall mean the mortgage note, in the form
of Exhibit "12" hereto, secured by the GDB Facility Mortgage on the Premises.
"Partnership Pledge Agreement" shall mean a pledge agreement,
substantially in the form of Exhibit "14" hereto, executed by the Partnership
and pledging to GDB the Partnership
31
Mortgage Note and the Facility Mortgage on the Premises to secure the payment of
interest under the GDB Facility Documents.
"Partnership Proceeds" shall mean any issues, income, profits, avails
or other proceeds from the Project or the Partnership in which any Partner or
any Affiliate of any Partner or the Partnership has any interest whatsoever,
such Partnership Proceeds to include, without limitation, any Condominium
Revenues, any Partnership Returns (not including payments on loans by
third-party lenders other than the Partners or any Affiliate of the Partners or
the Partnership), any notes or receivables payable by the Partnership, or any
claims or other rights of any such Person against the Partnership or in any of
the documents, instruments, reports and agreements of any nature whatsoever
listed in Paragraph 4.2.4 hereof; provided, however, that Partnership Proceeds
shall not include (i) the Development Fee and the Basic Management Fee and
reimbursable expenses under the Management Agreement; (ii) the Construction
Management Fee and reimbursable expenses under the Construction management
Agreement; (iii) the Borrowers' Share of Excess Revenues and (iv) payments under
Fair Value Contracts in respect of Operating Expenses. The Borrowers' ownership
interests in the Partnership are not to be construed as Partnership Proceeds
hereunder.
"Partnership Returns" shall mean (i) any payment of principal or
interest on any Deficiency Loans (as defined in the Partnership Agreement) or on
any working capital or other loans to the Partnership from any Partner or any
Affiliate of any Partner or the partnership, (ii) any distributions by or on
behalf of the Partnership of profits or capital, including, without limitation,
dividends and withdrawals of profits, to or for the benefit of any Partner or
any Affiliate of any Partner or (iii) payments by or on behalf of the
Partnership of any amounts to
32
any partner or to any Affiliate of a Partner or the Partnership as a lender to
the Partnership (regardless of whether the Indebtedness to such Lender is
Permitted Indebtedness) or (iv) any other payments or transfers of property
directly or indirectly to or for the benefit of any Partner or any Affiliate of
any Partner or the Partnership (other than the Basic Management Fee and the
Development Fee and reimbursable expenses under the Management Agreement and the
Construction Management Fee and reimbursable expenses under the Construction
Management Agreement and payments under Fair Value Contracts in respect of
Operating Expenses).
"Party" shall mean either of the Borrowers or GDB.
"Permits" shall mean, collectively, (i) all Construction Permits and
(ii) all applicable authorizations, consents, licenses, approvals and permits of
Government Authorities (A) for operation of the Project, including, without
limitation, all applicable authorizations and licenses relating to sales of
liquor and operation of the casino and other facilities comprising the
Improvements; and (B) for the performance and observance of all agreements,
provisions and conditions herein contained.
"Permitted Indebtedness" shall mean with respect to the Borrowers, any
Indebtedness incurred for fair consideration, and, with respect to the
Partnership or any of its Subsidiaries (i) Indebtedness contemplated by the
Budget, the LC Agreement and the GDB Loan Agreement; (ii) accounts payable and
accrued liabilities prudently incurred in the ordinary course of business in the
development and operation of the Project; provided, however, that no Event of
Default has occurred or would occur as a result of such Indebtedness; or (iii)
Indebtedness that consists of the obligation of the Partnership or any of its
Subsidiaries to repay any loan from any of the Borrowers or their Affiliates;
provided, however, that (A) such Indebtedness is junior, subject
33
and subordinate in all respects to the Obligations owed by the Partnership to
GDB under the Facility, and the maker of such loan shall not and may not,
without the prior written consent of GDB in each instance, which consent may be
withheld by GDB in its sole and absolute discretion, exercise any rights or
remedies as a result of a default of the Partnership or any of its Subsidiaries;
and (B) such Indebtedness of the Partnership or any of its Subsidiaries shall be
evidenced by a promissory note of the Partnership or such Subsidiary pledged and
assigned to the benefit of GDB pursuant to the Proceeds Pledge Agreement or (iv)
for purposes of Article Eight, the Incentive Management Fee (as defined in the
Management Agreement) and Indebtedness to the Partners (other than loans)
arising under the Partnership Agreement.
"Permitted Liens and Encumbrances" shall mean:
(a) The Liens in favor of GDB set forth in the Security
Documents and the Additional Security Documents.
(b) Liens arising out of judgments or awards with respect to
which the Borrowers or the Partnership shall in good faith be prosecuting an
appeal or proceedings for review and in respect of which the aforesaid shall
have set aside on its books reserves which GDB deems adequate with respect to
each such judgment or award, so long as no imminent risk of sale or forfeiture
of any interest in the Mortgaged Properties or any part thereof arises during
the pendency of such appeal or proceeding.
(c) Liens for any charges, if payments of such Charges shall
not at the time be required to be made under the AFICA Loan Agreement or any
other Operative Document.
(d) Inchoate Liens.
34
(e) Existing easements, rights of way and servitudes on the
Mortgaged Properties as of the Closing Date, including such easements, rights of
way and servitudes as are listed in the Title Policy, and such future easements,
rights of way and servitudes as GDB shall approve as to the Mortgaged
Properties.
(f) Liens on personal property to be acquired by the
Partnership, whether by sale or lease, subsequent to the commencement of hotel
operations by the Partnership and which do not replace the originally
contemplated furniture and fixtures or equipment to be acquired for such
operations, or to secure financing from sources other than GDB in accordance
with and to the extent permitted in this Agreement.
(g) Deposits and similar payments incurred in the ordinary
course of the partnership's business.
(h) Liens created pursuant to the Bank Loan Documents or the
GDB Loan Agreement.
(i) Liens created pursuant to the Partnership Agreement,
provided that any such Lien shall be junior, subject and subordinate in all
respects to the Obligations owed to GDB.
(j) The fourth-priority mortgage lien on the Premises in favor
of KGC.
(k) The necessary easements, rights of way, and servitudes 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.
35
"Person" shall mean an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Planning Board" shall mean the "Junta de Planificacion" of the
Commonwealth of Puerto Rico.
"Plans" shall mean the plans, drawings and specifications of the
construction of the Improvements, including, without limitation, the
architectural, structural, mechanical and electrical plans and specifications
therefor prepared or to be prepared by the Partnership, the Architects and the
partnership'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 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.
"Pledge of the GDB Guaranty Mortgage Notes" shall mean the pledge by
the Borrowers to GDB of the GDB Guaranty Mortgage Notes pursuant to the
execution and delivery by the Parties of a pledge agreement substantially in the
form of Exhibit "13" hereto.
"Pledge of the Partnership Mortgage Note" shall mean the pledge by the
Partnership to GDB of the Partnership Mortgage Note pursuant to the execution
and delivery by the Parties of a pledge agreement substantially in the form of
Exhibit "14" hereto.
"Pledges" shall mean the Pledge of the GDB Guaranty Mortgage Notes and
the Pledge of the Partnership Mortgage Note.
36
"Premises" shall mean that certain real estate more fully described in
Exhibit "15" (attached hereto and incorporated by reference herein), comprising
Borrower's fee simple title to the ▇▇▇▇▇▇▇ Property, including the Condominium
Parcels and the Condominium Units and excluding the leasehold estate in the
Palominos Island Property; provided, however, that such portion of the
Condominium Parcels and Condominium Units as is released from the Facility
Mortgage on the Premises in accordance with Paragraph 4.4 hereof shall, upon
such release, be excluded from the definition of Premises for purposes of
Articles Six, Seven and Eight, but not for purposes of any other provision of
this Agreement (including, without limitation, the definitions).
"Proceeds Pledge Agreement" shall mean the pledge or assignment
agreement, substantially in the form of Exhibit "16" hereto, to be executed by
each of the Partners in accordance with Paragraph hereof.
"Project" shall mean, collectively, the acquisition of the ▇▇▇▇▇▇▇
Property, the leasing as tenant of the Palominos Island Property and the
renovation, development, construction, furnishing and equipping of the Premises
and the Improvements.
"Project Costs" shall mean any item of cost and expense arising out of
or necessary for the acquisition and development of the Project and the
Construction, 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.
37
"Quarter" shall mean a period of time that (i) begins each January 1,
April 1, July 1 and October 1 and (ii) ends each March 31, June 30, September 30
and December 31, respectively, or, in the case of the period next preceding the
Maturity Date, ends on the Maturity Date.
"Release Conditions" shall have the meaning ascribed thereto in
Paragraph 10.4 hereof.
"Reportable Event" shall have the meaning assigned thereto in Title IV
of ERISA.
"Request for Disbursement" shall have the meaning assigned thereto in
the LC Agreement.
"Restoration" shall mean, in case of a Casualty or Taking, (i) with
respect to the Premises, 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 were made in compliance with the GDB Mortgage, the Facility
Mortgage on the Premises, the GDB Loan Agreement 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 Premises which
was the subject of such Taking, such restoration, replacement or rebuilding as
shall, when such restoration, replacement or rebuilding is completed, render the
Project an integral unit similar in condition, character and scope to the
Project prior to such Casualty or Taking and (ii) with respect to any other
property, the restoration, replacement or rebuilding of such property to a
similar condition, character and use as that in existence prior to such Casualty
or Taking. For Restoration to have taken place pursuant to the preceding
sentence, the value of the Project or other property, when so restored,
38
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 principal
indebtedness evidenced by the Note, the GDB Notes (as such term is defined in
the GDB Loan Agreement), the Bank Loan documents, or the first mortgages on such
other property, shall be equal to or greater than the value and usefulness of
the Project or such other property, as the case may be, immediately prior to
such Casualty or Taking.
"Rights" shall mean rights, remedies, powers and privileges.
"Security" shall have the meaning assigned to it in Paragraph 4.1
hereof.
"Security Documents" shall mean the Pledges, the Proceeds Pledge
Agreement, the Partnership Pledge Agreement, the GDB Facility Mortgages, the GDB
Guaranty Mortgages, the Note, the partnership Mortgage Notes, the GDB Guaranty
Mortgage Notes, the Assignments, the GDB Facility Guaranties, and the Title
Policy.
"Soft Costs" shall mean, collectively, all costs set forth in the
Budget, excluding Hard Costs.
"Subsidiary" 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 such Person.
"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 applicable use or occupancy permits therefor
satisfactory to GDB and the Bank; and (ii) the delivery to GDB and the Bank of
certificates, in form and content satisfactory to GDB and the Bank, from the
Partnership, the Architects and
39
the Bank's Consultant to the effect that all of the work required to be
performed to complete the Improvements in accordance with all Legal Requirements
and in accordance with the Plans has been substantially performed.
"Survey" shall mean a survey of the Mortgaged Properties prepared
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 GDB.
"Taking" shall mean 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, rule, regulation or court.
"Term" shall shall mean that period from and including the Closing Date
through the Maturity Date.
"Threshold Amount" shall mean, for any Fiscal Year, two million five
hundred thousand Dollars ($2,500,000).
40
"Title Insurer" shall mean The American Title Insurance Company or any
other issuer, approved by GDB, of the title insurance policy insuring GDB as
holder of the Facility Mortgage on the Premises and the GDB Guaranty Mortgages.
"Title Policy" shall mean the title insurance policy issued by the
Title Insurer insuring GDB as holder of the GDB Facility Mortgages and the GDB
Guaranty Mortgages.
"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 LC Agreement, which contract shall
require the Trade Contractor to name GDB as an additional named insured 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 of the Premises or any
portion thereof except any sale or transfer of the Condominium Parcels or the
Condominium Units in accordance with Paragraph 4.4 hereof or (ii) any transfer
of any direct or indirect equity interest in any of the Borrowers, the
Partnership or the Guarantors, including, without limitation, any sale or
transfer of a direct or indirect equity interest in the constituent Partners of
the Borrowers or Kumagai.
"▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇▇ Hospitality Management Corporation, a
Delaware corporation.
"WKA" shall mean WKA El Con Corp., a Delaware corporation.
41
"WMS El Con" shall mean WMS El Con Corp., 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
AMOUNT AND TERMS OF CREDIT FACILITY
3.1 Advances. Subject to the terms and conditions hereof, and relying
on the representations, covenants, and warranties of the Borrowers contained
herein, GDB agrees to make available to the Borrowers a credit facility and to
advance to the Borrowers on the Closing Date monies from such facility in a
non-revolving line of credit of EIGHT MILLION DOLLARS (U.S. $8,000,000) for the
purpose of providing the proceeds thereof to the Partnership in order to finance
part of the Project Costs including accrued and accruing interest on the
Existing GDB Loan from time to time during the period commencing on the date of
this Agreement to and including the Completion Date.
3.2 Interest. The loan made by GDB to Borrowers hereunder shall be
evidenced by the Note, and shall bear interest at the Applicable Rate. The
Applicable Rate shall be adjusted quarterly on each Interest Adjustment Date to
reflect any change in LIBOR as of such date, and such adjustment in the
Applicable Rate shall become effective on such date. Except as otherwise
provided herein, such interest accrued during any Quarter shall be payable on
the first day of the following Quarter and shall be computed on the Outstanding
Principal Amount on the basis
42
of a year of three hundred sixty (360) days and for the number of actual days
elapsed; provided, however, that, during the first sixty (60) months following
the Closing Date, payment of accrued interest shall be deferred, and all such
amounts ("Capitalized Interest") of deferred interest (i) shall, on the date
they otherwise would have become due and payable but for such deferral, be
capitalized and added to the Outstanding Principal Amount; and (ii) shall be
repaid in accordance with the provisions of Paragraph 3.6 and 3.7 hereof.
3.3 Commitment Fee. In consideration of the commitment of GDB to make
the Facility available to Borrowers (the "Commitment"), Borrowers have agreed to
pay to the GDB a commitment fee equal to EIGHTY THOUSAND DOLLARS ($80,000,00)
(the "Commitment Fee"), in accordance with the terms of a commitment letter
dated March 20, 1992 which fee shall not be reimbursable to Borrowers, in whole
or in part, under any circumstance whatsoever.
3.4 Intentionally Omitted.
3.5 Proceeds of Advances under the Facility. The proceeds of advances
under the Facility shall, immediately on the Closing Date, be placed on deposit
with the Bank for the purpose of being provided to the Partnership pursuant to
an irrevocable direction by the Borrowers to the Bank to disburse such proceeds
to the Partnership to pay Project Costs subject to and in accordance with the LC
Agreement. Such proceeds shall be used solely for the payment of Project Costs
(as such costs are incurred in accordance with the Budget and the Construction
Schedule) including payment of accrued and accruing interest under the Existing
GDB Loan.
3.6 Repayment of Principal. Except as otherwise provided herein, the
Borrowers shall repay, on each Interest Payment Date occurring on or after March
31, 2000 an amount of
43
principal equal to two hundred fifty thousand Dollars ($250,000) (each such
payment, a "Scheduled Principal Payment"), as follows:
(i) for any Interest Payment Date prior to and including the
Facility Escrow Expiration Date, such Scheduled Principal Payment shall, subject
to Paragraph 3.7(b), be deposited into the GDB Facility Escrow; and
(ii) for any Interest Payment Date after the Facility Escrow
Expiration Date, such Scheduled Principal Payment shall be paid directly to GDB
until payment in full of the amounts due to GDB under the Facility.
3.7 Mandatory Prepayment.
(a) If there are any Excess Revenues in any Fiscal Year,
Borrowers shall pay, or shall cause the Partnership to pay, the GDB Share of
Excess Revenues on the date that is thirty (30) days after the due date for
delivery to the Bank of audited financial statements of the Partnership pursuant
to Paragraph 7(g) of the LC Agreement demonstrating to the Bank the existence
and amount of Distributable Cash (as such term is defined in the Partnership
Agreement) for such Fiscal Year, as follows:
(i) the GDB Share of Excess Revenues shall, to the
extent of any (A) accrued but unpaid interest hereunder plus (B) Capitalized
Interest hereunder, be paid directly to GDB; and
(ii) any remaining GDB Share of Excess Revenues after
payment of the amount provided for in subparagraph (a)(i) of this Paragraph 3.7
shall (A) subject to the provisions of Paragraph 3.7(b) hereof, on any date
prior to and including the Facility Escrow Expiration Date, be deposited into
the GDB Facility Escrow and (B) on any date after the
44
Facility Escrow Expiration Date, be paid directly to GDB until payment in full
of amounts due GDB under the Facility.
(b) On any Interest Payment Date prior to and including the
Facility Escrow Expiration Date, Borrower shall not be required to make the
deposit required under Paragraph 3.6 (i) or subparagraph (a)(ii)(A) of this
Paragraph 3.7 to the extent that, on such date, such deposit would cause the
amount in the GDB Facility Escrow to exceed the Facility Escrow Cap as of such
date.
(c) Upon any refinancing of the Partnership's Loan under the
Bank Loan Documents, if any Excess Refinancing Proceeds shall remain after
repayment of the Existing GDB Loan pursuant to Paragraph 4.2(e) of the GDB Loan
Agreement and payment to the Bank of any amounts owed to it, Borrowers shall
cause GDB to be repaid the Obligations under the GDB Facility Documents in whole
or in part from and to the extent of such remaining Excess Refinancing Proceeds.
3.8 Optional Prepayment. Upon at least ten (10) days' prior written
notice to GDB, the Borrowers or the Guarantors may, if all accrued interest,
including Capitalized Interest, has been paid, use any funds not derived from
the Project or the operation thereof to prepay or cause to be prepaid, directly
to GDB, outstanding principal under the Facility, in whole or in part, at any
time.
3.9 Payments from GDB Facility Escrow. Amounts in the GDB Facility
Escrow shall be paid as follows:
(a) if, on any Interest Payment Date, the Bank has not
notified GDB that the Partnership has failed to pay all interest and other fees
due under the Bank Loan Documents on
45
a current basis through and including the 15th day prior to such Interest
Payment Date, an amount shall be paid directly to GDB from the GDB Escrow
Account, on such Interest Payment Date, which is equal to, if any, the sum of
(i) accrued but unpaid interest and (ii) Capitalized Interest hereunder;
(b) any amounts remaining in the GDB Facility Escrow Account
on the Facility Escrow Expiration Date shall be paid directly to GDB on such
date to the extent of Borrowers' then-outstanding Obligations to the GDB under
the GDB Facility Documents' provided, however, that, in the event that the
Facility Escrow Expiration Date occurs as to one Borrower and not the other as a
result of the application of clause (iv) of the definition thereof, GDB shall be
paid directly on such date any amount in the GDB Facility Escrow to the extent
of such Borrower's remaining Obligations, as limited in accordance with
Paragraph 4.5 hereof (with any remaining amounts to remain subject to this
Paragraph 3.9 in respect of any other remaining Obligations hereunder); and
(c) in the event that amounts on deposit in the GDB Facility
Escrow shall exceed the Facility Escrow Cap as a result of a payment received by
GDB in respect of principal or capitalized interest, such excess amounts shall
be released to the Borrowers, which hereby irrevocably direct that such excess
amounts shall be released to the Partnership; provided, however, that such
excess amounts shall be considered Partnership Returns and shall be subject to
the limitations thereupon hereunder. Any amounts remaining in the GDB Facility
Escrow after GDB has received payment in full of the Borrowers' obligations
hereunder shall be released to the Borrowers.
46
3.10 Priority of Application of Payments to GDB. All amounts
paid directly to GDB in accordance with Paragraphs 3.6, 3.7 and 3.8 hereof shall
be applied first to accrued but unpaid interest, second to Capitalized Interest
and third to any remaining Outstanding Principal Amount. Amounts deposited in
the GDB Facility Escrow shall not be deemed paid until paid directly to GDB
pursuant to Paragraphs 3.9(a) or 3.9(b).
3.11 Note. The Facility shall be evidenced by and repaid in
accordance with the Note. The Note shall include on its reverse side notations
evidencing (i) the amount of accrued interest capitalized and added to such
principal amount pursuant to Paragraph hereof; and (ii) the amount by which the
Outstanding Principal Amount has been reduced pursuant to Paragraph 3.6 or
Paragraph 3.7 hereof.
3.12 GDB Facility Escrow. Borrowers shall execute a GDB
Facility Escrow Agreement substantially in the form of Exhibit "5" attached
hereto and shall cause the Partnership to deposit with the Facility Escrow Agent
the amounts to be paid into the GDB Facility Escrow in accordance with
Paragraphs 3.6 and 3.7 hereof. Amounts held in the GDB Facility Escrow may be
invested as directed by GDB in investments in accordance with Paragraph 2.6 of
the GDB Escrow Agreement, and earnings therefrom shall remain on deposit in the
GDB Escrow and shall be withdrawn in accordance with the terms thereof. If the
GDB Facility Escrow Agreement actually executed by the Facility Escrow Agent
does not contain all of the terms and conditions of the form of GDB Facility
Escrow Agreement attached hereto as Exhibit 5, then all of the terms and
conditions in such Exhibit 5 shall be deemed incorporated herein by reference
and made part hereof, and each of the Borrowers and GDB agrees to act, with
respect to the GDB Facility Escrow, in accordance with those terms. Each of the
47
Borrowers and GDB shall instruct the Facility Escrow Agent to act, deal with the
GDB Facility Escrow and make deposits thereto and withdrawals therefrom in
accordance with the terms of said Exhibit 5 hereto.
3.13 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
in excess thereof shall be charged, and, in the event it should be determined
that any excess over such highest lawful rate has been charged or received, GDB
shall promptly refund such excess to the Borrowers or the Partnership; provided,
however, that, if lawful, any such excess shall be paid by the Borrowers or the
Partnership to GDB 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.
ARTICLE 4
SECURITY
4.1 The Security. As Security for the Facility and the performance and
observance of the covenants, agreements and other obligations of the Borrowers
under the GDB Facility Documents, the Borrowers shall deliver or shall cause the
Partnership to deliver to GDB, in form and substance acceptable to GDB, the
following collateral (the "Security"):
4.1.1 (i) guaranties from Kumagai and KGC in respect of a
portion of the principal under the Facility, each in the form of Exhibit "19"
hereto; (ii) a guaranty from WKA in respect of a portion of the principal under
the Facility in the form of Exhibit "20" hereto; (iii)
48
the GDB Guaranty Mortgages; and (iv) a guaranty from WMS Industries in respect
of a portion of the principal under the Facility in the form of Exhibit "21"
hereto;
4.1.2 The Pledge of the GDB Guaranty Mortgage Notes, secured
by the GDB Guaranty Mortgages, to secure payment of the Note;
4.1.3 To the extent that any of the Borrowers, the Partnership
or any of their Affiliates have any interest in any such property or asset: (i)
a valid lien and mortgage on any assets connected or associated with the Project
that are released from the lien and mortgage of the Bank under the Bank Loan
Documents; provided, however, that, without prejudice to GDB's rights under
Paragraph 4.5 of the GDB Loan Agreement, any such lien and mortgage granted to
GDB in respect of the Condominium Parcels or Condominium Units shall be limited
to the Lien described in clause (v) below in the event that the Bank has
released its lien on the Condominium Parcels pursuant to Paragraph 6 of the LC
Agreement; (ii) a valid assignment, to the extent permitted by law, of (a) all
Condominium Construction Documents, consulting contracts, payment and
performance bonds, plans and specifications, warranties and Permits for or
related to the Condominium Parcels or the Condominium Units, together with such
consents by any contractors, architects, surveyors, appraisers and other
entities and persons as are necessary to perfect such assignment, (B) all
operating licenses, permits, accreditations, approvals and rights granted to the
Condominium Parcels or the Condominium Units, or to any of the Borrowers, the
Partnership or any of their Affiliates in connection with or related to the
Condominium Parcels or the Condominium Units; (C) all surveys and development
plans relating to the Condominium Parcels or the Condominium Units, and (D) all
other contracts and contract rights, options, agreements, deposits, leases,
concessions, and any and all other rights or
49
privileges of any of the Borrowers, the Partnership or any of their Affiliates,
tangible or intangible, in connection with, arising from or related to the
construction, development or operation of Condominium Parcels or the Condominium
Units; (iii) valid and perfected personal property mortgages in all personal
properties, including all vehicles, furniture, fixtures, furnishings,
appliances, machinery, equipment, with all replacements, accessories, parts and
tools, now owned or hereafter acquired for or at the Condominium Parcels or the
Condominium Units, which are not covered by the GDB Facility Mortgages; (iv) a
valid and perfected assignment of all space leases, concessions, agreements and
any other agreement relating to the Condominium Parcels or the Condominium
Units; and (v) a valid lien in the form of Exhibit "22" hereto (the "Condominium
Lien") on proceeds from the development, financing, sale or rental, or otherwise
derived from any of the assets and properties listed in clauses (i) through (iv)
of this Paragraph 4.1.3, including, without limitation, Condominium Revenues;
4.1.4 The Proceeds Pledge Agreement, executed by each of the
Partners, ▇▇▇▇▇▇▇▇, AMK, Hospitality, WMS El Con and HASN pledging to GDB a
valid lien on and assignment of all interests of such partner in Partnership
Proceeds as collateral for certain of the obligations of the Borrowers under the
GDB Facility Documents and subordinating claims of such Partner against the
Partnership in any obligation payable to GDB under any of the GDB Facility
Documents; and a valid assignment of the GDB Facility Escrow Agreement.
4.2 Additional Security. As additional assurance for the payment of
interest (including Capitalized Interest) on the Note and the performance of
certain of their obligations hereunder, Borrowers shall deliver, or cause the
Partnership to deliver to GDB, in form and
50
substance acceptable to GDB, the following collateral (the "Additional
Security") in accordance with the terms hereof:
4.2.1 The Partnership Pledge Agreement;
4.2.2 The Pledge of the Partnership Mortgage Note, secured by
the GDB Facility Mortgage on the Premises, to secure payment of interest on the
Note;
4.2.3 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";
4.2.4 The valid Assignment, to the extent permitted by law, of
(i) all Construction Documents, payment and performance bonds, Plans, warranties
and Permits 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 assignments; (ii) the Surveys and (iii) all other
contracts and contract rights, options, agreements, deposits, leases,
concessions, and any and all other rights or privileges of the Partnership,
tangible or intangible, in connection with, arising from or related to the
Premises or their operation;
4.2.5 The valid and perfected Assignment of all space leases,
concessions, agreements and any other agreement relating to the Premises;
4.2.6 The valid Assignment by the Partnership, as continuing
collateral security, of the benefit of all the Insurance Policies or the
appropriate mortgagee endorsements for such polices as may be approved by GDB;
4.2.7 The valid Assignment, as continuing collateral security,
of the Partnership's interest in the Management Agreement;
51
4.2.8 An assignment as collateral security, if and to the
extent permitted by law, of all rights of the Partnership under any license
required for the operation of the casino (each, a "Casino License"), and any
other Permit required for the operation of the Project, provided that the
Partnership shall commit as a binding obligation under the Facility to use its
best efforts, as necessary or required, to secure any consent of any Government
Authority to effect the assignment of any Casino License or any other license or
Permit to GDB or its subsequent transfer or issuance to GDB upon the occurrence
of an Event of Default, all pursuant to, and if and to the extent permitted by,
the Laws of Puerto Rico;
4.2.9 Such other Security Documents or Additional Security as
Borrowers may hereafter be bound to execute and deliver or cause to be executed
and delivered to GDB under the terms of this Agreement or the Partnership Pledge
Agreement.
All of the above Additional Security shall be
subordinated under the Facility Standstill Agreement to the Bank Loan Documents
and shall be next in priority after the existing Liens in favor of GDB.
4.3 Preservation of Security. The Borrowers shall take, and shall cause
the Partnership to take, all action necessary to protect and preserve the
Security and the Additional Security, including, without limitation, (i) the
proper filing or recording of the GDB Facility Mortgages, the GDB Guaranty
Mortgages, the Assignments executed or to be executed by Borrower as Security or
Additional Security for the Facility, and the guaranties to be provided pursuant
to Paragraph 4.1.1 hereof, the Pledge of the GDB Guaranty Mortgage Notes to be
provided pursuant to Paragraph 4.1.2 hereof, the liens, mortgages and
assignments to be provided pursuant to Paragraph 4.1.3 hereof and the Proceeds
Pledge Agreement to be provided
52
pursuant to Paragraph 4.1.4 hereof as Security or Additional Security for the
Facility; (ii) at GDB's request, the extension of the Lien of the GDB Facility
Mortgages to cover future personal property of any of the Borrowers or the
Partnership, including vehicles, equipment and machinery to be placed or used in
connection with or in any way forming part of the Premises; (iii) the proper
filing of the said Proceeds Pledge Agreement, GDB Facility Mortgages and GDB
Guaranty Mortgages for recording in the corresponding section of the Property
Registry of Puerto Rico or the Department of Transportation and Public Works of
Puerto Rico, as applicable; and (iv) the execution and proper filing of such
other agreements and documents that GDB may request from time to time to protect
its Liens and other interests hereunder.
4.4 Condominium Development.
(a) In the event that (i) a Condominium Developer has agreed
to develop the Condominium Units and (ii) the Bank, pursuant to Paragraph 6 of
the LC Agreement, has consented to the release of its lien on a portion of the
Premises to permit such development, GDB agrees that, at the Borrowers' request,
it will release the Condominium Units and the portion of the Condominium Parcels
to be so developed from the Facility Mortgage on the Premises if GDB shall have
approved the terms and conditions of the plan of development proposed by the
Condominium Developer in accordance with subparagraph 4.4(b) hereof.
(b) If the Borrowers seek the release of the Lien of the
Facility Mortgage on the Premises pursuant to subparagraph 4.4(a) the Borrowers
shall provide to GDB, together with such request, a detailed plan setting forth
(i) the terms and conditions upon which such development shall occur, (ii) the
basis upon which revenues and expenses relating to such development will be
shared by the Condominium Developer, the owners of any interest in such
53
Condominium Developer, the Borrowers, the Partnership and any of their
Affiliates and (iii) such other information as may be reasonably necessary to
ascertain whether the development arrangements reflect an arm's-length
relationship among the Condominium Developer, the owners of any interests in the
Condominium Developer, the Borrowers, the Partnership and any of their
Affiliates and adequately protects GDB's Lien on the Condominium Proceeds under
the Condominium Lien. GDB agrees to review such requests and related information
promptly, and shall notify Borrowers, within 30 days of receipt of such request,
whether it approves of the terms and conditions of the plan of development,
which approval shall not be unreasonably withheld. Such requests shall be deemed
approved by GDB if not disapproved within such 30 day period.
(c) Notwithstanding subparagraphs 4.4(a) and 4.4(b) hereof,
(i) any consideration of any nature whatsoever, whether fixed or contingent,
received, directly or indirectly, by any of the Borrowers, the Partnership or
any of their Affiliates in connection with a transfer of the Condominium Parcels
or any portion thereof to a Condominium Developer shall be subject to the
condominium Lien and treated hereunder as Condominium Revenues and (ii) to the
extent that any of the Borrowers, the partnership or any of their Affiliates has
any remaining interest, whether direct or indirect, fixed or contingent, in the
Condominium Parcels, the Condominium Units or the Condominium Developer after
such transfer, such interest shall remain subject to the Condominium Lien;
provided, however, that Condominium Revenues shall exclude, and GDB shall have
no Lien on, that proportion of the revenues received by the Condominium
Developer in excess of the proportionate ownership interest of any of the
54
Borrowers, the Partnership or any of their Affiliates in the revenues and
profits of the Condominium Developer.
4.5 Recourse and Non-Recourse Obligations.
(a) The obligations of the Borrowers under the GDB Facility
Documents for the payment of principal (other than Capitalized Interest) and
Paragraphs 7.1.12 and 7.1.16 hereof shall be with full recourse to and payable
from all properties and assets of both of the Borrowers; provided, however, that
the respective obligation of each Borrower with respect to repayment of
principal (other than Capitalized Interest) shall be limited to the lesser of
one half the Outstanding Principal Amount (other than Capitalized Interest) not
yet directly paid to GDB and four million Dollars ($4,000,000).
(b) the obligations of the Borrowers under the GDB Facility
Documents shall, with respect to interest under the Facility, including
Capitalized Interest, and obligations under Paragraphs 10.4 and 10.5 hereof, be
non-recourse to the Borrowers, payable solely from the assets (other than the
Guaranties or the GDB Guaranty Mortgages) that secure or guaranty the Facility.
Obligations of the Borrowers other than those identified in Paragraph 4.5 (a)
above and this Paragraph (b) shall be non-recourse to the Borrowers.
(c) Notwithstanding subparagraphs (a) and (b) of this
Paragraph 4.5, and subject to the provisions of the GDB Standstill Agreement
with respect to the Subordinate Loan Documents (as defined therein) and subject
to the provisions of the Facility Standstill Agreement with respect to the
Additional Subordinate Loan Documents (as defined therein), nothing in this
Agreement or any of the other GDB Facility Documents shall (i) limit, prevent,
prejudice or impair GDB's Rights to (A) recover damages, expenses or costs
(including, without limitation,
55
reasonable attorneys' fees and disbursements) incurred by GDB as a result of
fraud by any of the Borrowers, the Partnership or any of their Affiliates
against the party committing such fraud, (B) recover any condemnation or
insurance proceeds paid to any of the Borrowers, the Partnership or any of their
Affiliates and not paid over to GDB to the extent required by the GDB Facility
Documents, (C) recover any revenues, including without limitation Aggregate
Revenues, from any of the Mortgaged Properties received or accrued after the
occurrence of an Event of Default, to the extent such revenues have not been
applied to pay Operating Expenses, insurance premiums or charges, or Debt
Service or other sums due and payable to GDB, (D) recover any tenant security
deposits or tenant rental or other payments or charges collected by any of the
Borrowers, the Partnership or any of their Affiliates or the agent of any of
them in advance and not transferred to GDB upon foreclosure, (E) recover against
any assets pledged under Paragraph 4.1.3 or 4.1.4 hereof, (F) name the
Borrowers, the Partnership or any of their Affiliates as a party defendant in
any action or suit for judicial foreclosures and sale under any of the GDB
Facility Documents or (G) obtain the appointment of a receiver; (ii) affect the
validity or the enforceability of any of the GDB Facility Documents; (iii) be
deemed to be a waiver of any right which GDB may have under any Debtor Relief
Laws; or (iv) be deemed to impair the validity of the Obligations.
(d) At any given time, GDB shall not be entitled to receive or
recover from or under, as the case may be, each of (i) WKA (whether as Borrower
or Guarantor), the GDB Guaranty Mortgages and the GDB Facility Guaranty executed
by WMS, collectively and (ii) KGC (whether as Borrower or Guarantor) and the GDB
Facility Guaranty executed by Kumagai, collectively, with respect to principal
(excluding Capitalized Interest) under the Agreement or
56
the Note, an aggregate amount greater than the lesser of the Outstanding
Principal Amount or $4,000,000.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Making Facility Available. The obligation
of GDB to make the Facility available to Borrowers is subject to the following
conditions precedent, which shall be satisfied on or before the Closing Date in
form and substance satisfactory to GDB:
(a) Title to Premises: GDB shall have received evidence
satisfactory to GDB that the Partnership has acquired and continues to hold a
fee simple, good, valid, recordable and insurable title to the Premises (except
for the Palominos Island Property, in which the Partnership holds a leasehold
estate) and that ▇▇▇▇▇▇▇ de Puerto Rico Association, Inc. and ▇▇▇▇▇▇▇▇ hold fee
simple, good, valid recordable and insurable title to the Facility-Mortgaged
Properties, subject, in each case, only to Permitted Liens and Encumbrances.
(b) Payment of Fees and Expenses: Borrowers shall have paid
GDB the Commitment Fee and shall have paid GDB for all fees and expenses
reimbursable by the Borrowers up to the Closing Date.
(c) Collateral: Borrowers shall have delivered or shall have
caused the Partnership to deliver to GDB (i) the Security Documents, (ii) the
Additional Security Documents, and (iii) all other documents required under the
terms of the Security Documents and the Additional Security Documents, each
valid, binding and enforceable in accordance with its respective terms.
57
(d) Escrow Agreements: GDB shall have received (i) a valid,
executed Escrow Agreement; and (ii) a valid, executed GDB Facility Escrow
Agreement in accordance with Paragraph 3.12 hereof.
(e) Equity and Other Contributions: GDB shall have received
evidence that Borrowers shall have invested or provided for the investment in
the Project (i) the Borrowers' equity contribution of thirty million Dollars
(U.S. $30,000,000) made in accordance with the requirements of the Existing GDB
Loan Agreement; (ii) an additional equity contribution of sixteen million
Dollars (U.S. $16,000,000), net of the Initial Disbursement (as defined in the
LC Agreement); and (iii) a subordinated loan in the amount of eight million
Dollars ($8,000,000), representing the proceeds of amounts advanced to the
Borrowers hereunder, in the case of items (ii) and (iii) to be deposited with
the Bank and disbursed for the payment of Project Costs subject to and in
accordance with the terms and provisions of the LC Agreement.
(f) Financial Information: GDB shall have received the most
recent audited and a current unaudited balance sheet of each of (i) the
Borrowers, the Partnership and every Subsidiary of any of them and (ii) the
Guarantors, certified in each case by the chief financial officer of the
Borrower, the Partnership or the Subsidiary to which such balance sheet relates.
(g) Updated Appraisals, Surveys, Etc.: GDB shall have received
such Appraisals, Surveys, Environmental Reports, and title insurance policies
regarding the Mortgaged Properties, each updated or made current, in a form
acceptable to GDB, as of the Closing Date, as GDB shall, in its reasonable
discretion, deem necessary.
(h) Budget: GDB shall have received a Budget for the Project
which shall be current as of the Closing Date.
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(i) Special Report: GDB shall have received a Bank
Consultant's Report, which shall be current as of the Closing Date hereof,
satisfactory to GDB in form and content, setting forth (i) that 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) that the necessary approval of the
Environmental Impact Statement for the Project as currently proposed to be
completed has been obtained from the Environmental Quality Control Board, as
well as any necessary approvals of the site and master development plan for the
Project from the Planning Board; (iii) that the Project as shown by the existing
Plans will comply with applicable zoning ordinances and regulations; (iv) that
all Permits necessary or appropriate for the Construction and development and
operation of the Project have been obtained; (v) that all existing and proposed
roads and utilities necessary for the full utilization of the Project are or
will be provided pursuant to the Plans; (vi) the adequacy of the amounts set
forth in the Budget for the Construction and for the activities and operations
intended to be covered by Soft Costs; (vii) its approval of a soil report;
(viii) the adequacy of the funds provided under the Facility, together with the
General Partners' additional $16 million equity contribution, to permit
completion and operation of the Project without giving rise to a default under
the payment terms of any financing agreement or other indebtedness relating to
the Project and without the need for additional funding in the future; and (ix)
such other reasonable matters that GDB may require.
(j) Insurance: GDB shall have received evidence of and
certificates naming GDB as additional insured under the Insurance Policies,
together with evidence of the payment
59
of the premiums therefor insuring the Project (except for such portions as are
not yet in existence).
(k) Contractor's Insurance: GDB shall have received current
certificates from the insurance carrier for the general contractor or
contractors (and, if the Partnership is not adequately insured therein, from the
Partnership's insurance carrier) evidencing workmen's compensation, disability
and liability insurance (including contractual liability) carried during the
course of construction, naming GDB as an additional insured, with liability
insurance limits for death of or injury to persons, satisfactory to GDB.
(l) Utility Facilities: GDB shall have received 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, electric power supply, telephone services, fire protection,
means of ingress and egress to and from the Premises and public highways and
other required public utilities.
(m) Construction Documents: GDB shall have received executed
copies of all Construction Documents for the Project, as in effect as of the
Closing Date, including contracts, subcontracts, and purchase orders for all
fixtures and equipment to be installed as required for the operation of the
Project.
(n) Bonds: GDB shall have received 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 GDB as co-obligee and issued by insurance companies
acceptable to GDB.
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(o) Construction Schedule: GDB shall have received 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 (the "Construction
Schedule"), which Construction schedule shall be current as of the Closing Date.
(p) Permits: GDB shall have received two photocopies of each
Construction Permit, and any other Permits required as of the Closing Date,
complete in all respects, subject to pending appeals or rights of appeal.
(q) Plans: GDB shall have received (i) current detailed Plans
for the Project, as approved, consistent with preliminary plans, if any,
satisfactory to GDB, including all changes to the date of delivery to GDB
thereof, together with a certificate of the Architects containing a detailed
listing of said Plans; (ii) a statement that said Plans comply fully with all
applicable Legal Requirements; and (iii) a statement that said Plans are
complete in all respects, containing all requisite detail such that the
Improvements, when built in accordance therewith, shall be ready for occupancy.
(r) Taxes: GDB shall have received evidence of payment of real
estate taxes on the Premises and each of the Facility-Mortgaged Properties for
the last five (5) years and the current fiscal year, to the extent required to
have been paid.
(s) Federal Taxes: GDB shall have received a 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 any of the Borrowers, the
Partnership or any of their Affiliates, and that no federal tax lien against any
of the Borrowers, or the Partnership or any of their Affiliates is
61
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.
(t) Labor Contributions: GDB shall have received a certificate
from the Secretary of Labor of the Commonwealth of Puerto Rico evidencing that
there is no liability for contributions owing by any of the Borrowers or the
Partnership under the provisions of the Employment Security Act of 1956, as
amended.
(u) Trade Contracts. GDB shall have received evidence
satisfactory to GDB that at least seventy-five percent (75%) of the Trade
Contracts shall have been executed.
(v) Partnership Agreement: the Partnership Agreement, as
amended.
(w) Counsel Opinion: GDB shall have received the favorable
written opinion of counsel to the Borrowers, of counsel to the Partnership and
of counsel to the Guarantors, each dated the date of this Agreement, and in form
and substance satisfactory to GDB and its counsel, with respect to such matters
as GDB may reasonably require.
(x) Intentionally Omitted.
(y) Interest on Existing GDB Loan. GDB shall have received
evidence satisfactory to GDB (i) that funds for the payment of interest on the
Existing GDB Loan will be allocated as part of a Budget Line Item for
construction period interest and fees to the Bank and (ii) that there will be no
reallocation out of this Budget Line Item prior to the Date of Substantial
Completion.
(z) Bank Consent: The Bank shall have consented in writing to
the terms of the GDB Facility Documents and the performance by each of the
parties thereto of its obligations thereunder and shall have provided written
assurances reasonably acceptable to GDB
62
that GDB will be permitted to participate in the procedures for disbursement of
the entire Project funding, provided, however, that such participation by GDB in
the disbursement of the Project funding shall not be construed to give GDB any
right of approval or disapproval with respect to any disbursement of such funds.
(aa) Initial Disbursement: The Bank shall have certified that
the conditions to Initial Disbursement under the LC Agreement have been
satisfied or waived and shall otherwise have consented to such Initial
Disbursement and to the GDB Facility Documents.
(bb) Certification by Bank: The Bank shall have certified that
no default or event of default under the Bank Loan Documents or the AFICA Loan
Agreement (other than any default or event of default that has been waived) has
occurred and is continuing.
(cc) Facility Standstill Agreement: The Bank shall have
executed the Facility Standstill Agreement attached hereto as Exhibit "23".
(dd) No Defaults: On the Closing Date the representations and
warranties contained in Article Six of this Agreement shall be true and correct
in all material respects on and as of such date; and on 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.
(ee) Notation on Note: GDB shall have received, in form and
substance satisfactory to GDB, a notation on the reverse side of the Note,
executed by a person properly authorized to execute such notation on behalf of
Borrowers, in accordance with Paragraph 3.4 hereof.
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5.2 Payment of Bills. Borrowers agree that they shall cause the
Partnership to permit the Bank's Consultant to inspect the periodic progress of
the Construction of the Project, and agree that the Partnership (or an Affiliate
of the Partnership designated by the Borrowers) shall be responsible for the
cost thereof. In addition GDB 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 Borrowers of the current and full
payment of bills for all labor rendered and materials furnished relating to the
Construction, but GDB shall not be required to ascertain that any bills are
paid. The authority herein conferred upon GDB, and any action taken by GDB in
making inspections of the Project, will be taken by GDB on its behalf for its
own protection only (and shall not be deemed to grant to GDB any right to delay
the making of any disbursement by the Bank under the Bank Loan Documents), and
GDB shall not be deemed to have assumed any responsibility to the Borrowers or
the Partnership with respect to any such action herein authorized or taken by
GDB or with respect to proper Construction, performance of any Trade Contract,
or prevention of claims for mechanic's Liens.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
As an inducement to GDB to provide the Facility to Borrowers, Borrowers
represent and warrant to GDB that:
6.1 Partnership Existence; Compliance with Law. The Partnership (i) is
a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Delaware and duly qualified to do business in and
within the Commonwealth of Puerto Rico, the latter being the only jurisdiction
in which the Partnership owns real property or conducts
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business, (ii) has all necessary power and authority to own, pledge, mortgage or
otherwise encumber and operate its properties, and to conduct its business as
presently or heretofore conducted or proposed to be conducted; (iii) possesses
(or will possess when required) all permits necessary or desirable for the
conduct of its business as it exists at any time and has made or will have made,
when required, all filings with, and has given or will have given, when
required, any notice to, any and all Governmental Authorities requiring such
notice or filing (except for such licenses, permits, consents or approvals, the
absence of which, and such filings and notices which, if not made or given,
would not reasonably be expected to have a Material Adverse Effect); (iv) is in
compliance with the 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 the Partnership,
those relating to Environmental Laws where the failure to comply would have a
Material Adverse Effect.
6.2 Borrowers' Existence; Compliance with Law.
(a) KGC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas and duly qualified to do
business in and within the Commonwealth of Puerto Rico, the latter being the
only jurisdiction in which KGC owns real property or conducts business, and WKA
is a general partnership duly organized, validly existing and in good standing
under the laws of the State of New York and duly qualified to do business in and
within the Commonwealth of Puerto Rico, the latter being the only jurisdiction
in which WKA owns real property or conducts business.
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(b) Each of KGC and WKA has all necessary power and authority
to pledge, mortgage or otherwise encumber and operate its properties, and to
conduct its business as presently or heretofore conducted or proposed to be
conducted.
(c) Each of KGC and WKA possesses (or will possess when
required) all licenses, permits, consents or approvals necessary or desirable
for the conduct of its business as it exists at any time and has made or will
have made, when required, all filings with, and has given or will have given,
when required, any notice to, any and all Government Authorities requiring such
notice or filing (except for such licenses, permits, consents or approvals, the
absence of which, and such filings and notices which, if not made or given,
would not reasonably be expected to have a Material Adverse Effect).
(d) Each of KGC and WKA is in compliance with the Partnership
Agreement.
(e) Each of KGC and WKA is, as of the date hereof, in material
compliance with all applicable provisions of law, including, without limitation,
Environmental Laws, except as disclosed in the Environmental Report and approval
by GDB.
6.3 Executive Offices. The location of the chief executive offices of
the Borrowers and the Partnership is at the respective address for each, as
shown in Paragraph 10.14 hereof. The Borrowers will give GDB prior written
notice of any relocation of such offices.
6.4 Subsidiaries. There exist no Subsidiaries of any of the Borrowers
(other than the Partnership) or the Partnership.
6.5 Partnership Power; Authorization; Enforceable Obligations. With
respect to the assets encumbered by the Security and the Additional Security,
(i) WKA or an Affiliate of WKS
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that has executed a GDB Guaranty Mortgage is the sole owner of each of the
Facility-Mortgaged Properties, as more fully provided in the guaranty executed
by WKA in accordance with Paragraph 4.1.1 hereof; (ii) the Borrowers have the
right to receive and, as of the date hereof, are the sole owners of the
Partnership Proceeds (iii) as of the date hereof, the Partnership is, and
hereafter, except as provided in Paragraphs 4.1.3 and 4.4 hereof, the
Partnership will be, the sole owner of all of the other assets encumbered by the
Security and the Additional Security, in each case free from any adverse lien,
security interest or adverse claim of any kind whatsoever, except the Permitted
Liens and Encumbrances, and each of the Borrowers and the Partnership has the
corporate or partnership power and authority to enter into and perform its
obligations under this Agreement, all other Operative Documents (other than the
GDB Loan Agreement, as to which the provisions thereof shall apply) and the
Construction Documents to which it is a party; each of the Operative Documents
(other than the GDB Loan Agreement, as to which the provisions thereof shall
apply) and the Construction Documents to which any of the Borrowers or the
Partnership is a party has been or will be when entered into, duly executed and
delivered on behalf of each of the Borrowers or the Partnership, as the case may
be, and authorized by all necessary corporate or partnership action, as the case
may be, of Borrowers or the Partnership; and the Operative Documents (other than
the GDB Loan Agreement, as to which the provisions thereof shall apply) and the
Construction Documents to which the Borrowers or the Partnership is a party are,
or will be when executed or issued, legal, valid, binding and enforceable
obligations of the Borrowers or the Partnership, as the case may be, enforceable
in accordance with their respective terms.
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6.6 Financial Statements. Each of the financial statements of the
Borrowers and the Partnership previously delivered to GDB fairly presents the
financial position of the Person to which such financial statement relates as of
the date thereof and the results of operations and changes in financial position
of the Person to which it relates as of the period then ended, all in accordance
with generally accepted accounting principles as in effect from time to time,
applied on a basis consistent with the most recent financial statements
delivered to GDB.
6.7 No Litigation. No action, suit, claims, proceeding, inquiry or
investigation, at law, in equity or otherwise is now pending or, to the best
knowledge of Borrowers after due inquiry, threatened, against or affecting any
of the Borrowers, the Partnership or the Project or any portion thereof, before
any court, board, commission, agency or instrumentality of the United States or
Puerto Rico or before any arbitrator or panel of arbitrators, which, if
determined adversely, would result in the payment by the Borrowers or the
Partnership of an amount equal to or greater than one hundred thousand Dollars
($100,000) or would otherwise have a Material Adverse Effect. None of the
matters set forth therein questions the validity of any of the Operative
Documents (other than the GDB Loan Agreement, as to which the provisions thereof
shall apply) 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.
6.8 No Defaults. None of the Borrowers or the Partnership is in default
under, nor are there any violations or notices or other records of violation of,
any law or any regulation, order, writ, injunction or decree of any court or
governmental body, agency or other instrumentality applicable to the Borrowers
or the Partnership (including, without limitation, any zoning, health, safety,
building, environmental or other statute, ordinance or restriction affecting
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all or any part of the Project or any use or condition thereof), and no default
has occurred and is continuing under any Indebtedness or any indenture or other
agreement or instrument evidencing outstanding Indebtedness of the Borrowers or
the Partnership (other than Indebtedness under the GDB Loan Agreement), or any
other contract, agreement or instrument to which any of the Borrowers or the
Partnership is a party or by which any of them or their respective properties
are bound, and no event has occurred which with the giving of notice or the
passage of time or both would constitute such a default (other than the
Partnership's failure to comply with the "Loan Balance" provision of Paragraph
9(k) of the LC Agreement and certain other agreements to which the Partnership
is a party, which default will be cured by the transactions contemplated by this
Agreement), and no such default or event will occur upon the making of any
disbursement hereunder.
6.9 Consents. No consent or approval of, or notice to, any creditor of
any of the Borrowers or the Partnership, other than the consents required by
Paragraph 5.1 hereof, is required for the execution or delivery of, or the
performance of the obligations of the Borrowers under, any of the GDB Facility
Documents or the consummation of the transactions contemplated thereby; and such
execution, delivery, performance and consummation will not result in any breach
or violation of, or constitute a default under, the organic documents of any of
the Borrowers or the Partnership or any judgment, order, statute, rule or
regulation applicable to any of the Borrowers or the Partnership or to any of
their respective properties, or result in or require the imposition of any Lien
upon or with respect to any of the properties now owned or hereafter acquired by
any of the Borrowers or the Partnership (other than the Liens granted
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to GDB on the Security or the Additional Security under the Security Documents
or the Additional Security Documents and the liens granted to the Bank under the
LC Agreement).
6.10 Investment Company Act. None of the Borrowers or the Partnership
is 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 Facility
by GDB, the application of the proceeds and repayment thereof by the Borrowers
and the consummation of the transactions contemplated by this Agreement and the
other GDB Facility Documents will not result in the violation by any of the
Borrowers or the Partnership of any provision of such act or any rule,
regulation or order applicable to any of the Borrowers or the Partnership issued
by a court of competent jurisdiction in the application of such act.
6.11 Margin Regulations. None of the Borrowers or the Partnership owns
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 Facility will be used only for the purposes contemplated
hereunder. The Facility 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 advances under this Agreement to be considered a "purpose credit" within the
meaning of Regulations G, T, U or X of the Federal Reserve Board. None of the
Borrowers or the Partnership will take, or permit any agent acting on behalf of
any of them to take, any action that might cause this Agreement or any document
or instrument delivered pursuant hereto to violate any regulation of the Federal
70
Reserve Board. The making of advances under this Agreement will not constitute a
violation of such Regulations G, T, U or X.
6.12 Taxes. Each of the Borrowers and the Partnership has filed or has
obtained currently valid extensions for filing all federal, state, Commonwealth
and foreign tax returns, reports and statements required by law to be filed by
any of the Borrowers or the Partnership and has paid all Charges and other
impositions due and payable, other than those presently payable without fine,
penalty, interest or late charge.
6.13 Use of Facility Proceeds. The advances to be made by GDB to the
Borrowers hereunder shall be applied only for the purposes set forth in Article
Three hereof.
6.14 Compliance with ERISA. Each Employees' Plan, if any, is in
substantial compliance with ERISA; all contributions required to be made to any
Employees' Plan by its terms, the Internal Revenue Code of 1986, as amended from
time to time (the "Code") or ERISA (including any quarterly installments
required under Section 412(m) of the Code) have been made by the applicable due
date; no Employees' Plan is insolvent or in reorganization; no Employees' Plan
has an accumulated or waived funding deficiency within the meaning of Section
412 of the Code; neither any of the Borrowers or the Partnership nor any
Subsidiary nor an ERISA Affiliate has incurred any material liability (including
any material contingent liability) to or on account of a Plan pursuant to
Section 4062, 4063, 4064, 4201 or 4204 of ERISA; no proceedings have been
instituted to terminate any Employees' Plan, and no condition exists which
represents a material risk to any of the Borrowers or the Partnership or any
Subsidiary of incurring a liability to or on account of an Employees' Plan
pursuant to any of the foregoing Sections of ERISA.
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6.15 Environmental Matters.
(a) Except as set forth below, all facilities owned, leased,
used or operated by the Partnership have been and continue to be owned, leased,
used or operated in compliance in all material respects with all applicable
Environmental Laws. None of the Borrowers or the Partnership makes any
representations as to the ownership, lease, use or operation of the Premises
prior to the Partnership's acquisition of the Premises.
(b) The Environmental Report, together with all previous
reports submitted to GDB by the Partnership identifies, with respect to the
Premises, to the best knowledge of the Borrowers or the Partnership, (i) all
environmental audits, assessments or occupational health studies undertaken by
or at the direction of, governmental agencies within the past twenty-four (24)
months; (ii) the results of the most recent analysis of water (including
groundwater analyses), soil, air or asbestos samples that indicates
contamination or non-compliance with any applicable Environmental law; (iii) the
most recent inspection by any environmental protection agency relating to issues
of contamination or non-compliance with any applicable Environmental Law; (iv)
any claim or complaint concerning environmental matters; and (v) all Permits
issued to the Partnership under any Environmental Laws.
6.16 Condemnation. At the Closing Date, other than condemnation
proceedings related to the acquisition of the Premises by the Partnership and
the proceedings to widen the road in front of the main entrance to the Premises,
to the best knowledge of any of the Borrowers or the Partnership, no
Governmental Authority, quasi-governmental authority, or public or private
Person has taken, commenced or threatened to take or commence any action, with
respect to any portion of any of the Mortgaged Properties, that would result in
(i) the condemnation or other
72
similar taking of any portion of the Mortgaged Properties, (ii) the condemnation
or relocation of any roadways abutting any of the Mortgaged properties, (iii) a
denial of access to any of the Mortgaged Properties from any point of access to
any such Mortgaged Property or (iv) any withdrawal, challenge, denial or
revocation of any permit, license, use agreement or other operating agreement or
application relating to the business operations of any of the Borrowers or the
Partnership, including, without limitation, the Project.
6.17 Labor Matters. As of the Closing Date, (i) none of the Borrowers
or the Partnership is a party to any labor dispute; (ii) there are no strikes or
walkouts relating to any aspect of the business or operations of any of the
Borrowers or the Partnership; and (iii) there are no collective bargaining
agreements with any of the Borrowers, the Partnership or any Subsidiary.
6.18 Other Ventures. As of the Closing Date, the Partnership is not
engaged in any joint venture or partnership with any other Person, and neither
of the Borrowers is engaged in any joint venture or partnership, except for the
Partnership, with any other Person.
6.19 No Contract Cancellations. To Borrowers' knowledge, as of the
Closing Date, there exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the Rights of the Partnership
under the Construction Management Agreement, the Management Agreement or the
Architects' Agreements. All such Agreements, and the Trade Contracts and
Construction Documents to be delivered pursuant to Paragraph 5.1 hereof, remain
valid and in full force and effect.
6.20 Liens. The Liens granted to GDB pursuant to the Security Documents
and the Additional Security Documents will be, when filed, subject only, in the
case of documents that
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require such recording, to recording (which will be effected in due course),
fully perfected Liens in and to the Security and the Additional Security
described therein, subject only, where applicable, to Permitted Liens and
Encumbrances.
6.21 Sufficiency of Funds. As of the Closing Date, the Facility,
together with Borrowers' own funds and those to be borrowed under the Bank Loan
Documents, are sufficient for all purposes to complete the Project and,
thereafter, taking into consideration the Completion Guaranty, will remain
sufficient for all purposes to complete the Project. The Completion Guaranty is
and shall remain legal, valid, binding and enforceable in accordance with its
terms and, in the case of the Completion Guaranty of Kumagai International USA
Corporation, is currently in effect with respect to each of the Trade Contracts
delivered to GDB on or prior to the Closing Date.
6.22 Title to Property. The Partnership has, and at all times will
have, good and insurable title in fee simple to the Premises, except as
otherwise provided in Paragraph 4.1.3 and 4.4 hereof with respect to the
Condominium Parcels and the Condominium Units, subject to no liens, charges, or
encumbrances other than Permitted Liens and Encumbrances and those Liens and
encumbrances listed in the Title Policy.
6.23 Possession of Premises. As of the Closing Date, to the best of
Borrowers' knowledge, there are no squatters on the Premises; and, except as
otherwise provided In Paragraphs 4.1.3 and 4.4 hereof with respect to the
Condominium Parcels and the Condominium Units, the Partnership is and will be at
all times until the Maturity Date in complete and exclusive possession of the
Premises.
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6.24 Utilities and Streets. There is vehicular and pedestrian access to
and from the Premises via publicly dedicated roads, streets and highways, and
all utility services, including water, sanitary and storm sewers, electric power
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.
6.25 General. Neither the GDB Facility Documents nor any other
agreement, document, certificate or statement furnished to GDB by or on behalf
of the Borrowers or any Person in connection with the transactions contemplated
hereby, taken individually or collectively and in the context made and to whom
made, at the time when made or delivered, contains any untrue statement of
material fact or omits to state a material fact necessary in order to make
statements contained herein or therein, in light of the circumstances, not
misleading. To the knowledge of Borrowers, there are no significant material
facts or conditions relating to the making of the Facility, any of the Security
or the Additional Security or the financial condition and business of any of the
Borrowers or the Partnership which, collectively or individually, could cause a
Material Adverse Effect, and which have not been fully disclosed, in writing, to
GDB. All writings heretofore or hereafter delivered to GDB by or on behalf of
the borrowers or the Partnership by any Person, are and will be genuine and in
all respects what they purport to be.
6.26 Plans; Construction. The Plans are, as of the Closing Date,
satisfactory to the Borrowers and the Partnership and have been approved, to the
extent required by applicable law, ordinance or regulation or any effective
restrictive covenant, by all Government Authorities and the beneficiaries of any
such covenant, respectively. All Construction, if any, heretofore
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performed in connection with the Improvements has been performed within the
perimeter of the Premises or within the area of an easement benefitting the
Premises and with respect to which such Construction is permitted, and in
accordance with the Plans and all Legal Requirements, and such Construction has
been fully paid for, or payment is not yet due, or payment is being disputed in
good faith; provided, however, that any such disputes have been fully disclosed
to GDB and such failure to pay would not have a Material Adverse Effect in the
Partnership's ownership rights in the Project. There are no structural defects
in the Improvements (to the extent currently constructed), no violation of any
Legal Requirement exists with respect thereto, and the anticipated use thereof
complies with all restrictive covenants affecting the Project and all Legal
Requirements, including all applicable zoning and environmental protection
ordinances and regulations.
6.27 Intentionally Omitted.
6.28 No Liens. Except for the Operative Documents, the Construction
Documents, the Project Documents and the Permitted Liens and Encumbrances,
neither the Borrowers nor the Partnership has made or entered into any contract
or arrangement of any kind, the performance of which by the other party thereto
would give rise to a Lien against all or any portion of the Collateral.
6.29 Compliance with Building Codes, Zoning Laws, Etc. The current
zoning law and declarations covering the Project permit the Construction to be
completed and, upon completion of Construction, the Improvements to be used as
contemplated by this Agreement. The Project and, upon completion of
Construction, the Improvements and the proposed use thereof will be in all
respects in compliance with all Permits and all Legal Requirements.
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6.30 Budget. The Budget contains all costs and expenses reasonably
anticipated to be incurred in connection with the Construction, equipping and
leasing of the Improvements.
6.31 Security Documents and Additional Security Documents. (a) The
provisions of each Security Document and Additional Security Document are
effective to create a legal, valid, binding and enforceable Lien on or security
interest in all of the Collateral described therein, subject to the proper
filing thereof; and (b) when the appropriate recordings and filings have been
effected in public offices, each of the Security Documents and the Additional
Security Documents will constitute a perfected Lien on and security interest in
all right, title, estate and interest in the Collateral described therein, prior
and superior to all other Liens, except as permitted under the Operative
Documents.
6.32 Commissions. No broker's or finder's fee or commission will be
payable by the Borrowers, the Partnership or any of their Affiliates with
respect to the transactions contemplated hereby, and the Borrowers shall hold
GDB harmless from any claim, demand or other liability for any broker's or
finder's fees or commissions alleged to have been incurred by the Borrowers, the
Partnership or any of their Affiliates in connection herewith.
6.33 Survival of Representations and Warranties: All representations
and warranties made herein by Borrowers or in any of the other Loan Documents,
or in any other certificate, document or instrument delivered pursuant thereto,
shall survive the Closing and the transactions effected hereunder or thereunder.
It is herein acknowledged and agreed by the Borrowers that the above
warranties and representations are of the essence to the granting of the
Facility to Borrowers and to this Agreement.
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ARTICLE 7
AFFIRMATIVE COVENANTS
7.1 So long as Borrowers or the Partnership shall be indebted to GDB
hereunder or otherwise, each of the Borrowers agrees that it will, and will
cause the Partnership to:
7.1.1. Application of Loan Proceeds. Apply the proceeds of the
Loans advanced hereunder as set forth in Article Three hereof.
7.1.2 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 GDB. The firm of Ernst & Young is acceptable
to GDB.
7.1.3 Financial Information.
(a) Furnish to GDB within fifty (50) days after the close of
each of the first three quarters of its fiscal year, unaudited quarterly
financial statements,including but not limited to balance sheets, income
statements and statements of changes in financial position; a certificate,
executed on its behalf by an officer with authority to execute such certificate,
certifying that no default has occurred under this Agreement,and that no fact or
circumstances exists which, with the lapse of time or the giving of notice or
both, would result in an Event of Default hereunder; and, if in its opinion such
Event of Default has occurred, or there is in existence such condition, event or
act, as statement specifying the nature thereof.
(b) Furnish to GDB within one hundred twenty-five (125) days
after the end of each fiscal year, financial statements, including but not
limited to, balance sheets and
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statements of income, and statements of changes in financial position for such
Fiscal Year, accompanied by the report of independent certified public
accountants satisfactory to GDB. The firm of Ernst & Young is acceptable to GDB.
Each such report of independent certified public accountants shall be
accompanied by a written statement from the chief financial officer of the
Person to which such report refers, certifying that, during the Fiscal Year
covered by the financial statements, there has not occurred or there is not in
existence any Default or Event of Default.
7.1.4 Construction and 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 by the Completion
Date 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, except Permitted Liens or Encumbrances.
7.1.5 Effectiveness of Permits: Approvals. Keep in full force
and effect every Permit necessary or appropriate for the ownership, development
and operation of the Premises and the Project, if failure to do so would result
in a Material Adverse Effect.
7.1.6 Access by GDB. Permit all officers, qualified employees
and other representatives of GDB designated by it to visit and inspect the
Mortgaged Properties and examine the books and discuss the affairs, finances and
accounts of the Partnership with the officers and auditors thereof, all at such
reasonable times and as often as GDB may reasonably request.
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7.1.7 Maintain Rights; Franchises. Maintain, preserve and
renew all rights, powers, privileges and franchises necessary or desirable for
the conduct of its business and operation of the Premises, the Project and the
Facility-Mortgaged Properties.
7.1.8 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 or against any of the Borrowers
or the Partnership and any of their respective properties, real or personal. It
will likewise pay and discharge all social security taxes, unemployment
insurance, State Insurance Fund assessments and the like imposed upon itself,
its income and profits or its assets and its payrolls. The Borrowers and the
Partnership shall have the right to contest such Taxes in the manner and as
provided in Paragraph 7.4 hereof.
7.1.9 Estoppel Certificates. Deliver to GDB, at any time or
times, but in no event more than twice in any calendar year, within fifteen (15)
days after written demand by GDB therefor, a certificate, duly executed and in
form satisfactory to GDB, stating and acknowledging the then Outstanding
Principal Amount and that there are no defenses, offsets or counterclaims
hereunder.
7.1.10 Insurance.
(a) Prior to the Date of Substantial Completion, at
its sole costs and expense, keep the then-existing structures related to the
Premises, insured for the benefit of GDB 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 in nature,
use, location, height and type of construction to the Premises. The amount of
such Insurance Policy
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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 any contracts 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," Off-site Storage including Inland and Ocean Transit, "Hot and Cold"
Testing, Increased Cost of Construction and Contingent Liability from Building
Laws.
(b) On and after the Date of Substantial
Completion, at the sole cost and expense of the Partnership, secure insurance
for the benefit of GDB covering the Premises 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 in nature, use, location, height and type of construction
to the Premises, in an amount not less than the greater of (A) full insurable
value, or (B) an amount sufficient to prevent the Partnership 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 Paragraph
7.1.10 shall mean the cost of actual replacement, without deduction for
depreciation, less the cost 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 Substantial Completion
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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 Borrowers or
the Partnership, as the case may be, and approved by GDB 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 GDB in
its sole discretion. The Insurance Policies described above shall provide for
deductions of not more than $10,000 per occurrence for all perils except Flood,
Earthquake and Windstorm, for which deductions of not more than $25,000 per
occurrence may be made.
(c) Maintain or cause to be maintained, at the sole
cost and expense of the Partnership, for the benefit of GDB, (i) prior to the
Date of Substantial Completion, Soft Costs/Additional Expense Incurred, Loss of
Gross Earnings 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 or Loss of Rental Income, Business
Interruption and Additional Expense Incurred Insurance on an Actual Loss
Sustained Basis (if available) in an amount equal to the greater of (A) an
estimate reasonably satisfactory to GDB of the succeeding year's Gross Revenues
(as defined in the LC Agreement), or (B) $24,000,0000 with the Extended Period
of Indemnity Endorsement attached; (iii) upon and after the installation of any
boilers or machinery at the Project, Boiler and Machinery Coverage for Rent Loss
(including,
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without limitation, loss from both retail space and nightly room rentals), with
an "Extended Period of Indemnity" and Improvements Loss in such amounts as are
customarily carried by persons operating property and buildings similar in
nature, use, location, height and type of construction to the Premises.
(d) Maintain or cause to be maintained, at the sole
cost and expense of the Partnership, at all times (i) General Public Liability
Insurance, including, without limitation, the Broad Form Comprehensive General
Liability Endorsement, with the respective Primary Coverages as follows:
General Aggregate $1,000,000 Per Location
Products/Completed Operations $1,000,000*
*(two-year Completed Operation
Extension)
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 GDB shall reasonably require; (iii) Worker's
Compensation and Non-Occupational Disability Insurance 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 Mortgage Properties and the
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operation thereof as are customarily maintained in the case of other property
and buildings similar in nature, use, location, height and type of construction
to the Mortgaged Properties, as may from time to time be required by GDB,
including, without limitation, Automobile Liability Insurance in amounts
reasonably required by GDB from time to time.
(e) The Borrowers shall cause the Partnership to
ensure that (i) all Insurance Policies are 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 (or such equivalent rating as is acceptable to GDB) and
shall be otherwise satisfactory to GDB in form and content; (ii) the Property
and Business Interruption Insurance Policies contain the Standard Mortgagee
Non-Contribution Clause Endorsement or its equivalent endorsement satisfactory
to GDB, naming GDB as First Mortgagee and providing GDB (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 Paragraph hereof;
(iii) all Liability Insurance Policies name GDB as additional insured according
to its respective interest.
(f) Except with GDB's prior written consent, (i)
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 LC
Agreement; and (ii) except as provided herein, not name any Person as named
insured or loss payee under any Insurance Policy.
(g) The Borrowers shall cause the Partnership to
pay the premiums for the Insurance Policies as such premiums become due and
payable.
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(h) Deliver original binders and certified copies
of the Insurance Policies to GDB as further security for the Borrowers'
performance of the terms and conditions contained herein, provided that GDB
shall not be deemed by reason of the custody of such Insurance Policies to have
knowledge of the contents thereof.
(i) Deliver to GDB, within 10 days of GDB's request
to do so, a certificate of insurance issued by the Partnership'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.
(j) Not later than 30 days prior to the expiration
date of each of the Insurance Policies, deliver to GDB original binders and
certified copies of a renewal policy or polices marked "premium paid" or
accompanied by other evidence of payment of premium satisfactory to GDB.
(k) Ensure that each Insurance Policy required
hereunder contains a provision whereby the insurer (i) agrees that such policy
shall not be canceled or modified, and shall not fail to be renewed, without at
least 60 days' prior written notice to GDB, (ii) waives any right to claim any
premiums and commissions against GDB and (iii) provides that GDB is permitted to
make payments to effect the confirmation of such Insurance Policy upon notice of
cancellation due to nonpayment of premiums.
(l) Ensure that, 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 Insurance Policy provides that, with respect to the interests
of GDB, such Insurance Policy shall not be invalidated by and shall
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insure GDB regardless of (A) any act, failure to act or negligence of or
violation of warranties, declarations or conditions contained in such Insurance
Policy by any named insured, (B) the occupancy or use of any of the Mortgage
Properties for purposes more hazardous than permitted by the terms thereof, (C)
any foreclosure or other action or proceeding taken by the GDB pursuant to any
provision of this Agreement, or any of the GDB Facility Mortgages or GDB
Guaranty Mortgages or (D) any change in title to or ownership of all or any of
the Mortgaged Properties.
(m) Any insurance maintained pursuant to this
Paragraph 7.1.10 may be evidenced by blanket Insurance Policies covering the
Premises and other properties or assets of the Partnership 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 Premises and shall in other respects
comply with the requirements of this Paragraph 7.1.10. GDB, in its sole
discretion, shall determine whether such blanket Insurance Policies provide
sufficient insurance coverage.
(n) Notwithstanding anything to the contrary
contained herein, if at any time GDB is not in receipt of written evidence that
all insurance required hereunder is maintained in full force and effect, GDB
shall have the right, upon notice to the Borrowers, to take such action as GDB
may deem necessary to protect its interests in the Premises, including, without
limitation, the obtaining of such insurance coverage as GDB deems appropriate,
and all expenses incurred by GDB in connection with such action or in obtaining
such insurance and keeping it in effect shall be paid by the Partnership
promptly after demand.
(o) In the event of a foreclosure of any of the
Facility Mortgage on the Premises, the purchaser of the Premises will succeed to
all of the rights of any of the Borrowers
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and the Partnership, including the rights to all unearned premiums paid, with
respect to the Insurance Policies, to the extent assignable.
7.1.12 Environmental Matters.
(a) 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 make or cause to be made all necessary and proper repairs, replacements
and renewals.
(b) Keep the Facility-Mortgaged Properties free and
clear at all times of claims or attachments of any kind, except Permitted Liens
or Encumbrances.
(c) Not commit, nor permit any other Person or
event (whether by act of God or otherwise) to commit, waste or damage upon any
of the Mortgaged Properties, including without limitation, the Premises, other
than such damages as are covered under the Casualty provisions of this
Agreement, without promptly restoring such Mortgaged Property to an equivalent
or better condition than that prevailing prior to such occurrence. In the event
of any material loss or damage to any portion of the any Mortgaged property due
to fire, floods, wind, or other natural causes, whether alone or in combination,
including hurricanes and the effects thereof, GDB shall have the right (with the
Bank's approval, so long as the LC Agreement shall remain in effect), at its
sole discretion, to call for an Appraisal of such Mortgaged Property.
(d) Keep the Mortgaged Properties free from
squatters.
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7.1.11 Preservation of the Properties.
(a) In connection with the ownership and operation
of the Premises and the Facility-Mortgaged Properties, (i) comply strictly and
in all respects with all applicable Environmental Laws, and (ii) forward
promptly to GDB a copy of any order, notice, permit, application, or any other
communication or report in connection with any release of any Hazardous Material
or any other matter relating to Environmental Laws as they may affect the
Premises, the Project or any Facility-Mortgaged Property.
(b) 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 as successor
in interest to the Partnership as owner or lessee of any of the Mortgaged
Properties 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 Material
affecting any of the Mortgaged Properties, whether or not the same originates or
emanates from such Mortgaged Property or any contiguous real estate, including
any loss of value of such Mortgaged Property as a result of a release of any
Hazardous Material; and (iii) with respect to any other environmental matter
affecting such Mortgaged Property within the jurisdiction of any official
administering the Environmental Laws.
(c) The obligations of Borrowers or the Partnership
under this Article 7.1.12 shall not extend or apply to (i) any condition or
state of facts existing in respect of the
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Premises or the Improvements on the date the partnership acquired title to the
▇▇▇▇▇▇▇ 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 any Mortgaged Property. The Borrowers shall,
and shall cause the Partnership to, make available to GDB to the fullest extent
permitted by law any and all rights available to the Borrowers or the
Partnership against the Puerto Rico Lands Administration with respect to any
liability under any Environmental Law, any release of any Hazardous Material
affecting any of the Mortgaged Properties or with respect to any other
environmental matter affecting any of the Mortgaged Properties, and the
Borrowers hereby consent to assign, and to cause the Partnership to assign such
rights to GDB and to authorize GDB to enforce such rights directly against the
Puerto Rico Lands Administration to the same extent as if any of the Borrowers
or the Partnership enforced such rights.
The procedure for Borrowers and the Partnership to provide the
foregoing indemnifications shall be covered by the procedures set forth in
Article 10.3 hereof.
7.1.13 Notices. Promptly give written notice to GDB in the
manner provided in Article 10.14 hereof of (i) the occurrence of any Default or
Event of Default; (ii) any legal, judicial or regulatory proceedings affecting
any of the Borrowers or the Partnership or any of their respective properties or
assets, in which the amount involved is material and could have a Material
Adverse Effect; (iii) any dispute between any of the Borrowers or the
Partnership and any Governmental Authority or other Person that will have a
Material Adverse Effect; (iv) substantial damage, loss or impairment in value,
to any part of the Security (except the Facility- Mortgaged Properties), the
Additional Security or the Premises, specifying the nature and extent
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of damage, loss, or impairment in value, and whether such damage, loss, or
impairment in value is being repaired in due course, or the total loss or
destruction of any material part of the Security, the Additional Security or the
Premises; (v) to the extent the Borrowers or the Partnership have knowledge
thereof, substantial damage, loss or impairment in value to any part of the
Facility-Mortgaged Properties, specifying the nature and extent of damage, loss
or impairment in value, and whether such damage, loss or impairment in value is
being repaired in due course, or the total loss or destruction of any material
part of the Facility-Mortgaged Properties; (vi) any other action, event or
condition of any nature of which any of the Borrowers or the Partnership has
knowledge that would result in any Material Adverse Effect; and (vii) 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, any of
the Borrowers or the Partnership.
7.1.14 Certification of Substantial Completion. Upon reaching
Substantial Completion of the Project, submit to GDB a certification from the
Architects to that effect, and a certification of the Project Costs incurred up
to the date of Substantial Completion, signed by the chief financial officer of
the Partnership, together with the financial statements for the fiscal year
during which Substantial Completion is reached.
7.1.15 Approval of the Project.
(a) On or prior to the date of this Agreement,
obtain (i) the approval of ARPE or of the Planning Board of the site plan and,
prior to commencement of any stage of the Project, of the final Plans of such
stage of the Project to be commenced shortly thereafter, (ii) the approval of
all other Governmental Authorities having jurisdiction in the premises, and
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(iii) all Permits necessary to allow the Partnership to proceed with the
construction of the Project.
(b) Complete the Project substantially in
accordance with the Plans and in accordance with the Permits, which will have
been obtained on or before Completion Date.
(c) Cause the Construction to be done in a
workmanlike manner and 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 proceed continuously to complete the same with all
reasonable speed and dispatch.
(d) Not make any substantial changes in the Plans
except with (i) prior written notice to and consent from GDB, which consent
shall not be unreasonably withheld, and (ii) such approvals as shall be
necessary under the requirements of ARPE or of the Planning Board.
(e) Make full payments for all costs of all such
construction and installations, promptly as and when due, except as diligently
contested in good faith, and assure that no lien arises on account of failure to
pay wages of Construction workers.
(f) Use and employ all materials contracted or
purchased for delivery to the Project, or for use in its installations or
construction, and all labor contracted or hired for or in connection with said
installations or construction solely on said Project, and only in accordance
with the Plans.
(g) Not permit any part of the Project to become
occupied until the applicable use permit required by law has been granted.
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(h) Manage the Project, or cause the Project to be
managed, in conformity with all requirements of Governmental Authorities, and in
compliance with any and all laws, rules and regulations of any Governmental
Authority.
(i) Submit a copy to GDB of each request for
disbursement submitted to the Bank pursuant to Paragraph 9(a) of the LC
Agreement, on the date each such request is submitted to the Bank, together with
copies of all other required documents in connection with such request for
disbursement pursuant to Paragraph 9(a) of the LC Agreement, including without
limitation Trade Contractors' requisitions for payment, unpaid invoices and
receipted bills, lists of Trade Contracts and Work Changes and evidence of
disbursement of the last preceding disbursement, each with such notations,
certifications and statements as are required pursuant to Paragraph 9(a) of the
LC Agreement.
7.1.16 Deposit of Escrow Requirements. Deposit with the
Facility Escrow Agent the Escrow Requirements when such deposits become due,
which obligation is hereby guaranteed by the respective General Partners of the
Partnership by their execution of this Agreement.
7.1.17 Condominium Lien. Deliver to GDB the Condominium Lien
on any assets that are released from the lien and mortgage of the Bank under the
Bank Loan Documents in accordance with Paragraph 4.1.3 hereof.
7.2 Correctness of Representations; Warranties. Each of the Borrowers
agrees that all representations and warranties contained in Article Six of this
Agreement, except those in Paragraphs 6.4, 6.8, 6.15, 6.19 and 6.26 and those
which by the action of third parties may be otherwise than as represented,
specifically those set forth in Paragraphs 6.7, 6.16, and 6.17 or
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as specifically stated otherwise in any Paragraph, shall remain true and correct
in all material respects during the entire Term of the Facility.
7.3 Maintenance of Existence and Conduct of Business. Each of the
Borrowers shall (a) do or cause to be done all things necessary to preserve and
keep in full force and effect their own legal existence, rights and franchises
and the legal existence, rights and franchises of the Partnership; (b) continue,
and cause the Partnership to continue, to conduct business substantially as now
contemplated and as a going concern; and (c) at all times maintain, preserve and
protect, and cause the Partnership to maintain, preserve and protect all of
their respective trademarks, service marks and trade names.
7.4 Payment of Obligations.
(a) Subject to Paragraphs (b) and (c) of this Article 7.4,
each of the Borrowers shall, and shall cause the Partnership to, (i) pay and
discharge or cause to be paid and discharged all of their respective
Indebtedness and obligations, including, without limitation, all the obligations
(other than Indebtedness and obligations under the GDB Loan Agreement and
related Documents, as to which GDB's rights and remedies shall be those provided
in the GDB Loan Agreement and related Documents), as and when due and payable,
unless failure to do so would not have a Material Adverse Effect; 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, unless failure to do so would not
have a Material Adverse Effect.
(b) The Borrowers and the Partnership may in good faith
contest, by proper legal actions or proceedings, the validity or amount of any
Indebtedness, obligations, Charges,
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Liens or claims, other than the Obligations, provided that Borrowers give GDB
advance notice of their 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; and (iv) none of the Security or the Additional Security would be
subject to forfeiture or loss of any Lien in favor of GDB by reason of the
institution or prosecution of such contest. Borrowers shall, if such contest is
terminated or discontinued adversely to Borrowers or the Partnership, promptly
pay or discharge or cause to be paid or discharged such contested Charges and
all additional charges, interest, penalties and expenses, if any, and shall
deliver to GDB evidence acceptable to GDB of such compliance, payment or
discharge.
7.5 Agreements. Borrowers shall perform, and shall cause the
Partnership to perform, within any required time period (after giving effect to
any applicable grace periods), all of their respective Obligations and shall
enforce, and shall cause the Partnership to enforce all of their respective
rights under each agreement to which any of them is a Party (other than the GDB
Loan Agreement, as to which GDB's rights and remedies shall be those provided in
the GDB Loan Agreement and related Documents), including, without limitation,
leases to which the Partnership is a party, where the failure so to perform or
enforce would have a Material Adverse Effect. Borrowers shall not terminate or
modify in any manner any agreement to which either of them is a party, and shall
cause the Partnership not to terminate or modify in any
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manner any agreement to which it is a party, if such termination or modification
could reasonably be expected to have a Material Adverse Effect.
7.6 Litigation. Borrowers shall notify GDB in writing, promptly upon
any executive officer of either General Partner learning thereof, of any
litigation commenced against any of the Borrowers or the Partnership, and of the
institution against any of the Borrowers or the Partnership of any suit or
administrative proceeding in which the total relief sought equals or exceeds
$100,000 or that would otherwise have a Material Adverse Effect.
7.7 Compliance with Law. Each of the Borrowers and the Partnership
shall comply with all legal Requirements applicable to it, including, without
limitation, those regarding environmental matters, where the failure so to
comply would have a Material Adverse Effect.
7.8 Supplemental Disclosure. From time to time as may be necessary (in
the event that such information is not otherwise delivered by either of the
Borrowers or the Partnership to GDB pursuant to this Agreement), so long as
there are Obligations outstanding hereunder, each of the Borrowers, as promptly
as is reasonable under the circumstances after either of the Borrowers has
knowledge with respect thereto, shall supplement or amend and deliver, or shall
cause the Partnership to supplement or amend and deliver, to GDB (i) any and all
material contracts, permits, licenses, declarations and covenants, operating
agreements, or any other agreements, documents or instruments pertaining to any
of the Mortgaged Properties; 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 representation or which is necessary to
correct any information in such Exhibit or representation which has been
rendered inaccurate thereby.
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7.9 Recording; Transfer Taxes and Fees. Borrowers shall pay,
or shall cause the Partnership to pay, all transfer, excise, mortgage recording
or similar taxes and fees in connection with the issuance, sale, delivery or
transfer to GDB by Borrowers or the Partnership, as the case may be, of the
Partnership Mortgage Notes and the GDB Guaranty Mortgage Notes and the execution
and delivery of the Security Documents and any other GDB Facility Documents and
any other agreements and instruments contemplated hereby, and shall save GDB
harmless against any and all liabilities with respect to such taxes and fees.
The obligations of Borrower under this Paragraph 7.9 shall survive the payment,
prepayment or redemption of the Facility and the Existing GDB Loan and the
termination of this Agreement.
7.10 Permits and Licenses. Borrowers agree and covenant that they
possess or will possess when required, and have caused the Partnership or other
owner of each Mortgaged Property to possess or will cause the Partnership or
such owner to possess when required, all rights, accreditations, franchises,
patents, Permits and privileges necessary for the conduct of their respective
businesses as now or heretofor conducted or proposed to be conducted, and as
necessary for the ownership and management of each of the Mortgaged Properties,
without known conflict with the rights of any Person.
7.11 Fair Value Contracts. Each contract between the Partnership and
any Borrower or Affiliate of the Borrower relating to the ownership, operation
or sale as the case may be, of the Premises or any interest therein or rights
thereto or any other activities of the Premises entered into after the date
hereof shall be on terms and for amounts no less favorable to the Partnership
than that would be given by an unrelated Person contracting with the Partnership
for the same or substantially similar purpose.
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7.12 Other Agreements. Each of GDB, on the one hand, and the Borrowers
on the other hand shall use its best efforts to apprise the other of any
agreements that relate to the Project. The Borrowers shall cause the Partnership
to use its best efforts to apprise GDB of any agreements that relate to the
Project.
7.13 Japanese Counsel Opinion. On or before May 31, 1992, without
prejudice to Section 5.1(w), Borrowers shall have provided GDB with the
favorable written opinion of Japanese counsel to Kumagai, dated on or before May
31, 1992, and in form and substance satisfactory to GDB and its counsel, with
respect to such matters as GDB may reasonably require.
7.14 Federal Taxes. On or before May 15, 1992, Borrowers shall have
provided GDB with a 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 any of the Borrowers, the Partnership, the Guarantors or their
Affiliates listed in Paragraph 4.1.4 hereof, and that no federal tax lien
against any of the Borrowers, the Partnership, the Guarantor or their Affiliates
listed in Paragraph 4.1.4 hereof 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.
ARTICLE 8
NEGATIVE COVENANTS
8.1 Actions by the Borrowers or the Partnership. The Borrowers covenant
that, until full payment of the GDB Facility and the performance of all other
Obligations of the Borrowers hereunder, they will not, without the prior written
consent of GDB, and will not permit the Partnership without the prior written
consent of GDB, to:
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8.1.1 Create, assume, or suffer to exist any mortgage, pledge,
encumbrance or other lien on the Mortgaged Properties or any other asset of the
Borrowers, except for the Permitted Liens and Encumbrances, except that the
foregoing shall not apply to any mortgage, pledge, encumbrance or other lien on
assets of the Borrowers, other than the Mortgaged Properties, created, assumed
or suffered to exist for fair consideration;
8.1.2 Create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any Indebtedness other
than Permitted Indebtedness;
8.1.3 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 any of the Borrowers or the Partnership
(whether legally or beneficially owned) would become the property of any other
Person, whether by way of reorganization, amalgamation, merger, transfer, sale,
lease, sale and leaseback or otherwise except that the foregoing shall not
apply, in the case of the Borrowers, to any transaction for fair consideration;
8.1.4 Permit any change in the legal or beneficial ownership
of any of the Mortgaged Properties, or permit any change in the ownership of the
Partnership except as follows: (a) any transfer, direct or indirect, of the
interests of or in KGC 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 interest of or in AMK
to a member of the ▇▇▇▇▇▇▇ family or to any entity which is owned by one or more
members of the ▇▇▇▇▇▇▇ family; (d) any transfer, direct or indirect, of
interests in Hospitality to members of the ▇▇▇▇▇▇▇ family or any entity wholly
owned and controlled by one or more members of the
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▇▇▇▇▇▇▇ family, provided that Hospitality shall at all times be controlled by
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for so long as he shall be alive and competent; and (e) any
issuance or transfer of publicly-traded ownership interests in WMS Industries or
Kumagai.
8.1.5 Make any substantial change to the operation of the
Project as presently contemplated without the prior written approval of GDB;
8.1.6 Other than in relation to the Project, permit the
Partnership to guarantee 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, 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;
8.1.7 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 Mortgaged Properties or any other asset of
the Partnership, except Permitted Liens and Encumbrances;
8.1.8 Permit or be a party to any arrangement regarding the
dissolution of any of the Borrowers or the Partnership;
8.1.9 Directly or indirectly, assign, transfer or attempt to
assign or transfer any of their Rights, duties or Obligations under this
Agreement or any other Operative Document except as required under the Bank Loan
Documents or a specifically permitted under this Agreement;
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8.1.10 Agree to a substantial Work Change without prior
written notice to and consent from GDB, which consent shall not be unreasonably
withheld and shall be deemed given if not denied within 30 days;
8.1.11 Cause any of the Permits for the Project to be revoked
or modified in any manner or form;
8.1.12 Except as permitted in this Article Eight, make any
loans and advances, (which terms do not include customary Compensation as a
result of employment) to any of their officers beyond what would be considered
reasonable or prudent;
8.1.13 Permit the aggregate Compensation paid to officers,
directors, and employees of the Partnership 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 types of business and producing comparable
results from operations;
8.1.14 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;
8.1.15 Allow the Partnership to create any direct or indirect
Subsidiary or enter into any partnership, joint venture, or similar arrangements
or make any Transfer;
8.1.16 Amend or materially modify in any material respect the
Partnership Agreement, as in effect on the Closing Date hereof;
8.1.17 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, the Additional
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Security Documents or any other Operative Documents (other than the GDB Loan
Agreement, as to which the provisions thereof shall apply), in whole or in part,
or which seeks damages in connection with any of such transactions, which
compromise settlement or discharge materially adversely affects the interest of
GDB under this Agreement;
8.1.18 Enter into any contract, agreement or transaction which
could reasonably be expected to have a Material Adverse Effect; or
8.1.19 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 GDB Facility Documents or the
LC Agreement or (ii) except as provided elsewhere in this Agreement, a material
default or event of default pursuant to, or non-compliance with any 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
(except the GDB Loan Agreement), unless, in either case, such default, event of
default or non-compliance would not have a Material Adverse Effect.
8.2 Actions by the Partnership. The Borrowers further covenant that,
until full payment of the GDB Facility and the performance of all other
Obligations of the Borrowers hereunder, they will not, without the prior consent
of GDB, and will not permit the Partnership, without the prior consent of GDB,
to:
8.2.1 During the Term of this Agreement, make or permit to be
made any payment of Partnership Returns, except payments applied in reduction of
the Borrowers' Obligations hereunder, or any other distribution of any revenues
from the Partnership to any
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Partner (except with the Borrowers' Share of Excess Revenues) unless and until
the Facility shall have been repaid in full;
8.2.2. Make any loans or advances to, any investments in or
any other payment of any kind to any Partner except, if applicable, (i) the
Borrowers' Share of Excess Revenues, (ii) the Basic Management Fee, (iii) the
Development Fee, and (iv) the Construction Management Fee; provided, however,
that KGC may make, and WKA may repay to KGC, KG Loans (as defined in and in
accordance with the Partnership Agreement as in effect on the date hereof);
8.2.3 Permit the Partnership to 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.
ARTICLE 9
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
9.1 Events of Default. The occurrence of any one or more of the
following events shall constitute and "Event of Default" hereunder:
(a) Borrowers shall fail to make, within ten (10) calendar
days of written notice from GDB, any payment of principal or interest or within
thirty (30) calendar days of written notice from GDB of any other amount owing
in respect of, the Facility.
(b) Borrowers shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the GDB Facility
Documents, and such failure or neglect shall remain unremedied for a period
ending thirty (30) days after Borrowers shall receive written notice of any such
failure from GDB, provided that, except with respect to a
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Default under Paragraph 7.1.1, 7.1.6, 7.1.13, 7.1.14, 7.1.15, 7.6, 8.1.1, 8.1.2,
8.1.3, 8.1.4, 8.1.7, 8.1.8, 8.1.16, 8.2.1, 8.2.2 or 10.3 hereof, no Event of
Default shall exist under this paragraph (b) so long as (i) Borrowers are
proceeding diligently to cure such failure, (ii) such delay would not have a
Material Adverse Effect and (iii) Borrowers cure such failure within one hundred
eighty (180) days after Borrowers shall receive written notice of any such
failure from GDB.
(c) Any representation or warranty herein or in any other GDB
Facility Document or the Bank Loan Documents in any written statement delivered
pursuant thereto or hereto, or in any report, financial statement or certificate
made or delivered to GDB by any of the Borrowers or the Partnership pursuant to
this Agreement, shall be untrue or incorrect in any material respect as to any
of the Borrowers or the Partnership, as of the date when made or deemed made.
(d) The Project shall not have been completed on or before the
Completion Date, and the same shall remain unremedied for a period ending
forty-five (45) days after Borrowers shall have received written notice from
GDB;
(e) An "Event of Default" shall occur and be continuing under
any of the other GDB Facility Documents.
(f) All or a substantial part of the assets of any of the
Borrowers or the Partnership 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 any of the
Borrowers or the Partnership, which action shall remain unstated or undismissed
for sixty (60) consecutive days; or any person shall apply for the appointment
of
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a receiver, trustee or custodian for any of the assets of any of the Borrowers
or the Partnership, which action shall remained unstated or undismissed for
thirty (30) consecutive days; or any of the Borrowers or the Partnership shall
have concealed, removed or permitted to be concealed or removed, any part of any
of their respective assets with intent to hinder, delay or defraud any of their
creditors or made or suffered an unauthorized transfer of any of their
respective 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 any
of the Borrowers or the Partnership in a court of competent jurisdiction seeking
a decree or order in respect of any of the Borrowers or the Partnership, (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 any of
the Borrowers or the Partnership, or of any substantial part of any of their
respective assets, or (iii) ordering the winding-up or liquidation of the
affairs of any of the Borrowers or the Partnership, and such case or proceeding
shall remain undismissed or unstated for sixty (60) consecutive days or such
court shall enter a decree or order granting the relief sought in such case or
proceeding.
(h) Any of the Borrowers or the Partnership 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
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similar official) of any of the Borrowers or the Partnership of any substantial
part of their respective 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 one hundred
thousand Dollars ($100,000.00) shall be rendered against any of the Borrowers or
the Partnership and the same shall not (i) be fully covered by the Insurance
Policies required by this Agreement or the GDB Loan Agreement or, with respect
to the Borrowers, any insurance maintained by them; 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 other than as explicitly provided for hereunder or the assignment or
purported assignment of this Agreement, the Security Documents, the Additional
Security Documents or any of their rights thereunder shall have been made by any
of the Borrowers or the Partnership, except as required under the Bank Loan
Documents.
(k) Any material provision of any Security Document or any
Additional Security Document after delivery thereof shall for any reason cease
to be legal, valid, binding or enforceable in accordance with its terms, or any
material security interest created under any Security Document or any Additional
Security Document shall cease to be a valid and perfected first-, second-, or
third-priority security interest or Lien, as the case may be, (except as
otherwise permitted herein or therein) in any of the Security or the Additional
Security purported to be covered thereby.
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(l) Any Reportable Event which GDB 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 Borrowers by
GDB, 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.
(m) Any of the Borrowers or the Partnership shall be enjoined,
restrained, or in any way prevented by court order, from conducting all or a
substantial part of their business affairs, including without limitation
ownership of the Facility Mortgaged Properties, or proceeding with the
development and operation of the Premises and the Project and such action is not
stayed, nullified or reversed within thirty (30) days thereafter.
9.2 Remedies. Subject to Paragraph 9.7, upon and during the
continuation of any Event of Default hereunder, GDB shall have the absolute
right, at its option and election, to:
(a) Cancel this Agreement by written notice to Borrowers;
(b) Declare all or any amounts owing to GDB under any of the
GDB Facility Documents to be immediately due and payable, all without diligence,
presentment, demand or payment, protest or notice of any kind, which are hereby
expressly waived by Borrowers;
(c) Institute appropriate proceedings, judicial or otherwise,
to specifically enforce performance hereof, or for the (i) complete foreclosure
of any of the Mortgaged Properties to the fullest extent permitted by applicable
Legal Requirements or (ii) partial
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foreclosure of any of the Mortgaged Properties, as permitted by applicable Legal
Requirements for the portion of the Obligations then due and payable (excluding
Obligations under the GDB Loan Agreement, as to which the remedies thereunder
shall apply), with the GDB Facility Documents then continuing unimpaired and
without loss of priority so as to secure the balance of such Obligations;
(d) Intentionally omitted;
(e) Make application to a court of competent jurisdiction for
the appointment of a receiver of the Mortgaged Properties of any portion
thereof, as a matter of strict right without notice to the Borrowers or the
Partnership (unless notice is required by applicable Legal Requirements and such
right of notice may not be waived) and without regard to the solvency of the
Borrowers or the Partnership, for the purpose of preserving the Mortgaged
Properties, preventing waste, and to protect all rights accruing to GDB by
virtue of this Agreement. Any such receiver shall have all the usual powers and
duties of receivers in similar cases, including the full power to rent, maintain
and otherwise operate the Mortgaged Properties, all upon such terms as may be
approved by the court. All expenses incurred in connection with the appointment
of said receiver, or in protecting and preserving the Mortgaged Properties,
shall be chargeable against Borrowers and shall be enforced as a lien against
the applicable Mortgaged Properties;
(f) To the extent permitted by applicable Legal Requirements
and subject to applicable provisions of the GDB Standstill Agreement and the
Facility Standstill Agreement, the Mortgaged Properties may be sold in one or
more parcels and in such manner and order as
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GDB in its sole discretion may elect, it being expressly understood and agreed
that any right of sale arising under this Agreement shall not be exhausted by
any one or more sales;
(g) Accelerate maturity of the Note 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 or other appropriate action in any tribunal.
(h) Require that Borrowers comply with instructions of GDB or
any Person designated by GDB in its reasonable discretion to take or refrain
from taking any lawful action with respect to the operation of the business of
any of the Borrowers of the Partnership which, in the judgment of GDB exercised
in its reasonable discretion, is necessary or desirable to remedy any Default;
(i) Exercise any and all other Rights granted under the GDB
Facility Documents or now or hereafter existing in equity or at law, by virtue
of statute or otherwise.
The said remedies and rights of GDB shall be cumulative and
not exclusive. GDB shall be privileged, and shall have the absolute right,
subject to Paragraph 9.7, to resort to any or all of said remedies, none to
limit or exclude any other. In any Event of Default, GDB shall have the absolute
right to refuse to disburse any undisbursed amounts from the Facility, and no
Person shall have any interest in the undisbursed balance of the Facility or any
right to require or compel payment thereof toward discharge or satisfaction of
any claim or lien which any Person has or may have for work performed on, or
materials supplied to, the Improvements.
9.3 Waiver of Defaults. The waiver by GDB of any Event of Default
hereof shall not be deemed, nor shall the same constitute, a waiver of any
subsequent Event of Default.
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9.4 Waivers by Borrowers. Except as otherwise provided for in this
Agreement and applicable law, Borrowers waive 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, protests, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by GDB on which any of the
Borrowers or the Partnership may in any way be liable and hereby ratifies and
confirms whatever GDB may do in this regard, (ii) all rights to notice and a
hearing prior to GDB's taking possession or control of, or to GDB's replevy,
attachment or levy upon, the Security, the Additional Security or may bond or
other collateral which might be required by any court prior to allowing GDB to
exercise any of its remedies, and (iii) the benefit or all valuation, appraisal
and exemption laws.
9.5 Right of Set-Off. Upon the occurrence and during the continuance of
any Event of Default and GDB's termination of this Agreement or GDB's declaring
all obligations to be forthwith due and payable pursuant to the provisions of
Paragraph 9.2 hereof, GDB 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 GDB to or for the credit or the
account of the Borrowers (except that any monies held pursuant to the GDB
Investment Agreement (as such term is defined in the LC Agreement) and the GDB
Facility Escrow shall not be deemed to be such deposits or indebtedness ) or any
of their Affiliates against any and all of the obligations of Borrowers or any
of their Affiliates now or hereafter existing under this Agreement, irrespective
of whether or not GDB shall have made any demand under this
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Agreement and although such Obligations may be unmatured. GDB agrees promptly to
notify Borrowers after any such set-off and application made by GDB; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off or application.
9.6 Control. None of the covenants or other provisions contained in
this Agreement shall, or shall be deemed to, give GDB under this Agreement the
right or power to exercise control over the affairs or management of any of the
Borrowers or the Partnership.
9.7 Exercise of Remedies.
(a) If an Event of Default shall occur solely as a result of a
failure by WKA or WMS to perform any obligations hereunder or under their
respective Guaranties or a failure by either of the owners of the
Facility-Mortgaged Properties to perform any obligations under any of the GDB
Facility Documents to which it is a party, GDB agrees that, without limiting its
rights as to WKA or WMS or otherwise hereunder, it will not exercise the
remedies set forth in Paragraph 9.2 with respect to the obligations of KGC or
Kumagai hereunder or under their respective Guaranties if KGC or Kumagai has
cured such Event of Default or provided cash collateral to secure payment in
full of such obligations of WKA and WMS.
(b) If an Event of Default shall occur solely as a result of a
failure by KGC or Kumagai to perform any obligations hereunder or under their
respective Guaranties, GDB agrees that, without limiting its rights as to KGC or
Kumagai or otherwise hereunder, it will not exercise the remedies set forth in
Paragraph 9.2 with respect to the obligations of WKS or WMS hereunder or under
their respective Guaranties or the obligations under the GDB Facility Mortgages
if WKA or WMS has cured such Event of Default or provided cash collateral to
secure payment in full of such obligations of KGC or Kumagai.
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(c) The limitations in Paragraphs 9.7(a) and 9.7(b) on the
exercise by GDB of its remedies set forth in Paragraph 9.2 shall not apply if
(i) an Event of Default has occurred which relates to the Partnership, the
Project, the Premises, the Security Documents (other than the Security Documents
referred to in Paragraph 4.1.1 or 4.1.2), the Additional Security Documents, the
deposit of amounts in the GDB Facility Escrow or the payment of interest or
principal when due under the Facility or (ii) if an event described in Paragraph
9.1(f), 9.1(g) or 9.1(h) has occurred with respect to WKS, WMS, KGC or Kumagai.
ARTICLE 10
MISCELLANEOUS
10.1 No Agency Relationship. The Borrowers understand and agree that
GDB is not the agent, representative, or partner of, or joint-venturer with any
of the Borrowers or the Partnership, and this Agreement shall not be construed
to make GDB 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 any of the Borrowers or the
Partnership, and it is distinctly understood and agreed that there is no
contractual relation, either express or implied, between GDB 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.
10.2 Liability. It is understood between the parties hereto that
Borrower or the Partnership has selected or will select all architects,
engineers, contractors, subcontractors, materialmen, as well as all others
furnishing services or materials for the Project, and GDB has,
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and shall have, no responsibility whatsoever for them or for the quality of
their materials or workmanship, it being understood that GDB's sole function is
that of lender and the only consideration passing from GDB to Borrowers is the
proceeds of the Facility in accordance with and subject to the terms of this
Agreement. It is also agreed that none of the Borrowers or the Partnership shall
have any right to rely on any procedures required by GDB herein, such procedures
being for the protection of GDB as lender and no one else. Borrowers hereby
agree to hold and save GDB harmless and indemnify it against and from claims of
any kind, by any Person, including but without limiting the generality of the
foregoing, employees of any of the Borrowers or the Partnership, any contractor
constructing the Improvements and the employees of any such contractor, any
tenant of any of the Borrowers or the Partnership, 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 any of the Borrowers or the Partnership.
10.3 Indemnity of GDB. Borrowers hereby indemnify GDB and its
respective directors, officers, employees, Affiliates and agents (collectively,
"Indemnified Persons") against, and agree to hold each such Indemnified Person
harmless from any and all losses, claims, damages and liabilities, and related
expenses, including reasonable fees and expenses of legal counsel, 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 transactions, services or matters that are the subject of the GDB
Facility Documents or the Bank 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
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jurisdiction to have arisen from the gross negligence or willful misconduct of
such Indemnified Person. If any litigation or proceeding is brought against any
Indemnified Person in respect of which indemnity may be sought against Borrowers
pursuant to this Paragraph 10.3, such Indemnified Person shall promptly notify
Borrowers in writing of the commencement of such litigation or proceeding, but
the omission so to notify Borrowers shall not relieve Borrowers from any other
obligation or liability which they may have to any Indemnified Person otherwise
than under this Paragraph 10.3 or Paragraph 7.1.12 hereof. Failure of the
Indemnified Person to timely notify Borrowers of the commencement of such
litigation of proceeding shall not relieve Borrowers of their obligations under
this Paragraph 10.3 or Paragraph 7.1.12 hereof, 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 brought
against any Indemnified Person and such Indemnified Persons shall notify
Borrowers of the commencement of such litigation or proceeding, Borrowers shall
be entitled to participate in such litigation or proceeding and, after written
notice from Borrowers 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 Borrowers 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, each at Borrowers' sole cost and expense, if (i) the
use of counsel chosen by Borrowers 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 any
Indemnified Person and any of the
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Borrowers, the Partnership or their Affiliates, and such Indemnified Person
shall have reasonably concluded that there may be legal defenses available to it
which are different from or additional to those available to any of the
Borrowers or the Partnership (in which case Borrowers 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 reasonable judgment of the Indemnified Person within a
reasonable time after notice of the institution of such litigation or
proceeding; or (iv) Borrowers shall authorize in writing such Indemnified Person
to employ separate counsel at the expense of Borrowers, provided, however, that
Borrowers 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. Borrowers 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 of such claim or litigation.
The agreements of Borrowers in this Paragraph 10.3 shall be in
addition to any liability that Borrowers may otherwise have and shall be
continuing and survive the repayment of the GDB Facility. All amounts due under
this Paragraph 10.3 shall be payable as incurred upon written demand therefor,
and shall be guaranteed by the Security.
10.4 Damage or Destruction.
(a) In case of a Casualty, the Borrowers will immediately give
notice thereof to GDB, generally describing the nature and extent of such
Casualty and setting forth the
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Borrowers' best estimate of the cost of Restoration and the Borrowers shall, at
their 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) Without prejudice to GDB's rights under the Facility
Mortgages or the mortgages on the Facility Mortgaged Properties, GDB shall be
entitled to receive all insurance proceeds payable on account of a Casualty in
respect of the Project. The Borrowers hereby irrevocably assign, transfer and
set over to GDB, and will cause the Partnership or other owner of any Mortgaged
Property irrevocably to assign, transfer and set over to GDB, all rights of any
of the Borrowers or the Partnership to any such proceeds, award or payment and
irrevocably authorized and empower GDB, in the name of the Borrowers or
otherwise, to file for and prosecute in its own name what would otherwise be the
claim of the Borrowers or the Partnership for any such proceeds. Notwithstanding
the foregoing, so long as no Event of Default shall have occurred and shall then
be continuing, and provided the Borrowers or the partnership promptly files and
diligently prosecutes all claims, the Borrowers or the Partnership shall have
the right to file, adjust, settle and prosecute any claim for such proceeds;
provided, however, that none of the Borrowers or the Partnership shall agree to
any adjustment or settlement of any such claim payable with respect to a Major
Casualty without GDB's prior written consent. The Borrowers shall pay promptly,
or shall cause the Partnership to pay promptly after demand all costs and
expenses (including, without limitation, attorneys' fees and expenses) incurred
by GDB in connection with a Casualty and the seeking and obtaining of any
insurance proceeds, award or payment with respect thereto.
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(c) In the event of a Major Casualty to the Premises, the Net
Proceeds shall be held, at GDB's option, by GDB as additional collateral for the
interest on the Note and shall be applied or dealt with by GDB as follows:
(i) if the Release Conditions (as hereinafter
defined) are satisfied, all Net Proceeds shall be made available to the
Borrowers or the Partnership to be applied towards the costs of the Restoration
in accordance with paragraph (e) of this Paragraph 10.4; and
(ii) if the Release Conditions are not satisfied,
all Net Proceeds shall be applied in accordance with Paragraph 10.6 hereof.
(d) In case of a Major Casualty, all Net Proceeds shall be
applied as provided in clause (i) of paragraph (c) of this Paragraph 10.4 if all
of the following conditions are satisfied or otherwise waived by GDB
(collectively, the "Release Conditions"):
(i) no Default or Event of Default shall have
occurred and be continuing;
(ii) the Borrowers or the Partnership shall have
delivered to GDB within thirty (30) days after the occurrence of the Major
Casualty, a notice of the Borrowers' desire to undertake, or to cause the
Partnership to undertake, the Restoration of the Project;
(iii) the Borrowers or the Partnership shall have
demonstrated to the satisfaction of GDB that the Restoration of the Project can
be completed at least six months prior to the then-current due date of the Term
Loan under the GDB Loan Agreement and at least six months prior to the Maturity
Date of the GDB Loan Agreement.
(iv) the Borrowers or the Partnership shall have
demonstrated to the satisfaction of GDB that sufficient funds are available to
the Borrowers or the Partnership
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through revenues or business interruption insurance maintained pursuant to
Paragraph 7.1.10 hereof, or a cash deposit, letter of credit or similar
cash-equivalent security (which in the case of a letter of credit or similar
cash-equivalent security shall be satisfactory to GDB as to form, content, and
issuer) and which shall be for the benefit of GDB, to pay all amounts estimated
to be paid with respect to the Existing GDB Loan and the Facility, and all other
estimated operating expenses with respect to the Project during the period
estimated by the Borrowers and approved by GDB 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 costs of the Project (as
specified in the Insurance Policies), Borrowers shall have provided GDB with a
guaranty of completion of the Restoration satisfactory to GDB 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 GDB's judgment, that the Net
Proceeds are insufficient to pay the costs of the Restoration, the Borrowers
shall have caused the Partnership to provide GDB 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 GDB as to form, content and issuer).
(e) Provided that no Default or 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 the connection with which the Release Conditions have
been met, the Net Proceeds shall be paid over to the Borrowers for the
Restoration of the Project. The Net Proceeds shall be disbursed substantially
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in accordance with, and in the same manner and subject to the same conditions as
the disbursement of the proceeds of the Existing 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
Borrowers for the Restoration of the Project without any requirement that the
Borrowers comply with such disbursement provisions of the GDB Loan Agreement.
(f) All costs and expenses incurred by GDB in connection with
making the Net Proceeds or Net Restoration Awards available for the Restoration
(including, without limitation, attorneys' fees and expenses and fees and
expenses of the Bank's Consultant) shall be paid by the Partnership or the
Borrowers. 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 deposited in the GDB Facility Escrow Account to be
established in accordance with the provisions of Paragraph 3.12 hereof.
10.5 Taking of the Mortgaged Properties.
(a) In case of a Taking or the commencement of any proceedings
or negotiations that might result in a Taking, the Borrowers immediately will
give notice thereof to GDB 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 that might result therefrom. Without prejudice to GDB's
rights under the GDB Facility Mortgages or the Mortgages on the Facility
Mortgaged Properties, GDB shall be entitled hereunder to all awards or
compensation payable on account of a Taking. The Borrowers hereby irrevocably
assign, transfer and set over to GDB, and will cause the Partnership irrevocably
to assign, transfer and set over to GDB, all
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rights of any of the Borrowers or the Partnership to any such award or
compensation and irrevocably authorize and empower GDB, in the name of the
Borrowers or the Partnership or otherwise, to collect and receive any such award
or compensation and to file and prosecute any and all claims for any such award
or compensation. Notwithstanding the foregoing, so long as no Event of Default
shall have occurred and shall then be continuing, and provided the Borrowers or
the Partnership promptly files and diligently prosecutes such claim or claims,
the Borrowers or the Partnership shall have the right to prosecute and file any
such claim or claims, and the Borrowers shall cause any such award or
compensation to be collected and promptly paid over to GDB; provided, however,
that none of the Borrowers or the Partnership shall agree to or accept any award
or compensation without GDB's prior written consent. GDB may participate in such
proceedings or negotiations, and the Borrowers will deliver or cause to be
delivered to GDB all instruments requested by GDB to permit such participation,
provided, however, that GDB 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 Borrowers shall, upon demand of
GDB, make, execute and deliver, and cause the Partnership to execute and
deliver, any and all assignments and other instruments sufficient for the
purpose of assigning any such award or compensation to GDB, free and clear of
any encumbrances of any kind or nature whatsoever other than the GDB Mortgage
and any junior encumbrances arising as a result of the KGC Mortgage (as such
term is defined in the LC Agreement). The Borrowers will cause the Partnership
to pay promptly after demand all costs and expenses (including, without
limitation, attorneys' fees and expenses and fees and expenses
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of the Bank's Consultant) incurred by GDB 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 GDB's judgment, the
Project can be restored substantially to its value and usefulness as it existed
prior to such Taking, then the Borrowers shall cause the Partnership, at its
sole cost and expense, promptly to commence and diligently to 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 GDB's option,
by GDB as additional collateral for interest on the Note and shall be applied or
dealt with by GDB as follows:
(i) Provided that no Default or 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 Paragraph 10.5 and, to the extent necessary
thereunder, if the Release Conditions are satisfied, all Net Restoration Awards
shall be applied to pay the cost of 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 10.4 (e) 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 Paragraph 10.4(f) hereof.
(ii) In the case of any Taking other than a Taking of the
nature referred to in Paragraph (b) of this Paragraph 10.5, all Net Restoration
Awards actually received by GDB shall be applied in accordance with Paragraph
10.6 hereof.
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(d) Notwithstanding anything to the contrary contained herein,
in the case of a Taking such that, in GDB's judgment, the Project is an
economically viable architectural whole notwithstanding such Taking, the
Borrowers shall have no obligation to commence or complete Restoration and all
Net Restoration Awards shall be applied in the order specified in Paragraph 10.6
hereof.
10.6 Application of Proceeds upon Casualty or Substantial
Taking. Upon a Casualty relating to the Premises, if the disposition of the Net
Proceeds is governed by clause (ii) of paragraph (c) of Paragraph 10.4 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 Paragraph 10.5 hereof, GDB
shall have the option, in GDB's sole discretion to (a) make available the Net
Proceeds or the Net Restoration Awards, as the case may be, to the Borrowers or
the Partnership for Restoration in the manner provided in paragraph (e) of
Paragraph 10.4 hereof or (b) apply such Net Proceeds or Net Restoration Awards
to the payment of any outstanding interest obligations of the Borrowers or the
Partnership under the Note.
If GDB shall receive and retain any Net Proceeds or Net
Restoration Awards, in trust or otherwise, the interest obligations under the
Note shall be reduced only by the amount thereof received and retained by GDB
and actually applied by GDB in reduction of the such interest obligations.
Notwithstanding anything contained in this Agreement to the
contrary, GDB shall release the proceeds of any business interruption insurance
maintained hereunder to the Borrowers or the Partnership, provided that the
Borrowers satisfy the conditions set forth in Paragraph 10.4(d)(i), (ii) and
(iv) herein and provided further that GDB shall retain that portion
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of such insurance proceeds that GDB deems necessary to pay all amounts estimated
to become payable with respect to interest on the Note during the period
estimated by the Borrowers and approved by GDB 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.
10.7 Complete Agreement, Modification of Agreement. The Operative
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 Borrowers and GDB.
No amendment or waiver of any provision of this Agreement, the
Note or any other Operative Document, nor consent to any departure by the
Borrowers 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.
10.8 Fees and Expenses. The Borrowers shall pay all reasonable
out-of-pocket expenses of GDB in connection with the preparation of the GDB
Facility Documents (including the fees and expenses of all of its counsel and
consultants retained in connection with the GDB Facility Documents and the
transactions contemplated thereby) subject to the limitation contained in the
Partnership's Letter to GDB dated April 9, 1992 relating thereto. If, at any
time or times, regardless of the existence of any Event of Default (except with
respect to Clauses (iii) and (iv) of this Paragraph 10.8, which shall be subject
to an Event of Default having occurred
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and continuing), GDB 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 or the GDB
Facility Documents;
(ii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by GDB, the Borrowers, or any other
Person) in any way relating to the Security, the Additional Security, any of the
Operative Documents (other than the GDB Loan Agreement, as to which the
provisions thereof shall apply) or any other agreements to be executed or
delivered in connection herewith;
(iii) any attempt to enforce any rights of GDB
against the Borrowers or the Partnership, or any other Person, that may be
obligated to GDB by virtue of any of the Loan Documents or the GDB Facility
Documents;
(iv) any attempt to verify, protect, collect, sell,
liquidate or otherwise dispose of the Security or the Additional 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 connection with or relating to any of the events or actions
described in this Section shall be payable, on demand, by the Borrowers to GDB
and shall be additional Obligations secured under this Agreement and the other
Operative 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.
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10.9 No Waiver by GDB. GDB's failure, at any time or times, to require
strict performance by the Borrowers of any provisions of this Agreement and any
of the other Operative Documents shall not waive, affect or diminish any right
of GDB thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by GDB of an Event of Default by the Borrowers under the
Operative Documents shall not suspend, waive or affect any other Event of
Default by the Borrowers under this Agreement and any of the other Operative
Documents, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of the Borrowers contained in this Agreement or
any of the other Operative Documents and no Event of Default by the Borrowers
under this Agreement and no defaults by the Borrowers under any of the other
Operative Documents shall be deemed to have been suspended or waived by GDB,
unless such suspension or waiver is by an instrument in writing signed by an
officer of GDB and directed to the Borrowers specifying such suspension or
waiver.
10.10 Remedies. GDB's rights and remedies under this Agreement shall be
cumulative and non-exclusive of any other rights and remedies which GDB may have
under any other agreement, including without limitation, the Operative
Documents, by operation of law or otherwise. Recourse to the Security or the
Additional Security shall not be required.
10.11 Parties. This Agreement and the other GDB Facility Documents
shall be binding upon, and inure to the benefit of, GDB's approved successors of
the Borrowers, GDB and the assigns, transferees and endorsees of GDB. Nothing in
this Agreement or the other GDB Facility Documents, express or implied, shall
give to any Person, other than the Parties hereto
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and their successors hereunder, any benefit or any legal or equitable right,
remedy or claim under this Agreement.
10.12 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other GDB Facility 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 GDB Facility Documents, the provision contained in this Agreement shall
govern and control.
10.13 Authorized Signatories. Until GDB shall be notified by the
Borrowers to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an authorized representative of each of the
Borrowers shall bind the Borrowers and be deemed to be the act of the Borrowers
pursuant to and in accordance with resolutions duly adopted by the Borrowers'
authorized representatives.
10.14 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 or the Partnership by another, or whenever any of the Parties or the
Partnership desires 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:
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(a) If to GDB:
Government Development Bank for Puerto Rico
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President and Director of Private
Sector - Banking Services
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With copies to:
Trias, ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Lic. ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
and
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to Borrowers or the Partnership:
Kumagai Caribbean, Inc.
Suite ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
and
126
WKA El Con Associates/El Conquistador Partnership
c/▇ ▇▇▇▇▇▇▇▇ Hospitality Management Corp.
El San ▇▇▇▇ Hotel & Casino
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Authorized Representative
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
and
WMS Industries Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
and
Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
c/o Public Loan Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
10.15 Captions. The headings, captions and arrangements used herein and
in any of the GDB Facility Documents are, unless specified otherwise, for
convenience only and shall not be
127
deemed to limit, amplify or modify the terms of the GDB Facility Documents, nor
affect the meaning thereof.
10.16 Exhibits and Schedules. All exhibits and schedules attached
hereto shall be and are hereby incorporated herein, and made a part of this
Agreement for all purposes.
10.17 Governing Law and Venue:
(a) The GDB Facility Documents are being executed and
delivered by Borrowers and GDB, and are intended to be performed in the
Commonwealth of Puerto Rico, and 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 GDB Facility Documents.
(b) The Parties agree that any legal action or proceeding with
respect to, arising out of, connected with, related to or incidental to the
relationship established between Borrowers and GDB in connection with this
Agreement, whether arising in contract, tort, equity or otherwise may be brought
in, and the Parties accept, generally, irrevocably and unconditionally the
jurisdiction and venue of, any Court of the Commonwealth of Puerto Rico with
respect to their persons and properties. Nothing in this Paragraph 10.17 shall
affect the right of GDB to serve process in any other manner permitted by law or
limit the right of GDB to bring any action or proceedings against the Borrowers
or their properties in the courts of any other jurisdiction. Borrowers hereby
waive any claim that Puerto Rico is an inconvenient forum.
10.18 Severability. If any provision of any of the GDB Facility
Documents is held to be illegal, invalid or unenforceable under present or
future laws effective during the term
128
thereof, such provision shall be fully severable; the appropriate GDB Facility
Document shall be construed and enforced as if such illegal, invalid or
unenforceable provisions 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.
10.19 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 Borrowers and GDB, and supplemented
only by documents delivered or to be delivered in accordance with the express
terms hereof.
10.20 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 advance of
funds under the Facility and shall continue in full force and effect until the
Obligations (other than Obligations under the GDB Loan Agreement, as to which
the provisions thereof shall apply) 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 GDB's Lien.
10.21 GDB 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
129
instruction as may be necessary to effect the terms and spirit of this Agreement
and the other GDB Facility Documents.
10.22 Reliance by GDB. GDB 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 GDB 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
day and year first above written.
WKA EL CON ASSOCIATES GOVERNMENT DEVELOPMENT BANK
FOR PUERTO RICO
Itself By: /s/ By: /s/
----------------------------- ------------------------
KUMAGAI CARIBBEAN, INC.
Itself By: /s/
-----------------------------
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