LOAN AND SECURITY AGREEMENT
US $10,000,000 Credit Facility
provided by Textron Financial Corporation to:
CR Resorts Cancun, S. de ▇.▇. de C.V.,
CR Resorts Los Cabos, S. de ▇.▇. de C.V.,
CR Resorts Puerto Vallarta, S. de ▇.▇. de C.V.,
Corporacion Mexitur, S. de ▇.▇. de C.V.,
CR Resorts Cancun Timeshare Trust, S. de ▇.▇. de C.V.,
CR Resorts Cabos Timeshare Trust, S. de ▇.▇. de C.V. and
CR Resorts Puerto Vallarta Timeshare Trust, S. de ▇.▇. de C.V.
(Collectively, the "Borrower")
As of November 23, 1999
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TABLE OF CONTENTS
Section 1. DEFINITION OF TERMS................................................................................... 6
1.1 Definitions............................................................................................... 6
Section 2. THE LOAN.............................................................................................. 27
2.1 Loan...................................................................................................... 27
2.2 Interest Rate............................................................................................. 27
2.3 Payments.................................................................................................. 28
2.4 Prepayments............................................................................................... 28
2.5 Guaranty.................................................................................................. 30
Section 3. COLLATERAL............................................................................................ 30
3.1 Grant of Security Interest................................................................................ 30
3.2 Security Interest in All Pledged Notes Receivable and Interval Lease Contracts............................ 30
3.3 Perfection of Security.................................................................................... 30
3.4 Location of Collateral.................................................................................... 30
3.5 Insurance and Protection of Collateral.................................................................... 30
3.6 Protection of Collateral; Reimbursement................................................................... 31
3.7 Cross-Collateralization and Default....................................................................... 31
Section 4. CONDITIONS PRECEDENT TO THE CLOSING AND FUNDING PROCEDURE............................................. 32
4.1 Conditions Precedent...................................................................................... 32
4.2 Funding Procedure......................................................................................... 41
Section 5. INTENTIONALLY OMITTED................................................................................. 45
Section 6. GENERAL REPRESENTATIONS AND WARRANTIES................................................................ 45
6.1 Organization, Standing, Qualification..................................................................... 45
6.2 Authorization, Enforceability, Etc........................................................................ 46
6.3 Financial Statements and Business Condition............................................................... 48
6.4 Taxes..................................................................................................... 48
6.5 Title to Properties: Prior Liens......................................................................... 48
6.6 Subsidiaries, Affiliates and Capital Structure............................................................ 49
6.7 Litigation, Proceedings, Etc.............................................................................. 49
6.8 Licenses, Permits, Etc.................................................................................... 49
6.9 Environmental Matters..................................................................................... 50
6.10 Full Disclosure.......................................................................................... 50
6.11 Use of Proceeds/Margin Stock............................................................................. 50
6.12 No Defaults.............................................................................................. 51
6.13 Compliance with Law...................................................................................... 51
6.14 Restrictions of Borrower or Guarantors................................................................... 52
6.15 Broker's Fees............................................................................................ 52
6.16 Deferred Compensation Plans.............................................................................. 52
6.17 Labor Relations.......................................................................................... 53
6.18 Resort................................................................................................... 53
6.19 Timeshare Documents and Reports.......................................................................... 55
6.20 Operating Contracts...................................................................................... 55
6.21 Architectural and Environmental Control.................................................................. 56
6.22 Tax Identification/Social Security Numbers............................................................... 56
6.23 Construction............................................................................................. 56
6.24 Continuation and Investigation........................................................................... 57
6.25 Exchange Control......................................................................................... 57
6.26 Year 2000................................................................................................ 57
Section 7. COVENANTS............................................................................................. 58
7.1 Affirmative Covenants..................................................................................... 58
7.2 Construction Covenants................................................................................... 73
7.3 Negative Covenants........................................................................................ 73
Section 8. EVENTS OF DEFAULT..................................................................................... 76
8.1 Nature of Events.......................................................................................... 76
Section 9. REMEDIES.............................................................................................. 80
9.1 Remedies Upon Default..................................................................................... 80
9.2 Notice of Sale............................................................................................ 84
9.3 Application of Collateral; Termination of Agreements...................................................... 85
9.4 Rights of Lender Regarding Collateral..................................................................... 85
9.5 Delegation of Duties and Rights........................................................................... 85
9.6 Lender Not in Control..................................................................................... 85
9.7 Waivers................................................................................................... 85
9.8 Cumulative Rights......................................................................................... 86
9.9 Expenditures by Lender.................................................................................... 86
9.10 Diminution in Value of Collateral........................................................................ 86
Section 10. CERTAIN RIGHTS OF LENDER............................................................................. 86
10.1 Protection of Collateral................................................................................. 86
10.2 Performance by Lender.................................................................................... 87
10.3 No Liability of Lender................................................................................... 87
10.4 Right to Defend Action Affecting Security................................................................ 88
10.5 Expenses................................................................................................. 88
10.6 Lender's Right of Set-Off................................................................................ 88
10.7 No Waiver................................................................................................ 88
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10.8 Right of Lender to Extend Time of Payment, Substitute, Release Security, Etc............................. 89
10.9 Assignment of Lender's Interest.......................................................................... 89
10.10 Notice to Purchaser..................................................................................... 89
10.11 Collection of the Notes................................................................................. 89
10.12 Power of Attorney....................................................................................... 90
10.13 Relief from Automatic Stay, Etc......................................................................... 90
10.14 Investigations and Inquiries............................................................................ 91
10.16 Right of First Refusal.................................................................................. 91
10.17 Withholding Tax......................................................................................... 91
Section 11. TERM OF AGREEMENT.................................................................................... 92
Section 12. MISCELLANEOUS........................................................................................ 92
12.1 Notices.................................................................................................. 92
12.2 Survival................................................................................................. 94
12.3 Governing Law............................................................................................ 94
12.4 Limitation on Interest................................................................................... 94
12.5 Invalid Provisions....................................................................................... 95
12.6 Successors and Assigns................................................................................... 95
12.7 Amendment................................................................................................ 96
12.8 Counterparts; Effectiveness.............................................................................. 96
12.9 Lender Not a Fiduciary................................................................................... 96
12.10 Return of Notes Receivable.............................................................................. 96
12.11 Accounting Principles................................................................................... 97
12.12 Total Agreement......................................................................................... 97
12.13 Litigation.............................................................................................. 97
12.14 Incorporation of Exhibits............................................................................... 98
12.15 Consent to Advertising and Publicity of Timeshare Documents............................................. 98
12.16 Directly or Indirectly.................................................................................. 98
12.17 Headings................................................................................................ 98
12.18 Gender.................................................................................................. 98
12.19 No Duty................................................................................................. 98
12.20 Reimbursement for Taxes................................................................................. 98
12.21 Submissions............................................................................................. 99
12.22 Investigations and Inquiries............................................................................ 99
12.23 Service of Process...................................................................................... 99
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TABLE OF EXHIBITS
Exhibit A ASSIGNMENT OF PLEDGED NOTES RECEIVABLE AND INTERVAL
LEASE CONTRACTS
Exhibit B PERMITTED LIENS AND ENCUMBRANCES
Exhibit C LEGAL DESCRIPTION OF RESORT PROPERTY
Exhibit D TIMESHARE DOCUMENTS
Exhibit E PENDING LITIGATION
Exhibit F FORM OF REQUEST FOR ADVANCE (RECEIVABLES)
Exhibit G OPERATING CONTRACTS
Exhibit H FORM OF OFFICER'S CERTIFICATE
Exhibit I OWNERSHIP OF BORROWER ENTITIES
Schedule 1 SALES PROJECTIONS
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is made and entered into as of November
23, 1999, by and among CR Resorts Cancun, S. de ▇.▇. de C.V., a Mexican limited
responsibility corporation with variable capital ("CR Cancun"), CR Resorts Los
Cabos, S. de ▇.▇. de C.V., a Mexican limited responsibility corporation with
variable capital ("CR Cabos"), CR Resorts Puerto Vallarta, S. de ▇.▇. de C.V., a
Mexican limited responsibility corporation with variable capital ("CR Puerto
Vallarta"), Corporacion Mexitur, S. de ▇.▇. de C.V., a Mexican limited
responsibility corporation with variable capital, CR Resorts Cancun Timeshare
Trust, S. de ▇.▇. de C.V., a Mexican limited responsibility corporation with
variable capital, CR Resorts Cabos Timeshare Trust, S. de ▇.▇. de C.V., a
Mexican limited responsibility corporation with variable capital and CR Resorts
Puerto Vallarta Timeshare Trust S. de ▇.▇. de C.V. a Mexican limited
responsibility corporation with variable capital (collectively, jointly and
severally, the "Borrower"); Raintree Resorts International, Inc., a Nevada
corporation ("Guarantor"), and TEXTRON FINANCIAL CORPORATION, a Delaware
corporation ("Lender").
In consideration of the mutual covenants and agreements contained
herein and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:
Section 1. DEFINITION OF TERMS.
1.1 Definitions. The capitalized terms used in this Agreement are defined
in this Section 1.1. The definitions include the singular and plural forms of
the terms defined.
(a) Advance. A portion of the proceeds of the Loan advanced from time
to time by Lender to Borrower in accordance with the terms of this
Agreement and pursuant to Section 2.1 herein.
(b) Affiliate. Any Person controlled by, controlling or under common
control with Borrower or the Guarantor.
(c) Agreement. This Loan and Security Agreement by and among Borrower,
the Guarantor and Lender (including the exhibits and schedules to it), as
it may be amended from time to time.
(d) Assignment of Interest in Contracts, Permits, Licenses and
Approvals. The properly recorded document executed and delivered by
Borrower securing the Obligations granting Lender an assignment of all of
Borrower's interest in and to all contracts, permits, licenses and
approvals with respect to the Resorts, to the extent recordation of such
document is permissible under applicable United States or Mexican law.
(e) Assignment of Pledged Notes Receivable and Interval Lease
Contracts. A recordable Mexican pledge or assignment executed before a
Mexican Notary made by Borrower in favor of Lender, a specimen form of
which is attached hereto as Exhibit A, evidencing the assignment by
Borrower of all Pledged Notes Receivable and related Interval Lease
Contracts.
(f) Background Documents. Defined in Section 4.1(f) of this Agreement.
(g) Bankruptcy Code. Defined in Section 10.13 of this Agreement.
(h) Borrowing Base. With respect to Eligible Notes Receivable pledged
to Lender in connection with each Advance of the Loan for which at least
one monthly payment has been made, an amount equal to the sum of (i) eighty
percent (80%) of the aggregate remaining principal balance of each Mexican
Nuevos Peso denominated Eligible Note Receivable, plus (ii) eighty-five
percent (85%) of the aggregate remaining principal balance of each U.S.
Dollar denominated Eligible Note Receivable.
(i) Business Day. Each day which is not a Saturday or Sunday or a
legal holiday under the laws of the State of Connecticut, the State of
Rhode Island, the United States of America or the United Mexican States.
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(j) CERCLA. Defined in Section 1.1(cc) of this Agreement.
(k) Closing Date. The date of this Agreement.
(l) Code. The Uniform Commercial Code in force in any applicable
jurisdiction of the United States, as amended from time to time, and
applicable Mexican law.
(m) Collateral. Collectively, all now owned or hereafter acquired
right, title and interest of Borrower in and to all of the following:
(i) A first priority lien and security interest in and pledge of
the Pledged Notes Receivable generated from the sale of Intervals in
the Resorts, together with all accounts, chattel paper and general
intangibles related thereto and the cash and non-cash proceeds
thereof;
(ii) A first priority assignment of and lien of proceeds from the
Interval Lease Contracts executed by Purchasers in favor of Borrower
encumbering the Intervals financed by the Notes Receivable, including
a first priority assignment of Borrower's rights (exercisable
following the occurrence of, and soley during the continuance of, an
Event of Default hereunder) to cancel such Interval Lease Contracts
and to re-sell (or cause the resale of) the Intervals relating to such
Interval Lease Contracts;
(iii) A first priority assignment of Borrower's right to
foreclose, cancel or resell (or cause the resale of) all Intervals
which are related to Pledged Notes Receivable which are in default or
which are or become ineligible hereunder; provided, however, that the
rights of Lender under such assignment shall be exercisable following
the occurrence of, and solely during the continuance of, an Event of
Default hereunder. Notwithstanding anything to the contrary contained
herein, Lender shall allow Borrower to substitute replacement Eligible
Notes Receivable for Pledged Notes Receivable which are in default or
otherwise ineligible hereunder;
(iv) A first priority assignment, subject to the Permitted FINOVA
Liens, of Borrower's, Guarantor's, and/or any and all Affiliates'
interest in any management, marketing or other use, maintenance or
service contracts for the Resorts;
(v) All Encumbered Intervals related to each Pledged Note
Receivable including, without limitation, the right to cancel or
resell (or cause the resale of) an Interval (exercisable following the
occurrence of an Event of Default hereunder) in the event of default
by a Purchaser pursuant to the terms of the Pledged Note Receivable,
together with all appurtenant rights and interests, including, without
limitation, appurtenant rights and interests in and to the Units and
Facilities, and any easement, license and use rights appurtenant to
such Intervals in and to all facilities and amenities of the Resorts,
all as described and set forth in the Timeshare Documents;
(vi) A first priority security interest in and to all documents,
instruments, accounts, chattel paper, and general intangibles relating
to the Pledged Notes Receivable and the other Collateral (including
the cash and non-cash proceeds thereof);
(vii) A first priority security interest, subject to the
Permitted FINOVA Liens, in and to all furniture, furnishings and
fixtures of every kind and description (and all improvements and
accessions thereto, including, without limitation, the Common
Furnishings) located in or on or used in connection with any Interval;
(viii) To the greatest extent permitted under United States and
Mexican law and subject to the Permitted FINOVA Liens, easements,
leasehold interests (whether as lessor or lessee), franchises,
permits, approvals, licenses, facilities and amenities on, affecting
or appurtenant to each of the Resorts and rights to occupy, use and
enjoy any such facilities or amenities and any Encumbered Intervals;
(ix) All rights in, to and under all Payment Authorization
Agreements signed and delivered by or on behalf of each Purchaser of
an Encumbered Interval and all accounts and proceeds relating thereto
or deriving therefrom;
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(x) Subject to the Permitted FINOVA Liens, any rights inuring to
Borrower as an "institutional mortgagee, an "institutional lender" or
a "mortgagee" in connection with any Encumbered Interval as provided
in the Timeshare Documents;
(xi) Extensions, additions, improvements, betterments, renewals,
substitutions and replacements of, for or to any of the Collateral,
wherever located, together with the products, proceeds, issues, rents
and profits thereof, and any replacements, additions or accessions
thereto or substitutions thereof, and all rights in or under insurance
policies and to the proceeds of any insurance policies covering any of
the other Collateral, all rights to unearned or refunded insurance
premiums, and the proceeds of any condemnation awards or any claims
regarding any of the other Collateral;
(xii) A first priority security interest (pledge and deposit),
subject to the Permitted FINOVA Liens, in and to Borrower's interest
in all books, records, reports, computer tapes, computer disks and
software relating to all or any portion of the Collateral, including,
without limitation, Borrower's reservation system for use of the
Resorts;
(xiii) Subject to the Permitted FINOVA Liens, the Textron
Mortgages on the Resort Property and all Improvements constructed or
to be constructed thereon;
(xiv) A first priority lien (pledge and deposit), subject to the
Permitted FINOVA Liens, in and to the Personal Property, together with
the cash and non-cash proceeds thereof, with appropriate
non-disturbance language relating to common area equipment, fixtures
and furniture;
(xv) To the extent allowed under Mexican law and subject to the
Permitted FINOVA Liens, an absolute and unconditional first assignment
or pledge of any and all leases, subleases, licenses, concessions,
entry fees, or other agreements which grant a possessory interest in
and to, or the right to use the Resort Property or any portion
thereof, including any Unsold Intervals (collectively the "Tenant
Leases");
(xvi) Subject to the Permitted FINOVA Liens, an absolute and
unconditional first assignment or pledge of all of the rents,
revenues, income, proceeds, royalties, profits and other benefits
payable for using, leasing, licensing, possessing, operating from or
in, or otherwise enjoying the Resort Property pursuant to the Tenant
Leases, including, without limitation, damages received upon the
occurrence of a default under any of the Tenant Leases and all
proceeds payable under any policy of insurance covering loss of rents
with respect thereto (collectively the "Tenant Income");
(xvii) To the extent allowed under Mexican law and subject to the
Permitted FINOVA Liens, an absolute and unconditional first assignment
or pledge of all other agreements to which Borrower is or becomes a
party or holds any interest therein and which in any way relate to the
use, occupancy, management, marketing, maintenance or enjoyment of the
Resort Property, including, but not limited to, purchase contracts,
and related documents, building permits, construction contracts,
completion bonds, utility contracts, maintenance agreements, marketing
and sales agreements, management agreements and service contracts, and
any agreement guaranteeing the performance of the obligations
contained in any of the foregoing agreements (collectively the
"Property Contracts"), and in and to all related accounts and proceeds
and all deposits, letters of credit or other property pledged or
delivered pursuant thereto;
(xviii) A first priority security interest, subject to the
Permitted FINOVA Liens, in all inventory, supplies, accounts, chattel
paper and general intangibles owned or hereafter acquired by Borrower,
used or useful in connection with, and placed or to be placed on or
under the Resort Property, including but not limited to the Units
contained therein, the Encumbered Intervals and the Unsold Intervals
and the cash and non-cash proceeds thereof;
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(xix) A first priority security interest, subject to the
Permitted FINOVA Liens, in all furniture, appliances, furnishings,
machinery, plumbing, heating, ventilating, air conditioning systems,
fixtures and equipment owned or hereafter acquired by Borrower, used
or useful in connection with, and placed or to be placed on or under
the Resort Property, the Units, the Encumbered Intervals or the Unsold
Intervals and the cash and non-cash proceeds thereof; and
(xx) The first priority assignment of Borrower's interest in the
Declaration, to the greatest extent permitted under Mexican law and
subject to the Permitted FINOVA Liens, as provided under that certain
Assignment of Declarant's Rights.
(n) Commitment. The Loan commitment issued by Lender to Borrower,
dated September 28, 1999, and accepted by Borrower on October 1, 1999.
(o) Commitment Fee. An amount equal to US$100,000.00, which was earned
upon Borrower's acceptance of the Commitment and which has been paid in
full by Borrower to Lender.
(p) CR Cabos. Defined in the Introduction to this Agreement.
(q) CR Cancun. Defined in the Introduction to this Agreement.
(r) CR Capital. CR Resorts Capital, S. de ▇.▇. de C.V., a variable
capital stock limited liability company organized and existing under the
laws of the United Mexican States.
(s) CR Puerto Vallarta. Defined in the Introduction to this Agreement.
(t) CR Remainder. CR Resorts Remainder Company, S. de ▇.▇. de C.V., a
variable capital stock limited liability company organized and existing
under the laws of the United Mexican States.
(u) Common Furnishings. All fixtures, furniture, appliances,
carpeting, equipment and furnishings located in the Units or elsewhere
within each of the Resorts.
(v) Debtor Relief Laws. Any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or
similar law, proceeding or device providing for the relief of debtors from
time to time in effect and generally affecting the rights of creditors.
(w) Declaration. Collectively, with respect to the Club ▇▇▇▇▇▇ Resort
at Puerto Vallarta, the Declaration of Property Regime and its Regulations,
formalized in public deed number 11,924, dated August 8, 1997, recorded in
the Public Registry of Property in the City of Puerto Vallarta, Mexico,
with respect to the Club ▇▇▇▇▇▇ Resort at Los Cabos, the Declaration of
Property Regime and its Regulations, formalized in public deed number
34708, dated August 12, 1997, recorded in the Public Registry of Property
in ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, with respect to the Club ▇▇▇▇▇▇
Resort at Cancun, the Declaration of Property Regime formalized in public
deed number 10973, dated August 11, 1997, recorded in the Public Registry
in the city of Cancun, Mexico and its corresponding Regulations.
(x) Default. An event or condition, the occurrence of which
immediately is or, with the lapse of time or the giving of notice or both,
becomes an Event of Default.
(y) Default Rate. The Interest Rate plus two percent (2%) per annum;
provided, however, that the Default Rate shall in no event exceed the
highest interest rate permitted to be charged under applicable usury laws.
(z) Eligible Notes Receivable. Those Pledged Notes Receivable which
satisfy each of the following criteria:
(i) one or more of the entities constituting the Borrower is the
sole payee;
(ii) it arises from a bona fide sale by Borrower of one (1) or
more Intervals in one of the Resorts;
(iii) the Interval sale from which it arises has not been
canceled by the Purchaser, any statutory or other applicable
cancellation or rescission period has expired and the Interval sale is
otherwise in total compliance with the terms and provisions of this
Agreement and all of the other Loan Documents;
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(iv) it is secured by a properly executed and recorded Assignment
of Pledged Notes Receivable and a properly executed Interval Lease
Contract;
(v) principal and interest payments on it are payable to the
Borrower in legal tender of the United States, provided, however, that
up to thirty percent (30%) by number of all Eligible Notes Receivable
may be payable in Mexican Nuevos Pesos;
(vi) payments of principal and interest on it are due in equal
monthly installments (or in such other amounts to cover principal and
interest);
(vii) it shall have an original term of no more than sixty (60)
months, payable in equal monthly installments of principal and
interest; provided, however, that up to twenty-five percent (25%) of
the aggregate outstanding balance of all Eligible Notes Receivable
may, at any time, be comprised of Notes Receivable having an original
term of no more than eighty-four (84) months;
(viii) a cash down payment and/or other cash payments have been
received from the Purchaser in an amount equal to at least fifteen
percent (15%) of the original purchase price of the related Interval,
and the Purchaser thereafter shall have received no cash or other
rebates of any kind which would cause the down payment to be less than
fifteen percent (15%) of the total purchase price;
(ix) no monthly installment due with respect to the Pledged Note
Receivable is more than thirty (30) days contractually past due as of
the date of funding of the Initial Advance with respect to such
Pledged Note Receivable, or more than sixty (60) days contractually
past due thereafter;
(x) the weighted average interest rate of all Eligible Notes
Receivable payable in legal tender of the United States at any time
shall be not less than twelve percent (12.0%) per annum;
(xi) the weighted average interest rate of all Eligible Notes
Receivable payable in Mexican Nuevos Pesos at any time shall be not
less than twenty two percent (22.0%) per annum;
(xii) the Purchaser of the related Interval has immediate access
to a Unit of the type specified in such Purchaser's Interval Lease
Contract, which Interval and related Unit have been completed,
developed and furnished in accordance with the specifications provided
in the Purchaser's Interval Lease Contract, the public offering
statement (if any) and the other Timeshare Documents; and the
Purchaser has, subject to the terms of the Declaration, Interval Lease
Contract and other Timeshare Documents, complete and unrestricted
access to the related Interval, Unit, Facilities and the Resorts;
(xiii) neither the Purchaser of the related Interval nor any
other maker of the Note Receivable is an Affiliate of, personally
related to or employed by Borrower;
(xiv) the Purchaser or other obligor has no claim against
Borrower or any Affiliate of Borrower, and no defense, set-off or
counterclaim exists with respect to the Note Receivable;
(xv) the maximum outstanding principal balance of such Note
Receivable does not exceed US$25,000.00 (or the then equivalent in
Mexican Nuevos Pesos), and total principal balance of all Notes
Receivable executed by any one (1) obligor will not exceed
US$25,000.00 (or the then equivalent in Mexican Nuevos Pesos), without
the prior written approval of Lender;
(xvi) the Note Receivable is executed by a Mexican resident;
(xvii) the original of the Note Receivable and all related
consumer documents have been endorsed in the manner prescribed by
Lender and delivered to Lender or its approved agent (the "Agent") as
provided in this Agreement, and the terms thereof and all instruments
related thereto shall comply in all respects with all applicable
federal and state statutes, ordinances, rules and regulations;
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(xviii) the Unit in which the Interval being financed by the Note
Receivable is located shall not be subject to any Lien which has not
previously been consented to in writing by Lender other than the
Permitted FINOVA Liens;
(xix) the form of promissory note, federal truth-in-lending
disclosure statement, if any, or other applicable disclosure, purchase
contract and all other documents and instruments corresponding to the
Interval purchase transaction giving rise to such Note Receivable has
been approved in advance by Lender in writing;
(xx) the Purchaser (a) is entitled to fifty (50) consecutive
years of use (commencing in 1997) in a specific Unit type during a
specified season at one of the three locations of the Resorts each
year expiring in the year 2047, which right shall be exercised for a
seven (7) day period each year for such fifty (50) year term, or (b)
is entitled to twenty-five (25) biennual years of use (commencing in
1997) in a specific Unit type during a specified season at one of the
three locations of the Resorts expiring in the year 2047, which shall
be exercised for a seven (7) day period every alternate year for such
term;
(xxi) the Purchaser may not accelerate their usage in the Resorts
(provided, however, that certain Purchasers may accelerate their usage
by a maximum of one (1) week per year, provided that such Purchasers
pay all additional maintenance fees and any and all other fees related
to such accelerated usage);
(xxii) the Note Receivable is originated in connection with an
Interval Lease Contract and Borrower has provided and/or caused all
interest or lienholders which have mortgages encumbering the Resorts
or other agreements or amendments to their respective security
documents which expressly state to Lender's satisfaction that such
interest or lienholder may not disturb the use rights of any Purchaser
pursuant to such Purchaser's Interval Lease Contract for so long as
Purchaser is not in default pursuant to the terms of such Interval
Lease Contract;
(xxiii) Lender is in possession of the executed original Notes
Receivable endorsed by Borrower to Lender, along with the executed
original Interval Lease Contracts corresponding to such Notes
Receivable;
(xxiv) the Note Receivable is originated in connection with a
related Interval Lease Contract whereby Land Trustee under a Mexican
guaranty trust satisfactory to Lender holds legal title to each of the
Resorts on behalf of CR Cabos, CR Cancun, or CR Puerto Vallarta,
together with CR Remainder (as to the remainder interest in each of
the Resorts commencing under the FINOVA Mortgages in the year 2047)
and whereby non-disturbance provisions for the continued use and
enjoyment by the Interval Purchasers of the Resorts and Facilities are
in a form and substance acceptable to Lender; and
(xxv) any and all release payments required under the inventory
component of the FINOVA Loan pertaining to the Interval related to
such Note Receivable, specifically including the "Interval Sales
Payment" as such term is defined in the FINOVA Loan Agreement, have
been paid in full by Borrower.
(aa) Encumbered Intervals. The Intervals that are subject to the
Pledged Notes Receivable.
(bb) Environmental Inspection. An engineering report or reports
covering each of the Resorts and/or Units, as specified below, confirming:
(i) that soil conditions are sufficient to support the existing
Units and any contemplated improvements to the Units;
(ii) the absence of toxic or hazardous substances at each of the
Resorts;
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(iii) that in accordance with any and all applicable Mexican
laws, the engineering firm has obtained, reviewed and included within
its report statements from information as Lender may reasonably
require, all of which information shall confirm that there is no known
or suspected toxic or hazardous waste site located at the Resorts or
in such proximity thereto as to create a material risk of
contamination of the Collateral.
(cc) Environmental Laws. Any and all comparable principles of Federal
and local pollution control, environmental protection or regulation or
Hazardous Materials statutes or ordinances applicable in Mexico or the
States of Baja California Sur, Jalisco and ▇▇▇▇▇▇▇▇ Roo, Mexico comparable
to the following laws of the United States of America: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
from time to time ("CERCLA"), the Resource Conservation and Recovery Act of
1976, as amended from time to time ("RCRA"), the Superfund Amendments and
Reauthorization Act of 1986, as amended, the federal Clean Air Act, the
federal Clean Water Act, the federal Safe Drinking Water Act, the federal
Toxic Substances Control Act, the federal Hazardous Materials
Transportation Act, the federal Emergency Planning and Community Right to
Know Act of 1986, the federal Endangered Species Act, the federal
Occupational Safety and Health Act of 1970, the federal Water Pollution
Control Act, as all of the foregoing laws may be amended from time to time,
and any rules or regulations promulgated pursuant to the foregoing;
together with any similar local, state or federal statutes, ordinances,
rules or regulations, either in existence as of the date hereof or enacted
or promulgated after the date of this Agreement, that concern the
management, control, storage, discharge, treatment, containment, removal
and/or transport of Hazardous Materials or other substances that are or may
become a threat to public health or the environment; together with any
common law theory involving Hazardous Materials or substances which are (or
alleged to be) hazardous to human health or the environment, based on
nuisance, trespass, negligence, strict liability or other tortious conduct,
or any other federal, state or local statute, regulation, rule, policy, or
determination pertaining to health, hygiene, the environment or
environmental conditions.
(dd) EPA. Defined in Section 4.1(f)(v)(C) of this Agreement.
(ee) Event of Default. Defined in Section 8.1 of this Agreement.
(ff) Exchange Company. Resort Condominiums, International de Mexico,
S. de ▇.▇. de C.V.
(gg) Facilities. Any amenities, recreational facilities, services,
improvements, real property, improved or unimproved, or personal property
at the Resorts which are part of the Resorts, other than the Units, or
which are made available to Purchasers, and including those common areas
and facilities of the three (3) separate ▇▇▇▇▇▇ ▇▇▇▇▇▇ Hotels located
adjacent to each of the three (3) separate locations of the Resorts in
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ available pursuant to the
terms of those certain three (3) separate Operating Agreements executed by
and between Starwood Cancun, S. de ▇.▇. de C.V., Bancomer, S.A., CR Cancun,
and CR Remainder as to the Cancun Resort, Starwood Puerto Vallarta, S. de
▇.▇. de C.V., Bancomer S.A., CR Puerto Vallarta and CR Remainder as to the
Puerto Vallarta Resort, and Starwood Los Cabos, S. de ▇.▇. de C.V.,
Bancomer, S.A., CR Cabos, and CR Remainder as to the Los Cabos Resort
(Collectively, the "Operating Agreements").
(hh) Financial Statements. The tax returns, balance sheets and
statements of income and expense of Borrower and Guarantor and the related
notes and schedules delivered by Borrower prior to the Closing Date and
provided for in Section 6.3 of this Agreement; and the financial statements
and reports of the Guarantor delivered to Lender prior to the Closing Date;
and the monthly, quarterly and annual financial statements and reports
required to be provided to Lender pursuant to Sections 7.1(h) of this
Agreement.
(ii) Financing Statements. Defined in Section 3.3 of this Agreement.
(jj) FINOVA. FINOVA Capital Corporation, a Delaware corporation,
together with its successors and assigns.
11
(kk) FINOVA Loan. Collectively, a receivables loan from FINOVA to
Borrower up to the present maximum amount of Twenty Million Dollars
(US$20,000,000.00) and an inventory loan from FINOVA to Borrower up to the
present maximum amount of Thirteen Million Five Hundred Thousand Dollars
(US$13,500,000.00) as provided in the FINOVA Loan Agreement, and as
evidenced by a Receivables Promissory Note dated as of November 23, 1998,
as amended from time to time, executed by Borrower and payable to FINOVA in
the present principal amount of Twenty Million Dollars (US$20,000,000.00)
and by an Inventory Promissory Note dated as of April 23, 1999, as amended
from time to time, executed by Borrower and payable to FINOVA in the
present principal amount of Thirteen Million Five Hundred Thousand Dollars
(US$13,500,000.00).
(ll) FINOVA Loan Agreement. That certain First Amended and Restated
Loan and Security Agreement dated as of April 23, 1999 by and between
FINOVA and Borrower, as amended from time to time.
(mm) FINOVA Mortgages. As security for the FINOVA Loan, the Trust
Agreements executed by Borrower in favor of FINOVA registered in the
appropriate property records in the location of each of the Resorts, and
encumbering the Resorts with a first priority mortgage lien in favor of
FINOVA by appointing FINOVA as first beneficiary in guaranty with respect
to the trust use rights (derechos fideicomisarios de uso) at each of the
Resorts, as amended from time to time.
(nn) GAAP. Generally accepted accounting principles, applied on a
consistent basis, as described in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or in
statements of the Financial Accounting Standards Board which are applicable
in the circumstances as of the date in question. Notwithstanding anything
to the contrary provided in this Agreement, Lender shall allow Borrower to
comply, at Borrower's option, with the Mexican equivalent of the United
States' GAAP until such possible time when Lender, in its reasonable
discretion, requests compliance with United States' GAAP.
(oo) Governmental Agency. Defined in Section 7.1(w) of this Agreement.
(pp) Guarantor. Raintree Resorts International, Inc., a Nevada
corporation.
(qq) Guaranty. A Payment Guaranty and Subordination Agreement executed
by the Guarantor and delivered to Lender concurrently with this Agreement.
The Guaranty shall be the absolute and unconditional guaranty of payment
and performance of the Loan and all amounts secured by or under the Loan
Documents, as more fully set forth herein.
(rr) Hazardous Materials. "Hazardous substances," "hazardous waste,"
or "hazardous constituents," "toxic substances" or "solid waste," as
defined in the Environmental Laws, and any other contaminant or any
material, waste or substance which is petroleum or petroleum based,
asbestos, polychlorinated biphenyls, flammable explosives or radioactive
materials.
(ss) ILSA. Defined in Section 6.13(b) of this Agreement.
(tt) Improvements. All Units, Facilities and other buildings,
structures, recreational facilities and appurtenances now located on, or to
be constructed on the Resort Property.
(uu) Indemnified Lender Parties. Defined in Section 7.1(w) of this
Agreement.
(vv) Indenture. That certain Indenture, dated as of December 5, 1997,
by and between Guarantor, CR Capital, and IBJ ▇▇▇▇▇▇▇▇ Bank and Trust
Company.
(ww) Intercreditor Agreement. That certain agreement entered as of
November 23, 1999 by and between Lender, FINOVA, Borrower and Guarantor
relating to this Agreement, the Textron Mortgages, the FINOVA Loan and the
FINOVA Mortgages.
(xx) Interest Rate. A variable rate, adjusted as of the first day of
each calendar month, equal to the sum of the Prime Rate as of the first day
of each calendar month, plus two percent (2.00%) per annum.
12
(yy) Initial Advance. The first Advance under the Loan.
(zz) Interval Lease Contract. A purchase contract or membership
agreement whereby a Purchaser purchases an Interval in one of the Resorts.
(aaa) Interval. As more specifically described in the Timeshare
Documents and pursuant to the Declaration, a right-to-use interest in one
of the Resorts that allows a Purchaser to (i) occupy a specific Unit type
during a specified season at one of the three locations of the Resorts each
year on a recurring annual basis over a period of fifty (50) consecutive
years, as set forth in each Purchaser's Interval Lease Contract, together
with all related membership rights to use the Facilities and Common
Furnishings, or (ii) occupy a specific Unit type during a specified season
at one of the three locations of the Resorts on a recurring alternate year
basis for (25) biennual years of use, as set forth in each Purchaser's
Interval Lease Contract, together with all related membership rights to use
the Facilities and Common Furnishings.
(bbb) Land Trustee. Bancomer, S.A., Institucion de Banca Mulitple,
Grupo Financiero, Direccion Fiduciaria, a Mexican banking corporation
acceptable to Lender, as trustee of the three separate Mexican land trusts
(Fideicomisos) established pursuant to the Trust Agreements and holding
legal title to the Resort Property.
(ccc) Lien. Any interest in property securing an obligation owed to, a
perfected security interest in favor of, or valid claim by, a Person other
than the owner of such property, whether such interest arises in equity or
is based on common law, statute or contract.
(ddd) Loan. The maximum US$10,000,000.00 credit facility, as described
in this Agreement.
(eee) Loan Documents. Collectively, the following documents and
instruments, as each may be amended, renewed, extended, restated or
supplemented from time to time:
(i) This Agreement;
(ii) the Note;
(iii) the Textron Mortgages;
(iv) the Assignment of Pledged Notes Receivable and Interval
Lease Contracts;
(v) the Lockbox Agreement;
(vi) the Servicing Agreement;
(vii) the Environmental Indemnity Agreement;
(viii) the Assignment of Interest in Contracts, Permits, Licenses
and Approvals;
(ix) the Guaranty;
(x) the Assignment of Borrower's beneficial interest in any
guaranteed trust;
(xi) the UCC-1 financing statements (or Mexican equivalent)
covering the Collateral, to be recorded with the Nevada Secretary of
State, the Texas Secretary of State, and in ▇▇▇▇▇▇ County, Texas;
(xii) the Assignment of Declarant's Rights;
(xiii) the Assignment of Interest in Servicing Agreement;
(xiv) Intercreditor Agreement; and
(xv) such other agreements, documents, instruments, certificates
and materials as Lender may request to evidence or secure the
Obligations, to evidence and perfect the rights and Liens and security
interests of Lender contemplated by the Loan Documents and to
effectuate the transactions contemplated herein.
13
(fff) Loan Year. The period from the date of the Initial Advance
through the last day of the next full twelve (12) calendar month period and
each twelve (12) calendar month period thereafter.
(ggg) Lockbox Agent. A financial institution duly licensed in its
jurisdiction of operation as may be approved by Lender in writing from time
to time in Lender's sole discretion. Lockbox Agent shall act as Lender's
exclusive agent for the collection of all payments made on the Pledged
Notes Receivable, at Borrower's expense.
(hhh) Lockbox Agreement. A Lockbox Agreement or Blocked Account
Agreement among Borrower, Lender and Lockbox Agent, pursuant to which
Lockbox Agent agrees to provide for the receipt and deposit of payments on
the Notes Receivable and disbursement of such payments to Lender, as well
as certain financial reporting services.
(iii) Management Contract. Defined in Section 4.1(w) of this
Agreement.
(jjj) Mandatory Prepayment. Any prepayment of the Loan required by
Section 2.4(b) of this Agreement.
(kkk) Material Party. Defined in Section 4.1(i) of this Agreement.
(lll) Mirror Notes. Those Certain promissory notes totaling, in the
aggregate, Eighty-Three Million Three Hundred Forty-Six Thousand Three
Hundred Seventy-Two and 70/100 United States Dollars (U.S.$83,346,372.70)
issued by CR Cancun, CR Cabos, and/or CR Puerto Vallarta, in favor of CR
Capital.
(mmm) Note. The Note Receivable Promissory Note.
(nnn) Note Receivable. A promissory note made and executed by a
Purchaser in favor of Borrower in connection with such Purchaser's
acquisition of an Interval.
(ooo) Note Receivable Promissory Note. The promissory note evidencing
the Loan, dated as of the Closing Date and made and executed by Borrower
and delivered to Lender concurrently with this Agreement.
(ppp) Obligations. All indebtedness, liabilities, obligations, and
responsibilities, both financial and otherwise, to which Borrower is
subject under any of the Loan Documents, including but not limited to all
amounts due or becoming due to Lender with respect to the Loan or any of
the Loan Documents, including principal, interest, prepayment premiums,
contributions, taxes, insurance premiums, loan charges, custodial fees,
attorneys' and paralegals' fees and expenses and other fees or expenses
incurred by Lender or advanced to or on behalf of Borrower by Lender
pursuant to any of the Loan Documents, and the prompt and complete payment
and performance by Borrower and Guarantor, of all obligations, indebtedness
and liabilities pursuant to this Agreement, or any of the other Loan
Documents or otherwise.
(qqq) Operating Contract. As defined in Section 6.20 of this
Agreement.
(rrr) Payment Authorization Agreement. The pre-authorized electronic
debit agreement by a Purchaser which provides for payment of a Note
Receivable addressed to the Lockbox Agent.
(sss) Pension Reform Act. Defined in Section 6.16 of this Agreement.
(ttt) Permitted Debt. This term shall mean, collectively, (i) short
term accounts payable incurred in connection with the operation of the
Resorts in the ordinary course of business, (ii) the financing of
time-share receivables denominated in Mexican Unidades de Inversion, (iii)
the Mirror Notes, and (iv) the FINOVA Loan.
(uuu) Permitted FINOVA Liens . Those certain Liens encumbering the
Resort Property and certain of the remaining Collateral, specifically
including the FINOVA Mortgages, perfected in favor of FINOVA pursuant to
the FINOVA Loan.
(vvv) Permitted Liens and Encumbrances. Those liens and encumbrances
affecting all or a portion of one or more of the Resorts to which Lender
consents, as set forth on Exhibit B attached hereto and incorporated herein
by this reference, and specifically including the Permitted FINOVA Liens.
14
(www) Person. An individual, partnership, corporation, limited
liability company, trust, unincorporated organization, other entity or a
government or agency or political subdivision thereof.
(xxx) Personal Property. All equipment, furniture, furnishings,
inventory, supplies, accounts, chattel paper and general intangibles at any
time located at, arising out of the use of and/or used in connection with
the operation of the Resort Property, together with the cash and non-cash
proceeds thereof.
(yyy) Plan. Defined in Section 6.16 of this Agreement.
(zzz) Pledged Note Receivable. Any Eligible Note Receivable which at
any time has been pledged to Lender by Borrower, pursuant to this Agreement
or any of the other Loan Documents.
(aaaa) Prime Rate. The prime rate of interest as announced or
published from time to time by Chase Manhattan Bank.
(bbbb) Power of Attorney. Defined in Section 10.12 of this Agreement.
(cccc) Preparer. Defined in Section 12.21(b) of this Agreement.
(dddd) Property Contracts. Defined in Section 1.1(m)(xvii) of this
Agreement.
(eeee) Purchase Price. The total purchase price of an Interval, as set
forth in the Interval Lease Contract and the Note Receivable relating to
the purchase of such Interval.
(ffff) Purchaser. Any Person who purchases one (1) or more Intervals
and is the maker of one (1) or more Pledged Notes Receivable.
(gggg) RCRA. Defined in Section 1.1(cc) of this Agreement.
(hhhh) Resorts. Collectively, the three separate timeshare projects
consisting of, among other things, the Resort Property, commonly known as
Club ▇▇▇▇▇▇ Resort at Cancun (located in Cancun, Mexico), Club ▇▇▇▇▇▇
Resort at Puerto Vallarta (located in Puerto Vallarta, Mexico) and Club
▇▇▇▇▇▇ Resort at Los Cabos (located in Los Cabos, Mexico), which presently
consist of an aggregate of four hundred two (402) Units, and the Intervals
now existing or hereafter added in one (1) or more phases, and all related
Facilities, Common Furnishings and other appurtenances.
(iiii) Resort Property. Collectively, that certain real property of
approximately Ten Thousand Two Hundred Seventy-Six and Ninety-Six One
Hundredths (10,276.96) square meters located in Cancun Mexico, that certain
real property of approximately Twenty-Four Thousand Nine Hundred Thirty-Six
and Eight Hundred Nineteen One Thousandths (24,936.819) square meters
located in Puerto Vallarta, Mexico, and that certain real property of
approximately Thirty-Eight Thousand Five Hundred Seventy and Nine One
Thousandths (38,570.009) square meters located in Los Cabos, Mexico, all as
more fully described in Exhibit C, attached hereto and incorporated herein
by this reference together with all related and appurtenant property, both
real and personal, amenities, facilities, furniture, furnishings,
equipment, appliances, fixtures, easements, licenses, rights and interests
as established by and more fully described in the Declaration and the other
Timeshare Documents, as the same may be amended from time to time.
(jjjj) RESPA. Defined in Section 6.13(b) of this Agreement.
(kkkk) Revolving Credit Period. Defined in Section 2.1 of this
Agreement.
(llll) Security. Shall have the same meaning as that ascribed to it in
Section 2(1) of the Securities Act of 1933, as amended.
(mmmm) Service of Process Agent. Defined in Section 12.23 of this
Agreement.
(nnnn) Servicing Agent. Corporacion Mexitur, S. de ▇.▇. de C.V., an
affiliate of Borrower and Guarantor, or other Person expressly designated
from time to time by Lender, in Lender's sole and absolute discretion, to
provide reports pursuant to the Servicing Agreement, at Borrower's expense
(at a current market rate as agreed to by Borrower and TBS Business
15
Services, Inc. in advance of the Closing Date). Lender shall have the
right, in its sole and absolute discretion, to remove any Servicing Agent
appointed by Borrower and require that Borrower appoint a replacement
Servicing Agent that is satisfactory to Lender, in its sole and absolute
discretion. For so long as Servicing Agent is Corporacion Mexitur, S. de
▇.▇. de C.V., or is affiliated in any way with Borrower or Guarantor, such
Servicing Agent shall provide to Lender fidelity insurance and any other
insurance policies deemed necessary by Lender, in its sole and absolute
discretion. Under no circumstances shall Borrower or an Affiliate of
Borrower be the Servicing Agent during any period of time in which an
uncured Event of Default hereunder exists.
(oooo) Servicing Agreement. The Servicing Agreement which has been
executed or which shall be executed prior to the Initial Advance, by and
among Lender, Borrower and Servicing Agent, providing for servicing of
Pledged Notes Receivable and providing certain required reports.
(pppp) Submissions. Defined in Section 12.21(a) of this Agreement.
(qqqq) Survey. As Lender may require, perimeter, as-built surveys of
each of the Resorts and the Units, as of a date no earlier than ninety (90)
days prior to the Closing Date, with signature and seal of a registered
engineer or surveyor affixed thereto showing all easements affecting the
Resort Property and other matters apparent thereon, the relation of the
Resort Property to public thoroughfares for access purposes and the
location of the proposed Improvements on the Resort Property and certifying
that the Resort Property is not in a flood hazard area (if applicable in
Mexico), together with a legal description of the Resort Property
compatible with said survey and sufficient for purposes of the Textron
Mortgages. The survey shall be certified to Lender, as Lender may require.
(rrrr) Tenant Income. Defined in Section 1.1(m)(xvi) of this
Agreement.
(ssss) Tenant Leases. Defined in Section 1.1(m)(xv) of this Agreement.
(tttt) Term. A period of sixty (60) calendar months from the Closing
Date, plus the number of days from the Closing Date to the end of the month
in which the Closing Date occurs.
(uuuu) Textron Mortgages. Collectively, three separate properly
recorded and perfected mortgages delivered by Borrower in favor of Lender
securing the Loan and encumbering the Resort Property and all Improvements
(including the Units, all Interval Lease Contracts and, to the greatest
extent permitted under United States and Mexican law, all Unsold Intervals)
constructed or to be constructed thereon, subject only to the Permitted
Liens and Encumbrances. The Textron Mortgages shall be of a second priority
and exclusive (with the exception of the FINOVA Mortgages) as to the Resort
Property (including all possible future phases, all amenities, improvements
and fixtures now or hereafter located on the Resort Property, and all
easements and other rights appurtenant to the Resort Property now existing
or to be constructed or renovated) and the Improvements. In accordance with
Mexican law, Textron's Mortgages shall be perfected by recording amendments
to the existing guaranty Trust Agreements which establish the FINOVA
Mortgages in order to add Lender as the second beneficiary in guaranty as
to each of the Resorts, with FINOVA remaining as the first beneficiary in
guaranty as to each of the Resorts. The documents establishing the guaranty
Trust Agreements shall be amended under terms acceptable to Lender, the
trustee of the guaranty Trust Agreements (the "Land Trustee") shall be a
bank acceptable to Lender, and the Trust Agreements shall be recorded with
the Public Registries of Property in the location of each of the Resorts.
Each of the three separate Trust Agreements establishing the Textron
Mortgages shall be in the amount of US$10,000,000.00. The Trust Agreements
shall each include an acknowledgement by Borrower and FINOVA to Lender's
rights in and to the Resort Property and to Lender's rights to the Notes
Receivable and related Interval Lease Contracts and Intervals to be
financed by Lender pursuant to the terms of this Agreement.
(vvvv) Timeshare Act. Any and all applicable Mexican laws, rules and
regulations governing the creation and sale of timeshare, specifically
including NOM-029-SCFI-1998 Commercial Information - Normative Elements for
Time Sharing Services.
16
(wwww) Timeshare Documents. All documents listed on Exhibit D relating
to the Resorts and the creation, marketing and sale of Intervals, which
shall consist of, but not be limited to, the following:
(i) The public offering statements, if any, and any other reports
or registrations, together with all exhibits and schedules thereto,
with evidence of approvals thereof from the applicable Mexican
regulatory authorities related to the establishment and operation of
each of the Resorts and the sale of Intervals by Borrower in Mexico
and in each other jurisdiction in which sales of Intervals are made,
to the extent such public offering statements and other reports,
registrations, or approvals are required by applicable law. With
respect to the marketing and sale of Intervals in jurisdictions other
than Mexico for which Borrower claims that no registration is
required, Borrower shall deliver to Lender:
(A) written statements from the applicable governmental
authorities confirming that no such registration is required
where such applicable governmental authorities exist;
(B) opinions of counsel licensed to practice in such
jurisdictions stating that no such registration is necessary; or
(C) such other evidence of compliance with such
jurisdictions' statutes, ordinances, rules and regulations as
Lender may request.
(ii) with respect to each of the Resorts, the Declaration and all
amendments thereto, any site plan and any easements or other
instruments, establishing and describing the status of the Units and
the Intervals, and all amenities, facilities, services, and common
areas and elements related or appurtenant thereto;
(iii) other registrations, approvals and permits for the creation
and sale of Intervals and the operation of each of the Resorts,
including, without limitation, the Borrower's occupational and other
business licenses relating to the Borrower or the Resorts, samples of
all advertising, gift, prize and promotional materials, and evidence
of any required approvals thereof by the applicable Mexican regulatory
authorities, as well as copies of any agreements with the Exchange
Company and a list of all salespeople and sales managers in connection
with the sale of Intervals, together with evidence that each is
properly licensed in accordance with applicable law; and
(iv) all agreements entered into by or on behalf of the Borrower
including, without limitation, agreements regarding Purchasers' rights
to use the Facilities and Common Furnishings, and any agreements with
any Affiliate or third party related to management, operations and
maintenance of the Resorts, and any such agreements with Purchasers;
(v) the form of all documents used to market and sell Intervals
or Encumbered Intervals or that govern the rights of Purchasers,
including without limitation, purchase contracts, advertising and
solicitation materials, Notes Receivable, truth-in-lending disclosure
statements or other applicable disclosure, disclosures, documents,
acknowledgments, exchange club agreements, reservation agreements, and
management agreements.
Each Timeshare Document shall be in form and content acceptable
to Lender, in its sole discretion. Lender shall have received and
approved true, correct and complete copies of the Timeshare Documents
as a condition precedent to any Advances hereunder.
(xxxx) Trust Agreements. Collectively (i) with respect to the Club
▇▇▇▇▇▇ Resort at Los Cabos, that certain Irrevocable Trust Agreement dated
as of August 18, 1997, by and between Desarrollos Turisticos Integrales, S.
de ▇.▇. de C.V., a Mexican limited responsibility corporation with variable
capital (predecessor-in-interest to CR Cabos) both as trustor and
beneficiary with respect to the Trust Use Rights, the Land Trustee, as
trustee, and Residual Beneficiary, as beneficiary with respect to the Trust
Residual Interest, as evidenced by Public Instrument No. 55, 929, as
amended by that certain Amendment to Irrevocable Trust Agreement, dated as
of November 28, 1997, by and between CR Cabos, Land Trustee and Residual
Beneficiary, as evidenced by Public Instrument No. 51,158, as further
amended by that certain Amendment to Irrevocable Trust Agreement dated as
of March 3, 1998 by and between CR Cabos, Land Trustee and Residual
17
Beneficiary, as evidenced by Public Instrument No. 51,403, and as further
amended by that certain Amendment to Irrevocable Trust Agreement (Convenio
Modificatorio del Contracto de Fideicomiso Irrevocable) dated as of April
26, 1999 evidenced by Public Instrument No. 67,620 of Notary Public Number
103 for the Federal District of Mexico, executed by Land Trustee, as
Trustee, CR Cabos, as beneficiary with respect to the Trust Use Rights,
FINOVA, as beneficiary in guaranty with respect to the Trust Use Rights and
Residual Beneficiary, as beneficiary with respect to the Trust Residual
Interest, as it may be from time to time renewed, amended, restated or
replaced, (ii) with respect to the Club ▇▇▇▇▇▇ Resort at Cancun, that
certain Irrevocable Trust Agreement, dated as of August 18, 1997, by and
between Promotora Turistica Nizuc, S. de ▇.▇. de C.V. a Mexican limited
responsibility corporation with variable capital (predecessor-in-interest
to CR Cancun) both as trustor and beneficiary with respect to the Trust Use
Rights, the Land Trustee, as trustee, and Residual Beneficiary as
beneficiary with respect to the Trust Residual Interest, as evidenced by
Public Instrument No. 55,928, as amended by that certain Amendment to
Irrevocable Trust Agreement, dated as of November 28, 1997, by and between
CR Cancun, Land Trustee and Residual Beneficiary, as evidenced by Public
Instrument No. 51,162, as further amended by that certain Amendment to
Irrevocable Trust Agreement dated as of March 3, 1998 by and between CR
Cancun, Land Trustee and Residual Beneficiary, as evidenced by Public
Instrument No. 51,404, and as further amended by that certain Amendment to
Irrevocable Trust Agreement (Convenio Modificatorio del Contracto de
Fideicomiso Irrevocable) dated as of April 26, 1999 evidenced by Public
Instrument No. 67619 of Notary Public Number 103 for the Federal District
of Mexico, executed by Land Trustee, as Trustee, CR Cancun, as beneficiary
with respect to the Trust Use Rights, FINOVA, as beneficiary in guaranty
with respect to the Trust Use Rights and Residual Beneficiary, as
beneficiary with respect to the Trust Residual Interest, as it may be from
time to time renewed, amended, restated or replaced, and (iii) with respect
to the Club ▇▇▇▇▇▇ Resort at Puerto Vallarta, that certain Irrevocable
Trust Agreement, dated as of August 18, 1997, by and between Promotora y
Desarrolladora Pacifico, S. de ▇.▇. de C.V., a Mexican limited
responsibility corporation with variable capital (predecessor-in-interest
to CR Puerto Vallarta), both as trustor and beneficiary with respect to the
Trust Use Rights, the Land Trustee, as trustee, and Residual Beneficiary,
as beneficiary with respect to the Trust Residual Interest, as evidenced by
Public Instrument No. 55,927, as amended by that certain Amendment to
Irrevocable Trust Agreement, dated as of November 28, 1997, by and between
CR Puerto Vallarta, Land Trustee and Residual Beneficiary as evidenced by
Public Instrument No. 51,159, as further amended by that certain Amendment
to Irrevocable Trust Agreement dated as of March 3, 1998 by and between CR
Puerto Vallarta, Land Trustee and Residual Beneficiary, as evidenced by
Public Instrument No. 51,405, and as further amended by Amendment to
Irrevocable Trust Agreement (Convenio Modificatorio del Contracto de
Fideicomiso Irrevocable) dated as of April 26, 1999 evidenced by Public
Instrument No. 67,618 of Notary Public Number 103 for the Federal District
of Mexico, executed Land Trustee, as Trustee, CR Puerto Vallarta, as
beneficiary with respect to the Trust Use Rights, FINOVA, as beneficiary in
guaranty with respect to the Trust Use Rights, and Residual Beneficiary, as
beneficiary with respect to the Trust Residual Interest, as it may be form
time to time renewed, amended, restated or replaced. The term Trust
Agreement shall mean any of the Trust Agreements.
(yyyy) Unit. The individual living units in a building in each of the
Resorts, together with all related or appurtenant interests in services,
easements, rights of access or other rights or benefits, as described in
the Timeshare Documents. The Resorts presently consist of an aggregate of
four hundred two (402) Units.
(zzzz) Unsold Intervals. All Intervals owned by Borrower at any
particular time within the Resorts and for sale in the ordinary course of
business.
(aaaaa) Voluntary Prepayment. Any voluntary prepayment of the Loan
permitted to be made by Borrower under the terms of this Agreement.
Section 2. THE LOAN.
2.1 Loan. Except as may be expressly set forth herein to the contrary, all
amounts of money set forth herein and in the Loan Documents shall be in U.S.
Dollars. Upon the terms and subject to the conditions set forth in this
Agreement, Lender shall advance to Borrower, and Borrower may borrow, repay and
18
reborrow, principal under the Loan to be funded in a series of Advances during
the initial full twelve (12) month period following the Closing Date (the
"Revolving Credit Period") not to exceed an outstanding balance of the lesser of
US$10,000,000 or the Borrowing Base. In accordance with the provisions of
Section 4.2(c)(v) and Section 4.2(c)(vi) of this Agreement, Advances would be
made in increments of at least US$50,000 but not more often than twice a month.
As provided in Section 6.11 herein, the proceeds of the Loan will be disbursed
by Lender solely to pay for Loan Costs (as such term is defined in the
Commitment), to Borrower for amortization (principal or interest) of mortgage
and non-mortgage debt owed by Borrower or by any Affiliates of Borrower and for
sales, marketing, working capital, project development and administrative
expenses incurred in the operations for the Resorts, and for future expansion of
timeshare development in accordance with plans and projections acceptable to
Lender (provided, however, that the use of the proceeds of the Loan for such
expansion shall not adversely affect the operations of any of the Resorts).
The maximum Loan amount (exclusive of accrued but unpaid interest) which
may be outstanding at any time under this Agreement shall not exceed
US$10,000,000.00, and Lender shall have no obligation whatsoever to make any
Advance which would cause the aggregate outstanding principal balances of the
Loan to exceed US$10,000,000.00. In the event that the proceeds of the Loan and
any other amounts required to be paid by Borrower hereunder are insufficient to
fully pay all costs as contemplated hereunder such proceeds will be applied, or
if the use of the Loan proceeds varies materially (as determined reasonably and
in good faith by Lender) from the uses described herein, then Lender shall have
no obligation to fund (or continue funding) the Loan or any portion thereof;
provided, however, that, Borrower shall be permitted to provide from its own
funds an amount sufficient to cover that portion of the Loan proceeds used for
uses materially varying from the uses described herein.
2.2 Interest Rate. The aggregate principal amount of all Advances of the
Loan which are outstanding from time to time shall bear interest at a rate equal
to the Interest Rate. The average monthly outstanding principal balance of the
Loan shall bear interest in arrears as of Lender's wiring of funds through its
receipt of repayment of the Loan (if received by Lender later than 12 noon,
Eastern Standard Time, then interest accrual shall be through the next Business
Day following such receipt). Immediately upon the occurrence, but solely during
the continuance, of an Event of Default and after the Note Maturity Date) (if
the Loan is not paid in full on the Note Maturity Date), at Lender's election,
in its sole discretion, the Loan shall bear interest at the Default Rate.
2.3 Payments. Borrower agrees punctually to pay or cause to be paid to
Lender all principal and interest due under the Note or otherwise with respect
to the Loan. The Borrower shall make the following payments on the Loan:
(a) Monthly Payments. Borrower shall direct or otherwise cause the
makers of all Pledged Notes Receivable to pay all monies due thereunder to
the Lockbox Agent for deposit in the lockbox account established pursuant
to the Lockbox Agreement, or as otherwise required by Lender. All funds
from the Pledged Notes Receivable shall be paid by Purchasers directly to
the Lockbox Agent. Lockbox Agent shall disburse proceeds pursuant to the
terms of the Lockbox Agreement. At least one (1) time per week, one hundred
percent (100%) of the cleared funds collected from the Pledged Notes
Receivable, if any, will be paid to Lender by the Lockbox Agent, pursuant
to the Lockbox Agreement, and will be applied by Lender in the following
order: (A) to the payment of costs or expenses incurred by Lender pursuant
to this Agreement in creating, maintaining, protecting or enforcing its
Liens in and to the Collateral and in collecting any amounts due to Lender
in connection with the Loan; (B) to any interest accrued at the Default
Rate; (C) to the payment of accrued and unpaid interest at the Interest
Rate; and (D) to the reduction of the principal balance of the Loan. If the
amount of the funds received by Lender from the Lockbox Agent with respect
to any month is insufficient to pay in full the amounts provided for in
clauses (A), (B), and (C) of the preceding sentence for such month, without
notice or demand, Borrower shall pay the difference to Lender on or before
last day of the month following interest accrual. In the event Borrower
receives any payments on any of the Pledged Notes Receivable directly from
or on behalf of the maker or makers thereof, Borrower shall receive all
such payments in trust for the sole and exclusive benefit of Lender; and
Borrower shall deliver to the Lockbox Agent all such payments (in the form
so received by Borrower) as and when received by Borrower, unless Lender
shall have notified Borrower to deliver directly to Lender all payments
with respect to the Pledged Notes Receivable which may be received by
Borrower, in which event all such payments (in the form received) shall be
endorsed by Borrower to Lender and delivered to Lender promptly upon
Borrower's receipt thereof.
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(b) Final Payment. The entire outstanding principal balance of the
Loan, together with all other Obligations, shall be paid in full on or
before the first day of the sixty-first (61st) month following the end of
the month in which the Closing Date occurs (the "Note Maturity Date").
2.4 Prepayments.
(a) Voluntary Prepayments. Subject to the terms of this Agreement and
the payment of the applicable prepayment premium set forth in Section
2.4(c) below, Borrower may prepay the Loan, in whole but not in part, at
any time after the end of the first Loan Year, upon thirty (30) days prior
written notice to Lender. In the event that Borrower elects to prepay the
Loan in full, such prepayment must include all outstanding principal,
accrued but unpaid interest, and all other Obligations, including the
applicable prepayment premium provided in Section 2.4(c) below. The Loan
may not be prepaid before the end of the first Loan Year.
(b) Mandatory Prepayments. If at any time and for any reason, the
outstanding unpaid principal balance of the Loan exceeds the aggregate
amount of the Borrowing Base, and Borrower has not replaced ineligible
Notes Receivable with Eligible Notes Receivable, then, within ten (10) days
following Borrower's receipt of telecopied notice from Lender of the
occurrence of such excess over Borrowing Base, or, absent such telecopied
notice, within fifteen (15) days after the end of the calendar month in
which such excess first occurred, Borrower shall either (A) prepay the
principal balance of the Loan in an amount equal to the difference between
the aggregate principal balance of the Loan and the amount of the Borrowing
Base; or (B) increase the aggregate principal amount of Eligible Notes
Receivable pledged to Lender so that the amount of Borrowing Base equals or
exceeds the aggregate outstanding principal balance of the Loan. The pledge
and delivery to Lender of additional Eligible Notes Receivable shall comply
with the document delivery and recordation requirements set forth in
Section 4.2 of this Agreement and shall be accompanied by a written
certification of Borrower to the effect that such additional Pledged Notes
Receivable are Eligible Notes Receivable and that, giving effect to the
pledge to Lender of such Eligible Note Receivable, the outstanding unpaid
principal balance of the Loan is equal to or less than the aggregate amount
of the Borrowing Base. If Borrower elects to prepay the excess principal
balance of the Loan pursuant to this Section 2.4(b), no prepayment premium
shall be due Lender in connection with such prepayment.
(c) Prepayment Premiums. Any prepayment of the Loan pursuant to
Section 2.4(a) above must be accompanied by a prepayment premium
calculated, as of the date of such prepayment, as follows:
Date of Prepayment Premium
Loan Year Two Three percent (3%) of the then
outstanding balance of the Loan
Loan Year Three Two percent (2%) of the then
outstanding balance of the Loan
Loan Year Four One percent (1%) of the then
outstanding balance of the Loan
Thereafter Zero (0)
No prepayment premium shall be payable, and there shall be no
prepayment prohibition at any time, in connection with (i) any prepayment
of the principal balance of the Loan which arises from the prepayment of
one or more Eligible Notes Receivable by its maker or makers, or (ii) any
prepayment of the principal balance of the Loan which arises from the
casualty or condemnation at one or more of the Resorts where the Borrower
is not required to rebuild.
2.5 Guaranty. Payment and performance by Borrower of one hundred percent
(100%) of all of the Obligations (including one hundred percent [100%] of the
outstanding principal, plus one hundred percent [100%] of all accrued interest,
late charges, attorneys' fees, and other charges arising under the Loan) shall
be unconditionally guaranteed by the Guarantor, in accordance with the terms of
this Agreement, the Note and the Guaranty.
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Section 3. COLLATERAL.
3.1 Grant of Security Interest. To secure the payment and performance of
the Obligations, for value received, Borrower unconditionally and irrevocably
assigns, pledges and grants to Lender a continuing first priority security
interest in and to the Collateral, subject to the Permitted FINOVA Liens.
3.2 Security Interest in All Pledged Notes Receivable and Interval Lease
Contracts. Notwithstanding that Lender may be obligated, subject to the terms
and conditions set forth in the Loan Documents, to make Advances only with
respect to Eligible Notes Receivable, Lender shall have a continuing security
interest in all of the Pledged Notes Receivable and related Interval Lease
Contracts relating to such Pledged Notes Receivable and may collect all payments
made under or with respect to all Pledged Notes Receivable and related Interval
Lease Contracts, including Eligible Notes Receivable that may become ineligible,
until any of the same may be released by Lender, if at all, pursuant to Section
12.10 below.
3.3 Perfection of Security. Borrower agrees, at its own expense, to execute
the financing statements or applicable security agreements under United States
or applicable Mexican law, if any, provided for by the Code ("Financing
Statements"), together with any and all other instruments or documents, and to
take such other action as may be required to perfect and to continue the
perfection of Lender's security interests in the Collateral and, unless
prohibited by law, Borrower hereby authorizes Lender to execute and file any
such Financing Statements on Borrower's behalf. Borrower further agrees, at its
own expense, to execute any and all instruments or documents and to take such
other action as may be required to perfect and to continue the perfection of
Lender's security interests in the Collateral under Mexican law and under
applicable laws of the United States.
3.4 Location of Collateral. All tangible Collateral (other than Collateral
delivered to Lender or the Lockbox Agent) which is personal property is to
remain, at all times, within the Resorts, and Borrower may not transfer the
Collateral from such premises without the prior written approval of Lender.
3.5 Insurance and Protection of Collateral. Borrower agrees to maintain and
pay for insurance upon all Collateral wherever located (whether in storage or in
transit) covering risks in such amounts and with such insurance companies as is
provided in Section 7.1(d) hereof.
3.6 Protection of Collateral; Reimbursement. The portion of the Collateral
consisting of (i) the original Pledged Notes Receivable; (ii) the original
Interval Lease Contracts (including any addenda thereto) related to such Pledged
Notes Receivable; and (iii) originals or true copies of the related
truth-in-lending disclosure statements, if any, or other applicable disclosure,
and if required by Lender, loan applications, the related Purchaser's
acknowledgments, receipts, the Payment Authorization Agreements and the Exchange
Company applications and disclosures, shall be delivered, at Borrower's expense,
to Lender at its East Hartford, Connecticut office and held in Lender's
possession and control until the Obligations are fully satisfied. Borrower shall
pay to Lender, at the time of each Advance, a one-time custodial fee of US$10.00
for each Pledged Note Receivable (and related Collateral) delivered into
Lender's physical possession. The portion of the Collateral delivered to Lender
as described above shall be segregated by Lender and stored in a fire-resistant
filing cabinet. Borrower and the Guarantor agree that such storage is and shall
be deemed to constitute reasonable care by Lender with respect to such
Collateral. All insurance expenses and all expenses of protecting the Collateral
including without limitation, storing, warehousing, insuring, handling,
maintaining and shipping the Collateral, and any and all excise, property,
intangibles, sales and use taxes imposed by any state, federal or local
authority on any of the Collateral or with respect to the sale thereof shall be
paid by Lender from the custodial fee referenced above. Any and all other sums
for which Borrower may become liable hereunder and all costs and expenses
(including attorneys' and paralegals' fees, legal expenses and court costs)
which Lender may incur in enforcing or protecting its Lien on, or rights and
interest in, the Collateral or any of its rights or remedies under this
Agreement or any other Loan Document or with respect to any of the transactions
to be had hereunder or thereunder, until paid by Borrower to Lender with
interest at the Default Rate, shall be included among the Obligations and, as
such, shall be secured by all of the Collateral. Provided that Lender retains
the original Pledged Notes Receivable and originals or copies of the related
Timeshare Documents delivered to it in a fire-resistant filing cabinet as
provided above, Lender shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto or for
21
any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, the Lockbox Agent, Servicing Agent or
any other Person whomsoever, excluding damages or losses that occur as a result
of Lender's gross negligence or willful misconduct.
3.7 Cross-Collateralization and Default. The Collateral shall secure all of
the Obligations. All Liens, pledges, assignments, mortgages, security interests
and collateral granted by Borrower to or for the benefit of Lender pursuant
hereto or any other related documents or instruments shall also secure the
Obligations. In addition, all other loans of any type made by Lender to Borrower
and any Affiliate of Borrower shall be cross-collateralized and cross-defaulted.
Section 4. CONDITIONS PRECEDENT TO THE CLOSING AND FUNDING PROCEDURE.
4.1 Conditions Precedent. The obligation of Lender to enter into this
Agreement and to fund the Loan shall be subject to the satisfaction of each of
the conditions precedent set forth in the Commitment, in addition to all of the
conditions precedent set forth below and elsewhere in the Loan Documents on or
before the Closing Date:
(a) Loan Documents. On or prior to the Closing Date, Borrower and the
Guarantor shall execute and deliver (or cause to be executed and delivered,
as the case may be) to Lender, the Loan Documents.
(b) Title. To the extent available, a title insurance policy in form
acceptable to Lender, or to the extent such a title insurance policy is not
available, a satisfactory legal opinion or certification issued by
qualified real estate counsel or Mexican notary acceptable to Lender which
confirms that satisfactory security documents, specifically including the
Textron Mortgages, are recorded in the appropriate registry, and that such
security documents create a first priority lien, subject to the FINOVA
Mortgages, in and to the Resort Property in the amount of the Loan, subject
only to such exceptions and conditions to title which are listed in Exhibit
B to this Agreement (the "Permitted Liens and Encumbrances"). Each of the
Resorts shall be placed in a Mexican land trust (fideicomiso) subject to
the Trust Agreements in form and substance that are acceptable to Lender
and which are subject to the rights of Interval Purchasers pursuant to the
Declaration and the Timeshare Documents. The condition of title must be
satisfactory to Lender in all respects. An updated opinion or certification
may be required prior to any subsequent Advance. Title certification issued
by a notary shall be in a form acceptable to Lender.
(c) Opinions of Counsel. Lender shall have received from counsel for
Borrower and the Guarantor, licensed in the United Mexican States of the
United States of America, as appropriate, and acceptable to Lender, closing
opinions in form and substance satisfactory to Lender, dated as of the
Closing Date, covering such items as may be required by Lender, including
without limitation, (i) that the Loan Documents are valid, binding and
enforceable in accordance with their terms and that they do not violate any
applicable usury (if any) or other applicable laws, the procedures and
requirements which must be satisfied by Borrower in connection with the
making of withholding payments to the Mexican taxing authorities, that the
Borrower and the Resorts and the Resorts' intended uses comply with all
timeshare and other applicable statutes, ordinances, rules and regulations,
that each of the Resorts and the Resort Property are in compliance with all
applicable Environmental Laws, that Borrower and the Resort Property are in
compliance with all applicable statutes, ordinances, rules and regulations
governing the marketing and sale of timeshare Intervals (confirming that
each of the Resorts has been properly registered with the appropriate
Mexican governmental authorities) and that the Timeshare Documents comply
with all applicable statutes, ordinances, rules and regulations and have
been properly recorded as required under the applicable laws of the United
Mexican States, (ii) that Guarantor is duly established under the laws of
Nevada and is authorized to execute this Agreement and the remaining Loan
Documents, and (iii) that the Loan is "Permitted Debt" (as such term is
defined in the Indenture) and is otherwise allowed pursuant to the terms of
the Indenture.
(d) Representations, Warranties, Covenants and Agreements. The
representations and warranties contained in the Loan Documents and in any
certificates delivered to Lender in connection with the closing shall be
true and correct in all material respects, and all covenants and agreements
to have been complied with and performed by Borrower as of the Closing Date
shall have been fully complied with and performed to the satisfaction of
Lender.
22
(e) No Prohibitions. Neither Borrower nor the Guarantor shall have
taken any action or permitted any condition to exist, the result of which
action or condition continues to exist as of the Closing Date and, would
have been prohibited by any provision of this Agreement or the Commitment.
(f) Background Documents. Borrower shall have delivered to Lender and
Lender shall have approved each of the following (collectively, the
"Background Documents"):
(i) Borrower's Organizational Documents. Copies of Borrower's
organizational and corporate documents, including but not limited to
its articles of organization and bylaws, partnership certificates and
agreements, together with any amendments thereto and evidence of
filing of appropriate documentation with the appropriate Public
Registries in Mexico, certified to be true and complete by Borrower's
secretary;
(ii) Good Standing Certificate. Current good standing
certificates or mercantile folio certificates issued for Borrower by
the government of Mexico and by the Public Registry of Property and
Commerce in any state in which Borrower is qualified to do business,
to the extent available in Mexico;
(iii) Resolutions. Certified resolutions of Borrower's board of
directors authorizing the execution of all Loan Documents and the
performance of all Obligations thereunder, to the extent required
under Mexican law and by the bylaws of Borrower;
(iv) Survey. Three (3) original copies of perimeter as-built
surveys of the Resort Property, dated within ninety (90) days prior to
the Closing Date, satisfactory to Lender and prepared by a licensed
surveyor satisfactory to Lender and in accordance with Lender's
requirements, with the signature and seal of a registered engineer or
surveyor affixed thereto, showing the location and dimensions of all
Units, foundation perimeters, Facilities and other Improvements
thereon and indicating the location of proposed improvements (if any),
the routes of ingress and egress for public access to each of the
Resorts, all utility lines, walks, drives, recorded or visible
easements and rights-of-way on the Resort Property, and showing that
there are no encroachments, improvements, projections or easements
(recorded or unrecorded) on the property lines. The survey shall
certify the surface area of the Resort Property and shall indicate
whether the Resort Property is located within any flood hazard area.
The survey must be prepared in accordance with the standards set forth
by ALTA/ACSM and those of any and all Mexico Surveyors' bureaus or
associations as well as any and all regulations or applicable local,
state and federal law and must be certified to Lender. The surveyor's
certificate placed on the survey shall include a legal description of
the Resort Property compatible with the Survey and sufficient for
purposes of the Textron Mortgages, and shall include any other
information required by Lender. Similar surveys shall be furnished
from time to time upon the reasonable request of Lender, but not more
often than once per year, which shall show the actual locations of the
Improvements on the Resort Property. A final as-built survey shall be
furnished to Lender after all future Improvements are completed (if
any);
(v) Environmental Report. Lender reserves the right to require in
its discretion an Environmental Inspection or reports covering each of
the Resorts prepared by an engineering firm acceptable to Lender,
including all real property and personal property intended to be
subject to the Timeshare Documents, confirming:
(A) that soil conditions are sufficient to support existing
improvements and any contemplated Improvements to the Resort
Property, and confirming the absence of sinkholes;
(B) the absence of Hazardous Materials on, under or
affecting the Resort Property or any other real property or
personal property comprising the Resorts;
23
(C) that the engineering or environmental consulting firm
has obtained, reviewed and included within its report a CERCLIS
printout from the Environmental Protection Agency (the "EPA") or
equivalent Mexican authority, if such authority and such report
exist, statements from the EPA or equivalent Mexican authority
and other applicable state and local authorities and such other
information as Lender may reasonably require, all of which
information shall confirm that there are no known or suspected
Hazardous Materials located at or used or stored on or
transported to or from, the Resorts or in such proximity thereto
as to create a material risk of contamination of the Collateral;
(D) the absence of radon gas at the each of the Resorts,
including all of the Units, or, if radon gas is found to be
present in any part of the Resorts or the Units, that such
presence is of a nature or magnitude so as to be fully in
compliance with applicable standards under the Environmental Laws
and all other laws or standards applicable to the Resorts; and
(E) the absence of asbestos within the Units, Facilities or
elsewhere at each of the Resorts, or, if asbestos is found to be
present in any part of the Resorts, that such presence is of a
nature or magnitude which is able to be removed by a licensed
removal contractor for a guaranteed maximum sum satisfactory to
Lender. The costs of all inspections and corrective procedures
shall be borne by the Borrower.
(vi) Soil Tests. Lender reserves the right to require in its
discretion a report as to soil and compaction condition and analysis
made at the Resort Property by a soil testing firm satisfactory to
Lender. The number and location of such borings shall be in accordance
with the recommendations of the soil testing firm and must also be
satisfactory to Lender and also shall include a sinkhole analysis of
each of the Resorts. The report shall include the recommendations of
the soil testing firm as to the preparation of the soil needed in
order to adequately support the Improvements. During the course of
construction, Borrower shall also provide such reports as to concrete
tests and such additional soil tests as Lender reasonably may require;
(vii) Physical Inspection. An independently prepared structural
and mechanical engineering report prepared by an engineering firm
acceptable to Lender covering each of the Resorts and the Units
confirming that the Units and the remainder of the Resorts are
mechanically and structurally sound. If Borrower shall be unable to
satisfy the requirements of this paragraph within one hundred eighty
(180) days following the date of receipt by Borrower of the
aforementioned structural and mechanical engineering report, Lender
shall have the right to terminate the Loan or, alternatively, to
require corrective procedures satisfactory to it. The cost of all
inspections, reports and corrective procedures with respect to the
mechanical and structural condition of the Resorts and the Units shall
be borne entirely by Borrower.
(g) Evidence of Insurance. Lender shall have received certified copies
of all insurance policies and endorsements thereto or other evidence
satisfactory to Lender, in its sole discretion, that Borrower has obtained
and is maintaining all policies of insurance required by and in accordance
with Section 7.1(d) hereof, including but not limited to copies of the most
current paid insurance premium invoices for such policies.
(h) Applicable Laws. Lender shall have received evidence satisfactory
to Lender that all existing and contemplated Improvements at each of the
Resorts are and will be in compliance with all applicable zoning, building
and other Mexican laws, if any, in connection with the construction,
development, establishment and operation of the Resorts and the sale, use,
marketing and occupancy of Units and Intervals; provided, however, that the
approval of the Timeshare Documents and Borrower's sales and marketing
efforts in respect thereof shall have been obtained from the appropriate
Mexican governmental authority prior to the sale of any Interval. In
addition, on or before the Closing Date, Lender shall have received
evidence satisfactory to Lender that all existing and contemplated
Improvements are and will be in compliance with all applicable zoning,
building and other Mexican laws, if any, in connection with the
construction, development, establishment and operation of the Resorts and
the sale, use marketing and occupancy of Units and Intervals. Borrower
24
shall provide evidence satisfactory to Lender confirming that all
approvals, consents, licenses and permits necessary to create the Intervals
and to provide time-share services in compliance with Mexican law and to
operate, use and market Intervals at the Resorts under the time-share
system have been obtained, including, but not limited to, permits issued by
the Mexican Consumer Protection Agency and the Mexican Ministry of Commerce
and Industrial Development.
(i) Litigation. Other than those particular matters described in
Exhibit E hereto, there shall be no bankruptcy, suspension of payments,
foreclosure action or other material litigation or judgments pending or
outstanding against any of the Resorts, the Units, any portion of the
Collateral, the Borrower, any general partner or shareholder of the
Borrower, Guarantor, any general partner or shareholder of Guarantor, the
managing agent for each of the Resorts or the Affiliates of any of the
foregoing (each a "Material Party"). The term "other material litigation"
as used herein shall not include matters in which (i) a Material Party is
plaintiff and no counterclaim is pending; or (ii) Lender determines, in its
sole discretion, that such litigation is immaterial due to settlement,
insurance coverage, frivolity or amount or nature of claim. Lender (or
Borrower, upon the request of Lender) shall have obtained an independent
search, at Borrower's expense, confirming that no such bankruptcy,
foreclosure action or other material litigation or judgment exists.
(j) Loan Documents. On or prior to the Closing Date, Borrower and
Guarantor shall execute and deliver (or cause to be executed and delivered,
as the case may be) to Lender, the Loan Documents.
(k) UCC/Other Searches. Lender shall have obtained such searches of
the applicable public records as it deems necessary under Mexican and other
applicable laws to verify that Lender shall have a first and prior
perfected Lien and security interest covering all of the Collateral,
subject to the Permitted FINOVA Liens. Lender shall not be obligated to
fund any Advance if Lender determines that it does not have a first and
prior perfected lien and security interest covering any portion of the
Collateral, subject to the Permitted FINOVA Liens. Notwithstanding anything
to the contrary as provided in this Section 4.1(k), Lender acknowledges and
understands that the Textron Mortgages serve as second priority mortgages
on the Resort Property, subject to the first priority FINOVA Mortgages.
(l) Taxes and Assessments. Lender shall have received copies of the
most current tax bills related to the Units, the Intervals, the Resort
Property and the remainder of each of the Resorts, together with evidence
satisfactory to it that all taxes and assessments either owed by Borrower,
or for the collection of which Borrower is responsible have been paid, or
will be paid out of closing proceeds, which taxes and assessments include,
without limitation, sales taxes, room occupancy taxes, payroll taxes,
personal property taxes, excise taxes, intangible taxes, real property
taxes, income taxes, and any assessments related to the Resorts or the
Units. Lender shall also have received information satisfactory to Lender
disclosing the tax identification numbers, tax rates, estimated tax values,
assessment ratios and estimated assessment values or amounts with respect
to each of the Resorts and the Resort Property and the identities of the
taxing authorities having jurisdiction over the Resort Property and Resorts
as well as the instrumentalities and entities having the power and
jurisdiction to impose assessments against the Resort Property or the
Resorts, and evidence satisfactory to Lender to demonstrate that the Units
and Intervals, if applicable, have been segregated from all other property
on the applicable municipal tax rolls and assessment rolls.
(m) Financial Statements. Lender shall have received and approved the
Financial Statements required pursuant hereto and the Commitment to be
delivered to Lender on or before the Closing Date, or otherwise required by
Lender, for Borrower and the Guarantor, all in form and substance
satisfactory to Lender, specifically including certified financial
statements for the year ending 1998 for the Borrower and the Guarantor.
(n) Preclosing Inspections. Lender shall have conducted and approved
due diligence investigations of Borrower, the Guarantor, the Timeshare
Documents and each of the Resorts.
(o) Proceedings Satisfactory. All actions taken in connection with the
execution or delivery of the Loan Documents, and all documents and papers
relating thereto, shall be reasonably satisfactory to Lender and its
counsel. Lender and its counsel shall have received copies of such
documents and papers as Lender or such counsel may reasonably request in
connection therewith, all in form and substance satisfactory to Lender and
its counsel.
25
(p) Expenses. Borrower shall have paid all fees, expenses and other
amounts required to be paid prior to or at closing, pursuant to this
Agreement; provided, however, that Borrower shall be permitted to pay such
fees, expenses and other amounts from the proceeds of the Initial Advance.
(q) Intentionally omitted.
(r) Credit References. Borrower shall have caused such creditors as
requested by Lender to furnish Lender directly (by mail) with independent
credit references for Borrower, the Guarantor, the principals of Borrower
and Guarantor, and any other Material Party in form and content
satisfactory to Lender, in its sole discretion. Lender reserves the right
to request additional credit references on any Material Party as Lender
deems necessary in its sole discretion.
(s) Utilities. Letters addressed to Lender or other evidence
reasonably acceptable to Lender demonstrating the availability and
sufficiency of water, sewer, electric, telephone and natural gas utility
services to satisfactorily service each of the Resorts.
(t) Permits and Approvals. Building permit(s) and satisfactory
evidence that the Resort Property and the Improvements and the intended
uses of the Resorts are in compliance with any and all applicable laws,
regulations and ordinances, including, without limitation: (i)
Environmental Laws; (ii) erosion control ordinances; (iii) doing-business
and/or licensing laws; (iv) laws protecting disabled or handicapped
persons; and (v) any zoning laws (in this regard, the evidence submitted
should include (A) the zoning designation made for the Resort Property
(where available or applicable by local Mexican laws and regulations); (B)
zoning requirements as to parking, lot size, ingress and egress and
building setbacks, and (C) the length of time of the validity of all such
approvals, variances and permits). Such evidence may include letters,
licenses, permits, certificates and other correspondence from the
appropriate governmental authorities, opinions of Borrower's attorney or
other attorneys and opinions or certifications from Borrower's architect,
as Lender may determine, letters from utility companies, governmental
entities or other Persons, or certification by Borrower or other
confirmation acceptable to Lender, confirming that water, sewer (sanitary
and storm), electricity, gas, solid waste disposal, telephone, police, fire
and rescue services are being provided to each of the Resorts. Borrower
shall have furnished Lender with satisfactory evidence that it has obtained
all applicable governmental and utility permits, approvals, consents,
licenses and certificates for the use and occupancy of each of the Resorts.
The foregoing shall include, but not be limited to any environmental
approvals of the Mexican federal, state or local government authorities of
Mexico, all approvals for water, sewer and other utilities; and all
approvals required for compliance with local laws and regulations. All such
approvals shall continue to be legally valid and shall remain in full force
and effect for so long as the Loan is outstanding.
(u) Lien Waivers. A certificate or affidavit of Borrower (or the
Mexican equivalent) certifying that within the past ninety (90) days, no
work has been performed on any of the Resorts for which payment has not
been made in full and for which a lien could be filed (to the extent
possible under Mexican law), together with waivers of lien from each and
every contractor, subcontractor, laborer or material supplier performing
services or supplying material to any of the Resorts within the past ninety
(90) days and an affidavit listing all of said entities and certifying that
no work has been performed and no material have been supplied for which the
costs remain unpaid prior to closing; provided, however, that no such lien
waiver need be delivered by any subcontractor, laborer or material supplier
performing services or supplying material with a value of less than Five
Thousand Dollars (US$5,000.00) until such time as the aggregate value of
labor or materials supplied or services performed by such subcontractors,
laborers or suppliers exceeds Fifty Thousand Dollars (US$50,000.00).
(v) Timeshare Documents. Borrower shall have prepared and filed such
documents as are necessary or appropriate to receive the approval of the
Mexican Federal Consumer Protection Agency and any and all other federal,
state or local Mexican authorities in connection with the creation,
marketing and sale of Intervals in each of the Resorts to the general
public. Upon the approval of Borrower's registration application, Borrower
shall promptly provide Lender with written evidence of such approval,
26
together with a written opinion of counsel acceptable to Lender confirming
Borrower's compliance with all applicable statues, ordinances, rules and
regulations in connection with the creation, marketing and sale of
Intervals. No sale or pre-sale of Intervals may occur until final approval
of the registration by the Mexican Federal Consumer Protection Agency. Any
and all documentation establishing each of the Resorts and the Units as a
timeshare project of public record shall be in form and content reasonably
satisfactory to Lender.
(w) Management and Property Contract. Borrower shall deliver to Lender
a copy of the management contract for each of the Resorts (collectively,
the "Management Contract"), and Lender shall have determined to its
reasonable satisfaction that the Resorts are managed by a professional
management company reasonably acceptable to Lender. Borrower shall deliver
to Lender copies of all Property Contracts, and Lender reserves the right
to review and approve any Property Contracts which affect in any way the
Trust Agreements.
(x) Lien Documents. Copies of all existing lien and mortgage documents
for the Permitted Liens and Encumbrances in form and content satisfactory
to Lender and copies of the existing liens registered at the Public
Registry of Property and Commerce. The Trust Agreements establishing the
Resorts must be acceptable to Lender in its sole discretion, and must
include appropriate non-disturbance terms with respect to the use and
enjoyment of the Resorts and Facilities by Interval Purchasers in
accordance with the Declaration and the Timeshare Documents.
(y) Note Receivable Documents. The form of Interval Lease Contract and
all purchase documents used in connection with the Notes Receivable shall
be satisfactory to Lender and to the Mexican Consumer Protection Agency.
The form of Interval Lease Contract and Note Receivable shall be translated
to English at Borrower's expense and be reasonably acceptable to Lender's
Mexican counsel.
(z) Tenant Estoppel. If requested by Lender, Borrower shall deliver to
Lender estoppel certificates from any commercial tenants in each of the
Resorts, dated no earlier than thirty (30) days prior to the Closing Date,
in a form reasonably acceptable to Lender. Each estoppel certificate shall
make certain certifications to Lender including, but not limited to the
following: (i) that the lease or contract is in full force and effect and
is unmodified or, if modified, a certification as to the modification
thereto; (ii) that Borrower has performed its obligations under the lease
or contract and there exists no right of setoff or counterclaim against
Borrower; (iii) that there has been no prepayment of any rents or other
sums not yet due under the lease or contract in excess of the amount of one
(1) month's rental; (iv) confirmation of the amounts paid as of November 1,
1999, for expense reimbursement; and (v) any other certification as Lender
shall reasonably request. In addition, each commercial tenant shall agree
with Lender in writing: (i) as to the assignment or pledge to Lender of
Borrower's rights under the applicable contract or lease; (ii) that the
contract or lease may not be modified or terminated during the Term of the
Loan without the prior written consent of Lender; (iii) that the contract
or lease is subordinate to the Loan Documents; (iv) that should an Event of
Default occur under any of the Loan Documents, all amounts due and payable
shall be subordinate to amounts due and payable to Lender under the Loan
Documents; (v) that upon the occurrence of an event of default by Borrower
under a contract or lease, Lender shall receive notice of such default and
a reasonable opportunity to cure; (vi) that in the event Lender succeeds to
all or part of Borrower's interest in the Resorts, tenants should fully and
completely attorn to Lender or Lender's nominee and each party shall
execute such instrument with certification of such attornment as Lender
shall reasonably request; (vii) such party shall not assert any offset
rights of liability with Borrower against Lender; and (viii) any other
agreements as Lender shall reasonably request.
(aa) Estoppel From Existing Lender. Borrower shall have delivered to
Lender an estoppel certificate(s) from FINOVA in conformance with the terms
of the Intercreditor Agreement. Borrower shall deliver to Lender an
estoppel certificate from any other lenders of Borrower confirming the good
standing and current dollars outstanding, if any, to such lender.
(bb) Certification by Borrower and Guarantor. On or before the Closing
Date, Borrower shall provide Lender with a written certification as to all
material facts pertinent to the Loan and pertinent to the legal opinions
described above in Section 4.1(c) of this Agreement, executed by Borrower
and Guarantor.
27
(cc) Facilities Access. Evidence satisfactory to Lender, in its sole
and absolute discretion, ensuring that all Interval Purchasers shall have
perpetual, unlimited and undisturbed recorded access rights to all
Facilities of the Resorts, whether such Facilities are owned by Borrower,
Guarantor or other related party.
(dd) Power of Attorney. The Lender shall have received (i) a copy of a
notarized power of attorney from the Borrower and Guarantor in favor of the
Service of Process Agent referred to in Section 12.23 hereof, in form
satisfactory to special Mexican counsel to the Lender, (ii) evidence of the
Process Agent's acceptance of its appointment, and (iii) a copy of a
notarized power of attorney from the Borrower in favor of Lender referred
to in Section 10.12 hereof, in form satisfactory to special Mexican counsel
to the Lender, empowering the Lender to act as Borrower's attorney-in-fact
to take any and all actions in Borrower's name and/or on Borrower's behalf
as Lender may deem necessary or appropriate, in its sole discretion, in the
manner contemplated in said Section 10.12 and Sections 10.11 and 9.1(e)
hereof. The powers and agency granted by Borrower are coupled with an
interest and are irrevocable until the Obligations have been paid in full
and are granted as cumulative to Lender's other remedies for collection and
enforcement of the Obligations.
(ee) Tax Consequences. Lender is satisfied, in its sole discretion,
that Lender will incur no adverse foreign tax consequences as a result of
the making of Advances and the performance of its obligations under this
Agreement and the remaining Loan Documents. Lender shall be further
satisfied, in its sole discretion, that the principal and interest payments
being made to Lender with respect to the Loan, and any other monies payable
to Lender under this Agreement or the remaining Loan Documents will not be
subject to withholding or subject Lender to a withholding requirement, with
the exception of Mexican Income Tax Withholdings made by Borrower pursuant
to Mexican Income Tax laws and International Treaties executed between
Mexico and the United States, as provided under Section 10.17 herein.
(ff) Miscellaneous. Such other matters, insurance or documents as
Lender shall require.
4.2 Funding Procedure. The obligation of Lender to make any Advance shall
be subject to the satisfaction of all of the following conditions precedent:
(a) Requests for Advances. Each request for an Advance under the Loan
shall be completed on the appropriate form attached hereto as Exhibit F,
attached hereto and incorporated herein by this reference, and shall:
(i) be in writing and shall certify the amount of the
then-current Borrowing Base, specify the principal amount of the
Advance requested and designate the account to which the proceeds of
such Advance are to be transferred;
(ii) state that the representations and warranties of Borrower
contained in this Agreement, as amended from time to time, and any
closing or funding related certifications are true and correct as of
the date of the request and, after giving effect to the making of such
requested Advance, will be true and correct as of the date on which
the requested Advance is to be made;
(iii) state that no Default or Event of Default exists as of the
date of the request and, after giving effect to the making of such
requested Advance, no Default or Event of Default would exist as of
the date on which the requested Advance is to be made;
(iv) be delivered to the office of Lender in East Hartford
Connecticut (or elsewhere upon written notice) within the Term of the
Loan and at least ten (10) Business Days prior to the date of the
requested Advance;
(v) be signed by a principal financial officer of Borrower;
(vi) certify that Borrower has no knowledge of any asserted or
threatened defense, offset, counterclaim, discount or allowance with
respect to each Note Receivable to be pledged in connection with such
requested Advance, or with respect to any of the Pledged Notes
Receivable;
(vii) contain an aging report on the Pledged Notes Receivable;
identifying, among other things, which among them are Eligible Notes
Receivable for the subject Advance; and
28
(viii) contain a delinquency report which shall be in form and
substance satisfactory to the Lender and shall show which of such
Notes Receivable for the subject Advance are delinquent and the
duration of each such delinquency, and which of such Pledged Notes
Receivable is not an Eligible Note Receivable, respectively.
(b) Loan Documents/Collateral. Not less than ten (10) Business Days
prior to the date of any Advance under the Loan, the Borrower shall have:
(i) delivered to Lender a list of all Eligible Notes Receivable
which are to be the subject of such requested Advance, indicating the
unpaid principal balance owing on each of the Pledged Notes Receivable
deemed to be an Eligible Note Receivable, together with such
additional information as Lender may reasonably request;
(ii) delivered to Lender (or, if Lender shall so instruct, a
designee appointed by Lender in writing) (i) the original of each
Pledged Note Receivable (duly endorsed by Borrower with the words
"▇▇▇▇▇▇▇ ▇. ▇▇▇▇, en mi caracter de apoderado de la sociedad CR
Resorts Puerto Vallarta, S. de ▇.▇. de C.V., endoso en prenda con
recurso este ▇▇▇▇▇▇ suscrito por el Sr. ______________, a favor de la
sociedad Textron Financial Corporation, cuyo domicilio es ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Estados Unidos de
America"); (ii) the original or, if not yet received, a true copy of
each purchase contract (including addenda) relating to the Pledged
Notes Receivable and the Interval Lease Contracts; (iii) originals or
true copies of the related truth-in-lending disclosures or other
applicable disclosure, if any, and, if required by Lender, loan
applications, Payment Authorization Agreements, the related
Purchaser's acknowledgments, receipts, consents to closing, and
Exchange Company applications, disclosures and materials and (iv)
evidence that proper notice of Borrower's pledge and assignment to
Lender of the Pledged Notes Receivable and related Interval Lease
Contracts has been delivered to and acknowledged by each consumer
obligor (Borrower shall use its best efforts to obtain within sixty
(60) days from the date of the Initial Advance evidence that the
consumer obligor(s) of each Note Receivable pledged to Lender with
respect to the Initial Advance has acknowledged and accepted
Borrower's pledge and assignment of such Note Receivable to Lender;
thereafter, Borrower shall provide Lender with such evidence of
acknowledgement with each request for Advance under the Loan);
(iii) delivered to Lender (or if Lender shall so instruct, a
designee appointed by Lender in writing) an Assignment of Pledged
Notes Receivable and Interval Lease Contracts, duly executed and in
proper form for recording, assigning to Lender all of Borrower's
right, title and interest in and to each such Pledged Note Receivable
and the related Interval Lease Contract;
(iv) delivered to Lender, with respect to each Encumbered
Interval, a notary's opinion confirming that the Interval Lease
Contract with respect to such Interval has been assigned to Lender and
insuring in favor of Lender a valid and first priority assignment of
and security interest in such Interval Lease Contract;
(v) for the Initial Advance only, delivered to Lender, the
original UCC financing statements or Mexican equivalent covering the
Collateral, recorded, to the extent permitted under applicable Mexican
laws, in the Public Registry of Properties in the location of each of
the Resorts. The assignments of the Interval Purchase Contracts and
the UCC financing statements or Mexican equivalent, if required, shall
each have been duly recorded, to the extent permitted under applicable
Mexican laws, in the Public Registry of Properties of in the location
of each of the Resorts.
All Pledged Notes Receivable assigned to Lender must have evidence
thereon of payment of all required documentary stamps and intangible taxes,
if any are required. The funding of the requested Advance, delivery of the
Collateral and recording of the assignments or pledges, or any releases and
the UCC financing statements, if any, may, in Lender's discretion, be
effected by way of an escrow arrangement with the Mexican notary who issues
the title report or certificate required under Section 4.1(b) of this
Agreement or other fiduciary selected by Lender, the form and substance of
which shall be satisfactory to Lender.
29
(c) Other Conditions. In addition to the other conditions set forth in
this Agreement, the making of the initial or any requested Advance under
the Loan shall be subject to the satisfaction of the following conditions:
(i) there shall not have occurred and remain uncured, at any
time, an Event of Default hereunder, no Default or Event of Default
shall exist immediately prior to the making of such requested Advance
or, after giving effect thereto, immediately after the making of such
requested Advance;
(ii) each agreement required to have been executed and delivered
by Borrower in connection with any prior Advance shall be consistent
with the terms of this Agreement and shall be in full force and
effect;
(iii) the date on which such requested Advance is to be made
shall be a Business Day;
(iv) Borrower shall have delivered to Lender a certification
showing the dollar amount of the requested Advance based on the
Eligible Notes Receivable pledged to Lender, and the Notes Receivable
being pledged contemporaneously with each requested Advance in the
form of Exhibit F, attached hereto and incorporated herein by this
reference;
(v) not more than two (2) Advances under the Loan shall have
previously been made in the same calendar month in which such
requested Advance is to be made, unless Lender, in its sole
discretion, agrees to make an additional such Advance during such
calendar month;
(vi) such requested Advance shall be in a principal amount of not
less than US$50,000, unless Lender, in its sole discretion, agrees to
make an Advance in an amount less than US$50,000;
(vii) Lender shall have determined that the requested Advance,
when added to the aggregate outstanding principal amount of all
previous Advances, if any, does not exceed the total amount of the
Borrowing Base, based on the Eligible Notes Receivable that have been
or will be duly pledged in favor of Lender;
(viii) Lender shall have received evidence satisfactory to it
that:
(a) Borrower has obtained any applicable approvals or
permits from the appropriate federal, state or local Mexican
governmental authorities necessary to create the Intervals in
compliance with Mexican law and offer the Intervals for sale to
the general public;
(b) Borrower has completed all contemplated upgrades and
refurbishments to the Units which correspond to the subject
Interval sales;
(c) the applicable Units and Intervals have been accepted by
the Exchange Company into its reciprocal exchange program;
(d) with respect to the applicable Units and Intervals,
Borrower has obtained all required approvals, consents, permits,
licenses and certificates necessary to create and occupy such
Units and Intervals for their intended use, to operate the
Resorts and to market and sell the Intervals;
(e) all documents establishing the Units as part of the
Resorts must be completed in form and in content satisfactory to
Lender, and the form of consumer promissory note, Interval Lease
Contract, and all remaining purchase documentation utilized by
Borrower in connection with the Eligible Notes Receivable shall
be satisfactory to Lender;
(f) Borrower has delivered to Lender or established an
escrow arrangement satisfactory to Lender for delivery of the
documents required pursuant to Section 4.2(b)(ii) of this
Agreement; and
30
(g) within ten (10) days following the end of each calendar
month, Borrower shall provide Lender with a monthly sales and
cancellations report on all Notes Receivable.
(ix) During the term of each Pledged Note Receivable, title to
the respective Interval shall be held by Lender, if it so elects in
its sole and absolute discretion.
(x) Prior to making the Initial Advance, a release or
nondisturbance procedure shall be established pursuant to the terms of
the Intercreditor Agreement which is satisfactory to Lender.
(d) Expenses. Borrower shall have paid all fees and expenses required
to be paid pursuant to this Agreement in connection with such requested
Advance or any conditions related thereto.
(e) Proceedings Satisfactory. All actions taken in connection with
such requested Advance and all documents and papers relating thereto shall
be satisfactory to Lender and its counsel. Lender and its counsel shall
have received copies of such documents and papers as Lender or such counsel
may reasonably request in connection with such requested Advance, all in
form and substance reasonably satisfactory to Lender and its counsel.
Section 5. INTENTIONALLY OMITTED.
Section 6. GENERAL REPRESENTATIONS AND WARRANTIES.
Borrower and the Guarantor, jointly and severally, hereby represent and
warrant to Lender as follows:
6.1 Organization, Standing, Qualification. Each of the respective Borrower
entities (a) are Mexican variable capital stock limited liability companies duly
organized, validly existing and in good standing under the laws of Mexico and as
foreign corporations under the laws of each jurisdiction in which the character
or location of the properties owned or the business transacted requires
licensing and qualifications; and (b) have all requisite power, to conduct their
business and to execute and deliver, and to perform their obligations under, the
Loan Documents to which each is a party; (c) the individuals executing this Loan
Agreement and the remaining Loan Documents have the proper authority to do so,
pursuant to an appropriate power of attorney; and (d) have a financial interest
in one or more of the Resorts and will derive financial benefit from its
execution of this Agreement and the remaining Loan Documents. Each of the
entities comprising Borrower acknowledges that Lender would not make the Loan
contemplated by this Agreement unless each of the entities comprising the
Borrower (i) became a party to this Agreement and the remaining Loan Documents,
(ii) became jointly and severally liable for the payment and performance of all
of the Obligations, and (iii) granted to Lender a security interest, subject to
the Permitted Liens and Encumbrances (and specifically including the Permitted
FINOVA Liens), in all items of Collateral owned by each Borrower. Although each
of the entities comprising Borrower maintains its separate legal existence and
operates as a distinct and separate entity, such entities have historically
engaged in substantial business with each other and have operated, and intend to
continue operating, as a joint and consolidated entity for financial planning
and cash management purposes and for purposes of achieving certain business
operation efficiencies. Each of the entities comprising Borrower will therefore
benefit from the financing arrangement and accommodations by Lender under this
Agreement and the remaining Loan Documents.
Guarantor is permitted by its bylaws to execute, deliver and perform its
obligations under each of the Loan Documents to which it is a party; Guarantor
has a financial interest in Borrower and will derive financial benefit from its
execution of the Guaranty.
6.2 Authorization, Enforceability, Etc.
(a) The execution, delivery and performance by Borrower of the Loan
Documents has been duly authorized by all necessary corporate actions by
Borrower and does not and will not (i) violate any provision of Borrower's
articles of organization ("estatutos"), operating agreements or any
agreement, law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect to which Borrower is a
party or is subject; (ii) result in, or require the creation or imposition
of, any Lien upon or with respect to any asset of Borrower or Guarantor
other than Liens in favor of Lender; or (iii) result in a breach of, or
31
constitute a default by Borrower or Guarantor under, any indenture, loan or
credit agreement or any other agreement, document, instrument or
certificate to which Borrower or Guarantor is a party or by which they or
it or any of their or its assets are bound or affected.
(b) No approval, authorization, order, license, permit, franchise or
consent of, or registration (with the exception of the registration of the
Textron Mortgages), declaration, qualification or filing with, any
governmental authority or other Person, including without limitation, any
applicable regulatory authorities is required in connection with the
execution, delivery and performance by Borrower or Guarantor of any of the
Loan Documents.
(c) The Loan Documents constitute legal, valid and binding obligations
of Borrower and Guarantor, enforceable against Borrower and Guarantor in
accordance with their respective terms.
(d) Borrower has good and marketable title to all of the Collateral,
free and clear of any Lien, security interest, charge or encumbrance except
for the Liens or security interests created by this Agreement or any Loan
Document or otherwise created in favor of Lender or those Permitted Liens
and Encumbrances as set forth on Exhibit B. No financing statement or other
instrument similar in effect covering all or any part of the Collateral is
on file in any recording office, except such as may have been filed in
favor of Lender or in favor of FINOVA with respect to the Permitted FINOVA
Liens.
(e) The execution and delivery of the Loan Documents, the delivery and
endorsement to Lender of the Pledged Notes Receivable, the filing of the
UCC-1 financing statements, or Mexican equivalent, with the Public
Registries of Property in the location of each of the Resorts, recordation
of the Assignment of Pledged Notes Receivable and Interval Lease Contracts,
the Assignment of Interest in Contracts, Permits, Licenses and Approvals,
and the Textron Mortgages in the Public Registries of Property in the
location of each of the Resorts, create in favor of Lender a valid and
perfected continuing first priority liens and security interests in and to
all of the Collateral, subject to the Permitted FINOVA Liens. The
Collateral shall secure the full payment and performance of the
Obligations.
(f) To the best of the Borrower's knowledge, none of the Pledged Notes
Receivable is forged or has affixed thereto any unauthorized signatures or
has been entered into by any Person without the required legal capacity;
and during the term of the Agreement, none will be forged, or will have
affixed thereto, any unauthorized signatures.
(g) There have been no modifications or amendments whatsoever to the
Pledged Notes Receivable or the related Interval Lease Contracts which
modifications or amendments are not evidenced by appropriate documentation,
duly executed, forming a part thereof.
(h) To the best of Borrower's knowledge, the makers of the Eligible
Notes Receivable have no defenses, offsets, counterclaims or claims
relating to the Eligible Notes Receivable or the Interval Lease Contracts.
(i) The Pledged Notes Receivable and the related Interval Lease
Contracts were executed and delivered by Purchasers in favor of Borrower in
connection with the purchase of the related Encumbered Intervals.
(j) The Pledged Notes Receivable and the related Interval Lease
Contracts are and shall remain in full force and effect, and, once endorsed
in favor of Lender, will be valid and binding obligations of the respective
makers in favor of Lender, as holder; and Borrower further warrants and
guarantees the value, quantity, sound condition, grade and quality of the
Encumbered Intervals and all rights, properties, easements and interests
appurtenant or related thereto.
(k) The grant of the security interests described herein has not
affected and will not affect the validity or enforceability of the
obligations of the respective makers of the Pledged Notes Receivable under
such Notes Receivable or the related Interval Lease Contracts.
32
(l) Lender is not and shall not be required to take any steps, and
Borrower has taken any and all required steps, to protect Lender's security
interests in the Collateral (other than maintaining possession of the
portion of the Collateral constituting instruments and timely filing
continuation statements for the Financing Statements); and Lender is not
and shall not be required to collect or realize upon the Collateral or any
distribution of interest or principal, nor shall loss of, or damage to, the
Collateral release Borrower (or the Guarantor) from any of the Obligations.
6.3 Financial Statements and Business Condition. The Financial Statements
submitted by Borrower and Guarantor pursuant to the requirements set forth
herein, fairly present the respective financial conditions and results of
operations of Borrower and the Guarantor as of the date or dates thereof and for
the periods covered thereby. There are no material liabilities, direct or
indirect, fixed or contingent, of Borrower or the Guarantor as of the dates of
such Financial Statements which are not reflected therein or in the notes
thereto, which have not otherwise been disclosed to Lender in writing. Except
for any such changes heretofore expressly disclosed in writing to Lender, there
has been no material adverse change in the respective financial conditions of
Borrower or the Guarantor from the financial conditions shown in its or their
respective Financial Statements, nor have Borrower or the Guarantor incurred any
material liabilities, direct or indirect, fixed or contingent, which are not
shown in their respective Financial Statements. Borrower and the Guarantor,
respectively, are able to pay all of their respective debts as they become due,
and Borrower and the Guarantor, as the case may be, shall maintain such solvent
financial condition, giving effect to the Obligations, as long as Borrower or
the Guarantor are obligated to Lender under the Agreement, or with respect to
the Guarantor, the Guaranty, or in any other manner whatsoever. Borrower's or
the Guarantor's Obligations under this Agreement and under the Loan Documents
will not render Borrower or the Guarantor unable to pay its or their debts as
they become due. The present fair market value of Borrower's or the Guarantor's
assets are greater than the amount required to pay its or their respective total
liabilities.
6.4 Taxes. Borrower represents and warrants that Borrower has paid in full
all ad valorem taxes, if any, and other taxes and assessments to be levied
against the Collateral owned by it and due and payable as of the date hereof,
and Borrower knows of no basis for any additional taxes or assessments against
any of the Resorts or the Collateral owned by it, other than periodic taxes
currently paid by Borrower or Guarantor from time to time with respect to the
Collateral. Borrower has filed all tax returns required to have been filed by it
and has paid or will pay, prior to delinquency, all taxes shown to be due and
payable on such returns, including interest and penalties, and all other taxes
which are payable by it or them, to the extent the same have become due and
payable. Borrower shall pay all applicable sales, rental, occupancy and other
taxes with regard to the sale or rental of any Intervals related to the
Collateral owned by it hereunder. To the best of Borrower's knowledge, no tax
audit is pending or is threatened with respect to Borrower or the Guarantor.
6.5 Title to Properties: Prior Liens. Borrower has good and marketable
title (or holds a first beneficial interest in trust use rights as to all
Collateral pursuant to the Trust Agreements) to all of the Collateral and to all
Unsold Intervals, Encumbered Intervals and all rights, properties and benefits
appurtenant or related thereto. Borrower's sole business involves the operation
of the Resorts and the marketing, sale and financing of Intervals at the
Resorts, and the Resorts are the sole real estate asset of Borrower. Borrower is
not in default under any of the documents evidencing or securing any
indebtedness which is secured, wholly or in part, by all or any portion of the
Collateral, and no event has occurred which with the giving of notice, the
passage of time or both, would constitute a default under any of the documents
evidencing or securing any such indebtedness. Other than the Liens granted in
favor of Lender and the Permitted FINOVA Liens, there are no Liens or
encumbrances against all or any portion of the Collateral, except for the
Permitted Liens and Encumbrances.
6.6 Subsidiaries, Affiliates and Capital Structure. Borrower has no
subsidiaries or Affiliates which have any involvement or interest in the Resorts
in any way, with the sole exceptions of (a) Club ▇▇▇▇▇▇, S.A. de C.V., which
collects memberships fees and makes payment of maintenance fees under the
Operating Agreements, and (b) Servicios Turisticos Integrales Cobamex, S. de ▇.
▇. de C.V., which provides administrative services to certain of the Borrower
entities. The Guarantor is involved, directly or through its subsidiaries, in
the business operations of and derives financial benefit from Borrower. Except
as set forth in Section 7.1(c), for so long as Borrower is obligated to Lender
33
under any of the Loan Documents, there shall be no change of ownership of the
shares of stock in Borrower without the prior written consent of Lender. None of
the Affiliates of Borrower nor Guarantor is a party to any proxies, voting
trusts, shareholders agreements or similar arrangements pursuant to which voting
authority, rights or discretion with respect to Borrower or Guarantor is vested
in any other Person.
6.7 Litigation, Proceedings, Etc. Except as set forth in Exhibit E, there
are no actions, suits, proceedings, orders or injunctions pending or threatened
against or affecting Borrower, any Affiliate of Borrower, the Guarantor or any
of the Resorts, at law or in equity, or before or by any governmental authority
or other tribunal, which (a) could have a material adverse effect on Borrower,
any Affiliate of Borrower or the Guarantor; or (b) relate to the Loan or which
could have a material adverse effect on the Collateral or the Resorts. Exhibit
E, attached hereto and incorporated herein by this reference, describes all
currently pending litigation against Borrower and the Guarantor. Borrower has
received no notice from any court, governmental authority or other tribunal
alleging that Borrower or any of the Resorts have violated the Timeshare Act,
any other applicable statute, ordinance, rule or regulation governing the
marketing and sale of Intervals, the Declaration, the other Timeshare Documents
or any other applicable laws, agreements or arrangements that could have any
material adverse effect on the Loan, the Collateral or the Resorts. Borrower
shall provide to Lender prompt written notice of any action commenced against
any of the foregoing Persons.
6.8 Licenses, Permits, Etc. Borrower, each of the Resorts and all other
Persons involved in the management or operations of the Resorts, possess and
will at all times continue to possess all requisite franchises, certificates of
convenience and necessity, operating rights, approvals, licenses, permits,
consents, authorizations, exemptions and orders as are necessary to carry on its
or their business as now being conducted, without any known conflict with the
rights of others and, with respect to Borrower and the Collateral in each case
subject to no mortgage, pledge, Lien, lease, encumbrance, charge, security
interest, title retention agreement or option other than the Permitted FINOVA
Liens and other than as provided for by this Agreement. All such licenses and
permits are presently in full force and effect, and there is no action currently
pending or threatened to revoke or modify any such license or permit.
6.9 Environmental Matters. The Resorts do not contain and will not contain
any Hazardous Materials in violation of applicable law, and no Hazardous
Materials, other than such items, by way of example and not by way of
limitation, as cleaning supplies, are used or stored at or transported to or
from the Resorts. Neither Borrower, the Resorts, nor any manager thereof have
received notice from any governmental agency, entity or other Person with regard
to Hazardous Materials on, under or affecting the Collateral, and neither
Borrower nor the Collateral, nor any portion thereof, nor to Borrower's
knowledge after diligent inquiry, the Resorts or any manager thereof are in
violation of any Environmental Laws. Borrower hereby represents to Lender that
the Resorts are located on or near a Mexican Federal Maritime and Terrestrial
Zone such that Borrower is or has in the past, been required to secure from the
Mexican Federal Government (a) an Environmental Construction License or impact
analysis, or (b) to the extent required under local or Federal Mexican law, a
concession granted by the Mexican Federal Government with respect to the
occupancy of a Federal Maritime and Terrestrial Zone.
6.10 Full Disclosure. No information, exhibit or written report or the
content of any schedule furnished by Borrower or Guarantor to Lender in
connection with the Loan, the Resorts or the Collateral, and no representation
or statement made by Borrower or Guarantor in any Loan Document, contains any
material misstatement of fact or omits the statement of a material fact
necessary to make the statement contained herein or therein not misleading.
Borrower and the Guarantor know of no fact or condition which could prevent or
delay the sale of Intervals to Purchasers or prevent or impede the operation of
the Resorts in accordance with the Declaration, the remaining Timeshare
Documents and related public offering statement or other disclosure documents,
and in accordance with applicable law, or prevent Borrower's or Guarantor's
performance of its Obligations pursuant to the Loan Documents.
6.11 Use of Proceeds/Margin Stock. The proceeds of the Loan will be
disbursed only for the following purposes:
(a) Payment of the Loan Costs (as defined in the Commitment) and those
amounts set forth in Section 7.1(v) hereof;
34
(b) Payment of all indebtedness secured by any prior and subordinate
liens and mortgages encumbering all or any portion of the Collateral,
except the Declaration, the remaining Timeshare Documents and the Security
Documents (as defined in the Commitment); and
(c) To Borrower:
(i) To pay marketing, project development, sales and
administrative expenses incurred in connection with the marketing and
sale of Encumbered Intervals and in connection with the operations for
the Resort, for working capital, for future expansion of timeshare
development in accordance with plans and projections acceptable to
Lender (provided, however, that the use of the proceeds of the Loan
for such expansion shall not adversely affect the operations of any of
the Resorts), and as provided for under Section 2.1 of this Agreement.
If the proceeds of any Advance and other monies paid by Borrower to
Lender are insufficient to satisfy the costs and liens with respect to
Collateral against which an Advance is to be made, or the use of proceeds
of the Loan or any Advance varies materially, as determined by Lender in
its sole discretion, from the uses described above, Lender shall have no
obligation to fund the remainder of the Loan or any further Advances.
6.12 No Defaults. No Default or Event of Default exists, and there is no
violation in any material respect of any term of any agreement, charter
instrument, bylaw or other instrument to which Borrower, Guarantor or any
Affiliate thereof is a party or by which it may be bound, specifically including
the FINOVA Loan, the Indenture and the Mirror Notes.
6.13 Compliance with Law. Borrower:
(a) is not in violation, nor are any of the Resorts or the business
operations with respect to the Resorts in violation of the Timeshare Act,
the Mexican Federal Law of Consumer Protection, all Federal and local laws
applicable in Mexico and the States of Baja California Sur, Jalisco and
▇▇▇▇▇▇▇▇ Roo, Mexico, or any other statues, ordinances, rules or
regulations of any other jurisdiction to which Borrower, the Encumbered
Intervals, the Unsold Intervals or the business operations conducted with
respect to the Resorts are subject; and
(b) has not failed, nor have any of the Resorts failed, to obtain any
consents or joinders, or any approvals, licenses, permits, franchises or
other governmental authorizations, or to make or cause to be made any
filings, submissions, registrations or declarations with any government or
agency or department thereof, necessary to the establishment, ownership or
operation of the Unsold Intervals, the Encumbered Intervals or any of
Borrower's properties, or to the conduct of Borrower's business, including,
without limitation, the previous offer and sale of Intervals or the sale,
or offering for sale, of Unsold or Encumbered Intervals at the Resorts;
which violation or failure to obtain or register materially adversely
affects Borrower, the Unsold Intervals, the Encumbered Intervals or the
business, prospects, profits, properties or condition (financial or
otherwise) of Borrower, the Guarantor or any of the Resorts. Borrower has,
to the extent required by its activities and businesses, fully complied
with the following laws and regulations (i) at such possible time as
Borrower markets or sells Intervals in any of the Resorts within the
borders of the United States, all of the applicable provisions of (A) the
Consumer Credit Protection Act; (B) Regulation Z of the Federal Reserve
Board; (C) the Equal Credit Opportunity Act; (D) Regulation B of the
Federal Reserve Board; (E) the Federal Trade Commission's 3-day cooling-off
Rule for Door-to-Door Sales; (F) Section 5 of the Federal Trade Commission
Act; (G) the Interstate Land Sales Full Disclosure Act ("ILSA"); (H) the
federal postal laws; (I) all applicable state and federal securities laws;
(J) all applicable usury laws; (K) all applicable trade practices, home and
telephone solicitation, sweepstakes, anti-lottery and consumer credit and
protection laws; (L) all applicable real estate sales licensing,
disclosure, reporting and escrow laws; (M) the Americans With Disabilities
Act and related accessibility guidelines ("ADA"); (N) the Real Estate
Settlement Procedures Act ("RESPA"); (O) all amendments to and rules and
regulations promulgated under the foregoing acts or laws; and (P) all other
applicable federal statutes and the rules and regulations promulgated
thereunder; and (ii) all of the applicable provisions of the Timeshare Act
and any other applicable Mexican law or the law of any other state having
jurisdiction (and the rules and regulations promulgated thereunder)
relating to timeshare ownership, the establishment of any of the Resorts,
or the sale, offering for sale, marketing or financing of Intervals
therein.
35
6.14 Restrictions of Borrower or Guarantor. Neither Borrower, Guarantor,
any of the Resorts, the Unsold Intervals nor the Encumbered Intervals is/are a
party to any contract or agreement, or subject to any Lien, charge or corporate
restriction, which materially and adversely affects its or their business.
Except for the FINOVA Loan Agreement and the documents related thereto, and the
Indenture, which is indirectly binding on Borrower by reason of its relationship
with Guarantor, and except as otherwise may be approved by Lender in accordance
herewith, Borrower will not be, on or after the Closing Date, a party to any
contract or agreement which restricts its right or ability to incur indebtedness
or prohibits Borrower's execution of, or compliance with the terms of, this
Agreement or the other Loan Documents. Borrower has not agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of the Collateral, whether now owned or hereafter acquired, to be subject to
a Lien except in favor of Lender as provided hereunder and except in favor of
FINOVA with respect to the Permitted FINOVA Liens.
6.15 Broker's Fees. Lender and Borrower represent to each other that
neither of them has made any commitment or taken any action which could result
in a claim for any broker's, finder's or other similar fees or commissions with
respect to any of the transactions contemplated by this Agreement. Borrower
agrees to indemnify Lender and save and hold Lender harmless from and against
any and all claims of any Person for any broker's or finder's fee, commission,
taxes or similar compensation or amount arising in connection with the Loan, and
this indemnity shall include reasonable attorneys' fees and legal expenses.
6.16 Deferred Compensation Plans. Borrower has no pension, profit sharing
or other compensatory or similar plan (herein called a "Plan") providing for a
program of deferred compensation for any employee or officer, with the exception
of Borrower's profit sharing plan as is required under Mexican Labor Law (under
which Borrower is not in default in payment of (i) any wages or salaries to its
employees; or (ii) any assessments payable by Borrower under any Federal or
state act). As provided under the comparable local and Federal Mexican laws, no
fact or situation, including but not limited to, any "Reportable Event," as that
term is defined in Section 4043 of the United States Federal Employee Retirement
Income Security Act of 1974 as the same may be amended from time to time
("Pension Reform Act") exists or will exist in connection with any Plan of
Borrower which might constitute grounds for termination of any Plan by any
Mexican equivalent of the Pension Benefit Guaranty Corporation or cause the
appointment by the appropriate United States District Court of a Trustee or the
appropriate Mexican Court to administer any such Plan. As provided under the
comparable local and Federal Mexican laws, no "Prohibited Transaction" within
the meaning of Section 406 of the Pension Reform Act exists or will exist upon
the execution and delivery of the Agreement or the performance by the parties
hereto of their respective duties and obligations hereunder. Borrower will (a)
at all times make prompt payment of contributions required to meet the minimum
funding standards set forth in the Mexican equivalent of Sections 302 through
305 of the Pension Reform Act with respect to each of its Plans; (b) promptly,
after the filing thereof, furnish to Lender copies of each annual report
required to be filed pursuant to the Mexican equivalent of Section 103 of the
Pension Reform Act in connection with each Plan for each Plan Year, including
any certified financial statements or actuarial statements required pursuant to
the Mexican equivalent of said Section 103; (c) notify Lender immediately of any
fact, including, but not limited to, any Reportable Event arising in connection
with any Plan which might constitute grounds for termination thereof by the
Mexican equivalent of the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a Trustee or
appropriate Mexican Court to administer the Plan; and (d) notify Lender of any
"Prohibited Transaction," as that term is defined in the Mexican equivalent of
Section 406 of the Pension Reform Act. Borrower will not (a) engage in any
Prohibited Transaction; or (b) terminate any such Plan in a manner which could
result in the imposition of a Lien on any asset of Borrower pursuant, to the
Mexican equivalent of Section 4068 of the Pension Reform Act.
6.17 Labor Relations. The employees of Borrower are not parties to any
collective bargaining agreement with Borrower and, to the best of Borrower's
knowledge, there are no material grievances, disputes or controversies with any
union or any other organization of Borrower's employees, or threats of strikes,
work stoppages or any asserted pending demands for collective bargaining by any
union or organization of which any employees of Borrower are members.
6.18 Resorts.
(a) Timeshare Plan. Each of the Resorts have been established,
dedicated and to Borrower's knowledge, are and will remain, timeshare plans
and projects in full compliance with all applicable laws and regulations,
including without limitation, the Timeshare Act, and the Resort Property,
36
all Units, all Improvements thereon, the Facilities, the Common Furnishings
and all related real and personal property have been and will continue to
be duly submitted to the provisions of the Declaration. Borrower will not
amend the Timeshare Documents, specifically including the Declaration, in
any material respect without the prior written approval of Lender, unless
it is ordered mandatory by the appropriate Mexican governmental authorities
upon prior written notice to Lender.
(b) Access. The Resort Property (including all Units and Facilities)
have direct access to publicly dedicated roads, and all roadways located on
the Resort Property are subject to an access and use easement or other
dedication or provision that benefits and will continue to benefit all
Purchasers.
(c) Utilities. Electric, gas, sanitary and stormwater sewer,
telephone, water facilities and other necessary utilities are available
and, to the best of Borrower's knowledge after diligent inquiry, there is
sufficient capacity to service each of the Resorts and all Units,
Facilities and Common Furnishings. Any easements necessary to the
furnishing of such utility services have been obtained, duly recorded and
inure to the benefit of the Resort Property.
(d) Amenities. Each Purchaser of an Interval, for so long as
he/she/they fulfill each and all of the obligations of Purchaser under the
Note Receivable, the Interval Lease Contract and any and all other
documents evidencing the purchase of said Purchaser's Interval, including
without limitation, the obligation to pay assessments, has and will have
access to and the full use and enjoyment of all of the Facilities, Common
Furnishings and public utilities of the Resorts, all in accordance with the
Declaration and the other Timeshare Documents.
(e) Construction. All costs arising from Borrower's construction or
acquisition of any Units and any other improvements and the purchase of any
furniture, fixtures, equipment, inventory, furnishings or other personalty
related to the Collateral hereunder have been paid or will be paid when
due.
(f) Sale of Intervals. The marketing, sale, offering for sale, rental,
solicitation of Purchasers or, if applicable, lessees, and financing of
Intervals by Borrower at the Resorts (i) do not constitute the sale, or the
offering of sale, of securities subject to the registration or other
requirements of the Securities Act of 1933, as amended, or any applicable
United States or Mexican securities law; (ii) do not violate the Timeshare
Act or any other statute, ordinance, rule or regulation of Mexico or any
other state or jurisdiction in which a Purchaser resides or in which sales
or solicitation activities occur; and (iii) do not violate any consumer
credit or usury statute of Mexico, the United States or any other state or
jurisdiction in which a Purchaser resides or in which sales or solicitation
activities occur. All Interval marketing and sales activities are performed
by Borrower (or by a sales and marketing organization, acceptable to
Lender, contracted with or employed by Borrower), who is and shall remain
properly licensed in accordance with Mexican and United States law and any
other applicable laws. Borrower has registered each of the Resorts to
permit Interval sales pursuant to applicable Mexican registration laws, and
Borrower has complied with all laws of these jurisdictions governing its
conduct. Before Borrower markets, offers for sale or sells Intervals in any
other jurisdictions, Borrower will promptly notify Lender and provide
Lender with evidence satisfactory to Lender that Borrower has complied with
all laws of such jurisdiction governing its proposed conduct.
Notwithstanding anything to the contrary provided in this Section 6.18(f),
the laws of the United States concerning the sale of Intervals shall be
applicable only at such possible time as Borrower markets or sells
Intervals within the borders of the United States.
(g) Tangible Property. Except for specific items which may be owned by
independent contractors, the machinery, equipment, fixtures, tools and
supplies used in connection with the Resorts, including without limitation,
with respect to the operations and maintenance of the Facilities and Common
Furnishings, are owned by the Borrower or by the Land Trustee on behalf of
Borrower.
37
(h) Units at the Resorts. The Resorts presently includes aggregate of
four hundred two (402) timeshare Units which are part of the Resorts, with
sixty-nine (69) Units located at the Resort in Cancun, Mexico, two hundred
three (203) Units located at the Resort in Puerto Vallarta, Mexico, and one
hundred thirty (130) Units located at the Resort in Los Cabos, Mexico. Each
Unit is fully furnished and ready for use and occupancy by Purchasers. All
Common Furnishings (including appliances) within Units in which Borrower
has sold Intervals have been fully paid for and are free and clear of any
liens or other interests of any third party (subject to the Permitted
FINOVA Liens), including any lessor or other lender.
(i) Assessments. As the operator of the Resorts, the Borrower levies
annual assessments to cover the costs of maintaining and operating the
Resorts. The currently levied assessments upon Purchasers will be adequate
to cover the reasonably foreseeable costs of maintaining and operating the
Resorts and to establish and maintain a reasonable reserve for deferred
maintenance and capital improvements. There are no events which currently
exist or could reasonably be foreseen by Borrower which could give rise to
a material increase in such costs. Borrower shall maintain the reserves
described above.
6.19 Timeshare Documents and Reports. The Borrower has furnished to the
Lender true and correct copies of the Timeshare Documents listed on Exhibit D
hereto which consist of all those placed on file by the Borrower with the
applicable Mexico regulatory authorities or any other appropriate federal, state
or local regulatory or recording agencies, offices or departments, if required.
All such filings and/or recordations and all joinders and consents, necessary in
order to establish the plan with respect to the Unsold Intervals and Encumbered
Intervals, including, without limitation, the Units, Intervals, and all
appurtenant Facilities, Common Furnishings, and all related use and access
rights have been made or obtained, and all statutes, ordinances, rules and
regulations, and all agreements or arrangements in connection therewith have
been complied with.
6.20 Operating Contracts. The contracts, agreements and arrangements listed
and described in Exhibit G comprise all of the agreements and arrangements
relating to the operation of the Resorts to which Borrower is a party or in
which Borrower holds any interest in and which in any way relate to the use,
occupancy, maintenance or enjoyment of the Unsold Intervals or the Encumbered
Intervals, including, without limitation, with respect to utilities,
maintenance, management, services, marketing and sales (collectively, the
"Operating Contracts"). All of the Operating Contracts are and shall (unless
Lender shall otherwise consent in advance in writing) remain unmodified, in full
force and effect, and free and clear of any Lien except the Lien in favor of
FINOVA.
6.21 Architectural and Environmental Control. All Units, Facilities, Common
Furnishings and other real or personal property at, upon or appurtenant to the
Resorts are and will continue to be in compliance with the design, use,
architectural and environmental control provisions, if any, set forth in the
Timeshare Documents.
6.22 Tax Identification/Social Security Numbers. The Borrower's and
Guarantor's respective federal taxpayer's identification numbers, or social
security numbers, are as follows:
Borrower: Not Applicable
Guarantor: ▇▇-▇▇▇▇▇▇▇
6.23 Improvements.
(a) Zoning Ordinances and Similar Laws. The Improvements and the use
of each of the Resorts has been approved by all appropriate governmental
and quasi-governmental authorities (if any), and accordingly, comply and
will continue to comply with all applicable United States and Mexican
governmental and quasi-governmental statutes, ordinances, rules,
regulations and standard requirements, including, but not limited to, any
Mexican equivalent of the United States Federal Fair Housing Act of 1968,
as amended, and any Mexican equivalent of the United States Federal
Americans with Disabilities Act of 1990.
38
(b) Availability of Utilities. All utility services necessary for the
operation of the Resorts have been available in the past and, to the best
of Borrower's knowledge after diligent inquiry, all utility services
necessary for the operation of the Improvements for their intended purposes
shall continue to be available, including water supply, storm and sanitary
sewer facilities, electric and telephone facilities.
(c) Condition of Resorts. The Resorts are not now damaged as a result
of any fire, explosion, accident, flood or other casualty.
(d) Access. The rights-of-way for all roads necessary for the full
utilization of each of the Resorts, for its intended purposes, have either
been acquired by the appropriate governmental authority or have been
dedicated to public use and accepted by such governmental authority, and
all such roads shall have been completed, or all necessary steps shall have
been taken by Borrower and such governmental authority to assure the
complete construction and installation thereof prior to the date upon which
access to the Resorts via such road will be reasonably necessary. All curb
cuts and traffic signals, if any, are existing or have been fully approved
by all necessary governmental authorities.
6.24 Continuation and Investigation. The representations and warranties
contained herein shall be and remain true and correct so long as any of
Borrower's Obligations hereunder have not been fully satisfied, or so long as
any part of the Loan shall remain outstanding, and each request by Borrower for
an Advance under the Loan shall constitute an affirmation that all of the
foregoing representations and warranties remain true and correct as of the date
thereof. All representations, warranties, covenants and agreements made herein
or in any certificate or other document delivered to Lender by or on behalf of
Borrower, pursuant to or in connection with this Agreement, shall be deemed to
have been relied upon by Lender, notwithstanding any investigation heretofore or
hereafter conducted by or on behalf of Lender and shall survive the making of
any or all Advances and payments contemplated hereby.
6.25 Exchange Control. Borrower is in compliance with all applicable United
States and Mexican exchange control statutes and regulations, and has paid all
fees required thereunder.
6.26 Year 2000.
(a) Year 2000 Compliant. Borrower has (i) begun analyzing the
operations of Borrower and its subsidiaries and affiliates that could be
adversely affected by failure to become Year 2000 compliant (that is, that
computer applications, imbedded microchips and other systems will be able
to perform date-sensitive functions prior to and after December 31, 1999,
including, without limitation, the function of completing reservations at
the Resorts) and; (ii) developed a plan for becoming Year 2000 compliant in
a timely manner, the implementation of which is on schedule in all material
respects. Borrower reasonably believes that it will become Year 2000
compliant for its operations and for those of its subsidiaries and
affiliates on a timely basis except to the extent that a failure to do so
could not reasonably be expected to have a material adverse effect upon the
financial condition of the Borrower.
(b) Suppliers, Vendors, Subsidiaries and Affiliates. Borrower
reasonably believes any suppliers and vendors that are material to the
operations of Borrower or its subsidiaries and affiliates will be Year 2000
compliant for their own computer applications except to the extent that a
failure to do so could not reasonably be expected to have a material
adverse effect upon the financial condition of Borrower.
(c) Notice. Borrower will promptly notify Lender in the event Borrower
determines that any computer application which is material to the
operations of Borrower, its subsidiaries or any of its material vendors or
suppliers will not be fully Year 2000 compliant on a timely basis, except
to the extent that such failure could not reasonably be expected to have a
material adverse effect upon the financial condition of Borrower.
6.27 FINOVA Loan and the Indenture. The execution, delivery and performance
of this Agreement does not and will not violate any provision of law or
administrative regulation, any order of any court or other agency of government,
any provision of any indenture, agreement or other instrument to which Borrower
or Guarantor is a party (specifically including the FINOVA Loan Agreement, the
Indenture and the Mirror Notes), or by which Borrower or Guarantor or any of the
39
Borrower's or Guarantor's properties or assets are bound, and is not and will
not be in conflict with, result in a breach of or constitute (with due notice
and/or lapse of time) a default under any such indenture, agreement or other
instrument (specifically including the FINOVA Loan Agreement, the Indenture and
the Mirror Notes), and is not and will not result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of Borrower or Guarantor except as expressly provided in
this Agreement. Neither Borrower nor Guarantor is in default in any material
respect under any agreement or other instrument to which it is a party or by
which it may be bound, specifically including the FINOVA Loan Agreement, the
Indenture and the Mirror Notes. The Loan is "Permitted Debt", as such term is
defined in Section 4.09(b) of the Indenture. As provided in the Guaranty,
Guarantor covenants with Lender that (a) as and when required by the Indenture,
the Guarantor shall cause the Issuers (as such term is defined in the Indenture)
to supply the Lender with true and complete copies of all reports,
certifications, notices or demands given by the Issuers under the Indenture
(including, but not limiting the generality of the foregoing, materials required
by Sections 4.03, 4.04, 4.21, 7.06, and Article 8 of the Indenture) and (b) it
will not amend or modify the Indenture without the prior written consent of
Lender and any such amendment or modification to the Indenture made without the
prior written consent of Lender shall not be binding upon Lender. As provided in
the Guaranty, Guarantor further agrees to cause Issuers to promptly (but in any
event within three (3) days after Issuer's receipt of same) supply Lender with a
true and complete copy of any notice sent to Issuers under Section 6.01 of the
Indenture, or any other notice alleging a default by the Issuer under the
Indenture.
Section 7. COVENANTS.
7.1 Affirmative Covenants. So long as any portion of the Obligations
remains unsatisfied, Borrower hereby covenants and agrees with Lender as
follows:
(a) Payment and Performance of Obligations. Borrower shall repay all
of the Loan and all related amounts when and as the same become due and
payable, and Borrower shall strictly observe and perform all of the
Obligations, including without limitation, all covenants, agreements,
terms, conditions and limitations contained in the Loan Documents, and will
do all things necessary which are not prohibited by law to prevent the
occurrence of any Event of Default hereunder; and, pursuant to Section
12.23 of this Agreement, Borrower will maintain an office or agency in the
State of Texas where notices, presentations and demands with respect to the
Loan Documents may be made upon Borrower, such address being: c/o Raintree
Resorts International, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇. The books and records of Borrower shall be maintained at the
Resorts until such time as Borrower shall notify Lender, in writing, of any
change of location of such office or agency.
(b) Maintenance of Existence, Qualification and Assets. Borrower shall
at all times (i) maintain its legal existence, (ii) maintain its
qualification, where required, to transact business in good standing in
Mexico and in any other jurisdiction where it conducts business in
connection with the Resorts, and (iii) comply or cause compliance with all
applicable statutes, ordinances, rules and regulations applicable to the
Unsold Intervals or the Encumbered Intervals, Borrower or its business,
including, without limitation, the Timeshare Act and all other applicable
timeshare and consumer protection acts and regulations.
(c) Consolidation and Merger. Unless Borrower shall have first
obtained Lender's prior written approval, which may be granted, withheld or
conditioned in Lender's sole discretion, Borrower will not consolidate with
or merge into any other Person or permit any other Person to consolidate
with or merge into it, provided, however, that the foregoing restriction
shall not apply to Borrower if one or more of the Persons constituting
Borrower is consolidated with or merged into another entity controlled
directly or indirectly by Guarantor and such resulting entity has a net
worth not less than that of the consolidated or merged entity.
40
(d) Maintenance of Insurance. Borrower shall maintain at all times
during the term of this Agreement, policies of insurance with premiums
therefor being paid when due, and shall deliver to Lender certified copies
of insurance policies issued by insurance companies (together with paid
premium invoices in respect thereof), in amounts, in form and in substance,
and with expiration dates, all acceptable to Lender and containing waivers
of subrogation rights by the insuring company, non-contributory standard
mortgagee benefit clauses or their equivalents and mortgagee loss payable
endorsements in favor of and satisfactory to Lender and breach of warranty
coverage, providing the following types of insurance on and with respect to
Borrower and each of the Resorts:
(i) As to all the Improvements that have already been completed
as of the date hereof, "All Risk Special Form" insurance coverage
(including fire, lightning, hurricane, tornado, wind and water damage,
earthquake, vandalism and malicious mischief coverage) covering all
real and personal property which comprise the Resorts, in an amount
not less than the full replacement value of such improvements and
personal property, and said policy of insurance shall provide for a
deductible acceptable to Lender, breach of warranty coverage,
replacement cost endorsements satisfactory to Lender, and shall not
permit co-insurance. All insurance shall specifically cover architect
and engineering fees necessary to repair or replace any insured
portion of the Resorts and shall cover debris removal;
(ii) Public liability and property damage insurance covering the
Resorts in amounts and on terms satisfactory to Lender;
(iii) Such other insurance on the Resorts or any replacements or
substitutions therefor, including, without limitation, rent loss,
business interruption, flood insurance (if any of the Resorts are or
become located in an area which is considered a flood risk by any
Mexican equivalent of the U.S. Federal Emergency Management Agency,
pursuant to the National Flood Insurance program or pursuant to
Mexican programs), in such amounts and upon such terms as may from
time to time be reasonably required by Lender; and
Lender shall expressly be named an insured and loss payee in each
insurance policy described in this Section 7.1(d). To the extent any
"institutional mortgagee," "institutional lender" or "mortgagee" (as
defined or used in the Declaration or the remaining Timeshare
Documents) other than Lender has any rights to approve the form of
insurance policies with respect to the Resorts, the amounts of
coverage thereunder, the insurers under such policies or the
designation of an attorney-in-fact for purposes of dealing with damage
to any part of the Resorts or insurance claims or matters related
thereto or any successor to such attorney-in-fact or any changes with
respect to any of the foregoing, Borrower shall take all steps as may
be necessary to ensure that Lender shall at all times have a co-equal
right with such other "institutional mortgagee," "institutional
lender" or other "mortgagee" (including, without limitation, Borrower
or any third-party lender), to approve all such matters and any
proposed changes in respect thereof; and Borrower shall not cause, and
shall use its best efforts to prohibit, any changes with respect to
any insurance policies, insurers, coverage, attorney-in-fact or
insurance trustees, if any, without Lender's prior written approval.
Subject to the provisions of the Intercreditor Agreement, in the
event of any insured loss or claim with respect to all or any portion
of the Resorts, the Unsold Intervals, the Encumbered Intervals or any
Units which relate to such Intervals, Borrower shall apply all
proceeds of such insurance policies in a manner consistent with the
Timeshare Documents, the Timeshare Act and all other applicable
statutes, ordinances, rules and regulations.
All insurance policies required pursuant to this Agreement (or
the Timeshare Documents or the Timeshare Act) shall provide that the
coverage afforded thereby shall not expire or be amended, canceled,
modified or terminated without at least thirty (30) days prior written
notice to Lender and contain a provision affirming Lender's rights and
benefits thereunder despite any violation of the applicable policy
terms by Borrower or any other Person. At least thirty (30) days prior
to the expiration date of each policy maintained pursuant to this
Section 7.1(d), a renewal or replacement thereof satisfactory to
41
Lender shall be delivered to Lender. Borrower shall deliver to Lender
receipts evidencing the payment of all premiums for all such insurance
policies and renewals or replacements. The delivery of any insurance
policies hereunder shall constitute an assignment of all unearned
premiums as further security for the Obligations. In the event that
Borrower shall fail to make all required premium payments for all such
insurance policies at least thirty (30) days prior to the expiration
date of each policy maintained pursuant to Section 7.1(d), Borrower
shall immediately notify Lender in writing of such failure to timely
pay the required insurance premiums. Borrower shall have thirty (30)
days from receipt of a written request from Lender to cause the
required insurance premiums to be paid. If the required insurance
premiums are not paid within such thirty (30) day period, Lender may,
in its sole discretion, without any obligation to do so, choose to pay
such required insurance premiums on behalf of Borrower, in which case
Borrower shall pay Lender interest at the Default Rate for any amounts
so advanced until such sums are repaid to Lender. Lender may also, in
its sole discretion, in the event the required insurance premiums are
not paid when due, establish an insurance escrow account from which
Lender may make insurance payments on behalf of Borrower when
insurance premiums shall become due. If the required insurance
premiums are not paid as required and Lender elects not to pay such
insurance premiums or establish an escrow account for payment thereof,
such failure shall constitute an Event of Default hereunder.
In the event of any fire or other casualty to or with respect to
all or any portion of the Resorts, Borrower covenants that it shall
promptly restore, repair or replace the damaged portion(s) of the
Resorts and repair or replace any other personal property to the same
condition as immediately prior to such fire or other casualty and,
with respect to the real and personal property comprising the Resorts,
in accordance with the terms of the Timeshare Documents, the Timeshare
Act and all other applicable statutes, ordinances, rules and
regulations. The insufficiency of any net insurance proceeds shall in
no way relieve Borrower of its obligations as set forth herein.
Borrower covenants that it shall comply promptly and cause compliance
with the provisions of the Declaration and the other Timeshare
Documents, and of the Timeshare Act and all other applicable statutes,
ordinances, rules and regulations relating to such restoration, repair
or replacement. In Lender's sole discretion (but subject to the terms
of the Intercreditor Agreement), all insurance proceeds payable to or
received by Lender pursuant to the Declaration or the applicable
insurance policies may be applied to the payment of the Obligations,
whether or not due and in whatever order Lender elects, consistent
with the terms of the applicable insurance policy and the Declaration.
Borrower shall in good faith cooperate with Lender in obtaining
for Lender the benefits of any insurance or other proceeds lawfully or
equitably payable to Borrower or Lender in connection with the
transactions contemplated hereby and in paying any Obligation
(including the payment by Borrower of the expense of an independent
appraisal on behalf of Lender in case of a fire or other casualty
affecting the Resorts).
(e) Maintenance of Security. Borrower shall execute and deliver (or
cause to be executed and delivered) to Lender all security agreements,
financing statements, assignments and such other agreements, documents,
instruments and certificates, and all supplements and amendments thereto,
and take such other actions, as Lender deems necessary or appropriate in
order to maintain as valid, enforceable and perfected first priority liens
and security interests (subject to the Permitted FINOVA Liens), all Liens
and security interests in the Collateral granted to Lender to secure the
Obligations. Borrower shall not grant extensions of time for the payment
of, or compromise for less than the full face value or release in whole or
in part, any Purchaser or other Person liable for the payment of, or allow
any credit whatsoever except for the amount of cash to be paid upon, any
Collateral or any instrument, chattel paper or document representing the
Collateral.
(f) Payment of Taxes and Claims. Borrower shall pay, when due, all
taxes imposed on or with respect to the Loan or any of the Loan Documents,
the Collateral, the Unsold Intervals, the Encumbered Intervals or on or
with respect to Borrower or any income, property or profits of Borrower and
shall pay all other charges and assessments against Borrower, the
Collateral, the Unsold Intervals and the Encumbered Intervals before any
claim (including, without limitation, claims for labor, services, materials
42
and supplies) arises for sums which have become due and payable. Borrower
covenants that Borrower shall pay when due, all taxes imposed upon each of
the Resorts, or any of its assets or with respect to any of its franchises,
businesses, income or profits. Borrower shall make good faith inquiry on a
regular basis to determine if the required taxes have been paid. Borrower
shall immediately notify Lender in writing of any failure to timely pay all
taxes when due. In the event that Lender determines (through notice from
Borrower or otherwise) that such taxes have not been paid when due,
Borrower shall have thirty (30) days from receipt of a written request for
payment from Lender to cause the required taxes with respect to the Resorts
to be paid. If such required taxes (and any applicable late charges, etc.)
are not paid within such thirty (30) day period, Lender may, in its sole
discretion, without any obligation to do so, choose to pay such taxes on
behalf of Borrower, in which case Borrower shall pay Lender interest at the
Default Rate for any sums so advanced until such sums are repaid to Lender;
Lender may also, in its discretion (but subject to the terms of the
Intercreditor Agreement), in the event the required taxes with respect to
each of the Resorts are not paid when due, establish a tax escrow account
from which Lender may, make tax payments on behalf of Borrower when taxes
shall become due. In the event Lender elects not to pay the required taxes
or establish a tax escrow account, and the required taxes for the Resorts
are not paid as set forth above, such failure shall constitute an Event of
Default hereunder. Borrower shall pay, where applicable, all other charges
and assessments levied against Borrower, the Collateral or the Resorts
before any claim (including, without limitation, claims for labor,
services, materials and supplies) arises for amounts which have become due
and payable. Except for the Liens in favor of Lender granted pursuant to
the Loan Documents, and except as otherwise specifically provided for
herein, Borrower covenants that in the event that any statutory or other
Liens whatsoever (including, without limitation, mechanics', materialmen's,
judgment or tax liens) attach to any of the Collateral (except for the
Permitted Liens and Encumbrances which include, without limitation, the
lien for taxes not yet due and payable), Borrower shall, within thirty (30)
days after any such Lien attaches, either (i) cause such Lien to be
released of record; or (ii) provide Lender with a bond in accordance with
the applicable laws of Mexico, issued by a corporate surety acceptable to
Lender, in an amount and form acceptable to Lender.
(g) Inspections. Borrower shall, at any time, and from time to time,
upon reasonable notice and at the expense of Borrower, including but not
limited to the reasonable travel expenses of Lender's agents, permit Lender
or its agents or representatives to inspect each of the Resorts, the
Collateral and any of Borrower's, Guarantor's, any Material Party's, or
Lockbox Agent's assets, including, but not limited to, all documents, bank
statements, and other records within Borrower's possession, custody or
control, and to examine and make copies of and abstracts from such
materials and to discuss its affairs, finances and accounts with any of its
officers, employees, Affiliates, contractors or independent certified
public accountants (and by this provision, Borrower authorizes said
accountants to discuss with Lender, its agents or representatives, the
affairs, finances and accounts of Borrower). Lender agrees to use
reasonable efforts not to unreasonably interfere with Borrower's business
operations in connection with any such inspections. Without limiting the
foregoing, Lender shall have the right to make such credit investigations
as Lender may deem appropriate in connection with its review of Notes
Receivable pledged or to be pledged to Lender, and Borrower shall make
available to Lender all credit information in Borrower's possession or
under its control or to which it may have access, with respect to
Purchasers or other obligors under such Notes Receivable as Lender may
request.
(h) Reporting Requirements. So long as any portion of the Obligations
remains unsatisfied, Borrower shall furnish (or use its best efforts to
cause to be furnished, as the case may be) to Lender, in each case
certified in writing by Borrower and the Guarantor as true and correct ,
the following:
(i) Monthly Financial Reports. As soon as available and in any
event within ten (10) days after the end of each calendar month, a
report showing (i) the trial balance of the Pledged Notes Receivable;
(ii) a current aging report on the Pledged Notes Receivable; (iii) a
report detailing the collections on each of the Pledged Notes
Receivable; (iv) a delinquency report on all Pledged Notes Receivable;
(v) a Borrowing Base report; (vi) monthly reports from the Lockbox
Agent required pursuant to the Lockbox Agreement; and (vii) monthly
reports from the Servicing Agent required pursuant to the Servicing
Agreement;
43
(ii) Quarterly Financial Reports. As soon as available and in any
event within forty-five (45) days following the end of each calendar
quarter, unaudited statements of income and expense of Borrower and
for each of the Resorts for the preceding quarterly period in question
and balance sheets of Borrower and for the Resorts as of the last day
of such preceding calendar quarter, all in such detail and scope as
may be reasonably required by Lender, prepared in accordance with GAAP
and on a basis consistent with prior accounting periods and certified
as true and correct by Borrower's chief financial officer, as
appropriate;
(iii) Annual Financial Reports. As soon as available and in any
event within one hundred twenty (120) days after the end of each
fiscal year as may be applicable with respect to Borrower and the
Resorts (a "Fiscal Year"), statements of income and expense of
Borrower and of the Resorts for the annual period ended as of the end
of such Fiscal Year, and balance sheets of Borrower and of the Resorts
as of the end of such Fiscal Year, all in such detail and scope as may
be reasonably required by Lender and prepared and reviewed by an
independent certified Mexican public accounting firm acceptable to
Lender in accordance with GAAP and on a basis consistent with prior
accounting periods. Each annual financial statement of Borrower and of
the Resorts shall be certified by Borrower and the Guarantor to be
true, correct and complete, and shall otherwise be in form acceptable
to Lender;
(iv) Guarantor's Financial Statements. Contemporaneously with
Borrower's submission to Lender of the annual financial reports
described in SubSection (iii) immediately above, Guarantor shall
deliver to Lender its Financial Statements. The Guarantor's Financial
Statements shall be in such detail and scope as may reasonably be
required by Lender and prepared by an independent certified public
accounting firm acceptable to Lender in accordance with GAAP on a
basis consistent with prior accounting periods. The Guarantor's
Financial Statements shall be dated as of the end of the immediately
preceding calendar year or fiscal year as applicable to each such
Guarantor and shall be certified as being true, correct and complete
by each such Guarantor;
(v) Officer's Certificate. Each set of annual Financial
Statements or reports delivered to the Lender pursuant to Sections
7.1(h)(i), (ii) (iii) and (iv) of this Agreement shall be accompanied
by a certificate of the President or the Treasurer of Borrower in the
form attached hereto as Exhibit H, setting forth that the signers have
reviewed the relevant terms of this Agreement (and all other
agreements and exhibits between the relevant parties), have made, or
caused to be made, under their supervision, a review of the
transactions and conditions of Borrower from the beginning of the
period covered by the Financial Statements or reports being delivered
therewith to the date of the certificate and that such review has not
disclosed the existence during such period of any condition or event
which constitutes a Default or Event of Default or, if any such
condition or event existed or exists or will exist, specifying the
nature and period of existence thereof and what action Borrower has
taken or proposes to take with respect thereto;
(vi) Sales Reports. Within ten (10) days after the end of each
month and each Fiscal Year quarter ("Fiscal Quarter"), and within
ninety (90) days after the end of each Fiscal Year, Borrower shall
deliver to Lender, monthly, quarterly and annually, as appropriate, a
monthly, quarterly or annual sales report, detailing the sales of all
Unsold Intervals and Encumbered Intervals for the period covered
thereby, together with all Interval sales made by Borrower which have
been canceled during such period. Such monthly and quarterly reports
shall be certified by Borrower, and such annual reports shall be
certified by Borrower and the Guarantor to be true, correct and
complete and otherwise in a form approved by Lender;
(vii) Audit Reports. Within thirty (30) days of receipt thereof
by Borrower, one (1) copy of each other report submitted to Borrower
by independent public accountants or other Persons in connection with
any annual, interim or special audit made by them of the books of
Borrower;
44
(viii) Notice of Default or Event of Default. Immediately upon
becoming aware of the existence of any condition or event which
constitutes a Default or an Event of Default, a written notice
specifying the nature and period of existence thereof and what action
the Borrower is taking or proposes to take with respect thereto;
(ix) Notice of Claimed Default. Immediately upon becoming aware
that the holder of any material obligation or of any evidence of
material indebtedness of Borrower has given notice or taken any other
action with respect to a claimed default or event of default
thereunder, a written notice specifying the notice given or action
taken by such holder and the nature of the claimed default or event of
default and what action Borrower is taking or proposes to take with
respect thereto;
(x) Material Adverse Developments. Immediately upon becoming
aware of any claim, action, proceeding, development or other
information which may materially and adversely affect Borrower, the
Guarantor, any of the Collateral, all or any portion of one or more of
the Resorts, or the business, prospects, profits or condition
(financial or otherwise) of Borrower, an event of default under the
FINOVA Loan, the Indenture or the Mirror Notes or a fact or
circumstance which, upon the lapse of time, will lead to an event of
default under the FINOVA Loan, the Indenture or the Mirror Notes, or
the ability of Borrower to perform its Obligations under the
Agreement, Borrower shall provide Lender with telephonic or
telegraphic notice, followed by telecopied and mailed written
confirmation, specifying the nature of such development or information
and the anticipated effect thereof;
(xi) Other Information. Borrower will promptly deliver to Lender
any other information related to the Loan, the Collateral, the
Resorts, Borrower or the Guarantor as Lender may in good faith request
including, without limitation, annually, federal call reports relating
to Lockbox Agent, if any. In addition, concurrently with the financial
statements described in Section 7.1(h) above, Borrower and the
Guarantor shall cause to be furnished to Lender the Financial
Statements as described and provided in the Guaranty from time to
time;
(xii) Hazardous Materials. Borrower shall promptly notify Lender
of any change in the nature or extent of any Hazardous Materials
maintained on, or under the Resort Property or used in connection
therewith, and will deliver to Lender copies of any citation, orders,
notices or other material governmental or other communication received
with respect to any other Hazardous Materials, or other
environmentally regulated substances affecting any of the Resorts.
Lender shall have the right to require Borrower to periodically
perform (at Borrower's expense) an environmental audit and, if deemed
reasonably necessary by Lender, an environmental risk assessment, each
of which must be satisfactory to Lender, in its sole discretion, of
the Resort Property. Such audit and/or risk assessment must be
conducted by a licensed environmental consultant. All costs and
expenses incurred by Lender in the exercise of such rights shall bear
interest at the Default Rate set forth in the Note until paid, shall
be secured by the Collateral and shall be payable by Borrower upon
demand or charged to Borrower's Loan balance in the discretion of
Lender;
(xiii) Quarterly Purchaser Reports. As soon as available and in
any event within forty-five (45) days following the end of each
calendar quarter, an updated listing of the name, address, and phone
number of the consumer obligor(s) for each Note Receivable which has
been pledged and assigned to Lender pursuant to the terms of this
Agreement.
(i) Records. Borrower shall keep adequate records and books of account
in accordance with GAAP reflecting all financial transactions of Borrower
with respect to the Resort. In addition, Borrower shall keep, and shall
promptly deliver to Lender upon Lender's request therefor, complete, timely
and accurate records of all sales of Intervals and all payments made with
respect to Pledged Notes Receivable.
45
(j) Marketing and Management. Borrower and the Guarantor shall use
their best efforts to keep, Borrower or a sales and marketing organization
contracted with or employed by Borrower, engaged in the active marketing
and sales of the Resorts, and Starwood Cancun, S. de ▇.▇. de C.V., Starwood
Los Cabos, S. de ▇.▇. de C.V., and Starwood Puerto Vallarta, S. de ▇.▇. de
C.V., engaged in the management of the Resorts so that each of these
companies continues to perform duties substantially similar to those
presently performed, as provided in the marketing, sales and management
agreement relating to the Resorts. In the event of the resignation or
termination of any of the respective entities referenced herein, Borrower
and the Guarantor shall use their best efforts to engage or cause to be
engaged within three (3) months after the date of any such event, as
marketing and sales agent or manager of the Resorts, a Person or Persons
who have substantially equivalent experience, background and demonstrated
ability to perform services, in accordance with new marketing and
management agreements, respectively, performed at the time of the Closing
Date by the above-referenced companies. Lender shall provide Borrower with
its prior written consent to any change in the above-referenced entities.
(k) Employee Deductions. Borrower shall furnish to Lender, within
forty-five (45) days after the expiration of each calendar quarter, proof
satisfactory to Lender that Borrower's obligations to make all required
employee deductions or withholdings at source for income tax, contributions
to the Mexican Social Security Institute, Borrower's pension plan under
Mexican Labor Law and, if applicable, unemployment insurance have been
satisfied.
(l) Operating Contracts. No Operating Contract to which Borrower is a
party or as to which Borrower's consent or joinder is required, shall be
modified, extended, terminated by Borrower or entered into, without the
prior written approval of Lender.
(m) Guarantor. Absent the prior written consent of Lender, which may
be granted or withheld in Lender's sole discretion, Guarantor, through
certain subsidiaries in which Guarantor holds a majority ownership interest
(as set forth in Exhibit I attached hereto), shall, subject to the terms of
Section 7.1(c) hereof, continue to own a majority ownership interest in
each of the Borrower entities. Borrower shall not enter into proxies,
voting trusts, shareholders agreements or similar arrangements for the
purpose of vesting voting rights, authority or discretion in any other
Person.
(n) Notices. Borrower shall notify Lender within five (5) Business
Days of the occurrence of any event (i) as a result of which any
representation or warranty of Borrower contained in any Loan Documents
would be incorrect or materially misleading if made at that time; or (ii)
as a result of which Borrower is not in full compliance with all of its
covenants and agreements contained in this Agreement or any Loan Document;
or (iii) which constitutes or, with the passage of time, notice or a
determination by Lender would constitute, an Event of Default.
(o) Maintenance. Borrower shall use its best efforts to maintain, or
cause to be maintained, each of the Resorts in good repair, working order
and condition and to make all necessary replacements and improvements to
the Resorts so that the value and operating efficiency of the Resorts will
be maintained at all times and so that the Resorts remains in compliance in
all respects with the Timeshare Act, the Timeshare Documents and all other
applicable statutes, ordinances, rules and regulations.
(p) Claims. Upon receiving notice thereof, Borrower shall promptly
notify Lender of any claim, action or proceeding affecting any of the
Resorts or the Collateral, or any part thereof, or any of the security
interests or rights granted in favor of Lender hereunder or under any of
the other Loan Documents. At the request of Lender, Borrower shall appear
in and defend in favor of Lender, at Borrower's sole expense, with regard
to any such claim, action or proceeding which might materially adversely
affect the value of all or any part of the Collateral or the rights and
remedies of Lender under this Agreement or any of the other Loan Documents.
(q) Registration and Regulations.
46
(i) Local Legal Compliance. The Borrower will comply, and will
use its best efforts to cause each of the Resorts to comply, with all
applicable servitudes, restrictive covenants, all applicable planning,
zoning and land use ordinances and building codes, all applicable
health and Environmental Laws and regulations, and all other
applicable statutes, ordinances, rules, regulations, court orders,
agreements and arrangements. All inspections, licenses and permits
required to be made or issued with respect to the buildings and other
improvements in which the Units related to the Unsold Intervals and
the Encumbered Intervals are located have been made or issued by the
appropriate governmental authorities, and the use and occupancy of
such buildings for their intended purposes is lawful under all
applicable statutes, ordinances, rules and regulations. Final
certificates of occupancy have been issued and are currently in effect
for all completed Units. The timeshare use and occupancy of Unsold or
Encumbered Intervals will not violate or constitute a non-conforming
use under any private covenant or restriction or any zoning, use or
similar statutes, ordinances, rules or regulations affecting the use
or occupancy of the such Unsold Intervals. All inspections, licenses
and certificates required to be made or issued with respect to any
buildings, improvements or amenities which are related to the Unsold
Intervals or the Encumbered Intervals and with respect to the use or
occupancy thereof, including but not limited to certificates of
occupancy, have been made or issued by the appropriate authorities and
the use or occupancy of all such buildings, improvements and amenities
for their respective intended purposes are lawful under all applicable
statutes, ordinances, rules, and regulations;
(ii) Registration Compliance. Borrower shall at all times
maintain or cause to be maintained all necessary registrations,
current filings, consents, franchises, approvals, and exemption
certificates, and Borrower will make or pay, or cause to be made or
paid, all registrations, declarations or fees with the applicable
Mexican regulatory authorities and any other governmental agencies or
departments thereof, whether in Mexico or another jurisdiction,
required in connection with the Unsold Intervals and Encumbered
Intervals and the occupancy, use and operation thereof, the
incorporation of Units into the timeshare plan established pursuant to
the Declaration and the other Timeshare Documents, and the sale,
advertising, marketing, and offering for sale of Unsold Intervals and
Encumbered Intervals. All such registrations, filings and reports will
be truthfully completed, and true and complete copies of such
registrations, applications, consents, licenses, permits, franchises,
approvals, exemption certificates, filings and reports will be
delivered to the Lender upon request. Borrower shall advise Lender of
any material changes with respect to its marketing or sales programs
in any jurisdiction, including jurisdictions other than Mexico, and at
Lender's request from time to time, Borrower shall deliver to Lender
(A) written statements by the applicable governmental authorities, in
form reasonably acceptable to Lender stating that no registration is
necessary for the sale of Intervals in the particular state; (B) an
opinion of counsel in form reasonably acceptable to Lender and
rendered by counsel reasonably acceptable to Lender, stating that no
such registration is necessary; or (C) such other evidence of
compliance with applicable laws as Lender may require; and
(iii) Other Compliance. The Borrower will continue to comply, in
all material respects, with all statutes, ordinances, rules and
regulations of the United States (at such possible time as Borrower
markets or sells Intervals in the Resorts within the borders of the
United States), Mexico, and any other applicable federal, state and
local statutes, ordinances, rules and regulations including, to the
extent applicable, but not limited to: (A) the Land Sales Full
Disclosure Act; (B) the Condominium Act; (C) Regulation Z of the
Federal Reserve Board; (D) the Equal Credit Opportunity Act; (E)
Regulation B of the Federal Reserve Board; (F) the Federal Trade
Commission's 3-day cooling-off rule for Door-to-Door Sales; (G)
Section 5 of the Federal Trade Commission Act; (H) ILSA; (I) the
federal postal laws; (J) all applicable state and federal securities
laws; (K) all applicable usury laws; (L) all applicable trade
practices, home and telephone solicitation, sweepstakes, anti-lottery
and consumer credit and protection laws; (M) all applicable real
estate sales licensing, disclosure, reporting and escrow laws; (N) the
ADA; (O) RESPA; (P) all amendments to and rules and regulations
47
promulgated under the foregoing acts or laws; (Q) all other applicable
federal statutes and the rules and regulations promulgated thereunder;
and (R) any Mexican law, statute, rule or regulation, or the law of
any other jurisdiction (and the rules and regulations promulgated
thereunder) relating to ownership, establishment or operation of the
Collateral, or the sale, offering for sale, marketing or financing of
Intervals.
(r) Other Documents. Borrower will maintain to the satisfaction of
Lender, and make available to Lender, accurate and complete files relating
to the Encumbered Intervals, the Pledged Notes Receivable, and all of the
other Collateral, and such files will contain true copies of each Pledged
Note Receivable, as amended from time to time, copies of all relevant
credit memoranda relating to such Notes Receivable and all collection
information and correspondence relating thereto.
(s) Further Assurances. Borrower will execute and deliver, or cause to
be executed and delivered, such other and further agreements, documents,
instruments, certificates and assurances as, in the judgment of Lender
exercised in good faith, may be necessary or appropriate to more
effectively evidence or secure, and to ensure the performance of, the
Obligations. In addition, Borrower shall deliver to Lender from time to
time, upon request by Lender, such documents, instruments and other matters
or items as Lender may reasonably require to evidence Borrower's compliance
with the covenants set forth in this Section 7.1.
(t) Utilities. Borrower will use its best efforts to ensure that the
manager of each of the Resorts will cause electric, gas, sanitary and
stormwater sewer, water facilities, drainage facilities, solid waste
disposal, telephone and other necessary utilities to be available to the
Resorts in sufficient capacity to service the Resorts, including all Units,
Facilities and Common Furnishings.
(u) Amenities. Borrower will use its best efforts to ensure that the
manager of each of the Resorts will cause the Resorts to be maintained in
good condition and repair, and in accordance with the provisions of the
applicable Timeshare Documents, and Borrower will use its best efforts to
cause each Purchaser of an Unsold Interval or Encumbered Interval at the
Resorts to have continuing access to, and the use of during the period of
any occupancy of the Units, all of the Facilities, Common Furnishings and
related or appurtenant services, rights and benefits, all as provided in
the Declaration and the other Timeshare Documents.
(v) Expenses and Closing Fees. Whether or not the transactions
contemplated hereunder are consummated, Borrower shall pay all expenses of
Lender relating to negotiating, preparing, documenting, closing and
enforcing this Agreement and the other Loan Documents, including, but not
limited to:
(i) the cost of preparing, reproducing and binding this
Agreement, the other Loan Documents and all exhibits and schedules
thereto;
(ii) the fees and disbursements of Lender's and Borrower's
counsel;
(iii) Lender's out-of-pocket expenses;
(iv) all fees and expenses (including fees and expenses of
Lender's counsel) relating to any amendments, waivers, consents or
subsequent closings or other transactions pursuant to the provisions
hereof;
(v) all costs, outlays, legal fees and expenses of every kind and
character had or incurred in: (A) the interpretation or enforcement of
any of the provisions of, or the creation, preservation or exercise of
rights and remedies under, any of the Loan Documents including the
costs of appeal; (B) the preparation for, negotiations regarding,
consultations concerning, or the defense or prosecution of legal
proceedings involving any claim or claims made or threatened against
the Lender arising out of this transaction or the protection of the
Collateral securing the Loan or Advances made hereunder, expressly
including, without limitation, the defense by Lender of any legal
proceedings instituted or threatened by any Person to seek to recover
48
or set aside any payment or set off theretofore received or applied by
the Lender with respect to the Obligations, and any and all appeals
thereof; and (C) the advancement of any expenses provided for under
any of the Loan Documents;
(vi) all expenses relating to the maintenance and administration
of the Lockbox and Lockbox Account by the Lockbox Agent and all fees
and expenses of the Servicing Agent and any escrow by any title
insurance company, any Mexican Notary, or any other escrow agent;
(vii) the custodial fees payable to Lender with respect to the
original Pledged Notes Receivable and related Collateral;
(viii) all costs and expenses incurred by Lender under the Note,
and all late charges payable under the Note; and
(ix) all real and personal property taxes and assessments,
documentary stamp and intangible taxes, sales taxes, recording fees,
title insurance premiums and other title charges, document copying,
transmittal and binding costs, appraisal fees, lien and judgment
search costs, both Borrower's and Lender's attorneys' fees, fees of
architects, engineers, environmental consultants, surveyors and any
special consultants, construction inspection fees, brokers fees,
escrow fees, wire transfer fees, and all travel and out-of-pocket
expenses of Lender to conduct inspections or audits. Without limiting
any of the foregoing, Borrower shall pay the costs of UCC (or Mexican
equivalent) and other searches, UCC (or Mexican equivalent) and other
Loan Document recording and filing fees and applicable taxes and
premiums on each mortgagee policy of title insurance delivered to
Lender pursuant to this Agreement.
(w) Indemnification of Lender. In addition to (and not in lieu of) any
other provisions of any Loan Document providing for indemnification in
favor of Lender, Borrower hereby defends, indemnifies and holds harmless
Lender, its subsidiaries, Affiliates, officers, directors, agents,
employees, representatives, consultants, contractors, servants, and
attorneys, as well as the respective heirs, personal representatives,
successors and assigns of any or all of them (hereinafter collectively the
"Indemnified Lender Parties"), from and against, and agrees promptly to pay
on demand or reimburse each of them with respect to, any and all
liabilities, claims, demands, losses, damages, costs and expenses
(including without limitation, reasonable attorneys' and paralegals' fees
and costs), actions or causes of action of any and every kind or nature
whatsoever asserted against or incurred by any of them by reason of or
arising out of or in any way related or attributable to: (i) this
Agreement, the other Loan Documents, the Commitment or the Collateral; (ii)
the transactions contemplated under any of the Loan Documents or any of the
Timeshare Documents, including without limitation, those in any way
relating to or arising out of the violation of any applicable United States
or Mexican federal, state or local statutes, ordinances, rules or
regulations; (iii) any breach of any covenant or agreement or the
incorrectness or inaccuracy of any representation or warranty of the
Borrower contained in this Agreement or any of the Loan Documents
(including without limitation any certification of the Borrower delivered
to the Lender; (iv) any and all taxes, including real estate, personal
property, sales, mortgage, excise, intangible or transfer taxes, and any
and all fees or charges, including, without limitation, those arising under
the Timeshare Act, which may at any time arise or become due prior to the
payment, performance and discharge in full of the Obligations; (v) the
breach of any representation or warranty as set forth herein regarding any
Environmental Laws; (vi) the failure of Borrower to perform any obligation
or covenant herein required to be performed pursuant to any Environmental
Laws; (vii) the use, generation, storage, release, threatened release,
discharge, disposal or presence on, under or about any of the Resorts of
any Hazardous Materials in violation of applicable Environmental Laws;
(viii) the removal or remediation of any Hazardous Materials from any of
the Resorts required to be performed pursuant to any Environmental Laws or
as a result of recommendations of any environmental consultant or as
required by Lender; (ix) claims asserted by any Person (including, without
limitation, any governmental or quasi-governmental agency, commission,
department, instrumentality or body, court, arbitrator or administrative
board [hereinafter collectively, a "Governmental Agency"]), in connection
49
with or any in any way arising out of the presence, use, storage, disposal,
generation, transportation, release, or treatment of any Hazardous
Materials on, in, under or affecting any of the Resorts; (x) the violation
or claimed violation of any Environmental Laws in regard to any of the
Resorts; or (xi) the preparation of an environmental audit or report on the
Resorts not to exceed one (1) per calendar year and premised upon the
Lender's reasonable belief of the existence of a violation of Environmental
Laws, whether conducted by Lender, Borrower or a third party, or the
implementation of environmental audit recommendations. Such indemnification
shall not give Borrower or the Guarantor any right to participate in the
selection of counsel for Lender or the conduct or settlement of any dispute
or proceeding for which indemnification may be claimed. Lender agrees to
give Borrower written notice of the assertion of any claim or the
commencement of any action or lawsuit covered by this Section. It is the
express intention of the parties hereto that the indemnity provided for in
this Section, as well as the disclaimers of liability referred to in this
Agreement, are intended to and shall protect and indemnify Lender from the
consequences of Lender's own negligence, whether or not that negligence is
the sole or concurring cause of any liability, obligation, loss, damage,
penalty, action, judgment, suit, claim, cost, expense or disbursement but
not from the consequences of Lender's own gross negligence or willful
misconduct. The provisions of this Section shall survive the full payment,
performance and discharge of the Obligations and the termination of this
Agreement, and shall continue thereafter in full force and effect.
(x) No Amounts Due. Borrower shall deliver a statement to Lender at
the end of each calendar year, commencing in the present calendar year and
continuing throughout the Term of the Loan, indicating any amounts due and
payable to Borrower from the Guarantor or any Affiliate of Borrower and
further indicating that all taxes and insurance premiums payable by the
Borrower have been paid when due. Borrower hereby covenants that, as of the
date of this Agreement, except as set forth on the financial statements
heretofore delivered by Borrower to Lender, no amounts are due and payable
to the Borrower from the Guarantor or any Affiliate of Borrower. Borrower
agrees to submit annually to Lender, within thirty (30) days after it is
available, the proposed annual maintenance and operating budget of each of
the Resorts, certified by the manager thereof.
(y) Loan Servicing. The Servicing Agent and Servicing Agreement shall
be in form and content satisfactory to Lender and shall be reasonably
acceptable to Borrower. Borrower may not terminate the Servicing Agreement
without Lender's prior written approval. The Servicing Agreement shall be
cancelable by Lender immediately following the occurrence of an Event of
Default. If the Servicing Agent is Borrower or an Affiliate of Borrower, no
servicing fees shall be paid during or with respect to any period of time
in which an uncured Event of Default exists.
(z) Use of Borrower's Name. Upon Borrower's prior written consent,
Borrower shall at all times during the term of the Loan permit Lender to
use the name of Borrower, any of its Affiliates, Guarantor and the Resorts
in any press release, advertisement or other promotional materials issued
regarding the Loan.
(aa) Withholding Tax. For so long as any of the Obligations remain
outstanding, Borrower agrees to take all steps now or hereafter required in
order to avoid the imposition of withholding taxes under Section 871, 881
and 1442 of the United States Federal Internal Revenue Code or any
successor statutes. Without limiting the generality of the foregoing,
Borrower hereby agrees, for so long as any of the Obligations remain
outstanding not to engage in a United States trade or business, as that
term is interpreted under the United States Federal Internal Revenue Code.
In that regard, but without limiting the generality of the foregoing,
Borrower agrees to engage in no operational, marketing, collection,
administrative, servicing or other business within the United States. To
the extent that Borrower retains the services of an Affiliate for purposes
of performing operational, marketing, collection, administrative, servicing
or other business activities for the benefit of Borrower, such business
activities shall be conducted pursuant to arm's-length pricing and terms,
and be evidenced by a written agreement approved by Lender. Borrower shall
abide by all of its obligations under such agreement in a timely fashion.
Any such Affiliate retained to perform such business activities on the part
of Borrower shall have, in the past, performed similar businesses and
services with and on behalf of persons or entitles other than Borrower;
50
7.2 Covenants of Borrower and Guarantor. Borrower and the Guarantor hereby
covenant and agree with Lender as follows:
(a) Ad Valorem and Real Estate Taxes. Subject to the provisions of any
of the other Loan Documents, Borrower shall submit evidence in form and
content acceptable to Lender, on an annual basis, that all applicable ad
valorem, if any, and other real property taxes due with respect to each of
the Resorts have been timely paid.
(b) Application of Loan Proceeds. Borrower shall use the proceeds of
the Loan solely for the purpose set forth herein and for no other purpose.
(c) Sign Regarding Financing. If requested by Lender, Borrower shall,
at Lender's cost (to be pre-approved by Lender), promptly erect and
maintain, at each of the Resorts, on a site suitable to Lender, and in
accordance with applicable law, a sign indicating that Lender is providing
financing for the Resorts, all to Lender's reasonable satisfaction, and
Borrower shall use its best efforts to prevent the destruction or removal
of said sign without Lender's prior written approval.
(d) Notification of Claims by Subcontractors and Materialmen. Borrower
shall advise Lender promptly in writing if Borrower receives any notice,
written or oral, from any laborer, subcontractor or materialman in
connection with any labor or materials furnished in the construction of any
improvements on the Resort Property.
7.3 Negative Covenants. So long as any portion of the Obligations remains
unsatisfied, Borrower hereby covenants and agrees with Lender as follows:
(a) Limitation on Other Debt/Further Encumbrances. Except for the
Permitted Debt and except as may be expressly provided for in the
Intercreditor Agreement, Borrower will not obtain financing or grant liens
with respect to the Collateral, any Units, Unsold Intervals, Encumbered
Intervals, Notes Receivable or other accounts receivable (whether now
existing or created hereafter) other than those in favor of Lender, without
the prior written consent of Lender, which may be granted, withheld or
conditioned, in Lender's sole discretion.
(b) Restrictions on Transfers. Borrower shall not, without obtaining
the prior written consent of Lender (which consent may be given, withheld
or conditioned by Lender, in Lender's sole discretion), whether voluntarily
or involuntarily, by operation of law or otherwise (except to the extent
that such transfers constitute or would constitute Permitted FINOVA Liens):
(i) transfer, sell, pledge, convey, hypothecate, factor or assign all or
any portion of any of the Resorts or the Collateral, or contract to do any
of the foregoing, including, without limitation, pursuant to options to
purchase and so-called "installment sales contracts," "land contracts," or
"contracts for deed" (except that Borrower shall have the right to sell
Intervals to Purchasers in arms-length transactions in the ordinary course
of Borrower's business); (ii) lease or license any portion of the
Collateral, or change the legal or actual possession or use thereof (except
rental of Intervals in the ordinary course of Borrower's business); (iii)
permit the dilution, transfer, pledge, hypothecation or encumbrance of any
of the Intervals of Borrower except to Borrower's Affiliates or for estate
planning purposes (except with respect to the sale of Intervals to
Purchasers in arms length transactions in the ordinary course of business
and except to the extent that such transfers constitute or would constitute
Permitted FINOVA Liens); (iv) permit the assignment, transfer, delegation,
change, modification or diminution of the duties or responsibilities of
Borrower or the Guarantor; or (v) to the extent within the control of
Borrower, cause or permit the assignment, pledge or other encumbrance of
any of the Operating Contracts or all or any portion of Borrower's right,
title or interest in the Declaration or the remaining Timeshare Documents.
Without limiting the generality of the preceding sentence, and subject to
the terms of this Agreement, the prior written consent of Lender shall be
required for (A) any transfer of the Collateral or any part thereof (except
with respect to the sale of Intervals to Purchasers in arms length
transactions in the ordinary course of business and except to the extent
that such transfers constitute or would constitute Permitted FINOVA Liens)
made to a subsidiary or other Affiliate of Borrower or otherwise; (B) any
transfer of all or any part of the Collateral by Borrower to its
shareholders or Affiliates or vice versa; (C) any corporate merger or
consolidation, disposition or other reorganization except in accordance
with Section 7.1(c) of this Agreement; (D) any change in the ownership or
51
management responsibility of Borrower or a material adverse change in the
business or financial condition of Borrower; and (E) any transfer of or
change in the status of Guarantor (through certain subsidiaries in which
Guarantor holds a majority ownership interest, as set forth in Exhibit I
attached hereto) as the majority ownership interest holder in each of the
Borrower entities, except as expressly provided in Section 7.1(c) hereof.
In the event that Lender, in Lender's sole discretion, is willing to
consent to a transfer which would otherwise be prohibited by this Section
7.3(b) Lender may condition its consent on such terms as it desires,
including, without limitation, an increase in the Interest Rates and the
requirement that Borrower pay a transfer fee, together with any expenses
incurred by Lender in connection with the granting of such consent
(including, without limitation, attorneys' fees and expenses). If Borrower
violates the terms of this Section 7.3(b), in addition to any other rights
or remedies which Lender may have hereunder, in any other Loan Document, or
at law or in equity, Lender may, by written notice to Borrower, increase,
effective immediately as of the date of such violation, the Interest Rate
to the Default Rate. Notwithstanding anything to the contrary in this
Section 7.3(b), this Section 7.3(b) shall not be any more restrictive to
Borrower than is permitted by Section 4.08 of the Indenture.
(c) Use of Lender's Name. Borrower will not, and will use its best
efforts not to permit any Affiliate to, without the prior written consent
of Lender, use the name of Lender or the name of any affiliate of Lender in
connection with any of their respective businesses or activities, except in
connection with internal business matters and as required in dealings with
governmental agencies.
(d) Transactions with Affiliates. Without the prior written consent of
Lender, Borrower shall not enter into any transaction with any Affiliate in
connection with the Collateral, including, without limitation, relating to
the purchase, sale or exchange any assets or properties or the rendering of
any service, except in the ordinary course of, and pursuant to the
reasonable requirements of, the operations of the Resorts and upon fair and
reasonable terms.
(e) Restrictive Covenants. Borrower will not, without Lender's prior
written consent, seek, consent to, or otherwise acquiesce in, any change in
any private restrictive covenant, planning or zoning law or other public or
private restriction, which would limit or alter the use of the Units, the
Unsold Intervals or the Encumbered Intervals.
(f) Subordinated Obligations. Borrower will not, directly or
indirectly: (i) permit any payment to be made with respect to any
indebtedness, liabilities or obligations, direct or contingent, including
without limitation, the Subordinated Indebtedness (as defined in the
Guaranty) to any of its shareholders or their Affiliates or the Guarantor
which are subordinated by the terms thereof or by separate instrument to
the payment of principal of, and interest on, the Note, except in
accordance with the terms of such subordination; provided, however, that
the restrictions of this subsection 7.3(f)(i) shall not apply to any
payments required to be made by Borrower under the Mirror Notes, and
provided further that, so long as no Default or Event of Default exists
with respect to the Loan and payment of any such Subordinated Indebtedness
does not render Borrower insolvent, such Subordinated Indebtedness may be
repaid under such regularly scheduled payment terms as are approved in
writing by Lender; (ii) permit the amendment, rescission or other
modification of any such subordination provisions of any of Borrower's
subordinated obligations in such a manner as to affect adversely the
Lender's Lien in and to the Collateral or Lender's senior priority position
and entitlement as to payment and rights with respect to the Note and the
Obligations; or (iii) permit the prepayment or redemption, except for
mandatory prepayments, of all or any part of Borrower's obligations to its
shareholders or their Affiliates, or of any subordinated obligations of
Borrower except in accordance with the terms of such subordination.
Notwithstanding the foregoing, any and all such subordinations of
indebtedness required by this Section 7.3(f) shall be subject to the
provisions of Section 4.08 of the Indenture.
(g) Timeshare Regime. Without Lender's prior written consent, Borrower
shall not amend, modify or terminate the Declaration or any other Timeshare
Document, or any other restrictive covenants, agreements or easements
52
regarding the Collateral; nor shall Borrower assign its rights as
"developer" or "declarant", if any, under the Declaration or other
Timeshare Documents (except to the extent that such actions constitute or
would constitute Permitted FINOVA Liens), or file or permit to be filed any
additional covenants, conditions, easements or restrictions against or
affecting any of the Resorts (or any portion thereof) without Lender's
prior written consent, except as to those changes required by the Mexican
Consumer Protection Agency (upon prior written notice to Lender).
(h) Name Change. Without Lender's prior written consent, Borrower
shall not change its name, its chief executive office or the locations at
which it does business.
(i) Collateral. Neither Borrower nor Guarantor shall take any action
(or permit or consent to the taking of any action) which might impair the
value of all or any portion of the Collateral or any of the rights of
Lender with respect to the Collateral, nor shall Borrower nor Guarantor
cause or permit any amendment to or modification of the form or terms of
any of the Pledged Notes Receivable, Interval Lease Contracts or other
Timeshare Documents.
(j) Marketing/Sales. Borrower shall not market, attempt to sell or
sell or permit or justify any sales or attempted sales of any Intervals
except in compliance with all applicable statutes, ordinances, rules and
regulations enacted or promulgated in Mexico and any other jurisdictions
where marketing, sales or solicitation activities occur.
(k) Consolidation and Merger. Without the prior written consent of
Lender, Borrower shall not consolidate with or merge into any other Person
or permit any other Person to consolidate or merge into it. Borrower shall
not enter into any reorganization or reclassify any capital stock without
Lender's prior written approval.
Section 8. EVENTS OF DEFAULT.
8.1 Nature of Events. An "Event of Default" shall exist if any of the
following occur:
(a) Payments. If Borrower fails to make, as and when due, any payment
or mandatory prepayment of principal, interest, or other fees or amounts
with respect to the Loan.
(b) Covenant Defaults. If Borrower fails to perform or observe any
non-monetary covenant, agreement or warranty contained in this Agreement or
in any of the other Loan Documents and such failure continues for a period
of ten (10) days after notice of such failure is furnished by Lender;
provided, however, that if Borrower commences to cure such failure within
such ten (10) day period but, because of the nature of such failure, cure
cannot be completed within ten (10) days, notwithstanding Borrower's
diligent good faith efforts to do so, then, provided Borrower diligently
seeks to complete such cure, an Event of Default shall not result unless
such failure continues for a total of thirty (30) days after notice of such
failure is provided by Lender.
(c) Warranties or Representations. If any representation or other
statement made by or on behalf of Borrower or Guarantor in this Agreement,
in any of the other Loan Documents or in any instrument furnished in
compliance with or in reference to the Loan Documents, is false, misleading
or incorrect in any material respect as of the date made or reaffirmed.
(d) Enforceability of Liens. If any Lien or security interest granted
by Borrower to Lender in connection with the Loan is or becomes invalid or
unenforceable or is not, or ceases to be, a perfected first priority lien
or security interest (subject to the Permitted FINOVA Liens) in favor of
Lender encumbering the asset to which it is intended to encumber, and
Borrower fails to cause such Lien or security interest to become a valid,
enforceable, first and prior Lien or security interest (subject to the
Permitted FINOVA Liens) in a manner satisfactory to Lender, in its sole
discretion, within ten (10) days after Lender delivers written notice
thereof to Borrower.
53
(e) Involuntary Proceedings. If a case is commenced or a petition is
filed against Borrower or Guarantor under any Debtor Relief Law or under
the Ley de Quiebras y Suspension de Pagos of Mexico and the same is not
dismissed or discharged within forty-five (45) days thereafter; a receiver,
liquidator or trustee of Borrower or Guarantor or of any material asset of
Borrower or the Guarantor is appointed by court order and such order
remains in effect for more than forty-five (45) days; or if any material
asset of Borrower or Guarantor is sequestered by court order and such order
remains in effect for more than forty-five (45) days.
(f) Proceedings. If Borrower or Guarantor voluntarily seeks, consents
to or acquiesces in the benefit of any provision of any Debtor Relief Law
or under the Ley de Quiebras y Suspension de Pagos of Mexico, whether now
or hereafter in effect; consents to the filing of any petition against it
under such law; makes an assignment for the benefit of its creditors;
admits in writing its inability to pay its debts generally as they become
due; or consents to or suffers the appointment of a receiver, trustee,
liquidator or conservator for it or any part of its assets.
(g) Attachment; Judgment; Tax Liens. The issuance, filing, levy or
seizure against the Collateral, or, with respect to the Obligations,
against Borrower or Guarantor, of one or more attachments, injunctions,
executions, tax liens or judgments for the payment of money cumulatively in
excess of US$10,000 which is not discharged in full or stayed within thirty
(30) days after issuance or filing. The issuance, filing, levy or seizure
against any of the Resorts of one or more attachments, injunctions,
executions, tax liens or judgments for the payment of money cumulatively in
excess of US$25,000, which is not discharged in full or stayed within sixty
(60) days after issuance or filing.
(h) Failure to Deposit Proceeds. If Borrower shall fail to deliver
payments made to Borrower under the Pledged Notes Receivable directly to
Lender or Lockbox Agent, as required hereunder, or if Borrower shall take
any other act which Lender shall deem to be a conversion of all or any
portion the Collateral or fraudulent with respect to Lender.
(i) Timeshare Documents. If the Declaration, the remaining Timeshare
Documents, any of the other documents creating or governing the Resorts,
its timeshare regime, or any restrictive covenants with respect to the
Resorts, shall be terminated without Lender's prior written consent.
(j) Removal of Collateral. If Borrower conceals, removes, transfers,
conveys, assigns or permits to be concealed, removed, transferred, conveyed
or assigned, any of the Collateral in violation of the terms of any of the
Loan Documents or with the intent to hinder, delay or defraud its creditors
or any of them, including, without limitation, Lender.
(k) Other Defaults. If a material default occurs in connection with
any other loans or financing arrangements which Borrower, Guarantor, or any
of their respective Affiliates may have with Lender and such default
remains uncured beyond any applicable cure or grace period.
(l) Material Adverse Change. Any material adverse change in the
financial condition of Borrower, Guarantor, or in the condition of the
Collateral.
(m) Default of Guarantor. Any default under the Guaranty or the
revocation or attempted revocation or repudiation thereof, in whole or
part, by Guarantor.
(n) Default by Borrower in Other Agreements. Any default by Borrower
(i) in the payment of any indebtedness to Lender; (ii) in the payment or
performance of other indebtedness for borrowed money or obligations in
excess of US$50,000 secured by all or any portion of the Collateral; or
(iii) in the payment or performance of any other material indebtedness or
obligations of Borrower.
(o) Loss of License. The suspension, loss, revocation or failure to
renew or file for renewal of any registration, approval (if required),
license, permit or franchise now held or hereafter acquired by Borrower or
with respect to the Unsold Intervals or the Encumbered Intervals, or the
failure to pay any fee, which is necessary for the continued operation of
the Unsold Intervals, Encumbered Intervals or Borrower's business in the
same manner as it is being conducted at the time of such loss, revocation,
failure to renew or failure to pay.
54
(p) Suspension of Sales. The issuance of any stay order, cease and
desist order, injunction, temporary restraining order or other judicial or
nonjudicial sanction limiting or materially affecting any Interval
marketing or sales activities, or the enforcement of Lender's remedies,
which order or sanction is not terminated or dissolved within thirty (30)
days after issuance.
(q) Violation of Negative Covenants. Borrower or Guarantor violates
any negative covenant set forth in Section 7.3 hereof.
(r) Insolvency. Borrower or Guarantor becomes insolvent or otherwise
generally unable to pay its or his respective debts as and when they become
due or payable.
(s) Default under FINOVA Loan or the Indenture. An event of default
exists under the FINOVA Loan, the Indenture or the Mirror Notes, a fact or
circumstance which, upon the lapse of time, will lead to an event of
default under the FINOVA Loan, the Indenture or the Mirror Notes, or the
exercise by FINOVA (or its successors or assigns) of foreclosure
proceedings or any other remedy available under the FINOVA Loan Agreement
with respect to the Resort Property or any other real or personal property
that serves as Collateral under this Agreement.
(t) Transfer of Property. Except for the sale of Intervals in the
ordinary course of business in accordance with the terms hereof, and except
for transfers due to involuntary condemnation which do not render the
Resorts useless for its intended purpose as contemplated hereby, if
Borrower shall, without Lender's prior written consent, sell, convey or
further encumber all or any part of its interest in any of the Resorts or
in any of the personalty located thereon or used or intended to be used in
connection therewith (except to the extent that such transfers constitute
or would constitute Permitted FINOVA Liens). For purposes of this
paragraph, an assignment, sale or transfer shall also include the transfer
of any stock of Borrower other than to an existing shareholder thereof.
(u) Lien Against Resorts. Except as otherwise specifically provided
herein to the contrary, if Borrower grants any mortgages, lien or other
encumbrance upon any of the Resorts other than in favor of Lender in
connection with the Loan and other than the Permitted FINOVA Liens, unless
approved by Lender in writing, in its sole and absolute discretion.
(v) Encroachments and Permits. Except as described in Exhibit B
hereof, if all or any portion of the Improvements encroach upon any street
or road, setback or easement or upon any adjoining property, or violate any
ordinance, regulation, rule or direction of any federal or state agency, or
of any governmental or quasi-governmental authority, or any zoning setback
line; or if the building permit(s) shall be revoked or suspended or shall
lapse, or if any building or other permit or license shall be conditional
in nature and Borrower fails to punctually satisfy the conditions so as to
prevent its invalidity.
(w) Unauthorized Work. If Borrower, without Lender's prior written
consent, undertakes or contracts for work on any of the Resorts, except
during an emergency situation at one or more of the Resorts where the
giving of notice to Lender would reasonably risk material adverse
consequences for any one or more of the Resorts.
(x) Breach. If any violation or breach shall occur in any agreement,
covenant or restriction affecting title to all or any portion of any of the
Resorts, including but not limited to any Permitted Liens and Encumbrances.
(y) Payment of Withholding Tax and Exchange Control Appraisal Fees. If
Borrower does not pay when due any required withholding taxes or exchange
control appraisal fees or payments.
Section 9. REMEDIES.
9.1 Remedies Upon Default. Should an Event of Default occur, Lender may
take any one or more of the actions described in this Section 9, all without
notice to Borrower or Guarantor (but subject to the provisions of the
Intercreditor Agreement):
(a) Acceleration. Without demand or notice of any nature whatsoever,
declare the unpaid balance of the Loan, or any part thereof, immediately
due and payable, whereupon the same shall be due and payable.
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(b) Termination of Obligation to Advance. Terminate any commitment of
Lender to lend under this Agreement in its entirety, or any portion of any
such commitment, and/or terminate Lender's further performance under this
Agreement or any other document or instrument to which Lender and Borrower
or Guarantor are parties, without further liability or obligation to
Borrower or Guarantor, to the extent Lender shall deem appropriate, all
without notice to Borrower or Guarantor.
(c) Judgment. Reduce Lender's claim to judgment, foreclose or
otherwise enforce the Textron Mortgages and/or any other lien or security
interest in all or any part of the Collateral by any available judicial or
other procedure under law. Lender's right to ▇▇▇ and recover a judgment,
either before, after or during the pendency of any proceeding for the
enforcement of the Textron Mortgages and the right of Lender to recover
such judgment shall not be affected by any taking, possession or
foreclosure sale hereunder or by the exercise of any other right, power or
remedy for the enforcement of the terms of the Textron Mortgages or the
foreclosure of the lien thereof.
(d) Foreclosure. Whether or not Lender takes possession of the
Collateral, Lender may proceed to foreclose the Textron Mortgages and to
sell the Collateral in its entirety or in separate increments under the
judgment of decree of a court or courts of competent jurisdiction and to
pursue any other remedy available to it, all as Lender shall deem
appropriate. Upon the commencement of suit or foreclosure proceedings with
respect to the Textron Mortgages the unpaid principal balance of each Note,
if not previously accelerated and declared due, together with the interest
accrued thereon and all other Obligations, shall immediately be due and
payable. Upon any foreclosure sale pursuant to judicial proceedings, Lender
may bid for and purchase all or any portion of the Collateral and, upon
compliance with the terms of sale, may hold, retain and possess and dispose
of the Collateral.
In the case of a foreclosure sale of all or any portion of the
Collateral and the application of the proceeds of sale to the payment of
the debt secured by the Textron Mortgages, Lender shall be entitled to
enforce payment of and to receive all amounts then remaining due and unpaid
upon the Note, and Lender shall be entitled to recover judgment for any
portion of the debt remaining unpaid, with interest.
Borrower agrees, to the full extent that it may lawfully so agree,
that no recovery of any such judgment by Lender and no attachment or levy
of any execution upon any such judgment upon any of the Resorts or upon any
other property shall in any manner or to any extent affect the lien of the
Textron Mortgages on the Collateral or any part thereof of any lien,
rights, powers or remedies of Lender hereunder, and such lien, rights,
powers and remedies shall continue unimpaired.
(e) Lender's Right to Take Possession, Operate and Apply Income.
(i) Upon Lender's demand, Borrower shall forthwith surrender to
Lender the actual possession of the Resorts and, to the extent
permitted by law, Lender may enter and take possession of the Resorts
and may exclude Borrower and its employees and other agents wholly
therefrom and may have joint access with Borrower to Borrower's books,
papers and accounts. If Borrower fails to surrender or deliver all or
any portion of the Resorts to Lender upon demand, Lender may obtain a
judgment or decree conferring upon Lender the right to immediate
possession or requiring Borrower to deliver immediate possession of
all or part of the Resorts to Lender, and Borrower hereby specifically
consents to the entry of such a judgment or decree.
(ii) Upon every such entering upon or taking of possession,
Lender may hold, store, use, operate, manage and control the Resorts
and conduct Borrower's business on the Resorts and, from time to time,
do any of the following things as Lender may from time to time deem
necessary, appropriate or desirable:
(A) perform all maintenance, repairs, renewals,
replacements, additions and improvements necessary and proper to
the Resorts and purchase or otherwise acquire additional
fixtures, personalty and other property;
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(B) insure, manage and operate the Resorts and exercise all
of the rights and powers of Borrower (in Lender's name or
otherwise) with respect to the insurance, management and
operation of the Resorts; and
(C) enter into any and all agreements with respect to the
exercise by others of any of the powers herein granted to Lender.
(iii) Lender may collect and receive all of the income, revenues,
rents, issues and profits of the Resorts, including those past due as
well as those accruing thereafter. Lender shall apply such amounts
received by Lender first to the payment of accrued interest and then
to the payment of principal and all other sums or indebtedness that
may be due hereunder, after deducting therefrom:
(A) All expenses of taking, holding, managing and operating
the Resorts (including compensation for the services of all
persons employed for such purposes);
(B) The cost of all such maintenance, repairs, renewals,
replacements, additions, betterments, improvements, purchases and
acquisitions;
(C) The cost of insurance;
(D) Such taxes, assessments and other charges prior to the
lien of the Textron Mortgages as Lender may determine to pay;
(E) Other proper charges upon the Resorts or any part
thereof; and
(F) The reasonable compensation, expenses and disbursements
of the attorneys and other agents of Lender, including attorneys'
fees and court costs.
(iv) If an Event of Default giving rise to pursuit of the
foregoing remedy shall have been cured, Lender may, at its option,
surrender possession of the Resorts to Borrower, its successors or
assigns; provided, however, that Lender's right to take possession and
to pursue any other remedies hereunder or under any of the other Loan
Documents shall exist if any subsequent Event of Default shall occur.
(f) Sale of Collateral. After notification, if any, provided for in
Section 9.2 below, Lender may direct the Land Trustee to sell or otherwise
dispose of, at the office of the Land Trustee, or elsewhere, as chosen by
Lender, all or any part of the Collateral, and any such sale or other
disposition may be as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the
sale of any part of the Collateral shall not exhaust Lender's power of
sale, but sales may be made from time to time until all of the Collateral
has been sold or until the Obligations have been paid in full and fully
performed), and at any such sale it shall not be necessary to exhibit the
Collateral. Borrower and the Guarantor hereby acknowledge and agree that a
private sale or sales of the Collateral, after notification as provided for
in Section 9.2, shall constitute a commercially reasonable disposition of
the Collateral sold at any such sale or sales, and otherwise, commercially
reasonable action on the part of the Lender.
(g) Retention of Collateral. At its discretion, retain such portion of
the Collateral as shall aggregate in value to an amount equal to the total
amount owed by the Borrower pursuant to the Loan Documents, in satisfaction
of the Obligations, whenever the circumstances are such that Lender is
entitled and elects to do so under applicable law.
(h) Receiver. Apply by appropriate procedures to the Land Trustee for
the appointment of a receiver who shall have the authority to enter upon
and take possession of the Resorts, collect the rents and profits therefrom
and apply the same as the court may direct. Borrower hereby consents to any
such appointment. The receiver shall have all of the rights and powers
permitted under the laws of Mexico. All costs and expenses (including
receiver's fees, attorneys' fees and costs, and other amounts) incurred in
connection with the appointment of a receiver shall be secured by the
Textron Mortgages.
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(i) Purchase of Collateral. Buy all or any part of the Collateral at
any public or private sale.
(j) Exercise of Other Rights. Lender shall have all the rights and
remedies of a secured party under the Code and other legal and equitable
rights to which it may be entitled, including, without limitation, and
without notice to Borrower, the right to continue to collect all payments
made on the Pledged Notes Receivable, and to apply such payments to the
Obligations, and to ▇▇▇ in its own name the maker of any defaulted Pledged
Notes Receivable. Lender may also exercise any and all other rights or
remedies afforded by any other applicable laws or by the Loan Documents as
Lender shall deem appropriate, at law, in equity or otherwise, including,
but not limited to, the right to bring suit or other proceeding, either for
specific performance of any covenant or condition contained in the Loan
Documents or in aid of the exercise of any right or remedy granted to
Lender in the Loan Documents. Lender shall also have the right to require
the Borrower to assemble any of the Collateral not in Lender's possession,
at Borrower's expense, and make it available to Lender at a place to be
determined by Lender which is reasonably convenient to both parties, and
Lender shall have the right to take immediate possession of all of the
Collateral, and may enter the Resorts or any of the premises of Borrower or
wherever the Collateral shall be located, with or without process of law
wherever the Collateral may be, and, to the extent such premises are not
the property of Lender, to keep and store the same on said premises until
sold (and if said premises be the property of Borrower, Borrower agrees not
to charge Lender for use and occupancy, rent, or storage of the Collateral,
for a period of at least ninety (90) days after sale or disposition of the
Collateral).
(k) Escrow Account. Require that an escrow account be established by
Lender or an escrow agent acceptable to Lender to collect any and all taxes
that may be payable by Borrower.
9.2 Notice of Sale. Reasonable notification of the time and place of any
public sale of the Collateral or reasonable notification of the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be sent to Borrower and to any other Person entitled to notice under the
Code or other applicable law; provided, however, that if the Collateral
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Lender may, subject to any applicable local laws, sell or
otherwise dispose of the Collateral without notification, advertisement or other
notice of any kind. It is agreed that notice sent not less than ten (10)
calendar days prior to the taking of the action to which such notice relates is
reasonable notification and notice for the purposes of this Section 9.2. Lender
shall have the right to bid at any public or private sale on its own behalf. Out
of money arising from any such sale, Lender shall retain an amount equal to all
costs and charges, including attorneys' fees, for advice, counsel or other legal
services or for pursuing, reclaiming, seeking to reclaim, taking, keeping,
removing, storing and advertising such Collateral for sale, selling same and any
and all other charges and expenses in connection therewith and in satisfying any
prior Liens thereon. Any balance shall be applied upon the Obligations, and in
the event of deficiency, Borrower shall remain liable to Lender. In the event of
any surplus, such surplus shall be paid to Borrower or to such other Persons as
may be legally entitled to such surplus. If, by reason of any suit or proceeding
of any kind, nature or description against Borrower, or by Borrower or any other
party against Lender, which in Lender's sole discretion makes it advisable for
Lender to seek counsel for the protection and preservation of its security
interest, or to defend its own interest, such expenses and counsel fees shall be
allowed to Lender and the same shall be made a further charge and Lien upon the
Collateral.
In view of the fact that federal and state securities laws may impose
certain restrictions on the methods by which a sale of Collateral comprised of
Securities may be effected after an Event of Default, Borrower agrees that upon
the occurrence or existence of an Event of Default, Lender may, from time to
time, attempt to sell all or any part of such Collateral by means of a private
placement restricting the bidding and prospective purchasers who will represent
and agree that they are purchasing for investment only and not for, or with a
view to, distribution. In so doing, Lender may solicit offers to buy such
Collateral, or any part of it for cash, from a limited number of investors
deemed by Lender, in its reasonable judgment, to be responsible parties who
might be interested in purchasing the Collateral, and if Lender solicits such
offers from not less than three (3) such investors, then the acceptance by
Lender of the highest offer obtained therefrom shall be deemed to be a
commercially reasonable method of disposition of such Collateral.
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9.3 Application of Collateral; Termination of Agreements. Upon the
occurrence of any Event of Default, Lender may, with or without proceeding with
such sale or foreclosure or demanding payment or performance of the Obligations,
without notice, terminate Lender's further performance under this Agreement or
any other agreement or agreements between Lender and Borrower or any Affiliate
of Borrower, without further liability or obligation by Lender, and may also, at
any time, appropriate and apply on any Obligations any and all Collateral in its
(or the Lockbox Agent's) possession, any and all balances, credits, deposits,
accounts, reserves, indebtedness or other moneys due or owing to Borrower held
by Lender hereunder or under any other financing agreement or otherwise, whether
accrued or not. Neither such termination, nor the termination of this Agreement
by lapse of time, the giving of notice or otherwise, shall absolve, release or
otherwise affect the liability of Borrower with respect to transactions prior to
such termination, or affect any of the Liens, security interests, rights, powers
and remedies of Lender, but they shall, in all events, continue until all of the
Obligations are satisfied.
9.4 Rights of Lender Regarding Collateral. In addition to all other rights
possessed by Lender, Lender, at its option, may from time to time after there
shall have occurred an Event of Default, and so long as such Event of Default
remains uncured, at its sole discretion and subject to applicable law, take the
following actions:
(a) Transfer all or any part of the Collateral into the name of Lender
or its nominee;
(b) Take control of any proceeds of any of the Collateral;
(c) Extend or renew the Loan and grant releases, compromises or
indulgences with respect to the Obligations, any portion thereof, any
extension or renewal thereof, or any security therefor, to any obligor
hereunder or thereunder; and
(d) Exchange certificates or instruments representing or evidencing
the Collateral for certificates or instruments of smaller or larger
denominations for any purpose consistent with the terms of this Agreement.
9.5 Delegation of Duties and Rights. Lender may execute any of its duties
and/or exercise any of its rights or remedies under the Loan Documents by or
through its officers, directors, employees, attorneys, agents or other
representatives.
9.6 Lender Not in Control. None of the covenants or other provisions
contained in this Agreement or in any other Loan Document shall give Lender the
right or power to exercise control over the affairs and/or management of
Borrower.
9.7 Waivers. The acceptance by Lender at any time and from time to time of
partial payments of the Loan or performance of the Obligations shall not be
deemed to be a waiver of any Event of Default then existing. No waiver by Lender
of any Event of Default shall be deemed to be a waiver of any other or
subsequent Event of Default. No delay or omission by Lender in exercising any
right or remedy under the Loan Documents shall impair such right or remedy or be
construed as a waiver thereof or an acquiescence therein, nor shall any single
or partial exercise of any such right or remedy preclude other or further
exercises thereof, or the exercise of any other right or remedy under the Loan
Documents or otherwise. Further, except as otherwise expressly provided in this
Agreement or by applicable law, Borrower and each and every surety, endorser,
guarantor and other party liable for the payment or performance of all or any
portion of the Obligations, severally waive notice of the occurrence of any
Event of Default, presentment and demand for payment, protest, and notice of
protest, notice of intention to accelerate, acceleration and nonpayment, and
agree that their liability shall not be affected by any renewal or extension in
the time of payment of the Loan, or by any release or change in any security for
the payment or performance of the Loan, regardless of the number of such
renewals, extensions, releases or changes.
9.8 Cumulative Rights. All rights and remedies available to Lender under
the Loan Documents shall be cumulative of and in addition to all other rights
and remedies granted to Lender under any of the Loan Documents, at law or in
equity, whether or not the Loan is due and payable and whether or not Lender
shall have instituted any suit for collection or other action in connection with
the Loan Documents.
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9.9 Expenditures by Lender. Any sums reasonably expended by or on behalf of
Lender pursuant to the exercise of any right or remedy provided herein shall
become part of the Obligations and shall bear interest at the Default Rate, from
the date of such expenditure until the date repaid.
9.10 Diminution in Value of Collateral. Lender shall not have any liability
or responsibility whatsoever for any diminution or loss in value of any of the
Collateral, specifically including that which may arise from Lender's negligence
or inadvertence, whether such negligence or inadvertence is the sole or
concurring cause of any damage, but specifically excluding any diminution or
loss in value which is actually and proximately caused by Lender's failure to
retain the Pledged Notes Receivable in a fire-resistant filing cabinet as
provided in Section 3.6 above.
Section 10. CERTAIN RIGHTS OF LENDER
10.1 Protection of Collateral. Lender may, at any time and from time to
time, take such actions as Lender deems necessary or appropriate to protect
Lender's Liens and security interests in and to preserve the Collateral, and to
establish, maintain and protect the enforceability of Lender's rights with
respect thereto, all at the expense of Borrower. Borrower agrees to cooperate
fully with all of Lender's efforts to preserve the Collateral and Lender's
Liens, security interests and rights and will take such actions to preserve the
Collateral and Lender's Liens, security interests and rights as Lender may
direct, including, without limitation, by promptly paying upon Lender's demand
therefor, all documentary stamp taxes, withholding taxes, exchange fees, notary
fees, registration fees or other taxes or fees that may be or may become due
with respect to any of the Collateral. All of Lender's expenses of preserving
the Collateral and its Liens and security interests and rights therein shall be
added to the principal amount of the Loan and secured by the Collateral.
10.2 Performance by Lender. If Borrower fails to perform any agreement
contained herein, Lender may itself perform, or cause the performance of, such
agreement, and the expenses of Lender incurred in connection therewith shall be
payable by Borrower under Section 10.5 below. In no event, however, shall Lender
have any obligation or duty whatsoever to perform any covenant or agreement of
Borrower contained herein or in any of the other Loan Documents, Timeshare
Documents or Operating Contracts, and any such performance by Lender shall be
wholly discretionary with Lender. The performance by Lender of any agreement or
covenant of Borrower on any occasion shall not give rise to any duty on the part
of Lender to perform any such agreements or covenants on any other occasion or
at any time. In addition, Borrower acknowledges that Lender shall not at any
time or under any circumstances whatsoever have any duty to Borrower or to any
third party to exercise any of Lender's rights or remedies hereunder.
10.3 No Liability of Lender. Neither the acceptance of this Agreement by
Lender, nor the exercise of any rights hereunder by Lender, shall be construed
in any way as an assumption by Lender of any obligations, responsibilities or
duties of Borrower arising in connection with the Resorts or under the Timeshare
Documents, any applicable statutes, ordinances, rules or regulations, under any
of the Operating Contracts, or in connection with any other business of Borrower
or the Collateral, or otherwise bind Lender to the performance of any
obligations with respect to the Resorts or the Collateral; it being expressly
understood that Lender shall not be obligated to perform, observe or discharge
any obligation, responsibility, duty, or liability of Borrower with respect to
the Resorts or any of the Collateral, or under any of the Timeshare Documents,
any applicable statutes, ordinances, rules or regulations, or under any of the
Operating Contracts, including, but not limited to, appearing in or defending
any action, expending any money or incurring any expense in connection
therewith. Without limitation of the foregoing, neither this Agreement, any
action or actions on the part of Lender taken hereunder, nor the acquisition of
the Pledged Notes Receivable and the related Interval Lease Contracts by Lender
prior to or following the occurrence of an Event of Default shall constitute an
assumption by Lender of any Obligations of Borrower with respect to the Resorts
or the Pledged Notes Receivable, the related Interval Lease Contracts or any
documents or instruments executed in connection therewith, and Borrower shall
continue to be liable for all of its obligations thereunder or with respect
thereto. Borrower and Guarantor, jointly and severally, hereby agree to
indemnify, protect, defend and hold Lender harmless from and against any and all
claims, demands, causes of action, losses, damages, liabilities, suits, costs
and expenses, including, without limitation, attorneys' fees and court costs,
asserted against or incurred by Lender by reason of, arising out of, or
connected in any way with (i) any failure or alleged failure of Borrower to
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perform any of its covenants or obligations with respect to the Resorts or to
the Purchasers of any of the Intervals; (ii) a breach of any certification,
representation, warranty or covenant of Borrower set forth in any of the Loan
Documents; (iii) the ownership of the Pledged Notes Receivable, the Interval
Lease Contracts and the rights, titles and interests assigned hereby, or
intended so to be; (iv) the debtor-creditor relationships between Borrower on
the one hand, and the Purchasers or Lender, as the case may be, on the other; or
(v) the Pledged Notes Receivable, the Interval Lease Contracts or the operation
of the Resorts. The obligations of Borrower to indemnify, protect, defend and
hold Lender harmless as provided in this Agreement are absolute, unconditional,
present and continuing, and shall not be dependent upon or affected by the
genuineness, validity, regularity or enforceability of any claim, demand or suit
from which Lender is indemnified. The indemnity provisions in this Section 10.3
shall survive the satisfaction of the Obligations and termination of this
Agreement, and remain binding and enforceable against Borrower, together with
its successors and assigns. Borrower hereby waives all notices with respect to
any losses, damages, liabilities, suits, costs and expenses, and all other
demands whatsoever hereby indemnified, and agrees that its obligations under
this Agreement shall not be affected by any circumstances, whether or not
referred to above, which might otherwise constitute legal or equitable
discharges of its obligations hereunder. If a court of competent jurisdiction
should determine that Borrower is entitled to recover damages from Lender for
any reason or upon any cause, claim or counterclaim, in connection with the Loan
or the transactions provided for or contemplated pursuant to this Agreement or
the other Loan Documents, Borrower stipulates and agrees that any such damages
or awards shall be limited to the amount of the Commitment Fees or any portion
thereof actually paid by Borrower to Lender.
10.4 Right to Defend Action Affecting Security. Lender may, at Borrower's
expense, appear in and defend any action or proceeding, at law or in equity,
which Lender in good faith believes may affect the Liens or security interests
granted under this Agreement, including without limitation, with respect to
Pledged Notes Receivable, the Textron Mortgages, the value of the Collateral, or
Lender's rights under any of the Loan Documents.
10.5 Expenses. All expenses payable by Borrower under any provision of this
Agreement shall be an Obligation of Borrower, and if paid by Lender, shall be
repaid by Borrower to Lender, upon demand, and shall bear interest at the
Default Rate from the date of payment of such expense(s) by Lender until repaid
by Borrower.
10.6 Lender's Right of Set-Off. Lender shall have the right to set-off
against any or all of the Collateral any Obligations then due and unpaid by
Borrower.
10.7 No Waiver. No failure or delay on the part of Lender in exercising any
right, remedy or power under this Agreement or in giving or insisting upon
strict performance by Borrower hereunder or in giving notice hereunder shall
operate as a waiver of the same or any other power or right, and no single or
partial exercise of any such power or right shall preclude any other or further
exercise thereof or the exercise of any other such power or right. Lender,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by Borrower of any and all of the terms and provisions of
this Agreement to be performed by Borrower. The collection and application of
proceeds, the entering and taking possession of the Collateral, and the exercise
of the rights of Lender contained in this Agreement and the other Loan Documents
shall not cure or waive any Default, or affect any Default or affect any notice
of Default, or invalidate any acts done pursuant to such notice. No waiver by
Lender of any breach or Default of or by any party hereunder shall be deemed to
alter or affect Lender's rights hereunder with respect to any prior or
subsequent Default.
10.8 Right of Lender to Extend Time of Payment, Substitute, Release
Security, Etc. Without affecting the liability of any Person or entity,
including, without limitation, any Purchasers, for the payment of any of the
Obligations and without affecting or impairing Lender's Lien on the Collateral,
or the remainder thereof, as security for the full amount of the Loan unpaid and
the Obligations, Lender may from time to time, without notice: (a) release any
Person liable for the payment of the Loan; (b) extend the time or otherwise
alter the terms of payment of the Loan; (c) accept additional security for the
Obligations of any kind, including deeds of trust or mortgages and security
agreements; (d) alter, substitute or release any property securing the
Obligations; (e) realize upon any Collateral for the payment of all or any
portion of the Loan in such order and manner as it may deem fit; or (f) join in
any subordination or other agreement affecting this Agreement or the lien or
charge thereof.
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10.9 Assignment of Lender's Interest. Lender shall have the right to assign
the Loan and all or any portion of its rights in or pursuant to this Agreement
or any of the Loan Documents to any subsequent holder or holders of the Note or
the Obligations.
10.10 Notice to Purchaser. Borrower authorizes any of Lender, the Lockbox
Agent or Servicing Agent (but neither Lender, the Lockbox Agent nor the
Servicing Agent shall be obligated) to communicate at any time and from time to
time with any Purchaser or any other Person primarily or secondarily liable
under a Pledged Note Receivable with regard to the Lien of the Lender thereon
and any other matter relating thereto, and by no later than the Closing Date,
Borrower shall deliver to Lender a notification to the Purchasers executed in
blank by Borrower and in form acceptable to Lender, pursuant to which the
Purchasers (or other obligors) may be directed to remit all payments with
respect to the Collateral as Lender may require.
10.11 Collection of the Notes. Borrower hereby directs and authorizes each
Person liable for the payment of any Pledged Note Receivable, and promptly after
the Closing Date, itself shall direct, in writing, each such Person, to pay each
installment thereon to the Lockbox Agent, pursuant to the Lockbox Agreement,
unless and until directed otherwise by written notice from Lender or, at
Lender's direction, from Borrower, after which such parties are and shall be
directed to make all further payments on the Pledged Notes Receivable in
accordance with the directions of Lender. Borrower shall have no rights to such
installment payments. Lockbox Agent shall have no right of setoff with respect
to the monies held by Lockbox Agent pursuant to the Lockbox Agreement. Borrower
shall be responsible for all costs and expenses related to the Lockbox Agreement
and the Lockbox Agent. Following the occurrence of an Event of Default, Lender
shall have the right to require that all payments becoming due under the Pledged
Notes Receivable (if any) be paid directly to Lender, and Lender is hereby
authorized to receive, collect, hold and apply the same in accordance with the
provisions of this Agreement. In the event that following the occurrence of an
Event of Default, Lender or Lockbox Agent does not receive any installment of
principal or interest due and payable under any of the Pledged Notes Receivable
on or prior to the date upon which such installment becomes due, Lender may, at
its election (but without any obligation to do so), give or cause Lockbox Agent
to give notice of such event of default to the defaulting party or parties, and
Lender shall have the right (but not the obligation), subject to the terms of
such Notes, to accelerate payment of the unpaid balance of any of the Pledged
Notes Receivable in default, and to enforce any other remedies available to the
holder of such Pledged Notes Receivable with respect to such Event of Default.
Borrower hereby further authorizes, directs and empowers Lender (and Lockbox
Agent or any other Person as may be designated by Lender in writing) to collect
and receive all checks and drafts evidencing such payments and to endorse such
checks or drafts in the name of Borrower and upon such endorsements, to collect
and receive the money therefor. The right to endorse checks and drafts granted
pursuant to the preceding sentence is irrevocable by Borrower, and the banks or
banks paying such checks or drafts upon such endorsements, as well as the
signers of the same, shall be as fully protected as though the checks or drafts
had been endorsed by Borrower.
10.12 Power of Attorney. Borrower does hereby irrevocably constitute and
appoint Lender as Borrower's true and lawful agent and attorney-in-fact, with
full power of substitution, for Borrower and in Borrower's name, place and
stead, or otherwise, to (a) endorse any checks or drafts payable to Borrower in
the name of Borrower and in favor of Lender as provided in Section 10.11 above;
(b) to demand and receive from time to time any and all property, rights,
titles, interests and liens hereby sold, assigned and transferred, or intended
so to be, and to give receipts for same; (c) upon an Event of Default, to
collect all rent, revenues and income, pursuant to the terms of the Textron
Mortgages, subject however to the provisions of the Intercreditor Agreement; (d)
from time to time, to institute and prosecute, in Lender's own name, any and all
proceedings at law, in equity, or otherwise, that Lender may deem proper in
order to collect, assert or enforce any claim, right or title, of any kind, in
and to the property, rights, titles, interests and liens hereby sold, assigned
or transferred, or intended so to be, and to defend and compromise any and all
actions, suits or proceedings with respect to any of the said property, rights,
titles, interests and liens; (e) with respect to Pledged Notes Receivable, upon
an Event of Default, to change the Borrower's post office mailing address; and
(f) generally to do all and any such acts and things in relation to the
Collateral as Lender shall in good ▇▇▇▇▇ ▇▇▇▇ advisable. Borrower hereby
declares that the appointment made and the powers granted pursuant to this
Section 10.12 are coupled with an interest and are and shall be irrevocable by
Borrower in any manner, or for any reason, unless and until a release of the
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same is executed by Lender and, to the extent permissible under Mexican law,
duly recorded in the appropriate public records of the location of each of the
Resorts. For purposes of effectuating Borrower's grant of an irrevocable power
of attorney to Lender, contemporaneous herewith Borrower has executed that
certain power of attorney in favor of Lender which has been or which shall be
recorded in the Public Registry of Commerce ("Power of Attorney").
10.13 Relief from Automatic Stay, Etc. To the fullest extent permitted by
law, in the event the Borrower or Guarantor shall make application for or seek
relief or protection under the United States federal bankruptcy code
("Bankruptcy Code") or other United States or Mexican Debtor Relief Laws, or in
the event that any involuntary petition is filed against the Borrower or
Guarantor under such Code or other Debtor Relief Laws, and not dismissed with
prejudice within forty-five (45) days, the automatic stay provisions of Section
362 of the Bankruptcy Code are hereby modified as to Lender to the extent
necessary to implement the provisions hereof permitting set-off and the filing
of financing statements or other instruments or documents; and Lender shall
automatically and without demand or notice (each of which is hereby waived) be
entitled to immediate relief from any automatic stay imposed by Section 362 of
the Bankruptcy Code or otherwise, on or against the exercise of the rights and
remedies otherwise available to Lender as provided in the Loan Documents. In
addition, in the event relief is sought by or against Guarantor under the
Bankruptcy Code, such Guarantor agrees not to seek, directly or indirectly, in
any ensuing bankruptcy proceeding, any extension of the exclusivity period
otherwise available to a debtor under the Bankruptcy Code, including, without
limitation, the exclusivity period provided for under Section 1121(b) of the
Bankruptcy Code. Guarantor agrees not to contest the validity or enforceability
of this Section.
10.14 Investigations and Inquiries. Borrower hereby authorizes Lender to
conduct such investigations and inquiries as to credit, operations, the
Guarantor, the Resorts and the Collateral as Lender shall, in its sole
discretion, deem necessary or desirable in connection with monitoring the Loan,
and all such Persons of whom Lender may make such inquiry are empowered to
cooperate with, and to provide requested information to, Lender.
10.15 Right of First Refusal. Subject to the right of first refusal set
forth in the FINOVA Loan Agreement, Lender shall have the unconditional right
and option (but not the obligation), in its sole discretion, and right of first
refusal to commit to provide and subsequently provide any and all future
receivables financing to Borrower or any Affiliate of Borrower in connection
with said Person's sale of one (1) or more future phases of Units and Intervals
or other timeshare interests of any type at the Resorts, on substantially the
same terms as those set forth herein.
10.17 Withholding Tax. Any and all payments by the Borrower hereunder or
under the Note shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto. If the Borrower shall be
required by law to deduct any taxes from or with respect to any sum payable
hereunder or under the Note (i) the sum payable shall be increased or "grossed
up" as may be necessary so that after making all required deductions the Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall pay the full amount of any sums
deducted to the relevant taxing authority or other authority in accordance with
applicable law. Lender and Borrower shall enter into an arrangement whereby
Borrower will provide to Lender evidence satisfactory to Lender in its sole
discretion of the payment of withholding taxes required pursuant to Article 154
of the Mexican Income Tax Law and the Treaty to Avoid Double Taxation between
the United States and Mexico dated as of November 8, 1992 (or successor
provisions, as applicable). If permissible under applicable laws, Borrower shall
allow Lender to take tax credits for such withholding tax payments made by
Borrower and, after Lender's receipt of evidence satisfactory to Lender in
Lender's sole discretion of Borrower's payment of such withholding tax payments,
Lender will remit to Borrower an amount equal to such tax credits to the extent
actually enjoyed by Lender, taking into account, at Lender's sole discretion,
tax credit or other limitations, but in no event greater than the amount of the
withholding tax payments actually paid by Borrower with respect to the Note.
10.18 Intercreditor Agreement. Borrower, Guarantor and Lender each
acknowledge and confirm that the provisions of this Loan Agreement, the Textron
Mortgages, and the remaining Loan Documents shall be subject to the terms of the
Intercreditor Agreement.
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Section 11. TERM OF AGREEMENT. This Agreement shall continue in full force and
effect, and the security interests granted hereby and the duties, covenants and
liabilities of Borrower hereunder and all the terms, conditions and provisions
hereof relating thereto shall continue to be fully operative until all of the
Obligations have been satisfied in full. Borrower expressly agrees that if
either Borrower or Guarantor makes a payment to Lender, which payment or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, or otherwise required to be repaid to a trustee, receiver or any
other party under any Debtor Relief Laws, state or federal law, common law or
equitable cause, then to the extent of such repayment, the Obligations or any
part thereof intended to be satisfied and the Liens provided for hereunder
securing the same shall be revived and continued in full force and effect as if
said payment had not been made.
Section 12. MISCELLANEOUS
12.1 Notices. All notices, requests and other communications to either
party hereunder shall be in writing and shall be given to such party at its
address set forth below or at such other address as such party may hereafter
specify for the purpose of notice to Lender or Borrower. Each such notice,
request or other communication shall be effective (a) if given by mail, when
such notice is deposited in the United States or Mexican mail with first class
postage prepaid, and addressed as aforesaid, provided that such mailing is by
registered or certified mail, return receipt requested; (b) if given by
overnight delivery, two (2) days following the date that such notice is
deposited with an internationally recognized overnight delivery service such as
Federal Express or Airborne, with all fees and charges prepaid, addressed as
provided below; or (c) if given by any other means, when delivered at the
address specified in this Section 12.1:
If to Borrower: c/o Raintree Resorts International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
And a Copy (which
copy shall not
constitute notice) to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Battle ▇▇▇▇▇▇, LLP
Suite 2350
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Lender: Textron Financial Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal
With a Copy to: Textron Financial Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
First Floor #104
East Hartford, Connecticut 06108
Attention: Vice President
If to Guarantor: c/o Raintree Resorts International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
And a Copy
which copy shall
not constitute
notice) to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Battle ▇▇▇▇▇▇, LLP
Suite 2350
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Notwithstanding the foregoing, copies of the requests or notices from
Borrower to Lender which are specified in Sections 2.4(a), 4.2(a) and 12.10
of this Agreement shall not be delivered to Providence, Rhode Island as
provided above, but rather shall be delivered in accordance with this
Section 12.1 only to Textron Financial Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
In addition, all documents, instruments and other items to be delivered to
Lender from time to time pursuant to this Agreement shall be delivered to
Lender's office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
12.2 Survival. All representations, warranties, covenants and agreements
made by Borrower herein, in the other Loan Documents or in any other agreement,
document, instrument or certificate delivered by or on behalf of Borrower under
or pursuant to the Loan Documents shall be considered to have been relied upon
by Lender and shall survive the delivery to Lender of such Loan Documents (and
each part thereof), regardless of any investigation made by or on behalf of
Lender.
12.3 Governing Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS
MAY BE EXPRESSLY PROVIDED THEREIN TO THE CONTRARY) SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE ISLAND, EXCLUSIVE OF
ITS CHOICE OF LAWS PRINCIPLES. BORROWER AND THE GUARANTOR HEREBY AGREE TO ACCEPT
THE FEDERAL AND STATE COURTS LOCATED IN PROVIDENCE COUNTY, RHODE ISLAND AS
HAVING PROPER JURISDICTION AND BEING THE PROPER VENUE FOR ANY LEGAL PROCEEDINGS
ARISING OUT OF THE LOAN DOCUMENTS AND EACH PARTY HERETO HEREBY EXPRESSLY SUBMITS
TO THE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LEGAL PROCEEDINGS
AND EXPRESSLY WAIVES FOR SUCH PURPOSE ANY OTHER PREFERENTIAL JURISDICTION BY
REASON OF ITS PRESENT OR FUTURE DOMICILE OR OTHERWISE. NOTWITHSTANDING ANYTHING
TO THE CONTRARY PROVIDED HEREIN, BORROWER AND GUARANTOR EXPRESSLY WAIVE ANY AND
ALL CLAIMS TO JURISDICTION IN MEXICO. NOTWITHSTANDING ANYTHING TO THE CONTRARY
PROVIDED HEREIN, THERE SHALL BE NO PROHIBITION BY LAW, RULE OR REGULATION OF
MEXICO OR ANY POLITICAL SUBDIVISION THEREOF AS TO THE LENDER'S PROVIDING THE
LOAN TO BORROWER AND LENDER'S COLLECTION OF PAYMENTS OF PRINCIPAL AND INTEREST
PURSUANT TO THE LOAN TOGETHER WITH LENDER'S COLLECTION OF ANY AND ALL COSTS
RELATING TO THE LOAN OR EXERCISE OF RIGHTS AS TO THE COLLATERAL. ALL COLLATERAL
WILL BE PERFECTED IN ACCORDANCE WITH THE LAWS OF MEXICO, THE STATE OF RHODE
ISLAND, AND THE LOCATION OF THE COMPANY PROVIDING SERVICES AND MANAGEMENT TO THE
RESORTS.
12.4 Limitation on Interest. Lender and Borrower intend to comply at all
times with all applicable usury laws. All agreements between Lender and
Borrower, whether now existing or hereafter arising and whether written or oral,
are hereby limited so that in no contingency, whether by reason of demand or
acceleration of the maturity of the Note or otherwise, shall the interest
contracted for, charged, received, paid or agreed to be paid to Lender exceed
the highest lawful rate permissible under applicable usury laws. If, from any
circumstance whatsoever, fulfillment of any provision hereof, of the Note or of
any other Loan Documents shall involve transcending the limit of such validity
prescribed by any law which a court of competent jurisdiction may deem
applicable hereto, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if from any circumstance Lender shall
ever receive anything of value deemed interest by applicable law which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal of the Loan and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal of the Loan, such excess shall be refunded to Borrower. All interest
paid or agreed to be paid to Lender shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal so that the interest on the Loan for such
full period shall not exceed the highest lawful rate. Borrower agrees that in
determining whether or not any interest payment under the Loan Documents exceeds
the highest lawful rate, any non-principal payment (except payments specifically
described in the Loan Documents as "interest") including without limitation,
prepayment fees and late charges, shall to the maximum extent not prohibited by
law, be an expense, fee, premium or penalty rather than interest. Lender hereby
expressly disclaims any intent to contract for, charge or receive interest in an
amount which exceeds the highest lawful rate. The provisions of the Note, this
Agreement, and all other Loan Documents are hereby modified to the extent
necessary to conform with the limitations and provisions of this Section, and
this Section shall govern over all other provisions in any document or agreement
65
now or hereafter existing. This Section shall never be superseded or waived
unless there is a written document executed by the Lender and Borrower,
expressly declaring the usury limitation of this Agreement to be null and void,
and no other method or language shall be effective to supersede or waive this
paragraph.
12.5 Invalid Provisions. If any provision of this Agreement or any of the
other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws effective during the term thereof, such provision shall
be fully severable, this Agreement and the other Loan Documents shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof or thereof, and the remaining provisions
hereof or 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. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement and/or
the other Loan Documents (as the case may be) a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
12.6 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon and inure to the benefit of Borrower, the Guarantor and
Lender and their respective successors and assigns; provided that neither
Borrower nor Guarantor may transfer or assign any of its rights or obligations
under this Agreement, the Commitment or the other Loan Documents without the
prior written consent of Lender. This Agreement and the transactions provided
for or contemplated hereunder or under any of the Loan Documents are intended
solely for the benefit of the parties hereto. No third party shall have any
rights or derive any benefits under or with respect to this Agreement, the
Commitment or the other Loan Documents except as specifically set forth herein
or otherwise provided in a written document signed by Borrower and Lender. No
person other than Borrower shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that Lender
will refuse to make advances in the absence of strict compliance with any or all
thereof, and no other Person, other than Borrower, under any circumstances
whatsoever, shall be deemed to be a beneficiary of such conditions, any or all
of which Lender freely may waive in whole or in part, at any time if, in its
sole discretion, it deems it desirable to do so. In particular, Lender makes no
representation and assumes no obligation as to third parties concerning the
quality of the construction of the Improvements by Borrower or the absence
therefrom of defects. In this connection, Borrower agrees to and shall indemnify
Lender from any liability, claim or loss, together with attorneys' fees and
costs, resulting from the disbursement of the Loan proceeds or from the
condition of the Property, whether related to the quality of construction or
otherwise and whether arising during or after the term of the Loan. This
provision shall survive the repayment of the Loan and shall continue in full
force and effect so long as the possibility of such liability or claim exists.
12.7 Amendment. This Agreement (including all exhibits and schedules
hereto) may not be amended or modified, and no term or provision hereof may be
waived, except by a written instrument signed by all of the parties hereto.
12.8 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signature thereto and hereto were on the same instrument. This
Agreement shall become effective upon Lender's receipt of one or more
counterparts hereof signed by Borrower, the Guarantor and Lender.
12.9 Lender Not a Fiduciary. The relationship between Borrower and Lender
is solely that of debtor and creditor, and Lender has no fiduciary or other
special relationship with Borrower or Guarantor, and no term or provision of any
of the Loan Documents shall be construed so as to deem the relationship between
Borrower, the Guarantor and Lender to be other than that of debtor and creditor.
12.10 Return of Pledged Notes Receivable.
(a) In the event Borrower complies with its Obligations under Section
2.4(b) of this Agreement with respect to Pledged Notes Receivable that
cease to be Eligible Notes Receivable and Borrower thereafter desires to
enforce such ineligible Pledged Note Receivable against the Purchaser
thereof, then provided that no Event of Default has occurred which has not
been cured to Lender's satisfaction (as evidenced by a written acceptance
of such cure executed by Lender), and no event has occurred which with
notice, the passage of time or both, would constitute an Event of Default,
then within thirty (30) days after its receipt of a written request from
66
Borrower, Lender shall release and/or cancel the endorsement in pledge
previously effected by Borrower in favor of Lender, without recourse,
(liberacion y/o cancelacion del endoso en prenda, sin responsabilidad para
el Acreedor) and thereafter deliver such ineligible Note Receivable to
Borrower;
(b) In the event that all Obligations hereunder are fully satisfied
then, within a reasonable time thereafter, Lender shall release and/or
cancel the endorsement in pledge previously effected by Borrower in favor
of Lender, without recourse, (liberacion y/o cancelacion del endoso en
prenda, sin responsabilidad para el Acreedor) and thereafter deliver such
Pledged Notes Receivable to Borrower, together with any other nonrecourse
Collateral reassignment documents requested and prepared by Borrower, at
Borrower's sole cost and expense.
12.11 Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be determined or made in accordance
with GAAP consistently applied at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
12.12 Total Agreement. This Agreement and the other Loan Documents,
including the exhibits and schedules thereto, comprise the entire agreement
between the parties relating to the subject matter hereof and supersede all
prior agreements and understandings, both oral and written, between the parties
hereto relating to the subject matter hereof (including but not limited to the
Commitment, except as otherwise expressly provided herein), cannot be changed or
terminated orally or by course of conduct, and shall be deemed effective as of
the date it is accepted by Lender at the offices set forth above.
12.13 Litigation. TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF BORROWER, THE GUARANTOR AND LENDER HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY
ANY RIGHT, POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN,
WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE, OR WITH RESPECT TO ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS
OF ANY PARTY; AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A JUDGE AND NOT BEFORE A JURY. EACH OF BORROWER, THE GUARANTOR AND LENDER
FURTHER WAIVES ANY RIGHT TO SEEK TO CONSOLIDATE ANY SUCH LITIGATION IN WHICH A
JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL
CANNOT OR HAS NOT BEEN WAIVED. FURTHER, BORROWER AND THE GUARANTOR HEREBY
CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER, INCLUDING LENDER'S COUNSEL,
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF
SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
BORROWER AND THE GUARANTOR ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION ARE A
MATERIAL INDUCEMENT TO LENDER'S ACCEPTANCE OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
The waiver and stipulations of Borrower, the Guarantor and Lender in this
Section 12.13 shall survive the final payment or performance of all of the
Obligations and the resulting termination of this Agreement.
12.14 Incorporation of Exhibits. This Agreement, together with all exhibits
and schedules hereto, constitute one document and agreement which is referred to
herein by the use of the defined term "Agreement." Such exhibits and schedules
are incorporated herein as though fully set out in this Agreement. The
definitions contained in any part of this Agreement shall apply to all parts of
this Agreement.
12.15 Consent to Advertising and Publicity of Timeshare Documents. Borrower
hereby consents that the Lender may issue and disseminate to the public
information describing the credit accommodation entered into pursuant to this
Agreement, consisting of the name and address of Borrower, the Loan's amount,
and the Collateral therefor.
12.16 Directly or Indirectly. Where any provision in the Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provisions shall be applicable, whether such action is taken
directly or indirectly by such Person.
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12.17 Headings. Section headings have been inserted in the Agreement as a
matter of convenience of reference only; such Section headings are not a part of
the Agreement and shall not be used in the interpretation of this Agreement.
12.18 Gender. Words of any gender in this Agreement shall include each
other gender where appropriate.
12.19 No Duty. All attorneys, accountants, appraisers, consultants,
custodians and other professionals retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care or other duty or obligation of any type or nature
whatsoever to Borrower, the Guarantor or any other Person.
12.20 Reimbursement for Taxes. Borrower will promptly, upon written demand
of Lender, reimburse Lender for any taxes assessed against Lender by the
Government of Mexico or any subdivision thereof (with the exception of income
taxes payable by Lender which are imposed on the net income of Lender) which is
on account of or measured by the interest income received by Lender under the
Pledged Notes Receivable and Interval Lease Contracts assigned to Lender
pursuant to this Agreement or in any way imposed upon Lender in connection with
the transactions contemplated hereunder, including, without limitation, any
general intangible tax or documentary tax.
12.21 Submissions.
(a) All documents, agreements, reports, surveys, appraisals, insurance
policies, references, financial information and other submissions required
to be furnished by Borrower or Guarantor to Lender hereunder or pursuant to
any of the other Loan Documents (collectively "Submissions") shall be in
form and content satisfactory to Lender, in its reasonable discretion, and
prepared at Borrower's expense.
(b) Lender shall have the prior right of approval of any Person
responsible for preparing a Submission (a "Preparer") and may reject any
Submission if Lender, in its reasonable discretion, believes that the
experience, skill or reputation of the applicable Preparer is
unsatisfactory in any respect whatsoever.
(c) All reports and appraisals required to be furnished by Borrower or
Guarantor to Lender hereunder or pursuant to any of the other Loan
documents shall specifically be addressed to Lender and include the
following statement:
THE UNDERSIGNED ACKNOWLEDGES THAT TEXTRON FINANCIAL
CORPORATION IS RELYING ON THE WITHIN INFORMATION IN
CONNECTION WITH ITS ADVANCES TO BORROWER ON THE
SUBJECT RESORTS.
12.22 Investigations and Inquiries. Borrower hereby authorizes Lender to
conduct all such investigations and inquiries as to credit, operations,
Borrower, any Affiliate of Borrower, Guarantor, any Material Party, the Resorts
and the Collateral as shall be necessary or desirable, in Lender's sole
discretion, in connection with its monitoring of the Loan. By this
authorization, individuals of whom Lender may make any such inquiry are
empowered to cooperate with and supply all requested information and
documentation to Lender.
12.23 Service of Process. Borrower and Guarantor have appointed Raintree
Resorts International, Inc., with an address of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, as their agent for service of process ("Service of Process
Agent") who shall be responsible for accepting service of process within the
United States on behalf of Borrower and Guarantor.
12.24 Joint and Several Liability. All of the Obligations, covenants,
representations and warranties of Borrower in this Agreement and in any of the
remaining Loan Documents shall be the joint and several Obligations, covenants,
representations and warranties of each entity constituting Borrower, except to
the extent as may be expressly set forth herein to the contrary. Although Lender
and Borrower intend that each entity constituting Borrower shall be jointly and
severally liable for all Obligations, to the extent that this Agreement or the
other Loan Documents may be determined to secure indebtedness of any Borrower
for which any other Borrower is not primarily liable, each Borrower entity
expressly waives the benefit of any and all defenses available to a guarantor,
surety, endorser or accommodation party dependant on an obligor's character as
such.
68
IN WITNESS WHEREOF, Borrower, Lender and the Guarantor have caused this
Agreement to be duly executed and delivered effective as of the date first above
written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURES BEGIN ON FOLLOWING PAGE]
69
BORROWER:
WITNESS: CR Resorts Cancun, S. de ▇.▇. de C.V., a
Mexican limited responsibility corporation
with variable capital
____________________________ By:__________________________________
Witness Name:
Its:
[SEAL]
WITNESS: CR Resorts Los Cabos, S. de ▇.▇. de C.V.,
a Mexican limited responsibility
corporation with variable capital
____________________________ By:__________________________________
Witness Name:
Its:
[SEAL]
WITNESS: CR Resorts Puerto Vallarta, ▇.▇▇ ▇.▇.▇▇ C.V.,
a Mexican limited responsibility corporation
with variable capital
____________________________ By:__________________________________
Witness Name:
Its:
[SEAL]
WITNESS: Corporacion Mexitur, S. de ▇.▇. de C.V.,
a Mexican limited responsibility corporation
with variable capital
____________________________ By:__________________________________
Witness Name:
Its:
[SEAL]
WITNESS: CR Resorts Cancun Timeshare Trust, S. de ▇.▇.
de C.V., a Mexican limited responsibility
corporation with variable capital
____________________________ By:__________________________________
Witness Name:
Its:
[SEAL]
WITNESSS: CR Resorts Cabos Timeshare Trust, S. de ▇.▇.
de C.V., a Mexican limited responsibility
corporation with variable capital
____________________________ By:__________________________________
Witness Name:
Its:
[SEAL]
70
WITNESS: CR Resorts Puerto Vallarta Timeshare Trust
S. de ▇.▇. de C.V., a Mexican limited
responsibility corporation with variable
capital
____________________________ By:__________________________________
Witness Name:
Its:
[SEAL]
LENDER:
TEXTRON FINANCIAL CORPORATION,
a Delaware corporation
____________________________ By: ________________________________
Witness Name:
Its:
[SEAL]
GUARANTOR:
Raintree Resorts International, Inc.,
a Nevada corporation
____________________________ By: _______________________________
Witness Name:
Its:
[SEAL]
71
EXHIBIT A
ASSIGNMENT Of PLEDGED NOTES RECEIVABLE
AND INTERVAL LEASE CONTRACTS
72
EXHIBIT B
PERMITTED LIENS AND ENCUMBRANCES
[TO BE COMPLETED UPON RECEIPT OF TITLE INFORMATION]
73
EXHIBIT C
LEGAL DESCRIPTION OF RESORT PROPERTY
[TO COMPLETE UPON RECEIPT OF FINAL TITLE POLICIES]
74
EXHIBIT D
TIMESHARE DOCUMENTS
[TO BE COMPLETED UPON RECEIPT OF DOCUMENTATION]
75
EXHIBIT E
PENDING LITIGATION
NONE.
76
EXHIBIT F
FORM OF REQUEST FOR ADVANCE (RECEIVABLES)
77
EXHIBIT G
OPERATING CONTRACTS
78
Exhibit H
FORM OF OFFICER'S CERTIFICATE
79
EXHIBIT I
OWNERSHIP OF BORROWER ENTITIES
80
SCHEDULE 1
SALES PROJECTIONS
81