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LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
Dated as of February 7, 1991
between
EL CONQUISTADOR PARTNERSHIP L.P.,
a Delaware limited partnership
and
THE MITSUBISHI BANK, LIMITED,
acting through its New York Branch
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$120,000,000
PUERTO RICO INDUSTRIAL, MEDICAL, EDUCATIONAL
AND ENVIRONMENTAL POLLUTION CONTROL
FACILITIES FINANCING AUTHORITY
INDUSTRIAL REVENUE BONDS,
1991 SERIES A
(EL CONQUISTADOR RESORT PROJECT)
CONVERTIBLE INDUSTRIAL REVENUE BONDS
1991 SERIES B (EL CONQUISTADOR
RESORT PROJECT) AND
INDUSTRIAL REVENUE BONDS
1991 SERIES C (EL CONQUISTADOR
RESORT PROJECT)
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TABLE OF CONTENTS
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1. DEFINITIONS................................................................................... 2
2. ISSUANCE OF LETTER OF CREDIT; FEES............................................................ 20
(a) Amount and Terms of Letter of Credit................................................. 20
(b) Annual Letter of Credit Fee.......................................................... 20
(c) Annual Agent's Fee................................................................... 21
(d) Substitution and Amendment Fees...................................................... 21
(e) Drawing Fees......................................................................... 21
(f) Additional Payment................................................................... 21
3. AGREEMENT TO REPAY DRAWINGS; PURCHASE OF BONDS................................................ 22
(a) Reimbursement........................................................................ 22
(b) Payments and Computations. ......................................................... 23
(c) Payment on Non-Business Days......................................................... 23
(d) Book Entries......................................................................... 23
(e) Obligations Absolute................................................................. 23
(f) No Withholdings...................................................................... 24
(g) Pledge of Bonds...................................................................... 25
(h) Credits for Amount Paid on Bonds; Other Credits...................................... 25
(i) Collateral Account................................................................... 25
4. CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF
CREDIT........................................................................................ 27
(a) Delivery of the Bonds and Operative Documents........................................ 27
(b) No Default........................................................................... 27
(c) Representations and Warranties....................................................... 27
(d) Certificate of Compliance............................................................ 27
(e) Opinion of Counsel................................................................... 27
(f) Opinion of Bond Counsel.............................................................. 27
(g) Guarantors' Representations and Warranties........................................... 27
(h) Documentation and Proceedings........................................................ 28
(i) Construction Management Agreement.................................................... 28
(j) Fees................................................................................. 28
(k) Management Agreement................................................................. 28
(l) Ground Lease......................................................................... 28
(m) Acquisition Documents................................................................ 28
(n) Title Policy......................................................................... 29
(o) Appraisal............................................................................ 29
(p) Survey............................................................................... 29
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(q) Environmental Report................................................................. 30
(r) Preliminary Report................................................................... 30
(s) Insurance............................................................................ 30
(t) Real Estate Taxes.................................................................... 30
(u) Formation of Company................................................................. 30
(v) Other Approvals...................................................................... 30
(w) Swap Arrangement..................................................................... 30
(x) Maximum Effective Interest Rate...................................................... 31
(y) GDB Loan Documents................................................................... 31
(z) Budget............................................................................... 31
(aa) Authorization........................................................................ 31
(bb) Accounting........................................................................... 31
(cc) No Flood Plain....................................................................... 31
(dd) Labor Contributions.................................................................. 31
5. INDEMNIFICATION; BROKERAGE.................................................................... 32
6. CONDOMINIUM UNITS............................................................................. 33
7. COVENANTS..................................................................................... 33
(a) Notice of Default.................................................................... 34
(b) ERISA................................................................................ 34
(c) Preservation of Existence............................................................ 34
(d) Successor Letter of Credit........................................................... 34
(e) Additional Indebtedness.............................................................. 35
(f) Payment of Swap Obligations.......................................................... 35
(g) Financial Statements................................................................. 35
(h) Transfers............................................................................ 36
(i) Decision Making...................................................................... 36
(j) Further Assurances................................................................... 37
(k) Compliance with Laws................................................................. 37
(l) Performance of This and Other Agreements. .......................................... 37
(m) Amendments........................................................................... 37
(n) Construction. ...................................................................... 37
(o) Inspection of Project and Books and Records.......................................... 38
(p) Expenses............................................................................. 38
(q) Plans................................................................................ 39
(r) Delivery of Agreement................................................................ 39
(s) Correction of Work................................................................... 39
(t) Revised Budget....................................................................... 39
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(u) Notices.............................................................................. 40
(v) Plan Changes......................................................................... 40
(w) No Encroachments..................................................................... 40
(x) Insurance............................................................................ 40
(y) Application of Insurance and Condemnation Proceeds................................... 41
(z) Compliance with Documents............................................................ 41
(aa) Bonds................................................................................ 41
(bb) Work Changes......................................................................... 41
(cc) No Contracts......................................................................... 41
(dd) Asbestos............................................................................. 42
(ee) Final Survey......................................................................... 42
(ff) Construction Trust Account........................................................... 42
(gg) Leasing.............................................................................. 42
(hh) Distribution Cash Under Company Partnership Agreements. ............................ 42
(ii) Deficiency Loans..................................................................... 43
(jj) Ground Lease and GDB Documents....................................................... 44
(kk) Compliance with Environmental Laws................................................... 44
(ll) Expropriation........................................................................ 44
(mm) Palominos Island Property............................................................ 45
(nn) Registration and Mortgages of Boats.................................................. 45
(oo) Recordation of True Description...................................................... 45
(pp) Additional Assignments and Chattel Mortgages......................................... 45
(qq) Amounts Secured by Mortgage.......................................................... 46
(rr) Sole Business........................................................................ 46
(ss) Loan Agreement Covenants............................................................. 46
(tt) Termination of Swap Agreements....................................................... 46
8. REPRESENTATIONS AND WARRANTIES................................................................ 46
(a) Due Organization..................................................................... 46
(b) No Violation......................................................................... 47
(c) Consents............................................................................. 47
(d) Enforceability....................................................................... 48
(e) No Litigation........................................................................ 48
(f) No Defaults.......................................................................... 48
(g) Tax Returns.......................................................................... 48
(h) Compliance with ERISA................................................................ 49
(i) Other Facts.......................................................................... 49
(j) Other Representations and Warranties................................................. 49
(k) Financial Statements................................................................. 49
(l) ▇▇▇▇▇▇ Regulations................................................................... 50
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(m) Investment Company Act............................................................... 50
(n) Disclosure........................................................................... 50
(o) Management Agreement; Ground Lease and Other Agreements.............................. 50
(p) Location of Company.................................................................. 51
(q) Plans; Construction.................................................................. 51
(r) Availability of Utilities. ......................................................... 51
(s) No Liens............................................................................. 51
(t) Compliance with Building Codes, Zoning Laws, Etc..................................... 51
(u) Budget............................................................................... 52
(v) Security Documents................................................................... 52
(w) Hazardous Materials.................................................................. 52
9. DISBURSEMENTS FOR CONSTRUCTION................................................................ 52
(a) Disbursements for Construction....................................................... 52
(b) Retainages........................................................................... 53
(c) Bank's Consultant.................................................................... 54
(d) Disbursements for Operating Deficits................................................. 54
(e) Documentation to the Bank............................................................ 54
(f) Use of Disbursements................................................................. 54
(g) Determination of Amounts of Disbursements............................................ 55
(h) Final Disbursement................................................................... 55
(i) Disbursements for Deposits or Stored Materials....................................... 55
(j) Reallocation......................................................................... 56
(k) Loan Balance......................................................................... 57
(l) Disbursements after Default.......................................................... 57
(m) Method of Disbursement............................................................... 58
(n) Disbursements for Amounts Due........................................................ 58
(o) Partial Disbursements................................................................ 58
(p) Investment of Bond Proceeds.......................................................... 59
(q) Disbursements for Vehicles........................................................... 59
10. CONDITIONS PRECEDENT TO MAKE THE INITIAL DISBURSEMENT......................................... 59
(a) Equity Contribution.................................................................. 59
(b) Trade Contracts...................................................................... 59
(c) Architect's and Engineer's Agreements and Subcontracts............................... 59
(d) [Intentionally Omitted].............................................................. 60
(e) GDB Loan............................................................................. 60
(f) Representations and Warranties....................................................... 60
(g) Receipt of Documents by Bank......................................................... 60
(h) No Condemnation...................................................................... 63
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(i) No Default........................................................................... 63
(j) Accounting........................................................................... 63
11. CONDITIONS PRECEDENT TO DISBURSEMENTS AFTER THE INITIAL
DISBURSEMENT.................................................................................. 63
(a) Conditions Satisfied................................................................. 63
(b) Representations and Warranties....................................................... 63
(c) Receipt of Documents by Bank......................................................... 64
(d) No Default........................................................................... 65
12. EVENTS OF DEFAULT............................................................................. 65
(a) Events of Default.................................................................... 65
(b) Bank Remedies........................................................................ 69
(c) Bank's Right to Stop Disbursing Funds................................................ 70
(d) Bank's Right to Complete............................................................. 70
(e) No Liability of the Bank............................................................. 71
(f) Termination of Agreement............................................................. 71
(g) Remedies Not Exclusive............................................................... 72
13. NATURE OF THE BANK'S DUTIES................................................................... 72
14. MISCELLANEOUS................................................................................. 73
(a) Amendments and Consents.............................................................. 73
(b) Survival of Representations and Warranties........................................... 73
(c) Expenses............................................................................. 73
(d) Set-off.............................................................................. 74
(e) No Approval of Work.................................................................. 74
(f) Bank's Review........................................................................ 74
(g) Submission of Evidence............................................................... 75
(h) Bank Sole Beneficiary................................................................ 75
(i) Contractors.......................................................................... 75
(j) Entire Agreement..................................................................... 75
(k) Further Assurances................................................................... 75
(l) No Waiver; Cumulative Remedies....................................................... 76
(m) Singular/Plural...................................................................... 76
(n) No Joint Venture..................................................................... 76
(o) Incorporation by Reference........................................................... 76
(p) Binding Effect; Assignment........................................................... 76
(q) Notices.............................................................................. 77
(r) Satisfaction......................................................................... 77
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(s) Governing Law and Consent to Jurisdiction............................................ 77
(t) Limitation of Liability.............................................................. 78
(u) Counterparts......................................................................... 79
(v) Defined Instruments.................................................................. 79
(w) Accounting Terms and Determinations.................................................. 79
(x) Lawful Interest...................................................................... 79
(y) Consents; Approvals.................................................................. 79
(z) Severability......................................................................... 80
(aa) Headings............................................................................. 80
(bb) Reliance by Bank..................................................................... 80
Exhibit A -- Form of Irrevocable Letter of Credit
Exhibit B -- Form of Assignment of Accounts Receivable
Exhibit C -- Form of Assignment of Contracts
Exhibit D -- Form of Assignment of Rents
Exhibit E -- Borrower's Affidavit
Exhibit F -- Budget
Exhibit G -- Form of Chattel Mortgage
Exhibit H -- Condominium Parcels
Exhibit I -- Request for Disbursement
Exhibit J -- Insurance Requirements for all Labor and Material
Exhibit K -- Trade Contractor Consent and Agreement
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
This LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this AGREEMENT)
dated as of February 7, 1991 between EL CONQUISTADOR PARTNERSHIP L.P., a
Delaware limited partnership (the COMPANY), AND THE MITSUBISHI BANK, LIMITED, a
Japanese banking corporation acting through its New York Branch (the BANK).
WITNESSETH:
WHEREAS, pursuant to the Loan Agreement dated as of the date hereof
(the LOAN AGREEMENT) between the Company and Puerto Rico Industrial, Medical,
Educational and Environmental Pollution Control Facilities Financing Authority,
a body corporate and politic constituting a public corporation and a
governmental instrumentality established and existing under and by virtue of the
laws of the Commonwealth of Puerto Rico (the ISSUER), the Issuer has resolved to
issue and sell its Industrial Revenue Bonds, 1991 Series A (El Conquistador
Resort Project) and Convertible Industrial Revenue Bonds 1991 Series B (El
Conquistador Resort Project), as the same may hereafter be converted to
Industrial Revenue Bonds, 1991 Series C (El Conquistador Resort Project) in the
aggregate principal amount of $120,000,000 (collectively, the BONDS) and to
apply the proceeds thereof to finance a portion of the cost of acquiring,
developing, constructing and equipping a first-class destination resort hotel
and related facilities to be located in Fajardo, Puerto Rico and to be known as
the El Conquistador Resort and Country Club; and
WHEREAS, Banco Popular de Puerto Rico has been designated to serve as
trustee under the Trust Agreement, dated as of the date hereof, between the
Issuer and the Trustee (the TRUST AGREEMENT) (together with any successor
trustee designated pursuant to the Trust Agreement, the TRUSTEE); and
WHEREAS, the Issuer and the Company have requested the Bank to issue
its irrevocable letter of credit (together with any substitute therefor or
replacement thereof issued in accordance with the terms of such letter of credit
or this Agreement, the LETTER OF CREDIT) to provide security for the payment of
the principal of, and interest accrued on, the Bonds; and
WHEREAS, the obligations of the Company under this Agreement, the Loan
Agreement and the four Mortgage Notes, dated as of the date hereof, from the
Company to the Issuer in the respective principal amounts of $120,000,000,
$6,612,000, $20,000,000 and $2,000,000 (collectively, the NOTE), shall be
secured, inter alia, by the Mortgage, dated as of the date hereof, from the
Company in favor of the Issuer (the FEE MORTGAGE), the Leasehold Mortgage dated
as of the date hereof, from the Company in favor of the Issuer (the LEASEHOLD
MORTGAGE), the Collateral Pledge Agreement, dated as of the date hereof, from
the Company in favor of the Issuer and the Bank (the PLEDGE AGREEMENT), the
Assignment of Contracts dated as of the date hereof, from the Company to the
Bank (the ASSIGNMENT OF CONTRACTS), and the Assignment of Management Agreement,
dated as of the date hereof, from the Company to the Bank (the
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ASSIGNMENT OF MANAGEMENT AGREEMENT) (the Note, the Fee Mortgage, the Leasehold
Mortgage, the Pledge Agreement, the Assignment and the Assignment of Management
Agreement together with any hereafter created Assignments of Accounts
Receivable, Assignments of Contracts, Assignments of Rents and Chattel
Mortgages, are herein collectively referred to as the SECURITY DOCUMENTS); and
WHEREAS, as further inducement to the Bank to issue the Letter of
Credit, (i) KG (Caribbean) Corporation, a Texas corporation (KGCC) and Kumagai
International USA Corporation, a Texas corporation (KIUSA) shall execute and
deliver to the Bank a Completion Guaranty dated as of the date hereof (the
COMPLETION GUARANTY), (ii) Kumagai Caribbean Inc., a Texas corporation (KGC)
shall execute and deliver to the Bank a Completion Guaranty dated as of the date
hereof (the SECONDARY COMPLETION GUARANTY) and (iii) KIUSA and KGC, together
with ▇▇▇▇▇▇▇▇ Hospitality Management Corporation, a Delaware corporation
(▇▇▇▇▇▇▇▇), shall execute and deliver to the Bank an Environmental Indemnity,
dated as of the date hereof (THE ENVIRONMENTAL INDEMNITY; the Environmental
Indemnity, the Completion Guaranty and the Secondary Completion Guaranty are
herein individually referred to as a GUARANTY and collectively referred to as
the GUARANTIES, and KIUSA, KGCC, KGC and ▇▇▇▇▇▇▇ are herein individually
referred to as a GUARANTOR and collectively referred to as the GUARANTORS).
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement and unless otherwise
expressly indicated, or unless the context clearly requires otherwise:
ACCOUNTANT shall mean Ernst & Young, or such other independent
certified public accountant reasonably satisfactory to the Bank.
ACT shall mean The Puerto Rico Industrial, Medical, Higher
Education and Environmental Pollution Control Facilities Financing Authority
Act, Act No. 121 of the Legislature of the Commonwealth of Puerto Rico, approved
June 27, 1977, as amended, and all future acts supplemental thereto or
amendatory thereof.
AGGREGATE BUDGET CHANGE AMOUNT shall mean $1,500,000.
AGREEMENT shall have the meaning set forth in the first
paragraph of this Agreement.
AMK shall mean AMK Conquistador, S.E., a Puerto Rico special
partnership.
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▇▇▇▇▇▇▇ FAMILY shall mean ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, his spouse and
children.
ANNUAL AGENT'S FEE shall have the meaning set forth in
Paragraph 2(c) hereof.
ANNUAL DEBT SERVICE shall mean, for any period for which
Annual Debt Service is being determined, the sum of (i) interest paid or payable
under the Loan at the Bond Fixed Rate with respect to such period (or, to the
extent the Bond Fixed Rate is inapplicable to any portion of the Loan, at the
rate provided for with respect to such portion of the Loan), (ii) interest paid
or payable under the GDB Loan at the rate provided for thereunder with respect
to such period or, to the extent interest swap arrangements are in place with
respect to the GDB Loan, at the GDB Fixed Rate with respect to such period,
(iii) the Annual Agent's Fee and the Annual Letter of Credit fee payable with
respect to such period, and (iv) any fees arising out of any swap arrangements
entered into by the Company in connection with the Loan and/or the GDB Loan
which are payable with respect to such period.
ANNUAL LETTER OF CREDIT FEE shall have the meaning set forth
in Paragraph 2(b) hereof.
APPLICABLE LIBID RATE shall have the meaning set forth in the
Trust Agreement.
APPRAISAL shall mean an appraisal in narrative form, prepared
by an appraiser retained by the Bank at the Company's sole cost and expense
setting forth a fair market value of the Premises, assuming that the
Improvements have been completed in accordance with the Plans and that the
Mortgage and the GDB Mortgage do not encumber the Premises.
ARCHITECT shall mean Ray, ▇▇▇▇▇▇▇▇ & Associates or any
successors engaged by the Company with the prior written consent of the Bank.
ARCHITECTS' AGREEMENTS shall mean those certain agreements
between the Company and the Architect and the Design Architects, respectively,
relating to the design of the Improvements and providing for architectural
services in connection with the construction of the Improvements.
ARCHITECTS' INITIAL CERTIFICATION shall mean the certification
from the Architect to the Bank dated February 7, 1991 annexed hereto.
ARPE shall mean the Administration of Regulations and Permits
of the Commonwealth of Puerto Rico.
ASSIGNMENT OF ACCOUNTS RECEIVABLE shall mean an assignment
from the Company to the Bank, which shall be in form and substance substantially
similar to that set forth in Exhibit B hereof, pursuant to which the Company
collaterally assigns to the Bank its rights in
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and to all accounts receivable obtained in connection with the Project,
including, without limitation, its rights in and to all Condominium Revenues.
ASSIGNMENT OF CONTRACTS shall mean an assignment from the
Company to the Bank, which shall be in form and substance substantially similar
to that set forth in Exhibit C hereof, pursuant to which the Company
collaterally assigns to the Bank its rights in and to all contracts, licenses,
permits and certain other documents entered into or obtained by the Company in
connection with the Project.
ASSIGNMENT OF MANAGEMENT AGREEMENT shall have the meaning set
forth in the WHEREAS clauses hereof.
ASSIGNMENT OF RENTS shall mean an assignment from the Company
to the Bank, which shall be in form and substance substantially similar to that
set forth in Exhibit D hereof, pursuant to which the Company collaterally
assigns to the Bank its rights in and to all rents, issues and profits derived
from any leases entered into for space at the Project.
BANK shall have the meaning set forth in the first paragraph
of this Agreement.
BANK COVERAGE REQUIREMENT shall mean that either (i) the Net
Earnings for the 24 full calendar-month period next preceding the date of
determination has been an amount not less than the Annual Debt Service for such
24 full calendar-month period multiplied by 1.30 or (ii) the Net Earnings for
the 12 full calendar-month period next preceding the date of determination has
been an amount not less than the Annual Debt Service for such 12 full
calendar-month period multiplied by 1.50.
BANK'S CONSULTANT shall mean ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. or such
other Person or architectural or engineering consultant as may be designated and
engaged by the Bank, at the Company's expense to examine the Budget and the
Plans, any changes thereto, and cost breakdowns and estimates with respect to
the Project (including, without limitation, all cost breakdowns and estimates
set forth in any Request for Disbursement and all accompanying certifications),
to make periodic inspections of the progress of the Construction of the
Improvements on behalf of the Bank, to advise and render reports to the Bank
concerning the foregoing and to otherwise consult with the Bank with respect to
the Project.
BANK'S CONSULTANT'S REPORT shall mean a report by the Bank's
Consultant (i) to the effect that all of the work theretofore completed on the
Project has been completed in a good an workmanlike manner, substantially in
accordance with the Plans and the Construction Schedule and in compliance with
the Legal Requirements, (ii) stating whether the work which is the basis of the
applicable Request for Disbursement has been completed within the applicable
Line Item therefor, (iii) stating whether the undisbursed amount of the Loan
allocable to the Construction of the Improvements is sufficient to complete the
Construction of the Improvements
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in accordance with the Plans, (iv) to the extent that the Bank's Consultant
determines that the remaining cost to complete the work which is the subject of
a Line Item is less than the undisbursed portion of such line item such that
such excess can be reallocated in accordance with Paragraph 9(j) hereof, or the
remaining cost to complete the work which is the subject of a Line Item is
greater than the undisbursed portion of such Line Item, setting forth such
amount and (v) addressing such other matters requested by the Bank to be
addressed therein.
BOND FIXED RATE shall mean 7.55% per annum.
BOND PROCEEDS shall mean the aggregate proceeds obtained from
the issuance of the Bonds.
BOND PURCHASE AGREEMENT shall mean the Purchase Contract,
dated January 25, 1991, among the Underwriter, the Company and the Issuer.
BOND SWAP AGREEMENT means an Interest Rate and Currency
Exchange Agreement entered into by the Company and the Bank in accordance with
Section 4(w) hereof and pursuant to which the Company and the Bank enter into an
interest rate swap under which the Company agrees to pay to the Bank amounts
calculated on a national amount of $120,000,000 at the Bond Fixed Rate in
exchange for the Bank's obligation to pay to the Company amounts calculated on a
notional amount of $120,000,000 at rates equal to 88% of the Applicable LIBID
Rate. The Bond Swap Agreement shall provide inter alia, that all sums payable by
the Bank to the Company pursuant to Section 2(a) thereof, shall be payable by
the Bank to the Trustee to be deposited in the Bond Fund.
BONDS shall have the meaning set forth in the WHEREAS clauses
hereof.
BORROWER'S AFFIDAVIT shall mean an affidavit substantially in
the form of Exhibit E annexed hereto.
BUDGET shall mean a budget prepared by the Company setting
forth Total Project Costs in detail satisfactory to the Bank, and the Bank's
Consultant, which most current Budget is annexed hereto as Exhibit F, as such
Budget may be amended, modified or supplemented from time to time pursuant to
the terms of this Agreement and as the Line Items set forth in such Budget may
be reallocated pursuant to Paragraph 9(j) hereof.
BUSINESS DAY shall mean any day other than a Saturday, Sunday
or other day on which banks in New York, New York or San ▇▇▇▇, Puerto Rico are
authorized or required by law or executive order to close.
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CASH COLLATERAL means all funds now or hereafter on deposit in
the Cash Collateral Account, together with any and all interest earned thereon,
to the extent such interest is on deposit in the Cash Collateral Account.
CASH COLLATERAL ACCOUNT has the meaning assigned to that term
in Section in 3(i) hereof.
CHATTEL MORTGAGE shall mean a mortgage made by the Company in
favor of the Issuer in substantially the form attached hereto as Exhibit G,
pursuant to which title to particular buses, vessels, limousines and other
moving vehicles are mortgaged as required hereunder.
CODE shall mean the Internal Revenue Code of 1986, as amended
from time to time.
COLLATERAL shall mean all of the property, real or personal,
tangible or intangible, and all rights thereto, pledged, mortgaged or
hypothecated pursuant to the Security Documents.
COMPANY shall have the meaning set forth in the first
paragraph of this Agreement.
COMPANY PARTNERSHIP AGREEMENT shall mean that certain Venture
Agreement dated January 12, 1990 between KGC and WKA.
COMPLETION DATE shall mean the date that is 24 months after
the date of the Initial Disbursement, subject to extension for Unavoidable Delay
as provided in Paragraph 7(n) hereof.
COMPLETION GUARANTY shall have the meaning set forth in the
WHEREAS clauses hereof.
CONDOMINIUM PARCELS shall mean the approximately 20-acre
portion of land shown on Exhibit H annexed hereto.
CONDOMINIUM REVENUES shall mean revenues derived by the
Company from the Condominium Units through (i) the rental of the Condominium
Units, (ii) the use of the Premises by the occupants of the Condominium Units
and (iii) the right of such occupants to use the premises.
CONDOMINIUM UNITS shall mean up to 150 residential condominium
units that may be developed and constructed on the Condominium Parcels.
CONSENTS shall have the meaning set forth in Paragraph 8(c)
hereof.
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CONSTRUCTION or CONSTRUCT, when used with reference to the
Project, shall mean construction, installation, renovation or development of the
Improvements or any portion thereof.
CONSTRUCTION DOCUMENTS shall mean, collectively, the
Construction Management Agreement, the Architect's Agreements, all Trade
Contracts and all other agreements to which the Company is party or beneficiary
pertaining to the Construction of the Improvements.
CONSTRUCTION MANAGEMENT AGREEMENT shall mean that certain
agreement between the Company and the Construction Manager dated as of January
12, 1990 and amended by First Amendment thereto dated as of September 30, 1990
and Second Amendment thereto dated as of January 31, 1991, providing for the
construction of the Improvements upon the terms and conditions set forth
therein.
CONSTRUCTION MANAGER shall mean KGCC or any successor engaged
by the Company with the prior written consent of the Bank.
CONSTRUCTION MANAGER CONSENT AND AGREEMENT shall mean that
certain agreement dated as of the date hereof between the Construction Manager
and the Bank.
CONSTRUCTION SCHEDULE shall have the meaning provided in
paragraph 10(g)(xii) hereof.
CONSTRUCTION TRUST ACCOUNT shall have the meaning set forth in
Paragraph 9(a) hereof.
COVERAGE DATE shall have the meaning set forth in Paragraph
2(b) hereof.
DATE OF ISSUANCE shall mean the date of issuance and delivery
of the Letter of Credit.
DATE OF SUBSTANTIAL COMPLETION shall mean the date which is 30
days following the date upon which the Company first delivers to the Bank
evidence satisfactory to the Bank that Substantial Completion has been achieved.
DEBT or DEBTS shall mean, with respect to any Person, (a)
indebtedness of such Person for money borrowed (including, without limitation,
indebtedness evidenced by notes, bonds, debentures or other similar instruments
of such Person), (b) indebtedness represented by the deferred purchase price of
property or services acquired by such Person, (c) rentals payable by such Person
under any lease of real or personal property which shall have been, or should,
under generally accepted accounting principles, be classified as capital lease,
(d) obligations of such Person under direct or indirect guarantees in respect
of, and obligations (contingent or otherwise) of such Person to purchase or
otherwise acquire, or otherwise assure a creditor
-8-
against loss in respect of, indebtedness or obligations of another Person of the
type described in clause (a), (b) or (c) above, and (e) liabilities of such
Person in respect of unfunded vested benefits under, or withdrawal liability in
respect of, plans covered by Title IV of ERISA.
DEFAULT shall mean any event which with notice or lapse of
time, or both, would become an Event of Default.
DEFICIENCY LOANS shall have the meaning set forth in Paragraph
7(ii) hereof.
DESIGN ARCHITECTS shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and
Associates, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Associates, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Associates,
P.C., ▇▇▇▇▇▇▇▇▇ Associates, ▇▇▇▇▇▇ ▇▇▇▇ and Associates, and ▇▇▇▇▇ ▇▇▇▇▇▇
Associates, Inc., or any successors engaged by the Company with the prior
written consent of the Bank.
DISBURSEMENT shall mean each disbursement of all or any
portion of the Project Fund.
DOLLARS or the sign "$" shall mean dollars in the lawful
currency of the United States of America.
DRAWING or DRAWINGS shall mean a Principal Drawing and/or an
Interest Drawing.
ENVIRONMENTAL INDEMNITY shall have the meaning set forth in
the WHEREAS clauses hereof.
ENVIRONMENTAL LAWS shall mean, collectively, all current and
future federal, state, commonwealth and local environmental laws, statutes and
regulations, now or at any time hereafter in effect, including, without
limitation, the Resource, Conservation and Recovery Act, as amended from time to
time, the Comprehensive Environmental Response, Compensation and Liability Act,
as amended from time to time, and any so-called Superfund or Superlien law,
including, without limitation, the Superfund Amendments an Reauthorization Act
of 1986, and the counterparts of such statutes as enacted by state, commonwealth
and local governments with jurisdiction over the Project, and any and all
regulations promulgated under or judicial or administrative interpretation of
any of the foregoing.
ENVIRONMENTAL REPORT shall mean an environmental report
relating to the Premises and the Improvements, addressed to the Bank, which
report shall include, without limitation, geological, soil and hazardous waste
evaluations, prepared at the Company's sole cost and expense by Certified
Engineering and Testing Company or by another firm of environmental consultants
acceptable to the Bank.
-9-
EQUITY CONTRIBUTION shall have the meaning set forth in
Paragraph 10(a) hereof.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time. Section references to ERISA are to ERISA
as in effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
ERISA AFFILIATE shall mean each trade or business (whether or
not incorporated) which, together with the Company or a Subsidiary, would be
deemed to be a SINGLE EMPLOYER within the meaning of Section 4001 of ERISA.
EVENT OF DEFAULT shall have the meaning set forth in Paragraph
12(a) hereof.
EXPIRATION DATE shall mean the Stated Expiration Date or such
later expiration date of the Letter of Credit, if the same is extended by the
Bank pursuant to Paragraph 2(a) hereof.
FAJARDO PROPERTY shall mean approximately 220 acres of land
located in Fajardo, Puerto Rico, as more particularly described in the Fee
Mortgage.
FEDERAL FUNDS EFFECTIVE RATE means, for any day, the weighted
average of the rates on overnight Federal funds transactions, with members of
the Federal Reserve System only, arranged by Federal funds brokers, as published
as of such day (or, if such day is not a New York Business Day, for the next
preceding New York Business Day) by the Federal Reserve Bank of New York (or, if
such rate is not so published for any day which is a New York Business Day, the
average of the quotations for such day on such transactions received by the Bank
from three Federal funds brokers of recognized standing selected by the Bank.
FEE DATES shall have the meaning set forth in Paragraph 2(b)
hereof.
FEE MORTGAGE shall have the meaning set forth in the WHEREAS
clauses hereof.
FINANCIAL STATEMENTS shall mean, as applicable, (i) all
statements of financial condition with respect to the Company and the Guarantors
previously submitted to the Bank and/or (ii) all updates of such statements
and/or other statements of financial condition submitted by the Company and the
Guarantors to the Bank as required pursuant to Paragraph 7(g) hereof.
FOUR PARTY AGREEMENT shall mean the Four Party Agreement,
dated as of the date hereof, among the Bank, the Company, WKA and KGC.
GDB shall mean Government Development Bank for Puerto Rico.
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GDB FIXED RATE shall mean the sum of (x) the effective per
annum fixed rate of interest that the Company will be obligated to pay with
respect to the GDB Loan upon the Company's entering into an interest rate swap
arrangement in connection with the GDB Loan and (y) the GDB Margin.
GDB INVESTMENT AGREEMENT shall mean, collectively, (i) the
Investment Agreement, dated the date hereof, between GDB and the Trustee, and
(ii) the Collateral and Security Agreement, dated the date hereof, among GDB,
the Trustee, the Company and Mitsubishi Bank Trust Company of New York.
GDB LOAN shall mean a loan by GDB to the Company in the amount
of up to $25,000,000 to be used to finance a portion of the Total Project Costs
pursuant to the GDB Loan Agreement.
GDB LOAN AGREEMENT shall mean the Loan Agreement dated the
date hereof between GDB and the Company.
GDB MORTGAGE shall mean that certain Mortgage, dated as of the
date hereof, made by the Company in favor of GDB, securing the GDB Loan.
GDB STANDSTILL AGREEMENT shall mean the Subordination and
Standstill Agreement, dated the date hereof, between GDB and the Bank.
GENERAL PARTNER shall mean either KGC or WKA, the sole general
partners of the Company (KGC and WKA together being the GENERAL PARTNERS).
GOVERNMENT ACTS shall have the meaning set forth in Paragraph
5(a) hereof.
GOVERNMENT AUTHORITY shall mean any court, agency, authority,
board (including, without limitation, any environmental protection, planning or
zoning board), bureau, commission, department, office or instrumentality of any
nature whatsoever of any governmental or quasi-governmental unit of the United
States, the Commonwealth of Puerto Rico, any State of the United States, or the
Municipality of Fajardo, whether now or hereafter in existence, having
jurisdiction over the Company or the Project.
GROSS REVENUES shall mean, for any period with respect to
which Gross Revenues are being determined, all revenues of any kind received or
derived by the Company from the ownership an operation of the Premises for such
period, including, without limitation, room, food and beverage, and other
facility revenues, Condominium Revenues, casino net wins, rentals or other
payments from leases and concession agreements, annual dues for golf
memberships, revenues derived from the resale of golf memberships, the proceeds
of any business interruption insurance, and, except as provided below, all
revenues received by the Company from all other
-11-
activities of the Premises, less in each case actual refunds made to customers,
guests or patrons. Gross Revenues shall not include the proceeds of the sale of
the Condominium Units, revenues derived from the initial sale of golf
memberships, tips, service charges added to a customer's ▇▇▇▇ or statement in
lieu of gratuities which are payable to employees of the Project, value of
complimentary rooms, food and beverages (except those purchased by the casino
forming a part of the Project), and any sales or other use or excise taxes
required by law to be collected with respect to the operations of the Premises
and remitted to taxing authorities. Notwithstanding the foregoing, Condominium
Revenues derived from any Condominium Units for any year shall only be included
in Gross Revenues to the extent that the Company has demonstrated to the Bank's
satisfaction (including, without limitation, by providing copies of written
contracts) that a corresponding number of Condominium Units of equivalent types
and sizes will be included in the rental arrangement pursuant to which such
units will be rented by ▇▇▇▇▇▇▇▇ on behalf of the owners thereof, for the
succeeding year (so that, if the Condominium Units of each type and size
included in the rental arrangement for the succeeding year are fewer than the
Condominium Units from which such Condominium Revenues were derived, the amount
of the Condominium Revenues which may be included in Gross Revenues shall be
proportionately reduced). For example, if, in year one, 100 Type A Condominium
Units were included in the rental arrangements and produced aggregate revenues
of $100,000, but only 50 type A Condominium Units have been included in the
rental arrangement for year two, then only $50,000 may be included in Gross
Revenues for year one.
GROUND LEASE shall have the meaning set forth in Paragraph
4(1) hereof.
GUARANTOR and GUARANTORS shall have the meaning set forth in
the WHEREAS clauses hereof.
GUARANTY and GUARANTIES shall have the meaning set forth in
the WHEREAS clauses hereof.
HARD COSTS shall mean costs and expenses in connection with
the Line Items indicated as being Hard Costs on the Budget annexed hereto as
Exhibit F.
HAZARDOUS MATERIAL shall mean asbestos, polychlorinated
biphenyls, petroleum products and any other substance or material that, whether
by its nature or use, is now or hereafter defined as hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Law, or which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and which is now or hereafter regulated under
any Environmental Law.
HOSPITALITY shall mean Hospitality Investor Group, S.E., a
Puerto Rico special partnership.
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IMPROVEMENTS shall mean the improvements to be renovated or
constructed on the Premises pursuant to the Plans, consisting of approximately
750 guest rooms, approximately 50,000 square feet of meeting space (including
prefunctionary space), six restaurants, approximately 13,000 square feet of
retail space, an approximately 10,000 square foot casino, a marina,
approximately 100,000 square feet of swimming pools and water features, an
18-hole golf course, an approximately 40,000 square foot clubhouse and spa
facility, eight tennis courts, water sports facilities on the Palominos Island
Property and related amenities and facilities and all related fixtures,
furniture and equipment.
INCREASED COSTS shall have the meaning set forth in Paragraph
2(f) hereof.
INDEMNIFIED PARTY shall have the meaning set forth in
Paragraph 5(a) hereof.
INDIVIDUAL BUDGET CHANGE AMOUNT shall mean $100,000.
INITIAL DISBURSEMENT shall mean the initial disbursement of
any of the Project Fund, other than disbursements to pay costs comprising Annual
Debt Service to the extent such disbursements are made from amounts, in the
Project Fund in excess of $120,000,000.
INITIAL DISBURSEMENT DATE shall mean the date on which the
Initial Disbursement is made.
INITIAL STATED AMOUNT shall have the meaning set forth in
Paragraph 2(a) hereof.
INTEREST DRAWING shall have the meaning set forth in the
Letter of Credit.
INTERNATIONAL TEXTILE shall mean International Textile
Products of Puerto Rico, Inc., a Puerto Rico corporation.
ISSUER shall have the meaning set forth in the WHEREAS clauses
hereof.
KGC shall mean Kumagai Caribbean, Inc., a Texas corporation.
KGC MORTGAGE shall have the meaning set forth in Paragraph
7(e) hereof.
KGCC shall mean KG (Caribbean) Corporation, a Texas
corporation.
KIUSA shall mean Kumagai International USA Corporation, a
Texas corporation.
KMA shall mean KMA Associates of Puerto Rico, Inc., a Puerto
Rico corporation.
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▇▇▇▇▇▇▇ FAMILY shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, their parents, issue (including adopted persons), wives, siblings and
direct descendants, and trusts organized for the benefit of any of the
foregoing.
KUMAGAI shall mean Kumagai Gumi Co., Ltd., a Japanese
corporation.
LEASEHOLD MORTGAGE shall have the meaning set forth in the
WHEREAS clauses hereof.
LEGAL REQUIREMENTS shall mean, collectively, (i) all statutes,
laws, rules, rulings, orders, regulations, ordinances, judgments, decrees and
injunctions of any Governmental Authority (including, without limitation, fire,
health, handicapped access, sanitation, ecological, historic, zoning,
environmental protection, wetlands and building laws) in any way applicable to
the Company or the Premises and the Improvements, or any portion thereof, or to
the ownership, use, occupancy, possession, operation or maintenance of the
Premises and the Improvements; (ii) all requirements of the local Board of Fire
Underwriters or other similar body acting in and for the locality in which the
premises are situated and all requirements of each insurance policy covering or
applicable to all or any portion of the Premises and the Improvements, or the
use thereof, and all requirements of the issuer of each such policy, including
any which may require repairs, modifications or alterations (structural or
otherwise) in or to the Improvements, or any portion thereof; and (iii) all
requirements of each permit, license, authorization and regulation relating to
the premises and the Improvements, or any portion thereof, or to the ownership,
use, occupancy, possession, operation or maintenance thereof.
LETTER OF CREDIT shall have the meaning set forth in the
WHEREAS clauses hereof.
LIEN shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, or the filing of, or any agreement to give, any financing statement
under the Uniform Commercial Code of any jurisdiction (other than informational
filings in respect of equipment leased under any lease not intended as security,
within the meaning of the Uniform Commercial Code) and any comparable financing
statement under the laws of the Commonwealth of Puerto Rico.
LINE ITEM shall mean a line item of cost set forth in the
Budget.
LOAN shall mean the loan made by the Issuer to the Company
pursuant to the Loan Agreement.
-14-
LOAN AGREEMENT shall have the meaning set forth in the WHEREAS
clauses hereof.
MANAGEMENT AGREEMENT shall mean the Development Services and
Management Agreement dated January 12, 1990 between ▇▇▇▇▇▇▇▇ and the Company, as
amended by the First Amendment thereto dated as of September 30, 1990, and
Second Amendment thereto dated as of January 31, 1991.
MANAGEMENT SUBORDINATION AGREEMENT shall mean the Management
Agreement Subordination and Attornment Agreement, dated as of the date hereof,
between the Bank and ▇▇▇▇▇▇▇▇.
MORTGAGE shall mean, collectively, the Fee Mortgage and the
Leasehold Mortgage.
NET EARNINGS shall mean Gross Revenues minus Operating
Expenses.
NEW YORK BUSINESS DAY means any day other than a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or
required by law or executive order to close.
NOTE shall have the meaning set forth in the WHEREAS clauses
hereof.
OFFICER'S CERTIFICATE shall mean a certificate signed by the
General partners.
OFFICIAL STATEMENT shall mean the official statement of the
Issuer pursuant to which the Bonds are offered for sale.
OPERATING DEFICITS shall mean, for any period after the Date
of Substantial Completion, an amount equal to the lesser of (1) the Annual Debt
Service with respect to such period, and (2) the excess, if any, of (a) the sum
of (i) the Operating Expenses with respect to such period, and (ii) the Annual
Debt Service with respect to such period over (b) the Gross Revenues with
respect to such period.
OPERATING EXPENSES shall mean, with respect to any period for
which Operating Expenses are being determined, all expenses paid by or on behalf
of the Company in connection with the ownership and operation of the Premises
and the Condominium Units of such period, including, without limitation,
insurance; utilities; funding of reserves for maintenance, capital and
non-capital repairs and the repair and replacement of furniture, fixtures and
equipment in amounts reasonably approved by the Bank (but in any event
commensurate with the guidelines set forth in Section 4.5 of the Management
Agreement); general and special real property taxes on and assessments of the
Premises; equipment rentals; maintenance and non-capital repairs to
-15-
the extent not paid for from reserves established therefor; non-capital repair
and replacement of furniture, fixtures and equipment to the extent not paid for
from reserves established therefor; governmental and license fees; advertising
and marketing; payments under the Ground Lease; fees and expenses arising under
the Management Agreement; all other operating expenses reasonably necessary for
the proper and efficient operation of the Premises as a first class destination
resort hotel. Operating Expenses shall not include Annual Debt Service.
OPERATIVE DOCUMENTS shall have the meaning set forth in
Paragraph 4(a) hereof.
OUTSIDE DISBURSEMENT DATE shall mean the date which is one
year from the date hereof.
PALOMINOS ISLAND PROPERTY shall mean approximately 90 acres of
land located on an island approximately three miles to the east of the ▇▇▇▇▇▇▇
Property, as more particularly described in the Leasehold Mortgage.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
PERMITS shall mean, collectively, all applicable
authorizations, consents, licenses, approvals and permits of Government
Authorities for Construction of the Improvements in accordance with the Plans
and all Legal Requirements, and for the performance and observance of all
agreements, provisions and conditions herein contained.
PERMITTED ENCUMBRANCES shall mean, collectively, the Mortgage,
the GDB Mortgage, the KGC Mortgage, if any (subject to the conditions set forth
in Paragraph 7(e) hereof), and any other Lien permitted under Paragraph 7(e)
hereof, real estate taxes not yet due and payable, those items listed as
exceptions to title on the Title Policy issued on the Date of Issuance, and any
other Liens consented to in writing by the Bank.
PERMITTED TRANSFERS shall mean (a) any transfer, direct or
indirect, of the interests of or in KGC, KGCC or KIUSA to Kumagai or to any
entity wholly owned and controlled by Kumagai; (b) any transfer, direct or
indirect, of the interests of or in WMS El Con to WMS Industries or any entity
wholly owned and controlled by WMS Industries; (c) any transfer, direct or
indirect, of the interests of or in International Textile or KMA to a member of
the ▇▇▇▇▇▇▇ Family or to any entity which is wholly owned by one or more members
of the ▇▇▇▇▇▇▇ Family; (d) any transfer, direct or indirect, of the interests of
or in AMK to a member of the ▇▇▇▇▇▇▇ Family or to any entity which is owned by
one or more members of the ▇▇▇▇▇▇▇ Family; (e) any transfer of the interests of
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. or ▇▇▇▇▇ ▇▇▇▇▇▇ in KMA which is not prohibited
by any shareholder's or similar agreement applicable to the transfer of such
interests; (f) any transfer, direct or indirect, of interests in Hospitality to
members of the ▇▇▇▇▇▇▇ Family or any entity wholly owned and controlled by one
or more
-16-
members of the ▇▇▇▇▇▇▇ Family, provided that Hospitality shall at all times be
controlled by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for so long as he shall be alive and competent;
(g) any transfer of a limited partner interest in the Company prior to the
Stabilization Date which is made with the Bank's prior written consent, which
consent may be withheld in the Bank's sole discretion; (h) any transfer of a
limited partner interest in the Company after the Stabilization Date which is
made with the Bank's prior written consent, which consent shall not be
unreasonably withheld, and (i) any transfer of publicly-traded ownership
interests in WMS Industries or Kumagai.
PERSON shall mean an individual, corporation, partnership,
joint venture, trust, association or any other entity or organization, including
a government or political subdivision, agency or instrumentality thereof.
PLAN shall mean any multiemployer plan or single employer
plan, as defined in Section 4001 and subject to Title IV of ERISA, which is
maintained, or at any time during the five calendar years preceding the date of
this Agreement was maintained, for employees of the Company or a Subsidiary or
an ERISA Affiliate.
PLANS shall mean the plans, drawings and specifications for
the construction of the Improvements, including, without limitation, the
architectural, structural, mechanical and electrical plans and specifications
therefor prepared or to be prepared by the Company, the Architects, the Design
Architects and the Company's engineers and contractors, as approved by the Bank
and the Bank's Consultant, together with all revisions and addenda to such
plans, drawings and specifications, provided that such revisions and addenda
have been approved by the Bank to the extent such approval is required pursuant
to Paragraph 7(bb) hereof, which Plans shall include, without limitation, a
description of the materials, equipment, fixtures and furnishings necessary for
the Construction of the Improvements.
PLEDGE AGREEMENT shall have the meaning set forth in the
WHEREAS clauses hereof.
PRELIMINARY OFFICIAL STATEMENT shall mean the preliminary
official statement of the Issuer prior to the sale of the Bonds.
PREMISES shall mean the fee simple title to the ▇▇▇▇▇▇▇
Property (other than those Condominium Parcels which have been released from the
lien of the Mortgage pursuant to Paragraph 6 hereof) and the leasehold estate in
the Palominos Island Property.
PRIME RATE shall mean at any time the lower of (i) the
fluctuating rate of interest announced publicly from time to time by The Chase
Manhattan Bank, N.A. in New York, New York as its "prime," "base," or
"reference" rate and (ii) the fluctuating rate of interest announced publicly
from time to time by Citibank, N.A. in New York, New York as its "prime,"
"base," or "reference" rate, it being understood that such rates shall not
necessarily
-17-
be the best or lowest rates of interest available to such bank's best or more
preferred large commercial customers.
PRINCIPAL DRAWING shall have the meaning set forth in the
Letter of Credit.
PROJECT shall mean, collectively, the acquisition of the
▇▇▇▇▇▇▇ Property, the leasing of the Palominos Island Property and the
renovation, development, construction, furnishing and equipping of the Premises
and the Improvements.
PROJECT DOCUMENTS shall mean (A) the Management Agreement and
(B) all licenses, easements or other agreements or instruments pertaining to the
Project and to be entered into by the Company with the approval of the Bank
(including, without limitation, all architects' agreements, engineers'
agreements and subcontracts for the Project).
PROJECT FUND shall have the meaning set forth in the Trust
Agreement.
PURCHASE DRAWING shall have the meaning set forth in the
Letter of Credit.
REPORTABLE EVENT shall mean an event described in Section
4043(b) of ERISA (with respect to which the 30-day notice requirement has not
been waived by the PBGC).
REQUEST FOR DISBURSEMENT shall mean a written certified
statement of the Company as more particularly set forth in Exhibit I hereto
setting forth the amount of the Disbursement sought, which shall constitute an
affirmation that the representations and warranties of the Company with respect
to the Improvements set forth in Paragraph 8 hereof and in the other Operative
Documents remain true and correct as of the date thereof, except to the extent
the Bank has been notified in writing to the contrary, and, unless the Bank is
notified in writing to the contrary prior to the Disbursement, will be true and
correct on the date of such Disbursement.
RETAINAGE shall have the meaning set forth in Paragraph 9(b)
hereof.
SECURITY DOCUMENTS shall have the meaning set forth in the
WHEREAS clauses hereof.
SOFT COSTS shall mean costs and expenses in connection with
the Line Items set forth on the Budget which are not designated as Hard Costs.
STABILIZATION DATE shall mean a date which is 30 days
following the date upon which the Company first delivers to the Bank audited
Financial Statements of the Company, prepared by the Accountant, demonstrating
that the Net Earnings for the 12 full calendar month
-18-
period to which such Financial Statements relate was an amount not less than the
Annual Debt Service for such 12 full calendar-month period.
STATED AMOUNT shall have the meaning set forth in the Letter
of Credit.
STATED EXPIRATION DATE shall mean the date which is seven
years and 30 days after the Date of Issuance.
SUBSIDIARY shall mean any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Company and/or one or more of its Subsidiaries.
SUBSTANTIAL COMPLETION shall mean the occurrence of all of the
following events: (i) the completion of the Construction of the Improvements
(excluding punchlist items) in accordance with all Legal Requirements and
substantially in accordance with the Plans as to any aspect of Construction and
the issuance of applicable use or occupancy permits therefor satisfactory to the
Bank and (ii) the delivery to the Bank of certificates, in form and content
satisfactory to the Bank, from the Company, the Architects and the Bank's
Consultant to the effect that all of the work required to be performed
substantially to complete the Improvements in accordance with all Legal
Requirements and in accordance with the Plans has been performed.
SUCCESSOR LETTER OF CREDIT shall have the meaning set forth in
the Trust Agreement.
SURVEY shall have the meaning set forth in Paragraph 4(p)
hereof.
TERMINATION DATE shall have the meaning set forth in the
Letter of Credit.
TERMINATION PAYMENTS shall mean any and all sums which may
become payable by the Company to the Bank pursuant to Section 6 of the Bond Swap
Agreement.
TERMINATION PAYMENTS GUARANTY shall mean that certain
Guaranty, dated the date hereof, pursuant to which KGC and ▇▇▇▇▇▇▇▇ guaranty to
the Bank the payment of Termination Payments in excess of $20,000,000.
TITLE POLICY shall have the meaning provided in Paragraph 4(n)
hereof, and shall include all endorsements thereto.
-19-
TOTAL PROJECT COSTS shall mean those costs and expenses that
are included within the Line Items in the Budget as of the date hereof.
TRADE CONTRACT shall mean any contract entered into by the
Company, including, without limitation, general construction contracts, with
respect to the Construction of the Improvements that satisfies the conditions
set forth in the following sentence. Each Trade Contract (A) shall be entered
into with a Trade Contractor satisfactory to the Bank in its sole and absolute
discretion, (B) shall provide for the Trade Contractor's obligations thereunder
to be performed for a fixed price or guaranteed maximum price which, when
aggregated with other existing and contemplated Trade Contracts and other costs
of Construction of the Improvements, as the same are estimated by the Bank, will
not exceed the Budget, (C) shall require the Trade Contractor to provide the
Bank with a payment and performance bond satisfactory to the Bank as to form,
content and issuer with respect to such Trade Contractor's obligations under its
respective Trade Contract, (D) shall require the Trade Contractor to maintain
the insurance coverage more particularly described in Exhibit J annexed hereto,
(E) shall provide the Trade Contractor's consent to the assignment thereof by
the Company to the Bank, and (F) shall be otherwise satisfactory to the Bank in
form and content. Trade Contracts shall not include Architect's Agreements.
TRADE CONTRACTOR shall mean any contractor engaged in the
Construction of the Improvements under a Trade Contract.
TRADE CONTRACTOR CONSENT AND AGREEMENT shall mean that certain
agreement in the form of Exhibit K annexed hereto.
TRANSFER shall mean (i) any sale or transfer by the Company of
the Premises or the Improvements, or any portion thereof (other than any
transfer, pledge or hypothecation of all or any portion of the Condominium
Parcels in accordance with the terms and conditions of Section 6 hereof), or
(ii) any transfer, pledge or hypothecation of any direct or indirect equity
interest in the Company, including, without limitation, any sale or transfer of
a direct or indirect equity interest in the constituent partners of the Company,
of WKA, of KIUSA or of Kumagai.
TRUST AGREEMENT shall have the meaning set forth in the
WHEREAS clauses hereof.
TRUSTEE shall have the meaning set forth in the WHEREAS
clauses hereof.
UNAVOIDABLE DELAY shall mean any delay due to conditions
beyond the control of the Company, including, without limitation, strikes, labor
disputes, acts of God, the elements, governmental restrictions, regulations or
controls, enemy action, civil commotion, fire, unavoidable casualty, mechanical
breakdowns or shortages of, or inability to obtain, labor,
-20-
utilities or material; PROVIDED, HOWEVER, that any lack of funds shall not be
deemed to be a condition beyond the control of the Company.
UNDERWRITER shall mean Chase Securities (P.R.), Inc.
▇▇▇▇▇▇▇▇ shall mean ▇▇▇▇▇▇▇▇ Hospitality Management
Corporation, a Delaware Corporation.
WKA shall mean WKA El Con Associates, a New York general
partnership.
WMS EL CON shall mean WMS El Con Corp., a Delaware
corporation.
WMS HOTEL shall mean WMS Hotel Corporation, a Delaware
corporation.
WMS INDUSTRIES shall mean WMS Industries Inc., a Delaware
corporation.
WORK CHANGE shall mean any change order, any other amendment
or modification to any contract or subcontract and any revision, addendum,
modification to or amendment of the Plans for the Improvements (including minor
departures from the Plans for the Improvements pursuant to field orders).
2. ISSUANCE OF LETTER OF CREDIT; FEES.
(a) Amount and Terms of Letter of Credit. The Bank agrees, on
the terms and subject to the conditions herein set forth, to issue the Letter of
Credit to the Trustee. The Letter of Credit (i) shall be in substantially the
form of Exhibit A attached hereto, (ii) shall have a term ending on the Stated
Expiration Date (subject to earlier termination as set forth therein) and shall
have an initial Stated Amount of $124,800,000 (as the same may be reduced from
time to time by a Principal Drawing or as a result of cancellation of Bonds, the
INITIAL STATED AMOUNT). The Bank shall have the option, exercisable in its sole
discretion at least one year prior to the Stated Expiration Date, to extend the
Expiration Date by up to one year.
(b) Annual Letter of Credit Fee. In consideration of the
issuance of the Letter of Credit, the Company hereby agrees to pay to the Bank
an annual letter of credit fee (the ANNUAL LETTER OF CREDIT FEE) equal to (i)
from the date hereof through the Date of Substantial Completion 1.25% per annum
of the amount at any time by which $120,000,000 exceeds the balance of the
Project Fund, and (iii) thereafter and through the Date which is 30 days after
the date upon which the Company delivers to the Bank audited financial
statements prepared by the Accountant demonstrating that the Bank Coverage
Requirement has been achieved (the COVERAGE DATE), 1.05% per annum of the amount
at any time by which $120,000,000 exceeds the balance of the Project Fund, and
(iii) thereafter and through the Termination Date, .90% per annum at any time by
which $120,000,000 exceeds the balance of the Project Fund. The Annual Letter
-21-
of Credit Fee shall be payable by the Company in advance installments, in
immediately available funds, on the Initial Disbursement Date and on each
February 1, May 1, August 1 and November thereafter (collectively, the FEE
DATES). The amount of the installment of the Annual Letter of Credit Fee payable
on any Fee Date shall be determined based on the Bank's projection of the
average amount at any time by which $120,000,000 exceeds the balance of the
Project Fund during the period to which such installment relates, and shall be
adjusted at the end of such period based on the actual average amount of Bond
Proceeds that were outstanding during such period. Any resulting overpayment or
underpayment of the Annual Letter of Credit Fee shall be credited against or
paid by the Company together with, as the case may be, the next succeeding
installment of the Annual Letter of Credit Fee. On the Termination Date, the
Annual Letter of Credit Fee shall be prorated for the period from the last Fee
Date to the Termination Date, and any underpayment shall made by the Company to
the Bank, or any overpayment shall be made by the Bank to the Company.
(c) Annual Agent's Fee. In consideration of the issuance of
the Letter of Credit, the Company hereby agrees to pay to the Bank an annual
agent's fee (the ANNUAL AGENT'S FEE) equal to .25% per annum of the Initial
Stated Amount from the date hereof through the Termination Date. The Annual
Agent's Fee shall be determined based on the Initial Stated Amount on the date
hereof, and on each February 1 after the date hereof, and shall be payable
quarterly by the Company in immediately available funds, in advance, on each of
the Fee Dates; provided that a prorated portion of the Annual Agent's Fee shall
be paid on the date hereof and on the last Fee Date prior to the Termination
Date.
(d) Substitution and Amendment Fees. In consideration of the
issuance of any substitute or amended letter of credit pursuant to the terms of
the Letter of Credit, the Company hereby agrees to pay to the Bank, upon each
such substitution or amendment, a fee equal to $5,000, or such other amount as
shall be, at the time of substitution or amendment, the charge which the Bank is
imposing for substitutions or amendments of similar letters of credit. A
reinstatement of the Stated Amount pursuant to the terms of the Letter of Credit
shall not, in and of itself, be deemed to be a substitution or amendment of the
Letter of Credit for the purposes of this subparagraph (d).
(e) Drawing Fees. In consideration of the use of the Letter of
Credit, the Company hereby agrees to pay to the Bank, upon each disbursement
made by the Bank under the Letter of Credit, a fee equal to $500, or such other
amount as shall at the time of such disbursement be the charge which the Bank is
making for disbursements on similar letters of credit.
(f) Additional Payment. In addition to the Annual Letter of
Credit Fee, the Annual Agent's Fee, interest payable with respect to Drawings
and all other sums due pursuant to this Agreement, the Company hereby agrees
promptly to pay to the Bank upon demand by the Bank and from time to time as
specified by the Bank, an amount equal to any increase in the
-22-
Bank's cost or any reduction in the rate of return on the Bank's capital (and
any participant's increase in cost or reduction in rate of return)
(collectively, INCREASED COSTS) actually incurred or determined by the Bank to
have been incurred in issuing or maintaining the Letter of Credit or funding or
maintaining Drawings (which increase in cost or reduction in rate of return
shall be determined by the Bank's allocation of the aggregate of such cost
increases or reduction in rates of return, as the case may be, resulting from
such event), including, without limitation, any such costs attributable to
present or future reserve, special deposit or similar requirements, present or
future capital adequacy requirements, or other regulatory conditions applicable
to the Bank. Notwithstanding the foregoing, (i) if the Bank shall issue and/or
maintain the Letter of Credit through a lending office of the Bank located
outside of the United States, the Company shall not pay any Increased Costs in
excess of Increased Costs that would have been incurred if the Letter of Credit
had been issued and/or maintained by a lending office of the Bank located in the
United States, and (ii) if the Bank shall issue participations in the Letter of
Credit, the Borrower shall not pay any Increased Costs with respect to such
participant's costs of the nature referred to above to the extent such Increased
Costs of such participant exceed what the Increased Costs would have been if the
Bank had not issued such participation in the Letter of Credit. A certificate
setting forth in reasonable detail such increased cost or reduced rate of return
and the calculation of the amount demanded, submitted by the Bank to the
Company, shall be conclusive, absent manifest error, as to the amount thereof.
3. AGREEMENT TO REPAY DRAWINGS; PURCHASE OF BONDS.
(a) Reimbursement. The Company hereby agrees to pay to the
Bank (i) immediately after payment is made under the Letter of Credit pursuant
to a Principal Drawing or an Interest Drawing, an amount equal to such amount so
paid under the Letter of Credit, (ii) interest on any and all amounts required
to be paid as provided in this Paragraph 3(a) from and after the due date
thereof until payment in full, payable on demand at the Prime Rate plus 2% (but
in no event greater than the maximum rate permitted by applicable law) and (iii)
(A) on the Termination Date, an amount equal to all Purchase Drawings and (B)
interest on each such Purchase Drawing from the date of each such Purchase
Drawing until payment (including prepayment pursuant to paragraph (g) below) in
full thereof together with all accrued interest thereon, at the Prime Rate plus
2% per annum (but in no event at a rate greater than the maximum rate permitted
by applicable law), payable in arrears on each of the Fee Dates and on the date
of payment (including prepayment pursuant to paragraph 3(g) below) of any such
amount. Unless waived by the Bank or as otherwise specifically set forth in this
Agreement, the Company shall be obligated, without notice of a Drawing or demand
for reimbursement from the Bank (which notice is hereby waived by the Company),
to reimburse the Bank for all Drawings (other than Purchase Drawings) on the
same day as made. The Company and the Bank agree that the reimbursement in full
for each Drawing on the date such Drawing is made is intended to be a
contemporaneous exchange for new value given to the Company by the Bank. If a
Drawing is repaid at or prior to 2:00 P.M. (New York City time) on the same day
on which it is made, no interest shall be payable on such Drawing.
-23-
(b) Payments and Computations. The Company shall make or cause
to be made each payment hereunder not later than 2:00 P.M. (New York City time)
on the day when due, in Dollars and in immediately available funds, to the Bank
at ▇▇▇▇▇▇ Guaranty Trust Company of New York ABA #▇▇▇▇▇▇▇▇▇ for credit to the
account of Mitsubishi Bank. Limited, New York Branch, Account #▇▇▇-▇▇-▇▇▇,
Advise: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Assistant Vice President-Planning & Administration
(phone #▇▇▇-▇▇▇-▇▇▇▇), or at such other place as the Bank may from time to time
designate in a notice to the Company. If any sum due hereunder is not paid
within 10 days after the date on which the same is due, a late charge in the
amount of one percent (1%) of such amount shall immediately become due and
payable; if such sum has not been paid within 20 days after the date on which
the same is due, an additional late charge in the amount of one percent (1%) of
such amount shall immediately become due and payable; and if such sum has not
been paid within 30 days after the date on which the same is due an additional
late charge in the amount of one percent (1%) of such amount shall immediately
become due and payable. All computations of interest and fees hereunder shall be
made on the basis of a year of 360 days for the actual number of days elapsed
(including the first day but excluding the last day). Any sums paid by the
Company to the Bank pursuant to this Agreement shall be applied by the Bank in
any order whatsoever, in the absolute and sole discretion of the Bank.
(c) Payment on Non-Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day which is not a Business Day,
such payment shall be due on the immediately succeeding Business Day.
(d) Book Entries. The Bank shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Company resulting from Drawings made from time to time and the amounts of
principal and interest payable and paid from time to time hereunder. In any
legal action or proceeding in respect of this Agreement, the entries made in
such account or accounts shall, in the absence of manifest error, be conclusive
evidence of the existence and amounts of the obligations of the Company therein
recorded.
(e) Obligations Absolute. The obligations of the Company under
this Agreement shall be unconditional and irrevocable, and shall be paid or
performed strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, this Agreement or any other Operative Documents;
(ii) any amendment or waiver of, or any consent to departure
from, any of the provisions of any of the Operative Documents;
-24-
(iii) the existence of any claim, set-off, defense or other
right which the Company may have at any time against the Trustee, any
beneficiary or any transferee of the Letter of Credit (or any Persons for whom
the Trustee, any such beneficiary or any such transferee may be acting), the
Bank or any other Person, whether in connection with this Agreement, any other
Operative Documents, the transactions contemplated herein or therein or any
unrelated transaction;
(iv) any certificate, statement or any other document
presented under the Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect, provided that payment by the Bank under the Letter of
Credit against presentation of any such certificate, statement or documents
shall not have constituted gross negligence or willful misconduct of the Bank;
(v) any non-application or misapplication by the Trustee of
the proceeds of any Drawing under the Letter of Credit;
(vi) payment by the Bank under the Letter of Credit against
presentation of a draft or a certificate which does not comply with the terms of
the Letter of Credit, provided that such payment by the Bank shall not have
constituted gross negligence or willful misconduct of the Bank; and
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
(f) No Withholdings. All payments required to be made by the
Company hereunder shall be made free and clear of, and without set-off or
counterclaim and without deduction or withholdings for, any and all present and
future taxes, levies, imposts, duties, filing and other fees or other charges of
any nature whatsoever imposed by any taxing authority, except as provided in
this Paragraph 3(f). The Company agrees to pay or cause to be paid directly to
the appropriate governmental authority, or to reimburse the Bank for the cost
of, any and all present and future taxes, duties, fees and other governmental
charges of any nature, including any interest, penalties and expenses arising
therefrom or with respect thereto levied or imposed by any Government Authority
on or with regard to any aspect of the transactions contemplated by this
Agreement whether or not such taxes or other charges were correctly or legally
asserted, except such taxes as are imposed on or measured by the Bank's net
income by applicable federal, state, commonwealth and local taxing authorities
and taxing authorities of the jurisdiction in which the head office of the Bank
is located and except such taxes and other charges as are imposed on any
participant in the Letter of Credit to the extent that such taxes and other
charges exceed the amount that they would have equalled if the Bank had not
issued such participation in the Letter of Credit. In the event that the Company
is prohibited by operation of law from (i) making payments without set-off or
counterclaim or without deduction or withholding as provided above or (ii)
paying, causing to be paid, or reimbursing the Bank for
-25-
the cost of any and all such taxes, duties, levies, imposts, filing and other
fees and other charges of any nature, including any interest, penalties and
expenses arising therefrom or with respect thereto, as provided above, then the
payments due to the Bank hereunder shall be increased to such amount as may be
necessary in order that the actual amount received after provision for such
taxes, duties, levies, imposts, filing and other fees or other charges shall
equal the amount that would have been received if such set-off, counter-claim,
deduction or withholding were not required. The Company shall provide evidence
that all applicable taxes imposed on the transactions contemplated by this
Agreement have been paid to the appropriate taxing authority by delivery to the
Bank of the official tax receipts or notarized copies of such receipts within
the later of (i) 30 days after the due date for payment of any such tax or (ii)
10 days after the date on which the Company receives the official receipts for
the payment of such tax.
(g) Pledge of Bonds. As security for the payment of the
obligations of the Company pursuant to Paragraph 3(a)(iii) hereof, the Company
shall pledge to the Bank, and grant to the Bank a security interest in, all of
the Company's right, title and interest in and to the Bonds delivered to the
Trustee in connection with Purchase Drawings (the Pledged Bonds), pursuant to a
Pledge and Security Agreement dated the date hereof between the Bank and the
Company (the Bond Pledge Agreement). At such time as the Bank determines that
the Pledged Bonds should be remarketed, it shall deliver to the Trustee the
notice required by Section 309 of the Trust Agreement. Upon the sale of the
Pledged Bonds or the cancellation of Pledged Bonds that cannot be remarketed and
the payment to the Bank of an amount equal to the Purchase Drawing corresponding
to the principal amount of Pledged Bonds sold or cancelled, together with (x)
accrued interest thereon, as set forth in clause (B) of Paragraph 3(a)(iii)
hereof, to the date of such payment or cancellation and (y) all amounts owing in
respect of the Interest Drawing, if any, made in conjunction with such Purchase
Drawing, then (1) the outstanding obligations of the Company under Paragraph
3(a)(iii) hereof shall be reduced by the amount of such payment, (2) interests
shall cease to accrue on the amount paid and (3) the Bank shall release from the
pledge and security interest created by the Bond Pledge Agreement a principal
amount of Pledged Bonds equal to the principal amount of Pledged Bonds to be
sold or cancelled.
(h) Credits for Amount Paid on Bonds; Other Credits. The
Company shall (A) receive a credit against its obligation to pay interest
pursuant to clause (B) of Paragraph 3(a)(iii) to the extent of any amounts
actually paid by or on behalf of the Issuer to the Bank in respect of the
interest due on any Pledged Bonds under the terms of the Trust Agreement. The
Company shall receive a credit against its reimbursement obligation pursuant to
Paragraph 3(a)(ii) hereof with respect to any Principal Drawing or Interest
Drawing to the extent of any payment with respect to such reimbursement
obligation made by the Trustee to the Bank, pursuant to the Trust Agreement from
the funds held by the Trustee under the Trust Agreement.
(i) Collateral Account. (i) Any sums payable to the Company
pursuant to Section 6 of the Bond Swap Agreement and which the Bank elects
pursuant to the terms thereof
-26-
to have deposited as collateral for the Company's performance of its obligations
hereunder, shall be deposited with the Bank in an account maintained for the
benefit of the Company (the Cash Collateral Account). The Cash Collateral shall
be held by the Bank as collateral security for the obligations of the Company
hereunder. Unless and until the Cash Collateral is withdrawn or disbursed from
the Cash Collateral Account, any funds in the Cash Collateral Account (i) may be
commingled with the general funds of the Bank, (ii) shall bear interest at a
fluctuating rate per annum, which rate shall be equal to the Federal Funds
Effective Rate, and (iii) together with such interest, shall constitute
additional security for the Company's performance of its obligations pursuant to
this Agreement (a security interest therein being granted hereby to the Bank).
The Cash Collateral and any interest accrued thereon may be applied by the Bank
to the payment of the obligations of the Company hereunder when and as the same
shall be due, in such order as the Bank may elect. Upon termination of the
Letter of Credit and this Agreement, and provided the Company shall have paid to
the Bank all amounts due and to become due to the Bank hereunder, the Bank shall
release and pay to the Company the amount remaining, if any, of the Cash
Collateral, together with any interest earned thereon and not theretofore
disbursed.
-27-
4. CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF CREDIT. The
obligation of the Bank to issue the Letter of Credit is subject to the
conditions precedent that the Bonds are issued and sold to the purchaser(s)
thereof and all of the following conditions are met:
(a) Delivery of the Bonds and Operative Documents. This
Agreement, the Letter of Credit, the Trust Agreement, the Loan Agreement, the
Note, the Security Documents, the Guaranties, the Bond Purchase Agreement, the
GDB Standstill Agreement, the Four Party Agreement, the Management Subordination
Agreement, the Construction Manager Consent and Agreement, the Architect's
Letter, the Official Statement, the GDB Investment Agreement, the Bond Swap
Agreement, the Termination Payment Guaranty and the Bond Pledge Agreement
(collectively, the Operative Documents) and the Bonds shall have been executed
and delivered by authorized Persons of the parties thereto and the Trust
Agreement shall have been duly adopted by the Issuer, each in form and substance
satisfactory to the Bank. The Bank shall have received an executed copy of each
of the Operative Documents.
(b) No Default. On the Date of Issuance and after giving effect to the
issuance of the Letter of Credit, there shall exist no Default or Event of
Default.
(c) Representations and Warranties. On the Date of Issuance
and after giving effect to the issuance of the Letter of Credit, all
representations and warranties of the Company contained herein or in the other
Operative Documents, or otherwise made in writing in connection herewith, shall
be true and correct in all material respects, with the same force and effect as
though such representations and warranties had been made on and as of such date.
(d) Certificate of Compliance. There shall have been delivered
to the Bank a certificate of the General Partners of the Company, dated as of
the Date of Issuance, to the effect that all of the conditions specified in
Paragraph 4(b) and 4(c) hereof have been satisfied as of such date.
(e) Opinion of Counsel. There shall have been delivered to the
Bank an opinion of counsel to the Company, dated as of the Date of Issuance and
in form and substance satisfactory to the Bank covering such matters as the Bank
may reasonably request.
(f) Opinion of Bond Counsel. There shall have been delivered
to the Bank an opinion of bond counsel to the Issuer, dated as of the Date of
Issuance and in form and substance satisfactory to the Bank, to the effect that
the Bonds are legal, valid and binding obligations of the Issuer and covering
such other matters as the Bank may reasonably request.
(g) Guarantors' Representations and Warranties. On the Date of Issuance
and after giving effect to the issuance of the Letter of Credit, all
representations and warranties of the Guarantors contained in the Guaranties or
otherwise made in writing in connection herewith
-28-
or with the Guaranties shall be true and correct with the same force and effect
as though such representations and warranties had been made on and as of such
date.
(h) Documentation and Proceedings. All corporate and legal
proceedings and all instruments in connection with the transactions contemplated
by this Agreement, the other Operative Documents, the Project Documents and the
Construction Documents, to the extent that the same have previously been entered
into by the Company, shall be satisfactory in form and substance to the Bank and
its counsel and the Bank shall have received all information and copies of all
documents, instruments, approvals (and, if requested by the Bank, certified
duplicates of executed copies thereof) and opinions as the Bank may reasonably
request, including, without limitation, records of corporate proceedings,
partnership documents and certificates, governmental approvals and incumbency
certificates, which it may have requested in connection with the transactions
contemplated by this Agreement, the other Operative Documents, the Project
Documents, and the Construction Documents, such documents, where appropriate, to
be certified by proper officers.
(i) Construction Management Agreement. There shall have been
delivered to the Bank a copy of the Construction Management Agreement, certified
by the General Partners to be true, correct and complete, in form and substance
satisfactory to the Bank.
(j) Fees. The Bank shall have received (1) the Annual Agent's
Fee, pursuant to Paragraph 2(c) hereof, (2) payment of the Bank's counsel fees
and the fees of the Bank's Consultant relating to the Project, (3) payment of
all other out-of-pocket expenses of the Bank relating to the Project, including,
without limitation, any Appraisal, investigation or insurance fees or costs and
the cost of the Environmental Report, and (4) payment of any portion of the
Facility Fee that has not yet been paid, as such fee is more particularly
described in that certain Facility Fee Letter dated October 4, 1990 between the
Company and the Bank.
(k) Management Agreement. The Management Agreement is in full
force and effect.
(l) Ground Lease. The Company shall have entered into a ground
lease (as amended or supplemented from time to time as permitted by the
Operative Documents, the GROUND LEASE) which shall be satisfactory in form and
substance to the Bank, pursuant to which the Company shall lease the Palominos
Island Property, and which shall be in full force and effect.
(m) Acquisition Documents. The Company shall have delivered to
the Bank and the Bank shall have approved a copy of the purchase agreement(s)
(and all modifications and supplements thereto) and deed(s) pursuant to which
the ▇▇▇▇▇▇▇ Property has been or will be acquired by the Company, together with
any redevelopment agreement or similar agreement
-29-
affecting the Premises or the Improvements and any documents affecting title to
the Premises or to the Improvements.
(n) Title Policy. The Bank shall have received and approved a
title policy (the TITLE POLICY) issued by a title company satisfactory to the
Bank in its sole and absolute discretion, marked paid in full, in the amount of
the Loan, insuring the Issuer, the Bank and the Trustee, as their respective
interests may appear, that the Fee Mortgage, in connection with the ▇▇▇▇▇▇▇
Property, and the Leasehold Mortgage, in connection with the Palominos Island
Property, together with the other Security Documents to be recorded constitute
valid first liens on the Premises, and on the other property secured, free and
clear of all defects, restrictions, Liens and violations, except the Permitted
Encumbrances, and which Title Policy shall contain:
(A) no exception for mechanics' or materialmen's
liens;
(B) no survey exceptions other than those approved by
the Bank;
(C) a statement that the Title Company agrees to
affirmatively insure the priority of each Disbursement against
the existence of any other Liens, including mechanic's and
materialman's liens, whether ▇▇▇▇▇▇ or inchoate;
(D) reinsurance with provisions for direct access
against the reinsurers, in amounts and with companies
acceptable to the Bank; and
(E) such other endorsements or affirmative insurance
as the Bank and the Bank's counsel shall require.
(o) Appraisal. The Bank shall have received the Appraisal, in
form and content satisfactory to the Bank in its sole discretion, which
Appraisal states that the fair market value of the Premises equals or exceeds
$172,700,000.
(p) Survey. The Bank shall have received a survey of the
Premises (the SURVEY), in form and content satisfactory to the Bank, certified
by ▇▇▇▇▇▇ ▇▇▇ or such other licensed surveyor acceptable to the Bank, certified
to the Bank and the title insurance company issuing the Title Policy, and dated
as of a date within 30 days prior to the Date of Issuance, showing (i) the
outlines of the Premises and the courses and measured distances of the exterior
property lines, the exact location of all buildings including the Improvements
(as of the date of such survey), (ii) the area of the Premises in square meters,
(iii) the exact location of all adjoining streets, (iv) the exact location of
any encroachments on the Premises by any improvements on adjoining property (as
of the date of such survey) and (v) the exact location of all easements and
rights-of-way and other matters of interest to the Bank and recordation
information with respect to the Premises.
-30-
(q) Environmental Report. The Bank shall have received the
Environmental Report, satisfactory to the Bank in form and content, and all
recommendations set forth in the Environmental Report shall have been
implemented to the Bank's satisfaction.
(r) Preliminary Report. The Bank shall have received a
preliminary report from the Bank's Consultant satisfactory to the Bank in form
and content with respect other acceptability of (i) the then-current Plans and
associated design materials; (ii) the design of various systems, including,
without limitation, architectural, structural, electrical, plumbing, heating,
air conditioning and sprinkler systems; (iii) the general conformity of
materials specified to overall Project quality objectives; (iv) the contents of
soil reports and coordination of foundation design of the Improvements; (v) the
conformity of the scope and design set forth in the then-current Plans to the
description of the Project otherwise presented to the Bank; (vi) the Company's
projected Date of Substantial Completion and Construction Schedule; (vii) the
Company's proposed Budget; (viii) the Company's distribution of overall Budget
to individual trade cost items; (ix) the adequacy of contingency reserves within
the Budget; (x) the value, scope, and limiting conditions of the Trade Contracts
and/or subcontracts received for review; and (xi) such other matters as the Bank
shall reasonably require.
(s) Insurance. The Bank shall have received such policies of
casualty, insurance, liability insurance, business interruption insurance,
worker's compensation insurance and such other insurance as the Bank may
require, issued by companies and in amounts satisfactory to the Bank, all as
more particularly set forth in the Pledge Agreement; the conditions set forth in
Paragraph 7(x) hereof shall have been satisfied; and the Bank shall have
received evidence that the applicable premiums with respect to such insurance
policies have been paid and that the insurance thereunder is in full force and
effect.
(t) Real Estate Taxes. The Bank shall have received evidence
of payment of all real estate taxes currently due and payable or delinquent with
respect to the Premises and the Improvements situated thereon.
(u) Formation of Company. All legal matters in connection with
the transaction and the formation and organization of the Company, its partners
and the Guarantors shall be satisfactory to the Bank and counsel for the Bank.
(v) Other Approvals. The bank shall have received and approved
evidence that the Premises cannot be subject to a lien for unpaid real property
taxes from any other property.
(w) Swap Arrangement. The Company shall have entered into and
satisfied all conditions precedent to the effectiveness of the Bond Swap
Agreement such that for the period commencing on the third "Business Day" (as
such term is employed in the Trust Agreement) following the date hereof up to
and including the Stated Expiration Date, the
-31-
Company's exposure with respect to interest payable on the Loan is fixed or
limited to the Bond Fixed Rate.
(x) Maximum Effective Interest Rate. The aggregate of the
interest payable with respect to the Loan at the Bond Fixed Rate, the Annual
Agent's Fee and the Annual Letter of Credit Fee (as projected by the Bank)
payable for any year during the term of the Letter of Credit shall not yield an
effective rate of interest on the Loan in excess of 11% per annum.
(y) GDB Loan Documents. The GDB Loan shall have been entered
into in accordance with documentation satisfactory to the Bank in its sole and
absolute discretion, which documentation shall include, without limitation, the
GDB Standstill Agreement. Copies of each of the documents executed in connection
with the GDB Loan shall have been delivered to the Bank, and shall have been
certified to be true, correct and complete by the General Partners.
(z) Budget. The Budget shall have been delivered to the Bank's
Consultant and shall be identical to the Budget annexed hereto as Exhibit F, or
shall otherwise be satisfactory to the Bank and the Bank's Consultant.
(aa) Authorization. The Bank shall have received copies of (i)
a transaction authorization executed by the General Partners authorizing the
Company's execution of this Agreement and the other Operative Documents to which
the Company is party, (ii) the Company Partnership Agreement and filed
certificate of limited partnership of the Company and all amendments thereto,
(iii) a certificate of good standing from the State of Delaware for the Company,
(iv) evidence that the Company has filed a properly certified copy of the
Company Partnership Agreement with the Mercantile Registry of Puerto Rico and
that such filing has been accepted, (v) organizational documents of the Company,
all of which shall be certified as true, correct and complete by the General
Partners and (vi) copies of all other organizational documents of the Company
and its partners which the Bank may reasonably request, all of which shall be in
form and substance satisfactory to the Bank.
(bb) Accounting. The Bank shall have received and approved an
accounting of all expenditures for costs shown on the Budget as having been
incurred prior to the Date of Issuance.
(cc) No Flood Plain. The Bank shall have received and approved
a certificate from the Architect or an insurance broker that the Improvements to
be Constructed in accordance with the Plans will not be located in a flood
hazard plain.
(dd) Labor Contributions. The Bank shall have received a
certificate from the Secretary of Labor of Puerto Rico evidencing that there is
no liability for contributions owing by the Company under the provisions of the
Employment Security Act of 1956, as amended.
-32-
5. INDEMNIFICATION; BROKERAGE.
(a) It is the intention of the parties hereto that this
Agreement shall be construed and applied to protect and indemnify the Bank
against any and all risks involved in the issuance of the Letter of Credit, all
of which risks are hereby assumed by the Company, including, without limitation,
any and all risks of the acts or omissions, whether rightful or wrongful, of any
present or future de jure or de facto government or Government Authority (all
such acts and omissions herein collectively referred to as GOVERNMENT ACTS).
Accordingly, in addition to amounts payable under Paragraphs 2 and 3 hereof, the
Company hereby agrees to defend, indemnify and hold the Bank, its affiliates,
members, employees, agents and representatives (each an INDEMNIFIED PARTY)
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including, without limitation, attorneys'
fees and disbursements) which such Indemnified Party may sustain or incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of the
Letter of Credit or with respect to any other Operative Documents, other than as
a result solely of the gross negligence or willful misconduct of such
Indemnified Party, (ii) any breach by the Company of any representation,
warranty, covenant, term or condition in, or the occurrence of any default
under, this Agreement, any other Operative Documents or the Bonds, together with
all reasonable expenses resulting from the compromise or defense of any claims
or liabilities arising as a result of any such breach or default, (iii) defense
against any legal action commenced to challenge the validity of this Agreement,
the bonds or any other Operative Documents, (iv) any misrepresentation of a
material fact or any failure to state a material fact (other than any facts
relating to and supplied by the Bank) in the Preliminary Official Statement or
the Official Statement, (v) the consummation of the transactions contemplated
herein or in any of the Operative Documents, and (vi) the Construction, use or
occupancy of the Project. In addition, the Bank shall not, in any way, be liable
for any failure by the Bank or anyone else to pay any drawing under the Letter
of Credit as a result of any Government Acts or any other cause beyond the
control of the Bank.
(b) Except as otherwise expressly provided herein, the
obligations of the Company under this Agreement are primary, absolute,
independent, irrevocable and unconditional. The Company understands and agrees
that no payment by it under any other agreement (whether voluntary or
involuntary or pursuant to court order or otherwise) shall constitute a defense
to the several obligations hereunder except to the extent that the Bank has been
indefeasibly paid in full.
(c) The Company and the Bank hereby each represents and
warrants to the other that neither it nor any of its agents has dealt with any
brokers, finders or advisors in connection with the transactions contemplated
hereby other than (i) ▇▇▇▇▇▇, ▇▇▇▇▇▇ and Company and (ii) San ▇▇▇▇ Capital
Corporation. The Company hereby agrees to pay any fees owed to ▇▇▇▇▇▇, ▇▇▇▇▇▇
and Company and San ▇▇▇▇ Capital Corporation, respectively, in connection with
the transactions contemplated hereby pursuant to separate agreements between
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the Company and such parties and agrees to defend, indemnify and hold the
Indemnified Parties harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including, without
limitation, attorneys' fees an disbursements) arising as a result of any claim
by any broker, finder or advisors including, without limitation, ▇▇▇▇▇▇, ▇▇▇▇▇▇
and Company and/or San ▇▇▇▇ Capital Corporation, except to the extent any such
claim, demand, liability, damage, loss, cost, charge or expense arises out of an
agreement between such broker, finder or advisor and the Bank in connection with
the transactions contemplated by this Agreement or any other Operative
Documents. The Bank agrees to defend and indemnify the Company and hold it
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including, without limitation, attorneys'
fees and disbursements) arising by reason of the foregoing representation by the
Bank being untrue or incorrect in any respect.
(d) The obligations of the Company under this Paragraph 5
shall survive the payment of the Bonds and the Note and the termination of this
Agreement and/or the Letter of Credit.
6. CONDOMINIUM UNITS. The Condominium Units, or a portion thereof,
shall be constructed at the option of the Company, subject to the Bank's
reasonable approval of the design concept, schematics, plans and specifications
for the Condominium Units. If constructed, all or a portion of the Condominium
Units may be operated by ▇▇▇▇▇▇▇▇ as part of a rental arrangement providing for
up to 450 hotel rooms. If the Bank has approved the design concept, schematics,
plans and specifications for the Condominium Units and subject to the Bank's
receipt of evidence satisfactory to the Bank that adequate financing is
available for the completion of the Condominium Units and that the legal
relationship between the Condominium Units and the Project is appropriate and
enforceable, and provided no Default or Event of Default exists or is continuing
hereunder or under any of the other Operative Documents, portions of the
Condominium Parcels will be released from the lien of the Fee Mortgage upon the
transfer of such property to the entity which will develop the Condominium
Units, with no consideration payable to the Bank therefor, other than amounts
payable pursuant to Paragraphs 7(p) or 14(c) hereof. The Bank shall subordinate
the Fee Mortgage to necessary easements reasonably approved by the Bank for
access roads to and utilities serving the Condominium Parcels so released.
Notwithstanding the release of all or any of the Condominium Parcels from the
lien of the Fee Mortgage, the Condominium Revenues shall continue to be included
in the Collateral given by the Company in connection with the Letter of Credit,
this Agreement and the Bonds, and any such release by the Bank shall be subject
to the Bank's prior receipt of a fully executed Assignment of Rents in
connection therewith.
7. COVENANTS. The Company covenants and agrees that, so long as a
Drawing is available under the Letter of Credit or any amount is payable to the
Bank under this Agreement:
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(a) Notice of Default. The Company will furnish to the Bank as
soon as possible and in any event within three Business Days after the discovery
by the Company or any of its General Partners of any Default or Event of
Default, an Officer's Certificate, setting forth the details of such Default or
Event of Default and the action which the Company proposes to take with respect
thereto.
(b) ERISA. As soon as possible and in any event within 10 days
after the Company or a Subsidiary knows or has reason to know that a Reportable
Event has occurred, that any payment required to be made under Section 412 of
the Code is not made before the due date, that an accumulated funding deficiency
has been incurred or an application may be or has been made to the Secretary of
the Treasury for a waiver of the minimum funding standard under Section 412 of
the Code with respect to a Plan, that a Plan has been or may be terminated, that
proceedings may be or have been instituted to terminate a Plan, or that the
Company, a Subsidiary or an ERISA Affiliate will or may incur any liability to
or on account of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA,
the Company will deliver to the Bank an Officer's Certificate setting forth
details as to such occurrence and action, if any, which the Company, the
Subsidiary or the ERISA Affiliate is required or proposes to take, together with
any notices required or proposed to be filed with or by the Company, the
Subsidiary, the ERISA Affiliate, the PBGC or the plan administrator with respect
thereto. Copies of any notices required to be delivered to the Bank under the
preceding sentence shall be delivered no later than 10 days after the later of
(i) the date such report or notice has been filed with the Internal Revenue
Service or the PBGC and (ii) notice has been received by the Company or the
Subsidiary. The Company will, as soon as possible and in any event within 60
days of filing, furnish to the Bank a copy of the annual report of each Plan
(Form 5500) required to be filed with the Internal Revenue Service, including a
copy of any actuarial valuation prepared in connection therewith.
(c) Preservation of Existence. The Company will preserve and
maintain its legal existence, franchises, rights and privileges in the
jurisdiction of its formation and will preserve and maintain its rights and
privileges in the Commonwealth of Puerto Rico, and shall comply with all Legal
Requirements.
(d) Successor Letter of Credit. (i) At any time following the
Date of Substantial Completion, the Bank may designate another bank which is
willing to issue a Successor Letter of Credit (as defined in the Trust
Agreement), on terms not less favorable to the Company that those contained in
this Agreement, in which case, provided that such bank and the letter of credit
to be issued by such bank meet the requirements of the Trust Agreement with
respect to a Successor Letter of Credit, and provided, further, that any
up-front fees imposed upon the Company in connection with the issuance of the
Successor Letter of Credit are borne by the Bank, the Company shall, at the
Bank's request, (A) take such action as shall be required pursuant to the Trust
Agreement to substitute such letter of credit for the Letter of Credit issued by
the Bank and (B) enter into a modification of this Agreement and such other
agreements and
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take such other action, including, without limitation, such action as may be
necessary to supplement the Trust Agreement, as shall be required to consummate
the issuance of the Successor Letter of Credit referred to in clause (A) above
and to provide for the reimbursement of the issuer of such Successor Letter of
Credit for any draws thereunder and such other terms and conditions as such
issuer may require, provided that such modification or any such other agreements
or actions shall be on such terms and conditions as the Company shall reasonably
approve.
(ii) Subject to the requirements of the Operative Documents,
the Company shall have the right to replace the Letter of Credit at any time on
30 days' prior written notice to the Bank, provided that, prior to such
replacement, payment to the Bank is made of all sums due and owing to the Bank
at the time of such replacement with respect to the Letter of Credit (including,
without limitation, sums due and owing under this Agreement).
(e) Additional Indebtedness. The Company will not, directly or
indirectly, create or permit or suffer to exist any Debt (i) secured by a
mortgage or other Lien on the Premises or Improvements, or any portion thereof,
other than (A) the Permitted Encumbrances, (B) capitalized leases for furniture,
fixtures or equipment, (C) Liens in favor of GDB created pursuant to the GDB
Loan and consented to by the Bank in writing, or (D) a third priority mortgage
on the Premises in favor of KGC (the KGC MORTGAGE), as provided in Section 6.03
of the Company Partnership Agreement, provided that KGC executes and delivers to
the Bank a standstill agreement on terms substantially similar to those
contained in the GDB Standstill Agreement and in any event on terms and
conditions satisfactory to the Bank in its sole and absolute discretion, or (ii)
secured by a Lien on any direct or indirect equity interest in the Company,
except a Lien on the interest of WKA in the Company securing WKA's repayment of
a KG Loan (as defined in the Company Partnership Agreement) as provided in
Section 6.03 of the Company Partnership Agreement.
(f) Payment of Swap Obligations. The Company shall pay all
amounts which it may be obligated to pay under the Bond Swap Agreement and the
GDB Swap Agreement, and all such amounts which become payable by the Company to
the Bank under such agreements shall be deemed amounts payable under this
Agreement.
(g) Financial Statements. The Company, each of the Guarantors,
WKA, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ de Puerto Rico Associates Incorporated, a Delaware
corporation, and ▇▇▇▇▇▇▇ de San ▇▇▇▇ Associates, a New York partnership (as well
as Kumagai and/or WMS Industries, to the extent either is no longer a publicly
traded company required to make Annual Reports publicly available), shall
deliver to the Bank within 125 days after the close of their respective fiscal
years, for the twelve-month period then ended, (i) an audited balance sheet,
(ii) an audit statement of operations, (iii) an audited statement of cash flow,
(iv) an audited statement of changes in shareholder's equity, and (v) with
respect to the Company only, an audited statement of profits and loss on a cash
flow basis. The Company, KGC and WKA shall deliver to the
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Bank within 50 days after the close of each quarter, for the three-month period
then ended, (i) a balance sheet, (ii) an unaudited statement of operations,
(iii) an unaudited statement of cash flow, (iv) an unaudited statement of
changes in shareholder's equity, and (v) with respect to the Company only, an
unaudited statement of profits and loss on a cash flow basis, each of which
shall be certified to be true and correct by the general partners, if a
partnership, or the chief financial officer, if a corporation of the respective
entities. Within 10 days after the close of each calendar month occurring after
the opening for business of all or any portion of the Project, the Company shall
deliver to the Bank the monthly financial reports which the Company prepares for
its partners, certified by the General Partners to be true and correct. Within
10 days after the close of each calendar month during which any Deficiency Loans
have been made, the Company shall deliver to the Bank a report with respect to
such loans in detail reasonably satisfactory to the Bank. Within 125 days after
the close of their respective fiscal years, for the twelve-month period then
ended, Kumagai and WMS Industries shall deliver to the Bank copies of their
respective Annual Reports and WMS Industries shall deliver to the Bank a copy of
its Form 10K, all of which shall be certified to be true and correct by its
chief financial officer. Within 125 days after the close of each calendar year,
each of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall deliver their
respective personal financial statements to the Company (which statements for
Messrs. ▇▇▇▇▇▇▇ may be prepared jointly), certified to be true and correct by
such individual. Each of the foregoing statements (other than statements for
individual) shall be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis consistent with
the most recent audited financial statements of the respective entities
delivered to the Bank, and each such statement shall present a fair and accurate
portrayal of the financial condition of the respective party. In addition to
such requirements, all Financial Statements of the Company and of ▇▇▇▇▇▇▇ de
Puerto Rico Associates Incorporated and ▇▇▇▇▇▇▇ de San ▇▇▇▇ Associates shall be
prepared based upon the Uniform System of Accounts for Hotels, copyrighted by
the Hotel Association for New York City, 8th edition of 1986, as amended from
time to time. All Financial Statements required to be audited hereunder shall be
audited by the Accountant in the case of the Company, and in all other cases by
an independent certified public accountant reasonably satisfactory to the Bank.
Throughout the term of this Agreement, the Company, each Guarantor, Kumagai and
WMS Industries (or its successor) shall deliver to the Bank, within 10 days
after request therefor, such other financial information and/or Financial
Statements with respect to the Company, the Guarantors, Kumagai, WMS Industries
(or its successor), as the case may be, as the Bank may reasonably request from
time to time.
(h) Transfers. The Company shall not make or permit or suffer to be
made any Transfer except for any Permitted Transfer.
(i) Decision Making. The Company shall recognize and honor the
right of the Bank, pursuant and to the extent set forth in the Pledge Agreement,
to exercise all rights and remedies and to make all decisions of the Mortgagee
under the Mortgage and of the holder of the Note.
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(j) Further Assurances. The Company will execute, acknowledge
where appropriate, and deliver, and use best efforts to cause others to execute,
acknowledge where appropriate, and deliver, from time to time promptly at the
request of the Bank, all such instruments and documents as in the opinion of the
Bank are necessary or advisable to carry out the intent and purpose of this
Agreement and the other Operative Documents and will execute and file or record,
or use best efforts to cause others to execute and file or record, any financing
statements, continuation statements or other documents, and take such other
actions as may necessary or advisable to create, perfect, protect and preserve
the first mortgage liens and first security interests acquired, or intended to
be acquired, by or for the benefit of the Bank under the Operative Documents.
(k) Compliance with Laws. The Company will comply with all
Legal Requirements, non-compliance with which would have a materially adverse
effect on its business, financial condition or results of operations or would
materially adversely affect the Company's ability to perform its obligations
under this Agreement or any of the Operative Documents. The Company will comply
with all conditions, covenants, restrictions, leases, easements, reservations,
rights and rights-of-way and all applicable requirements of any insurers related
to the Project.
(l) Performance of This and Other Agreements. The Company will
take all action and do all things which it is authorized by law to take and to
do in order to perform and observe all covenants and agreements on its part to
be performed and observed under this Agreement and each Operative Document. The
Company agrees that the Bon Swap Agreement shall not alter, impair, restrict,
limit or modify, in any respect the obligation of the Company to pay interest on
the Loan as and when the same becomes due and payable in accordance with the
provisions of the Loan Agreement and the Mortgage Note.
(m) Amendments. The Company will not surrender, terminate,
modify, amend or supplement in any material respect, or give any consent to any
surrender, termination, modification, amendment or supplement or make any waiver
with respect to any provision of the Company Partnership Agreement (including,
without limitation, any provision that would result in a transfer of an interest
in the Company or any partner of the Company which is prohibited by any of the
Operative Documents or would result in a diminution in the scope and powers of
any of the General Partners) and/or any organizational documents of any partner
of the Company, any Operative Document, any of the other Construction Documents
or the other Project Documents or any other documents relating to the Project,
including, without limitation, relating to the use or operation of the Project,
without the prior written consent of the Bank in each instance.
(n) Construction. The Company will cause the Construction of
the Improvements to be prosecuted with diligence and continuity, in a good and
workmanlike manner and in accordance with the Plans and the Construction
Schedule so as to cause
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Substantial Completion to occur, free and clear of all claims, liens and
encumbrances, within the Budget and on or prior to the Completion Date, as the
same may be extended in accordance with the next succeeding sentence, subject to
and in accordance with this Agreement, the Construction Documents and Project
Documents, to the extent the same specify construction requirements applicable
to the Construction of the Improvements. The Plans shall provide for the
purchase and installation of fixtures, furnishings and equipment of a sufficient
quantity and quality as is appropriate for a first-class destination resort. The
Completion Date may be extended for a period of time equal to the number of day
during which the Company is prevented from or delayed in proceeding with the
Construction of the Improvements by reason of any Unavoidable Delay upon
satisfaction of all of the following conditions at the time of any such
extension: (i) the Bank shall have received notice from the Company of any
requested extension and the anticipated duration thereof, (ii) no Event of
Default shall have occurred and be continuing, (iii) the Company shall have
delivered to the Bank a revised Budget to the extent such extension shall affect
the Budget, and (iv) the Company shall have satisfied the requirements of
Paragraph 9(k) hereof, if applicable; provided, however, that in no event shall
any such extension extend the Completion Date for Unavoidable Delay for an
aggregate period in excess of 180 days. The Company shall promptly notify the
Bank of any cessation of Construction of the Improvements for a period in excess
of ten days, regardless of whether or not such cessation is due to an
Unavoidable Delay.
(o) Inspection of Project and Books and Records. The Company
will permit the Bank and the Bank's Consultant, or designated representatives of
any of them, to enter upon the Project, at any reasonable times, with free
access to inspect or examine (i) the Project, (ii) all materials and shop
drawings which are or may be kept at the construction site, (iii) any contracts,
bills of sale, statements, receipts or vouchers, (iv) all work done, labor
performed or materials furnished in and about the Project, (v) all books,
contracts and records of the Company relating to the Project and (vi) any other
documents which are reasonably related to the Project. The Company will make its
representatives available for the Bank or the Bank's Consultant upon reasonable
notice to discuss the Company's affairs, finances and accounts relating to the
Project and the Company will cooperate, and take all reasonable steps to cause
the Construction Manager and the Trade Contractors to cooperate, with the Bank
or the Bank's consultant, as the case may be, or any designated representative
of either, to enable such Person to perform its functions hereunder. In
connection therewith, the Company will keep adequate records and books of
account, in which complete entries will be made in accordance with generally
accepted accounting principles, consistently applied, reflecting all financial
records of the Company.
(p) Expenses. The Company will pay promptly on demand to or
for the account of the Bank, as the case may be: (i) the Bank's counsel fees,
(ii) the fees and disbursements of the Bank's Consultant and (iii) all other
costs and expenses incurred by or on behalf of the Bank in connection with the
closing of the Loan or the issuance of the Letter of Credit or with respect to
any and all of the transactions contemplated herein or in any other Operative
Document. Without limiting the generality of the foregoing, the Company will
pay:
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(A) all taxes and recording expenses, including all
filing and notarial fees and mortgage recording fees and
taxes, with respect to the Security Documents, and any other
documents modifying, extending or consolidating the Security
Documents;
(B) all finder's fees, placement fees and commissions
lawfully due to brokers in connection with the Loan or the
issuance of the Letter of Credit, if any, except to the extent
provided otherwise in Section 5(c) hereof;
(C) all title insurance charges and premiums; and
(D) all appraisal, survey, investigation and
insurance fees and expenses and all costs of preparing
environmental and insurance reports concerning the Project.
(q) Plans. The Company shall proceed with diligence and
continuity to cause Substantial Completion and completion of the construction to
occur in accordance with the Plans and all Legal Requirements. Any material
variation of the Construction of the Improvements from the Plans shall be
subject to the prior written approval of the Bank. Without limiting the
generality of the foregoing, Substantial Completion and completion of the
Construction shall be achieved free and clear of Liens or claims for materials
supplied or for labor or services performed in connection with the Construction
of the Improvements or otherwise, except with respect to the Liens for the
performance of work or supply of materials to the extent permitted to remain
uncured and unbonded pursuant to the Mortgage.
(r) Delivery of Agreement. The Company will deliver to the
Bank, promptly after demand, copies of any contracts, bills of sale, statements,
receipted vouchers or agreements, under which the Company claims title to any
materials, fixtures or articles incorporated in the Project and subject to the
Lien of the Mortgage. The Company shall deliver to the Bank copies of all
Construction Documents and Project Documents hereafter entered into immediately
after the same are entered into.
(s) Correction of Work. The Company will, upon demand of the
Bank or the Bank's Consultant, promptly correct any structural defect in the
Improvements or any departure from the Plans not approved by the Bank and the
Bank's Consultant, to the extent any such approval is required pursuant to
Paragraph 7(bb) hereof, it being agreed that the making of any Disbursement
shall not constitute a waiver of the Bank's right to require compliance with
this covenant with respect to any such defects or departures from the Plans.
(t) Revised Budget. The Company will, at its sole cost and
expense, furnish to the Bank within 180 days after the date hereof and at least
once in every calendar quarter thereafter until the Date of Substantial
Completion, a revised construction budget which shall
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be in the form of the Budget an which shall indicate revisions made to date to
the Budget, which revised budget shall be satisfactory to the Bank in the Bank's
sole and absolute discretion.
(u) Notices. The Company shall give notice to the Bank
promptly upon the occurrence of:
(a) any (i) default or event of default under any
material contractual obligation of the Company, (ii)
litigation, investigation or proceeding of which the Company
has knowledge which may exist between the Company and any
Government Authority and (ii) any pending or threatened
litigation or action of a Government Authority of which the
Company has knowledge concerning the presence, release, threat
of release, placement on or in, or the generation,
transportation, storage, treatment or disposal at, the Project
of any Hazardous Material;
(b) any notice given pursuant to any of the Project
Documents or the Construction Document alleging that a default
or other failure by the Company has occurred thereunder; and
(c) any condition which results, or is likely to
result, in an Unavoidable Delay in Substantial Completion.
Each notice pursuant to this Paragraph 7(u) shall be accompanied by a statement
of the Company setting forth details of the occurrence referred to therein and
stating what action the Company proposes to take with respect thereto.
(v) Plan Changes. The Company shall provide to the Bank's
Consultant and, upon the Bank's request, the Bank, copies of all change orders,
change bulletins and other revisions of the Plans to the extent the Company has
received same, regardless of whether the prior approval by the Bank or the
Bank's Consultant of any such order, document or revision is required.
(w) No Encroachments. The Improvements shall be Constructed
entirely within the perimeter of the Premises and shall not encroach upon or
overhang (unless consented to in writing by the affected property owner) any
easement or right-of-way or overhang the land of owners, and when erected shall
be wholly within any building restriction lines, however established.
(x) Insurance. The Company shall provide and maintain at all
times insurance in such forms and covering such risks and hazards and in such
amounts and with such companies as may be required by the Pledge Agreement, and
shall deliver such policies, or signed insurance binders relating thereto, to
the Bank.
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(y) Application of Insurance and Condemnation Proceeds. The
application of all insurance or condemnation proceeds realized from the damage,
destruction or condemnation of the Project, or any portion thereof, shall be
governed by the Pledge Agreement.
(z) Compliance with Documents. The Company shall abide by,
perform and comply with all material terms and conditions of the Management
Agreement, the Construction Management Agreement, the Architect's Agreement, the
Trade Contracts, the other Construction Documents and the other Project
Documents and the Company, at its sole cost and expense, shall use best efforts
to secure or enforce the performance of each and every material obligation,
covenant, condition and agreement to be performed by the other parties under any
such documents.
(aa) Bonds. The Company will cause the Bank to be named as
co-obligee on all performance, payment or bid bonds obtained by the Company from
each Trade Contractor. All Trade Contracts shall be bonded pursuant to a
performance, payment or bid bond satisfactory to the Bank in form, content and
issuer.
(bb) Work Changes. Notwithstanding anything to the contrary
contained herein, the Company will not direct or permit the performance of any
work (i) pursuant to any single Work Change which would result, by itself, in an
increase in the cost of any Line Item in excess of the Individual Budget Change
Amount, (ii) pursuant to any single Work Change which, together with the
aggregate of all Work Changes theretofore executed or carried out by the
Company, would result in an increase or decrease in aggregate cost of
Construction of the Improvements in excess of the Aggregate Budget Change
Amount, nor (iii) pursuant to any single Work Change which would have the effect
of (x) materially increasing or reducing the gross square footage of the
Improvements as a whole or (y) modifying any of the design elements or
construction techniques of the Improvements in any way which would adversely
affect the quality of the Improvements as a whole; unless in each case it shall
have received the prior written approval of the Bank. Approval by the Bank of
any such Work Change shall not obligate the Bank to make any Disbursement on
account of such Work Changes unless the costs therefor are reflected in the
Budget. No Work Change shall be made unless the Company shall have obtained such
approvals as shall be necessary under the requirements of ARPE and/or the
Planning Board of Puerto Rico.
(cc) No Contracts. The Company will not, without the Bank's
prior written consent, execute any Trade Contract or become a party to any
arrangement for the performance of work or the furnishing of materials at the
Project except (a) with the Construction Manager or with those Trade Contractors
approved by the Bank and (b) a Trade Contract in substantially the form of, or
an arrangement with terms substantially equivalent to the terms provided in, the
standard form of contract or trade contract previously delivered to and approved
by the Bank. In connection with the foregoing approval, the Company may from
time to time deliver to the bank and the Bank's Consultant a list of the names
of prospective Trade Contractor's with whom
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the Construction Manager or the Company may contract for the construction of the
Improvements or for the furnishing of labor or materials therefor. Each Trade
Contract shall permit the Retainage until the work to be performed thereunder
has been completed.
(dd) Asbestos. The Company will not install, permit to be
installed or suffer to exist in the Improvements friable asbestos or any
substance containing asbestos and existing in a manner or for a use deemed
hazardous by federal, state or commonwealth regulations respecting such
material.
(ee) Final Survey. The Company will deliver to the Bank within
60 days after the Date of Substantial Completion an Update of the Survey, dated
no earlier than the Date of Substantial Completion, with a certification that no
encroachments exist by the Improvements or on the Premises other than those
shown on the Survey and consented to, in writing, by the Bank, and indicating
the completed Improvements, the dimensions thereof at ground surface level, the
distance therefrom to the facing exterior property lines and other buildings and
any set-back lines, the location of access to the Project and all utility, water
and other easements directly affecting the Project.
(ff) Construction Trust Account. The Company will (a) receive
and deposit in the Construction Trust Account all Disbursements made pursuant
hereto , (b) hold the same and the right to receive future Disbursements to be
made hereunder as a trust fund for the purpose of paying only Hard Costs and
Soft Costs and (c) apply the Disbursements to the payment of the costs for which
the applicable Request for Disbursement was made.
(gg) Leasing. To the extent that the Company leases space in
the Premises (other than renting guest rooms to transient guests), the Company
shall lease and cause the lessee to operate the space to be leased in a manner
compatible with the operation of the Premises as a first class destination
resort hotel. From time to time upon the request of the Bank, the Company shall
provide to the Bank such information as the Bank shall request with respect to
the Company's leasing activities and policies. All leases for all or any portion
of the Premises shall be subordinate in all respects to this Agreement and to
the Security Documents. The Company shall not enter into a lease for any space
in the Premises without first delivering to the Bank an Assignment of Rents in
connection therewith.
(hh) Distribution Cash Under Company Partnership Agreements.
The Company shall not make more than one distribution of Distributable Cash (as
defined in the Company Partnership Agreement ) with respect to any fiscal year
of the Company, and such distribution shall not be made earlier than the date
which is 30 days after audited Financial Statements of the Company demonstrating
the existence and the amount of such Distributable Cash have been delivered to
the Bank.
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(ii) Deficiency Loans. Any funds advanced to the Company as
Deficiency Loans (as defined in the Company Partnership Agreement), whether or
not at the direction of the Bank, shall be applied only to the operating costs
or other fees and expenses related to the operation of the Project; provided,
however, that (A) up to $6,000,000 of such funds available for Deficiency Loans
under the Company Partnership Agreement may be used by the Company to pay any
portion of the Total Project Costs for which the Company has insufficient funds
and (B) the foregoing restriction shall be of no effect from and after the
Coverage Date. After the Date of Substantial Completion and until the Coverage
Date, the Bank will have the right to cause the Company, acting through WKA, (A)
at such times as the Bank shall determine in the reasonable exercise of its
judgment that an Operating Deficit exists with respect to any month, to require
the General Partners to make Deficiency Loans in amounts of up to $20,000,000 in
the aggregate (less (x) any such Deficiency Loans for such purpose which may
have previously been voluntarily advanced and (y) any additional Deficiency
Loans of up to $6,000,000 in the aggregate which may have previously been
voluntarily advanced to pay Total Project Costs to the extent hereinabove
permitted), and (B) to apply such funds on account of such Operating Deficits.
The Bank shall have no right to cause Deficiency Loans to be made to pay
principal under the Bonds, the Loan Agreement or hereunder. In the event that
WKA elects not to make the Deficiency Loan pursuant to Section 6.03 of the
Company Partnership Agreement, the Bank may exercise the right of WKA pursuant
to Section 6.03 of the Company Partnership Agreement to require KGC to make the
Deficiency Loan on behalf of WKA through the making of a KG Loan (as defined in
the Company Partnership Agreement). In the event of a default by KGC in its
obligations to make a KG Loan, the Bank shall have the right, under the Four
Party Agreement, to cause the Company or WKA, respectively, to exercise such
available rights and remedies with respect thereto as the Bank shall determine.
The Bank's right to require Deficiency Loans to be made shall cease during the
pendency of any bankruptcy proceeding with respect to the Company or in the
event of the commencement of any foreclosure or similar proceeding with respect
to the Company's interest in the Project. If any Deficiency Loan is made to
enable the Company to make the deposit of interest on the Bonds required under
Section 401(c) of the Loan Agreement, then any Net Earnings, up to the amount of
such Deficiency Loan, for the period from the date of such deposit on the
Interest Payment Date to which such deposit relates, shall be paid to the Bank
to be held by the Bank for the benefit of the Company as collateral security for
the obligations of the Company hereunder and, subject to the conditions to
disbursement contained herein, disbursed by the Bank on account of the next
succeeding Disbursements with respect to Operating Deficits. Unless and until
such funds are withdrawn or disbursed from such account, any funds in such
account (i) maybe commingled with the general funds of the Bank, (ii) shall bear
interest at a fluctuating rate per annum, which rate shall be equal to the
Federal Funds Effective Rate, and (iii) together with such interest, shall
constitute additional security for the Company's performance of their
obligations pursuant to this Agreement (a security interest therein being
granted hereby to the Bank). Upon the occurrence and during the continuation of
any Event of Default, any sums in such account and any interest accrued thereon
may be applied by the Bank to the payment of the obligations of the Company
hereunder when and as the same shall be due, in such order, as the Bank may
elect. Upon
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termination of the Letter of Credit and this Agreement, provided the Company
shall have paid to the Bank all amounts due and to become due to the Bank
hereunder, the Bank shall release and pay to the Company the amount remaining,
if any, of such funds, together with any interest earned thereon and not
theretofore disbursed.
(jj) Ground Lease and GDB Documents. The Company shall comply
with all of the terms and conditions of the Ground Lease and of the documents
executed in connection with (i) the GDB Loan (for so long as the GDB Loan is
outstanding), respectively, and such documents shall remain in full force and
effect at all times in accordance with their terms. The Company shall not cause
or suffer any event of default on its part to occur under such documents. It is
expressly agreed that so long as the GDB is prevented by reason of the GDB
Standstill Agreement from exercising any rights or remedies against the Company
or any of the Collateral, then any failure by the Company to comply with any
non-monetary term or condition of the documents executed in connection with the
GDB Loan shall not, by itself, be deemed a breach by the Company of this Section
7(jj) or a Default or Event of Default under this Agreement or any Operative
Document.
(kk) Compliance with Environmental Laws. The Company will
comply with any and all Legal Requirements and Environmental Laws with respect
to the discharge, removal and disposal of Hazardous Material, and the Company
shall pay immediately when due the costs of removal and disposal of any such
Hazardous Material, and shall keep the Project free of any Lien imposed pursuant
to such Legal Requirements or Environmental Laws. In addition to all other
rights available to the Bank in connection therewith, if the Company fails to
comply with any requirement of this paragraph, the Bank may, but shall not be
obligated to, cause the Project to be freed from the Hazardous Material, with
the cost of the removal and disposal thereof being payable by the Company upon
the Bank's demand therefor. The Company further agrees not to release or dispose
of any Hazardous Material at the Project without the express written approval of
the Bank , and any such release or disposal will be in compliance with all Legal
Requirements and conditions established by the Bank, if any. The Bank shall have
the right upon reasonable notice to conduct an environmental audit of the
Project at any time and at the Company's sole cost and expense; provided,
however, that if the Bank requests such audit more often than once in any
calendar year, such additional audit shall be conducted at the Bank's cost and
expense. The Company shall cooperate in the conduct of any such environmental
audit. The Company shall give the Bank and its agents and employees access to
the Project to remove Hazardous Material, and the Company agrees to indemnify
and hold the Bank harmless from and against all loss, costs, damages and
expenses (including, without limitation, attorneys' fees and disbursements) that
the Bank may sustain by reason of the assertion against the Bank by any party of
any claim in connection with such Hazardous Material.
(ll) Expropriation. The Company agrees to take all actions,
execute and deliver all documents and pay all costs and expenses (including,
without limitation, payment of the purchase prices therefor) in connection with
(i) the acquisition, including, if necessary, the
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expropriation by the Lands Administration of Puerto Rico and the subsequent sale
to the Company of those parcels of land adjacent to the Project and presently
owned by ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, and identified on the Boundary Survey Map dated
February 19, 1990 prepared by ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, P.L.S. as Tract and G-1c/1d,
(ii) the spreading of the lien of the Fee Mortgage to cover such property or the
granting of a separate mortgage to cover such property, and (iii) the
endorsement of the Title Policy to include the lien of the Fee Mortgage or such
new mortgage with respect to such property.
(mm) Palominos Island Property. The Company agrees to take all
actions, execute and deliver all documents and pay all costs and expenses
necessary to effect the segregation of the premises demised to the Company under
the Ground Lease into two separate parcels, consisting of (a) the demised
premises less that portion of the demised premises defined in the Ground Lease
as the "Reserved Area" and (b) the Reserved Area.
(nn) Registration and Mortgages of Boats. The Company agrees
to enter into Chattel Mortgages for all boats and ships purchased by the Company
for use at the Project, provided, however, that if any such vessel otherwise
meets the requirements necessary to qualify as a preferred vessel under federal
laws, the Company will take all acts necessary to qualify such vessel as a
preferred vessel an will enter into a mortgage therefor, in form and substance
satisfactory to the Bank, and otherwise in compliance with federal law and the
Company shall, at its own cost and expense, cause such mortgage to be properly
filed of record.
(oo) Recordation of True Description. The Company agrees to
take all actions, execute and deliver all documents and pay all costs and
expenses necessary to obtain a resolution from the Planning Board of Puerto Rico
restating the surface area of the Premises, as described of record in the
Registry of Property to be the same as the surface area of the Premises as
described on the Survey.
(pp) Additional Assignments and Chattel Mortgages. The Company
agrees to enter into Assignments of Accounts Receivable and Assignments of
Contracts at all such times as the same may be required in order to ensure that
the Bank has a valid security interest in all accounts receivable and all
contracts and agreements of the Company, respectively, to the extent permitted
by law. The Company further agrees to enter into an Assignment of Rents each
time that a new lease is entered into for any portion of the Project and each
time that a Condominium Parcel is released pursuant to Section 6 hereof. In
addition, the Company shall execute and deliver a Chattel Mortgage to the Bank
in connection with any buses, limousines or other moving vehicles purchased by
the Company for use at or in connection with the Project, except to the extent
otherwise provided in Section 7(oo) above, and shall cause same to be properly
filed for record in the corresponding Section of the Property Registry of Puerto
Rico and/or the Department of Transportation and Public Works of Puerto Rico, as
applicable, at the sole cost and expense of the Company.
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(qq) Amounts Secured by Mortgage. Any costs and expenses
incurred by or amounts advanced by the Bank pursuant to the terms hereof
(including, without limitation, any amounts advanced pursuant to Section 7(kk)
hereof) and all other Reimbursement Obligations (as defined in the Pledge
Agreement) including, without limitation, the obligation of the Company to make
Termination Payments under the Bond Swap Agreement to the extent such
Termination Payments do not exceed $20,000,000 shall be secured by the Fee
Mortgage and by the Leasehold Mortgage and, to the extent permitted by
applicable law, are included in the "credit for additional advances" recited
respectively therein.
(rr) Sole Business. Puerto Rico is and shall be the only
jurisdiction in which the Company owns real property or conducts business and
the sole business conducted by the Company at any time is and shall be the
development and operation of the Project as a first class destination resort.
(ss) Loan Agreement Covenants. The Company shall comply with
all of the covenants of the Company set forth in the Loan Agreement.
(tt) Termination of Swap Agreements. Unless there shall have
occurred an Event of Default (as defined in the Bond Swap Agreement) by the Bank
or the other counterparty under the agreement in question, the Company shall not
terminate, modify, cancel or surrender, or permit the termination, modification,
cancellation or surrender of the Bond Swap Agreement without the prior written
consent of the Bank.
8. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to the Bank as follows (which representations and warranties shall survive the
execution and delivery of this Agreement and the other Operative Documents,
regardless of any investigation made by the Bank or on its behalf);
(a) Due Organization. (1) The Company is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware and duly qualified to do business in the Commonwealth of
Puerto Rico and in every other jurisdiction where it is currently doing
business, has all necessary power and authority to own its properties, to
conduct its business as presently conducted or proposed to be conducted, and to
enter into and perform its obligations under this Agreement, the other Operative
Documents and the Construction Documents to which the Company is a party, and
possesses all licenses and approvals necessary for the conduct of its business
as it exists at such time. True and complete copies of the Company Partnership
Agreement, the general partnership agreement of WKA and the organizational
documents of KGC have been delivered to the Bank.
(2) The sole general partners of the Company are KGC
and WKA, each of which has a 15% general partnership interest and a 35% limited
partnership interest in the Company. KGC is a wholly-owned subsidiary of KIUSA;
and KIUSA is a wholly-owned
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subsidiary of Kumagai. The sole partners of WKA are (i) WMS El Con, with a
46.54% interest, (ii) AMK, with a 37.23% interest and (iii) Hospitality, with a
16.23% interest. WMS El Con is a wholly-owned subsidiary of WMS Hotel, which in
turn is a wholly-owned subsidiary of WMS Industries. The sole partners of AMK
are International Textile and KMA, each of which has a 50% partnership interest.
International Textile is 100% owned, directly or indirectly through one or more
corporations, by the ▇▇▇▇▇▇▇ Family. KMA is 82% owned by International Textile
and 18% owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇▇▇▇▇▇, employees
of International Textile. Hospitality is wholly owned by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and his
wife, and is controlled by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(3) The Company and, to the best of the Company's
knowledge, each of the entities listed in Paragraph 8(a)(2) above are duly
organized, validly existing and in good standing under the laws of their
respective States or Commonwealth of incorporation or formation, as the case may
be, and the Company and, to the best of the Company's knowledge, KGC, KGCC, WKA,
AMK, International Textile, Hospitality and KMA are duly qualified to do
business in the Commonwealth of Puerto Rico and in every other jurisdiction in
which they are currently doing business, have all necessary power and authority
to own their respective properties, to conduct their respective businesses as
presently conducted or proposed to be conducted, and to enter into and perform
their respective obligations, if any, under this Agreement, the other Operative
Documents and the Construction Documents to which the Company is a party, and
possesses all licenses and approvals necessary for the conduct of their
respective businesses as conducted at such time.
(b) No Violation. The consummation of the transactions herein
contemplated and the execution, delivery and performance by the Company of its
obligations under this Agreement, the other Operative Documents, the Project
Documents and the Construction Documents to which it is a party and all other
agreements to be executed by the Company in connection herewith or therewith
have been duly authorized by all necessary partnership and corporate action, and
do not and will not violate any Legal Requirement or any law or any regulation,
order, writ, judgment, injunction or decree of any Government Authority, or
result in a breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien
upon any of the assets of the Company (except as contemplated hereby and by the
other Operative Documents) pursuant to the terms of the Company's Partnership
Agreement, or any mortgage, indenture, agreement or instrument to which the
Company is a party or by which it or any of its properties is bound. The Project
and the use, occupancy, operation and condition thereof, in its present stage,
are in compliance with all applicable governmental laws, rules and regulations.
(c) Consents. All authorizations, consents and approvals of,
notices to, registrations or filings with, or other actions in respect of or by,
any governmental body, agency or other instrumentality or court (collectively,
the CONSENTS) required in connection with the execution, delivery and
performance by the Company of this Agreement, the other Operative
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Documents, the Project Documents and the existing Construction Documents and all
other agreements to be executed by the Company in connection herewith or
therewith to which it is a party have been duly obtained, given or taken and are
in full force and effect or will be duly obtained, given or taken and will be in
full force and effect when required, and the Company agrees that all Consents
required for the Construction and operation of the Improvements and otherwise in
connection with the carrying out or performance of any of the transactions
required or contemplated hereby or thereby will be obtained when required.
(d) Enforceability. This Agreement, the other Operative
Documents, the existing Project Documents and the existing Construction
Documents to which the Company is a party have been duly executed and delivered
on behalf of the Company and are legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.
(e) No Litigation. There is no action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, public
board or body pending or, to the best knowledge of the Company after due
inquiry, threatened against or affecting the Company or the Project, or any
portion thereof (including, without limitation, any condemnation or eminent
domain proceeding against the Project, or any portion thereof), or any of the
Guarantors, WMS Industries, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
wherein an unfavorable decision, ruling or finding would have an adverse effect
on the properties, business, condition (financial or other) or results of
operations of the Company, the transactions contemplated by this Agreement, the
Project, the other Operative Documents, the Project Documents and the existing
Construction Documents or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement, the other Operative Documents, the Project
Documents and the existing Construction Documents to which it is a party.
(f) No Defaults. The Company is not in default under nor are
there any violations or notices or other records of violation of any law or any
regulation, order, writ, injunction or decree of any court or governmental body,
agency or other instrumentality applicable to the Company (including, without
limitation, any zoning, health, safety, building, environmental or other
statute, ordinance or restriction affecting all or any part of the Project or
any use or condition thereof), and no default has occurred and is continuing
under any Debt or any Indenture or other agreement or instrument governing
outstanding Debt of the Company, or any other contract, agreement or instrument
to which the Company is a party or by which it or its property is bound, and no
event has occurred which with the giving of notice or the passage of a time or
both would constitute such a default.
(g) Tax Returns. The Company has filed all tax returns, or
extensions thereof, required by law to be filed, and has paid all taxes,
assessments and other governmental charges levied upon the Company and its
properties, assets, income and franchises which are due and
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payable, other than those presently payable without penalty or interest. The
charges, accruals and reserves on the books of the Company in respect of
federal, state and commonwealth income taxes for all fiscal periods are adequate
in the opinion of the Company.
(h) Compliance with ERISA. Each Plan, if any, is in
substantial compliance with ERISA, all contributions required to be made to any
Plan by its terms, the Code or ERISA (including any quarterly installments
required under Section 412(m) of the Code) have been made by the applicable due
date, no Plan is insolvent or in reorganization, no Plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code, neither
the Company nor a Subsidiary nor an ERISA Affiliate has incurred any material
liability (including any material contingent liability) to or on account of a
Plan pursuant to Section 4062, 4063, 4064, 4201 or 4204 of ERISA, no proceedings
have been instituted to terminate any Plan, and no condition exists which
presents a material risk to the Company or a Subsidiary of incurring a liability
to or on account of a Plan pursuant to any of the foregoing Sections of ERISA.
(i) Other Facts. There is no fact particular to the Company or
the Project known to the Company after due inquiry which directly adversely
affects or in the future may (so far as the Company can now foresee after due
inquiry) directly adversely affect the business, property, assets or financial
condition of the Company which has not been set forth in this Agreement or in
any other Operative Documents. This representation shall not be deemed to extend
to general economic, political, military or other conditions or situations in
the Commonwealth of Puerto Rico or elsewhere in the world.
(j) Other Representations and Warranties. The Company hereby
makes to the Bank each of the representations and warranties made by the Company
contained in the Operative Documents to which the Company is a party as if such
representations and warranties were set forth in full herein.
(k) Financial Statements. The Financial Statements of the
Company, the Guarantors and WMS Industries, previously delivered to the Bank
fairly present the financial position of the Company, the respective Guarantors
and WMS Industries, as of such dates and the results of their operations and
changes in their financial positions for the period then ended, all in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent with the most recent financial statements
of the respective entities delivered to the Bank. Neither the Company, any of
the Guarantors nor WMS Industries has any contingent obligations, liabilities
for taxes or other outstanding liabilities or obligations, fixed or contingent,
which are material, individually or in the aggregate, except that, with respect
to clauses (i), (ii) and (iii) hereafter the Company has the following
outstanding obligations, and with respect to clauses (ii) and (iii) hereafter,
the Guarantors have the following outstanding obligation: (i) the Loan, (ii)
those liabilities and obligations in connection with the Project that have been
disclosed to the Bank and (iii) those liabilities and obligations disclosed
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in the financial statements described in this clause (k). Since the respective
dates set forth in the first sentence of this clause (k) there has been no
adverse change in the condition (financial or other), business, operations or
prospects of the Company or of any of the Guarantors or WMS Industries. Neither
the aforesaid financial statements of the Company and the Guarantors nor any
certificate or statement furnished to the Bank by or on behalf of the Company in
connection with the transactions contemplated hereby (including, without
limitation, any financial statements of other resorts owned or controlled by the
Company), nor any representation nor warranty in this Agreement, when taken
collectively as a whole and in the context made and to whom made, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein or herein not misleading in
light of the circumstances in which they were made.
(l) ▇▇▇▇▇▇ Regulations. The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System. No part of the proceeds of the Bonds will be used to purchase or carry
any margin stock,or to extend credit to others for that purpose, or for any
purpose that violates the provisions of Regulation U or X of the Board of
Governors of the Federal Reserve System.
(m) Investment Company Act. The Company is not an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(n) Disclosure. The Preliminary Official Statement, as of its
date, and the Official Statement, as of its date and as of the date hereof, did
not and do not contain any untrue statement of material fact or omit to state
any material fact (other than any fact relating to and supplied by the Bank)
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(o) Management Agreement; Ground Lease and Other Agreements.
The Management Agreement is in full force and effect; no event has occurred and
is continuing which constitutes a default on the part of the Company under the
Management Agreement, or would constitute any such default but for the giving of
notice of lapse of time or both; and no event has occurred or is continuing
which would excuse ▇▇▇▇▇▇▇▇ from its obligation under the Management Agreement
to use best efforts to operate the Project as a first class luxury destination
mega-report in accordance with the provisions of the Management Agreement and
consistent with the standards of other comparable properties in the area and
customary practices in the resort industry. The Ground Lease is in full force
and effect, and no event has occurred or is continuing which constitutes a
default on the part of the Company under the Ground Lease, or would constitute
any such default but for the giving of notice or lapse of time or both. The
Construction Management Agreement, the Architect's Agreement, the Trade
Contracts, the other
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Construction Documents and the other Project Documents heretofore executed by
the Company are in full force and effect, not having been amended, modified,
terminated or otherwise changed, or the provisions thereof waived, except as
permitted hereunder.
(p) Location of Company. The place of business or chief
executive office of the Company is located c/▇ ▇▇▇▇▇▇▇▇ Hospitality Management
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇. The Company will give the Bank prior written notice of any
relocation of such office.
(q) Plans; Construction. The Plans are satisfactory to the
Company and have been approved, to the extent required by applicable law,
ordinance or regulation or any effective restrictive covenant, by all Government
Authorities and the beneficiaries of any such covenant, respectively. All
Construction, if any, heretofore performed in connection with the Improvement
has been performed within the perimeter of the Premises or within the area of an
easement benefitting the Premises and with respect to which such Construction is
permitted and in accordance with the Plans and all Legal Requirements, and such
Construction has been fully paid for or else payment is not yet due or payment
is being disputed in good faith, provided that any such disputes have been fully
disclosed to the Bank and such failure to pay would not adversely affect the
Company's ownership rights in the Project. There are no structural defects in
the Improvements (to the extent currently constructed), no violation of any
Legal Requirement exists with respect thereto and the anticipated use thereof
complies with all restrictive covenants affecting the Project and all Legal
Requirements, including all applicable zoning and environmental protection
ordinances and regulations.
(r) Availability of Utilities. All utility services and
facilities necessary for the Improvements and, upon completion of Construction,
the operation and occupancy of the Improvements for their intended purposes and
which must be obtained from sources located outside the boundaries of the
Premises are available at the boundaries of the Premises, including water
supply, storm and sanitary sewer facilities, and electric and telephone
facilities.
(s) No Liens. Except for the Operative Documents, the
Construction Documents, the Project Documents, the Permitted Encumbrances and
any lien in favor of GDB created pursuant to the GDB Loan and consented to by
the Bank, the Company has made no contract or arrangement of any kind, the
performance of which by the other party thereto would give rise to a Lien
against all or any portion of the Collateral.
(t) Compliance with Building Codes, Zoning Laws, Etc. The
current zoning law and declarations covering the Project permit the Construction
of the Improvements to be completed and, upon completion of Construction, the
Improvements to be used as contemplated by this Agreement. The Project and, upon
completion of Construction, Improvements and the proposed use thereof will be in
all respects in compliance with all Permits and all Legal Requirements.
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(u) Budget. The Budget contains all costs and expenses
reasonably anticipated to be incurred in connection with the Construction,
equipping and leasing of the Improvements.
(v) Security Documents. The provisions of each Security
Document are effective to create a legal, valid and enforceable Lien on or
security interest in all of the Collateral described therein, subject to the
proper filing thereof, and when the appropriate recordings and filings have been
effected in public offices, each of the Security Documents will constitute a
perfected Lien on and security interest in all right, title, estate and interest
in the Collateral described therein, prior and superior to all other Liens,
except as permitted under the Operative Documents.
(w) Hazardous Materials. Except as specifically disclosed in
the Environmental Report, the Premises and the Improvements are not currently
and, to be best of the Company's knowledge, have never been subject to Hazardous
Materials or their effects. Other than as disclosed in the Environmental Report,
the Premises and the improvements thereon are in full compliance with the
Environmental Laws. There are no claims, litigation, administrative or other
proceedings, whether actual or threatened, or judgments or orders, regarding any
Hazardous Materials relating in any way to the Premises or the Improvements.
9. DISBURSEMENTS FOR CONSTRUCTION
(a) Disbursements for Construction. Each Disbursement shall be
made by the Trustee pursuant to Requests for Disbursements from time to time,
from the principal office of the Trustee or from such other place as the Trustee
may designate, and must be accompanied by a certificate of an Authorized Officer
of the Bank authorizing and directing such Disbursement. Each Disbursement
authorized by the Bank in accordance with the terms hereof shall be made in
accordance with the terms hereof and shall be made to or deposited in the
separate bank account of the Company at ScotiaBank de Puerto Rico (the
CONSTRUCTION TRUST ACCOUNT) which shall not be drawn upon except to pay for Hard
Costs and Soft Costs approved by the Bank, and shall be established so that the
Bank and the Trustee receive or are entitled to receive, on request, from the
depositary bank duplicate copies of regular monthly statements of all deposits
and withdrawals (including checks). Each Request for Disbursement under the Loan
shall be made in writing, shall be submitted to the Bank with a copy to the
Bank's Consultant not less than 10 Business Days prior to the proposed date for
such Disbursement and shall specify the Hard Costs and Soft Costs to be paid
with the proceeds of the requested Disbursement, including, without limitation,
the amount of any Retainage previously withheld and which has then become
payable by the Company. Each Request for Disbursement which requests payment for
Hard Costs (other than for payment of the Construction Manager's fixed monthly
fee payable under the terms of the Construction Management Agreement) shall be
accompanied by (i) the Trade Contractor's requisitions for payment, dated on or
about the date of such Request for Disbursement, accompanied by true copies of
unpaid invoices and receipted bills and noting that the only amounts due and
owing (other than any retainage pursuant to the
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terms of the applicable Trade Contract or subcontract) are the amounts to be
paid to trade contractors out of the Disbursement being requested or amounts due
and payable but which are being disputed by the Company and which are not
included in such Request for Disbursement, each of which shall be certified as
true and complete by the Company, (ii) a list of all Trade Contracts executed
since the date of the then last preceding Disbursement, together with a
certification that copies of the same and all contracts with any contractor or
subcontractor involved with the Construction of the Improvements executed by or
on behalf of the Company since the date of the then last preceding Disbursement
have been submitted to the Bank's Consultant prior to the date of such Request
for Disbursement, (iii) a list of all Work Changes, together with a statement by
the Company that copies of the same have been submitted to the Bank's Consultant
prior to the date of such Request for Disbursement, and (iv) evidence
satisfactory to the Bank that the full amount of the proceeds of the last
preceding Disbursement has been paid out by the Company in accordance with the
terms and conditions of this Agreement. In the case of any Disbursement to pay
any Soft Cost (other than interest due with respect to the Loan or payment of
the fixed monthly fees payable under the terms of the Management Agreement),
such Request for Disbursement shall be accompanied by true copies of the unpaid
invoices and a description of the costs for which the Disbursement being made,
as well as such additional supporting information as the Bank shall reasonably
request to the effect that such costs have been properly incurred and are due
and payable and are within budgeted amounts. The Bank shall not be required to
make any Disbursement for payment of amounts owed under any Trade Contract for
which the Bank has not previously received an Assignment of Contracts. All
Disbursements shall be made on a monthly basis and, with respect to
Disbursements for interest under the Loan, shall be made on the date on which
the Partnership is obligated to pay such interest pursuant to Section 401(c) of
the Loan Agreement. In the case of Disbursements to pay interest due with
respect to the Loan, any Request for Disbursement shall be reduced by the amount
of the Net Earnings reasonably estimated by the Borrower with respect to the
period commencing on the date of the previous Request for Disbursement and
ending on the date of the current Request for Disbursement. The next succeeding
Request for Disbursement shall be accompanied by a statement by the Borrower
certifying the actual amount of the Net Earnings for the prior period and such
Request for Disbursement shall be adjusted to take into account any variation
between the estimated Net Earnings and the actual Net Earnings for such prior
period as certified. To the extent that the Borrower's obligations under Section
2 of the Bond Swap Agreement for any period exceeds the interest on the Bonds
for such period, such excess shall be disbursed from the Project Fund to the
Bank as counterparty under the Bond Swap Agreement.
(b) Retainages. All Disbursements for Hard Costs (other than
for payment of the Construction Manager's fixed monthly fee payable under the
terms of the Construction Management Agreement) shall be subject to a retention
(each a RETAINAGE) equal to the greater of (i) 10% of the requested amount or
(ii) the amounts actually withheld or to be withheld pursuant to the contract
relating to such Hard Costs, which Retainage shall be disbursed after the later
to occur of (A) the date on which the Bank has received evidence satisfactory to
the
-54-
Bank of the completion of the work of the trade in question in accordance with
the requirements of the contract therefor and (B) the date on which the Bank has
received releases or other evidence satisfactory to the Bank in its sole
discretion that the contractor in question has no other claim of payment against
the Company other than the amount of the applicable Retainage.
(c) Bank's Consultant. The Company acknowledges that the Bank,
pursuant to a separate agreement and at the Company's expense, has retained the
Bank's Consultant to review the Budget, the Plans and such other matters
relating to the Construction of the Improvements as the Bank shall request, and
to furnish reports to the Bank from time to time on the progress of Construction
with each Request for Disbursement for Hard Costs and as otherwise requested by
the Bank. In order to enable the Bank's Consultant to complete its reports to
the Bank, the Company shall permit the Bank's Consultant, at any reasonable time
and as frequently as the Bank shall require, (i) to inspect the Project and (ii)
to inspect and review all documentation with respect thereto, including, without
limitation, (x) all change orders and field orders which modify the Plans or any
contract or subcontract or which change the price, schedule or any other aspect
of the Construction of the Improvements, (y) all contracts or, to the extent the
same are in the Company's possession, subcontracts relating to the Construction
of the Improvements and (z) such other information as the Bank's Consultant
shall request relating to (1) the Construction of the Improvements (including
copies of receipts, invoices and other supporting documentation to substantiate
the costs to be paid from the proceeds of any requested Disbursement) and/or (2)
the state of the Company's claimed title to any materials, fixtures or articles
incorporated or to be incorporated in the Project.
(d) Disbursements for Operating Deficits. Notwithstanding
anything herein to the contrary, Disbursements for Operating Deficits, to the
extent provided in the Budget under the Line Item for "Interest Reserves"
(OPERATING DEFICIT ADVANCES) shall be made not more frequently than once per
calendar month and on the same date as the Disbursement for other costs is made
for such month. At least ten days prior to the proposed date for an Operating
Deficit Advance, the Borrower shall deliver to the Bank a request for an
Operating Deficit Advance, together with such financial statements and other
information as the Bank shall require in order to confirm that the amount of the
Operating Deficit Advance requested is less than or equal to the then
outstanding amount of Operating Deficits.
(e) Documentation to the Bank. All documents required to be
submitted to the Bank as a condition of each Disbursement shall be furnished to
the Bank at its office referred to in Paragraph 14(g) hereof, or to such other
address or to the attention of such other Person as shall be designated in
writing by the Bank in a notice to the Company.
(f) Use of Disbursements. All Disbursements shall be used by
the Company to pay for Hard Costs and Soft Costs with respect to which such
Disbursement was made.
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(g) Determination of Amounts of Disbursements. Disbursements,
or portions thereof, allocable to Hard Costs (other than to payment of the
Construction Manager's fixed monthly fee payable under the terms of the
Construction Management Agreement) shall be made on the basis of the documented
cost of (i) the work in place or completed or (ii) subject to the provisions of
Paragraph 9(i) below the construction materials stored on or off of the Premises
or in fabrication, in each case as certified by the Company and the Construction
Manager and verified by the Bank's Consultant.
(h) Final Disbursement. The final Disbursement of the proceeds
of the Loan shall be conditioned on, in addition to those items listed in this
Agreement, the Bank's receipt, prior to authorizing or directing the Trustee to
make such Disbursement, of (A) written assurance satisfactory to the Bank from
the Bank's Consultant to the effect that Construction of the Improvements has
been completed, and any necessary utilities have been finished and made
available for use, in accordance with the Plans and (B) the final Survey of the
Project described in Paragraph 7(ee).
(i) Disbursements for Deposits or Stored Materials.
Disbursements for deposits placed with suppliers, or for materials stored at any
location, whether on the Project or otherwise, or in fabrication, shall be made,
in the amount of such deposits or the documented cost to the Company of such
materials, as the case may be, each such Disbursement to be made strictly in
accordance with the following terms and conditions:
(A) the Company shall deliver to the Bank (i) with
respect to such deposits, assignments of the Company's
interest in the contracts pursuant to which the deposits were
made, and acknowledgements of and consents to such assignments
by the other contracting party, and (ii) in the case of stored
materials bills of sale or other evidence satisfactory to the
Bank of the cost of, and the Company's title in and to, such
materials;
(B) the Company shall deliver to the Bank (i)
evidence satisfactory to the Bank that (x) security measures
have been taken to protect such stored materials from theft,
casualty or deterioration including, if requested by the Bank,
storage in a bonded warehouse and (y) such stored materials
are identified to the Project and are segregated so as
adequately to give notice to all third parties of the
Company's title in and to such materials and (ii) written
evidence from the supplier of the stored materials identifying
such materials and indicating that ownership thereof is
vested, or upon payment therefore will vest, in the Company,
free and clear of all Liens;
(C) the Company shall provide proof satisfactory to
the Bank that such stored materials are insured against all
risk of loss for their full replacement cost
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or such lesser amount as may be approved by the Bank and that
such insurance contains a standard mortgagee loss payable
endorsement;
(D) if such materials are stored off-site, the Bank
shall have received evidence satisfactory to the Bank (which
may include a Chattel Mortgage) of the Bank's perfected first
priority lien on and security interest in such materials;
(E) any such deposits shall be with suppliers in the
United States or Puerto Rico and shall be either (i) for
materials the cost of purchase and installation of which is
guarantied pursuant to the Completion Guaranty, or (ii) with a
supplier whose obligations under the relevant contract are
secured by a bond or other third-party guaranty satisfactory
to the Bank in its sole discretion.
(F) (x) the aggregate amount disbursed under this
Agreement in respect of such deposits with suppliers or for
materials stored off the Premises or materials in fabrication
of any time outstanding shall not exceed $4,000,000; and
(G) in the event any such stored materials are
stolen, lost or in any other manner misplaced, destroyed or
rendered unusable, the Bank shall not be obligated to
authorize or direct the Trustee to make a Disbursement with
respect thereto if such materials are stolen, lost or in any
other manner misplaced, destroyed or rendered unusable prior
to the making of any Disbursement with respect thereto or
otherwise to make any Disbursement on account of the cost of
replacement thereof (unless such Disbursement is within the
Budget or unless such Disbursement involves the release of
insurance proceeds required to be released to the Company
pursuant to the terms of the Pledge Agreement).
(j) Reallocation. If at any time the Bank determines that the
cost to complete a Line Item as set forth in the Budget exceeds the undisbursed
portion of the Bond Proceeds to be advanced from the Project Fund allocable to
such Line Item, the Bank shall only be required to make an additional
Disbursements on account of such Line Item (i) to the extent of the undisbursed
portion of the Bond Proceeds to be advanced from the Project Fund allocable to
such Line Item, (ii) from other Line Items to the extent of any savings in such
other Line Item as demonstrated by the Company to the satisfaction of the Bank
in its sole and absolute discretion, and (iii) from the undisbursed portion of
the Line Item for contingency for Hard Costs or Soft Costs, as the case may be,
provided that in any event the percentage of such Line Item for contingency
which remains undisbursed at any time shall not be less than the percentage of
the Hard Costs or Soft Costs portion of the Budget for the Project, as the case
may be, which has not yet been disbursed at such time. The Company shall be
responsible to advance from its own funds all additional amounts required to
complete the Line Item in question in accordance with the Plans; provided,
however, that any cash or equivalent security deposited with the Bank
-57-
by the Company pursuant to Paragraph 9(k) below with respect to the Line item in
question shall reduce the total of the additional amounts so required by an
equivalent amount.
(k) Loan Balance. Anything in this Agreement contained to the
contrary notwithstanding, it is expressly understood and agreed that the Loan
shall at all times be in balance. The Loan shall be deemed to be in balance only
at such time and from time to time as the Bank may determine that the aggregate
of the undisbursed Bond Proceeds (and after provision for any reallocation then
permissible pursuant to Paragraph 9(j)) above and applicable Retainage, if any)
is sufficient to pay the aggregate of the cost of completing the Construction of
the Improvements and the other costs contemplated in the Budget, as estimated by
the Bank and the Bank's Consultant, including, without limitation, the
undisbursed contingency amount provided for in the Budget and the payment of
interest due with respect to the Loan through the then-anticipated Date of
Substantial Completion. The Company agrees that, if the Bank determines than the
amount of such undisbursed Bond Proceeds shall at any time be or become
insufficient for such purpose regardless of how such condition may be caused,
then as a condition precedent to the Bank's direction or authorization of the
Trustee to make any further Disbursements, the Company shall deposit with the
Bank cash or equivalent security or such other security as is acceptable to the
Bank in its sole and absolute discretion in an amount reasonably determined by
the Bank to eliminate such deficiency. In determining the cost of completing any
portion of the Construction of the Improvements which is the subject of a fixed
price contract or a guaranteed maximum price contract, (a) a reasonable
contingency, as determined by the Bank, shall be added to the face amount of
such fixed price contract or guaranteed maximum price contract, as the case may
be, and (b) the Bank shall consider the value of work relating to the
Construction of the Improvements for which a contract has been entered into and
the value of such work for which a contract has not been entered into. Any funds
deposited with the Bank pursuant to this Paragraph 9(k) on account of any
deficiency may be applied by the Bank to pay costs of the Line Items as to which
such projected or anticipated deficiencies exist before the Bank shall direct or
authorize the Trustee to disburse proceeds of the Loan to pay such costs. In the
event that the Company shall deposit cash or deliver other security as
aforesaid, and if, after completion of the portion of the Improvements with
respect to which such deficiency was claimed, any funds remain undisbursed with
respect to the costs in connection with which such deposit was made, the Bank
will pay the surplus portion of such deficiency to the Company out of the
undisbursed proceeds of the surplus cash deposited by the Company as aforesaid
for such claimed deficiency and/or release to the Company any remaining cash,
cash equivalent security or other security, as the case may be.
(l) Disbursements after Default. At its option, the Bank may,
after the occurrence and during the continuance of a Default or an Event of
Default, authorize or direct the Trustee to make all Disbursements for work
performed or materials furnished directly to Trade Contractors or to the
Construction Manager, as the case may be, by deposit in an appropriately
designated special bank account and/or by check payable to the Person to whom a
Disbursement is to be made, and the execution of this Agreement by the Company
shall, and
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hereby does, constitute an irrevocable direction and authorization to so
disburse the funds. No further direction or authorization from the Company shall
be necessary or required for such direct Disbursements and all such
Disbursements shall satisfy pro tanto the obligations of the Bank hereunder and
shall be secured by the applicable Security Documents as fully as if made to the
Company, regardless of the disposition thereof by any Trade Contractor or the
Construction Manager.
(m) Method of Disbursement. Subject to the provisions of this
Agreement and the Loan Agreement, the Bank will direct the Trustee to disburse
from the Project Fund into the Construction Trust Account and the Company will
accept the amount of the Loan in installments as follows:
The Initial Disbursement will be made upon the
satisfaction of the applicable conditions set forth in Paragraph 10 hereof and
all subsequent Disbursements shall be made not more frequently than monthly
thereafter, upon the satisfaction of the applicable conditions set forth in
Paragraph 11 hereof, in amounts which shall be equal to the aggregate of the
Hard Costs and Soft Costs incurred by the Company through the end of the period
covered by the relevant Request for Disbursement, less:
(i) the Retainage; and
(ii) the total of the Disbursements
theretofore authorized or directed by the Bank to be made by the Trustee; and,
at the election of the Bank, less:
(iii) any costs covered by the relevant
Request for Disbursement not approved, certified or verified as provided herein
and/or any Hard Costs and/or Soft Costs covered by a previous Request for
Disbursement for which the items required pursuant to Paragraph 9(a) hereof have
not been received by the Bank and the Bank's Consultant.
(n) Disbursements for Amounts Due. Notwithstanding anything in
this Agreement which may be to the contrary, the Bank shall at all times have
the right, without regard to the Budget and the amount or classification of Line
Items and by its own action, to authorize or direct the Trustee to advance funds
into the Construction Trust Account for the purpose of paying (i) interest and
any other sums then due and payable to the Bank with respect to the Letter of
credit or pursuant to the Operative Documents or this Agreement and/or (ii)
interest and any other sums then due and payable to GDB with respect to the GDB
Loan and/or (iii) any amounts payable to the Bank under the Bond Swap Agreement.
(o) Partial Disbursements. If any or all conditions precedent
to making a Disbursement have not been satisfied on the applicable funding date
for such Disbursement, the
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Bank may, but shall not be obligated to, authorize or direct the Trustee to
disburse only that portion of the requested Disbursement for which all of the
conditions have been satisfied.
(p) Investment of Bond Proceeds. The Bond Proceeds will be
held by the Trustee in the Project Fund and will be invested in accordance with
the Investment Agreement dated the date hereof between the Trustee and the GDB.
(q) Disbursements for Vehicles. Notwithstanding anything
herein to the contrary and in addition to the other requirements hereunder, the
Bank shall not be required to make any Disbursement hereunder for the
acquisition by the Company of any boats, buses, limousines or other moving
vehicles unless the Company has executed and delivered a Chattel Mortgage (or,
in the case of boats, such other mortgage as is required pursuant to Section
7(oo) hereof) in connection therewith prior to the date of any Disbursement
therefor, and has, at its sole cost and expense, caused such Chattel Mortgage to
be properly filed for record in the corresponding Section of the Property
Registry of Puerto Rico and/or the Department of Transportation and Public Works
of Puerto Rico, as applicable.
10. CONDITIONS PRECEDENT TO MAKE THE INITIAL DISBURSEMENT. The Bank
shall not be obligated to authorize or direct the Trustee to make the Initial
Disbursement under the Trust Agreement unless, in addition to the conditions set
forth in the Loan Agreement and in Paragraph 9 hereof, the following conditions
have been satisfied.
(a) Equity Contribution. The Bank shall have received evidence
satisfactory to the Bank in its sole and absolute discretion that the Company
shall have invested at least $30,000,000 (the aggregate amount so advanced being
the EQUITY CONTRIBUTION) on account of Total Project Costs in the Project prior
to the date of the Initial Disbursement);
(b) Trade Contracts. (1) Trade Contracts shall have been
entered into for all contracts which are, in the Bank's sole and absolute
judgment, major contracts and in any event for Trade Contracts representing not
less than 75% of the Hard Costs of the Project as set forth in the Budget, (2)
if the Company determines to engage in local construction manager, the agreement
with such construction manager shall have been entered into and approved by the
Bank, (3) all payment and performance bonds required in connection with any then
existing Trade Contract shall have been delivered to the Bank, and (4) copies of
all existing Trade Contracts, and copies of all amendments thereto, together
with Trade Contractor Consents and Agreements with respect to each such Trade
Contract and Assignments of Contracts with respect to each such Trade Contract
shall have been delivered to the Bank and are satisfactory to the Bank in its
sole and absolute discretion;
(c) Architect's and Engineer's Agreements and Subcontracts.
All architect's and engineer's agreements contributing to the Plans and all
subcontracts determined to be material by the Bank, in its reasonable
discretion, which have been entered into prior to the
-60-
Initial Disbursement Date, shall be satisfactory to the Bank in form and content
and as to the party performing the services which are the subject of such
agreements;
(d) [Intentionally Omitted];
(e) GDB Loan. The Bank shall have received evidence
satisfactory to the Bank that the GDB Loan shall have been fully disbursed and
the proceeds thereof shall have been applied on account of Total Project Costs
in accordance with documentation satisfactory to the Bank;
(f) Representations and Warranties. The representations and
warranties made by the Company in Paragraph 8 hereof and the representations and
warranties made by the Company and/or the Guarantors in any other Operative
Documents shall be true and correct in all material respects on and as of the
date of such Disbursement with the same effect as if made on such date;
(g) Receipt of Documents by Bank. The Bank shall have received
and approved the following items and documents, duly executed and in recordable
form where applicable, on or before the Initial Disbursement Date, in each case
in form and substance satisfactory to the Bank:
(i) payment of the Annual Letter of Credit Fee, the
Annual Agent's Fee, the Bank's counsel fees and the fees of the Bank's
Consultant relating to the Project, as well as all other out-of-pocket expenses
of the Bank relating to the Project, including, without limitation, any
Appraisal, investigation or insurance fees or costs and the cost of the
Environmental Report, to the extent any of the foregoing are then due and
payable;
(ii) the Financial Statements then in existence and
required to be or to have been delivered pursuant to the terms of this
Agreement;
(iii) advice from the Bank's Consultant in form and
content satisfactory to the Bank, to the effect that (i) the Plans and
associated design materials relating to the Project have been reviewed and
approved by the Bank's Consultant and, to the extent required, by the
Governmental Authorities (including, without limitation, ARPE and/or The
Planning Board of Puerto Rico), (ii) the Improvements, when completed as shown
on the Plans, will comply with applicable zoning and environmental protection
ordinances and regulations, (iii) all public utilities necessary for the full
utilization of the Improvements for their intended purposes are available at or
within the perimeter of the Premises, (iv) the necessary approval of the
Environmental Impact Statement for the Project has been obtained from the
Environmental Quality Control Board, as well as the necessary approval of the
site and master development plan for the Project from the Planning Board, and
(v) the following are acceptable to the Bank's Consultant: (A) the then current
design of various systems, including, without limitation,
-61-
architectural, structural, electrical, plumbing, heating, air conditioning and
sprinkler systems, (B) the general conformity of specified materials to overall
Project quality objectives, (C) the contents of soil reports and coordination of
foundation design of the Improvements, (D) the conformity of the scope and
design set forth in the Plans to the description of the Improvements set forth
in this Agreement and as otherwise presented to the Bank; (E) the projected Date
of Substantial Completion and the Construction Schedule, (F) the Budget, (G) the
Company's allocation of the Budget to Individual Line Items, (H) the adequacy of
the Line Items for contingencies in the Budget, (I) the value, scope and
limiting conditions of the Construction Documents then in effect and/or trade
contracts and subcontracts received for review and (J) all other matters as the
bank shall reasonably require;
(iv) the Bank's Consultant's Report;
(v) any additional opinion(s) of counsel for the
Company requested by the Bank, in form and substance satisfactory to the Bank
and the Bank's counsel;
(vi) copies of all Permits issued by all Governmental
Authorities, evidencing the authorization of the Company to commence and
complete Construction of the Improvements, all of which shall be satisfactory to
the Bank, and evidence satisfactory to the Bank that other governmental
approvals necessary for the Construction and operation of the Improvements are
obtainable by nondiscretionary administrative procedures without the need for
any variance or waiver, whether through public hearing or otherwise, of
applicable zoning ordinances, land use regulations, building codes or similar
governmental laws and regulations;
(vii) an update to the Environmental Report, if
requested by the Bank, together with evidence satisfactory to the Bank that the
Company has fully complied with all recommendations set forth in the
Environmental Report and with the update thereto, if an update has been so
requested;
(viii) evidence that the insurance required pursuant
to Paragraph 7(x) hereof and the Pledge Agreement is in full force and effect
and evidence of the payment of the premiums therefor;
(ix) evidence of errors and omissions insurance
carried by the Architect and by each Design Architect and evidence of the
maintenance of the insurance required to be maintained by each Trade Contractor
under its Trade Contract;
(x) if requested by the Bank, an updated Survey,
satisfactory in form and content to the Bank and the Bank's counsel in their
sole and absolute discretion;
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(xi) evidence satisfactory to the Bank that the
Company has paid all real estate taxes on, and assessments of, the Project which
are due and payable and, if delinquent, all penalties and interest thereon;
(xii) a copy of the construction schedule prepared by
the Construction Manager showing a trade-by-trade breakdown (to the extent that
the information necessary to prepare such breakdown can then be ascertained) of
the estimated periods of time for Construction of the Improvements beginning
with the commencement of footings and foundations and ending with completion of
Construction of the Improvements in accordance with the Plans (the CONSTRUCTION
SCHEDULE);
(xiii) to the extent not previously delivered, copies
of the Project Documents and the other Operative Documents, each of which shall
be certified by the General Partners as true, correct and complete.
(xiv) a Request for Disbursement with respect to the
Initial Disbursement;
(xv) a Borrower's Affidavit dated the date of the
Initial Disbursement, with appropriate insertions and attachments, in form and
substance satisfactory to the Bank and the Bank's counsel, executed by the
General Partners;
(xvi) to the extent not previously delivered, copies
of the Architect's Agreements, certified by the General Partners to be true,
correct and complete;
(xvii) the standard form of contract or trade
contract to be used by the Company in connection with the Construction of the
Improvements, which shall be satisfactory in form and content to the Bank;
(xviii) a consent to the Assignment from each
architect relating to the Project, in form and content satisfactory to the Bank;
(xix) an executed counterpart of all space leases (if
any), certified by the General Partners to be true, correct and complete,
together with an executed notice to each tenant of the assignment thereof to the
Bank pursuant to the applicable Assignment of Rents;
(xx) copies of the Plans (including all approved Work
Changes) initialled to show the Company's approval, which are satisfactory to
the Bank;
(xxi) an updated Appraisal of the Project, if any
change or circumstance occurs from the date of the issuance of the Letter of
Credit that causes the Bank to determine that such an update is reasonably
appropriate;
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(xxii) an opinion of the Architect and any engineers
preparing or contributing to the Plans stating that the Construction of the
Improvements is permitted under, and such Improvements, when Constructed in
accordance with the Plans and occupied, shall be in compliance with all
applicable zoning ordinances, land use regulations and similar laws and
governmental rules and regulations relating to the Premises;
(xxiii) such other documents, instruments, opinions,
certificates and approvals (including, without limitation, estoppel certificates
and non-disturbance and attornment agreements) and such modifications and
supplements to any of the Operative Documents as the Bank shall have reasonably
requested;
(h) No Condemnation. No part of the Project shall have been
condemned, or threatened with condemnation, or in the event of such
condemnation, the Bank shall have received insurance or condemnation proceeds
sufficient, in the judgment of the Bank, to effect the satisfactory restoration
of the affected part of the Project and to permit Substantial Completion in
accordance with the Plans and the Budget prior to the Completion Date;
(i) No Default. On the Initial Disbursement Date, no Default
or Event of Default hereunder shall have occurred and be continuing and no
default of any of the Company's obligations under any of the other Operative
Documents shall have occurred and be continuing; and
(j) Accounting. The Bank shall have received an accounting to
its satisfaction of all expenditures for costs shown on the budget as having
been incurred from the Date of Issuance to the Initial Disbursement Date.
11. CONDITIONS PRECEDENT TO DISBURSEMENTS AFTER THE INITIAL
DISBURSEMENT. The Bank shall not be obligated to authorize or direct the Trustee
to make any Disbursement subsequent to the Initial Disbursement, unless in
addition to the conditions set forth in Paragraph 9 hereof, the following
conditions are satisfied:
(a) Conditions Satisfied. All conditions set forth in
Paragraph 10 hereof shall have been satisfied;
(b) Representations and Warranties. On the date of each such
subsequent Disbursement, the representations and warranties made by the Company
in Paragraph 8 and the representations and warranties made by the Company and/or
the Guarantors in any other Operative Document shall be true and correct in all
material respects on and as of the date of such Disbursement with the same
effect as if made on such date;
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(c) Receipt of Documents by Bank. The Bank shall have received
the following items and documents, duly executed and in each case in form and
substance satisfactory to the Bank;
(i) a Bank's Consultant's Report, dated the date of
the requested Disbursement, together with a revised and updated Budget;
(ii) copies of all Trade Contracts and all
architect's and engineer's agreements executed since the date of the last
preceding Request for Disbursement and copies of all amendments to any Trade
Contract, or architect's or engineer's agreement executed since the date of the
last preceding Request for Disbursement, together with copies of all performance
and payment bonds with respect to the Trade Contractors under such Trade
Contracts and together with a Trade Contractor Consent and Agreement with resect
to each such Trade Contract, and together with assignments to the Bank of all
such agreements and contracts;
(iii) such further builders' risk or other insurance
relating to the Construction of the Improvements as shall be required hereunder
or by the other Operative Documents or, to the extent the same relate to the
Project, as shall otherwise be reasonably requested by the Bank;
(iv) in the case of Disbursements to pay costs which
are shown as non- construction related Soft Costs in the Budget, such evidence
as the Bank may require to the effect that such costs have been properly
incurred and are due and payable;
(v) all documents, reports, certificates, affidavits
and other information as the Bank may require to evidence compliance by the
Company with all of the provisions of this Agreement;
(vi) a Borrower's Affidavit with appropriate
insertions and attachments, in form and substance satisfactory to the Bank and
to the Bank's counsel, executed by the General Partners, and a Request for
Disbursement, each dated the date for such Disbursement;
(vii) satisfactory evidence (including, without
limitation, contracts, bills of sale or other agreements) that title to all
materials and fixtures incorporated in the Construction of the Improvements and
all materials stored on-site or off-site or in fabrication shall vest in the
Company immediately upon delivery thereof to the Project;
(viii) payment of the Bank's counsel fees and the
fees of the Bank's Consultant relating to the Project, as well as all other
out-of-pocket expenses of the Bank relating to the Project and incurred since
the date of the preceding Request for Disbursement to the extent the foregoing
are then due and payable, including, without limitation, all Appraisal,
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investigation and insurance fees and expenses and all costs and expenses of the
Environmental Report;
(ix) evidence satisfactory to the Bank that the full
amount of all prior Disbursements has been paid out by the Company or its
contractors in accordance with this Agreement and that no Liens exist against
the Project or the Improvements;
(x) evidence satisfactory to the Bank of payment in
full by the Company to all Persons entitled to assert a mechanics' or
materialmen's lien for work done prior to the Disbursement;
(xi) if requested by the Bank, a survey inspection
and update of the Survey satisfactory in form and content to the Bank and the
Bank's counsel in their sole and absolute discretion;
(xii) if requested by the Bank, updates of the
opinions of the Architect and engineers described in clause (xxii) of Section
10(g) hereof.
(xiii) such other instruments, documents and
information pertaining to the Disbursement as the Bank may reasonably request;
and
(d) No Default. On the date of each such subsequent
Disbursement, no Default or Event of Default hereunder shall have occurred and
be continuing and no default of any of the Company's obligations under any of
the other Operative Documents shall have occurred and be continuing, other than
the failure of the Company to comply with its obligations pursuant to Section
4.01(c) of the Loan Agreement to deposit amounts required to be paid 124 days in
advance of the due date therefor.
12. EVENTS OF DEFAULT.
(a) Events of Default. It shall be deemed an Event of Default
if any of the following events shall occur and be continuing, unless such event
has been previously consented to by the Bank:
(i) any amount payable hereunder (including,
without limitation, under Paragraph 2 or Paragraph 3(a)) shall not be paid when
due; or
(ii) any representation, warranty or other
statement made or deemed to have been made by the Company or any Guarantor
under or in connection with this Agreement, any Operative Document or any
document, instrument or certificate executed or delivered in connection
herewith or therewith shall prove to have been incorrect or misleading in any
material respect when made or deemed to have been made; or
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(iii) the Company shall fail to perform or observe
any term, covenant or agreement on its part to perform or observe contained in
this Agreement or in any other Operative Document (other than the failure of the
Company to comply with the terms of Section 4.01(c) of the Loan Agreement) or
any Guarantor shall fail to perform or observe any term, covenant or agreement
on its part to perform or observe contained in any Guaranty (in any such cases,
other than as elsewhere specifically addressed in this Paragraph 12) and (A)
with respect to any such term, covenant or agreement contained herein, any such
failure shall remain unremedied for 30 days after notice and (B) with respect to
any such term, covenant or agreement contained in any of the other Operative
Documents, (other than the failure of the Company to comply with the terms of
Section 4.01(c) of the Loan Agreement)or any Guaranty any such failure remains
unremedied after any applicable grace period specified in such Operative
Document or Guaranty; provided, however, that if such failure described in this
subparagraph (iii) is of a nature such that it cannot be cured by the payment of
money and if such failure requires work to be performed, acts to be done or
conditions to be removed which cannot by their nature, with due diligence be
performed, done or removed, as the case may be, within such 30-day period or
such other applicable grace period, as the case may be, and the Company or the
Guarantor, as the case may be, shall have commenced to cure such failure, within
such 30-day period or such other applicable grace period, as the case may be,
such period shall be deemed extended for so long as shall be required by the
Company or the Guarantor, as the case may be, in the exercise of due diligence
to cure such failure, but in no event shall such 30-day grace period or such
other applicable grace period, as the case may be, be so extended to be a period
in excess of [60] days; or
(iv) the Company shall fail to perform or observe its
covenant in Paragraph 7(e), Paragraph 7(h) or Paragraph 7(ii) hereof; or
(v) there shall have been asserted in writing by or
on behalf of the Company or any Guarantor or ▇▇▇▇▇▇▇▇ that any provision of this
Agreement or any Guaranty or the Management Agreement, as the case may be, is
not valid and binding on the Company or any Guarantor or ▇▇▇▇▇▇▇▇, as the case
may be, or declaration shall have been sought by or on behalf of the Company or
any Guarantor or ▇▇▇▇▇▇▇▇, as the case may be, that any such provision is null
and void, or there shall have been commenced by or on behalf of the Company or
any Guarantor or ▇▇▇▇▇▇▇▇, as the case may be, a proceeding to contest the
validity or enforceability thereof, or there shall have been a denial by or on
behalf of the Company or any Guarantor or ▇▇▇▇▇▇▇▇, as the case may be, that it
has any further liability or obligation under this Agreement or any Guaranty or
the Management Agreement, as the case may be; or
(vi) The Company or any Guarantor shall fail to pay
any material Debt or Debts of the Company or any Guarantor, as the case may be
(but excluding Debt under this Agreement or any Guaranty), or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
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relating to such Debt or Debts; or any other default under any agreement or
instrument relating to any such Debt or Debts, or any other event, shall occur
and shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default or event is to accelerate
the maturity of such Debt or Debts or to accelerate or cause the holder of such
Debt or Debts (or any trustee or agent for the holders thereof) to threaten,
expressly or by implication, the acceleration of the maturity of such Debt or
Debts; or any Debt or Debts shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof; or
(vii) the Company or any Guarantor (A) shall suffer
or permit to be entered a decree or order of a court or agency or supervisory
authority having jurisdiction determining it to be insolvent or providing for
the appointment of a conservator, receiver, liquidator, trustee or any similar
Person appointed in connection with any insolvency, readjustment of debt,
marshalling of assets and liabilities, bankruptcy, reorganization or similar
proceedings of or relating to it or of or relating to all, or substantially all,
of its property, or for the winding-up or liquidation of its affairs or (B)
shall suffer or permit to be instituted proceedings under any law relating to
bankruptcy, insolvency or the reorganization or relief of debtors to be
instituted against it, and such proceedings remain undismissed or pending and
unstayed for a period of 60 days; or
(viii) the Company or any Guarantor shall (A) consent
to the appointment of a conservator, receiver, trustee, liquidator or custodian
in any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to it or of or relating to all, or
substantially all, of its property or for the winding-up or liquidation of its
affairs, (B) admit in writing its inability to pay its debts generally as they
become due, (C) file a petition, or otherwise institute, or consent to the
institution against it of, proceedings to take advantage of any law relating to
bankruptcy, insolvency or reorganization or the relief of debtors, (D) make an
assignment for the benefit of its creditors or (E) suspend payment of its
obligation; or
(ix) the rendering of judgment(s) for the payment of
money against the Company in excess of $250,000 in the aggregate, or against any
Guarantor in excess of $1,000,000 in the aggregate, and the continuance of any
such judgment(s) unsatisfied and without stay of execution thereon for a period
of 30 days after the entry of such judgment(s), or the continuance of such
judgment(s) unsatisfied for a period of 30 days after the termination of any
stay of execution thereon entered within such first mentioned 30 days; or
(x) any Event of Default under and as defined in any
Operative Document shall have occurred and be continuing, or in the case of an
Operative Document in which the term EVENT OF DEFAULT is not defined, any
default by the Company or a Guarantor, as the case may be, beyond applicable
grace and cure periods and after the giving of any
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required notice to the Company or the Guarantor, as the case may be, shall have
occurred and be continuing; or
(xi) the Management Agreement or the Ground Lease
shall at any time cease to be in full force and effect for any reason other than
by termination thereof by the Company in accordance with its terms and the terms
of this Agreement and/or any applicable Operative Document; or
(xii) a Plan shall fail to maintain a minimum funding
standard required by Section 412 of the Code for any plan year or a waiver of
such standard is sought or granted under Section 412(d) of the Code, or a Plan
is, shall have been or is likely to be terminated or the subject of termination
proceedings under ERISA, or the Company or a Subsidiary or an ERISA Affiliate
has failed to pay the full amount of any installment required under Section
412(m) of the Code or has incurred or is likely to incur a liability to or on
account of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, and
there shall result from any such event or events either a liability or a
material risk of incurring a liability to the PBGC or a Plan, which could have a
material or adverse effect upon the business, operations or financial condition
of the Company or a Subsidiary; or
(xiii) Construction of the Improvements shall not be
carried on with dispatch or there is any cessation of Construction of the
Improvements for a period in excess of 10 consecutive Business Days, unless the
cessation of Construction shall have been caused by an Unavoidable Delay of
which notice has been given to the Bank pursuant to Paragraph 7(n) hereof; or
(xiv) the Bank or the Bank's Consultant, or the
respective representatives of either, shall not be permitted at all reasonable
times after reasonable notice, to enter upon the Project for the purposes set
forth in Paragraph 7(o) hereof or the Company shall fail to furnish to the Bank
or the Bank's Consultant, or the respective representatives of either, within a
reasonable time after request therefor, copies of such plans, shop drawings,
specifications or other materials as the Bank or the Bank's Consultant, or the
respective representatives of either may reasonably request; or
(xv) The Company assigns this Agreement or any
Disbursement to be made under the Trust Agreement or the Loan Agreement, or any
interest in either, except as may be permitted hereunder; or
(xvi) as of the close of business on the Completion
Date, Substantial Completion has not occurred, or if the Bank or the Bank's
Consultant determines during the course of Construction of the Improvements that
the Improvements cannot be completed by the Completion Date (including if the
Improvements are partially or totally damaged or destroyed by fire, or any other
cause, or condemned and the restoration thereof cannot, in the Bank's
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judgment, reasonably be expected to be completed so that the Improvements will
be completed on or before the Completion Date); or
(xvii) any material default by the Company shall
occur and shall continue, beyond any applicable grace period provided for
therein, under the Management Agreement, the Construction Management Agreement,
the Architect's Agreement, the Trade Contracts or any other Construction
Document; or
(xviii) the Company shall fail to advance additional
funds as provided in Paragraph 9(j) hereof or deposit with the Bank cash or
cash-equivalent or other acceptable security for the benefit of the Bank as
provided in Paragraph 9(k) hereof, in either case within the time period
specified in the applicable provision; or
(xix) any Operative Documents, Construction Document
or Project Document is amended, modified or terminated without the prior written
consent or approval of the Bank to the extent such written consent or approval
is required pursuant to this Agreement; or
(xx) the Initial Disbursement shall not have occurred
by the Outside Disbursement Date; or
(xxi) the occurrence of an Event of Taxability (as
such term is defined in the Loan Agreement); or
(xxii) the occurrence of a default by the Company in
the performance of the Company's obligations under the Bond Swap Agreement or
the GDB Swap Agreement.
(b) Bank Remedies. If an Event of Default shall have occurred
then, and in any such event at any time thereafter if such Event of Default is
continuing, the Bank may, in its discretion:
(i) by notice to the Company declare all amounts
payable hereunder or under any Operative Document to be immediately due and
payable, whereupon the same shall become immediately due and payable without
demand, presentment, protest or further notice of any kind, all of which are
hereby expressly waived by the Company; and/or
(ii) exercise all or any of its rights and remedies
under or in respect of the Operative Documents (including, without limitation,
its rights and remedies under the Security Documents and any Guaranty); and/or
(iii) by notice to the Trustee and the Issuer,
require the Trustee to accelerate payment of all Bonds and interest accrued
thereon and/or purchase the Bonds as
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provided in Section 7.01(i) of the Loan Agreement or Section 305 of the Trust
Agreement, respectively; and/or
(iv) in the event that the Guarantors under the
Completion Guaranty are obligated to complete the Project and/or the Bank or the
Bank's designees or assignees undertake to complete the Project, the Bank or its
designees or assignees shall have the right to cause the Bond proceeds to be
disbursed on the same terms and conditions as if the Guarantors under the
Completion Guaranty, the Bank or such designees or assignees of the Bank were
the Company; and/or
(v) terminate the Letter of Credit by written notice
to the Trustee, the effect of which shall be to cause the Letter of Credit to
expire on the sixteenth calendar day after the date on which a notice of
termination is received by the Trustee; and/or
(vi) exercise any or all other rights and remedies
existing at law or in equity or by statute including, without limitation, the
rights and remedies of a secured creditor under the Uniform Commercial Code (or
any substitute therefor) of any applicable jurisdiction.
(c) Bank's Right to Stop Disbursing Funds. In addition to any
other rights and remedies the Bank may have pursuant to the other Operative
Documents, or as provided by law, and without limitation thereof, if any Default
or Event of Default shall occur, then the Bank shall not be obligated to
instruct the Trustee to make any further Disbursements until such Default or
Event of Default is remedied; PROVIDED, HOWEVER, the Bank may instruct the
Trustee to make any Disbursement so long as any such Default or Event of Default
shall exist without thereby waiving the right to demand payment of the
indebtedness and to exercise its rights and remedies pursuant to any one or more
of the Security Documents and/or exercise any other remedies available to the
Bank pursuant to the other Operative Documents or as provided by law, and
without becoming liable to instruct the Trustee to make any other or further
advance or Disbursement.
(d) Bank's Right to Complete. Upon the happening of any Event
of Default, the Bank may, in addition to any other remedies which the Bank may
have under this Agreement, the other Operative Documents or pursuant to law,
enter upon the Project and into possession of the Project and Construct and
complete the Construction of the Improvements substantially in accordance with
the Plans, with such changes therein as the Bank may from time to time deem
appropriate, all at the sole risk, cost and expense of the Company. The Bank
shall have the right, at any and all times, to discontinue any work commenced by
the Bank with respect to the Project or to change any course of action
undertaken by it and shall not be bound by any limitations or requirements of
time whether set forth herein or otherwise. The bank shall have the right and
power (but shall not be obligated) to assume any construction contract made by
or on behalf of the Company in any way relating to the Project and to take over
and use all or any part or parts of the labor, materials, supplies and equipment
contracted for, by or on
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behalf of the Company, whether or not previously incorporated into the Project,
all in the sole and absolute discretion of the Bank. In connection with any
portion of the Project undertaken by the Bank pursuant to the provisions of this
Paragraph 12(d), the Bank may (i) engage builders, contractors, architects,
engineers, inspectors and others for the purpose of furnishing labor, materials,
equipment and fixtures in connection with the Project, (ii) pay, settle or
compromise all bills or claims which may become Liens against the Project, or
which have been or may be incurred in any manner in connection with the
Construction and Substantial Completion or for the discharge of Liens,
encumbrances or defects in the title of the Project and (iii) take such other
action (including, without limitation, the employment of watchmen to project the
Project) or refrain from acting under this Agreement as the Bank may in its sole
and absolute discretion from time to time determine without any limitation
whatsoever. The Company shall be liable to the Bank for all sums paid or
incurred for the Project whether the same shall be paid or incurred pursuant to
the provisions of this Paragraph 12(d) or otherwise, and all payments made or
liabilities incurred by the Bank under this Paragraph 12(d) of any kind
whatsoever shall be paid by the Company to the Bank upon demand with interest at
the Prime Rate plus 2% per annum to the date of payment to the Bank, and all of
the foregoing sums, including such interest at the Prime Rate plus 2% per annum,
shall be deemed and shall constitute advances under the Loan Agreement and be
evidenced by the Note and secured by the Security Documents. Upon the occurrence
of any Event of Default, the rights, powers and privileges provided in this
Paragraph 12(d) and all other remedies available to the Bank under this
Agreement and the other Operative Documents or by statute or by rule of law may
be exercised by the Bank at any time and from time to time whether or not the
indebtedness evidenced and secured by the Note and the Security Documents shall
be due and payable, and whether or not the Bank shall have instituted any
foreclosure or other action for the enforcement of any of the Mortgage, the
Pledge Agreement or the Note. The Company hereby assigns and quitclaims to the
Bank all sums advanced pursuant to this Paragraph 12(d), and all sums held by
the Bank for the account of the Company, whether in escrow accounts or
otherwise, and all other forms of security delivered by the Company as
additional security (a security interest therein being granted hereby to the
Bank) for the repayment of the Loan, all of which security may be utilized by
the Bank for the purposes set forth in this Paragraph 12(d) or applied against
the indebtedness evidenced by the Note as the Bank, in its sole and absolute
discretion, shall determine
(e) No Liability of the Bank. Whether or not the Bank elects
to employ any or all of the remedies available to it upon the occurrence of an
Event of Default, the Bank shall not be liable for the Construction of or
failure to Construct, complete or protect the Project or for payment of any
expense incurred in connection with the exercise of any remedy available to the
Bank or for the performance or non-performance of any other obligation of the
Company.
(f) Termination of Agreement. If for any reason whatsoever the
outstanding principal amount of the Loan, together with all interest and other
indebtedness due and payable in connection therewith and all amounts due or
payable hereunder have been paid in full, and the Letter of Credit shall have
been terminated, the parties hereto shall be released and
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discharged from all of their obligations hereunder except for those obligations
that expressly survive the termination hereof.
(g) Remedies Not Exclusive. No remedy herein conferred or
reserved is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or any other Operative Document or
now or hereafter existing at law or in equity or by statute. No delay or
omission to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right or power may be
exercised from time to time and as often as may be deemed expedient. In order to
exercise any remedy reserved to the Bank in this Agreement, it shall not be
necessary to give any notice, other than such notice as may be herein expressly
required. In the event any provision contained in this Agreement should be
breached by any party or thereafter duly waived by the other party so empowered
to act, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder. No waiver, amendment,
release or modification of this Agreement shall be established by conduct,
custom or course of dealing, but solely by an instrument in writing duly
executed by the parties thereunto duly authorized by this Agreement.
13. NATURE OF THE BANK'S DUTIES.
(a) The Company hereby assumes all risks of the acts,
omissions or misuse of the Letter of Credit by the Trustee or any beneficiary or
transferee of the Letter of Credit. Neither the Bank nor any of its officers or
directors shall be responsible for (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document, or any endorsements
thereon, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged, (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or
assigning the Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason, (iii) the failure of the Trustee or any beneficiary or transferee of
the Letter of Credit to comply fully with conditions required in order to draw
upon the Letter of Credit, (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher, (v) errors in interpretation of
technical terms, (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under the Letter of Credit or of
the proceeds thereof, (vii) any consequences arising from causes beyond the
control of the Bank, (viii) payment by the Bank against presentation of
documents which do not comply with the terms of the Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit or (ix) any other circumstances whatsoever in making or failing
to make payment under the Letter of Credit; provided, however, that the Bank
shall be responsible for any of the above occurrences to the extent that they
arise solely as a result of the gross negligence or willful malfeasance of the
Bank. In furtherance and extension and
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not in limitation of the foregoing, the Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary. None of the above shall
affect, impair, or prevent the vesting of any of the Bank's rights or powers
hereunder.
(b) In furtherance and extension, and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
Bank, under or in connection with the Letter of Credit or the related drafts or
documents(s), if taken or omitted in good faith, shall not create any liability
on the part of the Bank to the Company.
14. MISCELLANEOUS.
(a) Amendments and Consents. This Agreement may only be
amended by an instrument in writing signed by all of the parties hereto,
provided that the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the Company shall
obtain the prior written consent of the Bank. No course of dealing between the
company and the Bank, nor any delay in exercising any rights hereunder shall
operate as a waiver of any rights of the Bank hereunder.
(b) Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by the
Company in connection herewith shall survive the execution and delivery of this
Agreement, regardless of any investigation made by the Bank or on its behalf.
(c) Expenses. The Company agrees to pay promptly all costs and
expenses in connection with the preparation, negotiation, issuance, execution,
delivery, filing, recording and administration of the Letter of Credit, this
Agreement, the other Operative Documents, the Bonds and any other documents
which may be delivered in connection with this Agreement, including, without
limitation, all engineers', architects' and investigators' fees, the fees and
expenses of the Bank's counsel, construction consultant, insurance consultant
and any services selected by the Bank, each with respect to the transactions
contemplated by this Agreement, and all costs and expenses (including counsel
fees and expenses) in connection with (i) the transfer, drawing upon, change in
terms, maintenance, renewal or cancellation of the Letter of Credit, (ii) any
and all amounts which the Bank has paid relative to the Bank's curing of any
Event of Default resulting from the acts or omissions of the Company under this
Agreement, any other of the Operative Documents or the Bonds, (iii) the
enforcement of this Agreement or any other of the Operative Documents, (iv) any
action or proceeding relating to a court order, injunction, or other process or
decree restraining or seeking to restrain the Bank from paying any amount under
the Letter of Credit, (v) obtaining and reviewing appraisals and the engineering
and environmental reports relating to the Project and (vi) survey costs and
title insurance costs. In addition, the Company shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of the
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Letter of Credit, this Agreement, any other of the Operative Documents or the
Bonds, or any other document which may be delivered in connection with this
Agreement, and agrees to save the Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees. Notwithstanding the foregoing, no payment shall be
required under this Paragraph 14(c) in respect of any cost or expense which the
Bank has incurred solely as a result of its own gross negligence or willful
misconduct. All costs and expenses described in this Paragraph 14(c) shall be in
addition to the facility fee paid by the Company to the Bank in connection with
the transaction contemplated hereby and shall be in addition to the Annual
Letter of Credit Fee and the Annual Agent's Fee.
(d) Set-off. In addition to any rights and remedies the Bank
may have, including, without limitation, any rights now or hereafter granted
under applicable law, and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, the Bank is
hereby authorized at any time and from time to time, without notice to the
Company (any such notice being expressly waived by the Company) and to the
fullest extent permitted by law, to set forth and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Bank, including, without limitation,
pursuant to the Bond Swap Agreement, to or for the credit or the account of the
Company against any and all of the obligations of the Company now or hereafter
existing under this Agreement, irrespective of whether or not the Bank shall
have made any demand hereunder.
(e) No Approval of Work. No Disbursement authorized hereunder
shall constitute an approval or acceptance by the Bank of the work theretofore
done in connection with the Project or a waiver of any of the conditions of the
Bank's obligation to make or authorize further Disbursements, nor, in the event
the Company is unable to satisfy any such condition, shall any such failure to
insist upon compliance have the effect of precluding the Bank from thereafter
declaring such inability to be an Event of Default as herein provided, it being
agreed that any Disbursement made or authorized by the Bank in the absence of
strict compliance with any or all of the conditions of the Bank's obligation to
make or authorize such Disbursement shall be deemed to have been made pursuant
to this Agreement and not in modification of the terms hereof, unless the Bank
has specifically waived any such condition or approved a deviation therefrom.
(f) Bank's Review. Inspection and approvals of the Plans, the
Project and the workmanship and materials used therein shall impose no
responsibility or liability of any nature whatsoever on the Bank and no Person
shall, under any circumstances, be entitled to rely upon such inspections and
approvals by the Bank for any reason. Approvals granted by the Bank for any
matters covered under this Agreement shall be narrowly construed to cover only
the parties and facts identified in any such approval.
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(g) Submission of Evidence. Any condition of this Agreement
which requires the submission of evidence of the existence or non-existence of a
specified fact or facts implies as a condition the existence or non-existence,
as the case may be, off such fact or facts and the Bank shall, at all times, be
free independently to establish to its satisfaction such existence or
non-existence.
(h) Bank Sole Beneficiary. All terms, provisions, covenants
and other conditions of the obligations of the Bank to authorize Disbursements
hereunder are imposed and all trust funds hereunder are held solely and
exclusively for the benefit of the Bank and its successors and assigns, and no
other Person shall have standing to require satisfaction of such terms,
covenants and other conditions in accordance with their terms or be entitled to
assume that the Bank will refuse to authorize Disbursements in the absence of
strict compliance with any or all of such terms, covenants and other conditions
or be entitled to require any particular application of such trust funds. No
Person, other than the Bank, its successors and assigns and any Person to whom
the Bank shall have granted a participation pursuant to Paragraph 14 (p) herein
shall, under any circumstances, be deemed to be a beneficiary of the terms,
covenants and other conditions of this Agreement, any or all of which may be
freely waived, in whole or in part, by the Bank at any time if, in the Bank's
sole discretion, the Bank deems it advisable or desirable to do so, and no
Person, other than said parties, shall have any right, remedy or claim under or
by reason of this Agreement.
(i) Contractors. Except as provided by law, no contractors or
subcontractors dealing with the Company shall be, nor shall any of them be
deemed to be, third party beneficiaries of this Agreement, but each shall be
deemed to have agreed (i) that they shall look to the Company as their sole
source of recovery if not paid and (ii) except as otherwise agreed to in writing
between the Bank and the contractor(s) or subcontractor(s) in question, that
they may not claim against the Bank under any circumstances. Except as provided
by law, or as otherwise agreed in writing between the Bank and the contractor(s)
or subcontractor(s) in question, each such contractor or subcontractor shall be
deemed to have waived in writing all right to seek redress from the Bank under
any circumstances whatsoever. Counterpart originals of each of such contractor's
or subcontractor's agreement and waiver shall be delivered to the Bank on or
before the date hereof.
(j) Entire Agreement. This Agreement and the other Operative
Documents embody the entire agreement and understanding between the parties with
respect to the matters set forth herein and supersede and cancel all prior loan
applications, expressions of interest, commitments, agreements and
understandings, whether oral or written, relating to the subject matter hereof,
except as specifically agreed to the contrary.
(k) Further Assurances. The Company hereby agrees promptly to
execute and deliver such additional agreements and instruments and promptly to
take such additional action
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as the Bank may at any time and from time to time reasonably request in order
for the Bank to obtain the full benefits and rights granted or purported to be
granted by this Agreement.
(l) No Waiver; Cumulative Remedies. No failure or delay on the
part of the Bank in exercising any right, power or remedy hereunder or under or
in connection with this Agreement or the other Operative Documents or to insist
upon the strict performance of any term of this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right, or
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy under or in connection with this Agreement
or the other Operative Documents. The remedies in this Agreement or the other
Operative Documents herein are cumulative and not exclusive of any remedies
provided by law.
(m) Singular/Plural. Whenever appropriate herein or required
by the context or circumstances, the masculine shall be construed as the
feminine and/or the neuter, the singular as the plural, and vice versa.
(n) No Joint Venture. The Company is not and shall not be
deemed to be a joint venturer with, or an agent of, the Bank for any purpose.
Prior to any Default or Event of Default by the Company under this Agreement and
the Bank's exercise of the remedies granted herein the Bank shall not be deemed
to be in privity of contract with any contractor or provider of services with
respect to the Construction of the Improvements.
(o) Incorporation by Reference. The Company agrees that until
this Agreement is terminated by the repayment to the Issuer of all principal and
interest due and owing on the Note and other sums due and owing pursuant to the
Operative Documents, the Note and the other Operative Documents shall be made
subject to all the terms, covenants, conditions, obligations, stipulations and
agreements contained in this Agreement to the same extent and effect as if fully
set forth in and made a part of the Note and the other Operative Documents. In
the event of a conflict between any of the Operative Documents and the
provisions of this agreement, this Agreement shall be controlling.
(p) Binding Effect; Assignment. This Agreement is a continuing
obligation and shall (i) be binding upon the Company and its permitted
successors and assigns and (ii) inure to the benefit of and be enforceable by
the Bank and its successors, transferees and assigns; provided that the Company
may not assign all or any part of this Agreement without the prior written
consent of the Bank. The Bank may assign, negotiate, pledge or otherwise
hypothecate all or any portion of this Agreement, or grant participations
herein, in the Letter of Credit, in the Loan, in the Bond Swap Agreement and in
the Bank's other rights or security hereunder, including, without limitation,
the instruments securing the Company's obligations hereunder or under any
Operative Document. No such assignment or participations by the Bank, however,
will relieve the Bank of its obligations under the Letter of Credit. All
documentation, financial statements, appraisals and other data, or copies
thereof, relevant to the Company, any Guarantor
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or the Letter of Credit may be exhibited to and retained by any such assignee,
prospective assignee, participant or prospective participant.
(q) Notices. All notices, certificates, demands and other
communications provided for herein shall be in writing and mailed (registered or
certified mail, return receipt requested, and postage prepaid), hand-delivered,
with signed receipt, or sent by nationally-recognized overnight courier, if to
the Bank, to its address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Two World Financial Center, New
York, New York 10281, Attention: Real Estate Finance Group (Mr. ▇▇▇▇▇ ▇▇▇▇▇ or
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇), with a copy similarly delivered to ▇▇▇▇, Scholer, Fierman,
▇▇▇▇ & Handler, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Esq., if to the Company, to its address c/▇ ▇▇▇▇▇▇▇▇ Hospitality
Management Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with copies similarly delivered to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.;
Kumagai Caribbean, Inc., c/▇ ▇▇▇▇▇▇▇▇ Hospitality Management Corporation, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇; WMS Industries Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Chief Operating Officer; Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
c/o Richford American, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or to such
other address with respect to any party as such party shall notify the other
parties in writing. All such notices, certificates, demands and other
communications shall be effective when received at the address specified as
aforesaid.
(r) Satisfaction. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory Bank, the determination of such satisfaction shall
be made by the Bank in its sole and exclusive judgment.
(s) Governing Law and Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York. The Company irrevocably (i) agrees that any suit, action or other
legal proceeding arising out of or relating to this Agreement, the other
Operative Documents or such other documents which may be delivered in connection
with this Agreement or the other Operative Documents may be brought in the City
and State of New York or in the Courts of the Untied States of America located
in the Southern District of New York [, provided, however, that any suit, action
or other legal proceeding arising out of or directly concerning the Mortgage or
the Pledge Agreement shall be brought in the Commonwealth of Puerto Rico;] (ii)
consents to the jurisdiction of each such court in any such suit, action or
proceeding and (iii) waives any objection which it may have to the laying of
venue of any such suit, action or proceeding in any of such courts and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum. The Company irrevocably consents to the service of any and all process in
any such suit, action or proceeding by service of copies of such process to the
Company at its address provided in Paragraph 14(q) hereof or by personal service
on any partner of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇. In addition to any method of service of
process provided for under applicable laws, all service of
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process under this Paragraph 14(s) may be made by certified or registered mail,
return receipt requested, directed to the Company at the address set forth in
Paragraph 14(q) hereof, and the service so made shall be complete five days
after the same shall have been so mailed. Nothing in this Paragraph 14(s) shall
affect the right of the Bank to serve legal process in any other manner
permitted by law or affect the right of the Bank to bring any suit, action or
proceeding against the Company or its property in the courts of any other
jurisdictions.
(t) Limitation of Liability. Notwithstanding anything to the
contrary contained in the Loan Agreement, any of the Security Documents or this
Agreement (except for Paragraph 5(c) hereof), no recourse shall be had, whether
by levy or execution or otherwise, for the payment of the principal of or
interest on, or other amounts owned hereunder or under the Loan Agreement or any
of the Security Documents, or for any claim based on this Agreement, the Loan
Agreement or any Security Documents or in respect thereof, against the Company,
any partner of the Company or any predecessor, successor or affiliate of any
such partner or any of their assets (other than from the interest of such person
in such partner in the Company), or against any principal, partner, shareholder,
officer, director, agent or employee of any such partner (other than from the
interest of any such partner), nor shall any such persons be personally liable
for any such amount or claims, or liable for any deficiency judgment based
thereon or with respect thereto, it being expressly understood that the sole
remedies of the Bank with respect to such amounts and claims shall be against
the assets of the Company, including the Mortgaged Property (as such term is
defined in both the Fee Mortgage and in the Leasehold Mortgage) and that all
such liability of the aforesaid persons, except as expressly provided in this
Paragraph 14(t) and Paragraph 5(c) hereof is expressly waived and released as a
condition of and as consideration for the execution of the Security Documents;
provided, however, that (A) nothing contained in this Agreement (including,
without limitation, the provisions of this Paragraph 14(t)), the Loan Agreement
or the Security Documents shall constitute a waiver of any indebtedness
evidenced hereby or any of the Company's other obligations under such
instruments or shall be taken to prevent recourse to and the enforcement against
the Company, including the Mortgaged Property, of all the liabilities,
obligations and undertakings contained in this Agreement, the Loan Agreement or
any of the Security Documents, (B) this Paragraph 14(t) shall not be applicable
to a breach by any person of any independent obligation to the Bank, including,
but not limited to, (x) the obligations of the Guarantors under the Guaranties,
(y) the obligation of WKA to enforce any or all of its remedies against KGC in
the event that KGC fails timely to provide the Deficiency Loans (as defined in
the Company Partnership Agreement) as set forth herein and in the other
Operative Documents, and (z) any other obligations of any Person under any other
guaranty or indemnity agreement executed or delivered in connection with any of
the Operative Documents (including, without limitation, the indemnities set
forth in Paragraph 5(c) hereof) and (C) this Paragraph 14(t) shall not be
applicable to the responsible party to the extent and in respect of any claim
the Bank would otherwise have against such party for (1) fraud, (2)
misappropriation of funds or other property, or (3) damage to any of the
Mortgaged Property or any part thereof intentionally inflicted in bad faith by
the Company or any partner, principal, shareholder, officer, director, agent or
employee
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of the Company or any of its partners, or principals of any of the foregoing.
For the purposes of the foregoing, the term SHAREHOLDER shall be deemed to
include the shareholders of any corporation which is a shareholder of a
corporation and the term PARTNER shall be deemed to include the partners of any
partnership which is a partner of a partnership.
(u) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
(v) Defined Instruments. All of the agreements or instruments
defined in this Agreement shall mean such agreements or instruments as the same
may, from time to time, be supplemented or amended or the terms thereof waived
or modified to the extent permitted by, and in accordance with, the terms
thereof and of this Agreement.
(w) Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent with the most recent audited financial statements of the
Company and the respective Guarantors delivered to the Bank.
(x) Lawful Interest. Nothing contained in this Agreement or in
any other Operative Document shall be construed to permit the Bank to receive,
at any time, interest, fees or other charges in excess of the amounts which the
Bank is legally entitled to charge and receive under any law to which such
interest, fees, or charges are subject. In no contingency or event whatsoever
shall the compensation payable to the Bank by the Company, howsoever
characterized or computed, hereunder, or under any other Operative Document,
exceed the highest rate permissible under any law to which such compensation is
subject. There is no intention that the Bank shall contract for, charge or
receive compensation in excess of the highest lawful rate, and, in the event it
should be determined that the Bank has contracted from any rate of interest in
excess of the highest lawful rate, then ipso facto such rate shall be reduced to
the highest lawful rate so that no amounts shall be charged which are in excess
over such highest lawful rate has been charged or received, the Bank shall
promptly refund such excess to the Company; provided, however, that, if lawful,
any such excess shall be paid by the Company to the Bank as additional interest
(accruing at a rate equal to the maximum legal rate minus the rate provided for
hereunder) during any subsequent period when regular interest is accruing
hereunder at less than the maximum legal rate.
(y) Consents; Approvals. Wherever in this Agreement the
consent or approval of the Bank shall be required, unless specifically provided
to the contrary, the Bank shall have the right to withhold, or grant, such
consent or approval in its sole discretion.
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(z) Severability. Any provision of this Agreement which is
unenforceable, prohibited or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforcability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
(aa) Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
(bb) Reliance by Bank. The Bank may but shall be under no
obligation to rely upon the advice of its legal counsel and of the Bank's
Consultant, as well as of all other parties whose advice it obtains in
connection with all decisions made by the Bank in connection with any matters
discussed herein.
IN WITNESS WHEREOF, the parties hereto have caused this Letter
of Credit and Reimbursement Agreement to be duly executed and delivered by their
respective duly authorized officers as of the day and year first above written.
EL CONQUISTADOR PARTNERSHIP L.P.,
a Delaware limited
partnership
By: Kumagai Caribbean, Inc.
By:_____________________________
Shunsuke Nakane, President
By: WKA El Con Associates, a
New York general partnership
By: ____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Signatory
THE MITSUBISHI BANK, LIMITED,
ACTING THROUGH ITS NEW YORK BRANCH
By:______________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President
IRREVOCABLE TRANSFERABLE STANDBY LETTER OF CREDIT
NO. C-182
February 7, 1991
Banco Popular de Puerto Rico
Banco Popular Center, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
At the request and for the account of El Conquistador Partnership L.P.,
a Delaware limited partnership (the ACCOUNT PARTY), we hereby establish in your
favor, as designated trustee under the Trust Agreement, dated the date hereof
between Puerto Rico Industrial, Medical, Educational and Environmental Pollution
Control Facilities Financing Authority (the ISSUER) and you (such Trust
Agreement, as it may be amended or supplemented from time to time in accordance
with its provisions, being the TRUST AGREEMENT), pursuant to which $120,000,000
aggregate principal amount of the Issuer's Industrial Revenue Bonds, 1991 Series
A (El Conquistador Resort Project), Convertible Industrial Revenue Bonds, 1991
Series B (El Conquistador Resort Project) and Industrial Revenue Bonds, 1991
Series C (El Conquistador Resort Project) (collectively, the BONDS) are being or
will be issued, our Irrevocable Transferable Letter of Credit No. C-182 (this
LETTER OF CREDIT), in the amount of $124,800,000 (such amount, as reduced and
reinstated from time to time in accordance with the provisions hereof, the
STATED AMOUNT). An amount not exceeding $120,000,000 (such amount, as reduced
and reinstated from time to time in accordance with the terms and conditions
hereof, being the PRINCIPAL COMPONENT) may be drawn upon this Letter of Credit,
in accordance with the terms and conditions hereof, to pay the unpaid principal,
or the portion of the Purchase Price (as defined in the Trust Agreement)
corresponding to principal, of the Bonds. An amount not exceeding $4,800,000
(such amount, as reduced and reinstated from time to time in accordance with the
terms and conditions hereof, being the INTEREST COMPONENT) may be drawn upon
this Letter of Credit, in accordance with the terms and conditions hereof, to
pay interest, or the portion of the Purchase Price corresponding to interest,
accrued on the Bonds. Draws upon this Letter of Credit may be made, in
accordance with the terms and conditions hereof, prior to the Termination Date
(as hereinafter defined). This Letter of Credit is issued pursuant to that
certain Letter of Credit and Reimbursement Agreement dated that date hereof
between the Account Party and us (such agreement, as it may be amended or
supplemented from time to time in accordance with its provisions, the LETTER OF
CREDIT AGREEMENT).
We hereby irrevocably authorize you to draw, in accordance with the
terms and conditions hereof, in one or more drawings by one or more of your
drafts (a) an amount not exceeding, in the aggregate, the Principal Component,
to pay the principal of the Bonds in the event and to the extent that the
Trustee (as defined in the Trust Agreement) does not have
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available sufficient other Eligible Moneys (as defined in the Trust Agreement)
for such payment as the same becomes due and payable (each such drawing, a
PRINCIPAL DRAWING), provided that each draft on us requesting a Principal
Drawing is accompanied by your written and completed certificate in
substantially the form of Annex I attached hereto; (b) an amount not exceeding,
in the aggregate, the Interest Component, to pay interest, or the portion of the
Purchase Price corresponding to interest, accrued on the Bonds in the event and
to the extent that the Trustee does not have available sufficient other Eligible
Moneys for such payment as the same becomes due and payable (each such drawing,
an INTEREST DRAWING), provided that each draft on us requesting an Interest
Drawing is accompanied by your written and completed certificate in
substantially the form of Annex II attached hereto; (c) an amount not exceeding,
in the aggregate, the Principal Component, to pay when due the portion of the
Purchase Price corresponding to the principal of Bonds subject to mandatory
tender for purchase pursuant to the Trust Agreement (each such drawing, a
PURCHASE DRAWING), provided that each draft on us requesting a Purchase Drawing
is accompanied by your written and completed certificate in the form of Annex
III attached hereto. In no event will you have a right to make any drawings
under this Letter of Credit to pay (a) the principal or the Purchase Price of or
interest accrued on Bonds the Holder (as defined in the Trust Agreement) of
which is (i) the Account Party or (ii) any of Kumagai International USA,
Corporation, Kumagai Caribbean, Inc., KG (Caribbean) Corporation or ▇▇▇▇▇▇▇▇
Hospitality Management Corporation (collectively, the Guarantors), (b) any
premium payable upon any optional or mandatory redemption of Bonds, or (c) any
indemnity payable by the Account Party upon the occurrence of an Event of
Taxability (as defined in the Trust Agreement). Funds under this Letter of
Credit are available to you against your draft drawn on us, stating on its face
"Drawn under The Mitsubishi Bank, Limited, New York Branch, Irrevocable
Transferable Standby Letter of Credit No. C-182" and accompanied by your written
and completed certificate substantially in the form of Annex I, Annex II or
Annex III attached hereto, as appropriate. All drawings under this Letter of
Credit will be paid in accordance with the terms and conditions of this Letter
of Credit, with our own funds.
Each Purchase Drawing honored by us hereunder shall automatically
reduce the Principal Component and the amount available to be drawn hereunder by
subsequent Purchase Drawings or Principal Drawings by an amount equal to the
amount of such Purchase Drawing. Each Principal Drawing honored by us hereunder
shall automatically reduce (i) the Principal Component and the amount available
to be drawn hereunder by subsequent Purchase Drawings or Principal Drawings by
an amount equal to the amount of such Principal Drawing and (ii) the Interest
Component and the amount available to be drawn hereunder by subsequent Interest
Drawings to an amount equal to 120 days' accrued interest (computed as described
below) on the Principal Component as so reduced. Each such reduction shall be
effective on the day of the honoring by us of such Purchase Drawing or Principal
Drawing, as the case may be, and shall automatically result in a corresponding
aggregate reduction in the Stated Amount. Upon the release by the Trustee, at
our direction, pursuant to Section 5 of the Pledge Agreement (as defined in the
Trust Agreement), of any Pledged Bonds the Principal Component, and the amount
available to be drawn hereunder by subsequent Purchase Drawings or Principal
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Drawings (unless the Principal Component has been previously reinstated with
respect to such Purchase Drawing) shall be automatically reinstated by an amount
equal to the principal of such Pledged Bonds and the Interest Component shall be
automatically reinstated to an amount equal to 120 days' accrued interest on the
reinstated Principal Component, computed as described below, each such
reinstatement effective on the date of the release of such Pledged Bonds;
provided, however, that in no event shall the Principal Component be reinstated
to an amount in excess of an amount equal to the aggregate principal amount of
the Bonds then Outstanding (as defined in the Trust Agreement).
Each Interest Drawing honored by us hereunder shall automatically
reduce the Interest Component and the amount available to be drawn hereunder by
subsequent Interest Drawings by an amount equal to the amount of such Interest
Drawing effective on the day of the honoring by us of such Interest Drawing.
Such reduction shall automatically and irrevocably result in a corresponding
reduction in the Stated Amount. If you shall not have received from us, within
15 calendar days after the honoring by us of any Interest Drawing, notice to the
effect that we have not been reimbursed for such Interest Drawing or that any
other "Event of Default" has occurred and is continuing under the Letter of
Credit Agreement and instructing you as the Trustee to declare the principal of
the Bonds to be immediately due and payable pursuant to Section 803 of the Trust
Agreement, then the Interest Component and the amount available to be drawn
hereunder by subsequent Interest Drawings shall be automatically reinstated by
us, effecting on the sixteenth calendar day after an honoring by us of such
Interest Drawing, by an amount equal to the amount of such Interest Drawing. In
no event shall the Interest Component be reinstated to an amount in excess of
the lesser of (i) $4,800,000 and (ii) an amount equal to 120 days' accrued
interest on the then effective Principal Component, computed at a rate of 12%
per annum for 120 days on the basis of 360-day year, including the first day but
excluding the last day, notwithstanding the actual rate borne from time to time
by the Bonds. Each such reinstatement of the Interest Component and the amount
available to be drawn hereunder by subsequent Interest Drawings shall
automatically result in a corresponding reinstatement of the Stated Amount.
Upon receipt by us of your written and completed certificate in
substantially the form of Annex IV attached hereto, with respect to the
cancellation of Bonds in accordance with Section 508 of the Trust Agreement, the
Stated Amount shall be reduced to an amount equal to the amount stated in
paragraph 6 of said certificate, and the amounts available to be drawn hereunder
by you by any subsequent Principal Drawings, Purchase Drawings or Interest
Drawings shall be reduced, effective upon our receipt of such certificate, to
the amounts stated in paragraph 4 (for Principal Drawings or Purchase Drawings)
and paragraph 5 (for Interest Drawings), respectively, of such certificate. If
the Stated Amount shall be partially reduced pursuant to this paragraph, we
shall have the right to require you to surrender this Letter of Credit to us on
or before the tenth Business Day (as hereinafter defined) following our receipt
of such certificate. Upon such surrender, we may, at our option, either (a)
amend this Letter of Credit to reflect thereon the amount of such reduction and
the corresponding reductions in
-4-
the amounts available for the various drawings hereunder or (b) cancel this
Letter of Credit and issue to you, in substitution therefor, a substitute
irrevocable letter of credit in substantially the form hereof, reflecting such
reductions. As used in this Letter of Credit, the term "Business Day" shall mean
a day other than a Saturday, Sunday or other day on which banks in New York, New
York or San ▇▇▇▇, Puerto Rico are authorized or required by law or executive
order to close.
Demand for payment may be made by you under this Letter of Credit at
any time during our business hours on a Business Day at our address set forth
below; provided, however, that no demand for payment may be made by you under
this Letter of Credit earlier than 10:00 A.M., New York time, on the Business
Day before the due date of the principal of, or interest accrued on the Bonds to
which such demand for payment relates, or, in the case of a Purchase Drawing,
10:00 a.m., New York time, on the Business Day on which the Trustee receives the
notice and documents described in Section 305(A) of the Trust Agreement which
relates to such Purchase Drawing. If a demand for payment is made by you under
this Letter of Credit at or prior to 2:00 P.M., New York time, on a Business Day
and such demand for payment and the documents presented in connection therewith
conform to the terms and conditions hereof, payment shall be made to you, in
accordance with your payment instructions, of the amount demanded, in
immediately available funds, not later than 12:00 P.M., New York time, on the
next Business Day, provided, however, that in the case of a Principal Drawing or
an Interest Drawing which is not made to pay the portion of the Purchase Price
corresponding to interest, such payment shall in no event be made prior to the
Payment Date (as defined in the applicable certificate in substantially the form
of Annex I, Annex II or Annex III attached hereto). If a demand for payment is
made by you under this Letter of Credit after 2:00 P.M., New York time, on a
Business Day and such demand for payment and the documents presented in
connection therewith conform to the terms and conditions hereof, payment shall
be made to you, in accordance with your payment instructions, of the amount
demanded, in immediately available funds, not later than 12:00 P.M., New York
time, on the second succeeding Business Day, provided, however, that in the case
of a Principal Drawing or an Interest Drawing which is not made to pay the
portion of the Purchase Price corresponding to interest, such payment shall in
no event be made prior to the Payment Date (as defined in the applicable
certificate in substantially the form of Annex I, Annex II or Annex III attached
hereto). If requested by you, payment under this Letter of Credit may be made by
wire transfer of Federal Reserve Bank of New York funds to your account in a
bank on the Federal Reserve wire system.
If a demand for payment made by you under this Letter of Credit does
not, in any instance, conform to the terms and conditions of this Letter of
Credit, we shall give you prompt notice that such demand for payment was not
effected in accordance with the terms and conditions of this Letter of Credit,
stating the reasons therefor and that we are holding any documents at your
disposal and will return the same to you, if you so request. Upon being notified
that a demand for payment made by you under this Letter of Credit was not
effected in conformity with this Letter of Credit, you may attempt to correct
such nonconforming demand
-5-
for payment if, and to the extent that, you are entitled (without regard to the
provisions of this sentence) and able to do so.
This Letter of Credit applies only to the payment of principal (or the
portion of the Purchase Price corresponding to principal) of Outstanding Bonds,
and up to 120 days' interest (computed as aforesaid) accrued (or the portion of
the Purchase Price corresponding to such interest) on Outstanding Bonds on or
prior to the Termination Date, and does not apply to any interest (or the
portion of the Purchase Price corresponding to such interest) that may accrue on
the Bonds, or any principal (or the portion of the Purchase Price corresponding
to principal) of the Bonds that may be payable with respect thereto, after the
Termination Date (as hereinafter defined).
This Letter of Credit shall expire at 5:00 P.M., New York time, on the
earliest to occur of the following dates (the TERMINATION DATE): (a) March 9,
1998 (the EXPIRATION DATE); (b) the date on which you surrender this Letter of
Credit to us, accompanied by your written statement certifying that all of the
Bonds have been paid in full (or provision has been made for such payment in
accordance with the Trust Agreement) or you are otherwise no longer entitled to
the benefits of this Letter of Credit; (c) the date on which you surrender this
Letter of Credit to us, accompanied by your written statement certifying that
(i) the conditions precedent to the acceptance of a Successor Letter of Credit
(as such term is defined in the Trust Agreement) have been satisfied and (ii)
you have accepted the Successor Letter of Credit; (d) the date that is the
sixteenth day after the date on which you receive notice from us to the effect
that this Letter of Credit is terminated by reason of the occurrence and
continuance of an "Event of Default" under the Letter of Credit Agreement and
instructing you to accelerate the Bonds; and (e) the date on which we honor a
Principal Drawing based upon the acceleration, mandatory redemption or maturity
of the Bonds as a whole; provided, however, that the Bank shall have the option,
exercisable in its sole discretion not later than March 9, 1997, to extend the
Expiration Date by up to one year. This Letter of Credit shall promptly be
surrendered to us by you upon any expiration pursuant to clause (a), (d) or (e)
of the preceding sentence.
You may transfer your rights under this Letter of Credit in their
entirety (but not in part) only to a successor trustee properly appointed and
qualified pursuant to Section 914 of the Trust Agreement and such transferred
rights may be successively transferred to any subsequent successor trustee
properly appointed and qualified pursuant to Section 914 of the Trust Agreement.
Transfer of your rights under this Letter of Credit to any such transferee shall
be effected upon the presentation to us of this Letter of Credit accompanied by
an Instruction to Transfer in substantially the form attached hereto as Annex V.
Only you (or a successor as permitted by the terms of this Letter of
Credit) may make a drawing under this Letter of Credit. Upon the payment to you,
in accordance with your payment instructions, of the amount specified in any
draft drawn under this Letter of Credit, we shall be fully discharged of our
obligation under this Letter of Credit with respect to such draft,
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and we shall not thereafter be obligated to make any further payments under this
Letter of Credit in respect of such draft, to you or to any other person
(including the holder of any Bond) who may have made to you or to the Account
Party, or makes to you or to the Account Party, a demand for payment with
respect to any Bond. By paying to you an amount demanded in accordance herewith,
we make no representation as to the correctness of such amount.
This Letter of Credit sets forth, in full, our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Trust Agreement, the Letter of Credit
Agreement or the Bonds), except the drafts and the certificates referred to
herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except such drafts and
certificates. References to this Letter of Credit shall include the certificates
attached hereto.
This Letter of Credit is subject to the Uniform Customs and Practice
for Documentary Credits (1983 Revision), International Chamber of Commerce,
Publication No. 400 (the UNIFORM CUSTOMS). This Letter of Credit shall be deemed
to be a contract made under the laws of the State of New York and shall, as to
matters not governed by the Uniform Customs, be governed by and construed in
accordance with the laws of the State of New York.
All demands for payment under this Letter of Credit, as well as all
notices and other communications to us with respect to this Letter of Credit,
shall be in writing and shall be addressed to us at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Two
World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Planning and Administration Department, with a copy to the attention of Real
Estate Finance Group - ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (or such other office as
we shall designate to you in writing), specifically referring thereon to "The
Mitsubishi Bank, Limited, New York Branch, Irrevocable Transferable Standby
Letter of Credit No. C 182." Such demands for payment, notices and other
communications shall be personally delivered or sent by tested telex to the
following number: Telex No. 42-0367 (Answerback: BISHIBANKA NYK).
All notices and other communications to you with respect to this Letter
of Credit shall be in writing and shall be addressed to you at your address set
forth above (or such other office
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as you shall designate to us in writing. Such notices and other communications
shall be sent by registered or certified mail, postage pre-paid, or by tested
telex to the following number: 62- 0439 (Answerback: UST).
Very truly yours,
THE MITSUBISHI BANK, LIMITED,
acting through its New York
Branch
By:______________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President
Annex I to
Irrevocable Transferable
Standby Letter of Credit
PRINCIPAL DRAWING
CERTIFICATE
The undersigned, a duly authorized officer of Banco Popular de Puerto
Rico (the TRUSTEE), hereby certifies to The Mitsubishi Bank, Limited, acting
through its New York Branch (the BANK), with reference to Irrevocable
Transferable Standby Letter of Credit No. _____ issued by the Bank in favor of
the Trustee (the LETTER OF CREDIT), that:
(1) The Trustee is the designated trustee under the Trust
Agreement (such term and all other capitalized terms used herein that
are not otherwise defined herein shall have the respective meanings set
forth in the Letter of Credit) for the holders of the Bonds.
(2) The Trustee is making a demand for payment under the
Letter of Credit to pay the principal of the Bonds that is due and
payable on _____________, 19____ (the PAYMENT DATE).
(3) The Trustee does not have available sufficient other
Eligible Moneys to pay the principal of the Bonds that is due and
payable on the Payment Date.
(4) The amount of the draft accompanying this Certificate (i)
represents $____________, being drawn by the Trustee under the Letter
of Credit to pay the amount of the principal of the Bonds (other than
Pledged Bonds) that is due and payable on the Payment Date, (ii) does
not include any amount to pay the principal of the Bonds held by or for
the account of the Account Party or the Guarantors, (iii) was computed
in accordance with the provisions of the Bonds and the Trust Agreement,
(iv) does not exceed the amount of the Principal Component or the
amount available to be drawn under the Letter of Credit by a Principal
Drawing as in effect on the Payment Date and (v) has not been and is
not the subject of a prior or contemporaneous demand for payment under
the Letter of Credit.
(5) Upon receipt by the Trustee of the amount demanded hereby,
(i) the Trustee will apply the same directly to the payment when due of
the principal of the Bonds then due pursuant to the Trust Agreement,
(ii) no portion of said amount shall be applied by the Trustee for any
other purpose and (iii) no portion of said amount shall be commingled
with other funds held by the Trustee.
The Trustee hereby acknowledges that, pursuant to the terms of the
Letter of Credit, (A) the honoring by the Bank of the Principal Drawing made by
this Certificate shall automatically
-2-
reduce (1) the Principal Component and the amount available to be drawn under
the Letter of Credit by subsequent Principal Drawings or Purchase Drawings by an
amount equal to the amount of such Principal Drawing, as set forth in clause (i)
of paragraph (4) of this Certificate and (2) the Interest Component and the
amount available to be drawn under the Letter of Credit by subsequent Interest
Drawings to an amount equal to 120 days' accrued interest (computed as provided
in the Letter of Credit) on the then effective Principal Component; and (B) such
reduction shall automatically result in a corresponding reduction in the Stated
Amount.
Please [deposit] [wire transfer] the amount demanded hereby [in] [to]
____________.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of ____________, 19____.
BANCO POPULAR DE PUERTO RICO,
as Trustee
By:_________________________________
Name:
Title:
Annex II to
Irrevocable Transferable
Standby Letter of Credit
INTEREST DRAWING
CERTIFICATE
The undersigned, a duly authorized officer of Banco Popular de Puerto
Rico (the TRUSTEE), hereby certifies to The Mitsubishi Bank, Limited, acting
through its New York Branch (the BANK), with reference to Irrevocable
Transferable Standby Letter of Credit No. _____ issued by the Bank in favor of
the Trustee (the LETTER OF CREDIT), that:
(1) The Trustee is the designated trustee under the Trust
Agreement (such term and all other capitalized terms used herein that
are not otherwise defined herein shall have the respective meanings set
forth in the Letter of Credit) for the holders of the Bonds.
(2) The Trustee is making a demand for payment under the
Letter of Credit to pay [interest accrued on the Bonds] [the portion of
the Purchase Price corresponding to interest accrued on the Put Bonds
pursuant to Section 305 of the Trust Agreement that is due and payable
on _____________, 199_ (the PAYMENT DATE).
(3) The Trustee does not have available sufficient other
Eligible Moneys to pay [the interest accrued on the Bonds] [the portion
of the Purchase Price corresponding to interest accrued on the Put
Bonds pursuant to Section 305 of the Trust Agreement] that is due and
payable on the Payment Date.
(4) The amount of the draft accompanying this Certificate (i)
represents $____________, being drawn by the Trustee under the Letter
of Credit to pay the amount of [interest accrued on the Bonds] [the
portion of the Purchase Price corresponding to interest accrued on the
Put Bonds pursuant to Section 305 of the Trust Agreement] that is due
on the Payment Date, (ii) does not include any amount to pay the
interest on Pledged Bonds or Bonds held by or for the account of the
Account Party or the Guarantors, (iii) was computed in accordance with
the provisions of the Bonds and the Trust Agreement, (iv) does not
exceed the amount of the Interest Component or the amount available to
be drawn under the Letter of Credit by Interest Drawings as in effect
on the Payment Date and (v) has not been and is not the subject of a
prior or contemporaneous demand for payment under the Letter of Credit.
(5) Upon receipt by the Trustee of the amount demanded hereby,
(i) the Trustee will apply the same directly to the payment when due of
[the interest accrued on the Bonds] [the portion of the Purchase Price
corresponding to interest accrued on the Put Bonds pursuant to Section
305 of the Trust Agreement], (ii) no portion of said
-2-
amount shall be applied by the Trustee for any other purpose and (iii)
no portion of said amount shall be commingled with other funds held by
the Trustee.
The Trustee hereby acknowledges that, pursuant to the terms of the
Letter of Credit, (A) the honoring by the Bank of the Interest Drawing made by
this Certificate shall automatically reduce the Interest Component and the
amount available to be drawn under the Letter of Credit by subsequent Principal
Drawings or Interest Drawings by an amount equal to the amount of the draft
accompanying this Certificate, as set forth in clause (i) of paragraph (4) of
this Certificate; and (B) such reduction shall automatically result in a
corresponding reduction in the Stated Amount, subject to reinstatement pursuant
to the terms and conditions of the Letter of Credit.
Please [deposit] [wire transfer] the amount demanded hereby [in] [to]
____________.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of ____________, 199_.
BANCO POPULAR DE PUERTO RICO,
as Trustee
By:
Name:
Title:
Annex III to
Irrevocable Transferable
Letter of Credit
PURCHASE DRAWING
CERTIFICATE
The undersigned, a duly authorized officer of Banco Popular de Puerto
Rico (the TRUSTEE), hereby certifies to The Mitsubishi Bank, Limited, acting
through its New York Branch (the BANK), with reference to Irrevocable
Transferable Letter of Credit No. _____ issued by the Bank in favor of the
Trustee (the LETTER OF CREDIT), that:
(1) The Trustee is the designated trustee under the Trust
Agreement (such term and all other capitalized terms used herein which
are not otherwise defined herein shall have the respective meanings set
forth in the Letter of Credit) for the holders of the Bonds.
(2) The Trustee is making a demand for payment under the
Letter of Credit to pay the portion of the Purchase Price corresponding
to principal of the Put Bonds pursuant to Section 305 of the Trust
Agreement that is due and payable on _____________, 19____ (the PAYMENT
DATE).
(3) The amount of the draft accompanying this Certificate (i)
represents $____________, being drawn by the Trustee under the Letter
of Credit to pay the amount of the portion of the Purchase Price
corresponding to principal of the Put Bonds pursuant to Section 305 of
the Trust Agreement that is due on the Payment Date, (ii) was computed
in accordance with the provisions of the Bonds and the Trust Agreement,
(iii) does not exceed the amount of the Principal Component or the
amount available to be drawn under the Letter of Credit by a Purchase
Drawing as in effect on the Payment Date and (iv) has not been and is
not the subject of a prior or contemporaneous demand for payment under
the Letter of Credit.
(4) Upon receipt by the Trustee of the amount demanded hereby,
(i) the Trustee will apply the same directly to the payment when due of
the amount of the portion of the Purchase Price corresponding to
principal on the Put Bonds pursuant to the Trust Agreement, (ii) no
portion of said amount shall be applied by the Trustee for any other
purpose and (iii) no portion of said amount shall be commingled with
other funds held by the Trustee.
The Trustee hereby acknowledges that, pursuant to the terms of the
Letter of Credit, (A) the honoring by the Bank of the Purchase Drawing made by
this Certificate shall automatically reduce the Principal Component and the
amount available to be drawn under the Letter of Credit by subsequent Purchase
Drawings or Principal Drawings by an amount equal to the amount of such Purchase
Drawing, as set forth in clause (i) of paragraph (3) of this Certificate; and
(B)
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such reduction shall automatically result in a corresponding reduction in the
Stated Amount, subject to reinstatement pursuant to the terms and conditions of
the Letter of Credit.
Please [deposit] [wire transfer] the amount demanded hereby to
____________.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of ____________, 19____.
BANCO POPULAR DE PUERTO RICO,
as Trustee
By:________________________________________
Name:
Title:
Annex IV to
Irrevocable Transferable
Standby Letter of Credit
CERTIFICATE FOR THE REDUCTION OF AMOUNTS
AVAILABLE UNDER LETTER OF CREDIT
The undersigned, a duly authorized officer of Banco Popular de Puerto
Rico (the TRUSTEE), hereby certifies to The Mitsubishi Bank, Limited, acting
through its New York Branch (the BANK), with reference to Irrevocable
Transferable Standby Letter of Credit No. _____ issued by the Bank in favor of
the Trustee (the LETTER OF CREDIT), that:
(1) The Trustee is the designated trustee under the Trust
Agreement (such term and all other capitalized terms used herein which
are not otherwise defined herein shall have the respective meanings set
forth in the Letter of Credit) for the holders of the Bonds.
(2) The Trustee hereby notifies the Bank that on or prior to
the date hereof $____________ principal amount of Bonds have been
delivered to the Trustee and cancelled in accordance with Section 508
of the Trust Agreement.
(3) Following the cancellation referred to in paragraph (2)
above, the aggregate principal amount of all of the Bonds which are
OUTSTANDING within the meaning of the Trust Agreement is
$________________.
(4) The Principal Component and amount available to be drawn
by the Trustee under the Letter of Credit by Principal Drawings or
Purchase Drawings is reduced to $____________ (such amount being equal
to the amount specified in paragraph (3) above), upon receipt by the
Bank of this Certificate.
(5) The Interest Component and amount available to be drawn by
the Trustee under the Letter of Credit by Interest Drawings is reduced
to $__________ upon receipt by the Bank of this Certificate, which
amount equals interest on the Bonds referred to in paragraph (3) above
computed at a rate of 12% per annum for a period of 120 days on the
basis of a 360-day year, including the first day but excluding the last
day.
(6) The Stated Amount of the Letter of Credit is reduced to
$______________ (such amount being equal to the sum of the amounts
specified in paragraphs (4) and (5) above), upon receipt by the Bank of
this Certificate.
-2-
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of ____________, 19____.
BANCO POPULAR DE PUERTO RICO,
as Trustee
By:
Name:
Title:
Annex V to
Irrevocable Transferable
Standby Letter of Credit
INSTRUCTION TO TRANSFER
[Date]
The Mitsubishi Bank, Limited,
New York Branch
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Two World Financial Center
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Real Estate Finance Group
The Mitsubishi Bank, Limited, New York Branch
Irrevocable Transferable Standby Letter of Credit No. ______
(the LETTER OF CREDIT)
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
_______________________________________
[Name of Transferee]
_______________________________________
[Address of Transferee]
all rights of the undersigned beneficiary under the Letter of Credit. The
transferee has succeeded the undersigned as designated trustee under the Trust
Agreement referred to in the first paragraph of the Letter of Credit.
By this transfer, all rights of the undersigned beneficiary in the
Letter of Credit are transferred to the transferee and the transferee shall
hereafter have the sole rights as beneficiary thereof.
-2-
The Letter of Credit is returned herewith, and we ask that this
transfer be effective and that you issue a new irrevocable transferable letter
of credit in favor of the transferee with provisions consistent with the Letter
of Credit.
Very truly yours,
BANCO POPULAR DE PUERTO RICO,
as predecessor Trustee
By:
Name:
Title: